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$20,000,000
CREDIT AGREEMENT
dated as of December 19, 1996
by and among
HOOPER HOLMES, INC.
as Borrower,
THE LENDERS LISTED ON THE SIGNATURE PAGES HEREOF
as Lenders,
AND
FIRST UNION NATIONAL BANK
as Agent
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TABLE OF CONTENTS
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Page
SECTION 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION...................... 1
1.01 Definitions............................................... 1
1.02 Principles of Construction................................ 13
SECTION 2. AMOUNT AND TERMS OF CREDIT...................................... 13
2.01 Revolving Credit.......................................... 13
2.02 Revolving Credit Payment and Maturity; Extension of
Maturity.................................................. 14
2.03 Procedure for Revolving Credit Loan Borrowings............ 14
2.04 Reduction of Commitment................................... 15
2.05 Interest.................................................. 16
2.06 Conversions and Continuations............................. 16
2.07 Letters of Credit......................................... 17
2.08 Letter of Credit Requests................................. 17
2.09 Letter of Credit Participations........................... 17
2.10 Agreement to Repay Letter of Credit Drawings.............. 19
2.11 Indemnification; Nature of Agent's Duties................. 20
2.12 Increased Costs; Illegality; Capital Adequacy; Funding
Losses.................................................... 21
2.13 Computation............................................... 23
SECTION 3. FEES............................................................ 23
3.01 Upfront Fee............................................... 23
3.02 Commitment Fee............................................ 24
3.03 Letter of Credit Fee...................................... 24
3.04 Letter of Credit Processing Fee........................... 24
SECTION 4. PREPAYMENTS AND PAYMENTS GENERALLY.............................. 24
4.01 Voluntary Prepayments..................................... 24
4.02 Mandatory Prepayments..................................... 24
4.03 Application of Mandatory Prepayments...................... 25
4.04 General Provisions as to Payments......................... 25
4.05 Net Payments.............................................. 25
4.06 Debiting of Account....................................... 26
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SECTION 5. CONDITIONS...................................................... 26
5.01 Documents Required for Initial Advance.................... 26
5.02 Requirements for Any Advance and Issuance of Letter
of Credit................................................. 29
SECTION 6. REPRESENTATIONS AND WARRANTIES.................................. 29
6.01 Organization; Authority................................... 29
6.02 Use of Proceeds; Margin Regulation........................ 30
6.03 Specific Financial Statements............................. 30
6.04 Burdensome Agreements..................................... 30
6.05 Suits..................................................... 31
6.06 Defaults.................................................. 31
6.07 ERISA..................................................... 31
6.08 Tax Returns and Taxes..................................... 31
6.09 Compliance with Statutes, etc............................. 31
6.10 Environmental Compliance.................................. 32
6.11 No Notification of Dumping of Hazardous Substances........ 32
6.12 No Authorizations or Approvals............................ 32
6.13 Not an Investment Company................................. 32
6.14 Subsidiaries.............................................. 32
6.15 Intellectual Property, etc................................ 32
6.16 Labor Matters............................................. 32
6.17 Assets and Properties..................................... 32
6.18 Insurance................................................. 33
6.19 True and Complete Disclosure.............................. 33
SECTION 7. AFFIRMATIVE COVENANTS........................................... 33
7.01 Payment of Indebtedness................................... 33
7.02 Payment of Taxes, Etc..................................... 33
7.03 Reporting Requirements.................................... 34
7.04 Compliance Certificate.................................... 35
7.05 Notice of Certain Events.................................. 35
7.06 Preservation of Property; Insurance....................... 35
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7.07 Conduct of Business and Maintenance of Existence.......... 35
7.08 Operation of Properties................................... 35
7.09 Access to Properties, Books and Records................... 35
7.10 Keeping of Records and Books of Account................... 36
7.11 ERISA Compliance.......................................... 36
7.12 Environmental Liens....................................... 36
7.13 Removal of Hazardous Substances........................... 36
7.14 Further Assurances........................................ 37
SECTION 8. NEGATIVE COVENANTS.............................................. 37
8.01 Incur Indebtedness........................................ 37
8.02 Negative Pledge........................................... 37
8.03 Sale of Assets; Liquidation; Merger; Acquisitions......... 38
8.04 Nature of Business........................................ 39
8.05 Dividends, Stock Redemption, Etc.......................... 39
8.06 Accounts.................................................. 39
8.07 Sale-Leaseback Transactions............................... 39
8.08 Prepayment of Other Indebtedness.......................... 40
8.09 Investments............................................... 40
8.10 Loans and Advance Generally............................... 40
8.11 Loans and Advances to Officers............................ 40
8.12 Create Subsidiaries....................................... 40
8.13 Hazardous Substances...................................... 40
8.14 Consolidated Tangible Net Worth........................... 40
8.15 Consolidated Debt Service Coverage Ratio.................. 41
8.16 Consolidated Funded Debt to Cash Flow Ratio............... 41
8.17 Use of Proceeds........................................... 41
SECTION 9. EVENTS OF DEFAULT AND REMEDIES.................................. 41
9.01 Events of Default......................................... 41
9.02 Right of Set-off.......................................... 44
9.03 Sharing of Payments, Etc.................................. 45
9.04 Turnover of Property held by Affiliate.................... 45
9.05 Remedies Cumulative; No Waiver............................ 45
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SECTION 10. THE AGENT...................................................... 46
10.01 Appointment.............................................. 46
10.02 Delegation of Duties..................................... 46
10.03 Exculpatory Provisions................................... 46
10.04 Reliance by Agent........................................ 46
10.05 Notice of Default........................................ 47
10.06 Non-Reliance on Agent and Other Lenders.................. 47
10.07 Indemnification.......................................... 48
10.08 Agent in Its Individual Capacity......................... 48
10.09 Successor Agent.......................................... 48
SECTION 11. MISCELLANEOUS.................................................. 48
11.01 Notices.................................................. 49
11.02 Costs and Expenses....................................... 49
11.03 Payment Due on a Day Other Than a Business Day........... 49
11.04 Governing Law............................................ 49
11.05 Counterparts; Integration................................ 49
11.06 Amendment or Waiver...................................... 50
11.07 Successors and Assigns................................... 50
11.08 Participations and Assignments........................... 50
11.09 Severability............................................. 51
11.10 Consent to Jurisdiction and Service of Process........... 51
11.11 Confidentiality.......................................... 52
11.12 Indemnification.......................................... 52
11.13 Inconsistencies.......................................... 53
11.14 Headings................................................. 53
11.15 Exhibits and Annexes..................................... 53
11.16 Judicial Proceeding; Waivers............................. 53
EXHIBIT A FORM OF REVOLVING CREDIT NOTE
EXHIBIT B FORM OF NOTICE OF BORROWING
EXHIBIT C FORM OF LETTER OF CREDIT REQUEST
EXHIBIT D FORM OF SUBSIDIARY GUARANTY AGREEMENT
EXHIBIT E COMPLIANCE CERTIFICATE OF BORROWER
ANNEX I BORROWER INFORMATION
ANNEX II EXISTING LETTERS OF CREDIT
ANNEX III PROVISIONS FOR ALTERNATIVE DISPUTE RESOLUTION
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made as of this 19th day of December, 1996,
by and among HOOPER HOLMES, INC. (the Borrower), the LENDERS listed on the
signature pages hereof and FIRST UNION NATIONAL BANK, as Agent.
WHEREAS, the Borrower has certain credit accommodations available to
it pursuant to that certain Credit Agreement, dated as of November 20, 1995, by
and among the Borrower, the Agent (then known as First Fidelity Bank, National
Association) and the lender parties thereto (as amended from time to time, the
Existing Credit Agreement) and desires to modify and replace said
accommodations, and refinance outstanding balances thereunder, with the credit
facilities provided herein; and
WHEREAS, subject to and upon the terms and conditions herein set
forth, the Lenders are willing to make available to the Borrower the credit
facilities provided herein to replace such existing credit accommodations; and
WHEREAS, for administrative convenience and to properly reflect (i)
the replacement of the credit accommodations provided under the Existing Credit
Agreement with the credit facilities herein provided and (ii) the relationship
and obligations of the Lenders as to one another with respect to such credit
facilities, the outstanding balances of all "Revolving Credit Loans" under the
Existing Credit Agreement shall be refinanced as Revolving Credit Loans
hereunder and any "Letters of Credit" issued under the Existing Credit Agreement
and outstanding as of the date hereof, shall be deemed to have been issued
hereunder in accordance with Section 2.07(b) hereof.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and intending to be legally bound
hereby, the parties hereto agree as follows:
SECTION 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION.
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1.01 Definitions. Unless the context requires otherwise, the
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following terms used throughout this Agreement shall have the meanings assigned
to such terms below (such meanings to be equally applicable to both the singular
and plural number of the terms defined):
Affiliate shall mean, as applied to any Person, any other Person
that directly or indirectly controls, is controlled by, or is under common
control with, that Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling", "controlled by"
and
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"under common control with"), as applied to any Person, means the possession,
directly or indirectly, of the power to vote ten percent (10%) or more of the
securities or other ownership interests having voting power for the election of
directors (or other persons performing similar functions) of such Person or
otherwise to direct or cause the direction of the management and policies of
that Person, whether through the ownership of voting securities or by contract
or otherwise.
Agent shall mean First Union National Bank, in its capacity as agent
for the Lenders hereunder, and its successors in such capacity.
Agreement shall mean this Credit Agreement, as the same may be from
time to time modified, amended and/or supplemented.
Applicable Margin shall mean (A) with respect to Prime Rate Loans,
minus 50 basis points (-.50%) and (B) with respect to LIBOR Loans, plus 150
basis points (1.50%); provided, however, that from and after the first day of
any Applicable Margin Adjustment Period to and including the last day of such
Applicable Margin Adjustment Period, the Applicable Margin shall be equal to the
percentages determined by reference to the Consolidated Funded Debt to Cash Flow
Ratio of the Borrower for the Test Period last ended, as follows:
If Such Ratio Is: Applicable Margin for Applicable Margin for
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Prime Rate Loans LIBOR Loans
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Equal to or less than minus 25 basis plus 175 basis points (1.75%)
2.50:1.00 but points (-.25%)
greater than 1.75:1.00
Equal to or less than minus 50 basis plus 150 basis points (1.50%)
1.75:1.00 but greater points (-.50%)
than 1.35:1.00
Equal to or less than minus 100 basis plus 100 basis points (1.00%)
1.35:1.00 but greater points (-1.00%)
than 1.00 to 1.00
Equal to or less minus 125 basis points plus 75 basis points (.75%)
than 0.99:1.00 (-1.25%)
Notwithstanding the foregoing, at all times during which there exists a Default
or Event of Default, the Applicable Margin (A) with respect to Prime Rate Loans,
shall be zero and (B) with respect to LIBOR Loans, shall be 200 basis points
(2.00%).
Applicable Margin Adjustment Period shall mean the period commencing
April 1, 1997 and ending June 30, 1997, and each calendar quarter occurring
thereafter.
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Approved Subordinated Indebtedness shall mean Indebtedness of the
Borrower that (i) is subordinated on terms and conditions approved in writing by
the Lenders and (ii) does not constitute Guaranteed Indebtedness of the Borrower
or any Subsidiary or Affiliate of the Borrower.
Availability shall mean, at any particular time, the amount by which
the Maximum Available Credit Amount at such time exceeds the Credit Obligations
at such time.
Business Day shall mean any day other than a Saturday, Sunday, or a
day on which the Agent and the Lenders are authorized or obligated by law or
executive order to be closed.
Capital Expenditures shall mean, with respect to any Person, without
duplication and for any period, the aggregate value attributed in accordance
with GAAP, to acquisitions during such period by such Person of any asset,
tangible or intangible, or replacements or substitutions therefor or additions
thereto which such Person treated as a non-current asset on such Person's
financial statements, including, without limitation, (y) the acquisition or
construction of assets having a useful life of more than one year, and (z)
assets acquired during such period in connection with Capitalized Leases.
Capitalized Lease shall mean any lease with respect to which the
obligation to pay rent or other amounts constitutes Capitalized Lease
Obligations.
Capitalized Lease Obligations shall mean obligations to pay rent or
other amounts under a lease of (or other agreement conveying the right to use)
real and/or personal property which obligations are required to be classified
and accounted for as capital leases on a balance sheet in accordance with GAAP.
Closing Date shall mean the date on which all of the conditions set
forth in Section 5.01 hereof have been fulfilled.
Code shall mean the Internal Revenue Code of 1986, as amended.
Consolidated shall mean an accounting presentation which includes any
consolidated Subsidiary of the Borrower.
Consolidated Debt Service Ratio shall mean the ratio of (A) the
Borrower's net income as determined in accordance with clause (B) of the
definition of Consolidated Funded Debt to Cash Flow Ratio plus amounts (without
duplication) deducted therefrom in determining net income for the relevant Test
Period in respect of interest expense, tax expense, but less unfinanced Capital
Expenditures to (B) the aggregate amount of the Indebtedness of the Borrower of
the type described in Clause (A) of the definition of Consolidated Funded Debt
to Cash Flow Ratio plus all cash and non-cash interest (including, without
limitation, capitalized interest) accrued and/or payable during the
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relevant Test Period on or in connection with any Indebtedness of the Borrower
of any type, in each case determined for the relevant Test Period on a
Consolidated basis in accordance with GAAP, consistently applied.
Consolidated Funded Debt to Cash Flow Ratio shall mean the ratio of
(A) the aggregate amount of the Indebtedness of the Borrower which by its terms
or by the terms of any instrument or agreement relating thereto, matures or
which is otherwise payable, one year or more from, or is directly or indirectly
renewable or extendible at the option of the obligor in respect thereof to a
date one year or more from, the date of the creation thereof, and any current
maturities of any such Indebtedness (including, without limitation, all of the
Credit Obligations hereunder and Capital Lease Obligations of the Borrower) to
(B) the Borrower's net income (excluding non-cash extraordinary items or non-
cash post-tax non-operating earnings adjustments) plus depreciation plus
amortization, in each case determined for the relevant Test Period on a
Consolidated basis in accordance with GAAP, consistently applied.
Credit Commitment shall mean, with respect to each Lender, the amount
set forth opposite such Lender's name under the heading Credit Commitment on the
signature pages hereof which is such Lender's Pro Rata Share of the Maximum
Available Credit Amount that such Lender has agreed to advance hereunder, as the
same may be (i) reduced from time to time pursuant to Section 2.04 hereof or
(ii) adjusted from time to time as a result of assignments to and from the
Lenders pursuant to Section 11.08 hereof.
Credit Documents shall mean this Agreement, each of the Revolving
Credit Notes, each Subsidiary Guaranty, each Notice of Borrowing, each Letter of
Credit Request and all other credit accommodations, notes, loan agreements,
guaranties, security agreements, mortgages, instruments, pledge agreements,
assignments, acceptance agreements, commitments, facilities, reimbursement
agreements and any other agreements and documents, now or hereafter existing,
creating, evidencing, guarantying, securing or relating to any or all of the
Obligations, together with all amendments, supplements, modifications, renewals,
or extensions thereof.
Credit Obligations shall mean, at any particular time, the sum of (A)
the aggregate principal amount of the outstanding Revolving Credit Loans and (B)
the Letter of Credit Outstandings.
Default shall mean any event, act or condition which, with notice or
the lapse of time, or both, would constitute an Event of Default.
Drawings shall have the meaning assigned to such term in Section
2.10(b) hereof.
Dumping shall mean the releasing, spilling, emptying, pouring,
emitting, dumping or discharging of any hazardous substance into, or otherwise
permitting to exist any hazardous substance in, the environment.
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ERISA shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time. Section references to ERISA are to ERISA, as in
effect at the date of this Agreement, and to any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
ERISA Affiliate shall mean any person (as defined in Section 3(9) of
ERISA) which together with the Borrower or any of its Subsidiaries would be
deemed to be a "single employer" within the meaning of Section 414 of the Code.
Event of Default shall have the meaning assigned to such term in
Section 9 hereof.
Existing Credit Agreement shall have the meaning assigned to such term
in the Recitals hereof.
Existing Letter of Credit shall have the meaning assigned to such term
in Section 2.07(b) hereof.
Facility shall mean either of the two (2) facilities established under
this Agreement, i.e., the Revolving Credit Facility and the Letter of Credit
Facility.
FASB shall mean the officially released written statements of the
Financial Accounting Standards Board in general usage from time to time in the
accounting profession in the United States.
Federal Funds Rate shall mean, for any period, a fluctuating interest
rate equal for each day during such period to 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 by the Federal Reserve
Bank of New York on the Business Day next preceding such day for amounts in
immediately available funds comparable to the principal amount of the relevant
indebtedness or, if such rate is not so published for any day for which the next
preceding day is a Business Day, the average of the quotations for such day on
such transactions received by the Agent from three (3) Federal Funds brokers of
recognized standing selected by the Agent.
First Fidelity Term Loan Agreement shall mean that certain Term Loan
Agreement, dated December 31, 1992, by and between the Borrower and First Union
National Bank (then known as First Fidelity Bank, National Association), as
amended from time to time.
Funding Losses shall have the meaning assigned to such term in Section
2.12(c) hereof.
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GAAP shall mean generally accepted accounting principles in effect
from time to time in the United States.
Guaranteed Indebtedness shall mean, as to any Person, all Indebtedness
of the type referred to in clauses (i) through (ix) of the definition of
Indebtedness in this Agreement guaranteed directly or indirectly in any manner
by such Person, or in effect guaranteed directly or indirectly by such Person
through an agreement (i) to pay or purchase such Indebtedness or to advance or
supply funds for the payment or purchase of such Indebtedness, (ii) to purchase,
sell or lease (as lessee or lessor) property, or to purchase or sell services,
primarily for the purpose of enabling the debtor to make payment of such
Indebtedness or to assure the holder of such Indebtedness against loss, (iii) to
supply funds to or in any other manner invest in the debtor (including any
agreement to pay for property or services irrespective of whether or not such
property is received or such services are rendered), or (iv) otherwise to assure
a creditor against loss.
Guarantor shall mean Health Care.
Health Care shall mean Hooper Holmes Health Care, Inc., a New Jersey
corporation and a wholly owned subsidiary of the Borrower.
Indebtedness shall mean, as to any Person (i) all indebtedness of such
Person for borrowed money, (ii) all obligations of such Person evidenced by
bonds, debentures, notes, or other similar instruments, (iii) all obligations of
such Person to pay the deferred purchase price of property or services, (iv) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property, (v)
all Capitalized Lease Obligations of such Person, (vi) all obligations,
contingent or otherwise, of such Person under acceptances, letters of credit or
similar facilities, (vii) all obligations of such Person to purchase, redeem,
retire, defease or otherwise acquire for value any capital stock of such person
or any warrants, rights or options to acquire such capital stock, valued, in the
case of redeemable preferred stock, at the greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid dividends, (viii) all
obligations of such Person in respect of interest rate swap agreements, currency
swap agreements and other similar agreements designed to hedge against
fluctuations in interest rates or foreign exchange rates, (ix) all obligations
of production payments from property operated by or on behalf of such Person and
other similar arrangements with respect to natural resources, (x) all Guaranteed
Indebtedness of such Person, and (xi) all Indebtedness of the type referred to
in clauses (i) through (x) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on property (including, without limitation, accounts and contracts
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness.
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Interest Period shall mean with respect to any LIBOR Loan:
(i) initially, the period commencing on the borrowing or conversion date,
as the case may be, with respect to such LIBOR Loan and ending one
(1), two (2) or three (3) months thereafter, as selected by the
Borrower in its Notice of Borrowing delivered pursuant to Section
2.03(a) hereof, or in its notice of conversion delivered pursuant to
Section 2.06(a) hereof, as the case may be, given with respect
thereto; and
(ii) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such LIBOR Loan and ending one
(1), two (2) or three (3) months thereafter, as selected by the
Borrower in its notice of continuance delivered pursuant to Section
2.06(b) hereof, with respect thereto;
provided that, all of the foregoing provisions relating to Interest Periods are
subject to the following:
(i) if any Interest Period pertaining to a LIBOR Loan would otherwise end
on a day that is not a LIBOR Business Day, such Interest Period shall
be extended to the next succeeding LIBOR Business Day unless the
result of such extension would be to carry such Interest Period into
another calendar month in which event such Interest Period shall end
on the immediately preceding LIBOR Business Day; and
(ii) any Interest Period pertaining to a LIBOR Loan that begins on the last
LIBOR Business Day of a calendar month (or on a day for which there is
no numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last LIBOR Business Day of a
calendar month.
Lender shall mean each Lender listed on the signature page hereto,
each assignee which becomes a Lender pursuant to Section 11.08 hereof, and their
respective successors and assigns.
Letter of Credit shall mean each standby letter of credit issued
pursuant to Section 2.07 hereof.
Letter of Credit Facility shall have the meaning assigned to such term
in Section 2.07 hereof.
Letter of Credit Fee shall have the meaning assigned to such term in
Section 3.03 hereof.
Letter of Credit Outstandings shall mean, at any time, the sum of,
without duplication (i) the aggregate Stated Amount of all outstanding Letters
of Credit; (ii) the aggregate
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amount of all Unpaid Drawings in respect of all Letters of Credit; and (iii) the
Stated Amount of all Letters of Credit requested pursuant to Section 2.08 hereof
but not yet issued.
Letter of Credit Processing Fees shall have the meaning assigned to
such term in Section 3.04 hereof.
Letter of Credit Request shall have the meaning assigned to such term
in Section 2.08 hereof.
Letter of Credit Sublimit shall mean Four Million Dollars
($4,000,000); provided, however, that in no event shall the Letter of Credit
Sublimit be at any time greater than the Maximum Available Credit Amount.
LIBOR Business Day shall mean any Business Day on which dealing in the
London interbank market may be carried on by commercial banks in London,
England.
LIBOR Loan shall mean any Loan that bears interest at a rate of
interest based upon the LIBOR Rate.
LIBOR Rate shall mean, with respect to each day during each Interest
Period pertaining to a LIBOR Loan, the per annum rate (rounded to the next
higher 1/100 of 1%) for deposits in United States dollars for a period equal to
the relevant Interest Period as reported on the Telerate Page 3750 as of 11:00
a.m. (London time), on the day that is two (2) LIBOR Business Days prior to the
commencement of such Interest Period (or if not so reported, then as determined
by the Agent from another recognized source for London interbank market
quotations), adjusted for reserves by dividing that rate by 1.00 minus the LIBOR
Reserve.
LIBOR Reserve shall mean the maximum percentage reserve requirements
(rounded to the next higher 1/100 of 1% and expressed as a decimal) of the Agent
(including, without limitation, basic, supplemental, marginal and emergency
reserves), in effect on any day during the relevant Interest Period under
Regulation D with respect to eurocurrency funding currently referred to as
"Eurocurrency liabilities" in Regulation D.
Lien shall mean any mortgage, pledge, security interest, encumbrance,
lien or other form of charge or preferential arrangement of any kind (including,
without limitation, any agreement to give any of the foregoing, any conditional
sale or other title retention or any lease in the nature thereof).
Loan shall mean each and every Revolving Credit Loan made by any
Lender hereunder. For purposes of this Agreement, the continuation or conversion
of a Prime Rate Loan or LIBOR Loan shall not constitute the making of a new
Loan.
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Maximum Available Credit Amount shall mean Twenty Million Dollars
($20,000,000), less any reduction to said Maximum Revolving Credit Amount
pursuant to Section 2.04 hereof.
Multi-employer Plan shall mean a Plan which is a multi-employer plan
as defined in Section 4001(a)(3) of ERISA.
Natural Resources shall mean each and all of the atmosphere, air,
waters, earth, land, minerals, flora, fauna, fish, shellfish, wildlife, biota,
and/or other natural resources.
Notice of Borrowing shall have the meaning assigned to such term in
Section 2.03(a) hereof.
Obligations shall mean any and all obligations and indebtedness of
every kind and description of the Borrower owed to the Agent, the Lenders or any
Affiliate of the Agent or any Lender (including, without limitation, the Credit
Obligations, any interest accrued thereon and any other amount due hereunder),
whether primary or secondary, direct or indirect, absolute or contingent, sole,
joint or several, secured or unsecured, due or to become due, contractual or
tortious, arising by operation of law or otherwise, or now or hereafter
existing, whether incurred by the Borrower, including, without limitation,
principal, interest and fees, including, without limitation, late fees and
expenses, including, without limitation, attorneys' fees and costs and/or
allocated fees and costs of any Lender's in-house legal counsel.
Obligor shall mean the Borrower, each Guarantor, and every other
maker, endorser, guarantor or surety of or for the Obligations.
Payment Office shall mean the office identified as such below the
signature of the Agent and the Lenders on the signature pages hereto, or such
other office as such parties may designate in writing to the other parties
hereto.
PBGC shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA, and any entity succeeding to any or
all of its functions under ERISA.
Permitted Investments shall mean (i) readily marketable direct
obligations of the Government of the United States of America or any agency or
instrumentality thereof or any full faith and credit obligations of the United
States Government or obligations guaranteed by the United States Government and
its agencies maturing within one (1) year of purchase, (ii) repurchase
agreements having a duration of not more than sixty (60) days that are
collateralized by full faith and credit obligations of the United States
Government or obligations guaranteed by the United States Government and its
agencies, (iii) interests in investment companies registered under the
Investment Company Act of 1940, as amended (or in a separate portfolio of such
an investment company), that invest primarily in full faith and credit
obligations of the United States Government or obligations
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guaranteed by the United States Government and its agencies and repurchase
agreements collateralized by such obligations, (iv) time deposits with any
office located in the United States of the Lenders or any other bank or trust
company which is organized under the laws of the United States and has combined
capital, surplus and undivided profits of not less than $500,000,000 or with any
bank which is organized other than under the laws of the United States (x) the
commercial paper of which is rated at least A-1+ by Standard & Poor's
Corporation (S&P) and P-1 by Moody's Investors Service, Inc. (Moody's) (or, if
such commercial paper is rated only by S&P, at least A-1+ by S&P, or if such
commercial paper is rated only by Moody's, at least P-1 by Moody's) or (y) the
long term senior debt of which is rated at least AA by S&P and Aa2 by Moody's
(or, if such debt is rated only by S&P, at least AA by S&P, or if such debt is
rated only by Moody's, at least Aa2 by Moody's), (v) commercial paper having a
maturity of not more than one year from the date of such investment and rated at
least A-1 by S&P and P-1 by Moody's (or, if such commercial paper is rated only
by S&P, at least A-1 by S&P or, if such commercial paper is rated only by
Moody's, at least P-1 by Moody's), (vi) instruments held for collection in the
ordinary course of business, (vii) any equity or debt securities or other form
of debt instrument obtained in settlement of debts previously contracted, (viii)
any equity or debt securities obtained by the Borrower in connection with any
acquisition permitted pursuant to clause (B) of Section 8.03 hereof, and (ix)
any equity or debt securities held by the Borrower as of the Closing Date that
are listed on Annex I hereto and any distributions of securities made in respect
thereof.
Permitted L/C Obligation shall mean, as to any Letter of Credit,
obligations (i) in connection with the Borrower's "Liberty Mutual" worker's
compensation self-insurance program; (ii) to support Indebtedness supported by
the Existing Letters of Credit; and (iii) to support any other obligation of the
Borrower acceptable to the Agent and the Required Lenders, in their sole
discretion.
Permitted Liens shall mean those Liens permitted to exist pursuant to
Section 8.02 hereof.
Person shall mean any individual, partnership, joint venture, firm,
corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
Plan shall mean any employee benefit plan which is subject to ERISA
and which covers the employees or former employees of the Borrower, any of its
Subsidiaries or an ERISA Affiliate, under which the Borrower, any of its
Subsidiaries or an ERISA Affiliate has any obligation or liability or under
which the Borrower, any of its Subsidiaries or an ERISA Affiliate has made
contributions within the preceding five years. References herein to a Plan shall
include any Multiemployer Plan.
Prime Rate shall mean the per annum rate of interest established by
the Agent as its reference rate in making loans, and does not reflect the rate
of interest charged to any particular borrower or class of borrowers. The
Borrower acknowledges that the Prime Rate is not tied to any external index or
rate of interest and that the rate of interest charged hereunder shall change
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automatically and immediately as of the date of any change in the Prime Rate,
without notice to the Borrower.
Prime Rate Loan shall mean any Loan that bears interest at a rate of
interest based upon the Prime Rate.
Pro Rata Share shall mean, with respect to each of the Facilities for
each Lender at any time, the percentage obtained by dividing such Lender's
Credit Commitment by the Maximum Available Credit Amount (in each case, as
adjusted from time to time in accordance with the provisions of this Agreement).
Regulation D shall mean Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing reserve requirements.
Required Lenders shall mean Lenders holding more than sixty-six and
two/thirds percent (66.67%) of the aggregate of all the Credit Commitments of
the Lenders, or, if the Credit Commitments have been terminated, the Lenders
holding more than sixty-six and two/thirds percent (66.67%) of such Credit
Commitments immediately prior to such termination.
Revolving Credit Expiration Date shall mean January 2, 2000, as the same
may be extended for an additional one (1) year period in accordance with Section
2.02 hereof.
Revolving Credit Facility shall have the meaning assigned to such term
in Section 2.01 hereof.
Revolving Credit Loans shall have the meaning assigned to such term in
Section 2.01 hereof.
Revolving Credit Notes shall have the meaning assigned to such term in
Section 2.01 hereof.
Revolving Credit Period shall mean the period from and including the
Closing Date to but excluding the Revolving Credit Expiration Date or such
earlier date on which the Lenders' obligation to make Revolving Credit Loans
shall have terminated as provided herein.
SEC shall mean the Securities and Exchange Commission or any
governmental entity which may be substituted therefor.
Stated Amount shall mean, as to any Letter of Credit, the maximum amount
available to be drawn thereunder, determined without regard to whether any
conditions to drawing could then be met.
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Subsidiary shall mean, as to any Person, any corporation or other entity
of which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned or controlled by such
Person, one or more of the other Subsidiaries of such Person or any combination
thereof.
Subsidiary Guaranty shall mean that certain Guaranty Agreement, dated
even date herewith, provided by Health Care in favor of the Agent for the
ratable benefit of the Lenders, substantially in the form of Exhibit D hereto.
Tangible Net Worth shall mean, at any time:
(a) the total assets of the Borrower which would be shown as
assets on a consolidated balance sheet of the Borrower and its
Subsidiaries as of such time prepared in accordance with GAAP,
consistently applied, after subtracting therefrom the aggregate amount
of any capitalized research and development costs, capitalized interest,
debt discount and expense, goodwill, patents, trademarks, copyrights,
franchises, licenses, amounts owing from officers, directors,
shareholders, principals, partners, or other Affiliates of the Borrower
and any investments in any Affiliate of any of the foregoing, and such
other assets as are properly classified as "intangible assets"
determined in accordance with GAAP, consistently applied,
minus
(b) the total liabilities of the Borrower which would be shown
as liabilities on a consolidated balance sheet of the Borrower and its
Subsidiaries as of such time, prepared in accordance with GAAP,
consistently applied;
provided, however, that for purposes of the foregoing determination of Tangible
Net Worth, increases thereto from stock offering and FASB changes shall not be
included.
Telerate Page 3750 shall mean the display designated as "Page 3750" on
the Dow Jones Telerate Service (or such other page as may replace that page on
that service for the purpose of displaying London interbank offered rates of
major banks).
Test Period shall mean, with respect to any applicable determination
under this Agreement, a period of twelve (12) consecutive months (taken as one
accounting period) and ending on the last day of the fiscal quarter of the
Borrower then last ended.
Type shall mean any type of Loan determined with respect to its interest
option applicable thereto, i.e., a Prime Rate Loan or LIBOR Loan.
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Unpaid Drawing shall have the meaning assigned to such term in Section
2.10 hereof.
1.02 Principles of Construction.
---------------------------
(a) References. All references to sections, schedules and
exhibits are to sections, schedules and exhibits in or to this Agreement unless
otherwise specified. The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.
(b) Accounting Terms. All accounting terms not specifically
defined herein or in any exhibit hereto shall be construed in accordance with
GAAP in conformity with those principles used in the preparation of the
financial statements referred to in Section 7.03 of this Agreement. Any non-cash
accrual accounting charges or gains arising from the adoption of FASB rulings
not yet fully adopted by the Borrower and the Guarantors shall not be included
in the definitions of said accounting terms, and therefore shall be excluded for
the purposes of financial covenant calculations required pursuant to Sections
8.14, 8.15 and 8.16 hereof.
SECTION 2. AMOUNT AND TERMS OF CREDIT.
---------------------------
2.01 Revolving Credit. Subject to the terms and conditions herein set
----------------
forth and in reliance upon representations and warranties set forth herein and
in the other Credit Documents, each Lender severally agrees to make available to
the Borrower a revolving credit facility (the Revolving Credit Facility),
pursuant to which each Lender shall make advances (each a Revolving Credit Loan)
to the Borrower from time to time during the Revolving Credit Period, in an
amount not to exceed such Lender's Pro Rata Share of the Availability. All
Revolving Credit Loans comprising the same advance under this Agreement shall be
made by the Lenders simultaneously and proportionately to their then respective
Pro Rata Shares, it being understood that no Lender shall be responsible for any
failure by another Lender to perform its obligations to make a Revolving Credit
Loan hereunder nor shall the Credit Commitment of any Lender be increased or
decreased as a result of any such failure. The Revolving Credit Loans
outstanding under the Revolving Credit Facility shall be evidenced by Revolving
Credit Notes issued to each of the Lenders, substantially in the form of Exhibit
A hereto (each a Revolving Credit Note), with blanks appropriately completed in
conformity herewith. Subject to Section 2.03(c) hereof, the Revolving Credit
Loans shall from time to time be (i) LIBOR Loans, (ii) Prime Rate Loans, or
(iii) a combination thereof, as determined by the Borrower in accordance with
Sections 2.03 and 2.06 hereof, provided that no Revolving Credit Loan shall be
made as a LIBOR Loan after the day that is one (1) month prior to the Revolving
Credit Expiration Date. Subject to the provisions of this Agreement, the
Borrower from time to time may borrow, repay and reborrow Loans made hereunder
at any time during the Revolving Credit Period.
2.02 Revolving Credit Payment and Maturity; Extension of Maturity.
-------------------------------------------------------------
Subject to the immediately succeeding sentences of this Section 2.02, the
aggregate unpaid principal amount of the Revolving Credit Loans, all accrued but
unpaid interest thereon, and any and all fees payable
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hereunder, shall mature and be due and payable on the Revolving Credit
Expiration Date. The Revolving Credit Expiration Date may be extended for an
additional one (1) year period upon the written request of the Borrower to the
Agent and the Lenders made at least six (6) months prior (but not more than nine
(9) months prior) to the then Revolving Credit Expiration Date. Such notice
shall be accompanied by a certificate of the chief financial officer of the
Borrower stating that no Default or Event of Default has occurred and is then
continuing and that the representations and warranties contained herein and in
the other Credit Documents are true and correct in all material respects on such
date. Neither the Agent nor any Lender shall be obligated to grant any
extensions pursuant to this Section 2.02 and any such extension shall be in the
sole and absolute discretion of each of them, but the Agent and each Lender
agrees to reply to any such request within a reasonable period of time.
2.03 Procedure for Revolving Credit Loan Borrowings.
----------------------------------------------
(a) Notice of Borrowing. Whenever the Borrower desires to incur
Revolving Credit Loans, the Borrower shall deliver a Notice of Borrowing (or
provide telephonic notice thereof, promptly confirmed in writing) to the Agent
(i) in the case of a LIBOR Loan, no later than 11:00 a.m. (prevailing Eastern
Standard Time) on the date that is at least two (2) LIBOR Business Days prior to
the date of the proposed Loan and (ii) in the case of a Prime Rate Loan, no
later than 10:00 a.m. (prevailing Eastern Standard Time) on the date of the
proposed Loan. Each such Notice of Borrowing (a Notice of Borrowing) shall be
substantially in the form of Exhibit B hereto and shall be irrevocable and shall
specify (i) the principal amount of the proposed Revolving Credit Loan, (ii) the
amount of the Availability as of the date of the funding of the proposed
Revolving Credit Loan, (iii) the date of funding of the proposed Revolving
Credit Loan, (iv) the Type of Revolving Credit Loan proposed, and (v) in the
case of a proposed Revolving Credit Loan in the form of a LIBOR Loan, the
desired Interest Period. The Agent shall promptly give each Lender written
notice (or telephonic notice promptly confirmed in writing) of each proposed
Revolving Credit Loan, of such Lender's Pro Rata Share thereof and of the other
matters covered by the Notice of Borrowing. Without in any way limiting the
obligation of the Borrower to confirm in writing any notice it may give
hereunder by telephone, the Agent may act prior to receipt of written
confirmation, without liability, upon the basis of such telephonic notice
believed by the Agent in good faith to be from the chief financial officer of
the Borrower, or from any other person designated in writing to the Agent by the
chief financial officer of the Borrower as a person entitled to give telephonic
notices under this Agreement on behalf of the Borrower. In each such case, the
Borrower hereby waives the right to dispute the Agent's record of the terms of
any such telephonic notice.
(b) Disbursement of Funds. No later than 2:00 p.m. (prevailing Eastern
Standard Time) on the date of each such Loan, each Lender will make available
its Pro Rata Share of such Revolving Credit Loan requested to be made on such
date in immediately available funds to the Agent at its Payment Office and the
Agent shall make such funds available to the Borrower by depositing such funds
into the Borrower's account at the Agent's Payment Office. Unless the Agent
shall have been notified by any Lender prior to the date of any such Revolving
Credit Loan that such Lender does not intend to make available to the Agent its
Pro Rata Share of such Revolving Credit Loan, the Agent may assume that such
Lender has made such amount available to the Agent on the
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date of such Revolving Credit Loan and the Agent, in reliance upon such
assumption, may (in its sole discretion and without any obligation to do so)
make available to the Borrower such Pro Rata Share of such Revolving Credit
Loan. If such Pro Rata Share is not in fact made available to the Agent by such
Lender and the Agent has made available the same to the Borrower, the Agent
shall be entitled to recover such amount from such Lender. If such Lender does
not pay such amount forthwith upon the Agent's demand therefor, the Agent shall
promptly notify the Borrower, and the Borrower shall immediately pay such amount
to the Agent. The Agent shall also be entitled to recover from such Lender or
the Borrower, as the case may be, interest on such amount in respect of each day
from the date such amount was made available by the Agent to the Borrower to the
date such amount is recovered by the Agent, at a rate per annum equal to (x) if
paid by such Lender, the Federal Funds Rate or (y) if paid by the Borrower, the
then applicable rate of interest, calculated in accordance with Section 2.13
hereof, for the respective Revolving Credit Loans. Nothing in this Section
2.03(b) shall be deemed to relieve any Lender from its obligation to fulfill its
Credit Commitment hereunder or to prejudice any rights which the Borrower may
have against any Lender as a result of any default by such Lender hereunder.
(c) Minimum Advance and Type Limitation. Each Revolving Credit Loan
requested hereunder shall be in an amount equal to $500,000 or any whole
multiple thereof, except that any Revolving Credit Loan may be in the aggregate
amount of the Availability. At no single time during the Revolving Credit Period
shall there be any more than five (5) LIBOR Loans outstanding under the
Revolving Credit Facility.
2.04 Reduction of Commitment. The Borrower shall have the right, upon
-----------------------
not less than three (3) Business Days' prior written notice to the Agent (which
the Agent shall promptly transmit to the Lenders), to reduce all or part of the
Maximum Available Credit Amount, such reduction to be permanent and irrevocable
upon delivery of said notice. Any partial reduction of the Maximum Available
Credit Amount shall be in a minimum amount equal to $500,000 or any whole
multiple thereof and shall reduce each Lender's Credit Commitment
proportionately in accordance with its Pro Rata Share.
2.05 Interest.
--------
(a) Interest Rates. Prior to an Event of Default (i) each LIBOR
Loan shall bear interest for each day during each Interest Period applicable
thereto at a per annum rate equal to the LIBOR Rate plus the Applicable Margin
and (ii) each Prime Rate Loan shall bear interest at a per annum rate equal to
the Prime Rate minus the Applicable Margin in effect from time to time. Upon and
following an Event of Default each Loan shall bear interest at the Default Rate,
as such term is defined in the Revolving Credit Notes.
(b) Interest Accrual and Payment Date. Interest on each Loan
shall accrue from and including the date of the advance of funds with respect to
such Loan or the first day of the relevant Interest Period to but excluding the
date of repayment thereof or the expiration of the Interest Period and shall be
payable in arrears (i) in the case of a Prime Rate Loan, on the last day of
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each calendar month and (ii) in the case of a LIBOR Loan on the last day of the
Interest Period with respect thereto.
(c) Agent's Determination. The Agent shall determine each
interest rate applicable to the Loans hereunder. The Agent shall give prompt
written notice to the Borrower and the Lenders of each rate of interest so
determined (and, in respect of the Prime Rate, any change thereof); provided,
however that the failure of the Agent to give such notice shall in no way affect
the validity or applicability of any such determination or change. The Agent's
determinations under this Section 2.05(c) shall be conclusive and binding,
absent manifest error.
2.06 Conversions and Continuations.
-----------------------------
(a) Conversions. Subject to Section 2.03(c) hereof, the Borrower
may elect from time to time to convert any Loan to any other Type of Loan by
delivering to the Agent an irrevocable notice (or by providing telephonic notice
promptly confirmed in writing) of such election (A) in the case of a conversion
to a Prime Rate Loan, at least one (1) Business Day prior to the expiration of
the then current Interest Period with respect to the LIBOR Loan to be converted
or (B) in the case of a conversion to a LIBOR Loan, at least two (2) LIBOR
Business Days prior to the proposed commencement of the Interest Period of the
LIBOR Loans as so converted. Any notice delivered pursuant to this Section
2.06(a) with respect to a conversion to a LIBOR Loan shall also specify the
desired Interest Period for the Loan as so converted. No Loan may be converted
pursuant to this Section 2.06(a) hereof (i) at any time during which an Event of
Default has occurred and is continuing, (ii) if, after giving effect to such
conversion, Section 2.03(c) hereof is violated, or (iii) if, in case of a
conversion to a LIBOR Loan, such conversion were to be effective at any time
after a date that is one (1) month prior to the Revolving Credit Expiration
Date. The Agent shall give each Lender notice as promptly as practicable of any
such proposed conversion affecting any of its Loans.
(b) Continuance of LIBOR Loan. The Borrower may elect to
continue any LIBOR Loan as such upon the expiration of the then current Interest
Period with respect thereto by delivering to the Agent an irrevocable notice (or
by providing telephone notice thereof, promptly confirmed in writing) of such
election, at least two (2) LIBOR Business Days prior to the expiration of the
then current Interest Period with respect thereto. Such notice shall also
specify the desired Interest Period for the Loan so continued. No continuance
shall be permitted under this Section 2.06(b), (i) at any time during which an
Event of Default has occurred and is continuing or (ii) if the effective date
(i.e., the value date) of such continuance were to occur after a date that is
one (1) month prior to the Revolving Credit Expiration Date. The Agent shall
give each Lender notice as promptly as practicable of any such proposed
continuance affecting any of its Revolving Credit Loans.
(c) Automatic Conversion to Prime Rate. If the Borrower fails to
notify the Agent of the conversion or continuance of any LIBOR Loan within the
time specified in this Section 2.06, or is otherwise not permitted to convert or
continue any LIBOR Loan pursuant to said Section, then any such Loan shall
automatically convert to a Prime Rate Loan on the last day of the then expiring
applicable Interest Period.
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2.07 Letters of Credit.
-----------------
(a) Issuance of Letters of Credit. Subject to and upon the terms
herein set forth and in reliance upon the representations and warranties herein
set forth and in the other Credit Documents, the Borrower at any time and from
time to time on or after the Closing Date and prior to the Revolving Credit
Expiration Date, may request that the Agent issue, for the account of the
Borrower and in support of any Permitted L/C Obligation, an irrevocable standby
letter of credit or letters of credit in such form as may be approved by the
Agent (the Letter of Credit Facility). Notwithstanding the foregoing (i) no
Letter of Credit shall be issued in a Stated Amount which (x) when added to the
Letter of Credit Outstandings at such time would exceed the Letter of Credit
Sublimit, or (y) when added to the sum of the aggregate principal amount of the
Credit Obligations then outstanding would exceed the Availability; (ii) each
Letter of Credit shall, unless otherwise agreed to by the Agent and the Required
Lenders, have an expiration date occurring no later than one (1) year after the
date of issuance thereof, and in no event occurring later than the Business Day
next preceding the Revolving Credit Expiration Date; (iii) each Letter of Credit
shall be denominated in U.S. dollars; and (iv) no Letter of Credit shall be
issued by the Agent after it has received a notice in writing from the Required
Lenders or the Borrower that one or more of the conditions specified in Section
5.02 hereof are not then satisfied.
(b) Existing Letter of Credit. Annex II hereto contains a
description of all letters of credit issued pursuant to the Existing Credit
Agreement and outstanding on the Closing Date. Each such letter of credit,
including any extension or renewal thereof (each, as amended from time to time
in accordance with the terms thereof and hereof, an Existing Letter of Credit)
shall constitute a Letter of Credit for all purposes of this Agreement, issued,
for purposes of Section 2.07(a), on the Closing Date.
2.08 Letter of Credit Requests. Whenever the Borrower desires that a
-------------------------
Letter of Credit be issued for its account, it shall give the Agent at least
five (5) Business Days' notice (or such lesser number of days as may be agreed
to by the Agent and the Required Lenders). Each notice shall be executed by the
Borrower and shall be in the form of Exhibit C hereto (each a Letter of Credit
Request). The Agent shall promptly transmit copies of each Letter of Credit
Request to each Lender. Each Letter of Credit Request shall be accompanied by a
completed and executed "Letter of Credit Application" (or an amendment to any
then effective application) in the form furnished by the Agent to the Borrower
from time to time. The terms of each such application are incorporated herein to
the extent not inconsistent herewith.
2.09 Letter of Credit Participations.
--------------------------------
(a) Participations. Immediately upon the issuance by the Agent
--------------
of any Letter of Credit, the Agent shall be deemed to have sold and transferred
to each other Lender (each such other Lender, in such capacity under this
Section 2.09, a L/C Participant), and each such L/C Participant shall be deemed
irrevocably and unconditionally to have purchased and received from the
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Agent, without recourse or warranty, an undivided interest and risk and income
participation (each a L/C Participation), to the extent of such L/C
Participant's Pro Rata Share, in such Letter of Credit, each substitute letter
of credit, each drawing made thereunder and the obligations of the Borrower
under this Agreement with respect thereto, and any security thereof or guaranty
pertaining thereto (although Letter of Credit Fees will be paid directly to the
Agent for the ratable account of the L/C Participants as provided in Section
3.03 and the L/C Participants shall have no right to receive any portion of any
Letter of Credit Processing Fees). Upon any change in the Credit Commitments of
the Lenders pursuant to Section 11.08 hereof, it is hereby agreed that, with
respect to all outstanding Letters of Credit and Unpaid Drawings, there shall be
an automatic adjustment to the L/C Participations pursuant to this Section 2.09
to reflect the new Pro Rata Shares of the assignor and assignee Lender.
(b) Agent's Obligations. In determining whether to pay under any
Letter of Credit, the Agent shall have no obligation relative to the L/C
Participants or the Borrower other than to confirm that any documents required
to be delivered under such Letter of Credit have been delivered and that they
appear to comply on their face with the requirements of such Letter of Credit.
Any action taken or omitted to be taken by the Agent under or in connection with
any Letter of Credit issued by it, if taken or omitted in the absence of gross
negligence or willful misconduct, shall not create for the Agent any resulting
liability.
(c) Payments Upon Drawing. In the event that the Agent makes any
payment under any Letter of Credit issued by it and the Borrower shall not have
reimbursed such amount in full to the Agent pursuant to Section 2.10(a), the
Agent shall promptly notify each L/C Participant of such failure, and each L/C
Participant shall promptly and unconditionally pay to the Agent the amount of
such L/C Participant's Pro Rata Share of such unreimbursed payment in
immediately available funds. If the Agent so notifies, prior to 11:00 A.M.
(prevailing Eastern Standard Time) on any Business Day, any L/C Participant
required to fund a payment under a Letter of Credit, shall make available to the
Agent such L/C Participant's Pro Rata Share of the amount of such payment on
such Business Day in same day funds. If and to the extent such L/C Participant
shall not have so made its Pro Rata Share of the amount of such payment
available to the Agent, such L/C Participant agrees to pay to the Agent,
forthwith on demand, such amount, together with interest thereon for each day
from such date until the date such amount is paid to the Agent at the Federal
Funds Rate. The failure of any L/C Participant to make available to the Agent
its Pro Rata Share of any payment under any Letter of Credit shall not relieve
any other L/C Participant of its obligation hereunder to make available to the
Agent its Pro Rata Share of any payment under any Letter of Credit on the date
required, as specified above, but no L/C Participant shall be responsible for
the failure of any other L/C Participant to make available to the Agent such
other L/C Participant's Pro Rata Share of any such payment.
(d) L/C Participants' Duties Absolute. The obligations of the
L/C Participants to make payments to the Agent with respect to Letters of Credit
shall be irrevocable and not subject to counterclaim, set-off or other defense
or any other qualification or exception whatsoever
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and shall be made in accordance with the terms and conditions of this Agreement
under all circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this Agreement or
any of the other Credit Documents;
(ii) the existence of any claim, set-off, defense or other right
which the Borrower may have at any time against a beneficiary named in a
Letter of Credit, any transferee of any Letter of Credit (or any Person
for whom any such transferee may be acting), the Agent, any Lender, or
other Person, whether in connection with this Agreement, any Letter of
Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transaction between the Borrower
and the beneficiary named in any such Letter of Credit);
(iii) any draft, certificate or any other document presented
under the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Credit
Documents;
(v) the occurrence of any Default or Event of Default; or
(vi) the failure of any condition precedent set forth in Section
5.02 hereof to have been satisfied at the time of the issuance of any
Letter of Credit unless the Agent shall have received a notice in
writing to such effect from such Lender hereof prior to the issuance of
such Letter of Credit.
2.10 Agreement to Repay Letter of Credit Drawings.
--------------------------------------------
(a) Borrower's Obligation to Pay Drawings. The Borrower hereby
agrees to reimburse the Agent, by making payment to the Agent in immediately
available funds, for any payment or disbursement made by the Agent under any
Letter of Credit issued by it (each such amount so paid until reimbursed, an
Unpaid Drawing) immediately after, and in any event on the date of, notice given
by the Agent to the Borrower of such payment (which notice the Agent hereby
agrees to give promptly after the making of any payment or disbursement under a
Letter of Credit), with interest on the amount so paid or disbursed by the
Agent, to the extent not reimbursed prior to 1:00 P.M. (prevailing Eastern
Standard Time) on the date of such payment or disbursement, from and including
the date paid or disbursed to but excluding the date the Agent is reimbursed
therefor, at a rate per annum which shall be the Prime Rate as in effect from
time to time (plus an additional 300 basis points (3.00%) per annum, if not
reimbursed by the second (2nd) Business Day following any such notice of payment
or disbursement), such interest to be payable on demand.
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(b) Borrower's Obligations Absolute. The Borrower's obligations
under this Section 2.10 to reimburse the Agent with respect to Unpaid Drawings
(including, in each case, interest thereon) issued by it shall be absolute and
unconditional under any and all circumstances and irrespective of any set-off,
counterclaim or defense to payment which the Borrower or any other Person may
have or have had against the Agent or any Lender, including, without limitation,
any defense based upon the failure of any drawing under a Letter of Credit (each
a Drawing) to conform to the terms of the Letter of Credit or any non-
application or misapplication by the beneficiary of the proceeds of such
Drawing; provided, that the Borrower shall not be obligated to reimburse the
Agent for any wrongful payment made by the Agent under a Letter of Credit as a
result of acts or omissions constituting willful misconduct or gross negligence
on the part of the Agent.
2.11 Indemnification; Nature of Agent's Duties.
-----------------------------------------
(a) Indemnification Generally. The Borrower hereby agrees to
protect, indemnify, pay and save the Agent harmless from and against any and all
claims, demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys' fees) that the Agent may incur or be subject to
as a consequence, direct or indirect, of (i) the issuance of any Letter of
Credit or (ii) the failure of the Agent to honor a Drawing under a Letter of
Credit as a result of any act or omission, whether rightful or wrongful, of any
present or future de jure or de facto government or governmental authority (all
such actions or omissions, herein called Government Acts).
(b) Allocation of Risk. As between the Borrower and the Agent,
the Borrower shall assume all risks of the acts, omissions or misuse of any
Letter of Credit by the beneficiary thereof. The Agent shall not be responsible:
(i) for the form, validity, sufficiency, accuracy, genuineness or legal effect
of any document submitted by any party in connection with the application for
and issuance of any Letter of Credit, even if it should in fact prove to be in
any or all respects invalid, insufficient, inaccurate, fraudulent or forged;
(ii) for the validity or sufficiency of any instrument transferring or assigning
or purporting to transfer or assign any Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, that may prove to
be invalid or ineffective for any reason; (iii) for failure of the beneficiary
of a Letter of Credit to comply fully with conditions required in order to draw
upon a Letter of Credit; (iv) for errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex or
otherwise; (v) for errors in interpretation of technical terms; (vi) for any
loss or delay in the transmission or otherwise of any document required in order
to make a Drawing under a Letter of Credit or of the proceeds thereof; and (vii)
for any consequences arising from causes beyond the control of the Agent,
including, without limitation, any Government Acts. None of the above shall
affect, impair, or prevent the vesting of any of the Agent's rights or powers
hereunder.
(c) Scope of Agent's Duties. In furtherance and extension and
not in limitation of the specific provisions hereinabove set forth, any action
taken or omitted by the Agent under or in connection with any Letter of Credit
or the related drawing certificates, if taken or omitted in good faith, shall
not put the Agent under any resulting liability to the Borrower. The Agent shall
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not, in any way, be liable for any failure by it or anyone else to pay any
Drawing under any Letter of Credit as a result of any Government Acts or
any other cause beyond the control of the Agent.
(d) No Limitation as to Reimbursement. Nothing in this
Section 2.11 is intended to limit the reimbursement obligation of the
Borrower contained in Section 2.10 hereof. The obligations of the Borrower
under this Section 2.11 shall survive the termination of this Agreement. No
act or omissions of any current or prior beneficiary of a Letter of Credit
shall in any way affect or impair the rights of the Agent to enforce any
right, power or benefit under this Agreement.
(e) Limitation of Indemnification. Notwithstanding
anything to the contrary contained in this Section 2.11, (i) the Borrower
shall have no obligation to indemnify the Agent in respect of any liability
incurred by the Agent arising solely out of the gross negligence or willful
misconduct of the Agent, as determined by a court of competent jurisdiction
and (ii) the Borrower shall have a claim against the Agent and the Agent
shall be liable to the Borrower to the extent, but only to the extent, of
any direct, as opposed to consequential, damages suffered by the Borrower
which the Borrower proves were caused by (x) the Agent's willful misconduct
or gross negligence in determining whether the documents presented under a
Letter of Credit complied with the terms of such Letter of Credit or (y)
the Agent's willful or grossly negligent failure to pay under a Letter of
Credit after presentation to it of a drawing certificate and any other
documents strictly complying with the terms and conditions of such Letter
of Credit.
2.12 Increased Costs; Illegality; Capital Adequacy; Funding
------------------------------------------------------
Losses.
------
(a) Increased Costs and Illegality. In the event that (x)
in the case of clause (i) below, the Agent, and (y) in the case of clauses
(ii) and (iii) below, any Lender, shall have determined (which
determination in either case shall, absent manifest error, be final and
conclusive and binding upon all parties hereto):
(i) on any date for determining the LIBOR Rate for any
Interest Period that, by reason of any changes arising
on or after the date of this Agreement affecting the
relevant capital market, (x) adequate and fair means do
not exist for ascertaining the applicable interest rate
on the basis provided for in the definition of LIBOR
Rate or (y) such means will not adequately and fairly
reflect the cost to the Lenders of funding LIBOR Loans
for the relevant Interest Periods; or
(ii) at any time, that such Lender shall incur increased
costs or reductions in the amounts received or
receivable hereunder with respect to any LIBOR Loans
because of (x) any change since the date of this
Agreement in any applicable law, governmental rule,
regulation, guideline or order (or in the
interpretation or administration thereof and including
the introduction of any new law or governmental rule,
regulation, guideline or order) (such as, for example,
but not limited to,
-21-
in the case of a LIBOR Loan, a change in official
reserve requirements, but, in all events, excluding
reserves required under Regulation D to the extent
included in the computation of the LIBOR Rate) and/or
(y) other circumstances affecting the relevant capital
market; or
(iii) at any time, that the making or continuance of any
LIBOR Loan has become unlawful by compliance by such
Lender in good faith with any law, governmental rule,
regulation, guideline or order (or would conflict with
any such governmental rule, regulation, guideline or
order not having the force of law even though the
failure to comply therewith would not be unlawful), or
has become impracticable as a result of a contingency
occurring after the date of this Agreement which
materially and adversely affects the relevant capital
market;
then, and in any such event, the Lender so affected (or the Agent, in the case
of clause (i) above) shall on such date give notice to the Borrower (and the
other Lenders and/or the Agent, as the case may be) of such determination.
Thereafter (x) in the case of clause (i) above, LIBOR Loans shall no longer be
available until such time as the Agent notifies the Borrower and the Lenders
that the circumstances giving rise to such notice by the Agent no longer exist,
and any Notice of Borrowing delivered pursuant to Section 2.03(a) hereof or
notice of conversion or continuance delivered pursuant to Section 2.06 hereof
with respect to a LIBOR Loan shall be deemed rescinded by the Borrower, (y) in
the case of clause (ii) above, the Borrower shall pay to such Lender, upon
written demand therefor, such additional amounts (in the form of an increased
rate of, or a different method of calculating, interest or otherwise as such
Lender in its sole discretion shall determine) as shall be required to
compensate such Lender for such increased costs or reductions in amounts
receivable hereunder (a written notice as to the additional amounts owed to such
Lender, showing in reasonable detail the basis for the calculation thereof,
submitted to the Borrower by such Lender shall, absent manifest error, be final
and conclusive and binding upon all parties hereto) and (z) in the case of
clause (iii) above, LIBOR Loans shall no longer be available until such time as
such Lender notifies the Borrower that the circumstances giving rise to such
notice no longer exist, any Notice of Borrowing delivered pursuant to Section
2.03(a) hereof or notice of conversion or continuance delivered pursuant to
Section 2.06 hereof with respect to LIBOR Loans shall be deemed rescinded by the
Borrower, and any LIBOR Loans that are then outstanding shall be automatically
converted to Prime Rate Loans; provided, however that if such Lender, in its
sole discretion, determines that such circumstances can only be alleviated by
repayment of such Loans, then, upon demand, the Borrower shall repay in full
such Loans, together with accrued but unpaid interest thereon.
(b) Capital Adequacy. If after the date hereof, the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by a Lender or
its parent with any request or directive made or adopted after the date hereof
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has
-22-
or would have the effect of reducing the rate of return on such Lender's or its
parent's capital or assets as a consequence of such Lender's commitments or
obligations hereunder to a level below that which such Lender or its parent
could have achieved but for such adoption, effectiveness, change or compliance
(taking into consideration such Lender's or its parent's policies with respect
to capital adequacy), then from time to time, upon demand, the Borrower shall
pay to such Lender such additional amount or amounts as will compensate such
Lender or its parent for such reduction. Such Lender, upon determining in good
faith that any additional amounts will be payable pursuant to this Section 2.12,
will give prompt written notice thereof to the Borrower, which notice shall set
forth in reasonable detail the basis of the calculation of such additional
amounts, although the failure to give any such notice shall not release or
diminish any of the Borrower's obligations to pay additional amounts pursuant to
this Section 2.12 upon receipt of such notice.
(c) Funding Losses. The Borrower shall compensate each Lender,
upon its written request (which request shall set forth the basis for requesting
such compensation), for all reasonable losses, expenses and liabilities,
including, without limitation, any loss, expense or liability incurred by reason
of the liquidation or reemployment of deposits or other funds required by such
Lender to fund its LIBOR Loans (all such losses Funding Losses) which such
Lender may sustain: (x) if for any reason an advance of, or conversion from or
into, LIBOR Loans does not occur on a date specified therefor in a Notice of
Borrowing or notice of conversion given pursuant to Section 2.06(a) or (b), as
the case may be, (whether or not withdrawn by the Borrower or deemed withdrawn
pursuant to Section 2.12(a)); (y) if any repayment (including any prepayment
made pursuant to Section 4.01 or 4.02) or conversion of any of its LIBOR Loans
occurs on a date which is not the last day of an Interest Period with respect
thereto; or (z) as a consequence of (i) any other default by the Borrower to
repay its Loans when required by the terms of this Agreement or any Note held by
such Lender or (ii) any prepayment or conversion made pursuant to Section
2.12(a). The amount of compensation available to any Lender pursuant to this
Section 2.12(c) shall be determined based on the assumption that such Lender has
funded the entire amount of the relevant LIBOR Loan through match funding
obtained in the London interbank market.
2.13 Computation. Interest and any fees or compensation based upon a
-----------
per annum rate shall be calculated on the basis of a 360 day year for the actual
number of days elapsed.
SECTION 3. FEES.
----
3.01 Upfront Fees. The Borrower shall pay, or have paid, to the
------------
Agent on or before the Closing Date a one-time facility upfront fee in an amount
equal to twelve and one-half (12 1/2) basis points (.125%) of the Maximum
Available Credit Amount as of the Closing Date. On the Closing Date, the Agent
shall disburse such fees to the Lenders based on their respective Pro Rata
Shares. The Borrower acknowledges that such fees are a liquidated damages amount
and, together with the amounts payable pursuant to Section 5.01(c) hereof,
constitute reasonable compensation to the Agent and the Lenders for their
expenses and services in connection with the arrangement of their respective
Credit Commitments and the negotiations and preparation of this Agreement and
the other Credit Documents.
-23-
3.02 Commitment Fee. The Borrower shall pay to the Agent for the
--------------
ratable account of the Lenders based on their respective Pro Rata Shares,
quarterly in arrears, a commitment fee for the period from and including the
Closing Date until the Revolving Credit Expiration Date, computed at a rate
equal to 25 basis points (.25%) per annum of the average daily amount of the
Availability. Such fee shall be payable commencing on March 31, 1997 (for the
period commencing on the Closing Date and ending on said March 31, 1997), and
continuing quarterly on the last Business Day of each March, June, September and
December occurring thereafter.
3.03 Letter of Credit Fee. The Borrower shall pay to the Agent for
--------------------
the ratable account of the Lenders based on their respective Pro Rata Shares,
quarterly in advance, a fee in respect of the Letters of Credit (the Letter of
Credit Fee) computed at a rate equal to 100 basis points (1.00%) per annum of
the aggregate Stated Amount of the Letters of Credit outstanding as of the first
day of each January, April, July and October. Such fee shall be payable
commencing on January 2, 1997 and continuing quarterly on the first Business Day
of each January, April, July and October occurring thereafter. For the avoidance
of doubt, the foregoing calculation of the Letter of Credit Fee may be
calculated in accordance with the following formula:
A (multiplied by) .01 (multiplied by) N
-----
360
; with A equal to the aggregated Stated Amount of the Letters of Credit
outstanding as of the first day of the relevant payment period and N equal to
the actual number of days elapsed during the period commencing on said first day
and ending on the last day of the relevant payment period.
3.04 Letter of Credit Processing Fee. The Borrower shall pay to the
-------------------------------
Agent for its sole account, upon each issuance of, drawing under, and/or
amendment of, a Letter of Credit, such amounts as shall at the time of such
issuance, drawing or amendment be the administrative charge which the Agent
customarily charges for such issuances of, drawings under or amendments of,
letters of credit issued by it (Letter of Credit Processing Fees).
SECTION 4. PREPAYMENTS AND PAYMENTS GENERALLY.
----------------------------------
4.01 Voluntary Prepayments. The Borrower may prepay any Loan, in
---------------------
whole or in part, without premium or penalty (except as provided in Section
2.12(c) hereof) upon at least three (3) Business Days' irrevocable notice to
each Lender (or one (1) Business Day's irrevocable notice in the case of a
prepayment of a Prime Rate Loan), specifying the date and the amount of the
prepayment and whether such prepayment is in respect of LIBOR Loans, Prime Rate
Loans or a combination thereof; provided, that any such prepayment shall include
all accrued but unpaid interest in respect of the Loans being prepaid. The
principal portion of any partial prepayment shall be in an amount equal to
$500,000 or any whole multiple thereof.
4.02 Mandatory Prepayments. Immediately upon the Credit Obligations
---------------------
exceeding the Maximum Available Credit Amount, the Borrower shall make, or cause
to be made, a
-24-
mandatory prepayment of the Credit Obligations in an amount equal to such
excess, together with accrued but unpaid interest thereon. Without limiting the
foregoing, immediately upon the Letter of Credit Outstandings exceeding the
Letter of Credit Sublimit, the Borrower shall make, or cause to be made, payment
to the Agent in the amount of such excess to be held as cash collateral (on
terms and conditions established by the Agent and reasonably acceptable to the
Borrower) to secure such Letter of Credit Outstandings in excess of the Letter
of Credit Sublimit. Provided that no Default or Event of Default has occurred
and is then continuing, such cash collateral shall be released by the Agent (on
behalf of the Lenders) if and when the Letter of Credit Outstandings have been
reduced to an amount equal to or less than the Letter of Credit Sublimit then in
effect.
4.03 Application of Mandatory Prepayments. Any prepayment
------------------------------------
received pursuant to Section 4.02 hereof shall be applied first to reduce
amounts owing in respect of any Prime Rate Loans and second to reduce amounts
owing in respect of any LIBOR Loans (provided that, if there is more than one
outstanding LIBOR Loan, then amounts owing in respect of the LIBOR Loans with
the Interest Period ending on the date that is the least number of days from the
date of such prepayment shall be reduced first before reduction of amounts owing
in respect of other LIBOR Loans). Within the order of priority set forth above,
the amount of any prepayment received hereunder shall be applied to the Loans
first to reduce amounts owing in respect of accrued but unpaid interest on the
Loans being prepaid and second to reduce amounts owing in respect of outstanding
principal of such loans. If by operation of the provisions set forth above or
any other reason, payment of principal in respect of a LIBOR Loan is received
(from any source) on a date other than the last day of the Interest Period
pertaining to such Loan, including, without limitation, due to acceleration of
said amount following the occurrence of an Event of Default, then the Borrower
shall pay to each Lender an additional amount equal to the applicable Funding
Losses. Such Funding Losses shall be payable on demand by such affected Lender.
4.04 General Provisions as to Payments. The Borrower shall make
---------------------------------
each payment of principal of, and interest on, the Loans and of fees due
hereunder, not later than 2:00 p.m. (prevailing Eastern Standard Time) on the
date when due, in immediately available funds to the Agent at its Payment
Office. Provided that the Agent receives such payments by such time, the Agent
will distribute to each Lender on the same day its Pro Rata Share of each such
payment received by the Agent.
4.05 Net Payments. All payments made by the Borrower hereunder
------------
shall be made without setoff or counterclaim. All such payments shall be made
free and clear of and without deduction or withholding for, any present or
future taxes, levies, imposts, duties, fees, assessments or other charges of
whatever nature, now or hereafter imposed by any jurisdiction or by any
department, agency, state or other political subdivision or taxing authority
thereof or therein (but excluding any tax imposed on or measured by the net
income of a Lender pursuant to the laws of the jurisdiction in which the
principal office or Payment Office of such Lender is located or under the laws
of any political subdivision or taxing authority of any such jurisdiction in
which the principal office or Payment Office of such Lender is located) and all
interest, penalties, or similar liabilities with respect thereto (collectively,
Taxes). If any Taxes are so levied or imposed, the Borrower agrees to pay the
full
-25-
amount of such Taxes, and such additional amounts as may be necessary so that
every net payment of amounts due hereunder, after withholding or deduction for
or on account of any Taxes, will not be less than the amounts provided for
herein. The Borrower shall furnish to the Agent, within thirty (30) days after
the date the payment of any Taxes is due pursuant to applicable law, certified
copies of tax receipts evidencing such payment by the Borrower. The Borrower
shall indemnify and hold harmless each Lender and reimburse each Lender upon the
written request of such Lender setting forth the basis for requesting such
amount, for the amount of any Taxes so levied or imposed and paid by such
Lender.
In addition, the Borrower agrees 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 by the Borrower or the Agent
hereunder or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement or any other Credit Document.
4.06 Debiting of Account. If so requested by the Agent, the Borrower
-------------------
shall maintain a demand deposit account (a DDA Account) at the Agent, and the
Agent may, and the Borrower hereby authorizes the Agent to, debit any such DDA
Account or such other account and/or certificate of deposit maintained by the
Borrower with the Agent for the amount of any payment, as and when such payment
becomes due hereunder, whether such payment is for accrued interest, principal
or expense, even if debiting any such account or certificate of deposit results
in a loss or reduction of interest to the Borrower or the imposition of a
penalty applicable to the early withdrawal of time deposits. Such authorization
shall not affect the Borrower's obligation to pay when due all amounts payable
hereunder, whether or not there are sufficient funds in any accounts of the
Borrower. The foregoing rights of the Agent to debit the Borrower's accounts
shall be in addition to, and not in limitation of, any rights of set-off which
the Agent may have hereunder or under any Credit Document. Nothing in this
Section 4.06 or otherwise in this Agreement shall be interpreted to obligate the
Agent to so debit, or set-off against, any account of the Borrower maintained
with the Agent to satisfy any of the Obligations of the Borrower, such right to
so debit and/or set-off to be exercised by the Agent in its sole and absolute
discretion.
SECTION 5. CONDITIONS.
----------
5.01 Documents Required for Initial Advance. The obligation of each
--------------------------------------
Lender to make the initial advances under the Revolving Credit Facility
requested on the Closing Date is subject to the satisfaction of all of the
following conditions precedent:
(a) Certain Documents. The Agent shall have received on or before the
Closing Date all of the following, each in form and substance satisfactory to
each of the Lenders and in such quantities as the Agent shall reasonably
request:
(i) the following Credit Documents, each duly executed and delivered
by the parties thereto:
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(A) this Agreement;
(B) the Notes; and
(C) the Subsidiary Guaranty;
(ii) a Notice of Borrowing requesting the initial advance hereunder in an
amount at least sufficient to pay in full the "Revolving Credit Loans"
outstanding under the Existing Credit Agreement and such other amounts
(without duplicating) owing to PNC Bank (as successor in interest to
Midlantic Bank, N.A.) under the Existing Credit Agreement as set forth
on its pay-off letter with respect thereto previously submitted to the
Agent, and evidence of the termination of the "Credit Commitments" the
Existing Credit Agreement;
(iii) pre-closing UCC lien search report and tax lien and judgment search
reports with respect to the Borrower and the Guarantors, in all
appropriate jurisdictions;
(iv) evidence of termination of all UCC-1 financing statements filed in
connection with the perfection of security interest in favor of the
"Agent" pursuant to the Existing Credit Agreement;
(v) an incumbency certificate of an appropriate officer of the Borrower
certifying, as of the Closing Date, the names, titles and true
signatures of the officers certified to execute the Credit Documents,
and the names, titles and true signatures of such officers of the
Borrower authorized to deliver Notices of Borrowing and Letter of
Credit Requests on behalf of the Borrower;
(vi) a favorable New Jersey and New York law opinion of outside counsel to
the Borrower and the Guarantors addressed to the Agent and the Lenders
to the effect that the Credit Documents have been duly authorized and
executed and are enforceable against the Borrower and the Guarantors in
accordance with their respective terms, and as to such other matters
reasonably requested by the Agent and the Lenders;
(vii) a secretary's certificate for each of the Borrower and the Guarantors,
to which are attached certified copies of (x) the respective articles
of incorporation of the Borrower and the Guarantors and all amendments
thereto, certified by an appropriate corporate officer, (y) the
respective By-Laws of the Borrower and the Guarantors and all
amendments thereto, and (z) appropriate resolutions and shareholder
consents authorizing the transactions herein contemplated;
-27-
(viii) a certificate from the chief financial officer of the Borrower dated
the Closing Date to the effect that as of such date (i) no Default or
Event of Default has occurred or is continuing, (ii) since September
30, 1996, there has been no material adverse change in the business,
financial condition or operations of the Borrower and (iii) each of
the representations and warranties of the Borrower contained in this
Agreement are true in all material respects;
(ix) good standing certificates issued by the appropriate official of the
state in which the Borrower and the Guarantors are incorporated; and
such good standing certificates issued by the appropriate official of
each of the states in which the Borrower and the Guarantors are
qualified as foreign corporations as the Lenders shall require;
(x) certificates of insurance evidencing the existence and full force and
effect of the insurance described in Section 6.18 hereof;
(xi) a letter from the certified public accountants for the Borrower and
Health Care consenting to the reliance by the Agent and the Lenders
upon the financial statements of the Borrower and Health Care;
(xii) an update in form and substance satisfactory to the Agent regarding
matters pertaining to the civil investigative demand served upon the
Borrower by the United States Department of Justice on April 4, 1995,
and evidence that the Borrower has adequately reserved for any
exposure resulting from said investigation;
(xiii) execution and delivery of documentation in form and substance
satisfactory to First Union National Bank that the representations,
warranties and covenants set forth herein have been incorporated by
reference into the First Fidelity Term Loan Agreement; and
(xiv) such other documents as the Lenders may reasonably require, including,
without limitation, other agreements, instruments, or indentures to
which any Obligor is a party, including, without limitation, financing
statements, proofs, opinions, guaranties and other written assurances.
(b) Settlement of Fees Under Existing Credit Agreement. The Borrower shall
have paid to the agent under the Existing Credit Agreement for the ratable
account of the lenders thereunder, the fees payable pursuant to Section 3.02 and
3.04 of the Existing Credit Agreement that have accrued through the date
immediately preceding the Closing Date.
(c) Fees and Expenses. The Borrower shall have paid (or otherwise
satisfied to the satisfaction of the Agent and the Lenders) to the Agent and/or
the Lenders, as the case may be, all
-28-
fees hereunder that are expenses due and payable on or prior to the Closing
Date, including, without limitation, fees and expenses incurred by the Agent and
Lenders related to the preparation, negotiation and closing of the transaction
contemplated herein that have been requested by such parties pursuant to
invoices submitted to the Borrower on or prior to the Closing Date.
5.02 Requirements for Any Advance and Issuance of Letter of Credit.
-------------------------------------------------------------
The obligation of the Lenders to make any Revolving Credit Loans and the
obligation of the Agent to issue any Letter of Credit, in each case subsequent
to the Closing Date, is subject to satisfaction of the following conditions:
(i) the representations and warranties contained in Section 6 hereof
are true and correct on and as of the date of funding of each
such Loan or date of issuance of such Letter of Credit, as the
case may be;
(ii) no Default or Event of Default has occurred and is continuing;
(iii) there has been no material adverse change in the Borrower's or
any other Obligor's condition, financial or otherwise, since the
date of this Agreement; and
(iv) all of the Credit Documents remain in full force and effect.
SECTION 6. REPRESENTATIONS AND WARRANTIES.
------------------------------
In order to induce the Lenders to enter into this Agreement, the
Borrower represents and warrants with respect to itself and, to the extent
applicable, each of its Subsidiaries, and agrees that each such representation
and warranty shall be deemed to be restated at the time of funding of each Loan
and at the time of issuance of each Letter of Credit, that:
6.01 Organization; Authority. The Borrower and the Guarantor is a
-----------------------
corporation, duly organized, validly existing and in good standing under the
laws of the state of its incorporation, is duly qualified as a foreign
corporation and is in good standing under the laws of each jurisdiction in which
it is required to be qualified because of the business it conducts or the
property it owns, and has the necessary power and authority to enter into and
perform its obligations under the Credit Documents. The execution and
performance of the Credit Documents have been duly authorized by all necessary
and appropriate corporate proceedings on the part of the Borrower and the
Guarantor, and, upon their execution and delivery, they will be valid, binding,
and enforceable in accordance with their terms; the execution and performance of
the Credit Documents will not violate any orders, laws or regulations applicable
to any such Obligor, any of their respective organizational documents, or any
instruments, indentures or agreements (including any provisions pertaining to
subordinated debt) to which they are a party or by which any such Obligor or any
of their respective properties are bound; and all consents, approvals, licenses,
franchises, patents, trademarks and other general intangibles
-29-
required in connection with this Agreement, the other Credit Documents or the
operation of any such Obligor's business have been obtained and are in full
force and effect. All of the issued and outstanding stock of the Borrower and
the Guarantor has been validly issued and fully paid and is non-assessable. The
Borrower's Subsidiary is duly organized, validly existing, and in good standing
under the laws of the jurisdiction of its organization and is duly qualified as
a foreign corporation and is in good standing under the laws of each
jurisdiction in which it is required to be qualified because of the business it
conducts or the property it owns.
6.02 Use of Proceeds; Margin Regulation. The proceeds of the
----------------------------------
Revolving Credit Loans shall be used only for the following purposes: (i) to
repay all amounts outstanding under the Existing Credit Agreement, (ii) to
finance the Borrower's accounts receivable, purchase equipment, make Capital
Expenditures permitted hereunder, (iii) in connection with acquisitions
permitted pursuant to Section 8.03, or (iv) in connection with the Borrower's
other working capital needs. The Letters of Credit shall be used solely to
support Permitted L/C Obligations. The Borrower is not engaged in the business
of extending credit for the purpose of buying or carrying "margin stock" (within
the meaning of Regulation U issued by the Board of Governors of the Federal
Reserve System). Neither the making of any Loan, the issuance of any Letter of
Credit, nor the use of the proceeds thereof, will violate or be inconsistent
with the provisions of Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System.
6.03 Specific Financial Statements.
-----------------------------
(i) The consolidated financial statements of the Borrower as of
December 31, 1995, audited by KPMG Peat Marwick and the six (6)
and nine (9) month statements as of June 30, 1996 and September
30, 1996, respectively, prepared by management, copies of which
have heretofore been provided to the Agent, present fairly the
financial condition of the Borrower and Health Care, as
applicable, as of such dates and the results of operations for
the periods then ended. All such financial statements, including
the related schedules and notes thereto, have been prepared in
accordance with GAAP, consistently applied.
(ii) There has been no material adverse change in the financial
condition of the Borrower and Health Care or any Subsidiary or
Affiliate of the Borrowers or Health Care since September 30,
1996.
(iii) Except as reflected in the financial statements referred to in
clause (i) of this Section 6.03, the Borrower and Health Care
have no material liabilities, absolute or contingent.
6.04 Burdensome Agreements. Neither the Borrower nor the Guarantor is
---------------------
a party to any indenture, loan or credit agreement or any other agreement,
contract or instrument, or subject to any certificate of incorporation, by-law,
or corporate restriction, which may reasonably be expected to
-30-
have an adverse affect on its corporate activities, properties, assets,
operations or conditions, financial or otherwise, or on its ability to carry out
its obligations under the Credit Documents.
6.05 Suits. Except as disclosed on Annex I hereto, there are no
-----
actions, suits, proceedings, or claims pending or, to the best knowledge of the
Borrower, threatened against the Borrower or its Subsidiaries, or any of their
property that, if determined adversely, are reasonably likely to have a material
adverse effect on the business, properties, assets, operations, financial
condition or prospects of the Borrower, or its Subsidiaries, taken as a whole.
6.06 Defaults. Except as disclosed on Annex I hereto, neither
--------
the Borrower nor any of its Subsidiaries is in default under any agreement to
which it is a party or by which it or any of its property is bound, or under any
indenture or instrument evidencing any Indebtedness, and neither the execution
of, nor performance under, the Credit Documents will create a default or any
Lien or encumbrance under any such agreement, indenture or instrument other than
Liens or encumbrances in favor of the Lenders.
6.07 ERISA. Each Plan is in substantial compliance with ERISA and
-----
the applicable provisions of the Code and there does not exist with respect to
any such Plan an "accumulated funding deficiency" (as such term is defined in
ERISA). No material liability to the PBGC has been incurred by the Borrower
with respect to any such Plan and no "Reportable Event" under ERISA has
occurred. Neither the Borrower nor any of its Subsidiaries has actual or
anticipated liability under Section 4971 of the Code (relating to tax on failure
to meet the minimum funding standard of Section 412 of the Code) with respect to
any Multiemployer Plan. No proceedings have been instituted to terminate any
Plan and no condition exists which presents a material risk to the Borrower or
any of its Subsidiaries of incurring a liability to or on account of any Plan
pursuant to the provisions of ERISA or the applicable provisions of the Code.
6.08 Tax Returns and Taxes. Each of the Borrower and its Subsidiaries
---------------------
has filed all federal, state and local tax returns required to be filed and has
paid all taxes, assessments and governmental charges and levies thereon,
including interest and penalties, except where the same are being contested in
good faith by appropriate proceedings and for which adequate reserves have been
set aside, and no liens for taxes have been filed and no claims are being
assessed by a governmental authority with respect to any taxes. The charges,
accruals and reserves on the books of the Borrower or its Subsidiaries, as the
case may be, with respect to taxes or other governmental charges are adequate.
6.09 Compliance with Statutes, etc. Each of the Borrower and its
------------------------------
Subsidiaries is in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the ownership
of its property (including, without limitation, applicable statutes,
regulations, orders and restrictions relating to environmental standards and
controls), except such noncompliances as would not, in the aggregate, have a
material adverse effect on the business, operations, property, assets or
financial condition of the Borrower or of the Borrower and its Subsidiaries
taken as a whole.
-31-
6.10 Environmental Compliance. To the best of the Borrower's
------------------------
knowledge, after due inquiry and investigation, no Lien has attached to any
revenues or any real or personal property owned by the Borrower or any of its
Subsidiaries in any jurisdiction, arising from an intentional or unintentional
action or omission of the Borrower or any of its Subsidiaries or any previous
owner and/or operator of said real property, resulting from the Dumping of
hazardous substances or wastes into the atmosphere or waters or onto lands.
6.11 No Notification of Dumping of Hazardous Substances. Neither the
--------------------------------------------------
Borrower nor any of its Subsidiaries has received a summons, citation,
directive, letter, or other communication, written or oral, from any
jurisdiction, or political sub-division or any agency or instrumentality
thereof, concerning any intentional or unintentional action or omission on the
part of the Borrower or any of its Subsidiaries arising from the Dumping of
hazardous substances into the atmosphere or waters, or onto the lands in any
jurisdiction.
6.12 No Authorizations or Approvals. No authorization or approval or
------------------------------
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and performance by
the Borrower of this Agreement and the other Credit Documents.
6.13 Not an Investment Company. The Borrower is not an "investment
-------------------------
company" or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.
6.14 Subsidiaries. Annex I hereto lists each Subsidiary of the
------------
Borrower (and the direct or indirect ownership interest of the Borrower
therein), in each case existing on the Closing Date. Neither the Borrower nor
any of its Subsidiaries has any interests in any Person other than as set forth
in said Annex I. No such Subsidiary has any Subsidiaries.
6.15 Intellectual Property, etc. The Borrower and each of its
--------------------------
Subsidiaries have obtained all material patents, trademarks, servicemarks, trade
names, copyrights, technology, processes, licenses and other rights
(Intellectual Property), free from any burdensome restrictions, that are
necessary for the operation of their respective businesses as presently
conducted and as proposed to be conducted. No claim has been asserted or
threatened questioning the use of such Intellectual Property, nor does the
Borrower know of any valid basis for any such claim.
6.16 Labor Matters. Except as disclosed on Annex I, neither the
-------------
Borrower nor any of its Subsidiaries is a party to a labor contract. There are
no strikes, lockouts or other disputes relating to any collective bargaining or
similar agreement to which the Borrower or any of its Subsidiaries is a party.
6.17 Assets and Properties. The Borrower and its Subsidiaries have
---------------------
good and marketable title to all of their respective assets and properties
(tangible and intangible) and all such
-32-
assets and properties are free and clear of all Liens (except Permitted Liens).
Substantially all of the assets and properties owned by, leased to or used by
the Borrower or its Subsidiaries are in adequate operating condition and repair,
ordinary wear and tear excepted, are free and clear of any known defects except
such defects as do not substantially increase with the continued use thereof in
the conduct of normal operation, and such assets are able to serve the function
for which they are currently being used, except in each case where the failure
of such asset or property to meet such requirements would not have or is not
expected to have a material adverse effect on the operations of the Borrower or
its Subsidiaries, taken as a whole.
6.18 Insurance. Annex I hereto lists all material insurance contracts
---------
and binders of the Borrower and its Subsidiaries which are currently in full
force and effect. Such contracts and binders provide coverages which are usual
and customary in the business of the Borrower and its Subsidiaries as to amount
and scope. If requested by the Agent, each such insurance contract and binder
shall contain standard lender's endorsement and loss payee endorsements in favor
of the Agent, on behalf of the Lenders, and be subject to cancellation or
reduction in coverage only upon thirty (30) days' prior written notice thereof
to the Agent.
6.19 True and Complete Disclosure. All factual information (taken as
----------------------------
a whole) heretofore or contemporaneously furnished by the Borrower to the Agent
or any of the Lenders for the purposes of or in connection with this Agreement
or any transactions contemplated herein is, and all other such factual
information (taken as a whole) hereafter furnished by or on behalf of such
Persons in writing to any Lender will be, true and accurate in all material
respects on the date as of which such information is dated or certified and does
not omit to state any fact necessary to make such information (taken as a whole)
not misleading at such time in light of the circumstances under which such
information was provided.
SECTION 7. AFFIRMATIVE COVENANTS.
---------------------
The Borrower covenants and agrees that for so long as there are any
outstanding Obligations hereunder, or the Agent or the Lenders shall have any
obligation hereunder, the Borrower shall (and, as applicable, shall cause each
of its Subsidiaries (including the Guarantors) to):
7.01 Payment of Indebtedness. Pay the Credit Obligations in
-----------------------
accordance with their respective terms and pay and perform its other
Indebtedness and obligations in accordance with their terms.
7.02 Payment of Taxes, Etc. Pay and discharge all taxes, assessments
---------------------
and governmental charges or levies imposed upon it, or upon its properties,
prior to the date on which penalties attach thereto, provided, however, that the
Borrower and its Subsidiaries shall not be required to pay or discharge such
tax, assessment, governmental charge or levy if the validity, amount or
applicability thereof is being contested by the Borrower or such Subsidiaries in
good faith, by appropriate proceedings and with diligence and continuity (and
for which adequate reserves therefor are maintained on the books of the Borrower
or such Subsidiaries, as the case may be).
-33-
7.03 Reporting Requirements. Furnish to the Agent and the Lenders:
(i) as soon as available and in any event within one hundred (100)
days after the end of each fiscal year of the Borrower and the
Guarantor, an annual audit report for the Borrower and the
Guarantor, including, but not limited to, the balance sheet of
the Borrower and the Guarantor as of the end of such fiscal year
and the statements of operations and cash flows of the Borrower
and the Guarantor for such fiscal year, setting forth in
comparative form the corresponding figures for the preceding
fiscal year, prepared in accordance with GAAP, consistently
applied, all in reasonable detail and prepared on a Consolidated
and consolidating basis and in each case duly certified by
independent certified public accountants of recognized standing
acceptable to the Agent. At the same time as the annual report is
so provided to the Agent and the Lenders, the Borrower shall also
provide to the Agent and the Lenders its Annual Report on
Form 10-KSB (or successor form) prescribed by the SEC for such
fiscal year; and
(ii) as soon as available and in any event within sixty (60) days
after the end of the first three quarters of each fiscal year of
the Borrower and the Guarantor, management prepared Consolidated
and consolidating financial statements including, but not limited
to, a balance sheet, income statement and cash flow statement
prepared in accordance with GAAP, consistently applied, in form
and substance satisfactory to the Agent for the quarter and the
period commencing at the end of the previous fiscal year and
ending with the end of such quarter. In addition, at the times of
delivery to the Agent and the Lenders of such quarterly reports,
the Borrower shall also deliver to the Agent and the Lenders its
Quarterly Report on Form 10-QSB (or successor form) prescribed by
the SEC for such fiscal year; and
(iii) promptly after filing, copies of any and all public disclosures
of the Borrower whether to the SEC or otherwise, including but
not limited to any reports on Form 8-K (or successor form)
prescribed by the SEC, and any proxy and registration statements;
and
(iv) within six (6) months after the end of the Borrower's fiscal
year, a management letter prepared by the independent certified
public accountants of the Borrower; and
(v) such other information as may be reasonably requested by the
Agent and any Lender respecting the condition or operations,
financial or otherwise, of the Borrower and the Subsidiaries and
their respective businesses.
-34-
7.04 Compliance Certificate. Furnish to the Agent and the Lenders,
----------------------
together with each set of financial statements described in clauses (i) and (ii)
of Section 7.03 hereof, a compliance certificate, substantially in the form of
Exhibit E hereto, signed by the Borrower's chief financial officer, certifying
that: (i) all representations and warranties set forth in this Agreement and in
any other Credit Document are true and correct as of the date thereof; (ii) none
of the covenants in this Agreement or in any other Credit Document has been
breached; (iii) no Default or Event of Default under this Agreement or under any
other Credit Document has occurred and is continuing; and (iv) the computation
of the financial covenants set forth in Sections 8.14, 8.15 and 8.16 hereof,
together with the calculation of each significant component thereof necessary to
determine compliance with such covenants.
7.05 Notice of Certain Events. Promptly give written notice to the
------------------------
Agent and the Lenders of: (i) the occurrence of any Default or Event of Default;
(ii) the commencement of any proceeding (administrative or otherwise) or
litigation which, if adversely determined, would materially and adversely affect
its financial condition or ability to conduct business; and (iii) the formation
of any Subsidiary of the Borrower after the date of this Agreement, which notice
shall be accompanied by the resolution of the Board of Directors of such
Subsidiary authorizing such Subsidiary to execute a guaranty of the Obligations,
satisfactory in form and substance to the Lenders, together with such guaranty
duly executed by such Subsidiary.
7.06 Preservation of Property; Insurance. Keep and maintain all of its
-----------------------------------
properties and assets in good order and repair; maintain all insurance coverages
described in Section 6.18 hereof and such other extended coverage, general
liability, hazard, malpractice, business interruption and property insurance in
amounts deemed satisfactory to the Agent and as is customary for businesses
similar to the Borrower's business and deliver to the Agent certificates of all
such insurance in effect; and cause all such policies to contain a standard
lender's endorsement and loss payee endorsements in favor of the Agent, on
behalf of the Lenders, and to be subject to cancellation or reduction in
coverage only upon thirty (30) days' prior written notice thereof to the Agent.
7.07 Conduct of Business and Maintenance of Existence. Continue to
------------------------------------------------
engage in business of the same general type as now conducted and preserve, renew
and keep in full force and effect its corporate existence and rights, privileges
and franchises necessary or desirable in the normal conduct of business and
which are material to the Borrower and each of its Subsidiaries.
7.08 Operation of Properties. Conduct its business and operate its
-----------------------
properties, in compliance with all applicable orders, rules and regulations
promulgated by the jurisdictions and agencies thereof where such business is
conducted and where such properties are located, and duly file or cause to be
filed such reports and/or information as may be required or appropriate under
applicable orders, regulations or law.
7.09 Access to Properties, Books and Records. Upon reasonable notice,
---------------------------------------
at any reasonable time and from time to time, permit the Agent's and/or the
Lenders' representatives and/or agents full and complete access to any or all of
the Borrower's and its Subsidiaries' properties and
-35-
financial records, to make extracts from and/or audit such records, and to
examine and discuss the Borrower's properties, business, finances and affairs
with the Borrower's officers and outside accountants.
7.10 Keeping of Records and Books of Account. Keep adequate records
---------------------------------------
and books of account reflecting all its financial transactions.
7.11 ERISA Compliance. Comply with all the applicable provisions of
----------------
ERISA now or hereafter in effect with respect to each of its Plans and notify
the Lenders of the following events, as soon as possible and in any event within
ten (10) days after the Borrower knows or has reason to know thereof: (i) the
occurrence of any "Reportable Event" (as defined in ERISA) with respect to any
Plan; (ii) the occurrence of a "prohibited transaction" (as defined in Section
406 of ERISA or Section 4975 of the Code) with respect to any Plan, (iii) the
institution of proceedings or the taking or expected taking of any other action
by the PBGC or the Borrower or any ERISA Affiliate to terminate or withdraw or
partially withdraw from any Plan and, with respect to a Multiemployer Plan, the
"Reorganization" or "Insolvency" of such Plans (as such terms are defined in
ERISA); (iv) the failure of the Borrower or any ERISA Affiliate to make a
required installment under Section 412 (m) of the Code or any other payment
required under Section 412 of the Code on or before the due date or (v) the
adoption of an amendment with respect to a Plan so that the Borrower or any
ERISA Affiliate is required to provide security to such Plan under Section
401(a)(29) of the Code, and in addition to such notice, deliver to the Lenders a
certificate signed by the chief financial officer of the Borrower or of the
respective ERISA Affiliate describing what action the Borrower or the respective
ERISA Affiliate proposes to take with respect thereto and when known, any action
taken or threatened by the Internal Revenue Service or the PBGC, together with a
copy of any notice to the PBGC or the Internal Revenue Service or any notice
delivered by the PBGC or the Internal Revenue Service.
7.12 Environmental Liens. In the event that there shall be filed a
-------------------
Lien against any property of the Borrower by any jurisdiction, political sub-
division, agency or instrumentality thereof arising from an intentional or
unintentional act or omission of the Borrower, resulting in the Dumping of
hazardous substances or wastes into the atmosphere or waters or onto lands then,
within thirty (30) days from the date that the Borrower is given notice that the
Lien has been placed against such property, or within such shorter period of
time in the event that such jurisdiction, political sub-division, agency, or
instrumentality thereof has commenced steps to cause such property to be sold
pursuant to the Lien, either (i) pay the claim and remove the Lien from the
applicable property or (ii) furnish such jurisdiction, political subdivision,
agency or instrumentality thereof that imposed the Lien with one of the
following: (a) a bond satisfactory to such jurisdiction, political sub-division,
agency, or instrumentality thereof that imposed the Lien in the amount of the
claim out of which the Lien arises, (b) a cash deposit in the amount of the
claim out of which the Lien arises, or (c) other security reasonably
satisfactory to such jurisdiction, political sub-division, agency, or
instrumentality thereof in an amount sufficient to discharge the claim out of
which the Lien arises.
7.13 Removal of Hazardous Substances. Should the Borrower cause or
-------------------------------
permit any intentional or unintentional act or omission resulting in the Dumping
of hazardous substances or
-36-
wastes into the atmosphere or waters or onto the lands resulting in damage to
the Natural Resources without having obtained a permit issued by the appropriate
governmental authorities, promptly remediate said damage in accordance with all
applicable federal, state, and local orders, statutes, laws, ordinances, rules
and regulations.
7.14 Further Assurances. Do, execute, acknowledge and deliver or cause
------------------
to be done, executed, acknowledged and delivered all such further instruments,
acts, deeds, and assurances as may be reasonably requested by the Agent or the
Lenders for the purpose of carrying out the provisions and intent of the Credit
Documents.
SECTION 8. NEGATIVE COVENANTS.
------------------
For so long as any Obligations are outstanding, or the Lenders shall
have any obligation hereunder, the Borrower shall not (and shall not, as
applicable, permit any of its Subsidiaries (including the Guarantor) to):
8.01 Incur Indebtedness. Incur, create, assume, or permit to exist any
------------------
Indebtedness, except:
(a) Indebtedness of the Borrower owing to the Lenders and the Agent
under this Agreement and the Notes;
(b) Indebtedness existing on the Closing Date that is listed on Annex
I hereto and any renewals, extensions or refinancings of the same, provided that
the principal amount of such Indebtedness at the time of such renewal, extension
or refinancing is not increased in connection therewith;
(c) Approved Subordinated Indebtedness;
(d) Indebtedness in respect of normal trade debt arising in the
ordinary course of business which does not significantly exceed the levels of
such debt historically incurred by the Borrower or its Subsidiary, as the case
may be;
(e) Indebtedness secured by Liens permitted by Section 8.02(f); and
(f) Indebtedness that constitutes Guaranteed Indebtedness of the
Borrower that has been incurred by the Borrower solely by virtue of the
Borrower's endorsement of checks or drafts negotiated in the ordinary course of
the Borrower's business.
8.02 Negative Pledge. Create, permit to exist, or suffer the creation
---------------
of, any Lien, on any of its properties or assets (real or personal, tangible or
intangible), except:
(a) Liens existing on the Closing Date that are listed on Annex I
hereto;
-37-
(b) Liens for taxes, assessments or governmental charges or levies to
the extent not required to be paid by Section 7.02 hereof;
(c) Liens imposed by law, such as materialmen's, mechanics',
carriers, workmen's, and repairmen's Liens and other similar Liens arising in
the ordinary course of business securing obligations which are not overdue for a
period of more than thirty (30) days;
(d) pledges or deposits to secure obligations under workmen's
compensation laws or similar legislation or to secure public or statutory
obligations of the Borrower;
(e) Certain de minimus Liens with respect to the assets and
properties acquired in acquisitions permitted pursuant to Section 8.03 hereof
which were existing upon such assets or properties prior to the relevant
permitted acquisitions;
(f) Liens for finance leases of equipment leased by the Borrower or
any of its Subsidiaries, which do not constitute Capitalized Leases or purchase
money Liens upon or in property acquired or held by the Borrower or any of its
Subsidiaries in the ordinary course of business to secure the purchase price of
such property or to secure Indebtedness incurred solely for the purpose of
financing the acquisition of any such property to be subject to such Liens, or
Liens existing on any such property at the time of the leasing, acquisition, or
extensions, renewals or replacements of any of the foregoing for the same or a
lesser amount, provided that no such Lien shall extend to or cover any property
other than the property being leased or acquired and no such extension, renewal
or replacement shall extend to or cover any property not theretofore subject to
the Lien being extended, renewed or replaced, and provided, further, that (i)
the aggregate principal amount of the Indebtedness at any one time outstanding
secured by Liens permitted pursuant to this clause (g) shall not exceed $250,000
at any one time outstanding and (ii) any such Indebtedness shall not otherwise
be prohibited by the terms of this Agreement; and
(g) the replacement, extension or renewal of any Lien permitted by
clauses (a) through (f) above upon or in the same property theretofore subject
thereto or the replacement, extension or renewal (without increase of principal
amount) of the Indebtedness secured thereby.
8.03 Sale of Assets; Liquidation; Merger; Acquisitions. Convey, lease,
-------------------------------------------------
sell, transfer or assign any assets or properties presently owned or hereafter
acquired except dispositions of inventory in the ordinary course of business for
value received and such other dispositions of assets and properties that are not
material to the business or operations of the Borrower or any of its
Subsidiaries, if such asset or property is replaced with reasonable promptness
or is otherwise obsolete; liquidate or discontinue its normal operations with
intent to liquidate; enter into any merger or consolidation; or acquire all or
substantially all of the assets, stock or other equity interests of another
entity. Notwithstanding the foregoing, (A) any of the Borrower's Subsidiaries
may merge with or be consolidated into the Borrower and the Borrower's
Subsidiaries may merge with or be consolidated into other Subsidiaries of the
Borrower, in each case upon not less than sixty (60) days' prior written
-38-
notice to the Agent and the Lenders and on terms reasonably acceptable to the
Agent and the Required Lenders and (B) upon twenty (20) days' prior written
notice to the Agent and the Lenders, the Borrower may from time to time acquire
(by stock or asset acquisitions) other business entities that are engaged in
businesses related or complimentary to the business of the Borrower, as
presently conducted; if, and only if, the aggregate cash and non-cash
consideration paid or exchanged by the Borrower in all such acquisitions does
not exceed (A) $3,000,000 in any consecutive twelve (12) month period or (B)
$5,000,000 at any time while the Obligations are outstanding or the Lenders have
any obligations hereunder. For purpose of determining the consideration paid or
exchanged in any such acquisition, such consideration shall include the amount
of any liability (direct or contingent) assumed by the Borrower in connection
with any such acquisition.
8.04 Nature of Business. Engage (directly or indirectly) in any
------------------
business other than the business in which it is generally engaged on the Closing
Date or any other business that is related or complimentary thereto.
8.05 Dividends, Stock Redemption, Etc. Declare or make any dividend
--------------------------------
payment or other distribution of assets, properties, cash, rights, obligations
or securities on account of any shares of any class of stock of the Borrower, or
purchase, redeem, or otherwise acquire for value (or permit any Subsidiary to do
so) any shares of any class of stock of the Borrower or any warrants, rights or
options to acquire any such shares, now or hereafter outstanding; except that
(A) if as at the relevant ex-dividend date, the Borrower's Consolidated Tangible
Net Worth is less than $20,000,000, the Borrower may declare and pay quarterly
cash dividends in respect of its capital stock or expend in connection with the
redemption, retirement or purchase of its common stock an amount not to exceed
thirty percent (30%) of its quarterly average net income (determined in
accordance with clause (B) of the definition of Consolidated Funded Debt to Cash
Flow Ratio and exclusively from continued operations) for the four (4) quarters
immediately preceding the relevant ex-dividend date and (B) if as at the
relevant ex-dividend date, the Borrower's Consolidated Tangible Net Worth is
greater than $20,000,000, the Borrower may declare and pay quarterly cash
dividends in respect of its capital stock or expend in connection the
redemption, retirement or purchase of its common stock an amount not to exceed
forty percent (40%) of its quarterly average net income (determined pursuant to
clause (B) hereof); provided, however, that if immediately after giving effect
to any such proposed dividend payment or stock redemption, a Default or Event of
Default would exist, then no such dividend payment or stock redemption shall be
permitted hereunder. Anything to the contrary in this Section 8.05
notwithstanding, the Borrower shall be permitted to distribute additional shares
of its capital stock in respect of any issued and outstanding shares of its
capital stock in connection with stock splits effected by the Borrower from time
to time.
8.06 Accounts. Sell, assign, transfer or dispose of any of its
--------
accounts or notes receivable, with or without recourse, except to the Agent or
the Lenders.
8.07 Sale-Leaseback Transactions. Enter into any sale-leaseback
---------------------------
transaction or any transaction howsoever termed which would have the same or
substantially the same result or effect as a sale-leaseback.
-39-
8.08 Prepayment of Other Indebtedness. Prepay any Indebtedness not
--------------------------------
required to be prepaid in excess of $250,000 in the aggregate in any period of
twelve (12) consecutive months, except to the Lenders or any Affiliate of any of
the Lenders, or cause or permit to be accelerated any amounts on any outstanding
Indebtedness now existing or hereafter arising.
8.09 Investments. Purchase or make any investment in the stock,
-----------
securities or evidences of indebtedness of (other than as permitted pursuant to
Sections 8.10 and 8.11 hereof), or make capital contributions to, or other forms
of investments in, any Person except Permitted Investments.
8.10 Loans and Advances Generally. Other than as permitted pursuant
----------------------------
to Section 8.11 hereof, loan or make advances, or other forms of extensions of
credit, to any Subsidiary or Affiliate of the Borrower, or any other Person
(other than as permitted under Section 8.9 hereof); provided however, that the
Borrower may make such loans, advances and other forms of extension of credit to
such parties in the ordinary course of business at arm's length and on
commercially reasonable terms.
8.11 Loans and Advances to Officers. Loan or make advances, or other
------------------------------
forms of extensions of credit, to any officer, director or shareholder of the
Borrower or any Subsidiary or to any Affiliate of any of the foregoing other
than at arm's length and/or commercially reasonable terms or which in the
aggregate for all such loans and advances do not exceed $1,000,000 outstanding
at any time.
8.12 Create Subsidiaries. Create, permit to exist, or invest or
-------------------
otherwise participate in any Subsidiaries or any partnership, joint venture or
other enterprise (other than the Subsidiaries and Persons listed in Annex I
hereto).
8.13 Hazardous Substances. Cause or permit to exist a Dumping of
--------------------
hazardous substances or wastes into the atmosphere or waters or onto lands
resulting in damage to the Natural Resources unless the Dumping is pursuant to
and in compliance with the conditions of a permit issued by the appropriate
federal, state, or local governmental authorities.
8.14 Consolidated Tangible Net Worth. Permit its Consolidated
-------------------------------
Tangible Net Worth at any time during the periods specified below to be less
than the amount set forth opposite such period:
Measuring Period Minimum Tangible Net Worth
---------------- --------------------------
Closing Date through
December 30, 1996 $ 7,500,000
December 31, 1996 through
-40-
December 30, 1997 $10,000,000
December 31, 1997 through
December 30, 1998 $11,000,000
December 31, 1998 through
December 30, 1999 $12,000,000;
and for each fiscal year thereafter, an amount equal to the sum of $1,000,000
plus the minimum Tangible Net Worth required hereunder during the immediately
preceding fiscal year, in all cases measured no less frequently than quarterly.
8.15 Consolidated Debt Service Coverage Ratio. Permit its Consolidated
----------------------------------------
Debt Service Coverage Ratio to be at any time less than 2.00 to 1.00, measured
on a quarterly basis for the relevant Test Period.
8.16 Consolidated Funded Debt to Cash Flow Ratio. Permit its
-------------------------------------------
Consolidated Funded Debt to Cash Flow Ratio to exceed at any time 2.5 to 1.00,
measured on a quarterly basis for the relevant Test Period.
8.17 Use of Proceeds. Use the proceeds of the Revolving Credit Loans,
---------------
and the Letters of Credit, for any purpose other than the purposes set forth in
Section 6.02 hereof.
SECTION 9. EVENTS OF DEFAULT AND REMEDIES.
------------------------------
9.01 Events of Default. Upon the occurrence of any of the following
-----------------
events (each an Event of Default):
(i) Payment Default. The Borrower shall (a) default in the payment
when due of any principal of the Loans or Unpaid Drawings or (b)
default in the payment of interest on the Loans or any other
amounts owing hereunder, under the Notes or under any other
Credit Document, and such default shall continue for a period of
five (5) or more days;
(ii) Negative Covenant Breach. The Borrower shall default in the due
performance or observance by it of any term, covenant or
agreement contained in Section 8 hereof;
(iii) Other Covenant Breaches. The Borrower shall default in the due
performance or observance of any term, covenant or agreement
(other than those referred to in clauses (i) and (ii) above)
contained in this Agreement, the Notes or any other Credit
Document, and such default shall continue unremedied for a period
of at least ten (10) days after the earlier to occur of (a)
-41-
the date the Borrower obtains actual knowledge of such default or
(b) the date notice of such default is given to the Borrower by
the Agent;
(iv) Default Under Other Agreements. (a) The Borrower or any of its
Subsidiaries shall default in any payment with respect to any
Indebtedness beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness was created
or default in the observance or performance of any agreement or
condition relating to any such Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto,
or any other event shall occur or condition exist, the effect of
which default or other event or condition is to cause, or to
permit the holder or holders of such Indebtedness (or a trustee
or agent on behalf of such holder or holders) to cause
(determined without regard to whether any notice or lapse of time
is required), any such Indebtedness to become due prior to its
stated maturity; (b) any such Indebtedness shall be declared to
be due and payable, or required to be prepaid as a mandatory
prepayment, prior to the stated maturity thereof; or (c) without
limiting the generality of the foregoing, the occurrence of an
"Event of Default" (as defined therein) under the First Fidelity
Term Loan Agreement;
(v) Voluntary Bankruptcy. The Borrower or any of its Subsidiaries
commences any bankruptcy, reorganization, debt arrangement, or
other case or proceeding under the United States Bankruptcy Code
or under any similar foreign, federal, state, or local statute,
or any dissolution or liquidation proceeding, or makes a general
assignment for the benefit of creditors, or takes any action for
the purpose of effecting any of the foregoing;
(vi) Involuntary Bankruptcy. Any bankruptcy, reorganization, debt
arrangement, or other case or proceeding under the United States
Bankruptcy Code or under similar foreign, federal, state or local
statute, or any dissolution or liquidation proceeding, is
involuntarily commenced against or in respect of the Borrower or
any of its Subsidiaries or an order for relief is entered in any
such proceeding and is not dismissed within sixty (60) days;
(vii) Appointment of Receiver. The appointment, or the filing of a
petition seeking the appointment, of a custodian, receiver,
trustee, or liquidator for the Borrower or any of its
Subsidiaries or any of their respective properties or the taking
of possession of any part of such property at the instance of any
governmental authority;
(viii) Insolvency. The Borrower or the Guarantor becomes insolvent
(however defined), is generally not paying its debts as they
become due, or has suspended transaction of its usual business;
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(ix) Reorganization. The dissolution, merger, consolidation, or
reorganization of the Borrower or any of its Subsidiary (other
than as expressly permitted under Section 8.03 hereof);
(x) Action in Furtherance of Certain Defaults. The Borrower or any of
its Subsidiaries has taken any corporate action for the purpose
of effecting any of the events described in clauses (v), (vii) or
(ix) above;
(xi) Material Misstatement. Any statement, representation or warranty
made in or pursuant to this Agreement or any other Credit
Document or to induce the Lenders to enter into this Agreement or
to enter into the transactions referred to in this Agreement
shall prove to be untrue or misleading in any material respect;
(xii) Material Adverse Change. The occurrence of a material adverse
change in the financial condition of the Borrower or any of its
Subsidiaries or the occurrence of any event which, in the sole
opinion of the Lenders, impairs the financial responsibility of
the Borrower or any of its Subsidiaries;
(xiii) Entry of Judgment. The entry or issuance of judgments, orders,
decrees or fines against the Borrower or any of its Subsidiaries
which, in the aggregate, involve liabilities in excess of the sum
of $100,000 (the discharge of which is not the obligation of any
insurance company) and any such judgments or orders involving
liabilities in excess of said sum shall have continued unbonded
or unsatisfied and without stay of execution or agreement between
the parties thereon for a period of thirty (30) days after the
entry or issuance of such judgment; or
(xiv) Transfer of Assets. The Borrower or any of its Subsidiaries
transfers or sells all or substantially all of their respective
assets, without the prior written consent of the Lenders;
then, and in any such event, and at any time thereafter, if any Event of
Default shall then be continuing the Agent shall, upon the written request of
the Required Lenders, by written notice to the Borrower, take any or all of the
following actions, without prejudice to the rights of the Agent or any Lender to
enforce its claim against the Borrower, except as otherwise specifically
provided for in this Agreement (provided that, if an Event of Default specified
in clause (v), (vi), (vii) or (viii) above shall occur with respect to the
Borrower, the result which would occur upon the giving of written notice by the
Agent as specified in clauses (i) and (ii) below shall occur automatically
without the giving of any such notice): (i) declare all of the Credit
Commitments terminated, whereupon the Credit Commitment of each Lender shall
forthwith terminate immediately and any fees theretofore accrued shall forthwith
become due and payable without any other notice of any kind; (ii) declare the
principal of and any
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accrued interest in respect of all Credit Obligations and all other Obligations
owing hereunder to be, whereupon the same shall become, forthwith due and
payable without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Borrower; (iii) terminate any Letter of Credit
which may be terminated in accordance with its terms; and (iv) direct the
Borrower to pay (and the Borrower agrees that upon receipt of such notice, or
upon the occurrence of an Event of Default as specified in clause (v) (vi),
(vii) or (viii) above, it will pay) to the Agent such additional amounts of cash
to be held as cash collateral for the Borrower's reimbursement obligations for
Drawings that may subsequently occur under any Letter of Credit then
outstanding, equal to the Stated Amount of all such Letters of Credit.
Notwithstanding anything contained in the foregoing paragraph,
if at any time within sixty (60) days after an acceleration of the Loans
pursuant to the preceding paragraph, the Borrower shall pay all arrears of
interest and all payments on account of principal which shall have become due
otherwise than by acceleration (with interest on principal and, to the extent
permitted by law, on overdue interest, at the rates specified in the Credit
Documents) and all Events of Default (other than non-payment of the principal of
and accrued interest on the Loans, in each case which is due and payable solely
by virtue of acceleration) shall be remedied or waived to the satisfaction of
the Lenders, then the Lenders, by written notice to the Borrower, may at their
option rescind and annul the acceleration and its consequences; but such action
shall not affect any subsequent Event of Default or impair any right consequent
thereon. The provisions of this paragraph are intended merely to bind the
Lenders to a decision which may be made at the election of the Lenders and are
not intended to benefit the Borrower and do not grant the Borrower the right to
require the Lenders to rescind or annul any acceleration hereunder, even if the
conditions set forth herein are met. Without limiting the generality of the
remedies available to the Lenders pursuant to the Credit Documents or by law
following an Event of Default, (y) the rate of interest on the principal portion
of the Obligations incurred hereunder shall be increased to a rate equal to the
lesser of: (i) the highest rate of interest set forth in the Credit Documents,
or (ii) the highest rate of interest allowed by law, such rate of interest to
apply to such Obligations upon and after an Event of Default, maturity, whether
by acceleration or otherwise, and the entry of a judgment in favor of the
Lenders with respect to any or all of such Obligations and (z) the Letter of
Credit Fee shall be increased to 300 basis points (3.00%) at all times during
which an Event of Default continues to exist.
9.02 Right of Set-off. If any of the Obligations shall be due and
----------------
payable or any one or more Events of Default shall have occurred, whether or not
any Lender shall have made demand under any Credit Document and regardless of
the adequacy of any collateral or other form of security for the Obligations or
other means of obtaining repayment of the Obligations, each Lender shall have
the right, without notice to the Borrower or any other Obligor, and is
specifically authorized hereby to set-off against and apply to the then unpaid
balance of the Obligations any items or funds of the Borrower and/or any Obligor
held by each Lender or any Affiliate of such Lender, any and all deposits
(whether general or special, time or demand, matured or unmatured) or any other
property of the Borrower and/or any Obligor, including, without limitation,
securities and/or certificates of deposit, now or hereafter maintained by the
Borrower and/or any Obligor for its or their own account with any Lender or any
Affiliate thereof, and any other indebtedness at any time held or owing by the
Lender or
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any Affiliate to or for the credit or the account of the Borrower and/or any
Obligor, even if effecting such set-off results in a loss or reduction of
interest or the imposition of a penalty applicable to the early withdrawal of
time deposits. For such purpose, each Lender shall have, and the Borrower hereby
grants to each Lender, a first Lien on and security interest in such deposits,
property, funds and accounts and the proceeds thereof.
9.03 Sharing of Payments, Etc. If any Lender shall obtain any payment
------------------------
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) on account of the Loans made by it in excess of its Pro Rata Share
of payments on account of the Loans obtained by all the Lenders, such Lender
shall forthwith purchase from the other Lenders such participations in the Loans
made by them as shall be necessary to cause such purchasing Lender to share the
excess payment ratably with each of them, provided, however, that if all or any
portion of such excess payment is thereafter recovered from such purchasing
Lender, such purchase from each Lender shall be rescinded and such Lender shall
repay to the purchasing Lender the purchase price to the extent of such recovery
together with an amount equal to such Lender's Pro Rata Share according to the
proportion of (i) the amount of such Lender's required repayment to (ii) the
total amount so recovered from the purchasing Lender of any interest or other
amount paid or payable by the purchasing Lender in respect of the total amount
so recovered. The Borrower agrees that any Lender so purchasing a participation
from another Lender pursuant to this Section 9.03 may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off) with respect to such participation as fully as if such Lender were the
direct creditor of the Borrower in the amount of such participation. The
foregoing shall in no way obligate any Lender to seek payment in respect of the
Obligations of the Borrower hereunder through such Lender's right of set-off or
otherwise at any time, or in any particular order relative to such other rights
or remedies such Lender may possess, in a manner that prejudices or impairs (as
determined in such Lender's sole discretion) any other right or remedy such
Lender may possess to enforce claims against the Borrower in respect of
Obligations of the Borrower hereunder or such other Obligations of the Borrower
owed to such Lender.
9.04 Turnover of Property held by Affiliate. The Borrower further
--------------------------------------
authorizes each Affiliate of any Lender, upon and following the occurrence of an
Event of Default, at the request of the Lender so affiliated, and without notice
to the Borrower, to turn over to such Lender any property of the Borrower,
including, without limitation, funds and securities, held by such Affiliate for
the Borrower's account and to debit, for the benefit of such Lender, any deposit
account maintained by the Borrower with such Affiliate (even if such deposit
account is not then due or there results a loss or reduction of interest or the
imposition of a penalty in accordance with law applicable to the early
withdrawal of time deposits), in the amount requested by such Lender up to the
amount of the Obligations, and to pay or transfer such amount or property to
such Lender for application to the Obligations.
9.05 Remedies Cumulative; No Waiver. The rights, powers and remedies
------------------------------
of the Agent and the Lenders provided in this Agreement and any of the Credit
Documents are cumulative and not exclusive of any right, power or remedy
provided by law or equity. No failure or delay on the part of the Agent or the
Lenders in the exercise of any right, power or remedy shall operate as a waiver
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thereof, nor shall any single or partial exercise preclude any other or further
exercise thereof, or the exercise of any other right, power or remedy.
SECTION 10. THE AGENT.
---------
10.01 Appointment. Each Lender hereby irrevocably designates and
-----------
appoints First Union National Bank as the Agent of such Lender under this
Agreement, and each such Lender irrevocably authorizes First Union National
Bank, as the Agent for such Lender, to take such action on its behalf under the
provisions of this Agreement and to exercise such powers and perform such duties
as are expressly delegated to the Agent by the terms of this Agreement and the
other Credit Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere in
this Agreement, the Agent shall not have any duties or responsibilities, except
those expressly set forth herein, or any fiduciary relationship with any Lender,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Credit Document or
otherwise exist against the Agent.
10.02 Delegation of Duties. The Agent may execute any of its duties
--------------------
under this Agreement by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
The Agent shall not be responsible for the negligence or misconduct of any
agents or attorneys in-fact selected by it with reasonable care.
10.03 Exculpatory Provisions. Neither the Agent nor any of its
----------------------
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or any other Credit Document
(except for its or such Person's own gross negligence or willful misconduct) or
(ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by the Borrower or any officer
thereof contained in this Agreement or any other Credit Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or any
other Credit Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or the Notes or any other Credit
Document or for any failure of the Borrower to perform its obligations hereunder
or thereunder. The Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Credit
Document, or to inspect the property, books or records of the Borrower.
10.04 Reliance by Agent. The Agent shall be entitled to rely, and shall
-----------------
be fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it in
good faith to be genuine and correct and to have been signed, sent or made by
the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower), independent
accountants and other experts selected by the Agent. The Agent may deem and
treat the payee of any Note as the owner thereof for all purposes
-46-
unless a written notice of assignment, negotiation or transfer thereof shall
have been filed with the Agent. The Agent shall be fully justified in failing or
refusing to take any action under this Agreement or any other Credit Document
unless it shall first receive such advice or concurrence of the Lenders as it
deems appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement and the Notes and the other Credit Documents in accordance with a
request of the Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future holders of
the Notes. Without limiting the generality of the foregoing, no Lender shall
have any right of action whatsoever against the Agent as a result of the Agent
acting or refraining from acting hereunder or under any Credit Documents in
accordance with the instructions of the Lenders.
10.05 Notice of Default. The Agent shall not be deemed to have
-----------------
knowledge or notice of the occurrence of any Event of Default hereunder unless
the Agent has received notice from a Lender or the Borrower referring to this
Agreement, describing such Event of Default and stating that such notice is a
"notice of default". In the event that the Agent receives such a notice, the
Agent shall give notice thereof to the Lenders. The Agent shall take such action
with respect to such Event of Default as shall be reasonably directed by the
Lenders; provided that unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Event of Default as it
shall deem advisable in the best interests of the Lenders.
10.06 Non-Reliance on Agent and Other Lenders. Each Lender expressly
---------------------------------------
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representations
or warranties to it and that no act by the Agent hereinafter taken, including
any review of the affairs of the Borrower, shall be deemed to constitute any
representation or warranty by the Agent to any Lender. Each Lender represents to
the Agent that it has, independently and without reliance upon the Agent or any
other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the
Borrower and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Credit Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrower. Except for notices, reports and other documents expressly required to
be furnished to the Lenders by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, condition (financial
or otherwise), prospects or creditworthiness of the Borrower which may come into
the possession of the Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates.
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10.07 Indemnification. The Lenders agree to indemnify the Agent in its
---------------
capacity as such (to the extent not reimbursed by the Borrower and without
limiting the obligation of the Borrower to do so), ratably according to their
Pro Rata Shares from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever which may at any time (including, without limitation, at
any time following the payment of the Notes) be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out of this
Agreement, any of the other Credit Documents or any documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
or any action taken or omitted by the Agent under or in connection with any of
the foregoing; provided that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from the
Agent's gross negligence or willful misconduct. If, however, the Agent shall
have been reimbursed by the Borrower in respect of any amounts previously paid
to the Agent by the Lenders pursuant to this Section 10.07, then the Agent shall
pay to the Lenders their Pro Rata Shares of such duplicative reimbursement. The
agreements in this subsection shall survive the payment of the Notes and all
other amounts payable hereunder.
10.08 Agent in Its Individual Capacity. The Agent and its Affiliates
--------------------------------
may make loans to, accept deposits from and generally engage in any kind of
business with the Borrower as though the Agent were not the Agent hereunder and
under the other Credit Documents. With respect to its Loans made or renewed by
it and any Note issued to it, the Agent shall have the same rights and powers
under this Agreement and the other Credit Documents as any Lender and may
exercise the same as though it were not the Agent, and the terms Lender and
Lenders shall include the Agent in its individual capacity.
10.09 Successor Agent. The Agent may resign as Agent upon ten (10)
---------------
days' notice to the Lenders. If the Agent shall resign as Agent under this
Agreement, then the Lenders shall appoint from among the Lenders a successor
agent for the Lenders, which successor agent shall be approved by the Borrower.
If a successor Agent shall not have been so appointed within said ten (10) day
period, the Borrower shall appoint from among the Lenders a successor agent for
the Lenders. Any such successor agent shall succeed to the rights, powers and
duties of the Agent, and the term Agent shall mean such successor agent
effective upon its appointment, and the former Agent's rights, powers and duties
as Agent shall be terminated, without any other or further act or deed on the
part of such former Agent or any of the parties to this Agreement or any holders
of the Notes. After any retiring Agent's resignation as Agent, the provisions of
this Section 10 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was the Agent under this Agreement.
SECTION 11. MISCELLANEOUS.
-------------
11.01 Notices. Unless otherwise expressly stated notices and
-------
communications under this Agreement and the other Credit Documents shall be in
writing and shall be delivered by either (i) hand-delivery, (ii) first class
mail (postage prepaid), (iii) reliable overnight commercial courier (charges
-48-
prepaid), or (iv) telecopy, to the addresses and telecopy numbers listed in this
Agreement. Notice by telecopy shall be deemed to have been delivered and
received when sent. Notice by overnight courier shall be deemed to have been
delivered and received on the date scheduled for delivery. Notice by mail shall
be deemed to have been delivered and received three (3) calendar days after the
date first deposited in the United States mail. Notice by hand delivery shall be
deemed to have been delivered and received upon delivery. A party may change its
address and/or telecopier number by delivering written notice to the other
parties as specified herein.
11.02 Costs and Expenses. Whether or not the transactions contemplated
------------------
by the Credit Documents are fully consummated, the Borrower shall promptly pay
(or reimburse, as the Agent and/or any of the Lenders, as the case may be, may
elect) all costs and expenses which the Agent or the Lenders have incurred or
may hereafter incur in connection with the negotiation, preparation,
reproduction, interpretation, perfection, monitoring, administration and
enforcement of the Credit Documents, the collection of all amounts due under the
Credit Documents, and all amendments, modifications, consents or waivers, if
any, to the Credit Documents. Such costs and expenses shall include, without
limitation, the fees and disbursements of counsel to the Agent and/or any of the
Lenders (including the Agent's in-house counsel), the costs of appraisals, costs
of environmental studies, searches of public records, costs of filing and
recording documents with public offices, internal and/or external audit and/or
examination fees and costs, stamp, excise and other taxes and costs and expenses
incurred by the Agent or any of the Lenders, and the fees of the accountants,
consultants or other professionals engaged by the Agent or the Lenders in
connection with the transactions contemplated in this Agreement and the other
Credit Documents. Without limiting the generality of the foregoing, the Borrower
shall reimburse the Agent for the costs and expenses of Shanley & Fisher, P.C.,
counsel to the Agent, for services rendered in consideration with the
preparation and negotiation of the Credit Documents and matters related thereto.
Such reimbursement shall be payable within ten (10) days after presentation to
the Borrower of an invoice itemizing such costs and expenses. The Borrower's
reimbursement obligations under this paragraph shall survive any termination of
the Credit Documents.
11.03 Payment Due on a Day Other Than a Business Day. If any payment
----------------------------------------------
due or action to be taken under this Agreement or any Credit Document falls due
or is required to be taken on a day that is not a Business Day, such payment or
action shall be made or taken on the next succeeding Business Day and such
extended time shall be included in the computation of interest.
11.04 Governing Law. This Agreement shall be construed in accordance
-------------
with and governed by the substantive laws of the State of New Jersey without
reference to conflict of laws principles.
11.05 Counterparts; Integration. This Agreement may be signed in any
-------------------------
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were on the same instrument. This
Agreement and the other Credit Documents constitute the sole agreement of the
parties with respect to the subject matter hereof and thereof and supersede all
oral negotiations and prior writings with respect to the subject matter hereof
and thereof.
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11.06 Amendment or Waiver. Neither this Agreement nor any other Credit
-------------------
Document nor any terms hereof or thereof may be changed, waived, discharged or
terminated unless such change, waiver, discharge or termination is in writing
signed by the Required Lenders; provided, that no such change, waiver, discharge
or termination shall, without the consent of each Lender, (i) extend the final
maturity of any Loan or Note, or any portion thereof, or reduce the rate or
extend the time of payment of interest (other than as a result of waiving the
applicability of any post-default increase in interest rates) thereon or fees
payable hereunder or reduce the principal amount thereof, or increase the Credit
Commitment of any Lender over the amount thereof then in effect (it being
understood that a waiver of any Default or Event of Default or of a mandatory
reduction in the Credit Commitment shall not constitute a change in the terms of
the Credit Commitment of any Lender), (ii) release all or substantially all of
collateral at such time securing the Obligations hereunder (except as expressly
provided in such instruments pertaining to such collateral), (iii) the release
of the Guaranty or any other guaranty at any time supporting the Obligations,
(iv) amend, modify or waive any provision of this Section, or Section 2.12,
2.13, 4.05, 9.01, 9.02, 9.03, 11.02, 11.08 or 11.11; (v) reduce any percentage
specified in, or otherwise modify, the definition of Required Lenders; (vi)
alter or amend any provision hereof expressly requiring the consent of all of
the Lenders; or (vii) consent to the assignment or transfer by the Borrower of
any of its rights and obligations under this Agreement. No provision of Section
10 may be amended without the consent of the Agent. The provisions of Sections
2.07, 2.08, 2.09, 2.10 and 2.11 shall not be amended or modified in any way that
adversely affects the Agent with respect to its obligation to issue Letters of
Credit, without the Agent's consent.
11.07 Successors and Assigns. This Agreement (i) shall be binding upon
----------------------
the Borrower, the Agent and the Lenders and their successors and permitted
assigns, and (ii) shall inure to the benefit of the Borrower, the Agent and the
Lenders and their respective successors and permitted assigns; provided,
however, that the Borrower may not assign its rights hereunder or any interest
herein without the prior written consent of the Lenders, and any such assignment
or attempted assignment by the Borrower shall be void and of no effect with
respect to the Lenders.
11.08 Participations and Assignments. The Borrower hereby acknowledges
------------------------------
and agrees that each Lender may at any time: (I) grant participations in all or
any portion of its rights and obligations hereunder (including, without
limitation, its obligation to make advances hereunder in accordance with its
Credit Commitment) or under its Revolving Credit Note (collectively,
Participations) to any other lending office or to any other bank, lending
institution or other entity which has the requisite sophistication to evaluate
the merits and risks of investments in Participations (each a Participant);
provided, however, that: (i) all amounts payable by the Borrower hereunder shall
be determined as if such Lender had not granted such Participation, such Lender
(A) shall retain the sole right and responsibility to enforce the obligations of
the Borrower hereunder including, without limitation, the right to approve any
amendment, modification or waiver of any provisions of this Agreement; and (B)
shall not in any event be relieved from its obligations to make advances
hereunder in accordance with its Credit Commitment; provided, however, that such
Lender may agree with the Participant that such Lender will not agree to any
modification, amendment or waiver of this Agreement without the consent of the
Participant if such amendment, modification or waiver would
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reduce the principal of or rate of interest on the Credit Obligations so
participated or postpone the date fixed for any payment of principal of or
interest on such Credit Obligations; and (II) assign up to one hundred percent
(100%) of its rights and obligations hereunder (including, without limitation,
its obligation to make advances hereunder in accordance with its Credit
Commitment) or under its Revolving Credit Note; provided, however, that, except
with respect to assignments between and among Lenders which are parties to this
Agreement (as to which the conditions in clauses (i) through (iii) below shall
not be applicable) prior to such assignment: (i) it has obtained the prior
written consent of the Agent (which consent shall not be unreasonably withheld);
(ii) the amount assigned shall be an amount equal to $2,000,000 or multiples of
$1,000,000 in excess thereof; and (iii) such Lender has paid to the Agent a
transfer fee of $2,500. Notwithstanding anything in this Section 11.08 to the
contrary, each Lender may sell or assign, in whole or in part, any or all of its
interest in the Credit Obligations (without the consent of any Person or any
other restriction) to (i) any Affiliate of such Lender, (ii) any Federal Reserve
Bank in connection with a pledge of said interest as collateral security
pursuant to Regulation A of the Board of Governors of the Federal Reserve
System, and (iii) any Person at any time after an Event of Default. The holder
of any sale, assignment or Participation permitted pursuant to this Section
11.08, if the applicable agreement between the relevant Lender and such holder
so provides, (i) shall be entitled to all of the rights, obligations and
benefits of a Lender hereunder and (ii) shall be deemed to hold and may exercise
the rights of set-off or banker's lien with respect to any and all obligations
of such holder to the Borrower, in each case as fully as though the Borrower
were directly indebted to such holder. The Borrower authorizes each Lender to
provide information concerning the Borrower to any prospective purchaser,
assignee or participant. The information provided may include, but is not
limited to, amounts, terms, balances, payment history, and any financial or
other information about the Borrower. The Borrower agrees to indemnify, defend,
and release any Lender that has so disclosed such information, and hold such
Lender harmless, at the Borrower's cost and expense, from and against any and
all lawsuits, claims, actions, proceedings, or suits against such Lender arising
out of or relating to such Lender's reporting or disclosure of such information.
11.09 Severability. The illegality or unenforceability of any
------------
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder. In lieu of any illegal or unenforceable provision in this Agreement,
there shall be added automatically as a part of this Agreement a legal and
enforceable provision as similar in terms to such illegal or unenforceable
provision as may be possible.
11.10 Consent to Jurisdiction and Service of Process. The Borrower
----------------------------------------------
irrevocably appoints each and every senior vice president (or higher ranking
officer) of the Borrower as its attorneys upon whom may be served, by regular or
certified mail at the address set forth in this Agreement, any notice, process
or pleading in any action or proceeding against it arising out of or in
connection with this Agreement or any of the other Credit Documents. The
Borrower hereby consents that any action or proceeding against it may be
commenced and maintained in any court within the State of New Jersey or in the
United States District Court for the District of New Jersey by service of
process on any such officer. The Borrower and Guarantor further agree that such
courts of the State
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of New Jersey and the United States District Court for the District of New
Jersey shall have jurisdiction with respect to the subject matter hereof and the
person of the Borrower and all collateral for the Obligations. Notwithstanding
the foregoing, the Borrower agrees that any action brought by the Borrower shall
be commenced and maintained only in a court in the federal judicial district or
county in which the Agent has its principal place of business in New Jersey.
11.11 Confidentiality. Each Lender shall hold, and shall cause its
---------------
Participants and prospective Participants, if any, to agree to hold, all non-
public information obtained pursuant to the requirements of any Credit Document
which has been identified as such by the Borrower in accordance with its
customary procedure for handling confidential information of such nature and in
accordance with safe and sound banking practices and in any event may make
disclosure reasonably required by any bona fide assignee, transferee or
participant or as legally required or reasonably requested by any governmental
agency or representative thereof or pursuant to legal process.
11.12 Indemnification.
---------------
(a) The Borrower agrees to indemnify the Agent and each Lender, their
respective Affiliates and each of their respective directors, officers, agents
and employees (each an Indemnitee) and hold each Indemnitee harmless from and
against any and all liabilities, losses, damages, costs and expenses of any
kind, including, without limitation, the reasonable fees and disbursements of
counsel, which may be incurred by such Indemnitee in connection with any
investigative, administrative or judicial proceeding (whether or not such
Indemnitee shall be designated a party thereto) brought or threatened relating
to or arising out of this Agreement, the other Credit Documents or any actual or
proposed use of proceeds of Loans hereunder; provided that no Indemnitee shall
have the right to be indemnified hereunder for such Indemnitee's own gross
negligence or willful misconduct as determined by a court of competent
jurisdiction.
(b) Without limiting the generality of the foregoing, the Borrower
shall indemnify, defend and hold harmless each Indemnitee with respect to any
and all claims, expenses, demands, losses, costs, fines or liabilities of any
kind (including, without limitation, those involving death, personal injury or
property damage and including reasonable attorneys fees and costs) arising from
or in any way related to any hazardous materials or a dangerous environmental
condition within, on, from, related to or affecting any real property owned or
occupied by the Borrower including, without limitation, any and all claims that
may arise as a result of an intentional or unintentional act or omission of the
Borrower, any previous owner and/or operator of real property owned or occupied
by the Borrower that resulted in the Dumping of hazardous substances or wastes
into the atmosphere or waters or onto the lands and that resulted in damage to
the Natural Resources or to any persons or property.
(c) If, after receipt of any payment of all or any part of the
Obligations, any Lender is compelled or agrees, for settlement purposes, to
surrender such payment to any person or entity for any reason (including,
without limitation, a determination that such payment is void or voidable as a
preference or fraudulent conveyance, an impermissible set-off, or a diversion of
trust funds), then this
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Agreement and the other Credit Documents shall continue in full force and
effect, and the Borrower shall be liable for, and shall indemnify, defend and
hold harmless such Lender with respect to, the full amount so surrendered.
(d) The provisions of this subsection shall survive the termination of
this Agreement and the other Credit Documents and shall be and remain effective
notwithstanding the payment of the Obligations, the release of any security
interest, lien or encumbrance securing the Obligations or any other action which
the Lenders may have taken in reliance upon their receipt of such payment. Any
action by the Lenders shall be deemed to have been conditioned upon any payment
of the Obligations having become final and irrevocable.
11.13 Inconsistencies. The Credit Documents are intended to be
---------------
consistent. However, in the event of any inconsistencies between this Agreement
and any of the other Credit Documents, the terms of this Agreement shall govern,
but such inconsistency shall not otherwise affect the validity or enforceability
of such inconsistent Credit Document.
11.14 Headings. The headings of sections and paragraphs have been
--------
included herein for convenience only and shall not be considered in interpreting
this Agreement.
11.15 Exhibits and Annexes. The Exhibits and Annexes attached hereto
--------------------
and the provisions thereof, are incorporated herein.
11.16 Judicial Proceeding; Waivers.
----------------------------
(i) EACH PARTY TO THIS AGREEMENT AGREES THAT ANY SUIT, ACTION OR
PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM, BROUGHT OR
INSTITUTED BY ANY PARTY HERETO OR ANY SUCCESSOR OR ASSIGN OF
ANY PARTY, ON OR WITH RESPECT TO THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS OR THE DEALINGS OF THE PARTIES WITH
RESPECT HERETO, OR THERETO, SHALL BE TRIED ONLY BY A COURT AND
NOT BY A JURY. IN THE EVENT THAT THE FOREGOING WAIVER OF JURY
TRIAL BY THE BORROWER IS DETERMINED TO BE INVALID OR
UNENFORCEABLE AS A MATTER OF LAW, THE BORROWER, THE AGENT AND
THE LENDERS AGREE THAT THE PROVISIONS OF ANNEX III TO THIS
AGREEMENT SHALL GOVERN AS TO THE MATTERS SET FORTH THEREIN.
(ii) EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR
PROCEEDING. FURTHER, EACH PARTY WAIVES ANY RIGHT IT MAY HAVE TO
CLAIM OR
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RECOVER, IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER
THAN, OR IN ADDITION TO, ACTUAL DAMAGES.
(iii) THE BORROWER ACKNOWLEDGES AND AGREES THAT THIS SECTION IS A
SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AND THAT THE
LENDERS WOULD NOT EXTEND CREDIT TO THE BORROWER IF THE WAIVERS
SET FORTH IN THIS SECTION WERE NOT A PART OF THIS AGREEMENT.
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IN WITNESS WHEREOF, the parties by themselves or their duly authorized
representatives have executed this Agreement the day and year first above
written.
WITNESS OR ATTEST: HOOPER HOLMES, INC.
By: /s/ Robert William Jarrett By: /s/ Fred Lash
------------------------------ -----------------------------
Name:Robert William Jarrett Name:Fred Lash
Title:Secretary Title:S.V.P./CFO & Treas.
Address:170 Mt. Airy Road Address: 170 Mt. Airy Road
------------------------- Basking Ridge, NJ 07920
Basking Ridge, NJ 07920 Attn: Fred Lash
------------------------- Senior Vice President,
Chief Financial Officer
and Treasurer
Telecopier No.: (908) 953-6304
FIRST UNION NATIONAL BANK,
Individually and as Agent
Credit Commitment: By: /s/ Richard F. Neuman
$12,000,000.00 -------------------------
Name: Richard F. Neuman
Title: Senior Vice President
Address: 550 Broad Street
Newark, New Jersey 07102
Attn: Robert Slater,
Senior Vice President
Telecopier No.: (201) 565-3908
with a copy to:
1889 Highway #27, NO2701
Edison, New Jersey 08817
Attn: Richard F. Neuman
Telecopier No.: (908) 985-4651
Payment Office:
Address: 1889 Highway #27, NO2701
Edison, NJ 08817
Telecopier No.: (908) 985-4651
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BROWN BROTHERS HARRIMAN & CO.
Credit Commitment: By:/s/William J. Whelan, Jr.
$4,000,000.00 ------------------------------
Name: William J. Whelan, Jr.
Title: Senior Manager
Address: 40 Water Street
Boston, MA 02109
Attn: Victoria Evans,
Administration Office
Telecopier No.: (617) 589-3178
Payment Office:
Address: 40 Water Street
Boston, MA 02109
Telecopier No.: (617) 589-3178
FLEET BANK, N.A.
Credit Commitment: By:/s/ Jill C. Malone
$4,000,000.00 ------------------------------
Name: Jill C. Malone
Title: Vice President
Address: 1125 Route 22W
Bridgewater, NJ 08816
Attn: Jill C. Malone
Telecopier No.: (908) 253-4118
Payment Office:
Address: 1125 Route 22W
Bridgewater, NJ 08816
Attn: Jill C. Malone
Telecopier No.: (908) 253-4118
Total Credit Commitment:
$20,000,000
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