EXHIBIT 10.1
---------------------------------------------------------------------------
---------------------------------------------------------------------------
DEBTOR-IN-POSSESSION REVOLVING CREDIT AGREEMENT
among
NUTRAMAX PRODUCTS, INC.
NUTRAMAX HOLDINGS, INC.
NUTRAMAX HOLDINGS II, INC.
NUTRAMAX OPHTHALMICS, INC.
NUTRAMAX ACQUISITION CORPORATION
FAIRTON REALTY HOLDINGS, INC.
ORAL CARE, INC.
POWERS PHARMACEUTICAL CORP.
▇▇▇▇▇▇▇▇ REALTY, INC.
CERTIFIED CORP.
FIRST AID PRODUCTS, INC.
ADHESIVE COATINGS, INC.
ELMWOOD PARK REALTY, INC.
F.A. PRODUCTS, L.P.
and
FLEET NATIONAL BANK
Dated May , 2000
---------------------------------------------------------------------------
---------------------------------------------------------------------------
TABLE OF CONTENTS
Section Page
------- ----
1. DEFINITIONS AND RULES OF INTERPRETATION...................1
ss.1.1. Definitions...............................................1
ss.1.2. Rules of Interpretation...................................9
2. THE LOANS................................................10
ss.2.1. Commitment to Make Loans.................................10
ss.2.2. The Note.................................................10
ss.2.3. Interest on Loans........................................10
ss.2.4. Requests for Loans.......................................10
ss.2.5. Maturity.................................................10
ss.2.6. Mandatory Repayments of Loans............................11
ss.2.7. Optional Prepayments of Loans............................11
3. LETTERS OF CREDIT 11
ss.3.1. Establishment of Letter of Credit Sublimits..............11
ss.3.2. Documentary Letter of Credit Fees........................12
ss.3.3. Standby Letter of Credit Fees............................12
ss.3.4. Effect of Drawing Under Letter of Credit.................12
ss.3.5. Requests for Issuance of Letters of Credit...............13
ss.3.6. Indemnity................................................13
ss.3.7. Additional Provisions Relating to Letters of Credit......14
4. CERTAIN GENERAL PROVISIONS...............................16
ss.4.1. Closing Fee..............................................16
ss.4.2. Funds for Payments.......................................16
ss.4.3. Computations.............................................17
ss.4.4. Additional Costs, Etc....................................17
ss.4.5. Capital Adequacy.........................................18
ss.4.6. Certificate..............................................18
ss.4.7. Interest After Default...................................18
5. COLLATERAL SECURITY......................................18
6. REPRESENTATIONS AND WARRANTIES...........................18
ss.6.1. Corporate Authority; Etc.................................19
ss.6.2. Governmental Approvals...................................19
ss.6.3. Litigation...............................................20
ss.6.4. No Materially Adverse Contracts, Etc.....................20
ss.6.5. Compliance With Other Instruments, Laws, Etc.............20
ss.6.6. Tax Status...............................................20
ss.6.7. Capitalization...........................................20
ss.6.8. Leases...................................................21
ss.6.9. No Event of Default......................................21
ss.6.10. Holding Company and Investment Company Acts..............21
ss.6.11. Absence of UCC Financing Statements, Etc.................21
ss.6.12. Title to Collateral......................................21
ss.6.13. Certain Transactions.....................................21
ss.6.14. Employee Benefit Plans; Multiemployer Plans;
Guaranteed Pension Plans.................................21
ss.6.15. Regulations U and X......................................22
ss.6.16. Subsidiaries.............................................22
ss.6.17. Loan Documents...........................................22
7. AFFIRMATIVE COVENANTS OF THE BORROWER....................22
ss.7.1. Punctual Payment.........................................22
ss.7.2. Maintenance of Office....................................22
ss.7.3. Records and Accounts.....................................22
ss.7.4. Financial Statements, Certificates and Information.......22
ss.7.5. Notices..................................................23
ss.7.6. Location of Records and Collateral; Name Change..........25
ss.7.7. Existence; Maintenance of Properties.....................25
ss.7.8. Insurance................................................25
ss.7.9. Taxes....................................................26
ss.7.10. Inspection of Properties and Books.......................26
ss.7.11. Compliance with Laws, Contracts, Licenses, and Permits...26
ss.7.12. Use of Proceeds..........................................27
ss.7.13. Bank Accounts............................................27
ss.7.14. Engagement of Agents.....................................27
ss.7.15. Further Assurances.......................................27
8. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS..............27
ss.8.1. Restrictions on Indebtedness.............................28
ss.8.2. Restrictions on Liens, Etc...............................28
ss.8.3. Restrictions on Investments..............................29
ss.8.4. Merger, Consolidation....................................29
ss.8.5. Sale and Leaseback.......................................30
ss.8.6. Compliance with Environmental Laws.......................30
ss.8.7. Distributions............................................30
ss.8.8. Subsidiaries.............................................30
ss.8.9. Fiscal Year..............................................30
ss.8.10. Loans and Advances.......................................30
ss.8.11. Terms of Subordinated Indebtedness.......................30
ss.8.12. Agreements with Affiliated Persons.......................31
ss.8.13. Return of Property.......................................31
9. FINANCIAL COVENANTS OF THE BORROWERS.....................31
ss.9.1. Capital Expenditures.....................................31
ss.9.2. Maximum Borrowings.......................................31
ss.9.3. Cumulative Sales.........................................32
ss.9.4. Minimum Eligible Accounts Receivable.....................32
10. CLOSING CONDITIONS.......................................32
ss.10.1. Loan Documents...........................................33
ss.10.2. Resolutions..............................................33
ss.10.3. Incumbency Certificate; Authorized Signers...............33
ss.10.4. Borrowing Order..........................................33
ss.10.5. Adequate Protection Stipulation..........................33
ss.10.6. Litigation...............................................33
ss.10.7. Evidence of Insurance....................................33
ss.10.8. Financial Statements.....................................34
ss.10.9. Settlement of Pre-Petition Obligations...................34
ss.10.10. Commitment Letters.......................................34
ss.10.11. Approval Motions.........................................34
ss.10.12. Compliance with Law......................................34
ss.10.13. Payment of Fees..........................................34
ss.10.14. Additional Documents.....................................34
11. CONDITIONS TO ALL BORROWINGS.............................34
ss.11.1. Representations True; No Event of Default................34
ss.11.2. No Legal Impediment......................................35
ss.11.3. Governmental Regulation..................................35
ss.11.4. Proceedings and Documents................................35
12. EVENTS OF DEFAULT; ACCELERATION; ETC.....................35
ss.12.1. Events of Default and Acceleration.......................35
ss.12.2. Termination of Commitments...............................37
ss.12.3. Remedies.................................................38
ss.12.4. Distribution of Collateral Proceeds......................38
13. SETOFF...................................................39
14. EXPENSES.................................................39
15. INDEMNIFICATION..........................................39
16. SURVIVAL OF COVENANTS, ETC...............................40
17. ASSIGNMENT AND PARTICIPATION.............................40
ss.17.1. Conditions to Assignment by Lenders......................40
ss.17.2. Participations...........................................41
ss.17.3. Pledge by Lender.........................................41
ss.17.4. No Assignment by Borrowers...............................41
ss.17.5. Disclosure...............................................41
18. NOTICES, ETC.............................................41
19. GOVERNING LAW............................................42
20. HEADINGS.................................................42
21. COUNTERPARTS.............................................42
22. ENTIRE AGREEMENT, ETC....................................42
23. WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS...........42
24. CONSENTS, AMENDMENTS, WAIVERS, ETC.......................43
25. SEVERABILITY.............................................43
26. ADDITIONAL WAIVERS.......................................43
EXHIBITS
A. Form of Borrowing Order
B. Business Plan
C. Form of Note
D. Form of Loan Request
E. Form of Adequate Protection Stipulation
SCHEDULES
6.7 Capital Stock
6.8 Leases
6.13 Affiliate Transactions
6.14 Employee Benefit Plans
6.16 Subsidiaries
7.6 Locations
7.8 Insurance
8.1 Outstanding Indebtedness
8.2 Outstanding Liens
8.3 Outstanding Investments
8.4 Certain Transactions
DEBTOR-IN-POSSESSION REVOLVING CREDIT AGREEMENT
-----------------------------------------------
This DEBTOR-IN-POSSESSION REVOLVING CREDIT AGREEMENT is made as of the
___ day of May, 2000, by and among, NUTRAMAX PRODUCTS, INC., NUTRAMAX
HOLDINGS, INC., NUTRAMAX HOLDINGS II, INC., NUTRAMAX OPHTHALMICS, INC.,
NUTRAMAX ACQUISITION CORPORATION, FAIRTON REALTY HOLDINGS, INC., ORAL CARE,
INC., POWERS PHARMACEUTICAL CORP., ▇▇▇▇▇▇▇▇ REALTY, INC., CERTIFIED CORP.,
FIRST AID PRODUCTS, INC., ADHESIVE COATINGS, INC., ELMWOOD PARK REALTY,
INC., and F.A. PRODUCTS, L.P. as debtors and debtors-in-possession
(individually, a "BORROWER" and collectively, the "BORROWERS"), and FLEET
NATIONAL BANK (the "LENDER").
1. DEFINITIONS AND RULES OF INTERPRETATION.
---------------------------------------
ss.1.1. Definitions. The following terms shall have the meanings set
forth in this ss.1 or elsewhere in the provisions of this Agreement
referred to below:
ACCOUNTS. "Accounts" as defined in the UCC and also all rights to
payment for goods sold or leased or services rendered, all sums of money or
other proceeds due or becoming due thereon (including, without limitation,
all accounts receivable, notes, bills, drafts, acceptances, instruments,
documents, chattel paper and all other debts, obligations and liabilities
in whatever form owing to any Person for goods sold by it or services
rendered by it), all guaranties and security therefor, and all right, title
and interest of such Person in the goods or services giving rise thereto
and the rights pertaining to such goods, including rights of reclamation
and stoppage in transit, and all related insurance, whether any of the
foregoing be now existing or hereafter arising, now or hereafter received
by or owing or belonging to such Person.
AFFILIATE. With reference to any Person, (i) any director, officer or
employee of that Person, (ii) any other Person controlling, controlled by
or under direct or indirect common control with that Person, (iii) any
other Person directly or indirectly holding 5% or more of any class of
capital stock or other equity interests (including options, warrants,
convertible securities and similar rights) of that Person and (iv) any
other Person 5% or more of any class of whose capital stock or other equity
interests (including options, warrants, convertible securities and similar
rights) is held directly or indirectly by that Person.
AGREEMENT. This Debtor-in-Possession Revolving Credit Agreement,
including the SCHEDULES and EXHIBITS hereto, all as modified, amended,
supplemented or restated.
ASSET SALE. Any sale, lease, conveyance, transfer or other disposition
by any Borrower or or any of its Subsidiaries (including by way of merger,
consolidation or a sale-leaseback transaction) in any transaction or group
of transactions that are part of a common plan, of any asset (other than
sales, leases, and other dispositions of inventory in the ordinary course
of business).
BASE RATE. The greater of (i) the variable per annum rate of interest
announced from time to time by the Lender as its "prime rate" , and (ii)
the Federal Funds Effective Rate plus 1/2 of 1% per annum. The "prime rate"
is a reference rate and does not necessarily represent the lowest or best
rate being charged to any customer.
BORROWER(S). As defined in the preamble hereto.
BORROWING ORDER. An order entered by the Bankruptcy Court in the
Proceedings in substantially the form annexed hereto as EXHIBIT A (as any
such Order may from time to time be amended with the written consent of the
Lender).
BUSINESS DAY. Any day, other than a Saturday or Sunday, or legal
holiday on which banking institutions in Boston, Massachusetts are open for
the conduct of a substantial part of their commercial banking business.
BUSINESS PLAN. The Borrower's business plan annexed hereto as EXHIBIT
B and any revision or amendment thereto to which the Lender has provided
its written consent.
CAPITAL EVENT. The issuance by any Borrower or any of its Subsidiaries
on or after the Closing Date (i) of Indebtedness for borrowed money or (ii)
of any equity interest. Nothing contained in this definition or in any
provision relating to Capital Events shall permit or be deemed to permit
any Borrower or any of its Subsidiaries to effectuate a Capital Event which
is otherwise prohibited hereunder or under the Borrowing Order.
CAPITAL EXPENDITURES. To the extent capitalized in accordance with
Generally Accepted Accounting Principles, all expenditures for fixed assets
including assets being constructed (whether or not completed), leasehold
improvements, capital leases under Generally Accepted Accounting
Principles, installment purchases of machinery and equipment, acquisitions
of real estate and other similar expenditures including (i) in the case of
a purchase, the entire purchase price, whether or not paid during the
fiscal period in question, (ii) in the case of a capital lease, the
capitalized amount thereon determined in accordance with Generally Accepted
Accounting Principles, and (iii) without duplication, expenditures in or
from any construction-in-progress account of any Borrower or its
Subsidiaries.
CHANGE IN CONTROL. Any of the following events shall constitute a
"Change of Control" hereunder:
(a) any "person" (other than the Investors), as such term is used in
Sections 13(d) and 14(d) of the Securities Act of 1933, as amended (other
than a Borrower, any of its Subsidiaries, or any trustee, fiduciary or
other Person holding securities under any employee benefit plan or trust of
a Borrower or any of its Subsidiaries), together with all "affiliates" and
"associates" (as such terms are defined in Rule 12b-2 under the Securities
Act of 1933, as amended) of such person, shall become the "beneficial
owner" (as such term is defined in Rule 13d-3 under the Securities Act)
directly or indirectly, of securities of Nutramax representing 25% or more
of either (i) the combined voting power of Nutramax's then outstanding
securities having a right to vote in an election of Nutramax's Board of
Directors or (ii) the then outstanding shares of common stock of Nutramax
(in either case other than as a result of acquisition of securities
directly from Nutramax); or
(b) individuals who on the Closing Date constituted the Board of
Directors of Nutramax (together with any new directors whose election by
such Board of Directors or whose nomination for election by the
stockholders of Nutramax was approved by a vote of the majority of the
directors then still in office who were either directors on the Closing
Date or whose election or nomination for election was previously s
approved) cease, for any reason to constitute a majority of the Board of
Directors of Nutramax then in office.
CLOSING DATE. The first date on which the conditions set forth inss.10
andss.11 have been satisfied and any Loans are to be made.
CODE. The Internal Revenue Code of 1986 and the rules and regulations
thereunder, collectively as the same may be supplemented or amended and in
effect from time to time.
COLLATERAL. All assets of the Borrowers, whenever acquired, real and
personal, tangible and intangible. "Collateral" includes, without
limitation, all Real Estate, Accounts, Inventory, Equipment, Investment
Property and General Intangibles.
CONSOLIDATED AND CONSOLIDATING. Shall have the respective meanings
ascribed to them in accordance with Generally Accepted Accounting
Principles.
CONSULTANT shall mean ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, L.L.C. which has been engaged
by the Lender, or any replacement thereof, to review and advise the Lender
with respect to the Borrowers' business, results of operation, financial
condition, the Collateral and such other matters as the Lender may request.
DEFAULT. An event or condition that, but for the requirement that time
elapse or notice be given or both, would constitute an Event of Default.
DISTRIBUTION. The declaration or payment of any dividend on or in
respect of any shares of any class of capital stock of any Borrower, other
than dividends payable solely in shares of common stock of a Borrower; the
purchase, redemption, or other retirement of any shares of any class of
capital stock of any Borrower, directly or indirectly by a Borrower through
a Subsidiary of a Borrower or otherwise; the return of capital by a
Borrower to its shareholders as such; or any other distribution on or in
respect of any shares of any class of capital stock of a Borrower.
DOCUMENTARY LETTERS OF CREDIT. Letters of credit issued by the Lender
pursuant to this Agreement, the drawing under which requires the delivery
of bills of lading, airway bills or other similar types of documents of
title.
DOLLARS OR $. Dollars in lawful currency of the United States of
America.
DRAWDOWN DATE. The date on which any Loan is made or is to be made.
EBITDA. In relation to the Borrowers for any period, an amount equal
to consolidated net income determined in accordance with Generally Accepted
Accounting Principles (with Inventory being determined on a "first-in,
first-out" basis) for such period, plus the following to the extent
deducted in computing such consolidated net income for such period: (i)
Interest Charges for such period, (ii) taxes in income for such period,
(iii) depreciation for such period, and (iv) amortization for such period;
but minus all extraordinary gains (and, subject to the prior approval of
the Lender), plus all extraordinary losses) attributable to the sale or
other disposition of assets.
EMPLOYEE BENEFIT PLAN. Any employee benefit plan within the meaning of
ss.3(3) of ERISA maintained or contributed to by a Borrower or any ERISA
Affiliate, other than a Multiemployer Plan.
ENVIRONMENTAL LAWS. Any and all applicable foreign, federal, state and
local environmental, health or safety statutes, laws, regulations,
ordinances, policies and common law (whether now existing or hereafter
enacted or promulgated), of all federal, state and local governmental
authorities, agencies, commissions, boards, bureaus or departments which
may now or hereafter have jurisdiction over any Borrower or any of its
Subsidiaries or any lanlord under any real estate lease under which a
Borrower or such Subsidiary is a tenant, and all applicable judicial and
administrative and regulatory decrees, judgments and orders, incuding
common law rulings and determinations, relating to injury to, or the
protection of, real or personal property or human health or the
environment, including, without limitation, all requirements pertaining to
reporting, licensing, permitting, investigation, remediation and removal of
emissions, discharges, releases or threatened releases of Hazardous
Substances, whether solid, liquid or gaseous in nature, into the
environment or relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of such Hazardous
Substances.
EQUIPMENT. "Equipment" as defined in the UCC and all rolling stock,
machinery, office equipment, plant equipment, tools, dies, molds, store
fixtures, furniture, and other goods, property, and assets which are used
and/or were purchased for use in the operation or furtherance of the
Borrowers' business and any and all accessions and additions thereto and
substitutions therefor.
ERISA. The Employee Retirement Income Security Act of 1974 and the
rules and regulations thereunder, collectively as the same may be
supplemented or amended and in effect from time to time.
ERISA AFFILIATE. Any Person which is treated as a single employer with
any Borrower under ss.414 of the Code.
EVENT OF DEFAULT. See ss.12.1.
FEDERAL FUNDS EFFECTIVE RATE. For any day, a fluctuating interest rate
per annum equal to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day that is
a Business Day, the average of the quotations for such day on such
transactions received by the Lender from three Federal funds brokers of
recognized standing selected by the Lender.
FINAL BORROWING ORDER. The Borrowing Order entered in the Proceedings
after notice and a final hearing pursuant to Rule 4001(c) of the Federal
Rules of Bankruptcy Procedure.
GENERAL INTANGIBLES. "General Intangibles" as defined in the UCC;
contractual rights; records; customer lists; telephone numbers; goodwill;
causes of action; judgments; licenses; franchises; patents, patent
applications, patents pending and other intellectual property; computer
software programs, including the source and object codes therefor;
tradenames, trademarks and service marks and all goodwill relating thereto;
and all amounts due to the Borrowers not constituting Accounts.
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES OR GAAP. Principles that are
consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, as in effect from time to
time.
GUARANTEES. As applied to any Person, without duplication, all
guarantees, endorsements or other contingent or surety obligations with
respect to obligations of others whether or not reflected on such Person's
consolidated balance sheet, including any obligation to furnish funds,
directly or indirectly (whether by virtue of partnership arrangements, by
agreement to keep-well or otherwise), through the purchase of goods,
supplies or services, or by way of stock purchase, capital contribution,
advance or loan, or to enter into a contract for any of the foregoing, for
the purpose of payment of obligations of any other Person.
HAZARDOUS SUBSTANCES. Any substance (i) the presence of which requires
or may hereafter require notification, investigation or remediation under
any Environmental Law; (ii) which is or becomes defined as a "hazardous
waste," hazardous material" or "hazardous substance" or "controlled
industrial waste" or "pollutant" or "contaminant" under any present or
future Environmental Law or amendments thereto including, without
limitation, the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Section 9601 et seq.) and any applicable local
statutes and the regulations promulgated thereunder; (iii) which is toxic,
explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise hazardous and is or becomes regulated by any
governmental authority, agency, department, commission, board, agency or
instrumentality of any foreign country, the United States, any state of the
United States, or any political subdivision thereof to the extent any of
the foregoing has or had jurisdiction over the Company; or (iv) without
limitation, which contains gasoline, diesel fuel or other petroleum
products, asbestos or polychlorinated biphenyls ("PCB's").
INDEBTEDNESS. As applied to any Person: (a) all obligations for
borrowed money or other extensions of credit whether or not secured or
unsecured, absolute or contingent, including, without limitation, unmatured
reimbursement obligations with respect to letters of credit or guarantees
issued for the account of or on behalf of such Person and all obligations
representing the deferred purchase price of property, other than accounts
payable arising in the ordinary course of business (b) all obligations
evidenced by bonds, notes, debentures or other similar instruments; (c) all
obligations secured by any mortgage, pledge, security interest, lien,
charge, or other encumbrance existing on property owned or acquired subject
thereto, whether or not the obligations secured thereby shall have been
assumed; and (d) that portion of all obligations arising under capital
leases that is required to be capitalized on the consolidated balance sheet
of such Person and (e) all Guarantees, and (f) all obligations that are
immediately due and payable out of the proceeds of or production from
property now or hereafter owned or acquired by such Person.
INTEREST CHARGES. For any period, means, without duplication, all
interest expense (including commitment fees, balance deficiency fees and
similar expenses) on any particular Indebtedness for which such
calculations are being made, all as determined in accordance with Generally
Accepted Accounting Principles.
INTEREST PAYMENT DATE. The first day of each month.
INTERIM BORROWING ORDER. The Borrowing Order entered in the
Proceedings prior to notice and a final hearing pursuant to Rule 4001(c) of
the Federal Rules of Bankruptcy Procedure.
INVENTORY. "Inventory" as defined in the UCC and all goods,
merchandise, and other personal property now owned or hereafter acquired by
a Person, which are held for sale or lease or are furnished or to be
furnished under a contract of sale or service, or are raw materials, work
in process or materials used or consumed or to be used or consumed in such
Person's business.
INVESTMENTS. As applied to any Person, the purchase or acquisition of
any shares of capital stock, partnership interests, limited liability
company membership interests, evidence of Indebtedness or other equity
securities of any other Person, any loans, advances, extensions of credit
to, or contribution of the capital of, any other Person, any real estate
held for sale or investment, any commodities futures contracts held other
than in connection with bona fide hedging transactions, any other
investment in any other Person, and the maknig of any commitment or
acquisition of any option to make an Investment.
INVESTMENT PROPERTY. "Investment Property" as defined in the UCC.
INVESTORS. Collectively, Cape ▇▇▇ Investors, LLC, Peritus Capital
Partners, LLC and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
LENDER. See the Preamble hereto.
LETTERS OF CREDIT. Documentary Letters of Credit and Standby Letters
of Credit.
LOAN DOCUMENTS. This Agreement, the Note, the Security Documents,
all Letters of Credit, and all other instruments, documents and agreements
executed in connection therewith, as each may be modified, amended,
supplemented or restated.
LOANS. The loans to be made by the Lender pursuant to ss.2 hereof.
MATURITY DATE. The earliest or (x) June 30, 2000 or (y) confirmation
of a plan of reorganization in the Proceedings, or (z) such earlier date on
which the Loans shall become due and payable pursuant to the terms hereof.
MAXIMUM DRAWING AMOUNT. With respect to the aggregate of all
Outstanding Letters of Credit, the sum of $1,000,000.00.
MULTIEMPLOYER PLAN. Any multiemployer plan within the meaning
of ss.3(37) of ERISA maintained or contributed to by the Borrower or any
ERISA Affiliate.
NET PROCEEDS. The aggregate amount of cash proceeds from any Asset
Sale or Capital Event (after payment of any senior liens, if any, secured
by the property sold, and payment of associated fees and expenses
(including, without limitation, reasonable fees and expenses of counsel,
accountants, appraisers, and underwriter's discounts)) received or
receivable by any Borrower or its Subsidiaries and cash proceeds paid from
time to time with respect to any promissory note or other instrument or
security delivered in connection with said transaction.
NOTE. Has the meaning set forth in ss.2.2 hereof.
NUTRAMAX. NutraMax Products, Inc.
OBLIGATIONS. All indebtedness, obligations and liabilities of the
Borrowers and their Subsidiaries to the Lender under this Agreement or any
of the other Loan Documents or in respect of any of the Loans or the Note
or other instruments at any time evidencing any thereof, whether existing
on the date of this Agreement or arising or incurred hereafter, direct or
indirect, joint or several, absolute or contingent, matured or unmatured,
liquidated or unliquidated, secured or unsecured, arising by contract,
operation of law of otherwise.
OUTSTANDING. With respect to the Loans, the aggregate unpaid principal
thereof as of any date of determination.
PBGC. The Pension Benefit Guaranty Corporation created by ss.4002 of
ERISA and any successor entity or entities having similar responsibilities.
PERMITTED LIENS. Liens, security interests and other encumbrances
permitted by ss.8.2.
PERSON. Any individual, company, corporation, partnership, limited
liability company, trust, unincorporated association, joint venture,
business, trust, estate, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
PRE-PETITION LOAN AGREEMENT. The Revolving Credit and Term Loan
Agreement among Nutramax, the lenders party thereto and Fleet National Bank
(f/k/a BankBoston, N.A.), as Agent dated December 30, 1996, as amended and
in effect (including, without limitation, pursuant to a Forbearance
Agreement and Amendment dated as of December 1, 1999 and pursuant to a
Second Forbearance Agreement and Amendment dated as of February 5, 2000).
PRE-PETITION REVOLVER. The revolving loans (including principal,
interest, and fees) made pursuant to the Pre-Petition Loan Agreement.
PRE-PETITION TERM LOAN. The term loans (including principal, interest
and fees) made pursuant to the Pre-Petition Loan Agreement.
PROCEEDINGS. The cases, pursuant to Chapter 11 of the Bankruptcy Code,
initiated by the Borrowers in the United States Bankruptcy Court for the
District of Delaware (Case No. ________).
REAL ESTATE. All real property at any time owned or leased (as lessee
or sublessee) by the Borrowers or any of their Subsidiaries.
RELEASE. Any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, storing, escaping, leaching, dumping, or
discarding, burying, abandoning, or disposing into the environment.
REVOLVING CREDIT CEILING. $5,000,000.00, less (a) the amount of any
"carve out" as set forth in the Borrowing Order and (b) the amount by which
the Overadvance under the Pre-Petition Loan Agreement exceeds Three Million
Dollars ($3,000,000.00).
SECURITY DOCUMENTS. All security agreements, mortgages, deeds of
trust, and other instruments, documents, and agreements from the Borrowers
and/or any Subsidiary, granting a lien, security interest or other right in
favor of the Lender in any asset of the Borrowers or their Subsidiaries to
secure the Obligations, whether such agreements now exist or hereafter
arise.
STANDBY LETTERS OF CREDIT. Letters of Credit issued by the Lender
pursuant to this Agreement, the drawing under which does not require the
delivery of bills of lading, airway bills or other similar types of
documents of title, or which are customarily referred to as Standby Letters
of Credit.
SUBORDINATED INDEBTEDNESS. Indebtedness which is expressly
subordinated in right of payment, in form and on terms approved by the
Lender in writing, to the prior payment in full of the Loans.
SUBSIDIARY. Any corporation, association, partnership, trust, or other
business entity of which the designated parent shall at any time own
directly or indirectly through a Subsidiary or Subsidiaries at least a
majority (by number of votes or controlling interests) of the outstanding
Voting Interests.
UCC. The Uniform Commercial Code as enacted in The Commonwealth of
Massachusetts, as such may be supplemented or amended and in effect from
time to time.
VOTING INTERESTS. Stock or similar ownership interests, of any class
or classes (however designated), the holders of which are at the time
entitled, as such holders, (a) to vote for the election of a majority of
the directors (or persons performing similar functions) of the corporation,
association, partnership, trust or other business entity involved, or (b)
to control, manage, or conduct the business of the corporation,
partnership, association, trust or other business entity involved.
ss.1.2. Rules of Interpretation.
-----------------------
(a) A reference to any document or agreement shall include
such document or agreement as amended, modified or
supplemented from time to time in accordance with its
terms and the terms of this Agreement.
(b) The singular includes the plural and the plural
includes the singular.
(c) A reference to any law includes any amendment or
modification to such law.
(d) A reference to any Person includes its permitted
successors and permitted assigns.
(e) Accounting terms not otherwise defined herein have the
meanings assigned to them by Generally Accepted
Accounting Principles.
(f) The words "include", "includes" and "including" are not
limiting.
(g) All terms not specifically defined herein or by
Generally Accepted Accounting Principles, which terms
are defined in the UCC, have the meanings assigned to
them therein.
(h) Reference to a particular "ss." refers to that section
of this Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of
like import shall refer to this Agreement as a whole
and not to any particular section or subdivision of
this Agreement.
2. THE LOANS.
---------
ss.2.1. Commitment to Make Loans. Subject to the terms and conditions
set forth in this Agreement, the Lender agrees to lend to the Borrowers and
the Borrowers may borrow, repay, and reborrow from time to time between the
Closing Date and the Maturity Date upon notice by Nutramax to the Lender
given in accordance with ss.2.4, such sums as are requested by the
Borrowers (each a " LOAN") provided that the aggregate principal amount of
Loans Outstanding (after giving effect to all amounts requested), together
with the stated amount of all Outstanding Letters of Credit shall at any
one time not exceed the Revolving Credit Ceiling. Each request for a Loan
hereunder shall constitute a representation and warranty by the Borrowers
that the conditions set forth in ss.10 and ss.11, in the case of the
initial Loan, and ss.11, in the case of all other Loans, have been
satisfied on the date of such request.
ss.2.2. The Note. The Loans shall be evidenced by a promissory note of
the Borrowers in substantially the form of EXHIBIT C hereto (the "NOTE"),
dated as of the Closing Date and completed with appropriate insertions. The
Outstanding amount of the Loans set forth in the Lender's record shall be
prima facie evidence of the principal amount thereof owing and unpaid to
the Lender.
ss.2.3. Interest on Loans.
-----------------
(a) Each Loan shall bear interest for the period commencing
with the Drawdown Date thereof at a rate equal to the
aggregate of the Base Rate plus two percent (2%) per
annum.
(b) The Borrowers shall pay interest on each Loan in
arrears on each Interest Payment Date with respect
thereto.
ss.2.4. Requests for Loans. Nutramax shall give to the Lender
telephonic notice (confirmed in writing in the form of EXHIBIT D hereto) of
each Loan requested hereunder. Each such notice shall be irrevocable and
binding on the Borrowers and shall obligate the Borrowers to accept the
Loan requested from the Lender on the proposed Drawdown Date. Notices for
any Loans shall be furnished to the Lender no later than 10:00 a.m. (Boston
time) one Business Day prior to the proposed Drawdown Date.
ss.2.5. Maturity. The Borrowers promise to pay on the Maturity Date,
and there shall become absolutely due and payable on the Maturity Date, all
of the Loans Outstanding on such date, together with any and all accrued
and unpaid interest thereon.
ss.2.6. Mandatory Repayments of Loans. (a) If at any time the
aggregate Outstanding principal balance of the Loans exceeds the Revolving
Credit Ceiling, then the Borrowers shall immediately pay the amount of such
excess to the Lender for application to the Loans.
(b) The Borrowers shall cause all proceeds of the Collateral and
from any other assets or source (including, without limitation, Asset
Sales, Capital Events, casualties and condemnations) to be directed to a
lockbox, blocked account, or other recipient over which the Lender has
control, with such proceeds to be applied FIRST to the Obligations under
this Agreement; and SECOND, after payment of the Obligations, to the
Pre-Petition Revolver, the Pre-Petition Term Loans and the other
obligations under the Pre-Petition Loan Agreement in the manner set forth
therein. Any amounts prepaid (other than from proceeds of the collection of
Accounts or sale of Inventory in the ordinary course) may not be
reborrowed.
ss.2.7. Optional Prepayments of Loans.
-----------------------------
The Borrowers shall have the right, at their election, to repay the
Outstanding amount of the Loans, as a whole or in part, at any time without
penalty or premium. No prepayment made hereunder shall postpone the time
for any subsequent payment on account of the Obligations.
3. LETTERS OF CREDIT
-----------------
ss.3.1. Establishment of Letter of Credit Sublimits.
-------------------------------------------
(a) Subject to the terms and conditions of the within
Agreement, the Lender, upon written request of the
Borrower, agrees to issue Letters of Credit for the
account of the Borrowers until the earlier of (i) five
(5) Business Days prior to the Maturity Date, or (ii)
the occurrence of any Default, each such Letter of
Credit to be in such form as the Borrower and the
Lender may agree from time to time.
(b) The amount which the beneficiaries under all Letters of
Credit then Outstanding may draw thereunder shall not
at any time exceed the Maximum Drawing Amount.
(c) The aggregate of (i) the Outstanding amount of the
Loans and (ii) the stated amount of all Outstanding
Letters of Credit (after giving effect to all amounts
requested) shall not at any time exceed the Revolving
Credit Ceiling.
(d) No Letter of Credit shall be issued for the benefit of
▇▇▇▇▇▇▇ ▇▇▇▇▇ (i) unless and until the Bankruptcy Court
in the Proceedings has entered a final order approving
Mr. Glass' current employment contract with the
modification requested by the Lenders regarding the
conditions to posting the Letter of Credit, and (ii) in
amounts aggregating in excess of $350,000.00 (or, at
the Lender's discretion, up to an amount not to exceed
$500,000.00).
ss.3.2. Documentary Letter of Credit Fees.
---------------------------------
(a) The Borrower will pay to the Lender a fee for each
Documentary Letter of Credit in an amount equal to 2%
per annum of the stated amount of each such Documentary
Letter of Credit, such fee to be paid monthly in
advance on the first day of each month.
(b) In addition to the fees payable pursuant to Subsection
(a), above, the Borrower shall pay to the Lender
standard processing, fronting, amendment, and
administrative fees on account of each Documentary
Letter of Credit at the Lender's customary rates
therefor.
(c) All fees provided for in this Section shall be
calculated in accordance with the provisions of Section
hereof, shall be deemed fully earned on the date due
for payment thereof and shall not be refunded in whole
or in part to the Borrower in any event.
ss.3.3. Standby Letter of Credit Fees.
-----------------------------
(a) The Borrower will pay to the Lender a fee for each
Standby Letter of Credit equal to 2% per annum of the
stated amount of each such Standby Letter of Credit.
Such fees shall be payable by the Borrower monthly in
advance on the first day of each month. Such fees shall
be calculated in accordance with the provisions of
Section 4.3 hereof, shall be deemed fully earned on the
date due for payment thereof and shall not be refunded
in whole or in part to the Borrower in any event.
(b) In addition to the fees payable pursuant to subsection
(a), above, the Borrower shall pay to the Lender
standard processing, fronting, amendment and
administrative fees on account of each Standby Letter
of Credit at the Lender's customary rates therefor.
ss.3.4. Effect of Drawing Under Letter of Credit.
----------------------------------------
The Borrowers shall reimburse the Lender for the amount of any
honoring of a Letter of Credit issued for the account of the Borrower and
honored in accordance with the terms of such Letter of Credit and of the
within Agreement. Any drawing or presentation which is not so reimbursed by
the Borrowers on the Business Day when so honored, shall constitute, a
Loan. If, as the result of the making of any loan hereunder, the Revolving
Credit Ceiling is then exceeded, the Borrowers shall make a mandatory
prepayment in the amount and manner described in Section 2.6(a) hereof.
ss.3.5. Requests for Issuance of Letters of Credit.
------------------------------------------
(a) The Borrowers shall give the Lender such prior
telephone, electronic, or written notice of each
request for Letter of Credit issuances as the Lender
may reasonably require, which notice shall include,
without limitation, the amount thereof, the requested
issuance date, and other information necessary to cause
the Letter of Credit to be issued. Each request for the
issuance of a Letter of Credit shall be irrevocable.
(b) Each request for the issuance of a Letter of Credit
hereunder shall constitute a representation by the
Borrowers that the applicable conditions set forth in
Articles 10 and 11, below, have been satisfied on the
date of such request.
(c) The Borrowers shall execute and deliver to the Lender
such further documents and instruments in connection
with any Letter of Credit as the Lender, in accordance
with the Lender's then customary practices with respect
to similar facilities, reasonably may request.
ss.3.6. Indemnity. The Borrower agrees to indemnify the Lender and its
correspondents and hold them harmless from and against any and all claims,
damages, losses, liabilities, costs and expenses whatsoever which they may
incur or suffer by reason of or in connection with the execution and
delivery or assignment of or payment or presentation under or in respect of
any Letter of Credit issued by the Lender or any action taken or omitted to
be taken with respect to any Letter of Credit issued by the Lender, except
to the extent that any such claims, damages, losses, liabilities, costs or
expenses shall be caused by the willful misconduct, gross negligence or bad
faith of the Lender or such correspondents, it being understood that (x) in
making such payment, the Lender's or its correspondent's exclusive reliance
in good faith on the documents presented to and believed to be genuine by
it in accordance with the terms of such Letter of Credit as to any and all
matters set forth therein, including, without limitation, reliance in good
faith on any affidavit presented pursuant to such Letter of Credit and on
the amount of any sight draft presented pursuant to any Letter of Credit
whether or not any statement or any other documents presented pursuant to
such Letter of Credit proves to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein proves to be untrue or
inaccurate in any respect whatsoever and (y) any such noncompliance in a
nonmaterial respect shall, in each case, not be deemed willful misconduct,
gross negligence or bad faith of the Lender. Upon demand by the Lender at
any time, the Borrowers shall reimburse the Lender for any reasonable legal
or other expenses incurred in connection with investigating or defending
against any of the foregoing, except if the same is due to the Lender's
gross negligence, bad faith, or willful misconduct as aforesaid. Without
limiting the foregoing, the Borrowers' indemnification provided herein
shall include any claims, damages, losses, liabilities, costs, or expenses
whatsoever which may be incurred by the Lender to any correspondent
utilized by the Lender with respect to any Letter of Credit. The
indemnities contained herein shall survive the expiration or termination of
the Letters of Credit and this Agreement and shall be payable upon demand.
ss.3.7. Additional Provisions Relating to Letters of Credit.
---------------------------------------------------
(a) The obligations of the Borrowers with respect to
Letters of Credit shall be absolute and unconditional
and shall rank pari passu with the obligations of the
Borrower to repay all other Obligations. The Lender's
rights, powers, privileges and immunities specified in
or arising under this Agreement and the other Loan
Documents are in addition to any heretofore or at any
time hereafter otherwise created or arising, whether by
statute or rules of law or contract.
(b) The Borrowers will
(i) promptly examine the copy of any Letter of Credit (and
any amendments thereto) sent to it by the Lender;
(ii) promptly examine all instruments and documents
delivered to it from time to time by the Lender; and
(iii) within two (2) Business Days of receipt thereof,
provide the Lender with written notice of any irregularity or claim of
non-compliance with the instructions of the Borrowers.
The Borrowers are conclusively deemed to have waived any such claim
against the Lender and its correspondents unless such notice is so timely
given.
(c) None of the Lender, the Lender's correspondents, any
advising, negotiating, or paying bank with respect to
any Letter of Credit shall be responsible in any way
for:
(i) performance by any beneficiary under any Letter of
Credit of that beneficiary's obligations to the Borrowers; or
(ii) the form, sufficiency, correctness, genuineness,
authority of any person signing; falsification; or the legal effect of; any
documents called for under any Letter of Credit if (with respect to the
foregoing) such documents on their face appear to be in order.
(d) The Lender may honor, as complying with the terms of
any Letter of Credit and of any drawing thereunder, any
drafts or other documents otherwise in order, but
signed or issued by an administrator, executor,
conservator, trustee in bankruptcy, debtor in
possession, assignee for the benefit of the creditors,
liquidator, receiver, or other legal representative of
the party authorized under such Letter of Credit to
draw or issue such drafts or other documents.
(e) Unless otherwise agreed to, in the particular instance,
the Borrowers hereby authorizes the Lender to (i)
select an advising bank, if any; (ii) select a paying
bank, if any; and (iii) select a negotiating bank.
(f) All directions, correspondence, and funds transfers
relating to any Letter of Credit are at the risk of the
Borrowers. The Lender shall have discharged its
respective obligations under any Letter of Credit
which, or the drawing under which, includes payment
instructions, by the initiation of the method of
payment called for in, and in accordance with, such
instruments (or by any other commercially reasonable
and comparable method). The Lender does not assume any
responsibility for any inaccuracy, interruption, error,
or delay in transmission or delivery by post, telegraph
or cable, or for any inaccuracy of translation.
(g) The Lender's rights, powers, privileges and immunities
specified in or arising under this Agreement are in
addition to any heretofore or at any time hereafter
otherwise created or arising, whether by statute or
rule of law or contract.
(h) The Letters of Credit, except to the extent otherwise
expressly provided hereunder or agreed to in writing by
the Lender and the account party of the subject Letter
of Credit, will be governed by the Uniform Customs and
Practice for Documentary Credits, International Chamber
of Commerce, Publication No. 500, and any subsequent
revisions thereof.
(i) The obligations of the Borrowers under the within
Agreement with respect to the Letters of Credit are
absolute, unconditional, and irrevocable and shall be
performed strictly in accordance with the terms hereof
under all circumstances, whatsoever including, without
limitation, the following:
(i) Any lack of validity or enforceability or restriction,
restraint or stay in the enforcement of the within Agreement, any Letter of
Credit, or any other agreement or instrument relating thereto.
(ii) Any amendment or waiver of, or consent to the departure
from, all or any of the above.
(iii) The existence of any claim, set-off, defense, or other
right which any Borrower may have at any time against the beneficiary of
any Letter of Credit.
4. CERTAIN GENERAL PROVISIONS.
--------------------------
ss.4.1. Closing Fee.
-----------
The Borrowers agrees to pay to the Lender on the Closing Date a
closing fee in the sum of $100,000. Such fee shall be deemed fully earned
on payment and shall not be refundable in whole or in part under any
circumstances.
ss.4.2. Funds for Payments.
------------------
(a) All payments of principal, interest, commitment fees,
closing fees and any other amounts due hereunder or
under any of the other Loan Documents shall be made to
the Lender, at its office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other location
that the Lender may from time to time designate, in
each case in immediately available funds.
(b) The Borrowers authorize the Lender, without further
notice to or consent from any Borrower, to charge to
any deposit account which any Borrower may maintain
with the Lender for the principal, interest, fees,
charges, taxes, expenses and other obligations provided
for in this Agreement and the other Loan Documents.
(c) All payments by the Borrowers hereunder and under any
of the other Loan Documents shall be made without
setoff or counterclaim and free and clear of and
without deduction for any taxes, levies, imposts,
duties, charges, fees, deductions, withholdings,
compulsory loans, restrictions or conditions of any
nature now or hereafter imposed or levied by any
jurisdiction or any political subdivision thereof or
taxing or other authority therein unless the Borrowers
are compelled by law to make such deduction or
withholding. If any such obligation is imposed upon the
Borrowers with respect to any amount payable by them
hereunder or under any of the other Loan Documents, the
Borrowers will pay to the Lender on the date on which
such amount is due and payable hereunder or under such
other Loan Document, such additional amount in Dollars
as shall be necessary to enable the Lender to receive
the same net amount which the Lender would have
received on such due date had no such obligation been
imposed upon the Borrowers. The Borrowers will deliver
promptly to the Lender certificates or other valid
vouchers for all taxes or other charges deducted from
or paid with respect to payments made by the Borrowers
hereunder or under such other Loan Document.
ss.4.3. Computations. All computations of interest on the Loans and of
other fees payable by the Borrowers to the extent applicable shall be based
on a 360-day year and paid for the actual number of days elapsed. Each
change in the Base Rate shall be effective, for purposes of the
determination of interest hereunder, contemporaneously with the
effectiveness of such change in the Base Rate. Whenever a payment hereunder
or under any of the other Loan Documents becomes due on a day that is not a
Business Day, the due date for such payment shall be extended to the next
succeeding Business Day, and interest shall accrue during such extension.
The Outstanding amount of the Loans as reflected on the Lender's records
from time to time shall be considered prima facie evidence of the amounts
owing and unpaid to the Lender.
ss.4.4. Additional Costs, Etc. If any present or future applicable
law, which expression, as used herein, includes statutes, rules and
regulations thereunder and interpretations thereof by any competent court
or by any governmental or other regulatory body or official charged with
the administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made
upon or otherwise issued to the Lender by any central bank or other fiscal,
monetary or other authority (whether or not having the force of law),
shall:
(a) subject the Lender to any tax, levy, impost, duty, charge,
fee, deduction or withholding of any nature with respect to this
Agreement, the other Loan Documents, the Lender's commitment or the
Loans (other than taxes based upon or measured by the income or
profits of the Lender); or
(b) materially change the basis of taxation (except for changes
in taxes on income or profits) of payments to the Lender of the
principal of or the interest on any Loans or any other amounts payable
to the Lender under this Agreement or the other Loan Documents; or
(c) impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Agreement) any
special deposit, reserve, assessment, liquidity, capital adequacy or
other similar requirements (whether or not having the force of law)
against assets held by, or deposits in or for the account of, or loans
by, or commitments of an office of the Lender; or
(d) impose on the Lender any other conditions or requirements
with respect to this Agreement, the other Loan Documents, the Loans,
the Lender's commitment, or any class of loans or commitments of which
any of the Loans or such Lender's commitment forms a part;
and the result of any of the foregoing is
(i) to increase the cost to the Lender of making, funding,
issuing, renewing, extending or maintaining any of the Loans or such
Lender's Commitment; or
(ii) to reduce the amount of principal, interest or other amount
payable to the Lender hereunder on account of such Lender's Commitment
or any of the Loans; or
(iii) to require the Lender to make any payment or to forego any
interest or other sum payable hereunder, the amount of which payment
or foregone interest or other sum is calculated by reference to the
gross amount of any sum receivable or deemed received by the Lender
from the Borrowers hereunder,
then, and in each such case, the Borrowers will, upon demand made by the
Lender at any time and from time to time and as often as the occasion
therefor may arise, pay to the Lender such additional amounts as will be
sufficient to compensate the Lender for such additional cost, reduction,
payment or foregone interest or other sum.
ss.4.5. Capital Adequacy. If any present or future law, governmental
rule, regulation, policy, guideline or directive (whether or not having the
force of law) or the interpretation thereof by a court or governmental
authority with appropriate jurisdiction affects the amount of capital
required or expected to be maintained by the Lender or any corporation
controlling the Lender and the Lender determines that the amount of capital
required to be maintained by it is increased by or based upon the existence
of the Loans or the commitments made or deemed to be made pursuant hereto,
then the Lender may notify the Borrowers of such fact, and the Borrowers
shall pay to the Lender from time to time on demand, as an additional fee
payable hereunder, such amount as the Lender shall determine in good faith
and certify in a notice in accordance with ss.4.6 to the Borrowers to be an
amount that will adequately compensate the Lender in light of these
circumstances for its increased costs of maintaining such capital.
ss.4.6. Certificate. A certificate setting forth any additional
amounts payable pursuant to ss.ss.or and a brief explanation of such
amounts which are due, submitted by the Lender to the Borrowers, shall be
prima facie evidence that such amounts are due and owing.
ss.4.7. Interest After Default. Following the occurrence of an Event
of Default, principal and (to the extent permitted by applicable law)
interest on the Loans and all other amounts payable hereunder or under any
of the other Loan Documents, at the option of the Lender, shall bear
interest (compounded daily) payable on demand at a rate per annum equal to
the aggregate of the Base Rate plus six percent (6%) per annum.
5. COLLATERAL SECURITY. The Obligations shall be secured by a
perfected first priority security interest to be held by the Lender
(subject only to Permitted Liens) in the Collateral.
6. REPRESENTATIONS AND WARRANTIES. The Borrowers represent and warrant
to the Lender as follows.
ss.6.1. Corporate Authority; Etc.
-------------------------
(a) Incorporation; Good Standing. The Borrowers (i) are
corporations or limited partnerships, as applicable,
validly existing and in good standing under the laws of
the state of their incorporation or organization (ii)
have all requisite power to own their property and
conduct their business as now conducted and as
presently contemplated, and (iii) are in good standing
as a foreign corporation and are duly authorized to do
business in each jurisdiction where Collateral is
located and in each other jurisdiction where such
qualification is necessary except where a failure to be
so qualified in such other jurisdiction would not have
a materially adverse effect on the business, assets or
financial condition of the Borrowers.
(b) Authorization. The execution, delivery and performance
of this Agreement and the other Loan Documents to which
the Borrowers are or are to become a party and the
transactions contemplated hereby and thereby (i) are
within the authority of each Borrower, (ii) have been
duly authorized by all necessary proceedings, (iii) do
not and will not conflict with or result in any breach
or contravention of any provision of law, statute,
rule, regulation or agreement to which any Borrower is
subject or any judgment, order, writ, injunction,
license or permit applicable to any Borrower, and (iv)
do not and will not conflict with any provision of any
Borrower's organization documents or other charter
documents or bylaws of, or any agreement or other
instrument binding upon, any Borrower, except where
such conflict would not have a materially adverse
effect on the business, assets or financial condition
of the Borrowers.
(c) Enforceability. The execution and delivery of this
Agreement and the other Loan Documents to which the
Borrowers are or are to become a party will result in
valid and legally binding obligations of each Borrower
enforceable against it in accordance with the
respective terms and provisions hereof and thereof,
except as enforceability is limited by bankruptcy,
insolvency, reorganization, moratorium or other laws
relating to or affecting generally the enforcement of
creditors' rights and except to the extent that
availability of the remedy of specific performance or
injunctive relief is subject to the discretion of the
court before which any proceeding therefor may be
brought.
ss.6.2. Governmental Approvals. The execution, delivery and
performance by the Borrowers of this Agreement and the other Loan Documents
to which the Borrowers are or are to become a party and the transactions
contemplated hereby and thereby do not require the approval or consent of,
or filing with, any governmental agency or authority other than the
Borrowing Order and those already obtained and the filing of related
financing statements in the appropriate records office with respect
thereto.
ss.6.3. Litigation. Except for any litigation which is stayed by the
commencement of the Proceedings, there are no actions, suits, proceedings
or investigations of any kind pending or, to the knowledge of the
Borrowers, threatened against the Borrowers or any of their Subsidiaries
before any court, tribunal or administrative agency or board that, if
adversely determined, might, either in any case or in the aggregate,
materially adversely affect the properties, assets, financial condition or
business of the Borrower or materially impair the right of the Borrowers
and their Subsidiaries to carry on business substantially as now conducted
by them, or result in any substantial liability not adequately covered by
insurance, or for which adequate reserves are not maintained on the balance
sheet of the Borrowers and their Subsidiaries, or which question the
validity of this Agreement or any of the other Loan Documents, or any
action taken or to be taken pursuant hereto or thereto.
ss.6.4. No Materially Adverse Contracts, Etc. None of the Borrowers or
any of their Subsidiaries is subject to any charter, corporate or other
legal restriction, or any judgment, decree, order, rule or regulation that
has a materially adverse effect on the business, assets or financial
condition of the Borrowers or their Subsidiaries.
ss.6.5. Compliance With Other Instruments, Laws, Etc. None of the
Borrowers or any of their Subsidiaries is in violation of any provision of
its charter or other organization documents, by-laws, or any agreement or
instrument to which any of them may be subject or by which any of them or
any of their properties may be bound or any decree, order, judgment,
statute, license, ruler regulation, in any of the foregoing cases in a
manner that could materially and adversely affect the financial condition,
properties or business of the Borrowers and their Subsidiaries, the
enforcement of any of which is not stayed by the commencement of the
Proceedings.
ss.6.6. Tax Status. The Borrowers (a) have made or filed all federal
and state income and all other tax returns, reports and declarations
required by any jurisdiction to which they are subject, (b) have paid all
taxes and other governmental assessments and charges shown or determined to
be due on such returns, reports and declarations, except those being
contested in good faith and by appropriate proceedings and (c) have set
aside on its books provisions reasonably adequate for the payment of all
taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. Except for taxes being contested as provided in
clause (b), above, there are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction, and the officers of
the Borrowers know of no basis for any such claim.
ss.6.7. Capitalization. On and as of the Closing Date, the authorized
capital stock of Nutramax and its Subsidiaries shall consist of the number
of shares of common stock and preferred stock set forth on Schedule 6.7
hereto. The identity and holdings of the owners of the outstanding shares
of such authorized stock is reflected on said Schedule 6.7 (provided that
in the case of Nutramax, only the identity and holdings of its executive
officers, key employees and Affiliates is required to be so disclosed). All
such outstanding shares have been duly and validly issued, are fully paid
and are non-assessable.
ss.6.8. Leases. Schedule 6.8 hereto contains a complete list of all
leases, occupancy agreements and all amendments thereto and all other
documents affecting rights and obligations thereunder, including, without
limitation, assignments and subleases pursuant to which any Borrower or
Subsidiary leases real property, and license agreements pursuant to which a
third party would have the right to enter upon the leased premises. To the
knowledge of the Borrowers, no default or event of default exists under any
of the leases (other than by virtue of the commencement of the
Proceedings).
ss.6.9. No Event of Default. No Default or Event of Default has
occurred and is continuing.
ss.6.10. Holding Company and Investment Company Acts. None of the
Borrowers or any of their Subsidiaries is a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a
"holding company", as such terms are defined in the Public Utility Holding
Company Act of 1935; nor are they an "investment company", or an
"affiliated company" or a "principal underwriter" of an "investment
company", as such terms are defined in the Investment Company Act of 1940.
ss.6.11. Absence of UCC Financing Statements, Etc. To the knowledge of
the Borrowers, except with respect to Permitted Liens, there is no
financing statement, security agreement, chattel mortgage, real estate
mortgage or other document filed or recorded with any filing records,
registry, or other public office, that purports to cover, affect or give
notice of any present or possible future lien on, or security interest in,
any Collateral or rights thereunder.
ss.6.12. Title to Collateral. To the knowledge of the Borrowers, the
Borrowers are the owner of the Collateral free from any lien, security
interest, encumbrance, and any other claim or demand, except for Permitted
Liens.
ss.6.13. Certain Transactions. Other than as set forth in SCHEDULE
6.13, none of the officers, trustees, directors, or employees of the
Borrowers or any of their Subsidiaries is presently a party to any
transaction with the Borrowers or any such Subsidiaries (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to
or by, providing for rental of real or personal property to or from, or
otherwise requiring payments to or from any officer, trustee, director or
such employee or any corporation, partnership, trust or other entity in
which any officer, trustee, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner.
ss.6.14. Employee Benefit Plans; Multiemployer Plans; Guaranteed
Pension Plans. None of the Borrowers or any ERISA Affiliate maintains or
contributes to any Employee Benefit Plan, Multiemployer Plan or Guaranteed
Pension Plan other than as set forth in SCHEDULE 6.14 hereof.
ss.6.15. Regulations U and X. No portion of any Loan is to be used for
the purpose of purchasing or carrying any "margin security" or "margin
stock" as such terms are used in Regulations U and X of the Board of
Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and 224.
ss.6.16. Subsidiaries. SCHEDULE 6.16 sets forth all of the
Subsidiaries of the Borrowers. A Borrower or a Subsidiary is the owner,
free and clear of all liens and encumbrances, of all of the issued and
outstanding capital stock of each Subsidiary. All shares of such stock have
been validly issued and are fully paid and nonassessable and no rights to
subscribe to any additional shares have been granted, and no options,
warrants, or similar rights are outstanding.
ss.6.17. Loan Documents. All of the representations and warranties of
the Borrowers made in the other Loan Documents or any document or
instrument delivered to the Lender or the Lenders pursuant to or in
connection with any of such Loan Documents are true and correct in all
material respects.
7. AFFIRMATIVE COVENANTS OF THE BORROWERS. The Borrowers covenants and
agrees that, so long as any Obligation is Outstanding or the Lender has any
obligation to make any Loan or issue any Letter of Credit:
ss.7.1. Punctual Payment. The Borrowers will duly and punctually pay
or cause to be paid the principal and interest on the Loans and all
interest, fees and other Obligations provided for in this Agreement, all in
accordance with the terms of this Agreement and the Note, as well as all
other sums owing pursuant to the Loan Documents.
ss.7.2. Maintenance of Office. The Borrowers will maintain their chief
executive offices in Gloucester, Massachusetts, or at such other place in
the United States of America as the Borrowers shall designate upon not less
than forty five (45) days prior written notice to the Lender.
ss.7.3. Records and Accounts. The Borrowers will (a) keep, and cause
each of their Subsidiaries to keep, true and accurate records and books of
account in which full, true and correct entries will be made in accordance
with Generally Accepted Accounting Principles and (b) maintain adequate
accounts and reserves for all taxes (including income taxes), depreciation
and amortization of their properties and the properties of their
Subsidiaries, contingencies, and other reserves.
ss.7.4. Financial Statements, Certificates and Information. The
Borrowers will deliver to the Lender in a form similar to that previously
delivered under the Pre-Petition Loan Agreement:
(a) As soon as practicable, but in any event not later than
forty-five (45) days after the end of each of Nutramax's fiscal
quarters, copies of the unaudited consolidated balance sheet of
Nutramax and its Subsidiaries as of the end of such quarter, and the
related unaudited consolidated statements of income and cash flow for
such quarter and that portion of Nutramax's fiscal year then elapsed,
all in reasonable detail and prepared in accordance with Generally
Accepted Accounting Principles, together with a certification by the
principal financial or accounting officer of Nutramax that the
information contained in such financial statements fairly presents the
financial position of Nutramax and its Subsidiaries on the date
thereof (subject to year-end adjustments) and that no Default or Event
of Default then exists (or if a Default or Event of Default then
exists, specifying the nature thereof).
(b) As soon as practicable, but in any event not later than
twenty (20) days after the end of each month, copies of the unaudited
consolidated balance sheet of Nutramax and its Subsidiaries as of the
end of such month, and the related unaudited consolidated statements
of income and cash flow for such month and that portion of Nutramax's
fiscal year then elapsed, all in reasonable detail and prepared in
accordance with Generally Accepted Accounting Principles, but
excluding footnotes, together with a certification by the principal
financial or accounting officer of Nutramax that the information
contained in such financial statements fairly presents the financial
position of Nutramax and its Subsidiaries on the date thereof (subject
to year-end adjustments which shall not be material in amount).
(c) Weekly, on Tuesday of each week as of the immediately
preceding Friday, a copy of the Borrowing Base Report furnished under
the Pre-Petition Loan Agreement and adequate protection stipulation
entered into by the Borrowers with respect thereto.
(d) Weekly, on Tuesday of each week, (A) an accounts receivable
aging, and (B) a variance report reflecting deviations from the
Business Plan for the subject week and year to date.
(e) Contemporaneously with the filing or mailing thereof, copies
of all material of a financial nature filed with the Securities and
Exchange Commission or sent to the stockholders of Nutramax.
(f) Contemporaneously with the Borrowers' receipt thereof, copies
of all accountants' management letters.
(g) From time to time such other financial data and information
as the Lender may reasonably request.
ss.7.5. Notices.
-------
(a) Defaults. The Borrowers will promptly, upon becoming
aware thereof, notify the Lender in writing of the
occurrence of any Default or Event of Default. If any
Person shall give any notice or take any other action
in respect of a claimed default (whether or not
constituting an Event of Default) under this Agreement
or, to the extent not stayed by the commencement of the
Proceedings, under any note, evidence of indebtedness,
indenture or other obligation to which or with respect
to which the Borrowers or any of their Subsidiaries is
a party or obligor, whether as principal or surety,
(b) and such default would permit the holder of such note
or obligation or other evidence of indebtedness to
accelerate the maturity thereof, the Borrowers shall
forthwith give written notice thereof to the Lender
describing the notice or action and the nature of the
claimed default.
(c) Environmental Events. The Borrowers will promptly give
notice to the Lender, upon becoming aware thereof, of
any inquiry, proceeding, investigation, or other
action, including a notice from any agency of potential
environmental liability, or any federal, state or local
environmental agency or board, that in either case has
the potential to materially affect the assets,
liabilities, financial condition or operations of the
Borrowers or the Lender's security interests pursuant
to the Security Documents.
(d) Notification of Claims against Collateral. The
Borrowers will, immediately upon becoming aware
thereof, notify the Lender in writing of (i) any
setoff, claims, withholdings or other defenses to which
any of the Collateral, or the rights of the Lender with
respect thereto, are subject, and (ii) any other
material events relating to the Collateral or the
rights of the Lender with respect thereto.
(e) Notice of Litigation and Judgments. The Borrowers will,
and will cause each of their Subsidiaries to, give
notice to the Lender in writing of any litigation or
proceedings threatened or any pending litigation and
proceedings affecting the Borrowers or any of their
Subsidiaries or to which any Borrower or any of its
Subsidiaries is or is to become a party involving an
claim against the Borrowers or any of their
Subsidiaries or that could reasonably be expected to
have a materially adverse effect on the Borrowers and
such Subsidiaries and stating the nature and status of
such litigation or proceedings. The Borrowers will, and
will cause each of their Subsidiaries to, give notice
to the Lender, in writing, in form and detail
satisfactory to the Lender, of any judgment, final or
otherwise, against the Borrowers or any of its
Subsidiaries.
(f) Notice of Offers etc. The Borrowers shall furnish
counsel to the Lender within five (5) Business Days
after the Borrower's receipt thereof, with copies of
(i) all offers, letters of intent, and purchase and
sale agreements for any of the Borrowers' assets
(including drafts, executed documents, and any
amendments or modifications thereof), and (ii) all
proposals, commitments, loan documents and other
material items (including any changes thereto or the
termination of previously issued commitments therefor)
with respect to the refinancing of the Obligations and
the obligations under the Pre-Petition Loan Agreement
(including both drafts, executed documents and any
amendments or modifications thereof). In addition, the
Borrowers shall promptly (prior to delivery of the
foregoing to the Lender's counsel) advise the Lender
telephonically or by facsimile transmission of any of
the foregoing events.
(g) Copies of Pleadings. The Borrowers shall provide the
Lender and the Lender's counsel (to the extent not
served on the Lender or its counsel) with copies, when
so filed or submitted, of any pleading filed in the
Proceedings by or on behalf of the Borrowers or the
submission by or on behalf of the Borrowers of any
report or financing statement to the Bankruptcy Court
in which the Proceedings are pending, the office of the
United States Trustee, or any committee appointed in
the Proceedings.
ss.7.6. Location of Records and Collateral; Name Change. The Borrowers
will give the Lender written notice of each location at which Collateral is
or will be kept and each office of each Borrower and Subsidiary at which
records of the Borrowers and such Subsidiary are kept. Except as such
notice is given, all Collateral owned by the Borrowers and each Subsidiary
is and shall be kept, and all records of the Borrowers and each Subsidiary
shall be maintained, at the locations set forth on SCHEDULE 7.6 hereto. The
Borrowers shall give the Lender thirty days' prior written notice of any
change in its name or corporate form or any change in the name or names
under which the Borrowers' or any Subsidiary's business is transacted.
ss.7.7. Existence; Maintenance of Properties. The Borrowers will do or
cause to be done all things necessary to preserve and keep in full force
and effect its existence as corporations and/or limited partnerships, as
applicable, under the laws of the jurisdictions of their incorporation or
formation. The Borrowers will do or cause to be done all things necessary
to preserve and keep in full force all of its rights and franchises and
those of their Subsidiaries, except where such failure would not have a
material adverse effect on the business, assets or financial condition of
the Borrowers or their Subsidiaries. The Borrowers (a) will cause all of
their properties and those of their Subsidiaries used or useful in the
conduct of their business or the business of their Subsidiaries to be
maintained and kept in good condition, repair and working order and
supplied with all necessary equipment, ordinary wear and tear excepted, (b)
will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, as may be necessary so that the
business carried on in connection therewith may be properly and
advantageously conducted at all times, and (c) will, and will cause each of
their Subsidiaries to, continue to engage primarily in the businesses now
conducted by them and in related businesses.
ss.7.8. Insurance. SCHEDULE 7.8 sets forth all presently existing
insurance maintained by the Borrowers (the "Insurance"). The Borrowers will
maintain the Insurance. The Lender shall be named as mortgagee, loss payee
and additional insured and shall be given thirty days' prior written notice
of any cancellation or modification of the Insurance. If the Borrowers fail
to maintain such Insurance, the Lender, in its sole discretion, may provide
such Insurance and charge the cost thereof to any account maintained by the
Borrowers with the Lender or may treat such as a Loan hereunder.
ss.7.9. Taxes. The Borrowers will duly pay and discharge, or cause to
be paid and discharged, before the same shall become overdue, all
post-petition taxes, assessments and other governmental charges imposed
upon them and their real properties, sales and activities, or any part
thereof, or upon the income or profits therefrom, except for those taxes,
assessments or charges which the Borrowers are contesting in good faith by
appropriate proceedings and with respect to which appropriate reserves have
been established and are being maintained in accordance with Generally
Accepted Accounting Principles and as to which no lien shall have been
filed.
ss.7.10. Inspection of Properties and Books. (a) The Borrowers shall
permit the Lender or any of the Lenders' other designated representatives
(at the Borrowers' expense) to visit and inspect any of the properties of
the Borrowers or any of their Subsidiaries to examine the books of account
of the Borrowers and their Subsidiaries (and to make copies thereof and
extracts therefrom) and to discuss the affairs, finances and accounts of
the Borrowers and their Subsidiaries with, and to be advised as to the same
by, its officers, all at such reasonable times and intervals as the Lender
may reasonably request.
(b) Without limiting the rights of the Lender under ss.7.10(a),
above, the Borrowers shall permit the Lender, at the Borrower's expense,
(i) to undertake commercial finance examinations; (ii) to obtain appraisals
of any of the Borrowers' assets in form and substance and by appraisers
satisfactory to the Lender; and (iii) to obtain environmental site
assessments of any of the Borrowers' properties, all of the foregoing at
such times and intervals as the Lender may request.
(c) The Borrowers shall continue to cooperate with the Consultant
and shall furnish the Consultant with such information as the Consultant
may request. All reasonable fees, costs and expenses of the Consultant
shall be for the Borrowers' account and the Borrowers shall reimburse the
Lender for such fees, costs and expenses on demand.
ss.7.11. Compliance with Laws, Contracts, Licenses, and Permits. The
Borrowers will comply with, and will cause each of their Subsidiaries to
comply with (a) all applicable laws and regulations now or hereafter in
effect wherever their business is conducted, (b) the provisions of their
corporate charter and other charter documents and by-laws, (c) all
agreements and instruments to which they are a party or by which they or
any of their properties may be bound and (d) all applicable decrees,
orders, and judgments, including, without limitation, those entered in the
Proceedings. If at any time while any Obligation is Outstanding or the
Lender has any obligation to make Loans hereunder, any authorization,
consent, approval, permit or license from any officer, agency or
instrumentality of any government shall become necessary or required in
order that the Borrowers may fulfill any of their obligations hereunder,
the Borrowers will promptly take or cause to be taken all reasonable steps
within the power of the Borrowers to obtain such authorization, consent,
approval, permit or license and furnish the Lender with evidence thereof.
ss.7.12. Use of Proceeds. The Borrowers will use the proceeds of the
Loans solely for the purposes set forth in the Business Plan, however in no
event shall proceeds in excess of Three Hundred and Forty Thousand dollars
($340,000.00) be used to pay professional expense included in which shall
be One and Sixty Thousand Dollars ($160,000.00) for professional expenses
incurred by the Lender.
ss.7.13. Bank Accounts. To permit the Lender to monitor the financial
performance of the Borrowers and each of the Borrowers' Subsidiaries, the
Borrowers shall, and shall cause each of their Subsidiaries to, maintain
all of its deposit accounts with the Lender. Further, and without limiting
the foregoing, the Borrowers shall comply with the cash dominion provisions
(ss.4) of the Security Agreement executed in connection herewith.
ss.7.14. Engagement of Agents. (a) Within ten (10) Business Days after
the Lender's request, the Borrowers shall engage a crisis manager and/or a
business broker reasonably acceptable to the Lender for the purpose of
managing the Borrowers' businesses and/or seeking, and negotiating with, a
purchaser for the Borrowers' business units, provided that the Lender shall
not request the Borrowers to engage a crisis manager or business broker
unless and until an Event of Default has occurred and is continuing.
(b) The Borrower shall cause its agents, including those engaged
hereunder, to discuss with the Lender the status and results of their
efforts, including, without limitation the status and results of their
efforts to dispose of the Borrowers' business units, any offers or
proposals which have been received and all material developments with
respect thereto, at such intervals as the Lender may reasonably request.
ss.7.15. Further Assurances. The Borrowers will cooperate with, and
will cause each of its Subsidiaries to cooperate with the Lender and
execute such further instruments and documents as the Lender shall
reasonably request to carry out to their satisfaction the transactions
contemplated by this Agreement and the other Loan Documents. Without
limiting the generality of the foregoing, the Borrowers acknowledge that
the Lender will does not intend to presently require the Borrowers to
execute separate mortgages financing statements and other documents to
reflect the Lender's interest in the Collateral but rather will rely upon
the terms of the Borrowing Order therefor; nevertheless the Lender may at
any time require the Borrowers to execute such Security Documents and to
take such action (such as the obtaining of title insurance) as the Lender
may reasonably require to evidence or more fully perfect the Lender's
rights in the Collateral.
8. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS. The Borrower covenants
and agrees that, so long as any Obligation is Outstanding or the Lender has
any obligation to make any Loans or issue any Letter of Credit:
ss.8.1. Restrictions on Indebtedness. The Borrowers will not, and will
not permit any of their Subsidiaries to, create, incur, assume, guarantee
or be or remain liable, contingently or otherwise, with respect to any
Indebtedness other than:
(a) Indebtedness to the Lender arising under any of the Loan
Documents;
(b) current liabilities of the Borrowers or their Subsidiaries
incurred in the ordinary course of business but not incurred through
(i) the borrowing of money, or (ii) the obtaining of credit except for
credit on an open account basis customarily extended and in fact
extended in connection with normal purchases of goods and services;
(c) Indebtedness in respect of taxes, assessments, governmental
charges or levies and claims for labor, materials and supplies to the
extent that payment therefor shall not at the time be required to be
made in accordance with the provisions of ss.6.9;
(d) Indebtedness in respect of judgments or awards that have been
in force for less than the applicable period for taking an appeal so
long as execution is not levied thereunder or in respect of which the
Borrowers shall at the time in good faith be prosecuting an appeal or
proceedings for review and in respect of which a stay of execution
shall have been obtained pending such appeal or review;
(e) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the
ordinary course of business;
(f) Indebtedness existing on the date of this Agreement and
listed and described on SCHEDULE 8.1 hereto;
(g) Indebtedness arising prior to the commencement of the
Proceedings; and
(h) Subordinated Indebtedness.
ss.8.2. Restrictions on Liens, Etc. The Borrowers will not, and will
not permit any of theiR Subsidiaries to, (a) create or incur or suffer to
be created or incurred or to exist any lien, encumbrance, mortgage, pledge,
charge, restriction or other security interest of any kind upon any of
their property or assets of any character whether now owned or hereafter
acquired, or upon the income or profits therefrom; (b) transfer any of
their property or assets or the income or profits therefrom for the purpose
of subjecting the same to the payment of Indebtedness or performance of any
other obligation in priority to payment of its general creditors; (c)
acquire, or agree or have an option to acquire, any property or assets upon
conditional sale or other title retention or purchase money security
agreement, device or arrangement; (d) suffer to exist for a period of more
than thirty (30) days after the same shall have been incurred any
Indebtedness or claim or demand against it that if unpaid might by law or
upon bankruptcy or insolvency, or otherwise, be given any priority
whatsoever over their general creditors; or (e) sell, assign, pledge or
otherwise transfer any accounts, contract rights, general intangibles,
chattel paper or instruments, with or without recourse; provided that the
Borrowers and any Subsidiary of the Borrowers may create or incur or suffer
to be created or incurred or to exist:
(i) liens in favor of a Borrower on all or part of the
assets of Subsidiaries of a Borrower securing Indebtedness owing by
Subsidiaries of any Borrower to a Borrower;
(ii) liens on properties to secure taxes, assessments and
other government charges or claims for labor, material or supplies in
respect of obligations not overdue;
(iii) deposits or pledges made in connection with, or to
secure payment of, workmen's compensation, unemployment insurance, old
age pensions or other social security obligations;
(iv) liens on properties in respect of judgments or awards,
the Indebtedness with respect to which is permitted byss.8.1(d);
(v) liens of carriers, warehousemen, mechanics and
materialmen, and other like liens on properties in respect of
obligations not overdue;
(vi) encumbrances on properties consisting of easements,
rights of way, zoning restrictions, restrictions on the use of real
property and defects and irregularities in the title thereto,
landlord's or lessor's liens under leases to which a Borrower or a
Subsidiary of a Borrower is a party, and other minor liens or
encumbrances none of which interferes materially with the use of the
property affected in the ordinary conduct of the business of the
Borrowers and their Subsidiaries, which defects do not individually or
in the aggregate have a materially adverse effect on the business of
any Borrower individually or of the Borrowers and their Subsidiaries
on a consolidated basis.
(vii) presently outstanding liens listed on SCHEDULE 8.2
hereto; and
(viii) liens in favor of the Lender under the Loan Documents.
ss.8.3. Restrictions on Investments. The Borrowers will not, and will
not permit any of their Subsidiaries to, make or permit to exist or to
remain outstanding any Investment except Investments in which the Lender
has a perfected first priority security interest and which constitute
Investments existing on the date hereof and listed on SCHEDULE 8.3 hereto.
ss.8.4. Merger, Consolidation. The Borrowers will not, and will not
permit any of their Subsidiaries to, become a party to any merger or
consolidation, or agree to or effect any asset acquisition or disposition
or stock acquisition or disposition (other than the acquisition or
disposition of assets in the ordinary course of business consistent with
past practices) except (i) the merger or consolidation of one or more of
the Subsidiaries of any Borrower with and into a Borrower, or (ii) the
merger or consolidation of two or more Subsidiaries of any Borrower, and
(iii) the transaction described on SCHEDULE 8.4 hereto.
ss.8.5. Sale and Leaseback. The Borrowers will not, and will not
permit any of their Subsidiaries to, enter into any arrangement, directly
or indirectly, whereby any Borrower or any Subsidiary of any Borrower shall
sell or transfer any property owned by it in order then or thereafter to
lease such property or lease other property that a Borrower or any
Subsidiary of any Borrower intends to use for substantially the same
purpose as the property being sold or transferred.
ss.8.6. Compliance with Environmental Laws. The Borrowers will not,
and will not permit any of their Subsidiaries to (a) do any of the
following, except in material compliance with all Environmental Laws and in
the ordinary course of business: (i) use any of the Real Estate or any
portion thereof as a facility for the handling, processing, storage or
disposal of Hazardous Substances, (ii) cause or permit to be located on any
of the Real Estate any underground tank or other underground storage
receptacle for Hazardous Substances, (iii) generate or dispose of any
Hazardous Substances on any of the Real Estate, or (b) conduct any activity
at any Real Estate or use any Real Estate in any manner so as to cause a
Release.
ss.8.7. Distributions. The Borrowers will not make any Distributions.
ss.8.8. Subsidiaries. The Borrowers shall not acquire, form, or
otherwise invest in any Subsidiary that is not a Borrower, without the
prior written consent of the Lender. Without limiting the foregoing, the
Borrower acknowledges that the Lender's consent may be conditioned upon,
among other things, the Lender's receipt of a security interest in the
Subsidiary's capital stock and assets in order to secure the Obligations.
ss.8.9. Fiscal Year. The fiscal year of the Borrowers and their
Subsidiaries presently ends on September 30 of each year. The Borrowers and
their Subsidiaries shall not change their fiscal year end without
furnishing prior written notice thereof to, and first obtaining the consent
of, the Lender.
ss.8.10. Loans and Advances. The Borrowers will not and will not
permit any of their Subsidiaries to, make any loans or advances to any
Person other than (a) deposits to the Borrowers' suppliers in the ordinary
course of business, and (b) advances to the Borrowers' or their
Subsidiaries' employees in the ordinary course of business for reasonable
expenses to be incurred by such employees for the benefit of the Borrowers
or such Subsidiaries.
ss.8.11. Terms of Subordinated Indebtedness. Neither the Borrower nor
its Subsidiaries shall:
(a) effect or permit any changes in or amendment to (i) the terms
by which any Subordinated Indebtedness purports to be subordinated to
the payment and performance of the Obligations or (ii) the terms
relating to the repayment of any Subordinated Indebtedness; or
(b) directly or indirectly make any payment of any principal,
interest, fees or other amounts with respect to, or in redemption,
retirement, or repurchase of, any Subordinated Indebtedness.
ss.8.12. Agreements with Affiliated Persons. Except as disclosed on
SCHEDULE 6.13, neither any Borrower or any of its Subsidiaries shall enter
into any agreement with any director, officer, trustee, or employee, or any
Person in which such director, officer, trustee or employee has an interest
other than in the ordinary course of business and on terms that are not
less favorable than the Borrowers or such Subsidiary could obtain from an
unrelated Person at such time.
ss.8.13. Return of Property. Without the prior written consent of the
Lender, the Borrowers shall not consent to or suffer the entry of an order
in the Proceedings which authorize the return of any of the Borrowers'
property pursuant to ss.546(g)* of the Bankruptcy Code.
9. FINANCIAL COVENANTS OF THE BORROWERS. The Borrowers covenant and
agree that, so long as any Obligation is Outstanding or the Lender has any
obligation to make any Loans:
ss.9.1. Capital Expenditures. None of the Borrowers or any of its
Subsidiaries shall make or incur any Capital Expenditures in excess of
$100,000.00 in the aggregate after the Closing Date.
ss.9.2. Maximum Borrowings. The Borrowers shall not permit the sum of
the Outstanding Loans made, and Letters of Credit issued, hereunder to
exceed the following amounts as of the following dates:
Week Ending Maximum Amount
May 5, 2000 $2,250,000
May 12, 2000 $3,000,000
May 19, 2000 $3,000,000
May 26, 2000 $4,000,000
June 2, 2000 $4,000,000
June 9, 2000 $4,500,000
June 16, 2000 $4,500,000
June 23, 2000 $5,000,000
ss.9.3. Cumulative Sales. The Borrowers shall not permit their total
shipments of finished goods Inventory to their unaffiliated customers for
sales made after April 24 , 2000 calculated on a cumulative basis, to be
less than the following amounts for the periods indicated:
Week Ending Amount
May 12, 2000 $4,000,000
May 19, 2000 $5,700,000
May 26, 2000 $7,000,000
June 2, 2000 $8,900,000
June 9, 2000 $10,500,000
June 16, 2000 $12,700,000
June 23, 2000 $14,300,000
June 30, 2000 $15,900,000
ss.9.4. Minimum Eligible Accounts Receivable. The Borrowers shall not
permit the aggregate Net Outstanding Amount of Base Accounts (as defined in
the Pre-Petition Loan Agreement) to be less than the following as of the
period indicated:
Week Ending Minimum Accounts
Receivable
May 19, 2000 $11,400,000
May 26, 2000 $11,250,000
June 2, 2000 $11,000,000
June 9, 2000 $10,800,000
June 16, 2000 $10,900,000
June 23, 2000 $10,800,000
June 30, 2000 $10,800,000
10. CLOSING CONDITIONS. The obligations of the Lender to make the
Loans on the Closing Date and thereafter shall be subject to satisfaction
of the following conditions precedent:
ss.10.1. Loan Documents. Each of the Loan Documents shall have been
duly executed and delivered by the respective parties thereto and, shall be
in full force and effect and shall be in form and substance satisfactory to
the Lender.
ss.10.2. Resolutions. All action on the part of the Borrowers
necessary for the valid execution, delivery and performance by the
Borrowers of this Agreement and the other Loan Documents to which they are
or are to become a party shall have been duly and effectively taken, and
evidence thereof satisfactory to the Lender shall have been provided to the
Lender. The Lender shall have received from the Borrowers true copies of
the Borrowers' resolutions adopted by the Borrowers' board of directors,
general partners or other governing body authorizing the transactions
described herein, certified by the Borrowers' secretary or general partners
as of a recent date to be true and complete.
ss.10.3. Incumbency Certificate; Authorized Signers. The Lender shall
have received from the Borrowers an incumbency certificate, dated as of the
Closing Date, signed by a duly authorized officer of the Borrowers and
giving the name and bearing a specimen signature of each individual who
shall be authorized: (a) to sign, in the name and on behalf of the
Borrowers, each of the Loan Documents to which the Borrowers are or are to
become a party; (b) to make requests for Loans; and (c) to give notices and
to take other action on behalf of the Borrowers under the Loan Documents.
ss.10.4. Borrowing Order. There shall have been entered in the
Proceedings an Interim Borrowing Order, which order shall not have been
stayed, modified, appealed, reversed or otherwise affected.
ss.10.5. Adequate Protection Stipulation. There shall have been
entered in the Proceedings an order approving a Stipulation, substantially
in the form of EXHIBIT E hereto, pursuant to which the agent and the
lenders under the Pre-Petition Loan Agreement shall be afforded adequate
protection during the Proceedings with respect to the Pre-Petition
Revolver, the Pre-Petition Term Loan and the other obligations under the
Pre-Petition Loan Agreement, which order shall not have been stayed,
modified, appealed, reversed, or otherwise affected.
ss.10.6. Litigation. There shall be no pending or threatened
litigation involving the Borrowers or any of their Subsidiaries which has
not been stayed in the Proceedings and which, in the judgment of the
Lender, could have a material adverse effect on the Borrowers or any of
their Subsidiaries or the ability of the Borrowers or their Subsidiaries to
perform their obligations under the Loan Documents, and no judgment, order,
injunction or other similar injunction or other similar restraint
prohibiting any of the transactions contemplated hereby shall exist.
ss.10.7. Evidence of Insurance. The Lender shall have received
evidence, in form, scope and substance and with such insurance carriers,
satisfactory to the Lender, for all insurance policies required under any
of the Loan Documents, naming the Lender as loss payee or mortgagee, as
applicable.
ss.10.8. Financial Statements. The Lenders shall have received the
Business Plan and such other information as the Lender shall have
reasonably requested, and the information shall be satisfactory to the
Lender.
ss.10.9. Settlement of Pre-Petition Obligations. The lenders under the
Pre-Petition Loan Agreement shall have entered into an agreement with the
Borrowers and with the Investors for the settlement of such lenders' claims
under the Pre-Petition Agreement.
ss.10.10. Commitment Letters. The Borrowers shall have delivered to
the Lender (a) a commitment letter from The CIT Group/Commercial Services,
Inc. and from the Investors, on terms satisfactory to the Lender and to the
lenders under the Pre-Petition Loan Agreement for the refinancing of the
Obligations and the funding of the settlement described in ss.10.9 hereof.
ss.10.11. Approval Motions. The Borrower shall have filed motions with
the Bankruptcy Court in the Proceedings seeking approval of the settlement
described in ss.10.9 hereof and the financing transactions described in
ss.10.10 hereof.
ss.10.12. Compliance with Law. The Lender shall be satisfied that the
Borrowers have obtained all material and appropriate authorizations and
approvals of all governmental authorities required for the due execution,
delivery and performance by the Borrowers of each of the Loan Documents to
which they are or will be a party and for the perfection of or the exercise
by the Lender of its rights and remedies under the Loan Documents.
ss.10.13. Payment of Fees. The Borrowers shall pay to the Lender, the
closing fee pursuant to ss. and shall have reimbursed the Lender for all
costs and expenses, including attorneys' fees, incurred by the Lender.
ss.10.14. Additional Documents. The Borrowers shall have provided such
additional instruments and documents to the Lender as the Lender and the
Lender's counsel may have reasonably requested.
11. CONDITIONS TO ALL BORROWINGS. The obligations of the Lender to
make any Loan , whether on or after the Closing Date, shall also be subject
to the satisfaction of the following conditions precedent:
ss.11.1. Representations True; No Event of Default. Each of the
representations and warranties of the Borrowers and their Subsidiaries
contained in this Agreement, the other Loan Documents or in any document or
instrument delivered pursuant to or in connection with this Agreement shall
be true as of the date as of which they were made and shall also be true at
and as of the time of the making of such Loan, with the same effect as if
made at and as of that time (except to the extent of changes resulting from
transactions contemplated and permitted by this Agreement and the other
Loan Documents and changes occurring in the ordinary course of business
that singly or in the aggregate are not materially adverse, and except to
the extent that such representations and warranties relate expressly to an
earlier date) and no Default or Event of Default shall have occurred and be
continuing. The Lender shall have received a certificate of the Borrowers
signed by an authorized officer of the Borrowers to such effect.
ss.11.2. No Legal Impediment. No change shall have occurred in any law
or regulations thereunder or interpretations thereof that in the reasonable
opinion of the Lender would make it illegal for the Lender to make such
Loan.
ss.11.3. Governmental Regulation. The Lender shall have received such
statements in substance and form reasonably satisfactory to the Lender as
the Lender shall require for the purpose of compliance with any applicable
regulations of the Comptroller of the Currency or the Board of Governors of
the Federal Reserve System.
ss.11.4. Proceedings and Documents. All proceedings in connection with
the transactions contemplated by this Agreement, the other Loan Documents
and all other documents incident thereto shall be reasonably satisfactory
in substance and in form to the Lender and to the Lender's counsel, and the
Lender and such counsel shall have received all information and such
counterpart originals or certified or other copies of such documents as the
Lender may reasonably request.
12. EVENTS OF DEFAULT; ACCELERATION; ETC.
------------------------------------
ss.12.1. Events of Default and Acceleration. If any of the following
events ("EVENTS OF DEFAULT") shall occur:
(a) the Borrowers shall fail to pay any principal of the Loans,
any interest on the Loans or any other sums due hereunder or under any
of the other Loan Documents, when the same shall become due and
payable, whether at the stated date of maturity or any accelerated
date of maturity or at any other date fixed for payment;
(b) the Borrowers shall fail to comply with any of their
covenants contained in ▇▇.▇▇. 7.1, 7.5(e), 7.10, 7.12, 7.13, 7.14, 8
or 9 hereof;
(c) the Borrowers shall fail to comply with any of their
covenants contained in (i) ss.7.4 hereof for two (2) Business Days
after the date when due or (ii) ss.7.8 hereof for five (5) Business
Days;
(d) the Borrowers or any of their Subsidiaries shall fail to
perform any other term, covenant or agreement contained herein (other
than those specified elsewhere in this ss.12) or any of the covenants
contained in any other Loan Documents (other than those specified
elsewhere in this ss.12) for fifteen (15) days after written notice of
such failure has been given to the Borrowers by the Lender;
(e) any representation or warranty of the Borrowers or any of
their Subsidiaries in this Agreement or any of the other Loan
Documents or in any other document or instrument delivered pursuant to
or in connection with this Agreement is determined by the Lender to
have been false in any material respect upon the date when made or
deemed to have been made or repeated;
(f) any Borrower or any of its Subsidiaries shall fail to pay at
maturity, or within any applicable period of grace, any post-petition
obligation for borrowed money or credit received or in respect of any
capital leases, or fail to observe or perform any term, covenant or
agreement contained in any agreement by which it is bound, evidencing
or securing borrowed money or credit received or in respect of any
capital leases for such period of time as would permit (assuming the
giving of appropriate notice if required) the holder or holders
thereof or of any obligations issued thereunder to accelerate the
maturity thereof;
(g) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty days, whether or not consecutive, any
post-petition final judgments in excess of $100,000 in the aggregate
against any Borrower or any of its Subsidiaries;
(h) if any of the Loan Documents shall be canceled, terminated,
revoked or rescinded or any action at law, suit or in equity or other
legal proceeding to cancel, revoke or rescind any of the Loan
Documents shall be commenced by or on behalf of any Borrower or any of
its Subsidiaries, or any court or any other governmental or regulatory
authority or agency of competent jurisdiction shall make a
determination that, or issue a judgment, order, decree or ruling to
the effect that, any one or more of the Loan Documents is illegal,
invalid or unenforceable in accordance with the terms thereof;
(i) any Borrower or any Subsidiary shall be indicted for a
federal crime, a punishment for which could include the forfeiture of
any assets of any Borrower or such Subsidiaries;
(j) there shall have occurred any material adverse change, as
determined by the Lender in good faith, in or to the assets,
liabilities, financial condition, business operations, or prospects of
the Borrowers and its Subsidiaries, taken as a whole;
(k) Any Change in Control;
(l) Unless the transactions described in ss.10.9 and 10.10 have
been consummated and the Obligations theretofore paid in full, the
failure of the Borrowers to have obtained a Final Borrowing Order on
or before June 10, 2000;
(m) The failure of the Borrowers to have obtained a final order
from the Bankruptcy Court in the Proceedings on or before June 15,
2000 approving the transactions described in ss.ss.10.9 and 10.10
hereof; or the entry of an order of the Bankruptcy Court at any time
denying approval of the transactions described in ss.ss.10.9 and 10.10
hereof;
(n) The termination of any of the commitments described in
ss.10.10 hereof for any reason, including, but not limited to, a
notice from any Investor stating that it is not in a position to fund
its entire commitment in accordance with the terms thereof;
(o) The failure of the Borrowers and the other parties thereto to
have consummated the transactions described in ss.ss.10.9 and 10.10
hereof on or before June 30, 2000 (or such later date as the Lender
may agree in writing);
(p) The entry of an order in the Proceedings, which order
constitutes the stay, modification, appeal, or reversal of any
Borrowing Order or which otherwise affects the effectiveness of any
Borrowing Order;
(q) The appointment in the Proceedings of a trustee or of any
examiner having expanded powers to operate all or any part of any
Borrower's business;
(r) The conversion of the Proceedings to a case under Chapter 7
of the Bankruptcy Code; or
(s) The entry of any order which provides relief from the
automatic stay otherwise imposed pursuant to Section 362 of the
Bankruptcy Code, which order permits any creditor, other than the
Lender , to realize upon, or to exercise any right or remedy with
respect to, any material asset of any Borrower or to terminate any
license, franchise, or similar agreement, where such termination could
have a material adverse effect on any Borrower's financial condition
or ability to conduct its business in the ordinary course; or
(t) An "event of default" shall arise under the Stipulation,
substantially in the form of EXHIBIT E hereto, pursuant to which the
agent and the lenders under the Pre-Petition Loan Agreement shall be
afforded adequate protection during the Proceedings with respect to
the Pre-Petition Revolver, the Pre-Petition Term Loan and the other
obligations under the Pre-Petition Loan Agreement.
then, and in any such event, so long as the same may be continuing, subject
to the terms of the Borrowing Order, the Lender, may, by notice in writing
to the Borrowers declare all amounts owing with respect to this Agreement,
the Note and the other Loan Documents to be, and they shall thereupon
forthwith become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly
waived by the Borrowers.
ss.12.2. Termination of Commitments. If any Event of Default shall
have occurred and be continuing, subject to the terms of the Borrowing
Order, the Lender may by notice to the Borrowers, terminate its commitment
hereunder, and upon such notice being given such commitment shall terminate
immediately and the Lender shall be relieved of all further obligations to
make Loans and to issue Letters of Credit. No termination of the credit
hereunder shall relieve the Borrowers of any of the Obligations or any of
its existing obligations to the Lender arising under other agreements or
instruments. Furthermore, in the event of termination of the commitments
hereunder, the Borrowers shall furnish the Lender with cash collateral for
all Outstanding Letters of Credit in an amount equal to one hundred five
percent of the maximum stated amount of all Outstanding Letters of Credit.
Such cash collateral may be immediately applied against any drawing under
any such Letter of Credit without further notice to or consent from the
Borrowers and, to the extent not utilized for such purpose, shall secure
and may be applied against any and all Obligations hereunder.
ss.12.3. Remedies. In case any one or more of the Events of Default
shall have occurred and be continuing, and whether or not the Lender shall
have accelerated the maturity of the Loans pursuant to ss., the Lender may,
subject to the terms of the Borrowing Order, proceed to protect and enforce
its rights and remedies under this Agreement, the Note or any of the other
Loan Documents by suit in equity, action at law or other appropriate
proceeding, whether for the specific performance of any covenant or
agreement contained in this Agreement and the other Loan Documents or any
instrument pursuant to which the Obligations to the Lender are evidenced,
including to the full extent permitted by applicable law the obtaining of
the ex parte appointment of a receiver, and, if such amount shall have
become due, by declaration or otherwise, proceed to enforce the payment
thereof or any other legal or equitable right of the Lender. No remedy
herein conferred upon the Lender or the holder of the Note is intended to
be exclusive of any other remedy and each and every remedy shall be
cumulative and shall be in addition to every other remedy given hereunder
or now or hereafter existing at law or in equity or by statute or any other
provision of law.
ss.12.4. Distribution of Collateral Proceeds. In the event that,
following the occurrence or during the continuance of any Event of Default,
the Lender receives any monies in connection with the enforcement of any of
the Security Documents, or otherwise with respect to the realization upon
any of the Collateral, such monies shall be distributed by the Lender for
application as follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of, the Lender for or in respect of all reasonable
costs, expenses, disbursements and losses which shall have been
incurred or sustained by the Lender in connection with the collection
of such monies by the Lender, for the exercise, protection or
enforcement by the Lender of all or any of the rights, remedies,
powers and privileges of the Lender under this Agreement or any of the
other Loan Documents or in respect of the Collateral or in support of
any provision of adequate indemnity to the Lender against any taxes or
liens which by law shall have, or may have, priority over the rights
of the Lender to such monies;
(b) Second, to all other Obligations in such order or preference
as the Lender may determine; provided, however, that the Lender may in
its discretion make proper allowance to take into account any
Obligations not then due and payable;
(c) Third, to payment of all obligations under the Pre-Petition
Revolver, the Pre-Petition Term Loan and the Pre-Petition Loan
Agreement in the manner and order set forth therein.
(d) Fourth, upon payment and satisfaction in full or other
provisions for payment in full satisfactory to the Lender of all of
the Obligations, to the payment of any obligations required to be paid
pursuant to ss.9-504(1)(c) of the Uniform Commercial Code of the
Commonwealth of Massachusetts; and
(e) Fifth, the excess, if any, shall be returned to the Borrowers
or to such other Persons as are entitled thereto.
13. SETOFF. Regardless of the adequacy of any collateral, whether or
not any Event of Default exists, any deposits (general or specific, time or
demand, provisional or final, regardless of currency, maturity, or the
branch of where such deposits are held) or other sums credited by or due
from any of the Lender to any Borrower and any securities or other property
of any Borrower in the possession of the Lender may be applied to or set
off against the payment of Obligations and any and all other liabilities,
direct, or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, of the Borrowers to the Lender.
14. EXPENSES. The Borrowers agree to pay (a) any taxes (including any
interest and penalties in respect thereto) payable by the Lender (other
than taxes based upon the Lender's net income), including any recording,
mortgage, documentary or intangibles taxes in connection with the Loan
Documents, or other taxes payable on or with respect to the transactions
contemplated by this Agreement, including any taxes payable by the Lender
after the Closing Date (the Borrowers hereby agreeing to indemnify the
Lender with respect thereto), (b) all reasonable appraisal fees, engineer's
fees, and the reasonable fees, expenses and disbursements of the Lender's
counsel or any local counsel to the Lender incurred in connection with the
preparation, administration or interpretation of the Loan Documents and
amendments, modifications, approvals, consents or waivers hereto or
hereunder, (c) the fees, expenses and disbursements of the Lender incurred
by the Lender in connection with the preparation, administration or
interpretation of the Loan Documents and other instruments mentioned
herein, (d) all reasonable out-of-pocket expenses (including reasonable
attorneys' and consultants' fees and costs and the fees and costs of
appraisers, engineers, investment bankers, business brokers, or other
experts retained by the Lender) incurred by the Lender in connection with
(i) the enforcement of or preservation of rights under any of the Loan
Documents against the Borrowers or any of their Subsidiaries or the
administration thereof (whether prior to or after the occurrence of an
Event of Default) and (ii) any litigation, proceeding or dispute whether
arising hereunder or otherwise, in any way related to the Lender's
relationship with the Borrowers or any of their Subsidiaries and (e) all
reasonable fees, expenses and disbursements of the Lender incurred in
connection with UCC searches, UCC filings or mortgage recordings. The
covenants of this ss.14 shall survive payment or satisfaction of payment of
amounts owing with respect to the Note.
15. INDEMNIFICATION. The Borrowers agree to indemnify and hold
harmless the Lender from and against any and all claims, actions and suits
whether groundless or otherwise, and from and against any and all
liabilities, losses, damages and expenses of every nature and character
arising out of this Agreement or any of the other Loan Documents or the
transactions contemplated hereby including, without limitation, (a) any
actual or proposed use by the Borrowers or any of their Subsidiaries of the
proceeds of any of the Loans, (b) any actual or alleged infringement of any
patent, copyright, trademark, service ▇▇▇▇ or similar right of the
Borrowers or any of their Subsidiaries comprised in the Collateral, (c) the
Borrowers or any of their Subsidiaries entering into or performing this
Agreement or any of the other Loan Documents or (d) with respect to the
Borrowers and their Subsidiaries and their respective properties and
assets, the violation of any Environmental Law, the Release or threatened
Release of any Hazardous Substances or any action, suit, proceeding or
investigation brought or threatened with respect to any Hazardous
Substances (including, but not limited to claims with respect to wrongful
death, personal injury or damage to property), in each case including,
without limitation, the reasonable fees and disbursements of counsel and
allocated costs of internal counsel incurred in connection with any such
investigation, litigation or other proceeding; provided however that the
Lender shall not be entitled to indemnification if a court of competent
jurisdiction finally determines (all appeals having been exhausted or
waived) that the Lender acted in bad faith or with willful misconduct. In
litigation, or the preparation therefor, the Lender shall be entitled to
select its own counsel and, in addition to the foregoing indemnity, the
Borrowers agree to pay promptly the reasonable fees and expenses of such
counsel. If, and to the extent that the obligations of the Borrowers under
this ss.15 are unenforceable for any reason, the Borrowers hereby agree to
make the maximum contribution to the payment in satisfaction of such
obligations which is permissible under applicable law. The provisions of
this ss.16 shall survive the repayment of the Loan and the termination of
the obligations of the Lender hereunder.
16. SURVIVAL OF COVENANTS, ETC. All covenants, agreements,
representations and warranties made herein, in the Note, in any of the
other Loan Documents or in any documents or other papers delivered by or on
behalf of the Borrowers or any of their Subsidiaries pursuant hereto shall
be deemed to have been relied upon by the Lender, notwithstanding any
investigation heretofore or hereafter made by it, and shall survive the
making by the Lender of any of the Loans, as herein contemplated, and shall
continue in full force and effect so long as any amount due under this
Agreement or the Note or any of the other Loan Documents remains
Outstanding or the Lender has any obligation to make any Loans. The
indemnification obligations of the Borrowers provided herein and the other
Loan Documents shall survive the full repayment of amounts due and the
termination of the obligations of the Lender hereunder and thereunder to
the extent provided herein and therein. All statements contained in any
certificate or other paper delivered to the Lender at any time by or at the
direction of the Borrowers or any of their Subsidiaries pursuant hereto or
in connection with the transactions contemplated hereby shall constitute
representations and warranties by the Borrowers or such Subsidiary
hereunder.
17. ASSIGNMENT AND PARTICIPATION.
----------------------------
ss.17.1. Conditions to Assignment by Lenders. The Lender may assign
all or a portion of its interests, rights and obligations under this
Agreement, provided that, prior to the occurrence of an Event of Default
such assignee may consist only of any or all of National Bank of Canada,
The Sumitomo Bank Limited, Senior Debt Portfolio or any of their
affiliates. From and after the effective date specified in each assignment
(i) the assignee thereunder shall be a party hereto and, to the extent
provided in such assignment, have the rights and obligations of a Lender
hereunder, and (ii) the assigning Lender shall, to the extent provided in
such assignment be released from its obligations under this Agreement.
ss.17.2. Participations. The Lender may sell participations to one or
more banks or other entities in all or a portion of the Lenders' rights and
obligations under this Agreement and the other Loan Documents; provided
that (a) any such sale or participation shall not affect the rights and
duties of the selling Lender hereunder to the Borrowers, (b) the only
rights granted to the participant pursuant to such participation
arrangements with respect to waivers, amendments or modifications of the
Loan Documents shall be the rights to approve waivers, amendments or
modifications that would reduce the principal of or the interest rate on
any Loans, extend the term, or reduce the amount of any fees to which such
participant is entitled, (c) no such participant shall constitute a
"Lender" for purposes of this Agreement, and (d) no participant shall have
the right to grant further participations or assign its rights, obligations
or interests under such participation to other Persons without the prior
written consent of the Lender.
ss.17.3. Pledge by Lender. The Lender may at any time pledge all or
any portion of its interest and rights under this Agreement (including all
or any portion of its Note) to any of the twelve Federal Reserve Lenders
organized under ss.4 of the Federal Reserve Act, 12 U.S.C. ss.341. No such
pledge or the enforcement thereof shall release the Lender from its
obligations hereunder or under any of the other Loan Documents.
ss.17.4. No Assignment by Borrowers. The Borrowers shall not assign or
transfer any of their rights or obligations under any of the Loan Documents
without the prior written consent of the Lender.
ss.17.5. Disclosure. The Borrowers agree that in addition to
disclosures made in accordance with standard banking practices any Lender
may disclose information obtained by the Lender pursuant to this Agreement
to assignees or participants and potential assignees or participants
hereunder.
18. NOTICES, ETC. Except as otherwise expressly provided in this
Agreement, all notices and other communications made or required to be
given pursuant to this Agreement, the Note or the other Loan Documents
shall be in writing and shall be delivered in hand, mailed by United States
registered or certified first class mail, postage prepaid, sent by
overnight courier, or sent by telegraph, telecopy, telefax or telex and
confirmed by delivery via courier or postal service, addressed as follows:
(a) if to the Borrowers, at ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Mr. ▇▇▇▇▇▇▇ ▇▇▇▇▇ (Telecopier:
978-281-0565), or at such other address for notice as the Borrowers
shall last have furnished in writing to the Person giving the notice;
and
(b) if to the Lender, at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
(Telecopier:617-434-1508), or such other address for notice as the
Lender shall last have furnished in writing to the Borrowers.
Any such notice or demand shall be deemed to have been duly given or
made and to have become effective (i) if delivered by hand, overnight
courier or facsimile to a responsible officer of the party to which it is
directed, at the time of the receipt thereof by such officer or the sending
of such facsimile and (ii) if sent by registered or certified first-class
mail, postage prepaid, on the third Business Day following the mailing
thereof.
19. GOVERNING LAW. THIS AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS
ARE CONTRACTS UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL
FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF SUCH COMMONWEALTH (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE
OF LAW).
20. HEADINGS. The captions in this Agreement are for convenience of
reference only and shall not define or limit the provisions hereof.
21. COUNTERPARTS. This Agreement and any amendment hereof may be
executed in several counterparts and by each party on a separate
counterpart, each of which when so executed and delivered shall be an
original, and all of which together shall constitute one instrument. In
proving this Agreement it shall not be necessary to produce or account for
more than one such counterpart signed by the party against whom enforcement
is sought.
22. ENTIRE AGREEMENT, ETC. The Loan Documents and any other documents
executed in connection herewith or therewith express the entire
understanding of the parties with respect to the transactions contemplated
hereby. Neither this Agreement nor any term hereof may be changed, waived,
discharged or terminated, except as provided inss.23. 8.
23. WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS. THE BORROWERS
HEREBY WAIVE THEIR RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR
CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE
NOTE OR ANY OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS
HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
THE BORROWERS HEREBY WAIVE ANY RIGHT THEY MAY HAVE TO CLAIM OR RECOVER IN
ANY LITIGATION REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR
IN ADDITION TO, ACTUAL DAMAGES. THE BORROWERS (A) CERTIFY THAT NO
REPRESENTATIVE, THE LENDER, OR ATTORNEY OF THE LENDER HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT THE LENDER WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (B) ACKNOWLEDGE THAT
THE LENDER HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS TO WHICH IT IS A PARTY BY, AMONG OTHER THINGS, THE WAIVERS AND
CERTIFICATIONS CONTAINED HEREIN.
24. CONSENTS, AMENDMENTS, WAIVERS, ETC. Any consent or approval
required or permitted by this Agreement may be given, and any term of this
Agreement or of any other instrument related hereto or mentioned herein may
be amended, and the performance or observance by the Borrowers of any terms
of this Agreement or such other instrument or the continuance of any
Default or Event of Default may be waived (either generally or in a
particular instance and either retroactively or prospectively) with, but
only with, the written consent of the Lender.
No waiver shall extend to or affect any obligation not expressly
waived or impair any right consequent thereon. No course of dealing or
delay or omission on the part of the Lender in exercising any right shall
operate as a waiver thereof or otherwise be prejudicial thereto. No notice
to or demand upon the Borrowers shall entitle the Borrowers to other or
further notice or demand in similar or other circumstances.
25. SEVERABILITY. The provisions of this Agreement are severable, and
if any one clause or provision hereof shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such invalidity
or unenforceability shall affect only such clause or provision, or part
thereof, in such jurisdiction, and shall not in any manner affect such
clause or provision in any other jurisdiction, or any other clause or
provision of this Agreement in any jurisdiction.
26. ADDITIONAL WAIVERS.
------------------
(i) The Obligations are the joint and several obligations of
each Borrower. To the fullest extent permitted by applicable law, the
obligations of each Borrower hereunder shall not be affected by (i)
the failure of the Lender to assert any claim or demand or to enforce
or exercise any right or remedy against any other Borrower under the
provisions of this Agreement, any other Loan Document or otherwise,
(ii) any rescission, waiver, amendment or modification of, or any
release from any of the terms or provisions of, this Agreement, any
other Loan Document, or any other agreement, including with respect to
any other Borrower of the Obligations under this Agreement, or (iii)
the failure to perfect any security interest in, or the release of,
any of the security held by or on behalf of the Lender.
(ii) The obligations of each Borrower hereunder shall not be
subject to any reduction, limitation, impairment or termination for
any reason (other than the indefeasible payment in full in cash of the
Obligations), including any claim of waiver, release, surrender,
alteration or compromise of any of the Obligations, and shall not be
subject to any defense or set-off, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of each Borrower
hereunder shall not be discharged or impaired or otherwise affected by
the failure of the Lender to assert any claim or demand or to enforce
any remedy under this Agreement, any other Loan Document or any other
agreement, by any waiver or modification of any provision of any
thereof, by any default, failure or delay, wilful or otherwise, in the
performance of the Obligations, or by any other act or omission that
may or might in any manner or to any extent vary the risk of any
Borrower or that would otherwise operate as a discharge of any
Borrower as a matter of law or equity (other than the indefeasible
payment in full in cash of all the Obligations).
(iii) To the fullest extent permitted by applicable law, each
Borrower waives any defense based on or arising out of any defense of
any other Borrower or the unenforceability of the Obligations or any
part thereof from any cause, or the cessation from any cause of the
liability of any other Borrower, other than the indefeasible payment
in full in cash of all the Obligations. The Lender may, at its
election, foreclose on any security held by one or more of them by one
or more judicial or nonjudicial sales, accept an assignment of any
such security in lieu of foreclosure, compromise or adjust any part of
the Obligations, make any other accommodation with any other Borrower,
or exercise any other right or remedy available to them against any
other Borrower, without affecting or impairing in any way the
liability of any Borrower hereunder except to the extent that all the
Obligations have been indefeasibly paid in full in cash. Pursuant to
applicable law, each Borrower waives any defense arising out of any
such election even though such election operates, pursuant to
applicable law, to impair or to extinguish any right of reimbursement
or subrogation or other right or remedy of such Borrower against any
other Borrower, as the case may be, or any security.
(iv) Upon payment by any Borrower of any Obligations, all
rights of such Borrower against any other Borrower arising as a result
thereof by way of right of subrogation, contribution, reimbursement,
indemnity or otherwise shall in all respects be subordinate and junior
in right of payment to the prior indefeasible payment in full in cash
of all the Obligations. In addition, any indebtedness of any Borrower
now or hereafter held by any other Borrower is hereby subordinated in
right of payment to the prior payment in full of the Obligations. None
of the Borrowers will demand, ▇▇▇ for, or otherwise attempt to collect
any such indebtedness. If any amount shall erroneously be paid to any
Borrower on account of (a) such subrogation, contribution,
reimbursement, indemnity or similar right or (b) any such indebtedness
of any Borrower, such amount shall be held in trust for the benefit of
the Lender and shall forthwith be paid to the Lender to be credited
against the payment of the Obligations, whether matured or unmatured,
in accordance with the terms of the Loan Documents.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
as a sealed instrument as of the date first set forth above.
NUTRAMAX PRODUCTS, INC.
NUTRAMAX HOLDINGS, INC.
NUTRAMAX HOLDINGS II, INC.
NUTRAMAX OPHTHALMICS, INC.
NUTRAMAX ACQUISITION CORPORATION
FAIRTON REALTY HOLDINGS, INC.
ORAL CARE, INC.
POWERS PHARMACEUTICAL CORP.
▇▇▇▇▇▇▇▇ REALTY, INC.
CERTIFIED CORP.
FIRST AID PRODUCTS, INC.
ADHESIVE COATINGS, INC.
ELMWOOD PARK REALTY, INC.
F.A. PRODUCTS, L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: CEO
FLEET NATIONAL BANK
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President