1
AMENDED AND RESTATED
CREDIT AGREEMENT
DATED AS OF MAY 26, 1998
AMONG
HORIZON MEDICAL PRODUCTS, INC.,
THE LENDERS REFERRED TO HEREIN
AND
NATIONSCREDIT COMMERCIAL CORPORATION,
AS AGENT
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TABLE OF CONTENTS
Page
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ARTICLE I - DEFINITIONS.................................................................1
SECTION 1.01. Certain Defined Terms...........................................1
SECTION 1.02. Accounting Terms and Determinations............................20
SECTION 1.03. Other Definitional Provisions..................................21
ARTICLE II - REVOLVING CREDIT LOANS....................................................21
SECTION 2.01. Revolving Credit Loans and Commitments.........................21
SECTION 2.02. Revolving Credit Notes.........................................22
SECTION 2.03. Interest on the Revolving Credit Loans.........................23
SECTION 2.04. Advancing Revolving Credit Loans...............................24
SECTION 2.05. Mandatory Repayments and Prepayments...........................24
SECTION 2.06. Optional Prepayments...........................................26
SECTION 2.07. Application of Payments........................................26
SECTION 2.08. Reduction of Commitment........................................26
SECTION 2.09. Letters of Credit..............................................27
ARTICLE III - CONDITIONS...............................................................30
SECTION 3.01. Conditions to Closing..........................................30
SECTION 3.02. Conditions to Acquisition Loans................................32
SECTION 3.03. Conditions to Each Loan........................................33
ARTICLE IV - REPRESENTATIONS AND WARRANTIES............................................34
SECTION 4.01. Corporate Existence and Power..................................34
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention..................................................35
SECTION 4.03. Binding Effect; Liens of Security Documents....................35
SECTION 4.04. Financial Information..........................................35
SECTION 4.05. Litigation.....................................................36
SECTION 4.06. Ownership of Property, Liens...................................36
SECTION 4.07. No Default.....................................................37
SECTION 4.08. No Burdensome Restrictions.....................................37
SECTION 4.09. Labor Matters..................................................37
SECTION 4.10. Subsidiaries; Other Equity Investments.........................37
SECTION 4.11. Investment Company Act.........................................37
SECTION 4.12. Margin Regulations.............................................38
SECTION 4.13. Taxes..........................................................38
SECTION 4.14. Compliance with ERISA..........................................38
SECTION 4.15. Brokers........................................................38
SECTION 4.16. Employment, Shareholders and Subscription Agreements...........38
SECTION 4.17. Full Disclosure................................................39
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SECTION 4.18. Representations and Warranties Incorporated
from Other Operative Documents.................................39
SECTION 4.19. Private Offering...............................................39
SECTION 4.20. Compliance with Environmental Requirements;
No Hazardous Materials.........................................39
SECTION 4.21. Capitalization.................................................41
SECTION 4.22. Real Property Interests........................................42
ARTICLE V - AFFIRMATIVE COVENANTS......................................................42
SECTION 5.01. Financial Statements and Other Reports.........................42
SECTION 5.02. Payment of Obligations.........................................46
SECTION 5.03. Conduct of Business and Maintenance of Existence...............46
SECTION 5.04. Maintenance of Property; Insurance.............................46
SECTION 5.05. Compliance with Laws...........................................47
SECTION 5.06. Inspection of Property, Books and Records......................47
SECTION 5.07. Use of Proceeds................................................48
SECTION 5.08. Further Assurances.............................................48
SECTION 5.09. Board Meetings.................................................48
SECTION 5.10. Lenders' Meetings..............................................48
SECTION 5.11. Additional Subsidiaries........................................48
SECTION 5.12. Hazardous Materials; Remediation...............................49
SECTION 5.13. Landlord and Warehouseman Waivers..............................49
SECTION 5.14. Collateral Reports.............................................50
SECTION 5.15. Collections; Right to Notify Account Debtors...................50
SECTION 5.16. Enforcement of Covenants Not to Compete........................50
SECTION 5.17. Hedging Facilities.............................................50
SECTION 5.18. Mortgages on Real Property; Title Insurance and Survey.........50
ARTICLE VI - NEGATIVE COVENANTS........................................................51
SECTION 6.01. Debt ...................................................51
SECTION 6.02. Negative Pledge................................................52
SECTION 6.03. Capital Stock..................................................52
SECTION 6.04. Restricted Payments............................................52
SECTION 6.05. ERISA..........................................................52
SECTION 6.06. Consolidations, Mergers and Sales of Assets....................53
SECTION 6.07. Purchase of Assets, Investments................................53
SECTION 6.08. Transactions with Affiliates...................................54
SECTION 6.09. [reserved].....................................................54
SECTION 6.10. Fiscal Year....................................................54
SECTION 6.11. Management Compensation........................................54
SECTION 6.12. Lease Payments.................................................54
SECTION 6.13. Minimum Net Worth..............................................54
SECTION 6.14. Capital Expenditures...........................................55
SECTION 6.15. Total Debt Coverage Ratio......................................55
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SECTION 6.16. Leverage.......................................................55
SECTION 6.17. Minimum EBITDA.................................................55
SECTION 6.18. Interest Coverage..............................................55
SECTION 6.19. Debt to Capitalization.........................................56
SECTION 6.20. Transition Rules...............................................56
ARTICLE VII -EVENTS OF DEFAULT.........................................................56
SECTION 7.01. Events of Default..............................................56
SECTION 7.02. Cash Collateral................................................59
ARTICLE VIII - FEES, EXPENSES AND INDEMNITIES; GENERAL PROVISIONS
RELATING TO PAYMENTS....................................................59
SECTION 8.01. Fees...........................................................59
SECTION 8.02. Computation of Interest and Fees...............................60
SECTION 8.03. General Provisions Regarding Payments..........................60
SECTION 8.04. Expenses.......................................................60
SECTION 8.05. Indemnity......................................................61
SECTION 8.06. Taxes..........................................................62
SECTION 8.07. Funding Losses.................................................62
SECTION 8.08. Maximum Interest...............................................62
ARTICLE IX - THE AGENT.................................................................63
SECTION 9.01. Appointment and Authorization..................................63
SECTION 9.02. Agent and Affiliates...........................................63
SECTION 9.03. Action by Agent................................................63
SECTION 9.04. Consultation with Experts......................................63
SECTION 9.05. Liability of Agent.............................................63
SECTION 9.06. Indemnification................................................64
SECTION 9.07. Credit Decision................................................64
SECTION 9.08. Successor Agent................................................64
ARTICLE X - MISCELLANEOUS..............................................................65
SECTION 10.01. Survival......................................................65
SECTION 10.02. No Waivers....................................................65
SECTION 10.03. Notices.......................................................65
SECTION 10.04. Severability..................................................65
SECTION 10.05. Amendments and Waivers........................................65
SECTION 10.06. Successors and Assigns; Registration..........................66
SECTION 10.07. Collateral....................................................67
SECTION 10.08. Headings......................................................68
SECTION 10.09. GOVERNING LAW; SUBMISSION TO JURISDICTION.....................68
SECTION 10.10. Notice of Breach by Agent or Lender...........................68
SECTION 10.11. WAIVER OF JURY TRIAL..........................................68
SECTION 10.12. Counterparts..................................................69
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SECTION 10.13. Special Provision Relating to this Amendment
and Restatement...............................................69
EXHIBIT A - Revolving Credit Note
EXHIBIT B - Notice of Revolving Credit Loan
EXHIBIT C - Company Security Agreement
EXHIBIT D - Company Pledge Agreement
EXHIBIT E - Subsidiary Guaranty Agreement
EXHIBIT F - Subsidiary Security Agreement
EXHIBIT G - Form of Letters of Credit
EXHIBIT H - Borrowing Base Certificate
EXHIBIT I - Opinion of Counsel to the Company
EXHIBIT J - Opinion of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, Special Counsel
to the Agent
SCHEDULE 3.01(l) - Debt to be Repaid at Closing
SCHEDULE 4.10 - Subsidiaries
SCHEDULE 4.15 - Brokers
SCHEDULE 4.16 - Employment, Shareholders' and Subscription Agreements
SCHEDULE 4.20 - Environmental Matters
SCHEDULE 4.21 - Capitalization
SCHEDULE 4.22 - Real Property Interests
SCHEDULE 5.04 - Required Insurance
SCHEDULE 6.01 - Permitted Debt
SCHEDULE 6.02 - Permitted Liens
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AMENDED AND RESTATED CREDIT AGREEMENT
AMENDED AND RESTATED CREDIT AGREEMENT dated as of May 26,
1998, among HORIZON MEDICAL PRODUCTS, INC., the LENDERS listed on the signature
pages hereof and NATIONSCREDIT COMMERCIAL CORPORATION, as Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. CERTAIN DEFINED TERMS. The following terms have
the following meanings:
"ACQUISITION" means the purchase by the Company or any
Subsidiary of any medical products company or certain of the assets of a medical
products company funded by the proceeds of an Acquisition Loan provided pursuant
to Section 2.01(c).
"ACQUISITION AVAILABILITY" has the meaning specified in
Section 2.01(c).
"ACQUISITION LOAN AVAILABILITY TERMINATION DATE" means May 26,
2000, or such later date to which the Lenders, in their sole discretion upon the
written request of the Company, may agree to extend the Company's ability to
incur Acquisition Loans.
"ACQUISITION LOANS" means, collectively, the Revolving Credit
Loans of the Lenders to be made to the Company pursuant to Section 2.01(c).
"ADDITIONAL ACQUISITION LIABILITIES" means those obligations
(actual or contingent), of the Company and/or any of its Subsidiaries to pay
consideration in respect of acquisitions in addition to that payable at the
closing of such acquisition, whether arising under the acquisition agreement
relating thereto, or otherwise, and whether in the form of a securities
repurchase arrangement or otherwise.
"ADJUSTED EBITDA" means, for any period, EBITDA for such
period less Consolidated Capital Expenditures for such period.
"ADJUSTED LIBOR" means a rate per annum (rounded upward, if
necessary to the next higher 1/16 of 1%) equal to the rate obtained by dividing
(a) LIBOR (similarly rounded) by (b) a percentage equal to 1 minus the Reserve
Requirement in effect from time to time.
"AFFILIATE" means (i) any Person that directly, or indirectly
through one or more intermediaries, controls the Company (a "CONTROLLING
PERSON") or (ii) any Person (other than the Company or any of its Subsidiaries)
which is controlled by or is under common control with a
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Controlling Person. As used herein, the term "control" of a Person means the
possession, directly or indirectly, of the power to vote 10% or more of any
class of voting securities of such Person or to direct or cause the direction of
the management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"AGENT" means NationsCredit in its capacity as agent for the
Lenders hereunder, and its successors in such capacity.
"AGREEMENT" means this Credit Agreement as the same shall be
amended, restated or modified from time to time.
"AGREEMENT DATE" means the date as of which this Agreement is
dated.
"AMORTIZATION COMMENCEMENT DATE" shall have the meaning
assigned to it in Section 2.05(c).
"ASSET SALE" means any sale, lease or other disposition
(including any such transaction effected by way of merger or consolidation) by
the Company or any Subsidiary of any asset, but excluding (i) dispositions of
inventory in the ordinary course of business, (ii) dispositions of Temporary
Cash Investments and cash payments otherwise permitted under this Agreement;
provided that a disposition of assets not excluded by clauses (i) or (ii) above
during any Fiscal Year shall not constitute an Asset Sale unless and until (and
only to the extent that) (x) the aggregate Net Cash Proceeds of such disposition
of assets are not used for the purchase of reasonably equivalent replacements of
such assets within 90 days thereof or (y) the aggregate Net Cash Proceeds from
such disposition (if not used as provided in clause (x) above), when combined
with all other such dispositions previously made during such Fiscal Year and not
used as provided in clause (x) above, exceeds $100,000.
"AUTHORIZED SIGNATORY" means a Person designated as such by
the Company to the Agent in writing.
"BENEFIT ARRANGEMENT" means at any time an employee benefit
plan within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group.
"BORROWING BASE" means, on any date, a dollar amount equal to
80% of Eligible Domestic Receivables, 80% of Eligible Secured Foreign
Receivables, 50% of Eligible Unsecured Foreign Receivables (not to exceed
$500,000 of Borrowing Base availability at any time) and 50% of Eligible
Inventory, each determined as of such date.
"BORROWING BASE CERTIFICATE" means a certificate, duly
executed by the chief financial officer or treasurer of the Company,
appropriately completed and substantially in the form of Exhibit H.
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"BUSINESS DAY" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized by law to
close.
"CAPITAL LEASE" of any Person means any lease of any property
(whether real, personal or mixed) by such Person as lessee which would, in
accordance with GAAP, be required to be accounted for as a capital lease on the
balance sheet of such Person.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (42 U.S.C. Sections 9601 et seq.), as
amended from time to time, and regulations promulgated thereunder.
"CLASS" defines a Revolving Credit Loan by reference to the
subfacility under which it is made. A Revolving Credit Loan is either a Working
Capital Loan or an Acquisition Loan.
"CLOSING DATE" means May 26, 1998, or such other date as the
parties hereto agree to in writing, but in any event not later than May 29,
1998.
"CODE" means the Internal Revenue Code of 1986, as amended
from time to time.
"COLLATERAL" means all property mortgaged, pledged or
otherwise purported to be subjected to a Lien pursuant to the Security
Documents.
"COMMITMENT" means a Revolving Credit Commitment.
"COMMITMENT TERMINATION DATE" shall have the meaning assigned
to it in Section 2.05(a).
"COMPANY" means Horizon Medical Products, Inc., a Georgia
corporation.
"COMPANY ACCOUNT" means the account specified on the signature
pages hereof into which all Loans to the Company shall be made available, or
such other account as the Company shall from time to time specify by notice to
the Lenders.
"COMPANY PLEDGE AGREEMENT" means the Pledge Agreement dated as
of July 15, 1997, between the Company and the Agent, in the form of Exhibit D.
"COMPANY SECURITY AGREEMENT" means the Security Agreement
dated as of July 15, 1997, between the Company and the Agent, in the form of
Exhibit C.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the
aggregate amount of expenditures by the Company and its Consolidated
Subsidiaries for plant, property and equipment during such period (including any
such expenditure by way of the assumption of indebtedness or other obligations
of a Person, to the extent reflected as plant, property and
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equipment), but excluding any such expenditures (or indebtedness assumed) (i)
made as a part of an Acquisition or (ii) made for the replacement or restoration
of assets to the extent financed by condemnation awards or proceeds of insurance
received with respect to the loss or taking of or damage to the asset or assets
being replaced or restored.
"CONSOLIDATED CAPITALIZATION" means at any time of
determination, the sum of (a) the Consolidated Total Debt at such time, and (b)
the Consolidated Net Worth at such time.
"CONSOLIDATED CURRENT ASSETS" means, at any date, the
consolidated current assets (excluding cash and cash equivalents) of the Company
and its Consolidated Subsidiaries determined as of such date.
"CONSOLIDATED CURRENT LIABILITIES" means, at any date, (i) the
consolidated current liabilities (excluding Debt) of the Company and its
Consolidated Subsidiaries plus (ii) the current liabilities of any Person (other
than the Company or a Consolidated Subsidiary) which are Guaranteed by the
Company or a Consolidated Subsidiary, all determined as of such date.
"CONSOLIDATED FREE CASH FLOW" means, for any period, EBITDA
for such period minus the following amounts:
(a) all cash payments of income taxes by the Company and its
Consolidated Subsidiaries during such period;
(b) Consolidated Capital Expenditures for such period, to the
extent that such Consolidated Capital Expenditures are permitted by
Section 6.13 and are not financed during such period (and will not be
financed in any future period) with the proceeds of Debt of the Company
or any Subsidiary permitted by Section 6.01(c); and
(c) any net gain in respect of Asset Sales during such period.
"CONSOLIDATED INTEREST EXPENSE" means for any period, the
aggregate amount of all interest on Debt (including payments in the nature of
interest under a Capital Lease), that would, in accordance with GAAP, be
deducted in determining consolidated net income for such period.
"CONSOLIDATED NET WORTH" means as of the date of any
determination thereof, the amount of the shareholder's equity of the Company and
its Consolidated Subsidiaries as would be shown on the consolidated balance
sheet of the Company and its Consolidated Subsidiaries, determined on a
consolidated basis in accordance with GAAP.
"CONSOLIDATED REVENUE" means, for any period, the consolidated
revenue of the Company and its Consolidated Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP.
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"CONSOLIDATED SUBSIDIARY" means at any date any Subsidiary or
other entity the accounts of which would be consolidated with those of the
Company and its consolidated financial statements if such statements were
prepared as of such date.
"CONSOLIDATED TOTAL DEBT" means at any date the Debt of the
Company and its Consolidated Subsidiaries, determined on a consolidated basis at
such date.
"CREDIT PARTY" means the Company and any Subsidiary of the
Company.
"DEBT" of a Person means at any date, without duplication, (i)
all obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all Capital Leases of such Person, (v) all obligations of such
Person to purchase securities (or other property) which arise out of or in
connection with the sale of the same or substantially similar securities (or
property), (vi) all non-contingent obligations of such Person to reimburse any
bank or other Person in respect of amounts paid under a letter of credit or
similar instrument, (vii) all equity securities of such Person subject to
repurchase or redemption otherwise than at the sole option of such Person,
(viii) all Debt secured by a Lien on any asset of such Person, whether or not
such Debt is otherwise an obligation of such Person, and (ix) all Debt of others
Guaranteed by such Person.
"DEFAULT" means any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of time or both
would, unless cured or waived, become an Event of Default.
"DEFAULT RATE" has the meaning set forth in Section 2.03(d),
provided that with respect to any Obligation for which a rate of interest is not
otherwise specified herein, the Default Rate shall be the Index Rate plus 5.25%
per annum.
"DISCLOSURE DOCUMENTS" shall mean the Registration Statement
on Form S-1 filed by the Company in connection with the IPO and all amendments,
modifications and supplements thereto.
"EBITDA" means, for any period, the consolidated net income of
the Company and its Consolidated Subsidiaries for such period, after all
expenses and other proper charges except depreciation, interest, amortization
and income taxes, determined in accordance with GAAP eliminating (i) all
intercompany items, (ii) all earnings attributable to equity interests in
Persons that are not Subsidiaries unless actually received by the Company or a
Consolidated Subsidiary, (iii) all income arising from the forgiveness,
adjustment, or negotiated settlement of any indebtedness, (iv) any extraordinary
items of income or expense, (v) any increase or decrease in income arising from
any change in the Company's method of accounting, subject to Section 1.02, (vi)
any interest income, and (vii) any non-recurring expenses incurred in connection
with an Acquisition not to exceed $100,000 for any Acquisition.
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"ELIGIBLE INVENTORY" means, at any date of determination
thereof, the aggregate value (determined at the lower of cost or market on a
basis consistent with that used in the preparation of the financial statements
referred to in Section 4.04(a)) at such date of all Inventory owned by the
Company or any Subsidiary and located in any jurisdiction in the United States
of America as to which appropriate UCC financing statements have been filed
naming the Company or such Subsidiary as "debtor" and the Agent as "secured
party", all net of any amounts payable by the Company or such Subsidiary in
respect of commissions, processing fees or other charges, excluding, however,
without duplication (i) any such Inventory which has been shipped to a customer,
even if on a consignment or "sale or return" basis and whether or not such
Inventory has been subsequently returned by such customer; (ii) any Inventory
subject to a Lien (other than Liens created pursuant to the Security
Agreements), including a landlord's or warehouseman's Lien; (iii) any Inventory
against which the Company or any Subsidiary has taken a reserve; (iv) any
Inventory not subject to a valid and perfected first-priority Lien in favor of
the Agent under the Security Agreements, subject to no prior or equal Lien; (v)
any Inventory not produced in compliance with the applicable requirements of the
Fair Labor Standards Act; and (vi) any supply, scrap or obsolete Inventory and
any Inventory that is not reasonably marketable.
"ELIGIBLE DOMESTIC RECEIVABLES" means, at any date of
determination thereof, the aggregate amount of all Receivables due at such date
from an account debtor that is both domiciled in the United States of America
and (if not a natural person) organized under the laws of the United States of
America or any political subdivision thereof, to the Company or a Subsidiary of
the Company, other than the following (determined without duplication):
(a) any Receivable that is due from an Affiliate of the
Company and any Receivable that is not denominated and payable in U.S.
dollars;
(b) any Receivable that does not comply with all applicable
legal requirements, including, without limitation, all laws, rules,
regulations and orders of any governmental or judicial authority
(including any Receivable due from an account debtor located in the
States of Indiana, New Jersey or Minnesota, unless the Company or the
applicable Subsidiary (at the time the Receivable was created and at
all times thereafter) (i) had filed and has maintained effective a
current notice of business activities report with the appropriate
office or agency of the States of Indiana, New Jersey or Minnesota, as
applicable, or (ii) was and has continued to be exempt from filing such
report and has provided the Agent with satisfactory evidence thereof);
(c) any Receivable in respect of which there is any unresolved
dispute with the account debtor, but only to the extent of such
dispute;
(d) any Receivable payable more than 90 days after the date of
the issuance of the original invoice therefor;
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(e) any Receivable that remains unpaid for more than 60 days
from the original due date specified at the time of the issuance of the
original invoice therefor;
(f) any unbilled Receivable and any Receivable in respect of
goods not yet shipped or services not yet performed;
(g) any Receivable arising outside the ordinary course of
business of the Credit Party whose activities gave rise thereto;
(h) any Receivable in respect of which there has been
established a contra account, or which is due from an account debtor to
whom the Company or any Subsidiary owes a trade payable, or that
otherwise may be subject to any right of recission, set-off,
recoupment, counterclaim or defense, whether or not arising out of
transactions concerning the contract, in each case to the extent of
such account payable, or such right of recission, set-off, recoupment,
counterclaim or defense.
(i) any Receivable that is not subject to a first priority
perfected Lien under the Security Agreements and any Receivable
evidenced by an "instrument" (as defined in the UCC) not in the
possession of the Agent;
(j) any Receivable due from an account debtor (i) as to which
on such date Receivables representing more than 25% of aggregate amount
of Receivables of such account debtor have remained unpaid for more
than 60 days from the original due date specified at the time of the
original issuance of the invoice therefor, (ii) in respect of which a
credit loss has been recognized or reserved by the Company or any
Subsidiary, (iii) in respect of which the Agent shall have notified the
Company that such account debtor does not have a satisfactory credit
standing as determined in good faith by the Agent, (iv) that is a
Subsidiary or an Affiliate of the Company, (v) that is the United
States of America or any department, agency or instrumentality thereof
or any state government or any department, agency or political
subdivision thereof, unless the Company or the applicable Subsidiary
has complied in all respects with the Federal Assignment of Claims Act
of 1940 (31 U.S.C. ss.ss.3727; 41 U.S.C. ss.15) or any similar
provision of applicable state law, (vi) that is the subject of a case
or proceeding of the type described in clauses (g) and (h) of Section
7.01, or (vii) the prospect of payment of which, in the good faith
judgment of the Lender, has been impaired;
(k) any Receivable due from an account debtor that the Company
or the applicable Subsidiary has not instructed such account debtor in
the invoice therefor to make payments in respect of such Receivable to
a Lockbox Account (as defined in the Security Agreements) or from any
account debtor that makes payments in a form that cannot be accepted in
the applicable Lockbox Account;
(l) any Receivable due from an account debtor at any time, to
the extent that the aggregate outstanding amount of Receivables due
from such account debtor and its
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affiliates at such time exceeds 20% of the aggregate amount of all
Receivables due to the Company and its Subsidiaries at such time, but
only to the extent of such excess;
(m) any Receivable that is not the binding and enforceable
obligation of the account debtor; and
(n) any Receivable that the Company or the applicable
Subsidiary does not have the full and unqualified right to assign and
▇▇▇▇▇ ▇ ▇▇▇▇ on to the Agent as security for the benefit of the Agent
and the Lenders hereunder.
"ELIGIBLE SECURED FOREIGN RECEIVABLES" means, at any date of
determination thereof, the aggregate amount of all Receivables due at such date
from an account debtor other than an account debtor that is both domiciled in
the United States of America and (if not a natural person) organized under the
laws of the United States of America or any political subdivision thereof, to
the Company or a Subsidiary of the Company, which are secured by a letter of
credit satisfactory to the Agent and the Required Lenders, other than the
following (determined without duplication):
(a) any Receivable due from an account debtor that is an
Affiliate of the Company and any Receivable that is not denominated and
payable in U.S. dollars;
(b) any Receivable that does not comply with all applicable
legal requirements, including, without limitation, all laws, rules,
regulations and orders of any governmental or judicial authority;
(c) any Receivable in respect of which there is any unresolved
dispute with the account debtor, but only to the extent of such
dispute;
(d) any Receivable payable more than 90 days after the date of
the issuance of the original invoice therefor;
(e) any Receivable that remains unpaid for more than 60 days
from the original due date specified at the time of the issuance of the
original invoice therefor;
(f) any unbilled Receivable and any Receivable in respect of
goods not yet shipped or services not yet performed;
(g) any Receivable arising outside the ordinary course of
business of the Credit Party whose activities gave rise thereto;
(h) any Receivable in respect of which there has been
established a contra account, or which is due from an account debtor to
whom the Company or any Subsidiary owes a trade payable, or that
otherwise may be subject to any right of recission, set-off,
recoupment, counterclaim or defense, whether or not arising out of
transactions
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concerning the contract, in each case to the extent of such account
payable, or such right of recission, set-off, recoupment, counterclaim
or defense.
(i) any Receivable that is not subject to a first priority
perfected Lien under the Security Agreements and any Receivable
evidenced by an "instrument" (as defined in the UCC) not in the
possession of the Agent;
(j) any Receivable due from an account debtor (i) as to which
on such date Receivables representing more than 25% of aggregate amount
of Receivables of such account debtor have remained unpaid for more
than 60 days from the original due date specified at the time of the
original issuance of the invoice therefor, (ii) in respect of which a
credit loss has been recognized or reserved by the Company or any
Subsidiary, (iii) in respect of which the Agent shall have notified the
Company that such account debtor does not have a satisfactory credit
standing as determined in good faith by the Agent, (iv) that is a
Subsidiary or an Affiliate of the Company, (v) that is the subject of a
case or proceeding of the type described in clauses (g) and (h) of
Section 7.01, or (vi) the prospect of payment of which, in the good
faith judgment of the Lender, has been impaired;
(k) any Receivable due from an account debtor that the Company
or the applicable Subsidiary has not instructed such account debtor in
the invoice therefor to make payments in respect of such Receivable to
a Lockbox Account (as defined in the Security Agreements) or from any
account debtor that makes payments in a form that cannot be accepted in
the applicable Lockbox Account;
(l) any Receivable due from an account debtor at any time, to
the extent that the aggregate outstanding amount of Receivables due
from such account debtor and its affiliates at such time exceeds 20% of
the aggregate amount of all Receivables due to the Company and its
Subsidiaries at such time, but only to the extent of such excess;
(m) any Receivable that is not the binding and enforceable
obligation of the account debtor; and
(n) any Receivable that the Company or the applicable
Subsidiary does not have the full and unqualified right to assign and
▇▇▇▇▇ ▇ ▇▇▇▇ on to the Agent as security for the benefit of the Agent
and the Lenders hereunder.
"ELIGIBLE UNSECURED FOREIGN RECEIVABLES" means, at any date of
determination thereof, the aggregate amount of all Receivables (other than
Eligible Secured Foreign Receivables) due at such date from an account debtor
other than an account debtor that is both domiciled in the United States of
America and (if not a natural person) organized under the laws of the United
States of America or any political subdivision thereof, to the Company or a
Subsidiary of the Company, other than the following (determined without
duplication):
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(a) any Receivable due from an account debtor that is an
Affiliate of the Company and any Receivable that is not denominated and
payable in U.S. dollars;
(b) any Receivable that does not comply with all applicable
legal requirements, including, without limitation, all laws, rules,
regulations and orders of any governmental or judicial authority;
(c) any Receivable in respect of which there is any unresolved
dispute with the account debtor, but only to the extent of such
dispute;
(d) any Receivable payable more than 90 days after the date of
the issuance of the original invoice therefor;
(e) any Receivable that remains unpaid for more than 60 days
from the original due date specified at the time of the issuance of the
original invoice therefor;
(f) any unbilled Receivable and any Receivable in respect of
goods not yet shipped or services not yet performed;
(g) any Receivable arising outside the ordinary course of
business of the Credit Party whose activities gave rise thereto;
(h) any Receivable in respect of which there has been
established a contra account, or which is due from an account debtor to
whom the Company or any Subsidiary owes a trade payable, or that
otherwise may be subject to any right of recission, set-off,
recoupment, counterclaim or defense, whether or not arising out of
transactions concerning the contract, in each case to the extent of
such account payable, or such right of recission, set-off, recoupment,
counterclaim or defense.
(i) any Receivable that is not subject to a first priority
perfected Lien under the Security Agreements and any Receivable
evidenced by an "instrument" (as defined in the UCC) not in the
possession of the Agent;
(j) any Receivable due from an account debtor (i) as to which
on such date Receivables representing more than 25% of aggregate amount
of Receivables of such account debtor have remained unpaid for more
than 60 days from the original due date specified at the time of the
original issuance of the invoice therefor, (ii) in respect of which a
credit loss has been recognized or reserved by the Company or any
Subsidiary, (iii) in respect of which the Agent shall have notified the
Company that such account debtor does not have a satisfactory credit
standing as determined in good faith by the Agent, (iv) that is a
Subsidiary or an Affiliate of the Company, (v) that is the subject of a
case or proceeding of the type described in clauses (g) and (h) of
Section 7.01, or (vi) the prospect of payment of which, in the good
faith judgment of the Lender, has been impaired;
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(k) any Receivable due from an account debtor that the Company
or the applicable Subsidiary has not instructed such account debtor in
the invoice therefor to make payments in respect of such Receivable to
a Lockbox Account (as defined in the Security Agreements) or from any
account debtor that makes payments in a form that cannot be accepted in
the applicable Lockbox Account;
(l) any Receivable due from an account debtor at any time, to
the extent that the aggregate outstanding amount of Receivables due
from such account debtor and its affiliates at such time exceeds 20% of
the aggregate amount of all Receivables due to the Company and its
Subsidiaries at such time, but only to the extent of such excess;
(m) any Receivable that is not the binding and enforceable
obligation of the account debtor; and
(n) any Receivable that the Company or the applicable
Subsidiary does not have the full and unqualified right to assign and
▇▇▇▇▇ ▇ ▇▇▇▇ on to the Agent as security for the benefit of the Agent
and the Lenders hereunder.
"EMPLOYMENT AGREEMENTS" has the meaning set forth in Section
6.11.
"ENVIRONMENTAL LAWS" means any and all federal, state, local
and foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, codes, plans, injunctions, permits, concessions,
grants, franchises, licenses, agreements and governmental restrictions, whether
now or hereafter in effect, relating to human health, the environment or to
emissions, discharges or releases of pollutants, contaminants, Hazardous
Materials or wastes into the environment, including ambient air, surface water,
ground water or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, Hazardous Materials or wastes or the clean-up or other
remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, or any successor statute.
"ERISA GROUP" means the Company, any Subsidiary and all
members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which, together with the
Company or any Subsidiary, are treated as a single employer under Section 414 of
the Code.
"EVENT OF DEFAULT" has the meaning set forth in Section 7.01.
"EXCESS CASH FLOW" means, for any period, an amount equal to
(i) EBITDA for such period minus (ii) the sum of (x) Consolidated Capital
Expenditures (except to the extent financed by the proceeds of Debt of the
Company or any Subsidiary permitted by Section
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6.01(c)), (y) Total Debt Service (exclusive of amortization of debt discount or
premium), and (z) all amounts accrued with respect to income taxes by the
Company and its Subsidiaries, all as determined for such period, plus (iii) any
interest income for such period plus (iv) any amounts deducted in determining
Excess Cash Flow in the prior period for accrued income taxes that were not paid
in cash by the Company in such prior period or in the period for which Excess
Cash Flow is being determined.
"EXISTING LETTER OF CREDIT" means Irrevocable Letter of Credit
No. 022, dated May 15, 1998, and issued by the LC Issuer in favor of Ideas for
Medicine, Inc. in the stated amount of $482,110.00.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating
interest rate per annum equal for each day during such period 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 which is a Business Day, the average of the quotations for such day
on such transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"FINANCING DOCUMENTS" means this Agreement, the Notes, the
Subsidiary Guaranty Agreement, and the Security Documents.
"FISCAL YEAR" means a fiscal year of the Company.
"GAAP" has the meaning set forth in Section 1.02.
"GUARANTEE" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of assuring in any
other manner the obligee of such Debt or other obligation of the payment thereof
or to protect such obligee against loss in respect thereof (in whole or in
part), provided that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"HAZARDOUS MATERIALS" means (i) any "hazardous substance" as
defined in CERCLA; (ii) asbestos; (iii) polychlorinated biphenyls; (iv)
petroleum, its derivatives, by-products and other hydrocarbons; and (v) any
other toxic, radioactive, caustic or otherwise hazardous substance regulated
under Environmental Laws.
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18
"HAZARDOUS MATERIALS CONTAMINATION" means contamination
(whether now existing or hereafter occurring) of the improvements, buildings,
facilities, personalty, soil, groundwater, air or other elements on or of the
relevant property by Hazardous Materials, or any derivatives thereof, or on or
of any other property as a result of Hazardous Materials, or any derivatives
thereof, generated on, emanating from or disposed of in connection with the
relevant property.
"HORIZON/NEOSTAR" means Horizon Acquisition Corp., a Georgia
corporation d/b/a Neostar Medical Technologies.
"INDEMNITEES" has the meaning set forth in Section 8.05.
"INDEX RATE" means for any day in any calendar month, the rate
of interest equivalent to the money market yield for the Interest Determination
Date falling in such month on the one month commercial paper rate for
dealer-placed commercial paper of issuers whose corporate bonds are rated "AA"
or its equivalent by a nationally recognized rating agency, as such rate is made
available on a discount basis or otherwise by the Federal Reserve Bank of New
York and published weekly by the Board of Governors of the Federal Reserve
System in its H.15 report, or any successor publication published by the Board
of Governors of the Federal Reserve System or, if such rate for such date is not
yet published in such statistical release, the rate for that date will be the
rate set forth in the weekly statistical release designated as such, or any
successor publication, published by the Board of Governors of the Federal
Reserve System.
"INITIAL CLOSING DATE" means July 15, 1997.
"INTEREST DETERMINATION DATE" means May 1, 1998 and the first
Business Day of each calendar month thereafter.
"INVENTORY" means inventory (as defined in Article 9 of the
UCC) to the extent comprised of readily marketable materials of a type
manufactured, consumed or held for resale (including raw materials and
work-in-process) by the Company or any Subsidiary in the ordinary course of its
business as presently conducted, or as modified from time to time in a manner
not prohibited by this Agreement.
"INVESTMENT" means any investment in any Person, whether by
means of share purchase, capital contribution, loan, time deposit or otherwise.
"IPO" has the meaning set forth in Section 3.01(i).
"LC ISSUER" means NationsCredit.
"LENDER" means NationsCredit and each other Person that
becomes a holder of a Note pursuant to Section 10.06, and their respective
successors, and "Lenders" means all of the foregoing.
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"LETTER OF CREDIT" means the Existing Letter of Credit and any
other standby letter of credit issued for the account of the Company by the LC
Issuer pursuant to Section 2.09 hereof.
"LETTER OF CREDIT LIABILITIES" means at any date of
determination thereof, the sum, without duplication, of (i) the amount available
for drawing under all Letters of Credit then outstanding (without regard to
whether any conditions to drawing thereunder can then be met) plus (ii) the
aggregate unpaid amount of all Reimbursement Obligations in respect of previous
drawings made under any Letters of Credit.
"LETTER OF CREDIT LIMIT" means $3,000,000.
"LETTER OF CREDIT REQUEST" has the meaning specified in
Section 2.09(a)(iii).
"LIBOR" means, with respect to any Interest Determination
Date, (i) the London Interbank Offered Rate for deposits in U.S. dollars for a
period of time comparable to the period from and including such Interest
Determination Date to and including the next succeeding Interest Determination
Date which is published in The Wall Street Journal (Eastern Edition) under the
caption "Money Rates - London Interbank Offered Rates (LIBOR)" on such Interest
Determination Date; or (ii) if The Wall Street Journal does not publish such
rate, the offered rate for deposits in U.S. dollars for a period of time
comparable to the period from and including such Interest Determination Date to
and including the next succeeding Interest Determination Date which appears on
the Dow ▇▇▇▇▇ Markets Page 3750 as of 10:00 a.m., New York time, on such
Interest Determination Date, provided that if at least two rates appear on the
Dow ▇▇▇▇▇ Markets Page 3750, the "London Interbank Offered Rate" applicable to
such period shall be the arithmetic mean of such rates; or (iii) if The Wall
Street Journal does not publish such rate and no such rate appears on the Dow
▇▇▇▇▇ Markets Page 3750 at such time, the rate per annum at which deposits in
U.S. dollars are offered by the principal London office of The Chase Manhattan
Bank, N.A. to leading banks in the London interbank market at approximately
11:00 a.m., London time, on such Interest Determination Date in an amount
approximately equal to the principal amount of the Loans for a period of time
comparable to the period from and including such Interest Determination Date to
and including the next succeeding Interest Determination Date, in each case as
determined by the Agent whose determination shall be conclusive absent manifest
error.
"LIEN" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind, or any other type
of preferential arrangement that has the practical effect of creating a security
interest, in respect of such asset, or any financing statement filed in respect
of such asset. For the purposes of this Agreement and the other Financing
Documents, the Company or any Subsidiary shall be deemed to own subject to a
Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to such asset.
"LOANS" means the Revolving Credit Loans.
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20
"LOCKBOX ACCOUNTS" has the meaning set forth in the Security
Agreements.
"LOCKBOX AGREEMENT" means, collectively, the Lockbox
Agreements each in form and substance satisfactory to Lender, entered into among
the Agent, the Company and/or its Subsidiaries and the Lockbox Banks pursuant to
the Security Agreements.
"LOCKBOX BANK" means, collectively, the banks or other
depository institutions at which Lockbox Accounts are established and
maintained.
"MAJOR CASUALTY PROCEEDS" means (i) the aggregate insurance
proceeds received in connection with one or more related events by the Company
or any of its Subsidiaries under any Property Insurance Policy and not used for
the purchase of reasonably equivalent replacements of such property within 90
days after receipt of such proceeds (or, in the case of the restoration of all
or a material portion of any office or manufacturing facility, within 180 days
after receipt of such proceeds), or (ii) any award or other compensation with
respect to any condemnation of property (or any transfer or disposition of
property in lieu of condemnation) received by the Company or any of its
Subsidiaries and not used for the restoration of or the purchase of reasonably
equivalent replacements of such property within 90 days after receipt of such
award (or, in the case of the restoration of all or a material portion of any
office or manufacturing facility, within 180 days after receipt of such award),
if the amount of such aggregate insurance proceeds or award or other
compensation exceeds $100,000.
"MANAGEMENT STOCKHOLDERS" means ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, ▇▇.
"MARGIN STOCK" has the meaning assigned thereto in Regulation
G, U or X of the Federal Reserve Board, as the same may be amended, supplemented
or modified from time to time.
"MATERIAL ADVERSE EFFECT" shall mean (a) a material adverse
effect on the business, assets, operations, prospects or condition (financial or
otherwise) of the Company and its Consolidated Subsidiaries, taken as a whole,
(b) a material impairment of the ability of the Company or any other Credit
Party to perform any of its obligations under any Financing Document to which it
is or will be a party or (c) a material impairment of the rights of or benefits
available to the Agent or the Lenders under any Credit Document.
"MATERIAL PLAN" means at any time a Plan having Unfunded
Liabilities.
"MORTGAGE" means any mortgage, deed of trust, deed to secure
debt or other similar instrument delivered by the Company or any of its
Subsidiaries pursuant to Section 5.18 hereof, which shall be in such form as may
be required by the Agent and the Required Lenders.
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"MULTIEMPLOYER PLAN" means at any time an employee pension
benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any
member of the ERISA Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions,
including for these purposes any Person which ceased to be a member of the ERISA
Group during such five year period.
"NATIONSCREDIT" means NationsCredit Commercial Corporation, a
Delaware corporation, and its successors.
"NET CASH PROCEEDS" means, with respect to any transaction, an
amount equal to the cash proceeds received by the Company or any of its
Subsidiaries from or in respect of such transaction (including any cash proceeds
received as income or other proceeds of any non-cash proceeds of such
transaction), less (x) any expenses (including commissions) reasonably incurred
by such Person in respect of such transaction and (y) in the case of an Asset
Sale, the amount of any Debt secured by a Lien on the related asset and
discharged from the proceeds of such Asset Sale and any taxes paid or payable by
such Person (as reasonably estimated by the chief financial officer of the
Company) in respect of such Asset Sale.
"NOTE" means a Revolving Credit Note.
"NOTICE OF FLOATING RATE ELECTION" has the meaning set forth
in Section 2.03(b)(ii).
"NOTICE OF REVOLVING CREDIT LOAN" has the meaning set forth in
Section 2.04.
"OBLIGATIONS" means all unpaid principal of and accrued and
unpaid interest on the Loans, all Reimbursement Obligations, all accrued and
unpaid fees and all expenses, reimbursements, indemnities and other obligations
of the Company to the Lenders or to any Lender, the Agent or any indemnified
party hereunder arising under the Financing Documents.
"OFFICER'S CERTIFICATE" means a certificate executed on behalf
of a Person by its chairman of the board (if an officer), chief executive
officer or president or one of its vice presidents and by its chief financial
officer or treasurer.
"PAYMENT ACCOUNT" means, with respect to each Lender, the
account specified on the signature pages hereof into which all payments by or on
behalf of the Company to such Lender under the Financing Documents shall be
made, or such other account as such Lender shall from time to time specify by
notice to the Company.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"PERMITTED CONTEST" means a contest maintained in good faith
by appropriate proceedings promptly instituted and diligently conducted and with
respect to which such reserve
-16-
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or other appropriate provision, if any, as shall be required in conformity with
GAAP shall have been made; provided that compliance with the obligation that is
the subject of such contest is effectively stayed during such challenge.
"PERMITTED LIENS" means Liens permitted pursuant to Section
6.02.
"PERSON" means any natural person, corporation, limited
partnership, general partnership, joint stock company, joint venture,
association, limited liability company, company, trust, bank, trust company,
land trust, business trust or other organization, whether or not a legal entity,
and any government agency or political subdivision thereof.
"PLAN" means at any time an employee pension benefit plan
(other than a Multiemployer Plan) which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"PLEDGE AGREEMENTS" means, collectively, the Company Pledge
Agreement and any other pledge agreement delivered from time to time by a
Subsidiary pursuant to Section 5.11 or 6.07.
"PRIME RATE" means the rate publicly announced from time to
time by NationsBank, N.A. as its "prime rate". Changes in the Prime Rate shall
be effective as of the opening of business on the date of each announced change
therein.
"PRIOR CREDIT AGREEMENT" has the meaning assigned to it in
Section 10.13.
"PROPERTY INSURANCE POLICY" means any insurance policy
maintained by the Company or any of its Subsidiaries covering losses with
respect to tangible real or personal property or improvements or losses from
business interruption.
"PROPORTIONATE SHARE" means, with respect to any Lender, its
Revolving Capital Commitment divided by the sum of the Revolving Capital
Commitments of all of the Lenders.
"QUARTERLY DATE" means each January 1, April 1, July 1 and
October 1.
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"REAL PROPERTY" shall have the meaning assigned to it in
Section 5.18.
"RECEIVABLE" means, as at any date of determination thereof,
the unpaid portion of the obligation, as stated in the respective invoice, of a
customer of the Company or a Subsidiary in respect of goods sold or leased, or
services rendered, in the ordinary course of business, which amount has been
earned by performance under the terms of the related contract and recognized as
revenue on the books of the Company or such Subsidiary, net of any credits,
rebates or offsets owed to the customer and also net of any commissions payable
to Persons other than employees of the Company or its Subsidiaries.
"REIMBURSEMENT OBLIGATIONS" means, at any date, the
obligations of the Company then outstanding to reimburse the LC Issuer for
payments made by the LC Issuer under the Letter of Credit.
"REQUIRED LENDERS" means at any time Lenders holding Notes
evidencing at least 51% of the aggregate unpaid principal amount of the Loans
or, if no Loans are outstanding, having at least 51% of the aggregate amount of
the Commitments.
"RESERVE REQUIREMENT" means at any time the then current
maximum rate for which reserves (including any marginal, supplemental or
emergency reserve) are required to be maintained under Regulation D by member
banks of the Federal Reserve System in New York City with deposits comparable in
amount to those of NationsBank, N.A. against "Eurocurrency liabilities", as that
term is used in Regulation D. Adjusted LIBOR shall be adjusted automatically on
and as of the effective date of any change in the Reserve Requirement.
"RESTRICTED PAYMENT" means as to any Person (i) any dividend
or other distribution on any shares of such Person's capital stock (other than
dividends payable solely in shares of its capital stock), (ii) any payment on
account of the principal of or premium, if any, on any Debt convertible into
shares of such Person's capital stock, or (iii) any payment on account of
purchase, redemption, retirement or acquisition of (A) any shares of such
Person's capital stock or (B) any option, warrant or other right to acquire
shares of such Person's capital stock (except an acquisition of shares of such
Person's capital stock upon the conversion thereof into or the exchange thereof
for other shares of such Person's capital stock).
"REVOLVING CREDIT COMMITMENT" means (i) for NationsCredit as
Lender, initially $50,000,000, less any amount assigned to another person that
becomes a Lender after the date hereof (a "Subsequent Lender") and (ii) for any
Subsequent Lender, the amount of Revolving Credit Commitment assigned to such
Lender, in each case as such amount may be reduced from time to time in
accordance with this agreement.
"REVOLVING CREDIT COMMITMENTS" means the sum of the Revolving
Credit Commitments of each Lender.
"REVOLVING CREDIT LOAN" shall have the meaning assigned to it
in Section 2.01.
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"REVOLVING CREDIT NOTE" shall have the meaning assigned to it
in Section 2.02.
"SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time, and the rules and regulations promulgated thereunder.
"SECURITY AGREEMENTS" means, collectively, the Company
Security Agreement and the Subsidiary Security Agreement.
"SECURITY DOCUMENTS" means the Security Agreements, the Pledge
Agreements, the Lockbox Agreements, and any other agreement pursuant to which
the Company or any of its Subsidiaries or Affiliates provides a Lien on its
assets in favor of the Agent for the benefit of the Lenders, and all
supplementary assignments, security agreements, pledge agreements,
acknowledgments or other documents delivered or to be delivered pursuant to the
terms hereof or of any other Security Document.
"STRATO/INFUSAID" means Strato/Infusaid, Inc., a Massachusetts
corporation.
"SUBSIDIARY" means, with respect to any Person, any
corporation or other entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions are at the time directly or
indirectly owned by such Person. Unless otherwise specified or required by the
context herein, the term Subsidiary shall be deemed to refer to a Subsidiary of
the Company.
"SUBSIDIARY GUARANTY AGREEMENT" means the Subsidiary Guaranty
Agreement between the Subsidiaries listed on Exhibit A thereto and the Agent,
dated as of July 15, 1997, in the form of Exhibit E.
"SUBSIDIARY SECURITY AGREEMENT" means the Subsidiary Security
Agreement between the Subsidiaries listed on Exhibit A thereto and the Agent,
dated as of July 15, 1997, in the form of Exhibit F.
"TEMPORARY CASH INVESTMENT" means any Investment in (i) direct
obligations of the United States or any agency thereof, or obligations
guaranteed by the United States or any agency thereof, (ii) commercial paper
rated at least A-1 by Standard & Poor's Rating Group and P-1 by ▇▇▇▇▇'▇
Investors Service, Inc., (iii) time deposits with, including certificates of
deposit issued by, any office located in the United States of any bank or trust
company which is organized under the laws of the United States or any State
thereof and has capital, surplus and undivided profits aggregating at least
$500,000,000 and which issues (or the parent of which issues) certificates of
deposit or commercial paper with a rating described in clause (ii) above, or
(iv) repurchase agreements with respect to securities described in clause (i)
above entered into with an office of a bank or trust company meeting the
criteria specified in clause (iii) above, provided in each case that such
Investment matures within one year from the date of acquisition thereof by the
Company or any of its Subsidiaries.
-19-
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"TOTAL DEBT SERVICE" means, for any period, the sum of: (i)
the aggregate interest charges incurred by the Company and its Consolidated
Subsidiaries for such period, whether expensed or capitalized, including the
portion of any obligation under Capital Leases allocable to interest expense in
accordance with GAAP and the portion of any debt discount or premium (but not
expenses of issuance) that shall be amortized in such period, and (ii) the
aggregate amount during such period of mandatory principal payments pursuant to
Section 2.05(c) and all other scheduled principal payments on all other Debt,
including the portion of any payments under Capital Leases that is allocable to
principal.
"UCC" has the meaning set forth in the Security Agreement.
"UNFUNDED LIABILITIES" means, with respect to any Plan at any
time, the amount (if any) by which (i) the value of all benefit liabilities
under such Plan, determined on a plan termination basis using the assumptions
prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the
fair market value of all Plan assets allocable to such liabilities under Title
IV of ERISA (excluding any accrued but unpaid contributions), all determined as
of the then most recent valuation date for such Plan, but only to the extent
that such excess represents a potential liability of a member of the ERISA Group
to the PBGC or any other Person under Title IV of ERISA.
"WORKING CAPITAL AVAILABILITY" has the meaning specified in
Section 2.01(b).
"WORKING CAPITAL LOANS" means the aggregation of Revolving
Credit Loans of the Lenders to be made to the Company pursuant to Section
2.01(b).
"WORKING CAPITAL SUBLIMIT" means $10,000,000.
SECTION 1.02. ACCOUNTING TERMS AND DETERMINATIONS. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared, in
accordance with generally accepted accounting principles as in effect from time
to time ("GAAP"), applied on a basis consistent (except for changes concurred in
by the Company's independent public accountants) with the most recent audited
consolidated financial statements of the Company and its Consolidated
Subsidiaries delivered to the Lenders; provided that, if the Company notifies
the Lenders that the Company wishes to amend any covenant in Article VIII or the
definition of "Excess Cash Flow" or any related definition to eliminate the
effect of any change in GAAP on the operation of such covenant or the
determination of "Excess Cash Flow" (or if the Agent notifies the Company that
the Required Lenders wish to amend Article VI or the definition of "Excess Cash
Flow" or any related definition for such purpose), then the Company's compliance
with such covenant or "Excess Cash Flow", as the case may be, shall be
determined on the basis of GAAP in effect immediately before the relevant change
in GAAP became effective, until either such notice is withdrawn or such covenant
is amended in a manner satisfactory to the Company and the Required Lenders.
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SECTION 1.03. OTHER DEFINITIONAL PROVISIONS. References in
this Agreement to "Articles", "Sections", "Schedules" or "Exhibits" shall be to
Articles, Sections, Schedules or Exhibits of or to this Agreement unless
otherwise specifically provided. Any of the terms defined in Section 1.01 may,
unless the context otherwise requires, be used in the singular or plural
depending on the reference. "Include", "includes" and "including" shall be
deemed to be followed by "without limitation" whether or not they are in fact
followed by such words or words of like import. "Writing", "written" and
comparable terms refer to printing, typing and other means of reproducing words
in a visible form. References to any agreement or contract are to such agreement
or contract as amended, modified or supplemented from time to time in accordance
with the terms hereof and thereof. References to any Person include the
successors and assigns of such Person. References "from" or "through" any date
mean, unless otherwise specified, "from and including" or "through and
including", respectively.
ARTICLE II
REVOLVING CREDIT LOANS
SECTION 2.01. REVOLVING CREDIT LOANS AND COMMITMENTS. (a) Upon
the terms and subject to the conditions set forth herein, from time to time
prior to the Commitment Termination Date, each Lender severally and not jointly
agrees to make revolving credit loans ("REVOLVING CREDIT LOANS") from time to
time to the Company and to purchase participations in Letter of Credit
Liabilities in an aggregate principal amount at any time outstanding not to
exceed such Lender's Revolving Credit Commitment. Revolving Credit Loans shall
constitute either Working Capital Loans or Acquisition Loans.
(b)(i) Working Capital Loans shall be available for the
working capital needs of the Company and its Subsidiaries. The sum of Working
Capital Loans and Letter of Credit Liabilities shall not at any time exceed in
aggregate principal amount outstanding the least of (said amount, the "WORKING
CAPITAL AVAILABILITY"):
(A) the Working Capital Sublimit;
(B) an amount equal to the Borrowing Base; and
(C) the Revolving Credit Commitment then in effect,
less the aggregate outstanding principal amount
of Acquisition Loans.
(ii) Each Working Capital Loan shall be in an aggregate amount
of $100,000 or an integral multiple of $10,000 in excess thereof. No more than
two Working Capital Loans shall be made within any week beginning on Monday of
such week and ending on the last Business Day of such week.
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(c)(i) Prior to the Acquisition Loan Availability Termination
Date, Acquisition Loans shall be available in the sole good faith discretion of
the Agent and the Required Lenders for the purpose of financing Acquisitions by
the Company, in an aggregate principal amount not to exceed at any time
outstanding (the "ACQUISITION AVAILABILITY"), the Revolving Credit Commitment
then in effect less the aggregate outstanding principal amount of Working
Capital Loans and Letter of Credit Liabilities.
(ii) Acquisition Loans may be made in such amounts and at such
times as the Agent and the Required Lenders shall agree in their sole good faith
discretion and upon such terms and conditions as the Agent and the Required
Lenders shall require.
(iii) The Lenders shall have no obligation to make Acquisition
Loans at any time on or after the Acquisition Loan Availability Termination
Date.
(d) Within the foregoing limits, to but excluding the
Commitment Termination Date, the Company may borrow under this Section 2.01,
repay or prepay Revolving Credit Loans as required under Section 2.05(b) or to
the extent permitted by Section 2.06, and reborrow pursuant to this Section
2.01.
SECTION 2.02. REVOLVING CREDIT NOTES. The Revolving Credit
Loans of each Lender shall be evidenced by a single Revolving Credit Note,
substantially in the form of Exhibit A (each such note, a "REVOLVING CREDIT
NOTE"), dated the Closing Date in an aggregate principal amount equal to the
amount of such Lender's Revolving Credit Commitment, duly executed and delivered
and payable to such Lender. Each Lender shall record the date and amount of each
Revolving Credit Loan made by it, whether such Revolving Credit Loan was a
Working Capital Loan or an Acquisition Loan, and the date and amount of each
payment of principal made by the Company with respect thereto, and prior to any
transfer of its Revolving Credit Note shall endorse on Schedule A thereto (or
any continuation thereof) forming a part thereof appropriate notations to
evidence the foregoing information with respect to each such Revolving Credit
Loan then outstanding; provided that the failure of any Lender to make any such
recordation or endorsement shall not affect the obligations of the Company
hereunder or under the Revolving Credit Notes. Each Lender is hereby irrevocably
authorized by the Company so to endorse its Revolving Credit Note and to attach
to and make a part of its Revolving Credit Note a continuation of any such
schedule as and when required.
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SECTION 2.03. INTEREST ON THE REVOLVING CREDIT LOANS.
(a) The Company shall pay interest on the Revolving Credit
Loans to the Lenders monthly in arrears on the first day of each calendar month
immediately succeeding the month for which such interest accrues, commencing
with the first day of the calendar month following the calendar month in which
the Closing Date occurs. In all cases accrued interest on all of the Revolving
Credit Loans shall be payable by the Company to the Lenders on the Commitment
Termination Date. Interest at the Default Rate shall be payable upon demand by
the Lenders. If any interest on any of the Revolving Credit Loans accrues or
remains payable after the Commitment Termination Date, such interest shall be
payable by the Company upon demand by the Lenders.
(b)(i) Except as provided in paragraph (d) below, the Company
shall be obligated to pay interest to the Lenders on the outstanding principal
balance of each Revolving Credit Loan from the date such Revolving Credit Loan
is made until such Revolving Credit Loan is repaid in full at a floating rate
per annum equal, at the Company's option, to one of: (i) the Index Rate plus
three and one-quarter percentage points (3.25%), (ii) Adjusted LIBOR plus three
and one-quarter percentage points (3.25%), or (iii) the Prime Rate plus one-half
of one percentage point (.50%).
(ii) On the Closing Date, continuing through the last day of
the calendar month in which the Closing Date occurs and thereafter unless the
Company shall have selected another rate or shall be deemed to have selected
another rate as provided below, the Revolving Credit Loans shall bear interest
based on the Index Rate. Thereafter, provided that no Default or Event of
Default has occurred and is then continuing, and subject to the terms and
conditions set forth herein, the Company may by written notice (or by telephonic
notice confirmed promptly in writing) delivered to the Agent not later than the
second Business Day preceding the beginning of each calendar month, elect
whether the interest payable to the Lenders for such calendar month shall be
based on the Index Rate or Adjusted LIBOR or the Prime Rate (each such notice
being referred to as a "NOTICE OF FLOATING RATE ELECTION"). In the event that
the Company shall fail to deliver any Notice of Floating Rate Election on the
date required above, provided that no Default or Event of Default shall have
occurred and be continuing, the Company shall be deemed to have delivered a
Notice of Floating Rate Election that elects to continue in effect for the
calendar month the interest rate determination mechanism in effect for the
previous month.
(iii) The Agent shall be entitled to rely upon and shall be
fully protected under this Agreement in relying on any Notice of Floating Rate
Election believed by the Agent to be genuine and to assume that the persons
giving the same on behalf of the Company were duly authorized unless the
responsible individual acting thereon for the Agent shall have actual notice to
the contrary.
(c) All computations of interest hereunder or under the other
Financing Documents for Revolving Credit Loans shall be made by the Agent on the
basis of a 360 day year for the actual number of days occurring in the period
for which such interest is payable.
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Each determination by the Agent of an interest rate hereunder shall be
conclusive and binding for all purposes, absent manifest error. The Agent agrees
that it shall, upon written request of the Company (but not more frequently than
once per month), provide a written calculation in reasonable detail of the most
recent interest rate determination.
(d) So long as any Event of Default shall have occurred and be
continuing, the interest rate applicable to the Loans, the Reimbursement
Obligations or any other obligations of the Company or any of its Subsidiaries
under the Financing Documents may be increased by the Required Lenders, at their
option, by up to two percentage points (2%) per annum above the rate otherwise
applicable (the "DEFAULT RATE").
SECTION 2.04. ADVANCING REVOLVING CREDIT LOANS. Except as
provided in the last sentence of this section, each Revolving Credit Loan shall
be made on notice by the Company to the Agent, given no later than 11:00 a.m.
(New York time) on the Business Day of the proposed Revolving Credit Loan. Such
notice (each a "NOTICE OF REVOLVING CREDIT LOAN") shall be substantially in the
form of Exhibit B hereto, shall be duly completed and executed by an Authorized
Signatory, and shall specify therein the requested date and amount of such
Revolving Credit Loan, and such other information as may be required by the
Agent. Each Notice of Revolving Credit Loan shall be given in writing (by
telecopy, telex or cable) or by telephone and confirmed immediately in writing.
Notwithstanding the foregoing, no Notice of Revolving Credit Loan that requests
an Acquisition Loan shall be effective until the Agent notifies the Company that
the Agent and the Required Lenders have consented to the proposed Acquisition
after having been provided such information respecting the proposed Acquisition
as is required to be delivered pursuant to Section 3.02 and such time to review
the same as the Agent and the Required Lenders shall reasonably deem necessary.
SECTION 2.05. MANDATORY REPAYMENTS AND PREPAYMENTS. (a) The
Revolving Credit Commitment of each Lender shall terminate at the opening of
business on July 1, 2004 (such date and such earlier date on which the Revolving
Credit Commitments shall terminate pursuant to Section 2.08, Section 7.01 or
otherwise, the "COMMITMENT TERMINATION DATE"), and there shall become due and
the Company shall pay on the Commitment Termination Date, the entire outstanding
principal amount of each Revolving Credit Loan, together with accrued and unpaid
interest thereon to but excluding the Commitment Termination Date.
(b) If at any time (i) the aggregate unpaid principal balance
of the Working Capital Loans and Letter of Credit Liabilities exceeds the
Working Capital Availability, or (ii) the aggregate unpaid principal balance of
the Revolving Credit Loans and Letter of Credit Liabilities exceeds the
Revolving Credit Commitments, then, on the next succeeding Business Day, the
Company shall prepay Working Capital Loans and/or Acquisition Loans in an
aggregate principal amount equal to such excess.
(c) Commencing on October 1, 2000 (the "AMORTIZATION
COMMENCEMENT DATE") and continuing on each Quarterly Date thereafter, the
Company shall repay the Acquisition Loans in quarterly installments of principal
in an amount equal to the percentage of
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all Acquisition Loans outstanding on the Acquisition Loan Availability
Termination Date set forth for such date below:
AMORTIZATION TABLE
QUARTERLY INSTALLMENT AMOUNT
QUARTERLY DATE (AS A PERCENTAGE OF ALL ACQUISITION LOANS OUTSTANDING
ON THE ACQUISITION LOAN AVAILABILITY TERMINATION DATE)
October 1, 2000 6.25%
January 1, 2001 6.25%
April 1, 2001 6.25%
July 1, 2001 6.25%
October 1, 2001 6.25%
January 1, 2002 6.25%
April 1, 2002 6.25%
July 1, 2002 6.25%
October 1, 2002 6.25%
January 1, 2003 6.25%
April 1, 2003 6.25%
July 1, 2003 6.25%
October 1, 2003 6.25%
January 1, 2004 6.25%
April 1, 2004 6.25%
July 1, 2004 6.25%
(d) There shall become due and payable, and the Company shall
prepay, an aggregate principal amount of the Revolving Credit Loans in the
following amounts at the following times, and in the case of any prepayment of
any Class of Revolving Credit Loans in whole, accrued and unpaid interest on the
principal amount being prepaid to but excluding the date of such payment:
(i) on the 90th day following the last day of each Fiscal Year,
beginning with the Fiscal Year ending December 31, 2000, an
amount equal to 50% of the Excess Cash Flow for such Fiscal
Year;
(ii) promptly upon the receipt by the Company or any of its
Subsidiaries of any Major Casualty Proceeds (to the extent not
used for replacement or restoration as provided in the
definition of such term), an amount equal to 100% of such
Major Casualty Proceeds; and
(iii) promptly upon receipt by the Company or any Subsidiary of the
proceeds of any Asset Sale after the Closing Date, an amount
equal to 100% of the Net Cash Proceeds of such Asset Sale.
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Any such prepayment to be applied first to Acquisition Loans
outstanding and then to Working Capital Loans, in either case, in inverse order
of maturity.
SECTION 2.06. OPTIONAL PREPAYMENTS. The Company may prepay the
Revolving Credit Loans in whole or in part (in minimum principal amounts of
$100,000 or in any larger integral multiple of $10,000, or the total remaining
amount outstanding) upon at least three Business Days' prior irrevocable written
notice to the Lenders, without premium or penalty. The aggregate principal
amount of the Revolving Credit Loans designated for prepayment in any notice of
optional prepayment given pursuant to this subsection shall become due and
payable on the date fixed for prepayment as specified in such notice. Unless
otherwise directed by the Company, optional prepayments shall be applied first
to Working Capital Loans outstanding and then to Acquisition Loans, in either
case, in inverse order of maturity.
SECTION 2.07. APPLICATION OF PAYMENTS. Unless otherwise
provided herein, each payment or prepayment of less than all the outstanding
aggregate principal amount of the Loans shall be applied pro rata to all Loans
according to their respective outstanding principal amounts, and shall be
applied to the Class of Loan required under this Agreement or, if not so
required, as directed by the Company. The principal amount of each payment on
the Acquisition Loans pursuant to Section 2.05(d) or 2.06 shall be applied to
reduce the remaining payments required by Section 2.05(c) in inverse order of
the maturity thereof. No payment of the principal amount of the Loans pursuant
to Section 2.05(c) or 2.06 shall reduce the amount of any payment required by
Section 2.05(d). Each payment of less than all of the outstanding aggregate
principal amount of Revolving Credit Loans of any Class shall be applied by the
Lender receiving such payment, pro rata to all Revolving Credit Loans of such
Class held by such Lender in according to their respective outstanding principal
amounts.
SECTION 2.08. REDUCTION OF COMMITMENTS. (a) The Revolving
Credit Commitment shall reduce to the sum of the aggregate outstanding principal
amount of the Acquisition Loans plus the Working Capital Sublimit on the
Acquisition Loan Availability Termination Date, and thereafter by the amount of
each payment made or required to be made pursuant to Section 2.05 or Section
2.06 which is applied against the Acquisition Loans.
(b) The Company shall have the right at any time to terminate
in whole this Agreement, or from time to time, irrevocably to reduce in part the
amount of the Revolving Credit Commitments upon at least 30 days' prior written
notice to the Agent. Such notice shall be irrevocable on the part of the Company
and shall specify the effective date of such reduction or termination, whether a
termination or reduction is being made, and, in the case of any reduction, the
amount thereof shall be in an amount of Two Million Five Hundred Thousand
Dollars ($2,500,000) or an integral multiple thereof. Upon any such reduction,
the Company shall simultaneously prepay any outstanding Revolving Credit Loans
to the extent necessary so that the aggregate outstanding principal amount of
the Revolving Credit Loans and Letter of Credit Liabilities does not exceed the
amount of the Revolving Credit Commitment after giving effect to any partial
reduction thereof. The aforesaid prior notice requirement shall not apply to the
Agent's exercise of remedies under Section 7.01. In the event the Company
exercises its
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rights under this paragraph to prepay the Revolving Credit Loans and terminate
this Agreement or permanently reduce the Revolving Credit Commitments, the
Company agrees that such prepayment shall be accompanied by the payment by the
Company to the Agent for the ratable account of the Lenders of all accrued and
unpaid interest and, in the case of a termination of this Agreement, all accrued
fees and other remaining Obligations hereunder. The amount of any Revolving
Credit Commitment may not be reinstated if it is reduced or if this Agreement is
terminated by the Company.
SECTION 2.09. LETTERS OF CREDIT.
(a) Issuance of Letters of Credit. (i) Subject to the terms
and conditions hereof and such additional terms and conditions as the LC Issuer
may require, the LC Issuer agrees to issue upon the Company's written request
therefor from time to time from the Closing Date to but not including the
Acquisition Loan Availability Termination Date, Letters of Credit for the
account of the Company.
(ii) Each Letter of Credit shall (x) have an expiration date
not later than the Commitment Termination Date, (y) be used only to secure
obligations of the Company or a Subsidiary in connection with Acquisitions
permitted under Section 6.07(d), and (z) be substantially in the form of Exhibit
G hereto and otherwise in form and substance satisfactory to the Agent and the
LC Issuer in all respects.
(iii) The Company shall deliver to the Agent and the LC Issuer
prior to noon (New York City time) at least 3 Business Days before the requested
date of issuance of a Letter of Credit, a written request for the issuance of
such Letter of Credit (a "LETTER OF CREDIT REQUEST"), together with all of the
documents, materials and evidences required to be delivered to the Agent
pursuant to Sections 3.02 and 3.03 prior to the issuance of such Letter of
Credit. Such request shall set forth: (v) the beneficiary of the Letter of
Credit, (w) the stated amount thereof, (x) the requested issue date, (y) the
requested expiration date and (z) the drawing conditions applicable thereto. On
the requested date of issuance of such Letter of Credit the Company shall
deliver to the Agent such documents, evidences and opinions as shall be required
by Section 3.02 or 3.03.
(b) Reimbursement Obligations of the Company. The Company
agrees, as a separate obligation, independent from any other obligation it may
have hereunder, to reimburse the LC Issuer for any drawing under any Letter of
Credit for the full amount of such drawing on the date of such drawing, in like
currency, without presentment, demand, protest or other formalities of any kind.
All amounts paid by the LC Issuer under any Letter of Credit not reimbursed by
the Company as provided herein shall bear interest, payable on demand, for each
day until the Company reimburses the LC Issuer therefor, at a rate per annum
equal to the sum of the Index Rate plus five and one-quarter percent (5.25%).
(c) Reimbursement and Other Payments by the Company. The
obligations of the Company to reimburse the LC Issuer shall be absolute,
unconditional and irrevocable, and
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shall be performed strictly in accordance with the terms of this Agreement,
under all circumstances whatsoever, including without limitation the following
circumstances:
(i) any lack of validity or enforceability of any Letter of
Credit or any related document;
(ii) any amendment or waiver of or any consent to departure
from any Letter of Credit or any related document;
(iii) the existence of any claim, set-off, defense or other
right which the Company may have at any time against the beneficiary of
any Letter of Credit (or any Person or entity for whom such beneficiary
may be acting), the Agent, the LC Issuer, any Lender or any other
Person or entity, whether in connection with this Agreement, any other
Financing Document or any unrelated transaction, provided that nothing
herein shall prevent the assertion of any such claim by separate suit
or compulsory counterclaim;
(iv) any statement or any other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect whatsoever;
(v) payment by the LC Issuer under any Letter of Credit
against presentation of a draft or document which does not comply with
the terms of such Letter of Credit;
(vi) any affiliation between the LC Issuer and any Lender; or
(vii) to the extent permitted under applicable law, any other
circumstance or happening whatsoever, whether or not similar to any of
the foregoing.
(d) Cash Collateralization of Letter of Credit Liabilities.
Upon any optional payment in full of the Loans and termination of the Revolving
Credit Commitments pursuant to and in accordance with the terms of Section 2.08,
and upon the occurrence and during the continuance of any Event of Default, the
Company on demand of the Agent shall deposit into an account established
pursuant to lockbox arrangements satisfactory to the Agent in its sole
discretion, an amount of cash or cash equivalents equal to all Letter of Credit
Liabilities then outstanding.
(e) Purchase of Participation by Lenders. Upon the issuance
of each Letter of Credit, each Lender shall be deemed to have irrevocably and
unconditionally purchased and received without recourse or warranty, an
undivided interest and participation in such Letter of Credit (including,
without limitation, all Letter of Credit Liabilities and all obligations of the
Company and the Subsidiaries thereof with respect thereto except those expressly
stated to be payable to the LC Issuer hereunder or under the other Financing
Documents) and any documents or security therefor or guaranty pertaining
thereto, equal to such Lender's Proportionate Share of such Letter of Credit.
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(f) Notice to Lenders. Promptly upon receipt by the LC
Issuer of any draft upon, or other notice of drawing under, any Letter of
Credit, the LC Issuer shall give the Company, the Agent and each Lender written
or telephonic notice of the amount of such draft or notice of drawing and of the
date upon which the LC Issuer proposes to honor such draft.
(g) Payments by Lenders. Each Lender hereby agrees that it
shall pay to the LC Issuer prior to 2:00 p.m. (New York City time) on the date
the LC Issuer honors each drawing under a Letter of Credit such Lender's
Proportionate Share of such Letter of Credit drawing; provided, that, if the
Company should pay in full or in part any Letter of Credit drawing on the date
thereof, the obligation of each Lender to pay to the LC Issuer pursuant to this
Section its Proportionate Share of such drawing shall be reduced by an amount
equal to such Lender's Proportionate Share of such payment. Amounts paid in
excess of the net amount so owed shall promptly be refunded by the LC Issuer to
such Lender.
(h) Failure to Pay by Lenders. If any Lender shall fail to
pay the amount of its participation in a Letter of Credit drawing on the date
such amount is due in accordance with subsection (g) above, the LC Issuer shall
be deemed to have advanced funds on behalf of such Lender. Each such advance
shall be secured by such Lender's participation interest, and the LC Issuer
shall be subrogated to such Lender's rights hereunder in respect thereof. Such
advance may be repaid by application to such advance of any payment that such
Lender is otherwise entitled to receive under this Agreement. Any amount not
paid by such Lender to the LC Issuer hereunder shall bear interest for each day
from the day such payment was due until such payment shall be paid in full at a
rate per annum equal to the Federal Funds Rate.
(i) Reimbursement and Other Payments by the Lenders. The
obligations of each Lender to reimburse the LC Issuer shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement, under all circumstances whatsoever, including
without limitation the following circumstances:
(i) any lack of validity or enforceability of any Letter of
Credit or any related document;
(ii) any amendment or waiver of or any consent to departure
from any Letter of Credit or any related document;
(iii) the existence of any claim, set-off, defense or other
right which such Lender may have at any time against the beneficiary of
any Letter of Credit (or any Person or entity for whom such beneficiary
may be acting), the Company, any Subsidiary of any of the Company, the
Agent, the LC Issuer, any Lender or any other Person or entity, whether
in connection with this Agreement, any other Financing Document or any
unrelated transaction, provided that nothing herein shall prevent the
assertion of any such claim by separate suit or compulsory
counterclaim;
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(iv) any statement or any other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect whatsoever;
(v) payment by the LC Issuer under any Letter of Credit
against presentation of a draft or document which does not comply with
the terms of such Letter of Credit;
(vi) any affiliation between the LC Issuer and any other
Person; or
(vii) to the extent permitted under applicable law, any other
circumstance or happening whatsoever, whether or not similar to any of
the foregoing.
ARTICLE III
CONDITIONS
SECTION 3.01. CONDITIONS TO CLOSING. The obligation of each
Lender to make Loans and to purchase participation in Letters of Credit, and of
the LC Issuer to issue Letters of Credit, on the Closing Date shall be subject
to the satisfaction of the following conditions precedent:
(a) receipt by the Agent of counterparts hereof signed by
each of the parties hereto (or, in the case of any party as to which an
executed counterpart shall not have been received, receipt by the Agent
in form satisfactory to it of telegraphic, telex or other written
confirmation from such party of execution of a counterpart hereof by
such party);
(b) receipt by NationsCredit of a duly executed Revolving
Credit Note for its account, in the form provided for herein;
(c) receipt by the Agent of duly executed counterparts of
each Security Document required to be effective on the Closing Date
(including the Lockbox Agreements), and each other Financing Document,
together with share certificates evidencing all of the outstanding
Common Stock of the Subsidiaries and irrevocable stock powers or
transfers, duly executed in blank, and also evidence satisfactory to it
in its sole good faith discretion of the effectiveness of the security
contemplated thereby;
(d) receipt by the Agent of the opinions of King & Spalding
and ▇▇▇▇▇▇▇▇▇ and Virgin, counsel for the Company, substantially in the
form of Exhibits I-1 and I-2, respectively, and covering such
additional matters relating to the transactions contemplated hereby as
NationsCredit may reasonably request (by its execution and delivery of
this Agreement, the Company authorizes and directs such counsel to
deliver such opinions to the Agent);
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(e) receipt by the Agent of an opinion of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
LLP, special counsel for the Agent, substantially in the form of
Exhibit J, and covering such additional matters relating to the
transactions contemplated hereby as NationsCredit may reasonably
request;
(f) receipt by NationsCredit, including in its capacity as
Agent, of all fees and any other amounts due and payable hereunder
(including fees and expenses payable pursuant to Section 8.04) of which
the Company has received notice;
(g) receipt by NationsCredit of any information it may request
concerning the financial condition, results of operations, liabilities
(contingent and otherwise, including with respect to environmental
liabilities and employee and retiree benefits) and prospects of, and
the financial reporting and accounting systems and the management
information systems of, the Company and satisfaction of NationsCredit
in its sole good faith discretion with all such information;
(h) satisfaction of NationsCredit in its sole good faith
discretion as to the absence of any material adverse change in any
aspect of the business, operations, properties, prospects or condition
(financial or otherwise) of the Company or any Subsidiaries, or any
event or condition which is reasonably likely to result in such a
material adverse change;
(i) receipt by NationsCredit of evidence satisfactory to it in
its sole good faith discretion that the Company shall have received on
or before the Closing Date at least $30,000,000 of net cash proceeds
from the sale of its common stock in an initial registered public
offering (the "IPO");
(j) receipt by NationsCredit of a certificate signed by the
chief financial officer or treasurer of the Company to the effect that,
both before and immediately after the making of the Loans and the
consummation of the other transactions contemplated to take place on
the Closing Date, (i) no Default shall have occurred and be continuing
and (ii) the representations and warranties of the Company made in or
pursuant to the Financing Documents are true;
(k) receipt by NationsCredit of (i) the financial statements
and pro forma balance sheet referred to in Sections 4.04 (b) and (c),
(ii) a statement of sources and uses of funds covering all payments
reasonably expected to be made by the Company in connection with the
transactions to be consummated on the Closing Date, and (iii) payment
instructions with respect to each wire transfer to be made by the Agent
or the Company on the Closing Date setting forth the amount of such
transfer, the purpose of such transfer, the name and number of the
account to which such transfer is to be made, the name and ABA number
of the bank or other financial institution where such account is
located and the name and telephone number of an individual that can be
contacted to confirm receipt of such transfer;
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(l) receipt by the Agent of evidence satisfactory to it in its
sole good faith discretion that all outstanding obligations of the
Company and its Subsidiaries under the existing financing agreements
set forth on Schedule 3.01(l) have been paid in full, all commitments
thereunder have been terminated and all Liens securing such obligations
and all guarantees thereof have been released;
(m) receipt by the Agent of all documents, opinions and other
evidences it may reasonably request relating to the existence of the
Company and its Subsidiaries, the corporate authority for and the
validity of the Financing Documents, the IPO and any other matters
relevant hereto, all in form and substance satisfactory to the Agent in
its sole good faith discretion; and
(n) receipt by NationsCredit of such other documents, opinions
and evidences as NationsCredit shall require in its sole good faith
discretion.
The documents referred to in this Section shall be delivered to the Agent no
later than the Closing Date. The certificates and opinions referred to in this
Section shall be dated the Closing Date.
SECTION 3.02. CONDITIONS TO ACQUISITION LOANS. The obligation
of any Lender to make an Acquisition Loan on the occasion of any borrowing and
to purchase a participation in any Letter of Credit issued in connection with an
Acquisition, and of the LC Issuer to issue a Letter of Credit in connection with
any Acquisition, is subject to the satisfaction of the following additional
conditions:
(a) receipt by each Lender of a Notice of Revolving Credit
Loan in accordance with Section 2.04 or, in the case of the issuance of
a Letter of Credit, receipt by the Agent and the LC Issuer of a Letter
of Credit Request;
(b) receipt by the Agent of all documents, instruments and
agreements to be delivered in connection with the Acquisition and/or
any financing therefor;
(c) completion of, and satisfaction of the Agent and the
Required Lenders with, such legal and/or business due diligence review
of the Acquisition, the terms thereof, and the target thereof as the
Agent and the Required Lenders reasonably shall deem relevant;
(d) evidence satisfactory to the Agent that all property to be
acquired in the Acquisition, including all property of any Person that,
following such Acquisition, is to become a Subsidiary, will be pledged
to the Agent and the Lenders as security for the Obligations and that
the Liens granted pursuant thereto will constitute perfected Liens,
subject only to Permitted Liens, and that any Person that will become a
Subsidiary as a result of such Acquisition has executed a guaranty of
the Obligations in form and
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substance satisfactory to the Agent and the Required Lenders and
otherwise complied with the requirements of Section 6.07;
(e) receipt by the Agent and the Lenders of such historical
financial statements and information and such market information
respecting the target of the Acquisition as the Agent and the Required
Lenders reasonably shall deem relevant;
(f) receipt by the Agent and the Lenders of pro forma
financial statements showing the target and the Company on a
consolidated basis after giving effect to such Acquisition as of the
date of the closing thereof and a certificate of the chief financial
officer or treasurer of the Company demonstrating that the Company,
both before and after giving effect to the Acquisition, will be in
compliance with the financial and other covenants contained herein and
in the other Financing Documents;
(g) receipt by the Agent of evidence satisfactory to the Agent
and the Required Lenders in their sole good faith discretion of the
satisfaction (without waiver) of all material conditions to the closing
of the Acquisition (other than payment of that portion of the purchase
price to be paid in connection with such Acquisition with proceeds of
an Acquisition Loan) on the closing date thereof, and satisfaction of
the Agent and the Required Lenders in their sole good faith discretion
with the material terms and conditions of the operative acquisition
documents;
(h) receipt by the Agent of a copy of each material opinion,
report and other document required to be delivered pursuant to the
operative acquisition documents and requested by the Agent, with a
letter from each Person delivering any such opinion or report
authorizing reliance thereon by the Agent and the Lenders, all in form
and substance satisfactory to the Agent; and
(i) such other information respecting the Acquisition, the
target or the Company as the Agent and the Lenders reasonably shall
deem relevant.
SECTION 3.03. CONDITIONS TO EACH LOAN. The obligation of any
Lender to make a Loan on the occasion of any borrowing thereof (including on the
Closing Date) or to purchase a participation in any Letter of Credit, and of the
LC Issuer to issue any Letter of Credit, is subject to the satisfaction of the
following additional conditions:
(a) receipt by each Lender of a Notice of Revolving Credit
Loan in accordance with Section 2.04 or a Letter of Credit Request in
accordance with Section 2.09(a)(iii), as applicable, and in the case of
a Working Capital Loan or a Letter of Credit, of a Borrowing Base
Certificate as of the close of business on the Business Day immediately
preceding the date of such borrowing;
(b) the fact that, immediately after such borrowing or
issuance, (i) the aggregate outstanding principal amount of the
Revolving Credit Loans and Letter of
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Credit Liabilities will not exceed the aggregate amount of the
Revolving Credit Commitments and (ii) the aggregate outstanding
principal amount of Working Capital Loans and Letter of Credit
Liabilities will not exceed the Working Capital Availability;
(c) the fact that, immediately before and after such
borrowing, no Default shall have occurred and be continuing; and
(d) the fact that the representations and warranties of the
Company contained in the Financing Documents shall be true on and as of
the date of such borrowing except as such representations and
warranties relate to a specified date.
Each borrowing hereunder shall be deemed to be a representation and warranty by
the Company on the date of such borrowing as to the facts specified in clauses
(b), (c) and (d) of this Section, unless a notice to the contrary specifically
captioned "Disclosure Statement" is received by the Agent from the Company prior
to 2:00 p.m. on the Business Day preceding the date of such borrowing. To the
extent that the Agent and the Required Lenders agree to make any Loan after
receipt of a Disclosure Statement in accordance with the preceding sentence, the
representations and warranties of the Company will be deemed made as modified by
the contents of such statement and repeated at the time of the making of such
Loan as so modified. Any such modification shall be effective only for the
occasion on which the Agent and the Required Lenders elect to make such Loan,
and unless expressly agreed by the Agent and the Required Lenders in writing to
the contrary as provided in Section 10.05, shall not be deemed a waiver or
modification of any condition to any future Loan.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants (including, in the case of
any such representation and warranty made or deemed made before the consummation
of any Acquisition, at the time such representation and warranty is made or
deemed made and immediately after giving effect to the consummation of such
Acquisition) that:
SECTION 4.01. CORPORATE EXISTENCE AND POWER. Each of the
Company and Horizon/Neostar is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Georgia, and Strato/Infusaid
is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Massachusetts, and the Company and each of its
Subsidiaries has all corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted and as will be conducted after the Acquisition. The Company and each
of its Subsidiaries is qualified to do business as a foreign corporation in each
jurisdiction where the failure to qualify would be likely to result in a
Material Adverse Effect.
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SECTION 4.02. CORPORATE AND GOVERNMENTAL AUTHORIZATION; NO
CONTRAVENTION. The execution, delivery and performance by each of the Company
and its Subsidiaries of the Financing Documents to which it is a party are
within the Company's or such Subsidiaries' corporate powers, have been duly
authorized by all necessary corporate action, require no action by or in respect
of, or filing with, any governmental body, agency or official (other than the
filing of UCC-1 financing statements, all of which have been made and are in
full force and effect) and do not contravene, or constitute a default under, any
provision of applicable law or regulation or of the certificate of incorporation
or by-laws of the Company or any of its Subsidiaries or of any agreement,
judgment, injunction, order, decree or other instrument binding upon the Company
or any of its Subsidiaries or result in the creation or imposition of any Lien
(other than the Liens created by the Security Documents) on any asset of the
Company or any of its Subsidiaries.
SECTION 4.03. BINDING EFFECT; LIENS OF SECURITY DOCUMENTS. (a)
Each of the Financing Documents to which the Company is a party (other than the
Notes) constitutes a valid and binding agreement of the Company, and each of the
Notes when executed and delivered in accordance with this Agreement, will
constitute valid and binding obligations of the Company, enforceable in
accordance with its respective terms, subject to bankruptcy and insolvency laws
affecting the rights of creditors generally and general principles of equity.
(b) Each of the Financing Documents to which any Subsidiary of
the Company is a party constitutes a valid and binding agreement of such
Subsidiary enforceable in accordance with its terms, subject to bankruptcy and
insolvency laws affecting the rights of creditors generally and general
principles of equity.
(c) The Security Documents create valid security interests in
the Collateral purported to be covered thereby, which security interests are and
will remain perfected security interests, prior to all other Liens other than
Permitted Liens. Each of the representations and warranties made by the Company
or any Subsidiary in the Security Documents is true and correct in all material
respects.
SECTION 4.04. FINANCIAL INFORMATION. (a) The balance sheet of
the Company as of December 31, 1997 and the related statements of operations,
stockholders' equity and cash flows for the Fiscal Year then ended, reported on
by Coopers & ▇▇▇▇▇▇▇ LLP, fairly present, in conformity with GAAP, the financial
position of the Company as of such date and its results of operations, changes
in stockholders' equity and cash flows for such period.
(b) The unaudited balance sheet of the Company as of March 31,
1998, and the related unaudited consolidated statements of operations and cash
flows for the three months then ended, copies of which have been delivered to
each of the Lenders, fairly present, in conformity with GAAP applied on a basis
consistent with the financial statements referred to in Section 4.04(a), the
financial position of the Company as of such date and its consolidated results
of operations and cash flows for the three months then ended (subject to normal
year-end adjustments and to the absence of footnotes).
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(c) The projected pro forma balance sheet of the Company as of
April 30, 1998, a copy of which has been delivered to each of the Lenders,
fairly presents, in conformity with GAAP applied on a basis consistent with the
financial statements referred to in Section 4.04(a), the consolidated financial
position of the Company as of such date, adjusted to give effect (as if such
events had occurred on such date) to (i) the IPO, (ii) the making of the Loans,
(iii) the application of the proceeds therefrom as contemplated by the
Disclosure Documents and the Financing Documents, and (iv) the payment of all
legal, accounting and other fees related thereto to the extent known at the time
of the preparation of such balance sheet. As of the date of such balance sheet
and the date hereof, neither the Company nor any of its Subsidiaries had or has
any material liabilities, contingent or otherwise, including liabilities for
taxes, long-term leases or forward or long-term commitments, which are not fully
reflected on such balance sheet.
(d) The information contained in the most recently delivered
Borrowing Base Certificate is complete and correct and the amounts shown therein
as "Eligible Domestic Receivables", "Eligible Foreign Secured Receivables",
"Eligible Foreign Unsecured Receivables" and "Eligible Inventory" has been
determined as provided in the Financing Documents.
(e) Since December 31, 1997, there has been no material
adverse change in the business, operations, properties, prospects or condition
(financial or otherwise) of the Company or any of its Consolidated Subsidiaries.
SECTION 4.05. LITIGATION. There is no action, suit or
proceeding pending against, or to the knowledge of the Company threatened
against or affecting the Company or any Subsidiary before any court or
arbitrator or any governmental body, agency or official in which there is a
reasonable possibility of an adverse decision which could result in a Material
Adverse Effect or which in any manner draws into question the validity of any of
the Financing Documents. There is no action, suit or proceeding pending against,
or to the knowledge of the Company threatened against or affecting, any party to
any of the Financing Documents (other than the Company) before any court or
arbitrator or any governmental body, agency or official which in any manner
draws into question the validity of any of the Financing Documents.
SECTION 4.06. OWNERSHIP OF PROPERTY, LIENS. On and as of the
Closing Date, each of the Company and its Subsidiaries is the lawful owner of,
has good title to and is in lawful possession of, or has valid leasehold
interests in, all material properties and other material assets (real or
personal, tangible, intangible or mixed) purported to be owned or leased (as the
case may be) by such Person on the balance sheet referred to in Section 4.04(a),
and none of such Person's material properties or material assets is subject to
any Liens, except Permitted Liens. The Company and each Subsidiary conduct their
respective businesses without infringement or claim of infringement of any
material license, patent, trademark, trade name, service ▇▇▇▇, copyright, trade
secret or other intellectual property right of others and there is no
infringement or claim of infringement by others of any material license, patent,
trademark, trade name, service
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▇▇▇▇, copyright, trade secret or other intellectual property right of the
Company or any Subsidiary.
SECTION 4.07. NO DEFAULT. No Default or Event of Default has
occurred and is continuing and neither the Company nor any Subsidiary is in
default under or with respect to any material contract, agreement, lease or
other instrument to which it is a party or by which its property is bound or
affected which default is reasonably likely to result in a Material Adverse
Effect.
SECTION 4.08. NO BURDENSOME RESTRICTIONS. No contract, lease,
agreement or other instrument to which the Company or any Subsidiary is a party
or by which any of its property is bound or affected, no charge, corporate
restriction, judgment, decree or order and no provision of applicable law or
governmental regulation is reasonably likely to have a Material Adverse Effect.
SECTION 4.09. LABOR MATTERS. There are no strikes or other
labor disputes pending or, to the best knowledge the Company, threatened,
against the Company or any Subsidiary, which are reasonably likely to have a
Material Adverse Effect. Hours worked and payments made to the employees of the
Company and its Subsidiaries have not been in violation of the Fair Labor
Standards Act or any other applicable law dealing with such matters. All
payments due from the Company or any Subsidiary, or for which any claim may be
made against any of them, on account of wages and employee and retiree health
and welfare insurance and other benefits have been paid or accrued as a
liability on the books of such Person, as the case may be. The consummation of
the transactions contemplated by the Financing Documents will not give rise to a
right of termination or right of renegotiation on the part of any union under
any collective bargaining agreement to which it is a party or by which it is
bound.
SECTION 4.10. SUBSIDIARIES; OTHER EQUITY INVESTMENTS. Other
than as set forth on Schedule 4.10, the Company has no Subsidiaries. Each such
Subsidiary is, and, in the case of any additional corporate Subsidiaries formed
after the Closing Date, each of such additional corporate Subsidiaries will be
at each time that this representation is made or deemed to be made after the
Closing Date, a wholly-owned Subsidiary that is a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted. Neither the Company nor any Subsidiary is engaged in
any joint venture or partnership with any other Person.
SECTION 4.11. INVESTMENT COMPANY ACT. The Company is not an
"investment company" as defined in the Investment Company Act of 1940, as
amended. The consummation of the transactions contemplated by the Financing
Documents and the Disclosure Documents do not and will not violate any provision
of such Act or any rule, regulation or order issued by the Securities and
Exchange Commission thereunder.
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SECTION 4.12. MARGIN REGULATIONS. None of the proceeds from
the Loans have been or will be used, directly or indirectly, for the purpose of
purchasing or carrying any Margin Stock, for the purpose of reducing or retiring
any indebtedness which was originally incurred to purchase or carry any Margin
Stock or for any other purpose which might cause any of the loans under this
Agreement to be considered a "purpose credit" within the meaning of Regulation
G, U or X of the Board of Governors of the Federal Reserve Board.
SECTION 4.13. TAXES. The Company's federal tax identification
number is ▇▇-▇▇▇▇▇▇▇. All Federal, state and local tax returns, reports and
statements required to be filed by or on behalf of the Company and its
Subsidiaries have been filed with the appropriate governmental agencies in all
jurisdictions in which such returns, reports and statements are required to be
filed, and all taxes (including real property taxes) and other charges shown to
be due and payable have been timely paid prior to the date on which any fine,
penalty, interest, late charge or loss may be added thereto for nonpayment
thereof. All state and local sales and use taxes required to be paid by the
Company or any of its Subsidiaries have been paid. All Federal and state returns
have been filed by the Company and its Subsidiaries for all periods for which
returns were due with respect to employee income tax withholding, social
security and unemployment taxes, and the amounts shown thereon to be due and
payable have been paid in full or adequate provisions therefor have been made.
SECTION 4.14. COMPLIANCE WITH ERISA. Each member of the ERISA
Group has fulfilled its obligations under the minimum funding standards of ERISA
and the Code with respect to each Plan and is in compliance in all material
respects with the presently applicable provisions of ERISA and the Code with
respect to each Plan. No member of the ERISA Group has (i) sought a waiver of
the minimum funding standard under Section 412 of the Code in respect of any
Plan, (ii) failed to make any contribution or payment to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement, or made any
amendment to any Plan or Benefit Arrangement, which has resulted or could result
in the imposition of a Lien or the posting of a bond or other security under
ERISA or the Code or (iii) incurred any liability under Title IV of ERISA other
than a liability to the PBGC for premiums under Section 4007 of ERISA.
SECTION 4.15. BROKERS. Except as described on Schedule 4.15,
no broker, finder or other intermediary has brought about the obtaining, making
or closing of the transactions contemplated by the Financing Documents, and
neither the Company nor any Subsidiary has or will have any obligation to any
Person in respect of any finder's or brokerage fees in connection herewith or
therewith.
SECTION 4.16. EMPLOYMENT, STOCKHOLDERS AND SUBSCRIPTION
AGREEMENTS. Except for the agreements described in Schedule 4.16, true and
complete copies of which have been delivered to the Lenders, there are no (i)
employment agreements covering the Management Stockholders, (ii) collective
bargaining agreements or other labor agreements covering any employees of the
Company or any of its Subsidiaries, (iii) agreements for managerial, consulting
or similar services to which the Company or any of its Subsidiaries is a party
or by which it is
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bound or (iv) agreements regarding the Company or any Subsidiary, its assets or
operations or any investment therein to which any of its stockholders is a party
or by which it is bound.
SECTION 4.17. FULL DISCLOSURE. None of the written information
(financial or otherwise) furnished by or on behalf of the Company to the Agent
or any Lender in connection with the consummation of the transactions
contemplated by any of the Financing Documents or the Disclosure Documents
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained herein or therein not misleading
in the light of the circumstances under which such statements were made. All
financial projections delivered to the Lenders have been prepared on the basis
of the assumptions stated therein. Such projections represent the Company's best
estimate of the Company's future financial performance and such assumptions are
believed by the Company to be fair in light of current business conditions.
SECTION 4.18. REPRESENTATIONS AND WARRANTIES INCORPORATED FROM
OTHER OPERATIVE DOCUMENTS. As of the Closing Date, each of the representations
and warranties made in the Financing Documents by each of the parties thereto is
true and correct in all material respects, and such representations and
warranties are hereby incorporated herein by reference with the same effect as
though set forth in their entirety herein, as qualified therein.
SECTION 4.19. PRIVATE OFFERING. Neither the Company nor any
Person acting on its behalf has offered the Notes or any similar securities for
sale to, or solicited any offer to buy any of the same from, or otherwise
approached or negotiated in respect thereof with, any Person other than the
Lenders and no more than five other institutional investors. Neither the Company
nor any Person acting on its behalf has taken, or will take, any action that
would subject the issuance or sale of the Notes to Section 5 of the Securities
Act.
SECTION 4.20. COMPLIANCE WITH ENVIRONMENTAL REQUIREMENTS; NO
HAZARDOUS MATERIALS. Except as provided on Schedule 4.20 or other
non-compliances which are not reasonably expected to have a Material Adverse
Effect:
(a) Other than generation in compliance with all applicable
Environmental Laws, no Hazardous Materials are located on any properties now
owned, leased or operated by the Company or any Subsidiary or have been released
into the environment, or deposited, discharged, placed or disposed of at, on,
under or near any of such properties. No portion of any such property is being
used for the disposal, storage, treatment, processing or other handling of
Hazardous Materials (other than processing or handling incidental to the
generation of Hazardous Materials in compliance with all applicable
Environmental Laws), nor is any such property affected by any Hazardous
Materials Contamination.
(b) Other than generation in compliance with all applicable
Environmental Laws, during any period of ownership, operation, possession or
control thereof by the Company or any Subsidiary, no Hazardous Materials were
located on any properties previously owned, leased or operated by the Company or
any Subsidiary or were released into the environment, or deposited,
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discharged, placed or disposed of at, on, under or near any of such properties.
No portion of any such property was used during any period of ownership,
operation, possession or control thereof by the Company or any Subsidiary, for
the disposal, storage, treatment, processing or other handling of Hazardous
Materials (other than processing or handling incidental to the generation of
Hazardous Materials in compliance with all applicable Environmental Laws), nor
is any such property, to the knowledge of the Company, affected by any Hazardous
Materials Contamination.
(c) No asbestos or asbestos-containing materials are present on any of
the properties now owned, leased or operated by the Company or any Subsidiary.
(d) No asbestos or asbestos-containing materials were present, during
any period of ownership, operation, possession or control thereof by the Company
or any Subsidiary, on any of the properties previously owned, leased or operated
by the Company or any Subsidiary.
(e) No polychlorinated biphenyls are located on or in any properties
now owned, leased or operated by the Company or any Subsidiary, in the form of
electrical transformers, fluorescent light fixtures with ballasts, cooling oils
or any other device or form.
(f) No polychlorinated biphenyls were, during any period of ownership,
operation, possession or control thereof by the Company or any Subsidiary,
located on or in any properties previously owned, leased or operated by the
Company or any Subsidiary, in the form of electrical transformers, fluorescent
light fixtures with ballasts, cooling oils or any other device or form.
(g) No underground storage tanks are located on any properties now
owned, leased or operated by the Company or any Subsidiary, or were located on
any such property and subsequently removed or filled.
(h) No underground storage tanks were, during any period of ownership,
operation, possession or control thereof by the Company or any Subsidiary,
located on any properties previously owned, leased or operated by the Company or
any Subsidiary, or were, during any period of ownership, operation, possession
or control thereof by the Company or any Subsidiary, located on any such
property and subsequently removed or filled.
(i) No notice, notification, demand, request for information,
complaint, citation, summons, investigation, administrative order, consent order
and agreement, litigation or settlement with respect to Hazardous Materials or
Hazardous Materials Contamination is in existence or, to Company's knowledge,
proposed, threatened or anticipated with respect to or in connection with the
operation of any properties now owned, leased or operated by the Company or any
Subsidiary. All such properties and their existing and prior uses comply and at
all times have complied with any applicable governmental requirements relating
to environmental matters or Hazardous Materials. There is no condition on any of
such properties which is in violation of any applicable governmental
requirements relating to Hazardous Materials, and neither the Company nor any
Subsidiary has received any communication from or on behalf of any
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governmental authority that any such condition exists. None of such properties
nor any property to which the Company or any Subsidiary has, directly or
indirectly, transported or arranged for the transportation of any material is
listed or, to the Company's knowledge, proposed for listing on the National
Priorities List promulgated pursuant to CERCLA, on CERCLIS (as defined in
CERCLA) or on any similar federal, state or foreign list of sites requiring
investigation or cleanup, nor, to the knowledge of the Company, is any such
property anticipated or threatened to be placed on any such list.
(j) No notice, notification, demand, request for information,
complaint, citation, summons, investigation, administrative order, consent order
and agreement, litigation or settlement with respect to Hazardous Materials or
Hazardous Materials Contamination is in existence or, to Company's knowledge,
proposed, threatened or anticipated with respect to or in connection with the
operation of any properties previously owned, leased or operated by the Company
or any Subsidiary and relating to any period of ownership, operation, possession
or control thereof by the Company or any Subsidiary. All such properties and
their prior uses by the Company or any Subsidiary at all times complied with any
applicable governmental requirements relating to environmental matters or
Hazardous Materials. There is no condition on any of such properties which is in
violation of any applicable governmental requirements relating to Hazardous
Materials and arising from any use of such properties during any period of
ownership, operation, possession or control thereof by the Company or any
Subsidiary, and neither the Company nor any Subsidiary has received any
communication from or on behalf of any governmental authority that any such
condition exists. None of such properties nor any property to which the Company
or any Subsidiary has, directly or indirectly, transported or arranged for the
transportation of any material is listed or, to the Company's knowledge,
proposed for listing on the National Priorities List promulgated pursuant to
CERCLA, on CERCLIS (as defined in CERCLA) or on any similar federal, state or
foreign list of sites requiring investigation or cleanup, nor, to the knowledge
of the Company, is any such property anticipated or threatened to be placed on
any such list.
(k) There has been no environmental investigation, study, audit, test,
review or other analysis conducted of which the Company has knowledge in
relation to the current or prior business of the Company or any Subsidiary or
any property or facility now or previously owned, leased or operated by the
Company or any Subsidiary which has not been delivered to the Lenders at least
five days prior to the Closing Date.
(1) For purposes of this Section 4.20, the terms "Company" and
"Subsidiary" shall include any business or business entity (including a
corporation) which is, in whole or in part, a predecessor of the Company or any
Subsidiary.
SECTION 4.21. CAPITALIZATION. Set forth on Schedule 4.21 is a
schedule of the capitalization of the Company as of the Closing Date, specifying
each class of interest held and the amount thereof.
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SECTION 4.22. REAL PROPERTY INTERESTS. Except for the
ownership, leasehold or other interests set forth in Schedule 4.22, the Company
and its Subsidiaries have, as of the Closing Date, no ownership, leasehold or
other interest in real property.
ARTICLE V
AFFIRMATIVE COVENANTS
The Company agrees that, so long as any Lender has any
Commitment hereunder or any amount payable under any Note remains unpaid:
SECTION 5.01. FINANCIAL STATEMENTS AND OTHER REPORTS. The
Company will maintain a system of accounting established and administered in
accordance with sound business practices to permit preparation of financial
statements in accordance with GAAP, and will deliver to each of the Lenders:
(a) as soon as practicable and in any event within 30 days
after the end of each month, a consolidated balance sheet of the Company and its
Consolidated Subsidiaries as at the end of such month and the related
consolidated statements of operations and cash flows for such month, and for the
portion of the Fiscal Year ended at the end of such month setting forth in each
case in comparative form the figures for the corresponding periods of the
previous Fiscal Year and the figures for such month and for such portion of the
Fiscal Year ended at the end of such month set forth in the annual operating and
capital expenditure budgets and cash flow forecast delivered pursuant to Section
5.01(l), all in reasonable detail and certified by the chief financial officer
of the Company, as fairly presenting the financial condition and results of
operations of the Company and its Consolidated Subsidiaries and as having been
prepared in accordance with GAAP applied on a basis consistent with the audited
financial statements of the Company, subject to changes resulting from audit and
normal year-end adjustments and subject to the absence of footnotes;
(b) as soon as practicable and in any event within 45 days
after the end of each of the first 3 fiscal quarters of each Fiscal Year, a
consolidated balance sheet of the Company and its Consolidated Subsidiaries as
at the end of such quarter and the related consolidated statements of operations
and cash flows for such fiscal quarter, and for the portion of the Fiscal Year
ended at the end of such quarter setting forth in each case in comparative form
the figures for the corresponding periods of the previous Fiscal Year and the
figures for such quarter and for such portion of the Fiscal Year ended at the
end of such quarter set forth in the annual operating and capital expenditure
budgets and cash flow forecast delivered pursuant to Section 5.01(l), all in
reasonable detail and certified by the chief financial officer of the Company as
fairly presenting the financial condition and results of operations of the
Company and its Consolidated Subsidiaries and as having been prepared in
accordance with GAAP applied on a basis consistent with the audited financial
statements of the Company delivered pursuant to Section 4.04(a), subject to
changes resulting from audit and normal year-end adjustments and subject to the
absence of footnotes;
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(c) as soon as available and in any event within 120 days
after the end of each subsequent Fiscal Year, a consolidated balance sheet of
the Company and its Consolidated Subsidiaries as of the end of such Fiscal Year
and the related consolidated statements of operations, stockholders' equity and
cash flows for such Fiscal Year, setting forth in each case in comparative form
the figures for the previous Fiscal Year and the figures for such Fiscal Year
set forth in the annual operating and capital expenditure budgets and cash flow
forecasts delivered pursuant to Section 5.01(l), in each case certified (solely
with respect to such consolidated statements) without qualification by Coopers &
▇▇▇▇▇▇▇ LLP or other independent public accountants of nationally recognized
standing;
(d) (i) together with each delivery of financial statements
pursuant to (a), (b) and (c) above, an Officer's Certificate for the Company
stating that the officers executing such certificate have reviewed the terms of
this Agreement and have made, or caused to be made under their supervision, a
review in reasonable detail of the transactions and condition of the Company and
its Consolidated Subsidiaries during the accounting period covered by such
financial statements and that such review has not disclosed the existence during
or at the end of such accounting period, and that such officers do not have
knowledge of the existence as at the date of such Officers' Certificate, of any
Default, or, if any such Default existed or exists, specifying the nature and
period of existence thereof and what action the Company has taken or is taking
or proposes to take with respect thereto; (ii) together with each delivery of
financial statements pursuant to (b) or (c) above, a compliance certificate of
the chief financial officer or treasurer of the Company (x) providing details of
all transactions between the Company and any Person referred to in Section 6.08,
(y) demonstrating in reasonable detail compliance during and at the end of such
accounting period with the restrictions contained in Sections 6.11 through 6.19,
and (z) if not specified in the financial statements delivered pursuant to (b)
or (c) above, as the case may be, specifying the aggregate amount of interest
paid or accrued and the aggregate amount of depreciation and amortization
charged, during such accounting period; and (iii) together with each delivery of
financial statements pursuant to (c) above, a statement setting forth in
reasonable detail the computation of Excess Cash Flow, if any, for such Fiscal
Year, certified by the chief financial officer of the Company as having been
prepared from such financial statements in accordance with this Agreement;
(e) together with each delivery of financial statements
pursuant to (c) above, a written statement by the independent public accountants
giving the report thereon (i) stating that their audit examination has included
a review of the terms of this Agreement as it relates to accounting matters,
(ii) stating whether, in connection with their audit examination, any Default
has come to their attention, and if such a condition or event has come to their
attention, specifying the nature and period of existence thereof, and (iii)
stating that based on their audit examination nothing has come to their
attention which causes them to believe that the information contained in the
certificates delivered therewith pursuant to (d) above is not correct and that
the matters set forth in the compliance certificate delivered therewith pursuant
to clause
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(ii) of (d) above for the applicable Fiscal Year are not stated in accordance
with the terms of this Agreement;
(f) promptly upon receipt thereof, copies of all reports
submitted to the Company by independent public accountants in connection with
each annual, interim or special audit of the financial statements of the Company
or any of its Subsidiaries made by such accountants, including the comment
letter submitted by such accountants to management in connection with their
annual audit;
(g) promptly upon their becoming available, copies of (i) all
financial statements, reports, notices and proxy statements sent or made
available generally by the Company to its security holders, (ii) all regular and
periodic reports and all registration statements and prospectuses filed by the
Company with any securities exchange or with the Securities and Exchange
Commission or any governmental authority succeeding to any of its functions and
(iii) all press releases and other statements made available generally by the
Company to the public concerning material developments in the business of the
Company or any Subsidiary;
(h) promptly upon any officer of the Company obtaining
knowledge (i) of the existence of any default with respect to any Debt of the
Company or any Subsidiary, that singly or that when aggregated with other Debt
in default has an aggregate outstanding principal amount greater than or equal
to $250,000, or that the holder of any such Debt has given any notice or taken
any other action with respect to a claimed default thereunder, (ii) of any
change in the Company's certified accountant or any resignation, or decision not
to stand for re-election, by any member of the Company's board of directors,
(iii) that any Person has given any notice to the Company or taken any other
action with respect to a claimed default under any material agreement or
instrument (other than the Financing Documents) to which the Company or any
Subsidiary is a party or by which any of their material assets are bound or (iv)
of the institution of any litigation or arbitration involving an alleged
liability of the Company or any Subsidiary equal to or greater than $250,000, or
any adverse determination in any litigation or arbitration involving a potential
liability of the Company or any Subsidiary equal to or greater than $250,000, an
Officers' Certificate of the Company specifying the nature and period of
existence of any such condition or event, or specifying the notice given or
action taken by such holder or Person and the nature of such claimed default
(including any Default), event or condition, and what action the Company has
taken, is taking or proposes to take with respect thereto;
(i) if and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as defined in
Section 4043 of ERISA) with respect to any Plan which might constitute grounds
for a termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any such
reportable event, a copy of the notice of such reportable event given or
required to be given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that any Multiemployer
Plan is in reorganization, is insolvent or has been terminated, a copy of such
notice; (iii) receives notice from the PBGC under Title IV
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of ERISA of an intent to terminate, impose liability (other than for premiums
under Section 4007 of ERISA) in respect of, or appoint a trustee to administer
any Plan, a copy of such notice; (iv) applies for a waiver of the minimum
funding standard under Section 412 of the Code, a copy of such application; (v)
gives notice of intent to terminate any Plan under Section 4041(c) of ERISA, a
copy of such notice and other information filed with the PBGC; (vi) gives notice
of withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such
notice; or (vii) fails to make any payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement which has resulted or could result
in the imposition of a Lien or the posting of a bond or other security, a
certificate of the chief financial officer or the chief accounting officer of
the Company setting forth details as to such occurrence and action, if any,
which the Company or applicable member of the ERISA Group is required or
proposes to take;
(j) copies of any material reports or notices related to taxes
and any other material reports or notices received by the Company from, or filed
by the Company with, any Federal, state or local governmental agency or body
regulating the activities of the Company;
(k) within 30 days prior to the conclusion of each Fiscal
Year, the Company's annual operating and capital expenditure budgets and cash
flow forecast for the following Fiscal Year presented on a monthly basis, which
shall be in a format reasonably consistent with projections, budgets and
forecasts theretofore provided to the Lenders;
(l) together with each Notice of Revolving Credit Loan
requesting a Working Capital Loan and each Letter of Credit Request, and on the
first Business Day of each month, a Borrowing Base Certificate as of the close
of business of the immediately preceding Business Day;
(m) within two Business Days after any request therefor, such
information in such detail concerning the amount, composition and manner of
calculation of the Borrowing Base as the Agent may reasonably request;
(n) within ten days after the end of each month, so long as
there shall be Working Capital Loans outstanding in an aggregate principal
amount greater than or equal to $1,000,000, a report, in form and substance
acceptable to the Agent, as to all accounts receivable of the Company and its
Subsidiaries outstanding as of the last day of such month (a "RECEIVABLES
REPORT"), which shall set forth in summary form an aging of such receivables and
which shall, if the Agent so requests, include a detailed aged trial balance of
all such receivables specifying the names, face amount and dates of all invoices
for each account debtor obligated on a receivable so listed; upon the reasonable
request of the Agent and to the extent available, each Receivables Report shall
be accompanied by copies of customer statements, and all documents, including
repayment histories and present status reports, relating to the receivables so
scheduled and such other matters and information relating to the status of any
receivables as the Agent shall reasonably request;
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(o) together with the next delivery of a Receivables Report
after the Company becomes aware thereof, notice of any dispute between any
account debtor and the Company or the applicable Subsidiary with respect to any
amounts due and owing in excess of $100,000 in the aggregate, with an
explanation in reasonable detail of the reason for the dispute, all claims
related thereto and the amount in controversy;
(q) together with each delivery of financial statements
pursuant to (a), (b) and (c) above, a management discussion of the comparison
between budget and actual performance and of performance versus performance for
the prior year in form and in substance satisfactory to the Agent in its sole
good faith discretion; and
(r) with reasonable promptness, such other information and
data with respect to the Company or any Subsidiary, as from time to time may be
reasonably requested by the Agent.
SECTION 5.02. PAYMENT OF OBLIGATIONS. The Company (i) shall
pay and discharge, and cause each Subsidiary to pay and discharge, at or before
maturity, all of their respective material obligations and liabilities,
including tax liabilities, except where the same may be the subject of a
Permitted Contest, (ii) shall maintain, and cause each of its Subsidiaries to
maintain, in accordance with GAAP, appropriate reserves for the accrual of any
of the same and (iii) shall not breach or permit any Subsidiary to breach, in
any material respect, or permit to exist any material default under, the terms
of any lease, commitment, contract, instrument or obligation to which it is a
party, or by which its properties or assets are bound where such breach or
default would be reasonably likely to have a Material Adverse Effect.
SECTION 5.03. CONDUCT OF BUSINESS AND MAINTENANCE OF
EXISTENCE. The Company will continue, and will cause each Subsidiary to
continue, to engage in business of the same general type as now conducted by it
and each Subsidiary, and will preserve, renew and keep in full force and effect,
and will cause each Subsidiary to preserve, renew and keep in full force and
effect their respective corporate existences and their respective rights,
privileges and franchises necessary or desirable in the normal conduct of
business.
SECTION 5.04. MAINTENANCE OF PROPERTY; INSURANCE. (a) The
Company will keep, and will cause each Subsidiary to keep, all property useful
and necessary in its business in good working order and condition, ordinary wear
and tear excepted.
(b) The Company will maintain, and will cause each Subsidiary
to maintain, (i) physical damage insurance on all real and personal property on
an all risks basis (including the perils of flood and quake), covering the
repair and replacement cost of all such property and consequential loss coverage
for business interruption and extra expense, covering such risks, for amounts
not less than those, and with deductible amounts not greater than those, set
forth in Part I of Schedule 5.04, (ii) public liability insurance (including
products/completed operations liability coverage) covering such risks, for
amounts not less than those, and with deductible amounts not greater than those,
set forth in Part II of Schedule 5.04 and (iii) such other insurance
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coverage in such amounts and with respect to such risks as the Required Lenders
may reasonably request. All such insurance shall be provided by insurers having
an A.M. Best policyholders rating of not less than B+ or such other insurers as
the Required Lenders may approve in writing.
(c) On or prior to the Closing Date, the Company shall cause
the Agent to be named as an additional insured or loss payee, as applicable, on
each insurance policy required to be maintained by it pursuant to this Section
5.04. The Company will deliver to the Lenders (i) on the Closing Date, a
certificate from the Company's insurance broker dated such date showing the
amount of coverage as of such date, and certifying that, in the opinion of such
broker, such amounts are reasonable and customary for companies of established
repute engaged in the same or a similar business, that such policies will
include effective waivers (whether under the terms of any such policy or
otherwise) by the insurer of all claims for insurance premiums against all loss
payees and additional insureds and all rights of subrogation against all loss
payees and additional insureds, and that if all or any part of such policy is
canceled, terminated or expires, the insurer will forthwith give notice thereof
to each additional insured and loss payee and that no cancellation, reduction in
amount or material change in coverage thereof shall be effective until at least
30 days after receipt by each additional insured and loss payee of written
notice thereof, (ii) upon the request of the Agent from time to time full
information as to the insurance carried, (iii) within five days of receipt of
notice from any insurer, a copy of any notice of cancellation, nonrenewal or
material change in coverage from that existing on the date of this Agreement and
(iv) forthwith, notice of any cancellation or nonrenewal of coverage by the
Company.
(d) The Company hereby appoints the Agent as its
attorney-in-fact to make proof of loss, claim for insurance and adjustments with
insurers, and to execute or endorse all documents, checks or drafts in
connection with payments under Property Insurance Policies.
SECTION 5.05. COMPLIANCE WITH LAWS. The Company will comply,
and cause each Subsidiary to comply, in all material respects with all
applicable laws, ordinances, rules, regulations, and requirements of
governmental authorities (including Environmental Laws and ERISA and the rules
and regulations thereunder).
SECTION 5.06. INSPECTION OF PROPERTY, BOOKS AND RECORDS. The
Company will keep and will cause each Subsidiary to keep, proper books of record
and account in which full, true and correct entries shall be made of all
dealings and transactions in relation to its business and activities; and will
permit, and will cause each of its Subsidiaries to permit, representatives of
any Lender at such Lender's expense to visit and inspect any of their respective
properties, to examine and make abstracts or copies from any of their respective
books and records, to conduct a collateral audit and analysis of their
respective inventories and accounts receivable and to discuss their respective
affairs, finances and accounts with their respective officers, employees and
independent public accountants, all at such reasonable times and as often as may
reasonably be desired.
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SECTION 5.07. USE OF PROCEEDS. The proceeds of Working Capital
Loans shall be used by the Company solely for working capital needs of the
Company and its Subsidiaries. The proceeds of Acquisition Loans shall be used by
the Company solely to fund Acquisitions consented to by the Agent and the
Required Lenders in their sole good faith discretion. The proceeds of the Letter
of Credit shall be used solely for purposes for which Acquisition Loans may be
obtained hereunder. None of the proceeds of any Loan or Letter of Credit will be
used in violation of any applicable law or regulation.
SECTION 5.08. FURTHER ASSURANCES. The Company will, and will
cause each Subsidiary to, at its own cost and expense, cause to be promptly and
duly taken, executed, acknowledged and delivered all such further acts,
documents and assurances (x) as may from time to time be necessary or as the
Required Lenders may from time to time reasonably request in order to carry out
the intent and purposes of the Financing Documents and the transactions
contemplated thereby, including all such actions to establish, preserve, protect
and perfect the estate, right, title and interest of the Lenders to the
Collateral (including Collateral acquired after the date hereof), including
first priority Liens thereon, subject only to Permitted Liens and (y) as the
Required Lenders may from time to time reasonably request, to establish,
preserve, protect and perfect first priority Liens in favor of the Lenders on
any and all assets of the Company and the Subsidiaries, now owned or hereafter
acquired, that are not Collateral on the date hereof. The Company shall promptly
give notice to the Agent of the acquisition after the Closing Date by the
Company of any real property (including leaseholds in respect of real property),
trademark, copyright or patent.
SECTION 5.09. BOARD MEETINGS. The Company will notify the
Agent of all meetings and actions by written consent of the board of directors
of the Company and each committee thereof at the same time and in the same
manner as notice of any meeting of such board or committee (if any) is required
to be given to its directors who do not waive such notice (or, if such action
requires no notice, then 10 days written notice thereof describing the matters
upon which action is to be taken). The Lenders shall have the right to send two
representatives selected by them to each such meeting, who shall be permitted to
attend such meeting and any adjournments thereof (other than any portion of such
meeting devoted to discussion of the Lenders solely in their respective
capacities as holders of the Notes).
SECTION 5.10. LENDERS' MEETINGS. Within 10 days following any
request therefore by the Agent, the Company will conduct a meeting of the
Lenders to discuss the results of any prior fiscal period and the financial
condition of the Company at which shall be present the chief executive officer
and the chief financial officer of the Company and such other officers of the
Company as the Company's chief executive officer shall designate. Such meetings
shall be held at a time and place convenient to the Lenders and the Company.
SECTION 5.11. ADDITIONAL SUBSIDIARIES. Promptly after the
creation or acquisition of any Subsidiary by the Company or any of its
Subsidiaries, the Company shall execute and deliver or cause to be executed and
delivered, (i) a Subsidiary Guaranty Agreement and a Subsidiary Security
Agreement from such Subsidiary, (ii) a pledge of all of the capital
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stock of such Subsidiary pursuant to a Pledge Agreement from the parent of such
Subsidiary, and (iii) such other related stock powers, financing statements,
opinions of counsel and other documents as the Agent may request, all in form
and substance reasonably satisfactory to the Agent.
SECTION 5.12. HAZARDOUS MATERIALS; REMEDIATION. The Company
will (i) promptly give notice to the Lenders in writing of any complaint, order,
citation, notice or other written communication from any Person with respect to,
or if the Company becomes aware of, (x) the existence or alleged existence of a
material violation of any applicable Environmental Law or the incurrence of any
material liability, obligation, loss, damage, cost, expense, fine, penalty or
sanction or the requirement to commence any material remedial action resulting
from or in connection with any air emission, water discharge, noise emission,
Hazardous Material or any other environmental, health or safety matter at, upon,
under or within any of the properties now or previously owned, leased or
operated by it or any Subsidiary or due to operations or activities of it or the
operations or activities of any Subsidiary of the Company, or any other Person
on or in connection with any such property or any part thereof or (y) any
release on any of such properties of Hazardous Materials in a quantity that is
reportable under any applicable Environmental Law; (ii) promptly comply and
cause each Restricted Subsidiary to comply with any governmental requirements
requiring the removal, treatment or disposal of such Hazardous Materials or
Hazardous Materials Contamination and provide evidence satisfactory to the
Required Lenders of such compliance; and (iii) provide the Lenders, within 30
days after demand therefor by the Required Lenders, with a bond, letter of
credit or similar financial assurance evidencing to the satisfaction of the
Required Lenders that sufficient funds are available to pay the cost of
removing, treating and disposing of such Hazardous Materials or Hazardous
Materials Contamination and discharging any assessment which may be established
on any such property as a result thereof.
SECTION 5.13. LANDLORD AND WAREHOUSEMAN WAIVERS. The Company
shall use its reasonable best efforts to deliver to the Agent waivers of
contractual and statutory landlord's, landlord's mortgagee's and warehouseman's
Liens in form and substance satisfactory to the Agent under each existing lease,
warehouse agreement or similar agreement to which the company or any Subsidiary
is a party; provided that the Company will use its reasonable best efforts to
assure that such waivers will be incorporated when the existing lease, warehouse
agreement or similar agreement is amended, renewed or extended and the Company
will use its reasonable best efforts to obtain waivers of both contractual and
statutory landlord's, landlord's mortgagee's and warehouseman's Liens in form
and substance satisfactory to the Agent in connection with each new lease,
warehouse agreement or similar agreement entered into by the Company or any
Subsidiary. Without limiting the obligations of the Company under this Section
5.13, it is understood and agreed that any Inventory that is subject to a
landlord's, landlord's mortgagee's or warehouseman's Lien or any other Lien not
created by the Security Documents shall not be included in Eligible Inventory.
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SECTION 5.14. COLLATERAL REPORTS. The Company shall keep
accurate and complete records of its accounts receivable in at least so much
detail as to enable the Company to provide the Receivables Reports and other
information described in Section 5.01.
SECTION 5.15. COLLECTIONS; RIGHT TO NOTIFY ACCOUNT DEBTORS. At
any time following the occurrence of an Event of Default and during the
continuance thereof, in addition to the Lenders' rights under the Security
Documents, the Company hereby authorizes the Agent, at any time, to (i) notify
any or all account debtors that the accounts receivable of the Company and its
Subsidiaries have been assigned to the Agent and that the Agent has a security
interest therein and (ii) direct such account debtors to make all payments due
from them to the Company or any Subsidiary upon such accounts receivable
directly to the Agent or to a lockbox designated by the Agent. The Agent shall
promptly furnish the Company with a copy of any such notice sent. Any such
notice, in the Agent's sole discretion, may be sent on the Company's stationery,
in which event the Company shall, if requested by the Agent, co-sign such notice
with the Agent.
SECTION 5.16. ENFORCEMENT OF COVENANTS NOT TO COMPETE. The
Company and each Subsidiary shall preserve, protect and defend, to the extent
permitted by applicable law and to the extent commercially reasonable, all of
its rights, if any, with respect to any covenant not to compete contained in any
of the material contracts of such Person or contained in any employment
agreement with any employee whose annual salary and other compensation payable
by the Company or any Subsidiary is $100,000 or more.
SECTION 5.17. HEDGING FACILITIES. The Company will maintain in
full force and effect its existing interest rate cap agreement with NationsBank,
N.A. and, upon the expiration thereof, the Company will, at its sole cost and
expense, enter into and thereafter maintain in full force and effect interest
rate cap agreements in such amounts and on such terms as shall reasonably be
requested by the Required Lenders.
SECTION 5.18. MORTGAGES ON REAL PROPERTY; TITLE INSURANCE AND
SURVEY. Within sixty (60) days after the acquisition of any real property by the
Company or any of its Subsidiaries, the Company will furnish the Agent with a
Mortgage covering each parcel of real property acquired by the Company or any
Subsidiary (the "REAL PROPERTY"), together with an ALTA extended coverage
lender's policy of title insurance in a policy amount equal to 100% of the
greater of (i) purchase price of such acquired property (including any
liabilities assumed in connection with the acquisition) or (ii) the fair market
value of such property, insuring such Mortgage as a valid, enforceable first
Lien on the Company's interest in the Real Property covered thereby, subject
only to Permitted Liens and to such other exceptions as are satisfactory to the
Agent, together with an ALTA survey with respect to each parcel of the Real
Property acquired, in form and substance reasonably satisfactory to the Agent,
and legible copies of all documents affecting title, which shall show all
recording information. The policy, including each of the exceptions to coverage
contained therein, shall be subject to the approval of the Agent, and shall be
issued by a title company acceptable to the Agent. Attached to the policy shall
be any and all endorsements reasonably required by the Agent,
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including (a) a comprehensive endorsement (ALTA 100 or equivalent) covering
restrictions and other matters, (b) a broad form zoning endorsement, which
specifically ensures that applicable parking requirements, if any, have been
satisfied, (c) an endorsement ensuring that the lien of each Mortgage is valid
against any applicable usury laws or other laws prohibiting the charging of
interest on interest in the state(s) where such Real Property is located, (d) an
endorsement ensuring that the Real Property has access to a dedicated public
street, (e) a revolving credit endorsement, (f) a contiguity endorsement, (g) a
survey and "same as" endorsement and (h) an endorsement deleting the so-called
"doing business" exclusion.
ARTICLE VI
NEGATIVE COVENANTS
The Company agrees that, so long as any Lender has any
Commitment hereunder or any amount payable under any Note remains unpaid:
SECTION 6.01. DEBT. The Company will not, and will not permit
any of its Subsidiaries to, directly or indirectly, create, incur, assume,
guarantee or otherwise become or remain directly or indirectly liable with
respect to, any Debt, except for:
(a) Debt of the Company outstanding on the date of this
Agreement as set forth in Schedule 6.01;
(b) Debt of the Company under the Financing Documents;
(c) Debt of the Company or any Subsidiary incurred or assumed
for the purpose of financing all or any part of the cost of acquiring any fixed
asset (including through Capital Leases), in an aggregate principal amount at
any time outstanding not greater than $1,000,000;
(d) Debt of the Company or any Subsidiary to a wholly-owned
Subsidiary of the Company, or of any Subsidiary of the Company to the Company;
(e) Debt in respect of the Hedging Facilities required
pursuant to Section 5.17;
(f) other Debt of the Company or any Subsidiary in an
aggregate principal amount at any time outstanding not greater than $250,000;
and
(g) extensions, refinancings, replacements and renewals of any
of the foregoing Debt described in clauses (a) or (c) of this Section 6.01,
provided that the principal amount thereof is not increased and such extension,
refinancing, replacement or renewal does not
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impose more burdensome terms upon the Company or any Subsidiary, as the case may
be, than the Debt being extended, refinanced, replaced or renewed.
SECTION 6.02. NEGATIVE PLEDGE.
(a) Neither the Company nor any Subsidiary will create, assume
or suffer to exist any Lien on any asset now owned or hereafter acquired by it,
except:
(i) any Lien on any asset securing Debt permitted under
Section 6.01(c) incurred or assumed for the purpose of financing all or
any part of the cost of acquiring such asset, provided that such Lien
attaches to such asset concurrently with or within 90 days after the
acquisition thereof;
(ii) Liens listed on Schedule 6.02 and existing on the date of
this Agreement securing Debt outstanding on such date permitted by
Section 6.01(a) and specified on Schedule 6.02;
(iii) Liens on property existing at the time such property was
acquired pursuant to an Acquisition and consented to by the Agent and
the Required Lenders;
(iv) Liens arising in the ordinary course of its business
which (A) do not secure Debt, (B) do not secure any single obligation
in an amount exceeding $50,000 or which in the aggregate do not secure
obligations in excess $200,000 and (C) do not in the aggregate
materially detract from the value of its assets or materially impair
the use thereof in the operation of its business; and
(v) Liens created by the Security Documents.
(b) Other Negative Pledges. Neither the Company nor any
Subsidiary will enter into any agreement or contract which restricts the Company
or such Subsidiary from granting a Lien on any of such Person's assets.
SECTION 6.03. CAPITAL STOCK. No Subsidiary shall issue any
shares of capital stock except shares of capital stock issued by any Subsidiary
to the Company or a wholly-owned Subsidiary.
SECTION 6.04. RESTRICTED PAYMENTS. The Company will not,
directly or indirectly, declare, order, pay, make or set apart any sum for any
Restricted Payment.
SECTION 6.05. ERISA. The Company will not, nor will it permit
any Subsidiary to:
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(a) engage in any transaction in connection with which the Company or
any Subsidiary could be subject to any material liability arising from either a
civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by
Section 4975 of the Code;
(b) terminate any Plan in a manner, or take any other action, which
could result in any material liability of any member of the ERISA Group to the
PBGC;
(c) fail to make full payment when due of all amounts which, under the
provisions of any Plan, it is required to pay as contributions thereto, or
permit to exist any accumulated funding deficiency, whether or not waived, with
respect to any Plan;
(d) permit the present value of all benefit liabilities under all Plans
to exceed the fair market value of the assets of such Plans; or
(e) fail to make any payments to any Multiemployer Plan that it may be
required to make under any agreement relating to such Multiemployer Plan or any
law pertaining thereto.
SECTION 6.06. CONSOLIDATIONS, MERGERS AND SALES OF ASSETS. The
Company will not and will not permit any Subsidiary to consolidate or merge with
or into any other Person, or sell, lease or otherwise transfer, directly or
indirectly, any of its assets, other than (w) sales of inventory in the ordinary
course of business, (x) dispositions of Temporary Cash Investments, (y) mergers
or consolidations of any Subsidiary with the Company (provided that the Company
shall be the surviving corporation therefrom) or any other Subsidiary, and (z)
dispositions for cash or fair value of assets that the board of directors of the
Company determines in good faith are no longer used or useful in the business of
the Company or such Subsidiary, provided that immediately after any such
disposition, the aggregate fair market value of all such assets disposed of
pursuant to this clause (z) after the date hereof does not exceed $1,000,000 and
the aggregate fair market value of all such assets during the Fiscal Year in
which such disposition is made does not exceed $250,000.
SECTION 6.07. PURCHASE OF ASSETS, INVESTMENTS. The Company
will not, and will not permit any Subsidiary to, acquire any assets other than
in the ordinary course of business, or make, acquire or own any Investment in
any Person other than (a) Temporary Cash Investments, (b) Investments in
Subsidiaries, (c) purchases of real estate for use and occupancy by the Company
and its Subsidiaries, and (d) Acquisitions approved by the Agent and the
Required Lenders in their sole good faith discretion. Without limiting the
generality of the foregoing, the Company will not, and will not permit any
Subsidiary to, (i) acquire or create any Subsidiary without the consent of the
Required Lenders (which may be given or withheld in their sole good faith
discretion) and arrangements satisfactory to the Required Lenders for (x) a
pledge of the stock of such Subsidiary to the Agent for the benefit of the
Lenders, (y) a guaranty by such Subsidiary of the obligations of the Company
hereunder and (z) a grant of a Lien on all of the assets of such Subsidiary to
the Agent for the benefit of the Lenders to secure such guaranty or (ii) engage
in any joint venture or partnership with any other Person.
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SECTION 6.08. TRANSACTIONS WITH AFFILIATES. The Company will
not, and will not permit any Subsidiary to, directly or indirectly, enter into
or permit to exist any transaction (including the purchase, sale, lease or
exchange of any property or service or the rendering of any service) with, or
for the benefit of, any Affiliate of the Company, any stockholder of the Company
who directly or indirectly owns or controls, or whose family members directly or
indirectly own or control 10% or more of the issued and outstanding shares of
the Company (a "COMPANY AFFILIATED PERSON") or any affiliate or family member of
any such stockholder, except upon terms not less favorable to the Company or any
Subsidiary than if the relationship of Affiliate or stockholder did not exist.
SECTION 6.09. [RESERVED].
SECTION 6.10. FISCAL YEAR. The Company shall not change its
fiscal year from a fiscal year ending December 31.
SECTION 6.11. MANAGEMENT COMPENSATION. The Company shall not,
and shall not permit any Subsidiary to, directly or indirectly, pay or become
obligated to pay, any compensation for services in any form to or for the
account of any Management Stockholder, except (i) the compensation provided for
in the Employment Agreements entered into by the Company with ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., each dated April 3, 1998 (collectively, the
"EMPLOYMENT AGREEMENTS") and (ii) such increases in compensation as may
hereafter be approved by the Board of Directors of the Company from time to
time, such increases not to exceed in the aggregate (on an annual basis) 50% of
the total annual compensation payable to the Management Stockholders under the
Employment Agreements as of the Closing Date.
SECTION 6.12. LEASE PAYMENTS. The Company will not, and will
not permit any Subsidiary to, incur or assume (whether pursuant to a Guarantee
or otherwise) any liability for rental payments under a lease with a lease term
(as defined in Financial Accounting Standards Board Statement No. 13, as in
effect on the date hereof) of one year or more if, after giving effect thereto,
the aggregate amount of minimum lease payments that the Company and its
Consolidated Subsidiaries have so incurred or assumed will exceed, on a
consolidated basis, $500,000 for any calendar year under any such leases
(excluding Capital Leases).
SECTION 6.13. MINIMUM NET WORTH. At no time after the Closing
Date, will the Company permit Consolidated Net Worth to be less than the amount
of Consolidated Net Worth as of the Closing Date (after giving effect to the
IPO), plus 75% of the positive amount of the consolidated net income of the
Company and its Consolidated Subsidiaries for each complete month ended on or
after such date, plus the amount of any increase in Consolidated Net Worth
resulting from the issuance of stock, corporate reorganizations,
recapitalizations or any similar event.
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SECTION 6.14. CAPITAL EXPENDITURES. The aggregate amount of
Capital Expenditures for any Fiscal Year shall not exceed 4% of Consolidated
Revenue for such year; provided that the purchase price for the additional
office condominium purchased by the Company in the 1998 Fiscal Year located at
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, in the amount of $472,000, shall be
excluded for purposes of this Section 6.14.
SECTION 6.15. TOTAL DEBT SERVICE COVERAGE RATIO. The Company
shall not permit the ratio on the last day of any fiscal quarter of (i)
Consolidated Free Cash Flow to (ii) Total Debt Service, in each case for the
twelve-month period then ended (or, in the case of any fiscal quarter ending
prior to the first anniversary of the Initial Closing Date, for the period
commencing on the Initial Closing Date and ending on the last day of such fiscal
quarter) to be less than 1.25 to 1.0.
SECTION 6.16. LEVERAGE. At no time shall the ratio of (i)
Consolidated Total Debt at such time to (ii) Adjusted EBITDA for the four
consecutive fiscal quarters then most recently ended (considered as a single
accounting period; provided that for the purposes of compliance on any date
prior to the date that four complete fiscal quarters have elapsed since the
Initial Closing Date, Adjusted EBITDA for the relevant period shall equal the
sum of Adjusted EBITDA for each fiscal quarter completed since the Initial
Closing Date, annualized), exceed 3.50 to 1.0.
SECTION 6.17. MINIMUM EBITDA. At no time during any period
specified below arising after the Closing Date, shall EBITDA for the four
consecutive fiscal quarters then most recently ended (or, in the case of any
fiscal quarter ending prior to the first anniversary of the Initial Closing
Date, for the period commencing on the Initial Closing Date and ending on the
last day of such fiscal quarter), considered as a single accounting period, be
less than the corresponding amount set forth below:
Fiscal Quarter Ending Amount
--------------------- ------
3/31/98 $ 5,500,000
6/30/98 7,000,000
9/30/98 8,000,000
12/31/98 9,000,000
all times thereafter 10,000,000
SECTION 6.18. INTEREST COVERAGE. The Company shall not permit
the ratio, calculated on the last day of any fiscal quarter for the number of
consecutive fiscal quarters then most recently ended since the Initial Closing
Date (considered as a single accounting period, but not to exceed four
quarters), of (i) Consolidated Free Cash Flow to (ii) the aggregate interest
charges incurred by the Company and its Consolidated Subsidiaries for such
period, whether expensed or capitalized, including the portion of any obligation
under Capital Leases allocable to
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interest expenses in accordance with GAAP and the portion of any debt discount
or premium (but not expenses of issuance) that shall be amortized in such
period, to be less than 3.0 to 1.0.
SECTION 6.19. DEBT TO CAPITALIZATION. The ratio at any time of
(i) Consolidated Total Debt to (ii) Consolidated Capitalization shall not exceed
60%.
SECTION 6.20. TRANSITION RULES. In delivering pro forma
covenant calculations for or including any entity that is the target of an
acquisition (whether such information is required pursuant to Section 3.02 or
otherwise) or when including an acquisition target that has not been under
management by the Company or one of its Subsidiaries for an entire fiscal
quarter in calculating financial covenant compliance, the Company shall use the
actual EBITDA for the target over the relevant period, as if such target had
been a Subsidiary of the Company during such period. In calculating compliance
with Sections 6.16 and 6.17, to the extent such target has been under management
by the Company or one of its Subsidiaries for one or more entire fiscal quarters
but less than one year, the Company shall calculate EBITDA and net revenues with
respect to the target based on the annualized actual performance of the target
during the most recently ended number of complete quarters that such target has
been under management of the Company or one of its Subsidiaries.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01. EVENTS OF DEFAULT. If any one or more of the
following events (each an "EVENT OF DEFAULT") shall occur and be continuing for
any reason whatsoever (whether voluntary or involuntary, by operation of law or
otherwise):
(a) the Company shall fail to pay any principal, interest or
premium on any Note or any fees payable hereunder when due, or any other amount
payable hereunder within five Business Days of when due;
(b) the Company or any Subsidiary shall fail to observe or
perform any covenant contained in Article VI hereof, or Section 5 or Sections
4(a), (e) or (i) of the Security Agreement or shall fail to perform any covenant
contained in Section 3(b) of the Pledge Agreement;
(c) the Company or any Subsidiary shall fail to observe or
perform any covenant or agreement contained in the Financing Documents (other
than those covered by clause (a) or (b) above) for 15 days after notice thereof
has been given to the Company by the Agent;
(d) any representation, warranty, certification or statement
made by the Company or any Subsidiary in any Financing Document or in any
certificate, financial statement or other document delivered pursuant to the
Financing Documents shall prove to have been
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incorrect in any respect (or in any material respect if such representation,
warranty, certification or statement is not by its terms already qualified as to
materiality) when made (or deemed made);
(e) the Company or any Subsidiary shall fail to make any
payment in respect of any Debt (other than the Notes) that singly, or that when
aggregated with all other Debt with respect to which such Person has failed to
make a payment, has an aggregate outstanding principal amount of $250,000 or
greater;
(f) any event or condition shall occur that (i) results in the
acceleration of the maturity of any Debt (other than the Notes) of the Company
or any Subsidiary that singly, or when aggregated with all other Debt of any
such Person with respect to which such an event or condition shall have
occurred, has an aggregate outstanding principal amount of $250,000 or greater,
or (ii) enables (or, with the giving of notice or lapse of time or both, would
enable) the holder of such Debt or any Person acting on such holder's behalf to
accelerate the maturity thereof, or (iii) results in a violation of, or a
default under, any provision of the certificate of incorporation of the Company
or any Subsidiary;
(g) the Company or any Subsidiary shall commence a voluntary
case or other proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidation, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize any of the
foregoing;
(h) an involuntary case or other proceeding shall be commenced
against the Company or any Subsidiary seeking liquidation, reorganization or
other relief with respect to it or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 90 days; or an order for
relief shall be entered against the Company or any Subsidiary under the federal
bankruptcy laws as now or hereafter in effect;
(i) any member of the ERISA Group shall fail to pay when due
an amount or amounts aggregating in excess of $250,000 which it shall have
become liable to pay under Title IV of ERISA; or notice of intent to terminate a
Material Plan shall be filed under Title IV of ERISA by any member of the ERISA
Group, any plan administrator or any combination of the foregoing; or the PBGC
shall institute proceedings under Title IV of ERISA to terminate, to impose
liability (other than for premiums under Section 4007 of ERISA) in respect of,
or to cause a trustee to be appointed to administer any Material Plan; or a
condition shall exist by reason of which the PBGC would be entitled to obtain a
decree adjudicating that any Material Plan must be terminated; or there shall
occur a complete or partial withdrawal from, or a default,
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within the meaning of Section 4219(c)(5) of ERISA, with respect to, one or more
Multiemployer Plans which could cause one or more members of the ERISA Group to
incur a current payment obligation in excess of $250,000;
(j) a judgment or order for the payment of money in excess of
$250,000 shall be rendered against the Company or any Subsidiary and such
judgment or order shall continue unsatisfied and unstayed for a period of 10
days or the staying of such judgment or order shall require the posting of a
bond in excess of $250,000.
(k) except as the result of any transfer made pursuant to the
Company Pledge Agreement, the Company shall cease to be the record and
beneficial owner of 100% of the issued and outstanding capital stock of any
Subsidiary; any person or group of persons (within the meaning of Rule 13d-3
promulgated by the Securities and Exchanges Commission under the Securities
Exchange Act of 1934, as amended), other than Management Stockholders or their
immediate family members or investment trusts or partnerships formed for the
benefit of the Management Stockholders and their immediate family members, shall
have acquired beneficial ownership (within the meaning of such Rule 13d-3) of
more than 25% of the Common Stock; or ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ shall cease to be chief
executive officer of the Company or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. shall cease to be
president of the Company and, in either case, a successor shall not have been
appointed by the Company and approved by the Required Lenders within 90 days
thereafter, which approval shall not be unreasonably withheld; or ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇ shall cease to be a director of the Company and a successor shall not have
been appointed by the Company and approved by the Required Lenders within 90
days thereafter, which approval shall not be unreasonably withheld;
(l) any auditor's report or reports on the audited statements
delivered pursuant to Section 5.01 shall include any material qualification
(including with respect to the scope of audit) or exception (including without
limitation any adverse statement as to the ability of the Company to continue as
a going concern);
(m) the Lien created by any of the Security Documents shall at
any time fail to constitute a valid and perfected Lien on all of the Collateral
purported to be secured thereby, subject to no prior or equal Lien except
Permitted Liens, or the Company or any of its Subsidiaries shall so assert in
writing;
(n) the Company or any Subsidiary of shall be prohibited or
otherwise materially restrained from conducting the business theretofore
conducted by it by virtue of any determination, ruling, decision, decree or
order of any court or regulatory authority of competent jurisdiction and such
determination, ruling, decision, decree or order remains unstayed and in effect
for any period of 10 days beyond any period for which any business interruption
insurance policy shall provide full coverage of any losses and lost profits; or
(o) any of the Financing Documents shall for any reason fail
to constitute the valid and binding agreement of any party thereto, or any such
party shall so assert in writing.
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then, and in every such event and at any time thereafter during the continuance
of such event, the Agent shall if requested by the Required Lenders, (i) by
notice to the Company terminate the Commitments and they shall thereupon
terminate, (ii) by notice to the Company declare the Notes (together with
accrued interest thereon) and all other obligations of the Company hereunder and
under the other Financing Documents to be, and the Notes and such other
obligations shall thereupon become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Company and/or (iii) exercise any rights or remedies
provided herein, under any other Financing Document, or otherwise; provided that
in the case of any of the Events of Default specified in clause (g) or (n) above
with respect to the Company, without any notice to the Company or any other act
by the Agent or the Lenders, the Commitments shall thereupon terminate and all
of the Notes (together with accrued interest thereon) and all other obligations
of the Company under the other Financing Documents shall become immediately due
and payable without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Company.
SECTION 7.02. CASH COLLATERAL. If any Event of Default
specified in clause (g) or (h) of Section 7.01 with respect to the Company shall
have occurred and be continuing or the Loans shall have otherwise been
accelerated pursuant to Section 7.01, then without any request or the taking of
any other action by the Agent or any of the Lenders, the Company shall be
obligated forthwith to deposit into an account established pursuant to lockbox
arrangements satisfactory to the Agent in its sole discretion an amount in
immediately available funds equal to the then aggregate amount available for
drawings (regardless of whether any conditions to any such drawing can then be
met) under the Letters of Credit then outstanding.
ARTICLE VIII
FEES, EXPENSES AND INDEMNITIES;
GENERAL PROVISIONS RELATING TO PAYMENTS
SECTION 8.01. FEES. (a) Closing Fees. On the Closing Date, the
Company shall pay to each Lender a fee in an amount equal to 1.25% of the sum of
such Lender's Revolving Credit Commitment (less, in the case of NationsCredit,
the amount of its Commitment under (and as defined in) the Prior Credit
Agreement).
(b) Administrative Fees. On the Closing Date and on each
anniversary thereof, the Company shall pay to the Agent an administrative fee in
the amount of $30,000 per annum.
(c) Unused Commitment Fee. During the period from the Closing
Date through the date on which the Revolving Credit Commitments are terminated,
the Company shall pay to each Lender a fee at the rate of .375% per annum on the
daily average amount by which the amount of such Lender's Revolving Credit
Commitment exceeds the aggregate outstanding principal amount of its Loans and
Letter of Credit Liabilities. Accrued fees under this Section
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shall be payable quarterly in arrears on each Quarterly Date prior to the date
on which the Revolving Credit Commitments are terminated and on the date of such
termination.
(d) Letter of Credit Fee. The Company agrees to pay to each
Lender a letter of credit fee with respect to each Letter of Credit, computed
for each day from and including the date of issuance of such Letter of Credit to
but excluding the date that is two Business Days after the last day a drawing is
available under such Letter of Credit, at a rate of 2.00% per annum on its
Proportionate Share of the sum of (i) the aggregate amount of the Letter of
Credit that is undrawn but available for drawing from time to time (whether or
not any conditions to drawing can then be met) plus (ii) the aggregate
unreimbursed amount payable to the LC Issuer in respect of previous drawings
thereunder; provided that to the extent such Letter of Credit is not drawn on or
before the last day a drawing is available under such Letter of Credit, such
letter of credit fee shall cease to accrue on the such last day. Such fee for
each Letter of Credit shall be payable in arrears on each Quarterly Date prior
to the date on which such Letter of Credit is terminated and on the date of such
termination.
SECTION 8.02. COMPUTATION OF INTEREST AND FEES. Commitment
fees pursuant to Section 8.01(c), letter of credit fees pursuant to Section
8.01(d) and all interest hereunder and under the Notes shall be calculated on
the basis of a 360-day year for the actual number of days elapsed.
SECTION 8.03. GENERAL PROVISIONS REGARDING PAYMENTS. All
payments (including prepayments) to be made by the Company under any Financing
Document, including payments of principal of and premium and interest on the
Notes, fees, expenses and indemnities, shall be made without set-off or
counterclaim and in immediately available funds. If any payment hereunder
becomes due and payable on a day other than a Business Day, such payment shall
be extended to the next succeeding Business Day and, with respect to payments of
principal, interest thereon shall be payable at the then applicable rate during
such extension. The Company shall make all payments in immediately available
funds to each Lender's Payment Account before 11:00 A.M. (New York City time) on
the date when due. Each payment (including prepayments) by the Company on
account of principal of and interest on any Loans shall be made pro rata
according to the respective outstanding principal amounts of such Class of Loans
held by each Lender. All amounts payable by the Company hereunder or under any
other Financing Document not paid when due shall bear interest, payable on
demand, at the Default Rate.
SECTION 8.04. EXPENSES. Whether or not the transactions
contemplated hereby shall be consummated, the Company agrees to pay on demand
(i) all reasonable costs and expenses of preparation of this Agreement and the
other Financing Documents and of the Company's performance of and compliance
with all agreements and conditions contained herein and therein, (ii) the
reasonable fees, expenses and disbursements of counsel (including the reasonable
allocation of the compensation, costs and expenses of in-house counsel, based
upon time spent) to, and independent appraisers and consultants retained by, the
Lenders in connection with the negotiation, preparation, execution and
administration of this Agreement, the other
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Financing Documents and any amendments hereto or thereto and waivers hereof and
thereof, (iii) all costs and expenses of creating, perfecting and maintaining
Liens pursuant to the Financing Documents, including filing and recording fees
and expenses, the costs of any bonds required to be posted in respect of future
filing and recording fees and expenses, title investigations and fees and
expenses of such local counsel as the Agent shall request, (iv) the reasonable
fees, expenses and disbursements of independent accountants or other experts
retained by the Agent in connection with not more than two accounting and
collateral audits or reviews of the Company and its affairs during any calendar
year and (v) if an Event of Default occurs, all out-of-pocket expenses incurred
by the Agent and each Lender, including reasonable fees and disbursements of
counsel (including the reasonable allocation of the compensation, costs and
expenses of in-house counsel, based upon time spent), in connection with such
Event of Default and collection, bankruptcy, insolvency and other enforcement
proceedings resulting therefrom.
SECTION 8.05. INDEMNITY. Whether or not the transactions
contemplated hereby shall be consummated, the Company agrees to indemnify, pay
and hold harmless the Agent, the LC Issuer and each Lender and any subsequent
holder of any of the Notes and the officers, directors, employees and agents of
the Agent, the LC Issuer, each Lender and such holders (collectively called the
"INDEMNITEES") from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, expenses and
disbursements of any kind or nature whatsoever (including the reasonable fees
and disbursements of counsel for such Indemnitee) in connection with any
investigative, administrative or judicial proceeding, whether or not such
Indemnitee shall be designated a party thereto and including any such proceeding
initiated by or on behalf of a Credit Party, and the expenses of investigation
by engineers, environmental consultants and similar technical personnel and any
commission, fee or compensation claimed by any broker (other than any broker
retained by NationsCredit) asserting any right to payment for the transactions
contemplated hereby, which may be imposed on, incurred by or asserted against
such Indemnitee as a result of or in connection with the transactions
contemplated hereby or by the Financing Documents or as a result of or in
connection with the IPO (including (i)(A) as a direct or indirect result of the
presence on or under, or escape, seepage, leakage, spillage, discharge, emission
or release from, any property now or previously owned, leased or operated by the
Company or any of its Subsidiaries of any Hazardous Materials or any Hazardous
Materials Contamination, (B) arising out of or relating to the offsite disposal
of any materials generated or present on any such property or (C) arising out of
or resulting from the environmental condition of any such property or the
applicability of any governmental requirements relating to Hazardous Materials,
whether or not occasioned wholly or in part by any condition, accident or event
caused by any act or omission of the Company or any of its Subsidiaries, (ii)
proposed and actual extensions of credit under this Agreement, and (iii) any
misstatement or omission contained in the Disclosure Documents), or the use or
intended use of the proceeds of the Notes and the Letters of Credit, except that
the Company shall have no obligation hereunder to an Indemnitee with respect to
any liability resulting from the gross negligence or willful misconduct of such
Indemnitee. To the extent that the undertaking set forth in the immediately
preceding sentence may be unenforceable, the Company shall contribute the
maximum portion which it is permitted to pay and satisfy under applicable law to
the payment and satisfaction of all such indemnified liabilities incurred by the
Indemnitees or any of them.
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Without limiting the generality of any provision of this Section, to the fullest
extent permitted by law, the Company hereby waives all rights for contribution
or any other rights of recovery with respect to liabilities, losses, damages,
costs and expenses arising under or relating to Environmental Laws that it might
have by statute or otherwise against any Indemnitee.
SECTION 8.06. TAXES. The Company agrees to pay all
governmental assessments, charges or taxes (except income or other similar taxes
imposed on any Lender or any holder of a Note), including any interest or
penalties thereon, at any time payable or ruled to be payable in respect of the
existence, execution or delivery of this Agreement, the other Financing
Documents, or the issuance of the Notes or the Letters of Credit, and to
indemnify and hold each Lender, the LC Issuer and each and every holder of the
Notes harmless against liability in connection with any such assessments,
charges or taxes.
SECTION 8.07. FUNDING LOSSES. If the Company fails to borrow
any Revolving Credit Loans after notice has been given to any Lender in
accordance with Section 2.04 or make any payment when due (including pursuant to
a notice of optional prepayment), the Company shall reimburse each Lender within
15 days after demand for any resulting loss or expense incurred by it (or by an
existing or prospective participant in the related Loan), including any loss
incurred in obtaining, liquidating or employing deposits from third parties, but
excluding loss of margin for the period after any such payment or failure to
borrow; provided that such Lender shall have delivered to the Company a
certificate as to the amount of such loss or expense, which certificate shall be
conclusive in the absence of manifest error.
SECTION 8.08. MAXIMUM INTEREST. (a) In no event shall the
interest charged with respect to the Notes or any other obligations of the
Company under the Financing Documents exceed the maximum amount permitted under
the laws of the State of Georgia or of any other applicable jurisdiction.
(b) Notwithstanding anything to the contrary herein or
elsewhere, if at any time the rate of interest payable for the account of any
Lender hereunder or under any Note or other Financing Document (the "STATED
RATE") would exceed the highest rate of interest permitted under any applicable
law to be charged by such Lender (the "MAXIMUM LAWFUL RATE"), then for so long
as the Maximum Lawful Rate would be so exceeded, the rate of interest payable
for the account of such Lender shall be equal to the Maximum Lawful Rate;
provided, that if at any time thereafter the Stated Rate is less than the
Maximum Lawful Rate, the Company shall, to the extent permitted by law, continue
to pay interest for the account of such Lender at the Maximum Lawful Rate until
such time as the total interest received by such Lender is equal to the total
interest which such Lender would have received had the Stated Rate been (but for
the operation of this provision) the interest rate payable. Thereafter, the
interest rate payable for the account of such Lender shall be the Stated Rate
unless and until the Stated Rate again would exceed the Maximum Lawful Rate, in
which event this provision shall again apply.
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(c) In no event shall the total interest received by any
Lender exceed the amount which such Lender could lawfully have received had the
interest been calculated for the full term hereof at the Maximum Lawful Rate
with respect to such Lender.
(d) In computing interest payable with reference to the
Maximum Lawful Rate applicable to any Lender, such interest shall be calculated
at a daily rate equal to the Maximum Lawful Rate divided by the number of days
in the year in which such calculation is made.
(e) If any Lender has received interest hereunder in excess of
the Maximum Lawful Rate with respect to such Lender, such excess amount shall be
applied to the reduction of the principal balance of its Loans or to other
amounts (other than interest) payable hereunder, and if no such principal or
other amounts are then outstanding, such excess or part thereof remaining shall
be paid to the Company.
ARTICLE IX
THE AGENT
SECTION 9.01. APPOINTMENT AND AUTHORIZATION. Each Lender
irrevocably appoints and authorizes the Agent to enter into each of the Security
Documents on its behalf and to take such action as agent on its behalf and to
exercise such powers under the Financing Documents as are delegated to the Agent
by the terms thereof, together with all such powers as are reasonably incidental
thereto.
SECTION 9.02. AGENT AND AFFILIATES. NationsCredit shall have
the same rights and powers under the Financing Documents as any other Lender and
may exercise or refrain from exercising the same as though it were not the
Agent, and NationsCredit and its affiliates may lend money to and generally
engage in any kind of business with the Company or any Subsidiary or affiliate
of the Company as if it were not the Agent hereunder.
SECTION 9.03. ACTION BY AGENT. The obligations of the Agent
hereunder are only those expressly set forth herein and under the other
Financing Documents. Without limiting the generality of the foregoing, the Agent
shall not be required to take any action with respect to any Default, except as
expressly provided in Article VII.
SECTION 9.04. CONSULTATION WITH EXPERTS. The Agent may consult
with legal counsel (who may be counsel for the Company), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
SECTION 9.05. LIABILITY OF AGENT. Neither the Agent nor any of
its directors, officers, agents or employees shall be liable for any action
taken or not taken by it in connection with the Financing Documents (i) with the
consent or at the request of the Required Lenders or (ii) in the absence of its
own gross negligence or willful misconduct. Neither the Agent nor any
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of its directors, officers, agents or employees shall be responsible for or have
any duty to ascertain, inquire into or verify (i) any statement, warranty or
representation made in connection with any Financing Document or any borrowing
hereunder; (ii) the performance or observance of any of the covenants or
agreements of the Company; (iii) the satisfaction of any condition specified in
Article III, except receipt of items required to be delivered to the Agent; or
(iv) the validity, effectiveness, sufficiency or genuineness of any Financing
Document or any other instrument or writing furnished in connection therewith.
The Agent shall not incur any liability by acting in reliance upon any notice,
consent, certificate, statement, or other writing (which may be a bank wire,
telex, facsimile transmission or similar writing) believed by it to be genuine
or to be signed by the proper party or parties.
SECTION 9.06. INDEMNIFICATION. Each Lender shall, ratably in
accordance with its Revolving Credit Commitment (whether or not the Revolving
Credit Commitments have been terminated), indemnify the Agent (to the extent not
reimbursed by the Company) against any cost, expense (including counsel fees and
disbursements), claim, demand, action, loss or liability (except such as result
from the Agent's gross negligence or willful misconduct) that the Agent may
suffer or incur in connection with the Financing Documents or any action taken
or omitted by the Agent hereunder or thereunder.
SECTION 9.07. CREDIT DECISION. Each Lender acknowledges that
it has, independently and without reliance upon the Agent or any other Lender,
and based on such documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement. Each Lender
also acknowledges that it will, independently and without reliance upon the
Agent or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking any action under the Financing Documents.
SECTION 9.08. SUCCESSOR AGENT. The Agent may resign at any
time by giving written notice thereof to the Lenders and the Company. Upon any
such resignation, the Required Lenders shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Required Lenders, and shall have accepted such appointment, within 30 days after
the retiring Agent gives notice of resignation, then the retiring Agent may, on
behalf of the Lenders, appoint a successor Agent, which shall be an institution
organized or licensed under the laws of the United States of America or of any
State thereof. Upon the acceptance of its appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Agent's resignation hereunder as Agent, the provisions of this Article
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent.
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ARTICLE X
MISCELLANEOUS
SECTION 10.01. SURVIVAL. All agreements, representations and
warranties made herein shall survive the execution and delivery of this
Agreement and the other Financing Documents and the execution, sale and delivery
of the Notes, Warrants and Warrant Shares. The indemnities and agreements set
forth in Articles VIII and IX shall survive the payment of the Notes, the
exercise, redemption or expiration of the Warrants and the termination of this
Agreement.
SECTION 10.02. NO WAIVERS. No failure or delay by the Agent or
any Lender in exercising any right, power or privilege under any Financing
Document shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein and
therein provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 10.03. NOTICES. All notices, requests and other
communications to any party hereunder shall be in writing (including prepaid
overnight courier, telex, facsimile transmission or similar writing) and shall
be given to such party at its address or telecopy or telex number set forth on
the signature pages hereof (or, in the case of any such Lender who becomes a
Lender after the date hereof, in a notice delivered to the Company and the Agent
by the assignee Lender forthwith upon such assignment) or at such other address
or telecopy or telex number as such party may hereafter specify for the purpose
by notice to the Agent and the Company. Each such notice, request or other
communication shall be effective (i) if given by telex or telecopy, when such
telex or telecopy is transmitted to the telex or telecopy number specified in
this Section and the appropriate answer back is received (in the case of telex)
or telephonic confirmation of receipt thereof is obtained (in the case of
telecopy) or (ii) if given by mail, prepaid overnight courier or any other
means, when received at the address specified in this Section or when delivery
at such address is refused.
SECTION 10.04. SEVERABILITY. In case any provision of or
obligation under this Agreement or the Notes or any other Financing Document
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
SECTION 10.05. AMENDMENTS AND WAIVERS. Any provision of this
Agreement or the Notes may be amended or waived if, but only if, such amendment
or waiver is in writing and is signed by the Company and the Required Lenders
(and, if the rights or duties of the Agent are affected thereby, by the Agent);
provided that no such amendment or waiver shall, unless signed by all the
Lenders, (i) increase or decrease any Commitment of any Lender (except for a
ratable decrease in the Commitments of all Lenders) or subject any Lender to any
additional
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obligation, (ii) reduce the principal of or rate of interest on any Loan or any
fees hereunder, (iii) postpone the date fixed for any payment of principal of
any Loan pursuant to Section 2.05, or of interest on any Loan or any fees
hereunder or for any termination of any Commitment or (iv) change the percentage
of the Commitments or of the aggregate unpaid principal amount of the Notes
which shall be required for the Lenders or any of them to take any action under
this Section or any other provision of this Agreement.
SECTION 10.06. SUCCESSORS AND ASSIGNS; REGISTRATION. (a) The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns (including any
transferee of any Note), except that the Company may not assign or otherwise
transfer any of its rights under this Agreement without the prior written
consent of all Lenders.
(b) The terms and provisions of this Agreement shall inure to
the benefit of any transferee or assignee of any Note and, in the event of such
transfer or assignment, the rights and privileges herein conferred upon the
assigning Lender shall automatically extend to and be vested in such transferee
or assignee, all subject to the terms and conditions hereof. Any assignment
shall be for an equal percentage of each Class of such assignor Lender's Loans
and its Revolving Credit Commitment, and any such assignee Lender shall, upon
its registration in the Note Register referred to below, become a "Lender" for
all purposes hereunder. Upon any such assignment, the assignor Lender shall be
released from its Revolving Credit Commitment to the extent assigned to and
assumed by the assignee Lender.
(c) Upon any assignment of any Note(s), the assigning Lender
shall surrender its Note(s) to the Company for exchange or registration of
transfer, and the Company will promptly execute and deliver in exchange therefor
a new Note or Note(s) of the same tenor and registered in the name of the
assignor Lender (if less than all of such Lender's Notes are assigned) and the
name of the assignee Lender.
(d) The Company shall maintain a register (the "NOTE
REGISTER") of the Lenders and all assignee Lenders that are the holders of all
the Notes issued pursuant to this Agreement. The Company will allow any Lender
to inspect and copy such list at the Company's principal place of business
during normal business hours. Prior to the due presentment for registration of
transfer of any Note, the Company may deem and treat the Person in whose name a
Note is registered as the absolute owner of such Note for the purpose of
receiving payment of principal of and premium and interest on such Note and for
all other purposes whatsoever, and the Company shall not be affected by notice
to the contrary.
(e) Each Lender (including any assignee Lender at the time of
such assignment) represents that it (i) is acquiring its Notes solely for
investment purposes and not with a view toward, or for sale in connection with,
any distribution thereof, (ii) has received and reviewed such information as it
deems necessary to evaluate the merits and risks of its investment in the Notes,
(iii) is an "accredited investor" within the meaning of Rule 501(a) under the
Securities Act and (iv) has such knowledge and experience in financial and
business matters
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as to be capable of evaluating the merits and risks of its investment in the
Notes, including a complete loss of its investment.
(f) Each Lender understands that the Notes are being offered
only in a transaction not involving any public offering within the meaning of
the Securities Act, and that, if in the future such Lender decides to resell,
pledge or otherwise transfer any of the Notes, such Notes may be resold, pledged
or transferred only (i) to the Company, (ii) to a person who such Lender
reasonably believes is a qualified institutional buyer that purchases for its
own account or for the account of a qualified institutional buyer to whom notice
is given that such resale, pledge or transfer is being made in reliance on Rule
144A under the Securities Act or (iii) pursuant to an exemption from
registration under the Securities Act.
(g) Each Lender understands that the Notes will, unless
otherwise agreed by the Company and the holder thereof, bear a legend to the
following effect:
THIS SECURITY IS NOT BEING REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING
THIS SECURITY, AGREES FOR THE BENEFIT OF THE ISSUER THAT THIS SECURITY
MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) TO THE
COMPANY, (2) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER THAT IS AWARE THAT THE RESALE, PLEDGE OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A OR (3) PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT.
(h) If any Note becomes mutilated and is surrendered by the
Lender with respect thereto to the Company, or if any Lender claims that any of
its Notes has been lost, destroyed or wrongfully taken, the Company shall
execute and deliver to such Lender a replacement Note, upon the affidavit of
such Lender attesting to such loss, destruction or wrongful taking with respect
to such Note and such lost, destroyed, mutilated, surrendered or wrongfully
taken Note shall be deemed to be canceled for all purposes hereof. Such
affidavit shall be accepted as satisfactory evidence of the loss, wrongful
taking or destruction thereof and no indemnity shall be required as a condition
of the execution and delivery of a replacement Note. Any costs and expenses of
the Company in replacing any such Note shall be for the account of such Lender.
SECTION 10.07. COLLATERAL. Each of the Lenders represents to
the Agent and each of the other Lenders that it in good faith is not relying
upon any Margin Stock as collateral in the extension or maintenance of the
credit provided for in this Agreement.
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SECTION 10.08. HEADINGS. Headings and captions used in the
Financing Documents (including the Exhibits and Schedules hereto and thereto)
are included herein and therein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 10.09. GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS
AGREEMENT AND EACH NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF GEORGIA. THE COMPANY HEREBY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
GEORGIA AND OF ANY GEORGIA STATE COURT SITTING IN ATLANTA FOR PURPOSES OF ALL
LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM
THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. EACH OF THE PARTIES HERETO IRREVOCABLY CONSENTS TO SERVICE
OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.03. NOTHING IN THIS
AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW.
SECTION 10.10. NOTICE OF BREACH BY AGENT OR LENDER. The
Company agrees to give the Agent and the Lenders notice of any action or
inaction by the Agent or any Lender or any agent or attorney of the Agent or any
Lender in connection with this Agreement or any other Financing Document or the
obligations of the Company under this Agreement or any other Financing Document
that may be actionable against the Agent or any Lender or any agent or attorney
of the Agent or any Lender or a defense to payment of any obligations of the
Company under this Agreement or any other Financing Document for any reason,
including commission of a tort or violation of any contractual duty or duty
implied by law. The Company agrees, to the fullest extent that it may lawfully
do so, that unless such notice is given promptly (and in any event within ten
(10) days after the Company has knowledge, or with the exercise of reasonable
diligence could have had knowledge, of any such action or inaction), the Company
shall not assert, and the Company shall be deemed to have waived, any claim or
defense arising therefrom to the extent that the Agent or any Lender could have
mitigated such claim or defense after receipt of such notice.
SECTION 10.11. WAIVER OF JURY TRIAL. EACH OF THE COMPANY, THE
AGENT AND THE LENDERS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE FINANCING
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY AND TO THE FULLEST EXTENT
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PERMITTED BY LAW WAIVES ANY RIGHTS THAT IT MAY HAVE TO CLAIM OR RECEIVE
CONSEQUENTIAL OR SPECIAL DAMAGES IN CONNECTION WITH ANY LEGAL PROCEEDING ARISING
OUT OF OR RELATING TO THE FINANCING DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
THEREBY.
SECTION 10.12. COUNTERPARTS. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement, the other Financing Documents, the Warrantholders Rights
Agreement and the Warrants constitute the entire agreement and understanding
among the parties hereto and supersede any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof.
SECTION 10.13. SPECIAL PROVISION RELATING TO THIS AMENDMENT
AND RESTATEMENT.
(a) This Agreement shall amend and restate and replace that
certain Credit Agreement, dated as of July 15, 1997, among the Company, the
Lenders signatories thereto and the Agent, as amended by First Amendment to
Credit Agreement, dated as of April 20, 1998, among the Company, the Lenders
signatories thereto and the Agent (the "PRIOR CREDIT AGREEMENT"). This Agreement
is not intended nor shall it be construed to be a novation or an accord and
satisfaction of the Obligations or any other indebtedness, liabilities or
obligations of the Company or its Subsidiaries under this Agreement or the other
Financing Documents. References to the Prior Credit Agreement contained in any
Financing Document shall be deemed to be a reference to such agreement as
amended and restated hereby.
(b) The Company hereby acknowledges and agrees that the
Company Security Agreement and the Company Pledge Agreement are and shall remain
in full force and effect, and hereby ratifies, confirms and approves the Company
Security Agreement and the Company Pledge Agreement and all of the terms and
provisions thereof, and agrees that each of the Company Security Agreement and
the Company Pledge Agreement constitutes the valid and binding obligation of the
Company, enforceable by the Agent and the Lenders in accordance with its terms.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
BORROWER:
HORIZON MEDICAL PRODUCTS, INC.
By:
---------------------------------------
President
Address: Seven North Parkway Square
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
LENDERS:
NATIONSCREDIT COMMERCIAL
CORPORATION
By:
---------------------------------------
Authorized Signatory
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Horizon Medical Products, Inc.,
Account Officer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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AGENT:
NATIONSCREDIT COMMERCIAL
CORPORATION
By:
---------------------------------------
Authorized Signatory
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Horizon Medical Products, Inc.,
Account Officer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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Payment Account Information:
First National Bank of Chicago
Account No.: 52-56933
ABA Routing No.: ▇▇▇▇▇▇▇▇▇
Account Name: NationsCredit
Commercial Corporation
Ref.: Horizon Medical Products, Inc.
Company Account Information:
Bank Name: Columbus Bank and Trust
Account No.: 22 33 800
ABA Routing No.: ▇▇▇▇▇▇▇▇▇
Ref.: Horizon Medical Products, Inc.
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REVOLVING CREDIT NOTE
THIS SECURITY IS NOT BEING REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING
THIS SECURITY, AGREES FOR THE BENEFIT OF THE ISSUER THAT THIS SECURITY
MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) TO THE
COMPANY (AS DEFINED BELOW), (2) TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE
144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER THAT IS AWARE THAT THE
RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A
OR (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT.
HORIZON MEDICAL PRODUCTS, INC.
REVOLVING CREDIT NOTE
$50,000,000 May 26, 1998
HORIZON MEDICAL PRODUCTS, INC., a Georgia corporation (the
"COMPANY"), for value received, promises to pay NATIONSCREDIT COMMERCIAL
CORPORATION (the "LENDER"), or registered assigns, the principal amount of Fifty
Million Dollars ($50,000,000) or the aggregate outstanding principal amount of
the Revolving Credit Loans made by the Lender, whichever is less, on such dates
and in such amounts as set forth in Section 2.05 of the Credit Agreement
referred to below and to pay interest on the aggregate unpaid principal amount
hereof on such dates and at such rates set forth in Section 2.03 of the Credit
Agreement referred to below.
This Note is one of the Revolving Credit Notes referred to in
the Amended and Restated Credit Agreement dated as of May 26, 1998 (as amended,
restated, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT"), among the Company, the lenders referred to therein and
NationsCredit Commercial Corporation, as Agent. The Credit Agreement and the
Security Documents referred to therein contain additional rights of the holder
of, and the security for, this Note. Capitalized terms used but not defined
herein have the meanings assigned thereto in the Credit Agreement.
79
If an Event of Default shall occur and be continuing, the
unpaid balance of the principal of this Note together with all accrued but
unpaid interest hereon may become or be declared forthwith due and payable in
the manner and with the effect provided in the Credit Agreement.
Each holder hereof is authorized to endorse on the grid
attached hereto, or on a continuation thereof, each Revolving Credit Loan made
by the Lender and each payment and prepayment with respect thereto. Failure of
the Lender or any holder hereof to make any such endorsement shall not affect
the obligations of the Company hereunder or under the Credit Agreement.
This Note is issued in replacement and substitution for that
certain Working Capital Note, dated July 15, 1997, and issued by Borrower in
favor of Lender in the stated principal amount of $3,000,000 (the "PRIOR NOTE").
This Note is not intended nor shall it be construed to be a novation or an
accord and satisfaction of the indebtedness evidenced by the Prior Note.
This Note also may and must be prepaid as provided in the
Credit Agreement, together with any premiums set forth therein, under the
circumstances therein described.
Payments of principal hereof and interest hereon shall be made
in lawful money of the United States of America.
Presentment, demand, protest and notice of any kind are hereby
waived by the undersigned.
This Note shall be governed by, and construed in accordance
with, the laws of the State of Georgia in all respects, including all matters of
construction, validity and performance, without regard to the choice of law
provisions thereof.
IN WITNESS WHEREOF, the Company has caused this Note to be
duly executed as of the day and year first above written.
HORIZON MEDICAL PRODUCTS,
INC.
By:
-----------------------------------
Title:
-----------------------------
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SCHEDULE A TO REVOLVING CREDIT NOTE
WORKING CAPITAL PRINCIPAL
LOAN/ACQUISITION AMOUNT PAYMENT OF
DATE LOAN OF LOAN PRINCIPAL NOTATION MADE
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EXHIBIT B
NOTICE OF REVOLVING CREDIT LOAN
-------------------
NationsCredit Commercial Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned Borrower, HORIZON MEDICAL PRODUCTS, INC.,
refers to the Amended and Restated Credit Agreement, dated as of May 22, 1998
(the "CREDIT AGREEMENT"; the capitalized terms defined therein being used herein
as therein defined), among the undersigned, certain lenders party thereto and
NationsCredit Commercial Corporation, as agent for such lenders, and hereby
gives you notice, irrevocably, pursuant to Section 2.04 of the Credit Agreement
that the undersigned Borrower hereby requests a [Working Capital Loan]
[Acquisition Loan] under the Credit Agreement, and in that connection sets forth
below the information relating to such Loan as required by Section 2.04 of the
Credit Agreement:
(i) The date of the requested Loan shall be _______________;
(ii) The amount of the requested Loan is $____________; and
(iii) The requested Loan is to be disbursed as set forth on
Exhibit A attached hereto and incorporated herein by reference.
The undersigned Borrower hereby certifies that the conditions
contained in Sections 3.01 and 3.03, and, if an Acquisition Loan, 3.02 of the
Credit Agreement have been satisfied on the date hereof, and will continue to be
satisfied on the date of the requested Loan, before and after giving effect
thereto and to the application of the proceeds therefrom.
Very truly yours,
HORIZON MEDICAL PRODUCTS, INC.
By:
---------------------------
Title:
--------------------
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EXHIBIT A
83
EXHIBIT C
SECURITY AGREEMENT
AGREEMENT dated as of July 15, 1997 between HORIZON MEDICAL
PRODUCTS, INC., a Georgia corporation (together with its successors, the
"COMPANY"), and NATIONSCREDIT COMMERCIAL CORPORATION, as Agent for the Lenders
referred to below (the "AGENT").
W I T N E S S E T H:
WHEREAS, the Company, certain lenders (the "LENDERS") and the
Agent are parties to a Credit Agreement of even date herewith (as the same may
be amended from time to time, the "CREDIT AGREEMENT"); and
WHEREAS, in order to induce the Lenders and the Agent to enter
into the Credit Agreement, the Company has agreed to grant a continuing security
interest in and to the Collateral (as hereafter defined) to secure its
obligations under the Financing Documents referred to in the Credit Agreement;
NOW THEREFORE, in consideration of the premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS.
Terms defined in the Credit Agreement and not otherwise
defined herein have, as used herein, the respective meanings provided for
therein. The following additional terms, as used herein, have the following
respective meanings:
"ACCOUNTS" means all "accounts" (as defined in the UCC) now
owned or hereafter acquired by the Company, and shall also mean and include all
accounts receivable, contract rights, book debts, notes, drafts and other
obligations or indebtedness owing to the Company arising from the sale, lease or
exchange of goods or other property by it and/or the performance of services by
it (including any such obligation which might be characterized as an account,
contract right or general intangible under the Uniform Commercial Code in effect
in any
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jurisdiction) and all of the Company's rights in, to and under all purchase
orders for goods, services or other property, and all of the Company's rights to
any goods, services or other property represented by any of the foregoing
(including returned or repossessed goods and unpaid sellers' rights of
rescission, replevin, reclamation and rights to stoppage in transit) and all
monies due to or to become due to the Company under all contracts for the sale,
lease or exchange of goods or other property and/or the performance of services
by it (whether or not yet earned by performance on the part of the Company), in
each case whether now in existence or hereafter arising or acquired including,
without limitation, the right to receive the proceeds of said purchase orders
and contracts and all collateral security and guarantees of any kind given by
any Person with respect to any of the foregoing.
"COLLATERAL" has the meaning set forth in Section 3.
"COLLATERAL ACCOUNTS" means the Lockbox Accounts .
"DOCUMENTS" means all "documents" (as defined in the UCC) or
other receipts covering, evidencing or representing goods, now owned or
hereafter acquired by the Company.
"EQUIPMENT" means all "equipment" (as defined in the UCC) now
owned or hereafter acquired by the Company, including without limitation all
motor vehicles, trucks, trailers, railcars and barges.
"GENERAL INTANGIBLES" means all "general intangibles" (as
defined in the UCC) now owned or hereafter acquired by the Company, including
(i) all obligations or indebtedness owing to the Company (other than Accounts)
from whatever source arising, (ii) all patents, patent licenses, trademarks,
trademark licenses, rights in intellectual property, goodwill, trade names,
service marks, trade secrets, copyrights, permits and licenses, (iii) all rights
or claims in respect of refunds for taxes paid and (iv) all rights in respect of
any pension plan or similar arrangement maintained for employees of any member
of the ERISA Group.
"INSTRUMENTS" means all "instruments", "chattel paper" or
"letters of credit" (each as defined in the UCC), including those evidencing,
representing, arising from or existing in respect of, relating to, securing or
otherwise supporting the payment of, any of the Accounts, including (but not
limited to) promissory notes, drafts, bills of exchange and trade acceptances,
now owned or hereafter acquired by the Company.
"INVENTORY" means all "inventory" (as defined in the UCC), now
owned or hereafter acquired by the Company, wherever located, and shall also
mean and include all raw
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materials and other materials and supplies, work-in-process and finished goods
and any products made or processed therefrom and all substances, if any,
commingled therewith or added thereto.
"LIQUID INVESTMENTS" has the meaning set forth in Section
5(D).
"LOCKBOX ACCOUNTS" has the meaning set forth in Section 5(A).
"LOCKBOX AGREEMENTS" has the meaning set forth in Section
5(A).
"LOCKBOX BANKS" means the banks or investment firms listed
opposite each Lockbox Account on Exhibit A hereto.
"PERFECTION CERTIFICATE" means a certificate substantially in
the form of Exhibit B, completed and supplemented with the schedules and
attachments contemplated thereby to the satisfaction of the Agent, and duly
executed by the chief executive officer or chief legal officer of the Company.
"PERMITTED LIENS" means the Security Interests and the Liens
on the Collateral permitted to be created, to be assumed or to exist pursuant to
Section 8.02 of the Credit Agreement.
"PROCEEDS" means all proceeds of, and all other profits,
products, rents or receipts, in whatever form, arising from the collection,
sale, lease, exchange, assignment, licensing or other disposition of, or other
realization upon, Collateral, including all claims of the Company against third
parties for loss of, damage to or destruction of, or for proceeds payable under,
or unearned premiums with respect to, policies of insurance in respect of, any
Collateral, and any condemnation or requisition payments with respect to any
Collateral, in each case whether now existing or hereafter arising.
"SECURED OBLIGATIONS" means the obligations secured under this
Agreement which include (a) all principal of and interest (including any
interest which accrues after the commencement of any case, proceeding or other
action relating to the bankruptcy, insolvency or reorganization of the Company,
whether or not allowed or allowable as a claim in any such proceeding) on any
Loan under, or any Note issued pursuant to, the Credit Agreement, (b) all other
amounts payable by the Company hereunder or under any other Financing Document,
(c) all other Obligations and (d) any amendments, restatements, renewals,
extensions or modifications of any of the foregoing.
"SECURED PARTIES" means the Agent and the Lenders.
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"SECURITY INTERESTS" means the security interests in the
Collateral granted hereunder securing the Secured Obligations.
"UCC" means the Uniform Commercial Code as in effect on the
date hereof in the State of Georgia; provided that if by reason of mandatory
provisions of law, the perfection or the effect of perfection or non-perfection
of the Security Interests in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than Georgia, "UCC" means
the Uniform Commercial Code as in effect in such other jurisdiction for purposes
of the provisions hereof relating to such perfection or effect of perfection or
non-perfection.
SECTION 2. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants as follows:
(A) The Company has good and marketable title to all of the
Collateral, free and clear of any Liens other than the Permitted Liens. The
Company has taken all actions necessary under the UCC to perfect its interest in
any Accounts purchased or otherwise acquired by or granted to it, as against its
assignors and grantors and creditors of its assignors and grantors.
(B) The Company has not performed any acts which might prevent
the Agent from enforcing any of the terms of this Agreement or which would limit
the Agent in any such enforcement. Other than financing statements or other
similar or equivalent documents or instruments with respect to the Security
Interests and Permitted Liens, no financing statement, mortgage, security
agreement or similar or equivalent document or instrument covering all or any
part of the Collateral is on file or of record in any jurisdiction in which such
filing or recording would be effective to perfect a Lien on such Collateral. No
Collateral is in the possession of any Person (other than the Company) asserting
any claim thereto or security interest therein, except that the Agent or its
designee may have possession of Collateral as contemplated hereby.
(C) The information set forth in the Perfection Certificate
delivered to the Agent prior to the Closing Date is correct and complete as of
the Closing Date.
(D) The Security Interests constitute valid security interests
under the UCC securing the Secured Obligations. When UCC financing statements in
the form specified in Schedule 6 to the Perfection Certificate shall have been
filed in the offices specified in the Perfection Certificate, the Security
Interests shall constitute perfected security interests in the Collateral
(except Inventory in transit) to the extent that a security interest therein may
be
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perfected by filing pursuant to the UCC, prior to all other Liens and rights of
others therein except for the Permitted Liens.
(E) The Inventory and Equipment are insured in accordance with
the requirements of the Credit Agreement.
(F) Exhibit A (as updated by the Company from time to time
with the consent of the Agent, such consent not to be unreasonably withheld)
lists each bank account, money market account and investment account of the
Company.
SECTION 3. THE SECURITY INTERESTS.
(A) In order to secure the full and punctual payment and
performance of the Secured Obligations in accordance with the terms thereof, the
Company hereby grants to the Agent for the ratable benefit of the Secured
Parties a continuing security interest in and to all of the following property
of the Company, whether now owned or existing or hereafter acquired or arising
and regardless of where located (all being collectively referred to as the
"COLLATERAL"):
(1) Accounts;
(2) Inventory;
(3) General Intangibles;
(4) Documents;
(5) Instruments;
(6) Equipment;
(7) The Lockbox Accounts, all cash deposited in any of the
foregoing from time to time, the Liquid Investments made pursuant to
Section 5(D) or otherwise and other monies and property of any kind of
the Company in the possession or under the control of the Agent;
(8) All books and records (including customer lists, credit
files, computer programs, printouts and other computer materials and
records) of the Company pertaining to any of the Collateral;
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(9) Insurance policies of the Company; and
(10) All Proceeds of all or any of the Collateral described in
Clauses 1 through 9 hereof.
(B) The Security Interests are granted as security only and
shall not subject any Secured Party to, or transfer or in any way affect or
modify, any obligation or liability of the Company with respect to any of the
Collateral or any transaction in connection therewith.
SECTION 4. FURTHER ASSURANCES; COVENANTS.
(A) The Company will not change its name, identity or form of
organization in any manner unless it shall have given the Agent prior notice
thereof and delivered an opinion of counsel with respect thereto in accordance
with Section 4(L). The Company will not change the location of (i) its chief
executive office or chief place of business or (ii) the locations where it keeps
or holds any Collateral or any records relating thereto from the applicable
location described in the Perfection Certificate unless it shall have given the
Agent prior notice thereof and delivered an opinion of counsel with respect
thereto in accordance with Section 4(L). The Company shall not in any event
change the location of any Collateral without the prior written consent of the
Agent if such change would cause the Security Interests in such Collateral to
lapse or cease to be perfected.
(B) The Company shall not in any event change the location of
any Collateral without the prior written consent of the Agent if such change
would cause the Security Interests to lapse or cease to be perfected.
(C) To the extent permitted under applicable law, the Company
will, from time to time, at its expense, execute, deliver, file and record any
statement, assignment, instrument, document, agreement or other paper and take
any other action (including any filings of financing or continuation statements
under the UCC) that from time to time may be necessary or desirable, or that the
Agent may request, in order to create, preserve, perfect, confirm or validate
the Security Interests or to enable the Secured Parties to obtain the full
benefits of this Agreement, or to enable the Agent to exercise and enforce any
of its rights, powers and remedies hereunder with respect to any of the
Collateral. To the extent permitted by applicable law, the Company hereby
authorizes the Agent, and appoints the Agent as its true and lawful attorney
(with full power of substitution, in the name of the Company, the Secured
Parties or otherwise, for the sole use and benefit of the Secured Parties), to
execute and file financing statements or continuation statements without the
Company's signature appearing thereon. The Company agrees that a carbon,
photographic, photostatic or other reproduction of this Agreement or of a
financing
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statement is sufficient as a financing statement. The Company shall pay the
costs of, or incidental to, any recording or filing of any financing or
continuation statements concerning the Collateral.
(D) If any Collateral is at any time in the possession or
control of any warehouseman, bailee or any of the Company's agents or
processors, the Company shall notify such warehouseman, bailee, agent or
processor of the Security Interests created hereby and to hold all such
Collateral for the Agent's account subject to the Agent's instructions.
(E) The Company shall keep full and accurate books and records
relating to the Collateral, and stamp or otherwise ▇▇▇▇ such books and records
in such manner as the Agent may reasonably require in order to reflect the
Security Interests.
(F) The Company will immediately deliver and pledge each
Instrument to the Agent, appropriately endorsed to the Agent, provided that so
long as no Event of Default shall have occurred and be continuing, the Company
may retain for collection in the ordinary course any Instruments (other than
checks and drafts constituting payments in respect of Accounts, as to which the
provisions of Section 5(B) shall apply) received by it in the ordinary course of
business and the Agent shall, promptly upon request of the Company, make
appropriate arrangements for making any other Instrument pledged by the Company
available to it for purposes of presentation, collection or renewal (any such
arrangement to be effected, to the extent deemed appropriate to the Agent,
against trust receipt or like document).
(G) The Company shall use its best efforts to cause to be
collected from its account debtors, as and when due, any and all amounts owing
under or on account of each Account (including Accounts which are delinquent,
such Accounts to be collected in accordance with lawful collection procedures
and the Company's customary practices) and shall apply forthwith upon receipt
thereof all such amounts as are so collected to the outstanding balance of such
Account. Subject to the rights of the Secured Parties hereunder upon the
occurrence and during the continuance of an Event of Default, the Company may
allow in the ordinary course of business as adjustments to amounts owing under
its Accounts (i) an extension or renewal of the time or times of payment, or
settlement for less than the total unpaid balance, which the Company finds
appropriate in accordance with sound business judgment unless such extension,
renewal or settlement results in causing such Account to not be an Eligible
Receivable and thereby causes the aggregate unpaid balance of Working Capital
Loans to exceed the Borrowing Base and (ii) a refund or credit due as a result
of returned or damaged merchandise or as a discount for prompt payment, all in
accordance with the Company's ordinary course of business consistent with its
historical collection practices. The costs and expenses (including attorney's
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fees) of collection, whether incurred by the Company or the Agent, shall be
borne by the Company.
(H) Upon the occurrence and during the continuance of any
Event of Default, upon request of the Required Lenders through the Agent, to the
extent permitted by applicable law the Company will promptly notify (and the
Company hereby authorizes the Agent so to notify) each account debtor in respect
of any Account or Instrument that such Collateral has been assigned to the Agent
hereunder, and that any payments due or to become due in respect of such
Collateral are to be made directly to the Agent or its designee.
(I) The Company shall not permit any items of Equipment to
become a fixture to real estate (unless the Agent has a first priority Lien
thereon) or an accession to other personal property.
(J) Without the prior written consent of the Agent and except
in the ordinary course of business, the Company will not sell, lease, exchange,
assign or otherwise dispose of, or grant any option with respect to, any
Collateral except, subject to the rights of the Secured Parties hereunder if an
Event of Default shall have occurred and be continuing, as permitted under the
Credit Agreement including Section 8.06, whereupon, in the case of such a sale
or exchange, the Security Interests created hereby in such item (but not in any
Proceeds arising from such sale or exchange) shall cease immediately without any
further action on the part of the Agent, except the execution of UCC-3
termination statements.
(K) The Company will, promptly upon request, provide to the
Agent all information and evidence it may reasonably request concerning the
Collateral to enable the Agent to enforce the provisions of this Agreement.
(L) Not more than six months nor less than 30 days prior to
each date on which the Company proposes to take any action contemplated by
Section 4(A), the Company shall give notice to the Agent of such proposed
action, and, at the Company's cost and expense, cause to be delivered to the
Secured Parties with such notice, an opinion of counsel, reasonably satisfactory
to the Agent and substantially in the form of Exhibit C to the effect that all
financing statements and amendments or supplements thereto, continuation
statements and other documents required to be recorded or filed in order to
perfect and protect the Security Interests have been filed in each filing office
necessary for such purpose and that all filing fees and taxes, if any, payable
in connection with such filings have been paid in full.
(M) The Company shall not open or maintain any bank account,
money market account or investment account unless such account is first listed
on Exhibit A (as updated by the
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Company from time to time with the consent of the Agent, such consent not to be
unreasonably withheld) and is subject to a Lockbox Agreement.
(N) The Company shall (i) upon the occurrence of an Event of
Default and (ii) within 10 days after the aggregate value of all Equipment
consisting of motor vehicles, trucks and trailers owned by the Company and its
Subsidiaries shall exceed $150,000, deliver to the Agent any and all
certificates of title, applications for title or similar evidence of ownership
of such Equipment and shall cause the Agent to be named as lienholder on any
such certificate of title or other evidence of ownership.
SECTION 5. LOCKBOX ACCOUNT AND INSURANCE ACCOUNT.
(A) On the Closing Date, the Company shall deliver to the
Agent for each account listed on Exhibit A hereto (each a "LOCKBOX ACCOUNT"), a
lockbox agreement substantially in form of Exhibit D hereto or in such other
form as shall be satisfactory to the Agent (each a "LOCKBOX AGREEMENT"), which
shall establish such account in the name "NationsCredit Commercial Corporation,
as Agent", and under the exclusive control of the Agent. From and after the
Closing Date, there shall be deposited from time to time into the Lockbox
Accounts the cash Proceeds of the Collateral required to be delivered to the
Agent pursuant to subsection (B) of this Section 5 or any other provision of
this Agreement. Any income received with respect to the balance from time to
time standing to the credit of each Lockbox Account, including any interest or
capital gains on Liquid Investments, may be withdrawn from such Lockbox Account
in accordance with subsection (C) below. All right, title and interest in and to
the cash amounts on deposit from time to time in the Lockbox Accounts together
with any Liquid Investments from time to time made pursuant to subsection (D) of
this Section shall vest in the Agent (pursuant to the Lockbox Agreement for each
Lockbox Account), shall constitute part of the Collateral hereunder and shall
not constitute payment of the Secured Obligations until applied thereto as
hereinafter provided.
(B) The Company shall instruct all account debtors and other
Persons obligated in respect of all Accounts, to make all payments in respect of
such Accounts and shall use its reasonable best efforts to cause such account
debtors and other Persons to remit all such payments directly to a Lockbox
Account (if paid by wire transfer). In addition to the foregoing, the Company
agrees that if the proceeds of any Collateral hereunder (including the payments
made in respect of Accounts) shall be received by it, the Company shall as
promptly as possible deposit such proceeds into a Lockbox Account. Until so
deposited, all such proceeds shall be held in trust by the Company for and as
the property of the Secured Parties and shall not be commingled with any other
funds or property of the Company.
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(C) The balance from time to time standing to the credit of
the Lockbox Accounts shall, except upon the occurrence and continuation of an
Event of Default, be distributed to the Company in accordance with the
provisions of each Lockbox Agreement. If immediately available cash on deposit
in the Lockbox Accounts is not sufficient to make any distribution to the
Company referred to in the previous sentence of this Section 5(C), the Agent
shall cause to be liquidated as promptly as practicable Liquid Investments in
the Lockbox Accounts designated by the Company as required to obtain sufficient
cash to make such distribution and, notwithstanding any other provision of this
Section 5, such distribution shall not be made until such liquidation has taken
place. Upon the occurrence and continuation of an Event of Default, the Agent
shall, if so instructed by the Required Lenders, apply or cause to be applied
(subject to collection) any or all of the balance from time to time standing to
the credit of any Lockbox Accounts in the manner specified in Section 9.
(D) Amounts on deposit in the Lockbox Accounts shall be
invested and re-invested from time to time in such Liquid Investments as the
Company shall determine, which Liquid Investments shall be held in the name and
be under the control of the Agent; provided that, if an Event of Default has
occurred and is continuing, the Agent shall, if instructed by the Required
Lenders, cause such Liquid Investments to be liquidated and apply or cause to be
applied the proceeds thereof to the payment of the Secured Obligations in the
manner specified in Section 9. For this purpose, "Liquid Investments" means
Temporary Cash Investments; provided that (i) each Liquid Investment shall
mature within 30 days after it is acquired by the Agent and (ii) in order to
provide the Agent, for the benefit of the Secured Parties, with a perfected
security interest therein, each Liquid Investment shall be either:
(i) evidenced by negotiable certificates or instruments, or
if non-negotiable then issued in the name of the Agent, which (together
with any appropriate instruments of transfer) are delivered to, and
held by, the Agent or an agent thereof (which shall not be the Company
or any of its Affiliates) in the State of Georgia; or
(ii) in book-entry form and issued by the United States and
subject to pledge under applicable state law and Treasury regulations
and as to which (in the opinion of counsel to the Agent) appropriate
measures shall have been taken for perfection of the Security
Interests.
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SECTION 6. GENERAL AUTHORITY.
The Company hereby irrevocably appoints the Agent its true and
lawful attorney, with full power of substitution, in the name of the Company,
the Secured Parties or otherwise, for the sole use and benefit of the Secured
Parties, but at the Company's expense, to the extent permitted by law to
exercise, at any time and from time to time while an Event of Default has
occurred and is continuing, all or any of the following powers with respect to
all or any of the Collateral:
(i) to demand, ▇▇▇ for, collect, receive and give
acquittance for any and all monies due or to become due thereon or by
virtue thereof,
(ii) to settle, compromise, compound, prosecute or defend any
action or proceeding with respect thereto,
(iii) to sell, transfer, assign or otherwise deal in or with
the same or the proceeds or avails thereof, as fully and effectually as
if the Agent were the absolute owner thereof, and
(iv) to extend the time of payment of any or all thereof and
to make any allowance and other adjustments with reference thereto;
provided that the Agent shall give the Company not less than ten days' prior
written notice of the time and place of any sale or other intended disposition
of any of the Collateral, except any Collateral which is perishable or threatens
to decline speedily in value or is of a type customarily sold on a recognized
market. The Company agrees that such notice constitutes "reasonable
notification" within the meaning of Section 9-504(3) of the UCC.
SECTION 7. REMEDIES UPON EVENT OF DEFAULT.
(A) If any Event of Default has occurred and is continuing,
the Agent may exercise on behalf of the Secured Parties all rights of a secured
party under the UCC (whether or not in effect in the jurisdiction where such
rights are exercised) and, in addition, the Agent may, without being required to
give any notice, except as herein or in the Credit Agreement or any other
Financing Document provided or as may be required by mandatory provisions of
law, (i) withdraw all cash and Liquid Investments in the Collateral Accounts and
apply such cash and Liquid Investments and other cash, if any, then held by it
as Collateral as specified in Section 9 and (ii) if there shall be no such cash
or Liquid Investments or if such cash and Liquid Investments shall be
insufficient to pay all the Secured Obligations in full, sell the Collateral or
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any part thereof at public or private sale, for cash, upon credit or for future
delivery, and at such price or prices as the Agent may deem satisfactory. The
Agent or any other Secured Party may be the purchaser of any or all of the
Collateral so sold at any public sale (or, if the Collateral is of a type
customarily sold in a recognized market or is of a type which is the subject of
widely distributed standard price quotations, at any private sale). The Company
will execute and deliver such documents and take such other action as the Agent
deems necessary or advisable in order that any such sale may be made in
compliance with law. Upon any such sale the Agent shall have the right to
deliver, assign and transfer to the purchaser thereof the Collateral so sold.
Each purchaser at any such sale shall hold the Collateral so sold to it
absolutely and free from any claim or right of whatsoever kind, including any
equity or right of redemption of the Company which may be waived, and the
Company, to the extent permitted by law, hereby specifically waives all rights
of redemption, stay or appraisal which it has or may have under any law now
existing or hereafter adopted. The notice (if any) of such sale required by
Section 6 shall (1) in case of a public sale, state the time and place fixed for
such sale, and (2) in the case of a private sale, state the day after which such
sale may be consummated. Any such public sale shall be held at such time or
times within ordinary business hours and at such place or places as the Agent
may fix in the notice of such sale. At any such sale the Collateral may be sold
in one lot as an entirety or in separate parcels, as the Agent may determine.
The Agent shall not be obligated to make any such sale pursuant to any such
notice. The Agent may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by announcement
at the time and place fixed for the sale, and such sale may be made at any time
or place to which the same may be so adjourned. In case of any sale of all or
any part of the Collateral on credit or for future delivery, the Collateral so
sold may be retained by the Agent until the selling price is paid by the
purchaser thereof, but the Agent shall not incur any liability in case of the
failure of such purchaser to take up and pay for the Collateral so sold and, in
case of any such failure, such Collateral may again be sold upon like notice.
The Agent, instead of exercising the power of sale herein conferred upon it, may
proceed by a suit or suits at law or in equity to foreclose the Security
Interests and sell the Collateral, or any portion thereof, under a judgment or
decree of a court or courts of competent jurisdiction.
(B) For the purpose of enforcing any and all rights and
remedies under this Agreement the Agent may (i) require the Company to, and the
Company agrees that it will, at its expense and upon the request of the Agent,
forthwith assemble all or any part of the Collateral as directed by the Agent
and make it available at a place designated by the Agent which is, in its
opinion, reasonably convenient to the Agent and the Company, whether at the
premises of the Company or otherwise, (ii) to the extent permitted by applicable
law, enter, with or without process of law and without breach of the peace, any
premise where any of the Collateral is or may be located, and without charge or
liability to it seize and remove such Collateral from such premises, (iii) have
access to and use the Company's books and records relating to the Collateral
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and (iv) prior to the disposition of the Collateral, store or transfer it
without charge in or by means of any storage or transportation facility owned or
leased by the Company, process, repair or recondition it or otherwise prepare it
for disposition in any manner and to the extent the Agent deems appropriate and,
in connection with such preparation and disposition, use without charge any
trademark, trade name, copyright, patent or technical process used by the
Company.
SECTION 8. LIMITATION ON DUTY OF AGENT IN RESPECT OF COLLATERAL.
Beyond the exercise of reasonable care in the custody thereof,
the Agent shall have no duty as to any Collateral in its possession or control
or in the possession or control of any agent or bailee or any income thereon or
as to the preservation of rights against prior parties or any other rights
pertaining thereto. The Agent shall be deemed to have exercised reasonable care
in the custody of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which it accords its own property, and
shall not be liable or responsible for any loss or damage to any of the
Collateral, or for any diminution in the value thereof, by reason of the act or
omission of any warehouseman, carrier, forwarding agency, consignee or other
agent or bailee selected by the Agent in good faith.
SECTION 9. APPLICATION OF PROCEEDS.
Upon the occurrence and during the continuance of an Event of
Default, the proceeds of any sale of, or other realization upon, all or any part
of the Collateral and any cash held in the Collateral Accounts shall be applied
by the Agent in the following order of priorities:
first, to payment of the expenses of such sale or other
realization, including reasonable compensation to agents and counsel
for the Agent, and all expenses, liabilities and advances incurred or
made by the Agent in connection therewith, and any other unreimbursed
expenses for which the Agent or any other Secured Party is to be
reimbursed pursuant to Section 10.04 of the Credit Agreement or Section
12 hereof and unpaid fees owing to the Agent under the Credit
Agreement;
second, to the ratable payment of accrued but unpaid interest
on the Secured Obligations in accordance with the provisions of the
Credit Agreement;
third, to the ratable payment of unpaid principal of the
Secured Obligations;
fourth, to the ratable payment of all other Secured
Obligations, until all Secured Obligations shall have been paid in
full; and
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finally, to payment to the Company or its successors or
assigns, or as a court of competent jurisdiction may direct, of any
surplus then remaining from such proceeds.
The Agent may make distributions hereunder in cash or in kind or, on a ratable
basis, in any combination thereof.
SECTION 10. CONCERNING THE AGENT.
The provisions of Section 10.05 and Article XI of the Credit
Agreement shall inure to the benefit of the Agent in respect of this Agreement
and shall be binding upon the parties to the Credit Agreement in such respect.
In furtherance and not in derogation of the rights, privileges and immunities of
the Agent therein set forth:
(A) The Agent is authorized to take all such action as is
provided to be taken by it as Agent hereunder and all other action reasonably
incidental thereto. As to any matters not expressly provided for herein
(including the timing and methods of realization upon the Collateral), the Agent
shall act or refrain from acting in accordance with written instructions from
the Required Lenders or, in the absence of such instructions, in accordance with
its discretion.
(B) The Agent shall not be responsible for the existence,
genuineness or value of any of the Collateral or for the validity, perfection,
priority or enforceability of the Security Interests in any of the Collateral,
whether impaired by operation of law or by reason of any action or omission to
act on its part hereunder. The Agent shall have no duty to ascertain or inquire
as to the performance or observance of any of the terms of this Agreement by the
Company.
SECTION 11. APPOINTMENT OF CO-AGENTS.
At any time or times, in order to comply with any legal
requirement in any jurisdiction, the Agent may appoint another bank or trust
company or one or more other persons, either to act as co-agent or co-agents,
jointly with the Agent, or to act as separate agent or agents on behalf of the
Secured Parties with such power and authority as may be necessary for the
effectual operation of the provisions hereof and may be specified in the
instrument of appointment (which may, in the discretion of the Agent, include
provisions for the protection of such co-agent or separate agent similar to the
provisions of Section 10).
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SECTION 12. EXPENSES.
In the event that the Company fails to comply with the
provisions of the Credit Agreement or this Agreement, such that the value of any
Collateral or the validity, perfection, rank or value of any Security Interest
is thereby diminished or potentially diminished or put at risk, the Agent if
requested by the Required Lenders may, but shall not be required to, effect such
compliance on behalf of the Company, and the Company shall reimburse the Agent
for the costs thereof on demand. All insurance expenses and all expenses of
protecting, storing, warehousing, appraising, insuring, handling, maintaining,
and shipping the Collateral, any and all excise, property, sales, and use taxes
imposed by any state, federal, or local authority on any of the Collateral, or
in respect of periodic appraisals and inspections of the Collateral to the
extent the same may be requested by the Required Lenders from time to time as
provided in the Credit Agreement, or in respect of the sale or other disposition
thereof shall be borne and paid by the Company; and if the Company fails to
promptly pay any portion thereof when due, the Agent or any other Secured Party
may, at its option, but shall not be required to, pay the same and charge the
Company's account therefor, and the Company agrees to reimburse the Agent or
such other Secured Party therefor on demand. All sums so paid or incurred by the
Agent or any other Secured Party for any of the foregoing and any and all other
sums for which the Company may become liable hereunder and all costs and
expenses (including attorneys' fees, legal expenses and court costs) reasonably
incurred by the Agent or any other Secured Party in enforcing or protecting the
Security Interests or any of their rights or remedies under this Agreement,
shall, together with interest thereon until paid as provided in Section 10.03 of
the Credit Agreement, be additional Secured Obligations hereunder.
SECTION 13. TERMINATION OF SECURITY INTERESTS; RELEASE OF COLLATERAL.
Upon the repayment in full of all Secured Obligations (other
than contingent indemnity or similar claims not yet asserted) and the
termination of the Commitment under the Credit Agreement, the Security Interests
shall terminate and all rights to the Collateral shall revert to the Company. At
any time and from time to time prior to such termination of the Security
Interests, the Agent may release any of the Collateral with the prior written
consent of the Required Lenders. Upon any such termination of the Security
Interests or release of Collateral, the Agent will, at the expense of the
Company, promptly execute and deliver to the Company such documents as the
Company shall reasonably request to evidence the termination of the Security
Interests or the release of such Collateral, as the case may be.
SECTION 14. NOTICES.
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All notices, communications and distributions hereunder shall
be given in accordance with Section 12.03 of the Credit Agreement.
SECTION 15. WAIVERS, NON-EXCLUSIVE REMEDIES.
No failure on the part of the Agent to exercise, and no delay
in exercising and no course of dealing with respect to, any right under this
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise by the Agent or any Secured Party of any right under the Credit
Agreement, any of the other Financing Documents or this Agreement preclude any
other or further exercise thereof or the exercise of any other right. The rights
in this Agreement, the Credit Agreement and the other Financing Documents are
cumulative and are not exclusive of any other remedies provided by law.
SECTION 16. SUCCESSORS AND ASSIGNS.
This Agreement is for the benefit of the Agent and the Secured
Parties and their successors and assigns, and in the event of an assignment of
all or any of the Secured Obligations, the rights hereunder, to the extent
applicable to the indebtedness so assigned, may be transferred with such
indebtedness. This Agreement shall be binding on the Company and its successors
and assigns.
SECTION 17. CHANGES IN WRITING.
Neither this Agreement nor any provision hereof may be
changed, waived, discharged or terminated orally, but only in writing signed by
the Company and the Agent with the consent of the Required Lenders.
SECTION 18. GEORGIA LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF GEORGIA (WITHOUT REFERENCE TO PRINCIPLES OR
CONFLICTS OF LAW), EXCEPT AS OTHERWISE REQUIRED BY MANDATORY PROVISIONS OF LAW
AND EXCEPT TO THE EXTENT THAT REMEDIES PROVIDED BY THE LAWS OF ANY JURISDICTION
OTHER THAN GEORGIA ARE GOVERNED BY THE LAWS OF SUCH JURISDICTION.
SECTION 19. SEVERABILITY.
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If any provision hereof is invalid or unenforceable in any
jurisdiction, then, to the fullest extent permitted by law, (i) the other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be liberally construed in favor of the Agent and the other Secured Parties
in order to carry out the intentions of the parties hereto as nearly as may be
possible; and (ii) the invalidity or unenforceability of any provision hereof in
any jurisdiction shall not affect the validity or enforceability of such
provision in any other jurisdiction.
SECTION 20. COUNTERPARTS.
This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective authorized officers as of the
day and year first above written.
HORIZON MEDICAL PRODUCTS, INC.
By:
Title:
NATIONSCREDIT COMMERCIAL CORPORATION,
as Agent
By:
Title:
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EXHIBIT A
LIST OF ACCOUNTS
Account Bank
------- ----
[TO BE COMPLETED BY BORROWER]
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EXHIBIT B
PERFECTION CERTIFICATE
The undersigned, __________________ of Horizon Medical
Products, Inc., a Georgia corporation (the "COMPANY"), hereby certifies with
reference to the Security Agreement dated as of July ____, 1997, between the
Company and NationsCredit Commercial Corporation, as Agent (terms defined
therein being used herein as therein defined), to the Agent and each Lender as
follows:
1. Names. (a) The exact corporate name of the Company as it
appears in its certificate of incorporation is as follows:
Horizon Medical Products, Inc.
(b) Set forth below is each other corporate name the Company
has had since its organization, together with the date of the relevant change:
(c) The Company has not changed its identity or form of
organization in any way within the past five years.
(d) The following is a list of all other names (including
trade names or similar appellations) used by the Company or any of its divisions
or other business units at any time during the past five years:
[Names of Company]
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2. Current Locations. (a) The chief executive office of the
Company is located at the following address:
Mailing Address County State
--------------- ------ -----
(b) The following are all the locations where the Company
maintains any books or records relating to any Accounts:
Mailing Address County State
--------------- ------ -----
(c) The following are all the places of business of the
Company not identified above:
Name Mailing Address County State
---- --------------- ------ -----
(d) The following are all the locations where the Company
maintains any Inventory not identified above:
Name Mailing Address County State
---- --------------- ------ -----
(e) The following are the names and addresses of all Persons
other than the Company which have possession of any of the Company's Inventory:
Name Mailing Address County State
---- --------------- ------ -----
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3. Prior Locations. (a) Set forth below is the information
required by subparagraphs (a), (b) and (c) of paragraph 2 with respect to each
location or place of business maintained by the Company at any time during the
past five years:
(b) Set forth below is the information required by
subparagraphs (d) and (e) of paragraph 2 with respect to each location or bailee
where or with whom Inventory has been lodged at any time during the past four
months:
4. Unusual Transactions. All Accounts have been originated by
the Company and all Inventory and Equipment has been acquired by the Company in
the ordinary course of its business.
5. File Search Reports. Attached hereto as Schedule 5(A) is a
true copy of a file search report from the Uniform Commercial Code filing
officer in each jurisdiction identified in paragraph 2 or 3 above with respect
to each name set forth in paragraph 1 above. Attached hereto as Schedule 5(B) is
a true copy of each financing statement or other filing identified in such file
search reports.
6. UCC Filings. Duly signed financing statements on Form UCC-1
attached as Schedule 6 hereto have been duly filed in the Uniform Commercial
Code filing office in each jurisdiction identified in paragraph 2 hereof and
each such filing has been duly acknowledged by the filing officer.
7. Schedule of Filings. Attached hereto as Schedule 7 is a
schedule setting forth filing information with respect to the filings described
in paragraph 6 above.
8. Filing Fees. All filing fees and taxes payable in
connection with the filings described in paragraph 6 above have been paid.
9. Patents, Trademarks, Copyrights. All patents, trademarks
and copyrights owned by the Company as of the date hereof and all patent
licenses, trademark licenses and
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copyright licenses to which the Company is a party as of the date hereof are
listed on Schedule 9 hereto.
IN WITNESS WHEREOF, we have hereunto set our hands this ____
day of July, 1997.
Title:
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EXHIBIT C
OPINION OF
COUNSEL FOR THE COMPANY
* * * *
1. The Security Agreement creates a valid security interest,
for the benefit of the Secured Parties, in all the Company's right, title and
interest in all Collateral to the extent the UCC is applicable thereto (the
"SECURITY INTEREST").
2. UCC financing statements and amendments thereto
(collectively, the "FINANCING STATEMENTS") have been filed in the filing offices
listed in Schedule 7 to the Perfection Certificate (the "FILING JURISDICTIONS"),
which are all of the offices in which filings are required to perfect the
Security Interest, to the extent the Security Interest may be perfected by
filing under the UCC, and no further filing or recording of any document or
instrument or other action will be required so to perfect the Security Interest
in the Collateral in which a security interest may be perfected by filing a
financing statement under the UCC, except that (i) continuation statements with
respect to each Financing Statement must be filed in accordance with the UCC;
(ii) additional filings may be necessary if the Company changes its name,
identity or corporate structure or the jurisdiction in which its places of
business, its chief executive office or the Collateral are located; and (iii) we
express no opinion on the perfection of, or need for further filing or recording
to perfect, the Security Interest in goods now or hereafter located in any
jurisdiction other than the Filing Jurisdictions.
3. There are
(i) Based on [describe search reports], as of that date of
such reports, no UCC financing statements which name the Company as
debtor or seller and cover any of the Collateral, other than the
Financing Statements, [and the financing statements with respect to
Permitted Liens annexed as Schedule 5(A) to the Perfection
Certificate], listed in the available records in the UCC filing offices
set forth in paragraphs 2 and 3 of the Perfection Certificate, which,
based on the information provided to us as to the location of the
Collateral, the Company and its books and records, include all of the
offices prescribed under the UCC as the offices in which filings should
have been made to perfect security interests in the Collateral; and
(ii) Based on [describe search reports], as of that date of
such reports, no notices of the filing of any federal tax lien (filed
pursuant to Section 6323 of the Internal
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Revenue Code) or any lien of the Pension Benefit Guaranty Corporation
(filed pursuant to Section 4068 of ERISA) covering any of the
Collateral listed in the available records in the [UCC filing office in
state of Company's chief executive office], which is the only office
having files which must be searched in order to fully determine the
existence of notices of the filing of federal tax liens (filed pursuant
to Section 6323 of the Internal Revenue Code) on the Collateral and
liens of the Pension Benefit Guaranty Corporation (filed pursuant to
Section 4068 of ERISA) on the Collateral.
4. The Security Interest validly secures the payment of all
future Loans made by the Lenders to the Company, whether or not at the time such
Loans are made an Event of Default or other event not within the control of the
Lenders has relieved or may relieve the Lenders from their obligations to make
such Loans, and is perfected to the extent set forth in paragraph 2 above with
respect to such future Loans. Insofar as the priority thereof is governed by the
UCC, the Security Interest has the same priority with respect to such future
Loans as it does with respect to Loans made on the date hereof.
Such opinion may contain such assumptions, qualifications and
limitations as the opinion of counsel for the Company delivered in connection
with the making of the initial Loan under the Credit Agreement.
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EXHIBIT D
FORM OF LOCKBOX AGREEMENT
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SCHEDULE 6
Description of Collateral
All accounts, chattel paper, contract rights, general
intangibles, inventory, equipment and documents, and all other property of the
Debtor all as more particularly described on Exhibit A attached hereto, now
owned or hereafter acquired, wherever located, and all proceeds thereof.
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SCHEDULE 7
SCHEDULE OF FILINGS
Date
Debtor Filing Office File Number of Filing
--------------------------------------------------------------------------------
-------------------------
* Indicate lapse date, if other than fifth anniversary.
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EXHIBIT D
PLEDGE AGREEMENT
AGREEMENT dated as of July 15, 1997, between HORIZON MEDICAL
PRODUCTS, INC., a Georgia corporation (the "COMPANY") and NATIONSCREDIT
COMMERCIAL CORPORATION, as agent for the Lenders referred to below (the
"AGENT").
W I T N E S S E T H:
WHEREAS, the Company is the sole stockholder of all of the
outstanding shares of every class of capital stock of the corporations described
on Schedule I attached hereto (collectively, the "SUBSIDIARIES"); and
WHEREAS, the Company, certain Lenders (the "LENDERS") and the
Agent are parties to a Credit Agreement of even date herewith (as the same may
be amended from time to time, the "CREDIT AGREEMENT"); and
WHEREAS, in order to induce the Lenders and the Agent to enter
into the Credit Agreement, the Company has agreed to grant a continuing security
interest in and to the Collateral (as hereafter defined) to secure obligations
of the Company under the Credit Agreement and the Notes issued pursuant thereto
and the other Financing Documents;
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS.
Terms defined in the Credit Agreement and not otherwise
defined herein have, as used herein, the respective meanings provided for
therein. The following additional terms, as used herein, have the following
respective meanings:
"COLLATERAL" has the meaning assigned to such term in Section
3(A).
"PLEDGED SECURITIES" means the Pledged Stock.
"PLEDGED STOCK" means the Subsidiaries Shares and any other
capital stock required to be pledged to the Agent pursuant to Section 3(B).
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"SECURED OBLIGATIONS" means the obligations secured under this
Agreement which include (a) all principal of and interest (including any
interest which accrues after the commencement of any case, proceeding or other
action relating to the bankruptcy, insolvency or reorganization of the Company,
whether or not allowed or allowable as a claim in any such proceeding) on any
Loan under, or any Note issued pursuant to, the Credit Agreement, (b) all other
amounts payable by the Company under any Financing Document, (c) all other
Obligations, and (d) any amendments, restatements, renewals, extensions or
modifications of any of the foregoing.
"SECURED PARTIES" means the Lenders and the Agent.
"SECURITY AGREEMENT" means that certain Security Agreement
dated the date hereof executed by the Company in favor of the Agent for the
benefit of the Agent and the Lenders.
"SECURITY INTERESTS" means the security interests in the
Collateral granted hereunder securing the Secured Obligations.
"SUBSIDIARIES SHARES" means one hundred percent (100%) of the
issued and outstanding shares of any class of capital stock of each Subsidiary
that the Company may now or hereafter own, control or hold, which stock as of
this date is described on Schedule I attached hereto.
"UCC" has the meaning given such term in the Security
Agreement.
Unless otherwise defined herein, or unless the context
otherwise requires, all terms used herein which are defined in the Georgia UCC
as in effect on the date hereof shall have the meanings therein stated.
SECTION 2. REPRESENTATIONS AND WARRANTIES.
Company represents and warrants as follows:
(A) Title to Pledged Securities. Company owns all of the
Pledged Securities, free and clear of any Liens other than the Security
Interests. All of the Pledged Stock has been duly authorized and validly issued,
and is fully paid and non-assessable, and is subject to no options to purchase
or similar rights of any Person. Company is not and will not become a party to
or otherwise bound by any agreement, other than this Agreement, which restricts
in any manner the rights of any present or future holder of any of the Pledged
Securities with respect thereto.
(B) Validity, Perfection and Priority of Security Interests.
Upon the delivery of certificates representing the Pledged Stock to the Agent in
accordance with Section 4 hereof, the Agent will have valid and perfected
security interests in the Collateral subject to no prior Lien. No registration,
recordation or filing with any governmental body, agency or official is
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required in connection with the execution or delivery of this Agreement or
necessary for the validity or enforceability hereof or for the perfection or
enforcement of the Security Interests. Neither the Company nor the Subsidiaries
has performed or will perform any acts which might prevent the Agent from
enforcing any of the terms and conditions of this Agreement or which would limit
the Agent in any such enforcement.
(C) UCC Filing Locations. The chief executive office of the
Company is located at its address set forth on the signature pages of the Credit
Agreement. Under the Uniform Commercial Code as in effect in the state in which
such office is located, no local filing is required to perfect a security
interest in collateral consisting of general intangibles.
SECTION 3. THE SECURITY INTERESTS.
In order to secure the full and punctual payment and
performance of the Secured Obligations in accordance with the terms thereof, and
to secure the performance of all the obligations of the Company hereunder:
(A) The Company hereby assigns and pledges to and with the
Agent for the benefit of the Secured Parties and grants to the Agent for the
benefit of the Secured Parties a security interest in the Pledged Securities,
and all of its rights and privileges with respect to the Pledged Securities, and
all income and profits thereon, and all interest, dividends and other payments
and distributions with respect thereto, and all proceeds of the foregoing (the
"COLLATERAL"). Contemporaneously with the execution and delivery hereof, the
Company is delivering the certificates representing the Subsidiaries Shares in
pledge hereunder.
(B) In the event that the Subsidiaries at any time issue any
additional or substitute shares of capital stock of any class or owes any other
Debt to the Company, the Company will immediately pledge and deposit with the
Agent certificates representing all such shares or an instrument evidencing such
other Debt as additional security for the Secured Obligations. All such shares
and instruments constitute Pledged Securities and are subject to all provisions
of this Agreement.
(C) The Security Interests are granted as security only and
shall not subject any Secured Party to, or transfer or in any way affect or
modify, any obligation or liability of the Company or the Subsidiaries with
respect to any of the Collateral or any transaction in connection therewith.
SECTION 4. DELIVERY OF PLEDGED SECURITIES.
All certificates representing Pledged Stock delivered to the
Agent by the Company pursuant hereto shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, and accompanied by any required transfer tax stamps, all in
form and substance satisfactory to the Agent.
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SECTION 5. FILING; FURTHER ASSURANCES.
(A) The Company agrees that it will, at its expense and in
such manner and form as the Agent may require, execute, deliver, file and record
any financing statement, specific assignment or other paper and take any other
action that may be necessary or desirable, or that the Agent may request, in
order to create, preserve, perfect or validate any Security Interest or to
enable the Agent to exercise and enforce its rights hereunder with respect to
any of the Collateral. To the extent permitted by applicable law, the Company
hereby authorizes the Agent to execute and file, in the name of the Company or
otherwise, UCC financing statements (which may be carbon, photographic,
photostatic or other reproductions of this Agreement or of a financing statement
relating to this Agreement) which the Agent in its sole discretion may deem
necessary or appropriate to further perfect the Security Interests.
(B) The Company agrees that it will not change (i) its name,
identity or form of organization in any manner or (ii) the location of its chief
executive office unless it shall have given the Agent not less than 30 days'
prior notice thereof.
SECTION 6. RECORD OWNERSHIP OF PLEDGED STOCK.
The Agent may at any time or from time to time, upon the
occurrence and during the continuance of an Event of Default, in its sole
discretion, cause any or all of the Pledged Stock to be transferred of record
into the name of the Agent or its nominee. The Company will promptly give to the
Agent copies of any notices or other communications received by it with respect
to Pledged Stock registered in the name of the Company and the Agent will
promptly give to the Company copies of any notices and communications received
by the Agent with respect to Pledged Stock registered in the name of the Agent
or its nominee.
SECTION 7. RIGHT TO RECEIVE DISTRIBUTIONS ON COLLATERAL.
Upon the occurrence and during the continuance of any Event of
Default, the Agent shall have the right to receive and to retain as Collateral
hereunder all dividends, interest and other payments and distributions made upon
or with respect to the Collateral and the Company shall take all such action as
the Agent may deem necessary or appropriate to give effect to such right. Upon
the occurrence and during the continuance of an Event of Default, all such
dividends, interest and other payments and distributions which are received by
the Company shall be received in trust as Collateral for the benefit of the
Agent and the Secured Parties and, if the Agent so directs, shall be segregated
from other funds of the Company and shall, forthwith upon demand by the Agent
during the continuance of an Event of Default, be paid over to the Agent as
Collateral in the same form as received (with any necessary endorsement). After
all Events of Default that shall have occurred have been cured, the Agent's
right to retain dividends, interest and other payments and distributions under
this Section 7 shall cease and the Agent shall pay over to the Company any such
Collateral retained by the Agent during the continuance of an Event of Default.
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SECTION 8. RIGHT TO VOTE PLEDGED STOCK.
Unless an Event of Default shall have occurred and be
continuing, the Company shall have the right, from time to time, to vote and to
give consents, ratifications and waivers with respect to the Pledged Stock, and
the Agent shall, upon receiving a written request from the Company accompanied
by a certificate signed by its principal financial officer stating that no Event
of Default has occurred and is continuing, deliver to the Company or as
specified in such request such proxies, powers of attorney, consents,
ratifications and waivers in respect of any of the Pledged Stock which is
registered in the name of the Agent or its nominee as shall be specified in such
request and be in form and substance satisfactory to the Agent.
If an Event of Default shall have occurred and be continuing,
the Agent shall have the right to the extent permitted by law and the Company
shall take all such action as may be necessary or appropriate to give effect to
such right, to vote and to give consents, ratifications and waivers, and take
any other action with respect to any or all of the Pledged Stock with the same
force and effect as if the Agent were the absolute and sole owner thereof.
SECTION 9. GENERAL AUTHORITY.
The Company hereby irrevocably appoints the Agent its true and
lawful attorney, with full power of substitution, in the name of the Company,
the Agent, the Secured Parties or otherwise, for the sole use and benefit of the
Agent and Secured Parties, but at the expense of the Company, to the extent
permitted by law to exercise, at any time and from time to time while an Event
of Default has occurred and is continuing, all or any of the following powers
with respect to all or any of the Collateral:
(i) to demand, ▇▇▇ for, collect, receive and give
acquittance for any and all monies due or to become due upon or by
virtue thereof,
(ii) settle, compromise, compound, prosecute or defend any
action or proceeding with respect thereto,
(iii) to sell, transfer, assign or otherwise deal in or with
the same or the proceeds or avails thereof, as fully and effectually as
if the Agent were the absolute owner thereof, and
(iv) to extend the time of payment of any or all thereof and
to make any allowance and other adjustments with reference thereto;
provided that the Agent shall give the Company not less than ten days' prior
written notice of the time and place of any sale or other intended disposition
of any of the Collateral except any Collateral which is perishable or threatens
to decline speedily in value or is of a type customarily sold on a recognized
market. The Agent and the Company agree that such notice constitutes "reasonable
notification" within the meaning of Section 9-504(3) of the UCC.
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SECTION 10. REMEDIES UPON EVENT OF DEFAULT.
If any Event of Default shall have occurred and be continuing,
the Agent may exercise on behalf of the Secured Parties all the rights of a
secured party under the UCC (whether or not in effect in the jurisdiction where
such rights are exercised) and, in addition, the Agent may, without being
required to give any notice, except as herein provided or as may be required by
mandatory provisions of law, (i) apply the cash, if any, then held by it as
Collateral as specified in Section 13 and (ii) if there shall be no such cash or
if such cash shall be insufficient to pay all the Secured Obligations in full,
sell the Collateral or any part thereof at public or private sale or at any
broker's board or on any securities exchange, for cash, upon credit or for
future delivery, and at such price or prices as the Agent may deem satisfactory.
Any Secured Party may be the purchaser of any or all of the Collateral so sold
at any public sale (or, if the Collateral is of a type customarily sold in a
recognized market or is of a type which is the subject of widely distributed
standard price quotations, at any private sale). The Agent is authorized, in
connection with any such sale, if it deems it advisable so to do, (i) to
restrict the prospective bidders on or purchasers of any of the Pledged
Securities to a limited number of sophisticated investors who will represent and
agree that they are purchasing for their own account for investment and not with
a view to the distribution or sale of any of such Pledged Securities, (ii) to
cause to be placed on certificates for any or all of the Pledged Securities or
on any other securities pledged hereunder a legend to the effect that such
security has not been registered under the Securities Act of 1933 and may not be
disposed of in violation of the provision of said Act, and (iii) to impose such
other limitations or conditions in connection with any such sale as the Agent
deems necessary or advisable in order to comply with said Act or any other law.
The Company covenants and agrees that it will execute and deliver such documents
and take such other action as the Agent deems necessary or advisable in order
that any such sale may be made in compliance with law. Upon any such sale the
Agent shall have the right to deliver, assign and transfer to the purchaser
thereof the Collateral so sold. Each purchaser at any such sale shall hold the
Collateral so sold absolutely and free from any claim or right of whatsoever
kind, including any equity or right of redemption of the Company which may be
waived, and the Company, to the extent permitted by law, hereby specifically
waives all rights of redemption, stay or appraisal which it has or may have
under any law now existing or hereafter adopted. The notice (if any) of such
sale required by Section 9 shall (1) in case of a public sale, state the time
and place fixed for such sale, (2) in case of sale at a broker's board or on a
securities exchange, state the board or exchange at which such sale is to be
made and the day on which the Collateral, or the portion thereof so being sold,
will first be offered for sale at such board or exchange, and (3) in the case of
a private sale, state the day after which such sale may be consummated. Any such
public sale shall be held at such time or times within ordinary business hours
and at such place or places as the Agent may fix in the notice of such sale. At
any such sale the Collateral may be sold in one lot as an entirety or in
separate parcels, as the Agent may determine. The Agent shall not be obligated
to make any such sale pursuant to any such notice. The Agent may, without notice
or publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to which the same may be so
adjourned. In case of any sale of all or any part of the Collateral on credit or
for future delivery, the Collateral so sold may be retained by the Agent until
the selling price is paid by the purchaser thereof, but the Agent
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shall not incur any liability in case of the failure of such purchaser to take
up and pay for the Collateral so sold and, in case of any such failure, such
Collateral may again be sold upon like notice. The Agent, instead of exercising
the power of sale herein conferred upon it, may proceed by a suit or suits at
law or in equity to foreclose the Security Interests and sell the Collateral, or
any portion thereof, under a judgment or decree of a court or courts of
competent jurisdiction.
SECTION 11. EXPENSES.
The Company agrees that it will forthwith upon demand pay to
the Agent:
(i) the amount of any taxes which the Agent may have been
required to pay by reason of the Security Interests or to free any of
the Collateral from any Lien thereon, and
(ii) the amount of any and all out-of-pocket expenses,
including the reasonable fees and disbursements of counsel and of any
other experts, which the Agent may incur in connection with (w) the
administration or enforcement of this Agreement, including such
expenses as are incurred to preserve the value of the Collateral and
the validity, perfection, rank and value of any Security Interest, (x)
the collection, sale or other disposition of any of the Collateral, (y)
the exercise by the Agent of any of the rights conferred upon it
hereunder or (z) any Default or Event of Default.
Any such amount not paid on demand shall bear interest as provided in Section
10.03 of the Credit Agreement.
SECTION 12. LIMITATION ON DUTY OF AGENT IN RESPECT OF COLLATERAL.
Beyond the exercise of reasonable care in the custody thereof,
the Agent shall have no duty as to any Collateral in its possession or control
or in the possession or control of any agent or bailee or any income thereon or
as to the preservation of rights against prior parties or any other rights
pertaining thereto. The Agent shall be deemed to have exercised reasonable care
in the custody and preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that which it accords
its own property, and shall not be liable or responsible for any loss or damage
to any of the Collateral, or for any diminution in the value thereof, by reason
of the act or omission of any agent or bailee selected by the Agent in good
faith.
SECTION 13. APPLICATION OF PROCEEDS.
Upon the occurrence and during the continuance of an Event of
Default, the proceeds of any sale of, or other realization upon, all or any part
of the Collateral and any cash held shall be applied by the Agent in the
following order of priorities:
first, to payment of the expenses of such sale or other
realization, including reasonable compensation to agents and counsel
for the Agent, and all expenses, liabilities
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and advances incurred or made by the Agent in connection therewith, and
any other unreimbursed expenses for which the Agent or any Secured
Party is to be reimbursed pursuant to Section 10.04 of the Credit
Agreement or Section 11 hereof and unpaid fees owing to the Agent under
the Credit Agreement;
second, to the ratable payment of accrued but unpaid interest
on the Secured Obligations in accordance with the provisions of the
Credit Agreement;
third, to the ratable payment of unpaid principal of the
Secured Obligations;
fourth, to the ratable payment of all other Secured
Obligations, until all Secured Obligations shall have been paid in
full; and
finally, to payment to the Company or its successors or
assigns, or as a court of competent jurisdiction may direct, of any
surplus then remaining from such proceeds.
SECTION 14. CONCERNING THE AGENT.
The provisions of Article IX of the Credit Agreement shall
inure to the benefit of the Agent in respect of this Agreement and shall be
binding upon the parties to the Credit Agreement in such respect. In furtherance
and not in derogation of the rights, privileges and immunities of the Agent
therein set forth:
(A) The Agent is authorized to take all such action as is
provided to be taken by it as Agent hereunder and all other action reasonably
incidental thereto. As to any matters not expressly provided for herein
(including, without limitation, the timing and methods of realization upon the
Collateral) the Agent shall act or refrain from acting in accordance with
written instructions from the Required Lenders or, in the absence of such
instructions, in accordance with its discretion.
(B) The Agent shall not be responsible for the existence,
genuineness or value of any of the Collateral or for the validity, perfection,
priority or enforceability of the Security Interests in any of the Collateral,
whether impaired by operation of law or by reason of any action or omission to
act on its part hereunder. The Agent shall have no duty to ascertain or inquire
as to the performance or observance of any of the terms of this Agreement by the
Company.
SECTION 15. APPOINTMENT OF CO-AGENTS.
At any time or times, in order to comply with any legal
requirement in any jurisdiction, the Agent may appoint another bank or trust
company or one or more other persons, either to act as co-agent or co-agents,
jointly with the Agent, or to act as separate agent or agents on behalf of the
Secured Parties with such power and authority as may be necessary for the
effectual operation of the provisions hereof and may be specified in the
instrument of
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appointment (which may, in the discretion of the Agent, include provisions for
the protection of such co-agent or separate agent similar to the provisions of
Section 14).
SECTION 16. TERMINATION OF SECURITY INTERESTS; RELEASE OF COLLATERAL.
Upon the repayment in full of all Secured Obligations (other
than contingent indemnity or similar claims not yet asserted) and the
termination of the Commitment under the Credit Agreement, the Security Interests
shall terminate and all rights to the Collateral shall revert to the Company. At
any time and from time to time prior to such termination of the Security
Interests, the Agent may release any of the Collateral with the prior written
consent of the Lenders. Upon any such termination of the Security Interests or
release of Collateral, the Agent will, at the expense of the Company, execute
and deliver to the Company such documents as the Company shall reasonably
request to evidence the termination of the Security Interests or the release of
such Collateral, as the case may be.
SECTION 17. NOTICES.
All notices, communications and distributions hereunder shall
be given in accordance with Section 12.03 of the Credit Agreement.
SECTION 18. WAIVERS, NON-EXCLUSIVE REMEDIES.
No failure on the part of the Agent to exercise, and no delay
in exercising and no course of dealing with respect to, any right under this
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise by the Agent of any right under the Credit Agreement, any other
Financing Document or this Agreement preclude any other or further exercise
thereof or the exercise of any other right. The rights in this Agreement, the
other Security Documents and the Credit Agreement are cumulative and are not
exclusive of any other remedies provided by law.
SECTION 19. SUCCESSORS AND ASSIGNS.
This Agreement is for the benefit of the Agent and the other
Secured Parties and their successors and assigns, and in the event of an
assignment of all or any of the Secured Obligations, the rights hereunder, to
the extent applicable to the indebtedness so assigned, may be transferred with
such indebtedness. This Agreement shall be binding on the Company and its
successors and assigns.
SECTION 20. CHANGES IN WRITING.
Neither this Agreement nor any provision hereof may be
changed, waived, discharged or terminated orally, but only in writing signed by
the Company and the Agent with the consent of the Required Lenders (or in the
case of Section 16, all of the Lenders).
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SECTION 21. GEORGIA LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF GEORGIA (WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW), EXCEPT AS OTHERWISE REQUIRED BY MANDATORY PROVISIONS OF LAW
AND EXCEPT TO THE EXTENT THAT REMEDIES PROVIDED BY THE LAWS OF ANY JURISDICTION
OTHER THAN GEORGIA ARE GOVERNED BY THE LAWS OF SUCH JURISDICTION.
SECTION 22. SEVERABILITY.
If any provision hereof is invalid or unenforceable in any
jurisdiction, then, to the fullest extent permitted by law, (i) the other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be liberally construed in favor of the Agent and the Secured Parties in
order to carry out the intentions of the parties hereto as nearly as may be
possible; and (ii) the invalidity or unenforceability of any provision hereof in
any jurisdiction shall not affect the validity or enforceability of such
provision in any other jurisdiction.
SECTION 23. COUNTERPARTS.
This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective authorized
officers as of the day and year first above written.
HORIZON MEDICAL PRODUCTS, INC.
By:
------------------------------------
Title:
---------------------------------
NATIONSCREDIT COMMERCIAL CORPORATION
By:
------------------------------------
Title:
---------------------------------
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SCHEDULE I
PLEDGED STOCK
NUMBER AND PERCENTAGE OF
NAME OF CORPORATION CLASS OF SHARES SHARES OF SUCH CLASS
------------------- --------------- --------------------
Horizon Acquisition Corp. 1,000 100%
Strato/Infusaid, Inc. 275,294 100%
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EXHIBIT F
SUBSIDIARY SECURITY AGREEMENT
AGREEMENT dated as of July 15, 1997, among the CORPORATIONS
listed in Exhibit A attached hereto and incorporated herein by reference
(hereinafter referred to individually as the "PLEDGOR" and collectively as the
"PLEDGORS") and NATIONSCREDIT COMMERCIAL CORPORATION, as Agent for the Lenders
referred to below (the "AGENT").
W I T N E S S E T H :
WHEREAS, Horizon Medical Products, Inc., a Georgia corporation
(the "COMPANY"), certain lenders (the "LENDERS") and the Agent are parties to a
Credit Agreement of even date herewith (as the same may be amended from time to
time, the "CREDIT AGREEMENT"); and
WHEREAS, the Company and the Pledgors share an identity of
interests as members of a consolidated group of companies engaged in
substantially similar businesses; the Company provides certain centralized
financial, account and management services to the Pledgors; and the making of
Loans to the Company under the Credit Agreement from time to time will enhance
the overall financial strength and stability of the Company's corporate group.
WHEREAS, in order to induce such Lenders and the Agent to
enter into the Credit Agreement and as a condition precedent to the Lenders'
obligation to make Loans from time to time to the Company under the Credit
Agreement, the Pledgors have agreed to guaranty the repayment of such Loans and
other Obligations of the Company pursuant to that certain Subsidiary Guaranty
Agreement, dated of the date hereof (the "GUARANTY"), and to execute and deliver
to Lender this Agreement to secure the Guaranty;
NOW THEREFORE, in consideration of the premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS.
Terms defined in the Credit Agreement and not otherwise
defined herein have, as used herein, the respective meanings provided for
therein. The following additional terms, as used herein, have the following
respective meanings:
"ACCOUNTS" means all "accounts" (as defined in the UCC) now
owned or hereafter acquired by any Pledgor, and shall also mean and include all
accounts receivable, contract rights, book debts, notes, drafts and other
obligations or indebtedness owing to any
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Pledgor arising from the sale, lease or exchange of goods or other property by
such Pledgor and/or the performance of services by such Pledgor (including any
such obligation which might be characterized as an account, contract right or
general intangible under the Uniform Commercial Code in effect in any
jurisdiction) and all of any Pledgor's rights in, to and under all purchase
orders for goods, services or other property, and all of any Pledgor's rights to
any goods, services or other property represented by any of the foregoing
(including returned or repossessed goods and unpaid sellers' rights of
rescission, replevin, reclamation and rights to stoppage in transit) and all
monies due to or to become due to such Pledgor under all contracts for the sale,
lease or exchange of goods or other property and/or the performance of services
by it (whether or not yet earned by performance on the part of such Pledgor), in
each case whether now in existence or hereafter arising or acquired including,
without limitation, the right to receive the proceeds of said purchase orders
and contracts and all collateral security and guarantees of any kind given by
any Person with respect to any of the foregoing.
"COLLATERAL" has the meaning set forth in Section 3.
"COLLATERAL ACCOUNTS" means the Lockbox Accounts.
"DOCUMENTS" means all "documents" (as defined in the UCC) or
other receipts covering, evidencing or representing goods, now owned or
hereafter acquired by any Pledgor.
"EQUIPMENT" means all "equipment" (as defined in the UCC) now
owned or hereafter acquired by any Pledgor, including without limitation all
motor vehicles, trucks, trailers, railcars and barges.
"GENERAL INTANGIBLES" means all "general intangibles" (as
defined in the UCC) now owned or hereafter acquired by any Pledgor, including
(i) all obligations or indebtedness owing to such Pledgor (other than Accounts)
from whatever source arising, (ii) all patents, patent licenses, trademarks,
trademark licenses, rights in intellectual property, goodwill, trade names,
service marks, trade secrets, copyrights, permits and licenses, (iii) all rights
or claims in respect of refunds for taxes paid and (iv) all rights in respect of
any pension plan or similar arrangement maintained for employees of any member
of the ERISA Group.
"INSTRUMENTS" means all "instruments", "chattel paper" or
"letters of credit" (each as defined in the UCC), including those evidencing,
representing, arising from or existing in respect of, relating to, securing or
otherwise supporting the payment of, any of the Accounts, including (but not
limited to) promissory notes, drafts, bills of exchange and trade acceptances,
now owned or hereafter acquired by any Pledgor.
"INVENTORY" means all "inventory" (as defined in the UCC), now
owned or hereafter acquired by any Pledgor, wherever located, and shall also
mean and include all raw materials and other materials and supplies,
work-in-process and finished goods and any products made or processed therefrom
and all substances, if any, commingled therewith or added thereto.
"LIQUID INVESTMENTS" has the meaning set forth in Section
5(D).
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"LOCKBOX ACCOUNTS" has the meaning assigned to such term in
Section 5(A).
"LOCKBOX AGREEMENTS" has the meaning assigned to such term in
Section 5(A).
"LOCKBOX BANKS" means the banks or investment firms listed
opposite each Lockbox Account on Exhibit B hereto.
"PERFECTION CERTIFICATE" means, collectively, each certificate
substantially in the form of Exhibit C, completed and supplemented with the
schedules and attachments contemplated thereby to the satisfaction of the Agent,
and duly executed by the chief executive officer or chief legal officer of each
Pledgor.
"PERMITTED LIENS" means the Security Interests and the Liens
on the Collateral permitted to be created, to be assumed or to exist pursuant to
Section 8.02 of the Credit Agreement.
"PROCEEDS" means all proceeds of, and all other profits,
products, rents or receipts, in whatever form, arising from the collection,
sale, lease, exchange, assignment, licensing or other disposition of, or other
realization upon, Collateral, including all claims of any Pledgor against third
parties for loss of, damage to or destruction of, or for proceeds payable under,
or unearned premiums with respect to, policies of insurance in respect of, any
Collateral, and any condemnation or requisition payments with respect to any
Collateral, in each case whether now existing or hereafter arising.
"SECURED OBLIGATIONS" means the obligations secured under this
Agreement which include (a) all principal of and interest (including any
interest which accrues after the commencement of any case, proceeding or other
action relating to the bankruptcy, insolvency or reorganization of the Company,
whether or not allowed or allowable as a claim in any such proceeding) on any
Loan under, or any Note issued pursuant to, the Credit Agreement, (b) all other
Obligations of the Company, (c) all Guaranteed Obligations, under and as defined
in the Guaranty and (d) any amendments, restatements, renewals, extensions or
modifications of any of the foregoing.
"SECURED PARTIES" means the Agent and the Lenders.
"SECURITY INTERESTS" means the security interests in the
Collateral granted hereunder securing the Secured Obligations.
"UCC" means the Uniform Commercial Code as in effect on the
date hereof in the State of Georgia; provided that if by reason of mandatory
provisions of law, the perfection or the effect of perfection or non-perfection
of the Security Interests in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than Georgia, "UCC" means
the Uniform Commercial Code as in effect in such other jurisdiction for purposes
of the provisions hereof relating to such perfection or effect of perfection or
non-perfection.
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SECTION 2. REPRESENTATIONS AND WARRANTIES.
Each Pledgor represents and warrants as follows:
(A) Each Pledgor has good and marketable title to all of the
Collateral, free and clear of any Liens other than the Permitted Liens. Each
Pledgor has taken all actions necessary under the UCC to perfect its interest in
any Accounts purchased or otherwise acquired by or granted to it, as against its
assignors and grantors and creditors of its assignors and grantors.
(B) No Pledgor has performed any acts which might prevent the
Agent from enforcing any of the terms of this Agreement or which would limit the
Agent in any such enforcement. Other than financing statements or other similar
or equivalent documents or instruments with respect to the Security Interests
and Permitted Liens, no financing statement, mortgage, security agreement or
similar or equivalent document or instrument covering all or any part of the
Collateral is on file or of record in any jurisdiction in which such filing or
recording would be effective to perfect a Lien on such Collateral. No Collateral
is in the possession of any Person (other than a Pledgor or the Company)
asserting any claim thereto or security interest therein, except that the Agent
or its designee may have possession of Collateral as contemplated hereby.
(C) The information set forth in each Perfection Certificate
delivered to the Agent prior to the Closing Date is correct and complete as of
the Closing Date.
(D) The Security Interests constitute valid security interests
under the UCC securing the Secured Obligations. When UCC financing statements in
the form specified in Schedule 6 to the Perfection Certificate shall have been
filed in the offices specified in each Perfection Certificate, the Security
Interests shall constitute perfected security interests in the Collateral
(except Inventory in transit) to the extent that a security interest therein may
be perfected by filing pursuant to the UCC, prior to all other Liens and rights
of others therein except for the Permitted Liens.
(E) The Inventory and Equipment are insured in accordance with
the requirements of the Credit Agreement.
(F) Exhibit B (as updated by such Pledgor from time to time
with the consent of the Agent, such consent not to be unreasonably withheld)
lists each bank account, money market account and investment account for each
Pledgor.
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SECTION 3. THE SECURITY INTERESTS.
(A) In order to secure the full and punctual payment and
performance of the Secured Obligations in accordance with the terms thereof,
each Pledgor hereby grants to the Agent for the ratable benefit of the Secured
Parties a continuing security interest in and to all of the following property
of such Pledgor, whether now owned or existing or hereafter acquired or arising
and regardless of where located (all being collectively referred to as the
"COLLATERAL"):
(1) Accounts;
(2) Inventory;
(3) General Intangibles;
(4) Documents;
(5) Instruments;
(6) Equipment;
(7) The Lockbox Accounts, all cash deposited in any of the
foregoing from time to time, the Liquid Investments made pursuant to
Section 5(D) and other monies and property of any kind of such Pledgor
in the possession or under the control of the Agent;
(8) All books and records (including customer lists, credit
files, computer programs, printouts and other computer materials and
records) of such Pledgor pertaining to any of the Collateral;
(9) Insurance policies of such Pledgor; and
(10) All Proceeds of all or any of the Collateral described in
Clauses 1 through 9 hereof.
(B) The Security Interests are granted as security only and
shall not subject any Secured Party to, or transfer or in any way affect or
modify, any obligation or liability of any Pledgor with respect to any of the
Collateral or any transaction in connection therewith.
SECTION 4. FURTHER ASSURANCES; COVENANTS.
(A) No Pledgor will change its name, identity or form of
organization in any manner unless it shall have given the Agent prior notice
thereof and delivered an opinion of counsel with respect thereto in accordance
with Section 4(L). No Pledgor will change the location of (i) its chief
executive office or chief place of business or (ii) the locations where it keeps
or holds any Collateral or any records relating thereto from the applicable
location described in the Perfection Certificate of such Pledgor unless it shall
have given the Agent prior
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notice thereof and delivered an opinion of counsel with respect thereto in
accordance with Section 4(L).
(B) No Pledgor shall in any event change the location of any
Collateral without the prior written consent of the Agent if such change would
cause the Security Interests in such Collateral to lapse or cease to be
perfected.
(C) Each Pledgor will, from time to time, at its expense,
execute, deliver, file and record any statement, assignment, instrument,
document, agreement or other paper and take any other action (including any
filings of financing or continuation statements under the UCC) that from time to
time may be necessary or desirable, or that the Agent may request, in order to
create, preserve, perfect, confirm or validate the Security Interests or to
enable the Secured Parties to obtain the full benefits of this Agreement, or to
enable the Agent to exercise and enforce any of its rights, powers and remedies
hereunder with respect to any of the Collateral. To the extent permitted by
applicable law, each Pledgor hereby authorizes the Agent, and appoints the Agent
as its true and lawful attorney (with full power of substitution, in the name of
such Pledgor, the Secured Parties or otherwise, for the sole use and benefit of
the Secured Parties), to execute and file financing statements or continuation
statements without such Pledgor's signature appearing thereon. Each Pledgor
agrees that a carbon, photographic, photostatic or other reproduction of this
Agreement or of a financing statement is sufficient as a financing statement.
Each Pledgor shall pay the costs of, or incidental to, any recording or filing
of any financing or continuation statements concerning the Collateral.
(D) If any Collateral is at any time in the possession or
control of any warehouseman, bailee or any of any Pledgor's agents or
processors, such Pledgor shall notify such warehouseman, bailee, agent or
processor of the Security Interests created hereby and to hold all such
Collateral for the Agent's account subject to the Agent's instructions.
(E) Each Pledgor shall keep full and accurate books and
records relating to the Collateral, and stamp or otherwise ▇▇▇▇ such books and
records in such manner as the Agent may reasonably require in order to reflect
the Security Interests.
(F) Each Pledgor will immediately deliver and pledge each
Instrument to the Agent, appropriately endorsed to the Agent, provided that so
long as no Event of Default shall have occurred and be continuing, such Pledgor
may retain for collection in the ordinary course any Instruments.
(G) Each Pledgor shall use its reasonable best efforts to
cause to be collected from its Account Debtors, as and when due, any and all
amounts owing under or on account of each Account (including Accounts which are
delinquent, such Accounts to be collected in accordance with lawful collection
procedures and such Pledgor's customary practices) and shall apply forthwith
upon receipt thereof all such amounts as are so collected to the outstanding
balance of such Account. Subject to the rights of the Secured Parties hereunder
upon the occurrence and during the continuance of an Event of Default, each
Pledgor may allow in the ordinary course of business as adjustments to amounts
owing under its Accounts (i) an extension
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or renewal of the time or times of payment, or settlement for less than the
total unpaid balance, which such Pledgor finds appropriate in accordance with
sound business judgment unless such extension, renewal or settlement results in
causing such Account to not be an Eligible Receivable and thereby causes the
aggregate unpaid balance of Working Capital Loans to exceed the Borrowing Base
and (ii) a refund or credit due as a result of returned or damaged merchandise
or as a discount for prompt payment, all in accordance with such Pledgor's
ordinary course of business consistent with its historical collection practices.
The costs and expenses (including attorney's fees) of collection, whether
incurred by any Pledgor or the Agent, shall be borne by such Pledgor.
(H) Upon the occurrence and during the continuance of any
Event of Default, upon request of the Required Lenders through the Agent, to the
extent permitted by applicable law each Pledgor will promptly notify (and hereby
authorizes the Agent so to notify) each Account Debtor in respect of any Account
or Instrument that such Collateral has been assigned to the Agent hereunder, and
that any payments due or to become due in respect of such Collateral are to be
made directly to the Agent or its designee.
(I) Each Pledgor shall not permit any items of Equipment to
become a fixture to real estate (unless the Agent has a first priority Lien
thereon) or an accession to other personal property.
(J) Without the prior written consent of the Agent and except
in the ordinary course of any Pledgor's business, no Pledgor will sell, lease,
exchange, assign or otherwise dispose of, or grant any option with respect to,
any Collateral except, subject to the rights of the Secured Parties hereunder if
an Event of Default shall have occurred and be continuing, as permitted under
the Credit Agreement including Section 6.06, whereupon, in the case of such a
sale or exchange, the Security Interests created hereby in such item (but not in
any Proceeds arising from such sale or exchange) shall cease immediately without
any further action on the part of the Agent.
(K) Each Pledgor will, promptly upon request, provide to the
Agent all information and evidence it may reasonably request concerning the
Collateral to enable the Agent to enforce the provisions of this Agreement.
(L) Not more than six months nor less than 30 days prior to
each date on which any Pledgor proposes to take any action contemplated by
Section 4(A), such Pledgor shall give notice to the Agent of such proposed
action, and, at such Pledgor's cost and expense, cause to be delivered to the
Secured Parties with such notice, an opinion of counsel, satisfactory to the
Agent and substantially in the form of Exhibit D to the effect that all
financing statements and amendments or supplements thereto, continuation
statements and other documents required to be recorded or filed in order to
perfect and protect the Security Interests have been filed in each filing office
necessary for such purpose and that all filing fees and taxes, if any, payable
in connection with such filings have been paid in full.
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(M) No Pledgor shall open or maintain any bank account, money
market account or investment account unless such account shall first be listed
on Exhibit B (as updated by such Pledgor from time to time with the consent of
the Agent, such consent not to be unreasonably withheld) and, if the Agent
requires in its sole discretion, shall be subject to a Lockbox Agreement.
(N) Each Pledgor shall (i) upon the occurrence of an Event of
Default and (ii) within 10 days after the aggregate value of all Equipment
consisting of motor vehicles, trucks and trailers owned by the Company and its
Subsidiaries shall exceed $150,000, deliver to the Agent any and all
certificates of title, applications for title or similar evidence of ownership
of such Equipment and shall cause the Agent to be named as lienholder on any
such certificate of title or other evidence of ownership.
SECTION 5. LOCKBOX ACCOUNT.
(A) On the Closing Date, each Pledgor shall deliver to the
Agent for each account listed for such Pledgor on Exhibit B hereto (each a
"LOCKBOX ACCOUNT"), a lockbox agreement substantially in form of Exhibit E
hereto or in such other form as shall be satisfactory to the Agent (each a
"LOCKBOX AGREEMENT") which shall establish such account in the name
"NationsCredit Commercial Corporation, as Agent", and under the exclusive
control of the Agent. From and after the Closing Date, there shall be deposited
from time to time into the Lockbox Accounts the cash Proceeds of the Collateral
required to be delivered to the Agent pursuant to subsection (B) of this Section
5 or any other provision of this Agreement and all other funds of such Pledgor.
Any income received with respect to the balance from time to time standing to
the credit of each Lockbox Account, including any interest or capital gains on
Liquid Investments, may be withdrawn by the Company from such Lockbox Account in
accordance with subsection (C) below. All right, title and interest in and to
the cash amounts on deposit from time to time in the Lockbox Accounts together
with any Liquid Investments from time to time made pursuant to subsection (D) of
this Section shall vest in the Agent (pursuant to the Lockbox Agreement for each
Lockbox Account), shall constitute part of the Collateral hereunder and shall
not constitute payment of the Secured Obligations until applied thereto as
hereinafter provided.
(B) Each Pledgor shall instruct all Account Debtors and other
Persons obligated in respect of all Accounts, to make all payments in respect of
such Accounts and shall use its reasonable best efforts to cause such Account
Debtors and other Persons to remit all such payments directly to a Lockbox
Account of such Pledgor (if paid by wire transfer). In addition to the
foregoing, each Pledgor agrees that if the proceeds of any Collateral hereunder
(including the payments made in respect of Accounts) shall be received by such
Pledgor, such Pledgor shall as promptly as possible deposit such proceeds into
its Lockbox Account. Until so deposited, all such proceeds shall be held in
trust by such Pledgor for and as the property of the Secured Parties and shall
not be commingled with any other funds or property of such Pledgor.
(C) The balance from time to time standing to the credit of
the Lockbox Accounts shall, except upon the occurrence and continuation of an
Event of Default, be
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distributed to each Pledgor in accordance with the provisions of each Lockbox
Agreement. If immediately available cash on deposit in the Lockbox Accounts is
not sufficient to make any distribution to any Pledgor referred to in the
previous sentence of this Section 5(C), the Agent shall cause to be liquidated
as promptly as practicable Liquid Investments in the Lockbox Accounts designated
by the Pledgors as required to obtain sufficient cash to make such distribution
and, notwithstanding any other provision of this Section 5, such distribution
shall not be made until such liquidation has taken place. Upon the occurrence
and continuation of an Event of Default, the Agent shall, if so instructed by
the Required Lenders, apply or cause to be applied (subject to collection) any
or all of the balance from time to time standing to the credit of any Lockbox
Accounts in the manner specified in Section 9.
(D) Amounts on deposit in the Lockbox Accounts shall be
invested and re-invested from time to time in such Liquid Investments as the
Pledgors shall determine, which Liquid Investments shall be held in the name and
be under the control of the Agent; provided that, if an Event of Default has
occurred and is continuing, the Agent shall, if instructed by the Required
Lenders, cause such Liquid Investments to be liquidated and apply or cause to be
applied the proceeds thereof to the payment of the Secured Obligations in the
manner specified in Section 9. For this purpose, "Liquid Investments" means
Temporary Cash Investments; provided that (i) each Liquid Investment shall
mature within 30 days after it is acquired by the Agent and (ii) in order to
provide the Agent, for the benefit of the Secured Parties, with a perfected
security interest therein, each Liquid Investment shall be either:
(i) evidenced by negotiable certificates or instruments, or
if non-negotiable then issued in the name of the Agent, which (together
with any appropriate instruments of transfer) are delivered to, and
held by, the Agent or an agent thereof (which shall not be the Company
or any of its Affiliates) in the State of Georgia; or
(ii) in book-entry form and issued by the United States and
subject to pledge under applicable state law and Treasury regulations
and as to which (in the opinion of counsel to the Agent) appropriate
measures shall have been taken for perfection of the Security
Interests.
SECTION 6. GENERAL AUTHORITY.
Each Pledgor hereby irrevocably appoints the Agent its true
and lawful attorney, with full power of substitution, in the name of such
Pledgor, the Secured Parties or otherwise, for the sole use and benefit of the
Secured Parties, but at such Pledgor's expense, to the extent permitted by law
to exercise, at any time and from time to time while an Event of Default has
occurred and is continuing, all or any of the following powers with respect to
all or any of the Collateral:
(i) to demand, ▇▇▇ for, collect, receive and give acquittance
for any and all monies due or to become due thereon or by virtue
thereof,
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(ii) to settle, compromise, compound, prosecute or defend any
action or proceeding with respect thereto,
(iii) to sell, transfer, assign or otherwise deal in or with
the same or the proceeds or avails thereof, as fully and effectually as
if the Agent were the absolute owner thereof, and
(iv) to extend the time of payment of any or all thereof and
to make any allowance and other adjustments with reference thereto;
provided that the Agent shall give such Pledgor not less than ten days' prior
written notice of the time and place of any sale or other intended disposition
of any of the Collateral, except any Collateral which is perishable or threatens
to decline speedily in value or is of a type customarily sold on a recognized
market. Each Pledgor agrees that such notice constitutes "reasonable
notification" within the meaning of Section 9-504(3) of the UCC.
SECTION 7. REMEDIES UPON EVENT OF DEFAULT.
(A) If any Event of Default has occurred and is continuing,
the Agent may exercise on behalf of the Secured Parties all rights of a secured
party under the UCC (whether or not in effect in the jurisdiction where such
rights are exercised) and, in addition, the Agent may, without being required to
give any notice, except as herein or in the Credit Agreement or any other
Financing Document provided or as may be required by mandatory provisions of
law, (i) withdraw all cash and Liquid Investments in the Collateral Accounts and
apply such cash and Liquid Investments and other cash, if any, then held by it
as Collateral as specified in Section 9 and (ii) if there shall be no such cash
or Liquid Investments or if such cash and Liquid Investments shall be
insufficient to pay all the Secured Obligations in full, sell the Collateral or
any part thereof at public or private sale, for cash, upon credit or for future
delivery, and at such price or prices as the Agent may deem satisfactory. The
Agent or any other Secured Party may be the purchaser of any or all of the
Collateral so sold at any public sale (or, if the Collateral is of a type
customarily sold in a recognized market or is of a type which is the subject of
widely distributed standard price quotations, at any private sale). Each Pledgor
will execute and deliver such documents and take such other action as the Agent
deems necessary or advisable in order that any such sale may be made in
compliance with law. Upon any such sale the Agent shall have the right to
deliver, assign and transfer to the purchaser thereof the Collateral so sold.
Each purchaser at any such sale shall hold the Collateral so sold to it
absolutely and free from any claim or right of whatsoever kind, including any
equity or right of redemption of any Pledgor which may be waived, and each
Pledgor, to the extent permitted by law, hereby specifically waives all rights
of redemption, stay or appraisal which it has or may have under any law now
existing or hereafter adopted. The notice (if any) of such sale required by
Section 6 shall (1) in case of a public sale, state the time and place fixed for
such sale, and (2) in the case of a private sale, state the day after which such
sale may be consummated. Any such public sale shall be held at such time or
times within ordinary business hours and at such place or places as the Agent
may fix in the notice of such sale. At any such sale the Collateral may be sold
in one lot as an entirety or in separate parcels, as the Agent may determine.
The Agent shall not be obligated to
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make any such sale pursuant to any such notice. The Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to which the same may be so
adjourned. In case of any sale of all or any part of the Collateral on credit or
for future delivery, the Collateral so sold may be retained by the Agent until
the selling price is paid by the purchaser thereof, but the Agent shall not
incur any liability in case of the failure of such purchaser to take up and pay
for the Collateral so sold and, in case of any such failure, such Collateral may
again be sold upon like notice. The Agent, instead of exercising the power of
sale herein conferred upon it, may proceed by a suit or suits at law or in
equity to foreclose the Security Interests and sell the Collateral, or any
portion thereof, under a judgment or decree of a court or courts of competent
jurisdiction.
(B) For the purpose of enforcing any and all rights and
remedies under this Agreement the Agent may (i) require each Pledgor to, and
each Pledgor agrees that it will, at its expense and upon the request of the
Agent, forthwith assemble all or any part of the Collateral as directed by the
Agent and make it available at a place designated by the Agent which is, in its
opinion, reasonably convenient to the Agent and such Pledgor, whether at the
premises of such Pledgor or otherwise, (ii) to the extent permitted by
applicable law, enter, with or without process of law and without breach of the
peace, any premise where any of the Collateral is or may be located, and without
charge or liability to it seize and remove such Collateral from such premises,
(iii) have access to and use any Pledgor's books and records relating to the
Collateral and (iv) prior to the disposition of the Collateral, store or
transfer it without charge in or by means of any storage or transportation
facility owned or leased by any Pledgor, process, repair or recondition it or
otherwise prepare it for disposition in any manner and to the extent the Agent
deems appropriate and, in connection with such preparation and disposition, use
without charge any trademark, trade name, copyright, patent or technical process
used by any Pledgor.
SECTION 8. LIMITATION ON DUTY OF AGENT IN RESPECT OF COLLATERAL.
Beyond the exercise of reasonable care in the custody thereof,
the Agent shall have no duty as to any Collateral in its possession or control
or in the possession or control of any agent or bailee or any income thereon or
as to the preservation of rights against prior parties or any other rights
pertaining thereto. The Agent shall be deemed to have exercised reasonable care
in the custody of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which it accords its own property, and
shall not be liable or responsible for any loss or damage to any of the
Collateral, or for any diminution in the value thereof, by reason of the act or
omission of any warehouseman, carrier, forwarding agency, consignee or other
agent or bailee selected by the Agent in good faith.
SECTION 9. APPLICATION OF PROCEEDS.
Upon the occurrence and during the continuance of an Event of
Default, the proceeds of any sale of, or other realization upon, all or any part
of the Collateral and any cash held in the Collateral Accounts shall be applied
by the Agent in the following order of priorities:
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first, to payment of the expenses of such sale or other
realization, including reasonable compensation to agents and counsel
for the Agent, and all expenses, liabilities and advances incurred or
made by the Agent in connection therewith, and any other unreimbursed
expenses for which the Agent or any other Secured Party is to be
reimbursed pursuant to Section 8.04 of the Credit Agreement or Section
12 hereof and unpaid fees owing to the Agent under the Credit
Agreement;
second, to the ratable payment of accrued but unpaid interest
on the Secured Obligations in accordance with the provisions of the
Credit Agreement;
third, to the ratable payment of unpaid principal of the
Secured Obligations;
fourth, to the ratable payment of all other Secured
Obligations, until all Secured Obligations shall have been paid in
full; and
finally, to payment to the Pledgors or their successors or
assigns, or as a court of competent jurisdiction may direct, of any
surplus then remaining from such proceeds.
The Agent may make distributions hereunder in cash or in kind or, on a ratable
basis, in any combination thereof.
SECTION 10. CONCERNING THE AGENT.
The provisions of Section 10.05 and Article XI of the Credit
Agreement shall inure to the benefit of the Agent in respect of this Agreement
and shall be binding upon the parties to the Credit Agreement in such respect.
In furtherance and not in derogation of the rights, privileges and immunities of
the Agent therein set forth:
(A) The Agent is authorized to take all such action as is
provided to be taken by it as Agent hereunder and all other action reasonably
incidental thereto. As to any matters not expressly provided for herein
(including the timing and methods of realization upon the Collateral), the Agent
shall act or refrain from acting in accordance with written instructions from
the Required Lenders or, in the absence of such instructions, in accordance with
its discretion.
(B) The Agent shall not be responsible for the existence,
genuineness or value of any of the Collateral or for the validity, perfection,
priority or enforceability of the Security Interests in any of the Collateral,
whether impaired by operation of law or by reason of any action or omission to
act on its part hereunder. The Agent shall have no duty to ascertain or inquire
as to the performance or observance of any of the terms of this Agreement by the
Pledgor.
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SECTION 11. APPOINTMENT OF CO-AGENTS.
At any time or times, in order to comply with any legal
requirement in any jurisdiction, the Agent may appoint another bank or trust
company or one or more other persons, either to act as co-agent or co-agents,
jointly with the Agent, or to act as separate agent or agents on behalf of the
Secured Parties with such power and authority as may be necessary for the
effectual operation of the provisions hereof and may be specified in the
instrument of appointment (which may, in the discretion of the Agent, include
provisions for the protection of such co-agent or separate agent similar to the
provisions of Section 10).
SECTION 12. EXPENSES.
In the event that any Credit Party shall fail to comply with
the provisions of the Credit Agreement or this Agreement, such that the value of
any Collateral or the validity, perfection, rank or value of any Security
Interest is thereby diminished or potentially diminished or put at risk, the
Agent if requested by the Required Lenders may, but shall not be required to,
effect such compliance on behalf of the Credit Parties, and the Pledgors shall
reimburse the Agent for the costs thereof on demand. All insurance expenses and
all expenses of protecting, storing, warehousing, appraising, insuring,
handling, maintaining, and shipping the Collateral, any and all excise,
property, sales, and use taxes imposed by any state, federal, or local authority
on any of the Collateral, or in respect of periodic appraisals and inspections
of the Collateral to the extent the same may be requested by the Required
Lenders from time to time as provided in the Credit Agreement, or in respect of
the sale or other disposition thereof shall be borne and paid by the Pledgors;
and if any Pledgor fails to promptly pay any portion thereof when due, the Agent
or any other Secured Party may, at its option, but shall not be required to, pay
the same, and such Pledgor agrees to reimburse the Agent or such other Secured
Party therefor on demand. All sums so paid or incurred by the Agent or any other
Secured Party for any of the foregoing and any and all other sums for which the
Pledgors may become liable hereunder and all costs and expenses (including
reasonable attorney's fees, legal expenses and court costs) reasonably incurred
by the Agent or any other Secured Party in enforcing or protecting the Security
Interests or any of their rights or remedies under this Agreement, shall,
together with interest thereon until paid as provided in Section 10.03 of the
Credit Agreement, be additional Secured Obligations hereunder.
SECTION 13. TERMINATION OF SECURITY INTERESTS; RELEASE OF COLLATERAL.
Upon the repayment in full of all Secured Obligations (other
than contingent indemnity or similar claims not yet asserted) and the
termination of the Commitment under the Credit Agreement, the Security Interests
shall terminate and all rights to the Collateral shall revert to the Pledgors.
At any time and from time to time prior to such termination of the Security
Interests, the Agent may release any of the Collateral with the prior written
consent of the Required Lenders. Upon any such termination of the Security
Interests or release of Collateral, the Agent will, at the expense of the
Pledgors, execute and deliver to the Pledgors such documents as the Pledgors
shall reasonably request to evidence the termination of the Security Interests
or the release of such Collateral, as the case may be.
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SECTION 14. OBLIGATIONS UNCONDITIONAL; DISCHARGE OF OBLIGATIONS, ETC.
(a) The Security Interests and the obligations of each Pledgor
hereunder shall not be released, discharged or otherwise affected by:
(i) any extension, renewal, settlement, compromise, waiver
or release in respect of any obligation of the Company or any other
Person under any Financing Document, by operation of law or otherwise;
(ii) any modification or amendment of or supplement to any
Financing Document;
(iii) any release, non-perfection or invalidity of any direct
or indirect security for any obligation of the Company or any other
Person under any Financing Document;
(iv) any change in the corporate existence, structure or
ownership of the Company or any insolvency, bankruptcy, reorganization
or other similar proceeding affecting the Company or any other Person
or any of their respective assets or any resulting release or discharge
of any obligation of the Company or any other Person contained in any
Financing Document;
(v) the existence of any claim, set-off or other rights
which such Pledgor may have at any time against the Agent, any Lender
or any other Person, whether in connection herewith or any unrelated
transactions, provided that nothing herein shall prevent the assertion
of any such claim by separate suit or compulsory counterclaim;
(vi) any invalidity or unenforceability relating to or
against the Company or any other Person for any reason of any Financing
Document, or any provision of applicable law or regulation purporting
to prohibit the payment by the Company of the principal of or interest
on any Note or any other amount payable by the Company or any other
Person under any Financing Document; or
(vii) any other act or omission to act or delay of any kind by
the Agent, any Lender or any other Person or any other circumstance
whatsoever which might, but for the provisions of this paragraph,
constitute a legal or equitable discharge of the obligations of a
surety.
(b) Each Pledgor irrevocably waives acceptance hereof,
presentment, demand, protest and any notice not provided for herein, as well as
any requirement that at any time any action be taken by any corporation or
Person against the Company or any other corporation or Person.
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(c) Each Pledgor hereby waives any right or claim of
exoneration, reimbursement, subrogation, contribution or indemnity and any other
similar right or claim arising out of this Agreement.
(d) If acceleration of the time for payment of any amount
payable by the Company under the Credit Agreement or any Note is stayed upon the
insolvency, bankruptcy or reorganization of the Company, the Security Interests
and the obligations of each Pledgor hereunder may nonetheless be enforced as
fully as if such acceleration were effective.
SECTION 15. NOTICES.
All notices, communications and distributions hereunder to the
Agent shall be given in accordance with Section 12.03 of the Credit Agreement.
All notices, communications and distributions hereunder to any Pledgor shall be
given in accordance with Section 12.03 of the Credit Agreement and sent to the
address of the Borrower set forth on the signature page of the Credit Agreement.
SECTION 16. WAIVERS, NON-EXCLUSIVE REMEDIES.
No failure on the part of the Agent to exercise, and no delay
in exercising and no course of dealing with respect to, any right under this
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise by the Agent or any Secured Party of any right under the Credit
Agreement, any of the other Financing Documents or this Agreement preclude any
other or further exercise thereof or the exercise of any other right. The rights
in this Agreement, the Credit Agreement and the other Financing Documents are
cumulative and are not exclusive of any other remedies provided by law.
SECTION 17. SUCCESSORS AND ASSIGNS.
This Agreement is for the benefit of the Agent and the Secured
Parties and their successors and assigns, and in the event of an assignment of
all or any of the Secured Obligations, the rights hereunder, to the extent
applicable to the indebtedness so assigned, may be transferred with such
indebtedness. This Agreement shall be binding on the Pledgor and their
respective successors and assigns.
SECTION 18. CHANGES IN WRITING.
Neither this Agreement nor any provision hereof may be
changed, waived, discharged or terminated orally, but only in writing signed by
the Pledgors and the Agent with the consent of the Required Lenders.
SECTION 19. GEORGIA LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF GEORGIA (WITHOUT
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REFERENCE TO PRINCIPLES OR CONFLICTS OF LAW), EXCEPT AS OTHERWISE REQUIRED BY
MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT REMEDIES PROVIDED BY
THE LAWS OF ANY JURISDICTION OTHER THAN GEORGIA ARE GOVERNED BY THE LAWS OF SUCH
JURISDICTION.
SECTION 20. SEVERABILITY.
If any provision hereof is invalid or unenforceable in any
jurisdiction, then, to the fullest extent permitted by law, (i) the other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be liberally construed in favor of the Agent and the other Secured Parties
in order to carry out the intentions of the parties hereto as nearly as may be
possible; and (ii) the invalidity or unenforceability of any provision hereof in
any jurisdiction shall not affect the validity or enforceability of such
provision in any other jurisdiction.
SECTION 21. COUNTERPARTS.
This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective authorized
officers as of the day and year first above written.
PLEDGORS:
STRATO/INFUSAID, INC.
By:
-------------------------------------
Title:
----------------------------------
AGENT:
NATIONSCREDIT COMMERCIAL CORPORATION,
as Agent
By:
-------------------------------------
Title:
----------------------------------
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EXHIBIT A
PLEDGORS
Strato/Infusaid, Inc.
Notice Address for Pledgors:
c/o Horizon Medical Products, Inc.
Seven North Parkway Square
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
141
EXHIBIT B
LIST OF ACCOUNTS
ACCOUNT BANK
------- ----
142
EXHIBIT C
PERFECTION CERTIFICATE
The undersigned, chief executive officer or chief legal
officer, of ______________________, a _________ corporation (the "Pledgor"),
hereby certifies with reference to the Subsidiary Security Agreement dated as of
July ___, 1997 between the Pledgors and NationsCredit Commercial Corporation, as
Agent (terms defined therein being used herein as therein defined), to the Agent
and each Lender as follows:
1. Names. (a) The exact corporate name of the Pledgor as it
appears in its certificate of incorporation is as follows:
[Name of Pledgor]
(b) Set forth below is each other corporate name the Pledgor
has had since its organization, together with the date of the relevant change:
(c) The Pledgor has not changed its identity or form of
organization in any way within the past five years.
(d) The following is a list of all other names (including
trade names or similar appellations) used by the Pledgor or any of its divisions
or other business units at any time during the past five years:
[Names of Pledgor]
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2. Current Locations. (a) The chief executive office of the
Pledgor is located at the following address:
Mailing Address County State
--------------- ------ -----
(b) The following are all the locations where the Pledgor
maintains any books or records relating to any Accounts:
Mailing Address County State
--------------- ------ -----
(c) The following are all the places of business of the
Pledgor not identified above:
Name Mailing Address County State
---- --------------- ------ -----
(d) The following are all the locations where the Pledgor
maintains any Inventory not identified above:
Name Mailing Address County State
---- --------------- ------ -----
(e) The following are the names and addresses of all Persons
other than the Pledgor which have possession of any of the Pledgor's Inventory:
Name Mailing Address County State
---- --------------- ------ -----
3. Prior Locations. (a) Set forth below is the information
required by subparagraphs (a), (b) and (c) of paragraph 2 with respect to each
location or place of business maintained by the Pledgor at any time during the
past five years:
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(b) Set forth below is the information required by
subparagraphs (d) and (e) of paragraph 2 with respect to each location or bailee
where or with whom Inventory has been lodged at any time during the past four
months:
4. Unusual Transactions. All Accounts have been originated by
the Pledgor and all Inventory and Equipment has been acquired by the Pledgor in
the ordinary course of its business.
5. File Search Reports. Attached hereto as Schedule 5(A) is a
true copy of a file search report from the Uniform Commercial Code filing
officer in each jurisdiction identified in paragraph 2 or 3 above with respect
to each name set forth in paragraph 1 above. Attached hereto as Schedule 5(B) is
a true copy of each financing statement or other filing identified in such file
search reports.
6. UCC Filings. Duly signed financing statements on Form UCC-1
attached as Schedule 6 hereto have been duly filed in the Uniform Commercial
Code filing office in each jurisdiction identified in paragraph 2 hereof and
each such filing has been duly acknowledged by the filing officer.
7. Schedule of Filings. Attached hereto as Schedule 7 is a
schedule setting forth filing information with respect to the filings described
in paragraph 6 above.
8. Filing Fees. All filing fees and taxes payable in
connection with the filings described in paragraph 6 above have been paid.
9. Patents, Trademarks, Copyrights. All patents, trademarks
and copyrights owned by the Pledgor as of the date hereof and all patent
licenses, trademark licenses and copyright licenses to which the Pledgor is a
party as of the date hereof are listed on Schedule 9 hereto.
IN WITNESS WHEREOF, we have hereunto set our hands this ____
day of July, 1997.
----------------------------------
Title:
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SCHEDULE 6
TO PERFECTION CERTIFICATE
Description of Collateral
All accounts, chattel paper, contract rights, general
intangibles, inventory, equipment and documents, and all other property of the
Pledgor all as more particularly described on Exhibit A attached hereto, now
owned or hereafter acquired, wherever located, and all proceeds thereof.
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SCHEDULE 7
TO PERFECTION CERTIFICATE
SCHEDULE OF FILINGS
Date
Pledgor Filing Officer File Number of Filing
--------------------------------------------------------------------------------
-------------------------
* Indicate lapse date, if other than fifth anniversary.
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EXHIBIT D
OPINION OF
COUNSEL FOR THE PLEDGOR
* * * *
1. The Security Agreement creates a valid security interest,
for the benefit of the Secured Parties, in all the Pledgor's right, title and
interest in all Collateral to the extent the UCC is applicable thereto (the
"Security Interest").
2. UCC financing statements and amendments thereto
(collectively, the "Financing Statements") have been filed in the filing offices
listed in Schedule 7 to the Perfection Certificate (the "Filing Jurisdictions"),
which are all of the offices in which filings are required to perfect the
Security Interest, to the extent the Security Interest may be perfected by
filing under the UCC, and no further filing or recording of any document or
instrument or other action will be required so to perfect the Security Interest
in the Collateral in which a security interest may be perfected by filing a
financing statement under the UCC, except that (i) continuation statements with
respect to each Financing Statement must be filed in accordance with the UCC;
(ii) additional filings may be necessary if the Pledgor changes its name,
identity or corporate structure or the jurisdiction in which its places of
business, its chief executive office or the Collateral are located; and (iii) we
express no opinion on the perfection of, or need for further filing or recording
to perfect, the Security Interest in goods now or hereafter located in any
jurisdiction other than the Filing Jurisdictions.
3. There are
(i) based on [describe search reports], as of the date of
such reports, no UCC financing statements which name the Pledgor as
Pledgor or seller and cover any of the Collateral, other than the
Financing Statements, [and the financing statements with respect to
Permitted Liens annexed as Schedule 5(A) to the Perfection
Certificate], listed in the available records in the UCC filing offices
set forth in paragraphs 2 and 3 of the Perfection Certificate, which,
based on the information provided to us as to the location of the
Collateral, the Company and its banks and records, include all of the
offices prescribed under the UCC as the offices in which filings should
have been made to perfect security interests in the Collateral; and
(ii) based on [describe search reports], as of the date of
such reports, no notices of the filing of any federal tax lien (filed
pursuant to Section 6323 of the Internal Revenue Code) or any lien of
the Pension Benefit Guaranty Corporation (filed pursuant to Section
4068 of ERISA) covering any of the Collateral listed in the available
records in the [UCC filing office in state of Pledgor's chief executive
office], which is the only office having files which must be searched
in order to fully determine the existence of notices of the filing of
federal tax liens (filed pursuant to Section 6323 of the Internal
148
Revenue Code) on the Collateral and liens of the Pension Benefit
Guaranty Corporation (filed pursuant to Section 4068 of ERISA) on the
Collateral.
4. The Security Interest validly secures the guaranty by the
Pledgor of the payment of all future Loans made by the Lenders to the Company,
whether or not at the time such Loans are made an Event of Default or other
event not within the control of the Lenders has relieved or may relieve the
Lenders from their obligations to make such Loans, and is perfected to the
extent set forth in paragraph 2 above with respect to such future Loans. Insofar
as the priority thereof is governed by the UCC, the Security Interest has the
same priority with respect to such future Loans as it does with respect to Loans
made on the date hereof.
Such opinion may contain such assumptions, qualifications and
limitations as the opinions of counsel for the Company delivered in connection
with the making of the initial Loan under the Credit Agreement.
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EXHIBIT E
FORM OF LOCKBOX AGREEMENT
150
EXHIBIT G
No. _________
[Date]
To: [Name]
[Address]
Ladies and Gentlemen:
Upon the order and for the account of Horizon Medical Products, Inc.
(the "COMPANY"), we, NationsCredit Commercial Corporation (the "ISSUER"), hereby
establish for the benefit of [Beneficiary] (the "BENEFICIARY"), our Irrevocable
Standby Letter of Credit No. [________] (the "LETTER OF CREDIT") for a sum or
sums not to exceed in the aggregate [Dollar Amount ($)] (the "ORIGINAL LETTER OF
CREDIT AMOUNT", and as reduced from time to time as provided below, the "LETTER
OF CREDIT AMOUNT") effective as of the date first above written and expiring as
provided below.
The Issuer hereby irrevocably authorizes the Beneficiary to draw, in
one or more drawings, on the Issuer in compliance with the terms and conditions
of this Letter of Credit, an aggregate amount not to exceed the Original Letter
of Credit Amount. Only the Beneficiary may make a drawing under this Letter of
Credit. Upon the payment by the Issuer of the amount specified in any draft
drawn hereunder, (i) the Issuer shall be fully discharged from its obligations
under this Letter of Credit with respect to such draft, and the Issuer shall not
thereafter be obligated to make any further payment under this Letter of Credit
to you or any other person with respect to such draft and (ii) the Letter of
Credit Amount shall be reduced by the amount of such draft.
Partial drawings are permitted hereunder.
Funds under this Letter of Credit are available to you against
presentation at or before 4:00 P.M. (New York City time) on a business day prior
to the Expiration Date (as defined below) at our office referred to below of
your draft at sight accompanied by a certificate in the form of Annex I hereto
(with all elections made and all blanks filled in) purportedly signed by your
authorized representative.
151
The original of such draft and such certificate shall be presented at
the office of the Issuer as follows:
NationsCredit Commercial Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If the Issuer receives your draft and such certificate in connection
with a drawing, all in strict conformity with the terms and conditions of this
Letter of Credit, at or before 4:00 P.M. (New York City time) on a business day
prior to the Expiration Date, the Issuer will honor the same (to the extent
required by this Letter of Credit) by making payment in accordance with your
payment instructions by 1:00 P.M. (New York City time) on the next business day.
If requested by you, payment under this Letter of Credit may be made by wire
transfer of federal or other immediately available funds to accounts in New
York, New York, by deposit of immediately available funds into a designated
account or accounts maintained with the Issuer or by check or checks payable to
your order.
As used herein, "BUSINESS DAY" shall mean any day that is not a
Saturday, Sunday or other day on which banks in New York, Illinois or
Connecticut are required or authorized by law or executive order to close.
This Letter of Credit shall terminate at the close of business on
[Date], (the "EXPIRATION DATE") unless the Beneficiary shall have received
notice in the manner described below from the Issuer during the period which is
more than 30 but less than 60 days prior to any anniversary of the date of this
Letter of Credit, in which case this Letter of Credit shall expire on such
anniversary date (or if such date is not a business day, on the next succeeding
business day in which case such anniversary date shall be the "EXPIRATION
DATE").
Notices pursuant to the preceding sentence shall be provided in writing
at [Beneficiary Name and Address].
This Letter of Credit sets forth in full the undertaking of the Issuer,
and such undertaking shall not in any way be modified, amplified or amended by
reference to any document, instrument or agreement referred to herein and any
such reference shall not be deemed to incorporate herein by reference any such
document, instrument or agreement or any portion thereof.
This Letter of Credit is subject to the Uniform Customs and
Practice for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500 (the "UNIFORM CUSTOMS") and as to matters not
governed by the Uniform Customs shall be governed by and construed in accordance
with the laws of the State of New York, without regard to the principles of
conflicts of law.
2
152
Except as provided above for presentation of drafts and documents,
communications with respect to this Letter of Credit shall be in writing and
shall be addressed to the Issuer at One Canterbury Green, P. O. ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇ 06912-0013), Attention: General Counsel specifically referring to
the number of this Letter of Credit (or at any other office in the City and
State of New York that may be designated by the Issuer by written notice
delivered to you).
Yours sincerely,
NATIONSCREDIT COMMERCIAL CORPORATION
By:
------------------------------------
Authorized Signatory
3
153
ANNEX I
FORM OF CERTIFICATE FOR
DRAWING ON LETTER OF CREDIT
NationsCredit Commercial Corporation
Re: Irrevocable Letter of Credit No. [_________]
Ladies and Gentlemen:
The undersigned, an authorized representative of [Beneficiary] (the
"BENEFICIARY"), hereby certifies to NationsCredit Commercial Corporation (the
"ISSUER"), the issuer of Irrevocable Letter of Credit No. [__________] (the
"LETTER OF CREDIT"), that:
1. The undersigned is an authorized representative of the
Beneficiary.
2. The amount of the sight draft accompanying this Certificate
does not exceed the Letter of Credit Amount (as defined in the
Letter of Credit) as of the date hereof.
3. The drawing made pursuant to the sight draft accompanying this
Certificate is due to the fact that an amount equal to or in
excess of the sight draft is due and owing from Horizon
Medical Products, Inc. to the Beneficiary.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Certificate as of the __ day of _________________, 19 __.
[Beneficiary]
By:
-------------------------------------
Authorized Representative
154
FIRST AMENDMENT TO SECURITY AGREEMENT
THIS AGREEMENT is made and entered into as of this 26th day of May,
1998, by and between HORIZON MEDICAL PRODUCTS, INC., a Georgia corporation (the
"COMPANY"), and NATIONSCREDIT COMMERCIAL CORPORATION, as agent for the Lenders
referred to below (the "AGENT").
STATEMENT OF FACTS
WHEREAS, pursuant to that certain Credit Agreement, dated as of July
15, 1997, among the Company, certain lenders party thereto (the "LENDERS") and
the Agent, as amended and restated by that certain Amended and Restated Credit
Agreement, dated as of May 26, 1998, among the Company, the Agent and the
Lenders (as the same may be amended, restated, supplemented or otherwise
modified from time to time, the "CREDIT AGREEMENT"; terms defined in the Credit
Agreement and not otherwise defined herein being used herein as therein
defined), the Lenders have provided the Company with a credit facility which may
be used from time to time for working capital purposes and for acquisitions of
medical products companies;
WHEREAS, the Lenders and the Agent have previously required, as a
condition to extending credit under the Credit Agreement, that the Company
execute that certain Security Agreement, dated as of July 15, 1997, between the
Company and the Agent (as amended from time to time, the "SECURITY AGREEMENT"),
to secure the obligations of the Company under the Credit Agreement and related
Financing Documents;
WHEREAS, the parties now desire to amend the Security Agreement in
certain respects and are entering into this Agreement for such purpose.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
STATEMENT OF TERMS
1. AMENDMENT. (a) The Security Agreement is hereby amended to
provide that all references to the term "Credit Agreement" contained therein
shall mean and refer to the Credit Agreement described above.
(b) The Security Agreement is hereby further amended by
deleting Exhibit A attached thereto and substituting in lieu thereof the Exhibit
A attached hereto.
2. NO OTHER AMENDMENTS. Except as expressly supplemented
hereby, the Security Agreement is and shall remain in full force and effect.
155
3. CHOICE OF LAW. This Agreement shall be governed by and
shall be construed and enforced in accordance with the laws in the State of
Georgia without regard to the conflicts of law principles thereof.
4. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original and all of which
when taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this agreement as of the
day and year first above written.
COMPANY:
HORIZON MEDICAL PRODUCTS, INC.
By:
------------------------------
Title:
---------------------------
AGENT:
NATIONSCREDIT COMMERCIAL
CORPORATION, as Agent
By:
------------------------------
Title:
---------------------------
156
EXHIBIT A
BANK ACCOUNTS
BANK ACCOUNT NUMBER
---- --------------
Columbus Bank and Trust ▇▇-▇▇-▇▇▇
NationsBank, N.A. 8251106426
3261187639
157
FIRST AMENDMENT TO SUBSIDIARY SECURITY AGREEMENT,
JOINDER AGREEMENT AND
FIRST AMENDMENT TO SUBSIDIARY GUARANTY AGREEMENT
THIS AGREEMENT is made and entered into as of this 26th day of May,
1998, by and among HORIZON ACQUISITION CORP., a Georgia corporation d/b/a
Neostar Medical Technologies ("NEOSTAR"), STRATO/INFUSAID, INC., a Massachusetts
corporation ("STRATO/INFUSAID"), and NATIONSCREDIT COMMERCIAL CORPORATION, as
agent for the Lenders referred to below (the "AGENT").
STATEMENT OF FACTS
WHEREAS, pursuant to that certain Credit Agreement, dated as of July
15, 1997, among Horizon Medical Products, Inc., a Georgia corporation (the
"BORROWER"), certain lenders party thereto (the "LENDERS") and the Agent, as
amended and restated by that certain Amended and Restated Credit Agreement,
dated as of May 26, 1998, among the Borrower, the Agent and the Lenders (as the
same may be amended, restated, supplemented or otherwise modified from time to
time, the "CREDIT AGREEMENT"; terms defined in the Credit Agreement and not
otherwise defined herein being used herein as therein defined), the Lenders have
provided the Borrower with a credit facility which may be used from time to time
for working capital purposes and for acquisitions of medical products companies;
WHEREAS, Neostar and Strato/Infusaid have heretofore jointly and
severally guaranteed the obligations of the Borrower under the Credit Agreement
pursuant to that certain Subsidiary Guaranty Agreement, dated as of July 15,
1997, executed by Neostar and Strato/Infusaid in favor of the Lenders and the
Agent (the "SUBSIDIARY Guaranty");
WHEREAS, the Lenders and the Agent have required, as a condition to
extending credit under the Credit Agreement, that Neostar and Strato/Infusaid
execute that certain Subsidiary Security Agreement, dated as of July 15, 1997,
among each of the Borrower's Subsidiaries and the Agent (as amended from time to
time, the "SUBSIDIARY SECURITY AGREEMENT"), to secure the Subsidiary Guaranty;
WHEREAS, to satisfy the above condition, Neostar now desires to enter
into this Agreement in order that it may be joined as a party to the Subsidiary
Security Agreement; and
WHEREAS, the parties also desire to amend the Subsidiary Security
Agreement and the Subsidiary Guaranty in certain respects and are entering into
this Agreement for such purpose.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
158
STATEMENT OF TERMS
1. JOINDER. In accordance with the terms of the Credit
Agreement, Neostar by signing below agrees to become a Pledgor under, and as
such term is defined in, the Subsidiary Security Agreement, with the same force
and effect as if originally named therein as Pledgor, and Neostar hereby agrees
to be bound by all of the terms and conditions of the Subsidiary Security
Agreement applicable to it as a Pledgor thereunder. In furtherance of the
foregoing, and in order to secure the full and punctual payment and performance
of the Secured Obligations (as defined in the Subsidiary Security Agreement),
Neostar hereby grants to the Agent for the ratable benefit of the Secured
Parties a continuing security interest and lien upon any and all Collateral (as
defined in the Subsidiary Security Agreement), whether now owned or existing or
hereafter acquired or arising and regardless of where located. Each reference to
a Pledgor in the Subsidiary Security Agreement shall be deemed to include
Neostar, and the Subsidiary Security Agreement is hereby incorporated herein by
this reference.
2. AMENDMENTS. (a) The Subsidiary Security Agreement and the
Subsidiary Guaranty are each hereby amended to provide that all references to
the term "Credit Agreement" contained therein shall mean and refer to the Credit
Agreement defined above.
(b) The Subsidiary Security Agreement is hereby further
amended by deleting Exhibit A and Exhibit B attached thereto and substituting in
lieu thereof the Exhibit A and Exhibit B attached hereto.
3. NO OTHER AMENDMENTS. Except as expressly supplemented
hereby, the Subsidiary Security Agreement and the Subsidiary Guaranty are and
shall remain in full force and effect.
4. CHOICE OF LAW. This Agreement shall be governed by and
shall be construed and enforced in accordance with the laws in the State of
Georgia without regard to the conflicts of law principles thereof.
5. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original and all of which
when taken together shall constitute one and the same instrument.
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159
IN WITNESS WHEREOF, the parties have executed this agreement as of the
day and year first above written.
NEOSTAR:
HORIZON ACQUISITION CORP.
By:
----------------------------
Title:
-------------------------
STRATO/INFUSAID:
STRATO/INFUSAID, INC.
By:
----------------------------
Title:
-------------------------
AGENT:
NATIONSCREDIT COMMERCIAL
CORPORATION, as Agent
By:
----------------------------
Title:
-------------------------
160
EXHIBIT A
PLEDGORS
Horizon Acquisition Corp.
Strato/Infusaid, Inc.
Notice Address for Pledgors:
c/o Horizon Medical Products, Inc.
Seven North Parkway Square
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
161
CONSENT OF GUARANTORS
The undersigned, as guarantors (the "GUARANTORS") under that
certain Subsidiary Guaranty Agreement, dated as of July 15, 1997 (hereinafter
called the "GUARANTY"), executed by the undersigned pursuant to the Credit
Agreement, dated as of July 15, 1997 (as amended to the date hereof, the "CREDIT
AGREEMENT"), among Horizon Medical Products, Inc. (the "BORROWER"), the Lenders
signatory thereto (the "LENDERS") and NationsCredit Commercial Corporation, as
Agent for the Lenders (the "AGENT"), with respect to the indebtedness and
obligations of the Borrower arising under the Credit Agreement, do hereby
consent to and approve of the execution and delivery by the Borrower of that
certain Amended and Restated Credit Agreement (the "RESTATED CREDIT AGREEMENT"),
dated of even date herewith, executed by and among the Borrower, the Lenders
signatory thereto and the Agent, and the transactions contemplated thereby, and
do further consent to and approve of the execution and delivery by the Borrower
of all other documents executed or to be executed by the Borrower in connection
therewith.
Each Guarantor acknowledges and agrees that the execution and
delivery of the Restated Credit Agreement and the other documents contemplated
thereby shall not diminish, impair, alter, discharge or otherwise affect in any
manner whatsoever the duties, obligations and liabilities of the Guarantor under
the Guaranty or any other Financing Document, including, without limitation, the
joint and several obligation of the Guarantors for the payment of the
"Guaranteed Obligations" (as that term is defined in the Guaranty), which
obligations include, without limitation, the Working Capital Loans and the
Acquisition Loans made or to be made by the Lenders to the Borrower under the
Restated Credit Agreement, and the reimbursement obligations of the Company in
respect of Letters of Credit issued under the Restated Credit Agreement.
Each Guarantor hereby ratifies, confirms and approves the
Guaranty and each of the other Financing Documents executed and delivered by
such Guarantor and all of the terms and provisions thereof, and agrees that the
Guaranty and such other Financing Documents constitute the valid and binding
obligations of such Guarantor, enforceable by the Agent and the Lenders in
accordance with their respective terms.
IN WITNESS WHEREOF, each Guarantor has executed this Consent,
as of the 26th day of May, 1998.
HORIZON ACQUISITION CORP.
By:
----------------------------
Title:
----------------------
STRATO/INFUSAID, INC.
By:
----------------------------
Title:
----------------------
162
EXHIBIT H
BORROWING BASE CERTIFICATE
I, ________________, the ____________ of Horizon Medical
Products, Inc. (the "COMPANY"), DO HEREBY CERTIFY, pursuant to the Amended and
Restated Credit Agreement dated as of May 26, 1998 (as amended from time to
time, the "CREDIT AGREEMENT") among the Company, the Lenders referred to therein
and NationsCredit Commercial Corporation, as Agent, that attached hereto as
Exhibit A is a true and accurate calculation of the Borrowing Base of the
Company as of __________, 19__, determined in accordance with the requirements
of the Credit Agreement.
Capitalized terms used herein and not otherwise defined herein
have the meanings assigned to them in the Credit Agreement.
IN WITNESS WHEREOF, I have signed this certificate as of this
___ day of ____________, 19__.
-------------------------------------
Name:
Title:
163
Exhibit A
to
BORROWING BASE CERTIFICATE
(all numbers in thousands)
As at ____________, 19__
************************************************************
DOMESTIC ACCOUNTS RECEIVABLE
Gross Domestic Accounts Receivable ________
Less:
(a) Accounts not denominated in US dollars ________
(b) Receivables that do not comply with all ________
applicable legal requirements
(c) Receivables subject to an unresolved dispute ________
(to the extent of such dispute)
(d) Receivables payable more than 90 days after ________
the date of the issuance of the original
invoice
(e) Receivables that remain unpaid for more than ________
60 days from the original due date specified
in the original invoice
(f) Unbilled Receivables, and Receivables for ________
unshipped goods or services not yet
performed
(g) Receivables arising outside the ordinary ________
course of business of the Company
164
(h) Receivables for which there has been ________
established a contra account, due from an
account debtor to whom the Company owes a
trade payable, or otherwise subject to a
setoff or counterclaim, but only to the
extent of such trade payable, setoff or
counterclaim
(i) Receivables not subject to a first priority ________
perfected Lien under the Security Agreement
and Receivables evidenced by an "instrument"
(as defined in the Uniform Commercial Code)
not in possession of the Agent
(j) Receivables due from an ineligible account ________
debtor(1)
(k) Receivables due from an account debtor that ________
the Company has not instructed in its
invoice to make payments on such receivables
to the Lockbox Account (as defined in the
Security Agreement) or from any account
debtor that makes payments in a form that
cannot be accepted in the Lockbox Account
(l) Receivables due from an account debtor from ________
whom more than 20% of the aggregate
Receivables of the Company are due, but only
to the extent of such excess
Total Ineligible Domestic Receivables ________
ELIGIBLE DOMESTIC RECEIVABLES $____ X 80% = ____
---------------------------
(1) As used herein, an ineligible account debtor is an account debtor (i) as to
which on such date Receivables representing more than 25% of aggregate amount of
all Receivables of such account debtor have remained unpaid for more than 60
days from the original due date specified at the time of the original issuance
of the invoice therefor, (ii) in respect of which a credit loss has been
recognized or reserved by the Company or any of its Subsidiaries, (iii) in
respect of which the Agent shall have notified the Company that such account
debtor does not have a satisfactory credit standing as determined in good faith
by the Agent, (iv) that is a Subsidiary or Affiliate of the Company, (v) that is
the United States of America or any department, agency or instrumentality
thereof or any state government or any department, agency or political
subdivision thereof, unless the Company has complied in all respects with the
Federal Assignment of Claims Act of 1940, or any similar provision of applicable
state law, or (vi) the prospect of payment of which, in the good faith judgment
of the Lender, has been impaired.
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165
FOREIGN SECURED ACCOUNTS RECEIVABLE
Gross Foreign Secured Accounts Receivable ________
Less:
(a) Accounts not denominated in US dollars ________
(b) Receivables that do not comply with all ________
applicable legal requirements
(c) Receivables subject to an unresolved dispute ________
(to the extent of such dispute)
(d) Receivables payable more than 90 days after ________
the date of the issuance of the original
invoice
(e) Receivables that remain unpaid for more than ________
60 days from the original due date specified
in the original invoice
(f) Unbilled Receivables, and Receivables for ________
unshipped goods or services not yet
performed
(g) Receivables arising outside the ordinary ________
course of business of the Company
(h) Receivables for which there has been ________
established a contra account, due from an
account debtor to whom the Company owes a
trade payable, or otherwise subject to a
setoff or counterclaim, but only to the
extent of such trade payable, setoff or
counterclaim
(i) Receivables not subject to a first priority ________
perfected Lien under the Security Agreement
and Receivables evidenced by an "instrument"
(as defined in the Uniform Commercial Code)
not in possession of the Agent
(j) Receivables due from an ineligible account ________
debtor(2)
-------------------
(2) As used herein, an ineligible account debtor is an account debtor (i) as to
which on such date Receivables representing more than 25% of aggregate amount of
all Receivables of such account debtor have remained unpaid for more than 60
days from the original due date specified at the time of the original issuance
of the invoice therefor, (ii) in respect of which a credit loss has been
recognized or reserved by the Company or any of its Subsidiaries, (iii) in
respect of which the Agent shall have notified the Company that such account
debtor does not have a satisfactory credit standing as determined in good faith
by the Agent, (iv) that is a Subsidiary or Affiliate of the Company, or (v) the
prospect of payment of which, in the good faith judgment of the Lender, has been
impaired.
-3-
166
(k) Receivables due from an account debtor that ________
the Company has not instructed in its
invoice to make payments on such receivables
to the Lockbox Account (as defined in the
Security Agreement) or from any account
debtor that makes payments in a form that
cannot be accepted in the Lockbox Account
(l) Receivables due from an account debtor from ________
whom more than 20% of the aggregate
Receivables of the Company are due, but only
to the extent of such excess
Total Ineligible Foreign Secured Receivables ________
ELIGIBLE FOREIGN SECURED RECEIVABLES $____ X 80% = ____
FOREIGN UNSECURED ACCOUNTS RECEIVABLE
Gross Foreign Unsecured Accounts Receivable ________
Less:
(a) Accounts not denominated in US dollars ________
(b) Receivables that do not comply with all ________
applicable legal requirements
(c) Receivables subject to an unresolved dispute ________
(to the extent of such dispute)
(d) Receivables payable more than 90 days after ________
the date of the issuance of the original
invoice
(e) Receivables that remain unpaid for more than ________
60 days from the original due date specified
in the original invoice
(f) Unbilled Receivables, and Receivables for ________
unshipped goods or services not yet
performed
(g) Receivables arising outside the ordinary ________
course of business of the Company
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167
(h) Receivables for which there has been ________
established a contra account, due from an
account debtor to whom the Company owes a
trade payable, or otherwise subject to a
setoff or counterclaim, but only to the
extent of such trade payable, setoff or
counterclaim
(i) Receivables not subject to a first priority ________
perfected Lien under the Security Agreement
and Receivables evidenced by an "instrument"
(as defined in the Uniform Commercial Code)
not in possession of the Agent
(j) Receivables due from an ineligible account ________
debtor(3)
(k) Receivables due from an account debtor that ________
the Company has not instructed in its
invoice to make payments on such receivables
to the Lockbox Account (as defined in the
Security Agreement) or from any account
debtor that makes payments in a form that
cannot be accepted in the Lockbox Account
(l) Receivables due from an account debtor from ________
whom more than 20% of the aggregate
Receivables of the Company are due, but only
to the extent of such excess
Total Ineligible Foreign Unsecured Receivables ________
ELIGIBLE FOREIGN UNSECURED RECEIVABLES $____(4) X 50% = ____
------------------------
(3) As used herein, an ineligible account debtor is an account debtor (i) as to
which on such date Receivables representing more than 25% of aggregate amount of
all Receivables of such account debtor have remained unpaid for more than 60
days from the original due date specified at the time of the original issuance
of the invoice therefor, (ii) in respect of which a credit loss has been
recognized or reserved by the Company or any of its Subsidiaries, (iii) in
respect of which the Agent shall have notified the Company that such account
debtor does not have a satisfactory credit standing as determined in good faith
by the Agent, (iv) that is a Subsidiary or Affiliate of the Company, or (v) the
prospect of payment of which, in the good faith judgment of the Lender, has been
impaired.
(4) Not to exceed $500,000.
-5-
168
INVENTORY
Value (determined at the lower of cost or market on a
basis consistent with that used in the preparation of
the financial statements referred to in Section
6.04(a) of the Credit Agreement) of all Inventory
owned by the Company and located in any jurisdiction
in the United States of America as to which
appropriate UCC financing statements have been filed
naming the Company as "debtor" and the Agent as
"secured party", all net of any amounts payable by
the Company in respect of commissions, processing
fees or other charges ________
Less:
(i) Inventory shipped to a provider of services, ________
or to a customer, even if on a consignment
or "sale or return" basis
(ii) Inventory that is subject to a Lien (other ________
than Liens created pursuant to the Security
Documents)
(iii) Inventory against which a reserve has been ________
taken
(iv) Inventory not subject to a perfected first ________
priority lien under the Security Agreement,
and subject to no prior or equal Lien
(v) Inventory not produced in compliance with ________
the applicable requirements of the Fair
Labor Standards Act
(vi) Supply, scrap or obsolete Inventory and ________
Inventory not reasonably marketable
Total Ineligible Inventory
ELIGIBLE INVENTORY $____ X 50% = ____
BORROWING BASE TOTAL $____________
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