EXECUTION COPY
LOAN AND SECURITY AGREEMENT
BY AND AMONG
WRIGHT MEDICAL TECHNOLOGY, INC.
as Borrower,
WRIGHT MEDICAL TECHNOLOGY CANADA LTD.
as Guarantor,
THE LENDERS NAMED HEREIN
as Lenders,
AND
SANWA BUSINESS CREDIT CORPORATION,
as Agent and Lender
Dated as of
September 13, 1996
Table of Contents
1. DEFINITIONS..............................................................................................1
1.1 General Terms...................................................................................1
1.2 Accounting Terms...............................................................................24
1.3 Other Terms Defined in Illinois Uniform Commercial Code........................................24
1.4 Effective Date.................................................................................24
1.5 References.....................................................................................24
2. CREDIT..................................................................................................25
2.1 Revolving Credit Facility, Revolving Loan and Lender Guaranties................................25
2.2 Maximum Principal Balance of Revolving Loan....................................................29
2.3 Evidence of Revolving Loan Indebtedness........................................................29
2.4 Payment Dates..................................................................................29
2.5 Interest.......................................................................................29
2.6 Method of Borrowing; Manner and Method of Making
Interest and Other Payments....................................................................32
2.7 Term of this Agreement.........................................................................34
2.8 Audit Fee......................................................................................35
2.9 Closing Fee....................................................................................35
2.10 Prepayment Fee.................................................................................35
2.11 Financing Fee..................................................................................35
2.12 Unused Line Fee................................................................................36
2.13 Other Fees, Costs and Expenses.................................................................36
2.14 Loan Account...................................................................................37
2.15 Statements.....................................................................................37
2.16 Notification of Advances, Interest Rates and Prepayment........................................37
2.17 Lender Guaranty Fees...........................................................................38
2.18 Other Lender Guaranty Provisions...............................................................38
2.19 Taxes; Changes in Law..........................................................................40
2.20 Special Provisions Governing LIBOR Rate Loans..................................................41
3. REPORTING AND ELIGIBILITY REQUIREMENTS..................................................................43
3.1 Monthly Reports and Borrowing Base Certificates................................................43
3.2 Eligible Accounts..............................................................................43
3.3 Account Warranties.............................................................................45
3.4 Verification of Accounts.......................................................................46
3.5 Collection of Accounts and Payments............................................................46
3.6 Appointment of the Agent as Borrower's and the Guarantor's
Attorney-in-Fact...............................................................................47
3.7 Account Records................................................................................48
3.8 Instruments and Chattel Paper..................................................................48
3.9 Notice to Account Debtors......................................................................48
3.10 Eligible Inventory.............................................................................49
3.11 Inventory Warranties...........................................................................49
3.12 Inventory Records..............................................................................50
3.13 Safekeeping of Inventory and Inventory Covenants...............................................50
3.14 Equipment Warranties...........................................................................51
3.15 Equipment Records..............................................................................51
3.16 Maintenance of Equipment.......................................................................51
3.17 Real Estate....................................................................................51
3.18 Maintenance of Real Estate.....................................................................51
3.19 Intellectual Property and General Intangibles..................................................52
4. CONDITIONS TO ADVANCES..................................................................................52
4.1 Conditions to All Advances.....................................................................52
4.2 Conditions to Initial Advance..................................................................53
5. COLLATERAL..............................................................................................56
5.1 Security Interest..............................................................................56
5.2 Preservation of Collateral and Perfection of Liens Thereon.....................................57
5.3 Consigned Inventory............................................................................57
6. REPRESENTATIONS AND WARRANTIES..........................................................................58
6.1 Existence......................................................................................58
6.2 Authority......................................................................................58
6.3 Binding Effect.................................................................................59
6.4 Financial Data.................................................................................59
6.5 Collateral.....................................................................................60
6.6 Solvency.......................................................................................60
6.7 Places of Business.............................................................................60
6.8 Other Names....................................................................................61
6.9 Tax Obligations................................................................................61
6.10 Indebtedness and Liabilities...................................................................61
6.11 Use of Proceeds and Margin Security............................................................61
6.12 Government Contracts...........................................................................62
6.13 Investments....................................................................................62
6.14 Litigation and Proceedings.....................................................................62
6.15 Other Agreements and Deliveries................................................................62
6.16 Labor Matters..................................................................................63
6.17 Compliance with Laws and Regulations...........................................................64
6.18 Patents, Trademarks and Licenses...............................................................64
6.19 Benefit and Pension Plans......................................................................64
6.20 Property.......................................................................................65
6.21 Adverse Contracts..............................................................................65
6.22 Purchase or Other Commitments and Outstanding Bids.............................................65
6.23 Investment Company Act; Public Utility Holding Company Act.....................................66
6.24 Broker's Fees..................................................................................66
6.25 Licenses and Permits...........................................................................66
6.26 Environmental Compliance.......................................................................66
6.27 Full Disclosure................................................................................68
6.28 Insurance Policies.............................................................................68
6.29 Customer and Trade Relations...................................................................68
6.30 Survival of Warranties.........................................................................68
6.31 Corporate and Contractual Restrictions.........................................................69
6.32 Subsidiaries...................................................................................69
6.33 Deposit and Disbursement Accounts..............................................................69
6.34 Distributor Agreements.........................................................................69
7. AFFIRMATIVE COVENANTS...................................................................................69
7.1 Financial Statements...........................................................................70
7.2 Inspections and Audits.........................................................................72
7.3 Conduct of Business; Compliance With Laws......................................................73
7.4 Claims and Taxes...............................................................................73
7.5 Liability Insurance............................................................................74
7.6 Property Insurance.............................................................................74
7.7 Pension Plans..................................................................................75
7.8 Notice of Certain Matters......................................................................75
7.9 Landlord and Warehouseman Agreements...........................................................76
7.10 Indemnity......................................................................................76
7.11 Cash Flow Coverage.............................................................................77
8. NEGATIVE COVENANTS......................................................................................77
8.1 Encumbrances...................................................................................77
8.2 Indebtedness and Liabilities...................................................................79
8.3 Consolidations, Mergers........................................................................79
8.4 Investments and Acquisitions...................................................................80
8.5 Guaranties.....................................................................................81
8.6 Collateral Locations...........................................................................81
8.7 Disposal of Property...........................................................................81
8.8 Management Fees................................................................................82
8.9 Employee Loans.................................................................................82
8.10 Plans..........................................................................................82
8.11 Restricted Payments............................................................................83
8.12 Securities.....................................................................................83
8.13 Changes in Charter, Bylaws or Fiscal Year......................................................83
8.14 Transactions with Affiliates...................................................................83
8.15 Capital Structure; Other Business..............................................................84
8.16 Sale and Leaseback.............................................................................84
8.17 Impairment Agreements..........................................................................84
8.18 Amendments to Agreements.......................................................................84
8.19 Corporate Accounts.............................................................................84
9. DEFAULT, RIGHTS AND REMEDIES OF THE AGENT AND THE LENDERS...............................................85
9.1 Obligations....................................................................................85
9.2 Rights and Remedies Generally..................................................................85
9.3 Entry Upon Premises and Access to Information..................................................85
9.4 Sale or Other Disposition of Collateral by the Agent...........................................86
9.5 Grant of License...............................................................................86
9.6 Waiver of Demand...............................................................................87
9.7 Waiver of Notice...............................................................................87
10. OTHER RIGHTS AND OBLIGATIONS............................................................................87
10.1 Waiver.........................................................................................87
10.2 Costs and Attorneys' Fees......................................................................88
10.3 Expenditures by the Agent and the Lenders......................................................88
10.4 Custody and Preservation of Collateral.........................................................88
10.5 Reliance by the Agent and Lenders..............................................................89
10.6 Parties and Assignment.........................................................................89
10.7 Applicable Law; Severability...................................................................89
10.8 Submission to Jurisdiction; Waiver of Jury and Bond............................................90
10.9 Marshalling....................................................................................91
10.10 Section Titles.................................................................................91
10.11 Continuing Effect..............................................................................91
10.12 Incorporation by Reference.....................................................................91
10.13 Notices........................................................................................91
10.14 Waivers With Respect to Other Instruments......................................................92
10.15 Retention of the Borrower's Documents..........................................................92
10.16 Entire Agreement...............................................................................93
10.17 Equitable Relief...............................................................................93
10.18 Lenders' First Right of Refusal................................................................93
10.19 Counterparts...................................................................................93
10.20 Several Obligations; Nature of Lenders' Rights.................................................93
10.21 Exceptions to Covenants........................................................................94
10.22 Construction...................................................................................94
10.23 Reinstatement..................................................................................94
10.24 ACKNOWLEDGMENT.................................................................................94
10.25 Guarantor Joinder..............................................................................94
11. ASSIGNMENT AND PARTICIPATION............................................................................95
11.1 Assignments....................................................................................95
11.2 Participations.................................................................................95
12. AGENT...................................................................................................95
12.1 Appointment....................................................................................95
12.2 Powers.........................................................................................95
12.3 General Immunity...............................................................................95
12.4 No Responsibility for Loans, Recitals, etc.....................................................95
12.5 Action on Instructions of Lenders..............................................................96
12.6 Employment of Agents and Counsel...............................................................96
12.7 Reliance on Documents; Counsel.................................................................96
12.8 Agent's Reimbursement and Indemnification......................................................96
12.9 Rights as a Lender.............................................................................97
12.10 Lender Credit Decision.........................................................................97
12.11 Successor Agent................................................................................97
12.12 Notice of Default..............................................................................97
13. AMENDMENTS AND WAIVERS..................................................................................98
14. SET OFF AND SHARING OF PAYMENTS.........................................................................99
14.1 Setoff.........................................................................................99
14.2 Ratable Payments...............................................................................99
INDEX OF EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit 2.1 Form of Letter of Credit Application
Exhibit 2.3 Form of Revolving Loan Note
Exhibit 2.5-1 Form of Borrowing Notice
Exhibit 2.5-2 Form of Conversion/Continuation Notice
Exhibit 3.1 Form of Monthly Report Certificate
Exhibit 3.1-1 Initial Monthly Report
Exhibit 3.14 Equipment Locations and Leased Equipment
Exhibit 3.17 Real Estate
Exhibit 4.2(r) Material Transactions
Exhibit 6.1-1 Jurisdictions of Qualification
Exhibit 6.1-2 Capital Stock
Exhibit 6.4-1 Pro Forma Financial Statements
Exhibit 6.4-2 Projections
Exhibit 6.7 Places of Business
Exhibit 6.8 Trade Names
Exhibit 6.12 Government Contracts
Exhibit 6.13 Investments
Exhibit 6.14 Pending or Threatened Litigation
Exhibit 6.15 Other Agreements
Exhibit 6.16 Labor Matters
Exhibit 6.18 Patents, Trademarks and Licenses
Exhibit 6.19 ERISA Obligations
Exhibit 6.20 Property
Exhibit 6.26 Environmental Matters
Exhibit 6.32 Subsidiaries
Exhibit 6.33 Deposit Accounts
Exhibit 7.5 Liability Insurance
Exhibit 7.6 Form of Insurance Endorsement
Exhibit 8.2 Indebtedness
Exhibit 8.4 Investments
Exhibit 8.5 Guaranties
Exhibit 8.6 Collateral Locations
Exhibit 8.15 Transactions with Affiliates
SCHEDULES
Schedule 1 Commitments of Lenders
LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT is dated as of this 13th day
of September 1996, by and among WRIGHT MEDICAL TECHNOLOGY, INC., WRIGHT MEDICAL
TECHNOLOGY CANADA LTD. and SANWA BUSINESS CREDIT CORPORATION, as Agent for the
Lenders.
W I T N E S S E T H:
WHEREAS, in connection with the repayment of certain
pre-existing indebtedness of the Borrower and the continued working capital
needs of the Borrower subsequent to such repayment, the Borrower desires to
borrow up to Thirty Million Dollars ($30,000,000) from the Lenders, and the
Lenders are willing to make certain loans to the Borrower of up to such amount,
upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the terms and conditions
contained herein, and of any loans or extensions of credit heretofore, now or
hereafter made to or for the benefit of the Borrower by the Agent and the
Lenders, the parties hereto hereby agree as follows:
1. DEFINITIONS.
1.1 General Terms. When used herein, the following terms shall have the
following meanings:
"Account Debtor" shall mean any Person who is or may become obligated on or
under an Account.
"Accounting Changes" shall mean (a) changes in accounting principles
required by the promulgation of any rule, regulation, pronouncement or opinion
by the Financial Accounting Standards Board of the American Institute of
Certified Public Accountants (or successor thereto or any agency with similar
functions) or (b) changes in accounting principles concurred in by the
Borrower's certified public accountants.
"Accounts" shall mean all of the Borrower's or the Guarantor's presently
existing and hereafter arising or acquired accounts, accounts receivable, margin
accounts, futures positions, book debts, instruments, documents, contracts,
notes, drafts, acceptances, Chattel Paper, and other forms of obligations now or
hereafter owned or held by or payable to the Borrower or the Guarantor relating
in any way to Inventory or arising from the sale of Inventory or the rendering
of services by the Borrower or the Guarantor or howsoever otherwise arising,
including the right to payment of any interest or finance charges with respect
thereto, together with all merchandise represented by any of the Accounts; all
such merchandise that may be reclaimed or repossessed or returned to the
Borrower or the Guarantor; all of the Borrower's or the Guarantor's rights as an
unpaid vendor, including, without limitation, stoppage in transit, reclamation,
replevin, and sequestration; all pledged assets and all letters of credit,
guaranty claims, Liens held by or granted to
the Borrower or the Guarantor to secure payment of any Accounts; all proceeds
and products of all of the foregoing described properties and interests in
properties; and all proceeds of insurance with respect thereto, including,
without limitation, the proceeds of any applicable casualty or credit insurance
or fidelity bond, whether payable in cash or in kind; and all customer lists,
ledgers, books of account, records, computer programs, computer disks or tape
files (including, without limitation, all microfilm), computer printouts,
computer runs, and other computer prepared information relating to any of the
foregoing.
"Accounts Trial Balance" shall have the meaning ascribed thereto in
subsection 7.1(iii)(b).
"Acquisition" shall mean any transaction, or any series of related
transactions, consummated after the Closing Date by which the Borrower or any
Subsidiary (a) acquires, directly or indirectly, any business or all or
substantially all of the assets of any Person or portion thereof, whether
through purchase of assets, merger, licensing arrangement or otherwise or (b)
directly or indirectly acquires at least (i) a majority (in number of votes of
the securities or warrants, options or other rights to acquire such securities)
of a Person which have ordinary voting power for the election of directors or
(ii) a majority (by percentage of voting power) of the outstanding partnership
or other interests of a Person or (c) makes any Person a Subsidiary, or causes
any assets of such Person to be merged into the Borrower or such Subsidiary
pursuant to a merger, purchase of assets or other reorganization providing for
the delivery or issuance to the holders of such Person's then outstanding
securities or capital interests, in exchange for such securities, of cash or
securities of the Borrower or such Subsidiary, or any combination thereof.
"Affiliate" shall mean any Person (including any member of the immediate
family of any such natural person) (a) that directly or indirectly, through one
or more intermediaries, controls or is controlled by, or is under common control
with the Borrower or any Subsidiary, including, without limitation, the officers
and directors of the Borrower or such Subsidiary, (b) that directly or
beneficially owns or holds ten percent (10%) or more of any equity interest in
the Borrower or any Subsidiary, or (c) ten percent (10%) or more of whose voting
stock (or in the case of a Person which is not a corporation, ten percent (10%)
or more of any equity interest) is owned directly or beneficially or held by the
Borrower or any Subsidiary. Affiliate shall not be deemed to include the Agent
or any Lender. As used herein, the term "control" (including, with correlative
meanings, the terms "controlling," "controlled by" and "under common control
with") shall mean possession, directly or indirectly, of the power to direct the
management or policies of a Person, whether through ownership of securities, by
contract or otherwise.
"Agent" shall mean Sanwa Business Credit Corporation, a Delaware
corporation, in its capacity as agent for the Lenders and not in its individual
capacity as a Lender, and any successor in such capacity appointed pursuant to
subsection 12.11.
"Agreement" shall mean this Loan and Security Agreement, as the same may
hereafter be restated, amended, modified or supplemented from time to time.
"Audit Fee" shall have the meaning ascribed thereto in subsection 2.8.
"Authorized Officer" shall mean the Chief Executive Officer, the Senior
Vice President, any Executive Vice President, the Chief Financial Officer, any
Vice President, the Secretary or any Assistant Secretary of the Borrower;
provided that for purposes of requesting an advance on the Revolving Loan only
the Chief Executive Officer, the Senior Vice President, any Executive Vice
President and the Chief Financial Officer shall be Authorized Officers.
"Base Rate" shall mean the fluctuating interest rate per annum equal to the
Prime Rate from time to time in effect plus (i) prior to a Refinancing, one and
one-half percent (1.5%) per annum, and (ii) after the later to occur of (x) the
first anniversary of the Closing Date and (y) a Refinancing, one half of one
percent (0.5%) per annum.
"Base Rate Loans" shall mean Loans bearing interest at the Base Rate.
"Blocked Account Agreements" shall have the meaning ascribed thereto in
subsection 3.5.
"Blocked Accounts" shall have the meaning ascribed thereto in subsection
3.5.
"Borrower" shall mean Wright Medical Technology, Inc., a Delaware
corporation.
"Borrowing Availability" shall have the meaning ascribed thereto in
subsection 2.1(a).
"Borrowing Base Certificate" shall have the meaning ascribed thereto in
subsection 3.1.
"Borrowing Notice" shall have the meaning ascribed thereto in subsection
2.5(e).
"Business Day" shall mean (i) for all purposes other than as described in
clause (ii) below, any day other than a Saturday, Sunday or other day on which
banks in Chicago, Illinois are authorized or required to be closed and (ii) with
respect to all notices, determinations, borrowings, rate selections and payments
in connection with LIBOR Rate Loans, any day that is a Business Day described in
clause (i) above and that is also a day on which dealings in U.S. dollar
deposits are carried on in the applicable interbank LIBOR market.
"Canadian Benefit Plans" shall mean all material employee benefit plans
maintained or contributed to by the Borrower or any of its Subsidiaries that are
not Canadian Pension Plans including, without limitation, all profit sharing,
savings, supplemental retirement, retiring allowance, severance, pension,
deferred compensation, welfare, bonus, incentive compensation, phantom stock,
legal services, supplementary unemployment benefit plans or arrangement and all
life, health, dental and disability plans and arrangements in which the
employees or former employees of the Borrower or any of its Subsidiaries
employed in Canada participate or are eligible to participate but excluding all
stock option or stock purchase plans.
"Canadian Pension Plans" shall mean each plan which is considered to be a
pension plan for the purposes of any applicable pension benefits standards
statute and/or regulation in Canada established, maintained or contributed to by
the Borrower or any of its Subsidiaries for its or any of its Subsidiaries'
employees or former employees.
"Canadian Plans" shall mean, collectively, the Canadian Benefit Plans and
the Canadian Pension Plans.
"Capital Expenditures" shall mean, for any fiscal period, without
duplication, all expenditures (whether made in the form of cash (including,
without limitation, deposits) or other Property) by the Borrower or any
Subsidiary during such period for, or contracts for expenditures with respect
to, any fixed assets or improvements, or for renewals, replacements,
substitutions or additions thereto, which have a useful life of more than one
(1) year including, without limitation, the direct or indirect acquisition of
such assets by way of increased product or service charges, offset items or
otherwise, and shall include capitalized lease payments; provided that for
purposes of this definition, Capital Expenditures shall not include (i)
expenditures for Inventory consisting of instruments for use in the ordinary
course of the Borrower's business or (ii) any such expenditure constituting
consideration paid in connection with Permitted Investments pursuant to
subsection 8.4.
"Cash Equivalents" shall mean (i) bank certificates of deposit, bankers'
acceptances, deposit accounts, time deposits or overnight reverse repurchase
agreements (but only with banks organized under the laws of the United States or
of any State thereof (x) which do not have set-off rights against the foregoing,
other than set-offs for nominal service charges and similar fees incurred in the
ordinary course, and (y) which have combined capital and surplus in excess of
Fifty Million Dollars ($50,000,000)), (ii) commercial paper maturing within one
(1) year from the date issued and rated at least A-1 or the equivalent thereof
by Standard & Poors Corporation, or P-1 or the equivalent thereof by Moody's
Investors Service, Inc., and (iii) obligations maturing within one (1) year from
the date of acquisition issued or directly and fully guaranteed by the United
States government or any agency thereof.
"Cash Flow Coverage Ratio" shall mean, for any applicable fiscal period,
the ratio of (a) EBITDA for such period, minus cash Restricted Payments paid
during such period, minus income and franchise taxes paid during such period,
minus the unfinanced portion of Capital Expenditures during such period to (b)
the aggregate of (i) scheduled payments of principal with
respect to Indebtedness during such period, (ii) cash payments with respect to
Share Redemptions during such period, (iii) cash dividends with respect to
Preferred Stock paid during such period, and (iv) accrued interest and fees
during such period, but excluding interest on any intercompany Indebtedness
permitted by subsection 8.2.
"Change of Control" shall mean (a) with respect to the Guarantor, the
failure of the Borrower to own, free and clear of all Liens (other than Liens in
favor of the holders of the Senior Secured Notes) one hundred percent (100%) of
the outstanding Stock of the Guarantor on a full diluted basis, and (b) with
respect to the Borrower, (i) the failure of Kidd Kamm Equity Partners, L.P. and
the senior management of the Borrower to own, in the aggregate, free and clear
of all Liens (other than Liens in favor of the Borrower on the Borrower's stock
held by such Person), at least thirty-five percent (35%) of the outstanding
voting Stock of the Borrower on a fully diluted basis; provided that any sale of
equity securities of the Borrower pursuant to a private transaction or a public
offering under the Securities Act that results in Kidd Kamm Equity Partners,
L.P. and senior management of the Borrower owning in the aggregate less than 35%
of such Stock shall not constitute a Change of Control so long as such Persons
own in the aggregate, free and clear of all Liens (other than Liens in favor of
the Borrower on the Borrower's stock held by such Person), at least twenty
percent (20%) of the outstanding voting Stock of the Borrower on a fully diluted
basis, or (ii) the failure of the Borrower to employ three (3) or more of
Richard D. Nikolaev, Lewis H. Ferguson, George G. Griffin, Jack E. Parr and
Frederick Priess or, in lieu thereof, the person or persons selected by the
Borrower to replace each such person, if such replacements were approved in
writing by the Agent.
"Charges" shall mean all federal, state, county, city, municipal, local,
foreign or other governmental taxes (including, without limitation, taxes owed
to the PBGC at the time due and payable), duties, levies, assessments, charges,
liens, claims or encumbrances upon or relating to (i) the Collateral, (ii) the
Obligations, (iii) the employees, payroll, income or gross receipts of the
Borrower, (iv) the ownership or use of any Property of the Borrower or other
Guarantor, or (v) any other aspect of the Borrower's or the Guarantor's
business.
"Charter" shall mean the Borrower's Restated Certificate of Incorporation,
as the same may be amended, supplemented and restated from time to time.
"Chattel Paper" shall mean any "chattel paper," as such term is defined in
the Code, now owned or hereafter acquired by the Borrower or the Guarantor,
wherever located.
"Closing Date" shall mean the date of this Agreement.
"Closing Fee" shall have the meaning ascribed thereto in subsection 2.9.
"Code" shall have the meaning ascribed thereto in subsection 1.3.
"Collateral" shall mean all property and interests in property now owned or
hereafter acquired by the Borrower or the Guarantor in or upon which a Lien is
granted to the Agent, for the benefit of the Lenders, by the Borrower or the
Guarantor, whether under this Agreement or the other Financing Agreements or
under any other documents, instruments or writings executed by the Borrower or
the Guarantor and delivered to the Agent, including, without limitation,
Accounts, General Intangibles and Inventory.
"Collecting Banks" shall have the meaning ascribed thereto in subsection
3.5.
"Commitment" shall mean, with respect to each Lender, the commitment of
each Lender to make Loans to the Borrower with respect to the Revolving Loan as
of the Closing Date in the amounts set forth on Schedule 1; Schedule 1 shall be
amended and Lenders' Pro Rata Shares shall be adjusted from time to time to give
effect to the addition of any new Lenders pursuant to subsection 11.1.
"Conversion/Continuation Notice" shall have the meaning ascribed thereto in
subsection 2.5(f).
"Current Asset Base" shall have the meaning ascribed thereto in subsection
2.1.
"Default" shall mean an event which through the passage of time or the
service of notice, or both, would mature into an Event of Default.
"Default Rate" shall mean an interest rate per annum equal to (a) in the
case of principal or interest on the Revolving Loan, the sum of (i) the Base
Rate or LIBOR Rate, as applicable, from time to time in effect, plus (ii) two
percent (2%) and (b) in the case of all other Obligations, the sum of (i) the
Base Rate from time to time in effect, plus two percent (2%). With respect to
the Base Rate, such interest rate shall be a fluctuating rate and each change in
such interest rate shall take effect simultaneously with the corresponding
change in the Base Rate.
"Depository Account" shall have the meaning ascribed thereto in subsection
3.5.
"Distributor" shall mean an independent territory sales agent of the
Borrower.
"Distributor Agreement" shall mean a distribution agreement between the
Borrower or the Guarantor, as applicable, and a Distributor located within the
United States or Canada, as the same may be amended, modified or otherwise
supplemented from time to time.
"EBITDA" shall mean, for any applicable fiscal period, determined for the
Borrower and its Subsidiaries on a consolidated basis, Net Income for such
period, plus to the extent deducted in determining Net Income, interest expense
(including amortization of original issue discount, non-cash interest payments
and the interest portion of capitalized lease obligations) and
income and franchise taxes paid, plus to the extent deducted in determining Net
Income, amortization, depreciation and other similar non-cash charges, plus to
the extent deducted in determining Net Income, extraordinary losses, minus to
the extent added in determining Net Income, extraordinary gains, all as
determined in accordance with GAAP consistently applied.
"Eligible Accounts" shall have the meaning ascribed thereto in subsection
3.2.
"Eligible Inventory" shall have the meaning ascribed thereto in subsection
3.10.
"Environmental Laws" shall mean and includes the following as now in effect
or hereafter amended: the Comprehensive Environmental Response Compensation and
Liability Act, ("CERCLA"), 42 U.S.C. ss.9601 et. seq.; the Solid Waste Disposal
Act, as amended by the Resource Conservation and Recovery Act ("RCRA"), 42
U.S.C. ss.6901 et. seq.; the Toxic Substances Control Act ("TSCA"), 15 U.S.C.
ss.2601, et. seq.; the Clean Air Act, 42 U.S.C. ss.7401 et. seq.; the Federal
Water Pollution Control Act ("Clean Water Act"), 33 U.S.C. ss.1251 et. seq.; the
Emergency Planning and Community Right-to-Know Act, 42 U.S.C. ss.11001 et. seq.;
the Hazardous Materials Transportation Act, 49 U.S.C. ss.1801 et. seq.; the
Atomic Energy Act, 42 U.S.C. ss.2011 et. seq.; the Safe Drinking Water Act, 42
U.S.C. ss.300f et. seq. and the state law equivalents; any so-called "Superfund"
or "Superlien" law; and any statute, ordinance, code, rule, regulation, order,
decree or requirement under international, federal, state, regional, provincial
or local law (including, without limitation, administrative orders and consent
decrees) in effect and as amended regulating, relating to or imposing liability
or standards of conduct concerning public health and safety, protection of the
environment, or any pollutant or contaminant or hazardous, toxic or dangerous
substance, waste, chemical or material, as now or any time hereafter may be
existing.
"Environmental Matters" shall have the meaning ascribed thereto in
subsection 6.26(b).
"Equipment" shall mean all of the Borrower's machinery and equipment,
including, without limitation, processing equipment, conveyors, machine tools,
data processing and computer equipment with software and peripheral equipment
(other than software constituting part of the Accounts), and all engineering,
processing and manufacturing equipment, office machinery, furniture, materials
handling equipment, tools, instruments (other than instruments constituting part
of the Inventory), attachments, accessories and other equipment of every kind
and nature, trade fixtures and fixtures not forming a part of real property, all
whether now owned or hereafter acquired, and wherever situated.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and all rules and regulations promulgated thereunder.
"ERISA Affiliate" shall mean any Subsidiary or any Person, trade or
business that is, or was at any time during the previous six (6) years, along
with the Borrower or any
Subsidiary, in the same controlled group of corporations, under common control,
or otherwise, treated as a single employer for any purpose under Section 414 of
the IRC.
"Event of Default" shall mean the occurrence or existence of any one or
more of the following conditions or events:
(a) the Borrower fails to pay any of its Obligations hereunder when the
Obligations are due or are declared due or fails to deliver any
Borrowing Base Certificate or Monthly Report as required by Section
3.1;
(b) the Borrower or the Guarantor fails or neglects to perform, keep or
observe any of the covenants, conditions or agreements contained in
any of the subsections of this Agreement or in any of the other
Financing Agreements (other than occurrences referred to or embodied
in other provisions of this definition constituting immediate Events
of Default) by which it is bound for a period of thirty (30) days
after the earlier of (i) the Borrower's receipt of notice from the
Agent or (ii) actual knowledge of such breach by the Borrower or the
Guarantor;
(c) any warranty or representation now or hereafter made by the Borrower
or any Material Subsidiary in connection with this Agreement or any of
the other Financing Agreements is untrue or incorrect in any material
respect, or any schedule, certificate, statement, report, financial
data, notice or other writing furnished at any time by the Borrower or
any Material Subsidiary to the Agent or any Lender is untrue or
incorrect in any material respect, as of the date on which the
warranty, representation or the facts set forth therein are stated,
certified or deemed made;
(d) any Lien, levy or assessment is filed or recorded with respect to or
otherwise imposed upon all or any part of the Collateral or the
Property of the Borrower or any Subsidiary by any Governmental
Authority and that either (i) is in excess of Five Hundred Thousand
Dollars ($500,000) and such Lien, levy or assessment is not stayed,
vacated, bonded, paid or otherwise discharged within sixty (60) days
of such filing, recording or imposition, or (ii) is superior to the
Liens granted to the Agent, for the benefit of the Lenders;
(e) all or any part of the Collateral or the Property of the Borrower or
any Material Subsidiary is attached, seized, subjected to a writ or
distress warrant, or levied upon, or come within the possession or
control of any judgment creditor and on or before the sixty (60) day
period thereafter such Collateral or Property is not returned to the
Borrower or such Material Subsidiary or such writ, distress warrant or
levy is not dismissed, stayed, vacated, bonded or lifted;
(f) the Borrower or any Material Subsidiary makes an assignment for the
benefit of creditors; convenes a meeting of its creditors, or any
class thereof, for purposes of effecting a moratorium upon or
extension or composition of its debts; applies for, seeks,
consents to, or acquiesces in the appointment of a receiver, trustee or
custodian to take possession of all or any substantial portion of the
Property of the Borrower or any Material Subsidiary; commences any
bankruptcy, reorganization or insolvency case or proceeding or other
proceeding under any federal, state or other law for relief of debtors;
or the Borrower or such Material Subsidiary proposes, authorizes or
consents to the taking of any of the foregoing actions;
(g) the Borrower or any Material Subsidiary fails to obtain the dismissal,
within forty-five (45) days after the commencement thereof, of any
bankruptcy, reorganization or insolvency proceeding, or other
proceeding under any law for the relief of debtors instituted against
it; fails actively to oppose any such proceeding; or in any such
proceeding, defaults or files an answer admitting the material
allegations upon which the proceeding was based or states in any
filing in such proceeding its willingness to have an order for relief
entered or its desire to seek liquidation, reorganization or
adjustment of any of its debts;
(h) without the application, approval or consent of the Borrower or any
Material Subsidiary, any receiver, trustee, examiner, liquidator,
custodian or similar official is appointed to take possession of all
or any substantial portion of the Property of the Borrower or such
Material Subsidiary, or any committee of the Borrower's or such
Material Subsidiary's creditors or any class thereof, is formed for
the purpose of monitoring or investigating the financial affairs of
the Borrower or such Material Subsidiary or enforcing such creditors'
rights, or the filing of any motion, complaint or other pleading in
any bankruptcy, reorganization or insolvency case or proceeding of any
Person other than the Borrower or such Material Subsidiary that seeks
the consolidation the Borrower's or such Material Subsidiary's assets
and liabilities with the assets and liabilities of such Person;
(i) the Borrower or any Material Subsidiary voluntarily or involuntarily
dissolves or is dissolved, liquidates or is liquidated; provided that
the Borrower shall not be required to preserve the existence of any
Subsidiary (i) that the Board of Directors of the Borrower determines
to be no longer necessary in the conduct of the business of the
Borrower and its Subsidiaries taken as a whole and (ii) the
dissolution or liquidation of which would not have a Material Adverse
Effect;
(j) the Borrower or any Material Subsidiary ceases to be Solvent or admits
in writing that it is not Solvent or fails to pay all or any material
portion (measured in dollar amounts) of its debts as they become due
or admits in writing its present or prospective inability to pay its
debts as they become due;
(k) the Borrower or any Subsidiary is enjoined, restrained, or in any way
prevented by the order of any court or any administrative or
regulatory agency from conducting all or any material part of its
business representing ten percent (10%) or more of
the Borrower's and its Subsidiaries' business taken as a whole (based
upon gross revenues for the most recent twelve months ending on the
date of such occurrence);
(l) any default or breach under any agreement(s) evidencing Indebtedness
of the Borrower or any Subsidiary in an aggregate amount in excess of
Five Hundred Thousand Dollars ($500,000) shall occur and shall
continue after any applicable grace period specified in any such
document if the effect of such default or breach is to accelerate, or
to permit the acceleration of, the maturity of all or any part of any
such Indebtedness, whether or not such default or breach shall be
waived by the holders or trustees (if any) for such Indebtedness, or
any such Indebtedness shall be declared to be due and payable, or be
required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof;
(m) a material breach by the Borrower or any Material Subsidiary occurs
under any agreement, document or instrument (other than an agreement,
document or instrument evidencing Indebtedness), whether heretofore,
now or hereafter existing between the Borrower or such Material
Subsidiary and any other Person, and such breach continues for more
than thirty (30) days after such breach first occurs;
(n) in the sole judgment of the Agent a material adverse change occurs in
the business, operations or condition (financial or other) of the
Borrower, or of the Borrower and its Subsidiaries taken as a whole, or
in the value of the Collateral;
(o) any material damage to, or loss, theft, or destruction of, any of the
Collateral with a value in excess of Five Hundred Thousand Dollars
($500,000), whether or not insured, or any strike, lockout, labor
dispute, embargo, condemnation, act of God or public enemy, or other
casualty which results in or causes cessation or substantial
curtailment of production or other revenue producing activities at any
Facility for more than ten (10) consecutive days; provided that such
occurrence shall not constitute an Event of Default if such occurrence
is covered by the Borrower's business interruption insurance in an
amount which, in the judgment of the Required Lenders, is reasonably
expected to cover the period during which such revenue-producing
activities have ceased or are substantially curtailed;
(p) entry of a judgment or judgments in an aggregate amount in excess of
Five Hundred Thousand Dollars ($500,000) against the Borrower or any
Subsidiary which are not (i) stayed, bonded, vacated, paid or
discharged within thirty (30) days after entry or (ii) fully covered
by insurance as to which the insurance carrier has acknowledged
coverage to the Borrower in writing;
(q) the loss, suspension, revocation or failure to obtain or renew any
license or permit now held or hereafter acquired by the Borrower or
any of its Subsidiaries, which loss, suspension, revocation or failure
to renew shall have a Material Adverse Effect;
(r) the Borrower or the Guarantor fails to perform, keep or observe any of
the covenants contained in subsections 3.5, 7.5, 7.6, 7.11 or in
Section 8;
(s) any civil or criminal action, suit or proceeding is initiated against
the Borrower or any Subsidiary under any federal or state racketeering
statute (including, without limitation, the Racketeer Influenced and
Corrupt Organization Act of 1970, as amended);
(t) a Change in Control occurs;
(u) the Agent does not have or ceases to have a legal, valid and perfected
first priority Lien on the Collateral (subject to Permitted Liens) for
any reason other than the failure of the Agent to take any action
within its total control;
(v) any of the Financing Agreements shall cease for any reason to be in
full force and effect or is declared null and void or the Borrower,
any Subsidiary or any other Person (other than the Agent or any
Lender) shall disavow its respective obligations thereunder or shall
deny that it has any further obligations thereunder or shall contest
or challenge the validity or enforceability of any thereof, the
legality or enforceability of any of the Obligations or the perfection
or priority of any Lien granted to the Agent, or gives notice to such
effect; or
(w) any Subsidiary fails or neglects to perform, keep or observe any of
the covenants, conditions or agreements contained in any Financing
Agreement (other than the Agreement) to which it is a party, which
breach continues after any applicable grace period specified in such
Financing Agreement.
The occurrence or existence of any of the foregoing events shall constitute an
immediate Event of Default unless notice by the Agent or a cure period is
specifically required by the description of such event before such event matures
into an Event of Default.
"Excess Interest" shall have the meaning ascribed thereto in subsection
2.5(d).
"Facility" shall mean each of the Borrower's facilities located in
Arlington, Tennessee, the Guarantor's facilities located in Mississauga,
Ontario, Canada and any other facility established by the Borrower or the
Guarantor hereafter in accordance with the terms of this Agreement.
"FDA shall mean the United States Food and Drug Administration, or any
successor thereto.
"FDCA" shall mean the Food, Drug and Cosmetic Act, as amended.
"Federal Funds Rate" shall mean, for any day, the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System only arranged by Federal Funds brokers as published as of such
day by the Federal Reserve Bank of New York, or if such rate is not so
published, the rate then used by first class banks in extending overnight loans
to other first class banks.
"Financial Statements" shall have the meaning ascribed thereto in
subsection 6.4.
"Financing Agreements" shall mean, collectively, this Agreement, the
Revolving Loan Notes, the Intercreditor Agreement, the Wright Guaranty, the
Wright Security Agreement and all other agreements, instruments and documents,
including, without limitation, security agreements, loan agreements, notes,
guaranties, mortgages, deeds of trust, agreements, documents, instruments,
pledges, powers of attorney, consents, assignments, contracts, notices, leases,
financing statements and all other written matter whether heretofore, now, or
hereafter executed by or on behalf of the Borrower or any other Person and
delivered to the Agent or any Lender in connection with this Agreement, together
with all agreements and documents between the Borrower and the Agent or any
Lender referred to therein or contemplated thereby, as the same may hereafter be
amended, modified or supplemented from time to time.
"Financing Fee" shall have the meaning ascribed thereto in subsection 2.11.
"Financing Fee Reserve" shall mean a reserve in an amount equal to the
amount of the Financing Fee.
"Fiscal Quarter" shall mean any of the quarterly fiscal periods of the
Borrower and the Guarantor.
"Fiscal Year" shall mean the fiscal year of the Borrower and the Guarantor
ending on December 31 each year.
"Fixtures" shall mean all "fixtures" as such term is defined in the Code,
now owned or hereafter acquired by the Borrower or the Guarantor, wherever
located.
"Funding Date" shall mean the date of each funding under the Revolving Loan
or issuance of a Letter of Credit or a Lender Guaranty therefor, which date in
all cases shall be a Business Day.
"General Intangibles" shall mean all of the Borrower's and the Guarantor's
presently owned or hereafter acquired general intangibles solely relating to
Accounts and Inventory including, without limitation, goodwill, choses in
action, causes of action, franchises, methods, sales literature, drawings,
specifications, descriptions, name plates, catalogs, dealer contracts, supplier
contracts, distributor agreements, customer lists, contract rights, confidential
information, consulting
agreements, employment agreements, engineering contracts, insurance policies,
licenses, permits, deposit accounts, letters of credit, rights to refunds or
indemnification and other assets, in each case only to the extent such items
relate to Accounts and Inventory; and proceeds of all of the foregoing
including, without limitation, insurance proceeds only to the extent relating to
Accounts and Inventory; provided that General Intangibles shall exclude all
Intellectual Property (as defined in the Senior Secured Note Indenture).
"Generally Accepted Accounting Principles" or "GAAP" shall mean, as of the
date of any determination with respect thereto, generally accepted accounting
principles as used by the Financial Accounting Standards Board and/or the
American Institute of Certified Public Accountants, consistently applied and
maintained throughout the periods indicated.
"Governmental Authority" shall mean any nation or government or any
political subdivision thereof, any state or other political subdivision thereof,
and any agency, authority, court, central bank, instrumentality, department or
other law, regulation or rulemaking entity exercising executive, parliamentary,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government.
"Guarantor" shall mean Wright Medical Technology Canada Ltd., an Ontario
corporation.
"Guaranty" of a Person shall mean any agreement by which such Person
guarantees, endorses or otherwise in any way becomes or is responsible for any
obligations of any other Person, whether directly or indirectly, by agreement to
purchase the indebtedness of any other Person or through the purchase of goods,
supplies or services, or maintenance of working capital or other balance sheet
covenants or conditions, or by way of stock purchase, capital contribution,
advance or loan for the purpose of paying or discharging any indebtedness or
obligation of such other Person or otherwise assures any creditor of such other
Person against loss.
"Hazardous Materials" shall mean the following: hazardous substances;
hazardous wastes; polychlorinated biphenyls ("PCB"'s") or any substance or
compound containing PCB's; asbestos or any asbestos-containing materials in any
form or condition; radon; any other radioactive materials including any source,
special nuclear or by-product material; petroleum, crude oil or any fraction
thereof which is liquid at standard conditions of temperature and pressure (60
degrees Fahrenheit and 14.7 pounds per square inch absolute); and any other
pollutant or contaminant or hazardous, toxic or dangerous chemicals, materials
or substances, as all such terms are used in their broadest sense and defined by
Environmental Laws.
"Indebtedness" shall mean, as to any Person, at a particular time (i)
indebtedness for borrowed money or for the deferred purchase price of property
or services (other than current accounts payable arising in the ordinary course
of business on terms customary in the trade) in respect of which such Person is
liable, contingently or otherwise, as guarantor, obligor or otherwise or any
commitment by which such Person assures a creditor against loss, including
contingent reimbursement obligations with respect to letters of credit, (ii)
indebtedness guaranteed in any manner by such Person, including guaranties in
the form of an agreement to repurchase or reimburse; provided that the amount of
indebtedness represented by any guaranty of limited recourse shall be the lesser
of the amount of indebtedness so guaranteed or the value of the asset to which
the recourse of such indebtedness is limited, (iii) obligations under leases
which shall have been or should be, in accordance with Generally Accepted
Accounting Principles, recorded as capital leases in respect of which
obligations such Person is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or in respect of which obligations such Person assures a
creditor against loss, (iv) any unfunded obligation of, or withdrawal liability
incurred but not paid by, such Person with respect to a Multiemployer Plan, (v)
net liabilities under Rate Hedging Obligations and (vi) all accounts payable of
such Person, which are not being contested in good faith by appropriate
proceedings and which are more than ninety (90) days past due.
"Initial Term" shall have the meaning ascribed thereto in subsection 2.7.
"Instrument" shall mean any "instrument," as such term is defined in the
Code, now owned or hereafter acquired by the Borrower or the Guarantor, wherever
located, other than instruments that constitute, or are a part of a group of
writings that constitute, Chattel Paper.
"Intellectual Property" shall mean all of the Borrower's and the
Guarantor's present and future designs, patents, patent rights and applications
therefor, technology, trademarks and registrations or applications therefor,
trade names, inventions, copyrights and all applications and registrations
therefor, advertising matter, software or computer programs, license rights,
trade secrets, methods, processes, knowhow, drawings, specifications,
descriptions, and all memoranda, notes, and records with respect to any research
and development, whether now owned or hereafter acquired by the Borrower or the
Guarantor.
"Intercreditor Agreement" shall mean that certain Intercreditor Agreement,
dated as of the Closing Date, between the Agent and the Trustee of the Senior
Secured Note Indenture, as the same may be amended, modified or otherwise
supplemented from time to time.
"Interest Period" shall mean, with respect to a LIBOR Rate Loan, a period
of one, two or three months, as available, commencing on a Business Day,
selected by Borrower pursuant to subsection 2.6. Such Interest Period shall end
on the day in the relevant succeeding calendar month which corresponds
numerically to the beginning day of such Interest Period; provided that if there
is no such numerically corresponding day in such next, second or third
succeeding month, such Interest Period shall end on the last Business Day of
such next, second or third succeeding month. If an Interest Period would
otherwise end on a day which is not a Business Day, such Interest Period shall
end on the next succeeding Business Day; provided that if such next succeeding
Business Day falls in a new month, such Interest Period shall end on the
immediately preceding Business Day. In the case of immediately succeeding
Interest Periods, each successive Interest Period shall commence on the day on
which the immediately preceding Interest Period expires. Notwithstanding any of
the foregoing, no Interest Period shall extend beyond the Revolving Loan
Maturity Date.
"Inventory" shall mean all of the inventory of the Borrower or the
Guarantor of every kind and description, now or at any time hereafter owned by
or in the custody or possession, actual or constructive, of the Borrower or the
Guarantor, wherever located, including, without limitation, all merchandise, raw
materials, parts, supplies, instruments related to implants of medical devices,
work-in-process and finished goods intended for sale, together with all the
containers, packing, packaging, shipping and similar materials related thereto,
and including such inventory as is temporarily out of the Borrower's or the
Guarantor's custody or possession, including inventory on the premises of other
Persons and items in transit, and including any goods reclaimed, returned or
repossessed upon any accounts, documents, Instruments or Chattel Paper relating
to or arising from the sale of inventory, and all substitutions and replacements
therefor, and all additions and accessions thereto, and all ledgers, books of
account, records, computer printouts, computer runs, microfilm, microfiche and
other computer-prepared information relating to any of the foregoing, and any
and all proceeds of any of the foregoing, including, without limitation,
proceeds of insurance policies thereon.
"Investment" of a Person shall mean any loan, advance, extension of credit
(other than accounts receivable arising in the ordinary course of business on
terms customary in the trade), deposit account or contribution of capital by
such Person to any other Person or any investment in, or purchase or other
acquisition of, the stock, partnership interests, notes, debentures or other
securities of any other Person made by such Person. The amount of any Investment
shall be the original cost of such Investment plus the costs of all additions
thereto.
"IRC" shall mean the Internal Revenue Code of 1986, as amended from time to
time.
"Issuing Bank" shall mean any bank or financial institution which is
approved by the Borrower and the Agent and which issues Letters of Credit for
the account of the Borrower pursuant to subsection 2.1.
"ITA" means the Income Tax Act (Canada), as amended from time to time.
"Kidd Kamm" shall mean Kidd, Kamm & Company, a Delaware corporation.
"Lenders" shall mean the financial institutions signatory hereto and,
subject to the terms and conditions hereof, their respective successors and
assigns.
"Lender Guaranties" and "Lender Guaranty" shall have the respective
meanings ascribed thereto in subsection 2.1(c).
"Lender Guaranty Fees" shall have the meaning ascribed thereto in
subsection 2.17.
"Lender Guaranty Liability" means, as to each Lender Guaranty, all
liabilities of the Lenders with respect to the transaction for which such Lender
Guaranty was issued, whether contingent or otherwise, including with respect to
a letter of credit: (a) the amount available to be drawn or which may become
available to be drawn; (b) all amounts which have been paid or made available by
the Issuing Bank or the Lenders to the extent not reimbursed by the Borrower;
and (c) all unpaid interest, fees and expenses with respect thereto.
"Lender Guaranty Reserve" means, at any date of determination, a reserve in
an amount equal to (a) the aggregate amount of Lender Guaranty Liability with
respect to Lender Guaranties outstanding at such time, plus (b) the aggregate
amount theretofore paid by the Lenders under the Lender Guaranties for which the
Lenders have not been reimbursed by the Borrower or which has not been debited
to the Loan Account pursuant to subsection 2.1(c)(i).
"Letter of Credit" shall mean a standby letter of credit or bankers
acceptance issued by an Issuing Bank at the request and for the account of the
Borrower and for which the Lenders incur Lender Guaranties.
"Liabilities" shall mean liabilities of the Borrower and each Subsidiary
which are or should be reflected on a balance sheet of the Borrower and each
Subsidiary in accordance with Generally Accepted Accounting Principles, and
shall include Indebtedness.
"LIBOR Rate" shall mean, for each Interest Period, a rate of interest equal
to the sum of:
(a) the quotient of (i) the rate of interest determined by Agent to be the
rate at which deposits in U.S. Dollars for the relevant Interest
Period are offered based on information presented on the Telerate
Screen as of 11:00 a.m. (London time) on the applicable LIBOR Rate
Determination Date in the approximate amount of the LIBOR Rate Loan
and having a maturity approximately equal to such Interest Period;
provided that if at least two such offered rates appear on the
Telerate Screen in respect of such Interest Period, the arithmetic
mean of all such rates (as determined by Agent) will be the rate used;
provided further, that if the Telerate System ceases to provide LIBOR
quotations, such rate shall be the average rate of interest determined
by Agent at which deposits in U.S. Dollars are offered for the
relevant Interest Period by The Sanwa Bank, Limited (or its successor)
to banks with combined capital and surplus in excess of $500,000,000
in the London interbank market as of 11:00 a.m. (London time) on the
applicable LIBOR Rate Determination Date in the approximate amount of
the LIBOR Rate Loan and having a maturity approximately equal to such
Interest Period, divided by
(ii) one minus the rate (expressed as a decimal) of reserve
requirements in effect on the LIBOR Rate Determination Date
(including, without limitation, all basic, supplemental, marginal and
emergency reserves under any regulations of the Board
of Governors of the Federal Reserve System or other governmental
authority having jurisdiction with respect thereto, as now and from
time to time in effect) for Eurocurrency funding (currently referred
to as "Eurocurrency liabilities" in Regulation D) which are required
to be maintained by a member bank of the Federal Reserve System;
plus, (b) three and one-quarter percent (3.25%) per annum.
The LIBOR Rate shall be adjusted to the nearest one-sixteenth percent (1/16%)
or, if there is no nearest one-sixteenth percent (1/16%), to the next higher
one-sixteenth percent (1/16%).
"LIBOR Rate Determination Date" shall mean each date for calculating the
LIBOR Rate for purposes of determining the interest rate applicable to any LIBOR
Rate Loan made pursuant to subsection 2.5. The LIBOR Rate Determination Date
shall be the second Business Day prior to the first day of the related Interest
Period for a LIBOR Rate Loan.
"LIBOR Rate Loans" shall mean Loans bearing interest at the LIBOR Rate.
"Lien" shall mean, with respect to the Property of any Person, any
statutory or contractual lien, security interest, mortgage, pledge, claim,
encumbrance, charge, hypothecation, assignment, deposit arrangement, filing of,
or agreement to give, a financing statement, encumbrance or preference, priority
or other security agreement or preferential arrangement of any kind or nature
whatsoever, whether voluntary or involuntary (including, without limitation, the
interest of a vendor or lessor under any conditional sale, capitalized lease or
other title retention agreement), in, of or on any of the Property of such
Person in favor of any other Person.
"Litigation" shall have the meaning ascribed thereto in subsection 6.14.
"Loan" or "Revolving Loan" shall have the meaning ascribed thereto in
subsection 2.1.
"Loan Account" shall have the meaning ascribed thereto in subsection 2.14.
"Loan Year" shall mean the period of twelve (12) consecutive months
commencing on the Closing Date and each succeeding period of twelve (12)
consecutive months commencing on each anniversary of the Closing Date during the
Initial Term and any Renewal Term.
"Management Services Agreement" shall mean that certain Management Services
Agreement dated as of June 30, 1993 by and between the Borrower and Kidd Kamm,
as the same may have been heretofore or may hereafter be amended, modified or
otherwise supplemented in accordance with the terms of this Agreement.
"Material Adverse Effect" shall mean, as determined by the Required Lenders
in their reasonable business judgment, a material adverse effect upon (a) the
Agent's Lien priority in, or the value of, the Collateral, or (b) the business,
properties, operations or condition (financial or otherwise) or business
prospects of the Borrower or of the Borrower and its Subsidiaries taken as a
whole as a result of the occurrence or existence of any single event or
condition or series of events or conditions in the aggregate, or (c) the ability
of the Borrower or any Subsidiary to perform its obligations under any of the
Financing Agreements, or (d) the validity or enforceability of any of the
Financing Agreements or the rights, powers and remedies of the Agent or any
Lender to enforce or collect the Obligations. In determining whether any
individual event would result in a Material Adverse Effect, notwithstanding that
such event does not of itself have such effect, a Material Adverse Effect shall
be deemed to have occurred if the cumulative effect of such event and all other
then existing events would result in a Material Adverse Effect.
"Material Restructuring" shall mean an Acquisition or any transaction or
series of transactions resulting in an Acquisition which has been approved by
the Board of Directors of the Borrower and not consented to by the Required
Lenders.
"Material Subsidiary" shall mean (a) Guarantor and (b) any other Subsidiary
of the Borrower whose (i) sales constitute ten percent (10%) or more of the
total sales of the Borrower and its Subsidiaries on a consolidated basis, (ii)
assets constitute ten percent (10%) or more of the total assets of the Borrower
and its Subsidiaries on a consolidated basis or (iii) portion of EBITDA
constitutes ten percent (10%) or more of EBITDA.
"Monthly Report" shall have the meaning ascribed thereto in subsection 3.1.
"Multiemployer Plan" shall mean any multiemployer plan within the meaning
of Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate
contributes, is obligated to contribute or was required to contribute within the
immediately preceding six (6) years.
"Net Income" shall mean, for any applicable fiscal period, determined for
the Borrower and its Subsidiaries on a consolidated basis, the consolidated net
income after income and franchise taxes and shall have the meaning given such
term by Generally Accepted Accounting Principles; provided that there shall be
specifically excluded therefrom tax-adjusted (i) gains or losses from the sale
of capital assets, (ii) net income of any Person in which the Borrower or any
Subsidiary has an ownership interest, unless received by the Borrower in a cash
distribution, and (iii) any gains arising from extraordinary items, as defined
by Generally Accepted Accounting Principles.
"Note" or "Notes" shall mean one or more of the Revolving Loan Notes, or a
combination thereof.
"Obligations" shall mean all of the Borrower's obligations, liabilities and
indebtedness to the Agent and the Lenders and/or to any affiliate of the Agent
or the Lenders of any and every kind and nature, whether heretofore, now or
hereafter owing, arising, due or payable and
howsoever evidenced, created, incurred, acquired, or owing, whether primary,
secondary, direct, indirect, contingent, fixed or otherwise (including, without
limitation, obligations of performance) and whether arising or existing under
written agreement, oral agreement or operation of law including, without
limitation, all of the Borrower's indebtedness, liabilities and obligations to
the Agent and the Lenders or any Participant under this Agreement and the other
Financing Agreements.
"Participant" shall mean any Person now or from time to time hereafter
participating with any Lender in the Loans made by such Lender to the Borrower
pursuant to this Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any successor
thereto.
"Pension Plan" shall mean any Plan that is or was a defined benefit plan
(other than a Multiemployer Plan) defined in Section 3(35) of ERISA.
"Permitted Investments" shall have the meaning ascribed thereto in
subsection 8.4.
"Permitted Liens" shall have the meaning ascribed thereto in subsection
8.1.
"Person" shall mean any individual, sole proprietorship, partnership, joint
venture, trust, limited liability company, limited liability partnership,
unincorporated organization, association, corporation, institution, entity,
party, or government (whether national, federal, state, provincial, county,
city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"Plan" shall mean any employee benefit plan within the meaning of Section
3(3) of ERISA (other than any Multiemployer Plan) under which the Borrower or
any ERISA Affiliate is, or was at any time within the previous six (6) years, an
"employer" within the meaning of Section 3(5) of ERISA.
"Preferred Stock" shall mean, collectively, the Borrower's Series A
Preferred Stock, par value $.01 per share, Series B Preferred Stock, par value
$.01 per share and Series C Preferred Stock, par value $.01 per share.
"Preferred Stock Documents" shall mean all documents, agreements and
instruments pursuant to which any class of Preferred Stock was issued, including
without limitation, the Charter.
"Prime Rate" shall mean the highest "prime rate" of interest reported, from
time to time, by The Wall Street Journal; provided, however, that in the event
that The Wall Street Journal ceases reporting a "prime rate", "Prime Rate" shall
mean the per annum rate of interest
reported as the "Bank Prime Loan" rate for the most recent weekday for which
such rate is reported in Statistical Release H.15 (519) published from time to
time by the Board of Governors of the Federal Reserve System; provided further
that in the event that both of the aforesaid indices cease to be published or to
report rates of the aforesaid types, the "Prime Rate" shall be determined from a
comparable index chosen by the Agent in good faith. The "Prime Rate" shall
change effective on the date of the publication of any change in the applicable
index by which such "Prime Rate" is determined.
"Pro Rata Share" shall mean the percentage obtained by dividing (a) the
Commitments of a Lender by (b) the aggregate Commitments of all Lenders, as such
percentage may be adjusted by assignments permitted pursuant to subsection 11.1.
The Commitments of each Lender with respect to the Revolving Loan as of the
Closing Date are set forth on Schedule 1; Schedule 1 shall be amended and the
Lenders' Pro Rata Shares shall be adjusted from time to time to give effect to
the addition of any new Lenders pursuant to subsection 11.1. The sum of the Pro
Rata Shares of all Lenders at any date of determination shall equal one hundred
percent (100%).
"Projections" shall mean the projected balance sheets, profit and loss
statements, and cash flow statements of the Borrower and its Subsidiaries on a
consolidated and consolidating basis, prepared in accordance with Generally
Accepted Accounting Principles, together with appropriate supporting details and
a statement of underlying assumptions, which have been and will be delivered to
the Agent and the Lenders in accordance with the terms hereof by the Borrower, a
copy of the first of which is attached as Exhibit 6.4-2.
"Property" of a Person shall mean any and all assets or property, whether
real, personal, tangible, intangible, or mixed, of such Person, or other assets
or property leased or operated by such Person.
"Rate Hedging Obligations" of a Person shall mean any and all obligations
of such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefore), under (i) any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party's Property, liabilities or exchange
transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts and warrants, and (ii) any and all
cancellations, buy backs, reversals, terminations or assignments of any of the
foregoing.
"Rate Option" shall mean the Base Rate or the LIBOR Rate, as applicable.
"Real Estate" of a Person shall mean the real property, mineral rights,
leasehold or other interests in real property together with any purchase options
and other rights related to such leaseholds or other interests owned, leased,
used or operated now or hereafter by such Person, all
Fixtures and personal property used in conjunction therewith and such Person's
rights to leases, rents and profits with respect thereto.
"Refinancing" shall mean the date of funding of a refinancing of the
Borrower's Indebtedness for borrowed money (other than the Revolving Loan)
either through the proceeds of indebtedness or the sale of equity securities
which funding date shall be on a date on which no Default or Event of Default
has occurred and is continuing (or would occur after giving effect to such
refinancing) such that after such refinancing the sum of (i) the scheduled and
mandatory principal payments on the Indebtedness of the Borrower (other than the
Revolving Loan) plus (ii) the Share Redemptions required to be paid with respect
to such refinancing shall not exceed in the aggregate (x) $3,000,000 on an
annualized basis through September 30, 1999 and (y) $5,000,000 on an annualized
basis from October 1, 1999 through September 30, 2002.
"Renewal Term" shall have the meaning ascribed thereto in subsection 2.7.
"Required Lenders" shall mean (i) Lenders having in the aggregate at least
fifty-one percent (51%) of the Total Revolving Loan Facility, or (ii) if the
Revolving Credit Facility has been terminated, Lenders having in the aggregate
at least fifty-one percent (51%) of the aggregate outstanding amount of the
Loans.
"Restricted Payment" shall mean: (a) any dividend or other distribution,
direct or indirect, on account of any shares of any class of Stock of the
Borrower now or hereafter outstanding, except a dividend payable solely in
shares of that class of Stock to the holders of that class; (b) Share
Redemption, (c) any payment or prepayment of principal or premium, if any, or
interest on, fees with respect to, redemption, conversion, exchange, purchase,
retirement, defeasance, sinking fund or similar payment with respect to
Subordinated Debt of the Borrower; or (d) any payment by the Borrower of any
management fees, advisor fees or similar fees whether pursuant to a management
agreement or otherwise to any Affiliate of the Borrower.
"Revolving Loan Maturity Date" shall mean September 13, 1999, subject to
subsection 2.7.
"Revolving Loan Notes" shall have the meaning ascribed thereto in
subsection 2.3.
"SBCC" shall mean Sanwa Business Credit Corporation, a Delaware
corporation, in its individual capacity, and its successors.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Senior Secured Note Indenture" shall mean that certain Indenture dated as
of June 30, 1993 between the Borrower and The First National Bank of Boston, as
trustee, as the
same may have been heretofore or may hereafter be amended, modified or
supplemented from time to time in accordance with the terms of this Agreement.
"Senior Secured Notes" shall mean the senior secured promissory notes
issued pursuant to the Senior Secured Note Indenture.
"Service" shall mean the Internal Revenue Service and any successor
thereof.
"Share Redemptions" shall mean (a) any direct or indirect redemption,
conversion, exchange, retirement, sinking fund or similar payment, purchase or
other acquisition for value of any shares of any class of Stock of the Borrower
now or hereafter outstanding; or (b) any payment made to retire, or obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of Stock of Borrower now or hereafter outstanding.
"Solvency Affidavit" shall mean the solvency affidavit of even date
herewith executed and delivered by the chief financial officer of the Borrower
in favor of the Agent, for the benefit of the Lenders.
"Solvent" shall mean, when used with respect to any Person, that (i) the
fair saleable value of its Property is in excess of the total amount of its
Liabilities (including for purposes of this definition all liabilities, whether
or not reflected on a balance sheet prepared in accordance with Generally
Accepted Accounting Principles, and whether direct or indirect, fixed or
contingent, secured or unsecured, disputed or undisputed), (ii) it is able to
pay its debts or obligations in the ordinary course as they mature, and (iii)
that Person has capital sufficient to carry on its business and all businesses
in which it is about to engage. "Solvency" shall have a correlative meaning.
"Stock" shall mean all shares, options, general or limited partnership
interests or other equivalents (regardless of how designated), participation or
other equivalents (however designated) of or in a corporation, partnership or
equivalent entity, whether voting or non-voting, including, without limitation,
common stock, warrants, preferred stock, convertible debentures or any other
debt or equity security, and all agreements, instruments and documents
convertible, in whole or in part, into any one or more of all of the foregoing.
"Subordinated Debt" shall mean any Indebtedness (a) the payment of which is
subordinated to the payment of the Obligations and (b) which is incurred
pursuant to terms, conditions and documentation in form and substance
satisfactory to the Required Lenders.
"Subsidiary" of a Person shall mean (i) any corporation of which more than
fifty percent (50%) of the outstanding securities having ordinary voting power
to elect a majority of the board of directors or other Persons performing
similar functions is at any time of determination, directly or indirectly, owned
or controlled by such Person or by one or more of its Subsidiaries or by such
Person and one or more of its Subsidiaries, or (ii) any partnership,
association, trust, grantor trust, joint venture or similar business
organization more than 50% of the equity or partnership
interests having ordinary voting power or power of direction of which shall at
any time of determination be so owned or controlled. Unless otherwise expressly
provided or the context requires otherwise, all references herein to a
"Subsidiary" shall mean a Subsidiary of the Borrower.
"Taxes" shall mean taxes, liens, imposts, deductions, Charges or
withholdings, and all liabilities with respect thereto imposed by any
Governmental Authority (together with any fines, interest, penalties or other
additions thereto), excluding taxes imposed on or measured by the net income of
any Lender by the jurisdictions under the laws of which such Lender is organized
or any transfer taxes imposed as a results of the transfer of any Notes.
"Telerate Screen" shall mean the display designated as Screen 3750 on the
Telerate System or such other screen on the Telerate System as shall display the
London interbank offered rates for deposits in U.S. dollars quoted by selected
banks.
"Termination Date" shall mean the earlier of (i) the Revolving Loan
Maturity Date then in effect and (ii) the date of termination of the Lenders'
obligation to make advances under the Revolving Loan pursuant to subsection 9.1.
"Termination Event" shall mean: (a) the tax disqualification of a Plan
under Section 401(a) of the IRC; (b) a "Reportable Event" described in Section
4043 of ERISA and the regulations issued thereunder unless the thirty (30) day
notice to the PBGC has been waived for the event; (c) the withdrawal of the
Borrower or any ERISA Affiliate from a Pension Plan during a plan year in which
it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA or was
deemed such under Section 4062(e) of ERISA; (d) the termination of a Pension
Plan, the filing of a notice of intent to terminate a Pension Plan or the
treatment of a Pension Plan amendment as a termination under Section 4041(e) of
ERISA; (e) the institution of proceedings to terminate a Pension Plan by the
PBGC; (f) any other event or condition which would constitute grounds under
Section 4042(a) of ERISA for the termination of, or the appointment of a trustee
to administer, any Pension Plan; (g) the partial or complete withdrawal of the
Borrower or any ERISA Affiliate from a Multiemployer Plan; (h) the imposition of
a Lien pursuant to Section 412 of the IRC or Section 302 of ERISA; (i) any event
or condition which results in the reorganization or insolvency of a
Multiemployer Plan under Section 4241 or Section 4245 of ERISA, respectively; or
(j) any event or condition which results in the termination of a Multiemployer
Plan under Section 4041A of ERISA or the institution by the PBGC of proceedings
to terminate a Multiemployer Plan under Section 4042 of ERISA.
"Total Revolving Loan Facility" shall mean Thirty Million Dollars
($30,000,000), as such amount may be reduced, if at all, from time to time in
accordance with the terms of this Agreement.
"Unused Line Fee" shall have the meaning ascribed thereto in subsection
2.12.
"United States" shall mean the United States of America.
"Wright Canada Guaranty" shall mean that certain Canadian Guarantor
Guarantee, dated as of the Closing Date, in form and substance satisfactory to
the Agent, executed by the Guarantor in favor of the Agent, guarantying the
obligations of the Borrower under this Agreement, as the same may hereafter be
amended, modified or supplemented from time to time.
"Wright Canada Security Agreement" shall mean that certain Canadian
Guarantor Security Agreement, dated as of the Closing Date, in form and
substance satisfactory to the Agent, executed by the Guarantor in favor of the
Agent, securing the obligations of the Guarantor hereunder and under the Wright
Canada Guaranty, as the same may hereafter be amended, modified or supplemented
from time to time.
1.2 Accounting Terms. Any accounting terms used in this Agreement which are not
specifically defined herein shall have the meanings customarily given them in
accordance with Generally Accepted Accounting Principles. All determinations of
the book value of Inventory contemplated hereby shall be at the lower of cost
(on a first-in, first-out basis) or market.
1.3 Other Terms Defined in Illinois Uniform Commercial Code. All other terms
contained in this Agreement (and which are not otherwise specifically defined
herein) shall have the meanings provided in the Uniform Commercial Code of the
State of Illinois or the laws of any other state which are required to be
applied in connection with the issue of perfection or non-perfection of Liens on
the Collateral (the "Code") to the extent the same are used or defined therein.
1.4 Effective Date. All references to "the date hereof," "the date of this
Agreement," "the effective date hereof," "effective as of the date hereof" or
"of even date herewith" contained herein or in the other Financing Agreements
shall be deemed to refer to the Closing Date of this Agreement.
1.5 References. The foregoing definitions shall be equally applicable to both
the singular and plural forms of the defined terms. Unless otherwise expressly
provided or unless the context requires otherwise, all references in this
Agreement to Sections, subsections, Schedules and Exhibits shall mean and refer
to Sections, subsections, Schedules and Exhibits of this Agreement. References
to Persons include their respective permitted successors and assigns or, in the
case of a governmental authority, Persons succeeding to the relevant functions
of such Persons. All references to statutes shall include all related rules and
regulations and shall include all amendments of same and any successor or
replacement statutes and regulations.
2. CREDIT.
2.1 Revolving Credit Facility, Revolving Loan and Lender Guaranties.
(a) Revolving Loan. Provided there does not then exist a Default or an
Event of Default, and subject to the terms and conditions herein set forth, each
Lender agrees severally (and not jointly) to make its Pro Rata Share of advances
to the Borrower, on a revolving credit basis (the "Loan" or "Revolving Loan"),
in an aggregate amount not in excess of the lesser of (i) the Total Revolving
Loan Facility less the Lender Guaranty Reserve and the Financing Fee Reserve, or
(ii) the Current Asset Base ("Borrowing Availability"). As used herein, the
"Current Asset Base" shall mean an amount equal to:
(1) ninety percent (90%) of the face amount (less maximum discounts,
credits and allowances which may be taken by or granted to
Account Debtors in connection therewith) then outstanding of
existing Eligible Accounts (including up to an aggregate amount
of $1,000,000 of Eligible Accounts of the Guarantor), less such
reserves as the Agent in its sole and reasonable discretion
elects to establish, plus
(2) up to (i) prior to a Refinancing, the lesser of (x) twenty
percent (20%) of the book value of then existing Eligible
Inventory (including up to an aggregate amount of $3,000,000 of
Eligible Inventory of the Guarantor) and (y) Thirteen Million
Five Hundred Thousand Dollars ($13,500,000) and (ii) after a
Refinancing, the lesser of (x) forty percent (40)% of the book
value of then existing Eligible Inventory (including up to an
aggregate amount of $3,000,000 of Eligible Inventory of the
Guarantor) and (y) Eighteen Million Dollars ($18,000,000). The
book value of Eligible Inventory shall be determined at the lower
of cost (determined on a first-in-first-out ("FIFO") basis) or
market, less such reserves as the Agent in its sole and
reasonable discretion elects to establish, and minus
(3) the Lender Guaranty Reserve.
The advance rates set forth in subsection 2.1(a) may be subject to reserves
established by the Agent at any time and from time to time in the exercise of
its reasonable discretion and upon reasonable advance written notice to the
Borrower. The Borrower acknowledges that increasing the reserves may limit or
restrict advances requested by the Borrower. The provisions of subsection 2.10
shall not apply to any prepayment made at any time within 180 days after the
Agent shall have imposed any new reserve or changed any existing reserve by an
amount that exceeds 5.0% of the lesser of (x) the aggregate amount of Eligible
Inventory or (y) the aggregate amount of Eligible Accounts.
(b) Advances. Until all amounts outstanding in respect of the Revolving
Loan shall become due and payable on the Termination Date, within the foregoing
limits and subject to the terms, provisions and limitations set forth herein,
the Borrower may from time to time borrow, repay and reborrow under this
subsection 2.1. Each advance of the Revolving Loan shall be made on notice
by an Authorized Officer. The Agent shall be entitled to rely upon, and shall be
fully protected under this Agreement from any liability to any Person in relying
upon, any such notice believed by the Agent to be genuine and to assume that
each Person executing and delivering the same was duly authorized by the
Borrower. Each advance to the Borrower shall, on the day of such advance, be
deposited, in immediately available funds, in such account as the Borrower may,
from time to time, designate, unless otherwise requested by the Borrower in
writing.
(c) Lender Guaranty.
(i) Subject to the terms and conditions of this Agreement, as part of
the Total Revolving Loan Facility and in addition to advances
under the Revolving Loan, upon the request of the Borrower, SBCC,
on behalf of each Lender according to such Lender's Pro Rata
Share, may issue or arrange for the issuance of Letters of Credit
for the account of the Borrower and/or guaranty payment to the
Issuing Banks which issue Letters of Credit for the account of
the Borrower or to guaranty other obligations of the Borrower
under written contracts (all such guaranties and Letters of
Credit issued by SBCC are collectively referred to herein as
"Lender Guaranties" and individually as a "Lender Guaranty");
provided that SBCC shall not be under any obligation to issue any
Lender Guaranty if (i) any order, judgment or decree of any
government authority or other regulatory body shall purport by
its terms to enjoin or restrain SBCC or any Lender from issuing
such Lender Guaranty, or any law or governmental rule,
regulation, policy, guideline or directive (whether or not having
the force of law) from any governmental authority or other
regulatory body with jurisdiction over SBCC or any Lender shall
prohibit, or request that SBCC or such Lender refrain from, the
issuance of Lender Guaranties in particular or shall impose upon
SBCC or any Lender with respect to such Lender Guaranties any
restriction or reserve or capital requirement (for which SBCC or
such Lender is not otherwise compensated) or any unreimbursed
loss, cost or expense which SBCC or any Lender in good faith
deems material to it or (ii) the issuance thereof would violate
any established credit policy of any Lender or would be otherwise
unacceptable as determined by the Agent. In no event shall SBCC
issue or otherwise become obligated with respect to a Letter of
Credit (including, without limitation, Letters of Credit issued
with an automatic "evergreen" provision) having an expiration
date, or a date for payment of any draft presented thereunder,
later than the earlier of (i) twelve (12) months from the date of
issuance or (ii) thirty (30) days prior to the Revolving Loan
Maturity Date; provided that notwithstanding the foregoing any
Letter of Credit issued with respect to workers compensation
coverage may have an expiration date on the Revolving Loan
Maturity Date. Such issuance and obligations with respect to a
Letter of Credit pursuant to this subsection 2.1(c) shall be
deemed to be a Revolving Loan for purposes of requiring the
satisfaction of the applicable conditions set forth in Section 4.
Additions to the Lender Guaranty Reserve shall be established
concurrently with the issuance of each Lender Guaranty.
Immediately upon the issuance of any Lender Guaranty in
accordance with this subsection 2.1(c), each Lender shall be
deemed to have irrevocably and unconditionally purchased and
received from SBCC, without recourse, representation or warranty,
an individual participation interest equal to its Pro Rata Share
of the principal amount of such
Lender Guaranty and each draw paid by the Issuing Bank under the
Letter of Credit issued in connection therewith. Each Lender's
obligation to pay its Pro Rata Share of all draws under the
Letters of Credit issued in connection with such Lender
Guaranties shall be absolute, unconditional and irrevocable and
in each case shall be made without counterclaim or set-off by
such Lender.
(ii) The Borrower shall be irrevocably and unconditionally obligated
forthwith without presentment, demand, protest or other
formalities of any kind, to reimburse the Agent, on behalf of the
Lenders, for any amounts paid by the Lenders with respect to each
Lender Guaranty including, without limitation, all amounts paid
by the Lenders upon any draw with respect to a Letter of Credit,
any guaranty or reimbursement obligation paid by the Lenders to
any Person upon any draw upon a Letter of Credit and all fees,
costs and expenses paid by the Lenders to any Issuing Bank. All
such reimbursement obligations shall be due and payable on
demand. If not paid within one (1) Business Day following demand,
or, if an Event of Default shall have occurred and be continuing,
on the date such reimbursement obligations arise, the Borrower
hereby authorizes and directs the Agent, at the Agent's option,
to debit the Loan Account (by increasing the principal balance of
the Revolving Loan), in the amount of any payment made by the
Lenders with respect to any Lender Guaranty and, in connection
therewith, the Lender Guaranty Reserve then in effect shall be
reduced by the amount of such debit. All amounts paid by the
Lenders with respect to any Lender Guaranty that are not
immediately repaid by the Borrower with the proceeds of the
Revolving Loan or otherwise shall bear interest at the interest
rate applicable to the Revolving Loan. If SBCC makes a payment on
account of any Lender Guaranty and is not concurrently reimbursed
therefor by the Borrower and if for any reason an advance under
the Revolving Loan may not be made as stated in this subsection
2.1(c), then as promptly as practical during normal banking hours
on the date of its receipt of such notice or, if not practicable
on such date, not later than 12:00 noon (Chicago time) on the
Business Day immediately succeeding such date of notification,
each Lender shall deliver to the Agent for the account of the
Issuing Bank, in immediately available funds, the purchase price
for such Lender's interest in such unreimbursed Lender Guaranty,
which shall be an amount equal to such Lender's Pro Rata Share of
such payment. Each Lender acknowledges and agrees that its
obligation to reimburse the Agent pursuant to this subsection
2.1(c)(ii) with respect to Lender Guaranty Liabilities is
absolute and unconditional and shall not be affected by any
circumstance whatsoever including, without limitation, the
occurrence or continuance of a Default or an Event of Default,
and further acknowledges and agrees that each such payment shall
be made without any offset, abatement, withholding or reduction
whatsoever.
(iii)In addition to all other terms and conditions set forth in this
Agreement, the issuance by the Lenders of any Lender Guaranty
shall be subject to the conditions precedent that the Issuing
Bank be satisfactory to the Agent and that the Letter of Credit
or written contract for which the Borrower requests a Lender
Guaranty be in such form, be in such amount, contain such terms
and support such transactions as are reasonably satisfactory to
the Agent. The Borrower shall comply with all such terms and
conditions imposed on the
Borrower by any Issuing Bank or by the Agent with respect to the
issuance of any Letter of Credit, whether such terms and
conditions are imposed in the application for such Letter of
Credit, the Lenders' guaranty of such letter of credit or
otherwise. The Agent's standard form of application for a letter
of credit as currently in effect is attached as Exhibit 2.1. Each
Lender Guaranty shall be in form and substance satisfactory to
the Agent and shall provide that the guaranty terminates and all
demands or claims for payment must be presented by a date
certain, which date will be at least thirty (30) days before the
Revolving Loan Maturity Date; provided that, notwithstanding the
forgoing, such date may be the Revolving Loan Maturity Date with
respect to any Lender Guaranty supporting any Letter of Credit
issued with respect to workers' compensation coverage.
Notwithstanding the recitation in this Agreement of terms and
conditions with respect to the issuance of Lender Guaranties, the
Borrower hereby acknowledges and agrees that the issuance of any
Lender Guaranty shall be in the Agent's commercially reasonable
discretion.
(iv) Prior to the issuance of a Lender Guaranty and as a condition to
such issuance, the Borrower shall give the Agent prior written
notice specifying the date a Lender Guaranty is to be issued,
identifying the beneficiary of the guaranty and describing the
nature of the transactions proposed to be supported thereby and
specifying whether the Borrower is requesting a Lender Guaranty
in the form of a Letter of Credit issued by the Lenders or a
guaranty of a Letter of Credit issued by another Issuing Bank.
The notice shall be accompanied by the form of the Letter of
Credit or other written contract to be guarantied. Subject to the
terms hereof, the Agent shall issue the requested Lender Guaranty
as soon as practicable and not more than seven (7) Business Days
following the date of the applicable notice; provided that the
Lender Guaranty shall not be issued until the Agent and the
Issuing Bank have mutually agreed upon the form of such Lender
Guaranty.
(v) The Borrower hereby agrees to indemnify, pay and hold the Agent
and each Lender harmless from and against any and all pending or
threatened claims, litigation, damages, losses and liabilities
incurred by the Agent or any Lender (or which may be claimed
against the Agent or any Lender by any Person whatsoever) and
costs and expenses incurred in defending or responding to pending
or threatened claims or litigation by reason of or in connection
with the execution, delivery or transfer of, or payment or
failure to pay under, any Lender Guaranty including, without
limitation, any action taken or omitted by any Issuing Bank in
accordance with the provisions of subsection 7.10; provided that
the Borrower shall not be required to indemnify or hold harmless
the Agent or any Lender for any such claims, litigation, losses
or liabilities arising from such Person's own wilful misconduct
or gross negligence. The Borrower's unconditional obligations to
the Agent and the Lenders hereunder shall not be modified or
diminished for any reason or in any manner whatsoever. The
Borrower agrees that any charges made to the Agent or the Lenders
for the Borrower's account by any Issuing Bank shall be
conclusive as between such Persons and the Borrower and may be
charged to the Borrower's Loan Account hereunder.
2.2 Maximum Principal Balance of Revolving Loan. (a) Except as set forth in
Section 2.2(b), the aggregate outstanding principal balance of the Revolving
Loan shall at no time exceed the Borrowing Availability. If at any time the
principal balance of the Revolving Loan exceeds the Borrowing Availability, the
Borrower shall immediately and without notice or demand of any kind (a) repay
the Revolving Loan to the extent necessary to reduce the principal balance to an
amount that is equal to or less than the Borrowing Availability and (b) if any
excess remains after payment of the outstanding Revolving Loan, cash
collateralize the Lender Guaranty Liabilities to the extent necessary to
eliminate such remaining excess.
(b) Notwithstanding anything contained in this Agreement to the contrary,
until such time as a Refinancing shall occur, the outstanding principal balance
of the Revolving Loan shall at no time exceed Twenty-Five Million Dollars
($25,000,000).
2.3 Evidence of Revolving Loan Indebtedness. The advances by each Lender
constituting the Revolving Loan shall be evidenced by a promissory note in favor
of each respective Lender (collectively, the "Revolving Loan Notes") in the
amount of its Revolving Loan Commitment dated the Closing Date in the form
attached as Exhibit 2.3. All of the Borrower's Revolving Loan Obligations to the
Lenders hereunder shall be payable by the Borrower by application of the
proceeds of all Accounts and other Collateral in accordance with subsection 3.5,
and shall be payable in full upon the Termination Date, and the principal amount
of such Revolving Loan Obligations shall bear interest as hereinafter provided.
Each advance by the Lenders and each repayment of principal applicable to such
advance shall be reflected in the Borrower's Loan Account.
2.4 Payment Dates. Interest shall be payable on Base Rate Loans in arrears on
the first day of each calendar month for all periods ending prior to such month
for which such Loans are or, in the case of a Base Rate Loan converted to a
LIBOR Rate Loan during the prior month, were outstanding and at the maturity of
such Loan (whether by acceleration or otherwise) commencing with the first of
such dates to occur after the date of such Loan. Interest shall be payable on
LIBOR Rate Loans on the last day of each Interest Period relating to such Loan
and at the maturity of such Loan (whether by acceleration or otherwise),
commencing with the first of such dates to occur after the date of such Loan.
After maturity, accrued interest on all Loans shall be payable on demand. Any
payment due hereunder on any day other than a Business Day shall be due on the
next succeeding Business Day, and if such payment shall bear interest in
accordance herewith, interest shall accrue to (but excluding) the date of
payment.
2.5 Interest. (a) After the later of (i) the first anniversary of the Closing
Date and (ii) a Refinancing, subject to the terms and conditions of this
Agreement, the Revolving Loan may be divided into Base Rate Loans or LIBOR Rate
Loans, or a combination thereof, selected by the Borrower in accordance with
subsections 2.5(e) and 2.5(f); provided that the Revolving Loan shall not have
more than two (2) Interest Periods outstanding with respect to such Loan at any
one time. So long as no Event of Default has occurred and is continuing, the
Borrower shall pay to the Agent, for the benefit of the Lenders, interest on the
outstanding principal balance of the Loans at the Base Rate or the LIBOR Rate,
as applicable, in accordance with subsection 2.4.
(b) Interest and all fees (other than prepayment fees) shall be computed
(on a daily basis) on the basis of a 360-day year for the actual number of days
elapsed. In computing interest on any Loan, the date of funding of the Loan or
the first day of an Interest Period applicable to such Loan or, with respect to
a Base Rate Loan being converted from a LIBOR Rate Loan, the date of conversion
of such LIBOR Rate Loan to such Base Rate Loan, shall be included and the date
of payment of such Loan or the expiration date of an Interest Period applicable
to such Loan or, with respect to a Base Rate Loan being converted to a LIBOR
Rate Loan, the date of conversion of such Base Rate Loan to such LIBOR Rate
Loan, shall be excluded; provided that if a Loan is repaid on the same day on
which it is made, one day's interest shall be paid on that Loan. Each
determination by the Agent of an interest rate hereunder shall be conclusive and
binding for all purposes, absent manifest error.
(c) So long as an Event of Default shall have occurred and be continuing,
the Borrower shall pay to the Lenders interest from the date of such Event of
Default to and including the date of cure of such Event of Default on the
outstanding principal balance of the Obligations at the Default Rate applicable
to such Obligations; provided that in the case of LIBOR Rate Loans, upon the
expiration of the Interest Period in effect at the time any Event of Default
shall have occurred and be continuing, such LIBOR Rate Loans shall automatically
become Base Rate Loans and thereafter bear interest at the Default Rate
applicable to Base Rate Loans.
(d) (i) Interest shall be due at the Base Rate, the LIBOR Rate or the
Default Rate, as provided herein, after as well as before demand,
default and judgment notwithstanding any judgment rate of
interest provided for in any statute. If any interest payment or
other charge or fee payable hereunder exceeds the maximum amount
then permitted by applicable law, then to the extent permitted by
law and subject to the provisions of subparagraph (ii) of this
subsection 2.5(d), the Borrower shall be obligated to pay the
maximum amount then permitted by applicable law and the Borrower
shall continue to pay the maximum amount from time to time
permitted by applicable law until all such interest payments and
other charges and fees otherwise due hereunder (in the absence of
such restraint imposed by applicable law) have been paid in full.
(ii) It is the intention of the Agent, the Lenders and the Borrower to
comply with the laws of the State of Illinois, and
notwithstanding any provision to the contrary contained herein or
in the other Financing Agreements, the Borrower shall not be
required to pay and the Lenders shall not be permitted to collect
any amount in excess of the maximum amount of interest permitted
by law ("Excess Interest"). If any Excess Interest is provided
for or determined to have been provided for by a court of
competent jurisdiction in this Agreement or in any of the other
Financing Agreements, then in such event: (A) the provisions of
this subsection 2.5(d)(ii) shall govern and control; (B) neither
the Borrower nor any guarantor or endorser shall be obligated to
pay any Excess Interest; (C) any Excess Interest that any Lender
may have received hereunder shall be, at such Lender's option (1)
applied as a credit
against the outstanding principal balance of the Obligations or
accrued and unpaid interest (not to exceed the maximum amount
permitted by law), (2) refunded to the payor thereof, or (3) any
combination of the foregoing; (D) the interest rate(s) provided
for herein shall be automatically reduced to the maximum lawful
rate allowed under applicable law, and this Agreement and the
other Financing Agreements shall be deemed to have been, and
shall be, reformed and modified to reflect such reduction; and
(E) neither the Borrower nor any guarantor or endorser shall have
any action against any Lender for any damages arising out of the
payment or collection of any Excess Interest.
(e) Subject to the terms of this Agreement, Borrower shall select the Rate
Option and, in the case of LIBOR Rate Loans, the Interest Period applicable to
each LIBOR Rate Loan from time to time by giving the Agent irrevocable notice in
the form of Exhibit 2.5-1 hereto (a "Borrowing Notice") not later than 12:00
noon (Chicago time) (i) on the Funding Date of any Base Rate Loan, and (ii)
three (3) Business Days before the Funding Date for each LIBOR Rate Loan,
specifying:
(i) the Funding Date of each Loan;
(ii) the aggregate amount of such Loan (and, if such Borrowing Notice
refers to more than one Rate Option, the amount of each Base Rate
Loan and LIBOR Rate Loan which will become part of the Revolving
Loan);
(iii) the Rate Option(s) selected for such Loan; and
(iv) in the case of each LIBOR Rate Loan, the Interest Period
applicable thereto;
provided that no Loan may be made as a LIBOR Rate Loan if any Default or Event
of Default has occurred and is continuing.
(f) Base Rate Loans shall continue as Base Rate Loans unless and until such
Base Rate Loans are converted by the Borrower into LIBOR Rate Loans in
accordance with this subsection 2.5(f). Each LIBOR Rate Loan shall continue as a
LIBOR Rate Loan until the end of the then applicable Interest Period, at which
time such LIBOR Rate Loan shall be automatically converted into a Base Rate Loan
unless the Borrower shall have given the Agent an irrevocable notice in the form
of Exhibit 2.5-2 (a "Conversion/Continuation Notice") requesting that, at the
end of such Interest Period, such LIBOR Rate Loan continue as a LIBOR Rate Loan
for the same or another Interest Period; provided that no outstanding Loan may
be continued as, or be converted into, a LIBOR Rate Loan if any Default or Event
of Default has occurred and is continuing. Subject to the terms of this
Agreement, the Borrower may elect from time to time to convert all or any part
of the Revolving Loan of any Rate Option into any other Rate Option; provided
that any conversion of a LIBOR Rate Loan shall be made on, and only on, the last
day of the Interest Period applicable thereto. The Borrower shall give the Agent
a Conversion/Continuation Notice of each conversion
or continuation of a Base Rate Loan or LIBOR Rate Loan, as the case may be, not
later than 12:00 noon (Chicago time) (i) on the Funding Date, in the case of a
conversion into a Base Rate Loan, and (ii) at least three (3) Business Days
before the Funding Date of the requested conversion or continuation of a LIBOR
Rate Loan, specifying:
(i) the Funding Date of such conversion or continuation;
(ii) the aggregate amount and Rate Option(s) of the Loan which is to
be converted or continued; and
(iii)the amount and Rate Option(s) of the Base Rate Loans or LIBOR
Rate Loans into which such Loan is to be converted or continued
and, in the case of a conversion into or continuation of a LIBOR
Rate Loan, the duration of the Interest Period applicable
thereto.
(g) In lieu of delivering a Borrowing Notice or a Conversion/Continuation
Notice, the Borrower may give the Agent notice by telephone or telecopy by the
required time of any proposed borrowing or conversion/continuation under this
subsection 2.5; provided that such notice shall be promptly confirmed in writing
by delivery of a Borrowing Notice or a Conversion/Continuation Notice, as the
case may be, to the Agent on or before the proposed Funding Date. Neither the
Agent nor any Lender shall incur any liability to the Borrower in acting upon
any such notice by telephone that the Agent believes in good faith to have been
given by an Authorized Officer or for otherwise acting in good faith under this
subsection 2.5 and, upon the funding or conversion/continuation, as the case may
be, by the Agent in accordance with this Agreement pursuant to any such notice,
the Borrower shall have effected such funding, conversion or continuation, as
the case may be, hereunder. A Borrowing Notice or a Conversion/Continuation
Notice for the funding of, or conversion to, or continuation of, a LIBOR Rate
Loan (or notice by telephone or telecopy in lieu thereof) shall be irrevocable
once given, and the Borrower shall be bound to convert or continue in accordance
therewith.
(h) Each LIBOR Rate Loan (whether resulting from a Borrowing Notice or a
Conversion/Continuation Notice) shall be in the minimum amount of Five Hundred
Thousand Dollars ($500,000) and in integral multiples of One Hundred Thousand
Dollars ($100,000) if in excess thereof.
2.6 Method of Borrowing; Manner and Method of Making Interest and Other
Payments. (a) Not later than 12:00 noon (Chicago time) on each Funding Date,
each Lender shall make available its Pro Rata Share of the Loan or Loans (except
for Loans made pursuant to a Conversion/Continuation Notice, in which case each
Lender shall be deemed to have made its Loan or Loans) in funds immediately
available in Chicago, Illinois to the Agent at its address specified pursuant to
subsection 10.13. The Agent will make the funds so received from the Lenders
available to the Borrower in accordance with subsection 2.1(b). Notwithstanding
the foregoing provisions of this subsection 2.6(a), to the extent that a Loan or
portion thereof made by a Lender matures or is
to be repaid on the Funding Date of a requested Loan, such Lender shall first
apply the proceeds of the Loan it is then making to the repayment of the
maturing Loan or portion thereof.
(b) All payments by the Borrower of the Obligations shall be made without
deduction, defense, setoff or counterclaim and in same day funds. At the
election of the Borrower or in the event that the Borrower fails to make a
payment when due hereunder (other than the principal balance of the Revolving
Loan), the Agent may designate interest and other amounts payable hereunder
(other than the principal balance of the Revolving Loan) to be paid by causing
such amounts to be added to the principal balance of the Revolving Loan, all as
set forth on the Agent's books and records. The Borrower hereby authorizes and
directs the Lenders to make advances in the Revolving Loan by appropriate debits
to the Loan Account for all payments which the Borrower is required to make to
the Lenders under this Agreement and the other Financing Agreements. Unless
otherwise directed by the Agent, all payments to the Lenders hereunder shall be
made by delivery thereof to the Agent at its address set forth in subsection
10.13 or by delivery to the Agent for deposit in the Blocked Accounts of all
proceeds of Accounts or other Collateral in accordance with subsection 3.5. If
the Agent elects to bill the Borrower for any amount due hereunder, such amount
shall be immediately due and payable with interest thereon as provided herein.
Solely for the purpose of calculating interest earned by each Lender with
respect to the Revolving Loan, any check, draft or similar item of payment by or
for the account of the Borrower delivered to the Agent or deposited in a Blocked
Account in accordance with subsection 3.5 shall be applied by the Agent on
account of the Borrower's Revolving Loan Obligations on the Business Day the
Agent has received immediately available funds as a result of the deposit
thereof in accordance with subsection 3.5. Immediately available funds received
by the Agent after 2:00 p.m., (Chicago time), shall be deemed to have been
received on the following Business Day.
(c) (i) Unless the Borrower or a Lender, as the case may be, notifies the
Agent prior to the date on which it is scheduled to make payment
to the Agent of (A) in the case of a Lender, such Lender's Pro
Rata Share of the proceeds of a Loan or (B) in the case of the
Borrower, a payment of principal, interest, fees or other
Obligations to the Agent for the account of the Lenders, that it
does not intend to make such payment, the Agent may assume that
such payment has been made. The Agent may, but shall not be
obligated to, make the amount of such payment available to the
intended recipient in reliance upon such assumption. If the
Borrower or such Lender, as the case may be, has not in fact made
such payment to the Agent, the recipient of such payment shall,
on demand by the Agent, repay to the Agent the amount so made
available together with interest thereon in respect of each day
during the period commencing on the date such amount was so made
available by the Agent until the date the Agent recovers such
amount at a rate per annum equal to (x) in the case of payment by
a Lender, the Federal Funds Rate for such day (as determined by
the Agent) or (y) in the case of payment by the Borrower, the
interest rate applicable to the relevant Loan.
(ii) Nothing contained in this subsection 2.6(c) will be deemed to
relieve a Lender of its obligation to fulfill its Commitments or
to prejudice any rights the Agent or the Borrower may have
against such Lender as a result of any default by such Lender
under this Agreement.
(iii)If the Agent determines at any time that any amount received by
the Agent under this Agreement must be returned to the Borrower
or paid to any other Person pursuant to any insolvency law or
otherwise, then, notwithstanding any other term or condition of
this Agreement, the Agent will not be required to distribute any
portion thereof to any Lender. In addition, each Lender will
repay to the Agent on demand any portion of such amount that the
Agent has distributed to such Lender.
(iv) Without limiting the generality of the foregoing, each Lender
shall be obligated to fund its Pro Rata Share of any Revolving
Loan made after any acceleration of the Loans with respect to any
draw on a Letter of Credit or Lender Guaranty therefor.
2.7 Term of this Agreement.
(a) This Agreement shall be effective from the Closing Date until the
Revolving Loan Maturity Date (the "Initial Term"), subject to annual renewals
thereafter of the Revolving Loan Maturity Date as hereinafter provided (each
such renewal being referred to as a "Renewal Term"); provided that all of the
Agent's and each Lender's rights and remedies under this Agreement shall survive
such termination until all of the Obligations have been finally paid in full in
cash. Not less than ninety (90) days prior to the end of the Initial Term or any
Renewal Term, the Borrower shall notify the Agent in writing if it elects to
renew this Agreement for a Renewal Term, and not less than sixty (60) days prior
to the end of the Initial Term or such Renewal Term, as applicable, the Agent
shall notify the Borrower in writing if the Lenders elect to accept such
renewal. Notwithstanding the foregoing, unless the Borrower and each Lender
shall agree in writing to extend this Agreement in accordance with the preceding
sentence, this Agreement shall terminate upon the earlier to occur of the
expiration of the Initial Term or any Renewal Term, as applicable, or the final
payment in full of all of the Obligations. In addition, this Agreement may be
terminated as set forth in Section 9. Upon the effective date of termination,
all of the Obligations shall become immediately due and payable without notice
or demand notwithstanding any terms contained herein or in any Note to the
contrary. Notwithstanding any termination, until all of the Obligations shall
have been paid in full in cash and the Lender Guaranties shall have been
terminated or payment thereof shall have been secured in accordance with
subsection 2.7(b) on terms satisfactory to the Lenders, all of the Agent's and
the Lenders' rights and remedies under the Financing Agreements shall survive
such termination and, notwithstanding such payment, for so long as any pending
action or action threatened in writing which could result in a claim by the
Agent or any Lender under subsection 6.26 or subsection 7.10 exists hereunder,
the Agent, on behalf of the Lenders, shall be entitled to retain Liens upon all
existing and future Collateral, and the Borrower shall continue to remit
collections of Accounts and proceeds as provided herein.
(b) Subject to the prepayment fee as set forth in subsection 2.10 and the
provisions of subsection 2.20, upon not less than five (5) days prior written
notice to the Agent specifying the date of prepayment, the Borrower may prepay
in full, but not in part, all of the Obligations arising hereunder (excluding
outstanding Lender Guaranties). Upon prepayment in full of the Revolving Loan,
the Borrower shall cause the Agent and each Lender to be released from all
liability under all Lender Guaranties or the Borrower shall (i) cause to be
issued to and for the benefit of the Agent and the Lenders a letter of credit in
form and substance acceptable to the Agent issued by a bank or other financial
institution acceptable to the Agent, or (ii) deposit cash collateral with the
Agent, for the benefit of the Agent and the Lenders, in either case, in an
amount equal to 110% of the aggregate Lender Guaranty Liability with respect to
the Lender Guaranties that will remain outstanding after prepayment in full of
all other Obligations.
2.8 Audit Fee. The Borrower shall pay to SBCC, individually in its capacity as
the Agent, a collateral audit fee (the "Audit Fee") in an amount equal to (i)
the Agent's reasonable documented out-of-pocket costs, plus Two Thousand Five
Hundred Dollars ($2,500) per audit for each field audit conducted by the Agent
pursuant to Section 7.2; provided that so long as no Default or Event of Default
shall have occurred and be continuing, Borrower shall not be liable for
reimbursing the Agent for the costs and expenses of more than three (3) field
audits in any Fiscal Year.
2.9 Closing Fee. On the Closing Date, the Borrower shall pay to the Agent, for
the ratable benefit of the Lenders, a closing fee (the "Closing Fee") in the
amount of Two Hundred Fifty Thousand Dollars ($250,000).
2.10 Prepayment Fee. Except as set forth in subsection 2.7(b), if the Borrower
shall prepay all of the Obligations prior to the end of the Initial Term or, if
applicable, any Renewal Term, such repayment shall consist of payment in full of
the Obligations and the Borrower shall pay to the Agent, for the ratable benefit
of the Lenders, as liquidated damages and compensation for the costs of being
prepared to make funds available to the Borrower hereunder an amount determined
as follows: two percent (2%) of the Total Revolving Loan Facility for a
prepayment during the first Loan Year; one and one-half percent (1.5%) of the
Total Revolving Loan Facility for a prepayment during the second Loan Year; and
one percent (1%) of the Total Revolving Loan Facility for a prepayment during
the third Loan Year; provided that in the event that the Required Lenders do not
consent to a request by the Borrower prior to the end of the Initial Term or
such Renewal Term for a Material Restructuring, the Borrower may prepay all of
the Obligations without premium or penalty other than as provided in subsection
2.20.
2.11 Financing Fee. As additional compensation for the costs and risks in making
the Revolving Loan available to the Borrower, the Borrower agrees to pay to SBCC
in its individual capacity a fee in the amount of Seven Hundred Fifty Thousand
Dollars ($750,000) (the "Financing Fee"), which shall be deemed fully earned as
of the Closing Date; provided that payment of the Financing Fee shall be
postponed until December 22, 1997; provided further that if a Refinancing shall
have been funded on or prior to such date the Financing Fee shall not be payable
by the Borrower.
2.12 Unused Line Fee. From and after the Closing Date, the Borrower shall pay to
Agent, for the ratable benefit of the Lenders, a fee (the "Unused Line Fee") in
an amount equal to the Total Revolving Loan Facility less the sum of (i) the
respective average daily closing balance of the Revolving Loan plus Lender
Guaranty Liabilities outstanding during the preceding month (or shorter period
with respect to the period commencing with the Closing Date or the period ending
with the Termination Date) and (ii) the Financing Fee Reserve, multiplied by
one-half of one percent (0.5%) per annum; provided that so long as the terms of
subsection 2.2(b) shall be in effect the calculation of the Unused Line Fee
shall be subject to the effect of the limitation set forth therein. The Unused
Line Fee shall be payable in arrears on the first day of each calendar month
following the Closing Date and at maturity, whether on the termination of this
Agreement or earlier.
2.13 Other Fees, Costs and Expenses. The Borrower shall pay to the Agent on
demand all documented reasonable fees, costs and expenses incurred by the Agent
in connection with any matters contemplated by or arising out of this Agreement
or any other Financing Agreement (which fees, costs and expenses shall be part
of the Obligations and secured by the Collateral) including, without limitation:
(i) following the occurrence of an Event of Default in verifying or inspecting
the Accounts or the Inventory or the Borrower's or the Guarantor's records with
respect thereto; (ii) in connection with opening and maintaining the Blocked
Accounts and depositing for collection any check or item of payment received by
and/or delivered to any Collecting Bank or the Agent or any Lender on account of
the Obligations; (iii) arising out of the Agent's indemnification of any
Collecting Bank against damages incurred by such Collecting Bank in the
operation of a Blocked Account; (iv) in connection with the Agent's forwarding
to the Borrower the proceeds of loans or advances hereunder including, without
limitation, transfer fees; (v) arising from photocopying and other mechanical or
electronic reproduction in connection with the rights of inspection under
subsection 7.2; (vi) in connection with the negotiation, preparation, review,
execution, delivery and ongoing administration of the Financing Agreements and
all amendments, modifications and waivers with respect hereto or with respect to
the other Financing Agreements including, without limitation, search fees,
appraisal fees and expenses, title insurance policy fees, costs and expenses;
filing and recording fees; reasonable fees, costs and expenses of the Agent's
attorneys and paralegals (including, without limitation, the usual and customary
charges of the Agent's internal counsel) and all Taxes payable in connection
with this Agreement or the other Financing Agreements, whether such fees, costs
and expenses are incurred prior to, on or after the Closing Date; (vii) in
connection with any documentation, negotiation, review or closing with respect
to any Subordinated Debt, including, without limitation, the fees, costs and
expenses of the Agent's attorneys and paralegals (including, without limitation,
the usual and customary charges of the Agent's internal counsel); and (viii)
arising from the Agent's employment of counsel or otherwise in connection with
protecting, perfecting or preserving the Agent's Liens in the Collateral in
accordance with subsection 10.2 or in connection with any refinancing or
restructuring of the credit arrangements provided under the Financing
Agreements, whether in the nature of a "workout" or in connection with any
insolvency or bankruptcy proceedings, or in connection with any other matters
contemplated by or arising out of this Agreement or the other Financing
Agreements. Any portion of the foregoing fees, costs and expenses which remains
unpaid thirty (30) days following the Agent's statement and request for payment
thereof shall bear interest from the date of such statement and request for
payment at the Default Rate.
2.14 Loan Account. The Agent shall maintain a loan account ("Loan Account") on
its books in which shall be recorded (i) all Loans and advances made to the
Borrower pursuant to this Agreement, (ii) the issuance of all Lender Guaranties,
(iii) all payments made by the Borrower on all such Loans and advances and (iv)
all other appropriate debits and credits as provided in this Agreement
including, without limitation, all fees, charges, expenses and interest. All
entries in the Loan Account shall be made in accordance with the Agent's
customary accounting practices as in effect from time to time. The Borrower
shall pay the Obligations reflected as owing by it under the Loan Account and
all other Obligations hereunder as such amounts become due or are declared due
pursuant to the terms of this Agreement. So long as a Default or an Event of
Default shall have occurred and be continuing, the Borrower irrevocably waives
the right to direct the application of any and all payments at any time or times
thereafter received by the Agent or any Lender from or on behalf of the
Borrower, and the Borrower does hereby irrevocably agree that each Lender shall
have the continuing exclusive right to apply and to reapply any and all payments
received at any time or times hereafter against the Obligations in such manner
as such Lender may deem advisable notwithstanding any previous entry by the
Agent upon the Loan Account or by the Agent or such Lender on any other books
and records.
2.15 Statements. All advances to the Borrower, and all other debits and credits
provided for in this Agreement, shall be evidenced by entries made by the Agent
in the Loan Account and in the Agent's books and records showing the date,
amount and reason for each such debit or credit. Until such time as the Agent
shall have rendered to the Borrower written statements of account as provided
herein, the balance in the Borrower's Loan Account, as set forth on the Agent's
most recent printout or other written statement, shall be rebuttably presumptive
evidence of the amounts due and owing to each Lender by the Borrower provided
that any failure to so record or any error in so recording shall not limit or
otherwise affect the Borrower's obligations to pay the Obligations. Not more
than twenty (20) days after the last day of each calendar month, the Agent shall
render to the Borrower a statement setting forth the principal balance of the
Borrower's Loan Account and the calculation of interest due thereon. Each such
statement shall be subject to subsequent adjustment by the Agent but shall,
absent manifest errors or omissions, be presumed correct and binding upon the
Borrower, and shall constitute an account stated unless, within thirty (30) days
after receipt of any statement from the Agent, the Borrower shall deliver to the
Agent by registered or certified mail written objection thereto specifying the
error or errors, if any, contained in such statement. In the absence of a
written objection delivered to the Agent as set forth in this subsection 2.15,
the Agent's statement of the Borrower's Loan Account shall be conclusive
evidence of the amount of the Obligations.
2.16 Notification of Advances, Interest Rates and Prepayment. The Agent will
notify each Lender of the contents of each Borrowing Notice,
Conversion/Continuation Notice and prepayment notice received by it hereunder.
The Agent will notify each Lender of the interest rate
applicable to each LIBOR Rate Loan promptly upon determination of such interest
rate and will give each Lender prompt notice of each change in the Base Rate.
2.17 Lender Guaranty Fees. The Borrower shall pay to the Agent, for the benefit
of the Lenders, fees for any Lender Guaranty ("Lender Guaranty Fees") for the
period from and including the date of issuance of such Lender Guaranty to and
excluding the date of expiration or termination of such Lender Guaranty, equal
to the daily average amount of the Lender Guaranty Liability multiplied by three
percent (3%) per annum, such fees to be calculated on the basis of a 360- day
year for the actual number of days elapsed and to be payable monthly in arrears
on the first day of the month following the date of issuance of any such Lender
Guaranty and the first day of each month thereafter. The Borrower shall also
reimburse the Agent and each Lender for any and all documented fees and expenses
paid to the Issuing Bank.
2.18 Other Lender Guaranty Provisions.
(a) The obligation of the Borrower to reimburse the Agent and each Lender
for payments made under any Lender Guaranty shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances including the following circumstances:
(i) any lack of validity or enforceability of any Lender Guaranty or
any other agreement;
(ii) the existence of any claim, set-off, defense or other right which
the Borrower, any of its Affiliates or the Agent or any Lender
may have at any time against a beneficiary or any transferee of
any Lender Guaranty (or any Persons for whom any such transferee
may be acting), the Agent, any Lender or any other Person,
whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction (including,
without limitation, any underlying transaction between the
Borrower or any of its Affiliates and the beneficiary for which
such Lender Guaranty was procured);
(iii)any draft, demand, certificate or any other document presented
under any Lender Guaranty proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect;
(iv) payment by the Agent or any Lender under any Lender Guaranty
against presentation of a demand, draft or certificate or other
document which does not comply with the terms of such Lender
Guaranty;
(v) any other circumstance or happening whatsoever, which is similar
to any of the foregoing; or
(vi) the fact that a Default or an Event of Default shall have
occurred and be continuing;
provided that, in the case of any payment by the Agent or any Lender under any
Lender Guaranty, such Person has not acted with gross negligence or willful
misconduct as determined by a final judgment, not subject to review on appeal,
of a court of competent jurisdiction in determining that the demand for payment
under any Lender Guaranty complies on its face with any applicable requirements
for a demand for payment under such Lender Guaranty.
(b) In addition to amounts payable as elsewhere provided in this Agreement,
the Borrower hereby agrees to protect, indemnify, pay and hold the Agent and
each Lender harmless from and against any and all claims, suits, demands,
liabilities, damages, losses, costs, charges and expenses (including, without
limitation, reasonable attorneys' fees and allocated costs of internal counsel)
which the Agent or any Lender may incur or be subject to as a consequence,
direct or indirect, of (1) the issuance of any Lender Guaranty other than as a
result of the gross negligence or willful misconduct of such Person as
determined by a final order, not subject to review on appeal, of a court of
competent jurisdiction, or (2) the failure of the Agent or any Lender to honor a
demand for payment under any Lender Guaranty as a result of any act or omission,
whether rightful or wrongful, of any Governmental Authority.
As among the Agent, the Lenders and the Borrower, the Borrower assumes all risks
of the acts and omissions of, or misuse of any Lender Guaranty by, beneficiaries
thereof. In furtherance and not in limitation of the foregoing, neither the
Agent nor any Lender shall be responsible: (i) for the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document by any Person
in connection with the application for and issuance of any Lender Guaranty, even
if it should in fact prove to be in any and all respects invalid, insufficient,
inaccurate, fraudulent or forged; (ii) for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign any
Lender Guaranty or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective for any reason;
(iii) for failure of the beneficiary of any Lender Guaranty to comply fully with
conditions required in order to demand payment under such Lender Guaranty;
provided that, in the case of any payment by the Agent or any Lender under any
Lender Guaranty, such Person has not acted with gross negligence or willful
misconduct, as determined by a final judgment, not subject to review on appeal,
of a court of competent jurisdiction, in determining that the demand for payment
under any Lender Guaranty complies on its face with any applicable requirements
for a demand for payment under such Lender Guaranty; (iv) for errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
cable, telegraph or otherwise; (v) for errors in interpretation of technical
terms; (vi) for any loss or delay in the transmission or otherwise of any
document required in order to make a payment under any Lender Guaranty or of the
proceeds thereof; (vii) for the credit of the proceeds of any drawing under any
Lender Guaranty; and (viii) for any consequences arising from causes beyond the
control of the Agent or the Lenders, including, without limitation, any act or
omission, whether rightful or wrongful, of any Governmental Authority. None of
the above shall affect, impair, or prevent the vesting of any of the Agent's or
any Lender's rights or powers hereunder.
In furtherance and extension of, and not in limitation of, the specific
provisions hereinabove set forth, the Borrower hereby agrees that any action
taken or omitted by the Agent or any Lender under or in connection with any
Lender Guaranty, or the Collateral relating thereto, if taken or omitted in good
faith, or any action taken by any Issuing Bank, shall be binding on the Borrower
and shall not impose any resulting liability on the Agent or any Lender unless
constituting gross negligence or willful misconduct, as determined by a final
judgment, not subject to review upon appeal, of a court of competent
jurisdiction.
2.19 Taxes; Changes in Law.
(a) Any and all payments or reimbursements made hereunder or under the
Notes shall be made free and clear of and without deduction for any and all
present and future Taxes. If the Borrower shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder to the Agent or any
Lender, then (i) the sum payable hereunder shall be increased as may be
necessary so that, after making all required deductions, the Agent or such
Lender receives an amount equal to the sum it would have received had no such
deductions been made and (ii) the Borrower shall pay the full amount deducted to
the relevant taxing or other authority in accordance with applicable law. The
Borrower hereby indemnifies and agrees to hold the Agent and each Lender
harmless from and against all Taxes imposed upon the Agent or any Lender as a
result of or arising in connection with the transactions contemplated hereby.
(b) In the event that, subsequent to the Closing Date, or, in the case of a
Participant assigned an interest in or sold a participation in the Loans
pursuant to subsection 11.1, subsequent to the date of such assignment or sale,
(a) any change in any existing law, regulation, rule, policy, guideline, treaty
or directive or in the interpretation or application thereof (whether or not
having the force of law) including, without limitation, any change resulting
from the implementation of risk-based capital guidelines, (b) any new law,
regulation, rule, guideline, treaty or directive enacted or any interpretation
or application thereof or (c) compliance by any Lender with any request or
directive (whether or not having the force of law and including by way of
withdrawal or termination of any previously available exemption) from any
central bank, governmental authority, agency or instrumentality (including,
without limitation, any request or directive regarding capital adequacy)
(i) does or shall subject any Lender or such Participant to any Taxes
with respect to this Agreement, the other Financing Agreements or
any Loans made hereunder, or change the basis of taxation of
payments to any Lender or such Participant of principal,
commitment, fees, interest or any other amount payable hereunder
(except for changes in the rate of tax on the overall net income
of such Lender or such Participant imposed by the jurisdiction in
which such Lender is incorporated or has its principal place of
business); or
(ii) does or shall impose on any Lender or such Participant any other
condition or increased cost in connection with the transactions
contemplated hereby or participation herein; or
(iii)affects the amount of any reserve, special deposit, capital
adequacy, assessment or similar charge (other than reserves and
assessments taken into account in determining the LIBOR Rate)
required or expected to be maintained by any Lender or such
Participant or any corporation controlling such Lender or such
Participant and such Lender or such Participant determines that
such amount required or expected is increased by or based upon
the existence of this Agreement or its Loans hereunder,
and the result of any of the foregoing is to increase the cost to such Lender or
such Participant of making, funding, maintaining or continuing any Loan
hereunder or issuing Lender Guaranties or to reduce any amount receivable by
such Lender or such Participant in connection with any Loans or Lender
Guaranties, or to require any Lender or Participant to make any payment
calculated by reference to the amount of Loans held or Lender Guaranties issued
or interest received by it, then, in any such case, the Borrower shall within
thirty (30) days after written demand pay to such Lender or such Participant any
additional documented amounts which are necessary to compensate such Lender or
such Participant for such additional cost or reduced amount receivable which
such Lender or such Participant reasonably deems to be material as determined by
such Lender or such Participant with respect to this Agreement, the other
Financing Agreements or the Loans made hereunder. If such Lender or Participant
becomes entitled to claim any additional amounts pursuant to this subsection
2.19, it shall promptly notify the Borrower in writing of the event by reason of
which such Lender or Participant has become so entitled. A certificate as to any
additional amounts payable pursuant to this subsection 2.19 submitted by such
Lender or Participant to the Borrower shall be presumed correct in the absence
of manifest error.
2.20 Special Provisions Governing LIBOR Rate Loans. Notwithstanding any other
provision of this Agreement to the contrary, the following provisions shall
govern with respect to LIBOR Rate Loans as to the matters covered:
(a) As soon as practicable after 11:00 a.m. (Chicago time) on each LIBOR
Rate Determination Date, the Agent shall determine (which determination shall,
absent manifest error, be final, conclusive and binding upon all parties) the
interest rate that shall apply to the LIBOR Rate Loans for which an interest
rate is then being determined for the applicable Interest Period and shall
promptly give notice thereof (in writing or by telephone confirmed in writing)
to the Borrower and each Lender.
(b) If any Lender determines (which determination shall be final and
conclusive and binding upon all parties) that:
(i) adequate and fair means do not exist for ascertaining the
applicable interest rate by reference to the LIBOR Rate with
respect to the LIBOR Rate Loans as to which an interest rate
determination is then being made; or
(ii) deposits of a type and maturity appropriate to match fund LIBOR
Rate Loans are not available; or
(iii)maintenance of LIBOR Rate Loans would violate any applicable
law, rule, regulation or directive, whether or not having the
force of law;
then, and in any such event, promptly after being notified of a borrowing,
conversion or continuation, such Lender shall give notice (in writing or by
telephone confirmed in writing) to the Borrower and the Agent (which notice the
Agent shall promptly transmit to each other Lender) of such determination, and
the Agent shall suspend the availability of LIBOR Rate Loans until such
circumstance no longer exists and (except in the case of clause (i) above)
require any LIBOR Rate Loans to be repaid and Borrower shall repay or prepay the
LIBOR Rate Loans, together with all interest accrued thereon.
(c) The Borrower shall indemnify the Agent and each Lender, upon written
request (which request shall set forth in reasonable detail the basis for
requesting such amounts and which shall, absent manifest error, be presumed
correct and binding upon all parties hereto), for losses, expenses and
liabilities (including, without limitation, any loss (including interest paid)
sustained by it in connection with the liquidation or re-employment of funds
acquired to fund or maintain LIBOR Rate Loans), that such Person may sustain:
(i) if for any reason (other than a default by the Lenders) a borrowing of any
LIBOR Rate Loan does not occur on a date specified therefor in a Borrowing
Notice, a Conversion/Continuation Notice or a request by telephone or telecopy
for borrowing or conversion/continuation or a successive Interest Period does
not commence after notice therefor is given pursuant to subsection 2.5(e) or
2.5(f); (ii) if any prepayment of any of its LIBOR Rate Loans occurs on a date
that is not the last day of the Interest Period applicable to that Loan whether
because of acceleration, prepayment or otherwise (unless such prepayment is
required pursuant to the provisions of subsection 2.20(b)); (iii) if any of its
LIBOR Rate Loans are not paid on any date specified in a notice of prepayment
given by the Borrower; or (iv) as a consequence of any other default by the
Borrower to repay its LIBOR Rate Loans when required by the terms of this
Agreement; provided that during the period while any such amounts have not been
paid, the Lenders shall reserve an equal amount from amounts otherwise available
to be borrowed under the Revolving Loan. Unless otherwise provided herein, the
amount specified in the written statement of any Lender shall be payable on
demand after receipt by the Borrower thereof.
(d) Any Lender may make, carry or transfer LIBOR Rate Loans at, to, or for
the account of, any of its domestic or foreign branch offices or the office of
an affiliate of such Lender.
(e) Calculation of all amounts payable to a Lender under subsection 2.20(b)
or 2.20(c) shall be made as though each Lender had actually funded its relevant
LIBOR Rate Loan through the purchase of a LIBOR deposit bearing interest at the
LIBOR Rate in an amount equal to the amount of such LIBOR Rate Loan and having a
maturity comparable to the relevant Interest Period and through the transfer of
such LIBOR deposit from an offshore office to a domestic office in the United
States; provided that each Lender may fund each of its LIBOR Rate Loans in any
manner it sees fit and the foregoing assumption shall be utilized only for the
calculation of amounts payable under this subsection 2.20(e).
3. REPORTING AND ELIGIBILITY REQUIREMENTS.
3.1 Monthly Reports and Borrowing Base Certificates. The Borrower shall submit
to each Lender, not later than the thirtieth (30th) day of each month, a monthly
report ("Monthly Report"), accompanied by a certificate in the form attached as
Exhibit 3.1, which shall be signed by the chief executive or chief financial
officer of the Borrower. The Monthly Report shall be in form and substance
satisfactory to the Required Lenders and shall include, as of the last Business
Day of the preceding month (and with respect to the initial Monthly Report
attached as Exhibit 3.1-1, as of August 30, 1996): (i) an aged trial balance of
Accounts ("Accounts Trial Balance") as described in subsection 7.1(iii)(b) and a
payables report in a form satisfactory to the Required Lenders; and (ii) an aged
schedule of Inventory owned by the Borrower and the Guarantor and in the
Borrower's or the Guarantor's possession valued at the lower of cost or market
on a FIFO basis. The Borrower shall provide in all Monthly Reports and more
frequently if requested by the Required Lenders, in form satisfactory to the
Required Lenders, information on each of the following occurrences arising
subsequent to the immediately preceding Monthly Report: all sales or other
reductions of and all additions to Inventory, all returns of Inventory, all
credits issued by the Borrower or the Guarantor, and all material monetary
claims asserted against the Borrower or the Guarantor in connection with
Inventory. In addition, the Borrower shall provide the Agent and each Lender
with a borrowing base certificate ("Borrowing Base Certificate") in form and
substance satisfactory to the Agent (each such Borrowing Base Certificate to be
delivered to the Agent not later than the 20th day of each month for the
preceding month) or such shorter time period as the Required Lenders may require
upon, in the absence of a Default or Event of Default, thirty (30) days' prior
notice or, in the event of Default or Event of Default, upon three (3) days'
prior notice. The Borrower shall furnish copies of any other reports or
information, in a form and with such specificity as is satisfactory to the
Required Lenders, concerning Accounts included, described or referred to in the
Borrowing Base Certificates and any other documents in connection therewith
requested by the Required Lenders including, without limitation, but only if
specifically requested by the Required Lenders, copies of all invoices prepared
in connection with such Accounts and all credit memoranda issued by the Borrower
or the Guarantor (the Borrower and the Guarantor shall issue such credit
memoranda in accordance with its current practice and without delay, but in any
event within twenty (20) Business Days of receipt of notice of a dispute with
respect to an Account).
3.2 Eligible Accounts. "Eligible Accounts" shall mean all Accounts other than
the following: (i) Accounts which remain unpaid as of ninety (90) days (or, with
respect to Account
Debtors located in New York or New Jersey, one hundred twenty (120) days to the
extent determined by the Agent in its absolute discretion) after the date of the
original invoice with respect thereto; (ii) all Accounts owing by a single
Account Debtor, including a currently scheduled Account, if fifty percent (50%)
or more of the balance owing by such Account Debtor is ineligible by reason of
the criterion set forth in clause (i) of this subsection 3.2; (iii) Accounts
with respect to which the Account Debtor is a Distributor or an Affiliate of the
Borrower or the Guarantor or a director, officer or employee of the Borrower,
the Guarantor or any Affiliate of either of them; (iv) Accounts with respect to
which the Account Debtor is a Governmental Authority or prime contractor thereof
unless the Borrower or the Guarantor, as applicable, has complied in a manner
satisfactory to the Agent with the Federal Assignment of Claims Act of 1940, as
amended, or with the Financial Administration Act (Canada) or similar law or
statute of the relevant state, province, territory, municipality or other
jurisdiction, and any amendments thereto, relative to the assignment of such
Accounts; (v) Accounts with respect to which the Account Debtor is not a
resident of the United States or Canada (other than the provinces of Prince
Edward Island, Newfoundland and Nova Scotia and the Northwest Territories)
unless the Account Debtor has (A) supplied the Borrower or the Guarantor, as
applicable, with an irrevocable letter of credit, issued by a financial
institution satisfactory to the Agent or (B) obtained foreign credit insurance
naming the Agent, for the benefit of the Lenders, as loss payee, in each case in
an amount sufficient to cover such Account and in form and substance
satisfactory to the Required Lenders and without right of setoff and the Account
is payable in full in United States dollars; provided that, subject to the other
terms of this subsection 3.2, Two Million Dollars ($2,000,000) of Accounts owing
from Century Medical, Inc. shall be Eligible Accounts so long as Itochu
Corporation directly or indirectly owns a majority of the voting capital stock
of such Account Debtor; (vi) Accounts arising with respect to goods which have
not been shipped and delivered to and accepted as satisfactory by the Account
Debtor or arising with respect to services which have not been fully performed
and accepted as satisfactory by the Account Debtor; (vii) Accounts for which the
prospect of payment in full or performance in a timely manner by the Account
Debtor is or is likely to become impaired as determined by the Agent in
accordance with its customary asset-based financing; (viii) Accounts which are
not invoiced (and dated as of the date of such invoice) and sent to the Account
Debtor within five (5) days after the later of (A) the delivery of the purchase
order by such Account Debtor and (B) delivery of the underlying goods to or
performance of the underlying services for the Account Debtor but in any event
not later than thirty (30) days after such delivery; (ix) Accounts with respect
to which the Agent, on behalf of the Lenders, does not have a first and valid
fully perfected Lien free and clear of any other Lien whatsoever; (x) Accounts
with respect to which the Account Debtor is the subject of bankruptcy or a
similar insolvency proceeding or has made an assignment for the benefit of
creditors or whose assets have been conveyed to a receiver or trustee; (xi)
Accounts with respect to which the Account Debtor's obligation to pay the
Account is conditional upon the Account Debtor's approval or is otherwise
subject to any repurchase obligation or return right, as with sales made on a
guaranteed sale, bill-and-hold, sale-or-return, sale on approval or other terms
by reason of which the payment by the Account Debtor is or may be conditional
(except with respect to Accounts in connection with which Account Debtors are
entitled to return Inventory solely on the basis of the quality of such
Inventory) or consignment basis; (xii) Accounts with respect to which any
disclosure is required in accordance with subsection 3.3; (xiii) contra Accounts
to the extent of the amount of the accounts
payable owed by the Borrower or the Guarantor to the Account Debtor; (xiv)
Accounts with respect to which the Account Debtor is located in any state
denying creditors access to its courts in the absence of a Notice of Business
Activities Report or other similar filing unless the Borrower or the Guarantor,
as applicable, has either qualified as a foreign corporation authorized to
transact business in such state or other jurisdiction or has filed a Notice of
Business Activities Report or similar filing with the applicable Governmental
Authority for the then current year; (xv) Accounts evidenced by Chattel Paper or
any Instrument of any kind, to the extent possession of such Chattel Paper or
Instrument is not granted to the Agent, for the benefit of the Lenders; and
(xvi) Accounts which the Agent determines in good faith to be unacceptable.
3.3 Account Warranties. With respect to Accounts scheduled, listed or referred
to on the initial Accounts Trial Balance (included in the initial Monthly Report
attached as Exhibit 3.1-1) or on any subsequent Accounts Trial Balance or
Borrowing Base Certificate, the Borrower and the Guarantor each represent and
warrant to the Agent and each Lender that, except as disclosed in the applicable
Accounts Trial Balance or Borrowing Base Certificate: (i) the Accounts represent
bona fide sales of Inventory or the provision of services to customers in the
ordinary course of business completed in accordance with the terms and
provisions contained in the documents available to the Agent and each Lender
with respect thereto and are not evidenced by a judgment or by an Instrument or
Chattel Paper, unless the Agent is granted possession of such Instrument or
Chattel Paper; (ii) the amounts shown on the applicable Accounts Trial Balance
and on the Borrower's or the Guarantor's books and records and all invoices and
statements that may be delivered to the Agent or any Lender with respect thereto
are actually and absolutely owing to the Borrower or the Guarantor and are not
in any way contingent; (iii) no payments have been or shall be made thereon
except payments delivered to a Blocked Account pursuant to this Agreement and a
Blocked Account Agreement; (iv) there are no setoffs, claims or disputes
existing or asserted with respect thereto and the Borrower or the Guarantor, as
applicable, has not made any agreement with any Account Debtor for any deduction
therefrom except a discount or allowance allowed by the Borrower or the
Guarantor, as applicable, in the ordinary course of its business for prompt
payment and which discount and allowance is reflected in the calculation of the
face amount of each invoice related to such Account; (v) to the best of the
Borrower's and the Guarantor's knowledge, there are no facts, events or
occurrences which in any way impair the validity or enforcement thereof or tend
to reduce the amount payable thereunder as shown on the respective Accounts
Trial Balances or Borrowing Base Certificates, the Borrower's or the Guarantor's
books and records and all invoices and statements delivered to the Agent or any
Lender with respect thereto; (vi) to the best of the Borrower's and the
Guarantor's knowledge, all Account Debtors have the capacity to contract and are
solvent; (vii) neither the Borrower nor the Guarantor has received any notice of
proceedings or actions which are threatened or pending against any Account
Debtor which might, to the best of the Borrower's and the Guarantor's knowledge,
result in any material adverse change in such Account Debtor's financial
condition; (viii) neither the Borrower nor the Guarantor has any knowledge that
any Account Debtor is unable generally to pay its debts as they become due; (ix)
the Accounts do not arise from the sale of Inventory produced in violation of
the Fair Labor Standards Act so as to be subject to the so-called "hot goods"
provision contained in Title 29 U.S.C., Section 215(a)(1); (x) the services
furnished and/or Inventory sold giving rise to the Account are not, and will not
be at the
time of sale thereof, subject to any Lien except that of the Agent, for the
benefit of the Lenders; (xi) the Accounts have not been pledged or sold to any
Person or otherwise encumbered and the Borrower or the Guarantor, as applicable,
is the owner of the Accounts free and clear of any Lien except that of the
Agent, for the benefit of the Lenders; and (xii) with respect to Accounts for
which the Account Debtor is located in any state or other jurisdiction denying
creditors access to its courts in the absence of a Notice of Business Activities
Report or other similar filing, the Borrower or the Guarantor, as applicable,
has either qualified as a foreign corporation authorized to transact business in
such state or other jurisdiction or has filed all required Notice of Business
Activities Reports or comparable filings with the applicable Governmental
Authority for the then current year.
3.4 Verification of Accounts. The Agent shall have the right, at any time or
times hereafter, in the name of the Borrower or the Guarantor or a nominee of
the Agent, or during the pendency of an Event of Default, in the Agent's name,
to verify with Account Debtors the validity, amount or any other matter relating
to any Account, by mail, telephone, or in person.
3.5 Collection of Accounts and Payments. On or prior to the Closing Date, the
Borrower and the Guarantor shall each establish one or more lock box accounts
(the "Blocked Accounts") in the Borrower's or the Guarantor's, as the case may
be, name with such banks as are acceptable to the Agent ("Collecting Banks") and
enter into blocked account agreements among the Borrower, or the Guarantor, as
applicable, the Agent and each Collecting Bank (the "Blocked Account
Agreements"). All Account Debtors shall directly remit all payments on Accounts
into a Blocked Account and the Borrower and the Guarantor will immediately
deposit all cash payments made for Inventory or other cash payments constituting
proceeds of Collateral into a Blocked Account in the identical form in which
such payment was made, whether by cash or check. On or prior to the Closing
Date, the Borrower and the Guarantor shall notify in writing each of the
existing Account Debtors of the name and address of the Blocked Account to which
each such Account Debtor shall be directed to remit all payments on its
Accounts. In addition, the Agent shall, on or prior to the Closing Date,
establish a depository account at each Collecting Bank or at a centrally located
bank (the "Depository Account"). Each Blocked Account Agreement shall provide,
among other things, that (i) all items of payment deposited in each Blocked
Account are held by such Collecting Bank as agent and bailee-in-possession for
the Agent, (ii) the Collecting Bank has no rights of setoff or recoupment or any
other claim against such Blocked Account, other than for payment of its service
fees or other charges directly related to the administration of such Blocked
Account and for returned checks or other items of payment, (iii) unless and
until the Agent shall have given such Collecting Bank a Redirection Notice (as
such term is defined below), such Collecting Bank agrees to forward all amounts
received in such Blocked Account to such accounts or for such uses as the
Borrower or the Guarantor may from time to time instruct, and (iv) at all times
following delivery of notice by the Agent to such Collecting Bank to do so (a
"Redirection Notice"), such Collecting Bank agrees to immediately forward all
amounts received in such Blocked Account to the Depository Account through daily
sweeps from the Blocked Account into the Depository Account in accordance with
the terms of the applicable Blocked Account Agreement. The Agent shall not be
entitled to deliver a Redirection Notice to any Collecting Bank until the
occurrence of a Default or an Event of Default; provided that in the event such
Default or Event of Default is cured or waived, the Agent
shall deliver a notice to the Collecting Bank rescinding such Redirection
Notice. Subject to the terms of this Agreement and the Blocked Account
Agreements, the Borrower and the Guarantor each hereby agree that all payments
received by the Agent, whether by cash, check, wire transfer or any other
instrument, made to such Blocked Accounts or otherwise received by the Agent and
whether on the Accounts or as proceeds of other Collateral or otherwise will be
the sole and exclusive property of the Agent, for the benefit of the Lenders,
and shall be applied by the Agent to the Obligations as provided for herein. The
Borrower and the Guarantor shall each irrevocably instruct each Collecting Bank
that, upon receipt of a Redirection Notice, such Collecting Bank shall promptly
transfer all payments or deposits to the Blocked Accounts into the Agent's
Depository Account in accordance with the terms of the applicable Blocked
Account Agreement. The Borrower, the Guarantor and any of their respective
Affiliates, employees, agents or other Persons acting for or in concert with the
Borrower or the Guarantor, shall, acting as trustee for the Agent, receive, for
the benefit of the Lenders, any monies, checks, notes, drafts or any other
payments relating to and/or proceeds of Accounts or other Collateral which come
into the possession or under the control of the Borrower or the Guarantor or any
Affiliates, employees, agents or other Persons acting for or in concert with the
Borrower or the Guarantor, and immediately upon receipt thereof, the Borrower or
the Guarantor or such Persons shall remit the same or cause the same to be
deposited, in kind, into a Blocked Account or, during such time as a Default or
Event of Default shall have occurred and be continuing, at the direction of the
Agent, shall remit the same, or cause the same to be remitted, in kind, to the
Agent at the Agent's address set forth in subsection 10.13.
3.6 Appointment of the Agent as Borrower's and the Guarantor's Attorney-in-Fact.
The Borrower and the Guarantor each hereby irrevocably designate, make,
constitute and appoint the Agent (and all Persons designated by the Agent) the
Borrower's and the Guarantor's true and lawful agent and attorney-in-fact (which
appointment shall for all purposes be deemed to be coupled with an interest and
shall be irrevocable for so long as any Obligations are outstanding), and
authorizes the Agent, in the Borrower's or the Guarantor's, as applicable, or
the Agent's name, without notice to the Borrower or the Guarantor, to: (A)
following the occurrence of an Event of Default (i) demand payment of Accounts,
(ii) enforce payment of Accounts by legal proceedings or otherwise, (iii)
exercise all of the Borrower's and the Guarantor's rights and remedies with
respect to the collection of the Collateral or any legal proceedings brought to
collect an Account, (iv) sell or assign any Collateral upon such terms, for such
amount and at such time or times as the Agent deems advisable, (v) settle,
adjust, compromise, extend or renew any Collateral, (vi) discharge and release
any Account, (vii) prepare, file and sign the Borrower's or the Guarantor's, as
applicable , name on any proof of claim in bankruptcy or other similar document
against an Account Debtor or on any notice of Lien, assignment or satisfaction
of Lien or similar document in connection with any of the Collateral, (viii)
notify the postal authorities of any change of the address for delivery of the
Borrower's or the Guarantor's mail to an address designated by the Agent, and
receive, open and dispose of all mail addressed to the Borrower or the
Guarantor, (ix) take control in any manner of any item of payment or proceeds of
any Account, (x) have access to any lockbox or postal box into which the
Borrower's or the Guarantor's mail is deposited, (xi) endorse the Borrower's or
the Guarantor's name upon any items of payment or proceeds thereof and deposit
the same in the Agent's account on account of the Borrower's Obligations, (xii)
endorse the Borrower's or the Guarantor's
name upon any Chattel Paper, document, Instrument, invoice, freight bill, bill
of lading or similar document or agreement relating to any Account or any goods
pertaining thereto, (xiii) cause any Collateral in the possession of any
Distributor to be sold in accordance with the terms of the applicable
Distributor Agreement, and (xiv) do all other acts and things which are
necessary, in the Agent's sole discretion, to fulfill the Borrower's Obligations
under the Financing Agreements; and (B) at any time, to (i) execute in the
Borrower's or the Guarantor's name and on the Borrower's or the Guarantor's
behalf any financing statements or amendments thereto necessary to effectuate
the terms of this Agreement and secure the Liens of the Agent on the Collateral,
(ii) endorse the Borrower's or the Guarantor's name on any verification of
Accounts and notices thereof to Account Debtors, (iii) use the information
recorded or contained in any data processing equipment and computer hardware and
software relating to the Accounts and any other Collateral, and (iv) communicate
with the Borrower's and the Guarantor's independent certified public
accountants.
3.7 Account Records. The Borrower and the Guarantor shall at all times hereafter
maintain a record of Accounts, keeping correct and accurate records itemizing
and describing the names and addresses of Account Debtors, relevant invoice
numbers, shipping dates and due dates, collection histories, and Accounts
agings, all of which records shall be available during the Borrower's and the
Guarantor's usual business hours upon prior written or telephonic notice of any
of the Agent's officers, employees or agents; provided that no prior notice
shall be required upon the occurrence of a Default or Event of Default and
during the continuance thereof. The Borrower and the Guarantor shall cooperate
fully with the Agent and its agents who shall have the right at any time or
times to inspect the Accounts and the records with respect thereto. The Borrower
and the Guarantor shall conduct a review of their respective bad debt reserves
and collection histories at least once each year and promptly following such
review shall supply the Agent with a report in a form and with such specificity
as may be satisfactory to the Agent concerning such review of the Accounts.
3.8 Instruments and Chattel Paper. All Chattel Paper shall be marked with the
following legend: "This writing and the obligations evidenced or secured hereby
are subject to the security interest of Sanwa Business Credit Corporation, as
agent." Upon the request of the Agent and at all times after the occurrence of a
Default or Event of Default, immediately upon the Borrower's or the Guarantor's
receipt thereof, the Borrower or the Guarantor, as applicable, shall deliver or
cause to be delivered to the Agent, with appropriate endorsement and assignment
to vest title, with full recourse to the Borrower or the Guarantor, as
applicable, and possession in the Agent, on behalf of the Lenders, all
Instruments and Chattel Paper which the Borrower or the Guarantor now owns or
may at any time or times hereafter acquire that relate to or otherwise
constitute proceeds of the Collateral.
3.9 Notice to Account Debtors. The Agent may, in its sole discretion, at any
time or times, after the occurrence of an Event of Default and without prior
notice to the Borrower or the Guarantor, notify any or all Account Debtors that
the Accounts have been assigned to the Agent, for the benefit of the Lenders,
and that the Agent has a Lien therein. After the occurrence of an Event of
Default, the Agent may direct or, at the request of the Agent, the Borrower or
the
Guarantor, as applicable, shall direct, any or all Account Debtors to make all
payments upon the Accounts directly to the Agent. The Agent shall furnish the
Borrower with a copy of any such notice.
3.10 Eligible Inventory. "Eligible Inventory" shall consist of all raw
materials, work-in-progress that only remains to be sterilized in order to be
classified as finished goods and finished goods Inventory, except the following:
(i) Inventory which is damaged, obsolete, not in good condition, or not either
currently usable or currently saleable in the ordinary course of the Borrower's
or the Guarantor's business as determined by the Agent; (ii) Inventory which the
Agent determines, or which in accordance with the Borrower's or the Guarantor's
customary business practices, is unacceptable due to age, type, category and/or
quantity, including, without limitation, any Inventory which is in excess of a
two (2) year's supply or is otherwise slow-moving or whose expiration date has
occurred; (iii) Inventory with respect to which the Agent does not have a first
and valid, fully perfected Lien; (iv) Inventory consisting of packaging or
supplies, or instruments designated by the Borrower or the Guarantor as
equipment, if any, in its financial statements; (v) Inventory in the possession
of the Borrower or the Guarantor but not owned by the Borrower or the Guarantor,
as the case may be; (vi) Inventory produced in violation of the Fair Labor
Standards Act and subject to the so-called "hot goods" provision contained in
Title 29 U.S.C. ss. 215(a)(1); (vii) Inventory with respect to which any
disclosure is required in the applicable Monthly Report or Borrowing Base
Certificate in accordance with subsection 3.11; (viii) Inventory which is on
consignment or is located at a place other than the places of business and
collateral locations of the Borrower or its Subsidiaries listed on Exhibit 8.6;
provided that, subject to subsection 7.9, in the case of leased or bailment
locations listed on Exhibit 8.6, no Inventory located at any such location shall
be "Eligible Inventory" until the applicable landlord or bailee has executed a
lien waiver in form and substance satisfactory to the Agent) including, without
limitation, Inventory in transit; (ix) Inventory consisting of finished goods
which do not meet the specifications of the purchase order for which such
Inventory was produced; (x) Inventory which is subject to any licensing, patent,
royalty, trademark, trade name, copyright or other similar agreement with any
third party which materially restricts the ability of the Borrower or the
Guarantor or, in the case of an exercise of its remedies, the Agent on behalf of
the Lenders to sell such Inventory; and (xi) Inventory which fails to meet the
standards imposed by any Governmental Authority having regulatory authority over
such goods, their use and/or sale in the applicable jurisdiction of such use or
sale. In the event that Inventory previously scheduled in a Monthly Report or
Borrowing Base Certificate ceases to be Eligible Inventory, the Borrower shall
notify the Agent thereof immediately.
3.11 Inventory Warranties. With respect to Inventory scheduled, listed or
referred to in any Monthly Report or Borrowing Base Certificate, the Borrower
and the Guarantor each represent and warrant that, except as disclosed in such
Monthly Reports or Borrowing Base Certificates (i) such Inventory is located at
one of the Facilities or locations set forth on Exhibit 8.6 or in the possession
of a Distributor or their authorized agent, (ii) the Borrower or the Guarantor,
as applicable, has good, indefeasible and merchantable title to such Inventory
and such Inventory is not subject to any Lien or document whatsoever except for
the prior, first perfected Lien granted to the Agent hereunder, (iii) such
Inventory is in compliance with all regulatory requirements prescribed by the
FDA, with respect to Inventory used or sold in the United States, or the
applicable regulatory
requirements, with respect to Inventory used or sold in any other jurisdictions
including, without limitation, in each case current good manufacturing
practices, is of good and merchantable quality, free from any defects or
adulterations and is not goods taken in trade, (iv) such Inventory is not
subject to any licensing, patent, royalty, trademark, tradename or copyright
agreements with any third parties which materially restricts the ability of the
Borrower or the Guarantor, in the case of an exercise of its remedies, the Agent
on behalf of the Lenders to sell such Inventory, (v) the completion of
manufacture, marketing, sale, distribution or other disposition of such
Inventory by the Agent following an Event of Default shall not require the
consent or approval of any Person or Governmental Authority in the jurisdiction
in which such Inventory is then being manufactured, marketed, sold or
distributed (including, without limitation, the FDA) and shall not constitute a
breach or default under any contract or agreement to which the Borrower or the
Guarantor is a party or to which the Inventory is subject including, without
limitation, any Distributor Agreement or royalty or similar agreement, (vi) such
Inventory has the appropriate premarket approval by the FDA or is merchantable
in non-U.S. markets for entry into the market and, if applicable, is in
compliance with the labeling requirements of the FDCA, (vii) such Inventory is
not subject to any recall, seizure or other enforcement actions of any
Governmental Authority, and (viii) no Inventory has been produced in violation
of the Fair Labor Standards Act so as to be subject to the so-called "hot goods"
provision contained in Title 29 U.S.C., Section 215(a)(1).
3.12 Inventory Records. The Borrower and the Guarantor shall at all times
hereafter maintain a perpetual inventory, keeping correct and accurate records
itemizing and describing the kind, type and quantity of Inventory and of
Eligible Inventory, the Borrower's or the Guarantor's, as applicable, cost
therefor and daily withdrawals therefrom and additions thereto, and the
locations of all Inventory in the possession of bailees, all of which records
shall be available during the Borrower's or the Guarantor's respective usual
business hours upon prior written or telephonic notice of any of the Agent's
officers, employees or agents; provided that no prior notice shall be required
upon the occurrence of a Default or Event of Default and during the continuance
thereof. The Borrower and the Guarantor shall cooperate fully with the Agent and
its agents who shall have the right at any time or times to inspect the
Inventory and the records with respect thereto. Pursuant to the procedures
established by the Borrower or the Guarantor, as applicable, and its independent
public accountants, the Borrower and the Guarantor shall each conduct a physical
count of the Inventory at least once each year and promptly following such
physical inventory shall supply the Agent with a report in form and substance
satisfactory to the Agent concerning such physical count of the Inventory, and
shall furnish to the Agent, at the Agent's request, such other documents and
reports with respect to the Inventory.
3.13 Safekeeping of Inventory and Inventory Covenants. Neither the Agent nor any
Lender shall be responsible for: (i) the safekeeping of the Inventory; (ii) any
loss, spoilage or damage to the Inventory; (iii) any diminution in the value of
the Inventory; (iv) any act or default of any carrier, warehouseman, bailee,
forwarding agency or any other Person or (v) compliance with any of the
reporting requirements contemplated by the FDCA. Subject to subsection 10.4, as
between the Borrower and the Guarantor on the one hand and the Agent and each
Lender on the other hand,
responsibility for the safekeeping of the Inventory and all risk of loss,
spoilage, damage, destruction or diminution in value of the Inventory shall be
borne by the Borrower and the Guarantor.
3.14 Equipment Warranties. With respect to the Equipment, the Borrower
represents and warrants to the Agent and the Lenders that: (i) the Borrower has
good, indefeasible and merchantable title to or a valid leasehold interest in
the Equipment; (ii) the Equipment is located only on the premises listed on
Exhibit 3.14; (iii) the Equipment is not subject to any Lien whatsoever except
for Permitted Liens; (iv) the Equipment is in good condition and repair
(ordinary wear and tear excepted) and (other than obsolete Equipment) is
currently used or usable in the Borrower's business; and (v) except as described
in Exhibit 3.14, none of the Equipment used in the conduct of the Borrower's
business is leased.
3.15 Equipment Records. The Borrower shall at all times hereafter keep complete
and accurate records itemizing and describing the kind, type, age and condition
of Equipment, and the Borrower's cost therefor and accumulated depreciation
thereon and acquisitions, retirements, sales, or other dispositions thereof, all
of which records shall be available during the Borrower's usual business hours
upon prior written or telephonic notice to any of the Agent's officers,
employees or agents.
3.16 Maintenance of Equipment. The Borrower shall keep and maintain the
Equipment in good operating condition and repair (ordinary wear and tear
excepted) and shall make all necessary replacements thereof and renewals thereto
so that the value and operating efficiency of the Borrower shall at all times be
maintained and preserved. The Borrower shall not permit the Equipment to be
operated or maintained in violation of any applicable law, statute, rule or
regulation. In addition, with respect to all items of leased equipment, the
Borrower shall keep, maintain, repair, replace and operate such leased equipment
in accordance with the terms of the applicable lease.
3.17 Real Estate. Exhibit 3.17 describes all Real Estate or interests in Real
Estate owned or leased by the Borrower or the Guarantor. The Borrower and the
Guarantor each represent and warrant to the Agent and the Lenders that the
Borrower or the Guarantor, as applicable, has good, indefeasible and
merchantable title to and ownership of, or a valid leasehold interest in, each
parcel of Real Estate described in Exhibit 3.17, free and clear of all Liens,
except Permitted Liens. The Borrower and the Guarantor each further represent
and warrant to the Agent and the Lenders that no parcel of Real Estate is
subject to any boundary or encroachment dispute, special assessment,
condemnation or eminent domain proceeding, restrictive covenant, zoning or
building code violation or any other dispute, assessment, claim or violation of
law which might restrict or interfere with the Borrower's or the Guarantor's use
of such parcel of Real Estate in the ordinary course of the Borrower's or the
Guarantor's business or which might have a Material Adverse Effect. Except as
disclosed on Exhibit 3.17, neither the Borrower nor the Guarantor owns any other
real property or use or occupy any real property that it leases from any other
Person.
3.18 Maintenance of Real Estate. Each of the Borrower and the Guarantor shall
keep and maintain the Real Estate and all improvements thereon in good condition
and repair and
shall maintain the utility thereof and shall maintain such Real Estate in
conformity with all applicable building and zoning codes and other applicable
laws, statutes, rules and regulations. The Borrower and the Guarantor shall each
maintain its respective leased real property in the same manner as its owned
Real Estate, and comply with the terms of its leases of such real property, in
accordance with the applicable leases.
3.19 Intellectual Property and General Intangibles. Each of the Borrower and the
Guarantor is the owner of all its respective Intellectual Property and General
Intangibles free and clear of all Liens other than Permitted Liens. The Borrower
and the Guarantor shall maintain complete and accurate records with respect to
its respective Intellectual Property and General Intangibles and shall defend
such Intellectual Property and General Intangibles against infringement,
interference, opposition or similar actions or challenges and shall maintain and
preserve all of its rights with respect thereto; provided that neither the
Borrower nor the Guarantor shall be required to pursue any of the foregoing if
such failure will not have a Material Adverse Effect.
4. CONDITIONS TO ADVANCES.
4.1 Conditions to All Advances. In addition to those conditions set forth in
subsection 4.2 regarding the initial advance of funds, the issuance of a Lender
Guaranty under the Revolving Loan and the funding of the Revolving Loan shall be
conditioned upon the matters set forth in this subsection 4.1:
(a) Representations and Warranties. All of the representations and
warranties of the Borrower and the Guarantor contained herein or in any other
Financing Agreement shall be true and correct in all material respects on and as
of the date of such advance as if made on such date, except to the extent that
any such representation or warranty expressly relates to an earlier date.
(b) Borrower's Request. The Agent shall receive (i) Borrowing Notice or,
after a Refinancing, a Conversion/Continuation Notice on or prior to the date
required by the terms of the Agreement with respect to the Revolving Loan, (ii)
with respect to a Lender Guaranty, the notice required by subsection 2.1(d)(iv)
at least seven (7) Business Days prior to the issuance of a Lender Guaranty,
(iii) a Monthly Report from the Borrower dated no more than thirty (30) days
prior to the date of such advance, and (iv) a current Borrowing Base Certificate
and all other documents required to have been delivered to the Agent hereunder
prior to such date.
(c) Financial Condition. As determined by the Required Lenders in their
reasonable discretion, no Material Adverse Effect shall have occurred at any
time or times subsequent to the most recent annual financial statements provided
pursuant to subsection 7.1(ii).
(d) No Default. As determined by the Required Lenders, neither a Default
nor an Event of Default shall have occurred and be continuing or will result
from such advance.
(e) No Litigation. (i) No Litigation shall be pending or threatened against
the Borrower or the Guarantor or any officer, director, or executive thereof (A)
in connection with this Agreement or the other Financing Agreements or (B) other
than as disclosed on Exhibit 6.14, which, if adversely determined, would have a
Material Adverse Effect; and (ii) no injunction, writ, restraining order or
other order of any nature materially adverse to the Borrower or the Guarantor
shall have been issued or threatened by any Governmental Authority.
(f) Other Requirements. The Agent shall have received, in form and
substance satisfactory to the Agent, all certificates, orders, authorizations,
consents, affidavits, schedules, instruments, security agreements, financing
statements and other documents which are provided for hereunder, or which the
Agent may at any time reasonably request.
Each request and acceptance by the Borrower of the proceeds of any advance under
the Revolving Loan and the request by the Borrower for the incurrence by the
Lenders of any Lender Guaranty Liability shall constitute a representation and
warranty by the Borrower that the conditions contained in subsections 4.1(a),
4.1(d), and 4.1(e) have been satisfied. All legal matters incident to the making
of the advance of funds or the issuance of the Lender Guaranty shall be
satisfactory to the Agent and its counsel.
4.2 Conditions to Initial Advance. In addition to those conditions set forth in
subsection 4.1 with respect to all advances or issuances of Lender Guaranties
hereunder, the making of the initial advance of funds under the Revolving Loan
shall be conditioned upon the satisfaction on or before the Closing Date of the
conditions set forth in this subsection 4.2 and the delivery on or before the
Closing Date of the following documents to each Lender, in form and substance
satisfactory to each Lender, and consummation of all of the transactions or the
satisfaction of each condition contemplated by each such document in a manner
satisfactory to each Lender and its counsel.
(a) Financing Agreements; Notes. Duly executed copies of this Agreement,
the other Financing Agreements and one (1) duly executed copy of each of the
Revolving Loan Notes conforming to the requirements hereof, together with all
Schedules, Exhibits, certificates, instruments, documents and financial
statements required to be delivered pursuant hereto and thereto.
(b) Legal Opinion. The legal opinion of the Borrower's and the Guarantor's
counsel and such local counsel, including, without limitation, Canadian counsel
for the Guarantor, deemed necessary by the Lenders in form and substance
satisfactory to the Lenders and their counsel.
(c) UCC. Evidence of the proper filing of UCC financing statements
perfecting Liens in favor of the Agent in the Collateral and copies of searches
of financing statements filed under the Code or other applicable law, together
with tax lien and judgment searches with respect to the Property of the
Borrower, in such jurisdictions as the Agent may request.
(d) Officer's Certificate. A certificate executed by, with respect to the
Borrower, an Authorized Officer, and, with respect to the Guarantor, any duly
elected officer, stating that (i) no Default or Event of Default has occurred
and is continuing, (ii) since June 30, 1996, no material and adverse change has
occurred in the business, prospects, assets, liabilities, operations or
condition (financial or other) of the Borrower or the Guarantor or of the
Borrower and its Subsidiaries taken as a whole, (iii) no litigation,
investigation or proceeding, or injunction, writ or restraining order of the
type described in subsection 4.1(e) is pending or threatened, (iv) each of the
conditions precedent to the consummation of the Loans contemplated hereby has
been met, satisfied or waived, and (v) the representations and warranties of
such Person contained in the Financing Agreements are correct and complete in
all material respects on and as of the Closing Date.
(e) Insurance Policies and Endorsements. Copies of policies of insurance
required hereby together with loss payable endorsements in form and substance
satisfactory to the Agent, duly executed, and evidence of the payment of the
current monthly premium therefor.
(f) Initial Monthly Report and Other Exhibits. Copies of the initial
Monthly Report, Borrowing Base Certificate, the Solvency Affidavit, the initial
Projections, and all financial statements and other Exhibits and Schedules
required hereby.
(g) Fees. The Closing Fee payable pursuant to subsection 2.9 has been paid.
(h) Charter and Bylaws. A copy of the Charter of the Borrower and the
articles of incorporation of the Guarantor certified by the appropriate
Governmental Authority in its respective jurisdiction of incorporation as of a
date not more than twenty (20) days prior to the Closing Date and a copy of the
bylaws of the Borrower and the Guarantor and any amendments thereto certified by
the Secretary or Assistant Secretary of the Borrower or the Guarantor, as
applicable.
(i) Good Standing Certificates. Good Standing Certificates for the Borrower
and Certificates of Status for the Guarantor from the appropriate Governmental
Authority in its respective jurisdiction of incorporation and from each other
state or province in which the Borrower or the Guarantor is required to be
qualified to transact business as a foreign corporation, except where such
failure to so qualify does not have a Material Adverse Effect.
(j) Board Resolutions. Certified copies of resolutions of the board of
directors of the Borrower and the Guarantor authorizing the execution and
delivery of and the consummation of the transactions contemplated by this
Agreement, the other Financing Agreements, and all other documents or
instruments to be executed and delivered in conjunction herewith and therewith,
to which it is a party. The Borrower's resolutions shall also designate which
Authorized Officers shall be authorized to make a request for an advance of the
Revolving Loan hereunder.
(k) Incumbency Certificates. Incumbency certificates with respect to the
officers of the Borrower and the Guarantor executing the documents referred to
in item (j) above, certified
as of the Closing Date by the Secretary or Assistant Secretary of the Borrower
or the Guarantor, as applicable, as being true and correct.
(l) Waivers. Landlord waivers, bailee letters and mortgagee agreements in
form and substance satisfactory to Agent, in each case as required pursuant to
subsection 7.9. In the event the Borrower or the Guarantor is unable to obtain a
landlord waiver, bailee letter and/or mortgage agreement acceptable to Agent as
to any such location on or before the Closing Date, the eligibility of such
Inventory at that location shall be determined in accordance with subsection
7.9.
(m) Accountants' Letter. A letter authorizing Borrower's independent
certified public accountants to communicate with the Agent and the Lenders in
accordance with subsection 7.1 and acknowledging the Agent's and each Lender's
reliance on future financial statements.
(n) Power of Attorney. A power of attorney in favor of the Agent with
respect to the matters set forth in subsections 3.6, 5.2 and 7.6 in form and
substance satisfactory to the Agent.
(o) Agent for Service. An acknowledgment by CT Corporation System that it
has been appointed as the Borrower's and Guarantor's agent to accept service of
process for the Borrower and the Guarantor in Illinois.
(p) Letter of Direction. A letter of direction from the Borrower with
respect to the disbursement of the proceeds of the initial advance of funds
hereunder.
(q) No Material Adverse Change. No material and adverse change in the
business, operations or condition (financial or other) or prospects of the
Borrower or of the Borrower and its Subsidiaries taken as a whole shall have
occurred since June 30, 1996.
(r) No Material Transactions. Except as set forth on Exhibit 4.2(r),
neither the Borrower nor the Guarantor shall have entered into any material
commitment or material transaction since June 30, 1996, including without
limitation, transactions for borrowings and capital expenditures, which are not
in the ordinary course of the Borrower's or the Guarantor's business. No
materially advantageous agreement now in effect between the Borrower or the
Guarantor and any other Person shall have been terminated, modified or declared
to be in default since June 30, 1996.
(s) No Accounting Changes. Neither the Borrower nor the Guarantor shall
have made any material change in its accounting methods or principles since June
30, 1996.
(t) Blocked Account Agreements. Executed copies of each of the Blocked
Account Agreements.
(u) Consents. The Agent shall have received evidence satisfactory to the
Agent that the Borrower and the Guarantor have obtained consents and
acknowledgments of all Persons
whose consents and acknowledgments may be required including, without
limitation, all requisite Governmental Authorities, to the terms and to the
execution and delivery of this Agreement and the other Financing Agreements and
to the consummation of the transactions contemplated hereby and thereby.
(v) Payoff Letter; Termination Statements; Releases. A letter from Heller
Financial, Inc. in form and substance satisfactory to the Agent itemizing
amounts of principal, interest, fees and expenses or other amounts payable to
it; UCC-3 termination statements and all other instruments and documents
necessary to terminate all Liens on the Collateral existing on the Closing Date
except the Permitted Liens.
(w) Form W-9. A copy of IRS Form W-9, Taxpayer Identification Number and
Certification for the Borrower.
(x) Guaranty. The duly executed Wright Canada Guaranty.
(y) Security Agreement. The duly executed Wright Canada Security Agreement.
(z) Other Documents. All corporate and legal proceedings and all agreements
in connection with the transactions contemplated by this Agreement and the other
Financing Agreements shall be satisfactory to the Agent, and the Agent shall
have received all information and copies of all documents including, without
limitation, records of corporate existence, authority and proceedings and
governmental approvals, if any, which the Agent reasonably may have requested in
connection therewith, and such documents, where appropriate, shall be certified
by proper corporate or governmental authorities.
5. COLLATERAL.
5.1 Security Interest. All of the Borrower's Obligations constitute one (1) loan
secured by the Agent's Liens on the Collateral now or from time to time
hereafter granted by the Borrower to the Agent. To secure timely payment and
performance in full of the Obligations, the Borrower hereby sells, assigns,
conveys, mortgages, pledges, hypothecates and transfers and hereby grants to the
Agent, for the benefit of the Lenders, a right of setoff against and a
continuing Lien upon all of the Borrower's right, title and interest in and to
the following property and interests in property, whether now owned or hereafter
acquired by the Borrower and wheresoever located, subject in all cases to any
Permitted Lien: (A) (i) Accounts; (ii) General Intangibles; (iii) Inventory; and
(B) to the extent constituting proceeds or otherwise related to Accounts,
Inventory and General Intangibles: (i) all of the Borrower's deposit accounts
(general or special) with any financial institution with which the Borrower
maintains deposits; (ii) all of the Borrower's now owned or hereafter acquired
monies, and any and all other property and interests in property of the Borrower
now or hereafter coming into the actual possession, custody or control of the
Agent or any Lender or any agent or affiliate of the Agent or any Lender in any
way or for any purpose (whether for safekeeping, deposit, custody, pledge,
transmission, collection or otherwise); (iii) documents, Instruments and
Chattel Paper; (iv) all insurance policies relating to any of the foregoing,
including without limitation business interruption insurance; (v) all of the
Borrower's books and records relating to any of the foregoing; (vi) all
accessions and additions to, substitutions for, and replacements of any of the
foregoing; and (vii) all cash collections from, and all other cash and non-cash
proceeds of, any of the foregoing including, without limitation, proceeds of and
unearned premiums with respect to insurance policies insuring any of the
Collateral and claims against any Person for loss of, damage to, or destruction
of, any or all of the Collateral.
5.2 Preservation of Collateral and Perfection of Liens Thereon. Prior to the
execution of this Agreement, the Borrower and the Guarantor shall have executed
and delivered to the Agent, and at any time or times hereafter at the request of
the Agent, the Borrower and the Guarantor shall promptly and duly execute and
deliver any and all such further instruments and documents and take such further
action as the Agent may reasonably deem desirable to obtain the full benefits of
this Agreement and of the rights and powers herein granted including, without
limitation, all financing statements, security agreements, bailee letters, or
other documents (and pay the cost of filing or recording the same in all public
offices deemed necessary by the Agent), as the Agent may request, in a form
satisfactory to the Agent, to perfect and maintain the Liens on the Collateral
granted by the Borrower and the Guarantor to the Agent or to otherwise protect
and preserve the Collateral and the Liens thereon or to enforce the Agent's
Liens on the Collateral. Should the Borrower or the Guarantor fail to do so, the
Agent is authorized to sign any such financing statements or other documents as
the Borrower's or the Guarantor's agent. The Borrower and the Guarantor each
further agrees that a carbon, photocopy or other reproduction of this Agreement
or of a financing statement is sufficient as a financing statement.
5.3 Consigned Inventory. As of the Closing Date, neither the Borrower nor the
Guarantor has any consigned Inventory. For the purposes of this Agreement,
Inventory held by a Subsidiary or a Distributor pursuant to a Distributor
Agreement shall not constitute consigned Inventory. In the event that, after the
Closing Date, the Borrower and the Guarantor shall have any consigned Inventory,
the Borrower and the Guarantor shall perfect its interest in such Inventory by
filing and delivering notice to the creditors of record of the consignee, all as
provided in Section 9- 114 of the Code, and in form and substance satisfactory
to the Agent, and the Borrower and the Guarantor shall execute and deliver all
financing statements, security agreements, amendments thereto, or other
documents (and pay the cost of filing or recording the same in all public
offices deemed necessary by the Agent), as the Agent may request, in a form
satisfactory to the Agent, to perfect and maintain the Liens on such Collateral
granted by the Borrower to the Agent hereunder. With respect to goods in the
hands of bailees, the Borrower and the Guarantor shall deliver notice to such
bailees of Agent's interest in such goods and instructions with respect to the
disposition thereof, all in form and substance satisfactory to the Agent, and
Borrower and the Guarantor shall execute and deliver all financing statements,
security agreements, amendments thereto, or other documents (and pay the cost of
filing or recording the same in all public offices deemed necessary by the
Agent), as the Agent may request, in a form satisfactory to the Agent, to
perfect and maintain the Liens on such Collateral granted by the Borrower or the
Guarantor to the Agent hereunder.
6. REPRESENTATIONS AND WARRANTIES.
The Borrower and, as applicable, the Guarantor each represent and warrant and
covenant and agree that as of the Closing Date and continuing so long as any
Obligations remain outstanding, and (even if there shall be no Obligations
outstanding) so long as this Agreement remains in effect:
6.1 Existence. (a) The Borrower and each Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of their
respective jurisdiction of incorporation and is qualified to transact business
as a foreign corporation in, and is in good standing under the laws of, all
states in which such Person is required by applicable law to maintain such
qualification and good standing, except where the failure to so qualify would
not have a Material Adverse Effect. All such jurisdictions are listed on Exhibit
6.1-1.
(b) All shares of capital stock of the Borrower and each Subsidiary have
been duly authorized and validly issued and are fully paid and non-assessable.
Except as disclosed on Exhibit 6.1-2 and as otherwise permitted by this
Agreement (i) no authorized but unissued or treasury share of capital stock of
the Borrower or any Subsidiary is subject to any option, warrant, right to call
or commitment of any kind or character, (ii) except as set forth in the Charter
or pursuant to one of the Borrower's employee benefit plans or the Preferred
Stock Documents neither the Borrower nor any Subsidiary has any outstanding
stock or securities convertible into or exchangeable for any shares of its
capital stock, or any rights issued to any Person (either preemptive or other)
to subscribe for or to purchase, or any options or warrants for the purchase of,
or any agreements providing for the issuance (contingent or otherwise) of, or
any calls, commitments or claims of any character relating to any of its capital
stock or any stock or securities convertible into or exchangeable for any of its
capital stock, and (iii) neither the Borrower nor any Subsidiary is subject to
any obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital stock or any convertible securities, rights,
warrants or options of the type described in the clause (ii) above except as set
forth in the Charter or pursuant to one of the Borrower's stockholders
agreements or employee benefit plans or the Preferred Stock Documents.
6.2 Authority. The Borrower and each Subsidiary has full power, authority and
legal right to enter into this Agreement and the other Financing Agreements to
which such Person is a party. The execution and delivery by the Borrower and
each Subsidiary of such Financing Agreements: (i) have been duly authorized by
all necessary action on its part; (ii) are not in contravention of the terms of
its Articles of Incorporation or Bylaws or of any indenture, agreement or
undertaking to which it is a party or by which it or any of its Property is
bound; (iii) do not and will not require any registration with, or approval or
the consent or approval of, any Governmental Authority or of any other Person
that has not been obtained; (iv) do not and will not contravene any contractual
or governmental restriction to which it or any of its Property may be subject;
and (v) do not and will not, except as contemplated herein, result in the
imposition of any Lien upon any Property of it under any existing indenture,
mortgage, deed of trust, loan or credit agreement (including, without
limitation, the Senior Secured Note Indenture) or other material agreement or
instrument to which it is a party or by which it or any of its Property may be
bound or affected. The Borrower and each Subsidiary has the full corporate power
and authority and legal right to own, operate, pledge, mortgage or otherwise
encumber the Collateral, to lease the Property it now operates under lease and
conduct its business as now, heretofore and proposed to be conducted, and has
all material licenses, permits, consents and approvals from or by, and has made
all material filings with, and has given all notices to, all Governmental
Authorities having jurisdiction, to the extent required for such operation and
conduct of its business and for the manufacture, distribution, marketing and
sale of the Collateral.
6.3 Binding Effect. This Agreement and the other Financing Agreements have been
duly executed and delivered by the Borrower and the Guarantor, are the legal,
valid and binding obligations of the Borrower and the Guarantor and are
enforceable against such Person in accordance with their terms.
6.4 Financial Data. (a) The Borrower has furnished to the Agent and each Lender
consolidated financial statements (the "Financial Statements") of the Borrower
and its Subsidiaries on a consolidated and consolidating basis based on
financial data as June 30, 1996 and attached as Exhibit 6.4-1. As of the Closing
Date, the Financial Statements are complete and accurate and fairly represents
the assets, liabilities, financial condition and results of operations of the
Borrower and each Subsidiary in accordance with Generally Accepted Accounting
Principles, consistently applied, as of December 31, 1995 (subject to normal
year-end adjustment), but taking into account the transactions contemplated by
this Agreement. There are no omissions from the Financial Statements or other
facts and circumstances not reflected in the Financial Statements which are or
may be material. Except as contemplated hereby or otherwise disclosed in the
Financial Statements, since the date of the Financial Statements, neither the
Borrower nor any Subsidiary has: (i) incurred any debts, obligations, or
liabilities (absolute, accrued, or contingent and whether due or to become due)
except current liabilities incurred in the ordinary course of business which
(individually or in the aggregate) will not have a Material Adverse Effect; (ii)
paid any obligation or liability other than current liabilities in the ordinary
course of business, or discharged or satisfied any Liens other than those
securing current liabilities, in each case in the ordinary course of business;
(iii) declared or made any Restricted Payment or obligated itself to do so,
except for payments under the Management Services Agreement; (iv) mortgaged,
pledged, or subjected to any Lien on any of its Property, except Permitted
Liens; (v) sold, transferred, or leased any of its Property except in the usual
and ordinary course of business; (vi) suffered any physical damage, destruction,
or loss (whether or not covered by insurance) which might have a Material
Adverse Effect; (vii) entered into any transaction other than in the usual and
ordinary course of business and other than as disclosed on an Exhibit attached
hereto as contemplated hereby; (viii) encountered any labor difficulties or
labor union organizing activities; (ix) other than as disclosed on Exhibit
6.1-2, issued or sold any shares of capital stock or other securities or granted
any options or similar rights with respect thereto other than pursuant hereto;
or (x) agreed to do any of the foregoing other than pursuant hereto. There has
been no Material Adverse Effect since June 30, 1996.
(b) The Borrower has also furnished to the Agent and each Lender initial
Projections for the Borrower dated as of the Closing Date and attached as
Exhibit 6.4-2, containing the information required by clause (vi) of subsection
7.1. The initial Projections have been prepared, and all Projections hereafter
delivered in accordance with clause (vi) of subsection 7.1 shall be prepared, by
the chief financial officer of the Borrower on the basis of the assumptions set
forth therein and do represent, and in the future will represent, the best
available good faith estimate of the Borrower's management regarding the course
of business of the Borrower and each Subsidiary for the periods covered thereby.
The assumptions set forth in the initial Projections are, and the assumptions
set forth in the future Projections delivered hereafter shall be, reasonable
based on then current economic conditions. The Projections represent the good
faith belief of the Borrower as to reasonably achievable results and the
Borrower has no knowledge of any reason (other than unexpected adverse general
economic conditions) that would cause the Projections not to be achieved.
(c) The Borrower has also provided to the Agent and each Lender (i) audited
statements of income and cash flow and balance sheets for the Borrower and each
Subsidiary on a consolidated and consolidating basis for each of the three (3)
most recent Fiscal Years ending prior to December 31, 1995 and (ii) unaudited
statements of income and cash flow and balance sheets for the Borrower and each
Subsidiary on a consolidated and consolidating basis as of June 30, 1996 and for
the six months then ended and such financial statements fairly present the
financial condition and results of operations of the Borrower and its
Subsidiaries for the periods indicated therein, in accordance with Generally
Accepted Accounting Principles, consistently applied (subject to normal year-end
adjustment).
6.5 Collateral. Except for the Permitted Liens, all of the Collateral is and
will continue to be owned by the Borrower and the Guarantor free and clear of
all Liens. From and after the making of the first advance under any of the Loans
and after the making of all necessary filings, the provisions of Article 5 of
this Agreement will be effective to create and will give the Agent, for the
benefit of the Lenders, as security for the repayment of the Obligations, a
legal, valid, perfected and enforceable Lien (which priority is subject only to
Permitted Liens) upon all right, title and interest of the Borrower and the
Guarantor in any and all of the Collateral. Upon The First National Bank of
Chicago's acknowledgment of the Agent's security interest in the Blocked
Account, this Agreement will be effective to create and will give the Agent, for
the benefit of the Lenders, as security for the repayment of the Obligations, a
legal, valid, perfected and enforceable first priority Lien on all deposits or
other items in the Blocked Account.
6.6 Solvency. The Borrower and each Subsidiary is Solvent and will continue to
be Solvent following the consummation of the transactions contemplated by this
Agreement and the payment of all fees, costs and expenses payable by the
Borrower with respect thereto.
6.7 Places of Business. As of the Closing Date, the respective principal place
of business and chief executive office of the Borrower and the Guarantor is set
forth on Exhibit 6.7 and, except as disclosed on Exhibit 6.7, none of such
locations has changed within the past six (6) months.
The books and records of such Person and all Chattel Paper and all records of
account are located and hereafter shall continue to be located at such principal
place of business and chief executive office .
6.8 Other Names. The business conducted by each of the Borrower and the
Guarantor has not been conducted under any corporate, trade or fictitious name
other than those names disclosed on Exhibit 6.8.
6.9 Tax Obligations. The Borrower and each Subsidiary has filed complete and
correct federal, state and local tax reports and returns required to be filed by
it, prepared in accordance with applicable laws or regulations, and, except for
extensions duly obtained, has either duly paid all Charges owed by it, or made
adequate provision for the payment thereof. There are no material unresolved
questions or claims concerning any tax liability of the Borrower or any
Subsidiary except those for which the validity, amount or imposition of such
Charges are being contested in good faith by an appropriate proceeding promptly
initiated and diligently conducted and as to which (i) such proceeding will
prevent the forfeiture or sale of any Property of the Borrower or such
Subsidiary and no Lien which will have priority over the Agent's Liens granted
hereunder with respect to the Collateral is filed of record, (ii) adequate
reserves have been provided in accordance with Generally Accepted Accounting
Principles and (iii) such proceeding does not have a Material Adverse Effect. No
tax Liens have been filed and no claims are being asserted with respect to any
such Charges which might have a Material Adverse Effect. The charges, accruals
and reserves on the books of the Borrower and each Subsidiary are adequate for
all open years and for the current Fiscal Year. Neither the Borrower nor any
Subsidiary has consented to any extension of, or otherwise waived, any statute
of limitation with respect to any such Charges. Neither the Borrower nor any
Subsidiary is a party to any tax indemnity, tax sharing or tax allocation
agreement with any other Person. Proper and accurate amounts have been withheld
by the Borrower and each Subsidiary from its employees for all periods in full
and complete compliance with the tax, social security and unemployment
withholding provisions of applicable federal, state, local and foreign law and
such withholdings have been timely paid to the respective Governmental
Authorities.
6.10 Indebtedness and Liabilities. As of the Closing Date, neither the Borrower
nor any Subsidiary has Indebtedness other than Indebtedness reflected on the
Financial Statements, except for Indebtedness incurred in connection with the
formation of a joint venture with Tissue Engineering, Inc. and indebtedness
incurred in connection with the purchase of the biomaterials business of United
States Gypsum Corporation. As of the Closing Date, except for the Indebtedness
referred to above, and Liabilities reflected on the Financial Statements,
neither the Borrower nor any Subsidiary has any Liabilities required to be
reflected on a balance sheet prepared in accordance with GAAP.
6.11 Use of Proceeds and Margin Security. The Borrower shall use the proceeds of
the initial advance under the Revolving Loan for the refinancing of the
Borrower's existing credit facilities with Heller Financial, Inc. and for the
Borrower's ordinary working capital requirements and shall use the proceeds of
subsequent advances under the Revolving Loan solely for the ordinary working
capital requirements of the Borrower and for Acquisitions permitted by
subsection 8.4 and
shall use all advances and loans hereunder for proper business purposes,
consistent with all applicable laws, statutes, rules and regulations. The
Borrower does not own any margin security and none of the Loans advanced or
funded hereunder will be used for the purpose of purchasing or carrying any
margin securities or for the purpose of reducing or retiring any indebtedness
which was originally incurred to purchase any margin securities or for any other
purpose not permitted by Regulation G or U of the Board of Governors of the
Federal Reserve System.
6.12 Government Contracts. Neither the Borrower nor any Subsidiary is a party to
or bound by any agreements with the United States federal government or any
state or local government or any agency thereof or any province or territory,
the termination of which would have a Material Adverse Effect.
6.13 Investments. Except as disclosed on Exhibit 6.13, as of the Closing Date,
neither the Borrower nor any Subsidiary has any Investment in any Person other
than Permitted Investments and is not engaged in any joint venture or
partnership with any other Person.
6.14 Litigation and Proceedings. No judgments are outstanding against the
Borrower or any Subsidiary or binding upon any of its Property, nor, except as
disclosed on Exhibit 6.14, is there now pending or threatened, any litigation,
claim, arbitration, investigation, administrative proceeding or other
governmental proceeding ("Litigation") by or against the Borrower or any
Subsidiary, and to the best of the Borrower's knowledge, there are no presently
existing facts or circumstances likely to give rise to any such Litigation.
There is no Litigation pending or threatened against the Borrower or any
Subsidiary, which, if adversely determined, might have a Material Adverse
Effect. None of the Litigation will prevent, enjoin or delay the consummation of
the transactions contemplated by the Financing Agreements.
6.15 Other Agreements and Deliveries. (a) Except as disclosed on Exhibit 6.15,
neither the Borrower nor any Subsidiary is in default under any indenture, loan
agreement, mortgage, deed of trust or similar document relating to the borrowing
of monies or any other material contract, lease, or commitment to which it is a
party or by which it is bound. There is no dispute regarding any contract,
lease, or commitment which might have a Material Adverse Effect.
(b) The Borrower has provided or made available to the Agent or its counsel
accurate and complete copies of all of the following agreements or documents to
which the Borrower or any Subsidiary is subject:
(i) each Plan and other compensation or nonqualified benefit plan
arrangement which the Borrower or any ERISA Affiliate sponsors or
is committed to contribute to as of the Closing Date and, where
applicable, each Plan's most recent summary plan description,
actuarial report, determination letter from the Service and Forms
5500 for the previous two (2) years filed in respect of each such
Plan;
(ii) Collective bargaining agreements or other labor contracts;
(iii)supply agreements not terminable by the Borrower or any
Subsidiary within sixty (60) days following written notice issued
by the Borrower or any Subsidiary;
(iv) purchase agreements not terminable by the Borrower or any
Subsidiary within ninety (90) days following written notice
issued by the Borrower or any Subsidiary;
(v) leases of real property;
(vi) leases of Equipment having a remaining term of two (2) years or
longer and requiring aggregate rental and other payments in
excess of Ten Thousand Dollars ($10,000) per annum;
(vii)licenses and permits with respect to Environmental Matters;
(viii) licenses and permits necessary for the conduct of the
Borrower's business;
(ix) all management and employment agreements between the Borrower or
any Subsidiary and any other Person; and
(x) instruments and agreements evidencing the issuance of any Stock
of the Borrower.
6.16 Labor Matters. Except as disclosed on Exhibit 6.16, there are no strikes,
work stoppages, labor disputes, decertification petitions, union organizing
efforts, grievances or other controversies pending or, to the best of the
Borrower's knowledge, threatened, between the Borrower or any Subsidiary and any
of its employees, other than employee grievances arising in the ordinary course
of business which, in the aggregate, would not have a Material Adverse Effect.
All collective bargaining agreements, labor agreements or other contracts with
or affecting any employee of the Borrower or any Subsidiary necessary to
continue to conduct the business operations of the Borrower or such Subsidiary
are in full force and effect. Except as disclosed on Exhibit 6.16, neither the
Borrower nor any Subsidiary has any obligation under any collective bargaining
agreement or any employment agreement. To the best of the Borrower's knowledge,
there is no organizing activity pending or threatened by any labor union or
group of employees. Except as disclosed on Exhibit 6.16, there are no
representation proceedings pending or threatened with the National Labor
Relations Board or other applicable Governmental Authority, and no labor
organization or group of employees has made a pending demand for recognition.
There are no material complaints or charges pending or threatened to be filed
with any Governmental Authority or arbitrator based on, arising out of, in
connection with, or otherwise relating to the employment or termination of
employment by the Borrower or any Subsidiary of any individual.
6.17 Compliance with Laws and Regulations. The execution and delivery by the
Borrower and the Guarantor of this Agreement and the other Financing Agreements
to which such Person is a party and the performance of such Person's obligations
hereunder and thereunder are not in contravention of any order applicable to
such Person or, to such Person's best knowledge, any federal, foreign, state or
local laws, regulations or ordinances. The Borrower and each Material Subsidiary
are in compliance with all laws, orders, regulations and ordinances of all
federal, foreign, state and local governmental authorities relating to the
business operations and the Property of the Borrower or any such Subsidiary
except for laws, orders, regulations and ordinances the non-compliance or
violation of which would not, in the aggregate, have a Material Adverse Effect.
No Inventory has been recalled or seized or is subject to any present or
threatened recall or seizure by any Governmental Authority, which recall or
seizure could have a Material Adverse Effect.
6.18 Patents, Trademarks and Licenses. Except as disclosed on Exhibit 6.18, the
Borrower and the Guarantor each own or possess rights to use all material
licenses, patents, patent applications, copyrights, service marks, logos, names,
trademarks and tradenames required to continue to conduct its respective
business as heretofore conducted; all such material licenses, patents, patent
applications, copyrights, service marks, trademarks and tradenames are disclosed
on Exhibit 6.18; and no such license, patent or trademark has been declared
invalid, been limited by order of any court or by agreement, or is the subject
of any infringement, interference or similar proceeding or challenge that could
have a Material Adverse Effect.
6.19 Benefit and Pension Plans. (a) Neither the Borrower nor any ERISA Affiliate
has sponsored or contributed to, or has had any obligation (contingent or
otherwise) under, any Plan or Multiemployer Plan or Canadian Plan other than
those disclosed on Exhibit 6.19.
(b) With respect to all Plans and Canadian Plans, the Borrower and each
ERISA Affiliate is in compliance with the applicable provisions of ERISA and the
IRC in all material respects. Each Plan that is intended to be qualified under
Section 401(a) of the IRC has been determined by the Service to be so qualified,
and each trust related to each such Plan has been determined to be exempt from
federal income tax under Section 501(a) of the IRC. The Canadian Plans, if any,
are duly registered under the ITA and all other applicable laws which require
registration and no event has occurred which is reasonably likely to cause the
loss of such registered status. No liability has been incurred by the Borrower
or any ERISA Affiliate which remains unsatisfied for any taxes or penalties with
respect to any Plan or any Multiemployer Plan.
(c) The present value of all benefit liabilities under each Pension Plan
does not exceed the present value of the assets of such Plan. No Pension Plan
has been terminated, nor has any accumulated funding deficiency (as defined in
Section 412 of the IRC) been incurred (without regard to any waiver granted
under Section 412 of the IRC), nor has any funding waiver from the Internal
Revenue Service been received or requested with respect to any Pension Plan, nor
has the Borrower or any ERISA Affiliate failed to make any contributions or to
pay any amounts due and owing as required by Section 412 of the IRC, Section 302
of ERISA or the terms of any Pension Plan
by the applicable due dates, nor has there been any event requiring any
disclosure under Section 4041(c)(3)(C), or 4062(e) or 4063(a) of ERISA with
respect to any Pension Plan.
(d) Neither the Borrower nor any ERISA Affiliate has: (i) engaged in a
nonexempt prohibited transaction described in Section 406 of ERISA or Section
4975 of the IRC; (ii) incurred any liability to the PBGC which remains
outstanding other than the payment of premiums and there are no premium payments
which are due and unpaid; (iii) failed to make a required contribution or
payment to a Multiemployer Plan; or (iv) engaged in any transaction which could
subject it to liability under Section 4069 or 4212(c) of ERISA..
(e) No Termination Event has occurred and no Termination Event is
reasonably expected to occur which could result in a liability to the Borrower
or any ERISA Affiliate.
(f) Neither the Borrower nor any ERISA Affiliate has any contingent
liability with respect to any post-retirement benefit under any Plan which is a
welfare plan (as defined in Section 3(1) of ERISA), other than liability for
health plan continuation coverage described in Part 6 of Title I of ERISA.
6.20 Property. The Borrower and each Subsidiary owns, possesses, or has
unrestricted rights to use or exercise all Property and rights necessary for the
conduct of its respective business as heretofore conducted. Except as disclosed
on Exhibit 6.20, there are no actual, threatened, or alleged defaults with
respect to any agreements relating to, or evidencing, any Property. Except as
disclosed on Exhibit 6.20, no consent, approval, license, authorization or other
action in respect of any Person is required, except as have been obtained, in
connection with the right to use any Property. None of the items disclosed on
Exhibit 6.20 might have a Material Adverse Effect.
6.21 Adverse Contracts. Neither the Borrower nor any Subsidiary is a party to,
nor is the Borrower or any of its Property subject to or bound by, any long term
lease, forward purchase contract or futures contract, covenant not to compete,
or other agreement which restricts its ability to conduct its business in a
manner that might have a Material Adverse Effect.
6.22 Purchase or Other Commitments and Outstanding Bids. No material purchase or
other commitment of the Borrower or any Subsidiary is in excess of the normal,
ordinary, and usual requirements of its business, or contains terms (including,
without limitation, price) and conditions more onerous than those usual and
customary in the applicable industry. There is no outstanding bid, sales
proposal, contract, or unfilled order of the Borrower or any Subsidiary which
(i) will, or could if accepted, require the Borrower to supply goods or services
at a cost to the Borrower in excess of the revenues to be received therefor, or
(ii) quotes prices which do not include a mark-up over reasonably estimated
costs consistent with past mark-ups on similar business or market conditions
current at that time.
6.23 Investment Company Act; Public Utility Holding Company Act. Neither the
Borrower nor any Subsidiary is an "investment company" or a company "controlled"
by an investment company within the meaning of the Investment Company Act of
1940, as amended. Neither the Borrower nor any Subsidiary is a "holding company"
or a "subsidiary company" or a "holding company" or an "affiliate" of a "holding
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
6.24 Broker's Fees. Neither the Agent or any Lender nor the Borrower or any
Subsidiary is or will become obligated to any Person with respect to any
finder's or brokerage or similar fee or commission in connection with the
transactions contemplated hereby.
6.25 Licenses and Permits. The Borrower and each Subsidiary has been and is
current and in good standing with respect to all governmental approvals,
permits, certificates, licenses, inspections, consents and franchises
(collectively, the "Licenses") necessary to continue to conduct its business and
to own or lease and operate, its properties as heretofore conducted, owned,
leased or operated including any and all Licenses with respect to Environmental
Laws, except where such failure would not have a Material Adverse Effect.
6.26 Environmental Compliance.
(a) The operations of the Borrower and each Subsidiary comply in all
material respects with all applicable Environmental Laws.
(b) Except as disclosed on Exhibit 6.26, there are no claims,
investigations, litigation, administrative proceedings, whether pending or, to
the knowledge of the Borrower after diligent inquiry, threatened, or judgments
or orders, relating to any Hazardous Materials or alleging the violation of any
Environmental Laws (collectively "Environmental Matters") relating in any way to
any real property leased or otherwise used by the Borrower or any Subsidiary or
to the operations of the Borrower or any Subsidiary.
(c) Except as disclosed on Exhibit 6.26, no Hazardous Materials are
presently stored or otherwise located on, in or under any real property leased,
owned, operated or otherwise used by the Borrower or any Subsidiary except in
compliance with all applicable Environmental Laws, and, no part of any real
property leased, owned, operated or otherwise used by the Borrower or any
Subsidiary or to the Borrower's or the Guarantor's best knowledge, adjacent
parcels, including the groundwater located thereon, is presently contaminated by
any such Hazardous Material.
(d) Except as disclosed on Exhibit 6.26, neither the Borrower nor any
Subsidiary has filed any notice under any international, federal, state,
regional, provincial or local law indicating past or present treatment, storage
or disposal of a Hazardous Material or reporting a spill or release of a
Hazardous Material into the environment.
(e) Except as disclosed on Exhibit 6.26, neither the Borrower nor any
Subsidiary has any known material liability, contingent or otherwise, in
connection with any release of any Hazardous Material into the environment.
(f) So long as any Obligations are outstanding, no Hazardous Materials may
be used, generated, treated, stored or disposed of by any Person for any purpose
upon any real property leased, owned, operated, or otherwise used by the
Borrower or any Subsidiary, except in compliance with all applicable
Environmental Laws.
(g) The Borrower and the Guarantor each hereby indemnify the Agent and each
Lender and agrees to hold the Agent and each Lender harmless from and against
any and all losses, liabilities, damages, injuries, costs, expenses and claims
of any and every kind whatsoever (including, without limitation, court costs and
reasonable attorneys' fees and legal expenses) which at any time or from time to
time may be paid, incurred or suffered by, or asserted against, the Agent or any
Lender arising directly or indirectly from the violation of any Environmental
Law or the imposition of liability on the Borrower or any Subsidiary under any
Environmental Law or any laws or regulations relating to Hazardous Material,
treatment, storage, disposal, generation and transportation, air, water and
noise pollution, soil or ground or water contamination, the handling, storage or
release into the environment of Hazardous Materials, and the transportation of
Hazardous Materials; or with respect to, or as a direct or indirect result of
the presence on or under, or the escape, seepage, leakage, spillage, discharge,
emission or release from, properties utilized, owned or operated by the Borrower
or any Subsidiary in the conduct of its business into or upon any land, the
atmosphere, or any watercourse, body of water or wetland, of any Hazardous
Material (including, without limitation, any losses, liabilities, damages,
injuries, costs, expenses or claims asserted or arising under the Environmental
Laws); provided that to the extent that the Borrower or any Subsidiary is
strictly liable under any Environmental Laws, the Borrower's and the Guarantor's
obligations to indemnify the Agent and each Lender under this subsection 6.26(g)
shall likewise be without regard to fault on the part of the Borrower or any
Subsidiary and with respect to the violation of law which results in liability
to the Borrower or any Subsidiary. To the extent that the undertaking to
indemnify, pay and hold harmless set forth in this subsection 6.26(g) may be
unenforceable because it is violative of any law or public policy, the Borrower
and the Guarantor shall contribute the maximum portion that it is permitted to
pay and satisfy under applicable law to the payment and satisfaction of all
indemnifications set forth in this subsection 6.26(g).
(h) So long as any Obligations are outstanding, if the Agent or any Lender,
at any time, has a reasonable basis to believe that any real property leased or
otherwise used by the Borrower or any Subsidiary, or real property adjacent to
such real property, has or may become contaminated or subject to a clean up
order or decree by an agency having jurisdiction over the Borrower or such
Subsidiary; then the Borrower and the Guarantor each agree, upon request from
the Agent, to provide the Agent and each Lender with such reports, certificates,
engineering studies or other written material or data as the Agent or such
Lender, in its reasonable discretion, may require from it so as to satisfy the
Agent or such Lender that it is in compliance with all applicable Environmental
Laws; provided that with respect to real property adjacent to real property
owned by
or leased to the Borrower or any Subsidiary, such reports, certificates, studies
and other material or data shall not be required to be provided by the Borrower
or the Guarantor if (i) they are not otherwise required to be created or
provided pursuant to statute, regulation, order or otherwise, and (ii) such
contamination is not attributable to the acts or omissions of the Borrower or
any Subsidiary or any Affiliate or predecessor of any of them or any previous
owner, lessee, lessor or other user of such real property.
(i) The materiality standard used in this subsection 6.26 shall be exceeded
if the facts giving rise to a breach or breaches of the representations or
warranties contained herein might result in liability or potential liability in
excess of Five Hundred Thousand Dollars ($500,000) in the aggregate.
(j) None of the items disclosed on Exhibit 6.26 might have a Material
Adverse Effect.
6.27 Full Disclosure. This Agreement, the other Financing Agreements, the
financial statements delivered in connection herewith, the representations and
warranties of the Borrower and the Guarantor contained in this Agreement, the
other Financing Agreements or in any other document, certificate or written
statement by or on behalf of the Borrower or the Guarantor delivered or to be
delivered to the Agent or any Lender, do not and will not contain any untrue
statement of a material fact or omit a material fact necessary to make the
statements contained therein or herein, in light of the circumstances under
which they were made, not misleading. There is no material fact which the
Borrower or the Guarantor has not disclosed to the Agent in writing which has
had or, so far as the Borrower or the Guarantor can now foresee, might have a
Material Adverse Effect.
6.28 Insurance Policies. Exhibit 7.5 lists all insurance of any nature
maintained for current occurrences by the Borrower and the Guarantor, as well as
a summary of the terms of such insurance.
6.29 Customer and Trade Relations. There exists no actual or threatened
termination, cancellation or limitation of, or any modification or change in (a)
the business relationship of the Borrower or any Subsidiary with any customer or
group of customers whose purchases individually or in the aggregate are material
to the operations of the Borrower or such Subsidiary, or (b) the business
relationship of the Borrower or any Subsidiary with any material supplier to the
Borrower.
6.30 Survival of Warranties. All representations and warranties of the Borrower
and the Guarantor contained in this Agreement or any of the other Financing
Agreements shall survive the execution and delivery of this Agreement and the
other Financing Agreements and the making of the Loans. Notwithstanding anything
contained in this Agreement to the contrary, the provisions of, and the
undertakings, indemnifications and agreements of the Borrower and, as
applicable, the Guarantor set forth in subsections 2.1(c)(v), 2.13, 2.18(b),
2.19, 2.20(c), 6.26(g), 7.4,
7.10, 10.2 and 10.23 and the agreements of the Lenders set forth in subsections
12.8 and 14.2 shall survive payment of the Obligations and termination of this
Agreement. The Borrower shall supplement in writing and deliver to the Agent all
Exhibits required in accordance with this Agreement so that the representations
and warranties subject to such supplemental disclosure shall continue to be true
and accurate in all material respects; provided that the furnishing of such
supplemental disclosure shall not constitute a cure or waiver of any Default or
Event of Default resulting from the matters disclosed therein or otherwise then
existing.
6.31 Corporate and Contractual Restrictions. Neither the Borrower nor any
Subsidiary is a party or subject to any contract, agreement or charter or other
corporate restriction, which materially and adversely affects its business or
the use or ownership of any of its Property. Neither the Borrower nor the
Guarantor has agreed or consented to cause or permit in the future upon the
happening of a contingency or otherwise any of its Property, whether now owned
or hereafter acquired, to be subject to a Lien that is not a Permitted Lien.
Neither the Borrower nor the Guarantor is a party to or bound by any indenture,
contract, instrument or other agreement which prohibits the creation, incurrence
or sufferance to exist of any Lien upon the Collateral except the Financing
Agreements.
6.32 Subsidiaries. Except as set forth on Exhibit 6.32, the Borrower has no
Subsidiaries. Exhibit 6.32 contains an accurate list of all Subsidiaries of the
Borrower, setting forth their respective jurisdictions of incorporation and the
percentages of their capital stock owned by the Borrower or other Subsidiaries.
6.33 Deposit and Disbursement Accounts. As of the Closing Date, Exhibit 6.33
lists all banks and other financial institutions at which the Borrower or the
Guarantor maintains deposits and/or other accounts, including any disbursement
accounts, and such Exhibit correctly identifies the name, address and telephone
number of each depository, the name in which the account is held, a description
of the purpose of the account, and the complete account number.
6.34 Distributor Agreements. As of the Closing Date, the Borrower has provided
or made available to the Agent or its counsel accurate and complete copies of
all of the Distributor Agreements to which the Borrower or the Guarantor is
subject. Neither the Borrower nor any other party thereto is in material default
in the performance or compliance with any provisions thereof. Each Distributor
Agreement is in full force and effect as of the Closing Date. Each Distributor
Agreement entered into by the Borrower or the Guarantor after the Closing Date
shall be on terms substantially similar to the terms contained in the
Distributor Agreements in effect on the Closing Date.
7. AFFIRMATIVE COVENANTS.
The Borrower and, as applicable, the Guarantor each covenant and agree that, so
long as any Obligations remain outstanding, and (even if there shall be no
Obligations outstanding) so long as this Agreement remains in effect:
7.1 Financial Statements. The Borrower shall keep proper books of record and
account in which full and true entries will be made of all dealings or
transactions in respect of or in relation to the business and affairs of the
Borrower, in accordance with Generally Accepted Accounting Principles
consistently applied, and the Borrower shall furnish or cause to be furnished to
the Agent and each Lender: (i) as soon as practicable and in any event within
thirty (30) days after the end of each month, statements of net income and cash
flow of the Borrower and its Subsidiaries on a consolidated and consolidating
basis for such month and for the period from the beginning of the then current
Fiscal Year to the end of such month and a balance sheet of the Borrower and its
Subsidiaries on a consolidated and consolidating basis as of the end of such
month, setting forth in each case, in comparative form, figures for the
corresponding periods in the preceding Fiscal Year and as of a date one (1) year
earlier, all in reasonable detail and certified as accurate by the chief
financial officer or treasurer of the Borrower, subject to changes resulting
from normal year-end adjustments but excluding footnotes; (ii) as soon as
practicable and in any event within forty-five (45) days after the end of each
Fiscal Quarter, statements of net income and cash flow of the Borrower and its
Subsidiaries on a consolidated and consolidating basis for such quarterly period
and for the period from the beginning of the then current Fiscal Year to the end
of such quarterly period and a balance sheet of the Borrower and its
Subsidiaries on a consolidated and consolidating basis as of the end of such
period, setting forth in each case, in comparative form, figures for the
corresponding periods in the preceding Fiscal Year and as of a date one (1) year
earlier, all in reasonable detail and certified as accurate by the chief
financial officer or treasurer of the Borrower, subject to changes resulting
from normal year-end adjustments but excluding footnotes; (iii) as soon as
practicable and in any event within ninety (90) days after the end of each
Fiscal Year, statements of net income and cash flow of the Borrower and its
Subsidiaries on a consolidated and consolidating basis for such year, and a
balance sheet of the Borrower and its Subsidiaries on a consolidated and
consolidating basis as of the end of such year, setting forth in each case, in
comparative form, corresponding figures for the period covered by the preceding
annual audit and as of the end of the preceding Fiscal Year, all in reasonable
detail and satisfactory in scope to the Required Lenders and examined and
certified by Arthur Andersen & Co. or any other independent public accountants
of recognized national standing selected by the Borrower, whose opinion shall be
unqualified; (iv) as part of the Monthly Report, as soon as practicable and in
any event within thirty (30) days after the end of each month (a) copies of all
operating statements for such month prepared by the Borrower for its internal
use and other similar data as the Required Lenders may reasonably request, (b)
an aged trial balance of Accounts ("Accounts Trial Balance") indicating which
Accounts are current, up to 30, 30 to 60, 60 to 90 and 90 days or more past the
original invoice date (other than the Accounts Trial Balance with respect to New
York and New Jersey Accounts, which shall also indicate which accounts are 90 to
120 and 120 days or more past due) and a report listing the names and addresses
of all applicable Account Debtors, and (c) a summary of accounts payable showing
which accounts payable are current, up to 30, 30 to 60, 60 to 90 and 90 days or
more past due and listing the names and addresses of applicable creditors; (v)
concurrently with the preparation of the financial statements, the Borrower
shall send a letter to such accountants with a copy to the Agent and each
Lender, notifying such accountants that one of the primary purposes for
retaining such accountants' services and having audited financial statements
prepared by them is for use by the Agent and the Lenders and such accountants
shall deliver a letter addressed to the Agent and the Lenders acknowledging the
Agent's and the Lenders' reliance thereon in form and substance satisfactory to
the Required Lenders; (vi) within fifteen (15) days prior to the end of each
Fiscal Year Projections approved by the Board of Directors of the Borrower and
prepared in the same manner as the Projections attached as Exhibit 6.4-2,
including projected balance sheets for the forthcoming Fiscal Year,
month-by-month; projected cash flow statements (including proposed Capital
Expenditures) for the forthcoming Fiscal Year, month-by-month; projected profit
and loss statements for the forthcoming Fiscal Year, month-bymonth, together
with appropriate supporting details as requested by the Required Lenders, all
for the Borrower and its Subsidiaries on a consolidated and consolidating basis
and within thirty (30) days after the close of each calendar month, a statement
in which the actual results of such month are compared with the most recent
Projections for such month; (vii) as soon as practicable and in any event within
ten (10) days of delivery to the Borrower, a copy of any letter issued by the
Borrower's independent public accountants or other management consultants with
respect to the Borrower's financial or accounting systems or controls, including
all so-called "management letters"; (viii) not later than the thirtieth (30th)
day of each month, a Monthly Report for the Borrower computed as of the last
Business Day of the preceding month, signed by an Authorized Officer; (ix)
promptly following the filing or furnishing thereof, copies of all regular and
periodic reports, proxy statements, financial statements, registration
statements, prospectuses and other material filed by the Borrower or any of its
Subsidiaries with any securities exchange or with the Securities and Exchange
Commission or any other governmental or private regulatory authority or
distributed to the stockholders of any such Person and all press releases and
other statements made available by the Borrower or any of its Subsidiaries to
the public concerning material adverse changes or developments in the business
of any such Person; and (x) with reasonable promptness, such other business or
financial data as the Required Lenders may reasonably request.
All financial statements delivered to the Agent or any Lender pursuant to the
requirements of this subsection (except where otherwise expressly indicated)
shall be prepared in accordance with Generally Accepted Accounting Principles
consistently applied on a consolidated and consolidating basis for the Borrower
and its Subsidiaries. All financial computations hereunder shall be computed,
unless otherwise specifically provided herein, in accordance with GAAP
consistently applied. That certain items or computations are explicitly modified
by the phrase "in accordance with GAAP" shall in no way be construed to limit
the foregoing. In the event that any Accounting Changes occur and such changes
result in a change in the calculation of the financial covenants, standards,
advance rates or terms used in this Agreement or any other Financing Agreement,
then the Borrower, the Agent and the Lenders agree to enter into negotiations in
order to amend such provisions of this Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for evaluating the
Borrower's and its Subsidiaries' financial condition shall be the same after
such Accounting Changes as if such Accounting Changes had not been made;
provided that the agreement of the Required Lenders to any required amendments
of such provisions shall be sufficient to bind all Lenders. In the event that
the Agent, the Borrower and the Required Lenders shall have agreed upon the
required amendments, then after such agreement has been evidenced in writing and
the underlying Accounting Changes with respect thereto has been implemented, any
reference to GAAP contained in this Agreement or in any other Financing
Agreement shall, only to the extent of such Accounting Changes, refer to GAAP,
consistently applied
after giving effect to the implementation of such Accounting Changes. If the
Agent, the Borrower and the Required Lenders cannot agree upon the required
amendments within thirty (30) days following the date of implementation of any
Accounting Change, then all financial statements delivered and all calculations
of financial covenants and other standards, advance rates and terms in
accordance with this Agreement and the other Financing Agreements shall be
prepared, delivered and made without regard to any underlying Accounting Change.
Together with each delivery of financial statements required by subsections
7.1(i), 7.1(ii) and 7.1(iii), the Borrower shall deliver to the Agent and the
Lenders a certificate of an Authorized Officer (i) certifying that no Default or
Event of Default exists, or, if any Default or Event of Default exists,
specifying the nature thereof, the period of existence thereof and what action
the Borrower proposes to take with respect thereto and (ii) for each Fiscal
Quarter, setting forth computations in reasonable detail satisfactory to the
Agent demonstrating compliance with the covenant contained in subsection 7.11.
Together with each delivery of financial statements required by subsection
7.1(iii), the Borrower shall deliver to the Agent and the Lenders a certificate
of the accountants who performed the audit in connection with such statements
stating that in making the audit necessary to the issuance of a report on such
financial statements, they have obtained no knowledge of any Default or Event of
Default, or, if such accountants have obtained knowledge of a Default or Event
of Default, specifying the nature and period of existence thereof. Such
accountants shall not be liable by reason of any failure to obtain knowledge of
any Default or Event of Default which would not be disclosed in the ordinary
course of an audit. The Agent and each Lender shall exercise reasonable efforts
to keep such information, and all information acquired as a result of any
inspection conducted in accordance with subsection 7.2, confidential; provided
that the Agent or any Lender may communicate such information (a) to any other
Person in accordance with the customary practices of commercial lenders relating
to routine trade inquiries, (b) to any regulatory authority having jurisdiction
over the Agent or such Lender, (c) to any other Person in connection with the
Agent's or such Lender's sale of any participations in the Obligations, or (d)
to any other Person in connection with the exercise of the Agent's or such
Lender's rights hereunder or under any of the other Financing Agreements. The
Borrower authorizes the Agent to discuss the financial condition of the Borrower
with the Borrower's independent public accountants and agrees that such
discussion or communication shall be without liability to either the Agent or
the Borrower's independent public accountants. The Borrower shall deliver a
letter addressed to such accountants authorizing them to comply with the
provisions of this subsection 7.1.
7.2 Inspections and Audits. The Agent, or any Person designated by the Agent in
writing, shall have the right, from time to time hereafter, to call at the
Borrower's and the Guarantor's place or places of business (or any other place
where the Collateral or any information relating thereto is kept or located)
during normal business hours, and, without hindrance or delay (i) to inspect,
audit, check and make copies of and extracts from the Borrower's and the
Guarantor's books, records, journals, orders, receipts and any correspondence
and other data relating to the Borrower's or any Subsidiary's business or to any
transactions between the parties hereto, (ii) to make such verification
concerning the Collateral as the Agent may consider reasonable under the
circumstances, and (iii) to discuss the affairs, finances and business of the
Borrower and the Guarantor with any officers, employees or directors of the
Borrower or the Guarantor. All out-of-pocket costs and expenses incurred by the
Agent in connection with the Agent's field audits permitted under this
subsection 7.2 shall be reimbursed by the Borrower in accordance with subsection
2.8.
7.3 Conduct of Business; Compliance With Laws. The Borrower and the Guarantor
shall, and the Borrower shall cause each other Material Subsidiary to (i)
maintain its corporate existence and good standing in its respective state of
incorporation and qualify and remain qualified as a foreign corporation in each
jurisdiction in which such qualification is required, (ii) maintain in full
force and effect all licenses, bonds, franchises, leases, patents, contracts and
other rights necessary to the profitable conduct of its business and (iii)
comply with all applicable federal, state, local and foreign laws, rules,
regulations and orders including, without limitation, the FDCA and all rules and
regulations of the FDA and any other law, rule, regulation or order affecting
the manufacture, marketing, distribution or sale of Inventory except for such
laws, rules and regulations the violation of which would not, in the aggregate,
have a Material Adverse Effect. Following the Closing Date the Borrower will not
conduct its business under any trade or fictitious name other than the duly
registered names disclosed on Exhibit 6.8.
7.4 Claims and Taxes. (a) The Borrower agrees to indemnify and hold the Agent
and each Lender harmless from and against any and all claims, demands,
obligations, losses, damages, penalties, costs, and expenses (including
reasonable attorneys' fees) asserted by any Person (other than the Borrower or
the Guarantor) in connection with this Agreement or the other Financing
Agreements or asserted by any Person and relating to or in any way arising out
of the possession, use, operation or control of any of the Borrower's or any
Subsidiary's Property by any Person. The Borrower shall, and shall cause each
Subsidiary to, file all tax and information returns and reports required by and
prepared in accordance with applicable law and shall pay or cause to be paid all
license fees, bonding premiums and related taxes and charges, and shall pay or
cause to be paid all real and personal property taxes, assessments and charges
and franchise, income, unemployment, use, excise, old age benefit, withholding,
sales and other taxes and other governmental charges assessed against or payable
by, the Borrower or any Subsidiary, at such times and in such manner as to
prevent any penalty from accruing or any Lien from attaching to Property of the
Borrower or any Subsidiary, provided that the Borrower and each Subsidiary shall
have the right to contest in good faith, by an appropriate lawful proceeding
promptly initiated and diligently conducted, the validity, amount or imposition
of any such tax, assessment or charge, and upon such good faith contest to delay
or refuse payment thereof so long as (i) no Lien which will have priority over
the Agent's Lien granted hereunder with respect to any Collateral is filed or
recorded with respect thereto, (ii) the execution or other enforcement of such
subordinate Lien is and continues to be effectively stayed, (iii) such
proceeding will prevent the forfeiture or sale of any Property of the Borrower
or such Subsidiary, (iv) adequate reserves have been provided therefor in
accordance with GAAP, (v) such contest does not have a Material Adverse Effect
and (vi) if such contest is abandoned or determined adversely to the Borrower or
such Subsidiary, the Borrower pays, or causes to be paid, all such taxes and
other charges and any penalties and interest payable in connection therewith.
(b) The Borrower shall notify the Agent and each Lender promptly (and in no
event later than ten (10) days) after becoming aware of the intent of the
Service to assert a deficiency
with respect to the Borrower or any Subsidiary, and shall promptly (and in no
event later than five (5) days after receipt) send the Agent and each Lender
copies of any notices of proposed deficiency and any notices of deficiency
received from the Service.
7.5 Liability Insurance. The Borrower and the Guarantor shall maintain, at their
expense, such product liability insurance, general public liability and third
party property damage insurance with financially sound and reputable insurance
companies reasonably satisfactory to the Agent in such amounts and covering such
risks and with such deductibles as are acceptable to the Required Lenders naming
the Agent as an additional insured. The policy or policies shall further provide
for thirty (30) days' written notice to the Agent prior to cancellation or any
material change in coverage. The Borrower's and the Guarantor's current
liability insurance policies are summarized on Exhibit 7.5.
7.6 Property Insurance. The Borrower and the Guarantor shall, and the Borrower
shall cause each other Subsidiary to, at its expense, keep and maintain its
assets insured against loss or damage by fire, theft, explosion, spoilage and
all other hazards and risks ordinarily insured against by other owners or users
of such properties in similar businesses in an amount at least equal to the full
insurable value thereof (including business interruption insurance in an amount
not less than $25,000,000). All such policies of insurance insuring the
Collateral shall contain a breach or violation of warranties, declarations or
conditions endorsement in favor of the Agent, shall provide that the Agent shall
receive 30 days' written notice prior to cancellation or any material change in
coverage and shall otherwise be in form and substance satisfactory to the
Required Lenders. The Borrower shall deliver to the Agent a certificate of
insurance and, upon the renewal thereof, a binder evidencing such renewal, and
evidence of payment of all premiums therefor. Such policies of insurance
insuring the Collateral shall contain an endorsement, substantially in the form
of Exhibit 7.6, naming the Agent, on behalf of the Lenders, as the lender loss
payee and additional insured. The Borrower and the Guarantor hereby direct all
insurers under such policies of insurance insuring the Collateral to pay all
proceeds of such insurance policies directly to the Agent; provided that so long
as no Default or Event of Default shall have occurred and be continuing, the
Agent shall remit to the Borrower or the Guarantor, as applicable, all such
proceeds received by the Agent in an amount less than Five Hundred Thousand
Dollars ($500,000). Upon the occurrence and during the continuance of a Default
or an Event of Default, the Borrower and the Guarantor irrevocably make,
constitute and appoint the Agent (and all officers, employees or agents
designated by the Agent) as such Person's true and lawful attorney-in-fact for
the purpose of making, settling and adjusting claims under all such policies of
insurance, endorsing the name of such Person on any check, draft, instrument or
other item of payment received by such Person or the Agent pursuant to any such
policies of insurance and for making all determinations and decisions with
respect to such policies of insurance. If the Borrower or any Subsidiary, at any
time or times hereafter, shall fail to obtain or maintain any of the policies of
insurance required above or to pay any premium in whole or in part relating
thereto, then the Agent, without waiving or releasing any Obligation, Default or
Event of Default hereunder, may at any time or times thereafter (but shall be
under no obligation to do so) obtain and maintain such policies of insurance and
pay such premiums and take any other action with respect thereto which the Agent
deems advisable.
7.7 Pension Plans. (a) The Borrower shall (i) maintain all Plans and all
Canadian Plans which are presently in existence or may, from time to time, come
into existence, in compliance with ERISA, the IRC, the ITA as applicable, and
all other applicable laws in all material respects and (ii) make or cause to be
made contributions to all of the Pension Plans and the Canadian Plans in a
timely manner and in a sufficient amount to comply with the requirements of
Section 302 of ERISA and Section 412 of the IRC and the ITA, as applicable.
(b) The Borrower shall promptly deliver written notice of any of the
following to the Agent and each Lender, but in no event later than thirty (30)
days after such event or occurrence:
(1) the Borrower or any ERISA Affiliate knows or has reason to know
that a Termination Event has occurred, with such notice setting
forth the details of such event;
(2) the filing of a request for a funding waiver by the Borrower or
any ERISA Affiliate with respect to any Pension Plan, a copy of
such request and all correspondence received by Borrower or any
ERISA Affiliate with respect to such request;
(3) the Borrower or any ERISA Affiliate fails to make a required
installment or payment under Section 302 of ERISA or Section 412
of the IRC by the applicable due date;
(4) the Borrower or any ERISA Affiliate knows or has reason to know
that a prohibited transaction (as defined in Section 406 of ERISA
or Section 4975 of the IRC) has occurred with respect to any Plan
with a statement describing such transaction and the action or
response taken with respect thereto;
(5) any increase in the benefits of any existing Plan or contribution
rate to a Multiemployer Plan or the establishment of any new Plan
or the commencement of contributions to any Plan or Multiemployer
Plan to which the Borrower or any ERISA Affiliate had not been
contributing;
(6) receipt by the Borrower or any ERISA Affiliate of any adverse
ruling from the Service regarding the qualification of a Plan
under Section 401(a) of the IRC, with a copy of such ruling; and
(7) any other report such as an annual report on Form 5500 or
actuarial report in which any Lender may request from time to
time.
7.8 Notice of Certain Matters. The Borrower or the Guarantor, as applicable,
shall, as soon as possible, and in any event within five (5) days after such
Person learns of the following, give written notice to the Agent and each Lender
of (i) any material Litigation being
instituted or threatened to be instituted by or against the Borrower or any
Subsidiary in any federal, state, local or foreign court or before any
commission or other regulatory body (federal, state, local or foreign)
including, without limitation, any and all material pending or threatened
proceedings with respect to Environmental Matters, (ii) any labor dispute to
which the Borrower or any Subsidiary may become a party and which has had or
might have a Material Adverse Effect, any strikes or walkouts relating to any of
its plants or Facilities, and the expiration of any labor contract to which it
is a party or by which it is bound, (iii) any Default or Event of Default, (iv)
any material violation of, or receipt by the Borrower or the Guarantor of any
notice of material violation of or the institution of any regulatory or
enforcement action by any Governmental Authority with respect to, any federal,
state, local or foreign law applicable to it including, without limitation, the
FDCA, any rule or regulation of the FDA or any other law, rule or regulation
affecting the manufacture, marketing, distribution or sale of Inventory, and (v)
any other event or occurrence which could have a Material Adverse Effect.
7.9 Landlord and Warehouseman Agreements. The Borrower and the Guarantor shall
provide the Agent and each Lender with copies of all agreements between the
Borrower or the Guarantor and any landlord or warehouseman which owns any
premises at which Inventory or any other Collateral may, from time to time, be
located. The Borrower shall deliver or cause to be delivered to the Agent on or
before the Closing Date a landlord's waiver in form and substance acceptable to
the Agent from the lessor of each leased property currently being used by the
Borrower or any Subsidiary where Collateral is located. The Borrower shall
deliver or cause to be delivered to the Agent on or before the Closing Date a
bailee letter in form and substance acceptable to the Agent with respect to any
warehouse or other location where Collateral is located. With respect to
Collateral locations in existence on the Closing Date, if the Borrower is unable
to deliver such a landlord waiver or bailee letter, the Inventory at that
location shall automatically be deemed ineligible without further action by the
Agent or any Lender to constitute Eligible Inventory. In the event that the
Borrower delivers or causes to be delivered to the Agent such landlord waiver or
bailee letter, as applicable, after such date, subject to the terms and
conditions of this Agreement including, without limitation, subsection 3.10,
Inventory located at such leased location or warehouse location, as applicable,
may be considered Eligible Inventory. The Borrower and the Guarantor shall
timely and fully pay and perform its obligations under all leases and other
agreements with respect to each leased location or warehouse where any
Collateral is or may be located. The Borrower and the Guarantor shall promptly
deliver to the Agent copies of (i) any and all default notices received under or
with respect to any such leased location or warehouse, and (ii) such other
notices or documents as the Agent may request in its reasonable discretion.
7.10 Indemnity. (a) The Borrower and the Guarantor each agree to indemnify, pay
and hold harmless the Agent and each Lender and the officers, directors,
employees, agents, affiliates, representatives and attorneys of the Agent and
such Lender (collectively called the "Indemnitees") from and against any and all
liabilities, obligations, losses, damages, penalties, actions, proceedings,
judgments, suits, claims, costs, expenses and disbursements of any kind or
nature whatsoever (including, without limitation, all reasonable fees and
disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Indemnitee shall be designated a party thereto) that may be
imposed on, incurred
by, or instituted or asserted against any Indemnitee in any manner in connection
with or relating to or arising out of this Agreement or the other Financing
Agreements, or any other transaction contemplated hereby or thereby, the
statements contained in the commitment letters delivered by the Agent, the Agent
and the Lenders' agreement to make the Loans hereunder, the direct or indirect
application or proposed application of the proceeds of the Loans or the exercise
of any right, power or remedy hereunder or under any other Financing Agreement
(the "Indemnified Liabilities"); provided that neither the Borrower nor the
Guarantor shall have any obligation to an Indemnitee hereunder with respect to
Indemnified Liabilities if a court of competent jurisdiction shall render a
judgment, final and not subject to review on appeal, that such Indemnified
Liabilities arise solely from the gross negligence or willful misconduct of that
Indemnitee. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, the Borrower and the Guarantor shall
contribute the maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all Indemnified Liabilities
incurred by the Indemnitees or any of them.
(b) In any suit, proceeding or action brought by the Agent relating to any
Account, Chattel Paper, contract, General Intangible, Instrument or document for
any sum owing thereunder, or to enforce any provision of any Account, Chattel
Paper, the Borrower and the Guarantor shall save, indemnify and keep the Agent
and the Lenders harmless from and against all expense, loss or damage suffered
by reason of any defense, setoff, counterclaim, recoupment or reduction of
liability by such Person of any obligation thereunder arising out of a breach by
such Person of any obligation thereunder or arising out of any other agreement,
indebtedness or liability at any time owing to, or in favor of, such obligor or
its successors from such Person, all such obligations of such Person shall be
and remain enforceable against, and only against, the Borrower or the Guarantor,
as applicable, and shall not be enforceable against the Agent or any Lender.
7.11 Cash Flow Coverage. The Borrower on a consolidated basis with its
Subsidiaries shall maintain, as of the end of each Fiscal Quarter, a Cash Flow
Coverage Ratio for the 12-month period then ended of not less than 1.15 to 1.0.
8. NEGATIVE COVENANTS.
The Borrower and, as applicable, the Guarantor covenant and agree that so long
as any of the Obligations remain outstanding and (even if there shall be no
Obligations outstanding) so long as this Agreement remains in effect (unless the
Required Lenders shall give their prior written consent thereto):
8.1 Encumbrances. Neither the Borrower nor the Guarantor shall, and the Borrower
shall not permit any Subsidiary to, create, incur, assume or suffer to exist any
Lien of any nature whatsoever on any of its Property, including, without
limitation, the Collateral, other than the following "Permitted Liens": (i)
Liens (other than Liens relating to Environmental Laws or ERISA) securing the
payment of Charges not yet due and payable; (ii) Liens, pledges or deposits
under workmen's compensation, unemployment insurance, social security and other
similar laws, or to
secure the performance of bids, tenders or contracts (other than for the
repayment of borrowed money) or to secure statutory obligations or surety or
appeal bonds, or to secure indemnity, performance or other similar bonds in the
ordinary course of business; (iii) statutory Liens of landlords, carriers,
warehousemen, mechanics, materialmen or other similar Liens imposed by law,
which are incurred in the ordinary course of business for sums not more than 30
days delinquent or which are being contested in good faith; (iv) the Liens in
favor of the Agent, for the benefit of the Lenders; (v) purchase money Liens
(including capitalized leases and other forms of installment purchase financing)
granted to the Person financing a purchase of Equipment so long as the Lien
granted is limited to the specific Equipment so acquired, the debt secured by
the Lien is not more than the lesser of the acquisition cost or the fair market
value of the specific item of Equipment on which the Lien is granted, the
aggregate amount of Indebtedness secured by such Liens as a result of purchases
shall not exceed Ten Million Dollars ($10,000,000) at any time during the term
hereof, and the transaction does not violate any other provision of this
Agreement (notification of such purchase money Lien to be provided to the Agent
and each Lender within ten (10) days of acquisition of such Equipment); (vi)
Liens permitted in accordance with subsection 7.4(a); (vii) other Liens on Real
Estate, which do not, in the Agent's sole determination, (a) materially impair
the use of such property, or (b) materially lessen the value of such property
for the purposes for which the same is held by the Borrower or such Subsidiary;
(viii) Liens securing the Senior Secured Notes; (ix) leases or subleases granted
to others not interfering in any material respect with the business of the
Borrower or any of its Subsidiaries; (x) easements, survey exceptions, licenses,
minor defects in title, rights-of-way, restrictions, and other similar charges
or encumbrances not interfering in any material respect with the ordinary
conduct of the business of the Borrower or any of its Subsidiaries; (xi) Liens
on assets (other than Collateral) to secure Indebtedness assumed in connection
with Acquisitions permitted hereunder, and capital leases, purchase money Liens
and Liens for construction mortgages created on any type of property (other than
Collateral) by the Borrower or any of its Subsidiaries to secure Indebtedness
permitted pursuant to subsection 8.2 in any amount up to one hundred percent
(100%) of the total cost of such property, construction or improvement; (xii)
Liens on property of the Borrower or any of its Subsidiaries other than
Collateral which secure Environmental Matters; provided that all such claims do
not exceed $1,000,000 in the aggregate; provided further that such Environmental
Matters are being contested or remedied in good faith by the Borrower or such
Subsidiary; and provided further that if the Borrower or the Guarantor obtains
security (in the form of a letter of credit, cash collateral, escrow account or
third party indemnity from a third party which the Agent reasonably deems
financially capable of performing its obligations under said indemnity) to
secure the payment and satisfaction of any such claim, such adequately secured
Environmental Matter shall not be counted towards such $1,000,000 aggregate
limitation to the extent such security secures such payment and satisfaction;
for the purposes of determining "adequate security" under the preceding
sentence, the Borrower or the Guarantor, as applicable, shall provide the Agent
with a certificate executed by such Person's chief executive officer or chief
financial officer certifying the basis for such Person's opinion that such
security (in both amount and form) secures the payment of, and satisfaction of
liabilities with respect to, the Environmental Matter for which such security
relates and the extent to which such security secures such payment and
satisfaction and, if requested by the Agent, evidence satisfactory to the Agent
of such security; (xiii) Liens under bulk sales or similar statutes to secure
obligations incurred in connection with an Acquisition permitted hereunder for
which the Borrower is fully indemnified by the seller of the assets so acquired;
provided that the Borrower provides the Agent with a certificate executed by the
Borrower's chief executive officer or chief financial officer setting forth the
good faith opinion of the Borrower's board of directors that such seller is
indemnifying the Borrower in full for all liabilities, damages and costs related
to such Lien and the obligations it secures, and, if requested by the Agent,
evidence satisfactory to the Agent of such indemnification and that the
creditworthiness of such seller is reasonably satisfactory to the Agent; and
(ix) other Liens existing on the Closing Date and disclosed on Exhibit 8.1.
8.2 Indebtedness and Liabilities. Neither the Borrower not the Guarantor shall,
and the Borrower shall not permit any Subsidiary to, incur, create, assume,
become or be liable in any manner with respect to, or suffer to exist, any
Indebtedness, except for (i) the Obligations, (ii) Indebtedness outstanding
under the Senior Secured Note Indenture and other Indebtedness existing on the
Closing Date and disclosed on Exhibit 8.2, (iii) Indebtedness secured by
purchase money Liens permitted by subsection 8.1(iv), (iv) Indebtedness
permitted by subsection 8.5, (v) obligations under or in connection with Rate
Hedging Obligations, (vi) Subordinated Debt of the Borrower, (vii) Indebtedness
of Subsidiaries, (viii) Indebtedness permitted by the terms of the Senior
Secured Note Indenture as in effect on the Closing Date; provided that, for
purposes hereof, the provisions of such agreement, together with related
definitions and ancillary provisions, shall be deemed to be incorporated herein
as though specifically set forth in this Agreement, and all such provisions
shall be deemed to continue in effect for the benefit of the Lenders, whether
the Senior Secured Note Indenture remains in effect between, or is modified or
amended or terminated by, or any provisions thereof are waived by, the parties
thereto, and (ix) any extension, renewal, substitution, refinancing or
replacement of Indebtedness referred to in clauses (ii) and (iii) above;
provided that such Indebtedness shall not exceed the principal amount of the
Indebtedness refinanced and shall be on terms which are no less favorable to
such Person and the Lenders (other than the amendment of the interest rate in
any promissory note evidencing any such refinanced Indebtedness to a market rate
determined by such Person in good faith as of the time of any such refinancing).
Except for the Indebtedness permitted in the preceding sentence, neither the
Borrower nor the Guarantor shall, and the Borrower shall not permit any
Subsidiary to, incur any Liabilities except for trade obligations and normal
accruals in the ordinary course of business not yet due and payable, or with
respect to which the Borrower or such Subsidiary is contesting in good faith the
amount or validity thereof by appropriate proceedings, and then only to the
extent that the Borrower or such Subsidiary has set aside on its books adequate
reserves therefor, if appropriate under Generally Accepted Accounting
Principles. Except as otherwise provided in this subsection 8.2, neither the
Borrower nor the Guarantor shall, and the Borrower shall not permit any
Subsidiary to, voluntarily prepay, defease, purchase, redeem, retire or
otherwise acquire any Indebtedness other than the Obligations.
8.3 Consolidations, Mergers. Neither the Borrower nor the Guarantor shall, and
the Borrower shall not permit any Subsidiary to, merge or consolidate with, or
(except as permitted by subsection 8.4(v)) purchase, lease or otherwise acquire
all or substantially all of the assets or properties of, any other Person;
provided that (i) any Subsidiary may merge or consolidate with or into any other
Subsidiary or with or into the Borrower (so long as the Borrower is the
surviving entity and, in the case of a merger or consolidation of the Guarantor
into the Borrower, the Agent shall have
determined, after giving effect to such merger or consolidation, that the Agent
shall continue to have a first perfected Lien on the Collateral except for
Permitted Liens) and (ii) the Borrower may merge or consolidate with or into any
other Person; provided that (x) the Borrower is the surviving corporation, and
(y) immediately after giving effect to such transaction, no Default or Event of
Default exists. The Borrower shall not sell, assign, encumber, pledge, transfer
or otherwise dispose of any interest in the Borrower or any Material Subsidiary
or transfer any Property to any Affiliate except Property (other than the
Collateral) as permitted by the terms of the Senior Secured Note Indenture as in
effect on the Closing Date; provided that, for purposes hereof, the provisions
of such agreement, together with related definitions and ancillary provisions,
shall be deemed to be incorporated herein as though specifically set forth in
this Agreement, and all such provisions shall be deemed to continue in effect
for the benefit of the Lenders, whether the Senior Secured Note Indenture
remains in effect between, or is modified or amended or terminated by, or any
provisions thereof are waived by, the parties thereto.
8.4 Investments and Acquisitions. Except as otherwise permitted by subsections
8.2 and 8.9, neither the Borrower nor the Guarantor shall, and the Borrower
shall not permit any Subsidiary to, make or permit to exist Investments in, or
commitments therefor, or create any Subsidiary other than the following
"Permitted Investments": (i) mergers or consolidations permitted by subsection
8.3, (ii) Investments in Subsidiaries and other Investments existing on the
Closing Date and disclosed on Exhibit 6.13, (iii) demand deposit accounts
maintained in the ordinary course of business, (iv) so long as no Event of
Default shall have occurred and be continuing, investments in Cash Equivalents,
(v) Acquisitions; provided that (a) such Acquisition comprises a business, or
those assets of a business, of the type engaged in by the Borrower as of the
Closing Date, and which business would not subject the Agent or any Lender to
any additional regulatory approvals in connection with the exercise of its
rights and remedies under the Financing Documents; (b) such Acquisition shall be
consensual and shall have been approved by the target entity's board of
directors or other Persons performing similar functions; (c) the business and
assets acquired in such Acquisition shall be free and clear of all Liens other
than Permitted Liens; (d) at or prior to the closing of any domestic
Acquisition, Agent will be granted a first priority perfected Lien in all
accounts and inventory and related general intangibles acquired pursuant thereto
and the Borrower and all other necessary Persons shall have executed such
documents and taken such actions as may be required by the Agent in connection
therewith; (e) on or prior to the date of such Acquisition, the Agent shall have
received, in form and substance satisfactory to the Agent, all opinions,
certificates and other documents reasonably requested by the Agent; and (f) at
the time of such Acquisition and after giving effect thereto, no Default or
Event of Default shall have occurred and been continuing, (vi) Investments
permitted by the terms of the Senior Secured Note Indenture as in effect on the
Closing Date; provided that, for purposes hereof, the provisions of such
agreement, together with related definitions and ancillary provisions, shall be
deemed to be incorporated herein as though specifically set forth in this
Agreement, and all such provisions shall be deemed to continue in effect for the
benefit of the Lenders, whether the Senior Secured Note Indenture remains in
effect between, or is modified or amended or terminated by, or any provisions
thereof are waived by, the parties thereto, and (vii) the creation of a
Subsidiary in connection with an Acquisition permitted by this subsection 8.4 or
the creation of other Subsidiaries in the ordinary course of the Borrower's
business.
8.5 Guaranties. Neither the Borrower nor the Guarantor shall, and the Borrower
shall not permit any Subsidiary to, make or suffer to exist any Guaranty, except
(i) endorsements of negotiable instruments or items of payment for collection in
the ordinary course of business, (ii) unsecured Guaranties incurred for the
benefit of the Borrower or a Subsidiary if the primary obligation constitutes
Indebtedness permitted by subsection 8.2, (iii) Guaranties existing on the
Closing Date and disclosed on Exhibit 8.5, (iv) the Wright Canada Guaranty, and
(v) Guaranties permitted by the terms of the Senior Secured Note Indenture as in
effect on the Closing Date; provided that, for purposes hereof, the provisions
of such agreement, together with related definitions and ancillary provisions,
shall be deemed to be incorporated herein as though specifically set forth in
this Agreement, and all such provisions shall be deemed to continue in effect
for the benefit of the Lenders, whether the Senior Secured Note Indenture
remains in effect between, or is modified or amended or terminated by, or any
provisions thereof are waived by, the parties thereto.
8.6 Collateral Locations. Neither the location of the principal place of
business and chief executive office of the Borrower or the Guarantor as set
forth on Exhibit 6.7, the locations of Collateral as set forth on Exhibit 8.6
nor the corporate name or mailing address of the Borrower or the Guarantor shall
be changed, nor shall there be established additional places of business or
additional locations at which Collateral with a value of Three Million Dollars
($3,000,000) or more is stored, kept or processed unless (i) the Borrower shall
have given the Agent not less than fifteen (15) days prior written notice
thereof, (ii) the Agent shall have determined that, after giving effect to any
such change of name, address or location, the Agent shall have a first perfected
Lien in the Collateral except for Permitted Liens, (iii) in the case of
Collateral locations, the Borrower shall have delivered a landlord waiver or
bailee letter, as applicable, in form and substance satisfactory to the Agent
with respect to such location, and (iv) all negotiable documents and receipts in
respect of any Collateral maintained at such premises are promptly delivered to
the Agent; provided that with respect to Collateral with a value of less than
Three Million Dollars ($3,000,000), clauses (ii) through (iv) above shall be
satisfied within ten (10) days after the establishment of such additional
location of Collateral. In connection with making any such change or
establishing such new location, the Borrower or the Guarantor, as applicable,
shall execute any additional financing statements or other documents or notices
required by the Agent. All Collateral located at any such new location shall
automatically be deemed ineligible without further action by the Agent or any
Lender to constitute Eligible Accounts or Eligible Inventory, as the case may
be, until the Borrower shall have complied with the requirements of this
subsection 8.6 and subsection 7.9.
8.7 Disposal of Property. Neither the Borrower nor the Guarantor shall, and the
Borrower shall not permit any Subsidiary to, sell, lease, assign, transfer or
otherwise dispose of any of its Property, assets and rights to any Person except
for (i) bona fide sales of Inventory to customers for fair value in the ordinary
course of business, (ii) sales of Inventory consisting of instruments for fair
value in the ordinary course of business pursuant to past practices of the
Borrower and the Guarantor, (iii) sales of Equipment which is obsolete, worn-out
or otherwise not useable in the Borrower's or the Guarantor's business, and (iv)
sale of Property (other than Collateral) permitted by the terms of the Senior
Secured Note Indenture as in effect on the Closing Date; provided that, for
purposes hereof, the provisions of such agreement, together with related
definitions and ancillary
provisions, shall be deemed to be incorporated herein as though specifically set
forth in this Agreement, and all such provisions shall be deemed to continue in
effect for the benefit of the Lenders, whether the Senior Secured Note Indenture
remains in effect between, or is modified or amended or terminated by, or any
provisions thereof are waived by, the parties thereto.
8.8 Management Fees. Except with respect to the Management Services Agreement
and the Preferred Stock Documents, neither the Borrower nor the Guarantor shall
enter into any management agreements or consulting agreements (other than
physician consultants retained in the ordinary course of such Person's business)
or other similar arrangements with any Person or retain any management
consultants resulting in payment in any calendar year in connection therewith in
the aggregate in excess of One Million Dollars ($1,000,000).
8.9 Employee Loans. Except for (i) advances for travel and related expenses by
the Borrower or any Subsidiary to its employees in the ordinary course of
business, (ii) loans made to employees in accordance with the Borrower's
employee loan program, which loans are secured by such employee's bonus, the
Stock or options to acquire Stock of the Borrower held by such employee;
provided that the Borrower shall be permitted to make up to $75,000 in the
aggregate in unsecured employee loans and (iii) commission advances by the
Borrower or any Subsidiary to its Distributors in the ordinary course of the
Borrower's business, neither the Borrower nor the Guarantor shall, and the
Borrower shall not permit any Subsidiary to, make any loans or other advances to
any Person.
8.10 Plans. Neither the Borrower nor the Guarantor shall, and the Borrower shall
not permit any ERISA Affiliate to:
(i) assume or incur or be subject to any Liability under any Plan or
Canadian Plan other than those Plans and Canadian Plans disclosed in Exhibit
6.19(a) and, subject to subsections 8.10(ii) and 8.10(iii) those Plans assumed
in connection with permitted Acquisitions;
(ii) permit the amendment, establishment or assumption of any Pension Plan
or Canadian Pension Plan which could have a Material Adverse Effect;
(iii) commence participation or permit an ERISA Affiliate to participate in
a Multiemployer Plan which could have a Material Adverse Effect;
(iv) permit the termination of any Pension Plan or Canadian Pension Plan if
such termination might result in liability to the Borrower or any ERISA
Affiliate;
(v) permit the occurrence of an accumulated funding deficiency (as defined
in Section 302 of ERISA or Section 412 of the IRC) as to any Plan or of any
unpermitted funding deficiency under a Canadian Pension Plan;
(vi) engage, or permit any ERISA Affiliate to engage, in any non-exempt
prohibited transaction under Section 406 of ERISA or Section 4975 of the IRC;
(vii) permit the establishment, adoption, or assumption of any Plan
providing post-retirement welfare benefits; or
(viii) permit the occurrence of a Termination Event if such occurrence
might have a Material Adverse Effect.
8.11 Restricted Payments. Neither the Borrower nor the Guarantor shall, and the
Borrower shall not permit any Subsidiary to, directly or indirectly declare,
pay, order, make or set apart any Restricted Payment; provided that (i) any
Subsidiary may declare and pay dividends to any Subsidiary owning its capital
stock or to the Borrower and (ii) so long as no Default or Event of Default
shall have occurred and be continuing (or will result therefrom) the Borrower
may make the following Restricted Payments: (a) Share Redemptions in connection
with a Refinancing, (b) Restricted Payments in accordance with the terms of the
Preferred Stock Documents as in effect on the Closing Date, (c) Restricted
Payments consisting of repurchases, redemptions or other acquisition or
retirement for value of any Stock of the Borrower held by any officer or
employee of the Borrower (other than affiliates of Kidd Kamm) except pursuant to
the Borrower's employee plans or the Borrower's stockholder's agreements, in
each case as permitted by the Charter, (d) Restricted Payments permitted under
subsection 8.8 and (e) Restricted Payments with respect to Subordinated Debt of
the Borrower permitted by subsection 8.2.
8.12 Securities. Except as permitted by subsection 8.11, neither the Borrower
nor the Guarantor shall, and the Borrower shall not permit any Subsidiary to,
redeem, prepay, repurchase or acquire any capital Stock of the Borrower of any
description for consideration or otherwise except in connection with a
Refinancing.
8.13 Changes in Charter, Bylaws or Fiscal Year. Neither the Borrower nor the
Guarantor shall, and the Borrower shall not permit any Subsidiary to, (i) amend
its Charter or Bylaws or other constitutional documents in a manner that could
have a Material Adverse Effect or (ii) change its Fiscal Year.
8.14 Transactions with Affiliates. Except (i) as set forth on Exhibit 8.14, (ii)
Subordinated Debt permitted by subsection 8.2 and (iii) as permitted by
subsections 8.8 and 8.9, neither the Borrower nor the Guarantor shall, and the
Borrower shall not permit any Subsidiary to, enter into any transaction
including, without limitation, the purchase, sale, lease or exchange of property
or the rendering or purchase of any service to or from any Affiliate except in
the ordinary course of and pursuant to the reasonable requirements of the
Borrower's or such Subsidiary's business and upon fair and reasonable terms that
are fully disclosed to the Agent and the Lenders in advance and are no less
favorable to the Borrower or such Subsidiary than the Borrower or such
Subsidiary would obtain in a comparable arm's length transaction with an
unaffiliated Person.
8.15 Capital Structure; Other Business. Neither the Borrower nor the Guarantor
shall, and the Borrower shall not permit any Subsidiary to, change its capital
structure (except with respect to a Refinancing) or engage in any business
unrelated to its current businesses, engage in any transaction out of the
ordinary course of business, or engage in any transaction which might have a
Material Adverse Effect.
8.16 Sale and Leaseback. Except as otherwise permitted hereunder, neither the
Borrower nor the Guarantor shall, and the Borrower shall not permit any
Subsidiary to, sell or transfer any of its Property in order to concurrently or
subsequently lease as lessee such or similar Property unless (i) any such sale
is made for the fair market value of the Property, (ii) the sale consideration
received is cash, and (iii) the sale is upon fair and reasonable terms in an
arm's length transaction.
8.17 Impairment Agreements. Neither the Borrower nor the Guarantor shall, and
the Borrower shall not permit any Subsidiary to, enter into or assume any
agreement, instrument, indenture or other obligation (other than the Financing
Agreements) which (i) contains a negative pledge provision which would require a
sharing of any interest in the Collateral, (ii) prohibits or limits the creation
or assumption of any Lien upon the Collateral, whether now owned or hereafter
acquired, or (iii) restricts, prohibits or requires the consent of any Person
with respect to the payment of Restricted Payments.
8.18 Amendments to Agreements. The Borrower shall not (i) amend, waive or
otherwise modify any provision of the Management Services Agreement if such
amendment, waiver or modification could have a Material Adverse Effect, (ii)
violate any of the subordination provisions of any Subordinated Debt or amend,
waive or otherwise modify any provision of any Subordinated Debt or waive any
cause of action arising therefrom or related thereto, (iii) amend, waive or
otherwise modify any provision of the Preferred Stock Documents if such
amendment, waiver or modification would be materially adverse to the Borrower or
its Subsidiaries or the Agent or any Lender, or (iv) except in connection with a
Refinancing, amend, waive or otherwise modify any provision of the Senior
Secured Note Indenture or the Preferred Stock Documents, if any such amendment,
waiver or modification could (a) increase the principal amount thereof or
increase the interest rate or other amounts applicable to such Indebtedness or
the nature or amount of any Restricted Payments payable with respect to such
Stock, (b) change the dates upon which payments of principal, interest or any
other amounts are due thereunder, (c) change the amortization schedule thereof,
(d) change the prepayment, redemption or similar provisions thereof, (e)
materially increase the obligations of the obligor thereunder or confer
additional material rights on the holders thereof including, without limitation,
with respect defaults or events of default thereunder in a manner adverse to the
Borrower or its Subsidiaries or the Agent or any Lender or (f) have a Material
Adverse Effect.
8.19 Corporate Accounts. Neither the Borrower nor the Guarantor shall maintain
corporate deposit accounts jointly with any Affiliate or commingle any of its
funds with funds of any Affiliate.
9. DEFAULT, RIGHTS AND REMEDIES OF THE AGENT AND THE LENDERS.
9.1 Obligations. If a Default or an Event of Default shall exist or occur, the
Required Lenders (or the Agent with the consent of the Required Lenders) may
elect to do one or more of the following at any time or times and in any order:
(i) reduce the Total Revolving Loan Facility, (ii) restrict the amount of, or
suspend its obligations to make, Revolving Loans, (iii) restrict or suspend the
issuance of Lender Guaranties or (iv) demand that the Borrower immediately
deposit with the Agent an amount equal to the Lender Guaranty Liabilities to
enable the Agent to make payments under the Lender Guaranties when required and
such amount shall become immediately due and payable. If an Event of Default
shall exist or occur, in addition to the actions described in the preceding
sentence, the Required Lenders (or the Agent with the consent of the Required
Lenders) may elect to do one or more of the following at any time or times: (a)
terminate the Commitments to make Loans and this Agreement, (b) declare any or
all Obligations to be immediately due and payable; provided that upon the
occurrence of any Event of Default referred to in clauses (f), (g) or (h) within
the definition of "Event of Default," the Commitments shall automatically and
immediately terminate and all Obligations shall automatically become immediately
due and payable without notice, demand or other actions of any kind by any
Person, or (c) pursue its other rights and remedies under the Financing
Agreements and applicable law. In the case of any Event of Default occurring by
reason of any willful action or inaction by or on behalf of the Borrower in
order to avoid payment of the prepayment fee pursuant to subsection 2.10 which
the Borrower would have to pay if the Obligations were paid in full, an
equivalent fee shall also be immediately due and payable to the extent permitted
by law.
9.2 Rights and Remedies Generally. Upon acceleration of the Obligations, the
Agent, on behalf of the Lenders, shall have, in addition to any other rights and
remedies contained in this Agreement or in any of the other Financing
Agreements, all of the rights and remedies of a secured party under the Code or
other applicable laws, all of which rights and remedies shall be cumulative and
non-exclusive, to the extent permitted by law. In addition to all such rights
and remedies, the Agent or one of its agents shall have the right to sell, lease
or otherwise dispose of all or any part of the Collateral and the sale, lease or
other disposition of the Collateral, or any part thereof, by the Agent or one of
its agents after an Event of Default may be for cash, credit or any combination
thereof, and the Agent or any 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 purchase
price against the Obligations then owing. Any sales of the Collateral may be
adjourned from time to time with or without notice. The Agent or one of its
agents shall have the right to conduct such sales on the Borrower's or the
Guarantor's premises, at the Borrower's or the Guarantor's, as applicable,
expense, or elsewhere, on such occasion or occasions as the Agent may see fit.
9.3 Entry Upon Premises and Access to Information. Upon acceleration of the
Obligations, subject to the applicable provisions of the Code the Agent or one
of its agents shall have the right (i) to cause the Collateral to remain on the
Borrower's premises, without any obligation to
pay rent, (ii) to enter upon the premises of the Borrower where the Collateral
is located or any other place or places where the Collateral is believed to be
located and kept, without any obligation to pay rent, to render the Collateral
useable or saleable, or to remove the Collateral therefrom to the premises of
the Agent or one of its agents, at the Borrower's expense, for such time as the
Agent may desire in order effectively to collect or liquidate the Collateral,
and (iii) to require the Borrower to assemble the Collateral and make it
available to the Agent or one of its agents at a place or places to be
designated by the Agent or one of its agents. Upon acceleration of the
Obligations, subject to the applicable provisions of the Code or other
applicable law, the Agent or one of its agents shall have the right to take
possession of the Borrower's and the Guarantor's original books and records, to
obtain access to Borrower's and the Guarantor's data processing equipment,
computer hardware and software relating to the Collateral and to use all of the
foregoing and the information contained therein in any manner the Agent or one
of its agents deems appropriate; and the Agent or one of its agents shall have
the right to notify postal authorities to change the address for delivery of the
Borrower's and the Guarantor's mail to an address designated by the Agent and to
receive, open and dispose of all mail addressed to the Borrower or the Guarantor
and to take possession of all checks or other original remittances contained in
such mail.
9.4 Sale or Other Disposition of Collateral by the Agent. Any notice required to
be given by the Agent of a sale, lease or other disposition or other intended
action by the Agent or one of its agents with respect to any of the Collateral
which is deposited in the United States mails, postage prepaid and duly
addressed to the Borrower at the address specified in subsection 10.13, at least
ten (10) days prior to such proposed action, shall constitute fair and
reasonable notice to the Borrower and the Guarantor of any such action. The net
proceeds realized by the Agent or one of its agents upon any such sale or other
disposition, after deduction for the expenses of retaking, holding, storing,
transporting, preparing for sale, selling or otherwise disposing of the
Collateral incurred by the Agent in connection therewith, shall be applied as
provided herein toward satisfaction of the Obligations including, without
limitation, the Obligations described in subsections 2.13, 2.19, 2.20 and 10.2.
The Agent shall account to the Borrower for any surplus realized upon such sale
or other disposition, and the Borrower and the Guarantor shall remain liable for
any deficiency. The commencement of any action, legal or equitable, or the
rendering of any judgment or decree for any deficiency shall not affect the
Agent's Liens on the Collateral until the Obligations are fully paid. Except as
expressly provided in the Code, the Borrower and the Guarantor each agree that
the neither the Agent, any agent of the Agent nor any Lender has no obligation
to preserve rights to the Collateral against any other Person.
9.5 Grant of License. For the purpose of enabling the Agent or one of its agents
to exercise its rights, powers and remedies under this Section 9 (including,
without limitation, in order to take possession of, hold, preserve, process,
assemble, prepare for sale, market for sale, sell or otherwise dispose of the
Collateral) and under the Wright Canada Security Agreement at such time as the
Agent shall be entitled to exercise such rights and remedies, the Borrower and
the Guarantor each hereby grant to the Agent and to its agents a non-exclusive
license, lease and right to use (exercisable without payment of royalty or other
compensation to the Borrower or the Guarantor) the Borrower's and the
Guarantor's General Intangibles, Intellectual Property, Equipment (to the
extent permitted under any existing lease or mortgage), Fixtures, Real Estate
(to the extent permitted under any existing lease or mortgage), whether part of
the Collateral or not including, without limitation, any patents, copyrights,
rights of use of any name, trade secrets, trade names, trademarks, service marks
and advertising matter, or any other Property of a similar nature, as it
pertains to the Collateral, and the Borrower's and the Guarantor's rights under
all licenses, leases and franchise agreements shall inure to the Agent's or such
agent's benefit until all Obligations are paid in full. At any time after the
occurrence and during the continuance of an Event of Default, upon the request
of the Agent or any of its agents, the Borrower and the Guarantor will assist
the Agent and its agents in exercising all of the rights and remedies of the
Agent as a secured party under this Agreement, at law or in equity. Without
limiting the generality of the foregoing, at any time after the occurrence and
during the continuation of an Event of Default, upon the request of the Agent or
one of its agents the Borrower and the Guarantor will act as the Agent's agent
and in such capacity exercise any and all of the rights and remedies of and
available to the Agent under Section 9 for the benefit of the Agent and the
Lenders to the fullest extent requested by the Agent. The Borrower and the
Guarantor will remit any and all proceeds from the exercise of such rights and
remedies by the Borrower or the Guarantor at the Agent's request for the benefit
of the Agent and the Lenders directly to the Agent immediately upon receipt for
application by the Lenders in accordance with the terms of this Agreement.
9.6 Waiver of Demand. DEMAND, PRESENTMENT, PROTEST AND NOTICE OF DEMAND,
PRESENTMENT, PROTEST, NONPAYMENT, INTENT TO ACCELERATE AND ACCELERATION ARE
HEREBY WAIVED BY THE BORROWER AND THE GUARANTOR. THE BORROWER AND THE GUARANTOR
ALSO WAIVE THE BENEFIT OF ALL VALUATION, APPRAISAL AND EXEMPTION LAWS.
9.7 Waiver of Notice. UPON THE OCCURRENCE OF A DEFAULT OR AN EVENT OF DEFAULT,
THE BORROWER AND THE GUARANTOR HEREBY WAIVE ALL RIGHTS TO NOTICE AND HEARING OF
ANY KIND PRIOR TO THE EXERCISE BY THE AGENT OF ITS RIGHTS TO REPOSSESS THE
COLLATERAL WITHOUT JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE
COLLATERAL WITHOUT PRIOR NOTICE OR HEARING. THE BORROWER AND THE GUARANTOR EACH
ACKNOWLEDGE THAT IT HAS BEEN ADVISED BY COUNSEL OF ITS CHOICE WITH RESPECT TO
THIS TRANSACTION AND THIS AGREEMENT.
10. OTHER RIGHTS AND OBLIGATIONS.
10.1 Waiver. The failure of the Agent or any Lender, at any time or times
hereafter, to require strict performance by the Borrower or the Guarantor of any
provision of this Agreement shall not waive, affect or diminish any right of the
any such Person thereafter to demand strict compliance and performance
therewith. Any suspension or waiver by the Lenders or Required Lenders, as
applicable, of a Default or an Event of Default under this Agreement or any of
the other Financing Agreements shall not suspend, waive or affect any other
Default or Event of Default under this Agreement or any of the other Financing
Agreements, whether the same is prior or subsequent
thereto and whether of the same or of a different kind or character. None of the
undertakings, agreements, warranties, covenants and representations of the
Borrower or the Guarantor contained in this Agreement or any of the other
Financing Agreements and no Default or Event of Default by the Borrower or the
Guarantor under this Agreement or any of the other Financing Agreements shall be
deemed to have been suspended or waived by the Lenders or Required Lenders, as
applicable, unless such suspension or waiver is in writing and signed by an
officer of each of the Lenders or Required Lenders, as applicable, and directed
to the Borrower or the Guarantor, as applicable, specifying such suspension or
waiver. Neither this Agreement nor the other Financing Agreements may be
modified or amended except in a written agreement signed by the Borrower, the
Guarantor, the Agent and the Lenders.
10.2 Costs and Attorneys' Fees. All fees, costs and expenses incurred by the
Agent or any of its agents or any Lender in connection with protecting,
perfecting or preserving the Agent's Lien in the Collateral or in connection
with any matters contemplated by or arising out of this Agreement or the other
Financing Agreements, whether (a) to commence, defend, or intervene in any
litigation or to file a petition, complaint, answer, motion or other pleadings,
(b) to take any other action in or with respect to any suit or proceedings
(bankruptcy or otherwise), (c) to consult with officers of the Agent or any
Lender or to advise the Agent or any Lender, (d) to protect, collect, lease,
sell, take possession of, or liquidate any of the Collateral, or (e) to attempt
to enforce or to enforce any Lien on any of the Collateral, or to enforce any
rights of the Agent or any Lender to collect any of the Obligations, including,
without limitation, reasonable fees, costs and expenses of the attorneys and
paralegals of the Agent or any Lender, the usual and customary charges of the
internal counsel and the out-of-pocket costs and the per diem charges for the
examiners of such Persons at their then applicable rates, together with interest
thereon at the Default Rate then applicable to the Revolving Loan, shall be part
of the Obligations, payable on demand and secured by the Collateral.
10.3 Expenditures by the Agent and the Lenders. In the event the Borrower or the
Guarantor shall fail to pay Charges, insurance, assessments, costs or expenses
which the Borrower is, under any of the terms hereof, required to pay, or fails
to keep the Collateral free from Liens, except Permitted Liens, or fails to
maintain, replace or repair the Collateral as required hereby, the Agent or any
Lender may, in its sole discretion, make expenditures for any or all of such
purposes and acquire or accept an assignment of any Lien against the Collateral,
and the amount so expended (including, without limitation, reasonable attorneys'
fees and expenses, court costs, filing fees and other charges), together with
interest thereon at the Base Rate or the Default Rate then applicable to the
Revolving Loan shall be part of the Obligations, payable on demand and secured
by the Collateral.
10.4 Custody and Preservation of Collateral. Except as expressly provided in the
Code, the Agent shall have no duty with respect to any Collateral in its
possession or control (or in the possession or control of any agent or bailee)
or with respect to any income thereon. The Agent shall be deemed to have
exercised reasonable care in the custody and preservation of any of the
Collateral in its possession if it takes such action for that purpose as the
Borrower shall request in
writing, but failure by the Agent to comply with any such request shall not of
itself be deemed a failure to exercise reasonable care, and no failure by the
Agent to comply with any such request shall of itself be deemed a failure to
exercise reasonable care, and no failure by the Agent to preserve or protect any
right with respect to such Collateral against prior parties, or to do any act
with respect to the preservation of such Collateral not so requested by the
Borrower, shall of itself be deemed a failure to exercise reasonable care in the
custody or preservation of such Collateral. The Agent shall not be liable or
responsible for any loss or damage to any of the Collateral, or for any
diminution in the value thereof, by reason of the act or omission of any
warehouseman, carrier, forwarding agency, consignee or other agent or bailee
selected by the Agent in good faith.
10.5 Reliance by the Agent and Lenders. All covenants, agreements,
representations and warranties made herein or in any of the other Financing
Agreements by the Borrower or the Guarantor shall, notwithstanding any
investigation by the Agent or any Lender, be deemed to be material to and to
have been relied upon by the Agent and each Lender.
10.6 Parties and Assignment. This Agreement and the other Financing Agreements
shall be binding upon and inure to the benefit of the Agent, the Lenders, the
Borrower, the Guarantor and their respective successors and assigns. The
Borrower's and the Guarantor's successors and assigns shall include, without
limitation, any trustee, receiver or debtor in possession of or for the Borrower
or the Guarantor. Notwithstanding the foregoing, neither the Borrower nor the
Guarantor may sell, assign or transfer this Agreement, or the other Financing
Agreements or any portion thereof including, without limitation, its rights,
titles, interests, remedies, powers and/or duties hereunder or thereunder;
provided that a sale of a controlling interest in the Borrower pursuant to a
privately negotiated transaction or a registered offering under the Securities
Act shall not constitute an assignment of this Agreement. The Borrower and the
Guarantor each hereby consent to each Lender's sale, assignment, transfer or
other disposition pursuant hereto, at any time and from time to time hereafter,
of this Agreement, or the other Financing Agreements or any portion thereof,
including without limitation all or any part of each Lender's rights, titles,
interests, remedies, powers and/or duties hereunder or thereunder; provided that
such sale, assignment, transfer or other disposition does not increase any of
the Borrower's Obligations hereunder.
10.7 Applicable Law; Severability. This Agreement and the other Financing
Agreements have been submitted to the Agent and each Lender at its office in
Illinois, and this Agreement and the other Financing Agreements, shall not be
binding upon the Agent or any Lender or effective until accepted by the Agent
and each Lender and shall be construed in all respects in accordance with, and
governed by, all of the provisions of the Code and by the other internal laws
(as opposed to conflicts of law provisions) of the State of Illinois, except for
the perfection and enforcement of Liens in other jurisdictions which shall be
governed by the laws of those jurisdictions. Whenever possible, each provision
of this Agreement shall be interpreted in such a 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 provisions or the remaining provisions of
this Agreement.
10.8 Submission to Jurisdiction; Waiver of Jury and Bond. THE BORROWER, THE
GUARANTOR, THE AGENT AND EACH LENDER HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION
OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF COOK, STATE OF
ILLINOIS, AND IRREVOCABLY AGREE THAT ALL ACTIONS OR PROCEEDINGS RELATING TO THIS
AGREEMENT OR THE OTHER FINANCING AGREEMENTS SHALL BE LITIGATED IN SUCH COURTS,
AND THE BORROWER, THE GUARANTOR, THE AGENT AND EACH LENDER EACH WAIVE ANY
OBJECTION WHICH IT MAY HAVE BASED ON IMPROPER VENUE OR FORUM NON CONVENIENS TO
THE CONDUCT OF ANY PROCEEDING IN ANY SUCH COURT AND EACH WAIVES PERSONAL SERVICE
OF ANY AND ALL PROCESS UPON IT, AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE
MADE BY MAIL OR MESSENGER DIRECTED TO IT AT THE ADDRESS SET FORTH IN SUBSECTION
10.13 AND THAT SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON THE EARLIER
OF ACTUAL RECEIPT OR FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN POSTED TO THE
BORROWER'S ADDRESS. THE BORROWER AND THE GUARANTOR EACH DESIGNATE AND APPOINT CT
CORPORATION SYSTEM, 208 SOUTH LASALLE STREET, CHICAGO, ILLINOIS 60604 AND SUCH
OTHER PERSON AS MAY HEREAFTER BE SELECTED BY THE BORROWER WHICH IRREVOCABLY
AGREES IN WRITING TO SO SERVE AS ITS AGENT TO RECEIVE ON ITS BEHALF SERVICE OF
ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY
ACKNOWLEDGED BY THE BORROWER AND THE GUARANTOR TO BE EFFECTIVE AND BINDING
SERVICE IN EVERY RESPECT. A COPY OF ANY SUCH PROCESS SO SERVED SHALL BE MAILED
BY REGISTERED MAIL TO THE BORROWER AT ITS ADDRESS PROVIDED IN SUBSECTION 10.13,
EXCEPT THAT UNLESS OTHERWISE PROVIDED BY APPLICABLE LAW, ANY FAILURE TO MAIL
SUCH COPY SHALL NOT AFFECT THE VALIDITY OF SERVICES OF PROCESS. IF ANY AGENT
APPOINTED BY THE BORROWER OR THE GUARANTOR REFUSES TO ACCEPT SERVICE, THE
BORROWER AND THE GUARANTOR EACH HEREBY AGREE THAT SERVICE UPON IT BY MAIL OR
OTHERWISE IN ACCORDANCE WITH SUBSECTION 10.13 SHALL CONSTITUTE SUFFICIENT
NOTICE. THE AGENT, EACH LENDER, THE GUARANTOR AND THE BORROWER ACKNOWLEDGE THAT
THE TIME AND EXPENSE REQUIRED FOR TRIAL BY JURY EXCEED THE TIME AND EXPENSE
REQUIRED FOR A BENCH TRIAL AND HEREBY WAIVE, TO THE EXTENT PERMITTED BY LAW,
TRIAL BY JURY, AND WAIVE ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH
MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF THE AGENT OR ANY LENDER. NOTHING
CONTAINED IN THIS SUBSECTION 10.8 SHALL AFFECT THE RIGHT OF THE AGENT OR ANY
LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE
RIGHT OF THE AGENT OR ANY LENDER TO BRING ANY ACTION OR PROCEEDING AGAINST THE
BORROWER, THE GUARANTOR OR THEIR RESPECTIVE PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION TO THE EXTENT NECESSARY TO ENFORCE ITS LIENS AGAINST PROPERTY
LOCATED IN SUCH JURISDICTIONS. THE BORROWER AND THE GUARANTOR EACH WAIVE ANY
RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO
ABOVE ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES
OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.
10.9 Marshalling. The Agent shall be under no obligation to marshall any assets
in favor of the Borrower, the Guarantor or any other Person or against or in
payment of any or all of the Obligations.
10.10 Section Titles. The section titles contained in this Agreement shall be
without substantive meaning or content of any kind whatsoever and are not a part
of the agreement between the parties.
10.11 Continuing Effect. This Agreement, the Agent's Liens on the Collateral,
and all of the other Financing Agreements shall continue in full force and
effect so long as any Obligations shall be owed to the Agent or any Lender, and
(even if there shall be no Obligations outstanding) so long as this Agreement
has not been terminated as provided in subsection 2.7; provided that the
Borrower's and the Guarantor's obligations to indemnify the Agent and each
Lender under any Financing Agreement shall continue notwithstanding any
termination of this Agreement.
10.12 Incorporation by Reference. The provisions of the other Financing
Agreements are incorporated in this Agreement by this reference. Except as
otherwise provided in this Agreement and except as otherwise provided in the
other Financing Agreements by specific reference to the applicable provision of
this Agreement, if any provision contained in this Agreement is in conflict
with, or inconsistent with, any provisions in the other Financing Agreements,
the provision contained in this Agreement shall govern and control.
10.13 Notices. Except as otherwise expressly provided herein, any notice
required or desired to be served, given or delivered hereunder shall be in
writing, and shall be deemed to have been validly served, given or delivered (a)
if delivered in person, when delivered, (b) if delivered by telecopy or telex,
on the date of confirmed transmission, (c) if delivered by overnight courier,
two days after delivery to such courier properly addressed or (d) if by U.S.
Mail, three (3) days after deposit in the United States mails (by certified
mail, return receipt requested), with proper postage prepaid, to the following
addresses:
(i) If to the Agent, at:
SANWABUSINESS CREDIT CORPORATION
One South Wacker Drive, 39th Floor
Chicago, Illinois 60606
Attn: Commercial Finance Division
Telecopy No.: (312) 782-6035
With a copy to:
WINSTON & STRAWN
35 West Wacker Drive
Chicago, Illinois 60601
Attn: Jim L. Blanco
Telecopy No.: (312) 558-5700
(ii) If to a Lender, at the address set forth opposite its name on Schedule
1 hereto
(iii) If to the Borrower or the Guarantor, at:
WRIGHT MEDICAL TECHNOLOGY, INC.
5677 Airline Road
Arlington, Tennessee 38002
Attn: General Counsel
Telecopy No.: (901) 867-4794
or to such other address as each Person designates to the other in the manner
herein prescribed. The Borrower and the Guarantor each hereby acknowledge and
agree that, notwithstanding any provision to the contrary contained in this
Agreement, any notice required to be delivered hereunder by the Agent or any
Lender to the Guarantor shall be deemed binding upon the Guarantor upon delivery
of such notice to the Borrower pursuant to this subsection 10.13.
10.14 Waivers With Respect to Other Instruments. The Borrower and the Guarantor
waive presentment, demand and protest and notice of presentment, demand protest,
default, nonpayment, 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 the Agent on which
the Borrower or the Guarantor may in any way be liable and hereby ratifies and
confirms whatever the Agent may do regarding the enforcement, collection,
compromise, or release thereof.
10.15 Retention of the Borrower's Documents. The Agent or any Lender may destroy
or otherwise dispose of all documents, schedules, invoices or other papers
delivered to such Person in accordance with its customary practices unless the
Borrower requests in writing that same
be returned. Upon the Borrower's request and at the Borrower's expense, such
Person shall return such papers when such Person's actual or anticipated need
for same has terminated.
10.16 Entire Agreement. This Agreement, including all Exhibits, Schedules and
other documents attached hereto or incorporated by reference herein, constitutes
the entire agreement of the parties with respect to the subject matter hereof
and supersedes all other negotiations, understandings and representations, oral
or written, with respect to the subject matter hereof, including, without
limitation, that certain proposal letter dated as of June 25, 1996 between the
Borrower and SBCC.
10.17 Equitable Relief. The Borrower and the Guarantor recognize that, in the
event the Borrower or the Guarantor fails to perform, observe or discharge any
of its Obligations under this Agreement, any remedy at law may prove to be
inadequate relief to the Agent or any Lender; therefore, the Borrower and the
Guarantor each agree that the Agent or any Lender, if such Person so requests,
shall be entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages.
10.18 Lenders' First Right of Refusal. If at any time during the term of this
Agreement the Borrower enters into, or proposes to enter into, an agreement or
understanding to acquire any Person, or the assets of any Person, the Lenders
shall have the right at their sole discretion (but not an obligation) upon the
mutual agreement of all Lenders to provide the Borrower with the financing for
such acquisition and the Borrower shall not enter into any agreement or
understanding with any other Person to provide such financing without first
offering such financial opportunity to the Lenders and the Lenders have declined
to provide such financing; provided that if the Lenders fail to approve such
financing within twenty (20) Business Days, the right granted under this
subsection 10.18 shall terminate.
10.19 Counterparts. This Agreement and any amendments, waivers, consents or
supplements may be executed in any number of counterparts and by different
parties in separate counterparts, each of which when so executed and delivered
shall be deemed an original, but all of which counterparts together shall
constitute but one and the same agreement.
10.20 Several Obligations; Nature of Lenders' Rights. The respective obligations
of the Lenders hereunder are several and not joint and no Lender shall be the
partner or agent of any other Lender (except to the extent to which the Agent is
authorized to act as such). No provision contained herein or in any other
Financing Agreement and no course of dealing between the parties shall be deemed
to create any fiduciary relationship between the Agent or any Lender and the
Borrower or the Guarantor. The Indebtedness of the Borrower incurred under each
of the Notes shall be a separate obligation owing to the holder thereof;
provided that each Lender hereby agrees that it shall have no individual right
to seek to enforce its rights under its Note, or to realize upon the Collateral,
it being understood and agreed that such rights and remedies may be exercised
solely by the Agent for the benefit of the Lenders at the direction of the
Required Lenders in accordance with the terms of this Agreement.
10.21 Exceptions to Covenants. Neither the Borrower nor the Guarantor shall be
deemed to be permitted to take any action or omit to take any action which is
permitted as an exception to any of the terms, provisions or covenants contained
in any of the Financing Agreements if such action or omission would result in a
Default or Event of Default or the breach of any term, provision or covenant
contained in any Financing Agreement.
10.22 Construction. The Borrower and the Guarantor each acknowledge that it and
its counsel have approved the Financing Agreements and that the usual rule of
construction to the effect that any ambiguities or inconsistencies are to be
resolved against the drafting Person shall not be applicable in the
interpretation of any of the Financing Agreements.
10.23 Reinstatement. This Agreement shall remain in full force and effect and
continue to be effective should any petition be filed by or against the Borrower
for liquidation or reorganization, should the Borrower become insolvent or make
an assignment for the benefit of any creditor or creditors or should a receiver
or trustee be appointed for all or any significant part of the Borrower's
assets, and shall continue to be effective or to be reinstated, as the case may
be, if at any time payment and performance of the Obligations, or any part
thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee of the Obligations, whether as
a "voidable preference," "fraudulent conveyance," or otherwise, all as though
such payment or performance had not been made. In the event that any payment, or
any part thereof, is rescinded, reduced, restored or returned, the Obligations
shall be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.
10.24 ACKNOWLEDGMENT. THE BORROWER AND THE GUARANTOR EACH ACKNOWLEDGE THAT IT
HAS BEEN ADVISED BY COUNSEL OF ITS CHOICE WITH RESPECT TO THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY, AND THE BORROWER AND THE GUARANTOR EACH
ACKNOWLEDGE AND AGREE THAT (i) EACH OF THE WAIVERS SET FORTH HEREIN, INCLUDING,
WITHOUT LIMITATION, THOSE WAIVERS SET FORTH IN SUBSECTIONS 9.5, 9.6 AND 10.8
WERE KNOWINGLY AND VOLUNTARILY MADE, (ii) THE OBLIGATIONS OF THE AGENT AND EACH
LENDER HEREUNDER, INCLUDING THE OBLIGATION TO ADVANCE AND LEND FUNDS TO THE
BORROWER IN ACCORDANCE HEREWITH, SHALL BE STRICTLY CONSTRUED AND SHALL BE
EXPRESSLY SUBJECT TO THE BORROWER'S AND THE GUARANTOR'S COMPLIANCE IN ALL
RESPECTS WITH THE TERMS AND CONDITIONS HEREIN SET FORTH, AND (iii) NO
REPRESENTATIVE OF THE AGENT OR ANY LENDER HAS WAIVED OR MODIFIED ANY OF THE
PROVISIONS OF THIS AGREEMENT AS OF THE DATE HEREOF AND NO SUCH WAIVER OR
MODIFICATION FOLLOWING THE DATE HEREOF SHALL BE EFFECTIVE UNLESS MADE IN
ACCORDANCE WITH SUBSECTION 10.1.
10.25 Guarantor Joinder. The Guarantor has joined in the execution of this
Agreement for the purposes of the inclusion of the Guarantor's Accounts,
Inventory in the calculation of advances that may be made against Eligible
Accounts and Eligible Inventory, the representations
and warranties and other agreements concerning Accounts and Inventory, and
certain other covenants and agreements and not to make Guarantor a permitted
borrower under this Agreement.
11. ASSIGNMENT AND PARTICIPATION.
11.1 Assignments. Each Lender may, in the ordinary course of its business and in
accordance with applicable law, assign all or any part of its rights and
obligations under the Financing Agreements to any Person; provided that such
Lender shall first obtain the written consent of the Agent prior to any such
assignment becoming effective, and such assignment does not materially increase
any of the Borrower's obligations hereunder. The assigning Lender shall be
relieved of its Commitment or assigned portion thereof. The Borrower hereby
acknowledges and agrees that any assignment will give rise to a direct
obligation of the Borrower to the assignee and that the assignee shall be
considered to be a "Lender".
11.2 Participations. Each Lender shall have the right to sell or assign to a
Participant or Participants participating interests in the Borrower's
Obligations hereunder in such amounts and on such terms and conditions as such
Lender shall determine; provided such participation does not materially increase
the Borrower's obligations hereunder.
12. AGENT.
12.1 Appointment. SBCC is hereby appointed Agent hereunder and under each other
Financing Agreements, and each of the Lenders authorizes the Agent to act as the
Agent of such Lender. The Agent agrees to act as such upon the express
conditions contained in this Section 12. The Agent shall not have a fiduciary
relationship in respect of the Borrower, the Guarantor or any Lender by reason
of this Agreement.
12.2 Powers. The Agent shall have and may exercise such powers under the
Financing Agreements as are specifically delegated to the Agent by the terms of
each thereof, together with such powers as are reasonably incidental thereto.
The Agent shall have no implied duties to the Lenders, or any obligation to the
Lenders to take any action thereunder, except any action specifically provided
by the Financing Agreements to be taken by the Agent.
12.3 General Immunity. Neither the Agent nor any of its directors, officers,
Agents or employees shall be liable to the Borrower, the Guarantor or any Lender
for any action taken or omitted to be taken by it or them hereunder or under any
other Financing Agreements or in connection herewith or therewith except for its
or their own gross negligence or willful misconduct as determined by a final
order, not subject to review, of a court of competent jurisdiction.
12.4 No Responsibility for Loans, Recitals, etc. Neither the Agent nor any of
its directors, officers, Agents or employees shall be responsible for or have
any duty to ascertain, inquire into, or verify (a) any statement, warranty or
representation made in connection with any Financing Agreements or any borrowing
hereunder, (b) the performance or observance of any of the covenants
or agreements of any obligor under any Financing Agreements, (c) the
satisfaction of any condition specified in Section 4, except receipt of items
required to be delivered to the Agent and not waived at closing, or (d) the
validity, effectiveness or genuineness of any Financing Agreements or any other
instrument or writing furnished in connection therewith.
12.5 Action on Instructions of Lenders. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder and under any other
Financing Agreements in accordance with written instructions signed by the
Required Lenders, and such instructions and any action taken or failure to act
pursuant thereto shall be binding on all of the Lenders and on all holders of
Notes. The Agent shall be fully justified in failing or refusing to take any
action hereunder and under any other Financing Agreements unless it shall first
be indemnified to its satisfaction by the Lenders pro-rata against any and all
liability, cost and expense that it may incur by reason of taking or continuing
to take any such action.
12.6 Employment of Agents and Counsel. The Agent may execute any of its duties
as Agent hereunder and under any other Financing Agreements by or through
employees, Agents and attorneys-in-fact and shall not be answerable to the
Lenders, except as to money or securities received by it or its authorized
Agents, for the default or misconduct of any such Agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning all matters pertaining to the agency hereby created and its
duties hereunder and under any other Financing Agreements.
12.7 Reliance on Documents; Counsel. The Agent shall be entitled to rely upon
any Note, notice, consent, certificate, affidavit, letter, telegram, statement,
paper or document believed by it to be genuine and correct and to have been
signed or sent by the proper Person or Persons, and, in respect to legal
matters, upon the opinion of counsel selected by the Agent, which counsel may be
employees of the Agent.
12.8 Agent's Reimbursement and Indemnification. The Lenders agree to reimburse
and indemnify the Agent ratably in proportion to their respective Commitments
(a) for any amounts not reimbursed by the Borrower or the Guarantor for which
the Agent is entitled to reimbursement by the Borrower or the Guarantor under
the Financing Agreements, (b) for any other expenses incurred by the Agent on
behalf of the Lenders, in connection with the preparation, execution, delivery,
administration and enforcement of the Financing Agreements, and (c) for any
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Agent in any way relating to or
arising out of the Financing Agreements or any other document delivered in
connection therewith or the transactions contemplated thereby, or the
enforcement of any of the terms thereof or of any such other documents; provided
that no Lender shall be liable for any of the foregoing to the extent they arise
from the gross negligence or willful misconduct of the Agent as determined by a
final order, not subject to appeal, of a court of competent jurisdiction. The
obligations of the Lenders under this subsection 12.8 shall survive payment of
the Obligations and termination of this Agreement.
12.9 Rights as a Lender. In the event the Agent is a Lender, the Agent shall
have the same rights and powers hereunder and under any other Financing
Agreements as any Lender and may exercise the same as though it were not the
Agent, and the term "Lender" or "Lenders" shall, at any time when the Agent is a
Lender, unless the context otherwise indicates, include the Agent in its
individual capacity. The Agent may accept deposits from, lend money to, and
generally engage in any kind of trust, debt, equity or other transaction, in
addition to those contemplated by this Agreement or any other Financing
Agreements, with the Borrower or any of its Subsidiaries in which the Borrower
or such Subsidiary is not restricted hereby from engaging with any other Person.
12.10 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and based
on the financial statements prepared by the Borrower and the Guarantor and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and the other
Financing Agreements. Each Lender also acknowledges that it will, independently
and without reliance upon the Agent or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement and the other Financing Agreements.
12.11 Successor Agent. The Agent may resign at any time by giving written notice
thereof to the Lenders and the Borrower. The Agent may be removed at any time
for cause by the Required Lenders. Upon any such resignation or removal, the
Required Lenders shall have the right to appoint, on behalf of the Borrower and
the Lenders, a successor Agent. If no successor Agent shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within thirty days after the retiring Agent's giving notice of resignation or
within thirty days after the removal of such Agent, then the retiring Agent
shall use reasonable efforts to appoint, on behalf of the Borrower and the
Lenders, a successor Agent. Such successor Agent shall be a financial
institution having capital and retained earnings of at least One Hundred Fifty
Million Dollars ($150,000,000). Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder and under the other Financing Agreements. After any
retiring Agent's resignation or removal hereunder as Agent, the provisions of
this Section 12 shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as the Agent
hereunder and under the other Financing Agreements.
12.12 Notice of Default. The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder unless the
Agent has received notice from a Lender, the Borrower, or the Guarantor
referring to this Agreement describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the Agent
receives such a notice, the Agent shall give prompt notice thereof to the
Lenders. Subject to the provisions of subsection 12.5, the Agent shall take any
action of the type specified in this Agreement with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders (or, if
so required by Section 13, by all Lenders); provided that unless and until the
Agent shall have received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as the Agent shall determine is in the best
interests of the Lenders.
13. AMENDMENTS AND WAIVERS.
Subject to the provisions of this Section 13, the Required Lenders (or the Agent
with the consent in writing of the Required Lenders), the Borrower and the
Guarantor may enter into agreements supplemental hereto for the purpose of
adding, terminating or modifying any provisions to the Financing Agreements or
changing in any manner the rights of the Lenders, the Borrower and the Guarantor
hereunder or waiving any Event of Default hereunder; provided that no such
supplemental agreement shall, without the consent of each Lender:
(a) extend the final maturity of any Loan or Note or reduce the principal
amount thereof, or reduce the rate or extend the time of payment of interest or
fees thereon;
(b) reduce the percentage specified in the definition of Required Lenders;
(c) reduce the amount or extend the payment date for the mandatory payments
required hereunder, or increase the amount of the Commitment of any Lender
hereunder (other than an increase in the Commitment of any Lender as a result of
an assignment consummated between such Lender and another Lender pursuant to
subsection 11.1);
(d) extend the Initial Term or any Renewal Term, as applicable (except as
contemplated by subsection 2.8), or permit any Letter of Credit or Lender
Guaranty to have an expiry date beyond the Revolving Loan Maturity Date;
(e) amend this Section 13;
(f) change the definition of "Current Asset Base", "Eligible Accounts" or
"Eligible Inventory";
(g) release all or any substantial portion of the Collateral;
(h) permit any assignment by the Borrower of its Obligations or its rights
hereunder; or
(i) amend the definition of the term "Commitment".
No amendment, modification, termination or waiver affecting the rights or duties
of the Agent under any Financing Agreement shall be effective without the
written consent of the Agent.
Each amendment, modification, termination or waiver shall be effective only in
the specific instance and for the specific purpose for which it was given. No
amendment, modification, termination or waiver shall be required for the Agent
to take additional Collateral pursuant to any Financing Agreement. No notice to
or demand on the Borrower or the Guarantor not required by the terms hereof in
any case shall entitle the Borrower or the Guarantor to any other or further
notice or demand in similar or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with this Section 13 shall
be binding upon each holder of the Notes at the time outstanding, each future
holder of the Notes, the Borrower and the Guarantor.
Notwithstanding anything to the contrary contained herein, the Agent may, at its
sole discretion, release or compromise Collateral and the proceeds thereof to
the extent of asset dispositions permitted by the terms hereof.
14. SET OFF AND SHARING OF PAYMENTS.
14.1 Setoff. In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of any such rights, upon the occurrence and
during the continuance of any Event of Default, each Lender is hereby authorized
by the Borrower at any time or from time to time, with reasonably prompt
subsequent notice to the Borrower or to any other Person (any prior or
contemporaneous notice being hereby expressly waived) to set off and to
appropriate and to apply any and all (a) balances (including, without
limitation, all account balances, whether provisional or final and whether or
not collected or available) held or owing by such Lender at any of its offices
to or for the credit or account of the Borrower (regardless of whether such
balances are then due to the Borrower) and (b) other property held or owing by
such Lender to or for the credit or the account of the Borrower, toward the
payment of the Obligations owing to such Lender, whether or not the Obligations,
or any part hereof, shall then be due.
14.2 Ratable Payments. If any Lender, whether by setoff or otherwise, has
payment made to it upon its Loans (other than payments received pursuant to
subsections 2.19 and 2.20) in a greater proportion than its Pro Rata Share of
such Loans, such Lender agrees, promptly upon demand, to purchase a portion of
the Loans held by the other Lenders so that after such purchase each Lender will
hold its ratable proportion of Loans. If any Lender, whether in connection with
setoff or amounts which might be subject to setoff or otherwise, receives
collateral or other protection for its Obligations or such amounts which may be
subject to setoff, such Lender agrees, promptly upon demand, to take such action
necessary such that all Lenders share in the benefits of such collateral ratably
in proportion to their Loans. In case any such payment is disturbed by legal
process, or otherwise, appropriate further adjustments shall be made. If an
amount to be setoff is to be applied to Indebtedness of the Borrower to a
Lender, other than Indebtedness evidenced by any of the Notes held by such
Lender, such amount shall be applied ratably to such other Indebtedness and to
the Indebtedness evidenced by such Notes. The Borrower agrees, to the fullest
extent permitted by law, that (x) any Lender may exercise its right to set off
with respect to amounts in excess of its Pro Rata Share of the Obligations and
may sell participation in such excess to other Lenders, and (y) any Lender so
purchasing a participation in the Loans made or other Obligations
held by other Lenders may exercise all rights of set-off, bankers' lien,
counterclaim or similar rights with respect to such participation as fully as if
such Lender were a direct holder of Loans and other Obligations in the amount of
such participation.
[signature page follows]
IN WITNESS WHEREOF, this Agreement has been duly executed as
of the day and year first above written.
WRIGHT MEDICAL TECHNOLOGY, INC.
By:
Title:
WRIGHT MEDICAL TECHNOLOGY CANADA LTD.
By:
Title:
SANWA BUSINESS CREDIT CORPORATION, as Agent and as a Lender
By:
Title: