EXHIBIT 10.2
[***] A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
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LOAN AND SECURITY AGREEMENT
BY AND AMONG
NABI BIOPHARMACEUTICALS
AS BORROWER,
THE LENDERS THAT ARE SIGNATORIES HERETO
AS THE LENDERS,
AND
▇▇▇▇▇ FARGO FOOTHILL, INC.,
AS THE ARRANGER AND ADMINISTRATIVE AGENT
DATED AS OF JUNE 18, 2003
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is
entered into as of June 18, 2003 between and among, on the one hand, the lenders
identified on the signature pages hereof (such lenders, together with their
respective successors and assigns, are referred to hereinafter each individually
as a "Lender" and collectively as the "Lenders"), ▇▇▇▇▇ FARGO FOOTHILL, INC., a
California corporation, as the arranger and administrative agent for the Lenders
("Agent"), and, on the other hand, NABI BIOPHARMACEUTICALS, a Delaware
corporation ("Borrower").
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. As used in this Agreement, the following
terms shall have the following definitions:
"Account Debtor" means any Person who is or who may become
obligated under, with respect to, or on account of, an Account, chattel paper,
or a General Intangible.
"Accounts" means all of Borrower's now owned or hereafter
acquired right, title, and interest with respect to "accounts" (as that term is
defined in the Code), and any and all supporting obligations in respect thereof.
"ACH Transactions" means any cash management or related
services (including the Automated Clearing House processing of electronic funds
transfers through the direct Federal Reserve Fedline system) provided by ▇▇▇▇▇
Fargo or its Affiliates for the account of Borrower or its Subsidiaries.
"Activation Notice" has the meaning set forth in SECTION
2.7(B).
"Additional Documents" has the meaning set forth in SECTION
4.4(C).
"Advances" has the meaning set forth in SECTION 2.1.
"Affiliate" means, as applied to any Person, any other Person
who, directly or indirectly, controls, is controlled by, or is under common
control with, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct the management and
policies of a Person, whether through the ownership of Stock, by contract, or
otherwise; provided, however, that, for the purposes of the definition of
Eligible Accounts and SECTION 7.14 hereof: (a) any Person which owns directly or
indirectly 10% or more of the securities having ordinary voting power for the
election of directors or other members of the governing body of a Person or 10%
or more of the partnership or other ownership interests of a Person (other than
as a limited partner of such Person) shall be deemed to control such Person, (b)
each director (or comparable manager) of a Person shall be deemed to be an
Affiliate of such Person, and (c) each partnership or joint venture in which a
Person is a partner or joint venturer shall be deemed to be an Affiliate of such
Person.
"Agent" means Foothill, solely in its capacity as agent for
the Lenders hereunder, and any successor thereto.
"Agent Advances" has the meaning set forth in SECTION
2.3(E)(I).
"Agent's Account" means an account identified on SCHEDULE A-1.
"Agent's Liens" means the Liens granted by Borrower to Agent
for the benefit of the Lender Group under this Agreement or the other Loan
Documents.
"Agent-Related Persons" means Agent together with its
Affiliates, officers, directors, employees, and agents.
"Agreement" has the meaning set forth in the preamble hereto.
"AmerisourceBergen" means AmerisourceBergen Corporation, a
Delaware corporation.
"Applicable LIBOR Rate Revolver Margin" means, as of any date
of determination, the percentage points set forth below with respect to Advances
corresponding to the ratio of (x) Total Funded Debt at the end of the
immediately preceding fiscal quarter of Borrower to (y) EBITDA for the
twelve-month period ending as of the end of such fiscal quarter, as determined
by Agent based upon Borrower's financial statements delivered to Agent and
Lenders pursuant to SECTION 6.3(A) for such fiscal quarter:
----- ---------------------- ------------------------
Ratio of Total Funded Applicable LIBOR Rate
Level Debt to EBITDA Revolver Margin
----- ---------------------- ------------------------
I Less than 1.25:1 2.25 percentage points
----- ---------------------- ------------------------
II 1.25:1 to 2.50:1 2.75 percentage points
----- ---------------------- ------------------------
III Greater than 2.50:1 3.00 percentage points
----- ---------------------- ------------------------
PROVIDED, that, notwithstanding the foregoing, (a) the Applicable LIBOR Rate
Revolver Margin shall be effective from the date of delivery of Borrower's
financial statements for the fiscal quarter used to determine the Applicable
LIBOR Rate Revolver Margin until the date of delivery of such financial
statements pursuant to SECTION 6.3(A) hereof for the next fiscal quarter, (b) if
Borrower fails to deliver financial statements to Agent and the Lenders for any
fiscal quarter within 5 days of the date such financial statements are due in
accordance with SECTION 6.3(A) hereof, then until such financial statements are
delivered, the Applicable LIBOR Rate Revolver Margin shall be set in accordance
with Level III, and (c) on and after the Closing Date until the financial
statements for the first fiscal quarter ending after the Closing Date are
delivered, the Applicable LIBOR Rate Revolver Margin shall be set at Level II
above.
"Applicable Prepayment Premium" means, as of any date of
determination, an amount equal to (a) during the period of time from and after
the date of the execution and delivery of this Agreement up to the date that is
the first anniversary of the Closing Date, 2.0% times the Maximum ▇▇▇▇▇▇▇▇
▇
▇▇▇▇▇▇, (▇) during the period of time from and including the date that is the
first anniversary of the Closing Date up to the date that is the second
anniversary of the Closing Date, 1.0% times the Maximum Revolver Amount, and (c)
during the period of time from and including the date that is the second
anniversary of the Closing Date up to the date prior to the Maturity Date, 0.5%
times the Maximum Revolver Amount.
"Appraised Value" means the net forced liquidation value (net
of liquidation expenses) of any Equipment or the gross orderly liquidation value
of any Real Property Collateral, in each case, determined by the most recent
appraisal performed by a qualified independent appraiser, in form and substance
satisfactory to Agent.
"Approved Acquisitions" means the acquisitions by Borrower of
certain assets and other rights relating to the manufacture, sale and/or
distribution of certain biopharmaceutical products to the extent approved by
Agent in writing prior to the Closing Date.
"Assignee" has the meaning set forth in SECTION 14.1.
"Assignment and Acceptance" means an Assignment and Acceptance
in the form of Exhibit A-1.
"Authorized Person" means any officer or other employee of
Borrower set forth on SCHEDULE A-2.
"Autoplex T" means Autoplex(R) T (Anti-Inhibitor Coagulant
Complex, Heat Treated).
"Availability" means, as of any date of determination, if such
date is a Business Day, and determined at the close of business on the
immediately preceding Business Day, if such date of determination is not a
Business Day, the amount that Borrower is entitled to borrow as Advances under
SECTION 2.1 (after giving effect to all then outstanding Obligations (other than
Bank Products Obligations) and all sublimits and reserves applicable hereunder).
"Bank Product Agreements" means those certain cash management
service agreements entered into from time to time by Borrower or its
Subsidiaries in connection with any of the Bank Products.
"Bank Product Obligations" means all obligations, liabilities,
contingent reimbursement obligations, fees, and expenses owing by Borrower or
its Subsidiaries to ▇▇▇▇▇ Fargo or its Affiliates pursuant to or evidenced by
the Bank Product Agreements and irrespective of whether for the payment of
money, whether direct or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising, and including all such amounts that Borrower
is obligated to reimburse to Lender as a result of Lender purchasing
participations or executing indemnities or reimbursement obligations with
respect to the Bank Products provided to Borrower or its Subsidiaries pursuant
to the Bank Product Agreements.
"Bank Product Reserves" means, as of any date of
determination, the amount of reserves that Lender has established (based upon
▇▇▇▇▇ Fargo's or its Affiliate's reasonable determination of the credit exposure
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in respect of then extant Bank Products) for Bank Products then provided or
outstanding.
"Bank Products" means any service or facility extended to
Borrower or its Subsidiaries by ▇▇▇▇▇ Fargo or any Affiliate of ▇▇▇▇▇ Fargo
including: (a) credit cards, (b) credit card processing services, (c) debit
cards, (d) purchase cards, (e) ACH Transactions, (f) cash management, including
controlled disbursement, accounts or services, or (g) Hedge Agreements.
"Bankruptcy Code" means the United States Bankruptcy Code, as
in effect from time to time.
"Base LIBOR Rate" means, the rate per annum determined by
Agent in accordance with its customary procedures, and utilizing Bloomberg
Reporting Service or, if Bloomberg Reporting Service is unavailable, such other
electronic or other quotation sources as it considers appropriate (rounded
upwards, if necessary, to the next 1/16%), on the basis of the rates at which
Dollar deposits as are offered to major banks in the London interbank market as
such rates are in effect on or about 11:00 a.m. (California time) 2 Business
Days prior to the commencement of the applicable Interest Period, for a term and
in amounts comparable to the Interest Period and amount of the LIBOR Rate Loan
requested by Borrower in accordance with this Agreement, which determination
shall be conclusive in the absence of manifest error.
"Base Rate" means, the rate of interest announced within ▇▇▇▇▇
Fargo at its principal office in San Francisco as its "prime rate", with the
understanding that the "prime rate" is one of ▇▇▇▇▇ Fargo's base rates (not
necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publication or publications as ▇▇▇▇▇ Fargo may designate.
"Base Rate Loan" means each portion of an Advance or the Term
Loan that bears interest at a rate determined by reference to the Base Rate.
"Base Rate Margin" means 0.50 percentage points.
"Base Rate Term Loan Margin" means 2.25 percentage points.
"Bayer" means Bayer Corporation, an Indiana corporation.
"Benefit Plan" means a "defined benefit plan" (as defined in
Section 3(35) of ERISA) for which Borrower or any Subsidiary or ERISA Affiliate
of Borrower has been an "employer" (as defined in Section 3(5) of ERISA) within
the past six years.
"Board of Directors" means the board of directors (or
comparable managers) of Borrower or any committee thereof duly authorized to act
on behalf of the board.
"Books" means Borrower's and its Subsidiaries' now owned or
hereafter acquired books and records (including all of its Records indicating,
summarizing, or evidencing its assets (including the Collateral) or liabilities,
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all of Borrower's or its Subsidiaries' Records relating to its or their business
operations or financial condition, and all of its or their goods or General
Intangibles related to such information).
"Borrower" has the meaning set forth in the preamble to this
Agreement.
"Borrowing" means a borrowing hereunder consisting of Advances
(or term loans, in the case of the Term Loan) made on the same day by the
Lenders (or Agent on behalf thereof), or by Swing Lender in the case of a Swing
Loan, or by Agent in the case of an Agent Advance.
"Borrowing Base" has the meaning set forth in SECTION 2.1.
"Business Day" means any day that is not a Saturday, Sunday,
or other day on which national banks are authorized or required to close, except
that, if a determination of a Business Day shall relate to a LIBOR Rate Loan,
the term "Business Day" also shall exclude any day on which banks are closed for
dealings in Dollar deposits in the London interbank market.
"Capital Lease" means a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means any Indebtedness
represented by obligations under a Capital Lease.
"Cardinal" means Cardinal Health, Inc., an Ohio corporation.
"Carryforward Amount" has the meaning set forth in SECTION
7.19(C).
"Cash Equivalents" means (a) marketable direct obligations
issued or unconditionally guaranteed by the United States or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within 1 year from the date of acquisition thereof, (b)
marketable direct obligations issued by any state of the United States or any
political subdivision of any such state or any public instrumentality thereof
maturing within 1 year from the date of acquisition thereof and, at the time of
acquisition, having the highest rating obtainable from either S&P or ▇▇▇▇▇'▇,
(c) commercial paper maturing no more than 270 days from the date of acquisition
thereof and, at the time of acquisition, having a rating of A-1 or P-1, or
better, from S&P or ▇▇▇▇▇'▇, (d) certificates of deposit or bankers' acceptances
maturing within 1 year from the date of acquisition thereof either (i) issued by
any bank organized under the laws of the United States or any state thereof
which bank has a rating of A or A2, or better, from S&P or ▇▇▇▇▇'▇, or (ii)
certificates of deposit less than or equal to $100,000 in the aggregate issued
by any other bank insured by the Federal Deposit Insurance Corporation, (e)
investments made in accordance with Borrower's investment policy provided to
Agent prior to the Closing Date, and (f) other similar investments approved in
writing by Agent.
"Cash Management Account" has the meaning set forth in SECTION
2.7(A).
"Cash Management Agreements" means those certain cash
management service agreements, in form and substance satisfactory to Agent, each
of which is among Borrower, Agent, and one of the Cash Management Banks.
5
"Cash Management Bank" has the meaning set forth in SECTION
2.7(A).
"Change of Control" means (a) any "person" or "group" (within
the meaning of Sections 13(d) and 14(d) of the Exchange Act), becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of 15%, or more, of the Stock of Borrower having the right to vote
for the election of members of the Board of Directors, or (b) a majority of the
members of the Board of Directors do not constitute Continuing Directors, or (c)
Borrower ceases to directly own and control 100% (or such lower percentage that
Borrower owns on the Closing Date or with respect to Subsidiaries that are
acquired or formed after the Closing Date, such percentage that Borrower owns on
the date of acquisition or formation of such Subsidiary) of the outstanding
capital Stock of each of its Subsidiaries (other than its Subsidiaries existing
on the Closing Date).
"Closing Date" means the date of the making of the initial
Advance (or other extension of credit) hereunder or the date on which Agent
sends Borrower a written notice that each of the conditions precedent set forth
in SECTION 3.1 either have been satisfied or have been waived.
"Closing Date Business Plan" means the set of Projections of
Borrower for the one year period following the Closing Date (on a month by month
basis), in form and substance (including as to scope and underlying assumptions)
satisfactory to Agent.
"Code" means the New York Uniform Commercial Code, as in
effect from time to time.
"Collateral" means all of Borrower's now owned or hereafter
acquired property, including all of Borrower's right, title, and interest in and
to each of the following:
(a) Accounts,
(b) Books,
(c) Equipment,
(d) General Intangibles and DDA's,
(e) Inventory,
(f) Investment Property,
(g) Negotiable Collateral,
(h) Real Property Collateral,
(i) money or other assets of Borrower that now or
hereafter come into the possession, custody, or control of any member of the
Lender Group, and
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(j) the proceeds and products, whether tangible or
intangible, of any of the foregoing, including proceeds of insurance covering
any or all of the foregoing, and any and all Accounts, Books, Equipment, General
Intangibles and DDA's, Inventory, Investment Property, Negotiable Collateral,
Real Property, money, deposit accounts, or other tangible or intangible property
resulting from the sale, exchange, collection, or other disposition of any of
the foregoing, or any portion thereof or interest therein, and the proceeds
thereof.
"Collateral Access Agreement" means a landlord waiver, bailee
letter, or acknowledgement agreement of any lessor, warehouseman, processor,
consignee, or other Person in possession of, having a Lien upon, or having
rights or interests in the Equipment or Inventory, in each case, in form and
substance reasonably satisfactory to Agent.
"Collections" means all cash, checks, notes, instruments, and
other items of payment (including insurance proceeds, proceeds of cash sales,
rental proceeds, and tax refunds) of Borrower.
"Commercial Tort Claim Assignment" has the meaning set forth
in SECTION 4.4(B).
"Commitment" means, with respect to each Lender, its Revolver
Commitment, its Term Loan Commitment, or its Total Commitment, as the context
requires, and, with respect to all Lenders, their Revolver Commitments, their
Term Loan Commitments, or their Total Commitments, as the context requires, in
each case as such Dollar amounts are set forth beside such Lender's name under
the applicable heading on SCHEDULE C-1 or on the signature page of the
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of SECTION 14.1.
"Compliance Certificate" means a certificate substantially in
the form of EXHIBIT C-1 delivered by the chief financial officer of Borrower to
Agent.
"Consolidated Net Income" means, with respect to any Person
for any period, the net income (loss) of such Person and its Subsidiaries for
such period, determined on a consolidated basis and in accordance with GAAP, but
excluding from the determination of Consolidated Net Income (without
duplication) (a) any extraordinary or non-recurring gains or losses or gains or
losses from dispositions, (b) restructuring charges, (c) effects of discontinued
operations, and (d) interest income.
"Continuing Director" means (a) any member of the Board of
Directors who was a director (or comparable manager) of Borrower on the Closing
Date, and (b) any individual who becomes a member of the Board of Directors
after the Closing Date if such individual was appointed or nominated for
election to the Board of Directors by a majority of the Continuing Directors,
but excluding any such individual originally proposed for election in opposition
to the Board of Directors in office at the Closing Date in an actual or
threatened election contest relating to the election of the directors (or
comparable managers) of Borrower (as such terms are used in Rule 14a-11 under
the Exchange Act) and whose initial assumption of office resulted from such
contest or the settlement thereof.
"Control Agreement" means a control agreement, in form and
substance reasonably satisfactory to Agent, executed and delivered by Borrower,
7
Agent, and the applicable securities intermediary with respect to a Securities
Account or bank with respect to a deposit account.
"Daily Balance" means, with respect to each day during the
term of this Agreement, the amount of an Obligation owed at the end of such day.
"DDA" means any checking or other demand deposit account
maintained by Borrower.
"Default" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.
"Defaulting Lender" means any Lender that fails to make any
Advance (or other extension of credit) that it is required to make hereunder on
the date that it is required to do so hereunder.
"Defaulting Lender Rate" means (a) the Base Rate for the first
3 days from and after the date the relevant payment is due, and (b) thereafter,
at the interest rate then applicable to Advances that are Base Rate Loans
(inclusive of the Base Rate Margin applicable thereto).
"Designated Account" means that certain DDA of Borrower
identified on SCHEDULE D-1.
"Dilution" means, as of any date of determination, a
percentage, based upon the experience of the immediately prior twelve month
period, that is the result of dividing the Dollar amount of (a) bad debt
write-downs, discounts, advertising allowances, credits, or other dilutive items
with respect to the Accounts during such period, by (b) Borrower's gross
▇▇▇▇▇▇▇▇ plus the Dollar amount of clause (a).
"Dilution Reserve" means, as of any date of determination, an
amount sufficient to reduce the advance rate against Eligible Accounts by one
percentage point for each percentage point by which Dilution is in excess of
5.0%.
"Disbursement Letter" means an instructional letter executed
and delivered by Borrower to Agent regarding the extensions of credit to be made
on the Closing Date, the form and substance of which is satisfactory to Agent.
"Dollars" or "$" means United States dollars.
"Due Diligence Letter" means the due diligence letter sent by
Agent's counsel to Borrower, together with Borrower's completed responses to the
inquiries set forth therein, the form and substance of such responses to be
satisfactory to Agent.
"EBITDA" means, with respect to any fiscal period, Borrower's
and its Subsidiaries' consolidated net earnings (or loss), MINUS extraordinary
gains, PLUS extraordinary losses, PLUS interest expense, income taxes,
depreciation and amortization, as determined in accordance with GAAP, PLUS all
non-cash expenses attributable to stock option plans and to severance payments
made to employees for such period, provided, that, in the case of any fiscal
8
period in which an acquisition occurs, EBITDA shall be calculated on a pro forma
basis giving effect to such acquisition as of the first day of such fiscal
period.
"Eligible Accounts" means those Accounts created by Borrower
in the ordinary course of its business, that arise out of Borrower's sale of
goods or rendition of services, that comply with each of the representations and
warranties respecting Eligible Accounts made by Borrower in the Loan Documents,
that are reflected on the books and records of Borrower in a consistent manner
using substantially the same methodology as that which is used on the Closing
Date and that are not excluded as ineligible by virtue of one or more of the
criteria set forth below. In determining the amount to be included, Eligible
Accounts shall be calculated net of customer deposits and unapplied cash
remitted to Borrower and all chargebacks, rebates (and related fees) and
discounts of any kind that are at any time owing, granted, outstanding,
available or claimed with respect to such Eligible Accounts. Eligible Accounts
shall not include the following:
(a) Accounts that the Account Debtor has failed to
pay within 90 days of original invoice date or Accounts with selling terms of
more than 90 days,
(b) Accounts owed by an Account Debtor (or its
Affiliates) where 50% or more of all Accounts owed by that Account Debtor (or
its Affiliates) are deemed ineligible under clause (a) above,
(c) Accounts with respect to which the Account Debtor
is an employee, Affiliate, or agent of Borrower,
(d) Accounts arising in a transaction wherein goods
are placed on consignment or are sold pursuant to a guaranteed sale, a sale or
return, a sale on approval, a ▇▇▇▇ and hold, or any other terms by reason of
which the payment by the Account Debtor may be conditional,
(e) Accounts that are not payable in Dollars,
(f) Accounts with respect to which the Account Debtor
either (i) does not maintain its chief executive office in the United States, or
(ii) is not organized under the laws of the United States or any state thereof,
or (iii) is the government of any foreign country or sovereign state, or of any
state, province, municipality, or other political subdivision thereof, or of any
department, agency, public corporation, or other instrumentality thereof, unless
(y) the Account is supported by an irrevocable letter of credit reasonably
satisfactory to Agent (as to form, substance, and issuer or domestic confirming
bank) that has been delivered to Agent and is directly drawable by Agent, or (z)
the Account is covered by credit insurance in form, substance, and amount, and
by an insurer, reasonably satisfactory to Agent,
(g) Accounts with respect to which the Account Debtor
is either (i) the United States or any department, agency, or instrumentality of
the United States (exclusive, however, of Accounts with respect to which
Borrower has complied, to the reasonable satisfaction of Agent, with the
Assignment of Claims Act, 31 USC ss. 3727), or (ii) any state of the United
States (exclusive, however, of (y) Accounts owed by any state that does not have
9
a statutory counterpart to the Assignment of Claims Act, or (z) Accounts owed by
any state that does have a statutory counterpart to the Assignment of Claims Act
as to which Borrower has complied to Agent's reasonable satisfaction),
(h) Accounts with respect to which the Account Debtor
is a creditor of Borrower, including as a result of royalties payable by
Borrower to the Account Debtor (including Accounts with respect to which ZLB is
the Account Debtor and Accounts related to the sale of the plasma business to
ZLB for which Bayer is the Account Debtor), has or has asserted a right of
setoff, has disputed its liability, or has made any claim with respect to its
obligation to pay the Account, to the extent of such claim, right of setoff, or
dispute,
(i) Accounts with respect to (i) an Account Debtor
whose total obligations owing to Borrower exceed 10% (or 35%, in the case of
each of Cardinal, Bayer, McKesson and AmerisourceBergen) (each such percentage
as applied to a particular Account Debtor being subject to reduction by Agent in
its Permitted Discretion if the creditworthiness of such Account Debtor
deteriorates) of all Eligible Accounts, to the extent of the obligations owing
by such Account Debtor in excess of such percentage and (ii) Cardinal, Bayer,
McKesson and AmerisourceBergen whose combined total obligations owing to
Borrower exceed 75% of all Eligible Accounts, to the extent of the obligations
owing by such Account Debtors in excess of such percentage,
(j) Accounts with respect to which the Account Debtor
is subject to an Insolvency Proceeding, is not Solvent, has gone out of
business, or as to which Borrower has received notice of an imminent Insolvency
Proceeding or notice of a material impairment of the financial condition of such
Account Debtor,
(k) Accounts with respect to which the Account Debtor
is located in the states of New Jersey, Minnesota, or West Virginia (or any
other state that requires a creditor to file a business activity report or
similar document in order to bring suit or otherwise enforce its remedies
against such Account Debtor in the courts or through any judicial process of
such state), unless Borrower has qualified to do business in New Jersey,
Minnesota, West Virginia, or such other states, or has filed a business
activities report with the applicable division of taxation, the department of
revenue, or with such other state offices, as appropriate, for the then-current
year, or is exempt from such filing requirement,
(l) Accounts, the collection of which, Agent, in its
Permitted Discretion, believes to be doubtful by reason of the Account Debtor's
financial condition,
(m) Accounts that are not subject to a valid and
perfected first priority Agent's Lien,
(n) Accounts with respect to which (i) the goods
giving rise to such Account have not been shipped and billed to the Account
Debtor, or (ii) the services giving rise to such Account have not been performed
and billed to the Account Debtor,
(o) Accounts that represent the right to receive
progress payments or other advance ▇▇▇▇▇▇▇▇ that are due prior to the completion
of performance by Borrower of the subject contract for goods or services, or
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(p) Accounts which are generated from the sale,
license or distribution of products that are manufactured using any Material IP
consisting of patentable materials, which patentable materials have not been
registered with the United States Patent and Trademark Office.
"Eligible Equipment" means Equipment of Borrower located at
one of the business locations of Borrower set forth on SCHEDULE E-1, that
complies with each of the representations and warranties respecting Eligible
Equipment made by Borrower in the Loan Documents, and that is not excluded as
ineligible by virtue of the one or more of the criteria set forth below. In
determining the amount to be included, Equipment shall be valued based upon the
Appraised Value of such Equipment. An item of Equipment shall not be included in
Eligible Equipment if:
(a) Borrower does not have good, valid, and
marketable title thereto,
(b) it is not located at one of the locations in the
United States set forth on SCHEDULE E-1,
(c) it is located on real property leased by
Borrower, unless (i) it is subject to a Collateral Access Agreement executed by
the lessor, or other third party, as the case may be, and (ii) it is segregated
or otherwise separately identifiable from goods of others, if any, stored on the
premises,
(d) it is not subject to a valid and perfected first
priority Agent's Lien,
(e) it is substantially worn, damaged or defective
(in each case, if the Equipment is no longer suitable for its intended use), or
obsolete, or it constitutes furnishings, parts, fixtures or is affixed to real
property, unless such Equipment is affixed to Real Property that comprises Real
Property Collateral,
(f) Agent has not received evidence of the property
insurance required by this Agreement with respect to such Equipment, or
(g) it is subject to a lease with any Person.
"Eligible Inventory" means Inventory consisting of first
quality finished goods held for sale in the ordinary course of Borrower's
business and raw materials (other than supplies), in each case located at one of
Borrower's business locations set forth on SCHEDULE E-2 (or in-transit between
any such locations), that complies with each of the representations and
warranties respecting Eligible Inventory made by Borrower in the Loan Documents,
and that is not excluded as ineligible by virtue of the one or more of the
criteria set forth below. In determining the amount to be so included, Inventory
shall be valued at the lower of cost or market on a basis consistent with
Borrower's historical accounting practices. An item of Inventory shall not be
included in Eligible Inventory if:
(a) Borrower does not have good, valid, and
marketable title thereto,
11
(b) it is (i) located at Borrower's Rockville,
Maryland research and development facility or (ii) it is not located at one of
the locations in the United States set forth on SCHEDULE E-2 or in transit from
one such location to another such location,
(c) it is located on real property leased by Borrower
or in a contract warehouse, in each case, unless it is subject to a Collateral
Access Agreement executed by the lessor, warehouseman, or other third party, as
the case may be, and unless it is segregated or otherwise separately
identifiable from goods of others, if any, stored on the premises,
(d) it is not subject to a valid and perfected first
priority Agent's Lien,
(e) it consists of goods returned or rejected by
Borrower's customers, unless the goods can be resold as first quality goods,
(f) the Inventory is sold under a licensed patent or
trademark (other than a patent or trademark owned by Borrower), Agent shall have
entered into a licensor waiver letter, in form and substance reasonably
satisfactory to Agent, with the licensor with respect to the rights of Agent to
use the patent or trademark to manufacture, sell or otherwise distribute such
Inventory,
(g) it consists of goods that are obsolete, slow
moving or materially impaired, restrictive or custom items, work-in-process
(including products that are quarantined), or goods that constitute spare parts,
packaging and shipping materials, supplies used or consumed in Borrower's
business, ▇▇▇▇ and hold goods, defective goods, "seconds," or Inventory acquired
on consignment, or
(h) the Inventory consists of products that are
manufactured, marketed, sold, licensed or distributed using any Material IP
consisting of trademarkable or patentable materials, which trademarkable or
patentable materials have not been registered with the United States Patent and
Trademark Office.
"Eligible Real Property Collateral" means the Real Property
owned by Borrower located in Boca Raton, Florida, as more specifically
identified on SCHEDULE R-1.
"Eligible Transferee" means (a) a commercial bank organized
under the laws of the United States, or any state thereof, and having total
assets in excess of $250,000,000, (b) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development or a political subdivision of any such country and
which has total assets in excess of $250,000,000, provided that such bank is
acting through a branch or agency located in the United States, (c) a finance
company, insurance company, or other financial institution or fund that is
engaged in making, purchasing, or otherwise investing in commercial loans in the
ordinary course of its business and having (together with its Affiliates) total
assets in excess of $250,000,000, (d) any Affiliate (other than individuals) of
a Lender that was party hereto as of the Closing Date, (e) so long as no Event
of Default has occurred and is continuing, any other Person approved in writing
by Agent and Borrower, and (f) during the continuation of an Event of Default,
any other Person approved in writing by Agent.
12
"Enterprise Value" means the "enterprise value" of Borrower,
as determined by Agent pursuant to an enterprise valuation reasonably
satisfactory to Agent, using a methodology similar to the methodology used in
the enterprise valuation delivered to Agent pursuant to SECTION 3.1(M), and
performed by a third party reasonably satisfactory to Agent.
"Environmental Actions" means any complaint, summons,
citation, notice, directive, order, claim, litigation, investigation, judicial
or administrative proceeding, judgment, letter, or other communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials from (a) any assets, properties, or
businesses of Borrower or any predecessor in interest, (b) from adjoining
properties or businesses, or (c) from or onto any facilities which received
Hazardous Materials generated by Borrower or any predecessor in interest.
"Environmental Law" means any applicable federal, state,
provincial, foreign or local statute, law, rule, regulation, ordinance, code,
binding and enforceable guideline, binding and enforceable written policy, or
rule of common law now or hereafter in effect and in each case as amended, or
any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, to the extent binding on
Borrower, relating to the environment, employee health and safety, or Hazardous
Materials, including CERCLA; RCRA; the Federal Water Pollution Control Act, 33
USC ss. 1251 ET SEQ.; the Toxic Substances Control Act, 15 USC ss. 2601 ET SEQ.;
the Clean Air Act, 42 USC ss. 7401 ET SEQ.; the Safe Drinking Water Act, 42 USC
ss. 3803 ET SEQ.; the Oil Pollution Act of 1990, 33 USC ss. 2701 ET SEQ.; the
Emergency Planning and the Community Right-to-Know Act of 1986, 42 USC ss. 11001
ET SEQ.; the Hazardous Material Transportation Act, 49 USC ss. 1801 ET SEQ.; the
Occupational Safety and Health Act, 29 USC ss. 651 ET SEQ. (to the extent it
regulates occupational exposure to Hazardous Materials); and any state and local
or foreign counterparts or equivalents, in each case as amended from time to
time.
"Environmental Liabilities and Costs" means all liabilities,
monetary obligations, Remedial Actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts, or consultants,
and costs of investigation and feasibility studies), fines, penalties,
sanctions, and interest incurred as a result of any claim or demand by any
Governmental Authority or any third party, and which relate to any Environmental
Action.
"Environmental Lien" means any Lien in favor of any
Governmental Authority for Environmental Liabilities and Costs.
"Environmental Reserves" means reserves (determined from time
to time by Agent in its Permitted Discretion) for the estimated remediation of
any Environmental Liabilities and Costs as Agent in its Permitted Discretion
determines may be assessed against Borrower or any Real Property Collateral.
"Equipment" means all of Borrower's now owned or hereafter
acquired right, title, and interest with respect to equipment, machinery,
machine tools, motors, furniture, furnishings, fixtures, vehicles (including
motor vehicles), tools, parts, goods (other than consumer goods, farm products,
13
or Inventory), wherever located, including all attachments, accessories,
accessions, replacements, substitutions, additions, and improvements to any of
the foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of
Borrower under IRC Section 414(b), (b) any trade or business subject to ERISA
whose employees are treated as employed by the same employer as the employees of
Borrower under IRC Section 414(c), (c) solely for purposes of Section 302 of
ERISA and Section 412 of the IRC, any organization subject to ERISA that is a
member of an affiliated service group of which Borrower is a member under IRC
Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section
412 of the IRC, any Person subject to ERISA that is a party to an arrangement
with Borrower and whose employees are aggregated with the employees of Borrower
under IRC Section 414(o).
"ERISA Event" means (a) a Reportable Event with respect to any
Benefit Plan or Multiemployer Plan, (b) within the meaning of Section 4063 of
ERISA the withdrawal of Borrower, any of its Subsidiaries or ERISA Affiliates
from a Benefit Plan during a plan year in which it was a "substantial employer"
(as defined in Section 4001(a)(2) of ERISA), (c) the providing of notice of
intent to terminate a Benefit Plan in a distress termination (as described in
Section 4041(c) of ERISA), (d) the institution by the PBGC of proceedings to
terminate a Benefit Plan or Multiemployer Plan, (e) any event or condition (i)
that provides a basis under Section 4042(a)(1), (2), or (3) of ERISA for the
termination of, or the appointment of a trustee to administer, any Benefit Plan
or Multiemployer Plan, or (ii) that may result in termination of a Multiemployer
Plan pursuant to Section 4041A of ERISA, (f) the partial or complete withdrawal
within the meaning of Sections 4203 and 4205 of ERISA, of Borrower, any of its
Subsidiaries or ERISA Affiliates from a Multiemployer Plan, or (g) providing any
security to any Plan under Section 401(a)(29) of the IRC by Borrower or its
Subsidiaries or any of their ERISA Affiliates.
"Event of Default" has the meaning set forth in SECTION 8.
"Excess Availability" means the amount, as of the date any
determination thereof is to be made, equal to (i) Availability, PLUS (ii) all
unrestricted cash in an account that is subject to a Control Agreement, MINUS
(iii) the aggregate amount, if any, of all trade payables of Borrower aged in
excess of historical levels with respect thereto and all book overdrafts in
excess of historical practices with respect thereto, in each case as determined
by Agent in its Permitted Discretion.
"Excess Cash Flow" means, with respect to any Person for any
period, (i) Consolidated Net Income of such Person and its Subsidiaries for such
period, PLUS (ii) all non-cash items of such Person and its Subsidiaries
deducted in determining Consolidated Net Income for such period, LESS (iii) the
sum of (A) all non-cash items of such Person and its Subsidiaries added to the
calculation of Consolidated Net Income for such period, (B) all scheduled and
mandatory cash principal payments on the Advances and Term Loan made during such
period (but, in the case of the Advances, only to the extent that the Revolver
14
Commitment is permanently reduced by the amount of such payments), and all
scheduled cash principal payments on other Indebtedness of such Person or any of
its Subsidiaries during such period to the extent such other Indebtedness is
permitted to be incurred, and such payments are permitted to be made, under this
Agreement, and (C) the cash portion of capital expenditures made by such Person
and its Subsidiaries during such period to the extent permitted to be made under
this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
in effect from time to time.
"Extraordinary Receipts" means any Collections received by
Borrower not in the ordinary course of business (and not consisting of proceeds
described in SECTION 2.4(C)(IV) hereof), including, (i) foreign, United States,
state or local tax refunds, (ii) pension plan reversions, (iii) proceeds of
insurance (including proceeds of the key person life insurance policies), but
excluding property and casualty insurance with respect to Inventory, Equipment
and Real Property, (iv) judgments, proceeds of settlements or other
consideration of any kind in connection with any cause of action, (v)
condemnation awards (and payments in lieu thereof), but excluding condemnation
awards with respect to Inventory, Equipment and Real Property, (vi) indemnity
payments and (vii) any purchase price adjustment received in connection with any
purchase agreement.
"FDA" means the United States Food and Drug Administration and
any successor agency.
"FDA Notice" has the meaning set forth in SECTION 5.21.
"Fee Letter" means that certain fee letter, dated as of even
date herewith, between Borrower and Agent, in form and substance satisfactory to
Agent.
"FEIN" means Federal Employer Identification Number.
"Fiscal Year" means the fiscal year of Borrower ending on
December 31st of each calendar year.
"Fixed Asset Coverage Ratio" means the ratio of (a) the sum of
(i) the Appraised Value of the Eligible Equipment and (ii) the Appraised Value
of the Eligible Real Property to (b) the outstanding principal amount of the
Term Loan.
"Food and Drug Act" means the Federal Food, Drug and Cosmetic
Act, 21 USCss. 1 ET SEQ. and any successor act.
"Foothill" means ▇▇▇▇▇ Fargo Foothill, Inc., a California
corporation.
"Foreign Subsidiary" means a Subsidiary organized under the
laws of a jurisdiction other than the United States or the states thereof.
"Funded Debt" of any Person means all Indebtedness of such
Person.
"Funding Date" means the date on which a Borrowing occurs.
15
"Funding Losses" has the meaning set forth in SECTION
2.13(B)(II).
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States, consistently applied.
"General Intangibles" means all of Borrower's now owned or
hereafter acquired right, title, and interest with respect to general
intangibles (including Intellectual Property, payment intangibles, contract
rights, rights to payment, judgments, rights arising under common law, statutes,
or regulations, choses or things in action, goodwill, designs, inventions, trade
secrets, d/b/a's, Internet domain names, logos, blueprints, drawings, purchase
orders, customer lists, monies due or recoverable from pension funds, route
lists, rights to payment and other rights under any royalty or licensing
agreements, computer programs, information contained on computer disks or tapes,
software, literature, reports, catalogs, money, deposit accounts, insurance
premium rebates, tax refunds, and tax refund claims), and any and all supporting
obligations in respect thereof, and any other personal property other than
goods, Accounts, Investment Property, and Negotiable Collateral.
"Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"Governmental Authority" means any federal, state, local, or
other governmental or administrative body, instrumentality, department, or
agency (including, without limitation, the FDA) or any court, tribunal,
administrative hearing body, arbitration panel, commission, or other similar
dispute-resolving panel or body.
"Guarantor" means each Person that guarantees all or any part
of the obligations pursuant to a Guaranty.
"Guaranty" means that certain general continuing guaranty
executed and delivered by Guarantor in favor of Agent, for the benefit of the
Lender Group, in form and substance satisfactory to Agent.
"Hazardous Materials" means (a) substances that are defined or
listed in, or otherwise classified pursuant to, any applicable laws or
regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"Hedge Agreement" means any and all transactions, agreements,
or documents now existing or hereafter entered into between Borrower or its
Subsidiaries and ▇▇▇▇▇ Fargo or its Affiliates, which provide for an interest
rate, credit, commodity or equity swap, cap, floor, collar, forward foreign
16
exchange transaction, currency swap, cross currency rate swap, currency option,
or any combination of, or option with respect to, these or similar transactions,
for the purpose of hedging Borrower's or its Subsidiaries' exposure to
fluctuations in interest or exchange rates, loan, credit exchange, security or
currency valuations or commodity prices.
"Inactive Subsidiaries" means BioMune Corp., a Delaware
corporation, and NABI ForeignSales, Ltd., a company formed under the laws of
Barbados, West Indies.
"Indebtedness" means (a) all obligations for borrowed money,
(b) all obligations evidenced by bonds, debentures, notes, or other similar
instruments and all reimbursement or other obligations in respect of letters of
credit, bankers acceptances, interest rate swaps, or other financial products,
(c) all obligations under Capital Leases, (d) all obligations or liabilities of
others secured by a Lien on any asset of Borrower or its Subsidiaries,
irrespective of whether such obligation or liability is assumed, (e) all
obligations for the deferred purchase price of assets (other than trade debt
incurred in the ordinary course of business and repayable in accordance with
customary trade practices), and (f) any obligation guaranteeing or intended to
guarantee (whether directly or indirectly guaranteed, endorsed, co-made,
discounted, or sold with recourse) any obligation of any other Person.
"Indemnified Liabilities" has the meaning set forth in SECTION
11.3.
"Indemnified Person" has the meaning set forth in SECTION
11.3.
"Insolvency Proceeding" means any proceeding commenced by or
against any Person under any provision of the Bankruptcy Code or under any other
state or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.
"Intellectual Property" means all foreign and domestic (i)
trademarks, service marks, brand names, certification marks, collective marks,
d/b/a's, Internet domain names, logos, symbols, trade dress, assumed names,
fictitious names, trade names, and other indicia of origin, all applications and
registrations for all of the foregoing, and all goodwill associated therewith
and symbolized thereby, including all extensions, modifications and renewals of
same; (ii) inventions, discoveries and ideas, whether patentable or not, and all
patents, registrations, and applications therefor, including divisions,
continuations, continuations-in-part and renewal applications, and including
renewals, extensions and reissues; (iii) confidential and proprietary
information, trade secrets and know-how, including processes, schematics,
databases, formulae, drawings, prototypes, models, designs and customer lists;
(iv) published and unpublished works of authorship, whether copyrightable or
not, copyrights therein and thereto, and registrations and applications
therefor, and all renewals, extensions, restorations and reversions thereof; and
(v) all other intellectual property or proprietary rights and claims or causes
of action arising out of or related to any infringement, misappropriation or
other violation of any of the foregoing, including rights to recover for past,
present and future violations thereof.
"Interest Period" means, with respect to each LIBOR Rate Loan,
a period commencing on the date of the making of such LIBOR Rate Loan and ending
1, 2, or 3 months thereafter; provided, however, that (a) if any Interest Period
would end on a day that is not a Business Day, such Interest Period shall be
extended (subject to clauses (c)-(e) below) to the next succeeding Business Day,
17
(b) interest shall accrue at the applicable rate based upon the LIBOR Rate from
and including the first day of each Interest Period to, but excluding, the day
on which any Interest Period expires, (c) any Interest Period that would end on
a day that is not a Business Day shall be extended to the next succeeding
Business Day unless such Business Day falls in another calendar month, in which
case such Interest Period shall end on the next preceding Business Day, (d) with
respect to an Interest Period that 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 the end of such Interest Period), the Interest Period shall
end on the last Business Day of the calendar month that is 1, 2, or 3 months
after the date on which the Interest Period began, as applicable, and (e)
Borrower may not elect an Interest Period which will end after the Maturity
Date.
"Inventory" means all Borrower's now owned or hereafter
acquired right, title, and interest with respect to plasma and other inventory,
including goods held for sale or lease or to be furnished under a contract of
service, goods that are leased by Borrower as lessor, goods that are furnished
by Borrower under a contract of service, and raw materials, work in process, or
materials used or consumed in Borrower's business.
"Investment" means, with respect to any Person, any investment
by such Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide Accounts arising in the
ordinary course of business consistent with past practices), purchases or other
acquisitions for consideration of Indebtedness or Stock, and any other items
that are or would be classified as investments on a balance sheet prepared in
accordance with GAAP.
"Investment Property" means all of Borrower's now owned or
hereafter acquired right, title, and interest with respect to "investment
property" as that term is defined in the Code, and any and all supporting
obligations in respect thereof.
"IRC" means the Internal Revenue Code of 1986, as in effect
from time to time.
"Issuing Lender" means Foothill or any other Lender that, at
the request of Borrower and with the consent of Agent agrees, in such Lender's
sole discretion, to become an Issuing Lender for the purpose of issuing L/Cs or
L/C Undertakings pursuant to SECTION 2.12.
"L/C" has the meaning set forth in SECTION 2.12(A).
"L/C Disbursement" means a payment made by the Issuing Lender
pursuant to a Letter of Credit.
"L/C Undertaking" has the meaning set forth in SECTION
2.12(A).
"Lender" and "Lenders" have the respective meanings set forth
in the preamble to this Agreement, and shall include any other Person made a
party to this Agreement in accordance with the provisions of SECTION 14.1.
18
"Lender Group" means, individually and collectively, each of
the Lenders (including the Issuing Lender) and Agent.
"Lender Group Expenses" means all (a) costs or expenses
(including taxes, and insurance premiums) required to be paid by Borrower under
any of the Loan Documents that are paid or incurred by the Lender Group, (b)
reasonable fees or charges paid or incurred by Agent in connection with the
Lender Group's transactions with Borrower, including, fees or charges for
photocopying, notarization, couriers and messengers, telecommunication, public
record searches (including tax lien, judgment searches, and searches for liens
under the Uniform Commercial Code and including searches with the patent and
trademark office, the copyright office, or the department of motor vehicles),
filing, recording, publication, appraisal (including periodic Collateral
appraisals or business valuations to the extent of the fees and charges (and up
to the amount of any limitation) contained in this Agreement), real estate
surveys, real estate title policies and endorsements, and environmental audits,
(c) costs and expenses incurred by Agent in the disbursement of funds to
Borrower (by wire transfer or otherwise), (d) charges paid or incurred by any
one or more members of the Lender Group resulting from the dishonor of checks,
(e) reasonable costs and expenses paid or incurred by the Lender Group to
correct any default or enforce any provision of the Loan Documents, or in
gaining possession of, maintaining, handling, preserving, storing, shipping,
selling, preparing for sale, or advertising to sell the Collateral, or any
portion thereof, irrespective of whether a sale is consummated, (f) reasonable
audit fees and expenses of any one or more members of the Lender Group related
to audit examinations of the Books to the extent of the fees and charges (and up
to the amount of any limitation) contained in this Agreement, (g) reasonable
costs and expenses of third party claims or any other suit paid or incurred by
any one or more members of the Lender Group in enforcing or defending the Loan
Documents or in connection with the transactions contemplated by the Loan
Documents or any one or more members of the Lender Group's relationship with
Borrower or any guarantor of the Obligations, (h) Agent's and each Lender's
reasonable fees and expenses (including attorneys fees) incurred in advising,
structuring, drafting, reviewing, administering, or amending the Loan Documents,
and (i) Agent's and each Lender's reasonable fees and expenses (including
attorneys fees) incurred in terminating, enforcing (including attorneys fees and
expenses incurred in connection with a "workout," a "restructuring," or an
Insolvency Proceeding concerning Borrower or in exercising rights or remedies
under the Loan Documents), or defending the Loan Documents, irrespective of
whether suit is brought, or in taking any Remedial Action concerning the
Collateral.
"Lender-Related Person" means, with respect to any Lender,
such Lender, together with such Lender's Affiliates, and the officers,
directors, employees, and agents of such Lender.
"Letter of Credit" means an L/C or an L/C Undertaking, as the
context requires.
"Letter of Credit Usage" means, as of any date of
determination, the aggregate undrawn amount of all outstanding Letters of Credit
PLUS 100% of the amount of outstanding time drafts accepted by an Underlying
Issuer as a result of drawings under Underlying Letters of Credit.
"LIBOR Deadline" has the meaning set forth in SECTION
2.13(B)(I).
19
"LIBOR Notice" means a written notice in the form of EXHIBIT
L-1.
"LIBOR Rate" means, for each Interest Period for each LIBOR
Rate Loan, the rate per annum determined by Agent (rounded upwards, if
necessary, to the next 1/16%) by DIVIDING (a) the Base LIBOR Rate for such
Interest Period, BY (b) 100% MINUS the Reserve Percentage. The LIBOR Rate shall
be adjusted on and as of the effective day of any change in the Reserve
Percentage.
"LIBOR Rate Loan" means each portion of an Advance or the Term
Loan that bears interest at a rate determined by reference to the LIBOR Rate.
"LIBOR Rate Term Loan Margin" means 4.5 percentage points.
"Licensing Agreements" means each of the licensing agreements
set forth on SCHEDULE L-1 hereto among Borrower and any licensor with respect to
the rights to manufacture, sell and/or distribute Inventory.
"Lien" means any interest in an asset securing an obligation
owed to, or a claim by, any Person other than the owner of the asset, whether
such interest shall be based on the common law, statute, or contract, whether
such interest shall be recorded or perfected, and whether such interest shall be
contingent upon the occurrence of some future event or events or the existence
of some future circumstance or circumstances, including the lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, conditional
sale or trust receipt, or from a lease, consignment, or bailment for security
purposes and also including reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Real Property.
"Loan Account" has the meaning set forth in SECTION 2.10.
"Loan Documents" means this Agreement, the Bank Product
Agreements, the Cash Management Agreements, the Control Agreements, the
Disbursement Letter, the Due Diligence Letter, the Fee Letter, any Guaranty, the
Letters of Credit, the Mortgages, the Officers' Certificate, the Patent Security
Agreement, the Trademark Security Agreement, any note or notes executed by
Borrower in connection with this Agreement and payable to a member of the Lender
Group, and any other agreement entered into, now or in the future, by Borrower
and the Lender Group in connection with this Agreement.
"Material Adverse Change" means (a) a material adverse change
in the business, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of Borrower and its Subsidiaries, taken as a
whole, (b) a material impairment of Borrower's ability to perform its
obligations under the Loan Documents to which it is a party or of the Lender
Group's ability to enforce the Obligations or realize upon the Collateral, or
(c) a material impairment of the enforceability or priority of Agent's Liens
with respect to the Collateral as a result of an action or failure to act on the
part of Borrower.
"Material Contract" means any agreement or contract which (a)
involves consideration to Borrower of $250,000 or more in any year, (b) involves
consideration by Borrower of $250,000 or more in any year, (c) imposes financial
20
obligations on Borrower of $250,000 or more in any year (other than any
agreement that by its terms may be terminated by Borrower upon sixty (60) days'
notice or less), or (d) is otherwise material (or together with related
agreements and contracts, is material) to the business, operations, financial
condition, performance or properties of Borrower and its Subsidiaries, taken as
a whole, excluding, however, customer purchase orders or purchase orders to any
vendor, in each case entered into in the ordinary course of Borrower's business.
The Material Contracts shall in any event include the Licensing Agreements.
"Material IP" means all patentable, copyrightable or
trademarkable materials that (i) relate to or are used in connection with the
manufacturing, marketing, sale, license or distribution of products that
generate any Accounts or Inventory of Borrower or its Subsidiaries, which
Accounts or Inventory have an aggregate book value in excess of $500,000 at any
time or (ii) are otherwise material to the businesses of Borrower and its
Subsidiaries taken as a whole, PROVIDED that Material IP shall not include
copyrightable material arising in documents that are not made available by
Borrower or its Subsidiaries to the public.
"Maturity Date" has the meaning set forth in SECTION 3.4.
"Maximum Revolver Amount" means $25,000,000.
"McKesson" means McKesson Drug Company, an Alaskan company.
"Mortgages" means, individually and collectively, one or more
mortgages, deeds of trust, or deeds to secure debt, executed and delivered by
Borrower in favor of Agent, for the benefit of the Lender Group, in form and
substance satisfactory to Agent, that encumber the Real Property Collateral and
the related improvements thereto.
"Multiemployer Plan" means a "multiemployer plan" (as defined
in Section 4001(a)(3) of ERISA) to which Borrower, any of its Subsidiaries, or
any ERISA Affiliate has contributed, or was obligated to contribute, within the
past six years.
"Negotiable Collateral" means all of Borrower's now owned and
hereafter acquired right, title, and interest with respect to letters of credit,
letter of credit rights, instruments, promissory notes, drafts, documents, and
chattel paper (including electronic chattel paper and tangible chattel paper),
and any and all supporting obligations in respect thereof.
"Net Cash Proceeds" means, with respect to any sale or
disposition by any Person or any Subsidiary thereof of property or assets, the
amount of cash received (directly or indirectly) from time to time (whether as
initial consideration or through the payment of deferred consideration) by or on
behalf of such Person or such Subsidiary, in connection therewith after
deducting therefrom only (i) the amount of any Indebtedness secured by any
Permitted Lien on any asset (other than (A) Indebtedness owing to Agent or any
Lender under this Agreement or the other Loan Documents and (B) Indebtedness
assumed by the purchaser of such asset) which is required to be, and is, repaid
in connection with such disposition, (ii) reasonable expenses related thereto
incurred by such Person or such Subsidiary in connection therewith, and (iii)
21
taxes paid or payable to any taxing authorities by such Person or such
Subsidiary in connection therewith, in each case to the extent, but only to the
extent, that the amounts so deducted are, at the time of receipt of such cash,
actually paid or payable to a Person that is not an Affiliate and are properly
attributable to such transaction.
"Net Liquidation Percentage" means the percentage of the book
value of Borrower's Inventory that is estimated to be recoverable in an orderly
liquidation of such Inventory, such percentage to be as determined from time to
time by a qualified appraisal company selected by Agent in its Permitted
Discretion.
"Obligations" means (a) all loans (including the Term Loan),
Advances, debts, principal, interest (including any interest that, but for the
provisions of the Bankruptcy Code, would have accrued), contingent reimbursement
obligations with respect to outstanding Letters of Credit, premiums, liabilities
(including all amounts charged to Borrower's Loan Account pursuant hereto),
obligations, fees (including the fees provided for in the Fee Letter), charges,
costs, Lender Group Expenses (including any fees or expenses that, but for the
provisions of the Bankruptcy Code, would have accrued), lease payments,
guaranties, covenants, and duties of any kind and description owing by Borrower
to the Lender Group pursuant to or evidenced by the Loan Documents and
irrespective of whether for the payment of money, whether direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising,
and including all interest not paid when due and all Lender Group Expenses that
Borrower is required to pay or reimburse by the Loan Documents, by law, or
otherwise, and (b) all Bank Product Obligations. Any reference in this Agreement
or in the Loan Documents to the Obligations shall include all amendments,
changes, extensions, modifications, renewals replacements, substitutions, and
supplements, thereto and thereof, as applicable, both prior and subsequent to
any Insolvency Proceeding.
"Officers' Certificate" means the representations and
warranties of officers form submitted by Agent to Borrower, together with
Borrower's completed responses to the inquiries set forth therein, the form and
substance of such responses to be satisfactory to Agent.
"Originating Lender" has the meaning set forth in SECTION
14.1(E).
"Overadvance" has the meaning set forth in SECTION 2.5.
"Participant" has the meaning set forth in SECTION 14.1(E).
"Patent Security Agreement" means a patent security agreement
executed and delivered by Borrower and Agent, the form and substance of which is
satisfactory to Agent.
"Permitted Discretion" means a determination made in good
faith and in the exercise of reasonable (from the perspective of a secured
asset-based lender) business judgment.
"Permitted Dispositions" means (a) sales or other dispositions
by Borrower or its Subsidiaries of Equipment that is substantially worn,
damaged, or obsolete (in each case, if such Equipment is no longer suitable for
its intended use) in the ordinary course of business, (b) sales by Borrower or
its Subsidiaries of Inventory to buyers in the ordinary course of business,
including, without limitation, (i) sales involving discounts that are
substantially consistent with Borrower's past practice with respect to
discounts, (ii) bulk sales of products, and (iii) sales of products outside of
the ordinary course of business that are similar to sales that have been
22
previously conducted by Borrower, (c) the use or transfer of money or Cash
Equivalents by Borrower or its Subsidiaries in a manner that is not prohibited
by the terms of this Agreement or the other Loan Documents, (d) the licensing by
Borrower or its Subsidiaries, on a non-exclusive basis, of patents, trademarks,
copyrights, and other intellectual property rights in the ordinary course of
business, (e) the licensing by Borrower or its Subsidiaries, on an exclusive
basis for a particular country or countries, of patents, trademarks, copyrights
and other intellectual property rights, (f) the licensing, sale or other
disposition of patents, trademarks, copyrights and other intellectual property,
other than the Specified IP, and (g) any other sales or dispositions by Borrower
or its Subsidiaries of any assets (other than Accounts, Eligible Equipment,
Eligible Inventory, or Eligible Real Property Collateral), provided that the
aggregate book value of such assets sold or disposed of after the Closing Date
does not exceed $2,000,000.
"Permitted Investments" means (a) investments in Cash
Equivalents, (b) investments in negotiable instruments for collection, (c)
advances made in connection with purchases of goods or services in the ordinary
course of business, (d) the Approved Acquisitions, provided that both
immediately before and after giving effect to each such Approved Acquisition, no
Event of Default shall have occurred and be continuing, (e) acquisitions, other
than the Approved Acquisition, provided that the aggregate consideration paid by
Borrower in connection with such acquisitions does not exceed $1,000,000, (f)
investments in Subsidiaries (other than Foreign Subsidiaries) of Borrower,
PROVIDED that (i) the investment in any Subsidiary that is not wholly-owned by
Borrower does not include any Specified IP, (ii) the book value of the
investment, other than patents, trademarks, copyrights and other intellectual
property, does not exceed $1,000,000, (iii) Borrower and such Subsidiary comply
with SECTION 6.18, and (iv) both immediately before and after giving effect to
each such acquisition, no Event of Default shall have occurred and be
continuing, and (g) investments in Foreign Subsidiaries, joint ventures and
partnerships PROVIDED that (i) the investment does not include any Specified IP,
it being understood that the licensing of Specified IP to Foreign Subsidiaries,
joint ventures or partnerships on a non-exclusive basis at fair market value
(whether for a license fee or other payment and whether in cash or other
consideration) shall not constitute an investment in such Foreign Subsidiary,
joint venture or partnership, (ii) the book value of the investment, other than
patents, trademarks, copyrights and other intellectual property, does not exceed
$500,000, (iii) both immediately before and after giving effect to each such
acquisition, no Event of Default shall have occurred and be continuing, and (iv)
Agent receives a pledge, in form and substance satisfactory to Agent, of 100%
(or 65% in the case of a Foreign Subsidiary) of all of the Stock owned by
Borrower in such Foreign Subsidiary, joint venture or partnership.
"Permitted Liens" means (a) Liens held by Agent for the
benefit of Agent and the Lenders, (b) Liens for unpaid taxes that either (i) are
not yet delinquent, or (ii) do not constitute an Event of Default hereunder and
are the subject of Permitted Protests, (c) Liens set forth on SCHEDULE P-1, (d)
the interests of lessors under operating leases, (e) purchase money Liens or the
interests of lessors under Capital Leases to the extent that such Liens or
interests secure Permitted Purchase Money Indebtedness and so long as such Lien
attaches only to the asset purchased or acquired and the proceeds thereof, (f)
Liens arising by operation of law in favor of warehousemen, landlords, carriers,
mechanics, materialmen, laborers, or suppliers, incurred in the ordinary course
of business and not in connection with the borrowing of money, and which Liens
either (i) are for sums not yet delinquent, or (ii) are the subject of Permitted
Protests, (g) Liens arising from deposits made in connection with obtaining
worker's compensation or other unemployment insurance, (h) Liens or deposits to
secure performance of bids, tenders, or leases incurred in the ordinary course
of business and not in connection with the borrowing of money, (i) Liens granted
23
as security for surety or appeal bonds in connection with obtaining such bonds
in the ordinary course of business, (j) Liens resulting from any judgment or
award that is not an Event of Default hereunder, (k) Liens with respect to the
Real Property Collateral that are exceptions to the commitments for title
insurance issued in connection with the Mortgages, as accepted by Agent, (l)
with respect to any Real Property that is not part of the Real Property
Collateral, easements, rights of way, and zoning restrictions that do not
materially interfere with or impair the use or operation thereof, (m) Liens
securing the Indebtedness permitted by SECTION 7.1(E), (n) Liens upon any
property or assets of any Subsidiary of Borrower existing at the time such
Subsidiary is acquired by, merged into or consolidated with Borrower in
accordance with the terms of this Agreement, provided that such Liens (i) do not
secure Indebtedness or other obligations for the payment of money in an amount
in excess of $500,000 and (ii) were not created in contemplation of any such
acquisition, merger or consolidation, and (o) Liens upon any property or assets
existing at the time such property or assets are acquired by Borrower, provided
that such Liens (i) do not secure Indebtedness or other obligations for the
payment of money in an amount in excess of $500,000 and (ii) were not created in
contemplation of such acquisition.
"Permitted Protest" means the right of Borrower or any of its
Subsidiaries, as applicable, to protest any Lien (other than any such Lien that
secures the Obligations), taxes (other than payroll taxes or taxes that are the
subject of a United States federal tax lien), or rental payment, provided that
(a) a reserve with respect to such obligation is established on the Books in
such amount as is required under GAAP, (b) any such protest is instituted
promptly and prosecuted diligently by Borrower or any of its Subsidiaries, as
applicable, in good faith, and (c) Agent is satisfied that, while any such
protest is pending, there will be no impairment of the enforceability, validity,
or priority of any of Agent's Liens.
"Permitted Purchase Money Indebtedness" means, as of any date
of determination, Purchase Money Indebtedness incurred after the Closing Date in
an aggregate principal amount outstanding at any one time not in excess of
$2,500,000.
"Person" means natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.
"Personal Property Collateral" means all Collateral other than
Real Property.
"Pro Rata Share" means:
(a) with respect to a Lender's obligation to make
Advances and receive payments of principal, interest, fees, costs, and expenses
with respect thereto, (x) prior to the Revolver Commitment being terminated or
reduced to zero, the percentage obtained by dividing (i) such Lender's Revolver
Commitment, by (ii) the aggregate Revolver Commitments of all Lenders and (y)
from and after the time the Revolver Commitment has been terminated or reduced
24
to zero, the percentage obtained by dividing (i) the aggregate unpaid principal
amount of such Lender's Advances by (ii) the aggregate unpaid principal amount
of all Advances,
(b) with respect to a Lender's obligation to
participate in Letters of Credit, to reimburse the Issuing Lender, and to
receive payments of fees with respect thereto, (x) prior to the Revolver
Commitment being terminated or reduced to zero, the percentage obtained by
dividing (i) such Lender's Revolver Commitment, by (ii) the aggregate Revolver
Commitments of all Lenders and (y) from and after the time the Revolver
commitment has been terminated or reduced to zero, the percentage obtained by
dividing (i) the aggregate unpaid principal amount of such Lender's Advances by
(ii) the aggregate unpaid principal amount of all Advances,
(c) with respect to a Lender's obligation to make the
Term Loan and receive payments of interest, fees, and principal with respect
thereto, the percentage obtained by dividing (i) such Lender's Term Loan
Commitment, by (ii) the aggregate amount of all Lenders' Term Loan Commitments,
and
(d) with respect to all other matters (including the
indemnification obligations arising under SECTION 16.7), the percentage obtained
by dividing (i) such Lender's Total Commitment, by (ii) the aggregate amount of
Total Commitments of all Lenders; PROVIDED, HOWEVER, that, in each case, in the
event all Commitments have been terminated, Pro Rata Share shall be determined
according to the Commitments in effect immediately prior to such termination.
"Product Recall Notice" means any written notice from the FDA
stating that any product or product line of Borrower has been or will be
recalled.
"Projections" means Borrower's forecasted (a) balance sheets,
(b) profit and loss statements, and (c) cash flow statements, all prepared on a
basis consistent with Borrower's historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
"Purchase Money Indebtedness" means Indebtedness (other than
the Obligations, but including Capitalized Lease Obligations), incurred at the
time of, or within 20 days after, the acquisition of any fixed assets for the
purpose of financing all or any part of the acquisition cost thereof.
"Real Property" means any estates or interests, including
leasehold interests, in real property now owned or hereafter acquired by
Borrower and the improvements thereto.
"Real Property Collateral" means the Eligible Real Property
Collateral and any Real Property hereafter acquired by Borrower.
"Record" means information that is inscribed on a tangible
medium or which is stored in an electronic or other medium and is retrievable in
perceivable form.
"Remedial Action" means all actions taken to (a) clean up,
remove, remediate, contain, treat, monitor, assess, evaluate, or in any way
address Hazardous Materials in the indoor or outdoor environment, (b) prevent or
25
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC ss. 9601.
"Report" has the meaning set forth in SECTION 16.17.
"Required Availability" means Excess Availability and
unrestricted cash and Cash Equivalents in an amount of not less than
$10,000,000.
"Required Lenders" means, at any time, (i) Lenders whose Pro
Rata Shares aggregate (a) 51% of the Total Commitments when there are more than
three Lenders and (b) 100% of the Total Commitments when there are three or
fewer Lenders or (ii) if the Commitments have been terminated irrevocably, (a)
51% of the Obligations (other than Bank Product Obligations) then outstanding
when there are more than three Lenders and (b) 100% of the Obligations (other
than Bank Product Obligations) then outstanding when there are three or fewer
Lenders.
"Reserve Percentage" means, on any day, for any Lender, the
maximum percentage prescribed by the Board of Governors of the Federal Reserve
System (or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities") of that Lender, but so
long as such Lender is not required or directed under applicable regulations to
maintain such reserves, the Reserve Percentage shall be zero.
"Revolver Commitment" means, with respect to each Lender, its
Revolver Commitment, and, with respect to all Lenders, their Revolver
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on SCHEDULE C-1 or on the signature
page of the Assignment and Acceptance pursuant to which such Lender became a
Lender hereunder in accordance with the provisions of SECTION 14.1.
"Revolver Usage" means, as of any date of determination, the
sum of (a) the then extant amount of outstanding Advances, plus (b) the then
extant amount of the Letter of Credit Usage.
"Risk Participation Liability" means, as to each Letter of
Credit, all reimbursement obligations of Borrower to the Issuing Lender with
respect to an L/C Undertaking, consisting of (a) the amount available to be
drawn or which may become available to be drawn, (b) all amounts that have been
paid by the Issuing Lender to the Underlying Issuer to the extent not reimbursed
by Borrower, whether by the making of an Advance or otherwise, and (c) all
accrued and unpaid interest, fees, and expenses payable with respect thereto.
"SEC" means the United States Securities and Exchange
Commission and any successor thereto.
26
"Securities Account" means a "securities account" as that term
is defined in the Code.
"Settlement" has the meaning set forth in SECTION 2.3(F)(I).
"Settlement Date" has the meaning set forth in SECTION
2.3(F)(I).
"Solvent" means, with respect to any Person on a particular
date, that such Person is not insolvent (as such term is defined in the Uniform
Fraudulent Transfer Act).
"Specified IP" means the intellectual property that is related
to or derived from an existing product line set forth on SCHEDULE S-1 hereto.
"Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or
any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).
"Subsidiary" of a Person means a corporation, partnership,
limited liability company, or other entity in which that Person directly or
indirectly owns or controls the shares of Stock having ordinary voting power to
elect a majority of the board of directors (or appoint other comparable
managers) of such corporation, partnership, limited liability company, or other
entity.
"Swing Lender" means Foothill or any other Lender that, at the
request of Borrower and with the consent of Agent agrees, in such Lender's sole
discretion, to become the Swing Lender hereunder.
"Swing Loan" has the meaning set forth in SECTION 2.3(D)(I).
"Taxes" has the meaning set forth in SECTION 16.11.
"Term Loan" has the meaning set forth in SECTION 2.2.
"Term Loan Amount" means an amount equal to the lesser of:
(a) $10,000,000, and
(b) the sum of
(i) 100% times the Appraised Value of
Eligible Equipment, and
(ii) 100% of the Appraised Value of the
Eligible Real Property Collateral, and
(iii) $4,000,000.
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"Term Loan Commitment" means, with respect to each Lender, its
Term Loan Commitment, and, with respect to all Lenders, their Term Loan
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on SCHEDULE C-1 or on the signature
page of the Assignment and Acceptance pursuant to which such Lender became a
Lender hereunder in accordance with the provisions of SECTION 14.1.
"Total Commitment" means, with respect to each Lender, its
Total Commitment, and, with respect to all Lenders, their Total Commitments, in
each case as such Dollar amounts are set forth beside such Lender's name under
the applicable heading on SCHEDULE C-1 attached hereto or on the signature page
of the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of SECTION 14.1.
"Total Funded Debt" means, at any time, the aggregate Funded
Debt of Borrower at such time.
"Trademark Security Agreement" means a trademark security
agreement executed and delivered by Borrower and Agent, the form and substance
of which is satisfactory to Agent.
"Underlying Issuer" means a third Person which is the
beneficiary of an L/C Undertaking and which has issued a letter of credit at the
request of the Issuing Lender for the benefit of Borrower.
"Underlying Letter of Credit" means a letter of credit that
has been issued by an Underlying Issuer.
"Voidable Transfer" has the meaning set forth in SECTION 17.7.
"WARN" has the meaning set forth in SECTION 5.25.
"▇▇▇▇▇ Fargo" means ▇▇▇▇▇ Fargo Bank, National Association, a
national banking association.
"WinRho SDF" means WinRho SDF(R) (Rho (D) Immune Globulin
Intravenous (Human)).
"ZLB" means ZLB Bioplasma, Inc., a Delaware corporation.
1.2 ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP. When used herein, the
term "financial statements" shall include the notes and schedules thereto except
as otherwise expressly provided in this Agreement. Whenever the term "Borrower"
is used in respect of a financial covenant or a related definition, it shall be
understood to mean Borrower and its Subsidiaries on a consolidated basis unless
the context clearly requires otherwise.
1.3 CODE. Any terms used in this Agreement that are defined in
the Code shall be construed and defined as set forth in the Code unless
otherwise defined herein.
28
1.4 CONSTRUCTION. Unless the context of this Agreement or any
other Loan Document clearly requires otherwise, references to the plural include
the singular, references to the singular include the plural, the term
"including" is not limiting, and the term "or" has, except where otherwise
indicated, the inclusive meaning represented by the phrase "and/or." The words
"hereof," "herein," "hereby," "hereunder," and similar terms in this Agreement
or any other Loan Document refer to this Agreement or such other Loan Document,
as the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified. Any reference in this Agreement or in the other Loan
Documents to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein to any Person
shall be construed to include such Person's successors and assigns. Any
requirement of a writing contained herein or in the other Loan Documents shall
be satisfied by the transmission of a Record and any Record transmitted shall
constitute a representation and warranty as to the accuracy and completeness of
the information contained therein.
1.5 SCHEDULES AND EXHIBITS. All of the schedules and exhibits
attached to this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 REVOLVER ADVANCES.
(a) Subject to the terms and conditions of this
Agreement, and during the term of this Agreement, each Lender with a Revolver
Commitment agrees (severally, not jointly or jointly and severally) to make
advances ("Advances") to Borrower in an amount at any one time outstanding not
to exceed such Lender's Pro Rata Share of an amount equal to THE LESSER OF (i)
the Maximum Revolver Amount LESS the Letter of Credit Usage, and (ii) the
Borrowing Base LESS the Letter of Credit Usage. For purposes of this Agreement,
"Borrowing Base", as of any date of determination, shall mean the result of:
(x) THE LESSER OF
(i) 85% of the amount of Eligible
Accounts, LESS the amount, if
any, of the Dilution Reserve,
and
(ii) an amount equal to Borrower's
Collections with respect to
Accounts for the immediately
preceding 75 day period, PLUS
(y) THE LOWEST OF
(i) $15,000,000,
(ii) 60% of the value of Eligible
Inventory,
29
(iii) 80% TIMES the then extant Net
Liquidation Percentage TIMES the
book value of Borrower's
Inventory, and
(iv) only on the last Business Day of
each calendar quarter, 85% of
the amount of credit
availability created by CLAUSE
(X) above, MINUS
(z) the sum of (i) the Bank Products
Reserve, (ii) the Environmental Reserves,
and (iii) the aggregate amount of reserves,
if any, established by Agent under SECTION
2.1(B).
(b) Anything to the contrary in this SECTION 2.1
notwithstanding, Agent shall have the right to establish reserves in such
amounts, and with respect to such matters, as Agent in its Permitted Discretion
shall deem necessary or appropriate, against the Borrowing Base, including,
without limitation, reserves with respect to (i) sums that Borrower is required
to pay (such as taxes, assessments, insurance premiums, or, in the case of
leased assets, rents or other amounts payable under such leases) and has failed
to pay under any Section of this Agreement or any other Loan Document, (ii)
amounts owing by Borrower to any Person to the extent secured by a Lien on, or
trust over, any of the Collateral (other than any existing Permitted Lien set
forth on SCHEDULE P-1 which is specifically identified thereon as entitled to
have priority over Agent's Liens), which Lien or trust, in the Permitted
Discretion of Agent likely would have a priority superior to Agent's Liens (such
as Liens or trusts in favor of landlords, warehousemen, carriers, mechanics,
materialmen, laborers, or suppliers, or Liens or trusts for AD VALOREM, excise,
sales, or other taxes where given priority under applicable law) in and to such
item of the Collateral, and (iii) amounts past due to any licensor under any
License Agreement pursuant to which Borrower manufactures or sells Inventory or
generates Accounts. In addition to the foregoing, Agent shall have the right to
have the Inventory reappraised by a qualified appraisal company selected by
Agent in its Permitted Discretion from time to time after the Closing Date for
the purpose of redetermining the Net Liquidation Percentage of the Eligible
Inventory portion of the Collateral and, as a result, redetermining the
Borrowing Base; provided that, so long as no Event of Default has occurred and
is continuing, Borrower shall not be obligated to pay for more than two
appraisals of the Inventory each calendar year.
(c) The Lenders with Revolver Commitments shall have no
obligation to make additional Advances hereunder to the extent such additional
Advances would cause the Revolver Usage to exceed the Maximum Revolver Amount.
(d) Amounts borrowed pursuant to this Section may be repaid
and, subject to the terms and conditions of this Agreement, reborrowed at any
time during the term of this Agreement.
2.2 TERM LOAN. Subject to the terms and conditions of this Agreement,
on the Closing Date each Lender with a Term Loan Commitment agrees (severally,
not jointly or jointly and severally) to make term loans (collectively, the
"Term Loan") to Borrower in an amount equal to such Lender's Pro Rata Share of
the Term Loan Amount. The Term Loan shall be repaid in an amount equal to
30
$500,000 on the first day of each calendar quarter commencing October 1, 2003;
PROVIDED, HOWEVER, that the last such installment shall be in the amount
necessary to repay in full the unpaid principal amount of the Term Loan.
Borrower may, at any time, prepay all or a portion of the Term Loan without
penalty or premium. Each prepayment of the Term Loan shall be applied against
the remaining installments of the principal due on the Term Loan in the inverse
order of maturity. The outstanding unpaid principal balance and all accrued and
unpaid interest under the Term Loan shall be due and payable on the date of
termination of this Agreement, whether by its terms, by prepayment, or by
acceleration. All amounts outstanding under the Term Loan shall constitute
Obligations.
2.3 BORROWING PROCEDURES AND SETTLEMENTS.
(a) PROCEDURE FOR BORROWING. Each Borrowing shall be made by
an irrevocable written request by an Authorized Person delivered to Agent (which
notice must be received by Agent no later than 10:00 a.m. (California time) on
the Business Day prior to the date that is the requested Funding Date in the
case of a request for an Advance or the Term Loan specifying (i) the amount of
such Borrowing, and (ii) the requested Funding Date, which shall be a Business
Day; PROVIDED, HOWEVER, that in the case of a request for Swing Loan in an
amount of $3,500,000, or less, such notice will be timely received if it is
received by Agent no later than 10:00 a.m. (California time) on the Business Day
that is the requested Funding Date) specifying (i) the amount of such Borrowing,
and (ii) the requested Funding Date, which shall be a Business Day. At Agent's
election, in lieu of delivering the above-described written request, any
Authorized Person may give Agent telephonic notice of such request by the
required time, with such telephonic notice to be confirmed in writing within 24
hours of the giving of such notice.
(b) AGENT'S ELECTION. Promptly after receipt of a request for
a Borrowing pursuant to SECTION 2.3(A), Agent shall elect, in its discretion,
(i) to have the terms of SECTION 2.3(C) apply to such requested Borrowing, or
(ii) if the Borrowing is for an Advance, to request Swing Lender to make a Swing
Loan pursuant to the terms of SECTION 2.3(D) in the amount of the requested
Borrowing; PROVIDED, HOWEVER, that if Swing Lender declines in its sole
discretion to make a Swing Loan pursuant to SECTION 2.3(D), Agent shall elect to
have the terms of SECTION 2.3(C) apply to such requested Borrowing.
(c) MAKING OF ADVANCES.
(i) In the event that Agent shall elect to have the terms of
this SECTION 2.3(C) apply to a requested Borrowing as described in
SECTION 2.3(B), then promptly after receipt of a request for a
Borrowing pursuant to SECTION 2.3(A), Agent shall notify the Lenders,
not later than 1:00 p.m. (California time) on the Business Day
immediately preceding the Funding Date applicable thereto, by telecopy,
telephone, or other similar form of transmission, of the requested
Borrowing. Each Lender shall make the amount of such Lender's Pro Rata
Share of the requested Borrowing available to Agent in immediately
available funds, to Agent's Account, not later than 10:00 a.m.
(California time) on the Funding Date applicable thereto. After Agent's
receipt of the proceeds of such Advances (or the Term Loan, as
applicable), upon satisfaction of the applicable conditions precedent
set forth in SECTION 3 hereof, Agent shall make the proceeds thereof
31
available to Borrower on the applicable Funding Date by transferring
immediately available funds equal to such proceeds received by Agent to
Borrower's Designated Account; PROVIDED, HOWEVER, that, subject to the
provisions of SECTION 2.3(I), Agent shall not request any Lender to
make, and no Lender shall have the obligation to make, any Advance (or
its portion of the Term Loan) if Agent shall have actual knowledge that
(1) one or more of the applicable conditions precedent set forth in
SECTION 3 will not be satisfied on the requested Funding Date for the
applicable Borrowing unless such condition has been waived, or (2) the
requested Borrowing would exceed the Availability on such Funding Date.
(ii) Unless Agent receives notice from a Lender on or prior to
the Closing Date or, with respect to any Borrowing after the Closing
Date, at least one Business Day prior to the date of such Borrowing,
that such Lender will not make available as and when required hereunder
to Agent for the account of Borrower the amount of that Lender's Pro
Rata Share of the Borrowing, Agent may assume that each Lender has made
or will make such amount available to Agent in immediately available
funds on the Funding Date and Agent may (but shall not be so required),
in reliance upon such assumption, make available to Borrower on such
date a corresponding amount. If and to the extent any Lender shall not
have made its full amount available to Agent in immediately available
funds and Agent in such circumstances has made available to Borrower
such amount, that Lender shall on the Business Day following such
Funding Date make such amount available to Agent, together with
interest at the Defaulting Lender Rate for each day during such period.
A notice submitted by Agent to any Lender with respect to amounts owing
under this subsection shall be conclusive, absent manifest error. If
such amount is so made available, such payment to Agent shall
constitute such Lender's Advance on the date of Borrowing for all
purposes of this Agreement. If such amount is not made available to
Agent on the Business Day following the Funding Date, Agent will notify
Borrower of such failure to fund and, upon demand by Agent, Borrower
shall pay such amount to Agent for Agent's account, together with
interest thereon for each day elapsed since the date of such Borrowing,
at a rate per annum equal to the interest rate applicable at the time
to the Advances composing such Borrowing. The failure of any Lender to
make any Advance on any Funding Date shall not relieve any other Lender
of any obligation hereunder to make an Advance on such Funding Date,
but no Lender shall be responsible for the failure of any other Lender
to make the Advance to be made by such other Lender on any Funding
Date.
(iii) Agent shall not be obligated to transfer to a Defaulting
Lender any payments made by Borrower to Agent for the Defaulting
Lender's benefit, and, in the absence of such transfer to the
Defaulting Lender, Agent shall transfer any such payments to each other
non-Defaulting Lender member of the Lender Group ratably in accordance
with their Commitments (but only to the extent that such Defaulting
Lender's Advance was funded by the other members of the Lender Group)
or, if so directed by Borrower and if no Default or Event of Default
had occurred and is continuing (and to the extent such Defaulting
Lender's Advance was not funded by the Lender Group), retain same to be
re-advanced to Borrower as if such Defaulting Lender had made Advances
to Borrower. Subject to the foregoing, Agent may hold and, in its
Permitted Discretion, re-lend to Borrower for the account of such
Defaulting Lender the amount of all such payments received and retained
by it for the account of such Defaulting Lender. Solely for the
purposes of voting or consenting to matters with respect to the Loan
Documents, such Defaulting Lender shall be deemed not to be a "Lender"
and such Lender's Commitment shall be deemed to be zero. This Section
shall remain effective with respect to such Lender until (x) the
Obligations under this Agreement shall have been declared or shall have
become immediately due and payable, (y) the non-Defaulting Lenders,
Agent, and Borrower shall have waived such Defaulting Lender's default
in writing, or (z) the Defaulting Lender makes its Pro Rata Share of
the applicable Advance and pays to Agent all amounts owing by
Defaulting Lender in respect thereof. The operation of this Section
shall not be construed to increase or otherwise affect the Commitment
of any Lender, to relieve or excuse the performance by such Defaulting
Lender or any other Lender of its duties and obligations hereunder, or
to relieve or excuse the performance by Borrower of its duties and
obligations hereunder to Agent or to the Lenders other than such
Defaulting Lender. Any such failure to fund by any Defaulting Lender
shall constitute a material breach by such Defaulting Lender of this
Agreement and shall entitle Borrower at its option, upon written notice
to Agent, to arrange for a substitute Lender to assume the Commitment
32
of such Defaulting Lender, such substitute Lender to be acceptable to
Agent. In connection with the arrangement of such a substitute Lender,
the Defaulting Lender shall have no right to refuse to be replaced
hereunder, and agrees to execute and deliver a completed form of
Assignment and Acceptance Agreement in favor of the substitute Lender
(and agrees that it shall be deemed to have executed and delivered such
document if it fails to do so) subject only to being repaid its share
of the outstanding Obligations (other than Bank Product Obligations)
(including an assumption of its Pro Rata Share of the Risk
Participation Liability) without any premium or penalty of any kind
whatsoever; PROVIDED FURTHER, HOWEVER, that any such assumption of the
Commitment of such Defaulting Lender shall not be deemed to constitute
a waiver of any of the Lender Groups' or Borrower's rights or remedies
against any such Defaulting Lender arising out of or in relation to
such failure to fund.
(d) MAKING OF SWING LOANS.
(i) In the event Agent shall elect, with the consent of Swing
Lender, as a Lender, to have the terms of this SECTION 2.3(D) apply to
a requested Borrowing as described in SECTION 2.3(B), Swing Lender as a
Lender shall make such Advance in the amount of such Borrowing (any
such Advance made solely by Swing Lender as a Lender pursuant to this
SECTION 2.3(D) being referred to as a "Swing Loan" and such Advances
being referred to collectively as "Swing Loans") available to Borrower
on the Funding Date applicable thereto by transferring immediately
available funds to Borrower's Designated Account. Each Swing Loan is an
Advance hereunder and shall be subject to all the terms and conditions
applicable to other Advances, except that no such Swing Loan shall be
eligible for the LIBOR Option and all payments on any Swing Loan shall
be payable to Swing Lender as a Lender solely for its own account (and
for the account of the holder of any participation interest with
respect to such Swing Loan). Subject to the provisions of SECTION
2.3(I), Agent shall not request Swing Lender as a Lender to make, and
Swing Lender as a Lender shall not make, any Swing Loan if Agent has
actual knowledge that (i) one or more of the applicable conditions
33
precedent set forth in SECTION 3 will not be satisfied on the requested
Funding Date for the applicable Borrowing unless such condition has
been waived, or (ii) the requested Borrowing would exceed the
Availability on such Funding Date. Swing Lender as a Lender shall not
otherwise be required to determine whether the applicable conditions
precedent set forth in SECTION 3 have been satisfied on the Funding
Date applicable thereto prior to making, in its sole discretion, any
Swing Loan.
(ii) The Swing Loans shall be secured by Agent's Liens, shall
constitute Advances and Obligations hereunder, and shall bear interest
at the rate applicable from time to time to Advances that are Base Rate
Loans.
(e) AGENT ADVANCES.
(i) Agent hereby is authorized by Borrower and the Lenders,
from time to time in Agent's sole discretion, (1) after the occurrence
and during the continuance of a Default or an Event of Default, or (2)
at any time that any of the other applicable conditions precedent set
forth in SECTION 3 have not been satisfied, to make Advances to
Borrower on behalf of the Lenders that Agent, in its Permitted
Discretion deems necessary or desirable (A) to preserve or protect the
Collateral, or any portion thereof, (B) to enhance the likelihood of
repayment of the Obligations (other than Bank Product Obligations), or
(C) to pay any other amount chargeable to Borrower pursuant to the
terms of this Agreement, including Lender Group Expenses and the costs,
fees, and expenses described in SECTION 10 (any of the Advances
described in this SECTION 2.3(E) shall be referred to as "Agent
Advances"). Each Agent Advance is an Advance hereunder and shall be
subject to all the terms and conditions applicable to other Advances,
except that no such Agent Advance shall be eligible for the LIBOR
Option and all payments thereon shall be payable to Agent solely for
its own account (and for the account of the holder of any participation
interest with respect to such Agent Advance).
(ii) The Agent Advances shall be repayable by Borrower on
demand and secured by Agent's Liens granted to Agent under the Loan
Documents, shall constitute Advances and Obligations hereunder, and
shall bear interest at the rate applicable from time to time to
Advances that are Base Rate Loans.
(f) SETTLEMENT. It is agreed that each Lender's funded portion of the
Advances is intended by the Lenders to equal, at all times, such Lender's Pro
Rata Share of the outstanding Advances. Such agreement notwithstanding, Agent,
Swing Lender, and the other Lenders agree (which agreement shall not be for the
benefit of or enforceable by Borrower) that in order to facilitate the
administration of this Agreement and the other Loan Documents, settlement among
them as to the Advances, the Swing Loans, and the Agent Advances shall take
place on a periodic basis in accordance with the following provisions:
(i) Agent shall request settlement ("Settlement") with the
Lenders on a weekly basis, or on a more frequent basis if so determined
by Agent, (1) on behalf of Swing Lender, with respect to each
outstanding Swing Loan, (2) for itself, with respect to each Agent
Advance, and (3) with respect to Collections received, as to each by
notifying the Lenders by telecopy, telephone, or other similar form of
transmission, of such requested Settlement, no later than 2:00 p.m.
(California time) on the Business Day immediately prior to the date of
such requested Settlement (the date of such requested Settlement being
the "Settlement Date"). Such notice of a Settlement Date shall include
a summary statement of the amount of outstanding Advances, Swing Loans,
34
and Agent Advances for the period since the prior Settlement Date.
Subject to the terms and conditions contained herein (including SECTION
2.3(C)(III)): (y) if a Lender's balance of the Advances, Swing Loans,
and Agent Advances exceeds such Lender's Pro Rata Share of the
Advances, Swing Loans, and Agent Advances as of a Settlement Date, then
Agent shall, by no later than 12:00 p.m. (California time) on the
Settlement Date, transfer in immediately available funds to the account
of such Lender as such Lender may designate, an amount such that each
such Lender shall, upon receipt of such amount, have as of the
Settlement Date, its Pro Rata Share of the Advances, Swing Loans, and
Agent Advances, and (z) if a Lender's balance of the Advances, Swing
Loans, and Agent Advances is less than such Lender's Pro Rata Share of
the Advances, Swing Loans, and Agent Advances as of a Settlement Date,
such Lender shall no later than 12:00 p.m. (California time) on the
Settlement Date transfer in immediately available funds to the Agent's
Account, an amount such that each such Lender shall, upon transfer of
such amount, have as of the Settlement Date, its Pro Rata Share of the
Advances, Swing Loans, and Agent Advances. Such amounts made available
to Agent under clause (z) of the immediately preceding sentence shall
be applied against the amounts of the applicable Swing Loan or Agent
Advance and, together with the portion of such Swing Loan or Agent
Advance representing Swing Lender's Pro Rata Share thereof, shall
constitute Advances of such Lenders. If any such amount is not made
available to Agent by any Lender on the Settlement Date applicable
thereto to the extent required by the terms hereof, Agent shall be
entitled to recover for its account such amount on demand from such
Lender together with interest thereon at the Defaulting Lender Rate.
(ii) In determining whether a Lender's balance of the
Advances, Swing Loans, and Agent Advances is less than, equal to, or
greater than such Lender's Pro Rata Share of the Advances, Swing Loans,
and Agent Advances as of a Settlement Date, Agent shall, as part of the
relevant Settlement, apply to such balance the portion of payments
actually received in good funds by Agent with respect to principal,
interest and fees payable by Borrower and allocable to the Lenders
hereunder, and proceeds of Collateral. To the extent that a net amount
is owed to any such Lender after such application, such net amount
shall be distributed by Agent to that Lender as part of such next
Settlement.
(iii) Between Settlement Dates, Agent, to the extent no Agent
Advances or Swing Loans are outstanding, may pay over to Swing Lender
any payments received by Agent, that in accordance with the terms of
this Agreement would be applied to the reduction of the Advances, for
application to Swing Lender's Pro Rata Share of the Advances. If, as of
any Settlement Date, Collections received since the then immediately
preceding Settlement Date have been applied to Swing Lender's Pro Rata
Share of the Advances other than to Swing Loans, as provided for in the
previous sentence, Swing Lender shall pay to Agent for the accounts of
the Lenders, and Agent shall pay to the Lenders, to be applied to the
outstanding Advances of such Lenders, an amount such that each Lender
shall, upon receipt of such amount, have, as of such Settlement Date,
its Pro Rata Share of the Advances. During the period between
Settlement Dates, Swing Lender with respect to Swing Loans, Agent with
respect to Agent Advances, and each Lender (subject to the effect of
letter agreements between Agent and individual Lenders) with respect to
35
the Advances other than Swing Loans and Agent Advances, shall be
entitled to interest at the applicable rate or rates payable under this
Agreement on the daily amount of funds employed by Swing Lender, Agent,
or the Lenders, as applicable.
(g) NOTATION. Agent shall record on its books the principal amount of
the Advances owing to each Lender, including the Swing Loans owing to Swing
Lender, and Agent Advances owing to Agent, and the interests therein of each
Lender, from time to time. In addition, each Lender is authorized, at such
Lender's option, to note the date and amount of each payment or prepayment of
principal of such Lender's Advances in its books and records, including computer
records, such books and records constituting conclusive evidence, absent
manifest error, of the accuracy of the information contained therein.
(h) LENDERS' FAILURE TO PERFORM. All Advances (other than Swing Loans
and Agent Advances) shall be made by the Lenders contemporaneously and in
accordance with their Pro Rata Shares. It is understood that (i) no Lender shall
be responsible for any failure by any other Lender to perform its obligation to
make any Advance (or other extension of credit) hereunder, nor shall any
Commitment of any Lender be increased or decreased as a result of any failure by
any other Lender to perform its obligations hereunder, and (ii) no failure by
any Lender to perform its obligations hereunder shall excuse any other Lender
from its obligations hereunder.
(i) OPTIONAL OVERADVANCES. Any contrary provision of this Agreement
notwithstanding, the Lenders hereby authorize Agent or Swing Lender, as
applicable, and Agent or Swing Lender, as applicable, may, but is not obligated
to, knowingly and intentionally, continue to make Advances (including Swing
Loans) to Borrower notwithstanding that an Overadvance exists or thereby would
be created, so long as (i) after giving effect to such Advances (including a
Swing Loan), the outstanding Revolver Usage does not exceed the Borrowing Base
by more than $3,500,000, (ii) after giving effect to such Advances (including a
Swing Loan), the outstanding Revolver Usage (except for and excluding amounts
charged to the Loan Account for interest, fees, or Lender Group Expenses) does
not exceed the Maximum Revolver Amount, and (iii) at the time of the making of
any such Advance (including any Swing Loan), Agent does not believe, in good
faith, that the Overadvance created by such Advance will be outstanding for more
than 90 days. The foregoing provisions are for the exclusive benefit of Agent,
Swing Lender, and the Lenders and are not intended to benefit Borrower in any
way. The Advances and Swing Loans, as applicable, that are made pursuant to this
SECTION 2.3(I) shall be subject to the same terms and conditions as any other
Advance or Swing Loan, as applicable, except that they shall not be eligible for
the LIBOR Option and the rate of interest applicable thereto shall be the rate
applicable to Advances that are Base Rate Loans under SECTION 2.6(C) hereof
without regard to the presence or absence of a Default or Event of Default.
(i) In the event Agent obtains actual knowledge that the
Revolver Usage exceeds the amounts permitted by the preceding
paragraph, regardless of the amount of, or reason for, such excess,
Agent shall notify Lenders as soon as practicable (and prior to making
any (or any additional) intentional Overadvances (except for and
excluding amounts charged to the Loan Account for interest, fees, or
Lender Group Expenses) unless Agent determines that prior notice would
36
result in imminent harm to the Collateral or its value), and the
Lenders with Revolver Commitments thereupon shall, together with Agent,
jointly determine the terms of arrangements that shall be implemented
with Borrower intended to reduce, within a reasonable time, the
outstanding principal amount of the Advances to Borrower to an amount
permitted by the preceding paragraph. In the event Agent or any Lender
disagrees over the terms of reduction or repayment of any Overadvance,
the terms of reduction or repayment thereof shall be implemented
according to the determination of the Required Lenders.
(ii) Each Lender with a Revolver Commitment shall be obligated
to settle with Agent as provided in SECTION 2.3(F) for the amount of
such Lender's Pro Rata Share of any unintentional Overadvances by Agent
reported to such Lender, any intentional Overadvances made as permitted
under this SECTION 2.3(I), and any Overadvances resulting from the
charging to the Loan Account of interest, fees, or Lender Group
Expenses.
2.4 PAYMENTS.
(a) PAYMENTS BY BORROWER.
(i) Except as otherwise expressly provided herein, all
payments by Borrower shall be made to Agent's Account for the account
of the Lender Group and shall be made in immediately available funds,
no later than 11:00 a.m. (California time) on the date specified
herein. Any payment received by Agent later than 11:00 a.m. (California
time) shall be deemed to have been received on the following Business
Day and any applicable interest or fee shall continue to accrue until
such following Business Day.
(ii) Unless Agent receives notice from Borrower prior to the
date on which any payment is due to the Lenders that Borrower will not
make such payment in full as and when required, Agent may assume that
Borrower has made (or will make) such payment in full to Agent on such
date in immediately available funds and Agent may (but shall not be so
required), in reliance upon such assumption, distribute to each Lender
on such due date an amount equal to the amount then due such Lender. If
and to the extent Borrower does not make such payment in full to Agent
on the date when due, each Lender severally shall repay to Agent on
demand such amount distributed to such Lender, together with interest
thereon at the Defaulting Lender Rate for each day from the date such
amount is distributed to such Lender until the date repaid.
(b) APPORTIONMENT AND APPLICATION OF PAYMENTS.
(i) Except as otherwise provided with respect to Defaulting
Lenders and except as otherwise provided in the Loan Documents
(including letter agreements between Agent and individual Lenders),
aggregate principal and interest payments shall be apportioned ratably
among the Lenders (according to the unpaid principal balance of the
Obligations to which such payments relate held by each Lender) and
payments of fees and expenses (other than fees or expenses that are for
Agent's separate account, after giving effect to any letter agreements
between Agent and individual Lenders) shall be apportioned ratably
37
among the Lenders having a Pro Rata Share of the type of Commitment or
Obligation to which a particular fee relates. Except as otherwise
specifically provided in SECTION 2.4(C) below, all payments shall be
remitted to Agent and all such payments (other than payments received
while no Event of Default has occurred and is continuing and which
either (i) relate (or are designated by Borrower to be applied) to the
payment of principal of or interest on specific Obligations or (ii)
relate (or are designated by Borrower to be applied) to the payment of
specific fees), and all proceeds of Accounts or other Collateral
received by Agent in accordance with the terms of this Agreement, shall
be applied as follows:
(A) FIRST, to pay any Lender Group Expenses then due
to Agent under the Loan Documents, until paid in full,
(B) SECOND, to pay any Lender Group Expenses then due
to the Lenders under the Loan Documents, on a ratable basis,
until paid in full,
(C) THIRD, to pay any fees then due to Agent (for its
separate accounts, pursuant to any letter agreements between
Agent and individual Lenders) under the Loan Documents until
paid in full,
(D) FOURTH, to pay any fees then due to any or all of
the Lenders (pursuant to any letter agreements between Agent
and individual Lenders) under the Loan Documents, on a ratable
basis, until paid in full,
(E) FIFTH, to pay interest due in respect of all
Agent Advances, until paid in full,
(F) SIXTH, ratably to pay interest due in respect of
the Advances (other than Agent Advances), the Swing Loans, and
the Term Loan until paid in full,
(G) SEVENTH, to pay the principal of all Agent
Advances until paid in full,
(H) EIGHTH, ratably to pay all principal amounts then
due and payable (other than as a result of an acceleration
thereof) with respect to the Term Loan until paid in full,
(I) NINTH, to pay the principal of all Swing Loans
until paid in full,
(J) TENTH, so long as no Event of Default has
occurred and is continuing, and at Agent's election (which
election Agent agrees will not be made if an Overadvance would
be created thereby) to pay amounts then due and owing by
Borrower or its Subsidiaries in respect of Bank Products,
until paid in full,
38
(K) ELEVENTH, so long as no Event of Default has
occurred and is continuing, to pay the principal of all
Advances until paid in full,
(L) TWELFTH, if an Event of Default has occurred and
is continuing, ratably (i) to pay the principal of all
Advances until paid in full, and (ii) to Agent, to be held by
Agent, for the benefit of ▇▇▇▇▇ Fargo or its Affiliates, as
applicable, as cash collateral in an amount up to the amount
of the Bank Products Reserve established prior to the
occurrence of, and not in contemplation of, the subject Event
of Default until Borrower's and its Subsidiaries' obligations
in respect of the then extant Bank Products have been paid in
full or the cash collateral amount has been exhausted,
(M) THIRTEENTH, if an Event of Default has occurred
and is continuing, to pay the outstanding principal balance of
the Term Loan (in the inverse order of the maturity of the
installments due thereunder) until the Term Loan is paid in
full,
(N) FOURTEENTH, if an Event of Default has occurred
and is continuing, to Agent, to be held by Agent, for the
ratable benefit of Issuing Lender and those Lenders having a
Revolver Commitment, as cash collateral in an amount up to
102% of the then extant Letter of Credit Usage until paid in
full,
(O) FIFTEENTH, to pay any other Obligations
(including Bank Product Obligations) until paid in full, and
(P) SIXTEENTH, to Borrower (to be wired to the
Designated Account) or such other Person entitled thereto
under applicable law.
(ii) Agent promptly shall distribute to each Lender, pursuant
to the applicable wire instructions received from each Lender in
writing, such funds as it may be entitled to receive, subject to a
Settlement delay as provided in SECTION 2.3(F).
(iii) In each instance, so long as no Event of Default has
occurred and is continuing, SECTION 2.4(B)(I) shall not be deemed to
apply to any payment by Borrower specified by Borrower to be for the
payment of principal of or interest or fees on specific Obligations
then due and payable (or prepayable) under any provision of this
Agreement.
(iv) For purposes of the foregoing, "paid in full" means
payment of all amounts owing under the Loan Documents according to the
terms thereof, including loan fees, service fees, professional fees,
interest (and specifically including interest accrued after the
commencement of any Insolvency Proceeding), default interest, interest
on interest, and expense reimbursements, whether or not the same would
be or is allowed or disallowed in whole or in part in any Insolvency
Proceeding.
(v) In the event of a direct conflict between the priority
provisions of this SECTION 2.4 and other provisions contained in any
other Loan Document, it is the intention of the parties hereto that
39
such priority provisions in such documents shall be read together and
construed, to the fullest extent possible, to be in concert with each
other. In the event of any actual, irreconcilable conflict that cannot
be resolved as aforesaid, the terms and provisions of this SECTION 2.4
shall control and govern.
(c) MANDATORY PREPAYMENTS.
(i) If on any day the sum of the Revolver Usage exceeds the
Borrowing Base, Borrower shall immediately pay to Agent an amount equal
to such excess to be applied to the outstanding principal of the
Advances.
(ii) If on any day the Revolver Commitment is terminated,
Borrower shall immediately repay the Term Loan.
(iii) If at any time the Fixed Asset Coverage Ratio is less
than 0.50 to 1.0, Borrower shall immediately pay to Agent an amount
equal to such excess, to be applied to the principal installments of
the Term Loan in the inverse order of maturity. Agent shall have the
right to have the Eligible Equipment and the Eligible Real Property
Collateral reappraised by a qualified appraisal company selected by
Agent in its Permitted Discretion from time to time after the Closing
Date for the purposes of the definition of "Term Loan Amount" and this
SECTION 2.4(C)(III), provided that, so long as no Event of Default has
occurred and is continuing, appraisals of the Eligible Equipment shall
not be conducted more frequently than once each calendar year and
appraisals of the Eligible Real Property Collateral shall not be
conducted more frequently than once each calendar year.
(iv) Immediately upon any sale or disposition by Borrower of
property or assets (other than a Permitted Disposition described in
clauses (b), (c), (d), (e) or (f) of the definition of such term) or
the receipt by Borrower of the proceeds of any insurance policy with
respect to Inventory, Equipment or Real Property or condemnation awards
with respect to Inventory, Equipment or Real Property, Borrower shall
prepay the outstanding principal amount of the Term Loan and the
Advances in accordance with SECTION 2.4(D) in an amount equal to 100%
of the Net Cash Proceeds or the insurance or condemnation proceeds
received by such Person in connection with such sales or dispositions
or such casualty or condemnation event to the extent that the aggregate
amount of Net Cash Proceeds or proceeds of insurance or condemnation
awards received by Borrower (and not paid to Agent as a prepayment of
the Term Loan and the Advances) for all such sales or dispositions
shall exceed, since the Closing Date, (A) $500,000 in the case of Net
Cash Proceeds of sales or dispositions and (B) $1,000,000 in the case
of proceeds of insurance or condemnation awards (other than sales or
dispositions of Inventory, Equipment or Real Property or insurance
proceeds or condemnation awards with respect to Inventory, Equipment or
Real Property as to which, except as otherwise provided in SECTION
6.7(B), no minimum amount will apply), PROVIDED, that, except during
the continuance of an Event of Default, proceeds from any insurance
policy or condemnation award with respect to either of the facilities
located in Boca Raton, Florida shall not be required to be so applied
to the extent that such proceeds are used to replace, repair or restore
the applicable facility located in Boca Raton, Florida if (i) the
amount of proceeds received in respect of such insurance policy or
condemnation award is less than $2,000,000, (ii) Borrower delivers a
certificate to Agent within 30 days after the date of such loss,
40
destruction or taking stating that such proceeds shall be used to
replace, repair or restore the applicable facility located in Boca
Raton, Florida within a period specified in such certificate not to
exceed 180 days after the receipt of such proceeds (which certificate
shall set forth estimates of the proceeds to be so expended) and (iii)
such proceeds are deposited in a DDA subject to a Control Agreement. If
all or any portion of such proceeds not so applied to the prepayment of
the Term Loan and Advances in accordance with this SUBCLAUSE (IV) are
not used in accordance with the preceding sentence within such 180 day
period, such remaining portion shall be applied to the Term Loan and
Advances in accordance with this SUBCLAUSE (IV) on the last day of such
specified period. Borrower shall not be obligated under this Agreement
and the other Loan Documents to replace, repair or restore the
applicable facility located in Boca Raton, Florida to the extent, but
only to the extent, that the proceeds received in respect of any
insurance policy or condemnation award are applied to the Term Loan or
the Advances. Nothing contained in this SUBCLAUSE (IV) shall permit
Borrower to sell or otherwise dispose of any property or assets other
than in accordance with SECTION 7.4.
(v) Upon the receipt by Borrower of any Extraordinary Receipts
during the continuance of an Event of Default, Borrower shall prepay
the outstanding principal of the Term Loan and the Advances in
accordance with Section 2.4(d) below in an amount equal to 100% of such
Extraordinary Receipts, net of any reasonable expenses incurred in
collecting such Extraordinary Receipts.
(vi) Within ten (10) Business Days of delivery to Agent of
each of the audited annual financial statements pursuant to SECTION
6.3(B) or, if such financial statements are not delivered to Agent on
the date such statements are required to be delivered pursuant to
SECTION 6.3(B), ten (10) Business Days after the date such statements
are required to be delivered to Agent pursuant to SECTION 6.3(B),
Borrower shall pay to Agent an amount equal to 25% of the Excess Cash
Flow for the Fiscal Year covered by such financial statements, to be
applied in accordance with SECTION 2.4(D).
(d) APPLICATION OF PAYMENTS.
(i) Each prepayment pursuant to SUBCLAUSES (C)(V) AND (C)(VI)
above shall be applied, first, to the outstanding principal amount of
the Term Loan until paid in full, and second, to the outstanding
principal amount of the Advances (together with a corresponding
permanent reduction in the Revolver Commitment) until paid in full.
Each such prepayment of the Term Loan shall be applied against the
remaining installments of principal of the Term Loan in the inverse
order of maturity.
(ii) Each prepayment pursuant to SUBCLAUSE (C)(IV) above shall
be applied as follows:
(1) if the proceeds are from any sale or disposition
of any Accounts or Inventory or any insurance policy or
condemnation award with respect to Inventory, such proceeds
shall be applied, first, to the outstanding principal amount
41
of the Advances until paid in full, and second, to the
outstanding principal amount of the Term Loan until paid in
full;
(2) subject to CLAUSE (3) below, if the proceeds are
from the sale or disposition of any other assets or any
insurance policy or condemnation award not described in CLAUSE
(1) above, such proceeds shall be applied, first, to the
outstanding principal amount of the Term Loan, until paid in
full, and second, to the outstanding principal amount of the
Advances, until paid in full. Each such prepayment of the Term
Loan shall be applied against the remaining installments of
principal of the Term Loan in the inverse order of maturity;
and
(3) if the proceeds are from a sale or disposition of
assets or any insurance, which sale or disposition includes,
or proceeds of insurance relate to, Accounts, Inventory and
other assets, such proceeds shall be applied as follows: (x)
an amount equal to the Advances actually supported by such
assets determined using the effective advance rate under the
Borrowing Base against such Accounts, Inventory and
(determined at the time of such sale or disposition or event
resulting in such insurance proceeds), shall be applied to the
outstanding principal amount of the Advances and (y) the
remaining proceeds shall be applied, first, to the outstanding
principal amount of the Term Loan until paid in full, and
second, to the outstanding principal amount of the Advances
until paid in full. Each such prepayment of the Term Loan
shall be applied against the remaining installments of
principal of the Term Loan in the inverse order of maturity.
2.5 OVERADVANCES. If, at any time or for any reason, the amount of
Obligations (other than Bank Product Obligations) owed by Borrower to the Lender
Group pursuant to SECTIONS 2.1 AND 2.12 is greater than either the Dollar or
percentage limitations set forth in SECTIONS 2.1 OR 2.12 (an "Overadvance"),
Borrower immediately shall pay to Agent, in cash, the amount of such excess,
which amount shall be used by Agent to reduce the Obligations in accordance with
the priorities set forth in SECTION 2.4(B). In addition, Borrower hereby
promises to pay the Obligations (including principal, interest, fees, costs, and
expenses) in Dollars in full to the Lender Group as and when due and payable
under the terms of this Agreement and the other Loan Documents.
2.6 INTEREST RATES AND LETTER OF CREDIT FEE: RATES, PAYMENTS, AND
CALCULATIONS.
(a) INTEREST RATES. Except as provided in clause (c) below,
all Obligations (except for undrawn Letters of Credit and except for Bank
Product Obligations) that have been charged to the Loan Account pursuant to the
terms hereof shall bear interest on the Daily Balance thereof as follows (i) if
the relevant Obligation is an Advance that is a LIBOR Rate Loan, at a per annum
rate equal to the LIBOR Rate plus the Applicable LIBOR Rate Revolver Margin,
(ii) if the relevant Obligation is a portion of the Term Loan that is a LIBOR
Rate Loan, at a per annum rate equal to the LIBOR Rate plus the LIBOR Rate Term
42
Loan Margin, (iii) if the relevant Obligation is a portion of the Term Loan that
is a Base Rate Loan, at a per annum rate equal to the Base Rate plus the Base
Rate Term Loan Margin, and (iv) otherwise, at a per annum rate equal to the Base
Rate plus the Base Rate Margin.
(b) LETTER OF CREDIT FEE. Borrower shall pay Agent (for the
ratable benefit of the Lenders with a Revolver Commitment, subject to any letter
agreement between Agent and individual Lenders), a Letter of Credit fee (in
addition to the charges, commissions, fees, and costs set forth in SECTION
2.12(E)) which shall accrue at a rate equal to the Applicable LIBOR Rate
Revolver Margin TIMES the Daily Balance of the undrawn amount of all outstanding
Letters of Credit.
(c) DEFAULT RATE. Upon the occurrence and during the
continuation of an Event of Default (and at the election of Agent or the
Required Lenders),
(i) all Obligations (except for undrawn Letters of
Credit and except for Bank Product Obligations) that have been charged
to the Loan Account pursuant to the terms hereof shall bear interest on
the Daily Balance thereof at a per annum rate equal to 2 percentage
points above the per annum rate otherwise applicable hereunder, and
(ii) the Letter of Credit fee provided for above
shall be increased to 2 percentage points above the per annum rate
otherwise applicable hereunder.
(d) PAYMENT. Interest, Letter of Credit fees, and all other
fees payable hereunder shall be due and payable, in arrears, on the first day of
each month (or, in the case of fees, such other date on which such fees are due
and payable pursuant to the terms of the Fee Letter) at any time that
Obligations or Commitments are outstanding. Borrower hereby authorizes Agent,
from time to time without prior notice to Borrower, to, and Agent agrees that it
will, charge such interest and fees, all Lender Group Expenses (as and when
incurred), the charges, commissions, fees, and costs provided for in SECTION
2.12(E) (as and when accrued or incurred), the fees and costs provided for in
SECTION 2.11 (as and when accrued or incurred), and all other payments as and
when due and payable under any Loan Document (including the installments due and
payable with respect to the Term Loan and including any amounts due and payable
to ▇▇▇▇▇ Fargo or its Affiliates in respect of Bank Products up to the amount of
the then extant Bank Products Reserve) to Borrower's Loan Account, which amounts
thereafter shall constitute Advances hereunder and shall accrue interest at the
rate then applicable to Advances hereunder. Any interest not paid when due shall
be compounded by being charged to Borrower's Loan Account and shall thereafter
constitute Advances hereunder and shall accrue interest at the rate then
applicable to Advances that are Base Rate Loans hereunder.
(e) COMPUTATION. All interest and fees chargeable under the
Loan Documents shall be computed on the basis of a 360 day year for the actual
number of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.
43
(f) INTENT TO LIMIT CHARGES TO MAXIMUM LAWFUL RATE. In no
event shall the interest rate or rates payable under this Agreement, plus any
other amounts paid in connection herewith, exceed the highest rate permissible
under any law that a court of competent jurisdiction shall, in a final
determination, deem applicable. Borrower and the Lender Group, in executing and
delivering this Agreement, intend legally to agree upon the rate or rates of
interest and manner of payment stated within it; PROVIDED, HOWEVER, that,
anything contained herein to the contrary notwithstanding, if said rate or rates
of interest or manner of payment exceeds the maximum allowable under applicable
law, then, IPSO FACTO, as of the date of this Agreement, Borrower is and shall
be liable only for the payment of such maximum as allowed by law, and payment
received from Borrower in excess of such legal maximum, whenever received, shall
be applied to reduce the principal balance of the Obligations to the extent of
such excess.
2.7 CASH MANAGEMENT.
(a) Borrower shall (i) establish and maintain cash management
services of a type and on terms reasonably satisfactory to Agent at one or more
of the banks set forth on SCHEDULE 2.7(A) (each, a "Cash Management Bank"), and
shall request in writing and otherwise take such reasonable steps to ensure that
all of its Account Debtors forward payment of the amounts owed by them directly
to such Cash Management Bank, and (ii) deposit or cause to be deposited
promptly, and in any event no later than the first Business Day after the date
of receipt thereof, all Collections (including those sent directly by Account
Debtors to a Cash Management Bank) into a bank account in Agent's name (a "Cash
Management Account") at one of the Cash Management Banks.
(b) Each Cash Management Bank shall establish and maintain
Cash Management Agreements with Agent and Borrower, in form and substance
acceptable to Agent. Each such Cash Management Agreement shall provide, among
other things, that (i) all items of payment deposited in such Cash Management
Account and proceeds thereof are held by such Cash Management Bank as agent or
bailee-in-possession for Agent, (ii) the Cash Management Bank has no rights of
setoff or recoupment or any other claim against the applicable Cash Management
Account other than for payment of its service fees and other charges directly
related to the administration of such Cash Management Account and for returned
checks or other items of payment, (iii) from and after receipt of a notice (an
"Activation Notice") from Agent (which Activation Notice may be given by Agent
at any time (A) Borrower's Excess Availability is less than $15,000,000 or (B)
an Event of Default has occurred), the Cash Management Bank shall immediately
forward by daily sweep all amounts in the applicable Cash Management Account to
the Agent's Account, and (iv) prior to the receipt by such Cash Management Bank
of an Activation Notice, all amounts in such Cash Management Account may be
transferred to and used by Borrower in the ordinary course of business. From and
after the date Agent has delivered an Activation Notice to any Cash Management
Bank with respect to any Cash Management Account(s), Borrower shall not
accumulate or maintain cash in disbursement or payroll accounts as of any date
of determination in excess of checks outstanding against such accounts as of
that date and amounts necessary to meet minimum balance requirements.
(c) So long as no Default or Event of Default has occurred and
is continuing, Borrower may amend SCHEDULE 2.7(A) to add or replace a Cash
Management Bank or Cash Management Account; PROVIDED, HOWEVER, that (i) such
prospective Cash Management Bank shall be reasonably satisfactory to Agent and
Agent shall have consented in writing in advance to the opening of such Cash
44
Management Account with the prospective Cash Management Bank, which consent
shall not be unreasonably withheld or delayed, and (ii) prior to the time of the
opening of such Cash Management Account, Borrower and such prospective Cash
Management Bank shall have executed and delivered to Agent a Cash Management
Agreement. Borrower shall close any of its Cash Management Accounts (and
establish replacement cash management accounts in accordance with the foregoing
sentence) promptly and in any event within 30 days of notice from Agent that the
creditworthiness of any Cash Management Bank is no longer acceptable in Agent's
reasonable judgment, or as promptly as practicable and in any event within 60
days of notice from Agent that the operating performance, funds transfer, or
availability procedures or performance of the Cash Management Bank with respect
to Cash Management Accounts or Agent's liability under any Cash Management
Agreement with such Cash Management Bank is no longer acceptable in Agent's
reasonable judgment.
(d) The Cash Management Accounts shall be cash collateral
accounts, with all cash, checks and similar items of payment in such accounts
securing payment of the Obligations, and in which Borrower is hereby deemed to
have granted a Lien to Agent.
2.8 CREDITING PAYMENTS; FLOAT CHARGE. The receipt of any payment item
by Agent (whether from transfers to Agent by the Cash Management Banks pursuant
to the Cash Management Agreements or otherwise) shall not be considered a
payment on account unless such payment item is a wire transfer of immediately
available federal funds made to the Agent's Account or unless and until such
payment item is honored when presented for payment. Should any payment item not
be honored when presented for payment, then Borrower shall be deemed not to have
made such payment and interest shall be calculated accordingly. Anything to the
contrary contained herein notwithstanding, any payment item shall be deemed
received by Agent only if it is received into the Agent's Account on a Business
Day on or before 11:00 a.m. (California time). If any payment item is received
into the Agent's Account on a non-Business Day or after 11:00 a.m. (California
time) on a Business Day, it shall be deemed to have been received by Agent as of
the opening of business on the immediately following Business Day. From and
after the Closing Date, Agent shall be entitled to charge Borrower for one
Business Day of 'clearance' or 'float' at the rate applicable to Base Rate Loans
under SECTION 2.6 on all Collections that are received by Borrower (regardless
of whether forwarded by the Cash Management Banks to Agent), provided that such
'clearance' or 'float' charge shall be applied without duplication with respect
to Collections that are received by Borrower the proceeds of which are deposited
in multiple accounts of the Loan Parties. This across-the-board one Business Day
clearance or float charge on all Collections is acknowledged by the parties to
constitute an integral aspect of the pricing of the financing of Borrower and
shall apply irrespective of whether or not there are any outstanding monetary
Obligations; the effect of such clearance or float charge being the equivalent
of charging one Business Day of interest on such Collections. The parties
acknowledge and agree that the economic benefit of the foregoing provisions of
this SECTION 2.8 shall be for the exclusive benefit of Agent.
2.9 DESIGNATED ACCOUNT. Agent is authorized to make the Advances and
the Term Loan, and Issuing Lender is authorized to issue the Letters of Credit,
under this Agreement based upon written instructions (which may be by telecopy)
received from anyone purporting to be an Authorized Person, or without
45
instructions if pursuant to SECTION 2.6(D). Borrower agrees to establish and
maintain the Designated Account with the Designated Account Bank for the purpose
of receiving the proceeds of the Advances requested by Borrower and made by
Agent or the Lenders hereunder. Unless otherwise agreed by Agent and Borrower,
any Advance, Agent Advance, or Swing Loan requested by Borrower and made by
Agent or the Lenders hereunder shall be made to the Designated Account.
2.10 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Agent
shall maintain an account on its books in the name of Borrower (the "Loan
Account") on which Borrower will be charged with the Term Loan, all Advances
(including Agent Advances and Swing Loans) made by Agent, Swing Lender, or the
Lenders to Borrower or for Borrower's account, the Letters of Credit issued by
Issuing Lender for Borrower's account, and with all other payment Obligations
hereunder or under the other Loan Documents (except for Bank Product
Obligations), including, accrued interest, fees and expenses, and Lender Group
Expenses. In accordance with SECTION 2.8, the Loan Account will be credited with
all payments received by Agent from Borrower or for Borrower's account,
including all amounts received in the Agent's Account from any Cash Management
Bank. Agent shall render written statements regarding the Loan Account to
Borrower, including principal, interest, fees, and including an itemization of
all charges and expenses constituting Lender Group Expenses owing, and such
statements shall be conclusively presumed to be correct and accurate and
constitute an account stated between Borrower and the Lender Group unless,
within 30 days after receipt of such statements by Borrower, Borrower shall
deliver to Agent written objection thereto describing the error or errors
contained in any such statements.
2.11 FEES. Borrower shall pay to Agent the following fees and charges,
which fees and charges shall be non-refundable when paid (irrespective of
whether this Agreement is terminated thereafter) and shall be apportioned among
the Lenders in accordance with the terms of letter agreements between Agent and
individual Lenders:
(a) UNUSED LINE FEE. On the first day of each month during the
term of this Agreement, an unused line fee in an amount equal to 0.50% per annum
TIMES the result of (i) the Maximum Revolver Amount, LESS (ii) the sum of (A)
the average Daily Balance of Advances that were outstanding during the
immediately preceding month, PLUS (B) the average Daily Balance of the Letter of
Credit Usage during the immediately preceding month,
(b) FEE LETTER FEES. As and when due and payable under the
terms of the Fee Letter, Borrower shall pay to Agent the fees set forth in the
Fee Letter, and
(c) AUDIT, APPRAISAL, AND VALUATION CHARGES. For the separate
account of Agent, audit, appraisal, and valuation fees and charges as follows
(i) a fee of $950 per day, per auditor, plus actual and reasonable out-of-pocket
expenses for each financial audit of Borrower performed by personnel employed by
Agent, plus a charge of $950 per day plus actual and reasonable out-of-pocket
expenses incurred by personnel employed by Agent to establish electronic
collateral reporting systems, if such systems are implemented, (ii) actual costs
of each appraiser, including reasonable out-of-pocket expenses, for each
appraisal of the Collateral performed by personnel employed by Agent, and (iii)
the actual charges paid or incurred by Agent if it elects to employ the services
of one or more third Persons, selected by Agent in its Permitted Discretion, to
perform financial audits of Borrower, to appraise the Collateral, or any portion
thereof, or to assess Borrower's business valuation, provided that (x) Lender
46
intends to perform financial audits not less than quarterly and (y) so long as
no Event of Default has occurred and is continuing, Borrower shall not be
obligated to pay for more than one appraisal of the Equipment each calendar
year, more than two appraisals of the Inventory each calendar year, and more
than one appraisal of the Real Property each calendar year.
2.12 LETTERS OF CREDIT.
(a) Subject to the terms and conditions of this Agreement, the
Issuing Lender agrees to issue letters of credit for the account of Borrower
(each, an "L/C") or to purchase participations or execute indemnities or
reimbursement obligations (each such undertaking, an "L/C Undertaking") with
respect to letters of credit issued by an Underlying Issuer (as of the Closing
Date, the prospective Underlying Issuer is to be ▇▇▇▇▇ Fargo) for the account of
Borrower. To request the issuance of an L/C or an L/C Undertaking (or the
amendment, renewal, or extension of an outstanding L/C or L/C Undertaking),
Borrower shall hand deliver or telecopy (or transmit by electronic
communication, if arrangements for doing so have been approved by the Issuing
Lender) to the Issuing Lender and Agent at the address set forth in SECTION 12
hereof (reasonably, but in any event not more than five (5) Business Days, in
advance of the requested date of issuance, amendment, renewal, or extension) a
notice requesting the issuance of an L/C or L/C Undertaking, or identifying the
L/C or L/C Undertaking to be amended, renewed, or extended, the date of
issuance, amendment, renewal, or extension, the date on which such L/C or L/C
Undertaking is to expire, the amount of such L/C or L/C Undertaking, the name
and address of the beneficiary thereof (or the beneficiary of the Underlying
Letter of Credit, as applicable), and such other information as shall be
necessary to prepare, amend, renew, or extend such L/C or L/C Undertaking. If
requested by the Issuing Lender, Borrower also shall be an applicant under the
application with respect to any Underlying Letter of Credit that is to be the
subject of an L/C Undertaking. The Issuing Lender shall have no obligation to
issue a Letter of Credit if any of the following would result after giving
effect to the requested Letter of Credit:
(i) the Letter of Credit Usage would exceed the
Borrowing Base LESS the amount of outstanding Advances, or
(ii) the Letter of Credit Usage would exceed
$10,000,000, or
(iii) the Letter of Credit Usage would exceed the
Maximum Revolver Amount LESS the then extant amount of outstanding
Advances.
Borrower and the Lender Group acknowledge and agree that
certain Underlying Letters of Credit may be issued to support letters of credit
that already are outstanding as of the Closing Date. Each Letter of Credit (and
corresponding Underlying Letter of Credit) shall be in form and substance
acceptable to the Issuing Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable in
Dollars. If Issuing Lender is obligated to advance funds under a Letter of
Credit, Borrower immediately shall reimburse such L/C Disbursement to Issuing
Lender by paying to Agent an amount equal to such L/C Disbursement not later
47
than 12:00 p.m., California time, on the date that such L/C Disbursement is
made, if Borrower shall have received written or telephonic notice of such L/C
Disbursement prior to 9:00 a.m., California time, on such date, or, if such
notice has not been received by Borrower prior to such time on such date, then
not later than 12:00 p.m., California time, on the Business Day that Borrower
receives such notice, if such notice is received prior to 9:00 a.m., California
time, on the date of receipt, and, in the absence of such reimbursement, the L/C
Disbursement immediately and automatically shall be deemed to be an Advance
hereunder and, thereafter, shall bear interest at the rate then applicable to
Advances that are Base Rate Loans under SECTION 2.6. To the extent an L/C
Disbursement is deemed to be an Advance hereunder, Borrower's obligation to
reimburse such L/C Disbursement shall be discharged and replaced by the
resulting Advance. Promptly following receipt by Agent of any payment from
Borrower pursuant to this paragraph, Agent shall distribute such payment to the
Issuing Lender or, to the extent that Lenders have made payments pursuant to
SECTION 2.12(C) to reimburse the Issuing Lender, then to such Lenders and the
Issuing Lender as their interest may appear.
(b) Promptly following receipt of a notice of L/C Disbursement
pursuant to SECTION 2.12(A), each Lender with a Revolver Commitment agrees to
fund its Pro Rata Share of any Advance deemed made pursuant to the foregoing
subsection on the same terms and conditions as if Borrower had requested such
Advance and Agent shall promptly pay to Issuing Lender the amounts so received
by it from the Lenders. By the issuance of a Letter of Credit (or an amendment
to a Letter of Credit increasing the amount thereof) and without any further
action on the part of the Issuing Lender or the Lenders with Revolver
Commitment, the Issuing Lender shall be deemed to have granted to each Lender
with a Revolver Commitment, and each Lender with a Revolver Commitment shall be
deemed to have purchased, a participation in each Letter of Credit, in an amount
equal to its Pro Rata Share of the Risk Participation Liability of such Letter
of Credit, and each such Lender agrees to pay to Agent, for the account of the
Issuing Lender, such Lender's Pro Rata Share of any payments made by the Issuing
Lender under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender with a Revolver Commitment hereby absolutely and
unconditionally agrees to pay to Agent, for the account of the Issuing Lender,
such Lender's Pro Rata Share of each L/C Disbursement made by the Issuing Lender
and not reimbursed by Borrower on the date due as provided in clause (a) of this
Section, or of any reimbursement payment required to be refunded to Borrower for
any reason. Each Lender with a Revolver Commitment acknowledges and agrees that
its obligation to deliver to Agent, for the account of the Issuing Lender, an
amount equal to its respective Pro Rata Share pursuant to this SECTION 2.12(B)
shall be absolute and unconditional and such remittance shall be made
notwithstanding the occurrence or continuation of an Event of Default or Default
or the failure to satisfy any condition set forth in SECTION 3 hereof. If any
such Lender fails to make available to Agent the amount of such Lender's Pro
Rata Share of any payments made by the Issuing Lender in respect of such Letter
of Credit as provided in this Section, Agent (for the account of the Issuing
Lender) shall be entitled to recover such amount on demand from such Lender
together with interest thereon at the Defaulting Lender Rate until paid in full.
(c) Borrower hereby agrees to indemnify, save, defend, and
hold the Lender Group harmless from any loss, cost, expense, or liability, and
reasonable attorneys fees incurred by the Lender Group arising out of or in
connection with any Letter of Credit; PROVIDED, HOWEVER, that Borrower shall not
be obligated hereunder to indemnify for any loss, cost, expense, or liability
that is caused by (i) the gross negligence or willful misconduct of the Issuing
48
Lender or any other member of the Lender Group, or (ii) the breach by a Lender
of its payment obligations under this Agreement as finally determined by a court
of competent jurisdiction. Borrower agrees to be bound by the Underlying
Issuer's regulations and reasonable interpretations of any Underlying Letter of
Credit or by Issuing Lender's reasonable interpretations of any L/C issued by
Issuing Lender to or for Borrower's account, even though this interpretation may
be different from Borrower's own, and Borrower understands and agrees that the
Lender Group shall not be liable for any error made in good faith, negligence,
or mistake, whether of omission or commission, in following Borrower's
instructions or those contained in the Letter of Credit or any modifications,
amendments, or supplements thereto. Borrower understands that the L/C
Undertakings may require Issuing Lender to indemnify the Underlying Issuer for
certain costs or liabilities arising out of claims by Borrower against such
Underlying Issuer. Borrower hereby agrees to indemnify, save, defend, and hold
the Lender Group harmless with respect to any loss, cost, expense (including
reasonable attorneys fees), or liability incurred by the Lender Group under any
L/C Undertaking as a result of the Lender Group's indemnification of any
Underlying Issuer for such claims by Borrower; PROVIDED, HOWEVER, that Borrower
shall not be obligated hereunder to indemnify for any loss, cost, expense, or
liability that is caused by the gross negligence or willful misconduct of the
Issuing Lender or any other member of the Lender Group.
(d) Borrower hereby authorizes and directs any Underlying
Issuer to deliver to the Issuing Lender all instruments, documents, and other
writings and property received by such Underlying Issuer pursuant to such
Underlying Letter of Credit and to accept and rely upon the Issuing Lender's
instructions with respect to all matters arising in connection with such
Underlying Letter of Credit and the related application.
(e) Any and all charges, commissions, fees, and costs incurred
by the Issuing Lender relating to Underlying Letters of Credit shall be Lender
Group Expenses for purposes of this Agreement and immediately upon notice to
Borrower shall be reimbursable by Borrower to Agent (or without notice to
Borrower charged to the Loan Account) for the account of the Issuing Lender; it
being acknowledged and agreed by Borrower that, as of the Closing Date, the
issuance charge imposed by the prospective Underlying Issuer is .825% per annum
times the face amount of each Underlying Letter of Credit, that such issuance
charge may be changed from time to time, and that the Underlying Issuer also
imposes a schedule of charges for amendments, extensions, drawings, and
renewals.
(f) If by reason of (i) any change in any applicable law,
treaty, rule, or regulation or any change in the interpretation or application
thereof by any Governmental Authority, or (ii) compliance by the Underlying
Issuer or the Lender Group with any direction, request, or requirement
(irrespective of whether having the force of law) of any Governmental Authority
or monetary authority including, Regulation D of the Federal Reserve Board as
from time to time in effect (and any successor thereto):
(i) any reserve, deposit, or similar requirement is
or shall be imposed or modified in respect of any Letter of Credit
issued hereunder, or
49
(ii) there shall be imposed on the Underlying Issuer
or the Lender Group any other condition regarding any Underlying Letter
of Credit or any Letter of Credit issued pursuant hereto,
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Borrower, and Borrower shall pay on demand such amounts as Agent may
specify in good faith to be necessary to compensate the Lender Group for such
additional cost or reduced receipt, together with interest on such amount from
the date of such demand until payment in full thereof at the rate then
applicable to Base Rate Loans hereunder. The determination by Agent of any
amount due pursuant to this Section, as set forth in a certificate setting forth
the calculation thereof in reasonable detail, shall, in the absence of manifest
or demonstrable error, be final and conclusive and binding on all of the parties
hereto.
2.13 LIBOR OPTION.
(a) INTEREST AND INTEREST PAYMENT DATES. In lieu of having
interest charged at the rate based upon the Base Rate, Borrower shall have the
option (the "LIBOR Option") to have interest on all or a portion of the Advances
or the Term Loan be charged at a rate of interest based upon the LIBOR Rate.
Interest on LIBOR Rate Loans shall be payable on the earliest of (i) the last
day of the Interest Period applicable thereto, (ii) the occurrence of an Event
of Default in consequence of which the Required Lenders or Agent on behalf
thereof elect to accelerate the maturity of all or any portion of the
Obligations, or (iii) termination of this Agreement pursuant to the terms
hereof. On the last day of each applicable Interest Period, unless Borrower
properly has exercised the LIBOR Option with respect thereto, the interest rate
applicable to such LIBOR Rate Loan automatically shall convert to the rate of
interest then applicable to a LIBOR Rate Loan with an Interest Period of three
months. At any time that an Event of Default has occurred and is continuing,
Borrower no longer shall have the option to request that Advances or the Term
Loan bear interest at the LIBOR Rate and Agent shall have the right to convert
the interest rate on all outstanding LIBOR Rate Loans to the rate then
applicable to Base Rate Loans hereunder.
(b) LIBOR ELECTION.
(i) Borrower may, at any time and from time to time,
so long as no Event of Default has occurred and is continuing, elect to
exercise the LIBOR Option by notifying Agent prior to 11:00 a.m.
(California time) at least 2 Business Days prior to the commencement of
the proposed Interest Period (the "LIBOR Deadline"). Notice of
Borrower's election of the LIBOR Option for a permitted portion of the
Advances or the Term Loan and an Interest Period pursuant to this
Section shall be made by delivery to Agent of a LIBOR Notice received
by Agent before the LIBOR Deadline, or by telephonic notice received by
Agent before the LIBOR Deadline (to be confirmed by delivery to Agent
of a LIBOR Notice received by Agent prior to 5:00 p.m. (California
time) on the same day. Promptly upon its receipt of each such LIBOR
Notice, Agent shall provide a copy thereof to each of the Lenders
having a Revolver Commitment.
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(ii) Each LIBOR Notice shall be irrevocable and
binding on Borrower. In connection with each LIBOR Rate Loan, Borrower
shall indemnify, defend, and hold Agent and the Lenders harmless
against any loss, cost, or expense incurred by Agent or any Lender as a
result of (a) the payment of any principal of any LIBOR Rate Loan other
than on the last day of an Interest Period applicable thereto
(including as a result of an Event of Default), (b) the conversion of
any LIBOR Rate Loan other than on the last day of the Interest Period
applicable thereto, or (c) the failure to borrow, convert, continue or
prepay any LIBOR Rate Loan on the date specified in any LIBOR Notice
delivered pursuant hereto (such losses, costs, and expenses,
collectively, "Funding Losses"). Funding Losses shall, with respect to
Agent or any Lender, be deemed to equal the amount determined by Agent
or such Lender to be the excess, if any, of (i) the amount of interest
that would have accrued on the principal amount of such LIBOR Rate Loan
had such event not occurred, at the LIBOR Rate that would have been
applicable thereto, for the period from the date of such event to the
last day of the then current Interest Period therefor (or, in the case
of a failure to borrow, convert, or continue, for the period that would
have been the Interest Period therefor), MINUS (ii) the amount of
interest that would accrue on such principal amount for such period at
the interest rate which Agent or such Lender would be offered were it
to be offered, at the commencement of such period, on Dollar deposits
of a comparable amount and period in the London interbank market. A
certificate of Agent or a Lender delivered to Borrower setting forth
any amount or amounts that Agent or such Lender is entitled to receive
pursuant to this Section shall be conclusive absent manifest error.
(iii) Borrower shall have not more than ten LIBOR
Rate Loans in effect at any given time. Borrower only may exercise the
LIBOR Option for LIBOR Rate Loans of at least $250,000 and integral
multiples of $100,000 in excess thereof.
(c) PREPAYMENTS. Borrower may prepay LIBOR Rate Loans at any
time; PROVIDED, HOWEVER, that in the event that LIBOR Rate Loans are prepaid on
any date that is not the last day of the Interest Period applicable thereto,
including as a result of any automatic prepayment through the required
application by Agent of proceeds of Collections in accordance with SECTION
2.4(B) or for any other reason, including early termination of the term of this
Agreement or acceleration of all or any portion of the Obligations pursuant to
the terms hereof, Borrower shall indemnify, defend, and hold Agent and the
Lenders and their Participants harmless against any and all Funding Losses in
accordance with clause (b)(ii) above.
(d) SPECIAL PROVISIONS APPLICABLE TO LIBOR RATE.
(i) The LIBOR Rate may be adjusted by Agent with
respect to any Lender on a prospective basis to take into account any
additional or increased costs to such Lender of maintaining or
obtaining any eurodollar deposits or increased costs due to changes in
applicable law occurring subsequent to the commencement of the then
applicable Interest Period, including changes in tax laws (except
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changes of general applicability in corporate income tax laws) and
changes in the reserve requirements imposed by the Board of Governors
of the Federal Reserve System (or any successor), excluding the Reserve
Percentage, which additional or increased costs would increase the cost
of funding loans bearing interest at the LIBOR Rate. In any such event,
the affected Lender shall give Borrower and Agent notice of such a
determination and adjustment and Agent promptly shall transmit the
notice to each other Lender and, upon its receipt of the notice from
the affected Lender, Borrower may, by notice to such affected Lender
(y) require such Lender to furnish to Borrower a statement setting
forth the basis for adjusting such LIBOR Rate and the method for
determining the amount of such adjustment, or (z) repay the LIBOR Rate
Loans with respect to which such adjustment is made (together with any
amounts due under clause (b)(ii) above).
(ii) In the event that any change in market
conditions or any law, regulation, treaty, or directive, or any change
therein or in the interpretation of application thereof, shall at any
time after the date hereof, in the reasonable opinion of any Lender,
make it unlawful or impractical for such Lender to fund or maintain
LIBOR Advances or to continue such funding or maintaining, or to
determine or charge interest rates at the LIBOR Rate, such Lender shall
give notice of such changed circumstances to Agent and Borrower and
Agent promptly shall transmit the notice to each other Lender and (y)
in the case of any LIBOR Rate Loans of such Lender that are
outstanding, the date specified in such Lender's notice shall be deemed
to be the last day of the Interest Period of such LIBOR Rate Loans, and
interest upon the LIBOR Rate Loans of such Lender thereafter shall
accrue interest at the rate then applicable to Base Rate Loans, and (z)
Borrower shall not be entitled to elect the LIBOR Option until such
Lender determines that it would no longer be unlawful or impractical to
do so.
(e) NO REQUIREMENT OF MATCHED FUNDING. Anything to the
contrary contained herein notwithstanding, neither Agent, nor any Lender, nor
any of their Participants, is required actually to acquire eurodollar deposits
to fund or otherwise match fund any Obligation as to which interest accrues at
the LIBOR Rate. The provisions of this Section shall apply as if each Lender or
its Participants had match funded any Obligation as to which interest is
accruing at the LIBOR Rate by acquiring eurodollar deposits for each Interest
Period in the amount of the LIBOR Rate Loans.
2.14 CAPITAL REQUIREMENTS. If, after the date hereof, any Lender
reasonably determines that (i) the adoption of or change in any law, rule,
regulation or guideline regarding capital requirements for banks or bank holding
companies, or any change in the interpretation or application thereof by any
Governmental Authority charged with the administration thereof, or (ii)
compliance by such Lender or its parent bank holding company with any guideline,
request, or directive of any such entity regarding capital adequacy (whether or
not having the force of law), the effect of reducing the return on such Lender's
or such holding company's capital as a consequence of such Lender's Commitments
hereunder to a level below that which such Lender or such holding company could
have achieved but for such adoption, change, or compliance (taking into
consideration such Lender's or such holding company's then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by such Lender to be material, then such
Lender may notify Borrower and Agent thereof. Following receipt of such notice,
Borrower agrees to pay such Lender on demand the amount of such reduction of
return of capital as and when such reduction is determined, payable within 90
days after presentation by such Lender of a statement in the amount and setting
forth in reasonable detail such Lender's calculation thereof and the assumptions
upon which such calculation was based (which statement shall be deemed true and
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correct absent manifest error). In determining such amount, such Lender may use
any reasonable averaging and attribution methods.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT.
The obligation of the Lender Group (or any member thereof) to make the initial
Advance (or otherwise to extend any credit provided for hereunder), is subject
to the fulfillment, to the satisfaction of Agent, of each of the conditions
precedent set forth below:
(a) the Closing Date shall occur on or before June
25, 2003;
(b) Agent shall have received all financing
statements required by Agent, duly executed or otherwise authorized by Borrower,
and Agent shall have received evidence satisfactory to it of the filing of all
such financing statements;
(c) Agent shall have received each of the following
documents, in form and substance satisfactory to Agent, duly executed, and each
such document shall be in full force and effect:
(i) the Cash Management Agreements,
(ii) the Control Agreements,
(iii) the Disbursement Letter,
(iv) the Due Diligence Letter,
(v) the Fee Letter,
(vi) the Mortgage,
(vii) the Officers' Certificate,
(viii) the Patent Security Agreement, along
with a collateral assignment agreement with respect to each United
States patent owned by Borrower and confirmation (or other evidence
reasonably satisfactory to Agent) of the filing of such collateral
assignment agreement with the United States Patent and Trademark
Office, and
(ix) the Trademark Security Agreement, along
with a collateral assignment agreement with respect to each United
States trademark and tradename owned by Borrower and confirmation (or
other evidence reasonably satisfactory to Agent) of the filing of such
collateral assignment agreement with the United States Patent and
Trademark Office;
(d) Agent shall have received a certificate from the
Secretary of Borrower (i) attesting to the resolutions of Borrower's Board of
Directors authorizing its execution, delivery, and performance of this Agreement
and the
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other Loan Documents to which Borrower is a party and authorizing specific
officers of Borrower to execute the same and (ii) certifying the names and true
signatures of the officers of Borrower authorized to sign each Loan Document to
which it is a party;
(e) Agent shall have received copies of Borrower's Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of Borrower;
(f) Agent shall have received a certificate of status with
respect to Borrower, dated within 10 days of the Closing Date, such certificate
to be issued by the appropriate officer of the jurisdiction of organization of
Borrower, which certificate shall indicate that Borrower is in good standing in
such jurisdiction;
(g) Agent shall have received certificates of status with
respect to Borrower, each dated within 30 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions (other
than the jurisdiction of organization of Borrower) in which its failure to be
duly qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that Borrower is in good standing in such
jurisdictions;
(h) Agent shall have received a certificate of insurance,
together with the endorsements thereto, as are required by SECTION 6.7, the form
and substance of which shall be reasonably satisfactory to Agent;
(i) Agent shall have received Collateral Access Agreements
with respect to each of the locations leased by Borrower set forth on SCHEDULE
3.1(I);
(j) Agent shall have received an opinion of Borrower's counsel
in form and substance reasonably satisfactory to Agent;
(k) Agent shall have received evidence reasonably satisfactory
to it (including a certificate of the chief financial officer of Borrower) that
all tax returns required to be filed by Borrower have been timely filed and all
taxes upon Borrower or its properties, assets, income, and franchises (including
Real Property taxes and payroll taxes) have been paid prior to delinquency,
except such taxes that are the subject of a Permitted Protest;
(l) Borrower shall have the Required Availability after giving
effect to the initial extensions of credit hereunder;
(m) Agent shall have completed its business, legal, and
collateral due diligence, including (i) a collateral audit and review of
Borrower's books and records and verification of Borrower's representations and
warranties to the Lender Group, the results of which shall be reasonably
satisfactory to Agent, (ii) an inspection of each of the locations where
Inventory is located, the results of which shall be reasonably satisfactory to
Agent, (iii) a review of all Material Contracts, (iv) a review of all
substantive documents to be executed in connection with any Approved
Acquisitions to the extent such documents exist (even if only in draft form)
prior to the Closing Date, and (v) receipt and review of an Enterprise Value of
Borrower, the results of which shall be reasonably satisfactory to Lender Group;
54
(n) Agent shall have received completed reference checks with
respect to Borrower's senior management, the results of which are reasonably
satisfactory to Agent in its sole discretion;
(o) Agent shall have received an appraisal of the Net
Liquidation Percentage applicable to Borrower's Inventory and an appraisal of
Borrower's Equipment, the results of which shall be reasonably satisfactory to
Agent;
(p) Agent shall have received Borrower's financial
projections, together with a certificate of the chief financial officer of
Borrower stating, on behalf of Borrower, that the financial projections have
been prepared on a reasonable basis and in good faith and are based on
reasonable assumptions and the best information available;
(q) Borrower shall pay all Lender Group Expenses incurred in
connection with the transactions evidenced by this Agreement;
(r) Agent shall have received (i) appraisals of the Eligible
Real Property Collateral satisfactory to Agent, and (ii) mortgagee title
insurance policies (or marked commitments to issue the same) for the Eligible
Real Property Collateral issued by a title insurance company reasonably
satisfactory to Agent (each a "Mortgage Policy" and, collectively, the "Mortgage
Policies") in amounts satisfactory to Agent assuring Agent that the Mortgages on
such Real Property Collateral are valid and enforceable first priority mortgage
Liens on such Real Property Collateral free and clear of all defects and
encumbrances except Permitted Liens, and the Mortgage Policies otherwise shall
be in form and substance reasonably satisfactory to Agent;
(s) Agent shall have received a phase-I environmental report
and a real estate survey with respect to each parcel composing the Eligible Real
Property Collateral; the environmental consultants and surveyors retained for
such reports or surveys, the scope of the reports or surveys, and the results
thereof shall be reasonably acceptable to Agent;
(t) Agent shall have received copies of each Material
Contract, each of which shall be reasonably satisfactory to Agent, together with
a certificate of an officer of Borrower certifying, on behalf of Borrower, that
each such document as being a true, correct, and complete copy thereof;
(u) Borrower shall have (i) received all licenses, approvals
or evidence of other actions required by any Governmental Authority in
connection with the Eligible Real Property Collateral, the plasma collection
centers, the execution and delivery by Borrower of this Agreement or any other
Loan Document or with the consummation of the transactions contemplated hereby
and thereby and (ii) delivered copies of each such document to Agent, together
with a certificate of Borrower stating that no other license, approval or any
other actions required by any Governmental Authority is necessary in order for
the operation of Borrower's business;
(v) Agent shall have received a certificate from the chief
executive officer or the chief financial officer of Borrower (or, in the case of
the signatures of the Auhtorized Persons of Borrower, the Secretary) certifying,
on behalf of Borrower, (i) as to (A) the truth and accuracy of the
55
representations and warranties of Borrower contained in SECTION 5 and (B) the
absence of any Default or Events of Default, (ii) that after giving effect to
the incurrence of Indebtedness under this Agreement, Borrower is Solvent, and
(iii) the names and true signatures of the Authorized Persons of Borrower;
(w) Agent shall have received a certificate from the chief
executive officer or the chief financial officer of Borrower certifying, on
behalf of Borrower that there exists no claim, action, suit, investigation,
litigation or proceeding, pending or, to the knowledge of Borrower, threatened
in any court or before any arbitrator or governmental instrumentality which
relates to this Agreement, which is reasonably likely to result in a Material
Adverse Change; and
(x) all other documents and legal matters in connection with
the transactions contemplated by this Agreement shall have been delivered,
executed, or recorded and shall be in form and substance reasonably satisfactory
to Agent.
3.2 CONDITIONS SUBSEQUENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of the Lender Group (or any member thereof) to continue to make
Advances (or otherwise extend credit hereunder) is subject to the fulfillment,
on or before the date applicable thereto, of each of the conditions subsequent
set forth below (the failure by Borrower to so perform or cause to be performed
constituting an Event of Default):
(a) within 30 days of the Closing Date, Borrower shall deliver
to Agent certified copies of the policies of insurance, together with the
endorsements thereto, as are required by SECTION 6.7, the form and substance of
which shall be satisfactory to Agent and its counsel; and
(b) Agent shall have received, on or before August 31, 2003,
an appraisal of Borrower's Inventory, the results of which are satisfactory to
Agent, provided that Agent shall order such appraisal and shall take reasonable
efforts to receive such appraisal on or before August 31, 2003.
3.3 CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT. The obligation of
the Lender Group (or any member thereof) to make all Advances (or to extend any
other credit hereunder) shall be subject to the following conditions precedent:
(a) the representations and warranties contained in this
Agreement and the other Loan Documents shall be true and correct in all material
respects on and as of the date of such extension of credit, as though made on
and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date),
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof,
(c) no injunction, writ, restraining order, or other order of
any nature prohibiting, directly or indirectly, the extending of such credit
shall have been issued and remain in force by any Governmental Authority against
Borrower, Agent, any Lender, or any of their Affiliates.
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(d) no Material Adverse Change shall have occurred.
3.4 TERM. This Agreement shall become effective upon the execution and
delivery hereof by Borrower, Agent, and the Lenders and shall continue in full
force and effect for a term ending on June 19, 2006 (the "Maturity Date"). The
foregoing notwithstanding, the Lender Group, upon the election of the Required
Lenders, shall have the right to terminate its obligations under this Agreement
immediately and without notice upon the occurrence and during the continuation
of an Event of Default.
3.5 EFFECT OF TERMINATION. On the date of termination of this
Agreement, all Obligations (including contingent reimbursement obligations of
Borrower with respect to outstanding Letters of Credit and including all Bank
Products Obligations) immediately shall become due and payable without notice or
demand (including (a) either (i) providing cash collateral to be held by Agent
in an amount equal to 102% of the then extant Letter of Credit Usage, or (ii)
causing the original Letters of Credit to be returned to Agent, and (b)
providing cash collateral to be held by Agent for the benefit of ▇▇▇▇▇ Fargo or
its Affiliates with respect to the then extant Bank Products Obligations). No
termination of this Agreement, however, shall relieve or discharge Borrower of
its duties, Obligations, or covenants hereunder and Agent's Liens in the
Collateral shall remain in effect until all Obligations have been fully and
finally discharged and Agent's obligations to provide additional credit
hereunder have been terminated. When this Agreement has been terminated and all
of the Obligations have been fully and finally discharged and Agent's
obligations to provide additional credit under the Loan Documents have been
terminated irrevocably, Agent will, at Borrower's sole expense, execute and
deliver any Uniform Commercial Code termination statements, lien releases,
mortgage releases, re-assignments of trademarks, discharges of security
interests, and other similar discharge or release documents (and, if applicable,
in recordable form) as are reasonably necessary to release, as of record,
Agent's Liens and all notices of security interests and liens previously filed
by Agent with respect to the Obligations.
3.6 EARLY TERMINATION BY BORROWER. Borrower has the option, at any time
upon 90 days prior written notice to Agent, to terminate this Agreement by
paying to Agent, in cash, the Obligations (including (a) either (i) providing
cash collateral to be held by Agent in an amount equal to 102% of the then
extant Letter of Credit Usage, or (ii) causing the original Letters of Credit to
be returned to Agent, and (b) providing cash collateral to be held by Agent for
the benefit of ▇▇▇▇▇ Fargo or its Affiliates with respect to the then extant
Bank Products Obligations), in full, together with the Applicable Prepayment
Premium. If Borrower has sent a notice of termination pursuant to the provisions
of this Section, then Agent's obligations to extend credit hereunder shall
terminate and Borrower shall be obligated to repay the Obligations (including
(a) either (i) providing cash collateral to be held by Agent in an amount equal
to 102% of the then extant Letter of Credit Usage, or (ii) causing the original
Letters of Credit to be returned to Agent, and (b) providing cash collateral to
be held by Agent for the benefit of ▇▇▇▇▇ Fargo or its Affiliates with respect
to the then extant Bank Products Obligations), in full, together with the
Applicable Prepayment Premium, on the date set forth as the date of termination
of this Agreement in such notice. In the event of the termination of this
Agreement and repayment of the Obligations at any time prior to the Maturity
Date, for any other reason, including (a) termination upon the election of Agent
to terminate after the occurrence and during the continuance of an Event of
Default, (b) foreclosure and sale of Collateral, (c) sale of the Collateral in
57
any Insolvency Proceeding, or (iv) restructure, reorganization, or compromise of
the Obligations by the confirmation of a plan of reorganization or any other
plan of compromise, restructure, or arrangement in any Insolvency Proceeding,
then, in view of the impracticability and extreme difficulty of ascertaining the
actual amount of damages to Agent or profits lost by Agent as a result of such
early termination, and by mutual agreement of the parties as to a reasonable
estimation and calculation of the lost profits or damages of Agent, Borrower
shall pay the Applicable Prepayment Premium to Agent, measured as of the date of
such termination.
4. CREATION OF SECURITY INTEREST.
4.1 GRANT OF SECURITY INTEREST. Borrower hereby grants to
Agent, for the benefit of the Lender Group, a continuing security interest in
all of its right, title, and interest in all currently existing and hereafter
acquired or arising Personal Property Collateral in order to secure prompt
repayment of any and all of the Obligations in accordance with the terms and
conditions of the Loan Documents and in order to secure prompt performance by
Borrower of each of its covenants and duties under the Loan Documents. The
Agent's Liens in and to the Personal Property Collateral shall attach to all
Personal Property Collateral without further act on the part of Agent or
Borrower. Anything contained in this Agreement or any other Loan Document to the
contrary notwithstanding, except for Permitted Dispositions, Borrower has no
authority, express or implied, to dispose of any item or portion of the
Collateral.
4.2 NEGOTIABLE COLLATERAL. In the event that any Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral, and if
and to the extent that perfection or priority of Agent's security interest is
dependent on or enhanced by possession, Borrower, promptly upon the written
request of Agent, shall endorse and deliver physical possession of such
Negotiable Collateral to Agent.
4.3 COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, AND
NEGOTIABLE COLLATERAL. At any time after the occurrence and during the
continuation of an Event of Default, Agent or Agent's designee may (a) notify
Account Debtors of Borrower that the Accounts, chattel paper, or General
Intangibles have been assigned to Agent or that Agent has a security interest
therein, or (b) collect the Accounts, chattel paper, or General Intangibles
directly and charge the collection costs and expenses to the Loan Account.
Borrower agrees that it will hold in trust for the Lender Group, as the Lender
Group's trustee, any Collections that it receives and immediately will deliver
said Collections to Agent or a Cash Management Bank in their original form as
received by Borrower.
4.4 FILING OF FINANCING STATEMENTS; COMMERCIAL TORT CLAIMS,
ETC.
(a) Borrower authorizes Agent to file any financing
statement required hereunder, and any continuation statement for amendment with
respect thereto, in any appropriate filing office without the signature of
Borrower where permitted by applicable law. Borrower hereby ratifies the filing
of any financing statement, and any continuation statement or amendment with
respect thereto, filed without the signature of Borrower prior to the date
hereof. Agent shall deliver to Borrower copies of all such financing statements,
continuation statements, and/or amendments simultaneously with or promptly after
the filing thereof.
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(b) If Borrower acquires any commercial tort claims
after the date hereof, Borrower shall promptly deliver to Agent a written
description of such commercial tort claim and shall deliver a written agreement,
in form and substance satisfactory to Agent, pursuant to which Borrower shall
pledge and collaterally assign all of its right, title and interest in and to
such commercial tort claim to Lender as security for the Obligations (a
"Commercial Tort Claim Assignment").
(c) At any time upon the reasonable request of Agent,
Borrower shall execute and deliver to Agent, any and all financing statements,
original financing statements in lieu of continuation statements, fixture
filings, security agreements, pledges, assignments, endorsements of certificates
of title, and all other documents (the "Additional Documents") that Agent may
request in its Permitted Discretion, in form and substance satisfactory to
Agent, to perfect and continue perfected or better perfect Agent's Liens in the
Collateral (whether now owned or hereafter arising or acquired), and in order to
fully consummate all of the transactions contemplated hereby and under the other
Loan Documents. To the maximum extent permitted by applicable law, Borrower
authorizes Agent to execute any such Additional Documents in Borrower's name and
authorizes Agent to file such executed Additional Documents in any appropriate
filing office pursuant to SECTION 4.5 hereof. To the maximum extent permitted by
applicable law, Borrower authorizes the filing of any such Additional Documents
without the signature of Borrower in any appropriate filing office. In addition,
on a quarterly basis (not later than the fifteenth day of such quarter),
Borrower (i) shall provide Agent with a report of all new Material IP acquired
or generated by Borrower during the prior quarter, (ii) shall, with respect to
all Material IP acquired or generated by Borrower that is not already the
subject of a registration with the appropriate filing office (or an application
therefor diligently prosecuted), file and diligently prosecute an application to
register such Material IP with such appropriate filing office in a manner
sufficient to impart constructive notice of Borrower's ownership thereof, and
(iii) shall cause to be prepared, executed, and delivered to Agent supplemental
schedules to the applicable Loan Documents to identify such Material IP as being
subject to the security interests created thereunder.
4.5 POWER OF ATTORNEY. Borrower hereby irrevocably makes,
constitutes, and appoints Agent (and any of Agent's officers, employees, or
agents designated by Agent) as Borrower's true and lawful attorney, with power
to (a) if Borrower refuses to, or fails reasonably promptly to execute and
deliver any of the documents described in SECTION 4.4, sign the name of Borrower
on any of the documents described in SECTION 4.4, (b) at any time that an Event
of Default has occurred and is continuing, sign Borrower's name on any invoice
or ▇▇▇▇ of lading relating to the Collateral, drafts against Account Debtors, or
notices to Account Debtors, (c) send requests for verification of Accounts and,
in the absence of a continuing Event of Default, notify Borrower of such
requests, (d) endorse Borrower's name on any Collection item that may come into
the Lender Group's possession in accordance with the terms of this Agreement or
any other Loan Document, (e) at any time that an Event of Default has occurred
and is continuing, make, settle, and adjust all claims under Borrower's policies
of insurance and make all determinations and decisions with respect to such
policies of insurance, and (f) at any time that an Event of Default has occurred
and is continuing, settle and adjust disputes and claims respecting the
Accounts, chattel paper, or General Intangibles directly with Account Debtors,
for amounts and upon terms that Agent determines to be reasonable, and Agent may
cause to be executed and delivered any documents and releases that Agent
reasonably determines to be necessary. The appointment of Agent as Borrower's
attorney, and each and every one of its rights and powers, being coupled with an
59
interest, is irrevocable until all of the Obligations have been fully and
finally repaid and performed and the Lender Group's obligations to extend credit
hereunder are terminated.
4.6 RIGHT TO INSPECT. Agent and each Lender (through any of
their respective officers, employees, or agents) shall have the right, from time
to time hereafter to inspect the Books and to check, test, and appraise the
Collateral in order to verify Borrower's financial condition or the amount,
quality, value, condition of, or any other matter relating to, the Collateral,
provided that, in the absence of a continuing Event of Default, Agent and any
such Lender shall give Borrower reasonable notice of any such inspection, check,
test or appraisal and shall conduct any such inspection, check, test or
appraisal during normal business hours.
4.7 CONTROL AGREEMENTS. Borrower agrees that it will not
transfer assets out of any Securities Accounts other than as permitted under
SECTION 7.18 and, if to another securities intermediary, unless each of
Borrower, Agent, and the substitute securities intermediary have entered into a
Control Agreement. Borrower hereby agrees to take any and all action that Agent
requests in order for Agent to obtain control in accordance with Sections 9-104,
9-105, 9-106 and 9-107 of the Code with respect to any Securities Accounts,
DDA's, chattel paper, Investment Property and letter-of-credit rights. No
arrangement contemplated hereby or by any Control Agreement in respect of any
Securities Accounts or other Investment Property or any DDA, electronic chattel
paper or letter-of-credit rights shall be modified by Borrower without the prior
written consent of Agent. Upon the occurrence and during the continuance of a
Default or Event of Default, Agent may notify any securities intermediary or
depository to liquidate the applicable Securities Account or any related
Investment Property maintained or held thereby and remit the proceeds thereof to
the Agent's Account.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this
Agreement, Borrower makes the following representations and warranties to the
Lender Group which shall be true, correct, and complete, in all material
respects, as of the date hereof, and shall be true, correct, and complete, in
all material respects, as of the Closing Date, and at and as of the date of the
making of each Advance (or other extension of credit) made thereafter, as though
made on and as of the date of such Advance (or other extension of credit)
(except to the extent that such representations and warranties relate solely to
an earlier date) and such representations and warranties shall survive the
execution and delivery of this Agreement:
5.1 NO ENCUMBRANCES. Borrower has good and indefeasible title
to the Collateral and the Real Property, free and clear of Liens except for
Permitted Liens.
5.2 ELIGIBLE ACCOUNTS.
(a) The Eligible Accounts are bona fide existing
payment obligations of Account Debtors created by the sale and delivery of
Inventory or the rendition of services to such Account Debtors in the ordinary
course of Borrower's business, owed to Borrower without defenses, disputes,
offsets, counterclaims, or rights of return or cancellation. As to each Account
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that is identified by Borrower as an Eligible Account in a borrowing base report
submitted to Agent, such Account is not excluded as ineligible by virtue of one
or more of the excluding criteria set forth in the definition of Eligible
Accounts.
5.3 ELIGIBLE INVENTORY. All Eligible Inventory is of good and
merchantable quality, free from defects. As to each item of Inventory that is
identified by Borrower as Eligible Inventory in a borrowing base report
submitted to Agent, such Inventory is not excluded as ineligible by virtue of
one or more of the excluding criteria set forth in the definition of Eligible
Inventory.
5.4 ELIGIBLE EQUIPMENT. All of the Eligible Equipment is used
or held for use in Borrower's business and is fit for such purposes. As to each
item of Equipment that is identified from time to time by Borrower as Eligible
Equipment, such Equipment is not excluded as ineligible by virtue of one or more
of the excluding criteria set forth in the definition of Eligible Equipment.
5.5 LOCATION OF INVENTORY AND EQUIPMENT. The Inventory and
Equipment are not stored with a bailee (other than the Inventory stored at the
Making Distribution Intelligent facility, located at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ in
Walton, Kentucky), warehouseman, or similar party and are located only at the
locations identified on SCHEDULE 5.5.
5.6 INVENTORY RECORDS. Borrower keeps correct and accurate
records itemizing and describing the type, quality, and quantity of its
Inventory and the book value thereof.
5.7 JURISDICTION OF INCORPORATION; LOCATION OF CHIEF EXECUTIVE
OFFICE; FEIN.
(a) The jurisdiction of incorporation of Borrower is
set forth in SCHEDULE 5.7.
(b) The chief executive office of Borrower is located
at the address indicated in SCHEDULE 5.7 and Borrower's FEIN is identified in
SCHEDULE 5.7.
(c) Borrower's organizational identification number
is identified in SCHEDULE 5.7.
(d) Borrower hold no commercial tort claims as of the
date hereof, except as identified in SCHEDULE 5.7.
5.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Borrower is duly organized and existing and in
good standing under the laws of the jurisdiction of its organization and
qualified to do business in any state where the failure to be so qualified
reasonably could be expected to have a Material Adverse Change.
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(b) Set forth on SCHEDULE 5.8(B), is a complete and
accurate description of the authorized capital Stock of Borrower, by class, and,
as of the third trading day preceding the Closing Date, a description of the
number of shares of each such class that are issued and outstanding. Other than
as described on SCHEDULE 5.8(B), there are no subscriptions, options, warrants,
or calls relating to any shares of Borrower's capital Stock, including any right
of conversion or exchange under any outstanding security or other instrument.
Borrower is not subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of its capital Stock or any
security convertible into or exchangeable for any of its capital Stock.
(c) Set forth on SCHEDULE 5.8(C), is a complete and
accurate list of Borrower's direct and indirect Subsidiaries, showing: (i) the
jurisdiction of their organization, (ii) the number of shares of each class of
common and preferred Stock authorized for each of such Subsidiaries, and (iii)
the number and the percentage of the outstanding shares of each such class owned
directly or indirectly by Borrower. All of the outstanding capital Stock of each
such Subsidiary has been validly issued and is fully paid and non-assessable.
(d) Except as set forth on SCHEDULE 5.8(C), there are
no subscriptions, options, warrants, or calls relating to any shares of
Borrower's Subsidiaries' capital Stock, including any right of conversion or
exchange under any outstanding security or other instrument. Neither Borrower
nor any of its Subsidiaries is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of Borrower's
Subsidiaries' capital Stock or any security convertible into or exchangeable for
any such capital Stock.
5.9 DUE AUTHORIZATION; NO CONFLICT.
(a) The execution, delivery, and performance by
Borrower of this Agreement and the Loan Documents to which it is a party have
been duly authorized by all necessary action on the part of Borrower.
(b) The execution, delivery, and performance by
Borrower of this Agreement and the Loan Documents to which it is a party do not
and will not (i) violate any provision of federal, state, or local law or
regulation applicable to Borrower, the Governing Documents of Borrower, or any
order, judgment, or decree of any court or other Governmental Authority binding
on Borrower, (ii) conflict with, result in a breach of, or constitute (with due
notice or lapse of time or both) a default under any material contractual
obligation of Borrower (including, without limitation, any Material Contract of
Borrower), (iii) result in or require the creation or imposition of any Lien of
any nature whatsoever upon any properties or assets of Borrower, other than
Permitted Liens, or (iv) require any approval of Borrower's interestholders or
any approval or consent of any Person under any material contractual obligation
of Borrower.
(c) Other than the filing of financing statements,
fixture filings, and Mortgages, the execution, delivery, and performance by
Borrower of this Agreement and the Loan Documents to which Borrower is a party
do not and will not require any registration with, consent, or approval of, or
notice to, or other action with or by, any Governmental Authority or other
Person.
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(d) This Agreement and the other Loan Documents to
which Borrower is a party, and all other documents contemplated hereby and
thereby, when executed and delivered by Borrower will be the legally valid and
binding obligations of Borrower, enforceable against Borrower in accordance with
their respective terms, except as enforcement may be limited by equitable
principles or by bankruptcy, insolvency, reorganization, moratorium, or similar
laws relating to or limiting creditors' rights generally.
(e) The Agent's Liens are validly created, perfected,
and first priority Liens, subject only to Permitted Liens.
5.10 LITIGATION. Other than those matters disclosed on
SCHEDULE 5.10, there are no actions, suits, or proceedings pending or, to the
best knowledge of Borrower, threatened against Borrower, or any of its
Subsidiaries, as applicable, except for (a) matters that are fully covered by
insurance (subject to customary deductibles), (b) matters arising after the
Closing Date that, if decided adversely to Borrower, or any of its Subsidiaries,
as applicable, reasonably could not be expected to result in a Material Adverse
Change, and (c) matters arising on or prior to the Closing Date that, if decided
adversely to Borrower, or any of its Subsidiaries, as applicable, would not
result in liability to Borrower, or any of its Subsidiaries, as applicable, in
an aggregate amount for all such matters in excess of $1,000,000.
5.11 NO MATERIAL ADVERSE CHANGE. All financial statements
relating to Borrower that have been delivered by Borrower to the Lender Group
have been prepared in accordance with GAAP (except, in the case of unaudited
financial statements, for the lack of footnotes and being subject to year-end
audit adjustments) and present fairly in all material respects, Borrower's
financial condition as of the date thereof and results of operations for the
period then ended. There has not been a Material Adverse Change with respect to
Borrower since the date of the latest financial statements submitted to the
Lender Group on or before the Closing Date.
5.12 FRAUDULENT TRANSFER.
(a) Borrower is Solvent.
(b) No transfer of property is being made by Borrower
and no obligation is being incurred by Borrower in connection with the
transactions contemplated by this Agreement or the other Loan Documents with the
intent to hinder, delay, or defraud either present or future creditors of
Borrower.
5.13 EMPLOYEE BENEFITS. Except as set forth on SCHEDULE 5.13
none of Borrower, any of its Subsidiaries, or any of their ERISA Affiliates
maintains or contributes to any Benefit Plan. Except as set forth on SCHEDULE
5.13 no ERISA Event has occurred nor has any other event occurred that may
result in an ERISA Event that reasonably could be expected to result in a
Material Adverse Change. Except as set forth on SCHEDULE 5.13 neither Borrower
nor any ERISA Affiliate is required to provide security to any Benefit Plan
under Section 401(a)(29) of the IRC.
5.14 ENVIRONMENTAL CONDITION. Except as set forth on SCHEDULE
5.14, (a) to Borrower's knowledge, none of Borrower's assets has ever been used
by Borrower or by previous owners or operators in the disposal of, or to
produce, store, handle, treat, release, or transport, any Hazardous Materials,
where such production, storage, handling, treatment, release or transport was in
63
violation, in any material respect, of applicable Environmental Law, (b) to
Borrower's knowledge, none of Borrower's properties or assets has ever been
designated or identified in any manner pursuant to any environmental protection
statute as a Hazardous Materials disposal site, (c) Borrower has not received
notice that a Lien arising under any Environmental Law has attached to any
revenues or to any Real Property owned or operated by Borrower, and (d) Borrower
has not received a summons, citation, notice, or directive from the
Environmental Protection Agency or any other federal or state governmental
agency concerning any action or omission by Borrower resulting in the releasing
or disposing of Hazardous Materials into the environment.
5.15 BROKERAGE FEES. Borrower has not utilized the services of
any broker or finder in connection with Borrower's obtaining financing from the
Lender Group under this Agreement and no brokerage commission or finders fee is
payable by Borrower in connection herewith.
5.16 INTELLECTUAL PROPERTY. Borrower owns, or holds licenses
in, all Intellectual Property that is necessary to the conduct of its business
as currently conducted. Attached hereto as SCHEDULE 5.16 is a true, correct, and
complete listing of all material patents, patent applications, trademarks,
trademark applications, copyrights, and copyright registrations as to which
Borrower is the owner or is an exclusive licensee.
5.17 LEASES. Borrower enjoys peaceful and undisturbed
possession under all leases material to the business of Borrower and to which it
is a party or under which it is operating. All of such leases are valid and
subsisting and no material default by Borrower exists under any of them.
5.18 DDAS. Set forth on SCHEDULE 5.18 are all of Borrower's
DDAs, including, with respect to each depository (i) the name and address of
such depository, and (ii) the account numbers of the accounts maintained with
such depository.
5.19 COMPLETE DISCLOSURE. All factual information (taken as a
whole) furnished by or on behalf of Borrower in writing to Agent or any Lender
(including all information contained in the Schedules hereto or in the other
Loan Documents) for purposes of or in connection with this Agreement, the other
Loan Documents, or any transaction contemplated herein or therein is, and all
other such factual information (taken as a whole) hereafter furnished by or on
behalf of Borrower in writing to Agent or any Lender will be, true and accurate,
in all material respects, on the date as of which such information is dated or
certified and not incomplete by omitting to state any fact necessary to make
such information (taken as a whole) not misleading in any material respect at
such time in light of the circumstances under which such information was
provided. On the Closing Date, the Closing Date Projections represent, and as of
the date on which any other Projections are delivered to Agent, such additional
Projections represent Borrower's good faith best estimate of its future
performance for the periods covered thereby.
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5.20 INDEBTEDNESS. Set forth on SCHEDULE 5.20 is a true and
complete list of all Indebtedness of Borrower outstanding immediately prior to
the Closing Date that is to remain outstanding after the Closing Date and such
Schedule accurately reflects the aggregate principal amount of such Indebtedness
and the principal terms thereof.
5.21 FDA COMPLIANCE; NOTICES, ETC. Except as set forth in
SCHEDULE 5.21 hereto, Borrower and each of its Subsidiaries are, and the
products sold by Borrower and each of its Subsidiaries are, in compliance in all
respects with all current applicable statutes, rules, regulations, guides,
policies, orders or directives administered or issued by the FDA and the Food
and Drug Act, except (i) where in Borrower's reasonable opinion, Borrower and
its Subsidiaries will not ultimately be found by the FDA or under the Food and
Drug Act to be out of compliance with such statutes, rules, regulations, guides,
policies, orders or directives, (ii) where failure to so comply could not
reasonably be expected to have a Material Adverse Change, or (iii) with respect
to any FDA Form 483-s or warning letters issued by the FDA or pursuant to the
Food and Drug Act (the foregoing, together with any such notices as Borrower may
at any time hereafter receive, collectively, the "FDA Notices"), so long as
Borrower is diligently pursuing corrective action with respect to the same.
5.22 MATERIAL CONTRACTS. Set forth on SCHEDULE 5.22 is a
complete and accurate list as of the Closing Date of all Material Contracts of
Borrower, showing the parties thereto and subject matter thereof. Each such
Material Contract (i) is in full force and effect and is binding upon and
enforceable against Borrower and, to the best knowledge of Borrower, all other
parties thereto in accordance with its terms, (ii) has not been otherwise
amended or modified, and (iii) is not in default due to the action of Borrower
or, to the best knowledge of Borrower, any other party thereto.
5.23 REGULATION U. Borrower is not nor will it be engaged in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulations T, U or X of the Board of
Governors of the Federal Reserve System), and no proceeds of any Advance or the
Term Loan (or other extension of credit hereunder) will be used to purchase or
carry any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock.
5.24 PERMITS, ETC. Borrower has, and is in compliance with,
all permits, licenses, authorizations, approvals, entitlements and
accreditations required for Borrower lawfully to own, lease, manage or operate
its business as currently conducted and the Real Property currently owned,
leased, managed or operated by Borrower except for such permits, licenses,
authorizations, approvals, entitlements and accreditations the absence of which
could not reasonably be expected to result in a Material Adverse Change. No
condition exists or event has occurred which, in itself or with the giving of
notice or lapse of time or both, would result in the suspension, revocation,
impairment, forfeiture or non-renewal of any such permit, license,
authorization, approval, entitlement or accreditation, and to Borrower's
knowledge, there is no claim that any thereof is not in full force and effect.
5.25 EMPLOYEE AND LABOR MATTERS. Except as set forth on
SCHEDULE 5.25, there is (a) no unfair labor practice complaint pending or, to
Borrower's knowledge, threatened against Borrower before any Governmental
Authority and no grievance or arbitration proceeding pending or threatened
against Borrower which arises out of or under any collective bargaining
agreement, (b) no strike, labor dispute, slowdown, stoppage or similar action or
65
grievance pending or, to the best knowledge of Borrower, threatened against
Borrower and (c) no union representation question existing with respect to the
employees of Borrower and no union organizing activity taking place with respect
to any of the employees of any of them. Except as set forth on SCHEDULE 5.25,
neither Borrower nor any ERISA Affiliate of Borrower has incurred any liability
or obligation under the Worker Adjustment and Retraining Notification Act
("WARN") or similar state law, which remains unpaid or unsatisfied. The hours
worked and payments made to employees of Borrower have not been in violation of
the Fair Labor Standards Act or any other applicable legal requirements which
violation can reasonably be expected to result in a Material Adverse Change. All
material payments due from Borrower on account of workers compensation, wages
and employee health and welfare insurance and other benefits have been paid or
accrued as a liability on the books of Borrower except where failure to do so
cannot reasonably be expected to result in a Material Adverse Change.
5.26 LICENSORS. There exists no actual or, to Borrower's
knowledge, threatened termination, cancellation or limitation of, or
modification to or change in, the business relationship between Borrower, on the
one hand, and any licensor under any Licensing Agreement, on the other hand,
which termination, cancellation, limitation, modification or change in any such
case could, individually or in the aggregate, reasonably be expected to result
in a Material Adverse Change.
5.27 PROPERTIES. (a) Borrower has good and marketable title
to, or valid leasehold interests in, all property and assets material to its
business (collectively, the "Properties"), free and clear of all Liens except
Permitted Liens. The Properties are in good working order and condition,
ordinary wear and tear excepted.
(b) SCHEDULE 5.27 sets forth a complete and accurate
list of the location, by state and street address, of all Real Property.
5.28 INACTIVE SUBSIDIARIES. The Inactive Subsidiaries do not
own any assets with a value in excess of $50,000, conduct any business or have
any liabilities.
6. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the Obligations
and the termination of this Agreement, Borrower shall and shall cause each of
its Subsidiaries to do all of the following:
6.1 ACCOUNTING SYSTEM. Maintain a system of accounting that
enables Borrower to produce financial statements in accordance with GAAP and
maintain records pertaining to the Collateral that contain information as from
time to time reasonably may be requested by Agent. Borrower also shall keep an
inventory reporting system that shows all additions, sales, claims, returns, and
allowances with respect to the Inventory.
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6.2 COLLATERAL REPORTING. Provide Agent (and if so requested
by Agent, with copies for each Lender) with the following documents at the
following times in form reasonably satisfactory to Agent:
----------------------------------------- ----------------------------------------------------------------------------
Weekly (a) a sales journal, collection journal, and credit register since the
last such schedule and a calculation of the Borrowing Base as of
such date,
(b) Inventory reports specifying Borrower's cost and the market value of
its Inventory, by category, with additional detail showing additions
to and deletions from the Inventory,
(c) a detailed aging, by vendor, of Borrower's accounts payable and any
book overdraft, and
(d) a detailed aging, by total, of the Accounts, together with a
reconciliation to the detailed calculation of the Borrowing Base
provided to Agent;
----------------------------------------- ----------------------------------------------------------------------------
Monthly (not later than the 10th day of (e) notice of all returns, disputes, or claims,
each month)
(f) a detailed calculation of the Borrowing Base (including detail
regarding those Accounts that are not Eligible Accounts),
(g) a calculation of Dilution for the immediately prior twelve month
period ending at the end of such month, and
(h) a detailed aging of Borrower's Inventory;
----------------------------------------- ----------------------------------------------------------------------------
Quarterly (i) a detailed list of Borrower's customers,
(j) a report regarding Borrower's accrued, but unpaid, AD VALOREM taxes;
----------------------------------------- ----------------------------------------------------------------------------
Semi-annually (k) a detailed report setting forth the sales and royalty and other
payments made under each Licensing Agreements for WinRho SDF and
Autoplex T for the prior six month period;
----------------------------------------- ----------------------------------------------------------------------------
Upon request by Agent (l) copies of invoices in connection with the Accounts, credit memos,
remittance advices, deposit slips, shipping and delivery documents
in connection with the Accounts and, for Inventory and Equipment
acquired by Borrower, purchase orders and invoices, and
----------------------------------------- ----------------------------------------------------------------------------
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----------------------------------------- ----------------------------------------------------------------------------
(m) such other reports as to the Collateral, or the financial condition
of Borrower, as Agent may reasonably request;
----------------------------------------- ----------------------------------------------------------------------------
As soon as available (n) copies of all documents executed in connection with any acquisition,
any material notices that Borrower executes or receives in
connection with any acquisition or any Material Contract (including,
without limitation, any Licensing Agreement), and
(o) copies of any reports or notices that Borrower issues to or receives
from any Governmental Authority (including, without limitation, any
Product Recall Notices or FDA Notices).
========================================= ============================================================================
In addition, Borrower agrees to cooperate fully with Agent to
facilitate and implement a system of electronic collateral reporting in order to
provide electronic reporting of each of the items set forth above.
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Deliver to Agent, with
copies to each Lender:
(a) as soon as available, but in any event within 30 days (45
days in the case of a month that is the end of one of the first 3 fiscal
quarters in a fiscal year) after the end of each month during each of Borrower's
fiscal years,
(i) a company prepared consolidated balance sheet,
income statement, and statement of cash flow covering Borrower's and
its Subsidiaries' operations during such period,
(ii) a certificate signed by the chief financial
officer of Borrower certifying, on behalf of Borrower, that:
(A) the financial statements delivered
hereunder have been prepared in accordance with GAAP
(consistent with the most recent audited, annual financial
statements, except for the lack of footnotes and being subject
to year-end audit adjustments) and fairly present in all
material respects the financial condition of Borrower and its
Subsidiaries,
(B) the representations and warranties of
Borrower contained in this Agreement and the other Loan
Documents are true and correct in all material respects on and
as of the date of such certificate, as though made on and as
of such date (except to the extent that such representations
and warranties relate solely to an earlier date), and
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(C) there does not exist any condition or
event that constitutes a Default or Event of Default (or, to
the extent of any non-compliance, describing such
non-compliance as to which he or she may have knowledge and
what action Borrower has taken, is taking, or proposes to take
with respect thereto), and
(iii) for each month that is the date on which a
financial covenant in SECTION 7.19 is to be tested, a Compliance
Certificate demonstrating, in reasonable detail, compliance at the end
of such period with the applicable financial covenants contained in
SECTION 7.19, and
(b) as soon as available, but in any event within 90 days
after the end of each of Borrower's fiscal years,
(i) financial statements of Borrower and its
Subsidiaries for each such fiscal year, audited by independent
certified public accountants reasonably acceptable to Agent and
certified, without any qualifications (including, without limitation,
(A) any going concern or like qualification or exception or (B) any
qualification as to the scope of such audit), by such accountants to
have been prepared in accordance with GAAP (such audited financial
statements to include a balance sheet, income statement, and statement
of cash flow and, if prepared, such accountants' letter to management),
(ii) a certificate of such accountants addressed to
Agent and the Lenders stating that such accountants do not have
knowledge of the existence of any Default or Event of Default under
SECTION 7.19,
(c) as soon as available, but in any event within 30 days
prior to the start of each of Borrower's fiscal years,
(i) copies of Borrower's Projections, in form and
substance (including as to scope and underlying assumptions)
satisfactory to Agent, in its sole discretion, for the forthcoming
fiscal year, month by month, certified by the chief financial officer
of Borrower, on behalf of Borrower, as being such officer's good faith
best estimate of the financial performance of Borrower during the
period covered thereby,
(d) if and when filed by Borrower,
(i) Form 10-Q quarterly reports, Form 10-K annual
reports, and Form 8-K current reports,
(ii) any other filings made by Borrower with the SEC,
(iii) copies of Borrower's federal income tax
returns, and any amendments thereto, filed with the Internal Revenue
Service, and
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(iv) any other information that is provided by
Borrower to its shareholders generally,
(e) if and when filed by Borrower and as requested by Agent,
satisfactory evidence of payment of applicable excise taxes in each
jurisdictions in which (i) Borrower conducts business or is required to pay any
such excise tax, (ii) where Borrower's failure to pay any such applicable excise
tax would result in a Lien on the properties or assets of Borrower, or (iii)
where Borrower's failure to pay any such applicable excise tax reasonably could
be expected to result in a Material Adverse Change,
(f) promptly after the commencement thereof, but in any event
within 5 days after the service of process with respect thereto on Borrower,
notice of all actions, suits or proceedings brought by or against Borrower
before any Governmental Authority,
(g) within three (3) Business Days of the occurrence of any
event or condition that constitutes a Default or an Event of Default, notice
thereof and a statement of the curative action that Borrower proposes to take
with respect thereto, and
(h) upon the request of Agent, any other report reasonably
requested relating to the financial condition of Borrower.
In addition to the financial statements referred to above, Borrower
agrees to deliver fiscal year end financial statements prepared on both a
consolidated and consolidating basis and agrees that no Subsidiary of Borrower
will have a fiscal year different from that of Borrower. Borrower agrees that
its independent certified public accountants are authorized to communicate with
Agent and to release to Agent whatever financial information concerning Borrower
Agent reasonably may request. Borrower waives the right to assert a confidential
relationship, if any, it may have with any accounting firm or service bureau in
connection with any information requested by Agent pursuant to or in accordance
with this Agreement, and agrees that Agent may contact directly any such
accounting firm or service bureau in order to obtain such information. Borrower
shall have the opportunity to receive all financial information provided by its
public accountants to Agent and to participate in all communications between
such public accountants and Agent.
6.4 RETURN. Cause returns and allowances, as between Borrower and its
Account Debtors, to be on the same basis and in accordance with the usual
customary practices of Borrower, as they exist at the time of the execution and
delivery of this Agreement. If, at a time when no Event of Default has occurred
and is continuing, any Account Debtor returns any Inventory having an aggregate
net book value in excess of $250,000 to Borrower, Borrower promptly shall
determine the reason for such return and, if Borrower accepts such return, issue
a credit memorandum (with a copy to be sent to Agent) in the appropriate amount
to such Account Debtor. If, at a time when an Event of Default has occurred and
is continuing, any Account Debtor returns any Inventory having an aggregate net
book value in excess of $250,000 to Borrower, Borrower promptly shall determine
the reason for such return and, if Agent consents (which consent shall not be
unreasonably withheld), issue a credit memorandum (with a copy to be sent to
Agent) in the appropriate amount to such Account Debtor.
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6.5 MAINTENANCE OF PROPERTIES. Except as otherwise provided in SECTION
2.4(C)(IV), maintain and preserve all of its properties which are necessary in
the proper conduct of its business in good working order and condition, ordinary
wear and tear excepted, and comply at all times with the provisions of all
leases to which it is a party as lessee so as to prevent any loss or forfeiture
thereof or thereunder except, in the case of a failure to comply with the
provisions of leases, where all such failures taken together do not result in a
Material Adverse Change.
6.6 TAXES. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against Borrower
or any of its assets to be paid in full, before delinquency or before the
expiration of any extension period, except to the extent that (i) the validity
of such assessment or tax shall be the subject of a Permitted Protest or (ii)
all such unpaid assessments and taxes are not in excess of $50,000 in the
aggregate. Except as permitted in the prior sentence, Borrower will make timely
payment or deposit of all tax payments and withholding taxes required of it by
applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state
disability, and local, state, and federal income taxes, and will, upon request,
furnish Agent with proof satisfactory to Agent indicating that Borrower has made
such payments or deposits. Upon the reasonable request of Agent, Borrower shall
deliver satisfactory evidence of payment of applicable excise taxes in each
jurisdictions in which Borrower is required to pay any such excise tax.
6.7 INSURANCE.
(a) At Borrower's expense, maintain insurance respecting its
assets wherever located, covering loss or damage by fire, theft, explosion, and
all other hazards and risks as ordinarily are insured against by other Persons
engaged in the same or similar businesses in similar locations. Borrower also
shall maintain business interruption, public liability, and product liability
insurance, as well as insurance against larceny, embezzlement, and criminal
misappropriation. All such policies of insurance shall be in such amounts and
with such insurance companies as are reasonably satisfactory to Agent. Borrower
shall deliver copies of all such policies to Agent with a satisfactory lender's
loss payable endorsement naming Agent as sole loss payee or additional insured,
as appropriate. Each policy of insurance or endorsement shall contain a clause
requiring the insurer to give not less than 30 days prior written notice to
Agent in the event of cancellation of the policy for any reason whatsoever.
(b) Borrower shall give Agent prompt notice of any loss in
excess of $1,000,000 that is covered by such insurance. Agent shall have the
exclusive right to adjust any losses in excess of $1,000,000 (or in the case of
the facility located in Boca Raton, Florida, $2,000,000) payable under any such
insurance policies, without any liability to Borrower whatsoever in respect of
such adjustments. Except as provided in the proviso at the end of this sentence,
any monies received as payment for any loss in excess of $1,000,000 under any
insurance policy mentioned above (other than liability insurance policies) or as
payment of any award or compensation for condemnation or taking by eminent
domain, shall be paid over to Agent to be applied at the option of the Required
Lenders, in their Permitted Discretion, either to the prepayment of the
Obligations or shall be disbursed to Borrower under staged payment terms
reasonably satisfactory to the Required Lenders for application to the cost of
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repairs, replacements, or restorations; PROVIDED that, so long as no Event of
Default shall have occurred and be continuing, monies received as payment for
any such loss with respect to the Boca Raton facility under any insurance policy
or any such condemnation or taking in an amount not exceeding $2,000,000 for any
such occurrence may be used to replace, repair or restore the Boca Raton
facility if such payments are immediately deposited in a DDA subject to a
Control Agreement and used in accordance with SECTION 2.4(C)(IV). Any such
repairs, replacements, or restorations shall be effected with reasonable
promptness and shall be of a value at least equal to the value of the items of
property destroyed prior to such damage or destruction.
(c) Borrower will not take out separate insurance concurrent
in form or contributing in the event of loss with that required to be maintained
under this SECTION 6.7, unless Agent is included thereon as named insured with
the loss payable to Agent under a lender's loss payable endorsement or its
equivalent. Borrower immediately shall notify Agent whenever such separate
insurance is taken out, specifying the insurer thereunder and full particulars
as to the policies evidencing the same, and copies of such policies promptly
shall be provided to Agent.
6.8 LOCATION OF INVENTORY AND EQUIPMENT. Keep the Inventory (except
in-transit Inventory) and Equipment only at the locations identified on SCHEDULE
5.5; PROVIDED, HOWEVER, that Borrower may amend SCHEDULE 5.5 so long as such
amendment occurs by written notice to Agent not less than 30 days prior to the
date on which Inventory or Equipment is moved to such new location, so long as
such new location is within the continental United States, and so long as, at
the time of such written notification, Borrower provides any financing
statements or fixture filings necessary to perfect and continue perfected
Agent's Liens on such assets and also provides to Agent a Collateral Access
Agreement.
6.9 COMPLIANCE WITH LAWS. Comply with the requirements of all
applicable laws, rules, regulations, and orders of any Governmental Authority,
including the Food and Drug Act, the Fair Labor Standards Act and the Americans
With Disabilities Act, other than laws, rules, regulations, and orders the
non-compliance with which, individually or in the aggregate, would not result in
and reasonably could not be expected to result in a Material Adverse Change.
6.10 LEASES. Pay when due all rents and other amounts payable under any
leases to which Borrower is a party or by which Borrower's properties and assets
are bound, unless such payments are the subject of a Permitted Protest, except,
where all such failures to pay rents and such other amounts taken together do
not result in a Material Adverse Change.
6.11 BROKERAGE COMMISSIONS. Pay any and all brokerage commission or
finders fees incurred in connection with or as a result of Borrower's obtaining
financing from the Lender Group under this Agreement. Borrower agrees and
acknowledges that payment of all such brokerage commissions or finders fees
shall be the sole responsibility of Borrower, and Borrower agrees to indemnify,
defend, and hold Agent and the Lender Group harmless from and against any claim
of any broker or finder arising out of Borrower's obtaining financing from the
Lender Group under this Agreement.
6.12 EXISTENCE. At all times preserve and keep in full force and effect
Borrower's valid existence and good standing and any rights and franchises
material to Borrower's businesses.
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6.13 ENVIRONMENTAL.
(a) Keep any property either owned or operated by Borrower
free of any Environmental Liens or post bonds or post bonds or other financial
assurances sufficient to satisfy the obligations or liability evidenced by such
Environmental Liens, (b) comply, in all material respects, with Environmental
Laws and provide to Agent documentation of such compliance which Agent
reasonably requests, (c) promptly notify Agent of any release of a Hazardous
Material in any reportable quantify from or onto property owned or operated by
Borrower and take any Remedial Actions required to ▇▇▇▇▇ said release or
otherwise to come into compliance with applicable Environmental Law, and (d)
promptly provide Agent with written notice within 10 days of the receipt of any
of the following: (i) notice that an Environmental Lien has been filed against
any of the real or personal property of Borrower, (ii) commencement of any
Environmental Action or notice that an Environmental Action will be filed
against Borrower, and (iii) notice of a violation, citation, or other
administrative order which reasonably could be expected to result in a Material
Adverse Change.
6.14 DISCLOSURE UPDATES. Promptly and in no event later than 5 Business
Days after obtaining knowledge thereof, (a) notify Agent if any written
information, exhibit, or report furnished to the Lender Group contained any
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which made, and (b) correct any defect or error that may be
discovered therein or in any Loan Document or in the execution, acknowledgement,
filing, or recordation thereof.
6.15 COMMERCIAL TORT CLAIMS; ORGANIZATIONAL ID NUMBER. Promptly but in
no event later than three Business Days after obtaining any commercial tort
claim, deliver to Agent an updated SCHEDULE 5.7 and the other documents required
under SECTION 4.4. Immediately upon obtaining an organizational identification
number (to the extent Borrower has not been issued such number on or prior to
the Closing Date), notify Agent in writing and deliver to Agent an updated
SCHEDULE 5.7.
6.16 FDA NOTICES, ETC. Borrower shall notify Agent promptly and in any
event in writing within three (3) Business Days of any material violation,
claim, complaint, charge or receipt of any violation, claim, complaint or charge
of or under the Food and Drug Act or any material applicable statutes, rules,
regulations, guides, policies orders or directives administered or issued by the
FDA, including without limitation receipt by Borrower of any Product Recall
Notice, or any other FDA Notice or amendment to a previous Product Recall Notice
or FDA Notice, and in the case of a written document evidencing such event,
within such three (3) Business Days Borrower shall provide Agent with a true,
correct and complete copy of such Product Recall Notice, FDA Notice or amendment
or other notice, as the case may be.
6.17 PAYMENTS CURRENT. Borrower shall make (a) all royalty and other
payments due and payable under each Licensing Agreement prior to the time when
the other party thereto may terminate any such Licensing Agreement and (b) all
deferred payments when due in connection with any acquisition.
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6.18 FORMATION OF SUBSIDIARIES. At the time that Borrower forms any
direct or indirect Subsidiary organized under the laws of the United States or
any state thereof or acquires any direct or indirect Subsidiary organized under
the laws of the United States or any state thereof after the Closing Date,
Borrower shall (a) cause such new Subsidiary to provide to Agent a Guaranty,
security agreement, and such other security documents (including Mortgages with
respect to any Real Property of such new Subsidiary), together with appropriate
UCC-1 financing statements (and with respect to all property subject to a
Mortgage, fixture filings), all in form and substance satisfactory to Agent, (b)
provide to Agent a pledge agreement and appropriate certificates and powers or
UCC-1 financing statements, pledging all (or in the case of a Subsidiary
organized outside of the United States, 65%) of the direct or beneficial
ownership interest in such new Subsidiary, in form and substance satisfactory to
Agent, and (c) provide to Agent all other documentation, including one or more
opinions of counsel satisfactory to Agent, which in its opinion is appropriate
with respect to such formation and the execution and delivery of the applicable
documentation referred to above (including policies of title insurance or other
documentation with respect to all property subject to a Mortgage). Any document,
agreement or instrument executed or issued pursuant to this SECTION 6.18 shall
be a "Loan Document" for purposes of this Agreement.
7. NEGATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the Obligations
and the termination of this Agreement, Borrower will not and will not permit any
of its Subsidiaries to do any of the following:
7.1 INDEBTEDNESS. Create, incur, assume, permit, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the
other Loan Documents, together with Indebtedness owed to Underlying Issuers with
respect to Underlying Letters of Credit,
(b) Indebtedness set forth on SCHEDULE 5.20,
(c) Permitted Purchase Money Indebtedness,
(d) refinancings, renewals, or extensions of
Indebtedness permitted under clauses (b) and (c) of this SECTION 7.1 (and
continuance or renewal of any Permitted Liens associated therewith) so long as:
(i) the terms and conditions of such refinancings, renewals, or extensions do
not, in Agent's judgment, materially impair the prospects of repayment of the
Obligations by Borrower or materially impair Borrower's creditworthiness, (ii)
such refinancings, renewals, or extensions do not result in an increase in the
principal amount of, or interest rate with respect to, the Indebtedness so
refinanced, renewed, or extended, (iii) such refinancings, renewals, or
extensions do not result in a shortening of the average weighted maturity of the
Indebtedness so refinanced, renewed, or extended, nor are they on terms or
74
conditions that, taken as a whole, are materially more burdensome or restrictive
to Borrower, and (iv) if the Indebtedness that is refinanced, renewed, or
extended was subordinated in right of payment to the Obligations, then the terms
and conditions of the refinancing, renewal, or extension Indebtedness must
include subordination terms and conditions that are at least as favorable to the
Lender Group as those that were applicable to the refinanced, renewed, or
extended Indebtedness;
(e) Indebtedness incurred by Borrower and/or its
Subsidiaries in connection with acquisitions permitted by the terms of this
Agreement, provided that such Indebtedness (i) is unsecured, (ii) is subordinate
to the Obligations pursuant to an intercreditor agreement, in form and substance
reasonably satisfactory to the Lenders, and (iii) does not exceed the principal
amount of $2,000,000 in the aggregate;
(f) Indebtedness composing Approved Acquisitions and
other Permitted Investments other than acquisitions;
(g) Indebtedness of a Subsidiary of Borrower existing
at the time such Subsidiary is acquired by, merged into, or consolidated with
Borrower in a principal amount not in excess of $2,000,000 in the aggregate; and
(h) Indebtedness incurred by Foreign Subsidiaries in
a principal amount not to exceed $2,000,000 in the aggregate.
7.2 LIENS. Create, incur, assume, or permit to exist, directly
or indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under SECTION 7.1(D) and so long as the replacement Liens only encumber
those assets that secured the refinanced, renewed, or extended Indebtedness).
7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES.
(a) Except in connection with (i) an acquisition
constituting a Permitted Investment, if both before and after giving effect to
such acquisition no Event of Default has occurred and is continuing, (ii) a
reclassification of the Stock of Borrower, or (iii) a recapitalization of
Borrower that solely effects the Stock of Borrower and is not otherwise adverse
to the Lenders, enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its Stock.
(b) Liquidate, wind up, or dissolve itself (or suffer
any liquidation or dissolution), provided that nothing herein shall prohibit the
liquidation, winding-up or dissolution of Borrower's Subsidiaries so long as all
of the assets of any such Subsidiary shall be transferred to Borrower.
(c) Except for Permitted Dispositions, convey, sell,
lease, license, assign, transfer, or otherwise dispose of, in one transaction or
a series of transactions, all or any substantial part of its assets.
7.4 DISPOSAL OF ASSETS. Other than Permitted Dispositions,
convey, sell, lease, license, assign, transfer, or otherwise dispose of any of
Borrower's assets.
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7.5 CHANGE NAME. Change its name, organizational
identification number, state of incorporation, FEIN, corporate structure, or
identity, or add any new fictitious name; PROVIDED, HOWEVER, that Borrower may
change its name upon at least 30 days prior written notice to Agent of such
change and so long as, at the time of such written notification, Borrower
provides any financing statements or fixture filings necessary to perfect and
continue perfected Agent's Liens.
7.6 GUARANTEE. Guarantee or otherwise become in any way liable
with respect to the obligations of any third Person except (i) by endorsement of
instruments or items of payment for deposit to the account of Borrower or which
are transmitted or turned over to Agent and (ii) guarantees of Indebtedness
permitted by SECTION 7.1.
7.7 NATURE OF BUSINESS. Make any material change in the
principal nature of its business as it exists as of the Closing Date other than
changes that result in Borrower and its Subsidiaries engaging in businesses
reasonably related to the business of Borrower on the Closing Date.
7.8 PREPAYMENTS AND AMENDMENTS.
(a) Except in connection with a refinancing permitted
by SECTION 7.1(D), prepay, redeem, defease, purchase, or otherwise acquire any
Indebtedness of Borrower, other than the Obligations in accordance with this
Agreement, provided that if (i) the Term Loan has been repaid in full and (ii)
both immediately before and after giving effect to such prepayment, redemption,
defeasance, purchase or acquisition of Indebtedness (x) no Event of Default
shall have occurred and be continuing and (y) Borrower has Excess Availability
of not less than $5,000,000, Borrower may prepay, redeem, defease, purchase, or
otherwise acquire any Indebtedness of Borrower, and
(b) Except in connection with a refinancing permitted
by SECTION 7.1(D), directly or indirectly, amend, modify, alter, increase, or
change any of the terms or conditions of any agreement, instrument, document,
indenture, or other writing evidencing or concerning Indebtedness permitted
under SECTIONS 7.1(B) OR (C).
7.9 CHANGE OF CONTROL. Cause, permit, or suffer, directly or
indirectly, any Change of Control.
7.10 CONSIGNMENTS. Consign any Inventory or sell any Inventory
on ▇▇▇▇ and hold, sale or return, sale on approval, or other conditional terms
of sale.
7.11 DISTRIBUTIONS. Make any payment, distribution or declare
or pay any dividends (in cash or other property, other than common Stock) on, or
purchase, acquire, redeem, or retire any of Borrower's Stock, of any class,
whether now or hereafter outstanding, provided that if both immediately before
and after giving effect to such transaction (x) no Event of Default shall have
occurred and be continuing and (y) Borrower has Excess Availability of not less
than $5,000,000, Borrower may purchase Stock of employees who have terminated
their employment with Borrower for consideration not to exceed $3,500,000 in the
aggregate.
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7.12 ACCOUNTING METHODS. Modify or change its method of
accounting (other than as may be required to conform to GAAP) or enter into,
modify, or terminate any agreement currently existing, or at any time hereafter
entered into with any third party accounting firm or service bureau for the
preparation or storage of Borrower's accounting records without said accounting
firm or service bureau agreeing to (a) provide Agent information regarding the
Collateral or Borrower's financial condition, (b) provide Borrower with all
financial information provided by such accounting firm or service bureau to
Agent and (c) allow Borrower to participate in all communications between such
accounting firm or service bureau and Agent.
7.13 INVESTMENTS. Except for Permitted Investments, directly
or indirectly, make or acquire any Investment or incur any liabilities
(including contingent obligations) for or in connection with any Investment;
PROVIDED, HOWEVER, that, from and after the date that Agent delivers an
Activation Notice pursuant to SECTION 2.7(C) (with a copy to Borrower), Borrower
and its Subsidiaries shall not have Permitted Investments in an aggregate amount
in excess of $100,000 at any time (other than in the Cash Management Accounts)
in deposit accounts or Securities Accounts unless Borrower or its Subsidiary, as
applicable, and the applicable securities intermediary or bank have entered into
Control Agreements governing such Permitted Investments, as Agent shall
determine in its Permitted Discretion, to perfect (and further establish)
Agent's Liens in such Permitted Investments.
7.14 TRANSACTIONS WITH AFFILIATES. Directly or indirectly
enter into or permit to exist any transaction with any Affiliate of Borrower
except for transactions that are in the ordinary course of Borrower's business,
upon fair and reasonable terms, that are fully disclosed to Agent, and that are
no less favorable to Borrower than would be obtained in an arm's length
transaction with a non-Affiliate; PROVIDED, HOWEVER, that nothing contained in
this SECTION 7.14 shall prohibit employment agreements and amendments thereto
entered into in the ordinary course of business of Borrower that have been
approved by the compensation committee of Borrower's board of directors.
7.15 SUSPENSION. Suspend or go out of a substantial portion of
its business
7.16 USE OF PROCEEDS. Use the proceeds of the Advances and the
Term Loan for any purpose other than (a) (i) to pay up to $35,000,000 of the
purchase price for acquisitions permitted by the terms of this Agreement, and
(ii) on the Closing Date to pay transactional fees, costs, and expenses incurred
in connection with this Agreement, the other Loan Documents, and the
transactions contemplated hereby and thereby, and (b) after the Closing Date,
general business purposes and such uses as are consistent with the terms and
conditions hereof, for its lawful and permitted purposes.
7.17 CHANGE IN LOCATION OF CHIEF EXECUTIVE OFFICE; INVENTORY
AND EQUIPMENT WITH BAILEES. Relocate its chief executive office to a new
location without providing 30 days prior written notification thereof to Agent
and so long as, at the time of such written notification, if requested by Agent,
Borrower provides any financing statements or fixture filings necessary to
perfect and continue perfected Agent's Liens and also provides to Agent a
Collateral Access Agreement with respect to such new location. The Inventory and
Equipment shall not at any time now or hereafter be stored with a bailee,
warehouseman, or similar party without Agent's prior written consent.
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7.18 SECURITIES ACCOUNTS. From and after the date that Agent
delivers an Activation Notice pursuant to SECTION 2.7(C) (with a copy to
Borrower) establish or maintain any Securities Account unless Agent shall have
received a Control Agreement in respect of such Securities Account. Borrower
shall not transfer assets out of any Securities Account; provided, however,
that, so long as no Event of Default has occurred and is continuing or would
result therefrom, Borrower may use such assets (and the proceeds thereof) to the
extent not prohibited by this Agreement.
7.19 FINANCIAL COVENANTS.
(a) Fail to maintain:
(i) MINIMUM EBITDA. EBITDA, measured on a
fiscal quarter-end basis, of not less than the required amount set forth in the
following table for the trailing four fiscal quarters of Borrower ending on the
last Saturday of the month set forth opposite thereto;
------------------------------------- ------------------------------------------
Applicable Amount Date
------------------------------------- ------------------------------------------
------------------------------------- ------------------------------------------
[***] September, 2003
------------------------------------- ------------------------------------------
------------------------------------- ------------------------------------------
[***] December, 2003
------------------------------------- ------------------------------------------
------------------------------------- ------------------------------------------
[***] March, 2004
------------------------------------- ------------------------------------------
------------------------------------- ------------------------------------------
[***] June, 2004
------------------------------------- ------------------------------------------
------------------------------------- ------------------------------------------
[***] September, 2004
------------------------------------- ------------------------------------------
------------------------------------- ------------------------------------------
[***] December, 2004
------------------------------------- ------------------------------------------
, PROVIDED that, upon receipt of the Projections for the 2005 Fiscal Year of
Borrower required to be delivered to Agent and Lenders pursuant to SECTION
6.3(C)(I), Borrower and Agent shall negotiate in good faith to determine the
minimum EBITDA for each trailing four fiscal quarter period of Borrower in the
2005 Fiscal Year of Borrower and, in the event Borrower and Agent are unable to
agree upon such amounts on or before November 30, 2004, the minimum EBITDA for
each trailing four fiscal quarter period of Borrower ending in the 2005 Fiscal
Year of Borrower shall remain unchanged from that set forth above for the
trailing four fiscal quarter period in the 2004 Fiscal Year of Borrower.
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(b) Commencing with June 2003 and for each month thereafter,
permit:
(i) TOTAL LEVERAGE RATIO. The ratio of (x) Total
Funded Debt outstanding at the end of each month, to (y) EBITDA for the trailing
four fiscal quarters ending at the end of such month, to exceed [***].
(ii) DEBT TO CASH COLLECTIONS. Total Funded Debt
outstanding at the end of each month to exceed the aggregate Collections of
Borrower for the previous 120 day period ending on the last day of each such
month.
(iii) DEBT TO ENTERPRISE VALUE. Total Funded Debt
outstanding at the end of each month to exceed [***] of the most recent
Enterprise Value of Borrower, provided that Agent shall have the right to
redetermine the Enterprise Value of Borrower and intends to redetermine such
Enterprise Value not less than once each calendar year.
(c) CAPITAL EXPENDITURES. Make capital expenditures in any
Fiscal Year in excess of (A) [***] for the 2003 Fiscal Year, (B) [***] for the
2004 Fiscal Year, and (C) [***] for the 2005 Fiscal Year, plus, in the case of
clauses (B) and (C) above, the Carryforward Amount (if any). Borrower shall be
entitled to carry forward the unused capital expenditure amount from the prior
year in an amount (the "CARRYFORWARD AMOUNT") equal to (I) in the 2004 Fiscal
Year, the lesser of (x) the unused portion of capital expenditures permitted to
be expended by Borrower for the immediately preceding Fiscal Year and (y) [***]
and (II) in the 2005 Fiscal Year, the lesser of (x) the unused portion of
capital expenditures permitted to be expended by Borrower for the immediately
preceding Fiscal Year and (y) [***]. Capital expenditures during any Fiscal Year
shall be applied, first, to the applicable amount of the capital expenditures
permitted for such Fiscal Year (without giving effect to the Carryforward
Amount) and, second, to the Carryforward Amount for the immediately preceding
Fiscal Year.
7.20 INACTIVE SUBSIDIARIES. In the case of the Inactive Subsidiaries,
own any assets with a value in excess of $50,000, conduct any business or have
any liabilities.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:
8.1 If Borrower fails to pay when due and payable, or when declared due
and payable, all or any portion of the Obligations (whether of principal,
interest (including any interest which, but for the provisions of the Bankruptcy
Code, would have accrued on such amounts), fees and charges due the Lender
Group, reimbursement of Lender Group Expenses, or other amounts constituting
Obligations) and, in the case of any Obligation constituting interest, fees,
expenses, changes or reimbursements only, such failure shall continue for 3
days;
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8.2 (i) If Borrower fails to perform, keep, or observe any term,
provision, condition, covenant, or agreement contained in SECTIONS 6.1, 6.4,
6.5, and 6.13 of this Agreement, or comparable provisions of the other Loan
Documents, and such failure continues for 15 days, (ii) if Borrower fails to
perform, keep, or observe any term, provision, condition, covenant or agreement
contained in SECTIONS 6.2 (but only up to three times during any 12-month
period), 6.3, 6.6, 6.8, 6.9, 6.10, 6.12 (but solely with respect to failure to
remain in good standing), 6.14, 6.15, and 6.17 of this Agreement, or comparable
provisions of the other Loan Documents, and such failure continues for 5 days,
or (iii) if Borrower otherwise fails to perform, keep, or observe any other
term, provision, condition, covenant, or agreement contained in this Agreement
or in any of the other Loan Documents;
8.3 If any material portion of Borrower's or any of its Subsidiaries'
assets is attached, seized, subjected to a writ or distress warrant, levied
upon, or comes into the possession of any third Person;
8.4 If an Insolvency Proceeding is commenced by Borrower or any of its
Subsidiaries;
8.5 If an Insolvency Proceeding is commenced against Borrower, or any
of its Subsidiaries, and any of the following events occur: (a) Borrower or the
Subsidiary consents to the institution of such Insolvency Proceeding against it,
(b) the petition commencing the Insolvency Proceeding is not timely
controverted, (c) the petition commencing the Insolvency Proceeding is not
dismissed within 60 calendar days of the date of the filing thereof; PROVIDED,
HOWEVER, that, during the pendency of such period, Agent (including any
successor agent) and each other member of the Lender Group shall be relieved of
their obligations to extend credit hereunder, (d) an interim trustee is
appointed to take possession of all or any substantial portion of the properties
or assets of, or to operate all or any substantial portion of the business of,
Borrower or any of its Subsidiaries, or (e) an order for relief shall have been
entered therein;
8.6 If Borrower or any of its Subsidiaries is enjoined, restrained, or
in any way prevented by court order from continuing to conduct all or any
material part of its business affairs;
8.7 If a notice of Lien, levy, or assessment is filed of record with
respect to any of Borrower's or any of its Subsidiaries' assets by the United
States, or any department, agency, or instrumentality thereof, or by any state,
county, municipal, or governmental agency, or if any taxes or debts owing at any
time hereafter to any one or more of such entities becomes a Lien, whether
▇▇▇▇▇▇ or otherwise, upon any of Borrower's or any of its Subsidiaries' assets
and the same is not paid before such payment is delinquent;
8.8 If a judgment or other claim becomes a Lien or encumbrance upon any
material portion of Borrower's or any of its Subsidiaries' assets;
8.9 If there is a default in any Material Contract to which Borrower or
any of its Subsidiaries is a party and such default (a) occurs at the final
maturity of the obligations thereunder, or (b) results in a right by the other
party thereto, irrespective of whether exercised, to accelerate the maturity of
80
Borrower's or its Subsidiaries' obligations thereunder, to terminate such
agreement, or to refuse to renew such agreement pursuant to an automatic renewal
right therein;
8.10 If Borrower or any of its Subsidiaries makes any payment on
account of Indebtedness that has been contractually subordinated in right of
payment to the payment of the Obligations, except to the extent such payment is
permitted by the terms of the subordination provisions applicable to such
Indebtedness;
8.11 If any material misstatement or material misrepresentation exists
now or hereafter in any warranty, representation, statement, or Record made to
the Lender Group by Borrower, its Subsidiaries, or any officer, employee, agent,
or director of Borrower or any of its Subsidiaries;
8.12 If there is a loss, suspension or revocation of, or failure to
renew, any license or permit now held or hereafter acquired by Borrower or any
of its Subsidiaries and such loss, suspension, revocation or failure to renew
could reasonably be expected to have a Material Adverse Change;
8.13 If this Agreement or any other Loan Document that purports to
create a Lien, shall, for any reason, fail or cease to create a valid and
perfected and, except to the extent permitted by the terms hereof or thereof,
first priority Lien on or security interest in the Collateral covered hereby or
thereby;
8.14 If Borrower shall (i) receive a Product Recall Notice or (ii) fail
to be in substantial compliance with the Food and Drug Act and all current
applicable statutes, rules, regulations, guides, policies, orders or directives
administered or issued by the FDA, to the extent that such failure would
reasonably be anticipated to (a) result in a Material Adverse Change or (b)
result in or account for a 10% or greater decrease in Borrower's total sales
from the preceding Fiscal Year; or
8.15 Any provision of any Loan Document shall at any time for any
reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by Borrower, or a proceeding shall be commenced by
Borrower, or by any Governmental Authority having jurisdiction over Borrower,
seeking to establish the invalidity or unenforceability thereof, or Borrower
shall deny that Borrower has any liability or obligation purported to be created
under any Loan Document;
provided that, notwithstanding anything to the contrary contained herein, if any
one or more of the events set forth in SECTIONS 8.1 through 8.15 above shall
occur at a time when there are no outstanding Obligations for the payment of
money, (x) such events set forth in SECTIONS 8.1 through 8.15 above shall not
result in an Event of Default and (y) no Advances, Letters of Credit or other
extensions of credit under this Agreement shall be permitted until any such
event set forth in SECTIONS 8.1 through 8.15 above is cured to the satisfaction
of the Required Lenders or waived in writing by the Required Lenders.
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9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 RIGHTS AND REMEDIES. Upon the occurrence, and during the
continuation, of an Event of Default, the Required Lenders (at their election
but without notice of their election and without demand) may authorize and
instruct Agent to do any one or more of the following on behalf of the Lender
Group (and Agent, acting upon the instructions of the Required Lenders, shall do
the same on behalf of the Lender Group), all of which are authorized by
Borrower:
(a) Declare all Obligations, whether evidenced by
this Agreement, by any of the other Loan Documents, or otherwise, immediately
due and payable (provided, that upon the occurrence of any Event of Default
arising under SECTION 8.4, SECTION 8.5(A) or SECTION 8.5(C) in respect of
Borrower, all Obligations evidenced by this Agreement or by any other Loan
Documents shall automatically become due and payable and the obligation of each
Lender to advance money or extend credit to or for the benefit of Borrower under
this Agreement, under any of the Loan Documents, or under any other agreement
between Borrowers and the Lender Group shall automatically terminate, in each
case without the need for any act of Agent or any Lender);
(b) Cease advancing money or extending credit to or
for the benefit of Borrower under this Agreement, under any of the Loan
Documents, or under any other agreement between Borrower and the Lender Group;
(c) Terminate this Agreement and any of the other
Loan Documents as to any future liability or obligation of the Lender Group, but
without affecting any of Agent's Liens in the Collateral and without affecting
the Obligations;
(d) Settle or adjust disputes and claims directly
with Account Debtors for amounts and upon terms which Agent considers advisable,
and in such cases, Agent will credit Borrower's Loan Account with only the net
amounts received by Agent in payment of such disputed Accounts after deducting
all Lender Group Expenses incurred or expended in connection therewith;
(e) Cause Borrower to hold all returned Inventory in
trust for the Lender Group, segregate all returned Inventory from all other
assets of Borrower or in Borrower's possession and conspicuously label said
returned Inventory as the property of the Lender Group;
(f) Without notice to or demand upon Borrower, make
such payments and do such acts as Agent considers necessary or reasonable to
protect its security interests in the Collateral. Borrower agrees to assemble
the Personal Property Collateral if Agent so requires, and to make the Personal
Property Collateral available to Agent at a place that Agent may designate which
is reasonably convenient to both parties. Borrower authorizes Agent to enter the
premises where the Personal Property Collateral is located, to take and maintain
possession of the Personal Property Collateral, or any part of it, and to pay,
purchase, contest, or compromise any Lien that in Agent's determination appears
to conflict with Agent's Liens and to pay all expenses incurred in connection
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therewith and to charge Borrower's Loan Account therefor. With respect to any of
Borrower's owned or leased premises, Borrower hereby grants Agent a license to
enter into possession of such premises and to occupy the same, without charge,
in order to exercise any of the Lender Group's rights or remedies provided
herein, at law, in equity, or otherwise;
(g) Without notice to Borrower (such notice being
expressly waived), and without constituting a retention of any collateral in
satisfaction of an obligation (within the meaning of the Code), set off and
apply to the Obligations any and all (i) balances and deposits of Borrower held
by the Lender Group (including any amounts received in the Cash Management
Accounts), or (ii) Indebtedness at any time owing to or for the credit or the
account of Borrower held by the Lender Group;
(h) Hold, as cash collateral, any and all balances
and deposits of Borrower held by the Lender Group, and any amounts received in
the Cash Management Accounts, to secure the full and final repayment of all of
the Obligations;
(i) Ship, reclaim, recover, store, finish, maintain,
repair, prepare for sale, advertise for sale, and sell (in the manner provided
for herein) the Personal Property Collateral in accordance with all applicable
laws. Borrower hereby grants to Agent a license or other right to use, without
charge, Borrower's labels, patents, copyrights, trade secrets, trade names,
trademarks, service marks, and advertising matter, or any property of a similar
nature, as it pertains to the Personal Property Collateral, in completing
production of, advertising for sale, and selling any Personal Property
Collateral and Borrower's rights under all licenses and all franchise agreements
shall inure to the Lender Group's benefit;
(j) Sell the Personal Property Collateral at either a
public or private sale, or both, by way of one or more contracts or
transactions, for cash or on terms, in such manner and at such places (including
Borrower's premises) as Agent determines is commercially reasonable. It is not
necessary that the Personal Property Collateral be present at any such sale;
(k) Agent shall give notice of the disposition of the
Personal Property Collateral as follows:
(i) Agent shall give Borrower a notice in
writing of the time and place of public sale, or, if the sale is a
private sale or some other disposition other than a public sale is to
be made of the Personal Property Collateral, the time on or after which
the private sale or other disposition is to be made; and
(ii) The notice shall be personally
delivered or mailed, postage prepaid, to Borrower as provided in
SECTION 12, at least 10 days before the earliest time of disposition
set forth in the notice; no notice needs to be given prior to the
disposition of any portion of the Personal Property Collateral that is
perishable or threatens to decline speedily in value or that is of a
type customarily sold on a recognized market;
(l) Agent, on behalf of the Lender Group, may credit
bid and purchase at any public sale; and
(m) Agent may seek the appointment of a receiver or
keeper to take possession of all or any portion of the Collateral or to operate
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same and, to the maximum extent permitted by law, may seek the appointment of
such a receiver without the requirement of prior notice or a hearing;
(n) Agent, on behalf of the Lender Group, may
foreclose any or all of the Mortgages and sell the Real Property or cause the
Real Property to be sold in accordance with the provisions of the Mortgages and
applicable law, and exercise any and all other rights or remedies available to
Agent, on behalf of the Lender Group, under the Mortgages, any of the other Loan
Documents, at law or in equity with respect to the Collateral encumbered by the
Mortgages;
(o) The Lender Group shall have all other rights and
remedies available at law or in equity or pursuant to any other Loan Document;
and
(p) Any deficiency that exists after disposition of
the Personal Property Collateral as provided above will be paid immediately by
Borrower. Any excess will promptly be returned, without interest and subject to
the rights of third Persons, by Agent to Borrower.
9.2 REMEDIES CUMULATIVE. The rights and remedies of the Lender
Group under this Agreement, the other Loan Documents, and all other agreements
shall be cumulative. The Lender Group shall have all other rights and remedies
not inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.
10. TAXES AND EXPENSES.
If Borrower fails to pay any monies (whether taxes,
assessments, insurance premiums, or, in the case of leased properties or assets,
rents or other amounts payable under such leases) due to third Persons which are
not the subject of a Permitted Protest or fails to make any deposits or furnish
any required proof of payment or deposit, all as required under the terms of
this Agreement, then, Agent, in its sole and reasonable discretion and without
prior notice to Borrower, may do any or all of the following: (a) make payment
of the same or any part thereof, (b) set up such reserves in Borrower's Loan
Account as Agent deems necessary to protect the Lender Group from the exposure
created by such failure, or (c) in the case of the failure to comply with
SECTION 6.7 hereof, obtain and maintain insurance policies of the type described
in SECTION 6.7 and take any action with respect to such policies as Agent deems
prudent. Any such amounts paid by Agent shall constitute Lender Group Expenses
and any such payments shall not constitute an agreement by the Lender Group to
make similar payments in the future or a waiver by the Lender Group of any Event
of Default under this Agreement. Agent need not inquire as to, or contest the
validity of, any such expense, tax, or Lien and the receipt of the usual
official notice for the payment thereof shall be conclusive evidence that the
same was validly due and owing. Agent shall provide Borrower with written notice
of payments made by Agent on behalf of Borrower promptly after such payments are
made by Agent.
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11. WAIVERS; INDEMNIFICATION.
11.1 DEMAND; PROTEST; ETC. Borrower waives demand, protest,
notice of protest, notice of default or dishonor, notice of payment and
nonpayment, nonpayment at maturity, release, compromise, settlement, extension,
or renewal of documents, instruments, chattel paper, and guarantees at any time
held by the Lender Group on which Borrower may in any way be liable.
11.2 THE LENDER GROUP'S LIABILITY FOR COLLATERAL. Borrower
hereby agrees that: (a) so long as Agent complies with its obligations, if any,
under the Code, the Lender Group shall not in any way or manner be liable or
responsible for: (i) the safekeeping of the Collateral, (ii) any loss or damage
thereto occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by Borrower.
11.3 INDEMNIFICATION. (a) GENERAL. Borrower shall pay,
indemnify, defend, and hold the Agent-Related Persons, the Lender-Related
Persons with respect to each Lender, each Participant, and each of their
respective officers, directors, employees, agents, and attorneys-in-fact (each,
an "Indemnified Person") harmless (to the fullest extent permitted by law) from
and against any and all claims, demands, suits, actions, investigations,
proceedings, and damages, and all reasonable attorneys fees and disbursements
and other costs and expenses actually incurred in connection therewith (as and
when they are incurred and irrespective of whether suit is brought), at any time
asserted against, imposed upon, or incurred by any of them (a) in connection
with or as a result of or related to the execution, delivery, enforcement,
performance, or administration of this Agreement, any of the other Loan
Documents, or the transactions contemplated hereby or thereby, and (b) with
respect to any investigation, litigation, or proceeding related to this
Agreement, any other Loan Document, or the use of the proceeds of the credit
provided hereunder (irrespective of whether any Indemnified Person is a party
thereto), or any act, omission, event, or circumstance in any manner related
thereto (all the foregoing, collectively, the "Indemnified Liabilities"). The
foregoing to the contrary notwithstanding, Borrower shall have no obligation to
any Indemnified Person under this SECTION 11.3 with respect to any Indemnified
Liability that a court of competent jurisdiction finally determines to have
resulted from the gross negligence or willful misconduct of such Indemnified
Person. This provision shall survive the termination of this Agreement and the
repayment of the Obligations. If any Indemnified Person makes any payment to any
other Indemnified Person with respect to an Indemnified Liability as to which
Borrower was required to indemnify the Indemnified Person receiving such
payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by Borrower with respect thereto. WITHOUT LIMITATION,
THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO
INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART CAUSED BY OR ARISE OUT OF ANY
NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
(b) ENVIRONMENTAL INDEMNITY. Without limiting Section
11.3(a) hereof, Borrower shall pay, indemnify, defend, and hold harmless each
Indemnified Person against any and all Environmental Liabilities and Costs and
all other claims, demands, penalties, fines, liability (including strict
liability), losses, damages, costs and expenses (including reasonable legal fees
85
and expenses, consultant fees and laboratory fees), arising out of (i) any
releases or threatened releases of any Hazardous Materials (x) at any property
presently or formerly owned or operated by Borrower or any Subsidiary of
Borrower, or any predecessor in interest, or (y) generated and disposed of by
Borrower or any Subsidiary of Borrower, or any predecessor in interest; (ii) any
violations of Environmental Laws; (iii) any Environmental Action relating to
Borrower or any Subsidiary of Borrower, or any predecessor in interest; (iv) any
personal injury (including wrongful death) or property damage (real or personal)
arising out of exposure to Hazardous Materials used, handled, generated,
transported or disposed by Borrower or any Subsidiary of Borrower, or any
predecessor in interest; and (v) any breach of any warranty or representation
regarding environmental matters made by Borrower in SECTION 5.14 or the breach
of any covenant made by Borrower in SECTION 6.14.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or
demands by Borrower or Agent to the other relating to this Agreement or any
other Loan Document shall be in writing and (except for financial statements and
other informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by registered or certified mail
(postage prepaid, return receipt requested), overnight courier, electronic mail
(at such email addresses as Borrower or Agent, as applicable, may designate to
each other in accordance herewith), or telefacsimile to Borrower or Agent, as
the case may be, at its address set forth below:
If to Borrower: NABI BIOPHARMACEUTICALS
▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇.▇.
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇
Fax No.: ▇▇▇.▇▇▇.▇▇▇▇
with copies to: ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & FISH, LLP
World Trade Center West
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Fax No.: ▇▇▇.▇▇▇.▇▇▇▇
If to Agent: ▇▇▇▇▇ FARGO FOOTHILL, INC.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Business Finance Division Manager
Fax No.: ▇▇▇.▇▇▇.▇▇▇▇
86
▇▇▇▇▇ FARGO FOOTHILL, INC.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Business Finance Division Manager
Fax No.: ▇▇▇.▇▇▇.▇▇▇▇
with copies to: ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax No.: ▇▇▇.▇▇▇.▇▇▇▇
Agent and Borrower may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given to
the other party. All notices or demands sent in accordance with this SECTION 12,
other than notices by Agent in connection with enforcement rights against the
Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit
thereof in the mail. Borrower acknowledges and agrees that notices sent by the
Lender Group in connection with the exercise of enforcement rights against
Collateral under the provisions of the Code shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit
thereof in the mail or, under any method permitted by applicable law, at such
time as provided under such applicable law.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN
RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO
WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING
IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED
AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF NEW
YORK, STATE OF NEW YORK, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S OPTION, IN
THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE
SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWER AND THE LENDER GROUP
87
WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO
ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT
ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13(B).
(c) BORROWER AND THE LENDER GROUP HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW OR STATUTORY CLAIMS. BORROWER AND THE LENDER GROUP REPRESENT
THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS
JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 ASSIGNMENTS AND PARTICIPATIONS.
(a) Any Lender may, with the written consent of Agent
(provided that no written consent of Agent shall be required in connection with
any assignment and delegation by a Lender to an Eligible Transferee), assign and
delegate to one or more assignees (each an "Assignee") all, or any ratable part
of all, of the Obligations, the Commitments and the other rights and obligations
of such Lender hereunder and under the other Loan Documents, in a minimum amount
of $5,000,000; PROVIDED, HOWEVER, that Borrower and Agent may continue to deal
solely and directly with such Lender in connection with the interest so assigned
to an Assignee until (i) written notice of such assignment, together with
payment instructions, addresses, and related information with respect to the
Assignee, have been given to Borrower and Agent by such Lender and the Assignee,
(ii) such Lender and its Assignee have delivered to Borrower and Agent an
Assignment and Acceptance in form and substance satisfactory to Agent, and (iii)
the assignor Lender or Assignee has paid to Agent for Agent's separate account a
processing fee in the amount of $5,000. Anything contained herein to the
contrary notwithstanding (x) the consent of Agent shall not be required (and
payment of any fees shall not be required) if such assignment is in connection
with any merger, consolidation, sale, transfer, or other disposition of all or
any substantial portion of the business or loan portfolio of such Lender so long
as an assignee under such circumstances shall be an Eligible Transferee and (y)
no assignment of any portion of the Obligations, Commitments, or other rights
and obligations of any Lender hereunder shall be made to any Person listed on
the letter designated as the "Section 14.1 Side Letter" delivered by Borrower to
Agent on or prior to the Closing Date, which "Section 14.1 Side Letter" may be
updated by Borrower from time to time (in a writing delivered by Borrower to
each Lender) to include the name of any Person that conducts a substantial
portion of its business in the biopharmaceutical industry.
(b) From and after the date that Agent notifies the assignor
Lender (with a copy to Borrower) that it has received an executed Assignment and
Acceptance and payment of the above-referenced processing fee, (i) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Lender under the Loan
Documents, and (ii) the assignor Lender shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights (except
with respect to SECTION 11.3 hereof) and be released from its obligations under
88
this Agreement (and in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Lender's rights and obligations under this
Agreement and the other Loan Documents, such Lender shall cease to be a party
hereto and thereto), and such assignment shall affect a novation between
Borrower and the Assignee.
(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (1) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (2) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrower or the performance or observance by Borrower of any of its obligations
under this Agreement or any other Loan Document furnished pursuant hereto, (3)
such Assignee confirms that it has received a copy of this Agreement, together
with such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such Assignment and
Acceptance, (4) such Assignee will, independently and without reliance upon
Agent, such assigning Lender or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement, (5)
such Assignee appoints and authorizes Agent to take such actions and to exercise
such powers under this Agreement as are delegated to Agent, by the terms hereof,
together with such powers as are reasonably incidental thereto, and (6) such
Assignee agrees that it will perform all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.
(d) Immediately upon each Assignee's making its processing fee
payment under the Assignment and Acceptance and receipt and acknowledgment by
Agent of such fully executed Assignment and Acceptance, this Agreement shall be
deemed to be amended to the extent, but only to the extent, necessary to reflect
the addition of the Assignee and the resulting adjustment of the Commitments
arising therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender PRO TANTO.
(e) Any Lender may at any time, with the written consent of
Agent, sell to one or more commercial banks, financial institutions, or other
Persons not Affiliates of such Lender (a "Participant") participating interests
in its Obligations, the Commitment, and the other rights and interests of that
Lender (the "Originating Lender") hereunder and under the other Loan Documents
(provided that no written consent of Agent shall be required in connection with
any sale of any such participating interests by a Lender to an Eligible
Transferee); PROVIDED, HOWEVER, that (i) the Originating Lender shall remain a
"Lender" for all purposes of this Agreement and the other Loan Documents and the
Participant receiving the participating interest in the Obligations, the
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Commitments, and the other rights and interests of the Originating Lender
hereunder shall not constitute a "Lender" hereunder or under the other Loan
Documents and the Originating Lender's obligations under this Agreement shall
remain unchanged, (ii) the Originating Lender shall remain solely responsible
for the performance of such obligations, (iii) Borrower, Agent, and the Lenders
shall continue to deal solely and directly with the Originating Lender in
connection with the Originating Lender's rights and obligations under this
Agreement and the other Loan Documents, (iv) no Lender shall transfer or grant
any participating interest under which the Participant has the right to approve
any amendment to, or any consent or waiver with respect to, this Agreement or
any other Loan Document, except to the extent such amendment to, or consent or
waiver with respect to this Agreement or of any other Loan Document would (A)
extend the final maturity date of the Obligations hereunder in which such
Participant is participating, (B) reduce the interest rate applicable to the
Obligations hereunder in which such Participant is participating, (C) release
all or a material portion of the Collateral or guaranties (except to the extent
expressly provided herein or in any of the Loan Documents) supporting the
Obligations hereunder in which such Participant is participating, (D) postpone
the payment of, or reduce the amount of, the interest or fees payable to such
Participant through such Lender, (E) change the amount or due dates of scheduled
principal repayments or prepayments or premiums, or (F) subordinate Agent's
Liens to the Liens of any other creditor of Borrower, and (v) all amounts
payable by Borrower hereunder shall be determined as if such Lender had not sold
such participation, except that, if amounts outstanding under this Agreement are
due and unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set-off in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement. The rights of any Participant only shall be derivative through the
Originating Lender with whom such Participant participates and no Participant
shall have any rights under this Agreement or the other Loan Documents or any
direct rights as to the other Lenders, Agent, Borrower, the Collections, the
Collateral, or otherwise in respect of the Obligations. No Participant shall
have the right to participate directly in the making of decisions by the Lenders
among themselves. The provisions of this SECTION 14.4(E) are solely for the
benefit of the Lender Group, and Borrower shall not have any rights as a third
party beneficiary of such provisions.
(f) In connection with any such assignment or participation or
proposed assignment or participation, a Lender may disclose all documents and
information which it now or hereafter may have relating to Borrower or
Borrower's business.
(g) Any other provision in this Agreement notwithstanding, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank
or U.S. Treasury Regulation 31 CFR ss.203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
14.2 SUCCESSORS. This Agreement shall bind and inure to the benefit of
the respective successors and assigns of each of the parties; PROVIDED, HOWEVER,
that Borrower may not assign this Agreement or any rights or duties hereunder
without the Lenders' prior written consent and any prohibited assignment shall
be absolutely void AB INITIO. No consent to assignment by the Lenders shall
release Borrower from its Obligations. A Lender may assign this Agreement and
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the other Loan Documents and its rights and duties hereunder and thereunder
pursuant to SECTION 14.1 hereof and, except as expressly required pursuant to
SECTION 14.1 hereof, no consent or approval by Borrower is required in
connection with any such assignment.
15. AMENDMENTS; WAIVERS.
15.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by Borrower therefrom, shall be effective unless the same shall be in
writing and signed by the Required Lenders (or by Agent at the written request
of the Required Lenders) and Borrower and then any such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given; PROVIDED, HOWEVER, that no such waiver, amendment, or consent
shall, unless in writing and signed by all of the Lenders affected thereby and
Borrower, do any of the following:
(a) increase or extend any Commitment of any Lender,
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees, or other
amounts due hereunder or under any other Loan Document,
(c) reduce the principal of, or the rate of interest on, any
loan or other extension of credit hereunder, or reduce any fees or other amounts
payable hereunder or under any other Loan Document,
(d) change the percentage of the Commitments that is required
to take any action hereunder,
(e) amend, modify or waive this Section or any provision of
the Agreement providing for consent or other action by all Lenders,
(f) release Collateral other than as permitted by SECTION
16.12,
(g) change the definition of "Required Lenders" or "Pro Rata
Share",
(h) contractually subordinate any of Agent's Liens,
(i) release Borrower from any obligation for the payment of
money, or
(j) change, modify or waive the definition of Borrowing Base
or the definitions of Eligible Accounts, Eligible Inventory, Eligible Real
Property Collateral, Eligible Equipment, Maximum Revolver Amount, Net
Liquidation Percentage, Term Loan Amount, or change, modify or waive SECTION
2.1(B), or SECTION 2.4(B), or
(k) amend, modify or waive any of the provisions of SECTION
16,
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and, PROVIDED FURTHER, HOWEVER, that no amendment, waiver or
consent shall, unless in writing and signed by Agent, Issuing Lender, or Swing
Lender, as applicable, affect the rights or duties of Agent, Issuing Lender, or
Swing Lender, as applicable, under this Agreement or any other Loan Document.
The foregoing notwithstanding, any amendment, modification, waiver, consent,
termination, or release of, or with respect to, any provision of this Agreement
or any other Loan Document that relates only to the relationship of the Lender
Group among themselves, and that does not affect the rights or obligations of
Borrower, shall not require consent by or the agreement of Borrower.
15.2 REPLACEMENT OF HOLDOUT LENDER.
(a) If any action to be taken by the Lender Group or Agent
hereunder requires the unanimous consent, authorization, or agreement of all
Lenders, and a Lender ("Holdout Lender") fails to give its consent,
authorization, or agreement, then Agent, upon at least 5 Business Days prior
irrevocable notice to the Holdout Lender, may permanently replace the Holdout
Lender with one or more substitute Lenders (each, a "Replacement Lender"), and
the Holdout Lender shall have no right to refuse to be replaced hereunder. Such
notice to replace the Holdout Lender shall specify an effective date for such
replacement, which date shall not be later than 15 Business Days after the date
such notice is given.
(b) Prior to the effective date of such replacement, the
Holdout Lender and each Replacement Lender shall execute and deliver an
Assignment and Acceptance Agreement, subject only to the Holdout Lender being
repaid its share of the outstanding Obligations (including an assumption of its
Pro Rata Share of the Risk Participation Liability) without any premium or
penalty of any kind whatsoever. If the Holdout Lender shall refuse or fail to
execute and deliver any such Assignment and Acceptance Agreement prior to the
effective date of such replacement, the Holdout Lender shall be deemed to have
executed and delivered such Assignment and Acceptance Agreement. The replacement
of any Holdout Lender shall be made in accordance with the terms of SECTION
14.1. Until such time as the Replacement Lenders shall have acquired all of the
Obligations, the Commitments, and the other rights and obligations of the
Holdout Lender hereunder and under the other Loan Documents, the Holdout Lender
shall remain obligated to make the Holdout Lender's Pro Rata Share of Advances
and to purchase a participation in each Letter of Credit, in an amount equal to
its Pro Rata Share of the Risk Participation Liability of such Letter of Credit.
15.3 NO WAIVERS; CUMULATIVE REMEDIES. No failure by Agent or any Lender
to exercise any right, remedy, or option under this Agreement or any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated. No waiver by
Agent or any Lender on any occasion shall affect or diminish Agent's and each
Lender's rights thereafter to require strict performance by Borrower of any
provision of this Agreement. Agent's and each Lender's rights under this
Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy that Agent or any Lender may have.
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16. AGENT; THE LENDER GROUP.
16.1 APPOINTMENT AND AUTHORIZATION OF AGENT. Each Lender hereby
designates and appoints Foothill as its representative under this Agreement and
the other Loan Documents and each Lender hereby irrevocably authorizes Agent to
take such action on its behalf under the provisions of this Agreement and each
other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to Agent by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto. Agent
agrees to act as such on the express conditions contained in this SECTION 16.
The provisions of this SECTION 16 are solely for the benefit of Agent, and the
Lenders, and Borrower shall have no rights as a third party beneficiary of any
of the provisions contained herein. Any provision to the contrary contained
elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against Agent; it being expressly understood and
agreed that the use of the word "Agent" is for convenience only, that Foothill
is merely the representative of the Lenders, and only has the contractual duties
set forth herein. Except as expressly otherwise provided in this Agreement,
Agent shall have and may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or refraining from
taking any actions that Agent expressly is entitled to take or assert under or
pursuant to this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, or of any other provision of the Loan Documents
that provides rights or powers to Agent, Lenders agree that Agent shall have the
right to exercise the following powers as long as this Agreement remains in
effect: (a) maintain, in accordance with its customary business practices,
ledgers and records reflecting the status of the Obligations, the Collateral,
the Collections, and related matters, (b) execute or file any and all financing
or similar statements or notices, amendments, renewals, supplements, documents,
instruments, proofs of claim, notices and other written agreements with respect
to the Loan Documents, (c) make Advances, for itself or on behalf of Lenders as
provided in the Loan Documents, (d) exclusively receive, apply, and distribute
the Collections as provided in the Loan Documents, (e) open and maintain such
bank accounts and cash management arrangements as Agent deems necessary and
appropriate in accordance with the Loan Documents for the foregoing purposes
with respect to the Collateral and the Collections, (f) perform, exercise, and
enforce any and all other rights and remedies of the Lender Group with respect
to Borrower, the Obligations, the Collateral, the Collections, or otherwise
related to any of same as provided in the Loan Documents, and (g) incur and pay
such Lender Group Expenses as Agent may deem necessary or appropriate for the
performance and fulfillment of its functions and powers pursuant to the Loan
Documents.
16.2 DELEGATION OF DUTIES. Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
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16.3 LIABILITY OF AGENT. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by Borrower or any Subsidiary or
Affiliate of Borrower, or any officer or director thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of Borrower or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the Books or properties of Borrower or the books or
records or properties of any of Borrower's Subsidiaries or Affiliates.
16.4 RELIANCE BY AGENT. Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent, or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to Borrower
or counsel to any Lender), independent accountants and other experts selected by
Agent. Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless Agent shall first receive
such advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by Lenders against any and all liability and expense that may be
incurred by it by reason of taking or continuing to take any such action. Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement or any other Loan Document in accordance with a request or
consent of the Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders.
16.5 NOTICE OF DEFAULT OR EVENT OF DEFAULT. Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal, interest,
fees, and expenses required to be paid to Agent for the account of the Lenders,
except with respect to Defaults and Events of Default of which Agent has actual
knowledge, unless Agent shall have received 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." Agent promptly
will notify the Lenders of its receipt of any such notice or of any Event of
Default of which Agent has actual knowledge. If any Lender obtains actual
knowledge of any Event of Default, such Lender promptly shall notify the other
Lenders and Agent of such Event of Default. Each Lender shall be solely
responsible for giving any notices to its Participants, if any. Subject to
SECTION 16.4, Agent shall take such action with respect to such Default or Event
of Default as may be requested by the Required Lenders in accordance with
SECTION 9; PROVIDED, HOWEVER, that unless and until Agent has received any such
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request, 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.
16.6 CREDIT DECISION. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of Borrower
and its Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower and any other Person (other than the Lender Group)
party to a Loan Document, and all applicable bank regulatory laws relating to
the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to Borrower. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower and any other Person (other than the Lender Group)
party to a Loan Document. Except for notices, reports, and other documents
expressly herein required to be furnished to the Lenders by Agent, Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of Borrower and any other
Person party to a Loan Document that may come into the possession of any of the
Agent-Related Persons.
16.7 COSTS AND EXPENSES; INDEMNIFICATION. Agent may incur and pay
Lender Group Expenses to the extent Agent reasonably deems necessary or
appropriate for the performance and fulfillment of its functions, powers, and
obligations pursuant to the Loan Documents, including court costs, reasonable
attorneys fees and expenses, costs of collection by outside collection agencies
and auctioneer fees and costs of security guards or insurance premiums paid to
maintain the Collateral, whether or not Borrower is obligated to reimburse Agent
or Lenders for such expenses pursuant to the Loan Agreement or otherwise. Agent
is authorized and directed to deduct and retain sufficient amounts from
Collections received by Agent to reimburse Agent for such out-of-pocket costs
and expenses prior to the distribution of any amounts to Lenders. In the event
Agent is not reimbursed for such costs and expenses from Collections received by
Agent, each Lender hereby agrees that it is and shall be obligated to pay to or
reimburse Agent for the amount of such Lender's Pro Rata Share thereof. Whether
or not the transactions contemplated hereby are consummated, the Lenders shall
indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by
or on behalf of Borrower and without limiting the obligation of Borrower to do
so), according to their Pro Rata Shares, from and against any and all
Indemnified Liabilities; PROVIDED, HOWEVER, that no Lender shall be liable for
the payment to any Agent-Related Person of any portion of such Indemnified
Liabilities resulting solely from such Person's gross negligence or willful
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misconduct nor shall any Lender be liable for the obligations of any Defaulting
Lender in failing to make an Advance or other extension of credit hereunder.
Without limitation of the foregoing, each Lender shall reimburse Agent upon
demand for such Lender's ratable share of any costs or out-of-pocket expenses
(including attorneys fees and expenses) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment, or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that Agent is not reimbursed for such expenses by or on behalf of
Borrower. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of Agent.
16.8 AGENT IN INDIVIDUAL CAPACITY. Foothill and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in, and generally engage in any kind of banking,
lending, trust, financial advisory, underwriting, or other business with
Borrower and its Subsidiaries and Affiliates and any other Person (other than
the Lender Group) party to any Loan Documents as though Foothill were not Agent
hereunder, and, in each case, without notice to or consent of the other members
of the Lender Group. The other members of the Lender Group acknowledge that,
pursuant to such activities, Foothill or its Affiliates may receive information
regarding Borrower or its Affiliates and any other Person (other than the Lender
Group) party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrower or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to them. The
terms "Lender" and "Lenders" include Foothill in its individual capacity.
16.9 SUCCESSOR AGENT. Agent may resign as Agent upon 45 days notice to
the Lenders. If Agent resigns under this Agreement, the Required Lenders shall
appoint a successor Agent for the Lenders. If no successor Agent is appointed
prior to the effective date of the resignation of Agent, Agent may appoint,
after consulting with the Lenders, a successor Agent, which successor Agent
shall be a then current Lender or an Eligible Transferee. If Agent has
materially breached or failed to perform any material provision of this
Agreement or of applicable law, the Required Lenders may agree in writing to
remove and replace Agent with a successor Agent from among the Lenders. In any
such event, upon the acceptance of its appointment as successor Agent hereunder,
such successor Agent shall succeed to all the rights, powers, and duties of the
retiring Agent and the term "Agent" shall mean such successor Agent and the
retiring Agent's appointment, powers, and duties as Agent shall be terminated.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this SECTION 16 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement. If no successor Agent
has accepted appointment as Agent by the date which is 45 days following a
retiring Agent's notice of resignation, the retiring Agent's resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of the
duties of Agent hereunder until such time, if any, as the Lenders appoint a
successor Agent as provided for above.
16.10 LENDER IN INDIVIDUAL CAPACITY. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with Borrower
and its Subsidiaries and Affiliates and any other Person (other than the Lender
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Group) party to any Loan Documents as though such Lender were not a Lender
hereunder without notice to or consent of the other members of the Lender Group.
The other members of the Lender Group acknowledge that, pursuant to such
activities, such Lender and its respective Affiliates may receive information
regarding Borrower or its Affiliates and any other Person (other than the Lender
Group) party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrower or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Lender will use its reasonable best efforts to
obtain), such Lender not shall be under any obligation to provide such
information to them. With respect to the Swing Loans and Agent Advances, Swing
Lender shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not the sub-agent of Agent.
16.11 WITHHOLDING TAXES.
(a) If any Lender is a "foreign corporation, partnership or
trust" within the meaning of the IRC and such Lender claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the IRC, such
Lender agrees with and in favor of Agent and Borrower, to deliver to Agent and
Borrower:
(i) if such Lender claims an exemption from
withholding tax pursuant to its portfolio interest exception, (a) a
statement of the Lender, signed under penalty of perjury, that it is
not a (I) a "bank" as described in Section 881(c)(3)(A) of the IRC,
(II) a 10% shareholder (within the meaning of Section 881(c)(3)(B) of
the IRC), or (III) a controlled foreign corporation described in
Section 881(c)(3)(C) of the IRC, and (B) a properly completed IRS Form
W-8BEN, before the first payment of any interest under this Agreement
and at any other time reasonably requested by Agent or Borrower;
(ii) if such Lender claims an exemption from, or a
reduction of, withholding tax under a United States tax treaty,
properly completed IRS Form W-8BEN before the first payment of any
interest under this Agreement and at any other time reasonably
requested by Agent or Borrower;
(iii) if such Lender claims that interest paid under
this Agreement is exempt from United States withholding tax because it
is effectively connected with a United States trade or business of such
Lender, two properly completed and executed copies of IRS Form W-8ECI
before the first payment of any interest is due under this Agreement
and at any other time reasonably requested by Agent or Borrower;
(iv) such other form or forms as may be required
under the IRC or other laws of the United States as a condition to
exemption from, or reduction of, United States withholding tax.
Such Lender agrees promptly to notify Agent and Borrower of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
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(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form W-8BEN
and such Lender sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of Borrower to such Lender, such Lender
agrees to notify Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of Borrower to such Lender. To the extent of
such percentage amount, Agent will treat such Lender's IRS Form W-8BEN as no
longer valid.
(c) If any Lender is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment to such Lender an
amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to Agent, then Agent may withhold from any
interest payment to such Lender not providing such forms or other documentation
an amount equivalent to the applicable withholding tax.
(d) If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Lender shall indemnify and hold Agent harmless for all amounts
paid, directly or indirectly, by Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts
payable to Agent under this Section, together with all costs and expenses
(including attorneys fees and expenses). The obligation of the Lenders under
this subsection shall survive the payment of all Obligations and the resignation
or replacement of Agent.
(e) All payments made by Borrower hereunder or under any note
will be made without setoff, counterclaim, or other defense, except as required
by applicable law other than for Taxes (as defined below). All such payments
will be made free and clear of, and without deduction or withholding for, any
present or future taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature now or hereafter imposed by any jurisdiction (other
than the United States) or by any political subdivision or taxing authority
thereof or therein (other than of the United States) with respect to such
payments (but excluding, any tax imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein (i) measured by or based on
the net income or net profits of a Lender, or (ii) to the extent that such tax
results from a change in the circumstances of the Lender, including a change in
the residence, place of organization, or principal place of business of the
Lender, or a change in the branch or lending office of the Lender participating
in the transactions set forth herein) and all interest, penalties or similar
liabilities with respect thereto (all such non-excluded taxes, levies, imposts,
duties, fees, assessments or other charges being referred to collectively as
"Taxes"). If any Taxes are so levied or imposed, Borrower agrees to pay the full
amount of such Taxes, and such additional amounts as may be necessary so that
every payment of all amounts due under this Agreement or under any note,
including any amount paid pursuant to this SECTION 16.11(E) after withholding or
deduction for or on account of any Taxes, will not be less than the amount
provided for herein; PROVIDED, HOWEVER, that Borrower shall not be required to
increase any such amounts payable to Agent or any Lender (i) that is not
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organized under the laws of the United States, if such Person fails to comply
with the other requirements of this SECTION 16.11, or (ii) if the increase in
such amount payable results from Agent's or such Lender's own willful misconduct
or gross negligence. Borrower will furnish to Agent as promptly as possible
after the date the payment of any Taxes is due pursuant to applicable law
certified copies of tax receipts evidencing such payment by Borrower.
16.12 COLLATERAL MATTERS.
(a) The Lenders hereby irrevocably authorize Agent, at its
option and in its sole discretion, to release any Lien on any Collateral (i)
upon the termination of the Commitments and payment and satisfaction in full by
Borrower of all Obligations, (ii) constituting property being sold or disposed
of if a release is required or desirable in connection therewith and if Borrower
certifies to Agent that the sale or disposition is permitted under SECTION 7.4
of this Agreement or the other Loan Documents (and Agent may rely conclusively
on any such certificate, without further inquiry), (iii) constituting property
in which Borrower owned no interest at the time the security interest was
granted or at any time thereafter, or (iv) constituting property leased to
Borrower under a lease that has expired or is terminated in a transaction
permitted under this Agreement. Except as provided above, Agent will not execute
and deliver a release of any Lien on any Collateral without the prior written
authorization of (y) if the release is of all or any material portion of the
Collateral, all of the Lenders, or (z) otherwise, the Required Lenders. Upon
request by Agent or Borrower at any time, the Lenders will confirm in writing
Agent's authority to release any such Liens on particular types or items of
Collateral pursuant to this SECTION 16.12; PROVIDED, HOWEVER, that (1) Agent
shall not be required to execute any document necessary to evidence such release
on terms that, in Agent's opinion, would expose Agent to liability or create any
obligation or entail any consequence other than the release of such Lien without
recourse, representation, or warranty, and (2) such release shall not in any
manner discharge, affect, or impair the Obligations or any Liens (other than
those expressly being released) upon (or obligations of Borrower in respect of)
all interests retained by Borrower, including, the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.
(b) Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by Borrower or is cared
for, protected, or insured or has been encumbered, or that Agent's Liens have
been properly or sufficiently or lawfully created, perfected, protected, or
enforced or are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to Agent pursuant to any of the Loan Documents, it being understood
and agreed that in respect of the Collateral, or any act, omission, or event
related thereto, subject to the terms and conditions contained herein, Agent may
act in any manner it may deem appropriate, in its sole discretion given Agent's
own interest in the Collateral in its capacity as one of the Lenders and that
Agent shall have no other duty or liability whatsoever to any Lender as to any
of the foregoing, except as otherwise provided herein.
16.13 RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS.
(a) Each of the Lenders agrees that it shall not, without the
express consent of Agent, and that it shall, to the extent it is lawfully
entitled to do so, upon the request of Agent, set off against the Obligations,
any amounts owing by such Lender to Borrower or any deposit accounts of Borrower
now or hereafter maintained with such Lender. Each of the Lenders further agrees
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that it shall not, unless specifically requested to do so by Agent, take or
cause to be taken any action, including, the commencement of any legal or
equitable proceedings, to foreclose any Lien on, or otherwise enforce any
security interest in, any of the Collateral the purpose of which is, or could
be, to give such Lender any preference or priority against the other Lenders
with respect to the Collateral.
(b) If, at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations arising under, or relating to, this
Agreement or the other Loan Documents, except for any such proceeds or payments
received by such Lender from Agent pursuant to the terms of this Agreement, or
(ii) payments from Agent in excess of such Lender's Pro Rata Share portion of
all such distributions by Agent, such Lender promptly shall (1) turn the same
over to Agent, in kind, and with such endorsements as may be required to
negotiate the same to Agent, or in immediately available funds, as applicable,
for the account of all of the Lenders and for application to the Obligations in
accordance with the applicable provisions of this Agreement, or (2) purchase,
without recourse or warranty, an undivided interest and participation in the
Obligations owed to the other Lenders so that such excess payment received shall
be applied ratably as among the Lenders in accordance with their Pro Rata
Shares; provided, however, that if all or part of such excess payment received
by the purchasing party is thereafter recovered from it, those purchases of
participations shall be rescinded in whole or in part, as applicable, and the
applicable portion of the purchase price paid therefor shall be returned to such
purchasing party, but without interest except to the extent that such purchasing
party is required to pay interest in connection with the recovery of the excess
payment.
16.14 AGENCY FOR PERFECTION. Agent hereby appoints each other Lender as
its agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting Agent's Liens in assets which, in accordance with Article 9 of the
Code can be perfected only by possession. Should any Lender obtain possession of
any such Collateral, such Lender shall notify Agent thereof, and, promptly upon
Agent's request therefor shall deliver such Collateral to Agent or in accordance
with Agent's instructions.
16.15 PAYMENTS BY AGENT TO THE LENDERS. All payments to be made by
Agent to the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds pursuant to such wire transfer instructions as each
party may designate for itself by written notice to Agent. Concurrently with
each such payment, Agent shall identify whether such payment (or any portion
thereof) represents principal, premium, or interest of the Obligations.
16.16 CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS. Each member
of the Lender Group authorizes and directs Agent to enter into this Agreement
and the other Loan Documents relating to the Collateral, for the benefit of the
Lender Group. Each member of the Lender Group agrees that any action taken by
Agent in accordance with the terms of this Agreement or the other Loan Documents
relating to the Collateral and the exercise by Agent of its powers set forth
therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.
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16.17 FIELD AUDITS AND EXAMINATION REPORTS; CONFIDENTIALITY;
DISCLAIMERS BY LENDERS; OTHER REPORTS AND INFORMATION. By becoming a party to
this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report (each a "Report" and collectively, "Reports") prepared by or
at the request of Agent, and Agent shall so furnish each Lender with such
Reports,
(b) expressly agrees and acknowledges that Agent does not (i)
make any representation or warranty as to the accuracy of any Report, and (ii)
shall not be liable for any information contained in any Report,
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing any
audit or examination will inspect only specific information regarding Borrower
and will rely significantly upon the Books, as well as on representations of
Borrower's personnel,
(d) agrees to keep all Reports and other material, non-public
information regarding Borrower and its Subsidiaries and their operations,
assets, and existing and contemplated business plans in a confidential manner;
it being understood and agreed by Borrower that in any event such Lender may
make disclosures (a) to counsel for and other advisors, accountants, and
auditors to such Lender, (b) reasonably required by any bona fide potential or
actual Assignee or Participant in connection with any contemplated or actual
assignment or transfer by such Lender of an interest herein or any participation
interest in such Lender's rights hereunder, (c) of information that has become
public by disclosures made by Persons other than such Lender, its Affiliates,
assignees, transferees, or Participants, or (d) as required or requested by any
court, governmental or administrative agency, pursuant to any subpoena or other
legal process, or by any law, statute, regulation, or court order; provided,
however, that, unless prohibited by applicable law, statute, regulation, or
court order, such Lender shall notify Borrower of any request by any court,
governmental or administrative agency, or pursuant to any subpoena or other
legal process for disclosure of any such non-public material information
concurrent with, or where practicable, prior to the disclosure thereof, and
(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i) to hold Agent
and any other Lender preparing a Report harmless from any action the
indemnifying Lender may take or conclusion the indemnifying Lender may reach or
draw from any Report in connection with any loans or other credit accommodations
that the indemnifying Lender has made or may make to Borrower, or the
indemnifying Lender's participation in, or the indemnifying Lender's purchase
of, a loan or loans of Borrower, and (ii) to pay and protect, and indemnify,
defend and hold Agent, and any such other Lender preparing a Report harmless
from and against, the claims, actions, proceedings, damages, costs, expenses,
and other amounts (including, attorneys fees and costs) incurred by Agent and
any such other Lender preparing a Report as the direct or indirect result of any
third parties who might obtain all or part of any Report through the
indemnifying Lender.
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In addition to the foregoing: (x) any Lender may from time to
time request of Agent in writing that Agent provide to such Lender a copy of any
report or document provided by Borrower to Agent that has not been
contemporaneously provided by Borrower to such Lender, and, upon receipt of such
request, Agent promptly shall provide a copy of same to such Lender, (y) to the
extent that Agent is entitled, under any provision of the Loan Documents, to
request additional reports or information from Borrower, any Lender may, from
time to time, reasonably request Agent to exercise such right as specified in
such Lender's notice to Agent, whereupon Agent promptly shall request of
Borrower the additional reports or information reasonably specified by such
Lender, and, upon receipt thereof from Borrower, Agent promptly shall provide a
copy of same to such Lender, and (z) any time that Agent renders to Borrower a
statement regarding the Loan Account, Agent shall send a copy of such statement
to each Lender.
16.18 SEVERAL OBLIGATIONS; NO LIABILITY. Notwithstanding that certain
of the Loan Documents now or hereafter may have been or will be executed only by
or in favor of Agent in its capacity as such, and not by or in favor of the
Lenders, any and all obligations on the part of Agent (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender. Each Lender shall
be solely responsible for notifying its Participants of any matters relating to
the Loan Documents to the extent any such notice may be required, and no Lender
shall have any obligation, duty, or liability to any Participant of any other
Lender. Except as provided in SECTION 16.7, no member of the Lender Group shall
have any liability for the acts or any other member of the Lender Group. No
Lender shall be responsible to Borrower or any other Person for any failure by
any other Lender to fulfill its obligations to make credit available hereunder,
nor to advance for it or on its behalf in connection with its Commitment, nor to
take any other action on its behalf hereunder or in connection with the
financing contemplated herein.
17. GENERAL PROVISIONS.
17.1 EFFECTIVENESS. This Agreement shall be binding and deemed
effective when executed by Borrower, Agent, and each Lender whose signature is
provided for on the signature pages hereof.
17.2 SECTION HEADINGS. Headings and numbers have been set forth herein
for convenience only. Unless the contrary is compelled by the context,
everything contained in each Section applies equally to this entire Agreement.
17.3 INTERPRETATION. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed against the Lender Group or Borrower,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
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17.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement shall
be severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
17.5 AMENDMENTS IN WRITING. This Agreement only can be amended by a
writing signed by Agent (on behalf of the requisite Lenders) and Borrower.
17.6 COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
17.7 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or
payment of the Obligations by Borrower or any Guarantor or the transfer to the
Lender Group of any property should for any reason subsequently be declared to
be void or voidable under any state or federal law relating to creditors'
rights, including provisions of the Bankruptcy Code relating to fraudulent
conveyances, preferences, or other voidable or recoverable payments of money or
transfers of property (collectively, a "Voidable Transfer"), and if the Lender
Group is required to repay or restore, in whole or in part, any such Voidable
Transfer, or elects to do so upon the reasonable advice of its counsel, then, as
to any such Voidable Transfer, or the amount thereof that the Lender Group is
required or elects to repay or restore, and as to all reasonable costs,
expenses, and attorneys fees of the Lender Group related thereto, the liability
of Borrower or such Guarantor automatically shall be revived, reinstated, and
restored and shall exist as though such Voidable Transfer had never been made.
17.8 INTEGRATION. This Agreement, together with the other Loan
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
[Signature page to follow.]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date first above written.
NABI BIOPHARMACEUTICALS,
a Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer
▇▇▇▇▇ FARGO FOOTHILL, INC.,
a California corporation, as Agent and as a Lender
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
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