EXHIBIT 10.11
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AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of April 28, 2000
Between
▇▇▇▇▇▇▇▇▇ DENTAL COMPANY,
THE BANK OF TOKYO - MITSUBISHI, LTD., CHICAGO BRANCH,
M & I ▇▇▇▇▇▇▇▇ & ILSLEY BANK, THE
NORTHERN TRUST COMPANY
and
U.S. BANK NATIONAL ASSOCIATION, as a Bank and as Agent
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AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT dated as of April 28, 2000, is
by and between ▇▇▇▇▇▇▇▇▇ DENTAL COMPANY, a Minnesota corporation (the
"Borrower"), U.S. BANK NATIONAL ASSOCIATION ("U.S. Bank"), individually and as
agent (in such capacity, the "Agent") for the "Banks" (as defined below), THE
BANK OF TOKYO - MITSUBISHI, LTD., CHICAGO BRANCH ("Tokyo"), M&I ▇▇▇▇▇▇▇▇ &
ILSLEY BANK ("M&I"), and THE NORTHERN TRUST COMPANY ("Northern"; U.S. Bank in
its individual capacity, Tokyo, M&I and Northern, together with any other Person
that may become a party hereto pursuant to Section 11.4 are collectively
referred to herein as the "Banks").
WHEREAS, the Borrower, the Banks and the Agent are parties to the Existing
Credit Agreement (as defined below);
WHEREAS, the Borrower, the Banks and the Agent desire to amend and restate
the Existing Credit Agreement in its entirety.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1 Defined Terms. In addition to the terms defined elsewhere in
this Agreement, the following terms shall have the following respective meanings
(and such meanings shall be equally applicable to both the singular and plural
form of the terms defined, as the context may require):
"Account": The Borrower's or any Subsidiary's right to the payment of money
from the sale, lease or other disposition of goods or other assets by the
Borrower or any Subsidiary, a rendering of services by the Borrower or any
Subsidiary, a loan by the Borrower or any Subsidiary, the overpayment of taxes
or other liabilities of the Borrower or any Subsidiary, or otherwise any
contract or agreement, however such right to payment may be evidenced, together
with all other rights and interests (including all liens and security interests)
that the Borrower or any Subsidiary may at any time have against any account
debtor or other party obligated thereon or against any of the property of such
account debtor or other party.
"Advance": The portion of the outstanding Loans bearing interest at an
identical rate for an identical Interest Period, provided that all Reference
Rate Advances shall be deemed a single Advance and all Daily Rate Advances shall
be deemed a single Advance. An Advance may be a "Eurodollar Advance," "Daily
Rate Advance" or "Reference Rate Advance" (each, a "type" of Advance).
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"Adverse Event": The occurrence of any event that could have material
adverse effect on the business, operations, property, assets or condition
(financial or otherwise) of the Borrower and the Subsidiaries as a consolidated
enterprise or on the ability of the Borrower or any other party obligated
thereunder to perform its obligations under the Loan Documents.
"Aggregate Commitment": As of any date, the sum of the Commitments of all
of the Banks.
"Agreement": This Amended and Restated Credit Agreement, as it may be
amended, modified, supplemented, restated or replaced from time to time.
"Applicable Commitment Percentage": With respect to each fiscal quarter of
the Borrower, the Applicable Commitment Percentage set forth in the table below,
based on the BD/EBITDA Ratio computed as of the last day of the immediately
preceding fiscal quarter:
BD/EBITDA Ratio Applicable Commitment Percentage
--------------- --------------------------------
Less than or equal to 1.0 0.125%
Greater than 1.0 0.20%
If at any time of determination the applicable BD/EBITDA Ratio cannot be
determined, the Applicable Commitment Percentage shall be 0.20%.
"Applicable Daily Margin": With respect to each day, the Applicable Daily
Margin set forth in the table below, based on the BD/EBITDA Ratio computed as of
the last day of the most recent fiscal quarter to end on or prior to the third
day prior to such day:
BD/EBITDA Ratio Applicable Daily Margin
--------------- -----------------------
Less than or equal to 1.0 0.65%
Greater than 1.0 0.90%
If at any time of determination the applicable BD/EBITDA Ratio cannot be
determined, the Applicable Daily Margin shall be 0.90%.
"Applicable Eurodollar Margin": With respect to each Interest Period, the
Applicable Eurodollar Margin set forth in the table below, based on the
BD/EBITDA Ratio computed as of the last day of the most recent fiscal quarter to
end on or prior to the third day prior to the first day of such Interest Period:
BD/EBITDA Ratio Applicable Eurodollar Margin
--------------- ----------------------------
Less than or equal to 1.0 0.45%
Greater than 1.0 0.70%
If at any time of determination the applicable BD/EBITDA Ratio cannot be
determined, the Applicable Eurodollar Margin shall be 0.70%.
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"BD/EBITDA Ratio": The ratio of (i) the consolidated indebtedness for
borrowed money of the Borrower and its Subsidiaries as of the last day of a
fiscal quarter, to (ii) EBITDA for the period of four fiscal quarters ending on
such date.
"Business Day": Any day (other than a Saturday, Sunday or legal holiday in
the State of Minnesota) on which national banks are permitted to be open in
Minneapolis, Minnesota and, with respect to Eurodollar Advances or Daily Rate
Advances, a day on which dealings in Dollars may be carried on by the Agent in
the interbank eurodollar market.
"Closing Date": The date on which all conditions precedent contained in
Section 6.1 of this Agreement and Section 5.1 of the Purchase Agreement are
satisfied.
"Code": The Internal Revenue Code of 1986, as amended, or any successor
statute, together with regulations thereunder.
"Commitment": With respect to each Bank, initially the amount set opposite
such Bank's name on the signature page hereof, as the same may be reduced or
increased from time to time pursuant to Section 4.3 and Section 11.4 and, as the
context may require, the agreement of the Bank to make Loans to the Borrower
subject to the terms and conditions of this Agreement.
"Commitment Fee": As defined in Section 3.2.
"Consolidated Tangible Net Worth": As of any date of determination, the
following, reported in compliance with GAAP: (a) the sum of the amounts set
forth on the consolidated balance sheet of the Borrower as the book value of all
assets of the Borrower and its Subsidiaries; less (b) total liabilities; less
(c) Deferred Credits, and less (d) the book value of all assets of the Borrower
and its Subsidiaries that would be treated as intangibles under GAAP, including,
without limitation, all such items as goodwill, trademarks, trade names, service
marks, copyrights, patents, licenses, unamortized debt discount and unamortized
deferred charges (but excluding from such intangibles, to the extent included
therein, prepaid expenses and deferred taxes).
"Daily Eurodollar Rate": For any day, the Eurodollar Rate (Reserve
Adjusted) that would apply to a hypothetical Eurodollar Advance with a one month
Interest Period beginning on that day, except that the calculation thereof shall
be based on the Eurodollar Interbank Rate for a one- month Interest Period as of
11:00 a.m., London time (or such other time as of which such rate appears) (and
not two Eurodollar Business Days preceding such day), on such day selected by
the Agent. In the case of a day which is not a Eurodollar Business Day, the
Daily Eurodollar Rate shall be the Daily Eurodollar Rate for the preceding
Business Day.
"Daily Rate Advance": An Advance designated as such in a notice of
borrowing under Section 2.3 or a notice of continuation or conversion under
Section 2.4.
"Default": Any event which, with the giving of notice to the Borrower or
lapse of time, or both, would constitute an Event of Default.
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"Deferred Credits": Deferred credits of the Borrower, calculated
consistently with calculation for the Borrower's consolidated financial
statements dated April 25, 1992.
"EBITDA": For any period of determination, the consolidated net income of
the Borrower and its Subsidiaries before deductions for interest expense, income
taxes, depreciation and amortization, all determined in accordance with GAAP.
"ERISA": The Employee Retirement Income Security Act of 1974, as amended,
and any successor statute, together with regulations thereunder.
"ERISA Affiliate": Any trade or business (whether or not incorporated) that
is a member of a group of which the Borrower is a member and which is treated as
a single employer under Section 414 of the Code.
"Eurodollar Advance": An Advance designated as such in a notice of
borrowing under Section 2.3 or a notice of continuation or conversion under
Section 2.4.
Eurodollar Business Day": A Business Day which is also a day for trading by
and between banks in United States dollar deposits in the interbank Eurodollar
market and a day on which banks are open for business in New York City.
"Eurodollar Interbank Rate": With respect to each Interest Period
applicable to a Eurodollar Rate Advance, the average offered rate for deposits
in United States dollars (rounded upward, if necessary, to the nearest 1/16 of
1%) for delivery of such deposits on the first day of such Interest Period, for
the number of days in such Interest Period, which appears on the Telerate page
3750 as of 11:00 a.m., London time (or such other time as of which such rate
appears) two Eurodollar Business Days prior to the first day of such Interest
Period, or the rate for such deposits determined by the Agent at such time based
on such other published service of general application (including, without
limitation, the Reuters Screen LIBO page) as shall be selected by the Agent for
such purpose; provided, that in lieu of determining the rate in the foregoing
manner, the Agent may determine the rate based on rates at which United States
dollar deposits are offered to the Agent in the interbank Eurodollar market at
such time for delivery in Immediately Available Funds on the first day of such
Interest Period in an amount approximately equal to the Advance by the Agent to
which such Interest Period is to apply (rounded upward, if necessary, to the
nearest 1/16 of 1%). "Telerate page 3750 " means the display designated as such
on Telerate System Incorporated (or such other page as may replace page 3750 or
that service for the purpose of displaying London interbank offered rates of
major banks for U.S. Dollar deposits).
"Reuters Screen LIBO page" means the display designated as page "LIBO" on
the Reuters Monitor Money Rate Screen (or such other page as may replace
the LIBO page on such service for the purpose of displaying London
interbank offered rates of major banks for United States dollar deposits).
"Eurodollar Rate (Reserve Adjusted)": With respect to each Interest Period
applicable to a Eurodollar Rate Advance, the rate (rounded upward, if necessary,
to the next one
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sixteenth of one percent) determined by dividing the Eurodollar Rate for such
Interest Period by 1.00 minus the Eurodollar Reserve Percentage.
"Eurodollar Reserve Rate": As of any day, that percentage (expressed as a
decimal) which is in effect on such day, as prescribed by the Board of Governors
of the Federal Reserve System for determining the maximum reserve requirement
(including any basic, supplemental or emergency reserves) for a member bank of
the Federal Reserve System, with deposits comparable in amount to those held by
the Agent, in respect of "Eurocurrency Liabilities" as such term is defined in
Regulation D of such Board. The rate of interest applicable to any outstanding
Eurodollar Rate Advances shall be adjusted automatically on and as of the
effective date of any change in the Eurodollar Reserve Percentage.
"Event of Default": Any event described in Section 10.1.
"Existing Credit Agreement" That certain Credit Agreement, dated as of June
20, 1997 as amended by First Amendment to Credit Agreement dated as of April 28,
1998, and by Second Amendment to Credit Agreement dated as of April 2, 1999,
among the Borrower, the Banks and the Agent.
"Federal Reserve Board": The Board of Governors of the Federal Reserve
System or a successor thereto.
"GAAP": Generally accepted accounting principles as applied in the
preparation of the audited financial statement of the Borrower referred to in
Section 7.5.
"Interest Period" For any Eurodollar Advance, the period commencing on the
borrowing date of such Eurodollar Advance or the date a Reference Rate Advance
is converted into such Eurodollar Advance, or the last day of the preceding
Interest Period for such Eurodollar Advance, as the case may be, and ending on
the numerically corresponding day one, two, three or six months thereafter as
selected by the Borrower pursuant to Section 2.3 or Section 2.4; provided, that:
(i) any Interest Period which would otherwise end on a day which is
not a Business Day shall end on the next succeeding Business Day unless
such next succeeding Business Day falls in another calendar month, in which
case such Interest Period shall end on the next preceding Business Day;
(ii) any Interest Period which begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall end on
the last Business Day of the calendar month at the end of such Interest
Period; and
(iii) no Interest Period shall extend beyond the Termination Date.
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"Inventory": All goods held by the Borrower or any Subsidiary for sale or
lease, or leased by Borrower or any Subsidiary, or furnished or to be furnished
by the Borrower or any Subsidiary under any contract of service, or held by the
Borrower or any Subsidiary as raw materials, work in process or materials used
or consumed in a business, and all returned and repossessed goods.
"Lien": Any security interest, mortgage, pledge, lien, hypothecation,
judgment lien or similar legal process, charge, encumbrance, title retention
agreement or analogous instrument or device (including, without limitation, the
interest of a vendor under any conditional sale or other title retention
agreement).
"Loan Documents": This Agreement, the Notes, and each other instrument,
document, guaranty, or other agreement executed and delivered by the Borrower or
any other party in connection with this Agreement, the Loans or any collateral
for the Loans.
"Majority Banks": At any time, Banks holding at least 60% of the aggregate
unpaid principal amount of the Notes, or if no Loans are at the time outstanding
hereunder, Banks with Commitments at least equal to 60% of the Aggregate
Commitments.
"Payment Date": The Termination Date, or date of any other termination of
the Aggregate Commitment, plus (a) the last day of each Interest Period for each
Eurodollar Advance and, if such Interest Period is in excess of three months,
the day three months after the first day of such Interest Period, and thereafter
each day three months after each succeeding Payment Date; (b) each day for each
Daily Rate Advance; (c) the last day of each month of each year for each
Reference Rate Advance; and (d) the last day of March, June, September and
December of each year for Commitment Fees.
"PBGC": The Pension Benefit Guaranty Corporation, established pursuant to
Subtitle A of Title IV of ERISA, and any successor thereto or to the functions
thereof.
"Permitted Account Sales": Sales, with limited recourse, or no recourse, by
the Borrower or ▇▇▇▇▇▇▇▇▇ Dental Supply, Inc. of Accounts, which Accounts were
derived from sales on contract of furnishings and equipment (but not, however,
open-account sales of supplies and not accounts derived from provision of
services).
"Permitted Liens": Any of the following: (a) Liens for taxes, assessments
or governmental charges or levies not yet due and payable, except to the extent
required to be paid by Section 8.4 of this Agreement; (b) Liens imposed by law,
such as landlords', materialmen's, mechanics', carriers', workmen's, employees'
and repairmen's liens to the extent incurred in the ordinary course of business
for sums not yet delinquent, except to the extent required to be paid by Section
8.4 of this Agreement; (c) pledges or deposits to secure payment of workers'
compensation, unemployment insurance, old age pensions or other social security
obligations, in the ordinary course of business of the Borrower or a Subsidiary;
(d) any security interest pertaining to the Permitted Account Sales; (e) the
landlord's interest in any security deposit provided by the Borrower or a
Subsidiary under any lease of real
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property used in its business; and (f) any Lien securing either a loan whose
proceeds were used by the Borrower or a Subsidiary to acquire assets or a
capitalized lease, provided that such Lien does not extend to any assets other
than those acquired with such loan proceeds or subject to such capitalized lease
and that the aggregate amount payable under all such loans and capitalized
leases at any time does not exceed $5,000,000; provided, however, that none of
the Liens listed in clauses (a) through (c) or (e) above shall constitute
"Permitted Liens" on and after the commencement in respect thereof of any
enforcement, collection, execution, levy or foreclosure or forfeiture
proceeding, including any setoff, which remains unstayed or unbonded for thirty
(30) consecutive days.
"Person": Any natural person, corporation, partnership, joint venture,
firm, association, trust, unincorporated organization, government or
governmental agency or political subdivision or any other entity, whether acting
in an individual, fiduciary or other capacity.
"Plan": An employee benefit plan or other plan, maintained for employees of
the Borrower or of any ERISA Affiliate, and subject to Title IV of ERISA or
Section 412 of the Code.
"Purchase Agreement": That certain Second Amended and Restated Contract
Purchase Agreement dated as of April 30, 2000 between the Borrower and ▇▇▇▇▇▇▇▇▇
Dental Supply, Inc., as Sellers, U.S. Bank, as Agent, and the Banks, as Buyers,
as the same may be amended, supplemented or otherwise modified from time to
time.
"Reference Rate": The rate of interest from time to time publicly announced
by the Agent as its "reference rate." The Agent may lend to its customers at
rates that are at, above or below the Reference Rate. For purposes of
determining any interest rate which is based on the Reference Rate, such
interest rate shall change on the effective date of any change in the Reference
Rate.
"Reference Rate Advance": An Advance designated as such in a notice of
borrowing under Section 2.3 or a notice of continuation or conversion under
Section 2.4.
"Reportable Event": A reportable event as defined in Section 4043 of ERISA
and the regulations issued under such Section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation has waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event, provided that a failure to meet the minimum
funding standard of Section 412 of the Code and Section 302 of ERISA shall be a
reportable event regardless of the issuance of any such waivers in accordance
with Section 412(d) of the Code.
"Subsidiary": Any Person of which or in which the Borrower and its other
Subsidiaries own directly or indirectly 50% or more of: (a) the combined voting
power of all classes of stock having general voting power under ordinary
circumstances to elect a majority of the board of directors of such Person, if
it is a corporation, (b) the capital interest or profit
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interest of such Person, if it is a partnership, joint venture or similar
entity, or (c) the beneficial interest of such Person, if it is a trust,
association or other unincorporated organization.
"Termination Date": The earliest of (a) ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇) the date to
which the Commitment is extended pursuant to Section 2.7 hereof, (c) the date on
which the Commitment is terminated pursuant to Section 10.2 hereof, or (d) the
date on which the Commitment is reduced to zero pursuant to Section 4.3 hereof.
Section 1.2 Accounting Terms and Calculations. Except as may be expressly
provided to the contrary herein, all accounting terms used herein shall be
interpreted and all accounting determinations hereunder (including, without
limitation, determination of compliance with financial ratios and restrictions
in Articles VIII and IX hereof) shall be made in accordance with GAAP
consistently applied. Any reference to "consolidated" financial terms shall be
deemed to refer to those financial terms as applied to the Borrower and its
Subsidiaries in accordance with GAAP.
Section 1.3 Computation of Time Periods. In this Agreement, in the
computation of a period of time from a specified date to a later specified date,
unless otherwise stated the word "from" means "from and including" and the word
"to" or "until" each means "to but excluding."
Section 1.4 Other Definitional Terms. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. References to Sections, Exhibits, schedules and like references are
to this Agreement unless otherwise expressly provided.
ARTICLE II
TERMS OF LENDING
Section 2.1 The Commitment. Subject to the terms and conditions hereof and
in reliance upon the warranties of the Borrower herein, each Bank severally
agrees to make loans (each, a "Loan" and, collectively, the "Loans") to the
Borrower from time to time from the date hereof until the Termination Date,
during which period the Borrower may repay and reborrow in accordance with the
provisions hereof, provided, that the aggregate unpaid principal amount of all
outstanding Loans shall not exceed the remainder of: (x) the amount of the
Aggregate Commitment at any time, minus (y) the sum of (i) the aggregate
principal amount outstanding under all "Buyers' Contracts" (as defined in the
Purchase Agreement), plus (ii) the aggregate principal portion of all payments
by "Obligors" under "Buyers' Contracts" that have not been remitted to U.S. Bank
for the benefit of the "Buyers" (as those terms are defined in the Purchase
Agreement) pursuant to Section 4.1(a) of the Purchase Agreement. Loans hereunder
shall be made by the several Banks ratably in the proportion of their respective
Commitments.
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Section 2.2 Advance Options. The Loan shall be constituted of Eurodollar
Advances, Daily Rate Advances and Reference Rate Advances, as shall be selected
by the Borrower, except as otherwise provided herein. Any combination of types
of Advances may be outstanding at the same time. Each Eurodollar Advance shall
be in a minimum amount of $1,000,000 or in an integral multiple of $500,000
above such amount. Each Daily Rate Advance and each Reference Rate Advance shall
be in an amount of $100,000 or an integral multiple of $10,000 in excess
thereof.
Section 2.3 Borrowing Procedures. On the Closing Date, each Bank shall make
a Loan hereunder in an amount equal to its ratable share of the amount of loans
outstanding under the Existing Credit Agreement. Any subsequent request by the
Borrower for a Loan may be in writing or by telephone, and must be given so as
to be received by the Agent not later than:
(a) 1:00 p.m., Minneapolis time, on the date of the requested Loan, if
the Loan shall be a Daily Rate Advance or Reference Rate Advance; or
(b) 10:00 a.m., Minneapolis time, two Business days prior to the date
of the requested Loan, if the Loan shall be, or shall include, a Eurodollar
Advance.
Any telephonic request for a Loan shall be made by a Person designated as
authorized to make such requests in a schedule of authorized representatives
delivered to the Agent by the Borrower and shall be confirmed by a writing
signed by such a Person, which written confirmation shall be delivered to the
Agent not later than five Business Days after the date the Loans in question are
made. The Commitments of the Banks shall be suspended from the fifth Business
Day after the date the Agent notifies the Borrower that such written
confirmation is past due until any such past due written confirmation has been
delivered. Each request for Loans hereunder shall be irrevocable and shall be
deemed a representation by the Borrower that on the requested loan date and
after giving effect to the requested Loans the applicable conditions specified
in Article VI have been and will be satisfied. Each request for a Loan shall
specify (i) the borrowing date (which shall be a Business Day), (ii) the amount
of such Loan and the type or types of Advances comprising such Loan, and (iii)
if such Loan shall include Eurodollar Advances, the initial Interest Periods for
such Advances. The Agent may rely on any telephone request for Loans hereunder
which it believes in good faith to be genuine; and the Borrower hereby waives
the right to dispute the Agent's record of the terms of such telephone request.
The Agent shall promptly notify each other Bank of the receipt of such request,
the matters specified therein, and of such Bank's ratable share of the requested
Loans. On the borrowing date, each Bank shall provide its share of the requested
Loans to the Agent in Immediately Available Funds not later than 3:00 p.m.,
Minneapolis time. Unless the Agent determines that any applicable condition
specified in Article III has not been satisfied, the Agent will make available
to the Borrower at the Agent's principal office in Minneapolis, Minnesota in
immediately available funds not later than 4:00 p.m. (Minneapolis time) on the
requested borrowing date the amount of the requested Loans. If the Agent has
made a Loan to the Borrower on behalf of a Bank but has not received the amount
of such Loan from such Bank by the time herein required, such Bank shall pay
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interest to the Agent on the amount so advanced at the overnight Federal Funds
rate from the date of such Loan to the date funds are received by the Agent from
such Bank, such interest to be payable with such remittance from such Bank of
the principal amount of such Loan (provided, however, that the Agent shall not
make any Loan on behalf of a Bank if the Agent has received prior notice from
such Bank that it will not make such Loan). If the Agent does not receive
payment from such Bank by the next Business Day after the date of any Loan, the
Agent shall be entitled to recover such Loan, with interest thereon at the rate
(or rates) then applicable to such Loan, on demand, from the Borrower, without
prejudice to the Agent's and the Borrower's rights against such Bank. If such
Bank pays the Agent the amount herein required with interest at the overnight
Federal Funds rate before the Agent has recovered from the Borrower, such Bank
shall be entitled to the interest payable by the Borrower with respect to the
Loan in question accruing from the date the Agent made such Loan.
2.4 Continuation or Conversion of Loans. The Borrower may elect to (i)
continue any outstanding Eurodollar Advance from one Interest Period into a
subsequent Interest Period to begin on the last day of the earlier Interest
Period, or (ii) convert any outstanding Advance into another type of Advance (on
the last day of an Interest Period only, in the instance of a Eurodollar
Advance), by giving the Agent notice, which may be by telephone, given so as to
be received by the Agent not later than:
(a) 1:00 p.m., Minneapolis time, on the date of the requested
continuation or conversion, if the continuing or converted Advance shall be
a Daily Rate Advance or a Reference Rate Advance; or
(b) 10:00 a.m., Minneapolis time, two Business days prior to the date
of the requested continuation or conversion, if the continuing or converted
Advance shall be a Eurodollar Advance.
Each notice of continuation or conversion of an Advance shall specify (i) the
effective date of the continuation or conversion date (which shall be a Business
Day), (ii) the amount and the type or types of Advances following such
continuation or conversion (subject to the limitation on amount set forth in
Section 2.2), and (iii) for continuation as, or conversion into, Eurodollar
Advances, the Interest Periods for such Advances. Absent timely notice of
continuation or conversion, each Eurodollar Advance shall automatically convert
into a Reference Rate Advance on the last day of an applicable Interest Period,
unless paid in full on such last day. No Advance shall be continued as, or
converted into, a Eurodollar Advance if the shortest Interest Period for such
Advance may not transpire prior to the Termination Date or if a Default or Event
of Default shall exist. Except during a suspension period described in Section
5.2 or 5.3, all conversions and continuations of Advances must be made uniformly
and ratably among the Banks. (E.g., when continuing a two-month Eurodollar Rate
Advance of one Bank to a three-month Eurodollar Rate Advance, the Borrower must
simultaneously continue all two-month Eurodollar Rate Advances of all Banks
having Interest Periods ending on the date of continuation as three-month
Eurodollar Rate Advances.)
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Section 2.5 The Notes. The Loans of each Bank shall be evidenced by a
single promissory note of the Borrower payable to the order of that Bank,
substantially in the form of Exhibit A hereto with appropriate insertions, in
the amount of that Bank's Commitment originally in effect and dated as of the
date of this Agreement (collectively, and as the same may hereafter be amended,
supplemented, extended, restated or otherwise modified from time to time, the
"Notes"). Upon receipt of each Bank's Note from the Borrower, the Agent shall
mail such Note to such Bank. Each Bank shall enter in its records the amount of
each Loan and Advance made thereunder, the rate of interests borne by each
Advance and the payments made on the Loans, and such records shall be deemed
conclusive evidence of the subject matter thereof, absent manifest error.
Section 2.6 Funding Losses. The Borrower will indemnify each Bank upon
demand against any loss or expense which that Bank may sustain or incur
(including, without limitation, any loss or expense sustained or incurred in
obtaining liquidating or employing deposits or other funds acquired to effect,
fund, or maintain any Advance) as a consequence of (i) any failure of the
Borrower to make any payment when due of any amount due hereunder or under that
Bank's Note, (ii) any failure of the Borrower to borrow, continue or convert an
Advance on a date specified therefor in a notice thereof, or (iii) any payment
(including, without limitation, any payment pursuant to Section 4.2, 4.3 or
10.2), prepayment or conversion of any Eurodollar Advance on a date other than
the last day of the Interest Period for such Advance. Determinations by a Bank
for purposes of this Section 2.6 of the amount required to indemnify that Bank
shall be conclusive in the absence of manifest error.
Section 2.7 Commitment Ending Date and Extension. The "Termination Date" is
April 27, 2001; provided, however, that if the Borrower, by written notice given
to the Banks on or before January 31 of any year, beginning January 31, 2001,
requests in writing an extension of the Termination Date for an additional 364
day period of time and if the Banks, in their sole and absolute discretion and
based on such review of the Borrower's financial performance and condition and
such other factors as the Banks consider relevant (which may include, without
limitation, future loan policies and other policies adopted by the Banks
unrelated to the Borrower's financial condition), consent in writing to such
extension, then the Termination Date shall be extended for a period of 364 days.
The Banks shall be under no obligation or commitment to extend the Termination
Date, and no such obligation or commitment on the part of the Banks should be
inferred from the provisions of this Section.
ARTICLE III
INTEREST AND FEES
Section 3.1 Interest.
(a) Eurodollar Advances. The unpaid principal amount of each
Eurodollar Advance shall bear interest prior to maturity at a rate per
annum equal to the Eurodollar Rate (Reserve Adjusted) in effect for each
Interest Period for such Eurodollar Advance plus the Applicable Eurodollar
Margin per annum.
11
(b) Daily Rate Advances. The unpaid principal amount of each Daily
Rate Advance shall bear interest prior to maturity at a rate per annum
equal to the Daily Eurodollar Rate plus the Applicable Daily Margin per
annum.
(c) Reference Rate Advances. The unpaid principal amount of each
Reference Rate Advance shall bear interest prior to maturity at a rate per
annum equal to the Reference Rate.
(d) Interest After Maturity. Any amount of the Loans not paid when
due, whether at the date scheduled therefor or earlier upon acceleration,
shall bear interest until paid in full at a rate per annum equal to the
Reference Rate plus 2.00% per annum.
Section 3.2 Commitment Fee. The Borrower shall pay to the Agent for the
account of each Bank fees (the "Commitment Fees") from the date hereof through
the Termination Date in an amount determined by applying the Applicable
Commitment Percentage to the average daily amount (if any) by which the
Commitment of that Bank exceeds the sum of the principal amount of all Loans
made by that Bank that are outstanding under this Agreement and that Bank's
"Buyer's Percentage" (as defined in the Purchase Agreement) of the unpaid
principal amount of all "Contracts" (as defined in the Purchase Agreement)
purchased by the Banks under the Purchase Agreement.
Section 3.3 Computation. Interest and Commitment Fees shall be computed on
the basis of actual days elapsed and a year of 360 days.
Section 3.4 Payment Dates. Accrued interest under Section 3.1(a), (b) and
(c) and Commitment Fees shall be payable on the Payment Dates for the applicable
types of Advances and for fees. Accrued interest under Section 3.1(d) shall be
payable on demand.
Section 3.5 Agent's Fees. The Borrower shall pay to the Agent, for the
Agent's own account, a yearly agent's fee in the amount and on the dates
provided in a fee letter of even date herewith from the Agent to the Borrower.
No Bank (other than the Agent) shall be entitled to any portion of such fee.
ARTICLE IV
PAYMENTS, PREPAYMENTS, REDUCTION OR
TERMINATION OF THE CREDIT AND SETOFF
Section 4.1 Repayment. Principal of the Loans, together with all accrued
and unpaid interest thereon, shall be due and payable on the Termination Date.
Section 4.2 Optional Prepayments. The Borrower may prepay the Loans, in
whole or in part, at any time subject to the provisions of Section 2.6, without
any other premium or penalty. Any such prepayment must be accompanied by accrued
and unpaid interest on the
12
amount prepaid. Each partial prepayment shall be in an amount of $10,000 or an
integral multiple thereof.
Section 4.3 Optional Reduction or Termination of Commitment. The Borrower
may, at any time, by notice to the Agent, reduce the Aggregate Commitments, with
any such reduction in a minimum amount of $1,000,000 or an integral multiple
thereof. Upon any reduction in the Aggregate Commitment pursuant to this Section
the Borrower shall pay to the Agent, for the account of the Banks, the amount,
if any, by which the aggregate unpaid principal amount of outstanding Loans
exceeds the Aggregate Commitment as so reduced. Amounts so paid cannot be
reborrowed. Any reduction of the Aggregate Commitment cannot be reinstated. The
Borrower may, by notice to the Agent, terminate the Commitment in its entirety.
Upon termination of the Commitment pursuant to this Section, the Borrower shall
pay to the Agent for the account of the Banks the full amount of all outstanding
Loans, all accrued and unpaid interest thereon and all unpaid Commitment Fees
accrued to the date of such termination and all other unpaid obligations of the
Borrower to the Banks or the Agent hereunder. All payment described in this
Section is subject to the provisions of Section 2.6.
Section 4.4 Payments. Payments and prepayments of principal of, and
interest on, the Notes and all fees, expenses and other obligations under the
Loan Documents shall be made without set-off or counterclaim in immediately
available funds not later than 2:00 p.m., Minneapolis time, on the dates due at
the main office of the Agent in Minneapolis, Minnesota. Funds received on any
day after such time shall be deemed to have been received on the next Business
Day. Subject to the definition of the term "Interest Period," whenever any
payment to be made hereunder or on the Notes shall be stated to be due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
any interest or fees. The Borrower authorizes the Agent to debit the Borrower's
demand deposit account No. 1-801- 2061-1819, maintained at the Agent's principal
office, for principal, interest and Commitment Fees when due. Any amounts paid
or prepaid on the Loans shall be paid to the Agent for the account of each Bank
in proportion to its share of the outstanding Loans. The Agent will promptly
distribute in like funds to each Bank its ratable share of each payment of
principal, interest or fees received by the Agent for the account of the Banks.
ARTICLE V
ADDITIONAL PROVISIONS RELATING TO LOANS
Section 5.1 Increased Costs. If, as a result of any law, rule, regulation,
treaty or directive, or any change therein or in the interpretation or
administration thereof, or compliance by any Bank with any request or directive
(whether or not having the force of law) from any court, central bank,
governmental authority, agency or instrumentality, or comparable agency:
13
(a) any tax, duty or other charge with respect to any Loan, the Note
or the Commitment is imposed, modified or deemed applicable, or the basis
of taxation of payments to such Bank of interest or principal of the Loans
or of the Commitment Fees (other than taxes imposed on the overall net
income of such Bank by the jurisdiction in which such Bank has its
principal office) is changed;
(b) any reserve, special deposit, special assessment or similar
requirement against assets of, deposits with or for the account of, or
credit extended by, such Bank is imposed, modified or deemed applicable; or
(c) any other condition affecting this Agreement or the Commitment is
imposed on such Bank or the relevant funding markets;
and such Bank determines that, by reason thereof, the cost to such Bank of
making or maintaining the Loans or the Commitment is increased, or the amount of
any sum receivable by such Bank hereunder or under its Note in respect of any
Loan is reduced;
then, the Borrower shall pay to such Bank upon demand such additional amount or
amounts as will compensate such Bank (or the controlling Person in the instance
of (c) above) for such additional costs or reduction (provided that such Bank
has not been compensated for such additional cost or reduction in the
calculation of the Eurodollar Reserve Rate). Determinations by such Bank for
purposes of this Section 5.1 of the additional amounts required to compensate
the Bank shall be conclusive in the absence of manifest error. In determining
such amounts, each Bank may use any reasonable averaging, attribution and
allocation methods.
Section 5.2 Deposits Unavailable or Interest Rate Unascertainable or
Inadequate; Impracticability. If any Bank determines (which determination shall
be conclusive and binding on the parties hereto) that:
(a) deposits of the necessary amount for the relevant Interest Period
for any Eurodollar Advance or Daily Rate Advance are not available to such
Bank in the relevant markets or that, by reason of circumstances affecting
such market, adequate and reasonable means do not exist for ascertaining
the Eurodollar Rate or Daily Eurodollar Rate for such Interest Period;
(b) the Eurodollar Rate (Reserve Adjusted) or Daily Eurodollar Rate
will not adequately and fairly reflect the cost to such Bank of making or
funding (i) the Eurodollar Advances for a relevant Interest Period, or (ii)
the Daily Rate Advances for a relevant day; or
(c) the making or funding of Eurodollar Advances or Daily Rate
Advances has become impracticable as a result of any event occurring after
the date of this Agreement which, in the opinion of such Bank, materially
and adversely affects such
14
Advances or such Bank's Commitment to make such Advances or the relevant
market;
such Bank shall promptly give notice of such determination to the Borrower and
the other Banks, whereupon the obligation of such Bank to make or continue, or
to convert any Advances to, Eurodollar Advances or Daily Rate Advances, as
appropriate, shall be suspended until such Bank notifies the Borrower and the
Agent that the circumstances giving rise to such suspension no longer exist.
While any suspension of the obligation to make Eurodollar Advances or Daily Rate
Advances continues, all further Advances by such Bank shall be made as a
Reference Rate Advance. No such suspension shall affect the interest rate then
in effect during the applicable Interest Period for any Eurodollar Rate Advance
outstanding at the time such suspension is imposed.
Section 5.3 Changes in Law Rendering Eurodollar Advances Unlawful. If at
any time due to the adoption of any law, rule, regulation, treaty or directive,
or any change therein or in the interpretation or administration thereof by any
court, central bank, governmental authority, agency or instrumentality, or
comparable agency charged with the interpretation or administration thereof, or
for any other reason arising subsequent to the date of this Agreement, it shall
become unlawful or impossible for any Bank to make or fund any Eurodollar
Advance or Daily Rate Advance, the obligation of that Bank to provide such
Advance shall, upon the happening of such event, forthwith be suspended for the
duration of such illegality or impossibility. If any such event shall make it
unlawful or impossible for a Bank to continue or maintain any Eurodollar Advance
or Daily Rate Advance previously made by it hereunder, that Bank shall, upon the
happening of such event, notify the Borrower thereof in writing, and any
Eurodollar Advances or Daily Rate Advances of that Bank shall be continued as a
Reference Rate Advance.
Section 5.4 Capital Adequacy. In the event that any change in any law,
rule, regulation, treaty or directive, or any change therein or in the
interpretation or administration thereof by any court, central bank,
governmental authority, agency or instrumentality, or comparable agency (a
"Governmental Agency") charged with the interpretation or administration
thereof, or compliance by any Bank with any request or directive (whether or not
having the force of law) of any such Governmental Agency reduces or shall have
the effect of reducing the rate of return on any Bank's capital or the capital
of its parent corporation (by an amount such Bank deems material) as a
consequence of its Commitments and/or its Loans to a level below that which such
Bank or its parent corporation could have achieved but for such change (taking
into account such Bank's policies and the policies of its parent corporation
with respect to capital adequacy), then the Borrower shall, within 30 days after
written notice and demand from such Bank (with a copy to the Agent), pay to such
Bank additional amounts sufficient to compensate such Bank or its parent
corporation for such reduction. Any determination by such Bank under this
Section and any certificate as to the amount of such reduction given to the
Borrower by such Bank shall be final, conclusive and binding for all purposes,
absent error.
15
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.1 Conditions of Initial Loan. The obligation of the Banks to make
the initial Loans hereunder shall be subject to the satisfaction of the
conditions precedent, in addition to the applicable conditions precedent set
forth in Section 6.2 below, that the Agent shall have received all of the
following, in form and substance satisfactory to the Agent, each duly executed
and certified or dated the date of the initial Loans or such other date as is
satisfactory to the Agent and in sufficient counterparts (except for the Notes)
for each Bank:
(a) A Note drawn to the order of each Bank executed by a duly
authorized officer (or officers) of the Borrower.
(b) A copy of the corporate resolution of the Borrower authorizing the
execution, delivery and performance of the Loan Documents, certified by the
Secretary or an Assistant Secretary of the Borrower.
(c) An incumbency certificate showing the names and titles, and
bearing the signatures of, the officers of the Borrower authorized to
execute the Loan Documents and to designate, by delivery of a Schedule of
Authorized Representatives or otherwise, officers or employees authorized
to request Loans and agree to rates of interest and otherwise agree to
transactions with the Agent and the Banks in connection with this
Agreement, certified by the Secretary or an Assistant Secretary of the
Borrower.
(d) A copy of the Articles of Incorporation of the Borrower with all
amendments thereto, certified by the appropriate governmental official of
the jurisdiction of its incorporation as of a date not more than 15 days
prior to the Closing Date.
(e) A long-form certificate of good standing for the Borrower in the
jurisdiction of its incorporation, certified by the appropriate
governmental officials as of a date not more than 15 days prior to the
Closing Date.
(f) A copy of the bylaws of the Borrower, certified as of the Closing
Date by the Secretary or an Assistant Secretary of the Borrower.
(g) An opinion of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., counsel to the Borrower,
addressed to the Bank, in substantially the form of Exhibit F to the
Purchase Agreement.
(h) A copy of the Purchase Agreement, duly executed by the parties
thereto, together with evidence reasonably satisfactory to the Agent that
all conditions precedent specified in Section 5.1 of the Purchase Agreement
have been satisfied.
16
Section 6.2 Conditions Precedent to All Loans. The obligation of the Banks
to make any Loans hereunder (including the initial Loans) shall be subject to
the satisfaction of the following conditions precedent, and any request for
Loans shall be deemed a representation or warranty that the following are true:
(a) Before and after giving effect to such Loans, the representations
and warranties contained in Article VII shall be true and correct, as
though made on the date of such Loans; and
(b) Before and after giving effect to such Loans, no Default or Event
of Default shall have occurred and be continuing.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Banks to enter into this Agreement, to grant
the Commitments and to make Loans hereunder, the Borrower represents and
warrants to the Agent and the Banks:
Section 7.1 Organization; Standing, Etc. The Borrower and each of its
corporate Subsidiaries are corporations duly incorporated and validly existing
and in good standing under the laws of the jurisdiction of their respective
incorporation and have all requisite corporate power and authority to carry on
their respective businesses as now conducted, to (in the instance of the
Borrower) enter into the Loan Documents and to perform its obligations under the
Loan Documents. The Borrower and each of its Subsidiaries are duly qualified and
in good standing as a foreign corporation in each jurisdiction in which the
character of the properties owned, leased or operated by it or the business
conducted by it makes such qualification necessary and where failure to so
qualify or to maintain such good standing would constitute an Adverse Event.
Section 7.2 Authorization and Validity. The execution, delivery and
performance by the Borrower of the Loan Documents have been duly authorized by
all necessary corporate action by the Borrower, and the Loan Documents
constitute the legal, valid and binding obligations of the Borrower, enforceable
against the Borrower in accordance with their respective terms, subject to
limitations as to enforceability which might result from bankruptcy, insolvency,
moratorium and other similar laws affecting creditors' rights generally and
subject to limitations on the availability of equitable remedies.
Section 7.3 No Conflict; No Default. The execution, delivery and
performance by the Borrower of the Loan Documents will not (a) violate any
provision of any law, statute, rule or regulation or any order, writ, judgement,
injunction, decree, determination or award of any court, governmental agency or
arbitrator presently in effect having applicability to the Borrower, (b) violate
or contravene any provisions of the Articles (or Certificate) of Incorporation
or by-laws of the Borrower, or (c) result in a breach of or constitute a default
under any indenture, loan or credit agreement or any other agreement, lease or
instrument to
17
which the Borrower is a party or by which it or any of its properties may be
bound or result in the creation of any Lien on any asset of the Borrower or any
Subsidiary. Neither the Borrower nor any Subsidiary is in default under or in
violation of any such law, statute, rule or regulation, order, writ, judgment,
injunction, decree, determination or award or any such indenture, loan or credit
agreement or other agreement, lease or instrument in any case in which the
consequences of such default or violation could constitute an Adverse Event.
Section 7.4 Government Consent. No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or
exemption by, any governmental or public body or authority is required on the
part of the Borrower to authorize, or is required in connection with the
execution, delivery and performance of, or the legality, validity, binding
effect or enforceability of, the Loan Documents.
Section 7.5 Financial Statements and Condition. The Borrower's audited
consolidated financial statements as at April 24, 1999 and its unaudited
consolidated financial statements as at January 21, 2000, as heretofore
furnished to the Banks, have been prepared in accordance with GAAP on a
consistent basis and fairly present the financial condition of the Borrower and
its Subsidiaries as at such dates and the results of their operations and
changes in financial position for the respective periods then ended. As of the
dates of such financial statements, neither the Borrower nor any Subsidiary had
any material obligation, contingent liability, liability for taxes or long-term
lease obligation which is not reflected in such financial statements or in the
notes thereto. Since April 24, 1999, no Adverse Event has occurred.
Section 7.6 Litigation and Contingent Liabilities. Except as previously
disclosed to the Banks in writing, there are no actions, suits or proceedings
pending or, to the knowledge of the Borrower, threatened against or affecting
the Borrower or any Subsidiary or any of their properties before any court or
arbitrator, or any governmental department, board, agency or other
instrumentality which, if determined adversely to the Borrower or such
Subsidiary, could constitute an Adverse Event.
Section 7.7 Compliance. The Borrower and its Subsidiaries are in material
compliance with all statutes and governmental rules and regulations applicable
to them.
Section 7.8 Environmental, Health and Safety Laws. There does not exist any
violation by the Borrower or any Subsidiary of any applicable federal, state or
local law, rule or regulation or order of any government, governmental
department, board, agency or other instrumentality relating to environmental,
pollution, health or safety matters which will or threatens to impose a material
liability on the Borrower or a Subsidiary or which would require a material
expenditure by the Borrower or such Subsidiary to cure. Neither the Borrower nor
any Subsidiary has received any notice to the effect that any part of its
operations or properties is not in material compliance with any such law, rule,
regulation or order or notice that it or its property is the subject of any
governmental investigation evaluating whether any remedial action is needed to
respond to any release of any toxic or
18
hazardous waste or substance into the environment, the consequences of which
non-compliance or remedial action could constitute an Adverse Event.
Section 7.9 ERISA. Each Plan complies with all material applicable
requirements of ERISA and the Code and with all material applicable rulings and
regulations issued under the provisions of ERISA and the Code setting forth
those requirements. No Reportable Event, other than a Reportable Event for which
the reporting requirements have been waived by regulations of the PBGC, has
occurred and is continuing with respect to any Plan. All of the minimum funding
standards applicable to such Plans have been satisfied and there exists no event
or condition which would permit the institution of proceedings to terminate any
Plan under Section 4042 of ERISA. The current value of the Plans' benefits
guaranteed under Title IV of ERISA does not exceed the current value of the
Plans' assets allocable to such benefits.
Section 7.10 Regulation U. The Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (as
defined in Regulation U of the Board of Governors of the Federal Reserve System)
and no part of the proceeds of any Loan will be used to purchase or carry margin
stock or for any other purpose which would violate any of the margin
requirements of the Board of Governors of the Federal Reserve System.
Section 7.11 Ownership of Property; Liens. None of the Accounts or
Inventory of the Borrower or any of its Subsidiaries is subject to a Lien,
except for Permitted Liens.
Section 7.12 Taxes. Each of the Borrower and the Subsidiaries has filed all
federal, state and local tax returns required to be filed and has paid or made
provision for the payment of all taxes due and payable pursuant to such returns
and pursuant to any assessments made against it or any of its property and all
other taxes, fees and other charges imposed on it or any of its property by any
governmental authority (other than taxes, fees or charges the amount or validity
of which is currently being contested in good faith by appropriate proceedings
and with respect to which reserves in accordance with GAAP have been provided on
the books of the Borrower). No tax Liens have been filed and no material claims
are being asserted with respect to any such taxes, fees or charges. The charges,
accruals and reserves on the books of the Borrower in respect of taxes and other
governmental charges are adequate.
Section 7.13 Investment Company Act. Neither the Borrower nor any
Subsidiary is an "investment company" or a company "controlled" by an investment
company within the meaning of the Investment Company Act of 1940, as amended.
Section 7.14 Public Utility Holding Company Act. Neither the Borrower nor
any Subsidiary is a "holding company" or a "subsidiary company" of a holding
company or an "affiliate" of a holding company or of a subsidiary company of a
holding company within the meaning of the Public Utility Holding Company Act of
1935, as amended.
19
Section 7.15 Subsidiaries. Exhibit H to the Purchase Agreement sets forth
as of the date of this Agreement a list of all Subsidiaries and the number and
percentage of the shares of each class of capital stock owned beneficially or of
record by the Borrower or any Subsidiary therein, and the jurisdiction of
incorporation of each Subsidiary.
Section 7.16 Partnerships and Joint Ventures. The Borrower and Subsidiaries
are not currently partners (limited or general) or joint venturers in any
partnership or joint venture.
Section 7.17 Year 2000. The Borrower has reviewed and assessed its business
operations and computer systems and applications to address the "year 2000
problem" (that is, that computer applications and equipment used by the
Borrower, directly or indirectly through third parties, may have been or may be
unable to properly perform date-sensitive functions before, during and after
January 1, 2000). The Borrower represents and warrants that the year 2000
problem has not resulted in and will not result in a material adverse change in
the Borrower's business condition (financial or otherwise), operations,
properties or prospects or ability to repay the Banks. The Borrower agrees that
this representation will be true and correct on and shall be deemed made by the
Borrower on each date the Borrower requests any Advance under this Agreement or
the Notes or delivers any information to the Agent or the Banks. The Borrower
will promptly deliver to the Agent or the Banks such information relating to
this representation and warranty as the Agent or the Banks may request from time
to time.
ARTICLE VIII
AFFIRMATIVE COVENANTS
From the date of this Agreement and thereafter until the Aggregate
Commitment is terminated or expires and the Loans and all other liabilities of
the Borrower to the Agent and the Banks hereunder and under the Notes have been
paid in full, unless the Majority Banks shall otherwise expressly consent in
writing, the Borrower will do, and will cause each Subsidiary (except in the
instance of Section 8.1) to do, all of the following:
Section 8.1 Financial Statements and Reports. Furnish to the Banks:
(a) As soon as available and in any event within 90 days after the end
of each fiscal year of the Borrower, the annual audit report of the
Borrower and its Subsidiaries prepared on a consolidated basis and in
conformity with GAAP, consisting of at least statements of income, cash
flow, changes in financial position and stockholders' equity, and a
consolidated balance sheet as at the end of such year, setting forth in
each case in comparative form corresponding figures from the previous
annual audit, certified without qualification by independent certified
public accountants of recognized standing selected by the Borrower and
acceptable to the Agent, together with any management letters, management
reports or other supplementary comments or reports to the Borrower or its
board of directors furnished by such accountants.
20
(b) As soon as available and in any event within 45 days after the end
of each of the first three fiscal quarters of each fiscal year, a copy of
the unaudited financial statement of the Borrower and its subsidiaries
prepared in the same manner as the audit report referred to in Section
8.1(a), signed by the Borrower's chief financial officer, consisting of at
least consolidated statements of income and cash flow for the Borrower and
the Subsidiaries for such quarter and for the period from the beginning of
such fiscal year to the end of such quarter, and a consolidated balance
sheet of the Borrower as at the end of such quarters setting forth in each
case in comparative form corresponding figures from the previous year.
(c) Together with the financial statements furnished by the Borrower
under Sections 8.1(a) and 8.1(b), a statement signed by the chief financial
officer of the Borrower demonstrating in reasonable detail compliance (or
noncompliance, as the case may be) with each of the financial ratios and
restrictions contained in Article IX and stating that as at the date of
each such financial statement there did not exist any Default or Event of
Default or, if such Default or Event of Default existed, specifying the
nature and period of existence thereof and what action the Borrower
proposes to take with respect thereto.
(d) Immediately upon becoming aware of any Default or Event of
Default, a notice describing the nature thereof and what action the
Borrower proposes to take with respect thereto.
(e) Immediately upon becoming aware of the occurrence, with respect to
any Plan, of any Reportable Event (other than a Reportable Event for which
the reporting requirements have been waived by PBGC regulations) or any
"prohibited transaction" (as defined in Section 4975 of the Code), a notice
specifying the nature thereof and what action the Borrower proposes to take
with respect thereto, and, when received, copies of any notice from PBGC of
intention to terminate or have a trustee appointed for any Plan.
(f) Promptly upon the mailing or filing thereof, copies of all
financial statements, reports and proxy statements mailed to the Borrower's
shareholders, and copies of all registration statements, periodic reports
and other documents filed with the Securities and Exchange Commission (or
any successor thereto) or any national securities exchange.
(g) Immediately upon becoming aware of the occurrence thereof, notice
of the institution of any litigation, arbitration or governmental
proceeding, or the rendering of a judgment or decision in such litigation
or proceeding, which could constitute an Adverse Event, and the steps being
taken by the Person(s) affected by such proceeding.
(h) Immediately upon becoming aware of the occurrence thereof, notice
of any violation as to any environmental matter by the Borrower or any
Subsidiary and
21
of the commencement of any judicial or administrative proceeding relating
to health, safety or environmental matters (i) in which an adverse
determination or result could result in the revocation of or have a
material adverse effect on any operating permits, air emission permits,
water discharge permits, hazardous waste permits or other permits held by
the Borrower or any Subsidiary which are material to the operations of the
Borrower or such Subsidiary, or (ii) which will or threatens to impose a
material liability on the Borrower or such Subsidiary to any Person or
which will require a material expenditure by the Borrower or such
Subsidiary to cure any alleged problem or violation.
(i) From time to time, such other information regarding the business,
operation and financial condition of the Borrower and the Subsidiaries as
the Agent or any Bank may reasonably request.
Section 8.2 Corporate Existence. Subject to Section 9.1 in the instance of
a Subsidiary, maintain its corporate existence in good standing under the laws
of its jurisdiction of incorporation and its qualification to transact business
in each jurisdiction in which the character of the properties owned, leased or
operated by it or the business conducted by it makes such qualification
necessary.
Section 8.3 Insurance. Maintain with financially sound and reputable
insurance companies such insurance as may be required by law and such other
insurance in such amounts and against such hazards as is customary in the case
of reputable corporations engaged in the same or similar business and similarly
situated.
Section 8.4 Payment of Taxes and Claims. File all tax returns and reports
which are required by law to be filed by it and pay before they become
delinquent all taxes, assessments and governmental charges and levies imposed
upon it or its property and all claims or demands of any kind (including,
without limitation, those of suppliers, mechanics, carriers, warehouses,
landlords and other like Persons) which, if unpaid, might result in the creation
of a Lien upon its property; provided that the foregoing items need not be paid
if they are being contested in good faith by appropriate proceedings, and as
long as the Borrower's or such Subsidiary's title to its property is not
materially adversely affected, its use of such property in the ordinary course
of its business is not materially interfered with and adequate reserves with
respect thereto have been set aside on the Borrower's or such Subsidiary's books
in accordance with GAAP.
Section 8.5 Inspection. Permit any Person designated by any Bank to visit
and inspect any of its properties, corporate books and financial records, to
examine and to make copies of its books of accounts and other financial records,
and to discuss the affairs, finances and accounts of the Borrower and the
Subsidiaries with, and to be advised as to the same by, its officers at such
reasonable times and intervals as any Bank may designate. So long as no Event of
Default exists, the expenses of each Bank for such visits, inspections and
examinations shall be at the expense of that Bank, but any such visits,
inspections, and
22
examinations made while any Event of Default is continuing shall be at the
expense of the Borrower.
Section 8.6 Maintenance of Properties. Maintain its properties used or
useful in the conduct of its business in good condition, repair and working
order, and supplied with all necessary equipment, and make all necessary
repairs, renewals, replacements, betterments and improvements thereto, all as
may be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times.
Section 8.7 Books and Records. Keep adequate and proper records and books
of account in which full and correct entries will be made of its dealings,
business and affairs.
Section 8.8 Compliance. Comply in all material respects with all laws,
rules, regulations, orders, writs, judgments, injunctions, decrees or awards to
which it may be subject.
Section 8.9 ERISA. Maintain each Plan in compliance with all material
applicable requirements of ERISA and of the Code and with all material
applicable rulings and regulations issued under the provisions of ERISA and of
the Code.
Section 8.10 Environmental Matters. Observe and comply with all laws,
rules, regulations and orders of any government or government agency relating to
health, safety, pollution, hazardous materials or other environmental matters to
the extent non-compliance could result in a material liability or otherwise
constitute an Adverse Event.
Section 8.11 Reaffirmation of Guaranties. When so requested by the Agent
from time to time, the Borrower will promptly cause ▇▇▇▇▇▇▇▇▇ Dental Supply,
Inc., and any other Person who may hereafter guarantee the Loans or any part
thereof, to execute and deliver to the Agent reaffirmations of their respective
guaranties in such form as the Agent may require.
Section 8.12 Intercreditor Agreements. If the Borrower incurs any
Indebtedness for borrowed money other than the Loans, it will promptly notify
the Agent and, upon request by the Agent, cause the lender with respect to such
Indebtedness to enter into an intercreditor agreement in form and substance
satisfactory to the Agent, providing that neither such lender nor the Banks will
accept any collateral for such Indebtedness or the Loans unless all of such
Indebtedness and the Loans is simultaneously granted a parity Lien on such
collateral.
ARTICLE IX
NEGATIVE COVENANTS
From the date of this Agreement and thereafter until the Aggregate
Commitment is terminated or expires and the Loans and all other liabilities of
the Borrower to the Agent and the Banks hereunder and under the Notes have been
paid in full, unless the Majority Banks shall otherwise expressly consent in
writing, the Borrower will not, and will not permit any Subsidiary to, do any of
the following:
23
Section 9.1 Merger. Merge or consolidate or enter into any analogous
reorganization or transaction with any Person, unless the Borrower shall be the
surviving corporation and no Default or Event of Default shall exist before and
after giving effect to such merger, consolidation, reorganization, or
transaction; provided, however, any wholly-owned Subsidiary may be merged with
or liquidated into the Borrower (if the Borrower is the surviving corporation)
or any other wholly-owned Subsidiary.
Section 9.2 Sale of Assets. Sell, transfer, lease or otherwise convey all
or any substantial part of its assets except for sales and leases of inventory
in the ordinary course of business and except for sales or other transfers by a
wholly-owned Subsidiary to the Borrower or another wholly-owned Subsidiary
provided, however, that the foregoing shall not prohibit the Permitted Account
Sales or the capitalization of ▇▇▇▇▇▇▇▇▇ Dental Supply, Inc. by a contribution
of the distribution centers, warehouses, sales offices and related assets owned
by the Borrower if and only if ▇▇▇▇▇▇▇▇▇ Dental Supply, Inc. is a wholly-owned
Subsidiary of the Borrower (and any such capitalization and contribution shall
not be deemed to be a change in the nature of the Borrower's or ▇▇▇▇▇▇▇▇▇ Dental
Supply, Inc.'s business in violation of Section 9.4).
Section 9.3 Plans. Permit any condition to exist in connection with any
Plan which might constitute grounds for the PBGC to institute proceedings to
have such Plan terminated or a trustee appointed to administer such Plan, permit
any Plan to terminate under any circumstances which would cause the lien
provided for in Section 4068 of ERISA to attach to any property, revenue or
asset of the Borrower or any Subsidiary or permit the underfunded amount of Plan
benefits guaranteed under Title IV of ERISA to exceed $500,000.
Section 9.4 Change in Nature of Business. Make any material change in the
nature of the business of the Borrower or such Subsidiary, as carried on at the
date hereof.
Section 9.5 Liens. Create, incur, assume or suffer to exist any Lien on any
Account or Inventory, except for Permitted Liens.
Section 9.6 Use of Proceeds. Permit any proceeds of the Loans to be used,
either directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of "purchasing or carrying any margin stock" within the meaning of
Regulation U of the Federal Reserve Board, as amended from time to time, and
furnish to the Bank, upon its request, a statement in conformity with the
requirements of Federal Reserve Form U-1 referred to in Regulation U.
Section 9.7 Current Ratio. Permit the ratio of its consolidated current
assets to its consolidated current liabilities plus, without duplication, the
amount of the Loans outstanding (whether or not current liabilities) to be less
than 1.50:1.00 at any time.
Section 9.8 Tangible Net Worth. Permit its Consolidated Tangible Net Worth
at any time to be less than the sum of (a) $75,000,000, plus (b) 75% of the
cumulative net income
24
for all periods following the fiscal quarter of the Borrower ending July 27,
1996 (without taking into account any net loss in any such period), plus (c) 90%
of the net proceeds of any issuance after July 27, 1996 of common or preferred
stock, convertible debentures, or any other equity interests in the Borrower.
Section 9.9 Leverage Ratio. Permit the ratio of consolidated total
liabilities plus Deferred Credits to Consolidated Tangible Net Worth to be more
than 1.50:1.00 at any time.
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
Section 10.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an Event of Default:
(a) The Borrower shall fail to make when due, whether by acceleration
or otherwise, any payment of (i) principal on the Notes, or (ii) interest,
Commitment Fee, agent's fee or other amount required to be made to the
Agent or any Bank pursuant to the Loan Documents if such failure to pay
such amounts under this subsection (ii) shall continue for 5 or more
Business Days;
(b) Any representation or warranty made or deemed to have been made by
or on behalf of the Borrower or any Subsidiary in the Loan Documents or on
behalf of the Borrower or any Subsidiary in any certificate, statement,
report or other writing furnished by or on behalf of the Borrower to the
Agent or the Banks pursuant to the Loan Documents or any other instrument,
document or agreement shall prove to have been false or misleading in any
material respect on the date as of which the facts set forth are stated or
certified or deemed to have been stated or certified;
(c) The Borrower shall fail to comply with any agreement, covenant,
condition, provision or term contained in the Loan Documents (and such
failure shall not constitute an Event of Default under any of the other
provisions of this Section 10.1) and such failure to comply shall continue
for 30 calendar days after notice thereof to the Borrower by the Agent;
(d) The Borrower or any Subsidiary shall become insolvent or shall
generally not pay its debts as they mature or shall apply for, shall
consent to, or shall acquiesce in the appointment of a custodian, trustee
or receiver of the Borrower or such Subsidiary or for a substantial part of
the property thereof or, in the absence of such application, consent or
acquiescence, a custodian, trustee or receiver shall be appointed for the
Borrower or a Subsidiary or for a substantial part of the property thereof
and shall not be discharged within 30 days;
(e) Any bankruptcy, reorganization, debt arrangement or other
proceedings under any bankruptcy or insolvency law shall be instituted by
or against the Borrower or a Subsidiary, and, if instituted against the
Borrower or a Subsidiary,
25
shall have been consented to or acquiesced in by the Borrower or such
Subsidiary, or shall remain undismissed for 30 days, or an order for relief
shall have been entered against the Borrower or such Subsidiary, or the
Borrower or any Subsidiary shall take any corporate action to approve
institution of, or acquiescence in, such a proceeding;
(f) Any dissolution or liquidation proceeding shall be instituted by
or against the Borrower or a Subsidiary and, if instituted against the
Borrower or such Subsidiary, shall be consented to or acquiesced in by the
Borrower or such Subsidiary or shall remain for 30 days undismissed, or the
Borrower or any Subsidiary shall take any corporate action to approve
institution of, or acquiescence in, such a proceeding;
(g) A judgment or judgments for the payment of money in excess of the
sum of $2,000,000 in the aggregate shall be rendered against the Borrower
or a Subsidiary and the Borrower or such Subsidiary shall not discharge the
same or provide for its discharge in accordance with its terms, or procure
a stay of execution thereof, prior to any execution on such judgments by
such judgment creditor, within 30 days from the date of entry thereof, and
within said period of 30 days, or such longer period during which execution
of such judgment shall be stayed, appeal therefrom and cause the execution
thereof to be stayed during such appeal;
(h) The institution by the Borrower or any ERISA Affiliate of steps to
terminate any Plan if in order to effectuate such termination, the Borrower
or any ERISA Affiliate would be required to make a contribution to such
Plan, or would incur a liability or obligation to such Plan, in excess of
$2,000,000, or the institution by the PBGC of steps to terminate any Plan;
(i) The maturity of any indebtedness of the Borrower (other than
indebtedness under this Agreement) or a Subsidiary in an aggregate amount
of $2,000,000 or more shall be accelerated, or the Borrower or a Subsidiary
shall fail to pay any such indebtedness in such amount when due or, in the
case of such indebtedness payable on demand, when demanded, or any event
shall occur or condition shall exist and shall continue for more than the
period of grace, if any, applicable thereto and shall have the effect of
causing, or permitting (any required notice having been given and grace
period having expired) the holder of any such indebtedness or any trustee
or other Person acting on behalf of such holder to cause, such indebtedness
in such amount to become due prior to its stated maturity or to realize
upon any collateral given as security therefor; or
(j) Any Person, or group of Persons acting in concert, that owned less
than 5% of the shares of any voting class of stock of the Borrower shall
have acquired more than 50% of the shares of such voting stock; or
(k) The occurrence of any Termination Event under the Purchase
Agreement.
26
Section 10.2 Remedies. If (a) any Event of Default described in Sections
10.1(d), (e) or (f) shall occur with respect to the Borrower, the Aggregate
Commitment shall automatically terminate and the outstanding unpaid principal
balance of the Notes, the accrued interest thereon and all other obligations of
the Borrower to the Agent and the Banks under the Loan Documents shall
automatically become immediately due and payable; or (b) any other Event of
Default shall occur and be continuing, then the Agent may, and upon the request
of the Majority Banks shall, take any or all of the following actions: (i)
declare the Aggregate Commitment terminated, whereupon the Aggregate Commitment
shall terminate, (ii) declare that the outstanding unpaid principal balance of
the Notes, the accrued and unpaid interest thereon and all other obligations of
the Borrower to the Agent and the Banks under the Loan Documents to be forthwith
due and payable, whereupon the Notes, all accrued and unpaid interest thereon
and all such obligations shall immediately become due and payable, in each case
without demand or notice of any kind, all of which are hereby expressly waived,
anything in this Agreement or in the Notes to the contrary notwithstanding,
(iii) exercise all rights and remedies under any other instrument, document or
agreement between the Borrower and the Agent or the Banks, and (iv) enforce all
rights and remedies under any applicable law.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Waiver and Amendment. No failure on the part of the Agent or
the holder of any Note to exercise and no delay in exercising any power or right
hereunder or under any other Loan Document shall operate as a waiver thereof;
nor shall any single or partial exercise of any power or right preclude any
other or further exercise thereof or the exercise of any other power or right.
The remedies herein and in any other instrument, document or agreement delivered
or to be delivered to the Agent or the Banks hereunder or in connection herewith
are cumulative and not exclusive of any remedies provided by law. No notice to
or demand on the Borrower not required hereunder or under the Notes shall in any
event entitle the Borrower to any other or further notice or demand in similar
or other circumstances or constitute a waiver of the right of the Agent or the
holder of any Note to any other or further action in any circumstances without
notice or demand. No amendment, modification or waiver of any provision of this
Agreement or consent to any departure by the Borrower therefrom shall be
effective unless the same shall be in writing and signed by the Majority Banks,
and then such amendment, modifications, waiver or consent shall be effective
only in the specific instances and for the specific purpose for which given.
Notwithstanding the foregoing, no such amendment, modification, waiver or
consent shall:
11.1(a) Reduce the rate or extend the time of payment of interest
thereon, or reduce the amount of the principal thereof, or modify any of
the provisions of any Note with respect to the payment or repayment
thereof, without the consent of the holder of each Note so affected; or
11.1(b) Increase the amount or extend the time of any Commitment of
any Bank, without the consent of such Bank; or
27
11.1(c) Reduce the rate or extend the time of payment of any fee
payable to a Bank, without the consent of the Bank affected; or
11.1(d) Except as may otherwise be expressly provided in any of the
other Loan Documents, release any material portion of collateral securing,
or any guaranties for, all or any part of the Obligations without the
consent of all the Banks; or
11.1(e) Amend the definition of Majority Banks or otherwise reduce the
percentage of the Banks required to approve or effectuate any such
amendment, modification, waiver, or consent, without the consent of all the
Banks; or
11.1(f) Amend any of the foregoing Sections 11.1 (a) through (e) or
this Section 11.1 (f) without the consent of all the Banks; or
11.1(g) Amend any provision of this Agreement relating to the Agent in
its capacity as Agent without the consent of the Agent.
Section 11.2 Expenses and Indemnities. Whether or not any Loan is made
hereunder, the Borrower agrees to reimburse the Agent upon demand for all
reasonable expenses paid or incurred by the Agent (including filing and
recording costs and reasonable fees and expenses of legal counsel, who may be
employees of the Agent) in connection with the preparation, negotiation,
execution, delivery, amendment, modification and interpretation of the Loan
Documents. The Borrower agrees to pay, and save the Agent and the Banks harmless
from all liability for, any stamp or other taxes which may be payable with
respect to the execution or delivery of the Loan Documents. The Borrower shall
also reimburse the Agent and each Bank upon demand for all reasonable
out-of-pocket expenses (including expenses of legal counsel) paid or incurred by
the Agent or any Bank in connection with the collection and enforcement of this
Agreement and any other Loan Document. The Borrower agrees to indemnify and hold
the Banks and the Agent harmless from any loss or expense which may arise or be
created by the acceptance of telephonic or other instructions for making Loans
or disbursing the proceeds thereof. The Borrower further agrees to defend,
protect, indemnify and hold harmless the Agent and the Banks and their
respective Affiliates and the directors, officers, employees, attorneys and
agents of the Agent and the Banks and their respective Affiliates (each of the
foregoing being an "Indemnitee" and all of the foregoing being collectively the
"Indemnitees") from and against any and all claims, actions, damages,
liabilities, judgments, costs and expenses (including all reasonable fees and
disbursements of counsel which may be incurred in the investigation or defense
of any matter) imposed upon, incurred by or asserted against any Indemnitee,
whether direct, indirect or consequential and whether based on any federal,
state, local or foreign laws or regulations (including securities laws,
environmental laws, commercial laws and regulations), under common law or on
equitable cause, or on contract or otherwise:
(a) by reason of, relating to or in connection with the execution,
delivery, performance or enforcement of any Loan Document, any commitments
relating
28
thereto, the creation of a Lien in favor of the Agent or the Banks under
any Loan Document, or any transaction contemplated by any Loan Document; or
(b) by reason of, relating to or in connection with any credit
extended or used under the Loan Documents or any act done or omitted by any
Person thereunder or with respect thereto, or the exercise of any rights or
remedies thereunder, including the acquisition of any collateral by the
Banks by way of foreclosure of the Lien thereon, deed or ▇▇▇▇ of sale in
lieu of such foreclosure or otherwise;
provided, however, that the Borrower shall not be liable to any Indemnitee for
any portion of such claims, damages, liabilities and expenses resulting from
such Indemnitee's gross negligence or willful misconduct. In the event this
indemnity is unenforceable as a matter of law as to a particular matter or
consequence referred to herein, it shall be enforceable to the full extent
permitted by law. The foregoing indemnifications apply, without limitation, to
any act, omission, event or circumstance existing or occurring on or prior to
the later of the Termination Date or the date of payment in full of the Loans
and other obligations under this Agreement, including specifically obligations
arising under clause (b) of this Section. The indemnification provisions set
forth above shall be in addition to any liability the Borrower may otherwise
have. The obligations of the Borrower under this Section 11.2 shall survive any
termination of this Agreement.
Section 11.3 Notices. Except when telephonic notice is expressly authorized
by this Agreement, any notice or other communication to any party in connection
with this Agreement shall be in writing and shall be sent by manual delivery,
telegram, telex, facsimile transmission, overnight courier or United States mail
(postage prepaid) addressed to such party at the address specified on the
signature page hereof, or at such other address as such party shall have
specified to the other party hereto in writing. All periods of notice shall be
measured from the date of delivery thereof if manually delivered, from the date
of sending thereof if sent by telegram, telex or facsimile transmission, from
the first Business Day after the date of sending if sent by overnight courier,
or from four days after the date of mailing if mailed; provided, however, that
any notice to the Agent or any Bank under Article II hereof shall be deemed to
have been given only when received by the Agent or such Bank.
Section 11.4 Successors and Assigns; Disposition of Loans; Transferees.
11.4(a) This Agreement shall be binding upon and inure to the benefit
of the Borrower, the Banks, the Agent, all future holders of the Notes, and
their respective successors and assigns, except that the Borrower may not
assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of each Bank.
11.4(b) Any Bank may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time sell to one or
more banks or other entities ("Participants") participating interests in
any Loan owing to such Bank, the Note held by such Bank, and the Commitment
of such Bank, or any other
29
interest of such Bank hereunder. In the event of any such sale by a Bank of
participating interests to a Participant, (i) such Bank's obligations under
this Agreement to the other parties to this Agreement shall remain
unchanged, (ii) such Bank shall remain solely responsible for the
performance thereof, (iii) such Bank shall remain the holder of the Note
for all purposes under this Agreement, (iv) the Borrower and the Agent
shall continue to deal solely and directly with such Bank in connection
with such Bank's rights and obligations under this Agreement and (v) the
agreement pursuant to which such Participant acquires its participating
interest herein shall provide that such Bank shall retain the sole right
and responsibility to enforce the Loans, including, without limitation the
right to consent or agree to any amendment, modification, consent or waiver
with respect to this Agreement or any other Loan Document, provided that
such agreement may provide that such Bank will not consent or agree to any
such amendment, modification, consent or waiver with respect to the matters
set forth in Sections 11.1(a) - (c) without the prior consent of such
Participant. The Borrower agrees that if amounts outstanding under this
Agreement, the Notes and the Loan Documents are due and unpaid, or shall
have been declared or shall have become due and payable upon the occurrence
of an Event of Default, each Participant shall be deemed to have, to the
extent permitted by applicable law, the right of setoff in respect of its
participating interest in amounts owing under this Agreement and any Note
or other Loan Document to the same extent as if the amount of its
participating interest were owing directly to it as a Bank under this
Agreement or any Note or other Loan Document; provided, that such right of
setoff shall be subject to the obligation of such Participant to share with
the Banks, and the Banks agree to share with such Participant, as provided
in subsection 12.11. The Borrower also agrees that each Participant shall
be entitled to the benefits of subsections 2.6, 5.1, 5.2, 5.3 and 11.2 with
respect to its participation in the Commitments and Loans; provided, that
no Participant shall be entitled to receive any greater amount pursuant to
such subsections than the transferor Bank would have been entitled to
receive in respect of the amount of the participation transferred by such
transferor Bank to such Participant had no such transfer occurred.
11.4(c) Each Bank may, from time to time, with the consent of the
Agent (which consents shall not be unreasonably withheld), assign to other
lenders ("Assignees") part of the Indebtedness evidenced by the Note then
held by that Bank, together with equivalent proportions of its Commitment
and its "Buyer's Percentage" (as defined in the Purchase Agreement)
pursuant to written agreements executed by such assigning Bank, such
Assignee(s) and the Agent in substantially the form of Exhibit B, which
agreements shall specify in each instance the portion of the Loans which is
to be assigned to each Assignee and the portion of the Commitment of such
Bank to be assumed by each Assignee (each, an "Assignment Agreement");
provided, however, that the assigning Bank must pay to the Agent a
processing and recordation fee of $3,500 and that each Assignment must be
for an aggregate amount of $15,000,000 or more (or the entire amount of the
assigning Bank's Commitment, if lesser). Upon the execution of each
Assignment Agreement by the assigning Bank, the relevant Assignee, the
Borrower and the Agent, payment to the assigning Bank by
30
such Assignee of the purchase price for the portion of the Loans being
acquired by it and receipt by the Borrower of a copy of the relevant
Assignment Agreement, (x) such Assignee lender shall thereupon become a
"Bank" for all purposes of this Agreement with a Commitment in the amount
set forth in such Assignment Agreement and with all the rights, powers and
obligations afforded a Bank under this Agreement, (y) such assigning Bank
shall have no further liability for funding the portion of its Commitment
assumed by such Assignee and (z) the address for notices to such Assignee
shall be as specified in the Assignment Agreement executed by it.
Concurrently with the execution and delivery of each Assignment Agreement,
the assigning Bank shall surrender to the Agent the Note a portion of which
is being assigned, and the Borrower shall execute and deliver a Note to the
Assignee in the amount of its Commitment, and a new Note to the assigning
Bank in the amount of its Commitment after giving effect to the reduction
occasioned by such assignment, all such Notes to constitute "Notes" for all
purposes of this Agreement and of the other Loan Documents.
11.4(d) The Borrower shall not be liable for any costs incurred by the
Banks in effecting any participation or assignment.
11.4(e) Each Bank may disclose to any Assignee or Participant and to
any prospective Assignee or Participant any and all financial information
in such Bank's possession concerning the Borrower or any of its
Subsidiaries which has been delivered to such Bank by or on behalf of the
Borrower or any of its Subsidiaries pursuant to this Agreement or which has
been delivered to such Bank by or on behalf of the Borrower or any of its
Subsidiaries in connection with such Bank's credit evaluation of the
Borrower or any of its Subsidiaries prior to entering into this Agreement,
provided that prior to disclosing such information, such Bank shall first
obtain the agreement of such prospective Assignee or Participant to comply
with the provisions of Section 11.13.
Section 11.5 Severability. Any provision of the Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 11.6 Subsidiary References. The provisions of this Agreement
relating to Subsidiaries shall apply only during such times as the Borrower has
one or more Subsidiaries.
Section 11.7 Captions. The captions or headings herein and any table of
contents hereto are for convenience only and in no way define, limit or describe
the scope or intent of any provision of this Agreement.
Section 11.8 Entire Agreement. This Agreement and the Notes embody the
entire agreement and understanding between the Borrower and the Bank with
respect to the subject
31
matter hereof and thereof. This Agreement supersedes all prior agreements and
understandings relating to the subject matter hereof.
Section 11.9 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and either of the parties hereto may execute this Agreement by
signing any such counterpart.
Section 11.10 Governing Law. THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY
OF THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES
THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE UNITED STATES APPLICABLE TO
NATIONAL BANKS.
Section 11.11 Consent to Jurisdiction. AT THE OPTION OF THE AGENT, THIS
AGREEMENT AND THE NOTE MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA STATE
COURT SITTING IN MINNEAPOLIS OR ST. ▇▇▇▇, MINNESOTA; AND THE BORROWER CONSENTS
TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT
VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE BORROWER COMMENCES ANY
ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY
ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT,
THE AGENT AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF
THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE
ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.
Section 11.12 Waiver of Jury Trial. THE BORROWER, THE AGENT AND EACH BANK
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS (a) UNDER THIS AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
CONNECTION HEREWITH OR (b) ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN
CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING
SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
Section 11.13 Confidentiality of Information. The Agent and each Bank shall
use reasonable efforts to assure that information about the Borrower and its
operations, affairs and financial condition, not generally disclosed to the
public or to trade and other creditors, which is furnished to the Agent or such
Bank pursuant to the provisions hereof is used only for the purposes of this
Agreement and any other relationship between any Bank and the Borrower and shall
not be divulged to any Person other than the Banks, their Affiliates and their
respective officers, directors, employees and agents, except: (a) to their
attorneys and accountants, (b) in connection with the enforcement of the rights
of the Banks hereunder and
32
under the Notes and any guaranty or otherwise in connection with applicable
litigation, (c) in connection with assignments and participations and the
solicitation of prospective assignees and participants referred to in the
immediately preceding Section, and (d) as may otherwise be required or requested
by any regulatory authority having jurisdiction over any Bank or by any
applicable law, rule, regulation or judicial process, the opinion of such Bank's
counsel concerning the making of such disclosure to be binding on the parties
hereto. No Bank shall incur any liability to the Borrower by reason of any
disclosure permitted by this Section 11.13.
Section 11.14 Withholding Taxes.
(a) Banks to Submit Forms. Each Bank represents to the Borrower and
the Agent that, as of the date it becomes a Bank and at all times
thereafter, it is either (i) a corporation organized under the laws of the
United States or any State thereof or (ii) entitled to complete exemption
from United States withholding tax imposed on or with respect to any
payments, including fees, to be made pursuant to this Agreement (x) under
an applicable provision of a tax convention to which the United States is a
party or (y) because it is acting through a branch, agency or office in the
United States and any payment to be received by it hereunder is effectively
connected with a trade or business in the United States. Each Bank that is
not a United States person (as such term is defined in Section 7701(a)(30)
of the Code) shall submit to the Borrower and the Agent, on or before the
later of the date hereof or the day on which such Bank becomes a Bank, duly
completed and signed copies of either Form 1001 (relating to such Bank and
entitling it to a complete exemption from withholding on all payments to be
received by such Bank hereunder) or Form 4224 (relating to all payments to
be received by such Bank hereunder) of the United States Internal Revenue
Service. Thereafter and from time to time, each such Bank shall submit to
the Borrower and the Agent such additional duly completed and signed copies
of one or the other of such Forms (or such successor Forms as shall be
adopted from time to time by the relevant United States taxing authorities)
as may be (i) reasonably requested by the Borrower or the Agent and (ii)
required and permitted under then-current United States law or regulations
to avoid United States withholding taxes on payments in respect of all
payments to be received by such Bank hereunder. Upon the request of the
Borrower or the Agent, each Bank that is a United States person (as such
term is defined in Section 7701(a)(30) of the Code) shall submit to the
Borrower and the Agent a certificate in such form as is reasonably
satisfactory to the Borrower and the Agent to the effect that it is such a
United States person.
(b) Inability of a Bank. If any Bank that is not a United States
person (as such term is defined in Section 7701(a)(30) of the Code)
determines that, as a result of any change in law or regulation or the
interpretation thereof, the Borrower or the Agent is required by law or
regulation to make any deduction, withholding or backup withholding (in
which case the Borrower or the Agent is hereby authorized to make such
deduction, withholding or backup withholding) of any taxes, levies,
imposts, duties, fees, liabilities or similar charges of the United States
of America, any
33
possession or territory of the United States of America (including the
Commonwealth of Puerto Rico) or any area subject to the jurisdiction of the
United States of America ("U.S. Taxes") from any payments to a Bank
pursuant to any Loan Document in respect of the obligations payable to such
Bank then or thereafter outstanding under this Agreement or that Bank's
Note, the amount payable will be increased to the amount which, after
deduction from such increased amount of all U.S. Taxes required to be
withheld or deducted therefrom, will yield the amount required under any
Loan Document to be paid with respect thereto; provided, that the Borrower
shall not be required to pay any additional amount pursuant to this Section
11.14(b) to any Bank (i) that is not, either on the date this Agreement is
executed by such Bank or on the date such Bank becomes such under Section
11.4(c), either (x) entitled to submit Form 1001 (relating to such Bank and
entitling it to a complete exemption from withholding on all payments to be
received by such Bank hereunder) or Form 4224 (relating to all payments to
be received by such Bank hereunder) or (y) a United States person (as such
term is defined in Section 7701(a)(30) of the Code), or (ii) that has
failed to submit any form or certificate that it was required to file
pursuant to subsection (a) and entitled to file under applicable law or
(iii) arising from such Bank's failure to comply with any certification,
identification or other similar requirement under United States income tax
laws or regulations (including backup withholding) to establish entitlement
to exemption from such U.S. Taxes; and provided, further, that if a Bank,
as a result of any amount paid by the Borrower to such Bank pursuant to
this Section 11.14, shall realize a tax credit or refund, which tax credit
or refund would not have been realized but for the Borrower's payment of
such amount, such Bank shall pay to the Borrower an amount equal to such
tax credit or refund. Each Bank may determine the portion, if any, of any
tax credit or refund attributable to the Borrower's payments using such
attribution and accounting methods as such Bank reasonably selects, and
such Bank's determination of the portion of any tax credit or refund
attributable to the Borrower's payments shall be conclusive in the absence
of manifest error. The obligation of the Borrower under this Section
11.14(b) shall survive the payment in full of the Obligations and the
termination of the Commitments of such Bank.
(c) Substitution of Bank. In the event the Borrower is required
pursuant to this Section 11.14 to pay any additional amount to any Bank,
such Bank shall, if no Event of Default has occurred and is continuing,
upon the request of the Borrower to such Bank and the Agent, assign,
pursuant to and in accordance with the provisions of Section 11.4, all of
its rights and obligations under this Agreement and under its Note to
another Bank or an Assignee selected by the Borrower and reasonably
satisfactory to the Agent, in consideration for (i) the payment by such
assignee to the assigning Bank of the principal of, and interest accrued
and unpaid to the date of such assignment on, the Note of such Bank, (ii)
the payment by the Borrower to the assigning Bank of any and all other
amounts owing to such Bank under any provision of this Agreement accrued
and unpaid to the date of such assignment and (iii) the Borrower's release
of the assigning Bank from any further obligation or liability under this
Agreement. Notwithstanding anything to the contrary in this Section
11.14(c), in
34
no event shall the replacement of any Bank result in a decrease in the
aggregate Commitments without the written consent of the Majority Banks.
ARTICLE XII
THE AGENT
The following provisions shall govern the relationship of the Agent with
the Banks.
Section 12.1 Appointment and Authorization. Each Bank appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such respective powers under the Loan Documents as are delegated to the Agent by
the terms thereof, together with such powers as are reasonably incidental
thereto. Neither the Agent nor any of its directors, officers or employees shall
be liable for any action taken or omitted to be taken by it under or in
connection with the Loan Documents, except for its own gross negligence or
willful misconduct. The Agent shall act as an independent contractor in
performing its obligations as Agent hereunder and nothing herein contained shall
be deemed to create any fiduciary relationship among or between the Agent, the
Borrower or the Banks.
Section 12.2 Note Holders. The Agent may treat the payee of any Note as the
holder thereof until written notice of transfer shall have been filed with it,
signed by such payee and in form satisfactory to the Agent.
Section 12.3 Consultation with Counsel. The Agent may consult with legal
counsel selected by it and shall not be liable for any action taken or suffered
in good faith by it in accordance with the advice of such counsel.
Section 12.4 Loan Documents. The Agent shall not be under a duty to examine
or pass upon the validity, effectiveness, genuineness or value of any of the
Loan Documents or any other instrument or document furnished pursuant thereto,
and the Agent shall be entitled to assume that the same are valid, effective and
genuine and what they purport to be.
Section 12.5 U.S. Bank and Affiliates. With respect to its Commitment and
the Loans made by it, U.S. Bank shall have the same rights and powers under the
Loan Documents as any other Bank and may exercise the same as though it were not
the Agent consistent with the terms thereof, and U.S. Bank and its Affiliates
may accept deposits from, lend money to and generally engage in any kind of
business with the Borrower as if it were not the Agent.
Section 12.6 Action by Agent. Except as may otherwise be expressly stated
in this Agreement, the Agent shall be entitled to use its discretion with
respect to exercising or refraining from exercising any rights which may be
vested in it by, or with respect to taking or refraining from taking any action
or actions which it may be able to take under or in respect of, the Loan
Documents. The Agent shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the
instructions of the Majority Banks, and such instructions shall be binding upon
all holders of Notes;
35
provided, however, that the Agent shall not be required to take any action which
exposes the Agent to personal liability or which is contrary to the Loan
Documents or applicable law. The Agent shall incur no liability under or in
respect of any of the Loan Documents by acting upon any notice, consent,
certificate, warranty or other paper or instrument believed by it to be genuine
or authentic or to be signed by the proper party or parties and to be consistent
with the terms of this Agreement.
Section 12.7 Credit Analysis. Each Bank has made, and shall continue to
make, its own independent investigation or evaluation of the operations,
business, property and condition, financial and otherwise, of the Borrower in
connection with entering into this Agreement and has made its own appraisal of
the creditworthiness of the Borrower. Except as explicitly provided herein, the
Agent has no duty or responsibility, either initially or on a continuing basis,
to provide any Bank with any credit or other information with respect to such
operations, business, property, condition or creditworthiness, whether such
information comes into its possession on or before the first Event of Default or
at any time thereafter.
Section 12.8 Notices of Event of Default, Etc. In the event that the Agent
shall have acquired actual knowledge of any Event of Default or Default, the
Agent shall promptly give notice thereof to the Banks.
Section 12.9 Indemnification. Each Bank agrees to indemnify the Agent, as
Agent (to the extent not reimbursed by the Borrower), ratably according to such
Bank's share of the Aggregate Commitment from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on or incurred by the Agent in any way relating to or arising out of the
Loan Documents or any action taken or omitted by the Agent under the Loan
Documents, provided that no Bank shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Agent's gross negligence or
willful misconduct. No payment by any Bank under this Section shall relieve the
Borrower of any of its obligations under this Agreement.
Section 12.10 Payments and Collections. All funds received by the Agent in
respect of any payments made by the Borrower on the Notes or Commitment Fees
shall be distributed forthwith by the Agent among the Banks, in like currency
and funds as received, ratably according to each Bank's Commitment. After any
Event of Default has occurred, all funds received by the Agent, whether as
payments by the Borrower or as realization on any collateral or on any
guaranties, shall (except as may otherwise be required by law) be distributed by
the Agent in the following order: (a) first to the Agent or any Bank who has
incurred unreimbursed costs of collection with respect to any Loans or fees
payable hereunder, ratably to the Agent and each Bank in the proportion that the
costs incurred by the Agent or such Bank bear to the total of all such costs
incurred by the Agent and all Banks; (b) next to the Agent for the account of
the Banks (pro rata to the amounts outstanding under their respective Notes) for
application on the Notes; (c) next to the Agent for the account of the Banks (in
accordance with their respective Commitments) for any unpaid Commitment
36
Fees owing by the Borrower hereunder; and (d) last to the Agent for application
to any unpaid agent's fees.
Section 12.11 Sharing of Payments. If any Bank shall receive and retain any
payment, voluntary or involuntary, whether by setoff, application of deposit
balance or security, or otherwise, in respect of Indebtedness under this
Agreement or the Notes in excess of such Bank's share thereof as determined
under this Agreement, then such Bank shall purchase from the other Banks for
cash and at face value and without recourse, such participation in the Notes
held by such other Banks as shall be necessary to cause such excess payment to
be shared ratably as aforesaid with such other Banks; provided, that if such
excess payment or part thereof is thereafter recovered from such purchasing
Bank, the related purchases from the other Banks shall be rescinded ratably and
the purchase price restored as to the portion of such excess payment so
recovered, but without interest. Subject to the participation purchase
obligation above, each Bank agrees to exercise any and all rights of setoff,
counterclaim or banker's lien first fully against any Notes and participations
therein held by such Bank, next to any other indebtedness of the Borrower to
such Bank arising under or pursuant to this Agreement and to any participations
held by such Bank in indebtedness of the Borrower arising under or pursuant to
this Agreement, and only then to any other indebtedness of the Borrower to such
Bank.
Section 12.12 Advice to Banks. The Agent shall forward to the Banks copies
of all notices, financial reports and other communications received hereunder
from the Borrower by it as Agent, excluding, however, notices, reports and
communications which by the terms hereof are to be furnished by the Borrower
directly to each Bank.
Section 12.13 Resignation. If at any time U.S. Bank shall deem it
advisable, in its sole discretion, it may submit to each of the Banks and the
Borrower a written notification of its resignation as Agent under this
Agreement, such resignation to be effective upon the appointment of a successor
Agent, but in no event later than 30 days from the date of such notice. Upon
submission of such notice, the Majority Banks may appoint a successor Agent.
37
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above.
▇▇▇▇▇▇▇▇▇ DENTAL COMPANY
By:
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R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Executive Vice President,
Treasurer and Chief Financial Officer
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▇▇. ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Commitment
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$45,000,000 U.S. BANK NATIONAL ASSOCIATION
By: -------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
Senior Vice President
U.S. Bank Place
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Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
$20,000,000 THE BANK OF TOKYO - MITSUBISHI,
LTD., CHICAGO BRANCH
By:
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Name:
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Title:
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Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier: (▇▇▇)▇▇▇-▇▇▇▇
Signature Page To Amended and Restated Credit Agreement
S-1
$15,000,000 M & I ▇▇▇▇▇▇▇▇ & ILSLEY BANK
By:
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Name:
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Title:
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By:
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Name:
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Title:
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4135 Multifoods Tower
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▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier: (▇▇▇)▇▇▇-▇▇▇▇
$20,000,000 THE NORTHERN TRUST COMPANY
By:
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Name:
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Title:
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The Northern Trust Company
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Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Signature Page To Amended and Restated Credit Agreement
S-2
