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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported): FEBRUARY 19, 1997
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SELFCARE, INC.
(Exact name of Registrant as specified in charter)
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DELAWARE 0-20871 04-3164127
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(State or other jurisdiction (Commission file number) (IRS employer
of incorporation) identification no.)
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200 PROSPECT STREET, WALTHAM, MASSACHUSETTS 02154
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(Address of principal executive offices) (Zip Code)
(617) 647-3900
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(Registrant's telephone number, including area code)
There are 6 pages in this Report.
Page 1 of 6
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Acquisition of Nutritional Supplement Lines
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On February 19, 1997, the Company, through a newly-formed subsidiary (the
"Acquisition Subsidiary"), acquired the U.S. rights to several nutritional
supplement product lines (the "Nutritional Supplement Lines") from American Home
Products Corporation ("AHP"). As consideration for the Nutritional Supplement
Lines, the Acquisition Subsidiary paid to AHP $30.0 million in cash and the
Company issued to AHP a $6.0 million promissory note (the "AHP Note"). The
Company funded the cash portion of the purchase price with a credit facility
(the "Acquisition Facility") consisting of a $25.0 million term loan (the "AHP
Term Loan") and a $5.0 million bridge loan (the "AHP Bridge Loan") made to the
Acquisition Subsidiary by Fleet National Bank ("Fleet"). The AHP Note is due on
the first anniversary of the closing of the Nutritional Supplement Lines
Acquisition and bears interest payable quarterly at a rate of 7.0% per annum.
The Nutritional Supplement Lines include Stress Tabs(R), Ferro-Sequels(R),
Posture(R), Protegra(TM), Allbee(R), and Z-Bec(R). The Nutritional Supplement
Lines had domestic sales of approximately $24.0 million in 1996. The Stress
Tabs, Allbee and Z-Bec product lines included in the Nutritional Supplement
Lines currently represent, according to industry resources, approximately a
29.0% share of the B-Complex Vitamin category sold through U.S. drug, food and
mass-merchandising retail chains.
ITEM 5. OTHER EVENTS
------------
On February 19, 1997, the Company and the Acquisition Subsidiary entered
into a credit agreement (the "Credit Agreement") with various lenders party
thereto from time to time and Fleet National Bank, as agent, to provide for
borrowings to finance the acquisition of the Nutritional Supplement Lines and to
provide the Acquisition Subsidiary with working capital. The Credit Agreement
provides for (a) a secured term loan (the "AHP Term Loan"), (b) a short term
secured bridge loan (the "AHP Bridge Loan" and, together with the AHP Term Loan,
the "Acquisition Facility"), and (c) a secured revolving credit line in an
amount up to $5,000,000 (the "Credit Line").
The AHP Term Loan has a five-year term, with quarterly amortization of
principal at annual rates ranging from $3.0 million to $5.0 million, and a $6.5
million balloon payment at maturity. In addition to this amortization schedule,
the Acquisition Subsidiary is required to make mandatory prepayments of the AHP
Term Loan at the end of each fiscal year, in an amount equal to 50% of the
excess of (i) its earnings before interest, taxes, depreciation and amortization
("EBITDA") for such fiscal year over (ii) principal payments on the AHP Term
Loan, cash interest and tax expense, capital expenditures and any change in
working capital.
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These prepayments will be applied in the inverse order of the established
amortization schedule. The AHP Term Loan at the Company's election, bears
interest at an annual floating rate equal to either LIBOR plus two percent, or
Fleet's Prime Rate. The AHP Bridge Loan is due June 3, 1997, and at the
company's election, bears interest at an annual floating rate equal to either
LIBOR plus 3.5 percent or Fleet's Prime Rate plus 1.5 percent. If the AHP Bridge
Loan has not been repaid or refinanced by May 3, 1997, Selfcare will be required
to maintain a minimum of $5.0 million in cash or liquid investments. As of
December 31, 1996, the Company had approximately $16.5 million in cash and
liquid investments. If the AHP Bridge Loan has not been repaid or refinanced at
maturity, Selfcare would have the option of extending the loan with cash pledged
to collateralize a like amount.
In connection with the Acquisition Facility, the Acquisition Subsidiary has
obtained from Fleet a $5.0 million revolving credit line (the "Credit Line").
The Credit Line at the Company's election, bears interest at an annual floating
rate equal to either LIBOR plus 1.75 percent or Fleet's Prime Rate and matures
in three years. The Company has a limited number of LIBOR rate options for the
AHP Term Loan, the AHP Bridge Loan, and the Credit Line. Each LIBOR rate option
must be exercised for a period between one month and 12 months and must cover a
minimum of $1.0 million of the loan. The Acquisition Facility and the Credit
Line are secured by a first priority lien on all of the Acquisition Subsidiary's
assets and a guaranty by the Company that is secured by a first priority lien on
substantially all the Company's U.S. assets.
The Acquisition Facility and the Credit Line impose certain financial
covenants on the Acquisition Subsidiary, including (i) requirements to maintain
minimum EBITA levels of $2.3 million per quarter beginning with the quarter
ended June 30, 1998 and $2.475 million per quarter beginning with the quarter
ended June 30, 1999 and not to exceed certain ratios of total indebtedness to
EBITDA, beginning with the quarter ended December 31, 1997, at which time the
ratio of total indebtedness to EBITDA can not exceed 3.75 to 1, (ii) limits on
capital expenditures of $250,000 per year, (iii) a requirement to maintain a
ratio of EBITDA to fixed charges of not less than 1.25 for any quarter beginning
with the quarter ending March 31, 1998, and (iv) a requirement of a positive net
income for any quarter. The Acquisition Subsidiary has also agreed to
restrictions on (x) acquisitions, mergers or joint ventures without Fleet's
consent, (y) material asset sales and other payments, and (z) dividends and
distributions. Further, the Company, as guarantor of the Acquisition
Subsidiary's debt under the Acquisition Facility and the Credit Facility, is
subject to a limited number of covenants, none of which are financial
maintenance covenants, including a requirement to provide Fleet with periodic
financial statements and other information and a prohibition on the Company
permitting other liens on its U.S. assets. The Company also will be limited in
its ability to receive dividends and distributions from the Acquisition
Subsidiary. In addition, an event of default shall be deemed to have occurred
under the Acquisition Facility and the Credit Line if any three of Ron
Zwanziger, Kenneth D. Legg, Richard A. Pinkowitz, Anthony H. Hall and Gary E.
Long cease to be employed by the Company or the Acquisition Subsidiary in
positions comparable to their current positions. Messrs. Zwanziger, Legg,
Pinkowitz and Hall are
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officers of the Company. Mr. Long joined the Company in February 1997 and has
responsibility for the operation of the Nutritional Supplement Lines business.
In addition, the Acquisition Subsidiary was required, at the time of the closing
of the Acquisition Facility, to have a proforma capital base of at least $9.5
million. This requirement was satisfied through a combination of (i) the
Company's obligations under the AHP Note, (ii) a $2.0 million subordinated loan
by the Company to the Acquisition Subsidiary and (iii) the Company's capital
contribution of approximately $1.5 million to be used to pay expenses incurred
in connection with the completion of the acquisition of the Nutritional
Supplement Lines. The Company and the Acquisition Subsidiary have paid Fleet
fees and expenses totaling approximately $350,000 in connection with the
Acquisition Facility and the Credit Facility. As of the date hereof, the
Acquisition Subsidiary has not drawn down on the Credit Line. The Company may
prepay the AHP Note and the AHP Bridge Loan at any time.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired
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At the time of filing of this Form 8-K it is impracticable for the
Company to provide the required financial statements of the
Nutritional Supplement Lines. Such financial statements will be filed
by amendment not later than May 5, 1997, in accordance with Item 7,
paragraph (a)(4) of Form 8-K.
(b) Pro Forma Financial Information
-------------------------------
At the time of filing of this Form 8-K it is impracticable for the
Company to provide the pro forma financial information that would be
required pursuant to Article 11 of Regulation S-X with respect to the
acquisition of the Nutritional Supplement Lines. Such financial
information will be filed by amendment not later than May 5, 1997, in
accordance with Item 7, paragraph (b)(2) of Form 8-K.
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(c) Exhibits
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2.1 Asset Purchase Agreement, dated as of January 14, 1997, by and
between American Home Products Corporation, American Cyanamid
Company, A.H. Robins Company, Incorporated and Selfcare Inc. and
Selfcare Acquisition Corp. (incorporated by reference to Exhibit
10.53 to the Company's Registration Statement on Form SB-2,
No. 333-19911).
10.1 Credit Agreement, dated as of February 19, 1997, by and among
Selfcare, Inc., Selfcare Acquisition Corp., the Lenders from time
to time party thereto and Fleet National Bank, as agent.
Page 5 of 6
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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.
Date: March 5, 1997 SELFCARE, INC.
/s/ Kenneth D. Legg
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Kenneth D. Legg
Vice President, U.S. Operations and Secretary
Page 6 of 6
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Execution Copy
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SELFCARE, INC.
SELFCARE ACQUISITION CORP.
CREDIT AGREEMENT
Dated as of February 19, 1997
FLEET NATIONAL BANK, Agent
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TABLE OF CONTENTS
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1. Definitions; Certain Rules of Construction...................................1
2. The Credits.................................................................22
2.1. Revolving Credit.................................................22
2.1.1. Revolving Loan........................................22
2.1.2. Maximum Amount of Revolving Credit....................23
2.1.3. Borrowing Requests....................................23
2.1.4. Borrower Loan Account; Revolving Notes................23
2.2. Term Credit......................................................24
2.2.1. Term Loan.............................................24
2.2.2. Term Notes............................................24
2.3. Bridge Credit....................................................24
2.3.1. Bridge Loan...........................................24
2.3.2. Bridge Notes..........................................24
2.4. Application of Proceeds..........................................24
2.4.1. Revolving Loan........................................24
2.4.2. Term Loan.............................................24
2.4.3. Bridge Loan...........................................25
2.4.4. Specifically Prohibited Applications..................25
2.5. Nature of Obligations of Lenders to Make Extensions of Credit....25
3. Interest; Pricing Options Fees..............................................25
3.1. Interest.........................................................25
3.2. Pricing Options..................................................26
3.2.1. Election of LIBOR Pricing Options.....................26
3.2.2. Selection of LIBOR Interest Periods...................26
3.2.3. Additional Interest...................................26
3.2.4. Violation of Legal Requirements.......................27
3.2.5. Funding Procedure.....................................27
3.3. Commitment Fee; Revolving Loan...................................28
3.4. Changes in Circumstances; Yield Protections......................28
3.4.1. Reserve Requirements, etc.............................28
3.4.2. Taxes.................................................28
3.4.3. Capital Adequacy......................................29
3.4.4. Regulatory Changes....................................29
3.4.5. Compensation Claims...................................30
3.4.6. Mitigation............................................30
3.5. Computations of Interest and Fees................................30
4. Payment.....................................................................31
4.1. Payment at Maturity..............................................31
4.1.1. Revolving Loan........................................31
4.1.2. Term Loan.............................................31
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4.1.3. Bridge Loan...........................................31
4.2. Contingent Required Prepayments..................................31
4.2.1. Excess Revolving Credit Exposure......................31
4.2.2. Excess Cash Flow......................................31
4.2.3. Net Asset Sale Proceeds...............................31
4.2.4. Subordinated Debt.....................................32
4.3. Fixed Required Prepayments.......................................32
4.4. Voluntary Prepayments............................................32
4.5. Reborrowing; Application of Payments, etc........................32
4.5.1. Reborrowing...........................................33
4.5.2. Order of Application..................................33
4.5.3. Payment with Accrued Interest, etc....................33
4.5.4. Payment for Lenders...................................33
5. Conditions to Extending Credit..............................................33
5.1. Conditions on Initial Closing Date...............................33
5.1.1. Notes.................................................33
5.1.2. Perfection of Security................................33
5.1.3. Payment of Fees.......................................34
5.1.4. Legal Opinions........................................34
5.1.5. Acquisition...........................................34
5.1.6. Consolidated Funded Indebtedness......................35
5.1.7. Consolidated Senior Funded Indebtedness...............35
5.1.8. Minimum Consolidated Capital Base.....................35
5.1.9. Interest Rate Protection..............................35
5.1.10. Capitalization, etc..................................35
5.1.11. Proper Proceedings...................................36
5.1.12. General..............................................36
5.2. Conditions to Each Extension of Credit...........................36
5.2.1. Borrower Officer's Certificate........................36
5.2.2. Proper Proceedings....................................37
5.2.3. Legality, etc.........................................37
5.2.4. General...............................................37
6. General Covenants...........................................................37
6.1. Taxes and Other Charges; Accounts Payable........................37
6.1.1. Taxes and Other Charges...............................37
6.1.2. Accounts Payable......................................38
6.2. Conduct of Business, etc.........................................38
6.2.1. Types of Business.....................................38
6.2.2. Maintenance of Properties.............................38
6.2.3. Statutory Compliance..................................38
6.2.4. Compliance with Material Agreements...................39
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6.3. Insurance..............................................................39
6.3.1. Business Interruption Insurance.............................39
6.3.2. Property Insurance..........................................39
6.3.3. Liability Insurance.........................................39
6.3.4. Flood Insurance.............................................39
6.4. Financial Statements and Reports.......................................40
6.4.1. Annual Reports..............................................40
6.4.2. Quarterly Reports...........................................41
6.4.3. Monthly Reports.............................................42
6.4.4. Other Reports...............................................43
6.4.5. Notice of Litigation; Notice of Defaults....................44
6.4.6. ERISA Reports...............................................44
6.4.7. Other Information; Audit....................................44
6.4.8. Commercial Examinations.....................................45
6.5. Certain Financial Tests.............................................45
6.5.1. Consolidated Funded Indebtedness to Consolidated EBITDA.....45
6.5.2. Consolidated Senior Funded Indebtedness
to Consolidated EBITDA............................45
6.5.3. Consolidated EBITDA.........................................46
6.5.4. Capital Expenditures........................................46
6.5.5. Consolidated Adjusted EBITDA to Consolidated Fixed Charges..46
6.5.6. Consolidated Net Income.....................................46
6.5.7. Consolidated Tangible Capital Base..........................46
6.6. Indebtedness...........................................................47
6.7. Guarantees; Letters of Credit..........................................48
6.8. Liens..................................................................48
6.9. Investments and Acquisitions...........................................49
6.10. Distributions.........................................................50
6.11. Mergers, Consolidations and Dispositions of Assets....................50
6.12. Lease Obligations.....................................................51
6.13. Issuance of Stock by Subsidiaries; Subsidiary Distributions...........51
6.13.1. Issuance of Stock by Subsidiaries..........................51
6.13.2. No Restrictions on Subsidiary Distributions................51
6.14. Voluntary Prepayments of Other Indebtedness...........................52
6.15. Derivative Contracts..................................................52
6.16. Negative Pledge Clauses...............................................52
6.17. ERISA, etc............................................................52
6.18. Transactions with Affiliates..........................................53
6.19. Interest Rate Protection..............................................53
6.20. Environmental Laws....................................................53
6.20.1. Compliance with Law and Permits............................53
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6.20.2. Notice of Claims, etc.................................53
6.20.3. Successor Liability...................................53
6.21. Liquidity of the Guarantor.......................................54
6.22. Maintenance of Cash and Cash Equivalents.........................54
6.23. Additional Contribution by the Guarantor.........................54
6.24. Credit Security Matters..........................................54
6.25. Ownership of the Borrower........................................54
7. Representations and Warranties...............................................54
7.1. Organization and Business.........................................54
7.1.1. Guarantor..............................................54
7.1.2. The Borrower. ........................................55
7.1.3. Subsidiaries...........................................55
7.1.4. Qualification..........................................56
7.1.5. Capitalization.........................................56
7.2. Financial Statements and Other Information; Material Agreements...56
7.2.1. Financial Statements and Other Information.............56
7.2.2. Material Agreements....................................57
7.3. Agreements Relating to Financing Debt, Investments, etc...........57
7.4. Changes in Condition..............................................57
7.5. Title to Assets...................................................58
7.6. Operations in Conformity With Law, etc............................58
7.7. Litigation........................................................58
7.8. Authorization and Enforceability..................................58
7.9. No Legal Obstacle to Agreements...................................59
7.10. Defaults.........................................................59
7.11. Licenses, etc....................................................60
7.12. Tax Returns......................................................60
7.13. Certain Business Representations.................................60
7.13.1. Labor Relations.......................................60
7.13.2. Antitrust.............................................60
7.13.3. Consumer Protection...................................61
7.13.4. Burdensome Obligations................................61
7.13.5. Future Expenditures...................................61
7.14. Environmental Regulations........................................61
7.14.1. Environmental Compliance..............................61
7.14.2. Environmental Litigation..............................61
7.14.3. Hazardous Material....................................62
7.14.4. Environmental Condition of Properties.................62
7.15. Pension Plans....................................................62
7.16. Acquisition Agreement, etc.......................................63
7.17. Foreign Trade Regulations; Government Regulation; Margin Stock...63
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7.17.1. Foreign Trade Regulations............................63
7.17.2. Government Regulation................................63
7.17.3. Margin Stock.........................................63
7.18. Disclosure......................................................63
8. Defaults....................................................................64
8.1. Events of Default................................................64
8.1.1. Payment...............................................64
8.1.2. Specified Covenants...................................64
8.1.3. Other Covenants.......................................64
8.1.4. Representations and Warranties........................64
8.1.5. Cross Default, etc....................................64
8.1.6. Ownership; Liquidation; Management; etc...............65
8.1.7. Enforceability, etc...................................66
8.1.8. Judgments.............................................66
8.1.9. ERISA.................................................66
8.1.10. Bankruptcy, etc. ...................................66
8.1.11. Examination by the Agent.............................67
8.1.12. Material Adverse Change..............................67
8.2. Certain Actions Following an Event of Default....................67
8.2.1. Terminate Obligation to Extend Credit.................67
8.2.2. Specific Performance; Exercise of Rights..............67
8.2.3. Acceleration..........................................68
8.2.4. Enforcement of Payment; Credit Security; Setoff.......68
8.2.5. Cumulative Remedies...................................68
8.3. Annulment of Defaults............................................68
8.4. Waivers..........................................................68
9. Guarantees..................................................................69
9.1. Guarantees of Credit Obligations.................................69
9.2. Continuing Obligation............................................69
9.3. Waivers with Respect to Credit Obligations.......................70
9.4. Lenders' Power to Waive, etc.....................................71
9.5. Information Regarding the Borrower, etc..........................72
9.6. Certain Guarantor Representations................................73
9.7. Subrogation......................................................73
9.8. Subordination....................................................74
9.9. Future Subsidiaries; Further Assurances..........................74
10. Security...................................................................74
10.1. Credit Security.................................................74
10.1.1. Tangible Personal Property...........................74
10.1.2. Rights to Payment of Money...........................74
10.1.3. Intangibles..........................................75
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10.1.4. Pledged Stock.........................................75
10.1.5. Pledged Rights........................................75
10.1.6. Pledged Indebtedness..................................75
10.1.7. Chattel Paper, Instruments and Documents..............75
10.1.8. Leases................................................75
10.1.9. Deposit Accounts......................................75
10.1.10. Collateral...........................................76
10.1.11. Books and Records....................................76
10.1.12. Real Property........................................76
10.1.13. Insurance............................................76
10.1.14. All Other Property...................................76
10.1.15. Proceeds and Products................................76
10.1.16. Excluded Property....................................76
10.2. Representations, Warranties and Covenants with
Respect to Credit Security............................77
10.2.1. Pledged Stock.........................................77
10.2.2. Accounts and Pledged Indebtedness.....................77
10.2.3. Government Contracts Receivables......................78
10.2.4. No Sales of Assets, Liens or Restrictions on
Transfer or Change of Control................78
10.2.5. Location of Credit Security...........................78
10.2.6. Trade Names...........................................79
10.2.7. Property Insurance....................................79
10.2.8. Insurance.............................................79
10.2.9. Modifications to Credit Security......................80
10.2.10. Delivery of Documents................................80
10.2.11. Perfection of Credit Security........................80
10.3. Administration of Credit Security................................80
10.3.1. Use of Credit Security................................80
10.3.2. Deposits; Accounts....................................81
10.3.3. Pledged Securities....................................81
10.4. Right to Realize upon Credit Security............................82
10.4.1. Assembly of Credit Security; Receiver.................82
10.4.2. General Authority.....................................82
10.4.3. Marshaling, etc.......................................83
10.4.4. Sales of Credit Security..............................83
10.4.5. Sale without Registration.............................84
10.4.6. Application of Proceeds...............................85
10.5. Custody of Credit Security.......................................85
11. Expenses; Indemnity.........................................................85
11.1. Expenses.........................................................85
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11.2. General Indemnity................................................86
12. Operations; Agent...........................................................86
12.1. Interests in Credits.............................................87
12.2. Agent's Authority to Act, etc....................................87
12.3. Borrower to Pay Agent, etc.......................................87
12.4. Lender Operations for Advances, etc..............................87
12.4.1. Advances..............................................87
12.4.2. Agent to Allocate Payments, etc.......................87
12.4.3. Delinquent Lenders; Nonperforming Lenders.............88
12.5. Sharing of Payments, etc.........................................89
12.6. Amendments, Consents, Waivers, etc...............................89
12.7. Agent's Resignation..............................................90
12.8. Concerning the Agent.............................................91
12.8.1. Action in Good Faith, etc.............................91
12.8.2. No Implied Duties, etc................................91
12.8.3. Validity, etc.........................................91
12.8.4. Compliance............................................91
12.8.5. Employment of Agents and Counsel......................92
12.8.6. Reliance on Documents and Counsel.....................92
12.8.7. Agent's Reimbursement.................................92
12.8.8. Agent's Fees..........................................92
12.9. Rights as a Lender...............................................92
12.10. Independent Credit Decision.....................................93
12.11. Indemnification.................................................93
13. Successors and Assigns; Lender Assignments and Participations...............93
13.1. Assignments by Lenders...........................................93
13.1.1. Assignees and Assignment Procedures...................94
13.1.2. Terms of Assignment and Acceptance....................94
13.1.3. Register..............................................95
13.1.4. Acceptance of Assignment and Assumption...............96
13.1.5. Federal Reserve Bank..................................96
13.1.6. Further Assurances....................................96
13.2. Credit Participants..............................................96
14. Confidentiality.............................................................97
15. Foreign Lenders.............................................................97
16. Notices.....................................................................98
17. Course of Dealing; Amendments and Waivers...................................99
18. No Strict Construction......................................................99
19. Defeasance..................................................................99
20. Venue; Service of Process..................................................100
21. Waiver of Jury Trial.......................................................100
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22. General....................................................................101
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EXHIBITS
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2.1.3 - Borrowing Request Notice
2.1.4 - Revolving Note
2.2.2 - Term Note
2.3.2 - Bridge Note
5.1.9 - Capitalization and Proforma Closing Covenants
5.2.1 - Officer's Certificate
6.4A - Computation Covenants Certificate
6.4B - Certificate of Guarantor Computation Covenants
6.4.3 - Borrowing Base Certificate
6.8.11 - Existing Liens of the Guarantor
7.1 - Organization of the Guarantor, the Borrower and the Borrower's
Subsidiaries
7.2.2 - Material Agreements
7.3 - Financing Debt, Certain Investments, etc.
7.15 - Multi-employer and Defined Benefit Plans
12.1 - Percentage Interests
13.1.1 - Assignment and Acceptance
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SELFCARE, INC.
SELFCARE ACQUISITION CORP.
CREDIT AGREEMENT
This Agreement, dated as of February 19, 1997, is among Selfcare, Inc.,
a Delaware corporation, Selfcare Acquisition Corp., a Delaware corporation, the
Lenders from time to time party hereto and Fleet National Bank, a national
banking association both in its capacity as agent for itself and the other
Lenders. The parties agree as follows:
1. Definitions; Certain Rules of Construction. Certain capitalized terms are
used in this Agreement and in the other Credit Documents with the specific
meanings defined below in this Section 1. Except as otherwise explicitly
specified to the contrary or unless the context clearly requires otherwise, (a)
the capitalized term "Section " refers to sections of this Agreement, (b) the
capitalized term "Exhibit" refers to exhibits to this Agreement, (c) references
to a particular Section include all subsections thereof, (d) the word
"including" shall be construed as "including without limitation", (e) accounting
terms not otherwise defined herein have the meaning provided under GAAP, (f)
terms defined in the UCC and not otherwise defined herein have the meaning
provided under the UCC, (g) references to a particular statute or regulation
include all rules and regulations thereunder and any successor statute,
regulation or rules, in each case as from time to time in effect, and (h)
references to a particular Person include such Person's successors and assigns
to the extent not prohibited by this Agreement and the other Credit Documents.
References to "the date hereof" mean the date first set forth above.
1.1. "Accounts" is defined in Section 10.1.2.
1.2. "Accumulated Benefit Obligations" means the actuarial present
value of the accumulated benefit obligations under any Plan, calculated in
accordance with Statement No. 87 of the Financial Accounting Standards Board.
1.3. "Acquisition" means the acquisition of certain assets of the
Sellers as contemplated by the Acquisition Agreement.
1.4. "Acquisition Agreement" means the Asset Purchase Agreement dated
as of January 14, 1997 among the Borrower, the Guarantor and the Sellers.
1.5. "Affiliate" means, with respect to the Borrower (or any other
specified Person), any other Person directly or indirectly controlling,
controlled by or under direct or indirect common control with the Borrower, and
shall include (a) any officer or director of the Borrower and (b) any Person of
which the Borrower or any Affiliate (as defined in clause (a) above) of the
Borrower shall, directly or indirectly, beneficially own either (i) at least 10%
of the outstanding equity securities having the general power to vote or (ii) at
least 10% of all equity interests.
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1.6. "Agent" means Fleet National Bank, in its capacity as agent for
the Lenders hereunder, as well as its successors and assigns in such capacity
pursuant to Section 12.7.
1.7. "Applicable Rate" means, at any date:
(a) (i) with respect to the Term Loan, for each portion of the Term
Loan subject to a LIBOR Pricing Option, the sum of the LIBOR Basic Rate
plus 2.0%, and for each other portion of the Term Loan, the Prime Rate;
and
(ii) with respect to the Revolving Loan, for each portion of
the Revolving Loan subject to a LIBOR Pricing Option, the sum of the
LIBOR Basic Rate plus 1.75%, and for each other portion of the
Revolving Loan, the Prime Rate; and
(iii) with respect to the Bridge Loan, for each portion of the
Bridge Loan subject to a LIBOR Pricing Option, the sum of the LIBOR
Basic Rate plus 3.5% and for each other portion of the Bridge Loan, the
Prime Rate plus 1.5%;
plus (b) an additional 3% effective on the day the Agent notifies the
Borrower that the interest rates hereunder are increasing as a result
of the occurrence and continuance of an Event of Default until the
earlier of such time as (i) such Event of Default is no longer
continuing or (ii) such Event of Default is deemed no longer to exist,
in each case pursuant to Section 8.3.
1.8. "Assignment and Acceptance" is defined in Section 13.1.1.
1.9. "Banking Day" means any day other than Saturday, Sunday or a day
on which banks in Boston, Massachusetts are authorized or required by law or
other governmental action to close.
1.10. "Bankruptcy Code" means Title 11 of the United States Code.
1.11. "Bankruptcy Default" means an Event of Default referred to in
Section 8.1.10.
1.12. "Borrower" means Selfcare Acquisition Corp., a Delaware
corporation.
1.13. "Borrower Loan Account" is defined in Section 2.1.4.
1.14. "Borrowing Base" means, at any date, the sum of (a) 80% of
Eligible Accounts Receivable plus (b) 50% of Eligible Inventory; provided,
however, that the Borrowing Base shall be reduced to $1 at any time that the
Borrower has failed to furnish the computation of the Borrowing Base required by
Section 6.4.3 within five days after such computation was originally due and
thereafter until the applicable computation of the Borrowing Base has been
delivered by the Borrower to the Agent.
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1.15. "Boston Office" means the principal banking office of the Agent
in Boston, Massachusetts.
1.16. "Bridge Loan" is defined in Section 2.3.
1.17. "Bridge Loan Maturity Date" means June 3, 1997 or as extended
pursuant to Section 6.23.
1.18. "Bridge Note" is defined in Section 2.3.2.
1.19. "By-laws" means all written by-laws, rules, regulations and all
other documents relating to the management, governance or internal regulation of
any Person other than an individual, or interpretive of the Charter of such
Person, all as from time to time in effect.
1.20. "Capital Expenditures" means, for any period, amounts added or
required to be added to the property, plant and equipment or other fixed assets
account on the Consolidated balance sheet of the specified Persons, prepared in
accordance with GAAP, in respect of (i) the acquisition, construction,
improvement or replacement of land, buildings, machinery, equipment, leaseholds
and any other real or personal property and (ii) software development costs to
the extent not expensed.
1.21. "Capitalized Lease" means any lease which is required to be
capitalized on the balance sheet of the lessee in accordance with GAAP,
including to the extent applicable, Statement Nos. 13 and 98 of the Financial
Accounting Standards Board.
1.22. "Capitalized Lease Obligations" means the amount of the liability
reflecting the aggregate discounted amount of future payments under all
Capitalized Leases calculated in accordance with GAAP, including to the extent
applicable, Statement Nos. 13 and 98 of the Financial Accounting Standards
Board.
1.23. "Cash Equivalents" means:
(a) negotiable certificates of deposit, time deposits
(including sweep accounts), demand deposits and bankers' acceptances
having a maturity of nine months or less and issued by any domestic
office of a United States financial institution having capital and
surplus and undivided profits aggregating at least $100,000,000 and
rated at least Prime-1 by Moody's Investors Service, Inc. or A-1 by
Standard & Poor's Ratings Group or issued by any Lender;
(b) corporate obligations having a maturity of nine months or
less and rated at least Prime-1 by Moody's Investors Service, Inc. or
A-1 by Standard & Poor's Ratings Group or issued by any Lender;
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(c) any direct obligation of the United States of America or
any agency or instrumentality thereof, or of any state or municipality
thereof, (i) which has a remaining maturity at the time of purchase of
not more than one year or which is subject to a repurchase agreement
with Lender (or any other financial institution referred to in clause
(a) above) exercisable within one year from the time of purchase and
(ii) which, in the case of obligations of any state or municipality, is
rated at least AAA by Moody's Investors Service, Inc. or AAA or better
by Standard & Poor's Ratings Group; and
(d) any mutual fund or other pooled investment vehicle rated
Aa or better by Moody's Investors Service, Inc. or AA or better by
Standard & Poor's Ratings Group which invests principally in
obligations described above.
1.24. "CERCLA" means the federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980.
1.25. "CERCLIS" means the federal Comprehensive Environmental Response
Compensation Liability Information System List (or any successor document)
promulgated under CERCLA.
1.26. "Charter" means the articles of organization, certificate of
incorporation, statute, constitution, joint venture agreement, partnership
agreement, trust indenture, limited liability company agreement or other charter
document of any Person other than an individual, each as from time to time in
effect.
1.27. "Closing Date" means the Initial Closing Date and each other date
on which any extension of credit is made pursuant to Section 2.
1.28. "Code" means the federal Internal Revenue Code of 1986.
1.29. "Commitment" means with respect to any Lender, such Lender's
obligation to extend the credits contemplated by Section 2. The original
Commitments are set forth in Exhibit 12.1 and the current Commitments are
recorded from time to time in the Register.
1.30. "Computation Covenants" means Sections 6.5, 6.6.7, 6.10.2,
6.11.1, 6.12.2 and 6.17.
1.31. "Consolidated" and "Consolidating", when used with reference to
any term, mean that term as applied to the accounts of the Borrower (or other
specified Person) and all of its Subsidiaries (or other specified group of
Persons), consolidated or consolidating, as the case may be, in accordance with
GAAP and with appropriate deductions for minority interests in Subsidiaries.
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1.32. "Consolidated Adjusted EBITDA" means, for any period, the total
of (a) Consolidated EBITDA, minus, (b) taxes based upon or measured by net
income that are actually paid in cash by the Borrower and its Subsidiaries
during such period, minus (c) Distributions declared by the Borrower that are
payable during such period, minus (d) Capital Expenditures of the Borrower and
its Subsidiaries during such period.
1.33. "Consolidated Capital Base" means, at any date, the total of:
(a) stockholders' equity of the Borrower and its Subsidiaries
determined in accordance with GAAP on a Consolidated basis, excluding
the effect of any foreign currency translation adjustments;
plus (b) the principal amount outstanding on any Subordinated Debt;
minus (c) the amount by which such stockholders' equity has been
increased after the Initial Closing Date by the items described in
clauses (a) through (f) of the definition of Consolidated Net Income or
by goodwill;
minus (d) to the extent not already deducted from the amount in clause
(a) above, treasury stock;
plus (e) to the extent not already included in clause (a) above, any
capital contribution made by the Guarantor as contemplated by Sections
5.1.10.
1.34. "Consolidated EBITDA" means, for any period, the total of:
(a) Consolidated Net Income;
plus (b) all amounts deducted in computing such Consolidated Net
Income in respect of:
(i) Interest Expense,
(ii) taxes based upon or measured by net income, and
(iii) depreciation and amortization.
1.35. "Consolidated Fixed Charges" means, for any period, the sum of:
(i) Consolidated Interest Expense, plus
(ii) all current maturities of Indebtedness, calculated based
on payments due within 12 months after the end of such period.
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1.36. "Consolidated Funded Indebtedness" means, at any date,
Indebtedness other than the items described in clauses (g) and (h) of the
definition of the term "Indebtedness".
1.37. "Consolidated Interest Expense" means, for any period, the
aggregate amount of interest, including payments in the nature of interest under
Capitalized Leases and Interest Rate Protection Agreements, accrued by the
Borrower and its Subsidiaries (whether such interest is reflected as an item of
expense or capitalized) in accordance with GAAP on a Consolidated basis.
1.38. "Consolidated Net Income" means, for any period, the net income
(or loss) of the Borrower and its Subsidiaries, determined in accordance with
GAAP on a Consolidated basis; provided, however, that Consolidated Net Income
shall not include:
(a) the income (or loss) of any Person accrued prior to the
date such Person becomes a Subsidiary or is merged into or consolidated
with the Borrower or any of its Subsidiaries;
(b) the income (or loss) of any Person (other than a
Subsidiary) in which the Borrower or any of its Subsidiaries has an
ownership interest; provided, however, that (i) Consolidated Net Income
shall include amounts in respect of the income of such Person when
actually received in cash by the Borrower or such Subsidiary in the
form of dividends or similar Distributions and (ii) Consolidated Net
Income shall be reduced by the aggregate amount of all Investments,
regardless of the form thereof, made by the Borrower or any of its
Subsidiaries in such Person for the purpose of funding any deficit or
loss of such Person;
(c) all amounts included in computing such net income (or
loss) in respect of the write-up of any asset (including the subsequent
amortization or expensing of the written-up portion of assets on
account of the transactions contemplated by the Acquisition Agreement)
or the retirement of any Indebtedness or equity at less than face
value;
(d) extraordinary and nonrecurring gains;
(e) non-recurring, non-cash charges as a result of the
Acquisition or discontinuation of product lines not material to the
business of the Borrower;
(f) the income of any Subsidiary of the Borrower to the extent
the payment of such income in the form of a Distribution or repayment
of Indebtedness to the Borrower or any Wholly Owned Subsidiary of the
Borrower is not permitted, whether on account of any Charter or By-law
restriction, any agreement, instrument, deed or lease or any law,
statute, judgment, decree or governmental order, rule or regulation
applicable to such Subsidiary; and
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(g) any after-tax gains or losses attributable to returned
surplus assets of any Plan.
1.39. "Consolidated Net Revenues" means revenues as reported in the
audited statements of revenues, net of direct expenses, of the product lines
being acquired by the Borrower from the Sellers in the Acquisition for the
twelve months ended November 30, 1996 delivered pursuant to Section 7.2.1(b).
1.40. "Consolidated Senior Funded Indebtedness" means Consolidated
Funded Indebtedness minus the principal amount of Subordinated Debt or, prior to
the placement of the Subordinated Debt, the Bridge Loan.
1.41. "Consolidated Tangible Capital Base" means, at any date, the
total of:
(a) Consolidated Capital Base;
minus (b) the amount of intangible assets carried on the balance sheet
of the Borrower and its Subsidiaries determined in accordance with GAAP
on a Consolidated basis, including in any event, manufacturing rights
and agreements, goodwill, patents, patent applications, copyrights,
trademarks, tradenames, research and development expense,
organizational expense, unamortized debt discount, deferred financing
charges and debt acquisition costs;
minus (c) cash dividends paid during such fiscal year.
1.42. "Consolidated Working Capital Factor" means an amount (which may
be less than zero) equal to the sum of (a) the Current Asset Factor during such
period plus (b) the Current Liabilities Factor during such period.
1.43. "Credit Documents" means:
(a) this Agreement, the Notes, the letter agreement
contemplated by Section 5.1.3 and each Interest Rate Protection
Agreement provided by a Lender (or an Affiliate of a Lender) to the
Borrower or any of its Subsidiaries, each as from time to time in
effect;
(b) all financial statements, reports, notices, mortgages,
assignments, UCC financing statements or certificates delivered to the
Agent or any of the Lenders by the Borrower, any of its Subsidiaries or
any other Obligor in connection herewith or therewith; and
(c) any other present or future agreement or instrument from
time to time entered into among the Borrower, any of its Subsidiaries
or any other Obligor, on one hand, and the Agent or all the Lenders, on
the other hand, relating to, amending or
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modifying this Agreement or any other Credit Document referred to above
or which is stated to be a Credit Document, each as from time to time
in effect.
1.44. "Credit Obligations" means all present and future liabilities,
obligations and Indebtedness of the Borrower owing to the Agent or any other
Lender under or in connection with this Agreement or any other Credit Document,
including obligations in respect of principal, interest, and Interest Rate
Protection Agreements provided by Lender (or an Affiliate of a Lender),
commitment fees, amounts provided for in Sections 3.2.3, 3.4 and 11 and other
fees, charges, indemnities and expenses from time to time owing hereunder or
under any other Credit Document (whether accruing before or after a Bankruptcy
Default).
1.45. "Credit Participant" is defined in Section 13.2.
1.46. "Credit Security" means all assets now or from time to time
hereafter subjected to a security interest, mortgage or charge (or intended or
required so to be subjected pursuant to this Agreement or any other Credit
Document) to secure the payment or performance of any of the Credit Obligations,
including the assets described in Section 10.1.
1.47. "Current Asset Factor" means, for any period, the amount (which
may be less than zero) equal to the total of:
(a) the amount, if any, by which accounts receivable at the
end of such period were greater than accounts receivable at the
beginning of such period;
minus (b) the amount, if any, by which accounts receivable at the end
of such period were less than accounts receivable at the beginning of
such period;
plus (c) the amount, if any, by which inventory at the end of such
period was greater than inventory at the beginning of such period;
minus (d) the amount, if any, by which inventory at the end of such
period was less than inventory at the beginning of such period;
plus (e) the amount, if any, by which prepaid expenses and other
current assets (other than cash and Cash Equivalents) at the end of
such period were greater than prepaid expenses and other current assets
(other than cash and Cash Equivalents) at the beginning of such period;
minus (f) the amount, if any, by which prepaid expenses and other
current assets (other than cash and Cash Equivalents) at the end of
such period were less than prepaid expenses and other current assets
(other than cash and Cash Equivalents) at the beginning of such period;
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<PAGE> 19
plus (g) the amount, if any, by which deferred income tax benefits at
the end of such period were greater than deferred income tax benefits
at the beginning of such period;
minus (h) the amount, if any, by which deferred income tax benefits at
the end of such period were less than deferred income tax benefits at
the beginning of such period;
in each case determined in accordance with GAAP.
1.48. "Current Liabilities Factor" means, for any period, the amount
(which may be less than zero) equal to the total of:
(a) the amount, if any, by which accounts payable and accrued
expenses at the end of such period were less than accounts payable and
accrued expenses at the beginning of such period;
minus (b) the amount, if any, by which accounts payable and accrued
expenses at the end of such period were greater than accounts payable
and accrued expenses at the beginning of such period;
plus (c) the amount, if any, by which current liabilities for income
taxes at the end of such period were less than current liabilities for
income taxes at the beginning of such period;
minus (d) the amount, if any, by which current liabilities for income
taxes at the end of such period were greater than current liabilities
for income taxes at the beginning of such period;
plus (e) the amount, if any, by which other current liabilities (other
than current maturities of long-term debt and accrued interest expense)
at the end of such period were less than other current liabilities
(other than current maturities of long-term debt and accrued interest
expense) at the beginning of such period;
minus (f) the amount, if any, by which other current liabilities (other
than current maturities of long-term debt and accrued interest expense)
at the end of such period were greater than other current liabilities
(other than current maturities of long-term debt and accrued interest
expense) at the beginning of such period;
in each case determined in accordance with GAAP.
1.49. "Default" means any Event of Default and any event or condition
which with the passage of time or giving of notice, or both, would become an
Event of Default and the filing against the Borrower, any of its Subsidiaries or
any other Obligor of a petition commencing an involuntary case under the
Bankruptcy Code.
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1.50. "Delinquency Period" is defined in Section 12.4.3.
1.51. "Delinquent Lender" is defined in Section 12.4.3.
1.52. "Delinquent Payment" is defined in Section 12.4.3.
1.53. "Distribution" means, with respect to the Borrower (or other
specified Person):
(a) the declaration or payment of any dividend or
distribution, including dividends payable in shares of capital stock of
or other equity interests in the Borrower (or such specified Person),
on or in respect of any shares of any class of capital stock of or
other equity interests in the Borrower (or such specified Person);
(b) the purchase, redemption or other retirement of any shares
of any class of capital stock of or other equity interest in the
Borrower (or such specified Person) or of options, warrants or other
rights for the purchase of such shares, directly, indirectly through a
Subsidiary or otherwise;
(c) any other distribution on or in respect of any shares of
any class of capital stock of or equity or other beneficial interest in
the Borrower (or such specified Person);
(d) any payment of principal or interest with respect to, or
any purchase, redemption or defeasance of, any Indebtedness of the
Borrower (or such specified Person) which by its terms or the terms of
any agreement is subordinated to the payment of the Credit Obligations;
and
(e) any payment, loan or advance by the Borrower (or such
specified Person) to, or any other Investment by the Borrower (or such
specified Person) in, the holder of any shares of any class of capital
stock of or equity interest in the Borrower (or such specified Person),
or any Affiliate of such holder;
provided, however, that the term "Distribution" shall not include (i) dividends
payable in perpetual common stock of or other similar equity interests in the
Borrower (or such specified Person) or (ii) payments in the ordinary course of
business in respect of (A) reasonable compensation paid to employees, officers
and directors, (B) advances to employees for travel expenses, drawing accounts
and similar expenditures or (C) rent paid to, or accounts payable for services
rendered or goods sold by, non-Affiliates that own capital stock of or other
equity interests in the Borrower (or such specified Person).
1.54. "Eligible Accounts Receivable" means, at any date,
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(a) the aggregate amount carried as accounts receivable
(reduced appropriately for doubtful accounts and customer returns) on
the most recent Consolidated balance sheet of the Borrower and its
Subsidiaries delivered in accordance with Section 6.4.3;
minus (b) the aggregate amount of any such accounts receivable
outstanding that are more than 90 days from the date of invoice.
minus (c) discounts, commissions, house accounts, chargebacks, customer
incentives, promotions, rebates, reclamation fees, offsets of accounts
payable and distribution fees payable by the Borrower or any of its
Subsidiaries to any Person (other than the Borrower or any of its
Wholly Owned Subsidiaries) in respect of such payments;
minus (d) the amount of such payments due from Affiliates;
minus (e) all payments to be made in a currency other than United
States Funds that is not readily convertible into United States Funds
or that may not be readily withdrawn from the country of origin;
minus (f) payments subject to Liens other than Liens securing the
Credit Obligations.
provided, however, that this definition may be revised by the Agent
from time to time to reflect to Agent's satisfaction the results of any
review conducted by commercial financial examiners under Section 6.4.8.
1.55. "Eligible Inventory" means, at any date, the total of:
(a) the aggregate amount carried as inventory, at the lower of
cost or market value, on the most recent Consolidated balance sheet,
which represent finished goods of the Borrower and its Subsidiaries
delivered in accordance with Section 6.4.3.
minus (b) only to the extent included in the foregoing clause (a), the
aggregate amount of any overhead costs associated with the manufacture,
procurement and storage of inventory, and any operating and marketing
costs;
minus (c) advance payments from customers reflected on such balance
sheet.
provided, however, that this definition may be revised by the Agent
from time to time to reflect to the Agent's satisfaction the results of
any review conducted by commercial financial examiners under Section
6.4.8.
1.56. "Environmental Laws" means all applicable federal, state or local
statutes, laws, ordinances, codes, rules, regulations and guidelines (including
consent decrees and
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administrative orders) relating to public health and safety and protection of
the environment, including OSHA.
1.57. "ERISA" means the federal Employee Retirement Income Security Act
of 1974.
1.58. "ERISA Group Person" means the Borrower, any Subsidiary of the
Borrower and any Person which is a member of the controlled group or under
common control with the Borrower or any Subsidiary of the Borrower within the
meaning of section 414 of the Code or section 4001(a)(14) of ERISA.
1.59. "Events of Default" is defined in Section 8.1.
1.60. "Excess Cash Flow" means, for any period, the total of:
(a) Consolidated EBITDA;
minus (b) Term Loan principal payments made;
minus (c) Interest Expense;
minus (d) taxes based upon or measured by net income that are
actually paid in cash;
minus (e) Capital Expenditures;
minus (f) the Consolidated Working Capital Factor.
1.61. "Exchange Act" means the federal Securities Exchange Act of 1934.
1.62. "Excluded Subsidiaries" means a Foreign Subsidiary of the
Guarantor for which the Guarantor has no recourse obligations on any liabilities
of $250,000 or greater, and which together with other Excluded Subsidiaries is
not material to the business, assets, financial condition, income or prospects
of the Guarantor.
1.63. "FACA" means the Federal Assignment of Claims Act as set forth in
31 U.S.C. Section 3727 and 41 U.S.C. Section 15.
1.64. "Federal Funds Rate" means, for any day, the rate equal to the
weighted average (rounded upward to the nearest 1/8%) of the rates on overnight
federal funds transactions with members of the Federal Reserve System arranged
by federal funds brokers, (a) as such weighted average is published for such day
(or, if such day is not a Banking Day, for the immediately preceding Banking
Day) by the Federal Reserve Bank of New York or (b) if such rate is not so
published for such Banking Day, as determined by the Agent using
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any reasonable means of determination. Each determination by the Agent of the
Federal Funds Rate shall, in the absence of manifest error, be conclusive.
1.65. "Final Maturity Date" means, each of the Revolving Loan Maturity
Date, the Term Loan Maturity Date and the Bridge Loan Maturity Date, as the case
may be.
1.66. "Financial Officer" of the Borrower (or other specified Person)
means its chief executive officer, chief financial officer, chief operating
officer, chairman, president, treasurer or any of its vice presidents whose
primary responsibility is for its financial affairs.
1.67. "Financing Debt" means each of the items described in clauses (a)
through (f) of the definition of the term "Indebtedness".
1.68. "Foreign Subsidiary" means each Subsidiary of the Guarantor that
is organized under the laws of, and conducting its business in jurisdictions
outside of, the United States.
1.69. "Foreign Trade Regulations" means (a) any act that prohibits or
restricts, or empowers the President or any executive agency of the United
States of America to prohibit or restrict, exports to or financial transactions
with any foreign country or foreign national, (b) the regulations with respect
to certain prohibited foreign trade transactions set forth at 22 C.F.R. Parts
120-130 and 31 C.F.R. Part 500 and (c) any order, regulation, ruling,
interpretation, direction, instruction or notice relating to any of the
foregoing.
1.70. "Funding Liability" means (a) any deposit which was used (or
deemed by Section 3.2.5 to have been used) to fund any portion of the Loan
subject to a LIBOR Pricing Option, and (b) any portion of the Loan subject to a
LIBOR Pricing Option funded (or deemed by Section 3.2.5 to have been funded)
with the proceeds of any such deposit.
1.71. "GAAP" means generally accepted accounting principles as from
time to time in effect, including the statements and interpretations of the
United States Financial Accounting Standards Board and any predecessor or
successor entity; provided, however, that for purposes of compliance with
Section 6 (other than Section 6.4) and the related definitions, "GAAP" means
such principles as in effect on December 31, 1996 as applied by the Guarantor
and its Subsidiaries in the preparation of the December 31, 1996 financial
statements referred to in Section 7.2.1(a), and consistently followed, without
giving effect to any subsequent changes thereto.
1.72. "Government Receivables" means any Accounts as to which the
United States of America or any agency or department thereof is the obligor.
1.73. "Guarantee" means, with respect to the Borrower (or other
specified Person):
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(a) any guarantee by the Borrower (or such specified Person),
of the payment or performance of, or any contingent obligation by the
Borrower (or such specified Person), in respect of, any Indebtedness or
other obligation of any primary obligor;
(b) any other arrangement whereby credit is extended to a
primary obligor on the basis of any promise or undertaking of the
Borrower (or such specified Person), including any binding "comfort
letter" or "keep well agreement" written by the Borrower (or such
specified Person), to a creditor or prospective creditor of such
primary obligor, to (i) pay the Indebtedness of such primary obligor,
(ii) purchase an obligation owed by such primary obligor, (iii) pay for
the purchase or lease of assets or services regardless of the actual
delivery thereof or (iv) maintain the capital, working capital,
solvency or general financial condition of such primary obligor;
(c) any liability of the Borrower (or such specified Person),
as a general partner of a partnership in respect of Indebtedness or
other obligations of such partnership;
(d) any liability of the Borrower (or such specified Person)
as a joint venturer of a joint venture in respect of Indebtedness or
other obligations of such joint venture; and
(e) reimbursement obligations (whether contingent or matured)
of the Borrower (or such specified Person) with respect to letters of
credit, bankers acceptances, surety bonds, other financial guarantees
and Interest Rate Protection Agreements,
whether or not any of the foregoing are reflected on the balance sheet of the
Borrower (or such specified Person) or in a footnote thereto; provided, however,
that the term "Guarantee" shall not include endorsements for collection or
deposit in the ordinary course of business. The amount of any Guarantee and the
amount of Indebtedness resulting from such Guarantee shall be the maximum amount
that the guarantor may become obligated to pay in respect of the obligations
(whether or not such obligations are outstanding at the time of computation).
1.74. "Guarantor" means Selfcare, Inc., a Delaware corporation.
1.75. "Hazardous Material" means any pollutant, toxic or hazardous
material or waste, including any "hazardous substance" or "pollutant" or
"contaminant" as defined in section 101(14) of CERCLA or any other Environmental
Law or regulated as toxic or hazardous under RCRA or any other Environmental
Law, including asbestos or oil or petroleum or any hazardous constituent
thereof.
1.76. "Guarantor Computation Covenants" means Section 6.21.
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1.77. "Indebtedness" means all obligations, contingent or otherwise,
which in accordance with GAAP are or are required to be classified upon the
balance sheet of the Borrower (or other specified Person) as liabilities, but in
any event including (without duplication):
(a) borrowed money;
(b) indebtedness evidenced by notes, debentures or similar
instruments;
(c) Capitalized Lease Obligations;
(d) the deferred purchase price of assets or securities,
including related noncompetition, consulting and stock repurchase
obligations (other than ordinary trade accounts payable within six
months after the incurrence thereof in the ordinary course of
business);
(e) mandatory redemption or dividend rights on capital stock
(or other equity);
(f) reimbursement obligations, whether contingent or matured,
with respect to letters of credit, bankers acceptances, surety bonds,
other financial guarantees and Interest Rate Protection Agreements
(without duplication of other Indebtedness supported or guaranteed
thereby);
(g) unfunded pension liabilities;
(h) obligations that are immediately and directly due and
payable out of the proceeds of or production from property;
(i) liabilities secured by any Lien existing on property owned
or acquired by the Borrower (or such specified Person), whether or not
the liability secured thereby shall have been assumed; and
(j) all Guarantees in respect of Indebtedness of others.
1.78. "Indemnified Party" is defined in Section 11.2.
1.79. "Initial Closing Date" means February 19, 1997.
1.80. "Interest Expense" means, for any period, the aggregate amount of
interest, including commitment fees and payments in the nature of interest under
Capitalized Leases and Interest Rate Protection Agreements, accrued (whether
such interest is reflected as an item of expense or capitalized) in accordance
with GAAP on a Consolidated basis.
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1.81. "Interest Payment Date" means the last Banking Day of each month
occurring after the Initial Closing Date, starting with March 31, 1997.
1.82. "Interest Rate Protection Agreement" means any interest rate
swap, interest rate cap, interest rate hedge or other contractual arrangement
that converts variable interest rates into fixed interest rates, fixed interest
rates into variable interest rates or other similar arrangements.
1.83. "Investment" means, with respect to the Borrower (or other
specified Person):
(a) any share of capital stock, partnership or other equity
interest, evidence of Indebtedness or other security issued by any
other Person;
(b) any loan, advance or extension of credit to, or
contribution to the capital of, any other Person;
(c) any Guarantee of the Indebtedness of any other Person;
(d) any acquisition of all or any part of the business of
any other Person or the assets comprising such business or part
thereof; and
(e) any other similar investment.
The investments described in the foregoing clauses (a) through (e)
shall be included in the term "Investment" whether they are made or acquired by
purchase, exchange, issuance of stock or other securities, merger,
reorganization or any other method; provided, however, that the term
"Investment" shall not include (i) current trade and customer accounts
receivable for property leased, goods furnished or services rendered in the
ordinary course of business and payable in accordance with customary trade
terms, (ii) advances and prepayments to suppliers for property leased, goods
furnished and services rendered in the ordinary course of business, (iii)
advances to employees for travel expenses, drawing accounts and similar
expenditures, (iv) stock or other securities acquired in connection with the
satisfaction or enforcement of Indebtedness or claims due to the Borrower (or
such specified Person) or as security for any such Indebtedness or claim or (v)
demand deposits in banks or similar financial institutions.
In determining the amount of outstanding Investments:
(A) the amount of any Investment shall be the cost thereof
minus any returns of capital in cash on such Investment (determined in
accordance with GAAP without regard to amounts realized as income on
such Investment);
(B) the amount of any Investment in respect of a purchase
described in clause (d) above shall include the amount of any Financing
Debt assumed in connection with
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such purchase or secured by any asset acquired in such purchase
(whether or not any Financing Debt is assumed) or for which any Person
that becomes a Subsidiary is liable on the date on which the securities
of such Person are acquired; and
(C) no Investment shall be increased as the result of an
increase in the undistributed retained earnings of the Person in which
the Investment was made or decreased as a result of an equity interest
in the losses of such Person.
1.84. "Legal Requirement" means any present or future requirement
imposed upon any of the Lenders or the Borrower and its Subsidiaries by any law,
statute, rule, regulation, directive, order, decree, guideline (or any
interpretation thereof by courts or of administrative bodies) of the United
States of America or any state or political subdivision thereof, or by any
board, governmental or administrative agency, central bank or monetary authority
of the United States of America or any political subdivision thereof. Any such
requirement imposed on any of the Lenders not having the force of law shall be
deemed to be a Legal Requirement if such Lender reasonably believes that
compliance therewith is in the best interest of such Lender.
1.85. "Lender" means each of the Persons listed as lenders on the
signature pages hereto, including the Agent in its capacity as a Lender and such
other Persons who may from time to time own a Percentage Interest in the Credit
Obligations, but the term "Lender" shall not include any Credit Participant.
1.86. "Lending Officer" means such individuals whom the Agent may
designate by notice to the Borrower from time to time as an officer who may
receive requests for borrowings under Section 2.1.3.
1.87. "LIBOR Basic Rate" means, for any LIBOR Interest Period:
(a) the rate of interest at which deposits of United States
Funds are offered in the London interbank market for a period of time
equal to such LIBOR Interest Period that appears on the Telerate Page
3750 (or is available through a comparable successor source) as of
11:00 a.m. London time two Banking Days prior to the Banking Day on
which such LIBOR Interest Period begins or
(b) if no such rate appears on the Telerate Page 3750, the
rate of interest determined by the Agent to be the average of up to
four interest rates per annum at which deposits of United States Funds
are offered in the London interbank market for a period of time equal
to such LIBOR Interest Period which appear on the Reuter's Screen LIBO
Page as of 11:00 a.m. London time two Banking Days prior to the Banking
Day on which such LIBOR Interest Period begins if at least two such
offered rates so appear on the Reuter's Screen LIBO Page or
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(c) if no such rate appears on the Telerate Page 3750 (or is
available through a comparable successor source) and fewer than two
offered rates appear on the Reuter's Screen LIBO Page, the rate of
interest at which deposits of United States Funds in an amount
comparable to the portion of the Loan as to which the related LIBOR
Pricing Option has been elected and which have a term corresponding to
such LIBOR Interest Period are offered to the Agent by first class
banks in the London inter-bank market for delivery in immediately
available funds at a LIBOR Office on the first day of such LIBOR
Interest Period as determined by the Lender at approximately 10:00 a.m.
(Boston time) two Banking Days prior to the date upon which such LIBOR
Interest Period is to commence (which determination by the Lender
shall, in the absence of manifest error, be conclusive).
1.88. "LIBOR Interest Period" shall mean any period, selected as
provided below in Section 3.2.2, of an integral number of months not exceeding
twelve calendar months commencing on any Banking Day. The number of days in any
month of any LIBOR Interest Period shall be determined by the Agent in
accordance with the then current banking practice in London. If any LIBOR
Interest Period selected hereunder would otherwise end on a date which is not a
Banking Day in London, such LIBOR Interest Period shall instead end on the next
preceding or succeeding Banking Day as determined by the Agent in accordance
with the then current banking practice in London. Each such determination by the
Agent shall, in the absence of demonstrable error, be conclusive.
1.89. "LIBOR Pricing Options" shall mean the options granted pursuant
to Section 3.2.1 to have the interest on all or any portion of the Loan computed
with reference to a Basic LIBOR Rate.
1.90. "Lien" means, with respect to the Borrower (or any other
specified Person):
(a) any lien, encumbrance, mortgage, pledge, charge or
security interest of any kind upon any property or assets of the
Borrower (or such specified Person), whether now owned or hereafter
acquired, or upon the income or profits therefrom;
(b) the acquisition of, or the agreement to acquire, any
property or asset upon conditional sale or subject to any other title
retention agreement, device or arrangement (including a Capitalized
Lease);
(c) the sale, assignment, pledge or transfer for security of
any accounts, general intangibles or chattel paper of the Borrower (or
such specified Person), with or without recourse;
(d) the transfer of any tangible property or assets for the
purpose of subjecting such items to the payment of previously
outstanding Indebtedness in priority to payment of the general
creditors of the Borrower (or such specified Person); and
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(e) the existence for a period of more than 120 consecutive
days of any Indebtedness against the Borrower (or such specified
Person) which if unpaid would by law or upon a Bankruptcy Default be
given any priority over general creditors.
1.91. "Loan" means each of the Revolving Loan, the Term Loan and the
Bridge Loan.
1.92. "Margin Stock" means "margin stock" within the meaning of
Regulations G, T, U or X of the Board of Governors of the Federal Reserve
System.
1.93. "Material Adverse Change" means, since any specified date or from
the circumstances existing immediately prior to the happening of any specified
event, a material adverse change in: (a) the business, assets, financial
condition, income or prospects of the Borrower (on an individual basis), the
Borrower and its Subsidiaries (on a Consolidated basis), or the Guarantor and
its Subsidiaries (other than the Borrower and its Subsidiaries, on a
consolidated basis), whether as a result of (i) general economic conditions
affecting (A) in the case of the Borrower or the Borrower and its Subsidiaries,
the over-the-counter nutritional supplements industry and (B) in the case of the
Guarantor and its Subsidiaries, other than the Borrower and its Subsidiaries,
the self-test diagnostics industry, (ii) difficulties in obtaining supplies and
raw materials or manufacturing, warehousing or distribution, (iii) fire, flood
or other natural calamities, (iv) environmental pollution, (v) regulatory
changes (including those of the Food and Drug Administration), judicial
decisions, war or other governmental action or (vi) any other event or
development, whether or not related to those enumerated above; (b) the ability
of the Obligors to perform their obligations under the Credit Documents; or (c)
the rights and remedies of the Agent and the Lenders under the Credit Documents.
1.94. "Material Agreements" is defined in Section 7.2.2.
1.95. "Maximum Amount of Revolving Credit" is defined in Section 2.1.2.
1.96. "Multiemployer Plan" means any Plan that is a "multiemployer
plan" as defined in section 4001(a)(3) of ERISA.
1.97. "Net Asset Sale Proceeds" means the cash proceeds of the sale or
disposition of assets (including by way of merger of a Subsidiary, but excluding
assets sold or disposed of pursuant to Section 6.11.1) by the specified Persons
net of (a) any Indebtedness permitted by Section 6.6.7 (Capitalized Leases and
purchase money indebtedness) secured by assets being sold in such transaction
required to be paid from such proceeds, (b) income taxes that, as estimated by
such specified Persons in good faith, will be required to be paid by such
specified Persons in cash as a result of, and within 15 months after such sale
or disposition and (c) all reasonable expenses of such specified Persons
incurred in connection with the transaction.
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1.98. "Nonperforming Lender" is defined in Section 12.4.3.
1.99. "Notes" means each of the Revolving Notes, the Term Notes and the
Bridge Notes.
1.100. "Obligor" means each of the Borrower, the Guarantor and each
other Person guaranteeing or providing collateral for the Credit Obligations.
1.101. "OSHA" means the Federal Occupational Health and Safety Act.
1.102. "PBGC" means the Pension Benefit Guaranty Corporation or any
successor entity.
1.103. "Percentage Interest" means (a) at all times when no Event of
Default under Section 8.1.1 and no Bankruptcy Default exists, the ratio that the
respective Commitments of the Lenders bear to the total Commitments of all
Lenders as from time to time in effect and reflected in the Register, and (b) at
all other times, the ratio that the respective amounts of the outstanding Credit
Obligations owing to the Lenders in respect of extensions of credit under
Section 2 bear to the total outstanding Credit Obligations owing to all Lenders.
1.104. "Performing Lender" is defined in Section 12.4.3.
1.105. "Person" means any present or future natural person or any
corporation, association, partnership, joint venture, joint stock, limited
liability or other company, business trust, trust, organization, business or
government or any governmental agency or political subdivision thereof.
1.106. "Plan" means, at any date, any pension benefit plan subject to
Title IV of ERISA maintained, or to which contributions have been made or are
required to be made, by any ERISA Group Person within six years prior to such
date.
1.107. "Pledged Indebtedness" is defined in Section 10.1.6.
1.108. "Pledged Rights" is defined in Section 10.1.5.
1.109. "Pledged Securities" means the Pledged Stock, the Pledged Rights
and the Pledged Indebtedness, collectively.
1.110. "Pledged Stock" is defined in Section 10.1.4.
1.111. "Prime Rate" means, on any day, the greater of (a) the rate of
interest announced by the Agent at the Boston Office as its "prime rate" or (b)
the sum of 1/2% plus the Federal Funds Rate.
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1.112. "Principal Payment Date" means the last Banking Day of each
March, June, September and December occurring after the Initial Closing Date,
starting with June 30, 1997.
1.113. "RCRA" means the federal Resource Conservation and Recovery Act,
42 U.S.C. Section 690, et seq.
1.114. "Register" is defined in Section 13.1.3.
1.115. "Required Lenders" means, with respect to any approval, consent,
modification, waiver or other action to be taken by the Agent or the Lenders
under the Credit Documents which require action by the Required Lenders, such
Lenders as own at least a majority of the Percentage Interests; provided,
however, that with respect to any matters referred to in the proviso to Section
12.6, Required Lenders means such Lenders as own at least the respective
portions of the Percentage Interests required by Section 12.6.
1.116. "Revolving Loan" is defined in Section 2.1.4.
1.117. "Revolving Loan Maturity Date" means February 19, 2000.
1.118. "Revolving Note" is defined in Section 2.1.4.
1.119. "Securities Act" means the federal Securities Act of 1933.
1.120. "Sellers" means American Home Products Corporation, a Delaware
corporation, and certain of its Affiliates.
1.121. "Stated Maximum Amount of Revolving Credit" means the lesser of
(a) $5,000,000 or (b) the amount (in an integral multiple of $500,000) to which
the then applicable amount set forth in clause (a) above shall have been
irrevocably reduced from time to time by at least five Banking Days prior notice
from the Borrower to the Agent.
1.122. "Subordinated Debt" means as approved by the Required Lenders in
the Required Lenders' sole discretion, subordinated notes in the principal
amount of $5,000,000 proposed to be placed by the Borrower, expressly made
subordinate to the Credit Obligations and containing terms and conditions
approved by the Required Lenders, in their sole discretion, including but not
limited to, a prohibition against any and all prepayments of principal on such
Indebtedness prior to or during the 90 day period after the repayment in full of
the Credit Obligations and interest payable only as permitted by Section 6.10.3.
1.123. "Subsidiary" means any Person of which the Borrower (or other
specified Person) shall at the time, directly or indirectly through one or more
of its Subsidiaries, (a) own at least 50% of the outstanding capital stock (or
other shares of beneficial interest)
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entitled to vote generally, (b) hold at least 50% of the partnership, joint
venture or similar interests or (c) be a general partner or joint venturer.
1.124. "Tax" means any present or future tax, levy, duty, impost
deduction, withholding or other charges of whatever nature at any time required
by any Legal Requirement (a) to be paid by any Lender or (b) to be withheld or
deducted from any payment otherwise required hereby to be made to any Lender, in
each case on or with respect to its obligations hereunder, the Loan, any payment
in respect of the Credit Obligations or any Funding Liability not included in
the foregoing; provided, however, that the term "Tax" shall not include taxes
imposed upon or measured by the net income of such Lender (other than
withholding taxes) or franchise taxes.
1.125. "Term Loan" is defined in Section 2.2.1.
1.126. "Term Loan Maturity Date" means February 19, 2002.
1.127. "Term Note" is defined in Section 2.2.2.
1.128. "UCC" means the Uniform Commercial Code as in effect in
Massachusetts on the date hereof; provided, however, that with respect to the
perfection of the Agent's Lien in the Credit Security and the effect of
nonperfection thereof, the term "UCC" means the Uniform Commercial Code as in
effect in any jurisdiction the laws of which are made applicable by section
9-103 of the Uniform Commercial Code as in effect in Massachusetts.
1.129. "United States Funds" means such coin or currency of the United
States of America as at the time shall be legal tender therein for the payment
of public and private debts.
1.130. "Wholly Owned Subsidiary" means any Subsidiary of which all of
the outstanding capital stock (or other shares of beneficial interest) entitled
to vote generally (other than directors' qualifying shares) is owned by the
Borrower (or other specified Person) directly, or indirectly through one or more
Wholly Owned Subsidiaries.
2. The Credits.
2.1. Revolving Credit.
2.1.1. Revolving Loan. Subject to all the terms and conditions
of this Agreement and so long as no Default exists, from time to time
on and after the Initial Closing Date and prior to the Revolving Loan
Maturity Date, the Lenders will severally in accordance with their
respective Percentage Interests, make loans to the Borrower in such
amounts as may be requested by the Borrower in accordance with Section
2.1.3. The aggregate principal amount of loans made under this Section
2.1.1 at any one time outstanding shall in no event exceed the Maximum
Amount of
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Revolving Credit. In no event will the principal amount of loans at any
one time outstanding made by any Lender pursuant to this Section 2.1.1
exceed such Lender's commitment.
2.1.2. Maximum Amount of Revolving Credit. The term "Maximum
Amount of Revolving Credit" means, at any date, the lesser of:
(a) the Stated Maximum Amount of Revolving Credit; or
(b) the Borrowing Base.
2.1.3. Borrowing Requests. The Borrower may from time to
time request a loan under Section 2.1.1 by providing to the Agent a
notice, substantially in the form of Exhibit 2.1.3, not later than noon
(Boston time) on the first Banking Day (or, in the case of Loans
subject to the LIBOR Pricing Option, the third Banking Day) prior to
the requested Closing Date for such loan. The notice must specify (a)
the amount of the requested loan (which shall be not less than $250,000
and an integral multiple of $100,000) and (b) the requested Closing
Date therefor (which shall be a Banking Day). Upon receipt of such
notice, the Agent will promptly inform each other Lender (by telephone
or otherwise). Each such loan will be made at the Boston Office by
depositing the amount thereof to the general account of the Borrower
with the Agent. In connection with each such loan, the Borrower shall
furnish to the Agent a certificate in substantially the form of Exhibit
5.2.1.
2.1.4. Borrower Loan Account; Revolving Notes. The Agent will
establish on its books a loan account for the Borrower (the "Borrower
Loan Account") which the Agent shall administer as follows: (a) the
Agent shall add to the Borrower Loan Account, and the Borrower Loan
Account shall evidence, the principal amount of all loans from time to
time made by the Lenders to the Borrower pursuant to Section 2.1.1 and
(b) the Agent shall reduce the Borrower Loan Account by the amount of
all payments made on account of the Indebtedness evidenced by the
Borrower Loan Account. The aggregate principal amount of the
Indebtedness evidenced by the Borrower Loan Account is referred to as
the "Revolving Loan". The Revolving Loan shall be deemed owned to each
Lender severally in accordance with such Lender's Percentage Interest,
and all payments credited to the Borrower Loan Account shall be for the
account of each Lender in accordance with its Percentage Interest. The
Borrower's obligations to pay each Lender's Percentage Interest in the
Revolving Loan shall be evidenced by a separate note of the Borrower in
substantially the form of Exhibit 2.1.4 (each a "Revolving Note")
payable to each Lender in maximum principal amount equal to such
Lender's Percentage Interest in the Borrower Revolving Loan.
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2.2. Term Credit.
2.2.1. Term Loan. Subject to all the terms and conditions of
this Agreement and so long as no Default exists, on the Initial Closing
Date the Lenders will in accordance with their respective Percentage
Interests, severally lend to the Borrower as a term loan the aggregate
principal amount of $25,000,000. The aggregate principal amount of the
loan made pursuant to this Section 2.2.1 at any one time outstanding is
referred to as the "Term Loan". In connection with the Term Loan, the
Borrower shall furnish to the Agent a certificate in substantially the
form of Exhibit 5.2.1.
2.2.2. Term Notes. The Term Loan shall be made at the Boston
Office by crediting the amount of such loan to the general account of
the Borrower with the Agent against delivery to the Agent of a separate
term note of the Borrower (each a "Term Note") payable to the
respective Lenders. The Term Note issued to each Lender shall be in a
principal amount equal to such Lender's Percentage Interest in the Term
Loan, and shall be in substantially the form of Exhibit 2.2.2.
2.3. Bridge Credit.
2.3.1. Bridge Loan. Subject to all the terms and conditions of
this Agreement and so long as no Default exists, on the Initial Closing
Date Lenders will lend to the Borrower as a bridge loan the aggregate
principal amount of $5,000,000. The aggregate principal amount of the
loan made pursuant to this Section 2.3.1 at any one time outstanding is
referred to as the "Bridge Loan". In connection with the Bridge Loan,
the Borrower shall furnish to Lender a certificate in substantially the
form of Exhibit 5.2.1.
2.3.2. Bridge Notes. The Bridge Loan shall be made at the
Boston Office by crediting the amount of such loan to the general
account of the Borrower with the Agent against delivery to the Agent of
the separate term notes of the Borrower (each a "Bridge Note") payable
to the respective Lenders. The Bridge Note issued to each Lender shall
be in a principal amount equal to such Lender's Percentage Interest in
the Bridge Loan, and shall be in substantially the form of Exhibit
2.3.2.
2.4. Application of Proceeds.
2.4.1. Revolving Loan. Subject to Section 2.4.4, the
Borrower will apply the proceeds of the Revolving Loan for working
capital and other lawful corporate purposes of the Borrower.
2.4.2. Term Loan. The Borrower will apply the proceeds of
the Term Loan solely to acquire certain assets of the Sellers pursuant
to the terms of the Acquisition Agreement.
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2.4.3. Bridge Loan. The Borrower will apply the proceeds of
the Bridge Loan solely to acquire certain assets of the Sellers
pursuant to the terms of the Acquisition Agreement.
2.4.4. Specifically Prohibited Applications. The Borrower will
not, directly or indirectly, apply any part of the proceeds of any
extension of credit made pursuant to the Credit Documents to purchase
or to carry Margin Stock or to any transaction prohibited by the
Foreign Trade Regulations, by other Legal Requirements applicable to
Lender or by the Credit Documents.
2.5. Nature of Obligations of Lenders to Make Extensions of Credit. The
Lenders' obligations to extend credit under this Agreement are several and are
not joint or joint and several. If on any Closing Date any Lender shall fail to
perform its obligations under this Agreement, the aggregate amount of
Commitments to make the extensions of credit under this Agreement shall be
reduced by the amount of unborrowed Commitment of the Lender so failing to
perform and the Percentage Interests shall be appropriately adjusted. The
Lenders that have not failed to perform their obligations to make the extensions
of credit contemplated by Section 2 may, if any such Lender so desires, assume,
in such proportions as such Lenders may agree, the obligations of any Lender who
has so failed and the Percentage Interests shall be appropriately adjusted. The
provisions of this Section 2.5 shall not affect the rights of the Borrower
against any Lender failing to perform its obligations hereunder.
3. Interest; Pricing Options Fees.
3.1. Interest. The Loan shall accrue and bear interest at a rate per
annum which shall at all times equal the Applicable Rate. Prior to any stated or
accelerated maturity of the Loan, the Borrower will, on each Interest Payment
Date, pay the accrued and unpaid interest on the portion of the Loan which was
not subject to a LIBOR Pricing Option. On the last day of each LIBOR Interest
Period or on any earlier termination of any LIBOR Pricing Option, the Borrower
will pay the accrued and unpaid interest on the portion of the Loan which was
subject to the LIBOR Pricing Option which expired or terminated on such date. On
the stated or any accelerated maturity of the Loan, the Borrower will pay all
accrued and unpaid interest on the Loan. Upon the occurrence and during the
continuance of an Event of Default, the Lenders may require accrued interest to
be payable on demand or at regular intervals more frequent than each Interest
Payment Date. All payment of interest hereunder shall be made for the account of
each Lender in accordance with such Lender's Percentage Interest.
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3.2. Pricing Options.
3.2.1. Election of LIBOR Pricing Options. Subject to all of
the terms and conditions hereof and so long as no Default exists, the
Borrower may from time to time, by irrevocable notice to the Agent
actually received not less than three Banking Days prior to the
commencement of the LIBOR Interest Period selected in such notice,
elect to have any portion of the Loan as the Borrower may specify in
such notice accrue and bear daily interest during the LIBOR Interest
Period so selected at the Applicable Rate at a per annum rate equal to
the LIBOR Basic Rate for such LIBOR Interest Period.
No such election shall become effective if, prior to the
commencement of any such LIBOR Interest Period, the Agent determines
that (i) the electing or granting of the LIBOR Pricing Option in
question would violate a Legal Requirement, (ii) deposits in an amount
comparable to the principal amount of the Loan as to which such LIBOR
Pricing Option has been elected and which have a term corresponding to
the proposed LIBOR Interest Period are not readily available in the
LIBOR interbank market, or (iii) by reason of circumstances affecting
the LIBOR interbank market, adequate and reasonable methods do not
exist for ascertaining the interest rate applicable to such deposits
for the proposed LIBOR Interest Period.
3.2.2. Selection of LIBOR Interest Periods. LIBOR Interest
Periods shall be selected so that:
(a) no more than four LIBOR Pricing Options shall be
outstanding at any time with respect to the Revolving Loan, and no more
than two LIBOR Pricing Options shall be outstanding at any time with
respect to the Term Loan;
(b) the minimum portion of the Loan subject to any LIBOR
Pricing Option shall be $1,000,000 and an integral multiple of
$100,000;
(c) an aggregate principal amount of the Loan that is not less
than the amount of the next mandatory prepayment required by Sections
4.2 and 4.3 shall not be subject to a LIBOR Pricing Option on the date
such mandatory prepayment is required to be made; and
(d) no LIBOR Interest Period with respect to any part of the
Loan subject to a LIBOR Pricing Option shall expire later than the
Final Maturity Date.
3.2.3. Additional Interest. If any portion of the Loan that is
subject to a LIBOR Pricing Option is repaid, or any LIBOR Pricing
Option is terminated for any reason, on a date which is prior to the
last Banking Day of the LIBOR Interest Period applicable to such LIBOR
Pricing Option, the Borrower will pay to the Agent for the account of
each Lender in accordance with such Lender's Percentage Interest, in
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addition to any amounts of interest otherwise payable hereunder, an
amount equal to the present value (calculated in accordance with this
Section 3.2.3) of daily interest for the unexpired portion of such
LIBOR Interest Period on the portion of the Loan so repaid, or as to
which a LIBOR Pricing Option was so terminated, at a per annum rate
equal to the excess, if any, of (a) the Applicable Rate calculated on
the basis of the rate applicable to such LIBOR Pricing Option minus (b)
the rate of interest obtainable by the Agent, as Agent determines in
its sole discretion on such date of repayment or termination, on
readily marketable debt securities customarily issued by the Treasury
of the United States of America that have a maturity date approximating
the last Banking Day of such LIBOR Interest Period. The present value
of such additional interest shall be calculated by discounting the
daily amount of such interest with respect to each day in such
unexpired portion of such LIBOR Interest Period from such day to the
date of such repayment or termination at a per annum interest rate
equal to the interest rate determined pursuant to clause (b) of the
preceding sentence, and by aggregating all such amounts for all such
days during such period. The determination by the Agent of such amount
of interest shall, in the absence of manifest error, be conclusive. For
purposes of this Section 3.2.3, if any portion of the Loan that was to
have been subject to a LIBOR Pricing Option is not outstanding on the
first day of the LIBOR Interest Period applicable to such LIBOR Pricing
Option other than for reasons described in Section 3.2.1, the Borrower
shall be deemed to have terminated such LIBOR Pricing Option.
3.2.4. Violation of Legal Requirements. If any Legal
Requirement shall prevent any Lender from funding through the purchase
of deposits in the LIBOR interbank market or the domestic certificate
of deposit market, as the case may be, any portion of the Loan subject
to a LIBOR Pricing Option or otherwise from giving effect to such
Lender's obligations as contemplated hereby, (a) the Agent may by
notice to the Borrower terminate all of the affected LIBOR Pricing
Options, (b) the portion of the Loan subject to such terminated LIBOR
Pricing Options shall immediately bear interest thereafter at the
Applicable Rate computed on the basis of the Prime Rate and (c) the
Borrower shall make any payment required by Section 3.2.3.
3.2.5. Funding Procedure. The Lenders may fund any portion of
the Loan subject to a LIBOR Pricing Option out of any funds available
to the Lenders. Regardless of the source of the funds actually used by
any of the Lenders to fund any portion of the Loan subject to a LIBOR
Pricing Option, however, all amounts payable hereunder, including
without limitation the interest rate applicable to any such portion of
the Loan and the amounts payable under Section 3.2.3 shall be computed
as if each Lender had actually funded such portion of the Loan through
the purchase of deposits in such amount of the type on which the LIBOR
Basic Rate was determined with a maturity the same as the applicable
LIBOR Interest Period relating thereto.
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3.3. Commitment Fee; Revolving Loan. In consideration of the Lenders'
commitments to make the extensions of credit provided for in Section 2.1, while
such commitments are outstanding, the Borrower will pay to the Agent for the
account of the Lenders in accordance with the Lenders' respective Percentage
Interests, on each Interest Payment Date and on the Final Maturity Date, an
amount equal to interest computed at the rate of 0.25% per annum on the amount
by which (a) the Stated Maximum Amount of Revolving Credit during the one-month
period or portion thereof ending on such Interest Payment Date or the Revolving
Loan Final Maturity Date, as the case may be, exceeded (b) the average daily
Revolving Loan during such period or portion thereof.
3.4. Changes in Circumstances; Yield Protections.
3.4.1. Reserve Requirements, etc. If any Legal Requirement
shall (a) impose, modify, increase or deem applicable any insurance
assessment, reserve, special deposit or similar requirement against any
Funding Liability, (b) impose, modify, increase or deem applicable any
other requirement or condition with respect to any Funding Liability or
(c) change the basis of taxation of payments in respect of any Funding
Liability (other than changes in the rate of taxes measured by the
overall net income of such Lender) and the effect of any of the
foregoing shall be to increase the cost to any Lender of issuing,
making, funding or maintaining its respective Percentage Interest in
any Funding Liability, to reduce the amounts received or receivable by
such Lender under this Agreement or to require such Lender to make any
payment or forego any amounts otherwise payable to such Lender under
this Agreement, then, within 15 days after the receipt by the Borrower
of a certificate from such Lender setting forth why it is claiming
compensation under this Section 3.4 and computations (in reasonable
detail) of the amount thereof, the Borrower shall immediately pay to
the Agent for the account of such Lender such additional amounts as are
from time to time specified by such Lender in such certificate as
sufficient to compensate such Lender for such increased cost or such
reduction, together with interest at the highest Applicable Rate then
in effect on such amount from the 15th day after receipt of such
certificate until payment in full thereof; provided, however, that the
foregoing provisions shall not apply to any Tax. The determination by
such Lender of the amount of such costs shall, in the absence of
manifest error, be conclusive.
3.4.2. Taxes. All payments of the Credit Obligations shall be
made without set-off or counterclaim and free and clear of any
deductions, including deductions for Taxes, unless the Borrower is
required by law to make such deductions. If (a) any Lender shall be
subject to any Tax with respect to any payment of the Credit
Obligations or its obligations hereunder or (b) the Borrower shall be
required to withhold or deduct any Tax on any payment on the Credit
Obligations, within 15 days after the receipt by the Borrower of a
certificate from such Lender setting forth why it is claiming
compensation under this Section 3.4 and computations (in reasonable
detail) of the amount thereof, the Borrower shall pay to the Agent for
such Lender's
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account such additional amount as is necessary to enable Lender to
receive the amount of Tax so imposed on Lender's obligations hereunder
or the full amount of all payments which it would have received on the
Credit Obligations (including amounts required to be paid under
Sections 3.4.1, 3.4.3, 3.4.4 and this Section 3.4.2) in the absence of
such Tax, as the case may be, together with interest at the highest
Applicable Rate then in effect on such amount from the 15th day after
receipt of such certificate until payment in full thereof. Whenever
Taxes must be withheld by the Borrower with respect to any payments of
the Credit Obligations, the Borrower shall promptly furnish to the
Agent for the account of the applicable Lender official receipts (to
the extent that the relevant governmental authority delivers such
receipts) evidencing payment of any such Taxes so withheld. If the
Borrower fails to pay any such Taxes when due or fails to remit to the
Agent for the account of the applicable Lender the required receipts
evidencing payment of any such Taxes so withheld or deducted, the
Borrower shall indemnify the affected Lender for any incremental Taxes
and interest or penalties that may become payable by such Lender as a
result of any such failure. The determination by such Lender of the
amount of such Tax and the basis therefor shall, in the absence of
manifest error, be conclusive.
3.4.3. Capital Adequacy. If any Lender shall determine that
compliance by such Lender with any Legal Requirement regarding capital
adequacy of banks or bank holding companies has or would have the
effect of reducing the rate of return on the capital of such Lender and
its Affiliates as a consequence of such Lender's commitment to make the
extensions of credit contemplated hereby, or such Lender's maintenance
of the extensions of credit contemplated hereby, to a level below that
which such Lender could have achieved but for such compliance (taking
into consideration the policies of such Lender and its Affiliates with
respect to capital adequacy immediately before such compliance and
assuming that the capital of such Lender and its Affiliates was fully
utilized prior to such compliance) by an amount deemed by such Lender
to be material, then, within 15 days after the receipt by the Borrower
of a certificate from such Lender setting forth why it is claiming
compensation under this Section 3.4.3 and computations (in reasonable
detail) of the amount thereof, the Borrower shall pay to the Agent for
the account of such Lender such additional amounts as shall be
sufficient to compensate Lender for such reduced return, together with
interest at the highest Applicable Rate then in effect on each such
amount from the 15th day after receipt of such certificate until
payment in full thereof. The determination by Lender of the amount to
be paid to it and the basis for computation thereof shall, in the
absence of manifest error, be conclusive. In determining such amount,
Lender may use any reasonable averaging, allocation and attribution
methods.
3.4.4. Regulatory Changes. If Lender shall determine that (a)
any change in any Legal Requirement (including any new Legal
Requirement) after the date hereof shall directly or indirectly (i)
reduce the amount of any sum received or receivable by such Lender with
respect to the Loan or the return to be earned by such Lender on
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<PAGE> 40
the Loan, (ii) impose a cost on such Lender or any Affiliate of such
Lender that is attributable to the making or maintaining of, or such
Lender's commitment to make its portion of the Loan or (iii) require
such Lender or any Affiliate of such Lender to make any payment on, or
calculated by reference to, the gross amount of any amount received by
such Lender under any Credit Document, and (b) such reduction,
increased cost or payment shall not be fully compensated for by an
adjustment in the Applicable Rate, then, within 15 days after the
receipt by the Borrower of a certificate from such Lender setting forth
why it is claiming compensation under this Section 3.4.4 and
computations (in reasonable detail) of the amount thereof, the Borrower
shall pay to such Lender such additional amounts as such Lender
determines will, together with any adjustment in the Applicable Rate,
fully compensate for such reduction, increased cost or payment,
together with interest on such amount from the 15th day after receipt
of such certificate until payment in full thereof at the highest
Applicable Rate then in effect. The determination by such Lender of the
amount to be paid to it and the basis computation thereof hereunder
shall, in the absence of manifest error, be conclusive. In determining
such amount, such Lender may use any reasonable averaging and
attribution methods.
3.4.5. Compensation Claims. Within 15 days after the receipt
by the Borrower of a certificate from any Lender setting forth why it
is claiming compensation under this Section 3.4 and computations (in
reasonable detail) of the amount thereof, the Borrower shall pay to
such Lender such additional amounts as such Lender sets forth in such
certificate as sufficient fully to compensate it on account of the
foregoing provisions of this Section 3.4, together with interest on
such amount from the 15th day after receipt of such certificate until
payment in full thereof at the Overdue Reimbursement Rate. The
determination by such Lender of the amount to be paid to it and the
basis for computation thereof hereunder shall, in the absence of
manifest error, be conclusive. In determining such amount, such Lender
may use any reasonable averaging and attribution methods.
3.4.6. Mitigation. Each Lender shall take such commercially
reasonable steps as it may determine are not disadvantageous to it,
including changing lending offices to the extent feasible, in order to
reduce amounts otherwise payable by the Borrower to such Lender
pursuant to Sections 3.2.3 and 3.4 or to make LIBOR Pricing Options
available under Sections 3.2.1 and 3.2.4. In addition, the Borrower
shall not be responsible for costs (a) under Section 3.4 arising more
than 90 days prior to receipt by the Borrower of the certificate from
the affected Lender pursuant to such Section 3.4 or (b) under Section
3.2.3 arising from the termination of LIBOR Pricing Options more than
90 days prior to the demand by the Agent for payment under Section
3.2.3.
3.5. Computations of Interest and Fees. For purposes of this Agreement,
interest, commitment fees (and any other amount expressed as interest or such
fees) shall be computed on the basis of a 360-day year for actual days elapsed.
If any payment required by this
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Agreement becomes due on any day that is not a Banking Day, such payment shall
be made on the next succeeding Banking Day. If the due date for any payment of
principal is extended as a result of the immediately preceding sentence,
interest shall be payable for the time during which payment is extended at the
Applicable Rate.
4. Payment.
4.1. Payment at Maturity.
4.1.1. Revolving Loan. On the Revolving Loan Maturity Date or
any accelerated maturity of the Revolving Loan, the Borrower will pay
to the Agent for the account of the Lenders an amount equal to the
Revolving Loan then due, together with all accrued and unpaid interest
thereon and all other Credit Obligations with respect to the Revolving
Loan of the Borrower then outstanding.
4.1.2. Term Loan. On the Term Loan Maturity Date or any
accelerated maturity of the Term Loan, the Borrower will pay to the
Agent for the account of the Lenders an amount equal to the Term Loan
then due, together with all accrued and unpaid interest thereon and all
other Credit Obligations with respect to the Term Loan of the Borrower
then outstanding.
4.1.3. Bridge Loan. On the Bridge Loan Maturity Date or any
accelerated maturity of the Bridge Loan, the Borrower will pay to the
Agent for the account of the Lenders an amount equal to the Bridge Loan
then due, together with all accrued and unpaid interest thereon and all
other Credit Obligations with respect to the Bridge Loan of the
Borrower then outstanding.
4.2. Contingent Required Prepayments.
4.2.1. Excess Revolving Credit Exposure. If at any time the
Revolving Loan exceeds the Maximum Amount of Revolving Credit, the
Borrower shall immediately pay to the Agent for the account of the
Lenders as a prepayment of the Revolving Loan the amount of such
excess.
4.2.2. Excess Cash Flow. Within three Banking Days after the
date annual financial statements have been (or are required to have
been) furnished by the Borrower to the Lenders in accordance with
Section 6.4.1, (a) the Borrower shall prepay the Term Loan in an amount
equal to the lesser of (i) 50% of the Excess Cash Flow of the Borrower
and its Subsidiaries for their most recently completed fiscal year or
(ii) the amount of the Term Loan.
4.2.3. Net Asset Sale Proceeds. Upon receipt of any Net Asset
Sale Proceeds by the Borrower or any of its Subsidiaries, the Borrower
shall within three Banking Days pay to the Agent for the account of the
Lenders as a prepayment of the Term
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Loan the lesser of (a) the amount of such Net Asset Sale Proceeds or
(b) the amount of the Term Loan.
4.2.4. Subordinated Debt. Immediately upon the placement of
the Subordinated Debt, the Borrower shall prepay all Credit Obligations
with respect to the Bridge Loan.
4.3. Fixed Required Prepayments. On each Principal Payment Date prior
to the Final Maturity Date, the Borrower will pay to the Agent for the account
of the Lenders as a prepayment of the Term Loan the lesser of (a) the amount
specified in the table below on the Principal Payment Date nearest each date
specified in the table below or (b) the Term Loan then outstanding.
<TABLE>
<CAPTION>
Date Amount
---- ------
<S> <C>
June 30, 1997 $1,000,000
September 30, 1997 $1,000,000
December 31, 1997 $1,000,000
March 31, 1998 $1,000,000
June 30, 1998 $ 750,000
September 30, 1998 $ 750,000
December 31, 1998 $ 750,000
March 31, 1999 $ 750,000
June 30, 1999 $ 875,000
September 30, 1999 $ 875,000
December 31, 1999 $ 875,000
March 31, 2000 $ 875,000
June 30, 2000 $1,125,000
September 30, 2000 $1,125,000
December 31, 2000 $1,125,000
March 31, 2001 $1,125,000
June 30, 2001 $1,250,000
September 30, 2001 $1,250,000
December 31, 2001 $1,250,000
February 19, 2002 $6,250,000
</TABLE>
4.4. Voluntary Prepayments. In addition to the prepayments required by
Sections 4.2 and 4.3, the Borrower may from time to time prepay all or any
portion of a Loan (in a minimum amount of $100,000 and an integral multiple of
$100,000) without premium. The Borrower shall give the Agent at least one
Banking Day prior notice of its intention to prepay, specifying the date of
payment, the amount of the Loan to be paid on such date and the amount of
interest to be paid with such prepayment.
4.5. Reborrowing; Application of Payments, etc.
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4.5.1. Reborrowing. The amounts of the Revolving Loan prepaid
pursuant to Section 4.4 may be reborrowed from time to time prior to
the Revolving Loan Final Maturity Date in accordance with Section 2.1,
subject to the limits set forth therein. No portion of the Term Loan or
the Bridge Loan prepaid hereunder may be reborrowed.
4.5.2. Order of Application. Prepayments of the Term Loan made
by the Borrower pursuant to Sections 4.2.2 or 4.2.3 shall be applied
first to the principal amount of the Term Loan which is due on the Term
Loan Final Maturity Date and then to the installments required to be
made on the Term Loan pursuant to Section 4.3 in the inverse order of
the maturity thereof so that no partial prepayment of the Term Loan
shall affect the obligation of the Borrower to make the prepayments
required by Section 4.3.
4.5.3. Payment with Accrued Interest, etc. Upon all
prepayments of the Loan, the Borrower shall pay to the Agent the
principal amount to be prepaid, together with unpaid interest in
respect thereof accrued to the date of prepayment. Notice of prepayment
having been given in accordance with Section 4.4, and whether or not
notice is given of prepayments pursuant to Sections 4.2 and 4.3, the
amount specified to be prepaid shall become due and payable on the date
specified for prepayment.
4.5.4. Payment for Lenders. All payments of principal
hereunder shall be made to the Agent for the account of the Lenders in
accordance with the Lenders' respective Percentage Interests.
5. Conditions to Extending Credit.
5.1. Conditions on Initial Closing Date. The obligations of the Lenders
to make any extension of credit pursuant to Section 2 shall be subject to the
satisfaction, on or before the Initial Closing Date, of the conditions set forth
in this Section 5.1 as well as the further conditions in Section 5.2. If the
conditions set forth in this Section 5.1 are not met on or prior to the Initial
Closing Date, the Lenders shall have no obligation to make any extensions of
credit hereunder.
5.1.1. Notes. The Borrower shall have duly authorized,
executed and delivered to the Agent a Bridge Note, Revolving Note and a
Term Note for each Lender having a commitment with respect thereto.
5.1.2. Perfection of Security. The Borrower shall have duly
authorized, executed, acknowledged and delivered to the Agent for
filing, registering and recording such security agreements, notices,
financing statements and other instruments as the Agent may have
requested in order to perfect the Liens purported
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or required pursuant to the Credit Documents to be created in the
Credit Security and shall have paid all filing or recording fees or
taxes required to be paid in connection therewith, including any
recording, mortgage, documentary, transfer or intangible taxes.
5.1.3. Payment of Fees. The Borrower shall have paid to (a)
the Agent the fees as previously agreed between the Borrower and the
Agent, and (b) the Agent's special counsel the fees and disbursements
of such special counsel for services rendered on or prior to the
Initial Closing Date.
5.1.4. Legal Opinions. On the Initial Closing Date, the
Lenders shall have received from the following counsel their respective
opinions with respect to the transactions contemplated by the Credit
Documents, which opinions shall be in form and substance satisfactory
to the Required Lenders:
(a) Foley, Hoag & Eliot LLP, special counsel for the Borrower,
which the Borrower authorizes and directs its counsel to furnish.
(b) Ropes & Gray, special counsel for the Agent.
5.1.5. Acquisition. Other than as consented to by the Agent
in writing, which consent shall not be unreasonably withheld:
(a) The provisions of the Acquisition Agreement shall not have
been amended, modified, waived or terminated.
(b) All of the representations and warranties of the Sellers
set forth in the Acquisition Agreement shall be complete and correct in
all material respects on and as of the Initial Closing Date with the
same force and effect as though made on and as of such date.
(c) All of the other conditions to the obligations of the
Borrower set forth in the Acquisition Agreement shall have been
satisfied or waived by the Sellers.
(d) Any material consent, authorization, order or approval of
any Person required in connection with the transactions contemplated by
the Acquisition Agreement shall have been obtained and shall be in full
force and effect.
(e) All of the items required to be delivered under the
Acquisition Agreement shall have been so delivered.
(f) Contemporaneously with the making by the Lenders of the
first extension of credit hereunder, the Lenders shall have received a
certificate of a Financial Officer to the effect that the closing has
occurred under the Acquisition Agreement
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and to the effect that each of the conditions set forth in this Section
5.1.5 has been satisfied.
5.1.6. Consolidated Funded Indebtedness. On the Initial
Closing Date, after giving effect to the Acquisition, Consolidated
Funded Indebtedness to Consolidated Net Revenues shall not exceed 375%.
5.1.7. Consolidated Senior Funded Indebtedness. On the
Initial Closing Date, after giving effect to the Acquisition,
Consolidated Senior Funded Indebtedness to Consolidated Net Revenues
shall not exceed 300%.
5.1.8. Minimum Consolidated Capital Base. The Borrower shall
deliver, and the Agent shall be satisfied with, a pro forma balance
sheet which demonstrates that after the closing of the transactions
contemplated by the Acquisition Agreement, the Borrower will have a
Consolidated Capital Base of $9,500,000.
5.1.9. Interest Rate Protection. To the extent elected by
the Borrower, the Borrower shall have in place one or more Interest
Rate Protection Agreements as contemplated by Section 6.19.
5.1.10. Capitalization, etc.
(a) A minimum of $3,500,000 in cash contribution to the
Borrower by the Guarantor, of which not less than $2,000,000 shall be
in the form of a capital contribution, which, if in the form of a note,
shall be expressly subordinate to all the Credit Obligations, with no
interest or principal payable prior to or during the 90 day period
after the payment in full of all Credit Obligations, except as
permitted by Section 6.10.2, and such additional amount representing
the estimated transaction expenses associated with the Acquisition and
the financing thereof.
(b) After giving effect to the Acquisition and the incurrence
of the Credit Obligations, the Borrower and its Subsidiaries, taken as
a whole will be solvent, as evidenced by the following:
(i) will have assets having a fair saleable value in
excess of the amount required to pay their probable liability
on their existing debts as such debts become absolute and
mature;
(ii) will have adequate capital for the conduct of
their business; and
(iii) are able and expect to be able to pay their
debts from time to time incurred as such debts mature.
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(c) The Borrower shall have furnished to the Lenders a
certificate, in substantially the form of Exhibit 5.1.9, of a Financial
Officer to such effect, together with detailed computations as
appropriate verifying the items in clauses (a) and (b) above and
calculations demonstrating compliance with Sections 5.1.6, 5.1.7 and
5.1.8, in each case giving pro forma effect to the acquisition
contemplated by the Acquisition Agreement and the incurrence of the
Credit Obligations.
5.1.11. Proper Proceedings. This Agreement, each other Credit
Document and the transactions contemplated hereby and thereby shall
have been authorized by all necessary corporate or other proceedings.
All necessary consents, approvals and authorizations of any
governmental or administrative agency or any other Person of any of the
transactions contemplated hereby or by any other Credit Document shall
have been obtained and shall be in full force and effect.
5.1.12. General. All legal and corporate proceedings in
connection with the transactions contemplated by this Agreement shall
be reasonably satisfactory in form and substance to the Agent and the
Agent shall have received copies of all documents, including certified
copies of the Charter and By-Laws of the Borrower and the other
Obligors, records of corporate proceedings, certificates as to
signatures and incumbency of officers and opinions of counsel, which
the Agent may have reasonably requested in connection therewith, such
documents where appropriate to be certified by proper corporate or
governmental authorities.
5.2. Conditions to Each Extension of Credit. The obligations of the
Lenders to make any extension of credit pursuant to Section 2 shall be subject
to the satisfaction, on or before the Closing Date for such extension of credit,
of the following conditions:
5.2.1. Borrower Officer's Certificate. The representations and
warranties contained in Sections 7 and 10.2 shall be true and correct
on and as of such Closing Date with the same force and effect as though
made on and as of such date (except as to any representation or
warranty which refers to a specific earlier date); no Default shall
exist on such Closing Date prior to or immediately after giving effect
to the requested extension of credit; no Material Adverse Change shall
have occurred since, in the case of the Guarantor and its Subsidiaries,
September 30, 1996, and in the case of the Borrower and its
Subsidiaries, November 30, 1996; and the Borrower shall have furnished
to the Agent in connection with the requested extension of credit a
certificate to these effects, in substantially the form of Exhibit
5.2.1, signed by a Financial Officer of the Borrower.
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<PAGE> 47
5.2.2. Proper Proceedings. This Agreement, each other Credit
Document and the transactions contemplated hereby and thereby shall
have been authorized by all necessary corporate or other proceedings.
All necessary consents, approvals and authorizations of any
governmental or administrative agency or any other Person of any of the
transactions contemplated hereby or by any other Credit Document shall
have been obtained and shall be in full force and effect.
5.2.3. Legality, etc. The making of the requested extension of
credit shall not (a) subject any Lender to any penalty or special tax
(other than a Tax for which the Borrower is required to reimburse the
Lenders under Section 3.4.2), (b) be prohibited by any Legal
Requirement or (c) violate any credit restraint program of the
executive branch of the government of the United States of America, the
Board of Governors of the Federal Reserve System or any other
governmental or administrative agency so long as any Lender reasonably
believes that compliance therewith is in the best interests of such
Lender.
5.2.4. General. All legal and corporate proceedings in
connection with the transactions contemplated by this Agreement shall
be satisfactory in form and substance to the Agent, and the Agent shall
have received copies of all documents, including certified copies of
the Charter and By-Laws of the Borrower and the other Obligors, records
of corporate proceedings, certificates as to signatures and incumbency
of officers and opinions of counsel, which the Agent may have
reasonably requested in connection therewith, such documents where
appropriate to be certified by proper corporate or governmental
authorities.
6. General Covenants. Until all of the Credit Obligations shall have been paid
in full and until the Lenders' commitments to extend credit under this Agreement
and any other Credit Document shall have been irrevocably terminated, the
Borrower covenants that the Borrower and its Subsidiaries will comply with the
following provisions, and the Guarantor covenants both the specific provisions
applicable to it, and that, as the sole stockholder of the Borrower, that the
Guarantor shall not cause the Borrower or any of the Borrower's Subsidiaries to
fail to comply with any of the following provisions:
6.1. Taxes and Other Charges; Accounts Payable.
6.1.1. Taxes and Other Charges. Each of the Borrower and its
Subsidiaries shall duly pay and discharge, or cause to be paid and
discharged, before the same becomes in arrears, all taxes, assessments
and other governmental charges imposed upon such Person and its
properties, sales or activities, or upon the income or profits
therefrom, as well as all claims for labor, materials or supplies which
if unpaid might by law become a Lien upon any of its property;
provided, however, that any such tax, assessment, charge or claim need
not be paid if the validity or amount thereof shall at the time be
contested in good faith by appropriate proceedings and if such Person
shall, in accordance with GAAP, have set aside on its books adequate
reserves
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with respect thereto; and provided, further, that each of the Borrower
and its Subsidiaries shall pay or bond, or cause to be paid or bonded,
all such taxes, assessments, charges or other governmental claims
immediately upon the commencement of proceedings to foreclose any Lien
which may have attached as security therefor (except to the extent such
proceedings have been dismissed or stayed).
6.1.2. Accounts Payable. Each of the Borrower and its
Subsidiaries shall promptly pay when due, or in conformity with
customary trade terms, all other Indebtedness incident to the
operations of such Person not referred to in Section 6.1.1; provided,
however, that any such Indebtedness need not be paid if the validity or
amount thereof shall at the time be contested in good faith and if such
Person shall, in accordance with GAAP, have set aside on its books
adequate reserves with respect thereto.
6.2. Conduct of Business, etc.
6.2.1. Types of Business. The Borrower and its Subsidiaries
shall engage only in the business of producing, distributing and
selling over-the-counter nutritional supplements and related products.
6.2.2. Maintenance of Properties. Each of the Borrower and
its Subsidiaries:
(a) shall keep its properties in such repair, working order
and condition, and shall from time to time make such repairs,
replacements, additions and improvements thereto as are necessary for
the efficient operation of its businesses and shall comply at all times
in all respects with all franchises, licenses and leases to which it is
party so as to prevent any loss or forfeiture thereof or thereunder,
except where failure to so comply has not resulted, or does not create
a material risk of resulting, in the aggregate in any Material Adverse
Change; and
(b) shall do all things necessary to preserve, renew and keep
in full force and effect and in good standing its legal existence and
authority necessary to continue its business; provided, however, that
this Section 6.2.2(b) shall not prevent the merger, consolidation or
liquidation of Subsidiaries permitted by Section 6.11.
6.2.3. Statutory Compliance. Each of the Borrower and its
Subsidiaries shall comply in all respects with all valid and applicable
statutes, laws, ordinances, zoning and building codes and other rules
and regulations, including environmental regulations, of the United
States of America, of the states and territories thereof and their
counties, municipalities and other subdivisions and of any foreign
country or other jurisdictions applicable to such Person, except where
failure so to comply has
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not resulted, or does not create a material risk of resulting, in the
aggregate in any Material Adverse Change.
6.2.4. Compliance with Material Agreements. Each of the
Guarantor and its Subsidiaries shall comply in all material respects
with the Material Agreements (to the extent not in violation of the
other provisions of this Agreement or any other Credit Document).
Without the prior written consent of the Required Lenders, no Material
Agreement shall be amended, modified, waived or terminated in any
manner that would have in any material respect an adverse effect on the
interests of the Lenders.
6.3. Insurance.
6.3.1. Business Interruption Insurance. Each of the Borrower
and its Subsidiaries shall maintain with financially sound and
reputable insurers insurance related to interruption of business,
either for loss of revenues or for extra expense, in the manner
customary for businesses of similar size engaged in similar activities.
6.3.2. Property Insurance. Each of the Borrower and its
Subsidiaries shall keep its assets which are of an insurable character
insured by financially sound and reputable insurers against theft and
fraud and against loss or damage by fire, explosion and hazards insured
against by extended coverage to the extent, in amounts and with
deductibles at least as favorable as those generally maintained by
businesses of similar size engaged in similar activities.
6.3.3. Liability Insurance. Each of the Borrower and its
Subsidiaries shall maintain with financially sound and reputable
insurers insurance against liability for hazards, risks and liability
to persons and property, including product liability insurance, to the
extent, in amounts and with deductibles at least as favorable as those
generally maintained by businesses of similar size engaged in similar
activities, including appropriate coverage for any third party
liabilities, including those that might arise in connection with
manufacturing, distribution or warehousing services provided by third
parties; provided, however, that it may effect workers' compensation
insurance or similar coverage with respect to operations in any
particular state or other jurisdiction through an insurance fund
operated by such state or jurisdiction or by meeting the self-insurance
requirements of such state or jurisdiction.
6.3.4. Flood Insurance. Each of the Borrower and its
Subsidiaries shall at all times keep each parcel of real property owned
or leased by it which is (a) included in the Credit Security, (b) in an
area determined by the Director of the Federal Emergency Management
Agency to be subject to special flood hazard and (c) in a community
participating in the National Flood Insurance Program, insured against
such special flood hazards in an amount equal to the maximum limit of
coverage
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available for the particular type of property under the federal
National Flood Insurance Act of 1968.
6.4. Financial Statements and Reports. Each of the Borrower and its
Subsidiaries shall maintain a system of accounting in which entries shall be
made of all transactions in relation to their business and affairs in accordance
with generally accepted accounting principles. The fiscal year of each of the
Borrower and its Subsidiaries shall end on December 31 in each year and the
fiscal quarters of the Borrower and its Subsidiaries shall end on March 31, June
30, September 30 and December 31 in each year.
6.4.1. Annual Reports. The Borrower shall furnish to the
Lenders as soon as available, and in any event within 95 days after the
end of each fiscal year:
(a) Consolidated balance sheets of the Guarantor and its
Subsidiaries and the Borrower and its Subsidiaries as at the end of
such fiscal year, the Consolidated statements of operations and the
Consolidated statements of stockholders' equity and of cash flows of
the Guarantor and the Borrower and their respective Subsidiaries for
such fiscal year (all in reasonable detail) and together, in the case
of Consolidated financial statements of the Guarantor, with comparative
figures for the immediately preceding fiscal year.
(b) Reports of Arthur Andersen LLP (or, if they cease to be
auditors of the Guarantor or the Borrower, other independent certified
public accountants of recognized national standing reasonably
satisfactory to the Required Lenders), containing no material
qualification, to the effect that they have audited the foregoing
financial statements in accordance with generally accepted auditing
standards and that such financial statements present fairly, in all
material respects, the financial position of the Guarantor and its
Subsidiaries and the Borrower and its Subsidiaries covered thereby at
the dates thereof and the results of their operations for the periods
covered thereby in conformity with GAAP.
(c) The statement of such accountants (which statement may be
limited to accounting matters only and may disclaim responsibility for
legal interpretation) that they have caused this Agreement to be
reviewed and that in the course of their audit of the Guarantor and its
Subsidiaries and the Borrower and its Subsidiaries no facts have come
to their attention that cause them to believe that any Default exists
and in particular that they have no knowledge of any Default under
Sections 6.5 through 6.22 or, if such is not the case, specifying such
Default and the nature thereof. This statement is furnished by such
accountants with the understanding that the examination of such
accountants cannot be relied upon to give such accountants knowledge of
any such Default except as it relates to accounting or auditing matters
within the scope of their audit.
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<PAGE> 51
(d) A certificate of each of the Guarantor and the Borrower
signed by a Financial Officer to the effect that such officer has
caused this Agreement to be reviewed and has no knowledge of any
Default, or if such officer has such knowledge, specifying such Default
and the nature thereof, and what action the Guarantor or the Borrower
has taken, as the case may be, is taking or proposes to take with
respect thereto.
(e) Computations by the Borrower comparing the financial
statements referred to above with the most recent budgets for such
fiscal year furnished to the Lenders in accordance with Section 6.4.4.
(f) Computations by the Borrower in substantially the form of
Exhibit 6.4A demonstrating, as of the end of such fiscal year,
compliance with the Computation Covenants, certified by a Financial
Officer.
(g) Calculations, as at the end of such fiscal year, of (A)
the Accumulated Benefit Obligations for each Plan covered by Title IV
of ERISA (other than Multiemployer Plans) and (B) the fair market value
of the assets of such Plan allocable to such benefits.
(h) Supplements to Exhibits 7.1 and 7.3 showing any changes
in the information set forth in such Exhibits not previously furnished
to the Lenders in writing, as well as any changes in the Charter,
By-laws or incumbency of officers of the Obligors from those previously
certified to the Agent.
(i) In the event of a change in GAAP after December 31, 1996,
computations by each of the Guarantor and the Borrower, certified by a
Financial Officer, reconciling the financial statements referred to
above with financial statements prepared in accordance with GAAP as
applied to the other covenants in Section 6 and related definitions.
(j) An annual written management letter furnished to the
Borrower by the Borrower's auditors.
(k) Certificate by the Guarantor in substantially the form of
Exhibit 6.4B demonstrating, as of the end of such fiscal year
compliance with the Guarantor Computation Covenants, certified by a
Financial Officer.
6.4.2. Quarterly Reports. The Borrower shall furnish to the
Lenders as soon as available and, in any event, within 50 days after
the end of each of the first three fiscal quarters of the Guarantor and
the Borrower:
(a) The internally prepared Consolidated balance sheets of the
Guarantor, the Borrower and their respective Subsidiaries as at the end
of such fiscal quarter, the
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Consolidated statements of operation and the Consolidated statements of
stockholders' equity and of cash flows of the Guarantor, the Borrower
and their respective Subsidiaries for such fiscal quarter and for the
portion of the fiscal year then ended (all in reasonable detail) and
together, in the case of Consolidated financial statements, with
comparative figures for the same period in the preceding fiscal year.
(b) A certificate of each of the Guarantor and the Borrower
signed by a Financial Officer to the effect that such financial
statements have been prepared in accordance with GAAP and present
fairly, in all material respects, the financial position of such
company at the dates thereof and the results of their operations for
the periods covered thereby, subject only to normal year-end audit
adjustments and the addition of footnotes and schedules at year end.
(c) A certificate of the Borrower signed by a Financial
Officer to the effect that such officer has caused this Agreement to be
reviewed and has no knowledge of any Default, or if such officer has
such knowledge, specifying such Default and the nature thereof and what
action the Borrower has taken, is taking or proposes to take with
respect thereto.
(d) Computations by the Borrower comparing the financial
statements referred to above with the most recent budget for the period
covered thereby furnished to the Lenders in accordance with Section
6.4.4.
(e) Computations by the Borrower in substantially the form of
Exhibit 6.4A demonstrating, as of the end of such quarter, compliance
with the Computation Covenants, certified by a Financial Officer.
(f) Supplements to Exhibits 7.1 and 7.3 showing any changes in
the information set forth in such Exhibits not previously furnished to
the Lenders in writing, as well as any changes in the Charter, By-laws
or incumbency of officers of the Borrower and its Subsidiaries from
those previously certified to the Agent.
(g) In the event of a change in GAAP after December 31, 1996,
computations by each of the Guarantor and the Borrower, certified by a
Financial Officer, reconciling the financial statements referred to
above with financial statements prepared in accordance with GAAP as
applied to the other covenants in Section 6 and related definitions.
(h) Certificate by the Guarantor in substantially the form of
Exhibit 6.4B demonstrating, as of the end of such fiscal quarter,
compliance with the Guarantor Computation Covenants, certified by a
Financial Officer.
6.4.3. Monthly Reports.
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<PAGE> 53
(a) The Borrower shall furnish to the Lenders as soon as
available, and in any event within 30 days after the end of each month:
(i) The internally prepared Consolidated balance
sheets of the Borrower and its Subsidiaries as at the end of
such month, in reasonable detail, together with a certificate
of the Borrower signed by a Financial Officer confirming or,
if necessary, revising the most recent computation of the
Borrowing Base furnished by the Borrower to the Lenders
pursuant to Section 6.4.3(b).
(ii) A certificate of the Borrower signed by a
Financial Officer to the effect that such financial statements
were prepared in accordance with GAAP and present fairly, in
all material respects, the financial position of the Persons
covered thereby at the dates thereof and the results of their
operations for the periods covered thereby, subject only to
normal quarterly or year end audit adjustments and the
addition of footnotes and schedules at year-end.
(b) The Borrower shall furnish to the Lenders as soon as
available, and in any event within 15 days after the end of each month:
a certificate of the Borrower, in substantially the form of Exhibit
6.4.3, signed by a Financial Officer supplying computations of the
Borrowing Base at the beginning of such month and certifying that such
computations were based on the monthly financial reports prepared in
accordance with GAAP.
6.4.4. Other Reports. The Borrower shall promptly furnish to
the Lenders:
(a) As soon as prepared and in any event before the beginning
of each fiscal year, an annual budget and operating projections for
such fiscal year of the Borrower and its Subsidiaries, prepared in a
manner consistent with the manner in which the financial projections
described in Section 7.2.1 were prepared.
(b) Any material updates of such budgets and projections.
(c) Any final management letters furnished to the Borrower
or any of its Subsidiaries by the Borrower's auditors.
(d) All budgets, projections, statements of operations and
other reports furnished generally to the shareholders of the Guarantor
or the Borrower.
(e) Such registration statements, proxy statements and
reports, including Forms SB-2, S-1, S-2, S-3, 10-KSB, 10-QSB and 8-KSB,
as may be filed by the Guarantor, the Borrower or any of their
respective Subsidiaries with the Securities and Exchange Commission.
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<PAGE> 54
(f) Any 90-day letter or 30-day letter from the federal
Internal Revenue Service (or the equivalent notice received from state
or other taxing authorities) asserting tax deficiencies against the
Guarantor, the Borrower or any of their respective Subsidiaries.
6.4.5. Notice of Litigation; Notice of Defaults. The Borrower
shall promptly furnish to the Lenders notice of any litigation or any
administrative or arbitration proceeding (a) which creates a material
risk of resulting, after giving effect to any applicable insurance, in
the payment by the Borrower and its Subsidiaries of more than $250,000
or (b) which may result, or create a material risk of resulting, in a
Material Adverse Change. Promptly upon acquiring knowledge thereof, the
Borrower shall notify the Lenders of the existence of any Default,
specifying the nature thereof and what action the Borrower or any of
its Subsidiaries has taken, is taking or proposes to take with respect
thereto.
6.4.6. ERISA Reports. The Borrower shall furnish to the
Lenders as soon as available the following items with respect to any
Plan:
(a) any request for a waiver of the funding standards or an
extension of the amortization period;
(b) any reportable event (as defined in section 4043 of
ERISA), unless the notice requirement with respect thereto has been
waived by regulation;
(c) any notice received by any ERISA Group Person that the
PBGC has instituted or intends to institute proceedings to terminate
any Plan, or that any Multiemployer Plan is insolvent or in
reorganization;
(d) notice of the possibility of the termination of any Plan
by its administrator pursuant to section 4041 of ERISA; and
(e) notice of the intention of any ERISA Group Person to
withdraw, in whole or in part, from any Multiemployer Plan.
6.4.7. Other Information; Audit. From time to time at
reasonable intervals upon request of any authorized officer of any
Lender, each of the Guarantor, the Borrower and their respective
Subsidiaries shall furnish to the Lenders such other information
regarding the business, assets, financial condition, income or
prospects of the Guarantor, the Borrower and their respective
Subsidiaries as such officer may reasonably request, including copies
of all tax returns, licenses, agreements, leases and instruments to
which any of the Guarantor, the Borrower and their respective
Subsidiaries is party. The Lenders' authorized officers and
representatives shall have the right during normal business hours upon
reasonable notice and at reasonable intervals to examine the books and
records of the Guarantor, the Borrower and their
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<PAGE> 55
respective Subsidiaries, and to make copies and notes therefrom, for
the purpose of verifying the accuracy of the reports delivered by the
Guarantor, the Borrower and their respective Subsidiaries pursuant to
this Section 6.4 or otherwise and ascertaining compliance with or
obtaining enforcement of this Agreement or any other Credit Document.
6.4.8. Commercial Examinations. Within 180 days of the closing
of the Acquisition, the Guarantor and the Borrower shall implement the
recommendations contained in the report of Nardella & Taylor, CPAs
conducted January 11-17, 1997 and shall be reviewed by the Agent's
commercial financial examiners and fixed asset appraisers, or by an
unaffiliated entity, which review shall be satisfactory to the Agent.
Thereafter, on an annual basis (and at such additional times as the
Agent, in its sole and absolute discretion, may request), the Agent,
upon reasonable advance notice and at the Borrower's expense, may
undertake to have the Guarantor, the Borrower and their respective
Subsidiaries reviewed by the Agent's commercial financial examiners.
6.5. Certain Financial Tests.
6.5.1. Consolidated Funded Indebtedness to Consolidated
EBITDA. On the last day of each fiscal quarter beginning with the
quarter ended December 31, 1997, Consolidated Funded Indebtedness to
Consolidated EBITDA for the four consecutive quarters then ending shall
not exceed the percentage specified in the table below for the period
specified in the table; provided, however, that for the purpose of
calculating Consolidated EBITDA for the period ending December 31,
1997, Consolidated EBITDA shall be Consolidated EBITDA for the three
consecutive fiscal quarters ending on such date multiplied by 4/3:
<TABLE>
<CAPTION>
PERIOD ENDING PERCENTAGE
------------- ----------
<S> <C>
Prior to and including December 31, 1998 375%
January 1, 1999 - December 31, 1999 300%
After December 31, 1999 225%
</TABLE>
6.5.2. Consolidated Senior Funded Indebtedness to Consolidated
EBITDA. On the last day of each fiscal quarter beginning with the
quarter ended December 31, 1997, Consolidated Senior Funded
Indebtedness to Consolidated EBITDA for the four consecutive fiscal
quarters then ending shall not exceed the percentage specified in the
table below for the period specified in the table; provided, however,
that for the purpose of calculating Consolidated EBITDA for the period
ending December 31, 1997, Consolidated EBITDA shall be Consolidated
EBITDA for the three consecutive fiscal quarters ending on such date
multiplied by 4/3:
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<PAGE> 56
<TABLE>
<CAPTION>
PERIOD ENDING PERCENTAGE
------------- ----------
<S> <C>
Prior to and including December 31, 1998 300%
January 1, 1999 - December 31, 1999 250%
After December 31, 1999 200%
</TABLE>
6.5.3. Consolidated EBITDA.
(a) For the periods beginning on the Initial Closing Date and
ending on the date specified in the table below, Consolidated EBITDA
shall be not less than the amount specified in such table:
<TABLE>
<CAPTION>
DATE AMOUNT
---- ------
<S> <C>
June 30, 1997 $1,667,000
September 30, 1997 $3,946,000
December 31, 1997 $6,236,000
March 31, 1998 $8,525,000
</TABLE>
(b) for each fiscal quarter ending on or after June 30, 1998,
Consolidated EBITDA for each fiscal quarter then ending shall not be
less than the amount specified in the table below, for the period
specified in such table:
<TABLE>
<CAPTION>
PERIOD ENDING AMOUNT
------------- ------
<S> <C>
June 30, 1998 - March 31, 1999 $2,300,000
June 30, 1999 and each quarterly
period ending thereafter $2,475,000
</TABLE>
6.5.4. Capital Expenditures. During any fiscal year of the
Borrower, the aggregate amount of Capital Expenditures shall not exceed
$250,000 for such fiscal year.
6.5.5. Consolidated Adjusted EBITDA to Consolidated Fixed
Charges. On March 31, 1998 and on the last day of each fiscal quarter
of the Borrower thereafter, Consolidated Adjusted EBITDA shall not be
less than 125% of Consolidated Fixed Charges for the period of four
consecutive fiscal quarters then ending.
6.5.6. Consolidated Net Income. For each fiscal quarter of
the Borrower, Consolidated Net Income shall not be less than zero.
6.5.7. Consolidated Tangible Capital Base. The Consolidated
Tangible Capital Base shall as of the end of each fiscal quarter be
greater than the sum of (a) ($28,000,000) which is a negative number
plus (b) Consolidated Net Income for each
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<PAGE> 57
fiscal quarter (if positive) minus (d) cash Distributions paid during
such fiscal quarter in accordance with Section 6.10 plus (e) to the
extent any Subordinated Debt is outstanding, the amount of any such
Indebtedness.
6.6. Indebtedness. Neither the Borrower nor any of its Subsidiaries
shall create, incur, assume or otherwise become or remain liable with respect
to any Indebtedness except the following:
6.6.1. Indebtedness in respect of the Credit Obligations.
6.6.2. Guarantees permitted by Section 6.7.
6.6.3. Current liabilities, other than Financing Debt,
incurred in the ordinary course of business, but not in any event
including intercompany loans or advances, except as permitted pursuant
to Section 6.6.12.
6.6.4. To the extent that payment thereof shall not at the
time be required by Section 6.1, Indebtedness in respect of taxes,
assessments, governmental charges and claims for labor, materials and
supplies.
6.6.5. Indebtedness secured by Liens of carriers, warehouses,
mechanics and landlords permitted by Sections 6.8.5 and 6.8.6.
6.6.6. Indebtedness in respect of judgments or awards (a)
which have been in force for less than the applicable appeal period or
(b) in respect of which the Borrower or any of its Subsidiaries shall
at the time in good faith be prosecuting an appeal or proceedings for
review and, in the case of each of clauses (a) and (b), the Borrower or
such Subsidiary shall have taken appropriate reserves therefor in
accordance with GAAP and execution of such judgment or award shall not
be levied.
6.6.7. To the extent permitted by Section 6.8.9, Indebtedness
in respect of Capitalized Lease Obligations or secured by purchase
money security interests of up to an aggregate principal amount of
$250,000 per fiscal year.
6.6.8. Indebtedness in respect of deferred taxes arising in
the ordinary course of business.
6.6.9. Indebtedness in respect of intercompany loans and
advances among the Borrower and its Subsidiaries which are not
prohibited by Section 6.9.
6.6.10. Unfunded pension liabilities and obligations with
respect to Plans so long as the Borrower is in compliance with Section
6.17.
6.6.11. Indebtedness in respect of Subordinated Debt.
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<PAGE> 58
6.6.12. Indebtedness to the Guarantor which is expressly
subordinate to all the Credit Obligations, with no interest or
principal payable prior to or during the 90 day period after the
payment in full of all Credit Obligations, except as permitted by
Section 6.10.2 and which is pledged to the Agent for the benefit of the
Lenders as part of the Credit Security.
6.7. Guarantees; Letters of Credit. Neither the Borrower nor any of its
Subsidiaries shall become or remain liable with respect to any Guarantee,
including reimbursement obligations, whether or not due or payable, under
letters of credit or other financial guarantees by third parties, except the
following:
6.7.1. Guarantees of the Credit Obligations.
6.7.2. Guarantees by the Borrower of Indebtedness incurred by
its Subsidiaries and permitted by Section 6.6.
6.8. Liens. None of the Guarantor, the Borrower nor any of their
respective Subsidiaries shall create, incur or enter into, or suffer to be
created or incurred or to exist, any Lien (or become contractually committed
to do so), except the following:
6.8.1. Liens on the Credit Security that secure the Credit
Obligations.
6.8.2. Liens to secure taxes, assessments and other
governmental charges, to the extent that payment thereof shall not at
the time be required by Section 6.1.
6.8.3. Deposits or pledges made (a) in connection with, or to
secure payment of, workers' compensation, unemployment insurance, old
age pensions or other social security, (b) in connection with casualty
insurance maintained in accordance with Section 6.3, (c) to secure the
performance of bids, tenders, contracts (other than contracts relating
to Financing Debt) or leases, (d) to secure statutory obligations or
surety or appeal bonds, (e) to secure indemnity, performance or other
similar bonds in the ordinary course of business or (f) in connection
with contested amounts to the extent that payment thereof shall not at
that time be required by Section 6.1.
6.8.4. Liens in respect of judgments or awards, to the extent
that such judgments or awards are permitted by Section 6.6.6 but only
to the extent that such Liens are junior to the Liens on the Credit
Security granted to secure the Credit Obligations.
6.8.5. Liens of carriers, warehouses, mechanics and similar
Liens, in each case (a) in existence less than 90 days from the date of
creation thereof or (b) being contested in good faith by the Borrower
or any of its Subsidiaries in appropriate
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<PAGE> 59
proceedings (so long as the Borrower or such Subsidiary shall, in
accordance with GAAP, have set aside on its books adequate reserves
with respect thereto).
6.8.6. Encumbrances in the nature of (a) zoning restrictions,
(b) easements, (c) restrictions of record on the use of real property,
(d) landlords' and lessors' Liens on rented premises and (e)
restrictions on transfers or assignment of leases, which in each case
do not materially detract from the value of the encumbered property or
impair the use thereof in the business of the Borrower or any of its
Subsidiaries.
6.8.7. Restrictions under federal and state securities laws
on the transfer of securities.
6.8.8. Restrictions under Foreign Trade Regulations on the
transfer or licensing of certain assets of the Borrower and its
Subsidiaries.
6.8.9. Liens constituting (a) purchase money security
interests (including mortgages, conditional sales, Capitalized Leases
and any other title retention or deferred purchase devices) in real
property, interests in leases or tangible personal property (other than
inventory) existing or created on the date on which such property is
acquired, and (b) the renewal, extension or refunding of any security
interest referred to in the foregoing clause (a) in an amount not to
exceed the amount thereof remaining unpaid immediately prior to such
renewal, extension or refunding; provided, however, that (i) each such
security interest shall attach solely to the particular item of
property so acquired, and the principal amount of Indebtedness
(including Indebtedness in respect of Capitalized Lease Obligations)
secured thereby shall not exceed the cost (including all such
Indebtedness secured thereby, whether or not assumed) of such item of
property, and (ii) the aggregate principal amount of all Indebtedness
secured by Liens permitted by this Section 6.8.9 shall not exceed the
amount permitted by Section 6.6.7.
6.8.10. Liens on assets of the Guarantor or its Foreign
Subsidiaries located outside of the United States.
6.8.11. Liens on assets of the Guarantor existing on the
Initial Closing Date and listed on Exhibit 6.8.11.
6.9. Investments and Acquisitions. Neither the Borrower nor any of its
Subsidiaries shall have outstanding, acquire, commit itself to acquire or hold
any Investment (including any Investment consisting of the acquisition of any
business) (or become contractually committed to do so) except for the following:
6.9.1. Investments of the Borrower in Wholly Owned
Subsidiaries of the Borrower which are organized and operate solely
within the United States.
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6.9.2. Intercompany loans and advances from any Wholly Owned
Subsidiary of the Borrower who is a Guarantor to the Borrower.
6.9.3. Investments in Cash Equivalents.
6.9.4. Guarantees permitted by Section 6.7.
6.9.5. The acquisition on the Initial Closing Date
contemplated by the Acquisition Agreement.
6.10. Distributions. Neither the Borrower nor any of its Subsidiaries
shall make any Distribution (or become contractually committed to do so)
except for the following:
6.10.1. So long as immediately before and after giving effect
thereto no Default exists, Subsidiaries of the Borrower may make
Distributions to the Borrower.
6.10.2. So long as immediately before and after giving effect
thereto no Default exists, the Borrower (i) may pay interest to
Guarantor on any note, issued by Borrower to Guarantor permitted under
Section 6.6.12 and (ii) may declare and pay dividends to the Guarantor,
in each case from Consolidated Net Income (if positive) for the fiscal
year then most recently ended within 30 days after the Lenders have
received financial statements delivered in accordance with Section 6.4
indicating all of the following conditions have been met:
(a) Consolidated Senior Funded Indebtedness is equal to
$20,000,000 or less at the end of such fiscal year;
(b) Consolidated EBITDA to Consolidated Fixed Charges, is
equal to at least 150% for the two consecutive fiscal quarters
immediately ended; and
(c) Consolidated Funded Indebtedness to Consolidated EBITDA
for the fiscal quarter immediately ended is equal to 200% or less.
6.10.3. So long as immediately before and after giving effect
thereto no Default exists, the Borrower may pay interest on the
Subordinated Debt pursuant to the terms and conditions of a
subordination agreement with the Agent, as approved by the Required
Lenders in their sole discretion.
6.11. Mergers, Consolidations and Dispositions of Assets. Neither the
Borrower nor any of its Subsidiaries shall merge or enter into a consolidation
or joint venture or sell, lease, sell and lease back, sublease or otherwise
dispose of any of its assets (or become contractually committed to do so),
except the following:
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6.11.1. The Borrower and any of its Subsidiaries may sell or
otherwise dispose of (a) inventory in the ordinary course of business
and (b) tangible assets that are no longer used or useful in the
business of the Borrower or such Subsidiary, and (c) tangible assets to
be replaced in the ordinary course of business by other assets of equal
or greater value; provided, however, that the aggregate fair market
value (or book value if greater) of the assets sold or disposed of
pursuant to clause (b) shall not exceed $100,000 in any fiscal year.
6.11.2. Any Wholly Owned Subsidiary of the Borrower may merge
or be liquidated into the Borrower or any other Wholly Owned Subsidiary
of the Borrower so long as after giving effect to any such merger to
which the Borrower is a party the Borrower shall be the surviving or
resulting Person.
6.12. Lease Obligations. Neither the Borrower nor any of its
Subsidiaries shall be or become obligated as lessee under any lease except:
6.12.1. Capitalized Leases permitted by Sections 6.6.7 and
6.8.9.
6.12.2. Leases other than Capitalized Leases; provided,
however, that the aggregate fixed rental obligations for any fiscal
year (excluding payments required to be made by the lessee in respect
of taxes and insurance whether or not denominated as rent) shall not
exceed $250,000.
6.13. Issuance of Stock by Subsidiaries; Subsidiary Distributions.
6.13.1. Issuance of Stock by Subsidiaries.
(a) The Borrower shall not issue or sell any shares of its
capital stock or other evidence of beneficial ownership except to the
Guarantor, which shares shall have been pledged to the Agent as part of
the Credit Security.
(b) No Subsidiary of the Borrower shall issue or sell any
shares of its capital stock or other evidence of beneficial ownership
to any Person other than the Borrower or any Wholly Owned Subsidiary of
the Borrower, and directors of Subsidiaries as qualifying shares to the
extent required by Legal Requirements.
6.13.2. No Restrictions on Subsidiary Distributions. Except
for this Agreement and the Credit Documents, neither the Borrower nor
any of its Subsidiaries shall enter into or be bound by any agreement
(including covenants requiring the maintenance of specified amounts of
net worth or working capital) restricting the right of any Subsidiary
to make Distributions or extensions of credit to the Borrower (directly
or indirectly through another Subsidiary).
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6.14. Voluntary Prepayments of Other Indebtedness. Neither the Borrower
nor any of its Subsidiaries shall make any voluntary prepayment of principal of
or interest on any Consolidated Funded Indebtedness other than the Credit
Obligations, or make any voluntary redemptions or repurchases of Consolidated
Funded Indebtedness other than the Credit Obligations.
6.15. Derivative Contracts. Other than as required by Section 6.19,
neither the Borrower nor any of its Subsidiaries shall enter into any Interest
Rate Protection Agreement, foreign currency exchange contract or other financial
or commodity derivative contracts except to provide hedge protection for an
underlying economic transaction in the ordinary course of business.
6.16. Negative Pledge Clauses. None of the Guarantor, the Borrower nor
any of their respective Subsidiaries shall enter into any agreement, instrument,
deed or lease which prohibits or limits the ability of the Guarantor, the
Borrower or any such Subsidiary to create, incur, assume or suffer to exist any
Lien upon any of their respective properties, assets or revenues, whether now
owned or hereafter acquired, wherever located, or which requires the grant of
any collateral for such obligation if collateral is granted for another
obligation, except the following:
6.16.1. This Agreement and the other Credit Documents.
6.16.2. Covenants in documents creating Liens permitted by
Section 6.8 prohibiting further Liens on the assets encumbered thereby.
6.16.3. Liens on assets of the Guarantor or its Foreign
Subsidiaries located outside of the United States.
6.17. ERISA, etc. Each of the Borrower and its Subsidiaries shall
comply, and shall cause all ERISA Group Persons to comply, in all material
respects, with the provisions of ERISA and the Code applicable to each Plan.
Each of the Borrower and its Subsidiaries shall meet, and shall cause all ERISA
Group Persons to meet, all minimum funding requirements applicable to them with
respect to any Plan pursuant to section 302 of ERISA or section 412 of the Code,
without giving effect to any waivers of such requirements or extensions of the
related amortization periods which may be granted. At no time shall the
Accumulated Benefit Obligations under any Plan that is not a Multiemployer Plan
exceed the fair market value of the assets of such Plan allocable to such
benefits by more than $250,000. The Borrower and its Subsidiaries shall not
withdraw, and shall cause all other ERISA Group Persons not to withdraw, in
whole or in part, from any Multiemployer Plan so as to give rise to withdrawal
liability exceeding $250,000 in the aggregate. At no time shall the actuarial
present value of unfunded liabilities for post-employment health care benefits,
whether or not provided under a Plan, calculated in a manner consistent with
Statement No. 106 of the Financial Accounting Standards Board, exceed $250,000.
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6.18. Transactions with Affiliates. Neither the Borrower nor any of its
Subsidiaries shall effect any transaction with any of their respective
Affiliates (except for the Borrower and its Subsidiaries) on a basis less
favorable to the Borrower and its Subsidiaries than would be the case if such
transaction had been effected with a non-Affiliate.
6.19. Interest Rate Protection. The Borrower shall either (i) on or
within five Banking Days of the Initial Closing Date, obtain and thereafter keep
in effect for an aggregate period of not less than two years, one or more
Interest Rate Protection Agreements covering a notional amount of at least
$6,000,000 of the Term Loan, or (ii) if at any time, the LIBOR Basic Rate
increases by 2% or more, as compared to the LIBOR Basic Rate in effect on the
Initial Closing Date, then, within 30 days, the Borrower shall obtain and
thereafter keep in effect one or more Interest Rate Protection Agreements,
which, together with any prior existing Interest Rate Protection Agreements, are
for an aggregate amount equal to 50% of the amount then outstanding on the Term
Loan for the lesser of an aggregate period of not less than two years from the
date thereof or until the Final Maturity Date. Any such Interest Rate Protection
Agreement shall conform to International Securities Dealers Association
standards, each in form and substance reasonably satisfactory to the Agent.
6.20. Environmental Laws.
6.20.1. Compliance with Law and Permits. Each of the Borrower
and its Subsidiaries shall use and operate all of its facilities and
properties in compliance with all Environmental Laws, keep all
necessary permits, approvals, certificates, licenses and other
authorizations relating to environmental matters in effect and remain
in compliance therewith, and handle all Hazardous Materials in
compliance with all applicable Environmental Laws except in each case
where the failure so to comply has not resulted or does not create a
material risk of resulting, in any Material Adverse change.
6.20.2. Notice of Claims, etc. Each of the Borrower and its
Subsidiaries shall (a) immediately notify the Agent, and provide copies
upon receipt, of all written claims, information requests, complaints,
notices or inquiries from governmental authorities and (b) immediately
notify the Agent of any known instances, in each case relating to the
condition of its past or present facilities and properties or
compliance with or liability under Environmental Laws, and shall
promptly cure and have dismissed with prejudice or otherwise resolved
to the satisfaction of the Agent any claims, notices of liability,
instances of noncompliance and actions and proceedings relating to
compliance with or liability under Environmental Laws.
6.20.3. Successor Liability. For purposes of this Section
6.20, any reference to the Borrower or any of its Subsidiaries shall
also be deemed to refer to any other Person with respect to which the
Borrower or such Subsidiary may be deemed a successor under any
applicable Environmental Laws.
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6.21. Liquidity of the Guarantor. If the Borrower fails to place
$5,000,000 in principal amount of Subordinated Debt prior to May 3, 1997, the
Guarantor shall, at all times until all Credit Obligations with respect to the
Bridge Loan are paid in full, maintain $5,000,000 in cash or Cash Equivalents.
6.22. Maintenance of Cash and Cash Equivalents. The Guarantor shall
keep all cash and Cash Equivalents in the United States, except for cash needed
for working capital and other general corporate purposes in the ordinary course
of business of Subsidiaries of the Guarantor organized or with operations
outside of the United States.
6.23. Additional Contribution by the Guarantor. On or prior to June 3,
1997, either (i) the Subordinated Debt shall have been placed and the Credit
Obligations with respect to the Bridge Loan shall have been paid in full, (ii)
the Guarantor shall have paid in full all Credit Obligations with respect to the
Bridge Loan, or (iii) the Guarantor shall have pledged to the Agent as
collateral $5,000,000 in cash or Cash Equivalents in a manner satisfactory to
the Agent. In the event the Agent receives such pledge of collateral under
Section 6.23 (iii), the Borrower may extend the Bridge Loan Maturity Date, as
long as no Default exists, to a date not later than December 31, 1997.
6.24. Credit Security Matters. (i) Within 90 days after the Initial
Closing Date, the Guarantor shall perfect to the Agent as soon as practicable,
security interests whether by pledge or otherwise, in the Pledged Stock of all
Foreign Subsidiaries of the Guarantor to the extent included in the Credit
Security not delivered on the Initial Closing Date, together with opinions of
counsel satisfactory to the Agent, and (ii) within 10 days after the Initial
Closing Date, send notice of the Lenders' security interest in, and use
reasonable efforts to obtain the acknowledgment thereof by Life Scan, Inc., a
subsidiary of Johnson & Johnson, the worldwide alliance and distribution
agreement between the Guarantor and Lifescan, Inc.
6.25. Ownership of the Borrower. The Guarantor shall not sell, or
become contractually committed to sell, any shares of capital stock of the
Borrower currently held by the Guarantor, or subsequently obtained by the
Guarantor.
7. Representations and Warranties. In order to induce the Lenders to extend
credit to the Borrower hereunder, each of the Guarantor, the Borrower and their
respective Subsidiaries party hereto jointly and severally represents and
warrants as follows:
7.1. Organization and Business.
7.1.1. Guarantor. The Guarantor is a duly organized and
validly existing corporation, in good standing under the laws of
Delaware, with all power and authority, corporate or otherwise,
necessary to (a) enter into and perform this Agreement and each other
Credit Document to which it is party, (b) guarantee the Credit
Obligations, (c) grant the Agent for the benefit of the Lenders the
security
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interest in the Credit Security owned by it to secure the Credit
Obligations and (d) own its properties and carry on the business
now conducted or proposed to be conducted by it. A certified
copy of the Charter and By-laws of the Guarantor have been previously
delivered to the Agent and is correct and complete. Exhibit 7.1, as
from time to time hereafter supplemented in accordance with Sections
6.4.1 and 6.4.2, sets forth, as of the later of the date hereof or as
of the end of the most recent fiscal quarter for which financial
statements are required to be furnished in accordance with such
Sections, (i) the jurisdiction of organization of the Guarantor, (ii)
the address of the principal executive office and chief place of
business of the Guarantor, (iii) each name, including any trade name,
under which the Guarantor conducts its business and (iv) each
jurisdiction in which the Guarantor keeps tangible personal property.
7.1.2. The Borrower. The Borrower is a duly organized and
validly existing corporation, in good standing under the laws of
Delaware, with all power and authority, corporate or otherwise,
necessary to (a) enter into and perform this Agreement and each other
Credit Document to which it is party, (b) grant the Agent for the
benefit of the Lenders the security interests in the Credit Security
owned by it to secure the Credit Obligations and (c) own its properties
and carry on the business now conducted or proposed to be conducted by
it. Certified copies of the Charter and By-laws of the Borrower have
been previously delivered to the Agent and are correct and complete.
Exhibit 7.1, as from time to time hereafter supplemented in accordance
with Sections 6.4.1 and 6.4.2, sets forth, as of the later of the date
hereof or as of the end of the most recent fiscal quarter for which
financial statements are required to be furnished in accordance with
such Sections, (i) the jurisdiction of incorporation of the Borrower,
(ii) the address of the principal executive office and chief place of
business of the Borrower, (iii) each name, including any trade name,
under which the Borrower conducts its business and (iv) the
jurisdictions in which the Borrower keeps tangible personal property.
7.1.3. Subsidiaries. Each Subsidiary of the Borrower is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized, with all power and authority,
corporate or otherwise, necessary to (a) enter into and perform this
Agreement and each other Credit Document to which it is party and (b)
own its properties and carry on the business now conducted or proposed
to be conducted by it. Certified copies of the Charter and By-laws of
each Subsidiary of the Borrower have been previously delivered to the
Agent and are correct and complete. Exhibit 7.1, as from time to time
hereafter supplemented in accordance with Sections 6.4.1 and 6.4.2,
sets forth, as of the later of the date hereof or as of the end of the
most recent fiscal quarter for which financial statements are required
to be furnished in accordance with such Sections, (i) the name and
jurisdiction of organization of each Subsidiary of the Borrower, (ii)
the address of the chief executive office and principal place of
business of each such Subsidiary, (iii) each
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name under which each such Subsidiary conducts its business and (iv)
the number of authorized and issued shares and ownership of each such
Subsidiary.
7.1.5. Qualification. Each of the Guarantor, the Borrower and
its respective Subsidiaries is duly and legally qualified to do
business as a foreign corporation or other entity and is in good
standing in each state or jurisdiction in which such qualification is
required and is duly authorized, qualified and licensed under all laws,
regulations, ordinances or orders of public authorities, or otherwise,
to carry on its business in the places and in the manner in which it is
conducted, except for failures to be so qualified, authorized or
licensed which would not in the aggregate result, or create a material
risk of resulting, in any Material Adverse Change.
7.1.6. Capitalization. No options, warrants, conversion
rights, preemptive rights or other statutory or contractual rights to
purchase shares of capital stock or other securities of the Borrower or
any of its Subsidiaries now exist, nor has the Guarantor, the Borrower
or any of its Subsidiaries authorized any such right, nor is the
Guarantor, the Borrower or any of its Subsidiaries obligated in any
other manner to issue shares of the capital stock or other securities
of the Borrower or its Subsidiaries.
7.2. Financial Statements and Other Information; Material Agreements.
7.2.1. Financial Statements and Other Information. The
Borrower has previously furnished to the Lenders copies of the
following:
(a) The audited Consolidated and unaudited Consolidating
balance sheets of the Guarantor and its Subsidiaries as at December 31,
1996 and December 31, 1995 and the audited Consolidated and unaudited
Consolidating statements of operations and the audited Consolidated
statements of stockholders' equity and of cash flows of the Guarantor
and its Subsidiaries for fiscal years of the Guarantor then ended.
(b) The audited statements of net revenues in excess of direct
expenses of the product lines to be acquired pursuant to the
Acquisition Agreement for the years ended November 30, 1996 and
November 30, 1995.
(c) The five-year financial and operational projections for
the Borrower and its Subsidiaries provided on December 5, 1996.
The audited Consolidated financial statements (including the
notes thereto) referred to in clause (a) above, were prepared in
accordance with GAAP and fairly present the financial position of the
Guarantor, and its Subsidiaries on a Consolidated basis at the
respective dates thereof and the results of their operations for the
periods covered thereby. Neither the Guarantor, nor any of its
Subsidiaries has any known contingent liability material to the
Guarantor, and its Subsidiaries individually, or on a
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Consolidated basis which is not reflected in the balance sheets
referred to in clause (a) above (or delivered pursuant to Sections
6.4.1 or 6.4.2) or in the notes thereto.
The information contained in the statements of net revenues in
excess of direct expenses referred to in clause (b) above fairly
present in all material respects net revenues, costs of sales, direct
marketing expenses, direct selling, general and administrative expenses
and net revenues in excess of direct expenses for the product lines to
be acquired pursuant to the Acquisition Agreement, in conformity with
GAAP applied on a consistent basis (except as may be indicated in the
notes thereto) for the periods presented.
.
In the Borrower's judgment, the financial and operational
projections referred to in clause (c) above constitute a reasonable
basis as of the Initial Closing Date for the assessment of the future
performance of the Borrower and its Subsidiaries during the periods
indicated therein, it being understood that any projected financial
information represents an estimate, based on various assumptions, of
future results of operations which may or may not in fact occur.
7.2.2. Material Agreements. The Borrower has previously
furnished to the Lenders correct and complete copies, including all
exhibits, schedules and amendments thereto, of the agreements, each as
in effect on the date hereof, listed in Exhibit 7.2.2 (the "Material
Agreements"), and there are no other agreements material to the
business of the Borrower.
7.3. Agreements Relating to Financing Debt, Investments, etc. Exhibit
7.3, as from time to time hereafter supplemented in accordance with Sections
6.4.1 and 6.4.2, sets forth (a) the amounts (as of the dates indicated in
Exhibit 7.3, as so supplemented) of all Financing Debt of the Borrower and its
Subsidiaries and all agreements which relate to such Financing Debt, (b) all
Liens and Guarantees with respect to such Financing Debt, (c) all agreements
which directly or indirectly require the Borrower or any of its Subsidiaries to
make any Investment, (d) material license agreements with respect to the
products of the Borrower and its Subsidiaries, including the parties thereto and
the expiration dates thereof, and (e) all trademarks, tradenames, service marks,
service names and patents of the Borrower registered with the United States
Patent and Trademark Office (or with respect to which applications for such
registrations have been filed). The Borrower has furnished the Lenders with
correct and complete copies of any agreements described in clauses (a) through
(e) above requested by the Required Lenders.
7.4. Changes in Condition. Since September 30, 1996 with respect to the
Guarantor and its Subsidiaries, and November 30, 1996 with respect to the
Borrower and its Subsidiaries no Material Adverse Change has occurred, and
between such dates and the date hereof, neither the Guarantor, the Borrower nor
any of its Subsidiaries has entered into any material transaction outside the
ordinary course of business except for the transactions contemplated by this
Agreement and the Material Agreements.
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7.5. Title to Assets. The Guarantor, the Borrower and its Subsidiaries
have the valid right to use or good title to all assets (and valid leasehold
interest in properties occupied by them) necessary for or used in the operations
of their business as now conducted by them and reflected in the most recent
balance sheet referred to in Section 7.2.1 (or the balance sheet most recently
furnished to the Lenders pursuant to Sections 6.4.1 or 6.4.2), and to all assets
acquired subsequent to the date of such balance sheet, subject to no Liens
except for Liens permitted by Section 6.8 and except for assets disposed of as
permitted by Section 6.11.
7.6. Operations in Conformity With Law, etc. The operations of the
Guarantor, the Borrower and its Subsidiaries as now conducted or proposed to be
conducted are not in violation of, nor is the Guarantor, the Borrower or any of
its Subsidiaries in default under, any Legal Requirement presently in effect,
except for such violations and defaults as do not and will not, in the
aggregate, result, or create a material risk of resulting, in any Material
Adverse Change. Neither the Guarantor, the Borrower nor any of its Subsidiaries
has received any notice of any such violation or default and has any knowledge
of any basis on which the operations of the Guarantor, the Borrower or any of
its Subsidiaries, as now conducted and as currently proposed to be conducted
after the date hereof, would be held so as to violate or to give rise to any
such violation or default.
7.7. Litigation. Except as disclosed under "Business - Legal
Proceedings" in Guarantor's preliminary prospectus dated February 14, 1997, no
litigation, at law or in equity, or any proceeding before any court, board or
other governmental or administrative agency or any arbitrator is pending or, to
the knowledge of the Guarantor, the Borrower or any of its Subsidiaries,
threatened which may involve any material risk of any final judgment, order or
liability which, after giving effect to any applicable insurance and indemnity,
has resulted, or creates a material risk of resulting, in any Material Adverse
Change or which seeks to enjoin the consummation, or which questions the
validity, of any of the transactions contemplated by this Agreement or any other
Credit Document. No judgment, decree or order of any court, board or other
governmental or administrative agency or any arbitrator has been issued against
or binds the Guarantor, the Borrower or any of its Subsidiaries which has
resulted, or creates a material risk of resulting, in any Material Adverse
Change.
7.8. Authorization and Enforceability. Each of the Guarantor, the
Borrower and the other Obligors has taken all corporate action required to
execute, deliver and perform this Agreement and each other Credit Document to
which it is party. No consent of stockholders of any Obligor is necessary in
order to authorize the execution, delivery or performance of this Agreement or
any other Credit Document to which any Obligor is party. Each of this Agreement
and each other Credit Document constitutes the legal, valid and binding
obligation of each Obligor party thereto and is enforceable against such Obligor
in accordance with its terms.
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7.9. No Legal Obstacle to Agreements. Neither the execution and
delivery of this Agreement or any other Credit Document, nor the making of any
borrowings hereunder, nor the guaranteeing of the Credit Obligations, nor the
securing of the Credit Obligations with the Credit Security, nor the
consummation of any transaction referred to in or contemplated by this Agreement
or any other Credit Document, nor the fulfillment of the terms hereof or thereof
or of any other agreement, instrument, deed or lease contemplated by this
Agreement or any other Credit Document, has constituted or resulted in or will
constitute or result in:
(a) any breach or termination of the provisions of any
material agreement, instrument, deed or lease to which the Guarantor,
the Borrower or any other Obligor is a party or by which it is bound,
or of the Charter or By-laws of the Guarantor, the Borrower, any
Subsidiary or any other Obligor;
(b) the violation of any law, statute, judgment, decree or
governmental order, rule or regulation applicable to the Guarantor, the
Borrower, any Subsidiary or any other Obligor;
(c) the creation under any agreement, instrument, deed or
lease of any Lien (other than Liens on the Credit Security which secure
the Credit Obligations) upon any of the assets of the Guarantor, the
Borrower, any Subsidiary or any other Obligor; or
(d) any redemption, retirement or other repurchase obligation
of the Guarantor, the Borrower, any Subsidiary or any other Obligor
under any Charter, By-law, agreement, instrument, deed or lease.
Except for the filing or recording of financing statements and the filing and
recording of security agreements with the United States Patent and Trademark
Office in connection with perfecting the security interests granted to the Agent
as contemplated hereunder, no approval, authorization or other action by, or
declaration to or filing with, any governmental or administrative authority or
any other Person is required to be obtained or made by the Guarantor, the
Borrower, any Subsidiary or any other Obligor in connection with the execution,
delivery and performance of this Agreement, the Notes or any other Credit
Document, the transactions contemplated hereby or thereby, the making of any
borrowing hereunder, the guaranteeing of the Credit Obligations or the securing
of the Credit Obligations with the Credit Security.
7.10. Defaults. Neither the Guarantor, the Borrower nor any of its
Subsidiaries is in default under any provision of its Charter or By-laws, this
Agreement or any other Credit Document. Neither the Guarantor, the Borrower nor
any of its Subsidiaries is in default under any provision of any agreement,
instrument, deed or lease to which it is party or by which it or its property is
bound, or has violated any law, judgment, decree or governmental order, rule or
regulation, in each case so as to result, or create a material risk of
resulting, in any Material Adverse Change.
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7.11. Licenses, etc. The Guarantor, the Borrower and its Subsidiaries
have all material patents, patent applications, patent licenses, patent rights,
trademarks, trademark rights, trade names, trade name rights, copyrights,
licenses, franchises, permits, authorizations and other rights as are necessary
for the conduct of the business of the Guarantor, the Borrower and its
Subsidiaries as now conducted by them. All of the foregoing are in full force
and effect in all material respects, and each of the Guarantor, the Borrower and
its Subsidiaries is in substantial compliance with the foregoing without any
known conflict with the valid rights of others which has resulted, or creates a
material risk of resulting, in any Material Adverse Change. No event has
occurred which permits, or after notice or lapse of time or both would permit,
the revocation or termination of any such license, franchise or other right or
which affects the rights of any of the Guarantor, the Borrower and its
Subsidiaries thereunder so as to result, or to create a material risk of
resulting, in any Material Adverse Change. No litigation or other proceeding or
dispute exists with respect to the validity or, where applicable, the extension
or renewal, of any of the foregoing which has resulted, or creates a material
risk of resulting, in any Material Adverse Change.
7.12. Tax Returns. Each of the Guarantor, the Borrower and its
Subsidiaries has filed all material tax and information returns which are
required to be filed by it and has paid, or made adequate provision for the
payment of, all taxes which have or may become due pursuant to such returns or
to any assessment received by it. Neither the Guarantor, the Borrower nor any of
its Subsidiaries knows of any material additional assessments or any basis
therefor. Each of the Guarantor and the Borrower reasonably believes that the
charges, accruals and reserves on the books of the Guarantor, the Borrower and
its Subsidiaries in respect of taxes or other governmental charges are adequate.
7.13. Certain Business Representations.
7.13.1. Labor Relations. No dispute or controversy between the
Guarantor, the Borrower or any of its Subsidiaries and any of their
respective employees has resulted, or is reasonably likely to result,
in any Material Adverse Change, and neither the Guarantor, the Borrower
nor any of its Subsidiaries anticipates that its relationships with its
unions or employees will result, or are reasonably likely to result, in
any Material Adverse Change. Each of the Guarantor, the Borrower and
its Subsidiaries is in compliance in all material respects with all
federal and state laws with respect to (a) non-discrimination in
employment with which the failure to comply, in the aggregate, has
resulted, or creates a material risk of resulting, in a Material
Adverse Change and (b) the payment of wages.
7.13.2. Antitrust. Each of the Guarantor, the Borrower and its
Subsidiaries is in compliance in all material respects with all federal
and state antitrust laws relating to its business and the geographic
concentration of its business.
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7.13.3. Consumer Protection. Neither the Borrower nor any of
its Subsidiaries is in violation of any rule, regulation, order, or
interpretation of any rule, regulation or order of the Federal Trade
Commission, with which the failure to comply, in the aggregate, has
resulted or created a material risk of resulting, in a Material Adverse
Change.
7.13.4. Burdensome Obligations. Neither the Guarantor, the
Borrower nor any of its Subsidiaries is party to or bound by any
agreement, instrument, deed or lease or is subject to any Charter,
By-law or other restriction, commitment or requirement which, in the
opinion of the management of such Person, is so unusual or burdensome
as in the foreseeable future to result, or create a material risk of
resulting, in a Material Adverse Change.
7.13.5. Future Expenditures. Neither the Guarantor, the
Borrower nor any of its Subsidiaries anticipates that the future
expenditures, if any, by the Guarantor, the Borrower and its
Subsidiaries needed to meet the provisions of any federal, state or
foreign governmental statutes, orders, rules or regulations will be so
burdensome as to result, or create a material risk of resulting, in any
Material Adverse Change.
7.14. Environmental Regulations.
7.14.1. Environmental Compliance. Each of the Guarantor, the
Borrower and its Subsidiaries is in compliance in all material respects
with the Clean Air Act, the Federal Water Pollution Control Act, the
Marine Protection Research and Sanctuaries Act, RCRA, CERCLA and any
other Environmental Law in effect in any jurisdiction in which any
properties of the Guarantor, the Borrower or any of its Subsidiaries
are located or where any of them conducts its business, and with all
applicable published rules and regulations (and applicable standards
and requirements) of the federal Environmental Protection Agency and of
any similar agencies in states or foreign countries in which the
Guarantor, the Borrower or any of its Subsidiaries conducts its
business other than those instances of noncompliance which in the
aggregate have not resulted, and do not create a material risk of
resulting, after giving effect to any applicable indemnity, in a
Material Adverse Change.
7.14.2. Environmental Litigation. No suit, claim, action,
notice of potential liability, information request or proceeding of
which the Guarantor, the Borrower or any of its Subsidiaries has been
given notice or otherwise has knowledge is now pending before any
court, governmental agency or board or other forum, or to the knowledge
of the Guarantor, the Borrower or any of its Subsidiaries, threatened
by any Person (nor to the knowledge of the Guarantor, the Borrower or
any of its Subsidiaries, does any factual basis exist therefor) for,
and since January 1, 1994 neither the Guarantor, the Borrower nor any
of its Subsidiaries has received written correspondence from any
federal, state or local governmental authority with respect to:
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(a) noncompliance by the Guarantor, the Borrower or any of its
Subsidiaries with, or any potential liability of the Guarantor, the
Borrower or any of its Subsidiaries under, any Environmental Law;
(b) personal injury, wrongful death or other tortious conduct
relating to materials, commodities or products used, generated, sold,
transferred or manufactured by the Guarantor, the Borrower or any of
its Subsidiaries (including products made of, containing or
incorporating asbestos, lead or other hazardous materials, commodities
or toxic substances); or
(c) the release into the environment by the Guarantor, the
Borrower or any of its Subsidiaries of any Hazardous Material generated
by the Guarantor, the Borrower or any of its Subsidiaries whether or
not occurring at or on, or migrating to or from, a site formerly or
currently owned, leased or operated by the Guarantor, the Borrower or
any of its Subsidiaries.
7.14.3. Hazardous Material. The disposal at any waste disposal
or dump sites at which Hazardous Material generated by the Guarantor,
the Borrower or any of the Borrower's Subsidiaries has been disposed of
directly or indirectly by the Guarantor, the Borrower any of the
Borrower's Subsidiaries, or any independent contractors or agents to
whom the Guarantor, the Borrower or any of its Subsidiaries have
delivered Hazardous Material, or to the knowledge of the Guarantor, the
Borrower or any of its Subsidiaries, any other waste disposal or dump
sites where Hazardous Material generated by the Guarantor, the Borrower
or any of its Subsidiaries finally came to be located, has not
resulted, and does not create a material risk of resulting, in a
Material Adverse Change.
7.14.4. Environmental Condition of Properties. No Hazardous
Material is present on or in, or migrating to or from, any real
property formerly or currently owned or operated by the Guarantor, the
Borrower or any of its Subsidiaries except that which has not resulted,
and does not create a material risk of resulting, in a Material Adverse
Change.
7.15. Pension Plans. Each Plan (other than a Multiemployer Plan) and,
to the knowledge of the Guarantor, the Borrower and its Subsidiaries, each
Multiemployer Plan is in material compliance with the applicable provisions of
ERISA and the Code. Each Multiemployer Plan and each Plan that constitutes a
"defined benefit plan" (as defined in ERISA) are set forth in Exhibit 7.15. Each
ERISA Group Person has met all of the funding standards applicable to all Plans
that are not Multiemployer Plans, and no condition exists which would permit the
institution of proceedings to terminate any Plan that is not a Multiemployer
Plan under section 4042 of ERISA. To the best knowledge of the Guarantor, the
Borrower and its Subsidiaries, no Plan that is a Multiemployer Plan is currently
insolvent or in reorganization or has been terminated within the meaning of
ERISA.
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7.16. Acquisition Agreement, etc. The Acquisition Agreement is a valid
and binding contract as to the Guarantor and the Borrower and, to the best
knowledge of the Guarantor and the Borrower, as to the Sellers. Neither the
Guarantor nor the Borrower is in default in any material respect of its
obligations under the Acquisition Agreement and, to the best knowledge of the
Guarantor and the Borrower, the Sellers are not in default in any material
respect of any of its obligations thereunder. The representations and warranties
of the Guarantor and the Borrower set forth in the Acquisition Agreement are
true and correct in all material respects as of the date hereof with the same
force and effect as though made on and as of the date hereof. To the best
knowledge of the Guarantor and the Borrower, all of the representations and
warranties of the Sellers set forth in the Acquisition Agreement are true and
correct in all material respects as of the date hereof with the same force and
effect as though made on and as of the date hereof.
7.17. Foreign Trade Regulations; Government Regulation; Margin Stock.
7.17.1. Foreign Trade Regulations. Neither the execution and
delivery of this Agreement or any other Credit Document, nor the making
by the Borrower of any borrowings hereunder, nor the guaranteeing of
the Credit Obligations by any Guarantor, nor the securing of the Credit
Obligations with the Credit Security, has constituted or resulted in or
will constitute or result in the violation of any Foreign Trade
Regulation.
7.17.2. Government Regulation. Neither the Guarantor, the
Borrower nor any of its Subsidiaries, nor any Person controlling the
Guarantor, the Borrower or any of its Subsidiaries or under common
control with the Guarantor, the Borrower or any of its Subsidiaries, is
subject to regulation under the Public Utility Holding Company Act of
1935, the Federal Power Act, the Investment Company Act, the Interstate
Commerce Act or any statute or regulation which regulates the incurring
by the Guarantor, the Borrower or any of its Subsidiaries of Financing
Debt as contemplated by this Agreement and the other Credit Documents.
7.17.3. Margin Stock. Neither the Guarantor, the Borrower nor
any of its Subsidiaries owns any Margin Stock.
7.18. Disclosure. Neither this Agreement nor any other Credit Document
to be furnished to the Lenders by or on behalf of the Guarantor, the Borrower or
any of its Subsidiaries in connection with the transactions contemplated hereby
or by such Credit Document contains any untrue statement of material fact or
omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading in light of the circumstances under
which they were made. No fact is actually known to the Guarantor, the Borrower
or any of its Subsidiaries which has resulted, or in the future (so far as the
Guarantor, the Borrower or any of its Subsidiaries can reasonably foresee) will
result,
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or creates a material risk of resulting, in any Material Adverse Change,
except to the extent that present or future general economic conditions may
result in a Material Adverse Change.
8. Defaults.
8.1. Events of Default. The following events are referred to as "Events
of Default":
8.1.1. Payment. The Borrower shall fail to make any payment in
respect of: (a) interest or any fee on or in respect of any of the
Credit Obligations owed by it as the same shall become due and payable,
and such failure shall continue for a period of two Banking Days, or
(b) principal of any of the Credit Obligations owed by it as the same
shall become due, whether at maturity or by acceleration or otherwise.
8.1.2. Specified Covenants. The Guarantor, the Borrower, any
of its Subsidiaries or any other Obligor shall fail to perform or
observe any of the provisions of Section 6.4.5 or Sections 6.5 through
6.25.
8.1.3. Other Covenants. The Borrower, any of its Subsidiaries
or any other Obligor shall fail to perform or observe any other
covenant, agreement or provision to be performed or observed by it
under this Agreement or any other Credit Document, and such failure
shall not be rectified or cured to the written satisfaction of the
Required Lenders within 20 days after the earlier of (a) notice thereof
by the Agent to the Borrower or (b) a Financial Officer of the Borrower
shall have actual knowledge thereof.
8.1.4. Representations and Warranties. Any representation or
warranty of or with respect to the Borrower, any of its Subsidiaries or
any other Obligor made to the Lenders or the Agent, in, pursuant to or
in connection with this Agreement or any other Credit Document, or in
any financial statement, report, notice, mortgage, assignment, UCC
financing statement or certificate delivered to the Lender by, the
Borrower or the Borrower or any Subsidiary, or any other Obligor in
connection herewith or therewith, shall be materially false on the date
as of which it was made.
8.1.5. Cross Default, etc.
(a) The Guarantor, the Borrower or any of their respective
Subsidiaries (other than the Excluded Subsidiaries) shall fail to make
any payment when due (after giving effect to any applicable grace
periods) in respect of any Financing Debt (other than the Credit
Obligations) outstanding in an aggregate amount of principal (whether
or not due) and accrued interest exceeding $250,000;
(b) The Guarantor, the Borrower or any of their respective
Subsidiaries (other than the Excluded Subsidiaries) shall fail to
perform or observe the material terms of any material agreement or
instrument relating to such Financing Debt, and such
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failure shall continue, without having been duly cured, waived or
consented to, beyond the period of grace, if any, specified in such
agreement or instrument, and such failure shall permit the acceleration
of such Financing Debt;
(c) all or any part of such Financing Debt of the Guarantor,
the Borrower or any of their respective Subsidiaries (other than the
Excluded Subsidiaries) shall be accelerated or shall become due or
payable prior to its stated maturity (except with respect to voluntary
prepayments thereof) for any reason whatsoever;
(d) any Lien on any property of the Guarantor, the Borrower or
any of their respective Subsidiaries (other than the Excluded
Subsidiaries) securing any such Financing Debt shall be enforced by
foreclosure or similar action; or
(e) any holder of any such Financing Debt shall exercise any
right of rescission or put right with respect to the issuance thereof
or put or repurchase rights against any Obligor with respect to such
Financing Debt (other than any such rights that may be satisfied with
"payment in kind" notes or other similar securities).
8.1.6. Ownership; Liquidation; Management; etc. Except as
permitted by Section 6.11:
(a) any Person, together with "affiliates" and "associates" of
such Person within the meaning of Rule 12b-2 of the Exchange Act, or
any "group" including such Person under sections 13(d) and 14(d) of the
Exchange Act, shall acquire after the date hereof beneficial ownership
within the meaning of Rule 13d-3 of the Exchange Act of 20% or more of
either the voting stock or total equity capital of the Guarantor;
(b) the Guarantor shall cease to control and own beneficially
all of the equity capital of the Borrower;
(c) the Borrower shall cease to own, directly or indirectly,
all the capital stock of its Subsidiaries;
(d) the Guarantor, the Borrower, or any of their respective
Subsidiaries shall initiate any action to dissolve, liquidate or
otherwise terminate its existence;
(e) any three of the following individuals shall cease to be
employed by the Borrower or the Guarantor in positions comparable to
the position held on the date hereof: Ron Zwanziger, Kenneth D. Legg,
Richard A. Pinkowitz, Anthony H. Hall or Gary E. Long;
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(f) the Guarantor or the Borrower shall merge or consolidate,
or the Guarantor or the Borrower shall sell substantially all of its
assets, or enter into any agreement to do any of the above.
8.1.7. Enforceability, etc. Any Credit Document shall cease
for any reason (other than the scheduled termination thereof in
accordance with its terms) to be enforceable in accordance with its
terms or in full force and effect; or any party to any Credit Document
shall so assert in a judicial or similar proceeding; or the security
interests created by this Agreement or any other Credit Documents shall
cease to be enforceable and of the same effect and priority purported
to be created hereby.
8.1.8. Judgments. A final judgment (a) which, with other
outstanding final judgments against the Guarantor, the Borrower and its
Subsidiaries, exceeds an aggregate of $250,000 in excess of applicable
insurance coverage shall be rendered against the Guarantor, the
Borrower or any of its Subsidiaries, or (b) which grants injunctive
relief that results, or creates a material risk of resulting, in a
Material Adverse Change and in either case if, (i) within 30 days after
entry thereof, such judgment shall not have been discharged or
execution thereof stayed pending appeal or (ii) within 30 days after
the expiration of any such stay, such judgment shall not have been
discharged.
8.1.9. ERISA. Any "reportable event" (as defined in section
4043 of ERISA) shall have occurred that reasonably could be expected to
result in termination of a Plan or the appointment by the appropriate
United States District Court of a trustee to administer any Plan or the
imposition of a Lien in favor of a Plan; or any ERISA Group Person
shall fail to pay when due amounts aggregating in excess of $250,000
which it shall have become liable to pay to the PBGC or to a Plan under
Title IV of ERISA; or notice of intent to terminate a Plan shall be
filed under Title IV of ERISA by any ERISA Group Person or
administrator; or the PBGC shall institute proceedings under Title IV
of ERISA to terminate or to cause a trustee to be appointed to
administer any Plan or a proceeding shall be instituted by a fiduciary
of any Plan against any ERISA Group Person to enforce section 515 or
4219(c)(5) of ERISA and such proceeding shall not have been dismissed
within 30 days thereafter; or a condition shall exist by reason of
which the PBGC would be entitled to obtain a decree adjudicating that
any Plan must be terminated.
8.1.10. Bankruptcy, etc. The Guarantor, the Borrower or any of
their respective Subsidiaries (other than Excluded Subsidiaries) shall:
(a) commence a voluntary case under the Bankruptcy Code or
authorize, by appropriate proceedings of its board of directors or
other governing body, the commencement of such a voluntary case;
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(b) (i) have filed against it a petition commencing an
involuntary case under the Bankruptcy Code that shall not have been
dismissed within 60 days after the date on which such petition is
filed, or (ii) file an answer or other pleading within such 60-day
period admitting or failing to deny the material allegations of such a
petition or seeking, consenting to or acquiescing in the relief therein
provided, or (iii) have entered against it an order for relief in any
involuntary case commenced under the Bankruptcy Code;
(c) seek relief as a debtor under any applicable law, other
than the Bankruptcy Code, of any jurisdiction relating to the
liquidation or reorganization of debtors or to the modification or
alteration of the rights of creditors generally, or consent to or
acquiesce in such relief;
(d) have entered against it an order by a court of competent
jurisdiction (i) finding it to be bankrupt or insolvent, (ii) ordering
or approving its liquidation or reorganization as a debtor or any
modification or alteration of the rights of its creditors generally or
(iii) assuming custody of, or appointing a receiver or other custodian
for, all or a substantial portion of its property; or
(e) make an assignment for the benefit of, or enter into a
composition with, its creditors, or appoint, or consent to the
appointment of, or suffer to exist a receiver or other custodian for,
all or a substantial portion of its property.
8.1.11. Examination by the Agent. The results of the
commercial examinations contemplated by Section 5.1.9 do not adequately
address the issues raised in the report of Nardella & Taylor conducted
January 11-17, 1997, or subsequent such examinations, to the sole
satisfaction of the Agent.
8.1.12. Material Adverse Change. The Guarantor and its
Subsidiaries, other than the Borrower, or the Borrower and its
Subsidiaries shall experience a Material Adverse Change.
8.2. Certain Actions Following an Event of Default. If any one or more
Events of Default shall occur and be continuing, then in each and every such
case:
8.2.1. Terminate Obligation to Extend Credit. The Agent on
behalf of the Lenders may (and upon written request of the Required
Lenders the Agent shall) terminate the obligations of the Lender to
make any further extensions of credit under the Credit Documents by
furnishing notice of such termination to the Borrower.
8.2.2. Specific Performance; Exercise of Rights. The Agent on
behalf of the Lenders may (and upon written request of the Required
Lenders the Agent shall) proceed to protect and enforce the Lenders'
rights by suit in equity, action at law and/or other appropriate
proceeding, either for specific performance of any covenant
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or condition contained in this Agreement or any other Credit Document
or in any instrument or assignment delivered to the Lenders pursuant to
this Agreement or any other Credit Document, or in aid of the exercise
of any power granted in this Agreement or any other Credit Document or
any such instrument or assignment.
8.2.3. Acceleration. The Agent on behalf of the Lenders may
(and upon written request of the Required Lenders the Agent shall) by
notice in writing to the Borrower declare all or any part of the unpaid
balance of the Credit Obligations then outstanding to be immediately
due and payable; provided, however, that if a Bankruptcy Default shall
have occurred, the unpaid balance of the Credit Obligations shall
automatically become immediately due and payable.
8.2.4. Enforcement of Payment; Credit Security; Setoff. The
Agent on behalf of the Lenders may (and upon written request of the
Required Lenders the Agent shall) proceed to enforce payment of the
Credit Obligations in such manner as it may elect, to cancel, or
instruct other Letter of Credit Issuers to cancel, any outstanding
Letters of Credit which permit the cancellation thereof and to realize
upon any and all rights in the Credit Security. The Lenders may offset
and apply toward the payment of the Credit Obligations (and/or toward
the curing of any Event of Default) any Indebtedness from the Lenders
to the respective Obligors, including any Indebtedness represented by
deposits in any account maintained with the Lenders, regardless of the
adequacy of any security for the Credit Obligations. The Lenders shall
have no duty to determine the adequacy of any such security in
connection with any such offset.
8.2.5. Cumulative Remedies. To the extent not prohibited by
applicable law which cannot be waived, all of the Lenders' rights
hereunder and under each other Credit Document shall be cumulative.
8.3. Annulment of Defaults. Once an Event of Default has occurred, such
Event of Default shall be deemed to exist and be continuing for all purposes of
the Credit Documents until the Required Lenders or the Agent (with the consent
of the Required Lenders) shall have waived such Event of Default in writing,
stated in writing that the same has been cured to Lenders' reasonable
satisfaction or entered into an amendment to this Agreement which by its express
terms cures such Event of Default, at which time such Event of Default shall no
longer be deemed to exist or to have continued. No such action by the Agent
shall extend to or affect any subsequent Event of Default or impair any rights
of the Lenders upon the occurrence thereof. The making of any extension of
credit during the existence of any Default or Event of Default shall not
constitute a waiver thereof.
8.4. Waivers. To the extent that such waiver is not prohibited by the
provisions of applicable law that cannot be waived, each of the Borrower and the
other Obligors waives:
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(a) all presentments, demands for performance, notices of
nonperformance (except to the extent required by this Agreement or any
other Credit Document), protests, notices of protest and notices of
dishonor;
(b) any requirement of diligence or promptness on the part of
any Lender in the enforcement of its rights under this Agreement, the
Notes or any other Credit Document;
(c) any and all notices of every kind and description which
may be required to be given by any statute or rule of law; and
(d) any defense (other than indefeasible payment in full)
which it may now or hereafter have with respect to its liability under
this Agreement, the Notes or any other Credit Document or with respect
to the Credit Obligations.
9. Guarantees.
9.1. Guarantees of Credit Obligations. The Guarantor unconditionally
jointly and severally guarantees that the Credit Obligations will be performed
and will be paid in full in cash when due and payable, whether at the stated or
accelerated maturity thereof or otherwise, this guarantee being a guarantee of
payment and not of collectability and being absolute and in no way conditional
or contingent. In the event any part of the Credit Obligations shall not have
been so paid in full when due and payable, the Guarantor will, immediately upon
notice by the Agent or, without notice, immediately upon the occurrence of a
Bankruptcy Default, pay or cause to be paid to the Agent for the amount of each
Lender in accordance with Lenders' respective Percentage Interests the amount of
such Credit Obligations which are then due and payable and unpaid. The
obligations of the Guarantor hereunder shall not be affected by the invalidity,
unenforceability or irrecoverability of any of the Credit Obligations as against
any other Obligor, any other guarantor thereof or any other Person. For purposes
hereof, the Credit Obligations shall be due and payable when and as the same
shall be due and payable under the terms of this Agreement or any other Credit
Document notwithstanding the fact that the collection or enforcement thereof may
be stayed or enjoined under the Bankruptcy Code or other applicable law.
9.2. Continuing Obligation. The Guarantor acknowledges that the Lenders
and the Agent have entered into this Agreement (and, to the extent that the
Lenders or the Agent may enter into any future Credit Document, will have
entered into such agreement) in reliance on this Section 9 being a continuing
irrevocable agreement, and the Guarantor agrees that its guarantee may not be
revoked in whole or in part. The obligations of the Guarantor hereunder shall
terminate when the commitment of the Lenders to extend credit under this
Agreement shall have terminated and all of the Credit Obligations have been
indefeasibly paid in full in cash and discharged; provided, however, that:
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(a) if a claim is made upon the Lenders at any time for
repayment or recovery of any amounts or any property received by the
Lenders from any source on account of any of the Credit Obligations and
the Lenders repay or return any amounts or property so received
(including interest thereon to the extent required to be paid by the
Lenders) or
(b) if the Lenders become liable for any part of such claim by
reason of (i) any judgment or order of any court or administrative
authority having competent jurisdiction, or (ii) any settlement or
compromise of any such claim,
then the Guarantor shall remain liable under this Agreement for the amounts so
repaid or property so returned or the amounts for which the Lenders become
liable (such amounts being deemed part of the Credit Obligations) to the same
extent as if such amounts or property had never been received by the Lenders,
notwithstanding any termination hereof or the cancellation of any instrument or
agreement evidencing any of the Credit Obligations. Not later than five days
after receipt of notice from the Agent, the Guarantor shall jointly and
severally pay to the Agent an amount equal to the amount of such repayment or
return for which the Lenders have so become liable. Payments hereunder by the
Guarantor may be required by the Agent on any number of occasions.
9.3. Waivers with Respect to Credit Obligations. Except to the extent
expressly required by this Agreement or any other Credit Document, the Guarantor
waives, to the fullest extent permitted by the provisions of applicable law, all
of the following (including all defenses, counterclaims and other rights of any
nature based upon any of the following):
(a) presentment, demand for payment and protest of nonpayment
of any of the Credit Obligations, and notice of protest, dishonor or
nonperformance;
(b) notice of acceptance of this guarantee and notice that
credit has been extended in reliance on the Guarantor's guarantee of
the Credit Obligations;
(c) notice of any Default or of any inability to enforce
performance of the obligations of the Borrower or any other Person with
respect to any Credit Document, or notice of any acceleration of
maturity of any Credit Obligations;
(d) demand for performance or observance of, and any
enforcement of any provision of, the Credit Obligations, this Agreement
or any other Credit Document or any pursuit or exhaustion of rights or
remedies with respect to any Credit Security or against the Borrower or
any other Person in respect of the Credit Obligations or any
requirement of diligence or promptness on the part of the Agent or the
Lenders in connection with any of the foregoing;
(e) any act or omission on the part of the Agent or the
Lenders which may impair or prejudice such rights of the Guarantor,
including rights to obtain
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subrogation, exoneration, contribution, indemnification or any other
reimbursement from the Borrower or any other Person, or otherwise
operate as a deemed release or discharge;
(f) failure or delay to perfect or continue the perfection of
any security interest in any Credit Security or any other action which
harms or impairs the value of, or any failure to preserve or protect
the value of, any Credit Security;
(g) any statute of limitations or any statute or rule of law
which provides that the obligation of a surety must be neither larger
in amount nor in other respects more burdensome than the obligation of
the principal;
(h) any "single action" or "anti-deficiency" law which would
otherwise prevent the Lenders from bringing any action, including any
claim for a deficiency, against the Guarantor before or after the
Agent's or the Lenders' commencement or completion of any foreclosure
action, whether judicially, by exercise of power of sale or otherwise,
or any other law which would otherwise require any election of remedies
by the Agent or the Lenders;
(i) all demands and notices of every kind with respect to the
foregoing; and
(j) to the extent not referred to above, all defenses (other
than payment) which the Borrower or the Guarantor may now or hereafter
have to the payment of the Credit Obligations, together with all
suretyship defenses, which could otherwise be asserted by the
Guarantor.
The Guarantor represents that it has obtained the advice of counsel as to the
extent to which suretyship and other defenses may be available to it with
respect to its obligations hereunder in the absence of the waivers contained in
this Section 9.3.
No delay or omission on the part of the Agent or the Lenders in
exercising any right under this Agreement or any other Credit Document or under
any guarantee of the Credit Obligations or with respect to the Credit Security
shall operate as a waiver or relinquishment of such right. No action which the
Agent, the Lenders or the Borrower may take or refrain from taking with
respect to the Credit Obligations, including any amendments thereto or
modifications thereof or waivers with respect thereto, shall affect the
provisions of this Agreement or the obligations of any Guarantor hereunder.
None of the Lenders' or the Agent's rights shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of any Obligor,
or by any noncompliance by the Borrower with the terms, provisions and covenants
of this Agreement, regardless of any knowledge thereof which the Lenders may
have or otherwise be charged with.
9.4. Lenders' Power to Waive, etc. The Guarantor grants to the Lenders
full power in their discretion, without notice to or consent of the Guarantor,
such notice and consent
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being expressly waived to the fullest extent permitted by applicable law, and
without in any way affecting the liability of any Guarantor under its guarantee
hereunder:
(a) to waive compliance with, and any Default under, and to
consent to any amendment to or modification or termination of any terms
or provisions of, or to give any waiver in respect of, this Agreement,
any other Credit Document, the Credit Security, the Credit Obligations
or any guarantee thereof (each as from time to time in effect);
(b) to grant any extensions of the Credit Obligations (for any
duration), and any other indulgence with respect thereto, and to effect
any total or partial release (by operation of law or otherwise),
discharge, compromise or settlement with respect to the obligations of
the Obligors or any other Person in respect of the Credit Obligations,
whether or not rights against any Guarantor under this Agreement are
reserved in connection therewith;
(c) to take security in any form for the Credit Obligations,
and to consent to the addition to or the substitution, exchange,
release or other disposition of, or to deal in any other manner with,
any part of any property contained in the Credit Security whether or
not the property, if any, received upon the exercise of such power
shall be of a character or value the same as or different from the
character or value of any property disposed of, and to obtain, modify
or release any present or future guarantees of the Credit Obligations
and to proceed against any of the Credit Security or such guarantees in
any order;
(d) to collect or liquidate or realize upon any of the Credit
Obligations or the Credit Security in any manner or to refrain from
collecting or liquidating or realizing upon any of the Credit
Obligations or the Credit Security; and
(e) to extend credit under this Agreement, any other Credit
Document or otherwise in such amount as the Lenders may determine,
including increasing the amount of credit and the interest rate and
fees with respect thereto, even though the condition of the Obligors
(financial or otherwise on an individual or Consolidated basis) may
have deteriorated since the date hereof.
9.5. Information Regarding the Borrower, etc. The Guarantor has made
such investigation as it deems desirable of the risks undertaken by it in
entering into this Agreement and is fully satisfied that it understands all such
risks. The Guarantor waives any obligation which may now or hereafter exist on
the part of the Agent or the Lenders to inform it of the risks being undertaken
by entering into this Agreement or of any changes in such risks and, from and
after the date hereof, the Guarantor undertakes to keep itself informed of such
risks and any changes therein. The Guarantor expressly waives any duty which may
now or hereafter exist on the part of the Agent or the Lenders to disclose to
the Guarantor any matter related to the business, operations, character,
collateral, credit,
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condition (financial or otherwise), income or prospects of the Borrower and any
of its Subsidiaries and Affiliates or their properties or management, whether
now or hereafter known by the Agent or the Lenders. The Guarantor represents,
warrants and agrees that it assumes sole responsibility for obtaining from the
Borrower and its Subsidiaries all information concerning this Agreement and all
other Credit Documents and all other information as to the Borrower and any of
its Subsidiaries and Affiliates or their properties or management as the
Guarantor deems necessary or desirable.
9.6. Certain Guarantor Representations. The Guarantor represents that:
(a) it is in its best interest and in pursuit of the purposes
for which it was organized as an integral part of the business
conducted and proposed to be conducted by the Borrower and its
Subsidiaries, and reasonably necessary and convenient in connection
with the conduct of the business conducted and proposed to be conducted
by them, to induce the Lenders to enter into this Agreement and to
extend credit to the Borrower by making the guarantees contemplated by
this Section 9;
(b) the credit available hereunder will directly or indirectly
inure to its benefit;
(c) by virtue of the foregoing it is receiving at least
reasonably equivalent value from the Lenders for its guarantee;
(d) it will not be rendered insolvent as a result of entering
into this Agreement, as evidenced by the following:
(i) after giving effect to the transactions
contemplated by this Agreement, it will have assets having a
fair saleable value in excess of the amount required to pay
its probable liability on its existing debts as they become
absolute and matured;
(ii) it has access to adequate capital for the
conduct of its business; and
(iii) it is able and expects to be able to pay its
debts from time to time incurred in connection therewith as
such debts mature; and
(e) it has been advised by the Agent and the Lenders that they
are unwilling to enter into this Agreement unless the Guarantees
contemplated by this Section 9 are given by the Guarantor.
9.7. Subrogation. The Guarantor agrees that, until the Credit
Obligations are paid in full, it will not exercise any right of reimbursement,
subrogation, contribution, offset or other claims against the other Obligors
arising by contract or operation of law in connection with any payment made or
required to be made by the Guarantor under this Agreement.
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After the payment in full of the Credit Obligations, the Guarantor shall be
entitled to exercise against the Borrower and the other Obligors all such rights
of reimbursement, subrogation, contribution and offset, and all such other
claims, to the fullest extent permitted by law.
9.8. Subordination. The Guarantor covenants and agrees that, after the
occurrence of an Event of Default, all Indebtedness, claims and liabilities then
or thereafter owing by the Borrower or any other Obligor to the Guarantor
whether arising hereunder or otherwise are subordinated to the prior payment in
full of the Credit Obligations and are so subordinated as a claim against such
Obligor or any of its assets, whether such claim be in the ordinary course of
business or in the event of voluntary or involuntary liquidation, dissolution,
insolvency or bankruptcy, so that no payment with respect to any such
Indebtedness, claim or liability will be made or received while any Event of
Default exists.
9.9. Future Subsidiaries; Further Assurances. The Borrower will from
time to time cause any future Subsidiary within 30 days after any such Person
becomes a Subsidiary, to join this Agreement as a Guarantor pursuant to a
joinder agreement in form and substance satisfactory to the Agent. The Guarantor
will, promptly upon the request of the Agent from time to time, execute,
acknowledge and deliver, and file and record, all such instruments, and take all
such action, as the Agent deems necessary or advisable to carry out the intent
and purposes of this Section 9.
10. Security.
10.1. Credit Security. As security for the payment and performance of
the Credit Obligations, each Obligor mortgages, pledges and collaterally grants
and assigns to the Agent for the benefit of the Lenders and the holders from
time to time of any Credit Obligation, and creates a security interest in favor
of the Agent for the benefit of the Lenders and such holders in, all of such
Obligor's right, title and interest in and to (but none of its obligations or
liabilities, except as expressly assumed, with respect to) the items and types
of present and future property described in Sections 10.1.1 through 10.1.15
(subject, however, to Section 10.1.16), whether now owned or hereafter acquired,
all of which shall be included in the term "Credit Security":
10.1.1. Tangible Personal Property. All goods, machinery,
equipment, inventory and all other tangible personal property of any
nature whatsoever, wherever located, including raw materials, work in
process, finished parts and products, supplies, spare parts,
replacement parts, merchandise for resale, computers, tapes, disks and
computer equipment.
10.1.2. Rights to Payment of Money. All rights to receive the
payment of money, including accounts (as defined in the UCC) and
receivables, rights to receive the payment of money under contracts,
franchises, licenses, permits, subscriptions or other agreements
(whether or not earned by performance), and rights to receive
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payments from any other source. All such rights, other than Financing
Debt, are collectively referred to as "Accounts").
10.1.3. Intangibles. All of the following (to the extent not
included in Section 10.1.2): (a) contracts, franchises, licenses,
permits, subscriptions and other agreements and all rights thereunder;
(b) rights granted by others which permit the Obligor to sell or market
items of personal property; (c) United States common law and statutory
copyrights and rights in literary property and rights and licenses
thereunder; (d) trade names, United States trademarks, service marks,
any registrations thereof and any related good will; (e) United States
patents and patent applications; (f) computer software, designs,
models, know-how, trade secrets, rights in proprietary information,
formulae, customer lists, backlog, orders, subscriptions, royalties,
catalogues, sales material, documents, good will, inventions and
processes; (g) judgments, causes in action and claims, whether or not
inchoate, and (h) all other general intangibles (as defined in the UCC)
and intangible property and all rights thereunder.
10.1.4. Pledged Stock. (a) All shares of capital stock or
other evidence of beneficial interest in any corporation, business
trust or limited liability company, (b) all limited partnership
interests in any limited partnership, (c) all general and limited
partnership interests in any general or limited partnership, (d) all
joint venture interests in any joint venture and (e) all options,
warrants and similar rights to acquire such capital stock or such
interests. All such capital stock, interests, options, warrants and
other rights are collectively referred to as the "Pledged Stock".
10.1.5. Pledged Rights. All rights to receive profits or
surplus of, or other Distributions (including income, return of capital
and liquidating distributions) from, any partnership or joint venture,
including any distributions by any such Person to partners or joint
venturers. All such rights are collectively referred to as the "Pledged
Rights".
10.1.6. Pledged Indebtedness. All Financing Debt from time to
time owing to such Obligor from any Person. All such Financing Debt is
collectively referred to as the "Pledged Indebtedness").
10.1.7. Chattel Paper, Instruments and Documents. All chattel
paper (as defined in the UCC), non-negotiable instruments, negotiable
instruments (as defined in the UCC) and documents (as defined in the
UCC).
10.1.8. Leases. All leases of personal property, whether the
Obligor is the lessor or the lessee thereunder.
10.1.9. Deposit Accounts. All general or special deposit
accounts, including any demand, time, savings, passbook or similar
account maintained by the Obligor
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with any bank, trust company, savings and loan association, credit
union or similar organization, and all money, cash and cash equivalents
of the Obligor, whether or not deposited in any such deposit account.
10.1.10. Collateral. All collateral granted by third party
obligors to, or held by, the Obligor with respect to the Accounts,
Pledged Securities, chattel paper, instruments, leases and other items
of Credit Security.
10.1.11. Books and Records. All books and records, including
books of account and ledgers of every kind and nature, all
electronically recorded data (including all computer programs, disks,
tapes, electronic data processing media and software used in connection
with maintaining the Obligor's books and records), all files and
correspondence and all receptacles and containers for the foregoing.
10.1.12. Real Property. All real property and immovable
property and fixtures, leasehold interests and easements wherever
located, together with any and all estates and interests of the Obligor
therein, including lands, buildings, stores, manufacturing facilities
and other structures erected on such property, fixed plant, fixed
equipment and all permits, rights, licenses, benefits and other
interests of any kind or nature whatsoever in respect of such real and
immovable property.
10.1.13. Insurance. All insurance policies which insure
against any loss or damage to any other Credit Security.
10.1.14. All Other Property. All other property, assets and
items of value of every kind and nature, tangible, or intangible,
absolute or contingent, legal or equitable.
10.1.15. Proceeds and Products. All proceeds, including
insurance proceeds, and products of the items of Credit Security
described or referred to in Sections 10.1.1 through 10.1.14 and, to the
extent not included in the foregoing, all Distributions and rights of
redemption or rescission with respect to the Pledged Securities.
10.1.16. Excluded Property. Notwithstanding Sections 10.1.1
through 10.1.15, the payment and performance of the Credit Obligations
shall not be secured by:
(a) any rights arising under, and any property, tangible or
intangible, acquired under, any agreement executed by the Obligor prior
to the date hereof which validly prohibits the creation by such Obligor
of a security interest in such rights or property;
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(b) any rights or property to the extent that any valid and
enforceable law or regulation applicable to such rights or property
prohibits the creation of a security interest therein;
(c) any items of the Guarantor described in Sections 10.1.1
through 10.1.15 and located outside the United States;
(d) more than 66% of the outstanding stock or other equity in
any Foreign Subsidiary; or
(e) as long as no Default exists, Pledged Stock of the
Guarantor in foreign entities which are not Subsidiaries or which are
subject to negative pledge covenants existing prior to the date hereof.
In addition, in the event the Borrower and its Subsidiaries dispose of
assets to third parties in a transaction permitted by Section 6.11, such assets,
but not the proceeds or products thereof, shall automatically be released from
the Lien of the Credit Security.
10.2. Representations, Warranties and Covenants with Respect to Credit
Security. Each Obligor represents, warrants and covenants that:
10.2.1. Pledged Stock. All shares of capital stock, limited
partnership interests and similar securities included in the Pledged
Stock are and shall be at all times duly authorized, validly issued,
fully paid and (in the case of capital stock and limited partnership
interests) nonassessable. Each Obligor will deliver to the Agent
certificates representing the Pledged Stock, registered, if the Agent
so requests, in the name of the Agent or its nominee, as pledgee, or
accompanied by a stock transfer power executed in blank and, if the
Agent so requests, with the signature guaranteed, all in form and
manner satisfactory to the Agent. Pledged Stock that is not evidenced
by a certificate will be registered in the Agent's name as pledgee on
the issuer's records, all in form and substance satisfactory to the
Agent. The Agent may transfer into its name or the name of its nominee,
as pledgee, any Pledged Securities. In the event the Pledged Stock
includes any Margin Stock, the Obligors will furnish to the Lenders
Federal Reserve Form U-1 and take such other action as the Agent may
request to ensure compliance with applicable laws.
10.2.2. Accounts and Pledged Indebtedness. All Accounts and
Pledged Indebtedness owed by any Affiliate of the Obligors shall be on
open account and shall not be evidenced by any note or other
instrument; provided, however, that all Pledged Indebtedness owed by
any Affiliate of any Obligor shall, if the Agent requests, be evidenced
by a promissory note, which note shall be delivered to the Agent after
having been endorsed in blank. Each Obligor will, immediately upon the
receipt thereof, deliver to the Agent any promissory note or similar
instrument representing
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any Pledged Indebtedness, after having endorsed such promissory note or
instrument in blank.
10.2.3. Government Contracts Receivables.
(a) Any Obligor's right, title and interest in any Government
Receivables shall constitute Accounts for all purposes hereunder;
provided, however, that nothing in this Agreement shall obligate any
Obligor to comply with FACA except if requested by the Agent if an
Event of Default shall have occurred, or as set forth below. If at any
time either (i) Government Receivables owing from one account debtor
constitute more than 3% of total Accounts (or Government Receivables
owing from one account debtor having a term or payable over a period of
more than 90 days constitute more than 1% of total Accounts) or (ii)
all Government Receivables constitute more than 5% of total Accounts,
the Borrower shall give prompt notice thereof to the Agent and, if
requested by the Agent, take such actions required to comply with FACA
with respect to all Government Receivables referred to in clause (i)
above, or in the case of clause (ii), as necessary to ensure that not
more than 5% of total Accounts consist of Government Receivables as to
which there has been no compliance with FACA.
(b) No contracts of the Borrower and its Subsidiaries with
government contractors provide that payments to the Borrower or its
Subsidiaries, as the case may be, are contingent or dependent upon the
government contractor receiving payment from the federal government.
10.2.4. No Sales of Assets, Liens or Restrictions on Transfer
or Change of Control. No Obligor shall transfer, sell or dispose of any
item of Credit Security in contravention of this Agreement. All Credit
Security shall be free and clear of any Liens and restrictions on the
transfer thereof, including contractual provisions which prohibit the
assignment of rights under contracts (except to the extent necessary
for such contracts entered into in the ordinary course of business),
except for Liens permitted by Section 6.8. Without limiting the
generality of the foregoing, each Obligor will exclude from material
contracts to which it becomes a party after the date hereof provisions
that would prevent such Obligor from creating a security interest in
such contract or any property acquired thereunder as contemplated
hereby. None of the Pledged Stock is subject to any option to purchase
or similar rights of any Person. Except with the written consent of the
Agent, no Obligor is, and none of them will be, party to or bound by
any agreement, instrument, deed or lease that restricts the change of
control or ownership, or the creation of a security interest in the
ownership, of the Borrower or any of its Subsidiaries.
10.2.5. Location of Credit Security. Each Obligor shall at all
times keep its records concerning the Accounts at its chief executive
office and principal place of business, which office and place of
business shall be set forth in Exhibit 7.1, or, so long as such Obligor
shall have taken all steps reasonably necessary to perfect the
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Lenders' security interest in the Credit Security with respect to such
new address, at such other address as such Obligor may specify by
notice actually received by the Agent not less than 10 Banking Days
prior to such change of address. Except for manufacturing plates, dies
and molds of Borrower delivered to contract manufacturers, no Obligor
shall at any time keep tangible personal property of the type referred
to in Section 10.1.1 in any jurisdiction other than the jurisdictions
specified in Exhibit 7.1, or, so long as such Obligor shall have taken
all steps reasonably necessary to perfect the Lenders' security
interest in the Credit Security with respect to such other
jurisdiction, other jurisdictions as such Obligor may specify by notice
actually received by the Agent not less than 10 days prior to moving
such tangible personal property into such other jurisdiction.
10.2.6. Trade Names. No Obligor will adopt or do business
under any name other than its name or names designated in Exhibit 7.1
or any other name specified by notice actually received by the Agent
not less than 10 Banking Days prior to the conduct of business under
such additional name. Since its incorporation, no Obligor has changed
its corporate name or adopted or conducted business under any trade
name other than a name specified on Exhibit 7.1.
10.2.7. Property Insurance. Each Obligor shall keep its assets
that are of an insurable character insured by financially sound and
reputable insurers against theft and fraud and against loss or damage
by fire, explosion or hazards to the extent, in amounts and with
deductibles at least as favorable as those generally maintained by
businesses of similar size engaged in similar activities. Such
insurance shall provide coverage in amounts sufficient to prevent the
Obligor from becoming a co-insurer.
10.2.8. Insurance. Each insurance policy included in, or
insuring against loss or damage to, the Credit Security shall name the
Agent as additional insured party or as loss payee. No such insurance
policy shall be cancelable or subject to termination or reduction in
amount or scope of coverage until after at least 30 days' prior written
notice from the insurer to the Agent. At least 30 days prior to the
expiration of any such insurance policy for any reason, each Obligor
shall furnish the Agent with a renewal or replacement policy and
evidence of payment of the premiums therefor when due. Each Obligor
grants to the Agent full power and authority as its attorney-in-fact,
effective upon notice to such Obligor after the occurrence of an Event
of Default to obtain, cancel, transfer, adjust and settle any such
insurance policy and to endorse any drafts thereon. Any amounts that
the Agent receives under any such policy (including return of unearned
premiums) insuring against loss or damage to the Credit Security prior
to the occurrence of an Event of Default shall be delivered to the
Obligors for the replacement, restoration and maintenance of the Credit
Security. Any such amounts that the Agent receives after the occurrence
of an Event of Default shall, at the Agent's option, be applied to
payment of the Credit Obligations or to the replacement, restoration
and maintenance of the Credit Security. If any Obligor fails to provide
insurance as required by this Agreement, the Agent may, at its option,
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purchase such insurance, and such Obligor will on demand pay to the
Agent the amount of any payments made by the Agent or the Lenders for
such purpose, together with interest on the amounts so disbursed from
five Banking Days after the date demanded until payment in full thereof
at the Overdue Rate.
10.2.9. Modifications to Credit Security. Except with the
prior written consent of the Agent, no Obligor shall amend or modify,
or waive any of its rights under or with respect to, any material
Accounts, general intangibles, Pledged Securities, leases or contract
manufacturing agreements (including manufacturing contracts with the
Sellers entered into in connection with the Acquisition, or with
subsequent manufacturers with free assignability and on other
substantially similar terms) if the effect of such amendment,
modification or waiver would be to reduce the amount of any such
material items or to extend the time of payment thereof, to waive any
default by any other party thereto, or to waive or impair any remedies
of the Obligors or the Lenders under or with respect to any such
Accounts, general intangibles, Pledged Securities or leases, in each
case other than consistent with past practice in the ordinary course of
business and on an arm's-length basis. Each Obligor will promptly give
the Agent written notice of any request by any Person for any material
credit or adjustment with respect to any material Account, general
intangible, Pledged Securities or leases.
10.2.10. Delivery of Documents. At the Agent's request, each
Obligor shall deliver to the Agent, promptly upon such Obligor's
receipt thereof, copies of any agreements, instruments, documents or
invoices comprising or relating to the Credit Security. Pending such
request, such Obligor shall keep such items at its chief executive
office and principal place of business (as specified pursuant to
Section 10.2.5).
10.2.11. Perfection of Credit Security. Upon the Agent's
request from time to time, the Obligors will execute and deliver, and
file and record in the proper filing and recording places, all such
instruments, including financing statements, collateral assignments of
copyrights, trademarks and patents, mortgages or deeds of trust, and
notations on certificates of title and will take all such other action,
as the Agent deems advisable for confirming to it the Credit Security
or to carry out any other purposes of this Agreement or any other
Credit Document.
10.3. Administration of Credit Security. The Credit Security shall be
administered as follows, and if an Event of Default shall have occurred, Section
10.4 shall also apply.
10.3.1. Use of Credit Security. Until the Agent provides
written notice to the contrary, each Obligor may use, commingle and
dispose of any part of the Credit Security in the ordinary course of
its business, all subject to Section 6.11.
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10.3.2. Deposits; Accounts. The Borrower shall keep all its
bank and deposit accounts only with the Agent. To the extent specified
by prior written notice from the Agent, whether prior to or after the
occurrence of an Event of Default, all sums collected or received and
all property recovered or possessed by any Obligor in connection with
any Credit Security shall be received and held by such Obligor in trust
for and on the Lenders' behalf, shall be segregated from the assets and
funds of such Obligor, and shall be delivered to the Agent for benefit
of the Lenders. Without limiting the foregoing, upon the Agent's
request, Borrower and its Subsidiaries shall institute depositary
collateral accounts, lock-box receipts and similar credit procedures
providing for the direct receipt of payment on Accounts at a separate
address, the segregation of such proceeds for direct payment to the
Agent and appropriate notices to Account debtors. Upon the Agent's
request, each Obligor will cause its accounting books and records to be
marked with such legends and segregated in such manner as the Agent may
specify.
10.3.3. Pledged Securities.
(a) (i) Until an Event of Default shall occur, the respective
Obligors shall be entitled, to the extent permitted by the Credit
Documents, to receive all Distributions on or with respect to the
Pledged Securities (other than Distributions constituting additional
Pledged Securities). All Distributions constituting additional Pledged
Securities will be retained by the Agent (or if received by any Obligor
shall be held by such Person in trust and shall be immediately
delivered by such Person to the Agent in the original form received,
endorsed in blank) and held by the Agent as part of the Credit
Security.
(ii) If an Event of Default shall have occurred, all
Distributions on or with respect to the Pledged Securities shall be
retained by the Agent (or if received by any Obligor shall be held by
such Person in trust and shall be immediately delivered by it to the
Agent in the original form received, endorsed in blank) and held by the
Agent as part of the Credit Security or applied by the Agent to the
payment of the Credit Obligations in accordance with Section 10.4.6.
(b) (i) Until an Event of Default shall occur, the respective
Obligors shall be entitled to vote or consent with respect to the
Pledged Securities in any manner not inconsistent with the terms of any
Credit Document, and the Agent will, if so requested, execute
appropriate revocable proxies therefor.
(ii) If an Event of Default shall have occurred, if and to the
extent that the Agent shall so notify in writing the Obligor pledging
the Pledged Securities in question, only the Agent shall be entitled to
vote or consent or take any
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other action with respect to the Pledged Securities (and any Obligor
will, if so requested, execute or cause to be executed appropriate
proxies therefor).
10.4. Right to Realize upon Credit Security. Except to the extent
prohibited by applicable law that cannot be waived, this Section 10.4 shall
govern the Lenders' right to realize upon the Credit Security if any Event of
Default shall have occurred and be continuing. The provisions of this Section
10.4 are in addition to any rights and remedies available at law or in equity
and in addition to the provisions of any other Credit Document. In the case of a
conflict between this Section 10.4 and any other Credit Document, this Section
10.4 shall govern.
10.4.1. Assembly of Credit Security; Receiver. Each of the
Obligors shall, upon the Agent's request, assemble the Credit Security
and otherwise make it available to the Agent. The Agent may have a
receiver appointed for all or any portion of the Obligor's assets or
business which constitutes the Credit Security in order to manage,
protect, preserve, sell and otherwise dispose of all or any portion of
the Credit Security in accordance with the terms of the Credit
Documents, to continue the operations of the Obligors and to collect
all revenues and profits therefrom to be applied to the payment of the
Credit Obligations, including the compensation and expenses of such
receiver.
10.4.2. General Authority. To the extent specified in written
notice from the Agent to the Obligor in question, each Obligor grants
the Agent full and exclusive power and authority, subject to the other
terms hereof and applicable law, to take any of the following actions
(for the sole benefit of the Agent on behalf of the Lenders and the
holders from time to time of any Credit Obligations, but at the
Obligor's expense):
(a) to ask for, demand, take, collect, sue for and receive all
payments in respect of any Accounts, general intangibles, Pledged
Securities or leases which the Obligor could otherwise ask for, demand,
take, collect, sue for and receive for its own use;
(b) to extend the time of payment of any Accounts, general
intangibles, Pledged Securities or leases and to make any allowance or
other adjustment with respect thereto;
(c) to settle, compromise, prosecute or defend any action or
proceeding with respect to any Accounts, general intangibles, Pledged
Securities or leases and to enforce all rights and remedies thereunder
which the Obligor could otherwise enforce;
(d) to enforce the payment of any Accounts, general
intangibles, Pledged Securities or leases, either in the name of the
Obligor or in its own name, and to
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endorse the name of the Obligor on all checks, drafts, money orders and
other instruments tendered to or received in payment of any Credit
Security;
(e) to notify the third party payor with respect to any
Accounts, general intangibles, Pledged Securities or leases of the
existence of the security interest created hereby and to cause all
payments in respect thereof thereafter to be made directly to the
Agent; provided, however, that whether or not the Agent shall have so
notified such payor, the Obligors will at their expense render all
reasonable assistance to the Agent in collecting such items and in
enforcing claims thereon; and
(f) to sell, transfer, assign or otherwise deal in or with any
Credit Security or the proceeds thereof, as fully as any Obligor
otherwise could do.
10.4.3. Marshaling, etc. Neither the Agent nor the Lenders
shall be required to make any demand upon, or pursue or exhaust any of
their rights or remedies against, any Obligor or any other guarantor,
pledgor or any other Person with respect to the payment of the Credit
Obligations or to pursue or exhaust any of their rights or remedies
with respect to any collateral therefor or any direct or indirect
guarantee thereof. Neither the Agent nor the Lenders shall be required
to marshal the Credit Security or any guarantee of the Credit
Obligations or to resort to the Credit Security or any such guarantee
in any particular order, and all of its and their rights hereunder or
under any other Credit Document shall be cumulative. To the extent it
may lawfully do so, each of the Obligors absolutely and irrevocably
waives and relinquishes the benefit and advantage of, and covenants not
to assert against the Agent or the Lenders, any valuation, stay,
appraisement, extension, redemption or similar laws now or hereafter
existing which, but for this provision, might be applicable to the sale
of any Credit Security made under the judgment, order or decree of any
court, or privately under the power of sale conferred by this
Agreement, or otherwise. Without limiting the generality of the
foregoing, each of the Obligors (a) agrees that it will not invoke or
utilize any law which might prevent, cause a delay in or otherwise
impede the enforcement of the rights of the Agent or the Lenders in the
Credit Security, (b) waives all such laws, and (c) agrees that it will
not invoke or raise as a defense to any enforcement by the Agent or the
Lenders of any rights and remedies relating to the Credit Security or
the Credit Obligations any legal or contractual requirement with which
the Agent or the Lenders may have in good faith failed to comply. In
addition, to the extent it may lawfully do so, each of the Obligors
waives any right to prior notice (except to the extent expressly
required by this Agreement) or judicial hearing in connection with
foreclosure on or disposition of any Credit Security, including any
such right which such Obligor would otherwise have under the
Constitution of the United States of America, any state or territory
thereof or any other jurisdiction.
10.4.4. Sales of Credit Security. All or any part of the
Credit Security may be sold for cash or other value in any number of
lots at public or private sale, without
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demand, advertisement or notice; provided, however, that unless the
Credit Security to be sold threatens to decline speedily in value or is
of a type customarily sold on a recognized market, the Agent shall give
the Obligor granting the security interest in such Credit Security 10
days' prior written notice of the time and place of any public sale, or
the time after which a private sale may be made, which notice each of
the Obligors and the Lenders hereby agrees to be reasonable. At any
sale or sales of Credit Security, the Lender or any of its respective
officers acting on its behalf, or such Lender's assigns, may bid for
and purchase all or any part of the property and rights so sold, may
use all or any portion of the Credit Obligations owed to such Lender as
payment for the property or rights so purchased, and upon compliance
with the terms of such sale may hold and dispose of such property and
rights without further accountability to the respective Obligor, except
for the proceeds of such sale or sales pursuant to Section 10.4.6. The
Obligors acknowledge that any such sale will be made by the Agent on an
"as is" basis with disclaimers of all warranties, whether express or
implied. The respective Obligors will execute and deliver or cause to
be executed and delivered such instruments, documents, assignments,
waivers, certificates and affidavits, will supply or cause to be
supplied such further information and will take such further action as
the Agent shall request in connection with any such sale.
10.4.5. Sale without Registration. If, at any time when the
Agent shall determine to exercise its rights hereunder to sell all or
part of the securities included in the Credit Security, the securities
in question shall not be effectively registered under the Securities
Act (or other applicable law), the Agent may, in its sole discretion,
sell such securities by private or other sale not requiring such
registration in such manner and in such circumstances as the Agent may
deem necessary or advisable in order that such sale may be effected in
accordance with applicable securities laws without such registration
and the related delays, uncertainty and expense. Without limiting the
generality of the foregoing, in any event the Agent may, in its sole
discretion, (a) approach and negotiate with a single purchaser or one
or more possible purchasers to effect such sale, (b) restrict such sale
to one or more purchasers each of whom will represent and agree that
such purchaser is purchasing for its own account, for investment and
not with a view to the distribution or sale of such securities and (c)
cause to be placed on certificates representing the securities in
question a legend to the effect that such securities have not been
registered under the Securities Act (or other applicable law) and may
not be disposed of in violation of the provisions thereof. Each of the
Obligors agrees that such manner of disposition is commercially
reasonable, that it will upon the Agent's request give any such
purchaser access to such information regarding the issuer of the
securities in question as the Lender may reasonably request and that
the Agent and the Lenders shall not incur any responsibility for
selling all or part of the securities included in the Credit Security
at any private or other sale not requiring such registration,
notwithstanding the possibility that a substantially higher price might
be realized if the sale were deferred until after registration under
the Securities Act (or other applicable law) or
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until made in compliance with certain other rules or exemptions from
the registration provisions under the Securities Act (or other
applicable law). Each of the Obligors acknowledges that no adequate
remedy at law exists for breach by it of this Section 10.4.5 and that
such breach would not be adequately compensable in damages and
therefore agrees that this Section 10.4.5 may be specifically enforced.
10.4.6. Application of Proceeds. The proceeds of all sales and
collections in respect of any Credit Security or other assets of any
Obligor, all funds collected from the Obligors and any cash contained
in the Credit Security, the application of which is not otherwise
specifically provided for herein, shall be applied as follows:
First, to the payment of the costs and expenses of such sales
and collections, the reasonable expenses of the Agent and the
reasonable fees and expenses of its special counsel;
Second, any surplus then remaining to the payment of the
Credit Obligations (other than in respect of Interest Rate Protection
Agreements) relating to the Term Loan, then to the Bridge Loan and then
to the Revolving Loan; provided, however, that any such payment of
Credit Obligations owed to all Lenders shall be pro rata in accordance
with the respective Percentage Interests of the Lenders in the Credit
Obligations;
Third, any surplus then remaining to the payment of the Credit
Obligations in respect of Interest Rate Protection Agreements with any
Lender in such order and manner as the Agent may in its sole discretion
determine; and
Fourth, any surplus then remaining shall be paid to the
Obligors, subject, however, to the rights of the holder of any then
existing Lien of which the Agent has actual notice.
10.5. Custody of Credit Security. Except as provided by applicable law
that cannot be waived, the Agent will have no duty as to the custody and
protection of the Credit Security, the collection of any part thereof or of any
income thereon or the preservation or exercise of any rights pertaining thereto,
including rights against prior parties, except for the use of reasonable care in
the custody and physical preservation of any Credit Security in its possession.
The Lenders will not be liable or responsible for any loss or damage to any
Credit Security, or for any diminution in the value thereof, by reason of the
act or omission of any agent selected by the Agent acting in good faith.
11. Expenses; Indemnity.
11.1. Expenses. Whether or not the transactions contemplated hereby
shall be consummated, the Borrower will pay:
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(a) all reasonable expenses of the Agent (including the
out-of-pocket expenses related to forming the group of Lenders and
reasonable fees and disbursements of the counsel to the Agent) in
connection with the preparation and duplication of this Agreement, each
other Credit Document, environmental audit reports, examinations by,
and reports of, the Agent's commercial financial examiners, the
transactions contemplated hereby and thereby and amendments, waivers,
consents and other operations hereunder and thereunder;
(b) all recording and filing fees and transfer and documentary
stamp and similar taxes at any time payable in respect of this
Agreement, any other Credit Document, any Credit Security or the
incurrence of the Credit Obligations; and
(c) all other reasonable expenses incurred by the Lenders in
connection with the enforcement of any rights hereunder or under any
other Credit Document, including costs of collection and reasonable
attorneys' fees (including a reasonable allowance for the hourly cost
of attorneys employed by the Lenders on a salaried basis) and expenses.
11.2. General Indemnity. The Borrower shall indemnify the Lenders and
the Agent and hold them harmless from any liability, loss or damage resulting
from the violation by the Borrower of Section 2.4. In addition, the Borrower
shall indemnify the Lender, the Agent, each of the Lenders' or the Agent's
directors, officers and employees, and each Person, if any, who controls the
Lender or the Agent (each Lender, the Agent and each of such directors,
officers, employees and control Persons is referred to as an "Indemnified
Party") and hold each of them harmless from and against any and all claims,
damages, liabilities and reasonable expenses (including reasonable fees and
disbursements of counsel with whom any Indemnified Party may consult in
connection therewith and all reasonable expenses of litigation or preparation
therefor) which any Indemnified Party may incur or which may be asserted against
any Indemnified Party in connection with (a) the Indemnified Party's compliance
with or contest of any subpoena or other process issued against it in any
proceeding involving the Borrower, any of its Subsidiaries or their Affiliates,
(b) any litigation or investigation involving the Borrower or any of its
Subsidiaries or their Affiliates, or any officer, director or employee thereof,
(c) the existence or exercise of any security rights with respect to the Credit
Security in accordance with the Credit Documents, or (d) this Agreement, any
other Credit Document or any transaction contemplated hereby or thereby;
provided, however, that the foregoing indemnity shall not apply to litigation
commenced by the Borrower or any of its Subsidiaries against the Lenders or the
Agent which seeks enforcement of any of the rights of the Borrower or any of its
Subsidiaries hereunder or under any other Credit Document and is determined
adversely to the Lenders or the Agent in a final nonappealable judgment or to
the extent such claims, damages, liabilities and expenses result from the
Lender's or the Agent's gross negligence or willful misconduct.
12. Operations; Agent.
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12.1. Interests in Credits. The percentage interest of each Lender in
the Loans and the related Commitments, shall be computed based on the maximum
principal amount for each Lender as set forth in the Register, as from time to
time in effect. The current Percentage Interests are set forth in Exhibit 12.1,
which may be updated by the Agent from time to time to conform to the Register.
12.2. Agent's Authority to Act, etc. Each of the Lenders appoints and
authorizes the Agent to act for the Lenders as the Lenders' agent in connection
with the transactions contemplated by this Agreement and the other Credit
Documents on the terms set forth herein. In acting hereunder, the Agent is
acting for its own account to the extent of its Percentage Interest and for the
account of each other Lender to the extent of the Lenders' respective Percentage
Interests, and all action in connection with the enforcement of, or the exercise
of any remedies (other than the Lenders' rights of set-off as provided in
Section 8.2.4 or in any Credit Document) in respect of the Credit Obligations
and Credit Documents shall be taken by the Agent.
12.3. Borrower to Pay Agent, etc. The Borrower and the Guarantor shall
be fully protected in making all payments in respect of the Credit Obligations
to the Agent, in relying upon consents, modifications and amendments executed by
the Agent purportedly on the Lenders' behalf, and in dealing with the Agent as
herein provided. The Agent may charge the accounts of the Borrower, on the dates
when the amounts thereof become due and payable, with the amounts of the
principal of and interest on the Loan, commitment fees and all other fees and
amounts owing under any Credit Document.
12.4. Lender Operations for Advances, etc.
12.4.1. Advances. On each Closing Date, each Lender shall
advance to the Agent in immediately available funds such Lender's
Percentage Interest in the portion of the Loan advanced on such Closing
Date prior to 12:00 noon (Boston time). If such funds are not received
at such time, but all applicable conditions set forth in Section 5 have
been satisfied, each Lender authorizes and requests the Agent to
advance for the Lender's account, pursuant to the terms hereof, the
Lender's respective Percentage Interest in such portion of the Loan and
agrees to reimburse the Agent in immediately available funds for the
amount thereof prior to 2:00 p.m. (Boston time) on the day any portion
of the Loan is advanced hereunder; provided, however, that the Agent is
not authorized to make any such advance for the account of any Lender
who has previously notified the Agent in writing that such Lender will
not be performing its obligations to make further advances hereunder;
and provided, further, that the Agent shall be under no obligation to
make any such advance.
12.4.2. Agent to Allocate Payments, etc. All payments of
principal and interest in respect of the extensions of credit made
pursuant to this Agreement, commitment fees, and other fees under this
Agreement shall, as a matter of convenience, be made by the Borrower
and the Guarantor to the Agent in immediately
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available funds. The share of each Lender shall be credited to such
Lender by the Agent in immediately available funds in such manner that
the principal amount of the Credit Obligations to be paid shall be paid
proportionately in accordance with the Lenders' respective Percentage
Interests in such Credit Obligations, except as otherwise provided in
this Agreement. Under no circumstances shall any Lender be required to
produce or present its Notes as evidence of its interests in the Credit
Obligations in any action or proceeding relating to the Credit
Obligations.
12.4.3. Delinquent Lenders; Nonperforming Lenders. In the
event that any Lender fails to reimburse the Agent pursuant to Section
12.4.1 for the Percentage Interest of such lender (a "Delinquent
Lender") in any credit advanced by the Agent pursuant hereto, overdue
amounts (the "Delinquent Payment") due from the Delinquent Lender to
the Agent shall bear interest, payable by the Delinquent Lender on
demand, at a per annum rate equal to (a) the Federal Funds Rate for the
first three days overdue and (b) the sum of 2% plus the Federal Funds
Rate for any longer period. Such interest shall be payable to the Agent
for its own account for the period commencing on the date of the
Delinquent Payment and ending on the date the Delinquent Lender
reimburses the Agent on account of the Delinquent Payment (to the
extent not paid by the Borrower as provided below) and the accrued
interest thereon (the "Delinquency Period"), whether pursuant to the
assignments referred to below or otherwise. Upon notice by the Agent,
the Borrower will pay to the Agent the principal (but not the interest)
portion of the Delinquent Payment. During the Delinquency Period, in
order to make reimbursements for the Delinquent Payment and accrued
interest thereon, the Delinquent Lender shall be deemed to have
assigned to the Agent all interest, commitment fees and other payments
made by the Borrower under Section 3 that would have thereafter
otherwise been payable under the Credit Documents to the Delinquent
Lender. During any other period in which any Lender is not performing
its obligations to extend credit under Section 2 (a "Nonperforming
Lender"), the Nonperforming Lender shall be deemed to have assigned to
each Lender that is not a Nonperforming Lender (a "Performing Lender")
all principal and other payments made by the Borrower under Section 4
that would have thereafter otherwise been payable under the Credit
Documents to the Nonperforming Lender. The Agent shall credit a portion
of such payments to each Performing Lender in an amount equal to the
Percentage Interest of such Performing Lender divided by an amount
equal to one minus the Percentage Interest of the Nonperforming Lender
until the respective portions of the Loan owed to all the Lenders are
the same as the Percentage Interests of the Lenders immediately prior
to the failure of the Nonperforming Lender to perform its obligations
under Section 2. The foregoing provisions shall be in addition to any
other remedies the Agent, the Performing Lenders or the Borrower may
have under law or equity against the Delinquent Lender as a result of
the Delinquent Payment or against the Nonperforming Lender as a result
of its failure to perform its obligations under Section 2.
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12.5. Sharing of Payments, etc. Each Lender agrees that (a) if by
exercising any right of set-off or counterclaim or otherwise, it shall receive
payment of (i) a proportion of the aggregate amount due with respect to its
Percentage Interest in the Loan which is greater than (ii) the proportion
received by any other Lender in respect of the aggregate amount due with respect
to such other Lender's Percentage Interest in the Loan and (b) if such
inequality shall continue for more than 10 days, the Lender receiving such
proportionately greater payment shall purchase participations in the Percentage
Interests in the Loan held by the other Lenders, and such other adjustments
shall be made from time to time (including rescission of such purchases of
participations in the event the unequal payment originally received is recovered
from such Lender through bankruptcy proceedings or otherwise), as may be
required so that all such payments of principal and interest with respect to the
Loan held by the Lenders shall be shared by the Lenders pro rata in accordance
with their respective Percentage Interests; provided, however, that this Section
12.5 shall not impair the right of any Lender to exercise any right of set-off
or counterclaim it may have and to apply the amount subject to such exercise to
the payment of Indebtedness of any Obligor other than such Obligor's
Indebtedness with respect to the Loan. Each Lender that grants a participation
in the Credit Obligations to a Credit Participant shall require as a condition
to the granting of such participation that such Credit Participant agree to
share payments received in respect of the Credit Obligations as provided in this
Section 12.5. The provisions of this Section 12.5 are for the sole and exclusive
benefit of the Lenders and no failure of any Lender to comply with the terms
hereof shall be available to any Obligor as a defense to the payment of the
Credit Obligations.
12.6. Amendments, Consents, Waivers, etc. Except as otherwise set forth
herein, the Agent may (and upon the written request of the Required Lenders the
Agent shall) take or refrain from taking any action under this Agreement or any
other Credit Document, including giving its written consent to any modification
of or amendment to and waiving in writing compliance with any covenant or
condition in this Agreement or any other Credit Document (other than an Interest
Rate Protection Agreement) or any Default or Event of Default, all of which
actions shall be binding upon all of the Lenders; provided, however, that:
(a) Except as provided below, without the written consent of
the Lenders owning at least 80% of the Percentage Interests (other than
any Delinquent Lender during the existence of a Delinquency Period so
long as such Delinquent Lender is treated the same as the other Lenders
with respect to any actions enumerated below), no written modification
of, amendment to, consent with respect to, waiver of compliance with or
waiver of a Default under, any of the Credit Documents (other than an
Interest Rate Protection Agreement) shall be made.
(b) Without the written consent of such Lenders as own 100% of
the Percentage Interests (other than any Delinquent Lender during the
existence of a Delinquency Period so long as such Delinquent Lender is
treated the same as the other Lenders with respect to any actions
enumerated below):
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(i) No reduction shall be made in (A) the amount of
principal of the Loan, (B) the interest rate on the Loan or
(C) the commitment fees.
(ii) No change shall be made in the stated time of
payment of all or any portion of the Loan or interest thereon
or reimbursement of payments made under Letters of Credit or
fees relating to any of the foregoing payable to all of the
Lenders and no waiver shall be made of any Default under
Section 8.1.1.
(iii) No increase shall be made in the amount, or
extension of the term, of the Commitments beyond that provided
for under Section 2.
(iv) No alteration shall be made of the Lenders'
rights of set-off contained in Section 8.2.4.
(v) No release of any Credit Security or of any
Guarantor shall be made (except that the Agent may release
particular items of Credit Security or a particular Guarantor
in dispositions permitted by Section 6.11 and may release all
Credit Security pursuant to Section 19 upon payment in full of
the Credit Obligations and termination of the Commitments
without the written consent of the Lenders).
(vi) No amendment to or modification of this Section
12.6 shall be made.
12.7. Agent's Resignation. The Agent may resign at any time by giving
at least 60 days' prior written notice of its intention to do so to each of the
other Lenders and the Borrower and upon the appointment by the Required Lenders
of a successor Agent satisfactory to the Borrower. If no successor Agent shall
have been so appointed and shall have accepted such appointment within 45 days
after the retiring Agent's giving of such notice of resignation, then the
retiring Agent may with the consent of the Borrower, which shall not be
unreasonably withheld, appoint a successor Agent which shall be a bank or a
trust company organized under the laws of the United States of America or any
state thereof and having a combined capital, surplus and undivided profit of at
least $100,000,000; provided, however, that any successor Agent appointed under
this sentence may be removed upon the written request of the Required Lenders,
which request shall also appoint a successor Agent satisfactory to the Borrower.
Upon the appointment of a new Agent hereunder, the term "Agent" shall for all
purposes of this Agreement thereafter mean such successor. After any retiring
Agent's resignation hereunder as the Agent, or the removal hereunder of any
successor Agent, the provisions of this Agreement shall continue to inure to the
benefit of such Agent as to any actions taken or omitted to be taken by it while
it was the Agent under this Agreement.
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12.8. Concerning the Agent.
12.8.1. Action in Good Faith, etc. The Agent and its officers,
directors, employees and agents shall be under no liability to any of
the Lenders or to any future holder of any interest in the Credit
Obligations for any action or failure to act taken or suffered in good
faith, and any action or failure to act in accordance with an opinion
of its counsel shall conclusively be deemed to be in good faith. The
Agent shall in all cases be entitled to rely, and shall be fully
protected in relying, on instructions given to the Agent by the
Required Lenders.
12.8.2. No Implied Duties, etc. The Agent shall have and may
exercise such powers as are specifically delegated to the Agent under
this Agreement or any other Credit Document together with all other
powers incidental thereto. The Agent shall have no implied duties to
any Person or any obligation to take any action under this Agreement or
any other Credit Document except for action specifically provided for
in this Agreement or any other Credit Document to be taken by the
Agent. Before taking any action under this Agreement or any other
Credit Document, the Agent may request an appropriate specific
indemnity satisfactory to it from each Lender in addition to the
general indemnity provided for in Section 12.11. Until the Agent has
received such specific indemnity, the Agent shall not be obligated to
take (although it may in its sole discretion take) any such action
under this Agreement or any other Credit Document. Each Lender confirms
that the Agent does not have a fiduciary relationship to it under the
Credit Documents. Each of the Borrower and its Subsidiaries party
hereto confirms that neither the Agent nor any other Lender has a
fiduciary relationship to it under the Credit Documents.
12.8.3. Validity, etc. The Agent shall not be responsible to
any Lender or any future holder of any interest in the Credit
Obligations (a) for the legality, validity, enforceability or
effectiveness of this Agreement or any other Credit Document, (b) for
any recitals, reports, representations, warranties or statements
contained in or made in connection with this Agreement or any other
Credit Document, (c) for the existence or value of any assets included
in any security for the Credit Obligations, (d) for the effectiveness
of any Lien purported to be included in the Credit Security, (e) for
the specification or failure to specify any particular assets to be
included in the Credit Security, or (f) unless the Agent shall have
failed to comply with Section 12.8.1, for the perfection of the
security interests in the Credit Security.
12.8.4. Compliance. The Agent shall not be obligated to
ascertain or inquire as to the performance or observance of any of the
terms of this Agreement or any other Credit Document, and in connection
with any extension of credit under this Agreement or any other Credit
Document, the Agent shall be fully protected in relying on a
certificate of the Borrower as to the fulfillment by the Borrower of
any conditions to such extension of credit.
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12.8.5. Employment of Agents and Counsel. The Agent may
execute any of its duties as the Agent under this Agreement or any
other Credit Document by or through employees, agents and
attorneys-in-fact and shall not be responsible to any Lender, the
Borrower or any other Obligor for the default or misconduct of any such
agents or attorneys-in-fact selected by the Agent acting in good faith.
The Agent shall be entitled to advice of counsel concerning all matters
pertaining to the agency hereby created and its duties hereunder or
under any other Credit Document.
12.8.6. Reliance on Documents and Counsel. The Agent shall be
entitled to rely, and shall be fully protected in relying, upon any
affidavit, certificate, cablegram, consent, instrument, letter, notice,
order, document, statement, telecopy, telegram, telex or teletype
message or writing reasonably believed in good faith by the Agent to be
genuine and correct and to have been signed, sent or made by the Person
in question, including any telephonic or oral statement made by such
Person, and, with respect to legal matters, upon an opinion or the
advice of counsel selected by the Agent.
12.8.7. Agent's Reimbursement. Each of the Lenders severally
agrees to reimburse the Agent, in the amount of such Lender's
Percentage Interest, for any reasonable expenses not reimbursed by the
Borrower or the Guarantor (without limiting the obligation of the
Borrower or the Guarantor to make such reimbursement): (a) for which
the Agent is entitled to reimbursement by the Borrower or the Guarantor
under this Agreement or any other Credit Document, and (b) after the
occurrence of a Default, for any other reasonable expenses incurred by
the Agent on the Lenders' behalf in connection with the enforcement of
the Lenders' rights under this Agreement or any other Credit Document.
12.8.8. Agent's Fees. The Borrower shall pay to the Agent for
its own account an agent's fee in the amount separately agreed to from
time to time by the Borrower and the Agent.
12.9. Rights as a Lender. With respect to any credit extended by it
hereunder, Agent shall have the same rights, obligations and powers hereunder as
any other Lender and may exercise such rights and powers as though it were not
the Agent, and unless the context otherwise specifies, Agent shall be treated in
its individual capacity as though it were not the Agent hereunder. Without
limiting the generality of the foregoing, the Percentage Interest of the Agent
shall be included in any computations of Percentage Interests. The Agent and its
Affiliates may accept deposits from, lend money to, act as trustee for and
generally engage in any kind of banking or trust business with the Borrower, any
of its Subsidiaries or any Affiliate of any of them and any Person who may do
business with or own an equity interest in the Borrower or any of its
Subsidiaries or any Affiliate of any of them, all as if the Agent were not the
Agent and without any duty to account therefor to the other Lenders.
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12.10. Independent Credit Decision. Each of the Lenders acknowledges
that it has independently and without reliance upon the Agent, based on the
financial statements and other documents referred to in Section 7.2, on the
other representations and warranties contained herein and on such other
information with respect to the Borrower and its Subsidiaries as such Lender
deemed appropriate, made such Lender's own credit analysis and decision to enter
into this Agreement and to make the extensions of credit provided for hereunder.
Each Lender represents to the Agent that such Lender will continue to make its
own independent credit and other decisions in taking or not taking action under
this Agreement or any other Credit Document. 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
such Lender, and no act by the Agent taken under this Agreement or any other
Credit Document, including any review of the affairs of the Borrower and its
Subsidiaries, shall be deemed to constitute any representation or warranty by
the Agent. Except for notices, reports and other documents expressly required to
be furnished to each Lender by the Agent under this Agreement or any other
Credit Document, 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, or creditworthiness of
the Borrower or any of its Subsidiaries which may come into the possession of
the Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates.
12.11. Indemnification. The holders of the Credit Obligations
shall indemnify the Agent and its officers, directors, employees and agents
(to the extent not reimbursed by the Obligors and without limiting the
obligation of any of the Obligors to do so), pro rata in accordance with their
respective Percentage Interests, 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 be
imposed on, incurred by or asserted against the Agent or such Persons relating
to or arising out of this Agreement, any other Credit Document, the
transactions contemplated hereby or thereby, or any action taken or omitted by
the Agent in connection with any of the foregoing; provided, however, that the
foregoing shall not extend to actions or omissions which are taken by the
Agent with gross negligence or willful misconduct.
13. Successors and Assigns; Lender Assignments and Participations. Any reference
in this Agreement to any of the parties hereto shall be deemed to include the
successors and assigns of such party, and all covenants and agreements by or on
behalf of the Borrower, the Guarantor, the Lenders or the Agent that are
contained in this Agreement or any other Credit Documents shall bind and inure
to the benefit of their respective successors and assigns; provided, however,
that (a) the Borrower, its Subsidiaries and the Guarantor may not assign their
rights or obligations under this Agreement except for mergers or liquidations
permitted by Section 6.11, and (b) the Lenders shall be not entitled to assign
their respective Percentage Interests in the Loan hereunder except as set forth
below in this Section 13.
13.1. Assignments by Lenders.
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13.1.1. Assignees and Assignment Procedures. Each Lender may
(a) without the consent of the Agent or the Borrower if the proposed
assignee is already a Lender hereunder or a Wholly Owned Subsidiary of
the same corporate parent of which the assigning Lender is a
Subsidiary, or (b) otherwise with the consents of the Agent and (so
long as no Event of Default exists) the Borrower (which consents will
not be unreasonably withheld), in compliance with applicable laws in
connection with such assignment, assign to one or more commercial banks
or other financial institutions (each an "Assignee") all or a portion
of its interests, rights and obligations under this Agreement and the
other Credit Documents, including all or a portion of its Commitment
and the portion of the Loan at the time owing to it and the Notes held
by it; provided, however, that:
(i) the aggregate amount of the Commitment of the
assigning Lender subject to each such assignment to any
Assignee other than another Lender (determined as of the date
the Assignment and Acceptance with respect to such assignment
is delivered to the Agent) shall be not less than $5,000,000
and in increments of $1,000,000; and
(ii) the parties to each such assignment shall
execute and deliver to the Agent an Assignment and Acceptance
(the "Assignment and Acceptance") substantially in the form of
Exhibit 13.1.1, together with the Note subject to such
assignment and a processing and recordation fee of $3,000
payable to the Agent by the assigning Lender or the Assignee.
Upon acceptance and recording pursuant to Section 13.1.4, from and
after the effective date specified in each Assignment and Acceptance
(which effective date shall be at least five Banking Days after the
execution thereof unless waived by the Agent):
(A) the Assignee shall be a party hereto and, to the
extent provided in such Assignment and Acceptance, have the
rights and obligations of a Lender under this Agreement and
(B) the assigning Lender shall, to the extent
provided in such assignment, 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 Lender shall cease to be a party hereto but
shall continue to be entitled to the benefits of Sections
3.2.3, 3.4 and 11, as well as to any fees accrued for its
account hereunder and not yet paid).
13.1.2. Terms of Assignment and Acceptance. By executing and
delivering an Assignment and Acceptance, the assigning Lender and
Assignee shall be deemed to confirm to and agree with each other and
the other parties hereto as follows:
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(a) other than the representation and warranty that it is the
legal and beneficial owner of the interest being assigned thereby free
and clear of any adverse claim, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement,
any other Credit Document or any other instrument or document furnished
pursuant hereto;
(b) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition
of the Borrower and its Subsidiaries or the performance or observance
by the Borrower or any of its Subsidiaries of any of its obligations
under this Agreement, any other Credit Document or any other instrument
or document furnished pursuant hereto;
(c) such Assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 7.2 or Section 6.4 and such other
documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and
Acceptance;
(d) such Assignee will independently and without reliance upon
the Agent, such assigning Lender or any other Lender, and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking
action under this Agreement;
(e) such Assignee appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under
this Agreement as are delegated to the Agent by the terms hereof,
together with such powers as are reasonably incidental thereto; and
(f) such Assignee agrees that it will perform in accordance
with the terms of this Agreement all the obligations which are required
to be performed by it as a Lender.
13.1.3. Register. The Agent shall maintain at the Boston
Office a register (the "Register") for the recordation of (a) the names
and addresses of the Lenders and the Assignees which assume rights and
obligations pursuant to an assignment under Section 13.1.1, (b) the
Percentage Interest of each such Lender as set forth in Section 12.1
and (c) the amount of the Loan owing to each Lender from time to time.
The entries in the Register shall be conclusive, in the absence of
manifest error, and the Borrower, the Lenders and the Agent may treat
each Person whose name is registered therein for all purposes as a
party to this Agreement. The Register shall be
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available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
13.1.4. Acceptance of Assignment and Assumption. Upon its
receipt of a completed Assignment and Acceptance executed by an
assigning Lender and an Assignee together with the Note subject to such
assignment, and the processing and recordation fee referred to in
Section 13.1.1, the Agent shall (a) accept such Assignment and
Acceptance, (b) record the information contained therein in the
Register and (c) give prompt notice thereof to the Borrower. Within
five Banking Days after receipt of notice, the Borrower, at its own
expense, shall execute and deliver to the Agent, in exchange for the
surrendered Note, a new Note to the order of such Assignee in a
principal amount equal to the applicable Commitment and Loan assumed by
it pursuant to such Assignment and Acceptance and, if the assigning
Lender has retained a Commitment and Loan, a new Note to the order of
such assigning Lender in a principal amount equal to the applicable
Commitment and Loan retained by it. Such new Note shall be in an
aggregate principal amount equal to the aggregate principal amount of
such surrendered Note, and shall be dated the date of the surrendered
Note which it replaces.
13.1.5. Federal Reserve Bank. Notwithstanding the foregoing
provisions of this Section 13, any Lender may at any time pledge or
assign all or any portion of such Lender's rights under this Agreement
and the other Credit Documents to a Federal Reserve Bank; provided,
however, that no such pledge or assignment shall release such Lender
from such Lender's obligations hereunder or under any other Credit
Document.
13.1.6. Further Assurances. The Borrower and its Subsidiaries
shall sign such documents and take such other actions from time to time
reasonably requested by an Assignee to enable it to share in the
benefits of the rights created by the Credit Documents.
13.2. Credit Participants. Each Lender may, without the consent of the
Borrower or the Agent, in compliance with applicable laws in connection with
such participation, sell to one or more commercial banks or other financial
institutions (each a "Credit Participant") participations in all or a portion of
its interests, rights and obligations under this Agreement and the other Credit
Documents (including all or a portion of its Commitment, the Loan and the Note
held by it); provided, however, that:
(a) such Lender's obligations under this Agreement shall
remain unchanged;
(b) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations;
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(c) the Credit Participant shall be entitled to the benefit of
the cost protection provisions contained in Sections 3.2.3, 3.4 and 11,
but shall not be entitled to receive any greater payment thereunder
than the selling Lender would have been entitled to receive with
respect to the interest so sold if such interest had not been sold; and
(d) the Borrower, the other Lenders 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
such Lender shall retain the sole right as one of the Lenders to vote
with respect to the enforcement of the obligations of the Borrower
relating to the Loan and the approval of any amendment, modification or
waiver of any provision of this Agreement (other than amendments,
modifications, consents or waivers described in clause (b) of the
proviso to Section 12.6).
Each Obligor agrees, to the fullest extent permitted by applicable law, that any
Credit Participant and any Lender purchasing a participation from another Lender
pursuant to Section 12.5 may exercise all rights of payment (including the right
of set-off), with respect to its participation as fully as if such Credit
Participant or such Lender were the direct creditor of the Obligors and a Lender
hereunder in the amount of such participation.
14. Confidentiality. Each Lender will make no disclosure of confidential
information furnished to it by the Borrower or any of its Subsidiaries unless
such information shall have become public, except:
(a) in connection with operations under or the enforcement of
this Agreement or any other Credit Document;
(b) pursuant to any statutory or regulatory requirement or any
mandatory court order, subpoena or other legal process;
(c) to the Borrower or corporate Affiliate of the Lender or to
any Credit Participant, proposed Credit Participant or proposed
Assignee; provided, however, that any such Person shall agree to comply
with the restrictions set forth in this Section 14 with respect to such
information;
(d) to its independent counsel, auditors and other
professional advisors with an instruction to such Person to keep such
information confidential; and
(e) with the prior written consent of the Borrower, to any
other Person.
15. Foreign Lenders. If any Lender is not incorporated or organized under the
laws of the United States of America or a state thereof, such Lender shall
deliver to the Borrower and the Agent the following:
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(a) two duly completed copies of United States Internal
Revenue Service Form 1001 or 4224 or successor form, as the case may
be, certifying in each case that such Person is entitled to receive
payments under this Agreement, the Notes and the Letters of Credit
payable to it, without deduction or withholding of any United States
federal income taxes; and
(b) a duly completed Internal Revenue Service Form W-8 or W-9
or successor form, as the case may be, to establish an exemption from
United States backup withholding tax.
Each such Lender that delivers to the Borrower and the Agent a Form
1001 or 4224 and Form W-8 or W-9 pursuant to this Section 15 further undertakes
to deliver to the Borrower and the Agent two further copies of Form 1001 or 4224
and Form W-8 or W-9, or successor applicable form, or other manner of
certification, as the case may be, on or before the date that any such form
expires or becomes obsolete or after the occurrence of any event requiring a
change in the most recent form previously delivered by it to the Borrower and
the Agent. Such Forms 1001 or 4224 shall certify that such Lender is entitled to
receive payments under this Agreement without deduction or withholding of any
United States federal income taxes. The foregoing documents need not be
delivered in the event any change in treaty, law or regulation or official
interpretation thereof has occurred which renders all such forms inapplicable or
which would prevent such Lender from delivering any such form with respect to
it, or such Lender advises the Borrower that it is not capable of receiving
payments without any deduction or withholding of United States federal income
tax and, in the case of a Form W-8 or W-9, establishing an exemption from United
States backup withholding tax. Until such time as the Borrower and the Agent
have received such forms indicating that payments hereunder are not subject to
United States withholding tax or are subject to such tax at a rate reduced by an
applicable tax treaty, the Borrower shall withhold taxes from such payments at
the applicable statutory rate without regard to Section 3.4.
16. Notices. Except as otherwise specified in this Agreement, any notice
required to be given pursuant to this Agreement shall be given in writing. Any
notice, consent, approval, demand or other communication in connection with this
Agreement shall be deemed to be given if given in writing (including telex,
telecopy or similar teletransmission) addressed as provided below (or to the
addressee at such other address as the addressee shall have specified by notice
actually received by the addressor), and if either (a) actually delivered in
fully legible form to such address (evidenced in the case of a telex by receipt
of the correct answerback, and in the case of telecopy by oral acknowledgment of
receipt) or (b) in the case of a letter, unless actual receipt of the notice is
required by any Credit Document five days shall have elapsed after the same
shall have been deposited in the United States mails, with first-class postage
prepaid and registered or certified.
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If to the Guarantor, the Borrower, or any Subsidiaries of the Borrower,
to it at its address set forth in Exhibit 7.1 (as supplemented pursuant to
Sections 6.4.1 and 6.4.2), to the attention of the chief financial officer.
If to any Lender or the Agent, to it at its address set forth on the
signature pages of this Agreement or in the Register, with a copy to the Agent
17. Course of Dealing; Amendments and Waivers. No course of dealing between any
Lender or the Agent, on one hand, and the Borrower or any other Obligor, on the
other hand, shall operate as a waiver of any of the Lenders' or the Agent's
rights under this Agreement or any other Credit Document or with respect to the
Credit Obligations. Each of the Borrower and the Guarantor acknowledges that if
the Lenders or the Agent, without being required to do so by this Agreement or
any other Credit Document, give any notice or information to, or obtain any
consent from, the Borrower or any other Obligor, the Lender and the Agent shall
not by implication have amended, waived or modified any provision of this
Agreement or any other Credit Document, or created any duty to give any such
notice or information or to obtain any such consent on any future occasion. No
delay or omission on the part of the Lender or the Agent in exercising any right
under this Agreement or any other Credit Document or with respect to the Credit
Obligations shall operate as a waiver of such right or any other right hereunder
or thereunder. A waiver on any one occasion shall not be construed as a bar to
or waiver of any right or remedy on any future occasion. No waiver, consent or
amendment with respect to this Agreement or any other Credit Document shall be
binding unless it is in writing and signed by the Agent or the Required Lenders.
18. No Strict Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement and the other Credit Documents with
counsel sophisticated in financing transactions. In the event an ambiguity or
question of intent or interpretation arises, this Agreement and the other Credit
Documents shall be construed as if drafted jointly by the parties and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement and the other
Credit Documents.
19. Defeasance. When all Credit Obligations have been paid, performed and
reasonably determined by the Lenders to have been indefeasibly discharged in
full, and if at the time no Lender continues to be committed to extend any
credit to the Borrower hereunder or under any other Credit Document, this
Agreement shall terminate and, at the Borrower's written request, accompanied by
such certificates and other items as the Agent shall reasonably deem necessary,
the Credit Security shall revert to the Obligors and the right, title and
interest of the Lenders therein shall terminate. Thereupon, on the Obligors'
demand and at their cost and expense, the Agent shall execute proper
instruments, acknowledging satisfaction of and discharging this Agreement, and
shall redeliver to the Obligors any Credit Security then in its possession;
provided, however, that Sections 3.2.3, 3.4, 11, 12.8.7, 12.11, 14, 20 and 21
shall survive the termination of this Agreement.
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20. Venue; Service of Process. Each of the Borrower and the other Obligors:
(a) irrevocably submits to the nonexclusive jurisdiction of
the state courts of The Commonwealth of Massachusetts and to the
nonexclusive jurisdiction of the United States District Court for the
District of Massachusetts for the purpose of any suit, action or other
proceeding arising out of or based upon this Agreement or any other
Credit Document or the subject matter hereof or thereof;
(b) waives to the extent not prohibited by applicable law that
cannot be waived, and agrees not to assert, by way of motion, as a
defense or otherwise, in any such proceeding brought in any of the
above-named courts, any claim that it is not subject personally to the
jurisdiction of such court, that its property is exempt or immune from
attachment or execution, that such proceeding is brought in an
inconvenient forum, that the venue of such proceeding is improper, or
that this Agreement or any other Credit Document, or the subject matter
hereof or thereof, may not be enforced in or by such court.
Each of the Borrower and the other Obligors consents to service of process in
any such proceeding in any manner at the time permitted by Chapter 223A of the
General Laws of The Commonwealth of Massachusetts and agrees that service of
process by registered or certified mail, return receipt requested, at its
address specified in or pursuant to Section 16 is reasonably calculated to give
actual notice.
21. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT
CANNOT BE WAIVED, EACH OF THE BORROWER, THE OTHER OBLIGORS, THE LENDERS AND THE
AGENT WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF,
DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF
ANY ISSUE, CLAIM OR PROCEEDING ARISING OUT OF THIS AGREEMENT OR ANY OTHER CREDIT
DOCUMENT OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY CREDIT OBLIGATION OR IN
ANY WAY CONNECTED WITH THE DEALINGS OF THE BORROWER, ANY OTHER OBLIGOR, ANY
LENDER OR THE AGENT IN CONNECTION WITH ANY OF THE ABOVE, IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT, TORT OR OTHERWISE.
Each of the Borrower and the other Obligors acknowledges that it has been
informed by the Agent that the provisions of this Section 21 constitute a
material inducement upon which the Lenders have relied and will rely in entering
into this Agreement and any other Credit Document, and that it has reviewed the
provisions of this Section 21 with its counsel. The Borrower, any other Obligor,
any Lender or the Agent may file an original counterpart or a copy of this
Section 21 with any court as written evidence of the consent of the Borrower,
the other Obligors, the Lenders and the Agent to the waiver of their rights to
trial by jury.
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22. General. All covenants, agreements, representations and warranties made in
this Agreement or any other Credit Document or in certificates delivered
pursuant hereto or thereto shall be deemed to have been relied on by the Lender,
notwithstanding any investigation made by the Lender on its behalf, and shall
survive the execution and delivery to the Lenders hereof and thereof. The
invalidity or unenforceability of any provision hereof shall not affect the
validity or enforceability of any other provision hereof. The headings in this
Agreement are for convenience of reference only and shall not limit or otherwise
affect the meaning hereof. This Agreement and the other Credit Documents
constitute the entire understanding of the parties with respect to the subject
matter hereof and thereof and supersede all prior and contemporaneous
understandings and agreements, whether written or oral, with respect to such
subject matter. This Agreement may be executed in any number of counterparts
which together shall constitute one instrument. This Agreement shall be governed
by and construed in accordance with the laws (other than the conflict of laws
rules) of The Commonwealth of Massachusetts, except as may be required by the
UCC with respect to matters involving the perfection of the Agent's Lien on the
Credit Security.
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Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
date first above written.
SELFCARE, INC.
By /s/ Anthony H. Hall
-----------------------------------
Title: Chief Financial Officer
SELFCARE ACQUISITION CORP.
By /s/ Anthony H. Hall
-----------------------------------
Title: Treasurer
FLEET NATIONAL BANK
both as a Lender and as Agent for itself
and the other Lenders
By /s/ C. Struder
-----------------------------------
Title: Vice President
Fleet Bank of Massachusetts
Mail Stop MA/OF/D044
One Federal Street
Boston, Massachusetts 02110
Telecopy: (617) 346-5788
Telex:
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