<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 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 0-22726
SAFESKIN CORPORATION
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-2617525
- --------------------------------- ---------------------
(State or other jurisdiction (IRS Employer ID No.)
of incorporation or organization)
12671 High Bluff Drive, San Diego, California 92130
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(Address of principal executive offices)
(619) 794-8111
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Class Outstanding at April 30, 1999
----- -----------------------------
<S> <C>
Common Stock, par value $0.01 per share 55,095,109
</TABLE>
<PAGE> 2
SAFESKIN CORPORATION
INDEX
<TABLE>
<CAPTION>
Page Number
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<S> <C>
PART I: Financial Information............................................ 1
ITEM 1. Financial Statements............................................. 1
Condensed Consolidated Balance Sheets at March 31, 1999 and
December 31, 1998................................................ 2
Condensed Consolidated Statements of Operations for the three
months ended March 31, 1999 and 1998............................. 3
Consolidated Statements of Comprehensive Income
for the three months ended March 31, 1999 and 1998 .............. 4
Condensed Consolidated Statements of Cash Flows for the three
months ended March 31, 1999 and 1998............................. 5
Notes to Condensed Consolidated Financial Statements............. 6
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................ 8
PART II: Other Information................................................ 24
ITEM 6. Exhibits and Reports on Form 8-K................................. 24
SIGNATURES....................................................... 25
</TABLE>
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<PAGE> 3
PART I: FINANCIAL INFORMATION
ITEM 1. Financial Statements
<TABLE>
<CAPTION>
INDEX PAGE
----- ----
<S> <C>
Condensed Consolidated Balance Sheets at March 31, 1999
and December 31, 1998............................................................2
Condensed Consolidated Statements of Operations for
the three months ended March 31, 1999 and 1998...................................3
Consolidated Statements of Comprehensive Income for
the three months ended March 31, 1999 and 1998 ..................................4
Condensed Consolidated Statements of Cash Flows for
the three months ended March 31, 1999 and 1998...................................5
Notes to Condensed Consolidated Financial Statements.............................6
</TABLE>
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SAFESKIN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 1999 AND DECEMBER 31, 1998
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
(UNAUDITED)
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<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ............................. $ 6,969,681 $ 9,416,802
Accounts receivable, net .............................. 32,254,082 32,511,412
Inventory ............................................. 44,797,703 37,056,821
Other current assets .................................. 12,935,468 9,829,335
------------- -------------
Total current assets ............................. 96,956,934 88,814,370
Property, plant and equipment, net ........................... 127,802,021 119,456,352
Deferred taxes and other assets .............................. 42,096,351 40,690,386
------------- -------------
Total assets ..................................... $ 266,855,306 $ 248,961,108
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ...................................... $ 8,816,396 $ 8,661,602
Accrued liabilities ................................... 20,738,776 24,515,378
Current portion of long-term debt ..................... 6,000,000 4,500,000
------------- -------------
Total current liabilities ........................ 35,555,172 37,676,980
Long-term debt ............................................... 105,000,000 87,731,158
Other long-term liabilities .................................. 3,960,269 2,140,682
------------- -------------
Total liabilities ..................................... 144,515,441 127,548,820
Commitments and contingencies
Shareholders' equity:
Preferred stock; $.01 par value; 10,000,000 shares
authorized and no shares outstanding ............. -- --
Common stock; $.01 par value; 80,000,000 shares
authorized; 55,095,109 shares
and 54,600,399 shares outstanding ............... 550,951 546,004
Additional paid-in-capital ............................ 77,310,944 75,360,306
Treasury stock, at cost; 1,999,900 shares in 1999
and 1998......................................... (73,589,169) (73,589,169)
Accumulated other comprehensive loss .................. (28,980,668) (26,993,003)
Retained earnings ..................................... 147,047,807 146,088,150
------------- -------------
Total shareholders' equity ...................... 122,339,865 121,412,288
------------- -------------
Total liabilities and shareholders' equity ...... $ 266,855,306 $ 248,961,108
============= =============
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
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SAFESKIN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Net sales .......................................... $ 41,762,915 $ 53,295,835
Cost of goods sold ................................. 21,413,306 25,454,262
------------ ------------
Gross profit ........................... 20,349,609 27,841,573
------------ ------------
Operating expenses:
Selling ....................................... 7,088,558 5,631,092
Research and development ...................... 1,666,002 1,834,673
General and administrative .................... 7,025,983 5,920,950
------------ ------------
Total operating expenses ............... 15,780,543 13,386,715
------------ ------------
Income from operations ................. 4,569,066 14,454,858
Interest expense (income), net ..................... 1,722,912 (282,736)
Other expense (income), net ........................ 1,611,811 (56,142)
------------ ------------
Income before income tax provision ................. 1,234,343 14,793,736
Income tax provision ............................... 274,686 1,479,374
------------ ------------
Net income ......................................... $ 959,657 $ 13,314,362
============ ============
Per share amounts:
Earnings per share of common stock
and common stock equivalents:
Basic ............................. $ 0.02 $ 0.25
Diluted ........................... 0.02 0.22
Weighted average number of shares of common
stock and common stock equivalents outstanding:
Basic ............................. 52,910,264 53,368,370
Diluted ........................... 57,681,398 60,635,961
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
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<PAGE> 6
SAFESKIN CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Net income ..................................... $ 959,657 $13,314,362
Other comprehensive income, (loss):
Foreign currency translation adjustments .. (1,987,665) 13,362,798
----------- -----------
Comprehensive income (loss) .................... $(1,028,008) $26,677,160
=========== ===========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
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<PAGE> 7
SAFESKIN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
MARCH 31, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income ................................................. $ 959,657 $ 13,314,362
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ........................ 3,698,133 2,287,376
Exchange loss ........................................ 1,476,320 4,414,459
(Gain) Loss on disposal of equipment ................. (10,197) 13,478
Changes in operating assets and liabilities:
Accounts receivable ............................. 70,650 (1,007,497)
Inventory ....................................... (8,098,477) (3,634,558)
Other assets .................................... (5,152,248) (224,794)
Accounts payable and accrued liabilities ........ (1,487,721) (8,517,622)
------------- -------------
Net cash provided by (used in) operating activities .. (8,543,883) 6,645,204
------------- -------------
Cash flows from investing activities:
Net cash paid for acquisition of subsidiary ................ -- (5,145,128)
Purchases of property, plant and equipment ................. (14,636,274) (12,537,319)
------------- -------------
Net cash used in investing activities ................ (14,636,274) (17,682,447)
------------- -------------
Cash flows from financing activities:
Proceeds from issuance of common stock ..................... 1,955,585 3,314,467
Borrowings of debt ......................................... 124,043,524 --
Repayments of debt ......................................... (105,274,682) --
------------- -------------
Net cash provided by financing activities ............ 20,724,427 3,314,467
------------- -------------
Effect of exchange rate changes on cash ......................... 8,609 (192,623)
------------- -------------
Net decrease in cash and cash equivalents ....................... (2,447,121) (7,915,399)
Cash and cash equivalents at beginning of period ................ 9,416,802 23,916,959
------------- -------------
Cash and cash equivalents at end of period ...................... $ 6,969,681 $ 16,001,560
============= =============
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
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<PAGE> 8
SAFESKIN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements contain all adjustments, which consist
of normal and recurring adjustments, necessary for a fair presentation
of results for the periods indicated. The results of any interim period
are not necessarily indicative of results for the full year. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These condensed consolidated
financial statements should be read in conjunction with the consolidated
financial statements and the related notes thereto for the year ended
December 31, 1998. The December 31, 1998 condensed consolidated balance
sheet was derived from audited financial statements, but does not
include all disclosures required by generally accepted accounting
principles. Certain reclassifications have been made to prior periods to
conform to the current period's presentation.
2. Inventories at March 31, 1999 consisted of $7,020,000, $866,000 and
$36,912,000 for raw materials, work in process and finished goods,
respectively. At December 31, 1998, inventories consisted of $5,587,000,
$909,000 and $30,561,000 for raw materials, work in process and finished
goods, respectively.
3. On February 17, 1998, the Company authorized a two-for-one stock split
of its common stock to be effective in the form of a stock dividend
distributed on April 1, 1998 to shareholders of record at the close of
business on February 27, 1998. The holders of the Company's common stock
received a stock dividend at the rate of one share of common stock for
each share of common stock owned. The par value of each share was not
changed from $.01. All share and per share amounts have been
retroactively restated to reflect the stock split.
4. The Company is exposed to exchange rate risk when it and certain of its
subsidiaries enter into transactions denominated in currencies other
than their functional currency. Certain firmly committed transactions
are hedged with forward foreign exchange contracts. As exchange rates
change, gains and losses on the exposed transactions may be partially
offset by gains and losses related to the hedging contracts. Both the
exposed transactions and the hedging contracts are translated at current
spot rates, with gains and losses included in earnings. The Company's
derivative activities, all of which consist of forward foreign exchange
contracts as of March 31, 1999, are initiated primarily to hedge
intercompany receivables and payables.
The forward foreign exchange contracts generally require the Company to
exchange U.S. dollars for foreign currencies based on pre-established
exchange rates at the contracts' maturity dates. If the counterparties
to the exchange contracts (primarily A2 rated international
institutions) do not fulfill their obligations to deliver the contracted
currencies,
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<PAGE> 9
the Company could be at risk for currency related fluctuations
(generally limited to unrealized gains). Management believes using A2
rated international institutions as counterparties to the hedging
contracts minimizes the risk of non-performance.
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<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
condensed consolidated financial statements and related notes thereto.
GENERAL
Safeskin's net sales have grown substantially over the past several years.
Safeskin attributes the growth in net sales during the past several years
principally to increased market penetration due to the implementation of sales
and marketing programs, the introduction of new products and growth in markets
for its products. Safeskin introduced lightly powdered medical gloves in 1989,
powder-free medical gloves in 1990, HypoClean(R) powder-free gloves in 1992,
powder-free latex surgical gloves in 1994 and various high technology and
scientific nitrile gloves in 1995. In 1997, Safeskin began selling a medical
examination glove made of nitrile, a non-latex material. Additionally, in 1997,
as a result of its acquisition of the synthetic glove business of Tactyl
Technologies, Inc. ("Tactyl"), Safeskin began selling Tactylon(R) synthetic
examination and surgical gloves. In February 1998, as a result of its
acquisition of Absolute Quality Leadership, Inc. ("AQL"), Safeskin expanded its
current product line associated with the high-technology and scientific markets
to include a broad line of proprietary latex and synthetic glove products,
specifically designed for the microelectronics, health technologies and general
laboratory and safety market segments. Although Safeskin has continued to
develop new products and expects to do so in the future, no assurance can be
given that the new products will be accepted in the marketplace or will have
similar growth rates.
Safeskin's net sales are derived from the sale of finished products, net of
contractual allowable rebates, incentives, fees and allowance for estimated
returns. These rebates are provided to distributors for the resale of Safeskin's
products in specific volumes to specified end user customers and fees are
provided to group purchasing organization based on sales made to their member
organizations. Safeskin estimates allowable rebates, on a monthly basis, through
the analysis of actual sales information from distributors, Safeskin's
projections of distributor inventories, contractual arrangements and historical
and projected trends related to actual rebates issued. The Company establishes
an allowance for estimated returns based on historical return patterns and
estimated future returns. Cost of goods sold includes all costs to manufacture
the finished product plus related costs associated with ocean freight, customs
duty, warehousing and product delivery expenses. Selling expenses include
salaries for sales and marketing staffs and other related expenses such as sales
commissions, and costs associated with travel, trade show participation and
advertising. Research and development expenses include salaries for research and
development staffs and related expenses for consulting, product testing and
travel. General and administrative expenses include salaries for administrative
and information technology staffs and related expenses for travel, insurance,
facilities, consulting and professional fees. The income tax provision is
substantially less than statutory rates as a result of the tax-free status of
Safeskin's foreign manufacturing operations. Safeskin's existing Thailand
manufacturing
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<PAGE> 11
facilities have been granted tax-free status through 2003 and have been granted
a reduced tax rate through 2007. In 1998, Safeskin built new production
facilities in Thailand, and applied for and received similar tax-free status for
these operations. These new facilities in Thailand have been granted tax-free
status through 2006 and were granted a reduced tax rate through 2010. Safeskin's
Malaysian manufacturing operations were granted five years of tax-free status
which expired on September 30, 1998. The expiration of this tax-free status is
not expected to have a material adverse effect upon Safeskin's operations as
significantly all of the Malaysian manufacturing operations were transferred to
Thailand during the first quarter of 1999.
Restructuring
During 1996, Safeskin announced plans to move all of its remaining latex
examination glove production from its Malaysian facility to its Thailand
facility. Safeskin also announced that the Malaysian facility would continue to
operate as Safeskin's manufacturing source of higher-value synthetic, surgical,
and scientific products. At December 31, 1996, the Malaysian facility was
considered held for sale. During 1997, Safeskin extended the planned use of the
Malaysian facility due to existing production requirements and the timing of
bringing new production capacity on-line in Thailand. During 1998, Safeskin
successfully increased its examination glove production capacity at its existing
Thailand facility and in 1998, Safeskin commenced operations at its new 54-acre
manufacturing facility in Thailand. This facility was constructed to provide
additional capacity for the production of Safeskin's synthetic, surgical, and
scientific products. As a result of this increased production capacity in
Thailand for specialized gloves, during 1998 Safeskin decided to move all of its
remaining examination, surgical, and synthetic glove production from its Ipoh,
Malaysia and Vista, California production facilities to Safeskin's manufacturing
facilities in Thailand by the end of the first quarter of 1999. In addition,
Safeskin completed the integration of AQL in the fourth quarter of 1998 by
relocating AQL's offices from Santa Maria, California to Safeskin's corporate
headquarters in San Diego, California. In connection with the closure of
Safeskin's facilities in Ipoh, Malaysia and Vista and Santa Maria, California,
Safeskin recognized expense of $14,331,000 in the fourth quarter of 1998. This
expense consists of approximately $5,134,000 related to fixed assets written
down to estimated fair value, $3,883,000 related to employee termination costs,
$3,335,000 related to impairment of goodwill associated with the Tactyl
acquisition, $1,535,000 related to the write-off of leased equipment and the
costs to renovate a leased facility, and approximately $444,000 associated with
various other unusual charges. All remaining assets were assumed to be scrapped
at the disposition date. The net book value of assets expected to be disposed of
totaled approximately $14 million as of December 31, 1998. As of March 31, 1999,
Safeskin had not yet disposed of a significant portion of its fixed assets
written down to estimated fair value, primarily at its Ipoh, Malaysia facility.
Safeskin intends to dispose of these assets in 1999. There have been no
significant changes to the carrying amount of fixed assets held for disposal. In
connection with the restructuring activities related to the closure of
Safeskin's facilities in Ipoh, Malaysia and Vista and Santa Maria, California,
Safeskin accrued restructuring charges
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<PAGE> 12
totaling $5,158,889 at December 31, 1998. As of March 31, 1999, there have been
no significant changes in Safeskin's previous estimates of accrued restructuring
charges. These charges related primarily to liabilities associated with
anticipated employee termination costs totaling $3,809,545 and costs associated
with the write-off of an equipment lease and costs to renovate a leased facility
totaling $1,349,344. As a result of the restructuring activities, Safeskin
estimated that approximately 1,800 employees would be terminated primarily in
Malaysia, in the first quarter of 1999. As of April 30, 1999, Safeskin has
terminated the majority of these employees.
THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THE THREE MONTHS ENDED MARCH 31,
1998
Net sales for the three months ended March 31, 1999 were $41,763,000 which
represents a 21.6% decrease from net sales of $53,296,000 for the same three
month period in 1998. The predominant cause for the sales decline was a decrease
in unit volumes sold by the medical division in the 1999 period as compared to
the 1998 period. Safeskin began operating certain of its new manufacturing
facilities in the second half of 1998, which enabled Safeskin to increase its
production capacity during 1998. From July 1997 to June 1998, Safeskin operated
with its customers on an allocation of product basis, as Safeskin was only able
to fill a portion of each distributor's orders. As Safeskin increased production
capacity, Safeskin's sales personnel began a new and increased sales program
directed at new and current end-user customers. As part of this sales program,
Safeskin, its distributors and certain end-users entered into new three-way
contracts providing for the pricing and supply of Safeskin products to such
end-users. During the third quarter and the fourth quarter of 1998, Safeskin's
distributors increased their orders from Safeskin to enable them to fulfill new
sales they anticipated would be placed pursuant to these contracts. Safeskin
expected these trends to continue into the first quarter of 1999. However,
end-users did not purchase products under the new contracts as quickly as
anticipated. In addition, during the first quarter of 1999, Safeskin experienced
a longer than anticipated sales cycle for signing new contracts. As a result,
Safeskin publicly announced its expectation that sales and earnings for the full
year 1999 would be lower than anticipated.
Cost of goods sold decreased 15.9% from $25,454,000 for the three months ended
March 31, 1998 to $21,413,000 for the three months ended March 31, 1999. As a
percentage of net sales, cost of goods sold increased from 47.8% for the three
months ended March 31, 1998 to 51.3% for the same period in 1999. The primary
factors associated with the increase in cost of goods sold as a percentage of
net sales were attributable to lower average selling prices, a higher mix of
lower margin international sales and the negative effects of foreign currency in
the current period due to the strengthening of the Thai baht. These factors were
partially offset by an increased mix of higher-margin powder-free gloves and
lower costs associated with the shift of production from Malaysia to Thailand.
As a result of the above factors, gross profits decreased 26.9% from $27,842,000
for the three months ended March 31, 1998 to $20,350,000 for the three months
ended March 31, 1999. In the remaining quarters of fiscal 1999, Safeskin
anticipates that gross profit margins will be negatively affected by startup
costs associated with transferring operations to the new Thailand facility,
wind-down costs associated with the closing of the Malaysian manufacturing
facility and increased pricing
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<PAGE> 13
pressures in the industry.
Selling expenses increased 25.9% from $5,631,000 for the three months ended
March 31, 1998 to $7,089,000 for the three months ended March 31, 1999. As a
percentage of net sales, selling expenses increased from 10.6% for the three
months ended March 31, 1998 to 17.0% for the same period in 1999. The increase
in selling expenses as a percentage of net sales is primarily attributed to
lower sales levels for the three months ended March 31, 1999. In addition,
Safeskin experienced increased selling expenses related to its efforts to expand
its business in international markets.
Research and development expenses decreased 9.2% from $1,835,000 for the three
months ended March 31, 1998 to $1,666,000 for the three months ended March 31,
1999. As a percentage of net sales, these expenses increased from 3.4% for the
three months ended March 31, 1998 to 4.0% for the three months ended March 31,
1999. The increase in research and development expenses as a percentage of net
sales is primarily attributed to lower sales levels for the three months ended
March 31, 1999. During the remaining quarters of fiscal 1999, Safeskin expects
research and development expenses to be affected by costs associated with
developing and testing new products scheduled for introduction in 1999.
General and administrative expenses increased 18.7% from $5,921,000 for the
three months ended March 31, 1998 to $7,026,000 for the three months ended March
31, 1999. As a percentage of net sales, these expenses increased from 11.1% for
the 1998 period to 16.8% for the 1999 period. The increase in general and
administrative expenses as a percentage of net sales is primarily attributed to
lower sales levels for the three months ended March 31, 1999. In addition,
Safeskin experienced increased costs associated with its efforts to improve and
streamline its information technology systems and services as well as increased
legal and related expenses associated with product liability lawsuits.
Income from operations decreased 68.4% from $14,455,000 for the three months
ended March 31, 1998 to $4,569,000 for the three months ended March 31, 1999,
and operating margins decreased from 27.1% in the 1998 period to 10.9% in the
1999 period.
Interest expense (income), net, changed from $283,000 of interest income for the
three months ended March 31, 1998 to $1,723,000 of interest expense for the
three months ended March 31, 1999, primarily due to the fact that in 1999
Safeskin had incurred interest expense on debt outstanding during the period. By
comparison, for the three months ended March 31, 1998, Safeskin had no debt
outstanding and generated investment returns on its cash balances.
Other expense (income), net, changed from $56,000 of other income for the three
months ended March 31, 1998 to $1,612,000 of other expense for the three months
ended March 31, 1999. This change in other expense was substantially due to
net foreign currency transaction losses in Safeskin's Thailand subsidiaries in
1999. In 1998, the Company was not significantly impacted by net foreign
currency transaction gains or losses.
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<PAGE> 14
Provision for income taxes decreased 81.4% from $1,480,000 for the three months
ended March 31, 1998 to $275,000 for the three months ended March 31, 1999. The
income tax provision recorded in 1998 was less than United States statutory
rates due primarily to the tax-free status of a significant portion of
Safeskin's foreign manufacturing operations. In 1999, the income tax provision
was less than United States statutory rates due primarily to the tax-free
status of a significant portion of Safeskin's foreign manufacturing operations
and the effect of a transaction entered into by two of Safeskin's subsidiaries,
during the third quarter of 1998, that qualified as a Section 351 Exchange, as
defined in Section 351 of the Internal Revenue Code.
Net income decreased 92.8% from $13,314,000 for the three months ended March 31,
1998 to $959,000 for the three months ended March 31, 1999. Due to the foregoing
factors, net income as a percentage of net sales decreased from 25.0% in 1998 to
2.3% in 1999.
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<PAGE> 15
LIQUIDITY AND CAPITAL RESOURCES
Safeskin began operating certain of its new manufacturing facilities in the
second half of 1998, which enabled Safeskin to increase its production capacity
during 1998. From July 1997 to June 1998, Safeskin operated with its customers
on an allocation of product basis, as Safeskin was only able to fill a portion
of each distributor's orders. As Safeskin increased production capacity,
Safeskin's sales personnel began a new and increased sales program directed at
new and current end-user customers. As part of this sales program, Safeskin, its
distributors and certain end-users entered into new three-way contracts
providing for the pricing and supply of Safeskin products to such end-users.
During the third quarter and the fourth quarter of 1998, Safeskin's distributors
increased their orders from Safeskin to enable them to fulfill new sales they
anticipated would be placed pursuant to these contracts. Safeskin expected these
trends to continue into the first quarter of 1999. However, end-users did not
purchase products under the new contracts as quickly as anticipated. In
addition, during the first quarter of 1999, Safeskin experienced a longer than
anticipated sales cycle for signing new contracts. As a result, Safeskin's
inventory levels as of March 31, 1999 increased significantly from $37,057,000
at December 31, 1998 to $44,798,000 at March 31, 1999. On March 11, 1999,
Safeskin publicly announced its expectation that sales and earnings for the full
year 1999 would be lower than anticipated.
During the three months ended March 31, 1999 and 1998, Safeskin acquired capital
assets of approximately $14,636,000 and $12,537,000, respectively, primarily for
the expansion of Safeskin's foreign manufacturing operations.
Safeskin is currently building a latex concentrate plant in Thailand. Safeskin
began initial production of latex concentrate at this plant in the third quarter
of 1997 and expects the final phase of construction to be completed in 1999. The
output of the plant currently supplies approximately 70% of the latex
concentrate required by Safeskin's factories in Thailand for the manufacture of
its disposable latex gloves. Safeskin believes that this plant allows it to
integrate its manufacturing processes to gain better control over the quality,
cost and reliability of latex supplies. Safeskin anticipates that the completion
of this construction will be funded with internally generated funds and
borrowings under the credit facility.
Safeskin is expanding its Thailand manufacturing operations and has transferred
manufacturing capacity from California and Malaysia to capitalize on the
increased production efficiencies and lower operating costs in Thailand that
Safeskin expects to realize. Safeskin has recently
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<PAGE> 16
completed construction of a fifth building and related machinery at Safeskin's
existing Hat Yai, Thailand facility. This building houses 22 high-speed and
product-flexible dipping production lines which were commissioned throughout
1998, beginning in the second quarter, and are expected to increase production
capacity by an additional 1.5 billion gloves annually. During 1999, Safeskin's
expansion plans include the completion of a second manufacturing facility in
Sadao, Thailand that is expected to produce latex and synthetic surgical,
high-technology and scientific and medical examination gloves. Construction of
the new manufacturing facility in Sadao, Thailand began in the second half of
1997 after approval by the Thailand Board of Investment. Four production
buildings have been constructed on this site. The first building provides
additional capacity for the production of Safeskin's surgical and cleanroom
glove products and was completed in the fourth quarter of 1998. The second
building is expected to house the expansion of Safeskin's Tactylon(R) synthetic
medical examination and surgical glove products and Safeskin's nitrile glove
production. This building is expected to increase by over 200 percent the
production capacity of the Tactylon(R) product line in comparison to the
previous facility located in Vista, California. Finally, the additional two
buildings are expected to provide Safeskin increased capacity for latex and
synthetic medical examination, surgical and scientific glove production. The new
buildings, machines and supporting infrastructure at the new Sadao manufacturing
facility and the fifth building at the Hat Yai facility are currently expected
to cost approximately $80 million in the aggregate, approximately $60 million of
which has been expended as of March 31, 1999. Safeskin believes that its
significant investment in its manufacturing operations has increased Safeskin's
annualized production capacity from approximately 3.5 billion gloves to
approximately 5.5 billion gloves as of December 31, 1998. Financing for the
total capital expenditures is projected to come from internally generated funds
and borrowings from the credit facilities.
In the fourth quarter of 1998, Safeskin began construction of a facility in
southern Thailand designed to manufacture boxes and ceramic gloveformers for its
own use. This facility is expected to allow Safeskin to further integrate its
manufacturing operations to gain better control over the quality, timeliness,
cost and reliability of these products. This facility is expected to commence
production in September 1999 and is expected to produce approximately 80% of
Safeskin's requirements. The total expected costs for the construction of these
facilities is approximately $7 million. This construction is expected to be
funded through internally generated cash and borrowings under Safeskin's credit
facilities.
During 1998, Safeskin had an unsecured two-year credit facility for financing
general working capital needs, up to a maximum of $40,000,000 in borrowings (the
"Revolving Credit Facility"). As of December 31, 1998, there was approximately
$12,000,000 outstanding under the Revolving Credit Facility. On July 30, 1998,
Safeskin, through its subsidiary Safeskin (B.V.I.) Limited ("Safeskin BVI"),
entered into and closed a credit agreement for a $100 million loan facility (the
"BVI Facility") with Union Bank of California, N.A., as Agent. The BVI Facility
was secured by a first priority lien on the Common Stock of Safeskin purchased
by Safeskin BVI, a first priority lien on all the assets of Safeskin BVI and a
first priority pledge of the capital stock
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<PAGE> 17
and beneficial interest in Safeskin Corporation (Thailand) Limited. Safeskin BVI
had the option to accrue interest on the BVI Facility at an annual rate equal to
either (i) the base rate plus 0.25% or (ii) LIBOR plus 1.75%. As of December 31,
1998, there was approximately $80,000,000 outstanding under the BVI Facility.
During the second half of 1998, Safeskin used a majority of the funds from the
BVI Facility to repurchase approximately two million shares of its Common Stock.
The total cost of the treasury stock acquired related to this share buyback
totaled approximately $73,600,000 for the year ended December 31, 1998.
Borrowings above the cost of Safeskin's share buyback were used to finance (i)
Safeskin's ongoing investment in its Thailand facilities (ii) Safeskin's working
capital requirements and (iii) other general corporate purposes.
On March 5, 1999, Safeskin entered into a $100 million loan agreement, including
a $60 million term loan (the "Term Loan") and a $40 million revolving credit
facility (the "Revolver") both maturing in 2004. The Term Loan and the Revolver
bear interest at approximately LIBOR plus 1.625%, however, the rate may vary
according to certain financial ratios. Concurrently, Safeskin also closed a
private placement of $40 million of senior secured notes due 2009 (the "Notes")
with a final maturity of ten years and an average life of seven-years. The Notes
bear interest at an annual fixed rate of 6.89%. The Notes constitute senior debt
of Safeskin, ranking pari passu with Safeskin's other senior bank indebtedness.
The proceeds of the Term Loan, the Revolver and the Notes were used to repay
amounts outstanding under the Revolving Credit Facility and BVI Facility, which
were subsequently canceled. The Term Loan, Revolver, and the Notes are secured
by certain assets of Safeskin as well as a guarantee of all current and future
significant domestic subsidiaries. Safeskin also entered into a seven year lease
(the "Lease") for a new corporate headquarters campus facility to be constructed
for Safeskin. The lessor of the campus has committed to fund up to a maximum of
$60 million for the construction of the campus, with the portion of the
committed amount actually used to be determined by Safeskin. Safeskin has the
option to purchase the leased premises at any time during the lease. If Safeskin
elects not to purchase the premises, Safeskin has guaranteed that the lessor,
upon subsequent sale of the building, will receive a percentage of the total
amount of funding, up to $53.9 million. The Company's lease obligations,
including the payment of rents and the payment of the guaranteed residual value
is secured by the Company's interest in the real estate subject to the Lease
and, pari passu with the lenders on the Term Loan, Revolver, and Notes, certain
other assets of Safeskin. As of March 31, 1999, there was $111,000,000
outstanding under these credit facilities. As of March 31, 1998, the Company had
no debt outstanding.
Safeskin's foreign manufacturing subsidiaries have revolving lines of credit for
financing general working capital needs up to approximately $9,100,000. As of
March 31, 1999, there were no borrowings outstanding under these credit
facilities. These borrowings are collateralized by all assets of the
subsidiaries and are further supported by a guarantee of Safeskin.
-15-
<PAGE> 18
YEAR 2000 READINESS DISCLOSURE
Overview
The Year 2000 Issue is the issue of whether information and non-information
technology systems will be able to accurately recognize and process
date-sensitive information involving dates in and beyond the Year 2000. Safeskin
relies, directly and indirectly, on information technology systems, such as
desktop computers, network hardware equipment and applications software, to
manage its business data and to perform a variety of administrative services
including, accounting, financial reporting, payroll and invoicing. Safeskin also
relies on non-information technology systems including office equipment,
security systems, telephone systems and process controllers, to control its
manufacturing systems and carry out its day-to-day operations. In addition,
third parties material to Safeskin's operations, such as suppliers, vendors and
customers, rely on information and non-information technology systems to manage
their businesses. All of these technology systems could potentially be affected
by the Year 2000 Issue.
In order to minimize the risk of Year 2000 related losses, Safeskin has
completed a comprehensive assessment of its Year 2000 Issue. Perot Systems
Corporation has been retained to help Safeskin (i) identify and update or
replace non-Year 2000 compliant information and non-information technology
systems that are material to Safeskin's operations and (ii) develop contingency
and business continuation plans in the event that Safeskin is unable to timely
address its Year 2000 Issue.
Safeskin's Year 2000 assessment involves the testing and analyzing of all
information technology equipment, applications software and non-information
technology systems used by Safeskin, and the evaluation of the Year 2000
preparedness of third parties critical to Safeskin's operations. As of March 31,
1999, Safeskin's Year 2000 assessment in each of these areas was over 90%
complete. To date, the assessment has revealed that two of the material
applications software on which Safeskin relies are not Year 2000 compliant.
Safeskin plans to replace both of these applications in 1999. In early 1998,
Safeskin began to implement a Year 2000 compliant enterprise-wide business
systems application. Although Safeskin installed the application in order to
improve the management of its business data, the application is also expected to
have the effect of ensuring that a significant percentage of Safeskin's
information technology systems are Year 2000 compliant. This application was
online at Safeskin's U.S. facilities in January 1999 and Safeskin expects it to
be online at the Southeast Asian manufacturing facilities by the end of the
third quarter of 1999.
Safeskin has developed preliminary remediation plans for each of the areas
targeted by the Year 2000 assessment. Specifically, non-Year 2000 compliant
information technology equipment, including obsolete hardware components and
outdated operating systems, BIOS or chip codes, will be updated or replaced,
applications software that is not Year 2000 compliant are expected to be
converted or replaced by the end of the third quarter of 1999 and any
non-information technology systems or processors that are either non-Year 2000
compliant or suspect due to lack of information from the vendor are expected to
be replaced or upgraded to a compliant version.
-16-
<PAGE> 19
In addition, Safeskin is currently requesting confirmation that all suppliers
and customers material to its operations are, or within a short period of time
are planning to become, Year 2000 compliant.
Safeskin has approved and began implementing a final remediation plan for
addressing all known Year 2000 Issues in the fourth quarter of 1998. Safeskin's
remediation plan will give priority to those non-Year 2000 compliant technology
systems which are material to Safeskin's operations. Perot Systems Corporation
is expected to handle all remediation efforts, including, if necessary, the
replacement of any information technology hardware or software, the upgrading of
manufacturing systems and the changing of BIOS or chip codes. Perot Systems
Corporation will coordinate its remediation efforts with Safeskin in order to
avoid, to the extent possible, disruption of Safeskin's manufacturing capacity.
Safeskin expects that contingency plans for all known Year 2000 Issues will be
finalized by mid-1999.
Safeskin also plans to examine the Year 2000 readiness of any information or
non-information technology systems acquired in the future and develop
remediation and contingency plans as necessary.
Safeskin is also preparing contingency plans in the event that there is a
disruption to the business caused by Year 2000 data processing problems.
Although Safeskin anticipates complete remediation by mid-1999, it is possible
that delays in the remediation process or Year 2000 issues caused by third party
trading partners could arise. Safeskin is assessing these issues and is
developing contingency plans that would provide for uninterrupted business
operations. Safeskin expects these contingency plans will be fully developed
by the end of the second quarter in 1999.
Costs
Although the total costs associated with becoming Year 2000 compliant have not
been fully identified, Safeskin does not currently expect the costs of
remediating its Year 2000 Issues to be material to its operations, results of
operations or financial condition. As of March 31, 1999, Safeskin has spent
approximately $165,000 on Year 2000 Issues, primarily attributable to the cost
of conducting the Year 2000 assessment and developing a remediation plan.
The future cost of identifying and remediating Year 2000 Issues is expected to
be at least $175,000. Costs for replacements or modifications that would have
been necessary independent of Year 2000 Issues, including the $1.0 million that
will be spent to install the new enterprise-wide business applications software
at Safeskin's Asian operation sites, have not been included in Safeskin's Year
2000 cost estimates.
Risks
The failure to correct a material Year 2000 problem could result in an
interruption in, or a failure
-17-
<PAGE> 20
of, certain normal business activities or operations of Safeskin. Such failures
could materially and adversely affect Safeskin's results of operations and
financial condition. In addition, the costs associated with the remediation of
the Year 2000 Issues may be significantly higher than Safeskin estimates,
depending upon the availability and cost of personnel trained in the remediation
of Year 2000 Issues, the ability to locate and correct all relevant computer
codes, the ability to obtain timely responses to and corrections by
third-parties and suppliers, the ability to implement interfaces between the new
systems and the systems not being replaced and similar uncertainties. Due to the
general uncertainty inherent in the Year 2000 problem, resulting in part from
the uncertainty of the Year 2000 readiness of third party suppliers and
customers and of the infrastructure in those countries in which Safeskin
operates, there can be no assurance that Year 2000 Issues will not have a
material impact on Safeskin's results of operations or financial condition.
However, Safeskin's Year 2000 remediation efforts are expected to significantly
reduce Safeskin's level of uncertainty about the Year 2000 Issue and, in
particular, about the Year 2000 compliance and readiness of its material third
party suppliers, customers and vendors. Furthermore, Safeskin believes that,
with the implementation of new business systems and the completion of its Year
2000 remediation plan as scheduled, the possibility of significant interruptions
of normal operations will be minimal.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk represents the risk of loss that may impact the consolidated
financial position, results of operations or cash flows of Safeskin. Safeskin,
in the normal course of doing business, is exposed to the risks associated with
foreign currency exchange rates, changes in interest rates, and certain
commodity prices. Safeskin employs established policies and procedures governing
the use of financial instruments to manage its exposure to such risks. These
financial exposures are monitored and managed by Safeskin as an integral part of
Safeskin's overall risk management program, which recognizes the
unpredictability of financial markets and seeks to reduce the potentially
adverse effect on Safeskin's results.
Foreign Currency Exchange Rate Risk
Safeskin is exposed to exchange rate risk when its U.S. and non-U.S.
subsidiaries enter into transactions denominated in currencies other than their
functional currency. Certain firmly committed transactions are hedged with
forward foreign exchange contracts. As exchange rates change, gains and losses
on the exposed transactions are partially offset by gains and losses related to
the hedging contracts. Both the exposed transactions and the hedging contracts
are translated at current spot rates, with gains and losses included in
earnings. Safeskin's derivative activities, all of which consist of forward
foreign exchange contracts, are initiated primarily to hedge intercompany
receivables and payables.
The forward foreign exchange contracts generally require Safeskin to exchange
U.S. dollars for foreign currencies based on pre-established exchange rates at
the contracts maturity dates. If the counterparties to the exchange contracts
(primarily A2 rated international institutions) do not
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<PAGE> 21
fulfill their obligations to deliver the contracted currencies, Safeskin could
be at risk for currency related fluctuations (generally limited to unrealized
gains). Management believes using A2 rated international institutions as
counterparties to the hedging contracts minimizes the risk of non-performance.
As of March 31, 1999, Safeskin had forward foreign exchange contracts to
purchase Thai baht in the aggregate amount of $15,000,000 outstanding, with a
weighted average exchange rate of 37.19 Thai baht to 1 U.S. dollar. For the
three months ended March 31, 1999, Safeskin recorded an unrealized loss of
approximately $169,000 in connection with these contracts. Further disclosure
relating to forward foreign exchange contracts is included in Note 2 in the
Notes to the 1998 Consolidated Financial Statements.
Interest Rate Risk
Except for indebtedness under Safeskin's Note Agreement which is fixed rate
financing, the balance of Safeskin's indebtedness is variable rate financing.
Safeskin believes that its exposure to market risk relating to interest rate
risk is not material. Safeskin does not expect changes in interest rates to have
a material effect on income or cash flows in fiscal 1999, although there can be
no assurances that interest rates will not significantly change. Further
disclosure relating to financial instruments is included in Note 6 and Note 13
in the Notes to the 1998 Consolidated Financial Statements.
Commodity Price and Availability Risk
Safeskin is subject to risk associated with the consistent availability, at
budgeted prices, of raw rubber from independent growers and latex concentrate
from plant operators in Malaysia and Thailand and the availability of nitrile.
Safeskin enters into commodity forward contracts with suppliers. Such contracts
are executed to offset Safeskin's exposure to the potential change in supply
mainly for raw rubber and latex concentrate used in the manufacturing of
Safeskin's gloves.
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<PAGE> 22
LEGAL PROCEEDINGS
Approximately 222 product liability lawsuits seeking monetary damages, in most
cases of an unspecified amount, were pending in federal and state courts against
Safeskin and other manufacturers of latex gloves. These lawsuits allege injuries
ranging from dermatitis to severe allergic reactions caused by the residual
chemicals or latex proteins in gloves worn by medical workers while performing
their duties. On February 26, 1997, the Judicial Panel on Multi-District
Litigation entered an order transferring all latex allergy lawsuits brought on
behalf of healthcare workers against Safeskin and other latex glove
manufacturers in the Federal courts to the United States District Court for the
Eastern District of Pennsylvania, consolidating those cases for discovery
management and other pre-trial proceedings. Safeskin has referred the defense of
these lawsuits to its insurance carriers.
Since March 11, 1999, numerous lawsuits (collectively the "Securities Actions")
have been filed in the U.S. District Court for the Southern District of
California against Safeskin and certain officers and directors alleging
violations of Sections 10(b) and 20(a) of the Securities and Exchange Act of
1934, and Rule 10b-5 promulgated thereunder. The Securities Actions were brought
by plaintiffs in their individual capacity and on behalf of a purported class of
persons who purchased or otherwise acquired Safeskin publicly traded securities
during various periods occurring between October 23, 1997 and March 11, 1999.
The suits allege that plaintiffs purchased Safeskin securities at prices
artificially inflated by defendants' misrepresentations and omissions concerning
Safeskin's financial condition and prospects and seek an unspecified amount of
damages. In addition, a shareholder derivative action has been filed against
certain of Safeskin's directors, and Safeskin as a nominal defendant, in the
Supreme Court of the State of California, San Diego County (the "Derivative
Action"). The Derivative Action alleges breach of fiduciary duty, waste of
corporate assets and gross negligence in connection with Safeskin's stock
repurchase program and seeks an unspecified amount of damages. Defendants'
time to respond to the allegations made in the Securities Actions and the
Derivative Action has not yet expired, however, Safeskin believes that these
claims are without merit and intends to contest the claims vigorously.
From time to time, Safeskin is involved in other litigation relating to claims
arising out of its operations in the normal course of business. As of the date
hereof, Safeskin is not a party to any other legal proceedings, the adverse
outcome of which, in management's opinion, individually or in the aggregate,
would have a material adverse effect on Safeskin's business, results of
operation or financial condition.
Safeskin's tax returns for the years ended December 31, 1995, 1996 and 1997 are
currently being
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<PAGE> 23
audited by the Internal Revenue Service.
CAUTIONARY STATEMENT PURSUANT TO SAFE HARBOR PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
This report and the documents incorporated by reference herein contain
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934,
as amended. These forward-looking statements include, among others, the
following statements included in Management's Discussion and Analysis:
o statements regarding Safeskin's estimates with respect to sales, revenues,
cost of goods sold and operating margins;
o the financial effect of the expiration of the tax-free status of the
Malaysian manufacturing operations;
o the ability of Safeskin to dispose of its Malaysian and Vista, California
assets in 1999 and to realize estimated fair values;
o the effect on gross profit margins of start-up costs associated with
transferring operations to the new Thailand facility, wind-down costs
associated with the closing of the Malaysian manufacturing facility and
increased pricing pressures;
o the effect of currency fluctuations in Thailand on the cost of goods sold
and upon Safeskin's operating results;
o statements concerning Safeskin's outlook for 1999 and beyond including the
ability of Safeskin to retain and increase sales under GPO, end-user and
distributor contracts;
o Safeskin's liquidity and working capital;
o Safeskin's ability to complete construction of new facilities as
scheduled;
o Safeskin's ability to achieve anticipated production capacity in the new
manufacturing facilities and recognize certain operating efficiencies and
savings in Thailand; and
o and other statements of expectations, beliefs, future plans and
strategies, anticipated events or trends and similar expressions
concerning matters that are not historical facts. The forward-looking
statements in this report are subject to risks and uncertainties that
could cause the assumptions underlying such forward-looking statements and
the actual results to differ materially from those expressed in or implied
by the statements.
The most important factors that could prevent Safeskin from achieving its goals
- -- and cause the assumptions underlying forward-looking statements and the
actual results of Safeskin to differ
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<PAGE> 24
materially from those expressed in or implied by those forward-looking
statements -- include, but are not limited to, the following:
o the competitive nature of the industry and the ability of Safeskin to
continue to distinguish its products on the basis of quality, reliability
and value; possible obsolescence of Safeskin's primary products due to the
development by competitors of new products, manufacturing processes or
technologies including latex alternatives; the ability of Safeskin to
maintain and build strong distributor relationships and attract new
customer orders; and the ability of Safeskin to maintain selling prices
and anticipated volumes;
o the ability of Safeskin to meet existing or future FDA regulations
regarding the manufacture and sale of Safeskin's gloves;
o Safeskin's ability to successfully develop and introduce new products to
the market through record or even combined internal investments into
product development or research and development;
o risks associated with investments and operations in foreign countries,
particularly Thailand and Malaysia, including exchange rate fluctuations,
local economic conditions, governmental policies regarding foreign
ownership of manufacturing facilities, local regulatory requirements, tax
holidays and political factors;
o Safeskin's ability to successfully integrate the operations of acquired
businesses in a timely and efficient manner and to realize the anticipated
benefits of such acquisitions;
o the consistent availability, at budgeted prices, of raw rubber from
independent growers and latex concentrate from plant operators in Malaysia
and Thailand and the availability of nitrile;
o adverse outcomes or excessive legal expenses in connection with lawsuits
or the ability to obtain and maintain sufficient insurance coverage at
reasonable rates;
o delays in the completion of the construction of Safeskin's new production
facilities in Thailand or the failure of these production facilities to
generate anticipated productivity and efficiencies;
o delays in the completion of the final phase of Safeskin's construction of
its latex concentrate plant in Thailand or the failure of this plant to
generate anticipated productivity and efficiencies;
o Safeskin's ability to make the necessary capital investments, which are
required to expand its manufacturing operations and capacity;
o the non-linearity of Safeskin's sales throughout the quarter which limits
Safeskin's ability to accurately monitor and predict net sales and
profitability;
-22-
<PAGE> 25
o Safeskin's ability to monitor inventories of products held by third-party
distributors and to predict sales trends given Safeskin's limited
visibility of sales to end user customers;
o economic conditions in the healthcare industry, including the potential
impact of industry consolidation and cost constraints on the end-user;
o changes in significant government regulations affecting the healthcare
industry;
o the ability of Safeskin to protect its proprietary products, know-how and
manufacturing processes;
o the ability to attract and retain key personnel;
o Safeskin's ability to develop, maintain and improve information systems
that provide the Company with accurate and timely information;
o changes in Safeskin's rates or basis of income taxation, including
applicable U.S. tax laws and policies governing foreign operations and
Section 351 transactions;
o the ability of Safeskin to complete its Year 2000 project and remediate
its Year 2000 Issues within the specified time frames or within currently
estimated costs; and
o rapid levels of inflation which could have a significant effect on
Safeskin's net sales and profitability.
These and other risks and uncertainties affecting Safeskin are discussed in
greater detail in this report and in other filings by Safeskin with the
Securities and Exchange Commission.
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<PAGE> 26
PART II: OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
EXHIBIT DESCRIPTION OF DOCUMENT
------- -----------------------
10.46 Amended and Restated Revolving/Term Loan Agreement, dated as of
March 5, 1999, by and among Safeskin Corporation, Union Bank of
California, N.A. and certain lenders named therein; First
Amendment to Amend and Restated Revolving/Term Loan Agreement,
dated as of March 31, 1999.
10.47 Security Agreement,dated as of March 5, 1999, by Safeskin
Corporation, Safeskin Scientific Corporation and Union Bank of
California, N.A.
10.48 Note Purchase Agreement, dated as of March 5, 1999, by and
among Safeskin Corporation and the several purchasers named
therein.
10.49 Intercreditor and Collateral Agency Agreement, dated as of
March 5, 1999, by and among Safeskin Corporation, Safeskin
Scientific Corporation, Union Bank of California, N.A., the
holders of the 6.89% Senior Secured Notes due 2009 and the
Synthetic Lease Investors named therein.
10.50 Credit Agreement, dated as of March 5, 1999, by and among Union
Bank of California, N.A., as trustee, Union Bank of
California, N.A. and the several lenders named therein; First
Amendment to the Credit Agreement, dated as of March 31, 1999.
10.51 Participation Agreement, dated as of March 5, 199, by and among
Union Bank of California, N.A., as trustee, Union Bank of
California, N.A., Bankers Commercial Corporation and the several
lenders named therein.
10.52 Guarantee, dated as of March 5, 1999, by Safeskin Corporation
and Safeskin Scientific Corporation in favor of the
beneficiaries named therein.
10.53 Lease, dated as of March 5, 1999, by and between Union Bank of
California, N.A., as trustee, and Safeskin Real Estate
Incorporated.
11 Statement re: Computation of Per Share Earnings
(b) Reports on Form 8-K
None.
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<PAGE> 27
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.
SAFESKIN CORPORATION
Date: May 17, 1999 By: /s/ David L. Morash
---------------------------------------
David L. Morash, Executive Vice-
President, Chief Financial Officer
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<PAGE> 28
EXHIBIT INDEX
EXHIBIT DESCRIPTION OF DOCUMENT
------- -----------------------
10.46 Amended and Restated Revolving/Term Loan Agreement, dated as of
March 5, 1999, by and among Safeskin Corporation, Union Bank of
California, N.A. and certain lenders named therein; First
Amendment to Amend and Restated Revolving/Term Loan Agreement,
dated as of March 31, 1999.
10.47 Security Agreement,dated as of March 5, 1999, by Safeskin
Corporation, Safeskin Scientific Corporation and Union Bank of
California, N.A.
10.48 Note Purchase Agreement, dated as of March 5, 1999, by and
among Safeskin Corporation and the several purchasers named
therein.
10.49 Intercreditor and Collateral Agency Agreement, dated as of
March 5, 1999, by and among Safeskin Corporation, Safeskin
Scientific Corporation, Union Bank of California, N.A., the
holders of the 6.89% Senior Secured Notes due 2009 and the
Synthetic Lease Investors named therein.
10.50 Credit Agreement, dated as of March 5, 1999, by and among Union
Bank of California, N.A., as trustee, Union Bank of
California, N.A. and the several lenders named therein; First
Amendment to the Credit Agreement, dated as of March 31, 1999.
10.51 Participation Agreement, dated as of March 5, 199, by and among
Union Bank of California, N.A., as trustee, Union Bank of
California, N.A., Bankers Commercial Corporation and the several
lenders named therein.
10.52 Guarantee, dated as of March 5, 1999, by Safeskin Corporation
and Safeskin Scientific Corporation in favor of the
beneficiaries named therein.
10.53 Lease, dated as of March 5, 1999, by and between Union Bank of
California, N.A., as trustee, and Safeskin Real Estate
Incorporated.
11 Statement re: Computation of Per Share Earnings
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 10.46
AMENDED AND RESTATED REVOLVING/TERM LOAN AGREEMENT
Dated as of March 5, 1999
among
SAFESKIN CORPORATION
THE LENDERS HEREIN NAMED
and
UNION BANK OF CALIFORNIA, N.A.,
as Administrative Agent
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Article 1 DEFINITIONS AND ACCOUNTING TERMS................................................1
1.1 Defined Terms...................................................................1
1.2 Use of Defined Terms...........................................................30
1.3 Accounting Terms...............................................................30
1.4 Rounding.......................................................................30
1.5 Exhibits and Schedules.........................................................30
1.6 References to "Borrower and its Subsidiaries"..................................30
1.7 Miscellaneous Terms............................................................30
Article 2 LOANS AND LETTERS OF CREDIT....................................................31
2.1 Loans-General..................................................................31
2.2 Alternate Base Rate Loans......................................................32
2.3 Eurodollar Rate Loans..........................................................33
2.4 Letters of Credit..............................................................33
2.5 Voluntary Reduction of Revolving Commitment....................................37
2.6 Optional Termination of Commitments............................................38
2.7 Administrative Agent's Right to Assume Funds Available for
Advances.......................................................................38
2.8 Collateral.....................................................................39
Article 3 PAYMENTS AND FEES..............................................................40
3.1 Principal and Interest.........................................................40
3.2 Arranger and Agency Fees.......................................................42
3.3 Commitment Fee.................................................................42
3.4 Letter of Credit Fees..........................................................42
3.5 Increased Commitment Costs.....................................................43
3.6 Eurodollar Costs and Related Matters...........................................44
3.7 Late Payments..................................................................48
3.8 Computation of Interest and Fees...............................................48
3.9 Non-Banking Days...............................................................48
3.10 Manner and Treatment of Payments..............................................49
3.11 Funding Sources...............................................................50
3.12 Failure to Charge Not Subsequent Waiver.......................................50
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
3.13 Administrative Agent's Right to Assume Payments Will be Made..................50
3.14 Fee Determination Detail......................................................51
3.15 Survivability.................................................................51
Article 4 REPRESENTATIONS AND WARRANTIES.................................................52
4.1 Existence and Qualification; Power; Compliance With Laws.......................52
4.2 Authority; Compliance With Other Agreements and Instruments
and Government Regulations.....................................................52
4.3 No Governmental Approvals Required.............................................53
4.4 Subsidiaries...................................................................53
4.5 Financial Statements...........................................................54
4.6 No Other Liabilities; No Material Adverse Changes .............................54
4.7 Title to and Location of Property..............................................55
4.8 Intangible Assets..............................................................55
4.9 Public Utility Holding Company Act.............................................55
4.10 Litigation....................................................................55
4.11 Binding Obligations...........................................................55
4.12 No Default....................................................................56
4.13 ERISA.........................................................................56
4.14 Regulation U; Investment Company Act..........................................56
4.15 Disclosure....................................................................57
4.16 Tax Liability.................................................................57
4.17 Projections...................................................................57
4.18 Hazardous Materials...........................................................57
4.19 Security Interests............................................................57
Article 5 AFFIRMATIVE COVENANTS (OTHER THAN INFORMATION AND
REPORTING REQUIREMENTS)............................................................59
5.1 Payment of Taxes and Other Potential Liens.....................................59
5.2 Preservation of Existence......................................................59
5.3 Maintenance of Properties......................................................59
5.4 Maintenance of Insurance.......................................................60
5.5 Compliance With Laws...........................................................60
5.6 Inspection Rights..............................................................60
5.7 Keeping of Records and Books of Account........................................60
5.8 Compliance With Agreements.....................................................60
</TABLE>
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<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
5.9 Use of Proceeds................................................................60
5.10 Hazardous Materials Laws......................................................60
5.11 Future Subsidiaries...........................................................61
5.12 Future Real Property..........................................................61
5.13 Year 2000 Compliance..........................................................61
5.14 Security Interest in Property of Foreign Subsidiaries ........................62
5.15 Syndication Process...........................................................62
Article 6 NEGATIVE COVENANTS.............................................................63
6.1 Payment of Subordinated Obligations............................................63
6.2 Disposition of Property........................................................63
6.3 Mergers........................................................................63
6.4 Hostile Acquisitions...........................................................64
6.5 Acquisitions...................................................................64
6.6 Distributions..................................................................64
6.7 ERISA..........................................................................64
6.8 Change in Nature of Business...................................................65
6.9 Liens and Negative Pledges.....................................................65
6.10 Indebtedness and Guaranty Obligations.........................................66
6.11 Transactions with Affiliates..................................................67
6.12 Leverage Ratio................................................................67
6.13 Interest Coverage Ratio.......................................................67
6.14 Fixed Charge Coverage Ratio...................................................67
6.15 Tangible Net Worth............................................................68
6.16 Adjusted Current Ratio........................................................68
6.17 Net Income....................................................................68
6.18 Investments...................................................................68
6.19 Capital Expenditures..........................................................69
6.20 Operating Leases..............................................................70
6.21 Subsidiary Indebtedness.......................................................70
6.22 Amendments to Subordinated Obligations........................................70
Article 7 INFORMATION AND REPORTING REQUIREMENTS.........................................71
7.1 Financial and Business Information.............................................71
7.2 Compliance Certificates........................................................74
</TABLE>
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<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C>
Article 8 CONDITIONS.....................................................................75
8.1 Initial Advances...............................................................75
8.2 Any Advance....................................................................77
Article 9 EVENTS OF DEFAULT AND REMEDIES UPON EVENT OF DEFAULT ..........................79
9.1 Events of Default..............................................................79
9.2 Remedies Upon Event of Default.................................................81
Article 10 THE ADMINISTRATIVE AGENT......................................................85
10.1 Appointment and Authorization................................................85
10.2 Administrative Agent and Affiliates..........................................85
10.3 Proportionate Interest in any Collateral.....................................85
10.4 Lenders' Credit Decisions....................................................86
10.5 Action by Administrative Agent...............................................86
10.6 Liability of Administrative Agent............................................87
10.7 Indemnification..............................................................88
10.8 Successor Administrative Agent...............................................89
10.9 No Obligations of Borrower...................................................90
Article 11 MISCELLANEOUS.................................................................91
11.1 Cumulative Remedies; No Waiver...............................................91
11.2 Amendments; Consents.........................................................91
11.3 Costs, Expenses and Taxes....................................................92
11.4 Nature of Lenders' Obligations...............................................93
11.5 Survival of Representations and Warranties...................................93
11.6 Notices......................................................................93
11.7 Execution of Loan Documents..................................................94
11.8 Binding Effect; Assignment...................................................94
11.9 Right of Setoff..............................................................97
11.10 Sharing of Setoffs...........................................................97
11.11 Indemnity by Borrower........................................................98
11.12 Nonliability of the Lenders..................................................99
11.13 No Third Parties Benefited..................................................100
</TABLE>
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<PAGE> 6
<TABLE>
<CAPTION>
Page
----
<S> <C>
11.14 Confidentiality.............................................................101
11.15 Further Assurances..........................................................101
11.16 Integration.................................................................101
11.17 Governing Law; JURISDICTION AND VENUE.......................................102
11.18 Severability of Provisions..................................................102
11.19 Headings....................................................................102
11.20 Time of the Essence.........................................................103
11.21 Foreign Lenders and Participants............................................103
11.22 Hazardous Material Indemnity................................................103
11.23 Waiver of Right to Trial by Jury............................................104
11.24 Purported Oral Amendments...................................................105
Exhibits
A - Commitment Assignment and Acceptance
B - Compliance Certificate
C - Intercreditor Agreement
D - Opinion of Counsel
E - Pledge Agreement
F - Pricing Certificate
G - Request for Letter of Credit
H - Request for Loan
I - Revolving Note
J - Security Agreement
K - Subsidiary Guaranty
L - Term Note
Schedules
1.1 Lender Commitments
2.4 Existing Letters of Credit
4.4 Subsidiaries
4.7A Existing Liens, Negative Pledges and Rights of Others
4.7B Location of Property
4.10 Material Litigation
4.18 Hazardous Materials Matters
6.10 Existing Indebtedness and Guaranty Obligations
6.18 Existing Investments
</TABLE>
-v-
<PAGE> 7
AMENDED AND RESTATED REVOLVING/TERM LOAN AGREEMENT
Dated as of March 5, 1999
This AMENDED AND RESTATED REVOLVING/TERM LOAN AGREEMENT
("Agreement") is entered into by and among Safeskin Corporation, a Florida
corporation ("Borrower"), each lender whose name is set forth on the signature
pages of this Agreement and each lender which may hereafter become a party to
this Agreement pursuant to Section 11.8 (collectively, the "Lenders" and
individually, a "Lender"), and Union Bank of California, N.A., as Administrative
Agent, with reference to the following facts:
RECITALS
A. Borrower, the Lenders and the Administrative Agent are
parties to that certain Revolving/Term Loan Agreement dated as of July 30, 1998
(the "Prior Agreement"), pursuant to which the Lenders agreed to provide
Borrower with the revolving and term loan financing described therein.
B. Borrower, the Lenders and the Administrative Agent wish to
enter into this Agreement, which shall amend, restate, replace and supersede the
Prior Agreement in its entirety.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto covenant and agree as follows:
Article 1
DEFINITIONS AND ACCOUNTING TERMS
1.1 Defined Terms. As used in this Agreement, the following
terms shall have the respective meanings set forth below:
"Acquisition" means any transaction, or any series of related
transactions, consummated after the Closing Date, by which Borrower
and/or any of its Subsidiaries directly or indirectly (a) acquires any
ongoing business or all or substantially all of the assets of any
Person engaged in any ongoing business, whether through purchase of
assets, merger or otherwise, (b) acquires control of securities of a
Person engaged in an ongoing business representing more than 50% of the
ordinary voting power for the election of directors or
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<PAGE> 8
other governing position if the business affairs of such Person are
managed by a board of directors or other governing body or (c) acquires
control of more than 50% of the ownership interest in any partnership,
joint venture, limited liability company, business trust or other
Person engaged in an ongoing business that is not managed by a board of
directors or other governing body.
"Additional Senior Indebtedness" has the meaning specified in
the Intercreditor Agreement.
"Adjusted Current Ratio" means, as of the last day of any
Fiscal Quarter, the ratio of (a) the current assets of Borrower and its
Subsidiaries on such date, determined in accordance with GAAP to (b)
the sum of (i) the current liabilities of Borrower and its Subsidiaries
on such date, determined in accordance with GAAP plus (ii) the average
daily balance of the Indebtedness evidenced by the Revolving Notes for
such Fiscal Quarter (or, if such Fiscal Quarter commenced prior to the
Closing Date, for the period commencing on the Closing Date ended on
the last day of such Fiscal Quarter), to the extent not included under
clause (i) above).
"Administrative Agent" means Union Bank of California, N.A.
when acting in its capacity as the Administrative Agent under any of
the Loan Documents, or any successor Administrative Agent.
"Administrative Agent's Office" means the Administrative
Agent's address as set forth on the signature pages of this Agreement,
or such other address as the Administrative Agent hereafter may
designate by written notice to Borrower and the Lenders.
"Advance" means any advance made or to be made by any Lender
to Borrower as provided in Article 2, and includes each Alternate Base
Rate Advance and Eurodollar Rate Advance.
"Affiliate" means, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (and
the correlative terms, "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of power to direct or
cause the direction of management or policies (whether through
ownership of securities or partnership or other ownership interests, by
contract or otherwise); provided that, in any event, any Person that
owns, directly or indirectly, 10% or more of the securities having
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<PAGE> 9
ordinary voting power for the election of directors or other governing
body of a corporation that has more than 100 record holders of such
securities, or 10% or more of the partnership or other ownership
interests of any other Person that has more than 100 record holders of
such interests, will be deemed to be an Affiliate of such corporation,
partnership or other Person.
"Agreement" means this Amended and Restated Revolving/Term
Loan Agreement, either as originally executed or as it may from time to
time be supplemented, modified, amended, restated or extended.
"Aggregate Effective Amount" means, as of any date of
determination and with respect to all Letters of Credit then
outstanding, the sum of (a) the aggregate effective face amounts of all
such Letters of Credit not then paid by the Issuing Lender plus (b) the
aggregate amounts paid by the Issuing Lender under such Letters of
Credit not then reimbursed to the Issuing Lender by Borrower pursuant
to Section 2.4(d) and not the subject of Advances made pursuant to
Section 2.4(e).
"Alternate Base Rate" means, as of any date of determination,
the rate per annum (rounded upwards, if necessary, to the next 1/100 of
1%) equal to the higher of (a) the Prime Rate in effect on such date
and (b) the Federal Funds Rate in effect on such date plus 1/2 of 1%
(50 basis points).
"Alternate Base Rate Advance" means an Advance made hereunder
and specified to be an Alternate Base Rate Advance in accordance with
Article 2.
"Alternate Base Rate Loan" means a Loan made hereunder and
specified to be an Alternate Base Rate Loan in accordance with Article
2.
"Amortization Amount" means, with respect to each Amortization
Date described below, the amount set forth below opposite that
Amortization Date:
<TABLE>
<CAPTION>
Amortization Date Amount
- ----------------- -----------
<S> <C>
First four (4)
Amortization Dates after
Closing Date $1,500,000
Next four (4)
Amortization Dates $2,250,000
</TABLE>
-3-
<PAGE> 10
<TABLE>
<S> <C>
Next four (4)
Amortization Dates $3,000,000
Next four (4)
Amortization Dates $3,750,000
Next five (5)
Amortization Dates $3,600,000
(including the
Maturity Date)
</TABLE>
"Amortization Date" means the first Quarterly Payment Date
after the Closing Date, and each Quarterly Payment Date thereafter
through the Maturity Date.
"Applicable Commitment Fee Rate" means, for each Pricing
Period, the rate set forth below (expressed in basis points per annum)
opposite the Applicable Pricing Level for that Pricing Period:
<TABLE>
<CAPTION>
Applicable
Pricing Level Commitment Fee
------------- --------------
<S> <C>
I 20
II 25
III 25
IV 37.5
V 37.5
</TABLE>
"Applicable Eurodollar Rate Margin" means, for each Pricing
Period, the interest rate margin set forth below (expressed in basis
points per annum) opposite the Applicable Pricing Level for that
Pricing Period:
<TABLE>
<CAPTION>
Applicable
Pricing Level Margin
------------- ------
<S> <C>
I 87.5
II 112.5
III 125
IV 137.5
V 150
</TABLE>
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<PAGE> 11
"Applicable Pricing Level" means, for each Pricing Period, the
pricing level set forth below opposite the Leverage Ratio as of the
last day of the Fiscal Quarter most recently ended prior to the
commencement of that Pricing Period:
<TABLE>
<CAPTION>
Pricing Level Leverage Ratio
------------- --------------
<S> <C>
I Less than or equal to 1.00 to 1.00
II Greater than 1.00 to 1.00, but less
than or equal to 1.50 to 1.00
III Greater than 1.50 to 1.00, but less
than or equal to 2.00 to 1.00
IV Greater than 2.00 to 1.00, but less
than or equal to 2.50 to 1.00
V Greater than 2.50 to 1.00
</TABLE>
provided that (i) in the event that Borrower does not deliver a Pricing
Certificate with respect to any Pricing Period prior to the
commencement of such Pricing Period, then until (but only until) such
Pricing Certificate is delivered the Applicable Pricing Level for that
Pricing Period shall be Pricing Level V and (ii) if any Pricing
Certificate is subsequently determined to be in error, then any
resulting change in the Applicable Pricing Level shall be made
retroactively to the beginning of the relevant Pricing Period.
"Applicable Standby Letter of Credit Fee Rate" means, as of
any date of determination, the then effective Applicable Eurodollar
Rate Margin.
"Arranger" means Union Bank of California, N.A.
"Banking Day" means any Monday, Tuesday, Wednesday, Thursday
or Friday, other than a day on which banks are authorized or required
to be closed in California or New York.
"Capital Expenditure" means any expenditure by Borrower or any
of its Subsidiaries for or related to fixed assets or purchased
intangibles that is treated as a capital expenditure under GAAP,
including any amount which is required to be treated as an asset
subject to a Capital Lease Obligation. The amount of Capital
Expenditures in respect of fixed assets purchased or constructed by
Borrower or any of its Subsidiaries in any fiscal period shall be net
of (a) any net sales proceeds received during such fiscal period by
Borrower or such Subsidiary for fixed assets sold by Borrower or such
Subsidiary and (b) any
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<PAGE> 12
casualty insurance proceeds received during such fiscal period by
Borrower or such Subsidiary for casualties to fixed assets and applied
to the repair or replacement thereof.
"Capital Lease Obligations" means all monetary obligations of
a Person under any leasing or similar arrangement which, in accordance
with GAAP, is classified as a capital lease.
"Cash" means, when used in connection with any Person, all
monetary and non-monetary items owned by that Person that are treated
as cash in accordance with GAAP, consistently applied.
"Cash Equivalents" means, when used in connection with any
Person, that Person's Investments in:
(a) Government Securities due within one year after
the date of the making of the Investment;
(b) readily marketable direct obligations of any
State of the United States of America or any political subdivision of
any such State or any public agency or instrumentality thereof given on
the date of such Investment a credit rating of at least Aa by Moody's
Investors Service, Inc. or AA by Standard & Poor's Rating Group (a
division of McGraw-Hill, Inc.), in each case due within one year from
the making of the Investment;
(c) certificates of deposit issued by, bank deposits
in, Eurodollar deposits through, bankers' acceptances of, and
repurchase agreements covering Government Securities executed by any
Lender or any bank incorporated under the Laws of the United States of
America, any State thereof or the District of Columbia and having on
the date of such Investment combined capital, surplus and undivided
profits of at least $250,000,000, or total assets of at least
$5,000,000,000, in each case due within one year after the date of the
making of the Investment;
(d) certificates of deposit issued by, bank deposits
in, Eurodollar deposits through, bankers' acceptances of, and
repurchase agreements covering Government Securities executed by any
Lender or any branch or office located in the United States of America
of a bank incorporated under the Laws of any jurisdiction outside the
United States of America having on the date of such Investment combined
capital, surplus and undivided profits
-6-
<PAGE> 13
of at least $500,000,000, or total assets of at least $15,000,000,000,
in each case due within one year after the date of the making of the
Investment;
(e) repurchase agreements covering Government
Securities executed by a broker or dealer registered under Section
15(b) of the Securities Exchange Act of 1934, as amended, having on the
date of the Investment capital of at least $50,000,000, due within 90
days after the date of the making of the Investment; provided that the
maker of the Investment receives written confirmation of the transfer
to it of record ownership of the Government Securities on the books of
a "primary dealer" in such Government Securities or on the books of
such registered broker or dealer, as soon as practicable after the
making of the Investment;
(f) readily marketable commercial paper or other debt
securities issued by corporations doing business in and incorporated
under the Laws of the United States of America or any State thereof or
of any corporation that is the holding company for a bank described in
clause (c) or (d) above given on the date of such Investment a credit
rating of at least P-1 by Moody's Investors Service, Inc. or A-1 by
Standard & Poor's Rating Group (a division of McGraw-Hill, Inc.), in
each case due within one year after the date of the making of the
Investment;
(g) "money market preferred stock" issued by a
corporation incorporated under the Laws of the United States of America
or any State thereof (i) given on the date of such Investment a credit
rating of at least Aa by Moody's Investors Service, Inc. and AA by
Standard & Poor's Rating Group (a division of McGraw-Hill, Inc.), in
each case having an investment period not exceeding 50 days or (ii) to
the extent that investors therein have the benefit of a standby letter
of credit issued by a Lender or a bank described in clauses (c) or (d)
above; provided that (y) the amount of all such Investments issued by
the same issuer does not exceed $5,000,000 and (z) the aggregate amount
of all such Investments does not exceed $15,000,000;
(h) a readily redeemable "money market mutual fund"
sponsored by a bank described in clause (c) or (d) hereof, or a
registered broker or dealer described in clause (e) hereof, that has
and maintains an investment policy limiting its investments primarily
to instruments of the types described in clauses (a) through (g) hereof
and given on the date of such Investment a credit rating of at least Aa
by Moody's Investors Service, Inc. and AA by Standard & Poor's Rating
Group (a division of McGraw-Hill, Inc.); and
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<PAGE> 14
(i) corporate notes or bonds having an original term
to maturity of not more than one year issued by a corporation
incorporated under the Laws of the United States of America, or a
participation interest therein; provided that (i) commercial paper
issued by such corporation is given on the date of such Investment a
credit rating of at least Aa by Moody's Investors Service, Inc. and AA
by Standard & Poor's Rating Group (a division of McGraw-Hill, Inc.),
(ii) the amount of all such Investments issued by the same issuer does
not exceed $5,000,000 and (iii) the aggregate amount of all such
Investments does not exceed $15,000,000.
"Cash Income Taxes" means, with respect to any fiscal period,
taxes on or measured by the income of Borrower that are paid or
currently payable in Cash by Borrower during that fiscal period.
"Cash Interest Expense" means Interest Expense that is paid or
currently payable in Cash.
"Certificate" means a certificate signed by a Senior Officer
or Responsible Official (as applicable) of the Person providing the
certificate.
"Change in Control" means (a) any transaction or series of
related transactions in which any Unrelated Person or two or more
Unrelated Persons acting in concert acquire beneficial ownership
(within the meaning of Rule 13d-3(a)(1) under the Securities Exchange
Act of 1934, as amended), directly or indirectly, of 20% or more of the
outstanding Common Stock, (b) Borrower consolidates with or merges into
another Person or conveys, transfers or leases its properties and
assets substantially as an entirety to any Person or any Person
consolidates with or merges into Borrower, in either event pursuant to
a transaction in which the outstanding Common Stock is changed into or
exchanged for cash, securities or other property, with the effect that
any Unrelated Person becomes the beneficial owner, directly or
indirectly, of 20% or more of Common Stock or that the Persons who were
the holders of Common Stock immediately prior to the transaction hold
less than 80% of the common stock of the surviving corporation after
the transaction, (c) during any period of 24 consecutive months,
individuals who at the beginning of such period constituted the board
of directors of Borrower (together with any new or replacement
directors whose election by the board of directors, or whose nomination
for election, was approved by a vote of at least a majority of the
directors then still in office who were either directors at the
beginning of such period or whose election or nomination for reelection
was previously so
-8-
<PAGE> 15
approved) cease for any reason to constitute a majority of the
directors then in office or (d) a "change in control" as defined in any
document governing Indebtedness of Borrower in excess of $5,000,000
which gives the holders of such Indebtedness the right to accelerate or
otherwise require payment of such Indebtedness prior to the maturity
date thereof. For purposes of the foregoing, the term "Unrelated
Person" means any Person other than (i) Richard Jaffe, Irving Jaffe,
Neil Braverman, any Affiliate of any thereof and members of the
immediate family of any thereof, (ii) a Subsidiary of Borrower or (iii)
an employee stock ownership plan or other employee benefit plan
covering the employees of Borrower and its Subsidiaries.
"Closing Date" means the time and Banking Day on which the
conditions set forth in Section 8.1 are satisfied or waived. The
Administrative Agent shall notify Borrower and the Lenders of the date
that is the Closing Date.
"Code" means the Internal Revenue Code of 1986, as amended or
replaced and as in effect from time to time.
"Collateral" means all of the collateral covered by the
Collateral Documents.
"Collateral Agent" means Union Bank of California, N.A. when
acting in its capacity as the Collateral Agent under the Intercreditor
Agreement for the ratable benefit of the Secured Creditors identified
therein, or any successor Collateral Agent.
"Collateral Documents" means, collectively, the Security
Agreement, the Pledge Agreement and any other security agreement,
pledge agreement, deed of trust, mortgage, notice to or acknowledgment
of a registrar or depositary institution, control agreement or other
collateral security agreement executed and delivered by Borrower or any
of its Subsidiaries (and executed by any third party whose signature is
necessary) to secure the Obligations.
"Commercial Letter of Credit" means each Letter of Credit
issued to support the purchase of goods by Borrower which is determined
to be a commercial letter of credit by the Issuing Lender.
"Commitments" means, collectively, the Revolving Commitment
and the Term Commitment.
-9-
<PAGE> 16
"Commitment Assignment and Acceptance" means a commitment
assignment and acceptance substantially in the form of Exhibit A.
"Common Stock" means the common stock of Borrower or its
successor.
"Compliance Certificate" means a certificate in the form of
Exhibit B, properly completed and signed by a Senior Officer of
Borrower.
"Contractual Obligation" means, as to any Person, any
provision of any outstanding security issued by that Person or of any
material agreement, instrument or undertaking to which that Person is a
party or by which it or any of its Property is bound.
"Debtor Relief Laws" means the Bankruptcy Code of the United
States of America, as amended from time to time, and all other
applicable liquidation, conservatorship, bankruptcy, moratorium,
rearrangement, receivership, insolvency, reorganization, or similar
debtor relief Laws from time to time in effect affecting the rights of
creditors generally.
"Default" means any event that, with the giving of any
applicable notice or passage of time specified in Section 9.1, or both,
would be an Event of Default.
"Default Rate" means the sum of (a) any incremental interest
rate then in effect pursuant to Section 3.1(d) plus (b) the interest
rate prescribed in Section 3.7.
"Designated Deposit Account" means a deposit account to be
maintained by Borrower with Union Bank of California, N.A. or one of
its Affiliates, as from time to time designated by Borrower by written
notification to the Administrative Agent.
"Designated Eurodollar Market" means, with respect to any
Eurodollar Rate Loan, the London Eurodollar Market.
"Disqualified Stock" means any capital stock, warrants,
options or other rights to acquire capital stock (but excluding any
debt security which is conver tible, or exchangeable, for capital
stock), which, by its terms (or by the terms of any security into which
it is convertible or for which it is exchangeable), or upon the
happening of any event, matures or is mandatorily redeemable,
-10-
<PAGE> 17
pursuant to a sinking fund obligation or otherwise, or is redeemable at
the option of the holder thereof, in whole or in part, on or prior to
the Maturity Date.
"Disposition" means the sale, transfer or other disposition in
any single transaction or series of related transactions of any asset,
or group of related assets, of Borrower or any of its Subsidiaries (a)
which asset or assets constitute a line of business or substantially
all the assets of Borrower or the Subsidiary or (b) the aggregate
amount of the Net Cash Sales Proceeds of such assets is more than
$500,000, other than (i) inventory or other assets sold or otherwise
disposed of in the ordinary course of business of Borrower or its
Subsidiary, (ii) equipment sold or otherwise disposed of where
substantially similar equipment in replacement thereof has theretofore
been acquired, or thereafter within 90 days is acquired, by Borrower or
its Subsidiary and (iii) obsolete assets no longer useful in the
business of Borrower and its Subsidiaries whose carrying value on the
books of Borrower or such Subsidiary is zero or de minimus.
"Distribution" means, with respect to any shares of capital
stock or any warrant or option to purchase an equity security or other
equity security issued by a Person, (a) the retirement, redemption,
purchase or other acquisition for Cash or for Property by such Person
of any such security, (b) the declaration or (without duplication)
payment by such Person of any dividend in Cash or in Property on or
with respect to any such security, (c) any Investment by such Person in
the holder of 5% or more of any such security if a purpose of such
Investment is to avoid characterization of the transaction as a
Distribution and (d) any other payment in Cash or Property by such
Person constituting a distribution under applicable Laws with respect
to such security.
"Dollars" or "$" means United States of America dollars.
"EBITDA" means, with respect to any fiscal period, the sum of
(a) Net Income for that period, plus (b) any non-operating
non-recurring loss reflected in such Net Income, including Borrower's
non-recurring loss for the Fiscal Quarter ended December 31, 1998
associated with the closure and relocation of certain of Borrower's
facilities, minus (c) any non-operating non-recurring gain reflected in
such Net Income, plus (d) Interest Expense of Borrower and its
Subsidiaries for that period, plus (e) the aggregate amount of federal
and state taxes on or measured by income of Borrower and its
Subsidiaries for that period (whether or not payable during that
period), minus (f) the aggregate amount of
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<PAGE> 18
federal and state credits against taxes on or measured by income of
Borrower and its Subsidiaries for that period (whether or not usable
during that period), plus (g) depreciation, amortization and all other
non-cash expenses of Borrower and its Subsidiaries for that period,
plus (h) payments in respect of the Synthetic Lease Outstandings (as
defined in the Intercreditor Agreement), in each case as determined in
accordance with GAAP, consistently applied.
"Eligible Assignee" means (a) another Lender, (b) with respect
to any Lender, any Affiliate of that Lender, (c) any commercial bank
having total assets of $1,000,000,000 or more, (d) any (i) savings
bank, savings and loan association or similar financial institution or
(ii) insurance company engaged in the business of writing insurance
which, in either case (A) has total assets of $1,000,000,000 or more,
(B) is engaged in the business of lending money and extending credit
under credit facilities substantially similar to those extended under
this Agreement and (C) is operationally and procedurally able to meet
the obligations of a Lender hereunder to the same degree as a
commercial bank and (e) any other financial institution (including a
mutual fund or other fund) having total assets of $1,000,000,000 or
more which meets the requirements set forth in subclauses (B) and (C)
of clause (d) above; provided that each Eligible Assignee must either
(aa) be organized under the Laws of the United States of America, any
State thereof or the District of Columbia or (bb) be organized under
the Laws of the Cayman Islands or any country which is a member of the
Organization for Economic Cooperation and Development, or a political
subdivision of such a country, and (i) act hereunder through a branch,
agency or funding office located in the United States of America and
(ii) be exempt from withholding of tax on interest and deliver the
documents related thereto pursuant to Section 11.21.
"ERISA" means the Employee Retirement Income Security Act of
1974, and any regulations issued pursuant thereto, as amended or
replaced and as in effect from time to time.
"ERISA Affiliate" means each Person (whether or not
incorporated) which is required to be aggregated with Borrower pursuant
to Section 414 of the Code.
"Eurodollar Banking Day" means any Banking Day on which
dealings in Dollar deposits are conducted by and among banks in the
Designated Eurodollar Market.
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"Eurodollar Lending Office" means, as to each Lender, its
office or branch so designated by written notice to Borrower and the
Administrative Agent as its Eurodollar Lending Office. If no Eurodollar
Lending Office is designated by a Lender, its Eurodollar Lending Office
shall be its office at its address for purposes of notices hereunder.
"Eurodollar Market" means a regular established market located
outside the United States of America by and among banks for the
solicitation, offer and acceptance of Dollar deposits in such banks.
"Eurodollar Obligations" means eurocurrency liabilities, as
defined in Regulation D or any comparable regulation of any
Governmental Agency having jurisdiction over any Lender.
"Eurodollar Period" means, as to each Eurodollar Rate Loan,
the period commencing on the date specified by Borrower pursuant to
Section 2.1(c) and ending 7, 14, or 21 days or 1, 2, 3 or 6 months (or,
with the written consent of all of the Lenders, any other period)
thereafter, as specified by Borrower in the applicable Request for
Loan; provided that:
(a) The first day of any Eurodollar Period shall be a
Eurodollar Banking Day;
(b) Any Eurodollar Period that would otherwise end on
a day that is not a Eurodollar Banking Day shall be extended
to the immediately succeeding Eurodollar Banking Day unless
such Eurodollar Banking Day falls in another calendar month,
in which case such Eurodollar Period shall end on the
immediately preceding Eurodollar Banking Day;
(c) Borrower may not specify a Eurodollar Period with
respect to a Term Loan that extends beyond the next
Amortization Date unless the aggregate principal amount of the
Eurodollar Loans that are Term Loans having a Eurodollar
Period ending after such Amortization Date does not exceed the
outstanding amount of Term Loans (after giving effect to the
Amortization Amount to be paid on such Amortization Date); and
(d) No Eurodollar Period shall extend beyond the
Maturity Date.
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<PAGE> 20
"Eurodollar Rate" means, with respect to any Eurodollar Rate
Loan, the average of the interest rates per annum (rounded upward, if
necessary, to the next 1/16 of 1%) at which deposits in Dollars are
offered to the Administrative Agent in the Designated Eurodollar Market
at or about 11:00 a.m. local time in the Designated Eurodollar Market,
two (2) Eurodollar Banking Days before the first day of the applicable
Eurodollar Period in an aggregate amount approximately equal to the
amount of the Advance to be made by the Administrative Agent with
respect to such Eurodollar Rate Loan and for a period of time
comparable to the number of days in the applicable Eurodollar Period.
"Eurodollar Rate Advance" means an Advance made hereunder and
specified to be a Eurodollar Rate Advance in accordance with Article 2.
"Eurodollar Rate Loan" means a Loan made hereunder and
specified to be a Eurodollar Rate Loan in accordance with Article 2.
"Event of Default" shall have the meaning provided in Section
9.1.
"Existing Letters of Credit" means the letters of credit, if
any, outstanding on the Closing Date listed on Schedule 2.4.
"Federal Funds Rate" means, as of any date of determination,
the rate set forth in the weekly statistical release designated as
H.15(519), or any successor publication, published by the Federal
Reserve Board (including any such successor, "H.15(519)") for such date
opposite the caption "Federal Funds (Effective)". If for any relevant
date such rate is not yet published in H.15(519), the rate for such
date will be the rate set forth in the daily statistical release
designated as the Composite 3:30 p.m. Quotations for U.S. Government
Securities, or any successor publication, published by the Federal
Reserve Lender of New York (including any such successor, the
"Composite 3:30 p.m. Quotation") for such date under the caption
"Federal Funds Effective Rate". If on any relevant date the appropriate
rate for such date is not yet published in either H.15(519) or the
Composite 3:30 p.m. Quotations, the rate for such date will be the
arithmetic mean of the rates for the last transaction in overnight
Federal funds arranged prior to 9:00 a.m. (New York City time) on that
date by each of three leading brokers of Federal funds transactions in
New York City selected by the Administrative Agent. For purposes of
this Agreement, any change in the Alternate Base Rate due to a change
in the Federal Funds Rate
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<PAGE> 21
shall be effective as of the opening of business on the effective date
of such change.
"Fiscal Quarter" means the fiscal quarter of Borrower ending
on each March 31, June 30, September 30 and December 31.
"Fiscal Year" means the fiscal year of Borrower ending on each
December 31.
"Fixed Charge Coverage Ratio" means, as of the last day of any
Fiscal Quarter, the ratio of (a) EBITDA for the fiscal period
consisting of the four (4) Fiscal Quarters ended on that date minus
Capital Expenditures made by Borrower and its Subsidiaries during such
fiscal period to (b) the sum of (i) Interest Expense of Borrower and
its Subsidiaries for such fiscal period plus (ii) Cash Income Taxes of
Borrower with respect to such fiscal period plus (iii) Cash dividends
on Common Stock paid during such period plus (iv) the current portion
of long-term debt of Borrower and its Subsidiaries on such date plus
(v) the current portion of long-term lease obligations of Borrower and
its Subsidiaries on such date plus (vi) payments in respect of the
Synthetic Lease Outstandings (as defined in the Intercreditor
Agreement).
"Foreign Subsidiary" means a Subsidiary of Borrower that (a)
is organized under the Laws of a country (or political subdivision
thereof) other than the United States of America and (b) holds all or
substantially all of its assets outside the United States of America.
"GAAP" means, as of any date of determination, accounting
principles (a) set forth as generally accepted in then currently
effective Opinions of the Accounting Principles Board of the American
Institute of Certified Public Accountants, (b) set forth as generally
accepted in then currently effective Statements of the Financial
Accounting Standards Board or (c) that are then approved by such other
entity as may be approved by a significant segment of the accounting
profession in the United States of America. The term "consistently
applied," as used in connection therewith, means that the accounting
principles applied are consistent in all material respects with those
applied at prior dates or for prior periods.
"Government Securities" means readily marketable (a) direct
full faith and credit obligations of the United States of America or
obligations guaranteed by the full faith and credit of the United
States of America and (b) obligations
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<PAGE> 22
of an agency or instrumentality of, or corporation owned, controlled or
sponsored by, the United States of America that are generally
considered in the securities industry to be implicit obligations of the
United States of America.
"Governmental Agency" means (a) any international, foreign,
federal, state, county or municipal government, or political
subdivision thereof, (b) any governmental or quasi-governmental agency,
authority, board, bureau, commission, department, instrumentality or
public body or (c) any court or administrative tribunal of competent
jurisdiction.
"Guaranty Obligation" means, as to any Person, any (a)
guarantee by that Person of Indebtedness of, or other obligation
performable by, any other Person or (b) assurance given by that Person
to an obligee of any other Person with respect to the performance of an
obligation by, or the financial condition of, such other Person,
whether direct, indirect or contingent, including any purchase or
repurchase agreement covering such obligation or any collateral
security therefor, any agreement to provide funds (by means of loans,
capital contributions or otherwise) to such other Person, any agreement
to support the solvency or level of any balance sheet item of such
other Person or any "keep-well" or other arrangement of whatever nature
given for the purpose of assuring or holding harmless such obligee
against loss with respect to any obligation of such other Person;
provided, however, that the term Guaranty Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Guaranty Obligation in respect of
Indebtedness shall be deemed to be an amount equal to the stated or
determinable amount of the related Indebtedness (unless the Guaranty
Obligation is limited by its terms to a lesser amount, in which case to
the extent of such amount) or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof as
determined by the Person in good faith. The amount of any other
Guaranty Obligation shall be deemed to be zero unless and until the
amount thereof has been (or in accordance with Financial Accounting
Standards Board Statement No. 5 should be) quantified and reflected or
disclosed in the consolidated financial statements (or notes thereto)
of Borrower.
"Hazardous Materials" means substances defined as "hazardous
substances" pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Section 9601 et seq.,
or as "hazardous", "toxic" or "pollutant" substances or as "solid
waste" pursuant to the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801, et seq., the
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<PAGE> 23
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et
seq., or as "friable asbestos" pursuant to the Toxic Substances Control
Act, 15 U.S.C. Section 2601 et seq. or any other applicable Hazardous
Materials Law, in each case as such Laws are amended from time to time.
"Hazardous Materials Laws" means all Laws governing the
treatment, transportation or disposal of Hazardous Materials applicable
to any of the Real Property.
"Indebtedness" means, as to any Person (without duplication),
(a) indebtedness of such Person for borrowed money or for the deferred
purchase price of Property (excluding trade and other accounts payable
in the ordinary course of business in accordance with ordinary trade
terms), including any Guaranty Obligation for any such indebtedness,
(b) indebtedness of such Person of the nature described in clause (a)
that is non-recourse to the credit of such Person but is secured by
assets of such Person, to the extent of the fair market value of such
assets as determined in good faith by such Person, (c) Capital Lease
Obligations of such Person, (d) indebtedness of such Person arising
under bankers' acceptance facilities or under facilities for the
discount of accounts receivable of such Person, (e) any direct or
contingent obligations of such Person under letters of credit issued
for the account of such Person, (f) any net obligations of such Person
under Interest Rate Protection Agreements and (g) indebtedness,
liabilities and obligations of such Person in respect of the Noteholder
Outstandings or the Synthetic Lease Outstandings (as such terms are
defined in the Intercreditor Agreement). In no event shall the
obligations of any Person in connection with foreign exchange contracts
constitute "Indebtedness".
"Intangible Assets" means assets that are considered
intangible assets under GAAP, including customer lists, goodwill,
covenants not to compete, copyrights, trade names, trademarks and
patents.
"Intercreditor Agreement" means the intercreditor and
collateral agency agreement to be executed and delivered pursuant to
Article 8 by Borrower, the Subsidiary Guarantors, the Administrative
Agent and the representatives of Borrower's other secured creditors
identified more particularly therein, in the form of Exhibit C, either
as originally executed or as it may from time to time be supplemented,
modified, amended, extended or supplanted.
"Interest Coverage Ratio" means, as of the last day of any
Fiscal Quarter, the ratio of (a) EBITDA for the fiscal period
consisting of the four (4) Fiscal
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<PAGE> 24
Quarters ended on such date to (b) the sum of (i) Interest Expense of
Borrower and its Subsidiaries for such fiscal period and (ii) payments
by Borrower and its Subsidiaries for such fiscal period in respect of
the Synthetic Lease Outstandings (as defined in the Intercreditor
Agreement).
"Interest Expense" means, with respect to any Person and as of
the last day of any fiscal period, the sum of (a) all interest, fees,
charges and related expenses (in each case as such expenses are
calculated according to GAAP) paid or payable (without duplication) for
that fiscal period by that Person to a lender in connection with
borrowed money (including any obligations for fees, charges and related
expenses payable to the issuer of any letter of credit) or the deferred
purchase price of assets that are considered "interest expense" under
GAAP plus (b) the portion of rent paid or payable (without duplication)
for that fiscal period by that Person under Capital Lease Obligations
that should be treated as interest in accordance with Financial
Accounting Standards Board Statement No. 13.
"Interest Rate Protection Agreement" means a written agreement
between Borrower and one or more financial institutions providing for
"swap", "cap", "collar" or other interest rate protection with respect
to any Indebtedness.
"Investment" means, when used in connection with any Person,
any investment by or of that Person, whether by means of purchase or
other acquisition of stock or other securities of any other Person or
by means of a loan, advance creating a debt, capital contribution,
guaranty or other debt or equity participation or interest in any other
Person, including any partnership and joint venture interests of such
Person. The amount of any Investment shall be the amount actually
invested (minus any return of capital with respect to such Investment
which has actually been received in Cash or has been converted into
Cash), without adjustment for subsequent increases or decreases in the
value of such Investment.
"Issuing Lender" means Union Bank of California, N.A.
"Joint Venture" means any Investment by Borrower in any Person
that is not a Wholly-Owned Subsidiary of Borrower, which Person is
engaged in the same or a similar line of business as Borrower.
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<PAGE> 25
"Laws" means, collectively, all international, foreign,
federal, state and local statutes, treaties, rules, regulations,
ordinances, codes and administrative or judicial precedents.
"Lender" means each lender whose name is set forth in the
signature pages of this Agreement and each lender which may hereafter
become a party to this Agreement pursuant to Section 11.8.
"Letters of Credit" means (a) the Existing Letters of Credit
and (b) any of the Commercial Letters of Credit or Standby Letters of
Credit issued by the Issuing Lender under the Revolving Commitment
pursuant to Section 2.4, either as originally issued or as the same may
be supplemented, modified, amended, renewed, extended or supplanted.
"Leverage Ratio" means, as of the last day of any Fiscal
Quarter, the ratio of (a) the sum of (i) all Indebtedness of Borrower
and its Subsidiaries on that date other than Indebtedness evidenced by
the Revolving Notes plus (ii) the average daily balance of Indebtedness
evidenced by the Revolving Notes for such Fiscal Quarter (or, if such
Fiscal Quarter commenced prior to the Closing Date, for the period
commencing on the Closing Date and ended on the last day of such Fiscal
Quarter) to (b) EBITDA for the fiscal period consisting of the four (4)
Fiscal Quarters ended on that date.
"Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment for security, security interest, encumbrance,
lien or charge of any kind, whether voluntarily incurred or arising by
operation of Law or otherwise, affecting any Property, including any
conditional sale or other title retention agreement, any lease in the
nature of a security interest, and/or the filing of any financing
statement (other than a precautionary financing statement with respect
to a lease that is not in the nature of a security interest) under the
Uniform Commercial Code or comparable Law of any jurisdiction with
respect to any Property.
"Loan" means the aggregate of the Advances made at any one
time by the Lenders pursuant to Section 2.1.
"Loan Documents" means, collectively, this Agreement, the
Notes, the Subsidiary Guaranty, the Collateral Documents, the
Intercreditor Agreement and any other agreements of any type or nature
hereafter executed and delivered by Borrower or any of the Subsidiary
Guarantors to the Administrative Agent or
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<PAGE> 26
to any Lender in any way relating to or in furtherance of this
Agreement, in each case either as originally executed or as the same
may from time to time be supplemented, modified, amended, restated,
extended or supplanted.
"Margin Stock" means "margin stock" as such term is defined in
Regulation U.
"Material Adverse Effect" means any set of circumstances or
events which (a) has had or could reasonably be expected to have any
material adverse effect whatsoever upon the validity or enforceability
of any Loan Document, (b) has been or could reasonably be expected to
be material and adverse to the business or condition (financial or
otherwise) of Borrower and its Subsidiaries, taken as a whole or (c)
has materially impaired or could reasonably be expected to materially
impair the ability of Borrower to perform the Obligations.
"Maturity Date" means the fifth anniversary of the first
Quarterly Payment Date after the Closing Date.
"Monthly Payment Date" means the last day of each calendar
month.
"Multiemployer Plan" means any employee benefit plan of the
type described in Section 4001(a)(3) of ERISA to which Borrower or any
of its ERISA Affiliates contributes or is obligated to contribute.
"Negative Pledge" means a Contractual Obligation which
contains a covenant binding on Borrower or any of its Subsidiaries that
prohibits Liens on any of its Property, other than (a) any such
covenant contained in a Contractual Obligation granting or relating to
a particular Lien which affects only the Property that is the subject
of such Lien and (b) any such covenant that does not apply to Liens
securing the Obligations.
"Net Cash Issuance Proceeds" means, with respect to the
issuance of any debt security or equity security by Borrower or any of
its Subsidiaries, the Cash proceeds received by or for the account of
Borrower or such Subsidiary in consideration of such issuance net of
(a) underwriting discounts and commissions actually paid to any Person
not an Affiliate of Borrower and (b) professional fees and
disbursements actually paid in connection therewith.
"Net Cash Sales Proceeds" means, with respect to any
Disposition, the sum of (a) the Cash proceeds received by or for the
account of Borrower and its
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Subsidiaries from such Disposition plus (b) the amount of Cash received
by or for the account of Borrower and its Subsidiaries upon the sale,
collection or other liquidation of any proceeds that are not Cash from
such Disposition, in each case net of (i) any amount required to be
paid to any Person owning an interest in the assets disposed of, (ii)
any amount applied to the repayment of Indebtedness secured by a Lien
permitted under Section 6.9 on the asset disposed of, (iii) any
transfer, income or other taxes payable as a result of such
Disposition, (iv) professional fees and expenses, fees due to any
Governmental Agency, broker's commissions and other out-of-pocket costs
of sale actually paid to any Person that is not an Affiliate of
Borrower attributable to such Disposition and (v) any reserves
established in accordance with GAAP in connection with such
Disposition.
"Net Income" means, with respect to any fiscal period, the
consolidated net income of Borrower and its Subsidiaries for that
period, determined in accordance with GAAP, consistently applied.
"Note" means any of the Revolving Notes or the Term Notes, and
"Notes" means, collectively, the Revolving Notes and the Term Notes.
"Obligations" means all present and future obligations of
every kind or nature of Borrower or any of the Subsidiary Guarantors at
any time and from time to time owed to the Administrative Agent or the
Lenders or any one or more of them, under any one or more of the Loan
Documents, whether due or to become due, matured or unmatured,
liquidated or unliquidated, or contingent or noncontingent, including
obligations of performance as well as obligations of payment, and
including interest that accrues after the commencement of any
proceeding under any Debtor Relief Law by or against Borrower or any of
the Subsidiary Guarantors.
"Opinion of Counsel" means the favorable written legal opinion
of Morgan, Lewis & Bockius LLP, special counsel to Borrower,
substantially in the form of Exhibit D, together with copies of factual
certificates and legal opinions, if any, delivered to such counsel in
connection with such opinion upon which such counsel has relied.
"Original Credit Agreement" means that certain Amended and
Restated Loan Agreement dated as of May 4, 1998, as amended, between
Borrower and Union Bank of California, N.A.
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<PAGE> 28
"Party" means any Person other than the Administrative Agent
and the Lenders, which now or hereafter is a party to any of the Loan
Documents.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereof established under ERISA.
"Pension Plan" means any "employee pension benefit plan" (as
such term is defined in Section 3(2) of ERISA), other than a
Multiemployer Plan, which is subject to Title IV of ERISA and is
maintained by Borrower or to which Borrower contributes or has an
obligation to contribute.
"Permitted Encumbrances" means:
(a) Inchoate Liens incident to construction on or
maintenance of Property; or Liens incident to construction on or
maintenance of Property now or hereafter filed of record for which
adequate reserves have been set aside (or deposits made pursuant to
applicable Law) and which are being contested in good faith by
appropriate proceedings and have not proceeded to judgment,
provided that, by reason of nonpayment of the obligations secured by
such Liens, no such Property is subject to a material impending risk of
loss or forfeiture;
(b) Liens for taxes and assessments on Property which
are not yet past due; or Liens for taxes and assessments on Property
for which adequate reserves have been set aside and are being contested
in good faith by appropriate proceedings and have not proceeded to
judgment, provided that, by reason of nonpayment of the obligations
secured by such Liens, no such Property is subject to a material
impending risk of loss or forfeiture;
(c) defects and irregularities in title to any
Property which in the aggregate do not materially impair the fair
market value or use of the Property for the purposes for which it is or
may reasonably be expected to be held;
(d) easements, exceptions, reservations, or other
agreements for the purpose of pipelines, conduits, cables, wire
communication lines, power lines and substations, streets, trails,
walkways, drainage, irrigation, water, and sewerage purposes, dikes,
canals, ditches, the removal of oil, gas, coal, or other minerals, and
other like purposes affecting Property which in the aggregate do
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<PAGE> 29
not materially burden or impair the fair market value or use of such
Property for the purposes for which it is or may reasonably be expected
to be held;
(e) easements, exceptions, reservations, or other
agreements for the purpose of facilitating the joint or common use of
Property in or adjacent to a shopping center or similar project
affecting Property which in the aggregate do not materially burden or
impair the fair market value or use of such Property for the purposes
for which it is or may reasonably be expected to be held;
(f) rights reserved to or vested in any Governmental
Agency to control or regulate, or obligations or duties to any
Governmental Agency with respect to, the use of any Property;
(g) rights reserved to or vested in any Governmental
Agency to control or regulate, or obligations or duties to any
Governmental Agency with respect to, any right, power, franchise,
grant, license, or permit;
(h) present or future zoning laws and ordinances or
other laws and ordinances restricting the occupancy, use, or enjoyment
of Property;
(i) statutory Liens, other than those described in
clauses (a) or (b) above, arising in the ordinary course of business
with respect to obligations which are not delinquent or are being
contested in good faith, provided that, if delinquent, adequate
reserves have been set aside with respect thereto and, by reason of
nonpayment, no Property is subject to a material impending risk of loss
or forfeiture;
(j) covenants, conditions, and restrictions affecting
the use of Property which in the aggregate do not materially impair the
fair market value or use of the Property for the purposes for which it
is or may reasonably be expected to be held;
(k) rights of tenants under leases and rental
agreements covering Property entered into in the ordinary course of
business of the Person owning such Property;
(l) Liens consisting of pledges or deposits to secure
obligations under workers' compensation laws or similar legislation,
including Liens of judgments thereunder which are not currently
dischargeable;
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(m) Liens consisting of pledges or deposits of
Property to secure performance in connection with operating leases made
in the ordinary course of business, provided the aggregate value of all
such pledges and deposits in connection with any such lease does not at
any time exceed 20% of the annual fixed rentals payable under such
lease;
(n) Liens consisting of deposits of Property to
secure bids made with respect to, or performance of, contracts (other
than contracts creating or evidencing an extension of credit to the
depositor);
(o) Liens consisting of any right of offset, or
statutory bankers' lien, on bank deposit accounts maintained in the
ordinary course of business so long as such bank deposit accounts are
not established or maintained for the purpose of providing such right
of offset or bankers' lien;
(p) Liens consisting of deposits of Property to
secure statutory obligations of Borrower;
(q) Liens consisting of deposits of Property to
secure (or in lieu of) surety, appeal or customs bonds;
(r) Liens created by or resulting from any litigation
or legal proceeding in the ordinary course of business which is
currently being contested in good faith by appropriate proceedings,
provided that, adequate reserves have been set aside and no material
Property is subject to a material impending risk of loss or forfeiture;
and
(s) other non-consensual Liens incurred in the
ordinary course of business but not in connection with the incurrence
of any Indebtedness, which do not in the aggregate, when taken together
with all other Liens, materially impair the fair market value or use of
the Property for the purposes for which it is or may reasonably be
expected to be held.
"Permitted Right of Others" means a Right of Others consisting
of (a) an interest (other than a legal or equitable co-ownership
interest, an option or right to acquire a legal or equitable
co-ownership interest and any interest of a ground lessor under a
ground lease), that does not materially impair the fair market value or
use of Property for the purposes for which it is or may reasonably be
expected to be held, (b) an option or right to acquire a Lien that
would be a Permitted Encumbrance, (c) the subordination of a lease or
sublease in favor of
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<PAGE> 31
a financing entity and (d) a license, or similar right, of or to
Intangible Assets granted in the ordinary course of business.
"Person" means any individual or entity, including a trustee,
corporation, limited liability company, general partnership, limited
partnership, joint stock company, trust, estate, unincorporated
organization, business association, firm, joint venture, Governmental
Agency, or other entity.
"Pledge Agreement" means the pledge agreement to be executed
and delivered pursuant to Article 8 by Borrower, in the form of Exhibit
E, either as originally executed or as it may from time to time be
supplemented, modified, amended, extended or supplanted.
"Pledged Collateral" means (a) the certificates evidencing
100% of the shares of capital stock held by Borrower in all Significant
Domestic Subsidiaries and (b) certificates evidencing 65% of the shares
of capital stock held by Borrower in all Significant Foreign
Subsidiaries other than Safeskin Corporation (Malaysia) SDN BHD.
"Pricing Certificate" means a certificate in the form of
Exhibit F, properly completed and signed by a Senior Officer of
Borrower.
"Pricing Period" means (a) the period commencing on the
Closing Date and ending on August 15, November 15, February 15 or May
15, whichever first occurs, (b) the period commencing on each August 16
and ending on the next following November 15, (c) the period commencing
on each November 16 and ending on the next following February 15, (d)
the period commencing on each February 16 and ending on the next
following May 15 and (e) the period commencing on each May 16 and
ending on the next following August 15.
"Prime Rate" means the rate of interest publicly announced
from time to time by the Administrative Agent in San Francisco,
California (or other headquarters city of the Administrative Agent), as
its "reference rate." The "reference rate" is one of several base rates
used by the Administrative Agent and serves as the basis upon which
effective rates of interest are calculated for loans and other credits
making reference thereto. The "reference rate" is not necessarily the
lowest base interest rate used by the Administrative Agent. The
"reference rate" is evidenced by the recording thereof after its
announcement in such internal publication or publications as the
Administrative Agent may designate. Any change in the Prime Rate
announced by the Administrative
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Agent shall take effect at the opening of business on the day specified
in the public announcement of such change.
"Projections" means the projected financial information to be
prepared by Borrower and to be contained in the Confidential Offering
Memorandum furnished to the Lenders as part of the syndication process
referred to in Section 5.14.
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Pro Rata Share" means, with respect to each Lender, the
percentage of the Revolving Commitment and Term Commitment set forth
opposite the name of that Lender on Schedule 1.1, as such percentage
may be increased or decreased pursuant to a Commitment Assignment and
Acceptance executed in accordance with Section 11.8.
"Quarterly Payment Date" means each June 30, September 30,
December 31 and March 31, commencing with June 30, 1999.
"Real Property" means, as of any date of determination, all
real property then or theretofore owned, leased or occupied by any of
Borrower.
"Regulation D" means Regulation D, as at any time amended, of
the Board of Governors of the Federal Reserve System, or any other
regulation in substance substituted therefor.
"Regulation U" means Regulation U, as at any time amended, of
the Board of Governors of the Federal Reserve System, or any other
regulation in substance substituted therefor.
"Request for Letter of Credit" means a written request for a
Letter of Credit substantially in the form of Exhibit G, signed by a
Responsible Official of Borrower and properly completed to provide all
information required to be included therein.
"Request for Loan" means a written request for a Loan
substantially in the form of Exhibit H, signed by a Responsible
Official of Borrower, on behalf of Borrower, and properly completed to
provide all information required to be included therein.
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"Requirement of Law" means, as to any Person, the articles or
certificate of incorporation and by-laws or other organizational or
governing documents of such Person, and any Law, or judgment, award,
decree, writ or determination of a Governmental Agency, in each case
applicable to or binding upon such Person or any of its Property or to
which such Person or any of its Property is subject.
"Requisite Lenders" means (a) as of any date of determination
if the Commitments are then in effect, Lenders having in the aggregate
66-2/3% or more of the Commitments then in effect and (b) as of any
date of determination if the Commitments have then been suspended or
terminated and there is then any Indebtedness evidenced by the Notes,
Lenders holding Notes evidencing in the aggregate 66-2/3% or more of
the aggregate Indebtedness then evidenced by the Notes.
"Responsible Official" means (a) any Senior Officer of
Borrower and (b) any other responsible official of Borrower so
designated in a written notice thereof from a Senior Officer to the
Administrative Agent. The Lenders shall be entitled to conclusively
rely upon any document or certificate that is signed or executed by a
Responsible Official of Borrower or any of its Subsidiaries as having
been authorized by all necessary corporate, partnership and/or other
action on the part of Borrower or such Subsidiary.
"Revolving Commitment" means, subject to Section 2.5,
$40,000,000. The respective Pro Rata Shares of the Lenders with respect
to the Revolving Commitment are set forth in Schedule 1.1.
"Revolving Loan" means a Loan made under the Revolving
Commitment.
"Revolving Note" means any of the promissory notes made by
Borrower to a Lender evidencing Advances under that Lender's Pro Rata
Share of the Revolving Commitment, substantially in the form of Exhibit
I, either as originally executed or as the same may from time to time
be supplemented, modified, amended, renewed, extended or supplanted.
"Right of Others" means, as to any Property in which a Person
has an interest, any legal or equitable right, title or other interest
(other than a Lien) held by any other Person in that Property, and any
option or right held by any other Person to acquire any such right,
title or other interest in that Property, including any option or right
to acquire a Lien; provided, however, that (a) no
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covenant restricting the use or disposition of Property of such Person
contained in any Contractual Obligation of such Person and (b) no
provision contained in a contract creating a right of payment or
performance in favor of a Person that conditions, limits, restricts,
diminishes, transfers or terminates such right shall be deemed to
constitute a Right of Others.
"Security Agreement" means the security agreement to be
executed and delivered pursuant to Article 8 by Borrower and the
Subsidiary Guarantors, in the form of Exhibit J, either as originally
executed or as it may from time to time be supplemented, modified,
amended, extended or supplanted.
"Senior Officer" means (a) the chief executive officer, (b)
the president, (c) any executive vice president, (d) the chief
financial officer or (e) the treasurer, in each case of Borrower.
"Significant Domestic Subsidiary" means a Significant
Subsidiary that is not a Foreign Subsidiary.
"Significant Foreign Subsidiary" means a Foreign Subsidiary
that is a Significant Subsidiary.
"Significant Subsidiary" means a Subsidiary that either (i)
had net income for the Fiscal Year then most recently ended in excess of 5% of
Net Income for such Fiscal Year or (ii) had assets in excess of 5% of the total
assets of Borrower and its Subsidiaries on a consolidated basis as at the end of
the Fiscal Year then most recently ended.
"Special Eurodollar Circumstance" means the application or
adoption after the Closing Date of any Law or interpretation, or any change
therein or thereof, or any change in the interpretation or administration
thereof by any Governmental Agency, central bank or comparable authority charged
with the interpretation or administration thereof, or compliance by any Lender
or its Eurodollar Lending Office with any request or directive (whether or not
having the force of Law) of any such Governmental Agency, central bank or
comparable authority.
"Standby Letter of Credit" means each Letter of Credit that is
not a Commercial Letter of Credit.
"Stockholders' Equity" means, as of any date of determination
and with respect to any Person, the consolidated stockholders' equity of the
Person as of that
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date determined in accordance with GAAP; provided that there shall be excluded
from Stockholders' Equity any amount attributable to Disqualified Stock.
"Subordinated Obligations" means any Indebtedness of Borrower
that (a) does not have any scheduled principal payment, mandatory principal
prepayment or sinking fund payment due prior to the date that is one year after
the Maturity Date, (b) is not secured by any Lien on any Property of Borrower or
any of its Subsidiaries, (c) is not guarantied by any Subsidiary of Borrower,
(d) is subordinated by its terms in right of payment to the Obligations pursuant
to provisions acceptable to the Requisite Lenders, (e) is subject to such
financial and other covenants and events of defaults as may be acceptable to the
Requisite Lenders and (f) is subject to customary interest blockage and delayed
acceleration provisions as may be acceptable to the Requisite Lenders.
"Subsidiary" means, as of any date of determination and with
respect to any Person, any corporation, limited liability company or partnership
(whether or not, in any case, characterized as such or as a "joint venture"),
whether now existing or hereafter organized or acquired: (a) in the case of a
corporation or limited liability company, of which a majority of the securities
having ordinary voting power for the election of directors or other governing
body (other than securities having such power only by reason of the happening of
a contingency) are at the time beneficially owned by such Person and/or one or
more Subsidiaries of such Person, or (b) in the case of a partnership, of which
a majority of the partnership or other ownership interests are at the time
beneficially owned by such Person and/or one or more of its Subsidiaries.
"Subsidiary Guarantors" means all Significant Domestic
Subsidiaries.
"Subsidiary Guaranty" means the continuing guaranty of the
Obligations to be executed and delivered pursuant to Article 8 by the Subsidiary
Guarantors, in the form of Exhibit K, either as originally executed or as it may
from time to time be supplemented, modified, amended, extended or supplanted.
"Tangible Net Worth" means, as of the last day of any Fiscal
Quarter, (a) Stockholders' Equity of Borrower and its Subsidiaries on such date
minus (b) all Intangible Assets of Borrower and its Subsidiaries on such date.
"Term Commitment" means $60,000,000. The respective Pro Rata
Shares of the Lenders with respect to the Term Commitment are set forth in
Schedule 1.1.
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"Term Loan" means a Loan made under the Term Commitment.
"Term Note" means any of the promissory notes made by Borrower
to a Lender evidencing Advances under that Lender's Pro Rata Share of the Term
Commitment, substantially in the form of Exhibit L, either as originally
executed or as the same may from time to time be supplemented, modified,
amended, renewed, extended or supplanted.
"to the best knowledge of" means, when modifying a
representation, warranty or other statement of any Person, that the fact or
situation described therein is known by the Person (or, in the case of a Person
other than a natural Person, known by a Responsible Official of that Person)
making the representation, warranty or other statement, or with the exercise of
reasonable due diligence under the circumstances (in accordance with the
standard of what a reasonable Person in similar circumstances would have done)
would have been known by the Person (or, in the case of a Person other than a
natural Person, would have been known by a Responsible Official of that Person).
"type", when used with respect to any Loan or Advance, means
the designation of whether such Loan or Advance is an Alternate Base Rate Loan
or Advance, or a Eurodollar Rate Loan or Advance.
"Wholly-Owned Subsidiary" means a Subsidiary of Borrower, 100%
of the capital stock or other equity interest of which is owned, directly or
indirectly, by Borrower, except for director's qualifying shares required by
applicable Laws.
1.2 Use of Defined Terms. Any defined term used in the plural
shall refer to all members of the relevant class, and any defined term used in
the singular shall refer to any one or more of the members of the relevant
class.
1.3 Accounting Terms. All accounting terms not specifically
defined in this Agreement shall be construed in conformity with, and all
financial data required to be submitted by this Agreement shall be prepared in
conformity with, GAAP applied on a consistent basis, except as otherwise
specifically prescribed herein. In the event that GAAP changes during the term
of this Agreement such that the covenants contained in Sections 6.12 through
6.17, inclusive, would then be calculated in a different manner or with
different components, (a) Borrower and the Lenders agree to amend this Agreement
in such respects as are necessary to conform those covenants as criteria for
evaluating Borrower's financial condition to substantially the same criteria as
were effective prior to such change in GAAP and (b) Borrower shall be deemed to
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be in compliance with the covenants contained in the aforesaid Sections if and
to the extent that Borrower would have been in compliance therewith under GAAP
as in effect immediately prior to such change, but shall have the obligation to
deliver each of the materials described in Article 7 to the Administrative Agent
and the Lenders, on the dates therein specified, with financial data presented
in a manner which conforms with GAAP as in effect immediately prior to such
change.
1.4 Rounding. Any financial ratios required to be maintained
by Borrower pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed in this
Agreement and rounding the result up or down to the nearest number (with a
round-up if there is no nearest number) to the number of places by which such
ratio is expressed in this Agreement.
1.5 Exhibits and Schedules. All Exhibits and Schedules to this
Agreement, either as originally existing or as the same may from time to time be
supplemented, modified or amended, are incorporated herein by this reference. A
matter disclosed on any Schedule shall be deemed disclosed on all Schedules.
1.6 References to "Borrower and its Subsidiaries". Any
reference herein to "Borrower and its Subsidiaries" or the like shall refer
solely to Borrower during such times, if any, as Borrower shall have no
Subsidiaries.
1.7 Miscellaneous Terms. The term "or" is disjunctive; the
term "and" is conjunctive. The term "shall" is mandatory; the term "may" is
permissive. Masculine terms also apply to females; feminine terms also apply to
males. The term "including" is by way of example and not limitation.
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Article 2
LOANS AND LETTERS OF CREDIT
2.1 Loans-General.
(a) Subject to the terms and conditions set forth in
this Agreement, at any time and from time to time from the Closing Date
through the Maturity Date, each Lender shall, pro rata according to
that Lender's Pro Rata Share of the then applicable Revolving
Commitment, make Advances to Borrower under the Revolving Commitment in
such amounts as Borrower may request that do not result in the sum of
(i) the aggregate principal amount outstanding under the Revolving
Notes and (ii) the Aggregate Effective Amount of all outstanding
Letters of Credit to exceed the Revolving Commitment. Subject to the
limitations set forth herein, Borrower may borrow, repay and reborrow
under the Revolving Commitment without premium or penalty.
(b) Subject to the terms and conditions set forth in
this Agreement, on the Closing Date, each Lender shall, pro rata
according to that Lender's Pro Rata Share of the Term Commitment, make
an Advance to Borrower under the Term Commitment such that the
aggregate of all such Advances equals the Term Commitment. Amounts
repaid under the Term Commitment may not be reborrowed.
(c) Subject to the next sentence, each Loan shall be
made pursuant to a Request for Loan which shall specify the requested
(i) date of such Loan, (ii) type of Loan, (iii) amount of such Loan,
and (iv) in the case of a Eurodollar Rate Loan, the Eurodollar Period
for such Loan. Unless the Administrative Agent has notified, in its
sole and absolute discretion, Borrower to the contrary, a Loan may be
requested by telephone by a Responsible Official of Borrower, in which
case Borrower shall confirm such request by promptly delivering a
Request for Loan (conforming to the preceding sentence) in person or by
telecopier to the Administrative Agent. The Administrative Agent shall
incur no liability whatsoever hereunder in acting upon any telephonic
request for Loan purportedly made by a Responsible Official of
Borrower, and Borrower hereby agrees to indemnify the Administrative
Agent from any loss, cost, expense or liability as a result of so
acting.
(d) Promptly following receipt of a Request for Loan,
the Administrative Agent shall notify each Lender by telephone or
telecopier (and if
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by telephone, promptly confirmed by telecopier) of the date and type of
the Loan, the applicable Eurodollar Period, and that Lender's Pro Rata
Share of the Loan. Not later than 10:00 a.m., California time, on the
date specified for any Loan (which must be a Banking Day), each Lender
shall make its Pro Rata Share of the Loan in immediately available
funds available to the Administrative Agent at the Administrative
Agent's Office. Upon satisfaction or waiver of the applicable
conditions set forth in Article 8, all Advances shall be credited on
that date in immediately available funds to the Designated Deposit
Account.
(e) Unless the Requisite Lenders otherwise consent,
each Alternate Base Rate Loan shall be not less than $1,000,000 and in
an integral multiple of $100,000 and each Eurodollar Rate Loan shall be
not less than $3,000,000 and in an integral multiple of $1,000,000.
(f) Notwithstanding Section 2.1(c), during the period
commencing on the Closing Date and ending on the earlier of (i) six (6)
months after the Closing Date or (ii) the completion of the syndication
process referred to in Section 5.14, Borrower may not request a
Eurodollar Rate Loan with a Eurodollar Period longer than one (1)
month.
(g) The Advances made by each Lender under the
Revolving Commitment shall be evidenced by that Lender's Revolving
Note. The Advances made by each Lender under the Term Commitment shall
be evidenced by that Lender's Term Note.
(h) A Request for Loan shall be irrevocable upon the
Administrative Agent's first notification thereof.
(i) If no Request for Loan (or telephonic request for
Loan referred to in the second sentence of Section 2.1(c), if
applicable) has been made within the requisite notice periods set forth
in Section 2.2 or 2.3 prior to the end of the Eurodollar Period for any
outstanding Eurodollar Rate Loan, then on the last day of such
Eurodollar Period, such Eurodollar Rate Loan shall be automatically
converted into an Alternate Base Rate Loan in the same amount.
2.2 Alternate Base Rate Loans. Each request by Borrower for an
Alternate Base Rate Loan shall be made pursuant to a Request for Loan (or
telephonic or other request for loan referred to in the second sentence of
Section 2.1(c), if appli cable) received by the Administrative Agent, at the
Administrative Agent's Office, not
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later than 11:00 a.m. California time, on the date (which must be a Banking Day)
immediately prior to the date of the requested Alternate Base Rate Loan. All
Loans shall constitute Alternate Base Rate Loans unless properly designated as a
Eurodollar Rate Loan pursuant to Section 2.3.
2.3 Eurodollar Rate Loans.
(a) Each request by Borrower for a Eurodollar Rate
Loan shall be made pursuant to a Request for Loan (or telephonic or
other request for Loan referred to in the second sentence of Section
2.1(c), if applicable) received by the Administrative Agent, at the
Administrative Agent's Office, not later than 9:00 a.m., California
time, at least three (3) Eurodollar Banking Days before the first day
of the applicable Eurodollar Period.
(b) On the date which is two (2) Eurodollar Banking
Days before the first day of the applicable Eurodollar Period, the
Administrative Agent shall confirm its determination of the applicable
Eurodollar Rate (which determination shall be conclusive in the absence
of manifest error) and promptly shall give notice of the same to
Borrower and the Lenders by telephone or telecopier (and if by
telephone, promptly confirmed by telecopier).
(c) Unless the Administrative Agent and the Requisite
Lenders otherwise consent, no more than ten (10) Eurodollar Rate Loans
shall be out standing at any one time, not more than three (3) of which
shall have a Eurodollar Period of shorter than one (1) month.
(d) No Eurodollar Rate Loan may be requested during
the continuation of a Default or Event of Default.
(e) Nothing contained herein shall require any Lender
to fund any Eurodollar Rate Advance in the Designated Eurodollar
Market.
2.4 Letters of Credit.
(a) The Existing Letters of Credit described in
Schedule 2.4 shall be Letters of Credit for all purposes under this
Agreement. Subject to the terms and conditions hereof, at any time and
from time to time from the Closing Date through the Maturity Date, the
Issuing Lender shall issue such Letters of Credit under the Revolving
Commitment as Borrower may request by a Request for Letter of Credit;
provided that (i) giving effect to all such Letters of Credit,
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the sum of (A) the aggregate principal amount outstanding under the
Revolving Notes plus (B) the Aggregate Effective Amount of all
outstanding Letters of Credit, does not exceed the then applicable
Revolving Commitment and (ii) the Aggregate Effective Amount under all
outstanding Letters of Credit does not exceed $5,000,000. Each Letter
of Credit shall be in a form acceptable to the Issuing Lender. Unless
all the Lenders otherwise consent in a writing delivered to the
Administrative Agent, the term of any Letter of Credit shall not exceed
one (1) year or extend beyond the Maturity Date.
(b) Each Request for Letter of Credit shall be
submitted to the Issuing Lender, with a copy to the Administrative
Agent, at least two (2) Banking Days prior to the date upon which the
related Letter of Credit is proposed to be issued. The Administrative
Agent shall promptly notify the Issuing Lender whether such Request for
Letter of Credit, and the issuance of a Letter of Credit pursuant
thereto, conforms to the requirements of this Agreement. Upon issuance
of a Letter of Credit, the Issuing Lender shall promptly notify the
Administrative Agent, and the Administrative Agent shall promptly
notify the Lenders, of the amount and terms thereof.
(c) Upon the issuance of a Letter of Credit, each
Lender shall be deemed to have purchased a pro rata participation in
such Letter of Credit from the Issuing Lender in an amount equal to
that Lender's Pro Rata Share. Without limiting the scope and nature of
each Lender's participation in any Letter of Credit, to the extent that
the Issuing Lender has not been reimbursed by Borrower for any payment
required to be made by the Issuing Lender under any Letter of Credit,
each Lender shall, pro rata according to its Pro Rata Share, reimburse
the Issuing Lender through the Administrative Agent promptly upon
demand for the amount of such payment. The obligation of each Lender to
so reimburse the Issuing Lender shall be absolute and unconditional and
shall not be affected by the occurrence of an Event of Default or any
other occurrence or event. Any such reimbursement shall not relieve or
otherwise impair the obligation of Borrower to reimburse the Issuing
Lender for the amount of any payment made by the Issuing Lender under
any Letter of Credit together with interest as hereinafter provided.
(d) Borrower agrees to pay to the Issuing Lender
through the Administrative Agent an amount equal to any payment made by
the Issuing Lender with respect to each Letter of Credit within one (1)
Banking Day after demand made by the Issuing Lender therefor, together
with interest on such amount from the date of any payment made by the
Issuing Lender at the rate
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applicable to Alternate Base Rate Loans for two (2) Banking Days and
thereafter at the Default Rate. The principal amount of any such
payment shall be used to reimburse the Issuing Lender for the payment
made by it under the Letter of Credit and, to the extent that the
Lenders have not reimbursed the Issuing Lender pursuant to Section
2.4(c), the interest amount of any such payment shall be for the
account of the Issuing Lender. Each Lender that has reimbursed the
Issuing Lender pursuant to Section 2.4(c) for its Pro Rata Share of any
payment made by the Issuing Lender under a Letter of Credit shall
thereupon acquire a pro rata participation, to the extent of such
reimbursement, in the claim of the Issuing Lender against Borrower for
reimbursement of principal and interest under this Section 2.4(d) and
shall share, in accordance with that pro rata participation, in any
principal payment made by Borrower with respect to such claim and in
any interest payment made by Borrower (but only with respect to periods
subsequent to the date such Lender reimbursed the Issuing Lender) with
respect to such claim.
(e) Borrower may, pursuant to a Request for Loan,
request that Advances be made pursuant to Section 2.1(a) to provide
funds for the payment required by Section 2.4(d) and, for this purpose,
the conditions precedent set forth in Article 8 shall not apply. The
proceeds of such Advances shall be paid directly to the Issuing Lender
to reimburse it for the payment made by it under the Letter of Credit.
(f) If Borrower fails to make the payment required by
Section 2.4(d) within the time period therein set forth, in lieu of the
reimbursement to the Issuing Lender under Section 2.4(c) the Issuing
Lender may (but is not required to), without notice to or the consent
of Borrower, instruct the Administrative Agent to cause Advances to be
made by the Lenders under the Revolving Commitment in an aggregate
amount equal to the amount paid by the Issuing Lender with respect to
that Letter of Credit and, for this purpose, the conditions precedent
set forth in Article 8 shall not apply. The proceeds of such Advances
shall be paid directly to the Issuing Lender to reimburse it for the
payment made by it under the Letter of Credit.
(g) The issuance of any supplement, modification,
amendment, renewal, or extension to or of any Letter of Credit shall be
treated in all respects the same as the issuance of a new Letter of
Credit.
(h) The obligation of Borrower to pay to the Issuing
Lender the amount of any payment made by the Issuing Lender under any
Letter of
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Credit shall be absolute, unconditional, and irrevocable, subject only
to performance by the Issuing Lender of its obligations to Borrower
under Uniform Commercial Code Section 5109. Without limiting the
foregoing, Borrower's obligations shall not be affected by any of the
following circumstances:
(i) any lack of validity or enforceability
prior to its stated expiration date of the Letter of Credit,
this Agreement, or any other agreement or instrument relating
thereto;
(ii) any amendment or waiver of or any
consent to departure from the Letter of Credit, this
Agreement, or any other agreement or instrument relating
thereto, with the consent of Borrower;
(iii) the existence of any claim, setoff,
defense, or other rights which Borrower may have at any time
against the Issuing Lender, the Administrative Agent or any
Lender, any beneficiary of the Letter of Credit (or any
persons or entities for whom any such beneficiary may be
acting) or any other Person, whether in connection with the
Letter of Credit, this Agreement, or any other agreement or
instrument relating thereto, or any unrelated transactions;
(iv) any demand, statement, or any other
document presented under the Letter of Credit proving to be
forged, fraudulent, invalid, or insufficient in any respect or
any statement therein being untrue or inaccurate in any
respect whatsoever so long as any such document appeared
substantially to comply with the terms of the Letter of
Credit;
(v) payment by the Issuing Lender in good
faith under the Letter of Credit against presentation of a
draft or any accompanying document which does not strictly
comply with the terms of the Letter of Credit;
(vi) the existence, character, quality,
quantity, condition, packing, value or delivery of any
Property purported to be represented by documents presented in
connection with any Letter of Credit or any difference between
any such Property and the character, quality, quantity,
condition, or value of such Property as described in such
documents;
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(vii) the time, place, manner, order or contents of
shipments or deliveries of Property as described in documents
presented in connection with any Letter of Credit or the
existence, nature and extent of any insurance relative
thereto;
(viii) the solvency or financial responsibility of
any party issuing any documents in connection with a Letter of
Credit;
(ix) any failure or delay in notice of shipments or
arrival of any Property;
(x) any error in the transmission of any message
relating to a Letter of Credit not caused by the Issuing
Lender, or any delay or interruption in any such message;
(xi) any error, neglect or default of any
correspondent of the Issuing Lender in connection with a
Letter of Credit;
(xii) any consequence arising from acts of God, war,
insurrection, civil unrest, disturbances, labor disputes,
emergency conditions or other causes beyond the control of the
Issuing Lender;
(xiii) so long as the Issuing Lender in good faith
determines that the contract or document appears substantially
to comply with the terms of the Letter of Credit, the form,
accuracy, genuineness or legal effect of any contract or
document referred to in any document submitted to the Issuing
Lender in connection with a Letter of Credit; and
(xiv) where the Issuing Lender has acted in good
faith and observed general banking usage, any other
circumstances whatsoever.
(i) The Issuing Lender shall be entitled to the
protection accorded to the Administrative Agent pursuant to Section
10.6, mutatis mutandis.
(j) The Uniform Customs and Practice for Documentary
Credits, as published in its most current version by the International
Chamber of
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Commerce, shall be deemed a part of this Section and shall apply to all
Letters of Credit to the extent not inconsistent with applicable Law.
2.5 Voluntary Reduction of Revolving Commitment. Borrower
shall have the right, at any time and from time to time, without penalty or
charge, upon at least five (5) Banking Days' prior written notice by a
Responsible Official of Borrower to the Administrative Agent, voluntarily to
reduce, permanently and irrevocably, in aggregate principal amounts in an
integral multiple of $500,000 but not less than $5,000,000, or to terminate, all
or a portion of the then undisbursed portion of the Revolving Commitment. The
Administrative Agent shall promptly notify the Lenders of any reduction or
termination of the Revolving Commitment under this Section.
2.6 Optional Termination of Commitments. Following the
occurrence of a Change in Control, the Requisite Lenders may in their sole and
absolute discretion elect, during the thirty (30) day period immediately
subsequent to the later of (a) such occurrence or (b) the earlier of (i) receipt
of Borrower's written notice to the Administrative Agent of such occurrence or
(ii) if no such notice has been received by the Administrative Agent, the date
upon which the Administrative Agent has actual knowledge thereof, to terminate
the Commitments, in which case the Commitments shall be terminated, and all
outstanding Loans shall be repaid, effective on the date which is thirty (30)
days subsequent to written notice from the Administrative Agent to Borrower
thereof.
2.7 Administrative Agent's Right to Assume Funds Available for
Advances. Unless the Administrative Agent shall have been notified by any Lender
no later than 10:00 a.m. on the Banking Day of the proposed funding by the
Administrative Agent of any Loan that such Lender does not intend to make
available to the Administrative Agent such Lender's portion of the total amount
of such Loan, the Administrative Agent may assume that such Lender has made such
amount avail able to the Administrative Agent on the date of the Loan and the
Administrative Agent may, in reliance upon such assumption, make available to
Borrower a corresponding amount. If the Administrative Agent has made funds
available to Borrower based on such assumption and such corresponding amount is
not in fact made available to the Administrative Agent by such Lender, the
Administrative Agent shall be entitled to recover such corresponding amount on
demand from such Lender. If such Lender does not pay such corresponding amount
forthwith upon the Administrative Agent's demand therefor, the Administrative
Agent promptly shall notify Borrower and Borrower shall pay such corresponding
amount to the Administrative Agent. The Administrative Agent also shall be
entitled to recover from such Lender interest on such correspond ing amount in
respect of each day from the date such corresponding amount was made
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available by the Administrative Agent to Borrower to the date such corresponding
amount is recovered by the Administrative Agent, at a rate per annum equal to
the daily Federal Funds Rate. Nothing herein shall be deemed to relieve any
Lender from its obligation to fulfill its share of the Commitments or to
prejudice any rights which the Administrative Agent or Borrower may have against
any Lender as a result of any default by such Lender hereunder.
2.8 Collateral. The Obligations shall be secured by a first
priority (subject to Liens permitted by Section 6.9) perfected Lien on the
Collateral pursuant to the Collateral Documents.
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Article 3
PAYMENTS AND FEES
3.1 Principal and Interest.
(a) Interest shall be payable on the outstanding
daily unpaid principal amount of each Advance from the date thereof
until payment in full is made and shall accrue and be payable at the
rates set forth or provided for herein before and after Default, before
and after maturity, before and after judgment, and before and after the
commencement of any proceeding under any Debtor Relief Law, with
interest on overdue interest at the Default Rate to the fullest extent
permitted by applicable Laws.
(b) Interest accrued on each Alternate Base Rate Loan
shall be due and payable on each Monthly Payment Date. Except as
otherwise provided in Sections 3.1(d) and 3.8, the unpaid principal
amount of any Alternate Base Rate Loan shall bear interest at a
fluctuating rate per annum equal to the Alternate Base Rate. Each
change in the interest rate under this Section 3.1(b) due to a change
in the Alternate Base Rate shall take effect simultaneously with the
corresponding change in the Alternate Base Rate.
(c) Interest accrued on each Eurodollar Rate Loan
which is for a term of three months or less shall be due and payable on
the last day of the related Eurodollar Period. Interest accrued on each
other Eurodollar Rate Loan shall be due and payable on the date which
is three months after the date such Eurodollar Rate Loan was made (and,
in the event that all of the Lenders have approved a Eurodollar Period
of longer than six months, every three months thereafter through the
last day of the Eurodollar Period) and on the last day of the related
Eurodollar Period. Except as otherwise provided in Sections 3.1(d) and
3.8, the unpaid principal amount of any Eurodollar Rate Loan shall bear
interest at a rate per annum equal to the Eurodollar Rate for that
Eurodollar Rate Loan plus the Applicable Eurodollar Rate Margin.
(d) During the existence of an Event of Default, the
Loans shall bear interest at a rate equal to the sum of (i) the
interest rate specified in Sections 3.1(b) or 3.1(c), whichever is
applicable plus (ii) such incremental rate not in excess of 2% per
annum as may be specified by the Requisite Lenders.
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(e) If not sooner paid, the principal Indebtedness
evidenced by the Notes shall be payable as follows:
(i) the amount, if any, by which the sum of
(A) the principal Indebtedness evidenced by the Revolving
Notes plus (B) the Aggregate Effective Amount of all
outstanding Letters of Credit at any time exceeds the then
applicable Revolving Commitment shall be pay able immediately;
(ii) the Amortization Amount with respect to
each Amortization Date under the Term Notes shall be payable
on such Amortization Date; and
(iii) the principal Indebtedness evidenced by
the Notes shall in any event be payable on the Maturity Date.
(f) The principal Indebtedness evidenced by the Term
Notes shall be prepaid on or before the third Banking Day following the
receipt by Borrower or any of its Subsidiaries of (i) Net Cash Sales
Proceeds from the Disposition of the physical plant in Malaysia owned
by Safeskin Corporation (Malaysia) SDN BHD by an amount equal to fifty
percent (50%) of such Net Cash Sales Proceeds, (ii) Net Cash Sales
Proceeds from Dispositions (other than the Disposition of the physical
plant in Malaysia referred to in clause (i) above) in excess of
$3,000,000 in any Fiscal Year, by an amount equal to the amount of such
Net Cash Sales Proceeds in excess of $3,000,000, (iii) except for Net
Cash Issuance Proceeds from either (A) the issuance of the Senior Notes
(as defined in the Intercreditor Agreement) or (B) an issuance of debt
securities of Borrower or any of its Subsidiaries, Net Cash Issuance
Proceeds from the issuance of debt securities of Borrower or any of its
Subsidiaries in an amount exceeding the Permitted Additional Senior
Indebtedness Amount, by an amount equal to 75% of such Net Cash
Issuance Proceeds and (iv) Net Cash Issuance Proceeds from the issuance
of equity securities of Borrower or any of its Subsidiaries (except an
issuance of equity securities to Borrower or to a Wholly-Owned
Subsidiary or to employees or former employees of Borrower pursuant to
an employee stock option plan maintained by Borrower), by an amount
equal to 50% of such Net Cash Issuance Proceeds. Any prepayment of the
Term Notes under this Subsection shall be applied to principal coming
due in reverse order of maturity.
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(g) The principal Indebtedness evidenced by the Notes
may, at any time and from time to time, voluntarily be paid or prepaid
in whole or in part without premium or penalty, except that with
respect to any voluntary prepayment under this Subsection, (i) any
partial prepayment shall be not less than $1,000,000 and shall be an
integral multiple of $500,000, (ii) the Administrative Agent shall have
received written notice of any prepayment by 9:00 a.m. California time
on the date that is one (1) Banking Day before the date of prepayment
(which must be a Banking Day) in the case of an Alternate Base Rate
Loan, and, in the case of a Eurodollar Rate Loan, three (3) Banking
Days before the date of prepayment, which notice shall identify the
date and amount of the prepayment and the Loan(s) being prepaid, (iii)
each prepayment of principal on any Eurodollar Rate Loan shall be
accompanied by payment of interest accrued to the date of payment on
the amount of principal paid, (iv) any payment or prepayment of all or
any part of any Eurodollar Rate Loan on a day other than the last day
of the applicable Eurodollar Period shall be subject to Section 3.7(e),
and (v) prepayment of the Term Notes under this Subsection shall be
applied 50% to principal coming due in order of maturity and 50% to
principal coming due in reverse order of maturity.
3.2 Arranger and Agency Fees. On the Closing Date and on each
other date upon which a fee is payable, Borrower shall pay to the Arranger and
the Administrative Agent such fees as heretofore agreed upon by letter agreement
between Borrower and the Arranger. The fees paid to the Arranger and the
Administrative Agent, are solely for their own account and are nonrefundable.
3.3 Commitment Fee. From the Closing Date through the Maturity
Date, Borrower shall pay to the Administrative Agent, for the ratable accounts
of the Lenders pro rata according to their Pro Rata Share of the Revolving
Commitment, a commitment fee equal to the Applicable Commitment Fee Rate per
annum times the average daily amount by which the Revolving Commitment exceeds
the sum of (a) the aggregate daily principal Indebtedness evidenced by the
Revolving Notes plus (b) the Aggregate Effective Amount of all outstanding
Letters of Credit. The commitment fee shall be payable quarterly in arrears as
of each Quarterly Payment Date within ten (10) days after receipt by Borrower of
an invoice therefor from the Administrative Agent.
3.4 Letter of Credit Fees. With respect to each Letter of
Credit, Borrower shall pay the following fees:
(a) concurrently with the issuance of each Standby
Letter of Credit, a letter of credit issuance fee to the Issuing Lender
for the sole account
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of the Issuing Lender, in an amount set forth in the letter agreement
between Borrower and the Issuing Lender;
(b) concurrently with the issuance of each Standby
Letter of Credit, to the Administrative Agent for the ratable account
of the Lenders in accordance with their Pro Rata Share of the Revolving
Commitment, a standby letter of credit fee in an amount equal to the
Applicable Standby Letter of Credit Fee Rate as of the date of such
issuance times the face amount of such Standby Letter of Credit through
the termination or expiration of such Standby Letter of Credit, which
the Administrative Agent shall promptly pay to the Lenders; and
(c) concurrently with each issuance, negotiation,
drawing or amendment of each Commercial Letter of Credit, to the
Issuing Lender for the sole account of the Issuing Lender, issuance,
negotiation, drawing and amendment fees in the amounts set forth from
time to time as the Issuing Lender's published scheduled fees for such
services.
Each of the fees payable with respect to Letters of Credit under this
Section is earned when due and is nonrefundable.
3.5 Increased Commitment Costs. If any Lender shall determine
in good faith that the introduction after the Closing Date of any applicable
law, rule, regulation or guideline regarding capital adequacy, or any change
therein or any change in the interpretation or administration thereof by any
central bank or other Governmental Agency charged with the interpretation or
administration thereof, or compliance by such Lender (or its Eurodollar Lending
Office) or any corporation controlling such Lender, with any request, guideline
or directive regarding capital adequacy (whether or not having the force of Law)
of any such central bank or other authority not imposed as a result of such
Lender's or such corporation's failure to comply with any other Laws, affects or
would affect the amount of capital required or expected to be maintained by such
Lender or any corporation controlling such Lender and (taking into consideration
such Lender's or such corporation's policies with respect to capital adequacy
and such Lender's desired return on capital) determines in good faith that the
amount of such capital is increased, or the rate of return on capital is
reduced, as a consequence of its obligations under this Agreement, then, within
five (5) Banking Days after demand of such Lender, Borrower shall pay to such
Lender, from time to time as specified in good faith by such Lender, additional
amounts sufficient to compensate such Lender in light of such circumstances, to
the extent reasonably allocable to such obligations under this Agreement,
provided that Borrower shall not be obligated to pay any such amount which arose
prior to the date which is ninety (90) days preceding the date of such
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demand or is attributable to periods prior to the date which is ninety (90) days
preceding the date of such demand. Each Lender's determination of such amounts
shall be conclusive in the absence of manifest error.
3.6 Eurodollar Costs and Related Matters.
(a) In the event that any Governmental Agency imposes
on any Lender any reserve or comparable requirement (including any
emergency, supplemental or other reserve) with respect to the
Eurodollar Obligations of that Lender, Borrower shall pay that Lender
within five (5) Banking Days after demand all amounts necessary to
compensate such Lender (determined as though such Lender's Eurodollar
Lending Office had funded 100% of its Eurodollar Rate Advance in the
Designated Eurodollar Market) in respect of the imposition of such
reserve requirements (provided, that Borrower shall not be obligated to
pay any such amount which arose prior to the date which is ninety (90)
days preceding the date of such demand or is attributable to periods
prior to the date which is ninety (90) days preceding the date of such
demand). The Lender's determination of such amount shall be conclusive
in the absence of manifest error.
(b) If, after the date hereof, the existence or
occurrence of any Special Eurodollar Circumstance:
(1) shall subject any Lender or its
Eurodollar Lending Office to any tax, duty or other charge or
cost with respect to any Eurodollar Rate Advance, any of its
Notes evidencing Eurodollar Rate Loans or its obligation to
make Eurodollar Rate Advances, or shall change the basis of
taxation of payments to any Lender attributable to the
principal of or interest on any Eurodollar Rate Advance or any
other amounts due under this Agreement in respect of any
Eurodollar Rate Advance, any of its Notes evidencing
Eurodollar Rate Loans or its obligation to make Eurodollar
Rate Advances, excluding (i) taxes imposed on or measured in
whole or in part by its overall net income by (A) any
jurisdiction (or political subdivision thereof) in which it is
orga nized or maintains its principal office or Eurodollar
Lending Office or (B) any jurisdiction (or political
subdivision thereof) in which it is "doing business" and (ii)
any withholding taxes or other taxes based on gross income
imposed by the United States of America for any period with
respect to which it has failed to provide Borrower with the
appropriate
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form or forms required by Section 11.21, to the extent such
forms are then required by applicable Laws;
(2) shall impose, modify or deem applicable
any reserve not applicable or deemed applicable on the date
hereof (including any reserve imposed by the Board of
Governors of the Federal Reserve System, special deposit,
capital or similar requirements against assets of, deposits
with or for the account of, or credit extended by, any Lender
or its Eurodollar Lending Office); or
(3) shall impose on any Lender or its
Eurodollar Lending Office or the Designated Eurodollar Market
any other condition affecting any Eurodollar Rate Advance, any
of its Notes evidencing Eurodollar Rate Loans, its obligation
to make Eurodollar Rate Advances or this Agreement, or shall
otherwise affect any of the same;
and the result of any of the foregoing, as determined in good faith by
such Lender, increases the cost to such Lender or its Eurodollar
Lending Office of making or maintaining any Eurodollar Rate Advance or
in respect of any Eurodollar Rate Advance, any of its Notes evidencing
Eurodollar Rate Loans or its obligation to make Eurodollar Rate
Advances or reduces the amount of any sum received or receivable by
such Lender or its Eurodollar Lending Office with respect to any
Eurodollar Rate Advance, any of its Notes evidencing Eurodollar Rate
Loans or its obligation to make Eurodollar Rate Advances (assuming such
Lender's Eurodollar Lending Office had funded 100% of its Eurodollar
Rate Advance in the Designated Eurodollar Market), then, within five
(5) Banking Days after demand by such Lender (with a copy to the
Administrative Agent), Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender for such
increased cost or reduction (determined as though such Lender's
Eurodollar Lending Office had funded 100% of its Eurodollar Rate
Advance in the Designated Eurodollar Market); provided, that Borrower
shall not be obligated to pay any such amount which arose prior to the
date which is ninety (90) days preceding the date of such demand or is
attributable to periods prior to the date which is ninety (90) days
preceding the date of such demand. A statement of any Lender claiming
compensation under this subsection shall be conclusive in the absence
of manifest error.
(c) If, after the date hereof, the existence or
occurrence of any Special Eurodollar Circumstance shall, in the good
faith opinion of any Lender,
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make it unlawful or impossible for such Lender or its Eurodollar
Lending Office to make, maintain or fund its portion of any Eurodollar
Rate Loan, or materially restrict the authority of such Lender to
purchase or sell, or to take deposits of, Dollars in the Designated
Eurodollar Market, or to determine or charge interest rates based upon
the Eurodollar Rate, and such Lender shall so notify the Administrative
Agent, then such Lender's obligation to make Eurodollar Rate Advances
shall be suspended for the duration of such illegality or impossibility
and the Administrative Agent forthwith shall give notice thereof to the
other Lenders and Borrower. Upon receipt of such notice, the
outstanding principal amount of such Lender's Eurodollar Rate Advances,
together with accrued interest thereon, automatically shall be
converted to Alternate Base Rate Advances on either (1) the last day of
the Eurodollar Period(s) applicable to such Eurodollar Rate Advances if
such Lender may lawfully continue to main tain and fund such Eurodollar
Rate Advances to such day(s) or (2) immediately if such Lender may not
lawfully continue to fund and maintain such Eurodollar Rate Advances to
such day(s), provided that in such event the conversion shall not be
subject to payment of a prepayment fee under Section 3.6(e). Each
Lender agrees to endeavor promptly to notify Borrower of any event of
which it has actual knowledge, occurring after the Closing Date, which
will cause that Lender to notify the Administrative Agent under this
Section, and agrees to designate a different Eurodollar Lending Office
if such designation will avoid the need for such notice and will not,
in the good faith judgment of such Lender, otherwise be materially
disadvantageous to such Lender. In the event that any Lender is unable,
for the reasons set forth above, to make, maintain or fund its portion
of any Eurodollar Rate Loan, such Lender shall fund such amount as an
Alternate Base Rate Advance for the same period of time, and such
amount shall be treated in all respects as an Alternate Base Rate
Advance. Any Lender whose obligation to make Eurodollar Rate Advances
has been suspended under this Section shall promptly notify the
Administrative Agent and Borrower of the cessation of the Special
Eurodollar Circumstance which gave rise to such suspension.
(d) If, with respect to any proposed Eurodollar Rate
Loan:
(1) the Administrative Agent reasonably
determines that, by reason of circumstances affecting the
Designated Eurodollar Market generally that are beyond the
reasonable control of the Lenders, deposits in Dollars (in the
applicable amounts) are not being offered to any Lender in the
Designated Eurodollar Market for the applicable Eurodollar
Period; or
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(2) the Requisite Lenders advise the
Administrative Agent that the Eurodollar Rate as determined by
the Administrative Agent (i) does not represent the effective
pricing to such Lenders for deposits in Dollars in the
Designated Eurodollar Market in the relevant amount for the
applicable Eurodollar Period, or (ii) will not adequately and
fairly reflect the cost to such Lenders of making the
applicable Euro dollar Rate Advances;
then the Administrative Agent forthwith shall give notice thereof to
Borrower and the Lenders, whereupon until the Administrative Agent
notifies Borrower that the circumstances giving rise to such suspension
no longer exist, the obligation of the Lenders to make any future
Eurodollar Rate Advances shall be suspended.
(e) Upon payment or prepayment of any Eurodollar Rate
Advance (other than as the result of a conversion required under
Section 3.6(c) on a day other than the last day in the applicable
Eurodollar Period (whether voluntarily, involuntarily, by reason of
acceleration, or otherwise), or upon the failure of Borrower (for a
reason other than the breach by a Lender of its obligation pursuant to
Section 2.1(a) to make an Advance) to borrow on the date or in the
amount specified for a Eurodollar Rate Loan in any Request for Loan,
Borrower shall pay to the appropriate Lender within five (5) Banking
Days after demand a prepayment fee or failure to borrow fee, as the
case may be (determined as though 100% of the Eurodollar Rate Advance
had been funded in the Designated Eurodollar Market) equal to the sum
of:
(1) $250; plus
(2) the amount, if any, by which (i) the
additional interest would have accrued on the amount prepaid
or not borrowed at the Eurodollar Rate plus the Applicable
Eurodollar Rate Margin if that amount had remained or been
outstanding through the last day of the applicable Eurodollar
Period exceeds (ii) the interest that the Lender could recover
by placing such amount on deposit in the Designated Eurodollar
Market for a period beginning on the date of the prepayment or
failure to borrow and ending on the last day of the applicable
Eurodollar Period (or, if no deposit rate quotation is
available for such period, for the most comparable period for
which a deposit rate quotation may be obtained); plus
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(3) all out-of-pocket expenses incurred by
the Lender reasonably attributable to such payment, prepayment
or failure to borrow.
Each Lender's determination of the amount of any prepayment fee payable
under this Section shall be conclusive in the absence of manifest
error.
(f) Each Lender agrees to endeavor promptly to notify
Borrower of any event of which it has actual knowledge, occurring after
the Closing Date, which will entitle such Lender to compensation
pursuant to clause (a) or clause (b) of this Section, and agrees to
designate a different Eurodollar Lending Office if such designation
will avoid the need for or reduce the amount of such compensation and
will not, in the good faith judgment of such Lender, otherwise be
materially disadvantageous to such Lender. Any request for compensation
by a Lender under this Section shall set forth the basis upon which it
has been determined that such an amount is due from Borrower, a
calculation of the amount due, and a certification that the
corresponding costs have been incurred by the Lender.
3.7 Late Payments. If any installment of principal or interest
or any fee or cost or other amount payable under any Loan Document to the
Administrative Agent or any Lender is not paid when due, it shall thereafter
bear interest at a fluctuating interest rate per annum at all times equal to the
sum of the Alternate Base Rate plus 2%, to the fullest extent permitted by
applicable Laws. Accrued and unpaid interest on past due amounts (including,
without limitation, interest on past due interest) shall be compounded monthly,
on the last day of each calendar month, to the fullest extent permitted by
applicable Laws.
3.8 Computation of Interest and Fees. Computation of interest
and fees under this Agreement shall be calculated on the basis of a year of 360
days and the actual number of days elapsed. Interest shall accrue on each Loan
for the day on which the Loan is made; interest shall not accrue on a Loan, or
any portion thereof, for the day on which the Loan or such portion is paid. Any
Loan that is repaid on the same day on which it is made shall bear interest for
one day. Notwithstanding anything in this Agreement to the contrary, interest in
excess of the maximum amount permitted by applicable Laws shall not accrue or be
payable hereunder or under the Notes, and any amount paid as interest hereunder
or under the Notes which would otherwise be in excess of such maximum permitted
amount shall instead be treated as a payment of principal.
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3.9 Non-Banking Days. If any payment to be made by Borrower or
any other Party under any Loan Document shall come due on a day other than a
Banking Day, payment shall instead be considered due on the next succeeding
Banking Day and the extension of time shall be reflected in computing interest
and fees.
3.10 Manner and Treatment of Payments.
(a) Each payment hereunder (except payments pursuant
to Sections 3.5, 3.6, 11.3, 11.11 and 11.22) or on the Notes or under
any other Loan Document shall be made to the Administrative Agent at
the Administrative Agent's Office for the account of each of the
Lenders or the Administrative Agent, as the case may be, in immediately
available funds not later than 11:00 a.m. California time, on the day
of payment (which must be a Banking Day). All payments received after
such time, on any Banking Day, shall be deemed received on the next
succeeding Banking Day. The amount of all payments received by the
Administrative Agent for the account of each Lender shall be
immediately paid by the Administrative Agent to the applicable Lender
in immediately available funds and, if such payment was received by the
Administrative Agent by 11:00 a.m., California time, on a Banking Day
and not so made available to the account of a Lender on that Banking
Day, the Administrative Agent shall reimburse that Lender for the cost
to such Lender of funding the amount of such payment at the Federal
Funds Rate. All payments shall be made in lawful money of the United
States of America.
(b) Borrower hereby authorizes the Administrative
Agent to debit the general operating bank account of Borrower to effect
any payment due to the Lenders or the Administrative Agent pursuant to
this Agreement. Any resulting overdraft in such account shall be
payable by Borrower to the Administrative Agent on the next following
Banking Day.
(c) Each payment or prepayment on account of any Loan
shall be applied pro rata according to the outstanding Advances made by
each Lender comprising such Loan.
(d) Each Lender shall use its best efforts to keep a
record (in writing or by an electronic data entry system) of Advances
made by it and payments received by it with respect to each of its
Notes and, subject to Section 10.6(g), such record shall, as against
Borrower, be presumptive evidence of the amounts owing. Notwithstanding
the foregoing sentence, the
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failure by any Lender to keep such a record shall not affect Borrower's
obligation to pay the Obligations.
(e) Each payment of any amount payable by Borrower or
any other Party under this Agreement or any other Loan Document shall
be made free and clear of, and without reduction by reason of, any
taxes, assessments or other charges imposed by any Governmental Agency,
central bank or comparable authority, excluding (i) taxes imposed on or
measured in whole or in part by its overall net income by (A) any
jurisdiction (or political subdivision thereof) in which it is
organized or maintains its principal office or Eurodollar Lending
Office or (B) any jurisdiction (or political subdivision thereof) in
which it is "doing business" and (ii) any withholding taxes or other
taxes based on gross income imposed by the United States of America for
any period with respect to which it has failed to provide Borrower with
the appropriate form or forms required by Section 11.21, to the extent
such forms are then required by applicable Laws (all such non-excluded
taxes, assessments or other charges being hereinafter referred to as
"Taxes"). To the extent that Borrower is obligated by applicable Laws
to make any deduction or withholding on account of Taxes from any
amount payable to any Lender under this Agreement, Borrower shall (i)
make such deduction or withholding and pay the same to the relevant
Governmental Agency and (ii) pay such additional amount to that Lender
as is necessary to result in that Lender's receiving a net after-Tax
amount equal to the amount to which that Lender would have been
entitled under this Agreement absent such deduction or withholding. If
and when receipt of such payment results in an excess payment or credit
to that Lender on account of such Taxes, that Lender shall promptly
refund such excess to Borrower.
3.11 Funding Sources. Nothing in this Agreement shall be
deemed to obligate any Lender to obtain the funds for any Loan or Advance in any
particular place or manner or to constitute a representation by any Lender that
it has obtained or will obtain the funds for any Loan or Advance in any
particular place or manner.
3.12 Failure to Charge Not Subsequent Waiver. Any decision by
the Administrative Agent or any Lender not to require payment of any interest
(including interest arising under Section 3.7), fee, cost or other amount
payable under any Loan Document, or to calculate any amount payable by a
particular method, on any occasion shall in no way limit or be deemed a waiver
of the Administrative Agent's or such Lender's right to require full payment of
any interest (including interest arising under Section 3.7), fee, cost or other
amount payable under any Loan Document, or to
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calculate an amount payable by another method that is not inconsistent with this
Agreement, on any other or subsequent occasion.
3.13 Administrative Agent's Right to Assume Payments Will be
Made. Unless the Administrative Agent shall have been notified by Borrower prior
to the date on which any payment to be made by Borrower hereunder is due that
Borrower does not intend to remit such payment, the Administrative Agent may, in
its discretion, assume that Borrower has remitted such payment when so due and
the Administrative Agent may, in its discretion and in reliance upon such
assumption, make available to each Lender on such payment date an amount equal
to such Lender's share of such assumed payment. If Borrower has not in fact
remitted such payment to the Administrative Agent, each Lender shall forthwith
on demand repay to the Administrative Agent the amount of such assumed payment
made available to such Lender, together with interest thereon in respect of each
day from and including the date such amount was made available by the
Administrative Agent to such Lender to the date such amount is repaid to the
Administrative Agent at the Federal Funds Rate.
3.14 Fee Determination Detail. The Administrative Agent, and
any Lender, shall provide reasonable detail to Borrower regarding the manner in
which the amount of any payment to the Administrative Agent and the Lenders, or
that Lender, under Article 3 has been determined, concurrently with demand for
such payment.
3.15 Survivability. All of Borrower's obligations under
Sections 3.5 and 3.6 shall survive for the ninety (90) day period following the
date on which the Commitment is terminated and all Loans hereunder are fully
paid, and Borrower shall remain obligated thereunder for all claims under such
Sections made by any Lender to Borrower prior to the expiration of such period.
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Article 4
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to the Lenders that:
4.1 Existence and Qualification; Power; Compliance With Laws.
Borrower is a corporation duly formed, validly existing and in good standing
under the Laws of Florida. Borrower is duly qualified or registered to transact
business and is in good standing in California and each other jurisdiction in
which the conduct of its business or the ownership or leasing of its Properties
makes such qualification or registration necessary, except where the failure so
to qualify or register and to be in good standing would not constitute a
Material Adverse Effect. Borrower has all requisite power and authority to
conduct its business, to own and lease its Properties and to execute and deliver
each Loan Document to which it is a Party and to perform its Obligations. The
chief executive offices of Borrower are located in California. All outstanding
shares of capital stock of Borrower are duly authorized, validly issued, fully
paid and non-assessable, and no holder thereof has any enforceable right of
rescission under any applicable state or federal securities Laws. Borrower is in
compliance with all Laws and other legal requirements applicable to its
business, has obtained all authorizations, consents, approvals, orders, licenses
and permits from, and has accomplished all filings, registrations and
qualifications with, or obtained exemptions from any of the foregoing from, any
Governmental Agency that are necessary for the transaction of its business,
except where the failure so to comply, obtain authorizations, etc., file,
register, qualify or obtain exemptions does not constitute a Material Adverse
Effect.
4.2 Authority; Compliance With Other Agreements and
Instruments and Government Regulations. The execution, delivery and performance
by Borrower and the Subsidiary Guarantors of the Loan Documents to which it is a
Party have been duly authorized by all necessary corporate action, and do not
and will not:
(a) Require any consent or approval not heretofore
obtained of any partner, director, stockholder, security holder or
creditor of such Party;
(b) Violate or conflict with any provision of such
Party's charter, articles of incorporation or bylaws, as applicable;
(c) Result in or require the creation or imposition
of any Lien (other than pursuant to the Loan Documents) or Right of
Others upon or with
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respect to any Property now owned or leased or hereafter acquired by
such Party;
(d) Violate any Requirement of Law applicable to such
Party;
(e) Result in a breach of or constitute a default
under, or cause or permit the acceleration of any obligation owed
under, any indenture or loan or credit agreement or any other
Contractual Obligation to which such Party is a party or by which such
Party or any of its Property is bound or affected;
and such Party is not in violation of, or default under, any Requirement of Law
or Contractual Obligation, or any indenture, loan or credit agreement described
in Section 4.2(e), in any respect that constitutes a Material Adverse Effect.
4.3 No Governmental Approvals Required. Except as previously
obtained or made, no authorization, consent, approval, order, license or permit
from, or filing, registration or qualification with, any Governmental Agency is
or will be required to authorize or permit under applicable Laws the execution,
delivery and performance by Borrower or any Subsidiary Guarantor of the Loan
Documents to which it is a Party.
4.4 Subsidiaries.
(a) Schedule 4.4 hereto correctly sets forth the
names, form of legal entity, number of shares of capital stock issued
and outstanding, number of shares owned by Borrower or a Subsidiary of
Borrower (specifying such owner) and jurisdictions of organization of
all Subsidiaries of Borrower and specifies which thereof, as of the
Closing Date, are Inactive Subsidiaries. Except as described in
Schedule 4.4, Borrower does not own any capital stock, equity interest
or debt security which is convertible, or exchangeable, for capital
stock or equity interest in any Person. Unless otherwise indicated in
Schedule 4.4, all of the outstanding shares of capital stock, or all of
the units of equity interest, as the case may be, of each Subsidiary
are owned of record and beneficially by Borrower, there are no
outstanding options, warrants or other rights to purchase capital stock
of any such Subsidiary, and all such shares or equity interests so
owned are duly authorized, validly issued, fully paid and
non-assessable, and were issued in compliance with all applicable state
and federal securities and other Laws, and are free and clear of all
Liens, except for Permitted Encumbrances.
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(b) Each Subsidiary is a legal entity of the type
described in Schedule 4.4 duly formed, validly existing and in good
standing under the Laws of its jurisdiction of organization, is duly
qualified to do business as a foreign organization and is in good
standing as such in each jurisdiction in which the conduct of its
business or the ownership or leasing of its Properties makes such
qualification necessary (except where the failure to be so duly
qualified and in good standing does not constitute a Material Adverse
Effect), and has all requisite power and authority to conduct its
business and to own and lease its Properties.
(c) Each Subsidiary is in compliance with all Laws
and other requirements applicable to its business and has obtained all
authorizations, consents, approvals, orders, licenses, and permits
from, and each such Subsidiary has accomplished all filings,
registrations, and qualifications with, or obtained exemptions from any
of the foregoing from, any Governmental Agency that are necessary for
the transaction of its business, except where the failure to be in such
compliance, obtain such authorizations, consents, approvals, orders,
licenses, and permits, accomplish such filings, registrations, and
qualifications, or obtain such exemptions, does not constitute a
Material Adverse Effect.
4.5 Financial Statements. Borrower has furnished to the
Lenders (a) the audited financial statements of Borrower for the Fiscal Year
ended December 31, 1997 and (b) the unaudited balance sheet and statement of
operations of Borrower for the Fiscal Quarter ended September 30, 1998. The
financial statements described in clause (a) fairly present in all material
respects the financial condition, results of operations and changes in financial
position, and the balance sheet and statement of operations described in clause
(b) fairly present the financial condition and results of operations of Borrower
as of such dates and for such periods in conformity with GAAP consistently
applied, subject only to normal year-end accruals and audit adjustments.
4.6 No Other Liabilities; No Material Adverse Changes.
Borrower and its Subsidiaries do not have any material liability or material
contingent liability required under GAAP to be reflected or disclosed, and not
reflected or disclosed, in the balance sheet described in Section 4.5(b), other
than liabilities and contingent liabilities arising in the ordinary course of
business since the date of such financial statements. Except as set forth on
Schedule 4.6, as of the Closing Date, no circumstance or event has occurred that
constitutes a Material Adverse Effect since September 30, 1998.
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4.7 Title to and Location of Property. Borrower and its
Subsidiaries have valid title to the Property (other than assets which are the
subject of a Capital Lease Obligation) reflected in the balance sheet described
in Section 4.5(b), other than items of Property or exceptions to title which are
in each case immaterial and Property subsequently sold or disposed of in the
ordinary course of business. Such Property is free and clear of all Liens and
Rights of Others, other than Liens or Rights of Others described in Schedule
4.7A and Permitted Encumbrances and Permitted Rights of Others. All Property of
Borrower and its Subsidiaries is located at one of the locations described in
Schedule 4.7B.
4.8 Intangible Assets. Borrower and its Subsidiaries own, or
possess the right to use to the extent necessary in their respective businesses,
all material trademarks, trade names, copyrights, patents, patent rights,
computer software, licenses and other Intangible Assets that are used in the
conduct of their businesses as now operated, and no such Intangible Asset, to
the best knowledge of Borrower, conflicts with the valid trademark, trade name,
copyright, patent, patent right or Intangible Asset of any other Person to the
extent that such conflict constitutes a Material Adverse Effect. Except as set
forth in Schedule 4.8, Borrower has not used any trade name, trade style or
"dba" during the five year period ending on the Closing Date.
4.9 Public Utility Holding Company Act. Neither Borrower nor
any of its Subsidiaries is a "holding company", or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
4.10 Litigation. Except for (a) any matter fully covered as to
subject matter and amount (subject to applicable deductibles and retentions) by
insurance for which the insurance carrier has not asserted lack of subject
matter coverage or reserved its right to do so, (b) any matter, or series of
related matters, involving a claim against Borrower or any of its Subsidiaries
of less than $1,000,000, (c) matters of an administrative nature not involving
a claim or charge against Borrower or any of its Subsidiaries and (d) matters
set forth in Schedule 4.10, there are no actions, suits, proceedings or
investigations pending as to which Borrower or any of its Subsidiaries have been
served or have received notice or, to the best knowledge of Borrower, threatened
against or affecting Borrower or any of its Subsidiaries or any Property of any
of them before any Governmental Agency.
4.11 Binding Obligations. Each of the Loan Documents to which
Borrower and any Subsidiary Guarantor is a Party will, when executed and
delivered
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by such Party, constitute the legal, valid and binding obligation of such Party,
enforceable against such Party in accordance with its terms, except as
enforcement may be limited by Debtor Relief Laws or equitable principles
relating to the granting of specific performance and other equitable remedies as
a matter of judicial discretion.
4.12 No Default. No event has occurred and is continuing that
is a Default or Event of Default.
4.13 ERISA.
(a) With respect to each Pension Plan:
(i) such Pension Plan complies in all
material respects with ERISA and any other applicable Laws to
the extent that noncompliance could reasonably be expected to
have a Material Adverse Effect;
(ii) such Pension Plan has not incurred any
"accumulated funding deficiency" (as defined in Section 302 of
ERISA) that could reasonably be expected to have a Material
Adverse Effect;
(iii) no "reportable event" (as defined in
Section 4043 of ERISA, but excluding such events as to which
the PBGC has by regulation waived the requirement therein
contained that it be notified within thirty days of the
occurrence of such event) has occurred that could reasonably
be expected to have a Material Adverse Effect; and
(iv) neither Borrower nor any of its
Subsidiaries has engaged in any non-exempt "prohibited
transaction" (as defined in Section 4975 of the Code) that
could reasonably be expected to have a Material Adverse
Effect.
(b) Neither Borrower nor any of its Subsidiaries has
incurred or expects to incur any withdrawal liability to any
Multiemployer Plan that could reasonably be expected to have a Material
Adverse Effect.
4.14 Regulation U; Investment Company Act. No part of the
proceeds of any Loan hereunder will be used to purchase or carry, or to extend
credit to others for the purpose of purchasing or carrying, any Margin Stock in
violation of Regu-
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lation U. Neither Borrower nor any of its Subsidiaries is or is required to be
registered as an "investment company" under the Investment Company Act of 1940.
4.15 Disclosure. No written statement made by a Senior Officer
to the Administrative Agent or any Lender in connection with this Agreement, or
in connection with any Loan, as of the date thereof contained any untrue
statement of a material fact or omitted a material fact necessary to make the
statement made not misleading in light of all the circumstances existing at the
date the statement was made.
4.16 Tax Liability. Borrower and its Subsidiaries have filed
all tax returns which are required to be filed, and have paid, or made provision
for the payment of, all taxes with respect to the periods, Property or
transactions covered by said returns, or pursuant to any assessment received by
Borrower or any of its Subsidiaries, except (a) such taxes, if any, as are being
contested in good faith by appropriate proceedings and as to which adequate
reserves have been established and maintained and (b) immaterial taxes so long
as no material Property of Borrower or any of its Subsidiaries is at impending
risk of being seized, levied upon or forfeited.
4.17 Projections. As of the Closing Date, to the best
knowledge of Borrower, the assumptions set forth in the Projections are
reasonable and consistent with each other and with all facts known to Borrower,
and the Projections are reasonably based on such assumptions. Nothing in this
Section 4.17 shall be construed as a representation or covenant that the
Projections in fact will be achieved.
4.18 Hazardous Materials. Except as described in Schedule
4.18, as of the Closing Date (a) neither Borrower nor any of its Subsidiaries at
any time has disposed of, discharged, released or threatened the release of any
Hazardous Materials on, from or under the Real Property in violation of any
Hazardous Materials Law that would individually or in the aggregate constitute a
Material Adverse Effect, (b) to the best knowledge of Borrower, no condition
exists that violates any Hazardous Material Law affecting any Real Property
except for such violations that would not individually or in the aggregate
constitute a Material Adverse Effect, (c) no Real Property or any portion
thereof is or has been utilized by Borrower or any of its Subsidiaries as a site
for the manufacture of any Hazardous Materials and (d) to the extent that any
Hazardous Materials are used, generated or stored by Borrower or any of its
Subsidiaries on any Real Property, or transported to or from such Real Property
by Borrower or any of its Subsidiaries, such use, generation, storage and
transportation are in compliance with all Hazardous Materials Laws except for
such non-compliance that would not constitute a Material Adverse Effect or be
materially adverse to the interests of the Lenders.
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4.19 Security Interests. Upon the execution and delivery of
the Security Agreement, the Security Agreement will create a valid first
priority security interest in the Collateral described therein securing the
Obligations (subject only to Permitted Encumbrances, Permitted Rights of Others
and other matters permitted by Section 6.9 and to such qualifications and
exceptions as are contained in the Uniform Commercial Code with respect to the
priority of security interests perfected by means other than the filing of a
financing statement or with respect to the creation of security interests in
Property to which Division 9 of the Uniform Commercial Code does not apply) and
all actions necessary to perfect the security interests so created, other than
filing of the UCC-1 financing statements delivered to the Administrative Agent
pursuant to Section 8.1 with the appropriate Governmental Agency, have been
taken and completed. Upon the execution and delivery of the Pledge Agreement,
the Pledge Agreement will create a valid first priority security interest in the
Pledged Collateral and upon delivery of the Pledged Collateral to the
Administrative Agent all action necessary to perfect the security interest so
created will have been taken and completed.
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Article 5
AFFIRMATIVE COVENANTS
(OTHER THAN INFORMATION AND
REPORTING REQUIREMENTS)
So long as any Advance remains unpaid, or any other Obligation
remains unpaid, or any portion of the Commitment remains in force, Borrower
shall, and shall cause its Subsidiaries to, unless the Administrative Agent
(with the written approval of the Requisite Lenders) otherwise consents:
5.1 Payment of Taxes and Other Potential Liens. Pay and
discharge promptly all taxes, assessments and governmental charges or levies
imposed upon any of them, upon their respective Property or any part thereof and
upon their respective income or profits or any part thereof, except that
Borrower and its Subsidiaries shall not be required to pay or cause to be paid
(a) any tax, assessment, charge or levy that is not yet past due, or is being
contested in good faith by appropriate proceedings so long as the relevant
entity has established and maintains adequate reserves for the payment of the
same or (b) any immaterial tax so long as no material Property of Borrower or
its Subsidiaries is at impending risk of being seized, levied upon or forfeited.
5.2 Preservation of Existence. Preserve and maintain their
respective existences in the jurisdiction of their formation and all material
authorizations, rights, franchises, privileges, consents, approvals, orders,
licenses, permits, or registrations from any Governmental Agency that are
necessary for the transaction of their respective business and qualify and
remain qualified to transact business in each jurisdiction in which such
qualification is necessary in view of their respective business or the ownership
or leasing of their respective Properties except (a) a merger permitted by
Section 6.3 or as otherwise permitted by this Agreement and (b) where the
failure to so qualify or remain qualified would not constitute a Material
Adverse Effect.
5.3 Maintenance of Properties. Maintain, preserve and protect
all of their respective Properties in good order and condition, subject to wear
and tear in the ordinary course of business, and not permit any waste of their
respective Properties, except that the failure to maintain, preserve and protect
a particular item of Property that is at the end of its useful life or that is
not of significant value, either intrinsically or to the operations of Borrower,
shall not constitute a violation of this covenant.
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5.4 Maintenance of Insurance. Maintain liability, casualty and
other insurance (subject to customary deductibles and retentions) with
responsible insurance companies in such amounts and against such risks as is
carried by responsible companies engaged in similar businesses and owning
similar assets in the general areas in which Borrower and its Subsidiaries
operate.
5.5 Compliance With Laws. Comply with all Requirements of Law
noncompliance with which constitutes a Material Adverse Effect, except that
Borrower and its Subsidiaries need not comply with a Requirement of Law then
being contested by any of them in good faith by appropriate proceedings.
5.6 Inspection Rights. Upon reasonable notice, at any time
during regular business hours and as often as reasonably requested (but not so
as to materially interfere with the business of Borrower or any of its
Subsidiaries) permit the Administrative Agent or any Lender, or any authorized
employee, agent or representative thereof, to examine, audit and make copies and
abstracts from the records and books of account of, and to visit and inspect the
Properties of, Borrower and its Subsidiaries and to discuss the affairs,
finances and accounts of Borrower and its Subsidiaries with any of their
officers, key employees or accountants.
5.7 Keeping of Records and Books of Account. Keep adequate
records and books of account reflecting all financial transactions in conformity
with GAAP, consistently applied, and in material conformity with all applicable
requirements of any Governmental Agency having regulatory jurisdiction over
Borrower and its Subsidiaries.
5.8 Compliance With Agreements. Promptly and fully comply with
all Contractual Obligations to which any one or more of them is a party, except
for any such Contractual Obligations (a) the performance of which would cause a
Default or (b) then being contested by any of them in good faith by appropriate
proceedings or (c) if the failure to comply does not constitute a Material
Adverse Effect.
5.9 Use of Proceeds. Use the proceeds of all Revolving Loans
for working capital and general corporate purposes of Borrower, including
repayment of the Original Credit Agreement, and use the proceeds of the Term
Loan solely to retire Indebtedness of Borrower and its Subsidiaries.
5.10 Hazardous Materials Laws. Keep and maintain all Real
Property and each portion thereof in compliance in all material respects with
all applicable Hazardous Materials Laws and promptly notify the Administrative
Agent in writing
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(attaching a copy of any pertinent written material) of (a) any and all material
enforcement, cleanup, removal or other governmental or regulatory actions
instituted, completed or threatened in writing by a Governmental Agency pursuant
to any applicable Hazardous Materials Laws, (b) any and all material claims made
or threatened in writing by any Person against Borrower relating to damage,
contribution, cost recovery, compensation, loss or injury resulting from any
Hazardous Materials and (c) discovery by any Senior Officer of any of Borrower
of any material occurrence or condition on any real Property adjoining or in the
vicinity of such Real Property that could reasonably be expected to cause such
Real Property or any part thereof to be subject to any restrictions on the
ownership, occupancy, transferability or use of such Real Property under any
applicable Hazardous Materials Laws.
5.11 Future Subsidiaries. Pledge all of the capital stock of
any Significant Domestic Subsidiary, and 65% of the capital stock of any
Significant Foreign Subsidiary (other than Safeskin Corporation (Malaysia) SDN
BHD), formed or acquired after the Closing Date pursuant to the Pledge
Agreement, and cause each such Significant Domestic Subsidiary to execute and
deliver an appropriate joinder to the Subsidiary Guaranty and the Security
Agreement.
5.12 Future Real Property. Promptly following its acquisition
of any fee simple real property, execute and deliver to the Administrative Agent
a deed of trust or mortgage in form and substance acceptable to the
Administrative Agent creating a first priority Lien on such real property
securing the Obligations, and provide to the Administrative Agent such customary
lender's title insurance policies, appraisals, environmental reports and other
related documents as the Administrative Agent may reasonably request.
5.13 Year 2000 Compliance. Take such steps as are reasonably
necessary to assure that, prior to November 1, 1999, (a) Borrower and its
Subsidiaries are Year 2000 Compliant and (b) all customers and vendors of
Borrower and its Subsidiaries that are material to the business of Borrower and
whose ability to perform their business obligations to Borrower may be
materially affected by their not being Year 2000 Compliant are Year 2000
Compliant. Such steps shall include the performance of a comprehensive review
and assessment of all data storage and operating systems and the adoption of a
detailed plan and budget for the remediation, monitoring and testing of such
systems. The term "Year 2000 Compliant" means, for purposes of the foregoing,
that all hardware, software, firmware, equipment, goods and systems used by a
Person, or which are material to the business operations or financial condition
of a Person, will properly perform date-sensitive functions on and after January
1, 2000.
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5.14 Security Interest in Property of Foreign Subsidiaries. If
the aggregate sales by Foreign Subsidiaries to unrelated Persons constitute more
than 25% of the aggregate sales by Borrower and its Subsidiaries to unrelated
Persons, promptly execute and deliver such security documents to and in favor of
the Administrative Agent as the Administrative Agent may require to obtain and
perfect a Lien on the Property of any Foreign Subsidiary whose sales to
unrelated Persons constitute more than 15% of the total sales by Borrower and
its Subsidiaries to unrelated Persons.
5.15 Syndication Process. Cooperate in such respects as may be
requested by the Arranger in connection with the syndication of the credit
facilities under this Agreement, including the provision of information (in form
and substance acceptable to the Arranger) for inclusion in written materials
furnished to prospective syndicate members and the participation by Senior
Officers in meetings with prospective syndicate members. Nothing in this Section
5.15 shall obligate Borrower to amend any Loan Document.
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Article 6
NEGATIVE COVENANTS
So long as any Advance remains unpaid, or any other Obligation
remains unpaid, or any portion of the Commitment remains in force, Borrower
shall not, and shall not permit any of its Subsidiaries to, unless the
Administrative Agent (with the written approval of the Requisite Lenders or, if
required by Section 11.2, of all of the Lenders) otherwise consents:
6.1 Payment of Subordinated Obligations. Pay any (a) principal
(including sinking fund payments) or any other amount (other than scheduled
interest payments) with respect to any Subordinated Obligation, or purchase or
redeem (or offer to purchase or redeem) any Subordinated Obligation, or deposit
any monies, securities or other Property with any trustee or other Person to
provide assurance that the principal or any portion thereof of any Subordinated
Obligation will be paid when due or otherwise to provide for the defeasance of
any Subordinated Obligation or (b) scheduled interest on any Subordinated
Obligation unless the payment thereof is then permitted pursuant to the terms of
the indenture or other agreement governing such Subordinated Obligation.
6.2 Disposition of Property. Make any Disposition of its
Property, whether now owned or hereafter acquired, except (a) a Disposition by
Borrower to a Wholly-Owned Subsidiary, or by a Subsidiary to Borrower or a
Wholly-Owned Subsidiary, (b) a Disposition by Safeskin Corporation (Malaysia)
SDN BHD of all or substantially all of its physical plant in Malaysia, (c)
Dispositions of accounts receivable of Borrower or its Subsidiaries in an
aggregate amount of up to $10,000,000 in any Fiscal Quarter for a sales price of
not less than 80% of the amount of such accounts receivable, provided that at
the time of any such Disposition no Default or Event of Default exists or would
occur as a result of such Disposition, and (d) a Disposition (other than the
Dispositions referred to in clauses (b) and (c) above) for which the Net Cash
Sales Proceeds, when added to the aggregate Net Cash Sales Proceeds of all
Dispositions made during that Fiscal Year, does not exceed $5,000,000.
6.3 Mergers. Merge or consolidate with or into any Person,
except (a) mergers and consolidations of a Subsidiary of Borrower into Borrower
or a Wholly-Owned Subsidiary or of Subsidiaries with each other and (b) a merger
or consolidation of a Person into Borrower or with or into a Wholly-Owned
Subsidiary of Borrower which constitutes an Acquisition permitted by Section
6.5; provided that (i) Borrower or a Wholly-Owned Subsidiary is the surviving
entity, (ii) no Change in Control results
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therefrom, (iii) no Default or Event of Default then exists or would result
therefrom and (iv) Borrower and each of the Subsidiary Guarantors execute such
amendments to the Loan Documents as the Administrative Agent may reasonably
determine are appropriate as a result of such merger.
6.4 Hostile Acquisitions. Directly or indirectly use the
proceeds of any Loan in connection with the acquisition of part or all of a
voting interest of five percent (5%) or more in any corporation or other
business entity if such acquisition is opposed by the board of directors of such
corporation or business entity.
6.5 Acquisitions. Make any Acquisition, except any Acquisition
of a Person engaged in the same line of business as Borrower if the aggregate
consideration paid and payable by Borrower in respect of such Acquisition and in
respect of all transactions related to such Acquisition does not (a) exceed
$5,000,000 or (b) when aggregated with all other Acquisitions during that Fiscal
Year, exceed an amount equal to 50% of Tangible Net Worth as of the last day of
the immediately preceding Fiscal year; provided that, prior to any such
Acquisition, Borrower furnishes to the Administrative Agent a Certificate which
demonstrates that, giving effect thereto on a pro-forma basis, Borrower would
have been in compliance with Sections 6.12 through 6.17 for each of the four (4)
Fiscal Quarters most recently-ended and is projected to be in compliance with
such Sections for each of the next succeeding four (4) Fiscal Quarters.
6.6 Distributions. Make any Distribution, whether from
capital, income or otherwise, and whether in Cash or other Property, except:
(a) Distributions by any Subsidiary of Borrower to
Borrower or any Wholly-Owned Subsidiary;
(b) dividends payable on Common Stock; provided that
no Default or Event of Default then exists or would result
therefrom; and
(c) the repurchase, on or about the Closing Date, of
all Common Stock held by Safeskin (B.V.I.), Limited for a
purchase price not exceeding the fair market value of such
Common Stock, and repurchases of other Common Stock for an
aggregate repurchase price not in excess of $10,000,000 in any
Fiscal Year; provided that no Default or Event of Default then
exists or would result therefrom.
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6.7 ERISA. At any time, permit any Pension Plan to: (i) engage
in any non-exempt "prohibited transaction" (as defined in Section 4975 of the
Code); (ii) fail to comply with ERISA or any other applicable Laws; (iii) incur
any material "accumulated funding deficiency" (as defined in Section 302 of
ERISA); or (iv) terminate in any manner, which, with respect to each event
listed above, could reasonably be expected to result in a Material Adverse
Effect or (b) withdraw, completely or partially, from any Multiemployer Plan if
to do so could reasonably be expected to result in a Material Adverse Effect.
6.8 Change in Nature of Business. Make any material change in
the nature of the business of Borrower and its Subsidiaries, taken as a whole.
6.9 Liens and Negative Pledges. Create, incur, assume or
suffer to exist any Lien or Negative Pledge of any nature upon or with respect
to any of their respective Properties, or engage in any sale and leaseback
transaction with respect to any of their respective Properties, whether now
owned or hereafter acquired, except:
(a) Liens and Negative Pledges existing on the
Closing Date and disclosed in Schedule 4.7 and any renewals/extensions
or amendments thereof, provided that the obligations secured or
benefited thereby are not increased;
(b) Liens and Negative Pledges under the Loan
Documents, including Liens in favor of the Collateral Agent for the
ratable benefit of the Secured Creditors under (and as defined in) the
Intercreditor Agreement;
(c) Permitted Encumbrances;
(d) Liens on Property acquired by Borrower or any of
its Subsidiaries that were in existence at the time of the acquisition
of such Property and were not created in contemplation of such
acquisition;
(e) Liens securing Indebtedness permitted by Section
6.10(d) on and limited to the capital assets acquired, constructed or
financed with the proceeds of such Indebtedness or with the proceeds of
any Indebtedness directly or indirectly refinanced by such
Indebtedness;
(f) Non-consensual Liens securing Indebtedness of not
more than $500,000, provided that such Liens are discharged within
thirty (30) days after their incurrence by Borrower;
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(g) Liens securing Additional Senior Indebtedness in
an aggregate principal amount outstanding at any time of not more than
the Permitted Additional Senior Indebtedness Amount, provided that the
holder(s) of such Additional Senior Indebtedness become a party to the
Intercreditor Agreement; and
(h) Liens securing Borrower's obligations to
purchasers of accounts receivable sold by Borrower as permitted under
Section 6.2.
6.10 Indebtedness and Guaranty Obligations. Create, incur or
assume any Indebtedness or Guaranty Obligation except:
(a) Indebtedness and Guaranty Obligations existing on
the Closing Date and disclosed in Schedule 6.10, including the
Indebtedness and Guaranty Obligations owing to the Secured Creditors
under (and as defined in) the Intercreditor Agreement, and
refinancings, renewals, extensions or amendments that do not increase
the amount thereof;
(b) Indebtedness and Guaranty Obligations under the
Loan Documents;
(c) Indebtedness and Guaranty Obligations owed to
Borrower or any of its Subsidiaries;
(d) Indebtedness consisting of Capital Lease
Obligations, or otherwise incurred to finance the purchase or
construction of capital assets (which shall be deemed to exist if the
Indebtedness is incurred at or within 90 days before or after the
purchase or construction of the capital asset), or to refinance any
such Indebtedness, provided that the aggregate principal amount of such
Indebtedness incurred in any Fiscal Year does not exceed $10,000,000;
(e) Subordinated Obligations in such amount as may be
approved in writing by the Requisite Lenders;
(f) Indebtedness consisting of debt securities for
which the Net Cash Issuance Proceeds will be applied as a mandatory
prepayment pursuant to Section 3.1(f);
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(g) Indebtedness consisting of Interest Rate
Protection Agreements;
(h) Guaranty Obligations in support of the
obligations of a Wholly-Owned Subsidiary, provided that such
obligations are not prohibited by this Agreement; and
(i) Additional Senior Indebtedness, provided that the
holder(s) of such Additional Senior Indebtedness become a party to the
Intercreditor Agreement.
6.11 Transactions with Affiliates. Enter into any transaction
of any kind with any Affiliate of Borrower other than (a) salary, bonus,
employee stock option and other compensation arrangements with directors or
officers in the ordinary course of business, (b) transactions that are fully
disclosed to the board of directors (or executive committee thereof) of Borrower
and expressly authorized by a resolution of the board of directors (or executive
committee) of Borrower which is approved by a majority of the directors (or
executive committee) not having an interest in the transaction, (c) transactions
between or among Borrower and its Subsidiaries and (d) transactions on overall
terms at least as favorable to Borrower or its Subsidiaries as would be the case
in an arm's-length transaction between unrelated parties of equal bargaining
power.
6.12 Leverage Ratio. Permit the Leverage Ratio, as of the last
day of any Fiscal Quarter occurring during a period set forth below, to be
greater than the ratio set forth opposite such period:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Closing Date through December 30, 1999 2.75 to 1.00
December 31, 1999 through December 30, 2000 2.00 to 1.00
December 31, 2000 through December 30, 2001 1.75 to 1.00
December 31, 2001 through the Maturity Date 1.50 to 1.00
</TABLE>
6.13 Interest Coverage Ratio. Permit the Interest Coverage
Ratio, as of the last day of each Fiscal Quarter occurring during the term of
this Agreement, to be less than 4.00 to 1.00.
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6.14 Fixed Charge Coverage Ratio. Permit the Fixed Charge
Coverage Ratio, as of the last day of any Fiscal Quarter occurring during a
period set forth below, to be less than the ratio set forth opposite such
period:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Closing Date through December 30, 1999 1.15 to 1.00
December 31, 1999 through December 30, 2000 1.25 to 1.00
December 31, 2000 through December 30, 2001 1.50 to 1.00
December 31, 2001 through December 30, 2002 1.75 to 1.00
December 31, 2002 through the Maturity Date 2.00 to 1.00
</TABLE>
6.15 Tangible Net Worth. Permit Tangible Net Worth as of
December 31, 1998 to be less than $69,650,000 or permit Tangible Net Worth as of
the last day of each Fiscal Quarter thereafter occurring during the term of this
Agreement to be less than the sum of: (a) 75% of Tangible Net Worth as of the
more recent Fiscal Year end; (b) 75% of cumulative, Fiscal Year-to-date Net
Income (with no deduction for a net loss in such Fiscal Quarter, but excluding
any extraordinary loss or gain due to foreign currency translation adjustments);
and (c) 50% of the proceeds of any issuance by Borrower of equity securities
(except to employees or former employees of Borrower pursuant to an employee
stock option plan maintained by Borrower) subsequent to the Closing Date.
6.16 Adjusted Current Ratio. Permit the Adjusted Current
Ratio, as of the last day of any Fiscal Quarter, occurring during a period set
forth below, to be less than the ratio set forth opposite such period:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Closing Date through December 30, 2000 1.25 to 1.00
December 31, 2000 through December 30, 2001 1.50 to 1.00
December 31, 2001 through December 30, 2002 1.75 to 1.00
December 31, 2002 through the Maturity Date 2.25 to 1.00
</TABLE>
6.17 Net Income. Permit (a) Net Income for any Fiscal Quarter
to be less than zero or (b) Net Income for any Fiscal Year to be less than an
amount equal to 10% of consolidated gross revenues of Borrower and its
Subsidiaries for such Fiscal Year.
6.18 Investments. Make or suffer to exist any Investment,
other than:
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(a) Investments in existence on the Closing Date and
disclosed on Schedule 6.18;
(b) Investments consisting of Cash Equivalents;
(c) Investments in a Person that is the subject of an
Acquisition permitted by Section 6.5;
(d) Investments consisting of advances to officers,
directors and employees of Borrower and its Subsidiaries for
travel, entertainment, relocation, anticipated bonus and
analogous ordinary business purposes;
(e) Investments in a Domestic Subsidiary that is a
Wholly-Owned Subsidiary;
(f) Investments in a Foreign Subsidiary that is a
Wholly-Owned Subsidiary and Investments in Joint Ventures;
provided that the aggregate of all such Investments in all
Foreign Subsidiaries and Joint Ventures in any Fiscal Year
does not exceed $50,000,000;
(g) Investments consisting of the extension of credit
to customers or suppliers of Borrower and its Subsidiaries in
the ordinary course of business and any Investments received
in satisfaction or partial satisfaction thereof;
(h) Investments received in connection with the
settlement of a bona fide dispute with another Person;
(i) Investments representing all or a portion of the
sales price of Property sold or services provided to another
Person;
(j) Investments by Foreign Subsidiaries in any other
Subsidiary of Borrower (whether a Domestic Subsidiary or a
Foreign Subsidiary); and
(k) Investments not described above not in excess of
$50,000 in any Fiscal Year.
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6.19 Capital Expenditures. Make any Capital Expenditure in any
Fiscal Year, if to do so would result in the aggregate of all Capital
Expenditures made in such Fiscal Year to exceed the sum of (a) $65,000,000 for
the 1998 Fiscal Year, $65,000,000 for the 1999 Fiscal Year, or $50,000,000 for
each subsequent Fiscal Year, plus (b) the amount, if any, by which Capital
Expenditures of Borrower and its Subsidiaries for the immediately preceding
Fiscal Year was less than the applicable foregoing limit for such Fiscal Year.
6.20 Operating Leases. Incur any obligation to pay rent under
an operating lease in any Fiscal Year if to do so would result in the aggregate
obligation of Borrower and its Subsidiaries to pay rent under all operating
leases in that Fiscal Year to exceed the applicable amount set forth below for
such Fiscal Year:
<TABLE>
<CAPTION>
Maximum Aggregate Annual
Fiscal Year Operating Lease Obligation
------------- --------------------------
<S> <C>
1999 $3,250,000
2000 $4,000,000
2001 $6,000,000
2002 $7,000,000
2003 $8,000,000
</TABLE>
6.21 Subsidiary Indebtedness. Permit (whether or not otherwise
permitted under Section 6.10) any Subsidiary to create, incur, assume or suffer
to exist any Indebtedness or Guaranty Obligation, except (a) Indebtedness and
Guaranty Obligations in existence on the Closing Date, (b) a Guaranty Obligation
required by Section 5.11, (c) Indebtedness owed to Borrower or another
Subsidiary of Borrower, (d) Capital Lease Obligations and purchase money
obligations of a Subsidiary in respect of Property used by that Subsidiary, and
(e) line of credit debt of up to $10,000,000 outstanding at any time.
6.22 Amendments to Subordinated Obligations. Amend or modify
any term or provision of any indenture, agreement or instrument evidencing or
governing any Subordinated Obligation in any respect that will or may adversely
affect the interests of the Lenders.
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Article 7
INFORMATION AND REPORTING REQUIREMENTS
7.1 Financial and Business Information. So long as any Advance
remains unpaid, or any other Obligation remains unpaid, or any portion of the
Commitment remains in force, Borrower shall, unless the Administrative Agent
(with the written approval of the Requisite Lenders) otherwise consents, at
Borrower's sole expense, deliver to the Administrative Agent for distribution by
it to the Lenders, a sufficient number of copies for all of the Lenders of the
following:
(a) As soon as practicable, and in any event within
45 days after the end of each Fiscal Quarter (other than the fourth
Fiscal Quarter in any Fiscal Year), the consolidated and consolidating
balance sheet of Borrower and its Subsidiaries as at the end of such
Fiscal Quarter and the consolidated and consolidating statements of
operations and cash flows for such Fiscal Quarter, and the portion of
the Fiscal Year ended with such Fiscal Quarter, all in reasonable
detail. Such financial statements shall be certified by the chief
financial officer of Borrower as fairly presenting the financial
condition, results of operations and cash flows of Borrower and its
Subsidiaries in accordance with GAAP (other than footnote disclosures),
consistently applied, as at such date and for such periods, subject
only to normal year-end accruals and audit adjustments;
(b) As soon as practicable, and in any event within
45 days after the end of each Fiscal Quarter, a Pricing Certificate
setting forth a calculation of the Leverage Ratio as of the last day of
such Fiscal Quarter, and providing reasonable detail as to the
calculation thereof, which calculations in the case of the fourth
Fiscal Quarter in any Fiscal Year shall be based on the preliminary
unaudited financial statements of Borrower and its Subsidiaries for
such Fiscal Quarter, and as soon as practicable thereafter, in the
event of any material variance in the actual calculation of the
Leverage Ratio from such preliminary calculation, a revised Pricing
Certificate setting forth the actual calculation thereof;
(c) As soon as practicable, and in any event within
90 days after the end of each Fiscal Year, the consolidated and
consolidating balance sheet of Borrower and its Subsidiaries as at the
end of such Fiscal Year and the consolidated and consolidating
statements of operations, stockholders' equity and cash flows, in each
case of Borrower and its Subsidiaries for such Fiscal
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Year, all in reasonable detail. Such financial statements shall be
prepared in accordance with GAAP, consistently applied, and such
consolidated financial statements shall be accompanied by a report of
Deloitte & Touche LLP or other independent public accountants of
recognized standing selected by Borrower and reasonably satisfactory to
the Requisite Lenders, which report shall be prepared in accordance
with generally accepted auditing standards as at such date, and shall
not be subject to any qualifications or exceptions as to the scope of
the audit nor to any other qualification or exception determined by the
Requisite Lenders in their good faith business judgment to be adverse
to the interests of the Lenders. Such accountants' report shall be
accompanied by a certificate stating that, in making the examination
pursuant to generally accepted auditing standards necessary for the
certification of such financial statements and such report, such
accountants have obtained no knowledge of any Default then existing or,
if, in the opinion of such accountants, any such Default shall exist,
stating the nature and status of such Default, and stating that such
accountants have reviewed Borrower's financial calculations as at the
end of such Fiscal Year (which shall accompany such certificate) under
Sections 6.12 through 6.17, have read such Sections (including the
definitions of all defined terms used therein) and that nothing has
come to the attention of such accountants in the course of such
examination that would cause them to believe that the same were not
calculated by Borrower in the manner prescribed by this Agreement;
(d) As soon as practicable, and in any event not
later than sixty (60) days after the commencement of each Fiscal Year,
a budget and projection by Fiscal Quarter for that Fiscal Year and by
Fiscal Year for the next two succeeding Fiscal Years, including for the
first such Fiscal Year, projected balance sheets, statements of
operations and statements of cash flow and, for the second and third
such Fiscal Years, projected consolidated condensed balance sheets and
statements of operations and cash flows of Borrower and its Subsi-
diaries, all in reasonable detail;
(e) Promptly after request by the Administrative
Agent or any Lender, copies of any detailed audit reports by
independent accountants in connection with the accounts or books of
Borrower or any of its Subsidiaries, or any audit of any of them;
(f) Promptly after the same are available, and in any
event within five (5) Banking Days after filing with the Securities and
Exchange Commission, copies of each annual report, proxy or financial
statement or other
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report or communication sent to the stockholders of Borrower, and
copies of all annual, regular, periodic and special reports and
registration statements which Borrower may file or be required to file
with the Securities and Exchange Commission under Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended, and not otherwise
required to be delivered to the Lenders pursuant to other provisions of
this Section 7.1;
(g) Promptly after request by the Administrative
Agent or any Lender, copies of any other report or other document that
was filed by Borrower with any Governmental Agency;
(h) Promptly upon a Senior Officer becoming aware,
and in any event within five (5) Banking Days after becoming aware, of
the occurrence of any (i) "reportable event" (as such term is defined
in Section 4043 of ERISA, but excluding such events as to which the
PBGC has by regulation waived the requirement therein contained that it
be notified within thirty days of the occurrence of such event) or (ii)
non-exempt "prohibited transaction" (as such term is defined in Section
406 of ERISA or Section 4975 of the Code) involving any Pension Plan or
any trust created thereunder, telephonic notice specifying the nature
thereof, and, no more than two (2) Banking Days after such telephonic
notice, written notice again specifying the nature thereof and
specifying what action Borrower is taking or proposes to take with
respect thereto, and, when known, any action taken by the Internal
Revenue Service with respect thereto;
(i) As soon as practicable, and in any event within
two (2) Banking Days after a Senior Officer becomes aware of the
existence of any condition or event which constitutes a Default or
Event of Default, telephonic notice specifying the nature and period of
existence thereof, and, no more than two (2) Banking Days after such
telephonic notice, written notice again specifying the nature and
period of existence thereof and specifying what action Borrower is
taking or proposes to take with respect thereto;
(j) Promptly upon a Senior Officer becoming aware
that (i) any Person has commenced a legal proceeding with respect to a
claim against Borrower that is $1,000,000 or more in excess of the
amount thereof that is fully covered by insurance, (ii) any creditor
under a credit agreement involving Indebtedness of $1,000,000 or more
or any lessor under a lease involving aggregate rent of $1,000,000 or
more has asserted a default thereunder on the part of Borrower or,
(iii) any Person has commenced a legal proceeding with
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respect to a claim against Borrower under a contract that is not a
credit agreement or material lease with respect to a claim of in excess
of $1,000,000 or which otherwise may reasonably be expected to result
in a Material Adverse Effect, a written notice describing the pertinent
facts relating thereto and what action Borrower is taking or proposes
to take with respect thereto; and
(k) Such other data and information as from time to
time may be reasonably requested by the Administrative Agent, any
Lender (through the Administrative Agent) or the Requisite Lenders.
7.2 Compliance Certificates. So long as any Advance remains
unpaid, or any other Obligation remains unpaid or unperformed, or any portion of
the Commitment remains outstanding, Borrower shall, at Borrower's sole expense,
deliver to the Administrative Agent for distribution by it to the Lenders
concurrently with the financial statements required pursuant to Sections 7.1(a)
and 7.1(c), a Compliance Certificate signed by a Senior Officer.
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Article 8
CONDITIONS
8.1 Initial Advances. The obligation of each Lender to make
the initial Advance to be made by it, and the obligation of the Issuing Lender
to issue the initial Letter of Credit, is subject to the following conditions
precedent, each of which shall be satisfied prior to the making of the initial
Advances (unless all of the Lenders, in their sole and absolute discretion,
shall agree otherwise):
(a) The Administrative Agent shall have received all
of the following, each of which shall be originals unless otherwise
specified, each properly executed by a Responsible Official of each
party thereto, each dated as of the Closing Date and each in form and
substance satisfactory to the Administrative Agent and its legal
counsel (unless otherwise specified or, in the case of the date of any
of the following, unless the Administrative Agent otherwise agrees or
directs):
(1) at least one (1) executed counterpart of
this Agreement, together with arrangements satisfactory to the
Administrative Agent for additional executed counterparts,
sufficient in number for distribution to the Lenders and
Borrower;
(2) Revolving Notes executed by Borrower in
favor of each Lender, each in a principal amount equal to that
Lender's Pro Rata Share of the Revolving Commitment;
(3) Term Notes executed by Borrower in favor
of each Lender, each in a principal amount equal to that
Lender's Pro Rata Share of the Term Commitment;
(4) the Subsidiary Guaranty executed by the
Subsidiary Guarantors;
(5) the Pledge Agreement executed by
Borrower;
(6) the Pledged Collateral, together with
executed undated stock powers relating thereto;
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(7) the Security Agreement executed by
Borrower and the Subsidiary Guarantors;
(8) the Intercreditor Agreement executed by
Borrower, the Subsidiary Guarantors and each other party
thereto;
(9) such financing statements on Form UCC-1
executed by Borrower and the Subsidiary Guarantors with
respect to the Security Agreement as the Administrative Agent
may request;
(10) with respect to Borrower and the
Subsidiary Guarantors, such documentation as the
Administrative Agent may reasonably require to establish the
due organization, valid existence and good standing of
Borrower and the Subsidiary Guarantors, their qualification to
engage in business in each material jurisdiction in which they
are engaged in business or required to be so qualified, their
authority to execute, deliver and perform the Loan Documents
to which it is a Party, the identity, authority and capacity
of each Responsible Official thereof authorized to act on its
behalf, including certified copies of articles of
incorporation and amendments thereto, bylaws and amendments
thereto, certificates of good standing and/or qualification to
engage in business, tax clearance certificates, certificates
of corporate resolutions, incumbency certificates,
Certificates of Responsible Officials, and the like;
(11) the Opinion of Counsel;
(12) a Certificate of the chief financial
officer of Borrower certifying that the representation
contained in Section 4.17 is, to the best of his or her
knowledge, true and correct;
(13) a Certificate of the chief financial
officer of Borrower certifying that the conditions specified
in Sections 8.1(f) and 8.1(g) have been satisfied; and
(14) such other assurances, certificates,
documents, consents or opinions as the Administrative Agent or
the Requisite Lenders reasonably may require.
(b) The fees payable on the Closing Date pursuant to
Section 3.2 shall have been paid.
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(c) All Indebtedness outstanding under the Original
Credit Agreement shall have been (or shall concurrently be) paid and
the same shall, together with all Liens securing such Indebtedness,
have been (or shall concurrently be) terminated.
(d) The Administrative Agent shall be reasonably
satisfied that, upon the filing of the financing statements described
in Section 8.1(a)(8) with the appropriate Governmental Agencies, the
Collateral Agent will hold a first priority perfected Lien in the
Collateral, for the ratable benefit of the Lenders and the other
Secured Creditors identified in the Intercreditor Agreement, subject
only to Permitted Encumbrances.
(e) The reasonable costs and expenses of the
Administrative Agent in connection with the preparation of the Loan
Documents payable pursuant to Section 11.3, and invoiced to Borrower
prior to the Closing Date, shall have been paid.
(f) The representations and warranties of Borrower
contained in Article 4 shall be true and correct in all material
respects.
(g) Borrower and any other Parties shall be in
compliance with all the terms and provisions of the Loan Documents, and
giving effect to the initial Advance, no Default or Event of Default
shall have occurred and be continuing.
(h) All legal matters relating to the Loan Documents
shall be satisfactory to Sheppard, Mullin, Richter & Hampton LLP,
special counsel to the Administrative Agent.
(i) The Closing Date shall have occurred on or before
March 15, 1999.
8.2 Any Advance. The obligation of each Lender to make any
Advance, and the obligation of the Issuing Lender to issue any Letter of Credit,
is subject to the following conditions precedent (unless the Requisite Lenders
or, in any case where the approval of all of the Lenders is required pursuant to
Section 11.2, all of the Lenders, in their sole and absolute discretion, shall
agree otherwise):
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(a) except (i) for representations and warranties
which expressly speak as of a particular date or are no longer true and
correct as a result of a change which is permitted by this Agreement or
(ii) as disclosed by Borrower and approved in writing by the Requisite
Lenders, the representations and warranties contained in Article 4
(other than Sections 4.4, 4.6 (first sentence), 4.10 and 4.17) shall be
true and correct in all material respects on and as of the date of the
Advance as though made on that date;
(b) no circumstance or event shall have occurred that
constitutes a Material Adverse Effect since the Closing Date;
(c) other than matters described in Schedule 4.10 or
not required as of the Closing Date to be therein described, there
shall not be then pending or threatened any action, suit, proceeding or
investigation against or affecting Borrower or any of its Subsidiaries
or any Property of any of them before any Governmental Agency that
constitutes a Material Adverse Effect;
(d) the Administrative Agent shall have timely
received a Request for Loan (or telephonic or other request for Loan
referred to in the second sentence of Section 2.1(b), if applicable),
or a Request for Letter of Credit (as applicable), in compliance with
Article 2; and
(e) the Administrative Agent shall have received, in
form and substance satisfactory to the Administrative Agent, such other
assurances, certificates, documents or consents related to the
foregoing as the Administrative Agent or Requisite Lenders reasonably
may require.
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Article 9
EVENTS OF DEFAULT AND REMEDIES UPON EVENT OF DEFAULT
9.1 Events of Default. The existence or occurrence of any one
or more of the following events, whatever the reason therefor and under any
circumstances whatsoever, shall constitute an Event of Default:
(a) Borrower fails to pay any principal on any of the
Notes, or any portion thereof, on the date when due; or
(b) Borrower fails to pay any interest on any of the
Notes, or any fees under Sections 3.3, 3.4 or 3.5, or any portion
thereof, within two (2) Banking Days after the date when due; or fails
to pay any other fee or amount payable to the Lenders under any Loan
Document, or any portion thereof, within two (2) Banking Days after
demand therefor; or
(c) Borrower fails to comply with any of the
covenants contained in Article 6; or
(d) Borrower fails to comply with Section 7.1(i) in
any respect that is materially adverse to the interests of the Lenders;
or
(e) Borrower or any other Party fails to perform or
observe any other covenant or agreement (not specified in clause (a),
(b), (c) or (d) above) contained in any Loan Document on its part to be
performed or observed within twenty (20) Banking Days after the giving
of notice by the Administrative Agent on behalf of the Requisite
Lenders of such Default or, if such Default is not reasonably
susceptible of cure within such period, within such longer period as is
reasonably necessary to effect a cure so long as such Borrower or such
Party continues to diligently pursue cure of such Default but not in
any event in excess of forty (40) Banking Days; or
(f) Any representation or warranty of Borrower or any
other Party made in any Loan Document, or in any certificate or other
writing delivered by Borrower or such Party pursuant to any Loan
Document, proves to have been incorrect when made or reaffirmed in any
respect that is materially adverse to the interests of the Lenders; or
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(g) Borrower (i) fails to pay the principal, or any
principal installment, of any present or future Indebtedness of
$5,000,000 or more, or any guaranty of present or future Indebtedness
of $5,000,000 or more, on its part to be paid, when due (or within any
stated grace period), whether at the stated maturity, upon
acceleration, by reason of required prepayment or otherwise or (ii)
fails to perform or observe any other term, covenant or agreement on
its part to be performed or observed, or suffers any event of default
to occur, in connection with any present or future Indebtedness of
$5,000,000 or more, or of any guaranty of present or future
Indebtedness of $5,000,000 or more, if as a result of such failure or
sufferance any holder or holders thereof (or an agent or trustee on its
or their behalf) has the right to declare such Indebtedness due before
the date on which it otherwise would become due or the right to require
Borrower to redeem or purchase, or offer to redeem or purchase, all or
any portion of such Indebtedness; or
(h) Any Loan Document, at any time after its
execution and delivery and for any reason other than the agreement or
action (or omission to act) of the Administrative Agent or the Lenders
or satisfaction in full of all the Obligations, ceases to be in full
force and effect or is declared by a court of competent jurisdiction to
be null and void, invalid or unenforceable in any respect which is
materially adverse to the interests of the Lenders; or any Collateral
Document ceases (other than by action or inaction of the Administrative
Agent or any Lender) to create a valid and effective Lien in any
material portion of the Collateral; or any Party thereto denies in
writing that it has any or further liability or obligation under any
Loan Document, or purports to revoke, terminate or rescind same; or
(i) A final judgment against Borrower is entered for
the payment of money in excess of $1,000,000 (not covered by insurance
or for which an insurer has reserved its rights) and, absent
procurement of a stay of execution, such judgment remains unsatisfied
for thirty (30) calendar days after the date of entry of judgment, or
in any event later than five (5) days prior to the date of any proposed
sale thereunder; or any writ or warrant of attachment or execution or
similar process is issued or levied against all or any material part of
the Property of Borrower and is not released, vacated or fully bonded
within thirty (30) calendar days after its issue or levy; or
(j) Borrower institutes or consents to the
institution of any proceeding under a Debtor Relief Law relating to it
or to all or any material part of its Property, or is unable or admits
in writing its inability to pay its debts as
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they mature, or makes an assignment for the benefit of creditors; or
applies for or consents to the appointment of any receiver, trustee,
custodian, conservator, liquidator, rehabilitator or similar officer
for it or for all or any material part of its Property; or any
receiver, trustee, custodian, conservator, liquidator, rehabilitator or
similar officer is appointed without the application or consent of that
Person and the appointment continues undischarged or unstayed for sixty
(60) calendar days; or any proceeding under a Debtor Relief Law
relating to any such Person or to all or any part of its Property is
instituted without the consent of that Person and continues undismissed
or unstayed for sixty (60) calendar days; or
(k) The occurrence of an Event of Default (as such
term is or may hereafter be specifically defined in any other Loan
Document) under any other Loan Document; or
(l) Any holder of a Subordinated Obligation of more
than $5,000,000 asserts in writing that such Subordinated Obligation is
not subordinated to the Obligations in accordance with its terms and
Borrower does not promptly deny in writing such assertion and contest
any attempt by such holder to take action based on such assertion; or
(m) Any Pension Plan maintained by Borrower is
finally determined by the PBGC to have a material "accumulated funding
deficiency" as that term is defined in Section 302 of ERISA in excess
of an amount equal to 5% of the consolidated total assets of Borrower
as of the most-recently ended Fiscal Quarter; or
(n) The occurrence of an event of default in respect
of the "Noteholder Outstandings" (as defined in the Intercreditor
Agreement) or a default by Borrower in respect of its guaranty of the
"Synthetic Lease Outstandings" (as defined in the Intercreditor
Agreement); or
(o) The Requisite Lenders determine in good faith
that a circumstance or event has occurred that constitutes a Material
Adverse Effect.
9.2 Remedies Upon Event of Default. Without limiting any other
rights or remedies of the Administrative Agent or the Lenders provided for
elsewhere in this Agreement, or the other Loan Documents, or by applicable Law,
or in equity, or otherwise, but subject, in any event, to the terms and
provisions of the Intercreditor Agreement:
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(a) Upon the occurrence, and during the continuance,
of any Event of Default other than an Event of Default described in
Section 9.1(j):
(1) the Commitments to make Advances and all
other obligations of the Administrative Agent or the Lenders
and all rights of Borrower and any other Parties under the
Loan Documents shall be suspended without notice to or demand
upon Borrower, which are expressly waived by Borrower, except
that all of the Lenders or the Requisite Lenders (as the case
may be, in accordance with Section 11.2) may waive an Event of
Default or, without waiving, determine, upon terms and
conditions satisfactory to the Lenders or Requisite Lenders,
as the case may be, to reinstate the Commitments and such
other obligations and rights and make further Advances, which
waiver or determination shall apply equally to, and shall be
binding upon, all the Lenders;
(2) the Issuing Lender may, with the
approval of the Administrative Agent on behalf of the
Requisite Lenders, demand immediate payment by Borrower of an
amount equal to the aggregate amount of all outstanding
Letters of Credit to be held by the Issuing Lender in an
interest-bearing cash collateral account as collateral
hereunder; and
(3) the Requisite Lenders may request the
Administrative Agent to, and the Administrative Agent
thereupon shall, terminate the Commitments and/or declare all
or any part of the unpaid principal of all Notes, all interest
accrued and unpaid thereon and all other amounts payable under
the Loan Documents to be forthwith due and payable, whereupon
the same shall become and be forthwith due and payable,
without protest, presentment, notice of dishonor, demand or
further notice of any kind, all of which are expressly waived
by Borrower.
(b) Upon the occurrence of any Event of Default
described in Section 9.1(j):
(1) the Commitments to make Advances and all
other obligations of the Administrative Agent or the Lenders
and all rights of Borrower and any other Parties under the
Loan Documents shall terminate without notice to or demand
upon Borrower, which are expressly
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waived by Borrower, except that all of the Lenders may waive
the Event of Default or, without waiving, determine, upon
terms and conditions satisfactory to all the Lenders, to
reinstate the Commitment and such other obligations and rights
and make further Advances, which determination shall apply
equally to, and shall be binding upon, all the Lenders;
(2) an amount equal to the aggregate amount
of all outstanding Letters of Credit shall be immediately due
and payable to the Issuing Lender without notice to or demand
upon Borrower, which are expressly waived by Borrower, to be
held by the Issuing Lender in an interest-bearing cash
collateral account as collateral hereunder; and
(3) the unpaid principal of all Notes, all
interest accrued and unpaid thereon and all other amounts
payable under the Loan Documents shall be forthwith due and
payable, without protest, presentment, notice of dishonor,
demand or further notice of any kind, all of which are
expressly waived by Borrower.
(c) Upon the occurrence of any Event of Default, the
Lenders and the Administrative Agent, or any of them, without notice to
(except as expressly provided for in any Loan Document) or demand upon
Borrower, which are expressly waived by Borrower (except as to notices
expressly provided for in any Loan Document), may proceed (but only
with the consent of the Requisite Lenders) to protect, exercise and
enforce their rights and remedies under the Loan Documents against
Borrower and any other Party and such other rights and remedies as are
provided by Law or equity.
(d) The order and manner in which the Lenders' rights
and remedies are to be exercised shall be determined by the Requisite
Lenders in their sole discretion, and all payments received by the
Administrative Agent and the Lenders, or any of them, shall be applied
first to the costs and expenses (including reasonable attorneys' fees
and disbursements and the reasonably allocated costs of attorneys
employed by the Administrative Agent or by any Lender) of the
Administrative Agent and of the Lenders, and thereafter paid pro rata
to the Lenders in the same proportions that the aggregate Obligations
owed to each Lender under the Loan Documents bear to the aggregate
Obligations owed under the Loan Documents to all the Lenders, without
priority or preference among the Lenders. Regardless of how each Lender
may treat payments for the purpose of its own accounting, for the
purpose of computing Borrower' Obligations hereunder and under the
Notes, payments shall be applied
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first, to the costs and expenses of the Administrative Agent and the
Lenders, as set forth above, second, to the payment of accrued and
unpaid interest due under any Loan Documents to and including the date
of such application (ratably, and without duplication, according to the
accrued and unpaid interest due under each of the Loan Documents), and
third, to the payment of all other amounts (including principal and
fees) then owing to the Administrative Agent or the Lenders under the
Loan Documents. No application of payments will cure any Event of
Default, or prevent acceleration, or continued acceleration, of amounts
payable under the Loan Documents, or prevent the exercise, or continued
exercise, of rights or remedies of the Lenders hereunder or thereunder
or at Law or in equity.
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Article 10
THE ADMINISTRATIVE AGENT
10.1 Appointment and Authorization. Subject to Section 10.8,
each Lender hereby irrevocably appoints and authorizes the Administrative Agent
to take such action as agent on its behalf and to exercise such powers under the
Loan Documents as are delegated to the Administrative Agent by the terms thereof
or are reasonably incidental, as determined by the Administrative Agent,
thereto. This appointment and authorization is intended solely for the purpose
of facilitating the servicing of the Loans and does not constitute appointment
of the Administrative Agent as trustee for any Lender or as representative of
any Lender for any other purpose and, except as specifically set forth in the
Loan Documents to the contrary, the Administrative Agent shall take such action
and exercise such powers only in an administrative and ministerial capacity.
10.2 Administrative Agent and Affiliates. Union Bank of
California, N.A. (and each successor Administrative Agent) has the same rights
and powers under the Loan Documents as any other Lender and may exercise the
same as though it were not the Administrative Agent, and the term "Lender" or
"Lenders" includes Union Bank of California, N.A. in its individual capacity.
Union Bank of California, N.A. (and each successor Administrative Agent) and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of banking, trust or other business with Borrower, any Subsidiary thereof,
or any Affiliate of Borrower or any Subsidiary thereof, as if it were not the
Administrative Agent and without any duty to account therefor to the Lenders.
Union Bank of California, N.A. (and each successor Administrative Agent) need
not account to any other Lender for any monies received by it for reimbursement
of its costs and expenses as Administrative Agent hereunder, or (subject to
Section 11.10) for any monies received by it in its capacity as a Lender
hereunder. The Administrative Agent shall not be deemed to hold a fiduciary
relationship with any Lender and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or otherwise exist against the Administrative Agent.
10.3 Proportionate Interest in any Collateral. The Collateral
Agent, on behalf of all the Lenders and all of the other Secured Creditors
identified in the Intercreditor Agreement, shall hold in accordance with the
Loan Documents all items of any collateral or interests therein received or held
by the Administrative Agent. Subject to the Administrative Agent's and the
Lenders' rights to reimbursement for their costs and expenses hereunder
(including reasonable attorneys' fees and disburse-
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ments and other professional services and the reasonably allocated costs of
attorneys employed by the Administrative Agent or a Lender) and subject to the
application of payments in accordance with Section 9.2(d), each Lender shall
have an interest in the Lenders' interest in such collateral or interests
therein in the same proportions that the aggregate Obligations owed such Lender
under the Loan Documents bear to the aggregate Obligations owed under the Loan
Documents to all the Lenders, without priority or preference among the Lenders.
10.4 Lenders' Credit Decisions. Each Lender agrees that it
has, independently and without reliance upon the Administrative Agent, any other
Lender or the directors, officers, agents, employees or attorneys of the
Administrative Agent or of any other Lender, and instead in reliance upon
information supplied to it by or on behalf of Borrower and upon such other
information as it has deemed appropriate, made its own independent credit
analysis and decision to enter into this Agreement. Each Lender also agrees that
it shall, independently and without reliance upon the Administrative Agent, any
other Lender or the directors, officers, agents, employees or attorneys of the
Administrative Agent or of any other Lender, continue to make its own
independent credit analyses and decisions in acting or not acting under the Loan
Documents.
10.5 Action by Administrative Agent.
(a) Absent actual knowledge of the Administrative
Agent of the existence of a Default, the Administrative Agent may
assume that no Default has occurred and is continuing, unless the
Administrative Agent (or the Lender that is then the Administrative
Agent) has received notice from Borrower stating the nature of the
Default or has received notice from a Lender stating the nature of the
Default and that such Lender considers the Default to have occurred and
to be continuing.
(b) The Administrative Agent has only those
obligations under the Loan Documents as are expressly set forth
therein.
(c) Except for any obligation expressly set forth in
the Loan Documents and as long as the Administrative Agent may assume
that no Event of Default has occurred and is continuing, the
Administrative Agent may, but shall not be required to, exercise its
discretion to act or not act, except that the Administrative Agent
shall be required to act or not act upon the instructions of the
Requisite Lenders (or of all the Lenders, to the extent required by
Section 11.2) and those instructions shall be binding upon the
Administrative
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Agent and all the Lenders, provided that the Administrative Agent shall
not be required to act or not act if to do so would be contrary to any
Loan Document or to applicable Law or would result, in the reasonable
judgment of the Administrative Agent, in substantial risk of liability
to the Administrative Agent.
(d) If the Administrative Agent has received a notice
specified in clause (a), the Administrative Agent shall immediately
give notice thereof to the Lenders and shall act or not act upon the
instructions of the Requisite Lenders (or of all the Lenders, to the
extent required by Section 11.2), provided that the Administrative
Agent shall not be required to act or not act if to do so would be
contrary to any Loan Document or to applicable Law or would result, in
the reasonable judgment of the Administrative Agent, in substantial
risk of liability to the Administrative Agent, and except that if the
Requisite Lenders (or all the Lenders, if required under Section 11.2)
fail, for five (5) Banking Days after the receipt of notice from the
Administrative Agent, to instruct the Administrative Agent, then the
Administrative Agent, in its sole discretion, may act or not act as it
deems advisable for the protection of the interests of the Lenders.
(e) The Administrative Agent shall have no liability
to any Lender for acting, or not acting, as instructed by the Requisite
Lenders (or all the Lenders, if required under Section 11.2),
notwithstanding any other provision hereof.
10.6 Liability of Administrative Agent. Neither the
Administrative Agent nor any of its directors, officers, agents, employees or
attorneys shall be liable for any action taken or not taken by them under or in
connection with the Loan Documents, except for their own gross negligence or
willful misconduct. Without limitation on the foregoing, the Administrative
Agent and its directors, officers, agents, employees and attorneys:
(a) May treat the payee of any Note as the holder
thereof until the Administrative Agent receives notice of the
assignment or transfer thereof, in form satisfactory to the
Administrative Agent, signed by the payee, and may treat each Lender as
the owner of that Lender's interest in the Obligations for all purposes
of this Agreement until the Administrative Agent receives notice of the
assignment or transfer thereof, in form satisfactory to the
Administrative Agent, signed by that Lender;
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(b) May consult with legal counsel (including
in-house legal counsel), accountants (including in-house accountants)
and other professionals or experts selected by it, or with legal
counsel, accountants or other professionals or experts for Borrower
and/or their Subsidiaries or the Lenders, and shall not be liable for
any action taken or not taken by it in good faith in accordance with
any advice of such legal counsel, accountants or other professionals or
experts selected by it with reasonable care;
(c) Shall not be responsible to any Lender for any
statement, warranty or representation made in any of the Loan Documents
or in any notice, certificate, report, request or other statement
(written or oral) given or made in connection with any of the Loan
Documents except for those expressly made by it;
(d) Except to the extent expressly set forth in the
Loan Documents, shall have no duty to ask or inquire as to the
performance or observance by Borrower or its Subsidiaries of any of the
terms, conditions or covenants of any of the Loan Documents or to
inspect any collateral or any Property, books or records of Borrower or
their Subsidiaries;
(e) Will not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness,
effectiveness, sufficiency or value of any Loan Document, any other
instrument or writing furnished pursuant thereto or in connection
therewith, or any collateral;
(f) Will not incur any liability by acting or not
acting in reliance upon any Loan Document, notice, consent,
certificate, statement, request or other instrument or writing
reasonably believed by it to be genuine and signed or sent by the
proper party or parties; and
(g) Will not incur any liability for any arithmetical
error in computing any amount paid or payable by Borrower or any
Subsidiary or Affiliate thereof or paid or payable to or received or
receivable from any Lender under any Loan Document, including, without
limitation, principal, interest, commitment fees, Advances and other
amounts; provided that, promptly upon discovery of such an error in
computation, the Administrative Agent, the Lenders and (to the extent
applicable) Borrower and/or its Subsidiaries or Affiliates shall make
such adjustments as are necessary to correct such error and to restore
the parties to the position that they would have occupied had the error
not occurred.
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10.7 Indemnification. Each Lender shall, ratably in accordance
with its Pro Rata Share of the Commitments (if the Commitments are then in
effect) or in accordance with its proportion of the aggregate Indebtedness then
evidenced by the Notes (if the Commitments have then been terminated), indemnify
and hold the Administrative Agent and its directors, officers, agents, employees
and attorneys harmless against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever (including reasonable attorneys' fees and
disbursements and allocated costs of attorneys employed by the Administrative
Agent) that may be imposed on, incurred by or asserted against it or them in any
way relating to or arising out of the Loan Documents (other than losses incurred
by reason of the failure of Borrower to pay the Indebtedness represented by the
Notes) or any action taken or not taken by it as Administrative Agent
thereunder, except such as result from its own gross negligence or willful
misconduct. Without limitation on the foregoing, each Lender shall reimburse the
Administrative Agent upon demand for that Lender's Pro Rata Share of any
out-of-pocket cost or expense incurred by the Administrative Agent in connection
with the negotiation, preparation, execution, delivery, amendment, waiver,
restructuring, reorganization (including a bankruptcy reorganization),
enforcement or attempted enforcement of the Loan Documents, to the extent that
Borrower or any other Party is required by Section 11.3 to pay that cost or
expense but fails to do so upon demand. Nothing in this Section 10.7 shall
entitle the Administrative Agent or any indemnitee referred to above to recover
any amount from the Lenders if and to the extent that such amount has
theretofore been recovered from Borrower or any of its Subsidiaries. To the
extent that the Administrative Agent or any indemnitee referred to above is
later reimbursed such amount by Borrower or any of its Subsidiaries, it shall
return the amounts paid to it by the Lenders in respect of such amount.
10.8 Successor Administrative Agent. The Administrative Agent
may, and at the request of the Requisite Lenders shall, resign as Administrative
Agent upon reasonable notice to the Lenders and Borrower effective upon
acceptance of appointment by a successor Administrative Agent. If the
Administrative Agent shall resign as Administrative Agent under this Agreement,
the Requisite Lenders shall appoint from among the Lenders a successor
Administrative Agent for the Lenders, which successor Administrative Agent shall
be approved by Borrower (and such approval shall not be unreasonably withheld or
delayed). If no successor Administrative Agent is appointed prior to the
effective date of the resignation of the Administrative Agent, the
Administrative Agent may appoint, after consulting with the Lenders and
Borrower, a successor Administrative Agent from among the Lenders. Upon the
acceptance of its appointment as successor Administrative Agent hereunder,
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such successor Administrative Agent shall succeed to all the rights, powers and
duties of the retiring Administrative Agent and the term "Administrative Agent"
shall mean such successor Administrative Agent and the retiring Administrative
Agent's appointment, powers and duties as Administrative Agent shall be
terminated. After any retiring Administrative Agent's resignation hereunder as
Administrative Agent, the provisions of this Article 10, and Sections 11.3,
11.11 and 11.22, shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Administrative Agent under this Agreement.
Notwithstanding the foregoing, if (a) the Administrative Agent has not been paid
its agency fees under Section 3.4 or has not been reimbursed for any expense
reimbursable to it under Section 11.3, in either case for a period of at least
one (1) year and (b) no successor Administrative Agent has accepted appointment
as Administrative Agent by the date which is thirty (30) days following a
retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless thereupon become effective
and the Lenders shall perform all of the duties of the Administrative Agent
hereunder until such time, if any, as the Requisite Lenders appoint a successor
Administrative Agent as provided for above.
10.9 No Obligations of Borrower. Nothing contained in this
Article 10 shall be deemed to impose upon Borrower any obligation in respect of
the due and punctual performance by the Administrative Agent of its obligations
to the Lenders under any provision of this Agreement, and Borrower shall have no
liability to the Administrative Agent or any of the Lenders in respect of any
failure by the Administrative Agent or any Lender to perform any of its
obligations to the Administrative Agent or the Lenders under this Agreement.
Without limiting the generality of the foregoing, where any provision of this
Agreement relating to the payment of any amounts due and owing under the Loan
Documents provides that such payments shall be made by Borrower to the
Administrative Agent for the account of the Lenders, Borrower's obligations to
the Lenders in respect of such payments shall be deemed to be satisfied upon the
making of such payments to the Administrative Agent in the manner provided by
this Agreement. In addition, Borrower may rely on a written statement by the
Administrative Agent to the effect that it has obtained the written consent of
the Requisite Lenders or all of the Lenders, as applicable under Section 11.2,
in connection with a waiver, amendment, consent, approval or other action by the
Lenders hereunder, and shall have no obligation to verify or confirm the same.
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Article 11
MISCELLANEOUS
11.1 Cumulative Remedies; No Waiver. The rights, powers,
privileges and remedies of the Administrative Agent and the Lenders provided
herein or in any Note or other Loan Document are cumulative and not exclusive of
any right, power, privilege or remedy provided by Law or equity. No failure or
delay on the part of the Administrative Agent or any Lender in exercising any
right, power, privilege or remedy may be, or may be deemed to be, a waiver
thereof; nor may any single or partial exercise of any right, power, privilege
or remedy preclude any other or further exercise of the same or any other right,
power, privilege or remedy. The terms and conditions of Article 8 hereof are
inserted for the sole benefit of the Administrative Agent and the Lenders; the
same may be waived in whole or in part, with or without terms or conditions, in
respect of any Loan without prejudicing the Administrative Agent's or the
Lenders' rights to assert them in whole or in part in respect of any other Loan.
11.2 Amendments; Consents. No amendment, modification,
supplement, extension, termination or waiver of any provision of this Agreement
or any other Loan Document, no approval or consent thereunder, and no consent to
any departure by Borrower or any other Party therefrom, may in any event be
effective unless in writing signed by the Administrative Agent with the written
approval of the Requisite Lenders (and, in the case of any amendment,
modification or supplement of or to any Loan Document to which Borrower is a
Party, signed by Borrower, and, in the case of any amendment, modification or
supplement to Article 10, signed by the Administrative Agent), and then only in
the specific instance and for the specific purpose given; and, without the
approval in writing of all the Lenders, no amendment, modification, supplement,
termination, waiver or consent may be effective:
(a) To amend or modify the principal of, or the
amount of principal, principal prepayments or the rate of interest
payable on, any Note, or the amount of the Commitments or the Pro Rata
Share of any Lender or the amount of any commitment fee payable to any
Lender, or any other fee or amount payable to any Lender under the Loan
Documents or to waive an Event of Default consisting of the failure of
Borrower to pay when due principal, interest or any fee;
(b) To postpone any date fixed for any payment of
principal of, prepayment of principal of or any installment of interest
on, any Note or any installment of any fee, or to extend the term of
the Commitments;
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(c) To amend the provisions of the definition of
"Requisite Lenders", "Amortization Date", "Amortization Amount", or
"Maturity Date"; or
(d) To release any material Subsidiary Guarantor from
the Subsidiary Guaranty or to release any material Collateral from the
Lien of the Collateral Documents, except if such release of material
Collateral occurs in connection with a Disposition permitted under
Section 6.2, in which case such release shall not require the consent
of any of the Lenders; or
(e) To amend or waive Article 8 or this Section 11.2;
or
(f) To amend any provision of this Agreement that
expressly requires the consent or approval of all or a specified
portion of the Lenders.
Any amendment, modification, supplement, termination, waiver or consent pursuant
to this Section 11.2 shall apply equally to, and shall be binding upon, all the
Lenders and the Administrative Agent.
11.3 Costs, Expenses and Taxes. Borrower shall pay within five
(5) Banking Days after demand, accompanied by an invoice therefor, the
reasonable costs and expenses of the Administrative Agent in connection with the
negotiation, preparation, syndication, execution and delivery of the Loan
Documents and any amendment thereto or waiver thereof. Borrower shall also pay
on demand, accompanied by an invoice therefor, the reasonable costs and expenses
of the Administrative Agent and the Lenders in connection with the refinancing,
restructuring, reorganization (including a bankruptcy reorganization) and
enforcement or attempted enforcement of the Loan Documents, and any matter
related thereto. The foregoing costs and expenses shall include filing fees,
recording fees, title insurance fees, appraisal fees, search fees, and other
out-of-pocket expenses and the reasonable fees and out-of-pocket expenses of any
legal counsel (including reasonably allocated costs of legal counsel employed by
the Administrative Agent or any Lender), independent public accountants and
other outside experts retained by the Administrative Agent or any Lender,
whether or not such costs and expenses are incurred or suffered by the
Administrative Agent or any Lender in connection with or during the course of
any bankruptcy or insolvency proceedings of any of Borrower or any Subsidiary
thereof. Borrower shall pay any and all documentary and other taxes, excluding
(i) taxes imposed on or measured in whole or in part by a Lender's overall net
income imposed on it by (A) any jurisdiction (or political subdivision thereof)
in which it is organized or maintains its principal office or Eurodollar Lending
Office or
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(B) any jurisdiction (or political subdivision thereof) in which it is "doing
business" or (ii) any withholding taxes or other taxes based on gross income
imposed by the United States of America for any period with respect to which it
has failed to provide Borrower with the appropriate form or forms required by
Section 11.21, to the extent such forms are then required by applicable Laws,
and all costs, expenses, fees and charges payable or determined to be payable in
connection with the filing or recording of this Agreement, any other Loan
Document or any other instrument or writing to be delivered hereunder or
thereunder, or in connection with any transaction pursuant hereto or thereto,
and shall reimburse, hold harmless and indemnify on the terms set forth in 11.11
the Administrative Agent and the Lenders from and against any and all loss,
liability or legal or other expense with respect to or resulting from any delay
in paying or failure to pay any such tax, cost, expense, fee or charge or that
any of them may suffer or incur by reason of the failure of any Party to perform
any of its Obligations. Any amount payable to the Administrative Agent or any
Lender under this Section 11.3 shall bear interest from the fifth Banking Day
following the date of demand for payment at the Default Rate.
11.4 Nature of Lenders' Obligations. The obligations of the
Lenders hereunder are several and not joint or joint and several. Nothing
contained in this Agreement or any other Loan Document and no action taken by
the Administrative Agent or the Lenders or any of them pursuant hereto or
thereto may, or may be deemed to, make the Lenders a partnership, an
association, a joint venture or other entity, either among themselves or with
the Borrower or any Affiliate of any of Borrower. A default by any Lender will
not increase the Pro Rata Share of the Commitments attributable to any other
Lender. Any Lender not in default may, if it desires, assume in such proportion
as the nondefaulting Lenders agree the obligations of any Lender in default, but
is not obligated to do so. The Administrative Agent agrees that it will use its
best efforts either to induce promptly the other Lenders to assume the
obligations of a Lender in default or to obtain promptly another Lender,
reasonably satisfactory to Borrower, to replace such a Lender in default.
11.5 Survival of Representations and Warranties. All
representations and warranties contained herein or in any other Loan Document,
or in any certificate or other writing delivered by or on behalf of any one or
more of the Parties to any Loan Document, will survive the making of the Loans
hereunder and the execution and delivery of the Notes, and have been or will be
relied upon by the Administrative Agent and each Lender, notwithstanding any
investigation made by the Administrative Agent or any Lender or on their behalf.
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11.6 Notices. Except as otherwise expressly provided in the
Loan Documents, all notices, requests, demands, directions and other
communications provided for hereunder or under any other Loan Document must be
in writing and must be mailed, telegraphed, telecopied, dispatched by commercial
courier or delivered to the appropriate party at the address set forth on the
signature pages of this Agreement or other applicable Loan Document or, as to
any party to any Loan Document, at any other address as may be designated by it
in a written notice sent to all other parties to such Loan Document in
accordance with this Section. Except as otherwise expressly provided in any Loan
Document, if any notice, request, demand, direction or other communication
required or permitted by any Loan Document is given by mail it will be effective
on the earlier of receipt or the fourth Banking Day after deposit in the United
States mail with first class or airmail postage prepaid; if given by telegraph
or cable, when delivered to the telegraph company with charges prepaid; if given
by telecopier, when sent; if dispatched by commercial courier, on the scheduled
delivery date; or if given by personal delivery, when delivered.
11.7 Execution of Loan Documents. Unless the Administrative
Agent otherwise specifies with respect to any Loan Document, (a) this Agreement
and any other Loan Document may be executed in any number of counterparts and
any party hereto or thereto may execute any counterpart, each of which when
executed and delivered will be deemed to be an original and all of which
counterparts of this Agreement or any other Loan Document, as the case may be,
when taken together will be deemed to be but one and the same instrument and (b)
execution of any such counterpart may be evidenced by a telecopier transmission
of the signature of such party. The execution of this Agreement or any other
Loan Document by any party hereto or thereto will not become effective until
counterparts hereof or thereof, as the case may be, have been executed by all
the parties hereto or thereto.
11.8 Binding Effect; Assignment.
(a) This Agreement and the other Loan Documents to
which Borrower is a Party will be binding upon and inure to the benefit
of Borrower, the Administrative Agent, each of the Lenders, and their
respective successors and assigns, except that Borrower may not assign
its rights hereunder or thereunder or any interest herein or therein
without the prior written consent of all the Lenders. Each Lender
represents that it is not acquiring its Note with a view to the
distribution thereof within the meaning of the Securities Act of 1933,
as amended (subject to any requirement that disposition of such Note
must be within the control of such Lender). Any Lender may at any time
pledge its Note or any other instrument evidencing its rights as a
Lender under this
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Agreement to a Federal Reserve Bank, but no such pledge shall release
that Lender from its obligations hereunder or grant to such Federal
Reserve Bank the rights of a Lender hereunder absent foreclosure of
such pledge.
(b) From time to time following the Closing Date,
each Lender may assign to one or more Eligible Assignees all or any
portion of its Pro Rata Share of the Commitments; provided that (i)
such Eligible Assignee, if not then a Lender or an Affiliate of the
assigning Lender, shall be approved by the Administrative Agent and (if
no Event of Default then exists) Borrower (neither of which approvals
shall be unreasonably withheld or delayed), (ii) such assignment shall
be evidenced by a Commitment Assignment and Acceptance, a copy of which
shall be furnished to the Administrative Agent as hereinbelow provided,
(iii) except in the case of an assignment to an Affiliate of the
assigning Lender, to another Lender or of the entire remaining
Commitments of the assigning Lender, the assignment shall not assign a
Pro Rata Share of the Commitments that is equivalent to less than
$5,000,000 and (iv) the effective date of any such assignment shall be
as specified in the Commitment Assignment and Acceptance, but not
earlier than the date which is five (5) Banking Days after the date the
Administrative Agent has received the Commitment Assignment and
Acceptance. Upon the effective date of such Commitment Assignment and
Acceptance, the Eligible Assignee named therein shall be a Lender for
all purposes of this Agreement, with the Pro Rata Share of the
Commitments therein set forth and, to the extent of such Pro Rata
Share, the assigning Lender shall be released from its further
obligations under this Agreement. Borrower agrees that it shall execute
and deliver (against delivery by the assigning Lender to Borrower of
its Notes) to such assignee Lender, Notes evidencing that assignee
Lender's Pro Rata Share of the Commitments, and to the assigning
Lender, Notes evidencing the remaining balance Pro Rata Share retained
by the assigning Lender.
(c) By executing and delivering a Commitment
Assignment and Acceptance, the Eligible Assignee thereunder
acknowledges and agrees that: (i) other than the representation and
warranty that it is the legal and beneficial owner of the Pro Rata
Share of the Commitments being assigned thereby free and clear of any
adverse claim, the assigning Lender has made no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability,
genuineness or sufficiency of this Agreement or any other Loan
Document; (ii) the assigning Lender has made no representation or
warranty and assumes no responsibility
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with respect to the financial condition of Borrower or the performance
by Borrower of the Obligations; (iii) it has received a copy of this
Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 7.1 and such other documents and
information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Commitment Assignment and
Acceptance; (iv) it will, independently and without reliance upon the
Administrative Agent or any Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking action under this
Agreement; (v) it appoints and authorizes the Administrative Agent to
take such action and to exercise such powers under this Agreement as
are delegated to the Administrative Agent by this Agreement; and (vi)
it will perform in accordance with their terms all of the obligations
which by the terms of this Agreement are required to be performed by it
as a Lender.
(d) The Administrative Agent shall maintain at the
Administrative Agent's Office a copy of each Commitment Assignment and
Acceptance delivered to it and a register (the "Register") of the names
and address of each of the Lenders and the Pro Rata Share of the
Commitments held by each Lender, giving effect to each Commitment
Assignment and Acceptance. The Register shall be available during
normal business hours for inspection by Borrower or any Lender upon
reasonable prior notice to the Administrative Agent. After receipt of a
completed Commitment Assignment and Acceptance executed by any Lender
and an Eligible Assignee, and receipt of an assignment fee of $3,000
from such Lender or Eligible Assignee, the Administrative Agent shall,
promptly following the effective date thereof, provide to Borrower and
the Lenders a revised Schedule 1.1 giving effect thereto. Borrower, the
Administrative Agent and the Lenders shall deem and treat the Persons
listed as Lenders in the Register as the holders and owners of the Pro
Rata Share of the Commitments listed therein for all purposes hereof,
and no assignment or transfer of any such Pro Rata Share of the
Commitments shall be effective, in each case unless and until a
Commitment Assignment and Acceptance effecting the assignment or
transfer thereof shall have been accepted by the Administrative Agent
and recorded in the Register as provided above. Prior to such
recordation, all amounts owed with respect to the applicable Pro Rata
Share of the Commitments shall be owed to the Lender listed in the
Register as the owner thereof, and any request, authority or consent of
any Person who, at the time of making such request or giving such
authority or consent, is listed in the Register as a Lender shall be
conclusive and binding on any subsequent
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holder, assignee or transferee of the corresponding Pro Rata Share of
the Commitments.
(e) Each Lender may from time to time grant
participations to one or more banks or other financial institutions in
a portion of its Pro Rata Share of the Commitments; provided, however,
that (i) such Lender's obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) the
participating banks or other financial institutions shall not be a
Lender hereunder for any purpose except, if the participation agreement
so provides, for the purposes of Sections 3.6, 3.7, 11.11 and 11.22 but
only to the extent that the cost of such benefits to Borrower does not
exceed the cost which Borrower would have incurred in respect of such
Lender absent the participation, (iv) Borrower, the Administrative
Agent and the other Lenders shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and
obligations under this Agreement, (v) the participation interest shall
be expressed as a percentage of the granting Lender's Pro Rata Share of
the Commitments as it then exists and shall not restrict an increase in
the Commitments, or in the granting Lender's Pro Rata Share of the
Commitments, so long as the amount of the participation interest is not
affected thereby and (vi) the consent of the holder of such
participation interest shall not be required for amendments or waivers
of provisions of the Loan Documents other than those which (A) extend
any Amortization Date, the Maturity Date or any other date upon which
any payment of money is due to the Lenders, (B) reduce the rate of
interest on the Notes, any fee or any other monetary amount payable to
the Lenders, (C) reduce the amount of any installment of principal due
under the Notes, (D) release any material Subsidiary Guaranty, or (E)
release any material Collateral from the Lien of the Collateral
Documents, except if such release of material Collateral occurs in
connection with a Disposition permitted under Section 6.2, in which
case such release shall not require the consent of any of the Lenders
or of any holder of a participation interest in the Commitments.
11.9 Right of Setoff. If an Event of Default has occurred and
is continuing, the Administrative Agent or any Lender (but in each case only
with the consent of the Requisite Lenders) may exercise its rights under Article
9 of the Uniform Commercial Code and other applicable Laws and, to the extent
permitted by applicable Laws, apply any funds in any deposit account maintained
with it by Borrower and/or any Property of Borrower in its possession against
the Obligations.
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11.10 Sharing of Setoffs. Each Lender severally agrees that if
it, through the exercise of any right of setoff, banker's lien or counterclaim
against Borrower, or otherwise, receives payment of the Obligations held by it
that is ratably more than any other Lender, through any means, receives in
payment of the Obligations held by that Lender, then, subject to applicable
Laws: (a) the Lender exercising the right of setoff, banker's lien or
counterclaim or otherwise receiving such payment shall purchase, and shall be
deemed to have simultaneously purchased, from each of the other Lenders a
participation in the Obligations held by the other Lenders and shall pay to the
other Lenders a purchase price in an amount so that the share of the Obligations
held by each Lender after the exercise of the right of setoff, banker's lien or
counterclaim or receipt of payment shall be in the same proportion that existed
prior to the exercise of the right of setoff, banker's lien or counterclaim or
receipt of payment; and (b) such other adjustments and purchases of
participations shall be made from time to time as shall be equitable to ensure
that all of the Lenders share any payment obtained in respect of the Obligations
ratably in accordance with each Lender's share of the Obligations immediately
prior to, and without taking into account, the payment; provided that, if all or
any portion of a disproportionate payment obtained as a result of the exercise
of the right of setoff, banker's lien, counterclaim or otherwise is thereafter
recovered from the purchasing Lender by Borrower or any Person claiming through
or succeeding to the rights of Borrower, the purchase of a participation shall
be rescinded and the purchase price thereof shall be restored to the extent of
the recovery, but without interest. Each Lender that purchases a participation
in the Obligations pur suant to this Section 11.10 shall from and after the
purchase have the right to give all notices, requests, demands, directions and
other communications under this Agreement with respect to the portion of the
Obligations purchased to the same extent as though the purchasing Lender were
the original owner of the Obligations purchased. Borrower expressly consents to
the foregoing arrangements and agree that any Lender holding a participation in
an Obligation so purchased pursuant to this Section 11.10 may exercise any and
all rights of setoff, banker's lien or counterclaim with respect to the
participation as fully as if the Lender were the original owner of the
Obligation purchased.
11.11 Indemnity by Borrower. Borrower agrees to indemnify,
save and hold harmless the Administrative Agent and each Lender and their
respective directors, officers, agents, attorneys and employees (collectively
the "Indemnitees") from and against: (a) any and all claims, demands, actions or
causes of action (except a claim, demand, action, or cause of action for any
amount excluded from the definition of "Taxes" in Section 3.12(d)) if the claim,
demand, action or cause of action arises out of or relates to any act or
omission (or alleged act or omission) of Borrower, its Affiliates or any of its
officers, directors or stockholders relating to the Commitment, the use or
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contemplated use of proceeds of any Loan, or the relationship of Borrower and
the Lenders under this Agreement; (b) any administrative or investigative
proceeding by any Governmental Agency arising out of or related to a claim,
demand, action or cause of action described in clause (a) above; and (c) any and
all liabilities, losses, reasonable costs or expenses (including reasonable
attorneys' fees and the reasonably allocated costs of attorneys employed by any
Indemnitee and disbursements of such attorneys and other professional services)
that any Indemnitee suffers or incurs as a result of the assertion of any
foregoing claim, demand, action or cause of action; provided that no Indemnitee
shall be entitled to indemnification for any loss caused by its own gross
negligence or willful misconduct or for any loss asserted against it by another
Indemnitee. If any claim, demand, action or cause of action is asserted against
any Indemnitee, such Indemnitee shall promptly notify Borrower, but the failure
to so promptly notify Borrower shall not affect Borrower's obligations under
this Section unless such failure materially prejudices Borrower's right to
participate in the contest of such claim, demand, action or cause of action, as
hereinafter provided. Such Indemnitee may (and shall, if requested by Borrower
in writing) contest the validity, applicability and amount of such claim,
demand, action or cause of action and shall permit Borrower to participate in
such contest. Any Indemnitee that proposes to settle or compromise any claim or
proceeding for which Borrower may be liable for payment of indemnity hereunder
shall give Borrower written notice of the terms of such proposed settlement or
compromise reasonably in advance of settling or compromising such claim or
proceeding and shall obtain Borrower's prior consent (which shall not be
unreasonably withheld or delayed). In connection with any claim, demand, action
or cause of action covered by this Section 11.11 against more than one
Indemnitee, all such Indemnitees shall be represented by the same legal counsel
(which may be a law firm engaged by the Indemnitees or attorneys employed by an
Indemnitee or a combination of the foregoing) selected by the Indemnitees and
reasonably acceptable to Borrower; provided, that if such legal counsel
determines in good faith that representing all such Indemnitees would or could
result in a conflict of interest under Laws or ethical principles applicable to
such legal counsel or that a defense or counterclaim is available to an
Indemnitee that is not available to all such Indemnitees, then to the extent
reasonably necessary to avoid such a conflict of interest or to permit
unqualified assertion of such a defense or counterclaim, each affected
Indemnitee shall be entitled to separate representation by legal counsel
selected by that Indemnitee and reasonably acceptable to Borrower, with all such
legal counsel using reasonable efforts to avoid unnecessary duplication of
effort by counsel for all Indemnitees; and further provided that the
Administrative Agent (as an Indemnitee) shall at all times be entitled to
representation by separate legal counsel (which may be a law firm or attorneys
employed by the Administrative Agent or a combination of the foregoing). Any
obligation or liability of Borrower to any Indemnitee under this Section 11.11
shall
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survive the expiration or termination of this Agreement and the repayment
of all Loans and the payment and performance of all other Obligations owed to
the Lenders.
11.12 Nonliability of the Lenders. Borrower acknowledges and
agrees that:
(a) Any inspections of any Property of Borrower made
by or through the Administrative Agent or the Lenders are for purposes
of administration of the Loan only and Borrower is not entitled to rely
upon the same (whether or not such inspections are at the expense of
Borrower);
(b) By accepting or approving anything required to be
observed, performed, fulfilled or given to the Administrative Agent or
the Lenders pursuant to the Loan Documents, neither the Administrative
Agent nor the Lenders shall be deemed to have warranted or represented
the sufficiency, legality, effectiveness or legal effect of the same,
or of any term, provision or condition thereof, and such acceptance or
approval thereof shall not constitute a warranty or representation to
anyone with respect thereto by the Administrative Agent or the Lenders;
(c) The relationship between Borrower and the
Administrative Agent and the Lenders is, and shall at all times remain,
solely that of borrowers and lenders; neither the Administrative Agent
nor the Lenders shall under any circumstance be construed to be
partners or joint venturers of Borrower or its Affiliates; neither the
Administrative Agent nor the Lenders shall under any circumstance be
deemed to be in a relationship of confidence or trust or a fiduciary
relationship with Borrower or its Affiliates, or to owe any fiduciary
duty to Borrower or its Affiliates; neither the Administrative Agent
nor the Lenders undertake or assume any responsibility or duty to
Borrower or its Affiliates to select, review, inspect, supervise, pass
judgment upon or inform Borrower or its Affiliates of any matter in
connection with their Property or the operations of Borrower or its
Affiliates; Borrower and its Affiliates shall rely entirely upon their
own judgment with respect to such matters; and any review, inspection,
supervision, exercise of judgment or supply of information undertaken
or assumed by the Administrative Agent or the Lenders in connection
with such matters is solely for the protection of the Administrative
Agent and the Lenders and neither Borrower nor any other Person is
entitled to rely thereon; and
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(d) The Administrative Agent and the Lenders shall
not be responsible or liable to any Person for any loss, damage,
liability or claim of any kind relating to injury or death to Persons
or damage to Property caused by the actions, inaction or negligence of
Borrower and/or its Affiliates and Borrower hereby indemnify and hold
the Administrative Agent and the Lenders harmless on the terms set
forth in Section 11.11 from any such loss, damage, liability or claim.
11.13 No Third Parties Benefited. This Agreement is made for
the purpose of defining and setting forth certain obligations, rights and duties
of Borrower, the Administrative Agent and the Lenders in connection with the
Loans, and is made for the sole benefit of Borrower, the Administrative Agent
and the Lenders, and the Administrative Agent's and the Lenders' successors and
assigns. Except as provided in Sections 11.8 and 11.11, no other Person shall
have any rights of any nature hereunder or by reason hereof.
11.14 Confidentiality. Each Lender agrees to hold any
confidential information that it may receive from Borrower pursuant to this
Agreement in confidence, except for disclosure: (a) to other Lenders or
Affiliates of a Lender; (b) to legal counsel and accountants for Borrower or any
Lender; (c) to other professional advisors to Borrower or any Lender, provided
that the recipient has accepted such information subject to a confidentiality
agreement substantially similar to this Section 11.14; (d) to regulatory
officials having jurisdiction over that Lender; (e) as required by Law or legal
process, provided that each Lender agrees to notify Borrower of any such
disclosures unless prohibited by applicable Laws, or in connection with any
legal proceeding to which that Lender and Borrower are adverse parties; and (f)
to another financial institution in connection with a disposition or proposed
disposition to that financial institution of all or part of that Lender's
interests hereunder or a parti cipation interest in its Notes, provided that the
recipient has accepted such information subject to a confidentiality agreement
substantially similar to this Section 11.14. For purposes of the foregoing,
"confidential information" shall mean any information respecting Borrower or its
Subsidiaries reasonably considered by Borrower to be confidential, other than
(i) information previously filed with any Governmental Agency and available to
the public, (ii) information previously published in any public medium from a
source other than, directly or indirectly, that Lender, and (iii) information
previously disclosed by Borrower to any Person not associated with Borrower
which does not owe a professional duty of confidentiality to Borrower or which
has not executed an appropriate confidentiality agreement with Borrower. Nothing
in this Section shall be construed to create or give rise to any fiduciary duty
on the part of the Administrative Agent or the Lenders to Borrower.
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11.15 Further Assurances. Borrower shall, at its expense and
without expense to the Lenders or the Administrative Agent, do, execute and
deliver such further acts and documents as the Requisite Lenders or the
Administrative Agent from time to time reasonably require for the assuring and
confirming unto the Lenders or the Administrative Agent of the rights hereby
created or intended now or hereafter so to be, or for carrying out the intention
or facilitating the performance of the terms of any Loan Document.
11.16 Integration. This Agreement, together with the other
Loan Documents and the letter agreement referred to in Sections 3.2, 3.4, and
3.5, comprises the complete and integrated agreement of the parties on the
subject matter hereof and supersedes all prior agreements, written or oral, on
the subject matter hereof. In the event of any conflict between the provisions
of this Agreement and those of any other Loan Document, the provisions of this
Agreement shall control and govern; provided that the inclusion of supplemental
rights or remedies in favor of the Administrative Agent or the Lenders in any
other Loan Document shall not be deemed a conflict with this Agreement. Each
Loan Document was drafted with the joint participation of the respective parties
thereto and shall be construed neither against nor in favor of any party, but
rather in accordance with the fair meaning thereof.
11.17 Governing Law; JURISDICTION AND VENUE. Except to the
extent otherwise provided therein, each Loan Document shall be governed by, and
construed and enforced in accordance with, the Laws of California applicable to
contracts made and performed in California. THE PARTIES AGREE THAT ALL ACTIONS
OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND
LITIGATED ONLY IN A STATE OR FEDERAL COURT LOCATED IN THE STATE OF CALIFORNIA,
OR, AT THE SOLE OPTION OF THE ADMINISTRATIVE AGENT OR ANY LENDER, IN ANY OTHER
COURT IN WHICH THE ADMINISTRATIVE AGENT AND/OR ANY LENDER SHALL INITIATE LEGAL
OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE
MATTER IN CONTROVERSY. THE PARTIES EXPRESSLY SUBMIT AND CONSENT IN ADVANCE TO
SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED IN ANY SUCH COURT, AND
THE PARTIES HEREBY WAIVE ANY OBJECTION THEY MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION AND HEREBY CONSENT TO THE GRANTING OF SUCH LEGAL OR EQUITABLE
RELIEF AS IS DEEMED APPROPRIATE BY ANY SUCH COURT. FURTHERMORE, THE PARTIES
HEREBY WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT THEY MAY
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HAVE TO ASSERT THE DOCTRINE OF "FORUM NON CONVENIENS" OR TO OBJECT TO VENUE TO
THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 11.17.
11.18 Severability of Provisions. Any provision in any Loan
Document that is held to be inoperative, unenforceable or invalid as to any
party or in any jurisdiction shall, as to that party or jurisdiction, be
inoperative, unenforceable or invalid without affecting the remaining provisions
or the operation, enforceability or validity of that provision as to any other
party or in any other jurisdiction, and to this end the provisions of all Loan
Documents are declared to be severable.
11.19 Headings. Article and Section headings in this Agreement
and the other Loan Documents are included for convenience of reference only and
are not part of this Agreement or the other Loan Documents for any other
purpose.
11.20 Time of the Essence. Time is of the essence of the Loan
Documents.
11.21 Foreign Lenders and Participants. Each Lender that is
incorporated or otherwise organized under the Laws of a jurisdiction other than
the United States of America or any State thereof or the District of Columbia
shall deliver to Borrower (with a copy to the Administrative Agent), on or
before the Closing Date (or on or before accepting an assignment or receiving a
participation interest herein pursuant to Section 11.8, if applicable) two duly
completed copies, signed by a Responsible Official, of either Form 1001
(relating to such Lender and entitling it to a complete exemption from
withholding on all payments to be made to such Lender by Borrower pursuant to
this Agreement) or Form 4224 (relating to all payments to be made to such Lender
by the Borrower pursuant to this Agreement) of the United States Internal
Revenue Service or such other evidence (including, if reasonably necessary, Form
W-9) satisfactory to Borrower and the Administrative Agent that no withholding
under the federal income tax laws is required with respect to such Lender.
Thereafter and from time to time, each such Lender shall (a) promptly submit to
Borrower (with a copy to the Administrative Agent), such additional duly
completed and signed copies of one of such forms (or such successor forms as
shall be adopted from time to time by the relevant United States taxing
authorities) as may then be available under then current United States laws and
regulations to avoid, or such evidence as is satisfactory to Borrower and the
Administrative Agent of any available exemption from, United States withholding
taxes in respect of all payments to be made to such Lender by Borrower pursuant
to this Agreement and (b) take such steps as shall not be materially
disadvantageous to it, in the reasonable judgment of such Lender, and as may be
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reasonably necessary (including the re-designation of its Eurodollar Lending
Office, if any) to avoid any requirement of applicable Laws that Borrower make
any deduction or withholding for taxes from amounts payable to such Lender. In
the event that Borrower or the Administrative Agent become aware that a
participation has been granted pursuant to Section 11.8(e) to a financial
institution that is incorporated or otherwise organized under the Laws of a
jurisdiction other than the United States of America, any State thereof or the
District of Columbia, then, upon request made by Borrower or the Administrative
Agent to the Lender which granted such participation, such Lender shall cause
such participant financial institution to deliver the same documents and
information to Borrower and the Administrative Agent as would be required under
this Section if such financial institution were a Lender.
11.22 Hazardous Material Indemnity. Borrower hereby agrees to
indemnify, hold harmless and defend (by counsel reasonably satisfactory to the
Administrative Agent) the Administrative Agent and each of the Lenders and their
respective directors, officers, employees, agents, successors and assigns from
and against any and all claims, losses, damages, liabilities, fines, penalties,
charges, administrative and judicial proceedings and orders, judgments, remedial
action requirements, enforcement actions of any kind, and all reasonable costs
and expenses incurred in connection therewith (including but not limited to
reasonable attorneys' fees and the reasonably allocated costs of attorneys
employed by the Administrative Agent or any Lender, and expenses to the extent
that the defense of any such action has not been assumed by Borrower), arising
directly or indirectly out of (i) the presence on, in, under or about any Real
Property of any Hazardous Materials, or any releases or discharges of any
Hazardous Materials on, under or from any Real Property and (ii) any activity
carried on or undertaken on or off any Real Property by Borrower or any of its
predecessors in title, whether prior to or during the term of this Agreement,
and whether by Borrower or any predecessor in title or any employees, agents,
contractors or subcontractors of Borrower or any predecessor in title, or any
third persons at any time occupying or present on any Real Property, in
connection with the handling, treatment, removal, storage, decontamination,
clean-up, transport or disposal of any Hazardous Materials at any time located
or present on, in, under or about any Real Property. The foregoing indemnity
shall further apply to any residual contamination on, in, under or about any
Real Property, or affecting any natural resources, and to any contamination of
any Property or natural resources arising in connection with the generation,
use, handling, storage, transport or disposal of any such Hazardous Materials,
and irrespective of whether any of such activities were or will be undertaken in
accordance with applicable Laws, but the foregoing indemnity shall not apply to
Hazardous Materials on any Real Property, the presence of which is caused by the
Administrative Agent or the Lenders. Borrower hereby acknowledges and agrees
that,
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notwithstanding any other provision of this Agreement or any of the other Loan
Documents to the contrary, the obligations of Borrower under this Section shall
be unlimited corporate obligations of Borrower and shall not be secured by any
Lien on any Real Property. Any obligation or liability of Borrower to any
Indemnitee under this Section 11.22 shall survive the expiration or termination
of this Agreement and the repayment of all Loans and the payment and performance
of all other Obligations owed to the Lenders.
11.23 Waiver of Right to Trial by Jury. EACH PARTY TO THIS
AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTY HERETO OR
ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED
THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT
TO TRIAL BY JURY.
11.24 Purported Oral Amendments. BORROWER EXPRESSLY
ACKNOWLEDGES THAT THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY ONLY BE
AMENDED OR MODIFIED, OR THE PROVISIONS HEREOF OR THEREOF WAIVED OR SUPPLEMENTED,
BY AN INSTRUMENT IN WRITING THAT COMPLIES WITH SECTION 11.2. BORROWER AGREES
THAT IT WILL NOT RELY ON ANY COURSE OF DEALING, COURSE OF PERFORMANCE, OR ORAL
OR WRITTEN STATEMENTS BY ANY REPRESENTATIVE OF THE MANAGING AGENT OR ANY BANK
THAT DOES NOT COMPLY WITH SECTION 11.2 TO EFFECT AN
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AMENDMENT, MODIFICATION, WAIVER OR SUPPLEMENT TO THIS AGREEMENT OR THE OTHER
LOAN DOCUMENTS.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
SAFESKIN CORPORATION
By:
--------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Address:
Safeskin Corporation
12671 High Bluff Drive
San Diego, California 92130
Attn: William LaRue
Vice President-Treasurer
Telecopier: (619) 350-2380
Telephone: (619) 350-2128
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<PAGE> 114
UNION BANK OF CALIFORNIA, N.A.,
as Administrative Agent
By:
-----------------------------------
Douglas S. Lambell
Vice President
Address:
Union Bank of California, N.A.
San Diego Commercial Banking Office
530 "B" Street, 4th Floor, S-420
San Diego, California 92101-4407
Attn: Douglas S. Lambell
Telecopier: (619) 230-3766
Telephone: (619) 230-3029
COMERICA BANK,
as a Lender
By:
-----------------------------------
Emmanuel M. Skevofilax
Assistant Vice President
Address:
Comerica Bank
Irvine Loan Production Office
1920 Main Street, Suite 1150
Irvine, California 92614
Attn: Emmanuel M. Skevofilax
Telecopier: (949) 476-1222
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<PAGE> 115
Telephone: (949) 476-1933
THE FIRST NATIONAL BANK OF CHICAGO,
as a Lender
By:
-----------------------------------
Anthony B. Mathews
Vice President
Address:
The First National Bank of Chicago
Mail Suite 4001
777 S. Figueroa Street, 4th Floor
Los Angeles, California 90017-5800
Attn: Anthony B. Mathews
Telecopier: (213) 683-4949
Telephone: (619) 683-4957
SANWA BANK CALIFORNIA,
as a Lender
By:
-----------------------------------
Jacob A. Lenhof
Vice President
Address:
Sanwa Bank California
1280 4th Avenue, 2nd Floor
San Diego, California 92101
Attn: Jacob A. Lenhof
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<PAGE> 116
Telecopier: (619) 595-1918
Telephone: (619) 234-0938
UNION BANK OF CALIFORNIA, N.A.,
as a Lender
By:
-----------------------------------
Bruce A. Breslau
Vice President
Address:
Union Bank of California, N.A.
San Diego Commercial Banking Office
530 "B" Street, 4th Floor, S-420
San Diego, California 92101-4407
Attn: Bruce A. Breslau
Telecopier: (619) 230-3766
Telephone: (619) 230-3758
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<PAGE> 117
U.S. BANK, NATIONAL ASSOCIATION,
as a Lender
By:
-----------------------------------
Janet E. Jordan
Vice President
Address:
U.S. Bank, National Association
National Corporate Banking Division
PL-4
555 S.W. Oak Street, Suite 400
Portland, Oregon 97204
Attn: Janet E. Jordan
Telecopier: (503) 275-5428
Telephone: (503) 275-5871
WELLS FARGO BANK, NATIONAL
ASSOCIATION,
as a Lender
By:
-----------------------------------
Michael Sullivan
Vice President
Address:
Wells Fargo Bank, National Association
Commercial Banking Office
401 "B" Street, Suite 2201
San Diego, California 92101
Attn: Michael Sullivan
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<PAGE> 118
Telecopier: (619) 699-3020
Telephone: (619) 699-3038
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<PAGE> 119
FIRST AMENDMENT TO AMENDED AND RESTATED REVOLVING/
TERM LOAN AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED REVOLVING/TERM LOAN
AGREEMENT (this "Amendment"), dated as of March 31, 1999, is entered into by and
between SAFESKIN CORPORATION, a Florida corporation ("Borrower"), and UNION BANK
OF CALIFORNIA, N.A., as Administrative Agent for the Lenders referred to below,
with reference to the following facts:
RECITALS
A. Borrower, the Lenders identified therein and the
Administrative Agent are parties to that certain Amended and Restated
Revolving/Term Loan Agreement, dated as of March 5, 1999 (the "Loan Agreement"),
pursuant to which such Lenders have provided Borrower with the revolving and
term loan financing described therein.
B. Borrower, the Lenders and the Administrative Agent wish
to amend the Loan Agreement as set forth below.
NOW, THEREFORE, the parties hereby agree as follows:
1. Defined Terms. All initially capitalized terms used in this
Amendment without definition shall have the respective meanings ascribed thereto
in the Loan Agreement.
2. Amendment to Definition of "Applicable Commitment Fee Rate".
Section 1.1 of the Loan Agreement is hereby amended such that the definition of
"Applicable Commitment Fee Rate" shall read in full as follows:
" 'Applicable Commitment Fee Rate' means, for each Pricing
Period, the rates set forth below (expressed in basis points per annum)
opposite the Applicable Pricing Level for that Pricing Period:
<TABLE>
<CAPTION>
Applicable Pricing Level Commitment Fee
------------------------ --------------
<S> <C>
I 32.5
II 37.5
III 37.5
IV 50
</TABLE>
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<PAGE> 120
<TABLE>
<CAPTION>
Applicable Pricing Level Commitment Fee
------------------------ --------------
<S> <C>
V 50;
</TABLE>
provided, however, upon the Administrative Agent's receipt of a
Compliance Certificate from Borrower evidencing Borrower's compliance as
of December 31, 1999 or any subsequent compliance testing date with each
of the financial covenants set forth in Sections 6.12 through 6.21, the
Applicable Commitment Fee Rate shall be as set forth below:
<TABLE>
<CAPTION>
Applicable Pricing Level Commitment Fee
------------------------ --------------
<S> <C>
I 20
II 25
III 25
IV 37.5
V 37.5."
</TABLE>
3. Amendment to Definition of "Applicable Eurodollar Rate Margin".
Section 1.1 of the Loan Agreement is hereby further amended such that the
definition of "Applicable Eurodollar Rate Margin" shall read in full as follows:
" 'Applicable Eurodollar Rate Margin' means, for each Pricing
Period, the interest rate margin set forth below (expressed in basis
points per annum) opposite the Applicable Pricing Level for that Pricing
Period:
<TABLE>
<CAPTION>
Applicable Pricing Level Margin
------------------------ ------
<S> <C>
I 125
II 150
III 162.5
IV 175
V 187.5;
</TABLE>
provided, however, upon the Administrative Agent's receipt of a
Compliance Certificate from Borrower evidencing Borrower's compliance as
of December 31, 1999 or any subsequent compliance testing date with each
of the financial covenants set forth in Sections 6.12 through 6.21, the
Applicable Eurodollar Rate Margin shall be as set forth below:
<TABLE>
<CAPTION>
Applicable Pricing Level Margin
------------------------ ------
<S> <C>
I 87.5
II 112.5
</TABLE>
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<PAGE> 121
<TABLE>
<CAPTION>
Applicable Pricing Level Margin
------------------------ ------
<S> <C>
III 125
IV 137.5
V 150."
</TABLE>
4. Addition of Definitions For New Swing Line Facility. Section 1.1
of the Loan Agreement is hereby further amended by adding therein new
definitions of "Swing Line," "Swing Line Commitment," "Swing Line Bank," "Swing
Line Loan" and "Swing Line Outstanding" as follows:
"Swing Line" means the revolving line of credit established by
the Swing Line Bank in favor of the Borrower pursuant to Section 2.1A.
"Swing Line Commitment" means an amount equal to the lesser of
(i) $5,000,000 or (ii) the then applicable Revolving Commitment.
"Swing Line Bank" means Union Bank of California, N.A., or any
successor swing line bank hereunder.
"Swing Line Loan" means an Advance which bears interest at a
rate per annum equal to interest payable on an Alternative Base Rate
Loan and made by the Swing Line Bank to Borrower under the Swing Line.
"Swing Line Outstandings" means, as of any date of
determination, the aggregate principal amount of Swing Line Loans then
outstanding.
5. Addition of Swing Line Facility. Article 2 of the Loan Agreement
is hereby amended and supplemented by adding therein a new Section 2.1A as
follows:
"2.1A Swing Line
(a) The Swing Line Bank shall from time to time prior to the
Maturity Date make Swing Line Loans to Borrower in such amounts as
Borrower may request; provided, however, that (i) after giving effect to
such Swing Line Loan, the Swing Line Outstandings shall not exceed the
Swing Line Commitment, and (ii) without the consent of the Requisite
Lenders and the Swing Line Bank, no Swing Line Loan shall be made during
the continuation of an Event of Default. Unless notified to the contrary
by the Swing Line Bank, Advances under the Swing Line may be made in
amounts of at least $100,000 and integral multiples of $25,000 in excess
thereof (the 'integral amount') made by the Swing Line Bank in
accordance with Section 2.2. Promptly after receipt of such request, the
Swing Line Bank shall obtain telephone verification from the
Administrative
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<PAGE> 122
Agent that there is availability for such Swing Line Loan under the
Revolving Commitment. Unless notified to the contrary by the Swing Line
Bank, each repayment of a Swing Line Loan shall be in an amount which is
an integral multiple of the integral amount. The Swing Line Bank shall
promptly notify the Administrative Agent of the Swing Line Outstandings
each time there is a change therein.
(b) The Swing Line Loans shall bear interest at a fluctuating
rate per annum equal to the rate of interest payable on Alternate Base
Rate Loans payable on such dates, not more frequently than monthly, as
may be specified by the Swing Line Bank and in any event on the Maturity
Date. Interest on Swing Line Loans shall be payable upon demand of the
Swing Line Bank, and the Swing Line Loans shall be payable upon demand
of the Swing Line Bank, and the Swing Line Bank shall be responsible for
invoicing Borrower for such interest. The interest payable on Swing Line
Loans is solely for the account of the Swing Line Bank.
(c) The principal amount of the Swing Line Loans shall be
payable on demand made by the Swing Line Bank and in any event on the
Maturity Date.
(d) Upon the making of each Swing Line Loan by the Swing Line
Bank, each Lender shall be deemed to have purchased from the Swing Line
Bank a participation therein in an amount equal to that Lender's Pro
Rata Share of the then applicable Revolving Commitment times the amount
of the Swing Line Loan. Upon demand by the Administrative Agent,
including any such demand made following the occurrence of an Event of
Default, each Lender promptly shall provide to the Swing Line Bank such
Lender's participation amount of any such Swing Line Loan as computed in
accordance with the preceding sentence. The obligation of each Lender so
to provide its purchase price to the Swing Line Bank shall be absolute
and unconditional and shall not be affected by the occurrence of an
Event of Default or any other occurrence or event.
(e) In the event that the Swing Line Outstandings are in excess
of $2,000,000 on three consecutive Business Days, then on the next Business Day
(unless Borrower has made other arrangements acceptable to the Swing Line Bank
to reduce the Swing Line Outstandings below such amount), Borrower shall request
a Revolving Loan in a minimum amount necessary to reduce the Swing Line
Outstandings below such amount. The Administrative Agent shall request that the
Lenders provide such amount to the Swing Line Bank (which the Swing Line Bank
shall then apply to the Swing Line Outstandings) and credit any balance of such
Revolving Loan in immediately available funds to the Designated Deposit Account.
If Borrower fails to request a Revolving Loan within the requisite time therefor
pursuant to Section 2.2, the
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<PAGE> 123
Administrative Agent may, but is not required to, without notice to or the
consent of Borrower, cause a Revolving Loan to be made by the Lenders in the
minimum amount necessary to reduce the Swing Line Outstandings below such amount
and, for this purpose, the conditions precedent set forth in Section 8.2 shall
not apply. The proceeds of such Revolving Loan shall be paid to the Swing Line
Bank for application to the Swing Line Outstandings."
6. Amendment to Indebtedness and Guaranty Obligations Provision.
Section 6.10 of the Loan Agreement is hereby amended such that clause (i)
thereof shall read in full as follows:
"(i) Additional Senior Indebtedness incurred after the
Administrative Agent has received a Compliance Certificate from Borrower
evidencing Borrower's compliance as of December 31, 1999 or any
subsequent compliance testing date with each of the financial covenants
set forth in Sections 6.12 through 6.21 of the Loan Agreement, provided
that the holder(s) of such Additional Senior Indebtedness become a party
to the Intercreditor Agreement."
7. Amendment to Fixed Charge Coverage Ratio Provision. Section 6.14
of the Loan Agreement is hereby amended to read in full as follows:
"6.14 Fixed Charge Coverage Ratio. Permit the Fixed Charge
Coverage Ratio as of December 31, 1999 or as of the last day of any
Fiscal Quarter occurring during a period set forth below, to be less
than the ratio set forth opposite such Fiscal Quarter:
<TABLE>
<CAPTION>
Fiscal Quarter Ratio
-------------- -----
<S> <C>
December 31, 1999 1.10 to 1.00
March 31, 2000 through December 30, 2000 1.25 to 1.00
December 31, 2000 through December 30, 2001 1.50 to 1.00
December 31, 2001 through December 30, 2002 1.75 to 1.00
December 31, 2002 through the Maturity Date 2.00 to 1.00."
</TABLE>
8. Amendment to Capital Expenditures Provisions. Section 6.19 of
the Loan Agreement is hereby amended to read in full as follows:
"6.19 Capital Expenditures. Make any Capital Expenditure, if to
do so would result in either of the following applicable limits being
exceeded:
(a) If the aggregate of all Capital Expenditures
made in any Fiscal Year would exceed the sum of (i) $65,000,000
for the 1998 Fiscal
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<PAGE> 124
Year, $55,000,000 for the 1999 Fiscal Year, or $50,000,000 for
each subsequent Fiscal Year, plus (ii) the amount, if any, by
which Capital Expenditures of Borrower and its Subsidiaries for
the immediately preceding Fiscal Year was less than the
applicable foregoing limit for such Fiscal Year; or
(b) If the aggregate of all Capital Expenditures
made in the Fiscal Quarters ending March 31, 1999, June 30, 1999
or September 30, 1999 would exceed the sum of (i) $20,000,000
for the Fiscal Quarter ended March 31, 1999, $17,000,000 for the
Fiscal Quarter ending June 30, 1999, or $11,000,000 for the
Fiscal Quarter ending September 30, 1999, plus (ii) the amount,
not to exceed 25% of such preceding Fiscal Quarter's limit, by
which Capital Expenditures of Borrower and its Subsidiaries for
the immediately preceding Fiscal Quarter was less than the
applicable foregoing limit for such Fiscal Quarter."
9. Addition of EBITDA Covenant. Article 6 of the Loan Agreement is
hereby further amended and supplemented by adding therein a new Section 6.23 as
follows:
"6.23 EBITDA. Permit EBITDA for the Fiscal Quarters ending March
31, 1999, June 30, 1999 and September 30, 1999 to be less than the
applicable amount set forth below for such Fiscal Quarters:
<TABLE>
<CAPTION>
Fiscal Quarter Ending Minimum EBITDA
--------------------- --------------
<S> <C>
March 31, 1999 $ 8,000,000
June 30, 1999 $17,000,000
September 30, 1999 $20,000,000."
</TABLE>
10. Addition of Maximum Inventory Covenant. Article 6 of the Loan
Agreement is hereby further amended and supplemented by adding therein a new
Section 6.24 as follows:
"6.24 Inventory. Maintain inventory having an aggregate value
(determined at the lower of cost, on a first-in-first-out basis, or market, on a
net realizable value basis, as determined by Borrower consistent with its past
practices) as of the Fiscal Quarters ending March 31, 1999, June 30, 1999 and
September 30, 1999 of greater than the correlative amount set forth below:
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<PAGE> 125
<TABLE>
<CAPTION>
Fiscal Quarter Ending Maximum Permitted Inventory
--------------------- ---------------------------
<S> <C>
March 31, 1999 $51,000,000
June 30, 1999 $43,000,000
September 30, 1999 $38,000,000."
</TABLE>
11. Amendment Fee. In consideration of the accommodations provided
to Borrower pursuant to this Amendment, Borrower shall pay to the Administrative
Agent, for the ratable benefit of Lenders, an amendment fee in the amount of
$250,000 (the "Amendment Fee"). Borrower hereby acknowledges and agrees that the
Administrative Agent may effect payment of the Amendment Fee by charging the
full amount of the Amendment Fee to Borrower's Revolving Loan account on the
effective date of this Amendment.
12. Conditions Precedent. The effectiveness of this Amendment is
subject to the prior satisfaction of each of the following conditions:
a. Execution and Delivery of this Amendment by
Borrower. The Administrative Agent shall have
received a copy of this Amendment, duly executed
by Borrower;
b. Written Approval of the Lenders. The
Administrative Agent shall have received written
approval of the terms of this Amendment from
each of the Lenders;
c. Execution and Delivery of Commitment Assignment
and Acceptance. The Administrative Agent shall
have received a Commitment Assignment and
Acceptance in the form of Exhibit "A" attached
hereto, duly executed by the First National Bank
of Chicago ("First Chicago") and Wells Fargo
Bank, N.A. and acknowledged by Borrower and the
Administrative Agent; and
d. Execution and Delivery of Replacement First
Chicago Notes. The Administrative Agent shall
have received an original replacement Revolving
Note in the form of Exhibit "B" attached hereto
and an original replacement Term Note in the
form of Exhibit "C" attached hereto, each duly
executed by Borrower to the order of First
Chicago.
13. Otherwise Not Effected. Except as expressly amended hereby, the
Loan Agreement shall remain unaltered and in full force and effect.
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<PAGE> 126
14. Counterparts. This Amendment may be executed in multiple
counterparts, each of which shall constitute an original, and all of which,
taken together, shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Amendment by
their respective duly authorized officers as of the date first set forth above.
BORROWER:
SAFESKIN CORPORATION,
a Florida corporation
By
-------------------------------------
Title:
----------------------------------
ADMINISTRATIVE AGENT:
UNION BANK OF CALIFORNIA, N.A.
a national banking association
By
-------------------------------------
Douglas S. Lambell
Vice President
-8-
<PAGE> 1
EXHIBIT 10.47
SECURITY AGREEMENT
THIS SECURITY AGREEMENT, dated as of March 5, 1999, is made by
Safeskin Corporation, a Florida corporation (the "Borrower"), and those
Subsidiaries of the Borrower that are parties hereto, as indicated on the
signature pages hereof, and/or that become parties hereto in the manner provided
in Section 22 hereof, jointly and severally, in favor of Union Bank of
California, N.A., or any successor collateral agent, as the Collateral Agent
under the Intercreditor Agreement referred to below, for the ratable benefit of
each of the Secured Creditors, as Secured Party, with reference to the following
facts:
RECITALS
A. The Secured Creditors described in the Intercreditor and
Collateral Agency Agreement, of even date herewith, by and among Union Bank of
California, N.A. as the Bank Agent, the Noteholders therein named, the Synthetic
Lease Investor therein named, Union Bank of California, N.A. as the Synthetic
Lease Financing Agent, Union Bank of California, N.A. as the Collateral Agent,
the Borrower and the Grantors and Guarantors therein named (as amended or
supplemented from time to time, the "Intercreditor Agreement"), pursuant to
their respective Transaction Documents, have agreed to provide certain credit
facilities to the Borrower or to the Synthetic Lease Borrower, as applicable.
B. The respective Transaction Documents of the Secured Creditors
require, as a condition precedent to the availability of the credit facilities
to be provided thereunder by the Secured Creditors, that Grantors secure the
payment and performance of the Outstanding Obligations with a security interest
in and Lien on all of Grantors' personal property.
C. Pursuant to the Intercreditor Agreement, each of the Secured
Creditors appointed Secured Party as its collateral agent, and Secured Party
accepted such appointment.
D. Accordingly, the Secured Creditors require that Grantors enter
into this Agreement and grant Secured Party a security interest in and Lien, for
the ratable benefit of the Secured Creditors, as herein provided.
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<PAGE> 2
E. Each Grantor expects to realize direct and indirect benefits
as a result of the availability of the credit facilities to be provided to the
Borrower or to the Synthetic Lease Borrower, as applicable, by the Secured
Creditors under their respective Transaction Documents.
AGREEMENT
NOW, THEREFORE, in order to induce the Secured Creditors to
extend the aforementioned credit facilities, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
Grantors hereby jointly and severally represent, warrant, covenant, agree,
assign and grant as follows:
1. Definitions. This Agreement is the Security Agreement referred
to in the Intercreditor Agreement and is one of the Transaction Documents. Terms
defined in the Intercreditor Agreement and not otherwise defined in this
Agreement shall have the meanings defined for those terms in the Intercreditor
Agreement. Terms defined in the California Uniform Commercial Code and not
otherwise defined in this Agreement or in the Intercreditor Agreement shall have
the meanings defined for those terms in the California Uniform Commercial Code.
As used in this Agreement, the following terms shall have the meanings
respectively set forth after each:
"Agreement" means this Security Agreement, and any extensions,
modifications, renewals, restatements, supplements or amendments hereof,
including, without limitation, any documents or agreements by which additional
Grantors become party hereto.
"Cash" means all monetary and non-monetary items owned by
Grantors that are treated as cash in accordance with GAAP, consistently applied.
"Collateral" means and includes all present and future right,
title and interest of Grantors, or any one or more of them, in or to any
Property or assets whatsoever, and all rights and powers of Grantors, or any one
or more of them, to transfer any interest in or to any Property or assets
whatsoever, including, without limitation, any and all of the following
Property:
(a) All present and future accounts, accounts receivable,
agreements, contracts, leases, contract rights, rights to payment,
instruments, documents, chattel paper, security agreements, guaranties,
letters of credit, undertakings, surety bonds, insurance policies
(whether or not required by the terms of the respective Transaction
Documents of the Secured Creditors), notes and drafts, and all forms of
obligations owing to any Grantor or in which any
-2-
<PAGE> 3
Grantor may have any interest, however created or arising and whether
or not earned by performance;
(b) All present and future general intangibles, all tax
refunds of every kind and nature to which any Grantor now or hereafter
may become entitled, however arising, all other refunds, and all
deposits, reserves, loans, royalties, cost savings, deferred payments,
goodwill, choses in action, liquidated damages, rights to
indemnification, trade secrets, computer programs, software, customer
lists, trademarks, trade names, patents, licenses, copyrights,
technology, processes, proprietary information and insurance proceeds of
which any Grantor is a beneficiary;
(c) All present and future deposit accounts of any
Grantor, including, without limitation, any demand, time, savings,
passbook or like account maintained by any Grantor with any bank,
savings and loan association, credit union or like organization, and all
money, Cash and Cash equivalents of any Grantor, whether or not
deposited in any such deposit account;
(d) All present and future books and records, including,
without limitation, books of account and ledgers of every kind and
nature, all electronically recorded data relating to any Grantor or the
business thereof, all receptacles and containers for such records, and
all files and correspondence;
(e) All present and future goods, including, without
limitation, all consumer goods, farm products, inventory, equipment,
machinery, tools, molds, dies, furniture, furnishings, fixtures, trade
fixtures, motor vehicles, and all other goods used in connection with or
in the conduct of any Grantor's business;
(f) All present and future inventory and merchandise,
including, without limitation, all present and future goods held for
sale or lease or to be furnished under a contract of service, all raw
materials, work in process and finished goods, all packing materials,
supplies and containers relating to or used in connection with any of
the foregoing, and all bills of lading, warehouse receipts or documents
of title relating to any of the foregoing;
(g) All present and future stocks, bonds, debentures,
securities, subscription rights, options, warrants, puts, calls,
certificates, partnership interests, joint venture interests,
Investments and/or brokerage accounts and all rights, preferences,
privileges, dividends, distributions, redemption payments, or
liquidation payments with respect thereto;
-3-
<PAGE> 4
(h) All present and future accessions, appurtenances,
components, repairs, repair parts, spare parts, replacements,
substitutions, additions, issue and/or improvements to or of or with
respect to any of the foregoing;
(i) All other tangible and intangible Property of any
Grantor;
(j) All rights, remedies, powers and/or privileges of any
Grantor with respect to any of the foregoing; and
(k) Any and all proceeds and products of any of the
foregoing, including, without limitation, all money, accounts, general
intangibles, deposit accounts, documents, instruments, chattel paper,
goods, insurance proceeds, and any other tangible or intangible property
received upon the sale or disposition of any of the foregoing;
provided that the term "Collateral", as used in this Agreement, shall not
include the following: (i) interests pledged pursuant to the Pledge Agreement,
or (ii) Real Property or any interest therein.
"GAAP" means, as of any date of determination, accounting
principles (a) set forth as generally accepted in then currently effective
Opinions of the Accounting Principles Board of the American Institute of
Certified Public Accountants, (b) set forth as generally accepted in then
currently effective Statements of the Financial Accounting Standards Board or
(c) that are then approved by such other entity as may be approved by a
significant segment of the accounting profession in the United States of
America. The term "consistently applied," as used in connection therewith, means
that the accounting principles applied are consistent in all material respects
with those applied at prior dates or for prior periods.
"Governmental Agency" means (a) any international, foreign,
federal, state, county or municipal government, or political subdivision
thereof, (b) any governmental or quasi-governmental agency, authority, board,
bureau, commission, department, instrumentality or public body or (c) any court
or administrative tribunal of competent jurisdiction.
"Grantors" means the Borrower and those Significant Domestic
Subsidiaries of the Borrower that are parties hereto as indicated on the
signature pages hereof, or that become parties hereto as provided in Section 22
hereof, and each of them, and any one or more of them, jointly and severally. At
such times, if any, as no
-4-
<PAGE> 5
Domestic Subsidiaries of the Borrower are parties hereto, the term "Grantors"
shall refer solely to the Borrower.
"Investment" means, when used in connection with any Grantor, any
investment by or of that Grantor, whether by means of purchase or other
acquisition of stock or other securities of any other Person or by means of a
loan, advance creating a debt, capital contribution, guaranty or other debt or
equity participation or interest in any other Person, including any partnership
and joint venture interests of such Person.
"Laws" means, collectively, all international, foreign, federal,
state and local statutes, treaties, rules, regulations, ordinances, codes and
administrative or judicial precedents.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment for security, security interest, encumbrance, lien or charge of any
kind, whether voluntarily incurred or arising by operation of Law or otherwise,
affecting any Property, including any conditional sale or other title retention
agreement, any lease in the nature of a security interest, and/or the filing of
any financing statement (other than a precautionary financing statement with
respect to a lease that is not in the nature of a security interest) under the
Uniform Commercial Code or comparable Law of any jurisdiction with respect to
any Property.
"Permitted Encumbrances" means:
(a) inchoate Liens incident to construction on or
maintenance of Property; or Liens incident to construction on or
maintenance of Property now or hereafter filed of record for which
adequate reserves have been set aside (or deposits made pursuant to
applicable Law) and which are being contested in good faith by
appropriate proceedings and have not proceeded to judgment, provided
that, by reason of nonpayment of the obligations secured by such Liens,
no such Property is subject to a material impending risk of loss or
forfeiture;
(b) Liens for taxes and assessments on Property which are
not yet past due; or Liens for taxes and assessments on Property for
which adequate reserves have been set aside and are being contested in
good faith by appropriate proceedings and have not proceeded to
judgment, provided that, by reason of nonpayment of the obligations
secured by such Liens, no such Property is subject to a material
impending risk of loss or forfeiture;
-5-
<PAGE> 6
(c) defects and irregularities in title to any Property
which in the aggregate do not materially impair the fair market value or
use of the Property for the purposes for which it is or may reasonably
be expected to be held;
(d) easements, exceptions, reservations, or other
agreements for the purpose of pipelines, conduits, cables, wire
communication lines, power lines and substations, streets, trails,
walkways, drainage, irrigation, water, and sewerage purposes, dikes,
canals, ditches, the removal of oil, gas, coal, or other minerals, and
other like purposes affecting Property which in the aggregate do not
materially burden or impair the fair market value or use of such
Property for the purposes for which it is or may reasonably be expected
to be held;
(e) easements, exceptions, reservations, or other
agreements for the purpose of facilitating the joint or common use of
Property in or adjacent to a shopping center or similar project
affecting Property which in the aggregate do not materially burden or
impair the fair market value or use of such Property for the purposes
for which it is or may reasonably be expected to be held;
(f) rights reserved to or vested in any Governmental
Agency to control or regulate, or obligations or duties to any
Governmental Agency with respect to, the use of any Property;
(g) rights reserved to or vested in any Governmental
Agency to control or regulate, or obligations or duties to any
Governmental Agency with respect to, any right, power, franchise, grant,
license, or permit;
(h) present or future zoning laws and ordinances or other
laws and ordinances restricting the occupancy, use, or enjoyment of
Property;
(i) statutory Liens, other than those described in clauses
(a) or (b) above, arising in the ordinary course of business with
respect to obligations which are not delinquent or are being contested
in good faith, provided that, if delinquent, adequate reserves have been
set aside with respect thereto and, by reason of nonpayment, no Property
is subject to a material impending risk of loss or forfeiture;
(j) covenants, conditions, and restrictions affecting the
use of Property which in the aggregate do not materially impair the fair
market value or use of the Property for the purposes for which it is or
may reasonably be expected to be held;
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<PAGE> 7
(k) rights of tenants under leases and rental agreements
covering Property entered into in the ordinary course of business of the
Person owning such Property;
(l) Liens consisting of pledges or deposits to secure
obligations under workers' compensation laws or similar legislation,
including Liens of judgments thereunder which are not currently
dischargeable;
(m) Liens consisting of pledges or deposits of Property to
secure performance in connection with operating leases made in the
ordinary course of business, provided the aggregate value of all such
pledges and deposits in connection with any such lease does not at any
time exceed 20% of the annual fixed rentals payable under such lease;
(n) Liens consisting of deposits of Property to secure
bids made with respect to, or performance of, contracts (other than
contracts creating or evidencing an extension of credit to the
depositor);
(o) Liens consisting of any right of offset, or statutory
bankers' lien, on bank deposit accounts maintained in the ordinary
course of business so long as such bank deposit accounts are not
established or maintained for the purpose of providing such right of
offset or bankers' lien;
(p) Liens consisting of deposits of Property to secure
statutory obligations of Borrower;
(q) Liens consisting of deposits of Property to secure (or
in lieu of) surety, appeal or customs bonds;
(r) Liens created by or resulting from any litigation or
legal proceeding in the ordinary course of business which is currently
being contested in good faith by appropriate proceedings, provided that
adequate reserves have been set aside and no material Property is
subject to a material impending risk of loss or forfeiture; and
(s) other non-consensual Liens incurred in the ordinary
course of business but not in connection with the incurrence of any
indebtedness, which do not in the aggregate, when taken together with
all other Liens, materially impair the fair market value or use of the
Property for the purposes for which it is or may reasonably be expected
to be held.
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<PAGE> 8
"Property" means any interest of Grantors in any kind of property
or asset, whether real, personal or mixed, or tangible or intangible.
"Real Property" means all real property now or hereafter owned,
leased or occupied by Grantors.
"Secured Party" means the Collateral Agent, who shall hold the
Liens and security interests granted hereunder for the ratable benefit of each
of the Secured Creditors.
2. Further Assurances. Concurrent with its execution and delivery
of this Agreement to Secured Party and thereafter, each Grantor shall execute
and deliver to Secured Party all such financing statements and other agreements,
instruments and documents in form and substance satisfactory to Secured Party as
shall be reasonably necessary or desirable to perfect fully, when filed and/or
recorded, and to ensure the first-priority status of, Secured Party's security
interests granted pursuant to Section 3 of this Agreement. At any time and from
time to time, Secured Party shall be entitled to file and/or record any or all
such financing statements, instruments and documents held by it, and any or all
such further financing statements, documents and instruments, and to take all
such other actions, as Secured Party may reasonably deem appropriate to perfect
and to maintain perfected, and to ensure the first-priority status of, the
security interests granted in Section 3 of this Agreement. At Secured Party's
request, whether before or after the occurrence of a Triggering Event, each
Grantor shall execute all such further financing statements, instruments and
documents, and shall do all such further acts and things, as reasonably may be
deemed necessary or desirable by Secured Party to create and perfect, and to
continue and preserve, an indefeasible security interest in the Collateral in
favor of Secured Party, or the priority thereof. With respect to any Collateral
consisting of certificated securities, instruments, documents, certificates of
title or the like, as to which Secured Party's security interest need be
perfected by, or the priority thereof need be assured by, possession of such
Collateral, Grantors will upon demand of Secured Party deliver possession of
same in pledge to Secured Party. With respect to any Collateral consisting of
securities, instruments, partnership or joint venture interests or the like,
Grantors hereby consent and agree that the issuers of, or obligors on, any such
Collateral, or any registrar or transfer agent or trustee for any such
Collateral, shall be entitled to accept the provisions of this Agreement as
conclusive evidence of the right of Secured Party to effect any transfer or
exercise any right hereunder or with respect to any such Collateral,
notwithstanding any other notice or direction to the contrary heretofore or
hereafter given by any Grantor or any other Person to such issuers or such
obligors or to any such registrar or transfer agent or trustee.
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3. Security Agreement. For valuable consideration, Grantors, and
each of them, hereby assign and pledge to Secured Party, and grant to Secured
Party a first-priority security interest in, all presently existing and
hereafter acquired Collateral, as security for the timely payment and
performance of the Outstanding Obligations, and each of them. This Agreement is
a continuing and irrevocable agreement and all the rights, powers, privileges
and remedies hereunder shall apply to any and all Outstanding Obligations,
including those arising under successive transactions which shall either
continue the Outstanding Obligations, increase or decrease them, or from time to
time create new Outstanding Obligations after all or any prior Outstanding
Obligations have been satisfied, and notwithstanding the bankruptcy of any
Grantor or any other Person or any other event or proceeding affecting any
Person.
4. Grantors' Representations, Warranties and Agreements. Except
as otherwise disclosed to Secured Party in writing concurrently herewith,
Grantors represent, warrant and agree that: (a) each Grantor will pay, prior to
delinquency, all taxes, charges, Liens and assessments against the portion of
the Collateral owned by it, except Permitted Encumbrances, Liens permitted under
the Transaction Documents, and such other Liens as are timely contested in good
faith, and upon its failure to pay or so contest such taxes, charges, Liens and
assessments, Secured Party at its option may pay any of them, and Secured Party
shall be the sole judge of the legality or validity thereof and the amount
necessary to discharge the same; (b) the Collateral will not be used for any
unlawful purpose or in violation of any Law, regulation or ordinance, nor used
in any way that will void or impair any insurance required to be carried in
connection therewith; (c) each Grantor will, to the extent consistent with good
business practice, keep the portion of the Collateral owned by it in reasonably
good repair, working order and condition, and from time to time make all needful
and proper repairs, renewals, replacements, additions and improvements thereto
and, as appropriate and applicable, will otherwise deal with such portion of the
Collateral in all such ways as are considered good practice by owners of like
Property; (d) each Grantor will take all reasonable steps to preserve and
protect the Collateral; (e) each Grantor will maintain, with responsible
insurance companies, insurance covering the Collateral against such insurable
losses as is required by the respective Transaction Documents of the Secured
Creditor and as is consistent with sound business practice, and will cause
Secured Party to be designated as an additional insured and loss payee with
respect to all insurance (whether or not required by the respective Transaction
Documents of the Secured Creditors), will obtain the written agreement of the
insurers that such insurance shall not be cancelled, terminated or materially
modified to the detriment of Secured Party without at least 30 days prior
written notice to Secured Party, and will furnish copies of such insurance
policies or certificates to Secured Party promptly upon request therefor; (f)
Grantors will promptly notify Secured Party in
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writing in the event of damage to any material portion of the Collateral from
any source whatsoever, and, except for the disposition of collections and other
proceeds of the Collateral permitted by Section 6 hereof, Grantors will not
remove or permit to be removed any part of the Collateral from their places of
business without the prior written consent of Secured Party, except for such
items of the Collateral as are removed in the ordinary course of business or in
connection with any transaction or disposition otherwise permitted by the
Transaction Documents; and (g) in the event any Grantor changes its name or its
address as either are set forth herein or in any Transaction Document, such
Grantor will notify Secured Party of such name and/or address change promptly,
but in any event, within five (5) Business Days.
5. Secured Party's Rights Regarding Collateral. At any time
(whether or not a Triggering Event has occurred), without notice or demand and
at the expense of each Grantor with regard to the portion of the Collateral
owned by it, Secured Party may, to the extent it may be necessary or desirable
to protect the security hereunder, but Secured Party shall not be obligated to:
(a) at all reasonable times on reasonable notice, enter upon any premises on
which Collateral is situated and examine the same or (b) perform any obligation
of any Grantor under this Agreement or any obligation of any other Person under
the Transaction Documents. At any time and from time to time, at the expense of
each Grantor with regard to the portion of the Collateral owned by it, Secured
Party may, to the extent it may be necessary or desirable to protect the
security hereunder, but Secured Party shall not be obligated to, request from
obligors on the Collateral, in the name of any Grantor or in the name of Secured
Party, information concerning the Collateral and the amounts owing thereon. Each
Grantor shall maintain books and records pertaining to the Collateral in such
detail, form and scope as Secured Party shall reasonably require consistent with
Secured Party's interests hereunder. Each Grantor shall at any time at Secured
Party's request mark the Collateral and/or such Grantor's ledger cards, books of
account and other records relating to the Collateral with appropriate notations
satisfactory to Secured Party disclosing that they are subject to Secured
Party's security interests. Secured Party shall at all reasonable times on
reasonable notice have full access to and the right to audit any and all of
Grantors' books and records pertaining to the Collateral, and to confirm and
verify the value of the Collateral and to do whatever else Secured Party
reasonably may deem necessary or desirable to protect its interests; provided,
however, that any such action which involves communicating with customers of
Grantors shall be carried out by Secured Party through Grantors' independent
auditors unless Secured Party shall then have the right directly to notify
obligors on the Collateral as provided in Section 9. Secured Party shall be
under no duty or obligation whatsoever to take any action to preserve any rights
of or against any prior or other parties in connection with the Collateral, to
exercise any voting rights or managerial rights with respect to any Collateral,
whether or not a Triggering
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Event shall have occurred, or to make or give any presentments, demands for
performance, notices of non-performance, protests, notices of protests, notices
of dishonor or notices of any other nature whatsoever in connection with the
Collateral or the Outstanding Obligations. Secured Party shall be under no duty
or obligation whatsoever to take any action to protect or preserve the
Collateral or any rights of any Grantor therein, or to make collections or
enforce payment thereon, or to participate in any foreclosure or other
proceeding in connection therewith.
6. Collections on the Collateral. Except as otherwise provided in
any Transaction Document, Grantors shall have the right to use and to continue
to make collections on and receive dividends and other proceeds of all of the
Collateral in the ordinary course of business so long as no Triggering Event
shall have occurred and be continuing. Upon the occurrence and during the
continuance of a Triggering Event, at the option of Secured Party, Grantors'
right to make collections on and receive dividends and other proceeds of the
Collateral and to use or dispose of such collections and proceeds shall
terminate, and any and all dividends, proceeds and collections, including all
partial or total prepayments, then held or thereafter received on or on account
of the Collateral will be held or received by Grantors in trust for Secured
Party and immediately delivered in kind to Secured Party. Any remittance
received by any Grantor from any Person shall be presumed to relate to the
Collateral and to be subject to Secured Party's security interests. Upon the
occurrence and during the continuance of a Triggering Event, Secured Party shall
have the sole right at all times to receive, receipt for, endorse, assign,
deposit and deliver, in the name of Secured Party or in the name of the
appropriate Grantor, any and all checks, notes, drafts and other instruments for
the payment of money constituting proceeds of or otherwise relating to the
Collateral; and each Grantor hereby authorizes Secured Party to affix, by
facsimile signature or otherwise, the general or special endorsement of it, in
such manner as Secured Party shall deem advisable, to any such instrument in the
event the same has been delivered to or obtained by Secured Party without
appropriate endorsement, and Secured Party and any collecting bank are hereby
authorized to consider such endorsement to be a sufficient, valid and effective
endorsement by the appropriate Grantor, to the same extent as though it were
manually executed by the duly authorized officer of the appropriate Grantor,
regardless of by whom or under what circumstances or by what authority such
facsimile signature or other endorsement actually is affixed, without duty of
inquiry or responsibility as to such matters, and each Grantor hereby expressly
waives demand, presentment, protest and notice of protest or dishonor and all
other notices of every kind and nature with respect to any such instrument.
7. Possession of Collateral by Secured Party. All the Collateral
now, heretofore or hereafter delivered to Secured Party in its capacity as
Secured Party shall be held by Secured Party in its possession, custody and
control. Any or all of the
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Collateral delivered to Secured Party in its capacity as Secured Party may be
held in an interest-bearing or non-interest-bearing account, in Secured Party's
sole and absolute discretion, and Secured Party may, in its discretion, apply
any such interest to payment of the Outstanding Obligations during the
continuance of a Triggering Event. Nothing herein shall obligate Secured Party
to invest any Collateral or obtain any particular return thereon. Upon the
occurrence and during the continuance of a Triggering Event, whenever any of the
Collateral is in Secured Party's possession, custody or control, Secured Party
may use, operate and consume the Collateral, whether for the purpose of
preserving and/or protecting the Collateral, or for the purpose of performing
any of Grantors' obligations with respect thereto, or otherwise, subject to
compliance with the requirements of applicable Laws. Secured Party may at any
time deliver or redeliver the Collateral or any part thereof to Grantors, and
the receipt of any of the same by any Grantor shall be complete and full
acquittance for the Collateral so delivered, and Secured Party thereafter shall
be discharged from any liability or responsibility therefor. So long as Secured
Party exercises reasonable care with respect to any Collateral in its
possession, custody or control, Secured Party shall have no liability for any
loss of or damage to such Collateral, and in no event shall Secured Party have
liability for any diminution in value of Collateral occasioned by economic or
market conditions or events. Secured Party shall be deemed to have exercised
reasonable care within the meaning of the preceding sentence if the Collateral
in the possession, custody or control of Secured Party is accorded treatment
substantially equal to that which Secured Party accords its own property, it
being understood that Secured Party shall not have any responsibility for (a)
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relating to any Collateral, whether or not
Secured Party has or is deemed to have knowledge of such matters, or (b) taking
any necessary steps to preserve rights against any Person with respect to any
Collateral.
8. Release of Collateral. Collateral that is required to be
released from the Lien created by this Agreement in order to permit Grantor to
consummate any disposition of assets or grant any Lien that Grantor is entitled
to consummate or grant pursuant to the Transaction Documents, shall be so
released by Secured Party at such times and to the extent necessary to permit
Grantor to effect such permitted trans actions promptly following the Secured
Party's receipt of written request therefor by Grantor specifying the purpose
for which release is requested and such further certifi cates or other documents
as Secured Party reasonably shall request in its discretion to confirm that
Grantor is permitted to effect such permitted transaction and to confirm Secured
Party's replacement Liens on appropriate collateral (unless replacement
collateral is not required pursuant to the Transaction Documents). Any request
for any permitted release shall be transmitted to Secured Party. Secured Party,
at the expense of Grantor, promptly shall release and return to Grantor all
Collateral in Secured
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Party's possession or under Secured Party's control and shall execute and
deliver to Grantor all documents requested by Grantor that are reasonably
necessary to release Secured Party's security interest in any Collateral
required to be released in accordance with this Section 8. Upon payment in full
of all Outstanding Obligations and the termination of all financing commitments
by the Secured Creditors, Secured Party, at the expense of Grantor, shall
promptly redeliver to Grantor all Collateral in Secured Party's possession or
under Secured Party's control and shall execute and deliver to Grantor all
documents requested by Grantor that are reasonably necessary to terminate
Secured Party's security interest in the Collateral.
9. Rights Upon Triggering Event. Upon the occurrence and during
the continuance of a Triggering Event, subject to compliance with the
requirements of applicable Laws, Secured Party shall have, in any jurisdiction
where enforcement hereof is sought, in addition to all other rights and remedies
that Secured Party may have under applicable Law or in equity or under this
Agreement (including, without limitation, all rights set forth in Section 6
hereof) or under any other Transaction Document, all rights and remedies of a
secured party under the Uniform Commercial Code as enacted in any jurisdiction,
and, in addition, the following rights and remedies, all of which may be
exercised with or without notice to Grantors and without affecting the
obligations of Grantors hereunder or under any other Transaction Document, or
the enforceability of the Liens and security interests created hereby: (a) to
foreclose the Liens and security interests created hereunder or under any other
agreement relating to any Collateral by any available judicial procedure or
without judicial process; (b) to enter any premises where any Collateral may be
located for the purpose of securing, protecting, inventorying, appraising,
inspecting, repairing, preserving, storing, preparing, processing, taking
possession of or removing the same; (c) to sell, assign, lease or otherwise
dispose of any Collateral or any part thereof, either at public or private sale
or at any broker's board, in lot or in bulk, for cash, on credit or otherwise,
with or without representations or warranties and upon such terms as shall be
acceptable to Secured Party; (d) to notify obligors on the Collateral that the
Collateral has been assigned to Secured Party and that all payments thereon are
to be made directly and exclusively to Secured Party; (e) to collect by legal
proceedings or otherwise all dividends, distributions, interest, principal or
other sums now or hereafter payable upon or on account of the Collateral; (f) to
cause the Collateral to be registered in the name of Secured Party, as legal
owner; (g) to enter into any extension, reorganization, deposit, merger or
consolidation agreement, or any other agreement relating to or affecting the
Collateral, and in connection therewith Secured Party may deposit or surrender
control of the Collateral and/or accept other Property in exchange for the
Collateral; (h) to settle, compromise or release, on terms acceptable to Secured
Party, in whole or in part, any amounts owing on the Collateral and/or any
disputes
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with respect thereto; (i) to extend the time of payment, make allowances and
adjustments and issue credits in connection with the Collateral in the name of
Secured Party or in the name of any Grantor; (j) to enforce payment and
prosecute any action or proceeding with respect to any or all of the Collateral
and take or bring, in the name of Secured Party or in the name of any Grantor,
any and all steps, actions, suits or proceedings deemed by Secured Party
necessary or desirable to effect collection of or to realize upon the
Collateral, including any judicial or nonjudicial foreclosure thereof or
thereon, and each Grantor specifically consents to any nonjudicial foreclosure
of any or all of the Collateral or any other action taken by Secured Party which
may release any obligor from personal liability on any of the Collateral, and
each Grantor waives any right not expressly provided for in this Agreement to
receive notice of any public or private judicial or nonjudicial sale or
foreclosure of any security or any of the Collateral; and any money or other
property received by Secured Party in exchange for or on account of the
Collateral, whether representing collections or proceeds of Collateral, and
whether resulting from voluntary payments or foreclosure proceedings or other
legal action taken by Secured Party or Grantors may be applied by Secured Party
without notice to Grantors to the Outstanding Obligations in such order and
manner as Secured Party in its sole discretion shall determine; (k) to insure,
process and preserve the Collateral; (l) to exercise all rights, remedies,
powers or privileges provided under any of the Transaction Documents; (m) to
remove, from any premises where the same may be located, the Collateral and any
and all documents, instruments, files and records, and any receptacles and
cabinets containing the same, relating to the Collateral, and Secured Party may,
at the cost and expense of each Grantor, use such of its supplies, equipment,
facilities and space at its places of business as may be necessary or
appropriate to properly administer, process, store, control, prepare for sale or
disposition and/or sell or dispose of the portion of the Collateral owned by
such Grantor or to properly administer and control the handling of collections
and reali zations thereon, and Secured Party shall be deemed to have a rent-free
tenancy of any premises of any Grantor for such purposes and for such periods of
time as reasonably required by Secured Party; (n) to receive, open and dispose
of all mail addressed to any Grantor and notify postal authorities to change the
address for delivery thereof to such address as Secured Party may designate;
provided that Secured Party agrees that it will promptly deliver over to the
appropriate Grantor such opened mail as does not relate to the Collateral; and
(o) to exercise all other rights, powers, privileges and remedies of an owner of
the Collateral; all at Secured Party's sole option and as Secured Party in its
sole discretion may deem advisable. Grantors will, at Secured Party's request,
assemble the Collateral and make it available to Secured Party at places which
Secured Party may reasonably designate, whether at the premises of Grantors or
elsewhere, and will make available to Secured Party, free of cost, all premises,
equipment and facilities of Grantors for the purpose of Secured Party's taking
possession of the
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Collateral or storing same or removing or putting the Collateral in salable form
or selling or disposing of same.
Upon the occurrence and during the continuance of a Triggering
Event, Secured Party also shall have the right, without notice or demand, either
in person, by agent or by a receiver to be appointed by a court (and Grantors
hereby expressly consent upon the occurrence and during the continuance of a
Triggering Event to the appointment of such a receiver), and without regard to
the adequacy of any security for the Outstanding Obligations, to take possession
of the Collateral or any part thereof and to collect and receive the rents,
issues, profits, income and proceeds thereof. Taking possession of the
Collateral shall not cure or waive any Triggering Event or notice thereof or
invalidate any act done pursuant to such notice. The rights, remedies and powers
of any receiver appointed by a court shall be as ordered by said court.
Any public or private sale or other disposition of the Collateral
may be held at any office of Secured Party, or at Grantors' places of business,
or at any other place permitted by applicable Law, and without the necessity of
the Collateral's being within the view of prospective purchasers. Secured Party
may direct the order and manner of sale of the Collateral, or portions thereof,
as it in its sole and absolute discretion may determine, and Grantors expressly
waive any right to direct the order and manner of sale of any Collateral.
Secured Party or any Person on Secured Party's behalf may bid and purchase at
any such sale or other disposition. The net cash proceeds resulting from the
collection, liquidation, sale, lease or other disposition of the Collateral
shall be applied, first, to the expenses (including reasonable attorneys' fees
and disbursements) of retaking, holding, storing, processing and preparing for
sale or lease, selling, leasing, collecting, liquidating and the like, and then
to the satisfaction of the Outstanding Obligations in such order as shall be
determined by Secured Party in its sole and absolute discretion. Grantors and
any other Person then obligated therefor shall pay to Secured Party on demand
any deficiency with regard thereto which may remain after such sale,
disposition, collection or liquidation of the Collateral.
Unless the Collateral is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized market,
Secured Party will send or otherwise make available to the Borrower, as agent
for Grantors and each of them, reasonable notice of the time and place of any
public sale thereof or of the time on or after which any private sale thereof is
to be made. The requirement of sending reasonable notice conclusively shall be
met if such notice is mailed, first class mail, postage prepaid, to the Borrower
at its address set forth in the Intercreditor Agreement, or delivered or
otherwise sent to the Borrower, at least five (5) days before the date of the
sale. Each Grantor other than the Borrower hereby irrevocably appoints the
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Borrower as its agent for the purpose of receiving notice of sale hereunder, and
agrees that such Grantor conclusively shall be deemed to have received notice of
sale when notice of sale has been given to the Borrower. Each Grantor expressly
waives any right to receive notice of any public or private sale of any
Collateral or other security for the Outstanding Obligations except as expressly
provided for in this paragraph.
With respect to any Collateral consisting of securities,
partnership interests, joint venture interests, Investments or the like, and
whether or not any of such Collateral has been effectively registered under the
Securities Act of 1933, as amended, or other applicable Laws, Secured Party may,
in its sole and absolute discretion, sell all or any part of such Collateral at
private sale in such manner and under such circumstances as Secured Party may
deem necessary or advisable in order that the sale may be lawfully conducted.
Without limiting the foregoing, Secured Party may (i) approach and negotiate
with a limited number of potential purchasers, and (ii) restrict the prospective
bidders or purchasers to Persons who will represent and agree that they are
purchasing such Collateral for their own account for investment and not with a
view to the distribution or resale thereof. In the event that any such
Collateral is sold at private sale, Grantors agree that if such Collateral is
sold for a price which Secured Party in good faith believes to be reasonable
under the circumstances then existing, then (a) the sale shall be deemed to be
commercially reasonable in all respects, (b) Grantors shall not be entitled to a
credit against the Outstanding Obligations in an amount in excess of the
purchase price, and (c) Secured Party shall not incur any liability or
responsibility to Grantors in connection therewith, notwithstanding the
possibility that a substantially higher price might have been realized at a
public sale. Grantors recognize that a ready market may not exist for such
Collateral if it is not regularly traded on a recognized securities exchange,
and that a sale by Secured Party of any such Collateral for an amount
substantially less than a pro rata share of the fair market value of the
issuer's assets minus liabilities may be commercially reasonable in view of the
difficulties that may be encountered in attempting to sell a large amount of
such Collateral or Collateral that is privately traded.
Upon consummation of any sale of Collateral hereunder, Secured
Party shall have the right to assign, transfer and deliver to the purchaser or
purchasers thereof the Collateral so sold. Each such purchaser at any such sale
shall hold the Collateral so sold absolutely free from any claim or right upon
the part of any Grantor or any other Person, and each Grantor hereby waives (to
the extent permitted by applicable Laws) all rights of redemption, stay and
appraisal which it now has or may at any time in the future have under any rule
of Law or statute now existing or hereafter enacted. If the sale of all or any
part of the Collateral is made on credit or for future delivery, Secured Party
shall not be required to apply any portion of the sale
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price to the Outstanding Obligations until such amount actually is received by
Secured Party, and any Collateral so sold may be retained by Secured Party until
the sale price is paid in full by the purchaser or purchasers thereof. Secured
Party shall not incur any liability in case any such purchaser or purchasers
shall fail to pay for the Collateral so sold, and, in case of any such failure,
the Collateral may be sold again.
10. Voting Rights; Dividends; etc. With respect to any Collateral
consisting of securities, partnership interests, joint venture interests,
Investments or the like (referred to collectively and individually in this
Section 10 and in Section 11 as the "Investment Collateral"), so long as no
Triggering Event has occurred and is continuing:
10.1 Voting Rights. Grantors shall be entitled to
exercise any and all voting and other consensual rights pertaining to the
Investment Collateral, or any part thereof, for any purpose not inconsistent
with the terms of this Agreement, the Intercreditor Agreement, or the
Transaction Documents.
10.2 Dividend and Distribution Rights. Except as otherwise
provided in any Transaction Document, Grantors shall be entitled to receive and
to retain and use any and all dividends or distributions paid in respect of the
Investment Collateral; provided, however, that, subject to compliance with the
requirements of applicable Laws, any and all such dividends or distributions
received in the form of capital stock, certificated securities, warrants,
options or rights to acquire capital stock or certificated securities forthwith
shall be, and the certificates representing such capital stock or certificated
securities, if any, forthwith shall be delivered to Secured Party to hold as
pledged Collateral and shall, if received by any Grantor, be received in trust
for the benefit of Secured Party, be segregated from the other Property of such
Grantor, and forthwith be delivered to Secured Party as pledged Collateral in
the same form as so received (with any necessary endorsements).
11. Rights During Triggering Event. With respect to any
Investment Collateral, so long as a Triggering Event has occurred and is
continuing:
11.1 Voting, Dividend, and Distribution Rights. At the
option of Secured Party, subject to compliance with the requirements of
applicable Laws, all rights of Grantors to exercise the voting and other
consensual rights which they would otherwise be entitled to exercise pursuant to
Section 10.1 above, and to receive the dividends and distributions which they
would otherwise be authorized to receive and retain pursuant to Section 10.2
above, shall cease, and all such rights thereupon shall become vested solely in
Secured Party which thereupon shall have the sole right
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to exercise such voting and other consensual rights and to receive and to hold
as pledged Collateral such dividends and distributions.
11.2 Dividends and Distributions Held in Trust. All
dividends and other distributions which are received by Grantors contrary to the
provisions of this Agreement shall be received in trust for the benefit of
Secured Party, shall be segregated from other funds of Grantors, and forthwith
shall be paid over to Secured Party as pledged Collateral in the same form as so
received (with any necessary endorsements).
11.3 Irrevocable Proxy. Subject to compliance with the
requirements of applicable Laws, each Grantor does hereby revoke all previous
proxies with regard to the Investment Collateral and appoint Secured Party as
its proxyholder to attend and vote at any and all meetings of the shareholders
or other equity holders of the Persons that issued the Investment Collateral and
any adjournments thereof, held on or after the date of the giving of this proxy
and prior to the termination of this proxy, and to execute any and all written
consents of shareholders or equity holders of such Persons executed on or after
the date of the giving of this proxy and prior to the termination of this proxy,
with the same effect as if such Grantor had personally attended the meetings or
had personally voted its shares or other interests or had personally signed the
written consents; provided, however, that the proxyholder shall have rights
hereunder only upon the occurrence and during the continuance of a Triggering
Event. Each Grantor hereby authorizes Secured Party to substitute another Person
as the proxyholder and, upon the occurrence and during the continuance of a
Triggering Event, hereby authorizes the proxyholder to file this proxy and any
substitution instrument with the secretary or other appropriate official of the
appropriate Person. This proxy is coupled with an interest and is irrevocable
until such time as all Outstanding Obligations have been paid and performed in
full.
12. Attorney-in-Fact. Each Grantor hereby irrevocably nominates
and appoints Secured Party as its attorney-in-fact for the following purposes,
subject to compliance with the requirements of applicable Laws: (a) to do all
acts and things which Secured Party may deem necessary or advisable to perfect
and continue perfected the security interests created by this Agreement and,
upon the occurrence of a Triggering Event, to preserve, process, develop,
maintain and protect the Collateral; (b) upon the occurrence and during the
continuance of a Triggering Event, to do any and every act which any Grantor is
obligated to do under this Agreement, at the expense of the Grantor so obligated
and without any obligation to do so; (c) to prepare, sign, file and/or record,
for any Grantor, in the name of the appropriate Grantor, any financing
statement, application for registration, or like paper, and to take any other
action deemed by Secured Party necessary or desirable in order to perfect or
maintain
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perfected the security interests granted hereby; and (d) upon the occurrence and
during the continuance of a Triggering Event, to execute any and all papers and
instruments and do all other things necessary or desirable to preserve and
protect the Collateral and to protect Secured Party's security interests
therein; provided, however, that Secured Party shall be under no obligation
whatsoever to take any of the foregoing actions, and, absent bad faith or actual
malice, Secured Party shall have no liability or responsibility for any act
taken or omission with respect thereto.
13. Costs and Expenses. Each Grantor agrees to pay to Secured
Party all reasonable costs and expenses (including, without limitation,
reasonable attorneys' fees and disbursements) incurred by Secured Party in the
enforcement or attempted enforcement of this Agreement, whether or not an action
is filed in connection therewith, and in connection with any waiver or amendment
of any term or provision hereof. All advances, charges, costs and expenses,
including reasonable attorneys' fees and disbursements, incurred or paid by
Secured Party in exercising any right, privilege, power or remedy conferred by
this Agreement (including, without limitation, the right to perform any
Outstanding Obligation of any Grantor under the Transaction Documents), or in
the enforcement or attempted enforcement thereof, shall be secured hereby and
shall become a part of the Outstanding Obligations and shall be paid to
Secured Party by each Grantor, immediately upon demand, together with interest
thereon at the rates provided for under the applicable Transaction Document.
14. Statute of Limitations and Other Laws. Until the Outstanding
Obligations shall have been paid and performed in full, the power of sale and
all other rights, privileges, powers and remedies granted to Secured Party
hereunder shall continue to exist and may be exercised by Secured Party at any
time and from time to time irrespective of the fact that any of the Outstanding
Obligations may have become barred by any statute of limitations. Each Grantor
expressly waives the benefit of any and all statutes of limitation, and any and
all Laws providing for exemption of property from execution or for valuation and
appraisal upon foreclosure, to the maximum extent permitted by applicable Law.
15. Other Agreements. Nothing herein shall in any way modify or
limit the effect of terms or conditions set forth in any other security or other
agreement executed by any Grantor or in connection with the Outstanding
Obligations, but each and every term and condition hereof shall be in addition
thereto. All provisions contained in the Intercreditor Agreement or any other
Transaction Document that apply to Transaction Documents generally are fully
applicable to this Agreement and are incorporated herein by this reference.
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<PAGE> 20
16. Incorporation of Suretyship Provisions and Waivers. The
attached Exhibit B, "Suretyship Provisions and Waivers", is hereby incorporated
by this reference as though set forth herein in full.
17. Condition of the Borrower and Its Subsidiaries. Each Grantor
represents and warrants to Secured Party that each Grantor has established
adequate means of obtaining from the Borrower and its Subsidiaries, on a
continuing basis, financial and other information pertaining to the businesses,
operations and condition (financial and otherwise) of the Borrower and its
Subsidiaries and their Properties, and each Grantor now is and hereafter will be
completely familiar with the businesses, operations and condition (financial and
otherwise) of the Borrower and its Subsidiaries and their Properties. Each
Grantor hereby expressly waives and relinquishes any duty on the part of Secured
Party (should any such duty exist) to disclose to any Grantor any matter, fact
or thing related to the businesses, operations or condition (financial or
otherwise) of the Borrower or its Subsidiaries or their Properties, whether now
known or hereafter known by Secured Party during the life of this Agreement.
With respect to any of the Outstanding Obligations, Secured Party need not
inquire into the powers of the Borrower or any Subsidiaries thereof or the
officers or employees acting or purporting to act on their behalf, and all
Outstanding Obligations made or created in good faith reliance upon the
professed exercise of such powers shall be secured hereby.
18. Liens on Real Property. In the event that all or any part of
the Outstanding Obligations at any time are secured by any one or more deeds of
trust or mortgages or other instruments creating or granting Liens on any
interests in Real Property, each Grantor authorizes Secured Party, upon the
occurrence and during the continuance of any Triggering Event, at its sole
option, without notice or demand and without affecting any Outstanding
Obligations of any Grantor, the enforceability of this Agreement, or the
validity or enforceability of any Liens of Secured Party on any Collateral, to
foreclose any or all of such deeds of trust or mortgages or other instruments by
judicial or nonjudicial sale. Insofar as the Liens created herein secure the
obligations of other Persons, (i) each Grantor expressly waives any defenses to
the enforcement of this Agreement or any Liens created or granted hereby or to
the recovery by Secured Party against the Borrower or any guarantor or any other
Person liable therefor of any deficiency after a judicial or nonjudicial
foreclosure or sale, even though such a foreclosure or sale may impair the
subrogation rights of Grantors and may preclude Grantors from obtaining
reimbursement or contribution from any of the other Grantors and (ii) each
Grantor expressly waives any defenses or benefits that may be derived from
California Code of Civil Procedure Sections 580a, 580b, 580d or 726, or
comparable provisions of the Laws of any other jurisdiction, and all other
suretyship defenses it otherwise might or would have under California Law or
other applicable Law. Each Grantor expressly waives any right to receive notice
of any judicial or
-20-
<PAGE> 21
nonjudicial foreclosure or sale of any Real Property or interest therein subject
to any such deeds of trust or mortgages or other instruments and any Grantor's
failure to receive any such notice shall not impair or affect such Grantor's
Obligations or the enforceability of this Agreement or any Liens created or
granted hereby.
19. Waiver of Rights of Subrogation. Notwithstanding anything to
the contrary elsewhere contained herein or in any other Transaction Document to
which any Grantor is a party, Grantors hereby waive with respect to the Borrower
and its successors and assigns (including any surety) and any other Person, any
and all rights at Law or in equity to subrogation, to reimbursement, to
exoneration, to contribution, to setoff or to any other rights that could accrue
to a surety against a principal, to a guarantor against a maker or obligor, to
an accommodation party against the party accommodated, or to a holder or
transferee against a maker and which Grantors may have or hereafter acquire
against the Borrower or any other Person in connection with or as a result of
Grantors' execution, delivery and/or performance of this Agreement or any other
Transaction Document to which any Grantor is a party. Grantors agree that they
shall not have or assert any such rights against the Borrower or its successors
and assigns or any other attempted setoff to any action commenced against
Grantors by any the Borrower (as borrower or in any other capacity) or any other
Person. Grantors hereby acknowledge and agree that this waiver is intended to
benefit Secured Party and shall not limit or otherwise affect Grantors'
liability hereunder, under any other Transaction Document to which any Grantor
is a party, or the enforceability hereof or thereof.
20. Understandings with Respect to Waivers and Consents. Grantors
and each of them warrant and agree that each of the waivers and consents set
forth herein are made after consultation with legal counsel and with full
knowledge of their significance and consequences, with the understanding that
events giving rise to any defense or right waived may diminish, destroy or
otherwise adversely affect rights which Grantors otherwise may have against the
Borrower, Secured Party or others, or against Collateral, and that, under the
circumstances, the waivers and consents herein given are reasonable and not
contrary to public policy or Law. If any of the waivers or consents herein are
determined to be contrary to any applicable Law or public policy, such waivers
and consents shall be effective to the maximum extent permitted by Law.
21. Continuing Effect. This Agreement shall remain in full force
and effect and continue to be effective should any petition be filed by or
against any Grantor for liquidation or reorganization, should any Grantor become
insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of any
Grantor's assets, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance
-21-
<PAGE> 22
of the Outstanding Obligations, or any part thereof, is, pursuant to applicable
Law, rescinded or reduced in amount, or must otherwise be restored or returned
by Administrative Agent or any Lender, whether as a "voidable preference,"
"fraudulent conveyance," or otherwise, all as though such payment or performance
had not been made. In the event that any payment or any part thereof is
rescinded, reduced, restored or returned, the Outstanding Obligations shall be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.
22. Additional Grantors. The initial Grantors hereunder shall be
the Borrower and the Significant Domestic Subsidiaries as are signatories
hereto. From time to time following the Closing Date, additional Significant
Domestic Subsidiaries of the Borrower may become parties hereto, as additional
Grantors, by executing and delivering to Secured Party an Instrument of Joinder
substantially in the form of Exhibit A, accompanied by such documentation as the
Secured Party may require in connection therewith, wherein such additional
Grantors agree to become a party hereto and to be bound hereby. Upon delivery of
such Instrument of Joinder to and acceptance thereof by Secured Party, notice of
which acceptance is hereby waived by Grantors, each such additional Grantor
shall be as fully a party hereto as if such Grantor were an original signatory
hereof. Each Grantor expressly agrees that its Outstanding Obligations and the
Liens upon its Property granted herein shall not be affected or diminished by
the addition or release of additional Grantors hereunder, nor by any election of
Secured Party not to cause any Significant Domestic Subsidiary of the Borrower
to become an additional Grantor hereunder. This Agreement shall be fully
effective as to any Grantor who is or becomes a party hereto regardless of
whether any other Person becomes or fails to become or ceases to be a Grantor
hereunder.
23. Release of Grantors. This Agreement and all Outstanding
Obligations of Grantors hereunder shall be released when all Outstanding
Obligations have been paid in full in cash or otherwise performed in full and
when no portion of the respective financing commitments of the Secured Creditors
remains outstanding. Upon such release of Grantors' Outstanding Obligations
hereunder, Secured Party shall promptly return any pledged Collateral to
Grantors, or to the Person or Persons legally entitled thereto, and shall
promptly endorse, execute, deliver, record and file all instruments and
documents, and do all other acts and things, reasonably required for the return
of the Collateral to Grantors, or to the Person or Persons legally entitled
thereto, and to evidence or document the release of Secured Party's interests
arising under this Agreement, all as reasonably requested by, and at the sole
expense of, Grantors.
-22-
<PAGE> 23
24. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which, taken
together, shall constitute one and the same agreement.
25. Additional Powers and Authorization. Secured Party shall be
entitled to the benefits accruing to it as the Collateral Agent under the
Intercreditor Agreement. Notwithstanding anything contained herein to the
contrary, Secured Party may employ agents, trustees, or attorneys-in-fact and
may vest any of them with any Property (including, without limitation, any
Collateral pledged hereunder), title, right or power deemed necessary for the
purposes of such appointment.
26. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA.
27. WAIVER OF JURY TRIAL. EACH GRANTOR AND SECURED PARTY
EXPRESSLY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE INTERCREDITOR AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR
PARTIES, WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH GRANTOR AND SECURED PARTY AGREE
THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE TRIED BY A COURT
TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE
THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS
SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE
OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT, THE
INTERCREDITOR AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, THE INTERCREDITOR
AGREEMENT AND THE OTHER INTERCREDITOR DOCUMENTS. ANY PARTY HERETO MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE
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<PAGE> 24
CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
IN WITNESS WHEREOF, each Grantor has executed this Agreement by
its duly authorized officer as of the date first written above.
"Grantors"
SAFESKIN CORPORATION,
a Florida corporation
By:
----------------------------------------
Name:
----------------------------------------
Title:
----------------------------------------
SAFESKIN SCIENTIFIC CORPORATION,
a California corporation
By:
----------------------------------------
Name:
----------------------------------------
Title:
----------------------------------------
ACCEPTED AND AGREED
AS OF THE DATE FIRST
ABOVE WRITTEN:
"Secured Party"
UNION BANK OF CALIFORNIA, N.A.,
as Collateral Agent,
for and on behalf of the Secured Creditors
By:
-----------------------------------------
Douglas S. Lambell
Vice President
-24-
<PAGE> 1
EXHIBIT 10.48
================================================================================
SAFESKIN CORPORATION
----------------------------------
NOTE PURCHASE AGREEMENT
----------------------------------
DATED AS OF MARCH 5, 1999
$40,000,000 6.89% SENIOR SECURED NOTES DUE MARCH 5, 2009
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
1. AUTHORIZATION OF NOTES............................................................................1
2. SALE AND PURCHASE OF NOTES........................................................................1
3. CLOSING...........................................................................................1
4. CONDITIONS TO CLOSING.............................................................................2
4.1 Representations and Warranties......................................................2
4.2 Performance; No Default.............................................................2
4.3 Compliance Certificates.............................................................2
4.4 Opinions of Counsel ................................................................3
4.5 Purchase Permitted By Applicable Law, etc...........................................3
4.6 Sale of Other Notes.................................................................3
4.7 Bank Loan Agreement.................................................................3
4.8 Synthetic Lease Documents...........................................................4
4.9 Intercreditor Agreement.............................................................4
4.10 Security Agreement..................................................................4
4.11 Pledge Agreement....................................................................4
4.12 Perfection of Liens.................................................................4
4.13 Termination or Assignment of Existing Liens.........................................4
4.14 Guaranty Agreement..................................................................5
4.15 Payment of Special Counsel Fees.....................................................5
4.16 Private Placement Number............................................................5
4.17 Changes in Corporate Structure......................................................5
4.18 Proceedings and Documents...........................................................5
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................................................5
5.1 Organization; Power and Authority...................................................5
5.2 Authorization, etc..................................................................6
5.3 Disclosure..........................................................................6
5.4 Organization and Ownership of Shares of Subsidiaries; Affiliates....................6
5.5 Financial Statements................................................................7
5.6 Compliance with Laws, Other Instruments, etc........................................7
5.7 Governmental Authorizations, etc....................................................8
5.8 Litigation; Observance of Agreements, Statutes and Orders...........................8
5.9 Taxes...............................................................................8
5.10 Title to Property; Leases...........................................................9
5.11 Licenses, Permits, etc..............................................................9
5.12 Compliance with ERISA...............................................................9
5.13 Private Offering by the Company....................................................10
5.14 Use of Proceeds; Margin Regulations................................................11
5.15 Existing Indebtedness; Future Liens................................................11
5.16 Foreign Assets Control Regulations, etc............................................11
</TABLE>
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
i
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
5.17 Status under Certain Statutes......................................................12
5.18 Environmental Matters..............................................................12
5.19 Security Documents.................................................................12
5.20 Solvency...........................................................................13
5.21 Year 2000 Problem..................................................................13
6. REPRESENTATIONS OF THE PURCHASER.................................................................13
6.1 Purchase for Investment............................................................13
6.2 Source of Funds....................................................................14
7. INFORMATION AS TO COMPANY........................................................................15
7.1 Financial and Business Information.................................................15
7.2 Officer's Certificate..............................................................17
7.3 Inspection.........................................................................18
8. PAYMENT OF THE NOTES, ETC........................................................................19
8.1 Required Prepayments; Payment at Maturity..........................................19
8.2 Optional Prepayments with Make-Whole Amount........................................19
8.3 Change in Control..................................................................19
8.4 Allocation of Partial Prepayments..................................................22
8.5 Maturity; Surrender, etc...........................................................22
8.6 No Other Optional Prepayments or Purchase of Notes.................................22
8.7 Make-Whole Amount..................................................................22
9. AFFIRMATIVE COVENANTS............................................................................24
9.1 Compliance with Law................................................................24
9.2 Insurance..........................................................................24
9.3 Maintenance of Properties..........................................................24
9.4 Payment of Taxes and Claims........................................................24
9.5 Corporate Existence, etc...........................................................25
9.6 New Subsidiaries...................................................................25
9.7 Pari Passu.........................................................................26
9.8 Further Assurances.................................................................26
9.9 Compliance Regarding Year 2000.....................................................27
10. NEGATIVE COVENANTS...............................................................................27
10.1 Transactions with Affiliates.......................................................27
10.2 Line of Business...................................................................27
10.3 Maintenance of Consolidated Net Worth..............................................27
10.4 Consolidated Pro Forma Interest Coverage Ratio.....................................28
10.5 Limitation on Debt.................................................................28
10.6 Liens..............................................................................29
10.7 Merger, Consolidation, etc.........................................................32
10.8 Sale of Assets, etc................................................................33
</TABLE>
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
ii
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
11. EVENTS OF DEFAULT................................................................................35
12. REMEDIES ON DEFAULT, ETC.........................................................................38
12.1 Acceleration.......................................................................38
12.2 Other Remedies.....................................................................39
12.3 Rescission.........................................................................39
12.4 No Waivers or Election of Remedies, Expenses, etc..................................40
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES....................................................40
13.1 Registration of Notes..............................................................40
13.2 Transfer and Exchange of Notes.....................................................40
13.3 Replacement of Notes...............................................................41
14. PAYMENTS ON NOTES................................................................................41
14.1 Place of Payment...................................................................41
14.2 Home Office Payment................................................................41
15. EXPENSES, ETC....................................................................................42
15.1 Transaction Expenses...............................................................42
15.2 Survival...........................................................................42
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.....................................42
17. AMENDMENT AND WAIVER.............................................................................42
17.1 Requirements.......................................................................42
17.2 Solicitation of Holders of Notes...................................................43
17.3 Binding Effect, etc................................................................43
17.4 Notes held by Company, etc.........................................................43
18. NOTICES..........................................................................................44
19. REPRODUCTION OF DOCUMENTS........................................................................44
20. CONFIDENTIAL INFORMATION.........................................................................44
21. SUBSTITUTION OF PURCHASER........................................................................46
22. MISCELLANEOUS....................................................................................46
22.1 Additional Notes...................................................................46
22.2 Successors and Assigns.............................................................47
22.3 Payments Due on Non-Business Days; When Payments Deemed Received...................47
22.4 Severability.......................................................................47
22.5 Construction.......................................................................47
22.6 Counterparts.......................................................................47
22.7 Governing Law......................................................................48
22.8 Jurisdiction.......................................................................48
</TABLE>
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
iv
<PAGE> 5
SCHEDULES & EXHIBITS
<TABLE>
<S> <C> <C>
SCHEDULE A -- Information Relating to Purchasers
SCHEDULE B -- Defined Terms
SCHEDULE 3 -- Payment Instructions
SCHEDULE 4.17 -- Changes in Corporate Structure
SCHEDULE 5.3 -- Disclosure Materials
SCHEDULE 5.4 -- Subsidiaries of the Company and Ownership of Subsidiary Stock
SCHEDULE 5.5 -- Financial Statements
SCHEDULE 5.8 -- Certain Litigation
SCHEDULE 5.11 -- Patents, etc.
SCHEDULE 5.12 -- ERISA Affiliates
SCHEDULE 5.14 -- Use of Proceeds
SCHEDULE 5.15 -- Existing Indebtedness and Liens
EXHIBIT 1 -- Form of 6.89% Senior Secured Note due March 5, 2009
EXHIBIT 4.4(a) -- Form of Opinion of Special Counsel for the Company and the
Initial Guarantor
EXHIBIT 4.4(b) -- Form of Opinion of Special Counsel for the Collateral Agent
EXHIBIT 4.4(c) -- Form of Opinion of Special Counsel for the Purchasers
EXHIBIT 4.9 -- Form of Intercreditor Agreement
EXHIBIT 4.10 -- Form of Security Agreement
EXHIBIT 4.11 -- Form of Pledge Agreement
EXHIBIT 4.14 -- Form of Guaranty Agreement
</TABLE>
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
v
<PAGE> 6
SAFESKIN CORPORATION
12671 HIGH BLUFF DRIVE
SAN DIEGO, CALIFORNIA 92130
6.89% SENIOR SECURED NOTES DUE MARCH 5, 2009
Dated as of March 5, 1999
To the Purchaser Named on
the Signature Page Hereto
Ladies and Gentlemen:
SAFESKIN CORPORATION, a Florida corporation (together with its
successors and assigns, the "COMPANY"), agrees with you as follows:
1. AUTHORIZATION OF NOTES
The Company will authorize the issue and sale of $40,000,000 aggregate
principal amount of its 6.89% Senior Secured Notes due March 5, 2009 (such
notes, together with all other notes issued pursuant to either this Agreement or
any of the Other Agreements in exchange or substitution thereof, the "NOTES").
The Notes shall be substantially in the form set out in Exhibit 1, with such
changes therefrom, if any, as may be approved by you and the Company. Certain
capitalized terms used in this Agreement are defined in Schedule B; references
to a "Section," "Schedule" or an "Exhibit" are, unless otherwise specified, to a
Section of, or a Schedule or an Exhibit attached to, this Agreement.
2. SALE AND PURCHASE OF NOTES
Subject to the terms and conditions of this Agreement, the Company will
issue and sell to you and you will purchase from the Company, at the Closing
provided for in Section 3, Notes in the principal amount specified below your
name in Schedule A at the purchase price of 100% of the principal amount
thereof. Contemporaneously with entering into this Agreement, the Company is
entering into separate Note Purchase Agreements (the "OTHER AGREEMENTS")
identical with this Agreement with each of the other purchasers named in
Schedule A (the "OTHER PURCHASERS"), providing for the sale at such Closing to
each of the Other Purchasers of Notes in the principal amount specified below
its name in Schedule A. Your obligation hereunder and the obligations of the
Other Purchasers under the Other Agreements are several and not joint
obligations and you shall have no obligation under any Other Agreement and no
liability to any Person for the performance or non-performance by any Other
Purchaser thereunder.
3. CLOSING
The sale and purchase of the Notes to be purchased by you and the Other
Purchasers shall occur at the offices of Sheppard, Mullin, Richter & Hampton,
LLC, 501 West Broadway, San Diego, California 92101, at 10:00 a.m., local time,
at a closing (the "CLOSING") on March 5, 1999. At the Closing the Company will
deliver to you the Notes to be purchased by you in the form of a single Note (or
such greater
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
<PAGE> 7
number of Notes in denominations of at least $100,000 as you may request), dated
the date of the Closing and registered in your name (or in the name of your
nominee), as indicated in Schedule A, against payment by federal funds wire
transfer in immediately available funds of the amount of the purchase price
therefor as directed by the Company in Schedule 3. If at the Closing the Company
shall fail to tender such Notes to you as provided above in this Section 3, or
any of the conditions specified in Section 4 shall not have been fulfilled to
your satisfaction, you shall, at your election, be relieved of all further
obligations under this Agreement, without thereby waiving any rights you may
have by reason of such failure or such nonfulfillment.
4. CONDITIONS TO CLOSING
Your obligation to purchase and pay for the Notes to be sold to you at
the Closing is subject to the fulfillment to your satisfaction, prior to or at
the Closing, of the following conditions:
4.1 REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company and the Initial
Guarantor in the Financing Documents shall be correct when made and at the time
of the Closing.
4.2 PERFORMANCE; NO DEFAULT.
The Company and the Initial Guarantor shall have performed and complied
with all agreements and conditions contained in the Financing Documents required
to be performed or complied with by the Company and the Initial Guarantor prior
to or at the Closing and after giving effect to the issue and sale of the Notes
(and the application of the proceeds thereof as contemplated by Schedule 5.14)
no Default or Event of Default shall have occurred and be continuing. Neither
the Company nor any Subsidiary shall have entered into any transaction since the
date of the Memorandum that would have been prohibited by any of Sections 10.1,
10.5, 10.6 or 10.8 had such Sections applied since such date.
4.3 COMPLIANCE CERTIFICATES.
(a) OFFICER'S CERTIFICATE. The Company shall have delivered to
you an Officer's Certificate, dated the date of the Closing, certifying
that the conditions specified in Sections 4.1, 4.2 and 4.17 have been
fulfilled.
(b) COMPANY SECRETARY'S CERTIFICATE. The Company shall have
delivered to you a certificate of its Secretary or one of its Assistant
Secretaries, dated the date of the Closing, certifying as to the
resolutions attached thereto and other corporate proceedings relating
to the authorization, execution and delivery of the Financing Documents
to which it is a party.
(c) INITIAL GUARANTOR SECRETARY'S CERTIFICATE. The Initial
Guarantor shall have delivered to you a certificate of its Secretary or
one of its Assistant Secretaries, dated the date of the Closing,
certifying as to the resolutions attached thereto and other corporate
proceedings relating to the authorization, execution and delivery of
the Financing Documents to which it is a party.
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
2
<PAGE> 8
4.4 OPINIONS OF COUNSEL.
You shall have received opinions in form and substance satisfactory to
you, dated the date of the Closing, from
(a) Morgan, Lewis & Bockius LLP, counsel for the Company and
the Initial Guarantor, substantially in the form set out in Exhibit
4.4(a) and covering such other matters incident to the transactions
contemplated hereby as you or your counsel may reasonably request (and
the Company hereby instructs such counsel to deliver such opinion to
you),
(b) Sheppard, Mullin, Richter & Hampton LLP, counsel for the
Collateral Agent, substantially in the form set out in Exhibit 4.4(b)
and covering such other matters incident to the transactions
contemplated hereby as you or your counsel may reasonably request, and
(c) Hebb & Gitlin, your special counsel, substantially in the
form set out in Exhibit 4.4(c) and covering such other matters incident
to the transactions contemplated hereby as you may reasonably request.
4.5 PURCHASE PERMITTED BY APPLICABLE LAW, ETC.
On the date of the Closing your purchase of Notes shall (a) be
permitted by the laws and regulations of each jurisdiction to which you are
subject, without recourse to provisions (such as section 1405(a)(8) of the New
York Insurance Law) permitting limited investments by insurance companies
without restriction as to the character of the particular investment, (b) not
violate any applicable law or regulation (including, without limitation,
Regulation T, U or X of the Board of Governors of the Federal Reserve System)
and (c) not subject you to any tax, penalty or liability under or pursuant to
any applicable law or regulation. If requested by you, you shall have received
an Officer's Certificate certifying as to such matters of fact as you may
reasonably specify to enable you to determine whether such purchase is so
permitted.
4.6 SALE OF OTHER NOTES.
Contemporaneously with the Closing the Company shall sell to the Other
Purchasers and the Other Purchasers shall purchase the Notes to be purchased by
them at the Closing as specified in Schedule A.
4.7 BANK LOAN AGREEMENT.
The Company and the Banks shall have entered into the Bank Loan
Agreement, in form and substance satisfactory to you, and the Company shall have
delivered to you copies of the Bank Loan Agreement and each other document
executed in connection therewith requested by you, certified as true and correct
by a Responsible Officer.
4.8 SYNTHETIC LEASE DOCUMENTS.
The Company and the Synthetic Lease Lenders shall have entered into the
Synthetic Lease Documents, in form and substance satisfactory to you, and the
Company shall have delivered to you copies of the Synthetic Lease Documents and
each other document executed in connection therewith requested by you, certified
as true and correct by a Responsible Officer.
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
3
<PAGE> 9
4.9 INTERCREDITOR AGREEMENT.
The Company, the Initial Guarantor, the Banks, the Synthetic Lease
Lenders, you, the Other Purchasers and the Collateral Agent shall have executed
and delivered the Intercreditor and Collateral Agency Agreement, substantially
in the form of Exhibit 4.9 (as amended or supplemented from time to time, the
"INTERCREDITOR AGREEMENT"), and the Intercreditor Agreement shall be in full
force and effect.
4.10 SECURITY AGREEMENT.
The Company, the Initial Guarantor and the Collateral Agent shall have
entered into a Security Agreement, substantially in the form of Exhibit 4.10 (as
amended or supplemented from time to time, the "SECURITY AGREEMENT"), and the
Security Agreement shall be in full force and effect.
4.11 PLEDGE AGREEMENT.
The Company and the Collateral Agent shall have entered into a Pledge
Agreement, substantially in the form of Exhibit 4.11 (as amended or supplemented
from time to time, the "PLEDGE AGREEMENT"), and the Pledge Agreement shall be in
full force and effect.
4.12 PERFECTION OF LIENS.
All actions necessary to perfect the Liens of the Collateral Agent in
the Collateral to be granted on or prior to the date of the Closing (including,
without limitation, the filing of all appropriate Uniform Commercial Code
financing statements, the recording of all appropriate documents with public
officials and the payment of all fees and taxes) shall have been taken in
accordance with the provisions of the Security Documents and the Company shall
have delivered to the Collateral Agent all appropriate stock certificates
(together with undated stock powers executed in blank to the Collateral Agent)
evidencing the shares of Capital Stock pledged pursuant to the Pledge Agreement.
4.13 TERMINATION OR ASSIGNMENT OF EXISTING LIENS.
All actions necessary to terminate, release or assign to the Collateral
Agent any and all Liens on the Collateral, other than Liens permitted under
Section 10.6(a), shall have been taken in accordance with the provisions of the
Security Documents, including, without limitation, the filing of all appropriate
Uniform Commercial Code termination statements.
4.14 GUARANTY AGREEMENT.
You shall have received a counterpart of the Guaranty Agreement, duly
executed and delivered by the Initial Guarantor, substantially in the form of
Exhibit 4.14 (as amended or supplemented from time to time, the "GUARANTY
AGREEMENT"), and the Guaranty Agreement shall be in full force and effect.
4.15 PAYMENT OF SPECIAL COUNSEL FEES.
Without limiting the provisions of Section 15.1, the Company shall have
paid on or before the Closing the fees, charges and disbursements of your
special counsel referred to in Section 4.4(c) to the extent reflected in a
statement of such counsel rendered to the Company at least one Business Day
prior to the date of the Closing.
4.16 PRIVATE PLACEMENT NUMBER.
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
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A Private Placement Number issued by Standard & Poor's CUSIP Service
Bureau (in cooperation with the Securities Valuation Office of the National
Association of Insurance Commissioners) shall have been obtained for the Notes.
4.17 CHANGES IN CORPORATE STRUCTURE.
Except as specified in Schedule 4.17, the Company shall not have
changed its jurisdiction of incorporation or been a party to any merger or
consolidation and shall not have succeeded to all or any substantial part of the
liabilities of any other entity, at any time following the date of the most
recent financial statements referred to in Schedule 5.5.
4.18 PROCEEDINGS AND DOCUMENTS.
All corporate and other proceedings in connection with the transactions
contemplated by the Financing Documents and all documents and instruments
incident to such transactions shall be satisfactory to you and your special
counsel, and you and your special counsel shall have received all such
counterpart originals or certified or other copies of such documents as you or
they may reasonably request.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to you, as of the date of the
Closing, that:
5.1 ORGANIZATION; POWER AND AUTHORITY.
The Company is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation, and is duly
qualified as a foreign corporation and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Company has the corporate power and authority to own or hold
under lease the properties it purports to own or hold under lease, to transact
the business it transacts and proposes to transact, to execute and deliver the
Financing Documents to which it is or is to be a party and to perform the
provisions thereof.
5.2 AUTHORIZATION, ETC.
The Financing Documents have been duly authorized by all necessary
corporate action on the part of the Company and the Initial Guarantor, and each
of this Agreement, the Other Agreements, the Security Agreement, the Pledge
Agreement, the Intercreditor Agreement and the Guaranty Agreement constitutes,
and upon execution and delivery thereof each Note will constitute, a legal,
valid and binding obligation of each Obligor party thereto, enforceable against
each such Obligor in accordance with its terms, except as such enforceability
may be limited by (a) applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and (b) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
5.3 DISCLOSURE.
The Company, through its agents, SPP Capital Partners, LLC and Wells
Fargo Bank, N.A., has delivered to you and each Other Purchaser a copy of a
Confidential Direct Placement Memorandum, dated January 1999 (the "MEMORANDUM"),
relating to the transactions contemplated hereby. The Memorandum
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
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fairly describes, in all material respects, the general nature of the business
and principal properties of the Company and its Subsidiaries. Except as
disclosed in Schedule 5.3, the Financing Documents, the Memorandum, the
documents, certificates or other writings delivered to you by or on behalf of
the Company in connection with the transactions contemplated by the Financing
Documents and the financial statements listed in Schedule 5.5, taken as a whole,
do not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading in light
of the circumstances under which they were made. Except as disclosed in the
Memorandum or as expressly described in Schedule 5.3, or in one of the
documents, certificates or other writings identified therein, or in the
financial statements listed in Schedule 5.5, since December 31, 1997, there has
been no change in the financial condition, operations, business, properties or
prospects of the Company or any Subsidiary except changes that individually or
in the aggregate could not reasonably be expected to have a Material Adverse
Effect. There is no fact known to the Company that could reasonably be expected
to have a Material Adverse Effect that has not been set forth herein or in the
Memorandum or in the other documents, certificates and other writings delivered
to you by or on behalf of the Company specifically for use in connection with
the transactions contemplated hereby.
5.4 ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES;
AFFILIATES.
(a) Schedule 5.4 contains (except as noted therein) complete
and correct lists of (i) the Company's Subsidiaries, showing, as to
each Subsidiary, the correct name thereof, the jurisdiction of its
organization, and the percentage of shares of each class of its Capital
Stock outstanding owned by the Company and each other Subsidiary and
(ii) the Company's Affiliates, other than Subsidiaries.
(b) All of the outstanding shares of Capital Stock of each
Subsidiary shown in Schedule 5.4 as being owned by the Company and its
Subsidiaries have been validly issued, are fully paid and nonassessable
and are owned by the Company or another Subsidiary free and clear of
any Lien (except as otherwise disclosed in Schedule 5.4).
(c) Each Subsidiary identified in Schedule 5.4 is a
corporation or other legal entity duly organized, validly existing and
in good standing under the laws of its jurisdiction of organization,
and is duly qualified as a foreign corporation or other legal entity
and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to
which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Each such Subsidiary has the corporate or
other power and authority to own or hold under lease the properties it
purports to own or hold under lease and to transact the business it
transacts and proposes to transact. The Initial Guarantor has the
corporate power and authority to execute and deliver the Guaranty
Agreement and the Security Agreement and to perform the provisions
thereof. The Company has no Significant Subsidiaries other than the
Initial Guarantor, Safeskin (B.V.I.), Limited, Safeskin Corporation
(Thailand) Limited, Safeskin Medical & Scientific (Thailand) Limited,
Safeskin Latex (Thailand) Limited, and Safeskin Corporation (Malaysia)
Sdn. Bhd.
(d) No Subsidiary is a party to, or otherwise subject to any
legal restriction or any agreement (other than this Agreement, the
agreements listed in Schedule 5.4 and customary limitations imposed by
corporate law statutes) restricting the ability of such Subsidiary to
pay dividends out of profits or make any other similar distributions of
profits to the Company or any of its Subsidiaries that owns outstanding
shares of Capital Stock of such Subsidiary.
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
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5.5 FINANCIAL STATEMENTS.
The Company has delivered to you and each Other Purchaser copies of the
financial statements of the Company and its Subsidiaries listed in Schedule 5.5.
All of said financial statements (including in each case the related schedules
and notes) fairly present in all material respects the consolidated financial
position of the Company and its Subsidiaries as of the respective dates
specified in such Schedule and the consolidated results of their operations and
cash flows for the respective periods so specified and have been prepared in
accordance with GAAP consistently applied throughout the periods involved except
as set forth in the notes thereto (subject, in the case of any interim financial
statements, to normal year-end adjustments and the lack of footnotes).
5.6 COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.
The execution, delivery and performance by the Company and the Initial
Guarantor of the Financing Documents to which such Obligor is a party will not
(a) contravene, result in any breach of, or constitute a
default under, or result in the creation of any Lien in respect of any
property of the Company or any Subsidiary (other than as contemplated
by the Security Documents) under, any indenture, mortgage, deed of
trust, loan, purchase or credit agreement, lease, corporate charter or
by-laws, or any other agreement or instrument to which the Company or
any Subsidiary is bound or by which the Company or any Subsidiary or
any of their respective properties may be bound or affected,
(b) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of
any court, arbitrator or Governmental Authority applicable to the
Company or any Subsidiary, or
(c) violate any provision of any statute or other rule or
regulation of any Governmental Authority applicable to the Company or
any Subsidiary.
5.7 GOVERNMENTAL AUTHORIZATIONS, ETC.
No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in connection with the
execution, delivery or performance by the Company or the Initial Guarantor of
the Financing Documents, other than the filing of appropriate financing
statements to perfect the Liens of the Collateral Agent in the Collateral.
5.8 LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS.
(a) Except as disclosed in Schedule 5.8, there are no actions,
suits or proceedings pending or, to the knowledge of the Company,
threatened against or affecting the Company or any Subsidiary or any
property of the Company or any Subsidiary in any court or before any
arbitrator of any kind or before or by any Governmental Authority that,
individually or in the aggregate, could reasonably be expected to have
a Material Adverse Effect.
(b) Neither the Company nor any Subsidiary is in default under
any term of any agreement or instrument to which it is a party or by
which it is bound, or any order, judgment, decree or ruling of any
court, arbitrator or Governmental Authority or is in violation of any
applicable law, ordinance, rule or regulation (including, without
limitation, Environmental Laws)
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
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of any Governmental Authority, which default or violation, individually
or in the aggregate, could reasonably be expected to have a Material
Adverse Effect.
5.9 TAXES.
The Company and its Subsidiaries have filed all tax returns that are
required to have been filed in any jurisdiction, and have paid all taxes shown
to be due and payable on such returns and all other taxes and assessments levied
upon them or their properties, assets, income or franchises, to the extent such
taxes and assessments have become due and payable and before they have become
delinquent, except for any taxes and assessments (a) the amount of which is not
individually or in the aggregate Material or (b) the amount, applicability or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which the Company or a Subsidiary, as the case
may be, has established adequate reserves in accordance with GAAP. The Company
knows of no basis for any other tax or assessment that could reasonably be
expected to have a Material Adverse Effect. The charges, accruals and reserves
on the books of the Company and its Subsidiaries in respect of Federal, state or
other taxes for all fiscal periods are adequate. The Federal income tax
liabilities of the Company and its domestic Subsidiaries have been determined by
the Internal Revenue Service and paid for all fiscal years up to and including
the fiscal year ended December 31, 1994.
5.10 TITLE TO PROPERTY; LEASES.
The Company and its Subsidiaries have good and sufficient title to
their respective properties that individually or in the aggregate are Material,
including all such properties reflected in the most recent audited balance sheet
referred to in Section 5.5 or purported to have been acquired by the Company or
any Subsidiary after said date (except as sold or otherwise disposed of in the
ordinary course of business), in each case free and clear of Liens prohibited by
this Agreement. All leases that individually or in the aggregate are Material
are valid and subsisting and are in full force and effect in all material
respects. Neither the Company nor any of its Subsidiaries owns in fee simple
title any real property located within the United States.
5.11 LICENSES, PERMITS, ETC.
Except as disclosed in Schedule 5.11,
(a) the Company and its Subsidiaries own or possess all
licenses, permits, franchises, authorizations, patents, copyrights,
service marks, trademarks and trade names, or rights thereto, that
individually or in the aggregate are Material, without known conflict
with the rights of others;
(b) to the best knowledge of the Company, no product or
practice of the Company or any Subsidiary infringes in any material
respect any license, permit, franchise, authorization, patent,
copyright, service mark, trademark, trade name or other right owned by
any other Person; and
(c) to the best knowledge of the Company, there is no Material
violation by any Person of any right of the Company or any of its
Subsidiaries with respect to any patent, copyright, service mark,
trademark, trade name or other right owned or used by the Company or
any of its Subsidiaries.
5.12 COMPLIANCE WITH ERISA.
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
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(a) The Company and each ERISA Affiliate have operated and
administered each Plan in compliance with all applicable laws except
for such instances of noncompliance as have not resulted in and could
not reasonably be expected to result in a Material Adverse Effect.
Neither the Company nor any ERISA Affiliate has incurred any liability
pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans (as defined
in section 3 of ERISA), and no event, transaction or condition has
occurred or exists that could reasonably be expected to result in the
incurrence of any such liability by the Company or any ERISA Affiliate,
or in the imposition of any Lien on any of the rights, properties or
assets of the Company or any ERISA Affiliate, in either case pursuant
to Title I or IV of ERISA or to such penalty or excise tax provisions
or to section 401(a)(29) or 412 of the Code, other than such
liabilities or Liens as would not be individually or in the aggregate
Material.
(b) The present value of the aggregate benefit liabilities
under each of the Plans (other than Multiemployer Plans), determined as
of the end of such Plan's most recently ended plan year on the basis of
the actuarial assumptions specified for funding purposes in such Plan's
most recent actuarial valuation report, did not exceed the aggregate
current value of the assets of such Plan allocable to such benefit
liabilities. The term "BENEFIT LIABILITIES" has the meaning specified
in section 4001 of ERISA and the terms "CURRENT VALUE" and "PRESENT
VALUE" have the meaning specified in section 3 of ERISA.
(c) The Company and the ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of
Multiemployer Plans that individually or in the aggregate are Material.
(d) The expected postretirement benefit obligation (determined
as of the last day of the Company's most recently ended fiscal year in
accordance with Financial Accounting Standards Board Statement No. 106,
without regard to liabilities attributable to continuation coverage
mandated by section 4980B of the Code) of the Company and its
Subsidiaries is not Material.
(e) The execution and delivery of the Financing Documents and
the issuance and sale of the Notes hereunder will not involve any
transaction that is subject to the prohibitions of section 406 of ERISA
or in connection with which a tax could be imposed pursuant to section
4975(c)(1)(A)-(D) of the Code. The representation by the Company in the
first sentence of this Section 5.12(e) is made in reliance upon and
subject to the accuracy of your representation in Section 6.2 as to the
sources of the funds used to pay the purchase price of the Notes to be
purchased by you.
(f) Schedule 5.12 sets forth all ERISA Affiliates and all
"employee benefit plans" maintained by the Company (or any "affiliate"
thereof) or in respect of which the Notes could constitute an "employer
security" ("EMPLOYEE BENEFIT PLAN" has the meaning specified in section
3 of ERISA, "AFFILIATE" has the meaning specified in section 407(d) of
ERISA and section V of the Department of Labor Prohibited Transaction
Exemption ("PTE") 95-60 (60 FR 35925, July 12, 1995) and "EMPLOYER
SECURITY" has the meaning specified in section 407(d) of ERISA).
(g) All Foreign Pension Plans have been established, operated,
administered and maintained in compliance with all laws, regulations
and orders applicable thereto except for such failures to comply, in
the aggregate for all such failures, that could not reasonably be
expected to have a Material Adverse Effect. All premiums, contributions
and any other amounts required by
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
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applicable Foreign Pension Plan documents or applicable laws have been
paid or accrued as required, except for premiums, contributions and
amounts that, in the aggregate for all such obligations, could not
reasonably be expected to have a Material Adverse Effect.
5.13 PRIVATE OFFERING BY THE COMPANY.
Neither the Company nor anyone acting on its behalf has offered the
Notes or any similar Securities for sale to, or solicited any offer to buy any
of the same from, or otherwise approached or negotiated in respect thereof with,
more than 59 Institutional Investors (including you and the Other Purchasers),
each of which has been offered the Notes at a private sale for investment.
Neither the Company nor anyone acting on its behalf has taken, or will take, any
action that would subject the issuance or sale of the Notes to the registration
requirements of section 5 of the Securities Act. For purposes of this Section
5.13 only, each reference to the Notes shall be deemed to include a reference to
the Guaranty Agreement.
5.14 USE OF PROCEEDS; MARGIN REGULATIONS.
The Company will apply the proceeds of the sale of the Notes as set
forth in Schedule 5.14. No part of the proceeds from the sale of the Notes
hereunder will be used, directly or indirectly, for the purpose of buying or
carrying any margin stock within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System (12 CFR 221), or for the purpose of
buying or carrying or trading in any Securities under such circumstances as to
involve the Company in a violation of Regulation X of said Board (12 CFR 224) or
to involve any broker or dealer in a violation of Regulation T of said Board (12
CFR 220). Margin stock does not constitute more than 5% of Consolidated Total
Assets and the Company does not have any present intention that margin stock
will constitute more than 5% of Consolidated Total Assets. As used in this
Section, the terms "margin stock" and "purpose of buying or carrying" shall have
the meanings assigned to them in said Regulation U.
5.15 EXISTING INDEBTEDNESS; FUTURE LIENS.
(a) Except as described therein, Schedule 5.15 sets forth a
complete and correct list of all outstanding Indebtedness of the
Company and its Subsidiaries as of the date of the Closing (indicating
as to each such Indebtedness, the collateral, if any, securing such
Indebtedness), since which date there has been no Material change in
the amounts, interest rates, sinking funds, instalment payments or
maturities of the Indebtedness of the Company or its Subsidiaries.
Neither the Company nor any Subsidiary is in default and no waiver of
default is currently in effect, in the payment of any principal or
interest on any Indebtedness of the Company or such Subsidiary and no
event or condition exists with respect to any Indebtedness of the
Company or any Subsidiary that would permit (or that with notice or the
lapse of time, or both, would permit) one or more Persons to cause such
Indebtedness to become due and payable before its stated maturity or
before its regularly scheduled dates of payment.
(b) Except as disclosed in Schedule 5.15, neither the Company
nor any Subsidiary has agreed or consented to cause or permit in the
future (upon the happening of a contingency or otherwise) any of its
property, whether now owned or hereafter acquired, to be subject to a
Lien not permitted by Section 10.6(a).
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
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5.16 FOREIGN ASSETS CONTROL REGULATIONS, ETC.
Neither the sale of the Notes by the Company hereunder nor its use of
the proceeds thereof, nor any other transaction contemplated by the Financing
Documents, will violate the Trading with the Enemy Act, as amended, or any of
the foreign assets control regulations of the United States Treasury Department
(31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or
executive order relating thereto.
5.17 STATUS UNDER CERTAIN STATUTES.
Neither the Company nor any Subsidiary is subject to regulation under
the Investment Company Act of 1940, as amended, the Public Utility Holding
Company Act of 1935, as amended, the Transportation Acts (49 U.S.C.), as
amended, or the Federal Power Act, as amended.
5.18 ENVIRONMENTAL MATTERS.
Neither the Company nor any Subsidiary has knowledge of any claim or
has received any notice of any claim, and no proceeding has been instituted
raising any claim against the Company or any of its Subsidiaries or any of their
respective real properties now or formerly owned, leased or operated by any of
them or other assets, alleging any damage to the environment or violation of any
Environmental Laws, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect. Except as otherwise disclosed
to you in writing,
(a) neither the Company nor any Subsidiary has knowledge of
any facts which would give rise to any claim, public or private, of
violation of Environmental Laws or damage to the environment emanating
from, occurring on or in any way related to real properties now or
formerly owned, leased or operated by any of them or to other assets or
their use, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect;
(b) neither the Company nor any of its Subsidiaries has stored
any Hazardous Materials on real properties now or formerly owned,
leased or operated by any of them or disposed of any Hazardous
Materials in a manner contrary to any Environmental Laws, in each case
in any manner that could reasonably be expected to result in a Material
Adverse Effect; and
(c) all buildings on all real properties now owned, leased or
operated by the Company or any of its Subsidiaries are in compliance
with applicable Environmental Laws, except where failure to comply
could not reasonably be expected to result in a Material Adverse
Effect.
5.19 SECURITY DOCUMENTS.
(a) SECURITY AGREEMENT. The Security Agreement creates (after
filing UCC-1 financing statements as therein provided) a valid and
perfected first priority Lien in and to the Collateral (as defined in
the Security Agreement) in favor of the Collateral Agent subject to no
Liens, except to the extent permitted by Section 10.6(a). All UCC-1
financing statements required by the Security Agreement to be filed
with public recording offices have been delivered to the Collateral
Agent for filing, and all taxes, recording fees and other fees and
charges required by applicable law to be paid in connection therewith
have been duly paid in full or will be paid concurrently with such
filing.
(b) PLEDGE AGREEMENT. The Pledge Agreement creates (upon
delivery of the Collateral (as defined in the Pledge Agreement) to the
Collateral Agent) a valid and perfected first priority
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
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Lien in and to the Pledged Collateral (as defined in the Pledge
Agreement) in favor of the Collateral Agent subject to no Liens, except
to the extent permitted by Section 10.6(a). All certificates and
documents evidencing the Pledged Securities (as defined in the Pledge
Agreement) have been delivered to the Collateral Agent, together with
all related blank bond powers and stock powers.
(c) WARRANTIES AND REPRESENTATIONS TRUE. All warranties and
representations of the Company and the Initial Guarantor made in the
Security Documents are true and correct as of the date of the Closing.
5.20 SOLVENCY.
The fair value of the business and assets of each of the Company and
the Initial Guarantor exceeds the amount that will be required to pay its
liabilities (including, without limitation, contingent, subordinated, unmatured
and unliquidated liabilities on existing debts, as such liabilities may become
absolute and matured), in each case after giving effect to the transactions
contemplated by the Financing Documents. After giving effect to the transactions
contemplated by the Financing Documents, neither the Company nor the Initial
Guarantor will be insolvent or be engaged in any business or transaction, or
about to engage in any business or transaction, for which it has unreasonably
small assets or capital (within the meaning of the Uniform Fraudulent Transfer
Act, the Uniform Fraudulent Conveyance Act and Section 548 of Title 11 of the
United States Code), and neither the Company nor the Initial Guarantor has any
intent to hinder, delay or defraud any entity to which it is, or will become, on
or after the date of the Closing, indebted or incur debts that would be beyond
its ability to pay as they mature.
5.21 YEAR 2000 PROBLEM.
The Company has reviewed the areas within the business and operations
of the Company and its Subsidiaries which could be adversely affected by the
risk (such risk herein being referred to as the "YEAR 2000 PROBLEM") that
computer applications, as well as embedded microchips in non-computing devices,
used by the Company and its Subsidiaries may be unable to recognize and perform
properly date-sensitive functions involving certain dates after December 31,
1999. Since September 30, 1998, there have been no changes or developments with
respect to the matters set forth in either the disclosures made in the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1998,
or in the Memorandum, which would cause the Company to reasonably believe that
its Year 2000 Problem will have a Material Adverse Effect.
6. REPRESENTATIONS OF THE PURCHASER
6.1 PURCHASE FOR INVESTMENT.
You represent that you are purchasing the Notes for your own account or
for one or more separate accounts maintained by you or for the account of one or
more pension or trust funds and not with a view to the distribution thereof,
provided that the disposition of your or their property shall at all times be
within your or their control. You understand that the Notes have not been
registered under the Securities Act and may be resold only if registered
pursuant to the provisions of the Securities Act or if an exemption from
registration is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the Company is
not required to register the Notes.
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
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6.2 SOURCE OF FUNDS.
You represent that at least one of the following statements is an
accurate representation as to each source of funds (a "SOURCE") to be used by
you to pay the purchase price of the Notes to be purchased by you hereunder:
(a) the Source is an "insurance company general account" as
defined in PTE 95-60 (60 FR 35925, July 12, 1995) and there is no
"employee benefit plan" (as defined in section 3(3) of ERISA and
section 4975(e)(1) of the Code (treating as a single plan all plans
maintained by the same employer or employee organization or affiliate
thereof)) with respect to which the amount of the general account
reserves and liabilities of all contracts held by or on behalf of such
plan exceeds 10% of the total reserves and liabilities of such general
account (exclusive of separate account liabilities) plus surplus, as
set forth in the National Association of Insurance Commissioners'
Annual Statement filed with your state of domicile; or
(b) if you are an insurance company, the Source does not
include assets allocated to any separate account maintained by you in
which any employee benefit plan (or its related trust) has any
interest, other than a separate account that is maintained solely in
connection with your fixed contractual obligations under which the
amounts payable, or credited, to such plan and to any participant or
beneficiary of such plan (including any annuitant) are not affected in
any manner by the investment performance of the separate account; or
(c) the Source is either (i) an insurance company pooled
separate account, within the meaning of PTE 90-1 (issued January 29,
1990), or (ii) a bank collective investment fund, within the meaning of
the PTE 91-38 (issued July 12, 1991) and, except as you have disclosed
to the Company in writing pursuant to this clause (c), no employee
benefit plan or group of plans maintained by the same employer or
employee organization beneficially owns more than 10% of all assets
allocated to such pooled separate account or collective investment
fund; or
(d) the Source constitutes assets of an "investment fund"
(within the meaning of part V of PTE 84-14 (the "QPAM EXEMPTION"))
managed by a "qualified professional asset manager" or "QPAM" (within
the meaning of part V of the QPAM Exemption), no employee benefit
plan's assets that are included in such investment fund, when combined
with the assets of all other employee benefit plans established or
maintained by the same employer or by an affiliate (within the meaning
of section V(c)(1) of the QPAM Exemption) of such employer or by the
same employee organization and managed by such QPAM, exceed 20% of the
total client assets managed by such QPAM, the conditions of part I(c)
and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a
person controlling or controlled by the QPAM (applying the definition
of "control" in section V(e) of the QPAM Exemption) owns a 5% or more
interest in the Company and
(i) the identity of such QPAM and
(ii) the names of all employee benefit plans whose assets
are included in such investment fund
have been disclosed to the Company in writing pursuant to this clause
(d); or
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(e) the Source is a governmental plan; or
(f) the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee
benefit plans, each of which has been identified to the Company in
writing pursuant to this clause (f); or
(g) the Source does not include assets of any employee benefit
plan, other than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms "EMPLOYEE BENEFIT PLAN", "GOVERNMENTAL
PLAN" and "SEPARATE ACCOUNT" shall have the respective meanings assigned to such
terms in section 3 of ERISA.
7. INFORMATION AS TO COMPANY
7.1 FINANCIAL AND BUSINESS INFORMATION.
The Company shall deliver to each holder of Notes that is an
Institutional Investor:
(a) QUARTERLY STATEMENTS -- within 45 days after the end of
each quarterly fiscal period in each fiscal year of the Company (other
than the last quarterly fiscal period of each such fiscal year),
duplicate copies of,
(i) a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of operations and cash flows
of the Company and its Subsidiaries, for such quarter and (in
the case of the second and third quarters) for the portion of
the fiscal year ending with such quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP applicable to quarterly
financial statements generally, and certified by a Senior Financial
Officer as fairly presenting, in all material respects, the
consolidated financial position of the companies being reported on and
their consolidated results of operations and cash flows, subject to
changes resulting from year-end adjustments, provided that delivery
within the time period specified above of copies of the Company's
Quarterly Report on Form 10-Q prepared in compliance with the
requirements therefor and filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this Section
7.1(a);
(b) ANNUAL STATEMENTS -- within 90 days after the end of each
fiscal year of the Company, duplicate copies of,
(i) a consolidated balance sheet of the Company and its
Subsidiaries, as at the end of such year, and
(ii) consolidated statements of operations, shareholders'
equity and cash flows of the Company and its Subsidiaries, for
such year,
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
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setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail, prepared in accordance
with GAAP, and accompanied by
(A) an opinion thereon of independent certified
public accountants of recognized national standing, which
opinion shall state that such financial statements present
fairly, in all material respects, the consolidated financial
position of the companies being reported upon and their
consolidated results of operations and cash flows and have
been prepared in conformity with GAAP, and that the
examination of such accountants in connection with such
financial statements has been made in accordance with
generally accepted auditing standards, and that such audit
provides a reasonable basis for such opinion in the
circumstances, and
(B) a certificate of such accountants stating that
they have reviewed this Agreement and stating further whether,
in making their audit, they have become aware of any condition
or event that then constitutes a Default or an Event of
Default, and, if they are aware that any such condition or
event then exists, specifying the nature and period of the
existence thereof (it being understood that such accountants
shall not be liable, directly or indirectly, for any failure
to obtain knowledge of any Default or Event of Default unless
such accountants should have obtained knowledge thereof in
making an audit in accordance with generally accepted auditing
standards or did not make such an audit),
provided that the delivery within the time period specified above of
the Company's Annual Report on Form 10-K for such fiscal year prepared
in accordance with the requirements therefor and filed with the
Securities and Exchange Commission, together with the accountant's
certificate described in clause (B) above, shall be deemed to satisfy
the requirements of this Section 7.1(b);
(c) SEC AND OTHER REPORTS -- promptly upon their becoming
available, one copy of (i) each financial statement, report (including,
without limitation, the Company's annual report to shareholders, if
any, prepared pursuant to Rule 14a-3 under the Exchange Act), notice or
proxy statement sent by the Company or any Subsidiary to public
securities holders generally, and (ii) each regular or periodic report,
each registration statement (without exhibits except as expressly
requested by such holder), and each prospectus and all amendments
thereto filed by the Company or any Subsidiary with the Securities and
Exchange Commission and of all press releases and other statements made
available generally by the Company or any Subsidiary to the public
concerning developments that are Material;
(d) NOTICE OF DEFAULT OR EVENT OF DEFAULT -- promptly, and in
any event within five days after a Responsible Officer becoming aware
of the existence of any Default or Event of Default or that any Person
has given any notice or taken any action with respect to a claimed
default hereunder or that any Person has given any notice or taken any
action with respect to a claimed default of the type referred to in
Section 11(f), a written notice specifying the nature and period of
existence thereof and what action the Company is taking or proposes to
take with respect thereto;
(e) ERISA MATTERS -- promptly, and in any event within 10
Business Days after a Responsible Officer becoming aware of any of the
following, a written notice setting forth the
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
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nature thereof and the action, if any, that the Company or an ERISA
Affiliate proposes to take with respect thereto:
(i) with respect to any Plan, any reportable event, as
defined in section 4043(c) of ERISA and the regulations
thereunder, for which notice thereof has not been waived
pursuant to such regulations as in effect on the date of the
Closing; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings
under section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or the
receipt by the Company or any ERISA Affiliate of a notice from
a Multiemployer Plan that such action has been taken by the
PBGC with respect to such Multiemployer Plan; or
(iii) any event, transaction or condition that could
result in the incurrence of any liability by the Company or
any ERISA Affiliate pursuant to Title I or IV of ERISA or the
penalty or excise tax provisions of the Code relating to
employee benefit plans, or in the imposition of any Lien on
any of the rights, properties or assets of the Company or any
ERISA Affiliate pursuant to Title I or IV of ERISA or such
penalty or excise tax provisions, if such liability or Lien,
taken together with any other such liabilities or Liens then
existing, could reasonably be expected to have a Material
Adverse Effect;
(f) NOTICES FROM GOVERNMENTAL AUTHORITY -- promptly, and in
any event within 30 days of receipt thereof, copies of any notice to
the Company or any Subsidiary from any Federal or state Governmental
Authority relating to any order, ruling, statute or other law or
regulation that could reasonably be expected to have a Material Adverse
Effect;
(g) ACTIONS, PROCEEDINGS -- promptly after a Responsible
Officer becomes aware of the commencement thereof, notice of any action
or proceeding relating to the Company or any Subsidiary in any court or
before any Governmental Authority or arbitration board or tribunal as
to which there is a reasonable possibility of an adverse determination
and that, if adversely determined, could reasonably be expected to have
a Material Adverse Effect; and
(h) REQUESTED INFORMATION -- with reasonable promptness, such
other data and information relating to the business, operations,
affairs, financial condition, assets or properties of the Company or
any of its Subsidiaries or relating to the ability of the Obligors to
perform their respective obligations under the Financing Documents as
from time to time may be reasonably requested by any such holder of
Notes, or such information regarding the Company required to satisfy
the requirements of 17 C.F.R. Section 230.144A, as amended from time to
time, in connection with any contemplated transfer of the Notes.
7.2 OFFICER'S CERTIFICATE.
Each set of financial statements delivered to a holder of Notes
pursuant to Section 7.1(a) or Section 7.1(b) shall be accompanied by a
certificate of a Senior Financial Officer setting forth:
(a) COVENANT COMPLIANCE -- (i) the information (including
detailed calculations) required in order to establish whether the
Company was in compliance with the requirements of Sections 10.3
through 10.8, inclusive, during the quarterly or annual period covered
by the statements then being furnished (including with respect to each
such Section, where applicable, the
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
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calculations of the maximum or minimum amount, ratio or percentage, as
the case may be, permissible under the terms of such Sections, and the
calculation of the amount, ratio or percentage then in existence), (ii)
a description of all sales of accounts receivable of the Company and
its Subsidiaries during such period and (iii) a schedule of the
transactions under or relating to the Hedge Facility entered into
during such period; and
(b) EVENT OF DEFAULT -- a statement that such officer has
reviewed the relevant terms of the Financing Documents and has made, or
caused to be made, under his or her supervision, a review of the
transactions and conditions of the Company and its Subsidiaries from
the beginning of the quarterly or annual period covered by the
statements then being furnished to the date of the certificate and that
such review has not disclosed the existence during such period of any
condition or event that constitutes a Default or an Event of Default
or, if any such condition or event existed or exists (including,
without limitation, any such event or condition resulting from the
failure of the Company or any Subsidiary to comply with any
Environmental Law), specifying the nature and period of existence
thereof and what action the Company shall have taken or proposes to
take with respect thereto.
7.3 INSPECTION.
The Company shall permit the representatives of each holder of Notes
that is an Institutional Investor:
(a) NO DEFAULT -- if no Default or Event of Default then
exists, at the expense of such holder and upon reasonable prior notice
to the Company, to visit the principal executive office of the Company,
to discuss the affairs, finances and accounts of the Company and its
Subsidiaries with the Company's officers, and (with the consent of the
Company, which consent will not be unreasonably withheld) its
independent public accountants, and (with the consent of the Company,
which consent will not be unreasonably withheld) to visit the other
offices and properties of the Company and each Subsidiary, all at such
reasonable times and as often as may be reasonably requested in
writing; and
(b) DEFAULT -- if a Default or Event of Default then exists,
at the expense of the Company, to visit and inspect any of the offices
or properties of the Company or any Subsidiary, to examine all their
respective books of account, records, reports and other papers, to make
copies and extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers and independent
public accountants (and by this provision the Company authorizes said
accountants to discuss the affairs, finances and accounts of the
Company and its Subsidiaries), all at such times and as often as may be
requested.
8. PAYMENT OF THE NOTES, ETC.
8.1 REQUIRED PREPAYMENTS; PAYMENT AT MATURITY.
On March 5, 2003 and on each March 5 thereafter to and including March
5, 2008, the Company will prepay $5,714,300 principal amount (or such lesser
principal amount as shall then be outstanding) of the Notes at par and without
payment of the Make-Whole Amount or any premium, and the Company will pay all of
the principal amount of the Notes remaining outstanding, if any, on March 5,
2009.
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8.2 OPTIONAL PREPAYMENTS WITH MAKE-WHOLE AMOUNT.
The Company may, at its option, upon notice as provided below, prepay
at any time all, or from time to time any part of, the Notes (but if in part, in
an amount not less than $2,000,000 or such lesser amount as shall then be
outstanding), at 100% of the principal amount so prepaid, plus the Make-Whole
Amount determined for the prepayment date with respect to such principal amount.
The Company will give each holder of Notes written notice of each optional
prepayment under this Section 8.2 not less than 15 Business Days and not more
than 60 days prior to the date fixed for such prepayment. Each such notice shall
specify such prepayment date, the aggregate principal amount of the Notes to be
prepaid on such date, the principal amount of each Note held by such holder to
be prepaid (determined in accordance with Section 8.4), and the interest to be
paid on the prepayment date with respect to such principal amount being prepaid,
and shall be accompanied by a certificate of a Senior Financial Officer as to
the estimated Make-Whole Amount due in connection with such prepayment
(calculated as if the date of such notice were the date of the prepayment),
setting forth the details of such computation. Two Business Days prior to such
prepayment, the Company shall deliver to each holder of Notes a certificate of a
Senior Financial Officer specifying the calculation of such Make-Whole Amount as
of the specified prepayment date.
Each partial prepayment of the Notes pursuant to this Section 8.2 will
be applied first, to the amount due on the maturity date of the Notes and
second, to the mandatory prepayments applicable to the Notes, as set forth in
Section 8.1, in the inverse order of the maturity thereof.
8.3 CHANGE IN CONTROL.
(a) NOTICE OF CHANGE IN CONTROL OR CONTROL EVENT. The Company
will, within 5 Business Days after any Responsible Officer has
knowledge of the occurrence of any Change in Control or Control Event
(except to the extent that the Company shall have received an opinion
of its independent counsel that disclosure relating to such Control
Event would violate applicable securities laws, rules or regulations or
the rules or regulations of any exchange or market on which any of the
Company's Capital Stock is listed) , give written notice of such Change
in Control or Control Event to each holder of Notes, unless notice in
respect of such Change in Control (or the Change in Control
contemplated by such Control Event) shall have been given pursuant to
Section 8.3(b). If a Change in Control has occurred, such notice shall
contain and constitute an offer to prepay Notes as described in Section
8.3(c) and shall be accompanied by the certificate described in Section
8.3(g).
(b) CONDITION TO COMPANY ACTION. The Company will not take any
action that consummates or finalizes a Change in Control unless
(i) at least 15 Business Days prior to such action it
shall have given to each holder of Notes written notice
containing and constituting an offer to prepay Notes as
described in Section 8.3(c), accompanied by the certificate
described in Section 8.3(g), and
(ii) contemporaneously with such action, it prepays all
Notes required to be prepaid in accordance with this Section
8.3.
(c) OFFER TO PREPAY NOTES. The offer to prepay Notes
contemplated by Section 8.3(a) and Section 8.3(b) shall be an offer to
prepay, in accordance with and subject to this Section 8.3, all, but
not less than all, the Notes held by each holder (in this case only,
"holder" in respect of any Note registered in the name of a nominee for
a disclosed beneficial owner shall mean such
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
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<PAGE> 24
beneficial owner) on a date specified in such offer (the "PROPOSED
PREPAYMENT DATE"). If such Proposed Prepayment Date is in connection
with an offer contemplated by Section 8.3(a), such date shall be not
less than 15 Business Days and not more than 20 Business Days after the
date of such offer (if the Proposed Prepayment Date shall not be
specified in such offer, the Proposed Prepayment Date shall be the 20th
Business Day after the date of such offer).
(d) ACCEPTANCE; REJECTION. A holder of Notes may accept or
reject the offer to prepay made pursuant to this Section 8.3 by causing
a notice of such acceptance or rejection to be delivered to the Company
at least two Business Days prior to the Proposed Prepayment Date. A
failure by a holder of Notes to respond to an offer to prepay made
pursuant to this Section 8.3 shall be deemed to constitute a rejection
of such offer by such holder.
(e) PREPAYMENT. Prepayment of the Notes to be prepaid pursuant
to this Section 8.3 shall be at 100% of the principal amount of such
Notes, together with interest on such Notes accrued to the date of
prepayment, but without any Make-Whole Amount. The prepayment shall be
made on the Proposed Prepayment Date except as provided in Section
8.3(f).
(f) DEFERRAL PENDING CHANGE IN CONTROL. The obligation of the
Company to prepay Notes pursuant to the offers accepted in accordance
with Section 8.3(d) is subject to the occurrence of the Change in
Control in respect of which such offers and acceptances shall have been
made. In the event that such Change in Control does not occur on the
Proposed Prepayment Date in respect thereof, the prepayment shall be
deferred until and shall be made on the date on which such Change in
Control occurs. The Company shall keep each holder of Notes reasonably
and timely informed of
(i) any such deferral of the date of prepayment,
(ii) the date on which such Change in Control and the
prepayment are expected to occur, and
(iii) any determination by the Company that efforts to
effect such Change in Control have ceased or been abandoned
(in which case the offers and acceptances made pursuant to
this Section 8.3 in respect of such Change in Control shall be
deemed rescinded).
(g) OFFICER'S CERTIFICATE. Each offer to prepay the Notes
pursuant to this Section 8.3 shall be accompanied by a certificate,
executed by a Senior Financial Officer and dated the date of such
offer, specifying:
(i) that such offer is made pursuant to this Section 8.3;
(ii) the Proposed Prepayment Date;
(iii) the last date upon which the offer can be accepted
or rejected, and setting forth the consequences of failing to
provide an acceptance or rejection, as provided in Section
8.3(d);
(iv) the principal amount of each Note offered to be
prepaid;
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
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(v) the interest that would be due on each Note offered to
be prepaid, accrued to the Proposed Prepayment Date;
(vi) that the conditions of this Section 8.3 have been
fulfilled; and
(vii) in reasonable detail, the nature and date or
proposed date of the Change in Control.
(h) EFFECT ON REQUIRED PAYMENTS. The amount of each payment of
the principal of the Notes made pursuant to this Section 8.3 shall be
applied against and reduce each of the then remaining principal
payments due pursuant to Section 8.1 by a percentage equal to the
aggregate principal amount of the Notes so paid divided by the
aggregate principal amount of the Notes outstanding immediately prior
to such payment.
(i) "CHANGE IN CONTROL" DEFINED. "CHANGE IN CONTROL" means the
acquisition, directly or indirectly, by any Person or Persons (other
than members of the Management Group) acting in concert of control or
ownership (beneficially or otherwise) of more than 50% (by number of
shares) of the issued and outstanding Voting Stock of the Company.
(j) "CONTROL EVENT" DEFINED. "CONTROL EVENT" means:
(i) the execution by the Company or any of its
Subsidiaries or Affiliates of any agreement or letter of
intent with respect to any proposed transaction or event or
series of transactions or events which, individually or in the
aggregate, may reasonably be expected to result in a Change in
Control,
(ii) the execution of any written agreement which, when
fully performed by the parties thereto, would result in a
Change in Control, or
(iii) the making of any written offer by any person (as
such term is used in section 13(d) and section 14(d)(2) of the
Exchange Act as in effect on the date of the Closing) or
related persons constituting a group (as such term is used in
Rule 13d-5 under the Exchange Act as in effect on the date of
the Closing) to the holders of the common stock of the
Company, which offer, if accepted by the requisite number of
holders, would result in a Change in Control.
(k) "MANAGEMENT GROUP" DEFINED. "MANAGEMENT GROUP" means each
director of the Company and each of the individuals holding the offices
of President, Chief Executive Officer, Chief Financial Officer and
Chief Operating Officer of the Company, together with Affiliates
thereof.
8.4 ALLOCATION OF PARTIAL PREPAYMENTS.
In the case of each partial prepayment of the Notes pursuant to Section
8.1 or Section 8.2, the principal amount of the Notes to be prepaid shall be
allocated among all of the Notes at the time outstanding in proportion, as
nearly as practicable, to the respective unpaid principal amounts thereof not
theretofore called for prepayment.
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8.5 MATURITY; SURRENDER, ETC.
In the case of each prepayment of Notes pursuant to this Section 8, the
principal amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with interest on such
principal amount accrued to such date and the applicable Make-Whole Amount, if
any. From and after such date, unless the Company shall fail to pay such
principal amount when so due and payable, together with the interest and the
applicable Make-Whole Amount, if any, as aforesaid, interest on such principal
amount shall cease to accrue. Any Note paid or prepaid in full shall be
surrendered to the Company and cancelled and shall not be reissued, and no Note
shall be issued in lieu of any prepaid principal amount of any Note.
8.6 NO OTHER OPTIONAL PREPAYMENTS OR PURCHASE OF NOTES.
The Company will not, and will not permit any Affiliate to, purchase,
redeem, pay, prepay or otherwise acquire, directly or indirectly, any of the
outstanding Notes except upon the payment or prepayment of the Notes in
accordance with the terms of this Agreement and the Notes. The Company will
promptly cancel all Notes acquired by it or any Affiliate pursuant to any
payment, prepayment or purchase of Notes pursuant to any provision of this
Agreement and no Notes may be issued in substitution or exchange for any such
Notes.
8.7 MAKE-WHOLE AMOUNT.
The term "MAKE-WHOLE AMOUNT" means, with respect to any Note, an amount
equal to the excess, if any, of the Discounted Value of the Remaining Scheduled
Payments with respect to the Called Principal of such Note over the amount of
such Called Principal, provided that the Make-Whole Amount may in no event be
less than zero. For the purposes of determining the Make-Whole Amount, the
following terms have the following meanings:
"CALLED PRINCIPAL" means, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to Section 8.2,
or has become or is declared to be immediately due and payable pursuant
to Section 12.1, as the context requires.
"DISCOUNTED VALUE" means, with respect to the Called Principal
of any Note, the amount obtained by discounting all Remaining Scheduled
Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that on which
interest on such Note is payable) equal to the Reinvestment Yield with
respect to such Called Principal.
"REINVESTMENT YIELD" means, with respect to the Called
Principal of any Note, 0.50% over the yield to maturity implied by (a)
the yields reported, as of 10:00 A.M. (New York City time) on the
second Business Day preceding the Settlement Date with respect to such
Called Principal, on the display designated as "Page PX1" on the
Bloomberg Financial Market Service (or such other display as may
replace Page PX1 on the Bloomberg Financial Market Service) for
actively traded U.S. Treasury securities having a maturity equal to the
Remaining Average Life of such Called Principal as of such Settlement
Date, or (b) if such yields are not reported as of such time or the
yields reported as of such time are not ascertainable, the Treasury
Constant Maturity Series Yields reported, for the latest day for which
such yields have been so reported as of the second Business Day
preceding the Settlement Date with respect to such Called Principal, in
Federal
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
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<PAGE> 27
Reserve Statistical Release H.15 (519) (or any comparable successor
publication) for actively traded U.S. Treasury securities having a
constant maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date. Such implied yield will be
determined, if necessary, by (i) converting U.S. Treasury bill
quotations to bond-equivalent yields in accordance with accepted
financial practice and (ii) interpolating linearly between (1) the
actively traded U.S. Treasury security with the duration closest to and
greater than the Remaining Average Life and (2) the actively traded
U.S. Treasury security with the duration closest to and less than the
Remaining Average Life.
"REMAINING AVERAGE LIFE" means, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth
year) obtained by dividing (a) such Called Principal into (b) the sum
of the products obtained by multiplying (i) the principal component of
each Remaining Scheduled Payment with respect to such Called Principal
by (ii) the number of years (calculated to the nearest one-twelfth
year) that will elapse between the Settlement Date with respect to such
Called Principal and the scheduled due date of such Remaining Scheduled
Payment.
"REMAINING SCHEDULED PAYMENTS" means, with respect to the
Called Principal of any Note, all payments of such Called Principal and
interest thereon that would be due after the Settlement Date with
respect to such Called Principal if no payment of such Called Principal
were made prior to its scheduled due date, provided that if such
Settlement Date is not a date on which interest payments are due to be
made under the terms of such Note, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of
interest accrued to such Settlement Date and required to be paid on
such Settlement Date pursuant to Section 8.2 or Section 12.1.
"SETTLEMENT DATE" means, with respect to the Called Principal
of any Note, the date on which such Called Principal is to be prepaid
pursuant to Section 8.2, or has become or is declared to be immediately
due and payable pursuant to Section 12.1, as the context requires.
9. AFFIRMATIVE COVENANTS
The Company covenants that so long as any of the Notes are outstanding:
9.1 COMPLIANCE WITH LAW.
The Company will and will cause each of its Subsidiaries to comply with
all laws, ordinances or governmental rules or regulations to which each of them
is subject, including, without limitation, Environmental Laws, and will obtain
and maintain in effect all licenses, certificates, permits, franchises and other
governmental authorizations necessary to the ownership of their respective
properties or to the conduct of their respective businesses, in each case to the
extent necessary to ensure that non-compliance with such laws, ordinances or
governmental rules or regulations or failures to obtain or maintain in effect
such licenses, certificates, permits, franchises and other governmental
authorizations could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
9.2 INSURANCE.
The Company will and will cause each of its Subsidiaries to maintain,
with financially sound and reputable insurers, insurance with respect to their
respective properties and businesses against such casualties and contingencies,
of such types, on such terms and in such amounts (including deductibles,
co-
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
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insurance and self-insurance, if adequate reserves are maintained with respect
thereto) as is customary in the case of entities of established reputations
engaged in the same or a similar business and similarly situated.
9.3 MAINTENANCE OF PROPERTIES.
The Company will and will cause each of its Subsidiaries to maintain
and keep, or cause to be maintained and kept, their respective properties in
good repair, working order and condition (other than ordinary wear and tear), so
that the business carried on in connection therewith may be properly conducted
at all times, provided that this Section shall not prevent the Company or any
Subsidiary from discontinuing the operation and the maintenance of any of its
properties if such discontinuance is desirable in the conduct of its business
and the Company has concluded that such discontinuance could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
9.4 PAYMENT OF TAXES AND CLAIMS.
The Company will and will cause each of its Subsidiaries to file all
tax returns required to be filed in any jurisdiction and to pay and discharge
all taxes shown to be due and payable on such returns and all other taxes,
assessments, governmental charges, or levies imposed on them or any of their
properties, assets, income or franchises, to the extent such taxes, assessments,
charges or levies have become due and payable and before they have become
delinquent and all claims for which sums have become due and payable that have
or might become a Lien on properties or assets of the Company or any Subsidiary,
provided that neither the Company nor any Subsidiary need pay any such tax or
assessment or claims if (a) the amount, applicability or validity thereof is
contested by the Company or such Subsidiary on a timely basis in good faith and
in appropriate proceedings, and the Company or such Subsidiary has established
adequate reserves therefor in accordance with GAAP on the books of the Company
or such Subsidiary or (b) the nonpayment of all such taxes, assessments, charges
and levies in the aggregate could not reasonably be expected to have a Material
Adverse Effect.
9.5 CORPORATE EXISTENCE, ETC.
The Company will at all times preserve and keep in full force and
effect its corporate existence. Subject to Sections 10.7 and 10.8, the Company
will at all times preserve and keep in full force and effect the corporate
existence of each of its Subsidiaries (unless merged into the Company or a
Subsidiary) and all rights and franchises of the Company and its Subsidiaries
unless, in the good faith judgment of the Company, the termination of or failure
to preserve and keep in full force and effect such corporate existence, right or
franchise could not, individually or in the aggregate, have a Material Adverse
Effect.
9.6 NEW SUBSIDIARIES.
(a) GUARANTY AGREEMENT. The Company will cause each Person
that, after the date of the Closing, becomes a direct or indirect
Domestic Significant Subsidiary of the Company, to become, promptly and
in any event within 30 days of becoming a Domestic Significant
Subsidiary, a Guarantor under the Guaranty Agreement by executing and
delivering to each holder of Notes a Joinder Agreement in the form
attached to the Guaranty Agreement as Annex 2.
(b) SECURITY AGREEMENT. The Company will cause each Person
that, after the date of the Closing, becomes a direct or indirect
Domestic Significant Subsidiary of the Company, to become, promptly and
in any event within 30 days of becoming a Domestic Significant
Subsidiary,
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a Grantor under (and as defined in) the Security Agreement by executing
and delivering to the Collateral Agent and to each holder of Notes an
Instrument of Joinder in the form attached to the Security Agreement as
Exhibit A, and to take all other actions necessary to perfect the Liens
of the Collateral Agent in the Collateral to be granted by such Person
(including, without limitation, the filing of all appropriate Uniform
Commercial Code financing statements, the recording of all appropriate
documents with public officials and the payment of all fees and taxes)
in accordance with the provisions of the Security Agreement.
(c) PLEDGE AGREEMENTS. The Company will execute, and will
cause each Person that, after the date of the Closing, becomes a direct
or indirect Subsidiary of the Company, to execute, promptly and in any
event within 30 days of such Person becoming a Subsidiary, and deliver
to each holder of Notes and the Collateral Agent, a new pledge
agreement (if such Person shall own any Capital Stock of any
Significant Subsidiary), and concurrently therewith the Company and
such Person shall deliver to the Collateral Agent all certificates and
documents constituting Pledged Collateral (as defined in the Pledge
Agreement or such new pledge agreement, as the case may be), together
with all related blank bond powers and stock powers, that in the
opinion of the Collateral Agent are necessary to create and preserve
the Liens with respect to all of the Capital Stock of each Domestic
Significant Subsidiary and at least 65% of the Capital Stock of each
Foreign Significant Subsidiary (other than Safeskin Corporation
(Malaysia) Sdn. Bhd.).
(d) CERTIFICATES REGARDING AUTHORIZATION, ETC. Each Joinder
Agreement and each Security Document or modification thereof delivered
by the Company or any Subsidiary pursuant to this Section 9.6 shall be
accompanied by copies of the constitutive documents and corporate
resolutions (or equivalent) of the Company and such Subsidiary
authorizing the respective transactions contemplated thereby, in each
case certified as true and correct by a Responsible Officer of the
Company and an officer of such Subsidiary.
(e) "DOMESTIC SIGNIFICANT SUBSIDIARY" DEFINED. "DOMESTIC
SIGNIFICANT SUBSIDIARY" means any Significant Subsidiary that is
organized under the laws of the United States or any state thereof.
(f) "FOREIGN SIGNIFICANT SUBSIDIARY" DEFINED. "FOREIGN
SIGNIFICANT SUBSIDIARY" means any Significant Subsidiary that is not a
Domestic Significant Subsidiary.
(g) "SIGNIFICANT SUBSIDIARY" DEFINED. "SIGNIFICANT SUBSIDIARY"
means any Subsidiary that
(i) (A) had net earnings for the fiscal year of the
Company then most recently ended in excess of 5% of
Consolidated Net Earnings for such period, or (B) has assets
in excess of 5% of Consolidated Total Assets as at the end of
the fiscal year of the Company then most recently ended, or
(ii) shall have become liable in respect of any Guaranty
of any of the obligations under the Bank Loan Agreement.
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
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9.7 PARI PASSU.
The Company covenants that its obligations under the Notes and under
this Agreement and the Other Agreements do and will rank at least pari passu
with all its other present and future Bank Debt and all other Debt, if any,
secured by the Liens granted under the Security Documents; provided that the
Synthetic Lease Debt shall be secured by both the Collateral and the Synthetic
Lease Collateral.
9.8 FURTHER ASSURANCES.
(a) GENERALLY. The Company will, and will cause each
Subsidiary to, execute and deliver, within 30 days after any request
therefor by the Required Holders or the Collateral Agent, all further
instruments and documents and take all further action that may be
necessary, in order to give effect to, and to aid in the exercise and
enforcement of the Liens, rights and remedies of the Collateral Agent
under, the Security Documents.
(b) FUTURE REAL PROPERTY. The Company will, and will cause
each Subsidiary to, promptly following the acquisition by the Company
or any such Subsidiary of any fee simple property located within the
United States, provide written notice thereof to the holders of the
Notes and execute and deliver to the Collateral Agent a deed of trust
or mortgage in form and substance acceptable to the Collateral Agent,
creating a first priority Lien on such property (including fixtures) in
favor of the Collateral Agent subject to no Liens, except to the extent
permitted by Section 10.6(a), and provide to the Collateral Agent such
customary lender's title insurance policies, appraisals, environmental
reports and other related documents as the Collateral Agent or the
Required Holders may reasonably request.
(c) LIENS. The Company will, and will cause each Subsidiary
to, execute and deliver, within 30 days after any request therefor by
the Required Holders, all further instruments and documents and take
all further action that may be necessary, in order to create and
perfect Liens in favor of the Collateral Agent in any property of the
Company or its Subsidiaries that is or is intended to be Collateral and
is not then subject to a Lien or to a perfected Lien.
9.9 COMPLIANCE REGARDING YEAR 2000.
The Company will, and will cause each of its Subsidiaries to, use its
commercially reasonable efforts to assure that, not later than June 30, 1999,
the computer-based and other systems of the Company and its Subsidiaries will be
able to effectively process data, including dates after December 31, 1999,
without experiencing any Year 2000 Problem that could have a Material Adverse
Effect.
10. NEGATIVE COVENANTS
The Company covenants that so long as any of the Notes are outstanding:
10.1 TRANSACTIONS WITH AFFILIATES.
The Company will not, and will not permit any Subsidiary to, enter into
directly or indirectly any Material transaction or Material group of related
transactions (including, without limitation, the purchase, lease, sale or
exchange of properties of any kind or the rendering of any service) with any
Affiliate (other than the Company or another Subsidiary), except in the ordinary
course and pursuant to the reasonable
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
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requirements of the Company's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to the Company or such Subsidiary than would
be obtainable in a comparable arm's-length transaction with a Person not an
Affiliate.
10.2 LINE OF BUSINESS.
The Company will not, and will not permit any of its Subsidiaries to,
engage to any substantial extent in any business other than the businesses in
which the Company and its Subsidiaries are engaged on the date of this Agreement
as described in the Memorandum and businesses reasonably related thereto
(including the manufacture and sale of disposable protective products) or in
furtherance thereof.
10.3 MAINTENANCE OF CONSOLIDATED NET WORTH.
The Company will not, at any time, permit Consolidated Net Worth to be
less than the sum of
(a) $75,000,000 plus
(b) an aggregate amount equal to 25% of Consolidated Net
Earnings (but, in each case, only if a positive number) for each
completed fiscal year of the Company beginning with the fiscal year
ending December 31, 1999.
10.4 CONSOLIDATED PRO FORMA INTEREST COVERAGE RATIO.
The Company will not at any time permit the Consolidated Pro Forma
Interest Coverage Ratio to be less than 2.50 to 1.00.
10.5 LIMITATION ON DEBT.
(a) MAINTENANCE OF FUNDED DEBT. The Company will not at any
time permit Consolidated Funded Debt to exceed 300% of Consolidated
Cash Flow for the then most recently ended period of four consecutive
fiscal quarters of the Company.
(b) LIMITATION ON SUBSIDIARY DEBT. The Company will not permit
any of its Subsidiaries to create, assume, incur, guaranty or otherwise
become obligated in respect of any Debt, except:
(i) Debt of any Subsidiary in existence on the date of the
Closing (after giving effect to the application of the
proceeds of the Notes pursuant to Section 5.14) and described
in Schedule 5.15);
(ii) Debt of any Subsidiary owing to the Company or
another Subsidiary;
(iii) Debt evidenced by the Notes and the Guaranty
Agreement;
(iv) Debt of any Subsidiary under such Subsidiary's
guaranty of the obligations under the Bank Loan Agreement or
in respect of the Synthetic Lease Debt or Additional Debt, so
long as such obligations of such Subsidiary are subject to the
sharing provisions of the Intercreditor Agreement;
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(v) Debt of the Specified Subsidiaries under the Hedge
Facility, provided that (A) such Debt by its terms matures on
demand or within one year from the date of the creation
thereof and such Debt is not directly or indirectly renewable
or extendible at the option of the obligor in respect thereof
to a date one year or more from such date, and (B) on the date
such Debt is incurred and after giving effect thereto and to
the concurrent retirement of any other Debt under the Hedge
Facility, the total amount of all Debt outstanding under the
Hedge Facility would not exceed $10,000,000 (or its equivalent
in any other currency);
(vi) Capital Lease Obligations of any Subsidiary; and
(vii) Debt of any Subsidiary secured by a Lien permitted
by Section 10.6(a)(vi) or Section 10.6(a)(vii).
(c) LIMITATION ON PRIORITY DEBT. The Company will not permit
Priority Debt at any time to exceed 15% of Consolidated Net Worth at
such time.
(d) DEBT OF ACQUIRED SUBSIDIARIES. Any Person becoming a
Subsidiary after the date hereof shall be deemed to have incurred all
of its then outstanding Debt at the time it becomes a Subsidiary.
10.6 LIENS.
(a) NEGATIVE PLEDGE. The Company will not, and will not permit
any of its Subsidiaries to, directly or indirectly create, assume,
incur or suffer to be created, assumed or incurred or to exist (upon
the happening of a contingency or otherwise), any Lien on or with
respect to any property or asset (including, without limitation, any
document or instrument in respect of goods or accounts receivable) of
the Company or any such Subsidiary, whether now owned or held or
hereafter acquired, or any income or profits therefrom, or assign or
otherwise convey any right to receive income or profits, except:
(i) TAXES, ETC. -- Liens for taxes, assessments or other
governmental charges that are not yet due and payable or the
payment of which is not at the time required by Section 9.4;
(ii) LEGAL PROCEEDINGS -- Liens
(a) arising from judicial attachments and judgments,
(b) securing appeal bonds, supersedeas bonds, and
(c) arising in connection with court proceedings
(including, without limitation, surety bonds and letters
of credit or any other instrument serving a similar
purpose),
provided that the execution or other enforcement of such Liens is
effectively stayed and the claims secured thereby are being actively
contested in good faith and by appropriate proceedings, and provided
further that the aggregate amount so secured will not at any time
exceed $3,000,000;
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
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(iii) ORDINARY COURSE LIENS -- Liens (other than any Lien
imposed by ERISA) incurred or deposits made in the ordinary course of
business
(a) in connection with workers' compensation,
unemployment insurance, social security and other like
laws,
(b) to secure (or to obtain letters of credit that
secure) the performance of tenders, statutory obligations,
surety and performance bonds (of a type other than set
forth in Section 10.6(a)(ii)), bids, leases (other than
Capital Leases), purchase, construction or sales contracts
and other similar obligations, in each case not incurred
or made in connection with the borrowing of money, the
obtaining of advances or credit or the payment of the
deferred purchase price of property,
(c) to secure the claims or demands of materialmen,
mechanics, carriers, warehousemen, vendors, repairmen,
landlords, lessors and other like Persons, arising in the
ordinary course of business, and
(d) in the nature of reservations, zoning laws and
ordinances, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases
and other similar title exceptions or encumbrances
affecting real property,
provided that (1) any amounts secured by such Liens are not overdue and
(2) such Liens do not, in the aggregate, materially detract from the
value of such property or materially impair the use of such property in
the conduct of the business of the Company, or the conduct of the
business of the Company and its Subsidiaries taken as a whole;
(iv) (a) EXISTING LIENS -- Liens in existence as of
the date of the Closing securing Debt and listed in
Schedule 5.15, and
(b) RENEWALS -- Liens securing renewals,
extensions (as to time) , replacements and refinancings of
Debt secured by the Liens listed in Schedule 5.15,
provided that the amount of Debt secured by each such Lien
is not increased in excess of the amount of Debt
outstanding on the date of such renewal, extension or
refinancing, and none of such Liens is extended to include
any additional property of the Company or any Subsidiary;
(V) INTRA-GROUP LIENS -- Liens on property of the Company
or any of its Subsidiaries securing Debt owing to the Company
or to any of its Subsidiaries;
(VI) PURCHASE MONEY LIENS -- Liens on tangible property
(or any improvement thereon) acquired or constructed by the
Company or any Subsidiary after the date of the Closing to
secure Debt of the Company or such Subsidiary incurred in
connection with such acquisition or construction, provided
that
(a) no such Lien shall extend to or cover any
property other than the property (or improvement thereon)
being acquired or constructed,
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
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(b) the amount of Debt secured by any such Lien shall
not exceed an amount equal to the lesser of (I) the cost
to the Company or such Subsidiary of the property (or
improvement thereon) so acquired or constructed and (II)
the Fair Market Value (as determined in good faith by the
Company) of such property (or improvement thereon),
determined at the time of such acquisition or at the time
of substantial completion of such construction, and
(c) such Lien shall be created concurrently with or
within 180 days after such acquisition or the substantial
completion of such construction;
(vii) ACQUISITION LIENS -- Liens existing on property of a
Person immediately prior to its being consolidated with or
merged into the Company or a Subsidiary or its becoming a
Subsidiary, or any Lien existing on any property acquired by
the Company or any Subsidiary at the time such property is so
acquired (whether or not the Debt secured thereby shall have
been assumed), provided that
(a) no such Lien shall have been created or assumed
in contemplation of such consolidation or merger or such
Person's becoming a Subsidiary or such acquisition of
property,
(b) each such Lien shall extend solely to the item or
items of property so acquired and, if required by the
terms of the instrument originally creating such Lien,
other property which is an improvement to or is acquired
for specific use in connection with such acquired
property, and
(c) the principal amount of the Debt secured by any
such Lien shall at no time exceed an amount equal to the
lesser of (1) the cost to the Company or such Subsidiary
of the property (or improvement thereon) so acquired and
(2) the Fair Market Value (as determined in good faith by
the board of directors of the Company or such Subsidiary)
of such property (or improvement thereon), determined at
the time of such transaction;
(viii) COLLATERAL LIENS -- Liens in respect of the
Collateral permitted under the Security Documents, including
(a) Liens not incurred or made in connection with the
borrowing of money, the obtaining of advances or credit or
the payment of the deferred purchase price of property;
and
(b) Liens securing the Notes, the Bank Debt, the
Synthetic Lease Debt and other Debt ("ADDITIONAL DEBT") of
the Company, provided that in the case of Additional Debt,
(I) such Additional Debt is permitted to be incurred at
such time under the applicable provisions of the
Intercreditor Agreement and (II) at the time of the
incurrence thereof and immediately after giving effect
thereto and to the concurrent retirement of any other
Debt, no Default or Event of Default would exist;
(ix) NON-CONSENSUAL LIENS -- Non-consensual Liens securing
Debt, provided that each such Lien is discharged within 30
days after a Responsible Officer obtaining
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knowledge of such Lien and the aggregate amount of Debt
secured by all such Liens will not at any time exceed
$1,000,000;
(x) ACCOUNTS RECEIVABLE SALES - Liens securing the
obligations of the Company to purchasers of accounts
receivable in connection with any Permitted Accounts
Receivable Transfer; and
(xi) PRIORITY DEBT -- Liens securing Debt (other than any
Bank Debt) of the Company and not otherwise permitted by
clauses (i) through (x), inclusive, of this Section 10.6(a),
provided that at the time of the incurrence thereof and
immediately after giving effect thereto and to the concurrent
retirement of any other Debt, no Default or Event of Default
would exist.
(b) EQUAL AND RATABLE LIEN; EQUITABLE LIEN. In case any
property shall be subjected to a Lien in violation of Section 10.6(a),
the Company will forthwith make or cause to be made, to the fullest
extent permitted by applicable law, provision whereby the Notes will be
secured equally and ratably with all other obligations secured thereby
pursuant to such agreements and instruments as shall be approved by the
Required Holders, and the Company will cause to be delivered to each
holder of a Note an opinion of independent counsel to the effect that
such agreements and instruments are enforceable in accordance with
their terms, and in any such case the Notes shall have the benefit, to
the full extent that, and with such priority as, the holders of Notes
may be entitled under applicable law, of an equitable Lien on such
property securing the Notes. Such violation of Section 10.6(a) will
constitute an Event of Default hereunder, whether or not any such
provision is made pursuant to this Section 10.6(b).
(c) FINANCING STATEMENTS. The Company will not, and will not
permit any of its Subsidiaries to, sign or file a financing statement
under the Uniform Commercial Code of any jurisdiction that names the
Company or such Subsidiary as debtor, or sign any security agreement
authorizing any secured party thereunder to file any such financing
statement, except, in any such case, a financing statement filed or to
be filed to perfect or protect a security interest that the Company or
such Subsidiary is entitled to create, assume or incur, or permit to
exist, under the foregoing provisions of this Section 10.6 or to
evidence for informational purposes a lessor's interest in property
leased to the Company or any such Subsidiary.
(d) LIENS OF SUBSIDIARIES. Each Person that becomes a
Subsidiary after the date of the Closing will be deemed to have granted
on the date such Person becomes a Subsidiary all the Liens in existence
on its property on such date.
10.7 MERGER, CONSOLIDATION, ETC.
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, consolidate with, or merge into, any other Person or
permit any other Person to consolidate with, or merge into, it, or Transfer
substantially all of its assets in a single transaction or series of
transactions to any Person, except that
(a) any Subsidiary (other than a Guarantor) may consolidate
with or merge into, or Transfer substantially all of its assets in a
single transaction or series of transactions to, the Company (with the
Company being the survivor thereof) or another Subsidiary if,
immediately after, and after giving effect to, such transaction, no
Default or Event of Default shall exist;
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
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(b) any Subsidiary (other than a Guarantor) may consolidate
with or merge into any other Person, or Transfer substantially all of
its assets in a single transaction or series of transactions to any
Person, or allow any other Person to consolidate with or merge into it,
if
(i) in the case of any consolidation or merger in which
the successor or surviving corporation is a Subsidiary,
immediately after, and after giving effect to, such
transaction, no Default or Event of Default would exist, and
(ii) in the case of any Transfer, or any consolidation or
merger in which the successor or surviving corporation is not
a Subsidiary, such transaction would be permitted under the
provisions of Section 10.8 (deeming such consolidation or
merger to be a Transfer of all of the assets and liabilities
of such Subsidiary) and immediately after, and after giving
effect to, such transaction, no Default or Event of Default
would exist; and
(c) the Company or any Guarantor may consolidate with or merge
into any other Person, or Transfer substantially all of its assets in a
single transaction or series of transactions to any Person, or permit
any other Person to consolidate with or merge into it, if
(i) the successor formed by such consolidation or the
survivor of such merger or the Person that acquires by
Transfer substantially all of the assets of the Company or
such Guarantor as an entirety, as the case may be (the
"SUCCESSOR CORPORATION"), shall be a solvent corporation
organized and existing under the laws of the United States of
America, any state thereof or the District of Columbia;
(ii) the Successor Corporation, if not the Company or such
Guarantor, shall have executed and delivered to each holder of
any Notes its assumption of the due and punctual performance
and observance of the obligations of the Company under this
Agreement, the Notes and the Security Documents, or of such
Guarantor under the Guaranty Agreement, as the case may be,
including, without limitation, all covenants herein and
therein contained, pursuant to documents in form and substance
satisfactory to the Required Holders, and the Company shall
have caused to be delivered to each holder an opinion, in form
and substance satisfactory to the Required Holders, of
independent counsel reasonably satisfactory to the Required
Holders, to the effect that all agreements or instruments
effecting such assumption are enforceable in accordance with
their terms and comply with the terms hereof; and
(iii) immediately after, and after giving effect to, such
transaction, no Default or Event of Default would exist.
No such Transfer of substantially all of the assets of the Company
shall have the effect of releasing the Company or any Successor Corporation from
its liability under the Financing Documents.
10.8 SALE OF ASSETS, ETC.
(a) SALE OF ASSETS, ETC. The Company will not, and will not
permit any of its Subsidiaries to, make any Asset Disposition, unless:
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(i) in the good faith opinion of the Company, such Asset
Disposition is in exchange for consideration having a Fair
Market Value at least equal to that of the property exchanged;
and
(ii) immediately after giving effect to such Asset
Disposition:
(a) no Default or Event of Default would exist; and
(b) the Disposition Value of all property that was
the subject of any Asset Disposition occurring on or after
the date of the Closing up to and including the date of
such Asset Disposition would not exceed 25% of
Consolidated Total Assets determined as of the end of the
then most recently ended fiscal quarter of the Company.
Notwithstanding the foregoing, if the Net Proceeds Amount for any
Transfer is applied by the Company to a Debt Prepayment Application (as
more particularly provided in subsection (b) of this Section 10.8)
substantially concurrently with such Transfer (whether or not the offer
of prepayment within such Debt Prepayment Application is accepted by
one or more holders of Notes), or a Property Reinvestment Application
within 12 months after such Transfer, then such Transfer, only for the
purpose of determining compliance with clause (a)(ii)(B) of this
Section 10.8 as of any date, shall be deemed not to be an Asset
Disposition.
If the Net Proceeds amount in respect of any Transfer are
intended to be applied to a Property Reinvestment Application, and the
Company shall fail to apply an amount equal to the entire Net Proceeds
Amount in respect of such Transfer to a Property Reinvestment
Application within 12 months after such Transfer, the Company shall be
deemed to have consummated an Asset Disposition to which the
immediately preceding paragraph does not apply in an amount equal to
the unapplied portion of the Net Proceeds Amount in respect of such
Transfer. Such deemed Asset Disposition shall be deemed to have
occurred on the date of the original Asset Disposition and the
Company's compliance with this Section 10.8 shall be determined, as of
such date, as if such unapplied portion of the Net Proceeds Amount had
not been excluded for purposes of determining compliance with clause
(a)(ii)(B) of this Section 10.8.
(b) DEBT PREPAYMENT OFFER. In connection with any Transfer
consummated after the date of the Closing and any Debt Prepayment
Application by the Company pursuant to subsection (a) of this Section
10.8 with respect thereto, the following procedure will apply:
(i) The Company shall provide written notice to each
holder of Notes of, and such written notice shall constitute,
an offer by the Company to prepay a principal amount of the
Notes of each such holder equal to such holder's Ratable
Portion (as defined in the definition of "Debt Prepayment
Application") of the Net Proceeds Amount with respect to such
Transfer, together with accrued interest with respect to such
principal amount being prepaid, but without any Make-Whole
Amount. Such written notice shall be given to each holder of
Notes not less than 30 days and not more than 60 days prior to
the actual date of prepayment (the "DEBT PREPAYMENT
APPLICATION DATE"), and shall set forth:
(a) the Debt Prepayment Application Date,
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(B) the principal amount of the Notes to be so
prepaid, and the amount of accrued interest thereon being
paid, and
(C) a statement describing, in reasonable detail, the
Transfer in respect of such prepayment and a calculation
of the Net Proceeds Amount in respect thereof.
(ii) Each holder of a Note that fails to respond to such
offer in writing at least 10 days prior to the Debt Prepayment
Application Date shall be deemed to have rejected such offer.
The Company may retain for its own purposes the Ratable
Portion of any rejecting holder.
(iii) The obligation of the Company to prepay Notes on any
Debt Prepayment Application Date is subject to the occurrence
of the Transfer in respect of which notice by the Company
shall have been made pursuant to subsection (b)(i). In the
event that such Transfer does not occur on the Debt Prepayment
Application Date in respect thereof, the prepayment shall be
deferred until and shall be made on the date on which such
Transfer occurs. The Company shall keep each holder of Notes
reasonably and timely informed of
(A) any such deferral of the date of prepayment,
(B) the date on which such Transfer and the
prepayment are expected to occur, and
(C) any determination by the Company that efforts to
effect such Transfer have ceased or been abandoned (in
which case the offer to make a Debt Prepayment Application
pursuant to this Section 10.8(b) shall be deemed
rescinded).
(iv) Any partial prepayment of the Notes pursuant to this
Section 10.8(b) shall reduce the principal amount of each
required prepayment of the Notes becoming due under Section
8.1 on and after the date of such prepayment and the principal
amount of the required payment due on the maturity date of the
Notes in the same proportion as the aggregate unpaid principal
amount of the Notes is reduced as a result of such partial
prepayment.
11. EVENTS OF DEFAULT
An "EVENT OF DEFAULT" shall exist if any of the following conditions or
events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or
Make-Whole Amount, if any, on any Note when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise; or
(b) the Company defaults in the payment of any interest on any
Note for more than 5 Business Days after the same becomes due and
payable; or
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(c) the Company defaults in the performance of or compliance
with any term contained in any of Sections 10.1 through 10.8,
inclusive, or Section 7.1(d); or
(d) the Company defaults in the performance of or compliance
with any term contained herein (other than those referred to in
paragraphs (a), (b) and (c) of this Section 11) and such default is not
remedied within 30 days after the earlier of (i) a Responsible Officer
obtaining actual knowledge of such default and (ii) the Company
receiving written notice of such default from any holder of a Note, or
(e) any representation or warranty made in writing by or on
behalf of any Obligor or by any officer of any Obligor in any Financing
Document or in any writing furnished in connection with the
transactions contemplated by any Financing Document proves to have been
false or incorrect in any material respect on the date as of which
made; or
(f) (i) the Company or any Significant Subsidiary is in
default (as principal or as guarantor or other surety) in the
payment of any principal of or premium or make-whole amount or
interest on any Indebtedness (other than Indebtedness under
this Agreement, the Other Agreements and the Notes) beyond any
period of grace provided with respect thereto, that
individually or together with such other Indebtedness as to
which any such failure exists has an aggregate outstanding
principal amount of at least $3,000,000, or
(ii) the Company or any Significant Subsidiary is in
default in the performance of or compliance with any term of
any evidence of any Indebtedness (other than Indebtedness
under this Agreement, the Other Agreements and the Notes),
that individually or together with such other Indebtedness as
to which any such failure exists has an aggregate outstanding
principal amount of at least $3,000,000, or of any mortgage,
indenture or other agreement relating thereto or any other
condition exists, and as a consequence of such default or
condition such Indebtedness has become, or has been declared
(or, if such default or condition shall have existed for more
than 60 days, one or more Persons are entitled to declare such
Indebtedness to be), due and payable before its stated
maturity or before its regularly scheduled dates of payment,
or
(iii) as a consequence of the occurrence or continuation
of any event or condition (other than the passage of time or
the right of the holder of Indebtedness to convert such
Indebtedness into equity interests),
(a) the Company or any Significant Subsidiary has
become obligated to purchase or repay Indebtedness (other
than Indebtedness under this Agreement, the Other
Agreements and the Notes) before its regular maturity or
before its regularly scheduled dates of payment in an
aggregate outstanding principal amount of at least
$3,000,000 (unless the Company or such Significant
Subsidiary shall have become so obligated as a result of a
voluntary Transfer of property or a mandatory prepayment
under the Bank Loan Agreement in connection with the
incurrence of Debt or the issuance of Capital Stock), or
(b) if such default or condition shall have existed
for more than 60 days, one or more Persons have the right
to require the Company or any Significant Subsidiary so to
purchase or repay such Indebtedness; or
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
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(g) the Company or any Significant Subsidiary (i) is generally
not paying, or admits in writing its inability to pay, its debts as
they become due, (ii) files, or consents by answer or otherwise to the
filing against it of, a petition for relief or reorganization or
arrangement or any other petition in bankruptcy, for liquidation or to
take advantage of any bankruptcy, insolvency, reorganization,
moratorium or other similar law of any jurisdiction, (iii) makes an
assignment of all or substantially all of its assets for the benefit of
its creditors, (iv) consents to the appointment of a custodian,
receiver, trustee or other officer with similar powers with respect to
it or with respect to any substantial part of its property, (v) is
adjudicated as insolvent or to be liquidated, or (vi) takes corporate
action for the purpose of any of the foregoing; or
(h) a court or governmental authority of competent
jurisdiction enters an order appointing, without consent by the Company
or any Significant Subsidiary, a custodian, receiver, trustee or other
officer with similar powers with respect to the Company or any
Significant Subsidiary or with respect to any substantial part of the
property of the Company or any Significant Subsidiary, or constituting
an order for relief or approving a petition for relief or
reorganization or any other petition in bankruptcy or for liquidation
or to take advantage of any bankruptcy or insolvency law of any
jurisdiction, or ordering the dissolution, winding-up or liquidation of
the Company or any Significant Subsidiary, or any such petition shall
be filed against the Company or any Significant Subsidiary and such
petition shall not be dismissed within 60 days; or
(i) a final judgment or judgments for the payment of money
aggregating in excess of $3,000,000 are rendered against one or more of
the Company and its Significant Subsidiaries and which judgments are
not, within 45 days after entry thereof, bonded, discharged or stayed
pending appeal, or are not discharged within 45 days after the
expiration of such stay; or
(j) any Obligor defaults in the performance of or compliance
with any term contained in any Security Document and such default is
not remedied within (A) 30 days after the earlier of (i) a Responsible
Officer obtaining actual knowledge of such default and (ii) the Company
receiving written notice of such default from the Collateral Agent or
any holder of a Note or (B) such shorter period of time, if any,
provided in such Security Document to cure such default; or
(k) (i) the Guaranty Agreement shall cease to be in full
force and effect or shall be declared by a court or
governmental authority of competent jurisdiction to be void,
voidable or unenforceable against any Guarantor,
(ii) the validity or enforceability of the Guaranty
Agreement against any Guarantor shall be contested by such
Guarantor, the Company or any Affiliate, or
(iii) any Guarantor, the Company or any Affiliate shall
deny that such Guarantor has any further liability or
obligation under the Guaranty Agreement; or
(l) if (i) any Plan shall fail to satisfy the minimum
funding standards of ERISA or the Code for any plan year or
part thereof or a waiver of such standards or extension of any
amortization period is sought or granted under section 412 of
the Code,
(ii) a notice of intent to terminate any Plan shall have
been or is reasonably expected to be filed with the PBGC or
the PBGC shall have instituted proceedings under ERISA section
4042 to terminate or appoint a trustee to administer any Plan
or the PBGC
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
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shall have notified the Company or any ERISA Affiliate that a
Plan may become a subject of any such proceedings,
(iii) the aggregate "amount of unfunded benefit
liabilities" (within the meaning of section 4001(a)(18) of
ERISA) under all Plans, determined in accordance with Title IV
of ERISA, shall exceed $1,000,000,
(iv) the Company or any ERISA Affiliate shall have
incurred or is reasonably expected to incur any liability
pursuant to Title I or IV of ERISA or the penalty or excise
tax provisions of the Code relating to employee benefit plans,
(v) the Company or any ERISA Affiliate withdraws from any
Multiemployer Plan, or
(vi) the Company or any Subsidiary establishes or amends
any employee welfare benefit plan that provides
post-employment welfare benefits in a manner that would
increase the liability of the Company or any Subsidiary
thereunder;
and any such event or events described in clauses (i) through (vi)
above, either individually or together with any other such event or
events, could reasonably be expected to have a Material Adverse Effect.
As used in Section 11(l), the terms "EMPLOYEE BENEFIT PLAN" and "EMPLOYEE
WELFARE BENEFIT PLAN" shall have the respective meanings assigned to such terms
in section 3 of ERISA.
12. REMEDIES ON DEFAULT, ETC.
12.1 ACCELERATION.
(a) If an Event of Default with respect to the Company
described in paragraph (g) or paragraph (h) of Section 11 (other than
an Event of Default described in clause (i) of paragraph (g) or
described in clause (vi) of paragraph (g) by virtue of the fact that
such clause encompasses clause (i) of paragraph (g)) has occurred, all
the Notes then outstanding shall automatically become immediately due
and payable.
(b) If any other Event of Default has occurred and is
continuing, any holder or holders of more than 66-2/3% in principal
amount of the Notes at the time outstanding may at any time at its or
their option, by notice or notices to the Company, declare all the
Notes then outstanding to be immediately due and payable.
(c) If any Event of Default described in paragraph (a) or (b)
of Section 11 has occurred and is continuing, any holder or holders of
Notes at the time outstanding affected by such Event of Default may at
any time, at its or their option, by notice or notices to the Company,
declare all the Notes held by it or them to be immediately due and
payable.
Upon any Notes becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Notes will forthwith mature and
the entire unpaid principal amount of such Notes, plus (x) all accrued and
unpaid interest thereon and (y) the Make-Whole Amount determined in respect of
such principal amount (to the full extent permitted by applicable law), shall
all be immediately due and payable,
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
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in each and every case without presentment, demand, protest or further notice,
all of which are hereby waived. The Company acknowledges, and the parties hereto
agree, that each holder of a Note has the right to maintain its investment in
the Notes free from repayment by the Company (except as herein specifically
provided for) and that the provision for payment of a Make-Whole Amount by the
Company in the event that the Notes are prepaid or are accelerated as a result
of an Event of Default, is intended to provide compensation for the deprivation
of such right under such circumstances.
12.2 OTHER REMEDIES.
If any Default or Event of Default has occurred and is continuing, and
irrespective of whether any Notes have become or have been declared immediately
due and payable under Section 12.1, the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained in any Financing Document, or
for an injunction against a violation of any of the terms thereof, or in aid of
the exercise of any power granted thereby or by law or otherwise.
12.3 RESCISSION.
At any time after any Notes have been declared due and payable pursuant
to clause (b) or clause (c) of Section 12.1, the holders of not less than a
majority in principal amount of the Notes then outstanding, by written notice to
the Company, may rescind and annul any such declaration and its consequences if
(a) the Company has paid all overdue interest on the Notes, all principal of and
Make-Whole Amount, if any, due and payable on any Notes other than by reason of
such declaration, and all interest on such overdue principal and Make-Whole
Amount, if any, and (to the extent permitted by applicable law) any overdue
interest in respect of the Notes, at the Default Rate, (b) all Events of Default
and Defaults, other than non-payment of amounts that have become due solely by
reason of such declaration, have been cured or have been waived pursuant to
Section 17, and (c) no judgment or decree has been entered for the payment of
any monies due pursuant hereto or to the Notes. No rescission and annulment
under this Section 12.3 will extend to or affect any subsequent Event of Default
or Default or impair any right consequent thereon.
12.4 NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC.
No course of dealing and no delay on the part of any holder of any Note
in exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power or
remedy conferred by any Financing Document upon any holder of any Note shall be
exclusive of any other right, power or remedy referred to herein or therein or
now or hereafter available at law, in equity, by statute or otherwise. Without
limiting the obligations of the Company under Section 15, the Company will pay
to the holder of each Note on demand such further amount as shall be sufficient
to cover all costs and expenses of such holder incurred in any enforcement or
collection under this Section 12, including, without limitation, reasonable
attorneys' fees, expenses and disbursements.
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES
13.1 REGISTRATION OF NOTES.
The Company shall keep at its principal executive office a register for
the registration and registration of transfers of Notes. The name and address of
each holder of one or more Notes, each transfer thereof and the name and address
of each transferee of one or more Notes shall be registered in
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
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such register. Prior to due presentment for registration of transfer, the Person
in whose name any Note shall be registered shall be deemed and treated as the
owner and holder thereof for all purposes hereof, and the Company shall not be
affected by any notice or knowledge to the contrary. The Company shall give to
any holder of a Note that is an Institutional Investor promptly upon request
therefor, a complete and correct copy of the names and addresses of all
registered holders of Notes.
13.2 TRANSFER AND EXCHANGE OF NOTES.
Upon surrender of any Note at the principal executive office of the
Company for registration of transfer or exchange (and in the case of a surrender
for registration of transfer, duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder of such Note or
his attorney duly authorized in writing and accompanied by the address for
notices of each transferee of such Note or part thereof), the Company shall
execute and deliver, at the Company's expense (except as provided below), one or
more new Notes (as requested by the holder thereof) in exchange therefor, in an
aggregate principal amount equal to the unpaid principal amount of the
surrendered Note. Each such new Note shall be payable to such Person as such
holder may request and shall be substantially in the form of Exhibit 1. Each
such new Note shall be dated and bear interest from the date to which interest
shall have been paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid thereon. The Company may
require payment of a sum sufficient to cover any stamp tax or governmental
charge imposed in respect of any such transfer of Notes. Notes shall not be
transferred in denominations of less than $500,000, provided that if necessary
to enable the registration of transfer by a holder of its entire holding of
Notes, one Note may be in a denomination of less than $500,000. Any transferee,
by its acceptance of a Note registered in its name (or the name of its nominee),
shall be deemed to have made the representation set forth in Section 6.2.
13.3 REPLACEMENT OF NOTES.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the ownership of and the loss, theft, destruction or mutilation of any Note
(which evidence shall be, in the case of an Institutional Investor, notice from
such Institutional Investor of such ownership and such loss, theft, destruction
or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the holder of such Note
is, or is a nominee for, an original purchaser or an Institutional
Investor, such Person's own unsecured agreement of indemnity shall be
deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.
14. PAYMENTS ON NOTES
14.1 PLACE OF PAYMENT.
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
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Subject to Section 14.2, payments of principal, Make-Whole Amount, if
any, and interest becoming due and payable on the Notes shall be made in New
York, New York at the principal office of Morgan Guaranty Trust Company of New
York or its successor. The Company may at any time thereafter, by notice to each
holder of a Note, change the place of payment of the Notes so long as such place
of payment shall be either a principal office of the Company in such
jurisdiction or a principal office of a bank or trust company in such
jurisdiction.
14.2 HOME OFFICE PAYMENT.
So long as you or your nominee shall be the holder of any Note, and
notwithstanding anything contained in Section 14.1 or in such Note to the
contrary, the Company will pay all sums becoming due on such Note for principal,
Make-Whole Amount, if any, and interest by the method and at the address
specified for such purpose below your name in Schedule A, or by such other
method or at such other address as you shall have from time to time specified to
the Company in writing for such purpose, without the presentation or surrender
of such Note or the making of any notation thereon, except that upon written
request of the Company made concurrently with or reasonably promptly after
payment or prepayment in full of any Note, you shall surrender such Note for
cancellation, reasonably promptly after any such request, to the Company at its
principal executive office or at the place of payment most recently designated
by the Company pursuant to Section 14.1. Prior to any sale or other disposition
of any Note held by you or your nominee you will, at your election, either
endorse thereon the amount of principal paid thereon and the last date to which
interest has been paid thereon or surrender such Note to the Company in exchange
for a new Note or Notes pursuant to Section 13.2. The Company will afford the
benefits of this Section 14.2 to any Institutional Investor that is the direct
or indirect transferee of any Note purchased by you under this Agreement and
that has made the same agreement relating to such Note as you have made in this
Section 14.2.
15. EXPENSES, ETC.
15.1 TRANSACTION EXPENSES.
Whether or not the transactions contemplated by the Financing Documents
are consummated, the Company will pay all reasonable costs and reasonable
expenses (including reasonable attorneys' fees of a special counsel and, if
reasonably required, local or other counsel) incurred by you and each Other
Purchaser or holder of a Note in connection with such transactions and in
connection with any amendments, waivers or consents under or in respect of the
Financing Documents (whether or not such amendment, waiver or consent becomes
effective), including, without limitation: (a) the reasonable costs and
reasonable expenses incurred in enforcing or defending (or determining whether
or how to enforce or defend) any rights under the Financing Documents or in
responding to any subpoena or other legal process or informal investigative
demand issued in connection with the Financing Documents, or by reason of being
a holder of any Note, and (b) the costs and expenses, including financial
advisors' fees, incurred in connection with the insolvency or bankruptcy of the
Company or any Subsidiary or in connection with any work-out or restructuring of
the transactions contemplated by the Financing Documents. The Company will pay,
and will save you and each other holder of a Note harmless from, all claims in
respect of any fees, costs or expenses if any, of brokers and finders (other
than those retained by you).
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<PAGE> 45
15.2 SURVIVAL.
The obligations of the Company under this Section 15 will survive the
payment or transfer of any Note, the enforcement, amendment or waiver of any
provision of any Financing Document, and the termination of any Financing
Document.
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT
All representations and warranties contained in any Financing Document
shall survive the execution and delivery of this Agreement and the Notes, the
purchase or transfer by you of any Note or portion thereof or interest therein
and the payment of any Note, and may be relied upon by any subsequent holder of
a Note, regardless of any investigation made at any time by or on behalf of you
or any other holder of a Note. All statements contained in any certificate or
other instrument delivered by or on behalf of the Company pursuant to any
Financing Document shall be deemed representations and warranties of the Company
under this Agreement. Subject to the preceding sentence, the Financing Documents
embody the entire agreement and understanding between you and the Company and
supersede all prior agreements and understandings relating to the subject matter
hereof.
17. AMENDMENT AND WAIVER
17.1 REQUIREMENTS.
This Agreement and the Notes may be amended, and the observance of any
term hereof or of the Notes may be waived (either retroactively or
prospectively), with (and only with) the written consent of the Company and the
Required Holders, except that (a) no amendment or waiver of any of the
provisions of any of Sections 1, 2, 3, 4, 5, 6 and 21, or any defined term (as
it is used therein), will be effective as to you unless consented to by you in
writing, and (b) no such amendment or waiver may, without the written consent of
the holder of each Note at the time outstanding affected thereby, (i) subject to
the provisions of Section 12 relating to acceleration or rescission, change the
amount or time of any prepayment or payment of principal of, or reduce the rate
or change the time of payment or method of computation of interest or of the
Make-Whole Amount on, the Notes, (ii) change the percentage of the principal
amount of the Notes the holders of which are required to consent to any such
amendment or waiver, or (iii) amend any of Sections 8, 11(a), 11(b), 12, 17 and
20.
17.2 SOLICITATION OF HOLDERS OF NOTES.
(a) SOLICITATION. The Company will provide each holder of the
Notes (irrespective of the amount of Notes then owned by it) with
sufficient information, sufficiently far in advance of the date a
decision is required, to enable such holder to make an informed and
considered decision with respect to any proposed amendment, waiver or
consent in respect of any of the provisions hereof or of the Notes. The
Company will deliver executed or true and correct copies of each
amendment, waiver or consent effected pursuant to the provisions of
this Section 17 to each holder of outstanding Notes promptly following
the date on which it is executed and delivered by, or receives the
consent or approval of, the requisite holders of Notes.
(b) PAYMENT. The Company will not directly or indirectly pay
or cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, or grant any security, to any
holder of Notes as consideration for or as an inducement to the
entering into by any holder of Notes of any waiver or amendment of any
of the terms and provisions hereof unless such remuneration is
concurrently paid, or security is concurrently granted, on the same
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
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<PAGE> 46
terms, ratably to each holder of Notes then outstanding even if such
holder did not consent to such waiver or amendment.
17.3 BINDING EFFECT, ETC.
Any amendment or waiver consented to as provided in this Section 17
applies equally to all holders of Notes and is binding upon them and upon each
future holder of any Note and upon the Company without regard to whether such
Note has been marked to indicate such amendment or waiver. No such amendment or
waiver will extend to or affect any obligation, covenant, agreement, Default or
Event of Default not expressly amended or waived or impair any right consequent
thereon. No course of dealing between the Company and the holder of any Note nor
any delay in exercising any rights hereunder or under any Note shall operate as
a waiver of any rights of any holder of such Note. As used herein, the term
"THIS AGREEMENT" and references thereto shall mean this Agreement as it may from
time to time be amended or supplemented.
17.4 NOTES HELD BY COMPANY, ETC.
Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Notes then outstanding
approved or consented to any amendment, waiver or consent to be given under any
of the Financing Documents, or have directed the taking of any action provided
in any of the Financing Documents to be taken upon the direction of the holders
of a specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by the Company or any of its
Affiliates shall be deemed not to be outstanding.
18. NOTICES
All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address
specified for such communications in Schedule A, or at such
other address as you or it shall have specified to the Company
in writing,
(ii) if to any other holder of any Note, to such holder at
such address as such other holder shall have specified to the
Company in writing, or
(iii) if to the Company, to the Company at its address set
forth at the beginning hereof to the attention of the Chief
Financial Officer, telecopier: 619-350-2380, or at such other
address as the Company shall have specified to the holder of
each Note in writing.
Notices under this Section 18 will be deemed given only when actually received.
19. REPRODUCTION OF DOCUMENTS
This Agreement and all documents relating hereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by you at the Closing
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
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<PAGE> 47
(except the Notes themselves), and (c) financial statements, certificates and
other information previously or hereafter furnished to you, may be reproduced by
you by any photographic, photostatic, microfilm, microcard, miniature
photographic or other similar process and you may destroy any original document
so reproduced. The Company agrees and stipulates that, to the extent permitted
by applicable law, any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made by you in
the regular course of business) and any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence. This
Section 19 shall not prohibit the Company or any other holder of Notes from
contesting any such reproduction to the same extent that it could contest the
original, or from introducing evidence to demonstrate the inaccuracy of any such
reproduction.
20. CONFIDENTIAL INFORMATION
For the purposes of this Section 20, "CONFIDENTIAL INFORMATION" means
information delivered to you by or on behalf of the Company or any Subsidiary in
connection with the transactions contemplated by or otherwise pursuant to this
Agreement that is proprietary in nature and that was clearly marked or labeled
or otherwise adequately identified when received by you as being confidential
information of the Company or such Subsidiary, provided that such term does not
include information that
(a) was publicly known or otherwise known to you prior to the
time of such disclosure,
(b) subsequently becomes publicly known through no act or
omission by you or any person acting on your behalf,
(c) otherwise becomes known to you other than through
disclosure by the Company or any Subsidiary, or
(d) constitutes financial statements delivered to you under
Section 7.1 that are otherwise publicly available.
You will maintain the confidentiality of such Confidential Information in
accordance with procedures adopted by you in good faith to protect confidential
information of third parties delivered to you, provided that you may deliver or
disclose Confidential Information to:
(i) your directors, officers, employees, trustees, agents,
attorneys and affiliates (to the extent such disclosure
reasonably relates to the administration of the investment
represented by your Notes),
(ii) your financial advisors and other professional
advisors who agree to hold confidential the Confidential
Information substantially in accordance with the terms of this
Section 20,
(iii) any other holder of any Note,
(iv) any Institutional Investor to which you sell or offer
to sell such Note or any part thereof or any participation
therein (if such Person has agreed in writing prior to its
receipt of such Confidential Information to be bound by the
provisions of this Section 20),
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
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(v) any Person from which you offer to purchase any
Security of the Company (if such Person has agreed in writing
prior to its receipt of such Confidential Information to be
bound by the provisions of this Section 20),
(vi) any federal or state regulatory authority having
jurisdiction over you,
(vii) the National Association of Insurance Commissioners
or any similar organization, or any nationally recognized
rating agency that requires access to information about your
investment portfolio or
(viii) any other Person to which such delivery or
disclosure may be necessary or appropriate
(a) to effect compliance with any law, rule,
regulation or order applicable to you,
(b) in response to any subpoena or other legal
process,
(c) in connection with any litigation to which you
are a party, or
(d) if an Event of Default has occurred and is
continuing, to the extent you may reasonably determine
such delivery and disclosure to be necessary or
appropriate in the enforcement or for the protection of
the rights and remedies under the Financing Documents.
Each holder of a Note, by its acceptance of a Note, will be deemed to have
agreed to be bound by and to be entitled to the benefits of this Section 20 as
though it were a party to this Agreement. On reasonable request by the Company
in connection with the delivery to any holder of a Note of information required
to be delivered to such holder under this Agreement or requested by such holder
(other than a holder that is a party to this Agreement or its nominee), such
holder will enter into an agreement with the Company embodying the provisions of
this Section 20.
21. SUBSTITUTION OF PURCHASER
You shall have the right to substitute any one of your Affiliates as
the purchaser of the Notes that you have agreed to purchase hereunder, by
written notice to the Company, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon receipt
of such notice, wherever the word "you" is used in this Agreement (other than in
this Section 21), such word shall be deemed to refer to such Affiliate in lieu
of you. In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to you all of the Notes then
held by such Affiliate, upon receipt by the Company of notice of such transfer,
wherever the word "you" is used in this Agreement (other than in this Section
21), such word shall no longer be deemed to refer to such Affiliate, but shall
refer to you, and you shall have all the rights of an original holder of the
Notes under this Agreement.
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
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22. MISCELLANEOUS
22.1 ADDITIONAL NOTES.
Subject to the terms and provisions hereof (including, but not limited
to, Section 10.5), the Company may, from time to time, issue and sell additional
promissory notes pursuant to agreements which may incorporate by reference all
or certain of the provisions of this Agreement and the Other Agreements. Such
incorporation by reference shall not have the effect of constituting such
promissory notes as Notes for any purpose, whether for acceleration of the
Notes, rescission of such acceleration, or the exercise of any other amendments
or waivers of the provisions hereof or of the Other Agreements, or otherwise.
22.2 SUCCESSORS AND ASSIGNS.
All covenants and other agreements contained in this Agreement by or on
behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and permitted assigns (including, without limitation, any
subsequent holder of a Note) whether so expressed or not.
22.3 PAYMENTS DUE ON NON-BUSINESS DAYS; WHEN PAYMENTS DEEMED
RECEIVED.
(a) PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of
principal of or Make-Whole Amount or interest on any Note that is due
on a date other than a Business Day shall be made on the next
succeeding Business Day without including the additional days elapsed
in the computation of the interest payable on such next succeeding
Business Day.
(b) PAYMENTS, WHEN RECEIVED. Any payment to be made to the
holders of Notes hereunder or under the Notes shall be deemed to have
been made on the Business Day such payment actually becomes available
to such holder at such holder's bank prior to 12:00 noon (local time of
such bank).
22.4 SEVERABILITY.
Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
22.5 CONSTRUCTION.
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant contained
herein, so that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant. Where any provision herein refers to action to be taken by any Person,
or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
44
<PAGE> 50
22.6 COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
22.7 GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND
THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK
EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE
THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
22.8 JURISDICTION.
EACH OF THE PARTIES HERETO IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW
YORK, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE OTHER DOCUMENTS AND INSTRUMENTS CONTEMPLATED HEREBY AND
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT
OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT. EACH
OF THE PARTIES HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT
TO VENUE TO THE EXTENT ANY SUCH PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS
SECTION 22.8.
[Remainder of page intentionally blank. Next page is signature page.]
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
45
<PAGE> 51
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company, whereupon the foregoing shall become a binding agreement between you
and the Company.
Very truly yours,
SAFESKIN CORPORATION
By:_________________________
Name:
Title:
The foregoing is hereby
agreed to as of the
date thereof.
[PURCHASER]
By:_________________________
Name:
Title:
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
46
<PAGE> 52
SCHEDULE B
DEFINED TERMS
As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:
"ACQUISITION" means any acquisition, directly or indirectly, by the
Company or any Subsidiary, after the date of the Closing, of
(a) any Capital Stock of a Person that concurrently with such
acquisition becomes a Subsidiary, or
(b) all or substantially all of the assets of an ongoing
business.
"ADDITIONAL DEBT" is defined in Section 10.6(a)(viii)(B).
"AFFILIATE" means, at any time, and with respect to any Person,
(a) any other Person that at such time directly or indirectly
through one or more intermediaries Controls, or is Controlled by, or is
under common Control with, such first Person, and
(b) any Person beneficially owning or holding, directly or
indirectly, 10% or more of any class of voting or equity interests of
the Company or any Subsidiary or any Person of which the Company and
its Subsidiaries beneficially own or hold, in the aggregate, directly
or indirectly, 10% or more of any class of voting or equity interests.
As used in this definition, "Control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise. Unless the context otherwise clearly requires, any
reference to an "Affiliate" is a reference to an Affiliate of the Company.
"AGREEMENT, THIS" is defined in Section 17.3.
"ASSET DISPOSITION" means any Transfer except:
(a) any Transfer from a Subsidiary to the Company or a
Wholly-Owned Subsidiary;
(b) any Permitted Accounts Receivable Transfer; or
(c) any Transfer made in the ordinary course of business and
involving only property that is either (i) inventory held for sale or
(ii) equipment, fixtures, supplies or materials no longer required in
the operation of the business of the Company or any of its Subsidiaries
or that is obsolete.
"BANK DEBT" means any Debt of the Company or any of its Subsidiaries
owed to any of the Banks under the Bank Loan Agreement or any related agreement,
instrument or other document.
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
Schedule B-1
<PAGE> 53
"BANK LOAN AGREEMENT" means the Amended and Restated Revolving/Term
Loan Agreement, dated as of March 5, 1999, among the Company, the Banks and
Union Bank of California, N.A., as agent, as may be amended, restated, otherwise
modified or replaced from time to time; provided that if any such new agreement
shall at any time be entered into by the Company, then concurrently therewith
the Company shall, unless otherwise agreed by the Required Holders, cause the
Banks under such new agreement to enter into a new intercreditor agreement with
the holders of the Notes substantially in the form of the Intercreditor
Agreement.
"BANKS" means the banks initially party to the Bank Loan Agreement
(namely, Union Bank of California, N.A., Comerica Bank, The First National Bank
of Chicago, Sanwa Bank California, U.S. Bank, National Association and Wells
Fargo Bank, National Association) and each other bank or other Person from time
to time acting as a lender or other provider of financial accommodations to the
Company or any Subsidiary under the Bank Loan Agreement.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day
on which commercial banks in New York City are required or authorized to be
closed.
"CAPITAL LEASE" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"CAPITAL LEASE OBLIGATION" means, with respect to any Person and a
Capital Lease, the amount of the obligation of such Person as the lessee under
such Capital Lease that would, in accordance with GAAP, appear as a liability on
a balance sheet of such Person.
"CAPITAL STOCK" means any class of capital stock, share capital or
similar equity interest of a Person.
"CHANGE IN CONTROL" is defined in Section 8.3(i).
"CLOSING" is defined in Section 3.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
"COLLATERAL" has, at any time, the meaning specified in the
Intercreditor Agreement at such time.
"COLLATERAL AGENT" means Union Bank of California, N.A., as collateral
agent under the Security Documents and the Intercreditor Agreement, and any
successor or assign appointed in accordance with the provisions of the
Intercreditor Agreement.
"COLLATERAL RELEASE EVENT" means, at any time, the written consent by
all of the holders of the Notes and the holders of all of the other obligations
that are secured by the Collateral at such time, to release all of the
Collateral from the lien of the Security Documents.
"COMPANY" is defined in the introductory sentence of this Agreement.
"CONFIDENTIAL INFORMATION" is defined in Section 20.
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
Schedule B-2
<PAGE> 54
"CONSOLIDATED CASH FLOW" means, with respect to any period,
Consolidated Net Earnings for such period plus all amounts deducted in the
computation thereof on account of (a) Consolidated Interest Expense, (b) taxes
imposed on or measured by income or excess profits and (c) depreciation and
amortization. For purposes of determining "Consolidated Cash Flow" for any
period, any Acquisition or Major Asset Disposition that is consummated during
such period shall be deemed to have been consummated as of the first day of such
period (and the earnings and other results of operations during such period in
respect of the property acquired or disposed of shall be included in the case of
an Acquisition or excluded in the case of a Major Asset Disposition, in each
case for purposes of such determination) and any incurrence of Debt in
connection with any such Acquisition or repayment of Debt in connection with any
such Major Asset Disposition shall be deemed to have occurred as of such first
day.
"CONSOLIDATED FUNDED DEBT" means, as of any date of determination, the
total of all Funded Debt of the Company and its Subsidiaries outstanding on such
date, after eliminating all offsetting debits and credits between the Company
and its Subsidiaries and all other items required to be eliminated in the course
of the preparation of consolidated financial statements of the Company and its
Subsidiaries in accordance with GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, with respect to any period, the
sum (without duplication) of the following (in each case, eliminating all
offsetting debits and credits between the Company and its Subsidiaries and all
other items required to be eliminated in the course of the preparation of
consolidated financial statements of the Company and its Subsidiaries in
accordance with GAAP): (a) all interest expense in respect of Debt of the
Company and its Subsidiaries (including imputed interest on Capital Lease
Obligations) deducted in determining Consolidated Net Earnings for such period,
plus (b) all debt discount and expense amortized or required to be amortized in
the determination of Consolidated Net Earnings for such period, plus (c) all
lease payments paid or required to be paid under the lease of the Synthetic
Lease Collateral during such period.
"CONSOLIDATED NET EARNINGS" means, with reference to any period, the
net income (or loss) of the Company and its Subsidiaries for such period (taken
as a cumulative whole), as determined in accordance with GAAP, after eliminating
all offsetting debits and credits between the Company and its Subsidiaries and
all other items required to be eliminated in the course of the preparation of
consolidated financial statements of the Company and its Subsidiaries in
accordance with GAAP, provided that there shall be excluded:
(a) the income (or loss) of any Person (other than a
Subsidiary) in which the Company or any Subsidiary has an ownership
interest, except to the extent that any such income has been actually
received by the Company or such Subsidiary in the form of cash
dividends or similar cash distributions, and
(b) any net income or gain, or net loss, during such period
from any extraordinary items.
"CONSOLIDATED NET WORTH" means, at any time, the total stockholders'
equity of the Company and its Subsidiaries as would be shown on a consolidated
balance sheet of the Company and its Subsidiaries as of such time prepared in
accordance with GAAP.
"CONSOLIDATED PRO FORMA INTEREST COVERAGE RATIO" means, at any time,
the ratio of (a) Consolidated Cash Flow for the period of four consecutive
fiscal quarters of the Company then most recently ended (for purposes of this
definition, a "ONE YEAR RETROSPECTIVE PERIOD"), after giving effect to
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
Schedule B-3
<PAGE> 55
the assumptions set forth below, to (b) Consolidated Interest Expense for such
One Year Retrospective Period, after giving effect to the assumptions set forth
below.
For purposes of determining "Consolidated Cash Flow" and "Consolidated
Interest Expense" in this definition, any Acquisition or Major Asset Disposition
that is consummated during the One Year Retrospective Period then most recently
ended shall be deemed to have been consummated as of the first day of such One
Year Retrospective Period (and the earnings and other results of operations
during such period in respect of the property acquired or disposed of shall
accordingly be included in the case of an Acquisition, or excluded in the case
of a Major Asset Disposition, for purposes of such determination) and any
incurrence of Debt in connection with any such Acquisition or repayment of Debt
in connection with any such Major Asset Disposition shall be deemed to have
occurred as of such first day.
"CONSOLIDATED TOTAL ASSETS" means, at any time, the total assets of the
Company and its Subsidiaries that would be shown as assets on a consolidated
balance sheet of the Company and its Subsidiaries as of such time prepared in
accordance with GAAP.
"CONTROL EVENT" is defined in Section 8.3(j).
"DEBT" means, with respect to any Person, without duplication,
(a) its liabilities for borrowed money and its redemption
obligations in respect of mandatorily redeemable Preferred Stock;
(b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable arising in
the ordinary course of business but including, without limitation, all
liabilities created or arising under any conditional sale or other
title retention agreement with respect to any such property);
(c) its Capital Lease Obligations;
(d) all liabilities for borrowed money secured by any Lien
with respect to any property owned by such Person (whether or not it
has assumed or otherwise become liable for such liabilities); and
(e) any Guaranty of such Person with respect to liabilities of
a type described in any of clauses (a) through (d) hereof;
provided that, with respect to the Company, Debt shall not include any unfunded
obligations which may now or hereafter exist with respect to Company's Plans.
"DEBT PREPAYMENT APPLICATION" means, with respect to any
Transfer of property by the Company or any Subsidiary, the application
by the Company or such Subsidiary of cash in an amount equal to the Net
Proceeds Amount with respect to such Transfer to pay Qualified Debt,
provided that in the course of making such application the Company
shall offer to prepay each outstanding Note in accordance with Section
10.8(b) in a principal amount that equals the Ratable Portion for such
Note. If any holder of a Note fails to accept such offer of prepayment,
then, for purposes of the preceding sentence only, the Company
nevertheless will be deemed to have paid Qualified Debt in an amount
equal to the Ratable Portion for such Note.
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
Schedule B-4
<PAGE> 56
As used in this definition,
"Ratable Portion" means, for any Note, an amount equal to the
product of
(a) the Net Proceeds Amount being so offered to the payment of
Qualified Debt, multiplied by
(b) a fraction the numerator of which is the outstanding
principal amount of such Note and the denominator of which is the
aggregate outstanding principal amount of Qualified Debt.
"Qualified Debt" means (a) at all times prior to the
Collateral Release Event, the Notes and any secured Debt of the Company
or its Subsidiaries that by its terms is not subordinated in right of
payment to any other Debt of the Company or any Subsidiary and (b) at
all times after the Collateral Release Event, the Notes and any Debt of
the Company or its Subsidiaries that by its terms is not subordinated
in right of payment to any unsecured Debt of the Company or any
Subsidiary; provided that in no event shall Qualified Debt include (i)
any Debt owing to any of the Subsidiaries or any Affiliate, or (ii) any
Debt in respect of any revolving credit or similar facility providing
the Company or such Subsidiary with the right to obtain loans or other
extensions of credit from time to time, except to the extent that in
connection with such payment of Debt the availability of credit under
such credit facility is permanently reduced by an amount not less than
the amount of such proceeds applied to the payment of such Debt.
"DEBT PREPAYMENT APPLICATION DATE" is defined in Section 10.8(b).
"DEFAULT" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default.
"DEFAULT RATE" means that rate of interest that is the greater of (i)
2% per annum above the rate of interest stated in clause (a) of the first
paragraph of the Notes or (ii) 2% over the rate of interest publicly announced
from time to time by Morgan Guaranty Trust Company of New York in New York, New
York (or its successor) as its "base" or "prime" rate.
"DISPOSITION VALUE" means, at any time, with respect to any property
(a) in the case of property that does not constitute
Subsidiary Stock, the book value thereof, valued at the time of such
disposition in good faith by the Company, and
(b) in the case of property that constitutes Subsidiary Stock,
an amount equal to that percentage of book value of the assets of the
Subsidiary that issued such stock as is equal to the percentage that
the book value of such Subsidiary Stock represents of the book value of
all of the outstanding Capital Stock of such Subsidiary (assuming, in
making such calculations, that all Securities convertible into such
Capital Stock are so converted and giving full effect to all
transactions that would occur or be required in connection with such
conversion) determined at the time of the disposition thereof, in good
faith by the Company.
"DOMESTIC SIGNIFICANT SUBSIDIARY" is defined in Section
9.6(e).
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
Schedule B-5
<PAGE> 57
"ENVIRONMENTAL LAWS" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under section 414 of the Code.
"EVENT OF DEFAULT" is defined in Section 11.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time.
"FAIR MARKET VALUE" means, at any time and with respect to any
property, the sale value of such property that would be realized in an
arm's-length sale at such time between an informed and willing buyer and an
informed and willing seller (neither being under a compulsion to buy or sell).
"FINANCING DOCUMENTS" means, collectively, this Agreement, the Other
Agreements, the Notes, the Guaranty Agreement, the Intercreditor Agreement, the
Security Agreement, the Pledge Agreement and any other Security Document
executed from time to time.
"FOREIGN PENSION PLAN" means any plan, fund or other similar program
(a) established or maintained outside of the United States of
America by any one or more of the Company or any of its Subsidiaries
primarily for the benefit of the employees (substantially all of whom
are aliens not residing in the United States of America) of the Company
or its Subsidiaries which plan, fund or other similar program provides
for retirement income for such employees or results in a deferral of
income for such employees in contemplation of retirement and
(b) not otherwise subject to ERISA.
"FOREIGN SIGNIFICANT SUBSIDIARY" is defined in Section 9.6(f).
"FUNDED DEBT" means, at any time and with respect to any Person, all
Debt of such Person which by its terms or by the terms of any instrument or
agreement relating thereto matures, or which is otherwise payable or unpaid, one
year or more from, or is directly or indirectly renewable or extendible at the
option of such Person to a date one year or more (including, without limitation,
an option of such Person under a revolving credit or similar agreement
obligating the lender or lenders to extend credit over a period of one year or
more) from, the date of the creation thereof, and includes, without duplication,
Current Maturities of Funded Debt, provided that any Debt under a revolving
credit or similar agreement that has been utilized for working capital purposes
and that would at such time otherwise be classified as "Funded Debt" shall be
excluded from "Funded Debt" if there shall have been during the then immediately
preceding 365 days a period of at least 30 consecutive days on each of which
there shall have been no such Debt outstanding.
As used in this definition,
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
Schedule B-6
<PAGE> 58
"Current Maturities of Funded Debt" means, at any time and with respect
to any item of Funded Debt, the portion of such Funded Debt outstanding at such
time which by the terms of such Funded Debt or the terms of any instrument or
agreement relating thereto is due on demand or one year or less from such time
(whether by sinking fund, other required prepayment or final payment at
maturity) and is not directly or indirectly renewable, extendible or refundable
at the option of the obligor under an agreement or firm commitment in effect at
such time to a date more than one year from such time.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"GOVERNMENTAL AUTHORITY" means
(a) the government of
(i) the United States of America or any state or other
political subdivision thereof, or
(ii) any jurisdiction in which the Company or any
Subsidiary conducts all or any part of its business, or that
asserts jurisdiction over any properties of the Company or any
Subsidiary, or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"GUARANTOR" means, at any time, each Person (including, without
limitation, the Initial Guarantor) that at such time is a guarantor under the
Guaranty Agreement.
"GUARANTY" means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including, without limitation, obligations
incurred through an agreement, contingent or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any
property constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment
of such indebtedness or obligation, or (ii) to maintain any working
capital or other balance sheet condition or any income statement
condition of any other Person or otherwise to advance or make available
funds for the purchase or payment of such indebtedness or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such indebtedness or
obligation of the ability of any other Person to make payment of the
indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness or
obligation against loss in respect thereof.
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
Schedule B-7
<PAGE> 59
In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
"GUARANTY AGREEMENT" is defined in Section 4.14.
"HAZARDOUS MATERIAL" means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).
"HEDGE FACILITY" means, collectively, one or more credit facilities
entered into by one or both of the Specified Subsidiaries which are utilized
solely for the purpose of mitigating foreign exchange risk associated with the
ordinary course of business by the Specified Subsidiaries.
"HOLDER" means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by the Company pursuant to Section
13.1.
"INDEBTEDNESS" means, with respect to any Person, without duplication,
(a) its liabilities for borrowed money and its redemption
obligations in respect of mandatorily redeemable Preferred Stock;
(b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable arising in
the ordinary course of business but including all liabilities created
or arising under any conditional sale or other title retention
agreement with respect to any such property);
(c) Capital Lease Obligations of such Person;
(d) all liabilities for borrowed money secured by any Lien
with respect to any property owned by such Person (whether or not it
has assumed or otherwise become liable for such liabilities);
(e) all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its
account by banks and other financial institutions (whether or not
representing obligations for borrowed money);
(f) Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities of
a type described in any of clauses (a) through (f) hereof.
Without limitation of the foregoing, Indebtedness of any Person shall include
all obligations of such Person of the character described in clauses (a) through
(g) to the extent such Person or its property remains legally liable in respect
thereof notwithstanding that any such obligation is deemed to be extinguished
under GAAP.
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
Schedule B-8
<PAGE> 60
"INITIAL GUARANTOR" means Safeskin Scientific Corporation, a California
corporation.
"INSTITUTIONAL INVESTOR" means (a) any original purchaser of a Note,
(b) any holder of a Note holding more than 5% of the aggregate principal amount
of the Notes then outstanding, and (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.
"INTERCREDITOR AGREEMENT" is defined in Section 4.9.
"LIEN" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"MAJOR ASSET DISPOSITION" means any Asset Disposition, directly or
indirectly, by the Company or any Subsidiary, after the date of the Closing, of
(a) all or substantially all of the Capital Stock or assets of
a Subsidiary; or
(b) any line of business of the Company and its Subsidiaries.
"MAKE-WHOLE AMOUNT" is defined in Section 8.7.
"MANAGEMENT GROUP" is defined in Section 8.3(k).
"MATERIAL" means material in relation to the business, operations,
financial condition, assets, properties, or prospects of the Company and its
Subsidiaries taken as a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, operations, financial condition, assets or properties of the Company
and its Subsidiaries taken as a whole, or (b) the ability of any Obligor to
perform its obligations under any of the Financing Documents to which it is a
party, or (c) the validity or enforceability of any of the Financing Documents.
"MEMORANDUM" is defined in Section 5.3.
"MULTIEMPLOYER PLAN" means any Plan that is a "multiemployer plan" (as
such term is defined in section 4001(a)(3) of ERISA).
"NET PROCEEDS AMOUNT" means, with respect to any Transfer of any
property by any Person, an amount equal to the difference of
(a) the aggregate amount of the consideration (valued at the
Fair Market Value of such consideration at the time of the consummation
of such Transfer) received by such Person in respect of such Transfer,
minus
(b) all ordinary and reasonable out-of-pocket costs and
expenses actually incurred by such Person in connection with such
Transfer.
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
Schedule B-9
<PAGE> 61
"NOTES" is defined in Section 1.
"OBLIGORS" means the Company and each Guarantor.
"OFFICER'S CERTIFICATE" means a certificate of a Senior Financial
Officer or of any other officer of the Company whose responsibilities extend to
the subject matter of such certificate.
"OTHER AGREEMENTS" is defined in Section 2.
"OTHER PURCHASERS" is defined in Section 2.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"PERMITTED ACCOUNTS RECEIVABLE TRANSFER" means any Transfer, during any
fiscal quarter of the Company, of accounts receivable (without recourse) to any
Person (other than an Affiliate) in connection with the compromise or collection
thereof, provided that (i) the sale price for such Transfer would not be less
than 95% of the amount of such accounts receivable, (ii) after giving effect
thereto, the amount of such accounts receivable together with the aggregate
amount of all other accounts receivable Transferred by the Company and its
Subsidiaries during such fiscal quarter would not exceed $10,000,000, and (iii)
immediately after, and after giving effect to such Transfer, no Default or Event
of Default would exist.
"PERSON" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"PLAN" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.
"PLEDGE AGREEMENT" is defined in Section 4.11.
"PREFERRED STOCK" means any class of Capital Stock of a Person that is
preferred over any other class of Capital Stock of such Person as to the payment
of dividends or other equity distributions or the payment of any amount upon
liquidation or dissolution of such Person.
"PRIORITY DEBT" means, at any time, without duplication, the sum of
(a) all Debt of the Company secured by any Lien on any
property of the Company or any Subsidiary, other than any such Debt
secured by Liens permitted by any one or more of clauses (a)(i) through
(a)(x), inclusive, of Section 10.6, plus
(b) all Debt of Subsidiaries,
provided that there shall be excluded from Priority Debt (i) Debt of any
Guarantor under the Guaranty Agreement, (ii) Debt of any Guarantor referred to
in the foregoing clause (i) under such Guarantor's guaranty of the obligations
under the Bank Loan Agreement or in respect of the Synthetic Lease Debt or the
Additional Debt, so long as such obligations of such Guarantor are subject to
the sharing provisions of the Intercreditor Agreement, (iii) Debt of any
Subsidiary with respect to which the holder thereof has a
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
Schedule B-10
<PAGE> 62
claim on the assets of such Subsidiary which is pari passu with, or junior to,
the claim of the holders of the Notes (either directly or through the Collateral
Agent) against such assets, and (iv) Debt of any Subsidiary under clause (b)
above owing solely to the Company or any Wholly-Owned Subsidiary.
"PROPERTY" or "PROPERTIES" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible, choate
or inchoate.
"PROPERTY REINVESTMENT APPLICATION" means, with respect to any Transfer
of property, the application of an amount equal to the Net Proceeds Amount with
respect to such Transfer to the acquisition by the Company or any Subsidiary of
operating assets of the Company or any Subsidiary of a nature similar, and a
value at least equivalent, to the property subject to such Transfer.
"PROPOSED PREPAYMENT DATE" is defined in Section 8.3(c).
"PTE" is defined in Section 5.12(f).
"QPAM EXEMPTION" is defined in Section 6.2(d).
"REQUIRED HOLDERS" means, at any time, the holder or holders of at
least 66-2/3% in principal amount of the Notes at the time outstanding
(exclusive of Notes then owned by the Company or any of its Affiliates).
"RESPONSIBLE OFFICER" means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time.
"SECURITY" has the meaning set forth in section 2(1) of the Securities
Act.
"SECURITY AGREEMENT" is defined in Section 4.10.
"SECURITY DOCUMENTS" means, collectively, the Security Agreement, the
Pledge Agreement and each other agreement, document or other instrument relating
to the Collateral executed from time to time, all as amended or supplemented
from time to time.
"SENIOR FINANCIAL OFFICER" means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.
"SIGNIFICANT SUBSIDIARY" is defined in Section 9.6(g).
"SOURCE" is defined in Section 6.2.
"SPECIFIED SUBSIDIARIES" means and includes each of Safeskin
Corporation (Thailand) Limited and Safeskin Medical & Scientific (Thailand)
Limited, each of which is a Thailand corporation.
"SUBSIDIARY" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity,
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
Schedule B-11
<PAGE> 63
and any partnership or joint venture if more than a 50% interest in the profits
or capital thereof is owned by such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries (unless such partnership or
joint venture can and does ordinarily take major business actions without the
prior approval of such Person or one or more of its Subsidiaries). Unless the
context otherwise clearly requires, any reference to a "Subsidiary" is a
reference to a Subsidiary of the Company.
"SUBSIDIARY STOCK" means, with respect to any Person, the Capital Stock
(or any options or warrants to purchase stock or other Securities exchangeable
for or convertible into any Capital Stock) of any Subsidiary of such Person.
"SUCCESSOR CORPORATION" is defined in 10.7(c)(i).
"SWAPS" means, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount of
the obligation under any Swap shall be the amount determined in respect thereof
as of the end of the then most recently ended fiscal quarter of such Person,
based on the assumption that such Swap had terminated at the end of such fiscal
quarter, and in making such determination, if any agreement relating to such
Swap provides for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous payment of
amounts by and to such Person, then in each such case, the amount of such
obligation shall be the net amount so determined.
"SYNTHETIC LEASE COLLATERAL" means the real property and related
improvements, together with any leases, rents or other assets associated
therewith or proceeds thereof in which a security interest has been granted to
secure the Synthetic Lease Debt pursuant to the Synthetic Lease Documents.
"SYNTHETIC LEASE DEBT" means, at any time, the Synthetic Lease
Outstandings (as defined in the Intercreditor Agreement) at such time .
"SYNTHETIC LEASE DOCUMENTS" means, collectively, the Participation
Agreement, dated as of March 5, 1999, entered into by the Company with the
Synthetic Lease Lenders, Union Bank California, N.A., in its capacities as
trustee and as agent for the Synthetic Lease Lenders, and the other parties
identified on the signature pages thereof, and each of the other "Operative
Agreements" (as defined in Annex A to such Participation Agreement), in each
case as may be amended, restated, otherwise modified or replaced from time to
time.
"SYNTHETIC LEASE LENDERS" means the Banks and their respective
successors and assigns under the Synthetic Lease Documents.
"TRANSFER" means, with respect to any Person, any transaction in which
such Person sells, conveys, transfers or leases (as lessor) any of its property,
including, without limitation, Subsidiary Stock.
"VOTING STOCK" means Capital Stock of any class or classes of a
corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate directors (or
Persons performing similar functions), irrespective of whether or not at the
time stock of any of the class or classes shall have or might have special
voting power or rights by reason of the happening of any contingency.
"WHOLLY-OWNED SUBSIDIARY" means, at any time, any Subsidiary 100% of
all of the equity interests (except directors' qualifying shares) and voting
interests of which are owned by any one or more of the Company and the
Company's other Wholly-Owned Subsidiaries at such time.
"YEAR 2000 PROBLEM" is defined in Section 5.21
SAFESKIN CORPORATION NOTE PURCHASE AGREEMENT
Schedule B-12
<PAGE> 1
EXHIBIT 10.49
INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT
DATED AS OF MARCH 5, 1999
among
UNION BANK OF CALIFORNIA, N.A.,
as the Bank Agent
THE NOTEHOLDERS HEREIN NAMED
THE SYNTHETIC LEASE INVESTOR HEREIN NAMED
UNION BANK OF CALIFORNIA, N.A.,
as the Synthetic Lease Financing Agent
UNION BANK OF CALIFORNIA, N.A.,
as the Collateral Agent
SAFESKIN CORPORATION
and
THE GRANTORS AND GUARANTORS HEREIN NAMED
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
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<S> <C>
ARTICLE I DEFINITIONS........................................................................3
ARTICLE II ACTS OF SECURED CREDITORS; OBLIGATIONS...........................................12
Section 2.1 Appointment of Collateral Agent. .....................................12
Section 2.2 Restrictions on Separate Enforcement Actions. ........................12
Section 2.3 Determination of Amounts of Obligations. .............................12
Section 2.4 Notice of Triggering Event. ..........................................13
ARTICLE III DUTIES OF COLLATERAL AGENT......................................................13
Section 3.1 Notices to Secured Creditors. ........................................13
Section 3.2 Actions Under Security Documents; Powers of Collateral Agent...........13
Section 3.3 Limitations on Responsibility of Collateral Agent. ...................14
Section 3.4 Reliance by Collateral Agent...........................................15
Section 3.5 Resignation and Removal of the Collateral Agent........................15
Section 3.6 Expenses and Indemnification. ........................................16
ARTICLE IV PROCEEDS OF SECURITY DOCUMENTS; OTHER AMOUNTS
RECEIVED FOLLOWING TRIGGERING EVENT ................................................17
Section 4.1 Disbursement Accounts; Application of Proceeds.........................17
(a) Establishment of Disbursement Account. ..............................17
(b) Deposits into Disbursement Account. .................................18
(c) Notices to Secured Creditors. .......................................18
(d) Determination of Outstanding Obligations. ...........................18
(e) Disbursements to Secured Creditors. .................................18
(f) Collateral Agent's Costs and Expenses. ..............................19
Section 4.2 Turnover of Collateral Received by Secured Creditors. ................20
Section 4.3 Ratable Sharing by Secured Creditors...................................20
(a) Sharing Payments. ...................................................20
(b) Determination of Pro Rata Shares and Deemed Collateral
Proceeds. ....................................................20
Section 4.4 Sharing of Distributions to Unsecured Creditors. .....................21
Section 4.5 Escrows. .............................................................21
(a) Synthetic Lease Outstandings..........................................21
(b) Canceled L/C Exposure. ..............................................22
(c) Escrow Account. .....................................................22
Section 4.6 Reconciliation of Recovered Payments. ................................22
</TABLE>
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<TABLE>
<S> <C>
Section 4.7 Payments. ............................................................23
Section 4.8 Expenses. ............................................................23
Section 4.9 Actual Proceeds Retained. ...........................................23
ARTICLE V REPRESENTATIONS AND WARRANTIES....................................................23
ARTICLE VI INTERCREDITOR ARRANGEMENTS.......................................................24
Section 6.1 Security Interests and Bankruptcy Matters..............................24
Section 6.2 Restrictions on Waivers, Amendments and Consents to Transaction
Documentation................................................................25
Section 6.3 Additional Collateral. ...............................................27
Section 6.4 Independent Investigation. ...........................................28
Section 6.5 Further Assurances, etc. .............................................28
ARTICLE VII MISCELLANEOUS...................................................................28
Section 7.1 Successors and Assigns. ..............................................28
Section 7.2 Notices. .............................................................28
Section 7.3 Termination. .........................................................30
Section 7.4 Applicable Law. ......................................................31
Section 7.5 Amendments and Waivers of Agreement. .................................31
Section 7.6 Waiver of Rights. ....................................................31
Section 7.7 Severability. ........................................................31
Section 7.8 Counterparts; Effectiveness. .........................................31
Section 7.9 Section Headings. ...................................................31a
Section 7.10 Complete Agreement. ................................................31a
Section 7.11 No Benefit to Third Parties. .......................................31a
Section 7.12 Attorneys' Fees. ...................................................31a
</TABLE>
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INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT
THIS INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT, dated as of
March 5, 1999, is entered into by and among UNION BANK OF CALIFORNIA, N.A., a
national banking association ("UBOC"), in its capacity as the Bank Agent (as
defined below), UBOC in its capacity as the Synthetic Lease Financing Agent (as
defined below), the Noteholders (as defined below), the Synthetic Lease Investor
(as defined below), UBOC in its capacity as the Collateral Agent (as defined
below) under this Agreement for the benefit of the Secured Creditors (as defined
below), and, for the purposes of Article I, Sections 3.6, 4.8, 4.9, 6.5 and
Article VII only, SAFESKIN CORPORATION, a Florida corporation (the "Company"),
and SAFESKIN SCIENTIFIC CORPORATION, a California corporation, with reference to
the following facts:
RECITALS
A. The Company, the lenders identified therein (collectively, the
"Banks"), and UBOC, as the Administrative Agent for the Banks (in such capacity,
the "Bank Agent"), intend to enter into a certain Amended and Restated
Revolving/Term Loan Agreement of even date herewith (as amended, modified,
supplemented or restated and in effect from time to time, the "Bank Loan
Agreement"), pursuant to which the Banks would provide the Company with a
revolving credit facility of $40,000,000 (which facility would include a
$5,000,000 sub-line of credit for commercial and standby letters of credit) and
a term credit facility in an original principal amount of $60,000,000.
B. The Company's obligations to the Banks in connection with the
revolving and term credit facilities provided under the Bank Loan Agreement
would be guaranteed by each of the Guarantors (as defined below) and would be
secured by the Collateral.
C. The Company proposes to enter into separate Note Purchase
Agreements of even date herewith (collectively, as amended or supplemented from
time to time, the "Noteholder Loan Agreement") with each of the purchasers
listed on Schedule A thereto (together with their respective successors and
assigns, the "Noteholders"), pursuant to which the Noteholders would provide the
Company with term loans in the aggregate original principal amount of
$40,000,000 and the Company would issue to the Noteholders its 6.89% Senior
Secured Notes due 2009 (together with all notes issued pursuant to the
Noteholder Loan Agreement in exchange or substitution therefor, the "Senior
Notes") to evidence the Company's obligation to the Noteholders in connection
with such term loans.
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<PAGE> 5
D. The Company's obligations to the Noteholders in connection
with the Noteholder Loan Agreement and the Senior Notes would be guaranteed by
each of the Guarantors and secured by the Collateral.
E. The Banks (in such capacity, the "Synthetic Lease Financers")
and UBOC in its capacity as the Administrative Agent for the Synthetic Lease
Financers (in such capacity, the "Synthetic Lease Financing Agent") propose to
enter into a certain Credit Agreement of even date herewith (as amended,
modified, supplemented or restated and in effect from time to time, the
"Synthetic Lease Financing Agreement") with Union Bank of California, N.A., not
in its individual capacity, but as Trustee (the "Synthetic Lease Borrower").
Bankers Commercial Corporation, a California corporation (the "Synthetic Lease
Investor"), the Synthetic Lease Financers, the Synthetic Lease Financing Agent,
the Synthetic Lease Borrower and Safeskin Real Estate Incorporated, a Delaware
corporation (the "Synthetic Lease Lessee"), propose to enter into a certain
Participation Agreement of even date herewith (as amended, modified,
supplemented or restated and in effect from time to time, the "Synthetic Lease
Participation Agreement").
F. Pursuant to the Synthetic Lease Financing Agreement, the
Synthetic Lease Financers would provide the Synthetic Lease Borrower with an
interest-only term loan in the aggregate original principal amount of up to
$58,200,000, and pursuant to the Synthetic Lease Participation Agreement, the
Synthetic Lease Investor would make an investment in the Synthetic Lease
Borrower in an amount of up to $1,800,000. The proceeds of the term loan to be
provided by the Synthetic Lease Financers to, and the investment by the
Synthetic Lease Investor in, the Synthetic Lease Borrower would be utilized by
the Synthetic Lease Borrower to acquire and construct office buildings in San
Diego, California, which the Synthetic Lease Borrower would lease to the
Synthetic Lease Lessee.
G. The Synthetic Lease Borrower's obligations to the Synthetic
Lease Financers under the Synthetic Lease Financing Agreement and the Synthetic
Lease Lessee's obligations under the Synthetic Lease would be guaranteed by the
Company and the Guarantors, and such guaranties would be secured by the
Collateral.
H. The Banks, the Noteholders, the Synthetic Lease Investor and
the Synthetic Lease Financers desire (i) to confirm their agreement that the
Bank Outstandings (as defined below), the Noteholder Outstandings (as defined
below) and the Synthetic Lease Outstandings (as defined below) shall rank pari
passu and of equal priority in right of payment and lien priority and (ii) to
appoint UBOC as their collective collateral agent for the purposes set forth
herein.
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<PAGE> 6
I. It is a condition precedent to the effectiveness of each of
the Bank Loan Agreement, the Noteholder Loan Agreement, the Synthetic Lease
Financing Agreement and the Synthetic Lease Participation Agreement that the
parties hereto shall have entered into this Agreement.
NOW, THEREFORE, in consideration of the above premises, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement (including, without limitation, in the
introduction and the recitals hereto), the following terms shall have the
respective meanings set forth below.
"Additional Collateral" has the meaning specified in Annex A to
the Synthetic Lease Participation Agreement.
"Additional Senior Indebtedness" means secured indebtedness of
the Company incurred after the date of this Agreement which ranks pari passu and
of equal priority in right of payment and lien priority with the other
Outstanding Obligations and the aggregate outstanding principal amount of which
does not exceed the sum of (i) $25,000,000 and (ii) an amount, not to exceed
$15,000,000, equal to the aggregate amount of principal payments made by the
Company in respect of the Term Loan (as defined in the Bank Loan Agreement) and
the Senior Notes; provided, however, that any increase in the commitments under
the Bank Loan Agreement shall reduce, dollar for dollar, the amount determined
under subclause (ii) above.
"Additional Senior Indebtedness Financing Agreements" means the
definitive financing agreements entered into by the Company in connection with
any Additional Senior Indebtedness.
"Additional Senior Indebtedness Outstandings" means, at any time,
subject to Section 6.2(d), the sum (without duplication) of the following:
(i) the aggregate principal amount outstanding at any
time under the Additional Senior Indebtedness Financing Agreements and the
aggregate amount of accrued and unpaid interest thereon at such time;
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<PAGE> 7
(ii) the aggregate amount of accrued and unpaid fees
payable to the holders of the Additional Senior Indebtedness under or in
connection with the Additional Senior Indebtedness Financing Agreements; and
(iii) the aggregate amount of all other monetary
obligations of the Company, the Grantors and the Guarantors that are accrued and
owing at such time to the holders of Additional Senior Indebtedness under the
Additional Senior Indebtedness Financing Agreements, including indemnification
and reasonable expense reimbursement obligations and fees, if any.
"Agency Termination Date" means the termination date of this
Agreement pursuant to Section 7.3 hereof; provided, however, the Collateral
Agent shall continue to perform the duties set forth in Section 4.1 hereof until
the last Disbursement Date.
"Allocable L/C Share" has the meaning specified in Section 4.5
hereof.
"Bank Agent" has the meaning specified in the recitals to this
Agreement.
"Bank Loan Agreement" has the meaning specified in the recitals
to this Agreement.
"Bank Outstandings" means, at any time, subject to Section
6.2(b), the sum (without duplication) of the following:
(i) the aggregate principal amount of Loans outstanding at
such time under (and as defined in) the Bank Loan Agreement and the
aggregate amount of accrued and unpaid interest thereon at such time;
(ii) the aggregate amount of all Letter of Credit
Disbursements not yet reimbursed to the Banks and accrued and unpaid
interest thereon at such time;
(iii) the aggregate amount of accrued and unpaid fees
payable to the Banks, or any of them, under or in connection with the
Bank Loan Agreement;
(iv) the L/C Exposure; and
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<PAGE> 8
(v) the aggregate amount of all other monetary obligations
of the Company that are accrued and owing at such time to the Banks
under the Bank Loan Agreement or any other Loan Document related
thereto (and as defined therein), including obligations in connection
with "swaps", "caps", "collars" or other interest rate protection
contracts, indemnification obligations and reasonable expense
reimbursement obligations.
"Bank Parties" means, collectively, the Bank Agent, the Banks and
their respective assigns, participants and successors.
"Banks" has the meaning specified in the recitals to this
Agreement.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks are authorized or required to be closed in
the State of California.
"Certificate Regarding Obligations" means, with respect to any
Secured Creditor, a notice executed by an officer thereof, addressed to the
Collateral Agent, certifying the aggregate amount of Outstanding Obligations
held by such Secured Creditor as of the date of such certificate, together with
the dollar amounts of the foregoing attributable to (i) principal, (ii)
interest, (iii) L/C Exposure (excluding any Allocable L/C Shares which must be
redistributed pursuant to Section 4.5), (iv) fees, (v) Make-Whole Amount, (vi)
costs, (vii) indemnity payments and (viii) other amounts, respectively.
"Closing Date" shall have the meaning set forth therefor in
Section 7.8.
"Collateral" means all of the personal property and assets of
whatever nature, tangible or intangible, now owned or existing or hereafter
acquired or arising, wherever located, of any of the Grantors on or in which the
Secured Creditors have been granted a lien or security interest pursuant to the
Security Documents, and all proceeds of any of the foregoing collateral. Without
limiting the foregoing, any and all amounts required to be provided as cash
collateral for L/C Exposure pursuant to the Bank Loan Agreement or any agreement
executed in connection therewith shall be deemed to be Collateral for the
purpose of this Agreement. The term "Collateral" shall not include either (i)
any Additional Collateral or any proceeds thereof in which either the Synthetic
Lease Financing Agent or the Synthetic Lease Financing Borrower is granted a
security interest following the repayment in full of the Noteholder Outstandings
or (ii) any real property, any improvements thereto, or any leases, rents or
other assets associated therewith or proceeds thereof (collectively, "Real
Property Assets") of the Company or of any Subsidiary of the Company, including,
without
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<PAGE> 9
limitation, any Real Property Assets in which the Synthetic Lease Financing
Agent may hold a deed of trust, mortgage, security interest or similar lien as
collateral security for the Synthetic Lease Outstandings.
"Collateral Agent" means UBOC in its capacity as the collateral
agent for the Secured Creditors hereunder and under the Security Documents, and
its successors in such capacity.
"Deemed Collateral Proceeds" means any payment or other
distribution received by any Secured Creditor (or the Collateral Agent acting as
its agent hereunder) in respect of the Outstanding Obligations owed to it, or
any reduction in the amount of Outstanding Obligations owed to such Secured
Creditor, whether by voluntary payment, by realization upon security, through
the exercise of any right of set-off or banker's lien, or by the enforcement of
any right under the Transaction Documents, other guaranties or security
agreements or otherwise, and whether by claim, counterclaim or cross action or
as adequate protection of a deposit treated as cash collateral under the federal
Bankruptcy Code, and including distributions of Collateral itself; provided,
however, Deemed Collateral Proceeds shall exclude (i) payments made pursuant to
this Agreement, (ii) reductions in L/C Exposure resulting from the expiration of
any Letter of Credit or reduction in the amount available to be drawn under any
Letter of Credit, (iii) any Additional Collateral or any proceeds thereof in
which either the Synthetic Lease Financing Agent or the Synthetic Lease
Financing Borrower is granted a security interest following the repayment in
full of the Noteholder Outstandings, and (iv) Real Property Assets.
"Deposit Notice" has the meaning specified in Section 4.1(c)
hereof.
"Disbursement Account" has the meaning specified in Section
4.1(a) hereof.
"Disbursement Date" has the meaning specified in Section 4.1(c)
hereof.
"Escrow Release Date" shall mean:
(a) with respect to any Letter of Credit, the earlier to
occur of (i) the date on which a drawing on such Letter of Credit is
made or (ii) the date of the expiration of such Letter of Credit in
accordance with its terms, and
(b) with respect to the Synthetic Lease Outstandings,
subject to Section 4.1(e), the first Disbursement Date after which the
Synthetic Lease Agent shall have foreclosed upon (or acquired by deed in
lieu of foreclosure)
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<PAGE> 10
the fee estate relating to the Real Property assets and all net
proceeds of such foreclosure or acquisition shall have been applied to
reduce the Synthetic Lease Outstandings.
"Foreign Subsidiary" means a Subsidiary of the Company that (i)
is organized under the laws of a country (or political subdivision thereof)
other than the United States of America and (ii) holds all or substantially all
of its assets outside the United States of America.
"Grantors" means, collectively, the Company, its Subsidiary,
Safeskin Scientific Corporation, and any other Subsidiary of the Company that
hereafter becomes a party to any Security Document.
"Guarantors" means, collectively, Safeskin Scientific
Corporation, and any and all future Significant Domestic Subsidiaries of the
Company.
"Issuing Lender" means UBOC or any successor Bank acting as the
letter of credit issuing bank for and on behalf of the Banks pursuant to the
Bank Loan Agreement.
"Insolvency Proceeding" means any proceeding commenced by or
against any Person under any provision of the United States Bankruptcy Code, as
amended, or under any other bankruptcy or insolvency law, including assignments
for the benefit of creditors, formal or informal moratoria, compositions,
extensions generally with its creditors, or proceedings seeking reorganization,
arrangement or other similar relief.
"Letter of Credit" means any commercial or standby letter of
credit issued by the Issuing Lender for and on behalf of the Banks pursuant to
the Bank Loan Agreement.
"L/C Exposure" means, as of any date, the aggregate maximum
available amount which may be drawn under all Letters of Credit outstanding as
of such date.
"Letter of Credit Disbursement" means a payment or disbursement
made by the Issuing Lender pursuant to a Letter of Credit.
"Majority Secured Creditors" means, as of any date, (i) Banks
holding a majority of the Bank Outstandings existing on such date, (ii)
Synthetic Lease Financers holding a majority of the Synthetic Lease Outstandings
existing on such date, (iii) Noteholders holding a majority of the Noteholder
Outstandings existing on such
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date, and (iv) if applicable, the holders of a majority of the Additional Senior
Indebtedness Outstandings existing on such date.
"Make-Whole Amount" has the meaning set forth in the Noteholder
Loan Agreement.
"Noteholder Outstandings" means, at any time, subject to Section
6.2(a), the sum (without duplication) of the following:
(i) the aggregate principal amount of the loans
outstanding at such time under the Noteholder Loan Agreement, the
aggregate amount of accrued and unpaid interest thereon at such time and
the Make-Whole Amount determined at such time in respect of such
principal amount;
(ii) the aggregate amount of accrued and unpaid fees
payable to the Noteholders under or in connection with the Noteholder
Loan Agreement; and
(iii) the aggregate amount of all other monetary
obligations of the Company, the Grantors and the Guarantors that are
accrued and owing at such time to the Noteholders under the Noteholder
Loan Agreement, the Senior Notes, or any of the "Financing Documents"
executed in connection with (and as defined in) the Noteholder Loan
Agreement, including indemnification and reasonable expense
reimbursement obligations and fees, if any.
"Noteholders" has the meaning set forth in the recitals to this
Agreement.
"Notice of Triggering Event" means a written notice delivered by
any Secured Creditor pursuant to this Agreement to the Collateral Agent, stating
that a Triggering Event has occurred and setting forth the date on which such
Triggering Event is believed to have first existed.
"Outstanding Obligations" means, at any time, the sum of: (i) the
aggregate Bank Outstandings at such time; (ii) the aggregate Noteholder
Outstandings at such time; and (iii) the aggregate Synthetic Lease Outstandings
at such time; and, (iv) if applicable, the aggregate Additional Senior
Indebtedness Outstandings at such time.
"Person" means any individual or entity, including, without
limitation, a trustee, corporation, general partnership, limited partnership,
limited liability company,
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<PAGE> 12
joint stock company, trust estate, unincorporated organization, business
association, firm, joint venture, governmental agency or authority, or other
entity.
"Pledge Agreement" means that certain Pledge Agreement of even
date herewith executed by the Company in favor of the Collateral Agent, for the
ratable benefit of the Secured Creditors, substantially in the form of Exhibit
"A" hereto, as amended or supplemented from time to time.
"Pro Rata Share" means, with respect to any Secured Creditor as
of any date, the percentage of all Outstanding Obligations owed to such Secured
Creditor, if any, as of such date, as evidenced by the Certificate Regarding
Obligations then most recently delivered to the Collateral Agent pursuant
hereto.
"Real Property Assets" has the meaning set forth in the
definition of the term "Collateral."
"Safeskin Scientific Corporation" means Safeskin Scientific
Corporation, a California corporation and a Subsidiary of the Company.
"Secured Creditors" means collectively: (i) the Bank Agent (on
behalf of the Bank Parties); (ii) the Noteholders; (iii) the Synthetic Lease
Financing Agent (on behalf of the Synthetic Lease Financers and the Synthetic
Lease Investor) and (iv) the holder of any Additional Senior Indebtedness which
hereafter becomes a party to this Agreement pursuant to Section 7.11 hereof.
"Security Agreement" means that certain Security Agreement of
even date herewith executed by the Company and the Guarantors in favor of the
Collateral Agent, for the ratable benefit of the Secured Creditors,
substantially in the form of Exhibit "B" hereto, as amended or supplemented from
time to time.
"Security Documents" means, collectively, the Pledge Agreement
and the Security Agreement and each other agreement, document or instrument
relating to the Collateral executed from time to time, all as amended or
supplemented from time to time.
"Senior Notes" has the meaning specified in the recitals to this
Agreement.
"Sharing Date" means, in respect of a Triggering Event, the date
specified in the related Notice of Triggering Event as being the date on which
such Triggering Event is believed to have first existed.
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"Significant Domestic Subsidiary" means a Subsidiary that is not
a Foreign Subsidiary and that either (i) had net income for the fiscal year of
the Company then most recently ended in excess of 5% of the consolidated net
income of the Company and its Subsidiaries for such fiscal year or (ii) had
assets in excess of 5% of the total assets of the Company and its Subsidiaries
on a consolidated basis as at the end of the fiscal year of the Company then
most recently ended.
"Subsidiary" means, as of any date of determination and with
respect to any Person, any corporation, limited liability company or partnership
(whether or not, in any case, characterized as such or as a "joint venture"),
whether now existing or hereafter organized or acquired: (a) in the case of a
corporation or limited liability company, of which a majority of the securities
having ordinary voting power for the election of directors or other governing
body (other than securities having such power only by reason of the happening of
a contingency) are at the time beneficially owned by such Person and/or one or
more Subsidiaries of such Person, or (b) in the case of a partnership, of which
a majority of the partnership or other ownership interests are at the time
beneficially owned by such Person and/or one or more of its Subsidiaries.
"Synthetic Lease Borrower" has the meaning specified in the
recitals to this Agreement.
"Synthetic Lease Financers" has the meaning specified in the
recitals to this Agreement.
"Synthetic Lease Financing Agent" means UBOC in its capacity as
the Administrative Agent for the Synthetic Lease Financers under the Synthetic
Lease Financing Agreement, and its successors in such capacities.
"Synthetic Lease Financing Agreement" has the meaning specified
in the recitals to this Agreement.
"Synthetic Lease Guarantee" means the collective reference to the
Guarantee dated as of the date hereof made by the Company and the Guarantors in
favor of the Synthetic Lease Financing Agent for the benefit of the Synthetic
Lease Financers and the Synthetic Lease Investor and the Guarantee dated as of
the date hereof made by the Company and the Guarantors in favor of the Synthetic
Lease Lessor, as the same may be amended, supplemented or otherwise modified
from time to time.
"Synthetic Lease Investor" has the meaning specified in the
recitals to this Agreement.
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"Synthetic Lease Lessee" has the meaning specified in the
recitals to this Agreement.
"Synthetic Lease Operative Agreements" means the "Operative
Agreements" as defined in Annex A to the Synthetic Lease Participation
Agreement.
"Synthetic Lease Outstandings" means, at any time, subject to
Section 6.2(b), the sum (without duplication) of the Company's and the
Guarantors' contingent or actual liability under each Synthetic Lease Guarantee
with respect to the following outstanding obligations:
(i) the aggregate principal amount of the loans
outstanding at such time under the Synthetic Lease Financing Agreement
and the aggregate amount of accrued and unpaid interest thereon at such
time;
(ii) the aggregate amount of accrued and unpaid fees
payable to the Synthetic Lease Financers under or in connection with the
Synthetic Lease Financing Agreement;
(iii) the amount of the Investor Contribution outstanding
at such time and the aggregate amount of accrued and unpaid Investor
Yield thereon at such time;
(iv) without duplication of clauses (i), (ii) and (iii)
above, the payment obligations and undertakings applicable to the
Synthetic Lease Lessee contained in or arising under the Synthetic Lease
or any of the Synthetic Lease Operative Agreements, including accrued
and unpaid Rent, the Purchase Option Price and the Maximum Residual
Guarantee Amount; and
(v) the aggregate amount of all other monetary obligations
of the Synthetic Lease Borrower and the Synthetic Lease Lessee that are
accrued and owing at such time to the Synthetic Lease Financers and the
Investor under the Synthetic Lease Financing Agreement, the Synthetic
Lease Guarantee, the Synthetic Lease Participation Agreement and the
other Synthetic Lease Operative Agreements, including indemnification
and reasonable expense reimbursement obligations and fees, if any.
"Synthetic Lease Participation Agreement" has the meaning
specified in the recitals to this Agreement.
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"Transaction Documents" means the Bank Loan Agreement and the
other "Loan Documents" delivered thereunder and as defined therein, the
Noteholder Loan Agreement and the "Financing Documents" delivered thereunder and
as defined therein, and the Synthetic Lease Financing Agreement and the other
Synthetic Lease Operative Agreements delivered thereunder and as defined
therein; in each case including each of the Security Documents and any and all
guaranties executed by the Company and the Guarantors for the benefit of the
Secured Creditors.
"Triggering Event" means the acceleration of the maturity or
claim for payment of the entire amount due in respect of any of the Additional
Senior Indebtedness Outstandings, the Bank Outstandings, the Noteholder
Outstandings or the Synthetic Lease Outstandings.
"Unsecured Claim Distributions" means any distributions of any
kind or character made in respect of unsecured or under secured deficiency
claims against the Company in any dissolution, winding up, liquidation,
reorganization or other insolvency proceeding of the Company.
ARTICLE II
ACTS OF SECURED CREDITORS; OBLIGATIONS
Section 2.1 Appointment of Collateral Agent. Each of the Secured
Creditors appoints UBOC to act as Collateral Agent pursuant to the terms of this
Agreement, and UBOC agrees to act as Collateral Agent for such Secured Creditors
pursuant to the terms of this Agreement, in each case until the Agency
Termination Date.
Section 2.2 Restrictions on Separate Enforcement Actions. Each Secured
Creditor agrees that, until the Agency Termination Date, (a) the provisions of
this Agreement shall exclusively govern the circumstances upon which any Secured
Creditor may exercise rights and remedies under the Security Documents or
otherwise with respect to the Collateral and (b) except as expressly permitted
hereunder, each Secured Creditor shall:
(1) refrain from taking or filing any action,
judicial or otherwise, to enforce any rights or pursue any
remedies under the Security Documents or otherwise with respect
to the Collateral, except for delivering notices hereunder; and
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(2) refrain from exercising any rights or remedies
under the Security Documents or otherwise with respect to the
Collateral which may be exercisable as a result of a Triggering
Event; and
(3) refrain (unless the Collateral Agent has
consented in writing thereto) from exercising any right of set
off or similar right with respect to amounts on deposit with such
Secured Creditor (excluding application of funds pursuant to
non-default contract rights);
provided, however, the foregoing shall not prevent any Secured Creditor from
taking any of the actions listed in Section 6.2(d) hereof.
Section 2.3 Determination of Amounts of Obligations. Whenever the
Collateral Agent is required to determine the existence or amount of any of the
Outstanding Obligations or any portion thereof, or the existence of any
Triggering Event for any purposes of this Agreement, it shall be entitled to
make such determination on the basis of the Certificates Regarding Obligations,
Notices of Triggering Event, notices rescinding Notices of Triggering Event and
other notices and certificates delivered to it by any Secured Creditor
hereunder. The Collateral Agent may rely conclusively, absent manifest error,
and shall be fully protected in so relying, on any determination made by it in
accordance with the provisions of the preceding sentence (or as otherwise
directed by a court of competent jurisdiction) and shall have no liability to
the Company or any other Grantor or Guarantor, to any Secured Creditor or to any
other Person as a result of any action taken by it based upon such determination
prior to receipt of notice of any error in such determination.
Section 2.4 Notice of Triggering Event. The Bank Agent shall, promptly
upon learning of the existence of any Triggering Event under the Bank Loan
Agreement or any Security Document to which it is a party or the beneficiary,
promptly deliver a Notice of Triggering Event to the Collateral Agent. The
Noteholders shall, upon learning of the existence of any Triggering Event under
the Noteholder Loan Agreement or any Security Document to which the Noteholders
are a party or the beneficiary, promptly deliver a Notice of Triggering Event to
the Collateral Agent. The Synthetic Lease Financing Agent shall, upon learning
of the existence of any Triggering Event under the Synthetic Lease Financing
Agreement or any Security Document to which the Synthetic Lease Financers are a
party or the beneficiary, promptly deliver a Notice of Triggering Event to the
Collateral Agent. A Notice of Triggering Event shall be deemed to be outstanding
at all times after such notice has been given until such time, if any, as such
notice has been rescinded by written notice to the Collateral Agent that such
Triggering Event has been cured or waived in accordance with the terms thereof
and hereof.
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ARTICLE III
DUTIES OF COLLATERAL AGENT
Section 3.1 Notices to Secured Creditors. The Collateral Agent shall
notify each Secured Creditor promptly upon receipt of any Notice of Triggering
Event, any certificate rescinding such Notice of Triggering Event delivered in
accordance with the last sentence of Section 2.4, or any request by any party
hereto for any consent, waiver or amendment with respect hereto or any other
Security Document. The Collateral Agent also shall promptly give notice to each
Secured Creditor at any time when the Collateral Agent shall otherwise become
aware of the existence of any Triggering Event.
Section 3.2 Actions Under Security Documents; Powers of Collateral
Agent.
(a) Each Secured Creditor hereby grants to the Collateral Agent
an exclusive and irrevocable power of attorney, until the Agency Termination
Date, for the purpose of enforcing any and all rights and remedies of such
Secured Creditor under each Security Document subject to the reservations of
rights set forth in Section 6.2(d) hereof.
(b) The Collateral Agent agrees to administer the Security
Documents and the Collateral, to make such demands, give such notices, take such
actions under or with respect to the Security Documents and exercise other
rights, powers and remedies as shall be available to it under the Security
Documents or any of them (including, at any time when a Notice of Triggering
Event shall have been given and shall be outstanding, the foreclosure on and
disposition of Collateral or any portion thereof) and as are requested in
writing by the Majority Secured Creditors and not inconsistent with or contrary
to the provisions of this Agreement, the Transaction Documents or law.
(c) Absent written instructions from the Majority Secured
Creditors at a time when a Notice of Triggering Event shall be outstanding, the
Collateral Agent may take, but shall have no obligation to take, any and all
such actions under the Security Documents or any of them or otherwise as it
shall deem to be in the best interests of the Secured Creditors in order to
maintain the Collateral and protect and preserve the Collateral and the rights
of the Secured Creditors, not inconsistent with or contrary to the provisions of
this Agreement, the Transaction Documents or law.
(d) Notwithstanding subsections (b) and (c) above, and any other
provision of this Agreement or any other agreement among the parties hereto, the
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Collateral Agent shall not without the prior written consent of the affected
Secured Creditor, release, waive, discharge, amend, assign, subordinate or
compromise any rights of such Secured Creditor in the Collateral or any other of
the rights of such Secured Creditor (or duties of the Company or any Grantor or
Guarantor) under any Security Document or other Transaction Document to which
the Collateral Agent is a party (except to the extent otherwise required or
permitted by either (i) any Transaction Document or (ii) a final order of a
court of competent jurisdiction or otherwise by law).
Section 3.3 Limitations on Responsibility of Collateral Agent. The
Collateral Agent shall have no duties or responsibilities except those expressly
set forth in this Agreement. The Collateral Agent shall not by reason of this
Agreement or the Security Documents have any fiduciary obligation to any Secured
Creditor. The Collateral Agent shall not be responsible in any manner whatsoever
for the correctness of any recitals, statements, representations or warranties
contained herein or in any other Transaction Document, except for those
expressly made by it herein. The Collateral Agent makes no representation as to
the value or condition of the Collateral or any part thereof, as to the title of
the Grantors to the Collateral, as to the security afforded by this Agreement or
any Security Document or, except as expressly set forth in Article V, as to the
validity, execution, enforceability, legality or sufficiency of this Agreement
or any Transaction Document. The Collateral Agent shall have no duty to the
Grantors or to the Secured Creditors as to any Collateral in its possession or
control or in the possession or control of any agent or nominee of the
Collateral Agent or any income thereon or as to the preservation of rights
against prior parties or any other rights pertaining thereto, except the duty to
accord such of the Collateral as may be in its possession substantially the same
care as it accords its own assets and the duty to account for monies received by
it. The Collateral Agent may exercise its powers and duties by or through
employees or agents and shall be entitled to take, and rely upon, advice of
counsel concerning all matters pertaining to its rights and duties hereunder.
Neither the Collateral Agent nor any of its officers, directors, shareholders,
employees or agents shall be liable for any action taken or omitted to be taken
hereunder except for its or their willful misconduct or gross negligence.
Section 3.4 Reliance by Collateral Agent.
(a) The Collateral Agent shall be fully protected in relying upon
any resolution, statement, certificate, instrument, opinion, report, notice,
request, consent, order or other paper or document which it reasonably believes
to be genuine and to have been signed or presented by the proper party or
parties.
(b) The Collateral Agent shall not be deemed to have actual,
constructive, direct or indirect notice or knowledge of the occurrence of any
Triggering
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Event unless and until the Collateral Agent shall have received a
Notice of Triggering Event; provided however, if the Secured Creditor with a
duty to give notice of such Triggering Event under Section 2.4 hereof is then
also serving as the Collateral Agent (e.g., initially UBOC hereunder), then the
Collateral Agent shall be deemed to have knowledge of such Triggering Event on
the date when such Secured Creditor is first required by Section 2.4 to give
such notice.
Section 3.5 Resignation and Removal of the Collateral Agent.
(a) The Collateral Agent (i) may resign at any time upon notice
to the Secured Creditors and (ii) may be removed at any time upon the written
request of the Majority Secured Creditors sent to the Collateral Agent and the
other Secured Creditors.
(b) If the Collateral Agent shall resign or be removed, the
Majority Secured Creditors shall have the right to select a replacement
Collateral Agent by notice to the Collateral Agent and the other Secured
Creditors.
(c) Upon any replacement of the Collateral Agent, the Collateral
Agent shall assign all right, title and interest of the Collateral Agent
hereunder and under all the Security Documents to the replacement Collateral
Agent, without recourse to or representation or warranty by the Collateral Agent
or any Secured Creditors and at the expense of the Company. Upon such
replacement, the retiring Collateral Agent shall be discharged and released from
its duties and obligations hereunder; however, the provisions of this Agreement
shall continue in effect for the benefit of the retiring Collateral Agent in
respect of any actions taken or omitted to be taken by the retiring Collateral
Agent while it was acting as Collateral Agent.
(d) No resignation or removal of the Collateral Agent shall
become effective until a replacement Collateral Agent shall have been selected
as provided herein and shall have assumed in writing the obligations of the
Collateral Agent hereunder and under the Security Documents. In the event that a
replacement Collateral Agent shall not have been selected as provided herein or
shall not have assumed such obligations within 45 days after the resignation or
removal of the Collateral Agent, then the Collateral Agent or any Secured
Creditor may apply to a court of competent jurisdiction for the appointment of a
replacement Collateral Agent for the remainder of its term.
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Section 3.6 Expenses and Indemnification.
(a) By countersigning this Agreement, the Company, each Grantor
and each Guarantor jointly and severally agrees (i) to reimburse the Collateral
Agent, on demand, for any expenses incurred by the Collateral Agent, including
reasonable counsel fees and compensation of agents, arising out of, in any way
connected with, or as a result of, the execution or delivery of this Agreement
or any Security Document or any agreement or instrument contemplated hereby or
thereby or the performance by the parties hereto or thereto of their respective
obligations hereunder or thereunder or in connection with the enforcement or
protection of the rights of the Collateral Agent and the Secured Creditors under
this Agreement and the Security Documents and (ii) to indemnify and hold
harmless the Collateral Agent and its directors, officers, employees and agents,
on demand, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, or suits (including reasonable costs,
expenses or disbursements) of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against the Collateral Agent in its capacity as the
Collateral Agent or any of them in any way relating to or arising out of this
Agreement or any Security Document or any action taken or omitted by them under
this Agreement or any Security Document; provided, however, that the Company,
the Grantors and the Guarantors shall not be liable to the Collateral Agent for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
gross negligence or willful misconduct of the Collateral Agent or any of its
directors, officers, employees or agents.
(b) Each Secured Creditor agrees (i) to reimburse the Collateral
Agent, on demand, in proportion to its Pro Rata Share on the date of such demand
for any expenses referred to in Section 3.6(a) which shall not have been
reimbursed by the Company or any other Grantor or Guarantor or paid from the
proceeds of Collateral as provided herein and (ii) to indemnify and hold
harmless the Collateral Agent and its directors, officers, employees and agents,
on demand, in the amount of such Pro Rata Share, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements referred to in Section 3.6(a), to the extent
the same shall not have been reimbursed by the Company or any other Grantor or
any Guarantor or paid from the proceeds of Collateral as provided herein;
provided, however, that no Secured Creditor shall be liable to the Collateral
Agent for any portion of such expenses, liabilities, obligations, losses,
damages, penalties, actions, judgments, or suits (including reasonable costs and
disbursements) resulting from the gross negligence or willful misconduct of the
Collateral Agent or any of its directors, officers, employees or agents, or in
any case from the exercise of foreclosure remedies by the Collateral Agent in
violation of the terms of this Agreement.
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ARTICLE IV
PROCEEDS OF SECURITY DOCUMENTS; OTHER
AMOUNTS RECEIVED FOLLOWING TRIGGERING EVENT
Section 4.1 Disbursement Accounts; Application of Proceeds.
(a) Establishment of Disbursement Account. Upon the occurrence of
a Triggering Event, the Collateral Agent promptly shall establish and maintain
at its banking office in San Diego, California (or upon notice to the Secured
Creditors, such other banking office in California as it may select and notify
to each Secured Creditor, so long as its lien is continuously maintained as
contemplated herein), a non-interest-bearing segregated deposit account entitled
the "Safeskin Intercreditor Disbursement Account" (the "Disbursement Account").
Such account will be held by the Collateral Agent as provided in this Agreement
and shall at all times be in the exclusive possession of, and under the control
of, the Collateral Agent, as agent for the Secured Creditors. Neither the
Company nor any Grantor or Guarantor shall have rights to any such account or to
any amounts on deposit therein. The Company hereby grants and assigns to the
Collateral Agent, for the benefit of the Secured Creditors, as collateral
security for the Outstanding Obligations, all of the Company's residual right,
title and interest, if any, in and to the Disbursement Account, all funds from
time to time maintained therein, all investments thereof, all interest,
dividends and other amounts earned thereon and all proceeds thereof.
(b) Deposits into Disbursement Account. Except as otherwise
explicitly required by law, the Collateral Agent shall deposit into the
Disbursement Account all amounts collected and received by it in its capacity as
Collateral Agent (and not in any other capacity) in respect of the Outstanding
Obligations, including all monies received on account of any sale of or other
realization upon any of the Collateral pursuant to any Security Document and any
distributions, or pursuant to enforcement of any guaranty or other Transaction
Document. The Collateral Agent shall be authorized to release amounts on deposit
in the Disbursement Account to the Company or any other Grantor to the extent
required by any of the Security Documents or applicable law.
(c) Notices to Secured Creditors. Not later than the last day of
each month in which any amounts shall have been deposited into the Disbursement
Account, and on the Agency Termination Date, the Collateral Agent shall provide
written notice of all such deposits during such month (or partial month if
applicable) to each Secured Creditor and to the Company (a "Deposit Notice"),
specifying (i) the dates of such deposits, (ii) the amounts of such deposits,
(iii) the date that the
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Collateral Agent will make a disbursement in respect of such deposits (which
date shall be not less than 10 nor more than 30 days after the date of the
Deposit Notice (the "Disbursement Date")), and (iv) the basis upon which the
amount due to each Secured Creditor will be calculated.
(d) Determination of Outstanding Obligations. Following receipt
of any Deposit Notice, each Secured Creditor shall, not later than four Business
Days next preceding the Disbursement Date specified in such Deposit Notice,
deliver to the Collateral Agent a duly completed Certificate Regarding
Obligations (or a supplement to a previously delivered a Certificate Regarding
Obligations) which shall certify the amount of Outstanding Obligations due and
payable to such Secured Creditor as of the date one Business Day before such
Disbursement Date. The Collateral Agent shall calculate the Pro Rata Shares of
each of the Secured Creditors in reliance upon such Certificates. Promptly
following its determination of such proportionate shares and in any event no
later than two Business Days prior to the applicable Disbursement Date, the
Collateral Agent shall notify the Secured Creditors of such determination
(including details showing such determination).
(e) Disbursements to Secured Creditors. On the applicable
Disbursement Date, the Collateral Agent shall disburse and retain the amount on
deposit in the Disbursement Account as set forth below:
FIRST: To the payment of the reasonable costs and expenses of
such sale, collection or other realization, and to the payment of any
and all reasonable expenses and costs incurred or suffered by the
Collateral Agent and its agents and counsel, including amounts required
to be provided to the Collateral Agent pursuant to subsection (f) hereof
in connection therewith or in connection with this Agreement or the
Security Documents; and thereafter,
SECOND: To the Secured Creditors in payment of the Outstanding
Obligations, the amounts of such payments to Secured Creditors to be
made in proportion to their respective Pro Rata Shares as measured
pursuant to subsection (d) hereof; provided, however, that all amounts
on deposit in the Disbursement Account allocable to (i) outstanding L/C
Exposure or (ii) the Synthetic Lease Outstandings shall be deposited in
escrow and held by the Collateral Agent until the Escrow Release Date
and thereafter applied in accordance with Sections 4.5(a) and 4.5(b)
hereof; provided, further, however, if based upon the advice of its
counsel, the Synthetic Lease Financing Agent notifies the Collateral
Agent (and the Collateral Agent, in turn, has notified the Secured
Creditors) of the determination by the Synthetic Lease Financing Agent
that a foreclosure upon (or acquisition by deed in lieu of foreclosure)
of the fee
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estate relating to the Real Property assets would materially impair the
exercise of the remedies of the Synthetic Lease Financing Agent with
respect to the Company, the Synthetic Lease Borrower or any other
obligor with respect to the Synthetic Lease Outstandings, or any
collateral provided by any of the foregoing entities as security for
the payment and performance of the Synthetic Lease Outstandings, as a
result of the application, or potential application, of the
anti-deficiency statutes or "one-action" rule of California law, all
amounts on deposit in the Disbursement Account allocable to the
Synthetic Lease Outstandings shall be disbursed to the Synthetic Lease
Financers on the applicable Disbursement Date; and thereafter,
THIRD: After payment in full of the obligations described in
clauses FIRST and SECOND above, to the order of the Company or to
whomsoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct.
Together with the payment of each disbursement from the Disbursement Account on
each Disbursement Date, the Collateral Agent shall deliver to each Secured
Creditor a statement detailing the aggregate amount disbursed to all Secured
Creditors, the amount deposited in the Disbursement Account and all deductions
therefrom pursuant to clause FIRST of this subsection (e).
(f) Collateral Agent's Costs and Expenses. Notwithstanding
subsections (d) and (e) above, the Collateral Agent shall have the right from
time to time to apply amounts in the Disbursement Account to the payment of the
reasonable out-of-pocket costs and expenses (including reasonable attorney fees
and disbursements) incurred by the Collateral Agent in administering and
carrying out its obligations under this Agreement or any of the Security
Documents, in exercising or attempting to exercise any right or remedy hereunder
or thereunder or in taking possession of, protecting, preserving or disposing of
any item of Collateral, and all amounts against or for which the Collateral
Agent is to be indemnified or reimbursed hereunder (excluding any such costs,
expenses or amounts which have theretofore been reimbursed) until all of such
costs, expenses and amounts have been paid in full.
Section 4.2 Turnover of Collateral Received by Secured Creditors. Until
the Agency Termination Date, each Secured Creditor shall promptly put in the
custody, possession or control of the Collateral Agent for disposition or
distribution in accordance with the provisions of Section 4.1 any Deemed
Collateral Proceeds, and any other proceeds of any enforcement of rights under
any Security Document, over which such Secured Creditor obtains custody, control
or possession, excluding Real Property Assets and any Additional Collateral or
any proceeds thereof in which either
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the Synthetic Lease Financing Agent or the Synthetic Lease Borrower has been
granted a security interest following the repayment in full of the Noteholder
Outstandings; and shall immediately notify each other Secured Creditor of the
amount and circumstances thereof. Until such time as each Secured Creditor shall
have complied with the provisions of this Section 4.2, such Secured Creditor
shall be deemed to hold any such Collateral or proceeds in trust for the parties
entitled thereto hereunder.
Section 4.3 Ratable Sharing by Secured Creditors.
(a) Sharing Payments. The Secured Creditors hereby agree among
themselves that if a Triggering Event shall occur after the Agency Termination
Date, and at any time after the related Sharing Date for such Triggering Event
any of them shall receive any Deemed Collateral Proceeds, in an amount in excess
of such Secured Creditor's Pro Rata Share (as of such Sharing Date) of all
Deemed Collateral Proceeds received by all Secured Creditors after such Sharing
Date, then the Secured Creditor receiving such excess Deemed Collateral Proceeds
shall immediately (i) notify each other Secured Creditor of the amount and
circumstances thereof, and (ii) pay over a portion of such Deemed Collateral
Proceeds, in amounts such that all such Deemed Collateral Proceeds shall be
shared by all Secured Creditors in proportion to their respective Pro Rata
Shares measured as of such Sharing Date, to each other Secured Creditor.
(b) Determination of Pro Rata Shares and Deemed Collateral
Proceeds. Promptly after the occurrence of a Triggering Event, the Secured
Creditor having issued the Notice of Triggering Event shall deliver such notice
to the Collateral Agent specifying the applicable Sharing Date for such
Triggering Event, whereupon the Collateral Agent shall promptly notify each of
the other Secured Creditors thereof. Not later than five Business Days following
receipt of such notice from the Collateral Agent, each Secured Creditor shall
deliver to the Collateral Agent and to each other Secured Creditor a duly
completed Certificate Regarding Obligations (or a supplement to a previously
delivered a Certificate Regarding Obligations) which shall additionally certify
(i) the amount of Outstanding Obligations due and payable to such Secured
Creditor as of the Sharing Date specified in such notice and (ii) the aggregate
amount of Deemed Collateral Proceeds received by such Secured Creditor since the
Sharing Date specified in such notice. Each Secured Creditor that shall receive
any Deemed Collateral Proceeds after the date of such Certificate Regarding
Obligations shall promptly give to the Collateral Agent a revised Certificate
Regarding Obligations. Within two Business Days following receipt of a
Certificate Regarding Obligations from each of the Secured Creditors, the
Collateral Agent shall deliver copies of each of such Certificates to each of
the Secured Creditors together with a schedule showing the Pro Rata Share of
each Secured Creditor.
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Section 4.4 Sharing of Distributions to Unsecured Creditors. If
Unsecured Claim Distributions of any type shall be made to the Secured Creditors
in respect of their unsecured claims against the Company, each Secured Creditor
receiving such Unsecured Claim Distributions shall (a) assign portions thereof,
without recourse, representation or warranty, to the other Secured Creditors to
the extent necessary to ensure that all Secured Creditors share in the Unsecured
Claim Distributions made to them in respect of their unsecured claims against
the Company, the Grantors and the Guarantors pro rata in proportion to the
amount of such unsecured claims held by them, and (b) provide written notice to
the Collateral Agent of the amounts of such assignments.
Section 4.5 Escrows.
(a) Synthetic Lease Outstandings. Any amounts placed in escrow
pursuant to clause (i) of paragraph SECOND of Section 4.1(e) shall be held in
escrow until the applicable Escrow Release Date. If on the applicable Escrow
Release Date the Synthetic Lease Outstandings shall not have been paid in full,
an amount equal to the amount deposited in escrow with respect to the Synthetic
Lease Outstandings (or such lesser amount as shall be necessary to pay the
Synthetic Lease Outstandings in full) shall be disbursed to the Synthetic Lease
Financing Agent to pay the Synthetic Lease Outstandings, with the balance
promptly disbursed by the Collateral Agent to the remaining Secured Creditors in
accordance with Section 4.1(e); provided that if on such Escrow Release Date the
Synthetic Lease Outstandings shall have been paid in full, the amount held in
escrow and relating to the Synthetic Lease Outstandings shall promptly be
disbursed by the Collateral Agent to the Secured Creditors in accordance with
Section 4.1(e).
(b) Canceled L/C Exposure. Any amounts placed in escrow pursuant
to clause (ii) of paragraph SECOND of Section 4.1(e) shall be held in escrow
until the applicable Escrow Release Date. If as of the applicable Escrow Release
Date the corresponding Letter of Credit (i) has been drawn on, an amount equal
to the amount of such draw (or such lesser amount as shall have been deposited
in escrow with respect to such Letter of Credit) shall be disbursed to the
applicable Secured Creditor in satisfaction of such Outstanding Obligation, or
(ii) has not been drawn on, the amount held in escrow and relating to such
Letter of Credit shall be disbursed on the next succeeding Disbursement Date to
the Secured Creditors in such proportions as they would have received had such
Letter of Credit, to the extent not drawn on, not been deemed to be issued and
outstanding as of the Disbursement Date which gave rise to the escrow deposit.
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<PAGE> 26
(c) Escrow Account. Pending the disbursement thereof pursuant to
the terms of this Section 4.5, amounts held in escrow shall (to the extent the
Collateral Agent deems practical) be invested by the Collateral Agent in (i)
marketable direct obligations of, or obligations the principal of and interest
on which are unconditionally guaranteed by, the United States of America (or by
any agency thereof to the extent such obligations are backed by the full faith
and credit of the United States of America), in each case maturing not later
than the earlier of the anticipated disbursement date of such amounts and the
date 180 days from the date of acquisition thereof; (ii) investments in
commercial paper maturing not later than the earlier of the anticipated
disbursement date of such amounts and the date 180 days from the date of
acquisition thereof and having, at such date of acquisition, a rate of "A-2" or
better from Standard & Poor's Ratings Group or a rating of "P-1" or better from
Moody's Investors Service, Inc.; (iii) investments in certificates of deposit,
banker's acceptances and time deposits maturing not later than the earlier of
the anticipated distribution date of such amounts and the date 180 days from the
date of acquisition thereof issued or guaranteed by or placed with, and money
market deposit accounts issued or offered by, any office of any commercial bank
which has a combined capital and surplus and undivided profits of not less than
$100,000,000 and which has a long-term bank deposit rating of "A" or better from
Standard & Poor's Ratings Group or from Moody's Investors Service, Inc.; and
(iv) investments in repurchase agreements with any commercial bank referred to
in clause (iii) above with respect to obligations of the type referred to in
clause (i) above, provided that such repurchase agreements are secured by such
obligations and require repurchase thereunder within ten days.
Section 4.6 Reconciliation of Recovered Payments. If a payment or
distribution received by the Collateral Agent or a Secured Creditor (herein, a
"sharing payor") and subsequently distributed to or shared with the Collateral
Agent or one or more Secured Creditors, as set forth herein, is rescinded or
recovered, or must otherwise be returned for any reason, each recipient of such
a distribution or sharing payment will, upon notice from such sharing payor,
forthwith pay over to such sharing payor an amount equal to the amount
distributed to it or shared with it in respect thereof.
Section 4.7 Payments. Except as otherwise provided in Section 4.1(c),
all payments to be made pursuant to this Article IV shall be made within five
Business Days following receipt by the payor of the corresponding Certificate
Regarding Obligations from the Collateral Agent or the payee pursuant hereto
(or, in the case of Section 4.6, the notice required thereunder), to the account
of such payee, where payments are to be made to such payee under the Bank Loan
Agreement, the Noteholder Loan Agreement or the Synthetic Lease Financing
Agreement, as
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<PAGE> 27
applicable (or to such other payment address as may be notified to the other
parties hereto in accordance with Section 7.2 hereof).
Section 4.8 Expenses. By countersigning this Agreement, the Company,
each Grantor and each Guarantor jointly and severally agrees to reimburse each
Secured Creditor, on demand, for any reasonable expenses incurred by such party,
including counsel fees and compensation of agents, arising out of, in any way
connected with, or as a result of, the execution or delivery of this Agreement
or any Security Document or any agreement or instrument contemplated hereby or
thereby or the performance by the parties hereto or thereto of their respective
obligations hereunder.
Section 4.9 Actual Proceeds Retained. The Company and each Grantor and
Guarantor each acknowledges that its indebtedness (and the amount of any other
payment obligation it may have) to any Secured Creditor is reduced only by
actual proceeds retained by such Secured Creditor for its own account.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Collateral Agent and the Secured Creditors each represent and
warrant to the other parties hereto that (a) the execution, delivery and
performance of this Agreement (i) have been duly authorized by all requisite
corporate or partnership action, as the case may be, on its part and (ii) will
not contravene any provision of its charter or by-laws or partnership agreement,
as the case may be, or any order of any court or other governmental authority
having applicability to it or any applicable law, and (b) this Agreement has
been duly executed and delivered by it and constitutes its legal, valid and
binding obligation.
ARTICLE VI
INTERCREDITOR ARRANGEMENTS
Section 6.1 Security Interests and Bankruptcy Matters.
(a) Subject to subsection (b) of this Section 6.1, the Collateral
Agent and the Secured Creditors each hereby agree that, with respect to each
item of Collateral, the liens and security interests of the respective Secured
Creditors therein shall secure all of the Outstanding Obligations on a pari
passu basis notwithstanding the order of filing of UCC financing statements or
recording of any Security Documents by the Collateral Agent or any Secured
Creditor, the order or time of granting any liens, the physical possession of
any of the Collateral or other method of perfection therein; and the Secured
Creditors further agree that all proceeds of
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<PAGE> 28
Collateral and other amounts received by the Collateral Agent or any Secured
Creditor under the Security Documents or any other Transaction Documents
(excluding Real Property Assets and any Additional Collateral or any proceeds
thereof in which either the Synthetic Lease Financing Agent or the Synthetic
Lease Borrower is granted a security interest after the repayment in full of the
Noteholder Outstandings) shall at all times be shared by the Secured Creditors
as provided herein. Any and all amounts required to be provided as cash
collateral for L/C Exposure pursuant to the Bank Loan Agreement or any agreement
executed in connection therewith shall be deemed to be Collateral for the
purpose of this Agreement.
(b) The obligations of the parties hereto shall not be affected
by the bankruptcy or insolvency of the Company or any of the Grantors or by the
invalidity, disallowance or subordination of any of the Outstanding Obligations
under Section 548 of the Federal Bankruptcy Code, under the Uniform Fraudulent
Transfer Act or the Uniform Fraudulent Conveyance Act as in effect in any state
or under any similar statute or rule of law (whether asserted by a creditor, a
trustee in bankruptcy or a debtor in possession). Each Secured Creditor waives
any right to, and any claim or defense which would, (i) challenge the validity,
perfection or priority of any security interest in the Collateral held by any
other Secured Creditor, or (ii) seek the subordination or avoidance of any such
security interest; and agrees, for the benefit of each other Secured Creditor,
not to initiate, encourage or join in any such action by any other party.
(c) For the limited purpose of perfecting the security interest
or lien of the Secured Creditors in those types or items of Collateral in which
a security interest or lien may, or is required to be, perfected by possession,
each Secured Creditor hereby appoints each other Secured Creditor as its bailee
for the limited purpose of possessing on its behalf any such Collateral that may
come into the possession of such other Secured Creditor from time to time, and
each Secured Creditor agrees to act as bailee for such limited purpose of
perfecting such other Secured Creditor's security interest or lien by possession
through a bailee.
Section 6.2 Restrictions on Waivers, Amendments and Consents to
Transaction Documentation.
(a) Notwithstanding any contrary provisions contained in the
Noteholder Loan Agreement, so long as there are either any Additional Senior
Indebtedness Outstandings, any Bank Outstandings, L/C Exposure or commitments by
the Banks to lend or issue Letters of Credit under the Bank Loan Agreement, or
any Synthetic Lease Outstandings or commitments by the Synthetic Lease Financers
to lend under the Synthetic Lease Financing Agreement, no amendment or waiver of
any
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<PAGE> 29
provision of the Noteholder Loan Agreement, nor consent to any departure by the
Company therefrom, shall do any of the following unless such amendment, waiver
or consent shall have been approved in writing by each of the holders of the
Additional Senior Indebtedness, the Bank Agent and the Synthetic Lease Financing
Agent:
(i) increase the maximum principal amount of the Senior
Notes and other obligations under the Noteholder Loan Agreement; or
(ii) shorten any scheduled date on which any payment shall
be required of principal of, or interest on, the loan under the
Noteholder Loan Agreement or the Senior Notes.
(b) Notwithstanding any contrary provisions contained in the Bank
Loan Agreement, so long as there are either any Additional Senior Indebtedness
Outstandings, any Noteholder Outstandings, or any Synthetic Lease Outstandings
or commitments by the Synthetic Lease Financers to lend under the Synthetic
Lease Financing Agreement, no amendment or waiver of any provision of the Bank
Loan Agreement nor consent to any departure by the Company therefrom, shall do
any of the following unless such amendment, waiver or consent shall have been
approved in writing by each of the holders of the Additional Senior
Indebtedness, the Noteholders and the Synthetic Lease Financing Agent:
(i) increase the maximum aggregate commitments under the
Bank Loan Agreement; or
(ii) shorten any scheduled date on which any payment shall
be required of principal of or interest on, the advances under the Bank
Loan Agreement (or any other "Loan Document" delivered pursuant to and
as defined in the Bank Loan Agreement), the reimbursement obligations in
respect of the Letters of Credit, or any fees or other amounts payable
under the Bank Loan Agreement or such other "Loan Documents", or shorten
any required expiration date of the Letters of Credit other than in
accordance with the terms of such Letter of Credit.
(c) Notwithstanding any contrary provisions contained in the
Synthetic Lease Financing Agreement, so long as there are either any Additional
Senior Indebtedness Outstandings, any Bank Outstandings, L/C Exposure or
commitments by the Banks to lend or issue Letters of Credit under the Bank Loan
Agreement, or any Noteholder Outstandings, no amendment or waiver of any
provision of the Synthetic Lease Financing Agreement nor consent to any
departure by the Synthetic Lease Borrower therefrom, shall do any of the
following unless such
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<PAGE> 30
amendment, waiver or consent shall have been approved in writing by each of the
holders of the Additional Senior Indebtedness, the Bank Agent and the
Noteholders:
(i) increase the maximum principal amount of loans and
other obligations under the Synthetic Lease Financing Agreement; or
(ii) shorten any scheduled date on which any payment shall
be required of principal of, or interest on, the loan under the
Synthetic Lease Financing Agreement or any "Synthetic Lease Operative
Agreement" delivered pursuant to and as defined in the Synthetic Lease
Financing Agreement) or any
fees or other amounts payable thereunder.
(d) Notwithstanding any contrary provisions contained in the
Additional Senior Indebtedness Financing Agreements, so long as there are either
any Bank Outstandings, L/C Exposure or commitments by the Banks to lend or issue
Letters of Credit under the Bank Loan Agreement, any Noteholder Outstandings, or
any Synthetic Lease Outstandings or commitments by the Synthetic Lease Financers
to lend under the Synthetic Lease Financing Agreement, no amendment or waiver of
any provision of the Additional Senior Indebtedness Financing Agreements nor
consent to any departure by the Company therefrom, shall do any of the following
unless such amendment, waiver or consent shall have been approved in writing by
each of the Bank Agent, the Noteholders and the Synthetic Lease Financing Agent:
(i) increase the maximum principal amount of the
Additional Senior Indebtedness above the aggregate amount permitted
under the definition of Additional Senior Indebtedness; or
(ii) shorten any scheduled date on which any payment shall
be required of principal of, or interest on, the loan under the
Additional Senior Indebtedness Financing Agreements.
(e) No provision of subsections (a), (b), (c), or (d) above, nor
any other provision of this Agreement or any other agreement among the parties
hereto, shall limit or restrict the ability of each Secured Creditor: (i) to
impose a default rate of interest in accordance with the terms of its respective
Transaction Documents; (ii) to accelerate its Outstanding Obligations; (iii) to
terminate its commitments to lend to the Company; (iv) to sue the Company and
obtain judgment on its debt with respect to all or part of the Outstanding
Obligations owed to it; (v) to raise any defenses in any action in which it has
been made a party defendant or has been joined as a third party; (vi) to declare
a "Default" or "Event of Default" under its respective Transaction Documents;
(vii) otherwise to exercise any of its rights or remedies against the
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<PAGE> 31
Company or any Grantor or Guarantor in accordance with the terms of any of its
respective Transaction Documents, as applicable, as in effect on the Closing
Date and as the same may be amended from time to time in accordance with the
terms hereof, except as may be explicitly prohibited hereby; (viii) to initiate
an action or actions in any bankruptcy, reorganization, compromise, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar
proceeding in its individual capacity or in its capacity as holder of
Outstanding Obligations and to appear or be heard on any matter before the
bankruptcy or other applicable court in any such proceeding, except to the
extent (if any) explicitly prohibited hereby. This Agreement shall survive the
commencement of any such bankruptcy, reorganization, compromise, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar
proceeding.
NOTWITHSTANDING THE FOREGOING PROVISIONS OF THIS SECTION 6.2(D), IN NO
EVENT SHALL ANY SECURED CREDITOR EITHER (1) EXERCISE ANY RIGHT OF OFFSET WITH
RESPECT TO ANY DEPOSIT ACCOUNT OF THE COMPANY OR OF ANY OTHER GRANTOR OR
GUARANTOR MAINTAINED WITH SUCH SECURED CREDITOR WITHOUT THE PRIOR CONSENT OF ALL
OTHER SECURED CREDITORS OR (II) COMMENCE ANY JUDICIAL FORECLOSURE ACTION AGAINST
THE COMPANY WITHOUT THE PRIOR CONSENT OF THE COLLATERAL AGENT.
Section 6.3 Additional Collateral. Each of the Secured Creditors hereby
covenants and agrees that it (i) will not accept any guarantee of any of the
Outstanding Obligations from any Person, other than the guaranties issued by the
Guarantors, unless each of the other Secured Creditors shall receive a guaranty
from such Person having substantially the same terms and provisions and (ii)
will not take any additional security interest in or lien on any real property
or other assets of the Company or any other Person (other than any Additional
Collateral in which either the Synthetic Lease Financing Agent or the Synthetic
Lease Borrower is granted a security interest following the repayment in full of
the Noteholder Outstandings) to secure any of the Secured Obligations unless
such security interest or lien secures the payment of all the Secured
Obligations on a pari passu basis pursuant to the Security Documents.
Section 6.4 Independent Investigation. No Secured Creditor, nor any of
its respective directors, officers, agents or employees, shall be responsible to
the other for the solvency or financial condition of the Company or of any other
Grantor or Guarantor or the ability of the Company or any Guarantor to repay any
of the Outstanding Obligations, or for the value, sufficiency, existence or
ownership of any of the Collateral, the perfection or vesting of any lien or
security interest, or the statements of the Company, any Grantor or any
Guarantor, oral or written, or for the validity, sufficiency or enforceability
of any of the Outstanding Obligations, any
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<PAGE> 32
Transaction Document, any document or agreement executed or delivered in
connection with or pursuant to any of the foregoing, or the liens or security
interests granted by the Company or any other Grantor to the Collateral Agent in
connection therewith. Each Secured Creditor has entered into its respective
Transaction Documents with the Company, the Grantors and the Guarantors based
upon its own independent investigation, and makes no warranty or representation
to the other, nor does it rely upon any representation by the other, with
respect to the matters identified or referred to in this Section 6.4.
Section 6.5 Further Assurances, etc. Each party hereto shall execute and
deliver such other documents and instruments, in form and substance reasonably
satisfactory to the other parties hereto, and shall take such other action, in
each case as any other party hereto may reasonably have requested (at the cost
and expense of the Company which, by countersigning this Agreement, agrees to
pay such costs and expenses), to effectuate and carry out the provisions of this
Agreement, including by recording or filing in such places as the requesting
party may deem desirable, this Agreement or such other documents or instruments.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Successors and Assigns. This Agreement shall be binding on
and inure to the benefit of each of the Secured Creditors and their respective
successors and assigns. This Agreement is not intended to confer any benefit on,
or create any obligation of any Secured Creditor to, the Company or any third
party, including the Grantors and the Guarantors.
Section 7.2 Notices. Notices and other communications provided for
herein or in any Security Document shall be in writing and shall be delivered by
hand or overnight courier service, mailed or sent by telecopy, as follows:
(a) if to the Bank Agent, at:
Union Bank of California, N.A.
San Diego Commercial Banking Office
530 "B" Street, 4th Floor
San Diego, California 92101
Attention: Douglas S. Lambell
Telecopier: (619) 230-3766
Telephone: (619) 230-3029
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<PAGE> 33
(b) if to the Noteholders, at their respective addresses for
notices set forth on Schedule A to the Noteholder Loan Agreement, or to such
other address of any Noteholder as it may designate in writing to the Collateral
Agent.
(c) if to the Synthetic Lease Financing Agent, at:
Union Bank of California, N.A.
San Diego Commercial Banking Office
530 "B" Street, 4th Floor
San Diego, California 92101
Attention: Douglas S. Lambell
Telecopier: (619) 230-3766
Telephone: (619) 230-3029
(d) If to the Synthetic Lease Investor, at:
Union Bank of California, N.A.
San Diego Commercial Banking Office
530 "B" Street, 4th Floor
San Diego, California 92101
Attention: Douglas S. Lambell
Telecopier: (619) 230-3766
Telephone: (619) 230-3029
(e) if to the Collateral Agent, at:
Union Bank of California, N.A.
San Diego Commercial Banking Office
530 "B" Street, 4th Floor
San Diego, California 92101
Attention: Douglas S. Lambell
Telecopier: (619) 230-3766
Telephone: (619) 230-3029
(f) if to the Company, any Grantor or any Guarantor, to it as
specified in the Bank Loan Agreement, the Noteholder Loan Agreement, the
Synthetic Lease Financing Agreement or the Security Document to which the party
sending such notice is a party.
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<PAGE> 34
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telex or telecopy, or on the date three (3) Business Days after dispatch by
certified or registered mail if mailed, in each case delivered, sent or mailed
(properly addressed) to such party as provided in this Section 7.2 or, in each
case, in accordance with the latest unrevoked direction from such party given in
accordance with this Section 7.2 (each such unrevoked direction from any Secured
Creditor or any assignee or successor of either shall be deemed to be an
amendment of this Section 7.2).
Section 7.3 Termination. This Agreement shall automatically terminate
upon the earlier to occur of:
(a) the indefeasible payment in full of all of the Outstanding
Obligations;
(b) in the event of any dissolution, winding up, liquidation,
reorganization or other insolvency proceeding of the Company, the completion of
all distributions to the Secured Creditors in respect of the Secured Obligations
after the discharge or satisfaction thereof (and this Agreement shall have no
effect with respect to the enforcement of any obligations so distributed), the
satisfaction or discharge of the obligations under the Security Documents and
the compliance with the provisions of this Agreement with respect to all Deemed
Collateral Proceeds, Unsecured Claim Distributions and other property received
by the Secured Creditors in respect of the Secured Obligations.
Section 7.4 Applicable Law. This agreement shall be construed in
accordance with and governed by the laws of the State of New York.
Section 7.5 Amendments and Waivers of Agreement. No amendment or waiver
of any provision of this Agreement shall in any event be effective unless the
same shall be in writing and signed by the Majority Secured Creditors; provided,
further, that any amendments that relate to any of Sections 3.2, 4.1, 4.2, 4.3,
4.4, 4.5, 4.6, 6.2, 7.3 or this Section 7.5 shall require the consent of all of
the Secured Creditors and provided further, that the consent of the Company
shall be required in connection with any amendment to Article I or this Section
7.5. No waiver of any provision of this Agreement and no consent to any
departure by any party hereto from the provisions hereof shall be effective
unless such waiver or consent shall be set forth in a written instrument
executed by the party against which it is sought to be enforced, and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given. No notice to or demand on any party hereto in any case
shall
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<PAGE> 35
entitle such party to any other or further notice or demand in the same, similar
or other circumstances.
Section 7.6 Waiver of Rights. Neither any failure nor any delay on the
part of any party hereto in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, and a single or partial exercise thereof
shall not preclude any other or further exercise or the exercise of any other
right, power or privilege.
Section 7.7 Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby. The
parties shall endeavor in good faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provision.
Section 7.8 Counterparts; Effectiveness. This Agreement may be executed
in two or more counterparts, each of which shall constitute an original, but all
of which, when taken together, shall constitute but one instrument. This
Agreement shall become effective on the date (the "Closing Date") on which each
of the following conditions precedent shall have been satisfied: (i) this
Agreement shall have been executed and delivered by each Secured Creditor, the
Company and Safeskin Scientific Corporation, and (ii) all conditions precedent
to the effectiveness of the Bank Loan Agreement, the Noteholder Loan Agreement
and the Synthetic Lease Financing Agreement (other than the effectiveness of
this Agreement) shall have been satisfied or waived in writing. Delivery of an
executed counterpart of this Agreement by facsimile transmission shall be
equally as effective as delivery of a manually executed counterpart of this
Agreement. Any party delivering an executed counterpart of this Agreement by
facsimile transmission also shall deliver a manually executed counterpart of
this Agreement, but the failure to deliver a manually executed counterpart shall
not affect the validity, enforceability and binding effect of this Agreement.
Section 7.9 Section Headings. The Article and Section headings used
herein are for convenience of reference only and are not to affect the
construction of or be taken into consideration in interpreting this Agreement.
Section 7.10 Complete Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior representations, negotiations, writings, memoranda and
agreements. To the extent any provision of this Agreement conflicts with any
other Transaction Document, the provisions of this Agreement shall be
controlling.
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<PAGE> 36
Section 7.11 No Benefit to Third Parties. The terms and provisions of
this Agreement shall be for the sole benefit of the Bank Parties, the
Noteholders, the Synthetic Lease Investor, the Synthetic Lease Financers, and
the holder of any Additional Senior Indebtedness which hereafter becomes a party
to this Agreement by executing a joinder agreement in form and substance
acceptable to the Secured Creditors, and the respective successors and assigns
of the foregoing parties. No other Person (including the Company or any Grantor
or Guarantor) shall have any right, benefit, priority or interest under, or
because of, this Agreement.
Section 7.12 Attorneys' Fees. If any legal action or proceeding is
brought by any party hereto to enforce or construe a provision of this
Agreement, the unsuccessful party in such action or proceeding, irrespective of
whether such action or proceeding is settled or prosecuted to final judgment,
shall pay all of the reasonable attorneys' fees and costs incurred by the
prevailing party.
IN WITNESS WHEREOF, the Bank Agent, for and on behalf of all
present and future Bank Parties, the Noteholders, the Synthetic Lease Investor
and the Synthetic Lease Financing Agent, for and on behalf of all present and
future Synthetic Lease Financers, have caused this Agreement to be duly executed
by their respective duly authorized officers, all as of the day and year first
above written.
The Bank Agent:
UNION BANK OF CALIFORNIA, N.A.,
a national banking association,
as Administrative Agent
By:
--------------------------------------
Douglas S. Lambell
Vice President
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<PAGE> 37
The Noteholders:
PACIFIC LIFE INSURANCE COMPANY
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
RELIASTAR LIFE INSURANCE COMPANY
By:
-------------------------------------
Name:
Title:
NORTHERN LIFE INSURANCE COMPANY
By:
-------------------------------------
Name:
Title:
RELIASTAR LIFE INSURANCE COMPANY OF
NEW YORK
By:
-------------------------------------
Name:
Title:
SECURITY CONNECTICUT LIFE INSURANCE
COMPANY
By:
-------------------------------------
Name:
Title:
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<PAGE> 38
AMERICAN UNITED LIFE INSURANCE
COMPANY
By:
-------------------------------------
Name:
Title:
THE STATE LIFE INSURANCE COMPANY
By:
-------------------------------------
Name:
Title:
THE SECURITY MUTUAL LIFE INSURANCE
COMPANY OF LINCOLN NEBRASKA
By:
-------------------------------------
Name:
Title:
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<PAGE> 39
The Synthetic Lease Investor:
BANKERS COMMERCIAL CORPORATION
By:
-------------------------------------
Name:
Title:
The Synthetic Lease Financing Agent:
UNION BANK OF CALIFORNIA, N.A.,
a national banking association,
as Administrative Agent
By:
-------------------------------------
Douglas S. Lambell
Vice President
The Collateral Agent:
UNION BANK OF CALIFORNIA, N.A.,
a national banking association,
as Collateral Agent
By:
-------------------------------------
Douglas S. Lambell
Vice President
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<PAGE> 40
The Company:
SAFESKIN CORPORATION,
a Florida corporation
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
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<PAGE> 41
The Guarantors and other Grantors:
SAFESKIN SCIENTIFIC CORPORATION,
a California corporation
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
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<PAGE> 1
EXHIBIT 10.50
================================================================================
CREDIT AGREEMENT
(SAFESKIN TRUST 1999)
among
UNION BANK OF CALIFORNIA, N.A.,
not in its individual capacity but solely as Trustee
under the Trust Agreement for the Investor named therein,
as Borrower
The Several Lenders
from Time to Time Parties Hereto
and
UNION BANK OF CALIFORNIA, N.A.,
as Agent
Dated as of March 5, 1999
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1. DEFINITIONS......................................................................1
1.1 Defined Terms................................................................1
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS..................................................1
2.1 Commitments..................................................................1
2.2 Notes........................................................................1
2.3 Procedure for Borrowing......................................................2
2.4 Commitment Fees..............................................................3
2.5 Prepayments..................................................................3
2.6 Conversion and Continuation Options..........................................4
2.7 Minimum Amounts of Tranches..................................................4
2.8 Interest Rates and Payment Dates.............................................4
2.9 Computation of Interest......................................................5
2.10 Inability to Determine Interest Rate.........................................5
2.11 Pro Rata Treatment and Payments..............................................6
2.12 Illegality...................................................................7
2.13 Requirements of Law..........................................................7
2.14 Indemnity....................................................................9
2.15 Taxes.......................................................................10
2.16 Change of Lending Office....................................................11
SECTION 3. REPRESENTATIONS AND WARRANTIES..................................................11
SECTION 4. CONDITIONS PRECEDENT............................................................12
4.1 Conditions to Effectiveness.................................................12
4.2 Conditions to Each Loan.....................................................12
SECTION 5. COVENANTS.......................................................................12
5.1 Other Activities............................................................12
5.2 Ownership of Property, Indebtedness.........................................12
5.3 Disposition of Assets.......................................................13
5.4 Compliance with Operative Agreements........................................13
5.5 Further Assurances..........................................................13
5.6 Notices.....................................................................13
5.7 Discharge of Liens..........................................................13
SECTION 6. REMEDIAL PROVISIONS.............................................................13
6.1 Events of Default...........................................................13
6.2 Certain Borrower Defaults...................................................17
SECTION 7. THE AGENT.......................................................................17
7.1 Appointment.................................................................17
7.2 Delegation of Duties........................................................18
</TABLE>
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<TABLE>
<CAPTION>
Page
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<S> <C> <C>
7.3 Exculpatory Provisions......................................................18
7.4 Reliance by Agent...........................................................18
7.5 Notice of Default...........................................................18
7.6 Non-Reliance on Agent and Other Lenders.....................................19
7.7 Indemnification.............................................................19
7.8 Agent in Its Individual Capacity............................................20
7.9 Successor Agent.............................................................20
SECTION 8. MATTERS RELATING TO PAYMENTS AND COLLATERAL.....................................20
8.1 The Account.................................................................20
8.2 Proceeds of Collateral; Proceeds Remaining in Account.......................22
8.3 Certain Remedial Matters....................................................23
8.4 Release of the Property, etc................................................24
SECTION 9. MISCELLANEOUS...................................................................24
9.1 Amendments and Waivers......................................................24
9.2 Notices.....................................................................25
9.3 No Waiver; Cumulative Remedies..............................................26
9.4 Survival of Representations and Warranties..................................26
9.5 Successors and Assigns; Participations and Assignments......................26
9.6 Participations..............................................................26
9.7 Assignments.................................................................27
9.8 The Register; Disclosure; Pledges to Federal Reserve Banks..................28
9.9 Adjustments; Set-Off........................................................28
9.10 Counterparts................................................................29
9.11 Severability................................................................29
9.12 Integration.................................................................29
9.13 GOVERNING LAW...............................................................29
9.14 SUBMISSION TO JURISDICTION; WAIVERS.........................................29
9.15 Acknowledgements............................................................30
9.16 WAIVERS OF JURY TRIAL.......................................................31
9.17 Nonrecourse.................................................................31
9.18 Lessee's Credit Agreement Rights............................................31
</TABLE>
EXHIBITS
Exhibit A-1 Form of Tranche A Note
Exhibit A-2 Form of Tranche B Note
Exhibit B Form of Assignment and Acceptance
SCHEDULES
Schedule 1.1 Commitments of Lenders
<PAGE> 4
CREDIT AGREEMENT, dated as of March 5, 1999 (this "Agreement"), among
UNION BANK OF CALIFORNIA, N.A., not in its individual capacity but solely as
Trustee under the Trust Agreement dated as of the date hereof with the Investor
named therein (the "Borrower"), the several banks and other financial
institutions from time to time parties to this Agreement (the "Lenders") and
UNION BANK OF CALIFORNIA, N.A., as agent for the Lenders hereunder (in such
capacity, the "Agent").
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. Capitalized terms used herein but not otherwise
defined in this Agreement shall have the respective meanings set forth in Annex
A attached to the Participation Agreement dated as of the date hereof among
Lessee, the Borrower, the Investor, the Agent and the Lenders, and the rules of
usage set forth in Annex A to the Participation Agreement shall apply to this
Agreement.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Commitments. (a) Subject to the terms and conditions hereof,
each Lender severally agrees to make loans (the "Loans") to the Borrower from
time to time during the Commitment Period for the purpose of enabling the
Borrower to acquire the Property and to pay Project Costs, in an aggregate
principal amount not to exceed the amount of such Lender's Commitment.
(b) The Loans may from time to time be (i) Eurodollar Loans,
(ii) Alternate Base Rate Loans, or (iii) a combination thereof, as determined by
the Borrower and notified to the Agent in accordance with Sections 2.3 and 2.6.
2.2 Notes. The Loans made by each Lender shall be evidenced by a
promissory note of the Borrower, substantially in the form of Exhibit A-1, in
the case of Tranche A Loans (each, a "Tranche A Note"), or Exhibit A-2, in the
case of Tranche B Loans (each, a "Tranche B Note"), with appropriate insertions
as to payee, date and principal amount, payable to the order of such Lender and
in a principal amount equal to the lesser of (a) the initial Commitment of such
Lender and (b) the aggregate outstanding principal amount of all Tranche A Loans
or Tranche B Loans, as the case may be, made by such Lender. Each Lender is
hereby authorized to record the date, Type and amount of each Loan made by such
Lender, each continuation thereof, each conversion of all or a portion thereof
to another Type, the date and amount of each payment or prepayment of principal
thereof and, in the case of Eurodollar Loans, the length of each Interest Period
with respect thereto, on the schedule annexed to and constituting a part of its
Note, and any such recordation shall constitute prima facie evidence of the
existence and accuracy of the loans therein recorded, in the absence of manifest
error, provided that the failure to make any such recordation or any error in
such
<PAGE> 5
2
recordation shall not affect the Borrower's actual obligations hereunder or
under such Note. Each Note shall (i) be dated the Initial Closing Date, (ii) be
stated to mature on the Maturity Date and (iii) provide for the payment of
interest in accordance with Section 2.8.
2.3 Procedure for Borrowing. (a) The Borrower may borrow under the
Commitments during the Commitment Period on any Business Day, provided that the
Borrower shall deliver to the Agent an irrevocable Requisition (appropriately
completed and including all documentation required to be attached thereto)
(which Requisition must be received by the Agent prior to 11:00 A.M., Pacific
Standard Time, five (5) Business Days prior to the requested Borrowing Date,
specifying (i) the amount to be borrowed, (ii) the requested Borrowing Date,
(iii) whether the borrowing is to be of Eurodollar Loans, Alternate Base Rate
Loans or a combination thereof and (iv) if the borrowing is to be entirely or
partly of Eurodollar Loans, the respective amounts of each such Type of Loan and
the respective lengths of the initial Interest Periods therefor, provided that
during the Construction Period, the length of the Interest Period shall be one
month. Each borrowing under the Commitments (other than borrowings of Interest
Payment Loans) shall be in an amount equal to (x) in the case of Alternate Base
Rate Loans, at least $500,000 or a whole multiple of $100,000 in excess thereof
(or, if the then Total Available Commitments are less than $500,000, such lesser
amount) and (y) in the case of Eurodollar Loans, at least $500,000 or a whole
multiple of $100,000 in excess thereof, provided that (i) the borrowings made
hereunder during the period commencing on the Initial Closing Date and
terminating on June 4, 1999 may be in a minimum amount of at least $250,000 and
(ii) the final borrowing hereunder may be in an amount that is less than the
foregoing amounts to the extent that the Project Costs outstanding upon
Completion are less than the foregoing amounts. Upon receipt of any such
Requisition from the Borrower, the Agent shall promptly notify each Lender
thereof. Each Lender will make the amount of its pro rata share of each
borrowing available to the Agent for the account of the Borrower at the office
of the Agent specified in Section 9.2 prior to 1:00 P.M., Pacific Standard Time,
on the Borrowing Date requested by the Borrower in funds immediately available
to the Agent. Such borrowing will then be made available to the Borrower by the
Agent crediting an account designated by the Borrower on the books of such
office with the aggregate of the amounts made available to the Agent by the
Lenders and in like funds as received by the Agent. The Borrower may submit no
more than one Requisition in any calendar month.
(b) Notwithstanding anything in the foregoing Section 2.3(a)
to the contrary, on each date during the Construction Period which is one
Business Day prior to any Scheduled Interest Payment Date, unless otherwise
requested by the Borrower at least three Business Days prior to such Scheduled
Interest Payment Date by written notice to the Agent, the Borrower shall be
deemed to have requested a borrowing pursuant to Section 2.3(a) of Alternate
Base Rate Loans in an amount equal to the aggregate amount of interest on the
Loans due and payable on such Scheduled Interest Payment Date. The Borrowing
Date with respect to any such borrowing shall be the relevant Scheduled Interest
Payment Date (provided, that the making of the Loans pursuant to such borrowing
shall be subject to satisfaction of the applicable conditions precedent set
forth in Section 4.2) and the proceeds of such borrowing
<PAGE> 6
3
shall be applied to pay such interest. On each such Borrowing Date, the Tranche
A/B Property Cost shall be increased by an amount equal to the interest paid on
such date with respect to such Property.
(c) A portion of the principal amount of each Loan made by
each Lender equal to the Tranche A Percentage of the principal amount of such
Loan shall be deemed to be a "Tranche A Loan" for the purposes of the Operative
Agreements and the remaining portion of the principal amount of such Loan shall
be deemed to be a "Tranche B Loan" for the purposes of the Operative Agreements,
provided that payments in respect of the Loans shall be allocated to reduce the
aggregate outstanding principal amount of Tranche A Loans and Tranche B Loans of
each Lender in the manner specified in Section 2.11(a).
2.4 Commitment Fees. Promptly after receipt from the Lessee of
payment of any Commitment Fees payable pursuant to the Participation Agreement,
the Agent shall distribute such payment to the Lenders pro rata according to
their respective Commitment Percentages.
2.5 Prepayments. (a) The Borrower may at any time and from time to
time prepay the Loans, in whole or in part, without premium or penalty (other
than breakage costs if due hereunder), upon at least three Business Days'
irrevocable notice to the Agent, specifying the date and amount of prepayment
and whether the prepayment is of Eurodollar Loans, Alternate Base Rate Loans or
a combination thereof, and, if of a combination thereof, the amount allocable to
each. Upon receipt of any such notice the Agent shall promptly notify each
Lender thereof. If any notice of prepayment is given, the amount specified in
such notice shall be due and payable on the date specified therein, together
with accrued interest to the payment date on the amount prepaid and amounts, if
any, required to be paid pursuant to Section 2.14. Partial prepayments pursuant
to this Section 2.5(a) shall be in an aggregate principal amount of $1,000,000
or a whole multiple of $500,000 in excess thereof.
(b) If on any date the Agent or the Borrower shall receive,
with respect to the Property, any payment in respect of excess wear and tear
pursuant to Section 21.3 of the Lease (a "Wear and Tear Payment") or any Net
Sales Proceeds Shortfall pursuant to Section 21.3 of the Lease, such payment
shall be applied to prepay the Loans on such date in accordance with Section
8.1(b)(vi).
(c)(i) On any date on which the Lessee is obligated to pay the
Lessor an amount equal to (x) the Termination Value of the Property in
connection with the delivery of a Termination Notice or (y) the Termination
Value of the Property in connection with the exercise of a Purchase Option or
Maturity Date Purchase Option pursuant to Section 20.1 and 20.2 of the Lease or
the Purchase Price of a portion of the Property in connection with the exercise
of a partial purchase option pursuant to Section 20.3 of the Lease, such amount
shall be applied to prepay the Loans on such date in accordance with Section
8.1(b)(ii), and (ii) on any date on which the Property shall have been sold
pursuant to Section 21 of the Lease, the Borrower shall prepay the Loans on such
date in an amount equal to the proceeds of such sale
<PAGE> 7
4
(net of costs and expenses described in Section 21.2(i) of the Lease) in
accordance with Section 8.1(b)(iii).
(d) Each prepayment of the Loans pursuant to this Section
2.5 shall be allocated to reduce the Tranche A/B Property Cost of the Property.
(e) Amounts prepaid on account of the Loans may not be
reborrowed.
2.6 Conversion and Continuation Options. (a) The Borrower may elect
from time to time to convert Eurodollar Loans to Alternate Base Rate Loans by
giving the Agent at least one Business Days' prior irrevocable notice of such
election, provided that any such conversion of Eurodollar Loans may only be made
on the last day of an Interest Period with respect thereto. The Borrower may
elect from time to time to convert Alternate Base Rate Loans to Eurodollar Loans
by giving the Agent at least three Business Days' prior irrevocable notice of
such election. Any such notice of conversion to Eurodollar Loans shall specify
the length of the initial Interest Period or Interest Periods therefor. Upon
receipt of any such notice the Agent shall promptly notify each Lender thereof.
All or any part of outstanding Eurodollar Loans or Alternate Base Rate Loans may
be converted as provided herein, provided that no Alternate Base Rate Loan may
be converted into a Eurodollar Loan when any Default has occurred and is
continuing, or after the date that is one month prior to the Maturity Date.
(b) Any Eurodollar Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower giving notice to the Agent, in accordance with the applicable
provisions of the term "Interest Period" set forth in Annex A, of the length of
the next Interest Period to be applicable to such Loans, provided that no
Eurodollar Loan may be continued as such when any Default has occurred and is
continuing, or after the date that is one month prior to the Maturity Date and
provided, further, that if the Borrower shall fail to give any required notice
as described above in this paragraph or if such continuation is not permitted
pursuant to the preceding proviso such Loans shall be automatically converted to
Alternate Base Rate Loans on the last day of such then expiring Interest Period.
2.7 Minimum Amounts of Tranches. Notwithstanding anything to the
contrary in this Agreement, all borrowings, conversions, continuations and
prepayments of Eurodollar Loans and all selections of Interest Periods shall be
in such amounts and be made pursuant to such elections so that, after giving
effect thereto, (a) the aggregate principal amount of the Eurodollar Loans
comprising each Eurodollar Tranche shall be equal to $3,000,000 or a whole
multiple of $1,000,000 in excess thereof and (b) no more than five Eurodollar
Tranches shall be outstanding at any one time.
2.8 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall
bear interest for each day during each Interest Period with respect thereto at a
rate per annum equal to the Eurodollar Rate determined for such day plus the
Applicable Eurodollar Rate Margin.
<PAGE> 8
5
(b) Each Alternate Base Rate Loan shall bear interest at a
rate per annum equal to the Alternate Base Rate.
(c) If all or a portion of (i) the principal amount of any
Loan, (ii) any interest payable thereon or (iii) any other amount payable
hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall bear interest at a rate
per annum which is the higher of (A) the rate that would otherwise be applicable
thereto pursuant to the foregoing provisions of this Section 2.8 plus 1% or (B)
the Alternate Base Rate plus 2%, from the date of such non-payment until such
amount is paid in full (as well after as before judgment).
(d) Interest shall be payable in arrears on each Scheduled
Interest Payment Date, provided that (i) interest accruing pursuant to paragraph
(c) of this Section 2.8 shall be payable from time to time on demand and (ii)
each prepayment of the Loans shall be accompanied by accrued interest to the
date of such prepayment on the amount prepaid and breakage costs, if any.
2.9 Computation of Interest. (a) Interest shall be calculated on the
basis of a 360- day year for the actual days elapsed. The Agent shall as soon as
practicable notify the Borrower and the Lenders of each determination of a
Eurodollar Rate in respect of any Eurodollar Tranche. Any change in the interest
rate on a Loan resulting from a change in the Alternate Base Rate shall become
effective as of the opening of business on the day on which such change becomes
effective. The Agent shall as soon as practicable notify the Borrower and the
Lenders of the effective date and the amount of each such change in interest
rate.
(b) Each determination of an interest rate by the Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrower and the Lenders in the absence of manifest error.
2.10 Inability to Determine Interest Rate. If prior to the first day
of any Interest Period:
(a) the Agent shall have determined (which determination
shall be conclusive and binding upon the Borrower) that, by reason of
circumstances affecting the Designated Eurodollar Market and despite the Agent's
best efforts to ascertain such rate, adequate and reasonable means do not exist
for ascertaining the Eurodollar Rate for such Interest Period, or
(b) the Agent shall have received notice from the Required
Lenders that the Eurodollar Rate determined or to be determined for such
Interest Period, by reason of circumstances affecting the Designated Eurodollar
Market, will not adequately and fairly reflect the cost to such Lenders (as
conclusively certified by such Lenders) of making or maintaining their affected
Eurodollar Loans during such Interest Period,
<PAGE> 9
6
the Agent shall give telecopy or telephonic notice thereof to the Borrower and
the Lenders as soon as practicable thereafter. If such notice is given (x) any
Eurodollar Loans requested to be made on the first day of such Interest Period
shall be made as Alternate Base Rate Loans and (y) any Loans that, on the first
day of such Interest Period, were to be converted to or continued as Eurodollar
Loans shall be converted to or continued as Alternate Base Rate Loans. Until
such notice has been withdrawn by the Agent, no further Eurodollar Loans shall
be made or continued as such, nor shall the Borrower have the right to convert
Alternate Base Rate Loans to Eurodollar Loans.
2.11 Pro Rata Treatment and Payments. (a) Each borrowing by the
Borrower from the Lenders hereunder and any reduction of the Commitments of the
Lenders shall be made pro rata according to the respective Commitment
Percentages of the Lenders. Except as otherwise provided in Section 2.5 or
Section 8, each payment (including each prepayment) by the Borrower on account
of principal of and interest on the Loans shall be made pro rata according to
the respective outstanding principal amounts of the Loans then held by the
Lenders (it being understood that, except as otherwise provided in Section 8,
any payment so made in respect of principal of any Lender's Loans shall be
deemed to ratably reduce the outstanding amount of Tranche A Loans and Tranche B
Loans of such Lender). All payments (including prepayments) to be made by the
Borrower hereunder and under the Notes, whether on account of principal,
interest or otherwise, shall be made without setoff or counterclaim and shall be
made prior to 11:00 A.M., Pacific Standard Time, on the due date thereof to the
Agent, for the account of the Lenders, at the Agent's office specified in
Section 9.2, in Dollars and in immediately available funds. The Agent shall
distribute such payments to the Lenders promptly upon receipt in like funds as
received. If any payment hereunder (other than payments on the Eurodollar Loans)
becomes due and payable on a day other than a Business Day, such payment shall
be extended to the next succeeding Business Day. If any payment on a Eurodollar
Loan becomes due and payable on a day other than a Business Day, the maturity
thereof shall be extended to the next succeeding Business Day unless the result
of such extension would be to extend such payment into another calendar month,
in which event such payment shall be made on the immediately preceding Business
Day. In the case of any extension of any payment of principal pursuant to the
preceding two sentences, interest thereon shall be payable at the then
applicable rate during such extension.
(b) Unless the Agent shall have been notified in writing by
any Lender prior to a borrowing that such Lender will not make its share of such
borrowing available to the Agent, the Agent may assume that such Lender is
making such amount available to the Agent, and the Agent may, in reliance upon
such assumption, make available to the Borrower a corresponding amount. If such
amount is not made available to the Agent by the required time on the Borrowing
Date therefor, such Lender shall pay to the Agent, on demand, such amount with
interest thereon at a rate equal to the daily average Federal Funds Effective
Rate for the period until such Lender makes such amount immediately available to
the Agent. A certificate of the Agent submitted to any Lender with respect to
any amounts owing under this Section 2.11(b) shall be conclusive in the absence
of manifest error. If such Lender's share of such borrowing is not made
available to the Agent by such Lender within three Business Days
<PAGE> 10
7
of such Borrowing Date, the Agent shall also be entitled to recover such amount
with interest thereon at the rate per annum applicable to Alternate Base Rate
Loans hereunder, on demand, from the Borrower.
2.12 Illegality. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert Alternate Base Rate Loans to Eurodollar Loans shall forthwith be
canceled and (b) such Lender's Loans then outstanding as Eurodollar Loans, if
any, shall be converted automatically to Alternate Base Rate Loans on the
respective last days of the then current Interest Periods with respect to such
Loans or within such earlier period as required by law. If any such conversion
of a Eurodollar Loan occurs on a day which is not the last day of the then
current Interest Period with respect thereto, the Borrower shall pay to such
Lender such amounts, if any, as may be required pursuant to subsection 2.14. Any
Lender whose obligation to make Eurodollar Loans has been canceled under this
subsection 2.12 shall promptly notify the Administrative Agent and Borrower of
the cessation of the illegality which gave rise to such cancellation.
2.13 Requirements of Law. (a) If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof or compliance
by any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority made subsequent to
the date hereof:
(i) shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement, any Note or any Eurodollar
Loan made by it, or change the basis of taxation of payments to such
Lender in respect thereof (except for Non-Excluded Taxes covered by
Section 2.15 and changes in the rate of tax on the overall net income of
such Lender) or a franchise tax in lieu of net income taxes;
(ii) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement against
assets held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing, as determined in good faith by such
Lender, is to increase the cost to such Lender, by an amount which such Lender
deems to be material, of making, converting into, continuing or maintaining
Eurodollar Loans or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay such Lender,
upon its demand, any additional amounts necessary to compensate such Lender for
such increased cost or reduced amount receivable; provided, that the Borrower
<PAGE> 11
8
shall not be obligated to pay any such amount which arose prior to the date
which is ninety (90) days preceding the date of such demand or is attributable
to periods prior to the date which is ninety (90) days preceding the date of
such demand.
(b) If any Lender shall have determined that any change in
any Requirement of Law regarding capital adequacy or in the interpretation or
application thereof or compliance by such Lender or any corporation controlling
such Lender with any request or directive regarding capital adequacy (whether or
not having the force of law) from any Governmental Authority, in each case made
subsequent to the date hereof, has the effect of reducing the rate of return on
such Lender's or such corporation's capital as a consequence of its obligations
hereunder to a level below that which such Lender or such corporation could have
achieved but for such change or compliance (taking into consideration such
Lender's or such corporation's policies with respect to capital adequacy) by an
amount deemed by such Lender to be material, then from time to time, the
Borrower shall promptly pay to such Lender, upon its demand, such additional
amount or amounts as will compensate such Lender for such reduction; provided,
that the Borrower shall not be obligated to pay any such amount which arose
prior to the date which is ninety (90) days preceding the date of such demand or
is attributable to periods prior to the date which is ninety (90) days preceding
the date of such demand.
(c) The Borrower agrees to pay to each Lender which requests
compensation under this Section 2.13(c) (by notice to the Borrower), on the last
day of each Interest Period with respect to any Eurodollar Loan made by such
Lender, so long as such Lender shall be required to maintain reserves against
"Eurocurrency Liabilities" under Regulation D of the Board (or, so long as such
Lender may be required by the Board or by any other Governmental Authority to
maintain reserves against any other "category of liabilities" under Regulation D
of the Board (or, so long as such Lender may be required by the Board or by any
other Governmental Authority to maintain reserves against any other category of
liabilities which includes deposits by reference to which the interest rate on
Eurodollar Loans is determined as provided in this Agreement or against any
category or extensions of credit or other assets of such Lender which includes
any Eurodollar Loans)), an additional amount (determined by such Lender and
notified to the Borrower) representing such Lender's calculation or, if an
accurate calculation is impracticable, reasonable estimate (using such
reasonable means of allocation as such Lender shall determine) of the costs, if
any, incurred by such Lender during such Interest Period, as a result of the
applicability of the foregoing reserves to such Eurodollar Loans, which amount
in any event shall not exceed the product of the following for each day of such
Interest Period:
(i) the principal amount of the Eurodollar Loans
made by such Lender to which such Interest Period relates and
outstanding on such day; and
(ii) the difference between (x) a fraction, the
numerator of which is the Eurodollar Rate (expressed as a decimal)
applicable to such Eurodollar Loans, and the denominator of which is one
minus the maximum rate (expressed as a decimal) at which
<PAGE> 12
9
such reserve requirements are imposed by the Board or other Governmental
Authority on such date, minus (y) such numerator; and
(iii) a fraction the numerator of which is one and the
denominator of which is 360.
(d) If any Lender becomes entitled to claim any additional
amounts pursuant to this Section 2.13, it shall promptly notify the Borrower
(with a copy to the Agent) of the event by reason of which it has become so
entitled and shall provide reasonable detail to the Borrower regarding the
manner in which such additional amounts have been determined. A certificate as
to any additional amounts payable pursuant to this Section 2.13 submitted by
such Lender to the Borrower (with a copy to the Agent) shall be conclusive in
the absence of manifest error. The agreements in this Section 2.13 shall survive
for the ninety (90) day period following the date of termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder,
and the Borrower shall remain obligated hereunder for all claims made by any
Lender to the Borrower prior to the expiration of such period.
2.14 Indemnity. The Borrower shall indemnify each Lender against any
loss or expense which such Lender may sustain or incur as a consequence of (a)
default by the Borrower in payment of the principal amount of or interest on any
Eurodollar Loans of such Lender, including, but not limited to, any such loss or
expense arising from interest or fees payable by such Lender to lenders of funds
obtained by it in order to make or maintain its Eurodollar Loans hereunder, (b)
default by the Borrower in making a borrowing after the Borrower has given a
notice in accordance with Section 2.3 or in making a conversion of Alternate
Base Rate Loans to Eurodollar Loans or in continuing Eurodollar Loans as such,
in either case, after the Borrower, has given notice in accordance with Section
2.6, (c) default by the Borrower in making any prepayment after the Borrower has
given a notice in accordance with Section 2.5, (d) a payment or prepayment of a
Eurodollar Loan or conversion (including without limitation, as a result of
Section 2.5 and/or a conversion pursuant to Section 2.10) of any Eurodollar Loan
into an Alternate Base Rate Loan, in either case on a day which is not the last
day of an Interest Period with respect thereto, including, but not limited to,
any such loss or expense arising from interest or fees payable by such Lender to
lenders of funds obtained by it in order to maintain its Eurodollar Loans
hereunder (but excluding loss of profit), or (e) not being covered by the
indemnities provided for in Section 12.1(a) of the Participation Agreement as
the result of the application of Section 12.1(b) of the Participation Agreement.
2.15 Taxes. (a) All payments made by the Borrower under this
Agreement and any Notes shall be made free and clear of, and without deduction
or withholding for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or withholdings,
now or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding (i) net income taxes and franchise taxes
(imposed in lieu of net income taxes) imposed on the Agent or any Lender as a
result of a present or former connection between the Agent or such Lender and
the jurisdiction of the Governmental Authority imposing such tax or any
political subdivision or taxing
<PAGE> 13
10
authority thereof or therein (other than any such connection arising solely from
the Agent or such Lender having executed, delivered or performed its obligations
or received a payment under, or enforced, this Agreement or any Note) and (ii)
any withholding taxes or other taxes based on gross income imposed by the United
States of America for any period with respect to which such Lender has failed to
comply with the requirements of paragraph (b) of this Section 2.15. If any such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("Non-Excluded Taxes") are required to be withheld from any amounts
payable to the Agent or any Lender hereunder, the amounts so payable to the
Agent or such Lender shall be increased to the extent necessary to yield to the
Agent or such Lender (after payment of all Non-Excluded Taxes) interest or any
such other amounts payable hereunder at the rates or in the amounts specified in
this Agreement. Whenever any Non-Excluded Taxes are payable by the Borrower, as
promptly as possible thereafter the Borrower shall send to the Agent for its own
account or for the account of such Lender, as the case may be, a certified copy
of an original official receipt received by the Borrower showing payment
thereof. If the Borrower fails to pay any Non-Excluded Taxes when due to the
appropriate taxing authority or fails to remit to the Agent 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.
The agreements in this Section 2.15 shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.
(b) Each Lender that is not a citizen or resident of the
United States of America, a corporation, partnership or other entity created or
organized in or under the laws of the United States of America, or any estate or
trust that is subject to federal income taxation regardless of the source of its
income (a "Non-U.S. Lender") shall deliver to the Borrower and the Agent (or, in
the case of a Participant, to the Lender from which the related participation
shall have been purchased) two copies of either U.S. Internal Revenue Service
Form 1001 or Form 4224, or, in the case of a Non-U.S. Lender claiming exemption
from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code
with respect to payments of "portfolio interest", a Form W-8, or any subsequent
versions thereof or successors thereto (and, if such Non-U.S. Lender delivers a
Form W-8, an annual certificate representing that such Non-U.S. Lender is not a
"bank" for purposes of Section 881(c) of the Code, is not a 10-percent
shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of the
Borrower and is not a controlled foreign corporation related to the Borrower
(within the meaning of Section 864(d)(4) of the Code)), properly completed and
duly executed by such Non-U.S. Lender claiming complete exemption from, or a
reduced rate of, U.S. federal withholding tax on all payments by the Borrower
under this Agreement and the other Operative Agreements. Such forms shall be
delivered by each Non-U.S. Lender on or before the date it becomes a party to
this Agreement (or, in the case of any Participant, on or before the date such
Participant purchases the related participation). In addition, each Non-U.S.
Lender shall deliver such forms promptly upon the obsolescence or invalidity of
any form previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender
shall promptly notify the Borrower at any time it determines that it is no
longer in a position to provide any previously
<PAGE> 14
11
delivered certificate to the Borrower (or any other form of certification
adopted by the U.S. taxing authorities for such purpose).
2.16 Change of Lending Office. Each Lender agrees that if it makes
any demand for payment under Section 2.13 or 2.15(a), or if any adoption or
change of the type described in subsection 2.12 shall occur with respect to it,
it will use reasonable efforts (consistent with its internal policy and legal
and regulatory restrictions and so long as such efforts would not be
disadvantageous to it, as determined in its sole discretion) to designate a
different lending office if the making of such a designation would reduce or
obviate the need for the Borrower to make payments under Section 2.13 or
2.15(a), or would eliminate or reduce the effect of any adoption or change
described in subsection 2.12.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this Agreement
and to make the Loans, the Borrower hereby represents and warrants to the Agent
and each Lender that the representations and warranties set forth in Section 7
of the Participation Agreement are true and correct.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions to Effectiveness. The effectiveness of this Agreement
is subject to the satisfaction of all conditions precedent set forth in Section
6.1 of the Participation Agreement required by said Section to be satisfied on
or prior to the Initial Closing Date.
4.2 Conditions to Each Loan. The agreement of each Lender to make
any Loan requested to be made by it on any date is subject to the satisfaction
of the following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by the Borrower, the Lessee or any Guarantor
in or pursuant to the Operative Agreements shall be true and correct in all
material respects on and as of such date as if made on and as of such date.
(b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the Loans
requested to be made on such date.
(c) Participation Agreement Conditions. With respect to each
Loan, the applicable conditions precedent to the Advance associated therewith
specified in Section 6 of the Participation Agreement shall have been satisfied.
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(d) Investor Contribution. With respect to each Advance, the
Agent shall be satisfied that the Borrower shall receive from the Investor on
the relevant Funding Date an amount equal to the Investor Contribution
associated with such Loan.
Each borrowing by the Borrower hereunder shall constitute a representation and
warranty by the Borrower or the Lessee, as the case may be, as of the date of
such Loan that the conditions contained in this Section 4.2 have been satisfied.
SECTION 5. COVENANTS
So long as the Commitments remain in effect, any Note remains
outstanding and unpaid or any other amount is owing to any Lender or the Agent
hereunder:
5.1 Other Activities. The Borrower shall not conduct, transact or
otherwise engage in, or commit to transact, conduct or otherwise engage in, any
business or operations other than the entry into, and exercise of rights and
performance of obligations in respect of, the Operative Agreements and other
activities incidental or related to the foregoing.
5.2 Ownership of Property, Indebtedness. The Borrower shall not own,
lease, manage or otherwise operate any properties or assets other than in
connection with the activities described in Section 5.1, or incur, create,
assume or suffer to exist any Indebtedness or other consensual liabilities or
financial obligations other than as may be incurred, created or assumed or as
may exist in connection with the activities described in Section 5.1 (including
the Loans and other obligations incurred by the Borrower hereunder).
5.3 Disposition of Assets. The Borrower shall not convey, sell,
lease, assign, transfer or otherwise dispose of any of its property, business or
assets, whether now owned or hereafter acquired, except to the extent expressly
authorized by the Operative Agreements.
5.4 Compliance with Operative Agreements. The Borrower shall at all
times observe and perform all of the covenants, conditions and obligations
required to be performed by it under each Operative Agreement to which it is a
party.
5.5 Further Assurances. At any time and from time to time, upon the
written request of the Agent, the Borrower will, at its own sole expense,
promptly and duly execute and deliver such further instruments and documents and
take such further action as the Agent or the Required Lenders may reasonably
request for the purpose of obtaining or preserving the full benefits of this
Agreement and the other Operative Agreements and of the rights and powers herein
or therein granted.
5.6 Notices. If on any date the Borrower shall obtain actual
knowledge of the occurrence of a Default or Event of Default, the Borrower will
give prompt written notice thereof to the Agent.
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5.7 Discharge of Liens. The Borrower will not create or permit to
exist at any time, and will, at its own expense, promptly take such action as
may be necessary duly to discharge, or cause to be discharged, all Lessor Liens
attributable to it, provided, that the Borrower shall not be required to
discharge any Lessor Lien while the same is being contested in good faith by
appropriate proceedings diligently prosecuted so long as such proceedings shall
not involve any material danger of impairment of any of the Liens contemplated
by the Security Documents or of the sale, forfeiture or loss of, and shall not
materially interfere with the construction, use, operation or disposition of
(including, as a result of the exercise of the Purchase Option), the Property or
title thereto or any interest therein or the payment of Rent.
SECTION 6. REMEDIAL PROVISIONS
6.1 Events of Default. Upon the occurrence of any of the following
specified events (each an "Event of Default"):
(a) The Borrower shall (i) default in the payment when due
of any principal of the Loans or (ii) default, and such default shall continue
for five (5) or more Business Days after notice thereof from the Agent, in the
payment when due of any interest on the Loans or any other amounts owing
hereunder or under any other Credit Document to which it is a party; or
(b) The Borrower shall default in the due performance or
observance by it of any term, covenant or agreement contained in any Credit
Document to which it is a party (other than the terms, covenants or agreements
referred to in paragraph (a) above) and such default shall have continued
unremedied for a period of twenty (20) Business Days after notice thereof from
the Agent or, if such Default is not reasonably susceptible of cure within such
period, within such longer period as is reasonably necessary to effect a cure so
long as the Borrower continues to diligently pursue cure of such Default but not
in any event in excess of forty (40) Business Days; or
(c) Any Guarantor shall default in the due performance or
observance by it of any term, covenant or agreement contained in the Guarantee
(including any term, covenant or agreement incorporated by reference in the
Guarantee, provided that a default in the due performance or observance of any
such incorporated term, covenant or agreement shall only constitute an Event of
Default hereunder after the giving of notice, if required, and the expiration of
cure periods, if applicable, under the Corporate Credit Agreement or any
Replacement Corporate Credit Agreement); or
(d) Any representation, warranty or statement made or deemed
made by the Borrower herein or in any other Credit Document or by the Borrower
or the Lessee in the Participation Agreement, or in any statement or certificate
delivered or required to be delivered pursuant hereto or thereto, shall prove to
be incorrect in any material respect on the date as of which made or deemed
made; or
<PAGE> 17
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(e) Any representation, warranty or statement made or deemed
made by any Guarantor in the Guarantee or in any other Operative Agreement, or
in any statement or certificate delivered or required to be delivered pursuant
thereto, shall prove to be untrue in any material respect on the date as of
which made or deemed made; or
(f)(i) Any Lease Event of Default shall have occurred and be
continuing or (ii) the Borrower shall default in the due performance or
observance by it of any term, covenant or agreement contained in the
Participation Agreement or the Trust Company shall default in the due
performance or observance by it of any term, covenant or agreement contained in
the Trust Agreement, and in each case under this clause (ii), such default shall
have continued unremedied for a period of at least 30 days after notice to the
Borrower by the Agent or the Required Lenders; or
(g) The Company shall (i) default in making any payment of
any principal of any Indebtedness of $5,000,000 or more (including any Guaranty
Obligation, but excluding the Guaranteed Obligations) beyond the period of
grace, if any, provided in the instrument or agreement under which such
Indebtedness was created; or (ii) default in the observance or performance of
any other agreement or condition relating to any such Indebtedness of $5,000,000
or more or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition exist, the effect
of which default or other event or condition is to cause, or to permit the
holder or beneficiary of such Indebtedness (or a trustee or agent on behalf of
such holder or beneficiary) to cause, with the giving of notice if required,
such Indebtedness to become due prior to its stated maturity or (in the case of
any such Indebtedness constituting a Guaranty Obligation) to become payable; or
(h)(i) The Borrower or the Investor shall commence any case,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian, conservator or other
similar official for it or for all or any substantial part of its assets, or the
Borrower or the Investor shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against the Borrower or the Investor
any case, proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such adjudication
or appointment or (B) remains undismissed, undischarged or unbonded for a period
of 60 days; or (iii) there shall be commenced against the Borrower or the
Investor any case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of an order for any
such relief which shall not have been vacated, discharged, or stayed or bonded
pending appeal within 60 days from the entry thereof; or (iv) the Borrower or
the Investor shall
<PAGE> 18
15
take any action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above;
or (v) the Borrower or the Investor shall generally not, or shall be unable to,
or shall admit in writing its inability to, pay its debts as they become due; or
(i)(i) The Company or any of its Subsidiaries shall commence
any case, proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian, conservator or other
similar official for it or for all or any substantial part of its assets, or the
Company or any of its Subsidiaries shall make a general assignment for the
benefit of its creditors; or (ii) there shall be commenced against the Company
or any of its Subsidiaries any case, proceeding or other action of a nature
referred to in clause (i) above which (A) results in the entry of an order for
relief or any such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of 60 days; or (iii) there shall be
commenced against the Company or any of its Subsidiaries any case, proceeding or
other action seeking issuance of a warrant of attachment, execution, distraint
or similar process against all or any substantial part of its assets which
results in the entry of an order for any such relief which shall not have been
vacated, discharged, or stayed or bonded pending appeal within 60 days from the
entry thereof; or (iv) the Company or any of its Subsidiaries shall take any
action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above;
or (v) the Company or any of its Subsidiaries shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as they
become due; or
(j) Any Security Document shall cease to be in full force
and effect, or shall cease to give the Agent the Liens, rights, powers and
privileges purported to be created thereby, in favor of the Agent on behalf of
the Lenders, superior to and prior to the rights of all third Persons and
subject to no other Liens (except in each case to the extent expressly permitted
herein or in the other Operative Agreements); or
(k) The Guarantee or any material provision thereof shall
cease to be in full force and effect or any Guarantor or any Person acting by or
on behalf of any Guarantor shall deny or disaffirm such Guarantor's obligations
under the Guarantee; or
(l) One or more judgments or judicial decrees shall be
entered against the Borrower involving a liability of $100,000 or more in the
case of any one such judgment or $250,000 or more in the aggregate for all such
judgments and decrees for the Borrower (to the extent not paid or fully covered
by insurance, provided by a carrier that has acknowledged coverage) and any such
judgments or decrees shall not
<PAGE> 19
16
have been vacated, discharged or stayed or bonded pending appeal within 90 days
from the entry thereof; or
(m) Any Pension Plan maintained by the Company is finally
determined by the PBGC to have a material "accumulated funding deficiency" as
that term is defined in Section 302 of ERISA in excess of an amount equal to 5%
of the consolidated total assets of the Company as of the most recently ended
Fiscal Quarter; or
(n) A final judgment against the Company is entered for the
payment of money in excess of $1,000,000 (not covered by insurance or for which
an insurer has reserved its rights) and, absent procurement of a stay of
execution, such judgment remains unsatisfied for thirty (30) calendar days after
the date of entry of judgment, or in any event later than five (5) days prior to
the date of any proposed sale thereunder; or any writ or warrant of attachment
or execution or similar process is issued or levied against all or any material
part of the Property of the Company and is not released, vacated or fully bonded
within thirty (30) calendar days after its issue or levy;
then, and in any such event, (A) if such event is an Event of Default specified
in paragraph (h) or paragraph (i), automatically the Commitments shall
immediately terminate and the Loans hereunder (with accrued interest thereon)
and all other amounts owing under this Agreement and the Notes shall immediately
become due and payable, and (B) if such event is any other Event of Default,
either or both of the following actions may be taken: (i) with the consent of
the Required Lenders, the Agent may, or upon the request of the Required
Lenders, the Agent shall, by notice to the Borrower declare the Commitments to
be terminated forthwith, whereupon the Commitments shall immediately terminate;
and (ii) with the consent of the Required Lenders, the Agent may, or upon the
request of the Required Lenders, the Agent shall, by notice to the Borrower,
declare the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement and the Notes to be due and payable
forthwith, whereupon the same shall immediately become due and payable (any of
the foregoing occurrences or actions referred to in clause (A) or (B) above, an
"Acceleration"). Except as expressly provided above in this Section 6,
presentment, demand, protest and all other notices of any kind are hereby
expressly waived.
6.2 Certain Borrower Defaults. Notwithstanding anything to the
contrary contained in Section 6.1, neither the Agent nor the Lenders shall (a)
be entitled to enforce their remedies under the Guarantee or (b) in the exercise
of any rights and remedies under the other Operative Agreements, interfere with
the Lessee's rights under the Lease or accelerate payment by the Lessee of any
amounts under the Lease upon the occurrence and during the continuance of an
Event of Default under Sections 6.1(b), 6.1(d) (but only with respect to
representations, warranties or statements of the Borrower), 6.1(f)(ii), 6.1(h)
or 6.1(l) (each, a "Borrower Default"), provided that (i) such Borrower Default
does not in any manner, directly or indirectly, interrupt or, in the reasonable
judgment of the Required Lenders, threaten to interrupt the Lenders' receipt of
all amounts due under this Agreement and each of the other
<PAGE> 20
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Operative Agreements, whether pursuant to the Assignment of Lease or otherwise
or (ii) no Lease Event of Default has occurred and is continuing.
SECTION 7. THE AGENT
7.1 Appointment. Each Lender hereby irrevocably designates and
appoints the Agent as the agent of such Lender under this Agreement and the
other Operative Agreements, and each such Lender irrevocably authorizes the
Agent, in such capacity, to take such action on its behalf under the provisions
of this Agreement and the other Operative Agreements and to exercise such powers
and perform such duties as are expressly delegated to the Agent by the terms of
this Agreement and the other Operative Agreements, together with such other
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary elsewhere in this Agreement, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Operative Agreement or otherwise exist against the Agent.
7.2 Delegation of Duties. The Agent may execute any of its duties
under this Agreement and the other Operative Agreements by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys in-fact selected by it with
reasonable care.
7.3 Exculpatory Provisions. Neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or any other Operative
Agreement (except for its or such Person's own gross negligence or willful
misconduct) or (ii) responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by the Lessee or any
officer thereof contained in this Agreement or any other Operative Agreement or
in any certificate, report, statement or other document referred to or provided
for in, or received by the Agent under or in connection with, this Agreement or
any other Operative Agreement or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other
Operative Agreement or for any failure of the Borrower to perform its
obligations hereunder or thereunder. Except to the extent expressly set forth
herein, the Agent shall not be under any obligation to any Lender to ascertain
or to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Operative Agreement,
or to inspect the properties, books or records of the Borrower or the Guarantor.
7.4 Reliance by Agent. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telecopy, telex or teletype message,
statement, order or other document or conversation
<PAGE> 21
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believed by it in good faith to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to any Guarantor),
independent accountants and other experts selected by the Agent. The Agent shall
be fully justified in failing or refusing to take any action under this
Agreement or any other Operative Agreement unless it shall first receive such
advice or concurrence of the Required Lenders as it deems appropriate or it
shall first be indemnified to its satisfaction by the Lenders against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and the
other Operative Agreements in accordance with a request of the Required Lenders,
and such request and any action taken or failure to act pursuant thereto shall
be binding upon all the Lenders and all future holders of the obligations owing
by the Borrower hereunder.
7.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Lender, the Borrower or
any Guarantor referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Agent receives such a notice, the Agent shall give notice thereof to the
Lenders. The Agent shall take such action with respect to such Default or Event
of Default as shall be reasonably directed by the Required Lenders; provided
that unless and until the Agent shall have received such directions, the Agent
may (but shall not be obligated to) take such action, or refrain from taking
such action, with respect to such Default or Event of Default as it shall deem
advisable in the best interests of the Lenders; provided, further, that the
Agent shall not be required to act or not act if to do so would be contrary to
any Operative Agreement or to applicable law or would result, in the reasonable
judgment of the Agent, in substantial risk of liability to the Agent.
7.6 Non-Reliance on Agent and Other Lenders. Each Lender expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representations
or warranties to it and that no act by the Agent hereinafter taken, including
any review of the affairs of the Borrower or any Guarantor, shall be deemed to
constitute any representation or warranty by the Agent to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon the Agent or any other Lender, and based on such documents and information
as it has deemed appropriate, made its own appraisal of and investigation into
the business, operations, property, financial and other condition and
creditworthiness of the Borrower and the Guarantors and made its own decision to
make its Loans hereunder and enter into this Agreement. Each Lender also
represents that it will, independently and without reliance upon the Agent or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement and the other
Operative Agreements, and to make such investigation as it deems necessary to
inform itself as to the business, operations, property, financial and other
condition and creditworthiness of the Borrower and the
<PAGE> 22
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Guarantors. Except for notices, reports and other documents expressly required
to be furnished to the Lenders by the Agent hereunder, the Agent shall not have
any duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, condition (financial
or otherwise), prospects or creditworthiness of the Borrower or the Guarantors
which may come into the possession of the Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
7.7 Indemnification. The Lenders agree to indemnify the Agent in its
capacity as such (to the extent not reimbursed by the Borrower or the Guarantors
and without limiting the obligation of the Borrower or the Guarantors to do so),
ratably according to their respective Commitment Percentages in effect on the
date on which indemnification is sought (or, if indemnification is sought after
the date upon which the Commitments shall have terminated and the Loans shall
have been paid in full, ratably in accordance with their Commitment Percentages
immediately prior to such date), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the amounts
owing hereunder) be imposed on, incurred by or asserted against the Agent in any
way relating to or arising out of, the Commitments, this Agreement, any of the
other Operative Agreements or any documents contemplated by or referred to
herein or therein or the transactions contemplated hereby or thereby or any
action taken or omitted by the Agent under or in connection with any of the
foregoing; provided that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's
gross negligence or willful misconduct. The agreements in this Section shall
survive the payment of the Loans and all other amounts payable hereunder.
7.8 Agent in Its Individual Capacity. The Agent and its Affiliates
may make loans to, accept deposits from and generally engage in any kind of
business with the Borrower or any Guarantor as though the Agent were not the
Agent hereunder and under the other Operative Agreements. With respect to the
Loans made by it, the Agent shall have the same rights and powers under this
Agreement and the other Operative Agreements as any Lender and may exercise the
same as though it were not the Agent, and the terms "Lender" and "Lenders" shall
include the Agent in its individual capacity.
7.9 Successor Agent. The Agent may resign as Agent upon 30 days'
notice to the Lenders. If the Agent shall resign as Agent under this Agreement
and the other Operative Agreements, then the Required Lenders shall appoint from
among the Lenders a successor agent for the Lenders, subject to the approval by
the Borrower, which approval shall not be unreasonably withheld, delayed or
conditioned. Any rejection by the Borrower of a successor agent shall specify
the reasons for such rejection. Failure of the Borrower to approve or reject a
successor agent within 10 days following a request for approval shall be deemed
to constitute approval. Upon such appointment and approval, (1) the successor
agent shall succeed to the rights, powers and duties of the Agent, (2) the term
"Agent" shall mean such successor agent effective upon such appointment and
approval, and (3) the former Agent's rights, powers and
<PAGE> 23
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duties as Agent shall be terminated, without any other or further act or deed on
the part of such former Agent or any of the parties to this Agreement or any
holders of the Loans. After any retiring Agent's resignation as Agent, the
provisions of this Section 7 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement and the
other Operative Agreements.
SECTION 8. MATTERS RELATING TO PAYMENTS AND COLLATERAL
8.1 The Account. (a) The Agent shall establish an account (the
"Account") into which the Agent shall deposit all payments, receipts and other
consideration of any kind whatsoever paid under the Lease and received by the
Agent pursuant to the Assignment of Lease.
(b) Payments deposited from time to time in the Account
shall be paid out as follows:
(i) Any such payment identified by the Lessee as
Basic Rent shall be paid out of the Account by the Agent on the relevant
Specified Interest Payment Date, and shall be applied, first, ratably to
the payment of interest then due and payable on the Loans until such
amounts are paid in full, second, to the payment to the Borrower of an
amount equal to the Investor Yield then due and payable under the
Operative Agreements until such amount is paid in full, and, third, the
remainder of such amount shall be paid out of the Account by the Agent
to such Person or Persons as the Borrower may designate.
(ii) Any payment identified by the Lessee as a
payment in respect of the Termination Value pursuant to Section 16 of
the Lease or of the Termination Value pursuant to Section 20 of the
Lease (other than Section 20.3 of the Lease) shall be paid out of the
Account by the Agent promptly after receipt, and shall be applied,
first, ratably to the payment of the principal of Loans then outstanding
and all interest due and payable on such amounts, second, to the payment
to the Borrower of an amount not to exceed the outstanding Investor
Contribution and the Investor Yield due and payable on such amount, and
third, the remainder of such amount shall be paid out of the Account by
the Agent to the Lessee, provided, however, that any payment identified
by the Lessee as a payment in respect of the Purchase Price pursuant to
Section 20.3 of the Lease shall be paid out of the Account by the Agent
promptly after receipt, and shall be applied, first, ratably to the
payment of the principal of Tranche B Loans then outstanding in an
amount equal to the Tranche B Percentage of 97% of the Purchase Price
and all interest due and payable on such amount, second, to the payment
to the Borrower of an amount equal to 3% of the Purchase Price and the
Investor Yield due and payable on such amount, and third, ratably to the
payment of the principal of Tranche A Loans then outstanding in an
amount equal to the Tranche A Percentage of 97% of the Purchase Price
and all interest due and payable on such amount.
<PAGE> 24
21
(iii) Any payment identified by the Lessee as proceeds
of the sale of any Property pursuant to Section 21 of the Lease (but in
any event excluding costs and expenses described in Section 21.2(i) of
the Lease) ("Net Sale Proceeds") shall be paid out of the Account by the
Agent simultaneously with the payment by the Agent out of the Account of
the Maximum Residual Guarantee Amount pursuant to Section 8.1(b)(iv)
promptly after receipt, and shall be applied, first, ratably to the
payment of the principal of Loans then outstanding and all interest then
due and payable on such amounts, second, to the payment to the Borrower
of an amount not to exceed the outstanding Investor Contribution and the
Investor Yield then due and payable on such amount, and third, the
remainder of such amount shall be paid out of the Account by the Agent
to the Lessee.
(iv) Any payment identified by the Lessee as the
Maximum Residual Guarantee Amount in respect of any Property shall be
paid out of the Account by the Agent promptly after receipt and shall be
applied ratably to the payment of the principal of Tranche A Loans then
outstanding.
(v) Any payment identified by the Lessee as a Wear
and Tear Payment or any Net Sale Proceeds Shortfall pursuant to Section
21.3 of the Lease shall be paid out of the Account by the Agent promptly
after receipt, and shall be applied, first, ratably to the payment of
the principal of Loans then outstanding (in each case determined as of
the date of sale of such Property pursuant to Section 21 of the Lease
immediately prior to giving effect thereto) and all interest due and
payable on such amounts, and second, the remainder of such amount shall
be paid out of the Account by the Agent to the Borrower.
(vi) Any payment identified by the Lessee as
Supplemental Rent (other than any Maximum Residual Guarantee Amount)
(but in any event excluding all Excepted Payments) shall be paid out of
the Account by the Agent promptly after receipt, and shall be applied to
the payment of any amounts then owing to the Agent, the Lenders, the
Investor and the other parties to the Operative Agreements (or any of
them) (other than any such amounts payable pursuant to the preceding
provisions of this Section 8.1(b)) as shall be designated by the Lessee
(or, in the absence of such designation, ratably according to the
respective amounts so owing of which the Agent has received written
notice).
In the event that the Lessee shall fail to identify the nature of any payment
deposited by it in the Account, or the Agent in its reasonable judgment shall
determine that the identification made by the Lessee is incorrect or
inappropriate, the nature of such payment shall instead be identified by the
Agent in its reasonable judgment and applied in the manner specified above;
provided, that in the event that the Agent identifies such payment as an
Excepted Payment, such payment shall be paid out of the Account by the Agent to
such Person or Persons as the Borrower may designate.
<PAGE> 25
22
(c) Upon the termination of the Commitments and the payment
in full of the Loans and all other amounts owing by the Borrower hereunder or
under any other Credit Document, any moneys remaining in the Account shall be
paid to the Borrower or such other Person or Persons as the Borrower may
designate.
8.2 Proceeds of Collateral; Proceeds Remaining in Account. (a) All
moneys collected by the Agent under the Guarantee or upon any sale or other
disposition of the Collateral pursuant to any Security Document, together with
all other moneys received by the Agent thereunder and (b) all moneys contained
in the Account on the date of an Acceleration or on the Maturity Date
(excluding, in the case of any application made pursuant to this Section 8.2 on
the Maturity Date, an amount equal to the Maximum Residual Guarantee Amount
deposited in the Account on or prior to such date, which amount shall instead be
applied on the Maturity Date in accordance with Section 8.1(b)(iv)), or
deposited in the Account thereafter, shall be applied as follows:
First, to the payment of (x) any and all sums advanced by the
Agent in order to preserve the Collateral or preserve its security
interest therein and (y) the expenses of retaking, holding, preparing
for sale or lease, selling or otherwise disposing or realizing on the
Collateral, or of any exercise by the Agent of its rights under the
Security Documents, together with reasonable attorneys' fees and court
costs;
Second, to the payment of the amounts then due and unpaid for
principal of the Tranche B Loans, according to the amounts due and
payable on the Tranche B Loans in respect of principal;
Third, to the payment of the amounts then due and unpaid for
principal of the Tranche A Loans according to the amounts due and
payable on the Tranche A Loans in respect of principal;
Fourth, to the payment of the amounts then due and unpaid for
interest accrued on the Tranche B Loans and the Tranche A Loans,
ratably, without preference or priority of any kind, according to the
amounts due and payable on the Tranche B Loans and the Tranche A Loans
in respect of principal;
Fifth, to the payment of an amount equal to the aggregate
outstanding Investor Contribution and all amounts then due and payable
on account of the Investor Yield;
Sixth, to the extent moneys remain after application pursuant to
clauses First through Fifth above, to the Lessee or to whomever may be
lawfully entitled to receive such surplus.
8.3 Certain Remedial Matters. Notwithstanding any other provision of
this Agreement or any other Credit Document:
<PAGE> 26
23
(i) the Borrower shall at all times to the exclusion
of the Agent retain (A) all rights to Excepted Payments and to demand,
collect or commence an action at law to obtain such payments and to
enforce any judgment with respect thereto and (B) all of its rights
under the Participation Agreement; and
(ii) the Borrower shall at all times retain the
right, but not to the exclusion of the Agent, (A) to receive from the
Lessee all notices, certificates and other documents and all information
that the Lessee is permitted or required to give or furnish to the
"Borrower" or the "Lessor" pursuant to the Lease, the Participation
Agreement or any other Operative Agreement, (B) to inspect the
Properties and otherwise exercise rights of the "Lessor" under Section
10.2 of the Lease, (C) to retain all rights with respect to insurance
that Section 14 of the Lease specifically confers upon the "Lessor", (D)
to provide such insurance as the Lessee shall have failed to maintain or
as the Borrower may desire, (E) to enforce compliance by the Lessee with
the provisions of Sections 8, 9, 10, 11, 14 and 30.10 of the Lease, and
(F) subject to the other applicable provisions of this Agreement, to
perform for the Lessee under Section 17 of the Lease.
8.4 Release of the Property, etc. (a) If the Lessee shall at any
time purchase the Property pursuant to Section 16.2 of the Lease or exercise its
Purchase Option with respect to the Property or a portion thereof under Section
20 of the Lease, or if the Property shall be sold in accordance with Section 21
of the Lease, then, upon satisfaction by the Borrower of its obligation to
prepay the Loans pursuant to Section 2.5(c) and to pay accrued interest on the
Loans so prepaid pursuant to Section 2.8, the Agent shall release the Property
or the applicable portion thereof from the Liens created by the Security
Documents. In addition, upon the termination of the Commitments and the payment
in full of the Loans and all other amounts owing by the Borrower or the
Guarantors hereunder or under any other Operative Agreement, the Agent shall
release the Property from the Liens created by the Security Documents. Upon
request of the Borrower following any such release, the Agent shall, at the sole
cost and expense of the Borrower, execute and deliver to the Borrower or the
Lessee such documents as the Borrower shall reasonably request to evidence such
release.
(b) Notwithstanding anything to the contrary herein, upon
the termination of the Commitments and the payment in full of (i) the Loans and
all other amounts owing by the Borrower or the any Guarantor hereunder or under
any other Operative Agreement and (ii) all amounts owing by the Lessee to the
Lessor or to any other Person under the Operative Agreements, all remaining
moneys in the Account shall be paid out to the Lessee.
SECTION 9. MISCELLANEOUS
9.1 Amendments and Waivers. Neither this Agreement, any other Credit
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 9.1. The
Required Lenders may, or, with the written consent of the Required Lenders, the
Agent may, from time to time, (a) subject to receipt of the written consent of
the Lessee, enter into with the Borrower or the Guarantors, as
<PAGE> 27
24
applicable, written amendments, supplements or modifications to the Operative
Agreements for the purpose of adding any provisions to the Operative Agreements
or changing in any manner the rights of the Agent, the Lenders, the Borrower or
the Guarantors thereunder or (b) waive, on such terms and conditions as the
Required Lenders or the Agent, as the case may be, may specify in such
instrument, any of the requirements of the Operative Agreements or any Default
or Event of Default and its consequences or (c) market the Property in
accordance with the provisions of Section 22.1(b) of the Lease. In addition, the
Agent may from time to time consent in writing to amendments, supplements,
modifications or waivers with respect to any Operative Agreement, subject to
receipt of the prior written consent of the Required Lenders. Notwithstanding
the foregoing, no such amendment, supplement, modification or waiver shall (i)
reduce the amount or extend the scheduled date of maturity of any Note, or
reduce the stated rate of any interest payable hereunder or any Commitment Fees
payable under the Participation Agreement or extend the scheduled date of any
payment of such interest or Commitment Fees or reduce the amount or extend the
scheduled date of any payment of Rent under the Lease or increase the amount or
extend the expiration date of any Lender's Commitment, in each case without the
consent of each Lender directly affected thereby, or (ii) amend, modify or waive
any provision of this Section 9.1 or reduce the percentage specified in the
definition of Required Lenders, or consent to the assignment or transfer by the
Borrower or the Guarantor of any of its rights and obligations under the
Operative Agreements or release any portion of the Collateral (except in
accordance with Section 8.4) or release any Guarantor from its obligations under
the Guarantee, in each case without the written consent of all of the Lenders,
or (iii) amend, modify or waive any provision of Section 7 without the written
consent of the then Agent. Any such waiver and any such amendment, supplement or
modification shall apply equally to each of the Lenders and shall be binding
upon the Borrower, the Guarantors, the Lessee, the Lenders, the Agent and all
future holders of the Notes. In the case of any waiver, the Borrower, the
Guarantors, the Lessee, the Lenders and the Agent shall be restored to their
former position and rights under the Operative Agreements, and any Default or
Event of Default waived shall be deemed to be cured and not continuing; but no
such waiver shall extend to any subsequent or other Default or Event of Default,
or impair any right consequent thereon.
9.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile transmission), and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) when delivered by hand, (b) one
Business Day after delivery to a nationally recognized courier service
specifying overnight delivery, (c) three Business Days after being deposited in
the mail, certified or registered, postage prepaid, or (d) in the case of
facsimile notice, when sent and receipt has been confirmed, addressed as follows
in the case of the Borrower and the Agent, and as set forth in Schedule 1.1 in
the case of the other parties hereto, or to such other address as may be
hereafter notified by the respective parties hereto and any future holders of
the Notes:
The Borrower: Union Bank of California, N.A.
Corporate Trust Division
<PAGE> 28
25
120 South San Pedro Street, Suite 400
Los Angeles, California 90012
Attention: Vivian Savedra
Telecopy No.: (213) 972-5694
The Agent: Union Bank of California, N.A.
San Diego Commercial Banking Office
530 "B" Street - 4th Floor
San Diego, California 92101-4407
Attention: Douglas S. Lambell
Telecopy No.: (619) 230-3766
provided that any notice, request or demand to or upon the Agent or the Lenders
pursuant to Section 2.3, 2.5, 2.6, 2.7 or 2.11(b) shall not be effective until
received.
9.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agent or any Lender, any right, remedy,
power or privilege hereunder or under the other Operative Agreements shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
9.4 Survival of Representations and Warranties. All representations
and warranties made hereunder, in the other Operative Agreements and in any
document, certificate or statement delivered pursuant hereto or in connection
herewith shall survive the execution and delivery of this Agreement and the
Notes and the making of the Loans hereunder.
9.5 Successors and Assigns; Participations and Assignments. This
Agreement shall be binding upon and inure to the benefit of the Borrower, the
Lenders, the Agent, all future holders of the Notes and their respective
successors and assigns, except that the Borrower may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of each Lender.
9.6 Participations. Any Lender may, in the ordinary course of its
business and in accordance with applicable law, at any time sell to one or more
banks, financial institutions or other entities (each, a "Participant")
participating interests in any Loan owing to such Lender, any Note held by such
Lender, any Commitment of such Lender or any other interest of such Lender
hereunder and under the other Operative Agreements; provided, that any such
participation shall be ratable as between the Tranche A Loans and Tranche B
Loans of such Lender. In the event of any such sale by a Lender of a
participating interest to a Participant, such Lender's obligations under this
Agreement to the other parties to this Agreement shall remain unchanged, such
Lender shall remain solely responsible for the performance thereof,
<PAGE> 29
26
such Lender shall remain the holder of any such Note for all purposes under this
Agreement and the Notes, 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 and the Notes. In no event shall any
Participant have any right to approve any amendment or waiver of any provision
of this Agreement or any other Operative Agreement, or any consent to any
departure by the Borrower, any Guarantor or any other Person therefrom, except
to the extent that such amendment, waiver or consent would (a) reduce the
principal of, or interest on, any Loan or Note, or postpone the date of the
final maturity of any Loan or Note, or reduce the amount of any Commitment Fee,
in each case to the extent subject to such participation or (b) release all or
substantially all of the Collateral. The Borrower agrees that, while an Event of
Default shall have occurred and be continuing, if amounts outstanding under this
Agreement and the Notes are due or unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of an Event of Default, each
Participant shall, to the maximum extent permitted by applicable law, be deemed
to have the right of setoff in respect of its participating interest in amounts
owing under this Agreement and any Note to the same extent as if the amount of
its participating interest were owing directly to it as a Lender under this
Agreement or any Note, provided that, in purchasing such participating interest,
such Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in Section 9.9(a) as fully as if it were a Lender
hereunder. The Borrower also agrees that each Participant shall be entitled to
the benefits of Sections 2.13, 2.14 and 2.15 with respect to its participation
in the Commitments and the Loans outstanding from time to time as if it was a
Lender; provided that, in the case of Section 2.15, such Participant shall have
complied with the requirements of said Section and provided, further, that no
Participant shall be entitled to receive any greater amount pursuant to any such
Section than the transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such transferor Lender
to such Participant had no such transfer occurred.
9.7 Assignments. (a) Any Lender may, in the ordinary course of its
business and in accordance with applicable law, at any time and from time to
time assign to any Lender or any affiliate of any Lender or, with the consent of
the Borrower, (if no Event of Default then exists) Lessee and the Agent (which
in each case shall not be unreasonably withheld or delayed), to an Eligible
Assignee all or any part of its rights and obligations under this Agreement and
the other Operative Agreements pursuant to an Assignment and Acceptance
substantially in the form of Exhibit B (an "Assignment and Acceptance"),
executed by such Eligible Assignee, such assigning Lender (and, in the case of
an Eligible Assignee that is not a Lender or an affiliate thereof, by the
Borrower, Lessee and the Agent) and delivered to the Agent for its acceptance
and recording in the Register; provided that, except in the case of an
assignment to an affiliate of the assigning Lender, to another Lender or of all
of a Lender's rights and obligations under this Agreement, the assignment shall
not assign Loans and/or Commitments aggregating not less than $5,000,000. Any
such assignment shall be ratable as between the Tranche A Loans and Tranche B
Loans of the assigning Lender. Upon such execution, delivery, acceptance and
recording, from and after the effective date determined pursuant to such
Assignment and Acceptance, (x) the Eligible Assignee thereunder shall be a party
hereto and, to the extent provided in such Assignment and Acceptance, have the
rights
<PAGE> 30
27
and obligations of a Lender hereunder with a Commitment as set forth therein,
and (y) the assigning Lender thereunder shall, to the extent provided in such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such assigning Lender shall cease to be a party hereto). Such Assignment and
Acceptance shall be deemed to amend this Agreement to the extent, and only to
the extent, necessary to reflect the addition of such Eligible Assignee and the
resulting adjustment of Commitment Percentage arising from the purchase by such
Eligible Assignee of all or a portion of the rights and obligations of such
assigning Lender.
(b) Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and an Eligible Assignee (and, in the case of an
Eligible Assignee that is not a Lender or an affiliate thereof, by the Borrower
and the Agent) together with payment to the Agent by such assigning Lender or
Eligible Assignee of a registration and processing fee of $3,000, the Agent
shall (i) promptly accept such Assignment and Acceptance and (ii) on the
effective date determined pursuant thereto, record the information contained
therein in the Register and give notice of such acceptance and recordation to
the Lenders and the Borrower. On or prior to such effective date, the Borrower,
at its own expense, shall execute and deliver to the Agent new Notes (in
exchange for the Notes of the assigning Lender), each in an amount equal to the
Commitment assumed by the relevant Eligible Assignee pursuant to such Assignment
and Acceptance, and, if the assigning Lender has retained a Commitment
hereunder, new Notes to the order of the assigning Lender, each in an amount
equal to the Commitment retained by it hereunder. Such new Notes shall be dated
the Effective Date and shall otherwise be in the form of the Notes replaced
thereby.
9.8 The Register; Disclosure; Pledges to Federal Reserve Banks. (a)
The Agent shall maintain at its address referred to in Section 9.2 copy of each
Assignment and Acceptance delivered to it and a register (the "Register") for
the recordation of the names and addresses of the Lenders, the Commitments of
the Lenders, and the principal amount of the Loans owing to each Lender from
time to time. The entries in the Register shall be conclusive, in the absence of
clearly demonstrable error, and the Borrower, the Agent and the Lenders may
treat each Person whose name is recorded in the Register as the owner of the
Loan recorded therein for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
(b) Nothing herein shall prohibit any Lender from pledging
or assigning any Loan or Note to any Federal Reserve Bank in accordance with
applicable law.
9.9 Adjustments; Set-Off. (a) If any Lender (a "Benefitted Lender")
shall at any time receive any payment of all or part of its Loans, or interest
thereon, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 6.1(h) or 6.1(i), or otherwise), in a greater proportion
than any such payment to or collateral received by any other Lender, if any, in
<PAGE> 31
28
respect of such other Lender's Loans, or interest thereon, such Benefitted
Lender shall purchase for cash from the other Lenders a participating interest
in such portion of each such other Lender's Loan, or shall provide such other
Lenders with the benefits of any such collateral, or the proceeds thereof, as
shall be necessary to cause such Benefitted Lender to share the excess payment
or benefits of such collateral or proceeds ratably with each of the Lenders;
provided, however, that if all or any portion of such excess payment or benefits
is thereafter recovered from such Benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest.
(b) In addition to any rights now or hereafter granted under
applicable law or otherwise, and not by way of limitation of any such rights,
upon the occurrence of an Event of Default, the Agent and each Lender is hereby
authorized at any time or from time to time, without presentment, demand,
protest or other notice of any kind to the Borrower or to any other Person, any
such notice being hereby expressly waived, to set off and to appropriate and
apply any and all deposits (general or special) and any other Indebtedness at
any time held or owing by the Agent or such Lender (including, without
limitation, by branches and agencies of the Agent or such Lender wherever
located) to or for the credit or the account of the Borrower against and on
account of the obligations and liabilities of the Borrower to the Agent or such
Lender under this Agreement or under any of the other Operative Agreements,
including, without limitation, all interests in obligations of the Borrower
purchased by any such Lender pursuant to Section 9.9(a), and all other claims of
any nature or description arising out of or connected with this Agreement or any
other Operative Agreement, irrespective of whether or not the Agent or such
Lender shall have made any demand hereunder and although said obligations,
liabilities or claims, or any of them, shall be contingent or unmatured.
9.10 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by telecopy transmission of signature pages hereto), and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Borrower and the Agent.
9.11 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
9.12 Integration. This Agreement and the other Operative Agreements
represent the agreement of the Borrower, the Agent and the Lenders with respect
to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Agent or any Lender relative to subject
matter hereof not expressly set forth or referred to herein or in the other
Operative Agreements.
<PAGE> 32
29
9.13 GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK.
9.14 SUBMISSION TO JURISDICTION; WAIVERS. THE BORROWER HEREBY
IRREVOCABLY AND UNCONDITIONALLY:
(a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS AGREEMENT AND THE OTHER OPERATIVE AGREEMENTS TO
WHICH IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGEMENT IN
RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;
(b) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE
BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT
SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO
PLEAD OR CLAIM THE SAME;
(c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED
MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO THE
BORROWER AT ITS ADDRESS SET FORTH IN SECTION 9.2 OR AT SUCH OTHER ADDRESS OF
WHICH THE AGENT SHALL HAVE BEEN NOTIFIED PURSUANT THERETO;
(d) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO
EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT
THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND
(e) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY
RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED
TO IN THIS SECTION 9.14 ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES.
9.15 Acknowledgements. The Borrower hereby acknowledges that:
<PAGE> 33
30
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the Notes and the other Operative
Agreements;
(b) neither the Agent nor any Lender has any fiduciary
relationship with or duty to the Borrower arising out of or in connection with
this Agreement or any of the other Operative Agreements, and the relationship
between Agent and Lenders, on one hand, and the Borrower, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other
Operative Agreements or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among the Borrower and the Lenders.
9.16 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENT AND THE LENDERS
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR
ANY COUNTERCLAIM THEREIN.
9.17 Nonrecourse. Anything to the contrary contained in this
Agreement or in any other Operative Agreement notwithstanding, neither the
Borrower nor any officer, director or shareholder thereof, nor any of the
Borrower's successors or assigns (all such Persons being hereinafter referred to
collectively as the "Exculpated Persons"), shall be personally liable in any
respect for any liability or obligation hereunder or under any other Operative
Agreement including the payment of the principal of, or interest on, the Notes,
or for monetary damages for the breach of performance of any of the covenants
contained in this Agreement, the Notes or any of the other Operative Agreements.
The Agent and the Lenders agree that, in the event any of them pursues any
remedies available to them under this Agreement, the Notes or any other
Operative Agreement, neither the Agent nor the Lenders shall have any recourse
against the Borrower, nor any other Exculpated Person, for any deficiency, loss
or claim for monetary damages or otherwise resulting therefrom and recourse
shall be had solely and exclusively against the Collateral and the Guarantor;
but nothing contained herein shall be taken to prevent recourse against or the
enforcement of remedies against the Property in respect of any and all
liabilities, obligations and undertakings contained in this Agreement, the Notes
or any other Operative Agreement. Notwithstanding the foregoing provisions of
this Section 9.17, nothing in this Agreement or any other Operative Agreement
shall (a) constitute a waiver, release or discharge of any obligation evidenced
or secured by this Agreement or any other Credit Document, (b) limit the right
of the Agent or any Lender to name the Borrower as a party defendant in any
action or suit for judicial foreclosure and sale under any Security Document, or
(c) affect in any way the validity or enforceability of the Guarantee or any
other guaranty (whether of payment and/or performance) given to the Agent or the
Lenders, or of any indemnity agreement given by the Borrower, in connection with
the Loans made hereunder.
<PAGE> 34
31
9.18 Lessee's Credit Agreement Rights. The parties hereto acknowledge
the rights of the Lessee set forth in Section 10 of the Participation Agreement
and agree for the express benefit of the Lessee to act in accordance therewith.
The parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
UNION BANK OF CALIFORNIA, N.A., not in its
individual capacity but solely as Trustee, as Borrower
By: ____________________________________
Name: Vivian R. Savedra
Title: Assistant Vice President
UNION BANK OF CALIFORNIA, N.A., as Agent
By: ____________________________________
Name: Douglas S. Lambell
Title: Vice President
COMERICA BANK, as a Lender
By: ____________________________________
Name: Emmanuel M. Skevofilax
Title: Assistant Vice President
THE FIRST NATIONAL BANK OF CHICAGO,
as a Lender
By: ____________________________________
Name: Anthony B. Mathews
Title: Vice President
SANWA BANK CALIFORNIA, as a Lender
<PAGE> 35
32
By: ____________________________________
Name: Jacob A. Lenhof
Title: Vice President
UNION BANK OF CALIFORNIA, N.A., as a Lender
By: ____________________________________
Name: Bruce A. Breslau
Title: Vice President
U.S. BANK, NATIONAL ASSOCIATION, as a Lender
By: ____________________________________
Name: Janet E. Jordon
Title: Vice President
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as a Lender
By: ____________________________________
Name: Michael Sullivan
Title: Vice President
<PAGE> 1
EXHIBIT 10.51
================================================================================
PARTICIPATION AGREEMENT
(SAFESKIN TRUST 1999)
among
SAFESKIN REAL ESTATE INCORPORATED,
as Lessee
UNION BANK OF CALIFORNIA, N.A.,
not in its individual capacity except as expressly
stated herein, but solely as Trustee,
as Lessor,
BANKERS COMMERCIAL CORPORATION,
a California corporation,
as Investor,
UNION BANK OF CALIFORNIA, N.A.,
as Agent for the
Lenders
and
THE LENDERS PARTIES HERETO
------------------------------
Dated as of March 5, 1999
------------------------------
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1. THE LOANS....................................................................... 1
1.1 Loans...................................................................... 1
1.2 Credit Agreement........................................................... 1
1.3 Collateral For Loans....................................................... 1
1.4 Guarantee.................................................................. 2
SECTION 2. INVESTOR CONTRIBUTION........................................................... 2
2.1 Investor Contribution...................................................... 2
2.2 Investor Yield............................................................. 2
SECTION 3. SUMMARY OF THE TRANSACTIONS..................................................... 2
3.1 Operative Agreements....................................................... 2
3.2 Property Purchase and Lease................................................ 3
3.3 Construction of Improvements............................................... 3
SECTION 4. THE CLOSINGS.................................................................... 3
4.1 Initial Closing Date....................................................... 3
4.2 Subsequent Funding Dates................................................... 3
4.3 Trust Company Authorization................................................ 3
SECTION 5. FUNDING OF ADVANCES............................................................. 4
5.1 General.................................................................... 4
5.2 Procedures for Funding..................................................... 4
SECTION 6. CONDITIONS OF THE CLOSINGS AND ADVANCES......................................... 5
6.1 General Conditions to the Lenders' and the Investor's Obligations
to Make Loans and Investor Contributions................................... 5
6.2 Conditions to the Investor's and the Lenders' Obligations to Make
Advances to Pay Property Acquisition Costs................................. 8
6.3 Conditions to the Investor's and the Lenders' Obligations to Make
Advances to Pay Project Costs for Construction on the Property.............12
SECTION 7. REPRESENTATIONS AND WARRANTIES .................................................15
7.1 Representations and Warranties of the Investor on the Initial
Closing Date ..............................................................15
7.2 Representations and Warranties of Trustee on the Initial Closing Date......16
7.3 Representations and Warranties of the Lessee on the Initial
Closing Date ..............................................................18
7.4 Representations and Warranties of the Lessee on the Property
Closing Date...............................................................21
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C>
7.5 Representations and Warranties of the Trustee on the Property
Closing Date ..............................................................24
7.6 Representations and Warranties of the Lessee Upon each Funding Date........25
7.7 Representations and Warranties of the Trustee Upon each Funding Date.......27
7.8 Representations and Warranties of the Investor Upon Funding Dates..........28
SECTION 8. PAYMENT OF CERTAIN EXPENSES.....................................................28
8.1 Transaction Expenses.......................................................28
8.2 Brokers' Fees and Stamp Taxes..............................................29
8.3 Certain Fees and Expenses..................................................29
8.4 Credit Agreement and Related Obligations...................................29
8.5 Commitment Fees; Amendment Fees............................................29
8.6 Overdue Rate...............................................................30
SECTION 9. OTHER COVENANTS AND AGREEMENTS..................................................30
9.1 Covenants of the Trustee and the Investor..................................30
9.2 Amendment of Certain Documents.............................................32
9.3 Proceeds of Casualty.......................................................32
9.4 Intercreditor Agreement....................................................32
9.6 Covenants of the Lessee....................................................33
SECTION 10. CREDIT AGREEMENT...............................................................33
10.1 Lessee's Credit Agreement Rights...........................................33
SECTION 11. TRANSFER OF INTEREST...........................................................34
11.1 Restrictions on Transfer...................................................35
11.2 Effect of Transfer.........................................................35
SECTION 12. INDEMNIFICATION................................................................35
12.2 General Tax Indemnity......................................................38
SECTION 13. MISCELLANEOUS..................................................................42
13.1 Survival of Agreements.....................................................43
13.2 No Broker, etc.............................................................43
13.3 Notices....................................................................43
13.4 Counterparts...............................................................44
13.5 Amendments and Termination.................................................44
13.6 Headings, etc..............................................................45
13.7 Parties in Interest........................................................45
13.8 GOVERNING LAW..............................................................45
13.9 Severability...............................................................45
13.10 Liability Limited..........................................................45
13.11 Rights of Lessee...........................................................45
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
Page
<S> <C>
13.12 Further Assurances.........................................................46
13.13 Successors and Assigns.....................................................46
13.14 No Representation or Warranty..............................................46
13.15 Highest Lawful Rate........................................................46
13.16 Ownership of the Property..................................................47
13.17 Confidentiality............................................................49
</TABLE>
-iii-
<PAGE> 5
PARTICIPATION AGREEMENT (SAFESKIN TRUST 1999), dated as of March
5, 1999 (this "Agreement"), among SAFESKIN REAL ESTATE INCORPORATED, a Delaware
corporation (the "Lessee"); UNION BANK OF CALIFORNIA, N.A., a national banking
association, not in its individual capacity except as expressly stated herein,
but solely as Trustee (the "Trustee" or the "Lessor"); UNION BANK OF CALIFORNIA,
N.A., a national banking association, as agent (in such capacity, the "Agent")
for the Lenders; BANKERS COMMERCIAL CORPORATION, a California corporation, as
investor (the "Investor"); and each of the financial institutions listed on the
signature pages hereof (each, a "Lender"; collectively, the "Lenders").
Capitalized terms used but not otherwise defined in this Agreement shall have
the meanings set forth in Annex A hereto, and the rules of usage set forth in
Annex A hereto shall apply to this Agreement.
Preliminary Statement
In consideration of the mutual agreements herein contained and
other good and valuable consideration, receipt of which is hereby acknowledged,
the parties hereto hereby agree as follows:
SECTION 1. THE LOANS
1.1 Loans. Subject to the terms and conditions of the Credit
Agreement and this Agreement, on each Funding Date, the Lenders shall make loans
to the Lessor in an amount in immediately available funds equal to 97% of the
amount of the Advance requested by the Construction Agent in the Requisition for
such Funding Date, not to exceed an aggregate principal amount of up to
$58,200,000 in order for the Lessor to acquire the Land described on Schedule 1
attached hereto, to develop and construct the Improvements in accordance with
the Construction Agreement (in the form attached hereto as Exhibit A-1) and the
Agency Agreement (in the form attached hereto as Exhibit A-2), and to pay other
Project Costs, and in consideration of the receipt of the proceeds of such
Loans, the Lessor will issue the Tranche A Notes and the Tranche B Notes.
1.2 Credit Agreement. The Loans shall be made and the Notes shall
be issued pursuant to the Credit Agreement. Pursuant to this Agreement and the
Credit Agreement, the Loans will be made to the Lessor from time to time at the
request of the Construction Agent in consideration for the Construction Agent's
agreeing for the benefit of the Lessor, pursuant to the Agency Agreement, to
acquire the land and construct the Improvements in accordance with the Plans and
Specifications.
1.3 Collateral For Loans. The Loans and the obligations of the
Lessor under the Credit Agreement shall be secured by, inter alia, (i) a first
priority assignment of the Lease, granted pursuant to the Assignment of Lease
and consented to by the Lessee pursuant to the Consent to Assignment (in each
case in the respective forms set forth on Exhibit B hereto), (ii) a
<PAGE> 6
2
first priority assignment of the Agency Agreement, granted pursuant to the
Contract Assignment and consented to by the Construction Agent pursuant to the
Consent to Contract Assignment (in each case in the respective forms set forth
on Exhibit C hereto); and (iii) a first priority mortgage lien on the Property
pursuant to a Deed of Trust and Security Agreement in the form set forth on
Exhibit D hereto.
1.4 Guarantee. The obligations of the Lessor under the Credit
Agreement and the Lessee under the Lease shall be guaranteed by the Guarantors
to the extent provided in the Guarantee (in the form attached hereto as Exhibit
E-1) and in the Lessor Guarantee (in the form attached hereto as Exhibit E-2).
The Guaranteed Obligations shall be secured pursuant to the Guarantee Collateral
Documents and by the Additional Collateral, if any.
SECTION 2. INVESTOR CONTRIBUTION
2.1 Investor Contribution. Subject to the terms and conditions of
this Agreement, and in reliance on the representations and warranties of each of
the parties hereto contained herein or made pursuant hereto, on each Funding
Date, the Investor shall make an investment in the Lessor (each, an "Investor
Contribution") by making available an amount in immediately available funds
equal to 3% of the amount of the Advance requested by the Construction Agent in
the Requisition for such Funding Date. The aggregate amount of Investor
Contributions made by the Investor shall not exceed the Investor Commitment. The
Lessor shall use the Investor Contributions to pay a portion of the Project
Costs simultaneously and pro rata with the fundings by the Lenders. The Lessee
shall have the right to prepay the Investor Contribution, in connection with the
exercise by the Lessee of its right to direct the Lessor to prepay the Loans in
accordance with Section 10.1(e).
2.2 Investor Yield. During the Construction Period, on each date
which is one Business Day prior to any date on which the Investor is entitled to
a payment on account of the Investor Yield, the Construction Agent shall be
deemed to have requested that the Investor make an Investor Contribution in an
amount equal to the Investor Yield due and payable on such date solely for the
purpose of paying such Investor Yield which is then due and payable.
SECTION 3. SUMMARY OF THE TRANSACTIONS
3.1 Operative Agreements. On the Initial Closing Date, each of
the respective parties hereto and thereto shall execute and deliver or cause to
be executed and delivered this Agreement, the Lease, the Construction Agreement,
the Agency Agreement, the Notes, the Guarantee, the Credit Agreement, the
Assignment of Lease, the Contract Assignment, the
<PAGE> 7
3
Consent to Assignment, the Consent to Contract Assignment and such other
documents, instruments, certificates and opinions of counsel as agreed to by the
parties hereto.
3.2 Property Purchase and Lease. On the Property Closing Date and
subject to the terms and conditions of this Agreement and the Credit Agreement
(i) the Investor will make an Investor Contribution in accordance with Section 2
hereof, (ii) the Lenders will make loans in accordance with Section 5 hereof and
the terms and provisions of the Credit Agreement secured by the Mortgage
executed and delivered by the Lessor and joined in by the Lessee, (iii) the
Lessor will purchase all right, title and interest in and to the Land and (iv)
the Lessor will simultaneously lease all of its right, title and interest in the
Property to the Lessee by executing and delivering a Lease Supplement and
Memorandum of Lease which will be recorded in the real estate records in the
county where the Land is located.
3.3 Construction of Improvements. On the Property Closing Date,
the Lessor and Lessee will execute and deliver the Agency Agreement Supplement,
dated as of the Property Closing Date, pursuant to which the Lessee will agree
to act as Construction Agent and to perform the Lessor's obligations under the
Construction Agreement in connection with the construction of the Improvements
on the Land.
SECTION 4. THE CLOSINGS
4.1 Initial Closing Date. All documents and instruments required
to be delivered on the Initial Closing Date shall be delivered at the offices of
Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York, or at such
other location as may be determined by the Agent and the Lessee.
4.2 Subsequent Funding Dates. The Lessee shall deliver to the
Lessor, the Investor and the Agent a Requisition appropriately completed, in
connection with each Funding Date.
4.3 Trust Company Authorization. The Investor agrees that, with
respect to the Initial Closing Date and the Property Closing Date, the
satisfaction or waiver of the conditions contained in Section 6 hereof shall
constitute, without further act, the authorization and direction by the Investor
to the Trust Company to take on behalf of the Lessor the actions specified in
Section 2.1 of the Trust Agreement.
<PAGE> 8
4
SECTION 5. FUNDING OF ADVANCES
5.1 General. To the extent funds have been made available to the
Lessor as Loans and Investor Contributions, the Lessor will make advances of
such funds to the Construction Agent from time to time in accordance with the
terms and conditions of this Agreement and the other Operative Agreements in
order to provide sufficient funds to: (i) allow the Lessor, at the direction of
the Construction Agent to acquire the Land in accordance with the terms of this
Agreement and the other Operative Agreements; (ii) allow the Lessor, on behalf
of the Lessee, to pay Transaction Expenses; (iii) permit the Construction Agent
to construct the Improvements in accordance with the Plans and Specifications
and the terms of the Construction Agreement, the Agency Agreement, the Lease and
the other Operative Agreements; and (iv) pay all other Project Costs.
5.2 Procedures for Funding. (a) Not later than 11:00 a.m. Pacific
Standard Time five (5) Business Days prior to each proposed Funding Date, the
Construction Agent shall deliver to the Investor and the Agent, a requisition (a
"Requisition"), appropriately completed, in the form of Exhibit F hereto.
(b) Each Requisition shall: (i) be irrevocable; and (ii) request
funds in an amount of at least $250,000 for the period commencing on the Initial
Closing Date and terminating on June 4, 1999 and $500,000 thereafter (or such
lesser amount as shall be equal to the total aggregate of the Available
Commitments plus the Available Investor Commitment at such time) for the payment
of Property Acquisition Costs or other Project Costs which have previously been
incurred and were not the subject of and funded pursuant to a prior Requisition,
in each case as specified in the Requisition.
(c) So long as no Default or Event of Default has occurred and is
continuing and subject to the Lessor and the Agent having each received the
materials required by Section 6.1, 6.2 and/or 6.3, as applicable, on each
Funding Date (i) the Lenders shall make Loans to the Lessor in an aggregate
amount equal to 97% of the funds specified in any Requisition, up to an
aggregate principal amount equal to the Available Commitments; (ii) the Investor
shall make an Investor Contribution in an amount equal to 3% of the funds
specified in any Requisition, up to an amount equal to the Available Investor
Commitment; and (iii) the total amount of such Loans and Investor Contribution
made on such date shall be paid to the Construction Agent to pay the Project
Costs.
<PAGE> 9
5
SECTION 6. CONDITIONS OF THE CLOSINGS AND ADVANCES
6.1 General Conditions to the Lenders' and the Investor's
Obligations to Make Loans and Investor Contributions. The agreement of each
Lender to make Loans, and the Investor to make Investor Contributions, is
subject to the satisfaction, immediately prior to or concurrently with the
making of such Loans and Investor Contribution, of the following conditions
precedent:
(a) Operative Agreements. Each of the Operative Agreements
entered into on the Initial Closing Date or subsequently shall have been
duly authorized, executed, acknowledged and delivered by the parties
thereto and shall be in full force and effect, and no default shall
exist thereunder (both before and after giving effect to the
transactions contemplated by the Operative Agreements), and the Agent
and the Investor shall have received a fully executed copy of each of
the Operative Agreements (other than the Notes of which the Agent shall
have received the originals thereof);
(b) Taxes. All taxes, fees and other charges in connection with
the execution, delivery, and, where applicable, recording, filing and
registration of the Operative Agreements shall have been paid or
provisions for such payment shall have been made (or the Requisition
shall provide for the payment thereof) to the satisfaction of the Agent
and the Investor;
(c) Governmental Approvals. All necessary (or, in the reasonable
opinion of the Agent, the Investor and their respective counsel,
advisable) Governmental Actions, in each case required by any
Requirement of Law for the purpose of authorizing the execution,
delivery and performance of the Operative Agreements, shall have been
obtained or made and be in full force and effect;
(d) Litigation. No action or proceeding shall have been
instituted, nor to the knowledge of the Lessee shall any action or
proceeding be threatened, before any Governmental Authority, nor shall
any order, judgment or decree have been issued or proposed to be issued
by any Governmental Authority (i) to set aside, restrain, enjoin or
prevent the full performance of this Agreement, any other Operative
Agreement or any of the transactions contemplated hereby or thereby or
(ii) which is reasonably likely to have a Material Adverse Effect;
(e) Legal Requirements. In the opinion of the Agent, the
Investor and their respective counsel, the transactions contemplated by
the Operative Agreements do not and will not violate in any respect any
Legal Requirements and do not and will not
<PAGE> 10
6
subject the Agent, any Lender or the Investor to any adverse regulatory
prohibitions or constraints;
(f) Corporate Proceedings of the Lessee and the Guarantors. On
the Initial Closing Date, the Agent and the Investor shall have received
a copy of the resolutions or minutes, in form and substance satisfactory
to the Agent and the Investor, of the Board of Directors of the Lessee
and each Guarantor authorizing the execution, delivery and performance
of this Agreement, the Guarantee and the other Operative Agreements to
which it is a party, certified by the Secretary or an Assistant
Secretary of the Lessee or of such Guarantor as of the Initial Closing
Date, which certificate shall be in form and substance satisfactory to
the Agent and the Investor and shall state that the resolutions or
minutes thereby certified have not been amended, modified, revoked or
rescinded;
(g) Lessee and Guarantors Incumbency Certificate. On the Initial
Closing Date, the Agent and the Investor shall have received a
certificate of the Lessee and each Guarantor, dated the Initial Closing
Date, as to the incumbency and signature of the officers of the Lessee
and such Guarantor executing any Operative Agreement satisfactory in
form and substance to the Agent and the Investor, executed by the
President or any Vice President and the Secretary or any Assistant
Secretary of the Lessee and such Guarantor;
(h) Corporate Proceedings of the Trust Company. On the Initial
Closing Date, the Agent, the Investor and the Lessee shall have received
a copy of the resolutions, in form and substance satisfactory to the
Agent, the Investor and the Lessee, of the Board of Directors of the
Trust Company authorizing the execution, delivery and performance of the
Operative Agreements to which it is a party, certified by the Secretary
or an Assistant Secretary of the Trust Company as of the Initial Closing
Date, which certificate shall be in form and substance satisfactory to
the Agent, the Investor and the Lessee and shall state that the
resolutions thereby certified have not been amended, modified, revoked
or rescinded;
(i) Trust Company Incumbency Certificate. On the Initial Closing
Date, the Agent, the Investor and the Lessee shall have received a
certificate of the Trustee Company, dated the Initial Closing Date, as
to the incumbency and signature of the officers of the Trust Company
executing any Operative Agreement, satisfactory in form and substance to
the Agent, the Investor and the Lessee, executed by the President or any
Vice President, Assistant Vice President, Trust Officer and the
Secretary or any Assistant Secretary of the Trust Company;
<PAGE> 11
7
(j) Corporate Documents of Lessee and Guarantors. The Agent and
the Investor shall have received true and complete copies of the
articles of incorporation and by-laws of the Lessee and each Guarantor,
certified as of the Initial Closing Date as complete and correct copies
thereof by the Secretary or an Assistant Secretary of the Lessee and
such Guarantor;
(k) Consents, Licenses and Approvals. The Agent and the Investor
shall have received a certificate of the chief financial officer of the
Lessee and each Guarantor (i) attaching copies of all consents,
authorizations and filings required to consummate the transaction
contemplated by this Agreement, and (ii) stating that such consents,
licenses and filings are in full force and effect, and each such
consent, authorization and filing shall be in form and substance
satisfactory to the Agent and the Investor;
(l) Fees. The Agent and the Arranger shall have received the
fees to be paid on the Initial Closing Date pursuant to the Fee Letter
which fees shall not be paid using the proceeds of the Loans or Investor
Contributions;
(m) Legal Opinions. (i) The Agent and the Investor shall have
received the executed legal opinions of Brobeck, Phleger & Harrison LLP
(with respect to enforceability) and Morgan Lewis and Bockius LLP (with
respect to due authorization), counsel to the Lessee and the Guarantors,
substantially in the form of Exhibit G-1 hereto; and
(ii) The Agent, the Lessee and the Investor shall have
received the executed legal opinions of Janis S. Penton, Vice President
and Senior Counsel of the Trust Company, and Seed Mackall & Cole LLP,
outside counsel to the Trustee and the Trust Company, substantially in
the form of Exhibit G-2 hereto;
(n) Actions to Perfect Liens. The Agent shall have received
evidence in form and substance satisfactory to it that all filings,
recordings, registrations and other actions, including the filing of
duly executed Lender Financing Statements and Lessor Financing
Statements, the Mortgage, and the Memorandum of Lease, necessary or, in
the opinion of the Agent, desirable to perfect the Liens created by the
Security Documents shall have been completed or arrangements made
therefor reasonably satisfactory to the Agent;
(o) Lien Searches. The Agent and the Investor shall have
received the results of a recent search by a Person reasonably
satisfactory to the Agent, of the Uniform Commercial Code, judgement and
tax lien filings which may have been filed in the State of California
with respect to personal property of the Lessee and the Company, and the
results of such search shall be satisfactory to the Agent and the
Investor;
<PAGE> 12
8
(p) Representations and Warranties. The representations and
warranties of the Lessor, the Lessee, the Investor and the Guarantors
contained herein and in each of the other Operative Agreements shall be
true and correct in all material respects on and as of each Funding Date
as if made on and as of each Funding Date, except to the extent such
representations and warranties relate solely to an earlier date, in
which case such representations and warranties shall have been true and
correct in all material respects on and as of such earlier date;
(q) Performance of Operative Agreements. The parties hereto
(other than the Investor or the Lenders) shall have performed their
respective agreements contained herein and in the other Operative
Agreements on or prior to each such Funding Date;
(r) Default. There shall not have occurred and be continuing any
Default or Event of Default under any of the Operative Agreements and no
Default or Event of Default under any of the Operative Agreements will
have occurred after giving effect to the Advance requested by such
Requisition; and
(s) Material Adverse Change. As of such Funding Date, there
shall not have occurred any material adverse change in the consolidated
assets, liabilities, operations, business or financial condition of the
Lessee or any Guarantor.
(t) Pricing Certificate. The Agent and the Investor shall have
received a Pricing Certificate setting forth in reasonable detail a
calculation of the Leverage Ratio as of the last day of the Fiscal
Quarter ended immediately prior to the Initial Closing Date.
(u) Cross-Collateralization. The Agent shall have received
evidence in form and substance reasonably satisfactory to it that all
filings, recordings, registrations and other actions, including the
filing of duly executed UCC-1 financing statements and the Guarantee
Collateral Documents, necessary or, in the opinion of the Agent,
desirable to perfect the Liens created by the Guarantee Collateral
Documents shall have been completed.
6.2 Conditions to the Investor's and the Lenders' Obligations to
Make Advances to Pay Property Acquisition Costs.
The obligations of the Investor to make an Investor Contribution,
and of the Lenders to make Loans to the Lessor, on the Property Closing
Date for the purpose of providing funds to the Lessor necessary to
acquire the Land are subject to the satisfaction or waiver of the
following conditions precedent:
<PAGE> 13
9
(a) Requisition. The Agent shall have received a fully executed
counterpart of the Requisition dated as of the Property Closing Date
(but delivered not later than 11:00 a.m., Pacific Standard Time five (5)
Business Days prior to the Property Closing Date), appropriately
completed;
(b) Deed. There shall have been delivered to the Lessor, a deed
(the "Deed"), in form and substance appropriate for recording with the
applicable Governmental Authority, conveying fee simple title to the
Property to the Lessor, subject only to the Permitted Exceptions;
(c) Title. Title to the Property shall conform to the
representations and warranties set forth in Section 7.5(n);
(d) Lease Supplement and Memorandum of Lease. The Lessee shall
have delivered a Lease Supplement and a Memorandum of Lease executed by
the Lessee and the Lessor with respect to the Property to the Agent;
(e) Mortgage. The Lessee shall have recorded in the real estate
records of the county where the Property is located an original of the
Mortgage executed by the Lessor and Lessee and the Lien of the Mortgage
shall conform to the representations and warranties set forth in Section
7.5(g);
(f) Assignment of Lease. The Lessee shall have recorded in the
real estate records of the county where the Property is located an
original of the Assignment of Lease executed by the Lessor;
(g) Consent to Assignment of Lease. The Lessee and each
Guarantor shall have delivered to the Agent a consent to the Assignment
of Lease executed by the Lessee and such Guarantor;
(h) Environmental Audit. (i) The Agent and the Investor shall
have received not less than thirty (30) days prior to the Property
Closing Date an Environmental Audit, prepared by the Environmental
Engineer and the results of the Environmental Audit shall be in form and
substance satisfactory to the Agent and the Investor; and
(ii) the Agent and the Investor shall have received
letters from the Environmental Engineer stating, among other things,
that the Agent, the Lenders, the Lessor and the Investor may rely on the
Environmental Audit as if it was originally addressed to them in all
respects;
<PAGE> 14
10
(i) Appraisal. The Agent and the Investor shall have received an
Appraisal of the Land and such Appraisal shall show a value equal to the
amount of the Advance being requested by the Construction Agent in the
Requisition for the Property Closing Date, and shall otherwise be in
form and substance acceptable to each Lender and the Lessor;
(j) Default. There shall not have occurred and be continuing any
Default or Event of Default under any of the Operative Agreements and no
Default or Event of Default under any of the Operative Agreements will
have occurred after giving effect to the Advance requested by such
Requisition;
(k) Survey. The Agent shall have received, and the Title Company
shall have received, a survey of the Property, certified to the Agent,
the Lessor and the Title Company in a manner satisfactory to them, dated
as of a date within ninety days of the Property Closing Date, by an
independent professionally licensed land surveyor satisfactory to the
Agent, which survey shall be made in accordance with the Minimum
Standard Detail Requirements for Land Title Surveys jointly established
and adopted by the American Land Title Association and the American
Congress on Surveying and Mapping in 1992, and, without limiting the
generality of the foregoing, there shall be surveyed and shown on such
survey the following: (i) the locations on the Property of all the
buildings, structures and other improvements, if any, and the
established building setback lines; (ii) the lines of streets abutting
the Property; (iii) all access and other easements appurtenant to the
Property; (iv) all roadways, paths, driveways, easements, encroachments
and overhanging projections and similar encumbrances affecting the
Property, whether recorded, apparent from a physical inspection of the
Property or otherwise known to the surveyor; (v) any encroachments on
any adjoining property by the building, structures and improvements on
the Property; and (vi) if the Property is described as being on a filed
map, a legend relating the survey to said map;
(l) Mortgagee's Title Insurance Policy. The Agent shall have
received with respect to the Mortgage a mortgagees' title policy or
marked up unconditional binder for such insurance dated the Property
Closing Date; such policy shall (i) be in an amount equal to the
aggregate amount shown on the Budget for the Property (with a pending
disbursements clause); (ii) be issued at ordinary rates; (iii) insure
that the Mortgage insured thereby creates a valid first Lien on the
Property, free and clear of all defects and encumbrances, except
Permitted Exceptions; (iv) name the Agent for the benefit of the Lenders
as the insured thereunder; (v) be in the form of ALTA Loan Policy - 1970
(Amended 10/17/70); (vi) contain comprehensive, zoning, access,
subdivision, tax lot, revolving credit and such other endorsements and
affirmative coverage as the Agent may reasonably request; and (vii) be
issued by the Title Company; and the Agent shall have received evidence
reasonably satisfactory to it that all premiums in respect of such
policy,
<PAGE> 15
11
and all charges for any mortgage recording tax with respect to the
Mortgage have been paid or provision made therefor;
(m) Owner's Title Insurance Policy. The Lessor shall have
received an owner's title policy, or marked up unconditional binder for
such insurance, dated the Property Closing Date; and the Lessor shall
have received evidence reasonably satisfactory to it that all premiums
in respect of such policy have been paid or provision made therefor;
(n) Recorded Documents. The Agent and the Investor shall have
received a copy of all recorded documents referred to, or listed as
exceptions to title in, the title policy referred to above;
(o) Local Opinions.
(i) the Agent and the Investor shall have received the
executed legal opinion of California counsel to the Lessee and the
Guarantors, substantially in the form of Exhibit G-1 hereto; and
(ii) the Agent, the Lessee and the Investor shall have
received the executed legal opinion of counsel to Lessor, the Trustee
and the Trust Company, substantially in the form of Exhibit G-2 hereto;
(p) FIRPTA Affidavit. Agent and the Investor shall have received
either (i) a FIRPTA Affidavit from the seller of the Property in
customary form or (ii) if such seller is a "foreign person" as defined
in Section 1445 of the Code, evidence that a portion of the sales price
to be paid to such seller has been withheld, if so required, in
accordance with the provisions of the Code;
(q) Insurance. The Agent and the Investor shall have received
evidence in form and substance satisfactory to them that all of the
requirements of Section 14 of the Lease shall have been satisfied;
(r) Purchase Agreement. The Lessor shall have received an
assignment of all of the Lessee's right, title and interest under the
Purchase Agreement and any ancillary agreements executed in connection
with the Purchase Agreement which, in the Agent's judgment, contain
rights with respect to the Property (any such agreements to be assigned
to the Lessor, collectively, the "Ancillary Agreements"). If any of the
Ancillary Agreements provide for obligations to be performed by the
Lessor, the Lessee shall enter into an agency agreement in form and
substance reasonably satisfactory to the Agent, the
<PAGE> 16
12
Lessor and the Lessee, whereby the Lessee shall agree to perform all of
such obligations contained in the Ancillary Agreements, as agent for the
Lessor.
(s) Soils and Geological Report. The Agent shall have received a
soils and geological report, including a summary of soils tests borings,
issued by URS Greiner Woodward & Clyde and satisfactory to the Agent.
6.3 Conditions to the Investor's and the Lenders' Obligations to
Make Advances to Pay Project Costs for Construction on the Property. The
obligations of the Investor to make each Investor Contribution, and of the
Lenders to make Loans to the Lessor, on a Funding Date for the purpose of
providing funds to the Lessor necessary to pay for the construction of the
Improvements or the payment of Transaction Costs or other Project Costs (other
than Property Acquisition Costs) are subject to the satisfaction or waiver of
the following conditions precedent:
(a) Requisition. The Agent shall have received a fully executed
counterpart of the Requisition, appropriately completed and accompanied
by true copies of unpaid invoices, receipted bills and such other
supporting information as the Agent may request;
(b) Title. Title to the Property shall conform to the
representations set forth in Section 7.4(n), and the Agent shall have
received a notice of continuation of, or an endorsement to, the title
insurance policy issued to the Agent pursuant to Section 6.2(m), which
continuation or endorsement shall state that since the last Advance
there have been no changes in the state of title to the Property and
that there are no additional survey exceptions not previously approved
by the Agent;
(c) Budget in Balance. Based upon the Budget, the Available
Commitments and the Available Investor Commitment will be sufficient to
complete the Improvement or Improvements on the Property;
(d) Lien Waivers. The Agent shall have received lien waivers, in
form and substance reasonably satisfactory to the Agent, from each
contractor, subcontractor, supplier and materialmen which the Lessee
reasonably believes will receive total compensation for services
rendered or materials supplied in connection with the construction of
the related Improvements of $25,000 or more; each such lien waiver shall
evidence that such contractor, subcontractor, supplier or materialmen
has been paid in full for all work performed or materials supplied to
the date of the request for such Advance, other than work which is the
subject of such request;
<PAGE> 17
13
(e) No Other Security Interests. All materials and fixtures
incorporated in the construction of the Improvements shall have been
purchased so that their absolute ownership shall have vested in the
Lessor immediately upon delivery to the Land and the Construction Agent
shall have produced and furnished, if required by the Agent, the
contracts, bills of sale or other agreements under which title to such
materials and fixtures is claimed;
(f) Statement of Expenditures. The Agent shall have received
with respect to the Improvements, a statement of the Construction Agent
and any contractor or subcontractor, in form and substance satisfactory
to the Agent, setting forth the names, addresses and amounts due or to
become due as well as the amounts previously paid to every contractor,
subcontractor, and supplier furnishing materials for or performing labor
on the construction of any part of the Improvements;
(g) Damage or Injury. The Improvements shall not have been
materially damaged by Casualty unless there shall have been received, by
the Agent, insurance proceeds sufficient in the judgment of the Agent,
to effect satisfactory restoration and Completion of the Improvements on
or before the Outside Completion Date;
(h) Appraisal. On or prior to the Initial Construction Funding
Date, the Agent shall have received an Appraisal of the Property and
such Appraisal shall show a value of at least $60,000,000 with respect
to the Property, and shall otherwise be in form and substance acceptable
to each Lender and the Lessor;
(i) Tranche A Percentage. On or prior to the Initial
Construction Funding Date, the Agent and the Lessee shall have executed
and delivered a supplement to Annex A of this Agreement setting forth
the Tranche A Percentage, which shall not be less than 85%;
(j) Construction Schedule. On or prior to the Initial
Construction Funding Date, the Agent and the Investor shall have
received a copy of the schedule prepared by or at the direction of the
Construction Agent showing the estimated (i) timetable for completion of
each Improvement to be constructed on the Land, and (ii) timetable for
the making of Loans;
(k) Budget. On or prior to the Initial Construction Funding
Date, the Agent and the Investor shall have received a copy of the
Budget with respect to the construction of each Improvement to be
constructed or installed on the Land, and such Budget shall be in form
and substance satisfactory to the Agent and the Lessor;
<PAGE> 18
14
(l) Plans and Specifications. On or prior to the Initial
Construction Funding Date, the Agent and the Investor shall have
received a copy of the Plans and Specifications with respect to each
Improvement to be constructed or installed on the Land;
(m) GC Agreement. On or prior to the Initial Construction
Funding Date, the GC Agreement between the Lessee and the General
Contractor relating to the construction of the Improvements shall have
been duly authorized, executed and delivered by the parties thereto and
shall be in full force and effect, and no default shall exist
thereunder, and the Agent shall have received a fully executed copy of
the GC Agreement;
(n) Architect Agreement. On or prior to the Initial Construction
Funding Date, the Architect Agreement between the Lessee and the
Architect relating to the design of the Improvements shall have been
duly authorized, executed and delivered by the parties thereto and shall
be in full force and effect, and no default shall exist thereunder, and
the Agent shall have received a fully executed copy of the Architect
Agreement;
(o) Availability of Utilities. On or prior to the Initial
Construction Funding Date, the Agent shall have received letters from
local utility companies or Governmental Authorities stating, or such
other evidence satisfactory to the Agent, showing that gas, electric
power, sanitary and storm sewers, water and all other utilities (i) that
are necessary and required during the Construction Period have been
completed and will be available in such a manner as to assure Agent that
construction will not be impeded by a lack of utilities and (ii) that
are necessary for operation and occupancy of the Improvements will be
completed in such a manner and at such a time as will assure the opening
and operation of the Improvements on or before the Outside Completion
Date;
(p) Permits, Etc. On or prior to the Initial Construction
Funding Date, the Agent shall have received copies of all consents,
licenses, and building permits required for the construction of the
Improvements as available;
(q) Agency Agreement Supplement. On or prior to the Initial
Construction Funding Date, the Construction Agent shall have delivered
an Agency Agreement Supplement executed by the Construction Agent and
the Lessor to the Agent.
SECTION 7. REPRESENTATIONS AND WARRANTIES
<PAGE> 19
15
7.1 Representations and Warranties of the Investor on the Initial
Closing Date. The Investor represents and warrants to each of the other parties
hereto as of the Initial Closing Date as follows:
(a) Due Organization, etc. It is a duly organized and validly
existing corporation in good standing under the laws of the State of
California and has the power and authority to carry on its business as
now conducted and to enter into and perform its obligations under this
Agreement, each Operative Agreement to which it is a party and each
other agreement, instrument and document executed and delivered by it on
the Closing Date in connection with or as contemplated by each such
Operative Agreement to which it is or will be a party.
(b) Authorization; No Conflict. The execution, delivery and
performance of each Operative Agreement to which it is a party has been
duly authorized by all necessary action on its part and neither the
execution and delivery thereof by the Investor, nor the consummation of
the transactions contemplated thereby by the Investor, nor compliance by
it with any of the terms and provisions thereof (i) requires or will
require any approval of (which approval has not been obtained) the
shareholders of, or approval or consent of any trustee or holders of any
indebtedness or obligations of the Investor, (ii) contravenes or will
contravene any Legal Requirement applicable to or binding on it as of
the date hereof, (iii) does or will contravene or result in any breach
of or constitute any default under, or result in the creation of any
Lessor Lien upon the Property or any of the Improvements, its articles
of incorporation or by-laws, any indenture, mortgage, chattel mortgage,
deed of trust, conditional sales contract, bank loan or credit agreement
or other agreement or instrument to which it or its properties may be
bound or (iv) does or will require any Governmental Action by any
Governmental Authority.
(c) Enforceability, etc. Each Operative Agreement to which it is
a party has been duly executed and delivered by it and constitutes, or
upon execution and delivery will constitute, a legal, valid and binding
obligation enforceable against it in accordance with the terms thereof.
(d) ERISA. The Investor is making the Investor Contribution
contemplated to be made by it hereunder for its own account and with its
general corporate assets in the ordinary course of its business, and no
part of such amount constitutes the assets of any Employee Benefit Plan.
(e) Litigation. No litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending or threatened
by or against the Investor (a) with respect to any of the Operative
Agreements or any of the transactions
<PAGE> 20
16
contemplated hereby or thereby, or (b) which could reasonably be
expected to have a material adverse effect on the assets, liabilities,
operations, business or financial condition of the Investor.
7.2 Representations and Warranties of Trustee on the Initial
Closing Date. The Trust Company, in its individual capacity (with respect to
paragraphs (a), (b), (c), (e) and (i) only) and as the Trustee, represents and
warrants to each of the other parties hereto as of the Initial Closing Date as
follows:
(a) Due Organization, etc. It is a duly organized and validly
existing national banking association in good standing under the laws of
the United States of America and has the power and authority to enter
into and perform its obligations under the Trust Agreement and (assuming
due authorization, execution and delivery of the Trust Agreement by the
Investor) has the power and authority to act as the Trustee and to enter
into and perform the obligations under this Agreement and each Operative
Agreement to which the Trust Company or the Trustee, as the case may be,
is a party and each other agreement, instrument and document executed
and delivered by it on the Closing Date in connection with or as
contemplated by each such Operative Agreement.
(b) Authorization; No Conflict. The execution, delivery and
performance of each Operative Agreement to which it is a party, either
in its individual capacity or (assuming due authorization, execution and
delivery of the Trust Agreement by the Investor) as the Trustee, as the
case may be, has been duly authorized by all necessary action on its
part and neither the execution and delivery thereof, nor the
consummation of the transactions contemplated thereby, nor compliance by
it with any of the terms and provisions thereof (i) requires or will
require any approval of (which approval has not been obtained) any party
or approval or consent of any trustee or holders of any indebtedness or
obligations, (ii) contravenes or will contravene any Legal Requirement
applicable to or binding on it as of the date hereof, (iii) does or will
contravene or result in any breach of or constitute any default under,
or result in the creation of any Lessor Lien upon the Property or any of
the Improvements or the Trust Agreement, any indenture, mortgage,
chattel mortgage, deed of trust, conditional sales contract, bank loan
or credit agreement or other agreement or instrument to which it or its
properties may be bound or (iv) does or will require any Governmental
Action by any Governmental Authority.
(c) Trust Company Enforceability, etc. The Trust Agreement and,
assuming the Trust Agreement is the legal, valid and binding obligation
of the Investor, each other Operative Agreement to which Trust Company
or the
<PAGE> 21
17
Trustee, as the case may be, is a party have been duly executed and
delivered by the Trust Company or the Trustee, as the case may be, and
the Trust Agreement and each such other Operative Agreement to the
extent entered into by the Trust Company constitutes, or upon execution
and delivery will constitute, a legal, valid and binding obligation
enforceable against Trust Company in accordance with the terms thereof.
(d) Trustee Enforceability, etc. The Trust Agreement and,
assuming the Trust Agreement is the legal, valid and binding obligation
of the Investor, each other Operative Agreement to which the Trustee is
a party have been duly executed and delivered by the Trustee and each
such other Operative Agreement to which is a party constitutes, or upon
execution and delivery will constitute, a legal, valid and binding
obligation enforceable against the Trustee in accordance with the terms
thereof.
(e) Litigation. No litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending and served
or, to the best knowledge of it, threatened by or against the Trust
Company or the Trustee (a) with respect to any of the Operative
Agreements or any of the transactions contemplated hereby or thereby, or
(b) which could reasonably be expected to have a material adverse effect
on the assets, liabilities, operations, business or financial condition
of the Trust Company or the Trustee.
(f) Assignment. It has not assigned or transferred any of its
right, title or interest in or under the Lease, any other Operative
Agreement or the Trust Estate, except in accordance with the other
Operative Agreements.
(g) No Default. The Trustee is not in default under or with
respect to any of its Contractual Obligations in any respect which could
have a material adverse effect on the assets, liabilities, operations,
business or financial condition of the Trustee. No Default or Event of
Default attributable to it has occurred and is continuing.
(h) Use of Proceeds. The proceeds of the Loans and the Investor
Contribution shall be applied by the Trustee solely in accordance with
the provisions of the Operative Agreements.
(i) Chief Place of Business. The Trust Company's and the
Trustee's principal corporate trust office and office where the
documents, accounts and records relating to the transactions
contemplated by this Agreement and each other Operative Agreement are
kept are located at its Corporate Trust Division, 120 South San Pedro
Street, Suite 400, Los Angeles, California 90012.
<PAGE> 22
18
(j) Securities Act. Neither the Trustee nor any Person
authorized by the Trustee to act on its behalf has offered or sold any
interest in the Trust Estate or the Notes, or in any similar security or
interest relating to the Property, or in any security the offering of
which for the purposes of the Securities Act would be deemed to be part
of the same offering as the offering of the aforementioned securities
to, or solicited any offer to acquire any of the same from, any Person
other than, in the case of the Notes, the Agent, and neither the Trustee
nor any Person authorized by the Trustee to act on its behalf will take
any action which would subject the issuance or sale of any interest in
the Trust Estate or the Notes to the provisions of Section 5 of the
Securities Act or require the qualification of any Operative Agreement
under the Trust Indenture Act of 1939, as amended.
(k) Lessor Liens. The Property and the Trust Estate are free and
clear of all Lessor Liens.
7.3 Representations and Warranties of the Lessee on the Initial
Closing Date. The Lessee represents and warrants to each of the other parties
hereto as of the Initial Closing Date as follows:
(a) Existence and Qualification; Power; Compliance With Laws.
The Lessee is a corporation duly formed, validly existing and in good
standing under the Laws of the State of Delaware. The Lessee is duly
qualified or registered to transact business and is in good standing in
California and each other jurisdiction in which the conduct of its
business or the ownership or leasing of its properties makes such
qualification or registration necessary, except where the failure so to
qualify or register and to be in good standing would not constitute a
Material Adverse Effect. The Lessee has all requisite power and
authority to conduct its business, to own and lease its properties and
to execute and deliver each Operative Agreement to which it is a Party
and to perform its Obligations. The chief executive offices of the
Lessee are located in California. All outstanding shares of capital
stock of the Lessee are duly authorized, validly issued, fully paid and
non-assessable, and no holder thereof has any enforceable right of
rescission under any applicable state or federal securities Laws. The
Lessee is in compliance with all Laws and other Legal Requirements
applicable to its business, has obtained all authorizations, consents,
approvals, orders, licenses and permits from, and has accomplished all
filings, registrations and qualifications with, or obtained exemptions
from any of the foregoing from, any Governmental Authority that are
necessary for the transaction of its business, except where the failure
so to comply, obtain authorizations, etc., file, register, qualify to
obtain exemptions does not constitute a Material Adverse Effect.
<PAGE> 23
19
(b) Authority; Compliance With Other Agreements and Instruments
and Government Regulations. The execution, delivery and performance by
the Lessee of the Operative Agreements to which it is a Party have been
duly authorized by all necessary corporate action, and do not and will
not:
(i) Require any consent or approval not heretofore
obtained of any partner, director, stockholder, security holder or
creditor of the Lessee;
(ii) Violate or conflict with any provision of the
Lessee's charter, articles of incorporation or bylaws, as applicable;
(iii) Result in or require the creation or imposition of
any Lien (other than pursuant to the Operative Agreements) or Right of
Others upon or with respect to any Property now owned or leased or
hereafter acquired by the Lessee;
(iv) Violate any Requirement of Law applicable to the
Lessee;
(v) Result in a breach of or constitute a default under,
or cause or permit the acceleration of any obligation owed under, any
indenture or loan or credit agreement or any other Contractual
Obligation to which the Lessee is a party or by which the Lessee or any
of its Property is bound or affected;
and the Lessee is not in violation of, or default under, any Requirement of Law
or Contractual Obligation, or any indenture, loan or credit agreement described
in Section 7.3(b)(v), in any respect that constitutes a Material Adverse Effect.
(c) No Governmental Approvals Required. Except as previously
obtained or made, no authorization, consent, approval, order, license or
permit from, or filing, registration or qualification with, any
Governmental Authority is or will be required to authorize or permit
under applicable Laws the execution, delivery and performance by the
Lessee of the Operative Agreements to which it is a Party.
(d) Public Utility Holding Company Act. The Lessee is not a
"holding company", or a "subsidiary company" of a "holding company", or
an "affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company", within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
(e) Litigation. There are no actions, suits, proceedings or
investigations pending as to which the Lessee has been served or has
received notice or, to the best
<PAGE> 24
20
knowledge of the Lessee, threatened against or affecting the Lessee or
any of its property before any Governmental Authority.
(f) Binding Obligations. Each of the Operative Agreements to
which the Lessee is a Party will, when executed and delivered by the
Lessee, constitute the legal, valid and binding obligation of the
Lessee, enforceable against the Lessee in accordance with its terms,
except as enforcement may be limited by Debtor Relief Laws to equitable
principles relating to the granting of specific performance and other
equitable remedies as a matter of judicial discretion.
(g) No Default. No event has occurred and is continuing that is
a Default or Event of Default.
(h) Regulation U; Investment Company Act. The Lessee is not
engaged principally, or as one of its important activities, in the
business of extending credit to others for the purpose of purchasing or
carrying, any Margin Stock in violation of Regulation U. The Lessee
neither is, nor is required to be, registered as an "investment company"
under the Investment Company Act of 1940.
(i) Tax Liability. The Lessee has filed all tax returns which
are required to be filed, and has paid, or made provision for the
payment of, all taxes with respect to the periods, property or
transactions covered by said returns, or pursuant to any assessment
received by the Lessee, except (a) such taxes, if any, as are being
contested in good faith by appropriate proceedings and as to which
adequate reserves have been established and maintained and (b)
immaterial taxes so long as no material property of the Lessee is at
impending risk of being seized, levied upon or forfeited.
(j) Separate Entity from Guarantor. The Lessee is a separate and
distinct entity from each of the Guarantors. The Lessee conducts its
business in accordance with the covenants contained in Section 9.6.
7.4 Representations and Warranties of the Lessee on the Property
Closing Date. The Lessee hereby represents and warrants to each of the other
parties hereto as of the Property Closing Date as follows:
(a) Representations and Warranties. The representations and
warranties of the Construction Agent, the Lessee, the Lessor and the Investor
set forth herein and in each of the other Operative Agreements are true and
correct in all respects on and as of the Property Closing Date as if made on and
as of the Property Closing Date. The Construction Agent, the Lessee, the
<PAGE> 25
21
Lessor and the Investor are in compliance with their respective obligations
under the Operative Agreements and there exists no Default or Event of Default
under any of the Operative Agreements.
(b) No Default. No Default or Event of Default will occur under
any of the Operative Agreements as a result of, or after giving effect to, the
Advance requested by the Requisition on the Property Closing Date.
(c) Authorization by the Lessee. The execution and delivery of
the Lease Supplement, Memorandum of Lease, Consent to Assignment and other
Operative Agreement delivered by the Lessee on the Property Closing Date and the
performance of the obligations of the Lessee under each such Lease Supplement,
Memorandum of Lease, Consent to Assignment and other Operative Agreements have
been duly authorized by all requisite corporate action of the Lessee.
(d) Execution and Delivery by the Lessee. The Lease Supplement,
Memorandum of Lease, Consent to Assignment and other Operative Agreement
delivered on the Property Closing Date by the Lessee have been duly executed and
delivered by the Lessee.
(e) Valid and Binding Obligations. The Lease Supplement,
Memorandum of Lease, Consent to Assignment and other Operative Agreement
delivered by the Lessee on the Property Closing Date is a legal, valid and
binding obligation of the Lessee, enforceable against the Lessee in accordance
with its respective terms.
(f) Recording of Documents. Each of the Deed, the Lease
Supplement, the Memorandum of Lease, the Assignment of Lease, the Consent to the
Assignment of Lease and the Mortgage delivered on the Property Closing Date has
been recorded with the appropriate Governmental Authority in the order set forth
in this paragraph, and the UCC Financing Statements will be filed with the
appropriate Governmental Authorities.
(g) Priority of Liens. (i) Each of the Mortgage, Assignment of
Lease and Memorandum of Lease delivered on the Property Closing Date,
constitutes a valid and perfected first lien on the Property in an amount not
less than the Tranche A/B Property Cost, subject only to the Permitted
Exceptions, and (ii) the Lessor Financing Statements perfect the Lessor's
interest under the Lease to the extent the Lease is a security agreement
governed by Article 9 of the Uniform Commercial Code.
(h) Flood Zone. No portion of the Property is located in an area
identified as a special flood hazard area by the
<PAGE> 26
22
Federal Emergency Management Agency or other applicable agency, or if the
Property is located in an area identified as a special flood hazard area by the
Federal Emergency Management Agency or other applicable agency, then flood
insurance has been obtained for the Property in accordance with Section 14.2(b)
of the Lease and in accordance with the National Flood Insurance Act of 1968, as
amended.
(i) Insurance Coverage. The Lessee maintains insurance coverage
for the Property which meets the requirements of Section 14.1 of the Lease and
all of such coverage is in full force and effect.
(j) Legal Requirements. The Property complies with all Legal
Requirements (including all zoning and land use laws and Environmental Laws).
(k) Consents, etc. All consents, licenses and building permits
required by all Legal Requirements for construction, completion, occupancy and
operation of the Property have been obtained and are in full force and effect.
(l) Utilities. All utility services and facilities necessary for
the use of the Improvements existing, or to be constructed, on the Land
(including gas, electrical, water and sewage services and facilities) will be
available to the Property on or prior to the Outside Completion Date.
(m) Environmental Matters.
(1) Except as disclosed in the Environmental Audit delivered
to the Agent and the Investor, the Property does not contain,
and has not previously contained, any Hazardous Materials in
amounts or concentrations which (i) constitute or constituted a
violation of, or (ii) could give rise to liability under, any
Hazardous Materials Laws.
(2) Except as disclosed in the Environmental Audit delivered
to the Agent and the Investor, the Property and all operations
at the Property are in compliance and have in the last ten years
been in compliance, in all respects with all applicable
Hazardous Materials Laws, and there is no contamination at, on
or under the Property or violation of any Hazardous Materials
Laws with respect to the Property or the business operated by
Lessee or any of its Subsidiaries at the Property (the
"Business").
(3) Neither the Lessee nor any of its Subsidiaries has
received any notice of violation, alleged violation,
non-compliance, liability or potential liability regarding
compliance with Hazardous Materials Laws with regard to the
<PAGE> 27
23
Property, nor does the Lessee have knowledge that any such
notice will be received or is being threatened.
(4) Except as disclosed in the Environmental Audit delivered
to the Agent and the Investor, Hazardous Materials have not been
transported or disposed of from the Property in violation of any
Hazardous Materials Laws, nor have any Hazardous Materials been
generated, treated, stored or disposed of at, on or under the
Property in violation of any applicable Hazardous Materials
Laws.
(5) No judicial proceeding or governmental or administrative
action is pending or, to the best knowledge of the Lessee,
threatened, under any Hazardous Materials Laws to which the
Lessee or any Subsidiary is or will be named as a party with
respect to the Property, nor are there any consent decrees or
other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements
outstanding under any Hazardous Materials Laws with respect to
the Property or the Business.
(6) There has been no release or threat of release of
Hazardous Materials at or from the Property, arising from or
related to the operations of the Lessee or any Subsidiary in
connection with the Property, in violation of or in amounts or
in a manner that could reasonably be expected to give rise to
any material liability under any Hazardous Materials Laws.
(n) Title to the Properties. The Lessor has good and marketable
title to the Property in fee simple, subject only to the Permitted Exceptions.
The Lessor has the right to grant the Mortgage on the Property. The Lessor will
at all times have good and marketable title to the Property, subject only to
Permitted Exceptions.
(o) Execution and Delivery by the Construction Agent. The
execution and delivery of each Operative Agreement delivered by the Construction
Agent on such date and the performance of the Construction Agent's obligations
under each Agency Agreement Supplement and Operative Agreement have been duly
authorized by all requisite corporate action of the Construction Agent.
(p) Agency Agreement Supplements. Each Operative Agreement
delivered by the Construction Agent on such date has been duly executed and
delivered by the Construction Agent.
(q) Valid and Binding Obligations of the Construction Agent. Each
Operative Agreement delivered by the Construction Agent on such date is a legal,
valid and binding
<PAGE> 28
24
obligation of the Construction Agent, enforceable against the Construction Agent
in accordance with its terms.
(r) Conditions Precedent in Operative Agreements. All conditions
precedent contained in this Agreement and in the other Operative Agreements
relating to the acquisition of the Property by the Lessor have been satisfied in
full or waived by the Agent and the Lessor.
(s) Hart-Scott-Rodino. The acquisition of the Property does not
conflict with, violate, or require the consent of any governmental entity, under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
7.5 Representations and Warranties of the Trustee on the Property
Closing Date. The Trustee hereby represents and warrants to each of the other
parties hereto as of the Property Closing Date as follows:
(a) Representations and Warranties; No Default. The
representations and warranties of the Trustee set forth herein and in each of
the other Operative Agreements are true and correct in all material respects on
and as of the Property Closing Date as if made on and as of the Property Closing
Date. The Trustee is in compliance with its respective obligations under the
Operative Agreements and there exists no Default or Event of Default known to
the Trustee under any of the Operative Agreements.
(b) Authorization by the Trustee. The execution and delivery of
the Lease Supplement, Memorandum of Lease, Mortgage, Assignment of Lease and
other Operative Agreement delivered by the Trustee on the Property Closing Date
and the performance of the obligations of the Trustee under the Lease
Supplement, Memorandum of Lease, Mortgage, the Assignment of Lease and other
Operative Agreement (assuming due authorization, execution and delivery of the
Trust Agreement by the Investor) have been duly authorized by all requisite
action of the Trustee.
(c) Execution and Delivery by the Trustee. Each Lease Supplement,
Memorandum of Lease, Mortgage, Assignment of Lease and other Operative Agreement
delivered by the Trustee on the Property Closing Date (assuming due
authorization, execution and delivery of the Trust Agreement by the Investor)
have been duly executed and delivered by the Trustee.
(d) Valid and Binding Obligations. Each Lease Supplement,
Memorandum of Lease, Mortgage, Assignment of Lease and other Operative Agreement
delivered by the Trustee on the Property Closing Date (assuming the Trust
Agreement is the legal, valid and binding
<PAGE> 29
25
obligation of the Investor) is a legal, valid and binding obligation of the
Trustee, enforceable against the Trustee in accordance with its terms.
7.6 Representations and Warranties of the Lessee Upon each
Funding Date. The Lessee hereby represents and warrants to each of the other
parties hereto as of each Funding Date as follows:
(a) Representations and Warranties. The representations and
warranties of the Construction Agent, the Lessee and the Guarantors set forth
herein and in each of the other Operative Agreements are true and correct in all
material respects on and as of such Funding Date as if made on and as of such
Funding Date, except to the extent such representations and warranties relate
solely to an earlier date, in which case such representations and warranties
shall have been true and correct in all material respects on such earlier date.
The Construction Agent, the Lessee and the Guarantors are in compliance with
their respective obligations under the Operative Agreements and there exists no
Default or Event of Default under any of the Operative Agreements to which the
Construction Agent, the Lessee or the Guarantors are a party. No Default or
Event of Default will occur under any of the Operative Agreements as a result
of, or after giving effect to, the Advance requested by the Requisition on such
date.
(b) Title to Properties. The Lessor has good and marketable title
to the Property in fee simple, subject only to the Permitted Exceptions.
(c) Priority of Liens. Each of the Mortgage, Supplement to the
Assignment of Lease and Lease Memorandum constitutes a valid and perfected first
lien on the Property in an amount not less than the Tranche A/B Property Cost,
subject only to Permitted Exceptions.
(d) Insurance. The Construction Agent has obtained insurance
coverage covering the Property which meets the requirements of the Agency
Agreement and the other Operative Agreements before commencing construction,
repairs or Modifications, as the case may be, and such coverage is in full force
and effect.
(e) Property-Related Matters. The Property, when improved in
accordance with the Plans and Specifications, will comply in all material
respects with all Legal Requirements (including all applicable zoning and land
use laws and Hazardous Materials Laws) and Insurance Requirements. The Plans and
Specifications have been or will be prepared in accordance with all applicable
Legal Requirements (including all applicable Hazardous Materials Laws and
building, planning, zoning and fire codes) and upon completion of the applicable
Improvements in accordance with the Plans and Specifications, such Improvements
will not encroach in any manner onto any adjoining land (except as permitted by
express written easements or variance) and such Improvements and the use thereof
by the Lessee and its agents,
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26
assignees, employees, invitees, lessees, licensees and tenants will comply with
all applicable Legal Requirements (including all applicable Hazardous Materials
Laws and building, planning, zoning and fire codes). Upon completion of such
Improvements in accordance with the Plans and Specifications, (i) there will be
no material defects to such Improvements including the plumbing, heating, air
conditioning and electrical systems thereof and (ii) all water, sewer, electric,
gas, telephone and drainage facilities and all other utilities required to
adequately service such Improvements for its intended use will be available
pursuant to adequate permits (including any that may be required under
applicable Hazardous Materials Laws). There is no action, suit or proceeding
(including any proceeding in condemnation or eminent domain or under any
applicable Hazardous Materials Laws) pending or, to the best knowledge of the
Lessee, threatened which adversely affects the title to, or the use, operation
or value of, the Property. No fire or other casualty with respect to the
Property has occurred which fire or other casualty has had a material adverse
effect on the Lessee's ability to perform its obligations under the Agency
Agreement and the other Operative Agreements. All utilities serving the
Property, or proposed to serve the Property in accordance with the Plans and
Specifications, are located in, and in the future will be located in, and
vehicular access to the Improvements on the Property is provided by, either
public rights-of-way abutting the Property or Appurtenant Rights. All applicable
licenses, approvals, authorizations, consents, permits (including, without
limitation, building, demolition and environmental permits, licenses, approvals,
authorizations and consents), easements and rights-of-way, including proof of
dedication, required for (i) the use, treatment, storage, transport, disposal or
disposition of any Hazardous Substance on, at, under or from the Property during
the construction of the Improvements thereon and the use and operation of the
Improvements following such construction, (ii) the construction of the
Improvements in accordance with the Plans and Specifications and the Agency
Agreement and (iii) the use and operation of the Improvements following such
construction as permitted pursuant to the Lease have been obtained from the
appropriate Governmental Authorities having jurisdiction or from private
parties.
(f) Lease Requirements. The Improvements, when completed, will
comply with all requirements and conditions set forth in the Lease and all other
conditions and requirements of the Operative Documents.
(g) Conditions Precedent contained in the Operative Agreements.
All conditions precedent contained in this Agreement and in the other Operative
Agreements to which the Lessee, any Guarantor or the Construction Agent is a
party relating to the relevant Advance have been satisfied in full.
7.7 Representations and Warranties of the Trustee Upon each
Funding Date. The Trustee hereby represents and warrants to each of the other
parties hereto as of each Funding Date as follows:
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27
(a) Representations and Warranties. The representations and
warranties of the Trustee set forth herein and in each of the other Operative
Agreements are true and correct in all respects on and as of such Funding Date
as if made on and as of such Funding Date. The Trustee is in compliance with its
respective obligations under the Operative Agreements.
(b) Authority of the Trustee. The execution and delivery of each
Operative Agreement delivered by the Trustee on such date and the performance of
the obligations of the Trustee under each Operative Agreement (assuming due
authorization, execution and delivery of the Trust Agreement by the Investor)
has been duly authorized by all requisite action of the Trustee.
(c) Execution and Delivery by the Trustee. Each Operative
Agreement delivered by the Trustee on such date (assuming due authorization,
execution and delivery of the Trust Agreement by the Investor) has been duly
executed and delivered by the Trustee.
(d) Valid and Binding Obligations of the Trustee. Each Operative
Agreement delivered by the Trustee on such date (assuming the Trust Agreement is
the legal, valid and binding obligation of the Investor) is a legal, valid and
binding obligation of the Trustee, enforceable against the Trustee in accordance
with its terms.
(e) Conditions Precedent contained in the Operative Agreements.
All conditions precedent contained in this Agreement and in the other Operative
Agreements to be satisfied by the Trustee relating to the relevant Advance have
been satisfied in full.
7.8 Representations and Warranties of the Investor Upon Funding
Dates. The Investor hereby represents and warrants to each of the other parties
hereto as of each Funding Date that: (a) the representations and warranties of
the Investor set forth herein and in each of the other Operative Agreements are
true and correct in all respects on and as of such Funding Date as if made on
and as of such Funding Date and (b) the Investor is in compliance with its
obligations under the Operative Agreements.
SECTION 8. PAYMENT OF CERTAIN EXPENSES
Lessee agrees, for the benefit of the Investor, the Trust Company, the
Trustee, the Agent and each of the Lenders, to:
8.1 Transaction Expenses. (a) On the Initial Closing Date, pay,
or cause to be paid, all fees, expenses and disbursements of each of the
Lessor's, the Trust Company's, the Agent's, and the Investor's counsel in
connection with the transactions contemplated by the
<PAGE> 32
28
Operative Agreements and incurred in connection with such Initial Closing Date,
including all Transaction Expenses, and all other expenses in connection with
such Initial Closing Date, including all expenses relating to all fees, taxes
and expenses for the recording, registration and filing of documents.
(b) On the Property Closing Date, pay, or cause to be paid out of
the Advance made on such date, all fees, expenses and disbursements of each of
the Lessor's, the Trust Company's, the Agent's and the Investor's counsel in
connection with the transactions contemplated by the Operative Agreements and
incurred in connection with the Property Closing Date, including all Transaction
Expenses arising from the Property Closing Date, all other expenses in
connection with the Property Closing Date, including all expenses relating to
the Appraisal, all fees, taxes and expenses for the recording, registration and
filing of documents and including reimbursement for Transaction Expenses paid in
connection with the Initial Closing Date.
8.2 Brokers' Fees and Stamp Taxes. Pay or cause to be paid
brokers' fees and any and all stamp, transfer and other similar taxes, fees and
excises, if any, including any interest and penalties, which are payable in
connection with the transactions contemplated by this Agreement and the other
Operative Agreements.
8.3 Certain Fees and Expenses. Pay or cause to be paid (i) the
initial and annual Trust Company's fee and all expenses of the Trust Company and
any necessary co-trustees (including reasonable counsel fees and expenses) or
any successor owner trustee, for acting as trustee under the Trust Agreement,
(ii) all costs and expenses incurred by the Lessee, the Agent, the Investor, the
Trust Company or the Lessor in entering into any future amendments or
supplements with respect to any of the Operative Agreements, whether or not such
amendments or supplements are ultimately entered into, or giving or withholding
of waivers of consents hereto or thereto, which have been requested by the
Lessee, and (iii) all costs and expenses incurred by the Lessor, the Lessee, the
Investor, the Trust Company or the Agent in connection with any purchase of the
Property by the Lessee pursuant to Section 20 of the Lease.
8.4 Credit Agreement and Related Obligations. (a) Pay, on or
prior to the due date thereof, all costs, fees, indemnities, expenses and other
amounts (other than principal and interest on the Loans, but including breakage
costs and interest on overdue amounts pursuant to Section 2.14 of the Credit
Agreement or otherwise) required to be paid by the Lessor under any Operative
Agreement.
(b) Pay the Agent all fees specified in the Fee Letter at the
time and in the manner required by the Fee Letter.
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(c) Pay the Lessor promptly after receipt of notice therefor any
additional amounts payable to the Investor in respect of the Investor
Contribution under Sections 2.13, 2.14 and 2.15 of the Credit Agreement (it
being agreed that the Investor is, for purposes of this Agreement, a beneficiary
of the provisions of Sections 2.13, 2.14 and 2.15 of the Credit Agreement).
8.5 Commitment Fees; Amendment Fees. (a) Pay to the Agent for the
account of each Lender the Commitment Fee on each Commitment Fee Payment Date.
(b) Pay to the Agent for the account of each Lender the Amendment
Fee on each Amendment Fee Payment Date.
(c) The Commitment Fee and the Amendment Fee shall be calculated
on the basis of a 360 day year for the actual days elapsed. If all or a portion
of the Commitment Fee or the Amendment Fee shall not be paid when due, such
overdue amount shall bear interest, payable by the Lessee on demand, at a rate
per annum equal to the applicable Overdue Rate, from the date of such
non-payment until such amount is paid in full (as well after as before
judgment).
8.6 Overdue Rate. If all or a portion of the Investor Yield, the
Investor Contribution or any other amount owed to the Investor shall not be paid
when due, such overdue amount shall bear interest, payable on demand, at a rate
per annum equal to the applicable Overdue Rate, from the date of such
non-payment until such amount is paid in full (as well after as before
judgment).
SECTION 9. OTHER COVENANTS AND AGREEMENTS
9.1 Covenants of the Trustee and the Investor. Each of the
parties hereby agrees that so long as this Agreement is in effect:
(a) Discharge of Liens. Each of the Investor, the Trustee and the
Trust Company, in its individual capacity, will not create or permit to exist at
any time, and will, at its own cost and expense, promptly take such action as
may be necessary duly to discharge, or to cause to be discharged, all Lessor
Liens on the Property attributable to it or any of its Affiliates; provided,
however, that the Investor, the Trustee and the Trust Company shall not be
required to so discharge any such Lessor Lien while the same is being contested
in good faith by appropriate proceedings diligently prosecuted so long as such
proceedings shall not involve any material danger of impairment of the Liens of
the Security Documents or of the sale, forfeiture or loss of, and shall not
interfere with the use or disposition of, the Property or title thereto or any
interest therein or the payment of Rent.
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(b) Trust Agreement. Without prejudice to any right under the
Trust Agreement of the Trust Company to resign, or the Investor's right under
the Trust Agreement to remove the institution acting as trustee, each of the
Investor and the Trust Company hereby agrees with the Lessee and the Agent (i)
not to terminate or revoke the trust created by the Trust Agreement except as
permitted by the Trust Agreement, (ii) not to amend, supplement, terminate or
revoke or otherwise modify any provision of the Trust Agreement without the
prior written consent of any party hereto adversely affected by such amendment
and (iii) to comply with all of the terms of the Trust Agreement, the
nonperformance of which would adversely affect such party.
(c) Successor Trust Company. The Trust Company or any successor
may resign or be removed by the Investor as trustee of the Trust, a successor
trustee may be appointed, and a corporation may become the trustee under the
Trust Agreement, only in accordance with the provisions of Article 9 of the
Trust Agreement and with the consent of the Lessee, which consent shall not be
unreasonably withheld or delayed.
(d) Indebtedness; Other Business. The Trustee in its capacity as
Trustee under the Trust Agreement, and not in its individual capacity, shall not
contract for, create, incur or assume any indebtedness, or enter into any
business or other activity, other than pursuant to or under the Operative
Agreements.
(e) No Violation. The Investor will not instruct the Trustee to
take any action in violation of the terms of any Operative Agreement.
(f) No Voluntary Bankruptcy. Neither the Investor nor the Trustee
shall (i) commence any case, proceeding or other action under any existing or
future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, arrangement, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (ii) seek
appointment of a receiver, trustee, custodian or other similar official for it
or for all or any substantial benefit of its creditors; and neither the Investor
nor the Trustee shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth in this
paragraph.
(g) Change of Chief Place of Business. The Trustee shall give
prompt notice to the Lessee and the Agent if the Trustee's principal corporate
trust office, or the office where the records concerning the accounts or
contract rights relating to the Property are kept, shall cease to be located at
Corporate Trust Division, 120 South San Pedro Street, Suite 400, Los Angeles,
California 90012 or if it shall change its name.
<PAGE> 35
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(h) Loan Documents. Provided that no Lease Event of Default has
occurred and is continuing, none of the Lenders, the Trustee, the Agent nor the
Investor shall consent to or permit any material amendment, supplement, waiver
or other modification of the terms and provisions of the Credit Agreement, the
Notes or the Security Documents, in each case without the prior written consent
of the Lessee.
(i) Disposition of Assets. The Trustee shall not convey, sell,
lease, assign, transfer or otherwise dispose of any of its property, business or
assets, whether now owned or hereafter acquired, except to the extent expressly
authorized by the Operative Agreements.
(j) Compliance with Operative Agreements. The Trustee shall at
all times observe and perform all of the covenants, conditions and obligations
required to be performed by it under each Operative Agreement to which it is a
party.
9.2 Amendment of Certain Documents. The Agent, for itself and on
behalf of the Lenders, hereby agrees for the benefit of the Trustee and the
Investor that it will not amend, alter or otherwise modify, or consent to any
amendment, alteration or modification of, the Lease (including the definitions
of any terms used in such document) without the prior written consent of the
Trustee and the Investor, as the case may be, if such amendment, alteration or
modification would materially and adversely affect the interests of the Trustee
or the Investor. Provisions requiring consent, include any amendment, alteration
or modification that would release the Lessee from any of its obligations in
respect of the payment of Basic Rent, Supplemental Rent, Termination Value,
Maximum Residual Guarantee Amount or the Purchase Option Price or any other
payments in respect of the Property as set forth in the Lease, or amend the
provisions of Section 8 of the Credit Agreement, or reduce the amount of, or
change the time or manner of payment of, obligations of the Lessee as set forth
in the Lease, or create or impose any obligation on the part of the Trustee or
the Investor under the Lease, or extend or shorten the duration of the Term, or
modify the provisions of this Section 9.2.
9.3 Proceeds of Casualty. The Lessor and the Investor agree, for
the benefit of the Agent and the Lenders, that if at any time either the Lessor
or the Investor receives any proceeds as a result, directly or indirectly, of
any Casualty or Condemnation with respect to the Property which the Lessor is
entitled to retain and hold in accordance with the terms of the Lease, the
Lessor and the Investor agree that they will promptly deposit such amounts in an
account with the Agent. The Lessor and the Investor also agree that they will
execute and deliver such documents and instruments as the Agent may request in
order to grant the Agent, for the benefit of the Lenders, a valid and perfected,
first priority security interest in such proceeds.
9.4 Intercreditor Agreement. The Lessee, the Agent, the Lenders
and the Lessor hereby agree and confirm that the provisions of Section 8 of the
Credit Agreement are
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intended to constitute an intercreditor agreement and a subordination agreement
under Section 510 of the Bankruptcy Code or any similar provision therein.
9.5 Appraisals The Lessee hereby agrees that the Agent shall have
the right, upon the occurrence of an Event of Default or if required pursuant to
the provisions of the Financial Institutions Reform, Recovery and Enforcement
Act of 1989, as amended, or any other banking Law, to commission, at the
Lessee's cost and expense, an Appraisal of the Property.
9.6 Covenants of the Lessee. The Lessee hereby agrees that so
long as this Agreement is in effect:
(a) Separate Accounts and Records. It will maintain its accounts,
financial statements, accounting records, and books separate from any other
Person, including, any of the Guarantors.
(b) Official Records. It will maintain its books, records,
resolutions and agreements as official records.
(c) Commingling. It will not commingle its funds or assets with
those of any other entity, including any of the Guarantors, and will hold its
assets in its own name.
(d) Own Name. It will conduct its business in its own name.
(e) Own Liabilities. It will pay its own liabilities out of its
own funds and assets.
(f) Formalities. It will observe all corporate formalities, as
applicable.
SECTION 10. CREDIT AGREEMENT
10.1 Lessee's Credit Agreement Rights. Notwithstanding anything
to the contrary contained in the Credit Agreement, the Agent, the Lessee, the
Investor and the Trustee hereby agree that:
(a) the Lessee shall have the right to give the notices and
deliver the Requisitions referred to in Section 2.3 of the Credit Agreement;
<PAGE> 37
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(b) the Lessee shall have the right to convert or continue Loans
in accordance with Section 2.6 of the Credit Agreement;
(c) the Lessee shall receive copies of all notices delivered to
the Lessor under the Credit Agreement and the other Operative Agreements and
such notices shall not be effective until received;
(d) the Lessee shall have the right to select Interest Periods in
accordance with the terms of the Credit Agreement;
(e) the Lessee shall have the right to give notice of prepayment
of the Loans in accordance with the Credit Agreement, provided that if the
Lessee shall give notice of prepayment of the Loans, the Lessee shall prepay a
pro rata portion of the Investor Contribution;
(f) the Lessee shall have the right to cure, to the extent
susceptible to a cure, any Default or Event of Default of the Lessor under the
Credit Agreement;
(g) the Lessee shall have the right to approve any successor
Agent pursuant to Section 7.9 of the Credit Agreement;
(h) the Lessee shall have the right, on behalf of the Lessor, to
select any person or persons (including the Lessee) to whom funds may be paid at
the discretion of the Lessor in accordance with Sections 8.1 and 8.2 of the
Credit Agreement;
(i) the Lessee shall have the right to consent to any assignment
by a Lender, if required pursuant to Section 9.7 of the Credit Agreement;
(j) the Lessee shall have the right to request that another
lending office be designated pursuant to Section 2.16 of the Credit Agreement;
and
(k) without limiting the foregoing clauses (a) through (j), and
in addition thereto, (x) the Trustee shall not exercise any right under the
Credit Agreement without giving the Lessee at least ten (10) Business Days'
prior written notice (or such shorter period as may be required but in no case
less than three (3) Business Days) and, following such notice, the Trustee shall
take such action, or forbear from taking such action, as the Lessee shall direct
and (y) the Lessee shall have the right to exercise any other right of the
Trustee under the Credit Agreement upon not less than two (2) Business Days'
prior written notice from the Lessee to the Trustee. Notwithstanding the
foregoing, the Investor shall retain the exclusive right to direct the Trustee
with respect to the exercise of the Excepted Rights.
<PAGE> 38
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SECTION 11. TRANSFER OF INTEREST
11.1 Restrictions on Transfer. (a) The Investor may not assign,
convey or otherwise transfer any of its right, title or interest in or to the
Trust Estate or the Trust Agreement without the consent of the Agent and
provided no Event of Default shall have occurred and be continuing at the time
of such assignment, conveyance or transfer, the Lessee, which consent shall not
be unreasonably withheld or delayed. Any transfer by the Investor as above
provided, shall be effected pursuant to an agreement in form and substance
reasonably satisfactory to the Agent, the Investor, the Trust Company, the
Lessee and their respective counsel.
(b) Notwithstanding the provisions of Section 11.1(a) to the
contrary, the Investor may at any time sell to an Affiliate or to any Lender or
any Affiliate of any Lender participating interests in the economic interest
held by the Investor in the Trust Estate or the Trust Agreement, provided that
the Investor's obligations under this Agreement and the other Operative
Agreements to the other parties hereto and thereto shall remain unchanged, the
Investor shall remain solely responsible for the performance thereof and the
Agent, the Lessee and the other parties to the Operative Agreements shall
continue to deal solely and directly with the Investor in connection with the
Investor's rights and obligations under this Agreement and the other Operative
Agreements.
11.2 Effect of Transfer. From and after any transfer effected in
accordance with this Section 11, the transferor shall be released, to the extent
of such transfer, from its liability hereunder and under the other documents to
which it is a party in respect of obligations to be performed on or after the
date of such transfer; provided, however, that any transferor Investor shall
remain liable under the Trust Agreement to the extent that the transferee
Investor shall not have assumed the obligations of the transferor Investor
thereunder. Upon any transfer by the Trustee or an Investor as above provided,
any such transferee shall assume the obligations of the Trustee, and the Lessor
or Investor, as the case may be, and shall be deemed the "Trustee", "Lessor" or
"Investor", as the case may be, for all purposes of such documents and each
reference herein to the transferor shall thereafter be deemed a reference to
such transferee for all purposes, except as provided in the preceding sentence.
Notwithstanding any transfer of all or a portion of the transferor's interest as
provided in this Section 11, the transferor shall be entitled to all benefits
accrued and all rights vested prior to such transfer including rights to
indemnification under any such document.
SECTION 12. INDEMNIFICATION
12.1 General Indemnity. (a) The Lessee, whether or not any of the
transactions contemplated hereby shall be consummated, hereby assumes liability
for and agrees to defend,
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indemnify and hold harmless each Indemnified Person on an After Tax Basis from
and against any Claims which may be imposed on, incurred by or asserted against
an Indemnified Person in any way relating to or arising or alleged to arise out
of (i) the financing, refinancing, purchase, acceptance, rejection, ownership,
design, construction, delivery, acceptance, nondelivery, leasing, subleasing,
possession, use, operation, repair, modification, transportation, condition,
sale, return, repossession (whether by summary proceedings or otherwise), or any
other disposition of the Property or any part thereof; (ii) any latent or other
defects in the Property whether or not discoverable by an Indemnified Person or
the Lessee; (iii) a violation of Hazardous Materials Laws, Environmental Claims
or other loss of or damage relating to the Property; (iv) the Operative
Agreements, or any transaction contemplated thereby; (v) any breach by the
Lessee of any of its representations or warranties under the Operative
Agreements or failure by the Lessee to perform or observe any covenant or
agreement to be performed by it under any of the Operative Agreements; and (vi)
personal injury, death or property damage relating to the Property, including
Claims based on strict liability in tort; but in any event excluding (v) Claims
resulting from Lessor Liens which the Lessor is responsible for discharging
under the Operative Agreement, (w) Claims to the extent such Claims arise solely
from legal proceedings commenced against an Indemnified Person by a Participant
or assignee for breach or alleged breach by such Indemnified Person of any
agreement entered into in connection with the participation in or assignment of
any Loan or the Trust Estate, and in any event, none of the costs or expenses of
the transaction by which such participation or assignment is made, (x) Claims to
the extent such Claims arise solely out of the gross negligence or willful
misconduct of such Indemnified Person, (y) Claims to the extent such Claims are
attributable to events occurring after the expiration of the Term and after the
Lessee's discharge of all its obligations under the Lease or (z) any Taxes
including any Claim (or any portion of a Claim) made upon an Indemnified Person
by a third party that at its origin is based upon a Tax (other than amounts
necessary to make any payments hereunder on an After Tax Basis, where the Lessee
is otherwise specifically required to make such payments on an After Tax Basis).
The Lessee shall be entitled to control, and shall assume full responsibility
for the defense of any Claim hereby indemnified against; provided, however, that
the Lessee shall not be entitled to assume and control the defense of any such
Claim, and any Indemnified Person named in such Claim, may retain separate
counsel at the expense of the Lessee in the event and to the extent that (A) in
the reasonable opinion of such Indemnified Person (x) such action, suit or
proceeding involves any risk of imposition of criminal liability or will involve
a risk of the sale, forfeiture or loss of, or the creation of any lien (other
than a Permitted Lien) on the Property or any part thereof unless, in the case
of civil liability, the Lessee shall have posted a bond or other security
satisfactory to the relevant Indemnified Person in respect to such risk or (y)
the control of such action, suit or proceeding would involve an actual or
potential conflict of interest, (B) such proceeding involves claims not fully
indemnified by the Lessee which the Lessee and the Indemnified Person have been
unable to sever from the indemnified claim(s), or (C) a Lease Event of Default
has occurred and is continuing. The Indemnified Person will join in the Lessee's
efforts to sever such action if applicable. The
<PAGE> 40
36
Indemnified Person may participate in a reasonable manner at its own expense and
with its own counsel in any proceeding conducted by the Lessee in accordance
with the foregoing. The Lessee shall not enter into any settlement or other
compromise with respect to any claim which is entitled to be indemnified under
this Section 12.1 without the prior written consent of the Indemnified Person,
which consent shall not be unreasonably withheld in the case of a money
settlement not involving an admission of liability of such Indemnified Person.
Each Indemnified Person shall, at the expense of the Lessee,
supply the Lessee with such information and documents reasonably requested by
the Lessee as are necessary or advisable for the Lessee to defend in any action,
suit or proceeding to the extent permitted by Section 12.1. Unless a Lease Event
of Default shall have occurred and be continuing, no Indemnified Person shall
enter into any settlement or other compromise with respect to any Claim which is
entitled to be indemnified under Section 12.1 without the prior written consent
of the Lessee, which consent shall not be unreasonably withheld, unless such
Indemnified Person waives its right to be indemnified under Section 12.1 with
respect to such Claim. The Lessee and each Indemnified Person agree to give each
other prompt written notice of any Claim hereby indemnified against but the
giving of any such notice by an Indemnified Person shall not be a condition to
the Lessee's obligations under this Section 12.1, except to the extent failure
to give such notice materially prejudices Lessee's rights hereunder. After an
Indemnified Person has been fully indemnified for a Claim pursuant to this
Section 12.1, and so long as no Event of Default under the Lease shall have
occurred and be continuing, the Lessee shall be subrogated to any right of such
Indemnified Person without further action by such Indemnified Person with
respect to such Claim and such Indemnified Person shall execute such instruments
of assignment and conveyance, evidence of claims and payment and such other
documents, instruments and agreements as may be necessary to preserve any such
claims and otherwise cooperate with the Lessee and give such further assurances
as are necessary or advisable to enable the Lessee vigorously to pursue such
claims.
(b) Notwithstanding anything to the contrary herein, during the
Construction Period, the Lessee shall not be obligated under any of the
Operative Agreements to indemnify any Person with respect to any costs arising
from third-party damage claims other than those third-party claims caused by or
resulting from the actions or failure to act by Lessee, or any of its agents,
employees, consultants, contractors or subcontractors (or anyone else under the
control of Lessee or such Persons), while Lessee is in possession or control of
the Property and those Claims imposed, incurred or asserted pursuant to (i)
clause (iii) of Section 12.1(a), (ii) a breach of the representations made by
Lessee pursuant to Section 7.4(m), or (iii) a violation by Lessee of the
covenants contained in Section 9.1 of the Lease and Section 2.7(a) of the Agency
Agreement with respect to Hazardous Materials Laws or Section 9.2 of the Lease.
<PAGE> 41
37
(c) Without limiting the express rights of the Indemnified
Persons under this Section 12.1, this Section 12.1 shall be construed as an
indemnity only and not a guaranty of the residual value of the Property or as a
guarantee of the Loans or Investor Contribution.
12.2 General Tax Indemnity. (a) The Lessee shall pay and assume
liability for, and does hereby agree to indemnify, protect and defend the
Property and all Tax Indemnitees, and hold them harmless against, all
Impositions on an After Tax Basis.
(b) Provided that no Default or Event of Default has occurred and
is continuing, if any Tax Indemnitee obtains a refund or a reduction in a
liability (but only if such reduction relates to a Tax not otherwise
indemnifiable hereunder and has not been taken into account in determining the
amount of a payment on an After Tax Basis) as a result of any Imposition paid or
reimbursed by the Lessee (in whole or in part), such Tax Indemnitee shall
promptly pay to the Lessee the lesser of (x) the amount of such refund or
reduction in liability and (y) the amount previously so paid or advanced by the
Lessee, in each case net of reasonable expenses not already paid or reimbursed
by the Lessee.
(c)(i) Subject to the terms of Section 12.2(g), the Lessee shall
pay or cause to be paid all Impositions directly to the taxing authorities where
feasible and otherwise to the Tax Indemnitee, as appropriate, and the Lessee
shall at its own expense, upon such Tax Indemnitee's reasonable request, furnish
to such Tax Indemnitee copies of official receipts or other satisfactory proof
evidencing such payment.
(ii) In the case of Impositions for which no contest is conducted
pursuant to Section 12.2(g) and which the Lessee pays directly to the taxing
authorities, the Lessee shall pay such Impositions prior to the latest time
permitted by the relevant taxing authority for timely payment. In the case of
Impositions for which the Lessee reimburses a Tax Indemnitee, the Lessee shall
do so within twenty (20) days after receipt by the Lessee of demand by such Tax
Indemnitee describing in reasonable detail the nature of the Imposition and the
basis for the demand (including the computation of the amount payable), but in
no event shall the Lessee be required to pay such reimbursement prior to thirty
(30) days before the latest time permitted by the relevant taxing authority for
timely payment. In the case of Impositions for which a contest is conducted
pursuant to Section 12.2(g), the Lessee shall pay such Impositions or reimburse
such Tax Indemnitee for such Impositions, to the extent not previously paid or
reimbursed pursuant to subsection (a), prior to the latest time permitted by the
relevant taxing authority for timely payment after conclusion of all contests
under Section 12.2(g).
(iii)Impositions imposed with respect to the Property for a
billing period during which the Lease expires or terminates (unless the Lessee
has exercised the Purchase Option with respect to the Property) shall be
adjusted and prorated on a daily basis between the Lessee and
<PAGE> 42
38
the Lessor, whether or not such Imposition is imposed before or after such
expiration or termination and each party shall pay or reimburse the other for
each party's pro rata share thereof.
(iv) At the Lessee's request, the amount of any indemnification
payment by the Lessee pursuant to subsection (a) shall be verified and certified
by an independent public accounting firm mutually acceptable to the Lessee and
the Tax Indemnitee. The fees and expenses of such independent public accounting
firm shall (i) in the case of the Trust Company or the Trustee, be paid by the
Lessee, and (ii) in the case of all other Tax Indemnitees, be paid by the Lessee
unless such verification shall result in an adjustment in the Lessee's favor of
10% or more of the payment as computed by such Tax Indemnitee, in which case
such fee shall be paid by such Tax Indemnitee.
(d)(i) The Lessee shall be responsible for preparing and filing
any real and personal property or ad valorem tax returns in respect of the
Property. In case any other report or tax return shall be required to be made
with respect to any obligations of the Lessee under or arising out of subsection
(a) and of which the Lessee has knowledge, the Lessee, at its sole cost and
expense, shall notify the relevant Tax Indemnitee of such requirement and
(except if such Tax Indemnitee notifies the Lessee that such Person intends to
file such report or return) (A) to the extent required or permitted by and
consistent with Legal Requirements, make and file in its own name such return,
statement or report; and (B) in the case of any other such return, statement or
report required to be made in the name of such Tax Indemnitee, advise such Tax
Indemnitee of such fact and prepare such return, statement or report for filing
by such Tax Indemnitee or, where such return, statement or report shall be
required to reflect items in addition to any obligations of the Lessee under or
arising out of subsection (a), provide such Tax Indemnitee at the Lessee's
expense with information sufficient to permit such return, statement or report
to be properly made with respect to any obligations of the Lessee under or
arising out of subsection (a). Such Tax Indemnitee shall, upon the Lessee's
request and at the Lessee's expense, provide any data maintained by such Tax
Indemnitee (and not otherwise within the control of the Lessee) with respect to
the Property which the Lessee may reasonably require to prepare any required tax
returns or reports;
(e) If as a result of the payment or reimbursement by the Lessee
of any expenses of a Tax Indemnitee or the payment of any Transaction Expenses
incurred in connection with the transactions contemplated by the Operative
Agreements, any Tax Indemnity, shall suffer a net increase in any federal, state
or local income tax liability, the Lessee shall indemnify such Tax Indemnities
(without duplication of any indemnification required by subsection (a)) on an
After Tax Basis for the amount of such increase. The calculation of any such net
increase shall take into account any current or future tax savings realized or
reasonably expected to be realized by such Tax Indemnities, in respect thereof,
as well as any interest, penalties and additions to tax payable by such Tax
Indemnities, in respect thereof;
<PAGE> 43
39
(f) As between the Lessee and the Lessor, the Lessee shall be
responsible for, and the Lessee shall indemnify and hold harmless the Trust
Company in its individual capacity and as the Trustee (without duplication of
any indemnification required by subsection (a)) on an After Tax Basis against,
any obligation for United States withholding taxes imposed in respect of the
interest payable on the Notes to the extent, but only to the extent, Lessor has
actually paid funds to a taxing authority with respect to such withholding taxes
(and, if the Lessor receives a demand for such payment from any taxing
authority, the Lessee shall discharge such demand on behalf of the Lessor);
(g)(i) If a written claim is made against any Tax Indemnitee or
if any proceeding shall be commenced against such Tax Indemnitee (including a
written notice of such proceeding), for any Impositions, such Tax Indemnitee
shall promptly notify Lessee in writing and shall not take action with respect
to such claim or proceeding without the consent of Lessee for thirty (30) days
after the receipt of such notice by Lessee; provided, that, in the case of any
such claim or proceeding, if action shall be required by law or regulation to be
taken prior to the end of such 30-day period, such Tax Indemnitee shall, in such
notice to Lessee, inform Lessee, and no action shall be taken with respect to
such claim or proceeding without the consent of Lessee before the end of such
shorter period; provided, further, that the failure of such Tax Indemnitee to
give the notices referred to this sentence shall not diminish Lessee's
obligation hereunder except to the extent such failure precludes Lessee from
contesting all or part of such claim.
(ii) If, within thirty (30) days of receipt of such notice from
the Tax Indemnitee (or such shorter period as the Tax Indemnitee has noticed
Lessee is required by law or regulation for the Tax Indemnitee to commence such
contest), Lessee shall request in writing that such Tax Indemnitee contest such
Imposition, the Tax Indemnitee shall, at the expense of Lessee, in good faith
conduct and control such contest (including, without limitation, by pursuit of
appeals) relating to the validity, applicability or amount of such impositions
(provided, however, that (A) if such contest can be pursued independently from
any other proceeding involving a tax liability of such Tax Indemnitee, the Tax
Indemnitee, at Lessee's request, shall allow Lessee to conduct and control such
contest and (B) in the case of any contest that Lessee is not entitled to
control, the Tax Indemnitee may request Lessee to conduct and control such
contest if possible or permissible under applicable law or regulation) by, in
the sole discretion of the Person conducting and controlling such contest, (1)
resisting payment thereof, (2) not paying the same except under protest, if
protest is necessary and proper, (3) if the payment be made, using reasonable
efforts to obtain a refund thereof in appropriate administrative and judicial
proceedings, or (4) taking such other action as is reasonably requested by
Lessee from time to time.
<PAGE> 44
40
(iii) The party controlling any contest shall consult in good
faith with the non-controlling party and shall keep the non-controlling party
reasonably informed as to the conduct of such contest; provided that all
decisions ultimately shall be made in the sole discretion of the controlling
party. The parties agree that a Tax Indemnitee may at any time decline to take
further action with respect to the contest of any Imposition and may settle such
contest if such Tax Indemnitee shall waive its rights to any indemnity from
Lessee that otherwise would be payable in respect of such claim (and any future
claim by any taxing authority with respect to other taxable periods that are
based, in whole or in part, upon the resolution of such claim) and shall pay to
Lessee any amount previously paid or advanced by Lessee pursuant to this Section
12.2 by way of indemnification or advance for the payment of an Imposition, and
no other then future liability of the Lessee is likely with respect to such
Imposition.
(iv) Notwithstanding the foregoing provisions of this Section
12.2, a Tax Indemnitee shall not be required to take any action and Lessee shall
not be permitted to contest any Impositions in its own name or that of the Tax
Indemnitee unless (A) Lessee shall have agreed to pay and shall pay to such Tax
Indemnitee on demand and on an After Tax Basis all reasonable costs, losses and
expenses that such Tax Indemnitee actually incurs in connection with contesting
such Impositions, including, without limitation, all reasonable legal,
accounting and investigatory fees and disbursements, (B) in the case of a claim
that must be pursued in the name of an Tax Indemnitee (or an Affiliate thereof),
the amount of the potential indemnity (taking into account all similar or
logically related claims that have been or could be raised in any audit
involving such Tax Indemnitee for which Lessee may be liable to pay an indemnity
under this Section 12.2) is more than $100,000 and less than $1,000,000, unless
the pursuit of such contest is in a manner mutually satisfactory to the Tax
Indemnitee and the Lessee, but in no event shall such right prevent the Lessee
from prosecuting or continuing such contest, (C) the Tax Indemnitee shall have
reasonably determined that the action to be taken will not result in any
material danger of sale, forfeiture or loss of the Property, or any part thereof
or interest therein, will not interfere with the payment of Rent, and will not
result in risk of criminal liability, (D) if such contest shall involve the
payment of the Imposition prior to the contest, Lessee shall provide to the Tax
Indemnitee an interest-free advance in an amount equal to the Imposition that
the Tax Indemnitee is required to pay (with no additional net after-tax cost to
such Tax Indemnitee), (E) in the case of a claim that must be pursued in the
name of an Tax Indemnitee (or an Affiliate thereof), Lessee shall have provided
to such Tax Indemnitee an opinion of independent tax counsel selected by the
Lessee and reasonably satisfactory to such Tax Indemnitee stating that a
reasonable basis exists to contest such claim (or, in the case of an appeal of
an adverse determination, an opinion of such counsel to the effect that there is
substantial authority for the position asserted in such appeal) and (F) no Event
of Default shall have occurred and be continuing. In no event shall a Tax
Indemnitee be required to appeal an adverse judicial determination to the United
State Supreme Court. In addition, a Tax Indemnitee shall not be required to
contest any claim in its name (or that of an Affiliate) if the subject matter
thereof
<PAGE> 45
41
shall be of a continuing nature and shall have previously been decided adversely
by a court of competent jurisdiction pursuant to the contest provisions of this
Section 12.2, unless there shall have been a change in law (or interpretation
thereof) and the Tax Indemnitee shall have received, at the Lessee's expense, an
opinion of independent tax counsel selected by the Tax Indemnitee and reasonably
acceptable to the Lessee stating that as a result of such change in law (or
interpretation thereof), it is more likely than not that the Tax Indemnitee will
prevail in such contest.
(h) At the Lessee's request, the amount of any indemnity payment
by the Lessee or any payment by a Tax Indemnitee to the Lessee pursuant to this
Section 12.2 shall be verified and certified by an independent public accounting
firm mutually acceptable to the Lessee and such Tax Indemnitee. The costs of
such verification shall be borne by the Lessee unless such verification shall
result in an adjustment in the Lessee's favor of 10 percent (10%) of the payment
as computed by such Tax Indemnitee, in which case such fee shall be paid by such
Tax Indemnitee. In no event shall the Lessee have the right to review such Tax
Indemnitee's tax returns or receive any other confidential information from such
Tax Indemnitee in connection with such verification. Any information provided to
such accountants by any Person shall be and remain the exclusive property of
such Person and shall be deemed by the parties to be (and the accountants will
confirm in writing that they will treat such information as) the private,
proprietary and confidential property of such Person, and no Person other than
such Person and the accountants shall be entitled thereto and all such materials
shall be returned to such Person. Such accounting firm shall be requested to
make its determination within thirty (30) days of the Lessee's request for
verifications and the computations of the accounting firm shall be final,
binding and conclusive upon the Lessee and such Tax Indemnitee. The parties
agree that the sole responsibility of the independent public accounting firm
shall be to verify the amount of a payment pursuant to the Lease and that
matters of interpretation of the Lease are not within the scope of the
independent accounting firm's responsibilities.
SECTION 13. MISCELLANEOUS
13.1 Survival of Agreements. The representations, warranties,
covenants, indemnities and agreements of the parties provided for in the
Operative Agreements, and the parties' obligations under any and all thereof,
shall survive the execution and delivery of this Agreement, the transfer of the
Property to the Trustee, the construction of any Improvements, any disposition
of any interest of the Trustee in the Property or the Improvements or any
interest of the Investor in the Trustee, the payment of the Notes and any
disposition thereof and shall be and continue in effect notwithstanding any
investigation made by any party and the fact that any party may waive compliance
with any of the other terms, provisions or conditions of any of the Operative
Agreements. Except as otherwise expressly set forth herein or in other Operative
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42
Agreements, the indemnities of the parties provided for in the Operative
Agreements shall survive the expiration or termination of any thereof.
13.2 No Broker, etc. Each of the parties hereto represents to the
others that it has not retained or employed any broker, finder or financial
adviser to act on its behalf in connection with this Agreement, nor has it
authorized any broker, finder or financial adviser retained or employed by any
other Person so to act, except for the Arranger, the fees of which shall be paid
by the Lessee. Any party who is in breach of this representation shall indemnify
and hold the other parties harmless from and against any liability arising out
of such breach of this representation.
13.3 Notices. Unless otherwise specifically provided herein, all
notices, consents, directions, approvals, instructions, requests and other
communications required or permitted by the terms hereof to be given to any
Person shall be given in writing by nationally recognized courier service and
any such notice shall become effective five Business Days after being deposited
in the mails, certified or registered with appropriate postage prepaid or one
Business Day after delivery to a nationally recognized courier service
specifying overnight delivery and shall be directed to the address of such
Person as indicated:
If to the Lessee, to it at:
Safeskin Real Estate Incorporated
12671 High Bluff Drive
San Diego, California 92130
Attention: William R. LaRue, Vice President-Treasurer
Telecopy No.: (619) 350-2380
If to the Trustee, to it at:
Union Bank of California, N.A.
Corporate Trust Division
120 South San Pedro Street, Suite 400
Los Angeles, California 90012
Attention: Vivian Savedra
Telecopy No.: (213) 972-5694
If to the Investor, to it at:
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43
Bankers Commercial Corporation
445 South Figueroa Street
Los Angeles, California 90071
Attention: Joni LeSage
Telecopy No.: (213) 236-7579
If to the Agent, to it at:
Union Bank of California, N.A.
San Diego Commercial Banking Office
530 "B" Street - 4th Floor
San Diego, California 92101-4407
Attention: Douglas S. Lambell
Telecopy No.: (619) 230-3766
From time to time any party may designate a new address for purposes of notice
hereunder by notice to each of the other parties hereto.
13.4 Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
13.5 Amendments and Termination. Neither this Agreement nor any
of the terms hereof may be terminated, amended, supplemented, waived or modified
except by an instrument in writing signed by the party against which the
enforcement of the termination, amendment, supplement, waiver or modification
shall be sought. This Agreement may be terminated by an agreement signed in
writing by the Trustee, the Investor, the Lessee, the Agent and the Lenders.
Notwithstanding the foregoing provisions to the contrary, in the case of the
Lenders, the action of the Required Lenders shall control, except as otherwise
provided in Section 9.1 of the Credit Agreement.
13.6 Headings, etc. The Table of Contents and headings of the
various Sections and Subsections of this Agreement are for convenience of
reference only and shall not modify, define, expand or limit any of the terms or
provisions hereof.
13.7 Parties in Interest. Except as expressly provided herein,
none of the provisions of this Agreement are intended for the benefit of any
Person except the parties hereto.
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44
13.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
13.9 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
13.10 Liability Limited. The Lessee and the Investor each
acknowledge and agree that the Trust Company is (except as otherwise expressly
provided herein or therein) entering into this Agreement and the other Operative
Agreements to which it is a party (other than the Trust Agreement), solely in
its capacity as trustee under the Trust Agreement and not in its individual
capacity and that Trust Company shall not be liable or accountable under any
circumstances whatsoever in its individual capacity for or on account of any
statements, representations, warranties, covenants or obligations stated to be
those of the Trustee, except for its own gross negligence or willful misconduct
and as otherwise expressly provided herein or in the other Operative Agreements.
13.11 Rights of Lessee. Notwithstanding any provision of the
Operative Agreements, if at any time all obligations (i) of the Trustee under
the Credit Agreement and the Security Documents and (ii) of the Lessee under the
Operative Agreements have in each case been satisfied or discharged in full,
then the Lessee shall be entitled to (a) terminate the Lease (to the extent not
previously terminated) and (b) receive all amounts then held under the Operative
Agreements and all proceeds with respect to the Properties. Upon the fulfillment
of the obligations contained in clauses (i) and (ii) above, the Lessor shall
transfer to the Lessee all of its right, title and interest in and to the
Properties (to the extent not previously transferred to the Lessee in accordance
with the Lease) and any amounts or proceeds referred to in the foregoing clause
(b) shall be paid over to the Lessee.
13.12 Further Assurances. The parties hereto shall promptly cause
to be taken, executed, acknowledged or delivered, at the sole expense of the
Lessee, all such further acts, conveyances, documents and assurances as the
other parties may from time to time reasonably request in order to carry out and
effectuate the intent and purposes of this Agreement, the other Operative
Agreements and the transactions contemplated hereby and thereby (including,
without limitation, the preparation, execution and filing of any and all Uniform
Commercial Code financing statements and other filings or registrations which
the parties hereto may from time to time request to be filed or effected). The
Lessee, at its own expense, shall take such action as
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45
may be reasonably requested in order to maintain and protect all security
interests provided for hereunder or under any other Operative Agreement.
13.13 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
13.14 No Representation or Warranty. Nothing contained herein, in
any other Operative Agreement or in any other materials delivered to the Lessee
in connection with the transactions contemplated hereby or thereby shall be
deemed a representation or warranty by the Agent or the Arranger or any of their
Affiliates as to the proper accounting treatment or tax treatment that should be
afforded to the Lease and the Lessor's ownership of the Properties and the Agent
expressly disclaims any representation or warranty with respect to such matters.
13.15 Highest Lawful Rate. It is the intention of the parties
hereto to conform strictly to applicable usury laws and, anything herein to the
contrary notwithstanding, the obligations of the Lessee, the Lessor or the
Investor or any other party under any Operative Agreement, shall be subject to
the limitation that payments of interest or of other amounts constituting
interest shall not be required to the extent that receipt thereof would be in
excess of the Highest Lawful Rate, or otherwise contrary to provisions of law
applicable to the recipient limiting rates of interest which may be charged or
collected by the recipient. Accordingly, if the transactions or the amount paid
or otherwise agreed to be paid for the use, forbearance or detention of money
under this Agreement, the Lease and any other Operative Agreement would exceed
the Highest Lawful Rate or otherwise be usurious with respect to the recipient
of any such amount, then, in that event, notwithstanding anything to the
contrary in this Agreement, the Lease or any other Operative Agreement, it is
agreed as follows as to the recipient of any such amount:
(a) the provisions of this Section 13.15 shall govern and control
over any other provision in this Agreement, the Lease and any other Operative
Agreement and each provision set forth therein is hereby so limited;
(b) the aggregate of all consideration which constitutes interest
that is contracted for, charged or received under this Agreement, the Lease, or
any other Operative Agreement shall under no circumstances exceed the maximum
amount of interest allowed by any Requirement of Law (such maximum lawful
interest rate, if any, with respect to such Lender herein called the "Highest
Lawful Rate"), and all amounts owed under this Agreement, the Lease and any
other Operative Agreement shall be held subject to reduction and (i) the amount
of interest which would otherwise be payable to the recipient hereunder and
under the Lease, the Loan Documents and any other Operative Agreement, shall be
automatically reduced to the amount allowed under any Requirement of Law and
(ii) any unearned interest paid in excess of
<PAGE> 50
46
the Highest Lawful Rate shall be credited to the payor by the recipient (or, if
such consideration shall have been paid in full, refunded to the payee);
(c) all sums paid, or agreed to be paid for the use, forbearance
and detention of the money under this Agreement, the Lease, or any other
Operative Agreement shall, to the extent permitted by any Requirement of Law, be
amortized, prorated, allocated and spread throughout the full term of such
indebtedness until payment in full so that the actual rate of interest is
uniform throughout the full term thereof; and
(d) if at any time the interest, together with any other fees,
late charges and other sums payable pursuant to or in connection with this
Agreement, the Lease, and any other Operative Agreement executed in connection
herewith or therewith, and deemed interest under any Requirement of Law exceeds
that amount which would have accrued at the Highest Lawful Rate, the amount of
interest and any such fees, charges and sums to accrue to the recipient of such
interest, fees, charges and sums pursuant to the Operative Agreement shall be
limited, notwithstanding anything to the contrary in the Operative Agreement to
that amount which would have accrued at the Highest Lawful Rate for the
recipient, but any subsequent reductions, as applicable, shall not reduce the
interest to accrue pursuant to the Operative Agreement below the recipient's
Highest Lawful Rate until the total amount of interest payable to the recipient
(including all consideration which constitutes interest) equals the amount of
interest which would have been payable to the recipient (including all
consideration which constitutes interest), plus the amount of fees which would
have been received but for the effect of this Section 3.15.
13.16 Ownership of the Property. (a) The parties hereto intend
that (i) for financial accounting purposes with respect to the Lessee (A) the
Lease will be treated as an "operating lease" pursuant to Statement of Financial
Accounting Standards (SFAS) No. 13, as amended, (B) the Lessor will be treated
as the beneficial owner and lessor of the Property and (C) the Lessee will be
treated as the lessee of the Property, but (ii) for federal, state and local
income tax and all other purposes (A) the Lease will be treated as a financing
arrangement, (B) the Lenders will be treated as senior lenders making loans to
the Lessee in an amount equal to the Loans, which Loans will be secured by the
Property, (C) the Lessor will be treated as a subordinated lender making a loan
to the Lessee in an amount equal to the Investor Contribution, which loan is
secured by the Property, and (D) the Lessee will be treated as the beneficial
owner of the Property and will be entitled to all tax benefits ordinarily
available to an owner of property like the Property for such tax purposes.
(b) The parties hereto further intend and agree that, for the
purpose of securing the Lessee's obligations for the repayment of the
above-described loans, (i) the Lease shall also be deemed to be a security
agreement and financing statement within the meaning of Article 9 of the Uniform
Commercial Code and a real property mortgage or deed of trust, as applicable;
<PAGE> 51
47
(ii) the conveyance provided for in Section 2 of the Lease shall be deemed a
grant of a security interest in and a mortgage lien on the Lessee's right, title
and interest in the Property (including the right to exercise all remedies as
are contained in the Mortgage and Memorandum of Lease upon the occurrence of a
Lease Event of Default) and all proceeds of the conversion, voluntary or
involuntary, of the foregoing into cash, investments, securities or other
property, whether in the form of cash, investments, securities or other
property, for the benefit of the Lessor to secure the Lessee's payment of all
amounts owed by the Lessee under the Lease and the other Operative Agreements
and the Lessor holds title to the Property so as to create and grant a first
lien and prior security interest in the Property (A) pursuant to the Lease for
the benefit of the Agent under the Assignment of Lease, to secure to the Agent
the obligations of the Lessee under the Lease and (B) pursuant to the Mortgage
to secure to the Agent the obligations of the Lessor under the Mortgage and the
Notes; (iii) the possession by the Lessor or any of its agents of notes and such
other items of property as constitute instruments, money, negotiable documents
or chattel paper shall be deemed to be "possession by the secured party" for
purposes of perfecting the security interest pursuant to Section 9-305 of the
Uniform Commercial Code; and (iv) notifications to Persons holding the Property,
and acknowledgements, receipts or confirmations from financial intermediaries,
bankers or agents (as applicable) of the Lessee shall be deemed to have been
given for the purpose of perfecting such security interest under applicable law.
The parties hereto shall, to the extent consistent with the Lease, take such
actions as may be necessary to ensure that, if the Lease were deemed to create a
security interest in the Property in accordance with Section 7.1 of the Lease,
such security interest would be deemed to be a perfected security interest of
first priority under applicable law and will be maintained as such throughout
the Basic Term. Nevertheless, the Lessee acknowledges and agrees that none of
Lessor, Investor, the Trust Company, Agent, or any Lender has provided or will
provide tax, accounting or legal advice to Lessee regarding the Lease, the
Operative Agreements or the transactions contemplated hereby and thereby, or
made any representations or warranties concerning the tax, accounting or legal
characteristics of the Operative Agreements, and that the Lessee has obtained
and relied upon such tax, accounting and legal advice concerning the Operative
Agreements as it deems appropriate.
(c) The parties hereto further intend and agree that in the event
of any insolvency or receivership proceedings or a petition under the United
States bankruptcy laws or any other applicable insolvency laws or statute of the
United States of America or any State or Commonwealth thereof affecting the
Lessee or the Lessor, the transactions evidenced by the Lease shall be regarded
as loans made by an unrelated third party lender to the Lessee.
13.17 Confidentiality. Each Lender, the Agent, the Lessor and the
Investor agree to hold any confidential information that it may receive from the
Company or its Subsidiaries pursuant to this Agreement or the other Operative
Agreements in confidence, except for disclosure: (a) to other Lenders or
Affiliates of a Lender or an Investor; (b) to legal counsel and
<PAGE> 52
48
accountants for the Company or its Subsidiaries or any Lender, the Lessor or the
Investor; (c) to other professional advisors to the Company or its Subsidiaries
or any Lender, the Lessor or the Investor, provided that the recipient has
accepted such information subject to a confidentiality agreement substantially
similar to this Section 13.17; (d) to regulatory officials having jurisdiction
over that Lender, the Lessor or the Investor; (e) as required by Law or legal
process, provided that each Lender, the Lessor or the Investor agrees to notify
the Company of any such disclosures unless prohibited by applicable Laws, or in
connection with any legal proceeding to which that Lender, the Lessor or the
Investor and the Company or its Subsidiaries are adverse parties; and (f) to
another financial institution in connection with a disposition or proposed
disposition to that financial institution of all or part of that Lender's
interests hereunder and under the Credit Documents or a participation interest
in its Notes, provided that the recipient has accepted such information subject
to a confidentiality agreement substantially similar to this Section 13.17. For
purposes of the foregoing, "confidential information" shall mean any information
respecting the Company or its Subsidiaries reasonably considered by the Company
to be confidential, other than (i) information previously filed with any
Governmental Authority and available to the public, (ii) information previously
published in any public medium from a source other than, directly or indirectly,
that Lender, the Lessor or the Investor and (iii) information previously
disclosed by the Company to any Person not associated with the Company which
does not owe a professional duty of confidentiality to the Company or which has
not executed an appropriate confidentiality agreement with the Company. Nothing
in this Section shall be construed to create or give rise to any fiduciary duty
on the part of the Agent, the Lenders, the Lessor or the Investor to the Company
or its Subsidiaries.
<PAGE> 53
49
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
SAFESKIN REAL ESTATE INCORPORATED
By: ____________________________________
Name:
Title:
UNION BANK OF CALIFORNIA, N.A., not in its
individual capacity except as expressly
stated herein, but solely as Trustee
By: ____________________________________
Name: Vivian R. Savedra
Title: Assistant Vice President
BANKERS COMMERCIAL CORPORATION, as
Investor
By: ____________________________________
Name: Lance Markowitz
Title: President
UNION BANK OF CALIFORNIA, N.A., as Agent
By: ____________________________________
Name: Douglas S. Lambell
Title: Vice President
<PAGE> 54
50
COMERICA BANK, as a Lender
By: ____________________________________
Name: Emmanuel M. Skevofilax
Title: Assistant Vice President
THE FIRST NATIONAL BANK OF CHICAGO,
as a Lender
By: ____________________________________
Name: Anthony B. Mathews
Title: Vice President
SANWA BANK CALIFORNIA, as a Lender
By: ____________________________________
Name: Jacob A. Lenhof
Title: Vice President
UNION BANK OF CALIFORNIA, N.A., as a
Lender
By: ____________________________________
Name: Bruce A. Breslau
Title: Vice President
U.S. BANK, NATIONAL ASSOCIATION, as a
Lender
By: ____________________________________
Name: Janet E. Jordon
Title: Vice President
<PAGE> 55
51
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as a Lender
By: ____________________________________
Name: Michael Sullivan
Title: Vice President
<PAGE> 56
FIRST AMENDMENT TO PARTICIPATION AGREEMENT
FIRST AMENDMENT, dated as of [*] March 31, 1999 (this
"Amendment"), to the Participation Agreement, dated as of March 5, 1999 (the
"Participation Agreement"), among SAFESKIN REAL ESTATE INCORPORATED, a Delaware
corporation (the "Lessee"); UNION BANK OF CALIFORNIA, N.A., a national banking
association, not in its individual capacity, but solely as Trustee (the
"Trustee" or the "Lessor"); UNION BANK OF CALIFORNIA, N.A., a national banking
association, as agent (in such capacity, the "Agent") for the Lenders; BANKERS
COMMERCIAL CORPORATION, a California corporation, as investor (the "Investor");
and each of the financial institutions listed on the signature pages hereof
(each, a "Lender"; collectively, the "Lenders").
W I T N E S S E T H:
WHEREAS, the Lessee, the Lessor, the Investor, the Lenders and
the Agent are parties to the Participation Agreement;
WHEREAS, the Lessor, the Agent, the Investor and the Lenders are
willing to amend the Participation Agreement upon the terms and conditions set
forth herein;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein,
capitalized terms which are defined in Annex A to the Participation Agreement,
as amended hereby, are used herein as therein defined.
2. Amendments. The Participation Agreement is hereby
amended as follows:
(a) Annex A (Rules of Usage and Definitions). The
Rules of Usage and Definitions set forth in Annex A are hereby amended
by (i) deleting the definitions of the defined terms "Applicable
Commitment Fee Rate" and "Applicable Eurodollar Rate Margin" in their
entirety and substituting in their place the following definitions:
"Applicable Commitment Fee Rate" shall mean, for each Pricing
Period, the rate set forth below (expressed in basis points per annum)
opposite the Applicable Pricing Level for that Pricing Period:
<PAGE> 57
2
<TABLE>
<CAPTION>
Applicable
Pricing Level Commitment Fee
------------- --------------
<S> <C>
I 45
II 50
III 50
IV 62.5
V 62.5
</TABLE>
; provided, however, that upon the Agent's receipt of a Compliance
Certificate from the Company evidencing the Company's compliance as of
December 31, 1999 or any subsequent compliance testing date with each of
the financial covenants set forth in Section 6.12 through 6.21 of the
Corporate Credit Agreement, the Applicable Commitment Fee Rate shall be
as set forth below:
<TABLE>
<CAPTION>
Applicable
Pricing Level Commitment Fee
------------- --------------
<S> <C>
I 32.5
II 37.5
III 37.5
IV 50
V 50
</TABLE>
"Applicable Eurodollar Rate Margin" shall mean, for each Pricing
Period, the interest rate margin set forth below (expressed in basis
points per annum) opposite the Applicable Pricing Level for that Pricing
Period:
<TABLE>
<CAPTION>
Applicable
Pricing Level Margin
------------- ------
<S> <C>
I 162.5
II 175
III 187.5
IV 200
V 212.5
</TABLE>
; provided, however, that upon the Agent's receipt of a Compliance
Certificate from the Company evidencing the Company's compliance as of
December 31, 1999 or any subsequent compliance testing date with each of
the financial covenants set forth in Sections 6.12 through 6.21 of the
Corporate Credit Agreement, the Applicable Eurodollar Rate Margin shall
be as set forth below:
<PAGE> 58
3
<TABLE>
<CAPTION>
Applicable
Pricing Level Margin
------------- ------
<S> <C>
I 125
II 137.5
III 150
IV 162.5
V 175
</TABLE>
; and provided, further, that from and after the Completion Date and the
date on which the Senior Secured Note Obligations have been paid in
full, the Company shall have the right to cause the Applicable
Eurodollar Rate Margin on any outstanding Eurodollar Tranche of at least
$20,000,000 or a whole multiple of $10,000,000 in excess thereof to be
reduced by 75 basis points per annum (a "Margin Reduction") upon and
subject to the satisfaction of the following conditions: (a) the Company
shall execute and deliver to the Agent the Security Deposit and Pledge
Agreement, (b) the Company, as a Guarantor, shall deposit with the Agent
Additional Collateral from time to time as required so that the fair
market value of such Additional Collateral, as determined by the Agent,
shall at all times be at least 103% of the principal amount of the
Eurodollar Tranche for which such Margin Reduction is in effect and (c)
the Agent shall have a first priority perfected security interest in
such Additional Collateral.
and (ii) adding the following definition in its appropriate
alphabetical place:
"Compliance Certificate" shall have the meaning set
forth in Section 1.1 of the Corporate Credit Agreement.
(b) Section 5.2. Section 5.2 is hereby amended by adding the
following provision at the end of the section:
"Notwithstanding any provision in this Agreement or the Credit
Agreement to the contrary, unless the Company shall be in
compliance as of September 30, 1999 with each of the financial
covenants set forth in the Corporate Credit Agreement and
incorporated by reference in the Guarantee, neither the Lenders
nor the Investor shall have any obligation to make Advances to
the Lessor if after giving effect to any such Advance, the
aggregate outstanding principal amount of the Loans and Investor
Contribution would exceed $16,084,477.09 plus Advances which may
be made to pay interest on the Loans and Investor Yield."
<PAGE> 59
4
3. Direction to Trust Company. By its execution hereof, the
Investor hereby authorizes and directs Union Bank of California, N.A., not in
its individual capacity but solely as Trustee, to execute this Amendment.
4. Representations and Warranties. The Lessee hereby
confirms, reaffirms and restates the representations and warranties set forth in
the Participation Agreement. The Lessee represents and warrants that no Default
or Event of Default has occurred and is continuing.
5. Conditions to Effectiveness. The amendments provided for
herein shall become effective on the date of satisfaction of the following
conditions precedent:
(a) The Agent shall have received counterparts of this
Amendment duly executed and delivered by the Lessee, the
Lessor, the Investor, the Required Lenders and the
Guarantors; and
(b) The Agent shall have received, for the account of each
Lender which consents to the amendments contained
herein, the amendment fee referred to in Section 7.
6. Payment of Expenses. The Lessee agrees to pay or
reimburse the Agent for all of its out-of-pocket costs and expenses incurred in
connection with this Amendment, any other documents prepared in connection
herewith and the transactions contemplated hereby, including, without
limitation, the fees and disbursements of counsel to the Agent.
7. Fees. In consideration of the agreement of the Lenders
to consent to the amendments contained herein, the Lessee agrees to pay to the
Agent for the account of each Lender which so consents on or prior to April 20,
1999, an amendment fee in an amount equal to 0.25% of the amount of such
Lender's Commitment, payable on the date hereof in immediately available funds.
8. Affirmation of Guarantee. The Guarantors hereby consent
to the execution and delivery of this Amendment; agrees that all references in
the Guarantee to any Operative Agreement shall be a reference to such agreement
as amended from time to time; reaffirms its obligations under the Guarantee; and
represents and warrants that there exist no offsets, counterclaims or defenses
to its obligations under the Guarantee.
9. Reference to and Effect on the Operative Agreements;
Limited Effect. On and after the date hereof and the satisfaction of the
conditions contained in
<PAGE> 60
5
paragraph 5 of this Amendment, each reference in the Participation Agreement to
"this Agreement", "hereunder", "hereof" or words of like import referring to the
Participation Agreement, and each reference in the other Operative Agreements to
"the Participation Agreement", "thereunder", "thereof" or words of like import
referring to the Participation Agreement, shall mean and be a reference to the
Participation Agreement as amended hereby. The execution, delivery and
effectiveness of this Amendment shall not, except as expressly provided herein,
operate as a waiver of any right, power or remedy of the Lessor, the Investor,
any Lender or the Agent under any of the Operative Agreements, nor constitute a
waiver of any provisions of any of the Operative Agreements. Except as expressly
amended herein, all of the provisions and covenants of the Participation
Agreement and the other Operative Agreements are and shall continue to remain in
full force and effect in accordance with the terms thereof and are hereby in all
respects ratified and confirmed.
10. Counterparts. This Amendment may be executed by one or
more of the parties hereto in any number of separate counterparts (which may
include counterparts delivered by facsimile transmission) and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. Any executed counterpart delivered by facsimile transmission shall
be effective as for all purposes hereof.
11. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE> 61
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
SAFESKIN REAL ESTATE INCORPORATED
By:
-------------------------------------
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.,
not in its individual capacity,
but solely as Trustee
By:
-------------------------------------
Name: Vivian R. Savedra
Title: Assistant Vice President
BANKERS COMMERCIAL CORPORATION,
as Investor
By:
-------------------------------------
Name: Lance Markowitz
Title: President
UNION BANK OF CALIFORNIA, N.A., as Agent
By:
-------------------------------------
Name: Douglas S. Lambell
Title: Vice President
COMERICA BANK, as a Lender
By:
-------------------------------------
Name: Emmanuel M. Skevofilax
Title: Assistant Vice President
<PAGE> 62
THE FIRST NATIONAL BANK OF CHICAGO,
as a Lender
By:
-------------------------------------
Name: Anthony B. Mathews
Title: Vice President
SANWA BANK CALIFORNIA, as a Lender
By:
-------------------------------------
Name: Jacob A. Lenhof
Title: Vice President
UNION BANK OF CALIFORNIA, N.A.,
as a Lender
By:
-------------------------------------
Name: Bruce A. Breslau
Title: Vice President
U.S. BANK, NATIONAL ASSOCIATION,
as a Lender
By:
-------------------------------------
Name: Janet E. Jordon
Title: Vice President
<PAGE> 63
GUARANTORS
SAFESKIN CORPORATION
By:
-------------------------------------
Name:
Title:
SAFESKIN SCIENTIFIC CORPORATION
By:
-------------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 10.52
GUARANTEE
GUARANTEE dated as of March 5, 1999, made by SAFESKIN
CORPORATION, a Florida corporation (the "Company") and the other parties hereto,
as joint and several guarantors hereunder (together with the Company and any
other Subsidiary of the Company that may become a party hereto as provided
herein, the "Guarantors" and individually, a "Guarantor"), in favor of the
Beneficiaries (as hereinafter defined).
Preliminary Statement
The Guarantors wish to induce (i) the Lenders to enter into the
Credit Agreement and the other Operative Agreements to which they are party; and
(ii) the Investor to enter into the Participation Agreement (as hereinafter
defined) and the other Operative Agreements to which it is a party.
NOW, THEREFORE, in consideration of the premises contained herein
and to induce (i) the Lenders to enter into the Credit Agreement and the other
Operative Agreements to which they are party; and (ii) the Investor to enter
into the Participation Agreement and the other Operative Agreements to which it
is a party, the Guarantors hereby agree for the benefit of the Agent, for the
ratable benefit of the Lenders, and the Investor and their respective successors
and assigns (individually a "Beneficiary", collectively, the "Beneficiaries"),
as follows:
1. Defined Terms. (a) Capitalized terms not otherwise defined
herein (including in the Preliminary Statement) shall have the meanings ascribed
to them in Annex A to the Participation Agreement dated as of the date hereof
among Safeskin Real Estate Incorporated (the "Lessee"), Union Bank of
California, N.A., not in its individual capacity but solely as Trustee (the
"Lessor"), Bankers Commercial Corporation (the "Investor"), the Trust Company,
Union Bank of California, N.A., as agent (the "Agent") and the several banks and
financial institutions from time to time party thereto (the "Lenders"), as the
same may from time to time be amended, supplemented or otherwise modified (the
"Participation Agreement"), and the rules of usage set forth in Annex A to the
Participation Agreement shall apply to this Guarantee.
(b) As used herein, the following terms shall have the following
meanings:
"Contribution Obligations" means the collective reference
to the outstanding amount of the Investor Contributions and the Investor Yield
with respect thereto and all rights of the Investor to receive distributions
under the Trust Agreement and any of the other Operative Agreements.
<PAGE> 2
2
"Guaranteed Obligations" means the collective reference to
(i) the Note Obligations and (ii) the Contribution Obligations and, with respect
to each such obligation, interest accruing thereon at the applicable rate
provided in the Operative Agreements after maturity and interest accruing at the
then applicable rate provided in the Operative Agreements after the filing of
any petition in bankruptcy, or the commencement of an insolvency, reorganization
or like proceeding, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding and whether such obligations are direct
or indirect, absolute or contingent, due or to become due, or now existing or
hereinafter incurred, which may arise, under, out of or in connection with any
of the Operative Agreements, any other document made, delivered or given in
connection therewith, in each case whether on account of principal, interest,
Investor Contributions or Investor Yield, reimbursement obligations, fees,
indemnities, costs, expenses, or payment obligations (including, without
limitation, all fees and disbursements of counsel to any of the Beneficiaries).
"Note Obligations" means the collective reference to the
unpaid principal of and interest on the Notes and all other payment obligations
and liabilities of the Lessor to the Agent and the Lenders under the Notes, the
Credit Agreement and any of the other Operative Agreements.
2. Guarantee. (a) Subject to the provisions of paragraph 2(b) and
(c), the Guarantors hereby, jointly and severally, unconditionally and
irrevocably guaranty to the Beneficiaries and their respective successors,
endorsees, transferees and assigns the prompt and complete payment when due
(whether at the stated maturity, by acceleration or otherwise) of the Guaranteed
Obligations.
(b) Anything to the contrary notwithstanding, (i) if a
Construction Risk Event has occurred and if no other Lease Event of Default or
Lease Default has occurred and is continuing at such time, the obligations of
the Guarantors hereunder shall be limited to the Note Obligations in the amount
of the Non-Completion Amount and (ii)(A) if no Lease Event of Default or Lease
Default on the Maturity Date has occurred and is continuing, the obligations of
the Guarantors hereunder shall be limited to the unpaid principal of and
interest on the Tranche A Notes and (B) if any Lease Event of Default or Lease
Default on the Maturity Date (other than or in addition to a Construction Risk
Event) has occurred and is continuing, the Guarantors shall be liable for the
Guaranteed Obligations.
(c) Anything herein or in any other Operative Agreement to the
contrary notwithstanding, the maximum liability of each Guarantor hereunder and
under the other Operative Agreement shall in no event exceed the amount which
can be guaranteed by such Guarantor under applicable federal and state laws
relating to the insolvency of debtors.
(d) Each Guarantor further agrees to pay any and all expenses
(including, without limitation, all fees and disbursements of counsel) which may
be paid or incurred by the Agent or any Lender in enforcing, or obtaining advice
of counsel in respect of, any rights with respect to, or collecting, any or all
of the Guaranteed Obligations and/or enforcing any rights with respect to, or
collecting against, such Guarantor under this Guarantee. This Guarantee shall
remain in full force and effect until the Guaranteed Obligations are paid in
full and the Commitments are terminated.
<PAGE> 3
3
(e) Each Guarantor agrees that the Guaranteed Obligations may at
any time and from time to time exceed the amount of the liability of such
Guarantor hereunder without impairing this Guarantee or affecting the rights and
remedies of the Agent or any Lender hereunder.
(f) No payment or payments made by the Borrower, any of the
Guarantors, any other guarantor or any other Person or received or collected by
the Agent or any Lender from the Borrower, any of the Guarantors, any other
guarantor or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application at any time or from time to time in
reduction of or in payment of the Guaranteed Obligations shall be deemed to
modify, reduce, release or otherwise affect the liability of any Guarantor
hereunder which shall, notwithstanding any such payment or payments (other than
payments made by such Guarantor in respect of the Guaranteed Obligations or
payments received or collected from such Guarantor in respect of the Guaranteed
Obligations), remain liable for the Guaranteed Obligations up to the maximum
liability of such Guarantor as set forth in this Section 2 until the Guaranteed
Obligations are paid in full and the Commitments are terminated.
3. Right of Set-off. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence and during the continuance of an Event of
Default, the Agent and each Lender is hereby authorized at any time or from time
to time, without presentment, demand, protest or other notice of any kind to the
Borrower, the Guarantors or to any other Person, any such notice being hereby
expressly waived, to set-off and to appropriate and apply any and all deposits
(general or special) and any other Indebtedness at any time held or owing by the
Agent or such Lender (including without limitation, by branches and agencies of
the Agent or such Lender wherever located) to or for the credit or the account
of the Guarantors against and on account of the obligations and liabilities of
the Guarantors hereunder or under any of the other Operative Agreements, and all
other claims of any nature or description arising out of or connected with this
Guarantee or any other Operative Agreement, irrespective of whether the Agent or
such Lender shall have made any demand hereunder and although said obligations,
liabilities or claims, or any of them, shall be contingent or unmatured. The
Agent and each Lender agrees promptly to notify the Guarantors and the Agent
after any such set-off and application made by the Agent or such Lender,
provided that the failure to give such notice shall not affect the validity of
such set-off and application.
4. No Subrogation. Notwithstanding any payment or payments made
by the Guarantors hereunder or any set-off or application of funds of the
Guarantors by any Lender, no Guarantor shall be entitled to exercise or enforce
any subrogation rights of the Agent or any Lender against the Borrower or any
other Person or any collateral security or guarantee or right of offset held by
the Agent or any Lender for the payment of the Guaranteed Obligations, nor shall
any Guarantor seek or be entitled to seek any contribution or reimbursement from
the Borrower or any other Person in respect of payments made by such Guarantor
hereunder, until all amounts owing to the Agent and the Lenders by the Borrower
on account of the Guaranteed Obligations and all amounts owing hereunder are
paid in full and the Commitments are terminated. If any amount shall be paid to
any Guarantor on account of such subrogation rights at any time when all of the
Guaranteed Obligations and all amounts owing hereunder shall not have been paid
in full or the Commitments shall not have been terminated, such amount shall be
held by such
<PAGE> 4
4
Guarantor in trust for the Agent and the Lenders, segregated from other funds of
such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned
over to the Agent in the exact form received by such Guarantor (duly indorsed by
such Guarantor to the Agent, if required), to be applied against the Guaranteed
Obligations, whether matured or unmatured, in such order as set forth in Section
8.2 of the Credit Agreement.
5. Amendments, etc. with respect to the Guaranteed Obligations;
Waiver of Rights. The Guarantors shall remain obligated hereunder
notwithstanding that, without any reservation of rights against the Guarantors
and without notice to or further assent by the Guarantors, any demand for
payment of any of the Guaranteed Obligations made by the Agent or any Lender may
be rescinded by such party and any of the Guaranteed Obligations continued, and
the Guaranteed Obligations, or the liability of any other party upon or for any
part thereof, or any collateral security or guarantee therefor or right of
offset with respect thereto, may, from time to time, in whole or in part, be
renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Agent or any Lender, and the Credit Agreement,
the Participation Agreement and the other Operative Agreements may be amended,
modified, supplemented or terminated, in whole or in part, as the Agent (or the
Required Lenders, as the case may be) may deem advisable from time to time in
accordance with the terms thereof, and any collateral security, guarantee or
right of offset at any time held by the Agent or any Lender for the payment of
the Guaranteed Obligations may be sold, exchanged, waived, surrendered or
released. Neither the Agent nor any Lender shall have any obligation to protect,
secure, perfect or insure any Lien at any time held by it as security for the
Guaranteed Obligations or for this Guarantee or any property subject thereto.
When making any demand hereunder against the Guarantors, the Agent or any Lender
may, but shall be under no obligation to, make a similar demand on the Borrower
or any other guarantor, and any failure by the Agent or any Lender to make any
such demand or to collect any payments from the Borrower or any other guarantor
or any release of the Borrower or such other guarantor shall not relieve the
Guarantors from their obligations under this Guarantee, and shall not impair or
affect the rights and remedies, express or implied, or as a matter of law, of
the Agent or any Lender against the Guarantors. For the purposes hereof "demand"
shall include the commencement and continuance of any legal proceedings.
6. Guarantee Absolute and Unconditional. Each Guarantor waives
any and all notice of the creation, renewal, extension or accrual of any of the
Guaranteed Obligations and notice of or proof of reliance by the Agent or any
Lender upon this Guarantee or acceptance of this Guarantee; the Guaranteed
Obligations, and any of them, shall conclusively be deemed to have been created,
contracted or incurred, or renewed, extended, amended or waived, in reliance
upon this Guarantee; and all dealings between the Borrower and such Guarantor,
on the one hand, and the Agent and the Lenders, on the other hand, likewise
shall be conclusively presumed to have been had or consummated in reliance upon
this Guarantee. Each Guarantor waives any right it may have to require the Agent
or any of the Lenders to proceed against the Lessor, the Lessee or any other
Person, to proceed against or exhaust any security held from the Lessor, the
Lessee or any other Person, or pursue or exhaust any other remedy available to
the Agent or any Lender. Each Guarantor waives all statutes of limitations as a
defense to any action or proceeding brought by the Agent or any Lender against
any Guarantor. Each Guarantor waives any defense based on (i) any claim that any
Guarantor's obligations exceed or are more burdensome than those of the Lessor,
the Lessee or any other Person; (ii) any legal disability of
<PAGE> 5
5
the Lessor, the Lessee or any other Person, (iii) any release, discharge,
modification, impairment or limitation of the liability of the Lessor, the
Lessee or any other Person, or (iv) any amendment, modification, termination,
release, cancellation, or other change to any of the Guaranteed Obligations.
Before signing this Guaranty, the Guarantors investigated the financial
condition and business operations of the Lessor and the Lessee, the present and
former condition, uses and ownership of any real property security, and such
other matters as the Guarantors deemed appropriate to assure themselves of the
Lessor's and the Lessee's ability to discharge the Guaranteed Obligations. The
Guarantors assume full responsibility for that due diligence, as well as for
keeping informed of all matters which may affect the Lessor's and the Lessee's
ability to pay and perform their respective obligations. The Agent and the
Lenders have no duty to disclose to the Guarantors any information which they
may have or receive about the Lessor's or the Lessee's financial condition or
business operations, the condition or uses of any such property, or any other
circumstances bearing on the Lessor's or the Lessee's ability to perform. Each
Guarantor waives diligence, presentment, protest, demand for payment and notice
of default or nonpayment to or upon the Borrower or such Guarantor with respect
to the Guaranteed Obligations. Each Guarantor understands and agrees that this
Guarantee shall be construed as a continuing, absolute and unconditional
guarantee and surety of payment without regard to (a) the validity, regularity
or enforceability of the Credit Agreement or any other Operative Agreement, any
of the Guaranteed Obligations or any other collateral security therefor or
guarantee or right of offset with respect thereto at any time or from time to
time held by the Agent or any Lender, (b) any defense, set-off or counterclaim
(other than a defense of payment or performance) which may at any time be
available to or be asserted by the Borrower or such Guarantor against the Agent
or any Lender, or (c) any other circumstance whatsoever (with or without notice
to or knowledge of the Borrower or such Guarantor) which constitutes, or might
be construed to constitute, an equitable or legal discharge of the Borrower for
the Guaranteed Obligations, or of such Guarantor under this Guarantee, in
bankruptcy or in any other instance. When pursuing its rights and remedies
hereunder against any Guarantor, the Agent and any Lender may, but shall be
under no obligation to, pursue such rights and remedies as it may have against
the Borrower or any other Person or against any collateral security or guarantee
for the Guaranteed Obligations or any right of offset with respect thereto, and
any failure by the Agent or any Lender to pursue such other rights or remedies
or to collect any payments from the Borrower or any such other Person or to
realize upon any such collateral security or guarantee or to exercise any such
right of offset, or any release of the Borrower or any such other Person or any
such collateral security, guarantee or right of offset, shall not relieve such
Guarantor of any liability hereunder, and shall not impair or affect the rights
and remedies, whether express, implied or available as a matter of law, of the
Agent and the Lenders against such Guarantor. This Guarantee shall remain in
full force and effect and be binding in accordance with and to the extent of its
terms upon such Guarantor and the successors and assigns thereof, and shall
inure to the benefit of the Agent and the Lenders, and their respective
successors, endorsees, transferees and assigns, until all the Guaranteed
Obligations and the obligations of such Guarantor under this Guarantee shall
have been satisfied by payment in full and the Commitments shall be terminated,
notwithstanding that from time to time during the term of the Credit Agreement
the Borrower may be free from any Guaranteed Obligations.
7. Reinstatement. This Guarantee shall continue to be effective,
or be reinstated, as the case may be, if at any time payment, or any part
thereof, of any of the Guaranteed Obligations is rescinded or must otherwise be
restored or returned by the Agent or
<PAGE> 6
6
any Lender upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Borrower or the Guarantors, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, the Borrower or the Guarantors or any substantial part of its
property, or otherwise, all as though such payments had not been made.
8. Payments. The Guarantors hereby guarantee that payments
hereunder will be paid to the Agent without set-off or counterclaim in Dollars
at the office of the Agent located at Union Bank of California, N.A., San Diego
Commercial Banking Office, 530 "B" Street, 4th Floor, S-420, San Diego,
California 92101-4407.
9. Representations and Warranties. Each of the Guarantors
represents and warrants to each of the Beneficiaries as of the Initial Closing
Date as follows:
(a) Existence and Qualification; Power; Compliance With Laws.
The Company is a corporation duly formed, validly existing and in good
standing under the Laws of Florida. The Company is duly qualified or
registered to transact business and is in good standing in California
and each other jurisdiction in which the conduct of its business or the
ownership or leasing of its properties makes such qualification or
registration necessary, except where the failure so to qualify or
register and to be in good standing would not constitute a Material
Adverse Effect. The Company has all requisite power and authority to
conduct its business, to own and lease its properties and to execute and
deliver each Operative Agreement to which it is a Party and to perform
the Guaranteed Obligations. The chief executive offices of the Company
are located in California. All outstanding shares of capital stock of
the Company are duly authorized, validly issued, fully paid and
non-assessable, and no holder thereof has any enforceable right of
rescission under any applicable state or federal securities Laws. The
Company is in compliance with all Laws and other Legal Requirements
applicable to its business, has obtained all authorizations, consents,
approvals, orders, licenses and permits from, and has accomplished all
filings, registrations and qualifications with, or obtained exemptions
from any of the foregoing from, any Governmental Authority that are
necessary for the transaction of its business, except where the failure
so to comply, obtain authorizations, etc., file, register, qualify to
obtain exemptions does not constitute a Material Adverse Effect.
(b) Authority; Compliance With Other Agreements and Instruments
and Government Regulations. The execution, delivery and performance by
the Company and the Subsidiary Guarantors of the Operative Agreements to
which it is a Party have been duly authorized by all necessary corporate
action, and do not and will not:
(i) Require any consent or approval not heretofore
obtained of any partner, director, stockholder, security holder or
creditor of such Party;
(ii) Violate or conflict with any provision of such
Party's charter, articles of incorporation or bylaws, as applicable;
<PAGE> 7
7
(iii) Result in or require the creation or imposition of
any Lien (other than pursuant to the Operative Agreements) or Right of
Others upon or with respect to any Property now owned or leased or
hereafter acquired by such Party;
(iv) Violate any Requirement of Law applicable to such
Party;
(v) Result in a breach of or constitute a default under,
or cause or permit the acceleration of any obligation owed under, any
indenture or loan or credit agreement or any other Contractual
Obligation to which such Party is a party or by which such Party or any
of its Property is bound or affected;
and such Party is not in violation of, or default under, any Requirement of Law
or Contractual Obligation, or any indenture, loan or credit agreement described
in Section 9(b)(v), in any respect that constitutes a Material Adverse Effect.
(c) No Governmental Approvals Required. Except as previously
obtained or made, no authorization, consent, approval, order, license or
permit from, or filing, registration or qualification with, any
Governmental Authority is or will be required to authorize or permit
under applicable Laws the execution, delivery and performance by the
Company or any Subsidiary Guarantor of the Operative Agreements to which
it is a Party.
(d) Subsidiaries.
(i) Schedule 9(d) hereto correctly sets forth the names,
form of legal entity, number of shares of capital stock issued and
outstanding, number of shares owned by the Company or a Subsidiary of
the Company (specifying such owner) and jurisdictions of organization of
all Subsidiaries of the Company and specifies which thereof, as of the
Initial Closing Date, are Inactive Subsidiaries. Except as described in
Schedule 9(d), the Company does not own any capital stock, equity
interest or debt security which is convertible, or exchangeable, for
capital stock or equity interest in any Person. Unless otherwise
indicated in Schedule 9(d), all of the outstanding shares of capital
stock, or all of the units of equity interest, as the case may be, of
each Subsidiary are owned of record and beneficially by the Company,
there are no outstanding options, warrants or other rights to purchase
capital stock of any such Subsidiary, and all such shares or equity
interests so owned are duly authorized, validly issued, fully paid and
non-assessable, and were issued in compliance with all applicable state
and federal securities and other Laws, and are free and clear of all
Liens, except for Permitted Encumbrances and other Liens permitted under
Section 10(b)(iv) of this Guarantee.
(ii) Each Subsidiary is a legal entity of the type
described in Schedule 9(d) duly formed, validly existing and in good
standing under the Laws of its jurisdiction of organization, is duly
qualified to do business as a foreign organization and is in good
standing as such in each jurisdiction in which the conduct of its
business or the ownership or leasing of its properties makes such
qualification necessary (except where the failure to be so duly
qualified and in good standing does not constitute a Material Adverse
Effect), and has all requisite power and authority to conduct its
business and to own and lease its properties.
<PAGE> 8
8
(iii) Each Subsidiary is in compliance with all Laws and
other requirements applicable to its business and has obtained all
authorizations, consents, approvals, orders, licenses, and permits from,
and each such Subsidiary has accomplished all filings, registrations,
and qualifications with, or obtained exemptions from any of the
foregoing from, any Governmental Authority that are necessary for the
transaction of its business, except where the failure to be in such
compliance, obtain such authorizations, consents, approvals, orders,
licenses, and permits, accomplish such filings, registrations, and
qualifications, or obtain such exemptions, does not constitute a
Material Adverse Effect.
(e) Financial Statements. The Company has furnished to the
Beneficiaries (i) the audited financial statements of the Company for
the Fiscal Year ended December 31, 1997 and (ii) the unaudited balance
sheet and statement of operations of the Company for the Fiscal Quarter
ended September 30, 1998. The financial statements described in clause
(i) fairly present in all material respects the financial condition,
results of operations and changes in financial position, and the balance
sheet and statement of operations described in clause (ii) fairly
present the financial condition and results of operation of the Company
as of such dates and for such periods in conformity with GAAP
consistently applied, subject only to normal year-end accruals and audit
adjustments.
(f) No Other Liabilities; No Material Adverse Changes. The
Company and its Subsidiaries do not have any material liability or
material contingent liability required under GAAP to be reflected or
disclosed, and not reflected or disclosed, in the balance sheet
described in Section 9(e)(ii), other than liabilities and contingent
liabilities arising in the ordinary course of business since the date of
such financial statements. Except as set forth in Schedule 9(f)
attached, as of the Initial Closing Date, no circumstance or event has
occurred that constitutes a Material Adverse Effect since September 30,
1998.
(g) Title to and Location of Property. The Company and its
Subsidiaries have valid title to their respective property (other than
assets which are the subject of a Capital Lease Obligation) reflected in
the balance sheet described in Section 9(e)(ii), other than items of
property or exceptions to title which are in each case immaterial and
property subsequently sold or disposed of in the ordinary course of
business. Such property is free and clear of all Liens and Rights of
Others, other than Liens or Rights of Others described in Schedule
9(g)(A) and Permitted Encumbrances and Permitted Rights of Others or
other Liens permitted under Section 10(b)(iv) of this Guarantee. All
property of the Company and its Subsidiaries is located at one of the
locations described in Schedule 9(g)(B).
(h) Intangible Assets. The Company and its Subsidiaries own, or
possess the right to use to the extent necessary in their respective
businesses, all material trademarks, trade names, copyrights, patents,
patent rights, computer software, licenses and other Intangible Assets
that are used in the conduct of their businesses as now operated, and no
such Intangible Asset, to the best knowledge of the Company, conflicts
with the valid trademark, trade name, copyright, patent, patent right or
Intangible Asset of any other Person to the extent that such conflict
constitutes a Material Adverse Effect. Except as set forth in Schedule
7.3(h), the Company has not used any trade name, trade style or "dba"
during the five year period ending on the Initial Closing Date.
<PAGE> 9
9
(i) Public Utility Holding Company Act. Neither the Company nor
any of its Subsidiaries is a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company", within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
(j) Litigation. Except for (i) any matter fully covered as to
subject matter and amount (subject to applicable deductibles and
retentions) by insurance for which the insurance carrier has not
asserted lack of subject matter coverage or reserved its right to do so,
(ii) any matter, or series of related matters, involving a claim against
the Company or any of its Subsidiaries of less than $1,000,000, (iii)
matters of an administrative nature not involving a claim or charge
against the Company or any of its Subsidiaries and (iv) matters set
forth in Schedule 9(j), there are no actions, suits, proceedings or
investigations pending as to which the Company or any of its
Subsidiaries have been served or have received notice or, to the best
knowledge of the Company, threatened against or affecting the Company or
any of its Subsidiaries or any property of any of them before any
Governmental Authority.
(k) Binding Obligations. Each of the Operative Agreements to
which the Company and any Subsidiary Guarantor is a Party will, when
executed and delivered by such Party, constitute the legal, valid and
binding obligation of such Party, enforceable against such Party in
accordance with its terms, except as enforcement may be limited by
Debtor Relief Laws to equitable principles relating to the granting of
specific performance and other equitable remedies as a matter of
judicial discretion.
(l) No Default. No event has occurred and is continuing that is
a Default or Event of Default.
(m) ERISA.
(i) With respect to each Pension Plan:
(a) such Pension Plan complies in all material respects
with ERISA and any other applicable Laws to the extent that
noncompliance could reasonably be expected to have a
Material Adverse Effect;
(b) such Pension Plan has not incurred any "accumulated
funding deficiency" (as defined in Section 302 of ERISA)
that could reasonably be expected to have a Material Adverse
Effect;
(c) no "reportable event" (as defined in Section 4043
of ERISA, but excluding such events as to which the PBGC has
by regulation waived the requirement therein contained that
it be notified within thirty days of the occurrence of such
event) has occurred that could reasonably be expected to
have a Material Adverse Effect; and
<PAGE> 10
10
(d) neither the Company nor any of its Subsidiaries has
engaged in any non-exempt "prohibited transaction" (as
defined in Section 4975 of the Code) that could reasonably
be expected to have a Material Adverse Effect.
(ii) Neither the Company nor any of its Subsidiaries has
incurred or expects to incur any withdrawal liability to any
Multiemployer Plan that could reasonably be expected to have a Material
Adverse Effect.
(n) Regulation U; Investment Company Act. Neither the Company
nor any of its Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit to others for
the purpose of purchasing or carrying, any Margin Stock in violation of
Regulation U. Neither the Company nor any of its Subsidiaries is or is
required to be registered as an "investment company" under the
Investment Company Act of 1940.
(o) Disclosure. No written statement made by a Senior Officer to
the Agent or any Lender in connection with this Guarantee, or in
connection with any Requisition, as of the date thereof contained any
untrue statement of a material fact or omitted a material fact necessary
to make the statement made not misleading in light of all the
circumstances existing at the date the statement was made.
(p) Tax Liability. The Company and its Subsidiaries have filed
all tax returns which are required to be filed, and have paid, or made
provision for the payment of, all taxes with respect to the periods,
property or transactions covered by said returns, or pursuant to any
assessment received by the Company or any of its Subsidiaries, except
(a) such taxes, if any, as are being contested in good faith by
appropriate proceedings and as to which adequate reserves have been
established and maintained and (b) immaterial taxes so long as no
material property of the Company or any of its Subsidiaries is at
impending risk of being seized, levied upon or forfeited.
(q) Projections. As of the Initial Closing Date, to the best
knowledge of the Company, the assumptions set forth in the Projections
are reasonable and consistent with each other and with all facts known
to the Company, and the Projections are reasonably based on such
assumptions. Nothing in this Section 9(q) shall be construed as a
representation or covenant that the Projections in fact will be
achieved.
(r) Hazardous Materials. Except as described in Schedule 9(r),
as of the Initial Closing Date (a) neither the Company nor any of its
Subsidiaries at any time has disposed of, discharged, released or
threatened the release of any Hazardous Materials on, from or under the
real property in violation of any Hazardous Materials Law that would
individually or in the aggregate constitute a Material Adverse Effect,
(b) to the best knowledge of the Company, no condition exists that
violates any Hazardous Material Law affecting any real property except
for such violations that would not individually or in the aggregate
constitute a Material Adverse Effect, (c) no real property or any
portion thereof is or has been utilized by the Company or any of its
Subsidiaries as a site for the manufacture of any Hazardous Materials
and (d) to the extent that any Hazardous Materials are used, generated
or stored by the Company or any of its Subsidiaries on any
<PAGE> 11
11
real property, or transported to or from such real property by the
Company or any of its Subsidiaries, such use, generation, storage and
transportation are in compliance with all Hazardous Materials Laws
except for such non-compliance that would not constitute a Material
Adverse Effect or be materially adverse to the interests of the
Beneficiaries.
(s) Security Interests. Upon the execution and delivery of the
Security Agreement, the Security Agreement will create a valid first
priority security interest in the Collateral described therein securing
the Guaranteed Obligations, the Corporate Credit Agreement Obligations
and the Senior Secured Note Obligations (subject only to Permitted
Encumbrances, Permitted Rights of Others and other matters permitted by
Section 6.9 of the Corporate Credit Agreement and to such qualifications
and exceptions as are contained in the Uniform Commercial Code with
respect to the priority of security interests perfected by means other
than the filing of a financing statement or with respect to the creation
of security interests in property to which Division 9 of the Uniform
Commercial Code does not apply) and all actions necessary to perfect the
security interest so created, other than filing of the UCC-1 financing
statements delivered to the Collateral Agent pursuant to Section 8.1 of
the Corporate Credit Agreement with the appropriate Governmental
Authority, have been taken and completed. Upon the execution and
delivery of the Pledge Agreement, the Pledge Agreement will create a
valid first priority security interest in the Pledged Collateral and
upon delivery of the Pledged Collateral to the Collateral Agent all
action necessary to perfect the security interest so created will have
been taken and completed.
10. Covenants. (a) The Guarantors hereby agree that all of the
covenants of the Company set forth in Article 5, Article 6 and Article 7 of the
Corporate Credit Agreement, as amended, supplemented or otherwise modified from
time to time, are hereby expressly incorporated by reference in this Guarantee
as though set forth in full in this Guarantee. Capitalized terms used in said
Article 5, Article 6 and Article 7 shall have the meanings given to such terms
in Article 1 of the Corporate Credit Agreement, except that all references in
said Articles to the "Borrower" shall mean the Company and to the
"Administrative Agent" shall mean the Agent. The Guarantors further agree that
all affirmative and negative covenants of the Company which may hereafter be set
forth in any Replacement Corporate Credit Agreement, as amended, supplemented or
otherwise modified from time to time, shall be incorporated by reference in this
Guarantee as though set forth in full in this Guarantee. In the event that the
Corporate Credit Agreement or any Replacement Corporate Credit Agreement shall
terminate (other than as a result of a Lease Event of Default set forth in
Section 17.1(i) of the Lease) without being replaced by a Replacement Corporate
Credit Agreement, such covenants as they exist on the date of such termination
shall remain in effect and incorporated herein as though set forth in full
herein notwithstanding such termination. Notwithstanding the provisions of the
first and second sentences of this Section 10(a), the covenants incorporated
herein may not be amended, supplemented, waived or otherwise modified without
the consent of the Required Lenders if a default under the Corporate Credit
Agreement or any Replacement Corporate Credit Agreement has occurred.
(b) So long as this Guarantee and the Commitments remain in
effect and the Guaranteed Obligations remain outstanding and unpaid, the Company
shall, and shall cause each of its Subsidiaries to:
<PAGE> 12
12
(i) Pledge all of the capital stock of any Significant
Domestic Subsidiary, and 65% of the capital stock of any
Significant Foreign Subsidiary (other than Safeskin
Corporation (Malaysia) SDN BHD), formed or acquired after
the Closing Date (as defined in the Corporate Credit
Agreement) pursuant to the Pledge Agreement, and cause each
such Significant Domestic Subsidiary to execute and deliver
an appropriate joinder to this Guarantee and the Security
Agreement
(ii) Promptly following its acquisition of any fee
simple real property in the United States, execute and
deliver to the Collateral Agent a deed of trust or mortgage
in form and substance acceptable to the Collateral Agent
creating a first priority Lien on such real property
securing the Guaranteed Obligations, the Corporate Credit
Agreement Obligations and the Senior Secured Note
Obligations, and provide to the Collateral Agent such
customary lender's title insurance policies, appraisals,
environmental reports and other related documents as the
Collateral Agent may reasonably request;
(iii) If the aggregate sales by Foreign Subsidiaries to
unrelated Persons constitute more than 25% of the aggregate
sales by the Company and its Subsidiaries to unrelated
Persons, promptly execute and deliver such security
documents to and in favor of the Collateral Agent as the
Collateral Agent may require to obtain and perfect a Lien on
the property of any Foreign Subsidiary whose sales to
unrelated Persons constitute more than 15% of the total
sales by the Company and its Subsidiaries to unrelated
Persons;
(iv) Not create, incur, assume or suffer to exist any
Lien or Negative Pledge of any nature upon or with respect
to any of their respective properties, or engage in any sale
and leaseback transaction with respect to any of their
respective properties, whether now owned or hereafter
acquired, except:
(a) Liens and Negative Pledges existing on the
Initial Closing Date and disclosed in Schedule 10(b)(iii)
and any renewals/extensions or amendments thereof,
provided that the obligations secured or benefitted
thereby are not increased;
(b) Liens and Negative Pledges securing, pari passu,
the Guaranteed Obligations, the Corporate Credit Agreement
Obligations and the Senior Secured Note Obligations;
(c) Permitted Encumbrances;
(d) Liens on Property acquired by the Company or any
of its Subsidiaries that were in existence at the time of
the acquisition of such Property and were not created in
contemplation of such acquisition;
(e) Liens securing Indebtedness permitted by Section
6.10(d) of the Corporate Credit Agreement on and limited
to the capital assets
<PAGE> 13
13
acquired, constructed or financed with the proceeds of
such Indebtedness or with the proceeds of any Indebtedness
directly or indirectly refinanced by such Indebtedness;
(f) Non-consensual Liens securing Indebtedness of not
more than $500,000 provided that such Liens are discharged
within thirty (30) days after their incurrence by the
Company;
(g) Liens securing Additional Senior Indebtedness in
an aggregate principal amount outstanding at any time of
not more than the Permitted Additional Senior Indebtedness
Amount, provided that the holder(s) of such Additional
Senior Indebtedness become a party to the Intercreditor
Agreement; and
(h) Liens securing the Company's obligations to
purchasers of accounts receivable sold by the Company as
permitted under Section 6.2 of the Corporate Credit
Agreement.
(v) As soon as practicable, and in any event within 45 days
after the end of each Fiscal Quarter, deliver to the Investor
and to the Agent, for distribution to the Lenders, a Pricing
Certificate substantially in the form set forth in Exhibit A
hereto setting forth a calculation of the Leverage Ratio as of
the last day of such Fiscal Quarter, and providing reasonable
detail as to the calculation thereof, which calculations in the
case of the fourth Fiscal Quarter in any Fiscal Year shall be
based on the preliminary unaudited financial statements of the
Company and its Subsidiaries for such Fiscal Quarter, and as
soon as practicable thereafter, in the event of any material
variance in the actual calculation of the Leverage Ratio from
such preliminary calculation, a revised Pricing Certificate
setting forth the actual calculation thereof.
11. Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made (a) when delivered by hand, (b) one Business Day
after delivery to a nationally recognized courier service specifying overnight
delivery, (c) three Business Days after being deposited in the mail, certified
or registered, postage prepaid, or (d) in the case of telecopy notice, when
sent, confirmation of receipt received, addressed as follows:
(a) if to the Agent or any Lender, at its address or telecopy
number for notices provided in Section 9.2 of the Credit Agreement; and
(b) if to any Guarantor, at its address or telecopy number for
notices set forth below:
The Company
and the other
Guarantors: Safeskin Corporation
<PAGE> 14
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12671 High Bluff Drive
San Diego, California 92130
Attention: William R. LaRue, Vice-President-Treasurer
Telecopy No.: (619) 350-2380
The Agent, each Lender and each Guarantor may change its address
and transmission numbers for notices by notice in the manner provided in this
Section 11.
12. Severability. Any provision of this Guarantee which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
13. Integration. This Guarantee and the other Operative
Agreements represents the agreement of the Guarantors with respect to the
subject matter hereof and there are no promises or representations by the Agent
or any Lender relative to the subject matter hereof not reflected herein or in
the other Operative Agreements.
14. Amendments in Writing; No Waiver; Cumulative Remedies (a)
None of the terms or provisions of this Guarantee may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
the Guarantors and the Agent as provided in Section 9.1 of the Credit Agreement.
(b) Neither the Agent nor any Lender shall not by any act (except
by a written instrument pursuant to Section 14(a) hereof), delay, indulgence,
omission or otherwise be deemed to have waived any right or remedy hereunder or
to have acquiesced in any Default or Event of Default or in any breach of any of
the terms and conditions hereof. No failure to exercise, nor any delay in
exercising, on the part of the Agent or any Lender, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by the Agent or any Lender of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which the Agent
or such Lender would otherwise have on any future occasion.
(c) The rights and remedies herein provided are cumulative, may
be exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
15. Section Headings. The section headings used in this Guarantee
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
16. Successors and Assigns. This Guarantee shall be binding upon
the successors and assigns of the Guarantors and shall inure to the benefit of
the Agent and the Lenders and their successors and assigns.
<PAGE> 15
15
17. SUBMISSION TO JURISDICTION; WAIVERS. (a) EACH GUARANTOR
HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(i) SUBMITS FOR ITSELF AND ITS PROPERTY IN ALL LEGAL ACTIONS OR
PROCEEDINGS RELATING TO THIS GUARANTEE OR ANY OTHER OPERATIVE AGREEMENT
TO WHICH IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY
JUDGMENT IN RESPECT THEREOF TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF
THE SUPREME COURT OF THE STATE OF NEW YORK, AND THE APPELLATE COURTS
THEREOF AND WAIVES THE RIGHT TO REMOVE ANY SUCH ACTION OR PROCEEDING TO
ANY FEDERAL COURT;
(ii) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT
IN SUCH COURT, WAIVES ANY OBJECTION THAT IT MAY HAVE NOW OR HEREAFTER TO
THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT AND WAIVES
ANY OBJECTION THAT SUCH ACTION OR PROCEEDING IN ANY SUCH COURT WAS
BROUGHT IN AN INCONVENIENT FORUM AND AGREES NOT TO PLEAD, CLAIM OR
ASSERT THE SAME;
(iii) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT MAY BE EFFECTED BY MAILING A COPY THEREOF
BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF
MAIL), POSTAGE PREPAID TO, OR BY PERSONAL SERVICE AT, ITS ADDRESS SET
FORTH HEREIN OR SUCH OTHER ADDRESS OF WHICH THE AGENT SHALL HAVE BEEN
NOTIFIED PURSUANT HERETO, WHETHER OR NOT SUCH ADDRESS BE WITHIN THE
JURISDICTION OF ANY SUCH COURT;
(iv) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT
THE RIGHT OF THE AGENT (AND NOT OF THIS GUARANTOR) TO SUE IN ANY OTHER
JURISDICTION; AND
(v) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY
RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING
REFERRED TO IN THIS SECTION 18 ANY SPECIAL, EXEMPLARY, OR PUNITIVE
DAMAGES.
(b) EACH GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES
TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTEE OR
ANY OTHER OPERATIVE AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
(c) EACH GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES
THE RIGHT TO ASSERT, ARGUE OR RAISE, IN ANY ACTION BROUGHT BY THE AGENT OR THE
LENDERS AGAINST ANY GUARANTOR
<PAGE> 16
16
UNDER THIS GUARANTY, THAT THE AGENT AND THE LENDERS STRUCTURED THE TRANSACTION
CONTEMPLATED BY THE OPERATIVE AGREEMENTS IN SUCH A MANNER PRIMARILY TO
CIRCUMVENT THE CALIFORNIA ONE-FORM-OF-ACTION AND ANTI-DEFICIENCY LAWS, INCLUDING
CALIFORNIA CODE OF CIVIL PROCEDURE Sections 580a, 580b, 580d AND 726.
(d) Each Guarantor hereby waives all of such Guarantor's rights
of subrogation and reimbursement and any other rights and defenses available to
such Guarantor by reason of California Civil Code Sections 2787 to 2855,
inclusive, including (a) any defenses such Guarantor may have to the obligations
undertaken by such Guarantor in this Guaranty by reason of an election of
remedies by the Agent or the Lenders, and (b) any rights or defenses such
Guarantor may have by reason of protection afforded to the Borrower with respect
to the obligations guaranteed hereby pursuant to the antideficiency or other
laws of the State of California limiting or discharging the Borrower's
indebtedness, including California Code of Civil Procedure Section 580a, 580b,
580d or 726. Each Guarantor's waiver of defenses under clause (a) above is made
even though an election of remedies by the Agent or the Lenders, such as a
nonjudicial foreclosure with respect to security for a guaranteed obligation,
destroys such Guarantor's rights of subrogation and reimbursement against the
Borrower by the operation of California Code of Civil Procedure Section 580d or
otherwise. The foregoing waivers shall not be deemed a waiver of the defense
that the Guaranteed Obligations have been paid or the Commitments reduced.
(e) Each Guarantor waives all rights and defenses that such
Guarantor may have because the Guaranteed Obligations are secured by real
property. This means, among other things:
1. The Agent and the Lenders may collect from the Guarantors
without first foreclosing on any real or personal property collateral
pledged by the Borrower or any other Person.
2. If the Agent or any Lender forecloses on any real property
collateral pledged by the Borrower or any other Person:
(A) The amount of the debt may be reduced only by the
price for which that collateral is sold at the foreclosure sale, even if
the collateral is worth more than the sale price.
(B) The Agent and/or any Lender may collect from the
Guarantors even if the Agent or any Lender, by foreclosing on the real
property collateral, has destroyed any right any Guarantor may have to
collect from the Borrower or any other Person.
This is an unconditional and irrevocable waiver of any rights and
defenses the Guarantors may have because the Guaranteed Obligations are secured
by real property. These rights and defenses include, but are not limited to, any
rights or defenses based upon Section 580a, 580b, 580d, or 726 of the California
Code of Civil Procedure.
<PAGE> 17
17
(f) Each Guarantor waives all rights and defenses arising out of
an election of remedies by the Agent and the Lenders, even though that election
of remedies, such as a nonjudicial foreclosure with respect to security for a
Guaranteed Obligation, has destroyed any Guarantor's rights of subrogation and
reimbursement against the principal by the operation of Section 580d of the
California Code of Civil Procedure or otherwise.
(g) Each Guarantor waives (A) all rights and defenses that are
based upon, directly or indirectly, Section 580a, 580b, 580d or 726 of the
California Code of Civil Procedure, and (B) all rights and defenses that are or
may become available to the Guarantors by reason of Sections 2787 to 2855,
inclusive, of the California Civil Code.
(h) Each Guarantor acknowledges and agrees that the waivers of
various California statutes and related provisions contained in this Guarantee
are for the added protection of the Agent and the Lenders and do not limit,
change or otherwise affect the choice of law provision contained in Section 18,
below (which choice of law provision shall be given full force and effect).
18. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
19. Authority of Agent. Each Guarantor acknowledges that the
rights and responsibilities of the Agent under this Guarantee with respect to
any action taken by the Agent or the exercise or non-exercise by the Agent of
any option, right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Guarantee shall, as between the Agent
and the Lenders, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Agent and each Guarantor, the Agent shall be conclusively
presumed to be acting as agent for the Lenders with full and valid authority so
to act or refrain from acting, and no Guarantor shall be under any obligation,
or entitlement, to make any inquiry respecting such authority.
20. Third Party Beneficiaries. Each Guarantor expressly
acknowledges and agrees that each Indemnified Person shall be a third party
beneficiary of this Guarantee.
21. Right of Contribution. Each Guarantor hereby agrees that to
the extent that a Guarantor shall have paid more than its proportionate share of
any payment made hereunder, such Guarantor shall be entitled to seek and receive
contribution from and against any other Guarantor hereunder who has not paid its
proportionate share of such payment. Each Guarantor's right of contribution
shall be subject to the terms and conditions of Section 4 hereof. The provisions
of this Section shall in no respect limit the obligations and liabilities of any
Guarantor to Beneficiaries and each Guarantor shall remain liable to the
Beneficiaries for the full amount guaranteed by such Guarantor hereunder.
<PAGE> 18
18
IN WITNESS WHEREOF, the undersigned have caused this Guarantee to
be duly executed and delivered by their respective duly authorized officer as of
the day and year first above written.
SAFESKIN CORPORATION
By:_________________________________
Name:
Title:
SAFESKIN SCIENTIFIC CORPORATION
By:_________________________________
Name:
Title:
<PAGE> 1
EXHIBIT 10.53
================================================================================
LEASE
between
UNION BANK OF CALIFORNIA, N.A.,
not in its individual capacity except as expressly stated herein,
but solely as Trustee, as Lessor,
and
SAFESKIN REAL ESTATE INCORPORATED,
as Lessee
---------------------------
Dated as of March 5, 1999
---------------------------
================================================================================
THIS LEASE IS SUBJECT TO A SECURITY INTEREST IN FAVOR OF UNION BANK OF
CALIFORNIA, N.A., AS AGENT (THE "AGENT"), UNDER A CREDIT AGREEMENT, DATED AS OF
MARCH 5, 1999 AMONG UNION BANK OF CALIFORNIA, N.A., NOT IN ITS INDIVIDUAL
CAPACITY BUT SOLELY AS TRUSTEE, AS BORROWER, THE LENDERS, AND THE AGENT, AS
AMENDED OR SUPPLEMENTED. THIS LEASE HAS BEEN EXECUTED IN SEVERAL COUNTERPARTS.
TO THE EXTENT, IF ANY, THAT THIS LEASE CONSTITUTES CHATTEL PAPER (AS SUCH TERM
IS DEFINED IN THE UNIFORM COMMERCIAL CODE OF THE STATE OF CALIFORNIA OR NEW
YORK), NO SECURITY INTEREST IN THIS LEASE MAY BE CREATED THROUGH THE TRANSFER OR
POSSESSION OF ANY COUNTERPART OTHER THAN THE ORIGINAL COUNTERPART CONTAINING THE
RECEIPT THEREFOR EXECUTED BY THE AGENT ON THE SIGNATURE PAGE HEREOF.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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<S> <C> <C>
SECTION 1. DEFINITIONS................................................... 1
1.1 Defined Terms.............................................. 1
SECTION 2. PROPERTY AND TERM............................................. 1
2.1 Property................................................... 1
2.2 Lease Term................................................. 2
2.3 Title...................................................... 2
2.4 Lease Supplements.......................................... 2
SECTION 3. RENT.......................................................... 2
3.1 Rent....................................................... 2
3.2 Supplemental Rent.......................................... 2
3.3 Performance on a Non-Business Day.......................... 3
SECTION 4. UTILITY CHARGES............................................... 3
4.1 Utility Charges............................................ 3
SECTION 5. QUIET ENJOYMENT............................................... 3
5.1 Quiet Enjoyment............................................ 3
SECTION 6. NET LEASE..................................................... 3
6.1 Net Lease; No Setoff; Etc.................................. 4
6.2 No Termination or Abatement................................ 5
SECTION 7. OWNERSHIP OF PROPERTY......................................... 5
7.1 Ownership of the Property.................................. 5
SECTION 8. CONDITION OF PROPERTY......................................... 6
8.1 Condition of the Property.................................. 6
8.2 Possession and Use of the Property......................... 7
SECTION 9. COMPLIANCE.................................................... 7
9.1 Compliance with Legal Requirements and Insurance
Requirements............................................. 7
9.2 Environmental Matters...................................... 7
SECTION 10................................................................ 8
10.1 Maintenance and Repair; Return............................. 8
10.2 Right of Inspection........................................ 9
10.3 Environmental Inspection................................... 10
SECTION 11. MODIFICATIONS................................................ 10
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
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<S> <C> <C>
11.1 Modifications, Substitutions and Replacements.............. 10
SECTION 12. TITLE........................................................ 11
12.1 Warranty of Title.......................................... 11
12.2 Grants and Releases of Easements........................... 12
SECTION 13. PERMITTED CONTESTS........................................... 12
13.1 Permitted Contests Other Than in Respect of Impositions.... 12
SECTION 14. INSURANCE.................................................... 13
14.1 Public Liability and Workers' Compensation Insurance....... 13
14.2 Hazard and Other Insurance................................. 13
14.3 Coverage................................................... 14
SECTION 15. CONDEMNATION AND CASUALTY.................................... 15
15.1 Casualty and Condemnation.................................. 15
SECTION 16. LEASE TERMINATION............................................ 17
16.1 Termination upon Certain Events............................ 17
16.2 Procedures................................................. 17
SECTION 17. DEFAULT...................................................... 17
17.1 Lease Events of Default.................................... 17
17.2 Final Liquidated Damages................................... 19
17.3 Lease Remedies............................................. 19
17.4 Waiver of Certain Rights................................... 21
17.5 Assignment of Rights Under Contracts....................... 21
17.6 Remedies Cumulative........................................ 21
SECTION 18. LESSOR'S RIGHT TO CURE....................................... 22
18.1 Lessor's Right to Cure Lessee's Lease Defaults............. 22
SECTION 19. LEASE TERMINATION............................................ 22
19.1 Provisions Relating to Lessee's Termination of this
Lease or Exercise of Purchase Option..................... 22
SECTION 20. PURCHASE OPTION.............................................. 22
20.1 Purchase Option............................................ 22
20.2 Maturity Date Purchase Option.............................. 23
20.3 Purchase of Less Than All of the Property.................. 23
SECTION 21. SALE OF PROPERTY............................................. 24
21.1 Sale Procedure............................................. 24
21.2 Application of Proceeds of Sale............................ 25
21.3 Indemnity for Excessive Wear............................... 25
21.4 Appraisal Procedure........................................ 25
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
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<S> <C> <C>
21.5 Certain Obligations Continue............................... 26
SECTION 22. HOLDING OVER................................................. 26
22.1 Holding Over............................................... 26
SECTION 23. RISK OF LOSS................................................. 26
23.1 Risk of Loss............................................... 26
SECTION 24. SUBLETTING AND ASSIGNMENT.................................... 27
24.1 Subletting and Assignment.................................. 27
24.2 Subleases.................................................. 27
SECTION 25. ESTOPPEL CERTIFICATES........................................ 27
25.1 Estoppel Certificates...................................... 27
SECTION 26. NO WAIVER.................................................... 27
26.1 No Waiver.................................................. 27
SECTION 27. ACCEPTANCE OF SURRENDER...................................... 28
27.1 Acceptance of Surrender.................................... 28
SECTION 28. NO MERGER OF TITLE........................................... 28
28.1 No Merger of Title......................................... 28
SECTION 29. NOTICES...................................................... 28
29.1 Notices.................................................... 28
SECTION 30. MISCELLANEOUS................................................ 29
30.1 Miscellaneous.............................................. 29
30.2 Amendments and Modifications............................... 30
30.3 Successors and Assigns..................................... 30
30.4 Headings and Table of Contents............................. 30
30.5 Counterparts............................................... 30
30.6 GOVERNING LAW.............................................. 30
30.7 Limitations on Recourse.................................... 30
30.8 Memorandum of Lease........................................ 30
30.9 Priority................................................... 31
</TABLE>
-iii-
<PAGE> 5
LEASE (this "Lease"), dated as of March 5, 1999 between UNION BANK
OF CALIFORNIA, N.A., not in its individual capacity except as expressly stated
herein, but solely as Trustee under the Trust Agreement, having its principal
office at Corporate Trust Division, 120 South San Pedro Street, Suite 400, Los
Angeles, California 90012, as lessor (the "Lessor"), and SAFESKIN REAL ESTATE
INCORPORATED, a Delaware corporation, having its principal office at 12671 High
Bluff Drive, San Diego, California 92130, as lessee (the "Lessee").
In consideration of the mutual agreements herein contained, and of
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. Capitalized terms used herein but not otherwise
defined in this Lease shall have the respective meanings specified in Annex A to
the Participation Agreement dated as of the date hereof among Lessee, Lessor,
Agent, the Investor and the Lenders named therein, as such Participation
Agreement may be amended, supplemented or otherwise modified from time to time,
and the rules of usage set forth in Annex A to the Participation Agreement shall
apply to this Lease.
SECTION 2. PROPERTY AND TERM
2.1 Property. Subject to the terms and conditions hereinafter set
forth and contained in the Lease Supplement relating to the Property, Lessor
hereby leases to Lessee, and Lessee hereby leases from Lessor, the Property.
Subject to the conditions set forth in the Participating Agreement, including
without limitation the satisfaction or waiver of the conditions set forth in
Section 6 thereof, Lessor hereby covenants and agrees to acquire and to accept
pursuant to the terms of the Participation Agreement delivery on the Property
Closing Date of the Land together with any Improvements thereon and
simultaneously to demise and lease to Lessee hereunder for the Term, Lessor's
interest in such Land and in such Improvements together with any Improvements
which thereafter may be constructed on such Land by the Construction Agent
pursuant to the Construction Agency Agreement and any Modifications to the
Property made pursuant to this Lease, and Lessee hereby agrees, expressly for
the direct benefit of Lessor, to lease from Lessor for the Term (subject to
Lessee's right to purchase the Property from Lessor prior to the expiration
thereof), Lessor's interest in such Land and in such Improvements together with
any Improvements and Modifications which thereafter may be constructed on such
Land pursuant to the Construction Agency Agreement and this Lease. Lessee's
delivery of each Requisition requesting the advance of funds by Lessor to
acquire the Land and any Improvements thereon and any Improvements which
thereafter may be constructed thereon pursuant to the Construction Agency
Agreement, respectively, shall, without further act, constitute the acceptance
by Lessee of all of the Land and/or Improvements which is the subject of such
Requisition submitted by Lessee to Lessor for all purposes of this Lease and the
other Operative Agreements on the terms set forth therein and herein, and that
such Land, together with any
<PAGE> 6
2
Improvements constructed on such Land pursuant to the Construction Agency
Agreement, shall be deemed to be included in the leasehold estate of this Lease
and shall be subject to the terms and conditions of this Lease as of the Funding
Date relating to such Requisition.
2.2 Lease Term. The Property is leased for the Term, unless extended
or earlier terminated in accordance with the provisions of this Lease.
2.3 Title. The Property is leased to Lessee without any
representation or warranty, express or implied, by Lessor and subject to the
rights of parties in possession, the existing state of title (including, without
limitation, the Permitted Exceptions) and all applicable Legal Requirements.
Lessee shall in no event have any recourse against Lessor for any defect in
title to the Property, other than resulting from Lessor Liens.
2.4 Lease Supplements. On the Property Closing Date, Lessee and
Lessor shall each execute and deliver the Lease Supplement for the Property in
substantially the form of Exhibit A hereto and thereafter the Property shall be
subject to the terms of this Lease.
SECTION 3. RENT
3.1 Rent. (a) On each applicable Payment Date occurring after the
Completion Date, Lessee shall pay the Basic Rent attributable to the Property.
(b) Basic Rent shall be due and payable in lawful money of the
United States and shall be paid by wire transfer of immediately available funds
on the due date therefor to such account or accounts at such bank or banks or to
such other Person or in such other manner as Lessor shall from time to time
direct. Each payment of Rent payable by Lessee to Lessor under this Lease or any
other Operative Agreement shall be made by Lessee to the Agent as assignee of
Lessor under the Assignment of Lease (or, if all Loans and all other amounts
owing from Lessor to the Lenders under the Credit Agreement and the other
Operative Agreements have been paid in full and all Commitments of the Lenders
have been permanently terminated, to Lessor) prior to 11:00 a.m., Pacific
Standard Time, to the Account established by the Agent in accordance with
Section 8.1 of the Credit Agreement, in immediately available funds consisting
of lawful currency of the United States of America on the date when such payment
shall be due. Payments received after 11:00 a.m., Pacific Standard time, on the
date due shall, for the purpose of Section 17.1 hereof be deemed received on
such day; provided, however, that for the purposes of the second sentence of
Section 3.2 hereof, such payments shall be deemed received on the next
succeeding Business Day and subject to interest at the Overdue Rate as provided
in such Section 3.2.
3.2 Supplemental Rent. Lessee shall pay to Lessor or the Person
entitled thereto any and all Supplemental Rent promptly as the same shall become
due and payable, and if Lessee fails to pay any Supplemental Rent, Lessor shall
have all rights, powers and remedies provided for herein or by law or equity or
otherwise in the case of nonpayment of Basic Rent. Lessee shall pay to Lessor as
Supplemental Rent, among other things, on demand, to the extent
<PAGE> 7
3
permitted by applicable Legal Requirements, interest at the applicable Overdue
Rate on any installment of Basic Rent not paid when due for the period for which
the same shall be overdue and on any payment of Supplemental Rent not paid when
due or demanded by Lessor for the period from the due date or the date of any
such demand, as the case may be, until the same shall be paid. The expiration or
other termination of Lessee's obligations to pay Basic Rent hereunder shall not
limit or modify the obligations of Lessee with respect to Supplemental Rent.
Unless expressly provided otherwise in this Lease or any other Operative
Agreement, in the event of any failure on the part of Lessee to pay and
discharge any Supplemental Rent as and when due, Lessee shall also promptly pay
and discharge any fine, penalty, interest or cost which may be assessed or added
for nonpayment or late payment of such Supplemental Rent, all of which shall
also constitute Supplemental Rent.
3.3 Performance on a Non-Business Day. If any payment is required
hereunder on a day that is not a Business Day, then such payment shall be due on
the next succeeding Business Day, unless, in the case of payments based on the
Eurodollar Rate, the result of such extension would be to extend such payment
into another calendar month, in which event such payment shall be made on the
immediately preceding Business Day.
SECTION 4. UTILITY CHARGES
4.1 Utility Charges. Lessee shall pay, or cause to be paid, all
charges for electricity, power, gas, oil, water, telephone, sanitary sewer
service and all other rents and utilities used in or on the Property during the
Term. Lessee shall be entitled to receive any credit or refund with respect to
any utility charge paid by Lessee and the amount of any credit or refund
received by Lessor on account of any utility charges paid by Lessee, net of the
costs and expenses incurred by Lessor in obtaining such credit or refund, shall
be promptly paid over to Lessee. All charges for utilities imposed with respect
to the Property for a billing period during which this Lease expires or
terminates shall be adjusted and prorated on a daily basis between Lessor and
Lessee, and each party shall pay or reimburse the other for each party's pro
rata share thereof.
SECTION 5. QUIET ENJOYMENT
5.1 Quiet Enjoyment. So long as no Lease Event of Default shall have
occurred and be continuing, Lessee shall peaceably and quietly have, hold and
enjoy the Property for the Term, free of any claim or other action by Lessor or
anyone rightfully claiming by, through or under Lessor.
SECTION 6. NET LEASE
6.1 Net Lease; No Setoff; Etc. This Lease shall constitute a net
lease and, notwithstanding any other provision of this Lease, Lessee shall pay
Basic Rent and Supplemental Rent without counterclaim, setoff, deduction or
defense of any kind and without abatement,
<PAGE> 8
4
suspension, deferment, diminution or reduction of any kind, and Lessee's
obligation to pay all such amounts is absolute and unconditional. The
obligations and liabilities of Lessee hereunder shall in no way be released,
discharged or otherwise affected for any reason, including, without limitation,
to the maximum extent permitted by law: (a) the defect in the condition,
merchantability, design, construction, quality or fitness for use of any portion
of the Property, or any failure of the Property to comply with all Legal
Requirements, including any inability to occupy or use the Property by reason of
such non-compliance; (b) any damage to, abandonment, loss, contamination of or
Release from or destruction of or any requisition or taking of the Property or
any part thereof, including eviction; (c) any restriction, prevention or
curtailment of or interference with any use of the Property or any part thereof,
including eviction; (d) any defect in title to or rights to the Property or any
Lien on such title or rights or on the Property; (e) any change, waiver,
extension, indulgence or other action or omission or breach in respect of any
obligation or liability of or by Lessor, Investor, Agent or any Lender; (f) any
bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceedings relating to Lessee, Lessor, Investor,
Agent, any Lender or any other Person, or any action taken with respect to this
Lease by any trustee or receiver of Lessee, Lessor, Investor, Agent, any Lender
or any other Person, or by any court, in any such proceeding; (g) any claim that
Lessee has or might have against any Person, including, without limitation,
Lessor, Investor, Agent or any Lender; (h) any failure on the part of Lessor to
perform or comply with any of the terms of this Lease, any other Operative
Agreement or of any other agreement; (i) any invalidity or unenforceability or
disaffirmance against or by Lessee of this Lease or any provision hereof or any
of the other Operative Agreements or any provision of any thereof; (j) the
impossibility of performance by Lessee, Lessor or both; (k) any action by any
court, administrative agency or other Governmental Authority; (l) any
restriction, prevention or curtailment of or any interference with any use of
the Property or any part thereof; or (m) any other occurrence whatsoever,
whether similar or dissimilar to the foregoing, whether or not Lessee shall have
notice or knowledge of any of the foregoing. Notwithstanding the foregoing
provisions, nothing contained in this Section 6.1 shall provide Lessor with any
right to payment by Lessee under this Lease prior to the Completion Date which
is contrary to Lessor's remedies under the Agency Agreement, including the
limitations set forth in Section 5.4 thereof; it being the express intention of
the parties hereto that Lessee's liability hereunder shall not exceed the
liability of the Construction Agent under the Agency Agreement prior to the
Completion Date. This Lease shall be noncancellable by Lessee for any reason
whatsoever except as expressly provided herein, and Lessee, to the extent
permitted by Legal Requirements, waives all rights now or hereafter conferred by
statute or otherwise to quit, terminate or surrender this Lease, or to any
diminution, abatement or reduction of Rent payable by Lessee hereunder. If for
any reason whatsoever this Lease shall be terminated in whole or in part by
operation of law or otherwise, except as otherwise expressly provided herein,
Lessee shall, unless prohibited by Legal Requirements, nonetheless pay to Lessor
(or, in the case of Supplemental Rent, to whomever shall be entitled thereto) an
amount equal to each Rent payment at the time and in the manner that such
payment would have become due and payable under the terms of this Lease if it
had not been terminated in whole or in part, and in such case, so long as such
payments are made and no Lease Event of Default shall have occurred and be
continuing, Lessor will deem this Lease to have remained in effect. Each payment
of Rent made by Lessee hereunder shall be final and, absent manifest error in
the computation of the amount thereof, Lessee shall not seek or have any right
to recover all or
<PAGE> 9
5
any part of such payment from Lessor, Investor, Agent or any party to any
agreements related thereto for any reason whatsoever. Lessee assumes the sole
responsibility for the condition, use, operation, maintenance, and management of
the Property and Lessor shall have no responsibility in respect thereof and
shall have no liability for damage to the property of Lessee or any subtenant of
Lessee on any account or for any reason whatsoever other than the gross
negligence or willful misconduct of Lessor, its agents or employees.
6.2 No Termination or Abatement. Lessee shall remain obligated under
this Lease in accordance with its terms and shall not take any action to
terminate, rescind or avoid this Lease, notwithstanding any action for
bankruptcy, insolvency, reorganization, liquidation, dissolution, or other
proceeding affecting Lessor, or any action with respect to this Lease which may
be taken by any trustee, receiver or liquidator of Lessor or by any court with
respect to Lessor, except as otherwise expressly provided herein. Lessee hereby
waives all right (i) to terminate or surrender this Lease, except as otherwise
expressly provided herein, or (ii) to avail itself of any abatement, suspension,
deferment, reduction, setoff, counterclaim or defense with respect to any Rent.
Lessee shall remain obligated under this Lease in accordance with its terms and
Lessee hereby waives any and all rights now or hereafter conferred by statute or
otherwise to modify or to avoid strict compliance with its obligations under
this Lease. Notwithstanding any such statute or otherwise, Lessee shall be bound
by all of the terms and conditions contained in this Lease.
SECTION 7. OWNERSHIP OF PROPERTY
7.1 Ownership of the Property. (a) Lessor and Lessee intend that (i)
for financial accounting purposes with respect to Lessee (A) this Lease will be
treated as an "operating lease" pursuant to Statement of Financial Accounting
Standards (SFAS) No. 13, as amended, (B) Lessor will be treated as the
beneficial owner and lessor of the Property and (C) Lessee will be treated as
the lessee of the Property, but (ii) for federal, state and local income tax and
all other purposes (A) this Lease will be treated as a financing arrangement,
(B) the Lenders will be treated as senior lenders making loans to Lessee in an
amount equal to the Loans, which Loans will be secured by the Property, (C)
Lessor will be treated as a subordinated lender making a loan to Lessee in an
amount equal to the Investor Contribution, which loan is secured by the
Property, and (D) Lessee will be treated as the beneficial owner of the Property
and will be entitled to all tax benefits ordinarily available to an owner of
property like the Property for such tax purposes.
(b) Lessor and Lessee further intend and agree that, for the purpose
of securing Lessee's obligations for the repayment of the above-described loans,
(i) this Lease shall also be deemed to be a security agreement and financing
statement within the meaning of Article 9 of the Uniform Commercial Code and a
real property mortgage or deed of trust, as applicable; (ii) the conveyance
provided for in Section 2 shall be deemed a grant of a security interest in and
a mortgage lien on the Lessee's right, title and interest in the Property
(including the right to exercise all remedies as are contained in the applicable
Mortgage and Memorandum of Lease upon the occurrence of a Lease Event of
Default) and all proceeds of the conversion, voluntary or
<PAGE> 10
6
involuntary, of the foregoing into cash, investments, securities or other
property, whether in the form of cash, investments, securities or other
property, for the benefit of the Lessor to secure the Lessee's payment of all
amounts owed by the Lessee under this Lease and the other Operative Agreements
and Lessor holds title to the Property so as to create and grant a first lien
and prior security interest in the Property (A) pursuant to this Lease for the
benefit of the Agent under the Assignment of Lease, to secure to the Agent the
obligations of the Lessee under the Lease and (B) pursuant to the Mortgage to
secure to the Agent the obligations of the Lessor under the Mortgage and the
Notes; (iii) the possession by Lessor or any of its agents of notes and such
other items of property as constitute instruments, money, negotiable documents
or chattel paper shall be deemed to be "possession by the secured party" for
purposes of perfecting the security interest pursuant to Section 9-305 of the
Uniform Commercial Code; and (iv) notifications to Persons holding the Property,
and acknowledgements, receipts or confirmations from financial intermediaries,
bankers or agents (as applicable) of Lessee shall be deemed to have been given
for the purpose of perfecting such security interest under applicable law.
Lessor and Lessee shall, to the extent consistent with this Lease, take such
actions as may be necessary to ensure that, if this Lease were deemed to create
a security interest in the Property in accordance with this Section, such
security interest would be deemed to be a perfected security interest of first
priority under applicable law and will be maintained as such throughout the
Basic Term. Nevertheless, Lessee acknowledges and agrees that none of Lessor,
Investor, the Trust Company, Agent, or any Lender has provided or will provide
tax, accounting or legal advice to Lessee regarding this Lease, the Operative
Agreements or the transactions contemplated hereby and thereby, or made any
representations or warranties concerning the tax, accounting or legal
characteristics of the Operative Agreements, and that Lessee has obtained and
relied upon such tax, accounting and legal advice concerning the Operative
Agreements as it deems appropriate.
(c) Lessor and Lessee further intend and agree that in the event of
any insolvency or receivership proceedings or a petition under the United States
bankruptcy laws or any other applicable insolvency laws or statute of the United
States of America or any State or Commonwealth thereof affecting Lessee or
Lessor, the transactions evidenced by this Lease shall be regarded as loans made
by an unrelated third party lender to Lessee.
SECTION 8. CONDITION OF PROPERTY
8.1 Condition of the Property. LESSEE ACKNOWLEDGES AND AGREES THAT
IT IS RENTING THE PROPERTY "AS IS" WITHOUT REPRESENTATION, WARRANTY OR COVENANT
(EXPRESS OR IMPLIED) BY LESSOR AND SUBJECT TO (A) THE EXISTING STATE OF TITLE
(EXCLUDING LESSOR LIENS), (B) THE RIGHTS OF ANY PARTIES IN POSSESSION THEREOF,
(C) ANY STATE OF FACTS WHICH AN ACCURATE SURVEY OR PHYSICAL INSPECTION MIGHT
SHOW AND (D) VIOLATIONS OF LEGAL REQUIREMENTS WHICH MAY EXIST ON THE DATE
HEREOF. NONE OF LESSOR, THE INVESTOR, THE AGENT AND ANY LENDER HAS MADE OR SHALL
BE DEEMED TO HAVE MADE ANY REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR
IMPLIED, INCLUDING THE CONDITION OF ANY IMPROVEMENTS THEREON, THE SOIL
CONDITION, OR ANY
<PAGE> 11
7
ENVIRONMENTAL OR HAZARDOUS MATERIAL CONDITION) OR SHALL BE DEEMED TO HAVE ANY
LIABILITY WHATSOEVER AS TO THE TITLE (OTHER THAN FOR LESSOR LIENS), VALUE,
HABITABILITY, USE, CONDITION, DESIGN, OPERATION, OR FITNESS FOR USE OF THE
PROPERTY (OR ANY PART THEREOF), OR ANY OTHER REPRESENTATION, WARRANTY OR
COVENANT WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE PROPERTY (OR ANY
PART THEREOF) AND NONE OF LESSOR, THE INVESTOR, THE AGENT AND ANY LENDER SHALL
BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT DEFECT THEREIN OR THE FAILURE OF THE
PROPERTY, OR ANY PART THEREOF, TO COMPLY WITH ANY LEGAL REQUIREMENT.
8.2 Possession and Use of the Property. The Property shall be used
in a manner consistent with the Agency Agreement and, after the Completion Date
as Lessee's primary place of business. Lessee shall pay, or cause to be paid,
all charges and costs required in connection with the use of the Property.
Lessee shall not commit or permit any waste of the Property or any part thereof.
SECTION 9. COMPLIANCE
9.1 Compliance with Legal Requirements and Insurance Requirements.
Subject to the terms of Section 13 relating to permitted contests, Lessee, at
its sole cost and expense, shall (a) comply with all Legal Requirements
(including all applicable Hazardous Materials Laws) and Insurance Requirements
relating to the Property, including the use, construction, operation,
maintenance, repair and restoration thereof, whether or not compliance therewith
shall require structural or extraordinary changes in the Improvements or
interfere with the use and enjoyment of the Property, and (b) procure, maintain
and comply with all licenses, permits, orders, approvals, consents and other
authorizations required for the construction, renovation, use, maintenance and
operation of the Property and for the use, operation, maintenance, repair and
restoration of the Improvements.
9.2 Environmental Matters. (a) Promptly upon Lessee's actual
knowledge of the presence of Hazardous Materials in any portion of a Property in
concentrations and conditions that constitute an Environmental Violation, Lessee
shall notify Lessor in writing of such condition. In the event of any
Environmental Violation, Lessee shall, not later than thirty (30) days after
Lessee has actual knowledge of such Environmental Violation, either deliver to
Lessor and the Agent an Officer's Certificate and a Termination Notice with
respect to the Property pursuant to Section 16.1, if applicable, or, at Lessee's
sole cost and expense, promptly and diligently undertake any response, clean up,
remedial or other action necessary to remove, cleanup or remediate the
Environmental Violation in accordance with the terms of Section 9.1. If Lessee
does not deliver a Termination Notice with respect to the Property pursuant to
Section 16.1, Lessee shall, upon completion of remedial action by Lessee, cause
to be prepared by an environmental consultant reasonably acceptable to Lessor a
report describing the Environmental Violation and the actions taken by Lessee
(or its agents) in response to such Environmental
<PAGE> 12
8
Violation, and a statement by the consultant that such Environmental Violation
has been remedied in full compliance with applicable Hazardous Materials Laws.
(b) In addition, Lessee shall provide to Lessor, within five (5)
Business Days of receipt, copies of all written communications with any
Governmental Authority relating to any Environmental Violation in connection
with the Property. Lessee shall also promptly provide such detailed reports of
any such environmental claims as reasonably may be requested by Lessor and the
Agent.
SECTION 10. MAINTENANCE AND REPAIR
10.1 Maintenance and Repair; Return. (a) From and after the
Completion Date, Lessee, at its sole cost and expense, shall maintain the
Property in good condition (ordinary wear and tear excepted) and make all
necessary repairs thereto, of every kind and nature whatsoever, whether interior
or exterior, ordinary or extraordinary, structural or nonstructural or foreseen
or unforeseen, in each case as required by all Legal Requirements and Insurance
Requirements and on a basis reasonably consistent with the operation and
maintenance of commercial properties comparable in type and location to the
Property subject, however, to the provisions of Section 15 with respect to
Condemnation and Casualty.
(b) Lessor shall under no circumstances be required to build any
Improvements on the Property, make any repairs, replacements, alterations or
renewals of any nature or description to the Property, make any expenditure
whatsoever in connection with this Lease or maintain the Property in any way.
Lessor shall not be required to maintain, repair or rebuild all or any part of
the Property, and Lessee waives the right to (i) require Lessor to maintain,
repair, or rebuild all or any part of the Property, or (ii) make repairs at the
expense of Lessor pursuant to any Legal Requirement, Insurance Requirement,
contract, agreement, covenants, condition or restriction at any time in effect.
(c) Lessee shall, upon the expiration or earlier termination of the
Term with respect to the Property (other than as a result of Lessee's purchase
of the Property from Lessor as provided herein), vacate, surrender and transfer
the Property to Lessor, at Lessee's own expense, free and clear of all Liens
other than Permitted Liens and Lessor Liens, in as good condition as they were
on the Completion, ordinary wear and tear excepted, and in compliance with all
Legal Requirements and the other requirements of this Lease (and in any event
without (x) any asbestos installed or maintained in any part of the Property,
(y) any polychlorinated byphenyls (PCBs) in, on or used, stored or located at
the Property, and (z) any other Hazardous Materials in violation of applicable
Hazardous Materials Laws). Lessee shall provide, or cause to be provided or
accomplished, at the sole cost and expense of Lessee, to or for the benefit of
Lessor or a purchaser, at least thirty Business Days prior to the expiration or
earlier termination of the Term with respect to the Property, each of the
following: (i) an endorsement to the title policy issued for the Property
showing (A) record title of the Lessor in the leasehold or fee estate, as the
case may be, subject to no Liens other than Permitted Liens described in clauses
(i), (v), (viii) and (ix) of the definition of Permitted Liens, Liens described
in clauses (ii) and (iii) of the definition of
<PAGE> 13
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Permitted Exceptions and Lessor Liens and (B) the Mortgage as a valid and
perfected first lien; (ii) an environmental assessment for the Property
satisfying the requirements set forth in Section 10.3 below; (iii) an assignment
(to the extent assignable) of all of the Lessee's right, title and interest in
and to each agreement executed by Lessee in connection with the construction,
renovation, development, use, maintenance or operation of the Property
(including all warranty, performance, service and indemnity provisions); (iv)
copies of all Plans and Specifications relating to the design, construction,
renovation or development of the Property; (v) an assignment (to the extent
assignable) of all permits, licenses, approvals and other authorizations from
all Governmental Authorities in connection with the construction, operation and
use of the Property; (vi) copies of all books and records, and in the event that
Completion shall not have occurred, all Budgets and construction schedules, with
respect to the construction, renovation, maintenance, repair, operation or use
of the Property; and (vii) in the event that Completion shall not have occurred,
(x) evidence satisfactory to Lessor that all building materials purchased or
contracted for purchase which have not been incorporated into the Improvements
at the Property are (A) owned by Lessor free from any Liens, (B) secured,
segregated and identifiable (and if stored off-site, the location of such place
of storage) and (C) insured under policies in amounts and by insurers reasonably
satisfactory to Lessor; (y) evidence satisfactory to Lessor that adequate
provision has been made for the protection of materials stored on-site and for
the protection of the Improvements, to the extent then constructed, against
deterioration and against other loss or damage or theft, and (z) an agreement,
in form and substance reasonably satisfactory to Lessor, from all contractors,
construction managers, architects, engineers and other designee professionals
that each will continue to perform under their respective contracts for the
benefit of Lessor or its assignee. Lessee shall cooperate with any independent
purchaser of the Property in order to facilitate the ownership and operation by
such purchaser of the Property after such expiration or earlier termination of
the Term, including providing all books, reports and records regarding the
maintenance, repair and ownership of the Property and all data and technical
information relating thereto, granting or assigning all licenses necessary for
the operation and maintenance of the Property and cooperating in seeking and
obtaining all necessary licenses, permits and approvals of Governmental
Authorities. Lessee shall have also paid the total cost for the completion (or
removal and restoration of the Improvements following such removal) of all
Modifications commenced prior to such expiration or earlier termination of the
Term. The obligation of Lessee under this Section 10.1(c) shall survive the
expiration or termination of this Lease.
10.2 Right of Inspection. Lessor may, at reasonable times and with
reasonable prior notice, enter upon, inspect and examine at its own cost and
expense (unless, from and after the Completion Date, a Lease Event of Default
exists, in which case the out-of-pocket costs and expenses of Lessor shall be
paid by Lessee), the Property. Lessee shall furnish to Lessor statements, no
more than once per year and promptly following written request therefor by
Lessor, accurate in all material respects, regarding the condition and state of
repair of the Property. Lessor shall have no duty to make any such inspection or
inquiry and shall not incur any liability or obligation by reason of not making
any such inspection or inquiry.
10.3 Environmental Inspection. Not less than 6 months prior to the
Maturity Date (unless Lessee has previously irrevocably exercised the Maturity
Date Purchase Option),
<PAGE> 14
10
and not more than thirty Business Days prior to surrender of possession of the
Property, Lessor shall, at Lessee's sole cost and expense (unless such surrender
of possession arises from a Construction Risk Event, in which case the
limitations of Section 5.4 of the Agency Agreement shall be applicable to such
cost and expense), obtain a report by an environmental consultant selected by
Lessor certifying that the Property or any portion thereof (i) does not contain
Hazardous Materials under circumstances or in concentrations that could result
in a violation of or liability under any applicable Hazardous Materials Law and
(ii) is in compliance with all applicable Hazardous Materials Laws. If such is
not the case on either such date, then Lessee shall be deemed to have
irrevocably exercised the Maturity Date Purchase Option pursuant to Section
20.2, unless Lessee remediates such Environmental Violation, at Lessee's
expense, by restoring the Property to a condition that is in compliance with all
applicable Hazardous Material Laws on the Maturity Date.
SECTION 11. MODIFICATIONS
11.1 Modifications, Substitutions and Replacements. (a) So long as
no Lease Event of Default has occurred and is continuing, Lessee, at its sole
cost and expense, may at any time and from time to time after Completion make
alterations, renovations, improvements and additions to the Property or any part
thereof (collectively, "Modifications"); provided, that: (i) except for any
Modification required to be made pursuant to a Legal Requirement or an Insurance
Requirement, no Modification, individually, or when aggregated with any (A)
other Modification or (B) grant, dedication, transfer or release pursuant to
Section 12.2, shall impair the value of the Property or the utility or useful
life of the Property from that which existed immediately prior to such
Modification; (ii) the Modification shall be performed expeditiously and in a
good and workmanlike manner; (iii) Lessee shall comply with all Legal
Requirements (including all Hazardous Materials Laws) and Insurance Requirements
applicable to the Modification, including the obtaining of all permits and
certificates of occupancy, and the structural integrity of the Property shall
not be adversely affected; (iv) Lessee shall maintain or cause to be maintained
builders' risk insurance at all times when a Modification is in progress; (v)
subject to the terms of Section 13 relating to permitted contests, Lessee shall
pay all costs and expenses and discharge any Liens arising with respect to the
Modification; (vi) such Modifications shall comply with Sections 8.2 and 10.1
and shall not change the primary character of the Property; and (vii) no
Improvements shall be demolished, except to the extent such demolition does not
impair the value, utility or useful life of the Property. All Modifications
(other than those that may be readily removed without impairing the value,
utility or remaining useful life of the Property) shall remain part of the
realty and shall be subject to this Lease, and title thereto shall immediately
vest in Lessor. So long as no Lease Event of Default has occurred and is
continuing, Lessee may place upon the Property any inventory, trade fixtures,
machinery, equipment or other property belonging to Lessee or third parties and
may remove the same at any time during the term of this Lease; provided that
such inventory, trade fixtures, machinery, equipment or other property, or their
respective operations, do not impair the value, utility or remaining useful life
of the Property (such inventory, trade fixtures, machinery, equipment or other
property, collectively, "Modification Equipment"). Lessor acknowledges Lessee's
right to finance and to secure under the Uniform Commercial Code, any
Modification Equipment located
<PAGE> 15
11
at the Property, and Lessor agrees to execute Lessor waiver forms and release of
Lessor Liens in favor of any purchase money seller, lessor or lender who has
financed or may finance in the future such items. Without limiting the
effectiveness of the foregoing, provided that no Lease Event of Default shall
have occurred and be continuing, Lessor shall, upon the request of Lessee, and
at Lessee's sole cost and expense, execute and deliver any instruments necessary
or appropriate to confirm any such grant, release, dedication, transfer,
annexation or amendment to any Person permitted under this Section 11.1
including landlord waivers with respect to any of the foregoing.
(b) Following the Completion Date with respect to the Property,
Lessee shall notify Lessor of the undertaking of any Modifications to the
Property the cost of which is anticipated to exceed $250,000. Prior to
undertaking any such Modifications, Lessee shall deliver to Lessor (i) a brief
narrative of the work to be done and a copy of the plans and specifications
relating to such work; and (ii) an Officer's Certificate stating that such work
when completed will not impair the value, utility or remaining life of the
Property. Lessor, by itself or its agents, shall have the right, but not the
obligation, from time to time to inspect such Modifications to ensure that the
same is completed consistent with the plans and specifications.
(c) Following the Completion Date, Lessee shall not without the
consent of Lessor undertake any Modifications to the Property if such
Modifications cannot, in the reasonable judgement of Agent, be completed on or
prior to the date that is eighteen months prior to the Expiration Date.
SECTION 12. TITLE
12.1 Warranty of Title. (a) Lessee agrees that, except as otherwise
provided herein and subject to the terms of Section 13 relating to permitted
contests, Lessee shall not directly or indirectly create or allow to remain, and
shall (subject to the limitations of Section 5.4 of the Agency Agreement which
shall apply to Lessee's liability under this Section 12.1 prior to the
Completion Date) promptly discharge at its sole cost and expense, any Lien,
defect, attachment, levy, title retention agreement or claim upon the Property
or any Modifications or any Lien, attachment, levy or claim with respect to the
Rent or with respect to any amounts held by the Agent pursuant to the Credit
Agreement, other than Lessor Liens or Permitted Liens. Lessee shall promptly
notify Lessor in the event it receives knowledge that a Lien (other than a
Permitted Lien) exists with respect to the Property.
(b) Nothing contained in this Lease shall be construed as
constituting the consent or request of Lessor, expressed or implied, to or for
the performance by any contractor, mechanic, laborer, materialman, supplier or
vendor of any labor or services or for the furnishing of any materials for any
construction, alteration, addition, repair or demolition of or to the Property
or any part thereof. NOTICE IS HEREBY GIVEN THAT LESSOR IS NOT AND SHALL NOT BE
LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO
LESSEE, OR TO ANYONE HOLDING THE PROPERTY OR ANY PART THEREOF THROUGH OR UNDER
LESSEE, AND THAT NO MECHANIC'S
<PAGE> 16
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OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR
AFFECT THE INTEREST OF LESSOR IN AND TO THE PROPERTY.
12.2 Grants and Releases of Easements. Provided that no Lease Event
of Default shall have occurred and be continuing and subject to the provisions
of Sections 8, 9, 10 and 11, Lessor hereby consents to the following actions by
Lessee, in the name and stead of Lessor, but at Lessee's sole cost and expense:
(a) the granting (prior to the Lien of the Mortgage) of easements, licenses,
rights-of-way and other rights and privileges in the nature of easements
reasonably necessary or desirable for the construction, use, repair, renovation
or maintenance of the Property as herein provided; (b) the release (free and
clear of the Lien of the Mortgage) of existing easements or other rights in the
nature of easements which are for the benefit of the Property; (c) the
dedication or transfer (prior to the Lien of the Mortgage) of unimproved
portions of the Property for road, highway or other public purposes; (d) the
execution of petitions to have the Property annexed to any municipal corporation
or utility district; (e) the filing and processing of Site Development Permit
Amendments, Parcel Maps, Legal Lot Line Adjustments, Development Agreements, and
any other permit applications, authorizations, entitlements or agreements with
any Governmental Authority required or beneficial for the construction of the
Improvements or permitted Modifications; and (f) the execution of amendments to
any covenants and restrictions affecting the Property; provided, that in each
case Lessee shall have delivered to Lessor an Officer's Certificate stating
that: (i) such grant, release, dedication, transfer, filing or processing does
not impair the value or remaining useful life of the Property, (ii) such grant,
release, dedication, transfer, filing or processing is necessary in connection
with the construction, use, maintenance, alteration, renovation or improvement
of the Property, (iii) Lessee shall remain obligated under this Lease and under
any instrument executed by Lessee consenting to the assignment of Lessor's
interest in this Lease as security for indebtedness, in each such case in
accordance with their terms, as though such grant, release, dedication,
transfer, filing or processing had not been effected and (iv) Lessee shall pay
and perform any obligations of Lessor under such grant, release, dedication,
transfer, filing or processing. Without limiting the effectiveness of the
foregoing, provided that no Lease Event of Default shall have occurred and be
continuing, Lessor shall, upon the request of Lessee, and at Lessee's sole cost
and expense, execute and deliver any instruments necessary or appropriate to
confirm any such grant, release, dedication or transfer to any Person permitted
under this Section.
SECTION 13. PERMITTED CONTESTS
13.1 Permitted Contests Other Than in Respect of Impositions. Except
to the extent otherwise provided for in Section 12.2 of the Participation
Agreement, Lessee, on its own or on Lessor's behalf but at Lessee's sole cost
and expense, may contest, by appropriate administrative or judicial proceedings
conducted in good faith and with due diligence, the amount, validity or
application, in whole or in part, of any Legal Requirement, or utility charges
payable pursuant to Section 4.1 or any Lien, attachment, levy, encumbrance or
encroachment, and Lessor agrees not to pay, settle or otherwise compromise any
such item, provided that (a) the commencement and continuation of such
proceedings shall suspend the collection thereof from, and suspend the
enforcement thereof against the Property, Lessor, the Agent, the Investor and
the
<PAGE> 17
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Lenders; (b) there shall be no substantial risk of the imposition of a Lien
(other than a Permitted Lien) on the Property and no part of the Property nor
any Rent would be in any danger of being sold, forfeited, lost or deferred; (c)
at no time during the permitted contest shall there be any risk of the
imposition of criminal liability or a substantial risk of civil liability on
Lessor, the Agent or any Lender for failure to comply therewith; and (d) in the
event that, at any time, there shall be a material risk of extending the
application of such item beyond the earlier of the Maturity Date and the
Expiration Date, then Lessee shall deliver to Lessor an Officer's Certificate
certifying as to the matters set forth in clauses (a), (b) and (c) of this
Section 13.1. Lessor, at Lessee's sole cost and expense, shall execute and
deliver to Lessee such authorizations and other documents as may reasonably be
required in connection with any such contest and, if reasonably requested by
Lessee, shall join as a party therein at Lessee's sole cost and expense.
SECTION 14. INSURANCE
14.1 Public Liability and Workers' Compensation Insurance. During
the Term, Lessee shall procure and carry, at Lessee's sole cost and expense,
commercial general liability insurance for claims for injuries or death
sustained by persons or damage to property while on the Property. Such insurance
shall be on terms and in amounts that are no less favorable than insurance
maintained by owners of similar properties, that are in accordance with normal
industry practice. The policy shall be endorsed to name Lessor, the Trust
Company, the Investor, the Agent and the Lenders as additional insureds. The
policy shall also specifically provide that the policy shall be considered
primary insurance which shall apply to any loss or claim before any contribution
by any insurance which Lessor, the Trust Company, the Agent or the Lenders may
have in force. Lessee shall, in the operation of the Property, comply with the
applicable workers' compensation laws and protect Lessor against any liability
under such laws.
14.2 Hazard and Other Insurance. (a) During the Term, Lessee shall
keep the Property insured against loss or damage by fire and other risks on
terms and in amounts that are no less favorable than insurance maintained by
owners of similar properties, that are in accordance with normal industry
practice, are in amounts equal to the actual replacement cost of the
Improvements. So long as no Lease Event of Default exists, any loss payable
under the insurance policy required by this Section will be paid to and adjusted
solely by Lessee, subject to Section 15.
(b) If at any time during the Term the area in which the Property is
located is designated a "flood-prone" area pursuant to the Flood Disaster
Protection Act of 1973 or any amendments or supplements thereto, then Lessee
shall comply with the National Flood Insurance Program as set forth in the Flood
Disaster Protection Act of 1973, as may be amended. In addition, Lessee will
fully comply with the requirements of the National Flood Insurance Act of 1968
and the Flood Disaster Protection Act of 1973, as each may be amended from time
to time, and with any other Legal Requirement, concerning flood insurance to the
extent that it applies to the Property.
<PAGE> 18
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(c) Lessee shall from time to time obtain such additional insurance
hereunder as Lessor may reasonably require.
14.3 Coverage. (a) Lessee shall furnish Lessor with certificates
showing the insurance required under Sections 14.1 and 14.2 to be in effect and
naming Agent, the Lenders, the Lessor, the Investor, and the Trust Company as an
additional insured with respect to liability insurance and showing the mortgagee
endorsement required by Section 14.3(c). All such insurance shall be at the cost
and expense of Lessee. Such certificates shall include a provision in which the
insurer agrees to provide thirty (30) days' advance written notice by the
insurer to Lessor and the Agent in the event of cancellation or modification of
such insurance that could be adverse to the interests of Lessor, the Trust
Company or the Agent. If a Lease Event of Default has occurred and is continuing
and Lessor so requests, Lessee shall deliver to Lessor copies of all insurance
policies required by this Lease.
(b) Lessee agrees that the insurance policy or policies required by
this Lease shall include an appropriate clause pursuant to which such policy
shall provide that it will not be invalidated should Lessee waive, in writing,
prior to a loss, any or all rights of recovery against any party for losses
covered by such policy. Lessee hereby waives any and all such rights against
Lessor, the Trust Company, the Investor, the Agent and the Lenders to the extent
of payments made under such policies.
(c) All insurance policies required by Section 14.2 shall include a
"New York" or standard form mortgagee endorsement in favor of the Agent.
(d) Neither Lessor nor Lessee shall carry separate insurance
concurrent in kind or form or contributing in the event of loss with any
insurance required under this Lease except that Lessor may carry separate
liability insurance so long as (i) Lessee's insurance is designated as primary
and in no event excess or contributory to any insurance Lessor may have in force
which would apply to a loss covered under Lessee's policy and (ii) each such
insurance policy will not cause Lessee's insurance required under this Lease to
be subject to a coinsurance exception of any kind.
(e) Lessee shall pay as they become due all premiums for the
insurance required by this Lease, shall renew or replace each policy prior to
the expiration date thereof and shall promptly deliver to Lessor and the Agent
certificates for renewal and replacement policies.
(f) Lessee may maintain insurance required by this Lease by means of
one or more blanket insurance policies maintained by Lessee; provided, however,
that (A) any such policy shall specify, or Lessee shall furnish to Lessor a
written statement from the insurer so specifying, the maximum amount of the
total insurance afforded by such blanket policy that is allocated to the
Property and any sublimits in such blanket policy applicable to the Property,
(B) each such blanket policy shall include an endorsement providing that, in the
event of a loss resulting from an insured peril, insurance proceeds shall be
allocated to the Property in an amount equal to the coverages required to be
maintained by Lessee as provided above and (C)
<PAGE> 19
15
the protection afforded under any such blanket policy shall be no less than that
which would have been afforded under a separate policy or policies relating only
to the Property.
SECTION 15. CONDEMNATION AND CASUALTY
15.1 Casualty and Condemnation. (a) Subject to the provisions of
this Section 15 and Section 16 (in the event Lessee delivers, or is obligated to
deliver, a Termination Notice), and prior to the occurrence and continuation of
a Lease Default under Section 17.1(a), (b), (f) or (g) or a Lease Event of
Default, Lessee shall be entitled to receive directly (and Lessor hereby
irrevocably assigns to Lessee all of Lessor's right, title and interest in), or
if received by Lessor or any other additional insured Person under Section 14
hereof, Lessor or such other Person shall pay over to Lessee, any award,
compensation or insurance proceeds to which Lessee or Lessor or any additional
insured Person under Section 14 hereof may become entitled by reason of their
respective interests in the Property (i) if all or a portion of the Property is
damaged or destroyed in whole or in part by a Casualty or (ii) if the use,
access, occupancy, easement rights or title to the Property or any part thereof
or any appurtenances thereto is the subject of a Condemnation; provided,
however, if a Lease Default under Section 17.1(a), (b), (f) or (g) or a Lease
Event of Default shall have occurred and be continuing, such award, compensation
or insurance proceeds shall be paid directly to Lessor or, if received by
Lessee, shall be held in trust for Lessor, and shall be paid over by Lessee to
Lessor, to be either paid over to Lessee if such Lease Default or Lease Event of
Default shall no longer be continuing or applied to Lessee's obligations under
Section 17, and provided further that in the event of any Casualty or
Condemnation, the estimated cost of restoration of which is in excess of
$1,000,000, any such award, compensation or insurance proceeds shall be paid
directly to Lessor, or if received by Lessee, shall be held in trust for Lessor
and shall be paid over by Lessee to Lessor to be held and applied by Lessor
toward payment of the cost of restoration in accordance with Section 15.1(e) or,
if applicable, shall be applied in accordance with Section 16.
(b) So long as no Lease Event of Default has occurred and is
continuing, Lessee may appear in any proceeding or action to negotiate,
prosecute, adjust or appeal any claim for any award, compensation or insurance
payment on account of any such Casualty or Condemnation and shall pay all
expenses thereof; provided that if the estimated cost of restoration of the
Property or the payment on account of such title defect is in excess of
$1,000,000, then Lessor shall be entitled to participate in any such proceeding
or action. At Lessee's reasonable request, and at Lessee's sole cost and
expense, Lessor and the Agent shall participate in any such proceeding, action,
negotiation, prosecution or adjustment. Lessor and Lessee agree that this Lease
shall control the rights of Lessor and Lessee in and to any such award,
compensation or insurance payment.
(c) If Lessor or Lessee shall receive notice of a Casualty or a
possible Condemnation of a Property or any interest therein, Lessor or Lessee,
as the case may be, shall give notice thereof to the other and to the Agent
promptly after the receipt of such notice.
<PAGE> 20
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(d) In the event of a Casualty or receipt of notice by Lessee or
Lessor of a Condemnation, Lessee shall, not later than thirty (30) days after
such occurrence, deliver to Lessor and the Agent an Officer's Certificate
stating that either (i) (x) such Casualty is not a Significant Casualty or (y)
such Condemnation is neither a Total Condemnation nor a Significant Condemnation
and that this Lease shall remain in full force and effect with respect to the
Property and, at Lessee's sole cost and expense, Lessee shall promptly and
diligently restore the Property in accordance with the terms of Section 15.1(e)
or (ii) this Lease shall terminate with respect to the Property in accordance
with Section 16.1.
(e) If pursuant to this Section 15.1, this Lease shall continue in
full force and effect following a Casualty or Condemnation with respect to the
Property, Lessee shall, at its sole cost and expense, promptly and diligently
repair any damage to the Property caused by such Casualty or Condemnation in
conformity with the requirements of Sections 10.1 and 11.1 using the as-built
plans and specifications for the Property (as modified to give effect to any
subsequent Modifications, any Condemnation affecting the Property and all
applicable Legal Requirements) so as to restore the Property to the same
condition, operation, function and value as existed immediately prior to such
Casualty or Condemnation. In such event, title to the Property shall remain with
Lessor. Lessor shall make disbursements from time to time of any award,
compensation or insurance proceeds held by it to Lessee for application to the
cost of restoration subject to the satisfaction of the following conditions: (i)
Lessor shall have received a fully executed counterpart of a Requisition
requesting funds in an amount not exceeding the cost of work completed or
incurred since the last disbursement, together with reasonably satisfactory
evidence of the stage of completion and of performance of the work in a good and
workman-like manner and in accordance with the as-built plans and
specifications, (ii) at the time of any such disbursement, no Lease Event of
Default shall have occurred and be continuing, and no mechanic's or
materialmen's liens shall have been filed and remain undischarged, except those
discharged by the disbursement of the requested funds or bonded, (iii) Lessor
shall be reasonably satisfied that sufficient funds are available to complete
such restoration and (iv) title to the Project shall conform to the
representation set forth in Section 7.7 (b) of the Participation Agreement.
Provided no Lease Default shall have occurred and be continuing, any award,
compensation or insurance proceeds remaining after restoration of the Project as
herein provided shall be paid to Lessee.
(f) In no event shall a Casualty or Condemnation with respect to
which this Lease remains in full force and effect under this Section 15.1 affect
Lessee's obligations to pay Rent pursuant to Section 3.1.
<PAGE> 21
17
SECTION 16. LEASE TERMINATION
16.1 Termination upon Certain Events. (a) If Lessor or Lessee shall
have received notice of a Total Condemnation or a Seller's Exercise of Purchase
Option, then Lessee shall be obligated, within thirty (30) days after Lessee
receives notice thereof, to deliver a written notice in the form described in
Section 16.2(a) (a "Termination Notice") of the termination of this Lease.
(b) If either: (i) Lessee or Lessor shall have received notice of a
Condemnation, and Lessee shall have delivered to Lessor an Officer's Certificate
that such Condemnation is a Significant Condemnation; or (ii) a Casualty occurs,
and Lessee shall have delivered to Lessor an Officer's Certificate that such
Casualty is a Significant Casualty; or (iii) an Environmental Violation occurs
or is discovered and Lessee shall have delivered to Lessor an Officer's
Certificate stating that, in the reasonable, good-faith judgment of Lessee, the
cost to remediate the same will exceed $3,000,000; then, Lessee shall,
simultaneously with the delivery of the Officer's Certificate pursuant to the
preceding clause (i), (ii) or (iii), deliver a Termination Notice.
16.2 Procedures. (a) A Termination Notice shall contain: (i) notice
of termination of this Lease on a date not more than thirty (30) days after
Lessor's receipt of such Termination Notice (the "Termination Date"); (ii) a
binding and irrevocable agreement of Lessee (A) if the termination of this Lease
occurs prior to the Completion Date, to pay, or cause to be paid, the amounts
for which the Construction Agent is liable under Section 5.4 of the Agency
Agreement, or (B) if the termination of this Lease occurs on or after the
Completion Date to pay either (y) the Termination Value and purchase the
Property or (z) the Maximum Residual Guarantee Amount and surrender the Property
to Lessor pursuant to Section 10.1(c) on such Termination Date and (iii) the
Officer's Certificate described in Section 16.1(b), if applicable.
(b) On the Termination Date, Lessee shall pay to Lessor the amount
due pursuant to the Termination Notice, and in the event such amount is the
Termination Value, Lessor shall convey the Property to Lessee (or Lessee's
designee) in accordance with Section 19.1 and in the case of a Significant
Condemnation or Significant Casualty, shall also convey all of Lessor's right,
title and interest to any Net Proceeds (including Net Proceeds theretofore
received by Lessor and not applied to the payment of Termination Value).
SECTION 17. DEFAULT
17.1 Lease Events of Default. If any one or more of the following
events (each a "Lease Event of Default") shall occur:
(a) Lessee shall fail to make payment of (i) any Basic Rent or any
Supplemental Rent representing amounts owed under this Lease or the other
Operative Agreements within five (5) Business Days after receipt by Lessee
of notice that the same
<PAGE> 22
18
has become due and payable or (ii) any Maximum Residual Guarantee Amount,
Purchase Option Price or Termination Value after the same has become due
and payable; or
(b) Lessee shall fail to maintain insurance as required by Section
14; or
(c) Lessee shall fail to observe or perform any term, covenant or
condition of Lessee under this Lease, the Participation Agreement or any
other Operative Agreement to which it is a party (other than those set
forth in Section 17.1(a) or (b) hereof) and such failure is not cured
within twenty (20) Business Days after the giving of notice thereof by the
Agent or, if such failure is not reasonably susceptible of cure within
such period, within such longer period as is reasonably necessary to
effect a cure so long as Lessee continues to diligently pursue such cure
but not in any event in excess of forty (40) Business Days; or
(d) any representation or warranty by Lessee set forth in this Lease
or in any other Operative Agreement to which it is a party or in any
document entered into in connection herewith or therewith or in any
document, certificate or financial or other statement delivered in
connection herewith or therewith shall be false or inaccurate in any
material way; or
(e) an Agency Agreement Event of Default shall have occurred and be
continuing; or
(f) Lessee or any Guarantor shall (i) admit in writing its inability
to pay its debts generally as they become due, (ii) file a petition under
the United States bankruptcy laws or any other applicable insolvency law
or statute of the United States of America or any State or Commonwealth
thereof, (iii) make a general assignment for the benefit of its creditors,
(iv) consent to the appointment of a receiver of itself or the whole or
any substantial part of its property, (v) fail to cause the discharge of
any custodian, trustee or receiver appointed for Lessee or such Guarantor
or the whole or a substantial part of its property within ninety (90) days
after such appointment, or (vi) file a petition or answer seeking or
consenting to reorganization under the United States bankruptcy laws or
any other applicable insolvency law or statute of the United States of
America or any State or Commonwealth thereof; or
(g) insolvency proceedings or a petition under the United States
bankruptcy laws or any other applicable insolvency law or statute of the
United States of America or any State or Commonwealth thereof shall be
filed against Lessee or any Guarantor and not dismissed within ninety (90)
days from the date of its filing, or a court of competent jurisdiction
shall enter an order or decree appointing, without its consent of, a
receiver of Lessee or any Guarantor or the whole or a substantial part of
its property, and such order or decree shall not be vacated or set aside
within ninety (90) days from the date of the entry thereof; or
<PAGE> 23
19
(h) a Credit Agreement Event of Default of the type specified in
Section 6.1(c), 6.1(e), 6.1(g), 6.1(i), 6.1(k), 6.1(m) or 6.1(n) of the
Credit Agreement shall have occurred and be continuing; or
(i) an event of default under the Corporate Credit Agreement or
under any Replacement Corporate Credit Agreement shall have occurred and
be continuing or a Triggering Event under (and as defined in) the
Intercreditor Agreement shall have occurred;
then, in any such event, Lessor may, in addition to the other rights and
remedies provided for in this Section 17 and in Section 18.1, terminate this
Lease by giving Lessee five (5) days notice of such termination, and this Lease
shall terminate. Lessee shall, to the fullest extent permitted by law, pay as
Supplemental Rent all costs and expenses incurred by or on behalf of Lessor,
including fees and expenses of counsel, as a result of any Lease Event of
Default hereunder.
17.2 Final Liquidated Damages. If a Lease Event of Default shall
have occurred and be continuing on or after the Completion Date, Lessor shall
have the right to recover, by demand to Lessee (provided no demand shall be
required in the case of a Lease Event of Default under Section 17.1 (f) or (g))
and at Lessor's election, and Lessee shall pay to Lessor, as and for final
liquidated damages, but exclusive of the indemnities payable under Section 12 of
the Participation Agreement, and in lieu of all damages beyond the date of such
demand the sum of (a) the Termination Value, plus (b) all other amounts owing in
respect of Rent and Supplemental Rent theretofore accruing under this Lease,
provided that if a Lease Event of Default shall have occurred and be continuing
prior to the Completion Date, the Lessor's rights and remedies shall be as set
forth in the Agency Agreement. Upon payment of the Termination Value plus all
other amounts owing in respect of Rent and Supplemental Rent theretofore
accruing under this Lease, Lessee shall be entitled to receive from Lessor, at
Lessee's request and cost, an assignment of Lessor's right, title and interest
in the Property, in recordable form and otherwise in conformity with local
custom and free and clear of the Lien of the Mortgage, and the Property shall be
quitclaimed to Lessee (or Lessee's designee) "AS IS" and in their then present
physical condition. If any statute or rule of law shall limit the amount of such
final liquidated damages to less than the amount agreed upon, Lessor shall be
entitled to the maximum amount allowable under such statute or rule of law;
provided, that Lessee shall not be entitled to receive an assignment of Lessor's
interest in the Property unless Lessee shall have paid in full the Termination
Value.
17.3 Lease Remedies. Lessor and Lessee intend that for commercial
law and bankruptcy law purposes, this Lease will be treated as a financing
arrangement, as set forth in Section 7. If, as a result of applicable state law,
which cannot be waived, this Lease is deemed to be a lease of the Property,
rather than a financing arrangement, and Lessor is unable to enforce the
remedies set forth in Section 17.2, the following remedies shall be available to
Lessor:
(a) Surrender of Possession. If a Lease Event of Default shall have
occurred and be continuing, and whether or not this Lease shall have been
terminated pursuant to Section 17.1, Lessee shall, upon thirty (30) days written
notice, surrender to Lessor possession of the
<PAGE> 24
20
Property and Lessee shall quit the same. Lessor may enter upon and repossess the
Property by such means as are available at law or in equity, and may remove
Lessee and all other Persons and any and all personal property and Lessee's
equipment and personalty and severable Modifications from the Property. Lessor
shall have no liability by reason of any such entry, repossession or removal
performed in accordance with applicable law.
(b) Reletting. If a Lease Event of Default shall have occurred and
be continuing, and whether or not this Lease shall have been terminated pursuant
to Section 17.1, Lessor may, but shall be under no obligation to, relet all, or
any portion, of the Property, for the account of Lessee or otherwise, for such
term or terms (which may be greater or less than the period which would
otherwise have constituted the balance of the Term) and on such conditions
(which may include concessions or free rent) and for such purposes as Lessor may
determine, and Lessor may collect, receive and retain the rents resulting from
such reletting. Lessor shall not be liable to Lessee for any failure to relet
the Property or for any failure to collect any rent due upon such reletting.
(c) Damages. None of (i) the termination of this Lease pursuant to
Section 17.1; (ii) the repossession of the Property; or (iii) except to the
extent required by applicable law, the failure of Lessor to relet all, or any
portion, of the Property, the reletting of all or any portion thereof, nor the
failure of Lessor to collect or receive any rentals due upon any such reletting
shall relieve Lessee of its liability and obligations hereunder, all of which
shall survive any such termination, repossession or reletting. If after the
Completion Date any Lease Event of Default shall have occurred and be continuing
and notwithstanding any termination of this Lease pursuant to Section 17.1,
Lessee shall forthwith pay to Lessor all Basic Rent and other sums due and
payable hereunder to and including the date of such termination. Thereafter, on
the days on which the Basic Rent or Supplemental Rent, as applicable, are
payable under this Lease or would have been payable under this Lease if the same
had not been terminated pursuant to Section 17.1 and until the end of the Term
or what would have been the Term in the absence of such termination, Lessee
shall pay Lessor, as current liquidated damages (it being agreed that it would
be impossible accurately to determine actual damages) an amount equal to the
Basic Rent and Supplemental Rent that are payable under this Lease or would have
been payable by Lessee hereunder if this Lease had not been terminated pursuant
to Section 17.1, less the net proceeds, if any, which are actually received by
Lessor with respect to the period in question of any reletting of the Property
or any portion thereof; provided that Lessee's obligation to make payments of
Basic Rent and Supplemental Rent under this Section 17.3 shall continue only so
long as Lessor shall not have received the amounts specified in Section 17.2. In
calculating the amount of such net proceeds from reletting, there shall be
deducted all of Lessor's, the Agent's and any Lenders' expenses in connection
therewith, including repossession costs, brokerage commissions, fees and
expenses for counsel and any necessary repair or alteration costs and expenses
incurred in preparation for such reletting. To the extent Lessor receives any
damages pursuant to this Section 17.3, such amounts shall be regarded as amounts
paid on account of Rent.
(d) Acceleration of Rent. If after the Completion Date a Lease Event
of Default shall have occurred and be continuing, and this Lease shall not have
been terminated pursuant to Section 17.1, and whether or not Lessor shall have
collected any current liquidated
<PAGE> 25
21
damages pursuant to Section 17.3(c), Lessor may upon written notice to Lessee
accelerate all payments of Basic Rent due hereunder and, upon such acceleration,
Lessee shall immediately pay Lessor, as and for final liquidated damages and in
lieu of all current liquidated damages on account of such Lease Event of Default
beyond the date of such acceleration (it being agreed that it would be
impossible accurately to determine actual damages) an amount equal to the sum of
(a) all Basic Rent (assuming interest at a rate per annum equal to the Overdue
Rate), as applicable, due from the date of such acceleration until the end of
the Term, plus (b) the Maximum Residual Guarantee Amount that would be payable
under Section 21.1(c) assuming the proceeds of the sale pursuant to such Section
21.1(c) are equal to zero, which sum is then discounted to present value at a
rate equal to the rate then being paid on United States treasury securities with
maturities corresponding to the then remaining Term. Following payment of such
amount by Lessee, Lessee will be permitted to stay in possession of the Property
for the remainder of the Term, subject to the terms and conditions of this
Lease, including the obligation to pay Supplemental Rent, provided that no
further Lease Event of Default shall occur and be continuing, following which
Lessor shall have all the rights and remedies set forth in this Section 17 (but
not including those set forth in this Section 17.3). If any statute or rule of
law shall limit the amount of such final liquidated damages to less than the
amount agreed upon, Lessor shall be entitled to the maximum amount allowable
under such statute or rule of law.
17.4 Waiver of Certain Rights. If this Lease shall be terminated
pursuant to Section 17.1, Lessee waives, to the fullest extent permitted by law,
(a) any notice of re-entry or the institution of legal proceedings to obtain
re-entry or possession; (b) any right of redemption, re-entry or repossession;
(c) the benefit of any laws now or hereafter in force exempting property from
liability for rent or for debt; and (d) any other rights which might otherwise
limit or modify any of Lessor's rights or remedies under this Section 17.
17.5 Assignment of Rights Under Contracts. If a Lease Event of
Default shall have occurred and be continuing, and whether or not this Lease
shall have been terminated pursuant to Section 17.1, Lessee shall upon Lessor's
demand immediately assign, transfer and set over to Lessor all of Lessee's
right, title and interest in and to each agreement executed by Lessee in
connection with the construction, renovation, development, use or operation of
the Property (including all right, title and interest of Lessee with respect to
all warranty, performance, service and indemnity provisions), as and to the
extent that the same relate to the construction renovation, and operation of the
Property.
17.6 Remedies Cumulative. Lessor shall be entitled to enforce
payment of the indebtedness and performance of the obligations secured hereby
and to exercise all rights and powers under this instrument or under any of the
other Operative Agreements or other agreement or any laws now or hereafter in
force, notwithstanding some or all of the obligation secured hereby may now or
hereafter be otherwise secured, whether by mortgage, security agreement, pledge,
lien, assignment or otherwise. Neither the acceptance of this instrument nor its
enforcement, shall prejudice or in any manner affect Lessor's right to realize
upon or enforce any other security now or hereafter held by Lessor, it being
agreed that Lessor shall be entitled to enforce this instrument and any other
security now or hereafter held by Lessor in such order and manner as Lessor may
determine in its absolute discretion. No remedy herein conferred upon or
<PAGE> 26
22
reserved to Lessor is intended to be exclusive of any other remedy herein or by
law provided or permitted, but each shall be cumulative and shall be in addition
to every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute. Every power or remedy given by any of the Operative
Agreements to Lessor or to which it may otherwise be entitled may be exercised,
concurrently or independently, from time to time and as often as may be deemed
expedient by Lessor. In no event shall Lessor, in the exercise of the remedies
provided in this instrument, be deemed a "mortgagee in possession," and Lessor
shall not in any way be made liable for any act, either of commission or
omission, in connection with the exercise of such remedies.
SECTION 18. LESSOR'S RIGHT TO CURE
18.1 Lessor's Right to Cure Lessee's Lease Defaults. Lessor, without
waiving or releasing any obligation or Lease Event of Default, may (but shall be
under no obligation to) remedy any Lease Event of Default for the account and at
the sole cost and expense of Lessee (subject to the limitation on Lessor's
remedies during the Construction Period as set forth in Section 5.4 of the
Agency Agreement), including the failure by Lessee to maintain any insurance
required by Section 14, and may, to the fullest extent permitted by law, and
notwithstanding any right of quiet enjoyment in favor of Lessee, enter upon the
Property for such purpose and take all such action thereon as may be necessary
or appropriate therefor. No such entry shall be deemed an eviction of Lessee.
All out-of-pocket costs and expenses so incurred (including the fees and
expenses of counsel), together with interest thereon at the Overdue Rate from
the date on which such sums or expenses are paid by Lessor, shall be paid by
Lessee to Lessor on demand as Supplemental Rent.
SECTION 19. LEASE TERMINATION
19.1 Provisions Relating to Lessee's Termination of this Lease or
Exercise of Purchase Option. In connection with any termination of this Lease
pursuant to the terms of Section 16.2 for which Lessee receives payment of the
Termination Value, or in connection with Lessee's exercise of its Purchase
Option or Maturity Date Purchase Option, upon the date on which this Lease is to
terminate or upon the Expiration Date, and upon tender by Lessee of the amounts
set forth in Section 16.2(b), 20.1 or 20.2, as applicable:
(a) Lessor shall execute and deliver to Lessee (or to Lessee's
designee) at Lessee's cost and expense an assignment of Lessor's entire
interest in the Property, in each case in recordable form and otherwise in
conformity with local custom and free and clear of the Lien of the
Mortgage and any Lessor Liens; and
(b) The Property shall be conveyed to Lessee "AS IS" and in then
present physical condition.
<PAGE> 27
23
SECTION 20. PURCHASE OPTION
20.1 Purchase Option. Lessee shall have the irrevocable option
(exercisable by giving Lessor irrevocable written notice (the "Purchase Notice")
of Lessee's election, which election shall be irrevocable, to exercise such
option not less than ten (10) days prior to the date of purchase pursuant to
such option) to purchase the Property on the date specified in such Purchase
Notice, which date must occur prior to the date which is six months prior to the
Maturity Date, at a price equal to the Termination Value (the "Purchase Option
Price") (which the parties do not intend to be a "bargain" purchase price). If
Lessee exercises its option to purchase the Property pursuant to this Section
20.1 (the "Purchase Option"), Lessor shall quitclaim to Lessee or Lessee's
designee all of Lessor's right, title and interest in and to the Property as of
the date specified in the Purchase Notice upon receipt of the Purchase Option
Price and all Rent and other amounts then due and payable under this Lease and
any other Operative Agreement, in accordance with Section 19.1. Lessee may
designate, in the Purchase Notice, the transferee or transferees to whom the
conveyance shall be made (if other than to Lessee), in which case such
conveyance shall (subject to the terms and conditions set forth herein) be made
to such designee; provided, however, that such designation of a transferee or
transferees shall not cause Lessee to be released, fully or partially, from any
of its obligations under this Lease, including, without limitation, the
obligation to pay to Lessor the Purchase Option Price on the date specified in
the Purchase Notice.
20.2 Maturity Date Purchase Option. Not less than six months prior
to the Maturity Date, Lessee shall give Lessor and Agent irrevocable written
notice (the "Maturity Date Election Notice") that Lessee is electing either (a)
to exercise the Maturity Date Purchase Option or (b) to remarket the Property
pursuant to Section 21. If Lessee does not give a Maturity Date Election Notice
on or before the date six months prior to the Maturity Date, then Lessee shall
be deemed to have elected to exercise the Maturity Date Purchase Option. If
Lessee has elected or is deemed to have elected to exercise the Maturity Date
Purchase Option, then on the Maturity Date Lessee shall pay to Lessor an amount
equal to the Termination Value for the Property (which the parties do not intend
to be a "bargain" purchase price) and, upon receipt of such amount plus all Rent
and other amounts then due and payable under this Lease and any other Operative
Agreement, Lessor shall transfer to Lessee or Lessee's designee all of Lessor's
right, title and interest in and to the Property in accordance with Section
19.1.
20.3 Purchase of Less Than All of the Property. Subject to the
conditions contained herein, Lessee shall have the irrevocable option on any
Business Day on or after the Completion Date to purchase a portion of the
Property; provided that Lessee shall be entitled to purchase less than all of
the Property only if the portion being purchased is released from the Mortgage
and if the portion of the Property not being purchased shall constitute one or
more legal lots after closing of such purchase, shall contain one of the two
Buildings and shall be viable as a separate property in compliance with all
Legal Requirements. The purchase price ("Purchase Price") for the portion of the
Property which Lessee elects to purchase shall be subject to the approval of
Lessor which approval shall not be unreasonably withheld if the fair market
value of the portion of the Property not purchased, as determined by an
Appraisal, shall
<PAGE> 28
24
equal the Termination Value for the portion of the Property not purchased.
Lessee's exercise of its option pursuant to this Section 20.3 shall be subject
to the following conditions:
(i) Lessee shall have delivered a Purchase Notice to the Lessor not
less than thirty (30) days prior to such purchase, specifying the date of such
purchase;
(ii) no Lease Default or Lease Event of Default shall have occurred
and be continuing on either the date of such Purchase Notice or on the date of
such purchase;
(iii) such purchase shall not occur during the Marketing Period.
If Lessee exercises its option pursuant to this Section 20.3 then, upon Lessor's
receipt of the Purchase Price and all Rent and other amounts then due and
payable under this Lease and any other Operative Agreement in connection
therewith, Lessor shall quitclaim to Lessee or its designee all of Lessor's
right, title and interest in and to the applicable portion of the Property in
accordance with Section 19, such transfer to be effective as of the date
specified in the Purchase Notice. Lessee may designate, in a notice given to
Lessor not less than ten (10) Business Days prior to the closing of such
purchase (time being of the essence), the transferee or transferees to whom the
conveyance shall be made (if other than to Lessee), in which case such
conveyance shall (subject to the terms and conditions set forth herein) be made
to such designee; provided, however, that such designation of a transferee or
transferees shall not cause Lessee to be released, fully or partially, from any
of its obligations under this Lease, including, without limitation, the
obligation to pay to Lessor the Purchase Price. The option contained in this
Section 20.3 may only be exercised by Lessee once during the Term.
SECTION 21. SALE OF PROPERTY
21.1 Sale Procedure. (a) Unless Lessee shall have elected or shall
be deemed to have elected to purchase the Property and has paid the Purchase
Option Price with respect thereto, or otherwise terminated this Lease with
respect thereto and paid the Termination Value with respect thereto, Lessee
shall (i) pay to Lessor the Maximum Residual Guarantee Amount as provided for in
Section 21.1(c), and (ii) act as Lessor's agent to sell the Property to one or
more third parties for cash in accordance with Section 21.1(b).
(b) During the Marketing Period, Lessee, as nonexclusive broker for
Lessor, shall use its best efforts to obtain bids for the cash purchase of the
Property for the highest price available in the relevant market, shall notify
Lessor promptly of the name and address of each prospective purchaser and the
cash price which each prospective purchaser shall have offered to pay for the
Property and shall provide Lessor with such additional information about the
bids and the bid solicitation procedure as Lessor may request from time to time.
Lessor may reject any and all bids and may assume sole responsibility for
obtaining bids by giving Lessee written notice to that effect; provided,
however, that notwithstanding the foregoing, Lessor may not reject a bid if such
bid, together with any amounts to be paid pursuant to Section 21.3, is greater
than or equal to the sum of the Limited Deficiency Amount and all costs and
expenses referred to
<PAGE> 29
25
in Section 21.2(i) and is a bona fide offer by a third party purchaser who is
not an Affiliate of Lessee. If the price which a prospective purchaser shall
have offered to pay for the Property is less than the sum of the Limited
Deficiency Amount and all costs and expenses referred to in Section 21.2(i),
Lessor may elect to retain the Property by giving Lessee at least two Business
Days' prior written notice of Lessor's election to retain the Property, and upon
receipt of such notice, Lessee shall surrender the Property to Lessor pursuant
to Section 10.1(c). Unless Lessor shall have elected to retain the Property
pursuant to the preceding sentence, Lessor shall sell the Property free of any
Lessor Liens attributable to it, without recourse or warranty, for cash to the
purchaser or purchasers identified by Lessee or Lessor, as the case may be.
Lessee shall surrender the Property so sold to each purchaser in the condition
specified in Section 10.1.
(c) On the date during the Marketing Period on which the Property is
sold pursuant to Section 21.1(b), or on the Maturity Date if the Property
remains unsold, Lessee shall pay to Lessor the Maximum Residual Guarantee
Amount.
21.2 Application of Proceeds of Sale. Lessor shall apply the
proceeds of sale of the Property in the following order of priority:
(i) FIRST, to pay or to reimburse Lessor for the payment of
all reasonable costs and expenses incurred by Lessor in connection with
the sale; and
(ii) SECOND, the balance shall be paid to the Agent to be
applied pursuant to the provisions of the Credit Agreement.
21.3 Indemnity for Excessive Wear. If the proceeds of the sale
described in Section 21.1(b) with respect to the Property, less all expenses
incurred by Lessor in connection with such sale, shall be less than the Limited
Deficiency Amount for the Property at the time of such sale and if it shall have
been determined (pursuant to the Appraisal Procedure) that the Fair Market Sales
Value of the Property shall have been impaired by greater than normal and
expected wear and tear during the Term, Lessee shall pay to Lessor within ten
(10) days after receipt of Lessor's written statement (i) the amount of such
excess wear and tear determined by the Appraisal Procedure or (ii) the amount of
the Net Sale Proceeds Shortfall, whichever amount is less.
21.4 Appraisal Procedure. For determining the Fair Market Sales
Value of a Property or any other amount which may, pursuant to any provision of
any Operative Agreement, be determined by an appraisal procedure, Lessor and
Lessee shall use the following procedure (the "Appraisal Procedure"). Lessor and
Lessee shall endeavor to reach a mutual agreement as to such amount for a period
of ten (10) days from commencement of the Appraisal Procedure, and if they
cannot agree within ten (10) days, then two qualified appraisers, one chosen by
Lessee and one chosen by Lessor, shall mutually agree thereupon, but if either
party shall fail to choose an appraiser within twenty (20) days after notice
from the other party of the selection of its appraiser, then the appraisal by
such appointed appraiser shall be binding on Lessee and Lessor. If the two
appraisers cannot agree within twenty (20) days after both shall have been
appointed, then a third appraiser shall be selected by the two appraisers or,
failing agreement as to such third
<PAGE> 30
26
appraiser within thirty (30) days after both shall have been appointed, by the
American Arbitration Association. The decisions of the three appraisers shall be
given within twenty (20) days of the appointment of the third appraiser and the
decision of the appraiser most different from the average of the other two shall
be discarded and such average shall be binding on Lessor and Lessee; provided
that if the highest appraisal and the lowest appraisal are equidistant from the
third appraisal, the third appraisal shall be binding on Lessor and Lessee. The
fees and expenses of all of the appraisers shall be paid by the Lessee.
21.5 Certain Obligations Continue. During the Marketing Period, the
obligation of Lessee to pay Rent with respect to the Property (including the
installment of Basic Rent due on the Maturity Date) shall continue undiminished
until payment in full to Lessor of the sale proceeds, the Maximum Residual
Guarantee Amount, if any, the amount due under Section 21.3, if any, and all
other amounts due to Lessor with respect to the Property. Lessor shall have the
right, but shall be under no duty, to solicit bids, to inquire into the efforts
of Lessee to obtain bids or otherwise to take action in connection with any such
sale, other than as expressly provided in this Section 21.
SECTION 22. HOLDING OVER
22.1 Holding Over. If Lessee shall for any reason remain in
possession of the Property after the expiration or earlier termination of this
Lease (unless the Property is conveyed to Lessee), such possession shall be as a
tenancy at sufferance during which time Lessee shall continue to pay
Supplemental Rent that would be payable by Lessee hereunder were the Lease then
in full force and effect with respect to the Property and Lessee shall continue
to pay Basic Rent at an annual rate equal to the rate payable hereunder
immediately preceding such expiration or earlier termination; provided, however,
that from and after the sixtieth (60th) day Lessee shall remain in possession of
the Property after such expiration or earlier termination, Lessee shall pay
Basic Rent at an annual rate equal to two hundred percent (200%) of the Basic
Rent payable hereunder immediately preceding such expiration or earlier
termination. Such Basic Rent shall be payable from time to time upon demand by
Lessor. During any period of tenancy at sufferance, Lessee shall, subject to the
second preceding sentence, be obligated to perform and observe all of the terms,
covenants and conditions of this Lease, but shall have no rights hereunder other
than the right, to the extent given by law to tenants at sufferance, to continue
its occupancy and use of the Property. Nothing contained in this Section 22
shall constitute the consent, express or implied, of Lessor to the holding over
of Lessee after the expiration or earlier termination of this Lease as to the
Property and nothing contained herein shall be read or construed as preventing
Lessor from maintaining a suit for possession of the Property or exercising any
other remedy available to Lessor at law or in equity.
SECTION 23. RISK OF LOSS
23.1 Risk of Loss The risk of loss of or decrease in the enjoyment
and beneficial use of the Property as a result of the damage or destruction
thereof by fire, the
<PAGE> 31
27
elements, casualties, thefts, riots, wars or otherwise is assumed by Lessee, and
Lessor shall in no event be answerable or accountable therefor, except for
Lessor's obligation to advance any insurance proceeds received by Lessor in
respect thereof pursuant to Section 15(e) hereof.
SECTION 24. SUBLETTING AND ASSIGNMENT
24.1 Subletting and Assignment. Lessee may not assign this Lease or
any of its rights or obligations hereunder in whole or in part to any Person
other than an Affiliate of Lessee. Lessee may, without the consent of Lessor,
sublease any portion of the Property to one or more Affiliates of Lessee, and
may sublease up to 25% of the Property to one or more Persons and may modify,
extend or renew any such sublease, provided that: (a) no sublease or other
relinquishment of possession of the Property shall in any way discharge or
diminish any of Lessee's obligations to Lessor hereunder and Lessee shall remain
directly and primarily liable under this Lease as to the Property, or any
portion thereof, so sublet, (b) any sublease of the Property shall be made
subject to and subordinate to this Lease and to the rights of Lessor hereunder,
and (c) any sublease shall expire prior to the expiration of the Term and shall
expressly provide for the surrender of the Property after a Lease Event of
Default hereunder.
24.2 Subleases. Promptly following the execution and delivery of any
sublease permitted by this Section 24, Lessee shall deliver a copy of such
executed sublease to Lessor and the Agent.
SECTION 25. ESTOPPEL CERTIFICATES
25.1 Estoppel Certificates. At any time and from time to time upon
not less than twenty (20) days' prior request by Lessor or Lessee (the
"Requesting Party"), the party receiving such request (the "Certifying Party")
shall furnish to the Requesting Party a certificate signed by an individual
having the office of vice president or higher in the Certifying Party that this
Lease is in full force and effect (or that this Lease is in full force and
effect as modified and setting forth the modifications); the dates to which the
Basic Rent and Supplemental Rent have been paid; to the best knowledge of the
signer of such certificate, whether or not the Requesting Party is in default
under any of its obligations hereunder (and, if so, the nature of such alleged
default); and such other matters under this Lease as the Requesting Party may
reasonably request. Any such certificate furnished pursuant to this Section 25
may be relied upon by the Requesting Party, and any existing or prospective
mortgagee, purchaser or lender, and any accountant or auditor, of, from or to
the Requesting Party (or any Affiliate thereof).
SECTION 26. NO WAIVER
26.1 No Waiver. No failure by Lessor or Lessee to insist upon the
strict performance of any term hereof or to exercise any right, power or remedy
upon a default hereunder, and no acceptance of full or partial payment of Rent
during the continuance of any
<PAGE> 32
28
such default, shall constitute a waiver of any such default or of any such term.
To the fullest extent permitted by law, no waiver of any default shall affect or
alter this Lease, and this Lease shall continue in full force and effect with
respect to any other then existing or subsequent default.
SECTION 27. ACCEPTANCE OF SURRENDER
27.1 Acceptance of Surrender. (a) As of the Expiration Date, if any
Default shall have occurred and be continuing under the Lease, then Lessee shall
be deemed to have irrevocably exercised the Maturity Date Purchase Option
pursuant to Section 20.2.
(b) Except as otherwise expressly provided in this Lease, no
surrender to Lessor of this Lease or of all or any portion of the Property or of
any interest therein shall be valid or effective unless agreed to and accepted
in writing by Lessor and, prior to the payment or performance of all obligations
under the Credit Documents, the Agent, and no act by Lessor or the Agent or any
representative or agent of Lessor or the Agent, other than a written acceptance,
shall constitute an acceptance of any such surrender.
SECTION 28. NO MERGER OF TITLE
28.1 No Merger of Title. There shall be no merger of this Lease or
of the leasehold estate created hereby by reason of the fact that the same
Person may acquire, own or hold, directly or indirectly, in whole or in part,
(a) this Lease or the leasehold estate created hereby or any interest in this
Lease or such leasehold estate, (b) the fee estate in the Property, except as
may expressly be stated in a written instrument duly executed and delivered by
the appropriate Person, or (c) a beneficial interest in Lessor.
SECTION 29. NOTICES
29.1 Notices. Unless otherwise specifically provided herein, all
notices, consents, directions, approvals, instructions, requests and other
communications required or permitted by the terms hereof to be given to any
Person to be effective shall be in writing (including by Facsimile transmission)
and shall be deemed to have been duly given or made (a) when delivered by hand,
(b) one Business Day after delivery to such nationally recognized courier
service specifying overnight delivery, (c) five (5) Business Days after being
deposited in the mail, certified or registered, postage prepaid or (d) in the
case of Facsimile notice, when received, addressed to such Person as indicated:
<PAGE> 33
29
If to Lessee: Safeskin Real Estate Incorporated
12671 High Bluff Drive
San Diego, California 92130
Attention: William R. LaRue,
Vice President-Treasurer
Telecopy No.: (619) 350-2380
If to Lessor: Union Bank of California, N.A.
Corporate Trust Division
120 South San Pedro Street, Suite 400
Los Angeles, California 90012
Attention: Vivian Savedra
Telecopy No.: (213) 972-5694
with a copy
to the Agent: Union Bank of California, N.A.
San Diego Commercial Banking Office
530 "B" Street - 4th Floor
San Diego, California 92101-4407
Attention: Douglas S. Lambell
Telecopy No.: (619) 230-3766
or such additional parties and/or other address as such party may hereafter
designate.
SECTION 30. MISCELLANEOUS
30.1 Miscellaneous. Anything contained in this Lease to the contrary
notwithstanding, all claims against and liabilities of Lessee or Lessor arising
from events commencing prior to the expiration or earlier termination of this
Lease shall survive such expiration or earlier termination. If any term or
provision of this Lease or any application thereof shall be declared invalid or
unenforceable, the remainder of this Lease and any other application of such
term or provision shall not be affected thereby. If any right or option of
Lessee provided in this Lease, including any right or option described in
Sections 15, 16, 22 or 21, would, in the absence of the limitation imposed by
this sentence, be invalid or unenforceable as being in violation of the rule
against perpetuities or any other rule of law relating to the vesting of an
interest in or the suspension of the power of alienation of property, then such
right or option shall be exercisable only during the period which shall end
twenty-one (21) years after the date of death of the last survivor of the
descendants of Franklin D. Roosevelt, the former President of the United States,
Henry Ford, the deceased automobile manufacturer, and John D. Rockefeller, the
founder of the Standard Oil Company, known to be alive on the date of the
execution and delivery of this Lease.
<PAGE> 34
30
30.2 Amendments and Modifications. Neither this Lease nor any
provision hereof may be amended, waived, discharged or terminated except by an
instrument in writing signed by Lessor and Lessee.
30.3 Successors and Assigns. All the terms and provisions of this
Lease shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
30.4 Headings and Table of Contents. The headings and table of
contents in this Lease are for convenience of reference only and shall not limit
or otherwise affect the meaning hereof.
30.5 Counterparts. This Lease may be executed in any number of
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same instrument.
30.6 GOVERNING LAW. THIS LEASE HAS BEEN DELIVERED IN, AND SHALL IN
ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY
WITHIN SUCH STATE, EXCEPT AS TO MATTERS RELATING TO THE CREATION OF THE
LEASEHOLD ESTATE HEREUNDER, THE CREATION, PERFECTION AND ENFORCEMENT OF LIENS
AND SECURITY INTERESTS AND THE EXERCISE OF REMEDIES WITH RESPECT THERETO, WHICH
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE IN
WHICH THE PROPERTY IS LOCATED.
30.7 Limitations on Recourse. Except as expressly set forth in the
Operative Agreements, Lessee agrees to look solely to Lessor's estate and
interest in the Property, the proceeds of sale thereof, any insurance proceeds
or any other award or any third party proceeds received by Lessor in connection
with the Property for the collection of any judgment requiring the payment of
money by Lessor in the event of liability by Lessor, and no other property or
assets of Lessor, the Trust Company member, partner or other owner of an
interest, direct or indirect, in Lessor, or any director, officer, shareholder,
employee, beneficiary, Affiliate of any of the foregoing shall be subject to
levy, execution or other enforcement procedure for the satisfaction of Lessee's
remedies under or with respect to this Lease, the relationship of Lessor and
Lessee hereunder or Lessee's use of the Property or any other liability of
Lessor to Lessee; provided that nothing in this Section shall be construed to
impair or limit the rights of Lessee against the Investor under the Operative
Agreements; and further, provided, that Lessor shall be liable in its individual
capacity for its own gross negligence or willful misconduct. Nothing in this
Section shall be interpreted so as to limit the terms of Section 6.1 or 6.2.
30.8 Memorandum of Lease. This Lease shall not be recorded, but
Lessor and Lessee shall, upon the execution and delivery of each Lease
Supplement, execute and deliver a memorandum of this Lease (the "Memorandum of
Lease") substantially in the form of Exhibit B and otherwise in form suitable
for recording under the laws of the jurisdiction in which the Property is
located, which memorandum shall be recorded at Lessee's sole cost and expense.
<PAGE> 35
31
30.9 Priority. Unless and until a Lease Event of Default shall
occur, the Mortgage shall be subject and subordinate to this Lease (and Lessee's
purchase options contained herein). From and after the occurrence of a Lease
Event of Default, the Mortgage, at the sole election of the Agent, shall be
senior to this Lease without any further act by any Person.
<PAGE> 36
32
IN WITNESS WHEREOF, the parties have caused this Lease be duly
executed and delivered as of the date first above written.
SAFESKIN REAL ESTATE INCORPORATED
By:
------------------------------------
Name:
Title:
UNION BANK OF CALIFORNIA, N.A., not in its individual capacity except as
expressly stated herein, but solely as Trustee
By:
------------------------------------
Name: Vivian R. Savedra
Title: Assistant Vice President
Receipt of this original counterpart of the foregoing Lease is
hereby acknowledged on this 5th day of March, 1999.
UNION BANK OF CALIFORNIA, N.A., as the
Agent for the Lenders
By:
------------------------------------
Name: Douglas S. Lambell
Title: Vice President
<PAGE> 1
EXHIBIT 11
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
--------------------------------------------
1999 1998
----------- -----------
<S> <C> <C>
Basic:
Net income ............................................ $ 959,657 $13,314,362
=========== ===========
Weighted average number of shares of common stock
outstanding ........................................... 52,910,264 53,368,370
Net income per common share ........................... $ .02 $ .25
=========== ===========
Diluted:
Net income ............................................ $ 959,657 $13,314,362
=========== ===========
Weighted average number of shares of common stock
outstanding ........................................... 52,910,264 53,368,370
Net effect of dilutive stock options--based on
the treasury stock method using average
market price .......................................... 4,771,134 7,267,591
----------- -----------
Total weighted average number of shares of common stock
and common stock equivalents outstanding .............. 57,681,398 60,635,961
=========== ===========
Net income per common share ........................... $ .02 $ .22
=========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 6,970
<SECURITIES> 0
<RECEIVABLES> 32,254
<ALLOWANCES> 0
<INVENTORY> 44,798
<CURRENT-ASSETS> 12,935
<PP&E> 127,802
<DEPRECIATION> 0
<TOTAL-ASSETS> 266,855
<CURRENT-LIABILITIES> 29,555
<BONDS> 111,000
0
0
<COMMON> 551
<OTHER-SE> 121,789
<TOTAL-LIABILITY-AND-EQUITY> 266,855
<SALES> 41,763
<TOTAL-REVENUES> 41,763
<CGS> 21,413
<TOTAL-COSTS> 21,413
<OTHER-EXPENSES> 1,666
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,723
<INCOME-PRETAX> 1,234
<INCOME-TAX> 275
<INCOME-CONTINUING> 959
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 959
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
