EXHIBIT 10.1
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of August 30, 1996
Among
ISOLYSER COMPANY, INC.
MEDSURG INDUSTRIES, INC.
MICROTEK MEDICAL, INC.
WHITE KNIGHT HEALTHCARE, INC.
THE GUARANTORS NAMED HEREIN,
THE LENDERS NAMED HEREIN,
and
THE CHASE MANHATTAN BANK (formerly known as
Chemical Bank), AS AGENT
TABLE OF CONTENTS
Page
I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.01. Certain Defined Terms. . . . . . . . . . . . . . . .1
SECTION 1.02. Accounting Terms . . . . . . . . . . . . . . . . . 21
II. THE LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.01. Term Loan Commitments and Revolving Credit
Commitments. . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.02. Loans. . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.03. Notice of Loans . . . . . . . . . . . . . . . . 25
SECTION 2.04. Notes; Repayment of Loans . . . . . . . . . . . 26
SECTION 2.05. Interest on Loans . . . . . . . . . . . . . . . 27
SECTION 2.06. (a) Fees . . . . . . . . . . . . . . . . . . . 28
SECTION 2.07. Termination and Reduction of Revolving
Credit Commitments and Term Loan Commitments . . . . . . . . . 28
SECTION 2.08. Interest on Overdue Amounts; Alternate
Rate of Interest . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.09. Prepayment of Loans . . . . . . . . . . . . . . 30
SECTION 2.10. Reserve Requirements; Change in
Circumstances. . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 2.11. Change in Legality. . . . . . . . . . . . . . . 38
SECTION 2.12. Indemnity . . . . . . . . . . . . . . . . . . . 39
SECTION 2.13. Pro Rata Treatment. . . . . . . . . . . . . . . 40
SECTION 2.14. Sharing of Setoffs. . . . . . . . . . . . . . . 41
SECTION 2.15. Taxes . . . . . . . . . . . . . . . . . . . . . 42
SECTION 2.16. Payments and Computations . . . . . . . . . . . 45
SECTION 2.17. Issuance of Letters of Credit . . . . . . . . . 46
SECTION 2.18. Payment of Letters of Credit;
Reimbursement. . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 2.19. Agent's Actions with respect to Letters
of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 2.20. Letter of Credit Fees . . . . . . . . . . . . . 49
III. COLLATERAL SECURITY . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 3.01. Security Documents. . . . . . . . . . . . . . . 50
SECTION 3.02. Filing and Recording. . . . . . . . . . . . . . 50
IV. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . 51
SECTION 4.01. Organization, Legal Existence . . . . . . . . . 51
SECTION 4.02. Authorization . . . . . . . . . . . . . . . . . 51
SECTION 4.03. Governmental Approvals . . . . . . . . . . . . . . . 52
SECTION 4.04. Binding Effect . . . . . . . . . . . . . . . . . . . 52
SECTION 4.05. Material Adverse Change. . . . . . . . . . . . . . . 52
SECTION 4.06. Litigation; Compliance with Laws; etc. . . . . . . . 52
SECTION 4.07. Financial Statements . . . . . . . . . . . . . . . . 53
SECTION 4.08. Federal Reserve Regulations. . . . . . . . . . . . . 54
SECTION 4.09. Taxes. . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 4.10. Employee Benefit Plans . . . . . . . . . . . . . . . 55
SECTION 4.11. No Material Misstatements. . . . . . . . . . . . . . 57
SECTION 4.12. Investment Company Act; Public Utility
Holding Company Act. . . . . . . . . . . . . . . . . . . . . . 57
SECTION 4.13. Security Interest. . . . . . . . . . . . . . . . . . 57
SECTION 4.14. Use of Proceeds. . . . . . . . . . . . . . . . . . . 57
SECTION 4.15. Subsidiaries . . . . . . . . . . . . . . . . . . . . 58
SECTION 4.16. Title to Properties; Possession Under
Leases; Trademarks . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 4.17. Solvency . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 4.18. Permits, etc . . . . . . . . . . . . . . . . . . . . 60
SECTION 4.19. Compliance with Environmental Laws . . . . . . . . . 60
SECTION 4.20. No Change in Credit Criteria or
Collection Policies. . . . . . . . . . . . . . . . . . . . . . 61
SECTION 4.21. Acquisition. . . . . . . . . . . . . . . . . . . . . 61
V. CONDITIONS OF CREDIT EVENTS . . . . . . . . . . . . . . . . . . . . 62
SECTION 5.01. All Credit Events. . . . . . . . . . . . . . . . . . 62
SECTION 5.02. First Borrowing. . . . . . . . . . . . . . . . . . . 62
VI. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 6.01. Legal Existence. . . . . . . . . . . . . . . . . . . 67
SECTION 6.02. Businesses and Properties. . . . . . . . . . . . . . 67
SECTION 6.03. Insurance. . . . . . . . . . . . . . . . . . . . . . 68
SECTION 6.04. Taxes. . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 6.05. Financial Statements, Reports, etc.. . . . . . . . . 68
SECTION 6.06. Litigation and Other Notices . . . . . . . . . . . . 71
SECTION 6.07. ERISA. . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 6.08. Maintaining Records; Access to
Properties and Inspections; Right to Conduct of Field
Examinations . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 6.09. Use of Proceeds. . . . . . . . . . . . . . . . . . . 74
SECTION 6.10. Fiscal Year-End. . . . . . . . . . . . . . . . . . . 74
SECTION 6.11. Further Assurances . . . . . . . . . . . . . . . . . 74
SECTION 6.12. Additional Grantors and Guarantors . . . . . . . . . 74
SECTION 6.13. Environmental Laws . . . . . . . . . . . . . . . . . 75
SECTION 6.14. Pay Obligations to Lenders and Perform
Other Covenants. . . . . . . . . . . . . . . . . . . . . . . . 77
VII. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 7.01. Liens. . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 7.02. Sale and Lease-Back Transactions . . . . . . . . . . 80
SECTION 7.03. Indebtedness . . . . . . . . . . . . . . . . . . . . 80
SECTION 7.04. Dividends, Distributions and Payments. . . . . . . . 81
SECTION 7.05. Consolidations, Mergers and Sales of
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 7.06. Investments. . . . . . . . . . . . . . . . . . . . . 81
SECTION 7.07. Capital Expenditures . . . . . . . . . . . . . . . . 83
SECTION 7.08. Leverage Ratio; Funds from Operations. . . . . . . . 83
SECTION 7.09. Net Income . . . . . . . . . . . . . . . . . . . . . 83
SECTION 7.10. Business . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 7.11. Sales of Receivables . . . . . . . . . . . . . . . . 84
SECTION 7.12. Use of Proceeds. . . . . . . . . . . . . . . . . . . 84
SECTION 7.13. ERISA. . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 7.14. Accounting Changes . . . . . . . . . . . . . . . . . 84
SECTION 7.15. Prepayment or Modification of
Subordinated Indebtedness. . . . . . . . . . . . . . . . . . . 85
SECTION 7.16. Negative Pledges, Etc. . . . . . . . . . . . . . . . 85
VIII. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . 85
IX. AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
X. MANAGEMENT, COLLECTION AND STATUS OF RECEIVABLES AND
OTHER COLLATERAL. . . . . . . . . . . . . . . . . . . . . . . . . . 93
SECTION 10.01. Collection of Receivables; Management of
Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . 93
SECTION 10.02. Receivables Documentation. . . . . . . . . . . . . . 96
SECTION 10.03. Status of Receivables and Other
Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . 96
SECTION 10.04. Monthly Statement of Account . . . . . . . . . . . . 98
SECTION 10.05. Collateral Custodian . . . . . . . . . . . . . . . . 98
XI. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
SECTION 11.01. Notices. . . . . . . . . . . . . . . . . . . . . . . 98
SECTION 11.02. Survival of Agreement. . . . . . . . . . . . . . . . 99
SECTION 11.03. Successors and Assigns; Participations . . . . . . . 99
SECTION 11.04. Expenses; Indemnity. . . . . . . . . . . . . . . . .103
SECTION 11.05. Applicable Law . . . . . . . . . . . . . . . . . . .105
SECTION 11.06. Right of Setoff. . . . . . . . . . . . . . . . . . .105
SECTION 11.07. Payments on Business Days. . . . . . . . . . . . . .106
SECTION 11.08. Waivers; Amendments. . . . . . . . . . . . . . . . .106
SECTION 11.09. Severability . . . . . . . . . . . . . . . . . . . .108
SECTION 11.10. Entire Agreement; Waiver of Jury Trial,
etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108
SECTION 11.11. Confidentiality . . . . . . . . . . . . . . . . . .109
SECTION 11.12. Submission to Jurisdiction. . . . . . . . . . . . .110
SECTION 11.13. Counterparts; Facsimile Signature . . . . . . . . .110
SECTION 11.14. Headings. . . . . . . . . . . . . . . . . . . . . .110
SECTION 11.15. Transitional Arrangements . . . . . . . . . . . . .110
XII. GUARANTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . .111
EXHIBITS
EXHIBIT A Form of Term Note
EXHIBIT B Form of Revolving Credit Note
EXHIBIT C Form of Opinion of Counsel
EXHIBIT D Form of Security Agreement
EXHIBIT E Form of Assignment and Acceptance
EXHIBIT F Form of Pledge Agreement
EXHIBIT G Form of Security Agreement -
Patent and Trademarks
EXHIBIT H Assignment of Contract as Collateral
SCHEDULES
SCHEDULE 2.01(a) Term Loan Commitments
SCHEDULE 2.01(b) Revolving Credit Commitments
SCHEDULE 2.02 Domestic Lending Offices
SCHEDULE 2.03 Eurodollar Lending Offices
SCHEDULE 4.01 Qualified Jurisdictions
SCHEDULE 4.05 Material Adverse Change
SCHEDULE 4.06(a) Litigation
SCHEDULE 4.06(b) Compliance with Laws
SCHEDULE 4.15 Subsidiaries
SCHEDULE 4.19 Environmental Law Compliance
SCHEDULE 6.05(g) Inventory Designation
SCHEDULE 6.05(j) Borrowing Base Certificate
SCHEDULE 7.01 Existing Liens
SCHEDULE 7.03 Existing Indebtedness
AMENDED AND RESTATED CREDIT AGREEMENT dated as of August
30, 1996, among ISOLYSER COMPANY, INC., a Georgia corporation
("Isolyser"), MEDSURG INDUSTRIES, INC., a Georgia corporation
("MedSurg"), MICROTEK MEDICAL, INC., a Delaware corporation
("Microtek") and WHITE KNIGHT HEALTHCARE, INC., a Pennsylvania
corporation ("White Knight")(Isolyser, MedSurg, Microtek and
White Knight, each a "Borrower" and, jointly and severally, the
"Borrowers"), the Guarantors named herein and signatories hereto,
the lenders named in Schedules 2.01(a) and 2.01(b) annexed hereto
(collectively, the "Lenders"), and THE CHASE MANHATTAN BANK
(formerly known as Chemical Bank), as agent for the Lenders (in
such capacity, the "Agent").
The Borrowers have applied to the Lenders for Loans (such
term and all other capitalized terms used in this paragraph
having the respective meanings ascribed to such terms above or
hereinafter) up to an aggregate principal amount of $55,000,000
in the form of (a) Term Loans to the Borrowers in an aggregate
principal amount not in excess of $15,000,000 outstanding and
(b) Revolving Credit Loans to the Borrowers at any time and from
time to time prior to the Revolving Credit Termination Date in an
aggregate principal amount not in excess of $40,000,000 at any
time outstanding. The proceeds of the Term Loans and in part the
Revolving Credit Loans shall be used to refinance outstanding
Obligations under the Isolyser Credit Agreement and repay
obligations under the Microtek Credit Agreement and to pay fees
and expenses related to the Acquisition. The proceeds of the
Revolving Credit Loans shall also be used for working capital
purposes. The Grantors will provide Collateral in accordance
with the provisions of this Agreement and the Security Documents.
The Lenders are severally, and not jointly, willing to extend
such Loans to the Borrowers subject to the terms and conditions
hereinafter set forth. Accordingly, the Borrowers, the
Guarantors, the Lenders and the Agent hereby agree to amend and
restate the Isolyser Credit Agreement to read in its entirety as
follows:
I. DEFINITIONS
SECTION 1.1. Certain Defined Terms. For purposes
hereof, the following terms shall have the meanings specified
below:
"ABB Capital Lease" shall mean that certain capital lease
arrangement between SafeWaste Corporation and ABB Credit, Inc.
for an Onsyte unit operated by Safe Horizon.
"Acquisition" shall mean the purchase by Isolyser of
Microtek.
"Acquisition Documents" shall mean the Merger Agreement
and Plan of Merger, dated as of March 15, 1996 and amended as of
June 23, 1996 and July 29, 1996 among Isolyser, Microtek and MMI
Merger Corp., and all agreements, documents and instruments
executed and delivered pursuant thereto or in connection
therewith, in each case as in effect on the Closing Date.
"Adjusted LIBO Rate" shall mean, with respect to any
Eurodollar Loan for any Interest Period, an interest rate per
annum (rounded upwards, if necessary, to the next 1/16 of 1%)
equal to the product of (i) the LIBO Rate in effect for such
Interest Period and (ii) Statutory Reserves. For purposes
hereof, "Statutory Reserves" shall mean a fraction (expressed as
a decimal), the numerator of which is the number one and the
denominator of which is the number one minus the aggregate of the
maximum reserve percentages (including, without limitation, any
marginal, special, emergency, or supplemental reserves) expressed
as a decimal established by the Board and any other banking
authority to which any Lender is subject with respect to the
Adjusted LIBO Rate for Eurocurrency Liabilities (as defined in
Regulation D). Such reserve percentages shall include, without
limitation, those imposed under Regulation D. Eurodollar Loans
shall be deemed to constitute Eurocurrency Liabilities and as
such shall be deemed to be subject to such reserve requirements
without benefit of or credit for proration, exceptions or offsets
which may be available from time to time to any Lender under
Regulation D. Statutory Reserves shall be adjusted automatically
on and as of the effective date of any change in any reserve
percentage.
"Affiliate" of any person shall mean any other person
which, directly or indirectly, controls or is controlled by or is
under common control with such person and, without limiting the
generality of the foregoing, includes (i) any person which
beneficially owns or holds 5% or more of any class of voting
securities of such person or 5% or more of the equity interest in
such person, (ii) any person of which such person beneficially
owns or holds 5% or more of any class of voting securities or in
which such person beneficially owns or holds 5% or more of the
equity interest in such person and (iii) any director, officer or
employee of such person. For the purposes of this definition,
the term "control" (including, with correlative meanings, the
terms "controlled by" and "under common control with"), as used
with respect to any person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of such person, whether through the
ownership of voting securities or by contract or otherwise.
"Agent" shall have the meaning assigned to such term in
the preamble to this Agreement.
"Alternate Base Loan" shall mean a Loan based on the
Alternate Base Rate in accordance with Article II hereof.
"Alternate Base Rate" shall mean, for any day, a rate per
annum (rounded upwards, if necessary, to the next 1/16 of 1%)
equal to the greatest of (a) the Prime Rate in effect on such
day, (b) the Base CD Rate in effect on such day plus 1%, and
(c) the Federal Funds Effective Rate in effect on such day plus
1/2 of 1%. "Prime Rate" shall mean the rate of interest per
annum publicly announced from time to time by the Agent at its
principal office in New York City as its prime rate in effect at
such time. "Base CD Rate" shall mean the sum of (a) the product
of (i) the Three-Month Secondary CD Rate and (ii) Statutory
Reserves and (b) the Assessment Rate. "Three-Month Secondary CD
Rate" shall mean, for any day, the secondary market rate for
three-month certificates of deposit reported as being in effect
on such day (or, if such day shall not be a Business Day, the
next preceding Business Day) by the Board through the public
information telephone line of the Federal Reserve Bank of
New York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release
H.15(519) during the week following such day), or, if such rate
shall not be so reported on such day or such next preceding
Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks
in New York City received at approximately 10:00 a.m., New York
City time, on such day (or, if such day shall not be a Business
Day, on the next preceding Business Day) by the Agent from three
New York City negotiable certificate of deposit dealers of
recognized standing selected by it. "Statutory Reserves" shall
mean a fraction (expressed as a decimal), the numerator of which
is the number one and the denominator of which is the number one
minus the maximum reserve percentage (including any marginal,
special, emergency or supplemental reserves) expressed as a
decimal, established by the Board and any other banking authority
to which the Agent is subject with respect to the Base CD Rate,
for new negotiable nonpersonal time deposits in dollars of over
$100,000 with maturities approximately equal to three months.
Statutory Reserves shall be adjusted automatically on and as of
the effective date of any change in any reserve percentage.
"Assessment Rate" shall mean the annual assessment rate (net of
refunds and rounded upwards, if necessary, to the next 1/16 of
1%) estimated by the Agent (in good faith, but in no event in
excess of statutory or regulatory maximums) to be payable by the
Agent to the Federal Deposit Insurance Corporation (or any
successor) for insurance by such Corporation (or such successor)
of time deposits made in dollars at the Agent's domestic offices
during the current calendar year. "Federal Funds Effective Rate"
shall mean, for any day, the weighted average of the rates on
overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on
the next succeeding Business Day by the Federal Reserve Bank of
New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for the day of
such transactions received by the Agent from three Federal funds
brokers of recognized standing selected by it. If for any reason
the Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain
the Base CD Rate or the Federal Funds Effective Rate, or both,
for any reason, including, the inability or failure of the Agent
to obtain sufficient quotations in accordance with the terms
hereof, the Alternate Base Rate shall be determined without
regard to clause (b) or (c), or both, of the first sentence of
this definition, as appropriate, until the circumstances giving
rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Prime Rate, the Three-
Month Secondary CD Rate or the Federal Funds Effective Rate shall
be effective on the effective date of such change in the Prime
Rate, the Three-Month Secondary CD Rate or the Federal Funds
Effective Rate, respectively.
"Applicable Lending Office" shall mean, with respect to
each Lender, such Lender's Domestic Lending Office in the case of
an Alternate Base Loan and such Lender's Eurodollar Lending
Office in the case of a Eurodollar Loan.
"Assignment and Acceptance" shall mean an assignment and
acceptance entered into by a Lender and an assignee and accepted
by the Agent, in substantially the form of Exhibit E annexed
hereto.
"Assignment of Contract as Collateral" shall mean the
Assignment of Contract as Collateral dated the date hereof
between Isolyser and the Agent, for the benefit of the Lenders,
in substantially the form of Exhibit H annexed hereto, as
amended, modified or supplemented from time to time.
"Availability" shall mean at any time (i) the lesser at
such time of (x) the Total Revolving Credit Commitment and
(y) the Borrowing Base, minus (ii) the sum at such time of
(x) the unpaid principal balance of, and accrued interest and
fees on the Revolving Credit Loans and (y) the Letter of Credit
Usage.
"Board" shall mean the Board of Governors of the Federal
Reserve System of the United States.
"Borrowers" shall have the meaning assigned to such term
in the preamble to this Agreement.
"Borrowing Base" shall have the meaning assigned to such
term in Section 2.01(b) hereof.
"Business Day" shall mean any day, other than a Saturday,
Sunday or legal holiday in the State of New York, on which banks
are open for substantially all their banking business in New York
City except that, if any determination of a "Business Day" shall
relate to a Eurodollar Loan, the term "Business Day" shall in
addition exclude any day on which banks are not open for dealings
in dollar deposits in the London interbank market.
"Capitalized Lease Obligation" shall mean an obligation
to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real and/or personal
property which obligation is required to be classified and
accounted for as a capital lease on a balance sheet prepared in
accordance with GAAP, and for purposes hereof the amount of such
obligation shall be the capitalized amount thereof determined in
accordance with GAAP.
"Closing Date" shall mean the date of the first borrowing
under this Agreement, but in no event later than September 30,
1996.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Collateral" shall mean all collateral and security as
described in the Security Documents.
"Commitment" shall mean, with respect to each Lender, the
sum of the Term Loan Commitment of such Lender as set forth in
Schedule 2.01(a), and the Revolving Credit Commitment of such
Lender as set forth in Schedule 2.01(b), as each may be adjusted
from time to time pursuant to Section 2.07.
"Commitment Fee" shall have the meaning set forth in
Section 2.06(a) hereof.
"Commitment Letter" shall mean the commitment letter,
outline of terms and fee letter from The Chase Manhattan Bank to
Isolyser, accepted by Isolyser on August 29, 1996.
"Consolidated" shall mean, in respect of any person, as
applied to any financial or accounting term, such term determined
on a consolidated basis in accordance with GAAP (except as
otherwise required herein) for the person and all consolidated
subsidiaries thereof.
"Contaminant" shall mean all Hazardous Materials and all
those substances which are regulated by or form the basis of
liability under Federal, state or local environmental, health and
safety statutes or regulations including, without limitation,
asbestos, polychlorinated biphenyls ("PCBs"), and radioactive
substances, or any other material or substance which constitutes
a material health, safety or environmental hazard to any person
or property.
"Credit Event" shall mean each borrowing and each
issuance of a Letter of Credit hereunder.
"Customer" shall mean and include the account debtor or
obligor with respect to any Receivable.
"Default" shall mean any condition, act or event which,
with notice or lapse of time or both, would constitute an Event
of Default.
"dollars" or the symbol "$" shall mean dollars in lawful
currency of the United States of America.
"Domestic Lending Office" shall mean, with respect to any
Lender, the office of such Lender specified as its "Domestic
Lending Office" opposite its name in Schedule 2.02 annexed
hereto, or such other office of such Lender as such Lender may
from time to time specify to the Borrowers and the Agent.
"Eligible Inventory" shall mean inventory of the
Borrowers or the Guarantors comprised solely of raw materials and
finished goods which is, in the opinion of the Agent, not
obsolete, slow-moving or unmerchantable and is and at all times
shall continue to be acceptable to the Agent in all respects;
provided, however, that Eligible Inventory shall in no event
include inventory which (i) (a) is not located at one of the
addresses for locations of Collateral set forth on Schedule I to
the Security Agreement (or any other Security Agreement executed
by any Guarantor after the date hereof) or (b) is located at a
location not owned by the Borrower as to which the Agent has not
received a waiver, in form and substance satisfactory to the
Agent, executed and delivered by the landlord, bailee, warehouse
or processor (as the case may be); provided, however, that for
sixty-five (65) days from the date hereof, such inventory shall
remain eligible so long as the Borrowers are making a good faith
effort to obtain the appropriate waivers, (ii) is located at an
address outside of the United States or (iii) has been returned
or rejected by a Customer. Standards of eligibility may be fixed
and revised from time to time solely by the Agent in the Agent's
reasonable business judgment. In determining eligibility, the
Agent may, but need not, rely on reports and schedules furnished
by the Borrowers, but reliance by the Agent thereon from time to
time shall not be deemed to limit the right of the Agent to
revise standards of eligibility at any time as to both present
and future inventory of the Borrowers and the Guarantors.
"Eligible Receivables" shall mean Receivables created by
the Borrowers or the Guarantors in the ordinary course of
business arising out of the sale or lease of goods or rendition
of services by the Borrowers or the Guarantors, which are and at
all times shall continue to be acceptable to the Agent in all
respects. Standards of eligibility may be fixed and revised from
time to time solely by the Agent in the Agent's reasonable
business judgment. In general, without limiting the foregoing, a
Receivable shall in no event be deemed to be an Eligible
Receivable unless: (a) all payments due on the Receivable have
been invoiced and shipped; (b) the payment due on the Receivable
is not more than 60 days past due and 90 days past the invoice
date; (c) the payments due on more than 50% of all Receivables
from the same Customer are less than 60 days past due and 90 days
past the invoice date; (d) the Receivable arose from a completed,
outright and lawful sale of goods, to which title has passed to
the Customer, by or on behalf of the Borrowers or the Guarantors;
(e) the Receivable is in full conformity with the representations
and warranties made by the Borrowers or the Guarantors to the
Agent and the Lenders with respect thereto and is free and clear
of all security interests and Liens of any nature whatsoever
other than any security interest deemed to be held by the
Borrowers, the Guarantors or any security interest created
pursuant to the Security Documents or permitted by Section 7.01
hereof; (f) the Receivable constitutes an "account" or "chattel
paper" within the meaning of the Uniform Commercial Code of the
state in which the Receivable is located; (g) the Customer has
not asserted that the Receivable, and the Borrowers or the
Guarantors are not aware that the Receivable, arises out of a
bill and hold, consignment or progress billing arrangement or is
subject to any setoff, contras, net-out contract, offset,
deduction, dispute, credit, counterclaim or other defense arising
out of the transactions represented by the Receivables or
independently thereof and the Customer has finally accepted the
goods from the sale out of which the Receivable arose and has not
objected to its liability thereon or returned, rejected or
repossessed any of such goods, except for complaints made or
goods returned in the ordinary course of business for which, in
the case of goods returned, goods of equal or greater value have
been shipped in return; (h) the Receivable arose in the ordinary
course of business of the Borrowers or the Guarantors; (i) the
Customer is not (x) the United States government or the
government of any state or political subdivision thereof or
therein, or any agency or department of any thereof (provided,
however, the Receivables due under any Veterans Administration
programs or any hospital owned or operated by the United States
government or the government of any state or political
subdivision thereof shall be deemed to be Eligible Receivables if
they otherwise meet the eligibility criteria set forth herein) or
(y) an Affiliate of the Borrowers or any subsidiary of any
thereof; (j) the Customer is a United States person or an obligor
in the United States, or such Receivable is backed by a letter of
credit or is fully insured with credit insurance from a United
States insurer, such letter of credit and such credit insurance
to be issued by persons and otherwise be on terms and conditions
acceptable in all respects to the Agent; (k) the Receivable
complies with all material requirements of all applicable laws
and regulations, whether Federal, state or local (including,
without limitation, usury laws and laws, rules and regulations
relating to truth in lending, fair credit billing, fair credit
reporting, equal credit opportunity, fair debt collection
practices and privacy); (l) to the knowledge of the Borrowers and
the Guarantors, the Receivable is in full force and effect and
constitutes a legal, valid and binding obligation of the Customer
enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency,
moratorium and other similar laws affecting the enforcement of
creditors' rights generally and by general equity principles;
(m) the Receivable is denominated in and provides for payment by
the Customer in dollars; (n) the Receivable has not been and is
not required to be charged off or written off as uncollectible in
accordance with GAAP or the customary business practices of the
Borrowers or the Guarantors; (o) the Agent on behalf of the
Lenders possesses a valid, perfected first priority security
interest in such Receivable as security for payment of the
Obligations; and (p) the Agent is satisfied with the credit
standing of the Customer in relation to the amount of credit
extended.
"Environmental Claim" shall mean any written notice of
violation, claim, demand, abatement or other order by any
governmental authority or any person for personal injury
(including sickness, disease or death), tangible or intangible
property damage, damage to the environment, nuisance, pollution,
contamination or other adverse effects on the environment, or for
fines, penalties or deed or use restrictions, resulting from or
based upon (i) the existence, or the continuation of the
existence, of a Release (including, without limitation, sudden or
non-sudden, accidental or nonaccidental Releases), of, or
exposure to, any substance, chemical, material, pollutant,
contaminant, odor or audible noise or other release or emission
in, into or onto the environment (including, without limitation,
the air, ground, water or any surface) at, in, by or from any of
the properties of the Borrowers or their subsidiaries, (ii) the
environmental aspects of the transportation, storage, treatment
or disposal of materials in connection with the operation of any
of the properties of the Borrowers or their subsidiaries or
(iii) the violation, or alleged violation by Borrowers or any of
their subsidiaries, of any statutes, ordinances, orders, rules,
regulations, Permits or licenses of or from any governmental
authority, agency or court relating to environmental matters
connected with any of the properties of the Borrowers or their
subsidiaries, under any applicable Environmental Law.
"Environmental Laws" shall mean the Comprehensive
Environmental Response, Compensation, and Liability Act (42
U.S.C. Section 9601 et seq.), the Hazardous Material Transportation Act
(49 U.S.C. Section 1801 et seq.), the Resource Conservation and
Recovery Act (42 U.S.C. Section 6901 et seq.), the Federal Water
Pollution Control Act (33 U.S.C. Section 1251 et seq.), the Oil
Pollution Act of 1990 (P.L. 101-380), the Safe Drinking Water Act
(42 U.S.C. Section 300(f), et seq.), the Clear Air Act (42 U.S.C.
Section 7401 et seq.), the Toxic Substances Control Act, as amended (15
U.S.C. Section 2601 et seq.), the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. Section 136 et seq.), and the Occupational
Safety and Health Act (29 U.S.C. Section 651 et seq.), as such laws
have been and hereafter may be amended or supplemented, and any
related or analogous present or future Federal, state or local,
statutes, rules, regulations, ordinances, licenses, permits and
interpretations and orders of regulatory and administrative
bodies.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended, and the rules and regulations
promulgated thereunder, as in effect from time to time.
"ERISA Affiliate" shall mean any trade or business
(whether or not incorporated) which together with any of the
Borrowers or any subsidiary of any thereof would be treated as a
single employer under the provisions of Title I or Title IV of
ERISA.
"Eurodollar Lending Office" shall mean, with respect to
any Lender, the office of such Lender specified as its
"Eurodollar Lending Office" opposite its name in Schedule 2.03
annexed hereto (or, if no such office is specified, its Domestic
Lending Office), or such other office of such Lender as such
Lender may from time to time specify to the Borrowers and the
Agent.
"Eurodollar Loan" shall mean a Loan based on the Adjusted
LIBO Rate in accordance with Article II hereof.
"Event of Default" shall have the meaning assigned to
such term in Article VIII hereof.
"Final Maturity Date" shall mean August 31, 2001.
"Financial Officer" shall mean, with respect to any
person, the chief financial officer of such person.
"FIRREA" shall mean the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended from time to
time.
"Fiscal Year" shall mean the fiscal year of each of the
Borrowers for accounting purposes which in each case ends on
December 31 of each year.
"Funded Debt" shall mean all Indebtedness of a person
including, without limitation, the current portion thereof, which
has a final maturity more than one year after the date of
creation thereof, or is renewable or extendable at the option of
such person for a period ending more than one year after the date
of creation thereof, and shall in any event include all
Subordinated Indebtedness and the unpaid principal balance of all
Revolving Credit Loans.
"Funds from Operations" shall mean, with respect to any
person for any period, the sum for such period of (i) Net Income
plus (ii) depreciation of tangible property plus (iii) amorti-
zation of intangible property.
"GAAP" shall have the meaning assigned to such term in
Section 1.02 hereof.
"Grantor" shall mean any Grantor, Pledgor or Debtor, as
such terms are as defined in any of the Security Documents.
"Guarantee" shall mean any obligation, contingent or
otherwise, of any person guaranteeing or having the economic
effect of guaranteeing any Indebtedness or obligation of any
other person in any manner, whether directly or indirectly, and
shall include, without limitation, any obligation of such person,
direct or indirect, to (i) purchase or pay (or advance or supply
funds for the purchase or payment of) such Indebtedness or
obligation or to purchase (or to advance or supply funds for the
purchase of) any security for the payment of such Indebtedness or
obligation, (ii) purchase property, securities or services for
the purpose of assuring the owner of such Indebtedness or
obligation of the payment of such Indebtedness or obligation, or
(iii) maintain working capital, equity capital, available cash or
other financial condition of the primary obligor so as to enable
the primary obligor to pay such Indebtedness or obligation;
provided, however, that the term Guarantee shall not include
endorsements for collection or collections for deposit, in either
case in the ordinary course of business.
"Guarantor" shall mean, collectively, the Borrowers and
each subsidiary thereof which is on the Closing Date or
thereafter becomes a guarantor of the Obligations.
"Hazardous Material" shall mean any pollutant,
contaminant, chemical, or industrial or hazardous, toxic or
dangerous waste, substance or material, defined or regulated as
such in (or for purposes of) any Environmental Law and any other
toxic, reactive, or flammable chemicals, including (without
limitation) any asbestos, any petroleum (including crude oil or
any fraction), any radioactive substance and any polychlorinated
biphenyls; provided, in the event that any Environmental Law is
amended so as to broaden the meaning of any term defined thereby,
such broader meaning shall apply subsequent to the effective date
of such amendment; and provided, further, to the extent that the
applicable laws of any state establish a meaning for "hazardous
material," "hazardous substance," "hazardous waste," "solid
waste" or "toxic substance" which is broader than that specified
in any Environmental Law, such broader meaning shall apply.
"Indebtedness" shall mean, with respect to any person,
(a) all obligations of such person for borrowed money or with
respect to deposits or advances of any kind, (b) all obligations
of such person evidenced by bonds, debentures, notes or other
similar instruments, (c) all obligations of such person for the
deferred purchase price of property or services, except current
accounts payable arising in the ordinary course of business and
not overdue beyond such period as is commercially reasonable for
such person's business, (d) all obligations of such person under
conditional sale or other title retention agreements relating to
property purchased by such person, (e) all payment obligations of
such person with respect to interest rate or currency protection
agreements, (f) all obligations of such person as an account
party under any letter of credit or in respect of bankers'
acceptances, (g) all obligations of any third party secured by
property or assets of such person (regardless of whether or not
such person is liable for repayment of such obligations), (h) all
Guarantees of such person and (i) the redemption price of all
redeemable preferred stock of such person, but only to the extent
that such stock is redeemable at the option of the holder or
requires sinking fund or similar payments at any time prior to
the Final Maturity Date.
"Indemnitees" shall have the meaning assigned to such
term in Section 11.04(c) hereof.
"Information" shall have the meaning assigned to such
term in Section 11.11 hereof.
"Interest Payment Date" shall mean (i) in the case of an
Alternate Base Loan, the first Business Day of each month
commencing October 1, 1996, and (ii) with respect to any
Eurodollar Loan, the last day of the Interest Period applicable
thereto, and, in addition, in respect of any Eurodollar Loan of
more than three (3) months' duration, each earlier day which is
three (3) months after the first day of such Interest Period.
"Interest Period" shall mean, as to any Eurodollar Loan,
the period commencing on the date of such Eurodollar Loan and
ending on the numerically corresponding day (or, if there is no
numerically corresponding day, on the last day) in the calendar
month that is one (1), two (2), three (3) or six (6) months
thereafter, as the Borrowers may elect with respect to its
Eurodollar Loans; provided, however, that (x) if an Interest
Period would end on a day that is not a Business Day, such
Interest Period shall be extended to the next succeeding Business
Day unless, with respect to Eurodollar Loans, such next
succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the next preceding
Business Day, (y) no Interest Period shall end later than the
Final Maturity Date and (z) interest shall accrue from and
including the first day of an Interest Period to but excluding
the last day of such Interest Period.
"Isolyser Credit Agreement" shall mean the Credit
Agreement dated as of November 28, 1994, as amended to the
Closing Date among Isolyser, MedSurg and White Knight, the
guarantors and lenders named therein and the Agent.
"Joint Venture Loans" shall mean those certain operating
loans of $50,000 payable by Safe Horizon to each of its joint
venture partners existing at the time of the acquisition of
SafeWaste Corporation referenced in Section 7.05 herein together
with such additional operating loans created in the future
payable by Safe Horizon to each of its joint venture partners not
to exceed $100,000 each and $200,000 in the aggregate.
"Lender" shall have the meaning assigned to such term in
the preamble to this Agreement.
"Letter of Credit" shall have the meaning assigned such
term in Section 2.17 hereof.
"Letter of Credit Usage" shall mean at any time, (i) the
aggregate undrawn amount of all outstanding Letters of Credit at
such time plus (ii) the unreimbursed drawings at such time under
all such Letters of Credit.
"Leverage Ratio" shall mean with respect to any person
the ratio of (i) Funded Debt, less cash, cash equivalents and
investments permitted by Section 7.06(a) through (e), at the end
of any fiscal quarter to (ii) Funds from Operations of such
person for the four most recent consecutive fiscal quarters
ending at the end of such fiscal quarter.
"LIBO Rate" shall mean, with respect to any Eurodollar
Loan for any Interest Period, an interest rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the rate
at which dollar deposits approximately equal in principal amount
to the Eurodollar Loan of the Agent and for a maturity equal to
the applicable Interest Period are offered in immediately
available funds to the London branch of the Agent by leading
banks in the London interbank market for Eurodollars at approxi-
mately 11:00 A.M., London time, two (2) Business Days prior to
the first day of such Interest Period.
"Lien" shall mean, with respect to any asset, (i) any
mortgage, lien, pledge, encumbrance, charge or security interest
in or on such asset, (ii) the interest of a vendor or a lessor
under any conditional sale agreement, capital lease or other
title retention agreement relating to such asset, (iii) in the
case of securities, any purchase option, call or similar right of
a third party with respect to such securities or (iv) any other
right of or arrangement with any creditor to have such creditor's
claim satisfied out of such assets, or the proceeds therefrom,
prior to the general creditors of the owner thereof.
"Loan" shall mean the Term Loan or any Revolving Credit
Loan.
"Loan Documents" shall mean this Agreement, each Security
Document, each Guarantee executed and delivered at any time with
respect to the Obligations, the Notes and each other document,
instrument, or agreement now or hereafter delivered to the Agent
or any Lender in connection herewith or therewith.
"Loan Party" shall mean each Borrower, each Grantor, each
Guarantor and each subsidiary thereof.
"Margin Stock" shall have the meaning assigned to such
term in Regulation U.
"Material Adverse Effect" shall mean a material adverse
effect on (i) the business, assets, prospects, operations or
financial or other condition of any person or its subsidiaries,
(ii) the ability of any Loan Party to perform or pay the
Obligations in accordance with the terms hereof or of any other
Loan Document or (iii) the Agent's Lien on any material portion
of the Collateral or the priority of such Lien.
"Medi-Plast Seller Note" shall mean the unsecured
subordinated seller note made by Microtek to the order of Medi-
Plast International, Inc. and J&P Leasing Company in the original
principal amount of $3,600,000 in connection with Microtek's
acquisition of certain assets of such persons.
"Microtek Credit Agreement" shall mean the Credit
Agreement dated as of October 1, 1991, as amended and restated as
of November 30, 1995 among Microtek, the guarantors and lenders
named therein and the Agent.
"Mortgages" shall mean the real property mortgages and/or
deeds of trust executed by the Grantor(s) at any time and from
time to time in favor of the Agent, for the benefit of the
Lenders, as amended, modified or supplemented from time to time.
"Multiemployer Plan" shall mean a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA.
"Net Amount of Eligible Inventory" shall mean, at any
time, the aggregate value, computed at the lower of cost (on a
FIFO basis) and current market value, of Eligible Inventory of
the Borrowers.
"Net Amount of Eligible Receivables" shall mean and
include at any time, without duplication, the gross amount of
Eligible Receivables at such time less (i) sales, excise or
similar taxes and (ii) returns, discounts, claims, credits and
allowances of any nature at any time issued, owing, granted,
outstanding, available or claimed.
"Net Income" shall mean, with respect to any person for
any period, the aggregate income (or loss) of such person for
such period which shall be an amount equal to net revenues and
other proper items of income for such person less the aggregate
for such person of any and all items that are treated as expenses
under GAAP, and less Federal, state and local income taxes, but
excluding any extraordinary gains or losses or any gains or
losses from the sale or disposition of assets other than in the
ordinary course of business, all computed and calculated in
accordance with GAAP.
"Notes" shall mean the Term Notes and the Revolving
Credit Notes.
"Obligations" shall mean all obligations, liabilities and
Indebtedness of the Borrowers to the Lenders and the Agent,
whether now existing or hereafter created, direct or indirect,
due or not, whether created directly or acquired by assignment,
participation or otherwise, including without limitation all
obligations, liabilities and Indebtedness of the Borrowers with
respect to the Security Documents and other Loan Documents, fees
owing to the Agent pursuant to the Commitment Letter, the
principal of and interest on the Revolving Credit Loans, the Term
Loans and the payment or performance of all other obligations,
liabilities, and Indebtedness of the Borrowers to the Lenders and
the Agent hereunder, under the Letters of Credit or under any one
or more of the other Loan Documents, including without limitation
all fees, costs, expenses and indemnity obligations hereunder and
thereunder.
"Other Taxes" shall have the meaning assigned to such
term in Section 2.15(b) hereof.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation.
"Pension Plan" shall mean any Plan which is subject to
the provisions of Title IV of ERISA.
"Permits" shall have the meaning assigned to such term in
Section 4.18 hereof.
"person" shall mean any natural person, corporation,
business trust, association, company, joint venture, partnership
or government or any agency or political subdivision thereof.
"Plan" shall mean any employee benefit plan within the
meaning of Section 3(3) of ERISA and which is maintained (in
whole or in part) for employees of the Borrowers, any subsidiary
or any ERISA Affiliate.
"Pledge Agreement" shall mean the Pledge Agreement dated
as of the date hereof between the Grantors and the Agent, for the
benefit of the Lenders, in substantially the form of Exhibit F
annexed hereto, as amended, modified or supplemented from time to
time.
"Receivables" shall mean and include all of the
Borrowers' and Guarantors' accounts, instruments, documents,
chattel paper and general intangibles, whether secured or
unsecured, whether now existing or hereafter created or arising,
and whether or not specifically assigned to the Agent for the
ratable benefit of the Lenders.
"Register" shall have the meaning assigned to such term
in Section 11.03(e) hereof.
"Regulation D" shall mean Regulation D of the Board, as
the same is from time to time in effect, and all official rulings
and interpretations thereunder or thereof.
"Regulation G" shall mean Regulation G of the Board, as
the same is from time to time in effect, and all official rulings
and interpretations thereunder or thereof.
"Regulation T" shall mean Regulation T of the Board, as
the same is from time to time in effect, and all official rulings
and interpretations thereunder or thereof.
"Regulation U" shall mean Regulation U of the Board, as
the same is from time to time in effect, and all official rulings
and interpretations thereunder or thereof.
"Regulation X" shall mean Regulation X of the Board, as
the same is from time to time in effect, and all official rulings
and interpretations thereunder or thereof.
"Release" shall mean any releasing, spilling, leaking,
seepage, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, disposing or dumping, in each case
as defined in Environmental Law, and shall include any
"Threatened Release," as defined in Environmental Law.
"Remedial Work" shall mean any investigation, site
monitoring, containment, cleanup, removal, restoration or other
remedial work of any kind or nature with respect to any property
of the Borrowers or their subsidiaries (whether such property is
owned, leased, subleased or used), including, without limitation,
with respect to Contaminants and the Release thereof.
"Repayment Date" shall have the meaning assigned to such
term in Section 2.04(c) hereof.
"Reportable Event" shall mean a Reportable Event as
defined in Section 4043(b) of ERISA.
"Required Lenders" shall mean Lenders having 67% of the
Total Commitment.
"Responsible Officer" shall mean, with respect to any
person, the chief financial officer or chief executive officer,
of such person.
"Revolving Credit Alternate Base Loan" shall mean a
Revolving Credit Loan that is an Alternate Base Loan.
"Revolving Credit Commitment" shall mean, with respect to
any Lender, the Revolving Credit Commitment of such Lender as set
forth in Schedule 2.01(b) annexed hereto, as the same may be
reduced from time to time pursuant to Section 2.07 hereof.
"Revolving Credit Eurodollar Loan" shall mean a Revolving
Credit Loan that is a Eurodollar Loan.
"Revolving Credit Loan" shall mean a Revolving Credit
Loan made pursuant to Sections 2.01 and 2.02 hereof.
"Revolving Credit Notes" shall mean the Revolving Credit
Notes of the Borrowers, executed and delivered as provided in
Section 2.04 hereof, in substantially the form of Exhibit B
annexed hereto, as amended, modified or supplemented from time to
time.
"Revolving Credit Termination Date" shall mean the
earlier to occur of (i) August 31, 1999 and (ii) such date as the
Revolving Credit Loans shall otherwise be payable in full and the
Revolving Credit Commitment shall terminate, expire or be
cancelled in accordance with the terms of this Agreement.
"Safe Horizon" shall mean the joint venture in which
SafeWaste Corporation holds a 50% interest.
"Security Agreement" shall mean the Amended and Restated
Security Agreement dated as of the date hereof, between the
Grantor(s) and the Agent, for the benefit of the Lenders,
substantially in the form of Exhibit D annexed hereto, as
amended, modified or supplemented from time to time.
"Security Agreement - Patents and Trademarks" shall mean
the Amended and Restated Security Agreement and Mortgage - Patent
and Trademarks, dated as of the date hereof between the Grantors
and the Agent, for the benefit of the Lenders, substantially in
the form of Exhibit G annexed hereto, as hereafter amended,
modified or supplemented from time to time.
"Security Documents" shall mean the Security Agreement,
the Mortgages, the Pledge Agreement, the Security Agreement -
Patents and Trademarks, the Assignment of Contract as Collateral
and each other agreement now existing or hereafter created
providing collateral security for the payment or performance of
any Obligations.
"Subordinated Indebtedness" shall mean, with respect to
any of the Borrowers, Indebtedness subordinated in right of
payment to such person's monetary obligations under this
Agreement upon terms satisfactory to and approved in writing by
the Agent, to the extent it does not by its terms mature or
become subject to any mandatory prepayment or amortization of
principal prior to the Final Maturity Date and shall in any event
include the Venodyne Seller Note and Medi-Plast Seller Note.
"subsidiary" shall mean, with respect to any person, any
corporation, association or other business entity of which
securities or other ownership interests representing more than
50% of the ordinary voting power are, at the time as of which any
determination is being made, owned or controlled, directly or
indirectly, by the parent of such person or one or more
subsidiaries of the parent of such person.
"Taxes" shall have the meaning assigned to such term in
Section 2.15(a) hereof.
"Term Alternate Base Loan" shall mean a Term Loan that is
an Alternate Base Loan.
"Term Eurodollar Loan" shall mean a Term Loan that is a
Eurodollar Loan.
"Term Loans" shall mean the Term Loans made pursuant to
Sections 2.01 and 2.02.
"Term Loan Commitment" shall mean, with respect to any
Lender, the Term Loan Commitment of such Lender as set forth in
Schedule 2.01(a).
"Term Notes" shall mean the Term Notes of the Borrowers,
executed and delivered as provided in Section 2.04, in
substantially the form of Exhibit A hereto, as amended, modified
or supplemented from time to time.
"Total Commitment" shall mean the sum of the Lenders'
Total Term Loan Commitment and Total Revolving Credit Commitment,
as the same may be reduced from time to time pursuant to Sec-
tion 2.07 hereof.
"Total Revolving Credit Commitment" shall mean the sum of
the Lenders' Revolving Credit Commitments, as the same may be
reduced from time to time pursuant to Section 2.07.
"Total Term Loan Commitment" shall mean the sum of the
Lenders' Term Loan Commitments, as the same may be reduced from
time to time pursuant to Section 2.07.
"Transactions" shall have the meaning assigned to such
term in Section 4.02 hereof.
"Venodyne Seller Note" shall mean the $1,750,000
unsecured subordinated seller note made by Microtek to the order
of Advanced Instruments, Inc. in connection with the acquisition
of the Venodyne Division of Advanced Instruments, Inc.
SECTION 1.2. Accounting Terms. Unless otherwise
expressly provided herein, each accounting term used herein shall
have the meaning given it under generally accepted accounting
principles in effect from time to time in the United States
applied on a basis consistent with those used in preparing the
financial statements referred to in Section 6.05 hereof ("GAAP");
provided, however, that each reference in Article VII hereof, or
in the definition of any term used in Article VII hereof, to GAAP
shall mean GAAP as in effect on the date hereof.
II. THE LOANS
SECTION 2.1. Term Loan Commitments and Revolving Credit
Commitments. (a) Subject to the terms and conditions herein set
forth including, without limitation, those set forth in Section
2.03 below, and relying upon the representations and warranties
herein set forth, each Lender, severally and not jointly, agrees
to make its Term Loan to the Borrowers on the Closing Date in an
amount not to exceed in the aggregate the amount of such Lender's
Term Loan Commitment set forth opposite its name in Schedule
2.01(a) annexed hereto.
(b) Subject to the terms and conditions and relying
upon the representations and warranties herein set forth, each
Lender, severally and not jointly, agrees to make Revolving
Credit Loans to the Borrowers, at any time and from time to time
from the date hereof to the Revolving Credit Termination Date, in
an aggregate principal amount at any time outstanding not to
exceed the amount of such Lender's Revolving Credit Commitment
set forth opposite its name in Schedule 2.01(b) annexed hereto,
as such Revolving Credit Commitment may be reduced from time to
time in accordance with the provisions of this Agreement. Not-
withstanding the foregoing, the aggregate principal amount of
Revolving Credit Loans outstanding at any time to the Borrowers
shall not exceed (1) the lesser of (A) the Total Revolving Credit
Commitment (as such amount may be reduced pursuant to the terms
of this Agreement including, without limitation, Section 2.07
hereof) and (B) an amount equal to the sum of (i) up to eighty-
five percent (85%) of the Net Amount of Eligible Receivables of
each of the Borrowers, such percentage, as it relates to any
Borrower, shall be subject to reduction at any time by the Agent
in its reasonable business judgment including, without
limitation, by reason of the Agent determining (based upon a
field examination) that the dilution percentage of such
Borrower's Receivables is in excess of five percent (5%), plus
(ii) the lesser of (a) $20,000,000 and (b) up to fifty percent
(50%) of the Net Amount of Eligible Inventory (this clause 1
(B) referred to herein as the "Borrowing Base"), minus (2) the
Letter of Credit Usage at such time (not to exceed $3,000,000 at
any time). The Borrowing Base will be computed monthly and a
compliance certificate from a Responsible Officer of the
Borrowers presenting its computation will be delivered to the
Agent in accordance with Section 6.05 hereof.
Subject to the foregoing and within the foregoing
limits, the Borrowers may borrow, repay (or, subject to the
provisions of Section 2.09 hereof, prepay) and reborrow Revolving
Credit Loans, on and after the date hereof and prior to the
Revolving Credit Termination Date, subject to the terms,
provisions and limitations set forth herein, including, without
limitation, the requirement that no Revolving Credit Loan shall
be made hereunder if the amount thereof exceeds the Availability
outstanding at such time.
SECTION 2.2. Loans. (a) The Revolving Credit Loans
made by the Lenders on any date shall be in any minimum aggregate
principal amount as may be requested by the Borrowers; provided,
however, that the Eurodollar Loans made on any date shall be in a
minimum aggregate principal amount of $1,000,000.
(b) Loans shall be made ratably by the Lenders in
accordance with their respective Term Loan Commitments or
Revolving Credit Commitments, as the case may be; provided,
however, that the failure of any Lender to make any Loan shall
not in itself relieve any other Lender of its obligation to lend
hereunder. The Term Loans shall be made by the Lenders against
delivery of Term Notes on the Closing Date, payable to the order
of the Lenders, as referred to in Section 2.04. The initial
Revolving Credit Loans shall be made by the Lenders against
delivery of Revolving Credit Notes, payable to the order of the
Lenders, as referred to in Section 2.04 hereof.
(c) Each Loan shall be either an Alternate Base Loan
or a Eurodollar Loan as the Borrowers may request pursuant to
Section 2.03 hereof. Each Lender may fulfill its obligations
under this Agreement by causing its Applicable Lending Office to
make such Loan; provided, however, that the exercise of such
option shall not affect the obligation of the Borrowers to repay
such Loan in accordance with the term of the applicable Note.
Not more than three (3) Term Eurodollar Loans and three (3)
Revolving Credit Eurodollar Loans may be outstanding at any one
time.
(d) Subject to the provisions of paragraph (e) below,
each Lender shall make its Term Loans and Revolving Credit Loans
on the proposed dates thereof by paying the amount required to
the Agent in New York, New York in immediately available funds
not later than 12:00 noon, New York City time, and the Agent
shall as soon as practicable, but in no event later than 3:00
p.m., New York City time, credit the amounts so received to the
general deposit account of the Borrowers with the Agent in
immediately available funds or, if Loans are not to be made on
such date because any condition precedent to a borrowing herein
specified is not met, return the amounts so received to the
respective Lenders.
(e) The Borrowers shall have the right at any time
upon prior irrevocable written, telex or facsimile notice
(promptly confirmed in writing) to the Agent given in the manner
and at the times specified in Section 2.03 with respect to the
Loans into which conversion or continuation is to be made, to
convert all or any portion of Eurodollar Loans into Alternate
Base Loans, to convert all or any portion of Alternate Base Loans
into Eurodollar Loans (specifying the Interest Period to be
applicable thereto), to convert the Interest Period with respect
to all or any portion of any Eurodollar Loans to another
permissible Interest Period, and to continue all or any portion
of any Loans into a subsequent Interest Period of the same
duration, subject to the terms and conditions of this Agreement
(including the last sentence of Section 2.02(c) hereof) and to
the following:
(i) in the case of a conversion or continuation
of fewer than all the Loans, the aggregate principal
amount of Loans converted or continued shall be in any
minimum amount in the case of Alternate Base Loans and
shall not be less than $1,000,000 in the case of
Eurodollar Loans and shall be an integral multiple of
$100,000;
(ii) accrued interest on a Loan (or portion
thereof) being converted or continued shall be paid by
the Borrowers at the time of conversion or
continuation;
(iii) if any Eurodollar Loan is converted at any
time other than the end of an Interest Period
applicable thereto, the Borrowers shall make such
payments associated therewith as are required pursuant
to Section 2.12;
(iv) any portion of a Revolving Credit Loan which
is subject to an Interest Period ending on a date that
is less than three (3) months prior to the Revolving
Credit Termination Date may not be converted into, or
continued as, a Eurodollar Loan and shall be
automatically converted at the end of such Interest
Period into an Alternate Base Loan;
(v) any portion of a Term Eurodollar Loan
required to be paid on any Repayment Date occurring
less than three (3) months after the end of the then
current Interest Period applicable to such Loan, may
not be converted into, or continued as, a Term
Eurodollar Loan and shall be automatically converted at
the end of such Interest Period into a Term Alternate
Base Loan; and
(vi) no Event of Default shall have occurred and
be continuing.
The Interest Period applicable to any Eurodollar Loan
resulting from a conversion shall be specified by the Borrowers
in the irrevocable notice of conversion delivered pursuant to
this Section; provided, however, that if no such Interest Period
shall be specified, the Borrowers shall be deemed to have
selected an Interest Period of three (3) months' duration. If
the Borrowers shall not have given timely notice to continue any
Eurodollar Loan into a subsequent Interest Period (and shall not
otherwise have given notice to convert such Loan), such Loan
(unless repaid or required to be repaid pursuant to the terms
hereof) shall, subject to (iv) and (v) above, automatically be
converted into an Alternate Base Loan. The Agent shall promptly
advise the Lenders of any notice given pursuant to this Section
and of each Lender's portion of the continuation or conversion
hereunder.
SECTION 2.3. Notice of Loans. The Borrowers shall,
through a Responsible Officer of any of the Borrowers, give the
Agent irrevocable written, telex or facsimile notice (promptly
confirmed in writing) of each borrowing (including, without
limitation, a conversion as permitted by Section 2.02(e) hereof)
not later than 11:00 A.M., New York City time, (i) three
(3) Business Days before a proposed Eurodollar Loan borrowing or
conversion and (ii) on the same Business Day with respect to an
Alternate Base Loan borrowing or conversion (except that no such
confirmation will be required, unless requested by the Agent, to
the extent that the proceeds of such borrowing are requested to
be disbursed to the Borrowers' controlled disbursement account
maintained with the Agent). Such notice shall specify
(w) whether the Loans then being requested are to be Term Loans
or Revolving Credit Loans and whether they are to be Alternate
Base Loans or Eurodollar Loans, (x) the date of such borrowing
(which shall be a Business Day) and amount thereof and (y) if
such Loans are to be Eurodollar Loans, the Interest Period with
respect thereto. If no election as to the type of Loan is
specified in any such notice, all such Loans shall be Alternate
Base Loans. If no Interest Period with respect to any Eurodollar
Loan is specified in any such notice, then an Interest Period of
three (3) months' duration shall be deemed to have been selected.
The Agent shall promptly advise the Lenders of any notice given
pursuant to this Section 2.03 and of each Lender's portion of the
requested borrowing.
SECTION 2.4. Notes; Repayment of Loans. (a) The
Term Loans made by a Lender shall be evidenced by a single Term
Note, duly executed on behalf of the Borrowers, dated the Closing
Date, in substantially the form of Exhibit A annexed hereto,
delivered and payable to such Lender in a principal amount equal
to its Term Loan Commitment on such date.
All Revolving Credit Loans made by a Lender to the
Borrowers shall be evidenced by a single Revolving Credit Note,
duly executed on behalf of the Borrowers, dated the Closing Date,
in substantially the form of Exhibit B annexed hereto, delivered
and payable to such Lender in a principal amount equal to its
Revolving Credit Commitment in respect of the Borrowers on such
date. The outstanding balance of each Revolving Credit Loan, as
evidenced by any such Revolving Credit Note, shall mature and be
due and payable on the Revolving Credit Termination Date.
(b) Each Revolving Credit Note shall bear interest
from its date on the outstanding principal balance thereof, as
provided in Section 2.05 hereof.
(c) The aggregate principal amount of the Term Loans,
as evidenced by the Term Notes, shall be payable in 19 consecu-
tive quarterly installments, commencing with December 31, 1996,
the first eight of which shall be in the amount of $500,000 each
and the next eleven of which shall be in the amount of $750,000
each, with a final payment on the Final Maturity Date in the
amount of $2,750,000 or such amount as shall constitute the
payment in full of the Term Loans (the date of each such
repayment, a "Repayment Date"), and such payments shall be
distributed ratably among the Lenders in accordance with their
respective Term Loan Commitments.
To the extent not previously paid, the Term Loans shall
be due and payable on the Final Maturity Date. Each Term Note
shall bear interest from its date on the outstanding principal
balance thereof, as provided in Section 2.05. All principal
payments in respect of the Term Loans shall be accompanied by
accrued interest on the principal amount being repaid to the date
of payment. No scheduled payment of principal in respect of the
Term Loans shall be made to the extent that a lesser principal
payment would result in the payment in full of the outstanding
amount of the Term Loans, and such lesser amount is paid.
(d) Each Lender, or the Agent on its behalf, shall,
and is hereby authorized by the Borrowers to, endorse on the
schedule attached to the Term Note or Revolving Credit Note, as
applicable, of such Lender (or on a continuation of such schedule
attached to such Note and made a part thereof) an appropriate
notation evidencing the date and amount of each Loan to the
Borrowers from such Lender, as well as the date and amount of
each payment and prepayment with respect thereto; provided,
however, that the failure of any person to make such a notation
on a Note shall not affect any obligations of the Borrowers under
such Note. Any such notation shall be conclusive and binding as
to the date and amount of such Loan or portion thereof, or
payment or prepayment of principal or interest thereon, absent
manifest error.
SECTION 2.5. Interest on Loans. (a) Subject to the
provisions of Section 2.05(c) and Section 2.08 hereof, (i) each
Revolving Credit Alternate Base Loan shall bear interest at a
rate per annum equal to the Alternate Base Rate and (ii) each
Term Alternate Base Loan shall bear interest at a rate per annum
equal to the Alternate Base Rate plus one-half of one percent
(1/2%).
(b) Subject to the provisions of Section 2.05(c) and
Section 2.08 hereof, (i) each Revolving Credit Eurodollar Loan
shall bear interest at a rate per annum equal to the Adjusted
LIBO Rate plus one and one half percent (1 1/2%) and (ii) each Term
Eurodollar Loan shall bear interest at a rate per annum equal to
the Adjusted LIBO Rate plus two percent (2%).
(c) Interest on each Loan shall be payable in arrears
on each applicable Interest Payment Date and on the Final
Maturity Date. Interest on each Alternate Base Loan and
Eurodollar Loan shall be computed based on the number of days
elapsed in a year of 360 days. The Agent shall determine each
interest rate applicable to the Loans and shall promptly advise
the Borrowers and the Lenders of the interest rate so determined.
SECTION 2.6. (a) Fees. The Borrowers shall pay each
Lender, through the Agent, (i) on the first Business Day of each
January, April, July and October commencing October 1, 1996,
(ii) on the date of any reduction of the Revolving Credit
Commitments pursuant to Section 2.07 hereof and (iii) on the
Revolving Credit Termination Date, in immediately available
funds, a commitment fee (the "Commitment Fee") of one-quarter of
one percent (1/4%) per annum on the average daily unused amount
of the Revolving Credit Commitment of such Lender during the
quarter (or shorter period commencing with the date hereof or
ending with the Revolving Credit Termination Date) ending on such
date. The Commitment Fee due to each Lender under this Section
2.06 shall commence to accrue on the date hereof and cease to
accrue on the earlier of (i) the Revolving Credit Termination
Date and (ii) the termination of the Revolving Credit Commitment
of such Lender pursuant to Section 2.07 hereof. The Commitment
Fee shall be calculated on the basis of the actual number of days
elapsed in a year of 360 days.
(b) The Borrower shall pay to the Agent for its own
account an administration fee of $50,000 per annum, payable on
the Closing Date and each anniversary thereof.
SECTION 2.7. Termination and Reduction of Revolving
Credit Commitments and Term Loan Commitments. (a) Upon at least
three (3) Business Days' prior irrevocable written notice (or
facsimile notice promptly confirmed in writing) to the Agent, the
Borrowers may at any time in whole permanently terminate, or from
time to time in part permanently reduce, the Total Revolving
Credit Commitment, ratably among the Lenders in accordance with
the amounts of their Revolving Credit Commitments; provided,
however, that the Total Revolving Credit Commitment shall not be
reduced at any time to an amount less than the Revolving Credit
Loans outstanding under the Revolving Credit Commitments and the
Letter of Credit Usage at such time. Each partial reduction of
the Total Revolving Credit Commitment shall be in a minimum of
$500,000 or an integral multiple of $100,000.
(b) Simultaneously with any termination or reduction
of the Total Revolving Credit Commitment pursuant to para-
graph (a) of this Section 2.07, the Borrowers shall pay to each
Lender, through the Agent, the amount of the Commitment Fee due
and owing under Section 2.06(a) hereof through and including the
date of such termination or reduction on the amount of the
Revolving Credit Commitment of such Lender so terminated or
reduced.
(c) The Revolving Credit Commitment of each Lender
shall automatically and permanently terminate on the Revolving
Credit Termination Date, and all Revolving Credit Loans still
outstanding on such date shall be due and payable in full
together with accrued interest thereon.
(d) The Total Term Loan Commitment shall be perma-
nently reduced by the amount of any repayment or prepayment of
the outstanding principal amount of the Term Loans on the date of
any such repayment or prepayment. In any event, all amounts due
and owing under the Total Term Loan Commitment shall be due and
payable on the Final Maturity Date.
(e) Simultaneously with (x) the termination of the
Total Commitment and repayment in full of the Obligations in
accordance with this Agreement including, without limitation,
this Section 2.07 (referred to in this paragraph (e) as a
"Termination") or (y) any permanent reduction of the Total
Revolving Credit Commitment in accordance with this Agreement
including, without limitation, Section 2.07(a) above (referred to
in this paragraph (e) as a "Reduction"), at any time during the
period from the Closing Date to but not including the third
anniversary of the Closing Date, the Borrowers shall pay to the
Agent for the ratable benefit of the Lenders (such amounts,
"Prepayment Fees") the following amounts: (i) from the Closing
Date to but not including the third anniversary thereof, an
amount equal to one percent (1%) of (x) the Total Commitment then
in effect immediately prior to a Termination and (y) the amount
of the Total Revolving Credit Commitment so reduced in the event
of a Reduction. No such Prepayment Fees shall be due and owing
to a Lender (other than The Chase Manhattan Bank) in the event
that the termination of such Lender's Total Revolving Credit
Commitment is a result of any actions permitted under Section
11.08(c) hereof.
SECTION 2.8. Interest on Overdue Amounts; Alternate
Rate of Interest. (a) If the Borrowers shall default in the
payment of the principal of or interest on any Loan or any other
amount becoming due hereunder, by acceleration or otherwise,
and/or any other Default or Event of Default as a result of any
non-compliance with Article VII hereof shall occur the Borrowers
shall on demand from time to time pay interest, to the extent
permitted by law, on the Obligations up to the date of actual
payment (after as well as before judgment) and/or the cure or
waiver of such Default or Event of Default at a rate per annum
equal to two percent (2%) in excess of the interest rate
applicable to Alternate Base Loans at such time hereunder.
(b) In the event, and on each occasion, that on the
day two (2) Business Days prior to the commencement of any
Interest Period for a Eurodollar Loan the Agent shall have
determined that dollar deposits in the amount of each Eurodollar
Loan are not generally available in the London interbank market,
or that the rate at which dollar deposits are being offered will
not reflect adequately and fairly the cost to any Lender of
making or maintaining such Eurodollar Loan during such Interest
Period, or that reasonable means do not exist for ascertaining
the Adjusted LIBO Rate, the Agent shall as soon as practicable
thereafter give written notice (or facsimile notice promptly
confirmed in writing) of such determination to the Borrowers and
the Lenders, and any request by the Borrowers for the making of a
Eurodollar Loan pursuant to Section 2.03 hereof or conversion or
continuation of any Loan into a Eurodollar Loan pursuant to
Section 2.02 hereof shall, until the circumstances giving rise to
such notice no longer exist, be deemed to be a request for an
Alternate Base Loan. Each determination by the Agent made
hereunder shall be conclusive absent manifest error.
SECTION 2.9. Prepayment of Loans. (a) Subject to
the terms and conditions contained in this Section 2.09 and else-
where in this Agreement, the Borrowers shall have the right to
prepay any Loan at any time in whole or from time to time in part
(except in the case of a Eurodollar Loan only on the last day of
an Interest Period) without penalty (except as otherwise provided
for herein).
(b) On the date of any termination or reduction of the
Total Revolving Credit Commitment pursuant to Section 2.07(a)
hereof or elsewhere in this Agreement, the Borrowers shall pay or
prepay so much of the Revolving Credit Loans as shall be
necessary in order that the Availability equals or exceeds zero
following such termination or reduction. Any prepayments
required by this paragraph (b) shall be applied to outstanding
Revolving Credit Alternate Base Loans up to the full amount
thereof before they are applied to outstanding Revolving Credit
Eurodollar Loans; provided, however, that the Borrowers shall not
be required to make any prepayment of any Eurodollar Loan
pursuant to this Section until the last day of the Interest
Period with respect thereto so long as an amount equal to such
prepayment is deposited by the Borrowers in a cash collateral
account with the Agent to be held in such account on terms
satisfactory to the Agent.
(c) The Borrowers shall make prepayments of the
Revolving Credit Loans from time to time such that the
Availability equals or exceeds zero at all times. Any
prepayments required by this paragraph (c) shall be applied to
outstanding Revolving Credit Alternate Base Loans up to the full
amount thereof before they are applied to outstanding Revolving
Credit Eurodollar Loans; provided, however, that the Borrowers
shall not be required to make any prepayment of any Eurodollar
Loan pursuant to this Section until the last day of the Interest
Period with respect thereto so long as an amount equal to such
prepayment is deposited by the Borrowers in a cash collateral
account with the Agent to be held in such account on terms
satisfactory to the Agent.
(d) Within five (5) days of the sale of any of
tangible property subject to the Security Agreement (excluding
sales of assets in the ordinary course of business, sales of such
property not in excess of $100,000 in the aggregate during any
Fiscal Year, and sales consented to by the Agent) subject to
Section 7.05 hereof and the Security Agreement, the Borrowers
shall make a mandatory prepayment of the Term Loans in an amount
equal to 100% of the proceeds received (net of taxes due and any
reasonable expenses of sale), which proceeds shall be applied as
set forth in paragraph (f) below; provided, however, the
Borrowers may provide the Agent with notice (written or
telephonic) within the five (5) day period, that such proceeds
shall be applied within 90 days of the date of such sale to the
acquisition by the Borrowers of capital assets useful in the
business of the Borrowers and having a fair market value (as
determined in good faith by the Borrowers) at least equal to that
of the assets sold; and provided further, that the mandatory
prepayment required by this paragraph (d) shall be made on the
91st day following the notice to the Agent, unless prior to such
date the Borrowers provide the Agent with (i) a description of
the assets acquired with such proceeds, and (ii) the location(s)
where such assets will be kept, at which time, the mandatory
prepayment shall be paid as reduced by the amount of such
acquisition. Nothing contained in this paragraph (d) shall be or
be deemed to be a consent to the sale of any assets.
(e) (i) Except as provided in clause (ii) below, not
later than the five (5) days following the receipt by the Agent
or any Borrower or any subsidiary of any Borrower (x) of any net
proceeds of any insurance required to be maintained pursuant to
Section 6.03 hereof on account of each separate loss, damage or
injury in excess of $500,000 (or, if there shall be continuing an
Event of Default, of any amount of net proceeds) to any
Collateral of such Borrower or such subsidiary, or (y) of any net
proceeds of any business interruption insurance required to be
maintained pursuant to Section 6.03 hereof in excess of $500,000
(or, if there shall be continuing an Event of Default, the full
amount of net proceeds), such Borrower or subsidiary shall notify
the Agent of such receipt in writing or by telephone promptly
confirmed in writing, and not later than the day following
receipt by the Agent or such Borrower or subsidiary of any such
proceeds, there shall become due and payable a prepayment of the
Loans in an amount equal to 100% of such proceeds. Prepayments
from such net proceeds shall be applied as set forth in
paragraph (f) below.
(ii) In the case of the receipt of net proceeds
described in clause (i) above with respect to the loss, damage or
injury to any asset of a Borrower or any subsidiary of a Borrower
(other than net proceeds of any business interruption insurance),
the Borrowers may elect, by written notice delivered to the Agent
not later than the day on which a prepayment would otherwise be
required under clause (i), to apply all or a portion of such net
proceeds for the purpose of replacing, repairing, restoring or
rebuilding the relevant tangible property, and, in such event,
any required prepayment under clause (i) above shall be reduced
dollar for dollar by the amount of such election. An election
under this clause (ii) shall not be effective unless: (x) at the
time of such election there is continuing no Event of Default;
(y) the Borrowers shall have certified to the Agent that:
(1) the net proceeds of the insurance adjustment for such loss,
damage or injury, together with other funds available to the
Borrowers shall be sufficient to complete such replacement,
repair, restoration or rebuilding in accordance with all
applicable laws, regulations and ordinances; and (2) to the best
knowledge of the Borrowers, no Event of Default has arisen or
will arise as a result of such loss, damage, injury, replacement,
repair or rebuilding; and (z) if the amount of net proceeds in
question exceeds $1,000,000, the Borrowers shall have obtained
the written consent of the Required Lenders to such election.
(iii) In the event of an election under
clause (ii) above, pending application of the net proceeds to the
required replacement, repairs, restoration or rebuilding, the
Borrowers shall not later than the time at which prepayment would
have been, in the absence of such election, required under
clause (i) above, apply such net proceeds to the prepayment of
the outstanding principal balance, if any, of the Revolving
Credit Loans (not in permanent reduction of the Revolving Credit
Commitment), and deposit (the "Special Deposit") with the Agent,
the balance, if any, of such net proceeds remaining after such
application, pursuant to agreements in form, scope and substance
reasonably satisfactory to the Agent. The Special Deposit,
together with all earnings on such Special Deposit, shall be
available to the Borrowers solely for the replacement, repair,
rebuilding or restoration of the tangible property suffering the
injury, loss or damage in respect of which such prepayment and
Special Deposit were made or to such other purpose as to which
the Required Lenders may consent in writing; provided, however,
that at such time as an Event of Default shall occur, the balance
of the Special Deposit and earnings thereon may be applied by
Agent to repay the Obligations in such order as the Agent shall
elect. The Agent shall be entitled to require proof, as a
condition to the making of any withdrawal from the Special
Deposit, that the proceeds of such withdrawal are being applied
for the purposes permitted hereunder.
(f) When making a prepayment, whether mandatory or
otherwise, pursuant to paragraph (a), (b), (c), (d) or (e) above,
the Borrowers (other than as provided in Section 10.01 hereof)
shall furnish to the Agent, not later than 11:00 a.m. (New York
City time) (i) three (3) Business Days prior to the date of such
prepayment of Alternate Base Loans and (ii) five (5) Business
Days prior to the date of such prepayment of Eurodollar Loans,
written, telex or facsimile notice (promptly confirmed in
writing) of prepayment which shall specify the prepayment date
and the principal amount of each Loan (or portion thereof) to be
prepaid, which notice shall be irrevocable and shall commit the
Borrowers to prepay such Loan by the amount stated therein on the
date stated therein. All prepayments (other than as provided in
Section 10.01 hereof) shall be accompanied by accrued interest on
the principal amount being prepaid to the date of prepayment.
Prepayments made pursuant to paragraph (d) above shall be applied
first, to outstanding Term Alternate Base Loans in the inverse
order of their maturity up to the full amount thereof and then to
outstanding Term Eurodollar Loans in the inverse order of their
maturity up to the full amount thereof. Prepayments made
pursuant to paragraph (e) above from the proceeds of any
insurance on account of any loss, damage or injury to the
Collateral shall be applied as follows: (A) first, to
outstanding Term Alternate Base Loans in the inverse order of
their maturity up to the full amount thereof and then to
outstanding Term Eurodollar Loans in the inverse order of their
maturity up to the full amount thereof and, (B) second, to
outstanding Revolving Credit Alternate Base Loans up to the full
amount thereof and then to Revolving Credit Eurodollar Loans up
to the full amount thereof; provided, however, that if at the
time of the making of any prepayment in accordance with clause
(B), there are undrawn Letters of Credit outstanding, then in the
discretion of the Agent, after payment in full of the outstanding
Revolving Credit Loans, all or a portion of any remaining amount
required to be prepaid (not to exceed an amount equal to the
aggregate undrawn amount of all such outstanding Letters of
Credit) shall be deposited by the Borrowers in a cash collateral
account to be held by the Agent for the benefit of the Lenders
for application by the Agent to the payment of any drawing made
under any such Letters of Credit. Prepayments made pursuant to
paragraph (e) above from the proceeds of any business
interruption insurance shall be applied as follows: (A) first, to
outstanding Revolving Credit Alternate Base Loans up to the full
amount thereof and then to Revolving Credit Eurodollar Loans up
to the full amount thereof; provided, however, that if at the
time of the making of any prepayment in accordance with clause
(A), there are undrawn Letters of Credit outstanding, then in the
discretion of the Agent, after payment in full of the outstanding
Revolving Credit Loans, all or a portion of any remaining amount
required to be prepaid (not to exceed an amount equal to the
aggregate undrawn amount of all such outstanding Letters of
Credit) shall be deposited by the Borrowers in a cash collateral
account to be held by the Agent for the benefit of the Lenders
for application by the Agent to the payment of any drawing made
under any such Letters of Credit and, (B) second, to outstanding
Term Alternate Base Loans in the inverse order of their maturity
up to the full amount thereof and then to outstanding Term
Eurodollar Loans in the inverse order of their maturity up to the
full amount thereof. Notwithstanding the foregoing, the
Borrowers shall not be required to make any prepayment of any
Term or Revolving Credit Eurodollar Loan required pursuant to
this Section 2.09(f) until the last day of the Interest Period
with respect thereto so long as an amount equal to such prepay-
ment is deposited by the Borrowers into a cash collateral account
with the Agent to be held in such account pursuant to terms
satisfactory to the Agent.
(g) All prepayments under this Section 2.09 shall be
subject to Section 2.12 hereof.
(h) Except as otherwise expressly provided in this
Section 2.09, payments with respect to any paragraph of this
Section 2.09 are in addition to payments made or required to be
made under any other paragraph of this Section 2.09.
(i) All prepayments of the Term Loans under this
Section 2.09 shall be applied in the inverse order of the
Repayment Dates. The amount of the Term Loans prepaid may not be
reborrowed.
SECTION 2.10. Reserve Requirements; Change in
Circumstances. (a) Notwithstanding any other provision herein,
if after the date of this Agreement (or in the case of any
assignee of any Lender, the date of assignment) any change in
applicable law or regulation or in the interpretation or
administration thereof by any governmental authority charged with
the interpretation or administration thereof (whether or not
having the force of law), or any change in GAAP or regulatory
accounting principles applicable to the Agent or any Lender shall
(i) subject the Agent or any Lender (which shall for the purpose
of this Section 2.10 include any assignee or lending office of
the Agent or any Lender) to any charge, fee deduction or
withholding of any kind or to any tax with respect to any amount
paid or to be paid by either the Agent or any Lender with respect
to any Eurodollar Loans made by a Lender to the Borrowers or with
respect to the obligations of any Lender under Sections 2.17
through 2.20 hereof or under any Letter of Credit (other than
(x) taxes imposed on the overall net income of the Agent or such
Lender and (y) franchise taxes imposed on the Agent or such
Lender, in either case by the jurisdiction in which such Lender
or the Agent has its principal office or its lending office with
respect to such Eurodollar Loan or any political subdivision or
taxing authority of either thereof); (ii) change the basis of
taxation of payments to any Lender or the Agent of the principal
of or interest on any Eurodollar Loan or any other fees or
amounts payable with respect to any Letter of Credit or otherwise
hereunder (other than taxes imposed on the overall net income of
such Lender or the Agent by the jurisdiction in which such Lender
or the Agent has its principal office or by any political
subdivision or taxing authority therein); (iii) impose, modify or
deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account
of, or loans or loan commitments extended by, or Letters of
Credit issued and maintained by such Lender; or (iv) impose on
any Lender or, with respect to Eurodollar Loans, the London
interbank market, any other condition affecting this Agreement,
Letters of Credit issued and maintained by or Eurodollar Loans
made by such Lender; and the result of any of the foregoing shall
be to increase the cost to any such Lender of making or maintain-
ing any Eurodollar Loan or Letter of Credit, or to reduce the
amount of any payment (whether of principal, interest, fee,
compensation or otherwise) receivable by such Lender or to
require such Lender to make any payment in respect of any
Eurodollar Loan or Letter of Credit, then the Borrowers shall pay
to such Lender or the Agent, as the case may be, upon such
Lender's or the Agent's demand, such additional amount or amounts
as will compensate such Lender or the Agent for such additional
costs or reduction. The Agent and each Lender agree to give
notice to the Borrowers of any such change in law, regulation,
interpretation or administration with reasonable promptness after
becoming actually aware thereof and of the applicability thereof
to the Transactions. Notwithstanding anything contained herein
to the contrary, nothing in clause (i) or (ii) of this Section
2.10(a) shall be deemed to (x) permit the Agent or any Lender to
recover any amount thereunder which would not be recoverable
under Section 2.15 hereof or (y) require the Borrowers to make
any payment of any amount to the extent that such payment would
duplicate any payment made by the Borrowers pursuant to Sec-
tion 2.15 hereof.
(b) If at any time and from time to time after the
date of this Agreement, any Lender shall determine that the
adoption of any applicable law, rule, regulation or guideline
regarding capital adequacy, or any change in any applicable law,
rule, regulation or guideline regarding capital adequacy, or any
change in the interpretation or administration of any thereof by
any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or
compliance by such Lender (or its lending office) with any
request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or
comparable agency, has or will have the effect of reducing the
rate of return on such Lender's capital as a consequence of its
obligations hereunder to a level below that which such Lender
could have achieved but for such adoption, change or compliance
(taking into consideration such Lender's policies with respect to
capital adequacy), then from time to time the Borrowers shall pay
to such Lender such additional amount or amounts as will
compensate such Lender for such reduction. Each Lender agrees to
give notice to the Borrowers of any adoption of, change in, or
change in interpretation or administration of, any such law,
rule, regulation or guideline with reasonable promptness after
becoming actually aware thereof and of the applicability thereof
to the Transactions.
(c) A statement of any Lender or the Agent setting
forth such amount or amounts, supported by calculations in
reasonable detail, as shall be necessary to compensate such
Lender (or the Agent) as specified in paragraphs (a) and (b)
above shall be delivered to the Borrowers and shall be conclusive
absent manifest error. The Borrowers shall pay each Lender or
the Agent the amount shown as due on any such statement within
ten (10) days after its receipt of the same.
(d) Failure on the part of any Lender or the Agent to
demand compensation for any increased costs, reduction in amounts
received or receivable with respect to any Interest Period or any
Letter of Credit or reduction in the rate of return earned on
such Lender's capital, shall not constitute a waiver of such
Lender's or the Agent's rights to demand compensation for any
increased costs or reduction in amounts received or receivable or
reduction in rate of return in such Interest Period or in any
other Interest Period or with respect to such Letter of Credit.
The protection under this Section 2.10 shall be available to each
Lender and the Agent regardless of any possible contention of the
invalidity or inapplicability of any law, regulation or other
condition which shall give rise to any demand by such Lender or
the Agent for compensation.
(e) Any Lender claiming any additional amounts payable
pursuant to this Section 2.10 agrees to use its best efforts
(consistent with legal and regulatory restrictions) to designate
a different Applicable Lending Office if the making of such a
designation would avoid the need for, or reduce the amount of,
any such additional amounts and would not, in the reasonable
judgment of such Lender, be otherwise materially disadvantageous
to such Lender.
SECTION 2.11. Change in Legality. (a) Notwith-
standing anything to the contrary herein contained, if any change
in any law or regulation or in the interpretation thereof by any
governmental authority charged with the administration or inter-
pretation thereof shall make it unlawful for any Lender to make
or maintain any Eurodollar Loan or to give effect to its obliga-
tions to make Eurodollar Loans as contemplated hereby, then, by
written notice to Borrowers and to the Agent, such Lender may:
(i) declare that Eurodollar Loans will not
thereafter be made by such Lender hereunder, whereupon
the Borrowers shall be prohibited from requesting
Eurodollar Loans from such Lender hereunder unless such
declaration is subsequently withdrawn; and
(ii) require that all outstanding Eurodollar
Loans, as the case may be, made by it be converted to
Alternate Base Loans, in which event (A) all such
Eurodollar Loans shall be automatically converted to
Alternate Base Loans as of the effective date of such
notice as provided in paragraph (b) below and (B) all
payments of principal which would otherwise have been
applied to repay the converted Eurodollar Loans shall
instead be applied to repay the Alternate Base Loans
resulting from the conversion of such Eurodollar Loans.
(b) For purposes of Section 2.11(a) hereof, a notice
to the Borrowers by any Lender shall be effective, if lawful, on
the last day of the then current Interest Period or, if there are
then two or more current Interest Periods, on the last day of
each such Interest Period, respectively; otherwise, such notice
shall be effective with respect to the Borrowers on the date of
receipt by the Borrowers.
SECTION 2.12. Indemnity. The Borrowers shall
indemnify the Agent and each Lender against any loss or
reasonable expense (including, but not limited to, any loss or
reasonable expense sustained or incurred or to be sustained or
incurred by reason of or in connection with the execution and
delivery or assignment of, or payment under, any Letter of
Credit, or in liquidating or employing deposits from third
parties acquired to affect or maintain any Loan or part thereof
as a Eurodollar Loan) which the Agent or such Lender may sustain
or incur as a consequence of the following events (regardless of
whether such events occur as a result of the occurrence of an
Event of Default or the exercise of any right or remedy of the
Agent or the Lenders under this Agreement or any other agreement,
or at law): any failure of the Borrowers to fulfill on the date
of any Credit Event the applicable conditions set forth in
Article V hereof applicable to it; any failure of the Borrowers
to borrow hereunder after irrevocable notice of borrowing
pursuant to Section 2.03 hereof has been given; any payment,
prepayment or conversion of a Eurodollar Loan on a date other
than the last day of the relevant Interest Period; any default in
payment or prepayment of the principal amount of any Loan or any
part thereof or interest accrued thereon, or with respect to any
Letter of Credit as and when due and payable (at the due date
thereof, by irrevocable notice of prepayment or otherwise); or
the occurrence of an Event of Default. Without limiting the
foregoing, the Borrowers further agree to indemnify and hold
harmless the Agent, each Lender as well as their respective
officers and directors, each person who controls the Agent or
Lender within the meaning of Section 15 of the Securities Act of
1933 or any applicable state securities law and their respective
successors, from and against any and all claims, damages, losses,
liabilities, costs or expenses, joint or several, to which they
or any of them may become subject under any Federal or state
securities law, rule or regulation, at common law or otherwise,
insofar as such claims, damages, losses, liabilities, costs or
expenses arise out of or are based upon the execution and
delivery by the Agent or any Lender of any Letter of Credit or
the execution and delivery of any other document in connection
therewith. Such loss or reasonable expense shall include,
without limitation, an amount equal to the excess, if any, of
(i) the amount of interest which would have accrued on the
principal or other amount so paid, prepaid or converted or not
borrowed for the period from the date of such payment, prepayment
or conversion or failure to borrow to, in the case of a Loan, the
last day of the Interest Period for such Loan (or, in the case of
a failure to borrow, the Interest Period for such Loan which
would have commenced on the date of such failure to borrow), at
the applicable rate of interest for such Loan provided for herein
over (ii) the amount of interest (as reasonably determined by
such Lender) that would be realized by such Lender in reemploying
the funds so paid, prepaid or converted or not borrowed in United
States Treasury obligations with comparable maturities for
comparable periods. Any such Lender shall provide to the
Borrowers a statement, signed by an officer of such Lender,
explaining any loss or expense and setting forth, if applicable,
the computation pursuant to the preceding sentence, and such
statement shall be conclusive absent manifest error. The
Borrowers shall pay such Lender the amount shown as due on any
such statement within ten (10) days after the receipt of the
same. The indemnities contained herein shall survive the
expiration or termination of this Agreement and of the Letters of
Credit.
SECTION 2.13. Pro Rata Treatment. (a) Except as
permitted under Section 2.11 hereof, each borrowing, each payment
or prepayment of principal of the Notes, each payment of interest
on the Notes, each payment of any fee or other amount payable
hereunder and each reduction of the Total Revolving Credit
Commitment and Total Term Loan Commitment shall be made pro rata
among the Lenders in the proportions that their Revolving Credit
Commitments bear to the Total Revolving Credit Commitment or that
their Term Loan Commitments bears to the Total Term Loan
Commitment, as the case may be.
(b) Unless the Agent shall have been notified in
writing by any Lender prior to the date of a proposed borrowing
that such Lender will not make the amount that would constitute
its pro rata share of the borrowing on such date available to the
Agent, the Agent may assume that such Lender has made such amount
available to the Agent on such date, and the Agent may, in
reliance upon such assumption, make available to the Borrowers a
corresponding amount. If such amount is made available to the
Agent on a date after such borrowing date, such Lender shall pay
to the Agent on demand an amount equal to the product of (i) the
daily average Federal funds rate during such period as quoted by
the Agent, times (ii) the amount of such Lender's pro rata share
of such borrowing, times (iii) a fraction the numerator of which
is the number of days that elapse from and including such
borrowing date to the date on which such Lender's pro rata share
of such borrowing shall have become immediately available to the
Agent and the denominator of which is 360. A certificate of the
Agent submitted to any Lender with respect to any amounts owing
under this subsection shall be conclusive in the absence of
manifest error. If such Lender's pro rata share of such
borrowing is not in fact made available to the Agent by such
Lender within three Business Days of such borrowing date, the
Agent shall be entitled to recover such amount with interest
thereon at the rate per annum applicable to the Loans hereunder,
on demand, from the Borrowers.
SECTION 2.14. Sharing of Setoffs. Each Lender agrees
that if it shall, through the exercise of a right of banker's
lien, setoff or counterclaim against the Borrowers, including,
but not limited to, a secured claim under Section 506 of Title 11
of the United States Code or other security or interest arising
from, or in lieu of, such secured claim, received by such Lender
under any applicable bankruptcy, insolvency or other similar law
or otherwise, obtain payment (voluntary or involuntary) in
respect of a Note held by it as a result of which the unpaid
principal portion of the Notes held by it shall be
proportionately less than the unpaid principal portion of the
Notes held by any other Lender, it shall be deemed to have
simultaneously purchased from such other Lender a participation
in the Notes held by such other Lender, so that the aggregate
unpaid principal amount of the Notes and participations in Notes
held by it shall be in the same proportion to the aggregate
unpaid principal amount of all Notes then outstanding as the
principal amount of the Notes held by it prior to such exercise
of banker's lien, setoff or counterclaim was to the principal
amount of all Notes outstanding prior to such exercise of
banker's lien, setoff or counterclaim; provided, however, that if
any such purchase or purchases or adjustments shall be made
pursuant to this Section 2.14 and the payment giving rise thereto
shall thereafter be recovered, such purchase or purchases or
adjustments shall be rescinded to the extent of such recovery and
the purchase price or prices or adjustments restored without
interest. The Borrowers expressly consent to the foregoing
arrangements and agree that any Lender holding a participation in
a Note deemed to have been so purchased may exercise any and all
rights of banker's lien, setoff or counterclaim with respect to
any and all moneys owing by the Borrowers to such Lender as fully
as if such Lender held a Note in the amount of such
participation.
SECTION 2.15. Taxes. (a) Any and all payments by the
Borrowers hereunder shall be made, in accordance with Sec-
tion 2.16 hereof, free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions,
charges or withholdings in any such case imposed by the United
States or any political subdivision thereof, excluding:
(i) in the case of the Agent and each Lender,
taxes imposed or based on its net income, and franchise
or capital taxes imposed on it, (A) if the Agent or
such Lender is organized under the laws of the United
States or any political subdivision thereof and (B) if
the Agent or such Lender is not organized under the
laws of the United States or any political subdivision
thereof, and its principal office or Applicable Lending
Office is located in the United States, and in the case
of both (A) and (B), withholding taxes payable with
respect to payments to the Agent or such Lender at its
principal office or Applicable Lending Office under
laws (including, without limitation, any treaty,
ruling, determination or regulation) in effect on the
date hereof, but not any increase in withholding tax
resulting from any subsequent change in such laws
(other than withholding with respect to taxes imposed
or based on its net income or with respect to franchise
or capital taxes), and
(ii) taxes (including withholding taxes) imposed
by reason of the failure of the Agent or any Lender, in
either case that is organized outside the United
States, to comply with Section 2.15(f) hereof (or the
inaccuracy at any time of the certificates, documents
and other evidence delivered thereunder)
(all such nonexcluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred
to as "Taxes"). If the Borrowers shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder
to the Lenders or the Agent, (x) the sum payable shall be
increased by the amount necessary so that after making all
required deductions (including without limitation deductions
applicable to additional sums payable under this Section 2.15)
such Lender or the Agent (as the case may be) receives an amount
equal to the sum it would have received had no such deductions
been made, (y) the Borrowers shall make such deductions and
(z) the Borrowers shall pay the full amount deducted to the
relevant tax authority or other authority in accordance with
applicable law.
(b) In addition, the Borrowers agree to pay any
present or future stamp or documentary taxes or any other excise
or property taxes, charges or similar levies which arise from any
payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement
(hereinafter referred to as "Other Taxes").
(c) The Borrowers will indemnify each Lender and the
Agent for the full amount of Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed by any
jurisdiction (except as specified in clauses (a)(i) and (ii)) on
amounts payable under this Section 2.15) paid by such Lender or
the Agent (as the case may be) and any liability (including
penalties, interest and expenses which are not the result of the
gross negligence or willful misconduct of the Agent or any
Lender) arising therefrom or with respect thereto. This
indemnification shall be made within 30 days from the date such
Lender or the Agent (as the case may be) makes written demand
therefor. If any Lender receives a refund in respect of any
Taxes or Other Taxes for which such Lender has received payment
from the Borrowers hereunder, such Lender shall promptly notify
the Borrowers of such refund and such Lender shall, within 30
days of receipt of a request by the Borrowers, repay such refund
to the Borrowers, provided that the Borrowers, upon the request
of such Lender, agree to return such refund (plus any penalties,
interest or other charges) to such Lender in the event such
Lender is required to repay such refund.
(d) Within 30 days after the date of any payment of
Taxes or Other Taxes withheld by the Borrowers in respect of any
payment to any Lender, the Borrowers will furnish to the Agent,
at its address referred to in Section 11.01 hereof, such certifi-
cates, receipts and other documents as may be reasonably required
to evidence payment thereof.
(e) Without prejudice to the survival of any other
agreement hereunder, the agreements and obligations contained in
this Section 2.15 shall survive the payment in full of principal
and interest hereunder.
(f) Each Lender that is organized outside of the
United States shall deliver to the Borrowers on the date hereof
(or, in the case of an assignee, on the date of the assignment)
and from time to time as required for renewal under applicable
law duly completed copies of United States Internal Revenue
Service Form 1001 or 4224 (or any successor or additional forms),
as appropriate, indicating in each case that such Lender is
entitled to receive payments under this Agreement without any
deduction or withholding of any United States federal income
taxes. The Agent (if the Agent is an entity organized outside
the United States) and each Lender that is organized outside the
United States shall promptly notify the Borrowers and the Agent
of any change in its Applicable Lending Office and upon written
request of the Borrowers such Lender shall, prior to the
immediately following due date of any payment by the Borrowers or
any Guarantor hereunder or under any other Loan Document, deliver
to the Borrowers or such Guarantor, as the case may be (with
copies to the Agent), such certificates, documents or other
evidence, as required by the Code or Treasury Regulations issued
pursuant thereto, including without limitation Internal Revenue
Service Form 4224, Form 1001 and any other certificate or
statement of exemption required by Treasury Regulation Sec-
tion 1.1441-4(a) or Section 1.1441-6(c) or any subsequent version
thereof, properly completed and duly executed by such Lender
establishing that such payment is (i) not subject to withholding
under the Code because such payment is effectively connected with
the conduct by such Lender of a trade or business in the United
States or (ii) totally exempt from United States tax under a
provision of an applicable tax treaty. The Borrowers shall be
entitled to rely on such forms in their possession until receipt
of any revised or successor form pursuant to this Section
2.15(f). If the Agent or a Lender fails to provide a certifi-
cate, document or other evidence required pursuant to this Sec-
tion 2.15(f), then (i) the Borrowers shall be entitled to deduct
or withhold on payments to the Agent or such Lender as a result
of such failure, as required by law, and (ii) the Borrowers shall
not be required to make payments of additional amounts with
respect to such withheld Taxes pursuant to clause (x) of Sec-
tion 2.15(a) to the extent such withholding is required solely by
reason of the failure of the Agent or such Lender to provide the
necessary certificate, document or other evidence.
(g) Each Lender and the Agent shall use its best
efforts to avoid or minimize any amounts which might otherwise be
payable pursuant to this subsection 2.15 (including seeking
refunds of any amounts that are reasonably believed not to have
been correctly or legally asserted); provided, however, that such
efforts shall not include the taking of any actions by such
Lender or the Agent that would result in any tax, costs or other
expense to such Lender or the Agent (other than a tax, cost or
other expense for which such Lender or the Agent shall have been
reimbursed or indemnified by the Borrowers pursuant to this
Agreement or otherwise) or any action which would or might in the
reasonable opinion of such Lender or the Agent have an adverse
effect upon its business, operations or financial condition or
otherwise be disadvantageous to such Lender or the Agent.
SECTION 2.16. Payments and Computations. The
Borrowers shall make each payment hereunder and under any
instrument delivered hereunder not later than 12:00 noon (New
York City time) on the day when due in lawful money of the United
States (in freely transferable dollars) to the Agent at its
offices at 633 Third Avenue, New York, New York 10017-6764 for
the account of the Lenders, in immediately available funds. The
Agent may charge, when due and payable, the Borrowers' account
with the Agent for all interest, principal and Commitment Fees or
other fees owing to the Agent or the Lenders on or with respect
to this Agreement and/or the Loans and other Loan Documents. If
at any time there is not sufficient availability to cover any of
the payments referred to in the prior sentence, and in any event
upon the occurrence of any Event of Default, the Borrowers shall
make any such payments upon demand.
SECTION 2.17. Issuance of Letters of Credit. Upon the
request of the Borrowers, and subject to the conditions set forth
in Article V hereof and such other conditions to the opening of
Letters of Credit as the Agent requires of its customers
generally, the Agent shall from time to time open standby and
commercial letters of credit (each, a "Letter of Credit") for the
account of the Borrowers, the aggregate undrawn amount of all
outstanding Letters of Credit not at any time to exceed
$3,000,000; provided however that the face amount of any Letter
of Credit that the Borrowers may request the Agent to open at any
time shall not exceed the lesser of (A) the Total Revolving
Credit Commitment at such time (as such may have been reduced in
accordance with the terms of this Agreement) minus the unpaid
principal amount of all Revolving Credit Loans outstanding at
such time minus the undrawn amount of all outstanding Letters of
Credit at such time, and (B) the Borrowing Base at such time
minus the unpaid principal amount of all Revolving Credit Loans
outstanding at such time minus the undrawn amount of all
outstanding Letters of Credit at such time. The issuance of each
Letter of Credit shall be made on at least 5 Business Days' prior
written notice from the Borrowers to the Agent, at its Domestic
Lending Office, which written notice shall be an application for
a Letter of Credit on the Agent's customary form. The expiration
date of any (i) commercial Letter of Credit shall not be later
than six (6) months from the date of issuance thereof and (ii)
standby Letter of Credit shall not be more than twelve (12)
months from the date of issuance thereof, and, in any event, no
Letter of Credit shall have an expiration date later than the
Revolving Credit Termination Date. The Letters of Credit shall
be issued with respect of transactions occurring in the ordinary
course of business of the Borrowers.
SECTION 2.18. Payment of Letters of Credit;
Reimbursement. Upon the issuance of any Letter of Credit, the
Agent shall notify each Lender of the principal amount, the
number, and the expiration date thereof and the amount of such
Lender's participation therein. By the issuance of a Letter of
Credit hereunder and without further action on the part of the
Agent or the Lenders, each Lender hereby accepts from the Agent a
participation (which participation shall be nonrecourse to the
Agent) in such Letter of Credit equal to such Lender's pro rata
(based on its Revolving Credit Commitment) share of such Letter
of Credit, effective upon the issuance of such Letter of Credit.
Each Lender hereby absolutely and unconditionally assumes, as
primary obligor and not as a surety, and agrees to pay and
discharge, and to indemnify and hold the Agent harmless from
liability in respect of, such Lender's pro rata share of the
amount of any drawing under a Letter of Credit. Each Lender
acknowledges and agrees that its obligation to acquire
participations in each Letter of Credit issued by the Agent and
its obligation to make the payments specified herein, and the
right of the Agent to receive the same, in the manner specified
herein, are absolute and unconditional and shall not be affected
by any circumstance whatsoever, including, without limitation,
the occurrence and continuance of a Default or an Event of
Default hereunder, and that each such payment shall be made
without any offset, abatement, withholding or reduction
whatsoever. The Agent shall review, on behalf of the Lenders,
each draft and any accompanying documents presented under a
Letter of Credit and shall notify each Lender of any such
presentment. Promptly after it shall have ascertained that any
draft and any accompanying documents presented under such Letter
of Credit appear on their face to be in substantial conformity
with the terms and conditions of the Letter of Credit, the Agent
shall give telephonic or facsimile notice to the Lenders and the
Borrowers of the receipt and amount of such draft and the date on
which payment thereon will be made, and the Lenders shall, by
11:00 A.M., New York City time on the date such payment is to be
made, pay the amounts required to the Agent in New York, New York
in immediately available funds, and the Agent, not later than
3:00 p.m. on such day, shall make the appropriate payment to the
beneficiary of such Letter of Credit. If the Lenders shall pay
any draft presented under a Letter of Credit, then the Agent, on
behalf of the Lenders, shall charge the general deposit account
of the Borrowers with the Agent for the amount thereof, together
with the Agent's customary overdraft fee in the event the funds
available in such account shall not be sufficient to reimburse
the Lenders for such payment and the Borrowers shall not
otherwise have discharged such reimbursement obligation by
11:00 a.m., New York City time, on the date of such payment. If
the Lenders have not been reimbursed with respect to such drawing
as provided above, the Borrowers shall pay to the Agent, for the
account of the Lenders, the amount of the drawing together with
interest on such amount at a rate per annum (computed on the
basis of the actual number of days elapsed over a year of
360 days) equal to the rate applicable to Alternate Base Loans
hereunder plus two percent (2%), payable on demand. The
obligations of the Borrowers under this Section 2.18 to reimburse
the Lenders and the Agent for all drawings under Letters of
Credit shall be joint and several, absolute, unconditional and
irrevocable and shall be satisfied strictly in accordance with
their terms, irrespective of:
(a) any lack of validity or enforceability of any
Letter of Credit;
(b) the existence of any claim, setoff, defense or
other right which the Borrowers or any other person may at
any time have against the beneficiary under any Letter of
Credit, the Agent or any Lender (other than the defense of
payment in accordance with the terms of this Agreement or a
defense based on the gross negligence or willful misconduct
of the Agent or any Lender) or any other person in connec-
tion with this Agreement or any other transaction;
(c) any draft or other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect;
(d) payment by the Agent or any Lender under any
Letter of Credit against presentation of a draft or other
document which does not comply with the terms of such Letter
of Credit; and
(e) any other circumstance or event whatsoever,
whether or not similar to any of the foregoing.
It is understood that in making any payment under any
Letter of Credit (x) the Agent's and any Lender's exclusive
reliance on the documents presented to it under such Letter of
Credit as to any and all matters set forth therein, including,
without limitation, reliance on the amount of any draft presented
under such Letter of Credit, whether or not the amount due to the
beneficiary equals the amount of such draft and whether or not
any document presented pursuant to such Letter of Credit proves
to be insufficient in any respect, if such document on its face
appears to be in order, and whether or not any other statement or
any other document presented pursuant to such Letter of Credit
proves to be forged or invalid or any statement therein proves to
be inaccurate or untrue in any respect whatsoever and (y) any
noncompliance in any immaterial respect of the documents
presented under such Letter of Credit with the terms thereof
shall, in each case, not be deemed willful misconduct or gross
negligence of the Agent or any Lender.
SECTION 2.19. Agent's Actions with respect to Letters
of Credit. Any Letter of Credit may, in the discretion of the
Agent or its correspondents, be interpreted by them (to the
extent not inconsistent with such Letter of Credit) in accordance
with the Uniform Customs and Practice for Documentary Credits of
the International Chamber of Commerce, as adopted or amended from
time to time, or any other rules, regulations and customs
prevailing at the place where any Letter of Credit is available
or the drafts are drawn or negotiated. The Agent and its
correspondents may accept and act upon the name, signature, or
act of any party purporting to be the executor, administrator,
receiver, trustee in bankruptcy, or other legal representative of
any party designated in any Letter of Credit in the place of the
name, signature, or act of such party.
SECTION 2.20. Letter of Credit Fees. The Borrowers
agree to pay to the Agent for the ratable benefit of the Lenders
with respect to each (i) standby Letter of Credit, a letter of
credit fee equal to two percent (2%) of the face amount thereof
per annum payable to the Agent at its Domestic Lending Office
quarterly in advance in immediately available funds and (ii)
commercial Letter of Credit, a letter of credit fee equal to
(x) one-half of one percent (1/2%) of the face amount thereof with
respect to any commercial Letter of Credit with an expiration
date of not more than 90 days from the date of issuance thereof
or (y) with respect to any commercial Letter of Credit with an
expiration date of more than 90 days from the date of issuance
thereof, a fee on the face amount thereof equal to the product of
two percent (2%) multiplied by a fraction having a numerator
equal to the number of days such letter of credit is to be
outstanding and a denominator of three hundred sixty (360), in
each case payable to the Agent at its Domestic Lending Office on
the date of issuance of such commercial Letter of Credit in
immediately available funds. The Agent shall disburse to each
Lender such Lender's pro rata share of any payment of the Letter
of Credit fees referred to in the prior sentence in immediately
available funds within two (2) Business Days of the last day of
the month during which the Agent received any such payment. The
Borrowers shall also pay to the Agent at its Domestic Lending
Office for the Agent's own account, issuance, processing
amendment and other standard fees charged by the Agent for such
transactions.
III. COLLATERAL SECURITY
SECTION 3.1. Security Documents. The Obligations
shall be secured by the Collateral described in the Security
Documents and are entitled to the benefits thereof. The
Borrowers shall duly execute and deliver the Security Documents,
all consents of third parties necessary to permit the effective
granting of the Liens created in such agreements, financing
statements pursuant to the Uniform Commercial Code and other
documents, all in form and substance satisfactory to the Agent,
as may be reasonably required by the Agent to grant to the
Lenders a valid, perfected and enforceable first priority Lien on
and security interest in (subject only to the Liens permitted
under Section 7.01 hereof) the Collateral.
SECTION 3.2. Filing and Recording. The Borrowers
shall, at their sole cost and expense, cause all instruments and
documents given as evidence of security pursuant to this Agree-
ment to be duly recorded and/or filed or otherwise perfected in
all places necessary, in the opinion of the Agent, and take such
other actions as the Agent may reasonably request, in order to
perfect and protect the Liens of the Agent and Lenders in the
Collateral. The Borrowers, to the extent permitted by law,
hereby authorize the Agent to file any financing statement in
respect of any Lien created pursuant to the Security Documents
which may at any time be required or which, in the opinion of the
Agent, may at any time be desirable although the same may have
been executed only by the Agent or, at the option of the Agent,
to sign such financing statement on behalf of the Borrowers and
file the same, and the Borrowers hereby irrevocably designate the
Agent, its agents, representatives and designees as its agent and
attorney-in-fact for this purpose. In the event that any re-
recording or refiling thereof (or the filing of any statements of
continuation or assignment of any financing statement) is
required to protect and preserve such Lien, the Borrowers shall,
at the Borrowers' cost and expense, cause the same to be recorded
and/or refiled at the time and in the manner requested by the
Agent.
IV. REPRESENTATIONS AND WARRANTIES
Each of the Borrowers and each of the Guarantors
jointly and severally represents and warrants to each of the
Lenders that both before and after giving effect to the
consummation of the Transactions (including, without limitation,
under the Acquisition Documents):
SECTION 4.1. Organization, Legal Existence. Each
Borrower and its subsidiaries is a legal entity duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its organization, has the requisite power and
authority to own its property and assets and to carry on its
business as now conducted and as currently proposed to be
conducted and is qualified to do business in every jurisdiction
where such qualification is required (all such jurisdictions
being listed in Schedule 4.01 annexed hereto). Each of the
Borrowers has the corporate power to execute, deliver and perform
its obligations under this Agreement and the other Loan Documents
to which it is a party, and to borrow hereunder and to execute
and deliver the Notes.
SECTION 4.2. Authorization. The execution, delivery
and performance by each of the Borrowers of this Agreement and
each of the other Loan Documents to which it is a party, the
borrowings hereunder by the Borrowers, the execution and delivery
by the Borrowers of the Notes, the grant of security interests in
the Collateral created by the Security Documents and the
transactions contemplated to occur under or in connection with
the Acquisition Documents (collectively, the "Transactions")
(a) have been duly authorized by all requisite corporate and, if
required, stockholder action and (b) will not (i) violate (A) any
provision of law, statute, rule or regulation or the certificate
or articles of incorporation or other applicable constitutive
documents or the by-laws of the Borrowers, or their respective
subsidiaries, as the case may be, (B) any order of any court, or
any rule, regulation or order of any other agency of government
binding upon the Borrowers, or their respective subsidiaries, or
(C) any provisions of any material indenture, agreement or other
instrument to which the Borrowers, or their respective
subsidiaries, or any of their respective properties or assets are
or may be bound, (ii) be in conflict with, result in a breach of
or constitute (alone or with notice or lapse of time or both) a
default under any material indenture, agreement or other
instrument referred to in (b)(i)(C) above or (iii) result in the
creation or imposition of any Lien of any nature whatsoever
(other than in favor of the Agent, for the benefit of the
Lenders, as contemplated by this Agreement and the Security
Documents) upon any property or assets of the Borrowers, or their
respective subsidiaries.
SECTION 4.3. Governmental Approvals. No registration
or filing (other than the filings necessary to perfect the Liens
created by the Security Documents) with consent or approval of,
or other action by, any Federal, state or other governmental
agency, authority or regulatory body is or will be required in
connection with the Transactions, other than any which have been
made or obtained.
SECTION 4.4. Binding Effect. This Agreement and each
of the other Loan Documents to which it is a party constitutes,
and each of the Notes when duly executed and delivered will
constitute, a legal, valid and binding obligation of the
Borrowers enforceable in accordance with its terms.
SECTION 4.5. Material Adverse Change. Except as set
forth in Schedule 4.05 annexed hereto, there has been no material
adverse change in the business, assets, operations or financial
condition of (i) Isolyser or any of its subsidiaries since
December 31, 1995 or (ii) Microtek or any of its subsidiaries
since November 30, 1995.
SECTION 4.6. Litigation; Compliance with Laws; etc.
(a) Except as set forth in Schedule 4.06(a) annexed hereto,
there are not any actions, suits or proceedings at law or in
equity or by or before any governmental instrumentality or other
agency or regulatory authority now pending or, to the knowledge
of any Responsible Officer of any Borrower overtly threatened by
written communication against or affecting any Borrower or any of
its subsidiaries or the businesses, assets or rights of any
Borrower or any of its subsidiaries (i) which involve any of the
Transactions or (ii) as to which it is probable (within the
meaning of Statement of Financial Accounting Standards No. 5)
that there will be an adverse determination and which, if
adversely determined, would, individually or in the aggregate,
materially impair the ability of any Borrower to conduct business
substantially as now conducted, or have a Material Adverse
Effect.
(b) Except as set forth in Schedule 4.06(b) annexed
hereto, no Borrower or subsidiary thereof is in violation of any
law, or in default with respect to any judgment, writ,
injunction, decree, rule or regulation of any court or
governmental agency or instrumentality which could reasonably be
expected to have a Material Adverse Effect.
SECTION 4.7. Financial Statements. (a) The Borrowers
have heretofore furnished to the Agent Consolidated balance
sheets and statements of income and cash flows of (w) Isolyser
dated as of December 31, 1995 and (x) Microtek dated as of
November 30, 1995, each audited by and accompanied by the opinion
of independent public accountants and (y) Isolyser dated as of
June 30, 1996 and (z) Microtek dated as of May 31, 1996, each
prepared by management for the six months period then ended.
Such balance sheets and statements of income and cash flows
present fairly the Consolidated financial condition and results
of operations of the applicable person and its subsidiaries as of
the dates and for the periods indicated, and such balance sheets
and the notes thereto disclose all material liabilities, direct
or contingent, of such person and its subsidiaries, as of the
dates thereof.
(b) The Borrowers have heretofore furnished to the
Agent quarterly in the case of Fiscal Years ending December 31,
1996 and December 31, 1997 and annually for the next two Fiscal
Years projected income statements, balance sheets and cash flows
of the Borrowers on a Consolidated basis, together with a
schedule confirming the ability of the Borrowers to consummate
the Transactions and demonstrating prospective compliance with
all financial covenants contained in this Agreement, such
projections disclosing all assumptions made by Borrowers in
formulating such projections and giving effect to the
Transactions. The projections are based upon reasonable
estimates and assumptions, all of which are reasonable in light
of the conditions which existed at the time the projections were
made, have been prepared on the basis of the assumptions stated
therein, and reflect as of the Closing Date the reasonable
estimate of the Borrowers of the results of operations and other
information projected therein.
(c) The financial statements referred to in this
Section 4.07 have been prepared in accordance with GAAP.
SECTION 4.8. Federal Reserve Regulations. (a) No
Borrower or subsidiary thereof is engaged principally, or as one
of its important activities, in the business of extending credit
for the purpose of purchasing or carrying Margin Stock.
(b) No part of the proceeds of the Loans will be used,
whether directly or indirectly, and whether immediately, inciden-
tally or ultimately, (i) to purchase or carry Margin Stock or to
extend credit to others for the purpose of purchasing or carrying
Margin Stock or to refund indebtedness originally incurred for
such purpose, or (ii) for any purpose which entails a violation
of, or which is inconsistent with, the provisions of the Regula-
tions of the Board, including, without limitation, Regulation G,
T, U or X thereof. If requested by any Lender, the Borrowers or
any subsidiary of any thereof shall furnish to such Lender a
statement on Federal Reserve Form U-1 referred to in said
Regulation U.
SECTION 4.9. Taxes. The Borrowers and each of their
respective subsidiaries has filed or caused to be filed all
Federal, state, local and foreign tax returns which are required
to be filed by it, on or prior to the date hereof, other than tax
returns in respect of taxes that (x) are not franchise, capital
or income taxes, (y) in the aggregate are not material and (z)
would not, if unpaid, result in the imposition of any material
Lien on any property or assets of any Borrower or any its
subsidiaries. Each Borrower and each of its subsidiaries has
paid or caused to be paid all taxes shown to be due and payable
on such filed returns or on any assessments received by it, other
than (i) any taxes or assessments the validity of which such
Borrower or such subsidiary is contesting in good faith by
appropriate proceedings, and with respect to which the Borrower
or such subsidiary shall, to the extent required by GAAP have set
aside on its books adequate reserves and (ii) taxes other than
income, capital or franchise taxes that in the aggregate are not
material and which would not, if unpaid, result in the imposition
of any material Lien on any property or assets of any Borrower or
any of its subsidiaries. Except as set forth on Schedule
4.06(a), (i)no Federal income tax returns of any Borrower or any
of its subsidiaries have been audited by the United States
Internal Revenue Service and (ii)no Borrower or subsidiary
thereof has as of the date hereof requested or been granted any
extension of time to file any Federal, state, local or foreign
tax return, other than in the ordinary course of business. None
of the Borrowers or their subsidiaries are party to or have any
obligation under any tax sharing agreement.
SECTION 4.10. Employee Benefit Plans. With respect to
the provisions of ERISA:
(i) No Reportable Event has occurred or is continuing
with respect to any Pension Plan.
(ii) No prohibited transaction (within the meaning of
Section 406 of ERISA or Section 4975 of the Code) has occurred
with respect to any Plan subject to Part 4 of Subtitle B of
Title I of ERISA.
(iii) None of the Borrowers or any ERISA Affiliate is
now, or has been during the preceding five years, obligated to
contribute to a Pension Plan or a Multiemployer Plan. None of
the Borrowers or any ERISA Affiliate has (A) ceased operations at
a facility so as to become subject to the provisions of Section
4062(e) of ERISA, (B) withdrawn as a substantial employer so as
to become subject to the provisions of Section 4063 of ERISA,
(C) ceased making contributions to any Pension Plan subject to
the provisions of Section 4064(a) of ERISA to which the
Borrowers, any subsidiary or any ERISA Affiliate made
contributions, (D) incurred or caused to occur a "complete
withdrawal" (within the meaning of Section 4203 of ERISA) or a
"partial withdrawal" (within the meaning of Section 4205 of
ERISA) from a Multiemployer Plan that is a Pension Plan so as to
incur withdrawal liability under Section 4201 of ERISA (without
regard to subsequent reduction or waiver of such liability under
Section 4207 or 4208 of ERISA), or (E) been a party to any
transaction or agreement under which the provisions of Sec-
tion 4204 of ERISA were applicable.
(iv) No notice of intent to terminate a Pension Plan
has been filed, nor has any Plan been terminated pursuant to the
provisions of Section 4041(e) of ERISA.
(v) The PBGC has not instituted proceedings to
terminate (or appoint a trustee to administer) a Pension Plan and
no event has occurred or condition exists which might constitute
grounds under the provisions of Section 4042 of ERISA for the
termination of (or the appointment of a trustee to administer)
any such Plan.
(vi) With respect to each Pension Plan that is subject
to the provisions of Title I, Subtitle B, Part 3 of ERISA, the
funding method used in connection with such Plan is acceptable
under ERISA, and the actuarial assumptions and methods used in
connection with funding such Pension Plan satisfy the require-
ments of Section 302 of ERISA. The assets of each such Pension
Plan (other than the Multiemployer Plans) are at least equal to
the present value of the greater of (i) accrued benefits (both
vested and non-vested) under such Plan, or (ii) "benefit
liabilities" (within the meaning of Section 4001(a)(16) of ERISA)
under such Plan, in each case as of the latest actuarial
valuation date for such Plan (determined in accordance with the
same actuarial assumptions and methods as those used by the
Plan's actuary in its valuation of such Plan as of such valuation
date). No such Pension Plan has incurred any "accumulated
funding deficiency" (as defined in Section 412 of the Code),
whether or not waived.
(vii) There are no actions, suits or claims pending
(other than routine claims for benefits) or, to the knowledge of
the Borrowers or any ERISA Affiliate, which could reasonably be
expected to be asserted, against any Plan or the assets of any
such Plan, which, if adversely determined, could reasonably be
expected to have a Material Adverse Effect. No civil or criminal
action brought pursuant to the provisions of Title I, Subtitle B,
Part 5 of ERISA is pending or threatened against any fiduciary or
any Plan which, if adversely determined, could reasonably be
expected to have a Material Adverse Effect. None of the Plans or
any fiduciary thereof (in its capacity as such) has been the
direct or indirect subject of any audit, investigation or
examination by any governmental or quasi-governmental agency
which, if adversely determined, could reasonably be expected to
have a Material Adverse Effect.
(viii) All of the Plans comply currently, and have
complied in the past, both as to form and operation, with their
terms and with the provisions of ERISA and the Code, and all
other applicable laws, rules and regulations except where the
lack of compliance could not reasonably be expected to have a
Material Adverse Effect; all necessary governmental approvals for
the Plans have been obtained and a favorable determination as to
the qualification under Section 401(a) of the Code of each of the
Plans which is an employee pension benefit plan (within the
meaning of Section 3(2) of ERISA) has been made by the Internal
Revenue Service and a recognition of exemption from federal
income taxation under Section 501(a) of the Code of each of the
funded employee welfare benefit plans (within the meaning of
Section 3(1) of ERISA) has been made by the Internal Revenue
Service, and nothing has occurred since the date of each such
determination or recognition letter that would adversely affect
such qualification.
SECTION 4.11. No Material Misstatements. No informa-
tion, report, financial statement, exhibit or schedule prepared
or furnished by or on behalf of the Borrowers to the Agent or any
Lender in connection with any of the Transactions or this
Agreement, the Security Documents, the Notes or any other Loan
Documents or included therein contained or contains any material
misstatement of fact or omitted or omits to state any material
fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
SECTION 4.12. Investment Company Act; Public Utility
Holding Company Act. No Borrower or subsidiary thereof is an
"investment company" as defined in, or is otherwise subject to
regulation under, the Investment Company Act of 1940. No
Borrower or subsidiary thereof is a "holding company" as that
term is defined in or is otherwise subject to regulation under,
the Public Utility Holding Company Act of 1935.
SECTION 4.13. Security Interest. Each of the Security
Documents creates and grants to the Agent, for the benefit of the
Lenders, a legal, valid and perfected first (except as permitted
pursuant to Section 7.01 hereof) priority security interest in
the collateral identified therein. Such collateral or property
is not subject to any other Liens whatsoever, except Liens
permitted by Section 7.01 hereof.
SECTION 4.14. Use of Proceeds. (a) All proceeds of
the borrowing under the Total Term Loan Commitment and the
initial Revolving Credit Loans shall be used to (i) refinance
outstanding Obligations under the Isolyser Credit Agreement, (ii)
repay outstanding obligations under the Microtek Credit Agreement
and (iii) pay fees and expenses relating to the Acquisition.
(b) All proceeds of each borrowing under the Revolving
Credit Commitment shall be used to provide for working capital
requirements of the Borrowers or for general corporate purposes
of the Borrowers.
SECTION 4.15. Subsidiaries. As of the Closing Date,
Schedule 4.15 annexed hereto sets forth each subsidiary of each
Borrower, its jurisdiction of incorporation, its capitalization
and ownership of capital stock of each such subsidiary.
SECTION 4.16. Title to Properties; Possession Under
Leases; Trademarks. (a) Each Borrower and each subsidiary has
good and marketable title to, or valid leasehold interest in, all
of its respective properties and assets shown on the most recent
balance sheet referred to in Section 4.07(a) hereof and all
assets and properties acquired since the date of such balance
sheet, except for such properties as are no longer used or useful
in the conduct of its business or as have been disposed of in the
ordinary course of business, and except for minor defects in
title that do not interfere with the ability of any Borrower or
any subsidiary thereof to conduct its business as now conducted.
All such assets and properties are free and clear of all Liens
other than those permitted by Section 7.01 hereof.
(b) Each Borrower and each of its subsidiaries has
complied with all obligations under all leases to which it is a
party and under which it is in occupancy, and all such leases are
in full force and effect and each Borrower and each of its
subsidiaries enjoys peaceful and undisturbed possession under all
such leases.
(c) Each Borrower and each of its respective
subsidiaries owns or controls all material trademarks, trademark
rights, trade names, trade name rights, copyrights, patents,
patent rights and licenses which are necessary for the conduct of
the business of such Borrower and such subsidiary. No Borrower
or subsidiary thereof is infringing upon or otherwise acting
adversely to any of such trademarks, trademark rights, trade
names, trade name rights, copyrights, patent rights or licenses
owned by any other person or persons. There is no claim or
action by any such other person pending, or to the knowledge of
any Responsible Officer of any Borrower or any subsidiary
thereof, overtly threatened by written communication, against any
Borrower or any subsidiary thereof with respect to any of the
rights or property referred to in this Section 4.16(c) which, if
adversely determined, could reasonably be expected to have a
Material Adverse Effect.
SECTION 4.17. Solvency. (a) The fair salable value
of the assets of each Borrower and its Consolidated subsidiaries
is not less than the amount that will be required to be paid on
or in respect of the probable liability on the existing debts and
other liabilities (including contingent liabilities) of such
Borrower and its Consolidated subsidiaries, as they become
absolute and mature.
(b) The assets of each Borrower and its Consolidated
subsidiaries do not constitute unreasonably small capital for
such Borrower and its Consolidated subsidiaries to carry out
their business as now conducted and as proposed to be conducted
including the capital needs of such Borrower and its Consolidated
subsidiaries, taking into account the particular capital
requirements of the business conducted by such Borrower and its
Consolidated subsidiaries and projected capital requirements and
capital availability thereof.
(c) No Borrower or any subsidiary thereof intends to
incur debts beyond its ability to pay such debts as they mature
(taking into account the timing and amounts of cash to be
received by such Borrower and such subsidiary, and of amounts to
be payable on or in respect of debt of such Borrower and such
subsidiary). The cash flow of each Borrower and its Consolidated
subsidiaries, after taking into account all anticipated uses of
the cash of such Borrower and its Consolidated subsidiaries, will
at all times be sufficient to pay all such amounts on or in
respect of debt of such Borrower and its Consolidated
subsidiaries when such amounts are required to be paid.
(d) No Borrower or any subsidiary thereof believes
that final judgments against it in actions for money damages
presently pending will be rendered at a time when, or in an
amount such that, it will be unable to satisfy any such judgments
promptly in accordance with their terms (taking into account the
maximum reasonable amount of such judgments in any such actions
and the earliest reasonable time at which such judgments might be
rendered). The cash flow of such Borrower and its Consolidated
subsidiaries, after taking into account all other anticipated
uses of the cash of such Borrower and its Consolidated
subsidiaries (including the payments on or in respect of debt
referred to in paragraph (c) of this Section), will at all times
be sufficient to pay all such judgments promptly in accordance
with their terms.
SECTION 4.18. Permits, etc. Except as would not
reasonably be expected to have a Material Adverse Effect, each
Borrower and each of its subsidiaries possesses all licenses,
permits, approvals and consents, including, without limitation,
all environmental, health and safety licenses, permits, approvals
and consents (collectively, "Permits") of all Federal, state and
local governmental authorities as required to conduct properly
its business as presently conducted, each such Permit is and will
be in full force and effect, each Borrower and each subsidiary is
in compliance in all material respects with all such Permits, and
no event (including, without limitation, any violation of any
law, rule or regulation) has occurred which allows the revocation
or termination of any such Permit or any restriction thereon.
SECTION 4.19. Compliance with Environmental Laws.
Except as disclosed in Schedule 4.19 hereto: (i) the operations
of the Borrowers and their subsidiaries comply in all material
respects with all applicable Environmental Laws; (ii) the
Borrowers and their subsidiaries and all of their present
facilities or operations, as well as to the knowledge of the
Borrowers and their subsidiaries their past facilities or
operations, are not subject to any judicial proceeding or
administrative proceeding or any outstanding written order or
agreement with any governmental authority or private party
respecting (a) any Environmental Law, (b) any Remedial Work, or
(c) any Environmental Claims arising from the Release of a
Contaminant into the environment; (iii) to the best of the
knowledge of the Borrowers and their subsidiaries, none of their
operations is the subject of any Federal or state investigation
evaluating whether any Remedial Work is needed to respond to a
Release of any Contaminant into the environment; (iv) none of the
Borrowers or any subsidiaries of the Borrowers nor any
predecessor of any of the Borrowers or any subsidiary of any
Borrower has filed any notice under any Environmental Law
indicating past or present treatment, storage, or disposal of a
Hazardous Material or reporting a spill or Release of a
Contaminant into the environment; (v) to the best of the
knowledge of the Borrowers and their subsidiaries, none of the
Borrowers or their subsidiaries has any contingent liability in
connection with any Release of any Contaminant into the
environment; (vi) none of the operations of the Borrowers or
their subsidiaries involve the generation, transportation,
treatment or disposal of Hazardous Materials in violation of any
Environmental Law; (vii) neither the Borrowers nor their
subsidiaries have disposed of any Contaminant by placing it in or
on the ground or waters of any premises owned, leased or used by
any of them and to the knowledge of the Borrowers and their
subsidiaries neither has any lessee, prior owner, or other
person; (viii) no underground storage tanks or surface
impoundments are on any property of the Borrowers and their
subsidiaries; and (ix) no Lien in favor of any governmental
authority for (A) any liability under any Environmental Law or
regulations, or (B) damages arising from or costs incurred by
such governmental authority in response to a Release of a
Contaminant into the environment, has been filed or attached to
the property of the Borrowers and their subsidiaries.
SECTION 4.20. No Change in Credit Criteria or
Collection Policies. There has been no material change in credit
criteria or collection policies concerning account receivables of
any of the Borrowers since December 31, 1995. Without
duplication, all Eligible Receivables of the Borrowers are valid,
binding and enforceable obligations of account debtors and are
not subject to any claims, defenses or setoffs. All account
receivables (other than Eligible Receivables) are valid, binding
and enforceable obligations of account debtors.
SECTION 4.21. Acquisition. On or prior to the Closing
Date: (i) the execution, delivery and performance by the parties
to the Acquisition Documents have been duly authorized by all
necessary action, (ii) the Acquisition Documents constitute the
valid, binding and enforceable obligation of each party thereto,
subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors'
rights generally, and are in full force and effect without
default or waiver of any of the conditions thereunder and
(iii) there are no governmental consents, filings, approvals or
notices required to be made or obtained in connection with the
execution, delivery and performance of such Acquisition Documents
except such as have been duly made, obtained or delivered.
V. CONDITIONS OF CREDIT EVENTS
The obligation of each Lender to make Loans and issue
Letters of Credit hereunder shall be subject to the following
conditions precedent:
SECTION 5.1. All Credit Events. On each date on
which a Credit Event is to occur:
(a) The Agent shall have received a notice of (or a
request for the issuance of a Letter of Credit pursuant to
Section 2.17 hereof) borrowing as required by Section 2.03
hereof.
(b) The representations and warranties set forth in
Article IV hereof and in any documents delivered herewith,
including, without limitation, the Loan Documents, shall be
true and correct in all material respects with the same
effect as though made on and as of such date (except insofar
as such representations and warranties relate expressly to
an earlier date).
(c) Each Borrower shall be in compliance with all the
terms and provisions contained herein on its part to be
observed or performed, and at the time of and immediately
after such Credit Event no Default or Event of Default shall
have occurred and be continuing.
(d) The Agent shall have received a certificate signed
by the Financial Officer of each Borrower (i) as to the
compliance with (b) and (c) above and (ii) with respect to
each Revolving Credit Loan and each Letter of Credit, demon-
strating that after giving effect thereto the Availability
is zero or greater.
SECTION 5.2. First Borrowing. The obligations of the
Lenders in respect of the first Credit Event hereunder is subject
to the following additional conditions precedent:
(a) The Lenders shall have received the favorable
written opinion of counsel for the Borrowers and each of the
Guarantors and Grantors, substantially in the form of
Exhibit C hereto, dated the Closing Date, addressed to the
Lenders and satisfactory to the Agent.
(b) The Lenders shall have received (i) a copy of the
certificate or articles of incorporation or constitutive
documents, in each case as amended to date, of each of the
Borrowers, the Grantors and the Guarantors, certified as of
a recent date by the Secretary of State or other appropriate
official of the state of its organization [or appropriate
officer of such person], and a certificate as to the good
standing of each from such Secretary of State or other
official, in each case dated as of a recent date; (ii) a
certificate of the Secretary of each Borrower, Grantor and
Guarantor, dated the Closing Date and certifying (A) that
attached thereto is a true and complete copy of such
person's By-laws as in effect on the date of such
certificate and at all times since a date prior to the date
of the resolution described in item (B) below, (B) that
attached thereto is a true and complete copy of a resolution
adopted by such person's Board of Directors authorizing the
execution, delivery and performance of this Agreement, the
Security Documents, the Notes, the other Loan Documents and
the Credit Events hereunder, as applicable, and that such
resolution has not been modified, rescinded or amended and
is in full force and effect, (C) that such person's
certificate or articles of incorporation or constitutive
documents has not been amended since the date of the last
amendment thereto shown on the certificate of good standing
furnished pursuant to (i) above, and (D) as to the
incumbency and specimen signature of each of such person's
officers executing this Agreement, the Notes, each Security
Document or any other Loan Document delivered in connection
herewith or therewith, as applicable; (ii) a certificate of
another of such person's officers as to incumbency and
signature of its Secretary; and (iii) such other documents
as the Agent or any Lender may reasonably request.
(c) The Agent shall have received a certificate, dated
the Closing Date and signed by the Financial Officer of each
Borrower, confirming compliance with the conditions
precedent set forth in paragraphs (b) and (c) of Sec-
tion 5.01 hereof and the conditions set forth in this
Section 5.02.
(d) Each Lender shall have received its Term Note and
Revolving Credit Note duly executed by the Borrowers,
payable to its order and otherwise complying with the
provisions of Section 2.04 hereof.
(e) The Agent shall have received the Security
Documents, each duly executed by the applicable Grantors,
together with any documents or certificates to be delivered
thereunder and updated endorsements for existing title
insurance policies satisfactory to the Agent.
(f) Each document (including, without limitation, each
Uniform Commercial Code financing statement) required by law
or requested by the Agent to be filed, registered or
recorded in order to create in favor of the Agent for the
benefit of the Lenders a first priority perfected security
interest in the Collateral shall have been properly filed,
registered or recorded in each jurisdiction in which the
filing, registration or recordation thereof is so required
or requested. The Agent shall have received an acknowl-
edgment copy, or other evidence satisfactory to it, of each
such filing, registration or recordation.
(g) The Agent shall have received the results of a
search of tax and other Liens, and judgments and of the
Uniform Commercial Code filings made with respect to each
Borrower and each Grantor in the jurisdictions in which the
Borrower is doing business and/or in which any Collateral is
located, and in which Uniform Commercial Code filings have
been made against each Borrower, each Guarantor and each
Grantor pursuant to paragraph (f) above. With respect to
any Liens not permitted pursuant to Section 7.01 hereof, the
Agent shall have received termination statements in form and
substance satisfactory to it.
(h) The Lenders and the Agent shall have received and
determined to be in form and substance satisfactory to them:
(i) the most recent (dated within thirty (30)
days of the Closing Date) schedule and aging of
accounts receivable and inventory designations of the
Borrowers;
(ii) evidence of the compliance by the Borrowers
with Section 6.03 hereof;
(iii) the financial statements described in Sec-
tion 4.07 hereof;
(iv) evidence that the Transactions are in
compliance with all applicable laws and regulations;
(v) evidence of the compliance by the Borrowers
with Section 6.13 hereof.
(vi) evidence of payment of all fees owed to the
Agent and the Lenders by the Borrowers under this
Agreement, the Commitment Letter or otherwise;
(vii) evidence that all requisite third party
consents (including, without limitation, consents with
respect to each of the Borrowers and each of the
Grantors and Guarantors) to the Transactions have been
received;
(viii) evidence that, except as disclosed on
Schedule 4.05 annexed hereto, there has been no
material adverse change in the business, assets,
operations or financial condition of Isolyser or any of
its subsidiaries since December 31, 1995 or Microtek or
any of its subsidiaries since November 30, 1995;
(ix) evidence that there are no actions, suits or
proceedings at law or in equity or by or before any
governmental instrumentality or other agency or
regulatory authority now pending or threatened against
or affecting any Borrower or any subsidiary thereof or
any of their respective businesses, assets or rights
which involve any of the Transactions; and
(x) evidence that the collateral value of the
Borrowers machinery and equipment exceeds the Total
Term Loan Commitment.
(i) The Agent shall have received and had the
opportunity to review and determine to be in form and
substance satisfactory to it a schedule of all Liens,
litigations and contingent liabilities with respect to the
Borrowers, their subsidiaries, Grantors or Guarantors.
(j) Messrs. Kaye, Scholer, Fierman, Hays & Handler,
counsel to the Agent, shall have received payment in full
for all legal fees charged, and all costs and expenses
incurred, by such counsel through the Closing Date in
connection with the transactions contemplated under this
Agreement, the Security Documents and the other Loan
Documents and instruments in connection herewith and
therewith.
(k) The corporate structure and capitalization of the
Borrowers shall be satisfactory to the Lenders in all
respects.
(l) All legal matters in connection with the
Transactions shall be satisfactory to the Agent, the Lenders
and their respective counsel in their sole discretion.
(m) The Borrowers shall have executed and delivered to
the Agent a disbursement authorization letter with respect
to the disbursement of the proceeds of the Credit Events
made on the Closing Date, in form and substance satisfactory
to the Agent; and which shall provide, among other things,
for the payment of all obligations under the Microtek Credit
Agreement.
(n) The Agent and the Lenders shall have:
(i) received copies of each of the Acquisition
Documents, including all amendments and schedules
thereto, each certified by a Responsible Officer of the
Borrowers; and
(ii) received evidence that the closing of the
Acquisition has been consummated in accordance with the
Acquisition Documents and all consents, filings and
approvals required by applicable law in connection
therewith shall have been obtained and made.
(o) The Agent shall have received a Certificate,
substantially in the form of Schedule 6.05(j) hereto,
executed by the Financial Officer of the Borrowers
demonstrating compliance as at July 31, 1996 with the
Availability requirements.
(p) The Agent shall have received such other documents
as the Lenders or the Agent or Agent's counsel shall
reasonably deem necessary.
VI. AFFIRMATIVE COVENANTS
Each of the Borrowers covenants and agrees with each
Lender that, so long as this Agreement shall remain in effect or
the principal of or interest on any Note, any amount under any
Letter of Credit or any fee, expense or amount payable hereunder
or in connection with any of the Transactions shall be unpaid, it
will, and will cause each of its subsidiaries and, with respect
to Section 6.07 hereof, each ERISA Affiliate, to:
SECTION 6.1. Legal Existence. Do or cause to be done
all things necessary to preserve, renew and keep in full force
and effect its legal existence.
SECTION 6.2. Businesses and Properties. At all times
do or cause to be done all things necessary to preserve, renew
and keep in full force and effect the rights, licenses, Permits,
franchises, patents, copyrights, trademarks and trade names
material to the conduct of its businesses; maintain and operate
such businesses in the same general manner in which they are
presently conducted and operated; maintain title to all inventory
located in the Dominican Republic in the name of one of the
Borrowers; comply with all laws, rules, regulations and
governmental orders (whether Federal, state or local) applicable
to the operation of such businesses whether now in effect or
hereafter enacted (including, without limitation, all applicable
laws, rules, regulations and governmental orders relating to
public and employee health and safety and all Environmental Laws)
the lack of compliance with which would have a Material Adverse
Effect; take all actions which may be required to obtain,
preserve, renew and extend all Permits and other authorizations
which are material to the operation of such businesses; and at
all times maintain, preserve and protect all property material to
the conduct of such businesses and keep such property in good
repair, working order and condition and from time to time make,
or cause to be made, all needful and proper repairs, renewals,
additions, improvements and replacements thereto necessary in
order that the business carried on in connection therewith may be
properly conducted at all times.
SECTION 6.3. Insurance. (a) Keep its insurable
properties adequately insured at all times by financially sound
and reputable insurers, (b) maintain such other insurance, to
such extent and against such risks, including fire and other
risks insured against by extended coverage and business
interruption, as is customary with companies similarly situated
and in the same or similar businesses, provided, however, that
such insurance shall insure the property of the Borrowers against
all risk of physical damage, including, without limitation, loss
by fire, explosion, theft, fraud and such other casualties as may
be reasonably satisfactory to the Agent, but in no event at any
time in an amount less than the replacement value of the
Collateral, (c) maintain in full force and effect public
liability insurance against claims for personal injury or death
or property damage occurring upon, in, about or in connection
with the use of any properties owned, occupied or controlled by
any Borrower or any of its subsidiaries, in such amount as the
Agent shall reasonably deem necessary, and (d) maintain such
other insurance as may be required by law or as may be reasonably
requested by the Agent for purposes of assuring compliance with
this Section 6.03. All insurance covering tangible personal
property subject to a Lien in favor of the Agent for the benefit
of the Lenders granted pursuant to the Security Documents shall
provide that, in the case of each separate loss the full amount
of insurance proceeds shall be payable to the Agent and shall
further provide for at least 30 days' prior written notice to the
Agent of the cancellation or substantial modification thereof.
SECTION 6.4. Taxes. Pay and discharge promptly when
due all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or in respect of
its property before the same shall become delinquent or in
default, as well as all lawful claims for labor, materials and
supplies or otherwise, which, if unpaid, might give rise to Liens
upon such properties or any part thereof unless in the case of
such Liens aggregating $500,000 or less the Borrowers are
diligently contesting in good faith by appropriate proceedings
and have established adequate reserves in amounts not less than
the aggregate of such Liens.
SECTION 6.5. Financial Statements, Reports, etc.
Furnish to the Agent, with copies for each of the Lenders:
(a) within 90 days after the end of each Fiscal Year,
(i) Consolidated and consolidating balance sheets and
Consolidated and consolidating income statements showing the
financial condition of the Borrowers and their subsidiaries
as of the close of such Fiscal Year and the results of their
operations during such year, and (ii) a Consolidated and
consolidating statement of shareholders' equity and a Con-
solidated and consolidating statement of cash flow, as of
the close of such Fiscal Year, all the foregoing to be in
comparative form with the prior Fiscal Year and with respect
to the Consolidated financial statements to be audited by
independent public accountants acceptable to the Agent
(which report shall not contain any qualification except
with respect to new accounting principles mandated by the
Financial Accounting Standards Board), and to be in form and
substance acceptable to the Agent;
(b) within 45 days after the end of each of the first
three (3) fiscal quarters of the Borrowers, unaudited
Consolidated and consolidating balance sheets and Con-
solidated and consolidating income statements showing the
financial condition and results of operations of the
Borrowers and their subsidiaries as of the end of each such
quarter, a Consolidated and consolidating statements of
shareholders' equity and a Consolidated and consolidating
statement of cash flow as of the end of each such fiscal
quarter prepared and certified by the Financial Officer of
each of the Borrowers as presenting fairly the financial
condition and results of operations of the Borrowers and
their subsidiaries and as having been prepared in accordance
with GAAP, in each case subject to normal year-end audit
adjustments;
(c) within 30 days after the end of each month
unaudited unconsolidated balance sheets and income
statements showing the financial condition and results of
operations of the Borrowers as of the end of each such month
and for the year to date period, a statement of
shareholders' equity and an unconsolidated statement of cash
flow as of the end of each such month and for the year to
date period prepared and certified by the Financial Officer
of the Borrowers as presenting fairly the financial
condition and results of operations of the Borrowers and
their subsidiaries and as having been prepared in accordance
with GAAP, in each case subject to normal year-end audit
adjustments;
(d) promptly after the same become publicly available,
copies of such registration statements, annual, periodic and
other reports, and such proxy statements and other
information, if any, as shall be filed by the Borrowers or
any subsidiaries with the Securities and Exchange Commission
pursuant to the requirements of the Securities Act of 1933
or the Securities Exchange Act of 1934;
(e) concurrently with any delivery under (a) or (b)
above, a certificate of the firm or person referred to
therein (which certificate furnished by the independent
public accountants referred to in paragraph (a) above may be
limited to accounting matters and disclaim responsibility
for legal interpretations) certifying that to the best of
its, his or her knowledge no Default or Event of Default has
occurred (including calculations demonstrating compliance,
as of the dates of the financial statements being furnished
at such time, with the covenants set forth in Sections 7.07,
7.08 and 7.09 hereof and, if such a Default or Event of
Default has occurred, specifying the nature and extent
thereof and any corrective action taken or proposed to be
taken with respect thereto; provided, however, that any
certificate delivered concurrently with (a) above shall be
signed by the Financial Officer of each of the Borrowers;
(f) concurrently with any delivery under (a) above, a
management letter prepared by the independent public
accountants who reported on the financial statements
delivered under (a) above, with respect to the internal
audit and financial controls of any Borrower and its
subsidiaries;
(g) within 15 days of the end of each fiscal month, an
aging schedule of the Receivables in the form of the aging
schedule of Receivables dated July 31, 1996 previously
furnished to the Agent, an aging schedule of payables in
form satisfactory to the Agent and a certificate,
substantially in the form of Schedule 6.05(g) hereto,
executed by the Financial Officer of the Borrowers with
respect to inventory designations;
(h) within 30 days prior to the beginning of each
Fiscal Year, a summary of business plans and financial
operation projections (including, without limitation, with
respect to capital expenditures) for the Borrowers and their
respective subsidiaries for such Fiscal Year (including
monthly balance sheets, statements of income and of cash
flow) and annual projections through the next two Fiscal
Years prepared by management and in form, substance and
detail (including, without limitation, principal
assumptions) satisfactory to the Agent;
(i) as soon as practicable, copies of all reports,
forms, filings, loan documents and financial information
submitted to its shareholders or, if requested by the Agent,
submitted to governmental agencies;
(j) within 15 days after the end of each fiscal month,
a certificate, substantially in the form of Schedule 6.05(j)
hereto, executed by the Financial Officer of the Borrowers
demonstrating compliance as at the end of each month with
the Availability requirements; and
(k) such other information as the Agent or any Lender
may reasonably request regarding the Borrower's operations,
business affairs and financial condition, including, without
limitation, monthly, or if so requested upon the occurrence
and continuance of any Event of Default or if a lockbox
arrangement shall at any time be established, daily, reports
as to sales and collections and debit and credit
adjustments.
SECTION 6.6. Litigation and Other Notices. Give the
Agent prompt written notice of the following:
(a) the issuance by any court or governmental agency
or authority of any injunction, order, decision or other
restraint prohibiting, or having the effect of prohibiting,
the making of the Loans or occurrence of other Credit
Events, or invalidating, or having the effect of
invalidating, any provision of this Agreement, the Notes or
the other Loan Documents, or the initiation of any
litigation or similar proceeding seeking any such injunc-
tion, order, decision or other restraint;
(b) the filing or commencement of any action, suit or
proceeding against any Borrower or any of its subsidiaries,
whether at law or in equity or by or before any court or any
Federal, state, municipal or other governmental agency or
authority, (i) which is material and is brought by or on
behalf of any governmental agency or authority, or in which
injunctive or other equitable relief is sought or (ii) as to
which it is probable (within the meaning of Statement of
Financial Accounting Standards No. 5) that there will be an
adverse determination and which, if adversely determined,
would (A) reasonably be expected to result in liability of
one or more Borrowers or a subsidiary thereof in an
aggregate amount of $500,000 or more, not reimbursable by
insurance, or (B) materially impair the right of any
Borrower or a subsidiary thereof to perform its obligations
under this Agreement, any Note or any other Loan Document to
which it is a party;
(c) any Default or Event of Default, specifying the
nature and extent thereof and the action (if any) which is
proposed to be taken with respect thereto; and
(d) any development in the business or affairs of any
Borrower or any of its subsidiaries which has had or which
is likely, in the reasonable judgment of any Responsible
Officer of such Borrower, to have, a Material Adverse
Effect.
SECTION 6.7. ERISA. (a) Pay and discharge promptly
any liability imposed upon it pursuant to the provisions of
Title IV of ERISA; provided, however, that neither the Borrowers
nor any ERISA Affiliate shall be required to pay any such
liability if (1) the amount, applicability or validity thereof
shall be diligently contested in good faith by appropriate
proceedings, and (2) such person shall have set aside on its
books reserves which, in the opinion of the independent certified
public accountants of such person, are adequate with respect
thereto.
(b) Deliver to the Agent, promptly, and in any event
within 30 days, after (i) the occurrence of any Reportable Event,
a copy of the materials that are filed with the PBGC, or the
materials that would have been required to be filed if the 30-day
notice requirement to the PBGC was not waived, (ii) any Borrower
or any ERISA Affiliate or an administrator of any Pension Plan
files with participants, beneficiaries or the PBGC a notice of
intent to terminate any such Plan, a copy of any such notice,
(iii) the receipt of notice by any Borrower or any ERISA
Affiliate or an administrator of any Pension Plan from the PBGC
of the PBGC's intention to terminate any Pension Plan or to
appoint a trustee to administer any such Plan, a copy of such
notice, (iv) the filing thereof with the Internal Revenue
Service, if requested by the Agent, copies of each annual report
that is filed on Treasury Form 5500 with respect to any Plan,
together with certified financial statements (if any) for the
Plan and any actuarial statements on Schedule B to such Form
5500, (v) any Borrower or any ERISA Affiliate knows or has reason
to know of any event or condition which might constitute grounds
under the provisions of Section 4042 of ERISA for the termination
of (or the appointment of a trustee to administer) any Pension
Plan, an explanation of such event or condition, (vi) the receipt
by any Borrower or any ERISA Affiliate of an assessment of
withdrawal liability under Section 4201 of ERISA from a Multi-
employer Plan, a copy of such assessment, (vii) any Borrower or
any ERISA Affiliate knows or has reason to know of any event or
condition which might cause any one of them to incur a liability
under Section 4062, 4063, 4064 or 4069 of ERISA or Section 412(n)
or 4971 of the Code, an explanation of such event or condition,
and (viii) any Borrower or any ERISA Affiliate knows or has
reason to know that an application is to be, or has been, made to
the Secretary of the Treasury for a waiver of the minimum funding
standard under the provisions of Section 412 of the Code, a copy
of such application, and in each case described in clauses (i)
through (iii) and (v) through (vii) together with a statement
signed by the Financial Officer setting forth details as to such
Reportable Event, notice, event or condition and the action which
such Borrower or such ERISA Affiliate proposes to take with
respect thereto.
SECTION 6.8. Maintaining Records; Access to
Properties and Inspections; Right to Conduct of Field
Examinations. Maintain financial records in accordance with
accepted financial practices and, upon reasonable notice (which
may be telephonic), at all reasonable times and as often as any
Lender may request, permit any authorized representative
designated by such Lender to visit and inspect the properties and
financial records of the Borrowers and their subsidiaries and to
make extracts from such financial records at such Lender's
expense, and permit any authorized representative designated by
such Lender to discuss the affairs, finances and condition of the
Borrowers and their subsidiaries with the appropriate Financial
Officer and such other officers as the Borrowers shall deem
appropriate and the Borrowers' independent public accountants, as
applicable. The Agent agrees that it shall schedule any meeting
with any such independent public accountant through the Borrowers
and a Responsible Officer of one or more Borrowers shall have the
right to be present at any such meeting. At the Borrowers'
expense, the Agent shall have the right to conduct field
examination and appraisals of tangible personal property, as
often as it may reasonably request, including determining the
existence and condition of the accounts receivables, inventory,
books and records of the Borrowers and their subsidiaries and
reviewing their compliance with the terms and conditions of this
Agreement and the other Loan Documents.
SECTION 6.9. Use of Proceeds. Use the proceeds of
the Credit Events only for the purposes set forth in Section 4.14
hereof.
SECTION 6.10. Fiscal Year-End. Cause its Fiscal Year
to end on December 31 in each year.
SECTION 6.11. Further Assurances. Execute any and all
further documents and take all further actions which may be
required under applicable law, or which the Agent may reasonably
request, to grant, preserve, protect and perfect the first
priority security interest created by the Security Documents in
the Collateral.
SECTION 6.12. Additional Grantors and Guarantors.
Promptly inform the Agent of the creation or acquisition of any
direct or indirect subsidiary (subject to the provisions of
Section 7.06 hereof) and (i) cause each direct or indirect
subsidiary not in existence on the date hereof as to which any
Borrower or subsidiary thereof owns at least a 60% ownership
interest therein to enter into a Guarantee in form and substance
satisfactory to the Agent, and to execute the Security Documents,
as applicable, as a Grantor and cause each such subsidiary to
pledge its accounts receivable and all other assets pursuant to
the Security Agreement and the Borrowers shall, or shall cause
their appropriate subsidiaries to, pledge to the Agent pursuant
to documentation in form and substance satisfactory to the Agent,
any equity interests of the Borrowers or such subsidiaries in
such subsidiary and (ii) with respect to each direct or indirect
subsidiary not in existence on the date hereof as to which any
Borrower or subsidiary thereof owns more than a 50% ownership
interest but less than a 60% ownership interest therein, the
Borrowers shall, or shall cause their appropriate subsidiaries
to, pledge to the Agent pursuant to documentation in form and
substance satisfactory to the Agent, any equity interests of the
Borrowers or such subsidiaries in such subsidiary.
SECTION 6.13. Environmental Laws. (a) Comply, and
cause each of their subsidiaries to comply, in all material
respects with the provisions of all Environmental Laws, and shall
keep their properties and the properties of their subsidiaries
free of any Lien imposed pursuant to any Environmental Law. The
Borrowers shall not cause or suffer or permit, and shall not
suffer or permit any of their subsidiaries to cause or suffer or
permit, the property of the Borrowers or their subsidiaries to be
used for the generation, production, processing, handling,
storage, transporting or disposal of any Hazardous Material,
except for Hazardous Materials used in the ordinary course of
business of the Borrowers, in which case such Hazardous Materials
shall be used, stored, generated, treated and disposed of only in
compliance with Environmental Law.
(b) Supply to the Agent copies of all submissions by
the Borrowers or any of their subsidiaries to any governmental
body and of the reports of all environmental audits and of all
other environmental tests, studies or assessments (including the
data derived from any sampling or survey of asbestos, soil, or
subsurface or other materials or conditions) that may be
conducted or performed (by or on behalf of the Borrowers or any
of their subsidiaries) on or regarding the properties owned,
operated, leased or occupied by the Borrowers or any of their
subsidiaries or regarding any conditions that might have been
affected by Hazardous Materials on or Released or removed from
such properties. The Borrowers shall also permit and authorize,
and shall cause their subsidiaries to permit and authorize, the
consultants, attorneys or other persons that prepare such
submissions or reports or perform such audits, tests, studies or
assessments to discuss such submissions, reports or audits with
the Agent and the Lenders.
(c) Promptly (and in no event more than two Business
Days after the Borrowers become aware or are otherwise informed
of such event) provide oral and written notice to the Agent upon
the happening of any of the following:
(i) any Borrower, any subsidiary of any Borrower,
or any tenant or other occupant of any property of such
Borrower or such subsidiary receives notice of any
claim, complaint, charge or notice of a violation or
potential violation of any Environmental Law;
(ii) there has been a spill or other Release of
Hazardous Materials upon, under or about or affecting
any of the properties owned, operated, leased or
occupied by any Borrower or any subsidiary of any
Borrower, or Hazardous Materials at levels or in
amounts that may have to be reported, remedied or
responded to under Environmental Law are detected on or
in the soil or groundwater;
(iii) any Borrower or any subsidiary of any
Borrower is or may be liable for any costs of cleaning
up or otherwise responding to a Release of Hazardous
Materials;
(iv) any part of the properties owned, operated,
leased or occupied by any Borrower or any subsidiary of
any Borrower is or may be subject to a Lien under any
Environmental Law; or
(v) any Borrower or any subsidiary of any
Borrower undertakes any Remedial Work with respect to
any Hazardous Materials.
(d) Timely undertake and complete any Remedial Work
required by any Environmental Law.
(e) Without in any way limiting the scope of
Section 11.04(c) and in addition to any obligations thereunder,
each Borrower hereby indemnifies and agrees to hold the Agent and
the Lenders harmless from and against any liability, loss,
damage, suit, action or proceeding arising out of its business or
the business of its subsidiaries pertaining to Hazardous
Materials, including, but not limited to, claims of any
governmental body or any third person arising under any
Environmental Law or under tort, contract or common law. To the
extent laws of the United States or any applicable state or local
law in which property owned, operated, leased or occupied by any
Borrower or any subsidiary of any Borrower is located provide
that a Lien upon such property of such Borrower or such
subsidiary may be obtained for the removal of Hazardous Materials
which have been or may be Released, no later than sixty days
after notice is given by the Agent to such Borrower or such
subsidiary, such Borrower or such subsidiary shall deliver to the
Agent a report issued by a qualified third party engineer
certifying as to the existence of any Hazardous Materials located
upon or beneath the specified property. To the extent any
Hazardous Materials located therein or thereunder either subject
the property to Lien or require removal to safeguard the health
of any persons, the removal thereof shall be an affirmative
covenant of the Borrowers hereunder.
(f) In the event that any Remedial Work is required to
be performed by any Borrower or any subsidiary of any Borrower
under any applicable Environmental Law, any judicial order, or by
any governmental entity, such Borrower or such subsidiary shall
commence all such Remedial Work at or prior to the time required
therefor under such Environmental Law or applicable judicial
orders and thereafter diligently prosecute to completion all such
Remedial Work in accordance with and within the time allowed
under such applicable Environmental Laws or judicial orders.
SECTION 6.14. Pay Obligations to Lenders and Perform
Other Covenants. (a) Make full and timely payment of the
Obligations, whether now existing or hereafter arising, (b) duly
comply with all the terms and covenants contained in this
Agreement (including, without limitation, the borrowing
limitations and mandatory prepayments in accordance with
Article II hereof) in each of the other Loan Documents, all at
the times and places and in the manner set forth therein,
(c) except for the filing of continuation statements and the
making of other filings by the Agent as secured party or
assignee, at all times take all actions necessary to maintain the
Liens and security interests provided for under or pursuant to
this Agreement and the Security Documents as valid and perfected
first Liens on the property intended to be covered thereby
(subject only to Liens expressly permitted hereunder) and supply
all information to the Agent necessary for such maintenance and
(d) maintain Availability at zero or greater.
VII. NEGATIVE COVENANTS
Each of the Borrowers covenants and agrees with each
Lender that, so long as this Agreement shall remain in effect or
the principal of or interest on any Note, any amount under any
Letter of Credit, or any fee, expense or amount payable hereunder
or in connection with any of the Transactions shall be unpaid, it
will not and will not cause or permit any of its subsidiaries
and, in the case of Section 7.13 hereof, any ERISA Affiliate to,
either directly or indirectly (without the prior written consent
of the Required Lenders):
SECTION 7.1. Liens. Incur, create, assume or permit
to exist any Lien on any of its property or assets (including the
stock of any direct or indirect subsidiary or any real property),
whether owned at the date hereof or hereafter acquired, or assign
or convey any rights to or security interests in any future
revenues, except:
(a) Liens incurred and pledges and deposits made in
the ordinary course of business in connection with workers'
compensation, unemployment insurance, old-age pensions and
other social security benefits (not including any lien
described in Section 412(m) of the Code);
(b) Liens imposed by law, such as carriers', ware-
housemen's, mechanics', materialmen's and vendors' liens and
other similar liens, incurred in good faith in the ordinary
course of business and securing obligations which are not
overdue for a period of more than 15 days or which are being
contested in good faith by appropriate proceedings as to
which any Borrower or any of its subsidiaries, as the case
may be, shall, to the extent required by GAAP, have set
aside on its books adequate reserves;
(c) Liens securing the payment of taxes, assessments
and governmental charges or levies, that are not delinquent
or if delinquent, do not aggregate more than $500,000 and
are being diligently contested in good faith by appropriate
proceedings (and as to which no proceeding has been
commenced against any property or assets of any Borrower or
its subsidiaries or if commenced has been stayed in a manner
satisfactory to the Agent) and as to which adequate reserves
have been established in accordance with GAAP; provided,
however, that in no event shall the aggregate amount of such
reserves be less than the aggregate amount secured by such
Liens;
(d) zoning restrictions, easements, licenses, reser-
vations, provisions, covenants, conditions, waivers,
restrictions on the use of property or minor irregularities
of title (and with respect to leasehold interests,
mortgages, obligations, liens and other encumbrances
incurred, created, assumed or permitted to exist and arising
by, through or under a landlord or owner of the leased
property, with or without consent of the lessee) which do
not in the aggregate materially detract from the value of
its property or assets or materially impair the use thereof
in the operation of its business;
(e) Liens upon any equipment acquired through the
purchase or lease by any Borrower or any of its subsidiaries
which are created or incurred contemporaneously with such
acquisition to secure or provide for the payment of any part
of the purchase price of, or lease payments on, such
equipment (but no other amounts and not in excess of the
purchase price or lease payments); provided, however, that
any such Lien shall not apply to any other property of the
Borrowers or any of their subsidiaries; and provided,
further, that after giving effect to such purchase or lease,
compliance is maintained with Section 7.07 hereof;
(f) Liens existing on the date of this Agreement and
set forth in Schedule 7.01 annexed hereto but not the
extension, renewal or refunding of the Indebtedness secured
thereby;
(g) Liens created in favor of the Agent for the
benefit of the Lenders;
(h) Liens securing the performance of bids, tenders,
leases, contracts (other than for the repayment of borrowed
money), statutory obligations, surety, customs and appeal
bonds and other obligations of like nature, incurred as an
incident to and in the ordinary course of business; or
(i) existing Liens securing the performance of the ABB
Capital Lease and other Capitalized Lease Obligations;
provided, however no additional Liens may be incurred,
created, assumed or permitted to exist for the purpose of
securing the ABB Lease and the total amount to be payable
under all Capitalized Lease Obligations (including the ABB
Capital Lease) shall not exceed $1,000,000.
SECTION 7.2. Sale and Lease-Back Transactions. Enter
into any arrangement, directly or indirectly, with any person
whereby any Borrower or any of its subsidiaries shall sell or
transfer any property, real or personal, and used or useful in
its business, whether now owned or hereafter acquired, and there-
after rent or lease such property or other property which such
Borrower or such subsidiary intends to use for substantially the
same purpose or purposes as the property being sold or transferred,
except for the Lease Purchase Agreement, dated as of December 22,
1995, between Isolyser and Abbeville County.
SECTION 7.3. Indebtedness. Incur, create, assume or
permit to exist any Indebtedness other than (i) Indebtedness
secured by Liens permitted under Section 7.01, (ii) Indebtedness
(including, without limitation, Guarantees) existing on the date
hereof and listed in Schedule 7.03 annexed hereto, but not the
extension, renewal or refunding thereof, (iii) Indebtedness
incurred hereunder, (iv) Indebtedness to trade creditors incurred
in the ordinary course of business, (v) Guarantees constituting
the endorsement of negotiable instruments for deposit or
collection in the ordinary course of business, (vi) Guarantees of
the Obligations and Guarantees of loans made to key employees in
connection with the exercise of stock options for Isolyser's
stock provided that the Indebtedness guaranteed does not exceed
$200,000 in the aggregate at any one time outstanding,
(vii) purchase money Indebtedness to the extent permitted by
Sections 7.01(e) and 7.07 hereof, (viii) Subordinated
Indebtedness and (ix) Indebtedness of any subsidiary of Isolyser
or any other Borrower (which is a Guarantor) owing to Isolyser or
such other Borrower, (x) Indebtedness of Isolyser or any other
Borrower owing to any subsidiary of Isolyser or any other
Borrower (which is a Guarantor), (xi) "Contingent Payments" under
and as defined in the Asset Purchase Agreement dated as of
April 26, 1996 between Microtek and Advanced Instruments, Inc.,
but not any amendments or modifications thereof,
(xii) "Contingent Payments" under and as defined in the Asset
Purchase Agreement dated as of March 22, 1996 between Microtek
and Phoenix Medical Technology, Inc., but not any amendments or
modifications thereof and (xiii) unsecured Indebtedness not in
excess of $1,000,000 outstanding at any time.
SECTION 7.4. Dividends, Distributions and Payments.
Declare or pay, directly and indirectly, any cash dividends or
make any other distribution, whether in cash, property, securi-
ties or a combination thereof, with respect to (whether by reduc-
tion of capital or otherwise) any shares of its capital stock or
directly or indirectly redeem, purchase, retire or otherwise
acquire for value (or permit any subsidiary to purchase or
acquire) any shares of any class of its capital stock or set
aside any amount for any such purpose other than (i) dividends by
any subsidiary of Isolyser or any other Borrower to Isolyser or
such other Borrower or any wholly-owned subsidiary of any
thereof, (ii) Microtek may make scheduled payments of principal
and interest on the Venodyne Seller Note and the Medi-Plast
Seller Note, (iii) so long as no Event of Default has occurred or
is continuing, redemption of shares of Isolyser in connection
with any exercise of stock options to purchase Isolyser shares,
and (iv) the exercise by Isolyser of rights by way of
indemnification of Isolyser in connection with the acquisition of
White Knight.
SECTION 7.5. Consolidations, Mergers and Sales of
Assets. Consolidate with or merge into any other person, or
sell, lease, transfer or assign to any persons or otherwise
dispose of (whether in one transaction or a series of transac-
tions) any portion of its assets (whether now owned or hereafter
acquired), or sell any of its inventory other than in the normal
course of business, or permit another person to merge into it, or
acquire all or substantially all the capital stock or assets of
any other person.
SECTION 7.6. Investments. Own, purchase or acquire
any stock, obligations, assets or securities of, or any interest
in, or make any capital contribution or loan or advance to, any
other person, or make any other investments, except:
(a) certificates of deposit, demand deposits or other
short term obligations in dollars of any commercial banks
registered to do business in any state of the United States
(i) having capital and surplus in excess of $500,000,000 and
(ii) whose long-term debt rating is at least investment
grade as determined by either Standard & Poor's Corporation
or Moody's Investor Service, Inc.;
(b) readily marketable direct obligations of the
United States government or any agency thereof which (i) are
backed by the full faith and credit of the United States or
(ii) are implicitly guaranteed by the United States and have
maturities not exceeding 180 days;
(c) investments in money market mutual funds having
assets in excess of $2,000,000,000;
(d) commercial paper at the time of acquisition having
the highest rating obtainable from either Standard & Poor's
Corporation or Moody's Investor Service, Inc.;
(e) federally tax exempt securities rated A or better
by either Standard & Poor's Corporation or Moody's Investor
Service, Inc.;
(f) investments in the stock of any subsidiary of any
of the Borrowers;
(g) investments in any person to the extent permitted
pursuant to Section 7.03 hereof;
(h) advances of not more than $500,000 in the
aggregate at any one time outstanding to persons in the
ordinary course of business in order to enable such persons
to procure materials necessary to produce products ordered
by the Borrowers or for other business purposes which will
result in direct benefits to the Borrowers;
(i) the Joint Venture Loans; and
(j) loans and advances by the Borrowers to
subsidiaries of the Borrowers incorporated in either the
United Kingdom or Mexico, 65% of the capital stock of which
has been pledged to the Agent pursuant to a pledge
agreement, in form and substance satisfactory to the Agent,
and as to which the Agent shall have a first priority
perfected security interest, provided that the aggregate
amount of such loans and advances at any time outstanding
shall not exceed $3,000,000.
provided that, in each case mentioned in (a), (b), (d) or (e)
above, such obligations shall mature not more than one year from
the date of acquisition thereof.
SECTION 7.7. Capital Expenditures. Permit the
aggregate amount of payments made for capital expenditures
including Capitalized Lease Obligations and Indebtedness secured
by Liens permitted under Section 7.01(e) hereof, to exceed
$20,000,000 in the Fiscal Year ending December 31, 1996 and
$21,500,000 in each Fiscal Year thereafter; provided, however,
that the total rent Obligations or other amounts to be paid under
the Capitalized Lease Obligations of SafeWaste Corporation,
including, without limitation, the ABB Capital Lease, shall not
exceed $1,000,000 at any given time.
SECTION 7.8. Leverage Ratio; Funds from Operations.
(a) Permit the Leverage Ratio of the Borrowers and their
subsidiaries on a Consolidated basis to be greater than
(i) 4.00:1.00 for the fiscal quarter ending December 31, 1996,
(ii) 3.00:1.00 for the fiscal quarter ending March 31, 1997, and
(iii) 2.50:1.00 thereafter.
(b) For each of the periods January 1, 1997 through
March 31, 1997, January 1, 1997 through June 30, 1997, January 1,
1997 through September 30, 1997 and January 1, 1997 through
December 31, 1997 permit the ratio of Funds from Operations minus
capital expenditures for each such period to scheduled principal
payments on the Term Notes and other funded debt for each such
period to be less than 2.00:1.00 and thereafter permit such ratio
computed at the end of each fiscal quarter for the four
consecutive fiscal quarters then ended to be less than 2.50:1.00.
SECTION 7.9. Net Income. Permit Net Income of the
Borrowers and their subsidiaries on a Consolidated basis to be
(a) less than ($3,000,000) for the fiscal quarter ending on
December 31, 1996, (b) less than ($2,500,000) for the Fiscal Year
ending December 31, 1996, or (c) less than zero in any month in
any Fiscal Year thereafter.
SECTION 7.10. Business. Alter the nature of its
business as operated on the date of this Agreement in any
material respect.
SECTION 7.11. Sales of Receivables. Sell, assign,
discount, transfer, or otherwise dispose of any accounts
receivable, promissory notes, drafts or trade acceptances or
other rights to receive payment held by it, with or without
recourse, except (i) for the purpose of collection or settlement
in the ordinary course of business or (ii) the sale of any such
accounts to the Agent.
SECTION 7.12. Use of Proceeds. Permit the proceeds of
any Credit Event to be used for any purpose which entails a
violation of, or is inconsistent with, Regulation G, T, U or X of
the Board, or for any purpose other than those set forth in
Section 4.14 hereof.
SECTION 7.13. ERISA. (a) Engage in any transaction
in connection with which any Borrowers or any ERISA Affiliate
could be subject to either a material civil penalty assessed
pursuant to the provisions of Section 502 of ERISA or a material
tax imposed under the provisions of Section 4975 of the Code.
(b) Terminate any Pension Plan in a "distress
termination" under Section 4041 of ERISA, or take any other
action which could result in a material liability of any Borrower
or any ERISA Affiliate to the PBGC.
(c) Fail to make payment when due of all amounts
which, under the provisions of any Plan, the Borrowers or any
ERISA Affiliate is required to pay as contributions thereto, or,
with respect to any Pension Plan, permit to exist any material
"accumulated funding deficiency" (within the meaning of Section
302 of ERISA and Section 412 of the Code), whether or not waived,
with respect thereto.
(d) Adopt an amendment to any Pension Plan requiring
the provision of security under Section 307 of ERISA or
Section 401(a)(29) of the Code.
SECTION 7.14. Accounting Changes. Make, or permit any
subsidiary to make any change in their accounting treatment or
financial reporting practices except as required or permitted by
GAAP or change the Fiscal Year from December 31.
SECTION 7.15. Prepayment or Modification of
Subordinated Indebtedness. (a) Directly or indirectly prepay,
redeem, purchase or retire in advance of maturity any
Subordinated Indebtedness.
(b) Modify, amend or otherwise alter in any material
respect the terms and provisions of any Subordinated
Indebtedness.
SECTION 7.16. Negative Pledges, Etc. Enter into any
agreement (other than this Agreement or any other Loan Document)
which (a) prohibits the creation or assumption of any Lien upon
any of the Collateral, including, without limitation, any
hereafter acquired property, or (b) specifically prohibits the
amendment or other modification of this Agreement or any other
Loan Document.
VIII. EVENTS OF DEFAULT
In case of the happening of any of the following events
(herein called "Events of Default"):
(a) any representation or warranty made or deemed made
in or in connection with this Agreement, any of the Security
Documents, the Notes or other Loan Documents or any Credit
Events hereunder, shall prove to have been incorrect in any
material respect when made or deemed to be made;
(b) default shall be made in the payment of any
principal of any Note when and as the same shall become due
and payable, whether at the due date thereof or at a date
fixed for prepayment thereof or by acceleration thereof or
otherwise;
(c) default shall be made in the payment of any
interest on any Note, or any fee or any other amount payable
hereunder, or under the Notes, Letters of Credit, or any
other Loan Document or in connection with any other Credit
Event or the Transactions when and as the same shall become
due and payable;
(d) default shall be made in the due observance or
performance of any covenant, condition or agreement to be
observed or performed on the part of any Loan Party pursuant
to the terms of this Agreement, any of the Notes, any of the
Security Documents or any other Loan Document;
(e) any Loan Party shall (i) voluntarily commence any
proceeding or file any petition seeking relief under
Title 11 of the United States Code or any other Federal,
state or foreign bankruptcy, insolvency, liquidation or
similar law, (ii) consent to the institution of, or fail to
contravene in a timely and appropriate manner, any such
proceeding or the filing of any such petition, (iii) apply
for or consent to the appointment of a receiver, trustee,
custodian, sequestrator or similar official for any Loan
Party or for a substantial part of its property or assets,
(iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors, (vi) become
unable, admit in writing its inability or fail generally to
pay its debts as they become due or (vii) take corporate
action for the purpose of effecting any of the foregoing;
(f) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of any Loan
Party, or of a substantial part of the property or assets of
any Loan Party, under Title 11 of the United States Code or
any other Federal state or foreign bankruptcy, insolvency,
receivership or similar law, (ii) the appointment of a
receiver, trustee, custodian, sequestrator or similar
official for any Loan Party or for a substantial part of the
property of any Loan Party, or (iii) the winding-up or
liquidation of any Loan Party; and such proceeding or
petition shall continue undismissed for 30 days or an order
or decree approving or ordering any of the foregoing shall
continue unstayed and in effect for 30 days;
(g) default shall be made with respect to any
Indebtedness or obligations under a capitalized lease of any
Loan Party (excluding Indebtedness outstanding hereunder)
which individually or in the aggregate exceeds $250,000 if
the effect of any such default shall be to accelerate, or to
permit the holder or obligee of any such Indebtedness or
obligations under a capitalized lease (or any trustee on
behalf of such holder or obligee) at its option to
accelerate, the maturity of such Indebtedness or obligations
under a capitalized lease;
(h) (i) a Reportable Event shall have occurred with
respect to a Pension Plan, (ii) the filing by any Loan
Party, any ERISA Affiliate, or an administrator of any Plan
of a notice of intent to terminate such a Plan in a
"distress termination" under the provisions of Section 4041
of ERISA, (iii) the receipt of notice by any Loan Party, any
ERISA Affiliate, or an administrator of a Plan that the PBGC
has instituted proceedings to terminate (or appoint a
trustee to administer) such a Pension Plan, (iv) any other
event or condition exists which might, in the opinion of the
Agent, constitute grounds under the provisions of Section
4042 of ERISA for the termination of (or the appointment of
a trustee to administer) any Pension Plan by the PBGC, (v) a
Pension Plan shall fail to maintain the minimum funding
standard required by Section 412 of the Code for any plan
year or a waiver of such standard is sought or granted under
the provisions of Section 412(d) of the Code, (vi) any Loan
Party or any ERISA Affiliate has incurred, or is likely to
incur, a liability under the provisions of Section 4062,
4063, 4064 or 4201 of ERISA, (vii) any Loan Party or any
ERISA Affiliate fails to pay the full amount of an install-
ment required under Section 412(m) of the Code, (viii) the
occurrence of any other event or condition with respect to
any Plan which would constitute an event of default under
any other agreement entered into by any Loan Party or any
ERISA Affiliate, and in each case in clauses (i) through
(viii) of this subsection (h), such event or condition,
together with all other such events or conditions, if any,
could subject any Loan Party or any ERISA Affiliate to any
taxes, penalties or other liabilities which, in the opinion
of the Agent, could have a Material Adverse Effect on the
financial condition of any Loan Party or any ERISA
Affiliate;
(i) any Loan Party or any ERISA Affiliate (i) shall
have been notified by the sponsor of a Multiemployer Plan
that it has incurred any material withdrawal liability to
such Multiemployer Plan, and (ii) does not have reasonable
grounds for contesting such withdrawal liability and is not
in fact contesting such withdrawal liability in a timely and
appropriate manner;
(j) a judgment (not reimbursable by insurance policies
of any Loan Party) or decree for the payment of money, a
fine or penalty which when taken together with all other
such judgments, decrees, fines and penalties shall exceed
$500,000 shall be rendered by a court or other tribunal
against any Loan Party and (i) shall remain undischarged or
unbonded for a period of 30 consecutive days during which
the execution of such judgment, decree, fine or penalty
shall not have been stayed effectively or (ii) any judgment
creditor or other person shall legally commence actions to
collect on or enforce such judgment, decree, fine or
penalty;
(k) this Agreement, any Note, any of the Security
Documents, any Guarantee or other Loan Documents shall for
any reason cease to be, or shall be asserted by any Loan
Party not to be, a legal, valid and binding obligation of
any Loan Party, enforceable in accordance with its terms, or
the security interest or Lien purported to be created by any
of the Security Documents shall for any reason cease to be,
or be asserted by any Loan Party not to be, a valid, first
priority perfected security interest in any Collateral
(except to the extent otherwise permitted under this
Agreement or any of the Security Documents); or
(l) the filing of any Lien for taxes exceeding
individually or in the aggregate $500,000;
then, and in any such event (other than an event described in
paragraph (e) or (f) above), and at any time thereafter during
the continuance of such event, the Agent may, and upon the
written request of the Required Lenders shall, by written notice
(or facsimile notice promptly confirmed in writing) to the
Borrowers, take any or all of the following actions at the same
or different times: (i) terminate forthwith all or any portion
of the Total Commitment and the obligations of the Lenders to
issue Letters of Credit hereunder; (ii) demand that the Borrowers
provide to the Lenders, and the Borrowers upon such demand agree
to provide, cash collateral in an amount equal to the aggregate
Letter of Credit Usage to be held by the Agent for the ratable
benefit of the Lenders on terms and pursuant to documents and
agreements satisfactory in all respects to the Agent; and
(iii) declare the Notes and any amounts then owing to the Lenders
on account of drawings under any Letters of Credit to be
forthwith due and payable, whereupon the principal of such Notes,
together with accrued interest and fees thereon and any amounts
then owing to the Lenders on account of drawings under any
Letters of Credit and other liabilities of the Borrowers accrued
hereunder, shall become forthwith due and payable both as to
principal and interest, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly
waived by the Borrowers, anything contained herein or in the
Notes to the contrary notwithstanding; provided, however, that
with respect to a default described in paragraph (e) or (f)
above, the Total Commitment and the obligation of the Lenders to
issue Letters of Credit shall automatically terminate and the
principal of the Notes, together with accrued interest and fees
thereon and any amounts then owing to the Lenders on account of
drawings under any Letters of Credit and any other liabilities of
the Borrowers accrued hereunder shall automatically become due
and payable, both as to principal and interest, without
presentment, demand, protest or other notice of any kind, all of
which are hereby expressly waived by the Borrowers, anything
contained herein or in the Notes to the contrary notwithstanding.
IX. AGENT
In order to expedite the transactions contemplated by
this Agreement, The Chase Manhattan Bank is hereby appointed to
act as Agent on behalf of the Lenders. Each of the Lenders and
each subsequent holder of any Note or issuer of any Letter of
Credit by its acceptance thereof, irrevocably authorizes the
Agent to take such action on its behalf and to exercise such
powers hereunder and under the Security Documents and other Loan
Documents as are specifically delegated to or required of the
Agent by the terms hereof and the terms thereof together with
such powers as are reasonably incidental thereto. Neither the
Agent nor any of its directors, officers, employees or agents
shall be liable as such for any action taken or omitted to be
taken by it or them hereunder or under any of the Security
Documents and other Loan Documents or in connection herewith or
therewith (a) at the request or with the approval of the Required
Lenders (or, if otherwise specifically required hereunder or
thereunder, the consent of all the Lenders) or (b) in the absence
of its or their own gross negligence or willful misconduct.
The Agent is hereby expressly authorized on behalf of
the Lenders, without hereby limiting any implied authority,
(a) to receive on behalf of each of the Lenders any payment of
principal of or interest on the Notes outstanding hereunder and
all other amounts accrued hereunder paid to the Agent, and to
distribute to each Lender on a weekly basis its proper share of
all payments so received, (b) to distribute to each Lender copies
of all notices, agreements and other material as provided for in
this Agreement or in the Security Documents and other Loan
Documents as received by such Agent and (c) to take all actions
with respect to this Agreement and the Security Documents and
other Loan Documents as are specifically delegated to the Agent.
In the event that (a) any Borrower fails to pay when
due the principal of or interest on any Note, any amount payable
under any Letter of Credit, or any fee payable hereunder or
(b) the Agent receives written notice of the occurrence of a
Default or an Event of Default, the Agent within a reasonable
time shall give written notice thereof to the Lenders, and shall
take such action with respect to such Event of Default or other
condition or event as it shall be directed to take by the
Required Lenders; provided, however, that, unless and until the
Agent shall have received such directions, the Agent may take
such action or refrain from taking such action hereunder or under
the Security Documents or other Loan Documents with respect to a
Default or Event of Default as it shall deem advisable in the
best interests of the Lenders.
The Agent shall not be responsible in any manner to any
of the Lenders for the effectiveness, enforceability, perfection,
value, genuineness, validity or due execution of this Agreement,
the Notes or any of the other Loan Documents or Collateral or any
other agreements or certificates, requests, financial statements,
notices or opinions of counsel or for any recitals, statements,
warranties or representations contained herein or in any such
instrument or be under any obligation to ascertain or inquire as
to the performance or observance of any of the terms, provisions,
covenants, conditions, agreements or obligations of this
Agreement or any of the other Loan Documents or any other
agreements on the part of the Borrowers and, without limiting the
generality of the foregoing, the Agent shall, in the absence of
knowledge to the contrary, be entitled to accept any certificate
furnished pursuant to this Agreement or any of the other Loan
Documents as conclusive evidence of the facts stated therein and
shall be entitled to rely on any note, notice, consent,
certificate, affidavit, letter, telegram, teletype message,
statement, order or other document which it believes in good
faith to be genuine and correct and to have been signed or sent
by the proper person or persons. It is understood and agreed
that the Agent may exercise its rights and powers under other
agreements and instruments to which it is or may be a party, and
engage in other transactions with the Borrowers, as though it
were not Agent of the Lenders hereunder.
The Agent shall promptly give notice to the Lenders of
the receipt or sending of any notice, schedule, report, projec-
tion, financial statement or other document or information
pursuant to this Agreement or any of the other Loan Documents and
shall promptly forward a copy thereof to each Lender.
Neither the Agent nor any of its directors, officers,
employees or agents shall have any responsibility to the
Borrowers on account of the failure or delay in performance or
breach by any Lender other than the Agent of any of its
obligations hereunder or to any Lender on account of the failure
of or delay in performance or breach by any other Lender or the
Borrowers of any of their respective obligations hereunder or in
connection herewith.
The Agent may consult with legal counsel selected by it
in connection with matters arising under this Agreement or any of
the other Loan Documents and any action taken or suffered in good
faith by it in accordance with the opinion of such counsel shall
be full justification and protection to it. The Agent may
exercise any of its powers and rights and perform any duty under
this Agreement or any of the other Loan Documents through agents
or attorneys.
The Agent and the Borrowers may deem and treat the
payee of any Note as the holder thereof until written notice of
transfer shall have been delivered as provided herein by such
payee to the Agent and the Borrowers.
With respect to the Loans made hereunder, the Notes
issued to it and any other Credit Event applicable to it, the
Agent in its individual capacity and not as an Agent shall have
the same rights, powers and duties hereunder and under any other
Agreement executed in connection herewith as any other Lender and
may exercise the same as though it were not the Agent, and the
Agent and its affiliates may accept deposits from, lend money to
and generally engage in any kind of business with the Borrowers
or other affiliate thereof as if it were not the Agent.
Each Lender agrees (i) to reimburse the Agent in the
amount of such Lender's pro rata share (based on its Total
Commitment hereunder) of any expenses incurred for the benefit of
the Lenders by the Agent, including counsel fees and compensation
of agents and employees paid for services rendered on behalf of
the Lenders, not reimbursed by the Borrowers and (ii) to
indemnify and hold harmless the Agent and any of its directors,
officers, employees or agents, on demand, in the amount of its
pro rata share, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted
against it in its capacity as the Agent or any of them in any way
relating to or arising out of this Agreement or any of the other
Loan Documents or any action taken or omitted by it or any of
them under this Agreement or any of the other Loan Documents, to
the extent not reimbursed by the Borrowers; provided, however,
that no Lender shall be liable to the Agent for any portion of
such liabilities, obligations, losses, damages, penalties,
actions, judgment, suits, costs, expenses or disbursements
resulting from the gross negligence or willful misconduct of the
Agent or any of its directors, officers, employees or agents.
Each Lender acknowledges that it has, independently and
without reliance upon the Agent or any other Lender and based on
such documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement
and any other Loan Document to which such Lender is party. 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 decisions in taking or not taking
action under or based upon this Agreement, any other Loan
Document, any related agreement or any document furnished
hereunder.
Subject to the appointment and acceptance of a suc-
cessor Agent as provided below, the Agent may resign at any time
by notifying the Lenders and the Borrowers. Upon any such resig-
nation, the Lenders shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by
such Lenders and shall have accepted such appointment within 30
days after the retiring Agent gives notice of its resignation,
then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent which shall be a bank with an office (or an
affiliate with an office) in New York, New York, having a
combined capital and surplus of at least $500,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor
bank, such successor 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 each of the other
Loan Documents. After any Agent's resignation hereunder, the
provisions of this Article 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 Agent.
The Lenders hereby acknowledge that the Agent shall be
under no duty to take any discretionary action permitted to be
taken by the Agent pursuant to the provisions of this Agreement
or any of the other Loan Documents unless it shall be requested
in writing to do so by the Required Lenders.
X. MANAGEMENT, COLLECTION AND STATUS OF RECEIVABLES AND
OTHER COLLATERAL
SECTION 10.1. Collection of Receivables; Management of
Collateral. (a) Upon the occurrence and during the continuance
of any Default or any Event of Default, or if Availability shall
at any time be less than $9,000,000, and if the Agent in its sole
discretion so requests, the Borrowers will, at their own cost and
expense, (i) arrange for remittances on Receivables to be made
directly to lockboxes designated by the Agent at The Chase
Manhattan Bank, and (ii) promptly deposit all payments received
by the Borrowers on account of Receivables, whether in the form
of cash, checks, notes, drafts, bills of exchange, money orders
or otherwise, in one or more accounts designated by the Agent in
precisely the form received (but with any endorsements of the
Borrowers necessary for deposit or collection), subject to
withdrawal by the Agent only, as hereinafter provided, and until
such payments are deposited, such payments shall be deemed to be
held in trust by the Borrowers for and as the Lenders' property
and shall not be commingled with the Borrowers' other funds. All
remittances and payments that are deposited in accordance with
the foregoing will, after one Business Day (or two Business Days
in the case of deposits that are made after 2:00 p.m., New York
time), be applied by the Agent to reduce the outstanding balance
of the Revolving Credit Loans, subject to final collection in
cash of the item deposited.
Upon the occurrence and continuance of an Event of
Default, the Agent may send a notice of assignment and/or notice
of the Agent's security interest to any and all Customers or any
third party holding or otherwise concerned with any of the
Collateral, and thereafter the Agent shall have the sole right to
collect the Receivables and/or take possession of the Collateral
and the books and records relating thereto. The Borrowers shall
not, without the Agent's prior written consent, grant any
extension of the time of payment of any Receivable, compromise or
settle any Receivable for less than the full amount thereof,
release, in whole or in part, any person or property liable for
the payment thereof, or allow any credit or discount whatsoever
thereon except, prior to the occurrence and continuance of an
Event of Default, as permitted by Section 10.03 hereof.
(b) (i) Each of the Borrowers hereby constitutes the
Agent or the Agent's designee as such Borrower's attorney-in-fact
with power to endorse such Borrower's name upon any notes,
acceptances, checks, drafts, money orders or other evidences of
payment or Collateral that may come into its possession; to sign
such Borrower's name on any invoice or bill of lading relating to
any Receivables, drafts against Customers, assignments and
verifications of Receivables and notices to Customers; to send
verifications of Receivables; upon the occurrence of an Event of
Default, to notify the Postal Service authorities to change the
address for delivery of mail addressed to such Borrower to such
address as the Agent may designate; and to do all other acts and
things necessary to carry out this Agreement. All acts of said
attorney or designee are hereby ratified and approved, and said
attorney or designee shall not be liable for any acts of omission
or commission, for any error of judgment or for any mistake of
fact or law, provided that the Agent or its designee shall not be
relieved of liability to the extent it is determined by a final
judicial decision that its act, error or mistake constituted
gross negligence or willful misconduct. This power of attorney
being coupled with an interest is irrevocable until all of the
Obligations are paid in full and this Agreement and the Total
Commitment is terminated.
(ii) The Agent, without notice to or consent of
the Borrowers, upon the occurrence and during the continuance of
an Event of Default, (A) may sue upon or otherwise collect,
extend the time of payment of, or compromise or settle for cash,
credit or otherwise upon any terms, any of the Receivables or any
securities, instruments or insurance applicable thereto and/or
release the obligor thereon; (B) is authorized and empowered to
accept the return of the goods represented by any of the
Receivables; and (C) shall have the right to receive, endorse,
assign and/or deliver in its name or the name of any of the
Borrowers any and all checks, drafts and other instruments for
the payment of money relating to the Receivables, and each
Borrower hereby waives notice of presentment, protest and non-
payment of any instrument so endorsed.
(c) Nothing herein contained shall be construed to
constitute any Borrower as agent of the Agent for any purpose
whatsoever, and the Agent shall not be responsible or liable for
any shortage, discrepancy, damage, loss or destruction of any
part of the Collateral wherever the same may be located and
regardless of the cause thereof (except to the extent it is
determined by a final judicial decision that the Agent's or a
Lender's act or omission constituted gross negligence or willful
misconduct). The Agent and the Lenders shall not, under any
circumstances or in any event whatsoever, have any liability for
any error or omission or delay of any kind occurring in the
settlement, collection or payment of any of the Receivables or
any instrument received in payment thereof or for any damage
resulting therefrom (except to the extent it is determined by a
final judicial decision that the Agent's or such Lender's error,
omission or delay constituted gross negligence or willful
misconduct). The Agent and the Lenders do not, by anything
herein or in any assignment or otherwise, assume any of the
Borrowers' obligations under any contract or agreement assigned
to the Agent or the Lenders, and the Agent and the Lenders shall
not be responsible in any way for the performance by the
Borrowers of any of the terms and conditions thereof.
(d) If any of the Receivables includes a charge for
any tax payable to any governmental tax authority, the Agent is
hereby authorized (but in no event obligated) in its discretion
to pay the amount thereof to the proper taxing authority for the
account of the applicable Borrower and to charge the Borrowers'
account therefor. The Borrowers shall notify the Agent if any
Receivables include any tax due to any such taxing authority and,
in the absence of such notice, the Agent shall have the right to
retain the full proceeds of such Receivables and shall not be
liable for any taxes that may be due from any Borrower by reason
of the sale and delivery creating such Receivables.
SECTION 10.2. Receivables Documentation. The
Borrowers will, in addition to the monthly Receivables agings
delivered pursuant to this Agreement, at such intervals as the
Agent may reasonably require, furnish such further schedules
and/or information as the Agent may require relating to the
Receivables, including, without limitation, sales invoices. In
addition, the Borrowers shall notify the Agent of any non-
compliance in respect of the representations, warranties and
covenants contained in Section 10.03 hereof. The items to be
provided under this Section 10.02 are to be in form satisfactory
to the Agent and are to be executed and delivered to the Agent
from time to time solely for its convenience in maintaining
records of the Collateral; the Borrowers' failure to give any of
such items to the Agent shall not affect, terminate, modify or
otherwise limit the Agent's Lien or security interest in the
Collateral.
SECTION 10.3. Status of Receivables and Other
Collateral. Each Borrower covenants, represents and warrants
that: (a) it shall be the sole owner, free and clear of all
Liens except in favor of the Agent or otherwise permitted
hereunder, of and fully authorized to sell, transfer, pledge
and/or grant a security interest in each and every item of said
Collateral owned by it; (b) each Receivable shall be a good and
valid account representing an undisputed bona fide indebtedness
incurred or an amount indisputably owed by the Customer therein
named, for a fixed sum as set forth in the invoice relating
thereto with respect to an absolute sale and delivery upon the
specified terms of goods sold by a Borrower, or work, labor
and/or services theretofore rendered by a Borrower; (c) no
Receivable is or shall be subject to any defense, offset,
counterclaim, discount or allowance (as of the time of its
creation) except as may be stated in the invoice relating thereto
or discounts and allowances as may be customary in such
Borrowers's business; (d) none of the transactions underlying or
giving rise to any Receivable shall violate any applicable state
or federal laws or regulations, and all documents relating to any
Receivable shall be legally sufficient under such laws or
regulations and shall be legally enforceable in accordance with
their terms; (e) to the best of its knowledge, each Customer,
guarantor or endorser with respect to any Receivable is solvent
and will continue to be fully able to pay all Receivables on
which it is obligated in full when due; (f) all documents and
agreements relating to Receivables shall be true and correct and
in all respects what they purport to be; (g) to the best of its
knowledge, all signatures and endorsements that appear on all
documents and agreements relating to Receivables shall be genuine
and all signatories and endorsers with respect thereto shall have
full capacity to contract; (h) it shall maintain books and
records pertaining to the Collateral in such detail, form and
scope as the Agent shall reasonably require; (i) it will
immediately notify the Agent if any accounts arise out of
contracts with the United States or any department, agency or
instrumentality thereof, and will execute any instruments and
take any steps required by the Agent in order that all monies due
or to become due under any such contract shall be assigned to the
Agent and notice thereof given to the United States Government
under the Federal Assignment of Claims Act; (j) it will,
immediately upon learning thereof, report to the Agent any
material loss or destruction of, or substantial damage to, any of
the Collateral, and any other matters affecting the value,
enforceability or collectability of any of the Collateral; (k) if
any amount payable under or in connection with any Receivable is
evidenced by a promissory note or other instrument, as such terms
are defined in the Uniform Commercial Code, such promissory note
or instrument shall be immediately pledged, endorsed, assigned
and delivered to the Agent as additional collateral; (l) it shall
not re-date any invoice or sale or make sales on extended dating
beyond that customary in the industry; (m) it shall conduct a
physical count of its inventory at such intervals as the Agent
may reasonably request and promptly supply the Agent with a copy
of such counts accompanied by a report of the value (based on the
lower of cost (on a FIFO basis, or with respect to White Knight,
on a LIFO basis) or market value) of such inventory; and (n) it
is not nor shall it be entitled to pledge the Lenders' credit on
any purchases or for any purpose whatsoever.
SECTION 10.4. Monthly Statement of Account. The Agent
shall render to the Borrowers each month a statement of the
Borrowers' account, which shall constitute an account stated and
shall be deemed to be correct and accepted by and be binding upon
the Borrowers (absent manifest error) unless the Agent receives a
written statement of the Borrowers' exceptions within 30 days
after such statement was rendered to the Borrowers.
SECTION 10.5. Collateral Custodian. Upon the
occurrence and continuance of an Event of Default, the Agent may
at any time and from time to time employ and maintain in the
premises of the Borrowers a custodian selected by the Agent who
shall have full authority to do all acts necessary to protect the
Agent's and Lenders' interests and to report to the Agent
thereon. The Borrowers hereby agree to cooperate with any such
custodian and to do whatever the Agent may reasonably request to
preserve the Collateral. All costs and expenses incurred by the
Agent by reason of the employment of the custodian shall be
charged to the Borrowers' account and added to the Obligations.
XI. MISCELLANEOUS
SECTION 11.1. Notices. Notices, consents and other
communications provided for herein shall be in writing and shall
be delivered or mailed (or in the case of telex or facsimile
communication, delivered by telex, graphic scanning, telecopier
or other telecommunications equipment, with receipt confirmed)
addressed,
(a) if to all or any of the Borrowers, Guarantors, or
Grantors, at 4320 International Boulevard, N.W., Norcross,
Georgia 30093, Attention: Mr. Dan Lee, Chief Financial
Officer, with a copy to Arnall Golden & Gregory, 2800 One
Atlantic Center, 1201 West Peachtree Street, Atlanta,
Georgia 30309-3450, Attention: Stephen D. Fox, Esq.;
(b) if to the Agent, at The Chase Manhattan Bank,
633 Third Avenue, New York, New York 10017, Attention:
Credit Deputy, with a copy to Kaye, Scholer, LLP et al., at
425 Park Avenue, New York, New York 10022, Attention:
Jeffrey M. Epstein, Esq.; and
(c) if to any Lender, at the address set forth below
its name in Schedule 2.01 annexed hereto.
All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed
to have been given on the date of receipt if hand delivered or
three days after being sent by registered or certified mail,
postage prepaid, return receipt requested, if by mail, or upon
receipt if by any telex, facsimile or other telecommunications
equipment, in each case addressed to such party as provided in
this Section 11.01 or in accordance with the latest unrevoked
direction from such party.
SECTION 11.2. Survival of Agreement. All covenants,
agreements, representations and warranties made by any Borrower
or any subsidiary thereof herein and in the certificates or other
instruments prepared or delivered in connection with this
Agreement, any of the Security Documents, any Guarantee or any
other Loan Document, shall be considered to have been relied upon
by the Lenders and shall survive the making by the Lenders of the
Loans and the execution and delivery to the Lenders of the Notes
and occurrence of any other Credit Event and shall continue in
full force and effect as long as the principal of or any accrued
interest on the Notes or any other fee or amount payable under
the Notes or this Agreement or any other Loan Document is
outstanding and unpaid and so long as the Total Commitment has
not been terminated.
SECTION 11.3. Successors and Assigns; Participations.
(a) Whenever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises
and agreements by or on behalf of any Borrower, any Guarantor,
any Grantor, any ERISA Affiliate, any subsidiary of any thereof,
the Agent or the Lenders, that are contained in this Agreement
shall bind and inure to the benefit of their respective
successors and assigns. Without limiting the generality of the
foregoing, the Borrowers specifically confirm that any Lender may
at any time and from time to time pledge or otherwise grant a
security interest in any Loan or any Note (or any part thereof)
to any Federal Reserve Bank. No Borrower may assign or transfer
any of its rights or obligations hereunder without the written
consent of all the Lenders.
(b) Each Lender, without the consent of the Borrowers,
may sell participations to one or more banks or other entities in
all or a portion of its rights and obligations under this Agree-
ment (including, without limitation, all or a portion of its
Revolving Credit Commitment or Term Loan Commitment) and the
Loans owing to it and undrawn Letters of Credit and the Notes
held by it; provided, however, that (i) such Lender's obligations
under this Agreement (including, without limitation, its
Revolving Credit Commitment and Term Loan Commitment) shall
remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of
such obligations, (iii) the banks or other entities buying
participations shall be entitled to the cost protection
provisions contained in Sections 2.10(a) (except to the extent
that application of such Section 2.10(a) to such banks and
entities would cause the Borrowers to make duplicate payments
thereunder), 2.11 and 2.12 hereof, but only to the extent any of
such Sections would be available to the Lender which sold such
participation, and (iv) the Borrowers, the Agent and the other
Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations
under this Agreement; provided, further, however, that each
Lender shall retain the sole right and responsibility to enforce
the obligations of the Borrowers, Grantors and the Guarantors
relating to the Loans, including, without limitation, the right
to approve any amendment, modification or waiver of any provision
of this Agreement, other than amendments, modifications or
waivers with respect to any fees payable hereunder or the amount
of principal or the rate of interest payable on, or the dates
fixed for any payment of principal of or interest on, the Loans
or the release of all Collateral.
(c) Each Lender may assign by novation, to any one or
more banks or other entities without the prior written consent of
the Borrowers but with the prior written consent of the Agent,
all or a portion of its interests, rights and obligations under
this Agreement and the other Loan Documents (including, without
limitation, all or a portion of its Revolving Credit Commitment
or Term Loan Commitment and the same portion of the Loans and
undrawn Letters of Credit at the time owing to it and the Note or
Notes held by it), provided, however, that (i) each such assign-
ment shall be of a constant, and not a varying, percentage of all
of the assigning Lender's rights and obligations under this
Agreement, which shall include the same percentage interest in
the Loans, Letters of Credit and Notes, (ii) the amount of the
Revolving Credit Commitment or Term Loan Commitment of the
assigning Lender being assigned pursuant to each such assignment
(determined as of the date the Assignment and Acceptance with
respect to such assignment is delivered to the Agent) shall be in
a minimum principal amount of $2,000,000 in the aggregate for the
Revolving Credit Commitment and Term Loan Commitment of such
Lender and (iii) the parties to each such assignment shall
execute and deliver to the Agent, for its acceptance and
recording in the Register (as defined below), an Assignment and
Acceptance, together with any Note subject to such assignment and
a processing and recordation fee of $5,000. Upon such execution,
delivery, acceptance and recording and after receipt of the
written consent of the Agent, from and after the effective date
specified in each Assignment and Acceptance, which effective date
shall be at least five (5) Business Days after the execution
thereof, (x) the assignee thereunder shall be a party hereto and,
to the extent provided in such Assignment and Acceptance, have
the rights and obligations of a Lender hereunder and under the
other Loan Documents and (y) the Lender which is assignor
thereunder shall, to the extent provided in such Assignment and
Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Lender's rights and
obligations under this Agreement, such Lender shall cease to be a
party hereto).
(d) By executing and delivering an Assignment and
Acceptance, the Lender which is assignor thereunder and the
assignee thereunder confirm to, and agree with, each other and
the other parties hereto as follows: (i) other than the
representation and warranty that it is the legal and beneficial
owner of the interest being assigned thereunder free and clear of
any adverse claim, such Lender makes no representation or war-
ranty and assumes no responsibility with respect to any state-
ments, warranties or representations made in or in connection
with this Agreement or the execution, legality, validity,
enforceability, perfection, genuineness, sufficiency or value of
this Agreement, the other Loan Documents or any Collateral with
respect thereto or any other instrument or document furnished
pursuant hereto or thereto; (ii) such Lender makes no
representation or warranty and assumes no responsibility with
respect to the financial condition of any Borrower, or any
Grantor or Guarantor or the performance or observance by any
Borrower, Grantor or the Guarantor of any of their respective
obligations under this Agreement, any Guarantees or any of the
other Loan Documents or any other instrument or document fur-
nished pursuant hereto or thereto; (iii) such assignee confirms
that it has received a copy of this Agreement, any Guarantees and
of the other Loan Documents, together with copies of financial
statements and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision
to enter into such Assignment and Acceptance; (iv) such assignee
will, independently and without reliance upon the Agent, such
Lender or any other Lender and based on such documents and infor-
mation as it shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking action under
this Agreement; (v) such assignee appoints and authorizes the
Agent to take such action as the Agent on its behalf and to
exercise such powers under this Agreement as are delegated to the
Agent by the terms hereof, together with such powers as are
reasonably incidental thereto; and (vi) such assignee agrees that
it will perform in accordance with their terms all of the obliga-
tions which by the terms of this Agreement are required to be
performed by it as a Lender.
(e) The Agent shall maintain at its address referred
to in Section 11.01 hereof a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of
the names and addresses of the Lenders and the Revolving Credit
Commitment or Term Loan Commitment, as the case may be, of, and
principal amount of the Loans owing to, each Lender from time to
time (the "Register"). The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrowers,
the Agent and the Lenders may treat each person whose name is
recorded in the Register as a Lender hereunder for all purposes
of this Agreement. The Register shall be available for
inspection by the Borrowers or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
(f) Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and an assignee together with any
Note or Notes subject to such assignment and the written consent
to such assignment, the Agent shall, if such Assignment and
Acceptance has been completed and is precisely in the form of
Exhibit E annexed hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Lenders and
the Borrowers. Within five (5) Business Days after receipt of
such notice, the Borrowers, at their own expense, shall execute
and deliver to the Agent in exchange for each surrendered Note or
Notes a new Note or Notes to the order of such assignee in an
amount equal to its portion of the Term Loan Commitment and/or
Revolving Credit Commitment, as the case may be, assumed by it
pursuant to such Assignment and Acceptance and, if the assigning
Lender has retained any Term Loan Commitment or Revolving Credit
Commitment hereunder, a new Note or Notes to the order of the
assigning Lender in an amount equal to the Term Loan Commitment
and/or Revolving Credit Commitment, as the case may be, retained
by it hereunder. Such new Note or Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such
surrendered Note or Notes, or, with respect to the Term Notes,
the principal amount of the Term Notes outstanding at such time
as evidenced by the Term Note or Notes shall be dated the
effective date of such Assignment and Acceptance and shall
otherwise be in substantially the form of Exhibit A or Exhibit B,
as the case may be. Notes surrendered to the Borrowers shall be
cancelled by the Borrowers.
(g) Notwithstanding any other provision herein, any
Lender may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Sec-
tion 11.03, disclose to the assignee or participant or proposed
assignee or participant, any information, including, without
limitation, any Information, relating to the Borrowers furnished
to such Lender by or on behalf of the Borrowers in connection
with this Agreement; provided, however, that prior to any such
disclosure, each such assignee or participant or proposed
assignee or participant shall agree to preserve the
confidentiality of any confidential Information relating to the
Borrowers received from such Lender.
SECTION 11.4. Expenses; Indemnity. (a) Each Borrower
agrees to pay all reasonable out-of-pocket expenses incurred by
the Agent in connection with the preparation of this Agreement
and the other Loan Documents or with any amendments,
modifications, waivers, extensions, renewals, renegotiations or
"workouts" of the provisions hereof or thereof (whether or not
the transactions hereby contemplated shall be consummated) or
incurred by the Agent or any of the Lenders in connection with
the enforcement or protection of its rights in connection with
this Agreement or any of the other Loan Documents or with the
Loans made or the Notes or Letters of Credit issued hereunder, or
in connection with any pending or threatened action, proceeding,
or investigation relating to the foregoing, including but not
limited to the reasonable fees and disbursements of counsel for
the Agent and ongoing field examination expenses and charges,
and, in connection with such enforcement or protection, the
reasonable fees and disbursements of counsel for the Lenders.
The Borrower further indemnifies the Lenders from and agrees to
hold them harmless against any documentary taxes, assessments or
charges made by any governmental authority by reason of the
execution and delivery of this Agreement or the Notes.
(b) Each Borrower indemnifies the Agent and each
Lender and their respective directors, officers, employees and
agents against, and agrees to hold the Agent, each Lender and
each such person harmless from, any and all losses, claims,
damages, liabilities and related expenses, including reasonable
counsel fees and expenses, incurred by or asserted against the
Lender or any such person arising out of, in any way connected
with, or as a result of (i) the use of any of the proceeds of the
Loans, (ii) this Agreement, the Guarantees, any of the Security
Documents, Acquisition Documents or the other documents
contemplated hereby or thereby, (iii) the performance by the
parties hereto and thereto of their respective obligations
hereunder and thereunder (including but not limited to the making
of the Total Commitment) and consummation of the transactions
contemplated hereby and thereby, (iv) breach of any representa-
tion or warranty, or (v) any claim, litigation, investigation or
proceedings relating to any of the foregoing, whether or not the
Agent, any Lender or any such person is a party thereto;
provided, however, that such indemnity shall not, as to the Agent
or any Lender, apply to any such losses, claims, damages,
liabilities or related expenses to the extent that they result
from the gross negligence or willful misconduct of the Agent or
any Lender.
(c) Each Borrower indemnifies, and agrees to defend
and hold harmless the Agent and the Lenders and their respective
officers, directors, shareholders, agents and employees
(collectively, the "Indemnitees") from and against any loss,
cost, damage, liability, lien, deficiency, fine, penalty or
expense (including, without limitation, reasonable attorneys'
fees and reasonable expenses for investigation, removal, cleanup
and remedial costs and modification costs incurred to permit,
continue or resume normal operations of any property or assets or
business of the Borrowers or any subsidiary thereof) arising from
a violation of, or failure to comply with any Environmental Law
and to remove any Lien arising therefrom except to the extent
caused by the gross negligence or willful misconduct of any
Indemnitee, which any of the Indemnitees may incur or which may
be claimed or recorded against any of the Indemnitees by any
person.
(d) The provisions of this Section 11.04 shall remain
operative and in full force and effect regardless of the
expiration of the term of this Agreement, the consummation of the
transactions contemplated hereby, the repayment of any of the
Loans, the invalidity or unenforceability of any term or
provision of this Agreement or the Notes, or any investigation
made by or on behalf of the Agent or any Lender. All amounts due
under this Section 11.04 shall be payable on written demand
therefor.
SECTION 11.5. Applicable Law. THIS AGREEMENT AND THE
NOTES SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK (OTHER THAN THE CONFLICTS OF LAWS
PRINCIPLES THEREOF).
SECTION 11.6. Right of Setoff. If an Event of Default
shall have occurred and be continuing, upon the request of the
Required Lenders each Lender shall and is hereby authorized at
any time and from time to time, to the fullest extent permitted
by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held
and other indebtedness at any time owing by such Lender to or for
the credit or the account of any Borrower against any and all of
the obligations of the Borrowers now or hereafter existing under
this Agreement and the Notes held by such Lender, irrespective of
whether or not such Lender shall have made any demand under this
Agreement or the Notes and although such obligations may be
unmatured. Each Lender agrees to notify promptly the Agent and
the Borrowers after any such setoff and application made by such
Lender, but the failure to give such notice shall not affect the
validity of such setoff and application. The rights of each
Lender under this Section are in addition to other rights and
remedies (including, without limitation, other rights of setoff)
which may be available to such Lender.
SECTION 11.7. Payments on Business Days. (a) Should
the principal of or interest on the Notes or any fee or other
amount payable hereunder become due and payable on other than a
Business Day, payment in respect thereof may be made on the next
succeeding Business Day (except as otherwise specified in the
definition of "Interest Period"), and such extension of time
shall in such case be included in computing interest, if any, in
connection with such payment.
(b) All payments by any Borrower hereunder and all
Loans made by the Lenders hereunder shall be made in lawful money
of the United States of America in immediately available funds at
the office of the Agent set forth in Section 11.01 hereof.
SECTION 11.8. Waivers; Amendments. (a) No failure or
delay of any Lender in exercising any power or right hereunder
shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment
or discontinuance of steps to enforce such right or power, pre-
clude any other or further exercise thereof or the exercise of
any other right or power. The rights and remedies of the Lenders
hereunder are cumulative and not exclusive of any rights or reme-
dies which they may otherwise have. No waiver of any provision
of this Agreement or the Notes nor consent to any departure by
any Borrower therefrom shall in any event be effective unless the
same shall be authorized as provided in paragraph (b) below, and
then such waiver or consent shall be effective only in the spe-
cific instance and for the purpose for which given. No notice to
or demand on any Borrower in any case shall entitle it to any
other or further notice or demand in similar or other circum-
stances. Each holder of any of the Notes shall be bound by any
amendment, modification, waiver or consent authorized as provided
herein, whether or not such Note shall have been marked to
indicate such amendment, modification, waiver or consent.
(b) Neither this Agreement nor any provision hereof
may be waived, amended or modified except pursuant to an agree-
ment or agreements in writing entered into by the Borrowers and
the Required Lenders; provided, however, that no such agreement
shall (i) change the principal amount of, or extend or advance
the maturity of or the dates for the payment of principal of or
interest on, any Note or reduce the rate of interest on any Note,
(ii) change the Revolving Credit Commitment or Term Loan
Commitment of any Lender or amend or modify the provisions of
this Section, Section 2.06, Section 2.13, Section 4.14 or
Section 11.04 hereof or the definition of "Required Lenders," or
(iii) release any material portion of Collateral, in each case
without the prior written consent of each Lender affected thereby
and provided, further, however, that no such agreement shall
amend, modify or otherwise affect the rights or duties of the
Agent under this Agreement or the other Loan Documents without
the written consent of the Agent. Each Lender and holder of any
Note shall be bound by any modification or amendment authorized
by this Section regardless of whether its Notes shall be marked
to make reference thereto, and any consent by any Lender or
holder of a Note pursuant to this Section shall bind any person
subsequently acquiring a Note from it, whether or not such Note
shall be so marked.
(c) In the event that the Borrowers request, with
respect to this Agreement or any other Loan Document, an
amendment, modification or waiver and such amendment,
modification or waiver would require the unanimous consent of all
of the Lenders in accordance with Section 11.08(b) above, or at
any time that the only Lenders are The Chase Manhattan Bank and
one other Lender and the consent of both Lenders is required, and
such amendment, modification or waiver is agreed to in writing by
the Borrowers and the Required Lenders but not by all of the
Lenders, or by The Chase Manhattan Bank but not the other Lender
where there are only two Lenders, as applicable, then
notwithstanding anything to the contrary in Section 11.08(b)
above, with the written consent of the Borrowers and such
Required Lenders, or The Chase Manhattan Bank, as applicable, the
Borrowers and Required Lenders or The Chase Manhattan Bank, as
applicable, may, but shall not be obligated to, amend this
Agreement without the consent of the Lender or Lenders who did
not agree to the proposed amendment, modification or waiver (the
"Minority Lenders") solely to provide for (i) the termination of
the Revolving Credit Commitment and Term Loan Commitment of each
Minority Lender, (ii) the assignment in accordance with Section
11.03 hereof to one or more persons of each Minority Lender's
interests, rights and obligations under this Agreement
(including, without limitation, all of such Minority Lender's
Revolving Credit Commitment and Term Loan Commitment as well as
its portion of all outstanding Loans and undrawn Letters of
Credit and the Note or Notes held by such Minority Lender) and
the other Loan Documents and/or an increase in the Revolving
Credit Commitment and Term Loan Commitment of one or more
Required Lenders, or The Chase Manhattan Bank, as applicable, in
each case so that after giving effect thereto the Total Revolving
Credit Commitment and Total Term Loan Commitment shall be in the
same amounts as prior to the events described in this paragraph,
(iii) the repayment to the Minority Lenders in full of all Loans
outstanding and accrued interest thereon at the time of the
assignment and/or increase in Commitments described in clause
(ii) above with the proceeds of Loans made by such persons who
are to become Lenders by assignment or with the proceeds of Loans
made by Required Lenders or The Chase Manhattan Bank, as
applicable, who have agreed to increase their Revolving Credit
Commitment and/or Term Loan Commitment, (iv) the payment to the
Minority Lenders by the Borrowers of all fees and other
compensation due and owing such Minority Lenders under the terms
of this Agreement and the other Loan Documents and (v) such other
modifications as the Required Lenders or The Chase Manhattan
Bank, as applicable, and Borrowers shall deem necessary in order
to effect to changes specified in clauses (i) through (iv)
hereof.
SECTION 11.9. Severability. In the event any one or
more of the provisions contained in this Agreement or in the
Notes should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the
remaining provisions contained herein or therein shall not in any
way be affected or impaired thereby.
SECTION 11.10. Entire Agreement; Waiver of Jury Trial,
etc. (a) This Agreement, the Notes and the other Loan Documents
constitute the entire contract between the parties hereto
relative to the subject matter hereof. Any previous agreement
among the parties hereto with respect to the Transactions is
superseded by this Agreement, the Notes and the other Loan
Documents. Except as expressly provided herein or in the Notes
or the Loan Documents (other than this Agreement), nothing in
this Agreement, the Notes or in the other Loan Documents,
expressed or implied, is intended to confer upon any party, other
than the parties hereto, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, the Notes or
the other Loan Documents.
(b) Except as prohibited by law, each party hereto
hereby waives any right it may have to a trial by jury in respect
of any litigation directly or indirectly arising out of, under or
in connection with this Agreement, the Notes, any of the other
Loan Documents or the Transactions.
(c) Except as prohibited by law, each party hereto
hereby waives any right it may have to claim or recover in any
litigation referred to in paragraph (b) of this Section 11.10 any
special, exemplary, punitive or consequential damages or any
damages other than, or in addition to, actual damages.
(d) Each party hereto (i) certifies that no
representative, agent or attorney of any Lender has represented,
expressly or otherwise, that such Lender would not, in the event
of litigation, seek to enforce the foregoing waivers and
(ii) acknowledges that it has been induced to enter into this
Agreement, the Notes or the other Loan Documents, as applicable,
by, among other things, the mutual waivers and certifications
herein.
SECTION 11.11. Confidentiality. The Agent and the
Lenders agree to keep confidential (and to cause their respective
officers, directors, employees, agents and representatives to
keep confidential) all information, materials and documents
furnished to the Agent or any Lender (the "Information"). Not-
withstanding the foregoing, the Agent and each Lender shall be
permitted to disclose Information (i) to such of its officers,
directors, employees, agents and representatives as need to know
such Information in connection with its participation in any of
the Transactions or the administration of this Agreement or the
other Loan Documents; (ii) to the extent required by applicable
laws and regulations or by any subpoena or similar legal process,
or requested by any governmental agency or authority; (iii) to
the extent such Information (A) becomes publicly available other
than as a result of a breach of this Agreement, (B) becomes
available to the Agent or such Lender on a non-confidential basis
from a source other than any Borrower, any Guarantor, any Grantor
or any of their respective subsidiaries or (C) was available to
the Agent or such Lender on a non-confidential basis prior to its
disclosure to the Agent or such Lender by any Borrower, any
Guarantor, any Grantor or any of their respective subsidiaries;
(iv) to the extent any Borrowers, any Guarantor or any of their
respective subsidiaries shall have consented to such disclosure
in writing; (v) in connection with the sale of any Collateral
pursuant to the provisions of any of the other Loan Documents; or
(vi) pursuant to Section 11.03(g) hereof.
SECTION 11.12. Submission to Jurisdiction. (a) Any
legal action or proceeding with respect to this Agreement or the
Notes or any other Loan Document may be brought in the courts of
the State of New York or of the United States of America for the
Southern District of New York, and, by execution and delivery of
this Agreement, each of the Borrowers and each of the Guarantors
hereby accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid
courts.
(b) Each of the Borrowers and each of the Guarantors
hereby irrevocably waive, in connection with any such action or
proceeding, any objection, including, without limitation, any
objection to the laying of venue or based on the grounds of forum
non conveniens, which it may now or hereafter have to the
bringing of any such action or proceeding in such respective
jurisdictions.
(c) Each of the Borrowers and each of the Guarantors
hereby irrevocably consents to the service of process of any of
the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail,
postage prepaid, to each such person, as the case may be, at its
address set forth in Section 11.01 hereof.
(d) Nothing herein shall affect the right of the Agent
or any Lender to serve process in any other manner permitted by
law or to commence legal proceedings or otherwise proceed against
any Borrower or any Guarantor in any other jurisdiction.
SECTION 11.13. Counterparts; Facsimile Signature. This
Agreement may be executed in counterparts, each of which shall
constitute an original but all of which when taken together shall
constitute but one contract, and shall become effective when
copies hereof which, when taken together, bear the signatures of
each of the parties hereto shall be delivered to the Agent.
SECTION 11.14. Headings. Article and Section headings
and the Table of Contents used herein are for convenience of
reference only and are not to affect the construction of, or to
be taken into consideration in interpreting, this Agreement.
SECTION 11.15. Transitional Arrangements. (a) This
Agreement shall supersede the Isolyser Credit Agreement in its
entirety, except that all Collateral thereunder and security
interests granted shall continue for the benefit of all
Obligations under this Agreement. On the Closing Date, the
Microtek Credit Agreement shall terminate and all obligations
thereunder paid in full except for any indemnity in favor of the
Agent or a Lender or similar provisions which by their terms
survive termination and except that all Collateral thereunder and
security interests granted shall continue as security for all
Obligations under this Agreement.
(b) Upon its receipt of its Note or Notes hereunder on
the Closing Date, each Lender will promptly return to the
applicable Borrower, marked "Cancelled", any note of the Borrower
held by such Lender pursuant to the Isolyser Credit Agreement or
the Microtek Credit Agreement.
(c) All interest and all commitment, agent s and other
fees and expenses owing or accruing under or in respect of the
Microtek Credit Agreement shall be paid in full on the Closing
Date.
(d) All commitment, agent s and other fees and
expenses owing or accruing under or in respect of the Isolyser
Credit Agreement shall be paid in full on the Closing Date, and
all interest owing or accruing under the Isolyser Credit
Agreement shall be calculated as of the Closing Date (prorated in
the case of any fractional periods), but shall be paid on the
initial Interest Payment Date under this Agreement.
XII. GUARANTEES
Each Guarantor unconditionally guarantees, as a primary
obligor and not merely as a surety, jointly and severally with
each other Guarantor, the due and punctual payment of the
principal of and interest on each of the Notes, when and as due,
whether at maturity, by acceleration, by notice of prepayment or
otherwise, and the due and punctual performance of all other
Obligations. Each Guarantor further agrees that the Obligations
may be extended and renewed, in whole or in part, without notice
to or further assent from it, and that it will remain bound upon
its guarantee notwithstanding any extension or renewal of any
Obligations.
Each Guarantor waives presentment to, demand of payment
from and protest to the Borrowers of any of the Obligations, and
also waives notice of acceptance of its guarantee and notice of
protest for nonpayment. The obligations of a Guarantor hereunder
shall not be affected by (a) the failure of any Lender or the
Agent to assert any claim or demand or to enforce any right or
remedy against the Borrowers or any other Guarantor under the
provisions of this Agreement, the Notes or any of the other Loan
Documents or otherwise; (b) any rescission, waiver, amendment or
modification of any of the terms or provisions of this Agreement,
the Notes, any of the other Loan Documents, any guarantee or any
other agreement; (c) the release of any security held by the
Agent for the Obligations or any of them; or (d) the failure of
any Lender to exercise any right or remedy against any other
Guarantor of the Obligations.
Each Guarantor further agrees that its guarantee
constitutes a guarantee of payment when due and not of collec-
tion, and waives any right to require that any resort be had by
any Lender to any security (including, without limitation, any
Collateral) held for payment of the Obligations or to any balance
of any deposit account or credit on the books of any Lender in
favor of any Borrower or any other person.
The obligations of each Guarantor hereunder shall not
be subject to any reduction, limitation, impairment or termina-
tion for any reason, including, without limitation, any claim of
waiver, release, surrender, alteration or compromise, and shall
not be subject to any defense or setoff, counterclaim, recoupment
or termination whatsoever by reason of the invalidity, illegality
or unenforceability of the Obligations or otherwise. Without
limiting the generality of the foregoing, the obligations of each
Guarantor hereunder shall not be discharged or impaired or
otherwise affected by the failure of the Agent or any Lender to
assert any claim or demand or to enforce any remedy under this
Agreement, the Notes or under any other Loan Document, any
guarantee or any other agreement, by any waiver or modification
of any provision thereof, by any default, failure or delay,
willful or otherwise, in the performance of the Obligations, or
by any other act or omission which may or might in any manner or
to any extent vary the risk of such Guarantor or otherwise
operate as a discharge of such Guarantor as a matter of law or
equity.
Each Guarantor further agrees that its guarantee shall
continue to be effective or be reinstated, as the case may be, if
at any time payment, or any part thereof, of principal of or
interest on any Obligation is rescinded or must otherwise be
returned by the Agent or any Lender upon the bankruptcy or
reorganization of any Borrower or otherwise.
Each Guarantor hereby waives and releases all rights of
subrogation against each Borrower and its property and all rights
of indemnification, contribution and reimbursement from each
Borrower and its property, in each case in connection with this
guarantee and any payments made hereunder, and regardless of
whether such rights arise by operation of law, pursuant to
contract or otherwise.
IN WITNESS WHEREOF, the Borrowers, Guarantors, the
Agent and the Lenders have caused this Agreement to be duly
executed by their respective authorized officers as of the day
and year first above written.
Borrowers:
ISOLYSER COMPANY, INC.
By:____________________________
Name:
Title:
MEDSURG INDUSTRIES, INC.
By:_____________________________
Name:
Title:
WHITE KNIGHT HEALTHCARE, INC.
By:_____________________________
Name:
Title:
MICROTEK MEDICAL, INC.
By:_____________________________
Name:
Title:
Guarantors:
CREATIVE RESEARCH AND
MANUFACTURING, INC.
By:
Name:
Title:
SAFEWASTE CORPORATION
By:_____________________________
Name:
Title:
Lenders:
THE CHASE MANHATTAN BANK, as Lender
By:______________________________
Name:
Title:
SIGNET BANK/VIRGINIA
By:_____________________________
Name:
Title:
Agent:
THE CHASE MANHATTAN BANK, as Agent
By:______________________________
Name:
Title:
SCHEDULE 2.01(a)
TERM LOAN COMMITMENTS
Approximate
Term Loan Percentage of Total
Lender Commitment Term Loan Commitment
The Chase Manhattan Bank $10,909,090.91 72.7273%
633 Third Avenue
New York, NY 10017
Attention: Credit Deputy
Signet Bank/Virginia $ 4,090,909.09 27.2727%
7 North Eighth Street
Richmond, VA 23219
SCHEDULE 2.01(b)
Revolving Credit Commitments
Approximate
Revolving Percentage of
Credit Total Revolving
Lender Commitment Credit Commitment
The Chase Manhattan Bank $29,090,909.09 72.7273%
633 Third Avenue
New York, New York 10017
Attention: Credit Deputy
Signet Bank/Virginia $10,909,090.91 27.2727%
7 North Eighth Street
Richmond, VA 23219
SCHEDULE 2.02
Domestic Lending Offices
Lender Domestic Lending Office
The Chase Manhattan Bank The Chase Manhattan Bank
633 Third Avenue
New York, NY 10017
Attn: Credit Deputy
Signet Bank/Virginia Signet Bank/Virginia
7 North Eighth Street
Richmond, VA 23219
Attn: Commercial Finance Division
SCHEDULE 2.03
Eurodollar Lending Offices
Lender Eurodollar Lending Office
The Chase Manhattan Bank The Chase Manhattan Bank
633 Third Avenue
New York, NY 10017
Attn: Credit Deputy
Signet Bank/Virginia Signet Bank/Virginia
7 North Eighth Street
Richmond, VA 23219
Attn: Commercial Finance Division