EXECUTION COPY
EXHIBIT 10.81
_______________________________________________________________________________
_______________________________________________________________________________
CREDIT AGREEMENT
AMONG
ADAC LABORATORIES
AND
THE LENDERS NAMED HEREIN
AND
ABN AMRO BANK N.V.,
AS AGENT FOR THE LENDERS
JULY 31, 1996
_______________________________________________________________________________
_______________________________________________________________________________
CREDIT AGREEMENT
----------------
TABLE OF CONTENTS
-----------------
SECTION I. INTERPRETATION
1.01. Definitions............................................... 1
1.02. GAAP...................................................... 18
1.03. Headings.................................................. 18
1.04. Plural Terms.............................................. 19
1.05. Time...................................................... 19
1.06. Governing Law............................................. 19
1.07. Construction.............................................. 19
1.08. Entire Agreement.......................................... 19
1.09. Calculation of Interest and Fees.......................... 19
1.10. Other Interpretation Provisions........................... 19
SECTION II. CREDIT FACILITY
2.01. Revolving Loan Facility................................... 20
2.02. Commitment Reductions, Etc................................ 23
2.03. Fees...................................................... 24
2.04. Prepayments............................................... 24
2.05. Other Payment Terms....................................... 25
2.06. Notes and Interest Account................................ 26
2.07. Loan Funding.............................................. 27
2.08. Pro Rata Treatment........................................ 28
2.09. Change of Circumstances................................... 29
2.10. Taxes on Payments......................................... 32
2.11. Funding Loss Indemnification.............................. 33
2.12. Security.................................................. 34
SECTION III. CONDITION PRECEDENT
3.01. Initial Conditions Precedent.............................. 35
3.02. Conditions Precedent to Each Credit Event................. 35
3.03. Covenant to Deliver....................................... 36
SECTION IV. REPRESENTATIONS AND WARRANTIES
4.01. Borrower's Representations and Warrants................... 36
4.02. Reaffirmation............................................. 42
SECTION V. COVENANTS
5.01. Affirmative Covenants..................................... 42
5.02. Negative Covenants........................................ 46
5.03. Financial Covenants....................................... 52
SECTION VI. DEFAULT
6.01. Events of Default......................................... 53
6.02. Remedies.................................................. 56
SECTION VII. THE AGENT AND RELATIONS AMONG LENDERS
7.01. Appointment, Powers nd Immunities......................... 56
7.02. Reliance by Agent......................................... 57
7.03. Defaults.................................................. 57
7.04. Indemnification........................................... 57
7.05. Non-Reliance.............................................. 58
i
7.06. Resignation or Removal of Agent........................... 59
7.07. Authorization............................................. 59
7.08. Agent in its Individual Capacity.......................... 59
SECTION VII. MISCELLANEOUS
8.01. Notices................................................... 59
8.02. Expenses.................................................. 60
8.03. Indemnification........................................... 61
8.04. Waivers; Amendments....................................... 61
8.05. Successors and Assigns.................................... 62
8.06. Setoff; Security Interest ................................ 65
8.07. No Third Party Rights..................................... 66
8.08. Partial Invalidity........................................ 66
8.09. Jury Trial................................................ 66
8.10. Counterparts.............................................. 66
8.11. Confidentiality........................................... 66
8.12. Termination of Prior Credit Agreements.................... 67
SCHEDULES
I. Lenders
1.01 Pricing Grid
3.01 Initial Conditions Precedent
4.01(q) Subsidiaries
5.02(a) Permitted Indebtness
5.02(B) Permitted Liens
EXHIBITS
A Notice of Borrowing (2.01(b))
B Notice of Conversion (2.01(d))
C Notice of Interest Period Selection (2.01(e))
D Note (2.06(a))
E Security Agreement (2.12(a))
F Intellectual Property Security Agreement (2.12(a))
G Pledge Agreement (2.12(a))
H Guaranty (2.12(a))
I Insurance Endorsements (5.01(d))
J Assignment Agreement (8.05(c))
ii
CREDIT AGREEMENT
----------------
THIS CREDIT AGREEMENT, dated as of July 31, 1996, is entered into by and
among:
(1) ADAC LABORATORIES, a California corporation ("Borrower");
--------
(2) Each of the financial institutions from time to time listed in
Schedule I hereto, as amended from time to time (such financial
----------
institutions to be referred to herein collectively as the "Lenders"); and
-------
(3) ABN AMRO BANK N.V., a Netherlands public company acting through
its San Francisco International Branch, as agent for the Lenders (in such
capacity, "Agent").
-----
RECITALS
--------
A. Borrower has requested the Lenders to provide certain credit
facilities to Borrower.
B. The Lenders are willing to provide such credit facilities upon the
terms and subject to the conditions set forth herein.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the above Recitals and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
SECTION I. INTERPRETATION
--------------
1.01. Definitions. Unless otherwise indicated in this Agreement or any
-----------
other Credit Document, each term set forth below, when used in this Agreement or
any other Credit Document, shall have the respective meaning given to that term
below or in the provision of this Agreement or other document, instrument or
agreement referenced below.
"ABN" shall mean ABN AMRO Bank N.V., a Netherlands public company.
---
"Affiliate" shall mean, with respect to any Person, (a) each Person
---------
that, directly or indirectly, owns or controls, whether beneficially or as a
trustee, guardian or other fiduciary, five percent (5%) or more of any class of
Equity Securities of such Person, (b) each Person that controls, is controlled
by or is under common control with such Person or any Affiliate of such Person
or (c) each of such Person's officers, directors, joint venturers and partners;
provided, however, that in no case shall Agent or
- -------- -------
any Lender be deemed to be an Affiliate of Borrower or any of its Subsidiaries
for purposes of this Agreement. For the purpose of this definition, "control" of
a Person shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of its management or policies, whether through the
ownership of voting securities, by contract or otherwise.
"Agent" shall have the meaning given to that term in clause (3) of the
-----
introductory paragraph hereof.
"Agent's Fee Letter" shall mean the letter agreement dated as of
------------------
April 25, 1996 between Borrower and Agent.
"Agreement" shall mean this Credit Agreement.
---------
"Applicable Lending Office" shall mean, with respect to any Lender,
-------------------------
(a) initially, its office designated as such in Schedule I (or, in the case of
----------
any Lender which becomes a Lender by an assignment pursuant to Subparagraph
------------
8.05(c), its office designated as such in the applicable Assignment Agreement)
- -------
and (b) subsequently, such other office or offices as such Lender may designate
to Agent as the office at which such Lender's Loans will thereafter be
maintained and for the account of which all payments of principal of, and
interest on, such Lender's Loans will thereafter be made.
"Applicable Margin" shall mean, with respect to any Loan at any time,
-----------------
the per annum margin which is determined pursuant to the Pricing Grid and added
to the Base Rate or LIBO Rate, as the case may be, for such Loan; provided,
--------
however, that each Applicable Margin determined pursuant to the Pricing Grid
- -------
shall be increased by two percent (2.00%) on the date an Event of Default occurs
and shall continue at such increased rate unless and until such Event of Default
is waived in accordance with this Agreement.
"Assignee Lender" shall have the meaning given to that term in
---------------
Subparagraph 8.05(c).
- --------------------
"Assignment" shall have the meaning given to that term in
----------
Subparagraph 8.05(c).
- --------------------
"Assignment Agreement" shall have the meaning given to
--------------------
that term in Subparagraph 8.05(c).
"Assignment Effective Date" shall have, with respect to each
-------------------------
Assignment Agreement, the meaning set forth therein.
"Assignor Lender" shall have the meaning given to that term in
---------------
Subparagraph 8.05(c).
- --------------------
"Base Rate" shall mean, on any day, the greater of (a) the Prime Rate
---------
in effect on such date and (b) the
2
Federal Funds Rate for such day plus one-half percent (0.50%).
----
"Base Rate Loan" shall mean, at any time, a Loan which then bears
--------------
interest as provided in clause (i) of Subparagraph 2.01(c).
----------------------------------
"BNP" shall mean Banque National de Paris, acting through its San
---
Francisco Branch.
"Borrower" shall have the meaning given to that term in clause (1)
-------- ----------
of the introductory paragraph hereof.
- -----------------------------
"Borrower Note Guaranties" shall mean, collectively, all guaranties
------------------------
executed by Borrower in favor ABN, Sanwa, BNP or UBOC in connection with sales
by Borrower to such Person of promissory notes or other instruments of
indebtedness owed to Borrower and all other documents, instruments and
agreements executed by Borrower and delivered to such Person in connection with
such sales.
"Borrowing" shall mean a borrowing by Borrower consisting of the
---------
Loans made by each of the Lenders on the same date and of the same Type pursuant
to a single Notice of Borrowing.
"Business Day" shall mean any day on which (a) commercial banks are
------------
not authorized or required to close in San Francisco, California or New York,
New York and (b) if such Business Day is related to a LIBOR Loan, dealings in
Dollar deposits are carried out in the London interbank market.
"Capital Adequacy Requirement" shall have the meaning given to that
----------------------------
term in Subparagraph 2.09(d).
--------------------
"Capital Leases" shall mean any and all lease obligations that, in
--------------
accordance with GAAP, are required to be capitalized on the books of a lessee.
"Cash Equivalents" shall mean:
----------------
(a) Direct obligations of, or obligations the principal and
interest on which are unconditionally guaranteed by, the United States
of America or obligations of any agency of the United States of America
to the extent such obligations are backed by the full faith and credit
of the United States of America, in each case maturing within one year
from the date of acquisition thereof;
(b) Certificates of deposit maturing within one year from the
date of acquisition thereof issued by a commercial bank or trust company
organized under the laws of the United States of America or a state
thereof
3
or that is a Lender, provided that (A) such deposits are denominated in
Dollars, (B) such bank or trust company has capital, surplus and
undivided profits of not less than $100,000,000 and (C) such bank or
trust company has certificates of deposit or other debt obligations
rated at least A-1 (or its equivalent) by Standard and Poor's Ratings
Group or P-1 (or its equivalent) by Moody's Investors Service, Inc.;
(c) Open market commercial paper maturing within 270 days from
the date of acquisition thereof issued by a corporation organized under
the laws of the United States of America or a state thereof, provided
such commercial paper is rated at least A-1 (or its equivalent) by
Standard and Poor's Ratings Group or P-1 (or its equivalent) by Moody's
Investors Service, Inc.; and
(d) Any repurchase agreement entered into with a commercial bank
or trust company organized under the laws of the United States of
America or a state thereof or that is a Lender, provided that (A) such
bank or trust company has capital, surplus and undivided profits of not
less than $100,000,000, (B) such bank or trust company has certificates
of deposit or other debt obligations rated at least A-1 (or its
equivalent) by Standard and Poor's Ratings Group or P-1 (or its
equivalent) by Moody's Investors Service, Inc., (C) the repurchase
obligations of such bank or trust company under such repurchase
agreement are fully secured by a perfected security interest in a
security or instrument of the type described in clause (i), (ii) or
-------------------
(iii) above and (D) such security or instrument so securing the
-----
repurchase obligations has a fair market value at the time such
repurchase agreement is entered into of not less than 100% of such
repurchase obligations.
"Change of Control" shall mean, with respect to Borrower, the
-----------------
occurrence of any of the following events: (a) any person or group of persons
(within the meaning of Section 13 or 14 of the Securities Exchange Act of 1934,
as amended) shall (i) acquire beneficial ownership (within the meaning of Rule
13d-3 promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended) of forty percent (40%) or more of the
outstanding Equity Securities of Borrower entitled to vote for members of the
board of directors or (ii) acquire all or substantially all of the assets of
Borrower and its Subsidiaries taken as a whole or (b) during any period of
twelve (12) consecutive calendar months, individuals who are directors of
Borrower on the first day of such period ("Initial Directors") and any directors
of Borrower who are specifically approved by two-thirds of the Initial Directors
and previously-approved Directors shall cease to constitute
4
a majority of the Board of Directors of Borrower before the end of such period.
"Change of Law" shall have the meaning given to that term in
-------------
Subparagraph 2.09(b).
- --------------------
"Closing Date" shall mean the date, not later than July 31, 1996,
------------
designated by Borrower for the initial Borrowing hereunder, as set forth in the
Notice of Borrowing for such Borrowing delivered by Borrower to Agent pursuant
to this Agreement.
"Collateral" shall mean all property in which Agent or any Lender has
----------
a Lien to secure the Secured Obligations.
"Collateral Certificate" shall mean the Collateral Certificate dated
----------------------
the date of this Agreement executed by Borrower and delivered to Agent.
"Commitment" shall mean, with respect to any Lender at any time, such
----------
Lender's Proportionate Share at such time of the Total Commitment at such time.
"Commitment Fee Percentage" shall mean, with respect to the Unused
-------------------------
Commitment at any time, the per annum rate which is determined pursuant to the
Pricing Grid and used to calculate the Commitment Fees.
"Commitment Fees" shall have the meaning given to that term in
---------------
Subparagraph 2.03(b).
- --------------------
"Contingent Obligation" shall mean, with respect to any Person, (a)
---------------------
any Guaranty Obligation of that Person; and (b) any direct or indirect
obligation or liability, contingent or otherwise, of that Person (i) in respect
of any Surety Instrument issued for the account of that Person or as to which
that Person is otherwise liable for reimbursement of drawings or payments,
(ii) to purchase any materials, supplies or other property from, or to obtain
the services of, another Person if the relevant contract or other related
document or obligation requires that payment for such materials, supplies or
other property, or for such services, shall be made regardless of whether
delivery of such materials, supplies or other property is ever made or tendered,
or such services are ever performed or tendered, or (iii) in respect to any Rate
Contract that is not entered into in connection with a bona fide hedging
operation that provides offsetting benefits to such Person. The amount of any
Contingent Obligation shall (subject, in the case of Guaranty Obligations, to
the last sentence of the definition of "Guaranty Obligation") be deemed equal to
the maximum reasonably anticipated liability in respect thereof, and shall, with
respect to item (b)(iii) of this definition be marked to market on a current
--------
basis.
5
"Contractual Obligation" of any Person shall mean, any indenture,
----------------------
note, lease, loan agreement, security, deed of trust, mortgage, security
agreement, guaranty, instrument, contract, agreement or other form of
contractual obligation or undertaking to which such Person is a party or by
which such Person or any of its property is bound.
"Credit Documents" shall mean and include this Agreement, the Notes,
----------------
the Security Documents, all Rate Contracts of Borrower with any Lender related
to any Loan and the Agent's Fee Letter; all other documents, instruments and
agreements delivered to Agent or any Lender pursuant to Paragraph 3.01; and all
other documents, instruments and agreements delivered by Borrower or any of its
Subsidiaries to Agent or any Lender in connection with this Agreement on or
after the date of this Agreement.
"Credit Event" shall mean the making of any Loan, the conversion of
------------
any Loan into a LIBOR Loan or the selection of a new Interest Period for any
LIBOR Loan.
"Current Ratio" shall mean, with respect to Borrower and its
-------------
Subsidiaries at any time, the ratio, determined on a consolidated basis in
accordance with GAAP, of (a) the current assets of Borrower and its Subsidiaries
at such time to (b) the sum of (i) the current liabilities of Borrower and its
Subsidiaries at such time and (ii) to the extent not included in such current
liabilities, the Outstanding Revolver Credit at such time.
"Debt/Capital Ratio" shall mean, with respect to Borrower and its
------------------
Subsidiaries at any time, the ratio, determined on a consolidated basis in
accordance with GAAP, of (a) the sum of the Funded Indebtedness of Borrower and
its Subsidiaries at such time to (b) the sum of the Funded Indebtedness and
Tangible Net Worth of Borrower and its Subsidiaries at such time.
"Debt/EBITDA Ratio" shall mean, with respect to Borrower and its
-----------------
Subsidiaries on the last day of any fiscal quarter, the ratio, determined on a
consolidated basis in accordance with GAAP, of (a) the sum of the Funded
Indebtedness of Borrower and its Subsidiaries at such time to (b) the EBITDA of
Borrower and its Subsidiaries for the consecutive four-quarter period which
ended on the last day of such fiscal quarter.
"Default" shall mean any event or circumstance not yet constituting
-------
an Event of Default which with the giving of any notice or the lapse of any
period of time or both, would become an Event of Default.
"Dollars" and "$" shall mean the lawful currency of the United States
------- -
of America and, in relation to any payment
6
under this Agreement, same day or immediately available funds.
"Domestic Subsidiary" shall mean each Subsidiary of Borrower which is
-------------------
"domestic" within the meaning of Section 7701(a)(4) of the IRC.
"EBITDA" shall mean, with respect to Borrower and its Subsidiaries
------
for any period, the sum of the following, determined on a consolidated basis in
accordance with GAAP:
(a) The net income of Borrower and its Subsidiaries for such
period before provision for income taxes;
plus
----
(b) The sum (to the extent deducted in calculating such Adjusted
Net Income) of (i) all Interest Expenses of Borrower and its
Subsidiaries accrued during such period and (ii) all depreciation and
amortization expenses of Borrower and its Subsidiaries accrued during
such period.
"Eligible Assignee" shall mean (a) a commercial bank organized under
-----------------
the laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $100,000,000; (b) a commercial bank organized
under the laws of any other country which is a member of the Organization for
Economic Cooperation and Development (the "OECD"), or a political subdivision of
any such country, and having a combined capital and surplus of at least
$100,000,000, provided that such bank is acting through a branch or agency
located in the United States; or (c) a Person that is primarily engaged in the
business of commercial banking and that is (i) a Subsidiary of a Lender, (ii) a
Subsidiary of a Person of which a Lender is a Subsidiary, or (iii) a Person of
which a Lender is a Subsidiary.
"Employee Benefit Plan" shall mean any employee benefit plan within
---------------------
the meaning of section 3(3) of ERISA maintained or contributed to by Borrower or
any ERISA Affiliate, other than a Multiemployer Plan.
"Environmental Laws" shall mean all Requirements of Law relating to
------------------
the protection of human health and the environment, including, without
limitation, all Requirements of Law, pertaining to reporting, licensing,
permitting, transportation, storage, disposal, investigation, and remediation of
emissions, discharges, releases, or threatened releases of Hazardous Materials,
chemical substances, pollutants, contaminants, or hazardous or toxic substances,
materials or wastes, whether solid, liquid, or gaseous in nature, into the air,
surface water, groundwater,
7
or land, or relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of chemical substances,
pollutants, contaminants, or hazardous or toxic substances, materials, or
wastes, whether solid, liquid, or gaseous in nature.
"Equity Securities" of any Person shall mean (a) all common stock,
-----------------
preferred stock, participations, shares, partnership interests or other equity
interests in and of such Person (regardless of how designated and whether or not
voting or non-voting) and (b) all warrants, options and other rights to acquire
any of the foregoing.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as the same may from time to time be amended or supplemented, including
any rules or regulations issued in connection therewith.
"ERISA Affiliate" shall mean any Person which is treated as a single
---------------
employer with Borrower under Section 414 of the IRC.
"Event of Default" shall have the meaning given to that term in
----------------
Paragraph 6.01.
- --------------
"Federal Funds Rate" shall mean, for any day, the rate per annum set
------------------
forth in the weekly statistical release designated as H.15(519), or any
successor publication, published by the Federal Reserve Board (including any
such successor publication, "H.15 (519)") for such day opposite the caption
"Federal Funds (Effective)". If on any relevant day, such rate is not yet
published in H.15 (519), the rate for such day shall be the rate set forth in
the daily statistical release designated as the Composite 3:30 p.m. Quotations
for U.S. Government Securities, or any successor publication, published by the
Federal Reserve Bank of New York (including any such successor publication, the
"Composite 3:30 p.m. Quotations") for such day under the caption "Federal Funds
Effective Rate". If on any relevant day, such rate is not yet published in
either H.15 (519) or the Composite 3:30 p.m. Quotations, the rate for such day
shall be the arithmetic means, as determined by Agent, of the rates quoted to
Agent for such day by three (3) Federal funds brokers of recognized standing
selected by Agent.
"Federal Reserve Board" shall mean the Board of Governors of the
---------------------
Federal Reserve System.
"Financial Statements" shall mean, with respect to any accounting
--------------------
period for any Person, statements of income, shareholders' equity and cash flows
of such Person for such period, and a balance sheet of such Person as of the end
of such period, setting forth in each case in comparative form figures for the
corresponding period in the preceding fiscal year if such period is less than a
full fiscal year or, if
8
such period is a full fiscal year, corresponding figures from the preceding
annual audit, all prepared in reasonable detail and in accordance with GAAP.
"Foreign Subsidiary" shall mean each Subsidiary of Borrower which is
------------------
"foreign" within the meaning of Section 7701(a)(5) of the IRC.
"Funded Indebtedness" of any Person shall mean, without duplication:
-------------------
(a) All obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments and all other obligations of such
Person for borrowed money (including obligations to repurchase receivables
and other assets sold with recourse);
(b) All obligations of such Person for the deferred purchase
price of property or services (including obligations under letters of
credit and other credit facilities which secure or finance such purchase
price and obligations under "synthetic" leases);
(c) All obligations of such Person under conditional sale or
other title retention agreements with respect to property acquired by such
Person (to the extent of the value of such property if the rights and
remedies of the seller or lender under such agreement in the event of
default are limited solely to repossession or sale of such property);
(d) All obligations of such Person as lessee under or with
respect to Capital Leases;
(e) All non-contingent payment or reimbursement obligations of
such Person under or with respect to Surety Instruments;
(f) All Guaranty Obligations of such Person with respect to the
obligations of other Persons of the types described in clauses (a) - (e)
-----------------
above; and
(g) All obligations of other Persons of the types described in
clauses (a) - (e) above to the extent secured by (or for which any holder
-----------------
of such obligations has an existing right, contingent or otherwise, to be
secured by) any Lien in any property (including accounts and contract
rights) of such Person, even though such Person has not assumed or become
liable for the payment of such obligations.
"GAAP" shall mean generally accepted accounting principles and
----
practices as in effect in the United States of America from time to time,
consistently applied.
9
"Governmental Authority" shall mean any domestic or foreign national,
----------------------
state or local government, any political subdivision thereof, any department,
agency, authority or bureau of any of the foregoing, or any other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including, without limitation, the
Federal Deposit Insurance Corporation, the Federal Reserve Board, the
Comptroller of the Currency, any central bank or any comparable authority.
"Governmental Charges" shall mean, with respect to any Person, all
--------------------
levies, assessments, fees, claims or other charges imposed by any Governmental
Authority upon such Person or any of its property or otherwise payable by such
Person.
"Governmental Rule" shall mean any law, rule, regulation, ordinance,
-----------------
order, code interpretation, judgment, decree, directive, guidelines, policy or
similar form of decision of any Governmental Authority.
"Guaranty" shall have the meaning given to that term in Subparagraph
-------- ------------
2.12(a).
- -------
"Guaranty Obligation" shall mean, with respect to any Person, any
-------------------
direct or indirect liability of that Person with respect to any indebtedness,
lease, dividend, letter of credit or other obligation (the "primary
obligations") of another Person (the "primary obligor"), including any
obligation of that Person, whether or not contingent, (a) to purchase,
repurchase or otherwise acquire such primary obligations or any property
constituting direct or indirect security therefor, or (b) to advance or provide
funds (i) for the payment or discharge of any such primary obligation, or (ii)
to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency or any balance sheet item, level
of income or financial condition of the primary obligor, or (c) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation, or (d) otherwise to assure or hold harmless
the holder of any such primary obligation against loss in respect thereof.
(Without limiting the generality of the foregoing definition, the Guaranty
Obligations of Borrower shall include the obligations of Borrower under the
Borrower Note Guaranties.) The amount of any Guaranty Obligation shall be deemed
equal to the stated or determinable amount of the primary obligation in respect
of which such Guaranty Obligation is made or, if not stated or if
indeterminable, the maximum reasonably anticipated liability in respect thereof.
"Hazardous Materials" shall mean all materials, substances and wastes
-------------------
which are classified or regulated as
10
"hazardous," "toxic" or similar descriptions under any Environmental Law or
which are hazardous, toxic, harmful or dangerous to human health.
"Indebtedness" of any Person shall mean, without duplication:
------------
(a) All obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments and all other obligations of such
Person for borrowed money (including obligations to repurchase receivables
and other assets sold with recourse);
(b) All obligations of such Person for the deferred purchase
price of property or services (including obligations under letters of
credit and other credit facilities which secure or finance such purchase
price and obligations under "synthetic" leases);
(c) All obligations of such Person under conditional sale or
other title retention agreements with respect to property acquired by such
Person (to the extent of the value of such property if the rights and
remedies of the seller or lender under such agreement in the event of
default are limited solely to repossession or sale of such property);
(d) All obligations of such Person as lessee under or with
respect to Capital Leases;
(e) All obligations of such Person, contingent or otherwise,
under or with respect to Surety Instruments;
(f) All obligations of such Person, contingent or otherwise,
under or with respect to Rate Contracts;
(g) All Guaranty Obligations of such Person with respect to the
obligations of other Persons of the types described in clauses (a) - (f)
-----------------
above and all other Contingent Obligations of such Person; and
(h) All obligations of other Persons of the types described in
clauses (a) - (f) above to the extent secured by (or for which any holder
-----------------
of such obligations has an existing right, contingent or otherwise, to be
secured by) any Lien in any property (including accounts and contract
rights) of such Person, even though such Person has not assumed or become
liable for the payment of such obligations.
"IP Security Agreement" shall have the meaning given to that term in
---------------------
Subparagraph 2.12(a).
- --------------------
11
"Interest Account" shall have the meaning given to that term in
Subparagraph 2.06(b).
- --------------------
"Interest Period" shall mean, with respect to any LIBOR Loan, the
---------------
time periods selected by Borrower pursuant to Subparagraph 2.01(b) or
--------------------
Subparagraph 2.01(d) which commences on the first day of such Loan or the
- -------------------
effective date of any conversion and ends on the last day of such time period,
and thereafter, each subsequent time period selected by Borrower pursuant to
Subparagraph 2.01(e) which commences on the last day of the immediately
- --------------------
preceding time period and ends on the last day of that time period.
"Investment" of any Person shall mean any loan or advance of funds by
----------
such Person to any other Person (other than advances to employees of such Person
for moving and travel expenses, drawing accounts and similar expenditures in the
ordinary course of business), any purchase or other acquisition of any Equity
Securities or Indebtedness of any other Person, any capital contribution by such
Person to or any other investment by such Person in any other Person (including
any Guaranty Obligations of such Person and any indebtedness of such Person of
the type described in clause (h) of the definition of "Indebtedness" on behalf
----------
of any other Person); provided, however, that Investments shall not include (a)
-------- -------
accounts receivable or other indebtedness owed by customers of such Person which
are current assets and arose from sales of inventory in the ordinary course of
such Person's business for ordinary terms or (b) prepaid expenses of such Person
incurred and prepaid in the ordinary course of business.
"IRC" shall mean the Internal Revenue Code of 1986, as amended from
---
time to time.
"Lenders" shall have the meaning given to that term in clause (2) of
------- -------------
the introductory paragraph hereof.
- ---------------------------------
"Leverage Ratio" shall mean, with respect to Borrower and its
--------------
Subsidiaries at any time, the ratio, determined on a consolidated basis in
accordance with GAAP, of (a) the sum of the total liabilities and Guaranty
Obligations of Borrower and its Subsidiaries at such time to (b) the Tangible
Net Worth of Borrower and its Subsidiaries at such time.
"LIBO Rate" shall mean, with respect to any Interest Period for the
---------
LIBOR Loans in any Borrowing consisting of LIBOR Loans, a rate per annum equal
to the quotient of (a) the arithmetic mean (rounded upward if necessary to the
nearest 1/16 of one percent) of the rates per annum provided to Agent by each of
the Reference Banks as the rate at which Dollar deposits are offered to such
Reference Bank in the London interbank market on the second Business Day prior
to the first day of such Interest Period at or about 11:00 A.M.
12
(London time) (for delivery on the first day of such Interest Period) in an
amount substantially equal to such Reference Bank's LIBOR Loan in such Borrowing
and for a term comparable to such Interest Period, divided by (b) one minus the
----------
Reserve Requirement for such Loans in effect from time to time. If for any
reason any of the Reference Banks fails to provide Agent with a rate on any day
as provided in clause (a) of the preceding sentence, Agent shall calculate the
----------
LIBO Rate based upon the rate(s) provided by the remaining Reference Bank(s).
The LIBO Rate shall be adjusted automatically as to all LIBOR Loans then
outstanding as of the effective date of any change in the Reserve Requirement.
"LIBOR Loan" shall mean, at any time, a Loan which then bears
interest as provided in clause (ii) of Subparagraph 2.01(c).
-----------------------------------
"Lien" shall mean, with respect to any property, any security
----
interest, mortgage, pledge, lien, charge or other encumbrance in, of, or on such
property or the income therefrom, including, without limitation, the interest of
a vendor or lessor under a conditional sale agreement, Capital Lease or other
title retention agreement, or any agreement to provide any of the foregoing, and
the filing of any financing statement or similar instrument under the Uniform
Commercial Code or comparable law of any jurisdiction.
"Loan" shall have the meaning given to that term in Subparagraph
---- ------------
2.01(a).
- -------
"Margin Stock" shall have the meaning given to that term in
------------
Regulation U issued by the Federal Reserve Board, as amended from time to time,
and any successor regulation thereto.
"Material Adverse Effect" shall mean a material adverse effect on
-----------------------
(a) the business, assets, operations, prospects or financial or other condition
of Borrower and its Subsidiaries; (b) the ability of Borrower to pay or perform
the Obligations in accordance with the terms of this Agreement and the other
Credit Documents; (c) the rights and remedies of Agent or any Lender under this
Agreement, the other Credit Documents or any related document, instrument or
agreement; or (d) the value of the Collateral, Agent's or any Lender's security
interest in the Collateral or the perfection or priority of such security
interests.
"maturity" shall mean, with respect to any Loan, interest, fee or
--------
other amount payable by Borrower under this Agreement or the other Credit
Documents, the date such Loan, interest, fee or other amount becomes due,
whether upon the stated maturity or due date, upon acceleration or otherwise.
"Maturity Date" shall mean July 30, 1999.
-------------
13
"Multiemployer Plan" shall mean any multiemployer plan within the
------------------
meaning of section 3(37) of ERISA maintained or contributed to by Borrower or
any ERISA Affiliate.
"Net Proceeds" shall mean, with respect to any sale or issuance of
------------
any Equity Security by any Person, the aggregate consideration received by such
Person from such sale or issuance less the sum of the actual amount of the
reasonable fees and commissions payable to Persons other than such Person or any
Affiliate of such Person, the reasonable legal expenses and the other reasonable
costs and expenses directly related to such sale or issuance that are to be paid
by such Person.
"Note" shall have the meaning given to that term in Subparagraph
---- ------------
2.06(a).
- -------
"Notice of Borrowing" shall have the meaning given to that term in
-------------------
Subparagraph 2.01(b).
- --------------------
"Notice of Conversion" shall have the meaning given to that term in
--------------------
Subparagraph 2.01(d).
- --------------------
"Notice of Interest Period Selection" shall have the meaning given to
-----------------------------------
that term in Subparagraph 2.01(e).
--------------------
"Obligations" shall mean and include, with respect to Borrower, all
-----------
loans, advances, debts, liabilities, and obligations, howsoever arising, owed by
Borrower to Agent or any Lender of every kind and description (whether or not
evidenced by any note or instrument and whether or not for the payment of
money), direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising pursuant to the terms of this Agreement or any of
the other Credit Documents, including without limitation all interest, fees,
charges, expenses, attorneys' fees and accountants' fees chargeable to Borrower
or payable by Borrower hereunder or thereunder.
"Outstanding Revolver Credit" shall mean, with respect to Borrower
---------------------------
and its Subsidiaries at any time, the sum of (a) the aggregate principal amount
of all Loans outstanding at such time plus (b) the aggregate principal amount of
----
all other loans of Borrower and its Subsidiaries outstanding at such time under
revolving lines of credit.
"Participant" shall have the meaning given to that term in
-----------
Subparagraph 8.05(b).
- --------------------
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
----
successor thereto.
"Permitted Indebtedness" shall have the meaning given to that term in
----------------------
Subparagraph 5.02(a).
- --------------------
14
"Permitted Liens" shall have the meaning given to that term in
---------------
Subparagraph 5.02(b).
- --------------------
"Person" shall mean and include an individual, a partnership, a
------
corporation (including a business trust), a joint stock company, an
unincorporated association, a limited liability company, a joint venture, a
trust or other entity or a Governmental Authority.
"Pledge Agreement" shall have the meaning given to that term in
----------------
Subparagraph 2.12(a).
- --------------------
"Pricing Grid" shall mean Schedule 1.01(a).
------------ ----------------
"Primary Secured Obligations" shall mean, collectively, (a) the
---------------------------
Obligations, (b) the obligations of Borrower to ABN or Sanwa (as long as ABN or
Sanwa, as the case may be, remains a Lender hereunder) under Borrower Note
Guaranties in a principal amount for each such Lender not exceeding $7,000,000,
(c) the obligations of Borrower to BNP or UBOC (as long as BNP or UBOC, as the
case may be, remains a Lender hereunder) under Borrower Note Guaranties in a
principal amount for each such Lender not exceeding $3,000,000, (d) the
obligations of Borrower or any of its Subsidiaries to any Lender under, on
account of or otherwise in connection with Rate Contracts in a net amount
(marked to market) for each Lender not exceeding $3,000,000, and (e) the
obligations of Borrower or any of its Subsidiaries to any Lender under, on
account of or otherwise in connection with Surety Instruments in a stated amount
for each Lender not exceeding $3,000,000.
"Prime Rate" shall mean the per annum rate publicly announced by ABN
----------
from time to time at its Chicago office as its prime commercial lending rate.
The Prime Rate is determined by ABN from time to time as a means of pricing
credit extensions to some customers and is neither directly tied to any external
rate of interest or index nor necessarily the lowest rate of interest charged by
ABN at any given time for any particular class of customers or credit
extensions. Any change in the Base Rate resulting from a change in the Prime
Rate shall become effective on the Business Day on which each change in the
Prime Rate occurs.
"Prior Credit Agreements" shall have the meaning given to that term in
-----------------------
Subparagraph 2.01(g).
- --------------------
"Proportionate Share" shall mean, with respect to each Lender, the
-------------------
percentage set forth under the caption "Proportionate Share" opposite such
Lender's name on Schedule I, or, if changed, such percentage as may be set forth
----------
for such Lender in the Register.
15
"Rate Contracts" shall mean swap agreements (as that term is defined
--------------
in Section 101 of the Federal Bankruptcy Reform Act of 1978, as amended) and any
other agreements or arrangements designed to provide protection against
fluctuations in interest or currency exchange rates.
"Reference Banks" shall mean ABN, Sanwa and BNP.
---------------
"Register" shall have the meaning given to that term in Subparagraph
-------- ------------
8.05(d).
- -------
"Reportable Event" shall have the meaning given to that term in ERISA
----------------
and applicable regulations thereunder.
"Required Lenders" shall mean (a) at any time Loans are outstanding,
----------------
Lenders holding sixty-six and two-thirds percent (66 2/3%) or more of the
aggregate principal amount of such Loans and (b) at any time no Loans are
outstanding, Lenders whose Proportionate Shares equal or exceed sixty-six and
two-thirds percent (66 2/3%).
"Requirement of Law" applicable to any Person shall mean (a) the
------------------
Articles or Certificate of Incorporation and By-laws, Partnership Agreement or
other organizational or governing documents of such Person, (b) any Governmental
Rule applicable to such Person, (c) any license, permit, approval or other
authorization granted by any Governmental Authority to or for the benefit of
such Person or (d) any judgment, decision or determination of any Governmental
Authority or arbitrator, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.
"Reserve Requirement" shall mean, with respect to any day in an
-------------------
Interest Period for a LIBOR Loan, the aggregate of the reserve requirement rates
(expressed as a decimal) in effect on such day for eurocurrency funding
(currently referred to as "Eurocurrency liabilities" in Regulation D of the
Federal Reserve Board) maintained by a member bank of the Federal Reserve
System. As used herein, the term "reserve requirement" shall include, without
limitation, any basic, supplemental or emergency reserve requirements imposed on
Lender by any Governmental Authority.
"Secondary Secured Obligations" shall mean, collectively, to the
-----------------------------
extent such obligations are not Primary Secured Obligations, (a) the obligations
of Borrower under any Borrower Note Guaranties; (b) the obligations of Borrower
or any of its Subsidiaries to any Lender under, on account of or otherwise in
connection with Rate Contracts; and (c) the obligations of Borrower or any of
its Subsidiaries to any Lender under, on account of or otherwise in connection
with Surety Instruments.
16
"Sanwa" shall mean Sanwa Bank California, a California banking
-----
corporation.
"Secured Obligations" shall mean, collectively, the Primary Secured
-------------------
Obligations and the Secondary Secured Obligations.
"Security Agreement" shall have the meaning given to that term in
------------------
Subparagraph 2.12(a).
- --------------------
"Security Documents" shall mean and include the Security Agreement,
------------------
the Pledge Agreement, the IP Security Agreement, the Guaranty and all other
instruments, agreements, certificates, opinions and documents (including Uniform
Commercial Code financing statements and fixture filings and landlord waivers)
delivered to Agent or any Lender in connection with any Collateral or to secure
the Secured Obligations.
"Subsidiary" of any Person shall mean (a) any corporation of which
----------
more than 50% of the issued and outstanding Equity Securities having ordinary
voting power to elect a majority of the Board of Directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned or controlled by such
Person, by such Person and one or more of its other Subsidiaries or by one or
more of such Person's other Subsidiaries, (b) any partnership, joint venture, or
other association of which more than 50% of the equity interest having the power
to vote, direct or control the management of such partnership, joint venture or
other association is at the time owned and controlled by such Person, by such
Person and one or more of the other Subsidiaries or by one or more of such
Person's other Subsidiaries or (c) any other Person included in the Financial
Statements of such Person on a consolidated basis.
"Surety Instruments" shall mean all letters of credit (including
------------------
standby and commercial), banker's acceptances, bank guaranties, shipside bonds,
surety bonds and similar instruments.
"Tangible Net Worth" shall mean, with respect to Borrower and its
------------------
Subsidiaries at any time, the remainder at such time, determined on a
consolidated basis in accordance with GAAP, of (a) the total assets of Borrower
and its Subsidiaries minus (b) the sum (without limitation and without
-----
duplication of deductions) of (i) the total liabilities of Borrower and its
Subsidiaries, (ii) all reserves established by Borrower and its Subsidiaries for
anticipated losses and expenses (to the extent not deducted in calculating total
assets in clause (a) above), (iii) all intangible assets of Borrower and its
----------
Subsidiaries (to the
17
extent included in calculating total assets in clause (a) above), including,
----------
without limitation, goodwill (including any amounts, however designated on the
balance sheet, representing the cost of acquisition of businesses and
investments in excess of underlying tangible assets), trademarks, trademark
rights, trade name rights, copyrights, patents, patent rights, licenses,
unamortized debt discount, marketing expenses, organizational expenses, non-
compete agreements and deferred research and development and (iv) all loans owed
to Borrower and its Subsidiaries by officers, directors and employees of
Borrower and its Subsidiaries.
"Taxes" shall have the meaning given to such term in Subparagraph
----- ------------
2.10(a).
- -------
"Total Commitment" shall mean, at any time, Sixty Million Dollars
----------------
($60,000,000) or, if such amount is reduced pursuant to Subparagraph 2.02(a),
--------------------
the amount to which so reduced and in effect at such time.
"Type" shall mean, with respect to any Loan or Borrowing at any time,
----
the classification of such Loan or Borrowing by the type of interest rate it
then bears, whether an interest rate based upon the Base Rate or the LIBO Rate.
"UBOC" shall mean Union Bank of California, a California banking
----
corporation.
"Unused Commitment" shall mean, at any time, the remainder of (a)
-----------------
the Total Commitment at such time minus (b) the aggregate principal amount of
all Loans outstanding at such time.
1.02. GAAP. Unless otherwise indicated in this Agreement or any other
----
Credit Document, all accounting terms used in this Agreement or any other Credit
Document shall be construed, and all accounting and financial computations
hereunder or thereunder shall be computed, in accordance with GAAP. If GAAP
changes during the term of this Agreement such that any covenants contained
herein would then be calculated in a different manner or with different
components, Borrower, the Lenders and Agent agree to negotiate in good faith to
amend this Agreement in such respects as are necessary to conform those
covenants as criteria for evaluating Borrower's financial condition to
substantially the same criteria as were effective prior to such change in GAAP;
provided, however, that, until Borrower, the Lenders and Agent so amend this
- -------- -------
Agreement, all such covenants shall be calculated in accordance with GAAP as in
effect immediately prior to such change.
1.03. Headings. Headings in this Agreement and each of the other Credit
--------
Documents are for convenience of reference only and are not part of the
substance hereof or thereof.
18
1.04. Plural Terms. All terms defined in this Agreement or any other
------------
Credit Document in the singular form shall have comparable meanings when used in
the plural form and vice versa.
----------
1.05 Time. All references in this Agreement and each of the other Credit
----
Documents to a time of day shall mean San Francisco, California time, unless
otherwise indicated.
1.06. Governing Law. This Agreement and each of the other Credit
-------------
Documents (unless otherwise provided in such other Credit Documents) shall be
governed by and construed in accordance with the laws of the State of California
without reference to conflicts of law rules.
1.07. Construction. This Agreement is the result of negotiations among,
------------
and has been reviewed by, Borrower, each Lender, Agent and their respective
counsel. Accordingly, this Agreement shall be deemed to be the product of all
parties hereto, and no ambiguity shall be construed in favor of or against
Borrower, any Lender or Agent.
1.08. Entire Agreement. This Agreement and each of the other Credit
----------------
Documents, taken together, constitute and contain the entire agreement of
Borrower, the Lenders and Agent and supersede any and all prior agreements,
negotiations, correspondence, understandings and communications among the
parties, whether written or oral, respecting the subject matter hereof
(including the commitment letter dated as of April 25, 1995 between Borrower and
ABN.
1.09. Calculation of Interest and Fees. All calculations of interest and
--------------------------------
fees under this Agreement and the other Credit Documents for any period
(a) shall include the first day of such period and exclude the last day of such
period and (b) shall be calculated on the basis of a year of 360 days for actual
days elapsed, except that during any period any Loan bears interest based upon
the Prime Rate, such interest shall be calculated on the basis of a year of 365
or 366 days, as appropriate, for actual days elapsed.
1.10. Other Interpretive Provisions. References in this Agreement to
-----------------------------
"Recitals," "Sections," "Paragraphs," "Subparagraphs," "Exhibits" and
"Schedules" are to recitals, sections, paragraphs, subparagraphs, exhibits and
schedules herein and hereto unless otherwise indicated. References in this
Agreement and each of the other Credit Documents to any document, instrument or
agreement (a) shall include all exhibits, schedules and other attachments
thereto, (b) shall include all documents, instruments or agreements issued or
executed in replacement thereof, and (c) shall mean such document, instrument or
agreement, or replacement or predecessor thereto, as amended, modified and
supplemented from time to time and in effect at any given time. References in
this Agreement and each of the other Credit Documents to any statute or other
law (i) shall include any successor statute or law, (ii) shall include all rules
and
19
regulations promulgated under such statute or law (or any successor statute or
law), and (iii) shall mean such statute or law (or successor statute or law) and
such rules and regulations, as amended, modified, codified or reenacted from
time to time and in effect at any given time. The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement or any other
Credit Document shall refer to this Agreement or such other Credit Document, as
the case may be, as a whole and not to any particular provision of this
Agreement or such other Credit Document, as the case may be. The words "include"
and "including" and words of similar import when used in this Agreement or any
other Credit Document shall not be construed to be limiting or exclusive. In the
event of any inconsistency between the terms of this Agreement and the terms of
any other Credit Document, the terms of this Agreement shall govern.
SECTION II. CREDIT FACILITY.
---------------
2.01. Revolving Loan Facility.
-----------------------
(a) Loan Availability. Subject to the terms and conditions of this
-----------------
Agreement, each Lender severally agrees to advance to Borrower from time to
time during the period beginning on the Closing Date and ending on the
Maturity Date such loans as Borrower may request under this Paragraph 2.01
--------------
(individually, a "Loan"); provided, however, that (i) the aggregate
---- -------- -------
principal amount of all Loans made by such Lender at any time outstanding
shall not exceed such Lender's Commitment at such time and (ii) the
aggregate principal amount of all Loans made by all Lenders at any time
outstanding shall not exceed the Total Commitment at such time. All Loans
shall be made on a pro rata basis by the Lenders in accordance with their
respective Proportionate Shares, with each Borrowing to be comprised of a
Loan by each Lender equal to such Lender's Proportionate Share of such
Borrowing. Except as otherwise provided herein, Borrower may borrow, repay
and reborrow Loans until the Maturity Date.
(b) Notice of Borrowing. Borrower shall request each Borrowing by
-------------------
delivering to Agent an irrevocable written notice in the form of Exhibit A,
---------
appropriately completed (a "Notice of Borrowing"), which specifies, among
-------------------
other things:
(i) The principal amount of the requested Borrowing, which
shall be in the amount of (A) $100,000 or an integral multiple of
$50,000 in excess thereof in the case of a Borrowing consisting of
Base Rate Loans; or (B) $400,000 or an integral multiple of $100,000
in excess thereof in the case of a Borrowing consisting of LIBOR
Loans;
20
(ii) Whether the requested Borrowing is to consist of Base
Rate Loans or LIBOR Loans;
(iii) If the requested Borrowing is to consist of LIBOR Loans,
the initial Interest Period selected by Borrower for such Loans in
accordance with Subparagraph 2.01(e); and
--------------------
(iv) The date of the requested Borrowing, which shall be a
Business Day;
Provided, however, that all Borrowings made during the period commencing on
-------- -------
the date of this Agreement and ending three (3) Business Days thereafter
shall consist solely of Base Rate Loans. Borrower shall give each Notice of
Borrowing to Agent at least three (3) Business Days before the date of the
requested Borrowing in the case of a Borrowing consisting of LIBOR Loans
with Interest Periods of one month or longer and on or before the date of
the requested Borrowing in the case of any other Borrowing. Each Notice of
Borrowing shall be delivered by first-class mail or facsimile to Agent at
the office or facsimile number and during the hours specified in Paragraph
---------
8.01; provided, however, that Borrower shall promptly deliver to Agent the
---- -------- -------
original of any Notice of Borrowing initially delivered by facsimile. Agent
shall promptly notify each Lender of the contents of each Notice of
Borrowing and of the amount and Type of (and, if applicable, the Interest
Period for) each Loan to be made by such Lender as part of the requested
Borrowing.
(c) Loan Interest Rates. Borrower shall pay interest on the unpaid
-------------------
principal amount of each Loan from the date of such Loan until the maturity
thereof, at one of the following rates per annum:
(i) During such periods as such Loan is a Base Rate Loan, at
a rate per annum equal to the Base Rate plus the Applicable Margin
----
therefor, such rate to change from time to time as the Applicable
Margin or Base Rate shall change; and
(ii) During such periods as such Loan is a LIBOR Loan, at a
rate per annum equal at all times during each Interest Period for
such LIBOR Loan to the LIBO Rate for such Interest Period plus the
----
Applicable Margin therefor, such rate to change from time to time
during such Interest Period as the Applicable Margin shall change.
All Loans in each Borrowing shall, at any given time prior to maturity,
bear interest at one, and only one, of the above rates. The number of
Borrowings consisting of LIBOR Loans shall not exceed seven (7) at any
time.
21
(d) Conversion of Loans. Borrower may convert any Borrowing from
-------------------
one Type of Borrowing to the other Type; provided, however, that any
-------- -------
conversion of a Borrowing consisting of LIBOR Loans into a Borrowing
consisting of Base Rate Loans shall be made on, and only on, the last day
of an Interest Period for such LIBOR Loans. Borrower shall request such a
conversion by an irrevocable written notice to Agent in the form of Exhibit
B, appropriately completed (a "Notice of Conversion"), which specifies,
--------------------
among other things:
(i) The Borrowing which is to be converted;
(ii) The Type of Borrowing into which such Borrowing is to be
converted;
(iii) If such Borrowing is to be converted into a Borrowing
consisting of LIBOR Loans, the initial Interest Period selected by
Borrower for such Loans in accordance with Subparagraph 2.01(e); and
--------------------
(iv) The date of the requested conversion, which shall be a
Business Day.
Borrower shall give each Notice of Conversion to Agent at least three (3)
Business Days before the date of the requested conversion in the case of a
conversion into a Borrowing consisting of LIBOR Loans with Interest Periods
of one month or more and on or before the date of the requested conversion
in the case of a conversion into any other Borrowing. Each Notice of
Conversion shall be delivered by first-class mail or facsimile to Agent at
the office or to the facsimile number and during the hours specified in
Paragraph 8.01; provided, however, that Borrower shall promptly deliver to
-------------- -------- -------
Agent the original of any Notice of Conversion initially delivered by
facsimile. Agent shall promptly notify each Lender of the contents of each
Notice of Conversion.
(e) LIBOR Loan Interest Periods.
---------------------------
(i) The initial and each subsequent Interest Period selected
by Borrower for a LIBOR Loan shall be one (1) week, two (2) weeks,
one (1) month, two (2) months, three (3) months or six (6) months;
provided, however, that (A) any Interest Period which would otherwise
end on a day which is not a Business Day shall be extended to the
next succeeding Business Day unless such next Business Day falls in
another calendar month, in which case such Interest Period shall end
on the immediately preceding Business Day; (B) any Interest Period
(other than a one-week or two-week Interest Period) which begins on
the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at
22
the end of such Interest Period) shall end on the last Business Day
of a calendar month; and (C) no such Interest Period shall end after
the Maturity Date.
(ii) Borrower shall notify Agent by an irrevocable written
notice in the form of Exhibit C, appropriately completed (a "Notice
--------- ------
of Interest Period Selection"), at least three (3) Business Days
----------------------------
prior to the last day of each Interest Period for LIBOR Loans of the
Interest Period selected by Borrower for the next succeeding Interest
Period for such Loans. Each Notice of Interest Period Selection shall
be given by first-class mail or facsimile to the office or the
facsimile number and during the hours specified in Paragraph 8.01;
--------------
provided, however, that Borrower shall promptly deliver to Agent the
-------- -------
original of any Notice of Interest Period Selection initially
delivered by facsimile. If Borrower fails to notify Agent of the next
Interest Period for LIBOR Loans in accordance with this Subparagraph
------------
2.01(e), such Loans shall automatically convert to Base Rate Loans on
-------
the last day of the current Interest Period therefor.
(f) Scheduled Loan Payments. Borrower shall repay the principal
-----------------------
amount of the Loans on the Maturity Date. Borrower shall pay accrued
interest on the unpaid principal amount of each Loan in arrears (A) in the
case of a Base Rate Loan, on the last day in each March, June, September
and December, (B) in the case of a LIBOR Loan, on the last day of each
Interest Period therefor (and, if any such Interest Period is longer than
three (3) months, every three (3) months); and (C) in the case of all
Loans, upon prepayment (to the extent thereof) and at maturity.
(g) Purpose. Borrower shall use the proceeds of the Loans
-------
(i) first, to repay on the Closing Date all indebtedness outstanding under
(A) the Amended and Restated Credit Agreement dated as of August 15, 1995
between Borrower and ABN and (B) the Credit Agreement dated as of
August 12, 1993 between Borrower and Sanwa (such agreements, as amended
from time to time prior to the date hereof, the "Prior Credit Agreements")
-----------------------
and (ii) thereafter, for Borrower's general corporate needs.
2.02. Commitment Reductions, Etc.
---------------------------
(a) Reduction or Cancellation of Commitments. Borrower may, upon
----------------------------------------
three (3) Business Days written notice to Agent, permanently reduce the Total
Commitment by the amount of one million Dollars ($1,000,000) or an integral
multiple of one million Dollars ($1,000,000) in excess thereof or cancel the
Total Commitment in its entirety; provided, however, that:
-------- -------
23
(i) Borrower may not reduce the Total Commitment prior to the
Maturity Date, if, after giving effect to such reduction, the
aggregate principal amount of all Loans then outstanding would exceed
the Total Commitment; and
(ii) Borrower may not cancel the Total Commitment prior to the
Maturity Date, if, after giving effect to such cancellation, any
Loans would then remain outstanding.
(b) Effect of Commitment Reductions. From the effective date of
-------------------------------
any reduction of the Total Commitment, the Commitment Fees payable pursuant to
Subparagraph 2.03(b) shall be computed on the basis of the Total Commitment as
- --------------------
so reduced. Once reduced or cancelled, the Total Commitment may not be increased
or reinstated without the prior written consent of all Lenders. Any reduction of
the Total Commitment pursuant to Subparagraph 2.02(a) shall be applied ratably
--------------------
to reduce each Lender's Commitment in accordance with clause (i) of Subparagraph
--------------------------
2.08(a).
- -------
2.03. Fees.
----
(a) Agent's Fee. Borrower shall pay to Agent, for its own
-----------
account, agent's fees and other compensation in the amounts and at the times set
forth in the Agent's Fee Letter.
(b) Commitment Fees. Borrower shall pay to Agent, for the ratable
---------------
benefit of the Lenders as provided in clause (iii) of Subparagraph 2.08(a),
------------------------------------
nonrefundable commitment fees (the "Commitment Fees") equal to the Commitment
---------------
Fee Percentage on the daily average Unused Commitment for the period beginning
on the date of this Agreement and ending on the Maturity Date. The Commitment
Fee Percentage shall be determined as provided in the Pricing Grid and may
change for each calendar quarter. Borrower shall pay the Commitment Fees in
arrears on the last day in each March, June, September and December and on the
Maturity Date (or if the Total Commitment is cancelled on a date prior to the
Maturity Date, on such prior date).
2.04. Prepayments.
-----------
(a) Terms of all Prepayments. Upon the prepayment of any Loan
------------------------
(whether such prepayment is an optional prepayment under Subparagraph 2.04(b), a
--------------------
mandatory prepayment required by Subparagraph 2.04(c) or a mandatory prepayment
--------------------
required by any other provision of this Agreement or the other Credit Documents,
including, without limitation, a prepayment upon acceleration), Borrower shall
pay to the Lender which made such Loan (i) all accrued interest to the date of
such prepayment on the amount prepaid and (ii) if such prepayment is the
prepayment of a LIBOR Loan on a day other than the
24
last day of an Interest Period for such LIBOR Loan, all amounts payable to such
Lender pursuant to Paragraph 2.11.
--------------
(b) Optional Prepayments. At its option, Borrower may, upon three
--------------------
(3) Business Days notice to Agent, prepay the Loans in any Borrowing in part, in
an aggregate principal amount of $1,000,000 or more, or in whole; except that
Borrower may prepay the Loans in any Borrowing consisting of Base Rate Loans on
the last Business Day in any fiscal quarter of Borrower upon same day notice to
Agent if Borrower delivers such notice to Agent not later than 1:00 p.m. on the
date of such prepayment.
(c) Mandatory Prepayments. If, at any time, the aggregate
---------------------
principal amount of all Loans then outstanding exceeds the Total Commitment at
such time, Borrower shall immediately prepay Loans in an aggregate principal
amount equal to such excess.
2.05. Other Payment Terms.
-------------------
(a) Place and Manner. Borrower shall make all payments due to each
----------------
Lender or Agent hereunder by payments to Agent at Agent's office located at the
address specified in Paragraph 8.01, with each payment due to a Lender to be for
--------------
the account of such Lender and such Lender's Applicable Lending Office. Borrower
shall make all payments hereunder in lawful money of the United States and in
same day or immediately available funds not later than 12:00 noon on the date
due, except that Borrower may make prepayments of the Loans in a Borrowing
consisting of Base Rate Loans on the last Business Day of a fiscal quarter as
late as 1:00 p.m. Agent shall promptly disburse to each Lender each payment
received by Agent for the account of such Lender.
(b) Date. Whenever any payment due hereunder shall fall due on a
----
day other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall be included in the computation of
interest or fees, as the case may be.
(c) Late Payments. If any amounts required to be paid by Borrower
-------------
under this Agreement or the other Credit Documents (including, without
limitation, principal or interest payable on any Loan, any fees or other
amounts) remain unpaid after such amounts are due, Borrower shall pay interest
on the aggregate, outstanding balance of such amounts from the date due until
those amounts are paid in full at a per annum rate equal to the Base Rate plus
two percent (2.00%), such rate to change from time to time as the Base Rate
shall change.
(d) Application of Payments. All payments hereunder shall be
-----------------------
applied first to unpaid fees, costs and expenses then due and payable under this
Agreement or the other Credit Documents, second to accrued interest then due and
payable under this Agreement or the other
25
Credit Documents, seconds to accrued interest then due and payable under this
Agreement or the other Credit Documents and finally to reduce the principal
amount of outstanding Loans.
(e) Failure to Pay Agent. Unless Agent shall have received notice
--------------------
from Borrower at least one (1) Business Day prior to the date on which any
payment is due to the Lenders hereunder that Borrower will not make such payment
in full, Agent shall be entitled to assume that Borrower has made or will make
such payment in full to Agent on such date and Agent may, in reliance upon such
assumption, cause to be paid to the Lenders on such due date an amount equal to
the amount then due such Lenders. If and to the extent Borrower shall not have
so made such payment in full to Agent, each such Lender shall repay to Agent
forthwith on demand such amount distributed to such Lender together with
interest thereon, for each day from the date such amount is distributed to such
Lender until the date such Lender repays such amount to Agent, at (i) the
Federal Funds Rate for the first three (3) days and (ii) the per annum rate
applicable to Base Rate Loans thereafter. A certificate of Agent submitted to
any Lender with respect to any amounts owing by such Lender under this
Subparagraph 2.05(e) shall be conclusive absent manifest error.
- --------------------
2.06. Notes and Interest Account.
--------------------------
(a) Notes. The obligation of Borrower to repay the Loans made by
-----
each Lender and to pay interest thereon at the rates provided herein shall be
evidenced by a promissory note in the form of Exhibit D (individually, a "Note")
--------- ----
which note shall be (i) payable to the order of such Lender, (ii) in the amount
of such Lender's Commitment, (iii) dated the Closing Date and (iv) otherwise
appropriately completed. Borrower authorizes each Lender to record on the
schedule annexed to such Lender's Note the date and amount of each Loan made by
such Lender and of each payment or prepayment of principal thereon made by
Borrower, and agrees that all such notations shall constitute prima facie
evidence of the matters noted; provided, however, that any failure by a Lender
-------- -------
to make any such notation shall not affect the Obligations. Borrower further
authorizes each Lender to attach to and make a part of such Lender's Note
continuations of the schedule attached thereto as necessary.
(b) Interest Account. Borrower authorizes Agent to record in an
----------------
account or accounts maintained by Agent on its books (the "Interest Account")
----------------
(i) the interest rates applicable to all Loans and the effective dates of all
changes thereto, (ii) the Interest Period for each LIBOR Loan, (iii) the date
and amount of each principal and interest payment on each Loan and (iv) such
other information as Agent may determine is necessary for the computation of
interest payable by Borrower hereunder.
26
2.07. Loan Funding.
-------------
(a) Lender Funding and Disbursement to Borrower. Each Lender
-------------------------------------------
shall, before 12:00 noon on the date of each Borrowing, make available to Agent
at Agent's office specified in Paragraph 8.01, in same day or immediately
--------------
available funds, such Lender's Proportionate Share of such Borrowing. After
Agent's receipt of such funds and upon satisfaction of the applicable conditions
set forth in Section III, Agent shall promptly disburse such funds to Borrower
-----------
in same day or immediately available funds. Unless otherwise directed by
Borrower, Agent shall disburse the proceeds of each Borrowing by disbursement to
the account or accounts specified in the applicable Notice of Borrowing.
(b) Lender Failure to Fund. Unless Agent shall have received
----------------------
notice from a Lender prior to the date of any Borrowing that such Lender will
not make available to Agent such Lender's Proportionate Share of such Borrowing,
Agent shall be entitled to assume that such Lender has made or will make such
portion available to Agent on the date of such Borrowing in accordance with
Subparagraph 2.07(a), and Agent may on such date, in reliance upon such
- --------------------
assumption, disburse or otherwise credit to Borrower a corresponding amount. If
any Lender does not make the amount of its Proportionate Share of any Borrowing
available to Agent on or prior to the date of such Borrowing, such Lender shall
pay to Agent, on demand, interest which shall accrue on such amount from the
date of such Borrowing until such amount is paid to Agent at rates equal to (i)
the daily Federal Funds Rate during the period from the date of such Borrowing
through the third Business Day thereafter and (ii) the rate applicable to Base
Rate Loans thereafter. A certificate of Agent submitted to any Lender with
respect to any amounts owing under this Subparagraph 2.07(b) shall be conclusive
--------------------
absent manifest error. If the amount of any Lender's Proportionate Share of any
Borrowing is not paid to Agent by such Lender within three (3) Business Days
after the date of such Borrowing, Borrower shall repay such amount to Agent, on
demand, together with interest thereon, for each day from the date such amount
was disbursed to Borrower until the date such amount is repaid to Agent, at the
interest rate applicable at the time to the Loans comprising such Borrowing.
(c) Lenders' Obligations Several. The failure of any Lender to
----------------------------
make the Loan to be made by it as part of any Borrowing shall not relieve any
other Lender of its obligation hereunder to make its Loan on the date of such
Borrowing, but no Lender shall be obligated in any way to make any Loan which
another Lender has failed or refused to make or otherwise be in any way
responsible for the failure or refusal of any other Lender to make any Loan
required to be made by such other Lender on the date of any Borrowing.
27
2.08. Pro Rata Treatment.
------------------
(a) Borrowings, Commitment Reductions, Etc. Except as otherwise
--------------------------------------
provided herein:
(i) Each Borrowing and reduction of the Total Commitment
shall be made or shared among the Lenders pro rata according to their
respective Proportionate Shares;
(ii) Each payment of principal of Loans in any Borrowing
shall be shared among the Lenders which made or funded the Loans in
such Borrowing pro rata according to the respective unpaid principal
amounts of such Loans so made or funded by such Lenders;
(iii) Each payment of interest on Loans in any Borrowing
shall be shared among the Lenders which made or funded the Loans in
such Borrowing pro rata according to (A) the respective unpaid
principal amounts of such Loans so made or funded by such Lenders and
(B) the dates on which such Lenders so made or funded such Loans;
(iv) Each payment of Commitment Fees shall be shared among
the Lenders pro rata according to (A) their respective Proportionate
Shares and (B) in the case of each Lender which becomes a Lender
hereunder after the date hereof, the date upon which such Lender so
became a Lender;
(v) Each payment of interest (other than interest on Loans)
shall be shared among the Lenders and Agent owed the amount upon
which such interest accrues pro rata according to (A) the respective
amounts so owed such Lenders and Agent and (B) the dates on which
such amounts became owing to such Lenders and Agent; and
(vi) All other payments under this Agreement and the other
Credit Documents shall be for the benefit of the Person or Persons
specified.
(b) Sharing of Payments, Etc. If any Lender shall obtain any
------------------------
payment (whether voluntary, involuntary, through the exercise of any right of
setoff, or otherwise) on account of Loans owed to it in excess of its ratable
share of payments on account of such Loans obtained by all Lenders entitled to
such payments, such Lender shall forthwith purchase from the other Lenders such
participations in the Loans as shall be necessary to cause such purchasing
Lender to share the excess payment ratably with each of them; provided, however,
-------- -------
that if all or any portion of such excess payment is thereafter recovered from
such purchasing Lender, such purchase shall be rescinded and each other Lender
shall repay to the purchasing Lender the purchase price to the
28
extent of such recovery together with an amount equal to such other Lender's
ratable share (according to the proportion of (i) the amount of such other
Lender's required repayment to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. Borrower agrees
that any Lender so purchasing a participation from another Lender pursuant to
this Subparagraph 2.08(b) may, to the fullest extent permitted by law, exercise
--------------------
all its rights of payment (including the right of setoff) with respect to such
participation as fully as if such Lender were the direct creditor of Borrower in
the amount of such participation.
2.09. Change of Circumstances.
-----------------------
(a) Inability to Determine Rates. If, on or before the first day
----------------------------
of any Interest Period for any LIBOR Loan, (i) any Lender shall advise Agent
that the LIBO Rate for such Interest Period cannot be adequately and reasonably
determined due to the unavailability of funds in or other circumstances
affecting the London interbank market or (ii) any Lender shall advise Agent that
the rate of interest for such Loan does not adequately and fairly reflect the
cost to such Lender of making or maintaining such LIBOR Loan, Agent shall
immediately give notice of such condition to Borrower and the other Lenders.
After the giving of any such notice and until Agent shall otherwise notify
Borrower that the circumstances giving rise to such condition no longer exist,
Borrower's right to request the making of or conversion to, and the Lenders'
obligations to make or convert to LIBOR Loans shall be suspended. Any LIBOR
Loans outstanding at the commencement of any such suspension shall be converted
at the end of the then current Interest Period for such LIBOR Loans into a Base
Rate Loans unless such suspension has then ended.
(b) Illegality. If, after the date of this Agreement, the adoption
----------
of any Governmental Rule, any change in any Governmental Rule or the application
or requirements thereof (whether such change occurs in accordance with the terms
of such Governmental Rule as enacted, as a result of amendment or otherwise),
any change in the interpretation or administration of any Governmental Rule by
any Governmental Authority, or compliance by any Lender with any request or
directive (whether or not having the force of law) of any Governmental Authority
(a "Change of Law") shall make it unlawful or impossible for any Lender to make
-------------
or maintain any LIBOR Loan, such Lender shall immediately notify Agent and
Borrower of such Change of Law. Upon receipt of such notice, (i) Borrower's
right to request the making of or conversion to, and such Lender's obligation to
make or convert to LIBOR Loans shall be terminated, and (ii) Borrower shall, at
the request of such Lender, either (A) pursuant to Subparagraph 2.01(d) convert
--------------------
any such then
29
outstanding LIBOR Loans into Base Rate Loans at the end of the current Interest
Period for such LIBOR Loans or (B) immediately repay or convert any such LIBOR
Loans if such Lender shall notify Borrower that such Lender may not lawfully
continue to fund and maintain such LIBOR Loans. Any conversion or prepayment of
LIBOR Loans made pursuant to the preceding sentence prior to the last day of an
Interest Period for such LIBOR Loans shall be deemed a prepayment thereof for
purposes of Paragraph 2.11. After any Lender notifies Agent and Borrower of such
--------------
a Change of Law and until such Lender notifies Agent and Borrower that it is no
longer unlawful or impossible for such Lender to make or maintain a LIBOR Loan,
all Loans of such Lender shall be Base Rate Loans.
(c) Increased Costs. If, after the date of this Agreement, any
---------------
Change of Law:
(i) Shall subject any Lender to any tax, duty or other
charge with respect to any LIBOR Loan, or shall change the basis of
taxation of payments by Borrower to any Lender on such a LIBOR Loan
or in respect to such a LIBOR Loan under this Agreement (except for
changes in the rate of taxation on the overall net income of any
Lender imposed by its jurisdiction of incorporation or the
jurisdiction in which its principal executive office is located); or
(ii) Shall impose, modify or hold applicable any reserve
(excluding any Reserve Requirement or other reserve to the extent
included in the calculation of the LIBO Rate for any Loans), special
deposit or similar requirement against assets held by, deposits or
other liabilities in or for the account of, advances or loans by, or
any other acquisition of funds by any Lender for any LIBOR Loan; or
(iii) Shall impose on any Lender any other condition related
to any LIBOR Loan or such Lender's Commitment;
And the effect of any of the foregoing is to increase the cost to such Lender of
making, renewing, or maintaining any such LIBOR Loan or its Commitment or to
reduce any amount receivable by such Lender hereunder; then Borrower shall from
time to time, within five (5) days after demand by such Lender, pay to such
Lender additional amounts sufficient to reimburse such Lender for such increased
costs or to compensate such Lender for such reduced amounts. A certificate as to
the amount of such increased costs or reduced amounts, submitted by such Lender
to Borrower shall, in the absence of manifest error, be conclusive and binding
on Borrower for all purposes. The obligations of Borrower under this
Subparagraph 2.09(c) shall survive the payment
- --------------------
30
and performance of the Obligations and the termination of this Agreement.
(d) Capital Requirements. If, after the date of this Agreement,
--------------------
any Lender determines that (i) any Change of Law affects the amount of capital
required or expected to be maintained by such Lender or any Person controlling
such Lender (a "Capital Adequacy Requirement") and (ii) the amount of capital
----------------------------
maintained by such Lender or such Person which is attributable to or based upon
the Loans, the Commitments or this Agreement must be increased as a result of
such Capital Adequacy Requirement (taking into account such Lender's or such
Person's policies with respect to capital adequacy), Borrower shall pay to such
Lender or such Person, within five (5) days after demand of such Lender, such
amounts as such Lender or such Person shall determine are necessary to
compensate such Lender or such Person for the increased costs to such Lender or
such Person of such increased capital. A certificate of any Lender setting forth
in reasonable detail the computation of any such increased costs, delivered by
such Lender to Borrower shall, in the absence of manifest error, be conclusive
and binding on Borrower for all purposes. The obligations of Borrower under this
Subparagraph 2.09(d) shall survive the payment and performance of the
- --------------------
Obligations and the termination of this Agreement.
(e) Mitigation. Any Lender which becomes aware of (i) any Change
----------
of Law which will make it unlawful or impossible for such Lender to make or
maintain any LIBOR Loan or (ii) any Change of Law or other event or condition
which will obligate Borrower to pay any amount pursuant to Subparagraph 2.09(c)
--------------------
or Subparagraph 2.09(d) shall notify Borrower and Agent thereof as promptly as
--------------------
practical. If any Lender has given notice of any such Change of Law or other
event or condition and thereafter becomes aware that such Change of Law or other
event or condition has ceased to exist, such Lender shall notify Borrower and
Agent thereof as promptly as practical. Each Lender affected by any Change of
Law which makes it unlawful or impossible for such Lender to make or maintain
any LIBOR Loan or to which Borrower is obligated to pay any amount pursuant to
Subparagraph 2.09(c) or Subparagraph 2.09(d) shall use reasonable commercial
- -------------------- --------------------
efforts (including changing the jurisdiction of its Applicable Lending Office)
to avoid the effect of such Change of Law or to avoid or materially reduce any
amounts which Borrower is obligated to pay pursuant to Subparagraph 2.09(c) or
--------------------
Subparagraph 2.09(d) if, in the reasonable opinion of such Lender, such efforts
- --------------------
would not be disadvantageous to such Lender or contrary to such Lender's normal
banking practices.
31
2.10. Taxes on Payments.
-----------------
(a) Payments Free of Taxes. All payments made by Borrower under
----------------------
this Agreement and the other Credit Documents shall be made free and clear of,
and without deduction or withholding for or on account of, any present or future
income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions
or withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority (except net income taxes and franchise
taxes in lieu of net income taxes imposed on Agent or any Lender by its
jurisdiction of incorporation or the jurisdiction in which its Applicable
Lending Office is located) (all such non-excluded taxes, levies, imposts,
duties, charges, fees, deductions and withholdings being hereinafter called
"Taxes"). If any Taxes are required to be withheld from any amounts payable to
-----
Agent or any Lender hereunder or under the other Credit Documents, the amounts
so payable to Agent or such Lender shall be increased to the extent necessary to
yield to Agent or such Lender (after payment of all Taxes) interest or any such
other amounts payable hereunder at the rates or in the amounts specified in this
Agreement and the other Credit Documents. Whenever any Taxes are payable by
Borrower, as promptly as possible thereafter, Borrower shall send to Agent for
its own account or for the account of such Lender, as the case may be, a
certified copy of an original official receipt received by Borrower showing
payment thereof. If Borrower fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to Agent the required receipts or other
required documentary evidence, Borrower shall indemnify Agent and the Lenders
for any incremental taxes, interest or penalties that may become payable by
Agent or any Lender as a result of any such failure. The obligations of Borrower
under this Subparagraph 2.10(a) shall survive the payment and performance of the
--------------------
Obligations and the termination of this Agreement.
(b) Withholding Exemption Certificates. On or prior to the date of
----------------------------------
the initial Borrowing or, if such date does not occur within thirty (30) days
after the date of this Agreement, by the end of such 30-day period, each Lender
which is not organized under the laws of the United States of America or a state
thereof shall deliver to Borrower and Agent two duly completed copies of United
States Internal Revenue Service Form 1001 or 4224 (or successor applicable
form), as the case may be, certifying in each case that such Lender is entitled
to receive payments under this Agreement without deduction or withholding of any
United States federal income taxes. Each Lender which delivers to Borrower and
Agent a Form 1001 or 4224 pursuant to the immediately preceding sentence further
undertakes to deliver to Borrower and Agent two further copies of Form 1001 or
4224 (or successor applicable forms), as the case may be, on or before the date
that any such form expires or becomes
32
obsolete or after the occurrence of any event requiring a change in the most
recent form previously delivered by such Lender to Borrower and Agent,
certifying that such Lender is entitled to receive payments under this Agreement
without deduction or withholding of any United States federal income taxes. Each
Lender which is not organized under the laws of the United States of America or
a state thereof further agrees (i) promptly to notify Agent and Borrower of any
change of circumstances (including without limitation any change in any treaty,
law or regulation) which would prevent such Lender from receiving payments
hereunder without any deduction or withholding of United States federal income
tax and (ii) to furnish to Agent and Borrower any other manner of certification
as Agent or Borrower may reasonably request to establish the right of such
Lender to receive payments hereunder without any deduction or withholding of
United States federal income tax.
(c) Mitigation. If Agent or any Lender claims any additional
----------
amounts to be payable to it pursuant to this Paragraph 2.10, such Person shall
--------------
use reasonable commercial efforts to file any certificate or document requested
in writing by Borrower (including without limitation copies of Internal Revenue
Service Form 1001 (or successor forms) reflecting a reduced rate of withholding)
or to change the jurisdiction of its Applicable Lending Office if the making of
such a filing or such change in the jurisdiction of its Applicable Lending
Office would avoid the need for or materially reduce the amount of any such
additional amounts which may thereafter accrue and if, in the reasonable opinion
of such Person, in the case of a change in the jurisdiction of its Applicable
Lending Office, such change would not be disadvantageous to such Person or
contrary to such Person's normal banking practices.
(d) Tax Returns. Nothing contained in this Paragraph 2.10 shall
-----------
require Agent or any Lender to make available any of its tax returns (or any
other information relating to its taxes which it deems to be confidential).
2.11. Funding Loss Indemnification. If Borrower shall (a) repay, prepay
----------------------------
or convert any LIBOR Loan on any day other than the last day of an Interest
Period therefor (whether a scheduled payment, an optional prepayment or
conversion, a mandatory prepayment or conversion, a payment upon acceleration or
otherwise), (b) fail to borrow any LIBOR Loan for which a Notice of Borrowing
has been delivered to Agent (whether as a result of the failure to satisfy any
applicable conditions or otherwise) or (c) fail to convert any Loans into LIBOR
Loans in accordance with a Notice of Conversion delivered to Agent (whether as a
result of the failure to satisfy any applicable conditions or otherwise),
Borrower shall, upon demand by any Lender, reimburse such Lender for and hold
such Lender harmless from all costs and losses incurred by such Lender as a
result of such repayment, prepayment, conversion or failure. Borrower
understands that
33
such costs and losses may include, without limitation, losses incurred by a
Lender as a result of funding and other contracts entered into by such Lender to
fund a LIBOR Loan. Each Lender demanding payment under this Paragraph 2.11 shall
--------------
deliver to Borrower, with a copy to Agent, a certificate setting forth the
amount of costs and losses for which demand is made, which certificate shall set
forth in reasonable detail the calculation of the amount demanded. Such a
certificate so delivered to Borrower shall constitute prima facie evidence of
such costs and losses. The obligations of Borrower under this Paragraph 2.11
--------------
shall survive the payment and performance of the Obligations and the termination
of this Agreement.
2.12. Security.
--------
(a) Mortgages, Security Agreements, Guaranties, Etc. The Secured
------------------------------------------------
Obligations shall be secured by the following:
(i) A Security Agreement in the form of Exhibit E, duly
---------
executed by Borrower (the "Security Agreement");
------------------
(ii) An Intellectual Property Security Agreement in the form
of Exhibit F, duly executed by Borrower (the "IP Security
-----------
Agreement");
---------
(iii) A Pledge Agreement in the form of Exhibit G, duly
---------
executed by Borrower (the "Pledge Agreement"); and
----------------
(iv) A Guaranty in the form of Exhibit H, duly executed by
---------
each Domestic Subsidiary of Borrower (the "Guaranty").
--------
(b) Further Assurances. Borrower shall deliver, or cause its
------------------
Subsidiaries to deliver, to Agent such additional mortgages, deeds of trust,
security agreements, pledge agreements, guaranties, lessor consents and
estoppels (containing appropriate mortgagee and lender protection language) and
other instruments, agreements, certificates, opinions and documents (including
Uniform Commercial Code financing statements and fixture filings and landlord
waivers) as Required Lenders may reasonably request to:
(i) Grant, perfect, maintain, protect and evidence security
interests in favor of Agent, for the benefit of Agent and the
Lenders as security for the Secured Obligations, in any or all
present and future real and personal property of Borrower prior to
the Liens or other interests of any Person, except for Permitted
Liens;
(ii) Cause all Domestic Subsidiaries of Borrower to
guarantee the Secured Obligations on the terms set forth in the
Guaranty; and
34
(iii) Otherwise establish, maintain, protect and evidence the
rights provided to Agent, for the benefit of Agents and the Lenders,
pursuant to the Security Documents.
Borrower shall fully cooperate with Agent and the Lenders and perform all
additional acts reasonably requested by Agent or any Lender to effect the
purposes of this Paragraph 2.12.
--------------
(c) Allocation of Collateral Proceeds. Agent shall apply any
---------------------------------
proceeds realized by Agent from the sale, disposition or collection of
Collateral as follows:
(i) Agent first shall apply such proceeds to pay all
reasonable costs and expenses incurred by Agent in realizing such proceeds.
(ii) If any proceeds then remain, Agent shall apply such
proceeds to the Primary Secured Obligations until all such obligations are
satisfied in full. If such proceeds are insufficient to satisfy all of the
Primary Secured Obligations in full, Agent shall allocate such proceeds
among the Lenders pro rata according to the Primary Secured Obligations
then owed to each Lender.
(iii) If any proceeds then remain, Agent shall apply such
proceeds to the Secondary Secured Obligations until all such obligations
are satisfied in full. If such proceeds are insufficient to satisfy all of
the Secondary Secured Obligations in full, Agent shall allocate such
proceeds among the Lenders pro rata according to the Secondary Secured
Obligations then owed to each Lender.
SECTION III. CONDITIONS PRECEDENT.
--------------------
3.01. Initial Conditions Precedent. The obligations of the Lenders to
----------------------------
make the Loans comprising the initial Borrowing are subject to receipt by Agent,
on or prior to the Closing Date, of each item listed in Schedule 3.01, each in
-------------
form and substance satisfactory to Agent and each Lender, and with sufficient
copies for, Agent and each Lender.
3.02. Conditions Precedent to Each Credit Event. The occurrence of each
-----------------------------------------
Credit Event (including the initial Borrowing) is subject to the further
conditions that:
(a) Borrower shall have delivered to Agent the Notice of
Borrowing, Notice of Conversion or Notice of Interest Period Selection, as
the case may be, for such Credit Event in accordance with this Agreement;
and
35
(b) On the date such Credit Event is to occur and after giving
effect to such Credit Event, the following shall be true and correct:
(i) The representations and warranties of Borrower and its
Subsidiaries set forth in Paragraph 4.01 and in the other Credit
--------------
Documents are true and correct in all material respects as if made on
such date (except for representations and warranties expressly made
as of a specified date, which shall be true as of such date);
(ii) No Default or Event of Default has occurred and is
continuing or will result from such Credit Event; and
(iii) All of the Credit Documents are in full force and
effect.
The submission by Borrower to Agent of each Notice of Borrowing, each
Notice of Conversion (other than a notice for a conversion to a Base Rate
Loan) and each Notice of Interest Period Selection shall be deemed to be a
representation and warranty by Borrower that each of the statements set
forth above in this Subparagraph 3.02(b) is true and correct as of the date
--------------------
of such notice.
3.03. Covenant to Deliver. Borrower agrees (not as a condition but as
-------------------
a covenant) to deliver to Agent each item required to be delivered to Agent as a
condition to the occurrence of any Credit Event if such Credit Event occurs.
Borrower expressly agrees that the occurrence of any such Credit Event prior to
the receipt by Agent of any such item shall not constitute a waiver by Agent or
any Lender of Borrower's obligation to deliver such item.
SECTION IV. REPRESENTATIONS AND WARRANTIES
------------------------------
4.01. Borrower's Representations and Warranties. In order to induce
-----------------------------------------
Agent and the Lenders to enter into this Agreement, Borrower hereby represents
and warranties to Agent and the Lenders as follows:
(a) Due Incorporation, Qualification, etc. Each of Borrower and
-------------------------------------
Borrower's Subsidiaries (i) is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization; (ii) has the power and authority to own, lease and operate
its properties and carry on its business as now conducted; and (iii) is
duly qualified, licensed to do business and in good standing as a foreign
corporation in each jurisdiction where the failure to be so qualified or
licensed is reasonably likely to have a Material Adverse Effect.
36
(b) Authority. The execution, delivery and performance by
---------
Borrower of each Credit Document executed, or to be executed, by Borrower
and the consummation of the transactions contemplated thereby (i) are
within the power of Borrower and (ii) have been duly authorized by all
necessary actions on the part of Borrower.
(c) Enforceability. Each Credit Document executed, or to be
--------------
executed, by Borrower has been, or will be, duly executed and delivered by
Borrower and constitutes, or will constitute, a legal, valid and binding
obligation of Borrower, enforceable against Borrower in accordance with its
terms, except as limited by bankruptcy, insolvency or other laws of general
application relating to or affecting the enforcement of creditors' rights
generally and general principles of equity.
(d) Non-Contravention. The execution and delivery by Borrower of
-----------------
the Credit Documents executed by Borrower and the performance and
consummation of the transactions contemplated thereby do not (i) violate
any Requirement of Law applicable to Borrower; (ii) violate any provision
of, or result in the breach or the acceleration of, or entitle any other
Person to accelerate (whether after the giving of notice or lapse of time
or both), any Contractual Obligation of Borrower; or (iii) result in the
creation or imposition of any Lien (or the obligation to create or impose
any Lien) upon any property, asset or revenue of Borrower (except such
Liens as may be created in favor of Agent pursuant to this Agreement or the
other Credit Documents).
(e) Approvals. No consent, approval, order or authorization of, or
---------
registration, declaration or filing with, any Governmental Authority or
other Person (including, without limitation, the shareholders of any
Person) is required in connection with the execution and delivery of the
Credit Documents executed by Borrower and the performance and consummation
of the transactions contemplated thereby, except such as have been made or
obtained and are in full force and effect.
(f) No Violation or Default. Neither Borrower nor any of its
-----------------------
Subsidiaries is in violation of or in default with respect to (i) any
Requirement of Law applicable to such Person; (ii) any Contractual
Obligation of such Person (nor is there any waiver in effect which, if not
in effect, would result in such a violation or default), where, in each
case, such violation or default is reasonably likely to have a Material
Adverse Effect. Without limiting the generality of the foregoing, neither
Borrower nor any of its Subsidiaries (A) has violated any Environmental
Laws, (B) has any liability under any Environmental Laws or (C) has
received notice or other communication of an investigation or is under
investigation by any Governmental Authority having authority to enforce
Environmental Laws, where such
37
violation, liability or investigation is reasonably likely to have a
Material Adverse Effect. No Event of Default or Default has occurred and is
continuing.
(g) Litigation. No actions (including, without limitation,
----------
derivative actions), suits, proceedings or investigations are pending or,
to the knowledge of Borrower, threatened against Borrower or any of its
Subsidiaries at law or in equity in any court or before any other
Governmental Authority which (i) is reasonably likely (alone or in the
aggregate) to have a Material Adverse Effect or (ii) seeks to enjoin,
either directly or indirectly, the execution, delivery or performance by
Borrower of the Credit Documents or the transactions contemplated thereby.
(h) Title; Possession Under Leases. Set forth in Part A of
------------------------------ ---------
Schedule 8 to the Collateral Certificate (as supplemented by Borrower from
----------------------------------------
time to time in a written notice to Agent pursuant to clause (vii) of
---------------
Subparagraph 5.01(a) or otherwise) is a complete list of all real property
--------------------
owned by Borrower or any of its Subsidiaries, with the owner of such
property, the location of such property, a brief description of such
property and the use of such property. Set forth in Part B of Schedule 8 to
-----------------------
the Collateral Certificate (as supplemented by Borrower from time to time
--------------------------
in a written notice to Agent pursuant to clause (vii) of Subparagraph
----------------------------
5.01(a) or otherwise) is a complete list of all real property leased by
-------
Borrower or any of its Subsidiaries as lessee or sublessee, with the lessee
or sublessee of such property, the location of such property, a brief
description of such property, the use of such property, the owner of such
property and the date and title of and parties to the lease for such
property (including all amendments thereof). Borrower and its Subsidiaries
(i) own and have good and marketable title (without regard to minor defects
of title) to the real property referred to in Part A of Schedule 8 to the
---------------------------
Collateral Certificate, (ii) have valid leasehold interests in the real
----------------------
property referred to in Part B of Schedule 8 to the Collateral Certificate,
--------------------------------------------------
(iii) own and have good title (without regard to minor defects of title) to
all their other respective properties and assets which are material to the
business of Borrower and its Subsidiaries, as reflected in the most recent
Financial Statements delivered to Agent (except those assets and properties
disposed of since the date of such Financial Statements in compliance with
this Agreement) and (iv) own and have good title (without regard to minor
defects of title) to all respective properties and assets acquired by
Borrower and its Subsidiaries since such date which are material to the
business of Borrower and its Subsidiaries (except those assets and
properties disposed of in compliance with this Agreement). Such assets and
properties are subject to no Lien, except for Permitted Liens. Each of
Borrower and its Subsidiaries enjoys peaceful and undisturbed possession
under all leases, except for any
38
failure to enjoy such possession which (alone or in the aggregate with any
other such failures) is not reasonably likely to have a Material Adverse
Effect.
(i) Financial Statements. The Financial Statements of Borrower
--------------------
and its Subsidiaries which have been delivered to Agent, (i) are in
accordance with the books and records of Borrower and its Subsidiaries,
which have been maintained in accordance with good business practice; (ii)
have been prepared in conformity with GAAP; and (iii) fairly present the
financial conditions and results of operations of Borrower and its
Subsidiaries as of the date thereof and for the period covered thereby.
Neither Borrower nor any of its Subsidiaries has any Contingent
Obligations, liability for taxes or other outstanding obligations which are
material in the aggregate, except as disclosed in the audited Financial
Statements dated October 2, 1995, furnished by Borrower to Agent prior to
the date hereof, or in the Financial Statements delivered to Agent pursuant
to clause (i) or (ii) of Subparagraph 5.01(a).
------------------------------------------
(j) Equity Securities. All outstanding Equity Securities of
-----------------
Borrower are duly authorized, validly issued, fully paid and non-
assessable. There are no outstanding subscriptions, options, conversion
rights, warrants or other agreements or commitments of any nature
whatsoever (firm or conditional) obligating Borrower to issue, deliver or
sell, or cause to be issued, delivered or sold, any additional Equity
Securities of Borrower, or obligating Borrower to grant, extend or enter
into any such agreement or commitment. All Equity Securities of Borrower
have been offered and sold in compliance with all federal and state
securities laws and all other Requirements of Law.
(k) No Agreements to Sell Assets; Etc. Neither Borrower nor any
---------------------------------
of its Subsidiaries has any legal obligation, absolute or contingent, to
any Person to sell the assets of Borrower or any of its Subsidiaries (other
than sales in the ordinary course of business), or to effect any merger,
consolidation or other reorganization of Borrower or any of its
Subsidiaries or to enter into any agreement with respect thereto.
(l) Employee Benefit Plans.
----------------------
(i) Based on the latest valuation of each Employee Benefit
Plan that either Borrower or any ERISA Affiliate maintains or
contributes to, or has any obligation under (which occurred within
twelve months of the date of this representation), the aggregate
benefit liabilities of such plan within the meaning of (S) 4001 of
ERISA did not exceed the aggregate value of the assets of such plan.
Neither Borrower nor any ERISA Affiliate has any liability with
respect to any post-retirement benefit under any Employee Benefit
Plan
39
which is a welfare plan (as defined in section 3(1) of ERISA), other
than liability for health plan continuation coverage described in
Part 6 of Title I(B) of ERISA, which liability for health plan
contribution coverage is not reasonably likely to have a Material
Adverse Effect.
(ii) Each Employee Benefit Plan complies, in both form and
operation, in all material respects, with its terms, ERISA and the
IRC, and no condition exists or event has occurred with respect to
any such plan which would result in the incurrence by either Borrower
or any ERISA Affiliate of any material liability, fine or penalty.
Each Employee Benefit Plan, related trust agreement, arrangement and
commitment of Borrower or any ERISA Affiliate is legally valid and
binding and in full force and effect. No Employee Benefit Plan is
being audited or investigated by any government agency or is subject
to any pending or threatened claim or suit. Neither Borrower nor any
ERISA Affiliate nor any fiduciary of any Employee Benefit Plan has
engaged in a prohibited transaction under section 406 of ERISA or
section 4975 of the IRC.
(iii) Neither Borrower nor any ERISA Affiliate contributes
to or has any material contingent obligations to any Multiemployer
Plan. Neither Borrower nor any ERISA Affiliate has incurred any
material liability (including secondary liability) to any
Multiemployer Plan as a result of a complete or partial withdrawal
from such Multiemployer Plan under Section 4201 of ERISA or as a
result of a sale of assets described in Section 4204 of ERISA.
Neither Borrower nor any ERISA Affiliate has been notified that any
Multiemployer Plan is in reorganization or insolvent under and within
the meaning of Section 4241 or Section 4245 of ERISA or that any
Multiemployer Plan intends to terminate or has been terminated under
Section 4041A of ERISA.
(m) Other Regulations. Borrower is not subject to regulation
-----------------
under the Investment Company Act of 1940, the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Interstate Commerce Act,
any state public utilities code or to any other Governmental Rule limiting
its ability to incur indebtedness.
(n) Patent and Other Rights. Borrower and its Subsidiaries own
-----------------------
or license under validly existing agreements, and have the full right to
license without the consent of any other Person, all patents, licenses,
trademarks, trade names, trade secrets, service marks, copyrights and all
rights with respect thereto, which are required to conduct their businesses
as now conducted.
40
(o) Governmental Charges. Borrower and its Subsidiaries have
--------------------
filed or caused to be filed all tax returns which are required to be filed
by them. Borrower and its Subsidiaries have paid, or made provision for the
payment of, all taxes and other Governmental Charges which have or may have
become due pursuant to said returns or otherwise and all other
indebtedness, except such Governmental Charges or indebtedness, if any,
which are being contested in good faith and as to which adequate reserves
(determined in accordance with GAAP) have been provided or which are not
reasonably likely to have a Material Adverse Effect if unpaid.
(p) Margin Stock. Borrower owns no Margin Stock which, in the
------------
aggregate, would constitute a substantial part of the assets of Borrower,
and no proceeds of any Loan will be used to purchase or carry, directly or
indirectly, any Margin Stock or to extend credit, directly or indirectly,
to any Person for the purpose of purchasing or carrying any Margin Stock.
(q) Subsidiaries, etc. Set forth in Schedule 4.01(q) (as
----------------- ----------------
supplemented by Borrower from time to time in a written notice to Agent) is
a complete list of all of Borrower's Subsidiaries, the jurisdiction of
incorporation of each, the classes of Equity Securities of each and the
number of shares and percentages of shares of each such class owned
directly or indirectly by Borrower. Except for such Subsidiaries, Borrower
has no Subsidiaries, is not a partner in any partnership or a joint
venturer in any joint venture.
(r) Catastrophic Events. Neither Borrower nor any of its
-------------------
Subsidiaries and none of their properties is or has been affected by any
fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or other casualty that is
reasonably likely to have a Material Adverse Effect. There are no disputes
presently subject to grievance procedure, arbitration or litigation under
any of the collective bargaining agreements, employment contracts or
employee welfare or incentive plans to which Borrower or any of its
Subsidiaries is a party, and there are no strikes, lockouts, work stoppages
or slowdowns, or, to the best knowledge of Borrower, jurisdictional
disputes or organizing activities occurring or threatened which alone or in
the aggregate are reasonably likely to have a Material Adverse Effect.
(s) Burdensome Contractual Obligations, Etc. Neither Borrower
---------------------------------------
nor any of its Subsidiaries and none of their properties is subject to any
Contractual Obligation or Requirement of Law which is reasonably likely to
have a Material Adverse Effect.
41
(t) No Material Adverse Effect. No event has occurred and no
--------------------------
condition exists which is reasonably likely to have a Material Adverse
Effect.
(v) Accuracy of Information Furnished. None of the Credit
---------------------------------
Documents and none of the other certificates, statements or information
furnished to Agent or any Lender by or on behalf of Borrower or any of its
Subsidiaries in connection with the Credit Documents or the transactions
contemplated thereby contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading.
4.02. Reaffirmation. Borrower shall be deemed to have reaffirmed, for
-------------
the benefit of the Lenders and Agent, each representation and warranty contained
in Paragraph 4.01 and in the other Credit Documents on and as of the date of
each Credit Event (except for representations and warranties expressly made as
of a specified date, which shall be true as of such date).
SECTION V. COVENANTS
5.01. Affirmative Covenants. Until the termination of this Agreement
---------------------
and the satisfaction in full by Borrower of all Obligations, Borrower will
comply, and will cause compliance, with the following affirmative covenants,
unless Required Lenders shall otherwise consent in writing:
(a) Financial Statements, Reports, etc. Borrower shall furnish to
----------------------------------
Agent, with sufficient copies for each Lender, the following, each in such
form and such detail as Agent or the Required Lenders shall reasonably
request:
(i) As soon as available and in no event later than
forty-five (45) days after the last day of the first three fiscal
quarters of Borrower in each fiscal year, a copy of the Financial
Statements of Borrower and its Subsidiaries (prepared on a
consolidated basis) for such quarter and for the fiscal year to date,
certified by the Chief Financial Officer or Vice President-Finance of
Borrower to present fairly the financial condition, results of
operations and other information reflected therein and to have been
prepared in accordance with GAAP (subject to normal year-end audit
adjustments);
(ii) As soon as available and in no event later than one
hundred, twenty (120) days after the close of each fiscal year of
Borrower, (A) copies of the audited Financial Statements of Borrower
and its Subsidiaries (prepared on a consolidated basis) for such
year, prepared by independent certified public accountants of
42
recognized national standing acceptable to Agent and (B) copies of
the unqualified opinions (or qualified opinions reasonably acceptable
to Agent) and management letters delivered by such accountants in
connection with all such Financial Statements;
(iii) Contemporaneously with the quarterly and year-end
Financial Statements required by the foregoing clauses (i) and (ii),
--------------------
a compliance certificate of the Chief Financial Officer or Vice
President-Finance of Borrower which (A) states that no Event of
Default and no Default has occurred and is continuing, or, if any
such Event of Default or Default has occurred and is continuing, a
statement as to the nature thereof and what action Borrower proposes
to take with respect thereto, (B) sets forth, for the quarter or year
covered by such Financial Statements or as of the last day of such
quarter or year (as the case may be), the calculation of the
financial ratios and tests provided in Paragraph 5.03 and (C) sets
--------------
forth, as of the last day of such quarter or year, the amounts at
such time of (1) the Primary Secured Obligations and Secondary
Secured Obligations by type of obligation of Borrower and its
Subsidiaries to each Lender and (2) the other Guaranty Obligations
and obligations on account of Rate Contracts and Surety Instruments
of Borrower and its Subsidiaries to others;
(iv) As soon as possible and in no event later than five
(5) Business Days after any officer of Borrower knows of the
occurrence or existence of (A) any Reportable Event under any
Employee Benefit Plan or Multiemployer Plan; (B) any actual or
threatened litigation, suits, claims or disputes against Borrower or
any of its Subsidiaries involving potential monetary damages payable
by Borrower or its Subsidiaries of $500,000 or more (alone or in the
aggregate); (C) any other event or condition which is reasonably
likely to have a Material Adverse Effect; or (D) any Default or Event
of Default; the statement of the President, Chief Financial Officer
or Vice President-Finance of Borrower setting forth details of such
event, condition, Default or Event of Default and the action which
Borrower proposes to take with respect thereto;
(v) As soon as available and in no event later than five
(5) Business Days after they are sent, made available or filed,
copies of (A) all registration statements and reports filed by
Borrower or any of its Subsidiaries with any securities exchange or
the Securities and Exchange Commission (including, without
limitation, all 10-Q, 10-K and 8-Q reports); (B) all reports, proxy
statements and financial statements sent or made available by
Borrower or any of its
43
Subsidiaries to its security holders; and (C) all press releases and
other similar public concerning any material developments in the
business of Borrower or any of its Subsidiaries made available by
Borrower or any of its Subsidiaries to the public generally;
(vi) As soon as available and in no event later than thirty
(30) days before the first day of each fiscal year of Borrower, the
consolidated plan and forecast of Borrower and its Subsidiaries for
such fiscal year, including quarterly cash flow projections;
(vii) As soon as possible and in no event later than thirty
(30) days prior to the acquisition by Borrower of any leasehold or
ownership interest in real property, a written supplement to Schedule
--------
8 to the Collateral Certificate;
-------------------------------
(viii) As soon as possible and in no event later than thirty
(30) days prior to the establishment or acquisition by Borrower or
any of its Subsidiaries of any new Subsidiary or any new Equity
Securities of any existing Subsidiary, written notice thereof;
(ix) As soon as possible and in no event later than sixty
(60) days after the issuance to or acquisition by Borrower of any new
patent, trademark, copyright or mask work, written notice thereof;
and
(x) Such other instruments, agreements, certificates,
opinions, statements, documents and information relating to the
operations or condition (financial or otherwise) of Borrower or its
Subsidiaries, and compliance by Borrower with the terms of this
Agreement and the other Credit Documents as Agent may from time to
time reasonably request.
(b) Books and Records. Borrower and its Subsidiaries shall at all
-----------------
times keep proper books of record and account in which full, true and
correct entries will be made of their transactions in accordance with GAAP.
(c) Inspections. Borrower and its Subsidiaries shall permit any
-----------
Person designated by any Lender, upon reasonable notice and during normal
business hours, to visit and inspect any of the properties and offices of
Borrower and its Subsidiaries, to conduct audits of any or all of the
Collateral at Borrower's expense, to examine the books and records of
Borrower and its Subsidiaries and make copies thereof and to discuss the
affairs, finances and business of Borrower and its Subsidiaries with, and
to be advised as to the same by, their officers, auditors and accountants,
all at such times and intervals as any Lender may reasonably request;
provided, however, that, so long as no Default or Event of Default has
-------- -------
occurred and is continuing, audits of
44
the Collateral shall be conducted by Persons designated by Agent at
reasonable cost and shall not be conducted at Borrower's expense more than
twice in any twelve (12) month period.
(d) Insurance. Borrower and its Subsidiaries shall:
---------
(i) Carry and maintain insurance of the types and in the
amounts customarily carried from time to time during the term of this
Agreement by others engaged in substantially the same business as
such Person and operating in the same geographic area as such Person,
including, but not limited to, fire, public liability, property
damage and worker's compensation;
(ii) Carry and maintain each policy for such insurance with
(A) a company which is rated A or better by A.M. Best and Company at
the time such policy is placed and at the time of each annual renewal
thereof or (B) any other insurer which is reasonably satisfactory to
Agent;
(iii) Obtain and maintain endorsements for such insurance as
specified in Exhibit I; and
---------
(iv) Deliver to Agent from time to time, as Agent may
request, schedules setting forth all insurance then in effect.
(e) Governmental Charges and Other Indebtedness. Borrower and its
-------------------------------------------
Subsidiaries shall promptly pay and discharge when due (i) all taxes and
other Governmental Charges prior to the date upon which penalties accrue
thereon, (ii) all Indebtedness which, if unpaid, could become a Lien upon
the property of Borrower or its Subsidiaries and (iii) subject to any
subordination provisions applicable thereto, all other Indebtedness which,
if unpaid, is reasonably likely to have a Material Adverse Effect, except
such Indebtedness as may in good faith be contested or disputed, or for
which arrangements for deferred payment have been made, provided that in
each such case appropriate reserves are maintained to the reasonable
satisfaction of Agent.
(f) Use of Proceeds. Borrower shall use the proceeds of the Loans
---------------
only for the purposes set forth in Subparagraph 2.01(g). Borrower shall not
--------------------
use any part of the proceeds of any Loan, directly or indirectly, for the
purpose of purchasing or carrying any Margin Stock or for the purpose of
purchasing or carrying or trading in any securities under such
circumstances as to involve Borrower, any Lender or Agent in a violation of
Regulations G, T, U or X issued by the Federal Reserve Board.
45
(g) General Business Operations. Each of Borrower and its
---------------------------
Subsidiaries shall (i) preserve and maintain its corporate existence and
all of its rights, privileges and franchises reasonably necessary to the
conduct of its business, (ii) conduct its business activities in compliance
with all Requirements of Law and Contractual Obligations applicable to such
Person, the violation of which is reasonably likely to have a Material
Adverse Effect and (iii) keep all property useful and necessary in its
business in good working order and condition, ordinary wear and tear
excepted. Borrower shall maintain its chief executive office and principal
place of business in the United States and shall not relocate its chief
executive office or principal place of business outside of California
except upon not less than ninety (90) days prior written notice to Agent.
5.02. Negative Covenants. Until the termination of this Agreement and
------------------
the satisfaction in full by Borrower of all Obligations, Borrower will comply,
and will cause compliance, with the following negative covenants, unless
Required Lenders shall otherwise consent in writing:
(a) Indebtedness. Neither Borrower nor any of its Subsidiaries
------------
shall create, incur, assume or permit to exist any Indebtedness except for
the following ("Permitted Indebtedness"):
----------------------
(i) The Obligations of Borrower under the Credit Documents;
(ii) Indebtedness of Borrower and its Subsidiaries listed in
Schedule 5.02(a) and existing on the date of this Agreement;
(iii) Indebtedness of Borrower and its Subsidiaries arising
from the endorsement of instruments for collection in the ordinary
course of Borrower's or a Subsidiary's business;
(iv) Indebtedness of Borrower and its Subsidiaries for
trade accounts payable, provided that (A) such accounts arise in the
ordinary course of business and (B) no material part of any such
account is more than ninety (90) days past due (unless subject to a
bona fide dispute and for which adequate reserves have been
established);
(v) Indebtedness of Borrower and its Subsidiaries under
Rate Contracts, provided that (A) all such arrangements are entered
into in connection with bona fide hedging operations and not for
speculation and (B) the aggregate net amount owed by Borrower and its
Subsidiaries under, on account of or otherwise in
46
connection with such Rate Contracts does not exceed $3,000,000
(marked to market) at any time;
(vi) Indebtedness of Borrower and its Subsidiaries under
purchase money loans and Capital Leases incurred by Borrower or any
of its Subsidiaries to finance the acquisition by such Person of real
property, fixtures or equipment provided that (A) in each case, (y)
such Indebtedness is incurred by such Person at the time of, or not
later than thirty (30) days after, the acquisition by such Person of
the property so financed and (z) such Indebtedness does not exceed
the purchase price of the property so financed and (B) the aggregate
amount of such Indebtedness outstanding at any time does not exceed
$5,000,000;
(vii) Indebtedness of Borrower and its Subsidiaries under
initial or successive refinancings of any Indebtedness permitted by
clause (ii) above, provided that (A) the principal amount of any such
----------
refinancing does not exceed the principal amount of the Indebtedness
being refinanced and (B) the material terms and provisions of any
such refinancing (including maturity, redemption, prepayment, default
and subordination provisions) are no less favorable to the Lenders
than the Indebtedness being refinanced;
(viii) Indebtedness of Borrower and its Subsidiaries with
respect to Surety Instruments in the ordinary course of business,
provided that the aggregate amount of the obligations secured by such
Surety Instruments at any time does not exceed $3,000,000;
(ix) Guaranty Obligations of Borrower in respect of
Permitted Indebtedness of its Subsidiaries;
(x) Guaranty Obligations of Borrower in connection with the
Borrower Note Guaranties, provided that the aggregate principal
amount of the obligations guaranteed by such Borrower Note Guaranties
at any time does not exceed $20,000,000; and
(xi) Indebtedness of Borrower to any of its Subsidiaries,
Indebtedness of any of Borrower's Subsidiaries to Borrower or
Indebtedness of any of Borrower's Subsidiaries to any of Borrower's
other Subsidiaries, provided that any Indebtedness of Borrower to any
of its Subsidiaries and any Indebtedness of any of Borrower's
Subsidiaries to Borrower shall be subject to Subparagraph 5.02(j).
--------------------
(b) Liens. Neither Borrower nor any of its Subsidiaries shall
-----
create, incur, assume or permit to exist any Lien on or with respect to any
of its assets or property
47
of any character, whether now owned or hereafter acquired, except for the
following ("Permitted Liens"):
(i) Liens granted to Agent or any Lender pursuant to the
Security Documents or any other Credit Documents to secure the
Secured Obligations;
(ii) Liens listed in Schedule 5.02(b) and existing on the
----------------
date of this Agreement, provided that no later than fourteen (14)
days after the Closing Date, the Lien in favor of Imperial Bank
evidenced by California UCC-1 Financing Statement number 9528460810
shall be terminated or subordinated in favor of Agent in such a
manner as is acceptable to Agent so that at all times thereafter the
security interest of Agent in the Collateral shall be senior to any
security interest of Imperial Bank in the Collateral;
(iii) Liens for taxes or other Governmental Charges not at
the time delinquent or thereafter payable without penalty or being
contested in good faith, provided that adequate reserves for the
payment thereof have been established in accordance with GAAP;
(iv) Liens of carriers, warehousemen, mechanics,
materialmen, vendors, and landlords and other similar Liens imposed
by law incurred in the ordinary course of business for sums not
overdue or being contested in good faith, provided that adequate
reserves for the payment thereof have been established in accordance
with GAAP;
(v) Deposits under workers' compensation, unemployment
insurance and social security laws or to secure the performance of
bids, tenders, contracts (other than for the repayment of borrowed
money) or leases, or to secure statutory obligations of surety or
appeal bonds or to secure indemnity, performance or other similar
bonds in the ordinary course of business;
(vi) Zoning restrictions, easements, rights-of-way, title
irregularities and other similar encumbrances, which alone or in the
aggregate are not substantial in amount and do not materially detract
from the value of the property subject thereto or interfere with the
ordinary conduct of the business of Borrower or any of its
Subsidiaries;
(vii) Banker's Liens and similar Liens (including set-off
rights) in respect of bank deposits;
(viii) Liens on property or assets of any corporation which
becomes a Subsidiary of Borrower after the date of this Agreement,
provided that (A) such Liens exist at the time the stock of such
48
corporation is acquired by Borrower and (B) such Liens were not
created in contemplation of such acquisition by Borrower;
(ix) Judgement Liens, provided that such Liens do not have
a value in excess of $500,000 or such Liens are released, stayed,
vacated or otherwise dismissed within thirty (30) days after issue or
levy and, if so stayed, such stay is not thereafter removed;
(x) Rights of vendors or lessors under conditional sale
agreements, Capital Leases or other title retention agreements,
provided that, in each case, (A) such rights secure or otherwise
relate to Permitted Indebtedness, (B) such rights do not extend to
any property other than property acquired with the proceeds of such
Permitted Indebtedness and (C) such rights do not secure any
Indebtedness other than such Permitted Indebtedness;
(xi) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties and in
connection with the importation of goods in the ordinary course of
Borrower's and its Subsidiaries' businesses;
(xii) Liens securing Indebtedness which constitutes Permitted
Indebtedness under clause (vi) of Subparagraph 5.02(a) provided that,
-----------------------------------
in each case, such Lien (A) covers only those assets, the acquisition
of which was financed by such Permitted Indebtedness, and (B) secures
only such Permitted Indebtedness;
(xiii) Liens on the property or assets of any Subsidiary of
Borrower in favor of Borrower or any other Subsidiary of Borrower;
(xiv) Liens incurred in connection with the extension,
renewal or refinancing of the Indebtedness secured by the Liens
described in clause (ii) or (xii) above, provided that any extension,
--------------------
renewal or replacement Lien (A) is limited to the property covered by
the existing Lien and (B) secures Indebtedness which is no greater in
amount and has material terms no less favorable to the Lenders than
the Indebtedness secured by the existing Lien; and
(xv) Liens on insurance proceeds in favor of insurance
companies with respect to the financing of insurance premiums.
(c) Asset Dispositions. Neither Borrower nor any of its
------------------
Subsidiaries shall sell, lease, transfer or otherwise dispose of any of its
assets or property, whether now owned or hereafter acquired, except for the
following:
49
(i) Sales of inventory by Borrower and its Subsidiaries in
the ordinary course of their businesses;
(ii) Sales of surplus, damaged, worn or obsolete equipment
or inventory for not less than fair market value;
(iii) Sales or other dispositions of Investments permitted by
clause (i) of Subparagraph 5.02(e) for not less than fair market
----------------------------------
value;
(iv) Sales or assignments of defaulted receivables to a
collection agency in the ordinary course of business;
(v) Sales or other dispositions of assets and property by
Borrower to any of Borrower's Subsidiaries or by any of Borrower's
Subsidiaries to Borrower or any of its other Subsidiaries, provided
that the terms of any such sales or other dispositions by or to
Borrower are terms which are no less favorable to Borrower then would
prevail in the market for similar transactions between unaffiliated
parties dealing at arm's length;
(vi) Sales by Borrower to ABN or Sanwa of promissory notes,
accounts receivable or other indebtedness which are, after such sale,
guaranteed by Borrower Note Guaranties subject to the limitation set
forth in clause (x) of Subparagraph 5.02(a);
----------------------------------
(vii) Sales and licenses by Borrower of its patents, in the
ordinary course of its business, provided that, in each case, the
terms of the transaction are terms which then would prevail in the
market for similar transactions between unaffiliated parties dealing
at arm's length; and
(viii) Other sales, leases, transfers and disposals of assets
and property, provided that the aggregate value of all such assets
and property (based upon the greater of the fair market or book value
of such assets and property) so sold, leased, transferred or
otherwise disposed of in any fiscal year does not exceed $1,000,0000
per year.
(d) Mergers, Acquisitions, Etc. Neither Borrower nor any of its
--------------------------
Subsidiaries shall consolidate with or merge into any other Person or
permit any other Person to merge into it, establish any Subsidiary or
acquire any Person or all or substantially all of the assets of any Person,
except that:
(i) Any wholly-owned Subsidiary of Borrower may merge into
any other wholly-owned Subsidiary of Borrower; and
50
(ii) Borrower and its Subsidiaries may acquire any Person
or all or substantially all of the assets of any Person, provided
that the aggregate cost of such acquisitions does not exceed in any
fiscal year ten percent (10%) of the Tangible Net Worth of Borrower
and its Subsidiaries on the last day of the immediately preceding
fiscal year.
(e) Investments. Neither Borrower nor any of its Subsidiaries
-----------
shall make any Investment except for Investments in the following:
(i) Investments of Borrower and its Subsidiaries in Cash
Equivalents;
(ii) Any transaction permitted by Subparagraph 5.02(a) or
--------------------
clause (ii) of Subparagraph 5.02(d);
-----------------------------------
(iii) Investments by Borrower and its Subsidiaries in each
other, provided that the book value of Borrower's aggregate
Investment in its Foreign Subsidiaries shall not exceed $1,000,000 at
any time; and
(iv) Investments consisting of loans to employees, officers
and directors.
(f) Change in Business. Neither Borrower nor any of its
------------------
Subsidiaries shall engage, either directly or indirectly through
Affiliates, in any business substantially different from its present
business.
(g) Indebtedness Payments, Etc. Neither Borrower nor any of its
--------------------------
Subsidiaries shall (i) prepay, redeem, purchase, defease or otherwise
satisfy in any manner prior to the scheduled payment thereof any
Indebtedness for borrowed money (other than the Obligations or any
Indebtedness owed by any Subsidiary to Borrower) or lease obligations or
(ii) amend, modify or otherwise change the terms of any document,
instrument or agreement evidencing Indebtedness for borrowed money (other
than the Obligations or any Indebtedness owed by any Subsidiary to
Borrower) or lease obligations so as to accelerate the scheduled payment
thereof.
(h) Security Issuances. None of Borrower's Subsidiaries shall
------------------
issue, offer or sell any Equity Securities not currently outstanding except
as follows:
(i) Any of Borrower's Subsidiaries may issue Equity
Securities to Borrower or a wholly-owned Subsidiary of Borrower,
provided that such Equity Securities are pledged to Agent pursuant to
the Pledge Agreement to the extent required by the Pledge Agreement;
and
51
(ii) Adac Healthcare Information Systems may issue and sell
its stock to officers of that Subsidiary pursuant to the terms of
stock options held by such officers on the date of this Agreement,
provided that the percentage of the outstanding voting stock in such
Subsidiary held by such officers does not at any time exceed ten
percent (10%).
(i) ERISA. Neither Borrower nor any ERISA Affiliate shall (i)
-----
adopt or institute any Employee Benefit Plan that is an employee pension
benefit plan within the meaning of Section 3(2) of ERISA, (ii) take any
action which will result in the partial or complete withdrawal, within the
meanings of sections 4203 and 4205 of ERISA, from a Multiemployer Plan,
(iii) engage or permit any Person to engage in any transaction prohibited
by section 406 of ERISA or section 4975 of the IRC involving any Employee
Benefit Plan or Multiemployer Plan which would subject either Borrower or
any ERISA Affiliate to any tax, penalty or other liability including a
liability to indemnify, (iv) incur or allow to exist any accumulated
funding deficiency (within the meaning of section 412 of the IRC or section
302 of ERISA), (v) fail to make full payment when due of all amounts due as
contributions to any Employee Benefit Plan or Multiemployer Plan, (vi) fail
to comply with the requirements of section 4980B of the IRC or Part 6 of
Title I(B) of ERISA, or (vii) adopt any amendment to any Employee Benefit
Plan which would require the posting of security pursuant to section
401(a)(29) of the IRC, where singly or cumulatively, the above would have a
Material Adverse Effect.
(j) Transactions With Affiliates. Neither Borrower nor any of its
----------------------------
Subsidiaries shall enter into any Contractual Obligation with any Affiliate
or engage in any other transaction with any Affiliate except upon terms at
least as favorable to Borrower or such Subsidiary as an arms-length
transaction with unaffiliated Persons.
(k) Accounting Changes. Neither Borrower nor any of its
------------------
Subsidiaries shall change (i) its fiscal year (currently October 1 through
September 30) or (ii) its accounting practices except as required by GAAP.
5.03. Financial Covenants. Until the termination of this Agreement and the
-------------------
satisfaction in full by Borrower of all Obligations, Borrower will comply, and
will cause compliance, with the following financial covenants, unless Required
Lenders shall otherwise consent in writing:
(a) Leverage Ratio. Borrower shall not permit the Leverage Ratio
--------------
of Borrower and its Subsidiaries to be greater than 1.85 to 1.00 at any
time.
52
(b) Current Ratio. Borrower shall not permit the Current Ratio of
-------------
Borrower and its Subsidiaries to be less than 1.30 to 1.00 at any time.
(c) Tangible Net Worth. Borrower shall not permit the Tangible
------------------
Net Worth of Borrower and its Subsidiaries on any date of determination
(such date to be referred to herein as a "determination date") which occurs
after March 31, 1996 (such date to be referred to herein as the "base
date") to be less than the sum on such determination date of the following:
(i) $53,879,000;
(ii) Fifty percent (50%) of the sum of the consolidated
quarterly net income (ignoring any quarterly losses) of Borrower and
its Subsidiaries for each quarter after the base date through and
including the quarter ending immediately prior to the determination
date; and
(iii) One hundred percent (100%) of the Net Proceeds realized
by Borrower and its Subsidiaries from the issuance and/or sale of
Equity Securities during the period commencing on the base date and
ending on the determination date.
(d) Debt/Capital Ratio. Borrower shall not permit the
------------------
Debt/Capital Ratio of Borrower and its Subsidiaries to be greater than 0.55
to 1.00 on the last day of any fiscal quarter.
(e) Debt/EBITDA Ratio. Borrower shall not permit the Debt/EBITDA
-----------------
Ratio of Borrower and its Subsidiaries to be greater than 2.00 to 1.00 on
the last day of any fiscal quarter.
(f) Profitability. Borrower shall not permit the consolidated net
-------------
income of Borrower and its Subsidiaries to be less than $1.00 for any
fiscal quarter.
SECTION VI. DEFAULT.
-------
6.01. Events of Default. The occurrence or existence of any one or more
-----------------
of the following shall constitute an "Event of Default" hereunder:
----------------
(a) Non-Payment. Borrower shall (i) fail to pay within one (1)
-----------
day after the same becomes due any principal of any Loan or (ii) fail to
pay within five (5) days after the same becomes due any interest, fees or
other amount required under the terms of this Agreement or any of the other
Credit Documents; or
53
(b) Specific Defaults. Borrower or any of its Subsidiaries shall
-----------------
fail to observe or perform any covenant, obligation, condition or agreement
set forth in Subparagraph 5.01(d), Paragraph 5.02 or Paragraph 5.03; or
-------------------- -------------- --------------
(c) Other Defaults. Borrower or any of its Subsidiaries shall
--------------
fail to observe or perform any other covenant, obligation, condition or
agreement contained in this Agreement or the other Credit Documents and
such failure shall continue for twenty (20) days after the earlier of
(i) the date an officer of Borrower first knew or should have known of such
failure and (ii) the date Agent delivers to Borrower a notice of such
failure; or
(d) Representations and Warranties. Any representation, warranty,
------------------------------
certificate, information or other statement (financial or otherwise) made
or furnished by or on behalf of Borrower or any of its Subsidiaries to
Agent or any Lender in or in connection with this Agreement or any of the
other Credit Documents, or as an inducement to Agent or any Lender to enter
into this Agreement, shall be false, incorrect, incomplete or misleading in
any material respect when made or furnished; or
(e) Cross-Default. (i) Borrower or any of its Subsidiaries shall
-------------
fail to make any payment when due on account of any Indebtedness of such
Person (other than the Obligations) and such failure shall continue beyond
any period of grace provided with respect thereto, if the amount of such
Indebtedness exceeds $500,000 or the effect of such failure is to cause, or
permit the holder or holders thereof to cause, Indebtedness of Borrower and
its Subsidiaries (other than the Obligations) in an aggregate amount
exceeding $500,000 to become due; (ii) Borrower or any of its Subsidiaries
shall otherwise fail to observe or perform any agreement, term or condition
contained in any agreement or instrument relating to any Indebtedness of
such Person (other than the Obligations), or any other event shall occur or
condition shall exist, if the effect of such failure, event or condition is
to cause, or permit the holder or holders thereof to cause, (A)
Indebtedness of Borrower and its Subsidiaries (other than the Obligations)
in an aggregate amount exceeding $500,000 to become due (and/or to be
secured by cash collateral) or (B) Indebtedness constituting Secured
Obligations to become due (and/or to be secured by cash collateral); or
(f) Insolvency, Voluntary Proceedings. Borrower or any of its
---------------------------------
Subsidiaries shall (i) apply for or consent to the appointment of a
receiver, trustee, liquidator or custodian of itself or of all or a
substantial part of its property, (ii) be unable, or admit in writing its
inability, to pay its debts generally as they mature, (iii) make a general
assignment for the benefit of its or any of its creditors, (iv) be
dissolved or liquidated in full or in
54
part, (v) become insolvent (as such term may be defined or interpreted
under any applicable statute), (vi) commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect
to itself or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or consent to any such relief or to the
appointment of or taking possession of its property by any official in an
involuntary case or other proceeding commenced against it, or (vi) take any
action for the purpose of effecting any of the foregoing; or
(g) Involuntary Proceedings. Proceedings for the appointment of
-----------------------
a receiver, trustee, liquidator or custodian of Borrower or any of its
Subsidiaries or of all or a substantial part of the property thereof, or an
involuntary case or other proceedings seeking liquidation, reorganization
or other relief with respect to Borrower or any of its Subsidiaries or the
debts thereof under any bankruptcy, insolvency or other similar law now or
hereafter in effect shall be commenced and an order for relief entered or
such proceeding shall not be dismissed or discharged within sixty (60) days
of commencement; or
(h) Judgments. (i) One or more judgments, orders, decrees or
---------
arbitration awards requiring Borrower and/or its Subsidiaries to pay an
aggregate amount of $500,000 or more (exclusive of amounts covered by
insurance issued by an insurer not an Affiliate of Borrower and otherwise
satisfying the requirements set forth in Subparagraph 5.01(d)) shall be
---------------------
rendered against Borrower and/or any of its Subsidiaries in connection with
any single or related series of transactions, incidents or circumstances
and the same shall not be vacated or stayed for a period of ten (10)
consecutive days; (ii) any judgment, writ, assessment, warrant of
attachment, tax lien or execution or similar process shall be issued or
levied against a substantial part of the property of Borrower or any of its
Subsidiaries and the same shall not be released, stayed, vacated or
otherwise dismissed within ten (10) days after issue or levy; or (iii) any
other judgments, orders, decrees, arbitration awards, writs, assessments,
warrants of attachment, tax liens or executions or similar processes which,
alone or in the aggregate, are reasonably likely to have a Material Adverse
Effect are rendered, issued or levied; or
(i) Credit Documents. Any Credit Document or any material term
----------------
thereof shall cease to be, or be asserted by Borrower or any of its
Subsidiaries not to be, a legal, valid and binding obligation of Borrower
or any of its Subsidiaries enforceable in accordance with its terms; or
(j) ERISA. Any Reportable Event which constitutes grounds for the
-----
termination of any Employee Benefit Plan by the PBGC or for the appointment
of a trustee by the PBGC to administer any Employee Benefit Plan shall
occur, or
55
any Employee Benefit Plan shall be terminated within the meaning of Title
IV of ERISA or a trustee shall be appointed by the PBGC to administer any
Employee Benefit Plan; or
(k) Change of Control. Any Change of Control shall occur; or
-----------------
(l) Material Adverse Effect. Any event(s) or condition(s) which
-----------------------
is(are) reasonably likely to have a Material Adverse Effect shall occur or
exist.
6.02. Remedies. At any time after the occurrence and during the
--------
continuance of any Event of Default (other than an Event of Default referred to
in Subparagraph 6.01(f) or 6.01(g)), Agent may, with the consent of the Required
-------------------- --------
Lenders, or shall, upon instructions from the Required Lenders, by written
notice to Borrower, (a) terminate the Commitments and the obligations of the
Lenders to make Loans and/or (b) declare all outstanding Obligations payable by
Borrower to be immediately due and payable without presentment, demand, protest
or any other notice of any kind, all of which are hereby expressly waived,
anything contained herein or in the Notes to the contrary notwithstanding. Upon
the occurrence or existence of any Event of Default described in Subparagraph
------------
6.01(f) or 6.01(g), immediately and without notice, (1) the Commitments and the
- ------- -------
obligations of the Lenders to make Loans shall automatically terminate and
(2) all outstanding Obligations payable by Borrower hereunder shall
automatically become immediately due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein or in the Notes to the contrary
notwithstanding. In addition to the foregoing remedies, upon the occurrence or
existence of any Event of Default, Agent may exercise any other right, power or
remedy available to it under any of the Credit Documents or otherwise by law,
either by suit in equity or by action at law, or both.
SECTION VII. THE AGENT AND RELATIONS AMONG LENDERS.
-------------------------------------
7.01. Appointment, Powers and Immunities. Each Lender hereby appoints
----------------------------------
and authorizes Agent to act as its agent hereunder and under the other Credit
Documents with such powers as are expressly delegated to Agent by the terms of
this Agreement and the other Credit Documents, together with such other powers
as are reasonably incidental thereto. Agent shall not have any duties or
responsibilities except those expressly set forth in this Agreement or in any
other Credit Document, be a trustee for any Lender or have any fiduciary duty to
any Lender. Notwithstanding anything to the contrary contained herein Agent
shall not be required to take any action which is contrary to this Agreement or
any other Credit Document or any applicable Governmental Rule. Neither Agent nor
any Lender shall be responsible to any other Lender for any recitals,
statements, representations or warranties made by Borrower or any of its
56
Subsidiaries contained in this Agreement or in any other Credit Document, for
the value, validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement or any other Credit Document or for any failure by Borrower or
any of its Subsidiaries to perform their respective obligations hereunder or
thereunder. Agent may employ agents and attorneys-in-fact and shall not be
responsible to any Lender for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. Neither Agent nor any of
its directors, officers, employees, agents or advisors shall be responsible to
any Lender for any action taken or omitted to be taken by it or them hereunder
or under any other Credit Document or in connection herewith or therewith,
except for its or their own gross negligence or willful misconduct. Except as
otherwise provided under this Agreement, Agent shall take such action with
respect to the Credit Documents as shall be directed by the Required Lenders.
7.02. Reliance by Agent. Agent shall be entitled to rely upon any
-----------------
certificate, notice or other document (including any cable, telegram, facsimile
or telex) believed by it in good faith to be genuine and correct and to have
been signed or sent by or on behalf of the proper Person or Persons, and upon
advice and statements of legal counsel, independent accountants and other
experts selected by Agent with reasonable care. As to any other matters not
expressly provided for by this Agreement, Agent shall not be required to take
any action or exercise any discretion, but shall be required to act or to
refrain from acting upon instructions of the Required Lenders and shall in all
cases be fully protected by the Lenders in acting, or in refraining from acting,
hereunder or under any other Credit Document in accordance with the instructions
of the Required Lenders, and such instructions of the Required Lenders and any
action taken or failure to act pursuant thereto shall be binding on all of the
Lenders.
7.03. Defaults. Agent shall not be deemed to have knowledge or notice
--------
of the occurrence of any Default or Event of Default unless Agent has received a
written notice from a Lender or Borrower, referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"Notice of Default". If Agent receives such a notice of the occurrence of a
Default or Event of Default, Agent shall give prompt notice thereof to the
Lenders. Agent shall take such action with respect to such Default or Event of
Default as shall be reasonably directed by the Required Lenders; provided,
--------
however, that until Agent shall have received such directions, Agent may (but
- -------
shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall deem advisable in
the best interest of the Lenders.
7.04. Indemnification. Without limiting the Obligations of Borrower
---------------
hereunder, each Lender agrees to indemnify Agent, ratably in accordance with
their Proportionate Shares, for any
57
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may at any time be imposed on, incurred by or asserted against
Agent in any way relating to or arising out of this Agreement or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or the enforcement of any of the terms hereof or
thereof; provided, however, that no Lender shall be liable for any of the
-------- -------
foregoing to the extent they arise from Agent's gross negligence or willful
misconduct. Agent shall be fully justified in refusing to take or in continuing
to take any action hereunder unless it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action. The
obligations of each Lender under this Paragraph 7.04 shall survive the payment
--------------
and performance of the Obligations, the termination of this Agreement and any
Lender ceasing to be a party to this Agreement (with respect to events which
occurred prior to the time such Lender ceased to be a Lender hereunder).
7.05. Non-Reliance. Each Lender represents that it has, independently
------------
and without reliance on Agent, or any other Lender, and based on such documents
and information as it has deemed appropriate, made its own appraisal of the
business, prospects, management, financial condition and affairs of Borrower and
the Subsidiaries and its own decision to enter into this Agreement and agrees
that it will, independently and without reliance upon Agent or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own appraisals and decisions in taking or not taking
action under this Agreement. Neither Agent nor any of its affiliates nor any of
their respective directors, officers, employees, agents or advisors shall (a) be
required to keep any Lender informed as to the performance or observance by
Borrower or any of its Subsidiaries of the obligations under this Agreement or
any other document referred to or provided for herein or to make inquiry of, or
to inspect the properties or books of Borrower or any of its Subsidiaries; (b)
have any duty or responsibility to provide any Lender with any credit or other
information concerning Borrower or any of its Subsidiaries which may come into
the possession of Agent, except for notices, reports and other documents and
information expressly required to be furnished to the Lenders by Agent
hereunder; or (c) be responsible to any Lender for (i) any recital, statement,
representation or warranty made by Borrower or any officer, employee or agent of
Borrower in this Agreement or in any of the other Credit Documents, (ii) the
value, validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any Credit Document, (iii) the value or sufficiency of the
Collateral or the validity or perfection of any of the liens or security
interests intended to be created by the Credit Documents, or (iv) any failure by
Borrower to perform its obligations under this Agreement or any other Credit
Document.
58
7.06. Resignation or Removal of Agent. Agent may resign at any time by
-------------------------------
giving thirty (30) days prior written notice thereof to Borrower and the
Lenders, and Agent may be removed at any time with or without cause by the
Required Lenders. Upon any such resignation or removal, the Required Lenders
shall have the right to appoint a successor Agent, which Agent, if not a Lender,
shall be reasonably acceptable to Borrower; provided, however, that Borrower
-----------------
shall have no right to approve a successor Agent if a Default or an Event of
Default has occurred and is continuing. Upon the acceptance of any appointment
as Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged from the
duties and obligations thereafter arising hereunder. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this Section VII
-----------
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as Agent.
7.07. Authorization. Agent is hereby authorized by the Lenders to
-------------
execute, deliver and perform, each of the Credit Documents to which Agent is or
is intended to be a party and each Lender agrees to be bound by all of the
agreements of Agent contained in the Credit Documents.
7.08. Agent in its Individual Capacity. Agent and its affiliates may
--------------------------------
make loans to, accept deposits from and generally engage in any kind of banking
or other business with Borrower and its Subsidiaries and affiliates as though
Agent were not Agent hereunder. With respect to Loans, if any, made by Agent in
its capacity as a Lender, Agent in its capacity as a Lender shall have the same
rights and powers under this Agreement and the other Credit Documents as any
other Lender and may exercise the same as though it were not Agent, and the
terms "Lender" or "Lenders" shall include Agent in its capacity as a Lender.
SECTION VIII. MISCELLANEOUS.
-------------
8.01. Notices. Except as otherwise provided herein, all notices,
-------
requests, demands, consents, instructions or other communications to or upon
Borrower, any Lender or Agent under this Agreement or the other Credit Documents
shall be in writing and faxed, mailed or delivered, if to Borrower or Agent, at
its respective facsimile number or address set forth below or, if to any Lender,
at the address or facsimile number specified beneath the heading "Address for
Notices" under the name of such Lender in Schedule I (or to such other facsimile
----------
number or address for any party as indicated in any notice given by that party
to the other parties). All such notices and communications shall be effective
(a) when sent by Federal Express or other overnight service of recognized
standing, on the Business Day following the deposit with such service; (b) when
mailed, first class postage prepaid and addressed as aforesaid through the
United States Postal Service, upon receipt; (c) when delivered by hand, upon
59
delivery; and (d) when faxed, upon confirmation of receipt; provided, however,
-------- -------
that any notice delivered to Agent under Section II shall not be effective until
----------
received by Agent.
Agent: ABN AMRO Bank N.V.
101 California Street, Suite 4550
San Francisco, CA 94111-5812
Attn: Daniel P. Taylor
Telephone: (415) 984-3733
Fax No: (415) 362-3524
with a copy to:
ABN AMRO Bank N.V.
335 Madison Avenue
New York, NY 10017
Attn: Linda Boardman
Telephone: (212) 370-8509
Fax No: (212) 682-0364
Borrower: ADAC Laboratories
540 Alder Drive
Milpitas, CA 95035
Attn: Andre' Simone
Telephone: (408) 321-9100
Fax No: (408) 321-9686
Each Notice of Borrowing, Notice of Conversion and Notice of Interest Period
Selection shall be given by Borrower to Agent's office located at the address
referred to above during Agent's normal business hours; provided, however, that
-------- -------
any such notice received by Agent after 10:30 a.m. on any Business Day shall be
deemed received by Agent on the next Business Day. In any case where this
Agreement authorizes notices, requests, demands or other communications by
Borrower to Agent or any Lender to be made by telephone or facsimile, Agent or
any Lender may conclusively presume that anyone purporting to be a person
designated in any incumbency certificate or other similar document received by
Agent or a Lender is such a person.
8.02. Expenses. Borrower shall pay on demand, whether or not any
--------
Loan is made hereunder, (a) all reasonable fees and expenses, including
reasonable attorneys' fees and expenses, incurred by Agent in connection with
the preparation, negotiation, execution and delivery of, and the exercise of its
duties under, this Agreement and the other Credit Documents, and the
preparation, negotiation, execution and delivery of amendments and waivers
hereunder and thereunder and (b) all reasonable fees and expenses, including
reasonable attorneys' fees and expenses, incurred by Agent and the Lenders in
the enforcement or attempted enforcement of any of the Obligations or in
preserving any of Agent's or the Lenders' rights and remedies (including,
without limitation, all such fees and expenses incurred in connection with any
"workout" or restructuring affecting the Credit Documents or the Obligations or
any
60
bankruptcy or similar proceeding involving Borrower or any of its
Subsidiaries). As used herein, the term "reasonable attorneys' fees and
expenses" shall include, without limitation, allocable costs and expenses of
Agent's and Lenders' in-house legal counsel and staff. The obligations of
Borrower under this Paragraph 8.02 shall survive the payment and performance of
--------------
the Obligations and the termination of this Agreement.
8.03. Indemnification. To the fullest extent permitted by law, Borrower
---------------
agrees to protect, indemnify, defend and hold harmless Agent, the Lenders and
their Affiliates and their respective directors, officers, employees, agents and
advisors ("Indemnitees") from and against any and all liabilities, losses,
-----------
damages or expenses of any kind or nature and from any suits, claims or demands
(including in respect of or for reasonable attorney's fees and other expenses)
arising on account of or in connection with any matter or thing or action or
failure to act by Indemnitees, or any of them, arising out of or relating to the
Credit Documents or any transaction contemplated thereby, including without
limitation any use by Borrower of any proceeds of the Loans, except to the
extent such liability arises from the willful misconduct or gross negligence of
such Indemnitee. Upon receiving knowledge of any suit, claim or demand asserted
by a third party that Agent or any Lender believes is covered by this indemnity,
Agent or such Lender shall give Borrower notice of the matter and an opportunity
to defend it, at Borrower's sole cost and expense, with legal counsel
satisfactory to Agent or such Lender, as the case may be. Agent or such Lender
may also require Borrower to defend the matter. Any failure or delay of Agent or
any Lender to notify Borrower of any such suit, claim or demand shall not
relieve Borrower of its obligations under this Paragraph 8.03 but shall reduce
--------------
such obligations to the extent of any increase in those obligations caused
solely by any such failure or delay which is unreasonable. The obligations of
Borrower under this Paragraph 8.03 shall survive the payment and performance of
--------------
the Obligations and the termination of this Agreement.
8.04. Waivers; Amendments. Any term, covenant, agreement or condition of
-------------------
this Agreement or any other Credit Document may be amended or waived, and any
consent under this Agreement or any other Credit Document may be given, if such
amendment, waiver or consent is in writing and is signed by Borrower and the
Required Lenders (or Agent on behalf of the Required Lenders with the written
approval of the Required Lenders); provided, however that:
-------- -------
(a) Any amendment, waiver or consent which would (i) increase the
Total Commitment, (ii) extend the Maturity Date, (iii) reduce the principal
of or interest on any Loan or any fees or other amounts payable for the
account of the Lenders hereunder, (iv) extend any scheduled principal,
interest or fee payment date, (v) amend this Paragraph 8.04, (vi) amend the
--------------
definition of Required Lenders or (vii)
61
release any substantial part of the Collateral, must be in writing and
signed or approved in writing by all Lenders;
(b) Any amendment, waiver or consent which increases or decreases
the Proportionate Share of any Lender must be in writing and signed by such
Lender; and
(c) Any amendment, waiver or consent which affects the rights or
obligations of Agent must be in writing and signed by Agent.
No failure or delay by Agent or any Lender in exercising any right under this
Agreement or any other Credit Document shall operate as a waiver thereof or of
any other right hereunder or thereunder nor shall any single or partial exercise
of any such right preclude any other further exercise thereof or of any other
right hereunder or thereunder. Unless otherwise specified in such waiver or
consent, a waiver or consent given hereunder shall be effective only in the
specific instance and for the specific purpose for which given.
8.05. Successors and Assigns.
----------------------
(a) Binding Effect. This Agreement and the other Credit Documents
--------------
shall be binding upon and inure to the benefit of Borrower, the Lenders,
Agent, all future holders of the Notes and their respective successors and
permitted assigns, except that Borrower may not assign or transfer any of
its rights or obligations under any Credit Document without the prior
written consent of Agent and each Lender. All references in this Agreement
to any Person shall be deemed to include all successors and assigns of such
Person.
(b) Participations. Any Lender may at any time sell to one or
--------------
more banks or other financial institutions ("Participants") participating
------------
interests in any Loan owing to such Lender, any Note held by such Lender,
any Commitment of such Lender or any other interest of such Lender under
this Agreement and the other Credit Documents. In the event of any such
sale by a Lender of participating interests, such Lender's obligations
under this Agreement shall remain unchanged, such Lender shall remain
solely responsible for the performance thereof, such Lender shall remain
the holder of its Notes for all purposes under this Agreement and Borrower
and Agent shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement.
Any agreement pursuant to which any such sale is effected may require the
selling Lender to obtain the consent of the Participant in order for such
Lender to agree in writing to any amendment, waiver or consent of a type
specified in clause (i), (ii), (iii) or (iv) of Subparagraph 8.04(a) but
-------------------------------------------------------
may not otherwise require the selling Lender to obtain the consent of such
Participant to any other amendment, waiver or consent hereunder. Borrower
also agrees that any Lender which has
62
transferred any participating interest in its Commitment or Loans shall,
notwithstanding any such transfer, be entitled to the full benefits
accorded such Lender under Paragraph 2.09, Paragraph 2.10, and Paragraph
-------------- -------------- ---------
2.11, as if such Lender had not made such transfer.
----
(c) Assignments. Any Lender may, at any time, sell and assign to
-----------
any Lender or any Eligible Assignee (individually, an "Assignee Lender")
---------------
all or a portion of its rights and obligations under this Agreement and the
other Credit Documents (such a sale and assignment to be referred to herein
as an "Assignment") pursuant to an assignment agreement in the form of
----------
Exhibit J (an "Assignment Agreement"), executed by each Assignee Lender and
--------- --------------------
such assignor Lender (an "Assignor Lender") and delivered to Agent for its
---------------
acceptance and recording in the Register; provided, however, that:
-------- -------
(i) Without the written consent of Agent and, if no
Default or Event of Default has occurred and is continuing, Borrower
(which consent of Agent and Borrower shall not be unreasonably
withheld), no Lender may make any Assignment to any Assignee Lender
which is not, immediately prior to such Assignment, a Lender
hereunder or an Affiliate thereof; or
(ii) Without the written consent of Agent and, if no Default
or Event of Default has occurred and is continuing, Borrower (which
consent of Agent and Borrower shall not be unreasonably withheld), no
Lender may make any Assignment to any Assignee Lender if, after
giving effect to such Assignment, the Commitment of such Lender or
such Assignee Lender would be less than Five Million Dollars
($5,000,000) (except that a Lender may make an Assignment which
reduces its Commitment to zero without the written consent of
Borrower and Agent); or
(iii) Without the written consent of Agent and, if no Default
or Event of Default has occurred and is continuing, Borrower (which
consent of Agent and Borrower shall not be unreasonably withheld), no
Lender may make any Assignment which does not assign and delegate an
equal pro rata interest in such Lender's Loans, Commitment and all
other rights, duties and obligations of such Lender under this
Agreement and the other Credit Documents.
Upon such execution, delivery, acceptance and recording of each Assignment
Agreement, from and after the Assignment Effective Date determined pursuant
to such Assignment Agreement, (A) each Assignee Lender thereunder shall be
a Lender hereunder with a Proportionate Share as set forth on Attachment 1
------------
to such Assignment Agreement (under the caption "Proportionate Share After
----------------------------
Assignment") and shall have the
63
rights, duties and obligations of such a Lender under this Agreement and
the other Credit Documents, and (B) the Assignor Lender thereunder shall be
a Lender with a Proportionate Share as set forth on Attachment 1 to such
--------------------
Assignment Agreement (under the caption "Proportionate Share After
--------------------
Assignment"), or, if the Proportionate Share of the Assignor Lender has
been reduced to 0%, the Assignor Lender shall cease to be a Lender and to
have any obligation to make any Loan; provided, however, that any such
-------- -------
Assignor Lender which ceases to be a Lender shall continue to be entitled
to the benefits of any provision of this Agreement which by its terms
survives the termination of this Agreement. Each Assignment Agreement shall
be deemed to amend Schedule I to the extent, and only to the extent,
----------
necessary to reflect the addition of each Assignee Lender, the deletion of
each Assignor Lender which reduces its Proportionate Share to 0% and the
resulting adjustment of Proportionate Shares arising from the purchase by
each Assignee Lender of all or a portion of the rights and obligations of
an Assignor Lender under this Agreement and the other Credit Documents. On
or prior to the Assignment Effective Date determined pursuant to each
Assignment Agreement, Borrower, at its own expense, shall execute and
deliver to Agent, in exchange for the surrendered Note of the Assignor
Lender thereunder, a new Note to the order of each Assignee Lender
thereunder (with each new Note to be in an amount equal to the Commitment
assumed by such Assignee Lender) and, if the Assignor Lender is continuing
as a Lender hereunder, a new Note to the order of the Assignor Lender (with
the new Note to be in an amount equal to the Commitment retained by it).
Each such new Note shall be dated the Closing Date and each shall otherwise
be in the form of the Note replaced thereby. The Notes surrendered by the
Assignor Lender shall be returned by Agent to Borrower marked "replaced".
Each Assignee Lender which was not previously a Lender hereunder and which
is not incorporated under the laws of the United States of America or a
state thereof shall, within three (3) Business Days of becoming a Lender,
deliver to Borrower and Agent two duly completed copies of United States
Internal Revenue Service Form 1001 or 4224 (or successor applicable form),
as the case may be, certifying in each case that such Lender is entitled to
receive payments under this Agreement without deduction or withholding of
any United States federal income taxes.
(d) Register. Agent shall maintain at its address referred to in
--------
Paragraph 8.01 a copy of each Assignment Agreement delivered to it and a
--------------
register (the "Register") for the recordation of the names and addresses of
--------
the Lenders and the Proportionate Shares of each Lender from time to time.
The entries in the Register shall be conclusive in the absence of manifest
error, and Borrower, Agent and the Lenders may treat each Person whose name
is recorded in the Register as the owner of the Loans recorded therein for
all purposes of this Agreement. The Register
64
shall be available for inspection by Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(e) Registration. Upon its receipt of an Assignment Agreement
------------
executed by an Assignor Lender and an Assignee Lender (and, to the extent
required by Subparagraph 8.05(c), by Borrower and Agent) together with
--------------------
payment to Agent by Assignor Lender of a registration and processing fee of
$2,500, Agent shall (i) promptly accept such Assignment Agreement and
(ii) on the Effective Date determined pursuant thereto record the
information contained therein in the Register and give notice of such
acceptance and recordation to the Lenders and Borrower. Agent may, from
time to time at its election, prepare and deliver to the Lenders and
Borrower a revised Schedule I reflecting the names, addresses and
----------
respective Proportionate Shares of all Lenders then parties hereto.
(f) Confidentiality. Agent and the Lenders may disclose the
---------------
Credit Documents and any financial or other information relating to
Borrower or any Subsidiary to each other or, with the consent of Borrower,
to any potential Participant or Assignee Lender.
8.06. Setoff; Security Interest.
-------------------------
(a) Setoff. In addition to any rights and remedies of the Lenders
------
provided by law, each Lender shall have the right, with the prior consent
of Agent but without prior notice to or consent of Borrower, any such
notice and consent being expressly waived by Borrower to the extent
permitted by applicable law, upon the occurrence and during the continuance
of an Event of Default, to set-off and apply against the Obligations any
amount owing from such Lender to Borrower. The aforesaid right of set-off
may be exercised by such Lender against Borrower or against any trustee in
bankruptcy, debtor in possession, assignee for the benefit of creditors,
receiver or execution, judgment or attachment creditor of Borrower or
against anyone else claiming through or against Borrower or such trustee in
bankruptcy, debtor in possession, assignee for the benefit of creditors,
receiver, or execution, judgment or attachment creditor, notwithstanding
the fact that such right of set-off may not have been exercised by such
Lender at any prior time. Each Lender agrees promptly to notify Borrower
after any such set-off and application made by such Lender, provided that
--------
the failure to give such notice shall not affect the validity of such set-
off and application.
(b) Security Interest. As security for the Obligations, Borrower
-----------------
hereby grants to Agent and each Lender, for the benefit of all Lenders, a
continuing security interest in any and all deposit accounts or moneys of
Borrower now or hereafter maintained with such Lender.
65
Each Lender shall have all of the rights of a secured party with respect to
such security interest.
8.07. No Third Party Rights. Nothing expressed in or to be implied from
---------------------
this Agreement is intended to give, or shall be construed to give, any Person,
other than the parties hereto and their permitted successors and assigns
hereunder, any benefit or legal or equitable right, remedy or claim under or by
virtue of this Agreement or under or by virtue of any provision herein.
8.08. Partial Invalidity. If at any time any provision of this Agreement
------------------
is or becomes illegal, invalid or unenforceable in any respect under the law or
any jurisdiction, neither the legality, validity or enforceability of the
remaining provisions of this Agreement nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction shall
in any way be affected or impaired thereby.
8.09. Jury Trial. EACH OF BORROWER, THE LENDERS AND AGENT, TO THE FULLEST
----------
EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY AS TO ANY ISSUE RELATING HERETO IN ANY ACTION, PROCEEDING, OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY CREDIT DOCUMENT.
8.10. Counterparts. This Agreement may be executed in any number of
------------
identical counterparts, any set of which signed by all the parties hereto shall
be deemed to constitute a complete, executed original for all purposes.
8.11. Confidentiality. None of the Banks and Agent shall disclose to any
---------------
Person any information with respect to Borrower or any of its Subsidiaries which
is furnished pursuant to this Agreement or under the other Credit Documents,
except that any Bank or Agent may disclose any such information (a) to its own
directors, officers, employees, auditors, counsel and other professional
advisors and to its Affiliates if such Bank or Agent or such Bank's or such
Agent's holding or parent company in its sole discretion determines that any
such party should have access to such information; (b) to another Bank or Agent;
(c) if generally available to the public through no fault of Agent or the Banks;
(d) if required or appropriate in any report, statement or testimony submitted
to any Governmental Authority having or claiming to have jurisdiction over such
Bank or Agent; (e) if required or appropriate in response to any summons or
subpoena or in connection with any litigation, to the extent permitted or deemed
advisable by counsel; (f) to comply with any Requirement of Law applicable to
such Bank or Agent; (g) to any Participant or Assignee Bank or any prospective
Participant or Assignee Bank, provided that such Participant or Assignee or
prospective Participant or Assignee agrees in writing to be bound by this
Paragraph 8.11 prior to disclosure; or (h) otherwise with the prior consent of
- --------------
Borrower; provided, however, that any disclosure made in violation of this
-------- -------
Agreement shall not affect the obligations of Borrower and its Subsidiaries
under this Agreement and the other Credit Documents.
66
8.12. Termination of Prior Credit Agreements. Borrower, ABN and Sanwa agree
--------------------------------------
that, on and after the Closing Date, all obligations of ABN and Sanwa to make
loans, issue letters of credit or otherwise extend credit to Borrower under the
Prior Credit Agreements shall be terminated; provided, however, that such
-------- -------
termination shall not (a) operate as a waiver of any right, power or remedy of
ABN or Sanwa under the Prior Credit Agreements or any related document,
instrument or agreement or (b) extinguish or impair any obligations of Borrower
under the Prior Credit Agreement or any related document, instrument or
agreement except to the extent any such obligation is actually satisfied by
Borrower.
[The first signature page follows.]
67
IN WITNESS WHEREOF, Borrower, the Lenders and Agent have caused this
Agreement to be executed as of the day and year first above written.
BORROWER: ADAC LABORATORIES
By:___________________________
Name:______________________
Title:_____________________
AGENT: ABN AMRO BANK N.V.
By ABN AMRO North America, Inc.,
it agent
By:___________________________
Name:______________________
Title:_____________________
By:___________________________
Name:______________________
Title:_____________________
LENDERS: ABN AMRO BANK N.V.
By ABN AMRO North America, Inc.,
it agent
By:___________________________
Name:______________________
Title:_____________________
By:___________________________
Name:______________________
Title:_____________________
SANWA BANK CALIFORNIA
By:___________________________
Name:______________________
Title:_____________________
BANQUE NATIONALE DE PARIS
By:___________________________
Name:______________________
Title:_____________________
68
UNION BANK OF CALIFORNIA, N.A.
By:___________________________
Name:______________________
Title:_____________________
69
SCHEDULE I
----------
LENDERS
-------
Proportionate
Lender Share*
- ------ -------------
ABN AMRO BANK N.V. 33.33333333%
- -----------------
Applicable Lending Office:
ABN AMRO Bank N.V.
San Francisco International
Branch
101 California Street
Suite 4550
San Francisco, CA 94111-5812
Address for Notices:
ABN AMRO Bank N.V.
San Francisco International
Branch
101 California Street
Suite 4550
San Francisco, CA 94111-5812
Attn: Daniel P. Taylor
Telephone: (415) 984-3733
Fax: (415) 362-3524
Wiring Instructions:
ABN AMRO Bank N.V.
ABA No.: 026-009-580
Account No.: 651001054541
Account Name: ABN AMRO San
Francisco
International
Branch
Reference: Adac Laboratories
* To be expressed as a percentage rounded to the eighth digit to the right of
the decimal point.
I-1
Proportionate
Lender Share*
- ------ -------------
SANWA BANK CALIFORNIA 33.33333333%
- ---------------------
Applicable Lending Office:
San Jose CBC
220 Almaden Boulevard
San Jose, CA 95113-2003
Address for notices:
220 Almaden Boulevard
San Jose, CA 95113-2003
Attn: Clifford M. Wallace
Telephone No: (408) 297-6500
Telecopier No: (408) 292-4092
Wiring Instructions:
Sanwa Bank California
ABA No. 122003516
220 Almaden Boulevard
San Jose, CA 95113
Account No: 1128-19005
Attn: Cliff Wallace/RE: ADAC Laboratories
* To be expressed as a percentage rounded to the eighth digit to the right of
the decimal point.
I-2
Proportionate
Lender Share*
- ------ -------------
BANQUE NATIONALE DE PARIS 16.66666667%
- -------------------------
Applicable Lending Office:
Banque National de Paris,
San Francisco Branch
180 Montgomery Street, 3rd Floor
San Francisco, CA 94104
Address for Notice:
180 Montgomery Street, 3rd Floor
San Francisco, CA 94104
Attention: Debra Wright, Vice President
Telephone: (415) 956-0707
Telecopier: (415) 296-8954
Telex: RCA 2788900 (Answerback: BNPs UR)
Wiring Instructions
Federal Reserve Bank of San Francisco
ABA Number: 121027234
Account Name: Banque Nationale de Paris, San Francisco
Branch
Reference: ADAC Laboratories
* To be expressed as a percentage rounded to the eighth digit to the right of
the decimal point.
I-3
Proportionate
Lender Share*
- ------ -------------
UNION BANK OF CALIFORNIA, N.A. 16.66666667%
- ------------------------------
Applicable Lending Office:
Union Bank of California, N.A.
400 California Street
San Francisco, CA 94104
Address for Notice:
Union Bank of California, N.A.
400 California Street, 17th Floor
San Francisco, CA 94104
Attention: Wanda Headrick
Telephone: (415) 765-3003
Telecopier: (415) 765-2634
Wiring Instructions
Union Bank of California
ABA Number: 12100015
Account Name: CBND Bancontrol Acct.
Reference: Account No. 001-060235
Attention: Corporate Note Dept.
* To be expressed as a percentage rounded to the eighth digit to the right of
the decimal point.
I-4
SCHEDULE 1.01(a)
----------------
PRICING GRID
------------
APPLICABLE MARGINS
------------------
BASE COMMITMENT
RATE LIBOR FEE
LOANS LOANS PERCENTAGE
----- ----- ----------
Level 1 Quarter 0% 0.875% 0.250%
Level 2 Quarter 0% 1.000% 0.275%
Level 3 Quarter 0% 1.125% 0.325%
Level 4 Quarter 0% 1.250% 0.375%
Level 5 Quarter 0% 1.375% 0.425%
EXPLANATION
-----------
1. The Applicable Margin for each Loan and the Commitment Fee Percentage will
be set for each quarter and will vary depending upon whether such quarter is
a Level 1 Quarter, a Level 2 Quarter, a Level 3 Quarter, a Level 4 Quarter
or a Level 5 Quarter.
2. The quarter ending September 30, 1996 will be a Level 2 Quarter.
3. Each quarter thereafter will be a Level 1 Quarter, a Level 2 Quarter, a
Level 3 Quarter, a Level 4 Quarter or a Level 5 Quarter depending upon
Borrower's Debt/EBITDA Ratio for the consecutive four-quarter period which
ended with the second quarter prior to such quarter as follows:
(a) If, for any consecutive four-quarter period, the Borrower's Debt/EBITDA
Ratio is less than 0.90, the second quarter after the last quarter in
such four-quarter period will be a Level 1 Quarter.
(b) If, for any consecutive four-quarter period, the Borrower's Debt/EBITDA
Ratio is equal to or greater than 0.90 but less than 1.20, the second
quarter after the last quarter in such four-quarter period will be a
Level 2 Quarter.
(c) If, for any consecutive four-quarter period, the Borrower's Debt/EBITDA
Ratio is equal to or greater than 1.20 but less than 1.40, the second
quarter after the last quarter in such four-quarter period will be a
Level 3 Quarter.
1.01(a) - 1
(d) If, for any consecutive four-quarter period, the Borrower's Debt/EBITDA
Ratio is equal to or greater than 1.40 but less than 1.60, the second
quarter after the last quarter in such four-quarter period will be a
Level 4 Quarter.
(e) If, for any consecutive four-quarter period, the Borrower's Debt/EBITDA
Ratio is equal to or greater than 1.60, the second quarter after the
last quarter in such four-quarter period will be a Level 5 Quarter.
4. Examples:
(a) For the consecutive four-quarter period ending March 31, 1996, the
Borrower's Debt/EBITDA Ratio was 1.30. The quarter ending September 30,
1996 will again be a Level 3 Quarter.
(b) For the consecutive four-quarter period ending June 30, 1996, the
Borrower's Debt/EBITDA Ratio was 1.10. The quarter ending December 31,
will again be a Level 2 Quarter.
1.01(a) - 2
SCHEDULE 3.01
-------------
INITIAL CONDITIONS PRECEDENT
----------------------------
A. Principal Credit Documents.
--------------------------
(1) The Credit Agreement, duly executed by Borrower, each Lender and each
Agent;
(2) A Note payable to each Lender, each duly executed by Borrower;
(3) The Security Agreement, duly executed by Borrower;
(4) The IP Security Agreement, duly executed by Borrower;
(5) The Pledge Agreement, duly executed by Borrower; and
(6) The Guaranty, duly executed by each Domestic Subsidiary of Borrower.
B. Borrower Corporate Documents.
----------------------------
(1) The Certificate or Articles of Incorporation of Borrower,
certified as of a recent date prior to the Closing Date by the Secretary of
State (or comparable official) of its jurisdiction of incorporation;
(2) A Certificate of Good Standing (or comparable certificate) for
Borrower, certified as of a recent date prior to the Closing Date by the
Secretary of State (or comparable official) of its jurisdiction of
incorporation;
(3) A certificate of the Secretary or an Assistant Secretary of
Borrower, dated the Closing Date, certifying (a) that attached thereto is a
true and correct copy of the Bylaws of Borrower as in effect on the Closing
Date; (b) that attached thereto are true and correct copies of resolutions
duly adopted by the Board of Directors of Borrower and continuing in
effect, which authorize the execution, delivery and performance by Borrower
of this Agreement and the other Credit Documents executed or to be executed
by Borrower and the consummation of the transactions contemplated hereby
and thereby; and (c) that there are no proceedings for the dissolution or
liquidation of Borrower;
(4) A certificate of the Secretary or an Assistant Secretary of
Borrower, dated the Closing Date, certifying the incumbency, signatures and
authority of the officers of Borrower authorized to execute, deliver and
perform this
3.01 - 1
Agreement, the other Credit Documents and all other documents, instruments
or agreements related thereto executed or to be executed by Borrower; and
(5) Certificates of Good Standing (or comparable certificates) for
Borrower, certified as of a recent date prior to the Closing Date by the
Secretaries of State (or comparable official) of each state in which
Borrower is qualified to do business.
C. Subsidiary Corporate Documents.
------------------------------
(1) The Certificate of Incorporation (or comparable certificate) of
each Domestic Subsidiary of Borrower, certified as of a recent date prior
to the Closing Date by the Secretary of State (or comparable public
official) of its state of incorporation;
(2) A Certificate of Good Standing (or comparable certificate) for
each Domestic Subsidiary of Borrower, certified as of a recent date prior
to the Closing Date by the Secretary of State (or comparable public
official) of its state of incorporation;
(3) A certificate of the Secretary or an Assistant Secretary of each
Domestic Subsidiary of Borrower, dated the Closing Date, certifying (a)
that attached thereto is a true and correct copy of the Bylaws of such
Subsidiary as in effect on the Closing Date; (b) that attached thereto are
true and correct copies of resolutions duly adopted by the Board of
Directors of such Subsidiary and continuing in effect, which authorize the
execution, delivery and performance by such Subsidiary of the Credit
Documents executed or to be executed by such Subsidiary and the
consummation of the transactions contemplated hereby and thereby; and (c)
that there are no proceedings for the dissolution or liquidation of such
Subsidiary; and
(4) A certificate of the Secretary or an Assistant Secretary of each
Domestic Subsidiary of Borrower, dated the Closing Date, certifying the
incumbency, signatures and authority of the officers of such Subsidiary
authorized to execute, deliver and perform the Credit Documents and all
other documents, instruments or agreements related thereto executed or to
be executed by such Subsidiary.
3.01 - 2
D. Financial Statements, Financial Condition, Etc.
-----------------------------------------------
(1) A copy of the unaudited Financial Statements of Borrower and its
Subsidiaries for the fiscal quarter ended March 31, 1996 and for the fiscal
year to such date (prepared on a consolidated and consolidating basis),
certified by the Chief Financial Officer or Vice President-Finance of
Borrower to present fairly the financial condition, results of operations
and other information reflected therein and to have been prepared in
accordance with GAAP (subject to normal year-end audit adjustments);
(2) A copy of the audited consolidated Financial Statements of
Borrower for the fiscal year ended October 2, 1995, prepared by Coopers &
Lybrand and a copy of the unqualified opinion delivered by such accountants
in connection with such Financial Statements;
(3) A copy of the 10-Q report filed by Borrower with the Securities
and Exchange Commission for the quarter ended March 31, 1996;
(4) A copy of the 10-K report filed by Borrower with the Securities
and Exchange Commission for the fiscal year ended October 2, 1995;
(5) The consolidated plan and forecast of Borrower and its
Subsidiaries for the fiscal year to end October 2, 1998, including
quarterly cash flow projections through October 1, 1997; and
(6) Such other financial, business and other information regarding
Borrower, or any of its Subsidiaries as Agent or any Lender may reasonably
request, including information as to possible contingent liabilities, tax
matters, environmental matters and obligations for employee benefits and
compensation.
E. Security Documents.
------------------
(1) The Collateral Certificate;
(2) Such Uniform Commercial Code financing statements and fixture
filings (appropriately completed and executed) for filing in such
jurisdictions as Agent may request to perfect the Liens granted to Agent in
this Agreement, the Security Documents and the other Credit Documents;
(3) Such Uniform Commercial Code termination statements (appropriately
completed and executed) for filing in such jurisdictions as Agent may
request to terminate any financing statement evidencing Liens of other
Persons in the Collateral which are prior to the Liens granted to Agent in
this Agreement, the Security Documents and the other Credit
3.01 - 3
Documents, except for any such prior Liens which are expressly permitted by
the Credit Agreement to be prior;
(4) Uniform Commercial Code search certificates from the
jurisdictions in which Uniform Commercial Code financing statements are to
be filed pursuant to item E.(2) above reflecting no other financing
----------
statements or filings which evidence Liens of other Persons in the
Collateral which are prior to the Liens granted to Agent in this Agreement,
the Security Documents and the other Credit Documents, except for any such
prior Liens (a) which are expressly permitted by the Credit Agreement to be
prior or (b) for which Agent has received a termination statement pursuant
to item E.(2) above;
----------
(5) The stock certificates representing all of the outstanding
capital stock of each Subsidiary of Borrower pledged to Agent pursuant to
the Borrower Pledge Agreement and existing on the Closing Date, together
with undated stock powers duly executed by Borrower in blank and attached
thereto;
(6) To the extent requested by Agent or the Required Lenders, a
Notice of Security Interest in Deposit Account in the form of Attachment 2
to the Borrower Security Agreement for each bank at which Borrower
maintains a deposit account, each appropriately completed, duly executed by
Borrower, as appropriate, and Agent and acknowledged by the depositary bank
to which addressed;
(7) Appropriate documents for filing with the United States Patent and
Trademark Office and all other filings necessary to perfect the security
interests granted to Agent by the IP Security Agreement, all appropriately
completed and duly executed by Borrower and, where appropriate, notarized;
(8) A Power of Attorney in the form of Attachment 4 to the IP Security
-------------------------------
Agreement, dated the Closing Date and otherwise appropriately completed,
---------
duly executed by Borrower and notarized;
(9) Such other documents, instruments and agreements as Agents may
reasonably request to establish and perfect the Liens granted to Agent or
any Lender in this Agreement, the Security Documents and the other Credit
Documents; and
(10) Such other evidence as Agent may request to establish that the
Liens granted to Agent or any Lender in this Agreement, the Security
Documents and the other Credit Documents are perfected and prior to the
Liens of other Persons in the Collateral, except for any such Liens which
are expressly permitted by the Credit Agreement to be prior.
3.01 - 4
F. Opinion.
-------
A favorable written opinion of Graven, Perry, Block, Brody & Qualls,
counsel for Borrower and its Subsidiaries, dated the Closing Date and addressed
to Agent for the benefit of Agent and the Lenders, covering such legal matters
as Agent may reasonably request and otherwise in form and substance satisfactory
to Agent.
G. Other Items.
-----------
(1) A duly completed and timely delivered Notice of Borrowing;
(2) Certificates of insurance evidencing the insurance Borrower is
required to maintain pursuant to Subparagraph 5.01(d), together with
--------------------
endorsements thereto as required by such subparagraph and Exhibit I;
---------
(3) An organization chart for Borrower and its Subsidiaries, setting
forth the relationship among such Persons, certified by the Chief Financial
Officer or Vice President-Finance of Borrower;
(4) A certificate of the Chief Financial Officer or Vice
President-Finance of Borrower, addressed to Agent and dated the Closing
Date, certifying that:
(a) The representations and warranties set forth in Paragraph
---------
4.01 and in the other Credit Documents are true and correct in all
----
material respects as of such date (except for such representations and
warranties made as of a specified date, which shall be true as of such
date); and
(b) No Event of Default or Default has occurred and is
continuing as of such date;
(5) All fees and expenses payable to Agent and the Lenders on or
prior to the Closing Date (including all fees payable to Agent pursuant to
the Agent's Fee Letter);
(6) All fees and expenses of Agent's counsels through the Closing
Date; and
(7) Such other evidence as Agent or any Lender may reasonably request
to establish the accuracy and completeness of the representations and
warranties and the compliance with the terms and conditions contained in
this Agreement and the other Credit Documents.
3.01 - 5
SCHEDULE 4.01(q)
----------------
SUBSIDIARIES
------------
Shares Shares Owned
Subsidiary Jurisdiction Outstanding by Borrower
---------- ------------- ----------- -----------
ADAC Research & California 1,000 100%
Manufacturing, Inc.
Community Health Delaware 4,000,000 100%
Computing Corp.
J.D. Technical Delaware 1,000 100%
Services, Inc.
ADAC Laboratories California 1,000 100%
Pacific, Inc.
ADAC Laboratories Canada 100 100%
Canada Ltd.
ADAC Laboratories BV. Netherlands 20,646 100%
ADAC Foreign Sales Virgin 1,000 100%
Corporation Inc. Islands
In addition, ADAC Healthcare Information Systems, a Texas corporation, is an
indirect Subsidiary of Borrower which is 100% owned by Community Health
Computing Corporation.
4.01(q) - 1
SCHEDULE 5.02(a)
----------------
INDEBTEDNESS
------------
NONE
5.02(a) - 1
SCHEDULE 5.02(b)
----------------
LIENS
-----
See Attachment
5.02(b) - 1
EXHIBIT A
---------
NOTICE OF BORROWING
-------------------
[Date]
ABN AMRO Bank N.V.
as Agent
335 Madison Ave.
New York, NY 10017
Attn: Linda Boardman
1. Reference is made to that certain Credit Agreement, dated as of
July 31, 1996 (the "Credit Agreement"), among ADAC Laboratories ("Borrower"),
---------------- --------
the financial institutions listed in Schedule I to the Credit Agreement (the
----------
"Lenders") and ABN AMRO Bank N.V., as agent for the Lenders (in such capacity,
-------
"Agent"). Unless otherwise indicated, all terms defined in the Credit Agreement
-----
have the same respective meanings when used herein.
2. Pursuant to Subparagraph 2.01(b) of the Credit Agreement, Borrower
--------------------
hereby irrevocably requests a Borrowing upon the following terms:
(a) The principal amount of the requested Borrowing is to be
$__________;
(b) The requested Borrowing is to consist of ["Base Rate" or "LIBOR"]
Loans;
(c) If the requested Borrowing is to consist of LIBOR Loans, the
initial Interest Period for such Loans will be __________ months; and
(d) The date of the requested Borrowing is to be __________, ____.
3. Borrower hereby certifies to Agent and the Lenders that, on the date
of this Notice of Borrowing and after giving effect to the requested Borrowing:
(a) The representations and warranties of Borrower set forth in
Paragraph 4.01 of the Credit Agreement and in the other Credit Documents
--------------
are true and correct in all material respects as if made on such date
(except for representations and warranties expressly made as of a specified
date, which shall be true as of such date);
(b) No Default or Event of Default has occurred and is continuing; and
(c) All of the Credit Documents are in full force and effect.
A-1
4. Please disburse the proceeds of the requested Borrowing to
_______________________________________________________________________________
_______________________________________________________________________________.
IN WITNESS WHEREOF, Borrower has executed this Notice of Borrowing on the
date set forth above.
ADAC LABORATORIES
By:____________________________
Name:_______________________
Title:______________________
A-2
EXHIBIT B
---------
NOTICE OF CONVERSION
--------------------
[Date]
ABN AMRO Bank N.V.
as Agent
335 Madison Ave.
New York, NY 10017
Attn: Linda Boardman
1. Reference is made to that certain Credit Agreement, dated as of
July 31, 1996 (the "Credit Agreement"), among ADAC Laboratories ("Borrower"),
---------------- --------
the financial institutions listed in Schedule I to the Credit Agreement (the
----------
"Lenders") and ABN AMRO Bank N.V., as agent for the Lenders (in such capacity,
-------
"Agent"). Unless otherwise indicated, all terms defined in the Credit Agreement
-----
have the same respective meanings when used herein.
2. Pursuant to Subparagraph 2.01(d) of the Credit Agreement, Borrower
--------------------
hereby irrevocably requests to convert a Borrowing as follows:
(a) The Borrowing to be converted consists of ["Base Rate" or
"LIBOR"] Loans in the aggregate principal amount of $__________ which were
initially advanced to Borrower on __________, ____;
(b) The Loans in the Borrowing are to be converted into ["Base Rate"
or "LIBOR"] Loans;
(c) If such Loans are to be converted into LIBOR Loans, the initial
Interest Period for such Loans commencing upon conversion will be
__________ months; and
(d) The date of the requested conversion is to be __________, ____.
3. Borrower hereby certifies to Agent and the Lenders that, on the date
of this Notice of Conversion, and after giving effect to the requested
conversion:
(a) The representations and warranties of Borrower set forth in
Paragraph 4.01 of the Credit Agreement and in the other Credit Documents
--------------
are true and correct in all material respects as if made on such date
(except for representations and warranties expressly made as of a specified
date, which shall be true as of such date);
(b) No Default or Event of Default has occurred and is continuing; and
B-1
(c) All of the Credit Documents are in full force and effect.
IN WITNESS WHEREOF, Borrower has executed this Notice of Conversion on the
date set forth above.
ADAC LABORATORIES
By:____________________________
Name:_______________________
Title:______________________
B-2
EXHIBIT C
---------
NOTICE OF INTEREST PERIOD SELECTION
-----------------------------------
[Date]
ABN AMRO Bank N.V.
as Agent
335 Madison Ave.
New York, NY 10017
Attn: Linda Boardman
1. Reference is made to that certain Credit Agreement, dated as of
July 31, 1996 (the "Credit Agreement"), among ADAC Laboratories ("Borrower"),
---------------- --------
the financial institutions listed in Schedule I to the Credit Agreement (the
----------
"Lenders") and ABN AMRO Bank N.V., as agent for the Lenders (in such capacity,
-------
"Agent"). Unless otherwise indicated, all terms defined in the Credit Agreement
-----
have the same respective meanings when used herein.
2. Pursuant to Subparagraph 2.01(e) of the Credit Agreement, Borrower
--------------------
hereby irrevocably selects a new Interest Period for a Borrowing as follows:
(a) The Borrowing for which a new Interest Period is to be selected
consists of LIBOR Loans in the aggregate principal amount of $__________
which were initially advanced to Borrower on __________, ____;
(b) The last day of the current Interest Period for such Loans is
___________, ____; and
(c) The next Interest Period for such Loans commencing upon the last
day of the current Interest Period is to be _________ months.
3. Borrower hereby certifies to the Agents and the Lenders that, on the
date of this Notice of Interest Period Selection, and after giving effect to the
requested selection:
(a) The representations and warranties of Borrower [and its
Subsidiaries] set forth in Paragraph 4.01 of the Credit Agreement and in
--------------
the other Credit Documents are true and correct in all material respects as
if made on such date (except for representations and warranties expressly
made as of a specified date, which shall be true as of such date);
(b) No Default or Event of Default has occurred and is continuing; and
(c) All of the Credit Documents are in full force and effect.
C-1
IN WITNESS WHEREOF, Borrower has executed this Notice of Interest Period
Selection on the date set forth above.
ADAC LABORATORIES
By:____________________________
Name:_______________________
Title:______________________
C-2
EXHIBIT D
---------
NOTE
----
$______________ ____________________, __________
________________, ____
FOR VALUE RECEIVED, ADAC LABORATORIES, a California corporation
("Borrower"), hereby promises to pay to the order of ____________________, a
--------
____________________ ("Lender"), the principal sum of
------
______________________________ DOLLARS ($__________) or such lesser amount as
shall equal the aggregate outstanding principal balance of the Loans made by
Lender to Borrower pursuant to the Credit Agreement referred to below (as
amended from time to time, the "Credit Agreement"), on or before the Maturity
----------------
Date specified in the Credit Agreement; and to pay interest on said sum, or such
lesser amount, at the rates and on the dates provided in the Credit Agreement.
Borrower shall make all payments hereunder, for the account of Lender's
Applicable Lending Office, to Agent as indicated in the Credit Agreement, in
lawful money of the United States and in same day or immediately available
funds.
Borrower hereby authorizes Lender to record on the schedule(s) annexed to
this note the date and amount of each Loan and of each payment or prepayment of
principal made by Borrower and agrees that all such notations shall constitute
prima facie evidence of the matters noted; provided, however, that the failure
-------- -------
of Lender to make any such notation shall not affect Borrower's obligations
hereunder.
This note is one of the Notes referred to in the Credit Agreement, dated
as of July 31, 1996, among Borrower, Lender and the other financial institutions
from time to time parties thereto (collectively, the "Lenders") and ABN AMRO
-------
Bank N.V., as agent for the Lenders. This note is subject to the terms of the
Credit Agreement, including the rights of prepayment and the rights of
acceleration of maturity set forth therein. Terms used herein have the meanings
assigned to those terms in the Credit Agreement, unless otherwise defined
herein.
The transfer, sale or assignment of any rights under or interest in this
note is subject to certain restrictions contained in the Credit Agreement,
including Paragraph 8.05 thereof.
Borrower shall pay all reasonable fees and expenses, including reasonable
attorneys' fees, incurred by Lender in the enforcement or attempt to enforce any
of Borrower's obligations hereunder not performed when due. Borrower hereby
waives notice of presentment, demand, protest or notice of any other kind.
D-1
This note shall be governed by and construed in accordance with the laws of the
State of California.
ADAC LABORATORIES
By:___________________________
Name:______________________
Title:_____________________
D-2
LOANS AND PAYMENTS OF PRINCIPAL
================================================================================
Amount of Unpaid
Type of Amount of Interest Principal Paid Principal Notation
Date Loan Loan Period or Prepaid Balance Made By
================================================================================
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
D-3
EXHIBIT E
---------
SECURITY AGREEMENT
------------------
THIS SECURITY AGREEMENT, dated as of July 31, 1996 is executed by ADAC
LABORATORIES, a California corporation ("Borrower"), in favor of ABN AMRO BANK
--------
N.V., a Netherlands public company acting through its San Francisco
International Branch, acting as agent (in such capacity, "Agent") for the
-----
financial institutions which are from time to time parties to the Credit
Agreement referred to in Recital A below (collectively, the "Lenders").
--------- -------
RECITALS
--------
A. Pursuant to a Credit Agreement, dated as of July 31, 1996 (the
"Credit Agreement"), among Borrower, the Lenders and Agent, the Lenders have
----------------
agreed to extend certain credit facilities to Borrower upon the terms and
subject to the conditions set forth therein.
B. The Lenders' obligations to extend the credit facilities to
Borrower under the Credit Agreement are subject, among other conditions, to
receipt by Agent of this Security Agreement, duly executed by Borrower.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Borrower hereby agrees with Agent, for the ratable benefit of the
Lenders and Agent, as follows:
1. DEFINITIONS AND INTERPRETATION. When used in this Security
------------------------------
Agreement, the following terms shall have the following respective meanings:
"Account Debtor" shall have the meaning given to that term in
--------------
subparagraph 3(g) hereof.
-----------------
"Agent" shall have the meaning given to that term in the introductory
-----
paragraph hereof.
"Borrower" shall have the meaning given to that term in the
--------
introductory paragraph hereof.
"Collateral" shall have the meaning given to that term in paragraph 2
---------- -----------
hereof.
"Collateral Certificate" shall have the meaning given to that term in
----------------------
the Credit Agreement.
E-1
"Credit Agreement" shall have the meaning given to that term in
----------------
Recital A hereof.
---------
"Depositary Bank" shall have the meaning given to that term in
---------------
subparagraph 4(e) hereof.
-----------------
"Equipment" shall have the meaning given to that term in Attachment 1
--------- ------------
hereto.
"Inventory" shall have the meaning given to that term in Attachment 1
--------- ------------
hereto.
"Lenders" shall have the meaning given to that term in the
-------
introductory paragraph hereof.
"Receivables" shall have the meaning given to that term in Attachment
----------- ----------
1 hereto.
-
"Related Contracts" shall have the meaning given to that term in
-----------------
Attachment 1 hereto.
------------
"Secured Obligations" shall have the meaning given to that term in the
-------------------
Credit Agreement.
"UCC" shall mean the Uniform Commercial Code as in effect in the State
---
of California from time to time.
Unless otherwise defined herein, all other capitalized terms used herein and
defined in the Credit Agreement shall have the respective meanings given to
those terms in the Credit Agreement, and all terms defined in the UCC shall have
the respective meanings given to those terms in the UCC. The rules of
construction set forth in Section I of the Credit Agreement shall, to the extent
---------------------------------
not inconsistent with the terms of this Security Agreement, apply to this
Security Agreement and are hereby incorporated by reference.
2. GRANT OF SECURITY INTEREST. As security for the Secured Obligations,
--------------------------
Borrower hereby pledges and assigns to Agent (for the ratable benefit of the
Lenders and Agent) and grants to Agent (for the ratable benefit of the Lenders
and Agent) a security interest in all right, title and interest of Borrower in
and to the property described in Attachment 1 hereto, whether now owned or
------------
hereafter acquired (collectively and severally, the "Collateral"), which
----------
Attachment 1 is incorporated herein by this reference.
- ------------
3. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to
------------------------------
the Lenders and Agent as follows:
(a) Borrower is the legal and beneficial owner of the Collateral (or,
in the case of after-acquired Collateral, at the time Borrower acquires
rights in the Collateral, will be the legal and beneficial owner thereof).
No other Person has (or, in the case of after-acquired Collateral, at the
E-2
time Borrower acquires rights therein, will have) any right, title, claim
or interest (by way of Lien, purchase option or otherwise) in, against or
to the Collateral, other than Permitted Liens.
(b) Agent has (or in the case of after-acquired Collateral, at the
time Borrower acquires rights therein, will have) a first priority
perfected security interest in the Collateral, except for the prior Liens
set forth in Schedule 5.02(b) to the Credit Agreement.
----------------------------------------
(c) All Equipment and Inventory are (i) located at the locations
indicated in item 8 of the Collateral Certificate, (ii) in transit to such
------------------------------------
locations or (iii) in transit to a third party purchaser which will become
obligated on a Receivable to Borrower upon receipt. Except for Equipment
and Inventory referred to in clauses (ii) and (iii) of the preceding
----------------------
sentence, Borrower has exclusive possession and control of the Inventory
and Equipment.
(d) All Inventory has been (or, in the case of hereafter produced
Inventory, will be) produced in compliance with all applicable Governmental
Rules, including the Fair Labor Standards Act (if applicable).
(e) Borrower keeps all records concerning the Receivables and the
originals of all Related Contracts at its chief executive office located at
the address set forth in item 2 of the Collateral Certificate.
------------------------------------
(f) Borrower has delivered to Agent, together with all necessary stock
powers, endorsements, assignments and other necessary instruments of
transfer, the originals of all Receivables consisting of instruments and
chattel paper in amounts exceeding $100,000.
(g) Each Receivable is genuine and enforceable against the party
obligated to pay the same (an "Account Debtor") free from any right of
--------------
rescission, defense, setoff or discount.
(h) Each insurance policy maintained by Borrower is validly existing
and is in full force and effect. Borrower is not in default in any
material respect under the provisions of any insurance policy, and there
are no facts which, with the giving of notice or passage of time (or both),
would result in such a default under any provision of any such insurance
policy.
(i) The information set forth in the Collateral Certificate is true,
--------------------------
correct and accurate.
4. COVENANTS. Borrower hereby agrees as follows:
---------
E-3
(a) Borrower, at Borrower's expense, shall promptly procure, execute
and deliver to Agent all documents, instruments and agreements and perform
all acts which are necessary or desirable, or which Agent may request, to
establish, maintain, preserve, protect and perfect the Collateral, the Lien
granted to Agent therein and the first priority of such Lien or to enable
Agent to exercise and enforce its rights and remedies hereunder with
respect to any Collateral. Without limiting the generality of the
preceding sentence, Borrower shall (i) procure, execute and deliver to
Agent all stock powers, endorsements, assignments, financing statements and
other instruments of transfer requested by Agent, (ii) deliver to Agent
promptly upon receipt all originals of Collateral consisting of
instruments, documents and chattel paper in amounts exceeding $100,000 and
(iii) cause the Lien of Agent in any Collateral consisting of securities,
securities entitlements or other investment property to be recorded or
registered in the books of any financial intermediary or clearing
corporation requested by Agent.
(b) Borrower shall not use or permit any Collateral to be used in
violation of (i) any provision of the Credit Agreement, this Security
Agreement or any other Security Document, (ii) any applicable Governmental
Rule where such use might have a Material Adverse Effect, or (iii) any
policy of insurance covering the Collateral.
(c) Borrower shall pay promptly when due all taxes and other
governmental charges, all Liens and all other charges now or hereafter
imposed upon, relating to or affecting any Collateral.
(d) Without thirty (30) days' prior written notice to Agent, Borrower
shall not (i) change Borrower's name or place of business (or, if Borrower
has more than one place of business, its chief executive office), or the
office in which Borrower's records relating to Receivables or the originals
of Related Contracts are kept, (ii) keep Collateral consisting of chattel
paper and documents at any location other than its chief executive office
set forth in item 2 of the Collateral Certificate, or (iii) keep Collateral
------------------------------------
consisting of Equipment, Inventory or other goods at any location other
than the locations set forth in item 8 of the Collateral Certificate.
------------------------------------
(e) For each deposit account maintained by Borrower, Borrower shall
(i) execute and deliver to the bank or other depository institution at
which such deposit account is maintained (the "Depositary Bank") a Notice
---------------
of Security Interest in the form of Attachment 2 hereto and (ii) cause the
------------
Depositary Bank to execute and deliver to Agent an Acknowledgment and
Agreement in the form set forth in such Notice of Security Interest.
Without ten (10) days prior written notice to Agent, Borrower shall not
establish any
E-4
deposit account not set forth in item 16 of the Collateral Certificate.
-------------------------------------
(f) Borrower shall deposit, or cause to be deposited, all remittances,
checks and other funds (in whatever form) received with respect to
Receivables to a deposit account for which Borrower has complied with
subparagraph 4(e) above and in which Agent has a first priority perfected
-----------------
security interest.
(g) Borrower shall appear in and defend any action or proceeding which
may affect its title to or Agent's interest in the Collateral.
(h) If Agent gives value to enable Borrower to acquire rights in or
the use of any Collateral, Borrower shall use such value for such purpose.
(i) Borrower shall keep separate, accurate and complete records of the
Collateral and shall provide Agent with such records and such other reports
and information relating to the Collateral as Agent may reasonably request
from time to time.
(j) Borrower shall not surrender or lose possession of (other than to
Agent), sell, encumber, lease, rent, option, or otherwise dispose of or
transfer any Collateral or right or interest therein except as permitted in
the Credit Agreement, and, notwithstanding any provision of the Credit
Agreement, Borrower shall keep the Collateral free of all Liens except
Permitted Liens.
(k) Borrower shall type, print or stamp conspicuously on the face of
all original copies of all Collateral consisting of chattel paper and
documents in excess of $100,000 not in the possession of Agent a legend
satisfactory to Agent indicating that such chattel paper and documents are
subject to the security interest granted hereby.
(l) Borrower shall collect, enforce and receive delivery of the
Receivables in accordance with past practice until otherwise notified by
Agent.
(m) Borrower shall comply with all material Requirements of Law
applicable to Borrower which relate to the production, possession,
operation, maintenance and control of the Collateral (including, without
limitation, the Fair Labor Standards Act).
(n) Borrower shall (i) maintain and keep in force insurance of the
types and in amounts customarily carried from time to time during the term
of this Credit Agreement in its lines of business, including fire, public
liability, property damage and worker's compensation, such insurance to
E-5
be carried with companies and in amounts satisfactory to Agent, (ii)
deliver to Agent from time to time, as Agent may request, schedules setting
forth all insurance then in effect, and (iii) deliver to Agent copies of
each policy of insurance which replaces, or evidences the renewal of, each
existing policy of insurance at least fifteen (15) days prior to the
expiration of such policy. Agent shall be named as additional insured or
additional loss payee, as appropriate, on all liability and property
insurance of Borrower and such policies shall contain such additional
endorsements as shall be required by Agent. Prior to the occurrence and the
continuance of an Event of Default, all proceeds of any property insurance
paid as a result of any event or occurrence shall be paid to Borrower. All
proceeds of any property insurance paid after the occurrence and during the
continuance of an Event of Default shall be paid to Agent to be held as
Collateral and applied as provided in the Credit Agreement or, at the
election of the Required Lenders, returned to Borrower.
5. AUTHORIZED ACTION BY AGENT. Borrower hereby irrevocably appoints
--------------------------
Agent as its attorney-in-fact and agrees that Agent may perform (but Agent shall
not be obligated to and shall incur no liability to Borrower or any third party
for failure so to do) any act which Borrower is obligated by this Security
Agreement to perform, and to exercise such rights and powers as Borrower might
exercise with respect to the Collateral, including, without limitation, the
right to (a) collect by legal proceedings or otherwise and endorse, receive and
receipt for all dividends, interest, payments, proceeds and other sums and
property now or hereafter payable on or on account of the Collateral; (b) enter
into any extension, reorganization, deposit, merger, consolidation or other
agreement pertaining to, or deposit, surrender, accept, hold or apply other
property in exchange for the Collateral; (c) insure, process, preserve and
enforce the Collateral; (d) make any compromise or settlement, and take any
action it deems advisable, with respect to the Collateral; (e) pay any
Indebtedness of Borrower relating to the Collateral; and (f) execute UCC
financing statements and other documents, instruments and agreements required
hereunder; provided, however, that Agent may exercise such powers only after the
-------- -------
occurrence and during the continuance of an Event of Default. Borrower agrees
to reimburse Agent upon demand for all reasonable costs and expenses, including
attorneys' fees, Agent may incur while acting as Borrower's attorney-in-fact
hereunder, all of which costs and expenses are included in the Secured
Obligations. Borrower agrees that such care as Agent gives to the safekeeping
of its own property of like kind shall constitute reasonable care of the
Collateral when in Agent's possession; provided, however, that Agent shall not
-------- -------
be required to make any presentment, demand or protest, or give any notice and
need not take any action to preserve any rights against any prior party or any
other Person in connection with the Secured Obligations or with respect to the
Collateral.
E-6
6. DEFAULT AND REMEDIES. Borrower shall be deemed in default under this
--------------------
Security Agreement upon the occurrence and during the continuance of an Event of
Default, as that term is defined in the Credit Agreement. In addition to all
other rights and remedies granted to Agent by this Security Agreement, the
Credit Agreement, the other Credit Documents, the UCC and other applicable
Governmental Rules, Agent may, upon the occurrence and during the continuance of
any Event of Default, exercise any one or more of the following rights and
remedies: (a) collect, receive, appropriate or realize upon the Collateral or
otherwise foreclose or enforce Agent's security interests in any or all
Collateral in any manner permitted by applicable Governmental Rules or in this
Security Agreement; (b) notify any or all Account Debtors to make payments on
Receivables directly to Agent; (c) sell or otherwise dispose of any or all
Collateral at one or more public or private sales, whether or not such
Collateral is present at the place of sale, for cash or credit or future
delivery, on such terms and in such manner as Agent may determine; (d) require
Borrower to assemble the Collateral and make it available to Agent at a place to
be designated by Agent; (e) enter onto any property where any Collateral is
located and take possession thereof with or without judicial process; and (f)
prior to the disposition of the Collateral, store, process, repair or
recondition any Collateral consisting of goods, perform any obligations and
enforce any rights of Borrower under any Related Contracts or otherwise prepare
and preserve Collateral for disposition in any manner and to the extent Agent
deems appropriate. In furtherance of Agent's rights hereunder, Borrower hereby
grants to Agent an irrevocable, non-exclusive license (exercisable without
royalty or other payment by Agent) to use, license or sublicense any patent,
trademark, tradename, copyright or other intellectual property in which Borrower
now or hereafter has any right, title or interest, together with the right of
access to all media in which any of the foregoing may be recorded or stored. In
any case where notice of any sale or disposition of any Collateral is required,
Borrower hereby agrees that seven (7) days notice of such sale or disposition is
reasonable.
7. MISCELLANEOUS.
-------------
(a) Notices. Except as otherwise specified herein, all notices,
-------
requests, demands, consents, instructions or other communications to or
upon Borrower or Agent under this Security Agreement shall be given as
provided in Paragraph 8.01 of the Credit Agreement.
--------------------------------------
(b) Waivers; Amendments. Any term, covenant, agreement or condition
-------------------
of this Security Agreement may be amended or waived only as provided in the
Credit Agreement. No failure or delay by Agent or any Lender in exercising
any right hereunder shall operate as a waiver thereof or of any other right
nor shall any single or partial exercise of any such right preclude any
other further exercise thereof or of any other right. Unless otherwise
specified in any such
E-7
waiver or consent, a waiver or consent given hereunder shall be effective
only in the specific instance and for the specific purpose for which given.
(c) Successors and Assigns. This Security Agreement shall be binding
----------------------
upon and inure to the benefit of Agent, the Lenders and Borrower and their
respective successors and assigns; provided, however, that Agent, the
-------- -------
Lenders and Borrower may sell, assign and delegate their respective rights
and obligations hereunder only as permitted by the Credit Agreement. Agent
and the Lenders may disclose this Security Agreement as provided in the
Credit Agreement.
(d) Partial Invalidity. If at any time any provision of this Security
------------------
Agreement is or becomes illegal, invalid or unenforceable in any respect
under the law or any jurisdiction, neither the legality, validity or
enforceability of the remaining provisions of this Security Agreement nor
the legality, validity or enforceability of such provision under the law of
any other jurisdiction shall in any way be affected or impaired thereby.
(e) Cumulative Rights, etc. The rights, powers and remedies of Agent
----------------------
and the Lenders under this Security Agreement shall be in addition to all
rights, powers and remedies given to Agent and the Lenders by virtue of any
applicable Governmental Rule, the Credit Agreement, any other Credit
Document or any other agreement, all of which rights, powers, and remedies
shall be cumulative and may be exercised successively or concurrently
without impairing Agent's rights hereunder. Borrower waives any right to
require Agent or any Lender to proceed against any Person or to exhaust any
Collateral or to pursue any remedy in Agent's or such Lender's power.
(f) Payments Free of Taxes, Etc. All payments made by Borrower under
----------------------------
this Security Agreement shall be made by Borrower free and clear of and
without deduction for any and all present and future taxes, levies,
charges, deductions and withholdings. In addition, Borrower shall pay upon
demand any stamp or other taxes, levies or charges of any jurisdiction with
respect to the execution, delivery, registration, performance and
enforcement of this Security Agreement. Upon request by Agent, Borrower
shall furnish evidence satisfactory to Agent that all requisite
authorizations and approvals by, and notices to and filings with,
governmental authorities and regulatory bodies have been obtained and made
and that all requisite taxes, levies and charges have been paid.
(g) Borrower's Continuing Liability. Notwithstanding any provision of
-------------------------------
this Security Agreement or any other Credit Document or any exercise by
Agent of any of its rights hereunder or thereunder (including, without
limitation, any right to collect or enforce any Collateral), (i) Borrower
E-8
shall remain liable to perform its obligations and duties in connection
with the Collateral (including, without limitation, the Related Contracts
and all other agreements relating to the Collateral) and (ii) neither Agent
nor any Lender shall assume any liability to perform such obligations and
duties or to enforce any of Borrower's rights in connection with the
Collateral (including, without limitation, the Related Contracts and all
other agreements relating to the Collateral).
(h) Governing Law. This Security Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of California without
reference to conflicts of law rules (except to the extent otherwise
provided in the UCC).
IN WITNESS WHEREOF, Borrower has caused this Security Agreement to be
executed as of the day and year first above written.
ADAC LABORATORIES
By:_____________________________
Name:_________________________
Title:________________________
E-9
ATTACHMENT 1
TO SECURITY AGREEMENT
---------------------
All right, title and interest of Borrower, whether now owned or
hereafter acquired, in and to the following:
(a) All equipment and fixtures (including, without limitation, all
diagnostic imaging equipment, furniture, vehicles and other machinery and office
equipment), together with all additions and accessions thereto and replacements
therefor (collectively, the "Equipment");
---------
(b) All inventory (including, without limitation, (i) all raw
materials, work in process and finished goods and (ii) all such goods which are
returned to or repossessed by Borrower), together with all additions and
accessions thereto, replacements therefor, products thereof and documents
therefor (collectively, the "Inventory");
---------
(c) All accounts, chattel paper, instruments, deposit accounts and
other rights to the payment of money (including, without limitation, general
intangibles and contract rights) (collectively, the "Receivables") and all
-----------
contracts, security agreements, leases, guaranties and other agreements
evidencing, securing or otherwise relating to the Receivables (collectively, the
"Related Contracts");
-----------------
(d) All other general intangibles and contract rights not otherwise
described above (including, without limitation, (i) customer and supplier lists
and contracts, books and records, insurance policies, tax refunds, contracts for
the purchase of real or personal property; (ii) all patents, copyrights,
trademarks, tradenames and service marks, (iii) all licenses to use,
applications for, and other rights to, such patents, copyrights, trademarks,
tradenames and service marks, and (iv) all goodwill of Borrower);
(e) All other property not otherwise described above (including,
without limitation, all money, certificated securities, uncertificated
securities, securities entitlements and other investment property, documents and
goods); and
(f) All proceeds of the foregoing (including, without limitation,
whatever is receivable or received when Collateral or proceeds is sold,
collected, exchanged, returned, substituted or otherwise disposed of, whether
such disposition is voluntary or involuntary, including rights to payment and
return premiums and insurance proceeds under insurance with respect to any
Collateral, and all rights to payment with respect to any cause of action
affecting or relating to the Collateral).
E(1) - 1
ATTACHMENT 2
TO SECURITY AGREEMENT
---------------------
NOTICE OF SECURITY INTEREST
IN
DEPOSIT ACCOUNT
---------------------------
, 199
------------- ------ --
[Name of Depositary Bank]
-----------------------
[Address of Depositary Bank]
--------------------------
- ------------------------------
- ------------------------------
ADAC LABORATORIES, a California corporation ("Borrower") and ABN AMRO
--------
BANK N.V., a Netherlands public company acting through its San Francisco
International Branch, acting as agent for certain financial institutions (in
such capacity, "Agent"), under that certain Credit Agreement dated as of
-----
July 31, 1996 (the "Credit Agreement"), hereby notify you that Borrower has
----------------
granted to Agent a security interest in all deposit accounts maintained by
Borrower with you including, without limitation, the deposit accounts described
below:
Account Depositor's Account
Number Name Type
-------------- ------------------ ------------
-------------- ------------------ ------------
-------------- ------------------ ------------
-------------- ------------------ ------------
Borrower and Agent authorize you to continue to allow Borrower to make deposits
to, draw checks upon and otherwise withdraw funds from such deposit accounts
(the "Deposit Accounts") without the consent of Agent until Agent shall instruct
----------------
you otherwise.
Borrower has authorized Agent to inform you when an Event of Default
(as defined in the Credit Agreement) has occurred and is continuing and at such
time instruct you to cease to permit any further payments or withdrawals from
the Deposit Accounts by Borrower and/or to pay any or all amounts in the Deposit
Accounts to Agent. Borrower authorizes and directs you to comply with all such
instructions received by you from Agent without further inquiry on your part and
hereby agrees to indemnify and hold harmless you and
E(2) - 1
your officers, directors and employees from and for any compliance by you with
such instructions.
ADAC LABORATORIES
By:______________________________
Name:___________________________
Title:__________________________
ABN AMRO BANK N.V., San Francisco
International Branch, as Agent
By ABN AMRO North America, Inc.,
its agent
By:______________________________
Name:___________________________
Title:__________________________
E(2) - 2
ACKNOWLEDGEMENT AND AGREEMENT
OF DEPOSITARY BANK
-----------------------------
The undersigned depositary bank hereby acknowledges receipt of the
above notice and agrees with Borrower and Agent to comply with any instruction
it may receive from Agent in accordance therewith. The undersigned confirms to
Agent that the information set forth above regarding the Deposit Accounts is
accurate, that such Deposit Accounts are currently open and that the undersigned
has no prior notice of any other security interest, lien or interest in such
Deposit Accounts. The undersigned waives any right of setoff except for its
right or recoupment for returned items.
------------------------------------
By:_________________________________
Name:_____________________________
Title:____________________________
E(2) - 3
EXHIBIT F
---------
SECURITY AGREEMENT
------------------
(INTELLECTUAL PROPERTY)
-----------------------
THIS SECURITY AGREEMENT (INTELLECTUAL PROPERTY), dated as of July 31,
1996 is executed by ADAC LABORATORIES, a California corporation ("Borrower") in
--------
favor of ABN AMRO BANK N.V., a Netherlands public company acting through its San
Francisco International Branch, acting as agent (in such capacity, "Agent") for
-----
the financial institutions which are from time to time parties to the Credit
Agreement referred to in Recital A below (collectively, the "Lenders").
--------- -------
RECITALS
--------
A. Pursuant to a Credit Agreement, dated as of July 31, 1996 (as
amended from time to time, the "Credit Agreement"), among Borrower, the Lenders
----------------
and Agent, the Lenders have agreed to extend certain credit facilities to
Borrower upon the terms and subject to the conditions set forth therein.
B. The Lenders' obligations to extend the credit facilities to
Borrower under the Credit Agreement are subject, among other conditions, to
receipt by Agent of this Security Agreement duly executed by Borrower.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Borrower hereby agrees with Agent, for the ratable benefit of the
Lenders and Agent, as follows:
1. DEFINITIONS AND INTERPRETATION. When used in this Security
------------------------------
Agreement, the following terms shall have the following respective meanings:
"Agent" shall have the meaning given to that term in the introductory
-----
paragraph hereof.
"Borrower" shall have the meaning given to that term in the
--------
introductory paragraph hereof.
"Collateral" shall have the meaning given to that term in paragraph 2
---------- -----------
hereof.
"Credit Agreement" shall have the meaning given to that term in
----------------
Recital A hereof.
---------
F-1
"Copyright Office" shall mean the United States Copyright Office or
----------------
any successor office or agency thereto.
"Copyrights" shall have the meaning given to that term in Attachment 1
---------- ------------
hereto.
"Lenders" shall have the meaning given to that term in the
-------
introductory paragraph hereof.
"Mask Works" shall have the meaning given to that term in Attachment 1
---------- ------------
hereto.
"Patent and Trademark Office" shall mean the United States Patent and
---------------------------
Trademark Office or any successor office or agency thereto.
"Patent Applications" shall mean all applications made by, or on
-------------------
behalf of, Borrower to the Patent and Trademark Office or to any similar
office or agency of any foreign country or political subdivision thereof
for the registration of Patents.
"Patent Registrations" shall mean all Patents registered with the
--------------------
Patent and Trademark Office or with any similar office or agency of any
foreign country or political subdivision thereof and all Patent
Applications.
"Patents" shall have the meaning given to that term in Attachment 1
------- ------------
hereto.
"Secured Obligations" shall have the meaning given to that term in the
-------------------
Credit Agreement.
"Trade Secrets" shall have the meaning given to that term in
-------------
Attachment 1 hereto.
------------
"Trademarks" shall have the meaning given to that term in Attachment 1
---------- ------------
hereto.
"UCC" shall mean the Uniform Commercial Code as in effect in the State
---
of California from time to time.
Unless otherwise defined herein, all other capitalized terms used herein and
defined in the Credit Agreement shall have the respective meanings given to
those terms in the Credit Agreement, and all terms defined in the UCC shall have
the respective meanings given to those terms in the UCC. The rules of
construction set forth in Section I of the Credit Agreement shall, to the extent
---------------------------------
not inconsistent with the terms of this Security Agreement, apply to this
Security Agreement and are hereby incorporated by reference.
2. GRANT OF SECURITY INTEREST. As security for the Secured Obligations,
--------------------------
Borrower hereby pledges and assigns to Agent (for the ratable benefit of the
Lenders and Agent) and grants to
F-2
Agent (for the ratable benefit of the Lenders and Agent) a security interest in
all right, title and interest of Borrower in and to the property described in
Attachment 1 hereto, whether now owned or hereafter acquired (collectively and
- ------------
severally, the "Collateral"), which Attachment 1 is incorporated herein by this
---------- ------------
reference.
3. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to
------------------------------
the Lenders and Agent as follows:
(a) Borrower is the legal and beneficial owner of the Collateral (or,
in the case of after-acquired Collateral, at the time Borrower acquires
rights in the Collateral, will be the beneficial owner thereof). No other
Person has (or, in the case of after-acquired Collateral, at the time
Borrower acquires rights therein, will have) any right, title, claim or
interest (by way of Lien, purchase option or otherwise) in, against or to
the Collateral, other than Permitted Liens.
(b) Agent has (or in the case of after-acquired Collateral, at the
time Borrower acquires rights therein, will have) a first priority
perfected security interest in the Collateral, subject to Permitted Liens;
provided, however, that (i) the security interest of Agent may be subject
-------- -------
to Permitted Liens and (ii) Agent must make the filings with the Patent and
Trademark Office contemplated by this Security Agreement to perfect its
security interest in Borrower's Patents and Trademarks registered with that
office.
(c) Borrower has the sole, full and unencumbered right, title and
interest in and to (i) each of the Trademarks described in Schedule A to
-------------
Attachment 1 hereto for the goods and services covered by the registrations
------------
thereof, (ii) each of the Patents described in Schedule B to Attachment 1
--------------------------
hereto, (iii) each of the Copyrights described in Schedule C to Attachment
------------------------
1 hereto and (iv) each of the Mask Works described in Schedule D to
- -------------
Attachment 1 hereto. The registrations for such Trademarks and Patents are
------------
valid and enforceable and in full force and effect and none of the Patents
has been abandoned or dedicated. According to the records of the Copyright
Office, such Copyrights and Mask Works are valid and enforceable and in
full force and effect.
(d) Borrower does not own any Patents, Trademarks, Copyrights or Mask
Works registered in, or the subject of pending applications in, the Patent
and Trademark Office or the Copyright Office, other than those described in
Schedules A, B, C and D to Attachment 1 hereto.
---------------------------------------
F-3
(e) To the best of Borrower's knowledge, no claim has been made by any
third party and remains unresolved that any of the Patents, Trademarks,
Copyrights or Mask Works is invalid and unenforceable or violates or may
violate the rights of any Person.
(f) Borrower has obtained from each employee who may be considered the
inventor of patentable inventions (invented within the scope of such
employee's employment with Borrower) an agreement to assign to Borrower all
rights to such inventions, including Patents.
(g) Borrower has exercised reasonable prudence to protect the secrecy
and the validity under applicable law of all material Trade Secrets.
4. COVENANTS OF BORROWER. Borrower hereby agrees as follows:
---------------------
(a) Borrower, at Borrower's expense, shall promptly procure, execute
and deliver to Agent all documents, instruments and agreements and perform
all acts which are necessary, or which Agent may reasonably request, to
establish, maintain, preserve, protect and perfect the Collateral, the Lien
granted to Agent therein and the first priority of such Lien or to enable
Agent to exercise and enforce its rights and remedies hereunder with
respect to any Collateral. Without limiting the generality of the
preceding sentence, Borrower shall (i) execute all notices of security
interest for each relevant type of intellectual property in forms suitable
for filing with the Patent and Trademark Office or the Copyright Office, as
applicable, substantially in the forms of Attachments 2 and 3 hereto or
-------------------
other forms acceptable to Agent and (ii) take all commercially reasonable
steps in any proceeding before the Patent and Trademark Office, the
Copyright Office or any similar office or agency in any other country or
any political subdivision thereof, to diligently prosecute or maintain, as
applicable, each application and registration of material Patents,
Trademarks, Copyrights and Mask Works, including filing of renewals,
affidavits of use, affidavits of incontestability and opposition,
interference and cancellation proceedings (except to the extent that
dedication, abandonment or invalidation is permitted hereunder or would not
be reasonably likely to have a Material Adverse Effect).
(b) Borrower shall not use any Collateral or permit any Collateral to
be used in violation of (i) any provision of the Credit Agreement, this
Security Agreement or any other Credit Document, (ii) any applicable
Governmental Rule or Contractual Obligation where such use could reasonably
be expected to have a Material Adverse Effect, or (iii) any policy of
insurance covering the Collateral where such use is reasonably likely to
have a Material Adverse Effect.
F-4
(c) Borrower shall pay promptly when due all taxes and other
governmental charges, all Liens and all other charges now or hereafter
imposed upon, relating to or affecting any Collateral.
(d) Borrower shall appear in and defend any action or proceeding which
may affect its title to or Agent's security interest in the Collateral if
an adverse decision is reasonably likely to have a Material Adverse Effect.
(e) Borrower shall keep separate, accurate and complete records of the
Collateral and shall permit Agent to examine and make copies of such
records and provide such reports and information relating to the Collateral
as Agent may reasonably request from time to time.
(f) Borrower shall not surrender or lose possession of (other than to
Agent), sell, encumber, lease, rent, option, license or otherwise dispose
of or transfer any Collateral or right or interest therein except as
permitted in the Credit Agreement, and Borrower shall keep the Collateral
free of all Liens except Permitted Liens.
(g) Borrower (either directly or through licensees) will make
commercially reasonable efforts to continue to use the Trademarks in
connection with each and every trademark class of goods or services
applicable to its current line of products or services as reflected in its
current catalogs, brochures, price lists or similar materials in order to
maintain the Trademarks in full force and effect free from any claim of
abandonment for nonuse, and Borrower will not (and will not permit any
licensee thereof to) do any act or knowingly omit to do any act whereby
Borrower's rights in any material Trademark is reasonably likely to become
invalidated. Borrower will not do any act, or omit to do any act, whereby
the Patents or Patent Registrations may become abandoned or dedicated or
the remedies available against potential infringers weakened if such action
or omission would be reasonably likely to have a Material Adverse Effect
and shall notify Agent immediately if it knows of any reason or has reason
to know that any such Patent Registration may become abandoned or
dedicated. Borrower will not do any act or omit to do any act, whereby the
Copyrights or Mask Works may become abandoned or dedicated or the remedies
available against potential infringers weakened if such action or omission
would be reasonably likely to have a Material Adverse Effect, and shall
notify Agent immediately if it knows of any reason or has reason to know
that any such Copyright or Mask Work may become abandoned or dedicated.
(h) Borrower will promptly notify Agent upon the filing, either by
Borrower or through any agent, employee, licensee or designee, of (i) an
application for the registration of any Patent, Trademark, Copyright or
Mask
F-5
Work with the Patent and Trademark Office or the Copyright Office or
any similar office or agency in any other country or any political
subdivision thereof, (ii) any assignment of any Patent or Trademark, which
Borrower may acquire from a third party, with the Patent and Trademark
Office or any similar office or agency in any other country or any
political subdivision thereof, or (iii) any assignment of any Copyright or
Mask Work, which Borrower may acquire from a third party, with the
Copyright Office or any similar office or agency in any other country or
any political subdivision thereof.
(i) Borrower shall (i) make application to the Patent and Trademark
Office to register any material unpatented but patentable inventions
developed by Borrower or its employees (within the scope of their
employment), unless Borrower, in the exercise of its prudent business
judgment, deems any such Patent not to have any significant commercial
value or determines that its rights thereunder are better preserved as a
Trade Secret, (ii) make application to the Patent and Trademark Office to
register any registerable but unregistered material Trademarks used by
Borrower in connection with its products or services unless Borrower in the
exercise of its prudent business judgment, deems any such Trademark not to
have any significant commercial value, and (iii) make application to the
Copyright Office to register any material unregistered Copyright or Mask
Work to which Borrower has rights unless Borrower in the exercise of its
prudent business judgment, deems any such Copyright or Mask Work not to
have any significant commercial value or determines that its rights
thereunder are better protectable as a Trade Secret.
(j) Borrower shall (i) use proper statutory notice in connection with
its use of the Trademarks, Copyrights and Mask Works, (ii) maintain
consistent standards of quality in its manufacture of products sold under
the Trademarks or provision of services in connection with the Trademarks,
and (iii) take all steps necessary to protect the secrecy and the validity
under applicable law of all material Trade Secrets.
(k) If any Executive Officer of Borrower learns of any use by any
Person of any term or design likely to cause confusion with any Trademark,
Borrower shall promptly notify Agent of such use and of all steps taken and
to be taken to remedy any infringement of such Trademark.
(l) Borrower shall maintain with each employee who may have access to
the Trade Secrets of Borrower an agreement by which such employee agrees
not to disclose such Trade Secrets and with each employee who may be the
inventor of patentable inventions (invented within the scope of such
employee's employment) an invention assignment agreement requiring such
employee to assign all rights to such
F-6
inventions, including, patents and patent applications, to Borrower and
further requiring such employee to cooperate fully with Borrower, its
successors in interest, including Agent, and their counsel, in the
prosecution of any patent application or in any litigation involving the
invention, whether such cooperation is required during such employee's
employment with Borrower or after the termination of such employment.
(m) Within ninety (90) days after the effective date of this
Agreement, Borrower shall have delivered to Agent, in form and substance
satisfactory to Agent, a complete list of (i) all material licenses of
Patents, Trademarks, Copyrights, Mask Works and Trade Secrets which
Borrower has granted to any Person, which shall be deemed incorporated into
this Agreement on Schedule E to Attachment 1 hereto, and (ii) all licenses
--------------------------
of Patents, Trademarks, Copyrights, Mask Works and Trade Secrets which any
Person has granted to Borrower, which shall be deeded to be incorporated
into this Agreement on Schedule F to Attachment 1 hereto.
--------------------------
5. AUTHORIZED ACTION BY AGENT. Borrower hereby irrevocably appoints
--------------------------
Agent as its attorney-in-fact and agrees that Agent may perform (but Agent shall
not be obligated to and shall incur no liability to Borrower or any third party
for failure so to do) any act which Borrower is obligated by this Security
Agreement to perform, and to exercise such rights and powers as Borrower might
exercise with respect to the Collateral, including, without limitation, the
right to (a) collect by legal proceedings or otherwise and endorse, receive and
receipt for all royalties, payments, proceeds and other sums and property now or
hereafter payable on or on account of the Collateral; (b) enter into any
extension, reorganization, deposit, merger, consolidation or other agreement
pertaining to, or deposit, surrender, accept, hold or apply other property in
exchange for the Collateral; (c) insure, process, preserve and enforce the
Collateral; (d) make any compromise or settlement, and take any action it deems
advisable, with respect to the Collateral; (e) pay any indebtedness of Borrower
relating to the Collateral; and (f) execute UCC financing statements and other
documents, instruments and agreements required hereunder; provided, however,
-------- -------
that Agent shall exercise such powers only after the occurrence and during the
continuance of an Event of Default. In furtherance of the powers granted in
this paragraph 5, Borrower shall execute and deliver to Agent a Special Power of
-----------
Attorney in the form of Attachment 4 hereto. Borrower agrees to reimburse Agent
------------
upon demand for all reasonable costs and expenses, including attorneys' fees,
Agent may incur while acting as Borrower's attorney-in-fact hereunder, all of
which costs and expenses are included in the Secured Obligations. Borrower
agrees that such care as Agent gives to the safekeeping of its own property of
like kind shall constitute reasonable care of the Collateral when in Agent's
possession; provided, however, that Agent shall not be required to make any
-------- -------
presentment, demand or protest, or give any notice and need not take any action
to
F-7
preserve any rights against any prior party or any other Person in connection
with the Secured Obligations or with respect to the Collateral.
6. DEFAULT AND REMEDIES. Borrower shall be deemed in default under this
--------------------
Security Agreement upon the occurrence and during the continuance of an Event of
Default, as that term is defined in the Credit Agreement. In addition to all
other rights and remedies granted to Agent by this Security Agreement, the
Credit Agreement, the other Credit Documents, the UCC and other applicable
Governmental Rules, Agent may, upon the occurrence and during the continuance of
any Event of Default, exercise any one or more of the following rights and
remedies: (a) collect, receive, appropriate or realize upon the Collateral or
otherwise foreclose or enforce Agent's security interests in any or all
Collateral in any manner permitted by applicable Governmental Rules or in this
Security Agreement; (b) notify any or all licensees to make payments on
Receivables directly to Agent; (c) sell or otherwise dispose of any or all
Collateral at one or more public or private sales, whether or not such
Collateral is present at the place of sale, for cash or credit or future
delivery, on such commercially reasonable terms and in such commercially
reasonable manner as Agent may determine; (d) upon ten (10) Business Days' prior
notice to Borrower, direct Borrower not to make any further use of the Patents,
the Trademarks (or any mark similar thereto), the Copyrights (or any work
deriving therefrom), or the Mask Works for any purpose; (e) upon ten (10)
Business Days' prior notice to Borrower, license, whether general, special or
otherwise, and whether on an exclusive or nonexclusive basis, any of the
Patents, Trademarks, Copyrights or Mask Works, throughout the world for such
term or terms, on such conditions, and in such manner, as Agent shall in its
sole discretion determine; (f) enforce (and upon notice to Borrower have the
exclusive right to enforce) against any licensee or sublicensee all rights and
remedies of Borrower in, to and under any one or more license agreements with
respect to the Collateral (without assuming any obligations or liability
thereunder), and take or refrain from taking any action under any thereof; and
(g) in addition to the foregoing, in order to implement the assignment, sale or
other disposal of any of the Collateral, pursuant to the authority granted in
paragraph 5 hereof, execute and deliver on behalf of Borrower, upon five (5)
- -----------
Business Days' prior notice to Borrower, one or more instruments of assignment
of the Patents, Trademarks, Copyrights or Mask Works (or any application or
registration thereof), in form suitable for filing, recording or registration in
any country.
7. INDEMNIFICATION AND RELEASE.
---------------------------
(a) Borrower agrees to protect, indemnify, defend and hold harmless
Agent, the Lenders and their Affiliates and their respective directors,
officers, employees, agents and advisors ("Indemnitees") as provided in
-----------
Paragraph 8.03 of the Credit Agreement.
--------------------------------------
F-8
(b) Borrower hereby releases the Indemnitees from any claims, causes
of action and demands at any time arising out of or with respect to any
actions taken or omitted to be taken by Agent under the powers of attorney
granted in paragraph 5 hereof, other than actions taken or omitted to be
-----------
taken through the gross negligence or willful misconduct of such
Indemnitees or any breach of this Agreement or the other Credit Documents.
(c) Borrower agrees to cause Agent to be named as an additional
insured with respect to any policy of insurance held by Borrower from time
to time covering product liability or intellectual property infringement
risk.
(d) Nothing contained in this Paragraph 7 shall, however, be deemed to
-----------
require Borrower to indemnify or hold harmless any Indemnitee from any
losses, costs, claims or damages arising from or relating to such
Indemnitee's gross negligence or willful misconduct.
8. MISCELLANEOUS.
-------------
(a) Notices. Except as otherwise specified herein, all notices,
-------
requests, demands, consents, instructions or other communications to or
upon Borrower or Agent under this Security Agreement shall be given as
provided in Paragraph 8.01 of the Credit Agreement.
--------------------------------------
(b) Waivers; Amendments. Any term, covenant, agreement or condition
-------------------
of this Security Agreement may be amended or waived only as provided in the
Credit Agreement. No failure or delay by Agent in exercising any right
hereunder shall operate as a waiver thereof or of any other right nor shall
any single or partial exercise of any such right preclude any other further
exercise thereof or of any other right. Unless otherwise specified in any
such waiver or consent, a waiver or consent given hereunder shall be
effective only in the specific instance and for the specific purpose for
which given.
(c) Successors and Assigns. This Security Agreement shall be binding
----------------------
upon and inure to the benefit of Agent, Borrower and the Lenders and their
respective successors and assigns; provided, however, that Agent, the
-------- -------
Lenders and Borrower may sell, assign and delegate their respective rights
and obligations hereunder only as permitted by the Credit Agreement. The
Lenders and Agent may disclose this Security Agreement as provided in the
Credit Agreement.
(d) Partial Invalidity. If at any time any provision of this Security
------------------
Agreement is or becomes illegal, invalid or unenforceable in any respect
under the law of any jurisdiction, neither the legality, validity or
enforceability of the remaining provisions of this Security Agreement nor
the legality, validity or enforceability of
F-9
such provision under the law of any other jurisdiction shall in any way be
affected or impaired thereby.
(e) Cumulative Rights, etc. The rights, powers and remedies of Agent
----------------------
under this Security Agreement shall be in addition to all rights, powers
and remedies given to Agent and the Lenders by virtue of any applicable
Governmental Rule, the Credit Agreement, any other Credit Document or any
other agreement, all of which rights, powers, and remedies shall be
cumulative and may be exercised successively or concurrently without
impairing Agent's rights hereunder. Borrower waives any right to require
Agent or any Lender to proceed against any Person or to exhaust any
Collateral or to pursue any remedy in Agent's or any Lender's power.
(f) Payments Free of Taxes, Etc. All payments made by Borrower under
----------------------------
this Security Agreement shall be made by Borrower free and clear of and
without deduction for any and all present and future taxes, levies,
charges, deductions and withholdings. In addition, Borrower shall pay upon
demand any stamp or other taxes, levies or charges of any jurisdiction with
respect to the execution, delivery, registration, performance and
enforcement of this Security Agreement. Upon request by Agent, Borrower
shall furnish evidence satisfactory to Agent that all requisite
authorizations and approvals by, and notices to and filings with,
governmental authorities and regulatory bodies have been obtained and made
and that all requisite taxes, levies and charges have been paid.
(g) Borrower's Continuing Liability. Notwithstanding any provision of
-------------------------------
this Security Agreement or any other Credit Document or any exercise by
Agent of any of its rights hereunder or thereunder (including, without
limitation, any right to collect or enforce any Collateral), (i) Borrower
shall remain liable to perform its obligations and duties in connection
with the Collateral and (ii) neither Agent nor any Lender shall assume or
be considered to have assumed any liability to perform such obligations and
duties or to enforce any of Borrower's rights in connection with the
Collateral.
(h) Governing Law. This Security Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of California without
reference to conflicts of law rules (except to the extent otherwise
provided in the UCC).
F-10
IN WITNESS WHEREOF, Borrower and Agent have caused this Security Agreement
to be executed as of the day and year first above written.
ADAC LABORATORIES
By:_____________________________
Name: ________________________
Title: _______________________
F-11
ATTACHMENT 1
TO SECURITY AGREEMENT
---------------------
All right, title and interest of Borrower, whether now owned or
hereafter acquired, in and to the following property:
(a) All trademarks, trade names, trade styles and service marks, and
all prints and labels on which said trademarks, trade names, trade styles and
service marks have appeared or appear, and all designs and general intangibles
of like nature, now existing or hereafter adopted or acquired, all right, title
and interest therein and thereto, all registrations and recordings thereof,
including, (i) all applications, registrations and recordings in the Patent and
Trademark Office or in any similar office or agency of the United States, any
state thereof, or any foreign country or any political subdivision thereof, all
whether now owned or hereafter acquired by Borrower, including those described
in Schedule A to this Attachment 1, which Schedule A is incorporated herein by
------------------------------- ----------
this reference, and (ii) all reissues, extensions or renewals thereof and all
licenses thereof (collectively, the "Trademarks");
----------
(b) All patentable inventions, patent rights, shop rights, letters
patent of the United States or any foreign country, all right, title and
interest therein and thereto, and all registrations and recordings thereof,
including (i) all Patent Registrations and recordings in the Patent and
Trademark Office or in any similar office or agency of the United States, any
state thereof or any foreign country or political subdivision thereof, all
whether now owned or hereafter acquired by Borrower, including those described
in Schedule B to this Attachment 1, which Schedule B is incorporated herein by
------------------------------- ----------
this reference, and (ii) all reissues, continuations, continuations-in-part or
extensions thereof and all licenses thereof (collectively, the "Patents");
-------
(c) All copyrights including, without limitation, (i) all original
works of authorship fixed in any tangible medium of expression, all right, title
and interest therein and thereto, and all registrations and recordings thereof,
including all applications, registrations and recordings in the Copyright Office
or in any similar office or agency of the United States, any state thereof, or
any foreign country or any political subdivision thereof, all whether now owned
or hereafter acquired by Borrower, including those described on Schedule C to
-------------
this Attachment 1, which Schedule C is incorporated herein by this reference,
- ----------------- ----------
and (ii) all extensions or renewals thereof and all licenses thereof
(collectively, the "Copyrights");
----------
(d) All mask works including all series of related images, however
fixed or encoded, in final or intermediate form, having or representing the
predetermined, three dimensional pattern of metallic, insulating, or
semiconductor material present or removed from the layers of a semiconductor
chip product, in which
F(1) - 1
series the relation of the images to one another is that each image has the
pattern of the surface of one form of the semiconductor chip product, and all
right, title and interest therein and thereto, and all registrations and
recordings thereof, including all applications, registrations and recordings in
the Copyright Office or in any similar office or agency of the United States,
any state thereof, or any foreign country or any political subdivision thereof,
all whether now owned or hereafter acquired by the Borrower, including those
described on Schedule D to this Attachment 1, which Schedule D is incorporated
------------------------------- ---------
herein by this reference, and (ii) all extensions or renewals thereof and all
licenses thereof (collectively, the "Mask Works");
----------
(e) All goodwill of Borrower's business symbolized by the Trademarks
and all customer lists and other records of Borrower relating to the
distribution of products or provision of services bearing or covered by the
Trademarks;
(f) All proprietary information, including formulas, patterns,
compilations, programs, devices, methods, techniques or processes, that derives
independent economic value, actual or potential, from not being generally known
to, and not being readily ascertainable by proper means by other Persons who can
obtain economic value from its disclosure or use, all whether now owned or
hereafter acquired by the Borrower (collectively, the "Trade Secrets");
-------------
(g) All claims by Borrower against any Person for past, present or
future infringement of the Patents, Trademarks, Copyrights, Mask Works or Trade
Secrets; and
(h) All proceeds of the foregoing (including whatever is receivable or
received when Collateral or proceeds is (are) sold, collected, exchanged,
licensed or otherwise disposed of, whether such disposition is voluntary or
involuntary, including rights to payment and return premiums and insurance
proceeds under insurance with respect to any Collateral, and all rights to
payment with respect to any cause of action affecting or relating to the
Collateral).
F(1) - 2
SCHEDULE A
TO ATTACHMENT 1
TO SECURITY AGREEMENT
---------------------
TRADEMARKS AND TRADEMARK APPLICATIONS
-------------------------------------
F(1) (A) - 1
SCHEDULE B
TO ATTACHMENT 1
TO SECURITY AGREEMENT
---------------------
PATENTS AND PATENT APPLICATIONS
-------------------------------
F(1) (B) - 1
SCHEDULE C
TO ATTACHMENT 1
TO SECURITY AGREEMENT
---------------------
COPYRIGHTS
----------
Registration No. Jurisdiction Date
- ---------------- ------------ ----
NONE
F(1) (C) - 1
SCHEDULE D
TO ATTACHMENT 1
TO SECURITY AGREEMENT
---------------------
MASK WORKS
----------
Registration No. Jurisdiction Date
- ---------------- ------------ ----
NONE
F(1) (D) - 1
SCHEDULE E
TO ATTACHMENT 1
TO SECURITY AGREEMENT
---------------------
LICENSES GRANTED BY BORROWER TO THIRD PARTIES
---------------------------------------------
TO BE PROVIDED AFTER CLOSING DATE
F(1) (E) - 1
SCHEDULE F
TO ATTACHMENT 1
TO SECURITY AGREEMENT
---------------------
LICENSES GRANTED BY THIRD PARTIES TO BORROWER
---------------------------------------------
TO BE PROVIDED AFTER CLOSING DATE
F(1) (F) - 1
ATTACHMENT 2
TO SECURITY AGREEMENT
---------------------
[SEPARATE INSTRUMENT FOR
EACH FORM OF COLLATERAL]
GRANT OF SECURITY INTEREST
--------------------------
[TRADEMARKS][COPYRIGHTS][MASK WORKS]
THIS GRANT OF SECURITY INTEREST, dated as of July 31, 1996 is executed
by ADAC LABORATORIES, a California corporation ("Borrower"), in favor of ABN
--------
AMRO BANK N.V., a Netherlands public company acting through its San Francisco
International Branch, acting as agent (in such capacity, "Agent") for the
-----
financial institutions which are from time to time parties to the Credit
Agreement referred to in Recital A below (collectively, the "Lenders").
--------- -------
A. Pursuant to a Credit Agreement, dated as of July 31, 1996 (as
amended from time to time, the "Credit Agreement"), among Borrower, the Lenders
----------------
and Agent, the Lenders have agreed to extend certain credit facilities to
Borrower upon the terms and subject to the conditions set forth therein.
[B. Borrower has adopted, used and is using the trademarks, more
particularly described on Schedules 1-A and 1-B annexed hereto and made a part
---------------------
hereof, which trademarks are registered or subject to an application for
registration in the United States Patent and Trademark Office (collectively, the
"Trademarks").]
----------
[B. Borrower owns the copyrights registered in the United States
Copyright Office, more particularly described on Schedule 1-A annexed hereto and
------------
made a part hereof (collectively, the "Copyrights").]
----------
[B. Borrower owns the mask works registered in the United States
Copyright Office, more particularly described on Schedule 1-A annexed hereto and
------------
made a part hereof (collectively, the "Mask Works").]
----------
C. Borrower has entered into a Security Agreement (Intellectual
Property) dated the date hereof (the "Security Agreement") in favor of Agent
------------------
(for the ratable benefit of the Lenders and Agent).
[D. Pursuant to the Security Agreement, Borrower has granted to Agent
(for the ratable benefit of the Lenders and Agent) a security interest in all
right, title and interest of Borrower in and to the Trademarks, together with
the goodwill of the business symbolized by the Trademarks and the customer lists
and records related to the Trademarks and the applications and registrations
thereof, and all proceeds thereof, including any and all causes of action which
may exist by reason of
F(2) - 1
infringement thereof (the "Collateral"), to secure the payment, performance and
----------
observance of the Secured Obligations, as defined in the Security Agreement.]
[D. Pursuant to the Security Agreement, Borrower has granted to Agent
(for the ratable benefit of the Lenders and Agent) a security interest in all
right, title and interest of Borrower in and to the Copyrights and the
registrations thereof, together with any renewals or extensions thereof, and all
proceeds thereof, including any and all causes of action which may exist by
reason of infringement thereof for the full term of the Copyrights (the
"Collateral"), to secure the prompt payment, performance and observance of the
----------
Secured Obligations, as defined in the Security Agreement.]
[D. Pursuant to the Security Agreement, Borrower has granted to Agent
(for the ratable benefit of the Lenders and Agent) a security interest in all
right, title and interest of Borrower in and to the Mask Works and the
registrations thereof, together with any renewals or extensions thereof, and all
proceeds thereof, including any and all causes of action which may exist by
reason of infringement thereof for the full term of the Mask Works (the
"Collateral"), to secure the prompt payment, performance and observance of the
----------
Secured Obligations, as defined in the Security Agreement.]
NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, Borrower does hereby further grant to Agent a security
interest in the Collateral to secure the prompt payment, performance and
observance of the Secured Obligations.
Borrower does hereby further acknowledge and affirm that the rights
and remedies of Agent with respect to the security interest in the Collateral
granted hereby are more fully set forth in the Security Agreement, the terms and
provisions of which are hereby incorporated herein by reference as if fully set
forth herein.
Agent's address is:
ABN AMRO BANK N.V.
c/o ABN AMRO North America, Inc.
101 California Street, Suite 4550
San Francisco, CA 94111-5812
Attn: Daniel P. Taylor
Telephone: (415) 984-3733
Fax No.: (415) 362-3524
F(2) - 2
IN WITNESS WHEREOF, Borrower has caused this Agreement to be executed as of
the day and year first above written.
ADAC LABORATORIES
By:_______________________________
Name: __________________________
Title: _________________________
F(2) - 3
STATE OF CALIFORNIA )
)
COUNTY OF _____________ )
On _________________________________ __________, ____ before me,
____________________________________, personally appeared
______________________________________________________, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in her/her/their authorized capacity(ies),
and that by his/her/their signature(s) on such instrument the person or entity
on behalf of which the person(s) acted executed the instrument.
WITNESS my hand and official seal.
Signature __________________________________ (Seal)
F(2) - 4
SCHEDULE 1-A TO GRANT OF SECURITY INTEREST
------------------------------------------
TRADEMARKS
----------
SCHEDULE 1-B TO GRANT OF SECURITY INTEREST
------------------------------------------
TRADEMARK APPLICATIONS
----------------------
Mark Application Date Application No.
- ---- ---------------- ---------------
F(2) - 5
SCHEDULE 1-A TO GRANT OF SECURITY INTEREST
------------------------------------------
COPYRIGHTS
----------
Description Registration Date Registration No.
- ----------- ----------------- ----------------
SCHEDULE 1-A TO GRANT OF SECURITY INTEREST
------------------------------------------
MASK WORKS
----------
Description Registration Date Registration No.
- ----------- ----------------- ----------------
F(2) - 6
ATTACHMENT 3
TO SECURITY AGREEMENT
---------------------
GRANT OF SECURITY INTEREST
--------------------------
(PATENTS)
THIS GRANT OF SECURITY INTEREST, dated as of July 31, 1996 is executed
by ADAC LABORATORIES, a California corporation ("Borrower"), in favor of ABN
--------
AMRO BANK N.V., a Netherlands public company acting through its San Francisco
International Branch, acting as agent (in such capacity, "Agent") for the
-----
financial institutions which are from time to time parties to the Credit
Agreement referred to in Recital A below (collectively, the "Lenders").
--------- -------
A. Pursuant to a Credit Agreement, dated as of July 31, 1996 (as
amended from time to time, the "Credit Agreement"), among Borrower, the Lenders
----------------
and Agent, the Lenders have agreed to extend certain credit facilities to
Borrower upon the terms and subject to the conditions set forth therein.
B. Borrower owns the letters patent, and/or applications for letters
patent, of the United States and certain foreign countries, more particularly
described on Schedules 1-A and 1-B annexed hereto and made a part hereof
---------------------
(collectively, the "Patents").
-------
C. Borrower has entered into a Security Agreement (Intellectual
Property) dated the date hereof (the "Security Agreement") in favor of Agent
------------------
(for the ratable benefit of the Lenders and Agent.
D. Pursuant to the Security Agreement, Borrower has assigned and
granted to Agent (for the ratable benefit of the Lenders and Agent) a security
interest in all right, title and interest of Borrower in and to the Patents,
together with any reissue, continuation, continuation-in-part or extension
thereof, and all proceeds thereof, including any and all causes of action which
may exist by reason of infringement thereof (the "Collateral"), to secure the
----------
prompt payment, performance and observance of the Secured Obligations, as
defined in the Security Agreement;
NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, Borrower does hereby further assign, transfer and convey
unto Agent and grant to Agent a security interest in the Collateral to secure
the prompt payment, performance and observance of the Secured Obligations.
Borrower does hereby further acknowledge and affirm that the rights
and remedies of Agent with respect to the assignment of and security interest in
the Collateral made and granted hereby are more fully set forth in the Security
Agreement, the terms and
F(3) - 1
provisions of which are hereby incorporated herein by reference as if fully set
forth herein.
Agent's address is:
ABN AMRO BANK N.V.
c/o ABN AMRO North America, Inc.
101 California Street, Suite 4550
San Francisco, CA 94111-5812
Attn: Daniel P. Taylor
Telephone: (415) 984-3733
Fax No.: (415) 362-3524
F(3) - 2
IN WITNESS WHEREOF, Borrower has caused this Agreement to be executed as of
the day and year first above written.
ADAC LABORATORIES
By:_____________________________
Name: ________________________
Title: _______________________
F(3) - 3
STATE OF CALIFORNIA )
)
COUNTY OF _____________ )
On _________________________________ __________, 1996 before me,
____________________________________, personally appeared
______________________________________________________, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in her/her/their authorized capacity(ies),
and that by his/her/their signature(s) on such instrument the person or entity
on behalf of which the person(s) acted executed the instrument.
WITNESS my hand and official seal.
Signature __________________________________ (Seal)
F(3) - 4
SCHEDULE 1-A TO GRANT OF SECURITY INTEREST
------------------------------------------
PATENTS
-------
SCHEDULE 1-B TO GRANT OF SECURITY INTEREST
------------------------------------------
PATENT APPLICATIONS
-------------------
Application No.
---------------
F(3) - 5
ATTACHMENT 4
TO SECURITY AGREEMENT
---------------------
SPECIAL POWER OF ATTORNEY
-------------------------
STATE OF CALIFORNIA )
) ss.:
COUNTY OF _____________ )
KNOW ALL PERSONS BY THESE PRESENTS, THAT ADAC LABORATORIES, a
California corporation ("Borrower"), pursuant to a Security Agreement
--------
(Intellectual Property), dated the date hereof (the "Security Agreement"),
------------------
between Borrower and ABN AMRO BANK N.V., as agent (for the ratable benefit of
the Lenders and Agent) (jointly in such capacities, "Agent") under that certain
-----
Credit Agreement dated July 31, 1996 (as amended from time to time, the "Credit
------
Agreement") among Borrower, the Lenders and Agent, hereby appoints and
- ---------
constitutes Agent its true and lawful attorney in fact, with full power of
substitution, and with full power and authority to perform the following acts on
behalf of Borrower:
1. For the purpose of assigning, selling, licensing or otherwise
disposing of all right, title and interest of Borrower in and to any letters
patent of the United States or any other country or political subdivision
thereof, and all registrations, recordings, reissues, continuations,
continuations-in-part and extensions thereof, and all pending applications
therefor, and for the purpose of the recording, registering and filing of, or
accomplishing any other formality with respect to, the foregoing, to execute and
deliver any and all agreements, documents, instruments of assignment or other
papers necessary or advisable to effect such purpose;
2. For the purpose of assigning, selling, licensing or otherwise
disposing of all right, title and interest of Borrower in and to any trademarks,
trade names, trade styles and service marks, and all registrations, recordings,
reissues, extensions and renewals thereof, and all pending applications
therefor, and for the purpose of the recording, registering and filing of, or
accomplishing any other formality with respect to, the foregoing, to execute and
deliver any and all agreements, documents, instruments of assignment or other
papers necessary or advisable to effect such purpose;
3. For the purpose of assigning, selling, licensing or otherwise
disposing of all right, title and interest of Borrower in and to any copyrights,
and all registrations, recordings, reissues, extensions and renewals thereof,
and all pending applications therefor, and for the purpose of the recording,
registering and filing of, or accomplishing any other formality with respect to,
the foregoing, to execute and deliver any and all agreements, documents,
instruments of assignment or other papers necessary or advisable to effect such
purpose;
F(4) - 1
4. For the purpose of assigning, selling, licensing or otherwise
disposing of all right, title and interest of Borrower in and to any mask works,
and all registrations, recordings, reissues, extensions and renewals thereof,
and all pending applications therefor, and for the purpose of the recording,
registering and filing of, or accomplishing any other formality with respect to,
the foregoing, to execute and deliver any and all agreements, documents,
instruments of assignment or other papers necessary or advisable to effect such
purpose;
5. For the purpose of evidencing and perfecting Agent's interest in
any patent, trademark, copyright or mask work not previously assigned to Agent
as security, or in any patent, trademark, copyright or mask work, which Borrower
may acquire from a third party, and for the purpose of the recording,
registering and filing of, or accomplishing any other formality with respect to,
the foregoing, to execute and deliver any and all agreements, documents,
instruments of assignment or other papers necessary or advisable to effect such
purpose.
6. To execute any and all documents, statements, certificates or other
papers necessary or advisable in order to obtain the purposes described above as
Agent may in its reasonable discretion determine.
F(4) - 2
This power of attorney is made pursuant to the Security Agreement and
takes effect solely for the purposes of thereof and is subject to the conditions
thereof and may not be revoked until termination of the Security Agreement as
provided therein.
Dated: July 31, 1996
ADAC LABORATORIES
By:____________________________
Name: ________________________
Title: _______________________
F(4) - 3
STATE OF CALIFORNIA )
) ss.:
COUNTY OF SAN FRANCISCO )
On _________________________________ __________, 1996 before me,
____________________________________, personally appeared
______________________________________________________, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in her/her/their authorized capacity(ies),
and that by his/her/their signature(s) on such instrument the person or entity
on behalf of which the person(s) acted executed the instrument.
WITNESS my hand and official seal.
Signature __________________________________ (Seal)
F(4) - 4
EXHIBIT G
---------
PLEDGE AGREEMENT
----------------
THIS PLEDGE AGREEMENT, dated as of July 31, 1996 is executed by ADAC
LABORATORIES, a California corporation ("Borrower"), in favor of ABN AMRO BANK
--------
N.V., a Netherlands public company acting through its San Francisco
International Branch, acting as agent (in such capacity, "Agent") for the
-----
financial institutions which are from time to time parties to the Credit
Agreement referred to in Recital A below (collectively, the "Lenders").
--------- -------
RECITALS
--------
A. Pursuant to a Credit Agreement, dated as of July 31, 1996 (the
"Credit Agreement"), among Borrower, the Lenders and Agent, the Lenders have
----------------
agreed to extend certain credit facilities to Borrower upon the terms and
subject to the conditions set forth therein.
B. The Lenders' obligations to extend the credit facilities to
Borrower under the Credit Agreement are subject, among other conditions, to
receipt by Agent of this Pledge Agreement, duly executed by Borrower.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Borrower hereby agrees with Agent, for the ratable benefit of the
Lenders and Agent, as follows:
1. DEFINITIONS AND INTERPRETATION. When used in this Pledge Agreement,
------------------------------
the following terms shall have the following respective meanings:
"Agent" shall have the meaning given to that term in the introductory
-----
paragraph hereof.
"Borrower" shall have the meaning given to that term in the
--------
introductory paragraph hereof.
"Collateral" shall have the meaning given to that term in paragraph 2
---------- -----------
hereof.
"Credit Agreement" shall have the meaning given to that term in
----------------
Recital A hereof.
---------
"Domestic Subsidiary" shall have the meaning given to that term in the
-------------------
Credit Agreement and shall include, without
G-1
limitation, as of the date hereof each of the Subsidiaries listed in Part A
------
of Attachment 1 hereto.
---------------
"Domestic Subsidiary Shares" shall mean all Subsidiary Shares in
--------------------------
Domestic Subsidiaries.
"Equity Securities" shall have the meaning given to that term in the
-----------------
Credit Agreement.
"Foreign Subsidiary" shall have the meaning given to that term in the
------------------
Credit Agreement and shall include, without limitation as of the date
hereof, each of the Subsidiaries listed in Part B of Attachment 1 hereto.
----------------------
"Foreign Subsidiary Nonvoting Shares" shall mean all Subsidiary Shares
-----------------------------------
in Foreign Subsidiaries having no voting power, including without
limitation as of the date hereof, the Subsidiary Shares so designated in
Part B of Attachment 1 hereto.
----------------------
"Foreign Subsidiary Voting Shares" shall mean all Subsidiary Shares in
--------------------------------
Foreign Subsidiaries having voting power, including without limitation as
of the date hereof, the Subsidiary Shares so designated in Part B of
---------
Attachment 1 hereto.
------------
"IRC" shall have the meaning given to that term in the Credit
---
Agreement.
"Lenders" shall have the meaning given to that term in the
-------
introductory paragraph hereof.
"Maximum Percentage" shall mean, with respect to the Foreign
------------------
Subsidiary Voting Shares of any Foreign Subsidiary, the maximum percentage
of such shares that can be pledged to Agent without increasing the gross
income of Borrower pursuant to Sections 951 and 956(c) (or any successor
provisions) of the IRC, which percentage as of the date hereof shall be
sixty-six percent (66%).
"Pledged Shares" shall mean the Subsidiary Shares described in
--------------
subparagraphs 2(a), 2(b) and 2(c) hereof.
---------------------------------
"Secured Obligations" shall have the meaning given to that term in the
-------------------
Credit Agreement.
"Subsidiary" shall have the meaning given to that term in the Credit
----------
Agreement.
"Subsidiary Shares" shall mean, with respect to any Subsidiary of
-----------------
Borrower, all Equity Securities issued by such Subsidiary.
"UCC" shall mean the Uniform Commercial Code as in effect in the State
---
of California from time to time.
G-2
Unless otherwise defined herein, all other capitalized terms used herein and
defined in the Credit Agreement shall have the respective meanings given to
those terms in the Credit Agreement, and all terms defined in the UCC shall have
the respective meanings given to those terms in the UCC. The rules of
construction set forth in Section I of the Credit Agreement shall, to the extent
---------------------------------
not inconsistent with the terms of this Pledge Agreement, apply to this Pledge
Agreement and are hereby incorporated by reference.
2. PLEDGE. As security for the Secured Obligations, Borrower hereby
------
pledges and assigns to Agent (for the ratable benefit of the Lenders and Agent)
and grants to Agent (for the ratable benefit of the Lenders and Agent) a
security interest in all right, title and interest of Borrower in and to the
property described in subparagraphs (a) - (e) below, whether now owned or
-----------------------
hereafter acquired (collectively and severally, the "Collateral"):
----------
(a) All Domestic Subsidiary Shares;
(b) All Foreign Subsidiary Voting Shares of each Foreign Subsidiary
equal to the Maximum Percentage therefor;
(c) All Foreign Subsidiary Nonvoting Shares;
(d) All dividends, cash, instruments and other property from time to
time received, receivable or otherwise distributed or distributable in
respect of or in exchange for any of the Pledged Shares; and
(e) All proceeds of the foregoing.
3. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to
------------------------------
the Lenders and Agent as follows:
(a) Borrower is the record legal and beneficial owner of the
Collateral (or, in the case of after-acquired Collateral, at the time
Borrower acquires rights in the Collateral, will be the record legal and
beneficial owner thereof). No other Person has (or, in the case of after-
acquired Collateral, at the time Borrower acquires rights therein, will
have) any right, title, claim or interest (by way of Lien, purchase option
or otherwise) in, against or to the Collateral.
(b) Agent has (or in the case of after-acquired Collateral, at the
time Borrower acquires rights therein, will have) a first priority
perfected security interest in the Pledged Shares and the other Collateral.
(c) All Pledged Shares have been (or in the case of after-acquired
Pledged Shares, at the time Borrower acquires rights therein, will have
been) duly authorized, validly issued and fully paid and are (or in the
case of
G-3
after-acquired Pledged Shares, at the time Borrower acquires rights
therein, will be) non-assessable.
(d) Borrower has (or will have within fourteen (14) days of the date
hereof) delivered to Agent, together with all necessary stock powers,
endorsements, assignments and other necessary instruments of transfer, the
originals of all Pledged Shares, other certificated securities, other
Collateral and all certificates, instruments and other writings evidencing
the same.
(e) Set forth in Attachment 1 hereto is a true, complete and accurate
------------
list of all Subsidiary Shares. All information set forth in Attachment 1
------------
is true, complete and accurate.
4. COVENANTS. Borrower hereby agrees as follows:
---------
(a) Borrower, at Borrower's expense, shall promptly procure, execute
and deliver to Agent all documents, instruments and agreements and perform
all acts which are necessary or desirable, or which Agent may request, to
establish, maintain, preserve, protect and perfect the Collateral, the Lien
granted to Agent therein and the first priority of such Lien or to enable
Agent to exercise and enforce its rights and remedies hereunder with
respect to any Collateral. Without limiting the generality of the
preceding sentence, Borrower shall (i) procure, execute and deliver to
Agent all stock powers, endorsements, assignments, financing statements and
other instruments of transfer requested by Agent, (ii) deliver to Agent
promptly upon receipt the originals of all Pledged Shares, other
certificated securities, other Collateral and all certificates, instruments
and other writings evidencing the same and (iii) cause the Lien of Agent to
be recorded or registered in the books of any financial intermediary or
clearing corporation requested by Agent.
(b) Borrower shall pay promptly when due all taxes and other
governmental charges, all Liens and all other charges now or hereafter
imposed upon, relating to or affecting any Collateral.
(c) Upon demand by Agent after the occurrence and during the
continuation of any Event of Default, Borrower shall deposit, or cause to
be deposited, all remittances, checks and other funds (in whatever form)
received with respect to Collateral to a deposit account for which Borrower
has complied with subparagraph 4(e) of the Security Agreement and in which
-------------------------------------------
Agent has a first priority perfected security interest.
(d) Borrower shall appear in and defend any action or proceeding which
may affect its title to or Agent's security interest in the Collateral.
G-4
(e) Borrower shall not surrender or lose possession of (other than to
Agent), sell, encumber, lease, rent, option, or otherwise dispose of or
transfer any Collateral or right or interest therein except as permitted in
the Credit Agreement, and, notwithstanding any provision of the Credit
Agreement, Borrower shall keep the Collateral free of all Liens.
5. VOTING RIGHTS AND DIVIDENDS PRIOR TO DEFAULT. Unless an Event of
--------------------------------------------
Default has occurred and is continuing:
(a) Borrower may exercise or refrain from exercising any and all
voting and other consensual rights pertaining to the Pledged Shares or any
part thereof; provided, however, that Borrower shall not exercise or
-------- -------
refrain from exercising any such rights where the consequence of such
action or inaction would be (i) to impair any Collateral, the Lien granted
to Agent therein, the first priority of such Lien or Agent's rights and
remedies hereunder with respect to any Collateral or (ii) otherwise
inconsistent with the terms of this Pledge Agreement and the other Credit
Documents.
(b) Borrower may receive and retain all dividends and interest paid in
cash in respect of the Pledged Shares, except for any such dividends and
interest paid in connection with a partial or total liquidation or
dissolution or in connection with a reduction of capital, capital surplus
or paid-in-surplus. Borrower shall promptly deliver to Agent to hold as
Collateral all dividends and interest which Borrower is not entitled to
receive and retain pursuant to the preceding sentence, in the same form as
so received (with any necessary endorsement), and, until so delivered,
shall hold such dividends and interest in trust for the benefit of Agent,
segregated from the other property or funds of Borrower.
6. AUTHORIZED ACTION BY AGENT. Borrower hereby irrevocably appoints
--------------------------
Agent as its attorney-in-fact and agrees that Agent may perform (but Agent shall
not be obligated to and shall incur no liability to Borrower or any third party
for failure so to do) any act which Borrower is obligated by this Pledge
Agreement to perform, and to exercise such rights and powers as Borrower might
exercise with respect to the Collateral, including, without limitation, the
right to (a) collect by legal proceedings or otherwise and endorse, receive and
receipt for all dividends, interest, payments, proceeds and other sums and
property now or hereafter payable on or on account of the Collateral; (b) enter
into any extension, reorganization, deposit, merger, consolidation or other
agreement pertaining to, or deposit, surrender, accept, hold or apply other
property in exchange for the Collateral; (c) insure, process, preserve and
enforce the Collateral; (d) make any compromise or settlement, and take any
action it deems advisable, with respect to the Collateral; (e) pay any
Indebtedness of Borrower relating to the Collateral; and (f) execute UCC
financing statements and other
G-5
documents, instruments and agreements required hereunder; provided, however,
-----------------
that Agent may exercise such powers only after the occurrence and during the
continuance of an Event of Default. Borrower agrees to reimburse Agent upon
demand for all reasonable costs and expenses, including attorneys' fees, Agent
may incur while acting as Borrower's attorney-in-fact hereunder, all of which
costs and expenses are included in the Secured Obligations. Borrower agrees that
such care as Agent gives to the safekeeping of its own property of like kind
shall constitute reasonable care of the Collateral when in Agent's possession;
provided, however, that Agent shall not be required to make any presentment,
- -----------------
demand or protest, or give any notice and need not take any action to preserve
any rights against any prior party or any other Person in connection with the
Secured Obligations or with respect to the Collateral.
7. EVENTS OF DEFAULT.
-----------------
(a) Event of Default. Borrower shall be deemed in default under this
----------------
Pledge Agreement upon the occurrence and during the continuance of an Event
of Default, as that term is defined in the Credit Agreement.
(b) Voting Rights and Dividends. Upon the occurrence and during the
---------------------------
continuance of an Event of Default:
(i) All rights of Borrower to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise
pursuant to subparagraph 5(b) hereof and to receive the dividends and
-----------------
interest payments which it would otherwise be authorized to receive
and retain pursuant to subparagraph 5(a) hereof shall cease and all
-----------------
such rights shall thereupon become vested in Agent which shall
thereupon have the sole right, but not the obligation, to exercise
such voting and other consensual rights and to receive and hold as
Collateral such dividends and interest payments.
(ii) Borrower shall promptly deliver to Agent to hold as Collateral
all dividends and interest received by Borrower after the occurrence
and during the continuance of any Event of Default, in the same form
as so received (with any necessary endorsement), and, until so
delivered, shall hold such dividends and interest in trust for the
benefit of Agent, segregated from the other property or funds of
Borrower.
(c) Other Rights and Remedies. In addition to all other rights and
-------------------------
remedies granted to Agent by this Pledge Agreement, the Credit Agreement,
the other Credit Documents, the UCC and other applicable Governmental
Rules, Agent may, upon the occurrence and during the continuance of any
Event of Default, exercise any one or more of the following rights and
remedies: (i) collect, receive, appropriate or realize upon the Collateral
or otherwise foreclose or enforce
G-6
Agent's security interests in any or all Collateral in any manner permitted
by applicable Governmental Rules or in this Pledge Agreement; (ii) notify
any or all issuers of or transfer or paying agents for the Collateral or
any applicable clearing corporation, financial intermediary or other Person
to register the Collateral in the name of Agent or its nominee and/or to
pay all dividends, interest and other amounts payable in respect of the
Collateral directly to Agent; (iii) sell or otherwise dispose of any or all
Collateral at one or more public or private sales, whether or not such
Collateral is present at the place of sale, for cash or credit or future
delivery, on such terms and in such manner as Agent may determine; and (iv)
require Borrower to assemble all records and information relating to the
Collateral and make it available to Agent at a place to be designated by
Agent. In any case where notice of any sale or disposition of any
Collateral is required, Borrower hereby agrees that seven (7) days notice
of such sale or disposition is reasonable.
(d) Securities Laws.
---------------
(i) Borrower acknowledges and recognizes that Agent may be unable
to effect a public sale of all or a part of the Pledged Shares and may
be compelled to resort to one or more private sales to a restricted
group of purchasers who will be obligated to agree, among other
things, to acquire the Pledged Shares for their own account, for
investment and not with a view to the distribution or resale thereof.
Borrower acknowledges that any such private sales may be at prices and
on terms less favorable to Agent than those of public sales, and
agrees that such private sales shall be deemed to have been made in a
commercially reasonable manner and that Agent has no obligation to
delay sale of any Pledged Shares to permit the issuer thereof to
register it for public sale under the Securities Act of 1933, as
amended, or under any state securities law.
(ii) Upon the occurrence of an Event of Default and at Agent's
request, Borrower shall, and shall cause all issuers of Collateral and
all officers and directors thereof and all other necessary Persons to,
execute and deliver all documents, instruments and agreements and
perform all other acts necessary or, in the opinion of Agent,
advisable to sell the Collateral in any public or private sale,
including any acts requested by Agent to (A) register any Collateral
under the Securities Act of 1933, (B) qualify any Collateral under any
state securities or "Blue Sky" laws or (C) otherwise permit any such
sale to be made in full compliance with all applicable Governmental
Rules.
G-7
8. MISCELLANEOUS.
-------------
(a) Notices. Except as otherwise specified herein, all notices,
-------
requests, demands, consents, instructions or other communications to or
upon Borrower or Agent under this Pledge Agreement shall be given as
provided in Paragraph 8.01 of the Credit Agreement.
--------------------------------------
(b) Waivers; Amendments. Any term, covenant, agreement or condition
-------------------
of this Pledge Agreement may be amended or waived only as provided in the
Credit Agreement. No failure or delay by Agent or any Lender in exercising
any right hereunder shall operate as a waiver thereof or of any other right
nor shall any single or partial exercise of any such right preclude any
other further exercise thereof or of any other right. Unless otherwise
specified in any such waiver or consent, a waiver or consent given
hereunder shall be effective only in the specific instance and for the
specific purpose for which given.
(c) Successors and Assigns. This Pledge Agreement shall be binding
----------------------
upon and inure to the benefit of Agent, the Lenders and Borrower and their
respective successors and assigns; provided, however, that Agent, the
-------- -------
Lenders and Borrower may sell, assign and delegate their respective rights
and obligations hereunder only as permitted by the Credit Agreement. Agent
may disclose this Pledge Agreement as provided in the Credit Agreement.
(d) Partial Invalidity. If at any time any provision of this Pledge
------------------
Agreement is or becomes illegal, invalid or unenforceable in any respect
under the law of any jurisdiction, neither the legality, validity or
enforceability of the remaining provisions of this Pledge Agreement nor the
legality, validity or enforceability of such provision under the law of any
other jurisdiction shall in any way be affected or impaired thereby.
(e) Cumulative Rights, etc. The rights, powers and remedies of Agent
----------------------
and the Lenders under this Pledge Agreement shall be in addition to all
rights, powers and remedies given to Agent and the Lenders by virtue of any
applicable Governmental Rule, the Credit Agreement, any other Credit
Document or any other agreement, all of which rights, powers, and remedies
shall be cumulative and may be exercised successively or concurrently
without impairing Agent's rights hereunder. Borrower waives any right to
require Agent or any Lender to proceed against any Person or to exhaust any
Collateral or to pursue any remedy in Agent's or such Lender's power.
(f) Payments Free of Taxes, Etc. All payments made by Borrower under
----------------------------
this Pledge Agreement shall be made by Borrower free and clear of and
without deduction for any and all present and future taxes, levies,
charges, deductions
G-8
and withholdings. In addition, Borrower shall pay upon demand any stamp or
other taxes, levies or charges of any jurisdiction with respect to the
execution, delivery, registration, performance and enforcement of this
Pledge Agreement. Upon request by Agent, Borrower shall furnish evidence
satisfactory to Agent that all requisite authorizations and approvals by,
and notices to and filings with, governmental authorities and regulatory
bodies have been obtained and made and that all requisite taxes, levies and
charges have been paid.
(g) Borrower's Continuing Liability. Notwithstanding any provision of
-------------------------------
this Pledge Agreement or any other Credit Document or any exercise by Agent
of any of its rights hereunder or thereunder (including, without
limitation, any right to collect or enforce any Collateral), (i) Borrower
shall remain liable to perform its obligations and duties in connection
with the Collateral and (ii) neither Agent nor any Lender shall assume or
be considered to have assumed any liability to perform such obligations and
duties or to enforce any of Borrower's rights in connection with the
Collateral.
(h) Governing Law. This Pledge Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of California without
reference to conflicts of law rules (except to the extent otherwise
provided in the UCC).
IN WITNESS WHEREOF, Borrower has caused this Pledge Agreement to be
executed as of the day and year first above written.
ADAC LABORATORIES
By:____________________________
Name:________________________
Title:_______________________
G-9
ATTACHMENT 1
TO PLEDGE AGREEMENT
-------------------
PART A
------
DOMESTIC SUBSIDIARY SHARES
--------------------------
Shares
Jurisdiction Class Number of Number of Owned
of of Shares Shares by
Subsidiary Incorporation Stock/1/ Issued Outstanding Borrower
- ---------- ------------- --------- --------- ----------- ---------
ADAC Research & Manufacturing, Inc. California Common 1,000 1,000 100%
Community Health Computing Corp. Delaware Preferred 4,000,000 4,000,000 100%
J.D. Technical Services, Inc. Delaware Common 1,000 1,000 100%
ADAC Laboratories Pacific, Inc. California Common 1,000 1,000 100%
_________________________________
/1/ Asterisks indicate non-voting. Otherwise all listed are voting.
G[1] - 1
PART B
------
FOREIGN SUBSIDIARY SHARES
-------------------------
Jurisdiction Number of Number of Shares
of Shares Shares Owned by
Subsidiary Incorporation Issued Outstanding Borrower
- ---------- -------------- --------- ----------- ---------
ADAC Laboratories Canada Ltd. Canada 100 100 100%
ADAC Laboratories BV. Netherlands 20,646 20,646 100%
ADAC Foreign Sales Corporation Inc. Virgin Islands 1,000 1,000 100%
G[1] - 2
EXHIBIT H
---------
GUARANTY
--------
THIS GUARANTY, dated as of July 31, 1996 is executed by each of the
undersigned (each such entity and each entity which hereafter executes and
delivers a Subsidiary Joinder in substantially the form of Attachment 1 hereto
------------
to be referred to herein as a "Guarantor"), in favor of ABN AMRO BANK N.V., a
---------
Netherlands public company acting through its San Francisco International
Branch, acting as agent (in such capacity, "Agent") for the financial
-----
institutions which are from time to time parties to the Credit Agreement
referred to in Recital A below (collectively, the "Lenders").
--------- -------
RECITALS
--------
A. Pursuant to a Credit Agreement, dated as of July 31, 1996 (the
"Credit Agreement"), among ADAC Laboratories, a California corporation
----------------
("Borrower"), the Lenders and Agent, the Lenders have agreed to extend certain
--------
credit facilities to Borrower upon the terms and subject to the conditions set
forth therein.
B. The Lenders' obligations to extend the credit facilities to
Borrower under the Credit Agreement are subject, among other conditions, to
receipt by Agent of (1) this Guaranty, duly executed by each existing Domestic
Subsidiary of Borrower, and (2) Subsidiary Joinders, duly executed by each
future Domestic Subsidiary of Borrower. Each of the undersigned Guarantors is a
Domestic Subsidiary of Borrower and expects to derive substantial direct and
indirect benefit from the transactions contemplated by the Credit Agreement.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, each Guarantor hereby agrees with Agent, for the ratable benefit
of the Lenders and Agent, as follows:
1. DEFINITIONS AND INTERPRETATION.
------------------------------
(a) Definitions. When used in this Guaranty, the following terms
-----------
shall have the following respective meanings:
"Adjusted Maximum Guaranty Amount" shall mean, with respect to
--------------------------------
any Guarantor, the maximum liability of such Guarantor under this
Guaranty, limited to the extent provided in Subparagraph 2(d) hereof
-----------------
(except that, for purposes of calculating the Adjusted Maximum
H-1
Guaranty Amount of a Guarantor only, any assets or liabilities of such
Guarantor arising under Paragraph 8 hereof shall be ignored).
-----------
"Agent" shall have the meaning given to that term in the
-----
introductory paragraph hereof.
----------------------
"Aggregate Guaranty Payments" shall mean, with respect to any
---------------------------
Guarantor at any time, the aggregate net amount of all payments made
by such Guarantor under this Guaranty (including, without limitation,
under Paragraph 8 hereof) at or prior to such time.
-----------
"Borrower" shall have the meaning given to that term in the
--------
Recital A hereof.
---------
"Credit Agreement" shall have the meaning given to that term in
----------------
the Recital A hereof.
---------
"Disallowed Post-Commencement Interest and Expenses" shall mean
--------------------------------------------------
interest computed at the rate provided in the Credit Agreement and
claims for reimbursement, costs, expenses or indemnities under the
terms of any of the Credit Documents accruing or claimed at any time
after the commencement of any Insolvency Proceeding, if the claim for
such interest, reimbursement, costs, expenses or indemnities is not
allowable, allowed or enforceable against Borrower in such Insolvency
Proceeding.
"Fair Share" shall mean, with respect to any Guarantor at any
----------
time, an amount equal to (i) a fraction, the numerator of which is the
Adjusted Maximum Guaranty Amount of such Guarantor and the denominator
of which is the aggregate Adjusted Maximum Guaranty Amounts of all
Guarantors, multiplied by (ii) the aggregate amount paid by all
Funding Guarantors under this Guaranty at or prior to such time.
"Fair Share Shortfall" shall mean, with respect to any Guarantor
--------------------
at any time, the amount, if any, by which the Fair Share of such
Guarantor at such time exceeds the Aggregate Guaranty Payments of such
Guarantor at such time.
"Funding Guarantor" shall have the meaning given to that term in
-----------------
Paragraph 8 hereof.
-----------
"Guaranteed Obligations" shall mean all loans, advances, debts,
----------------------
liabilities and obligations, howsoever arising, owed by Borrower to
Agent or any Lender of every kind and description (whether or not
evidenced by any note or instrument and whether or not for the payment
of money), direct or indirect, absolute or contingent, due or to
become due, now existing or
H-2
hereafter arising pursuant to the terms of the Credit Agreement or any
of the other Credit Documents, including, without limitation, all
principal, interest, rent, fees, taxes, charges, expenses, attorneys'
fees and accountants' fees chargeable to Borrower or payable by
Borrower thereunder.
"Guarantor" shall have the meaning given to that term in the
---------
introductory paragraph hereof.
----------------------
"Insolvency Proceeding" shall mean any case or proceeding under
---------------------
the United States Bankruptcy Code or any other similar law, rule or
regulation of the United States or any jurisdiction or any other
action or proceeding for the reorganization, liquidation, appointment
of a receiver, rearrangement of debts, marshalling of assets or
similar action relating to Borrower or any Guarantor, their respective
creditors or any substantial part of their respective assets, whether
or not any such case, proceeding or action is voluntary or
involuntary.
"Lenders" shall have the meaning given to that term in the
-------
introductory paragraph hereof.
----------------------
"Subordinated Obligations" shall have the meaning given to that
------------------------
term in Paragraph 6 hereof.
-----------
"Subsidiary Joinder" shall mean an agreement substantially in the
------------------
form of Attachment 1 hereto.
------------
Unless otherwise defined herein, all other capitalized terms used herein
and defined in the Credit Agreement shall have the respective meanings
given to those terms in the Credit Agreement.
(b) Other Interpretive Provisions. The rules of construction set
-----------------------------
forth in Section I of the Credit Agreement shall, to the extent not
---------------------------------
inconsistent with the terms of this Guaranty, apply to this Guaranty and
are hereby incorporated by reference. Each Guarantor acknowledges receipt
of copies of the Credit Agreement and the other Credit Documents.
2. GUARANTY.
--------
(a) Payment Guaranty. Each Guarantor unconditionally guarantees and
----------------
promises to pay and perform as and when due, whether at stated maturity,
upon acceleration or otherwise, any and all of the Guaranteed Obligations.
If any Insolvency Proceeding relating to Borrower is commenced, each
Guarantor further unconditionally guarantees and promises to pay and
perform, upon the demand of Agent, any and all of the Guaranteed
Obligations (including any and all Disallowed Post-Commencement Interest
and Expenses) in
H-3
accordance with the terms of the Credit Documents, whether or not such
obligations are then due and payable by Borrower and whether or not such
obligations are modified, reduced or discharged in such Insolvency
Proceeding. This Guaranty is a guaranty of payment and not of collection.
(b) Continuing Guaranty. This Guaranty is an irrevocable continuing
-------------------
guaranty of the Guaranteed Obligations which shall continue in effect until
all obligations of the Lenders to extend credit to Borrower have terminated
and all of the Guaranteed Obligations have been fully, finally and
indefeasibly paid. If any payment on any Guaranteed Obligation is set
aside, avoided or rescinded or otherwise recovered from Agent or any
Lender, such recovered payment shall constitute a Guaranteed Obligation
hereunder and, if this Guaranty was previously released or terminated, it
automatically shall be fully reinstated, as if such payment was never made.
(c) Independent Obligation. The liability of each Guarantor hereunder
----------------------
is independent of the Guaranteed Obligations and of the obligations of each
other Guarantor hereunder, and a separate action or actions may be brought
and prosecuted against each Guarantor irrespective of whether action is
brought against Borrower, any other Guarantor or any other guarantor of the
Guaranteed Obligations or whether Borrower, any other Guarantor or any
other guarantor of the Guaranteed Obligations is joined in any such action
or actions.
(d) Fraudulent Transfer Limitation. If, in any action to enforce this
------------------------------
Guaranty, any court of competent jurisdiction determines that enforcement
against any Guarantor for the full amount of the Guaranteed Obligations is
not lawful under or would be subject to avoidance under Section 548 of the
United States Bankruptcy Code or any applicable provision of any comparable
law of any state or other jurisdiction, the liability of such Guarantor
under this Guaranty shall be limited to the maximum amount lawful and not
subject to such avoidance.
(e) Termination. Notwithstanding any termination of this Guaranty in
-----------
accordance with Paragraph 6 hereof, this Guaranty shall continue to be in
-----------
full force and effect and applicable to any Guaranteed Obligations arising
thereafter which arise because prior payments of Guaranteed Obligations are
rescinded or otherwise required to be surrendered by Agent or any Lender
after receipt.
3. REPRESENTATIONS AND WARRANTIES. Each Guarantor hereby represents and
------------------------------
warrants to Agent and the Lenders as follows:
(a) Due Incorporation, Qualification, Etc. Such Guarantor is a duly
-------------------------------------
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and is duly qualified and in good
H-4
standing in each jurisdiction where the nature of its business or
properties requires such qualification, except where the failure to qualify
could not have a Material Adverse Effect.
(b) Authority. The execution, delivery and performance by such
---------
Guarantor of this Guaranty are within the power of such Guarantor and have
been duly authorized by all necessary actions on the part of such
Guarantor.
(c) Enforceability. This Guaranty has been duly executed and
--------------
delivered by such Guarantor and constitutes a legal, valid and binding
obligation of such Guarantor, enforceable against it in accordance with its
terms, except as limited by bankruptcy, insolvency or other laws of general
application relating to or affecting the enforcement of creditors' rights
generally.
(d) Non-Contravention. The execution, delivery and performance by
-----------------
such Guarantor of this Guaranty do not (i) violate any Requirement of Law
applicable to such Guarantor, (ii) contravene any material Contractual
Obligation of such Guarantor or (iii) result in the creation or imposition
of any Lien upon any property, asset or revenue of such Guarantor.
(e) Approvals. No consent, approval, order or authorization of, or
---------
registration, declaration or filing with, any Governmental Authority or
other Person (including, without limitation, the shareholders of any
Person) is required in connection with the execution, delivery and
performance of this Guaranty, except such consents, approvals, orders,
authorizations, registrations, declarations and filings that are so
required and which have been obtained and are in full force and effect.
(f) No Violation. No Guarantor is in violation of any Requirement of
------------
Law applicable to such Guarantor or any Contractual Obligation of such
Guarantor, where, in either case, such violation is reasonably likely to
have a Material Adverse Effect.
(g) Litigation. No actions (including, without limitation, derivative
----------
actions), suits, proceedings or investigations are pending or, to the
knowledge of such Guarantor, threatened against such Guarantor in any court
or before any other Governmental Authority which (i) is reasonably likely
(alone or in the aggregate) to have a Material Adverse Effect or (ii) seeks
to enjoin, either directly or indirectly, the execution, delivery or
performance of this Guaranty by such Guarantor;
(h) Financial Statements. The Financial Statements of such Guarantor,
--------------------
which have been delivered to Agent and the
H-5
Lenders fairly present the information reflected therein and have been
prepared in accordance with GAAP.
(i) Other Regulations. Such Guarantor is not subject to regulation
-----------------
under the Investment Company Act of 1940, the Public Utility Holding
Company Act of 1935, the Federal Power Act, any state public utilities code
or to any other Governmental Rule limiting its ability to incur
indebtedness.
(j) Taxes. Such Guarantor has paid all taxes and other charges
-----
imposed by any Governmental Authority due and payable by such Guarantor
other than those which are being challenged in good faith by appropriate
proceedings and for which adequate reserves have been established.
4. COVENANTS. Until all obligations of Agent or any Lender to extend
---------
credit to Borrower have terminated and all of the Guaranteed Obligations have
been fully, finally and indefeasibly paid, each Guarantor shall comply with the
following covenants:
(a) Financial Statements, Reports, Etc. Such Guarantor shall furnish
----------------------------------
to Agent, with sufficient copies for each Lender, the following, each in
such form and such detail as Agent or the Required Lenders shall reasonably
request:
(i) Such Financial Statements of such Guarantor as Agent or the
Required Lenders shall reasonably request;
(ii) Notice of any Default or Event of Default known to such
Guarantor or of any other event or condition known to such Guarantor
which is reasonably likely to have a Material Adverse Effect; and
(iii) Such other certificates, opinions, statements, documents and
information relating to the operations or condition (financial or
otherwise) of such Guarantor or its Subsidiaries, and compliance by
Borrower and such Guarantor with the terms of the Credit Documents as
Agent or any Lender may from time to time reasonably request.
(b) Books and Records. Such Guarantor and its Subsidiaries shall
-----------------
maintain proper books of record and account in accordance with good
business practices and GAAP.
(c) Inspections. Such Guarantor and its Subsidiaries shall permit any
-----------
Person designated by Agent or any Lender, upon reasonable notice and during
normal business hours, to visit and inspect any of the properties and
offices of such Guarantor and its Subsidiaries, to examine the books and
H-6
records of such Guarantor and its Subsidiaries and make copies thereof and
to discuss the affairs, finances and accounts of such Guarantor and its
Subsidiaries with, and to be advised as to the same by, their officers,
auditors and accountants, all at such times and intervals as Agent or any
Lender may reasonably request.
(d) Insurance. Such Guarantor and its Subsidiaries shall maintain
---------
with financially sound and reputable insurance carriers insurance in such
amounts, with such deductibles and covering such risks as is customary for
companies engaged in similar businesses in the same geographic areas as
such Guarantor and its Subsidiaries.
(e) Governmental Charges and Other Indebtedness. To the extent
-------------------------------------------
failure to do so could have a Material Adverse Effect, such Guarantor and
its Subsidiaries shall promptly pay and discharge all taxes and other
charges imposed by any Government Authority upon such Guarantor or its
Subsidiaries or their property as and when they become due.
(f) General Business Operations. To the extent failure to do so
---------------------------
could have a Material Adverse Effect, such Guarantor and its Subsidiaries
shall (i) maintain its corporate existence and all rights, privileges and
franchises necessary for the conduct of its business and (ii) comply with
all Requirements of Law and Contractual Obligations applicable to it.
5. AUTHORIZATIONS, WAIVERS, ETC.
----------------------------
(a) Authorizations. Each Guarantor authorizes Agent and the Lenders,
--------------
in their discretion, without notice to such Guarantor, irrespective of any
change in the financial condition of Borrower, such Guarantor, any other
Guarantor or any other guarantor of the Guaranteed Obligations since the
date hereof, and without affecting or impairing in any way the liability of
such Guarantor hereunder, from time to time to:
(i) Create new Guaranteed Obligations and renew, compromise,
extend, accelerate or otherwise change the time for payment or
performance of, or otherwise amend or modify the Credit Documents or
change the terms of the Guaranteed Obligations or any part thereof,
including increase or decrease of the rate of interest thereon;
(ii) Take and hold security for the payment or performance of the
Guaranteed Obligations and exchange, enforce, waive or release any
such security; apply such security and direct the order or manner of
sale thereof; and purchase such security at public or private sale;
H-7
(iii) Otherwise exercise any right or remedy they may have against
Borrower, such Guarantor, any other Guarantor, any other guarantor of
the Guaranteed Obligations or any security, including, without
limitation, the right to foreclose upon any such security by judicial
or nonjudicial sale;
(iv) Settle, compromise with, release or substitute any one or
more makers, endorsers or guarantors of the Guaranteed Obligations;
and
(v) Assign the Guaranteed Obligations, this Guaranty or the other
Credit Documents in whole or in part to the extent provided in the
Credit Agreement and the other Credit Documents.
(b) Waivers. Each Guarantor hereby waives:
-------
(i) Any right to require Agent or any Lender to (A) proceed
against Borrower, any other Guarantor or any other guarantor of the
Guaranteed Obligations, (B) proceed against or exhaust any security
received from Borrower, such Guarantor, any other Guarantor or any
other guarantor of the Guaranteed Obligations or otherwise marshall
the assets of Borrower, such Guarantor, any other Guarantor or any
other guarantor of the Guaranteed Obligations or (C) pursue any other
remedy in Agent's or any Lender's power whatsoever;
(ii) Any defense arising by reason of the application by
Borrower of the proceeds of any borrowing;
(iii) Any defense resulting from the absence, impairment or loss of
any right of reimbursement, subrogation, contribution or other right
or remedy of Guarantor against Borrower, any other Guarantor, any
other guarantor of the Guaranteed Obligations or any security, whether
resulting from an election by Agent or any Lender to foreclose upon
security by nonjudicial sale, or otherwise;
(iv) Any setoff or counterclaim of Borrower or any defense which
results from any disability or other defense of Borrower or the
cessation or stay of enforcement from any cause whatsoever of the
liability of Borrower (including, without limitation, the lack of
validity or enforceability of any of the Credit Documents);
(v) Any defense based upon any law, rule or regulation which
provides that the obligation of a surety must not be greater or more
burdensome than the obligation of the principal;
H-8
(vi) Until all obligations of Agent or any Lender to extend credit
to Borrower have terminated and all of the Guaranteed Obligations have
been fully, finally and indefeasibly paid, any right of subrogation,
reimbursement, indemnification or contribution and other similar right
to enforce any remedy which Agent, the Lenders or any other Person now
has or may hereafter have against Borrower on account of the
Guaranteed Obligations, and any benefit of, and any right to
participate in, any security now or hereafter received by Agent, any
Lender or any other Person on account of the Guaranteed Obligations;
(vii) All presentments, demands for performance, notices of non-
performance, notices delivered under the Credit Documents, protests,
notice of dishonor, and notices of acceptance of this Guaranty and of
the existence, creation or incurring of new or additional Guaranteed
Obligations and notices of any public or private foreclosure sale;
(viii) The benefit of any statute of limitations to the extent
permitted by law;
(ix) Any appraisement, valuation, stay, extension, moratorium
redemption or similar law or similar rights for marshalling;
(x) Any right to be informed by Agent or any Lender of the
financial condition of Borrower, any other Guarantor or any other
guarantor of the Guaranteed Obligations or any change therein or any
other circumstances bearing upon the risk of nonpayment or
nonperformance of the Guaranteed Obligations;
(xi) Until all obligations of Agent or any Lender to extend credit
to Borrower have terminated and all of the Guaranteed Obligations have
been fully, finally and indefeasibly paid, any right to revoke this
Guaranty;
(xii) Any defense arising from an election for the application of
Section 1111(b)(2) of the United States Bankruptcy Code which applies
to the Guaranteed Obligations;
(xiii) Any defense based upon any borrowing or grant of a security
interest under Section 364 of the United States Bankruptcy Code; and
(xiv) Any right it may have to a fair value hearing to determine
the size of a deficiency judgment following any foreclosure on any
security for the Guaranteed Obligations.
H-9
Without limiting the scope of any of the foregoing provisions of this
Paragraph 5, each Guarantor hereby further waives (A) all rights and
-----------
defenses arising out of an election of remedies by Agent or any Lender,
even though that election of remedies, such as a nonjudicial foreclosure
with respect to security for a Guaranteed Obligation, has destroyed such
Guarantor's rights of subrogation and reimbursement against Borrower by the
operation of Section 580d of the Code of Civil Procedure or otherwise, (B)
all rights and defenses such Guarantor may have by reason of protection
afforded to Borrower with respect to the Guaranteed Obligations pursuant to
the antideficiency or other laws of California limiting or discharging the
Guaranteed Obligations, including, without limitation, Section 580a, 580b,
580d, or 726 of the California Code of Civil Procedure, and (C) all other
rights and defenses available to such Guarantor by reason of Sections 2787
to 2855, inclusive, Section 2899 or Section 3433 of the California Civil
Code or Section 3605 of the California Commercial Code.
(c) Financial Condition of Borrower, Etc. Each Guarantor is fully
------------------------------------
aware of the financial condition and affairs of Borrower. Each Guarantor
has executed this Guaranty without reliance upon any representation,
warranty, statement or information concerning Borrower furnished to such
Guarantor by Agent or any Lender and has, independently and without
reliance on Agent or any Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of the
financial condition and affairs of Borrower and of other circumstances
affecting the risk of nonpayment or nonperformance of the Guaranteed
Obligations. Each Guarantor is in a position to obtain, and assumes full
responsibility for obtaining, any additional information about the
financial condition and affairs of Borrower and of other circumstances
affecting the risk of nonpayment or nonperformance of the Guaranteed
Obligations and will, independently and without reliance upon Agent or any
Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own appraisals and decisions
in taking or not taking action in connection with this Guaranty.
6. SUBORDINATION. Each Guarantor hereby subordinates any and all debts,
-------------
liabilities and obligations owed to such Guarantor by Borrower or any Subsidiary
of Borrower (the "Subordinated Obligations") to the Guaranteed Obligations as
------------------------
provided in this Paragraph 6.
-----------
(a) Prohibited Payments, Etc. Until the occurrence of a Default or an
------------------------
Event of Default or any default by any Guarantor hereunder, each Guarantor
and its Subsidiaries may receive regularly scheduled payments from Borrower
on account of Subordinated Obligations. After the occurrence
H-10
and during the continuance of any Default or Event of Default or any
default by any Guarantor hereunder (including the commencement and
continuation of any Insolvency Proceeding relating to Borrower, however,
unless Agent or Required Lenders otherwise requests, no Guarantor shall,
not shall it permit any of its Subsidiaries to, demand, accept or take any
action to collect any payment on account of the Subordinated Obligations.
(b) Prior Payment of Guaranteed Obligations. In any Insolvency
---------------------------------------
Proceeding relating to Borrower, each Guarantor agrees that Agent and the
Lenders shall be entitled to receive payment of all Guaranteed Obligations
(including any and all Disallowed Post-Commencement Interest and Expenses)
before such Guarantor or any of its Subsidiaries receives payment of any
Subordinated Obligations.
(c) Turn-Over. After the occurrence and during the continuance of
---------
any Default or Event of Default (including the commencement and
continuation of any Insolvency Proceeding relating to Borrower, each
Guarantor and its Subsidiaries shall, if Agent or Required Lenders so
requests, collect, enforce and receive payments on account of the
Subordinated Obligations as trustee for Agent and the Lenders and deliver
such payments to Agent on account of the Guaranteed Obligations (including
any and all Disallowed Post-Commencement Interest and Expenses), together
with any necessary endorsements or other instruments of transfer, but
without reducing or affecting in any manner the liability of such Guarantor
under the other provisions of this Guaranty.
(d) Agent Authorization. After the occurrence and during the
-------------------
continuance of any Default or Event of Default or any default by a
Guarantor hereunder (including the commencement and continuation of any
Insolvency Proceeding relating to Borrower, Agent is authorized and
empowered (but without any obligation to so do), in its discretion, (i) in
the name of each Guarantor and its Subsidiaries, to collect and enforce,
and to submit claims in respect of, Subordinated Obligations and to apply
any amounts received thereon to the Guaranteed Obligations (including any
and all Disallowed Post-Commencement Interest and Expenses), and (ii) to
require each Guarantor (A) to collect and enforce, and to submit claims in
respect of, Subordinated Obligations and (B) to pay any amounts received on
such obligations to Agent for application to the Guaranteed Obligations to
Agent for application to the Guaranteed Obligations (including any and all
Disallowed Post-Commencement Interest and Expenses).
7. GENERAL PLEDGE; SETOFF.
----------------------
(a) Pledge. In addition to all liens upon and rights of setoff
------
against the property of any Guarantor given to Agent or any Lender by law
or separate agreement to secure
H-11
the liabilities of any Guarantor hereunder, to the extent permitted by law,
each Guarantor hereby grants to Agent (for the ratable benefit of Agent and
the Lenders), as security for such Guarantor's obligations hereunder, a
security interest in all monies, deposit accounts, securities and other
property of such Guarantor now or hereafter in the possession of or on
deposit with Agent or any Lender, whether held in a general or special
account or deposit, or for safekeeping or otherwise; and Agent shall have
all rights and remedies of a secured party with respect to such property.
(b) Setoff. In addition to any rights and remedies of Agent or any
------
Lender provided by law, Agent and the Lenders (with the prior consent of
Agent) shall have the right, without prior notice to any Guarantor, any
such notice being expressly waived by each Guarantor to the extent
permitted by applicable law, upon the occurrence and during the continuance
of a Default or an Event of Default, to set-off and apply against the
Guaranteed Obligations any amount owing from Agent or any Lender to such
Guarantor, including all deposits, accounts and moneys of such Guarantor
then or thereafter maintained with Agent or any Lender, at or at any time
after, the happening of any of the above mentioned events.
(c) Nonwaiver. No security interest or right of setoff shall be
---------
deemed to have been waived by any act or conduct on the part of Agent or
any Lender or by any failure to exercise such right of setoff or to enforce
such security interest, or by any delay in so doing; and every right of
setoff and security interest shall continue in full force and effect until
such right of setoff or security interest is specifically waived or
released by an instrument in writing executed by Agent.
8. CONTRIBUTION AMONG GUARANTORS. The Guarantors desire to allocate among
-----------------------------
themselves, in a fair and equitable manner, their rights of contribution from
each other when any payment is made by any Guarantor under this Guaranty.
Accordingly, if any payment is made by any Guarantor under this Guaranty (a
"Funding Guarantor") that exceeds its Fair Share, the Funding Guarantor shall be
-----------------
entitled to a contribution from each other Guarantor in the amount of such other
Guarantor's Fair Share Shortfall, so that all such contributions shall cause
each Guarantor's Aggregate Guaranty Payments to equal its Fair Share. The
amounts payable as contributions hereunder shall be determined by the Funding
Guarantor as of the date on which the related payment or distribution is made by
the Funding Guarantor, and such determination shall be binding on the other
Guarantors absent manifest error. The allocation and right of contribution among
the Guarantors set forth in this Paragraph 8 shall not be construed to limit in
-----------
any way the liability of any Guarantor under this Guaranty or the amount of the
Guaranteed Obligations.
H-12
9. MISCELLANEOUS.
-------------
(a) Notices. Except as otherwise provided herein, all notices,
-------
requests, demands, consents, instructions or other communications to or upon any
Guarantor, any Lender or Agent under this Guaranty or the other Credit Documents
to which a Guarantor is a party shall be in writing and faxed, mailed or
delivered, if to a Guarantor or Agent, at its respective facsimile number or
address set forth below or in the respective Subsidiary Joinder for such
Guarantor or, if to any Lender, at the address or facsimile number specified
beneath the heading "Address for Notices" under the name of such Lender in
Schedule I to the Credit Agreement (or to such other facsimile number or address
- ----------
for any party as indicated in any notice given by that party to the other
parties). All such notices and communications shall be effective (i) when sent
by overnight service of recognized standing, on the second Business Day
following the deposit with such service; (ii) when mailed, first class postage
prepaid and addressed as aforesaid through the United States Postal Service,
upon receipt; (iii) when delivered by hand, upon delivery; and (iv) when faxed,
upon confirmation of receipt.
H-13
Guarantor: ADAC Research and Manufacturing
c/o ADAC Laboratories
540 Alder Drive
Milpitas, CA 95035
Attn: Andre' Simone
Telephone: (408) 321-9100
Facsimile: (408) 321-9686
Guarantor: Community Health Computing Corporation
c/o ADAC Laboratories
540 Alder Drive
Milpitas, CA 95035
Attn: Andre' Simone
Telephone: (408) 321-9100
Facsimile: (408) 321-9686
Guarantor: ADAC JD Technical Services
c/o ADAC Laboratories
540 Alder Drive
Milpitas, CA 95035
Attn: Andre' Simone
Telephone: (408) 321-9100
Facsimile: (408) 321-9686
Guarantor: ADAC Laboratories Pacific, Inc.
c/o ADAC Laboratories
540 Alder Drive
Milpitas, CA 95035
Attn: Andre' Simone
Telephone: (408) 321-9100
Facsimile: (408) 321-9686
Agent: ABN AMRO Bank N.V.
101 California Street, Suite 4550
San Francisco, CA 94111-5812
Attn: Daniel P. Taylor
Telephone: (415) 984-3733
Facsimile: (415) 362-3524
with a copy to:
ABN AMRO Bank N.V.
335 Madison Avenue
New York, NY 10017
Attn: Linda Boardman
Telephone: (212) 370-8509
Fax No: (212) 682-0364
(b) Payments. Each Guarantor shall make all payments required hereunder
--------
to Agent, or its order, at Agent's office located at the address set forth in
Subparagraph 9(a) hereof, or at such other office as Agent may designate, on
- -----------------
demand, in Dollars. If any amounts required to be paid by a Guarantor under this
Guaranty are not paid when due, such Guarantor shall pay interest on the
aggregate, outstanding
H-14
balance of such amounts from the date due until those amounts are paid in full
at a per annum rate equal to the Base Rate plus two percent (2.00%), such rate
----
to change from time to time as the Base Rate shall change.
(c) Expenses. Each Guarantor shall pay on demand (i) all reasonable fees
--------
and expenses, including reasonable attorney's fees and expenses, incurred by
Agent in connection with the preparation, execution and delivery of, and the
exercise of its duties under, this Guaranty and the preparation, execution and
delivery of amendments and waivers hereunder and (ii) all reasonable fees and
expenses, including reasonable attorneys' fees and expenses, incurred by Agent
and the Lenders in connection with the enforcement or attempted enforcement of
this Guaranty or any of the Guaranteed Obligations or in preserving any of the
Agent's or the Lenders' rights and remedies (including, without limitation, all
such fees and expenses incurred in connection with any "workout" or
restructuring affecting the Credit Documents or the Guaranteed Obligations or
any bankruptcy or similar proceeding involving Guarantor, any other Guarantor,
Borrower or any of their affiliates).
(d) Waivers; Amendments. This Guaranty may not be amended or modified,
-------------------
nor may any of its terms be waived, except by written instruments singed by each
Guarantor and Agent to the extent permitted pursuant to Section 8.04 of the
Credit Agreement. Each waiver or consent under any provision hereof shall be
effective only in the specific instances for the purpose for which given. No
failure or delay on Agent's or any Lender's part in exercising any right
hereunder shall operate as a waiver thereof or of any other right not shall any
single or partial exercise of any such right preclude any other further exercise
thereof or of any other right.
(e) Assignments. This Guaranty shall be binding upon and inure to the
-----------
benefit of Agent, the Lenders, the Guarantors and their respective successors
and assigns; provided, however, that no Guarantor may assign or transfer any of
-------- -------
its rights and obligations under this Guaranty without the prior written consent
of Agent and the Lenders, and, provided, further, that Agent and any Lender may
-------- -------
sell, assign and delegate their respective rights and obligations hereunder only
as permitted by the Credit Agreement. All references in this Guaranty to any
Person shall be deemed to include all permitted successors and assigns of such
Person.
(f) Cumulative Rights, etc. The rights, powers and remedies of Agent and
the Lenders under this Guaranty shall be in addition to all rights, powers and
remedies given to Agent and the Lenders by virtue of any applicable law, rule or
regulation of any Governmental Authority, the Credit Agreement, any other Credit
Document or any other agreement, all of which rights, powers, and remedies shall
be
H-15
cumulative and may be exercised successively or concurrently without impairing
Agent's or any Lender's rights hereunder. Each Guarantor waives any right to
require Agent or any Lender to proceed against any person or to exhaust any
Collateral or to pursue any remedy in Agent's or such Lender's power.
(g) Payments Free of Taxes, Etc. All payments made by each Guarantor
----------------------------
under this Guaranty shall be made by each Guarantor free and clear of and
without deduction for any and all present and future taxes, levies, charges,
deductions and withholdings. In addition, each Guarantor shall pay upon demand
any stamp or other taxes, levies or charges of any jurisdiction with respect to
the execution, delivery, registration, performance and enforcement of this
Guaranty. If any taxes, levies, charges or other amounts are required to be
withheld from any amounts payable to Agent or any Lender hereunder, the amounts
so payable to Agent or such Lender shall be increased to the extent necessary to
yield to Agent or such Lender (after payment of all such amounts) any such
amounts payable hereunder in the amounts specified in this Guaranty. Upon
request by Agent or any Lender, each Guarantor shall furnish evidence
satisfactory to Agent or such Lender that all requisite authorizations and
approvals by, and notices to and filings with, governmental authorities and
regulatory bodies have been obtained and made and that all requisite taxes,
levies and charges have been paid.
(h) Partial Invalidity. If at any time any provision of this Guaranty is
------------------
or becomes illegal, invalid or unenforceable in any respect under the law or any
jurisdiction, neither the legality, validity or enforceability of the remaining
provisions of this Guaranty nor the legality, validity or enforceability of such
provision under the law of any other jurisdiction shall be in any way affected
or impaired thereby.
(i) Joint and Several Obligation. The obligations of the Guarantors under
----------------------------
this Guaranty are joint and several obligations of each Guarantor and may be
freely enforced against each Guarantor, for the full amount of the Guaranteed
Obligations, without regard to whether enforcement is sought or available
against any other Guarantor.
(j) Governing Law. This Guaranty shall be governed by and construed in
-------------
accordance with the laws of the State of California without reference to
conflicts of law rules.
(k) Jury Trial. EACH GUARANTOR, THE LENDERS AND AGENT, TO THE FULLEST
----------
EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY AS TO ANY ISSUE RELATING HERETO IN ANY ACTION, PROCEEDING, OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS GUARANTY.
H-16
(l) Limitation of Liability. NO CLAIM MAY BE MADE BY ANY GUARANTOR
-----------------------
AGAINST AGENT, ANY LENDER OR THE AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES,
ATTORNEYS OR AGENTS OF AGENT OR ANY LENDER FOR ANY SPECIAL, INDIRECT,
CONSEQUENTIAL OR PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM (WHETHER BASED UPON
ANY BREACH OF CONTRACT, TORT, BREACH OF STATUTORY DUTY OR ANY OTHER THEORY OF
LIABILITY) ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS
GUARANTY, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, AND
GUARANTOR HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY CLAIM FOR ANY
SUCH DAMAGES, WHETHER OR NOT NOW ACCRUED AND WHETHER OR NOT KNOWN OR
SUSPECTED TO EXIST IN ITS FAVOR.
H-17
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be executed
as of the day and year first above written.
ADAC RESEARCH AND MANUFACTURING
By:________________________________
Name:___________________________
Title:__________________________
COMMUNITY HEALTHCARE COMPUTING CORPORATION
By:________________________________
Name:___________________________
Title:__________________________
ADAC JD TECHNICAL SERVICES
By:________________________________
Name:___________________________
Title:__________________________
ADAC LABORATORIES PACIFIC, INC.
By:________________________________
Name:___________________________
Title:__________________________
H-18
ATTACHMENT 1
------------
SUBSIDIARY JOINDER
------------------
THIS SUBSIDIARY JOINDER (this "Agreement"), dated as of _________, _____,
---------
is executed by [NEW SUBSIDIARY], a __________ [corporation] [partnership] [etc.]
--------------
("New Subsidiary"), in favor of ABN AMRO BANK N.V., a Netherlands public company
--------------
acting through its San Francisco International Branch, acting as agent (in such
capacity, "Agent") for the financial institutions which are from time to time
-----
parties to the Credit Agreement referred to in Recital A below (collectively,
---------
the "Lenders").
-------
RECITALS
--------
A. Pursuant to a Credit Agreement dates as of July 31, 1996 (as amended
from time to time, the "Credit Agreement"), among ADAC Laboratories, a
----------------
California corporation ("Borrower"), the Lenders and Agent, the Lenders have
--------
agreed to extend certain credit facilities to Borrower upon the terms and
subject to the conditions set forth therein.
B. The Lenders' obligations to extend the credit facilities to Borrower
under the Credit Agreement are subject, among other conditions, to receipt by
Agent of (1) a Guaranty, dated as of July 31, 1996 (the "Guaranty"), duly
--------
executed by each existing Domestic Subsidiary of Borrower, and (2) Subsidiary
Joinders, duly executed by each future Domestic Subsidiary of Borrower.
C. New Subsidiary is a new Domestic Subsidiary of Borrower and expects to
derive substantial direct and indirect benefit from the transactions
contemplated by the Credit Agreement.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the above recitals and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, New Subsidiary hereby agrees with Agent, for the ratable benefit
of the Lenders and Agent, as follows:
1. DEFINITIONS AND INTERPRETATION. Unless otherwise defined herein, all
------------------------------
capitalized terms used herein and defined in the Guaranty shall have the
respective meanings given to those terms in the Guaranty. New Subsidiary
acknowledges receipt of copies of the Guaranty, the Credit Agreement and the
other Credit Documents.
2. REPRESENTATIONS AND WARRANTIES. On and as of the date of this
------------------------------
Agreement (the "Effective Date") and for the ratable benefit of the Agent and
the Lenders, New Subsidiary hereby makes
H-[1] - 1
each of the representations and warranties made by each Guarantor in the
Guaranty.
3. AGREEMENT TO BE BOUND. New Subsidiary agrees that, on and as of the
---------------------
Effective Date, it shall become a Guarantor under the Guaranty and shall be
bound by all the provisions of the Guaranty to the same extent as if New
Subsidiary had executed the Guaranty on the Closing Date.
4. WAVIER. Without limiting the generality of the waivers in the
------
Guaranty, New Subsidiary specifically agrees to be bound by the Guaranty and
waives any right to notice of acceptance of its execution of this Agreement and
of its agreement to be bound by the Guaranty.
5. GOVERNING LAW. This Agreement shall be governed by, and construed in
-------------
accordance with, the laws of the State of California.
IN WITNESS WHEREOF, New Subsidiary has caused this Agreement to be executed
by its duly authorized officer.
[NEW SUBSIDIARY]
By:___________________________________
Name:______________________________
Title:_____________________________
Address:
[_____________________________________]
[_____________________________________]
[_____________________________________]
Attn: [_______________________________]
Telephone: [(___) ___ - ______________]
Facsimile: [(___) ___ - ______________]
H-[1] - 2
EXHIBIT I
---------
INSURANCE ENDORSEMENTS
----------------------
1. Property Insurance. Each of the property insurance policies of
------------------
Borrower and each of its Subsidiaries (individually, an "Insured Party") shall
-------------
contain substantially the following endorsements:
(a) Agent shall be named as additional loss payee.
(b) In respect of the interests of Agent in the policies, the
insurance shall not be invalidated by any action or by inaction of any
Insured Party or by any Person having temporary possession of the property
covered thereby (the "Property") while under contract with any Insured
--------
Party to perform maintenance, repair, alteration or similar work on the
Property, and shall insure the interests of Agent regardless of any breach
or violation of any warranty, declaration or condition contained in the
insurance policy by any Insured Party or Agent or any other additional
insured (other than by such additional insured, as to such additional
insured) or by any Person having temporary possession of the Property while
under contract with Borrower to perform maintenance, repair, alteration or
similar work on the Property.
(c) If the insurance policy is cancelled for any reason whatsoever, or
substantial change is made in the coverage that affects the interests of
Agent, or if the insurance coverage is allowed to lapse for non-payment of
premium, such cancellation, change or lapse shall not be effective as to
Agent for 30 days (or 10 days in the case of non-payment of premium) after
receipt by Agent of written notice from the insurers of such cancellation,
change or lapse.
(d) Neither Agent nor any Lender shall have any obligation or
liability for premiums, commissions, assessments, or calls in connection
with the insurance.
(e) The insurer shall waive any rights of set-off or counterclaim or
any other deduction, whether by attachment or otherwise, that it may have
against Agent and each Lender.
(f) The insurance shall be primary without right of contribution from
any other insurance that may be carried by Agent or any Lender with respect
to its or their interest in the Property.
(g) The insurer shall waive any right of subrogation against Agent and
each Lender.
I-1
(h) All provisions of the insurance, except the limits of liability,
shall operate in the same manner as if there were a separate policy
covering each insured party.
2. Liability Insurance. Each of the liability insurance policies of each
-------------------
Insured Party shall contain substantially the following endorsements:
(a) Agent shall be named as additional insured.
(b) In respect of the interests of Agent in the policies, the
insurance shall not be invalidated by any action or by inaction of any
Insured Party or by any Person having temporary possession of the property
covered thereby having temporary possession of the property covered thereby
(the "Property") while under contract with any Insured Party to perform
maintenance, repair, alteration or similar work on the Property, and shall
insure the interests of Agent regardless of any breach or violation of any
warranty, declaration or condition contained in the insurance policy by any
Insured Party or Agent or any other additional insured (other than by such
additional insured, as to such additional insured) or by any Person having
temporary possession of the Property while under contract with Borrower to
perform maintenance, repair, alteration or similar work on the Property;
provided, however, that the foregoing shall not be deemed to (i) cause such
-------- -------
insurance policies to cover matters otherwise excluded from coverage by the
terms of such policies or (ii) require any insurance to remain in force
notwithstanding non-payment of premiums except as provided in clause (c)
----------
below.
(c) If the insurance policy is cancelled for any reason whatsoever,
or substantial change is made in the coverage that affects the interests of
Agent, or if the insurance coverage is allowed to lapse for non-payment of
premium, such cancellation, change or lapse shall not be effective as to
Agent for 30 days (or 10 days in the case of non-payment of premium) after
receipt by Agent of written notice from the insurer of such cancellation,
change or lapse.
(d) Neither Agent nor any Lender shall have any obligation or
liability for premiums, commissions, assessments, or calls in connection
with the insurance.
(e) The insurer shall waiver any rights of set-off or counterclaim or
any other deduction, whether by attachment or otherwise, that it may have
against Agent and each Lender.
(f) The insurance shall be primary without right of contribution from
any other insurance that may be carried by Agent or any Lender with respect
to their interests in the Property.
I-2
(g) The insurer shall waive any right of subrogation against Agent and
each Lender.
(h) All provisions of the insurance, except the limits of liability, shall
operate in the same manner as if there were a separate policy covering each
insured party.
I-3
EXHIBIT J
---------
ASSIGNMENT AGREEMENT
--------------------
THIS ASSIGNMENT AGREEMENT, dated as of the date set forth at the top of
Attachment 1 hereto, by and among:
- ------------
(1) The bank designated under item A of Attachment I hereto as the
-------------
Assignor Lender ("Assignor Lender"); and
---------------
(2) Each bank designated under item B of Attachment I hereto as an
------------
Assignee Lender (individually, an "Assignee Lender").
---------------
RECITALS
--------
A. Assignor Lender is one of the lenders which is a party to the Credit
Agreement dated as of July 31, 1996, by and among ADAC Laboratories
("Borrower,") Assignor Lender and the other financial institution parties
--------
thereto (collectively, the "Lenders") and ABN AMRO Bank N.V., as agent for the
------
Lenders (in such capacity, "Agent"). (Such credit agreement, as amended,
-----
supplemented or otherwise modified in accordance with its terms from time to
time to be referred to herein as the "Credit Agreement").
---------------
B. Assignor Lender wished to sell, and Assignee Lender wished to purchase,
all or a portion of Assignor Lender's rights under the Credit Agreement pursuant
to Subparagraph 8.05 (c) of the Credit Agreement.
---------------------
AGREEMENT
---------
Now, therefore, the parties hereto hereby agree as follows:
1. Definitions. Except as otherwise defined in this Assignment Agreement,
-----------
all capitalized terms used herein and defined in the Credit Agreement have the
respective meanings given to those terms in the Credit Agreement.
2. Sales and Assignment. Subject to the terms and conditions of this
--------------------
Assignment Agreement, Assignor Lender hereby agrees to sell, assign and delegate
to each Assignee Lender and each Assignee Lender hereby agrees to purchase,
accept and assume the rights, obligations and duties of a Lender under the
Credit Agreement and the other Credit Documents equal to the Proportionate Share
set forth under the caption "Proportionate Share Transferred" opposite such
Assignee Lender's name on Attachment I hereto. Such sale, assignment and
------------
delegation shall become effective on the date designated in Attachment I hereto
------------
(the "Assignment Effective Date"), which date shall be at least five (5)
-------------------------
Business Days after the date following the date
J-1
counterparts of this Assignment Agreement are delivered to Agent in accordance
with Paragraph 3 hereof.
3. Assignment Effective Notice. Upon (a) receipt by Agent of five (5)
---------------------------
counterparts of this Assignment Agreement (to each of which is attached a fully
completed Attachment I), each of which has been executed by Assignor Lender and
------------
each Assignee Lender (and to the extent required by Subparagraph 8.05 (c) of the
----------------------------
Credit Agreement, by Borrower and Agent) and (b) payment to Agent of the
- ----------------
registration and processing fee specified in Subparagraph 8.05 (e) of the Credit
-----------------------------------
Agreement by Assignor Lender, Agent will transmit to Borrower, Assignor Lender
- ---------
and each Assignee Lender an Assignment Effective Notice substantially in the
form of Attachment II hereto, fully completed (an "Assignment Effective
------------- --------------------
Notice").
- ------
4. Assignment Effective Date. At or before 12:00 noon (local time of
-------------------------
Assignor Lender) on the Assignment Effective Date, each Assignee Lender shall
pay to Assignor Lender, in immediately available or same day funds, an amount
equal to the purchase price, as agreed between Assignor Lender and such Assignee
Lender (the "Purchase Price"), for the Proportionate Share purchased by such
--------------
Assignee Lender hereunder. Effective upon receipt by Assignor Lender of the
Purchase Price payable by each Assignee Lender, the sale, assignment and
delegation to such Assignee Lender of such Proportionate Share as described in
Paragraph 2 hereof shall become effective.
- -----------
5. Payments After the Assignment Effective Date. Assignor Lender and each
--------------------------------------------
Assignee Lender hereby agree that Agent shall, and hereby authorize and direct
Agent to, allocate amounts payable under the Credit Agreement and the other
Credit Documents as follows:
(a) All principal payments made after the Assignment Effective Date
with respect to each Proportionate Share assigned to an Assignee Lender pursuant
to this Assignment Agreement shall be payable to such Assignee Lender.
(b) All interest, fees and other amounts accrued after the Assignment
Effective Date with respect to each Proportionate Share assigned to an Assignee
Lender pursuant to his Assignment Agreement shall be payable to such Assignee
Lender.
Assignor Lender and each Assignee Lender shall make any separate arrangements
between themselves which they deem appropriate with respect to payments between
then of amounts paid under the Credit Documents on account of the Proportionate
Share assigned to such Assignee Lender, and neither Agent nor Borrower shall
have any responsibility to effect or carry out such separate arrangements.
6. Delivery of Notes. On or prior to he Assignment Effective Date, Assignor
-----------------
Lender will deliver to Agent the Notes payable to Assignor Lender. On or prior
to the Assignment
J-2
Effective Date, Borrower will deliver to Agent new Notes for each Assignee
Lender and Assignor Lender, in each case in principal amounts reflecting, in
accordance with the Credit Agreement, their respective Commitments (as adjusted
pursuant to this Assignment Agreement). As provided in Subparagraph 8.05(c) of
-----------------------
the Credit Agreement, each such new Note shall be dated the Closing Date.
- --------------------
Promptly after the Assignment Effective Date, Agent will send to each of
Assignor Lender and the Assignee Lenders its new Notes and will send to Borrower
the superseded Note payable to Assignor Lender, marked "Replaced."
7. Delivery of Copies of Credit Documents. Concurrently with the execution
--------------------------------------
and delivery hereof, Assignor Lender will provide to each Assignee Lender (if it
is not already a Lender party to the Credit Agreement) conformed copies of all
documents delivered to Assignor Lender on or prior to the Closing Date in
satisfaction of the conditions precedent set forth in the Credit Agreement.
8. Further Assurances. Each of the parties to this Assignment Agreement
------------------
agrees that at any time and from time to time upon the written request of any
other party, it will execute and deliver such further documents and do such
further acts and things as such other party may reasonably request in order to
effect the purposes of this Assignment Agreement.
9. Further Representations, Warranties and Covenants. Assignor Lender and
-------------------------------------------------
each Assignee Lender further represent and warrant to and covenant with each
other, Agent and the Lenders as follows:
(a) Other than the representation and warranty that it is the legal
and beneficial owner of the interest being assigned hereby free and clear
of any adverse claim, Assignor Lender makes no representation or warranty
and assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or the
other Credit Documents or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement
or the other Credit Documents furnished [or the Collateral or any security
interest therein].
(b) Assignor Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of Borrower or any
of its obligations under the Credit Agreement or any other Credit
Documents.
(c) Each Assignee Lender confirms that it has received a copy of the
Credit Agreement and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment Agreement.
J-3
(d) Each Assignee Lender will, independently and without reliance upon
Agent, Assignor Lender or any other Lender and based upon such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement and
the other Credit Documents.
(e) Each Assignee Lender appoints and authorizes Agent to take such
action as Agent on its behalf and to exercise such powers under the Credit
Agreement and the other Credit Documents as Agent is authorized to exercise by
the terms thereof, together with such powers as are reasonably incidental
thereto, all in accordance with Section VII of the Credit Agreement.
-----------------------------------
(f) Each Assignee Lender agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Credit
Agreement and the other Credit Documents are required to be performed by it as
a Lender.
(g) Attachment I hereto sets forth administrative information with
------------
respect to each Assignee Lender.
10. Effect of this Assignment Agreement. On and after the Assignment
-----------------------------------
Effective Date, (a) each Assignee Lender shall be a Lender with a Proportionate
Share equal to the Proportionate Share set forth under the caption
"Proportionate Share After Assignment" opposite such Assignee Lender's name on
Attachment I hereto and shall have the rights, duties and obligations of such a
- ------------
Lender under the Credit Agreement and the other Credit Documents and (b)
Assignor Lender shall be a Lender with a Proportionate Share equal to the
Proportionate Share set forth under the caption "Proportionate Share After
Assignment" opposite Assignor Lender's name on Attachment I hereto and shall
------------
have the rights, duties and obligations of such a Lender under the Credit
Agreement and the other Credit Documents, or, if the Proportionate Share of
Assignor Lender has been reduced to 0%, Assignor Lender shall cease to be a
Lender and shall have no further obligation to make any Loans.
11. Miscellaneous. This Assignment Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of California. Paragraph
headings in this Assignment Agreement are for convenience of reference only and
are not part of the substance hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
Agreement to be executed by their respective duly authorized officers as of the
date set forth in Attachment I hereto.
------------
, as
-------------------------------
Assignor Lender
J-4
By: ________________________________
Name: __________________________
Title: _________________________
____________________________________, as an
Assignee Lender
By: ________________________________
Name: __________________________
Title: _________________________
____________________________________, as an
Assignee Lender
By: ________________________________
Name: __________________________
Title: _________________________
____________________________________, as an
Assignee Lender
By: ________________________________
Name: __________________________
Title: _________________________
J-5
CONSENTED TO AND ACKNOWLEDGED BY:
_______________________________
By: ___________________________
Name: _____________________
Title: ____________________
_______________________________,
As Agent
By: ___________________________
Name: _____________________
Title: ____________________
ACCEPTED FOR RECORDATION
IN REGISTER:
_______________________________,
As Agent
By: ___________________________
Name: _____________________
Title: ____________________
J-6
ATTACHMENT 1
TO ASSIGNMENT AGREEMENT
-----------------------
NAMES, ADDRESSES AND PROPORTIONATE SHARES
OF ASSIGNOR LENDER AND ASSIGNEE LENDERS
AND ASSIGNMENTS EFFECTIVE DATE
______________, ____
Proportionate Proportionate
Share Share After
A. ASSIGNOR LENDER Transferred /1,2/ Assignment /1/
--------------- ----------------- --------------
______________________ _________________% ______________%
Applicable Lending Office:
_______________________________
_______________________________
_______________________________
_______________________________
Address for notices:
_______________________________
_______________________________
_______________________________
_______________________________
Telephone No: _________________
Telecopier No: ________________
Wiring Instructions:
_______________________________
_______________________________
______________________
/1/ To be expressed by a percentage rounded to the [seventh]-digit to the right
of he decimal point.
/2/ Share of Total Commitment sold by Assignor Lender, and share of Total
Commitment purchased by Assignee Lender.
J(1)-1
Proportionate Proportionate
Share Share After
B. ASSINGEE LENDERS Transferred /1,2/ Assignment /1/
---------------- ----------------- --------------
_____________________ _________________% _____________%
Applicable Lending Office:
______________________________
______________________________
______________________________
______________________________
Address for notices:
______________________________
______________________________
______________________________
______________________________
Telephone No: ________________
Telecopier No: _______________
Wiring Instruction:
_______________________________
_______________________________
________________________
/1/ To be expressed by a percentage rounded to the [seventh]-digit to the right
of the decimal point.
/2/ Share of Total Commitment sold by Assignor Lender, and share of Total
Commitment purchased by Assignee Lender.
J(1)-2
Proportionate Proportionate
Share Share After
B. ASSINGEE LENDERS Transferred /1,2/ Assignment /1/
---------------- ----------------- --------------
(cont'd)
_____________________ _________________% _____________%
Applicable Lending Office:
______________________________
______________________________
______________________________
______________________________
Address for notices:
______________________________
______________________________
______________________________
______________________________
Telephone No: ________________
Telecopier No: _______________
Wiring Instruction:
_______________________________
_______________________________
C. ASSIGNMENT EFFECTIVE DATE:
-------------------------
______________, ____
________________________
/1/ To be expressed by a percentage rounded to the [seventh]-digit to the right
of the decimal point.
/2/ Share of Total Commitment sold by Assignor Lender, and share of Total
Commitment purchased by Assignee Lender.
J(1)-3
ATTACHMENT 2
TO ASSIGNMENT AGREEMENT
-----------------------
FORM OF
ASSIGNMENT EFFECTIVE NOTICE
---------------------------
Reference is made to the Credit Agreement, dated as of July 31, 1996, among
ADAC Laboratories ("Borrower"), the financial institutions parties thereto (the
--------
"Lenders") and ABN AMRO Bank N.V., as agent for the Lenders (in such capacity,
-------
"Agent"). Agent hereby acknowledges receipt of five executed counterparts of a
-----
completed Assignment Agreement, a copy of which is attached hereto. [Note:
Attach copy of Assignment Agreement.] Terms defined in such Assignment Agreement
are used herein as therein defined.
1. Pursuant to such Assignment Agreement, you are advised that the
Assignment Effective Date will be .
---------------------
2. Pursuant to such Assignment Agreement, Assignor Lender is required to
deliver to Agent on or before the Assignment Effective Date the Notes payable to
Assignor Lender.
3. Pursuant to such Assignment Agreement, Borrower is required to deliver
to Agent on or before the Assignment Effective Date the following Notes, each
dated [Insert appropriate date]:
----------------------------------------
[Describe each new Note for Assignor Lender and each Assignee Lender as to
principal amount.]
4. Pursuant to such Assignment Agreement, each Assignee Lender is required
to pay its Purchase Price to Assignor Lender at or before 12:00 Noon on the
Assignment Effective Date in immediately available funds.
Very truly yours,
ABN AMRO BANK N.V.
as Agent
By:
----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
J(2)-1