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EXHIBIT *(10.21)
IGI, INC.,
IGEN, INC.,
IMMUNOGENETICS, INC.
BLOOD CELLS, INC.
AND
FLEET CAPITAL CORPORATION
LOAN AND SECURITY AGREEMENT
Dated: October 29, 1999
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TABLE OF CONTENTS
Page
SECTION 1. CREDIT FACILITY 1
1.1 Revolving Credit Loans 1
1.2 Term Loan 1
1.3 Capital Expenditure Loans 2
1.4 Notes 2
SECTION 2. INTEREST, FEES AND CHARGES 3
2.1 Interest 3
2.2 Computation of Interest and Fees 7
2.3 Commitment Fee 7
2.4 Unused Line Fee 7
2.5 Collateral Management Fee 7
2.6 Audit Fees 8
2.7 Reimbursement of Expenses 8
2.8 Bank Charges 8
2.9 Indemnity re: LIBOR 8
SECTION 3. LOAN ADMINISTRATION 9
3.1 Manner of Borrowing Revolving Credit Loans and Capital
Expenditure Loans 9
3.2 Payments 10
3.3 Mandatory and Permissive Prepayments 11
3.4 Application of Payments and Collections 11
3.5 All Loans to Constitute One Obligation 12
3.6 Loan Account 12
3.7 Statements of Account 12
3.8 Agent for Borrowers- Each Borrower hereby appoints IGI as its
agent on behalf of each Borrower to make
requests for loans and to make such
interest rate elections which by the
terms of this Agreement may be requested
or elected by Borrowers, and any such
request or election made by IGI shall
constitute an effective request or
election hereunder notwithstanding any
reference generally to the "Borrowers" or
any of them. Lender is authorized to rely
on any such request or election so made
by IGI, and any such request or election
so made will be deemed to have been made
by all Borrowers.
SECTION 4.TERM AND TERMINATION 12
4.1 Term of Agreement 12
4.2 Termination 12
SECTION 5. SECURITY INTERESTS 13
5.1 Security Interest in Collateral 13
5.2 Lien Perfection; Further Assurances 14
5.3 Real Property 15
SECTION 6. COLLATERAL ADMINISTRATION 15
6.1 General 15
6.2 Administration of Accounts 16
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6.3 Administration of Inventory 18
6.4 Administration of Equipment 18
6.5 Payment of Charges 19
SECTION 7. REPRESENTATIONS AND WARRANTIES 19
7.1 General Representations and Warranties 19
7.1.26 Year 2000 Compliance 24
7.2 Continuous Nature of Representations and Warranties 25
7.3 Survival of Representations and Warranties 25
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS 25
8.1 Affirmative Covenants 25
8.1.5 Year 2000 Compliance 27
8.2 Negative Covenants 27
8.3 Specific Financial Covenants 30
SECTION 9. CONDITIONS PRECEDENT 30
9.1 Documentation 30
9.2 No Default 31
9.3 Other Loan Documents 31
9.4 Availability 32
9.5 No Litigation 32
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT 32
10.1 Events of Default 32
10.2 Acceleration of the Obligations 34
10.3 Other Remedies 34
10.4 Remedies Cumulative; No Waiver 35
SECTION 11. MISCELLANEOUS 36
11.1 Power of Attorney 36
11.2 Indemnity 37
11.3 Modification of Agreement; Sale of Interest 37
11.4 Severability 37
11.5 Successors and Assigns 38
11.6 Cumulative Effect; Conflict of Terms 38
11.7 Execution in Counterparts 38
11.8 Notice 38
11.9 Lender's Consent 39
11.10 Credit Inquiries 39
11.11 Time of Essence 39
11.12 Entire Agreement 39
11.13 Interpretation 39
11.15 GOVERNING LAW; CONSENT TO FORUM 40
11.16 WAIVERS BY BORROWERS 41
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made this 29th day of October, 1999, by
and between FLEET CAPITAL CORPORATION ("Lender"), a Rhode Island corporation
with an office at 200 Glastonbury Boulevard, Glastonbury, CT 06033 and IGI, INC.
("IGI"), a Delaware corporation; IGEN, INC., ("IGEN"), a Delaware corporation,
IMMUNOGENETICS, INC., ("ImmunoGenetics"), a Delaware corporation, and BLOOD
CELLS, INC. ("Blood Cells"), a Delaware corporation, (IGI, IGEN, ImmunoGenetics,
and Blood Cells, each a "Borrower and collectively, "Borrowers"), each with its
chief executive office at Wheat Road and Lincoln Avenue, Buena, NJ 08310.
Capitalized terms used in this Agreement have the meanings assigned to them
in Appendix A, General Definitions. Accounting terms not otherwise specifically
defined herein shall be construed in accordance with GAAP, consistently applied.
SECTION 1. CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lender agrees to make a Total Credit Facility of up to $22,000,000
available upon Borrowers' request therefor, as follows:
1.1 Revolving Credit Loans.
1.1.1 Loans and Reserves. Lender agrees, for so long as no Default or
Event of Default exists, to make Revolving Credit Loans to Borrowers from time
to time, as requested by Borrowers in the manner set forth in subsection 3.1.1
hereof, up to a maximum principal amount at any time outstanding equal to the
Borrowing Base at such time which Revolving Credit Loans shall be repayable in
accordance with the terms of the Revolving Credit Note. If the unpaid balance of
the Revolving Credit Loans should exceed at any time the Borrowing Base or any
other limitation set forth in this Agreement, such excess Revolving Credit Loans
shall nevertheless constitute Obligations that are due and payable on demand,
secured by the Collateral (except the Georgia Real Estate) and entitled to all
benefits thereof. Lender shall have the right to establish reserves from time to
time, in its discretion, in such amounts and with respect to such matters, as
Lender deems necessary or appropriate.
1.1.2 Use of Proceeds. The Revolving Credit Loans shall be used solely
(i) for Borrowers' working capital needs, in a manner consistent with the
provisions of this Agreement and all applicable laws, and (ii) to repay in full
Borrowers' existing borrowed institutional indebtedness.
1.2 Term Loan.
1.2.1 Term Loan A. Lender agrees to make (Term Loan A to Borrowers on
the Closing Date in the principal amount of $6,650,000, which shall be secured
by all of the Collateral (except the Georgia Real Estate) and shall be payable
in equal quarterly installments of $233,333.33 each commencing on the first day
of the tenth month following the month in which Closing occurs and continuing on
the first day of each quarter thereafter, with a final payment of the entire
balance of Term Loan A due on the earlier of (i) the last day of the Original
Term or (ii) termination of this
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Agreement in accordance with Section 4. Term Loan A shall be repaid in
accordance with the provisions of the Term Loan A Note.
1.2.2 Term Loan B. Lender agrees to make Term Loan B to Borrowers on
the Closing Date in the principal amount of $350,000, which shall be secured by
all of the Collateral (including without limitation the Georgia Real Estate) and
shall be payable in one installment of the full principal amount on the earlier
of (i) the last day of the Original Term or (ii) termination of this Agreement
in accordance with Section 4. Term Loan B shall be repaid in accordance with the
provisions of the Term Loan B Note.
1.2.3 Use of Proceeds. The proceeds of the Term Loan shall be used
solely to repay in full Borrowers' existing borrowed institutional indebtedness.
1.3 Capital Expenditure Loans.
1.3.1 Lender agrees to make Capital Expenditure Loans to Borrowers from
time to time, so long as no Default or Event of Default exists, as requested by
Borrowers in the manner set forth in subsection 3.1.1 provided however that the
Capital Expenditure Loans shall not exceed $3,000,000 in the aggregate. To the
extent payments are made from time to time on the Capital Expenditure Loans,
they may not be reborrowed. Each Capital Expenditure Loan shall be in the
minimum amount of One Hundred Thousand Dollars ($100,000) and no Capital
Expenditure Loan shall exceed ninety percent (90%) of the invoice price of new
equipment (exclusive of taxes, license, transportation and installation
expenses) acquired by Borrowers with such Capital Expenditure Loan for use in
Borrowers' existing manufacturing facilities. The Capital Expenditure Loans
shall be repaid in accordance with the provisions of the Capital Expenditure
Loan Note. Each Capital Expenditure Loan shall be secured by all of the
Collateral, and shall be payable in equal quarterly installments, each of which
shall be one-twentieth (1/20) of the initial principal balance of the particular
Capital Expenditure Loan, with the first payment for each Capital Expenditure
Loan commencing on the first day of the first full fiscal quarter beginning
after the date the respective Capital Expenditure Loan is made and continuing on
the first day of each fiscal quarter thereafter, with a final payment of the
entire balance of each Capital Expenditure Loan due on the earlier of (i) the
last day of the Original Term or (ii) termination of this Agreement in
accordance with Section 4.
1.3.2 Use of Proceeds The Capital Expenditure Loans shall be used
solely to finance Capital Expenditures permitted to be made under this
Agreement.
1.4 Notes. Borrowers shall execute Notes on the Closing Date to evidence
their obligation to repay the respective Loans.
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SECTION 2. INTEREST, FEES AND CHARGES
2.1 Interest.
2.1.1 Revolving Credit Interest:
(a) Rate Options. At the time of each Revolving Credit Loan under
the Revolving Credit Facility, and thereafter from time to time, Borrowers shall
have the right, subject to the terms and conditions of this Agreement, and
provided no Default or Event of Default has occurred and is continuing, to
designate to Lender in writing that all or a portion of the Revolving Credit
Loans shall bear interest at either the (i) Revolving Credit LIBOR Rate or (ii)
Revolving Credit Base Rate. Interest on each portion thereof shall accrue and be
paid at the time and rate applicable to the respective option selected by
Borrowers or otherwise governing under the terms of this Agreement. If for any
reason the Revolving Credit LIBOR Rate option is unavailable, the Revolving
Credit Base Rate shall apply. The rate of interest on Revolving Credit Base Rate
Loans shall increase or decrease by an amount equal to any increase or decrease
in the Base Rate effective as of the opening of business on the day that any
such change in the Base Rate occurs.
(i) Revolving Credit LIBOR Rate Option:
(A) Requests. Provided no Default or
Event of Default has occurred and is continuing, and subject to the provisions
of this Section 2.1.1 (a)(i), if Borrowers desire to have the Revolving Credit
LIBOR Rate apply to all or a portion of the Revolving Credit Loans, Borrowers
shall give Lender a written irrevocable request no later than 11:00 A.M. Eastern
time on the second (2nd) Business Day prior to the requested borrowing date
specifying (i) the date the Revolving Credit LIBOR Rate shall apply (which shall
be a Business Day), (ii) the LIBOR Interest Period, and (iii) the amount to be
subject to the Revolving Credit LIBOR Rate provided that such amount shall be in
the minimum amount of $500,000. In no event may Borrowers have outstanding at
any time more than six (6) LIBOR Rate Loans. If an Event of Default is
outstanding, Lender shall have the right, in its sole discretion, to convert any
or all of the Revolving Credit LIBOR Rate Loans then currently outstanding to
Revolving Credit Base Rate Loans, and Borrowers shall be required to reimburse
Lender for any applicable losses or expenses under Section 2.9 in connection
with any such conversion.
(B) LIBOR Interest Periods.
Revolving Credit LIBOR Rate Loans shall be selected by Borrowers for a LIBOR
Interest Period during which the Revolving Credit LIBOR Rate is applicable;
provided, however, that if the LIBOR Interest Period would otherwise end on a
day which shall not be a London Business Day, such LIBOR Interest Period shall
end on the next preceding London Business Day to which such Revolving Credit
LIBOR Rate Loan relates. All accrued and unpaid interest on a Revolving Credit
LIBOR Rate Loan shall be paid monthly in accordance with Section 3.2.2. No LIBOR
Interest Period with respect to the Revolving Credit may end after the Revolving
Credit Maturity Date. Subject to all of the terms and conditions applicable to a
request to convert all or a portion of the Revolving Credit Loans to a Revolving
Credit LIBOR Rate Loan, Borrowers may extend a Revolving Credit LIBOR Rate Loan
as of the last day of the LIBOR Interest Period to a new Revolving Credit LIBOR
Rate Loan. If Borrowers fail to notify Lender of the LIBOR Interest Period for a
subsequent Revolving Credit LIBOR Rate Loan at least two (2) Business Days prior
to the last day of the then current LIBOR Interest Period of an outstanding
Revolving Credit LIBOR Rate Loan, then such outstanding Revolving Credit LIBOR
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Rate Loan shall, at the end of the applicable LIBOR Interest Period accrue
interest at the Revolving Credit Base Rate.
(C) Adjustments. The Adjusted LIBOR
Rate may be automatically adjusted by Lender on a prospective basis to take into
account the additional or increased cost of maintaining any necessary reserves
for Eurodollar deposits or increased costs due to changes in applicable law or
regulation or the interpretation thereof occurring subsequent to the
commencement of the then applicable LIBOR Interest Period, including but not
limited to changes in tax laws (except changes of general applicability in
corporate income tax laws) and changes in the reserve requirements imposed by
the Board of Governors of the Federal Reserve System (or any successor or other
applicable governing body), excluding the Reserve Percentage which has resulted
in a payment pursuant to Section 2.10 below, that increase the cost to Lender of
funding the Revolving Credit LIBOR Rate Loan. Lender shall give Borrowers notice
of such a determination and adjustment prior to the effectiveness thereof, which
determination shall be prima facie evidence of the correctness of the fact and
the amount of such adjustment.
(D) Unavailability. If Borrowers shall
have requested the rate based on the Adjusted LIBOR Rate in accordance with this
Section 2.1.1(a)(i) and Lender shall have determined, in good faith, that
Eurodollar deposits equal to the amount of the principal of the requested
Revolving Credit LIBOR Rate Loan and for the LIBOR Interest Period specified are
unavailable, or that the rate based on the Adjusted LIBOR Rate will not
adequately and fairly reflect the cost of the Adjusted LIBOR Rate applicable to
the specified LIBOR Interest Period, of making or maintaining the principal
amount of the requested Revolving Credit LIBOR Rate Loan during the LIBOR
Interest Period specified, or that by reason of circumstances affecting
Eurodollar markets, adequate means do not exist for ascertaining the rate based
on the Adjusted LIBOR Rate applicable to the specified LIBOR Interest Period,
Lender shall promptly give notice of such determination to Borrowers that the
rate based on the Adjusted LIBOR Rate is not available. A determination, in good
faith, by Lender hereunder shall be prima facie evidence of the correctness of
the fact and amount of such additional costs or unavailability. Upon such a
determination, (i) the obligation to convert to, or maintain a Revolving Credit
LIBOR Rate Loan at the rate based on the Adjusted LIBOR Rate shall be suspended
until Lender shall have notified Borrowers that such conditions shall have
ceased to exist, and (ii) the portion of the Revolving Credit Loans subject to
the request or requested conversion shall accrue interest at the Revolving
Credit Base Rate.
(E) Unlawful. If, as a result of any
changes in applicable law or regulation or the interpretation thereof, it
becomes unlawful for Lender to maintain Eurodollar deposits sufficient to fund
any Revolving Credit LIBOR Rate Loan subject to the rate based on the Adjusted
LIBOR Rate, then Lender shall immediately notify Borrowers thereof and Lender's
obligations hereunder to convert to, or maintain a Revolving Credit LIBOR Rate
Loan at the rate based on the Adjusted LIBOR Rate shall be suspended until such
time as Lender may again cause the rate based on the Adjusted LIBOR Rate to be
applicable to such Revolving Credit LIBOR Rate Loan. Immediately upon such
occurrence, the Revolving Credit Loans subject to the Revolving Credit LIBOR
Rate shall accrue interest at the Revolving Credit Base Rate. Promptly after
becoming aware that it is no longer unlawful for Lender to maintain such
Eurodollar deposits, Lender shall notify Borrowers thereof and such suspension
shall cease to exist.
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2.1.2 Term and Capital Expenditure Loans Interest:
(a) Rate Options. On the Closing Date and
thereafter from time to time, Borrowers shall have the right, subject to the
terms and conditions of this Agreement, and provided no Default or Event of
Default has occurred and is continuing, to designate to Lender in writing that
all, or a portion of the outstanding principal balance of the Term Loan and any
outstanding Capital Expenditure Loan shall bear interest at either the (i) Term
LIBOR Rate or (ii) Term Base Rate. Interest on each portion thereof shall accrue
and be paid at the time and rate applicable to the respective option selected by
Borrowers or otherwise governing under the terms of this Agreement. If for any
reason the Term LIBOR Rate option is unavailable, the Term Base Rate shall
apply. The rate of interest on Term Base Rate Loans shall increase or decrease
by an amount equal to any increase or decrease in the Base Rate, effective as of
the opening of business on the date that any such change in the Base Rate
occurs.
(i) Term LIBOR Rate Option:
(A) Requests. Provided no Default or
Event of Default has occurred and is continuing, and subject to the provisions
of this Section 2.1.2(a)(i) if Borrowers desire to have the Term LIBOR Rate
apply to all or a portion of the Term Loan or Capital Expenditure Loan,
Borrowers shall give Lender a written irrevocable request no later than 11:00
A.M. Eastern Time on the second (2nd) Business Day prior to the requested
borrowing date specifying (i) the date the Term LIBOR Rate shall apply (which
shall be a Business Day), (ii) the LIBOR Interest Period, and (iii) the amount
of the Term Loan or Capital Expenditure Loan to be subject to the Term LIBOR
Rate; provided that such amount shall be in the minimum amount of $500,000. In
no event may Borrowers have outstanding at any time more than six (6) LIBOR Rate
Loans. If an Event of Default is outstanding, Lender shall have the right, in
its sole discretion, to convert any or all of the Term LIBOR Rate Loans then
currently outstanding to Term Base Rate Loans, and Borrowers shall be required
to reimburse Lender for any applicable losses or expenses under Section 2.9 in
connection with any such conversion.
(B) LIBOR Interest Periods. Term LIBOR
Rate Loans or Capital Expenditure Loans shall be selected for a LIBOR Interest
Period during which the Term LIBOR Rate is applicable; provided, however, that
if the LIBOR Interest Period would otherwise end on a day which shall not be a
London Business Day, such LIBOR Interest Period shall end on the next preceding
London Business Day to which such Term LIBOR Rate Loans relates. All accrued and
unpaid interest on a Term LIBOR Rate Loan shall be paid monthly in accordance
with Section 3.2.2. No LIBOR Interest Period with respect to the Term Loan or
Capital Expenditure Loan may end after the applicable maturity due date for the
Term Loan or Capital Expenditure Loan. Subject to all of the terms and
conditions applicable to a request to convert all or a portion of the Term Loan
or Capital Expenditure Loans to a Term LIBOR Rate Loan, Borrowers may extend a
Term LIBOR Rate Loan as of the last day of the LIBOR Interest Period to a new
Term LIBOR Rate Loan. If Borrowers fail to notify Lender of the LIBOR Interest
Period for a subsequent Term LIBOR Rate Loan at least two (2) Business Days
prior to the last day of the then current LIBOR Interest Period of an
outstanding Term LIBOR Rate Loan, then such outstanding Term LIBOR Rate Loan
shall, at the end of the applicable LIBOR Interest Period accrue interest at the
Term Base Rate.
(C) Adjustments. The Adjusted LIBOR Rate
may be automatically adjusted by Lender on a prospective basis to take into
account the additional or increased cost of maintaining any necessary reserves
for Eurodollar deposits or increased costs
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due to changes in applicable law or regulation or the interpretation thereof
occurring subsequent to the commencement of the then applicable LIBOR Interest
Period, including but not limited to changes in tax laws (except changes of
general applicability in corporate income tax laws) and changes in the reserve
requirements imposed by the Board of Governors of the Federal Reserve System (or
any successor or other applicable governing body), that increase the cost to
Lender of funding the Term Loan. Lender shall give Borrowers notice of such a
determination and adjustment prior to the effectiveness thereof, which
determination shall be prima facie evidence of the correctness of the fact and
the amount of such adjustment.
(D) Unavailability. If Borrowers shall
have requested the rate based on the Adjusted LIBOR Rate in accordance with
Section 2.1.2(a)(i) and Lender shall have determined, in good faith, that
Eurodollar deposits equal to the amount of the principal of the requested Term
LIBOR Rate Loan and for the LIBOR Interest Period specified are unavailable, or
that the rate based on the Adjusted LIBOR Rate will not adequately and fairly
reflect the cost of the Adjusted LIBOR Rate applicable to the specified LIBOR
Interest Period, of making or maintaining the principal amount of the requested
Term LIBOR Rate Loan during the LIBOR Interest Period specified, or that by
reason of circumstances affecting Eurodollar markets, adequate means do not
exist for ascertaining the rate based on the Adjusted LIBOR Rate applicable to
the specified LIBOR Interest Period, Lender shall promptly give notice of such
determination to Borrowers that the rate based on the Adjusted LIBOR Rate is not
available. A determination, in good faith, by Lender hereunder shall be prima
facie evidence of the correctness of the fact and amount of such additional
costs or unavailability. Upon such a determination, (i) the obligation to
convert to, or maintain a Term LIBOR Rate Loan at the rate based on the Adjusted
LIBOR Rate shall be suspended until Lender shall have notified Borrowers that
such conditions shall have ceased to exist, and (ii) the portion of the Term
Loan subject to the request or requested conversion shall accrue interest at the
Term Base Rate.
(E) Unlawful. If, as a result of any
changes in applicable law or regulation or the interpretation thereof, it
becomes unlawful for Lender to maintain Eurodollar deposits sufficient to fund
any Term LIBOR Rate Loan subject to the rate based on the Adjusted LIBOR Rate,
then Lender shall immediately notify Borrowers thereof and Lender's obligations
hereunder to convert to, or maintain a Term LIBOR Rate Loan at the rate based on
the Adjusted LIBOR Rate shall be suspended until such time as Lender may again
cause the rate based on the Adjusted LIBOR Rate to be applicable to such Term
LIBOR Rate Loan. Immediately upon such occurrence, the portion of the Term Loan
subject to the Term LIBOR Rate shall continue to accrue interest at the Term
Base Rate. Promptly after becoming aware that it is no longer unlawful for
Lender to maintain such Eurodollar deposits, Lender shall notify Borrowers
thereof and such suspension shall cease to exist.
2.1.3 Minimum Loan. During the Original Term and any Renewal Terms,
the minimum outstanding Loans ("Minimum Loan") shall at all times be $5,000,000.
Borrowers shall at all times be required to pay interest on the greater of the
Minimum Loan or the actual outstanding principal balance of the Loans from month
to month.
2.1.4 Default Rate of Interest. Upon and after the occurrence of an
Event of Default, and during the continuation thereof, the principal amount of
all Loans shall bear interest at a rate per annum equal to the interest rate
otherwise applicable thereto plus 200 basis points (the "Default Rate").
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2.1.5 Maximum Interest. In no event whatsoever shall the aggregate
of all amounts deemed interest hereunder or under the Notes and charged or
collected pursuant to the terms of this Agreement or pursuant to the Notes
exceed the highest rate permissible under any law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto. If any
provisions of this Agreement or the Notes are in contravention of any such law,
the rate hereunder shall automatically be reduced to the maximum rate permitted
by applicable law, and Lender shall, in its discretion, to the extent permitted
by applicable law, apply such excess to the principal balance of the Loans or
refund such excess to Borrowers, and such provisions shall be deemed amended to
conform thereto.
2.2 Computation of Interest and Fees. Interest and collection charges
hereunder shall be calculated daily and shall be computed on the actual number
of days elapsed over a year of 360 days. For the purpose of computing interest
hereunder, all items of payment received by Lender shall be deemed applied by
Lender on account of the Obligations (subject to final payment of such items)
two (2) Business Days after receipt by Lender of fully collected funds from the
Dominion Account.
2.3 Commitment Fee. Borrowers shall pay to Lender on the Closing Date a
facility fee of $220,000, (less the $50,000 portion thereof previously paid)
which is deemed fully earned and nonrefundable on the Closing Date.
2.4 Unused Line Fee. Borrowers shall pay to Lender a fee ("Unused Line
Fee") equal to 0.50% per annum of the average daily difference during any
calendar month between (i) the Revolving Facility Limit and (ii) the average
principal balance of all outstanding Revolving Credit Loans. The Unused Line Fee
shall be payable monthly in arrears on the first day of each calendar month
hereafter.
2.5 Collateral Management Fee Borrowers shall pay Lender an annual
collateral management fee of $25,000, which fee shall be earned, nonrefundable
and payable quarterly in advance, with the first payment due on the Closing
Date, and continuing thereafter on the first day of each fiscal quarter.
2.6 Audit Fees. Notwithstanding Section 2.5 above, Borrowers shall, if an
Event of Default is outstanding, pay to Lender per person per diem reasonable
audit fees in connection with Lender's audits of Borrowers' books and records
and collateral, plus all reasonable out-of-pocket expenses incurred by Lender in
connection with such audits.
2.7 Reimbursement of Expenses. If, at any time or times regardless of
whether or not an Event of Default then exists, Lender incurs reasonable legal
or accounting expenses or any other out-of-pocket costs or reasonable
out-of-pocket expenses in connection with (i) the analysis, negotiation and
preparation of this Agreement or any of the other Loan Documents, any amendment
of or modification of this Agreement or any of the other Loan Documents (whether
or not consummated); (ii) the administration or termination of this Agreement or
any of the other Loan Documents and the transactions contemplated hereby and
thereby or any consent or waiver requested of Lender concerning any provisions
hereof or thereof; (iii) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by Lender, Borrowers or any other Person) in any way
relating to the Collateral, this Agreement or any of the other Loan Documents or
Borrowers' affairs; (iv) any attempt to enforce any rights of Lender against
Borrowers or any other Person which may be obligated to Lender by virtue of this
Agreement or any of the other Loan Documents, including, without limitation, the
Account Debtors; or (v) any attempt to inspect,
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appraise, verify, protect, preserve, restore, collect, sell, liquidate or
otherwise dispose of or realize upon the Collateral or enforce, protect or
defend Lender's rights with respect thereto (including without limitation
expenses incurred by Lender in conjunction with any workout restructuring,
liquidation, bankruptcy, or reorganization); then all such reasonable legal and
accounting expenses, other reasonable costs and out of pocket expenses
(including, without limitation appraisal expenses) of Lender shall be charged to
Borrowers. All amounts chargeable to Borrowers under this Section 2.7 shall be
Obligations secured by all of the Collateral, shall be payable on demand to
Lender and shall bear interest from the date such demand is made until paid in
full at the highest rate applicable to Revolving Credit Loans from time to time.
Borrowers shall also reimburse Lender for reasonable expenses incurred by Lender
in its administration of the Collateral to the extent and in the manner provided
in Section 6 hereof.
2.8 Bank Charges. Borrowers shall pay to Lender, on demand, any and all
fees, costs or expenses which Lender pays to a bank or other similar institution
(including, without limitation, any fees paid by Lender to a Participating
Lender), arising out of or in connection with (i) the forwarding to Borrowers or
any other Person on behalf of Borrowers, by Lender, or any Participating Lender,
of proceeds of Loans made by Lender to Borrowers pursuant to this Agreement and
(ii) the depositing for collection, by Lender, or any Participating Lender, of
any check or item of payment received or delivered to Lender, or any
Participating Lender, on account of the Obligations.
2.9 Indemnity re: LIBOR. Borrowers hereby indemnify Lender and holds
Lender harmless from and against any and all losses or expenses that Lender may
sustain or incur as a consequence of any prepayment or any Default by Borrowers
in the payment of the principal of or interest on any LIBOR Rate Loan or failure
by Borrowers to complete a borrowing of, a prepayment of or conversion of or to
a LIBOR Rate Loan after notice thereof has been given by Borrowers, including
(but not limited to) any interest payable by Lender to lenders of funds obtained
by it in order to make or maintain its LIBOR Rate Loans hereunder, and any other
loss or expense incurred by Lender by reason of the liquidation or reemployment
of deposits or other funds acquired by Lender to make, continue, convert into or
maintain, a LIBOR Rate Loan except for prepayment of LIBOR Rate Loans resulting
from Lender's determinations under Sections 2.1.1(a)(i)(D) or (E) or
2.1.2(a)(i)(D) or (E).
SECTION 3. LOAN ADMINISTRATION
3.1 Manner of Borrowing Revolving Credit Loans and Capital Expenditure
Loans. Borrowings under the Credit Facility established pursuant to Section 1
hereof shall be as follows:
3.1.1 Loan Requests. A request for a Revolving Credit Loan or a
Capital Expenditure Loan shall be made, or shall be deemed to be made, in the
following manner: (i) Borrowers may give Lender notice of the intention to
borrow, in which notice Borrowers shall specify the amount of the proposed
borrowing and the proposed borrowing date (which shall be a Business Day), no
later than 1:00 P.M. Eastern time on the proposed borrowing date or, in the case
of a request for a Revolving Credit LIBOR Rate Loan, or a Capital Expenditure
Loan which will bear interest at the Term LIBOR Rate, no later than 11:00 A.M.
Eastern time on the second (2nd) Business Day prior to the proposed borrowing
date, which notice, in the case of requests for Capital Expenditure Loans, shall
be accompanied by a copy of the invoice regarding the particular item(s) of
equipment which will be purchased with the proceeds of the particular Capital
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Expenditure Loan, provided, however, that no such request may be made at a time
when there exists a Default or an Event of Default,; and (ii) the becoming due
of any amount required to be paid under this Agreement or the Notes, whether as
interest or for any other Obligation, shall be deemed irrevocably to be a
request for a Revolving Credit Loan on the due date in the amount required to
pay such interest or other Obligation. As an accommodation to Borrowers, Lender
may permit telephonic requests for Loans and electronic transmittal of
instructions, authorizations, agreements or reports to Lender by Borrowers.
Borrowers shall specifically direct Lender in writing to accept or act upon
telephonic or electronic communications from specific representatives of
Borrowers ("Authorized Representative"). Lender shall have no liability to
Borrowers for any loss or damage suffered by Borrowers as a result of Lender's
honoring, in good faith, of any requests, execution of any instructions,
authorizations or agreements or reliance on any reports communicated to it
telephonically or electronically and purporting to have been sent to Lender by
an Authorized Representative of Borrowers and Lender shall have no duty to
verify the origin of any such communication or the authority of the Authorized
Representative sending it. All requests for loans or other instructions given to
Lender by any Borrower shall be deemed to have been given by, and to be binding
upon all Borrowers.
3.1.2 Disbursement. Borrowers hereby irrevocably authorize Lender to
disburse the proceeds of each Revolving Credit Loan or Capital Expenditure Loan
requested, or deemed to be requested, pursuant to this subsection 3.1.2 as
follows: (i) the proceeds of each Revolving Credit Loan or Capital Expenditure
Loan requested under subsection 3.1.1(i) shall be disbursed by Lender in lawful
money of the United States of America in immediately available funds, in the
case of the initial borrowing, in accordance with the terms of the written
disbursement letter from Borrowers, and in the case of each subsequent
borrowing, by wire transfer to such bank account as may be agreed upon by
Borrowers and Lender from time to time or elsewhere if pursuant to a written
direction from Borrowers; and (ii) the proceeds of each Revolving Credit Loan
requested under subsection 3.1.1(ii) shall be disbursed by Lender by way of
direct payment of the relevant interest or other Obligation.
3.1.3 Authorization. Borrowers hereby irrevocably authorize Lender,
in Lender's sole discretion, to advance to Borrowers, and to charge to
Borrowers' Loan Account hereunder as a Revolving Credit Loan, a sum sufficient
to pay all interest accrued on the Obligations during the immediately preceding
month, principal on the Loans when due and to pay all costs, fees and expenses
at any time owed by Borrowers to Lender hereunder.
3.1.4 Borrowing Base Certificates. Borrowers shall give Lender a
Borrowing Base Certificate (accompanied by such supporting documents as may be
satisfactory to Lender) on a daily basis, or on such less frequent basis as may
be agreed to in writing by Lender.
3.2 Payments. Except where evidenced by notes or other instruments issued
or made by Borrowers to Lender specifically containing payment provisions which
are in conflict with this Section 3.2 (in which event the conflicting provisions
of said notes or other instruments shall govern and control), the Obligations
shall be payable as follows:
3.2.1 Principal. Principal payable on account of the Revolving
Credit Loans shall be payable by Borrowers to Lender immediately upon the
earliest of (i) the receipt by Lender or any of the Borrowers of any proceeds of
any of the Collateral to the extent of said proceeds, (ii) the occurrence of an
Event of Default in consequence of which Lender elects to accelerate the
maturity and payment of the Obligations, or (iii) termination of this Agreement
pursuant to Section 4
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hereof; provided, however, that if an Overadvance shall exist at any time,
Borrowers shall, on demand, repay the Overadvance.
3.2.2 Interest. Interest accrued on the Loans (irrespective of the
rate option) shall be due on the earliest of (i) the first calendar day of each
month (for the immediately preceding month), computed through the last calendar
day of the preceding month, (ii) the occurrence of an Event of Default in
consequence of which Lender elects to accelerate the maturity and payment of the
Obligations, or (iii) termination of this Agreement pursuant to Section 4
hereof.
3.2.3 Costs, Fees and Charges. Costs, fees and charges payable
pursuant to this Agreement shall be payable by Borrowers as and when provided in
Section 2 hereof, to Lender or to any other Person designated by Lender in
writing.
3.2.4 Other Obligations. The balance of the Obligations requiring
the payment of money shall be payable by Borrowers to Lender as and when
provided in this Agreement, the Notes, the Other Agreements or the Security
Documents, or on demand, whichever is later.
3.3 Mandatory and Permissive Prepayments.
3.3.1 Proceeds of Sale, Loss, Destruction or Condemnation of
Collateral. Except for any dispositions of Equipment in accordance with
subsection 6.4.2 hereof, if any of the Borrowers sells any of the Equipment or
if any of the Collateral is lost or destroyed or taken by condemnation,
Borrowers shall pay to Lender, unless otherwise agreed by Lender in writing, as
and when received by Borrowers and as a mandatory prepayment first of the Term
Loan A, then to the Term Loan B and then to the Capital Expenditure Loan or (i)
if the sale, loss, destruction or taking concerns the Georgia Real Estate, then
as a mandatory prepayment of the Term Loan B, or (ii) if the acquisition of the
particular item(s) of equipment were financed by a Capital Expenditure Loan,
then as a mandatory prepayment of the particular Capital Expenditure Loan, a sum
equal to the proceeds (including insurance payments) received by Borrowers from
such sale, loss, destruction or condemnation. Any such prepayments shall be
applied to the Term Loan A, Term Loan B, or any Capital Expenditure Loans, as
the case may be, in the inverse order of maturity of unpaid installments
(balloon installment first).
3.3.2 Excess Cash Flow Recapture. Borrowers shall prepay the Term
Loan (first against Term Loan A and then against Term Loan B) in an amount equal
to 50% of Consolidated Group's Excess Cash Flow with respect to each fiscal year
of Borrowers (commencing with the fiscal year ending December 31, 1999), during
the term hereof, such prepayments to be made no later than the earlier of (i)
April 15 of the immediately succeeding year or (ii) 5 Business Days after
Lender's receipt of Borrowers' audited financial statements as required under
Section 8.1.3(i). Any such prepayment of Term Loan A shall be applied pro rata
to the remaining unpaid installments of the Term Loan A. The total amount of any
Excess Cash Flow payment hereunder in any year shall not exceed $500,000.
3.3.3 LIBOR Rate Loans. No portion of the LIBOR Rate Loans may be
prepaid during a LIBOR Interest Period unless Borrowers first satisfy in full
their obligations under Section 2.9 arising from such prepayment.
3.4 Application of Payments and Collections. Subject to subsection 2.2 of
this Agreement, all items of payment received by Lender by 12:00 Noon Eastern
time, on any Business Day shall be deemed received on that Business Day. All
items of payment received after 12:00 Noon Eastern time, on any Business Day
shall be deemed received on the following Business Day.
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Until payment in full of all Obligations and termination of this Agreement,
Borrowers irrevocably waive (except as otherwise expressly provided for by this
Agreement) the right to direct the application of any and all payments and
collections at any time or times hereafter received by Lender from or on behalf
of Borrowers, and each Borrower does hereby irrevocably agree that Lender shall
have the continuing exclusive right to apply and reapply any and all such
payments and collections received at any time or times hereafter by Lender or
its agent against the Obligations, in such manner as Lender may deem advisable,
but in no event in contravention of the other express provisions of this
Agreement, notwithstanding any entry by Lender upon any of its books and
records. If, as the result of collections of Accounts as authorized by
subsection 6.2.6 hereof, a credit balance exists in the Loan Account, such
credit balance shall not accrue interest in favor of Borrowers, but shall be
available to Borrowers at any time or times for so long as no Default or Event
of Default exists. Lender may, at its option, offset such credit balance against
any of the Obligations upon and after the occurrence of an Event of Default.
3.5 All Loans to Constitute One Obligation. The Loans and all other
Obligations, as well as all covenants and undertakings hereunder shall
constitute one general joint and several obligation of Borrowers, and shall be
secured by Lender's Lien upon all of the Collateral.
3.6 Loan Account. Lender shall enter all Loans as debits to the Loan
Account and shall also record in the Loan Account all payments made by Borrowers
on any Obligations and all proceeds of Collateral which are finally paid to
Lender, and may record therein, in accordance with customary accounting
practice, other debits and credits, including interest and all charges and
expenses properly chargeable to Borrowers.
3.7 Statements of Account. Lender will account to Borrowers monthly with a
statement of Loans, charges and payments made pursuant to this Agreement, and
such account rendered by Lender shall be deemed final, binding and conclusive
upon Borrowers unless Lender is notified by Borrowers in writing to the contrary
within 30 Business Days of the date each accounting is mailed to Borrowers. Such
notice shall only be deemed an objection to those items specifically objected to
therein.
3.8 Agent for Borrowers - Each Borrower hereby appoints IGI as its agent
on behalf of each Borrower to make requests for loans and to make such interest
rate elections which by the terms of this Agreement may be requested or elected
by Borrowers, and any such request or election made by IGI shall constitute an
effective request or election hereunder notwithstanding any reference generally
to the "Borrowers" or any of them. Lender is authorized to rely on any such
request or election so made by IGI, and any such request or election so made
will be deemed to have been made by all Borrowers.
SECTION 4. TERM AND TERMINATION
4.1 Term of Agreement. Subject to Lender's right to cease making Loans to
Borrowers upon or after the occurrence, and during the continuance, of any
Default or Event of Default, this Agreement shall be in effect for a period of 5
years from the date hereof, through and including October ___, 2004 (the
"Original Term") and this Agreement shall automatically renew itself for
one-year periods thereafter (the "Renewal Terms") unless terminated as provided
in Section 4.2 hereof. Upon termination of this Agreement, Borrowers shall not
request and Lender shall not make any Loans.
4.2 Termination.
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4.2.1 Termination by Lender. Upon at least 90 days prior written
notice to Borrowers, Lender may terminate this Agreement as of the last day of
the Original Term or the then current Renewal Term and Lender may terminate this
Agreement without notice upon or after the occurrence, and during the
continuance, of an Event of Default.
4.2.2 Termination by Borrowers. Upon at least 90 days prior written
notice to Lender, Borrowers may, at their option, terminate this Agreement;
provided, however, no such termination shall be effective until Borrowers have
paid all of the Obligations in immediately available funds. Any notice of
termination given by Borrowers shall be irrevocable unless Lender otherwise
agrees in writing, and Lender shall have no obligation to make any Loans on or
after the termination date stated in such notice. Borrowers may elect to
terminate this Agreement in its entirety only. No section of this Agreement or
type of Loan available hereunder may be terminated singly.
4.2.3 Termination Charges. At the effective date of termination of
this Agreement for any reason (other than a termination under Section 4.2.1),
Borrowers shall pay to Lender (in addition to the then outstanding principal,
accrued interest and other charges owing under the terms of this Agreement and
any of the other Loan Documents) as liquidated damages for the loss of the
bargain and not as a penalty, an amount equal to (a) the greater of (i) the
Minimum Loan and (ii) the average aggregate loan balance during the preceding 12
months (or since the Closing if termination occurs in the first year after
Closing) times (b)(i) 3.0% if termination occurs during the first twelve-month
period of the Original Term; (ii) 2.0% if termination occurs during the second
twelve month period of the Original Term; and (iii) 1.0% if termination occurs
during the third twelve month period of the Original Term.
4.2.4 Effect of Termination. All of the Obligations shall be
immediately due and payable upon the termination date stated in any required
notice of termination of this Agreement. All undertakings, agreements,
covenants, warranties and representations of Borrowers contained in the Loan
Documents shall survive any such termination and Lender shall retain its Liens
in the Collateral and all of its rights and remedies under the Loan Documents
notwithstanding such termination until Borrowers have paid the Obligations to
Lender, in full, in immediately available funds, together with the applicable
liquidated damages charge under Section 4.2.3, if any. Notwithstanding the
payment in full of the Obligations, Lender shall not be required to terminate
its security interests in the Collateral unless, with respect to any loss or
damage Lender may incur as a result of dishonored checks or other items of
payment received by Lender from Borrowers or any Account Debtor and applied to
the Obligations, Lender shall, at its option, (i) have received a written
agreement, executed by Borrowers and by any Person whose loans or other advances
to Borrowers are used in whole or in part to satisfy the Obligations,
indemnifying Lender from any such loss or damage; or (ii) have retained such
monetary reserves and Liens on the Collateral for such period of time as Lender,
in its reasonable discretion, may deem necessary to protect Lender from any such
loss or damage.
SECTION 5. SECURITY INTERESTS
5.1 Security Interest in Collateral.
5.1.1 Grant of Security Interest. To secure the prompt payment and
performance to Lender of all of the Obligations of all of the Borrowers
hereunder, each Borrower hereby grants
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to Lender a continuing first Lien upon all of such Borrower's Property,
including all of the following Property and interests in Property of such
Borrower, whether now owned or existing or hereafter created, acquired or
arising and wheresoever located:
(i) Accounts;
(ii) Inventory;
(iii) Equipment;
(iv) General Intangibles;
(v) Fixtures;
(vi) Deposit Accounts;
(vii) Investment Property;
(viii) Chattel Paper;
(ix) Instruments;
(x) Documents;
(xi) All monies and other Property of any kind now or at any time or
times hereafter in the possession or under the control of Lender or a
bailee or Affiliate of Lender;
(xii) All books and records (including, without limitation, customer
lists, credit files, computer programs, print-outs, and other computer
materials and records) of such Borrowers pertaining to any of (i) through
(xi) above; and
(xiii) All accessions to, substitutions for and all replacements,
products and cash and non-cash proceeds of (i) through (xii) above,
including, without limitation, proceeds of and unearned premiums with
respect to insurance policies insuring any of the Collateral.
5.1.2 Georgia Real Estate. Notwithstanding anything to the contrary
contained in this Agreement, the Georgia Real Estate shall only secure the
prompt payment of the Term Loan B, and the performance of the obligations of the
Borrowers connected therewith.
5.2 Lien Perfection; Further Assurances. Borrowers shall execute such
UCC-1 financing statements as are required by the Code and such other
instruments, assignments or documents, including without limitation, original
motor vehicle certificates of title and trademark, patent and/or copyright
security documents, as may be necessary to perfect Lender's Lien upon any of the
Collateral and shall take such other action as may be required by applicable law
to perfect or to continue the perfection of Lender's Lien upon the Collateral.
Borrowers hereby authorize Lender to execute and file any such financing
statement on Borrowers' behalf. The parties agree that a carbon, photographic or
other reproduction of this Agreement shall be sufficient as a financing
statement and may be filed in any appropriate office in lieu thereof. At
Lender's request, Borrowers shall also promptly execute or cause to be executed
and shall deliver to Lender any and all
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documents, instruments and agreements reasonably deemed necessary by Lender to
give effect to or carry out the terms or intent of the Loan Documents.
5.3 Real Property.
5.3.1 Lien on Realty. Mortgages securing prompt payment and
performance of all of the Obligations of all of the Borrowers (or, in the case
of the Georgia Real Estate, securing the prompt payment of the Term Loan B, and
the performance of the obligations of the Borrowers connected therewith) shall
be executed by each Borrower, as applicable, in favor of Lender and shall be
duly recorded, at Borrowers' expense, in each office where such recording is
required to constitute a fully perfected Lien on the Real Property covered
thereby. Borrowers shall deliver to Lender, at Borrowers' expense, mortgagee
title insurance policies issued by a title insurance company satisfactory to
Lender, which policies shall be in form and substance satisfactory to Lender and
shall insure a valid first Lien in favor of Lender on the Real Property covered
thereby, subject only to those exceptions acceptable to Lender and its counsel.
Borrowers shall deliver to Lender such other documents, endorsements,
certificates, opinions and assurances, including, without limitation, current
survey prints and flood plain certificates of the Real Property, as Lender and
its counsel may request relating to the Real Property subject to the Mortgage.
SECTION 6. COLLATERAL ADMINISTRATION
6.1 General
6.1.1 Location of Collateral. All Collateral, other than Inventory
in transit and motor vehicles, will at all times be kept by Borrowers at one or
more of the business locations set forth in Schedule 6.1.1 hereto and shall not,
without the prior written approval of Lender, be moved therefrom except, during
the absence of an Event of Default, for (i) sales of Inventory in the ordinary
course of business; and (ii) removals in connection with dispositions of
Equipment that are authorized by subsection 6.4.2 hereof; and (iii) removals in
connection with returns thereof to vendors in the ordinary course of Borrowers'
business.
6.1.2 Insurance of Collateral. Borrowers shall maintain and pay for
insurance upon all Collateral wherever located and with respect to each
Borrower's business, covering casualty, hazard, public liability, flood and such
other risks in such amounts and with such insurance companies as i) have a
Best's rating of at least "A", and ii) are otherwise reasonably satisfactory to
Lender. Borrowers shall deliver copies of such policies to Lender with
satisfactory lender's loss payable endorsements, naming Lender as lender loss
payee, assignee, mortgagee or additional insured, as appropriate. Each policy of
insurance or endorsement shall contain a clause requiring the insurer to give
not less than 30 days prior written notice to Lender in the event of
cancellation of the policy for any reason whatsoever, a clause specifying that
the interest of Lender shall not be impaired or invalidated by any act or
neglect of Borrowers or the owner of the Property or by the occupation of the
premises for purposes more hazardous than are permitted by said policy and shall
provide that proceeds of any less or damage shall be payable to Lender. If
Borrowers fail to provide and pay for such insurance, Lender may, at its option,
but shall not be required to, procure the same and charge Borrowers therefor.
Borrowers agree to deliver to Lender, promptly as rendered, true copies of all
reports made in any reporting forms to insurance companies.
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6.1.3 Protection of Collateral. All expenses of protecting, storing,
warehousing, insuring, handling, maintaining and shipping the Collateral, any
and all excise, property, sales, and use taxes imposed by any state, federal, or
local authority on any of the Collateral or in respect of the sale thereof shall
be borne and paid by Borrowers. If Borrowers fail to promptly pay any portion
thereof when due, and Borrowers fail to immediately make such past due payment
after Lender requests, Lender may, at its option, but shall not be required to,
pay the same and charge Borrowers therefor. Lender shall not be liable or
responsible in any way for the safekeeping of any of the Collateral or for any
loss or damage thereto (except for reasonable care in the custody thereof while
any Collateral is in Lender's actual possession) or for any diminution in the
value thereof, or for any act or default of any warehouseman, carrier,
forwarding agency, or other person whomsoever, but the same shall be at
Borrowers' sole risk.
6.2 Administration of Accounts.
6.2.1 Records, Schedules and Assignments of Accounts. Each Borrower
shall keep accurate and complete records of its Accounts and all payments and
collections thereon and shall submit to Lender on such periodic basis as Lender
shall request a sales and collections report for the preceding period, in form
satisfactory to Lender. On or before the thirtieth day of each month from and
after the date hereof, Borrowers shall deliver to Lender, in form acceptable to
Lender, a detailed aged trial balance of all Accounts existing as of the last
day of the preceding month, specifying the names, addresses, face value, dates
of invoices and due dates for each Account Debtor obligated on an Account so
listed ("Schedule of Accounts"), and, upon Lender's request therefor, copies of
proof of delivery and the original copy of all documents, including, without
limitation, repayment histories and present status reports relating to the
Accounts so scheduled and such other matters and information relating to the
status of then existing Accounts as Lender shall reasonably request. In
addition, if Accounts in an aggregate face amount in excess of $50,000 become
ineligible because they fall within one of the specified categories of
ineligibility set forth in the definition of Eligible Accounts or otherwise
established by Lender, Borrowers shall notify Lender of such occurrence on the
first Business Day following such occurrence and the Borrowing Base shall
thereupon be adjusted to reflect such occurrence. During the continuance of an
Event of Default, Borrowers shall, if requested by Lender, execute and deliver
to Lender formal written assignments of all of its Accounts from time to time,
which shall include all Accounts that have been created since the date of the
last assignment, together with copies of invoices or invoice registers related
thereto.
6.2.2 Discounts, Allowances, Disputes. If any Borrower grants any
discounts, allowances or credits that are not shown on the face of the invoice
for the Account involved, Borrowers shall report such discounts, allowances or
credits, as the case may be, to Lender as part of the next required Schedule of
Accounts. If any amounts due and owing in excess of $50,000 are in dispute
between any Borrower and any Account Debtor, Borrowers shall provide Lender with
written notice thereof at the time of submission of the next Schedule of
Accounts, explaining in detail the reason for the dispute, all claims related
thereto and the amount in controversy. Upon an Event of Default, Lender shall
have the right to settle or adjust all disputes and claims directly with the
Account Debtor or obligor on any General Intangible and to compromise the amount
or extend the time for payment of any Accounts or General Intangibles upon such
terms and conditions as Lender may deem advisable, and to charge the
deficiencies, reasonable costs and expenses thereof, including reasonable
attorneys' fees, to Borrowers.
6.2.3 Taxes. If an Account includes a charge for any tax payable to
any governmental taxing authority, and such tax is not being actively contested
in good faith and by
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appropriate proceedings by Borrowers and Borrowers maintains reasonable reserves
on its books in accordance with GAAP, Lender is authorized (without any
obligation or duty on Lender's part), in its sole discretion, to pay the amount
thereof to the proper taxing authority for the account of Borrowers and to
charge Borrowers therefor, provided, however that Lender shall not be liable for
any taxes to any governmental taxing authority that may be due by Borrowers.
6.2.4 Account Verification. Whether or not a Default or an Event of
Default has occurred, any of Lender's officers, employees or agents shall have
the right, at any time or times hereafter, in the name of Lender, any designee
of Lender or any of the Borrowers, to verify the validity, amount or any other
matter relating to any Accounts by mail, telephone, telegraph or otherwise.
Borrowers shall cooperate fully with Lender in an effort to facilitate and
promptly conclude any such verification process.
6.2.5 Maintenance of Dominion Account. Borrowers shall maintain a
lockbox and Dominion Account, acceptable to Lender with such banks as may be
selected by Borrowers and be acceptable to Lender. Borrowers shall issue to any
such banks an irrevocable letter of instruction directing such banks to transfer
all funds received in the lockbox or Dominion Account to Lender for application
on account of the Obligations. All payments from Account Debtors shall be paid
directly into such lockbox. All funds deposited in the lockbox or Dominion
Account shall immediately become the property of Lender and Borrowers shall
obtain the agreement by such banks in favor of Lender to waive any offset rights
against the funds so deposited. Lender assumes no responsibility for such
arrangement, including, without limitation, any claim of accord and satisfaction
or release with respect to deposits accepted by any bank thereunder.
6.2.6 Collection of Accounts, Proceeds of Collateral. To expedite
collection, Borrowers shall endeavor in the first instance to make collection of
its Accounts. All remittances received by Borrowers on account of Accounts,
together with the proceeds of any other Collateral, shall be held as Lender's
property by Borrowers as trustee of an express trust for Lender's benefit and
Borrowers shall immediately deposit same in kind in the Dominion Account. Lender
retains the right, at all times after an Event of Default, to notify Account
Debtors that Accounts have been assigned to Lender and to collect Accounts
directly in its own name and to charge the collection costs and expenses,
including attorneys' fees to Borrowers. Lender has no duty to protect, insure,
collect or realize upon the Accounts or preserve rights therein.
6.3 Administration of Inventory.
6.3.1 Records and Reports of Inventory. Borrowers shall keep
accurate and complete records of its Inventory. Borrowers shall furnish to
Lender Inventory reports in form and detail satisfactory to Lender at such times
as Lender may request, but at least once each month, not later than the
thirtieth (30th) day after the end of each month. Borrowers shall conduct a
physical inventory at least once a year and shall provide to Lender a report
based on each such physical inventory not later than the twentieth day of the
following month, together with such supporting information as Lender shall
request.
6.3.2 Returns of Inventory. If at any time or times hereafter, any
Account Debtor returns any Inventory to any Borrower in an amount in excess of
$50,000, Borrowers shall immediately notify Lender of the same, specifying the
reason for such return and the location, condition and intended disposition of
the returned Inventory.
6.4 Administration of Equipment.
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6.4.1 Records and Schedules of Equipment. Each Borrower shall keep
accurate records itemizing and describing the kind, type, quality, quantity and
value of its Equipment and all dispositions made in accordance with subsection
6.4.2 hereof, and shall furnish Lender with a current schedule containing the
foregoing information on at least an annual basis and more often if requested by
Lender. Immediately on request therefor by Lender, Borrowers shall deliver to
Lender any and all evidence of ownership of the Equipment.
6.4.2 Dispositions of Equipment. Borrowers will not sell, lease or
otherwise dispose of or transfer any of the Equipment or any part thereof
without the prior written consent of Lender; provided, however, that the
foregoing restriction shall not apply, for so long as no Default or Event of
Default exists, to dispositions of Equipment in the ordinary course of
Borrowers' business (including dispositions of Equipment that is no longer
useful in Borrowers' business) or which, in the aggregate during any consecutive
twelve-month period, have a fair market value or book value, whichever is less,
of $50,000 or less; provided that all such proceeds (cash and non-cash) thereof
are in any event remitted to Lender for application in accordance with Section
3.3.1; or replacements of Equipment that is worn, damaged or obsolete with
Equipment of like function and value (as reasonably determined by Lender),
provided that the replacement Equipment shall be acquired prior to or
substantially concurrently with any disposition of the Equipment that is to be
replaced and the replacement Equipment shall be free and clear of Liens other
than Permitted Liens (that are not Purchase Money Liens, unless the Equipment
being replaced was previously subject to a Purchase Money Lien) and Borrowers
shall have given Lender at least 5 days prior written notice of such
disposition.
6.5 Payment of Charges. All amounts chargeable to Borrowers under Section
6 hereof shall be Obligations secured by all of the Collateral, shall be payable
on demand and shall bear interest from the date such advance was made until paid
in full at the highest rate applicable to Revolving Credit Loans from time to
time.
SECTION 7. REPRESENTATIONS AND WARRANTIES
7.1 General Representations and Warranties. To induce Lender to enter into
this Agreement and to make advances hereunder, each Borrower warrants,
represents and covenants to Lender that:
7.1.1. Organization and Qualification. Each Borrower and each of its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Each Borrower
and each of its Subsidiaries is duly qualified and is authorized to do business
and is in good standing as a foreign corporation in each state or jurisdiction
listed on Schedule 7.1.1 hereto and in all other states and jurisdictions where
the character of its Properties or the nature of its activities make such
qualification necessary, except such states and jurisdictions in which the
failure of such Borrowers or any of its Subsidiaries to be so qualified would
not be reasonably likely to have a Material Adverse Effect on the financial
condition, business or Properties of such Borrowers or any of its Subsidiaries.
7.1.2 Power and Authority. Each Borrower has full power and
authority to enter into, execute, deliver and perform this Agreement and each of
the other Loan Documents to which it is a party. The execution, delivery and
performance of this Agreement and each of the other Loan Documents have been
duly authorized by all necessary corporate action on the part of the Borrowers
and do not and will not (i) require any consent or approval (that has not been
obtained)
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of the Shareholders of any Borrower; (ii) contravene any Borrower's Charter,
Articles of Incorporation or by-laws; (iii) violate, or cause any Borrower to be
in default under, any provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award in effect having
applicability to any Borrower; (iv) result in a breach of or constitute a
default under any indenture or loan or credit agreement or any other agreement,
lease or instrument to which any Borrower is a party or by which any Borrower or
any of its Properties may be bound or affected; or (v) result in, or require,
the creation or imposition of any Lien upon or with respect to any of the
Properties now owned or hereafter acquired by any Borrower, except pursuant to
this Agreement.
7.1.3 Legally Enforceable Agreement. This Agreement is, and each of
the other Loan Documents when delivered under this Agreement will be, a legal,
valid and binding obligation of each Borrowers enforceable against it in
accordance with its respective terms.
7.1.4 Capital Structure. Schedule 7.1.4 hereto states (i) the
correct name of each of the domestic and foreign Subsidiaries of each Borrower,
its jurisdiction of incorporation and the percentage of its Voting Stock owned
by the applicable Borrower, (ii) the name of each Borrower's corporate or joint
venture Affiliates and the nature of the affiliation and the name and
jurisdiction of organization of any entities acting as representatives of any of
the Borrowers in any foreign country and the nature of the relationship, and
(iii) the number, nature and holder of all authorized, issued and outstanding
securities and treasury shares of each Borrower and each of its Subsidiaries
(publicly held shares may be listed generally). No Borrower has any
Subsidiaries other than those listed on Schedule 7.1.4. Except as disclosed on
Schedule 7.1.4, there are no outstanding options to purchase, or any rights or
warrants to subscribe for, or any commitments or agreements to issue or sell, or
any Securities or obligations convertible into, or any powers of attorney
relating to, capital stock of any Borrower or any of its Subsidiaries.
7.1.5 Corporate Names. No Borrower has been known as or used any
corporate, fictitious or trade names except those listed on Schedule 7.1.5
hereto. Except as set forth on Schedule 7.1.5, no Borrower has been the
surviving corporation of a merger or consolidation or acquired all or
substantially all of the assets of any Person.
7.1.6 Business Locations; Agent for Process. Each Borrower's chief
executive office and other places of business are as listed on Schedule 6.1.1
hereto. During the preceding one-year period, no Borrower has had an office,
place of business or agent for service of process other than as listed on
Schedule 6.1.1. Except as shown on Schedule 6.1.1, no Inventory is stored with a
bailee, warehouseman or similar party, nor is any Inventory consigned to any
Person.
7.1.7 Title to Properties; Priority of Liens. Each Borrower has
good, indefeasible and marketable title to and fee simple ownership of, or valid
and subsisting leasehold interests in, all of its Real Property, and good title
to all of the Collateral and all of its other Property, in each case, free and
clear of all Liens except Permitted Liens. Each Borrower has paid or discharged,
or reserved for, all lawful claims which, if unpaid, might become a Lien against
any Properties of any Borrower that is not a Permitted Lien. The Liens granted
to Lender under Section 5 hereof are first priority Liens, subject only to
Permitted Liens.
7.1.8 Accounts. Lender may rely, in determining which Accounts are
Eligible Accounts, on all statements and representations made by any Borrower
with respect to any Account or Accounts. Unless otherwise indicated in writing
to Lender, with respect to each Account:
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(i) It is genuine and in all respects what it
purports to be, and it is not evidenced by a judgment;
(ii) It arises out of a completed, bona fide sale and
delivery of goods or rendition of services by any Borrower in the ordinary
course of its business and in substantial compliance with the terms and
conditions of all purchase orders, contracts or other documents relating
thereto and forming a part of the contract between such Borrower and the
Account Debtor;
(iii) It is for a liquidated amount maturing as stated
in the duplicate invoice covering such sale or rendition of services, a
copy of which has been furnished or is available to Lender;
(iv) Such Account, and Lender's security interest
therein, is not, and will not (by voluntary act or omission of any
Borrower) be in the future, subject to any offset, Lien, deduction,
defense, dispute, counterclaim or any other adverse condition, and each
such Account is absolutely owing to a Borrower and is not contingent in
any respect or for any reason;
(v) No Borrower has made any agreement with any Account
Debtor thereunder for any extension, compromise, settlement or
modification of any such Account or any deduction therefrom, except
discounts which are granted by a Borrowers in the ordinary course of its
business for prompt payment or sales incentives and which are reflected in
the calculation of the net amount of each respective invoice related
thereto and are reflected in the Schedules of Accounts submitted to Lender
pursuant to subsection 6.2.1 hereof;
(vi) To the best of each Borrower's knowledge, there are
no facts, events or occurrences which in any way impair the validity or
enforceability of any Accounts or tend to reduce the amount payable
thereunder from the face amount of the invoice and statements delivered to
Lender with respect thereto;
(vii) To the best of each Borrower's knowledge, the
Account Debtor had the capacity to contract at the time any contract or
other document giving rise to the Account was executed; and
(viii) To the best of each Borrower's knowledge, there
are no proceedings or actions which are threatened or pending against any
Account Debtor thereunder which might result in any material adverse
change in such Account Debtor's financial condition or the collectibility
of such Account.
7.1.9 Equipment. The Equipment is in satisfactory operating
condition and repair, in light of its intended use, and all necessary
replacements of and repairs thereto shall be made so that such condition shall
be maintained and preserved, reasonable wear and tear excepted. No Borrower will
permit any material item of the Equipment to become affixed to any real Property
leased to any Borrower so that an interest arises therein under the real estate
laws of the applicable jurisdiction unless the landlord of such real Property
has executed a landlord waiver or leasehold mortgage in favor of and in form
acceptable to Lender, and no Borrower will permit any
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of the Equipment to become an accession to any personal Property other than
Equipment that is subject to first priority Liens in favor of Lender.
7.1.10 Financial Statements; Fiscal Year. The consolidated balance
sheets of Borrowers and such other Persons described therein as of August 31,
1999 and the related statements of income, changes in stockholder's equity, and
changes in financial position for the periods ended on such dates, present
fairly the financial positions of Borrowers and such other Persons at such dates
and the results of Borrowers' operations for such period. Since June 30, 1999,
there has been no material change in the condition, financial or otherwise, of
Borrowers and no change in the aggregate value of Equipment and real Property
owned by Borrowers, except changes in the ordinary course of business and the
transactions contemplated hereby, none of which individually or in the aggregate
has been materially adverse. The fiscal year of Borrowers and each of their
Subsidiaries ends on December 31st of each year.
7.1.11 Full Disclosure. The financial statements referred to in
subsection 7.1.10 hereof do not, nor does this Agreement or any other written
statement of any Borrower to Lender upon which Lender reasonably and materially
relied, contain any untrue statement of a material fact or, (when taken as a
whole with all other information submitted by Borrowers or made available to,
and reviewed by Lender), omit a material fact necessary to make the statements
contained therein or herein not misleading. There is no fact which Borrowers
have failed to disclose to Lender in writing which materially affects adversely
or, to Borrowers' knowledge, will materially affect adversely the Properties,
business, prospects, profits or condition (financial or otherwise) of any
Borrower or any of its Subsidiaries or the ability of any Borrower to perform
this Agreement or the other Loan Documents other than matters of a general
economic or political nature.
7.1.12 Solvent Financial Condition. Each Borrower and each of its
Subsidiaries is now and, after giving effect to the Loans to be made hereunder,
at all times will be, Solvent.
7.1.13 Surety Obligations. Except as set forth on Schedule 7.1.13
hereto, neither any Borrower nor any of its Subsidiaries is not obligated as
surety or indemnitor under any surety or similar bond or other contract issued
or entered into or any agreement to assure payment, performance or completion of
performance of any undertaking or obligation of any Person.
7.1.14 Taxes. Each Borrower's federal tax identification number is
shown on Schedule 7.1.14 hereto. Each Borrower and each of its Subsidiaries has
filed all federal, state and local tax returns and other reports each is
required by law to file and has paid, or made provision for the payment of, all
taxes, assessments, fees, levies and other governmental charges upon it, its
income and Properties as and when such taxes, assessments, fees, levies and
charges are due and payable, unless and to the extent any thereof are being
actively contested in good faith and by appropriate proceedings and Borrowers
maintain reasonable reserves on their books therefor in accordance with GAAP.
The provision for taxes on the books of Borrowers and their Subsidiaries is
adequate for all years not closed by applicable statutes, and for its current
fiscal year.
7.1.15 Brokers. There are no claims against any Borrower or any of
its Subsidiaries for brokerage commissions, finder's fees or investment banking
fees in connection with the transactions contemplated by this Agreement, except
for those owed by Borrowers to Berwind Financial, L.P. in the amount of
$659,684.00. Borrowers have made no commitment or contractual undertaking on
Lender's behalf concerning any brokerage commission, finder's fee or investment
banking fee to any Person and has no knowledge of any basis for any claim
against or liability of Lender for any such obligation.
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7.1.16 Patents, Trademarks, Copyrights and Licenses. Each Borrower
owns or possess all the patents, trademarks, service marks, trade names,
copyrights and licenses necessary for the present and planned future conduct of
its business without any known conflict with the rights of others. All such
patents, trademarks, service marks, tradenames, copyrights, licenses and other
similar rights are listed on Schedule 7.1.16 hereto.
7.1.17 Governmental Consents. Each Borrower and each of its
Subsidiaries has, and is in good standing with respect to, all governmental
consents, approvals, licenses, authorizations, permits, certificates,
inspections and franchises necessary to continue to conduct its business as
heretofore or proposed to be conducted by it and to own or lease and operate its
Properties as now owned or leased by it.
7.1.18. Compliance with Laws. Except as set forth on Schedule 7.1.18
hereto, each Borrower and each of its Subsidiaries has duly complied with, and
its Properties, business operations and leaseholds are in compliance in all
material respects with, the provisions of all federal, state and local laws,
rules and regulations applicable to any Borrower or any of its Subsidiaries, its
Properties or the conduct of its business and there have been no citations,
notices or orders of noncompliance issued to any Borrower or any of its
Subsidiaries under any such law, rule or regulation, in each case except where
such noncompliance would not have a material and adverse effect on any
Borrower's or any of its Subsidiaries' business, Property, financial condition
or prospects. Each Borrower and each of its Subsidiaries has established and
maintains an adequate monitoring system to ensure that it remains in compliance
with all federal, state and local laws, regulations and rules applicable to it.
No Inventory has been produced in violation of the Fair Labor Standards Act (29
U.S.C. Section 201 et seq.), as amended.
7.1.19 Restrictions. Neither any Borrower nor any of its Subsidiary
is a party or subject to any contract, agreement, or charter or other corporate
or partnership restriction, which materially and adversely affects its business
or the use or ownership of any of its Properties. Neither any Borrower nor any
of its Subsidiary is not a party or subject to any contract or agreement which
restricts its right or ability to incur Indebtedness, other than as set forth on
Schedule 7.1.19 hereto, none of which prohibit the execution of or compliance
with this Agreement or the other Loan Documents by any Borrower.
7.1.20 Litigation. Except as set forth on Schedule 7.1.20 hereto,
there are no actions, suits, proceedings or investigations pending or, to the
knowledge of any Borrower, threatened against or affecting any Borrower or any
of its Subsidiaries or the business, operations, Properties, prospects, profits
or condition of any Borrower or any of its Subsidiaries. Neither any Borrower
nor any of its Subsidiaries is in default with respect to any order, writ,
injunction, judgment, decree or rule of any court, governmental authority or
arbitration board or tribunal.
7.1.21 No Defaults. No event has occurred and no condition exists
which would, upon or after the execution and delivery of this Agreement or any
Borrower's performance hereunder, constitute a Default or an Event of Default.
Neither any Borrower nor any of its Subsidiaries is in default, and no event has
occurred and no condition exists which constitutes, or which with the passage of
time or the giving of notice or both would constitute, a default, in the payment
of any Indebtedness to any Person for Money Borrowed.
7.1.22 Leases. Schedule 7.1.22(a) hereto is a complete listing of
all capitalized leases of Borrowers and Schedule 7.1.22(b) hereto is a complete
listing of each operating lease of
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Borrowers. Borrowers are in full compliance in all material respects with all of
the terms of each of its respective capitalized and operating leases.
7.1.23 Pension Plans. Except as disclosed on Schedule 7.1.23 hereto,
neither any Borrower nor any of its Subsidiaries has a Plan. Each Borrower and
its Subsidiaries are in full compliance in all material respects with the
requirements of ERISA and the regulations promulgated thereunder with respect to
each Plan. No fact or situation that could reasonably be expected to result in a
material adverse change in the financial condition of any Borrower or any of its
Subsidiaries exists in connection with any Plan. Neither any Borrower nor any of
its Subsidiaries has any withdrawal liability in connection with a Multiemployer
Plan.
7.1.24 Trade Relations. There exists no actual or to the knowledge
of Borrowers, threatened termination, cancellation or limitation of, or any
modification or change in, the business relationship between any Borrower or any
of its Subsidiaries and any customer or any group of customers whose purchases
individually or in the aggregate are material to the business of any Borrower or
any of its Subsidiaries or with any material supplier, and there exists no
present condition or state of facts or circumstances which would materially
affect adversely any Borrower or any of its Subsidiaries or prevent any Borrower
or any of its Subsidiaries from conducting such business after the consummation
of the transactions contemplated by this Agreement in substantially the same
manner in which it has heretofore been conducted.
7.1.25 Labor Relations. Except as described on Exhibit 7.1.25
hereto, no Borrower is a party to any collective bargaining agreement. There are
no material grievances, disputes or controversies with any union or any other
organization of any Borrower's employees, or threats of strikes, work stoppages
or any asserted pending demands for collective bargaining by any union or
organization.
7.1.26 Year 2000 Compliance. Each Borrower and each of its
Subsidiaries have the reviewed the areas within their respective business and
operations which could be adversely affected by, and have developed and are
implementing and will complete installation, implementation and testing by
October 31, 1999 of a program to address on a timely basis, the risk that
certain computer applications used by each Borrower and its Subsidiaries may be
unable to recognize and perform properly date-sensitive functions involving
dates prior to and after December 31, 1999 (the "Year 2000 Problem"). The Year
2000 Problem is not reasonably expected to result in any Material Adverse
Effect.
7.1.27 Business and Assets of Subsidiaries. No Subsidiaries of any
Borrower (except for Subsidiaries which are Borrowers) possesses any assets or
property of any kind (including any Accounts) or conducts any business
(including billing accounts or receiving any cash or other payments from any
Account Debtor with respect to any Accounts). None of the entities listed on
Schedule 7.1.4 as representations of Borrowers in foreign countries possess any
assets or any property or conduct any business of any kind.
7.1.28 Leased Locations. All of the leased or rented locations of
the Borrowers, including all locations where Borrowers rent space for the
storage of Inventory, are used only for the storage and distribution of
Inventory, and none of any such locations contain any significant Fixtures (as
defined in the Code).
7.2 Continuous Nature of Representations and Warranties. Each
representation and warranty contained in this Agreement and the other Loan
Documents shall be continuous in nature
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and shall, in all material respects, remain accurate, complete and not
misleading at all times during the term of this Agreement, except for changes in
the nature of any Borrower's or its Subsidiaries' business or operations that
would render the information in any exhibit attached hereto either materially
inaccurate, incomplete or misleading, so long as Lender has consented to such
changes or such changes are expressly permitted or not prohibited by this
Agreement.
7.3 Survival of Representations and Warranties. All representations and
warranties of Borrowers contained in this Agreement or any of the other Loan
Documents shall survive the execution, delivery and acceptance thereof by Lender
and the parties thereto and the closing of the transactions described therein or
related thereto.
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS
8.1 Affirmative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender, each Borrower
covenants that, it shall:
8.1.1 Visits and Inspections. Permit representatives of Lender, from
time to time, as often as may be reasonably requested, but (if no Event of
Default is outstanding) only during normal business hours, to visit and inspect
the Properties of each Borrower and its Subsidiaries, audit and make extracts
from its books and records, and discuss with its officers, its employees and its
independent accountants, each Borrower's business and the business of its
Subsidiaries, assets, liabilities, financial condition, business prospects and
results of operations.
8.1.2 Notices. Promptly notify Lender in writing of the occurrence
of any Default or Event of Default or of any other event or the existence of any
fact which renders any representation or warranty in this Agreement or any of
the other Loan Documents inaccurate, incomplete or misleading in any material
respect. Such notice, in each case, shall specify the nature of the occurrence
or existence, and what action Borrowers are taking (or proposes to take) with
respect thereto.
8.1.3 Financial Statements. Keep, and cause each Subsidiary to keep
adequate records and books of account with respect to its business activities in
which proper entries are made reflecting all its financial transactions in
accordance with GAAP; and cause to be prepared and furnished to Lender the
following (all to be prepared on a consistent basis for Borrowers (without
including or giving effect to any Subsidiary which is not a Borrower)):
(i) not later than 90 days after the close of each fiscal year
of Borrowers, unqualified audited consolidated financial statements (for
all purposes in this Agreement, "financial statements" shall mean the
balance sheet, income statement and statement of cash flows of Borrowers)
of Borrowers and their Subsidiaries as of the end of such year, certified
by a firm of independent certified public accountants of recognized
standing selected by Borrowers but acceptable to Lender to have been
prepared in accordance with GAAP;
(ii) not later than 30 days after the end of each month,
unaudited interim consolidated financial statements of Borrowers as of the
end of such month and of the portion of Borrowers' fiscal year then
elapsed, each certified by the principal financial officer of Borrowers as
prepared on a basis consistent with Borrowers' past practices for
preparing financial statements and fairly presenting the financial
position and results of
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operations of Borrowers for such month subject only to year-end
adjustments, and except that all such statements need not contain notes;
(iv) promptly after the sending or filing thereof, as the case
may be, copies of any proxy statements, financial statements or reports
which any Borrower has sent to all of its shareholders and copies of any
regular, periodic and special reports or registration statements which any
Borrower files with the Securities and Exchange Commission or any
governmental authority which may be substituted therefor, or any national
securities exchange;
(v) promptly after the filing thereof, copies of any annual
report to be filed under ERISA in connection with each Plan; and
(vi) not later than 30 days after the end of each month,
accounts receivable aging schedule, accounts payable aging schedule, and
detailed inventory report;
(vi) such other data and information (financial and otherwise)
as Lender, from time to time, may reasonably request, bearing upon or
related to the Collateral, Borrowers' and their Subsidiaries financial
condition or results of operations.
Borrowers shall forward to Lender a copy of the accountants' letter
to Borrowers' management that is prepared in connection with such financial
statements described in clause (i) of this subsection 8.1.3 promptly upon
Borrowers' receipt thereof, but in no case later than April 30th of each year.
Concurrently with the delivery of the financial statements described in clauses
(i) and (ii) of this subsection 8.1.3, or more frequently if requested by
Lender, Borrowers shall cause to be prepared and furnished to Lender a
Compliance Certificate in the form of Exhibit E hereto executed by the principal
financial officer, the chief operating officer or the executive vice president
general counsel of Borrowers.
8.1.4 Landlord and Storage Agreements. Provide Lender with copies of
all leases and other material written agreements between any Borrower, and any
of its Subsidiaries, and any landlord or warehouseman which owns any premises at
which any Inventory or Equipment may, from time to time, be kept, as well as
waivers, in form and substance acceptable to Lender, from landlords and
warehousemen for any locations where Collateral is located as Lender reasonably
may require. It is understood that Lender may establish reserves under the
Borrowing Base to cover some or all of the Inventory or Equipment located at any
premises not owned by Borrowers for which a landlord's or warehousemen's waiver
has not been provided. For such purpose, a landlord's or warehouseman's waiver
shall be deemed to have been required at each location where Collateral will be
located.
8.1.5. Year 2000 Compliance. By October 31, 1999, take all action
necessary to assure that at all times the computer-based systems utilized by
each Borrower and its Subsidiaries are able to recognize and perform properly
date-sensitive functions involving dates prior to and after December 31, 1999.
At Lender's request, each Borrower shall provide to Lender assurance reasonably
satisfactory to Lender that the computer-based systems utilized by each Borrower
and its Subsidiaries are able to recognize and perform properly date sensitive
functions involving dates prior to and after December 31, 1999.
8.1.6 Projections. No later than 15 days prior to the end of each of
Borrowers' fiscal years, deliver to Lender Projections of Borrowers for the
forthcoming fiscal year, month by month, in form acceptable to Lender.
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8.2 Negative Covenants. During the term of this Agreement, and thereafter
for so long as there are any Obligations to Lender, unless Lender otherwise
agrees in writing, each Borrower covenants that it will not:
8.2.1 Mergers; Consolidations; Acquisitions. Merge or consolidate,
or permit any Subsidiary of any Borrower to merge or consolidate, with any
Person; nor acquire nor permit any of its Subsidiaries to acquire, all or any
substantial part of the Properties of any Person.
8.2.2 Loans. Make, or permit any of its Subsidiaries to make, any
loans or other advances of money to any Person. Notwithstanding the foregoing,
IGI shall be permitted to engage in transactions involving the cashless exercise
of stock options by any officers, directors and employees of any of the
Borrowers within any stock option plans approved by a vote of the majority of
the Board of Directors of any Borrower.
8.2.3 Total Indebtedness. Create, incur, assume, or suffer to exist,
or permit any of its Subsidiaries to create, incur, assume or suffer to exist,
any Indebtedness, except:
(i) Obligations owing to Lender;
(ii) accounts payable to trade creditors and current operating
expenses (other than for Money Borrowed) which are not aged more than
60 days from the due date, in each case incurred in the ordinary
course of business and paid within such time period, unless the same
are being actively contested in good faith and by appropriate and
lawful proceedings; and Borrowers shall have set aside such reserves,
if any, with respect thereto as are required by GAAP and deemed
adequate by Borrowers or such Subsidiary and its independent
accountants;
(iii) Obligations to pay Rentals permitted by subsection 8.2.11
and Capitalized Lease Obligations permitted under subsection 8.2.7;
(iv) Permitted Purchase Money Indebtedness;
(v) contingent liabilities arising out of endorsements of
checks and other negotiable instruments for deposit or collection in the
ordinary course of business;
(vi) subordinated obligations pursuant to the terms of the
Subordinated Debt Agreements;
(vii) the Glaxo Debt; and
(viii) obligations for deferred salary compensation owing to Dr.
Edward Hager, Chief Executive Officer of the Borrowers.
8.2.4 Affiliate Transactions. Except as set forth in Schedule 8.2.4
hereto, enter into, or be a party to, or permit any Subsidiary of Borrower to
enter into or be a party to, any transaction with any Affiliate of Borrower
(except for any transactions solely amongst the Borrowers).
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8.2.5 Limitation on Liens. Create or suffer to exist, or permit any
Subsidiary of a Borrower to create or suffer to exist, any Lien upon any of its
Property, income or profits, whether now owned or hereafter acquired, except:
(i) Liens at any time granted in favor of Lender;
(ii) Liens for taxes (excluding any Lien imposed pursuant to
any of the provisions of ERISA) not yet due, or being contested in the
manner described in subsection 7.1.14 hereto, but only if in Lender's
judgment such Lien does not adversely affect Lender's rights or the
priority of Lender's Lien in the Collateral;
(iii) Liens arising in the ordinary course of Borrowers'
business by operation of law or regulation, but only if payment in respect
of any such Lien is not at the time past due and such Liens do not, in the
aggregate, materially detract from the value of the Property of any
Borrower or any of its Subsidiaries or materially impair the use thereof
in the operation of Borrowers' business;
(iv) such existing Liens as appear on Schedule 8.2.5
hereto;
(v) Purchase Money Liens securing Permitted Purchase
Money Indebtedness;
(vi) Liens granted to American Capital under the Subordinated
Debt agreements subordinate to the Liens granted to Lender; and
(vii) such other Liens as Lender may hereafter approve in
writing.
8.2.6 Distributions. Declare or make or permit any Subsidiary of a
Borrower to declare or make, any Distributions, except for Distributions to any
Borrower by a Subsidiary of such Borrower.
8.2.7 Capital Expenditures. Make non-financed Capital Expenditures
(including, without limitation, incurrence of Capitalized Lease
Obligations),which, in the aggregate, as to Borrowers, exceed (i) $150,000
during the period from the Closing Date through December 31, 1999, and (ii)
$500,000 during any fiscal year of Borrowers, beginning with the fiscal year
commencing January 1, 2000.
8.2.8 Disposition of Assets. Sell, lease or otherwise dispose of, or
permit any Subsidiary of Borrowers to sell, lease or otherwise dispose of, its
Properties, including any disposition of Property as part of a sale and
leaseback transaction, to or in favor of any Person, except (i) sales of
Inventory in the ordinary course of business for so long as there has been no
acceleration of the Obligations; (ii) a transfer of Property to any Borrower by
a Subsidiary of such Borrower or (iii) dispositions expressly authorized by this
Agreement.
8.2.9 Issuance of Stock. Issue or permit any of its Subsidiaries to
issue, any additional interests in or shares of its capital stock, except for
issuances to (i)(x) American Capital pursuant to the Subordinated Debt Documents
of warrants to acquire interests in or shares of the capital stock of IGI, (y)
holders of such warrants from time to time of the capital stock of IGI, issuable
upon the exercise of such warrants; and (z) holders of securities under (and as
defined in) the Subordinated Debt Documents; and (ii) to officers, directors,
consultants and employees of any
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Borrower or any of its Subsidiaries who are holders of options outstanding on
the date of this Agreement and disclosed on Schedule 7.1.4, or of common stock
upon the exercise of such options, pursuant to any plan, agreement or
arrangement approved by a vote of a majority of the Board of Directors of any
Borrower.
8.2.10 Restricted Investment. Make or have, or permit any of its
Subsidiaries to make or have any Restricted Investment. Notwithstanding the
foregoing, IGI shall be permitted to retain its investments in Indovax Private
Limited, an Indian private company limited by shares, and in IMX Corporation, a
Utah corporation.
8.2.11 Leases. Become, or permit any of its Subsidiaries to become,
a lessee under any operating lease (other than a lease under which a Borrower is
lessor) of Property if the aggregate Rentals payable during any current or
future period of 12 consecutive months under the lease in question and all other
leases (other than leases that are represented by Capitalized Lease Obligations)
under which any Borrower is then lessee would exceed $250,000.00. The term
"Rentals" means, as of the date of determination, all payments which the lessee
is required to make by the terms of any lease.
8.2.12 Tax Consolidation. File or consent to the filing of any
consolidated income tax return with any Person other than the other Borrowers
and their Subsidiaries existing as of the date of this Agreement.
8.2.13 Business and Assets of Subsidiaries. Permit any of its
Subsidiaries which are not Borrowers to own or hold any Property (including
Accounts) or conduct any business (including billing any Accounts or receiving
payment with respect to any Accounts).
8.3 Specific Financial Covenants. During the term of this Agreement,
and thereafter for so long as there are any Obligations to Lender, Borrowers
covenants that Borrowers shall on a consolidated basis (without consideration
given to any Subsidiary which is not a Borrower) maintain the financial
covenants set forth on Schedule 8.3 hereto.
SECTION 9. CONDITIONS PRECEDENT
Notwithstanding any other provision of this Agreement or any of the
other Loan Documents, and without affecting in any manner the rights of Lender
under the other sections of this Agreement, Lender shall not be required to make
any Loan under this Agreement unless and until each of the following conditions
has been and continues to be satisfied:
9.1 Documentation. Lender shall have received, in form and substance
satisfactory to Lender and its counsel, a duly executed copy of this Agreement
and the other Loan Documents, together with such additional documents,
instruments and certificates as Lender and its counsel shall reasonably require
in connection therewith from time to time, all in form and substance
satisfactory to Lender and its counsel, including, without limitation, the
following:
(A) Copies of Borrowers' casualty insurance policies, together with
loss payable endorsements on Lender's standard form of Lender Loss Payee naming
Lender as lender loss payee and copies of Borrowers' liability insurance
policies, together with endorsements naming Lender as additional insured;
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(B) All landlords' waivers on all leased locations, and
warehousemen's waivers for other locations, at which Collateral is located as
Lender may reasonably require;
(C) Certified copies of (i) resolutions of each Borrower's Board of
Directors authorizing the execution and delivery of this Agreement and the Loan
Documents and the performance of all transactions contemplated hereby and
thereby on behalf of such Borrower, (ii) each Borrower's by-laws and any
amendments thereto and (iii) an incumbency certificate of each Borrower;
(D) Good standing certificates for each Borrower and each of its
Subsidiaries issued by the Secretary of State or other appropriate official of
such Borrower's or its Subsidiary's jurisdiction of incorporation, and each
jurisdiction where the conduct of such Borrower's or its Subsidiary's business
activities or the ownership of its Properties necessitated qualification, and a
certified copy of the Articles or Certificate of Incorporation for each Borrower
and each of its Subsidiaries, and any amendments thereto, certified by the
Secretary of State or other appropriate official of its jurisdiction of
incorporation;
(E) A closing certificate signed by the chief executive officer or
chief operating officer of Borrowers, dated as of the date hereof, stating that
(i) the representations and warranties set forth in Section 7 hereof are true
and correct on and as of such date, (ii) Borrowers are on such date in
compliance with all the terms and provisions set forth in this Agreement and
(iii) on such date no Default or Event of Default has occurred or is continuing;
(F) The Security Documents duly executed, accepted and acknowledged
by or on behalf of each of the signatories thereto;
(G) The Other Agreements duly executed and delivered by Borrowers;
(H) The favorable, written opinion of Borrowers' counsel, as to the
transactions contemplated by this Agreement and any of the other Loan Documents
and such other opinions as Lender may reasonably require;
(I) Written instruction from Borrowers directing the application of
proceeds of the initial Loans made pursuant to this Agreement, and an initial
Borrowing Base Certificate from Borrowers;
(J) Duly executed agreements establishing the lockbox and Dominion
Account;
(K) Payoff letters and lien releases from Borrowers' existing
institutional lenders;
(L) Receipt by Borrowers of at least $7,000,000 in subordinated
loans pursuant to the Subordinated Debt Agreements;
(M) Receipt of copies of the Subordinated Debt Agreements;
(N) UCC, state and federal tax lien and judgment searches;
(O) Payment of all fees and expenses owing hereunder;
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(P) All conditions set forth in Lender's commitment letter of July
9, 1999 issued to Borrowers have been satisfied or fulfilled (unless waived or
amended in writing by Lender in its sole discretion); and
(Q) Such other documents, instruments and agreements as Lender shall
reasonably request in connection with the foregoing matters.
9.2 No Default. No Default or Event of Default shall exist.
9.3 Other Loan Documents. Each of the conditions precedent set forth in
the other Loan Documents shall have been satisfied.
9.4 Availability. Lender shall have determined that immediately after
Lender has made the initial Loans contemplated hereby, and paid all closing
costs incurred in connection with the transactions contemplated hereby have been
paid, Aggregate Adjusted Availability on the Closing Date shall not be less than
$1,500,000.
9.5 No Litigation. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or to
obtain damages in respect of, or which is related to or arises out of this
Agreement, the other Loan Documents, or the consummation of the transactions
contemplated hereby or thereby.
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
10.1 Events of Default. The occurrence of one or more of the following
events shall constitute an "Event of Default":
10.1.1 Payment of Obligations. Borrowers shall fail to pay any
Obligations owing hereunder or under the Notes, or any other of the Obligations,
on the due date thereof (whether due at stated installment due date, or
maturity, on demand, upon acceleration, or otherwise).
10.1.2 Misrepresentations. Any representation, warranty or other
statement made or furnished to Lender by or on behalf of any Borrower or any
Subsidiary of any Borrower in this Agreement, any of the other Loan Documents or
any instrument, certificate or financial statement furnished in compliance with
or in reference thereto proves to have been false or misleading in any material
respect when made or furnished or when reaffirmed pursuant to Section 7.2
hereof.
10.1.3 Breach of Specific Covenants. Any Borrower shall fail or
neglect to perform, keep or observe any covenant contained in Sections 6.2,
8.1.1, 8.1.2, 8.1.3, 8.2 (except 8.2.3(iii))or 8.3 hereof on the date that such
Borrower is required to perform, keep or observe such covenant.
10.1.4 Breach of Other Covenants. Any Borrower shall fail or neglect
to perform, keep or observe any covenant contained in this Agreement (other than
a covenant which is dealt with specifically elsewhere in Section 10.1 hereof)
and the breach of such other covenant is not cured to Lender's satisfaction
within 10 days after the sooner to occur of any Borrower's receipt of
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notice of such breach from Lender or the date on which such failure or neglect
first becomes known to any officer of any Borrower.
10.1.5 Default Under Security Documents/Other Agreements. Any event
of default shall occur under, or any Borrower shall default in the performance
or observance of any term, covenant, condition or agreement contained in, any of
the Security Documents or the Other Agreements and such default shall continue
beyond any applicable grace period.
10.1.6 Other Defaults. There shall occur any default or event of
default on the part of any Borrower or any of its Subsidiaries under any
agreement, document or instrument to which any Borrower or any of its
Subsidiaries is a party or by which such Borrower or any of its Subsidiaries or
any of their Property is bound, creating or relating to any Indebtedness (other
than the Obligations) which singly or in the aggregate with any such other
Indebtedness is in excess of $50,000, if the holder of such Indebtedness would
be entitled to accelerate such Indebtedness in consequence of such event of
default or default;
10.1.7 Uninsured Losses. Any material loss, theft, damage or
destruction of any of the Collateral not fully covered (subject to such
deductibles as Lender shall have permitted) by insurance.
10.1.8 Adverse Changes. There shall occur any material adverse
change in the financial condition of any Borrower or its Subsidiaries, or
business prospects of any Borrower or its Subsidiaries, after giving effect to
the transactions contemplated hereby.
10.1.9 Insolvency and Related Proceedings. Any Borrower or any of
its Subsidiaries shall cease to be Solvent or shall suffer the appointment of a
receiver, trustee, custodian or similar fiduciary, or shall make an assignment
for the benefit of creditors, or any petition for an order for relief shall be
filed by or against any Borrower or any of its Subsidiaries under the Bankruptcy
Code (if against any Borrower or any of its Subsidiaries, the continuation of
such proceeding for more than 60 days, provided that nothing herein contained
shall compel Lender to make Revolving Credit Loans or prevent Lender from
seeking protection or relief from the court in any such proceeding), or any
Borrower shall make any offer of settlement, extension or composition to its
unsecured creditors generally.
10.1.10 Business Disruption; Condemnation. There shall occur a
cessation of a substantial part of the business of any Borrower or any of its
Subsidiaries for a period which significantly affects such Borrower's or such
Subsidiary's capacity to continue its business, on a profitable basis; or any
Borrower or any of its Subsidiaries shall suffer the loss or revocation of any
license or permit now held or hereafter acquired by such Borrower or any of its
Subsidiaries which is necessary to the continued or lawful operation of its
business; or any Borrower's or any of its Subsidiaries shall be enjoined,
restrained or in any way prevented by court, governmental or administrative
order from conducting all or any material part of its business affairs; or any
material lease or agreement pursuant to which such Borrower or any of its
Subsidiaries leases, uses or occupies any Property shall be canceled or
terminated prior to the expiration of its stated term and such cancellation or
termination will have a material adverse effect on such Borrower's or any of its
Subsidiaries' business, financial condition, Collateral or prospects; or any
material part of the Collateral shall be taken through condemnation or the value
of such Property shall be impaired in any material respect through condemnation.
10.1.11 Change of Control. The occurrence of a Change of
Control.
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10.1.12 ERISA. A Reportable Event shall occur which Lender, in its
sole discretion, shall determine in good faith constitutes grounds for the
termination by the Pension Benefit Guaranty Corporation of any Plan of any
Borrower or any of its Subsidiaries or for the appointment by the appropriate
United States district court of a trustee for any Plan of any Borrower or any of
its Subsidiaries, or if any Plan shall be terminated in a "distress termination"
pursuant to Section 4041(c) or any such trustee shall be requested or appointed,
or if any Borrowers is in "default" (as defined in Section 4219(c)(5) of ERISA)
with respect to payments to a Multiemployer Plan resulting from any Borrower's
or any of its Subsidiaries' complete or partial withdrawal from such Plan.
10.1.13 Challenge to Agreement. Any Borrower or any of its
Subsidiaries shall challenge or contest in any action, suit or proceeding the
validity or enforceability of this Agreement, or any of the other Loan
Documents, the legality or enforceability of any of the Obligations or the
perfection or priority of any Lien granted to Lender.
10.1.14 Criminal Actions or Forfeiture. Any Borrower or any of its
Subsidiaries shall be criminally indicted or convicted under any law or any
judicial or administrative proceeding is commenced that could lead to a
forfeiture of any material Property of any Borrower or any of its Subsidiaries
to any Governmental Authority.
10.1.15 Judgments. Any money judgments not covered by insurance
which are in excess of $50,000 and are not stayed pending appeal or any writ of
attachment or similar process is filed against any Borrower or any of its
Subsidiaries or their Property.
10.2 Acceleration of the Obligations. Without in any way limiting the
right of Lender to demand payment of any portion of the Obligations payable on
demand in accordance with Section 3.2 hereof, upon or at any time after the
occurrence and during the continuation of an Event of Default, all or any
portion of the Obligations shall, at the option of Lender and without
presentment, demand, protest or further notice by Lender, become at once due and
payable and Borrowers shall forthwith pay to Lender, the full amount of such
Obligations, provided, that upon the occurrence of an Event of Default specified
in subsection 10.1.9 hereof, all of the Obligations shall become automatically
due and payable without declaration, notice or demand by Lender.
10.3 Other Remedies. Upon and after the occurrence and during the
continuance of an Event of Default, Lender shall have and may exercise from time
to time the following rights and remedies (to the full extent permitted by
applicable law):
10.3.1 All of the rights and remedies of a secured party under the
Code or under other applicable law, and all other legal and equitable rights to
which Lender may be entitled, all of which rights and remedies shall be
cumulative and shall be in addition to any other rights or remedies contained in
this Agreement or any of the other Loan Documents, and none of which shall be
exclusive.
10.3.2 The right to take immediate possession of the Collateral, and
to (i) require Borrowers to assemble the Collateral, at Borrowers' expense, and
make it available to Lender at a place designated by Lender which is reasonably
convenient to both parties, and (ii) enter any premises where any of the
Collateral shall be located and to keep and store the Collateral on said
premises until sold (and if said premises be the Property of Borrowers,
Borrowers agree not to charge Lender for storage thereof).
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10.3.3 The right to sell or otherwise dispose of all or any
Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as may
be required by law, in lots or in bulk, for cash or on credit, all as Lender, in
its sole discretion, may deem advisable. Borrowers agree that 7 days prior
written notice to Borrowers of any public or private sale or other disposition
of Collateral shall be reasonable notice thereof, and such sale shall be at such
locations as Lender may designate in said notice. Lender shall have the right to
conduct such sales on Borrowers' premises, without charge therefor, and such
sales may be adjourned from time to time in accordance with applicable law.
Lender shall have the right to sell, lease or otherwise dispose of the
Collateral, or any part thereof, for cash, credit or any combination thereof,
and Lender may purchase all or any part of the Collateral at public or, if
permitted by law, private sale and, in lieu of actual payment of such purchase
price, may set off the amount of such price against the Obligations. The
proceeds realized from the sale of any Collateral may be applied, after Lender
obtains cleared funds, first to the costs, expenses and attorneys' fees incurred
by Lender in collecting the Obligations, in enforcing the rights of Lender under
the Loan Documents and in collecting, retaking, completing, protecting,
removing, storing, advertising for sale, selling and delivering any Collateral;
second to the interest due upon any of the Obligations; and third, to the
principal of the Obligations. If any deficiency shall arise, Borrowers shall
remain liable to Lender therefor.
10.3.4 Lender is hereby granted a license or other right to use,
without charge, each Borrower's labels, patents, copyrights, rights of use of
any name, trade secrets, tradenames, trademarks and advertising matter, or any
Property of a similar nature, as it pertains to the Collateral, in advertising
for sale and selling any Collateral and each Borrower's rights under all
licenses and all franchise agreements shall inure to Lender's benefit.
10.3.5 Lender may, at its option, reduce or modify the Borrowing
Base, or any portion thereof or the advance rates or to take additional reserves
in the Borrowing Base.
10.4 Remedies Cumulative; No Waiver. All covenants, conditions,
provisions, warranties, guaranties, indemnities, and other undertakings of
Borrowers contained in this Agreement and the other Loan Documents, or in any
document referred to herein or contained in any agreement supplementary hereto
or in any schedule given to Lender or contained in any other agreement between
Lender and Borrowers, heretofore, concurrently, or hereafter entered into, shall
be deemed cumulative to and not in derogation or substitution of any of the
terms, covenants, conditions, or agreements of Borrowers herein contained. The
failure or delay of Lender to require strict performance by Borrowers of any
provision of this Agreement or to exercise or enforce any rights, Liens, powers,
or remedies hereunder or under any of the aforesaid agreements or other
documents or security or Collateral shall not operate as a waiver of such
performance, Liens, rights, powers and remedies, but all such requirements,
Liens, rights, powers, and remedies shall continue in full force and effect
until all Loans and all other Obligations owing or to become owing from
Borrowers to Lender shall have been fully satisfied. None of the undertakings,
agreements, warranties, covenants and representations of Borrowers contained in
this Agreement or any of the other Loan Documents and no Event of Default by
Borrowers under this Agreement or any other Loan Documents shall be deemed to
have been suspended or waived by Lender, unless such suspension or waiver is by
an instrument in writing specifying such suspension or waiver and is signed by a
duly authorized representative of Lender and directed to Borrowers.
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SECTION 11. MISCELLANEOUS
11.1 Power of Attorney. Each Borrower hereby irrevocably designates,
makes, constitutes and appoints Lender (and all Persons designated by Lender) as
such Borrower's true and lawful attorney (and agent-in-fact) and Lender, or
Lender's agent, may, without notice to such Borrower and in either such
Borrower's or Lender's name, but at the cost and expense of Borrowers:
11.1.1 At any time and from time to time as Lender or said agent, in
its sole discretion, may determine, endorse any Borrower's name on any checks,
notes, acceptances, drafts, money orders or any other evidence of payment or
proceeds of the Collateral which come into the possession of Lender or under
Lender's control.
11.1.2 At such time or times during the existence of an Event of
Default as Lender or its agent in its sole discretion may determine: (i) demand
payment of the Accounts from the Account Debtors, enforce payment of the
Accounts by legal proceedings or otherwise, and generally exercise all of each
Borrower's rights and remedies with respect to the collection of the Accounts;
(ii) settle, adjust, compromise, discharge or release any of the Accounts or
other Collateral or any legal proceedings brought to collect any of the Accounts
or other Collateral; (iii) sell or assign any of the Accounts and other
Collateral upon such commercially reasonable terms, for such amounts and at such
time or times as Lender deems advisable; (iv) take control, in any manner, of
any item of payment or proceeds relating to any Collateral; (v) prepare, file
and sign any Borrower's name to a proof of claim in bankruptcy or similar
document against any Account Debtor or to any notice of lien, assignment or
satisfaction of lien or similar document in connection with any of the
Collateral; (vi) receive, open and dispose of all mail addressed to any Borrower
and to notify postal authorities to change the address for delivery thereof to
such address as Lender may designate; (vii) endorse the name of any Borrower
upon any of the items of payment or proceeds relating to any Collateral and
deposit the same to the account of Lender on account of the Obligations; (viii)
endorse the name of any Borrower upon any chattel paper, document, instrument,
invoice, freight bill, bill of lading or similar document or agreement relating
to the Accounts, Inventory and any other Collateral; (ix) use any Borrower's
stationery and sign the name of any Borrower to verifications of the Accounts
and notices thereof to Account Debtors; (x) use the information recorded on or
contained in any data processing equipment and computer hardware and software
relating to the Accounts, Inventory, Equipment and any other Collateral; (xi)
make and adjust claims under policies of insurance; and (xii) do all other acts
and things necessary, in Lender's determination, to fulfill Borrowers'
obligations under this Agreement.
11.2 Indemnity. Each Borrower hereby agrees to indemnify Lender and hold
Lender harmless from and against any liability, loss, damage, suit, action or
proceeding ever suffered or incurred by Lender (including attorneys' fees and
legal expenses) (collectively "Losses") as the result of any Borrower's failure
to observe, perform or discharge Borrowers' duties hereunder or of any claim or
claim of any creditor or shareholder of any Borrower against Lender. In
addition, Borrowers shall defend Lender against and save it harmless from all
claims of any Person with respect to the Collateral. Without limiting the
generality of the foregoing, these indemnities shall extend to any claims
asserted against Lender by any Person under any Environmental Laws or similar
laws by reason of any action, conduct, inaction or omission by any Borrower or
any Borrower's or any other Person's failure to comply with laws applicable to
solid or hazardous waste materials or other toxic substances. Notwithstanding
any contrary provision in this Agreement, the obligation of Borrowers under this
Section 11.2 shall survive the payment in full of the Obligations
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and the termination of this Agreement. Notwithstanding anything to the contrary
in this subsection 11.2, Borrowers shall not be liable to indemnify Lender for
any Losses or claims incurred as result of Lender's gross negligence or wilful
misconduct.
11.3 Modification of Agreement; Sale of Interest. This Agreement may not
be modified, altered or amended, except by an agreement in writing signed by
Borrowers and Lender. Borrowers may not sell, assign or transfer any interest in
this Agreement, any of the other Loan Documents, or any of the Obligations, or
any portion thereof, including, without limitation, Borrowers' rights, title,
interests, remedies, powers, and duties hereunder or thereunder. Borrowers
hereby consent to Lender's participation, sale, assignment, transfer or other
disposition, at any time or times hereafter, of this Agreement and any of the
other Loan Documents, or of any portion hereof or thereof, including, without
limitation, Lender's rights, title, interests, remedies, powers, and duties
hereunder or thereunder. In the case of an assignment, the assignee shall have,
to the extent of such assignment, the same rights, benefits and obligations as
it would if it were "Lender" hereunder and Lender shall be relieved of all
obligations hereunder upon (but only to the extent of) any such assignments. In
the case of a participation, Lender shall not be relieved of its obligations to
make Revolving Credit Loans and Capital Expenditure Loans and shall retain the
sole right and responsibility to enforce the obligations of Borrowers hereto.
Any participation agreement with a Participating Lender may provide that Lender
will not agree to any amendment of this Agreement if such amendment would reduce
the principal of, or rate of interest on, the Loans, or postpone the date fixed
for any scheduled payment of principal or interest without the consent of such
Participating Lender. Borrowers agree that they will use their best efforts to
assist and cooperate with Lender in any manner reasonably requested by Lender to
effect the sale of participations in or assignments of any of the Loan Documents
or any portion thereof or interest therein, including, without limitation,
assisting in the preparation of appropriate disclosure documents. Borrowers
further agree that Lender may disclose credit information regarding Borrowers to
any potential participant or assignee, subject to the terms and provisions of
Section 11.14 below.
11.4 Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
11.5 Successors and Assigns. This Agreement, the Other Agreements and the
Security Documents shall be binding upon and inure to the benefit of the
successors and assigns of Borrowers and Lender permitted under Section 11.3
hereof.
11.6 Cumulative Effect; Conflict of Terms. The provisions of the Other
Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except as otherwise provided in Section 3.2 hereof
and except as otherwise provided in any of the other Loan Documents by specific
reference to the applicable provision of this Agreement, if any provision
contained in this Agreement is in direct conflict with, or inconsistent with,
any provision in any of the other Loan Documents, the provision contained in
this Agreement shall govern and control.
11.7 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which counterparts taken together shall constitute but one and the
same instrument.
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11.8 Notice. Except as otherwise provided herein, all notices, requests
and demands to or upon a party hereto, to be effective, shall be in writing and
shall be sent by certified or registered mail, return receipt requested, by
personal delivery against receipt, by overnight courier or by facsimile and,
unless otherwise expressly provided herein, shall be deemed to have been validly
served, given or delivered immediately when delivered against receipt, one
Business Day after deposit in the mail, postage prepaid, or with an overnight
courier or, in the case of facsimile notice, when sent, addressed as follows:
If to Lender: Fleet Capital Corporation
200 Glastonbury Boulevard
Glastonbury, CT 06033
Attention: Northeast Loan Administration Manager
Facsimile No.: 860-657-7759
With a copy to: Blank Rome Comisky & McCauley LLP
One Logan Square
Philadelphia, PA 19103
Attention: Harvey I. Forman, Esquire
Facsimile No.: 215-569-5522
If to Borrowers:
c/o IGI, Inc.
Wheat Road and Lincoln Avenue
Buena, NJ 08310
Attention: Chairman
Facsimile No. 609-697-2259
With a copy to:
Hale and Dorr LLP
60 State Street
Boston, MA 02104
Attention: C. Hall Swaim, Esquire
Paul P. Broutas, Esquire
Facsimile No. 617-526-5000
or to such other address as each party may designate for itself by notice given
in accordance with this Section 11.8; provided, however, that any notice,
request or demand to or upon Lender pursuant to subsections 2.1.1., 2.1.2, 3.1.1
or 4.2.2 hereof shall not be effective until received by Lender.
11.9 Lender's Consent. Whenever Lender's consent is required to be
obtained under this Agreement, any of the Other Agreements or any of the
Security Documents as a condition to any action, inaction, condition or even
(unless such agreement otherwise expressly provides), Lender shall be authorized
to give or withhold such consent in its sole and absolute discretion and to
condition its consent upon the giving of additional collateral security for the
Obligations, the payment of money or any other matter.
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11.10 Credit Inquiries. Borrowers hereby authorize and permit Lender to
respond to usual and customary credit inquiries from third parties concerning
Borrowers. Lender shall endeavor to notify Borrowers of the inquiry as soon as
possible after such inquiry has been made.
11.11 Time of Essence. Time is of the essence of this Agreement, the Other
Agreements and the Security Documents.
11.12 Entire Agreement. This Agreement and the other Loan Documents,
together with all other instruments, agreements and certificates executed by the
parties in connection therewith or with reference thereto, embody the entire
understanding and agreement between the parties hereto and thereto with respect
to the subject matter hereof and thereof and supersede all prior agreements,
understandings and inducements, whether express or implied, oral or written.
11.13 Interpretation. No provision of this Agreement or any of the other
Loan Documents shall be construed against or interpreted to the disadvantage of
any party hereto by any court or other governmental or judicial authority by
reason of such party having or being deemed to have structured or dictated such
provision.
11.14 Information and Confidentiality. Lender agrees to keep confidential
any information furnished or made available to it by Borrowers pursuant to this
Agreement that is marked confidential; provided that nothing herein shall
prevent Lender from disclosing such information (a) to any Affiliate of Lender,
or any officer, director, employee, attorney, agent, or advisor of Lender or any
Affiliate of Lender, provided that any such Person shall agree to be bound by
the same requirements to keep information confidential as are contained in this
Section, (b) to any other Person if reasonably incidental to the administration
of the credit facilities provided herein, provided that any such Person shall
agree to be bound by the same requirements to keep information confidential as
are contained in this Section, (c) as required by any law, rule, or regulation,
(d) upon the order of any court or administrative agency, (e) upon the request
or demand of any regulatory agency or authority, (f) that is or becomes
available to the public or that is or becomes available to Lender or any of its
Affiliates other than as a result of a disclosure by Lender or any of its
Affiliates prohibited by this Agreement, (g) in connection with any litigation
to which Lender or any of its Affiliates may be a party, (h) to the extent
necessary in connection with the exercise of any remedy under this Agreement or
any other Loan Document, (i) subject to provisions substantially similar to
those contained in this Section 11.14 to any actual or proposed participant or
assignee and (j) to Gold Sheets and other bank trade publications, such
information to consist of deal terms and other information customarily found in
such publications.
11.15 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN NEGOTIATED,
EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN PHILADELPHIA,
PENNSYLVANIA. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE PENNSYLVANIA; PROVIDED, HOWEVER, THAT IF ANY OF THE
COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN NEW YORK, THE LAWS OF
SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR FORECLOSURE
OF LENDER'S LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT OF LENDER'S OTHER
REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH
JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF PENNSYLVANIA.
AS PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY
PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF ANY BORROWER OR
LENDER, EACH BORROWER HEREBY CONSENTS AND AGREES THAT THE COURTS OF STATE OF
PENNSYLVANIA OR, AT LENDER'S OPTION, THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF PENNSYLVANIA, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY
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CLAIMS OR DISPUTES BETWEEN ANY BORROWER(S) AND LENDER PERTAINING TO THIS
AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT. EACH
BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY
ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH BORROWER HEREBY WAIVES ANY
OBJECTION WHICH SUCH BORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF
SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH
BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER
PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH
SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
RETURN RECEIPT REQUESTED ADDRESSED TO SUCH BORROWER AT THE ADDRESS SET FORTH IN
THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
EARLIER OF SUCH BORROWER'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER
DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT
SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF LENDER TO SERVE LEGAL PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY LENDER
OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION
UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR
JURISDICTION.
11.16 WAIVERS BY BORROWERS. EACH BORROWER WAIVES (I) THE RIGHT TO TRIAL BY
JURY (WHICH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS,
THE OBLIGATIONS OR THE COLLATERAL: (II) PRESENTMENT, DEMAND AND PROTEST AND
NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE,
COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER,
ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS CHATTEL PAPER AND GUARANTIES
AT ANY TIME HELD BY LENDER ON WHICH SUCH BORROWER MAY IN ANY WAY BE LIABLE AND
HEREBY RATIFIES AND CONFIRMS WHATEVER LENDER MAY DO IN THIS REGARD EXCEPT FOR
LENDER'S WILFUL MISCONDUCT OR GROSS NEGLIGENCE; (III) EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED BY THIS AGREEMENT, NOTICE PRIOR TO TAKING POSSESSION OR
CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY
COURT PRIOR TO ALLOWING LENDER TO EXERCISE ANY OF LENDER'S REMEDIES; (IV) THE
BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS; AND (V) NOTICE OF
ACCEPTANCE HEREOF. EACH BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A
MATERIAL INDUCEMENT TO LENDER'S ENTERING INTO THIS AGREEMENT AND THAT LENDER IS
RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH BORROWERS. EACH
BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH
ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties to this Loan and Security Agreement,
intending to be legally bound, have duly executed this Agreement on the day and
year specified at the beginning of this Agreement.
IGI, INC.
By: /s/ Manfred Hanuschek
___________________________
Name: Manfred Hanuschek
_______________________
Title: CFO
________________________
IGEN, INC.
By: /s/ Manfred Hanuschek
__________________________
Name: Manfred Hanuschek
_______________________
Title: CFO
________________________
IMMUNOGENETICS, INC.
By: /s/ Manfred Hanuschek
__________________________
Name: Manfred Hanuschek
_______________________
Title: CFO
________________________
BLOOD CELLS, INC.
By: /s/ Manfred Hanuschek
__________________________
Name: Manfred Hanuschek
_______________________
Title: CFO
________________________
FLEET CAPITAL CORPORATION
By: /s/ Walter Schuppe
___________________________
Name: Walter Schuppe
________________________
Title: CFO
_________________________
S - 1
43
APPENDIX A
GENERAL DEFINITIONS
When used in the Loan and Security Agreement dated as of October 29, 1999,
by and between Fleet Capital Corporation and IGI, Inc., IGEN, Inc.,
ImmunoGenetics, Inc. and Blood Cells, Inc. the following terms shall have the
following meanings (terms defined in the singular to have the same meaning when
used in the plural and vice versa):
Account Debtor - any Person who is or may become obligated under or
on account of an Account, Chattel Paper, Instrument, Document or General
Intangible.
Accounts - collectively, all Accounts, whether now owned or
hereafter created or acquired by any Borrower or in which any Borrower now
has or hereafter acquired any interest.
Adjusted LIBOR Rate - For any LIBOR Interest Period, as applied to
either a Revolving Credit LIBOR Rate Loan or Term LIBOR Rate Loan the rate
per annum (rounded upwards, if necessary to the next 1/16 of 1%)
determined pursuant to the following formula:
Adjusted Libor Rate = Libor Rate
---------------------------
(1.00 - Reserve Percentage)
For purposes hereof, "Libor Rate" shall mean the arithmetic average of the
rates of interest per annum (rounded upwards, if necessary to the next
1/16 of 1%) at which Bank is offered deposits of United States Dollars in
the interbank eurodollar loan market on or about 2:00 P.M. New York time
two (2) Business Days prior to the commencement of such LIBOR Interest
Period on amounts substantially equal to the Revolving Credit LIBOR Rate
Loan or Term LIBOR Rate Loan as to which Borrowers may elect the Adjusted
LIBOR Rate to be applicable with a maturity of comparable duration to the
LIBOR Interest Period selected by Borrowers for such Revolving Credit
LIBOR Rate Loan or Term LIBOR Rate Loan.
Adjusted Net Earnings From Operations - with respect to any fiscal
period, means the net earnings (or pre-tax loss) as reflected on the
financial statements of Borrowers supplied to Lender pursuant to
subsection 8.1.3 of the Agreement, but excluding:
(i) any gain or loss arising from the sale of
capital assets;
(ii) any gain arising from any write-up of assets;
(iii) earnings of any Subsidiary of any of the Borrowers
accrued prior to the date it became a Subsidiary;
(iv) earnings of any corporation, substantially all the
assets of which have been acquired in any manner by any of the
Borrowers, realized by such corporation prior to the date of such
acquisition;
(v) net earnings of any business entity (other than a
Subsidiary of any Borrower) in which any of the Borrowers has an
ownership interest unless such net earnings shall have actually been
received by any of the Borrowers in the form of cash distributions;
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(vi) any portion of the net earnings of any Subsidiary of any of
the Borrowers which for any reason is unavailable for payment of
dividends to any of the Borrowers;
(vii) the earnings of any Person to which any assets of any of
the Borrowers shall have been sold, transferred of disposed of, or
into which any of the Borrowers shall have merged, or been a party to
any consolidation or other form of reorganization, prior to the date
of such transaction;
(viii) any gain arising from the acquisition of any Securities of
any of the Borrowers; and
(ix) any gain arising from extraordinary or non-recurring items.
Adjusted Tangible Net Worth - at any date means a sum equal to:
(i) the net book value (after deducting related depreciation,
obsolescence, amortization, valuation, and other proper reserves) at
which the assets of a Person would be shown on a balance sheet at such
date in accordance with GAAP, minus
(ii) the amount at which such Person's liabilities (other than
Subordinated Debt, capital stock and surplus), and including as
liabilities all reserves for contingencies and other potential
liabilities, all as would be shown on such balance sheet in accordance
with GAAP; minus
(iii) prepaid assets, deferred assets, deposits, prepaid
expenses, miscellaneous current assets, and assets which would be
considered intangible assets under GAAP.
Affiliate - With respect to any Person, any other Person (other than a
Subsidiary): (i) which directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common control
with, such Person; (ii) which beneficially owns or holds 10% or more of any
class of the Voting Stock (or in the case of a Person which is not a
corporation, 10% or more of the equity interest) of such Person; or (iii)
10% or more of the Voting Stock (or in the case of a Person which is not a
corporation,10% or more of the equity interest) of which is beneficially
owned or held by such Person or a Subsidiary of such Person.
Agreement - the Loan and Security Agreement referred to in the first
sentence of this Appendix A, all Exhibits and Schedules thereto and this
Appendix A as each of the same may be amended, modified, renewed, extended,
replaced, restated or substituted from time to time.
Aggregate Adjusted Availability - an amount equal to the Borrowing
Base less the sum of (i) the amount of Revolving Credit Loans then
outstanding and requested to be made as of the date of calculation
thereof, plus (ii) all sums due and owing to trade creditors which remain
outstanding beyond normal terms or any special terms granted in writing by
Borrowers' trade creditors, plus (iii) any reserves against the Borrowing
Base, plus (iv) as to any calculation on the Closing Date, transaction
fees, costs and expenses.
American Capital - American Capital Strategies, Ltd.
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Authorized Representative - as defined in Section 3.1.1.
Availability - the amount of money which Borrowers are entitled to
borrow from time to time as Revolving Credit Loans, such amount being the
difference derived when the sum of the principal amount of Revolving
Credit Loans then outstanding (including any amounts which Lender may have
paid for the account of Borrowers pursuant to any of the Loan Documents
and which have not been reimbursed by Borrowers) is subtracted from the
Borrowing Base. If the amount outstanding is equal to or greater than the
Borrowing Base, Availability is 0.
Bank - Fleet National Bank, or such other bank as Lender may
hereafter designate.
Base Rate - the rate of interest announced or quoted by Bank from
time to time as its base rate for commercial loans, whether or not such
rate is the lowest rate charged by Bank to its most preferred borrowers;
and, if such base rate for commercial loans is discontinued by Bank as a
standard, a comparable reference rate designated by Bank as a substitute
therefor shall be the Base Rate.
Base Rate Loans - collectively, all Revolving Credit Base Rate Loans
and Term Base Rate Loans.
Borrowing Base - as at any date of determination thereof, an amount
equal to the lesser of:
(i) The Revolving Facility Limit; or
(ii) the then applicable Formula Availability.
Borrowing Base Certificate - the certificate signed by the
chief executive officer or chief financial officer of Borrowers showing
the status of Borrowers' Accounts and Inventory, outstanding Revolving
Credit Loans and other information in the form of Exhibit A to the
Agreement.
Business Day - any day excluding Saturday, Sunday and any day which
is a legal holiday under the laws of the State of Connecticut or is a day
on which banking institutions located in such state are closed.
Capital Expenditures - cash expenditures made for the acquisition of
any fixed assets or improvements, replacements, substitutions or additions
thereto which have a useful life of more than one year, including without
limitation the total principal portion of Capitalized Lease Obligations
excluding expenditures for the replacement of any assets leased under a
Capitalized Lease Obligation in connection with a casualty or loss
thereof.
Capital Expenditure Loans - the Loans described in Subsection 1.3 of
the Agreement.
Capital Expenditure Loan Note - the secured promissory note to be
executed by Borrowers on the Closing Date in favor of Lender to evidence
Borrowers' obligation to pay the Capital Expenditure Loans which shall be
in the form of Exhibit B to the Agreement.
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Capitalized Lease Obligation - any Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.
Change of Control - (i) the management of any of the Borrowers shall
cease to be reasonably satisfactory to Lender; (ii) any Person (other than
Borrowers or their Subsidiaries), together with members of any such
individual Person's immediate family and any trusts for the benefit of
such Person, or for the benefit of any such Person's immediate family and
any corporation controlled by such Person, or by the immediately family of
any such individual Person owns, legally or beneficially, more than 50% of
the Voting Stock of IGI; (iii) any transaction or series of related
transactions resulting in the sale, transfer, assignment or other
conveyance or disposition of any capital stock or any rights therein of
IGI by any holder(s) representing in the aggregate more than 50% of the
issued and outstanding capital stock; or (iv) IGI shall cease to own 100%
of the capital stock of any of IGEN, ImmunoGenetics or Blood Cells.
Closing Date - the date on which all of the conditions precedent in
Section 9 of the Agreement are satisfied and the initial Loan is made or
issued under the Agreement.
Code - the Uniform Commercial Code as adopted and in force in the
Commonwealth of Pennsylvania and as from time to time in effect.
Collateral - all of the Property and interests in Property of the
Borrowers described in Section 5 of the Agreement, and all other Property
of the Borrowers and interests in Property that now or hereafter secure
the payment and performance of any of the Obligations.
Consolidated - the consolidation in accordance with GAAP of the
accounts or other items as to which such term applies.
Consolidated Group - IGI and its consolidated Subsidiaries,
including each Borrower.
Credit Facility - the Revolving Credit Facility, the Term Loan and
all Capital Expenditure Loans.
Current Assets - at any date means the amount at which all of the
current assets of a Person would be properly classified as current assets
shown on a balance sheet at such date in accordance with GAAP.
Current Liabilities - at any date means the amount at which all of
the current liabilities of a Person would be properly classified as
current liabilities on a balance sheet at such date in accordance with
GAAP (including the Revolving Credit Loans and the current maturities of
any long-term Indebtedness).
Default - an event or condition the occurrence of which would, with
the lapse of time or the giving of notice, or both, become an Event of
Default.
Default Rate - as defined in subsection 2.1.3 of the Agreement.
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47
Distribution - in respect of any Person means and includes: (i) the
payment of any dividends (whether in cash or property) or other
distributions on capital stock or other ownership interest (including
partnership interests) and (ii) the redemption or acquisition of
Securities unless made contemporaneously from the net proceeds of the sale
of Securities.
Dominion Account - a special account of Lender established by
Borrowers pursuant to the Agreement at a bank selected by Borrowers, but
acceptable to Lender in its discretion, and over which Lender shall have
sole and exclusive access and control for withdrawal purposes.
EBITDA - Adjusted Net Earnings From Operations plus the sum of
depreciation, amortization and interest expenses and taxes during the
period for which Adjusted Net Earnings From Operations was calculated and
plus or minus any change in Borrowers' LIFO reserve from the immediately
preceding period of measurement, determined for the Borrowers for the
applicable measurement period.
Eligible Account - as to each Borrower, an Account arising in the
ordinary course of such Borrower's business from the sale of goods or
rendition of services and which Lender, in its sole credit judgment, deems
to be an Eligible Account. Without limiting the generality of the
foregoing, no Account shall be an Eligible Account if:
(i) it arises out of a sale made by a Borrower to
another Borrower, or to a Subsidiary or an such Affiliate of
Borrower, or to a Person controlled by such Borrower or an Affiliate
of such Borrower; or
(ii) it is unpaid more than 90 days after the original
invoice date (or in the case of international sales is unpaid more
than 150 days from invoice date) or in any event is more than 60
days from date due; or
(iii) 50% or more of the Accounts from the Account
Debtor are not deemed Eligible Accounts hereunder; or
(iv) the total unpaid Accounts of the Account Debtor
exceed 20% of the net amount of all Eligible Accounts, to the extent
of such excess; or
(v) any covenant, representation or warranty contained
in the agreement with respect to such Account has been materially
breached; or
(vi) the Account Debtor is also the Borrower's creditor
or supplier, or the Account Debtor has disputed liability with
respect to such Account or the Account Debtor has made any claim
with respect to any other Account due from such Account Debtor to
the Borrower, or the Account otherwise is or may become subject to
any right of setoff by the Account Debtor; or
(vii) the Account Debtor has commenced a voluntary case
under the federal bankruptcy laws, as now constituted or hereafter
amended, or made an assignment for the benefit of creditors, or a
decree or order for relief has been entered by a court having
jurisdiction in the premises in respect of the Account Debtor in an
involuntary case under the federal bankruptcy laws, as now
constituted or hereafter amended, or any other petition or other
application for relief under the federal bankruptcy laws has been
filed against the Account Debtor, or if the Account Debtor has
failed, suspended business, ceased to be Solvent, or
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consented to or suffered a receiver, trustee, liquidator or
custodian to be appointed for it or for all or a significant portion
of its assets or affairs; or
(viii) it arises from a sale to an Account Debtor
outside the United States, unless the sale is on irrevocable letter
of credit, guaranty or acceptance terms, or covered by credit
insurance in each case acceptable to Lender in its sole discretion;
or
(ix) it arises from a sale to the Account Debtor on a
bill-and-hold, guaranteed sale, sale-or-return, sale-on-approval,
consignment or any other repurchase or return basis or otherwise
does not represent a final sale; or
(x) the Account Debtor is the United States of America
or any department, agency or instrumentality thereof, unless the
Borrower assigns its right to payment of such Account to Lender, in
a manner satisfactory to Lender, so as to comply with the Assignment
of Claims Act of 1940 (31 U.S.C. Section 203 et seq., as amended);
or
(xi) the Account is not at all times subject to Lender's
duly perfected, first priority security interest and/or is subject
to any other Lien other than a Permitted Lien; or
(xii) the goods giving rise to such Account have not
been delivered to and accepted by the Account Debtor or the services
giving rise to such Account have not been performed by the Borrower
and accepted by the Account Debtor or the Account otherwise does not
represent a final sale; or
(xiii) the Account is evidenced by Chattel Paper or an
Instrument of any kind unless the same has been delivered to Lender,
or has been reduced to judgment; or
(xiv) the Borrower has made any agreement with the
Account Debtor for any deduction therefrom, except for discounts or
allowances which are made in the ordinary course of business for
prompt payment and which discounts or allowances are reflected in
the calculation of the face value of each invoice related to such
Account; or
(xv) the Borrower has made an agreement with the Account
Debtor to extend the time of payment thereof;
(xvi) the Account does not represent a claim for royalty
or license obligations; or
(xvii) any Account where the Account Debtor is Watera,
Inc., unless Lender in its sole discretion, shall determine
otherwise.
Notwithstanding any of the foregoing, Accounts where the Account Debtor is
Estee Lauder, Inc. or any of its Affiliates or Genesis Pharmaceutical, Inc. (or
its predecessor C&M Pharmacal) shall only be considered Eligible Accounts to the
extent that the aggregate amount of outstanding Accounts does not exceed
$650,000, in the case of Estee Lauder, Inc. and its Affiliates (taken as a
whole), and $350,000 in the case of Genesis Pharmaceutical, Inc. Any Accounts
from either of these two Account Debtors in excess of these limitations shall be
considered ineligible.
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However, if at any time the Borrowers shall provide to Lender a written
agreement from either Estee Lauder, Inc. (and its Affiliates) or Genesis
Pharmaceutical, Inc., which agreement shall in form and substance be acceptable
to Lender, whereby either of these Account Debtors shall agree to waive any
rights of offset, defense, deduction or counterclaim with respect to its
Accounts (except as such rights may relate to the quality or quantity of goods
or services provided under the invoice in question), the foregoing restriction
on the eligibility of such Account Debtor shall not apply.
Eligible Inventory - as to each Borrower, such raw materials,
finished WIP, or finished goods Inventory of each such Borrower which
Lender, in its sole credit judgment, deems to be Eligible Inventory.
Without limiting the generality of the foregoing, no Inventory shall be
Eligible Inventory if:
(i) it is not in good, new and saleable condition; or
(ii) it is slow-moving, obsolete or unmerchantable; or
(iii) it does not meet all standards imposed by any
governmental agency or authority for Inventory of its type; or
(iv) it does not conform in all respects to the
warranties and representations set forth in the Agreement; or
(v) it is not at all times subject to Lender's duly
perfected, first priority security interest and/or is subject to any
other Lien except a Permitted Lien; or
(vi) it is not situated at a location in the United
States which is in compliance with the Agreement; or
(vii) it is not situated at a location owned by any of
the Borrowers or a location for which Lender has received a
landlord's waiver acceptable to Lender; or
(viii) it is consigned inventory, demonstration
inventory, or repossessed or returned inventory.
Environmental Laws - all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidances, orders and consent
decrees relating to environmental matters.
Equipment - collectively, all machinery, apparatus, equipment,
fittings, furniture, fixtures, motor vehicles and other tangible personal
Property (other than Inventory) of every kind and description used in
Borrowers' operations or owned by any Borrower or in which any Borrower
has an interest, whether now owned or hereafter acquired by any Borrower
and wherever located, and all parts, accessories and special tools and all
increases and accessions thereto and substitutions and replacements
therefor.
ERISA - the Employee Retirement Income Security Act of 1974, as
amended, and all rules and regulations from time to time promulgated
thereunder.
Excess Cash Flow - for any period means Borrowers' (i) Adjusted Net
Earnings From Operations plus (ii) depreciation and amortization expenses
less (iii) Capital
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50
Expenditures (which are not financed), less (iv) payments of long term
Indebtedness (including without limitation the Term Loan) and Capitalized
Lease Obligations.
Event of Default - as defined in Section 10.1 of the Agreement.
Fixed Charges - for any period, without duplication, (i) interest
expense for such period, plus (ii) scheduled payments of principal of all
Indebtedness of Borrowers during such period (including, without
limitation, that portion of any Capitalized Lease Obligations attributable
to principal amortization in accordance with GAAP) plus (iii) tax
payments.
Fixed Charge Coverage Ratio - the ratio obtained by dividing the sum
(i) of EBITDA minus non-financed Capital Expenditures minus other non-cash
income plus non-cash expenses plus Hager compensation deferral accrued
during such period by (ii) Fixed Charges plus any payment of the deferred
compensation made during such period to Hager as determined on a
consolidated basis for Borrowers for the applicable measurement period.
Formula Availability - as at any date of determination thereof, as
to the Borrowers, an amount equal to the sum of:
(i) the sum of 85% of the net amount of Eligible Accounts of
each Borrower outstanding at such date;
PLUS
(ii) the lesser of (a) $4,000,000 and (b) the sum of 60% of the
value of Eligible Inventory of each Borrower at such date, in
each case calculated on the basis of the lower of cost or
market on a first-in, first-out basis;
MINUS
(iii) such reserves as Lender may establish from time to time under
Section 1.1.1.
For purposes hereof, the net amount of Eligible Accounts at any time
shall be the face amount of such Eligible Accounts less any and all
returns, rebates, discounts (which may, at Lender's option, be calculated
on shortest terms), credits, allowances or excise taxes of any nature at
any time issued, owing, claimed by Account Debtors, granted, outstanding
or payable in connection with such Accounts at such time.
GAAP - generally accepted accounting principles in the United States
of America in effect from time to time.
Glaxo Debt - the Indebtedness of the Borrowers to Glaxo Wellcome
Inc. in the amounts of $200,000.00 and $608,000.00 under the terms of two
promissory notes, dated December 10, 1998 and December 18, 1998
respectively.
General Intangibles - collectively, all personal property of
Borrowers (including things in action) other than goods, Accounts, Chattel
Paper, Documents, Instruments and money, whether now owned or hereafter
created or acquired by Borrowers, including without limitation all
trademarks, patents, copyrights, applications therefor, customer lists,
goodwill, computer software and data, tax and other refunds, rights and
claims under insurance policies (including without limitation credit
insurance), letters of credit, licenses, royalties, franchises, contract
rights, deposits, books and records, and choses in action, and
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51
all new drug approvals or any other such product approvals issued at any
time by the Food and Drug Administration and all manufacturer's
registrations with the Food and Drug Administration, and all equivalent
approvals and registrations with any governmental authorities of any state
or any foreign countries, including any foreign product registrations.
Georgia Real Estate - the leasehold interest of Borrowers in the
premises located at 1146 Airport Parkway, Gainesville, GA, and the
improvements located thereon.
Governmental Authority - shall mean any federal, state, local or
foreign court or governmental agency, authority, instrumentality,
subdivision or regulatory body.
Indebtedness - as applied to a Person means, without duplication.
(i) all items which in accordance with GAAP would be
included in determining total liabilities as shown on the liability
side of a balance sheet of such Person as at the date as of which
Indebtedness is to be determined, including, without limitation,
Capitalized Lease Obligations,
(ii) all monetary obligations of other Persons which
such Person has guaranteed,
(iii) all reimbursement obligations in connection with
letters of credit or letter of credit guaranties issued for the
account of such Person, and
(iv) in the case of Borrowers (without duplication), the
Obligations.
Inventory - collectively, all inventory of Borrowers, whether now
owned or hereafter acquired including, without limitation, any and all
inventory manufactured by Borrowers under any license agreements, all
goods intended for sale or lease by any Borrower, or for display or
demonstration; all work in process; all raw materials and other materials
and supplies of every nature and description used or which might be used
in connection with the manufacture, printing, packing, shipping,
advertising, selling, leasing or furnishing of such goods or otherwise
used or consumed in Borrowers' business; and all Documents evidencing and
General Intangibles relating to any of the foregoing, whether now owned or
hereafter acquired by any Borrower.
LIBOR Interest Period - a period of one, two, three or six months
duration during which the Revolving Credit LIBOR Rate or Term LIBOR Rate,
as the case may be, is applicable.
LIBOR Rate Loans - collectively, all Revolving Credit LIBOR Rate
Loans and Term LIBOR Rate Loans.
Lien - any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such
interest is based on common law, statute or contract and including,
without limitation, the security interest, security title or lien arising
from a security agreement, mortgage, deed of trust, deed to secure debt,
encumbrance, pledge, conditional sale or trust receipt, or a lease,
consignment or bailment for security purposes. The term "Lien" shall also
include reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases and other title exceptions and
encumbrances affecting Property. For the purpose of the
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52
Agreement, a Borrower shall be deemed to be the owner of any Property
which it has acquired or holds subject to a conditional sale agreement or
other arrangement pursuant to which title to the Property has been
retained by or vested in some other Person for security purposes.
Loan Account - the loan account established on the books of Lender
pursuant to Section 3.6 of the Agreement.
Loan Documents - the Agreement, the Other Agreements and the
Security Documents as each of the same may be amended, modified, renewed,
extended, replaced, restated or substituted from time to time.
Loans - all loans and advances of any kind made at any time by
Lender pursuant to the Agreement.
London Business Day - any Business Day on which banks in London,
England are open for business.
Material Adverse Effect - A material adverse effect on the business,
Property, financial condition, operations or business prospects of
Borrowers or on the ability of Borrowers to pay and perform its
obligations under this Agreement or the other Loan Documents.
Minimum Loan - means $5,000,000.
Money Borrowed - means (i) Indebtedness arising from the lending of
money by any Person to any Borrower; (ii) Indebtedness, whether or not in
any such case arising from the lending by any Person of money to any
Borrower, (A) which is represented by notes payable or drafts accepted
that evidence extensions of credit, (B) which constitutes obligations
evidenced by bonds, debentures, notes or similar instruments, or (C) upon
which interest charges are customarily paid (other than accounts payable)
or that was issued or assumed as full or partial payment for Property;
(iii) Indebtedness that constitutes a Capitalized Lease Obligation; (iv)
reimbursement obligations with respect to letters of credit or guaranties
of letters of credit and (v) Indebtedness of any Borrower under any
guaranty of obligations that would constitute Indebtedness for Money
Borrowed under clauses (i) through (iv) hereof, if owed directly by any
Borrower.
Multiemployer Plan - has the meaning set forth in Section 4001(a)(3)
of ERISA.
Net Cash Flow - for any period, Borrowers' (a) Adjusted Net Earnings
from Operations for such period plus (b) depreciation and amortization
expenses for such period plus (c) deferred taxes for such period, less (d)
non-financed Capital Expenditures, less (e) scheduled principal payments
on account of current maturities of long-term Indebtedness and (f) less
scheduled principal payments on Capitalized Lease Obligations, all as
determined in accordance with GAAP.
Notes - collectively, the Revolving Credit Note, the Term Loan Note
and the Capital Expenditure Loan Note.
Obligations - all Loans and all other advances, debts, liabilities,
obligations, covenants and duties, together with all interest, fees and
other charges thereon, owing, arising, due or payable from Borrowers to
Lender of any kind or nature, present or future, whether or not evidenced
by any note, guaranty or other instrument, whether arising under
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the Agreement or any of the other Loan Documents or otherwise whether
direct or indirect (including those acquired by assignment), absolute or
contingent, primary or secondary, due or to become due, now existing or
hereafter arising and however acquired. The term includes without
limitation, all interest, charges, fees, expenses, attorneys' fees, and
any other sums chargeable to Borrowers under any of the Loan Documents.
Original Term - as defined in Section 4.1 of the Agreement.
Other Agreements - any and all agreements and instruments (other
than the Agreement and the Security Documents) heretofore, now or
hereafter executed by Borrowers, any guarantor, or any other third party
and delivered to Lender in respect of the transactions contemplated by the
Agreement, as each of the same may be amended, modified, renewed,
extended, replaced, restated or substituted from time to time.
Overadvance - the amount, if any, by which the outstanding principal
amount of Revolving Credit Loans exceeds the Borrowing Base.
Participating Lender - each Person who shall be granted the right by
Lender to participate in any of the Loans described in the Agreement and
who shall have entered into a participation agreement in form and
substance satisfactory to Lender.
Permitted Liens - any Lien of a kind specified in subsection 8.2.5
of the Agreement.
Permitted Purchase Money Indebtedness - Purchase Money Indebtedness
of Borrowers incurred after the date hereof which is secured by a Purchase
Money Lien and which, when aggregated with the principal amount of all
other such Indebtedness and Capitalized Lease Obligations of Borrowers at
the time outstanding, does not exceed $250,000.00. For the purposes of
this definition, the principal amount of any Purchase Money Indebtedness
consisting of capitalized leases shall be computed as a Capitalized Lease
Obligation.
Person - an individual, partnership, corporation, limited liability
company, joint stock company, land trust, business trust, or
unincorporated organization, or a government or agency or political
subdivision thereof.
Plan - an employee benefit plan now or hereafter maintained for
employees of any Borrower that is covered by Title IV of ERISA.
Projections - Borrowers' forecasted (a) balance sheets, (b) profit
and loss statements, (c) cash flow statements, and (d) analysis of
borrowing availability, all prepared on a consistent basis with Borrowers'
historical financial statements, together with appropriate supporting
details and a statement of underlying assumptions.
Property - any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
Purchase Money Indebtedness - means and includes (i) Indebtedness
(other than the Obligations) for the payment of all or any part of the
purchase price of any fixed assets, (ii) any Indebtedness (other than the
Obligations) incurred at the time of or within 10 days prior to or after
the acquisition of any fixed assets for the purchase price thereof, and
(iii) any renewals, extensions or refinancings thereof, but not any
increases in the principal amounts thereof outstanding at the time.
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Purchase Money Lien - a Lien upon fixed assets which secures
Purchase Money Indebtedness, but only if such Lien shall at all times be
confined solely to the fixed assets the purchase price of which was
financed through the incurrence of the Purchase Money Indebtedness secured
by such Lien.
Real Property - Borrowers' premises (including buildings and
improvements) in New Jersey and Georgia.
Regulation D - Regulation D of the Board of Governors of the Federal
Reserve System, comprising Part 204 of Title 12, Code of Federal
Regulations, as amended, and any successor thereto.
Rentals - as defined in subsection 8.2.11 of the Agreement.
Renewal Terms - as defined in Section 4.1 of the Agreement.
Reportable Event - any of the events set forth in Section 4043(b) of
ERISA.
Reserve Percentage - for Bank on any day, that percentage (expressed
as a decimal) which is in effect on such day, prescribed by the Board of
Governors of the Federal Reserve System (or any successor or any other
banking authority to which Lender is subject, including any board or
governmental or administrative agency of the United States or any other
jurisdiction to which Bank is subject) for determining the maximum reserve
requirement (including without limitation any basic, supplemental,
marginal or emergency reserves) for (i) deposits of United States Dollars
or (ii) Eurocurrency liabilities as defined in Regulation D, in each case
used to fund a Revolving Credit LIBOR Rate Loan or Term LIBOR Rate Loan
subject to an Adjusted LIBOR Rate. The Adjusted LIBOR Rate shall be
adjusted automatically on and as of the effective day of any change in the
Reserve Percentage.
Restricted Investment - any investment made in cash or by delivery
of Property to any Person, whether by acquisition of stock, Indebtedness
or other obligation or Security, or by loan, advance or capital
contribution, or otherwise, or in any Property except the following:
(i) Property to be used in the ordinary course of
business;
(ii) Current Assets arising from the sale of goods and
services in the ordinary course of business of Borrowers;
(iii) investments in direct obligations of the United
States of America, or any agency thereof or obligations guaranteed
by the United States of America, provided that such obligations
mature within one year from the date of acquisition thereof;
(iv) investments in certificates of deposit maturing
within one year from the date of acquisition issued by a bank or
trust company organized under the laws of the United States or any
state thereof having capital surplus and undivided profits
aggregating at least $100,000,000;
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(v) investments in commercial paper given the highest
rating by a national credit rating agency and maturing not more than
270 days from the date of creation thereof; and
(vi) mutual funds that invest in any of the foregoing.
Revolving Credit Base Rate - a per annum rate equal to the sum of
the Base Rate plus 100 basis points.
Revolving Credit Base Rate Loan - that portion of the Revolving
Credit Loans that bears interest at the Revolving Credit Base Rate.
Revolving Credit Facility - that portion of the credit facilities
established by Lender for Borrowers' benefit under which Revolving Credit
Loans are being made.
Revolving Credit LIBOR Rate - a per annum rate equal to the sum of
the Adjusted LIBOR Rate plus 325 basis points.
Revolving Credit LIBOR Rate Loan - that portion of the Revolving
Credit Loans on which interest accrues at the Revolving Credit LIBOR Rate.
Revolving Credit Loan - a Loan made by Lender as provided in Section
1.1 of the Agreement.
Revolving Credit Maturity Date - the last day of the Original Term
or, if any Renewal Term is in effect, then the last day of such Renewal
Term.
Revolving Credit Note - the secured promissory note to be executed
by Borrowers on the Closing Date in favor of Lender to evidence Borrowers'
obligation to repay the Revolving Credit Loans, which shall be in the form
of Exhibit C to the Agreement.
Revolving Facility Limit - $12,000,000.
Schedule of Accounts - as defined in subsection 6.2.1 of the
Agreement.
Security - shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
Security Documents - all other instruments and agreements now or at
any time hereafter securing the whole or any part of the Obligations, as
each of the same may be amended, modified, renewed, extended, replaced,
restated or substituted from time to time.
Solvent - as to any Person, such Person (i) is able to pay all of
its Indebtedness as such Indebtedness matures and (ii) has capital
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage. When applied to any Person
other than Borrowers, solvent shall additionally mean that such Person
owns Property whose fair saleable value is greater than the amount
required to pay all of such Person's Indebtedness (including contingent
debts).
Subordinated Debt - the Indebtedness of Borrowers owed to American
Capital under the Subordinated Debt Agreements.
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Subordinated Debt Agreements - that certain Note and Equity Purchase
Agreement between Borrowers and American Capital dated as of the date
hereof, together with all documents contemplated thereby and connected
therewith.
Subsidiary - any corporation of which a Person owns, directly or
indirectly through one or more intermediaries, more than 50% of the Voting
Stock at the time of determination.
Term Base Rate - a per annum rate equal to the sum of the Base Rate
plus 150 basis points.
Term Base Rate Loan - that portion of the Term Loan or Capital
Expenditure Loans which bear interest at the Term Base Rate.
Term LIBOR Rate - a per annum rate equal to the sum of the Adjusted
LIBOR Rate plus 375 basis points.
Term LIBOR Rate Loan - that portion of the Term Loan or Capital
Expenditure Loans on which interest accrues at the Term LIBOR Rate.
Term Loan - collectively, the Term Loan A and the Term Loan B.
Term Loan A - the Loan described in Subsection 1.2.1 of the
Agreement.
Term Loan B - the Loan described in Subsection 1.2.2 of the
Agreement.
Term Loan Note - collectively, the Term Loan A Note and the Term
Loan B Note.
Term Loan A Note - the secured promissory note to be executed by
Borrowers on or about the Closing Date in favor of Lender to evidence
Borrowers' obligation to pay the Term Loan A, which shall be in the form
of Exhibit D-1 to the Agreement.
Term Loan B Note - The secured promissory note to be executed by
Borrowers on or about the Closing Date in favor of Lender to evidence
Borrowers' obligation to pay the Term Loan B, which shall be in the form
of Exhibit D-2 to the Agreement.
Termination Date - the last day of the Original Term or if extended,
the last day of any then existing Renewal Term.
Voting Stock - Securities of any class or classes of a corporation
the holders of which are ordinarily, in the absence of contingencies,
entitled to elect a majority of the corporate directors (or Persons
performing similar functions).
Other Terms. All other terms contained in the Agreement shall have,
when the context so indicates, the meanings provided for by the Code to
the extent the same are used or defined therein.
Certain Matters of Construction. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a
whole and not to any particular section, paragraph or subdivision. Any
pronoun used shall be deemed to cover all genders. The section titles,
table of contents and list of schedules and exhibits appear as a
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matter of convenience only and shall not affect the interpretation of the
Agreement. All references to statutes and related regulations shall
include any amendments of same and any successor statutes and regulations.
All references to any of the Loan Documents shall include any and all
modifications thereto and any and all extensions or renewals thereof.
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LIST OF EXHIBITS AND SCHEDULES
Exhibit A Borrowing Base Certificate
Exhibit B Capital Expenditure Loan Note
Exhibit C Revolving Credit Note
Exhibit D-1 Term Loan A Note
Exhibit D-2 Term Loan B Note
Exhibit E Compliance Certificate
Schedule 6.11 Borrowers' Business Locations
Schedule 7.1.1 Jurisdictions in which Borrowers is Authorized to do Business
Schedule 7.1.4 Capital Structure of Borrowers
Schedule 7.1.5 Corporate Names
Schedule 7.1.13 Existing Sureties
Schedule 7.1.14 Tax Identification Numbers of Subsidiaries
Schedule 7.1.16 Patents, Trademarks, Copyrights and Licenses
Schedule 7.1.18 Compliance with Laws
Schedule 7.1.19 Contracts Restricting Borrowers' Right to Incur Debts
Schedule 7.1.20 Litigation
Schedule 7.1.22(a) Capitalized Leases
Schedule 7.1.22(b) Operating Leases
Schedule 7.1.23 Pension Plans
Schedule 7.1.25 Labor Contracts
Schedule 8.2.4 Affiliate Transactions
Schedule 8.2.5 Permitted Liens
Schedule 8.3 Financial Covenants