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EXHIBIT 10.8
CREDIT AGREEMENT
DATED AS OF JULY 15, 1997
AMONG
HORIZON MEDICAL PRODUCTS, INC.,
THE LENDERS REFERRED TO HEREIN
AND
NATIONSCREDIT COMMERCIAL CORPORATION,
AS AGENT
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TABLE OF CONTENTS
Page
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ARTICLE I - DEFINITIONS................................................................................. 1
SECTION 1.01. Certain Defined Terms........................................................... 1
SECTION 1.02. Accounting Terms and Determinations.............................................18
SECTION 1.03. Other Definitional Provisions...................................................19
ARTICLE II - TRANCHE A LOANS............................................................................19
SECTION 2.01. Tranche A Loans.................................................................19
SECTION 2.02. Tranche A Notes.................................................................19
SECTION 2.03. Interest on the Tranche A Loans.................................................19
SECTION 2.04. Repayments and Prepayments of Tranche A Notes...................................19
ARTICLE III - TRANCHE B LOANS AND WARRANTS..............................................................22
SECTION 3.01. Tranche B Loans.................................................................22
SECTION 3.02. Tranche B Notes.................................................................22
SECTION 3.03. Interest on the Tranche B Loans.................................................22
SECTION 3.04. Repayments and Prepayments of Tranche B Notes...................................22
SECTION 3.05. Warrants........................................................................24
ARTICLE IV - WORKING CAPITAL LOANS......................................................................25
SECTION 4.01. Working Capital Loans and Commitments...........................................25
SECTION 4.02. Working Capital Notes...........................................................25
SECTION 4.03. Interest on the Working Capital Loans...........................................25
SECTION 4.04. Advancing Working Capital Loans.................................................25
SECTION 4.05. Mandatory Repayments and Prepayments............................................26
SECTION 4.06. Optional Prepayments............................................................26
SECTION 4.07. Application of Payments.........................................................26
ARTICLE V - CONDITIONS..................................................................................27
SECTION 5.01 Conditions to closing...........................................................27
SECTION 5.02. Conditions to Each Loan.........................................................29
ARTICLE VI - REPRESENTATIONS AND WARRANTIES.............................................................31
SECTION 6.01. Corporate Existence and Power...................................................31
SECTION 6.02. Corporate and Governmental Authorization; No Contravention......................31
SECTION 6.03. Binding Effect; Liens of Security Documents.....................................31
SECTION 6.04. Financial Information...........................................................32
SECTION 6.05. Litigation......................................................................33
SECTION 6.06. Ownership of Property, Liens....................................................33
SECTION 6.07. No Default......................................................................33
SECTION 6.08. No Burdensome Restrictions......................................................33
SECTION 6.09. Labor Matters...................................................................34
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SECTION 6.10. Subsidiaries; Other Equity Investments..........................................34
SECTION 6.11. Investment Company Act..........................................................34
SECTION 6.12. Margin Regulations..............................................................34
SECTION 6.13. Taxes...........................................................................34
SECTION 6.14. Compliance with ERISA...........................................................35
SECTION 6.15. Brokers.........................................................................35
SECTION 6.16. Related Transactions............................................................35
SECTION 6.17. Employment, Shareholders and Subscription Agreements............................35
SECTION 6.18. Full Disclosure.................................................................35
SECTION 6.19. Representations and Warranties Incorporated from Other Operative Documents......36
SECTION 6.20. Private Offering................................................................36
SECTION 6.21. Compliance with Environmental Requirements; No Hazardous Materials..............36
SECTION 6.22. Capitalization..................................................................38
SECTION 6.23. Real Property Interests.........................................................38
ARTICLE VII - AFFIRMATIVE COVENANTS.....................................................................39
SECTION 7.01. Financial Statements and Other Reports..........................................39
SECTION 7.02. Payment of Obligations..........................................................43
SECTION 7.03. Conduct of Business and Maintenance of Existence................................43
SECTION 7.04. Maintenance of Property; Insurance..............................................43
SECTION 7.05. Compliance with Laws............................................................44
SECTION 7.06. Inspection of Property, Books and Records.......................................44
SECTION 7.07. Use of Proceeds.................................................................44
SECTION 7.08. Further Assurances..............................................................45
SECTION 7.09. Board Meetings..................................................................45
SECTION 7.10. Lenders' Meetings...............................................................45
SECTION 7.11. Consummation of the Acquisition.................................................45
SECTION 7.12. Hazardous Materials; Remediation................................................45
SECTION 7.13. Landlord and Warehouseman Waivers...............................................46
SECTION 7.14. Collateral Reports..............................................................46
SECTION 7.15. Collections; Right to Notify Account Debtors....................................46
SECTION 7.16. Enforcement of Covenants Not to Compete.........................................47
SECTION 7.17. Hedging Facilities..............................................................47
ARTICLE VIII - NEGATIVE COVENANTS.......................................................................48
SECTION 8.01. Debt............................................................................48
SECTION 8.02. Negative Pledge.................................................................48
SECTION 8.03. Capital Stock...................................................................49
SECTION 8.04. Restricted Payments.............................................................49
SECTION 8.05. ERIS............................................................................50
SECTION 8.06. Consolidations, Mergers and Sales of Assets.....................................50
SECTION 8.07. Purchase of Assets, Investments.................................................51
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SECTION 8.08. Transactions with Affiliates....................................................51
SECTION 8.09. Amendments or Waivers...........................................................51
SECTION 8.10. Fiscal Year.....................................................................51
SECTION 8.11. Management Compensation.........................................................51
SECTION 8.12. Lease Payments..................................................................51
SECTION 8.13. Minimum Net Worth...............................................................52
SECTION 8.14. Capital Expenditures............................................................52
SECTION 8.15. Total Debt Coverage Ratio.......................................................52
SECTION 8.16. Leverage........................................................................52
SECTION 8.17. Minimum EBITDA..................................................................52
SECTION 8.18. Interest Coverage...............................................................53
ARTICLE IX -EVENTS OF DEFAULT...........................................................................54
SECTION 9.01. Events of Default...............................................................54
ARTICLE X - FEES, EXPENSES AND INDEMNITIES; GENERAL PROVISIONS RELATING TO PAYMENTS.....................58
SECTION 10.01. Fees...........................................................................58
SECTION 10.02. Computation of Interest and Fees...............................................58
SECTION 10.03. General Provisions Regarding Payments..........................................58
SECTION 10.04. Expenses.......................................................................59
SECTION 10.05. Indemnity......................................................................59
SECTION 10.06. Taxes..........................................................................60
SECTION 10.07. Funding Losses.................................................................60
SECTION 10.08. Maximum Interest...............................................................60
ARTICLE XI - THE AGENT..................................................................................62
SECTION 11.01. Appointment and Authorization..................................................62
SECTION 11.03. Action by Agent................................................................62
SECTION 11.04. Consultation with Experts......................................................62
SECTION 11.05. Liability of Agent.............................................................62
SECTION 11.06. Indemnification................................................................62
SECTION 11.07. Credit Decision................................................................63
SECTION 11.08. Successor Agent................................................................63
ARTICLE XII - MISCELLANEOUS.............................................................................64
SECTION 12.01. Survival.......................................................................64
SECTION 12.02. No Waivers.....................................................................64
SECTION 12.03. Notices........................................................................64
SECTION 12.04. Severability...................................................................64
SECTION 12.05. Amendments and Waivers.........................................................64
SECTION 12.06. Successors and Assigns; Registration...........................................65
SECTION 12.07. Collateral.....................................................................66
SECTION 12.08. Headings.......................................................................66
SECTION 12.09. GOVERNING LAW; SUBMISSION TO JURISDICTION......................................67
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SECTION 12.10. Notice of Breach by Agent or Lender............................................67
SECTION 12.11. WAIVER OF JURY TRIAL...........................................................67
SECTION 12.12. Counterparts...................................................................68
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EXHIBIT A - Tranche A Note
EXHIBIT B - Tranche B Note
EXHIBIT C - Working Capital Note
EXHIBIT D - Warrant
EXHIBIT E - Warrantholders Rights Agreement
EXHIBIT F - Company Security Agreement
EXHIBIT G - Company Pledge Agreement
EXHIBIT H - Subsidiary Guaranty Agreement
EXHIBIT I - Subsidiary Security Agreement
EXHIBIT J - Shareholder Pledge Agreement
EXHIBIT K - Borrowing Base Certificate
EXHIBIT L - Opinion of Counsel to the Company
EXHIBIT M - Opinion of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, Special Counsel
to the Agent
SCHEDULE 5.01(n) - Closing Costs to be Paid at Closing
SCHEDULE 5.01(o) - Debt to be Repaid at Closing
SCHEDULE 6.10 - Subsidiaries
SCHEDULE 6.15 - Brokers
SCHEDULE 6.17 - Employment, Shareholders' and Subscription Agreements
SCHEDULE 6.21 - Environmental Matters
SCHEDULE 6.22 - Initial Capitalization
SCHEDULE 6.23 - Real Property Interests
SCHEDULE 7.04 - Required Insurance
SCHEDULE 8.01 - Permitted Debt
SCHEDULE 8.02 - Permitted Liens
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CREDIT AGREEMENT
CREDIT AGREEMENT dated as of July 15, 1997 among HORIZON
MEDICAL PRODUCTS, INC., the LENDERS listed on the signature pages hereof and
NATIONSCREDIT COMMERCIAL CORPORATION, as Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. CERTAIN DEFINED TERMS. The following terms have
the following meanings:
"ACQUISITION" means the purchase of all of the outstanding
common stock of Strato/Infusaid on or before the Closing Date as described in
the Acquisition Documents.
"ACQUISITION DOCUMENTS" means (i) the Strato/Infusaid Purchase
Agreement and (ii) the Arrow Purchase Agreement.
"ADJUSTED EBITDA" means, for any period, EBITDA for such
period less Consolidated Capital Expenditures for such period.
"AFFILIATE" means (i) any Person that directly, or indirectly
through one or more intermediaries, controls the Company (a "CONTROLLING
PERSON") or (ii) any Person (other than the Company or any of its Subsidiaries)
which is controlled by or is under common control with a Controlling Person. As
used herein, the term "control" of a Person means the possession, directly or
indirectly, of the power to vote 10% or more of any class of voting securities
of such Person or to direct or cause the direction of the management or policies
of a Person, whether through the ownership of voting securities, by contract or
otherwise.
"AGENT" means NationsCredit in its capacity as agent for the
Lenders hereunder, and its successors in such capacity.
"ARROW" means Arrow Interventional, Inc., a Delaware
corporation.
"ARROW PURCHASE AGREEMENT" means the Asset Purchase and Stock
Redemption Agreement among the Company, Arrow and Strato/Infusaid, dated as of
July 15, 1997, including the exhibits and schedules thereto, and all agreements,
documents and instruments executed and delivered pursuant thereto or in
connection therewith.
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"ASSET SALE" means any sale, lease or other disposition
(including any such transaction effected by way of merger or consolidation) by
the Company or any Subsidiary of any asset, but excluding (i) dispositions of
inventory in the ordinary course of business, (ii) dispositions of Temporary
Cash Investments and cash payments otherwise permitted under this Agreement;
provided that a disposition of assets not excluded by clauses (i) or (ii) above
during any Fiscal Year shall not constitute an Asset Sale unless and until (and
only to the extent that) (x) the aggregate Net Cash Proceeds of such disposition
of assets are not used for the purchase of reasonably equivalent replacements of
such assets within 90 days thereof or (y) the aggregate Net Cash Proceeds from
such disposition (if not used as provided in clause (x) above), when combined
with all other such dispositions previously made during such Fiscal Year and not
used as provided in clause (x) above, exceeds $100,000.
"BENEFIT ARRANGEMENT" means at any time an employee benefit
plan within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group.
"BORROWING BASE" means, on any date, a dollar amount equal to
80% of Eligible Domestic Receivables, 80% of Eligible Secured Foreign
Receivables, 50% of Eligible Unsecured Foreign Receivables (not to exceed
$500,000 of Borrowing Base availability at any time) and 50% of Eligible
Inventory, each determined as of such date; provided, however, that the
Receivables and Inventory of Horizon/Neostar shall be excluded for purposes of
determining the Borrowing Base.
"BORROWING BASE CERTIFICATE" means a certificate, duly
executed by the chief financial officer or treasurer of the Company,
appropriately completed and substantially in the form of Exhibit K.
"BUSINESS DAY" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized by law to
close.
"CAPITAL LEASE" of any Person means any lease of any property
(whether real, personal or mixed) by such Person as lessee which would, in
accordance with GAAP, be required to be accounted for as a capital lease on the
balance sheet of such Person.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (42 U.S.C. Sections 9601 et seq.), as
amended from time to time, and regulations promulgated thereunder.
"CLASS" refers, with respect to Loans, to whether such Loans
are Tranche A Loans, Tranche B Loans or Working Capital Loans and, with respect
to Commitments, to whether such Commitments are Tranche A Commitments, Tranche B
Commitments or Working Capital Commitments.
"CLOSING DATE" means July 15, 1997, or such other date as the
parties hereto agree to in writing, but in any event not later than August 15,
1997.
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"CODE" means the Internal Revenue Code of 1986, as amended
from time to time.
"COLLATERAL" means all property mortgaged, pledged or
otherwise purported to be subjected to a Lien pursuant to the Security
Documents.
"COMMITMENT" means a Tranche A Commitment, Tranche B
Commitment or Working Capital Commitment, or any combination of the foregoing,
as the context may require.
"COMMON STOCK" means the Voting Common Stock or the Non-Voting
Common Stock, or both, as the context may require.
"COMPANY" means Horizon Medical Products, Inc., a Georgia
corporation.
"COMPANY ACCOUNT" means the account specified on the signature
pages hereof into which all Loans to the Company shall be made available, or
such other account as the Company shall from time to time specify by notice to
the Lenders.
"COMPANY PLEDGE AGREEMENT" means the Pledge Agreement dated as
of the date hereof, between the Company and the Agent, substantially in the form
of Exhibit G.
"COMPANY SECURITY AGREEMENT" means the Security Agreement
dated as of the date hereof between the Company and the Agent, substantially in
the form of Exhibit F.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the
aggregate amount of expenditures by the Company and its Consolidated
Subsidiaries for plant, property and equipment during such period (including any
such expenditure by way of acquisition of a Person or by way of assumption of
indebtedness or other obligations of a Person, to the extent reflected as plant,
property and equipment), but excluding any such expenditures made for the
replacement or restoration of assets to the extent financed by condemnation
awards or proceeds of insurance received with respect to the loss or taking of
or damage to the asset or assets being replaced or restored.
"CONSOLIDATED CURRENT ASSETS" means, at any date, the
consolidated current assets (excluding cash and cash equivalents) of the Company
and its Consolidated Subsidiaries determined as of such date.
"CONSOLIDATED CURRENT LIABILITIES" means, at any date, (i) the
consolidated current liabilities (excluding Debt) of the Company and its
Consolidated Subsidiaries plus (ii) the current liabilities of any Person (other
than the Company or a Consolidated Subsidiary) which are Guaranteed by the
Company or a Consolidated Subsidiary, all determined as of such date.
"CONSOLIDATED FREE CASH FLOW" means, for any period, EBITDA
for such period minus the following amounts:
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(a) all cash payments of income taxes by the Company and its
Consolidated Subsidiaries during such period;
(b) Consolidated Capital Expenditures for such period, to the
extent that such Consolidated Capital Expenditures are permitted by
Section 8.13 and are not financed during such period (and will not be
financed in any future period) with the proceeds of Debt of the Company
or any Subsidiary permitted by Section 8.01(c); and
(c) any net gain in respect of Asset Sales during such period.
"CONSOLIDATED INTEREST EXPENSE" means for any period, the
aggregate amount of all interest on Debt (including payments in the nature of
interest under a Capital Lease), that would, in accordance with GAAP, be
deducted in determining consolidated net income for such period.
"CONSOLIDATED NET WORTH" means as of the date of any
determination thereof, the amount of the shareholder's equity of the Company and
its Consolidated Subsidiaries as would be shown on the consolidated balance
sheet of the Company and its Consolidated Subsidiaries, determined on a
consolidated basis in accordance with GAAP.
"CONSOLIDATED SUBSIDIARY" means at any date any Subsidiary or
other entity the accounts of which would be consolidated with those of the
Company and its consolidated financial statements if such statements were
prepared as of such date.
"CONSOLIDATED TOTAL DEBT" means at any date the Debt of the
Company and its Consolidated Subsidiaries, determined on a consolidated basis at
such date and without giving effect to any amount attributable to original issue
discount in connection with the issuance of the Warrants.
"▇▇▇▇▇▇▇ WARRANT" means the Warrant to Purchase 10,000 Shares
of Common Stock issued by the Company to ▇▇▇▇▇▇▇ Capital Partners, L.P. -
Enhanced Appreciation, dated April 26, 1994, as amended by Agreement dated
September __, 1995, among ▇▇▇▇▇▇▇ Capital Partners, L.P. - Enhanced
Appreciation, the Company and the Management Stockholders.
"CREDIT PARTY" means the Company, any Subsidiary of the
Company and any shareholder of the Company which is a party to a Shareholder
Pledge Agreement.
"DEBT" of a Person means at any date, without duplication, (i)
all obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all Capital Leases of such Person, (v) all obligations of such
Person to purchase securities (or other property) which arise out of or in
connection with the sale of the same or substantially similar securities (or
property), (vi) all non-contingent obligations of such Person to reimburse any
bank or other Person in respect of amounts paid under a letter of
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credit or similar instrument, (vii) all equity securities of such Person (other
than the Warrants) subject to repurchase or redemption otherwise than at the
sole option of such Person, (viii) all Debt secured by a Lien on any asset of
such Person, whether or not such Debt is otherwise an obligation of such Person,
and (ix) all Debt of others Guaranteed by such Person.
"DEFAULT" means any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of time or both
would, unless cured or waived, become an Event of Default.
"EBITDA" means, for any period, the consolidated net income of
the Company and its Consolidated Subsidiaries for such period, after all
expenses and other proper charges except depreciation, interest, amortization
and income taxes, determined in accordance with GAAP eliminating (i) all
intercompany items, (ii) all earnings attributable to equity interests in
Persons that are not Subsidiaries unless actually received by the Company or a
Consolidated Subsidiary, (iii) all income arising from the forgiveness,
adjustment, or negotiated settlement of any indebtedness, (iv) any extraordinary
items of income or expense, (v) any increase or decrease in income arising from
any change in the Company's method of accounting, subject to Section 1.02, and
(vi) any interest income; provided that, for purposes of determining EBITDA for
periods on or before December 31, 1997, there shall be excluded from such
calculation any non-recurring expenses related to the acquisition or relocation
of Strato/Infusaid.
"ELIGIBLE INVENTORY" means, at any date of determination
thereof, the aggregate value (determined at the lower of cost or market on a
basis consistent with that used in the preparation of the financial statements
referred to in Section 6.04(a)) at such date of all Inventory owned by the
Company or any Subsidiary (other than Horizon/Neostar) and located in any
jurisdiction in the United States of America as to which appropriate UCC
financing statements have been filed naming the Company or such Subsidiary as
"debtor" and the Agent as "secured party", all net of any amounts payable by the
Company or such Subsidiary in respect of commissions, processing fees or other
charges, excluding, however, without duplication (i) any such Inventory which
has been shipped to a customer, even if on a consignment or "sale or return"
basis and whether or not such Inventory has been subsequently returned by such
customer; (ii) any Inventory subject to a Lien (other than Liens created
pursuant to the Security Agreements or the Sirrom Loan Documents), including a
landlord's or warehouseman's Lien; (iii) any Inventory against which the Company
or any Subsidiary has taken a reserve; (iv) any Inventory not subject to a valid
and perfected first-priority Lien in favor of the Agent under the Security
Agreements, subject to no prior or equal Lien; (v) any Inventory not produced in
compliance with the applicable requirements of the Fair Labor Standards Act; and
(vi) any supply, scrap or obsolete Inventory and any Inventory that is not
reasonably marketable.
"ELIGIBLE DOMESTIC RECEIVABLES" means, at any date of
determination thereof, the aggregate amount of all Receivables due at such date
from an account debtor that is both domiciled in the United States of America
and (if not a natural person) organized under the laws of the United States of
America or any political subdivision thereof, to the Company or a Subsidiary of
the Company (other than Horizon/Neostar), other than the following (determined
without duplication):
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(a) any Receivable that is due from an Affiliate of the
Company and any Receivable that is not denominated and payable in U.S.
dollars;
(b) any Receivable that does not comply with all applicable
legal requirements, including, without limitation, all laws, rules,
regulations and orders of any governmental or judicial authority
(including any Receivable due from an account debtor located in the
States of Indiana, New Jersey or Minnesota, unless the Company or the
applicable Subsidiary (at the time the Receivable was created and at
all times thereafter) (i) had filed and has maintained effective a
current notice of business activities report with the appropriate
office or agency of the States of Indiana, New Jersey or Minnesota, as
applicable, or (ii) was and has continued to be exempt from filing such
report and has provided the Agent with satisfactory evidence thereof);
(c) any Receivable in respect of which there is any unresolved
dispute with the account debtor, but only to the extent of such
dispute;
(d) any Receivable payable more than 90 days after the date of
the issuance of the original invoice therefor;
(e) any Receivable that remains unpaid for more than 60 days
from the original due date specified at the time of the issuance of the
original invoice therefor;
(f) any unbilled Receivable and any Receivable in respect of
goods not yet shipped or services not yet performed;
(g) any Receivable arising outside the ordinary course of
business of the Credit Party whose activities gave rise thereto;
(h) any Receivable in respect of which there has been
established a contra account, or which is due from an account debtor to
whom the Company or any Subsidiary owes a trade payable, or that
otherwise may be subject to any right of recission, set-off,
recoupment, counterclaim or defense, whether or not arising out of
transactions concerning the contract, in each case to the extent of
such account payable, or such right of recission, set-off, recoupment,
counterclaim or defense.
(i) any Receivable that is not subject to a first priority
perfected Lien under the Security Agreements and any Receivable
evidenced by an "instrument" (as defined in the UCC) not in the
possession of the Agent;
(j) any Receivable due from an account debtor (i) as to which
on such date Receivables representing more than 25% of aggregate amount
of Receivables of such account debtor have remained unpaid for more
than 60 days from the original due date specified at the time of the
original issuance of the invoice therefor, (ii) in respect of which a
credit loss has been recognized or reserved by the Company or any
Subsidiary,
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(iii) in respect of which the Agent shall have notified the Company
that such account debtor does not have a satisfactory credit standing
as determined in good faith by the Agent, (iv) that is a Subsidiary or
an Affiliate of the Company, (v) that is the United States of America
or any department, agency or instrumentality thereof or any state
government or any department, agency or political subdivision thereof,
unless the Company or the applicable Subsidiary has complied in all
respects with the Federal Assignment of Claims Act of 1940 (31 U.S.C.
ss.ss.3727; 41 U.S.C. ss.15) or any similar provision of applicable
state law, (vi) that is the subject of a case or proceeding of the type
described in clauses (h) and (i) of Section 9.01, or (vii) the prospect
of payment of which, in the good faith judgment of the Lender, has been
impaired;
(k) any Receivable due from an account debtor that the Company
or the applicable Subsidiary has not instructed such account debtor in
the invoice therefor to make payments in respect of such Receivable to
a Lockbox Account (as defined in the Security Agreements) or from any
account debtor that makes payments in a form that cannot be accepted in
the applicable Lockbox Account;
(l) any Receivable due from an account debtor at any time, to
the extent that the aggregate outstanding amount of Receivables due
from such account debtor and its affiliates at such time exceeds 20% of
the aggregate amount of all Receivables due to the Company and its
Subsidiaries at such time, but only to the extent of such excess;
(m) any Receivable that is not the binding and enforceable
obligation of the account debtor; and
(n) any Receivable that the Company or the applicable
Subsidiary does not have the full and unqualified right to assign and
▇▇▇▇▇ ▇ ▇▇▇▇ on to the Agent as security for the benefit of the Agent
and the Lenders hereunder.
"ELIGIBLE SECURED FOREIGN RECEIVABLES" means, at any date of
determination thereof, the aggregate amount of all Receivables due at such date
from an account debtor other than an account debtor that is both domiciled in
the United States of America and (if not a natural person) organized under the
laws of the United States of America or any political subdivision thereof, to
the Company or a Subsidiary of the Company (other than Horizon/Neostar), which
are secured by a letter of credit satisfactory to the Agent and the Required
Lenders, other than the following (determined without duplication):
(a) any Receivable due from an account debtor that is an
Affiliate of the Company and any Receivable that is not denominated and
payable in U.S. dollars;
(b) any Receivable that does not comply with all applicable
legal requirements, including, without limitation, all laws, rules,
regulations and orders of any governmental or judicial authority;
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(c) any Receivable in respect of which there is any unresolved
dispute with the account debtor, but only to the extent of such
dispute;
(d) any Receivable payable more than 90 days after the date of
the issuance of the original invoice therefor;
(e) any Receivable that remains unpaid for more than 60 days
from the original due date specified at the time of the issuance of the
original invoice therefor;
(f) any unbilled Receivable and any Receivable in respect of
goods not yet shipped or services not yet performed;
(g) any Receivable arising outside the ordinary course of
business of the Credit Party whose activities gave rise thereto;
(h) any Receivable in respect of which there has been
established a contra account, or which is due from an account debtor to
whom the Company or any Subsidiary owes a trade payable, or that
otherwise may be subject to any right of recission, set-off,
recoupment, counterclaim or defense, whether or not arising out of
transactions concerning the contract, in each case to the extent of
such account payable, or such right of recission, set-off, recoupment,
counterclaim or defense.
(i) any Receivable that is not subject to a first priority
perfected Lien under the Security Agreements and any Receivable
evidenced by an "instrument" (as defined in the UCC) not in the
possession of the Agent;
(j) any Receivable due from an account debtor (i) as to which
on such date Receivables representing more than 25% of aggregate amount
of Receivables of such account debtor have remained unpaid for more
than 60 days from the original due date specified at the time of the
original issuance of the invoice therefor, (ii) in respect of which a
credit loss has been recognized or reserved by the Company or any
Subsidiary, (iii) in respect of which the Agent shall have notified the
Company that such account debtor does not have a satisfactory credit
standing as determined in good faith by the Agent, (iv) that is a
Subsidiary or an Affiliate of the Company, (v) that is the subject of a
case or proceeding of the type described in clauses (h) and (i) of
Section 9.01, or (vi) the prospect of payment of which, in the good
faith judgment of the Lender, has been impaired;
(k) any Receivable due from an account debtor that the Company
or the applicable Subsidiary has not instructed such account debtor in
the invoice therefor to make payments in respect of such Receivable to
a Lockbox Account (as defined in the Security Agreements) or from any
account debtor that makes payments in a form that cannot be accepted in
the applicable Lockbox Account;
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15
(l) any Receivable due from an account debtor at any time, to
the extent that the aggregate outstanding amount of Receivables due
from such account debtor and its affiliates at such time exceeds 20% of
the aggregate amount of all Receivables due to the Company and its
Subsidiaries at such time, but only to the extent of such excess;
(m) any Receivable that is not the binding and enforceable
obligation of the account debtor; and
(n) any Receivable that the Company or the applicable
Subsidiary does not have the full and unqualified right to assign and
▇▇▇▇▇ ▇ ▇▇▇▇ on to the Agent as security for the benefit of the Agent
and the Lenders hereunder.
"ELIGIBLE UNSECURED FOREIGN RECEIVABLES" means, at any date of
determination thereof, the aggregate amount of all Receivables (other than
Eligible Secured Foreign Receivables) due at such date from an account debtor
other than an account debtor that is both domiciled in the United States of
America and (if not a natural person) organized under the laws of the United
States of America or any political subdivision thereof, to the Company or a
Subsidiary of the Company (other than Horizon/Neostar), other than the following
(determined without duplication):
(a) any Receivable due from an account debtor that is an
Affiliate of the Company and any Receivable that is not denominated and
payable in U.S. dollars;
(b) any Receivable that does not comply with all applicable
legal requirements, including, without limitation, all laws, rules,
regulations and orders of any governmental or judicial authority;
(c) any Receivable in respect of which there is any unresolved
dispute with the account debtor, but only to the extent of such
dispute;
(d) any Receivable payable more than 90 days after the date of
the issuance of the original invoice therefor;
(e) any Receivable that remains unpaid for more than 60 days
from the original due date specified at the time of the issuance of the
original invoice therefor;
(f) any unbilled Receivable and any Receivable in respect of
goods not yet shipped or services not yet performed;
(g) any Receivable arising outside the ordinary course of
business of the Credit Party whose activities gave rise thereto;
(h) any Receivable in respect of which there has been
established a contra account, or which is due from an account debtor to
whom the Company or any Subsidiary owes a trade payable, or that
otherwise may be subject to any right of recission, set-off,
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16
recoupment, counterclaim or defense, whether or not arising out of
transactions concerning the contract, in each case to the extent of
such account payable, or such right of recission, set-off, recoupment,
counterclaim or defense.
(i) any Receivable that is not subject to a first priority
perfected Lien under the Security Agreements and any Receivable
evidenced by an "instrument" (as defined in the UCC) not in the
possession of the Agent;
(j) any Receivable due from an account debtor (i) as to which
on such date Receivables representing more than 25% of aggregate amount
of Receivables of such account debtor have remained unpaid for more
than 60 days from the original due date specified at the time of the
original issuance of the invoice therefor, (ii) in respect of which a
credit loss has been recognized or reserved by the Company or any
Subsidiary, (iii) in respect of which the Agent shall have notified the
Company that such account debtor does not have a satisfactory credit
standing as determined in good faith by the Agent, (iv) that is a
Subsidiary or an Affiliate of the Company, (v) that is the subject of a
case or proceeding of the type described in clauses (h) and (i) of
Section 9.01, or (vi) the prospect of payment of which, in the good
faith judgment of the Lender, has been impaired;
(k) any Receivable due from an account debtor that the Company
or the applicable Subsidiary has not instructed such account debtor in
the invoice therefor to make payments in respect of such Receivable to
a Lockbox Account (as defined in the Security Agreements) or from any
account debtor that makes payments in a form that cannot be accepted in
the applicable Lockbox Account;
(l) any Receivable due from an account debtor at any time, to
the extent that the aggregate outstanding amount of Receivables due
from such account debtor and its affiliates at such time exceeds 20% of
the aggregate amount of all Receivables due to the Company and its
Subsidiaries at such time, but only to the extent of such excess;
(m) any Receivable that is not the binding and enforceable
obligation of the account debtor; and
(n) any Receivable that the Company or the applicable
Subsidiary does not have the full and unqualified right to assign and
▇▇▇▇▇ ▇ ▇▇▇▇ on to the Agent as security for the benefit of the Agent
and the Lenders hereunder.
"ENVIRONMENTAL LAWS" means any and all federal, state, local
and foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, codes, plans, injunctions, permits, concessions,
grants, franchises, licenses, agreements and governmental restrictions, whether
now or hereafter in effect, relating to human health, the environment or to
emissions, discharges or releases of pollutants, contaminants, Hazardous
Materials or wastes into the environment, including ambient air, surface water,
ground water or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage,
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17
disposal, transport or handling of pollutants, contaminants, Hazardous Materials
or wastes or the clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, or any successor statute.
"ERISA GROUP" means the Company, any Subsidiary and all
members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which, together with the
Company or any Subsidiary, are treated as a single employer under Section 414 of
the Code.
"EVENT OF DEFAULT" has the meaning set forth in Section 9.01.
"EXCESS CASH FLOW" means, for any period, an amount equal to
(i) EBITDA for such period minus (ii) the sum of (x) Consolidated Capital
Expenditures (except to the extent financed by the proceeds of Debt of the
Company or any Subsidiary permitted by Section 8.01(c)), (y) Total Debt Service
(exclusive of amortization of debt discount or premium), and (z) all amounts
accrued with respect to income taxes by the Company and its Subsidiaries, all as
determined for such period, plus (iii) any interest income for such period plus
(iv) any amounts deducted in determining Excess Cash Flow in the prior period
for accrued income taxes that were not paid in cash by the Company in such prior
period or in the period for which Excess Cash Flow is being determined.
"FINANCING DOCUMENTS" means this Agreement, the Notes, the
Subsidiary Guaranty Agreement, and the Security Documents.
"FISCAL YEAR" means a fiscal year of the Company.
"GAAP" has the meaning set forth in Section 1.02.
"GUARANTEE" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of assuring in any
other manner the obligee of such Debt or other obligation of the payment thereof
or to protect such obligee against loss in respect thereof (in whole or in
part), provided that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"HAZARDOUS MATERIALS" means (i) any "hazardous substance" as
defined in CERCLA; (ii) asbestos; (iii) polychlorinated biphenyls; (iv)
petroleum, its derivatives,
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18
by-products and other hydrocarbons; and (v) any other toxic, radioactive,
caustic or otherwise hazardous substance regulated under Environmental Laws.
"HAZARDOUS MATERIALS CONTAMINATION" means contamination
(whether now existing or hereafter occurring) of the improvements, buildings,
facilities, personalty, soil, groundwater, air or other elements on or of the
relevant property by Hazardous Materials, or any derivatives thereof, or on or
of any other property as a result of Hazardous Materials, or any derivatives
thereof, generated on, emanating from or disposed of in connection with the
relevant property.
"HORIZON/NEOSTAR" means Horizon Acquisition Corp., a Georgia
corporation d/b/a Neostar Medical Technologies.
"INDEMNITEES" has the meaning set forth in Section 10.05.
"INSURANCE ACCOUNT" has the meaning set forth in the Security
Agreements.
"INTEREST DETERMINATION DATE" means July 1, 1997 and the first
Business Day of each calendar month thereafter.
"INVENTORY" means inventory (as defined in Article 9 of the
UCC) to the extent comprised of readily marketable materials of a type
manufactured, consumed or held for resale (including raw materials and
work-in-process) by the Company or any Subsidiary in the ordinary course of its
business as presently conducted, or as modified from time to time in a manner
not prohibited by this Agreement.
"INVESTMENT" means any investment in any Person, whether by
means of share purchase, capital contribution, loan, time deposit or otherwise.
"KEY-PERSON LIFE INSURANCE POLICY" has the meaning set forth
in Section 7.04(e).
"LENDER" means NationsCredit and each other Person that
becomes a holder of a Note pursuant to Section 12.06, and their respective
successors, and "Lenders" means all of the foregoing.
"LIEN" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind, or any other type
of preferential arrangement that has the practical effect of creating a security
interest, in respect of such asset, or any financing statement filed in respect
of such asset. For the purposes of this Agreement and the other Financing
Documents, the Company or any Subsidiary shall be deemed to own subject to a
Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to such asset.
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19
"LOANS" means the Tranche A Loans, the Tranche B Loans and the
Working Capital Loans, or any combination of the foregoing, as the context may
require.
"LOCKBOX ACCOUNTS" has the meaning set forth in the Security
Agreements.
"LOCKBOX AGREEMENT" means, collectively, the Lockbox
Agreements each in form and substance satisfactory to Lender, entered into among
the Agent, the Company and/or its Subsidiaries and the Lockbox Banks pursuant to
the Security Agreements.
"LOCKBOX BANK" means, collectively, the banks or other
depository institutions at which Lockbox Accounts are established and
maintained.
"MAJOR CASUALTY PROCEEDS" means (i) the aggregate insurance
proceeds received in connection with one or more related events by the Company
or any of its Subsidiaries under any Property Insurance Policy or (ii) any award
or other compensation with respect to any condemnation of property (or any
transfer or disposition of property in lieu of condemnation) received by the
Company or any of its Subsidiaries, if the amount of such aggregate insurance
proceeds or award or other compensation exceeds $1,500,000.
"MANAGEMENT STOCKHOLDERS" means ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇. and ▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
"MARGIN STOCK" has the meaning assigned thereto in Regulation
G, U or X of the Federal Reserve Board, as the same may be amended, supplemented
or modified from time to time.
"MATERIAL ADVERSE EFFECT" shall mean (a) a material adverse
effect on the business, assets, operations, prospects or condition (financial or
otherwise) of the Company and its Consolidated Subsidiaries, taken as a whole,
(b) a material impairment of the ability of the Company or any other Credit
Party to perform any of its obligations under any Financing Document to which it
is or will be a party or (c) a material impairment of the rights of or benefits
available to the Agent or the Lenders under any Credit Document.
"MATERIAL PLAN" means at any time a Plan having Unfunded
Liabilities.
"MULTIEMPLOYER PLAN" means at any time an employee pension
benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any
member of the ERISA Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions,
including for these purposes any Person which ceased to be a member of the ERISA
Group during such five year period.
"NATIONSCREDIT" means NationsCredit Commercial Corporation,
a Delaware corporation, and its successors.
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20
"NEOSTAR" means Neostar Holding, Inc., a Delaware
corporation formerly known as Neostar Medical Technologies, Inc.
"NET CASH PROCEEDS" means, with respect to any transaction, an
amount equal to the cash proceeds received by the Company or any of its
Subsidiaries from or in respect of such transaction (including any cash proceeds
received as income or other proceeds of any non-cash proceeds of such
transaction), less (x) any expenses (including commissions) reasonably incurred
by such Person in respect of such transaction and (y) in the case of an Asset
Sale, the amount of any Debt secured by a Lien on the related asset and
discharged from the proceeds of such Asset Sale and any taxes paid or payable by
such Person (as reasonably estimated by the chief financial officer of the
Company) in respect of such Asset Sale.
"NON-VOTING COMMON STOCK" means Class B Common Stock, $.001
par value per share, of the Company.
"NOTES" means the Tranche A Notes, the Tranche B Notes and the
Working Capital Notes, or any combination of the foregoing, as the context may
require.
"NOTICE OF BORROWING" has the meaning set forth in Section
4.04.
"OFFICER'S CERTIFICATE" means a certificate executed on behalf
of a Person by its chairman of the board (if an officer), chief executive
officer or president or one of its vice presidents and by its chief financial
officer or treasurer.
"OPERATIVE DOCUMENTS" means the Financing Documents, the
Acquisition Documents, the Sirrom Loan Documents, the Warrants and the
Warrantholders Rights Agreement.
"PAYMENT ACCOUNT" means, with respect to each Lender, the
account specified on the signature pages hereof into which all payments by or on
behalf of the Company to such Lender under the Financing Documents shall be
made, or such other account as such Lender shall from time to time specify by
notice to the Company.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"PERMITTED CONTEST" means a contest maintained in good faith
by appropriate proceedings promptly instituted and diligently conducted and with
respect to which such reserve or other appropriate provision, if any, as shall
be required in conformity with GAAP shall have been made; provided that
compliance with the obligation that is the subject of such contest is
effectively stayed during such challenge.
"PERMITTED LIENS" means Liens permitted pursuant to Section
8.02.
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21
"PERSON" means any natural person, corporation, limited
partnership, general partnership, joint stock company, joint venture,
association, limited liability company, company, trust, bank, trust company,
land trust, business trust or other organization, whether or not a legal entity,
and any government agency or political subdivision thereof.
"PLAN" means at any time an employee pension benefit plan
(other than a Multiemployer Plan) which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"PLEDGE AGREEMENTS" means, collectively, the Company Pledge
Agreement and the Shareholder Pledge Agreements.
"PROPERTY INSURANCE POLICY" means any insurance policy
maintained by the Company or any of its Subsidiaries covering losses with
respect to tangible real or personal property or improvements or losses from
business interruption.
"QUARTERLY DATE" means each January 1, April 1, July 1 and
October 1.
"RECEIVABLE" means, as at any date of determination thereof,
the unpaid portion of the obligation, as stated in the respective invoice, of a
customer of the Company or a Subsidiary in respect of goods sold or leased, or
services rendered, in the ordinary course of business, which amount has been
earned by performance under the terms of the related contract and recognized as
revenue on the books of the Company or such Subsidiary, net of any credits,
rebates or offsets owed to the customer and also net of any commissions payable
to Persons other than employees of the Company or its Subsidiaries.
"REQUIRED LENDERS" means at any time Lenders holding Notes
evidencing at least 51% of the aggregate unpaid principal amount of the Loans
or, if no Loans are outstanding, having at least 51% of the aggregate amount of
the Commitments.
"RESTRICTED PAYMENT" means as to any Person (i) any dividend
or other distribution on any shares of such Person's capital stock (other than
dividends payable solely in shares of its capital stock), (ii) any payment on
account of the principal of or premium, if any, on any Debt convertible into
shares of such Person's capital stock, or (iii) any payment on account of
purchase, redemption, retirement or acquisition of (A) any shares of such
Person's capital stock or (B) any option, warrant or other right to acquire
shares of such Person's capital stock (except an acquisition of shares of such
Person's capital stock upon the conversion thereof into or the exchange thereof
for other shares of such Person's capital stock).
"SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time, and the rules and regulations promulgated thereunder.
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22
"SECURITY AGREEMENTS" means, collectively, the Company
Security Agreement and the Subsidiary Security Agreement.
"SECURITY DOCUMENTS" means the Security Agreements, the Pledge
Agreements, the Lockbox Agreements, and any other agreement pursuant to which
the Company or any of its Subsidiaries or Affiliates provides a Lien on its
assets in favor of the Agent for the benefit of the Lenders, and all
supplementary assignments, security agreements, pledge agreements,
acknowledgments or other documents delivered or to be delivered pursuant to the
terms hereof or of any other Security Document.
"SHAREHOLDER PLEDGE AGREEMENTS" means the Pledge Agreements
dated as of the date hereof between the Management Stockholders of the Company
and the Agent, substantially in the form of Exhibit J.
"SIRROM LOAN AGREEMENT" means the Loan Agreement, dated as of
September 25, 1995, between the Borrower, Sirrom Capital Corporation and Cardiac
Medical, Inc., as assigned by Sirrom Capital Corporation to NationsCredit as of
the Closing Date.
"SIRROM LOAN DOCUMENTS" means the Sirrom Loan Agreement and
each and every promissory note, guaranty, security agreement, collateral
document or other instrument, agreement, acknowledgement or other document
executed or delivered in connection therewith, as assigned by Sirrom Capital
Corporation to NationsCredit as of the Closing Date.
"STRATO/INFUSAID" means Strato/Infusaid, Inc., a Massachusetts
corporation.
"STRATO/INFUSAID PURCHASE AGREEMENT" means the Purchase
Agreement among the Company, Strato/Infusaid, Arrow and Pfizer, Inc., dated as
of June 20, 1997, including the exhibits and schedules thereto, and all
agreements, documents and instruments executed and delivered pursuant thereto or
in connection therewith.
"SUBORDINATED DEBT" means the Debt of Horizon Acquisition
Corp. evidenced by (i) that certain Subordinated Secured Note, dated October 24,
1995, executed by Horizon Acquisition Corp. in favor of Neostar in the principal
amount of $2,461,017 and (ii) those certain Non-Competition and Consulting
Agreements, each dated October 24, 1995, entered into between Horizon
Acquisition Corp. and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
"SUBORDINATED SECURITY AGREEMENT" means the Security
Agreement, dated October 24, 1995, executed by Horizon in favor of Neostar,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
as Trustee of the ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Family Trust, securing the Subordinated Debt.
"SUBSIDIARY" means, with respect to any Person, any
corporation or other entity of which securities or other ownership interests
having ordinary voting power to elect a majority
-16-
23
of the board of directors or other persons performing similar functions are at
the time directly or indirectly owned by such Person. Unless otherwise specified
or required by the context herein, the term Subsidiary shall be deemed to refer
to a Subsidiary of the Company.
"SUBSIDIARY GUARANTY AGREEMENT" means the guaranty agreement
between the Subsidiaries listed on Exhibit A thereto and the Agent,
substantially in the form of Exhibit H.
"SUBSIDIARY SECURITY AGREEMENT" means the Security Agreement
between the Subsidiaries listed on Exhibit A thereto and the Agent,
substantially in the form of Exhibit I.
"TEMPORARY CASH INVESTMENT" means any Investment in (i) direct
obligations of the United States or any agency thereof, or obligations
guaranteed by the United States or any agency thereof, (ii) commercial paper
rated at least A-1 by Standard & Poor's Rating Group and P-1 by ▇▇▇▇▇'▇
Investors Service, Inc., (iii) time deposits with, including certificates of
deposit issued by, any office located in the United States of any bank or trust
company which is organized under the laws of the United States or any State
thereof and has capital, surplus and undivided profits aggregating at least
$500,000,000 and which issues (or the parent of which issues) certificates of
deposit or commercial paper with a rating described in clause (ii) above, or
(iv) repurchase agreements with respect to securities described in clause (i)
above entered into with an office of a bank or trust company meeting the
criteria specified in clause (iii) above, provided in each case that such
Investment matures within one year from the date of acquisition thereof by the
Company or any of its Subsidiaries.
"TOTAL DEBT SERVICE" means, for any period, the sum of: (i)
the aggregate interest charges incurred by the Company and its Consolidated
Subsidiaries for such period, whether expensed or capitalized, including the
portion of any obligation under Capital Leases allocable to interest expense in
accordance with GAAP and the portion of any debt discount or premium (but not
expenses of issuance) that shall be amortized in such period, and (ii) the
aggregate amount during such period of mandatory principal payments pursuant to
Sections 2.04(a) and 3.04(a) and all other scheduled principal payments on all
other Debt, including the portion of any payments under Capital Leases that is
allocable to principal.
"TRANCHE A COMMITMENT" means, for NationsCredit as a Lender,
an amount equal to $21,500,000.
"TRANCHE A LOAN" has the meaning set forth in Section 2.01.
"TRANCHE A NOTE" has the meaning set forth in Section 2.02.
"TRANCHE B COMMITMENT" means, for NationsCredit as a Lender,
an amount equal to $3,500,000.
"TRANCHE B LOAN" has the meaning set forth in Section 3.01.
"TRANCHE B NOTE" has the meaning set forth in Section 3.02.
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24
"UCC" has the meaning set forth in the Security Agreement.
"UNFUNDED LIABILITIES" means, with respect to any Plan at any
time, the amount (if any) by which (i) the value of all benefit liabilities
under such Plan, determined on a plan termination basis using the assumptions
prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the
fair market value of all Plan assets allocable to such liabilities under Title
IV of ERISA (excluding any accrued but unpaid contributions), all determined as
of the then most recent valuation date for such Plan, but only to the extent
that such excess represents a potential liability of a member of the ERISA Group
to the PBGC or any other Person under Title IV of ERISA.
"VOTING COMMON STOCK" means Class A Common Stock, $.001 par
value per share, of the Company.
"WARRANTHOLDERS RIGHTS AGREEMENT" means the Warrantholders
Rights Agreement dated as of the date hereof among the Company and the
warrantholders and stockholders referred to therein, substantially in the form
of Exhibit E.
"WARRANT SHARES" means the shares of Non-Voting Common Stock
issuable upon exercise of the Warrants.
"WARRANTS" has the meaning set forth in Section 3.05.
"WORKING CAPITAL BORROWING" means the aggregation of Working
Capital Loans of the Lenders to be made to the Company pursuant to Section 4.01
on a single date.
"WORKING CAPITAL COMMITMENT" means, (i) for NationsCredit as a
Lender, initially $3,000,000, less any amount assigned to another Person that
becomes a Lender after the date hereof (a "SUBSEQUENT LENDER") and (ii) for any
Subsequent Lender, the amount of Working Capital Commitment assigned to such
Lender.
"WORKING CAPITAL LOANS" has the meaning set forth in Section
4.01.
"WORKING CAPITAL NOTE" has the meaning set forth in Section
4.02.
SECTION 1.02. ACCOUNTING TERMS AND DETERMINATIONS. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared, in
accordance with generally accepted accounting principles as in effect from time
to time ("GAAP"), applied on a basis consistent (except for changes concurred in
by the Company's independent public accountants) with the most recent audited
consolidated financial statements of the Company and its Consolidated
Subsidiaries delivered to the Lenders; provided that, if the Company notifies
the Lenders that the Company wishes to amend any covenant in Article VIII or the
definition of "Excess Cash Flow" or any related definition to
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25
eliminate the effect of any change in GAAP on the operation of such covenant or
the determination of "Excess Cash Flow" (or if the Agent notifies the Company
that the Required Lenders wish to amend Article VIII or the definition of
"Excess Cash Flow" or any related definition for such purpose), then the
Company's compliance with such covenant or "Excess Cash Flow", as the case may
be, shall be determined on the basis of GAAP in effect immediately before the
relevant change in GAAP became effective, until either such notice is withdrawn
or such covenant is amended in a manner satisfactory to the Company and the
Required Lenders.
SECTION 1.03. OTHER DEFINITIONAL PROVISIONS. References in
this Agreement to "Articles", "Sections", "Schedules" or "Exhibits" shall be to
Articles, Sections, Schedules or Exhibits of or to this Agreement unless
otherwise specifically provided. Any of the terms defined in Section 1.01 may,
unless the context otherwise requires, be used in the singular or plural
depending on the reference. "Include", "includes" and "including" shall be
deemed to be followed by "without limitation" whether or not they are in fact
followed by such words or words of like import. "Writing", "written" and
comparable terms refer to printing, typing and other means of reproducing words
in a visible form. References to any agreement or contract are to such agreement
or contract as amended, modified or supplemented from time to time in accordance
with the terms hereof and thereof. References to any Person include the
successors and assigns of such Person. References "from" or "through" any date
mean, unless otherwise specified, "from and including" or "through and
including", respectively.
ARTICLE II
TRANCHE A LOANS
SECTION 2.01. TRANCHE A LOANS. Upon the terms and subject to
the conditions set forth herein, NationsCredit agrees to make one senior
floating rate loan to the Company on the Closing Date pursuant to this Section
2.01 in a principal amount equal to its Tranche A Commitment (such loan, or any
portion thereof assigned to any other Lender in accordance with Section 12.06, a
"Tranche A Loan"). Tranche A Loans are not revolving in nature and amounts of
such Loans repaid or prepaid may not be reborrowed. The Tranche A Commitment
shall terminate at the close of business on the Closing Date.
SECTION 2.02. TRANCHE A NOTES. Each Tranche A Loan shall be
evidenced by a Tranche A Note of the Company substantially in the form of
Exhibit A (each such note, a "Tranche A Note"), dated the Closing Date in a
principal amount equal to the initial principal amount of such Tranche A Loan,
duly executed and delivered by the Company and payable to the Lender of such
Tranche A Loan.
SECTION 2.03. INTEREST ON THE TRANCHE A LOANS. Interest on
each Tranche A Loan shall accrue from the Closing Date on the outstanding
principal amount thereof at the rate set forth in the Tranche A Note, and shall
be payable monthly in arrears as set forth therein.
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SECTION 2.04. REPAYMENTS AND PREPAYMENTS OF TRANCHE A NOTES
(a) Mandatory Scheduled Repayments. There shall become due and
payable and the Company shall repay an aggregate principal amount of the Tranche
A Notes on each Quarterly Date, commencing with the third Quarterly Date
following the Closing Date, equal to the applicable installment amount set forth
below (or, if less, the aggregate outstanding principal amount of the Tranche A
Notes), in each case together with accrued and unpaid interest on the principal
amount being repaid to but excluding the date of payment:
Installments Principal Amount
------------ ----------------
Nos. 1 - 4 $ 537,500
Nos. 5 - 12 806,250
Nos. 13 - 24 1,075,000
(b) Mandatory Incremental Prepayments. There shall become due
and payable, and the Company shall prepay, an aggregate principal amount of the
Tranche A Notes (or, if less, the aggregate outstanding principal amount of the
Tranche A Notes) in the following amounts at the following times, in the case of
any prepayment of the remaining Tranche A Notes in whole, accrued and unpaid
interest on the principal amount being prepaid to but excluding the date of such
payment:
(i) on the 90th day following the last day of each Fiscal
Year, beginning with the Fiscal Year ending December 31, 1997, an
amount equal to 50% of the Excess Cash Flow for such Fiscal Year (or,
in the case of the payment for the first such period, for the period
beginning on the Closing Date and ending on the last day of such Fiscal
Year);
(ii) on the date on which the Company or any of its
Subsidiaries receives (x) any payment which constitutes Major Casualty
Proceeds or (y) any payment under the Key-Person Life Insurance Policy,
an amount equal to the amount of such payment, unless, in the case of
Major Casualty Proceeds only, the Required Lenders shall otherwise
direct (in which case the amount of such payment shall be deposited
into one or more of the Insurance Accounts to be held and applied in
accordance with Section 5 of the Security Agreements);
(iii) promptly upon receipt by the Company of the proceeds
from the issuance and sale of common stock or other equity securities
after the Closing Date, an amount equal to 100% of the Net Cash
Proceeds of such issuance and sale in excess of $250,000 in the
aggregate over the term of this Agreement; and
(iv) promptly upon receipt by the Company or any Subsidiary of
the proceeds of any Asset Sale after the Closing Date, an amount equal
to 100% of the Net Cash Proceeds of such Asset Sale.
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(c) Optional Prepayments.
(i) From and after the Closing Date, the Company may prepay
the Tranche A Notes in whole or in part (in principal amounts of
$100,000 or in any integral multiple of $10,000 in excess thereof) upon
at least 10 days' prior irrevocable written notice to the Lenders (and
such amounts specified in such notice shall become due and payable on
the date so specified), by paying an amount equal to the aggregate
principal amount being prepaid together with any premium due pursuant
to Section 2.04 (e) below, plus, in the case of any prepayment of the
remaining Tranche A Notes in whole, accrued and unpaid interest on the
principal amount being prepaid to but excluding the date of payment.
(ii) Notwithstanding the foregoing, the Company may not prepay
the Tranche A Notes in whole pursuant to this subsection (c) with the
proceeds of other Debt unless simultaneously with such prepayment the
Company (A) prepays any outstanding balance of the Tranche B Notes,
together with the premium due with respect thereto and accrued interest
thereon, in accordance with Section 3.04(c), (B) repays all Working
Capital Loans, together with any premium due with respect thereto and
accrued interest thereon, in accordance with Section 4.05, and
terminates the Working Capital Commitments, and (C) redeems in cash, as
provided in Section 5.2 of the Warrants, the number of Warrants which
any Lender holding such Warrants requests the Company in writing to
redeem.
(d) Application of Payments. Each repayment or prepayment of
less than all of the outstanding aggregate principal amount of the Tranche A
Notes shall be applied pro rata to all the Tranche A Notes according to their
respective outstanding principal amounts. The principal amount of each payment
pursuant to Section 2.04(b) or (c) shall be applied to reduce each of the
remaining payments required by Section 2.04(a) in the inverse order of the
maturity of such installments. No payment pursuant to Section 2.04(a) or (c)
shall (except as reflected in any determination of Excess Cash Flow) reduce the
amount of any payment required by Section 2.04(b).
(e) Prepayment Premium. Upon each prepayment pursuant to
Section 2.04(c) prior to the second anniversary of the Closing Date, the
Borrower shall pay to the Agent for the ratable account of the Lenders, a
premium equal to 3.00% of the principal amount being prepaid; provided that no
prepayment premium shall be due as a result of a prepayment pursuant to an
underwritten public offering.
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ARTICLE III
TRANCHE B LOANS AND WARRANTS
SECTION 3.01. TRANCHE B LOANS. Upon the terms and subject to
the conditions set forth herein, NationsCredit agrees to make one floating rate
loan to the Company on the Closing Date pursuant to this Section 3.01 in a
principal amount equal to its Tranche B Commitment (such loan, or any portion
thereof assigned to any other Lender in accordance with Section 12.06, a
"Tranche B Loan"). Tranche B Loans are not revolving in nature and amounts of
such Loans repaid or prepaid may not be reborrowed. The Tranche B Commitment
shall terminate at the close of business on the Closing Date. NationsCredit may,
in its discretion, use up to $1,500,000 of the Tranche B Commitment to purchase
on the Closing Date the outstanding indebtedness of the Company evidenced and
secured by the Sirrom Loan Documents, in which event the principal amount of
Tranche B Loans advanced under the Tranche B Commitment shall be reduced by such
amount and the mandatory scheduled prepayments under Section 3.04(a) below shall
be reduced pro rata by such amount.
SECTION 3.02. TRANCHE B NOTES. Each Tranche B Loan shall be
evidenced by a Tranche B Note of the Company substantially in the form of
Exhibit B (each such note, a "Tranche B Note"), dated the Closing Date in a
principal amount equal to the initial principal amount of such Tranche B Loan,
duly executed and delivered by the Company and payable to the Lender of such
Tranche B Loan.
SECTION 3.03. INTEREST ON THE TRANCHE B LOANS. Interest on
each Tranche B Loan shall accrue from the Closing Date on the outstanding
principal amount thereof at the rate set forth in the Tranche B Note, and shall
be payable monthly in arrears as set forth therein.
SECTION 3.04. REPAYMENTS AND PREPAYMENTS OF TRANCHE B NOTES
(a) Mandatory Scheduled Payments. There shall become due and
payable and the Company shall repay the Tranche B Notes on each Quarterly Date
occurring after the earlier of: (i) the date that the Tranche A Notes have been
paid in full and (ii) the sixth anniversary of the Closing Date, in an amount
equal to $875,000 per quarterly installment (or such other installment amounts
as may be specified in the Tranche B Notes), together with accrued and unpaid
interest on the principal amount being repaid to but excluding the date of
payment.
(b) Mandatory Incremental Prepayments. There shall become due
and payable, and the Company shall prepay, an aggregate principal amount of the
Tranche B Notes (or, if less, the aggregate outstanding principal amount of the
Tranche B Notes) in the following amounts at the following times, in each case
together with, in the case of any prepayment of the remaining Tranche B Notes in
whole, accrued and unpaid interest on the principal amount being prepaid to but
excluding the date of such payment:
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(i) on the 90th day following the last day of each Fiscal
Year, beginning with the Fiscal Year ending December 31, 1997, an
amount equal to the excess (if any) of (x) 50% of Excess Cash Flow for
such Fiscal Year then ended (or, in the case of the payment for the
first such period, for the period beginning on the Closing Date and
ending on the last day of such Fiscal Year) over (y) the amount applied
to the repayment of Tranche A Notes on such date in accordance with
Section 2.04(b)(i);
(ii) on the date on which the Company or any of its
Subsidiaries receives (x) any payment which constitutes Major Casualty
Proceeds or (y) any payment under the Key-Person Life Insurance Policy,
an amount equal to the excess (if any) of (A) the amount of such
payment over (B) any amount of such payment applied to the repayment of
Tranche A Notes on such date in accordance with Section 2.04(b)(ii)
unless, in the case of Major Casualty Proceeds only, the Required
Lenders shall otherwise direct (in which case the amount of such
payment shall be deposited into one or more of the Insurance Accounts
to be held and applied in accordance with Section 5 of the Security
Agreements);
(iii) promptly upon receipt by the Company of the proceeds
from the issuance and sale of common stock or other equity securities
after the Closing Date, an amount equal to the excess (if any) of (x)
100% of the Net Cash Proceeds of such issuance and sale in excess of
$250,000 in the aggregate over the term of this Agreement, over (y) any
amount of such Net Cash Proceeds applied to the repayment of Tranche A
Notes on such date in accordance with Section 2.04(b)(iii); and
(iv) promptly upon receipt by the Company or any Subsidiary of
the proceeds of any Asset Sale after the Closing Date, an amount equal
to the excess (if any) of (x) 100% of the Net Cash Proceeds of such
Asset Sale over (y) any amount of such Net Cash proceeds applied to the
repayment of Tranche A Notes on such date in accordance with Section
2.04(b) (iv).
(c) Optional Prepayments.
(i) From and after the date on which the Company has paid the
Tranche A Notes in full, the Company may prepay the Tranche B Notes in
whole or in part (in principal amounts of $100,000 or in any integral
multiple of $10,000 in excess thereof) upon at least 10 days' prior
irrevocable written notice to the Lenders (and such amounts specified
in such notice shall become due and payable on the date so specified),
by paying an amount equal to the aggregate principal amount being
prepaid together with any premium due pursuant to Section 3.04(e)
below, plus, in the case of any prepayment of the remaining Tranche B
Notes in whole, accrued and unpaid interest on the principal amount
being prepaid to but excluding the date of payment.
(ii) Notwithstanding the foregoing, the Company may not prepay
the Tranche B Notes in whole pursuant to this Section 3.04(c) with the
proceeds of other Debt unless simultaneously with such prepayment the
Company (A) prepays any outstanding balance
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of the Tranche A Notes, together with the premium due with respect
thereto and accrued interest thereon, in accordance with Section
2.04(c), (B) repays all Working Capital Loans, together with any
premium due with respect thereto and accrued interest thereon, in
accordance with Section 4.05, and terminates the Working Capital
Commitments, and (C) redeems in cash, as provided in Section 5.2 of the
Warrants, the number of Warrants which any Lender holding such Warrants
requests the Company in writing to redeem.
(d) Application of Payments. Each payment or prepayment of
less than all the outstanding aggregate principal amount of the Tranche B Notes
shall be applied pro rata to all the Tranche B Notes according to their
respective outstanding principal amounts. The principal amount of each payment
pursuant to Section 3.04(b) or (c) shall be applied to reduce each of the
remaining payments required by Section 3.04(a) in the inverse order of the
maturity of such installments. No payment pursuant to Section 3.04(a) or (c)
shall (except as reflected in any determination of Excess Cash Flow) reduce the
amount of any payment required by Section 3.04(b).
(e) Prepayment Premium. Upon each prepayment pursuant to
Section 3.04(c) prior to the second anniversary of the Closing Date, the
Borrower shall pay to the Agent for the ratable account of the Lenders, a
premium equal to 3.00% of the principal amount being prepaid; provided that no
prepayment premium shall be due as a result of a prepayment pursuant to an
underwritten public offering.
SECTION 3.05. WARRANTS. (a) On the Agreement Date, the
Company shall deliver to NationsCredit, in consideration for executing this
Agreement, warrants exercisable for 15,276 shares of Non-Voting Common Stock
(the "WARRANTS"). The Warrants shall be substantially in the form of Exhibit D
hereto, and shall be duly executed and registered in such name or names and in
such denominations as NationsCredit shall have notified the Company. The
Warrants shall be fully earned by NationsCredit by its execution hereof.
(b) The Company and NationsCredit agree that, for Federal
income tax purposes (i) the Warrants together with the Revolving Credit Loans
constitute an investment unit and (ii) the aggregate issue price of the Loans is
$27,750,000 (or, in the event that NationsCredit shall elect to purchase the
indebtedness evidenced and secured by the Sirrom Loan Documents as contemplated
by Section 3.01, $26,250,000) and the aggregate purchase price of the Warrants
is $250,000. Neither of the Company nor any Lender shall voluntarily take any
action inconsistent with the agreement set forth in the immediately preceding
sentence.
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ARTICLE IV
WORKING CAPITAL LOANS
SECTION 4.01. WORKING CAPITAL LOANS AND COMMITMENTS. Upon the
terms and subject to the conditions set forth herein, each Lender severally and
not jointly agrees to make working capital loans ("WORKING CAPITAL LOANS") from
time to time to the Company in an aggregate principal amount at any time
outstanding not exceed such Lender's Working Capital Commitment. Each Working
Capital Borrowing shall be in an aggregate amount of $100,000 or an integral
multiple of $10,000 in excess thereof. No more than two Working Capital
Borrowings shall be made within any week beginning on Monday of such week and
ending on the last Business Day of such week. Within the foregoing limits, the
Company may borrow under this Section 4.01, prepay or repay Working Capital
Loans as required under Section 4.05(b) or to the extent permitted by Section
4.06, and reborrow pursuant to this Section 4.01.
SECTION 4.02. WORKING CAPITAL NOTES. The Working Capital
Loans of each Lender shall be evidenced by a single Working Capital Note,
substantially in the form of Exhibit C (each such note, a "WORKING CAPITAL
NOTE"), dated the Closing Date in an aggregate principal amount equal to the
amount of such Lender's Working Capital Commitment, duly executed and delivered
and payable to such Lender. Each Lender shall record the date and amount of each
Working Capital Loan made by it and the date and amount of each payment of
principal made by the Company with respect thereto, and prior to any transfer of
its Working Capital Note shall endorse on Schedule A thereto (or any
continuation thereof) forming a part thereof appropriate notations to evidence
the foregoing information with respect to each such Working Capital Loan then
outstanding; provided that the failure of any Lender to make any such
recordation or endorsement shall not affect the obligations of the Company
hereunder or under the Working Capital Notes. Each Lender is hereby irrevocably
authorized by the Company so to endorse its Working Capital Note and to attach
to and make a part of its Working Capital Note a continuation of any such
schedule as and when required.
SECTION 4.03. INTEREST ON THE WORKING CAITAL LOANS. Interest
on the Working Capital Loans shall accrue on the aggregate outstanding principal
amount thereof at the rate set forth in the Working Capital Note with respect
thereto, and shall be payable monthly in arrears as set forth therein.
SECTION 4.04. ADVANCING WORKING CAPITAL LOANS. (a) The
Company shall give each Lender notice (a "NOTICE OF BORROWING") not later than
Noon (New York City time) on the Business Day immediately preceding each Working
Capital Borrowing, signed by the chief financial officer or treasurer of the
Company, specifying the date (which shall be a Business Day) and aggregate
principal amount of such Working Capital Borrowing, and certifying as to the
satisfaction of the conditions set forth in clauses (b), (c) and (d) of Section
5.02.
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(b) Not later than 1:00 P.M. (New York City time) on the date
of each borrowing specified in a Notice of Borrowing, each Lender shall make
available its ratable share of such Working Capital Borrowing, in Federal or
other immediately available funds, to the Company Account.
SECTION 4.05. MANDATORY REPAYMENTS AND PREPAYMENTS. (a) The
Working Capital Commitment of each Lender shall terminate at the opening of
business on the earlier of: (i) July 1, 2004 and (ii) the date on which both the
Tranche A Notes and the Tranche B Notes shall have been paid in full (the
"TERMINATION DATE"), and there shall become due and the Company shall pay on the
Termination Date, the entire outstanding principal amount of each Working
Capital Loan, together with accrued and unpaid interest thereon to but excluding
the Termination Date, and together with, in the case of any termination prior to
the second anniversary of the Closing Date pursuant to clause (ii) of this
Section that results from a prepayment of the Tranche A and Tranche B Notes, a
premium equal to 3.00% of the Working Capital Commitment in effect immediately
prior to such Termination; provided that no prepayment premium shall be payable
upon any termination or prepayment that results from an underwritten public
offering.
(b) If at any time the aggregate unpaid principal balance of
the Working Capital Loans exceeds the Borrowing Base, then, on the next
succeeding Business Day, the Company shall prepay Working Capital Loans in an
aggregate principal amount equal to such excess.
SECTION 4.06. OPTIONAL PREPAYMENTS. The Company may prepay
the Working Capital Loans in whole or in part (in minimum principal amounts of
$100,000 or in any larger integral multiple of $10,000) upon at least one
Business Day's prior irrevocable written notice to the Lenders, in an amount
equal to 100% of the principal amount being prepaid. The aggregate principal
amount of the Working Capital Loans designated for prepayment in any notice of
optional prepayment given pursuant to this subsection shall become due and
payable on the date fixed for prepayment as specified above.
SECTION 4.07. APPLICATION OF PAYMENTS. Each payment or
prepayment of less than all the outstanding aggregate principal amount of the
Working Capital Loans shall be applied pro rata to all the Working Capital Loans
according to their respective outstanding principal amounts.
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ARTICLE V
CONDITIONS
SECTION 5.01. CONDITIONS TO CLOSING. The obligation of each
Lender to make Loans on the Closing Date shall be subject to the satisfaction of
the following conditions precedent:
(a) receipt by the Agent of counterparts hereof signed by each
of the parties hereto (or, in the case of any party as to which an executed
counterpart shall not have been received, receipt by the Agent in form
satisfactory to it of telegraphic, telex or other written confirmation from such
party of execution of a counterpart hereof by such party);
(b) receipt by NationsCredit of a duly executed Tranche A
Note, Tranche B Note and Working Capital Note for its account and of the duly
executed Warrantholders Rights Agreement, each in the form provided for herein,
and of certificates representing the Warrants, all duly executed and registered
in such name or names and in such denominations as NationsCredit shall have
requested;
(c) receipt by the Agent of duly executed counterparts of each
Security Document required to be effective on the Closing Date (including the
Lockbox Agreements), and each other Financing Document, together with share
certificates evidencing all of the outstanding Common Stock of the Company held
by Management Stockholders and all of the outstanding Common Stock of the
Subsidiaries and irrevocable stock powers or transfers, duly executed in blank,
and also evidence satisfactory to it in its sole good faith discretion of the
effectiveness of the security contemplated thereby;
(d) receipt by NationsCredit of evidence satisfactory to it in
its sole good faith discretion of the satisfaction (without waiver) of all other
conditions to the closing of the Acquisition on the Closing Date, and that all
transactions contemplated by the Operative Documents to be consummated on the
closing date of the Acquisition will take place prior to or simultaneously with
the transactions hereunder contemplated to take place on the Closing Date, and
satisfaction of NationsCredit in its sole good faith discretion with the terms
and conditions of the Acquisition Documents;
(e) receipt by NationsCredit of (i) evidence satisfactory to
it in its sole good faith discretion of the effectiveness of all other Operative
Documents, each of which shall be in form and substance satisfactory to
NationsCredit in its sole good faith discretion, and (ii) each opinion, report,
and other document required to be delivered pursuant to the Acquisition
Documents in connection with the Acquisition, with a letter from each Person
delivering any such opinion, report and other document authorizing reliance
thereon by the Agent and the Lenders, all in form and substance satisfactory to
NationsCredit;
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(f) receipt by the Agent of the opinions of King & Spalding
and ▇▇▇▇▇▇▇▇▇ and Virgin, counsel for the Company substantially in the form of
Exhibit L, and covering such additional matters relating to the transactions
contemplated hereby as NationsCredit may reasonably request (by its execution
and delivery of this Agreement, the Company authorizes and directs such counsel
to deliver such opinions to the Agent);
(g) receipt by the Agent of an opinion of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
LLP, special counsel for the Agent, substantially in the form of Exhibit M, and
covering such additional matters relating to the transactions contemplated
hereby as NationsCredit may reasonably request;
(h) receipt by NationsCredit, including in its capacity as
Agent, of all fees and any other amounts due and payable hereunder (including
fees and expenses payable pursuant to Section 10.04) of which the Company has
received notice;
(i) receipt by NationsCredit of an environmental report
prepared by an environmental consultant satisfactory to NationsCredit,
certifying that the Strato/Infusaid facility located in Norwood, Massachusetts
is free of Hazardous Materials Contamination and is otherwise in compliance with
applicable environmental laws, and providing such detail and containing such
information in support of such conclusions as NationsCredit may request;
(j) receipt by NationsCredit of any information it may request
concerning the financial condition, results of operations, liabilities
(contingent and otherwise, including with respect to environmental liabilities
and employee and retiree benefits) and prospects of, and the financial reporting
and accounting systems and the management information systems of, the Company
and satisfaction of NationsCredit in its sole good faith discretion with all
such information;
(k) satisfaction of NationsCredit in its sole good faith
discretion as to the absence of any material adverse change in any aspect of the
business, operations, properties, prospects or condition (financial or
otherwise) of the Company or any Subsidiaries, or any event or condition which
is reasonably likely to result in such a material adverse change;
(l) receipt by NationsCredit of a certificate signed by the
chief financial officer or treasurer of the Company to the effect that, both
before and immediately after the making of the Loans, the purchase of the
Warrants and the consummation of the Acquisition and the other transactions
contemplated to take place on the Closing Date, (i) no Default shall have
occurred and be continuing and (ii) the representations and warranties of the
Company made in or pursuant to the Operative Documents are true;
(m) receipt by the Agent of the written consent of Pfizer,
Inc. and Arrow to the assignment by the Company of its rights and claims under
the Acquisition Documents, to the Agent as collateral under the Security
Documents;
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(n) receipt by NationsCredit of (i) the financial statements
and pro forma balance sheet referred to in Sections 6.04 (b) and (c), (ii) a
statement of sources and uses of funds covering all payments reasonably expected
to be made by the Company in connection with the transactions contemplated by
the Operative Documents to be consummated on the Closing Date, including an
itemized estimate of all fees, expenses and other closing costs in an aggregate
amount not to exceed the amounts provided for such fees, expenses and closing
costs that are set forth in Schedule 5.01(n) and (iii) payment instructions with
respect to each wire transfer to be made by the Agent or the Company on the
Closing Date setting forth the amount of such transfer, the purpose of such
transfer, the name and number of the account to which such transfer is to be
made, the name and ABA number of the bank or other financial institution where
such account is located and the name and telephone number of an individual that
can be contacted to confirm receipt of such transfer;
(o) receipt by the Agent of evidence satisfactory to it in its
sole good faith discretion that all outstanding obligations of the Company and
its Subsidiaries under the existing financing agreements set forth on Schedule
5.01(o) have been paid in full, all commitments thereunder have been terminated
and all Liens securing such obligations and all guarantees thereof have been
released;
(p) receipt by NationsCredit of evidence satisfactory to it in
its sole good faith discretion that the Company shall have a Consolidated Net
Worth as of the Closing Date of not less than negative One Million Five Hundred
Thousand Dollars ($1,500,000);
(q) receipt by the Agent of all documents it may reasonably
request relating to the existence of the Company and its Subsidiaries, the
corporate authority for and the validity of the Financing Documents and the
other Operative Documents, and any other matters relevant hereto, all in form
and substance satisfactory to the Agent in its sole good faith discretion; and
(r) receipt by NationsCredit of such other documents, opinions
and evidences as NationsCredit shall require in its sole good faith discretion.
The documents referred to in this Section shall be delivered to the Agent no
later than the Closing Date. The certificates and opinions referred to in this
Section shall be dated the Closing Date.
SECTION 5.02. CONDITIONS TO EACH LOAN. The obligation of any
Lender to make a Loan on the occasion of any borrowing thereof (including on the
Closing Date) is subject to the satisfaction of the following additional
conditions:
(a) in the case of a Working Capital Loan, receipt by each
Lender of a Notice of Borrowing in accordance with Section 4.04 and a Borrowing
Base Certificate as of the close of business on the Business Day immediately
preceding the date of such borrowing and, in the case of the Borrowing Base
Certificate delivered in connection with the initial borrowing, on a pro forma
basis after giving effect to the Acquisition;
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(b) the fact that, immediately after such borrowing, the aggregate
outstanding principal amount of the Working Capital Loans will not exceed the
lesser of (i) the Borrowing Base and (ii) the aggregate amount of the Working
Capital Commitments;
(c) the fact that, immediately before and after such borrowing, no
Default shall have occurred and be continuing; and
(d) the fact that the representations and warranties of the Company
contained in the Financing Documents shall be true on and as of the date of such
borrowing except as such representations and warranties relate to a specified
date.
Each borrowing hereunder shall be deemed to be a representation and warranty by
the Company on the date of such borrowing as to the facts specified in clauses
(b), (c) and (d) of this Section, unless a notice to the contrary specifically
captioned "Disclosure Statement" is received by the Agent from the Company prior
to 2:00 p.m. on the Business Day preceding the date of such borrowing. To the
extent that the Agent and the Required Lenders agree to make any Loan after
receipt of a Disclosure Statement in accordance with the preceding sentence, the
representations and warranties of the Company will be deemed made as modified by
the contents of such statement and repeated at the time of the making of such
Loan as so modified. Any such modification shall be effective only for the
occasion on which the Agent and the Required Lenders elect to make such Loan,
and unless expressly agreed by the Agent and the Required Lenders in writing to
the contrary as provided in Section 12.05, shall not be deemed a waiver or
modification of any condition to any future Loan.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants (including, in the case of
any such representation and warranty made or deemed made before the consummation
of the Acquisition, at the time such representation and warranty is made or
deemed made and immediately after giving effect to the consummation of the
Acquisition) that:
SECTION 6.01. CORPORATE EXISTENCE AND POWER. Each of the
Company and Horizon/Neostar is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Georgia, and Strato/Infusaid
is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Massachusetts, and the Company and each of its
Subsidiaries has all corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted and as will be conducted after the Acquisition. The Company and each
of its Subsidiaries is qualified to do business as a foreign corporation in each
jurisdiction where the failure to qualify would be likely to result in a
Material Adverse Effect.
SECTION 6.02. CORPORATE AND GOVERNMENTAL AUTHORIZATION; NO
CONTRAVENTION. The execution, delivery and performance by each of the Company
and its Subsidiaries of the Operative Documents to which it is a party are
within the Company's or such Subsidiaries' corporate powers, have been duly
authorized by all necessary corporate action, require no action by or in respect
of, or filing with, any governmental body, agency or official (other than the
filing of UCC-1 financing statements, all of which have been made and are in
full force and effect) and do not contravene, or constitute a default under, any
provision of applicable law or regulation or of the certificate of incorporation
or by-laws of the Company or any of its Subsidiaries or of any agreement,
judgment, injunction, order, decree or other instrument binding upon the Company
or any of its Subsidiaries or result in the creation or imposition of any Lien
(other than the Liens created by the Security Documents) on any asset of the
Company or any of its Subsidiaries.
SECTION 6.03. BINDING EFFECT; LIENS OF SECURITY DOCUMENTS. (a)
Each of the Operative Documents to which the Company is a party (other than the
Notes) constitutes a valid and binding agreement of the Company, and each of the
Notes when executed and delivered in accordance with this Agreement, will
constitute valid and binding obligations of the Company, enforceable in
accordance with its respective terms, subject to bankruptcy and insolvency laws
affecting the rights of creditors generally and general principles of equity.
The Warrants, when executed and delivered in accordance with this Agreement,
will constitute valid and binding obligations of the Company, in each case
enforceable in accordance with their respective terms, subject to bankruptcy and
insolvency laws affecting the rights of creditors generally and general
principles of equity. The Company has reserved and will keep available for
issuance upon exercise of the Warrants the total number of Warrant Shares
deliverable upon exercise of all Warrants from time to time outstanding.
The issuance of the Warrant Shares has been duly and validly authorized and,
when issued and sold in accordance with the Warrants, the
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Warrant Shares will be duly and validly issued, fully paid and nonassessable and
free of preemptive rights.
(b) Each of the Operative Documents to which any
Subsidiary of the Company is a party constitutes a valid and binding agreement
of such Subsidiary enforceable in accordance with its terms, subject to
bankruptcy and insolvency laws affecting the rights of creditors generally and
general principles of equity. The Company, for itself and on behalf of Horizon/
Neostar, acknowledges and acquisces in the transfer and assignment of the Sirrom
Loan Documents to NationsCredit, and further acknowledges and agrees that, as of
the Closing Date, neither the Company nor Horizon/Neostar had any claim,
counterclaim, offset of defense against or with respect to the Sirrom Loan
Documents or any indebtedness evidenced or secured thereby.
(c) The Security Documents create valid security
interests in the Collateral purported to be covered thereby, which security
interests are and will remain perfected security interests, prior to all other
Liens other than Permitted Liens. Each of the representations and warranties
made by the Company or any Subsidiary in the Security Documents is true and
correct in all material respects.
SECTION 6.04. FINANCIAL INFORMATION. (a) The balance sheet of
the Company as of December 31, 1996 and the related statements of operations,
stockholders' equity and cash flows for the Fiscal Year then ended, reported on
by Coopers & ▇▇▇▇▇▇▇ LLP, copies of which will be delivered to each of the
Lenders on or before July 31, 1997, shall fairly present, in conformity with
GAAP, the financial position of the Company as of such date and its results of
operations, changes in stockholders' equity and cash flows for such period.
(b) The unaudited balance sheet of the Company as of
April 30, 1997, and the related unaudited consolidated statements of operations
and cash flows for the four months then ended, copies of which have been
delivered to each of the Lenders, fairly present, in conformity with GAAP
applied on a basis consistent with the financial statements referred to in
Section 6.04(a), the financial position of the Company as of such date and its
consolidated results of operations and cash flows for the four months then ended
(subject to normal year-end adjustments and to the absence of footnotes).
(c) The pro forma balance sheet of the Company as of
April 30, 1997, a copy of which has been delivered to each of the Lenders,
fairly presents, in conformity with GAAP applied on a basis consistent with the
financial statements referred to in Section 6.04(a), the consolidated financial
position of the Company as of such date, adjusted to give effect (as if such
events had occurred on such date) to (i) the transactions contemplated by the
Acquisition Documents, (ii) the making of the Loans and the issuance of the
Warrants, (iii) the application of the proceeds therefrom as contemplated by the
Acquisition Documents and the Financing Documents and (v) the payment of all
legal, accounting and other fees related thereto to the extent known at the time
of the preparation of such balance sheet. As of the date of such balance sheet
and the date hereof, neither the Company nor any of its Subsidiaries had or has
any material liabilities, contingent or otherwise, including liabilities for
taxes, long-term leases or forward or long-term commitments, which are not fully
reflected on such balance sheet.
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(d) The information contained in the most recently
delivered Borrowing Base Certificate is complete and correct and the amount
shown therein as "Eligible Receivables" has been determined as provided in the
Financing Documents.
(e) Since December 31, 1996, there has been no material
adverse change in the business, operations, properties, prospects or condition
(financial or otherwise) of the Company or any of its Consolidated Subsidiaries.
SECTION 6.05. LITIGATION. There is no action, suit or
proceeding pending against, or to the knowledge of the Company threatened
against or affecting the Company or any Subsidiary before any court or
arbitrator or any governmental body, agency or official in which there is a
reasonable possibility of an adverse decision which could result in a Material
Adverse Effect or which in any manner draws into question the validity of any of
the Operative Documents. There is no action, suit or proceeding pending against,
or to the knowledge of the Company threatened against or affecting, any party to
any of the Operative Documents (other than the Company) before any court or
arbitrator or any governmental body, agency or official which in any manner
draws into question the validity of any of the Operative Documents.
SECTION 6.06. OWNERSHIP OF PROPERTY, LIENS. On and as of the
Closing Date, after giving effect to the Acquisition, each of the Company and
its Subsidiaries is the lawful owner of, has good title to and is in lawful
possession of, or has valid leasehold interests in, all material properties and
other material assets (real or personal, tangible, intangible or mixed)
purported to be owned or leased (as the case may be) by such Person on the
balance sheet referred to in Section 6.04(a), and none of such Person's material
properties or material assets is subject to any Liens, except Permitted Liens.
The Company and each Subsidiary conduct their respective businesses without
infringement or claim of infringement of any material license, patent,
trademark, trade name, service ▇▇▇▇, copyright, trade secret or other
intellectual property right of others and there is no infringement or claim of
infringement by others of any material license, patent, trademark, trade name,
service ▇▇▇▇, copyright, trade secret or other intellectual property right of
the Company or any Subsidiary.
SECTION 6.07. NO DEFAULT. No Default or Event of Default has
occurred and is continuing and neither the Company nor any Subsidiary is in
default under or with respect to any material contract, agreement, lease or
other instrument to which it is a party or by which its property is bound or
affected which default is reasonably likely to result in a Material Adverse
Effect.
SECTION 6.08. NO BURDENSOME RESTRICTIONS. No contract, lease,
agreement or other instrument to which the Company or any Subsidiary is a party
or by which any of its property is bound or affected, no charge, corporate
restriction, judgment, decree or order and no provision of applicable law or
governmental regulation is reasonably likely to have a Material Adverse Effect.
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SECTION 6.09. LABOR MATTERS. There are no strikes or other
labor disputes pending or, to the best knowledge the Company, threatened,
against the Company or any Subsidiary, which are reasonably likely to have a
Material Adverse Effect. Hours worked and payments made to the employees of the
Company and its Subsidiaries have not been in violation of the Fair Labor
Standards Act or any other applicable law dealing with such matters. All
payments due from the Company or any Subsidiary, or for which any claim may be
made against any of them, on account of wages and employee and retiree health
and welfare insurance and other benefits have been paid or accrued as a
liability on the books of such Person, as the case may be. The consummation of
the transactions contemplated by the Financing Documents and the other Operative
Documents will not give rise to a right of termination or right of renegotiation
on the part of any union under any collective bargaining agreement to which it
is a party or by which it is bound.
SECTION 6.10. SUBSIDIARIES; OTHER EQUITY INVESTMENTS. Other
than as set forth on Schedule 6.10, the Company has no Subsidiaries. Each such
Subsidiary is, and, in the case of any additional corporate Subsidiaries formed
after the Closing Date, each of such additional corporate Subsidiaries will be
at each time that this representation is made or deemed to be made after the
Closing Date, a wholly-owned Subsidiary that is a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted. Neither the Company nor any Subsidiary is engaged in
any joint venture or partnership with any other Person.
SECTION 6.11. INVESTMENT COMPANY ACT. The Company is not an
"investment company" as defined in the Investment Company Act of 1940, as
amended. The consummation of the transactions contemplated by the Operative
Documents do not and will not violate any provision of such Act or any rule,
regulation or order issued by the Securities and Exchange Commission thereunder.
SECTION 6.12. MARGIN REGULATIONS. None of the proceeds from
the Loans have been or will be used, directly or indirectly, for the purpose of
purchasing or carrying any Margin Stock, for the purpose of reducing or retiring
any indebtedness which was originally incurred to purchase or carry any Margin
Stock or for any other purpose which might cause any of the loans under this
Agreement to be considered a "purpose credit" within the meaning of Regulation
G, U or X of the Board of Governors of the Federal Reserve Board.
SECTION 6.13. TAXES. The Company's federal tax identification
number is ▇▇-▇▇▇▇▇▇▇. All Federal, state and local tax returns, reports and
statements required to be filed by or on behalf of the Company and its
Subsidiaries have been filed with the appropriate governmental agencies in all
jurisdictions in which such returns, reports and statements are required to be
filed, and all taxes (including real property taxes) and other charges shown to
be due and payable have been timely paid prior to the date on which any fine,
penalty, interest, late charge or loss may be added thereto for nonpayment
thereof. All state and local sales and use taxes required to be paid by the
Company or any of its Subsidiaries have been paid. All Federal
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and state returns have been filed by the Company and its Subsidiaries for all
periods for which returns were due with respect to employee income tax
withholding, social security and unemployment taxes, and the amounts shown
thereon to be due and payable have been paid in full or adequate provisions
therefor have been made.
SECTION 6.14. COMPLIANCE WITH ERISA. Each member of the ERISA
Group has fulfilled its obligations under the minimum funding standards of ERISA
and the Code with respect to each Plan and is in compliance in all material
respects with the presently applicable provisions of ERISA and the Code with
respect to each Plan. No member of the ERISA Group has (i) sought a waiver of
the minimum funding standard under Section 412 of the Code in respect of any
Plan, (ii) failed to make any contribution or payment to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement, or made any
amendment to any Plan or Benefit Arrangement, which has resulted or could result
in the imposition of a Lien or the posting of a bond or other security under
ERISA or the Code or (iii) incurred any liability under Title IV of ERISA other
than a liability to the PBGC for premiums under Section 4007 of ERISA.
SECTION 6.15. BROKERS. Except as described on Schedule 6.15,
no broker, finder or other intermediary has brought about the obtaining, making
or closing of the transactions contemplated by the Operative Documents, and
neither the Company nor any Subsidiary has or will have any obligation to any
Person in respect of any finder's or brokerage fees in connection herewith or
therewith.
SECTION 6.16. RELATED TRANSACTIONS. The closing of the
Acquisition will occur simultaneously with the making of the initial Loans and
purchase of the Warrants hereunder and no party has waived, without the consent
of the Required Lenders, any condition precedent to its obligations to close as
set forth in the Acquisition Documents. True and complete copies of all of the
Acquisition Documents have been delivered to each of the Lenders, together with
a true and complete copy of each document to be delivered at the closing of the
Acquisition.
SECTION 6.17. EMPLOYMENT, STOCKHOLDERS AND SUBSCRIPTION
AGREEMENTS. Except for the Operative Documents and the other agreements
described in Schedule 6.17, true and complete copies of which have been
delivered to the Lenders, there are no (i) employment agreements covering the
management of the Company or any of its Subsidiaries, (ii) collective bargaining
agreements or other labor agreements covering any employees of the Company or
any of its Subsidiaries, (iii) agreements for managerial, consulting or similar
services to which the Company or any of its Subsidiaries is a party or by which
it is bound or (iv) agreements regarding the Company or any Subsidiary, its
assets or operations or any investment therein to which any of its stockholders
is a party or by which it is bound.
SECTION 6.18. FULL DISCLOSURE. None of the written information
(financial or otherwise) furnished by or on behalf of the Company to the Agent
or any Lender in connection with the consummation of the transactions
contemplated by any of the Operative Documents contains any untrue statement of
a material fact or omits to state a material fact necessary to make the
statements contained herein or therein not misleading in the light of the
circumstances
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under which such statements were made. All financial projections delivered to
the Lenders have been prepared on the basis of the assumptions stated therein.
Such projections represent the Company's best estimate of the Company's future
financial performance and such assumptions are believed by the Company to be
fair in light of current business conditions.
SECTION 6.19. REPRESENTATIONS AND WARRANTIES INCORPORATED FROM
OTHER OPERATIVE DOCUMENTS. As of the Closing Date, each of the representations
and warranties made in the Operative Documents by each of the parties thereto is
true and correct in all material respects, and such representations and
warranties are hereby incorporated herein by reference with the same effect as
though set forth in their entirety herein, as qualified therein.
SECTION 6.20. PRIVATE OFFERING. Neither the Company nor any
Person acting on its behalf has offered the Notes or Warrants or any similar
securities for sale to, or solicited any offer to buy any of the same from, or
otherwise approached or negotiated in respect thereof with, any Person other
than the Lenders and no more than five other institutional investors. Neither
the Company nor any Person acting on its behalf has taken, or will take, any
action that would subject the issuance or sale of the Notes or Warrant Shares to
Section 5 of the Securities Act, other than as provided in the Warrants and the
Warrantholders Rights Agreement.
SECTION 6.21. COMPLIANCE WITH ENVIRONMENTAL REQUIREMENTS; NO
HAZARDOUS MATERIALS. After giving effect to the Acquisition and except as
provided on Schedule 6.21 or other non-compliances which are not reasonably
expected to have a Material Adverse Effect:
(a) Other than generation in compliance with all applicable
Environmental Laws, no Hazardous Materials are located on any properties now
owned, leased or operated by the Company or any Subsidiary or have been released
into the environment, or deposited, discharged, placed or disposed of at, on,
under or near any of such properties. No portion of any such property is being
used for the disposal, storage, treatment, processing or other handling of
Hazardous Materials (other than processing or handling incidental to the
generation of Hazardous Materials in compliance with all applicable
Environmental Laws), nor is any such property affected by any Hazardous
Materials Contamination.
(b) Other than generation in compliance with all applicable
Environmental Laws, during any period of ownership, operation, possession or
control thereof by the Company or any Subsidiary, no Hazardous Materials were
located on any properties previously owned, leased or operated by the Company or
any Subsidiary or were released into the environment, or deposited, discharged,
placed or disposed of at, on, under or near any of such properties. No portion
of any such property was used during any period of ownership, operation,
possession or control thereof by the Company or any Subsidiary, for the
disposal, storage, treatment, processing or other handling of Hazardous
Materials (other than processing or handling incidental to the generation of
Hazardous Materials in compliance with all applicable Environmental Laws), nor
is any such property, to the knowledge of the Company, affected by any Hazardous
Materials Contamination.
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(c) No asbestos or asbestos-containing materials are present on any of
the properties now owned, leased or operated by the Company or any Subsidiary.
(d) No asbestos or asbestos-containing materials were present, during
any period of ownership, operation, possession or control thereof by the Company
or any Subsidiary, on any of the properties previously owned, leased or operated
by the Company or any Subsidiary.
(e) No polychlorinated biphenyls are located on or in any properties
now owned, leased or operated by the Company or any Subsidiary, in the form of
electrical transformers, fluorescent light fixtures with ballasts, cooling oils
or any other device or form.
(f) No polychlorinated biphenyls were, during any period of ownership,
operation, possession or control thereof by the Company or any Subsidiary,
located on or in any properties previously owned, leased or operated by the
Company or any Subsidiary, in the form of electrical transformers, fluorescent
light fixtures with ballasts, cooling oils or any other device or form.
(g) No underground storage tanks are located on any properties now
owned, leased or operated by the Company or any Subsidiary, or were located on
any such property and subsequently removed or filled.
(h) No underground storage tanks were, during any period of ownership,
operation, possession or control thereof by the Company or any Subsidiary,
located on any properties previously owned, leased or operated by the Company or
any Subsidiary, or were, during any period of ownership, operation, possession
or control thereof by the Company or any Subsidiary, located on any such
property and subsequently removed or filled.
(i) No notice, notification, demand, request for information,
complaint, citation, summons, investigation, administrative order, consent order
and agreement, litigation or settlement with respect to Hazardous Materials or
Hazardous Materials Contamination is in existence or, to Company's knowledge,
proposed, threatened or anticipated with respect to or in connection with the
operation of any properties now owned, leased or operated by the Company or any
Subsidiary. All such properties and their existing and prior uses comply and at
all times have complied with any applicable governmental requirements relating
to environmental matters or Hazardous Materials. There is no condition on any of
such properties which is in violation of any applicable governmental
requirements relating to Hazardous Materials, and neither the Company nor any
Subsidiary has received any communication from or on behalf of any governmental
authority that any such condition exists. None of such properties nor any
property to which the Company or any Subsidiary has, directly or indirectly,
transported or arranged for the transportation of any material is listed or, to
the Company's knowledge, proposed for listing on the National Priorities List
promulgated pursuant to CERCLA, on CERCLIS (as defined in CERCLA) or on any
similar federal, state or foreign list of sites requiring investigation or
cleanup, nor, to the knowledge of the Company, is any such property anticipated
or threatened to be placed on any such list.
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(j) No notice, notification, demand, request for information,
complaint, citation, summons, investigation, administrative order, consent order
and agreement, litigation or settlement with respect to Hazardous Materials or
Hazardous Materials Contamination is in existence or, to Company's knowledge,
proposed, threatened or anticipated with respect to or in connection with the
operation of any properties previously owned, leased or operated by the Company
or any Subsidiary and relating to any period of ownership, operation, possession
or control thereof by the Company or any Subsidiary. All such properties and
their prior uses by the Company or any Subsidiary at all times complied with any
applicable governmental requirements relating to environmental matters or
Hazardous Materials. There is no condition on any of such properties which is in
violation of any applicable governmental requirements relating to Hazardous
Materials and arising from any use of such properties during any period of
ownership, operation, possession or control thereof by the Company or any
Subsidiary, and neither the Company nor any Subsidiary has received any
communication from or on behalf of any governmental authority that any such
condition exists. None of such properties nor any property to which the Company
or any Subsidiary has, directly or indirectly, transported or arranged for the
transportation of any material is listed or, to the Company's knowledge,
proposed for listing on the National Priorities List promulgated pursuant to
CERCLA, on CERCLIS (as defined in CERCLA) or on any similar federal, state or
foreign list of sites requiring investigation or cleanup, nor, to the knowledge
of the Company, is any such property anticipated or threatened to be placed on
any such list.
(k) There has been no environmental investigation, study, audit, test,
review or other analysis conducted of which the Company has knowledge in
relation to the current or prior business of the Company or any Subsidiary or
any property or facility now or previously owned, leased or operated by the
Company or any Subsidiary which has not been delivered to the Lenders at least
five days prior to the Closing Date.
(l) For purposes of this Section 6.21, the terms "Company" and
"Subsidiary" shall include any business or business entity (including a
corporation) which is, in whole or in part, a predecessor of the Company or any
Subsidiary.
SECTION 6.22. CAPITALIZATION. Set forth on Schedule 6.22 is a
schedule of the capitalization of the Company, after giving effect to the
transactions contemplated to take place on the Closing Date, including the
issuance of the Warrant Shares upon exercise of the Warrants, specifying each
class of interest held and the amount and holder thereof.
SECTION 6.23. REAL PROPERTY INTERESTS. Except for the ownership,
leasehold or other interests set forth in Schedule 6.23, the Company and its
Subsidiaries have, as of the Closing Date, no ownership, leasehold or other
interest in real property.
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ARTICLE VII
AFFIRMATIVE COVENANTS
The Company agrees that, so long as any Lender has any
Commitment hereunder or any amount payable under any Note remains unpaid:
SECTION 7.01. FINANCIAL STATEMENTS AND OTHER REPORTS. The
Company will maintain a system of accounting established and administered in
accordance with sound business practices to permit preparation of financial
statements in accordance with GAAP, and will deliver to each of the Lenders:
(a) as soon as practicable and in any event within 30
days after the end of each month, a consolidated and consolidating balance sheet
of the Company and its Consolidated Subsidiaries as at the end of such month and
the related consolidated and consolidating statements of operations and cash
flows for such month, and for the portion of the Fiscal Year ended at the end of
such month setting forth in each case in comparative form the figures for the
corresponding periods of the previous Fiscal Year and the figures for such month
and for such portion of the Fiscal Year ended at the end of such month set forth
in the annual operating and capital expenditure budgets and cash flow forecast
delivered pursuant to Section 7.01(l), all in reasonable detail and certified by
the chief financial officer of the Company, as fairly presenting the financial
condition and results of operations of the Company and its Consolidated
Subsidiaries and as having been prepared in accordance with GAAP applied on a
basis consistent with the audited financial statements of the Company, subject
to changes resulting from audit and normal year-end adjustments and subject to
the absence of footnotes;
(b) as soon as practicable and in any event within 45
days after the end of each of the first 3 fiscal quarters of each Fiscal Year, a
consolidated and consolidating balance sheet of the Company and its Consolidated
Subsidiaries as at the end of such quarter and the related consolidated and
consolidating statements of operations and cash flows for such fiscal quarter,
and for the portion of the Fiscal Year ended at the end of such quarter setting
forth in each case in comparative form the figures for the corresponding periods
of the previous Fiscal Year and the figures for such quarter and for such
portion of the Fiscal Year ended at the end of such quarter set forth in the
annual operating and capital expenditure budgets and cash flow forecast
delivered pursuant to Section 7.01(l), all in reasonable detail and certified by
the chief financial officer of the Company as fairly presenting the financial
condition and results of operations of the Company and its Consolidated
Subsidiaries and as having been prepared in accordance with GAAP applied on a
basis consistent with the audited financial statements of the Company delivered
pursuant to Section 6.04(a), subject to changes resulting from audit and normal
year-end adjustments and subject to the absence of footnotes;
(c) on or before July 31, 1997, for the Fiscal Year ended
December 31, 1996, and as soon as available and in any event within 120 days
after the end of each subsequent Fiscal Year, a consolidated and consolidating
balance sheet of the Company and its Consolidated Subsidiaries as of the end of
such Fiscal Year and the related consolidated and consolidating
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statements of operations, stockholders' equity and cash flows for such Fiscal
Year, setting forth in each case in comparative form the figures for the
previous Fiscal Year and the figures for such Fiscal Year set forth in the
annual operating and capital expenditure budgets and cash flow forecasts
delivered pursuant to Section 7.01(l), in each case certified (solely with
respect to such consolidated statements) without qualification by Coopers &
▇▇▇▇▇▇▇ LLP or other independent public accountants of nationally recognized
standing;
(d) (i) together with each delivery of financial
statements pursuant to (a), (b) and (c) above, an Officer's Certificate for the
Company stating that the officers executing such certificate have reviewed the
terms of this Agreement and have made, or caused to be made under their
supervision, a review in reasonable detail of the transactions and condition of
the Company and its Consolidated Subsidiaries during the accounting period
covered by such financial statements and that such review has not disclosed the
existence during or at the end of such accounting period, and that such officers
do not have knowledge of the existence as at the date of such Officers'
Certificate, of any Default, or, if any such Default existed or exists,
specifying the nature and period of existence thereof and what action the
Company has taken or is taking or proposes to take with respect thereto; (ii)
together with each delivery of financial statements pursuant to (b) or (c)
above, a compliance certificate of the chief financial officer or treasurer of
the Company (x) providing details of all transactions between the Company and
any Person referred to in Section 8.08, (y) demonstrating in reasonable detail
compliance during and at the end of such accounting period with the restrictions
contained in Sections 8.11 through 8.18, and (z) if not specified in the
financial statements delivered pursuant to (b) or (c) above, as the case may be,
specifying the aggregate amount of interest paid or accrued and the aggregate
amount of depreciation and amortization charged, during such accounting period;
and (iii) together with each delivery of financial statements pursuant to (c)
above, a statement setting forth in reasonable detail the computation of Excess
Cash Flow, if any, for such Fiscal Year, certified by the chief financial
officer of the Company as having been prepared from such financial statements in
accordance with this Agreement;
(e) together with each delivery of financial statements
pursuant to (c) above, a written statement by the independent public accountants
giving the report thereon (i) stating that their audit examination has included
a review of the terms of this Agreement as it relates to accounting matters,
(ii) stating whether, in connection with their audit examination, any Default
has come to their attention, and if such a condition or event has come to their
attention, specifying the nature and period of existence thereof, and (iii)
stating that based on their audit examination nothing has come to their
attention which causes them to believe that the information contained in the
certificates delivered therewith pursuant to (d) above is not correct and that
the matters set forth in the compliance certificate delivered therewith pursuant
to clause (ii) of (d) above for the applicable Fiscal Year are not stated in
accordance with the terms of this Agreement;
(f) promptly upon receipt thereof, copies of all reports
submitted to the Company by independent public accountants in connection with
each annual, interim or special audit of the financial statements of the Company
or any of its Subsidiaries made by such
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accountants, including the comment letter submitted by such accountants to
management in connection with their annual audit;
(g) promptly upon their becoming available, copies of (i)
all financial statements, reports, notices and proxy statements sent or made
available generally by the Company to its security holders, (ii) all regular and
periodic reports and all registration statements and prospectuses filed by the
Company with any securities exchange or with the Securities and Exchange
Commission or any governmental authority succeeding to any of its functions and
(iii) all press releases and other statements made available generally by the
Company to the public concerning material developments in the business of the
Company or any Subsidiary;
(h) promptly upon any officer of the Company obtaining
knowledge (i) of the existence of any default with respect to any Debt of the
Company or any Subsidiary, that singly or that when aggregated with other Debt
in default has an aggregate outstanding principal amount greater than or equal
to $100,000, or that the holder of any such Debt has given any notice or taken
any other action with respect to a claimed default thereunder, (ii) of any
change in the Company's certified accountant or any resignation, or decision not
to stand for re-election, by any member of the Company's board of directors,
(iii) that any Person has given any notice to the Company or taken any other
action with respect to a claimed default under any material agreement or
instrument (other than the Financing Documents) to which the Company or any
Subsidiary is a party or by which any of their material assets are bound or (iv)
of the institution of any litigation or arbitration involving an alleged
liability of the Company or any Subsidiary equal to or greater than $100,000, or
any adverse determination in any litigation or arbitration involving a potential
liability of the Company or any Subsidiary equal to or greater than $100,000, an
Officers' Certificate of the Company specifying the nature and period of
existence of any such condition or event, or specifying the notice given or
action taken by such holder or Person and the nature of such claimed default
(including any Default), event or condition, and what action the Company has
taken, is taking or proposes to take with respect thereto;
(i) if and when any member of the ERISA Group (i) gives
or is required to give notice to the PBGC of any "reportable event" (as defined
in Section 4043 of ERISA) with respect to any Plan which might constitute
grounds for a termination of such Plan under Title IV of ERISA, or knows that
the plan administrator of any Plan has given or is required to give notice of
any such reportable event, a copy of the notice of such reportable event given
or required to be given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that any Multiemployer
Plan is in reorganization, is insolvent or has been terminated, a copy of such
notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent
to terminate, impose liability (other than for premiums under Section 4007 of
ERISA) in respect of, or appoint a trustee to administer any Plan, a copy of
such notice; (iv) applies for a waiver of the minimum funding standard under
Section 412 of the Code, a copy of such application; (v) gives notice of intent
to terminate any Plan under Section 4041(c) of ERISA, a copy of such notice and
other information filed with the PBGC; (vi) gives notice of withdrawal from any
Plan pursuant to Section 4063 of ERISA, a copy of such notice; or (vii) fails to
make any payment or contribution to any Plan or Multiemployer Plan or in respect
of any
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Benefit Arrangement or makes any amendment to any Plan or Benefit Arrangement
which has resulted or could result in the imposition of a Lien or the posting of
a bond or other security, a certificate of the chief financial officer or the
chief accounting officer of the Company setting forth details as to such
occurrence and action, if any, which the Company or applicable member of the
ERISA Group is required or proposes to take;
(j) copies of any material reports or notices related to
taxes and any other material reports or notices received by the Company from, or
filed by the Company with, any Federal, state or local governmental agency or
body regulating the activities of the Company;
(k) within 30 days prior to the conclusion of each Fiscal
Year, the Company's annual operating and capital expenditure budgets and cash
flow forecast for the following Fiscal Year presented on a monthly basis, which
shall be in a format reasonably consistent with projections, budgets and
forecasts theretofore provided to the Lenders;
(l) together with each Notice of Borrowing and on the
first Business Day of each week, a Borrowing Base Certificate as of the close of
business of the immediately preceding Business Day;
(m) within two Business Days after any request therefor,
such information in such detail concerning the amount, composition and manner of
calculation of the Borrowing Base as the Agent may reasonably request;
(n) within ten days after the end of each month, a
report, in form and substance acceptable to the Agent, as to all accounts
receivable of the Company and its Subsidiaries outstanding as of the last day of
such month (a "RECEIVABLES REPORT"), which shall set forth in summary form an
aging of such receivables and which shall, if the Agent so requests, include a
detailed aged trial balance of all such receivables specifying the names, face
amount and dates of all invoices for each account debtor obligated on a
receivable so listed; upon the reasonable request of the Agent and to the extent
available, each Receivables Report shall be accompanied by copies of customer
statements, and all documents, including repayment histories and present status
reports, relating to the receivables so scheduled and such other matters and
information relating to the status of any receivables as the Agent shall
reasonably request;
(o) together with the next delivery of a Receivables
Report after the Company becomes aware thereof, notice of any dispute between
any account debtor and the Company or the applicable Subsidiary with respect to
any amounts due and owing in excess of $100,000 in the aggregate, with an
explanation in reasonable detail of the reason for the dispute, all claims
related thereto and the amount in controversy;
(q) together with each delivery of financial statements
pursuant to (a), (b) and (c) above, a management discussion of the comparison
between budget and actual performance and of performance versus performance for
the prior year in form and in substance satisfactory to the Agent in its sole
good faith discretion; and
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(r) with reasonable promptness, such other information
and data with respect to the Company or any Subsidiary, as from time to time may
be reasonably requested by the Agent.
SECTION 7.02. PAYMENT OF OBLIGATIONS. The Company (i) shall
pay and discharge, and cause each Subsidiary to pay and discharge, at or before
maturity, all of their respective material obligations and liabilities,
including tax liabilities, except where the same may be the subject of a
Permitted Contest, (ii) shall maintain, and cause each of its Subsidiaries to
maintain, in accordance with GAAP, appropriate reserves for the accrual of any
of the same and (iii) shall not breach or permit any Subsidiary to breach, in
any material respect, or permit to exist any material default under, the terms
of any lease, commitment, contract, instrument or obligation to which it is a
party, or by which its properties or assets are bound where such breach or
default would be reasonably likely to have a Material Adverse Effect.
SECTION 7.03. CONDUCT OF BUSINESS AND MAINTENANCE OF
EXISTENCE. The Company will continue, and will cause each Subsidiary to
continue, to engage in business of the same general type as now conducted by it
and each Subsidiary, and will preserve, renew and keep in full force and effect,
and will cause each Subsidiary to preserve, renew and keep in full force and
effect their respective corporate existences and their respective rights,
privileges and franchises necessary or desirable in the normal conduct of
business.
SECTION 7.04. MAINTENANCE OF PROPERTY; INSURANCE. (a) The
Company will keep, and will cause each Subsidiary to keep, all property useful
and necessary in its business in good working order and condition, ordinary wear
and tear excepted.
(b) The Company will maintain, and will cause each
Subsidiary to maintain, (i) physical damage insurance on all real and personal
property on an all risks basis (including the perils of flood and quake),
covering the repair and replacement cost of all such property and consequential
loss coverage for business interruption and extra expense, covering such risks,
for amounts not less than those, and with deductible amounts not greater than
those, set forth in Part I of Schedule 7.04, (ii) public liability insurance
(including products/completed operations liability coverage) covering such
risks, for amounts not less than those, and with deductible amounts not greater
than those, set forth in Part II of Schedule 7.04 and (iii) such other insurance
coverage in such amounts and with respect to such risks as the Required Lenders
may reasonably request. All such insurance shall be provided by insurers having
an A.M. Best policyholders rating of not less than B+ or such other insurers as
the Required Lenders may approve in writing.
(c) On or prior to the Closing Date, the Company shall
cause the Agent to be named as an additional insured or loss payee, as
applicable, on each insurance policy required to be maintained by it pursuant to
this Section 7.04. The Company will deliver to the Lenders (i) on the Closing
Date, a certificate from the Company's insurance broker dated such date showing
the amount of coverage as of such date, and certifying that, in the opinion of
such broker, such amounts are reasonable and customary for companies of
established repute engaged in the same or a similar business, that such policies
will include effective waivers (whether under the terms of any such policy or
otherwise) by the insurer of all claims for insurance premiums against all
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loss payees and additional insureds and all rights of subrogation against all
loss payees and additional insureds, and that if all or any part of such policy
is canceled, terminated or expires, the insurer will forthwith give notice
thereof to each additional insured and loss payee and that no cancellation,
reduction in amount or material change in coverage thereof shall be effective
until at least 30 days after receipt by each additional insured and loss payee
of written notice thereof, (ii) upon the request of the Agent from time to time
full information as to the insurance carried, (iii) within five days of receipt
of notice from any insurer, a copy of any notice of cancellation, nonrenewal or
material change in coverage from that existing on the date of this Agreement and
(iv) forthwith, notice of any cancellation or nonrenewal of coverage by the
Company.
(d) The Company hereby appoints the Agent as its
attorney-in-fact to make proof of loss, claim for insurance and adjustments with
insurers, and to execute or endorse all documents, checks or drafts in
connection with payments under Property Insurance Policies.
(e) The Company will within thirty (30) days after the
Closing Date obtain, and shall thereafter maintain, a term life insurance policy
in form and substance and issued by a life insurance company, in each case
acceptable to the Agent in its sole good faith discretion, with respect to
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., in an amount not less than
$1,000,000 for each such individual (the "KEY-PERSON LIFE INSURANCE POLICY").
Any Net Cash Proceeds payable to the Company under the Key-Person Life Insurance
Policy shall be paid to the Agent for application in accordance with this
Agreement and Section 5 of the Security Agreement.
SECTION 7.05. COMPLIANCE WITH LAWS. The Company will comply,
and cause each Subsidiary to comply, in all material respects with all
applicable laws, ordinances, rules, regulations, and requirements of
governmental authorities (including Environmental Laws and ERISA and the rules
and regulations thereunder).
SECTION 7.06. INSPECTION OF PROPERTY, BOOKS AND RECORDS. The
Company will keep and will cause each Subsidiary to keep, proper books of record
and account in which full, true and correct entries shall be made of all
dealings and transactions in relation to its business and activities; and will
permit, and will cause each of its Subsidiaries to permit, representatives of
any Lender at such Lender's expense to visit and inspect any of their respective
properties, to examine and make abstracts or copies from any of their respective
books and records, to conduct a collateral audit and analysis of their
respective inventories and accounts receivable and to discuss their respective
affairs, finances and accounts with their respective officers, employees and
independent public accountants, all at such reasonable times and as often as may
reasonably be desired.
SECTION 7.07. USE OF PROCEEDS. The Company will use the
proceeds of the Tranche A Loans solely for payment of amounts due under the
Acquisition Documents and transaction fees incurred in connection with the
Operative Documents. The Company will use the proceeds of the Tranche B Loans
solely for the refinancing of existing indebtedness to Sirrom Capital and
Columbus Bank & Trust. The proceeds of Working Capital Loans shall be used by
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the Company solely for working capital needs of the Company. None of the
proceeds of any Loan provided hereunder will be used in violation of any
applicable law or regulation.
SECTION 7.08. FURTHER ASSURANCES. The Company will, and will
cause each Subsidiary to, at its own cost and expense, cause to be promptly and
duly taken, executed, acknowledged and delivered all such further acts,
documents and assurances (x) as may from time to time be necessary or as the
Required Lenders may from time to time reasonably request in order to carry out
the intent and purposes of the Financing Documents and the transactions
contemplated thereby, including all such actions to establish, preserve, protect
and perfect the estate, right, title and interest of the Lenders to the
Collateral (including Collateral acquired after the date hereof), including
first priority Liens thereon, subject only to Permitted Liens and (y) as the
Required Lenders may from time to time reasonably request, to establish,
preserve, protect and perfect first priority Liens in favor of the Lenders on
any and all assets of the Company and the Subsidiaries, now owned or hereafter
acquired, that are not Collateral on the date hereof. The Company shall promptly
give notice to the Agent of the acquisition after the Closing Date by the
Company of any real property (including leaseholds in respect of real property),
trademark, copyright or patent.
SECTION 7.09. BOARD MEETINGS. The Company will notify the
Lenders of all meetings and actions by written consent of the board of directors
of the Company and each committee thereof at the same time and in the same
manner as notice of any meeting of such board or committee (if any) is required
to be given to its directors who do not waive such notice (or, if such action
requires no notice, then 10 days written notice thereof describing the matters
upon which action is to be taken). The Lenders shall have the right to send two
representatives selected by them to each such meeting, who shall be permitted to
attend such meeting and any adjournments thereof (other than any portion of such
meeting devoted to discussion of the Lenders solely in their respective
capacities as holders of the Notes).
SECTION 7.10. LENDERS' MEETINGS. Within 10 days following any
request therefore by the Agent, the Company will conduct a meeting of the
Lenders to discuss the results of any prior fiscal period and the financial
condition of the Company at which shall be present the chief executive officer
and the chief financial officer of the Company and such other officers of the
Company as the Company's chief executive officer shall designate. Such meetings
shall be held at a time and place convenient to the Lenders and the Company.
SECTION 7.11. CONSUMMATION OF THE ACQUISITION. The Company
will cause the closing of the Acquisition to occur concurrently with the making
of the Loans on the Closing Date, and will not without the prior written consent
of the Agent waive any condition to its obligations to consummate the
Acquisition.
SECTION 7.12. HAZARDOUS MATERIALS; REMEDIATION. The Company
will (i) promptly give notice to the Lenders in writing of any complaint, order,
citation, notice or other written communication from any Person with respect to,
or if the Company becomes aware of, (x) the existence or alleged existence of a
material violation of any applicable Environmental Law or the incurrence of any
material liability, obligation, loss, damage, cost, expense, fine,
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penalty or sanction or the requirement to commence any material remedial action
resulting from or in connection with any air emission, water discharge, noise
emission, Hazardous Material or any other environmental, health or safety matter
at, upon, under or within any of the properties now or previously owned, leased
or operated by it or any Subsidiary or due to operations or activities of it or
the operations or activities of any Subsidiary of the Company, or any other
Person on or in connection with any such property or any part thereof or (y) any
release on any of such properties of Hazardous Materials in a quantity that is
reportable under any applicable Environmental Law; (ii) promptly comply and
cause each Restricted Subsidiary to comply with any governmental requirements
requiring the removal, treatment or disposal of such Hazardous Materials or
Hazardous Materials Contamination and provide evidence satisfactory to the
Required Lenders of such compliance; and (iii) provide the Lenders, within 30
days after demand therefor by the Required Lenders, with a bond, letter of
credit or similar financial assurance evidencing to the satisfaction of the
Required Lenders that sufficient funds are available to pay the cost of
removing, treating and disposing of such Hazardous Materials or Hazardous
Materials Contamination and discharging any assessment which may be established
on any such property as a result thereof.
SECTION 7.13. LANDLORD AND WAREHOUSEMAN WAIVERS. The Company
shall use its reasonable best efforts to deliver to the Agent waivers of
contractual and statutory landlord's, landlord's mortgagee's and warehouseman's
Liens in form and substance satisfactory to the Agent under each existing lease,
warehouse agreement or similar agreement to which the company or any Subsidiary
is a party; provided that the Company will use its reasonable best efforts to
assure that such waivers will be incorporated when the existing lease, warehouse
agreement or similar agreement is amended, renewed or extended and the Company
will use its reasonable best efforts to obtain waivers of both contractual and
statutory landlord's, landlord's mortgagee's and warehouseman's Liens in form
and substance satisfactory to the Agent in connection with each new lease,
warehouse agreement or similar agreement entered into by the Company or any
Subsidiary. Without limiting the obligations of the Company under this Section
7.13, it is understood and agreed that any Inventory that is subject to a
landlord's, landlord's mortgagee's or warehouseman's Lien or any other Lien not
created by the Security Documents shall not be included in Eligible Inventory.
SECTION 7.14. COLLATERAL REPORTS. The Company shall keep
accurate and complete records of its accounts receivable in at least so much
detail as to enable the Company to provide the Receivables Reports and other
information described in Section 7.01.
SECTION 7.15. COLLECTIONS; RIGHT TO NOTIFY ACCOUNT DEBTORS. At
any time following the occurrence of an Event of Default and during the
continuance thereof, in addition to the Lenders' rights under the Security
Documents, the Company hereby authorizes the Agent, at any time, to (i) notify
any or all account debtors that the accounts receivable of the Company and its
Subsidiaries have been assigned to the Agent and that the Agent has a security
interest therein and (ii) direct such account debtors to make all payments due
from them to the Company or any Subsidiary upon such accounts receivable
directly to the Agent or to a lockbox designated by the Agent. The Agent shall
promptly furnish the Company with a copy of any such notice
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sent. Any such notice, in the Agent's sole discretion, may be sent on the
Company's stationery, in which event the Company shall, if requested by the
Agent, co-sign such notice with the Agent.
SECTION 7.16. ENFORCEMENT OF COVENANTS NOT TO COMPETE. The
Company and each Subsidiary shall preserve, protect and defend, to the extent
permitted by applicable law and to the extent commercially reasonable, all of
its rights, if any, with respect to any covenant not to compete contained in any
of the material contracts of such Person or contained in any employment
agreement with any employee whose annual salary and other compensation payable
by the Company or any Subsidiary is $100,000 or more.
SECTION 7.17. HEDGING FACILITIES. Not later than sixty (60)
days following the Closing Date, the Company will, at its sole cost and expense,
enter into and thereafter maintain in full force and effect an interest rate cap
agreement for a term of three (3) years, in an initial notional amount of
$15,000,000 and thereafter amortizing on a pro rata basis with the Tranche A
Loans, with a strike price at 8.8% per annum, or upon such other terms as may be
agreed to by the Agent in its sole discretion.
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ARTICLE VIII
NEGATIVE COVENANTS
The Company agrees that, so long as any Lender has any
Commitment hereunder or any amount payable under any Note remains unpaid:
SECTION 8.01. DEBT. The Company will not, and will not permit
any of its Subsidiaries to, directly or indirectly, create, incur, assume,
guarantee or otherwise become or remain directly or indirectly liable with
respect to, any Debt, except for:
(a) Debt of the Company outstanding on the date of this
Agreement as set forth in Schedule 8.01;
(b) Debt of the Company under the Financing Documents;
(c) Debt of the Company or any Subsidiary incurred or
assumed for the purpose of financing all or any part of the cost of acquiring
any fixed asset (including through Capital Leases), in an aggregate principal
amount at any time outstanding not greater than $1,000,000;
(d) Debt of the Company or any Subsidiary to a
wholly-owned Subsidiary of the Company, or of any Subsidiary of the Company to
the Company;
(e) the Subordinated Debt, provided such Debt is fully
subordinated to the Obligations on terms satisfactory to the Agent and the
Required Lenders;
(f) Debt in respect of the Hedging Facilities required
pursuant to Section 7.17;
(g) Debt of the Company or any Subsidiary outstanding
under the Sirrom Loan Documents;
(h) other Debt of the Company or any Subsidiary in an
aggregate principal amount at any time outstanding not greater than $50,000; and
(i) extensions, refinancings, replacements and renewals
of any of the foregoing Debt described in clauses (a) or (c) of this Section
8.01, provided that the principal amount thereof is not increased and such
extension, refinancing, replacement or renewal does not impose more burdensome
terms upon the Company or any Subsidiary, as the case may be, than the Debt
being extended, refinanced, replaced or renewed.
SECTION 8.02. NEGATIVE PLEDGE. (a) Neither the Company nor
any Subsidiary will create, assume or suffer to exist any Lien on any asset now
owned or hereafter acquired by it, except:
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(i) any Lien on any asset securing Debt permitted under
Section 8.01(c) incurred or assumed for the purpose of financing all or
any part of the cost of acquiring such asset, provided that such Lien
attaches to such asset concurrently with or within 90 days after the
acquisition thereof;
(ii) Liens listed on Schedule 8.02 and existing on the date of
this Agreement securing Debt outstanding on such date permitted by
Section 8.01(a) and specified on Schedule 8.02;
(iii) Liens arising in the ordinary course of its business
which (A) do not secure Debt, (B) do not secure any single obligation
in an amount exceeding $50,000 or which in the aggregate do not secure
obligations in excess $200,000 and (C) do not in the aggregate
materially detract from the value of its assets or materially impair
the use thereof in the operation of its business;
(iv) Liens created by the Sirrom Loan Documents; and
(v) Liens created by the Security Documents.
(b) Other Negative Pledges. Neither the Company nor any
Subsidiary will enter into any agreement or contract which restricts the Company
or such Subsidiary from granting a Lien on any of such Person's assets.
SECTION 8.03. CAPITAL STOCK. The Company shall not issue any
capital stock that under its certificate of incorporation is entitled to a
preference over the Common Stock as to payment of dividends or distributions,
and shall not issue any of its Common Stock except pursuant to the Warrants, the
anti-dilution provisions of the ▇▇▇▇▇▇▇ Warrant or in an underwritten public
offering; provided that the Company shall be permitted to issue (x) (i) Common
Stock in an amount of up to one percent (1%) of the outstanding Common Stock of
the Company (on a fully diluted basis) for consideration (net of any expenses
(including commissions) reasonably incurred in connection with such stock
issuance) not to exceed $500,000, (ii) up to 3,000 shares of Common Stock to
employees, officers and directors of the Company or its Subsidiaries as part of
incentive or compensation packages and (iii) up to 2.4% of the outstanding
shares of Common Stock of the Company pursuant to the Consulting and Services
Agreement, dated February 1, 1996, between Healthcare Alliance, Inc. and the
Company, on the condition that any and all such Common Stock issued to the
Company pursuant to clauses (i) and (ii) shall be pledged by the recipient or
other holder thereof to secure the Obligations on terms satisfactory to the
Agent and the Lenders, and (y) in an underwritten public offering only, shares
to ▇▇▇▇▇▇ ▇▇▇▇▇ pursuant to his consulting agreement with the Company dated May
8, 1997. No Subsidiary shall issue any shares of capital stock except shares of
capital stock issued by any Subsidiary to the Company.
SECTION 8.04. RESTRICTED PAYMENTS. (a) The Company will not,
directly or indirectly, declare, order, pay, make or set apart any sum for any
Restricted Payment; provided
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that the foregoing shall not restrict or prohibit purchases or redemptions of
the Warrants under the terms thereof.
(b) Without the prior written consent of the Required
Lenders, neither the Company nor any of its Subsidiaries will (i) consent to the
transfer of the Subordinated Note or (ii) pay, repay, redeem, purchase, acquire
or make any other payment in respect of the Subordinated Note, except as
specifically provided therein and expressly permitted thereby and by the
Subordination Agreement.
SECTION 8.05. ERISA. The Company will not, nor will it permit
any Subsidiary to:
(a) engage in any transaction in connection with which the Company
or any Subsidiary could be subject to any material liability arising from either
a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by
Section 4975 of the Code;
(b) terminate any Plan in a manner, or take any other action,
which could result in any material liability of any member of the ERISA Group to
the PBGC;
(c) fail to make full payment when due of all amounts which, under
the provisions of any Plan, it is required to pay as contributions thereto, or
permit to exist any accumulated funding deficiency, whether or not waived, with
respect to any Plan;
(d) permit the present value of all benefit liabilities under all
Plans to exceed the fair market value of the assets of such Plans; or
(e) fail to make any payments to any Multiemployer Plan that it
may be required to make under any agreement relating to such Multiemployer Plan
or any law pertaining thereto.
SECTION 8.06. CONSOLIDATIONS, MERGERS AND SALES OF ASSETS. The
Company will not and will not permit any Subsidiary to consolidate or merge with
or into any other Person, or sell, lease or otherwise transfer, directly or
indirectly, any of its assets, other than (v) sales of inventory in the ordinary
course of business, (w) dispositions of Temporary Cash Investments, (x) mergers
or consolidations of any Subsidiary with the Company (provided that the Company
shall be the surviving corporation therefrom) or any other Subsidiary, (y) the
transfer to Arrow on or after the Closing Date of those assets of
Strato/Infusaid relating to its pump product business, as provided in and
subject to the terms of the Arrow Purchase Agreement, and (z) dispositions for
cash or fair value of assets that the board of directors of the Company
determines in good faith are no longer used or useful in the business of the
Company or such Subsidiary, provided that immediately after any such
disposition, the aggregate fair market value of all such assets disposed of
pursuant to this clause (z) after the date hereof does not exceed $500,000 and
the aggregate fair market value of all such assets during the Fiscal Year in
which such disposition is made does not exceed $100,000.
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SECTION 8.07. PURCHASE OF ASSETS, INVESTMENTS. The Company
will not, and will not permit any Subsidiary to, acquire any assets other than
in the ordinary course of business. The Company will not, and will not permit
any Subsidiary to, make, acquire or own any Investment in any Person other than
Temporary Cash Investments. Without limiting the generality of the foregoing,
the Company will not, and will not permit any Subsidiary to, (i) acquire or
create any Subsidiary without the consent of the Required Lenders (which may be
given or withheld in their sole good faith discretion) and arrangements
satisfactory to the Required Lenders for (x) a pledge of the stock of such
Subsidiary to the Agent for the benefit of the Lenders, (y) a guaranty by such
Subsidiary of the obligations of the Company hereunder and (z) a grant of a Lien
on all of the assets of such Subsidiary to the Agent for the benefit of the
Lenders to secure such guaranty or (ii) engage in any joint venture or
partnership with any other Person.
SECTION 8.08. TRANSACTIONS WITH AFFILIATES. The Company will
not, and will not permit any Subsidiary to, directly or indirectly, enter into
or permit to exist any transaction (including the purchase, sale, lease or
exchange of any property or service or the rendering of any service) with, or
for the benefit of, any Affiliate of the Company, any stockholder of the Company
who directly or indirectly owns or controls, or whose family members directly or
indirectly own or control 10% or more of the issued and outstanding shares of
the Company (a "COMPANY AFFILIATED PERSON") or any affiliate or family member of
any such stockholder, except upon terms not less favorable to the Company or any
Subsidiary than if the relationship of Affiliate or stockholder did not exist.
SECTION 8.09. AMENDMENTS OR WAIVERS. Without the prior written
consent of the Required Lenders, the Company will not, nor will it permit any
Subsidiary to, agree to (i) any amendment to or waiver of or in respect of the
certificate of incorporation of the Company or any amendment or waiver of or in
respect of any Operative Document or the Subordinated Note, or (ii) any other
amendment to or waiver of any provision of any material contract constituting a
part of the Collateral.
SECTION 8.10. FISCAL YEAR. The Company shall not change its
fiscal year from a fiscal year ending December 31.
SECTION 8.11. MANAGEMENT COMPENSATION. The Company shall not,
and shall not permit any Subsidiary to, directly or indirectly, pay or become
obligated to pay, any compensation for services in any form to or for the
account of any Company Affiliated Person, except (i) from and after the date the
Company shall demonstrate compliance with the financial covenants contained
herein for the fiscal quarter ended December 31, 1997, aggregate compensation in
an amount not to exceed $250,000 for any consecutive 12 month period, or (ii)
upon such other terms as shall have been previously disclosed to and approved by
the Agent and the Required Lenders in writing.
SECTION 8.12. LEASE PAYMENTS. The Company will not, and will
not permit any Subsidiary to, incur or assume (whether pursuant to a Guarantee
or otherwise) any liability for rental payments under a lease with a lease term
(as defined in Financial Accounting Standards
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Board Statement No. 13, as in effect on the date hereof) of one year or more if,
after giving effect thereto, the aggregate amount of minimum lease payments that
the Company and its Consolidated Subsidiaries have so incurred or assumed will
exceed, on a consolidated basis, $250,000 for any calendar year under any such
leases (excluding Capital Leases).
SECTION 8.13. MINIMUM NET WORTH. At no time after the Closing
Date, will the Company permit Consolidated Net Worth to be less than the amount
of Consolidated Net Worth as of the Closing Date, plus 75% of the positive
amount of the consolidated net income of the Company and its Consolidated
Subsidiaries for each complete month ended on or after such date, plus the
amount of any increase in Consolidated Net Worth resulting from the issuance of
stock, corporate reorganizations, recapitalizations or any similar event.
SECTION 8.14. CAPITAL EXPENDITURES. The aggregate amount
of Capital Expenditures for any Fiscal Year shall not exceed the amounts set
forth below for such Fiscal Year:
Fiscal Year Ending Amount
------------------ ------
12/31/97 $700,000
12/31/98 $700,000
All Fiscal Yeast thereafter $500,000
SECTION 8.15. TOTAL DEBT SERVICE COVERAGE RATIO. The Company
shall not permit the ratio on the last day of any fiscal quarter of (i)
Consolidated Free Cash Flow to (ii) Total Debt Service, in each case for the
twelve-month period then ended (or, in the case of any fiscal quarter ending
prior to the first anniversary of the Closing Date, for the period commencing on
the Closing Date and ending on the last day of such fiscal quarter) to be less
than 1.25 to 1.0.
SECTION 8.16. LEVERAGE. At no time shall the ratio of (i)
Consolidated Total Debt at such time to (ii) Adjusted EBITDA for the four
consecutive fiscal quarters then most recently ended (considered as a single
accounting period; provided that for the purposes of compliance on any date
prior to the date that four complete fiscal quarters have elapsed since the
Closing Date, Adjusted EBITDA for the relevant period shall equal the sum of
Adjusted EBITDA for each fiscal quarter completed since the Closing Date,
annualized), exceed 3.50 to 1.0.
SECTION 8.17. MINIMUM EBITDA. At no time during any period
specified below arising after September 30, 1997, shall EBITDA for the four
consecutive fiscal quarters then most recently ended (or, in the case of any
fiscal quarter ending prior to the first anniversary of the Closing Date, for
the period commencing on the Closing Date and ending on the last day of such
fiscal quarter), considered as a single accounting period, be less than the
corresponding amount set forth below:
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Period Amount
------ ------
through 12/31/97 $ 4,000,000
through 3/31/98 $ 7,000,000
thereafter through 12/31/98 $10,000,000
thereafter through 12/31/99 $11,000,000
All times thereafter $12,000,000
SECTION 8.18. INTEREST COVERAGE. The Company shall not permit
the ratio, calculated on the last day of any fiscal quarter for the number of
consecutive fiscal quarters then most recently ended since the Closing
(considered as a single accounting period, but not to exceed four quarters), of
(i) Consolidated Free Cash Flow to (ii) the aggregate interest charges incurred
by the Company and its Consolidated Subsidiaries for such period, whether
expensed or capitalized, including the portion of any obligation under Capital
Leases allocable to interest expenses in accordance with GAAP and the portion of
any debt discount or premium (but not expenses of issuance) that shall be
amortized in such period, to be less than the ratio set forth below opposite the
period in which such last day shall fall:
PERIOD RATIO
Closing Date through 12/31/97 2.25:1.0
1/1/98 through 6/30/98 2.50:1.0
All times thereafter 3.00:1.0
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ARTICLE IX
EVENTS OF DEFAULT
SECTION 9.01. EVENTS OF DEFAULT. If any one or more of the
following events (each an "EVENT OF DEFAULT") shall occur and be continuing
for any reason whatsoever (whether voluntary or involuntary, by operation of
law or otherwise):
(a) the Company shall fail to pay any principal, interest or
premium on any Note or any fees payable hereunder when due, or any other amount
payable hereunder within five Business Days of when due;
(b) the Company or any Subsidiary shall fail to observe or
perform any covenant contained in Article VIII hereof, or Section 5 or Sections
4(a), (e) or (i) of the Security Agreement or shall fail to perform any
covenant contained in Section 3(b) of the Pledge Agreement;
(c) the Company or any Subsidiary shall fail to observe or
perform any covenant or agreement contained in the Financing Documents (other
than those covered by clause (a) or (b) above) for 15 days after notice thereof
has been given to the Company by the Agent;
(d) the Company shall, during any period that NationsCredit
shall be the holder of any Warrants, fail to observe or perform any covenant or
agreement contained in the Warrants or the Warrantholders Rights Agreement for
15 days after notice thereof has been given to the Company by the Agent
(provided that no default shall occur hereunder by reason of the Company's
failure to comply with Section 5.2 of the Warrants if compliance with such
Section shall cause an Event of Default hereunder, unless such other Event of
Default shall be waived by the Agent and the Required Lenders as provided
herein);
(e) any representation, warranty, certification or statement
made by the Company or any Subsidiary in any Financing Document or in any
certificate, financial statement or other document delivered pursuant to the
Financing Documents shall prove to have been incorrect in any respect (or in
any material respect if such representation, warranty, certification or
statement is not by its terms already qualified as to materiality) when made
(or deemed made);
(f) the Company or any Subsidiary shall fail to make any
payment in respect of any Debt (other than the Notes) that singly, or that when
aggregated with all other Debt with respect to which such Person has failed to
make a payment, has an aggregate outstanding principal amount of $150,000 or
greater;
(g) any event or condition shall occur that (i) results in
the acceleration of the maturity of any Debt (other than the Notes) of the
Company or any Subsidiary that singly, or when aggregated with all other Debt
of any such Person with respect to which such an event or condition shall have
occurred, has an aggregate outstanding principal amount of $150,000 or
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greater, or (ii) enables (or, with the giving of notice or lapse of time or
both, would enable) the holder of such Debt or any Person acting on such
holder's behalf to accelerate the maturity thereof, or (iii) results in a
violation of, or a default under, any provision of the certificate of
incorporation of the Company or any Subsidiary;
(h) the Company or any Subsidiary shall commence a voluntary
case or other proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidation, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment
for the benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize any of the
foregoing;
(i) an involuntary case or other proceeding shall be
commenced against the Company or any Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed for
a period of 90 days; or an order for relief shall be entered against the
Company or any Subsidiary under the federal bankruptcy laws as now or hereafter
in effect;
(j) any member of the ERISA Group shall fail to pay when due
an amount or amounts aggregating in excess of $150,000 which it shall have
become liable to pay under Title IV of ERISA; or notice of intent to terminate
a Material Plan shall be filed under Title IV of ERISA by any member of the
ERISA Group, any plan administrator or any combination of the foregoing; or the
PBGC shall institute proceedings under Title IV of ERISA to terminate, to
impose liability (other than for premiums under Section 4007 of ERISA) in
respect of, or to cause a trustee to be appointed to administer any Material
Plan; or a condition shall exist by reason of which the PBGC would be entitled
to obtain a decree adjudicating that any Material Plan must be terminated; or
there shall occur a complete or partial withdrawal from, or a default, within
the meaning of Section 4219(c)(5) of ERISA, with respect to, one or more
Multiemployer Plans which could cause one or more members of the ERISA Group to
incur a current payment obligation in excess of $150,000;
(k) a judgment or order for the payment of money in excess of
$150,000 shall be rendered against the Company or any Subsidiary and such
judgment or order shall continue unsatisfied and unstayed for a period of 10
days or the staying of such judgment or order shall require the posting of a
bond in excess of $150,000.
(l) except as the result of any transfer made pursuant to the
Company Pledge Agreement, the Company shall cease to be the record and
beneficial owner of 100% of the issued and outstanding capital stock of any
Subsidiary; and person or group of persons (within the meaning of Rule 13d-3
promulgated by the Securities and Exchanges Commission under the
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Securities Exchange Act of 1934, as amended), other than Management
Stockholders or NationsCredit, shall have acquired beneficial ownership (within
the meaning of such Rule 13d-3) of more than 5% of the Common Stock; or
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ shall cease to be chief executive officer of the Company or
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. shall cease to be president of the Company and, in
either case, a successor shall not have been appointed by the Company and
approved by the Required Lenders within 90 days thereafter, which approval
shall not be unreasonably withheld; or ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇. or ▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. shall cease to own beneficially at least the number
of shares (determined assuming the exercise of all options or warrants to
purchase Common Stock held by such Person and adjusted for stock splits,
combinations and similar events) of Common Stock owned by such Person on the
Closing Date (determined as aforesaid); or ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ shall cease to be a
director of the Company and a successor shall not have been appointed by the
Company and approved by the Required Lenders within 90 days thereafter, which
approval shall not be unreasonably withheld;
(m) any auditor's report or reports on the audited statements
delivered pursuant to Section 7.01 shall include any material qualification
(including with respect to the scope of audit) or exception (including without
limitation any adverse statement as to the ability of the Company to continue
as a going concern);
(n) the Lien created by any of the Security Documents shall
at any time fail to constitute a valid and perfected Lien on all of the
Collateral purported to be secured thereby, subject to no prior or equal Lien
except Permitted Liens, or the Company or any of its Subsidiaries shall so
assert in writing;
(o) the Company or any Subsidiary of shall be prohibited or
otherwise materially restrained from conducting the business theretofore
conducted by it by virtue of any determination, ruling, decision, decree or
order of any court or regulatory authority of competent jurisdiction and such
determination, ruling, decision, decree or order remains unstayed and in effect
for any period of 10 days beyond any period for which any business interruption
insurance policy shall provide full coverage of any losses and lost profits;
(p) any of the Operative Documents shall for any reason fail
to constitute the valid and binding agreement of any party thereto, or any such
party shall so assert in writing; or
(q) subject to Section 12.13 hereof, an Event of Default
under (and as defined in) the Sirrom Loan Agreement shall occur;
then, and in every such event and at any time thereafter during the continuance
of such event, the Agent shall if requested by the Required Lenders, (i) by
notice to the Company terminate the Commitments and they shall thereupon
terminate, (ii) by notice to the Company declare the Notes (together with
accrued interest thereon) and all other obligations of the Company hereunder
and under the other Financing Documents to be, and the Notes and such other
obligations shall thereupon become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Company and/or (iii) exercise any rights or remedies
provided herein, under any other Financing Document, or
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otherwise; provided that in the case of any of the Events of Default specified
in clause (h) or (i) above with respect to the Company, without any notice to
the Company or any other act by the Agent or the Lenders, the Commitments shall
thereupon terminate and all of the Notes (together with accrued interest
thereon) and all other obligations of the Company under the other Financing
Documents shall become immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Company.
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ARTICLE X
FEES, EXPENSES AND INDEMNITIES;
GENERAL PROVISIONS RELATING TO PAYMENTS
SECTION 10.01. FEES. (a) Participation Fees. On the Closing
Date, the Company shall pay to each Lender a fee in an amount equal to 1.25% of
the sum of such Lender's Tranche A Commitment, Tranche B Commitment and Working
Capital Commitment.
(b) Closing Fees. On the Closing Date, the Company shall pay
to the Lenders a fee in an aggregate amount (for all Lenders) equal to the sum
of (i) $300,000, minus (ii) the balance, if any, of the good faith deposit of
$30,000 previously paid by the Company in connection with the initial proposal
letter and the fee previously paid by the Company in connection with the
Commitment Letter, in each case after payment of all costs and expenses of the
negotiation, preparation and execution of the Financing Documents and the
consummation of the transactions contemplated thereby.
(c) Unused Commitment Fee. During the period from the Closing
Date through the date on which the Working Capital Commitments are terminated,
the Company shall pay to each Lender a fee at the rate of .38% per annum on the
daily average amount by which the amount of such Lender's Working Capital
Commitment exceeds the aggregate outstanding principal amount of its Working
Capital Outstandings. Accrued fees under this Section shall be payable
quarterly in arrears on each Quarterly Date prior to the date on which the
Working Capital Commitments are terminated and on the date of such termination.
SECTION 10.02. COMPUTATION OF INTEREST AND FEES. Commitment
fees pursuant to Section 10.01(c) and all interest hereunder and under the
Notes shall be calculated on the basis of a 360-day year for the actual number
of days elapsed.
SECTION 10.03. GENERAL PROVISIONS REGARDING PAYMENTS. All
payments (including prepayments) to be made by the Company under any Financing
Document, including payments of principal of and premium and interest on the
Notes, fees, expenses and indemnities, shall be made without set-off or
counterclaim and in immediately available funds. If any payment hereunder
becomes due and payable on a day other than a Business Day, such payment shall
be extended to the next succeeding Business Day and, with respect to payments
of principal, interest thereon shall be payable at the then applicable rate
during such extension. The Company shall make all payments in immediately
available funds to each Lender's Payment Account before 11:00 A.M. (New York
City time) on the date when due. Each payment (including prepayments) by the
Company on account of principal of and interest on any Loans shall be made pro
rata according to the respective outstanding principal amounts of such Class of
Loans held by each Lender. All amounts payable by the Company hereunder or
under any other Financing Document not paid when due (other than payments of
principal and interest on the Notes, which shall bear interest as set forth
therein) shall bear interest, payable on demand, for each day until paid at a
rate per annum equal to 2% plus the rate announced by NationsBank,
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N.A. from time to time as its prime rate (calculated on the basis of a 360-day
year for the actual number of days elapsed).
SECTION 10.04. EXPENSES. Whether or not the transactions
contemplated hereby shall be consummated, the Company agrees to pay on demand
(i) all reasonable costs and expenses of preparation of this Agreement, the
other Financing Documents and the Warrants and of the Company's performance of
and compliance with all agreements and conditions contained herein and therein,
(ii) the reasonable fees, expenses and disbursements of counsel (including the
reasonable allocation of the compensation, costs and expenses of in-house
counsel, based upon time spent) to, and independent appraisers and consultants
retained by, the Lenders in connection with the negotiation, preparation,
execution and administration of this Agreement, the other Financing Documents
and the Warrants and any amendments hereto or thereto and waivers hereof and
thereof, (iii) all costs and expenses of creating, perfecting and maintaining
Liens pursuant to the Financing Documents, including filing and recording fees
and expenses, the costs of any bonds required to be posted in respect of future
filing and recording fees and expenses, title investigations and fees and
expenses of such local counsel as the Agent shall request, (iv) the reasonable
fees, expenses and disbursements of independent accountants or other experts
retained by the Agent in connection with not more than two accounting and
collateral audits or reviews of the Company and its affairs during any calendar
year and (v) if an Event of Default occurs, all out-of-pocket expenses incurred
by the Agent and each Lender, including reasonable fees and disbursements of
counsel (including the reasonable allocation of the compensation, costs and
expenses of in-house counsel, based upon time spent), in connection with such
Event of Default and collection, bankruptcy, insolvency and other enforcement
proceedings resulting therefrom.
SECTION 10.05. INDEMNITY. Whether or not the transactions
contemplated hereby shall be consummated, the Company agrees to indemnify, pay
and hold harmless the Agent and each Lender and any subsequent holder of any of
the Notes, Warrants or Warrant Shares and the officers, directors, employees
and agents of the Agent, each Lender and such holders (collectively called the
"INDEMNITEES") from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, expenses and
disbursements of any kind or nature whatsoever (including the reasonable fees
and disbursements of counsel for such Indemnitee) in connection with any
investigative, administrative or judicial proceeding, whether or not such
Indemnitee shall be designated a party thereto and including any such
proceeding initiated by or on behalf of an Obligor, and the expenses of
investigation by engineers, environmental consultants and similar technical
personnel and any commission, fee or compensation claimed by any broker (other
than any broker retained by NationsCredit) asserting any right to payment for
the transactions contemplated hereby, which may be imposed on, incurred by or
asserted against such Indemnitee as a result of or in connection with the
transactions contemplated hereby or by the other Operative Documents (including
(i)(A) as a direct or indirect result of the presence on or under, or escape,
seepage, leakage, spillage, discharge, emission or release from, any property
now or previously owned, leased or operated by the Company or any of its
Subsidiaries of any Hazardous Materials or any Hazardous Materials
Contamination, (B) arising out of or relating to the offsite disposal of any
materials generated or present on any such property or (C) arising out of or
resulting from the
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environmental condition of any such property or the applicability of any
governmental requirements relating to Hazardous Materials, whether or not
occasioned wholly or in part by any condition, accident or event caused by any
act or omission of the Company or any of its Subsidiaries, and (ii) proposed
and actual extensions of credit under this Agreement) and the use or intended
use of the proceeds of the Notes and Warrants, except that the Company shall
have no obligation hereunder to an Indemnitee with respect to any liability
resulting from the gross negligence or willful misconduct of such Indemnitee.
To the extent that the undertaking set forth in the immediately preceding
sentence may be unenforceable, the Company shall contribute the maximum portion
which it is permitted to pay and satisfy under applicable law to the payment
and satisfaction of all such indemnified liabilities incurred by the
Indemnitees or any of them. Without limiting the generality of any provision of
this Section, to the fullest extent permitted by law, the Company hereby waives
all rights for contribution or any other rights of recovery with respect to
liabilities, losses, damages, costs and expenses arising under or relating to
Environmental Laws that it might have by statute or otherwise against any
Indemnitee.
SECTION 10.06. TAXES. The Company agrees to pay all
governmental assessments, charges or taxes (except income or other similar
taxes imposed on any Lender or any holder of a Note), including any interest or
penalties thereon, at any time payable or ruled to be payable in respect of the
existence, execution or delivery of this Agreement, the other Financing
Documents or the Warrants, or the issuance of the Notes, the Warrants or the
Warrant Shares, and to indemnify and hold each Lender and each and every holder
of the Notes, Warrants and Warrant Shares harmless against liability in
connection with any such assessments, charges or taxes.
SECTION 10.07. FUNDING LOSSES. If the Company fails to borrow
any Working Capital Loans after notice has been given to any Lender in
accordance with Section 4.04 or make any payment when due (including pursuant
to a notice of optional prepayment), the Company shall reimburse each Lender
within 15 days after demand for any resulting loss or expense incurred by it
(or by an existing or prospective participant in the related Loan), including
any loss incurred in obtaining, liquidating or employing deposits from third
parties, but excluding loss of margin for the period after any such payment or
failure to borrow; provided that such Lender shall have delivered to the
Company a certificate as to the amount of such loss or expense, which
certificate shall be conclusive in the absence of manifest error.
SECTION 10.08. MAXIMUM INTEREST. (a) In no event shall the
interest charged with respect to the Notes or any other obligations of the
Company under the Financing Documents exceed the maximum amount permitted under
the laws of the State of Georgia or of any other applicable jurisdiction.
(b) Notwithstanding anything to the contrary herein or
elsewhere, if at any time the rate of interest payable for the account of any
Lender hereunder or under any Note or other Financing Document (the "STATED
RATE") would exceed the highest rate of interest permitted under any applicable
law to be charged by such Lender (the "MAXIMUM LAWFUL RATE"), then for so long
as the Maximum Lawful Rate would be so exceeded, the rate of interest payable
for the account of such Lender shall be equal to the Maximum Lawful Rate;
provided,
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that if at any time thereafter the Stated Rate is less than the Maximum Lawful
Rate, the Company shall, to the extent permitted by law, continue to pay
interest for the account of such Lender at the Maximum Lawful Rate until such
time as the total interest received by such Lender is equal to the total
interest which such Lender would have received had the Stated Rate been (but
for the operation of this provision) the interest rate payable. Thereafter, the
interest rate payable for the account of such Lender shall be the Stated Rate
unless and until the Stated Rate again would exceed the Maximum Lawful Rate, in
which event this provision shall again apply.
(c) In no event shall the total interest received by any
Lender exceed the amount which such Lender could lawfully have received had the
interest been calculated for the full term hereof at the Maximum Lawful Rate
with respect to such Lender.
(d) In computing interest payable with reference to the
Maximum Lawful Rate applicable to any Lender, such interest shall be calculated
at a daily rate equal to the Maximum Lawful Rate divided by the number of days
in the year in which such calculation is made.
(e) If any Lender has received interest hereunder in excess
of the Maximum Lawful Rate with respect to such Lender, such excess amount
shall be applied to the reduction of the principal balance of its Loans or to
other amounts (other than interest) payable hereunder, and if no such principal
or other amounts are then outstanding, such excess or part thereof remaining
shall be paid to the Company.
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ARTICLE XI
THE AGENT
SECTION 11.01. APPOINTMENT AND AUTHORIZATION. Each Lender
irrevocably appoints and authorizes the Agent to enter into each of the
Security Documents on its behalf and to take such action as agent on its behalf
and to exercise such powers under the Financing Documents as are delegated to
the Agent by the terms thereof, together with all such powers as are reasonably
incidental thereto.
SECTION 11.02. AGENT AND AFFILIATES. NationsCredit shall have
the same rights and powers under the Financing Documents as any other Lender
and may exercise or refrain from exercising the same as though it were not the
Agent, and NationsCredit and its affiliates may lend money to and generally
engage in any kind of business with the Company or any Subsidiary or affiliate
of the Company as if it were not the Agent hereunder.
SECTION 11.03. ACTION BY AGENT. The obligations of the Agent
hereunder are only those expressly set forth herein and under the other
Financing Documents. Without limiting the generality of the foregoing, the
Agent shall not be required to take any action with respect to any Default,
except as expressly provided in Article IX.
SECTION 11.04. CONSULTATION WITH EXPERTS. The Agent may
consult with legal counsel (who may be counsel for the Company), independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken by it in good faith in accordance with
the advice of such counsel, accountants or experts.
SECTION 11.05. LIABILITY OF AGENT. Neither the Agent nor any
of its directors, officers, agents or employees shall be liable for any action
taken or not taken by it in connection with the Financing Documents (i) with
the consent or at the request of the Required Lenders or (ii) in the absence of
its own gross negligence or willful misconduct. Neither the Agent nor any of
its directors, officers, agents or employees shall be responsible for or have
any duty to ascertain, inquire into or verify (i) any statement, warranty or
representation made in connection with any Financing Document or any borrowing
hereunder; (ii) the performance or observance of any of the covenants or
agreements of the Company; (iii) the satisfaction of any condition specified in
Article V, except receipt of items required to be delivered to the Agent; or
(iv) the validity, effectiveness, sufficiency or genuineness of any Financing
Document or any other instrument or writing furnished in connection therewith.
The Agent shall not incur any liability by acting in reliance upon any notice,
consent, certificate, statement, or other writing (which may be a bank wire,
telex, facsimile transmission or similar writing) believed by it to be genuine
or to be signed by the proper party or parties.
SECTION 11.06. INDEMNIFICATION. Each Lender shall, ratably in
accordance with its Working Capital Commitment (whether or not the Working
Capital Commitments have been terminated), indemnify the Agent (to the extent
not reimbursed by the Company) against
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any cost, expense (including counsel fees and disbursements), claim, demand,
action, loss or liability (except such as result from the Agent's gross
negligence or willful misconduct) that the Agent may suffer or incur in
connection with the Financing Documents or any action taken or omitted by the
Agent hereunder or thereunder.
SECTION 11.07. CREDIT DECISION. Each Lender acknowledges that
it has, independently and without reliance upon the Agent or any other Lender,
and based on such documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement. Each Lender
also acknowledges that it will, independently and without reliance upon the
Agent or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking any action under the Financing Documents.
SECTION 11.08. SUCCESSOR AGENT. The Agent may resign at any
time by giving written notice thereof to the Lenders and the Company. Upon any
such resignation, the Required Lenders shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Required Lenders, and shall have accepted such appointment, within 30 days
after the retiring Agent gives notice of resignation, then the retiring Agent
may, on behalf of the Lenders, appoint a successor Agent, which shall be an
institution organized or licensed under the laws of the United States of
America or of any State thereof. Upon the acceptance of its appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent.
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ARTICLE XII
MISCELLANEOUS
SECTION 12.01. SURVIVAL. All agreements, representations and
warranties made herein shall survive the execution and delivery of this
Agreement and the other Operative Documents and the execution, sale and
delivery of the Notes, Warrants and Warrant Shares. The indemnities and
agreements set forth in Articles X and XI shall survive the payment of the
Notes, the exercise, redemption or expiration of the Warrants and the
termination of this Agreement.
SECTION 12.02. NO WAIVERS. No failure or delay by the Agent
or any Lender in exercising any right, power or privilege under any Financing
Document shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein and
therein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 12.03. NOTICES. All notices, requests and other
communications to any party hereunder shall be in writing (including prepaid
overnight courier, telex, facsimile transmission or similar writing) and shall
be given to such party at its address or telecopy or telex number set forth on
the signature pages hereof (or, in the case of any such Lender who becomes a
Lender after the date hereof, in a notice delivered to the Company and the
Agent by the assignee Lender forthwith upon such assignment) or at such other
address or telecopy or telex number as such party may hereafter specify for the
purpose by notice to the Agent and the Company. Each such notice, request or
other communication shall be effective (i) if given by telex or telecopy, when
such telex or telecopy is transmitted to the telex or telecopy number specified
in this Section and the appropriate answer back is received (in the case of
telex) or telephonic confirmation of receipt thereof is obtained (in the case
of telecopy) or (ii) if given by mail, prepaid overnight courier or any other
means, when received at the address specified in this Section or when delivery
at such address is refused.
SECTION 12.04. SEVERABILITY. In case any provision of or
obligation under this Agreement or the Notes or any other Financing Document
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
SECTION 12.05. AMENDMENTS AND WAIVERS. Any provision of this
Agreement or the Notes may be amended or waived if, but only if, such amendment
or waiver is in writing and is signed by the Company and the Required Lenders
(and, if the rights or duties of the Agent are affected thereby, by the Agent);
provided that no such amendment or waiver shall, unless signed by all the
Lenders, (i) increase or decrease any Commitment of any Lender (except for a
ratable decrease in the Commitments of all Lenders) or subject any Lender to
any additional obligation, (ii) reduce the principal of or rate of interest on
any Loan or any fees hereunder, (iii)
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postpone the date fixed for any payment of principal of any Loan pursuant to
Section 2.04(a), 3.04(a) or 4.05(a), or of interest on any Loan or any fees
hereunder or for any termination of any Commitment or (iv) change the
percentage of the Commitments or of the aggregate unpaid principal amount of
the Notes which shall be required for the Lenders or any of them to take any
action under this Section or any other provision of this Agreement.
SECTION 12.06. SUCCESSORS AND ASSIGNS; REGISTRATION. (a) The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns (including any
transferee of any Note or Warrant), except that the Company may not assign or
otherwise transfer any of its rights under this Agreement without the prior
written consent of all Lenders.
(b) The terms and provisions of this Agreement shall inure to
the benefit of any transferee or assignee of any Note or Warrant and, in the
event of such transfer or assignment, the rights and privileges herein
conferred upon the assigning Lender shall automatically extend to and be vested
in such transferee or assignee, all subject to the terms and conditions hereof.
Any assignment shall be for an equal percentage of each Class of such assignor
Lender's Loans and its Working Capital Commitment, and any such assignee Lender
shall, upon its registration in the Note Register referred to below, become a
"Lender" for all purposes hereunder. Upon any such assignment, the assignor
Lender shall be released from its Working Capital Commitment to the extent
assigned to and assumed by the assignee Lender.
(c) Upon any assignment of any Note(s), the assigning Lender
shall surrender its Note(s) to the Company for exchange or registration of
transfer, and the Company will promptly execute and deliver in exchange
therefor a new Note or Note(s) of the same tenor and registered in the name of
the assignor Lender (if less than all of such Lender's Notes are assigned) and
the name of the assignee Lender.
(d) The Company shall maintain a register (the "NOTE
REGISTER") of the Lenders and all assignee Lenders that are the holders of all
the Notes issued pursuant to this Agreement. The Company will allow any Lender
to inspect and copy such list at the Company's principal place of business
during normal business hours. Prior to the due presentment for registration of
transfer of any Note, the Company may deem and treat the Person in whose name a
Note is registered as the absolute owner of such Note for the purpose of
receiving payment of principal of and premium and interest on such Note and for
all other purposes whatsoever, and the Company shall not be affected by notice
to the contrary.
(e) Each Lender (including any assignee Lender at the time of
such assignment) represents that it (i) is acquiring its Notes solely for
investment purposes and not with a view toward, or for sale in connection with,
any distribution thereof, (ii) has received and reviewed such information as it
deems necessary to evaluate the merits and risks of its investment in the
Notes, (iii) is an "accredited investor" within the meaning of Rule 501(a)
under the Securities Act and (iv) has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of its investment in the Notes, including a complete loss of its
investment.
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(f) Each Lender understands that the Notes are being offered
only in a transaction not involving any public offering within the meaning of
the Securities Act, and that, if in the future such Lender decides to resell,
pledge or otherwise transfer any of the Notes, such Notes may be resold,
pledged or transferred only (i) to the Company, (ii) to a person who such
Lender reasonably believes is a qualified institutional buyer that purchases
for its own account or for the account of a qualified institutional buyer to
whom notice is given that such resale, pledge or transfer is being made in
reliance on Rule 144A under the Securities Act or (iii) pursuant to an
exemption from registration under the Securities Act.
(g) Each Lender understands that the Notes will, unless
otherwise agreed by the Company and the holder thereof, bear a legend to the
following effect:
THIS SECURITY IS NOT BEING REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE ISSUER THAT
THIS SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY
(1) TO THE COMPANY, (2) TO A PERSON WHO THE SELLER REASONABLY BELIEVES
IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER THAT IS AWARE THAT THE
RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A OR (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT.
(h) If any Note becomes mutilated and is surrendered by the
Lender with respect thereto to the Company, or if any Lender claims that any of
its Notes has been lost, destroyed or wrongfully taken, the Company shall
execute and deliver to such Lender a replacement Note, upon the affidavit of
such Lender attesting to such loss, destruction or wrongful taking with respect
to such Note and such lost, destroyed, mutilated, surrendered or wrongfully
taken Note shall be deemed to be canceled for all purposes hereof. Such
affidavit shall be accepted as satisfactory evidence of the loss, wrongful
taking or destruction thereof and no indemnity shall be required as a condition
of the execution and delivery of a replacement Note. Any costs and expenses of
the Company in replacing any such Note shall be for the account of such Lender.
SECTION 12.07. COLLATERAL. Each of the Lenders represents to
the Agent and each of the other Lenders that it in good faith is not relying
upon any Margin Stock as collateral in the extension or maintenance of the
credit provided for in this Agreement.
SECTION 12.08. HEADINGS. Headings and captions used in the
Financing Documents (including the Exhibits and Schedules hereto and thereto)
are included herein and therein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
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SECTION 12.09. GOVERNING LAW; SUBMISSION TO JURISDICTION.
THIS AGREEMENT AND EACH NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF GEORGIA. THE COMPANY HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF GEORGIA AND OF ANY GEORGIA STATE COURT SITTING IN ATLANTA FOR
PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE COMPANY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM. EACH OF THE PARTIES HERETO IRREVOCABLY CONSENTS TO
SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 12.03. NOTHING
IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
SECTION 12.10. NOTICE OF BREACH BY AGENT OR LENDER. The
Company agrees to give the Agent and the Lenders notice of any action or
inaction by the Agent or any Lender or any agent or attorney of the Agent or
any Lender in connection with this Agreement or any other Financing Document or
the obligations of the Company under this Agreement or any other Financing
Document that may be actionable against the Agent or any Lender or any agent or
attorney of the Agent or any Lender or a defense to payment of any obligations
of the Company under this Agreement or any other Financing Document for any
reason, including commission of a tort or violation of any contractual duty or
duty implied by law. The Company agrees, to the fullest extent that it may
lawfully do so, that unless such notice is given promptly (and in any event
within ten (10) days after the Company has knowledge, or with the exercise of
reasonable diligence could have had knowledge, of any such action or inaction),
the Company shall not assert, and the Company shall be deemed to have waived,
any claim or defense arising therefrom to the extent that the Agent or any
Lender could have mitigated such claim or defense after receipt of such notice.
SECTION 12.11. WAIVER OF JURY TRIAL. EACH OF THE COMPANY, THE
AGENT AND THE LENDERS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE FINANCING
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY AND TO THE FULLEST EXTENT
PERMITTED BY LAW WAIVES ANY RIGHTS THAT IT MAY HAVE TO CLAIM OR RECEIVE
CONSEQUENTIAL OR SPECIAL DAMAGES IN CONNECTION WITH ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THE FINANCING DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREBY.
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SECTION 12.12. COUNTERPARTS. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement, the other Financing Documents, the Warrantholders Rights
Agreement and the Warrants constitute the entire agreement and understanding
among the parties hereto and supersede any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof.
SECTION 12.13. SIRROM LOAN DOCUMENTS. The Company
acknowledges and acquisces in the purchase by and the transfer and assignment
to NationsCredit of the Sirrom Loan Documents and the indebtedness evidenced
thereby, and agrees with NationsCredit to perform the obligations and
agreements of the Company contained therein in accordance with the terms
thereof, subject to the amendments thereto set forth herein. The Company and
NationsCredit hereby agree that to the extent any of the representations and
warranties and affirmative and negative covenants contained in the Sirrom Loan
Agreement shall be inconsistent with the representations and warranties and
affirmative and negative covenants of the Company set forth in this Agreement,
such representations and warranties and affirmative and negative covenants are
and shall be deemed superseded and replaced by the representations and
warranties and affirmative and negative covenants contained in this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
BORROWER:
HORIZON MEDICAL PRODUCTS, INC.
By: /s/ [Unreadable]
-----------------------------------------
President
Address: Seven North Parkway Square
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
LENDERS:
NATIONSCREDIT COMMERCIAL
CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. Alt
-----------------------------------------
Authorized Signatory
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
One Canterbury Green
Stamford, Connecticut 06901
Attention: Horizon Medical Products, Inc.,
Account Officer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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AGENT:
NATIONSCREDIT COMMERCIAL
CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. Alt
----------------------------------------
Authorized Signatory
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
One Canterbury Green
Stamford, Connecticut 06901
Attention: Horizon Medical Products, Inc.,
Account Officer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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Payment Account Information:
First National Bank of Chicago
Account No.: 52-56933
ABA Routing No.: ▇▇▇▇▇▇▇▇▇
Account Name: NationsCredit
Commercial Corporation
Ref.: Horizon Medical Products, Inc.
Company Account Information:
Bank Name: Columbus Bank and Trust
Account No.: 22 33 800
ABA Routing No.: ▇▇▇▇▇▇▇▇▇
Ref.: Horizon Medical Products, Inc.
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EXHIBIT A
THIS SECURITY IS NOT BEING REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE ISSUER THAT
THIS SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY
(1) TO THE COMPANY, (2) TO A PERSON WHO THE SELLER REASONABLY BELIEVES
IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER THAT IS AWARE THAT THE
RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A OR (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT.
HORIZON MEDICAL PRODUCTS, INC.
TRANCHE A NOTE
$21,500,000 July 15, 1997
HORIZON MEDICAL PRODUCTS, INC., a Georgia corporation
(together with its successors, the "COMPANY"), for value received, promises to
pay NATIONSCREDIT COMMERCIAL CORPORATION (the "LENDER"), or registered assigns,
an aggregate principal amount of Twenty-One Million Five Hundred Thousand
Dollars ($21,500,000), by paying on each of the installment dates set forth in
Schedule A attached hereto the aggregate principal amount set forth on Schedule
A opposite such date in accordance with Section 2.04(a) of the Credit Agreement
referred to below, together with accrued and unpaid interest thereon to but
excluding the date of payment, and to pay in arrears on the first Business Day
of each calendar month, commencing with August 1, 1997, interest (computed on
the basis of the actual number of days elapsed over a year of 360 days) on the
aggregate unpaid principal amount hereof from time to time at a per annum rate
equal to the sum of (i) the Commercial Paper Rate (as hereinafter defined) plus
(ii) 4.25%, and to pay on demand interest at a rate equal to the sum of the
foregoing rate plus 2.00% per annum (in each case subject to Section 10.08 of
the Credit Agreement referred to below) on any overdue principal, premium and
interest from the due date thereof to the date of actual payment (after as well
as before judgment and during any bankruptcy proceeding). Changes in the rate
of interest applicable hereto shall occur as of the opening of business on any
day on which the Commercial Paper Rate changes.
"COMMERCIAL PAPER RATE" means for any day in any calendar
month, the rate of interest equivalent to the money market yield for the
Interest Determination Date falling in such
79
month on the one month Commercial Paper Rate for dealer-placed commercial paper
of issuers whose corporate bonds are rated "AA" or its equivalent by a
nationally recognized rating agency, as such rate is made available on a
discount basis or otherwise by the Federal Reserve Bank of New York and
published weekly by the Board of Governors of the Federal Reserve System in its
H.15 report, or any successor publication published by the Board of Governors
of the Federal Reserve System or, if such rate for such date is not yet
published in such statistical release, the rate for that date will be the rate
set forth in the weekly statistical release designated as such, or any
successor publication, published by the Board of Governors of the Federal
Reserve System. "Interest Determination Date" means July 1, 1997 and the first
Business Day of each calendar month thereafter.
This Note is one of the Tranche A Notes referred to in the
Credit Agreement dated as of July 15, 1997 (as amended from time to time, the
"CREDIT AGREEMENT") among the Company, the lenders referred to therein and
NationsCredit Commercial Corporation, as Agent. The Credit Agreement and the
Security Documents referred to therein contain additional rights of the holder
of, and the security for, this Note. Capitalized terms used but not defined
herein have the meanings assigned thereto in the Credit Agreement.
If an Event of Default shall occur and be continuing, the
unpaid balance of the principal of this Note together with all accrued but
unpaid interest hereon may become or be declared forthwith due and payable in
the manner and with the effect provided in the Credit Agreement.
This Note also may and must be prepaid as provided in the
Credit Agreement, together with any premiums set forth therein, under the
circumstances therein described.
Payments of principal hereof and interest and premium hereon
shall be made in lawful money of the United States of America.
Presentment, demand and notice of any kind are hereby waived
by the undersigned.
This Note shall be governed by, and construed in accordance
with, the laws of the State of Georgia in all respects, including all matters
of construction, validity and performance, without regard to the choice of law
provisions thereof.
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80
IN WITNESS WHEREOF, the Company has caused this Note to be
duly executed as of the day and year first above written.
HORIZON MEDICAL PRODUCTS, INC.
By
-------------------------------
Title:
-------------------------
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81
SCHEDULE A
TO TRANCHE A NOTE
Amortization Schedule
Quarterly Date
Installment Principal Amount
Nos. 1 - 4 $ 537,500
Nos. 5 - 12 806,250
Nos. 13 - 24 1,075,000
As used herein, "Quarterly Date" means each January 1, April 1, July 1 and
October 1 occurring on or after April 1, 1998.
82
EXHIBIT B
THIS SECURITY IS NOT BEING REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE ISSUER THAT
THIS SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY
(1) TO THE COMPANY, (2) TO A PERSON WHO THE SELLER REASONABLY BELIEVES
IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER THAT IS AWARE THAT THE
RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A OR (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT.
HORIZON MEDICAL PRODUCTS, INC.
TRANCHE B NOTE
$2,000,000 July 15, 1997
HORIZON MEDICAL PRODUCTS, INC., a Georgia corporation
(together with its successors, the "COMPANY"), for value received, promises to
pay NATIONSCREDIT COMMERCIAL CORPORATION (the "LENDER"), or registered assigns,
an aggregate principal amount of Two Million Dollars ($2,000,000), by paying on
each of the installment dates set forth in Schedule A attached hereto the
aggregate principal amount set forth on Schedule A opposite such date in
accordance with Section 3.04(a) of the Credit Agreement referred to below,
together with accrued and unpaid interest thereon to but excluding the date of
payment, and to pay in arrears on the first Business Day of each calendar
month, commencing with August 1, 1997, interest (computed on the basis of the
actual number of days elapsed over a year of 360 days) on the aggregate unpaid
principal amount hereof from time to time at a per annum rate equal to the sum
of (i) the Commercial Paper Rate (as hereinafter defined) plus (ii) 5.25%, and
to pay on demand interest at a rate equal to the sum of the foregoing rate plus
2.00% per annum (in each case subject to Section 10.08 of the Credit Agreement
referred to below) on any overdue principal, premium and interest from the due
date thereof to the date of actual payment (after as well as before judgment
and during any bankruptcy proceeding). Changes in the rate of interest
applicable hereto shall occur as of the opening of business or any day on which
the Commercial Paper Rate changes.
83
"COMMERCIAL PAPER RATE" means for any day in any calendar
month, the rate of interest equivalent to the money market yield for the
Interest Determination Date falling in such month on the one month Commercial
Paper Rate for dealer-placed commercial paper of issuers whose corporate bonds
are rated "AA" or its equivalent by a nationally recognized rating agency, as
such rate is made available on a discount basis or otherwise by the Federal
Reserve Bank of New York and published weekly by the Board of Governors of the
Federal Reserve System in its H.15 report, or any successor publication
published by the Board of Governors of the Federal Reserve System or, if such
rate for such date is not yet published in such statistical release, the rate
for that date will be the rate set forth in the weekly statistical release
designated as such, or any successor publication, published by the Board of
Governors of the Federal Reserve System. "Interest Determination Date" means
July 1, 1997 and the first Business Day of each calendar month thereafter.
This Note is one of the Tranche B Notes referred to in the
Credit Agreement dated as of July 15, 1997 (as amended from time to time, the
"CREDIT AGREEMENT") among the Company, the lenders referred to therein and
NationsCredit Commercial Corporation, as Agent. The Credit Agreement and the
Security Documents referred to therein contain additional rights of the holder
of, and the security for, this Note. Capitalized terms used but not defined
herein have the meanings assigned thereto in the Credit Agreement.
If an Event of Default shall occur and be continuing, the
unpaid balance of the principal of this Note together with all accrued but
unpaid interest hereon may become or be declared forthwith due and payable in
the manner and with the effect provided in the Credit Agreement.
This Note also may and must be prepaid as provided in the
Credit Agreement, together with any premium set forth therein, under the
circumstances therein described.
Payments of principal hereof and interest and premium hereon
shall be made in lawful money of the United States of America.
Presentment, demand and notice of any kind are hereby waived
by the undersigned.
This Note shall be governed by, and construed in accordance
with, the laws of the State of Georgia in all respects, including all matters
of construction, validity and performance, without regard to the choice of law
provisions thereof.
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84
IN WITNESS WHEREOF, the Company has caused this Note to be
duly executed as of the day and year first above written.
HORIZON MEDICAL PRODUCTS, INC.
By
------------------------------
Title:
------------------------
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85
SCHEDULE A
TO TRANCHE B NOTE
AMORTIZATION SCHEDULE
Tranche B Quarterly
Date Installment Principal Amount
Nos. 1-4 $500,000
As used herein, "Tranche B Quarterly Date" means each January 1, April 1, July
1 and October 1 occurring after the earlier of (i) the sixth (6th) anniversary
of the Closing Date and (ii) the date on which the Tranche A Notes shall have
been repaid in their entirety.
86
EXHIBIT C
THIS SECURITY IS NOT BEING REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE ISSUER THAT
THIS SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY
(1) TO THE COMPANY, (2) TO A PERSON WHO THE SELLER REASONABLY BELIEVES
IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER THAT IS AWARE THAT THE
RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A OR (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT.
HORIZON MEDICAL PRODUCTS, INC.
WORKING CAPITAL NOTE
$3,000,000 July 15, 1997
HORIZON MEDICAL PRODUCTS, INC., a Georgia corporation
(together with its successors, the "COMPANY"), for value received, promises to
pay NATIONSCREDIT COMMERCIAL CORPORATION (the "LENDER"), or registered assigns,
the principal amount of Three Million Dollars ($3,000,000) or the aggregate
outstanding principal amount of the Working Capital Loans made by the Lender,
whichever is less, on the Working Capital Termination Date (as herein defined),
and to pay in arrears on the first Business Day of each calendar month,
commencing with August 1, 1997, until the Working Capital Termination Date and
on the Working Capital Termination Date, interest (computed on the basis of the
actual number of days elapsed over a year of 360 days) on the aggregate unpaid
principal amount hereof on each day from time to time at a per annum rate equal
to the sum of (i) the Commercial Paper Rate (as hereinafter defined) plus (ii)
4.25%, and to pay on demand interest at a rate equal to the rate otherwise
applicable to this Working Capital Note plus 2.00% per annum (in each case
subject to Section 10.08 of the Credit Agreement referred to below) on any
overdue principal and interest from the due date thereof to the date of actual
payment (after as well as before judgment and during any bankruptcy
proceeding). Changes in the rate of interest applicable hereto shall occur as
of the opening of business on any day on which the Commercial Paper Rate
changes.
87
"WORKING CAPITAL TERMINATION DATE" means the earlier of July
1, 2004 and the date on which all of the Tranche A Notes and the Tranche B
Notes shall have been paid in full in accordance with their terms.
"COMMERCIAL PAPER RATE" means for any day in any calendar
month, the rate of interest equivalent to the money market yield for the
Interest Determination Date falling in such month on the one month Commercial
Paper Rate for dealer-placed commercial paper of issuers whose corporate bonds
are rated "AA" or its equivalent by a nationally recognized rating agency, as
such rate is made available on a discount basis or otherwise by the Federal
Reserve Bank of New York and published weekly by the Board of Governors of the
Federal Reserve System in its H.15 report, or any successor publication
published by the Board of Governors of the Federal Reserve System or, if such
rate for such date is not yet published in such statistical release, the rate
for that date will be the rate set forth in the weekly statistical release
designated as such, or any successor publication, published by the Board of
Governors of the Federal Reserve System. "Interest Determination Date" means
July 1, 1997 and the first Business Day of each calendar month thereafter.
This Note is one of the Working Capital Notes referred to in
the Credit Agreement dated as of July 15, 1997 (as amended from time to time,
the "CREDIT AGREEMENT"), among the Company, the lenders referred to therein and
NationsCredit Commercial Corporation, as Agent. The Credit Agreement and the
Security Documents referred to therein contain additional rights of the holder
of, and the security for, this Note. Capitalized terms used but not defined
herein have the meanings assigned thereto in the Credit Agreement.
If an Event of Default shall occur and be continuing, the
unpaid balance of the principal of this Note together with all accrued but
unpaid interest hereon may become or be declared forthwith due and payable in
the manner and with the effect provided in the Credit Agreement.
Each holder hereof is authorized to endorse on the grid
attached hereto, or on a continuation thereof, each Working Capital Loan made
by the Lender and each payment and prepayment with respect thereto. Failure of
the Lender or any holder hereof to make any such endorsement shall not affect
the obligations of the Company hereunder or under the Credit Agreement.
This Note also may and must be prepaid as provided in the
Credit Agreement, together with any premiums set forth therein, under the
circumstances therein described.
Payments of principal hereof and interest hereon shall be
made in lawful money of the United States of America.
Presentment, demand, protest and notice of any kind are
hereby waived by the undersigned.
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88
This Note shall be governed by, and construed in accordance
with, the laws of the State of Georgia in all respects, including all matters
of construction, validity and performance, without regard to the choice of law
provisions thereof.
IN WITNESS WHEREOF, the Company has caused this Note to be
duly executed as of the day and year first above written.
HORIZON MEDICAL PRODUCTS, INC.
By
---------------------------------
Title:
---------------------------
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89
EXHIBIT D
THIS WARRANT AND THE SHARES OF NON-VOTING COMMON STOCK PURCHASABLE HEREUNDER
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED OR ANY
STATE SECURITIES LAWS AND MAY NOT BE SOLD OR OFFERED FOR SALE OR TRANSFERRED
UNLESS REGISTERED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR
UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. THIS WARRANT AND THE
SHARES OF NON-VOTING COMMON STOCK PURCHASABLE HEREUNDER ARE SUBJECT TO AND HAVE
THE BENEFIT OF A WARRANTHOLDERS RIGHTS AGREEMENT DATED AS OF JULY 15, 1997,
AMONG HORIZON MEDICAL PRODUCTS, INC. AND THE STOCKHOLDERS AND WARRANTHOLDERS
LISTED ON THE SIGNATURE PAGES THEREOF, A COPY OF WHICH IS ON FILE WITH HORIZON
MEDICAL PRODUCTS, INC.
Dated: July 15, 1997
WARRANT
TO PURCHASE 15,276 SHARES OF NON-VOTING COMMON STOCK OF
HORIZON MEDICAL PRODUCTS, INC.
EXPIRING JULY 15, 2007
THIS IS TO CERTIFY THAT, for value received, NATIONSCREDIT
COMMERCIAL CORPORATION or registered assigns ("HOLDER") is entitled to purchase
from HORIZON MEDICAL PRODUCTS, INC., a Georgia corporation (the "COMPANY"), at
any time or from time to time after 9:00 a.m., New York City time, on the date
hereof and prior to 5:00 p.m., New York City time, on the earlier of July 15,
2007, and the Business Day preceding the date of redemption of this Warrant, at
the place where the Warrant Agency is located, at the Exercise Price, the
number of shares of Class B Common Stock, par value $.001 per share (the
"NON-VOTING COMMON STOCK") of the Company, all subject to adjustment and upon
the terms and conditions hereinafter provided, and is entitled also to exercise
the other appurtenant rights, powers and privileges hereinafter described.
This Warrant is one of one or more warrants (the "WARRANTS")
of the same form and having the same terms as this Warrant, entitling the
holders initially to purchase up to an aggregate of 15,276 shares of Non-Voting
Common Stock. The Warrants have
90
been issued pursuant to the Credit Agreement dated as of July 15, 1997 (as
amended from time to time, the "CREDIT AGREEMENT") among the Company, the
Lenders listed on the signature pages thereof and NationsCredit Commercial
Corporation ("NATIONSCREDIT"), as Agent, and the Holder is entitled to certain
benefits as set forth therein and to certain benefits described in the
Warrantholders Rights Agreement. The Company shall keep a copy of the Credit
Agreement and the Warrantholders Rights Agreement, and any amendments thereto,
at the Warrant Agency and shall furnish, without charge, copies thereof to the
Holder upon request.
Certain terms used in this Warrant are defined in Article VI.
ARTICLE I
EXERCISE OF WARRANTS
1.1. METHOD OF EXERCISE. To exercise this Warrant in whole or
in part, the Holder shall deliver on any Business Day to the Company, at the
Warrant Agency, (a) this Warrant, (b) a written notice of such Holder's
election to exercise this Warrant, which notice shall specify the number of
shares of Non-Voting Common Stock to be purchased (which shall be a whole
number of shares if for less than all the shares then issuable hereunder), the
denominations of the share certificate or certificates desired and the name or
names in which such certificates are to be registered, and (c) payment of the
Exercise Price with respect to such shares. Such payment may be made, at the
option of the Holder, either (a) by cash, certified or bank cashier's check or
wire transfer in an amount equal to the product of (i) the Exercise Price times
(ii) the number of Warrant Shares as to which this Warrant is being exercised
or (b) by receiving from the Company the number of Warrant Shares equal to (i)
the number of Warrant Shares as to which this Warrant is being exercised minus
(ii) the number of Warrant Shares having a value, based on the Closing Price on
the trading day immediately prior to the date of such exercise, equal to the
product of (x) the Exercise Price times (y) the number of Warrant Shares as to
which this Warrant is being exercised.
The Company shall, as promptly as practicable and in any
event within seven days after receipt of such notice and payment, execute and
deliver or cause to be executed and delivered, in accordance with such notice,
a certificate or certificates representing the aggregate number of shares of
Non-Voting Common Stock specified in said notice together with cash in lieu of
any fractions of a share as provided in Section 1.3. The share certificate or
certificates so delivered shall be in such denominations as may be specified in
such notice, and shall be issued in the name of the Holder or such other name
or names as shall be designated in such notice. This Warrant shall be deemed to
have been exercised and such certificate or certificates shall be deemed to
have been issued, and such Holder or any other Person so designated to be named
therein shall be deemed for all purposes to have become a holder of record of
shares, as of the date the aforementioned notice and payment is received by the
Company. If this Warrant shall
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have been exercised only in part, the Company shall, at the time of delivery of
such certificate or certificates, deliver to the Holder a new Warrant
evidencing the rights to purchase the remaining shares of Non-Voting Common
Stock called for by this Warrant, which new Warrant shall in all other respects
be identical with this Warrant, or, at the request of the Holder, appropriate
notation may be made on this Warrant which shall then be returned to the
Holder. The Company shall pay all expenses, taxes and other charges payable in
connection with the preparation, issuance and delivery of share certificates
and new Warrants, except that, if share certificates or new Warrants shall be
registered in a name or names other than the name of the Holder, funds
sufficient to pay all transfer taxes payable as a result of such transfer shall
be paid by the Holder at the time of delivery of the aforementioned notice of
exercise or promptly upon receipt of a written request of the Company for
payment.
1.2. SHARES TO BE FULLY PAID AND NONASSESSABLE. All shares of
Non-Voting Common Stock issued upon the exercise of this Warrant and all shares
of Voting Common Stock issued upon the conversion of such Non-Voting Common
Stock shall be validly issued, fully paid and nonassessable.
1.3. NO FRACTIONAL SHARES REQUIRED TO BE ISSUED. The Company
shall not be required to issue fractions of shares of Non-Voting Common Stock
upon exercise of this Warrant. If any fraction of a share would, but for this
Section, be issuable upon final exercise of this Warrant, in lieu of such
fractional share the Company shall pay to the Holder, in cash, an amount equal
to the same fraction of the Fair Market Value of the Company per share of
outstanding Common Stock on the Business Day immediately prior to the date of
such exercise.
1.4. ACKNOWLEDGEMENT REGARDING REGISTRATION. The Holder of
this Warrant and any transferee hereof of the shares of the Non-Voting Common
Stock issuable upon the exercise of this Warrant, by their acceptance hereof or
thereof, hereby acknowledge and agree that this Warrant and the shares of
Non-Voting Common Stock issuable upon the exercise hereof and any shares of
Voting Common Stock issued upon the conversion of such Non-Voting Common Stock
have not been registered under the Securities Act or any state securities laws
and shall not be sold, pledged, hypothecated, donated or otherwise transferred
unless registered under the Securities Act and any applicable state securities
laws or upon the issuance to the Company of an opinion of counsel reasonably
satisfactory to the Company to the effect that any such transfer shall not be
in violate of the Securities Act or any applicable state securities laws.
1.5. SHARE LEGEND. Each certificate for shares of Non-Voting
Common Stock issued upon exercise of this Warrant, unless at the time of
exercise such shares are registered under the Securities Act, shall bear the
following legend:
"This security has not been registered under the Securities Act of
1933 as amended or any state securities laws and may not be sold or offered for
sale or transferred
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unless registered under said Act and any applicable state securities laws or
unless an exemption from such registration is available. This security is also
subject to and has the benefit of a Warrantholders Rights Agreement dated as of
July 15, 1997, among Horizon Medical Products, Inc. and the Stockholders and
Warrantholders listed on the signature pages thereof, copies of which are on
file with Horizon Medical Products, Inc."
Any certificate issued at any time in exchange or
substitution for any certificate bearing such legend (except a new certificate
issued upon completion of a public offering pursuant to a registration
statement under the Securities Act) shall also bear such legend unless, in the
opinion of counsel selected by the holder of such certificate (who may be an
employee of such holder) and reasonably acceptable to the Company, the
securities represented thereby need no longer be subject to restrictions on
resale under the Securities Act.
1.6. RESERVATION; AUTHORIZATION; CAPITALIZATION. The Company
has duly reserved, and will keep available for issuance upon exercise of the
Warrants, the total number of Warrant Shares deliverable from time to time upon
exercise of all Warrants from time to time outstanding and the total number of
shares of Voting Common Stock deliverable upon conversion of such Warrant
Shares to Voting Common Stock. The Company will not take any actions during the
term of this Warrant that would result in any adjustment of the number of
shares of Common Stock issuable upon the exercise of the Warrant if (i) the
total number of shares of Common Stock issuable after such action upon exercise
of this Warrant, (ii) all shares of Common Stock issued and outstanding and
(iii) all shares then issuable (x) upon the exercise of all Options and (y)
upon the conversion or exchange of all Convertible Securities, would exceed the
total number of shares of Common Stock then authorized for issuance by the
Company. The Company will not change the Non-Voting Common Stock from par value
$.001 per share to any higher par value which exceeds the Exercise Price then
in effect, and will reduce the par value of the Non-Voting Common Stock upon
any event described in Article IV that provides for an increase in the number
of shares of Non-Voting Common Stock subject to purchase upon exercise of this
Warrant, in inverse proportion to and effective at the same time as such number
of shares is increased. At July 15, 1997, the Company had outstanding (i)
102,277 shares of Voting Common Stock, (ii) 0 shares of Non-Voting Common
Stock, (iii) options and warrants to acquire an additional 0 shares of Voting
Common Stock and (iv) no other shares of capital stock or any securities
convertible into or exchangeable for shares of capital stock or any rights,
options or warrants to purchase any shares of capital stock or any securities
convertible into or exchangeable for shares of capital stock, except as set
forth on Schedule 1 attached hereto. Neither the issuance of this Warrant nor
the issuance of Warrant Shares upon exercise of this Warrant violates or
conflicts with the Company's certificate of incorporation or bylaws or any
agreement to which the Company is a party.
1.7. REDUCTION OF WARRANT SHARES. (a) In the event the
Company shall complete a Qualified IPO on or before December 31, 1998, or shall
achieve
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EBITDA of not less than $10,000,000 for its fiscal year ending December
31, 1998 (as certified by the Company's independent public accountants), the
number of Warrant Shares issuable hereunder shall be reduced to such number as
shall represent 7.5% of the Common Stock of the Company on a Fully-Diluted
Basis.
(b) In the event the Company shall complete a Qualified IPO
after December 31, 1998 but on or before the second anniversary of the Closing
Date, or shall achieve EBITDA of not less than $14,000,000 for the twelve
consecutive months most recently ended prior to the second anniversary of the
Closing Date (as certified by the Company's independent public accountants),
the number of Warrant Shares issuable hereunder shall be reduced to such number
as shall represent 10.0% of the Common Stock of the Company on a Fully-Diluted
Basis.
ARTICLE II
WARRANT AGENCY; TRANSFER, EXCHANGE AND
REPLACEMENT OF WARRANTS
2.1. WARRANT AGENCY. As long as any of the Warrants remain
outstanding, the Company shall perform the obligations of and be the warrant
agency with respect to the Warrants (the "WARRANT AGENCY") at its address set
forth in Section 12.03 of the Credit Agreement or at such other address as the
Company shall specify by notice to all Warrantholders.
2.2. OWNERSHIP OF WARRANT. The Company may deem and treat the
person in whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by any
person other than the Company) for all purposes and shall not be affected by
any notice to the contrary, until due presentment of this Warrant for
registration of transfer as provided in this Article II.
2.3. TRANSFER OF WARRANT. The Company agrees to maintain at
the Warrant Agency books for the registration of transfers of the Warrants, and
transfer of this Warrant and all rights hereunder shall be registered, in whole
or in part, on such books, upon surrender of this Warrant at the Warrant
Agency, together with a written assignment of this Warrant duly executed by the
Holder or its duly authorized agent or attorney, with (if the Holder is a
natural person) signatures guaranteed by a bank or trust company or a broker or
dealer registered with the NASD, and funds sufficient to pay any transfer taxes
payable upon such transfer. Upon surrender and, if required, such payment, and
compliance with Section 1.4, the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denominations specified in the instrument of assignment (which shall be whole
numbers of shares only) and shall issue to the assignor a new Warrant
evidencing the portion of this Warrant not so assigned, and this Warrant shall
promptly be canceled.
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2.4. DIVISION OR COMBINATION OF WARRANTS. This Warrant may be
divided or combined with other Warrants upon presentment hereof and of any
Warrant or Warrants with which this Warrant is to be combined at the Warrant
Agency, together with a written notice specifying the names and denominations
(which shall be whole numbers of shares only) in which the new Warrant or
Warrants are to be issued, signed by the holders hereof and thereof or their
respective duly authorized agents or attorneys. Subject to compliance with
Section 2.3 as to any transfer or assignment which may be involved in the
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
2.5. LOSS, THEFT, DESTRUCTION OF WARRANT CERTIFICATES. Upon
receipt of evidence satisfactory to the Company of the ownership of and the
loss, theft, destruction or mutilation of any Warrant and, in the case of any
such loss, theft or destruction, upon receipt of indemnity or security
satisfactory to the Company (it being understood and agreed that if the holder
of such Warrant is NationsCredit, then a written agreement of indemnity given
by NationsCredit alone shall be satisfactory to the Company and no further
security shall be required) or, in the case of any such mutilation, upon
surrender and cancellation of such Warrant, the Company will make and deliver,
in lieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant of
like tenor and representing the right to purchase the same aggregate number of
shares of Non-Voting Common Stock.
2.6. EXPENSES OF DELIVERY OF WARRANTS. The Company shall pay
all expenses, taxes (other than transfer taxes) and other charges payable in
connection with the preparation, issuance and delivery of Warrants hereunder.
ARTICLE III
CERTAIN RIGHTS
3.1. RIGHTS AND OBLIGATIONS UNDER THE WARRANTHOLDERS RIGHTS
AGREEMENT. This Warrant is entitled to the benefits and subject to the terms of
the Warrantholders Rights Agreement dated as of July 15, 1997, among the
Company and the Stockholders and Warrantholders listed on the signature pages
thereof (as amended from time to time, the "WARRANTHOLDERS RIGHTS AGREEMENT").
The Company shall keep or cause to be kept a copy of the Warrantholders Rights
Agreement, and any amendments thereto, at the Warrant Agency and shall furnish,
without charge, copies thereof to the Holder upon request.
3.2. DETERMINATION OF FAIR MARKET VALUE. Subject to Section
3.3 hereof, each determination of Fair Market Value hereunder shall be made in
good faith by the Company. Upon each determination of Fair Market Value by the
Company
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hereunder, the Company shall promptly give notice thereof to all
Warrantholders, setting forth in reasonable detail the calculation of such Fair
Market Value and the method and basis of determination thereof (the "COMPANY
DETERMINATION").
3.3. CONTEST AND APPRAISAL RIGHTS. (a) If the holders of
Warrants entitling such holders to purchase a majority of the Non-Voting Common
Stock subject to purchase upon exercise of Warrants at the time outstanding
(exclusive of Warrants then owned by the Company or any Subsidiary (as defined
in the Credit Agreement) or Affiliate (as defined in the Credit Agreement)
thereof) (the "REQUIRED INTEREST") shall disagree with the Company
Determination and shall by notice to the Company given within 30 days after the
Company's notice of the Company Determination (an "APPRAISAL NOTICE") elect to
dispute the Company Determination, such dispute shall be resolved as set forth
in subsection (b) of this Section.
(b) The Company shall within 30 days after an Appraisal
Notice shall have been given pursuant to subsection (a) of this Section engage
an investment bank or other qualified appraisal firm acceptable to the Required
Interest (the "APPRAISER") to make an independent determination of Fair Market
Value (the "APPRAISER DETERMINATION"). The Appraiser Determination shall be
final and binding on the Company and all Warrantholders. If the Company
Determination and the Appraiser Determination differ by an amount of 15% or
less of the Company Determination, then the costs of conducting the appraisal
shall be borne equally by the Company and the Warrantholders; if the Company
Determination is greater than the Appraiser Determination by more than 15% of
the Company Determination, then the costs of conducting the appraisal shall be
borne entirely by the Warrantholders; and if the Appraiser Determination is
greater than the Company Determination by more than 15% of the Company
Determination, then the costs of conducting the appraisal shall be borne
entirely by the Company; provided that in each case costs separately incurred
by the Company and any Warrantholders shall be separately borne by them.
3.4. BOARD MEETINGS. The Company shall give to NationsCredit,
so long as it shall be the holder of any Warrants, notice of all meetings and
actions by written consent of its board of directors and each committee thereof
(if any), at the same time and in the same manner as notice of any meetings of
such board or committees is required to be given to directors who do not waive
such notice (or, if such action requires no notice, then 10 days written notice
thereof describing the matters upon which action is to be taken).
NationsCredit, so long as it shall be the holder of any Warrants, shall have
the right to send two representatives selected by it to each such meeting, who
shall be permitted to attend such meeting and any adjournments thereof (other
than any portion of such meeting devoted to discussion of NationsCredit solely
in its capacity as holder of the Warrants).
3.5 FINANCIAL STATEMENTS AND OTHER INFORMATION. Promptly upon
transmission thereof, the Company will deliver to NationsCredit, so long as it
shall be the
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holder of any Warrants, copies of any and all financial statements, proxy
statements, notices and other reports as it may send to its public stockholders
and copies of all registration statements and all reports which it files with
the Securities and Exchange Commission (or any governmental body or agency
succeeding to its functions). The Company also will, and will cause its
Subsidiaries to, deliver to NationsCredit, so long as it shall be the holder of
any Warrants, with reasonable promptness, such other information or data with
respect to the Company or any of its Subsidiaries as from time to time may be
reasonably requested by NationsCredit.
3.6 LIMITATION OF RIGHTS. The Warrantholders shall not, by
virtue of the Warrants, be entitled to any rights of a shareholder in the
Company, either at law or in equity, until the exercise of the Warrants as
provided therein. The Warrantholders, as such, shall not be entitled to vote or
receive dividends or be deemed the holder of Non-Voting Common Stock for any
purpose, nor shall anything contained in the Warrants be construed to confer
upon the Warrantholders, as such, any other rights of a shareholder of the
Company, including, but not limited to, any right to vote, give or withhold
consent to any action by the Company, whether upon recapitalization, issuance
of stock, reclassification of stock, consolidation, merger, share exchange,
conveyance or otherwise, receive notice of meetings or other action affecting
shareholders, or receive subscription rights, except as expressly provided
herein or in the Warrantholders Rights Agreement.
ARTICLE IV
ANTIDILUTION PROVISIONS
4.1. ADJUSTMENT GENERALLY. The Exercise Price and the number
of shares of Non-Voting Common Stock (or other securities or property) issuable
upon exercise of this Warrant shall be subject to adjustment from time to time
upon the occurrence of certain events as provided in this Article IV; provided
that notwithstanding anything to the contrary contained herein, the Exercise
Price shall not be less than the par value of the Non-Voting Common Stock, as
such par value is reduced from time to time in accordance with Section 1.6.
4.2. COMMON STOCK REORGANIZATION. If the Company shall
subdivide its outstanding shares of Common Stock (or any class thereof) into a
greater number of shares or consolidate its outstanding shares of Common Stock
(or any class thereof) into a smaller number of shares (any such event being
called a "COMMON STOCK REORGANIZATION"), then (a) the Exercise Price shall be
adjusted, effective immediately after the effective date of such Common Stock
Reorganization, to a price determined by multiplying the Exercise Price in
effect immediately prior to such effective date by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding on such
effective date before giving effect to such Common Stock Reorganization and the
denominator of which shall be the number of shares of Common Stock outstanding
after giving effect to such Common Stock Reorganization, and (b) the
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number of shares of Non-Voting Common Stock subject to purchase upon exercise
of this Warrant shall be adjusted, effective at such time, to a number
determined by multiplying the number of shares of Non-Voting Common Stock
subject to purchase immediately before such Common Stock Reorganization by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding after giving effect to such Common Stock Reorganization and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately before such Common Stock Reorganization.
4.3. COMMON STOCK DISTRIBUTION. (a) If the Company shall
issue, sell or otherwise distribute any shares of Common Stock (other than
Excluded Shares), other than pursuant to a Common Stock Reorganization (which
is governed by Section 4.2 hereof) (any such event, including any event
described in paragraphs (b) and (c) below, being herein called a "COMMON STOCK
DISTRIBUTION"), for a consideration per share less than the Fair Market Value
of the Company per share of outstanding Common Stock on a Fully Diluted Basis
on the date of such Common Stock Distribution (before giving effect to such
Common Stock Distribution), then, effective upon such Common Stock
Distribution, the Exercise Price shall be reduced, if such consideration per
share shall be less than such Fair Market Value per share, to the lowest of the
prices (calculated to the nearest one-thousandth of one cent) determined as
provided in clauses (i), (ii) and (iii) below:
(i) if the Company shall receive any consideration for the
Common Stock issued, sold or distributed in such Common Stock Distribution, the
consideration per share of Common Stock received by the Company upon such
issue, sale or distribution;
(ii) by dividing (A) an amount equal to the sum of (1) the
number of shares of Common Stock outstanding immediately prior to such Common
Stock Distribution multiplied by the then existing Exercise Price, plus (2) the
consideration, if any, received by the Company upon such Common Stock
Distribution by (B) the total number of shares of Common Stock outstanding
immediately after such Common Stock Distribution; and
(iii) by multiplying the Exercise Price in effect
immediately prior to such Common Stock Distribution by a fraction, the
numerator of which shall be the sum of (A) the number of shares of Common Stock
outstanding immediately prior to such Common Stock Distribution multiplied by
such Fair Market Value per share on the date of such Common Stock Distribution,
plus (B) the consideration, if any, received by the Company upon such Common
Stock Distribution, and the denominator of which shall be the product of (1)
the total number of shares of Common Stock outstanding immediately after such
Common Stock Distribution multiplied by (2) such Fair Market Value per share on
the date of such Common Stock Distribution.
If any Common Stock Distribution shall require an adjustment
to the
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Exercise Price pursuant to the foregoing provisions of this paragraph (a),
including by operation of paragraph (b) or (c) below, then, effective at the
time such adjustment is made, the number of shares of Non-Voting Common Stock
subject to purchase upon exercise of this Warrant shall be increased to a
number determined by multiplying the number of shares of Non-Voting Common
Stock subject to purchase immediately before such Common Stock Distribution by
a fraction, the numerator of which shall be the number of shares of Common
Stock outstanding immediately after giving effect to such Common Stock
Distribution and the denominator of which shall be the sum of the number of
shares outstanding immediately before giving effect to such Common Stock
Distribution (both calculated on a Fully Diluted Basis) plus the number of
shares of Common Stock which the aggregate consideration received by the
Company with respect to such Common Stock Distribution would purchase at the
Fair Market Value of the Company per share of outstanding Common Stock on a
Fully Diluted Basis on the date of such Common Stock Distribution (before
giving effect to such Common Stock Distribution). In computing adjustments
under this paragraph, fractional interests in Common Stock shall be taken into
account to the nearest one-thousandth of a share.
The provisions of this paragraph (a), including by operation
of paragraph (b) or (c) below, shall not operate to increase the Exercise Price
or reduce the number of shares of Non-Voting Common Stock subject to purchase
upon exercise of this Warrant.
(b) If the Company shall issue, sell, distribute or otherwise
grant in any manner (including by assumption) any rights to subscribe for or to
purchase, or any warrants or options for the purchase of Common Stock or any
stock or securities convertible into or exchangeable for Common Stock (other
than Excluded Shares) (such rights, warrants or options being herein called
"OPTIONS" and such convertible or exchangeable stock or securities being herein
called "CONVERTIBLE SECURITIES"), whether or not such Options or the rights to
convert or exchange any such Convertible Securities in respect of such Options
are immediately exercisable, and the price per share for which Common Stock is
issuable upon the exercise of such Options or upon conversion or exchange of
such Convertible Securities in respect of such Options (determined by dividing
(i) the aggregate amount, if any, received or receivable by the Company as
consideration for the granting of such Options, plus the minimum aggregate
amount of additional consideration payable to the Company upon the exercise of
all such Options, plus, in the case of Options to acquire Convertible
Securities, the minimum aggregate amount of additional consideration, if any,
payable upon the issuance or sale of such Convertible Securities and upon the
conversion or exchange thereof, by (ii) the total maximum number of shares of
Common Stock issuable upon the exercise of such Options or upon the conversion
or exchange of all such Convertible Securities issuable upon the exercise of
such Options) shall be less than the Fair Market Value of the Company per share
of outstanding Common Stock on a Fully Diluted Basis on the date of granting
such Options (before giving effect to such grant), then, for purposes of
paragraph (a) above, the total maximum number of shares of Common Stock
issuable upon the exercise of such Options or upon conversion or exchange of
the total maximum amount
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of such Convertible Securities issuable upon the exercise of such Options shall
be deemed to have been issued as of the date of granting of such Options and
thereafter shall be deemed to be outstanding and the Company shall be deemed to
have received as consideration of such price per share, determined as provided
above, therefor. Except as otherwise provided in paragraph (d) below, no
additional adjustment of the Exercise Price shall be made upon the actual
exercise of such Options or upon conversion or exchange of such Convertible
Securities.
(c) If the Company shall issue, sell or otherwise distribute
(including by assumption) any Convertible Securities (other than Excluded
Shares), whether or not the rights to exchange or convert thereunder are
immediately exercisable, and the price per share for which Common Stock is
issuable upon such conversion or exchange (determined by dividing (i) the
aggregate amount received or receivable by the Company as consideration for the
issuance, sale or distribution of such Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any, payable to the Company
upon the conversion or exchange thereof, by (ii) the total maximum number of
shares of Common Stock issuable upon the conversion or exchange of all such
Convertible Securities) shall be less than the Fair Market Value of the Company
per share of outstanding Common Stock on a Fully Diluted Basis on the date of
such issuance, sale or distribution (before giving effect to such issuance,
sale or distribution), then, for purposes of paragraph (a) above, the total
maximum number of shares of Common Stock issuable upon conversion or exchange
of all such Convertible Securities shall be deemed to have been issued as of
the date of the issuance, sale or distribution of such Convertible Securities
and thereafter shall be deemed to be outstanding and the Company shall be
deemed to have received as consideration such price per share, determined as
provided above, therefor. Except as otherwise provided in paragraph (d) below,
no additional adjustment of the Exercise Price shall be made upon the actual
conversion or exchange of such Convertible Securities.
(d) If (i) the purchase price provided for in any Option
(other than Excluded Shares) referred to in paragraph (b) above or the
additional consideration, if any, payable upon the conversion or exchange of
any Convertible Securities (other than Excluded Shares) referred to in
paragraph (b) or (c) above or the rate at which any Convertible Securities
(other than Excluded Shares) referred to in paragraph (b) or (c) above are
convertible into or exchangeable for Common Stock shall change at any time
(other than under or by reason of provisions designed to protect against
dilution upon an event which results in a related adjustment pursuant to this
Article IV), or (ii) any of such Options or Convertible Securities shall have
terminated, lapsed or expired, the Exercise Price then in effect shall
forthwith be readjusted (effective only with respect to any exercise of this
Warrant after such readjustment) to the Exercise Price which would then be in
effect had the adjustment made upon the issuance, sale, distribution or grant
of such Options or Convertible Securities been made based upon such changed
purchase price, additional consideration or conversion rate, as the case may be
(in the case of any event referred to in clause (i) of this paragraph (d)) or
had such adjustment not been made (in
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the case of any event referred to in clause (ii) of this paragraph (d)).
(e) If the Company shall pay a dividend or make any other
distribution upon any capital stock of the Company payable in Common Stock,
Options or Convertible Securities, then, for purposes of paragraph (a) above,
such Common Stock, Options or Convertible Securities shall be deemed to have
been issued or sold without consideration.
(f) If any shares of Common Stock, Options or Convertible
Securities shall be issued, sold or distributed for cash, the consideration
received therefor shall be deemed to be the amount received by the Company
therefor, after deduction therefrom of any expenses incurred in connection
therewith. If any shares of Common Stock, Options or Convertible Securities
(other than Excluded Shares) shall be issued sold or distributed for a
consideration other than cash, the amount of the consideration other than cash
received by the Company shall be deemed to be the Fair Market Value of such
consideration, after deduction of any expenses incurred in connection therewith.
If any shares of Common Stock, Options or Convertible Securities (other than
Excluded Shares) shall be issued in connection with any merger in which the
Company is the surviving corporation, the amount of consideration therefor shall
be deemed to be the Fair Market Value of such portion of the assets and business
of the non-surviving corporation as shall be attributable to such Common Stock,
Options or Convertible Securities, as the case may be. If any Options (other
than Excluded Shares) shall be issued in connection with the issuance and sale
of other securities of the Company, together comprising one integral transaction
in which no specific consideration is allocated by the Company to such Options
by the parties thereto, such Options shall be deemed to have been issued without
consideration.
4.4. SPECIAL DIVIDENDS. If the Company shall issue or
distribute to any holder or holders of shares of Common Stock evidences of
indebtedness, any other securities of the Company or any cash, property or
other assets (excluding a Common Stock Reorganization or a Common Stock
Distribution), whether or not accompanied by a purchase, redemption or other
acquisition of shares of Common Stock (any such nonexcluded event being herein
called a "SPECIAL DIVIDEND"), (a) the Exercise Price shall be decreased,
effective immediately after the effective date of such Special Dividend, to a
price determined by multiplying the Exercise Price then in effect by a
fraction, the numerator of which shall be the Fair Market Value of the Company
per share of outstanding Common Stock as of such effective date less any cash
and the then Fair Market Value of any evidences of indebtedness, securities or
property or other assets issued or distributed in such Special Dividend with
respect to one share of Common Stock, and the denominator of which shall be
such Fair Market Value per share and (b) the number of shares of Non-Voting
Common Stock subject to purchase upon exercise of this Warrant shall be
increased to a number determined by multiplying the number of shares of
Non-Voting Common Stock subject to purchase immediately before such special
Dividend by a fraction, the numerator of which shall be the Exercise Price in
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effect immediately before such Special Dividend and the denominator of which
shall be the Exercise Price in effect immediately after such Special Dividend.
A reclassification of Common Stock (other than a change in par value, or from
par value to no par value or from no par value to par value) into shares of
Common Stock and shares of any other class of stock shall be deemed a
distribution by the Company to the holders of such Common Stock of such shares
of such other class of stock and, if the outstanding shares of Common Stock
shall be changed into a larger or smaller number of shares of Common Stock as
part of such reclassification, a Common Stock Reorganization.
4.5. CAPITAL REORGANIZATIONS. If there shall be any
consolidation or merger to which the Company is a party, other than a
consolidation or a merger of which the Company is the continuing corporation
and which does not result in any reclassification of, or change (other than a
Common Stock Reorganization) in, outstanding shares of Common Stock, or any
sale or conveyance of the property of the Company as an entirety or
substantially as an entirety, or any recapitalization of the Company (any such
event being called a "CAPITAL REORGANIZATION"), then, effective upon the
effective date of such Capital Reorganization, the Holder shall no longer have
the right to purchase Non-Voting Common Stock, but shall have instead the right
to purchase, upon exercise of this Warrant, the kind and amount of shares of
stock and other securities and property (including cash) which the Holder would
have owned or have been entitled to receive pursuant to such Capital
Reorganization if this Warrant had been exercised immediately prior to the
effective date of such Capital Reorganization. As a condition to effecting any
Capital Reorganization, the Company or the successor or surviving corporation,
as the case may be, shall (a) execute and deliver to each Warrantholder and to
the Warrant Agency an agreement as to the Warrantholders' rights in accordance
with this Section 4.5, providing, to the extent of any right to purchase equity
securities hereunder, for subsequent adjustments as nearly equivalent as may be
practicable to the adjustments provided for in this Article IV and (b) provide
each Regulation Y Holder with an opinion of counsel reasonably satisfactory to
such Regulation Y Holder and such other assurances as any Regulation Y Holder
may reasonably request to the effect that the ownership and exercise by any
Regulation Y Holder of this Warrant after giving effect to such Capital
Reorganization shall not be prohibited by the BHC Act or the regulations
thereunder. The provisions of this Section 4.5 shall similarly apply to
successive Capital Reorganizations.
4.6. ADJUSTMENT RULES. Any adjustments pursuant to this
Article IV shall be made successively whenever an event referred to herein
shall occur, except that, notwithstanding any other provision of this Article
IV, no adjustment shall be made to the number of shares of Non-Voting Common
Stock to be delivered to each Warrantholder (or to the Exercise Price) if such
adjustment represents less than 1% of the number of shares previously required
to be so delivered, but any lesser adjustment shall be carried forward and
shall be made at the time and together with the next subsequent adjustment
which together with any adjustments so carried forward shall amount to 1% or
more of the number of shares to be so delivered. No adjustment shall be made
pursuant to this
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Article IV in respect of the issuance from time to time of shares of Common
Stock upon the exercise of any of the Warrants. If the Company shall take a
record of the holders of its Common Stock for any purpose referred to in this
Article IV, then (i) such record date shall be deemed to be the date of the
issuance, sale, distribution or grant in question and (ii) if the Company shall
legally abandon such action prior to effecting such action, no adjustment shall
be made pursuant to this Article IV in respect of such action.
4.7. PROCEEDINGS PRIOR TO ANY ACTION REQUIRING ADJUSTMENT. As
a condition precedent to the taking of any action which would require an
adjustment pursuant to this Article IV, the Company shall take any action which
may be necessary, including obtaining regulatory approvals or exemptions, in
order that (a) the Company may thereafter validly and legally issue as fully
paid and nonassessable all shares of Non-Voting Common Stock which any
Warrantholder is entitled to receive upon exercise thereof and (b) the
ownership and exercise of any Warrant by any Regulation Y Holder shall not be
prohibited by the BHC Act or the regulations thereunder.
4.8. NOTICE OF ADJUSTMENT. Not less than 10 nor more than 30
days prior to the record date or effective date, as the case may be, of any
action which requires or might require an adjustment or readjustment pursuant
to this Article IV, the Company shall give notice to each Warrantholder of such
event, describing such event in reasonable detail and specifying the record
date or effective date, as the case may be, and, if determinable, the required
adjustment and the computation thereof. If the required adjustment is not
determinable at the time of such notice, the Company shall give notice to each
Warrantholder of such adjustment and computation promptly after such adjustment
becomes determinable.
ARTICLE V
PURCHASE, REDEMPTION AND CANCELLATION OF WARRANTS
5.1. PURCHASE OF WARRANTS BY THE COMPANY. The Company shall
have the right or obligation to purchase or otherwise acquire Warrants at such
times, in such manner and for such consideration as set forth below.
5.2. MANDATORY REDEMPTION OF WARRANTS. The Holder may (a) at
any time and from time to time on or after the fourth anniversary of the
Closing Date, (b) at any time and from time to time on or after the repayment
in full of all principal of and premium and interest on the Notes (as defined
in the Credit Agreement) and the termination of the Commitments under the
Credit Agreement and (c) on or within 30 days after the date on which the
Company shall have delivered a Refinancing Notice, by notice to the Company
(any such redemption pursuant to this clause (c), a "REFINANCING REDEMPTION"),
demand a determination of the Redemption Price (a "DETERMINATION NOTICE") for
purposes of this Section 5.2. Within 30 days (or, in the case of a Refinancing
Redemption, 5 days) after the receipt of any Determination Notice from the
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Holder, the Company shall give to the Holder notice of the Redemption Price,
including a reasonably detailed description of the method of calculation
thereof, determined as of the day preceding such notice of the Redemption
Price. At any time within 30 days (or, in the case of a Refinancing Redemption,
15 days) after receipt of notice of the Redemption Price the Holder may demand
redemption of this Warrant, in whole or in part, at the Redemption Price by
notice to the Company, payable on the third Business Day after receipt of
notice of such demand (or, in the case of a Refinancing Redemption, on the
closing date of such refinancing) (any such date, the "REDEMPTION DUE DATE") in
immediately available funds to the Holder upon surrender of this Warrant at the
Warrant Agency or, if requested by the Holder, without surrender of this
Warrant, by wire transfer to any account in New York City specified by notice
to the Company. Thereupon, the right to purchase shares of Non-Voting Common
Stock theretofore represented by this Warrant as to which the Holder has
demanded (and the Company may effect) redemption shall terminate, and this
Warrant shall represent the right of the Holder to receive the full Redemption
Price from the Company in accordance with this Section. The Holder's right to
demand redemption of this Warrant pursuant to this Section 5.2 shall be
referred to hereinafter as the Holder's "MANDATORY REDEMPTION RIGHT".
5.3. OPTIONAL REDEMPTION. At any time and from time to time
after the fifth anniversary of the Closing Date, the Company shall have the
right to redeem all, but not less than all, of the outstanding Warrants at the
Optional Redemption Price, determined as of the day preceding the notice of
redemption. Irrevocable notice of such right of redemption shall be given by
the Company to all Warrantholders not more than 30 days nor less than 15 days
prior to the date scheduled for redemption, stating the date and price,
including a reasonably detailed description of the method of calculation
thereof, of redemption. Warrantholders may not exercise the Warrants after any
such notice of redemption unless the Company shall fail to redeem the Warrants
as provided herein, the right to purchase shares of Non-Voting Common Stock
theretofore represented by this Warrant shall terminate, and this Warrant shall
represent the right of the Holder to receive the Optional Redemption Price from
the Company in immediately available funds upon surrender of this Warrant at
the Warrant Agency. If the Optional Redemption Price shall be disputed pursuant
to Section 3.3, the Company shall pay to the affected Warrantholders on the
redemption date the Optional Redemption Price initially determined by it and
shall thereafter make supplemental payment of any increase (and the affected
Warrantholder shall remit to the Company any decrease) in the Optional
Redemption Price upon resolution of such dispute.
5.4. CANCELLATION OF Warrants. All Warrants purchased,
redeemed or otherwise acquired by the Company shall thereupon be canceled and
retired. The Warrant Agency shall cancel any Warrant surrendered for exercise
or registration of transfer or exchange and deliver such canceled Warrants to
the Company.
5.5. NOTICE OF REFINANCING. The Company shall give notice to
each of the Warrantholders of any intent by the Company to refinance in their
entirety the Notes
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(as defined in the Credit Agreement) not less than 30 days prior to the
proposed closing date of such refinancing, setting forth such proposed closing
date and notifying each Warrantholder of its rights under Section 5.2 (such
notice, the "REFINANCING NOTICE").
ARTICLE VI
DEFINITIONS
The following terms, as used in this Warrant, have the
following meanings:
"APPRAISAL NOTICE" has the meaning set forth in Section
3.3(a).
"APPRAISER" has the meaning set forth in Section 3.3(b).
"APPRAISER DETERMINATION" has the meaning set forth in
Section 3.3(b).
"BHC ACT" means the Bank Holding Company Act of 1956, as
amended.
"BUSINESS DAY" means any day excluding Saturday, Sunday and
any day on which banking institutions located in New York are authorized by law
or other governmental action to be closed, unless there shall have been an
offering of Common Stock registered under the Securities Act, in which case
"Business Day" means (a) if Common Stock is listed or admitted to trading on a
national securities exchange, a day on which the principal national securities
exchange on which the Common Stock is listed or admitted to trading is open for
business or (b) if Common Stock is not so listed or admitted to trading, a day
on which the New York Stock Exchange is open for business.
"CAPITAL REORGANIZATION" has the meaning set forth in Section
4.5.
"CLOSING DATE" has the meaning specified in the Credit
Agreement.
"CLOSING PRICE" on any day means (a) if Common Stock is
listed or admitted for trading on a national securities exchange, the reported
last sales price regular way or, if no such reported sale occurs on such day,
the average of the closing bid and asked prices regular way on such day, in
each case on the principal national securities exchange on which Common Stock
is listed or admitted to trading, or (b) if Common Stock is not listed or
admitted to trading on any national securities exchange, the average of the
closing bid and asked prices in the over-the-counter market on such day as
reported by NASDAQ or any comparable system or, if not so reported, as reported
by any New York Stock Exchange member firm selected by the Company for such
purpose.
"COMMON STOCK" means the Voting Common Stock or the
Non-Voting Common Stock, or both, as the context may require.
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"COMMON STOCK DISTRIBUTION" has the meaning set forth in
Section 4.3(a).
"COMMON STOCK REORGANIZATION" has the meaning set forth in
Section 4.2.
"COMPANY" means Horizon Medical Products, Inc., a Georgia
corporation, and its successors.
"CONSOLIDATED TOTAL DEBT" has the meaning specified in the
Credit Agreement.
"CONVERTIBLE SECURITIES" has the meaning set forth in
Section 4.3(b).
"CREDIT AGREEMENT" has the meaning set forth in the second
paragraph of this Warrant.
"DETERMINATION NOTICE" has the meaning set forth in Section
5.2.
"EBITDA" has the meaning specified in the Credit Agreement.
"EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended, and any successor Federal statute, and the rules and regulations of
the Securities and Exchange Commission (or its successor) thereunder, all as
the same shall be in effect at the time.
"EXCLUDED Shares" means up to 3,000 shares of Common Stock
issued by the Company to employees, officers and directors as a part of
incentive or compensation packages.
"EXERCISE PRICE" means $.01 per share of the Non-Voting
Common Stock, subject to adjustment pursuant to Article IV.
"FAIR MARKET VALUE" as at any date of determination means
the fair market value of the business or property or services in question as of
such date, as determined in good faith by the Board of Directors of the Company
or otherwise in accordance with Section 3.3 hereof. The Fair Market Value of
the Company as at any date of determination shall be the greatest of (i) the
Fair Market Value at such date of the Company and its Subsidiaries as a going
concern, (ii) the liquidation value at such date of the Company and its
Subsidiaries, (iii) the consolidated net worth of the Company and its
Subsidiaries as shown on its latest available consolidated balance sheet of the
Company and (iv) the result of (A) EBITDA for the twelve consecutive months
most recently ended prior to such date multiplied by six (6) plus (B) cash and
cash equivalents at such date
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minus (C) Consolidated Total Debt at such date. Notwithstanding the foregoing,
if, at any date of determination of the Fair Market Value of the Company, the
Common Stock shall then be publicly traded, the Fair Market Value of the
Company on such date shall be the greater of (a) the amount determined in
accordance with the immediately preceding sentence and (b) the Market Price on
such date multiplied by the number of shares of Common Stock then outstanding.
Determination of the Fair Market Value of the Company per share of Common
Stock, shall be made without giving effect to any discount for (i) minority
interest, (ii) any lack of liquidity of the Common Stock due to the fact that
there may be no public market for the Common Stock, or (iii) the voting status
of the Non-Voting Common Stock.
"FULLY DILUTED BASIS" means, with respect to any
determination or calculation, that such determination or calculation is
performed on a fully diluted basis determined in accordance with generally
accepted accounting principles as in effect from time to time.
"HOLDER" has the meaning set forth in the first paragraph
of this Warrant.
"COMPANY DETERMINATION" has the meaning set forth in
Section 3.2(a).
"MANDATORY REDEMPTION RIGHT" has the meaning set forth in
Section 5.2.
"MARKET PRICE" as at any date of determination means the
average of the daily Closing Prices of a share of Common Stock for the shorter
of (i) the 20 consecutive Business Days ending on the most recent Business Day
prior to the Time of Determination and (ii) the period commencing on the date
next succeeding the first public announcement of the issuance, sale,
distribution, grant or exercise in question through such most recent Business
Day prior to the Time of Determination. "TIME OF DETERMINATION" means the time
and date of the earliest of (x) the determination of the stockholders entitled
to receive such issuance, sale, distribution or grant, (y) the determination of
the Holders or the Company to exercise their respective rights set forth in
Sections 5.2 or 5.3 hereof and (z) the commencement of "ex-dividend" trading in
respect thereof.
"NASD" means The National Association of Securities
Dealers, Inc.
"NASDAQ" means The National Association of Securities
Dealers, Inc. Automated Quotation System.
"NATIONSCREDIT" has the meaning set forth in the second
paragraph of this Warrant.
"NON-VOTING COMMON STOCK" has the meaning set forth in the
first
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paragraph of this Warrant, subject to change pursuant to Article IV.
"OPTIONAL REDEMPTION PRICE" means, as of any date of
determination, a price for each share of Non-Voting Common Stock issuable upon
exercise of the Warrants equal to 110% of the Redemption Price, determined as
of such date.
"OPTIONS" has the meaning set forth in Section 4.3(b).
"PERSON" means any natural person, corporation, limited
partnership, general partnership, joint stock company, joint venture,
association, company, trust, bank, trust company, land trust, business trust or
other organization, whether or not a legal entity, and any government agency or
political subdivision thereof.
"QUALIFIED IPO" means any sale of shares of Common Stock by
and for the account of the Company pursuant to an underwritten initial public
offering registered under the Securities Act; provided that the proceeds to the
Company (net of underwriters' discount, fees and other expenses incurred by the
"Company" in connection therewith) from such sale of shares exceeds
$25,000,000.
"REDEMPTION DUE DATE" has the meaning set forth in Section
5.2 hereof.
"REDEMPTION Price" means, as of any date of determination,
a price for each share of Non-Voting Common Stock issuable upon exercise of the
Warrants equal to the excess of (a)(i) the Fair Market Value of the Company
plus the aggregate Exercise Price of all Warrants either being redeemed or then
outstanding and not being redeemed divided by (ii) the number of shares of
Common Stock outstanding on a Fully Diluted Basis over (b) the Exercise Price
then in effect.
"REFINANCING NOTICE" has the meaning set forth in Section
5.5 hereof.
"REGULATION Y HOLDER" means the Holder or a holder of
Warrant Shares, if such Holder or holder of Warrant Shares is a bank holding
company within the meaning of the BHC Act or a subsidiary thereof subject to
Regulation Y under the BHC Act.
"REQUIRED INTEREST" has the meaning set forth in Section
3.3(a).
"SECURITIES ACT" means the Securities Act of 1933, as
amended, and rules and regulations of the Securities and Exchange Commission
thereunder.
"SPECIAL DIVIDEND" has the meaning set forth in Section 4.4.
"SUBSIDIARY" of any Person means any corporation,
partnership, joint venture, association or other business entity of which more
than 50% of the total voting
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power of shares of stock or other interests therein entitled to vote in the
election of members of the board of directors, partnership committee, board of
managers or trustees or other managerial body thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more of the other
Subsidiaries of such Person or a combination thereof. Unless otherwise
specified, "Subsidiary" means a Subsidiary of the Company and "Subsidiaries"
means all Subsidiaries of the Company.
"VOTING COMMON STOCK" means the Class A common stock, par
value $.001 per share, of the Company.
"WARRANT AGENCY" has the meaning set forth in Section 2.1.
"WARRANT SHARES" means the shares of Non-Voting Common
Stock issuable upon the exercise of the Warrants.
"WARRANTHOLDER" means a holder of a Warrant.
"WARRANTHOLDERS RIGHTS AGREEMENT" has the meaning set forth
in Section 3.1.
"WARRANTS" has the meaning set forth in the second
paragraph of this Warrant.
All references herein to "DAYS" shall mean calendar days
unless otherwise specified.
ARTICLE VII
MISCELLANEOUS
7.1. NOTICES. Notices and other communications provided for
herein shall be in writing and may be given by mail, courier, confirmed telex
or facsimile transmission and shall, unless otherwise expressly required, be
deemed given when received or, if mailed, four Business Days after being
deposited in the United States mail with postage prepaid and properly
addressed. In the case of the Holder, such notices and communications shall be
addressed to its address as shown on the books maintained by the Warrant
Agency, unless the Holder shall notify the Warrant Agency that notices and
communications should be sent to a different address (or telex or facsimile
number), in which case such notices and communications shall be sent to the
address (or telex or facsimile number) specified by the Holder.
7.2. WAIVERS; AMENDMENTS. No failure or delay of the Holder
in exercising any power or right hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any
abandonment or
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discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. No notice
or demand on the Company in any case shall entitle the Company to any other or
future notice or demand in similar or other circumstances. The rights and
remedies of the Holder are cumulative and not exclusive of any rights or
remedies which it would otherwise have. The provisions of this Warrant may be
amended, modified or waived with (and only with) the written consent of the
Company and the holders of Warrants entitling such holders to purchase a
majority of the Non-Voting Common Stock subject to purchase upon exercise of
such Warrants at the time outstanding (exclusive of Warrants then owned by the
Company or any Subsidiary (as defined in the Credit Agreement) or Affiliate (as
defined in the Credit Agreement) thereof); provided, however, that no such
amendment, modification or waiver shall, without the written consent of each
holder of Warrants at the time outstanding affected thereby, (a) change the
number of shares of Non-Voting Common Stock subject to purchase upon exercise
of this Warrant, the Exercise Price or provisions for payment thereof or (b)
amend, modify or waive the provisions of this Section or Article III or IV or
Section 1.5, 5.2, 5.3 or 5.5. The provisions of the Credit Agreement and the
Warrantholders Rights Agreement may be amended, modified or waived only in
accordance with the respective provisions thereof.
Any such amendment, modification or waiver effected
pursuant to and in accordance with the provisions of this Section or the
applicable provisions of the Credit Agreement or the Warrantholders Rights
Agreement shall be binding upon the holders of all Warrants and Warrant Shares,
upon each future holder thereof and upon the Company. In the event of any such
amendment, modification or waiver the Company shall give prompt notice thereof
to all holders of Warrants and Warrant Shares and, if appropriate, notation
thereof shall be made on all Warrants thereafter surrendered for registration
of transfer or exchange.
7.3. GOVERNING LAW. THIS WARRANT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF GEORGIA (WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW).
7.4. TRANSFER; COVENANTS TO BIND SUCCESSOR AND ASSIGNS. All
covenants, stipulations, promises and agreements in this Warrant contained by
or on behalf of the Company or the Holder shall bind its successors and
assigns, whether so expressed or not. This Warrant shall be transferable and
assignable by the Holder hereof in whole or from time to time in part to any
other Person and the provisions of this Warrant shall be binding upon and inure
to the benefit of the Holder hereof and its successors and assigns.
7.5. SEVERABILITY. In case any one or more of the
provisions contained in this Warrant shall be invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any
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way be affected or impaired thereby. The parties shall endeavor in good faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.
7.6. SECTION HEADINGS. The section headings used herein are
for convenience of reference only, are not part of this Warrant and are not to
affect the construction of or be taken into consideration in interpreting this
Warrant.
7.7. TAX BASIS. The Company and the Holder agree pursuant
to Proposed Treasury Regulation Section 1.1273-2 that, for Federal income tax
purposes, the aggregate issue price of the Tranche B Loans (as defined in the
Credit Agreement) and the aggregate purchase price for the Warrants are those
set forth in Section 3.05 of the Credit Agreement. Neither the Company nor the
Holder hereof shall voluntarily take (nor shall the Company permit the Company
voluntarily to take) any action inconsistent with the agreement set forth in
this Section 7.7.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed in its corporate name by one of its officers thereunto duly
authorized, and its corporate seal to be hereunto affixed, attested by its
Secretary or an Assistant Secretary, all as of the day and year first above
written.
HORIZON MEDICAL PRODUCTS, INC.
By:
-------------------------------
President
[Corporate Seal]
Attest:
--------------------------------
Assistant Secretary
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EXHIBIT E
WARRANTHOLDERS RIGHTS AGREEMENT
WARRANTHOLDERS RIGHTS AGREEMENT dated as of July 15, 1997,
among HORIZON MEDICAL PRODUCTS, INC., a Georgia corporation (together with its
successors, the "COMPANY"), ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, ▇▇. (together with their respective successors, the "MANAGEMENT
STOCKHOLDERS"), and NATIONSCREDIT COMMERCIAL CORPORATION ("NATIONSCREDIT") (the
Management Stockholders, together with any holder of Conversion Shares (as
defined herein) and such other stockholders of the Company as may, from time to
time, become parties to this Agreement in accordance with the provisions
hereof, the "STOCKHOLDERS"; and NationsCredit and such other warrantholders of
the Company as may, from time to time, become parties to this Agreement in
accordance with the provisions hereof, the "WARRANTHOLDERS").
WHEREAS, on the date hereof, the Management Stockholders are
collectively the beneficial owners of 98,091 shares of Common Stock (as defined
herein), and NationsCredit has purchased and is the beneficial owner of the
Warrants (as defined herein) to purchase 15,276 shares of Non-Voting Common
Stock; and
WHEREAS, the Company and each Stockholder (other than the
holders of the Conversion Shares) wish to provide to the Warrantholders and the
holders of the Conversion Shares the rights described herein;
NOW THEREFORE the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. Unless otherwise defined herein, the
following terms used in this Agreement shall have the meanings specified below.
"AFFILIATE" means, with respect to any Person, any of (i) a
director or executive officer of such Person, (ii) a spouse, parent, sibling or
descendant of such Person (or a spouse, parent, sibling or descendant of any
director or executive officer of such Person) and (iii) any other Person that,
directly or indirectly, controls, or is controlled by or is under common control
with such Person. For the purpose of this
113
definition, "CONTROL" (including the terms "controlling", "controlled by" and
"under common control with"), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities or by contract or agency or otherwise.
"BHC ACT" means the Bank Holding Company Act of 1956, as
amended.
"COMMISSION" means the Securities and Exchange Commission or
any other Federal agency at the time administering the Securities Act.
"COMMON STOCK" means the Voting Common Stock or the Non-Voting
Common Stock, or both, as the context may require.
"CONVERSION SHARES" means (i) any shares of Non-Voting Common
Stock or other securities issued upon the exercise of any Warrants and (ii) any
securities issued with respect to any of such shares or other securities
referred to in clause (i) upon the conversion thereof into other securities
(including Voting Common Stock) or by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization or otherwise; provided that any of such securities shall
cease to be Conversion Shares when such securities shall have (x) been disposed
of pursuant to a Public Sale or (y) ceased to be outstanding.
"CREDIT AGREEMENT" means the Credit Agreement dated as of July
15, 1997, among the Company, the lenders named therein and NationsCredit, as
Agent, as amended from time to time.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, or
any successor Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Exchange Act of 1934 shall include a
reference to the comparable section, if any, of any such successor Federal
statute.
"INITIAL PUBLIC OFFERING" means the first registration of an
offering of shares of Common Stock under the Securities Act which becomes
effective (other than by a registration on Form S-4 or S-8 or any successor or
similar forms).
"INITIATING HOLDERS" has the meaning set forth in Section 3.1
hereof.
"NON-VOTING COMMON STOCK" means the Class B common stock, par
value $.001 per share, of the Company.
"OTHER SHARES" has the meaning set forth in Section 3.1.
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"PERSON" means a corporation, an association, a partnership, a
limited liability company, an organization, a business, an individual, a trust,
a government or a subdivision thereof or a governmental agency.
"PUBLIC SALE" means any sale of Common Stock to the public
pursuant to an offering registered under the Securities Act or to the public
through a broker, dealer or market maker pursuant to the provisions of Rule 144
(or any successor provision then in effect) adopted under the Securities Act.
"QUALIFIED IPO" has the meaning given such term in the
Warrants.
"REGISTRABLE SECURITIES" means any Conversion Shares until the
date (if any) on which such Conversion Shares shall have been transferred or
exchanged and new certificates for them not bearing a legend restricting further
transfer shall have been delivered by the Company and subsequent disposition of
them shall not require registration or qualification of them under the
Securities Act or any similar state law then in force.
"REGISTRATION EXPENSES" means all expenses incident to the
Company's performance of or compliance with Sections 3.1 through 3.5 hereof,
including (i) all registration, filing and NASD fees, (ii) all fees and expenses
of complying with securities or blue sky laws, (iii) all word processing,
duplicating and printing expenses, (iv) all messenger and delivery expenses, (v)
the fees and disbursements of counsel for the Company and of its independent
public accountants, including the expenses of any special audits or "cold
comfort" letters required by or incident to such performance and compliance,
(vi) the fees and disbursements of any one counsel retained by the holder or
holders of more than 50% of the Registrable Securities being registered (or, in
the case of any registration effected pursuant to Section 3.1, as the Initiating
Holders shall have selected to represent all holders of the Registrable
Securities being registered), (vii) premiums and other costs of policies of
insurance (if any) against liabilities arising out of the public offering of the
Registrable Securities being registered if the Company desires such insurance
and (viii) any fees and disbursements of underwriters customarily paid by
issuers or sellers of securities, but not including underwriting discounts and
commissions and transfer taxes, if any, provided that, in any case where
Registration Expenses are not to be borne by the Company, such expenses shall
not include (i) salaries of the Company personnel or general overhead expenses
of the Company, (ii) auditing fees, (iii) premiums or other expenses relating to
liability insurance required by underwriters of the Company or (iv) other
expenses for the preparation of financial statements or other data, to the
extent that any of the foregoing either is normally prepared by the Company in
the ordinary course of its business or would have been incurred by the Company
had no public offering taken place.
"REGULATION Y HOLDER" means any Warrant Securityholder that is
a bank holding company within the meaning of the BHC Act, or a subsidiary
thereof subject to Regulation Y under the BHC Act.
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"REGULATORY CHANGE" means, with respect to any Regulation Y
Holder, (i) any change on or after the date hereof in United States federal or
state or foreign laws or regulations (including the BHC Act and Regulation Y
thereunder); (ii) the adoption on or after the date hereof of any interpretation
or ruling applying to such Regulation Y Holder, individually or as a member of a
class, under any United States federal or state or foreign laws or regulations
by any court or governmental or regulatory authority charged with the
interpretation or administration thereof; or (iii) the modification on or after
the date hereof of any agreement or commitment with any such governmental or
regulatory authority that is applicable to or binding upon such Regulation Y
Holder.
"RESTRICTED SECURITIES" means the Warrants, the Conversion
Shares and any securities obtained upon exchange for or upon conversion or
transfer of or as a distribution on Warrants, the Conversion Shares or any such
securities; provided that particular securities shall cease to be Restricted
Securities when such securities shall have (x) been disposed of pursuant to a
Public Sale, (y) been otherwise transferred or exchanged and new certificates
for them not bearing a legend restricting further transfer shall have been
delivered by the Company and subsequent disposition of them shall not require
registration or qualification of them under the Securities Act or any similar
state law then in force or (z) ceased to be outstanding. Whenever any particular
securities cease to be Restricted Securities, the holder thereof shall be
entitled to receive from the issuer thereof or its transfer agent, without
expense (other than transfer taxes, if any), new securities of like tenor not
bearing a legend of the character set forth in Section 2.2.
"SECURITIES ACT" means the Securities Act of 1933, or any
similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Act of 1933 shall include a reference to
the comparable section, if any, of any such similar Federal statute.
"STOCKHOLDER" has the meaning set forth in the introductory
paragraph.
"VOTING COMMON STOCK" means the Class A common stock, par
value $.001 per share, of The Company.
"WARRANT SECURITYHOLDER" means at any time any Warrantholder
or any holder of Conversion Shares.
"WARRANTHOLDERS" has the meaning set forth in the introductory
paragraph (and for purposes of Section 2.6 shall include any Person that held
Warrants that were redeemed pursuant to Section 5.3 of the Warrants).
"WARRANTS" means the Warrant or Warrants originally issued to
NationsCredit, as such Warrants may be transferred or otherwise assigned, but
only to the
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extent not theretofore exercised, redeemed or expired in accordance with their
respective terms.
All references herein to "DAYS" shall mean calendar days
unless otherwise specified.
ARTICLE II
TRANSFER OF SHARES;
PAYMENTS TO WARRANT SECURITYHOLDERS
SECTION 2.1 GENERAL. Except as otherwise provided in this
Agreement or by law, each Stockholder may transfer its shares of Common Stock at
any time to any Person.
SECTION 2.2 RESTRICTIONS ON TRANSFER; LEGEND ON CERTIFICATES.
(a) Except as otherwise provided in this Agreement, Restricted Securities shall
not be transferable except (i) pursuant to an effective registration statement
under the Securities Act, (ii) pursuant to Rule 144 or 144A (or any successor
provisions) under the Securities Act or (iii) pursuant to a transaction that is
otherwise exempt from the registration requirements of the Securities Act and
any applicable state securities laws.
(b) Unless otherwise expressly provided herein, each
certificate for Restricted Securities and each certificate issued in exchange
for or upon transfer of any thereof shall be stamped or otherwise imprinted with
a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED OR ANY
APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD OR OFFERED FOR
SALE OR TRANSFERRED UNLESS REGISTERED UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO
SUBJECT TO AND HAVE THE BENEFIT OF A WARRANTHOLDERS RIGHTS AGREEMENT
DATED AS OF JULY 15, 1997, AMONG HORIZON MEDICAL PRODUCTS, INC. AND THE
STOCKHOLDERS AND WARRANTHOLDERS PARTIES THERETO, COPIES OF WHICH ARE ON
FILE WITH HORIZON MEDICAL PRODUCTS, INC."
(c) Any other provision of this Agreement to the contrary
notwithstanding, no transfer of any Restricted Securities other than pursuant to
a Public
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Sale may be made to any Person unless such Person shall have agreed in writing
that such Person, as a holder of Restricted Securities, and the Restricted
Securities it acquires shall be bound by and be entitled to the benefits of all
the provisions of this Agreement applicable to such Restricted Securities (and
upon such agreement such Person shall be entitled to such benefits). Any
purported transfer of Restricted Securities without compliance with the
applicable provisions of this Agreement shall be void and of no effect, and the
purported transferee shall have no rights as a Warrantholder or Stockholder (as
applicable) or under this Agreement. In the event of such non-complying
transfer, the Company shall not transfer any such Restricted Securities on its
books or recognize the purported transferee as a shareholder or warrantholder,
as the case may be, for any purpose, until all applicable provisions of this
Agreement have been complied with.
SECTION 2.3 PERMITTED TRANSFERS. The restrictions on transfer
provided in Section 2.2(a) shall not be applicable to (i) any transfer in
compliance with federal and all applicable state securities laws to an Affiliate
of the holder of Restricted Securities, from an Affiliate of such holder to such
holder or between Affiliates of such holder (if any such Affiliate to whom
shares of Restricted Securities have been transferred by a holder thereof ceases
to be an Affiliate of such holder of Restricted Securities, such Restricted
Securities shall immediately be transferred back to the transferor thereof),
(ii) any transfer upon the death of any holder of Restricted Securities to such
holder's executors, administrators or testamentary trustees or (iii) any
transfer to a trust the beneficiaries of which include only the holder of such
Restricted Securities or such holder's spouse, parents, siblings or descendants
(any transferee referred to in (i), (ii) or (iii) above being referred to herein
as a "PERMITTED TRANSFEREE"); provided that no such transfer shall be made to
any Permitted Transferee unless such Permitted Transferee shall have agreed in
writing that such Permitted Transferee, as a Stockholder or Warrantholder (as
the case may be), and the shares of Common Stock or Warrants it acquires shall
be bound by and be entitled to the benefits of all the provisions of this
Agreement applicable to Common Stock or Warrants (as the case may be), and upon
such agreement such Permitted Transferee shall be entitled to such benefits.
SECTION 2.4 TAG-ALONG RIGHTS. If, at any time prior to a
Qualified IPO, any Stockholder or any of its Affiliates (any such Person for
purposes of this Section 2.4, the "TRANSFEROR") wishes to transfer its shares of
Common Stock or any portion thereof to any Person (the "TRANSFEREE"), the
Transferor shall first give to the Company and each Warrant Securityholder
(pursuant to a list provided by the Company) a written notice (a "TRANSFER
NOTICE"), executed by it and the Transferee and containing (i) the number of
shares of Common Stock that the Transferee proposes to acquire from the
Transferor, (ii) the name and address of the Transferee, (iii) the proposed
purchase price, terms of payment and other material terms and conditions of such
proposed transfer, (iv) an estimate, in the Transferor's reasonable judgment, of
the fair market value of any non-cash consideration offered by the Transferee
and (v) an offer by the Transferee or Transferor to purchase, upon the purchase
by the Transferee of any shares of Common Stock owned by the Transferor and for
the same per share consideration, that
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number of Conversion Shares (or if such number is not an integral number, the
next integral number which is greater than such number) of each Warrant
Securityholder which shall be the product of (x) the aggregate number of
Conversion Shares either then owned, or issuable upon exercise of Warrants then
owned, by such Warrant Securityholder and (y) a fraction, the numerator of
which shall be the number of shares of Common Stock indicated in the Transfer
Notice as subject to purchase by the Transferee and the denominator of which
shall be the sum of (A) the total number of shares of Common Stock then owned
by the Transferor and its Affiliates plus (B) the total number of Conversion
Shares either then owned, or issuable upon exercise of Warrants then owned, by
each Warrant Securityholder. Each Warrant Securityholder shall have the right,
for a period of 20 days after the Transfer Notice is given, to accept such
offer in whole or in part, exercisable by delivering a written notice to the
Transferor and the Company within such 20-day period, stating therein the
number of shares of Common Stock (which may be the number of shares set forth
in the offer by the Transferor or Transferee, as the case may be, or a portion
thereof) to be sold by such Warrant Securityholder to the Transferor or
Transferee, as the case may be. Prior to the earlier of (x) the end of such
20-day period or (y) the acceptance or rejection by each Warrant Securityholder
of the Transferee's or Transferor's offer, as the case may be, neither the
Transferor nor its Affiliates will complete any sale of shares of Common Stock
to the Transferee. Thereafter, for a period of 60 days after the prohibition
under the preceding sentence shall have terminated, the Transferor may sell to
the Transferee for the consideration stated and on the terms set forth in the
Transfer Notice the shares of Common Stock stated in the Transfer Notice as
subject to purchase by the Transferee, provided that the Transferor or
Transferee, as the case may be, shall simultaneously purchase the number of
shares of Common Stock as calculated above from those Warrant Securityholders
who have accepted the Transferor's or Transferee's offer, as the case may be.
The provisions of this Section 2.4 shall not apply to transfers between the
Transferor and any of its Permitted Transferees.
SECTION 2.5 RESTRICTIONS ON TRANSFER BY REGULATION Y HOLDERS.
(a) No Regulation Y Holder may transfer any Warrant or any Conversion Shares;
provided that such Regulation Y Holder may transfer such Warrant or Conversion
Shares (i) to the Company, (ii) to the public in an offering registered under
the Securities Act, (iii) in a transaction pursuant to Rule 144 or Rule 144A (or
any successor provisions) under the Securities Act or otherwise exempt from the
registration requirements of the Securities Act in which no single purchaser
receives an interest (treating any such Warrant as exercised and any Non-Voting
Common Stock as converted to Voting Common Stock) equivalent to more than two
percent of the outstanding Voting Common Stock or (iv) in a single transaction
to a third party who acquires at least a majority of the Voting Common Stock
without regard to the transfer of such Warrant or Conversion Shares. In the
event of a Regulatory Change, the effect of which is to permit such Regulation Y
Holder to transfer such Warrant or Conversion Shares in any other manner, the
foregoing proviso shall be deemed modified to permit a transfer of such Warrant
or Conversion Shares in such other manner.
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(b) Nothing in Section 2.4 of this Agreement shall require any
Regulation Y Holder to make a transfer of Warrants or Conversion Shares in a
manner not permitted by Section 2.5(a) (an "IMPERMISSIBLE TRANSFER"). If Section
2.4 of this Agreement would otherwise require any Regulation Y Holder to make an
Impermissible Transfer as a condition precedent to making a transfer of Warrants
or Conversion Shares in a manner permitted by Section 2.5(a) (a "PERMISSIBLE
TRANSFER"), then such Regulation Y Holder shall not be required to make such
Impermissible Transfer as a condition precedent to making such Permissible
Transfer.
SECTION 2.6 ADJUSTMENT EVENT FEE. If (a) any Adjustment Event
shall occur within 365 days after the Optional Redemption Date and (b) the
Consideration Per Share for such Adjustment Event is greater than the Redemption
Price Per Share then, immediately upon the occurrence of such Adjustment Event,
the Company shall pay to each Warrant Securityholder an amount equal to the
product of (x) the number of shares of Non-Voting Common Stock issuable upon
exercise of the Warrants of such Warrant Securityholder that were redeemed and
(y) the difference between the Consideration Per Share for such Adjustment Event
and the Redemption Price Per Share paid to such Warrant Securityholder.
"ADJUSTMENT EVENT" means:
(a) the completion of an Initial Public Offering by the
Company; or
(b) 25% or more of the:
(i) Common Stock on a Fully Diluted Basis (as defined in the
Warrants) on an aggregate basis is sold, exchanged, transferred or
otherwise disposed of by the Company or any stockholder of the Company
(as part of a single sale or a series of sales) to any Person or group
or Persons other than an Affiliate of the Company or such stockholder,
as the case may be; or
(ii) capital stock of the Company issued and outstanding on
the Optional Redemption Date is sold, exchanged, transferred or
otherwise disposed of by the Company (as part of a single sale or a
series of sales) to any Person or group of Persons other than an
Affiliate of the Company or such stockholder, as the case may be; or
(iii) assets of the Company and its Subsidiaries on a
consolidated basis are, directly or indirectly, sold, exchanged,
leased, transferred or otherwise disposed of as an entirety or
substantially as an entirety (in one transaction or a series of
transactions) to any Person or group of Persons other than any
Affiliate of the Company.
"CONSIDERATION PER SHARE" means:
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(i) in the case of any Adjustment Event described in clause
(a) or (b)(i) of the definition of Adjustment Event, the highest consideration
per share (if any) received by the Company or any stockholder of the Company
from the sale, exchange, transfer or other disposition by it of Common Stock in
connection with such Adjustment Event; and
(ii) in the case of any other Adjustment Event, the highest
consideration per share of Common Stock that would be received by any
stockholder of the Company upon the disposition of all or substantially all of
the Common Stock or of the assets of the Company (determined by reference to all
of the consideration received by the stockholders of the Company (as
stockholders) for that portion actually disposed of in connection with such
Adjustment Event, or which would be received by such shareholders if the Company
were liquidated immediately following receipt of the consideration received by
the Company in connection with such Adjustment Event),
in each case net of underwriting commissions and other appropriate costs and
expenses deducted from such consideration.
"OPTIONAL REDEMPTION DATE" means the date of any redemption
of the Warrants pursuant to Section 5.3 of the Warrants.
"REDEMPTION PRICE PER SHARE" means the Optional Redemption
Price (as defined in the Warrants) which was paid to the Warrant Securityholders
pursuant to Section 5.3 of the Warrants (determined on a per share basis by
reference to the number of shares of Non-Voting Common Stock issuable upon
exercise of the Warrants that were redeemed).
SECTION 2.7 NO INCONSISTENT AGREEMENTS. The Company has not
entered into and will not enter into any registration rights agreement or
similar arrangements the performance by the Company of the terms of which would
in any manner conflict with, restrict or be inconsistent with the performance by
the Company of its obligations under this Agreement.
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ARTICLE III
REGISTRATION RIGHTS
SECTION 3.1 REGISTRATION ON REQUEST. (a) At any time or from
time to time after the date of consummation of an Initial Public Offering, upon
the written request of the holder or holders of a majority of all outstanding
Conversion Shares and Warrants (such majority determined, for purposes of this
Section 3.1, by calculating the number of Conversion Shares for which such
Warrants are then exercisable) (the "INITIATING HOLDERS"), requesting that the
Company effect the registration under the Securities Act of all or part of such
Initiating Holders' Registrable Securities and specifying the intended method of
disposition thereof, the Company will promptly give written notice of such
requested registration to all holders of Warrants and Registrable Securities,
and thereupon the Company will use its reasonable efforts to effect the
registration under the Securities Act of:
(i) the Registrable Securities which the Company has been so
requested to register by such Initiating Holders for disposition in
accordance with the intended method of disposition stated in such
request;
(ii) all other Registrable Securities the holders of which
shall have made a written request to the Company for registration
thereof within 30 days after the giving of such written notice by the
Company (which request shall specify the intended method of disposition
of such Registrable Securities); and
(iii) all shares of Common Stock which the Company may elect
to register in connection with the offering of Registrable Securities
pursuant to this Section 3.1, whether for its own account or for the
account of a holder of Common Stock,
all to the extent requisite to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Securities and the
additional shares of Common Stock, if any, to be so registered, provided that
the Warrant Securityholders as a class shall be entitled to not more than two
registrations upon request pursuant to this Section 3.1.
(b) Registrations under this Section 3.1 shall be on such
appropriate registration form of the Commission (i) as shall be selected by the
Company and (ii) as shall permit the disposition of such Registrable Securities
in accordance with the intended method or methods of disposition specified in
their request for such registration. The Company agrees to include in any such
registration statement all information which holders of Registrable Securities
being registered shall reasonably request.
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(c) The Company will pay all Registration Expenses in
connection with one registration requested pursuant to this Section 3.1,
provided that, in addition, the Company shall pay all Registration Expenses in
connection with any registration upon request pursuant to which less than 50% of
the Registrable Shares requested to be registered by such Initiating Holders are
registered, but no such registration shall be counted as a requested
registration for purposes of this Section 3.1. The Registration Expenses (and
underwriting discounts and commissions and transfer taxes, if any, allocable to
the Registrable Shares requested to be registered by the Initiating Holders) in
connection with each other registration requested under this Section 3.1 shall
be paid for by the Initiating Holders requesting such registration.
(d) A registration requested pursuant to this Section 3.1
shall not be deemed to have been effected (i) unless a registration statement
with respect thereto has become effective; provided that a registration which
does not become effective after the Company has filed a registration statement
with respect thereto solely by reason of the refusal to proceed by the
Initiating Holders (other than a refusal to proceed based upon the advice of
counsel relating to a matter with respect to the Company) shall be deemed to
have been effected by the Company at the request of the Initiating Holders
unless the Initiating Holders shall have elected to pay all Registration
Expenses in connection with such registration, (ii) if, after it has become
effective, such registration is interfered with by any stop order, injunction or
other order or requirement of the Commission or other governmental agency or
court for any reason, other than by reason of some act or omission by any
Warrantholder or Warrant Securityholder, or (iii) the conditions to closing
specified in the purchase agreement or underwriting agreement entered into in
connection with such registration are not satisfied, other than by reason of
some act or omission by any Warrantholder or Warrant Securityholder.
(e) If a requested registration pursuant to this Section 3.1
involves an underwritten offering, the underwriter or underwriters thereof shall
be selected by the Company and shall be reasonably satisfactory to the holders
of at least a majority (by a number of shares) of the Registrable Securities as
to which registration has been requested.
(f) If a requested registration pursuant to this Section 3.1
involves an underwritten offering, and the managing underwriter shall advise the
Company (with a copy of any such notice to each holder of Registrable Securities
requesting registration) that, in its opinion, the number of securities
requested to be included in such registration (including securities proposed to
be sold for the account of the Company) exceeds the number which can be sold in
such offering within a price range acceptable to the Initiating Holders, the
Company will include in such registration, to the extent of the number which the
Company is so advised can be sold in such offering, (i) first, Registrable
Securities requested to be included in such registration by the holder or
holders of Registrable Securities, pro rata among such holders requesting such
registration on the basis of the number of such securities requested to be
included by such holders, (ii) second, all shares proposed to be included by the
Company in such
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registration and (iii) third, all shares other than Registrable Shares (any
such shares with respect to any registration, "OTHER SHARES") requested to be
included in such registration by the holder or holders thereof.
SECTION 3.2 INCIDENTAL REGISTRATION. (a) If the Company at any
time proposes to register any of its securities under the Securities Act (other
than (x) by a registration on Form S-4 or S-8 or any successor or similar forms
or (y) pursuant to Section 3.1) whether for its own account or for the account
of the holder or holders of any Other Shares, it will each such time give prompt
written notice to all Warrant Securityholders of its intention to do so and of
such holders' rights under this Section 3.2. Upon the written request of any
such holder made within 20 days after the receipt of any such notice (which
request shall specify the Registrable Securities intended to be disposed of by
such holder and the intended method of disposition thereof), the Company will
use its reasonable efforts to effect the registration under the Securities Act
of all Registrable Securities which the Company has been so requested to
register by the holders thereof, to the extent requisite to permit the
disposition (in accordance with the intended methods thereof as aforesaid) of
the Registrable Securities so to be registered, by inclusion of such Registrable
Securities in the registration statement which covers the securities which the
Company proposes to register; provided that if, at any time after giving written
notice of its intention to register any securities and prior to the effective
date of the registration statement filed in connection with such registration,
the Company shall determine for any reason either not to register or to delay
registration of such securities, the Company may, at its election, give written
notice of such determination to each holder of Registrable Securities and,
thereupon, (i) in the case of a determination not to register, shall be relieved
of its obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration Expenses in
connection therewith), without prejudice, however, to the rights of any Warrant
Securityholder or Warrant Securityholders entitled to do so to request that such
registration be effected as a registration under Section 3.1, and (ii) in the
case of a determination to delay registering, shall be permitted to delay
registering any Registrable Securities, for the same period as the delay in
registering such other securities. No registration effected under this Section
3.2 shall relieve the Company of its obligation to effect any registration upon
request under Section 3.1, nor shall any such registration hereunder be deemed
to have been effected pursuant to Section 3.1. The Company will pay all
Registration Expenses in connection with each registration of Registrable
Securities pursuant to this Section 3.2.
(b) If the Company at any time proposes to register any of its
securities under the Securities Act as contemplated by Section 3.2 and such
securities are to be distributed by or through one or more underwriters, the
Company will, if requested by any holder of Registrable Securities as provided
in this Section 3.2, use its reasonable efforts to arrange for such underwriters
to include all the Registrable Securities to be offered and sold by such holder
among the securities to be distributed by such underwriters, provided that if
the managing underwriter of such underwritten offering shall inform the Company
and holders of the Registrable Securities requesting such
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registration and all other holders of any other shares of Common Stock which
shall have exercised, in respect of such underwritten offering, registration
rights comparable to the rights under this Section 3.2 by letter of its belief
that inclusion in such distribution of all or a specified number of such
securities proposed to be distributed by such underwriters would interfere with
the successful marketing of the securities being distributed by such
underwriters (such letter to state the basis of such belief and the approximate
number of such Registrable Securities and such Other Shares proposed so to be
registered which may be distributed without such effect), then the Company may,
upon written notice to all holders of such Registrable Securities and holders
of such Other Shares, reduce pro rata (if and to be extent stated by such
managing underwriter to be necessary to eliminate such effect) the number of
such Registrable Securities and Other Shares the registration of which shall
have been requested by each holder thereof so that the resultant aggregate
number of such Registrable Securities and Other Shares so included in such
registration, together with the number of securities to be included in such
registration for the account of the Company, shall be equal to the number of
shares stated in such managing underwriter's letter.
SECTION 3.3 REGISTRATION PROCEDURES. (a) If and whenever the
Company is required to effect the registration of any Registrable Securities
under the Securities Act as provided in Sections 3.1 and 3.2, the Company shall,
as expeditiously as possible:
(i) prepare and (within 75 days after the end of the period
within which requests for registration may be given to the Company or
in any event as soon thereafter as possible; provided that, in the case
of a registration pursuant to Section 3.1, such filing to be made
within 75 days after the initial request of an Initiating Holder of
Registrable Securities or in any event as soon thereafter as possible)
file with the Commission the requisite registration statement to effect
such registration (including such audited financial statements as may
be required by the Securities Act) and thereafter use its best efforts
to cause such registration statement to become and remain effective for
the Distribution Period as provided below; provided further that the
Company may discontinue any registration of its securities which are
not Registrable Securities at any time prior to the effective date of
the registration statement relating thereto; provided further that
before filing such registration statement or any amendments thereto,
the Company will furnish to the counsel selected by the holders of
Registrable Securities which are to be included in such registration
copies of all such documents proposed to be filed, which documents will
be subject to the review of such counsel;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
registration statement for the Distribution Period (for purposes
hereof, "Distribution Period" shall mean (i) in a firm commitment
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underwritten public offering, the period of time until each underwriter
has completed the distribution of all securities purchased by it and
(ii) for any other registration, the period of time until the earlier
of (x) the sale of all Registrable Securities covered by such
registration or (y)(1) in the case of a registration pursuant to
Section 3.1, the expiration of 120 days after such registration
statement becomes effective, or (2) in the case of a registration
pursuant to Section 3.2, the expiration of 90 days after such
registration statement becomes effective);
(iii) furnish to each seller of Registrable Securities covered
by such registration statement and each underwriter, if any, of the
securities being sold by such seller such number of conformed copies of
such registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of copies of
the prospectus contained in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other
prospectus filed under Rule 424 under the Securities Act, in conformity
with the requirements of the Securities Act, and such other documents,
as such seller and underwriter, if any, may reasonably request in order
to facilitate the public sale or other disposition of the Registrable
Securities owned by such seller;
(iv) use reasonable efforts to register or qualify all
Registrable Securities and other securities covered by such
registration statement under blue sky or similar laws of such
jurisdictions as any underwriter of the securities being sold shall
reasonably request, to keep such registrations or qualifications in
effect for so long as such registration statement remains in effect,
and take any other action which may be reasonably necessary or
advisable to enable such underwriter to consummate the disposition in
such jurisdictions of such securities, except that the Company shall
not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction wherein it would
not but for the requirements of this subdivision (iv) be obligated to
be so qualified, to subject itself to taxation in any such jurisdiction
or to consent to general service of process in any such jurisdiction;
(v) use reasonable efforts to cause all Registrable Securities
covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof to consummate the
disposition of such Registrable Securities;
(vi) furnish to each seller of Registrable Securities a
signed counterpart, addressed to such seller and the underwriters, if
any, of
(x) an opinion of counsel for the Company, dated the
effective date of such registration statement (and, if such
registration includes an underwritten public offering, an
opinion dated the date of the closing
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under the underwriting agreement), reasonably satisfactory in
form and substance to counsel for the underwriters and
counsel to such seller, and
(y) a "comfort" letter, dated the effective date of
such registration statement (and, if such registration
includes an underwritten public offering, a letter dated the
date of the closing under the underwriting agreement), signed
by the independent public accountants who have certified the
Company's financial statements included in such registration
statement,
covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and, in
the case of the accountants' letter, with respect to events subsequent
to the date of such financial statements, as are customarily covered in
opinions of issuer's counsel and in accountants' letters delivered to
the underwriters in underwritten public offerings of securities;
(vii) notify the holders of Registrable Securities and the
managing underwriter or underwriters, if any, promptly and confirm such
advice in writing promptly thereafter:
(A) when the registration statement, the prospectus
or any prospectus supplement related thereto or post-effective
amendment to the registration statement has been filed, and,
with respect to the registration statement or any
post-effective amendment thereto, when the same has become
effective;
(B) of any request by the Commission for amendments
or supplements to the registration statement or the
prospectus or for additional information;
(C) of the issuance by the Commission of any stop
order suspending the effectiveness of the registration or the
initiation of any proceedings by any Person for that purpose;
and
(D) of the receipt by the Company of any notification
with respect to the suspension of the qualification of any
Registrable Securities for sale under the securities or blue
sky laws of any jurisdiction or the initiation or threat of
any proceeding for such purpose;
(viii) notify each seller of Registrable Securities covered by
such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, upon the
Company's discovery that, or upon the happening of any event as a
result of which, the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated
therein or
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necessary to make the statements therein not misleading in the light
of the circumstances then existing, and at the request of any such
seller promptly prepare and furnish to such seller and each
underwriter, if any, a reasonable number of copies of a supplement to
or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light
of the circumstances then existing;
(ix) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of the registration statement
at the earliest possible moment;
(x) otherwise use reasonable efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months, but not more
than eighteen months, beginning with the first full calendar quarter
after the effective date of such registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the
Securities Act;
(xi) make available for inspection by a representative of the
holders of Registrable Securities participating in the offering, any
underwriter participating in any disposition pursuant to the
registration and any attorney or accountant retained by such selling
holders or underwriter (each, an "INSPECTOR"), all financial and other
records, pertinent corporate documents and properties of the Company
(the "RECORDS"), and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such
Inspector in connection with such registration; provided that the
Company shall not be required to comply with this subdivision (xi) if
there is a reasonable likelihood, in the judgment of the Company, that
such delivery could result in the loss of any attorney-client privilege
related thereto; and provided further that Records which the Company
determines, in good faith, to be confidential and which it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors
(other than to any holder of Registrable Securities participating in
the offering) unless (x) such Records have become generally available
to the public or (y) the disclosure of such Records may be necessary or
appropriate (A) to comply with any law, rule, regulation or order
applicable to any such Inspectors or holder of Registrable Securities,
(B) in response to any subpoena or other legal process or (C) in
connection with any litigation to which such Inspectors or any holder
of Registrable Securities is a party (provided that the Company is
provided with reasonable notice of such proposed disclosure and a
reasonable opportunity to seek a protective order or other appropriate
remedy with respect to such Records);
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(xii) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such registration
statement from and after a date not later than the effective date of
such Registration Statement;
(xiii) use reasonable efforts to list all Registrable
Securities covered by such registration statement on any securities
exchange on which any of the Common Stock is then listed and, if not so
listed, to be listed on the NASD automated quotation system and, if
listed on the NASD automated quotation system, use its best efforts to
secure designation of all such Registrable Securities covered by such
registration statement as a NASDAQ "national market system security"
within the meaning of Rule 11Aa2-1 of the Securities and Exchange
Commission or, failing that, to secure NASDAQ authorization for such
Registrable Securities and, without limiting the generality of the
foregoing, to arrange for at least two market makers to register as
such with respect to such Registrable Securities with the NASD; and
(xiv) use reasonable efforts to provide a CUSIP number for the
Registrable Securities, not later than the effective date of the
registration.
The Company may require each seller of Registrable Securities as to which any
registration is being effected to furnish the Company such information regarding
such seller and the distribution of such securities as the Company may from time
to time reasonably request in writing for purposes of preparing the relevant
registration statement and amendments and supplements thereto.
(b) Each holder of Registrable Securities agrees by
acquisition of such Registrable Securities that, upon receipt of any notice from
the Company of the occurrence of any event of the kind described in subdivision
(viii) of Section 3.3(a), such holder will forthwith discontinue such holder's
disposition of Registrable Securities pursuant to the registration statement
relating to such Registrable Securities until such holder's receipt of the
copies of the supplemented or amended prospectus contemplated by subdivision
(viii) of Section 3.3(a). In the event the Company shall give any such notice,
the periods specified in subdivision (ii) of Section 3.3(a) shall be extended by
the length of the period from and including the date when each seller of any
Registrable Securities covered by such registration statement shall have
received such notice to the date on which each such seller has received the
copies of the supplemented or amended prospectus contemplated by subdivision
(viii) of Section 3.3(a).
(c) If any such registration or comparable statement refers to
any holder of Registrable Securities by name or otherwise as the holder of any
securities of the Company, then such holder shall have the right to require, in
the event that such reference to such holder by name or otherwise is not
required by the Securities Act or any similar federal statute then in force, the
deletion of the reference to such holder.
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SECTION 3.4 UNDERWRITTEN OFFERINGS. (a) If requested by the
underwriters for any underwritten offering by holders of Registrable Securities
pursuant to a registration requested under Section 3.1, the Company will enter
into an underwriting agreement with such underwriters for such offering, such
agreement to be satisfactory in substance and form to the Company, each such
holder and the underwriters, and to contain such representations and warranties
by the Company and such other terms as are generally prevailing in agreements of
such type, including, without limitation, indemnities to the effect and to the
extent provided in Section 3.5. The holders of the Registrable Securities will
cooperate with the Company in the negotiation of the underwriting agreement.
(b) Each holder of Registrable Securities agrees by
acquisition of such Registrable Securities not to sell, make any short sale of,
loan, grant any option for the purchase of, effect any public sale or
distribution of or otherwise dispose of any equity securities of the Company,
during the ten days prior to and the 90 days after the effective date of any
underwritten registration pursuant to Section 3.1 or 3.2 has become effective,
except as part of such underwritten registration, whether or not such holder
participates in such registration, and except as otherwise permitted by the
managing underwriter of such underwriting (if any). Each holder of Registrable
Securities agrees that the Company may instruct its transfer agent to place stop
transfer notations in its records to enforce this Section 3.4(b).
(c) No Person may participate in any underwritten offering
hereunder unless such Person (i) agrees to sell such Person's securities on the
basis provided in any underwriting arrangements approved, subject to the terms
and conditions hereof, by the Person or a majority of the Persons entitled to
approve such arrangements and (ii) completes and executes all agreements,
questionnaires, indemnities and other documents (other than powers of attorney)
required under the terms of such underwriting arrangements.
SECTION 3.5 INDEMNIFICATION. (a) The Company agrees to
indemnify and hold harmless each holder of Registrable Securities whose
Registrable Securities are covered by any registration statement, its directors
and officers and each other Person, if any, who controls such holder within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which any such indemnified party may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such securities were registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
the Company will reimburse each such indemnified party for any legal or any
other expenses reasonably incurred by them in connection with investigating or
defending any
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such loss, claim, liability, action or proceeding; provided that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such holder specifically for use in
the preparation thereof. In addition, the Company shall indemnify any
underwriter of such offering and each other Person, if any, who controls any
such underwriter within the meaning of the Securities Act in substantially the
same manner and to substantially the same extent as the indemnity herein
provided to each Indemnified Party. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of such holder
or any such director, officer, underwriter or controlling person and shall
survive the transfer of such securities by such holder.
(b) Each prospective seller of Registrable Securities
hereunder shall indemnify and hold harmless (in the same manner and to the same
extent as set forth in subdivision (a) of this Section 3.5) the Company, each
director of the Company, each officer of the Company and each other person, if
any, who controls the Company within the meaning of the Securities Act, with
respect to any statement or alleged statement in or omission or alleged omission
from such registration statement, any preliminary prospectus, final prospectus
or summary prospectus contained therein, or any amendment or supplement thereof,
if such statement or alleged statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company by or on behalf of such seller specifically for use in the preparation
of such registration statement, preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement. Any such indemnity shall remain in
full force and effect, regardless of any investigation made by or on behalf of
the Company or any such director, officer or controlling person and shall
survive the transfer of such securities by such seller.
(c) Promptly after receipt by an indemnified party of notice
of the commencement of any action or proceeding involving a claim referred to in
the preceding subdivisions of this Section 3.5, such indemnified party will, if
a claim in respect thereof is to be made against an indemnifying party, give
written notice to the latter of the commencement of such action; provided that
the failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under the preceding
subdivisions of this Section 3.5, except to the extent that the indemnifying
party is actually prejudiced by such failure to give notice. In case any such
action is brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, the indemnifying party
shall be entitled to participate in and to assume the defense thereof, jointly
with any other indemnifying party similarly notified, to the extent that the
indemnifying party may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to
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such indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any
settlement of any such action which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect to such claim or litigation. No
indemnified party shall consent to entry of any judgment or enter into any
settlement of any such action the defense of which has been assumed by an
indemnifying party without the consent of such indemnifying party.
(d) If the indemnification provided for in the preceding
subdivisions of this Section 3.5 is unavailable to an indemnified party in
respect of any expense, loss, claim, damage or liability referred to therein,
then each indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such expense, loss, claim, damage or liability (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company on
the one hand and the holder or underwriter, as the case may be, on the other
from the distribution of the Registrable Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and of the holder or underwriter, as the case may be, on the other in
connection with the statements or omissions which resulted in such expense,
loss, damage or liability, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the holder or underwriter, as the case may be, on the other in connection
with the distribution of the Registrable Securities shall be deemed to be in the
same proportion as the total net proceeds received by the Company from the
initial sale of the Registrable Securities by the Company to the purchaser bear
to the gain realized by the selling holder or the underwriting discounts and
commissions received by the underwriter, as the case may be. The relative fault
of the Company on the one hand and of the holder or underwriter, as the case may
be, on the other shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission to
state a material fact relates to information supplied by the Company, by the
holder or by the underwriter and parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission;
provided that the foregoing contribution agreement shall not inure to the
benefit of any indemnified party if indemnification would be unavailable to such
indemnified party by reason of the proviso contained in the first sentence of
subdivision (a) of this Section 3.5, and in no event shall the obligation of any
indemnifying party to contribute under this subdivision (d) exceed the amount
that such indemnifying party would have been obligated to pay by way of
indemnification if the indemnification provided for under subdivisions (a) or
(b) of this Section 3.5 had been available under the circumstances.
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The Company and the holders of Registrable Securities agree
that it would not be just and equitable if contribution pursuant to this
subdivision (d) were determined by pro rata allocation (even if the holders and
any underwriters were treated as one entity for such purpose) or by any other
method of allocation that does not take account of the equitable considerations
referred to in the immediately preceding paragraph and subdivision (c) of this
Section 3.5. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subdivision (d), no
underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Registrable Securities purchased by it and
distributed to the public were offered to the public exceeds, in any such case,
the amount of any damages that such holder or underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
SECTION 3.6 RULE 144; RULE 144A. (a) If the Company shall have
filed a registration statement pursuant to Section 12 of the Exchange Act or a
registration statement pursuant to the Securities Act, the Company will file the
reports required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations adopted by the Commission thereunder and will take
such further action as any holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such holder to
sell Registrable Securities without registration under the Securities Act within
the limitation of the exemptions provided by (a) Rule 144 under the Securities
Act, as such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the Commission. Upon the request of any holder
of Registrable Securities, the Company will deliver to such holder a written
statement as to whether it has complied with such requirements.
(b) The Company represents and warrants that as of the date
hereof, the Common Stock is not, and is not part of a class of securities that
is, listed on a national securities exchange registered under Section 6 of the
Exchange Act or quoted in an automated inter-dealer quotation system. For so
long as any shares of Registrable Securities are restricted securities within
the meaning of Rule 144(a)(3) under the Securities Act, the Company covenants
and agrees that it shall, during any period in which it is not subject to
Section 13 or 15(d) of the Exchange Act, make available to any holder of
Registrable Securities in connection with the sale of such holder Registrable
Securities and any prospective purchaser of Registrable Securities from such, in
each case upon request, the information specified in, and meeting the
requirements of, Rule 144A(d)(4) under the Securities Act.
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ARTICLE IV
MISCELLANEOUS
SECTION 4.1 NOTICES. All notices and other communications
provided for hereunder shall be dated and in writing and shall be deemed to have
been given (i) if given by telecopy, when such telecopy is transmitted to the
telecopy number specified in this Section and telephonic confirmation of receipt
thereof is obtained or (ii) if given by mail, prepaid overnight courier or any
other means, when received at the address specified in this Section or when
delivery at such address is refused. Such notices shall be addressed to the
appropriate party to the attention of the person who executed this Agreement at
the address or telecopy number set forth under such party's signature below (or
to the attention of such other person or to such other address or telecopy
number as such party shall have furnished to each other party in accordance with
this Section 4.1).
SECTION 4.2 BINDING NATURE OF AGREEMENT. This Agreement shall
be binding upon and inure to the benefit of and be enforceable by the parties
hereto or their successors in interest, except as expressly otherwise provided
herein.
SECTION 4.3 DESCRIPTIVE HEADINGS. The descriptive headings of
the several sections and paragraphs of this Agreement are inserted for reference
only and shall not limit or otherwise affect the meaning hereof.
SECTION 4.4 SPECIFIC PERFORMANCE. Without limiting the rights
of each party hereto to pursue all other legal and equitable rights available to
such party for the other parties' failure to perform their obligations under
this Agreement, the parties hereto acknowledge and agree that the remedy at law
for any failure to perform their obligations hereunder would be inadequate and
that each of them, respectively, shall be entitled to specific performance,
injunctive relief or other equitable remedies in the event of any such failure.
SECTION 4.5 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED
BY, THE LAWS OF THE STATE OF GEORGIA, WITHOUT REGARD TO THE PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO HEREBY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
GEORGIA AND OF ANY GEORGIA STATE COURT SITTING IN ATLANTA, GEORGIA FOR PURPOSES
OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY
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LAW, ANY OBJECTION WHICH SUCH PARTY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY
SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. EACH OF THE PARTIES HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN
THE MANNER PROVIDED FOR NOTICES IN SECTION 4.1. NOTHING IN THIS AGREEMENT WILL
AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW.
SECTION 4.6 COUNTERPARTS. This Agreement may be executed
simultaneously in any number of counterparts, each of which shall be deemed an
original, but all such counterparts shall together constitute one and the same
instrument.
SECTION 4.7 SEVERABILITY. In the event that any one or more of
the provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect for any
reason, the validity, legality and enforceability of any such provision in every
other respect and of the remaining provisions contained herein shall not be in
any way impaired thereby, it being intended that all of the rights and
privileges of the parties hereto shall be enforceable to the fullest extent
permitted by law.
SECTION 4.8 ENTIRE AGREEMENT. This Agreement is intended by
the parties hereto as a final and complete expression of their agreement and
understanding in respect to the subject matter contained herein. This Agreement
supersedes all prior agreement and understandings, written or oral, between the
parties with respect to such subject matter.
SECTION 4.9 AMENDMENT AND WAIVER. Any provision of this
Agreement may be amended if, but only if, such amendment is in writing and is
signed by the Company and Stockholders and Warrantholders owning, or having
Warrants exercisable for, at least a majority of shares of Common Stock either
then outstanding or issuable upon the exercise of all outstanding Warrants,
provided that no such amendment may adversely affect the rights of any Warrant
Securityholder unless signed by such Warrant Securityholder. Any provision may
be waived if, but only if, such waiver is in writing and is signed by the party
or parties waiving such provision and for whose benefit such provision is
intended.
SECTION 4.10 NO THIRD PARTY BENEFICIARIES. Nothing in this
Agreement shall convey any rights upon any person or entity which is not a party
or an assignee of a party to this Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered as of the date first above written.
COMPANY:
HORIZON MEDICAL PRODUCTS,
INC.
By:
------------------------------------
President
Address:
Seven North Parkway Square
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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MANAGEMENT STOCKHOLDERS
(SEAL)
-----------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Address:
c/o Horizon Medical Products, Inc.
Seven North Parkway Square
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(SEAL)
-----------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Address:
c/o Horizon Medical Products, Inc.
Seven North Parkway Square
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(SEAL)
-----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Address:
c/o Horizon Medical Products, Inc.
Seven North Parkway Square
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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WARRANTHOLDER:
NATIONSCREDIT COMMERCIAL
CORPORATION
By:
------------------------------
Authorized Signatory
Address:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
One Canterbury Green
Stamford, Connecticut 06901
Attn: Horizon Medical Products, Inc.
Account Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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EXHIBIT F
SECURITY AGREEMENT
AGREEMENT dated as of July 15, 1997 between HORIZON MEDICAL
PRODUCTS, INC., a Georgia corporation (together with its successors, the
"COMPANY"), and NATIONSCREDIT COMMERCIAL CORPORATION, as Agent for the Lenders
referred to below (the "AGENT").
W I T N E S S E T H:
WHEREAS, the Company, certain lenders (the "LENDERS") and the
Agent are parties to a Credit Agreement of even date herewith (as the same may
be amended from time to time, the "CREDIT AGREEMENT"); and
WHEREAS, in order to induce the Lenders and the Agent to enter
into the Credit Agreement, the Company has agreed to grant a continuing security
interest in and to the Collateral (as hereafter defined) to secure its
obligations under the Financing Documents referred to in the Credit Agreement;
NOW THEREFORE, in consideration of the premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS.
Terms defined in the Credit Agreement and not otherwise
defined herein have, as used herein, the respective meanings provided for
therein. The following additional terms, as used herein, have the following
respective meanings:
"ACCOUNTS" means all "accounts" (as defined in the UCC) now
owned or hereafter acquired by the Company, and shall also mean and include all
accounts receivable, contract rights, book debts, notes, drafts and other
obligations or indebtedness owing to the Company arising from the sale, lease or
exchange of goods or other property by it and/or the performance of services by
it (including any such obligation which might be characterized as an account,
contract right or general intangible under the Uniform Commercial Code in effect
in any jurisdiction) and all of the Company's rights in, to and under all
purchase orders for goods, services or other property, and all of the Company's
rights to any goods, services or other property represented by any of the
foregoing (including returned or repossessed goods and unpaid sellers' rights of
rescission, replevin, reclamation and rights to stoppage in transit) and all
monies due to or to become due to the Company under all contracts for the sale,
lease or
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exchange of goods or other property and/or the performance of services by it
(whether or not yet earned by performance on the part of the Company), in each
case whether now in existence or hereafter arising or acquired including,
without limitation, the right to receive the proceeds of said purchase orders
and contracts and all collateral security and guarantees of any kind given by
any Person with respect to any of the foregoing.
"COLLATERAL" has the meaning set forth in Section 3.
"COLLATERAL ACCOUNTS" means the Lockbox Accounts .
"DOCUMENTS" means all "documents" (as defined in the UCC) or
other receipts covering, evidencing or representing goods, now owned or
hereafter acquired by the Company.
"EQUIPMENT" means all "equipment" (as defined in the UCC) now
owned or hereafter acquired by the Company, including without limitation all
motor vehicles, trucks, trailers, railcars and barges.
"GENERAL INTANGIBLES" means all "general intangibles" (as
defined in the UCC) now owned or hereafter acquired by the Company, including
(i) all obligations or indebtedness owing to the Company (other than Accounts)
from whatever source arising, (ii) all patents, patent licenses, trademarks,
trademark licenses, rights in intellectual property, goodwill, trade names,
service marks, trade secrets, copyrights, permits and licenses, (iii) all rights
or claims in respect of refunds for taxes paid and (iv) all rights in respect of
any pension plan or similar arrangement maintained for employees of any member
of the ERISA Group.
"INSTRUMENTS" means all "instruments", "chattel paper" or
"letters of credit" (each as defined in the UCC), including those evidencing,
representing, arising from or existing in respect of, relating to, securing or
otherwise supporting the payment of, any of the Accounts, including (but not
limited to) promissory notes, drafts, bills of exchange and trade acceptances,
now owned or hereafter acquired by the Company.
"INVENTORY" means all "inventory" (as defined in the UCC), now
owned or hereafter acquired by the Company, wherever located, and shall also
mean and include all raw materials and other materials and supplies,
work-in-process and finished goods and any products made or processed therefrom
and all substances, if any, commingled therewith or added thereto.
"LIQUID INVESTMENTS" has the meaning set forth in Section
5(D).
"LOCKBOX ACCOUNTS" has the meaning set forth in Section 5(A).
"LOCKBOX AGREEMENTS" has the meaning set forth in Section
5(A).
"LOCKBOX BANKS" means the banks or investment firms listed
opposite each Lockbox Account on Exhibit A hereto.
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"PERFECTION CERTIFICATE" means a certificate substantially in
the form of Exhibit B, completed and supplemented with the schedules and
attachments contemplated thereby to the satisfaction of the Agent, and duly
executed by the chief executive officer or chief legal officer of the Company.
"PERMITTED LIENS" means the Security Interests and the Liens
on the Collateral permitted to be created, to be assumed or to exist pursuant to
Section 8.02 of the Credit Agreement.
"PROCEEDS" means all proceeds of, and all other profits,
products, rents or receipts, in whatever form, arising from the collection,
sale, lease, exchange, assignment, licensing or other disposition of, or other
realization upon, Collateral, including all claims of the Company against third
parties for loss of, damage to or destruction of, or for proceeds payable under,
or unearned premiums with respect to, policies of insurance in respect of, any
Collateral, and any condemnation or requisition payments with respect to any
Collateral, in each case whether now existing or hereafter arising.
"SECURED OBLIGATIONS" means the obligations secured under this
Agreement which include (a) all principal of and interest (including any
interest which accrues after the commencement of any case, proceeding or other
action relating to the bankruptcy, insolvency or reorganization of the Company,
whether or not allowed or allowable as a claim in any such proceeding) on any
Loan under, or any Note issued pursuant to, the Credit Agreement, (b) all other
amounts payable by the Company hereunder or under any other Financing Document,
(c) all other Obligations and (d) any amendments, restatements, renewals,
extensions or modifications of any of the foregoing.
"SECURED PARTIES" means the Agent and the Lenders.
"SECURITY INTERESTS" means the security interests in the
Collateral granted hereunder securing the Secured Obligations.
"UCC" means the Uniform Commercial Code as in effect on the
date hereof in the State of Georgia; provided that if by reason of mandatory
provisions of law, the perfection or the effect of perfection or non-perfection
of the Security Interests in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than Georgia, "UCC" means
the Uniform Commercial Code as in effect in such other jurisdiction for purposes
of the provisions hereof relating to such perfection or effect of perfection or
non-perfection.
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SECTION 2. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants as follows:
(A) The Company has good and marketable title to all of
the Collateral, free and clear of any Liens other than the Permitted Liens. The
Company has taken all actions necessary under the UCC to perfect its interest in
any Accounts purchased or otherwise acquired by or granted to it, as against its
assignors and grantors and creditors of its assignors and grantors.
(B) The Company has not performed any acts which might
prevent the Agent from enforcing any of the terms of this Agreement or which
would limit the Agent in any such enforcement. Other than financing statements
or other similar or equivalent documents or instruments with respect to the
Security Interests and Permitted Liens, no financing statement, mortgage,
security agreement or similar or equivalent document or instrument covering all
or any part of the Collateral is on file or of record in any jurisdiction in
which such filing or recording would be effective to perfect a Lien on such
Collateral. No Collateral is in the possession of any Person (other than the
Company) asserting any claim thereto or security interest therein, except that
the Agent or its designee may have possession of Collateral as contemplated
hereby.
(C) The information set forth in the Perfection
Certificate delivered to the Agent prior to the Closing Date is correct and
complete as of the Closing Date.
(D) The Security Interests constitute valid security
interests under the UCC securing the Secured Obligations. When UCC financing
statements in the form specified in Schedule 6 to the Perfection Certificate
shall have been filed in the offices specified in the Perfection Certificate,
the Security Interests shall constitute perfected security interests in the
Collateral (except Inventory in transit) to the extent that a security interest
therein may be perfected by filing pursuant to the UCC, prior to all other Liens
and rights of others therein except for the Permitted Liens.
(E) The Inventory and Equipment are insured in accordance
with the requirements of the Credit Agreement.
(F) Exhibit A (as updated by the Company from time to
time with the consent of the Agent, such consent not to be unreasonably
withheld) lists each bank account, money market account and investment account
of the Company.
SECTION 3. THE SECURITY INTERESTS.
(A) In order to secure the full and punctual payment and
performance of the Secured Obligations in accordance with the terms thereof, the
Company hereby grants to the Agent for the ratable benefit of the Secured
Parties a continuing security interest in and to all of the following property
of the Company, whether now owned or existing or hereafter acquired or arising
and regardless of where located (all being collectively referred to as the
"COLLATERAL"):
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(1) Accounts;
(2) Inventory;
(3) General Intangibles;
(4) Documents;
(5) Instruments;
(6) Equipment;
(7) The Lockbox Accounts, all cash deposited in any of
the foregoing from time to time, the Liquid Investments made pursuant
to Section 5(D) or otherwise and other monies and property of any kind
of the Company in the possession or under the control of the Agent;
(8) All books and records (including customer lists,
credit files, computer programs, printouts and other computer materials
and records) of the Company pertaining to any of the Collateral;
(9) Insurance policies of the Company; and
(10) All Proceeds of all or any of the Collateral
described in Clauses 1 through 9 hereof.
(B) The Security Interests are granted as security only
and shall not subject any Secured Party to, or transfer or in any way affect or
modify, any obligation or liability of the Company with respect to any of the
Collateral or any transaction in connection therewith.
SECTION 4. FURTHER ASSURANCES; COVENANTS.
(A) The Company will not change its name, identity or
form of organization in any manner unless it shall have given the Agent prior
notice thereof and delivered an opinion of counsel with respect thereto in
accordance with Section 4(L). The Company will not change the location of (i)
its chief executive office or chief place of business or (ii) the locations
where it keeps or holds any Collateral or any records relating thereto from the
applicable location described in the Perfection Certificate unless it shall have
given the Agent prior notice thereof and delivered an opinion of counsel with
respect thereto in accordance with Section 4(L). The Company shall not in any
event change the location of any Collateral without the prior written consent of
the Agent if such change would cause the Security Interests in such Collateral
to lapse or cease to be perfected.
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(B) The Company shall not in any event change the
location of any Collateral without the prior written consent of the Agent if
such change would cause the Security Interests to lapse or cease to be
perfected.
(C) To the extent permitted under applicable law, the
Company will, from time to time, at its expense, execute, deliver, file and
record any statement, assignment, instrument, document, agreement or other paper
and take any other action (including any filings of financing or continuation
statements under the UCC) that from time to time may be necessary or desirable,
or that the Agent may request, in order to create, preserve, perfect, confirm or
validate the Security Interests or to enable the Secured Parties to obtain the
full benefits of this Agreement, or to enable the Agent to exercise and enforce
any of its rights, powers and remedies hereunder with respect to any of the
Collateral. To the extent permitted by applicable law, the Company hereby
authorizes the Agent, and appoints the Agent as its true and lawful attorney
(with full power of substitution, in the name of the Company, the Secured
Parties or otherwise, for the sole use and benefit of the Secured Parties), to
execute and file financing statements or continuation statements without the
Company's signature appearing thereon. The Company agrees that a carbon,
photographic, photostatic or other reproduction of this Agreement or of a
financing statement is sufficient as a financing statement. The Company shall
pay the costs of, or incidental to, any recording or filing of any financing or
continuation statements concerning the Collateral.
(D) If any Collateral is at any time in the possession or
control of any warehouseman, bailee or any of the Company's agents or
processors, the Company shall notify such warehouseman, bailee, agent or
processor of the Security Interests created hereby and to hold all such
Collateral for the Agent's account subject to the Agent's instructions.
(E) The Company shall keep full and accurate books and
records relating to the Collateral, and stamp or otherwise ▇▇▇▇ such books and
records in such manner as the Agent may reasonably require in order to reflect
the Security Interests.
(F) The Company will immediately deliver and pledge each
Instrument to the Agent, appropriately endorsed to the Agent, provided that so
long as no Event of Default shall have occurred and be continuing, the Company
may retain for collection in the ordinary course any Instruments (other than
checks and drafts constituting payments in respect of Accounts, as to which the
provisions of Section 5(B) shall apply) received by it in the ordinary course of
business and the Agent shall, promptly upon request of the Company, make
appropriate arrangements for making any other Instrument pledged by the Company
available to it for purposes of presentation, collection or renewal (any such
arrangement to be effected, to the extent deemed appropriate to the Agent,
against trust receipt or like document).
(G) The Company shall use its best efforts to cause to be
collected from its account debtors, as and when due, any and all amounts owing
under or on account of each Account (including Accounts which are delinquent,
such Accounts to be collected in accordance with lawful collection procedures
and the Company's customary practices) and shall apply forthwith upon receipt
thereof all such amounts as are so collected to the outstanding balance of
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such Account. Subject to the rights of the Secured Parties hereunder upon the
occurrence and during the continuance of an Event of Default, the Company may
allow in the ordinary course of business as adjustments to amounts owing under
its Accounts (i) an extension or renewal of the time or times of payment, or
settlement for less than the total unpaid balance, which the Company finds
appropriate in accordance with sound business judgment unless such extension,
renewal or settlement results in causing such Account to not be an Eligible
Receivable and thereby causes the aggregate unpaid balance of Working Capital
Loans to exceed the Borrowing Base and (ii) a refund or credit due as a result
of returned or damaged merchandise or as a discount for prompt payment, all in
accordance with the Company's ordinary course of business consistent with its
historical collection practices. The costs and expenses (including attorney's
fees) of collection, whether incurred by the Company or the Agent, shall be
borne by the Company.
(H) Upon the occurrence and during the continuance of any
Event of Default, upon request of the Required Lenders through the Agent, to the
extent permitted by applicable law the Company will promptly notify (and the
Company hereby authorizes the Agent so to notify) each account debtor in respect
of any Account or Instrument that such Collateral has been assigned to the Agent
hereunder, and that any payments due or to become due in respect of such
Collateral are to be made directly to the Agent or its designee.
(I) The Company shall not permit any items of Equipment
to become a fixture to real estate (unless the Agent has a first priority Lien
thereon) or an accession to other personal property.
(J) Without the prior written consent of the Agent and
except in the ordinary course of business, the Company will not sell, lease,
exchange, assign or otherwise dispose of, or grant any option with respect to,
any Collateral except, subject to the rights of the Secured Parties hereunder if
an Event of Default shall have occurred and be continuing, as permitted under
the Credit Agreement including Section 8.06, whereupon, in the case of such a
sale or exchange, the Security Interests created hereby in such item (but not in
any Proceeds arising from such sale or exchange) shall cease immediately without
any further action on the part of the Agent, except the execution of UCC-3
termination statements.
(K) The Company will, promptly upon request, provide to
the Agent all information and evidence it may reasonably request concerning the
Collateral to enable the Agent to enforce the provisions of this Agreement.
(L) Not more than six months nor less than 30 days prior
to each date on which the Company proposes to take any action contemplated by
Section 4(A), the Company shall give notice to the Agent of such proposed
action, and, at the Company's cost and expense, cause to be delivered to the
Secured Parties with such notice, an opinion of counsel, reasonably satisfactory
to the Agent and substantially in the form of Exhibit C to the effect that all
financing statements and amendments or supplements thereto, continuation
statements and other documents required to be recorded or filed in order to
perfect and protect the Security Interests
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have been filed in each filing office necessary for such purpose and that all
filing fees and taxes, if any, payable in connection with such filings have been
paid in full.
(M) The Company shall not open or maintain any bank
account, money market account or investment account unless such account is first
listed on Exhibit A (as updated by the Company from time to time with the
consent of the Agent, such consent not to be unreasonably withheld) and is
subject to a Lockbox Agreement.
(N) The Company shall (i) upon the occurrence of an Event
of Default and (ii) within 10 days after the aggregate value of all Equipment
consisting of motor vehicles, trucks and trailers owned by the Company and its
Subsidiaries shall exceed $150,000, deliver to the Agent any and all
certificates of title, applications for title or similar evidence of ownership
of such Equipment and shall cause the Agent to be named as lienholder on any
such certificate of title or other evidence of ownership.
SECTION 5. LOCKBOX ACCOUNT AND INSURANCE ACCOUNT.
(A) On the Closing Date, the Company shall deliver to the
Agent for each account listed on Exhibit A hereto (each a "LOCKBOX ACCOUNT"), a
lockbox agreement substantially in form of Exhibit D hereto or in such other
form as shall be satisfactory to the Agent (each a "LOCKBOX AGREEMENT"), which
shall establish such account in the name "NationsCredit Commercial Corporation,
as Agent", and under the exclusive control of the Agent. From and after the
Closing Date, there shall be deposited from time to time into the Lockbox
Accounts the cash Proceeds of the Collateral required to be delivered to the
Agent pursuant to subsection (B) of this Section 5 or any other provision of
this Agreement. Any income received with respect to the balance from time to
time standing to the credit of each Lockbox Account, including any interest or
capital gains on Liquid Investments, may be withdrawn from such Lockbox Account
in accordance with subsection (C) below. All right, title and interest in and to
the cash amounts on deposit from time to time in the Lockbox Accounts together
with any Liquid Investments from time to time made pursuant to subsection (D) of
this Section shall vest in the Agent (pursuant to the Lockbox Agreement for each
Lockbox Account), shall constitute part of the Collateral hereunder and shall
not constitute payment of the Secured Obligations until applied thereto as
hereinafter provided.
(B) The Company shall instruct all account debtors and
other Persons obligated in respect of all Accounts, to make all payments in
respect of such Accounts and shall use its reasonable best efforts to cause such
account debtors and other Persons to remit all such payments directly to a
Lockbox Account (if paid by wire transfer). In addition to the foregoing, the
Company agrees that if the proceeds of any Collateral hereunder (including the
payments made in respect of Accounts) shall be received by it, the Company shall
as promptly as possible deposit such proceeds into a Lockbox Account. Until so
deposited, all such proceeds shall be held in trust by the Company for and as
the property of the Secured Parties and shall not be commingled with any other
funds or property of the Company.
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(C) The balance from time to time standing to the credit
of the Lockbox Accounts shall, except upon the occurrence and continuation of an
Event of Default, be distributed to the Company in accordance with the
provisions of each Lockbox Agreement. If immediately available cash on deposit
in the Lockbox Accounts is not sufficient to make any distribution to the
Company referred to in the previous sentence of this Section 5(C), the Agent
shall cause to be liquidated as promptly as practicable Liquid Investments in
the Lockbox Accounts designated by the Company as required to obtain sufficient
cash to make such distribution and, notwithstanding any other provision of this
Section 5, such distribution shall not be made until such liquidation has taken
place. Upon the occurrence and continuation of an Event of Default, the Agent
shall, if so instructed by the Required Lenders, apply or cause to be applied
(subject to collection) any or all of the balance from time to time standing to
the credit of any Lockbox Accounts in the manner specified in Section 9.
(D) Amounts on deposit in the Lockbox Accounts shall be
invested and re-invested from time to time in such Liquid Investments as the
Company shall determine, which Liquid Investments shall be held in the name and
be under the control of the Agent; provided that, if an Event of Default has
occurred and is continuing, the Agent shall, if instructed by the Required
Lenders, cause such Liquid Investments to be liquidated and apply or cause to be
applied the proceeds thereof to the payment of the Secured Obligations in the
manner specified in Section 9. For this purpose, "Liquid Investments" means
Temporary Cash Investments; provided that (i) each Liquid Investment shall
mature within 30 days after it is acquired by the Agent and (ii) in order to
provide the Agent, for the benefit of the Secured Parties, with a perfected
security interest therein, each Liquid Investment shall be either:
(i) evidenced by negotiable certificates or instruments,
or if non-negotiable then issued in the name of the Agent, which
(together with any appropriate instruments of transfer) are delivered
to, and held by, the Agent or an agent thereof (which shall not be the
Company or any of its Affiliates) in the State of Georgia; or
(ii) in book-entry form and issued by the United States
and subject to pledge under applicable state law and Treasury
regulations and as to which (in the opinion of counsel to the Agent)
appropriate measures shall have been taken for perfection of the
Security Interests.
SECTION 6. GENERAL AUTHORITY.
The Company hereby irrevocably appoints the Agent its true and
lawful attorney, with full power of substitution, in the name of the Company,
the Secured Parties or otherwise, for the sole use and benefit of the Secured
Parties, but at the Company's expense, to the extent permitted by law to
exercise, at any time and from time to time while an Event of Default has
occurred and is continuing, all or any of the following powers with respect to
all or any of the Collateral:
(i) to demand, ▇▇▇ for, collect, receive and give
acquittance for any and all monies due or to become due thereon or by
virtue thereof,
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(ii) to settle, compromise, compound, prosecute or defend
any action or proceeding with respect thereto,
(iii) to sell, transfer, assign or otherwise deal in or
with the same or the proceeds or avails thereof, as fully and
effectually as if the Agent were the absolute owner thereof, and
(iv) to extend the time of payment of any or all thereof
and to make any allowance and other adjustments with reference thereto;
provided that the Agent shall give the Company not less than ten days' prior
written notice of the time and place of any sale or other intended disposition
of any of the Collateral, except any Collateral which is perishable or threatens
to decline speedily in value or is of a type customarily sold on a recognized
market. The Company agrees that such notice constitutes "reasonable
notification" within the meaning of Section 9-504(3) of the UCC.
SECTION 7. REMEDIES UPON EVENT OF DEFAULT.
(A) If any Event of Default has occurred and is
continuing, the Agent may exercise on behalf of the Secured Parties all rights
of a secured party under the UCC (whether or not in effect in the jurisdiction
where such rights are exercised) and, in addition, the Agent may, without being
required to give any notice, except as herein or in the Credit Agreement or any
other Financing Document provided or as may be required by mandatory provisions
of law, (i) withdraw all cash and Liquid Investments in the Collateral Accounts
and apply such cash and Liquid Investments and other cash, if any, then held by
it as Collateral as specified in Section 9 and (ii) if there shall be no such
cash or Liquid Investments or if such cash and Liquid Investments shall be
insufficient to pay all the Secured Obligations in full, sell the Collateral or
any part thereof at public or private sale, for cash, upon credit or for future
delivery, and at such price or prices as the Agent may deem satisfactory. The
Agent or any other Secured Party may be the purchaser of any or all of the
Collateral so sold at any public sale (or, if the Collateral is of a type
customarily sold in a recognized market or is of a type which is the subject of
widely distributed standard price quotations, at any private sale). The Company
will execute and deliver such documents and take such other action as the Agent
deems necessary or advisable in order that any such sale may be made in
compliance with law. Upon any such sale the Agent shall have the right to
deliver, assign and transfer to the purchaser thereof the Collateral so sold.
Each purchaser at any such sale shall hold the Collateral so sold to it
absolutely and free from any claim or right of whatsoever kind, including any
equity or right of redemption of the Company which may be waived, and the
Company, to the extent permitted by law, hereby specifically waives all rights
of redemption, stay or appraisal which it has or may have under any law now
existing or hereafter adopted. The notice (if any) of such sale required by
Section 6 shall (1) in case of a public sale, state the time and place fixed for
such sale, and (2) in the case of a private sale, state the day after which such
sale may be consummated. Any such public sale shall be held at such time or
times within ordinary business hours and at such place or places as the Agent
may fix in the notice of such sale. At any such sale the Collateral may be sold
in one lot as an
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entirety or in separate parcels, as the Agent may determine. The Agent shall not
be obligated to make any such sale pursuant to any such notice. The Agent may,
without notice or publication, adjourn any public or private sale or cause the
same to be adjourned from time to time by announcement at the time and place
fixed for the sale, and such sale may be made at any time or place to which the
same may be so adjourned. In case of any sale of all or any part of the
Collateral on credit or for future delivery, the Collateral so sold may be
retained by the Agent until the selling price is paid by the purchaser thereof,
but the Agent shall not incur any liability in case of the failure of such
purchaser to take up and pay for the Collateral so sold and, in case of any such
failure, such Collateral may again be sold upon like notice. The Agent, instead
of exercising the power of sale herein conferred upon it, may proceed by a suit
or suits at law or in equity to foreclose the Security Interests and sell the
Collateral, or any portion thereof, under a judgment or decree of a court or
courts of competent jurisdiction.
(B) For the purpose of enforcing any and all rights and
remedies under this Agreement the Agent may (i) require the Company to, and the
Company agrees that it will, at its expense and upon the request of the Agent,
forthwith assemble all or any part of the Collateral as directed by the Agent
and make it available at a place designated by the Agent which is, in its
opinion, reasonably convenient to the Agent and the Company, whether at the
premises of the Company or otherwise, (ii) to the extent permitted by applicable
law, enter, with or without process of law and without breach of the peace, any
premise where any of the Collateral is or may be located, and without charge or
liability to it seize and remove such Collateral from such premises, (iii) have
access to and use the Company's books and records relating to the Collateral and
(iv) prior to the disposition of the Collateral, store or transfer it without
charge in or by means of any storage or transportation facility owned or leased
by the Company, process, repair or recondition it or otherwise prepare it for
disposition in any manner and to the extent the Agent deems appropriate and, in
connection with such preparation and disposition, use without charge any
trademark, trade name, copyright, patent or technical process used by the
Company.
SECTION 8. LIMITATION ON DUTY OF AGENT IN RESPECT OF COLLATERAL.
Beyond the exercise of reasonable care in the custody thereof,
the Agent shall have no duty as to any Collateral in its possession or control
or in the possession or control of any agent or bailee or any income thereon or
as to the preservation of rights against prior parties or any other rights
pertaining thereto. The Agent shall be deemed to have exercised reasonable care
in the custody of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which it accords its own property, and
shall not be liable or responsible for any loss or damage to any of the
Collateral, or for any diminution in the value thereof, by reason of the act or
omission of any warehouseman, carrier, forwarding agency, consignee or other
agent or bailee selected by the Agent in good faith.
SECTION 9. APPLICATION OF PROCEEDS.
Upon the occurrence and during the continuance of an Event of
Default, the proceeds of any sale of, or other realization upon, all or any part
of the Collateral and any cash held in the Collateral Accounts shall be applied
by the Agent in the following order of priorities:
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first, to payment of the expenses of such sale or other
realization, including reasonable compensation to agents and counsel
for the Agent, and all expenses, liabilities and advances incurred or
made by the Agent in connection therewith, and any other unreimbursed
expenses for which the Agent or any other Secured Party is to be
reimbursed pursuant to Section 10.04 of the Credit Agreement or Section
12 hereof and unpaid fees owing to the Agent under the Credit
Agreement;
second, to the ratable payment of accrued but unpaid interest
on the Secured Obligations in accordance with the provisions of the
Credit Agreement;
third, to the ratable payment of unpaid principal of the
Secured Obligations;
fourth, to the ratable payment of all other Secured
Obligations, until all Secured Obligations shall have been paid in
full; and
finally, to payment to the Company or its successors or
assigns, or as a court of competent jurisdiction may direct, of any
surplus then remaining from such proceeds.
The Agent may make distributions hereunder in cash or in kind or, on a ratable
basis, in any combination thereof.
SECTION 10. CONCERNING THE AGENT.
The provisions of Section 10.05 and Article XI of the Credit
Agreement shall inure to the benefit of the Agent in respect of this Agreement
and shall be binding upon the parties to the Credit Agreement in such respect.
In furtherance and not in derogation of the rights, privileges and immunities of
the Agent therein set forth:
(A) The Agent is authorized to take all such action as is
provided to be taken by it as Agent hereunder and all other action reasonably
incidental thereto. As to any matters not expressly provided for herein
(including the timing and methods of realization upon the Collateral), the Agent
shall act or refrain from acting in accordance with written instructions from
the Required Lenders or, in the absence of such instructions, in accordance with
its discretion.
(B) The Agent shall not be responsible for the existence,
genuineness or value of any of the Collateral or for the validity, perfection,
priority or enforceability of the Security Interests in any of the Collateral,
whether impaired by operation of law or by reason of any action or omission to
act on its part hereunder. The Agent shall have no duty to ascertain or inquire
as to the performance or observance of any of the terms of this Agreement by the
Company.
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SECTION 11. APPOINTMENT OF CO-AGENTS.
At any time or times, in order to comply with any legal
requirement in any jurisdiction, the Agent may appoint another bank or trust
company or one or more other persons, either to act as co-agent or co-agents,
jointly with the Agent, or to act as separate agent or agents on behalf of the
Secured Parties with such power and authority as may be necessary for the
effectual operation of the provisions hereof and may be specified in the
instrument of appointment (which may, in the discretion of the Agent, include
provisions for the protection of such co-agent or separate agent similar to the
provisions of Section 10).
SECTION 12. EXPENSES.
In the event that the Company fails to comply with the
provisions of the Credit Agreement or this Agreement, such that the value of any
Collateral or the validity, perfection, rank or value of any Security Interest
is thereby diminished or potentially diminished or put at risk, the Agent if
requested by the Required Lenders may, but shall not be required to, effect such
compliance on behalf of the Company, and the Company shall reimburse the Agent
for the costs thereof on demand. All insurance expenses and all expenses of
protecting, storing, warehousing, appraising, insuring, handling, maintaining,
and shipping the Collateral, any and all excise, property, sales, and use taxes
imposed by any state, federal, or local authority on any of the Collateral, or
in respect of periodic appraisals and inspections of the Collateral to the
extent the same may be requested by the Required Lenders from time to time as
provided in the Credit Agreement, or in respect of the sale or other disposition
thereof shall be borne and paid by the Company; and if the Company fails to
promptly pay any portion thereof when due, the Agent or any other Secured Party
may, at its option, but shall not be required to, pay the same and charge the
Company's account therefor, and the Company agrees to reimburse the Agent or
such other Secured Party therefor on demand. All sums so paid or incurred by the
Agent or any other Secured Party for any of the foregoing and any and all other
sums for which the Company may become liable hereunder and all costs and
expenses (including attorneys' fees, legal expenses and court costs) reasonably
incurred by the Agent or any other Secured Party in enforcing or protecting the
Security Interests or any of their rights or remedies under this Agreement,
shall, together with interest thereon until paid as provided in Section 10.03 of
the Credit Agreement, be additional Secured Obligations hereunder.
SECTION 13. TERMINATION OF SECURITY INTERESTS; RELEASE OF COLLATERAL.
Upon the repayment in full of all Secured Obligations (other
than contingent indemnity or similar claims not yet asserted) and the
termination of the Commitment under the Credit Agreement, the Security Interests
shall terminate and all rights to the Collateral shall revert to the Company. At
any time and from time to time prior to such termination of the Security
Interests, the Agent may release any of the Collateral with the prior written
consent of the Required Lenders. Upon any such termination of the Security
Interests or release of Collateral, the Agent will, at the expense of the
Company, promptly execute and deliver to the Company such documents as the
Company shall reasonably request to evidence the termination of the Security
Interests or the release of such Collateral, as the case may be.
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SECTION 14. NOTICES.
All notices, communications and distributions hereunder shall
be given in accordance with Section 12.03 of the Credit Agreement.
SECTION 15. WAIVERS, NON-EXCLUSIVE REMEDIES.
No failure on the part of the Agent to exercise, and no delay
in exercising and no course of dealing with respect to, any right under this
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise by the Agent or any Secured Party of any right under the Credit
Agreement, any of the other Financing Documents or this Agreement preclude any
other or further exercise thereof or the exercise of any other right. The rights
in this Agreement, the Credit Agreement and the other Financing Documents are
cumulative and are not exclusive of any other remedies provided by law.
SECTION 16. SUCCESSORS AND ASSIGNS.
This Agreement is for the benefit of the Agent and the Secured
Parties and their successors and assigns, and in the event of an assignment of
all or any of the Secured Obligations, the rights hereunder, to the extent
applicable to the indebtedness so assigned, may be transferred with such
indebtedness. This Agreement shall be binding on the Company and its successors
and assigns.
SECTION 17. CHANGES IN WRITING.
Neither this Agreement nor any provision hereof may be
changed, waived, discharged or terminated orally, but only in writing signed by
the Company and the Agent with the consent of the Required Lenders.
SECTION 18. GEORGIA LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF GEORGIA (WITHOUT REFERENCE TO PRINCIPLES OR
CONFLICTS OF LAW), EXCEPT AS OTHERWISE REQUIRED BY MANDATORY PROVISIONS OF LAW
AND EXCEPT TO THE EXTENT THAT REMEDIES PROVIDED BY THE LAWS OF ANY JURISDICTION
OTHER THAN GEORGIA ARE GOVERNED BY THE LAWS OF SUCH JURISDICTION.
SECTION 19. SEVERABILITY.
If any provision hereof is invalid or unenforceable in any
jurisdiction, then, to the fullest extent permitted by law, (i) the other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be liberally construed in favor of the Agent and the other Secured Parties
in order to carry out the intentions of the parties hereto as nearly as may be
possible; and
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(ii) the invalidity or unenforceability of any provision hereof in any
jurisdiction shall not affect the validity or enforceability of such provision
in any other jurisdiction.
SECTION 20. COUNTERPARTS.
This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective authorized officers as of the
day and year first above written.
HORIZON MEDICAL PRODUCTS, INC.
By:
-----------------------------------------
Title:
--------------------------------------
NATIONSCREDIT COMMERCIAL
CORPORATION, as Agent
By:
-----------------------------------------
Title:
--------------------------------------
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EXHIBIT A
LIST OF ACCOUNTS
Account Bank
------- ----
[TO BE COMPLETED BY BORROWER]
155
EXHIBIT B
PERFECTION CERTIFICATE
The undersigned, __________________ of Horizon Medical
Products, Inc., a Georgia corporation (the "COMPANY"), hereby certifies with
reference to the Security Agreement dated as of July ____, 1997, between the
Company and NationsCredit Commercial Corporation, as Agent (terms defined
therein being used herein as therein defined), to the Agent and each Lender as
follows:
1. Names. (a) The exact corporate name of the Company as
it appears in its certificate of incorporation is as follows:
Horizon Medical Products, Inc.
(b) Set forth below is each other corporate name the
Company has had since its organization, together with the date of the relevant
change:
(c) The Company has not changed its identity or form of
organization in any way within the past five years.
(d) The following is a list of all other names (including
trade names or similar appellations) used by the Company or any of its divisions
or other business units at any time during the past five years:
[Names of Company]
156
2. Current Locations. (a) The chief executive office of
the Company is located at the following address:
Mailing Address County State
--------------- ------ -----
(b) The following are all the locations where the Company
maintains any books or records relating to any Accounts:
Mailing Address County State
--------------- ------ -----
(c) The following are all the places of business of the
Company not identified above:
Name Mailing Address County State
---- --------------- ------ -----
(d) The following are all the locations where the Company
maintains any Inventory not identified above:
Name Mailing Address County State
---- --------------- ------ -----
(e) The following are the names and addresses of all
Persons other than the Company which have possession of any of the Company's
Inventory:
Name Mailing Address County State
---- --------------- ------ -----
3. Prior Locations. (a) Set forth below is the
information required by subparagraphs (a), (b) and (c) of paragraph 2 with
respect to each location or place of business maintained by the Company at any
time during the past five years:
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157
(b) Set forth below is the information required by
subparagraphs (d) and (e) of paragraph 2 with respect to each location or bailee
where or with whom Inventory has been lodged at any time during the past four
months:
4. Unusual Transactions. All Accounts have been
originated by the Company and all Inventory and Equipment has been acquired by
the Company in the ordinary course of its business.
5. File Search Reports. Attached hereto as Schedule 5(A)
is a true copy of a file search report from the Uniform Commercial Code filing
officer in each jurisdiction identified in paragraph 2 or 3 above with respect
to each name set forth in paragraph 1 above. Attached hereto as Schedule 5(B) is
a true copy of each financing statement or other filing identified in such file
search reports.
6. UCC Filings. Duly signed financing statements on Form
UCC-1 attached as Schedule 6 hereto have been duly filed in the Uniform
Commercial Code filing office in each jurisdiction identified in paragraph 2
hereof and each such filing has been duly acknowledged by the filing officer.
7. Schedule of Filings. Attached hereto as Schedule 7 is
a schedule setting forth filing information with respect to the filings
described in paragraph 6 above.
8. Filing Fees. All filing fees and taxes payable in
connection with the filings described in paragraph 6 above have been paid.
9. Patents, Trademarks, Copyrights. All patents,
trademarks and copyrights owned by the Company as of the date hereof and all
patent licenses, trademark licenses and copyright licenses to which the Company
is a party as of the date hereof are listed on Schedule 9 hereto.
IN WITNESS WHEREOF, we have hereunto set our hands this ____
day of July, 1997.
-----------------------------------
Title:
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EXHIBIT G
PLEDGE AGREEMENT
AGREEMENT dated as of July 15, 1997, between HORIZON MEDICAL
PRODUCTS, INC., a Georgia corporation (the "COMPANY") and NATIONSCREDIT
COMMERCIAL CORPORATION, as agent for the Lenders referred to below (the
"AGENT").
W I T N E S S E T H:
WHEREAS, the Company is the sole stockholder of all of the
outstanding shares of every class of capital stock of the corporations described
on Schedule I attached hereto (collectively, the "SUBSIDIARIES"); and
WHEREAS, the Company, certain Lenders (the "LENDERS") and the
Agent are parties to a Credit Agreement of even date herewith (as the same may
be amended from time to time, the "CREDIT AGREEMENT"); and
WHEREAS, in order to induce the Lenders and the Agent to enter
into the Credit Agreement, the Company has agreed to grant a continuing security
interest in and to the Collateral (as hereafter defined) to secure obligations
of the Company under the Credit Agreement and the Notes issued pursuant thereto
and the other Financing Documents;
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS.
Terms defined in the Credit Agreement and not otherwise
defined herein have, as used herein, the respective meanings provided for
therein. The following additional terms, as used herein, have the following
respective meanings:
"COLLATERAL" has the meaning assigned to such term in Section
3(A).
"PLEDGED SECURITIES" means the Pledged Stock.
"PLEDGED STOCK" means the Subsidiaries Shares and any other
capital stock required to be pledged to the Agent pursuant to Section 3(B).
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"SECURED OBLIGATIONS" means the obligations secured under this
Agreement which include (a) all principal of and interest (including any
interest which accrues after the commencement of any case, proceeding or other
action relating to the bankruptcy, insolvency or reorganization of the Company,
whether or not allowed or allowable as a claim in any such proceeding) on any
Loan under, or any Note issued pursuant to, the Credit Agreement, (b) all other
amounts payable by the Company under any Financing Document, (c) all other
Obligations, and (d) any amendments, restatements, renewals, extensions or
modifications of any of the foregoing.
"SECURED PARTIES" means the Lenders and the Agent.
"SECURITY AGREEMENT" means that certain Security Agreement
dated the date hereof executed by the Company in favor of the Agent for the
benefit of the Agent and the Lenders.
"SECURITY INTERESTS" means the security interests in the
Collateral granted hereunder securing the Secured Obligations.
"SUBSIDIARIES SHARES" means one hundred percent (100%) of the
issued and outstanding shares of any class of capital stock of each Subsidiary
that the Company may now or hereafter own, control or hold, which stock as of
this date is described on Schedule I attached hereto.
"UCC" has the meaning given such term in the Security
Agreement.
Unless otherwise defined herein, or unless the context
otherwise requires, all terms used herein which are defined in the Georgia UCC
as in effect on the date hereof shall have the meanings therein stated.
SECTION 2. REPRESENTATIONS AND WARRANTIES.
Company represents and warrants as follows:
(A) Title to Pledged Securities. Company owns all of the
Pledged Securities, free and clear of any Liens other than the Security
Interests. All of the Pledged Stock has been duly authorized and validly issued,
and is fully paid and non-assessable, and is subject to no options to purchase
or similar rights of any Person. Company is not and will not become a party to
or otherwise bound by any agreement, other than this Agreement, which restricts
in any manner the rights of any present or future holder of any of the Pledged
Securities with respect thereto.
(B) Validity, Perfection and Priority of Security
Interests. Upon the delivery of certificates representing the Pledged Stock to
the Agent in accordance with Section 4 hereof, the Agent will have valid and
perfected security interests in the Collateral subject to no prior Lien. No
registration, recordation or filing with any governmental body, agency or
official is
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required in connection with the execution or delivery of this Agreement or
necessary for the validity or enforceability hereof or for the perfection or
enforcement of the Security Interests. Neither the Company nor the Subsidiaries
has performed or will perform any acts which might prevent the Agent from
enforcing any of the terms and conditions of this Agreement or which would limit
the Agent in any such enforcement.
(C) UCC Filing Locations. The chief executive office of
the Company is located at its address set forth on the signature pages of the
Credit Agreement. Under the Uniform Commercial Code as in effect in the state in
which such office is located, no local filing is required to perfect a security
interest in collateral consisting of general intangibles.
SECTION 3. THE SECURITY INTERESTS.
In order to secure the full and punctual payment and
performance of the Secured Obligations in accordance with the terms thereof, and
to secure the performance of all the obligations of the Company hereunder:
(A) The Company hereby assigns and pledges to and with
the Agent for the benefit of the Secured Parties and grants to the Agent for the
benefit of the Secured Parties a security interest in the Pledged Securities,
and all of its rights and privileges with respect to the Pledged Securities, and
all income and profits thereon, and all interest, dividends and other payments
and distributions with respect thereto, and all proceeds of the foregoing (the
"COLLATERAL"). Contemporaneously with the execution and delivery hereof, the
Company is delivering the certificates representing the Subsidiaries Shares in
pledge hereunder.
(B) In the event that the Subsidiaries at any time issue
any additional or substitute shares of capital stock of any class or owes any
other Debt to the Company, the Company will immediately pledge and deposit with
the Agent certificates representing all such shares or an instrument evidencing
such other Debt as additional security for the Secured Obligations. All such
shares and instruments constitute Pledged Securities and are subject to all
provisions of this Agreement.
(C) The Security Interests are granted as security only
and shall not subject any Secured Party to, or transfer or in any way affect or
modify, any obligation or liability of the Company or the Subsidiaries with
respect to any of the Collateral or any transaction in connection therewith.
SECTION 4. DELIVERY OF PLEDGED SECURITIES.
All certificates representing Pledged Stock delivered to the
Agent by the Company pursuant hereto shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, and accompanied by any required transfer tax stamps, all in
form and substance satisfactory to the Agent.
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SECTION 5. FILING; FURTHER ASSURANCES.
(A) The Company agrees that it will, at its expense and
in such manner and form as the Agent may require, execute, deliver, file and
record any financing statement, specific assignment or other paper and take any
other action that may be necessary or desirable, or that the Agent may request,
in order to create, preserve, perfect or validate any Security Interest or to
enable the Agent to exercise and enforce its rights hereunder with respect to
any of the Collateral. To the extent permitted by applicable law, the Company
hereby authorizes the Agent to execute and file, in the name of the Company or
otherwise, UCC financing statements (which may be carbon, photographic,
photostatic or other reproductions of this Agreement or of a financing statement
relating to this Agreement) which the Agent in its sole discretion may deem
necessary or appropriate to further perfect the Security Interests.
(B) The Company agrees that it will not change (i) its
name, identity or form of organization in any manner or (ii) the location of its
chief executive office unless it shall have given the Agent not less than 30
days' prior notice thereof.
SECTION 6. RECORD OWNERSHIP OF PLEDGED STOCK.
The Agent may at any time or from time to time, upon the
occurrence and during the continuance of an Event of Default, in its sole
discretion, cause any or all of the Pledged Stock to be transferred of record
into the name of the Agent or its nominee. The Company will promptly give to the
Agent copies of any notices or other communications received by it with respect
to Pledged Stock registered in the name of the Company and the Agent will
promptly give to the Company copies of any notices and communications received
by the Agent with respect to Pledged Stock registered in the name of the Agent
or its nominee.
SECTION 7. RIGHT TO RECEIVE DISTRIBUTIONS ON COLLATERAL.
Upon the occurrence and during the continuance of any Event of
Default, the Agent shall have the right to receive and to retain as Collateral
hereunder all dividends, interest and other payments and distributions made upon
or with respect to the Collateral and the Company shall take all such action as
the Agent may deem necessary or appropriate to give effect to such right. Upon
the occurrence and during the continuance of an Event of Default, all such
dividends, interest and other payments and distributions which are received by
the Company shall be received in trust as Collateral for the benefit of the
Agent and the Secured Parties and, if the Agent so directs, shall be segregated
from other funds of the Company and shall, forthwith upon demand by the Agent
during the continuance of an Event of Default, be paid over to the Agent as
Collateral in the same form as received (with any necessary endorsement). After
all Events of Default that shall have occurred have been cured, the Agent's
right to retain dividends, interest and other payments and distributions under
this Section 7 shall cease and the Agent shall pay over to the Company any such
Collateral retained by the Agent during the continuance of an Event of Default.
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SECTION 8. RIGHT TO VOTE PLEDGED STOCK.
Unless an Event of Default shall have occurred and be
continuing, the Company shall have the right, from time to time, to vote and to
give consents, ratifications and waivers with respect to the Pledged Stock, and
the Agent shall, upon receiving a written request from the Company accompanied
by a certificate signed by its principal financial officer stating that no Event
of Default has occurred and is continuing, deliver to the Company or as
specified in such request such proxies, powers of attorney, consents,
ratifications and waivers in respect of any of the Pledged Stock which is
registered in the name of the Agent or its nominee as shall be specified in such
request and be in form and substance satisfactory to the Agent.
If an Event of Default shall have occurred and be continuing,
the Agent shall have the right to the extent permitted by law and the Company
shall take all such action as may be necessary or appropriate to give effect to
such right, to vote and to give consents, ratifications and waivers, and take
any other action with respect to any or all of the Pledged Stock with the same
force and effect as if the Agent were the absolute and sole owner thereof.
SECTION 9. GENERAL AUTHORITY.
The Company hereby irrevocably appoints the Agent its true and
lawful attorney, with full power of substitution, in the name of the Company,
the Agent, the Secured Parties or otherwise, for the sole use and benefit of the
Agent and Secured Parties, but at the expense of the Company, to the extent
permitted by law to exercise, at any time and from time to time while an Event
of Default has occurred and is continuing, all or any of the following powers
with respect to all or any of the Collateral:
(i) to demand, ▇▇▇ for, collect, receive and give
acquittance for any and all monies due or to become due upon or by
virtue thereof,
(ii) settle, compromise, compound, prosecute or defend any
action or proceeding with respect thereto,
(iii) to sell, transfer, assign or otherwise deal in or
with the same or the proceeds or avails thereof, as fully and
effectually as if the Agent were the absolute owner thereof, and
(iv) to extend the time of payment of any or all thereof
and to make any allowance and other adjustments with reference thereto;
provided that the Agent shall give the Company not less than ten days' prior
written notice of the time and place of any sale or other intended disposition
of any of the Collateral except any Collateral which is perishable or threatens
to decline speedily in value or is of a type customarily sold on a recognized
market. The Agent and the Company agree that such notice constitutes "reasonable
notification" within the meaning of Section 9-504(3) of the UCC.
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SECTION 10. REMEDIES UPON EVENT OF DEFAULT.
If any Event of Default shall have occurred and be continuing,
the Agent may exercise on behalf of the Secured Parties all the rights of a
secured party under the UCC (whether or not in effect in the jurisdiction where
such rights are exercised) and, in addition, the Agent may, without being
required to give any notice, except as herein provided or as may be required by
mandatory provisions of law, (i) apply the cash, if any, then held by it as
Collateral as specified in Section 13 and (ii) if there shall be no such cash or
if such cash shall be insufficient to pay all the Secured Obligations in full,
sell the Collateral or any part thereof at public or private sale or at any
broker's board or on any securities exchange, for cash, upon credit or for
future delivery, and at such price or prices as the Agent may deem satisfactory.
Any Secured Party may be the purchaser of any or all of the Collateral so sold
at any public sale (or, if the Collateral is of a type customarily sold in a
recognized market or is of a type which is the subject of widely distributed
standard price quotations, at any private sale). The Agent is authorized, in
connection with any such sale, if it deems it advisable so to do, (i) to
restrict the prospective bidders on or purchasers of any of the Pledged
Securities to a limited number of sophisticated investors who will represent and
agree that they are purchasing for their own account for investment and not with
a view to the distribution or sale of any of such Pledged Securities, (ii) to
cause to be placed on certificates for any or all of the Pledged Securities or
on any other securities pledged hereunder a legend to the effect that such
security has not been registered under the Securities Act of 1933 and may not be
disposed of in violation of the provision of said Act, and (iii) to impose such
other limitations or conditions in connection with any such sale as the Agent
deems necessary or advisable in order to comply with said Act or any other law.
The Company covenants and agrees that it will execute and deliver such documents
and take such other action as the Agent deems necessary or advisable in order
that any such sale may be made in compliance with law. Upon any such sale the
Agent shall have the right to deliver, assign and transfer to the purchaser
thereof the Collateral so sold. Each purchaser at any such sale shall hold the
Collateral so sold absolutely and free from any claim or right of whatsoever
kind, including any equity or right of redemption of the Company which may be
waived, and the Company, to the extent permitted by law, hereby specifically
waives all rights of redemption, stay or appraisal which it has or may have
under any law now existing or hereafter adopted. The notice (if any) of such
sale required by Section 9 shall (1) in case of a public sale, state the time
and place fixed for such sale, (2) in case of sale at a broker's board or on a
securities exchange, state the board or exchange at which such sale is to be
made and the day on which the Collateral, or the portion thereof so being sold,
will first be offered for sale at such board or exchange, and (3) in the case of
a private sale, state the day after which such sale may be consummated. Any such
public sale shall be held at such time or times within ordinary business hours
and at such place or places as the Agent may fix in the notice of such sale. At
any such sale the Collateral may be sold in one lot as an entirety or in
separate parcels, as the Agent may determine. The Agent shall not be obligated
to make any such sale pursuant to any such notice. The Agent may, without notice
or publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to which the same may be so
adjourned. In case of any sale of all or any part of the Collateral on credit or
for future delivery, the Collateral so sold may be retained by the Agent until
the selling price is paid by the purchaser thereof, but the Agent
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shall not incur any liability in case of the failure of such purchaser to take
up and pay for the Collateral so sold and, in case of any such failure, such
Collateral may again be sold upon like notice. The Agent, instead of exercising
the power of sale herein conferred upon it, may proceed by a suit or suits at
law or in equity to foreclose the Security Interests and sell the Collateral, or
any portion thereof, under a judgment or decree of a court or courts of
competent jurisdiction.
SECTION 11. EXPENSES.
The Company agrees that it will forthwith upon demand pay to
the Agent:
(i) the amount of any taxes which the Agent may have been
required to pay by reason of the Security Interests or to free any of
the Collateral from any Lien thereon, and
(ii) the amount of any and all out-of-pocket expenses,
including the reasonable fees and disbursements of counsel and of any
other experts, which the Agent may incur in connection with (w) the
administration or enforcement of this Agreement, including such
expenses as are incurred to preserve the value of the Collateral and
the validity, perfection, rank and value of any Security Interest, (x)
the collection, sale or other disposition of any of the Collateral, (y)
the exercise by the Agent of any of the rights conferred upon it
hereunder or (z) any Default or Event of Default.
Any such amount not paid on demand shall bear interest as provided in Section
10.03 of the Credit Agreement.
SECTION 12. LIMITATION ON DUTY OF AGENT IN RESPECT OF COLLATERAL.
Beyond the exercise of reasonable care in the custody thereof,
the Agent shall have no duty as to any Collateral in its possession or control
or in the possession or control of any agent or bailee or any income thereon or
as to the preservation of rights against prior parties or any other rights
pertaining thereto. The Agent shall be deemed to have exercised reasonable care
in the custody and preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that which it accords
its own property, and shall not be liable or responsible for any loss or damage
to any of the Collateral, or for any diminution in the value thereof, by reason
of the act or omission of any agent or bailee selected by the Agent in good
faith.
SECTION 13. APPLICATION OF PROCEEDS.
Upon the occurrence and during the continuance of an Event of
Default, the proceeds of any sale of, or other realization upon, all or any part
of the Collateral and any cash held shall be applied by the Agent in the
following order of priorities:
first, to payment of the expenses of such sale or other
realization, including reasonable compensation to agents and counsel
for the Agent, and all expenses, liabilities
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and advances incurred or made by the Agent in connection therewith, and
any other unreimbursed expenses for which the Agent or any Secured
Party is to be reimbursed pursuant to Section 10.04 of the Credit
Agreement or Section 11 hereof and unpaid fees owing to the Agent under
the Credit Agreement;
second, to the ratable payment of accrued but unpaid interest
on the Secured Obligations in accordance with the provisions of the
Credit Agreement;
third, to the ratable payment of unpaid principal of the
Secured Obligations;
fourth, to the ratable payment of all other Secured
Obligations, until all Secured Obligations shall have been paid in
full; and
finally, to payment to the Company or its successors or
assigns, or as a court of competent jurisdiction may direct, of any
surplus then remaining from such proceeds.
SECTION 14. CONCERNING THE AGENT.
The provisions of Article IX of the Credit Agreement shall
inure to the benefit of the Agent in respect of this Agreement and shall be
binding upon the parties to the Credit Agreement in such respect. In furtherance
and not in derogation of the rights, privileges and immunities of the Agent
therein set forth:
(A) The Agent is authorized to take all such action as is
provided to be taken by it as Agent hereunder and all other action reasonably
incidental thereto. As to any matters not expressly provided for herein
(including, without limitation, the timing and methods of realization upon the
Collateral) the Agent shall act or refrain from acting in accordance with
written instructions from the Required Lenders or, in the absence of such
instructions, in accordance with its discretion.
(B) The Agent shall not be responsible for the existence,
genuineness or value of any of the Collateral or for the validity, perfection,
priority or enforceability of the Security Interests in any of the Collateral,
whether impaired by operation of law or by reason of any action or omission to
act on its part hereunder. The Agent shall have no duty to ascertain or inquire
as to the performance or observance of any of the terms of this Agreement by the
Company.
SECTION 15. APPOINTMENT OF CO-AGENTS.
At any time or times, in order to comply with any legal
requirement in any jurisdiction, the Agent may appoint another bank or trust
company or one or more other persons, either to act as co-agent or co-agents,
jointly with the Agent, or to act as separate agent or agents on behalf of the
Secured Parties with such power and authority as may be necessary for the
effectual operation of the provisions hereof and may be specified in the
instrument of
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appointment (which may, in the discretion of the Agent, include provisions for
the protection of such co-agent or separate agent similar to the provisions of
Section 14).
SECTION 16. TERMINATION OF SECURITY INTERESTS; RELEASE OF COLLATERAL.
Upon the repayment in full of all Secured Obligations (other
than contingent indemnity or similar claims not yet asserted) and the
termination of the Commitment under the Credit Agreement, the Security Interests
shall terminate and all rights to the Collateral shall revert to the Company. At
any time and from time to time prior to such termination of the Security
Interests, the Agent may release any of the Collateral with the prior written
consent of the Lenders. Upon any such termination of the Security Interests or
release of Collateral, the Agent will, at the expense of the Company, execute
and deliver to the Company such documents as the Company shall reasonably
request to evidence the termination of the Security Interests or the release of
such Collateral, as the case may be.
SECTION 17. NOTICES.
All notices, communications and distributions hereunder shall
be given in accordance with Section 12.03 of the Credit Agreement.
SECTION 18. WAIVERS, NON-EXCLUSIVE REMEDIES.
No failure on the part of the Agent to exercise, and no delay
in exercising and no course of dealing with respect to, any right under this
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise by the Agent of any right under the Credit Agreement, any other
Financing Document or this Agreement preclude any other or further exercise
thereof or the exercise of any other right. The rights in this Agreement, the
other Security Documents and the Credit Agreement are cumulative and are not
exclusive of any other remedies provided by law.
SECTION 19. SUCCESSORS AND ASSIGNS.
This Agreement is for the benefit of the Agent and the other
Secured Parties and their successors and assigns, and in the event of an
assignment of all or any of the Secured Obligations, the rights hereunder, to
the extent applicable to the indebtedness so assigned, may be transferred with
such indebtedness. This Agreement shall be binding on the Company and its
successors and assigns.
SECTION 20. CHANGES IN WRITING.
Neither this Agreement nor any provision hereof may be
changed, waived, discharged or terminated orally, but only in writing signed by
the Company and the Agent with the consent of the Required Lenders (or in the
case of Section 16, all of the Lenders).
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SECTION 21. GEORGIA LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF GEORGIA (WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW), EXCEPT AS OTHERWISE REQUIRED BY MANDATORY PROVISIONS OF LAW
AND EXCEPT TO THE EXTENT THAT REMEDIES PROVIDED BY THE LAWS OF ANY JURISDICTION
OTHER THAN GEORGIA ARE GOVERNED BY THE LAWS OF SUCH JURISDICTION.
SECTION 22. SEVERABILITY.
If any provision hereof is invalid or unenforceable in any
jurisdiction, then, to the fullest extent permitted by law, (i) the other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be liberally construed in favor of the Agent and the Secured Parties in
order to carry out the intentions of the parties hereto as nearly as may be
possible; and (ii) the invalidity or unenforceability of any provision hereof in
any jurisdiction shall not affect the validity or enforceability of such
provision in any other jurisdiction.
SECTION 23. COUNTERPARTS.
This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective authorized
officers as of the day and year first above written.
HORIZON MEDICAL PRODUCTS,
INC.
By:
-------------------------------------
Title:
----------------------------------
NATIONSCREDIT COMMERCIAL
CORPORATION
By:
-------------------------------------
Title:
----------------------------------
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SCHEDULE I
PLEDGED STOCK
NUMBER AND PERCENTAGE OF
NAME OF CORPORATION CLASS OF SHARES HARES OF SUCH CLASS
------------------- --------------- -------------------
Horizon Acquisition Corp. 1,000 100%
Strato/Infusaid, Inc. 275,294 100%
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EXHIBIT I
SUBSIDIARY SECURITY AGREEMENT
AGREEMENT dated as of July 15, 1997, among the CORPORATIONS
listed in Exhibit A attached hereto and incorporated herein by reference
(hereinafter referred to individually as the "PLEDGOR" and collectively as the
"PLEDGORS") and NATIONSCREDIT COMMERCIAL CORPORATION, as Agent for the Lenders
referred to below (the "AGENT").
W I T N E S S E T H :
WHEREAS, Horizon Medical Products, Inc., a Georgia corporation
(the "COMPANY"), certain lenders (the "LENDERS") and the Agent are parties to a
Credit Agreement of even date herewith (as the same may be amended from time to
time, the "CREDIT AGREEMENT"); and
WHEREAS, the Company and the Pledgors share an identity of
interests as members of a consolidated group of companies engaged in
substantially similar businesses; the Company provides certain centralized
financial, account and management services to the Pledgors; and the making of
Loans to the Company under the Credit Agreement from time to time will enhance
the overall financial strength and stability of the Company's corporate group.
WHEREAS, in order to induce such Lenders and the Agent to
enter into the Credit Agreement and as a condition precedent to the Lenders'
obligation to make Loans from time to time to the Company under the Credit
Agreement, the Pledgors have agreed to guaranty the repayment of such Loans and
other Obligations of the Company pursuant to that certain Subsidiary Guaranty
Agreement, dated of the date hereof (the "GUARANTY"), and to execute and deliver
to Lender this Agreement to secure the Guaranty;
NOW THEREFORE, in consideration of the premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS.
Terms defined in the Credit Agreement and not otherwise
defined herein have, as used herein, the respective meanings provided for
therein. The following additional terms, as used herein, have the following
respective meanings:
"ACCOUNTS" means all "accounts" (as defined in the UCC) now
owned or hereafter acquired by any Pledgor, and shall also mean and include all
accounts receivable, contract rights, book debts, notes, drafts and other
obligations or indebtedness owing to any Pledgor arising from the sale, lease or
exchange of goods or other property by such Pledgor
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and/or the performance of services by such Pledgor (including any such
obligation which might be characterized as an account, contract right or general
intangible under the Uniform Commercial Code in effect in any jurisdiction) and
all of any Pledgor's rights in, to and under all purchase orders for goods,
services or other property, and all of any Pledgor's rights to any goods,
services or other property represented by any of the foregoing (including
returned or repossessed goods and unpaid sellers' rights of rescission,
replevin, reclamation and rights to stoppage in transit) and all monies due to
or to become due to such Pledgor under all contracts for the sale, lease or
exchange of goods or other property and/or the performance of services by it
(whether or not yet earned by performance on the part of such Pledgor), in each
case whether now in existence or hereafter arising or acquired including,
without limitation, the right to receive the proceeds of said purchase orders
and contracts and all collateral security and guarantees of any kind given by
any Person with respect to any of the foregoing.
"COLLATERAL" has the meaning set forth in Section 3.
"COLLATERAL ACCOUNTS" means the Lockbox Accounts.
"DOCUMENTS" means all "documents" (as defined in the UCC) or
other receipts covering, evidencing or representing goods, now owned or
hereafter acquired by any Pledgor.
"EQUIPMENT" means all "equipment" (as defined in the UCC) now
owned or hereafter acquired by any Pledgor, including without limitation all
motor vehicles, trucks, trailers, railcars and barges.
"GENERAL INTANGIBLES" means all "general intangibles" (as
defined in the UCC) now owned or hereafter acquired by any Pledgor, including
(i) all obligations or indebtedness owing to such Pledgor (other than Accounts)
from whatever source arising, (ii) all patents, patent licenses, trademarks,
trademark licenses, rights in intellectual property, goodwill, trade names,
service marks, trade secrets, copyrights, permits and licenses, (iii) all rights
or claims in respect of refunds for taxes paid and (iv) all rights in respect of
any pension plan or similar arrangement maintained for employees of any member
of the ERISA Group.
"INSTRUMENTS" means all "instruments", "chattel paper" or
"letters of credit" (each as defined in the UCC), including those evidencing,
representing, arising from or existing in respect of, relating to, securing or
otherwise supporting the payment of, any of the Accounts, including (but not
limited to) promissory notes, drafts, bills of exchange and trade acceptances,
now owned or hereafter acquired by any Pledgor.
"INVENTORY" means all "inventory" (as defined in the UCC), now
owned or hereafter acquired by any Pledgor, wherever located, and shall also
mean and include all raw materials and other materials and supplies,
work-in-process and finished goods and any products made or processed therefrom
and all substances, if any, commingled therewith or added thereto.
"LIQUID INVESTMENTS" has the meaning set forth in Section
5(D).
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"LOCKBOX ACCOUNTS" has the meaning assigned to such term in
Section 5(A).
"LOCKBOX AGREEMENTS" has the meaning assigned to such term in
Section 5(A).
"LOCKBOX BANKS" means the banks or investment firms listed
opposite each Lockbox Account on Exhibit B hereto.
"PERFECTION CERTIFICATE" means, collectively, each certificate
substantially in the form of Exhibit C, completed and supplemented with the
schedules and attachments contemplated thereby to the satisfaction of the Agent,
and duly executed by the chief executive officer or chief legal officer of each
Pledgor.
"PERMITTED LIENS" means the Security Interests and the Liens
on the Collateral permitted to be created, to be assumed or to exist pursuant to
Section 8.02 of the Credit Agreement.
"PROCEEDS" means all proceeds of, and all other profits,
products, rents or receipts, in whatever form, arising from the collection,
sale, lease, exchange, assignment, licensing or other disposition of, or other
realization upon, Collateral, including all claims of any Pledgor against third
parties for loss of, damage to or destruction of, or for proceeds payable under,
or unearned premiums with respect to, policies of insurance in respect of, any
Collateral, and any condemnation or requisition payments with respect to any
Collateral, in each case whether now existing or hereafter arising.
"SECURED OBLIGATIONS" means the obligations secured under this
Agreement which include (a) all principal of and interest (including any
interest which accrues after the commencement of any case, proceeding or other
action relating to the bankruptcy, insolvency or reorganization of the Company,
whether or not allowed or allowable as a claim in any such proceeding) on any
Loan under, or any Note issued pursuant to, the Credit Agreement, (b) all other
Obligations of the Company, (c) all Guaranteed Obligations, under and as defined
in the Guaranty and (d) any amendments, restatements, renewals, extensions or
modifications of any of the foregoing.
"SECURED PARTIES" means the Agent and the Lenders.
"SECURITY INTERESTS" means the security interests in the
Collateral granted hereunder securing the Secured Obligations.
"UCC" means the Uniform Commercial Code as in effect on the
date hereof in the State of Georgia; provided that if by reason of mandatory
provisions of law, the perfection or the effect of perfection or non-perfection
of the Security Interests in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than Georgia, "UCC" means
the Uniform Commercial Code as in effect in such other jurisdiction for purposes
of the provisions hereof relating to such perfection or effect of perfection or
non-perfection.
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SECTION 2. REPRESENTATIONS AND WARRANTIES.
Each Pledgor represents and warrants as follows:
(A) Each Pledgor has good and marketable title to all of the
Collateral, free and clear of any Liens other than the Permitted Liens. Each
Pledgor has taken all actions necessary under the UCC to perfect its interest in
any Accounts purchased or otherwise acquired by or granted to it, as against its
assignors and grantors and creditors of its assignors and grantors.
(B) No Pledgor has performed any acts which might prevent the
Agent from enforcing any of the terms of this Agreement or which would limit the
Agent in any such enforcement. Other than financing statements or other similar
or equivalent documents or instruments with respect to the Security Interests
and Permitted Liens, no financing statement, mortgage, security agreement or
similar or equivalent document or instrument covering all or any part of the
Collateral is on file or of record in any jurisdiction in which such filing or
recording would be effective to perfect a Lien on such Collateral. No Collateral
is in the possession of any Person (other than a Pledgor or the Company)
asserting any claim thereto or security interest therein, except that the Agent
or its designee may have possession of Collateral as contemplated hereby.
(C) The information set forth in each Perfection Certificate
delivered to the Agent prior to the Closing Date is correct and complete as of
the Closing Date.
(D) The Security Interests constitute valid security interests
under the UCC securing the Secured Obligations. When UCC financing statements in
the form specified in Schedule 6 to the Perfection Certificate shall have been
filed in the offices specified in each Perfection Certificate, the Security
Interests shall constitute perfected security interests in the Collateral
(except Inventory in transit) to the extent that a security interest therein may
be perfected by filing pursuant to the UCC, prior to all other Liens and rights
of others therein except for the Permitted Liens.
(E) The Inventory and Equipment are insured in accordance with
the requirements of the Credit Agreement.
(F) Exhibit B (as updated by such Pledgor from time to time
with the consent of the Agent, such consent not to be unreasonably withheld)
lists each bank account, money market account and investment account for each
Pledgor.
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SECTION 3. THE SECURITY INTERESTS.
(A) In order to secure the full and punctual payment and
performance of the Secured Obligations in accordance with the terms thereof,
each Pledgor hereby grants to the Agent for the ratable benefit of the Secured
Parties a continuing security interest in and to all of the following property
of such Pledgor, whether now owned or existing or hereafter acquired or arising
and regardless of where located (all being collectively referred to as the
"COLLATERAL"):
(1) Accounts;
(2) Inventory;
(3) General Intangibles;
(4) Documents;
(5) Instruments;
(6) Equipment;
(7) The Lockbox Accounts, all cash deposited in any of the
foregoing from time to time, the Liquid Investments made pursuant to
Section 5(D) and other monies and property of any kind of such Pledgor
in the possession or under the control of the Agent;
(8) All books and records (including customer lists, credit
files, computer programs, printouts and other computer materials and
records) of such Pledgor pertaining to any of the Collateral;
(9) Insurance policies of such Pledgor; and
(10) All Proceeds of all or any of the Collateral described in
Clauses 1 through 9 hereof.
(B) The Security Interests are granted as security only and
shall not subject any Secured Party to, or transfer or in any way affect or
modify, any obligation or liability of any Pledgor with respect to any of the
Collateral or any transaction in connection therewith.
SECTION 4. FURTHER ASSURANCES; COVENANTS.
(A) No Pledgor will change its name, identity or form of
organization in any manner unless it shall have given the Agent prior notice
thereof and delivered an opinion of counsel with respect thereto in accordance
with Section 4(L). No Pledgor will change the location of (i) its chief
executive office or chief place of business or (ii) the locations where it keeps
or holds any Collateral or any records relating thereto from the applicable
location described in the Perfection Certificate of such Pledgor unless it shall
have given the Agent prior
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notice thereof and delivered an opinion of counsel with respect thereto in
accordance with Section 4(L).
(B) No Pledgor shall in any event change the location of any
Collateral without the prior written consent of the Agent if such change would
cause the Security Interests in such Collateral to lapse or cease to be
perfected.
(C) Each Pledgor will, from time to time, at its expense,
execute, deliver, file and record any statement, assignment, instrument,
document, agreement or other paper and take any other action (including any
filings of financing or continuation statements under the UCC) that from time to
time may be necessary or desirable, or that the Agent may request, in order to
create, preserve, perfect, confirm or validate the Security Interests or to
enable the Secured Parties to obtain the full benefits of this Agreement, or to
enable the Agent to exercise and enforce any of its rights, powers and remedies
hereunder with respect to any of the Collateral. To the extent permitted by
applicable law, each Pledgor hereby authorizes the Agent, and appoints the Agent
as its true and lawful attorney (with full power of substitution, in the name of
such Pledgor, the Secured Parties or otherwise, for the sole use and benefit of
the Secured Parties), to execute and file financing statements or continuation
statements without such Pledgor's signature appearing thereon. Each Pledgor
agrees that a carbon, photographic, photostatic or other reproduction of this
Agreement or of a financing statement is sufficient as a financing statement.
Each Pledgor shall pay the costs of, or incidental to, any recording or filing
of any financing or continuation statements concerning the Collateral.
(D) If any Collateral is at any time in the possession or
control of any warehouseman, bailee or any of any Pledgor's agents or
processors, such Pledgor shall notify such warehouseman, bailee, agent or
processor of the Security Interests created hereby and to hold all such
Collateral for the Agent's account subject to the Agent's instructions.
(E) Each Pledgor shall keep full and accurate books and
records relating to the Collateral, and stamp or otherwise ▇▇▇▇ such books and
records in such manner as the Agent may reasonably require in order to reflect
the Security Interests.
(F) Each Pledgor will immediately deliver and pledge each
Instrument to the Agent, appropriately endorsed to the Agent, provided that so
long as no Event of Default shall have occurred and be continuing, such Pledgor
may retain for collection in the ordinary course any Instruments.
(G) Each Pledgor shall use its reasonable best efforts to
cause to be collected from its Account Debtors, as and when due, any and all
amounts owing under or on account of each Account (including Accounts which are
delinquent, such Accounts to be collected in accordance with lawful collection
procedures and such Pledgor's customary practices) and shall apply forthwith
upon receipt thereof all such amounts as are so collected to the outstanding
balance of such Account. Subject to the rights of the Secured Parties hereunder
upon the occurrence and during the continuance of an Event of Default, each
Pledgor may allow in the ordinary course of business as adjustments to amounts
owing under its Accounts (i) an extension
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or renewal of the time or times of payment, or settlement for less than the
total unpaid balance, which such Pledgor finds appropriate in accordance with
sound business judgment unless such extension, renewal or settlement results in
causing such Account to not be an Eligible Receivable and thereby causes the
aggregate unpaid balance of Working Capital Loans to exceed the Borrowing Base
and (ii) a refund or credit due as a result of returned or damaged merchandise
or as a discount for prompt payment, all in accordance with such Pledgor's
ordinary course of business consistent with its historical collection practices.
The costs and expenses (including attorney's fees) of collection, whether
incurred by any Pledgor or the Agent, shall be borne by such Pledgor.
(H) Upon the occurrence and during the continuance of any
Event of Default, upon request of the Required Lenders through the Agent, to the
extent permitted by applicable law each Pledgor will promptly notify (and hereby
authorizes the Agent so to notify) each Account Debtor in respect of any Account
or Instrument that such Collateral has been assigned to the Agent hereunder, and
that any payments due or to become due in respect of such Collateral are to be
made directly to the Agent or its designee.
(I) Each Pledgor shall not permit any items of Equipment to
become a fixture to real estate (unless the Agent has a first priority Lien
thereon) or an accession to other personal property.
(J) Without the prior written consent of the Agent and except
in the ordinary course of any Pledgor's business, no Pledgor will sell, lease,
exchange, assign or otherwise dispose of, or grant any option with respect to,
any Collateral except, subject to the rights of the Secured Parties hereunder if
an Event of Default shall have occurred and be continuing, as permitted under
the Credit Agreement including Section 6.06, whereupon, in the case of such a
sale or exchange, the Security Interests created hereby in such item (but not in
any Proceeds arising from such sale or exchange) shall cease immediately without
any further action on the part of the Agent.
(K) Each Pledgor will, promptly upon request, provide to the
Agent all information and evidence it may reasonably request concerning the
Collateral to enable the Agent to enforce the provisions of this Agreement.
(L) Not more than six months nor less than 30 days prior to
each date on which any Pledgor proposes to take any action contemplated by
Section 4(A), such Pledgor shall give notice to the Agent of such proposed
action, and, at such Pledgor's cost and expense, cause to be delivered to the
Secured Parties with such notice, an opinion of counsel, satisfactory to the
Agent and substantially in the form of Exhibit D to the effect that all
financing statements and amendments or supplements thereto, continuation
statements and other documents required to be recorded or filed in order to
perfect and protect the Security Interests have been filed in each filing office
necessary for such purpose and that all filing fees and taxes, if any, payable
in connection with such filings have been paid in full.
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(M) No Pledgor shall open or maintain any bank account, money
market account or investment account unless such account shall first be listed
on Exhibit B (as updated by such Pledgor from time to time with the consent of
the Agent, such consent not to be unreasonably withheld) and, if the Agent
requires in its sole discretion, shall be subject to a Lockbox Agreement.
(N) Each Pledgor shall (i) upon the occurrence of an Event of
Default and (ii) within 10 days after the aggregate value of all Equipment
consisting of motor vehicles, trucks and trailers owned by the Company and its
Subsidiaries shall exceed $150,000, deliver to the Agent any and all
certificates of title, applications for title or similar evidence of ownership
of such Equipment and shall cause the Agent to be named as lienholder on any
such certificate of title or other evidence of ownership.
SECTION 5. LOCKBOX ACCOUNT.
(A) On the Closing Date, each Pledgor shall deliver to the
Agent for each account listed for such Pledgor on Exhibit B hereto (each a
"LOCKBOX ACCOUNT"), a lockbox agreement substantially in form of Exhibit E
hereto or in such other form as shall be satisfactory to the Agent (each a
"LOCKBOX AGREEMENT") which shall establish such account in the name
"NationsCredit Commercial Corporation, as Agent", and under the exclusive
control of the Agent. From and after the Closing Date, there shall be deposited
from time to time into the Lockbox Accounts the cash Proceeds of the Collateral
required to be delivered to the Agent pursuant to subsection (B) of this Section
5 or any other provision of this Agreement and all other funds of such Pledgor.
Any income received with respect to the balance from time to time standing to
the credit of each Lockbox Account, including any interest or capital gains on
Liquid Investments, may be withdrawn by the Company from such Lockbox Account in
accordance with subsection (C) below. All right, title and interest in and to
the cash amounts on deposit from time to time in the Lockbox Accounts together
with any Liquid Investments from time to time made pursuant to subsection (D) of
this Section shall vest in the Agent (pursuant to the Lockbox Agreement for each
Lockbox Account), shall constitute part of the Collateral hereunder and shall
not constitute payment of the Secured Obligations until applied thereto as
hereinafter provided.
(B) Each Pledgor shall instruct all Account Debtors and other
Persons obligated in respect of all Accounts, to make all payments in respect of
such Accounts and shall use its reasonable best efforts to cause such Account
Debtors and other Persons to remit all such payments directly to a Lockbox
Account of such Pledgor (if paid by wire transfer). In addition to the
foregoing, each Pledgor agrees that if the proceeds of any Collateral hereunder
(including the payments made in respect of Accounts) shall be received by such
Pledgor, such Pledgor shall as promptly as possible deposit such proceeds into
its Lockbox Account. Until so deposited, all such proceeds shall be held in
trust by such Pledgor for and as the property of the Secured Parties and shall
not be commingled with any other funds or property of such Pledgor.
(C) The balance from time to time standing to the credit of
the Lockbox Accounts shall, except upon the occurrence and continuation of an
Event of Default, be
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distributed to each Pledgor in accordance with the provisions of each Lockbox
Agreement. If immediately available cash on deposit in the Lockbox Accounts is
not sufficient to make any distribution to any Pledgor referred to in the
previous sentence of this Section 5(C), the Agent shall cause to be liquidated
as promptly as practicable Liquid Investments in the Lockbox Accounts designated
by the Pledgors as required to obtain sufficient cash to make such distribution
and, notwithstanding any other provision of this Section 5, such distribution
shall not be made until such liquidation has taken place. Upon the occurrence
and continuation of an Event of Default, the Agent shall, if so instructed by
the Required Lenders, apply or cause to be applied (subject to collection) any
or all of the balance from time to time standing to the credit of any Lockbox
Accounts in the manner specified in Section 9.
(D) Amounts on deposit in the Lockbox Accounts shall be
invested and re-invested from time to time in such Liquid Investments as the
Pledgors shall determine, which Liquid Investments shall be held in the name and
be under the control of the Agent; provided that, if an Event of Default has
occurred and is continuing, the Agent shall, if instructed by the Required
Lenders, cause such Liquid Investments to be liquidated and apply or cause to be
applied the proceeds thereof to the payment of the Secured Obligations in the
manner specified in Section 9. For this purpose, "Liquid Investments" means
Temporary Cash Investments; provided that (i) each Liquid Investment shall
mature within 30 days after it is acquired by the Agent and (ii) in order to
provide the Agent, for the benefit of the Secured Parties, with a perfected
security interest therein, each Liquid Investment shall be either:
(i) evidenced by negotiable certificates or instruments, or
if non-negotiable then issued in the name of the Agent, which (together
with any appropriate instruments of transfer) are delivered to, and
held by, the Agent or an agent thereof (which shall not be the Company
or any of its Affiliates) in the State of Georgia; or
(ii) in book-entry form and issued by the United States and
subject to pledge under applicable state law and Treasury regulations
and as to which (in the opinion of counsel to the Agent) appropriate
measures shall have been taken for perfection of the Security
Interests.
SECTION 6. GENERAL AUTHORITY.
Each Pledgor hereby irrevocably appoints the Agent its true
and lawful attorney, with full power of substitution, in the name of such
Pledgor, the Secured Parties or otherwise, for the sole use and benefit of the
Secured Parties, but at such Pledgor's expense, to the extent permitted by law
to exercise, at any time and from time to time while an Event of Default has
occurred and is continuing, all or any of the following powers with respect to
all or any of the Collateral:
(i) to demand, ▇▇▇ for, collect, receive and give acquittance
for any and all monies due or to become due thereon or by virtue
thereof,
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(ii) to settle, compromise, compound, prosecute or defend any
action or proceeding with respect thereto,
(iii) to sell, transfer, assign or otherwise deal in or with
the same or the proceeds or avails thereof, as fully and effectually as
if the Agent were the absolute owner thereof, and
(iv) to extend the time of payment of any or all thereof and
to make any allowance and other adjustments with reference thereto;
provided that the Agent shall give such Pledgor not less than ten days' prior
written notice of the time and place of any sale or other intended disposition
of any of the Collateral, except any Collateral which is perishable or threatens
to decline speedily in value or is of a type customarily sold on a recognized
market. Each Pledgor agrees that such notice constitutes "reasonable
notification" within the meaning of Section 9-504(3) of the UCC.
SECTION 7. REMEDIES UPON EVENT OF DEFAULT.
(A) If any Event of Default has occurred and is continuing,
the Agent may exercise on behalf of the Secured Parties all rights of a secured
party under the UCC (whether or not in effect in the jurisdiction where such
rights are exercised) and, in addition, the Agent may, without being required to
give any notice, except as herein or in the Credit Agreement or any other
Financing Document provided or as may be required by mandatory provisions of
law, (i) withdraw all cash and Liquid Investments in the Collateral Accounts and
apply such cash and Liquid Investments and other cash, if any, then held by it
as Collateral as specified in Section 9 and (ii) if there shall be no such cash
or Liquid Investments or if such cash and Liquid Investments shall be
insufficient to pay all the Secured Obligations in full, sell the Collateral or
any part thereof at public or private sale, for cash, upon credit or for future
delivery, and at such price or prices as the Agent may deem satisfactory. The
Agent or any other Secured Party may be the purchaser of any or all of the
Collateral so sold at any public sale (or, if the Collateral is of a type
customarily sold in a recognized market or is of a type which is the subject of
widely distributed standard price quotations, at any private sale). Each Pledgor
will execute and deliver such documents and take such other action as the Agent
deems necessary or advisable in order that any such sale may be made in
compliance with law. Upon any such sale the Agent shall have the right to
deliver, assign and transfer to the purchaser thereof the Collateral so sold.
Each purchaser at any such sale shall hold the Collateral so sold to it
absolutely and free from any claim or right of whatsoever kind, including any
equity or right of redemption of any Pledgor which may be waived, and each
Pledgor, to the extent permitted by law, hereby specifically waives all rights
of redemption, stay or appraisal which it has or may have under any law now
existing or hereafter adopted. The notice (if any) of such sale required by
Section 6 shall (1) in case of a public sale, state the time and place fixed for
such sale, and (2) in the case of a private sale, state the day after which such
sale may be consummated. Any such public sale shall be held at such time or
times within ordinary business hours and at such place or places as the Agent
may fix in the notice of such sale. At any such sale the Collateral may be sold
in one lot as an entirety or in separate parcels, as the Agent may determine.
The Agent shall not be obligated to
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make any such sale pursuant to any such notice. The Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to which the same may be so
adjourned. In case of any sale of all or any part of the Collateral on credit or
for future delivery, the Collateral so sold may be retained by the Agent until
the selling price is paid by the purchaser thereof, but the Agent shall not
incur any liability in case of the failure of such purchaser to take up and pay
for the Collateral so sold and, in case of any such failure, such Collateral may
again be sold upon like notice. The Agent, instead of exercising the power of
sale herein conferred upon it, may proceed by a suit or suits at law or in
equity to foreclose the Security Interests and sell the Collateral, or any
portion thereof, under a judgment or decree of a court or courts of competent
jurisdiction.
(B) For the purpose of enforcing any and all rights and
remedies under this Agreement the Agent may (i) require each Pledgor to, and
each Pledgor agrees that it will, at its expense and upon the request of the
Agent, forthwith assemble all or any part of the Collateral as directed by the
Agent and make it available at a place designated by the Agent which is, in its
opinion, reasonably convenient to the Agent and such Pledgor, whether at the
premises of such Pledgor or otherwise, (ii) to the extent permitted by
applicable law, enter, with or without process of law and without breach of the
peace, any premise where any of the Collateral is or may be located, and without
charge or liability to it seize and remove such Collateral from such premises,
(iii) have access to and use any Pledgor's books and records relating to the
Collateral and (iv) prior to the disposition of the Collateral, store or
transfer it without charge in or by means of any storage or transportation
facility owned or leased by any Pledgor, process, repair or recondition it or
otherwise prepare it for disposition in any manner and to the extent the Agent
deems appropriate and, in connection with such preparation and disposition, use
without charge any trademark, trade name, copyright, patent or technical process
used by any Pledgor.
SECTION 8. LIMITATION ON DUTY OF AGENT IN RESPECT OF COLLATERAL.
Beyond the exercise of reasonable care in the custody thereof,
the Agent shall have no duty as to any Collateral in its possession or control
or in the possession or control of any agent or bailee or any income thereon or
as to the preservation of rights against prior parties or any other rights
pertaining thereto. The Agent shall be deemed to have exercised reasonable care
in the custody of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which it accords its own property, and
shall not be liable or responsible for any loss or damage to any of the
Collateral, or for any diminution in the value thereof, by reason of the act or
omission of any warehouseman, carrier, forwarding agency, consignee or other
agent or bailee selected by the Agent in good faith.
SECTION 9. APPLICATION OF PROCEEDS.
Upon the occurrence and during the continuance of an Event of
Default, the proceeds of any sale of, or other realization upon, all or any part
of the Collateral and any cash held in the Collateral Accounts shall be applied
by the Agent in the following order of priorities:
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first, to payment of the expenses of such sale or other
realization, including reasonable compensation to agents and counsel
for the Agent, and all expenses, liabilities and advances incurred or
made by the Agent in connection therewith, and any other unreimbursed
expenses for which the Agent or any other Secured Party is to be
reimbursed pursuant to Section 8.04 of the Credit Agreement or Section
12 hereof and unpaid fees owing to the Agent under the Credit
Agreement;
second, to the ratable payment of accrued but unpaid interest
on the Secured Obligations in accordance with the provisions of the
Credit Agreement;
third, to the ratable payment of unpaid principal of the
Secured Obligations;
fourth, to the ratable payment of all other Secured
Obligations, until all Secured Obligations shall have been paid in
full; and
finally, to payment to the Pledgors or their successors or
assigns, or as a court of competent jurisdiction may direct, of any
surplus then remaining from such proceeds.
The Agent may make distributions hereunder in cash or in kind or, on a ratable
basis, in any combination thereof.
SECTION 10. CONCERNING THE AGENT.
The provisions of Section 10.05 and Article XI of the Credit
Agreement shall inure to the benefit of the Agent in respect of this Agreement
and shall be binding upon the parties to the Credit Agreement in such respect.
In furtherance and not in derogation of the rights, privileges and immunities of
the Agent therein set forth:
(A) The Agent is authorized to take all such action as is
provided to be taken by it as Agent hereunder and all other action reasonably
incidental thereto. As to any matters not expressly provided for herein
(including the timing and methods of realization upon the Collateral), the Agent
shall act or refrain from acting in accordance with written instructions from
the Required Lenders or, in the absence of such instructions, in accordance with
its discretion.
(B) The Agent shall not be responsible for the existence,
genuineness or value of any of the Collateral or for the validity, perfection,
priority or enforceability of the Security Interests in any of the Collateral,
whether impaired by operation of law or by reason of any action or omission to
act on its part hereunder. The Agent shall have no duty to ascertain or inquire
as to the performance or observance of any of the terms of this Agreement by the
Pledgor.
SECTION 11. APPOINTMENT OF CO-AGENTS.
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At any time or times, in order to comply with any legal
requirement in any jurisdiction, the Agent may appoint another bank or trust
company or one or more other persons, either to act as co-agent or co-agents,
jointly with the Agent, or to act as separate agent or agents on behalf of the
Secured Parties with such power and authority as may be necessary for the
effectual operation of the provisions hereof and may be specified in the
instrument of appointment (which may, in the discretion of the Agent, include
provisions for the protection of such co-agent or separate agent similar to the
provisions of Section 10).
SECTION 12. EXPENSES.
In the event that any Credit Party shall fail to comply with
the provisions of the Credit Agreement or this Agreement, such that the value of
any Collateral or the validity, perfection, rank or value of any Security
Interest is thereby diminished or potentially diminished or put at risk, the
Agent if requested by the Required Lenders may, but shall not be required to,
effect such compliance on behalf of the Credit Parties, and the Pledgors shall
reimburse the Agent for the costs thereof on demand. All insurance expenses and
all expenses of protecting, storing, warehousing, appraising, insuring,
handling, maintaining, and shipping the Collateral, any and all excise,
property, sales, and use taxes imposed by any state, federal, or local authority
on any of the Collateral, or in respect of periodic appraisals and inspections
of the Collateral to the extent the same may be requested by the Required
Lenders from time to time as provided in the Credit Agreement, or in respect of
the sale or other disposition thereof shall be borne and paid by the Pledgors;
and if any Pledgor fails to promptly pay any portion thereof when due, the Agent
or any other Secured Party may, at its option, but shall not be required to, pay
the same, and such Pledgor agrees to reimburse the Agent or such other Secured
Party therefor on demand. All sums so paid or incurred by the Agent or any other
Secured Party for any of the foregoing and any and all other sums for which the
Pledgors may become liable hereunder and all costs and expenses (including
reasonable attorney's fees, legal expenses and court costs) reasonably incurred
by the Agent or any other Secured Party in enforcing or protecting the Security
Interests or any of their rights or remedies under this Agreement, shall,
together with interest thereon until paid as provided in Section 10.03 of the
Credit Agreement, be additional Secured Obligations hereunder.
SECTION 13. TERMINATION OF SECURITY INTERESTS; RELEASE OF COLLATERAL.
Upon the repayment in full of all Secured Obligations (other
than contingent indemnity or similar claims not yet asserted) and the
termination of the Commitment under the Credit Agreement, the Security Interests
shall terminate and all rights to the Collateral shall revert to the Pledgors.
At any time and from time to time prior to such termination of the Security
Interests, the Agent may release any of the Collateral with the prior written
consent of the Required Lenders. Upon any such termination of the Security
Interests or release of Collateral, the Agent will, at the expense of the
Pledgors, execute and deliver to the Pledgors such documents as the Pledgors
shall reasonably request to evidence the termination of the Security Interests
or the release of such Collateral, as the case may be.
SECTION 14. OBLIGATIONS UNCONDITIONAL; DISCHARGE OF OBLIGATIONS, ETC.
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(a) The Security Interests and the obligations of each Pledgor
hereunder shall not be released, discharged or otherwise affected by:
(i) any extension, renewal, settlement, compromise, waiver
or release in respect of any obligation of the Company or any other
Person under any Financing Document, by operation of law or otherwise;
(ii) any modification or amendment of or supplement to any
Financing Document;
(iii) any release, non-perfection or invalidity of any direct
or indirect security for any obligation of the Company or any other
Person under any Financing Document;
(iv) any change in the corporate existence, structure or
ownership of the Company or any insolvency, bankruptcy, reorganization
or other similar proceeding affecting the Company or any other Person
or any of their respective assets or any resulting release or discharge
of any obligation of the Company or any other Person contained in any
Financing Document;
(v) the existence of any claim, set-off or other rights
which such Pledgor may have at any time against the Agent, any Lender
or any other Person, whether in connection herewith or any unrelated
transactions, provided that nothing herein shall prevent the assertion
of any such claim by separate suit or compulsory counterclaim;
(vi) any invalidity or unenforceability relating to or
against the Company or any other Person for any reason of any Financing
Document, or any provision of applicable law or regulation purporting
to prohibit the payment by the Company of the principal of or interest
on any Note or any other amount payable by the Company or any other
Person under any Financing Document; or
(vii) any other act or omission to act or delay of any kind by
the Agent, any Lender or any other Person or any other circumstance
whatsoever which might, but for the provisions of this paragraph,
constitute a legal or equitable discharge of the obligations of a
surety.
(b) Each Pledgor irrevocably waives acceptance hereof,
presentment, demand, protest and any notice not provided for herein, as well as
any requirement that at any time any action be taken by any corporation or
Person against the Company or any other corporation or Person.
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(c) Each Pledgor hereby waives any right or claim of
exoneration, reimbursement, subrogation, contribution or indemnity and any other
similar right or claim arising out of this Agreement.
(d) If acceleration of the time for payment of any amount
payable by the Company under the Credit Agreement or any Note is stayed upon the
insolvency, bankruptcy or reorganization of the Company, the Security Interests
and the obligations of each Pledgor hereunder may nonetheless be enforced as
fully as if such acceleration were effective.
SECTION 15. NOTICES.
All notices, communications and distributions hereunder to the
Agent shall be given in accordance with Section 12.03 of the Credit Agreement.
All notices, communications and distributions hereunder to any Pledgor shall be
given in accordance with Section 12.03 of the Credit Agreement and sent to the
address of the Borrower set forth on the signature page of the Credit Agreement.
SECTION 16. WAIVERS, NON-EXCLUSIVE REMEDIES.
No failure on the part of the Agent to exercise, and no delay
in exercising and no course of dealing with respect to, any right under this
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise by the Agent or any Secured Party of any right under the Credit
Agreement, any of the other Financing Documents or this Agreement preclude any
other or further exercise thereof or the exercise of any other right. The rights
in this Agreement, the Credit Agreement and the other Financing Documents are
cumulative and are not exclusive of any other remedies provided by law.
SECTION 17. SUCCESSORS AND ASSIGNS.
This Agreement is for the benefit of the Agent and the Secured
Parties and their successors and assigns, and in the event of an assignment of
all or any of the Secured Obligations, the rights hereunder, to the extent
applicable to the indebtedness so assigned, may be transferred with such
indebtedness. This Agreement shall be binding on the Pledgor and their
respective successors and assigns.
SECTION 18. CHANGES IN WRITING.
Neither this Agreement nor any provision hereof may be
changed, waived, discharged or terminated orally, but only in writing signed by
the Pledgors and the Agent with the consent of the Required Lenders.
SECTION 19. GEORGIA LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF GEORGIA (WITHOUT
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REFERENCE TO PRINCIPLES OR CONFLICTS OF LAW), EXCEPT AS OTHERWISE REQUIRED BY
MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT REMEDIES PROVIDED BY
THE LAWS OF ANY JURISDICTION OTHER THAN GEORGIA ARE GOVERNED BY THE LAWS OF SUCH
JURISDICTION.
SECTION 20. SEVERABILITY.
If any provision hereof is invalid or unenforceable in any
jurisdiction, then, to the fullest extent permitted by law, (i) the other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be liberally construed in favor of the Agent and the other Secured Parties
in order to carry out the intentions of the parties hereto as nearly as may be
possible; and (ii) the invalidity or unenforceability of any provision hereof in
any jurisdiction shall not affect the validity or enforceability of such
provision in any other jurisdiction.
SECTION 21. COUNTERPARTS.
This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective authorized
officers as of the day and year first above written.
PLEDGORS:
STRATO/INFUSAID, INC.
By:
--------------------------------
Title:
-----------------------------
AGENT:
NATIONSCREDIT COMMERCIAL
CORPORATION, as Agent
By:
--------------------------------
Title:
-----------------------------
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EXHIBIT A
PLEDGORS
Strato/Infusaid, Inc.
Notice Address for Pledgors:
c/o Horizon Medical Products, Inc.
Seven North Parkway Square
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
188
EXHIBIT B
LIST OF ACCOUNTS
ACCOUNT BANK
189
EXHIBIT C
PERFECTION CERTIFICATE
The undersigned, chief executive officer or chief legal
officer, of ______________________, a _________ corporation (the "Pledgor"),
hereby certifies with reference to the Subsidiary Security Agreement dated as of
July ___, 1997 between the Pledgors and NationsCredit Commercial Corporation, as
Agent (terms defined therein being used herein as therein defined), to the Agent
and each Lender as follows:
1. Names. (a) The exact corporate name of the Pledgor as it
appears in its certificate of incorporation is as follows:
[Name of Pledgor]
(b) Set forth below is each other corporate name the Pledgor
has had since its organization, together with the date of the relevant change:
(c) The Pledgor has not changed its identity or form of
organization in any way within the past five years.
(d) The following is a list of all other names (including
trade names or similar appellations) used by the Pledgor or any of its divisions
or other business units at any time during the past five years:
[Names of Pledgor]
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2. Current Locations. (a) The chief executive office of the
Pledgor is located at the following address:
Mailing Address County State
--------------- ------ -----
(b) The following are all the locations where the Pledgor
maintains any books or records relating to any Accounts:
Mailing Address County State
--------------- ------ -----
(c) The following are all the places of business of the
Pledgor not identified above:
Name Mailing Address County State
---- --------------- ------ -----
(d) The following are all the locations where the Pledgor
maintains any Inventory not identified above:
Name Mailing Address County State
---- --------------- ------ -----
(e) The following are the names and addresses of all Persons
other than the Pledgor which have possession of any of the Pledgor's Inventory:
Name Mailing Address County State
---- --------------- ------ -----
3. Prior Locations. (a) Set forth below is the information
required by subparagraphs (a), (b) and (c) of paragraph 2 with respect to each
location or place of business maintained by the Pledgor at any time during the
past five years:
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(b) Set forth below is the information required by
subparagraphs (d) and (e) of paragraph 2 with respect to each location or bailee
where or with whom Inventory has been lodged at any time during the past four
months:
4. Unusual Transactions. All Accounts have been originated by
the Pledgor and all Inventory and Equipment has been acquired by the Pledgor in
the ordinary course of its business.
5. File Search Reports. Attached hereto as Schedule 5(A) is a
true copy of a file search report from the Uniform Commercial Code filing
officer in each jurisdiction identified in paragraph 2 or 3 above with respect
to each name set forth in paragraph 1 above. Attached hereto as Schedule 5(B) is
a true copy of each financing statement or other filing identified in such file
search reports.
6. UCC Filings. Duly signed financing statements on Form UCC-1
attached as Schedule 6 hereto have been duly filed in the Uniform Commercial
Code filing office in each jurisdiction identified in paragraph 2 hereof and
each such filing has been duly acknowledged by the filing officer.
7. Schedule of Filings. Attached hereto as Schedule 7 is a
schedule setting forth filing information with respect to the filings described
in paragraph 6 above.
8. Filing Fees. All filing fees and taxes payable in
connection with the filings described in paragraph 6 above have been paid.
9. Patents, Trademarks, Copyrights. All patents, trademarks
and copyrights owned by the Pledgor as of the date hereof and all patent
licenses, trademark licenses and copyright licenses to which the Pledgor is a
party as of the date hereof are listed on Schedule 9 hereto.
IN WITNESS WHEREOF, we have hereunto set our hands this ____
day of July, 1997.
--------------------------------------
Title:
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SCHEDULE 6
TO PERFECTION CERTIFICATE
Description of Collateral
All accounts, chattel paper, contract rights, general
intangibles, inventory, equipment and documents, and all other property of the
Pledgor all as more particularly described on Exhibit A attached hereto, now
owned or hereafter acquired, wherever located, and all proceeds thereof.
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SCHEDULE 7
TO PERFECTION CERTIFICATE
SCHEDULE OF FILINGS
Date
Pledgor Filing Officer File Number of Filing
--------------------------------------------------------------------------------------
-------------------------
* Indicate lapse date, if other than fifth anniversary.
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EXHIBIT D
OPINION OF
COUNSEL FOR THE PLEDGOR
* * * *
1. The Security Agreement creates a valid security interest,
for the benefit of the Secured Parties, in all the Pledgor's right, title and
interest in all Collateral to the extent the UCC is applicable thereto (the
"Security Interest").
2. UCC financing statements and amendments thereto
(collectively, the "Financing Statements") have been filed in the filing offices
listed in Schedule 7 to the Perfection Certificate (the "Filing Jurisdictions"),
which are all of the offices in which filings are required to perfect the
Security Interest, to the extent the Security Interest may be perfected by
filing under the UCC, and no further filing or recording of any document or
instrument or other action will be required so to perfect the Security Interest
in the Collateral in which a security interest may be perfected by filing a
financing statement under the UCC, except that (i) continuation statements with
respect to each Financing Statement must be filed in accordance with the UCC;
(ii) additional filings may be necessary if the Pledgor changes its name,
identity or corporate structure or the jurisdiction in which its places of
business, its chief executive office or the Collateral are located; and (iii) we
express no opinion on the perfection of, or need for further filing or recording
to perfect, the Security Interest in goods now or hereafter located in any
jurisdiction other than the Filing Jurisdictions.
3. There are
(i) based on [describe search reports], as of the date of
such reports, no UCC financing statements which name the Pledgor as
Pledgor or seller and cover any of the Collateral, other than the
Financing Statements, [and the financing statements with respect to
Permitted Liens annexed as Schedule 5(A) to the Perfection
Certificate], listed in the available records in the UCC filing offices
set forth in paragraphs 2 and 3 of the Perfection Certificate, which,
based on the information provided to us as to the location of the
Collateral, the Company and its banks and records, include all of the
offices prescribed under the UCC as the offices in which filings should
have been made to perfect security interests in the Collateral; and
(ii) based on [describe search reports], as of the date of
such reports, no notices of the filing of any federal tax lien (filed
pursuant to Section 6323 of the Internal Revenue Code) or any lien of
the Pension Benefit Guaranty Corporation (filed pursuant to Section
4068 of ERISA) covering any of the Collateral listed in the available
records in the [UCC filing office in state of Pledgor's chief executive
office], which is the only office having files which must be searched
in order to fully determine the existence of notices of the filing of
federal tax liens (filed pursuant to Section 6323 of the Internal
195
Revenue Code) on the Collateral and liens of the Pension Benefit
Guaranty Corporation (filed pursuant to Section 4068 of ERISA) on the
Collateral.
4. The Security Interest validly secures the guaranty by the
Pledgor of the payment of all future Loans made by the Lenders to the Company,
whether or not at the time such Loans are made an Event of Default or other
event not within the control of the Lenders has relieved or may relieve the
Lenders from their obligations to make such Loans, and is perfected to the
extent set forth in paragraph 2 above with respect to such future Loans. Insofar
as the priority thereof is governed by the UCC, the Security Interest has the
same priority with respect to such future Loans as it does with respect to Loans
made on the date hereof.
Such opinion may contain such assumptions, qualifications and
limitations as the opinions of counsel for the Company delivered in connection
with the making of the initial Loan under the Credit Agreement.
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EXHIBIT E
FORM OF LOCKBOX AGREEMENT
197
EXHIBIT J
SHAREHOLDER PLEDGE AGREEMENT
AGREEMENT dated as of December [_____], 1997, between the
undersigned Pledgor (the "PLEDGOR") and NATIONSCREDIT COMMERCIAL CORPORATION, as
agent for the Lenders referred to below (the "AGENT").
W I T N E S S E T H:
WHEREAS, the Pledgor is the owner of the outstanding shares of
capital stock of Vista Hospice Care, Inc., a [__________] corporation (the
"COMPANY"), described on Schedule I attached hereto; and
WHEREAS, the Company, certain Lenders (the "LENDERS") and the
Agent are parties to a Credit Agreement of even date herewith (as the same may
be amended from time to time, the "CREDIT AGREEMENT"); and
WHEREAS, in order to induce the Lenders and the Agent to enter
into the Credit Agreement, the Pledgor has agreed to grant a continuing security
interest in and to the Collateral (as hereafter defined) to secure obligations
of the Company under the Credit Agreement and the Notes (as defined in the
Credit Agreement) issued pursuant thereto and the other Financing Documents;
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS.
Terms defined in the Credit Agreement and not otherwise
defined herein have, as used herein, the respective meanings provided for
therein. The following additional terms, as used herein, have the following
respective meanings:
"COLLATERAL" has the meaning assigned to such term in Section
3(A).
"COMPANY SHARES" means the issued and outstanding shares of
capital stock of the Company that the Pledgor may now or hereafter own, control
or hold, which stock as of this date is described on Schedule I attached hereto.
"PLEDGED SECURITIES" means the Pledged Stock.
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"PLEDGED STOCK" means the Company Shares and any other capital
stock required to be pledged to the Agent pursuant to Section 3(B).
"SECURED OBLIGATIONS" means the obligations secured under this
Shareholder Pledge Agreement including (a) all principal of and interest
(including any interest which accrues after the commencement of any case,
proceeding or other action relating to the bankruptcy, insolvency or
reorganization of the Company, whether or not allowed or allowable as a claim in
any such proceeding) on any Loan under, or any Note issued pursuant to, the
Credit Agreement, (b) all other amounts payable by the Company under any
Financing Document, (c) all other Obligations, and (d) any amendments,
restatements, renewals, extensions or modifications of any of the foregoing.
"SECURED PARTIES" means the Lenders and the Agent.
"SECURITY INTERESTS" means the security interests in the
Collateral granted hereunder securing the Secured Obligations.
"UCC" has the meaning given such term in the Security
Agreements.
Unless otherwise defined herein, or unless the context
otherwise requires, all terms used herein which are defined in the Georgia UCC
as in effect on the date hereof shall have the meanings therein stated.
SECTION 2. REPRESENTATIONS AND WARRANTIES.
The Pledgor represents and warrants as follows:
(A) Title to Pledged Securities. The Pledgor owns all of the
Pledged Securities, free and clear of any Liens other than the Security
Interests. All of the Pledged Stock has been duly authorized and validly issued,
and is fully paid and non-assessable, and is subject to no options to purchase
or similar rights of any Person. The Pledgor is not and will not become a party
to or otherwise bound by any agreement, other than this Shareholder Pledge
Agreement, which restricts in any manner the rights of any present or future
holder of any of the Pledged Securities with respect thereto.
(B) Validity, Perfection and Priority of Security Interests.
Upon the delivery of certificates representing the Pledged Stock to the Agent in
accordance with Section 4 hereof, the Agent will have valid and perfected
security interests in the Collateral subject to no prior Lien. No registration,
recordation or filing with any governmental body, agency or official is required
in connection with the execution or delivery of this Shareholder Pledge
Agreement or necessary for the validity or enforceability hereof or for the
perfection or enforcement of the Security Interests. Neither the Pledgor nor the
Company has performed or will perform any acts which might prevent the Agent
from enforcing any of the terms and conditions of this Shareholder Pledge
Agreement or which would limit the Agent in any such enforcement.
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(C) UCC Filing Locations. The chief executive office of (or,
if an individual, the residence address of) the Pledgor is located at its
address set forth on the signature page hereof. Under the Uniform Commercial
Code as in effect in the state in which such office is located, no local filing
is required to perfect a security interest in collateral consisting of general
intangibles.
SECTION 3. THE SECURITY INTERESTS.
In order to secure the full and punctual payment and
performance of the Secured Obligations in accordance with the terms thereof, and
to secure the performance of all the obligations of the Pledgor hereunder:
(A) The Pledgor hereby assigns and pledges to and with the
Agent for the benefit of the Secured Parties and grants to the Agent for the
benefit of the Secured Parties a security interest in the Pledged Securities,
and all of its rights and privileges with respect to the Pledged Securities, and
all income and profits thereon, and all interest, dividends and other payments
and distributions with respect thereto, and all proceeds of the foregoing (the
"COLLATERAL"). Contemporaneously with the execution and delivery hereof, the
Pledgor is delivering the certificates representing the Company Shares in pledge
hereunder.
(B) In the event that the Company at any time issues any
additional or substitute shares of capital stock of any class or owes any other
Debt to the Pledgor, the Pledgor will immediately pledge and deposit with the
Agent certificates representing all such shares or an instrument evidencing such
other Debt as additional security for the Secured Obligations. All such shares
and instruments constitute Pledged Securities and are subject to all provisions
of this Shareholder Pledge Agreement.
(C) The Security Interests are granted as security only and
shall not subject any Secured Party to, or transfer or in any way affect or
modify, any obligation or liability of the Pledgor or the Company with respect
to any of the Collateral or any transaction in connection therewith.
SECTION 4. DELIVERY OF PLEDGED SECURITIES.
All certificates representing Pledged Stock delivered to the
Agent by the Pledgor pursuant hereto shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, and accompanied by any required transfer tax stamps, all in
form and substance satisfactory to the Agent.
SECTION 5. FILING; FURTHER ASSURANCES.
(A) The Pledgor agrees that it will, at its expense and in
such manner and form as the Agent may require, execute, deliver, file and record
any financing statement, specific assignment or other paper and take any other
action that may be necessary or desirable, or that the Agent may request, in
order to create, preserve, perfect or validate any Security Interest or to
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enable the Agent to exercise and enforce its rights hereunder with respect to
any of the Collateral. To the extent permitted by applicable law, the Pledgor
hereby authorizes the Agent to execute and file, in the name of the Pledgor or
otherwise, UCC financing statements (which may be carbon, photographic,
photostatic or other reproductions of this Shareholder Pledge Agreement or of a
financing statement relating to this Shareholder Pledge Agreement) which the
Agent in its sole discretion may deem necessary or appropriate to further
perfect the Security Interests.
(B) The Pledgor agrees that it will not change (i) its name,
identity or form of organization in any manner or (ii) the location of its chief
executive office (or if an individual, its residence) unless it shall have given
the Agent not less than 30 days' prior notice thereof.
SECTION 6. RECORD OWNERSHIP OF PLEDGED STOCK.
The Agent may at any time or from time to time, upon the
occurrence and during the continuance of an Event of Default, in its sole
discretion, cause any or all of the Pledged Stock to be transferred of record
into the name of the Agent or its nominee. The Pledgor will promptly give to the
Agent copies of any notices or other communications received by it with respect
to Pledged Stock registered in the name of the Pledgor and the Agent will
promptly give to the Pledgor copies of any notices and communications received
by the Agent with respect to Pledged Stock registered in the name of the Agent
or its nominee.
SECTION 7. RIGHT TO RECEIVE DISTRIBUTIONS ON COLLATERAL.
Upon the occurrence and during the continuance of any Event of
Default, the Agent shall have the right to receive to retain as Collateral
hereunder all dividends, interest and other payments and distributions made upon
or with respect to the Collateral and the Pledgor shall take all such action as
the Agent may deem necessary or appropriate to give effect to such right. Upon
the occurrence and during the continuance of any Event of Default, all such
dividends, interest and other payments and distributions which are received by
the Pledgor shall be received in trust as Collateral for the benefit of the
Agent and the Secured Parties and, if the Agent so directs, shall be segregated
from other funds of the Pledgor and shall, forthwith upon demand by the Agent
during the continuance of an Event of Default, be paid over to the Agent as
Collateral in the same form as received (with any necessary endorsement). After
all Events of Default that shall have occurred have been cured, the Agent's
right to retain dividends, interest and other payments and distributions under
this Section 7 shall cease and the Agent shall pay over to the Pledgor any such
Collateral retained by the Agent during the continuance of an Event of Default.
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SECTION 8. RIGHT TO VOTE PLEDGED STOCK.
Unless an Event of Default shall have occurred and be
continuing, the Pledgor shall have the right, from time to time, to vote and to
give consents, ratifications and waivers with respect to the Pledged Stock, and
the Agent shall, upon receiving a written request from the Pledgor accompanied
by a certificate signed by its principal financial officer stating that no Event
of Default has occurred and is continuing, deliver to the Pledgor or as
specified in such request such proxies, powers of attorney, consents,
ratifications and waivers in respect of any of the Pledged Stock which is
registered in the name of the Agent or its nominee as shall be specified in such
request and be in form and substance satisfactory to the Agent.
If an Event of Default shall have occurred and be continuing,
the Agent shall have the right to the extent permitted by law and the Pledgor
shall take all such action as may be necessary or appropriate to give effect to
such right, to vote and to give consents, ratifications and waivers, and take
any other action with respect to any or all of the Pledged Stock with the same
force and effect as if the Agent were the absolute and sole owner thereof.
SECTION 9. GENERAL AUTHORITY.
The Pledgor hereby irrevocably appoints the Agent its true and
lawful attorney, with full power of substitution, in the name of the Pledgor,
the Agent, the Secured Parties or otherwise, for the sole use and benefit of the
Agent and Secured Parties, but at the expense of the Pledgor, to the extent
permitted by law to exercise, at any time and from time to time while an Event
of Default has occurred and is continuing, all or any of the following powers
with respect to all or any of the Collateral:
(i) to demand, ▇▇▇ for, collect, receive and give
acquittance for any and all monies due or to become due upon or by
virtue thereof,
(ii) settle, compromise, compound, prosecute or defend any
action or proceeding with respect thereto,
(iii) to sell, transfer, assign or otherwise deal in or with
the same or the proceeds or avails thereof, as fully and effectually as
if the Agent were the absolute owner thereof, and
(iv) to extend the time of payment of any or all thereof and
to make any allowance and other adjustments with reference thereto;
provided that the Agent shall give the Pledgor not less than ten days' prior
written notice of the time and place of any sale or other intended disposition
of any of the Collateral except any Collateral which is perishable or threatens
to decline speedily in value or is of a type customarily sold on a recognized
market. The Agent and the Pledgor agree that such notice constitutes "reasonable
notification" within the meaning of Section 9-504(3) of the UCC.
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SECTION 10. REMEDIES UPON EVENT OF DEFAULT.
If any Event of Default shall have occurred and be continuing,
the Agent may exercise on behalf of the Secured Parties all the rights of a
secured party under the UCC (whether or not in effect in the jurisdiction where
such rights are exercised) and, in addition, the Agent may, without being
required to give any notice, except as herein provided or as may be required by
mandatory provisions of law, (i) apply the cash, if any, then held by it as
Collateral as specified in Section 13 and (ii) if there shall be no such cash or
if such cash shall be insufficient to pay all the Secured Obligations in full,
sell the Collateral or any part thereof at public or private sale or at any
broker's board or on any securities exchange, for cash, upon credit or for
future delivery, and at such price or prices as the Agent may deem satisfactory.
Any Secured Party may be the purchaser of any or all of the Collateral so sold
at any public sale (or, if the Collateral is of a type customarily sold in a
recognized market or is of a type which is the subject of widely distributed
standard price quotations, at any private sale). The Agent is authorized, in
connection with any such sale, if it deems it advisable so to do, (i) to
restrict the prospective bidders on or purchasers of any of the Pledged
Securities to a limited number of sophisticated investors who will represent and
agree that they are purchasing for their own account for investment and not with
a view to the distribution or sale of any of such Pledged Securities, (ii) to
cause to be placed on certificates for any or all of the Pledged Securities or
on any other securities pledged hereunder a legend to the effect that such
security has not been registered under the Securities Act of 1933 and may not be
disposed of in violation of the provision of said Act, and (iii) to impose such
other limitations or conditions in connection with any such sale as the Agent
deems necessary or advisable in order to comply with said Act or any other law.
The Pledgor covenants and agrees that it will execute and deliver such documents
and take such other action as the Agent deems necessary or advisable in order
that any such sale may be made in compliance with law. Upon any such sale the
Agent shall have the right to deliver, assign and transfer to the purchaser
thereof the Collateral so sold. Each purchaser at any such sale shall hold the
Collateral so sold absolutely and free from any claim or right of whatsoever
kind, including any equity or right of redemption of the Pledgor which may be
waived, and the Pledgor, to the extent permitted by law, hereby specifically
waives all rights of redemption, stay or appraisal which it has or may have
under any law now existing or hereafter adopted. The notice (if any) of such
sale required by Section 9 shall (1) in case of a public sale, state the time
and place fixed for such sale, (2) in case of sale at a broker's board or on a
securities exchange, state the board or exchange at which such sale is to be
made and the day on which the Collateral, or the portion thereof so being sold,
will first be offered for sale at such board or exchange, and (3) in the case of
a private sale, state the day after which such sale may be consummated. Any such
public sale shall be held at such time or times within ordinary business hours
and at such place or places as the Agent may fix in the notice of such sale. At
any such sale the Collateral may be sold in one lot as an entirety or in
separate parcels, as the Agent may determine. The Agent shall not be obligated
to make any such sale pursuant to any such notice. The Agent may, without notice
or publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to which the same may be so
adjourned. In case of any sale of all or any part of the Collateral on credit or
for future delivery, the Collateral so sold may be retained by the Agent until
the selling price is paid by the purchaser thereof, but the Agent
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shall not incur any liability in case of the failure of such purchaser to take
up and pay for the Collateral so sold and, in case of any such failure, such
Collateral may again be sold upon like notice. The Agent, instead of exercising
the power of sale herein conferred upon it, may proceed by a suit or suits at
law or in equity to foreclose the Security Interests and sell the Collateral, or
any portion thereof, under a judgment or decree of a court or courts of
competent jurisdiction.
SECTION 11. EXPENSES.
The Pledgor agrees that it will forthwith upon demand pay to
the Agent:
(i) the amount of any taxes which the Agent may have been
required to pay by reason of the Security Interests or to free any of
the Collateral from any Lien thereon, and
(ii) the amount of any and all out-of-pocket expenses,
including the reasonable fees and disbursements of counsel and of any
other experts, which the Agent may incur in connection with (w) the
administration or enforcement of this Shareholder Pledge Agreement,
including such expenses as are incurred to preserve the value of the
Collateral and the validity, perfection, rank and value of any Security
Interest, (x) the collection, sale or other disposition of any of the
Collateral, (y) the exercise by the Agent of any of the rights
conferred upon it hereunder or (z) any Default or Event of Default.
Any such amount not paid on demand shall bear interest as provided in Section
8.03 of the Credit Agreement.
SECTION 12. LIMITATION ON DUTY OF AGENT IN RESPECT OF COLLATERAL.
Beyond the exercise of reasonable care in the custody thereof,
the Agent shall have no duty as to any Collateral in its possession or control
or in the possession or control of any agent or bailee or any income thereon or
as to the preservation of rights against prior parties or any other rights
pertaining thereto. The Agent shall be deemed to have exercised reasonable care
in the custody and preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that which it accords
its own property, and shall not be liable or responsible for any loss or damage
to any of the Collateral, or for any diminution in the value thereof, by reason
of the act or omission of any agent or bailee selected by the Agent in good
faith.
SECTION 13. APPLICATION OF PROCEEDS.
Upon the occurrence and during the continuance of an Event of
Default, the proceeds of any sale of, or other realization upon, all or any part
of the Collateral and any cash held shall be applied by the Agent in the
following order of priorities:
first, to payment of the expenses of such sale or other
realization, including reasonable compensation to agents and counsel
for the Agent, and all expenses, liabilities
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and advances incurred or made by the Agent in connection therewith, and
any other unreimbursed expenses for which the Agent or any Secured
Party is to be reimbursed pursuant to Section 8.04 of the Credit
Agreement or Section 11 hereof and unpaid fees owing to the Agent under
the Credit Agreement;
second, to the ratable payment of accrued but unpaid interest
on the Secured Obligations in accordance with the provisions of the
Credit Agreement;
third, to the ratable payment of unpaid principal of the
Secured Obligations;
fourth, to the ratable payment of all other Secured
Obligations, until all Secured Obligations shall have been paid in
full; and
finally, to payment to the Pledgor or its successors or
assigns, or as a court of competent jurisdiction may direct, of any
surplus then remaining from such proceeds.
SECTION 14. PLEDGOR'S OBLIGATIONS ABSOLUTE, ETC.
(a) The obligations of the Pledgor under this Shareholder
Pledge Agreement shall be absolute and unconditional in accordance with its
terms and shall remain in full force and effect without regard to, and shall not
be released, suspended, discharged, terminated or otherwise affected by, any
circumstance or occurrence whatsoever, including, without limitation any of the
following (whether or not the Pledgor consents thereto or has notice thereof):
(i) any change in the time, place or manner of payment of, or in any other term
of, all or any of the Secured Obligations, any waiver, indulgence, renewal,
extension, amendment or modification of or addition, consent or supplement to or
deletion from or any other action or inaction under or in respect of any of the
Secured Obligations or any documents, instruments or agreements relating to the
Secured Obligations or any assignment or transfer of any thereof, (ii) any lack
of validity or enforceability of any of the Secured Obligations or any
documents, instruments or agreements relating to any of the Secured Obligations
or any assignment or transfer of any thereof, (iii) any furnishing of any
additional security to any Secured Party for any of the Secured Obligations, or
its assignees, or any acceptance thereof or any release of any other security
for any of the Secured Obligations by any Secured Party, (iv) any bankruptcy,
insolvency, reorganization, composition, adjustment, dissolution, liquidation or
other like proceeding relating to the Pledgor or the Company, or any action
taken with respect to this Shareholder Pledge Agreement by any trustee or
receiver, or by any court, in any such proceeding, whether or not the Pledgor
shall have notice or knowledge of any of the foregoing, (v) any exchange,
release or nonperfection of any collateral, or any release, or amendment or
waiver of or consent to departure from any guaranty or security, for all or any
of the Secured Obligations, (vi) the failure of any Secured Party to assert any
claim or demand or to enforce any right or remedy in respect of any of the
Secured Obligations against the Company or any other Credit Party under the
provisions of the Financing Documents or otherwise, or (vii) any other act or
failure to act by any Secured Party which may adversely affect the Pledgor.
(b) Pledgor hereby waives: (i) notice of acceptance of this
Shareholder Pledge Agreement by the Agent, (ii) notice of the creation,
existence, acquisition, extension or renewal of
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any of the Secured Obligations, (iii) notice of the amount of the Secured
Obligations outstanding at any one time, (iv) notice of any default or event of
default with respect to any of the Secured Obligations or notice of any other
adverse change in the Company's financial condition or means or ability to pay
any of the Secured Obligations or perform its obligations or notice of any other
fact which might increase the Pledgor's risk hereunder, (v) notice of
presentment, demand, protest and notice of dishonor or non-payment as to any of
the Secured Obligations, (vi) notice of any acceleration or other demand for
payment of any of the Secured Obligations, and (vii) all other notices and
demands to which the Pledgor might otherwise be entitled with respect to any of
the Secured Obligations. The Pledgor further waives any right the Pledgor may
have, by statute or otherwise, to require that the Secured Parties (or any of
them) seek recourse first against the Company or any other Credit Party or
obligor, or to realize upon any collateral for any of the Secured Obligations
other than the Collateral pledged hereunder, as a condition precedent to
enforcing the Agent's rights and remedies under this Agreement in the
Collateral, and the Pledgor further waives any defense arising by reason of any
incapacity or other disability of the Company or by reason of any other defense
which the Company may have against the Secured Parties (or any of them) on any
of the Secured Obligations. The Pledgor further consents and agrees that,
without notice to or consent by the Pledgor and without affecting or impairing
this Shareholder Pledge Agreement and the lien, security interest and security
title granted hereunder, the Secured Parties may compromise or settle, extend
the period of duration or the time for the payment, discharge or performance of
any of the Secured Obligations or may refuse to enforce or may release the
Company or any of the Credit Parties or any other obligor or any other
collateral therefor, or may grant other indulgences to the Company or any of the
Credit Parties or any other obligor in respect thereof, or may waive, amend or
supplement in any manner the provisions of any document, instrument, guaranty,
or agreement relating to or securing any of the Secured Obligations (other than
this Shareholder Pledge Agreement) or may release, surrender, exchange, modify
or compromise any and all collateral securing any of the Secured Obligations
(other than the Collateral) or in which any of the Secured Parties may at any
time have a lien, or may refuse to enforce its rights or may make any compromise
or settlement or agreement therefor, in respect of any or all of such
collateral.
SECTION 15. EXCULPATION.
Notwithstanding anything in this Shareholder Pledge Agreement
to the contrary, the Pledgor shall have no personal liability to the Agent or
the Lenders under this Shareholder Pledge Agreement for the Secured Obligations
or any of the Pledgor's respective covenants, obligations or other liabilities
under this Shareholder Pledge Agreement beyond the rights, titles and interests
of the Pledgor in the Collateral covered by this Shareholder Pledge Agreement
and the Agent and the Lenders shall not ▇▇▇ or otherwise proceed against the
Pledgor to collect any deficiency which may remain owing on the Secured
Obligations or any of such other covenants, obligations or liabilities after the
exercise by the Agent of its rights and remedies hereunder with respect to the
Collateral. The foregoing provisions concern only the personal liability of the
Pledgor under this Shareholder Pledge Agreement and do not in any manner, and
shall not be interpreted or construed to, diminish, affect, impede, impair or
otherwise modify in any manner whatsoever the rights, titles and interests of
the Agent or any Lender in and to the Collateral under this Shareholder Pledge
Agreement, or the pursuit or exercise by the Agent or any Lender of its
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rights and remedies with respect to the Collateral under this Shareholder Pledge
Agreement, the priority and enforceability of the Agent's rights, titles and
interests in and to the Collateral under this Agreement, or any other rights or
remedies which the Agent or any Lender may have against the Company or any other
Credit Party or any other obligor, or any other rights or remedies the the Agent
or the Lenders may have against the Company or any other Credit Party under the
Credit Agreement or the other Financing Documents.
SECTION 16. WAIVER OF CERTAIN RIGHTS.
The Pledgor expressly postpones, and temporarily waives any
right to exercise, any and all rights of subrogation, reimbursement, indemnity,
exoneration or contribution or any other claim which the Pledgor may now or
hereafter have against the Company or against any property of the Company
arising from the existence or enforcement of the Agent's rights and remedies or
the Pledgor's obligations and liabilities under this Shareholder Pledge
Agreement until the Secured Obligations are indefeasibly paid in full.
SECTION 17. SUBORDINATION OF THE COMPANY'S OBLIGATIONS TO GUARANTOR.
As an independent covenant, the Pledgor hereby expressly
covenants and agrees for the benefit of the Agent and the Lenders that all
present or future indebtedness, obligations and liabilities of the Company to
the Pledgor of whatsoever description (collectively, the "JUNIOR CLAIMS") shall
be subordinate and junior in right of payment to all Secured Obligations
(collectively, the "SENIOR CLAIMS"), effective upon the occurrence and during
the continuance of an Event of Default under the Credit Agreement. If an Event
of Default under the Credit Agreement shall occur and be continuing, then,
unless and until the Event of Default shall have been cured or shall have ceased
to exist, no direct or indirect payment (in cash, property, securities by
set-off or otherwise) shall be made by the Company to the Pledgor on account of
or in any manner in respect of any Junior Claim except such payments and
distributions the proceeds of which shall be applied to the Senior Claims. In
the event of a Proceeding (as hereinafter defined), all Senior Claims shall
first be paid in full before any direct or indirect payment or distribution (in
cash, property, securities by set-off or otherwise) shall be made to the Pledgor
on account of or in any manner in respect of any Junior Claim except such
payments and distributions the proceeds of which shall be applied to the Senior
Claims. For the purposes of the previous sentence, a "PROCEEDING" shall occur if
the Company shall make an assignment for the benefit of creditors, file a
petition in bankruptcy, have entered against or in favor of it an order for
relief under the Bankruptcy Code (11 U.S.C. ▇▇.▇▇. 101 et. seq.), as amended, or
similar law of any other jurisdiction, generally fail to pay its debts as they
come due (either as to number or amount), admit in writing its inability to pay
its debts generally as they mature, make a voluntary assignment for the benefit
of creditors, commence any proceeding relating to it under any reorganization,
arrangement, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction, whether now or hereafter in effect, or by any act, indicate
its consent to, approval of or acquiescence in any such proceeding or in the
appointment of any receiver of, or trustee or custodian (as defined in the
Bankruptcy Code) for itself, or any substantial part of its property, or a
trustee or a receiver shall be appointed for the Company or for a substantial
part of the property of the Company and such appointment remains in effect for
more than sixty (60) days or the
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Company shall indicate its consent thereto, approval therefor or acquiescence
therein, or a petition under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction (whether now or hereafter in effect) shall be filed against the
Company and such petition shall not be dismissed within sixty (60) days after
such filing, an order for relief shall be entered in such proceeding, or the
Company shall indicate its consent thereto, approval therefor or acquiescence
therein. In the event any direct or indirect payment or distribution is made to
the Pledgor in contravention of this Section, such payment or distribution shall
be deemed received in trust for the benefit of the Agent and the Lenders and
shall be immediately paid over to the Agent for application against the Secured
Obligations. The Pledgor agrees to execute such additional documents as the
Agent may reasonably request to evidence the subordination provided for in this
Section.
SECTION 18. CONCERNING THE AGENT.
The provisions of Section 8.05 and Article IX of the Credit
Agreement shall inure to the benefit of the Agent in respect of this Shareholder
Pledge Agreement and shall be binding upon the parties to the Credit Agreement
in such respect. In furtherance and not in derogation of the rights, privileges
and immunities of the Agent therein set forth:
(A) The Agent is authorized to take all such action as is
provided to be taken by it as Agent hereunder and all other action reasonably
incidental thereto. As to any matters not expressly provided for herein
(including, without limitation, the timing and methods of realization upon the
Collateral) the Agent shall act or refrain from acting in accordance with
written instructions from the Required Lenders or, in the absence of such
instructions, in accordance with its discretion.
(B) The Agent shall not be responsible for the existence,
genuineness or value of any of the Collateral or for the validity, perfection,
priority or enforceability of the Security Interests in any of the Collateral,
whether impaired by operation of law or by reason of any action or omission to
act on its part hereunder. The Agent shall have no duty to ascertain or inquire
as to the performance or observance of any of the terms of this Shareholder
Pledge Agreement by the Pledgor.
SECTION 19. APPOINTMENT OF CO-AGENTS.
At any time or times, in order to comply with any legal
requirement in any jurisdiction, the Agent may appoint another bank or trust
company or one or more other persons, either to act as co-agent or co-agents,
jointly with the Agent, or to act as separate agent or agents on behalf of the
Secured Parties with such power and authority as may be necessary for the
effectual operation of the provisions hereof and may be specified in the
instrument of appointment (which may, in the discretion of the Agent, include
provisions for the protection of such co-agent or separate agent similar to the
provisions of Section 18).
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SECTION 20. TERMINATION OF SECURITY INTERESTS; RELEASE OF COLLATERAL.
Upon the repayment in full of all Secured Obligations (other
than contingent indemnity or similar claims not yet asserted) and the
termination of the Commitment under the Credit Agreement, the Security Interests
shall terminate and all rights to the Collateral shall revert to the Pledgor. At
any time and from time to time prior to such termination of the Security
Interests, the Agent may release any of the Collateral with the prior written
consent of the Lenders. Upon any such termination of the Security Interests or
release of Collateral, the Agent will, at the expense of the Pledgor, execute
and deliver to the Pledgor such documents as the Pledgor shall reasonably
request to evidence the termination of the Security Interests or the release of
such Collateral, as the case may be.
SECTION 21. NOTICES.
All notices, communications and distributions hereunder shall
be given in accordance with Section 10.03 of the Credit Agreement. With respect
to the Pledgor, all such notices, communications and distributions hereunder
shall be given to the Pledgor at its address or telecopy or telex number set
forth on their signature pages hereof or at such other address or telecopy or
telex number as the Pledgor may hereafter specify for the purpose by notice to
the Agent and the Company.
SECTION 22. WAIVERS, NON-EXCLUSIVE REMEDIES.
No failure on the part of the Agent to exercise, and no delay
in exercising and no course of dealing with respect to, any right under this
Shareholder Pledge Agreement shall operate as a waiver thereof; nor shall any
single or partial exercise by the Agent of any right under the Credit Agreement,
any other Financing Document or this Shareholder Pledge Agreement preclude any
other or further exercise thereof or the exercise of any other right. The rights
in this Shareholder Pledge Agreement, the other Security Documents and the
Credit Agreement are cumulative and are not exclusive of any other remedies
provided by law.
SECTION 23. SUCCESSORS AND ASSIGNS.
This Shareholder Pledge Agreement is for the benefit of the
Agent and the other Secured Parties and their successors and assigns, and in the
event of an assignment of all or any of the Secured Obligations, the rights
hereunder, to the extent applicable to the indebtedness so assigned, may be
transferred with such indebtedness. This Shareholder Pledge Agreement shall be
binding on the Pledgor and its successors and assigns.
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SECTION 24. CHANGES IN WRITING.
Neither this Shareholder Pledge Agreement nor any provision
hereof may be changed, waived, discharged or terminated orally, but only in
writing signed by the Pledgor and the Agent with the consent of the Required
Lenders (or in the case of Section 20, all of the Lenders).
SECTION 25. GEORGIA LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF GEORGIA (WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW), EXCEPT AS OTHERWISE REQUIRED BY MANDATORY PROVISIONS OF LAW
AND EXCEPT TO THE EXTENT THAT REMEDIES PROVIDED BY THE LAWS OF ANY JURISDICTION
OTHER THAN GEORGIA ARE GOVERNED BY THE LAWS OF SUCH JURISDICTION.
SECTION 26. SEVERABILITY.
If any provision hereof is invalid or unenforceable in any
jurisdiction, then, to the fullest extent permitted by law, (i) the other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be liberally construed in favor of the Agent and the Secured Parties in
order to carry out the intentions of the parties hereto as nearly as may be
possible; and (ii) the invalidity or unenforceability of any provision hereof in
any jurisdiction shall not affect the validity or enforceability of such
provision in any other jurisdiction.
SECTION 27. COUNTERPARTS.
This Shareholder Pledge Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this
Shareholder Pledge Agreement to be duly executed and delivered by their
respective authorized officers as of the day and year first above written.
PLEDGOR:
-----------------------------------
Name:
------------------------------
Address for Notices:
---------------------------------------
---------------------------------------
---------------------------------------
Telecopy No. (____) ___________________
Telephone No. (____) __________________
NATIONSCREDIT COMMERCIAL
CORPORATION, AS AGENT
By:
--------------------------------
Title:
-----------------------------
SECTION 17 OF THE FOREGOING
AGREEMENT ACKNOWLEDGED
AND AGREED TO:
VISTA HOSPICE CARE, INC.
By:
------------------------------------
Title:
---------------------------------
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SCHEDULE I
PLEDGED STOCK
NUMBER AND PERCENTAGE OF
NAME OF CORPORATION CLASS OF SHARES SHARES OF SUCH CLASS
------------------- --------------- --------------------
Vista Hospice Care, Inc.
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EXHIBIT K
BORROWING BASE CERTIFICATE
I, ________________, the ____________ of Horizon Medical
Products, Inc. (the "COMPANY"), DO HEREBY CERTIFY, pursuant to the Credit
Agreement dated as of July 15, 1997 (as amended from time to time, the "CREDIT
AGREEMENT") among the Company, the Lenders referred to therein and NationsCredit
Commercial Corporation, as Agent, that attached hereto as Exhibit A is a true
and accurate calculation of the Borrowing Base of the Company as of __________,
19__, determined in accordance with the requirements of the Credit Agreement.
Capitalized terms used herein and not otherwise defined herein
have the meanings assigned to them in the Credit Agreement.
IN WITNESS WHEREOF, I have signed this certificate as of this
___ day of ____________, 19__.
-----------------------------------------
Name:
Title:
213
Exhibit A
to
BORROWING BASE CERTIFICATE
(all numbers in thousands)
As at ____________, 19__
************************************************************
DOMESTIC ACCOUNTS RECEIVABLE
Gross Domestic Accounts Receivable ________
Less:
(a) Accounts not denominated in US dollars ________
(b) Receivables that do not comply with all applicable ________
legal requirements
(c) Receivables subject to an unresolved dispute (to the ________
extent of such dispute)
(d) Receivables payable more than 90 days after the date ________
of the issuance of the original invoice
(e) Receivables that remain unpaid for more than 60 days ________
from the original due date specified in the original
invoice
(f) Unbilled Receivables, and Receivables for unshipped ________
goods or services not yet performed
(g) Receivables arising outside the ordinary course of ________
business of the Company
214
(h) Receivables for which there has been established a ________
contra account, due from an account debtor to whom
the Company owes a trade payable, or otherwise
subject to a setoff or counterclaim, but only to the
extent of such trade payable, setoff or counterclaim
(i) Receivables not subject to a first priority perfected ________
Lien under the Security Agreement and Receivables
evidenced by an "instrument" (as defined in the
Uniform Commercial Code) not in possession of the
Agent
(j) Receivables due from an ineligible account debtor(1) ________
(k) Receivables due from an account debtor that the ________
Company has not instructed in its invoice to make
payments on such receivables to the Lockbox Account
(as defined in the Security Agreement) or from any
account debtor that makes payments in a form that
cannot be accepted in the Lockbox Account
(l) Receivables due from an account debtor from whom more ________
than 20% of the aggregate Receivables of the Company
are due, but only to the extent of such excess Total
Ineligible Domestic Receivables
ELIGIBLE DOMESTIC RECEIVABLES $______ X 80% = ______
----------
(1) As used herein, an ineligible account debtor is an account debtor (i) as to
which on such date Receivables representing more than 25% of aggregate amount of
all Receivables of such account debtor have remained unpaid for more than 60
days from the original due date specified at the time of the original issuance
of the invoice therefor, (ii) in respect of which a credit loss has been
recognized or reserved by the Company or any of its Subsidiaries, (iii) in
respect of which the Agent shall have notified the Company that such account
debtor does not have a satisfactory credit standing as determined in good faith
by the Agent, (iv) that is a Subsidiary or Affiliate of the Company, (v) that is
the United States of America or any department, agency or instrumentality
thereof or any state government or any department, agency or political
subdivision thereof, unless the Company has complied in all respects with the
Federal Assignment of Claims Act of 1940, or any similar provision of applicable
state law, or (vi) the prospect of payment of which, in the good faith judgment
of the Lender, has been impaired.
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FOREIGN SECURED ACCOUNTS RECEIVABLE
Gross Foreign Secured Accounts Receivable ________
Less:
(a) Accounts not denominated in US dollars ________
(b) Receivables that do not comply with all applicable ________
legal requirements
(c) Receivables subject to an unresolved dispute (to the ________
extent of such dispute)
(d) Receivables payable more than 90 days after the date ________
of the issuance of the original invoice
(e) Receivables that remain unpaid for more than 60 days ________
from the original due date specified in the original
invoice
(f) Unbilled Receivables, and Receivables for unshipped ________
goods or services not yet performed
(g) Receivables arising outside the ordinary course of ________
business of the Company
(h) Receivables for which there has been established a ________
contra account, due from an account debtor to whom
the Company owes a trade payable, or otherwise
subject to a setoff or counterclaim, but only to the
extent of such trade payable, setoff or counterclaim
(i) Receivables not subject to a first priority perfected ________
Lien under the Security Agreement and Receivables
evidenced by an "instrument" (as defined in the
Uniform Commercial Code) not in possession of the
Agent
(j) Receivables due from an ineligible account debtor(2) ________
----------
(2) As used herein, an ineligible account debtor is an account debtor (i) as to
which on such date Receivables representing more than 25% of aggregate amount of
all Receivables of such account debtor have remained unpaid for more than 60
days from the original due date specified at the time of the original issuance
of the invoice therefor, (ii) in respect of which a credit loss has been
recognized or reserved by the Company or any of its Subsidiaries, (iii) in
respect of which the Agent shall have notified the Company that such account
debtor does not have a satisfactory credit standing as determined in good faith
by the Agent, (iv) that is a Subsidiary or Affiliate of the Company, or (v) the
prospect of payment of which, in the good faith judgment of the Lender, has been
impaired.
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216
(k) Receivables due from an account debtor that the ________
Company has not instructed in its invoice to make
payments on such receivables to the Lockbox Account
(as defined in the Security Agreement) or from any
account debtor that makes payments in a form that
cannot be accepted in the Lockbox Account
(l) Receivables due from an account debtor from whom more ________
than 20% of the aggregate Receivables of the Company
are due, but only to the extent of such excess Total
Ineligible Foreign Secured Receivables
ELIGIBLE FOREIGN SECURED RECEIVABLES $______ X 80% = ______
FOREIGN UNSECURED ACCOUNTS RECEIVABLE
Gross Foreign Unsecured Accounts Receivable ________
Less:
(a) Accounts not denominated in US dollars ________
(b) Receivables that do not comply with all applicable ________
legal requirements
(c) Receivables subject to an unresolved dispute (to the ________
extent of such dispute)
(d) Receivables payable more than 90 days after the date ________
of the issuance of the original invoice
(e) Receivables that remain unpaid for more than 60 days ________
from the original due date specified in the original
invoice
(f) Unbilled Receivables, and Receivables for unshipped ________
goods or services not yet performed
(g) Receivables arising outside the ordinary course of ________
business of the Company
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217
(h) Receivables for which there has been established a ________
contra account, due from an account debtor to whom
the Company owes a trade payable, or otherwise
subject to a setoff or counterclaim, but only to the
extent of such trade payable, setoff or counterclaim
(i) Receivables not subject to a first priority perfected ________
Lien under the Security Agreement and Receivables
evidenced by an "instrument" (as defined in the
Uniform Commercial Code) not in possession of the
Agent
(j) Receivables due from an ineligible account debtor(3) ________
(k) Receivables due from an account debtor that the ________
Company has not instructed in its invoice to make
payments on such receivables to the Lockbox Account
(as defined in the Security Agreement) or from any
account debtor that makes payments in a form that
cannot be accepted in the Lockbox Account
(l) Receivables due from an account debtor from whom more ________
than 20% of the aggregate Receivables of the Company
are due, but only to the extent of such excess Total
Ineligible Foreign Unsecured Receivables
ELIGIBLE FOREIGN UNSECURED RECEIVABLES $______(4) X 50% = ______
----------
(3) As used herein, an ineligible account debtor is an account debtor (i) as to
which on such date Receivables representing more than 25% of aggregate amount of
all Receivables of such account debtor have remained unpaid for more than 60
days from the original due date specified at the time of the original issuance
of the invoice therefor, (ii) in respect of which a credit loss has been
recognized or reserved by the Company or any of its Subsidiaries, (iii) in
respect of which the Agent shall have notified the Company that such account
debtor does not have a satisfactory credit standing as determined in good faith
by the Agent, (iv) that is a Subsidiary or Affiliate of the Company, or (v) the
prospect of payment of which, in the good faith judgment of the Lender, has been
impaired.
(4) Not to exceed $500,000.
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218
INVENTORY
Value (determined at the lower of cost or market on a
basis consistent with that used in the preparation of
the financial statements referred to in Section
6.04(a) of the Credit Agreement) of all Inventory
owned by the Company and located in any jurisdiction
in the United States of America as to which
appropriate UCC financing statements have been filed
naming the Company as "debtor" and the Agent as
"secured party", all net of any amounts payable by
the Company in respect of commissions, processing
fees or other charges ________
Less:
(i) Inventory shipped to a provider of services, or to a
customer, even if on a consignment or "sale or
return" basis ________
(ii) Inventory that is subject to a Lien (other than Liens
created pursuant to the Security Documents) ________
(iii) Inventory against which a reserve has been taken ________
(iv) Inventory not subject to a perfected first priority
lien under the Security Agreement, and subject to no
prior or equal Lien ________
(v) Inventory not produced in compliance with the
applicable requirements of the Fair Labor Standards
Act ________
(vi) Supply, scrap or obsolete Inventory and Inventory not
reasonably marketable ________
Total Ineligible Inventory ________
ELIGIBLE INVENTORY $______ X 50% = ______
BORROWING BASE TOTAL $_______________
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219
EXHIBIT L
OPINION OF
COUNSEL FOR THE COMPANY
* * * *
1. The Security Agreement creates a valid security interest,
for the benefit of the Secured Parties, in all the Company's right, title and
interest in all Collateral to the extent the UCC is applicable thereto (the
"SECURITY INTEREST").
2. UCC financing statements and amendments thereto
(collectively, the "FINANCING STATEMENTS") have been filed in the filing offices
listed in Schedule 7 to the Perfection Certificate (the "FILING JURISDICTIONS"),
which are all of the offices in which filings are required to perfect the
Security Interest, to the extent the Security Interest may be perfected by
filing under the UCC, and no further filing or recording of any document or
instrument or other action will be required so to perfect the Security Interest
in the Collateral in which a security interest may be perfected by filing a
financing statement under the UCC, except that (i) continuation statements with
respect to each Financing Statement must be filed in accordance with the UCC;
(ii) additional filings may be necessary if the Company changes its name,
identity or corporate structure or the jurisdiction in which its places of
business, its chief executive office or the Collateral are located; and (iii) we
express no opinion on the perfection of, or need for further filing or recording
to perfect, the Security Interest in goods now or hereafter located in any
jurisdiction other than the Filing Jurisdictions.
3. There are
(i) Based on [describe search reports], as of that date of
such reports, no UCC financing statements which name the Company as
debtor or seller and cover any of the Collateral, other than the
Financing Statements, [and the financing statements with respect to
Permitted Liens annexed as Schedule 5(A) to the Perfection
Certificate], listed in the available records in the UCC filing offices
set forth in paragraphs 2 and 3 of the Perfection Certificate, which,
based on the information provided to us as to the location of the
Collateral, the Company and its books and records, include all of the
offices prescribed under the UCC as the offices in which filings should
have been made to perfect security interests in the Collateral; and
(ii) Based on [describe search reports], as of that date of
such reports, no notices of the filing of any federal tax lien (filed
pursuant to Section 6323 of the Internal Revenue Code) or any lien of
the Pension Benefit Guaranty Corporation (filed pursuant to Section
4068 of ERISA) covering any of the Collateral listed in the available
records in the [UCC filing office in state of Company's chief executive
office], which is the only office having files which must be searched
in order to fully determine the existence of notices of the filing of
federal tax liens (filed pursuant to Section 6323 of the Internal
220
Revenue Code) on the Collateral and liens of the Pension Benefit
Guaranty Corporation (filed pursuant to Section 4068 of ERISA) on the
Collateral.
4. The Security Interest validly secures the payment of all
future Loans made by the Lenders to the Company, whether or not at the time such
Loans are made an Event of Default or other event not within the control of the
Lenders has relieved or may relieve the Lenders from their obligations to make
such Loans, and is perfected to the extent set forth in paragraph 2 above with
respect to such future Loans. Insofar as the priority thereof is governed by the
UCC, the Security Interest has the same priority with respect to such future
Loans as it does with respect to Loans made on the date hereof.
Such opinion may contain such assumptions, qualifications and
limitations as the opinion of counsel for the Company delivered in connection
with the making of the initial Loan under the Credit Agreement.
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221
EXHIBIT D
FORM OF LOCKBOX AGREEMENT
222
SCHEDULE 6
Description of Collateral
All accounts, chattel paper, contract rights, general
intangibles, inventory, equipment and documents, and all other property of the
Debtor all as more particularly described on Exhibit A attached hereto, now
owned or hereafter acquired, wherever located, and all proceeds thereof.
223
SCHEDULE 7
SCHEDULE OF FILINGS
Date
Debtor Filing Office File Number of Filing
------------------------------------------------------------------------------------------------
-------------------------
* Indicate lapse date, if other than fifth anniversary.