EXHIBIT 10.26
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Conformed Copy
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CREDIT AGREEMENT
Between
RESPIRONICS, INC.
as the Borrower,
and
PNC BANK, NATIONAL ASSOCIATION
as the Bank
Dated as of February 19, 1997
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BF 51688.12
TABLE OF CONTENTS
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Page
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EXHIBITS iv
SCHEDULES v
ARTICLE 1. DEFINITIONS......................................... 1
1.1 Defined Terms....................................... 1
1.2 Accounting Terms.................................... 11
1.3 Rules of Construction............................... 11
ARTICLE 2. THE CREDIT FACILITY................................. 12
2.1 Revolving Credit Commitment......................... 12
2.2 Interest............................................ 13
2.3 Letter of Credit Commitment......................... 17
2.4 Requests for Revolving Credit Loans, Interest Rate
Options and Conversions............................. 24
2.5 Method of Disbursements and Payments................ 24
2.6 Loan Account........................................ 24
2.7 Payment From Accounts Maintained by Borrower........ 25
2.8 Commitment Fee...................................... 25
2.9 Capital Adequacy.................................... 25
ARTICLE 3. REPRESENTATIONS AND WARRANTIES...................... 25
3.1 Existence........................................... 26
3.2 Capitalization; Ownership........................... 26
3.3 Subsidiaries and Other Investments.................. 26
3.4 Power and Authority................................. 26
3.5 Validity; Binding Effect and Enforceability......... 26
3.6 No Conflict......................................... 26
3.7 Financial Matters; No Material Adverse Change....... 26
3.8 Litigation.......................................... 27
3.9 Compliance with Laws................................ 27
3.10 Fiscal Year......................................... 27
3.11 Condition of and Title to Assets.................... 27
3.12 Tax Returns and Payments............................ 27
3.13 Insurance........................................... 28
3.14 Consents and Approvals.............................. 28
3.15 No Defaults......................................... 28
3.16 Plans and Benefit Arrangements...................... 28
3.17 Senior Debt Status.................................. 28
3.18 Environmental Matters............................... 29
3.19 Margin Stock........................................ 29
3.20 Investment Company Act; Public Utility Holding
Company............................................. 29
3.21 Full Disclosure..................................... 29
3.22 Intellectual Property............................... 30
ARTICLE 4. AFFIRMATIVE COVENANTS............................... 30
4.1 Use of Proceeds..................................... 30
4.2 Delivery of Financial Statements and Other
Information......................................... 30
4.3 Preservation of Existence; Qualification............ 32
4.4 Compliance with Laws, Contracts and Licenses........ 32
4.5 Continuance of Business............................. 32
4.6 Accounting System; Books and Records................ 32
4.7 Payment of Taxes and Other Liabilities.............. 32
4.8 Insurance........................................... 33
4.9 Maintenance of Properties........................... 33
4.10 Plans and Benefit Arrangements...................... 33
4.11 Environmental Indemnification....................... 33
ARTICLE 5. NEGATIVE COVENANTS.................................. 33
5.1 Indebtedness........................................ 33
5.2 Liens; Negative Pledge.............................. 34
5.3 No Limitation on Dividends and Distributions........ 34
5.4 Liquidations, Mergers, Consolidations, Etc.......... 34
5.5 Dispositions of Assets.............................. 34
5.6 Loans, Advances and Investments..................... 35
5.7 Affiliate Transactions.............................. 35
5.8 Use of Proceeds..................................... 35
5.9 Change of Business.................................. 35
5.10 Financial Covenants................................. 35
ARTICLE 6. CONDITIONS TO MAKING................................ 36
6.1 All Loans and Letters of Credit..................... 36
6.2 Initial Loan........................................ 36
ARTICLE 7. EVENTS OF DEFAULT; REMEDIES......................... 38
7.1 Events of Default................................... 38
7.2 Remedies............................................ 40
ARTICLE 8. GENERAL PROVISIONS.................................. 41
8.1 Set-Off............................................. 41
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8.2 Amendments and Waivers.............................. 41
8.3 Taxes............................................... 41
8.4 Expenses............................................ 41
8.5 Notices............................................. 42
8.6 Participations...................................... 43
8.7 Indemnity........................................... 44
8.8 Successors and Assigns.............................. 45
8.9 Confidentiality..................................... 45
8.10 Severability........................................ 45
8.11 Survival............................................ 45
8.12 GOVERNING LAW....................................... 45
8.13 FORUM............................................... 45
8.14 Non-Business Days................................... 46
8.15 Integration......................................... 46
8.16 Headings............................................ 46
8.17 Counterparts........................................ 46
8.18 WAIVER OF JURY TRIAL................................ 47
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EXHIBITS
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Principal
Exhibit Section
Designation Exhibit Reference
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A Revolving Credit Note 2.1f
B Request for/Confirmation of 2.4
Revolving Credit Loan
C Compliance Certificate 4.2a
D Closing Certificate 6.2g
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SCHEDULES
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Schedule
Designation Schedule
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1.1 Existing Liens
3.3 Subsidiaries; Ownership Interests in Other Persons
3.7 Material Changes
3.8 Litigation and Other Matters
3.16 Plans and Benefit Arrangements
5.1 Existing Indebtedness Permitted to Remain Outstanding
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CREDIT AGREEMENT
This CREDIT AGREEMENT, dated as of February 19, 1997, is entered into
by and between RESPIRONICS, INC., a Delaware corporation (the "Borrower") and
PNC BANK, NATIONAL ASSOCIATION as the lender (in such capacity the "Bank").
WITNESSETH:
WHEREAS, the Borrower has requested that the Bank make available to it
a credit facility in the maximum principal amount of $13,000,000, and the Bank
has agreed to do so, on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises (each of which is
incorporated herein by reference) and the mutual promises contained herein and
other valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and with the intent to be legally bound hereby, the parties hereto
agree as follows:
ARTICLE 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, including the preamble and
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recitals hereto, the following terms shall have the meanings set forth below or
in the Section or Subsection of this Agreement referred to, unless the context
otherwise requires:
Acquisition: The acquisition of all of the issued and outstanding
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stock of Stimotron Medizinische Gerate GmbH, a German corporation, under and
pursuant to the terms of that certain Purchase Agreement dated Feburary 24,
1997, between Lifecare Europe GmbH (which is in the process of changing its name
to Respironics Deutschland GmbH) or another indirect wholly owned Subsidiary of
the Borrower and Johannes Wouterson.
Affiliate: As to any Person, any other Person directly or indirectly
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through one or more intermediaries Controlling, Controlled by, or under direct
or indirect common Control with such Person. A Person shall be deemed to
Control another Person if the Controlling Person owns five percent (5%) or more
of any class of voting securities, partnership interests or other equity
interests of the Controlled Person or possesses, indirectly or directly, the
power to direct or cause the direction of the management or policies of the
Controlled Person, whether through the ownership of voting securities, by
contract or otherwise.
Agreement: This Credit Agreement, together with all exhibits and
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schedules hereto and all extensions, renewals, amendments, substitutions and
replacements hereto and hereof.
Annualized EBITDA: As of any time of determination, the sum of the
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Borrower's (i) Consolidated Net Income, plus (ii) Consolidated income tax
expense, (iii)
Consolidated interest expense, (iv) Consolidated depreciation and amortization
expenses and (v) other Consolidated non-cash expenses for the Borrower, all for
immediately preceding four Fiscal Quarters, all determined in accordance with
GAAP.
Application for Letter of Credit: Any application and agreement for
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irrevocable letter of credit executed by an Authorized Person, on behalf of the
Borrower, in connection with the issuance by the Bank of a Letter of Credit
hereunder.
Authorized Officer: Any of (i) President and Chief Executive Officer,
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(ii) Vice President and Chief Financial Officer and (iii) Treasurer of the
Borrower. The Bank shall be entitled to rely on the incumbency certificate
delivered pursuant to Section 6.2 for the initial designation of each Authorized
Officer. Additions or deletions to the list of Authorized Officers may be made
by the Borrower at any time by delivering to the Bank a revised, fully-executed
incumbency certificate.
Base Rate: For any day the higher of (i) the sum of (A) the Federal
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Funds Effective Rate for such day plus (B) fifty (50) basis points (1/2%) per
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annum and (ii) the Prime Rate.
Base Rate Loan: A Loan under the Revolving Credit Commitment bearing
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interest at the Base Rate Option.
Base Rate Option: The ability of the Borrower to elect Base Rate
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Loans, as set forth in Section 2.2.
Benefit Arrangement: An "employee benefit plan", within the meaning
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of Section 3(3) of ERISA, which is not a Plan or a Multiemployer Plan and which
is maintained or otherwise contributed to by the Borrower or any ERISA Affiliate
for the benefit of employees of the Borrower or any ERISA Affiliate.
Borrower: Respironics, Inc., a Delaware corporation, and its
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successors and permitted assigns.
Business Day: With respect to any borrowing or payment of Euro-Rate
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Loans or a selection of the Euro-Rate Option, a day other than a Saturday or a
Sunday on which banks are open for business in Pittsburgh, Pennsylvania and on
which dealings in Dollars are carried on in the London interbank market; and for
all other purposes, a day other than a Saturday or a Sunday on which commercial
banks in Pittsburgh, Pennsylvania are open for business.
Capital Adequacy Event: This term shall have the meaning given it in
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Section 2.9.
Capital Compensation Amount: This term shall have the meaning given
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it in Section 2.9.
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Change of Control: Within a period of twelve (12) consecutive
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calendar months (i) individuals who were directors of the Borrower on the first
day of such period shall cease to constitute a majority of the board of
directors of the Borrower, or (ii) a Person or group of Persons acting in
concert and who is not (a) an Affiliate of shareholders of the Borrower on the
first day of such period or, (b) a Person who is eligible to report their
ownership of capital stock of the Borrower on Form 13G filed with the Securities
and Exchange Commission shall acquire twenty percent (20%) or more of the issued
and outstanding capital stock of the Borrower.
Closing Date: February 19, 1997 or such later date as is mutually
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agreeable to the parties hereto.
Compliance Certificate: A certificate substantially in the form of
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Exhibit "C" which has been executed by an Authorized Officer and delivered to
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the Bank.
Consolidated: The consolidation in accordance with GAAP of the items
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as to which such term applies.
Consolidated Net Income: The Consolidated net income of the Borrower
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and its Subsidiaries for the relevant period in after deducting all operating
expenses, provisions for all taxes and all other proper deductions, all
determined in accordance with GAAP.
Consolidated Tangible Net Worth: The Borrower's Consolidated
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stockholder's equity, after subtracting all items properly classified as
intangible, all as determined in accordance with GAAP.
Consolidated Total Assets: As of any date of determination on a
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Consolidated basis, the value of all properties and all right, title and
interest in such properties which would be classified as assets, determined in
accordance with GAAP exclusive of all write-ups above depreciated costs (other
than write-ups resulting from foreign currency translations, write-ups to market
value of marketable securities and of swaps, hedges and futures and write-ups of
assets of a going concern basis made within twelve months after the acquisition
of such business) subsequent to July 1, 1996 in the book value of any asset
owned by the Borrower or a Subsidiary.
Contamination: The uncontained presence of Hazardous Substances at
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any real property of the Borrower or any Subsidiary, whether owned or leased,
which may require clean-up or remediation under any Environmental Law.
Control and its Derivatives: The possession, directly or indirectly,
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of the power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, partnership
interests or other equity interests, by contract or otherwise, including the
power to elect a majority of the directors of a corporation or trustees of a
trust, as the case may be.
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Default: Any condition, event, omission or act which with the giving
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of notice, the passage of time or both would constitute an Event of Default.
Dollars or $: The legal tender of the United States of America.
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Environmental Claim: Any claim, suit, notice, order, demand or other
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communication made by any Person with respect to the Borrower or any Subsidiary
or any of their respective properties, whether owned or leased, that: (i)
asserts a violation of an Environmental Law; (ii) asserts a liability under an
Environmental Law; (iii) orders investigation, corrective action, remediation or
other response under an Environmental Law; (iv) demands information under an
Environmental Law; (v) alleges personal injury or property damage resulting from
Hazardous Substances; or (vi) alleges that there is or may be Contamination.
Environmental Law: Any Governmental Rule, permit, license, writ,
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injunction, decree, award or standard concerning health, safety and protection
of, or regulation of the discharge of substances into, the environment, whether
now in existence or hereafter enacted, agreed to, issued or otherwise becoming
effective.
ERISA: The Employee Retirement Income Security Act of 1974 as it may
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from time to time be amended, supplemented or otherwise modified, or any
successor statute, and the rules and regulations promulgated thereunder.
ERISA Affiliate: At any time any member of a controlled group of
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corporations under Section 414(b) of the Internal Revenue Code of which the
Borrower is a member, and any trade or business (whether or not incorporated)
under common control with the Borrower under Section 414(c) of the Internal
Revenue Code, and all other entities which, together with the Borrower, are or
were treated as a single employer under Sections 414(m) or 414(o) of the
Internal Revenue Code.
Euro-Rate: With respect to Euro-Rate Loans, the interest rate per
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annum determined by the Bank by dividing (i) the rate of interest determined by
the Bank in accordance with its usual procedures (which determination shall be
conclusive and binding upon the Borrower, absent manifest error on the part of
the Bank) to be equal to the offered rates for deposits in Dollars for the
applicable Euro-Rate Interest Period which appear on page 3750 of the TELERATE
rate reporting system or other similar system as of approximately 11:00 a.m.,
Greenwich Mean Time, two (2) Business Days prior to the first day of such Euro-
Rate Interest Period for an amount comparable to such Loan and having a
borrowing date and a maturity comparable to such Euro-Rate Interest Period, by
(ii) a number equal to 1.00 minus the Euro-Rate Reserve Percentage. The Euro-
Rate may also be expressed by the following formula:
Euro Rate = Offered Rate on TELERATE page 3750
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1.00 - Euro-Rate Reserve Percentage
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Euro-Rate Interest Period: Any individual period of one, two, three
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or six, months, commencing on the date a Euro-Rate Option is exercised with
respect to a Euro-Rate Loan; provided, however, that (i) any Euro-Rate Interest
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Period which would otherwise end on a day which is not a Business Day shall be
extended to the next Business Day unless such Business Day falls in the
succeeding calendar month, in which case such Euro-Rate Interest Period shall
end on the next preceding Business Day, (ii) any Euro-Rate Interest Period which
begins on the last day of a calendar month or on a day for which there is no
numerically corresponding day in the subsequent calendar month during which such
Euro-Rate Interest Period is to end shall end on the last Business Day of such
subsequent month, and (iii) no Euro-Rate Interest Period may end after the
Revolving Credit Termination Date.
Euro-Rate Loan: A Revolving Credit Loan bearing interest under the
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Euro-Rate Option, as set forth in Subsection 2.2.
Euro-Rate Option: The ability of the Borrower to elect Euro-Rate
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Loans, as set forth in Subsection 2.2.
Euro-Rate Reserve Percentage: For each Euro-Rate Interest Period,
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that percentage (expressed as a decimal), as determined by the Bank as to the
Euro-Rate Loan as to which the rate is then being set, which is in effect on the
first day of such Euro-Rate Interest Period, as prescribed by the Board of
Governors of the Federal Reserve System (or any successor), for determining the
maximum reserve requirements (including without limitation supplemental,
marginal or emergency reserve requirements) with respect to eurocurrency funding
(currently referred to as "Eurocurrency Liabilities") of a member bank in such
system.
Event of Default: Any of the events specified in Section 7.1.
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Fee: Any fee payable by the Borrower to the Bank hereunder, or under
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any of the other Loan Documents.
Fiscal Quarter: Each three-month fiscal period of the Borrower
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beginning respectively on each successive July 1, October 1, January 1 and April
1 during the term hereof and ending on the immediately succeeding September 30,
December 31, March 31 and June 30.
Fiscal Year: Each annual fiscal period of the Borrower beginning July
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1 and ending on the immediately succeeding June 30.
GAAP: Generally accepted accounting principles which are consistent
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with the principles promulgated or adopted by the Financial Accounting Standards
Board, its predecessors and its successors, including any official
interpretations thereof.
Governmental Approval: Any order, consent, authorization, license,
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validation, approval and permit, issued to or required to be obtained by the
Borrower or any
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of its Subsidiaries in connection with the ownership, construction, erection,
installation, operation and maintenance of their respective properties, and the
conduct of their respective present businesses.
Governmental Authority: The government of the United States or the
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government of any state or locality therein, any political subdivision or any
governmental, quasi-governmental, judicial, public or statutory instrumentality,
court, arbitrator, authority, body or entity or other regulatory bureau,
authority, body or entity of the United States or any state or locality therein,
including but not limited to the Federal Deposit Insurance Corporation, the
Comptroller of the Currency, the Board of Governors of the Federal Reserve
System, any central bank or any comparable authority, and any successor to any
of the foregoing.
Governmental Rule: Any law, statute, rule, regulation, treaty,
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ordinance, order, writ, injunction, decree, judgment, guideline, directive or
decision of any Governmental Authority, including without limitation
Environmental Laws, all whether in existence on the Closing Date or whether
issued, enacted or adopted after the Closing Date, and any change therein or in
the interpretation or application thereof following the Closing Date.
Guaranty: As to any Person, any obligation, direct or indirect, by
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which such Person undertakes to guaranty, assume or remain liable for the
payment of a second Person's obligations, including but not limited to (i)
endorsements of negotiable instruments, (ii) discounts with recourse, (iii)
agreements to pay or perform upon a second Person's failure to pay or perform,
(iv) agreements to remain liable on obligations assumed by a second Person, (v)
agreements to maintain the capital, working capital, solvency or general
financial condition of a second Person and (vi) agreements for the purchase or
other acquisition of products, materials, supplies or services, if in any case
payment therefor is to be made regardless of the nondelivery of such products,
materials or supplies or the nonfurnishing of such services.
Hazardous Substance: Any (i) substance which is defined as such or
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regulated in any manner by any Environmental Law and (ii) petroleum products.
Indebtedness: Individually and collectively, (i) obligations and
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indebtedness for borrowed money, including but not limited to the Obligations;
(ii) obligations evidenced by bonds, debentures, notes, including but not
limited to the Note, or similar instruments; (iii) obligations under conditional
sale or other title retention agreements relating to property purchased; (iv)
obligations issued or assumed as the deferred purchase price of property or
services; (v) obligations owed under capitalized leases; (vi) obligations with
respect to letters of credit, whether matured or contingent; (vii) obligations
with respect to any interest rate swap agreement, interest rate cap agreement,
interest rate collar agreement, interest rate insurance or any other agreement
or arrangement designed to provide protection against fluctuations in interest
rates; (viii) obligations of others secured by any Lien on property or assets
owned or acquired by the affected Person, whether or not the obligations secured
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thereby have been assumed; (ix) Guarantees; and (x) all extensions, renewals,
amendments, substitutions and replacements to and of any of the foregoing;
provided, however, that Indebtedness shall not include accounts payable incurred
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in the ordinary course of business or accruals, made in accordance with GAAP,
for liabilities for expenses incurred in the ordinary course of business, if
those accounts payable or accrued liabilities do not constitute or represent
obligations to repay borrowed money.
Interest Rate Option: Either of the Base Rate Option or the Euro-Rate
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Option.
Internal Revenue Code: The Internal Revenue Code of 1986 or any
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successor legislation thereto, and the rules and regulations issued or
promulgated thereunder, including any amendments to any of the foregoing.
Letter of Credit: Any irrevocable stand-by letter of credit issued by
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the Bank, as each such letter of credit may, from time to time, be amended,
renewed, extended, supplemented or replaced.
Letter of Credit Commitment: The Commitment of the Bank to issue
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Letters of Credit, all as set forth in Article II hereof.
Letter of Credit Usage: As of any date of determination, the sum of
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(i) the maximum aggregate Stated Amount that is or at any time thereafter may
become available for drawing under the Letters of Credit plus (ii) the aggregate
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amount of all draws under the Letter of Credit honored by the Bank and not
theretofore reimbursed by the Borrower.
Lien: Any security interest, mortgage, charge, pledge, hypothecation,
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assignment, deposit arrangement, encumbrance, lien (statutory or other),
preference, priority or other security agreement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement, any capitalized lease having substantially the same
economic effect as any of the foregoing, and the filing of any financing
statement under the Uniform Commercial Code), in, upon or against any asset of
the affected Person, whether or not voluntarily given.
Loan: Any Revolving Credit Loan.
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Loan Account: Any loan account referred to in Section 2.6.
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Loan Document: Any of this Agreement, the Revolving Credit Note, each
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Application for Letter of Credit and all other agreements, documents and
instruments executed and delivered from time to time to govern, evidence or
secure the Obligations or any of the foregoing documents and instruments, and
the statements, reports, certificates and other documents required by, or
related to, any of the foregoing, together with all extensions, renewals,
amendments, substitutions and replacements to and of any of the foregoing.
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Material Adverse Change: Any set of circumstances or events which (i)
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has any material adverse effect upon the validity or enforceability of this
Agreement or any of the other Loan Documents; (ii) is material and adverse to
the business, properties, assets, financial condition, results of operations or
prospects of the Borrower or any of its Subsidiaries taken as a whole; (iii)
impairs materially the ability of the Borrower to duly and punctually pay or
perform the Obligations; or (iv) impairs materially the ability of the Bank, to
the extent permitted, to enforce legal remedies pursuant to this Agreement and
the other Loan Documents.
Material Adverse Effect: An effect that results in or causes a
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Material Adverse Change.
Money Purchase Plan: Any Benefit Arrangement subject to the minimum
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funding standards under Section 302 of ERISA and Section 412 of the Internal
Revenue Code.
Moody's: Moody's Investor Services, Inc. or any successor thereto.
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Multiemployer Plan: A "multiemployer plan" as defined in Section
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4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is making or
accruing an obligation to make contributions or has within any of the preceding
five plan years made or accrued an obligation to make contributions.
Obligations: Collectively, (i) all unpaid principal of, and accrued
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and unpaid interest on, the Loans, (ii) all accrued and unpaid Fees, (iii) any
other amounts due hereunder or under any of the other Loan Documents, including
any and all reimbursements, indemnities, Fees, costs, expenses, prepayment
premiums, break-funding costs and other obligations the Borrower to the Bank or
any indemnified party hereunder and thereunder, and (iv) all out-of-pocket costs
and expenses incurred by the Bank in connection with this Agreement and the
other Loan Documents, including but not limited to the reasonable fees and
expenses of the Bank's counsel, which the Borrower is responsible to pay
pursuant to the terms of this Agreement and the other Loan Documents.
Participant: Any bank or financial institution which acquires from
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the Bank an undivided interest in the Bank's Revolving Credit Commitment and
Revolving Credit Loans, pursuant to Section 8.6.
Participation: The sale, made in accordance with the provisions of
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Section 8.6, by the Bank to any Participant of an undivided interest in the
Bank's Revolving Credit Commitment and Revolving Credit Loans.
PBGC: The Pension Benefit Guaranty Corporation established pursuant
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to ERISA, or any entity succeeding to any or all of its functions under ERISA.
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Permitted Investments: Any of the following:
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(i) direct obligations of the United States of America or any agency
or instrumentality thereof or obligations backed by the full faith and credit of
the United States of America maturing in twelve months or less from the date of
acquisition;
(ii) commercial paper maturing in 180 days or less rated not lower
than A-1 by S&P or P-1 by Moody's on the date of acquisition;
(iii) demand deposits, time deposits or certificates of deposit
maturing within one year in commercial banks whose obligations are rated A-1, A
or the equivalent or better by S&P or Moody's on the date of acquisition;
(iv) publicly traded debt securities rated at least A or better by
either S&P or Moody's on the date of acquisition;
(v) investments in money market funds rated AA or AAm-G or higher (or
an equivalent rating) by S&P or Moody's and whose net asset value remains
constant $1.00 per share; and
(vi) cash management "sweep accounts" made available to the Borrower
and its Subsidiaries by the Bank which invest directly or indirectly through
common investment funds, repurchase agreements or otherwise in securities of the
type described in items (i) through (v) inclusive above.
Permitted Lien: Any of the following:
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(i) Liens for taxes, assessments, governmental charges or levies on
the affected Person's properties if such taxes, assessments, governmental
charges or levies (A) are not at the time due and payable or if they can
thereafter be paid without penalty or are being contested in good faith by
appropriate proceedings diligently conducted and with respect to which such
Person has created adequate reserves or (B) are not pursuant to any
Environmental Law;
(ii) Pledges or deposits to secure payment of workers' compensation
obligations, unemployment insurance, deposits or indemnities to secure public or
statutory obligations or for similar purposes;
(iii) Liens arising out of judgments or awards against it with
respect to which enforcement has been stayed and such Person at the time shall
currently be prosecuting an appeal or proceeding for review in good faith by
appropriate proceedings diligently conducted and with respect to which it has
created adequate reserves or has adequate insurance protection; provided,
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however, that at no time may the aggregate Dollar amount of such judgment Liens
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exceed the amount of insurance applicable to such judgment or award plus the
amount of all reserves applicable to such judgment or award plus $500,000;
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(iv) Mechanics', carriers', workmen's, repairmen's and other similar
statutory liens incurred in the ordinary course of such Person's business, so
long as the obligation secured is not overdue or, if overdue, is being contested
in good faith by appropriate actions or proceedings being diligently conducted;
(v) Security interests in favor of lessors of personal property,
which property is the subject of a true lease between the lessor and the
affected Person;
(vi) Liens to secure purchase money security interests, as the that
term is defined in the Uniform Commercial Code, in property that secures the
indebtedness that was incurred to acquire the property;
(vii) Good-faith pledges or deposits made in the ordinary course of
business to secure performance of bids, tenders, contracts (other than for the
repayment of borrowed money) or leases, not in excess of the aggregate amount
due thereunder, or to secure statutory obligations, or surety, appeal,
indemnify, performance or other similar bonds required in the ordinary course of
business;
(viii) Encumbrances consisting of zoning restrictions, easements, or
other restrictions on the use of real property, none of which materially impairs
the use of such property or the value thereof, and none of which is violated in
any material respect by existing or proposed structures or land use; and
(ix) Liens existing on the Closing Date and set forth on Schedule 1.1
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and liens created to secure the refinancing of Indebtedness set forth on
Schedule 5.1 which refinancing is in accordance with the terms of item (ii) of
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Section 5.1.
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Person: Any individual, partnership, corporation, trust, joint
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venture, unincorporated organization, association, limited liability company,
entity or Governmental Authority.
Plan: As to any Person, any employee pension benefit plan other than
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a Multiemployer Plan which is covered by Title IV of ERISA and which either (i)
is maintained by such Person and/or any ERISA Affiliate of such Person for
employees of such Person and/or any ERISA Affiliate or (ii) has at any time
within the preceding five years been maintained by such Person and/or any entity
which was an ERISA Affiliate at such time for their respective employees.
Prime Rate: For any day, a fluctuating interest rate per annum equal
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to the rate of interest which the Bank announces from time to time as its prime
lending rate, which rate may not be the lowest rate then being charged by the
Bank to commercial borrowers.
Prohibited Transaction: A "prohibited transaction" as defined under
----------------------
Section 406 of ERISA or Section 4975 of the Internal Revenue Code.
-10-
Regulations G, T, U and X: Regulations G, T, U and X promulgated by
-------------------------
the Board of Governors of the Federal Reserve System (12 C.F.R. Part 207 et
seq., 12 C.F.R. Part 220 et seq., 12 C.F.R. Part 221 et seq. and 12 C.F.R. Part
224 et seq., respectively), as such regulations are now in effect and as may
hereafter be amended.
Reportable Event: A "reportable event" described in Section 4043(b)
----------------
of ERISA and in 29 C.F.R. Part 2615.
Revolving Credit Commitment: The obligation of the Bank to make
---------------------------
available to the Borrower a maximum aggregate principal amount not to exceed
$13,000,000 pursuant to Section 2.1.
Revolving Credit Loan: An individual borrowing by the Borrower under
---------------------
the Revolving Credit Commitment.
Revolving Credit Note: The promissory note of the Borrower evidencing
---------------------
Indebtedness of the Borrower under the Revolving Credit Commitment and in
substantially the form of Exhibit "A", together with all extensions, renewals,
-----------
amendments, substitutions and replacements thereto and thereof.
Revolving Credit Termination Date: March 31, 2002.
---------------------------------
S&P: Standard & Poor's Rating Group, a division of McGraw-Hill, Inc.,
---
and any successor thereto.
Stated Amount: The amount available to beneficiaries of Letters of
-------------
Credit for one or more drawings thereunder as such amount is increased, reduced
or reinstated from time to time in accordance with the provision of any Letter
of Credit.
Subsidiary: Either (i) any corporation more than 50% of the
----------
outstanding voting securities of which shall at the time be owned or controlled,
directly or indirectly, by the affected Person or one or more Subsidiaries or
such Person, or by the affected Person and one or more Subsidiaries, or (ii) any
other Person which is so owned or controlled.
Wouterson Letter of Credit: The Letter of Credit issued by the Bank
--------------------------
on or about the Closing Date in the initial Stated Amount of $2,500,000, having
an expiration date of August 31, 2001, having as its beneficiary Johannes
Wouterson and issued as part of the terms and conditions of the Acquisition.
1.2 Accounting Terms. Each accounting term not defined herein and each
----------------
accounting term partly defined herein, to the extent not defined, shall have the
meaning given it under GAAP.
1.3 Rules of Construction. In this Agreement and the other Loan Documents
---------------------
(except as otherwise expressly provided or unless the context otherwise
requires) (i) terms
-11-
defined in the singular shall have comparable meanings when used in the plural,
and vice versa, unless otherwise specified, (ii) any pronoun used shall be
deemed to cover all genders, (iii) the words "hereof", "herein" and "hereunder"
and words of similar import shall refer to this Agreement as a whole and not to
any particular provision of this Agreement and (iv) all references to particular
Articles, Sections, items, clauses, exhibits and schedules are references to the
Articles, Sections, items, exhibits and schedules of and to this Agreement.
ARTICLE 2. THE CREDIT FACILITY
2.1 Revolving Credit Commitment.
---------------------------
2.1a Revolving Credit Loans. The Bank agrees, subject to the terms and
----------------------
conditions hereof and relying upon the representations and warranties herein set
forth, that the Borrower shall have the right to borrow, repay and reborrow,
from the date hereof until the Revolving Credit Termination Date, a principal
amount not to exceed Thirteen Million Dollars ($13,000,000) in the aggregate at
any one time outstanding.
2.1b Voluntary Reductions of Revolving Credit Commitment; Voluntary
--------------------------------------------------------------
Principal Payments.
- ------------------
(i) Voluntary Reductions. Upon two Business Days' written notice to
--------------------
the Bank, the Borrower may from time to time voluntarily permanently reduce the
Revolving Credit Commitment. Each voluntary reduction shall be in a minimum
amount of $500,000 or, if greater than $500,000, in integral multiples of
$100,000.
(ii) Effect of Reductions. Simultaneously with each voluntary
--------------------
permanent reduction, the Borrower shall make a payment of the outstanding
Revolving Credit Loans equal to the excess, if any, of (A) the aggregate
principal amount of the outstanding Revolving Credit Loans over (B) the
Revolving Credit Commitment, as so reduced. Notice of a reduction, once given,
shall be irrevocable. All such reductions shall be without penalty or premium
(except for amounts owing pursuant to Section 2.2e(iv), if any).
(iii) Application of Reductions and Payments. Any principal payments
--------------------------------------
shall be accompanied by all accrued and unpaid interest thereon, all amounts due
pursuant to Section 2.2, if any, and, in the case of a permanent reduction of
the Revolving Credit Commitment to zero, any other outstanding Obligations which
are then due and payable. All such payments shall be applied by the Bank to
repay Base Rate Loans first, and then to repay Euro-Rate Loans.
2.1c Amount of Revolving Credit Loans. Each Base Rate Loan shall be in a
--------------------------------
minimum amount of $200,000. Each Euro-Rate Loan shall be in a minimum amount of
$500,000, or if in excess of $500,000, in integral multiples of $100,000.
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2.1d Repayment On Revolving Credit Termination Date. On the Revolving
----------------------------------------------
Credit Termination Date the entire outstanding principal balance of the
Revolving Credit Loans, plus all accrued and unpaid interest thereon, any unpaid
Fees relating thereto and any other outstanding Obligations shall be due and
payable, by federal wire transfer of immediately available funds.
2.1e Revolving Credit Note. The obligation of the Borrower to repay, on or
---------------------
before the Revolving Credit Termination Date, the aggregate unpaid principal
amount of the Revolving Credit Loans shall be evidenced by a Revolving Credit
Note, substantially in the form of Exhibit "A", (i) drawn by the Borrower to the
-----------
order of the Bank in the maximum amount of the Revolving Credit Commitment, (ii)
duly executed by the Borrower and (iii) delivered to the Bank. The principal
amount actually due and owing the Bank under the Revolving Credit Note shall be
the aggregate unpaid principal amount of all Revolving Credit Loans made by the
Bank, all as shown on the Loan Accounts established pursuant to Section 2.6.
2.2 Interest.
--------
2.2a Interest Rates.
--------------
Revolving Credit Loans. During the term hereof the Borrower, in
----------------------
accordance with the provisions of this Section 2.2, shall have the option of
electing from time to time one or more of the Interest Rate Options to be
applied by the Bank to outstanding Revolving Credit Loans, as follows: interest
(i) under the Base Rate Option shall accrue at a rate per annum equal to the
Base Rate, and (ii) under the Euro-Rate Option shall accrue at a rate per annum
equal to the sum of (A) the Euro-Rate plus (B) one-half of one percent (50 basis
points).
2.2b Adjustments to Interest Rates.
-----------------------------
(i) Changes in Base Rate. The Base Rate Option shall be adjusted from
--------------------
time to time, without notice to the Borrower, as necessary to reflect any
changes in the Base Rate, which adjustments shall be automatically effective on
the day of any such change.
(ii) Changes in Euro-Rate Reserve Percentage. The Euro-Rate shall be
---------------------------------------
adjusted from time to time, with respect to Revolving Credit Loans, without
notice to the Borrower, as necessary to reflect any changes in the Euro-Rate
Reserve Percentage, which adjustments shall be automatically effective on the
day of such change.
(iii) Event of Default. Upon the occurrence of and during the
----------------
continuance of an Event of Default, (A) the outstanding principal amount of all
Revolving Credit Loans shall bear interest from the date of such occurrence at a
rate per annum which is equal to the sum of the Base Rate plus one percent (1%).
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(iv) Notice of Changes. The Bank, consistent with its then current
-----------------
business practices, will notify the Borrower of any changes of rates set forth
in items (i), (ii) and (iii) above which notice, in all cases, will be after
such changes become effective. Failure of the Bank to notify the Borrower of
any such change shall not impair the validity of any such rate change.
2.2c Interest Rate Option Elections, Renewals and Conversions. Subject to
--------------------------------------------------------
the remaining provisions of this Agreement, the Borrower shall have the option
to elect to have all or any Revolving Credit Loans bear interest at either of
the Interest Rate Options and shall have the right to renew elections of
Interest Rate Options and convert Revolving Credit Loans to other Interest Rate
Options. Notice of the Borrower's election shall be made in accordance with
Section 2.4. Elections of, conversions to or renewals of the Base Rate Option
shall continue in effect until converted to the Euro-Rate Option. Elections of,
conversions to or renewals of the Euro-Rate Option shall expire as to each such
Euro-Rate Option at the expiration of the applicable Euro-Rate Interest Period.
Any Revolving Credit Loans outstanding for which no elections have been made
shall bear interest under the Base Rate Option.
2.2d Limitation on Election of Euro-Rate Options. Each election of the
-------------------------------------------
Euro-Rate Option or the prepayment of all or any Euro-Rate Loans shall be in the
minimum principal amount of $500,000 or, if in excess of $500,000, in integral
multiples of $100,000. At no time during the term hereof may there be more than
a total of five (5) separate Euro-Rate Interest Periods in effect; provided,
--------
however, if the Borrower is borrowing under the Base Rate Option there may be no
- -------
more than a total of four (4) separate Euro-Rate Options in effect. Upon the
occurrence and during the continuance of an Event of Default, the Borrower's
right to elect, renew or convert to Euro-Rate Loans shall be suspended.
2.2e Special Provisions Relating to Euro-Rate Option.
-----------------------------------------------
(i) Euro-Rate Unascertainable. In the event that on any date on which
-------------------------
a Euro-Rate would otherwise be set the Bank shall have determined in good faith
(which determination shall be final and conclusive) that, by reason of
circumstances affecting the London interbank market, adequate and reasonable
means do not exist for ascertaining the Euro-Rate, the Bank shall give prompt
notice of such determination to the Borrower and until the Bank notifies the
Borrower that the circumstances giving rise to such determination no longer
exist, the right of the Borrower to borrow under, renew or convert to the Euro-
Rate Option shall be treated as a request to borrow under, renew or convert to
the Base Rate Option.
(ii) Illegality of Offering Euro-Rate. If the Bank shall determine in
--------------------------------
good faith, which determination shall be final and conclusive, that compliance
by the Bank with any applicable Governmental Rule (whether or not having the
force of law), or the interpretation or application thereof by any Governmental
Authority has made it unlawful for the Bank to make or maintain Euro-Rate Loans,
the Bank shall give notice of such determination to the Borrower.
Notwithstanding any provision of this Agreement to the
-14-
contrary, unless and until the Bank shall give notice to the Borrower that the
circumstances giving rise to such determination no longer apply:
(A) with respect to any Euro-Rate Interest Periods thereafter
commencing, interest on the corresponding Euro-Rate Loans shall be computed and
payable under the Base Rate Option; and
(B) on such date, if any, as shall be required by law, any Euro-Rate
Loans then outstanding shall be automatically renewed at the Base Rate Option;
and the Borrower shall pay to the Bank the accrued and unpaid interest on such
Euro-Rate Loans to (but not including) such renewal date.
The Borrower shall pay the Bank any additional amounts reasonably necessary to
compensate the Bank (on an after-tax basis) for any out-of-pocket costs incurred
by the Bank as a result of any renewal pursuant to item (B) above on a day other
than the last day of the relevant Euro-Rate Interest Period, including, but not
limited to, any interest or fees payable by the Bank to lenders of funds
obtained by them to loan or maintain the Revolving Credit Loans so converted.
The Bank shall furnish to the Borrower a certificate showing the calculation of
the amount necessary to compensate the Bank (on an after-tax basis) for such
costs (which certificate, in the absence of manifest error, shall be
conclusive), and the Borrower shall pay such amount to the Bank, as additional
consideration hereunder, within ten (10) days of the Borrower's receipt of such
certificate.
(iii) Inability to Offer Euro-Rate. In the event that the Bank shall
----------------------------
determine, in its sole discretion, that it is unable to obtain deposits in the
London interbank market in sufficient amounts and with maturities related to the
Euro-Rate Loans which would enable the Bank to fund such Euro-Rate Loans, then
the Bank shall immediately notify the Borrower that the right of the Borrower to
borrow under, convert to or renew the Euro-Rate Option shall be suspended.
Following notification of the suspension of the Euro-Rate Option, the Borrower
shall negotiate with the Bank for a modified Euro-Rate which will allow the Bank
to realize its anticipated and bargained-for yield. In the event that the
Borrower and the Bank cannot agree on a modified Euro-Rate, any notice of
borrowing under, conversion to or renewal of the Euro-Rate Option which was to
become effective during the period of suspension shall be treated as a request
to borrow under, convert to or renew the Base Rate Option with respect to the
principal amount specified therein.
(iv) Indemnity. In addition to the other provisions of this Section
---------
2.2e, the Borrower hereby agrees to indemnify the Bank against any loss or
expense which the Bank may sustain or incur as a consequence of any default by
the Borrower in failing to make any borrowing, conversion or renewal hereunder
to bear interest at the Euro-Rate Option on the scheduled date, in failing to
make when due (whether by declaration, acceleration or otherwise) any payment of
any Euro-Rate Loan or in making any payment or prepayment of any Euro-Rate Loan
or any part thereof on any day other than the last day of the relevant Euro-Rate
Interest Period, including but not limited to any loss of profit, premium or
penalty incurred by the Bank in respect of funds borrowed by it for the purpose
of making or
-15-
maintaining any Euro-Rate Loan as determined in good faith by the Bank in the
exercise of its sole but reasonable discretion. The Bank shall furnish to the
Borrower a certificate showing the calculation of the amount of any such loss or
expense (which certificate, absent manifest error, shall be conclusive), and the
Borrower shall pay such amount to the Bank within ten (10) days of the
Borrower's receipt of such certificate.
2.2f Yield Protection. If any Governmental Rule or the interpretation or
----------------
application thereof by any court, any Governmental Authority charged with the
administration thereof or the compliance with any guideline or request from any
central bank or other Governmental Authority, whether or not having the force of
law:
(i) subjects the Bank to any tax, levy, impost, charge, fee, duty,
deduction or withholding of any kind hereunder (other than any tax imposed or
based upon the income of the Bank and payable to any Governmental Authority or
taxing authority of the United States of America or any state thereof) or
changes the basis of taxation of the Bank with respect to payments by the
Borrower or principal, interest or other amounts due from the Borrower hereunder
(other than any change which affects, and to the extent that it affects, the
taxation by the United States of America or any state thereof of the total net
income of the Bank); or
(ii) imposes, modifies or deems applicable any reserve, special
deposit, special assessment or similar requirements against assets held by,
deposits with or for the account of or credit extended by the Bank with respect
to loans to the Borrower (other than such requirements which are included in the
determination of the Euro-Rate hereunder); or
(iii) imposes upon the Bank any other condition with respect to this
Agreement;
and the result of any of the foregoing is to increase the cost to the Bank,
reduce the income receivable by the Bank, reduce the rate of return on the
Bank's capital or impose any expense upon the Bank by an amount which the Bank
in its sole but reasonable discretion deems to be material, the Bank shall from
time to time notify the Borrower of the amount determined by the Bank (which
determination, absent manifest error, shall be conclusive) to be reasonably
necessary to compensate the Bank (on an after-tax basis) for such increase in
cost, reduction in income, reduction in rate of return or additional expense,
and setting forth the calculations therefor. The Borrower shall pay such amount
to the Bank, as additional consideration hereunder, within ten (10) days of the
Borrower' receipt of such notice from the Bank.
2.2g Method of Calculation. In determining the amount due the Bank
---------------------
hereunder by reason of the application of this Section 2.2, the Bank may use any
reasonable averaging or attribution method; provided, however, that the Bank
-------- -------
must use reasonable efforts to minimize such losses and costs.
-16-
2.2h Interest Payment Dates. Interest due on all outstanding Base Rate
----------------------
Loans shall be payable quarterly in arrears on the last day of each calendar
quarter for the calendar quarter just ended, beginning on March 31, 1997.
Interest due on all outstanding Euro-Rate Loans and Base Rate Loans shall be
payable on the last day of each Euro-Rate Interest Period and, for Euro-Rate
Interest Periods of six months, also on the day which is three months after the
first day of such Euro-Rate Interest Period. All accrued and unpaid interest on
the Revolving Credit Loans shall be due and payable on the Revolving Credit
Termination Date. In addition, all accrued and unpaid interest on all of the
Obligations shall be due and payable after any maturity of the Note or the
Obligations, whether by acceleration or otherwise, on demand until all amounts
due hereunder are paid in full.
2.2i Calculation of Interest. Interest under the Base Rate Option shall be
-----------------------
calculated on the basis of the actual number of days elapsed, using a year of
365 or 366 days, as the case may be. Interest under the Euro-Rate Option shall
be calculated on the basis of the actual number of days elapsed, using a year of
360 days. Interest for any period shall be calculated from and including the
first day thereof to but not including the last day thereof.
2.3 Letter of Credit Commitment.
---------------------------
2.3a Issuance of Letters of Credit. Subject to the further terms and
-----------------------------
conditions of this Agreement and in reliance upon the representations and
warranties set forth herein, the Bank agrees to issue upon the request of the
Borrower to the Bank, Letters of Credit for the account of the Borrower in an
aggregate Stated Amount not to exceed TWO MILLION FIVE HUNDRED THOUSAND AND
NO/100 DOLLARS ($2,500,000) at any one time outstanding (as may be increased or
reduced and reinstated from time to time in accordance with the terms and
provisions hereof). The Stated Amount of each Letter of Credit, while the same
is issued and outstanding, shall be deducted from the maximum amount otherwise
available under the Revolving Credit Commitment. By way of illustration, if
there are outstanding at any one time Letters of Credit having an aggregate
Stated Amount of $500,000, the maximum availability under the Revolving Credit
Commitment, without accounting for reductions which are a function of voluntary
permanent reductions, would be $12,500,000. No Letters of Credit may be issued
hereunder to the extent the Stated Amount thereof would exceed the maximum
availability under the Revolving Credit Commitment (as may be reduced pursuant
to the terms of this Subsection 2.3a or Subsection 2.1b hereof). No Letter of
Credit issued pursuant hereto shall have an initial term which exceeds twelve
(12) months from the date of issuance (except the Wouterson Letter of Credit)
nor have an expiry date later than fifteen (15) days prior to the Revolving
Credit Termination Date. Prior to the issuance of any Letter of Credit
hereunder the Borrower shall complete and deliver to the Bank the Bank's then
current form of Application for Letter of Credit. The issuance of each Letter
of Credit in accordance with the provisions of this Subsection 2.3a shall
require the satisfaction of each condition set forth in Sections 6.1 and 6.2
hereof.
2.3b Limitation on Letters of Credit Commitment. In the event any
------------------------------------------
restrictions are imposed upon the Bank by any Governmental Rule of any
Governmental
-17-
Authority having jurisdiction over the banking activities of the Bank, which
would prevent the Bank from issuing a Letter of Credit or amending a Letter of
Credit the commitment of the Bank to issue the Letters of Credit or enter into
any amendment with respect thereto shall be immediately suspended. The Bank
shall promptly notify the Borrower of the existence and nature of any
restriction which would cause the suspension of the commitment of the Bank to
issue any Letter of Credit or to enter into amendments with respect thereto. The
Borrower will thereupon undertake reasonable efforts to obtain the cancellation
of the Letters of Credit; provided, however, that the refusal of any beneficiary
-------- -------
of the Letters of Credit to surrender such Letters of Credit will not be an
Event of Default hereunder and the Borrower shall undertake good faith efforts
to obtain a substitute letter of credit or letters of credit for the Letters of
Credit. Nothing contained in this Subsection 2.3b shall be deemed a termination
of the Revolving Credit Commitment and, in the event of a suspension of the
commitment of the Bank to issue Letters of Credit as set forth above, the
Borrower may continue to borrow under the Revolving Credit Commitment provided
the requirements of Article VI hereof are complied with.
2.3c Request for Amendments to Letters of Credit. Whenever the Borrower
-------------------------------------------
desires that the Bank enter into an amendment to a Letter of Credit, it shall
deliver to the Bank a written request no later than 11:00 A.M. (Pittsburgh,
Pennsylvania time) at least three (3) Business Days in advance of the proposed
date of such amendment. The Bank shall have no obligation to consent to any
amendment to a Letter of Credit. Any such amendment which may be so consented
to shall be effective only upon the satisfaction of the conditions set forth in
Article VI hereof.
2.3d Payment of Amounts Drawn Under Letters of Credit. Upon each request
------------------------------------------------
for a draw under a Letter of Credit by the beneficiary thereof, the Bank shall
immediately notify the Borrower and the Borrower shall reimburse, or cause the
reimbursement of, the Bank on demand in an amount in same day funds equal to the
amount of such draw; provided, however, that any failure of the Bank to notify
-------- -------
the Borrower prior to honoring any such draw shall not affect the Borrower's
obligation to reimburse the Bank. Unless the Borrower shall have notified the
Bank prior to such time that the Borrower intends to reimburse the Bank for all
or a portion of the amount of such draw with funds other than the proceeds of
Revolving Credit Loans, the Borrower shall conclusively be deemed to have given
a request for a Revolving Credit Loan under Section 2.4 hereof to the Bank
requesting the Bank to make Revolving Credit Loans at the Base Rate Option on
the first Business Day immediately following the date on which such draw is
honored in an aggregate amount equal to the excess of the amount of such draw
over the amount theretofore received by the Bank in reimbursement thereof (the
"Unreimbursed Amount"), plus accrued interest on such amount at the rate set
----
forth in Subsection 2.3e hereof. If the Borrower shall be deemed to have given
a request for a Revolving Credit Loan under Section 2.4 hereof to the Bank
pursuant to this Subsection 2.3d, then, subject to satisfaction or waiver of the
conditions specified in Section 6.1 hereof, the Bank shall, on the first
Business Day immediately following the date of such draw, make Revolving Credit
Loans at the Base Rate Option in the aggregate amount of the Unreimbursed
Amount, plus accrued interest on such amount at the rate set forth in Subsection
----
2.3e hereof. The proceeds of any such Revolving Credit
-18-
Loans shall be applied directly by the Bank, to reimburse the Bank for the
Unreimbursed Amount, plus accrued interest on such amount. The foregoing shall
----
not limit or impair the obligation of the Borrower to reimburse the Bank on
demand for any Unreimbursed Amount.
As to drafts or demands for payment under, or purporting to be under,
a Letter of Credit which are payable in currency other than Dollars, (i) on each
such draft, the equivalent of the amount paid at the rate of exchange then
current in New York, New York for wire transfers to the place of payment in the
currency in which such draft is drawn; and (ii) on each such demand for payment,
the equivalent of the demand for payment at the rate of exchange then current in
New York, New York for wire transfers to the place of payment in the currency in
which the demand for payment is payable, on demand and in any event not later
than the date for payment. If for any reason whatsoever, there exists at the
time in question no rate of exchange generally current in New York, New York for
wire transfers of such currency, the Borrower agrees to pay the Bank on demand
in Dollars an amount equal to the actual cost of settlement of the Bank's
obligation to the payor of the draft or demands for payment or any holder
thereof, as the case may be, and however and whenever such settlement may be
made by the Bank, including interest on the amount of United States of America
currency payable by the Borrower at the rate provided in item (iii) of
Subsection 2.3e from the date of payment of such draft or drawing to the date of
the Borrower's payment to the Bank.
2.3e Letter of Credit Fee and Related Charges.
----------------------------------------
(i) Letter of Credit Fees. The Borrower agrees to pay, in arrears to
---------------------
the Bank, a Letter of Credit Fee per annum equal to one half of one percent
(1/2%) on the Stated Amount (or of any increase or decrease thereof) of each
Letter of Credit, at the end of the first Fiscal Quarter after the issuance of
each Letter of Credit and continuing quarterly thereafter during the term of
each Letter of Credit or any subsequent amendment, renewal or extension thereof
and at the expiration, surrender or final payment thereof. The foregoing
notwithstanding, if any Event of Default shall have occurred and be continuing
at the time of such issuance of any Letter of Credit or subsequent amendment,
renewal or extension thereof, each Letter of Credit Fee payable thereafter
during the continuation of such Event of Default shall be one hundred (100)
basis points (1%) per annum above the fee otherwise in effect on the scheduled
payment date.
(ii) Other Fees. With respect to the amendment or transfer of any
----------
Letter of Credit and each draw made thereunder, the Borrower shall pay
documentary and processing charges in accordance with the Bank's standard
schedule for such charges in effect at the time of such amendment, transfer or
draw, as the case may be. The first and last of such payments shall be pro
rated to reflect the number of days in the applicable Fiscal Quarter that the
Letter of Credit will be outstanding. Without limitation the foregoing shall
include all charges and expenses paid or incurred by the Bank in connection with
any Letter of Credit, together with interest thereon at the rate provided in
item (iii) immediately below, including without limitation: (A) correspondents'
charges, if any, (B) any and all reasonable out-of-pocket expenses and charges
of the Bank in connection with the performance,
-19-
administration, interpretation, collection and enforcement of this Agreement and
any Letter of Credit, including all reasonable legal fees and expenses, and (C)
any and all applicable reserve or similar requirements and any and all premiums,
assessments, or levies imposed upon the Bank or any agency or instrumentality of
any government, including without limitation, assessments or charges of any
Governmental Authority; and
(iii) Interest. With respect to draws made under any Letter of
--------
Credit, the Borrower shall pay interest, payable on demand, on the amount paid
by the Bank in respect of each such draw from the Business Day of the draw
through the date such amount is reimbursed by the Borrower (including any such
reimbursement out of the proceeds of Revolving Credit Loans pursuant to
Subsection 2.3d hereof) at a rate which is at all times equal to two percent
(2.00%) per annum in excess of the interest rate applicable under the Base Rate
Option for Revolving Credit Loans.
2.3f Duty to Review Demands; Obligation Absolute. The obligation of the
-------------------------------------------
Borrower to reimburse the Bank for draws made under the Letters of Credit shall
be absolute, unconditional and irrevocable and shall be paid directly in
accordance with the terms of this Agreement under all circumstances, including,
without limitation, the following circumstances:
(i) any lack of validity or enforceability of the Letters of Credit;
(ii) the existence of any claim, set-off, defense or other right which
the Borrower may have at any time against a beneficiary or any transferee of the
Letters of Credit (or any Persons for whom any such transferee may be acting),
the Bank or any other Person, whether in connection with this Agreement, the
transactions contemplated herein or any unrelated transaction (including any
underlying transaction between the Borrower and the beneficiaries of the Letters
of Credit);
(iii) any draft, demand, certificate or any other document presented
under the Letters 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) payment by the Bank under a Letter of Credit against presentation
of a demand, draft or certificate or other document which does not comply with
the terms of such Letter of Credit except as the result of gross negligence or
wilful misconduct of the Bank;
(v) any other circumstance or happening whatsoever, which is similar
to any of the foregoing; and
(vi) the fact that an Event of Default shall have occurred and be
continuing.
2.3g Additional Payments. If by reason of (i) any change in any
-------------------
Governmental Rule or any change in the interpretation or application by any
judicial or regulatory authority
-20-
of any Governmental Rule or (ii) compliance by the Bank with any direction,
request or requirement (whether or not having the force of law) of any
Governmental Authority:
(i) the Bank shall be subject to any tax, levy, charge or withholding
of any nature or to any variation thereof or to any penalty with respect to the
maintenance or fulfillment of its obligations under this Section 2.3, whether
directly or by such being imposed on or suffered by the Bank;
(ii) any reserve, deposit or similar requirement is or shall be
applicable, imposed or modified in respect of the Letters of Credit;
(iii) there shall be imposed on the Bank any other condition
regarding this Section 2.3 or the Letters of Credit;
and if the result of any of the foregoing is to directly or indirectly increase
the cost to the Bank of issuing, making or maintaining any participation
therein, or to reduce the amount receivable in respect thereof by, the Bank,
then and in any such case the Bank may, at any time after the additional cost is
incurred or the amount receivable is reduced, notify the Borrower, and the
Borrower shall pay on demand such amounts as the Bank may specify to be
necessary to compensate the Bank for such additional cost or reduced receipt,
together with interest on such amount from the date of the notice of such event
which results in such increased cost or reduction in amount receivable until
payment in full thereof at a rate equal at all times to the Base Rate. The
determination by the Bank, as the case may be, of any amount due pursuant to
this Subsection 2.3g, as set forth in a certificate setting forth the
calculation thereof, shall, in the absence of manifest error, be final and
conclusive and binding on all of the parties hereto.
2.3h Indemnification; Nature of an Bank's Duties. In addition to amounts
-------------------------------------------
payable as elsewhere provided in this Section 2.3, the Borrower hereby agrees to
protect, indemnify, pay and save the Bank harmless from and against any and all
claims, demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys' fees) which the Bank may incur or be subject to
as a consequence, direct or indirect, of (i) the issuance of the Letters of
Credit or any amendment thereto, other than as a result of the gross negligence
or willful misconduct of the Bank as determined by a court of competent
jurisdiction, (ii) the failure of the Bank to honor a draw under any Letter of
Credit if the Bank in good faith and upon advice of counsel believes that it is
prohibited from making such payment as a result of any act or omission, any
Governmental Authority, or (iii) any material breach by the Borrower of any
representation, warranty, covenant, term or condition in, or the occurrence of
any default under, any document related to the issuance or any amendment of the
Letters of Credit. If any proceeding shall be brought or threatened against the
Bank by reason of or in connection with any event described in clauses (i)
through (iii) above, the Bank shall promptly notify the Borrower in writing, and
the Borrower shall assume the defense thereof, including the employment of
counsel and payment of all costs of litigation. Notwithstanding the preceding
sentence, the Bank shall have the right to employ its own counsel and to
determine its own defense of such action in any such case, but the
-21-
fees and expenses of such counsel shall be at the expense of the Bank unless (x)
the employment of such counsel shall have been authorized in writing by the
Borrower, (y) the Borrower, after the aforementioned notice of the action, shall
not have employed counsel to have charge of such defense or (z) if the position
of the Borrower is adverse or contrary to the position advocated by the Bank.
In each case described in clauses (x), (y) and (z) immediately above the
reasonable fees and expenses of counsel for the Bank shall be borne by the
Borrower. The Borrower shall not be liable for any settlement of any such
action affected without its consent.
The Bank is hereby expressly authorized and directed to honor any
request for payment which is made under and in compliance with the terms of any
Letter of Credit without regard to, and without any duty on the Bank's part to
inquire into, the existence of any disputes or controversies between the
Borrower, the beneficiary of any Letter of Credit or any other Person, or the
respective rights, duties or liabilities of any of them or whether any facts or
occurrences represented in any of the documents presented under any Letter of
Credit are true or correct. Furthermore, the Borrower fully understands and
agrees that the Bank's sole obligation to the Borrower shall be limited to
honoring requests for payment made under and in compliance with the terms of any
Letter of Credit, the Application therefor and this Agreement and the Bank's
obligation remains so limited even if the Bank may have assisted the Borrower in
the preparation of the wording of any Letter of Credit or any documents required
to be presented thereunder or that the Bank may otherwise be aware of the
underlying transaction giving rise to any Letter of Credit and this Agreement.
As between the Borrower and the Bank, the Borrower assumes all risks
of the acts and omissions of, or misuse of the Letters of Credit by, the
beneficiaries of the Letters of Credit. In furtherance and not in limitation of
the foregoing, the Bank 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 or the issuance or amendment of
the Letters 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 the Letters of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) for failure of a beneficiary of a
Letter of Credit to comply fully with conditions required in order to draw upon
such Letter of Credit; (iv) for errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telecopy,
telex or otherwise, whether or not they be in cipher; (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 draw under
the Letters of Credit or of the proceeds thereof; (vii) for the misapplication
by a beneficiary of any Letter of Credit of the proceeds of any drawing under
such Letter of Credit; (viii) for any consequences arising from causes beyond
the control of the Bank, including, without limitation, any Government Rules;
and (ix) for any other circumstances whatsoever in making or failing to make
payment under a Letter of Credit; except that the Borrower shall have a claim
against the Bank, and the Bank shall be liable to the Borrower, to the extent,
but only to the extent, of any direct, as opposed to consequential, damages
-22-
suffered by the Borrower, as determined by a court of competent jurisdiction to
be the result of (i) the Bank's willful misconduct or gross negligence in
determining whether documents presented under a Letter of Credit comply with the
terms of the Letter of Credit, (ii) the Bank's willful misconduct or gross
negligence in paying a draw under a Letter of Credit to any Person other than
the beneficiary of such Letter of Credit or its lawful successor, representative
or assign (or as otherwise directed in writing by the beneficiary of such Letter
of Credit) or (iii) the Bank's willful failure to pay under a Letter of Credit
after the presentation to it by the beneficiary of such Letter of Credit or its
lawful successor, representative or assign of a sight draft and certificate or
other documents strictly complying with the terms and conditions of such Letter
of Credit, unless the Bank in good faith and upon advice of counsel believes
that it is prohibited by law or other legal authority from making such payment.
None of the above shall affect, impair, or prevent the vesting of any of the
Bank's rights or powers hereunder.
Except for the Bank's obligations under a Letter of Credit, the Bank
shall have no liability to the Borrower from a reduction of the Bank's credit
rating or any deterioration in its financial condition.
The Borrower shall bear and pay all reasonable expenses of every kind
(including all charges for legal services) of the enforcement of any of the
Bank's rights, or of any claim or demand by the Bank against the Borrower, or of
any actual or attempted sale, exchange, enforcement, collection, maintenance,
retention, insurance, compromise, settlement, release, delivery on trust
receipt, or other security agreement, or delivery of any such security, and of
the receipt of proceeds thereof, and will repay to the Bank any such expenses
incurred by the Bank.
In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by the Bank under
or in connection with the Letters of Credit or the related sight drafts or
certificates or documents, if taken or omitted in good faith, shall not put the
Bank under any resulting liability to the Borrower.
Whenever appropriate to prevent unjust enrichment and to the end that
the Borrower shall bear substantially all of the risks relative to any Letter of
Credit and the underlying transactions, the Bank shall be subrogated (for
purposes of defending against the Borrower's claims and proceeding against
others to the extent of the Bank's liability to the Borrower) to the Borrower's
rights against any person, firm or entity who may be liable to the Borrower on
any underlying transaction, to the rights of any holder in due course or person
with similar status against the Borrower, and to the rights of the beneficiary
or its assignee or person with similar status against the Borrower.
2.3i Construction of Applications and Agreement for Letter of Credit. This
---------------------------------------------------------------
Agreement is intended to supplement the Applications for Letter of Credit,
executed by the Borrower and delivered to the Bank. Whenever possible, this
Agreement is to be construed as consistent with said Applications for Letter of
Credit and to the extent that the provisions
-23-
of this Agreement and said Applications for Letter of Credit conflict the terms
of this Agreement shall control.
2.3j Uniform Customs. Except and to the extent inconsistent with the
---------------
specific provisions hereof, this Agreement, each Letter of Credit hereunder and
all transactions in connection therewith shall be interpreted, construed and
enforced according to: (i) the "Uniform Customs and Practice for Documentary
Credits" (1993 Revision), International Chamber of Commerce Publication No. 500
and subsequent revisions thereof which shall supersede inconsistent provisions
of applicable law to the extent not prohibited by applicable law and (ii) the
laws of the Commonwealth of Pennsylvania, including, without limitation, the
Uniform Commercial Code, and excluding conflict of laws rules.
2.4 Requests for Revolving Credit Loans, Interest Rate Options and
--------------------------------------------------------------
Conversions. Each request for a Revolving Credit Loan and for the election or
- -----------
renewal of or conversion to an Interest Rate Option shall be made to the Bank
orally or in writing by an Authorized Officer, no later than 12:00 noon (Eastern
time) (i) at least one (1) Business Day prior thereto, with respect to Base Rate
Loans and (ii) at least three (3) Business Days prior thereto, with respect to
Euro-Rate Loans. Any oral request for a Revolving Credit Loan shall be followed
immediately by the Borrower's written confirmation of such request, executed by
an Authorized Officer, which confirmation must set forth the amount and date of
the Revolving Credit Loan, the Interest Rate Option selected and, if applicable,
the Euro-Rate Interest Period being selected and which shall be substantially in
the form of Exhibit "B". A request from the Borrower pursuant to this Section
-----------
2.4 with respect to a Euro-Rate Loan shall irrevocably commit the Borrower to
accept such Euro-Rate Loan on the date specified in such request.
2.5 Method of Disbursements and Payments. The Bank shall make each
------------------------------------
Revolving Credit Loan available to the Borrower at the principal office of the
Bank prior to 12:00 noon (Eastern time) on the date such Revolving Credit Loan
is to be made, by the Bank making a deposit into Borrower's demand deposit
account maintained with the Bank. All payments of principal, interest, Fees,
costs and other amounts due hereunder and under the other Loan Documents shall
be made by the Borrower to the Bank at the Bank's principal office at One PNC
Plaza, 249 Fifth Avenue, Pittsburgh Pennsylvania 15222 not later than 2:00 p.m.
(Eastern time) on the due date. All such Revolving Credit Loans and payments
shall be made in immediately available funds when either transferred by the Bank
into the Borrower's account with the Bank, or when delivered by the Borrower to
the Bank, as the case may be.
2.6 Loan Account. The Bank shall open and maintain on its books a Loan
------------
Account in the Borrower's name with respect to Revolving Credit Loans made,
repayments, prepayments, the computation and payment of interest and other
amounts due and sums paid to the Bank hereunder and under the other Loan
Documents. Except in the case of manifest error in computation, such records
shall be conclusive and binding on the Borrower as to the amount at any time due
to the Bank by the Borrower.
-24-
2.7 Payment From Accounts Maintained by Borrower. For ease of
--------------------------------------------
administration, in the event that any payment of principal, interest, Fees,
other expenses or amounts due the Bank under any of the Loan Documents is not
paid when due, the Bank is hereby authorized to effect such payment by debiting
any demand deposit account of the Borrower now or in the future maintained with
the Bank other than accounts maintained in trust for the benefit of third
parties. This right to debit accounts of the Borrower is in addition to any
right of setoff accorded the Bank hereunder or by operation of law.
2.8 Commitment Fee. Beginning on March 31, 1997, and continuing on the
--------------
last day of each calendar quarter thereafter until the Revolving Credit
Termination Date and on the Revolving Credit Termination Date, the Borrower
shall pay a Commitment Fee to the Bank, in arrears, at the rate of 0.20% (20
basis points) per annum on the average daily unused portion of the Revolving
Credit Commitment during the calendar quarter or period then ended. The
Commitment Fee shall be computed on the basis of the year of 365 or 366 days, as
the case may be, and paid on the actual number of days elapsed. The Commitment
Fee shall be calculated from the Closing Date.
2.9 Capital Adequacy. If (i) any adoption of, change in or interpretation
----------------
of any Governmental Rule, or (ii) compliance with any guideline, request or
directive of any central bank or other Governmental Authority exercising control
over banks or financial institutions generally, including but not limited to
regulations set forth at 12 C.F.R. Part 3 (Appendix A), 12 C.F.R. Part 208
(Appendix A), 12 C.F.R. Part 225 (Appendix A) and 12 C.F.R. Part 325 (Appendix
A), or any court requires that the Revolving Credit Commitment or the Letter of
Credit Commitment hereunder be treated as an asset or otherwise be included for
purposes of calculating the appropriate amount of capital to be maintained by
the Bank or any corporation controlling the Bank (a "Capital Adequacy Event"),
the result of which is to reduce the rate of return on the Bank's capital as a
consequence of the Revolving Credit Commitment or the Letter of Credit
Commitment to a level below that which the Bank could have achieved but for such
Capital Adequacy Event, taking into consideration the Bank's policies with
respect to capital adequacy, by an amount which the Bank deems to be material,
the Bank shall promptly deliver to the Borrower a certificate of the amount
necessary to compensate the Bank for the reduction in the rate of return on its
capital attributable to the Revolving Credit Commitment or the Letter of Credit
Commitment (the "Capital Compensation Amount"), calculated in good faith, using
reasonable attribution and averaging methods, which certificate, absent manifest
error, shall be presumed to be correct. Such amount shall be due and payable by
the Borrower to the Bank ten (10) days after such notice is given.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES
To induce the Bank to enter into this Agreement and to make the Loans
herein provided for, the Borrower makes the following representations and
warranties to the Bank, all of which shall survive the execution and delivery of
this Agreement and the making of the Loans:
-25-
3.1 Existence. The Borrower is a corporation duly organized, validly
---------
existing and in good standing under the laws of the State of Delaware and is in
good standing as a foreign corporation authorized to do business in each
jurisdiction where the nature of its activities or the ownership of its
properties makes such qualification or licensing necessary, other than
jurisdictions in which failure to be so qualified would not have a Material
Adverse Effect.
3.2 Capitalization; Ownership. All of the issued and outstanding shares
-------------------------
of capital stock of the Borrower are fully paid and nonassessable.
3.3 Subsidiaries and Other Investments. The Borrower does not have any
----------------------------------
Subsidiaries or any ownership interests in any other Person, except as shown on
Schedule 3.3.
- ------------
3.4 Power and Authority. The Borrower has the lawful power to own or
-------------------
lease its properties and to engage in the business it now conducts or proposes
to conduct in all material respects. The Borrower is duly authorized to enter
into, execute, deliver and perform all of the terms and provisions of this
Agreement and the other Loan Documents, to incur the Obligations and to perform
its obligations under the Loan Documents. All necessary corporate action
required to authorize the execution, delivery and performance of this Agreement,
the Note and the other Loan Documents has been properly taken by the Borrower.
3.5 Validity; Binding Effect and Enforceability. The Loan Documents have
-------------------------------------------
been duly executed and delivered by the Borrower. The Loan Documents, when
delivered by the Borrower, will constitute legal, valid and binding obligations
of the Borrower, enforceable against the Borrower in accordance with their
respective terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws affecting the enforcement of creditors' rights generally and
except as such enforceability may be limited by the availability of equitable
remedies.
3.6 No Conflict. Neither the execution and delivery of the Loan Documents
-----------
by the Borrower, nor the consummation of the transactions herein or therein
contemplated or compliance with the terms and provisions hereof or thereof by
them will conflict with, constitute a default under or result in any breach of
(i) the terms and conditions of the Borrower's articles or certificate of
incorporation, by-laws, or other organizational documents, (ii) any Governmental
Rule or (iii) any material agreement, instrument, order, writ, judgment,
injunction or decree, to which the Borrower is a party or by which it is bound
or to which it is subject, or will result in the creation or enforcement of any
Lien whatsoever upon any property, whether now owned or hereafter acquired, of
the Borrower, except for Permitted Liens.
3.7 Financial Matters; No Material Adverse Change. The Borrower has
---------------------------------------------
delivered to the Bank its unaudited quarterly financial statements for the
Fiscal Quarter ended September 30, 1996. Such financial statements are complete
and correct in all material
-26-
respects, subject to year-end adjustments, and fairly present the financial
condition of the Borrower and its Subsidiaries, on a consolidated basis, in all
material respects and the results of its operations as of the dates and for the
periods referred to, and have been prepared in accordance with GAAP consistently
applied throughout the periods involved (except that such financial statements
do not contain all of the footnote disclosures required by GAAP). The Borrower
and its Subsidiaries have no material liabilities, whether direct or indirect,
fixed or contingent, and no liability for taxes, long-term leases or unusual
forward or long-term commitments as of the date of such financial statements
which are not reflected in such financial statements or in any notes thereto.
Except as set forth in Schedule 3.7, since September 30, 1996, no Material
------------
Adverse Change has occurred.
3.8 Litigation. Except as set forth in the Borrower's annual report on
----------
Form 10-K for the Fiscal Year ended June 30, 1996, there are no actions, suits,
proceedings or investigations pending or, to the Borrower's knowledge,
threatened against the Borrower or any of its Subsidiaries or any of their
respective businesses, operations, properties, prospects, profits or condition
(financial or otherwise), at law or in equity, before any Governmental Authority
which, individually or in the aggregate, if adversely determined, could
reasonably be expected to have a Material Adverse Effect, or which purport to
affect the rights and remedies of the Bank pursuant to this Agreement and the
other Loan Documents or which purport to restrain or enjoin (either temporarily,
preliminarily or permanently) the performance by the Borrower of any action
contemplated by any of the Loan Documents. All pending and, to the Borrower's
knowledge, threatened actions, suits, proceedings and investigations affecting
the Borrower or any of its Subsidiaries in existence on the Closing Date which
are material are set forth in the Form 10-K referred to above or on
Schedule 3.8.
- ------------
3.9 Compliance with Laws. The Borrower has duly complied with, and its
--------------------
properties, business operations and leaseholds are in compliance in all material
respects with all Governmental Rules applicable to it, its properties and the
conduct of its business, except where the failure to comply will not have a
Material Adverse Effect.
3.10 Fiscal Year. The Fiscal Year of the Borrower ends on June 30 of each
-----------
year.
3.11 Condition of and Title to Assets. The Borrower and each of its
--------------------------------
Subsidiaries has good title to its properties and assets except for Permitted
Liens and defects in title which, taken as a whole, are not material. None of
the assets of the Borrower or any Subsidiary of the Borrower is subject to any
Liens except for Permitted Liens. All of material assets and properties of the
Borrower and its Subsidiaries that are necessary for the operation of their
respective businesses are in good working condition, ordinary wear and tear
excepted, and are able to serve the functions for which they are currently being
used.
3.12 Tax Returns and Payments. The Borrower and its Subsidiaries have
------------------------
filed all Federal, state, local and other tax returns required by law to be
filed. The Borrower and its Subsidiaries have paid all taxes, assessments and
other governmental charges levied upon them or any of their respective
properties, assets, income or franchises which are due and payable, other than
(i) those presently payable without penalty or interest, (ii) those which
-27-
are being contested in good faith by appropriate proceedings and (iii) those
which, if not paid, would not, in the aggregate, have a Material Adverse Effect;
and as to items (i), (ii) and (iii) the Borrower or such Subsidiary has set
aside on its books general or specific reserves for such claim as are determined
to be adequate by application of GAAP consistently applied. The charges,
accruals and reserves on the books of the Borrower and its Subsidiaries in
respect of Federal, state, local and other taxes and assessments for all fiscal
periods to date are adequate, and the Borrower knows of no unpaid assessments
for additional Federal, state, local or other taxes for any such fiscal period
or any basis therefor.
3.13 Insurance. The Borrower and its Subsidiaries currently maintain
---------
insurance of such types and at least in such amounts as are customarily carried
by, and insures against such risks as are customarily insured against by similar
businesses similarly situated and owning, leasing and operating similar
properties to those owned, leased and operated by the Borrower and its
Subsidiaries. All of such insurance policies are valid and in full force and
effect. No notice has been given or claim made and no grounds exist to cancel
or avoid any of such policies or to reduce the coverage provided thereby.
3.14 Consents and Approvals. No order, authorization, consent, license,
----------------------
validation or approval of, or notice to, filing, recording, or registration with
any Governmental Authority, or the exemption by any such Governmental Authority,
is required to authorize, or is required in connection with, (i) the execution,
delivery and performance of any of the Loan Documents or (ii) the legality,
binding effect or enforceability of any such Loan Document.
3.15 No Defaults. No event has occurred and is continuing and no condition
-----------
exists or will exist after giving effect to the Loans to be made on the Closing
Date which constitutes a Default or an Event of Default. The Borrower is not in
violation of (i) any term or provision of its articles of incorporation, by-
laws, or other organizational documents or (ii) any material agreement or
instrument to which it is a party or by which it or any of its properties may be
bound or subject, which violation would have a Material Adverse Effect.
3.16 Plans and Benefit Arrangements. Each Plan and Benefit Arrangement as
------------------------------
to which the Borrower may have any liability complies in all material respects
with all applicable provisions of ERISA, including minimum funding requirements,
and (i) no Prohibited Transaction has occurred with respect to any such Plan or
Benefit Arrangement, (ii) no Reportable Event has occurred with respect to any
such Plan or Benefit Arrangement which would cause the PBGC to institute
proceedings under Section 4042 of ERISA, (iii) the Borrower has not withdrawn
from any such Plan or Benefit Arrangement or initiated steps to do so, and (iv)
except as set forth on Schedule 3.16 no steps have been taken to terminate any
-------------
such Plan or Benefit Arrangement.
3.17 Senior Debt Status. From and after the Closing Date, all Obligations
------------------
outstanding under the Loan Documents will constitute senior Indebtedness of the
Borrower and will rank at least pari passu in priority of payment with all other
Indebtedness owed by
-28-
the Borrower from time to time, except other Indebtedness to the extent secured
by Permitted Liens.
3.18 Environmental Matters. To the best of the Borrower's knowledge the
---------------------
Borrower and its Subsidiaries are in material compliance with all applicable
Environmental Laws. There are no past, pending or, to the best of the
Borrower's knowledge, threatened Environmental Claims against the Borrower or
its Subsidiaries or any of the property of the Borrower or any of its
Subsidiaries, and, to the best of Borrower's knowledge, there is no condition or
occurrence on any property owned or leased by the Borrower or any of its
Subsidiaries that could reasonably be anticipated (i) to form the basis of a
material Environmental Claim against the Borrower, such Subsidiary or its
properties or (ii) to cause any property owned or leased by the Borrower or any
Subsidiary to be subject to any material restrictions on its ownership,
occupancy or transferability under any Environmental Law.
3.19 Margin Stock. The Borrower and its Subsidiaries are not engaged
------------
principally or as one of their important activities in the business of extending
credit for the purpose, immediately, incidentally or ultimately, of purchasing
or carrying margin stock (within the meaning of Regulation U). No Loan will be
used, immediately, incidentally or ultimately, to purchase or carry any margin
stock or to extend credit to others for the purpose of purchasing or carrying
margin stock, or for any other purpose which would violate or be inconsistent
with any of the regulations of the Board of Governors of the Federal Reserve
System.
3.20 Investment Company Act; Public Utility Holding Company. Neither the
------------------------------------------------------
Borrower nor any Subsidiary is an "investment company" registered or required to
be registered under the Investment Company Act of 1940, as amended from time to
time, or a company under the "control" of an "investment company", as those
terms are defined in such Act, and shall not become such an "investment company"
or under such "control." Further, neither the Borrower nor any Subsidiary is a
"holding company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company", or a "subsidiary company" of a "holding
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
3.21 Full Disclosure. Neither this Agreement nor any other document,
---------------
certificate or statement furnished to the Bank by or on behalf of the Borrower
or any Subsidiary pursuant to this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein and therein, in light of the circumstances under
which they were made, not misleading. There is no fact known to the Borrower
which materially and adversely affects the business, property, assets, financial
condition, results of operations or prospects of the Borrower or any Subsidiary
which has not been set forth in the Loan Documents or in the other documents,
certificates and statements (financial or otherwise including, without
limitation, all reports filed by the Borrower with the Securities and Exchange
Commission pursuant to the Securities and Exchange Act of 1934, as amended, and
all press releases issued by the Borrower) furnished
-29-
to the Bank by or on behalf of the Borrower or any Subsidiary prior to or on the
date hereof in connection with the transactions contemplated hereby.
3.22 Intellectual Property. The Borrower owns, is licensed or otherwise
---------------------
possesses the right to use all patents, patent rights, trademarks, trade names,
service marks, copyrights, intellectual property, technology, know-how and
processes necessary for the conduct of its business as currently conducted that
are material to the condition (financial or otherwise), business or operations
of the Borrower.
ARTICLE 4. AFFIRMATIVE COVENANTS
From the date hereof and thereafter until the termination of the
Revolving Credit Commitment and until the Loans and the other Obligations of the
Borrower hereunder are paid in full, the Borrower agrees, for the benefit of the
Bank, that it will comply with each of the following affirmative covenants:
4.1 Use of Proceeds. The Loans shall be used by the Borrower only to fund
---------------
the Acquisition whether as all or a portion of (i) the initial payment or (ii)
any subsequent installment payment. Each such payment shall be made, either
directly by the Borrower, or indirectly by the Borrower, making advances or
investments in a Subsidiary to be used exclusively for such purposes.
4.2 Delivery of Financial Statements and Other Information. During the
------------------------------------------------------
term hereof, the Borrower shall deliver or cause to be delivered to the Bank the
following financial statements and other information:
4.2a Financial Statements. The Borrower shall:
--------------------
(i) deliver to the Bank as soon as available but not later than forty-
five (45) days after the last day of each of the first three Fiscal Quarters of
each Fiscal Year, the Borrower's quarterly report to shareholders, if any, and
its quarterly report on Form 10-Q as filed with the Securities and Exchange
Commission and, within ninety (90) days after the end of each Fiscal Year, the
Borrower's annual report to shareholders and its annual report on Form 10-K, as
filed with the Securities and Exchange Commission, in each case accompanied by a
completed Compliance Certificate substantially in the form of Exhibit "C"
-----------
attached hereto duly executed by an Authorized Officer stating that (A) such
Authorized Officer has reviewed the terms of the Agreement and has made, or
caused to be made under his supervision, a review of the transactions and
condition of the Borrower during the accounting period covered by such financial
statements and that such review has not disclosed the existence during such
accounting period, and that such Authorized Officer does not have knowledge of
the existence as at the date of such Compliance Certificate, of any condition or
event which constitutes, a Default or an Event of Default or, if an Event of
Default did exist, a statement describing such Event of Default and the action
the Borrower
-30-
has taken or proposes to take with respect thereto and (B) the Borrower was in
compliance with the covenants set forth in Section 5.10 of this Agreement;
(ii) deliver to the Bank promptly upon their becoming available,
copies of all financial statements, reports, notices and information statements
sent or made available generally by the Borrower to its security holders
(including, without limitation, proxy materials) and copies of all other regular
and periodic reports (including, without limitation, Form 8-K) filed by the
Borrower with the Securities and Exchange Commission or any Governmental
Authority succeeding to any of its functions, and of all press releases and
other statements made available generally by the Borrower to the public
concerning material developments in the business of the Borrower and any of its
Subsidiaries taken as a whole;
4.2b Management Letters. If requested by the Bank, deliver to the Bank
------------------
copies of any management letters or similar information prepared by the public
accounting firm performing any audit promptly after such letters become
available to the Borrower;
4.2c Other Reports, Information and Notices.
--------------------------------------
(i) Promptly after any Authorized Officer of the Borrower has learned
of the occurrence or existence of a Default, an Event of Default, an event or
set of circumstances which has had or which is reasonably likely to have a
Material Adverse Effect or which has caused or which is reasonably likely to
cause a Material Adverse Change, or any Reportable Event or Prohibited
Transaction, deliver telephonic or written (including a copy of a press release
issued by the Borrower) notice thereof specifying the details thereof, the
anticipated effect thereof and the action which the Borrower has taken, is
taking or proposes to take with respect thereto, which notice shall be promptly
confirmed in writing within five days by an Authorized Officer; and
(ii) Promptly deliver notice of and any other information reasonably
requested by the Bank from time to time relating to planned or actual
acquisitions by the Borrower or any Subsidiary, by purchase, lease or otherwise,
of all or substantially all of the assets of, or a Controlling interest in, any
Person.
4.2d Additional Information; Visitation. The Borrower shall promptly
----------------------------------
deliver to the Bank such additional financial statements, reports, financial
projections and other information, whether or not financial in nature, as the
Bank may reasonably request from time to time. The Borrower will permit the
Bank and its designated employees and agents to have access, at any time and
from time to time, upon reasonable notice and during normal business hours, to
visit any of the properties of the Borrower and its Subsidiaries, to examine and
make copies of their respective books of record and account and such reports and
returns as the Borrower and its Subsidiaries may file with any Governmental
Authority and discuss their respective affairs and accounts with, and be advised
about them by, any Authorized Officer and the Borrower's accountants.
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4.3 Preservation of Existence; Qualification. At its own cost and
----------------------------------------
expense, the Borrower will do all things necessary to preserve and keep in full
force and effect its corporate existence and qualifications under the laws of
the state of its formation and each state where, due to the nature of its
activities or the ownership of its properties, qualification to do business is
required and where the failure to be so qualified would have a Material Adverse
Effect.
4.4 Compliance with Laws, Contracts and Licenses. The Borrower shall and
--------------------------------------------
shall cause its Subsidiaries to comply in all material respects with all
applicable Governmental Rules. The Borrower shall and shall cause its
Subsidiaries to comply with all material provisions of each material contract
and agreement to which they are parties. The Borrower shall and shall cause its
Subsidiaries to maintain in full force and effect all Governmental Approvals and
other material agreements which are necessary or advisable for the conduct of
their respective businesses in compliance with all applicable Governmental
Rules.
4.5 Continuance of Business. The Borrower shall and shall cause its
-----------------------
Subsidiaries to do or cause to be done all things reasonably necessary to
preserve and keep in full force and effect all permits, rights and privileges
necessary for the proper conduct of their respective businesses.
4.6 Accounting System; Books and Records. The Borrower shall and shall
------------------------------------
cause its Subsidiaries to maintain a system of accounting established and
administered in accordance with GAAP consistently applied and will and will
cause its Subsidiaries to set aside on their books all such proper reserves as
shall be required by GAAP (provided that, in the case of foreign Subsidiaries,
such books and records shall be maintained in accordance with generally accepted
accounting principles as established in the applicable jurisdiction which shall,
in any event, be sufficient to permit the Borrower to prepare Consolidated
financial statements in accordance with GAAP). The Borrower shall and shall
cause its Subsidiaries to maintain proper books of record and account in
accordance with GAAP in which full, true and correct entries shall be made of
all of their respective properties and assets and their respective dealings and
business affairs.
4.7 Payment of Taxes and Other Liabilities. The Borrower shall and shall
--------------------------------------
cause its Subsidiaries to promptly pay and discharge all obligations, accounts
and liabilities which are owed by them, to which they are subject or which are
asserted against them, including but not limited to all taxes, assessments and
governmental charges and levies upon them or upon any of their respective
income, profits or property prior to the date on which penalties attach thereto;
provided, however, that for purposes of this Agreement, the Borrower and its
- -------- -------
Subsidiaries shall not be required to pay any tax, assessment, charge or levy
(i) the payment of which is being contested in good faith by appropriate and
lawful proceedings diligently conducted and (ii) as to which the Borrower or the
affected Subsidiary shall have set aside on its books reserves for such claim as
are determined to be adequate by the application of GAAP consistently applied,
but only to the extent that failure to discharge any such liabilities would not
result in any additional liability which would have a Material Adverse Effect;
and
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provided, further, that the Borrower shall pay and shall cause its Subsidiaries
- -------- -------
to pay all such contested liabilities forthwith upon the commencement of
proceedings to foreclose any Lien which may have attached as security therefor.
4.8 Insurance. The Borrower shall and shall cause its Subsidiaries to
---------
maintain at all times adequate insurance to the satisfaction of the Bank with
financially sound and reputable insurers acceptable to the Bank, in its sole but
reasonable judgment, against such risks of loss as are customarily insured
against and in amounts customarily carried by Persons owning, leasing or
operating similar properties, including, but not limited to, fire and theft and
extended coverage insurance in an amount at least equal to the total full
insurable value of their respective insurable property. The Borrower shall and
shall cause its Subsidiaries to be adequately insured at all times against
liability on account of injury to persons or property and to comply with the
insurance provisions of all applicable workers' compensation and similar laws
and will effect all such insurance under valid and enforceable policies with
insurers satisfactory to the Bank, in its sole but reasonable judgment.
4.9 Maintenance of Properties. The Borrower shall and shall cause its
-------------------------
Subsidiaries to maintain, preserve, protect and keep their respective material
properties and assets in good repair, working order and condition (ordinary wear
and tear excepted), and make all necessary and proper repairs, renewals and
replacements so that their business carried on in connection therewith may be
properly and advantageously conducted at all times.
4.10 Plans and Benefit Arrangements. The Borrower shall, and shall cause
------------------------------
each ERISA Affiliate to, comply in all material respects with ERISA, the
Internal Revenue Code and all other Governmental Rules which are applicable to
Plans and Benefit Arrangements.
4.11 Environmental Indemnification. The Borrower shall defend and
-----------------------------
indemnify the Bank and hold it harmless from and against all loss, liability,
damage, expense, claims, costs, fines, penalties, assessments (including
interest on any of the foregoing) and reasonable attorneys' fees, suffered or
incurred by the Bank which arise, result from or in any way relate to a breach
or violation by the Borrower of any Environmental Law, either prior to or
subsequent to the date hereof, including the assertion or imposition of any Lien
on the Borrower's or its Subsidiaries' assets, or which relate to or arise out
of an Environmental Claim. The Borrower's obligations hereunder shall survive
the termination of this Agreement and the repayment of the Obligations.
ARTICLE 5. NEGATIVE COVENANTS
5.1 Indebtedness. The Borrower shall not and shall not permit its
------------
Subsidiaries to create, incur, assume or permit to exist or remain outstanding
any Indebtedness, except for:
(i) The Indebtedness owed by the Borrower to the Bank hereunder;
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(ii) Consolidated Indebtedness of the Borrower and its Subsidiaries
existing on the date hereof and listed on Schedule 5.1 and any extensions,
------------
renewals or refinancings thereof, in outstanding principal amounts not greater
than those shown on Schedule 5.1;
------------
(iii) Consolidated Indebtedness owed by the Borrower and its
Subsidiaries to purchase money secured creditors up to an aggregate principal
amount not to exceed $7,500,000 at any one time outstanding; and
(iv) Consolidated Indebtedness of the Borrower and its Subsidiaries in
addition to Indebtedness permitted under items (i), (ii) and (iii) immediately
above in an aggregate principal amount not to exceed $30,000,000 at any one time
outstanding.
5.2 Liens; Negative Pledge. The Borrower shall not and shall not permit
----------------------
its Subsidiaries to create, assume, incur or suffer to exist any Lien upon any
of their respective assets and properties, whether tangible or intangible,
whether now owned or in existence or hereafter acquired or created and wherever
located, nor acquire nor agree to acquire any assets or properties subject to a
Lien, except for Permitted Liens. The Borrower shall not and shall not permit
its Subsidiaries to make or enter into any agreement not to grant Liens for the
benefit of any Person other than for the benefit of the Bank, except for such
agreements existing on the date hereof and relating to the liens set forth in
Schedule 1.1 and the Indebtedness set forth on Schedule 5.1.
5.3 No Limitation on Dividends and Distributions. The Borrower shall not
--------------------------------------------
permit its Subsidiaries to enter into or otherwise be bound by any agreement not
to pay dividends to the Borrower.
5.4 Liquidations, Mergers, Consolidations, Etc. The Borrower shall not
-------------------------------------------
and shall not permit its Subsidiaries to dissolve, liquidate or wind up its
affairs, or become a party to any merger or consolidation; provided, however,
-------- -------
any Subsidiary may merge into or consolidate with any other Subsidiary and any
Subsidiary may merge into or consolidate with the Borrower, with the Borrower
being the surviving Person; and provided further, the Borrower or any Subsidiary
-------- -------
may merge or consolidate with any other Person so long as (i) the Borrower or
such Subsidiary, as the case may be, is the surviving Person, (ii) at the time
of such merger or consolidation, no Default or Event of Default hereunder has
occurred and is continuing and (iii) such merger or consolidation shall not
itself cause there to be a Default or Event of Default hereunder.
5.5 Dispositions of Assets. The Borrower shall not and shall not permit
----------------------
its Subsidiaries to sell, convey, assign, lease, abandon or otherwise transfer
or dispose of, voluntarily or involuntarily, any of their respective properties
or assets, whether tangible or intangible, except for (i) sales, conveyances,
assignments, leases or transfers in the ordinary course of their respective
businesses (ii) the sales, conveyances, assignments, leases or transfers of
assets which are obsolete, of immaterial value, or no longer utilized in the
business of the Borrower and (iii) sales conveyances, assignments, leases or
transfers not covered by items (i) or (ii) above, provided that the aggregate
proceeds of all such sales,
-34-
transfers or other dispositions permitted by this item (iii) shall not exceed,
on the aggregate in any one Fiscal Year of the Borrower, twenty percent (20%) of
the Borrower's Consolidated Total Assets as at the end of the immediately
preceding Fiscal Year.
5.6 Loans, Advances and Investments. The Borrower shall not and shall not
-------------------------------
permit its Subsidiaries to make loans, payments or other advances of funds to,
or investments in, any Person, except for (i) loans or advances to or
investments in Subsidiaries made by the Borrower or another Subsidiary; (ii)
advances for expenses made to the Borrower's and the Subsidiaries' employees in
reasonable amounts and in the ordinary course of business; (iii) loan or
advances not permitted by items (i) or (ii) above to any Person which
individually do not exceed $1,000,000 and which do not exceed $5,000,000 in the
aggregate at any one time outstanding; (iv) investments not otherwise permitted
by items (i) or (v) of this Section 5.6 in a Person which, when made, do not
exceed, individually, $2,000,000 or which, in the aggregate, do not exceed
(using the initial cost of each such investment) $10,000,000 and (v) Permitted
Investments.
5.7 Affiliate Transactions. The Borrower shall not and shall not permit
----------------------
its Subsidiaries to enter into or carry out any transaction with an Affiliate
(including, without limitation, purchasing property or services from or selling
property or services to any Affiliate or other Person) unless such transaction
(i) is entered into in the ordinary course of business upon fair and reasonable
arm's-length terms and conditions which are fully disclosed to the Bank at the
Bank's request and (ii) is in accordance with all applicable Governmental Rules.
5.8 Use of Proceeds. Should all or any part of the Loans be deemed to be
---------------
a "purpose loan" which is "directly or indirectly secured" (as those terms are
used in Regulation U) by "margin stock," as defined in Regulation U, the
Borrower shall not use proceeds of the Loans for the purpose, whether immediate,
incidental or ultimate, of purchasing or carrying any such margin stock which
would cause the outstanding Loans to be in violation of Regulations G, T, U or
X. The Borrower shall not request or accept any Loan in violation of
Regulations G, T, U or X. The Borrower shall not use proceeds of the Loans in a
manner which violates any term or condition of any Loan Document or which
violates any applicable law.
5.9 Change of Business. The Borrower shall not and shall not permit its
------------------
Subsidiaries to engage in any business other than the design, manufacture, sale
and distribution of medical devices and other business reasonably related
thereto.
5.10 Financial Covenants.
-------------------
(a) Tangible Net Worth. At all times the Borrower shall maintain
------------------
Consolidated Tangible Net Worth equal to the sum of $105,300,000 plus an amount
----
equal to 25% of the Borrower's Consolidated Net Income (if positive) for each
Fiscal Quarter ending after December 31, 1996.
-35-
(b) Fixed Charge Coverage Ratio. At all times, the ratio of the
---------------------------
Borrower's Consolidated Total Indebtedness to the Borrower's Annualized EBITDA
for the four immediately preceding four Fiscal Quarters shall not be more than
1.5 to 1.0.
ARTICLE 6. CONDITIONS TO MAKING ADVANCES
6.1 All Loans and Letters of Credit. The obligation of the Bank to make
-------------------------------
each Revolving Credit Loan and issue each Letter of Credit is subject to the
satisfaction of each of the following conditions precedent:
6.1a Request for Revolving Credit Loan. Receipt by the Bank of (i) as to
---------------------------------
each Loan a request satisfying the requirements of Section 2.4, for Revolving
Credit Loans and (ii) as to each Letter of Credit an Application for Letter of
Credit.
6.1b No Default or Event of Default. The Borrower shall have performed and
------------------------------
complied with all agreements and conditions herein required to be performed or
complied with by it prior to any Loan or Letter of Credit being made or issued
and, at the time such Loan or Letter of Credit is made or as a result of making
such Loan or issuing such Letter of Credit, no Default or Event of Default has
occurred and is continuing or will be caused by the making of such Loan or
issuing such Letter of Credit.
6.1c Representations Correct. The representations and warranties contained
-----------------------
in Article 3 hereof and otherwise made in writing by or on behalf of the
Borrower in connection with the transactions contemplated by the Loan Documents
shall be (i) correct when made and (ii) correct in all material respects at the
time of each Loan. Each request for a Loan or a Letter of Credit, whether made
orally or in writing, shall be deemed to be, as of the time made, a
representation and warranty by the Borrower as to the accuracy of the matters
set forth in Sections 6.1b, 6.1c and 6.1d.
6.1d No Material Adverse Change. At the time of making such Loan or
--------------------------
issuing such Letter of Credit, no Material Adverse Change has occurred and is
continuing.
6.2 Initial Loan. The obligation of the Bank to make the first Loan and
------------
issuing the Wouterson Letter of Credit hereunder is subject to the satisfaction
of each of the following conditions precedent, each of which must be
satisfactory to the Bank, in addition to the applicable conditions precedent set
forth in Section 6.1:
6.2a Credit Agreement. Receipt by the Bank of fully executed counterparts
----------------
of this Agreement.
6.2b Schedules to Credit Agreement. Receipt by the Bank of all schedules
-----------------------------
to this Agreement and the other Loan Documents prepared by the Borrower, in form
and substance satisfactory to the Bank.
-36-
6.2c Note. Receipt by the Bank of a Revolving Credit Note executed by the
----
Borrower and payable to the Bank.
6.2d Letter of Credit Documents. Receipt by the Bank of fully executed
--------------------------
counterparts of an Application for Letter of Credit relating to the Wouterson
Letter of Credit.
6.2e Corporate Documents for Borrower. Receipt by the Bank of the
--------------------------------
following corporate documents for the Borrower:
(i) a copy of its articles and/or certificate of incorporation,
certified as true and correct by the Secretary of the State of Delaware not more
than twenty (20) days prior to the date hereof;
(ii) resolutions of the board of directors authorizing the execution
of the Loan Documents and the performance by the Borrower pursuant thereto,
certified by the secretary of the Borrower as being true, correct, complete and
in effect and in form and substance satisfactory to the Bank;
(iii) a copy of the by-laws and all amendments thereto, certified by
the secretary of the Borrower as being true, correct, complete and in effect;
and
(iv) an incumbency certificate for the Borrower, showing the names of
the officers of the Borrower, their titles and containing their true signatures.
6.2f Opinion of Counsel. Receipt by the Bank of a satisfactory opinion of
------------------
Reed Smith Shaw & McClay, counsel to the Borrower, addressed to the Bank. In
rendering such opinion, Reed Smith Shaw & McClay may rely on certificates from
an officer of the Borrower as to factual matters on which such opinion is based.
6.2g Closing Certificate. Receipt by the Bank of a certificate
-------------------
substantially in the form of Exhibit "D", dated as of the Closing Date and
-----------
executed by an Authorized Officer of the Borrower, stating that, as of the
Closing Date and after giving effect to the Loans made on such date, all of the
representations and warranties made by the Borrower herein and in the other Loan
Documents are true and correct; no Default or Event of Default exists; and that
since September 30, 1996 no Material Adverse Change, except as disclosed on
Schedule 3.7, has occurred.
- ------------
6.2h Request for Initial Revolving Credit Loans. Receipt by the Bank of
------------------------------------------
written instructions addressed to the Bank and executed by the Borrower,
instructing the Bank as to the disbursement of the Revolving Credit Loan to be
made on the Closing Date.
6.2i Adequacy of Legal Matters. All legal matters incident to the Loans
-------------------------
and the Loan Documents shall be satisfactory to the Bank and its counsel.
-37-
6.2j Fees. Payment by the Borrower of all Fees which are to be paid on the
----
Closing Date, if any.
6.2k Acquisition. Evidence satisfactory to the Bank and its counsel that
-----------
the Acquisition has occurred or will occur simultaneously with the disbursement
of the initial Revolving Credit Loan.
ARTICLE 7. EVENTS OF DEFAULT; REMEDIES
7.1 Events of Default. Each of the following events shall constitute an
-----------------
Event of Default:
7.1a Payment Defaults.
----------------
(i) Payment Defaults Under Loan Documents. The Borrower shall default
-------------------------------------
(i) in the payment of interest on the Loan when due, or in the payment of any of
the Fees, expenses or other amounts due hereunder or under any of the other Loan
Documents when due, and such default in payment of interest, Fees, expenses or
other amounts shall have continued for a period of five (5) days after such due
date, or (ii) in any payment of principal of the Loan made hereunder when due.
(ii) Payment Defaults Under Other Indebtedness Documents. The
---------------------------------------------------
Borrower shall default in the payment of any Indebtedness (other than the
Obligations owed under this Agreement), which Indebtedness has an aggregate
outstanding principal balance of $1,000,000 or more when such payment is due
(whether by acceleration or otherwise after) after giving effect to any grace or
cure period, or default by the Borrower in the performance of any term of any
agreement or instrument under which any such Indebtedness is created or by which
it is governed or evidenced, if the effect of any such default is to cause such
Indebtedness to become, or to permit the holder or holders of such Indebtedness
(or any Person on behalf of such holder) to declare such Indebtedness, due prior
to its expressed maturity;
7.1b Insolvency, Etc.
----------------
(i) Involuntary Proceedings. A proceeding shall have been instituted
-----------------------
in a court having jurisdiction seeking a decree or order for relief in respect
of the Borrower in an involuntary case under the Federal bankruptcy laws, or any
other similar applicable Federal or state law, now or hereafter in effect, or
for the appointment of a receiver, liquidator, trustee, sequestrator or similar
official for the Borrower or for a substantial part of their respective
property, or for the winding up or liquidation of their respective affairs, and
such shall remain uncontested for a period of fifteen (15) days or, if
contested, remain undismissed or unstayed and in effect for a period of sixty
(60) days.
-38-
(ii) Voluntary Proceedings. The Borrower shall institute proceedings
---------------------
to be adjudicated a voluntary bankrupt, or shall consent to the filing of a
bankruptcy proceeding against it, or shall file a petition or answer or consent
seeking reorganization under the Federal bankruptcy laws, or any other similar
applicable Federal or state law now or hereafter in effect, or shall consent or
acquiesce to the filing of any such petition, or shall consent to or acquiesce
in the appointment of a receiver, liquidator, trustee, sequestrator or similar
official for the Borrower or for a substantial part of its respective property,
or shall make an assignment for the benefit of creditors, or shall admit in
writing its inability to pay its debts generally as they become due, or action
shall be taken by the Borrower in furtherance of any of the foregoing.
7.1c Dissolution; Cessation of Business. The Borrower shall terminate its
----------------------------------
existence, dissolve, liquidate substantially all of its assets, cease to exist
or permanently cease operations.
7.1d Change of Control. The occurrence of a Change of Control.
-----------------
7.1e Adverse Judgments. The aggregate amount of final judgments against
-----------------
the Borrower for which no further appellate review exists shall, at any one
time, exceed, by $1,000,000 or more, the aggregate amount of insurance proceeds
available to pay such judgments.
7.1f Failure to Comply with Loan Documents.
-------------------------------------
(i) Failure to Comply with Negative Covenants. The Borrower shall
-----------------------------------------
default in the due performance or observance of any negative covenant contained
in Article 5 of this Agreement.
(ii) Failure to Comply with Other Covenants and Loan Documents. The
---------------------------------------------------------
Borrower shall default in the due performance or observance of any covenant,
condition or provision set forth in this Agreement or any of the other Loan
Documents which is not set forth elsewhere in this Section 7.1, or the Borrower
shall default in the due performance of any covenant, condition or provision set
forth in any other Loan Documents, and such default described in this item (ii)
shall not be remedied to the satisfaction of the Bank for a period of thirty
(30) days after the earlier of (A) such default becoming known to any Authorized
Officer or (B) notice of such default being delivered by the Bank to the
Borrower.
7.1g Misrepresentation. Any representation or warranty made by the
-----------------
Borrower in any Loan Document to which it is a party is untrue in any material
respect as of the date made, or any schedule, statement, report, notice,
certificate or other writing furnished by the Borrower to the Bank is untrue in
any material respect on the date as of which the facts set forth therein are
stated or certified.
-39-
7.1h Invalidity, Etc. of Loan Documents. Any material provision of any
----------------------------------
Loan Document shall at any time for any reason cease to be valid and binding on
the Borrower, or shall be declared to be null and void, or the validity or
enforceability thereof shall be contested by the Borrower or any Governmental
Authority, or the Borrower shall deny that it has any or further liability or
obligation under any Loan Document to which it is a party.
7.2 Remedies.
--------
7.2a Events of Default Under Sections 7.1b and 7.1c. Upon the occurrence
----------------------------------------------
of an Event of Default set forth in Sections 7.1b and 7.1c, the Revolving Credit
Commitment and the Letter of Credit Commitment shall automatically terminate,
and the Loans, the Revolving Credit Note, interest accrued thereon and all other
Obligations of the Borrower to the Bank shall become immediately due and
payable, without the necessity of demand, presentation, protest, notice of
dishonor or notice of default, all of which are hereby expressly waived by the
Borrower. Thereafter, the Bank shall have no further obligation to make any
additional Loans hereunder. In addition, during any sixty (60)-day period
described in Section 7.1b(i), the Bank shall not have any obligation to make any
additional Loans hereunder.
7.2b Remaining Events of Default. Upon the occurrence and during the
---------------------------
continuance of any Event of Default set forth in Sections 7.1a, 7.1d, 7.1e,
7.1f, 7.1g or 7.1h the Bank may, at its option, declare the Revolving Credit
Commitment and the Letter of Credit Commitment terminated, and the Loans, the
Revolving Credit Note, interest accrued thereon and all other Obligations of the
Borrower to the Bank to be due and payable, without the necessity of demand,
presentation, protest, notice of dishonor or notice of default, all of which are
hereby expressly waived by the Borrower. After any such declaration, the Bank
shall have no further obligation to make any additional Loans hereunder.
7.2c Additional Remedies. In addition to the remedies set forth above,
-------------------
upon the occurrence of any Event of Default, the Bank shall have all of the
rights and remedies granted to them under this Agreement and the other Loan
Documents and all other rights and remedies granted by law to creditors.
7.2d Exercise of Remedies; Remedies Cumulative. No delay on the part of
-----------------------------------------
the Bank or failure by the Bank to exercise any power, right or remedy under
this Agreement or any other Loan Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any power, right or remedy or any
abandonment or discontinuance of steps to enforce such right, power or remedy
preclude other or further exercises thereof, or the exercise of any other power,
right or remedy. The rights and remedies in this Agreement and the other Loan
Documents are cumulative and not exclusive of any rights or remedies (including,
without limitation, the right of specific performance) which the Bank would
otherwise have.
-40-
ARTICLE 8. GENERAL PROVISIONS
8.1 Set-Off. If the unpaid principal amount of the Note, interest accrued
-------
on the unpaid principal amount of the Note or other amount owing by the Borrower
under this Agreement, the Note or the other Loan Documents shall have become due
and payable (at maturity, by acceleration or otherwise), the Bank will have the
right, in addition to all other rights and remedies available to it, to set-off
against and to appropriate and apply to such due and payable amounts any debt
owing to, and any other funds held in any manner for the account of, the
Borrower by the Bank including, without limitation, all funds in all deposit
accounts (whether time or demand, general or special, provisionally credited or
finally credit, or otherwise) now or in the future maintained by the Borrower
with the Bank (but excluding in any event accounts held by the Bank in a
fiduciary capacity or as trustee, such as Borrower's 401(i) Plan account). The
Borrower consents to and confirms the foregoing arrangements and confirms the
Bank's right of banker's lien and set-off. Nothing in this Agreement will be
deemed a waiver or prohibition of or restriction on the Bank's rights of
banker's lien or set-off.
8.2 Amendments and Waivers. The Bank and the Borrower may from time to
----------------------
time enter into amendments, extensions, supplements and replacements to and of
this Agreement and the other Loan Documents to which they are parties, and the
Bank may from time to time waive compliance with a provision of any of the Loan
Documents. No amendment, extension, supplement, replacement or waiver shall be
effective unless it is in writing and is signed by the Bank and the Borrower.
Each waiver shall be effective only for the specific instance and for the
specific purpose for which it is given.
8.3 Taxes. The Borrower shall pay any and all stamp, document, transfer
-----
and recording taxes, filing fees and similar impositions payable or hereafter
reasonably determined by the Bank to be payable in connection with this
Agreement, the other Loan Documents and any other documents, instruments and
transactions pursuant to or in connection with any of the Loan Documents other
than for any tax which is measured on the Bank's net income. The Borrower
agrees to save the Bank harmless from and against any and all present and future
claims or liabilities with respect to, or resulting from, any delay in paying or
failure to pay any such taxes or similar impositions (other than taxes or
similar impositions remitted by the Borrower to the Bank and which the Bank
fails to pay in a timely or appropriate manner). The obligations of the
Borrower pursuant to this Section 8.3 shall survive the termination of this
Agreement and the repayment of the Obligations.
8.4 Expenses. The Borrower shall pay:
--------
(i) All (A) out-of-pocket costs and expenses incurred by the Bank in
connection with the preparation, execution and delivery of this Agreement, the
other Loan Documents, and any and all other documents and instruments prepared
in connection herewith, including the Bank's legal fees and expenses in
connection therewith, and (B) reasonable costs and expenses of the Bank
(including but not limited to reasonable fees and expenses of the Bank's
counsel) in connection with all amendments, waivers, consents and
-41-
other documents and instruments prepared or entered into from time to time in
connection with this Agreement and the other Loan Documents, after the Closing
Date; and
(ii) All reasonable costs and expenses of the Bank (including without
limitation the reasonable fees and disbursements of the Bank's counsel) in
connection with (A) the enforcement of this Agreement and the other Loan
Documents arising pursuant to a breach by Borrower of any of the terms,
conditions, representations, warranties or covenants of any Loan Document to
which it is a party including without limitation workouts and renegotiations; or
(B) defending or prosecuting any actions, suits or proceedings relating to any
of the Loan Documents.
All of such costs and expenses shall be payable by the Borrower to the Bank,
upon demand or as otherwise agreed upon by the Bank and the Borrower, and shall
constitute Obligations under this Agreement. The Borrower's obligations to pay
such costs and expenses shall survive the termination of this Agreement and the
repayment of the Obligations.
8.5 Notices.
-------
8.5a Notice to the Borrower. All notices required to be delivered to the
----------------------
Borrower pursuant to this Agreement shall be in writing and shall be sent to the
following address, by hand delivery, recognized national overnight courier
service, telex, telegram, facsimile transmission or other means of electronic
data communication:
Respironics, Inc.
1001 Murry Ridge Drive
Murrysville, Pennsylvania 15668
Attention: James C. Woll
Facsimile: (412) 733-0299
8.5b Notice to Bank. All notices required to be deliver to the Bank
--------------
pursuant to the Agreement shall be in writing and shall be sent to the following
address by hand delivery, recognized national overnight courier service, telex,
telegram, facsimile transmission or other means of electronic data
communication:
PNC Bank, National Association
Regional Corporate Banking
Two PNC Plaza, 31st floor
620 Liberty Avenue
Pittsburgh, Pennsylvania 15222
Attention: Enrico Della Corna
Facsimile: (412) 762-7353
8.5c Other Notice Provisions. All such notices shall be effective three
-----------------------
days after mailing, the date of telecopy transmission or when received,
whichever is earlier. The
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parties hereto may each change the address for service of notice upon it by a
notice in writing to the other party hereto.
8.6 Participations.
--------------
8.6a Sale of Participations. With the Borrower's consent, which consent
----------------------
will not be unreasonably withheld, the Bank may, in the ordinary course of its
commercial banking business and in accordance with applicable law, at any time
sell to one or more Participants (which Participants may be Affiliates of the
Bank) Participations in the Revolving Credit Commitment, the Revolving Credit
Loans, the Revolving Credit Note, and the other interests of the Bank hereunder.
In the event of any such sale of a Participation, the Bank's obligations under
this Agreement to the Borrower shall remain unchanged, the Bank shall remain
solely responsible for its performance under this Agreement, the Bank shall
remain the holder of the Revolving Credit Note made payable to it for all
purposes under this Agreement, the Borrower shall continue to deal solely and
directly with the Bank in connection with such Bank's rights and obligations
under this Agreement and the other Loan Documents. The foregoing provisions of
this Section 8.6a notwithstanding, the consent of the Borrower to the sale of
Participations shall not be required if an Event of Default has occurred and is
continuing.
8.6b Right of Setoff. The Borrower agrees that if amounts outstanding
---------------
under this Agreement and the Revolving Credit Note are due and unpaid, or shall
have been declared or shall have become due and payable upon the occurrence of
an Event of Default, each Participant shall be deemed to have, to the extent
permitted by applicable law, the right of setoff in respect of its Participation
in amounts owing under this Agreement and the Revolving Credit Note to the same
extent as if the amount of its Participation were owing directly to it as a
lender under this Agreement or the Revolving Credit Note; provided, that such
right shall not arise unless and until the Borrower is made aware of the
identity of the Participant and such right shall not apply to any accounts held
by such Participant in a fiduciary capacity or as trustee.
8.6c Withholding of Income Taxes. At least five (5) Business Days prior to
---------------------------
the first date on which interest or fees are payable hereunder for the account
of any Participant each Participant that is not incorporated under the laws of
the United States or a state thereof shall deliver to the Borrower and the Bank
two (2) duly completed copies of United States Internal Revenue Service Form W-
9, 4224 or 1001 or other applicable form prescribed by the Internal Revenue
Service. Such form shall certify that such Participant is entitled to receive
payments under this Agreement and the Note without deduction or withholding of
any United States Federal income taxes, or is subject to such tax at a reduced
rate under an applicable tax treaty or under United States Internal Revenue
Service Form W-8, or another applicable form or a certificate of such
Participant indicating that no such exemption or reduced rate is allowable with
respect to such payments. Each Participant which delivers a Form W-8, W-9, 4224
or 1001 further undertakes to deliver to the Borrower and the Bank two
additional copies of such form (or a successor form) on or before the date that
such form expires or becomes obsolete or after the occurrence of any event
requiring a change in the
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most recent form so delivered by it, and such amendments thereto or extensions
or renewals thereof as may be reasonably required by the Borrower or the Bank,
either certifying that such Participant is entitled to receive payments under
this Agreement and the Revolving Credit Note without deduction or withholding of
any United States Federal income taxes or is subject to such tax at a reduced
rate under an applicable tax treaty or stating that no such exemption or reduced
rate is allowable. The Bank shall be entitled to withhold United States Federal
income taxes at the full withholding rate, unless the Participant establishes an
exemption, or at the applicable reduced rate, as established pursuant to the
provisions of this Section 8.6.
8.7 Indemnity. The Borrower hereby agrees to indemnify the Bank and each
---------
of its directors, officers, employees, attorneys, agents and Affiliates against,
and hold each of them harmless from, any loss, liabilities, damages, claims,
costs and expenses (including reasonable attorneys' fees and disbursements)
suffered or incurred by any of them arising out of, resulting from or in any
manner connected with, the execution, delivery and performance of each of the
Loan Documents, the Loans, the Revolving Credit Note and any and all
transactions related to or consummated in connection with the Loans, including,
without limitation, losses, liabilities, damages, claims, costs and expenses
suffered or incurred by the Bank or any of its directors, officers, employees,
attorneys, agents or Affiliates arising out of or related to investigating,
preparing for, defending against, or providing evidence, producing documents or
taking any other action in respect of any commenced or threatened litigation,
administrative proceeding or investigation under any Federal securities law or
any other Governmental Rule of any jurisdiction, or at common law or otherwise,
that is alleged to arise out of or is based on (i) any untrue statement or
alleged untrue statement of any material fact of the Borrower or any Affiliate
of the Borrower in any document or schedule filed with the Securities and
Exchange Commission or any other Governmental Authority; (ii) any omission or
alleged omission to state any material fact required to be stated in such
document or schedule, or necessary to make the statements made therein, in light
of the circumstances under which made, not misleading; (iii) any actual or
alleged acts, practices or omissions of the Borrower or its directors, officers,
partners, employees, attorneys, agents or Affiliates related to the making of
any acquisition, purchase of shares or assets pursuant thereto, financing of
such purchases or the consummation of any other transactions contemplated by any
such acquisitions that are alleged to be in violation of any Federal securities
law or of any other statute, regulation or other law of any jurisdiction
applicable to the making of any such acquisition, the purchase of shares or
assets pursuant thereto, the financing of such purchases or the consummation of
the other transactions contemplated by any such acquisition; or (iv) any
withdrawals, termination or cancellation of any such proposed acquisition for
any reason whatsoever. Excluding, however, any claim arising directly due to
the gross negligence or willful misconduct of the indemnified party. The
indemnity set forth in this Section 8.7 shall be in addition to any other
obligations or liabilities of the Borrower to the Bank, or at common law or
otherwise. The provisions of this Section 8.7 shall survive the payment of the
Obligations and the termination of this Agreement.
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8.8 Successors and Assigns. This Agreement shall be binding upon the
----------------------
Borrower, the Bank and their respective successors and assigns, and shall inure
to the benefit of the Borrower, the Bank and their respective successors and
assigns; provided, however, that the Borrower shall not assign its rights or
-------- -------
duties hereunder or under any of the other Loan Documents without the prior
written consent of all of the Bank.
8.9 Confidentiality. The Bank shall keep confidential and not disclose to
---------------
any Person, other than to its directors, officers, employees, Affiliates and
agents, and to actual and potential Participants, all non-public information
concerning the Borrower and its Affiliates which comes into the Bank's
possession during the term hereof. Notwithstanding the foregoing, the Bank may
disclose information concerning the Borrower (i) in accordance with normal
banking practices and the Bank's policies concerning disclosure of such
information, (ii) pursuant to what the Bank believes to be the lawful
requirements or request of any Governmental Authority regulating banks or
banking, (iii) as required by Governmental Rule, judicial process or subpoena
and (iv) to their respective attorneys, accountants and auditors.
8.10 Severability. Any provision of this Agreement which is prohibited or
------------
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or enforceability without invalidating the
remaining portions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
8.11 Survival. All representations, warranties, covenants and agreements
--------
of the Borrower contained herein or in the other Loan Documents or made in
writing in connection herewith shall survive the issuance of the Revolving
Credit Note and shall continue in full force and effect so long as the Borrower
may borrow hereunder and so long thereafter until payment in full of the Loans,
the Revolving Credit Note and the Obligations is made.
8.12 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE
-------------
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF
PENNSYLVANIA, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICT OF
LAWS, EXCEPTING APPLICABLE FEDERAL LAW AND EXCEPT ONLY TO THE EXTENT PRECLUDED
BY THE MANDATORY APPLICATION OF THE LAW OF ANOTHER JURISDICTION.
8.13 FORUM. THE PARTIES HERETO AGREE THAT ANY ACTION OR PROCEEDING ARISING
-----
OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS TO WHICH THE
BORROWER IS A PARTY MAY BE COMMENCED IN THE COURT OF COMMON PLEAS OF ALLEGHENY
COUNTY, PENNSYLVANIA OR IN THE DISTRICT COURT OF THE UNITED STATES FOR THE
WESTERN DISTRICT OF PENNSYLVANIA, AND THE PARTIES HERETO AGREE THAT A SUMMONS
AND COMPLAINT COMMENCING AN ACTION OR PROCEEDING IN EITHER OF SUCH COURTS SHALL
BE PROPERLY SERVED AND SHALL CONFER PERSONAL JURISDICTION IF SERVED PERSONALLY
OR
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BY CERTIFIED MAIL TO THE PARTIES AT THEIR ADDRESSES SET FORTH IN SECTION 8.5, OR
AS OTHERWISE PROVIDED UNDER THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA.
FURTHER, THE BORROWER HEREBY SPECIFICALLY CONSENTS TO THE PERSONAL JURISDICTION
OF THE COURT OF COMMON PLEAS OF ALLEGHENY COUNTY, PENNSYLVANIA AND THE DISTRICT
COURT OF THE UNITED STATES FOR THE WESTERN DISTRICT OF PENNSYLVANIA AND WAIVES
AND HEREBY ACKNOWLEDGES THAT IT IS ESTOPPED FROM RAISING ANY OBJECTION BASED ON
FORUM NON CONVENIENS, ANY CLAIM THAT EITHER SUCH COURT LACKS PROPER VENUE OR ANY
- --------------------
OBJECTION THAT EITHER SUCH COURT LACKS PERSONAL JURISDICTION OVER THE BORROWER
SO AS TO PROHIBIT EITHER SUCH COURT FROM ADJUDICATING ANY ISSUES RAISED IN A
COMPLAINT FILED WITH EITHER SUCH COURT AGAINST THE BORROWER BY THE BANK
CONCERNING THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR PAYMENT TO THE BANK.
THE BORROWER HEREBY ACKNOWLEDGES AND AGREES THAT THE CHOICE OF FORUM CONTAINED
IN THIS SECTION 8.13 SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY
JUDGMENT OBTAINED IN ANY FORUM OR THE TAKING OF ANY ACTION UNDER THE LOAN
DOCUMENTS TO ENFORCE THE SAME IN ANY APPROPRIATE JURISDICTION.
8.14 Non-Business Days. Whenever any payment under any of the Loan
-----------------
Documents is due and payable on a day which is not a Business Day, except as
otherwise provided in this Agreement such payment may be made on the next
succeeding Business Day, and such extension of time shall in each such case be
included in computing interest in connection with such payment. The foregoing
notwithstanding, all interest payments received by the Bank shall be applied to
the monthly, quarterly or other interest periods to which they relate,
regardless of when received by the Bank.
8.15 Integration. This Agreement is the entire agreement among the parties
-----------
relating to this financing transaction and it supersedes all prior
understandings and agreements, whether written or oral, between the parties
hereto relating to the transactions provided for herein.
8.16 Headings. Article, Section, Subsection and other headings used in
--------
this Agreement are intended for convenience only and shall not affect the
meaning or construction of this Agreement.
8.17 Counterparts. This Agreement and any amendment hereto may be executed
------------
in several counterparts and by each party on a separate counterpart, each of
which, when so
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executed and delivered, shall be an original, but all of which together shall
constitute but one and the same instrument. In proving this Agreement, it shall
not be necessary to produce or account for more than one such counterpart signed
by the other party against whom enforcement is sought.
8.18 WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE BANK IRREVOCABLY
--------------------
WAIVE ANY AND ALL RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR CLAIM OF ANY NATURE RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS, OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS. THE
BORROWER AND THE BANK ACKNOWLEDGE THAT THE FOREGOING WAIVER IS KNOWING AND
VOLUNTARY.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Credit Agreement to be executed by their respective
duly authorized officers as of the date first written above.
RESPIRONICS, INC.
By /s/ James C. Woll (SEAL)
----------------------------
Name: James C. Woll
Title: Treasurer
PNC BANK, NATIONAL ASSOCIATION
By /s/ Enrico A. Della Corna
---------------------------------
Name: Enrico A. Della Corna
Title: Vice President
BF 51688.12
000011 - 013161