Exhibit 10.20
REVOLVING CREDIT AGREEMENT
between
IBRD-ROSTRUM GLOBAL INC.
and
BANQUE NATIONALE DE PARIS
Los Angeles Branch
Dated as of March 13, 1998
TABLE OF CONTENTS
PAGE
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SECTION 1. DEFINITIONS....................................................................................... 1
1.1 DEFINED TERMS..................................................................................... 1
1.2 OTHER DEFINITIONAL PROVISIONS..................................................................... 13
SECTION 2. AMOUNT AND TERMS OF LOANS; COMMITMENT AMOUNTS..................................................... 14
2.1 REVOLVING LOANS.................................................................................... 14
2.2 OPTIONAL PREPAYMENTS............................................................................... 15
2.3 CONVERSION AND CONTINUATION OPTIONS................................................................ 15
2.4 MINIMUM AMOUNTS OF TRANCHES........................................................................ 16
2.5 INTEREST RATES, FEES AND PAYMENT DATES............................................................. 16
2.6 COMPUTATION OF INTEREST............................................................................ 17
2.7 INABILITY TO DETERMINE INTEREST RATE............................................................... 17
2.8 PAYMENTS........................................................................................... 18
2.9 ILLEGALITY......................................................................................... 18
2.10 INCREASED COSTS.................................................................................... 18
2.11 TAXES.............................................................................................. 20
2.12 INDEMNITY.......................................................................................... 21
2.13 MITIGATION OF COSTS................................................................................ 22
SECTION 3. REPRESENTATIONS AND WARRANTIES.................................................................... 22
3.1 FINANCIAL CONDITION................................................................................ 22
3.2 NO CHANGE.......................................................................................... 23
3.3 CORPORATE EXISTENCE; COMPLIANCE WITH LAW........................................................... 23
3.4 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS............................................ 23
3.5 NO LEGAL BAR....................................................................................... 24
3.6 NO MATERIAL LITIGATION............................................................................. 24
3.7 OWNERSHIP OF PROPERTY; LIENS; CONDITION OF PROPERTIES.............................................. 24
3.8 INTELLECTUAL PROPERTY.............................................................................. 24
3.9 TAXES.............................................................................................. 25
3.10 FEDERAL REGULATIONS................................................................................ 25
3.11 ERISA.............................................................................................. 25
3.12 INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT......................................... 26
3.13 SUBSIDIARIES....................................................................................... 26
3.14 PURPOSE OF LOANS................................................................................... 26
3.15 ENVIRONMENTAL MATTERS.............................................................................. 26
3.16 ACCURACY AND COMPLETENESS OF INFORMATION........................................................... 27
3.17 REAL PROPERTY ASSETS............................................................................... 27
3.18 PERMITS, ETC....................................................................................... 27
3.19 PATENTS, TRADEMARKS, ETC........................................................................... 28
3.20 COPYRIGHT ACT REQUIREMENTS......................................................................... 28
3.21 NATURE OF BUSINESS................................................................................. 28
3.22 CAPITAL STOCK OF BORROWER AND ITS SUBSIDIARIES..................................................... 28
3.23 RANKING OF LOANS................................................................................... 29
3.24 EXECUTIVE OFFICES.................................................................................. 29
3.25 INSOLVENCY......................................................................................... 29
3.26 LABOR MATTERS...................................................................................... 29
3.27 CONDEMNATION....................................................................................... 29
i
3.28 LEASES, LICENSES, PERMITS, SITE USE AGREEMENTS AND OTHER OCCUPANCY AGREEMENTS...................... 29
SECTION 4. CONDITIONS PRECEDENT.............................................................................. 29
4.1 CONDITIONS TO CLOSING DATE......................................................................... 29
4.2 CONDITIONS TO EACH LOAN............................................................................ 32
SECTION 5. AFFIRMATIVE COVENANTS............................................................................. 33
5.1 FINANCIAL STATEMENTS............................................................................... 33
5.2 CERTIFICATES; OTHER INFORMATION.................................................................... 34
5.3 PAYMENT OF OBLIGATIONS............................................................................. 35
5.4 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE................................................... 36
5.5 MAINTENANCE OF PROPERTY; INSURANCE................................................................. 36
5.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS............................................. 37
5.7 ENVIRONMENTAL LAWS................................................................................. 38
5.8 USE OF PROCEEDS.................................................................................... 38
5.9 COMPLIANCE WITH LAWS, ETC.......................................................................... 38
5.10 LEASE AND LICENSE APPROVALS........................................................................ 39
5.11 ACQUISITION OF REAL PROPERTY IN FEE SIMPLE......................................................... 39
5.12 LEASES AND LICENSES................................................................................ 39
5.13 NOTICES............................................................................................ 40
5.14 EMPLOYEE CONTRACTS................................................................................. 40
5.15 CONDITIONS SUBSEQUENT.............................................................................. 40
SECTION 6. NEGATIVE COVENANTS................................................................................ 40
6.1 LIMITATION ON FUNDAMENTAL CHANGES.................................................................. 40
6.2 LIMITATION ON RESTRICTED PAYMENTS.................................................................. 41
6.3 TRANSACTIONS WITH AFFILIATES....................................................................... 41
6.4 FISCAL YEAR........................................................................................ 41
6.5 UNFUNDED LIABILITIES............................................................................... 41
6.6 LINE OF BUSINESS................................................................................... 41
6.7 LIMITATION ON LIENS................................................................................ 42
6.8 LIMITATION ON LOANS AND ADVANCES................................................................... 42
SECTION 7. EVENTS OF DEFAULT................................................................................. 43
SECTION 8. MISCELLANEOUS..................................................................................... 46
8.1 AMENDMENTS AND WAIVERS............................................................................. 46
8.2 NOTICES............................................................................................ 46
8.3 NO WAIVER; CUMULATIVE REMEDIES..................................................................... 47
8.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES......................................................... 47
8.5 PAYMENT OF EXPENSES AND TAXES...................................................................... 47
8.6 SUCCESSORS AND ASSIGNS............................................................................. 48
8.7 COUNTERPARTS....................................................................................... 48
8.8 SEVERABILITY....................................................................................... 48
8.9 INTEGRATION........................................................................................ 48
8.10 GOVERNING LAW...................................................................................... 49
8.11 CLAIMS OR CONTROVERSIES SUBJECT TO JUDICIAL REFERENCE.............................................. 49
8.12 ACKNOWLEDGEMENTS................................................................................... 51
8.13 HEADINGS........................................................................................... 51
8.14 CONFLICT OF TERMS.................................................................................. 51
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Exhibits
A Form of Revolving Note
B Form of No Default/Representation Certificate
C Form of Continuation Notice
D Form of Closing Opinion
E Form of Borrower Security Agreement
F Form of Guarantees (U.S. and Canadian)
G Form of Monthly Declaration of Borrowing Limit
H Form of Environmental Compliance Agreement
Schedules
1 Borrower's Indebtedness
2 Borrower's Liens
3 Borrower's Permits and Approvals
4 Borrower's Real Property Assets
5 Borrower's Litigation Proceedings
6 Certain Environmental Matters
7 Regarding the Capital Stock of Borrower
8 Borrower Subsidiaries
9 Mortgages
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REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT, dated as of March 13, 1998, between
IBRD-ROSTRUM GLOBAL INC., a Delaware corporation (the "BORROWER") and BANQUE
NATIONALE DE PARIS, Los Angeles Branch (the "LENDER").
RECITALS
A. The Borrower has requested that the Lender make loans available to
the Borrower on a revolving basis in a maximum aggregate amount not to exceed at
any time $7,000,000. Such revolving credit facility would be available to
finance the Borrower's general corporate operations.
B. The Lender is willing to make available such revolving credit
facility on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, the following terms shall
have the following meanings:
"ACCOUNTANTS": Ernst & Young LLP, or such other firm of
independent certified public accountants or chartered
accountants of recognized national standing as shall be selected
by the Borrower and satisfactory to the Lender.
"ACCOUNT DEBTORS": any Person who is or who may become
obligated under, with respect to, or on account of an Account
Receivable.
"ACCOUNTS RECEIVABLE": all presently existing and hereafter arising
accounts receivable, contract rights and all other forms of obligation owing to
the Borrower arising out of the sale or lease of goods or the rendition of
services by the Borrower, whether or not earned by performance, all credit
insurance, guaranties and other security therefor, as well as all goods returned
to or reclaimed by the Borrower and all of the Borrower's books and records
relating to any of the foregoing.
"AFFILIATE": as to any Person, (a) any other Person (other
than a Subsidiary) which, directly or indirectly, is in control
of, is controlled by, or is under common control with, such
Person or (b) any Person who is a shareholder having control or
a director, officer, or partner (i) of such Person, (ii) of any Subsidiary of
such Person or (iii) of any Person described in the preceding clause (a). For
purposes of this definition, "control" of a Person means the power, directly or
indirectly, either to (i) vote securities having 10% or more of the ordinary
voting power for the election of directors of such Person or (ii) direct or
cause the direction of the management and policies of such Person whether by
contract or otherwise.
"AGREEMENT": this Revolving Credit Agreement, as amended,
waived, supplemented or otherwise modified from time to time.
"APPLICABLE LENDING OFFICE": for the Lender, its offices
for LIBOR Loans and Reference Rate Loans, specified on the
signature pages hereof, any of which offices may, upon 10 days'
prior written notice to the Borrower, be changed by the Lender.
"APPLICABLE LIBOR RATE MARGIN": with respect to the Loans
which are LIBOR Loans, for each Interest Period, 1.25% per
annum.
"APPLICABLE REFERENCE RATE MARGIN": with respect to the
Loans which are Reference Rate Loans, .25% per annum.
"BORROWER": as defined in the preamble hereto.
"BORROWING BASE": as at any date, (a) 80% of the Borrower's Eligible
Accounts Receivable PLUS (b) 50% of the EXCESS (which number shall not be
negative) of (i) the costs and estimated profit in excess of progress ▇▇▇▇▇▇▇▇
on contracts in progress OVER (ii) progress ▇▇▇▇▇▇▇▇ in excess of costs and
estimated profit on contracts in progress, the whole determined by using the
percentage of completion method, MINUS (c) the liabilities to be deducted
according to the Lender's form "Quarterly Declaration of Borrowing Limit" (as
provided by the Lender).
"BUSINESS DAY": a day other than a Saturday, Sunday or
other day on which commercial banks in the State of California
are authorized or required by law to close and which, in the
case of a LIBOR Loan, is a Eurodollar Business Day.
"CAPITALIZED LEASE OBLIGATIONS": obligations for the payment of rent
for any real or personal property under leases or agreements to lease that, in
accordance with GAAP, have been or should be capitalized on the books of the
lessee and, for purposes hereof, the amount of any such obligation shall be the
capitalized amount thereof determined in accordance with GAAP.
"CAPITAL STOCK": any and all shares, interests,
participation or other equivalent (however designated) of capital stock of a
corporation, any and all equivalent ownership interest in a Person (other than a
corporation), any and all warrants,
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options or rights to purchase or any other securities convertible into any of
the foregoing.
"CLOSING DATE": the date on which the conditions set forth
in Section 4.1 are satisfied and the initial Loan is made.
"CODE": the Internal Revenue Code of 1986, as amended from
time to time.
"COLLATERAL": all of the property (tangible or intangible)
subject to the lien or security interest to be created by any
mortgage, deed of trust, security agreement, pledge agreement,
assignment or other security document heretofore or hereafter
executed by the Borrower as security for all or part of the
Obligations.
"COLLATERAL DOCUMENTS": the Security Agreement, the Mortgages, all
notices of security interests in deposit accounts requested by the Lender
pursuant to the Security Agreement, Form UCC-1 Financing Statements and
amendments thereto and any other document encumbering the Collateral or
evidencing or perfecting a security interest therein for the benefit of the
Lender executed by the Borrower, as the same may be amended or modified from
time to time in accordance with the terms hereof.
"COMMONLY CONTROLLED ENTITY": as to any Person, an entity, whether or
not incorporated, which is under common control with such Person within the
meaning of Section 4001 of ERISA or is part of a group which includes such
Person and which is treated as a single employer under Section 414 of the Code.
"CONTINUATION NOTICE": a request for continuation or
conversion of a Loan as set forth in Section 2.3, substantially in
the form of Exhibit C.
"CONTRACTUAL OBLIGATION": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument
or other undertaking to which such Person is a party or by which
it or any of its Property is bound.
"DEFAULT": any of the events specified in Section 7, whether
or not any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"DOLLARS" and "$": dollars in lawful currency of the United
States.
"ELIGIBLE ACCOUNT RECEIVABLES": those Accounts Receivable created by
the Borrower in the ordinary course of business that arise out of the Borrower's
sale of goods or rendition of services, are owing from Account Debtors that are
reasonably acceptable to the Lender. In determining such eligibility, the Lender
may, but is not obligated to, rely on agings, reports and
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schedules of Accounts Receivables furnished by the Borrower, but reliance by the
Lender thereon from time to time shall not be deemed to limit the Lender's right
to revise standards of eligibility at any time as to both the Borrower's present
and future Accounts Receivable. Eligible Accounts shall not include any of the
following:
(a) Accounts Receivable, any portion of which has been due for
more than 90 days, except for Accounts Receivable which have been previously
approved by the Lender as good quality Accounts Receivable notwithstanding that
any portion thereof may be past due beyond 90 days, in which case the portion of
such Accounts Receivable which has been outstanding for less than 90 days may be
included as "Eligible Account Receivables";
(b) Accounts Receivable with respect to which the Account
Debtor is an officer, director, employee or agent of the Borrower;
(c) Accounts Receivable with respect to which the Account
Debtor is a subsidiary of, related to, affiliated with, or has common
shareholders, officers or directors with the Borrower;
(d) Accounts Receivable with respect to which goods are placed
on consignment, guaranteed sale, sale or return, sale on approval, ▇▇▇▇ and hold
or which contain other terms by reason of which payment by the Account Debtor
may be conditional;
(e) Accounts Receivable with respect to which the Account
Debtor is the United States or any department, agency or instrumentality of the
United States;
(f) Accounts Receivable with respect to which the Borrower is
or may become liable to the Account Debtor for goods sold or services rendered
by the Account Debtor to the Borrower or, for any other reason, are subject to
any right of offset in favor of the Account Debtor;
(g) Accounts Receivable with respect to which the Account
Debtor disputes liability or makes any claim with respect thereto, or is subject
to any insolvency or bankruptcy proceeding, or becomes Insolvent or goes out of
business; and
(h) Accounts Receivable that are payable in currency other
than Dollars.
"ENVIRONMENTAL COMPLIANCE AGREEMENT": the Environmental Compliance
Agreement (substantially in the form of Exhibit H) made by the Borrower in favor
of the Lender, as requested by the Lender from time to time, as it may be
amended or modified in accordance with the terms hereof.
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"ENVIRONMENTAL LAWS": any and all federal, state, local or municipal
laws, rules, orders, regulations, statutes, ordinances, codes, decrees,
requirements of any governmental authority or Requirements of Law (including
common law) regulating, relating to or imposing liability or standards of
conduct concerning protection of human health or the environment, as now or at
any time hereafter in effect.
"ERISA": the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA AFFILIATE": as to any Person, each trade or business including
such Person, whether or not incorporated, which together with such Person would
be treated as a single employer under Section 4001(a)(14) of ERISA.
"EVENT OF DEFAULT": any of the events specified in Section 7, PROVIDED
that any requirement for the giving of notice, the lapse of time, or both, and
all other conditions, have been satisfied.
"EURODOLLAR BUSINESS DAY": any day on which banks are open for dealings
in Dollar deposits in the London interbank market.
"EXCLUDED TAXES": all taxes imposed on or by reference to the net
income of the Lender or its Applicable Lending Office by any Governmental
Authority and all franchise taxes, taxes on doing business or taxes measured by
capital or net worth imposed on the Lender or its Applicable Lending Office by
any Governmental Authority and any taxes imposed by any Governmental Authority
arising as a consequence of the failure of the Lender to provide accurate
documentation required to be provided by the Lender pursuant to Section 2.11(b).
"FINANCIAL STATEMENTS": as defined in Section 3.1 hereof.
"GAAP": generally accepted accounting principles in the United States
in effect from time to time.
"GOVERNMENTAL AUTHORITY": any nation or government, any federal, state
or other political subdivision thereof and any federal, state or local entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"GUARANTEE OBLIGATION": as to any Person (the "GUARANTEEING PERSON"),
any obligation of (a) the guaranteeing Person or (b) another Person (including,
without limitation, any bank under any letter of credit) which Person the
guaranteeing Person has agreed to reimburse or indemnify for undertaking such
obligation in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "PRIMARY OBLIGATIONS")
of any other third Person (the "PRIMARY OBLIGOR") in
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any manner, whether directly or indirectly, including, without limitation, any
obligation of the guaranteeing Person, whether or not contingent, (i) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds for the purchase or
payment of any such primary obligation or to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof; PROVIDED, HOWEVER, that the
term Guarantee Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Guarantee Obligation of any guaranteeing Person shall be deemed to be the lesser
of (a) an amount equal to the stated or determinable (by the Borrower) amount of
the primary obligation in respect of which such Guarantee Obligation is made and
(b) the maximum amount for which such guaranteeing Person may be liable pursuant
to the terms of the instrument embodying such Guarantee Obligation, unless such
primary obligation and the maximum amount for which such guaranteeing Person may
be liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing Person's maximum reasonably
anticipated liability in respect thereof as determined by the Borrower in good
faith.
"GUARANTEES": the guarantees, substantially in the forms of Exhibit F
(as applicable), made by each Guarantor in favor of the Lender, on the Closing
Date, as the same may be amended or modified from time to time in accordance
with the terms hereof.
"GUARANTORS": the Parent and Phoenix.
"INDEBTEDNESS": of any Person at any date, without duplication, (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property (other than such amounts which are contingent upon earnings
performance or similar circumstances) or services (other than current trade
liabilities incurred in the ordinary course of business and payable in
accordance with customary practices) or which is evidenced by a note, bond,
debenture or similar instrument, (b) all obligations of such Person under
Capitalized Lease Obligations, (c) all obligations of such Person in respect of
acceptances issued or created for the account of such Person, (d) all
liabilities secured by any Lien on any property owned by such Person even though
such Person has not assumed or otherwise become liable for the payment thereof,
(e) all obligations of such Person, whether absolute or contingent, in respect
of letters of credit opened for the account of such Person and (f) all Guarantee
Obligations of such Person in respect of any indebtedness,
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obligations or liabilities of any other Person of the type referred to in
clauses (a) through (e) of this definition.
"INSOLVENCY": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"INSOLVENT": pertaining to a condition of Insolvency.
"INTELLECTUAL PROPERTY": as defined in Section 3.8 hereof.
"INTERCREDITOR AGREEMENT": an intercreditor agreement dated as of
February 5, 1998 among the Lender, Banque Nationale de Paris (Canada) and Royal
Bank of Canada, the Borrower, the Parent and Phoenix all in form and substance
satisfactory to the Lender, as it may be amended or modified in accordance with
the terms hereof.
"INTEREST PAYMENT DATE": for Reference Rate Loans, on the first day of
each calendar month while the Loans are outstanding and the day on which the
Loans become due and payable in full and are paid or prepaid in full and for
LIBOR Loans, the last day of each Interest Period therefor and if such Interest
Period is more than three months in length on each three-month anniversary date
of borrowing and the day on which the Loans become due and payable in full and
are paid or prepaid in full.
"INTEREST PERIOD": with respect to any LIBOR Loan:
(a) initially, the period commencing on the borrowing or conversion
date, as the case may be, with respect to such LIBOR Loan and ending one, two,
three or six months thereafter, as selected by the Borrower in its notice of
borrowing or its Continuation Notice, as the case may be, given with respect
thereto; and
(b) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such LIBOR Loan and ending one, two,
three or six months thereafter, as selected by the Borrower by irrevocable
notice to the Lender not less than three Eurodollar Business Days prior to the
last day of the then current Interest Period with respect thereto;
PROVIDED that, all of the foregoing provisions relating to
Interest Periods are subject to the following:
(i) if any Interest Period pertaining to a LIBOR Loan would
otherwise end on a day that is not a Business Day, such Interest Period
shall be extended to the next succeeding Business Day unless the result
of such extension would be to carry such Interest Period into another
calendar month in which event such Interest Period shall end on the
immediately preceding Business Day;
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(ii) any Interest Period that would otherwise extend beyond
the date final payment is due on the Loans shall end on the date of
such final payment; and
(iii) any Interest Period pertaining to a LIBOR Loan that
begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Business Day
of a calendar month.
"INVESTMENT COMPANY ACT": as defined in Section 3.12 hereof.
"LENDER": as defined in the preamble hereto.
"LETTER OF GUARANTEE": a nontransferable letter of guarantee for the
benefit of the Lender issued by Banque Nationale de Paris (Canada) in the face
amount of $7,000,000, in form and substance acceptable to the Lender, as it may
be amended or modified in accordance with the terms hereof and thereof.
"LIBOR": with respect to each day during each Interest Period
pertaining to a LIBOR Loan, the rate of interest determined by the Lender to be
the rate per annum at which deposits in Dollars would be offered to the Lender
by leading banks in the London interbank market at or about 9:00 a.m., Los
Angeles time, two Eurodollar Business Days prior to the beginning of such
Interest Period, for delivery on the first day of such Interest Period for the
number of days comprised therein and in an amount comparable to the amount of
its LIBOR Loan to be outstanding during such Interest Period.
"LIBOR ADJUSTED RATE": with respect to each day during each Interest
Period pertaining to a LIBOR Loan, a rate per annum determined for such day in
accordance with the following formula (rounded upward to the nearest 1/100th of
1%):
LIBOR
---------------------------------
1.00 - LIBOR Reserve Requirements
"LIBOR LOANS": Loans the rate of interest applicable to which is based
upon LIBOR.
"LIBOR RESERVE REQUIREMENTS": for any day as applied to a LIBOR Loan,
the aggregate (without duplication) of the maximum rates (expressed as a decimal
fraction) of reserve requirements in effect on such day (including, without
limitation, basic, supplemental, marginal and emergency reserves under any
regulations of the Board of Governors of the Federal Reserve System or other
Governmental Authority having jurisdiction with respect thereto) dealing with
reserve requirements prescribed for eurocurrency funding (currently referred to
as "Eurocurrency Liabilities" in Regulation D of such Board) maintained by a
member bank of such Federal Reserve System.
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"LIEN": any mortgage, pledge, charge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), security interest
or other security agreement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement, any
Capitalized Lease Obligation having substantially the same economic effect as
any of the foregoing, and the filing of any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction in respect of any
of the foregoing).
"LOAN": a revolving loan made to the Borrower by the Lender pursuant to
the provisions of Section 2.1 and "LOANS" means the aggregate of all revolving
loans outstanding at any given time.
"LOAN DOCUMENTS": this Agreement, the Note, the Collateral Documents,
the Guarantees, the Environmental Compliance Agreement and any other agreement
executed by a Loan Party in connection therewith and herewith including, but not
limited to, UCC-1 Financing Statements, as such agreements and documents may be
amended, supplemented and otherwise modified from time to time in accordance
with the terms hereof.
"LOAN PARTIES": the Borrower and the Guarantors.
"MARGIN STOCK": as defined in Regulation U.
"MATERIAL ADVERSE EFFECT": a material adverse effect on (a) the
business, operations, property or financial condition of the Borrower and its
Subsidiaries, taken as a whole, (b) the ability of the Borrower and its
Subsidiaries, taken as a whole, to perform their obligations under the Loan
Documents or (c) the validity or enforceability of the Loan Documents or the
rights or remedies of the Lender hereunder or thereunder.
"MATURITY": in respect of the Note, the date it shall become due and
payable in full, whether at stated maturity, by acceleration or otherwise.
"MORTGAGES": such mortgages, deeds of trust, collateral assignments of
leases and collateral assignments of licenses and permits as may be made by the
Borrower in favor of the Lender in respect of the Properties owned by the
Borrower, in form and substance satisfactory to the Lender, securing the
Obligations to the extent provided therein, as the same may be amended or
modified from time to time in accordance with the terms hereof.
"MULTIEMPLOYER PLAN": a plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"NOTE": as defined in Section 2.1(c) hereof.
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"OBLIGATIONS": the unpaid principal of and interest on (including,
without limitation, interest accruing after the maturity of the Loans and
interest accruing on or after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding and whether or not at a default rate) the Note,
and all other obligations and liabilities of the Borrower and its Subsidiaries
to the Lender, whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, this Agreement, the Note, any other Loan Document and
any other document made, delivered or given in connection herewith or therewith,
whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses (including, without limitation, all reasonable fees
and disbursements of counsel to the Lender that are required to be paid by the
Borrower and its Subsidiaries pursuant to the terms of this Agreement) or
otherwise.
"OCCUPANCY AGREEMENTS": as defined in Section 5.12.
"PARENT": Phoenix International Life Sciences (U.S.) Inc., a Delaware
corporation, which directly owns all of the Capital Stock of the Borrower.
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA or any successor thereto.
"PERSON": any individual, firm, partnership, joint venture,
corporation, association, business enterprise trust, unincorporated
organization, government or department or agency thereof or other entity,
whether acting in an individual, fiduciary or other capacity.
"PHOENIX": Phoenix International Life Sciences Inc., a Canadian
corporation which directly or indirectly owns all of the Capital Stock of the
Borrower and the Parent.
"PLAN": as to any Person, any plan (other than a Multiemployer Plan)
subject to Title IV of ERISA maintained for employees of such Person or any
ERISA Affiliate of such Person (and any such plan no longer maintained by such
Person or any of such Person's ERISA Affiliates to which such Person or any of
such Person's ERISA Affiliates has made or was required to make any
contributions within any of the five preceding years).
"PROPERTIES": the collective reference to the real and personal
property owned, leased, or under license or permit, by the Borrower or any of
its Subsidiaries.
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"REFERENCE RATE": the rate of interest per annum publicly announced
from time to time by the Lender, at its Los Angeles Branch office as its
"Reference Rate". The Reference Rate is determined by the Lender from time to
time as a means of pricing credit extensions to some customers and is neither
directly tied to any external rate of interest or index nor necessarily the
lowest rate of interest charged by the Lender at any given time for any
particular class of customers or credit extensions. Any change in the applicable
interest rate due to a change in the Reference Rate shall be effective on the
effective date of such change in the Reference Rate.
"REFERENCE RATE LOANS": Loans the rate of interest applicable to which
is based upon the Reference Rate.
"REGULATION D": Regulation D of the Board of Governors of the Federal
Reserve System, as the same is from time to time in effect, and all official
rulings and interpretations thereunder or thereof and any successor regulation
thereto.
"REGULATION U": Regulation U of the Board of Governors of the Federal
Reserve System, as the same is from time to time in effect, and all official
rulings and interpretations thereunder or thereof and any successor regulation
thereto.
"REORGANIZATION": with respect to any Multiemployer Plan, the condition
that such plan is in reorganization within the meaning of Section 4241 of ERISA.
"REPORTABLE EVENT": any of the events set forth in Section 4043(b) of
ERISA, other than those events as to which the thirty-day notice period is
waived under PBGC regulations.
"REQUIREMENT OF LAW": as to any Person, the Articles of Incorporation
and By-Laws or other organizational or governing documents of such Person, and
any law, treaty, rule, order, judgment or regulation of an arbitrator or a court
or other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject.
"RESPONSIBLE OFFICER": the chief executive officer, the president, any
senior vice president, treasurer or any vice president of the applicable Loan
Party, or, with respect to financial matters, the chief financial officer,
treasurer or controller of the applicable Loan Party, as applicable.
"RESTRICTED PAYMENTS": as defined in Section 6.2.
"REVOLVING COMMITMENT": the commitment of the Lender to make Loans
hereunder through its Applicable Lending Office in an amount not to exceed
$7,000,000, as the same may be adjusted pursuant to the provisions hereof.
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"REVOLVING PERIOD": as defined in Section 2.1(a).
"SECURITY AGREEMENT": the Security Agreement dated as of the Closing
Date by the Borrower in favor of the Lender in respect of the tangible and
intangible personal property of the Borrower described therein, substantially in
form of Exhibit E hereto, as it may be amended or otherwise modified from time
to time in accordance with the terms hereof.
"SINGLE EMPLOYER PLAN": any Plan which is covered by Title IV of ERISA,
but which is not a Multiemployer Plan.
"SOLVENT": when used with respect to any Person, that:
(a) the present fair salable value of such Person's assets is
in excess of the total amount of the probable liability on such
Person's liabilities;
(b) such Person is able to pay its debts generally as they
become due; and
(c) such Person does not have unreasonably small capital to
carry on such Person's business as theretofore operated and all
businesses in which such Person is about to engage.
"SUBSIDIARY": as to any Person at any time of determination, a
corporation, partnership or other entity of which shares of stock or other
ownership interests having ordinary Voting Power (other than stock or such other
ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers of
such corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries or Subsidiaries, or both, by such Person. Unless
otherwise qualified, all references to a "subsidiary" or to "subsidiaries" in
this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.
"TAXES": as defined in Section 2.11(a) hereof.
"TERMINATION EVENT": (a) a Reportable Event, (b) the institution of
proceedings to terminate a Single Employer Plan by the PBGC under Section 4042
of ERISA, (c) the appointment by the PBGC of a trustee to administer any Single
Employer Plan or (4) the existence of any other event or condition that would
reasonably be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment by the PBGC of a trustee to administer, any
Single Employer Plan.
"TRANCHE": the collective reference to LIBOR Loans the
Interest Periods with respect to all of which begin on the same
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date and end on the same later date (whether or not such LIBOR Loans shall
originally have been made on the same day).
"TRANSACTION COSTS": for any period, reasonable nonrecurring
out-of-pocket costs, fees and expenses (including reasonable attorneys' fees)
which are incurred by the Borrower and its Subsidiaries in connection with (a)
the negotiation, preparation and consummation of the transactions contemplated
under this Agreement and (b) financing agreements and proposed financing
agreements related to this Agreement.
"TYPE": as to any Loan, its nature as a Reference Rate Loan or a LIBOR
Loan.
"U.S. PERSON": a citizen or resident of the United States, a
corporation, a partnership or other entity created or organized in or under any
laws of the United States or any State thereof, or any estate or trust that is
subject to Federal income taxation regardless of the source of its income.
"VOTING POWER": the aggregate number of votes of all classes of Capital
Stock of such Person which ordinarily has voting power for the election of
directors of such Person.
1.2 OTHER DEFINITIONAL PROVISIONS. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in any other Loan Document or any certificate or other
document made or delivered pursuant hereto or thereto.
(b) As used herein, in any other Loan Document, and in any certificate
or other document made or delivered pursuant hereto or thereto, accounting terms
not defined in Section 1.1 and accounting terms partly defined in Section 1.1,
to the extent not defined, shall have the respective meanings given to them
under GAAP. Unless otherwise provided herein, all financial calculations made
with respect to the Borrower for the purpose of determining compliance with the
terms of this Agreement shall be made on a consolidated basis.
(c) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, subsection,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(e) References to agreements, other contractual instruments and other
documents include all subsequent amendments and other modifications to such
agreement and documents, but only to the
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extent such amendments and other modifications are not prohibited by the terms
of any Loan Document.
SECTION 2. AMOUNT AND TERMS OF LOANS; COMMITMENT AMOUNTS
2.1 REVOLVING LOANS. (a) Subject to the terms and conditions hereof,
the Lender agrees to make revolving loans through its Applicable Lending Office
to the Borrower during the period from and including the Closing Date to the
date upon which the Lender shall, by notice to the Borrower, terminate the right
of the Borrower to obtain revolving loans hereunder or demand the immediate
repayment of all revolving loan amounts hereunder (the "REVOLVING PERIOD") in an
aggregate principal amount not to exceed at any time outstanding the lesser of
(i) the Revolving Commitment, as such amount may be reduced hereunder and (ii)
the Borrowing Base (collectively, the "LOANS"). During the Revolving Period
Loans may be repaid and reborrowed up to the limits set forth herein.
(b) Subject to Sections 2.9 and 2.11, the Loans may from time to time
be (i) LIBOR Loans, (ii) Reference Rate Loans or (iii) a combination thereof, as
determined by the Borrower and notified to the Lender in accordance with either
Section 2.1(e) or 2.3. The Lender may make or maintain its Loans to the Borrower
by or through any Applicable Lending Office.
(c) The Loans made by the Lender to the Borrower shall be evidenced by
a promissory note of the Borrower, substantially in the form of Exhibit A (the
"NOTE"), with appropriate insertions therein, payable to the order of the Lender
and representing the obligation of the Borrower to pay the aggregate unpaid
principal amount of the Loans made by the Lender to the Borrower pursuant to
Section 2.1(a), with interest thereon as prescribed in Sections 2.5 and 2.6. The
Lender is hereby authorized (but not required) to record the date and amount of
each payment or prepayment of principal of its Loans made to the Borrower, each
continuation thereof, each conversion of all or a portion thereof to another
Type and, in the case of LIBOR Loans, the length of each Interest Period with
respect thereto, in the books and records of the Lender, and any such
recordation made as part of its normal lending practices shall constitute PRIMA
FACIE evidence of the accuracy of the information so recorded. The failure of
the Lender to make any such recordation or notation in the books and records of
the Lender (or any error in such recordation or notation) shall not affect the
obligations of the Borrower hereunder or under the Note. The Note shall (i) be
dated the Closing Date, (ii) provide for the payment of interest in accordance
with Sections 2.5 and 2.6 and (iii) be stated to be payable on the Lender's
demand.
(d) On Lender's demand, the Borrower shall immediately repay the
principal of the Note and all interest accrued and unpaid thereon (even if such
demand occurs during the Revolving Period).
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The Borrower shall immediately prepay the Loans in an amount equal to the excess
of any Loans outstanding over the lesser of (i) the Revolving Commitment and
(ii) the Borrowing Base.
(e) The Borrower shall give the Lender irrevocable written notice
(which notice must be received by the Lender prior to 9:00 a.m., Los Angeles
time, in the case of Reference Rate Loans, one Business Day prior to the
proposed date of borrowing and, in the case of a Eurodollar Loan, on the third
Business Day before the date of the proposed borrowing. Each such notice of a
Loan shall be by telephone and confirmed, by the end of the same Business Day,
by telecopy specifying therein the requested (i) date of such Loan, (ii) Type of
such Loan, (iii) amount of such Loan and (iv) in the case of a Eurodollar Loan,
the initial Interest Period for such Loan. Each Loan shall be in the amount of
$500,000 or in integral multiple of $100,000 in excess thereof.
2.2 OPTIONAL PREPAYMENTS. The Borrower may on the last day of any
applicable Interest Period with respect thereto or at any time subject to
compliance with Section 2.12, in the case of LIBOR Loans, or at any time and
from time to time, in the case of Reference Rate Loans, prepay the Loans, in
whole or in part, upon at least three Business Days' irrevocable written notice,
in the case of LIBOR Loans, and upon at least one Business Day's irrevocable
written notice, in the case of Reference Rate Loans, from the Borrower to the
Lender, specifying the date and amount of prepayment and whether the prepayment
is of LIBOR Loans, Reference Rate Loans or a combination thereof and, if of a
combination thereof, the amount allocable to each. If any such notice is given,
the amount specified in such notice shall be due and payable by the Borrower on
the date specified therein, together with accrued interest to such date on the
amount prepaid. Partial prepayments of the Loans shall be in an aggregate
principal amount of $500,000 or whole multiples of $100,000 in excess thereof.
2.3 CONVERSION AND CONTINUATION OPTIONS. (a) The Borrower may elect
from time to time to convert LIBOR Loans to Reference Rate Loans by the Borrower
giving the Lender at least two Business Days' prior irrevocable written notice
of such election pursuant to a Continuation Notice, PROVIDED that any such
conversion of LIBOR Loans may only be made on the last day of an Interest Period
with respect thereto. The Borrower may elect from time to time to convert
Reference Rate Loans to LIBOR Loans by the Borrower giving the Lender at least
three Eurodollar Business Days' prior irrevocable written notice of such
election pursuant to a Continuation Notice. Any such notice of conversion to
LIBOR Loans shall specify the length of the initial Interest Period or Interest
Periods therefor. All or any part of outstanding LIBOR Loans and Reference Rate
Loans may be converted as provided herein, PROVIDED that (i) any such conversion
may only be made if, after giving effect thereto, Section 2.4 shall not have
been contravened, (ii) no such Loan may be converted into a LIBOR Loan
after the date that is one month prior to the end of the Revolving
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Period and (iii) the Borrower shall not have the right to elect to continue at
the end of the applicable Interest Period, or to convert to, a LIBOR Loan if a
Default shall have occurred and be continuing.
(b) Any LIBOR Loan may be continued as such upon the expiration of the
then current Interest Period with respect thereto by the Borrower giving at
least three Eurodollar Business Days' prior irrevocable written notice to the
Lender, in accordance with the applicable provisions of the term "Interest
Period" set forth in Section 1.1, of the length of the next Interest Period to
be applicable to such LIBOR Loan, PROVIDED that no LIBOR Loan may be continued
as such (i) if, after giving effect thereto, Section 2.4 would be contravened,
(ii) after the date that is one month prior to the end of the Revolving Period
or (iii) if a Default shall have occurred and be continuing and PROVIDED,
FURTHER, that if the Borrower shall fail to give any required notice as
described above in this Section or if such continuation is not permitted
pursuant to the preceding proviso, such Loans shall be automatically converted
to Reference Rate Loans on the last day of such then-expiring Interest Period.
2.4 MINIMUM AMOUNTS OF TRANCHES. All borrowings, conversions and
continuations of the Loans hereunder and all selections of Interest Periods
hereunder shall be in such amounts and be made pursuant to such elections so
that, after giving effect thereto, the aggregate principal amount of the Loans
comprising such Tranche shall be equal to $500,000 or a whole multiple of
$100,000 in excess thereof, and, in any case, there shall not be more than ten
Tranches.
2.5 INTEREST RATES, FEES AND PAYMENT DATES.
(a) Each LIBOR Loan shall bear interest for each day during each
Interest Period with respect thereto at a rate per annum equal to the LIBOR
Adjusted Rate plus the Applicable LIBOR Rate Margin.
(b) Each Reference Rate Loan shall bear interest at a rate per annum
equal to the Reference Rate plus the Applicable Reference Rate Margin.
(c) If an Event of Default shall exist hereunder, at the option of the
Lender all amounts outstanding under the Note shall bear interest at a rate per
annum which is the rate otherwise applicable under Sections (a) and (b) above
plus 2% from the date of such Event of Default until the date such Event of
Default is cured or waived (after as well as before judgment).
(d) Should the Lender determine that the utilization of the credit
facility established hereunder is not adequately supported by the Borrowing Base
(which determination shall be in the Lender's sole and absolute discretion), the
Borrower agrees to pay
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a fee of 0.50% (with a minimum of $250) as calculated on the amount of the
coverage deficit established on the last day of each calendar month. This fee
will be charged to the account of the Borrower the month following the
determination of such deficit.
(e) If the Borrower fails to deliver to the Lender the reports required
by Section 5.2(a) within the time periods required, the Borrower shall pay to
the Lender a monthly fee of $250 for each month (or a prorated amount for any
portion thereof) for which such reports were not delivered; provided, however,
that payment of such fee shall not waive any resulting Default or Event of
Default which shall occur as a result of the Borrower's failure to provide such
reports to the Lender as required hereunder.
(f) Interest shall be payable in arrears on each Interest Payment Date,
provided that interest accruing pursuant to paragraph (c) of this Section shall
be payable on demand. The fees referenced in (d) and (e) above shall be payable
on demand of the Lender.
2.6 COMPUTATION OF INTEREST. Interest on Loans and all Obligations
shall be calculated on the basis of a 360-day year for the actual days elapsed.
Each determination of an interest rate or the applicable fees described in
Section 2.5(d) and (e) by the Lender pursuant to any provision of this Agreement
shall be conclusive and binding on the Borrower and the Lender in the absence of
manifest error.
2.7 INABILITY TO DETERMINE INTEREST RATE. In the event that prior to
the first day of any Interest Period:
(a) the Lender shall have determined (which determination shall be
conclusive and binding upon the Borrower absent manifest error) that, by reason
of circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the LIBOR Adjusted Rate for such Interest Period, or
(b) the LIBOR Adjusted Rate determined or to be determined for such
Interest Period will not adequately and fairly reflect the cost to the Lender
(as conclusively certified by the Lender) of making or maintaining its affected
Loans during such Interest Period;
the Lender shall give telecopy or telephonic notice thereof to the Borrower as
soon as practicable thereafter. If such notice is given (i) any LIBOR Loans
requested to be made on the first day of such Interest Period shall be made as
Reference Rate Loans and (ii) any outstanding LIBOR Loans shall be converted, on
the first day of such Interest Period, to Reference Rate Loans. Until such
notice has been withdrawn by the Lender, no further LIBOR Loans shall be made or
continued as such, nor shall the Borrower have the right to convert Reference
Rate Loans to LIBOR Loans.
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2.8 PAYMENTS. All payments (including prepayments) to be made by the
Borrower hereunder and under the Note, whether on account of principal,
interest, fees or otherwise, shall be made without set off or counterclaim and
shall be made prior to 10:00 a.m., Los Angeles time, on the due date thereof to
the Lender to such account as the Lender shall specify to the Borrower in
writing, in Dollars and in immediately available funds. All payments due to the
Lender from the Borrower hereunder shall be deemed paid when received by the
Lender. If any payment hereunder (other than payments on the LIBOR Loans)
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. If any payment on a LIBOR Loan becomes due and payable on
a day other than a Eurodollar Business Day, the maturity thereof shall be
extended to the next succeeding Eurodollar Business Day (and interest shall
continue to accrue thereon at the applicable rate) unless the result of such
extension would be to extend such payment into another calendar month, in which
event such payment shall be made on the immediately preceding Eurodollar
Business Day.
2.9 ILLEGALITY. Notwithstanding any other provision herein, if any
change after the Closing Date in any Requirement of Law or in the interpretation
or application thereof shall make it unlawful for the Lender or Applicable
Lending Office to maintain LIBOR Loans as contemplated by this Agreement, (a)
the commitment of the Lender hereunder to continue LIBOR Loans as such and to
convert Reference Rate Loans to LIBOR Loans shall forthwith be suspended during
such period of illegality and (b) the Loans of the Lender or Applicable Lending
Office then outstanding as LIBOR Loans, if any, shall be converted automatically
to Reference Rate Loans on the respective last days of the then current Interest
Periods with respect to such Loans or within such earlier period as required by
law. If any such conversion of a LIBOR Loan occurs on a day which is not the
last day of the then current Interest Period with respect thereto, the Borrower
shall pay to the Lender such amounts, if any, as may be required pursuant to
Section 2.12. To the extent that the Lender's LIBOR Loans have been converted to
Reference Rate Loans pursuant to this Section 2.9, all payments and prepayments
of principal that otherwise would be applied to the Lender's LIBOR Loans shall
be applied instead to its Reference Rate Loans.
2.10 INCREASED COSTS. (a) In the event that any change after the
Closing Date in any Requirement of Law or in the interpretation or application
thereof or compliance by the Lender with any request or directive (whether or
not having the force of law but, if not having such force, the compliance with
which is
- 18 -
generally accepted and standard in the banking industry) from any central bank
or other Governmental Authority having jurisdiction or authority over the Lender
made subsequent to the Closing Date:
(i) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirements against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of the Lender or Applicable Lending
Office which is not otherwise included in the determination of the
LIBOR Adjusted Rate hereunder; or
(ii) shall impose on the Lender or Applicable Lending Office any
other condition (other than with respect to a Tax matter or an Excluded
Tax matter);
and the result of any of the foregoing is to increase the cost to the Lender or
Applicable Lending Office, by an amount which the Lender reasonably deems to be
material, of converting into, continuing or maintaining LIBOR Loans or to reduce
any amount receivable hereunder in respect thereof then, in any such case, the
Borrower shall promptly pay to the Lender or Applicable Lending Office, upon the
demand of the Lender, any additional amounts necessary to compensate the Lender
for such increased cost or reduced amount receivable. If the Lender or any
Applicable Lending Office becomes entitled to claim any additional amounts
pursuant to this Section, it shall promptly notify the Borrower of the event by
reason of which it has become so entitled. A certificate as to any additional
amounts payable pursuant to this Section submitted by the Lender or Applicable
Lending Office to the Borrower, which shall demonstrate in reasonable detail the
computation of such amounts, shall be conclusive evidence of the accuracy of the
information so recorded, absent manifest error. Requests by the Lender for
compensation hereunder shall not be for a period more than six months
retroactive. This covenant shall survive the termination of this Agreement and
the payment of the Note.
(b) If, after the date of this Agreement, the introduction of or any
change in any applicable law, rule, regulation or guideline regarding capital
adequacy, or any change in the interpretation or administration thereof by any
Governmental Authority charged with the interpretation or administration
thereof, affects the amount of capital required or expected to be maintained by
the Lender and the Lender (taking into consideration the Lender's policies with
respect to capital adequacy) determines that the amount of capital maintained by
the Lender which is attributable to or based upon the Loans or this Agreement
must be increased as a consequence of such introduction or change by an amount
deemed by the Lender to be material, then, upon demand of the Lender, the
Borrower shall promptly pay to the Lender additional amounts sufficient to
compensate the Lender for the
- 19 -
increased costs to such Lender of such increased capital, without duplication of
any adjustment in interest based on the LIBOR Reserve Requirement. Any such
demand shall be accompanied by a certificate of the Lender setting forth in
reasonable detail the computation of any such increased costs, which certificate
shall be conclusive, absent manifest error. Requests by the Lender for
compensation hereunder shall not be for a period more than six months
retroactive. This obligation of the Borrower under this Section 2.10(b) shall
survive the termination of this Agreement and the payment of the Note and all
other amounts payable hereunder in full.
2.11 TAXES. (a) All payments made by the Borrower in respect of the
Obligations shall be made free and clear of, and without deduction or
withholding (except to the extent required by law, in which case the following
sentence shall apply) for or on account of, any present or future income, stamp
or other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any United States Governmental Authority or any political subdivision or
taxing authority thereof or therein, other than Excluded Taxes (all such
non-Excluded Taxes being hereinafter called "TAXES"). If any Taxes are required
to be withheld from any amounts payable to the Lender in respect of the
Obligations, the amounts so payable to the Lender shall be increased to the
extent necessary to yield to the Lender (after payment of all Taxes) interest or
any such other amounts payable hereunder at the rates or in the amounts
specified in this Agreement and the other Loan Documents; provided, however,
that no increased amount shall be required to be paid to the Lender under this
sentence except to the extent that any change after the date hereof in any such
withholding requirement (other than a change occasioned by an action of the
Lender) results in an increase in the rate of such withholding from that in
effect as of the date hereof in respect of payments to the Lender. The Lender
shall deliver to the Borrower a certificate setting forth the amount of such
Taxes, the calculation of such Taxes and an explanation of the requirement
therefor, all in reasonable detail and such certificate shall be conclusive,
absent manifest error. Whenever any Taxes are payable by the Borrower, as
promptly as possible thereafter, the Borrower shall send to the Lender a copy of
an original official receipt received by the Borrower showing payment thereof or
such other evidence of payment reasonably satisfactory to the Lender. If the
Borrower fails to pay any Taxes when due to the appropriate taxing authority or
fails to remit to the Lender the required receipts or other required documentary
evidence, the Borrower shall indemnify the Lender for any incremental taxes,
interest or penalties (and related reasonable fees and expenses of counsel) that
may become payable by the Lender as a result of any such failure. The agreements
in this Section shall survive the termination of this Agreement and the payment
of the Note and all other amounts payable hereunder.
- 20 -
(b) The Lender agrees that it will deliver to the Borrower on or prior
to the Closing Date (i) two duly completed copies of United States Internal
Revenue Service Form 1001 or 4224 or successor applicable form, as the case may
be, and (ii) an Internal Revenue Service Form W-8 or W-9 or successor applicable
form. The Lender also agrees to deliver to the Borrower two further copies of
the said Form 1001 or 4224, as applicable, and Form W-8 or W-9, or successor
applicable forms or other manner of certification as to such tax matters, as the
case may be, on or before the date that any such form expires or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent form previously delivered by it to the Borrower, and such extensions or
renewals thereof as may reasonably be requested by the Borrower, unless in any
such case an event beyond the control of the Lender (including, without
limitation, any change in treaty, law or regulation) has occurred prior to the
date on which any such delivery would otherwise be required which renders all
such forms inapplicable or which would prevent the Lender from duly completing
and delivering any such form with respect to it and the Lender so advised the
Borrower. The Lender shall certify (i) in the case of a Form 1001 or a Form
4224, that it is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes and (ii) in
the case of a Form W-8 or W-9, that it is entitled to an exemption from United
States backup withholding tax.
(c) The Borrower shall not be required to pay any additional amounts to
any Person in respect of United States withholding tax pursuant to Section
2.11(a) if the obligation to pay such additional amounts would not have arisen
but for a failure by such Person to comply with the requirements of Section
2.11(b) (including the accuracy of the certificate described in the final
sentence thereof).
2.12 INDEMNITY. The Borrower agrees to indemnify the Lender and to hold
the Lender harmless from and to pay the Lender on demand the amount of any
reasonable liability, loss or expense arising from the reemployment of funds
obtained by it or from fees payable to terminate the deposits from which such
funds were obtained (including reasonable fees and expenses of counsel) which
the Lender may sustain or incur as a consequence of (a) default by the Borrower
in payment when due of the principal amount of or interest on any LIBOR Loan,
(b) default by the Borrower in making a borrowing of, conversion into or
continuation of LIBOR Loans after the Borrower has given a notice requesting the
same in accordance with the provisions of this Agreement, but only if the Lender
has suffered actual loss, liability or expense in reliance on such notice, (c)
default by the Borrower in making any prepayment after the Borrower has given a
notice thereof in accordance with the provisions of this Agreement or (d) the
making by the Borrower of a prepayment or conversion of LIBOR Loans on a day
which is not the last day of an Interest Period with respect thereto. The
Lender's certificate as to such liability, loss or
- 21 -
expense shall be deemed conclusive, absent manifest error. This covenant shall
survive the termination of this Agreement and the payment of the Note and all
other amounts payable hereunder.
2.13 MITIGATION OF COSTS. If the Lender, by changing its Applicable
Lending Office or taking any other reasonable action, so long as making such
change or taking such other action is not disadvantageous to it in any
financial, regulatory or other respect, can mitigate any adverse effect on the
Borrower under Section 2.7, 2.9, 2.10 or 2.11, the Lender shall take such
action.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement and to make the
Loans, the Borrower hereby represents and warrants to the Lender that:
3.1 FINANCIAL CONDITION. (a) The reviewed balance sheet of the Borrower
and its consolidated Subsidiaries as at December 31, 1997, and the related
reviewed statements of income and of cash flows for the fiscal year ended on
such date, certified by the Accountants, copies of which will be furnished to
the Lender on or before May 15, 1998 will present fairly in all material
respects the financial condition of the Borrower and its consolidated
Subsidiaries as at such date, and the results of its operations and its cash
flows for the fiscal year then ended. All such financial statements (the
"FINANCIAL STATEMENTS"), including the related schedules and notes thereto, have
been prepared in accordance with GAAP applied consistently throughout the
periods involved (except as approved by such Accountants or Responsible Officer,
as the case may be, and as disclosed therein and for the absence of notes). The
Borrower does not have any, as of such date, Guarantee Obligation, contingent
liability or liability for taxes, or any long-term lease or unusual forward or
long-term commitment, including, without limitation, any interest rate or
foreign currency swap or exchange transaction, which is not reflected in the
foregoing statements or in the notes thereto and which is material in relation
to the financial condition of the Borrower at such date. During the period from
December 31, 1997 to and including the Closing Date, there has been no sale,
transfer or other disposition by the Borrower of any material part of its
business or property and no purchase or other acquisition of any business or
property (including any Capital Stock of any other Person) other than the
acquisition of Borrower's Capital Stock by the Parent material in relation to
the financial condition of the Borrower at December 31, 1997.
(b) The unaudited balance sheet of the Borrower as at February 28,
1998, a copy of which has heretofore been furnished to the Lender, presents
fairly in all material respects, in the opinion of the Borrower, the financial
condition of the Borrower as at such date, subject to year-end adjustments and
changes resulting from audit.
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3.2 NO CHANGE. Since December 31, 1997 no events have occurred which,
individually or in the aggregate, constitute a material adverse change in the
financial condition or business of the Borrower and its Subsidiaries taken as a
whole.
3.3 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. The Borrower and each
Subsidiary, (a) is (or, when formed, will be) duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization, (b)
has (or, when formed, will have) the corporate, partnership or limited liability
company power, as the case may be, and authority, and the legal right, to own
and operate its Properties, to lease the property it operates as lessee and to
conduct the business in which it is currently engaged and in which it proposes
to be engaged after the Closing Date, (c) is (or, when formed, will be) duly
qualified as a foreign entity and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property or the conduct
of its business requires such qualification and (d) is (or, when formed, will
be) in compliance with all Requirements of Law except to the extent that the
failure to comply therewith could not, in the aggregate, reasonably be expected
to have a Material Adverse Effect.
3.4 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. The
Borrower and each of its Subsidiaries has the corporate, partnership or limited
liability company power, as the case may be, and authority, and the legal right,
to make, deliver and perform the Loan Documents, to which it is or will be a
party, to borrow hereunder and the applicable Loan Party has taken all necessary
corporate action to authorize (a) the borrowings on the terms and conditions of
this Agreement and the Note and (b) the execution, delivery and performance of
the Loan Documents to which it is or will be a party. Each Subsidiary has (or,
when formed, will have) the corporate, partnership or limited liability company
power and authority, and the legal right, to make, deliver and perform the Loan
Documents to which it is or will be a party and has (or, when formed, will have)
taken all corporate, partnership or limited liability company action, as the
case may be, to authorize the execution, delivery and performance of such Loan
Documents. Except as set forth on Schedule 3, no consent or authorization of,
filing with or other act by or in respect of, any Governmental Authority or any
other Person is required in connection with the borrowings hereunder or with the
execution, delivery, performance, validity or enforceability of this Agreement,
the Note or the other Loan Documents except for any consent, authorization,
filing or other act the failure to obtain or make which could not reasonably be
expected to have a Material Adverse Effect. This Agreement has been, and the
Note and the other Loan Documents to which the Borrower or any Subsidiary is or
will be a party will be, duly executed and delivered by it. This Agreement
constitutes, and the Note and the other Loan Documents when executed and
delivered will constitute, a legal, valid and binding obligation of the Borrower
and each Subsidiary (to the
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extent the Borrower or such Subsidiary is a party thereto) enforceable against
it in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles (whether enforcement is sought by
proceedings in equity or at law).
3.5 NO LEGAL BAR. The execution, delivery and performance of this
Agreement, the Note and the other Loan Documents, the borrowings hereunder and
the use of the proceeds thereof will not violate any Requirement of Law or
Contractual Obligations of the Borrower or any Subsidiary which could reasonably
be expected to have a Material Adverse Effect and will not result in, or
require, the creation or imposition of any Lien on any of its properties or
revenues pursuant to any such Requirement of Law or Contractual Obligation,
except pursuant to the Loan Documents or except as otherwise permitted pursuant
to Section 6.7, which Lien could reasonably be expected to have a Material
Adverse Effect.
3.6 NO MATERIAL LITIGATION. Except as set forth in Schedule 5, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Borrower,
threatened by or against the Borrower or any Subsidiary or against any of its or
their properties or revenues or by or against any "affiliated person" of the
Borrower or any Subsidiary, within the meaning of the Investment Company Act,
(a) on the Closing Date with respect to this Agreement, the Note or the other
Loan Documents or any of the transactions contemplated hereby or thereby or (b)
which could reasonably be expected to have a Material Adverse Effect.
3.7 OWNERSHIP OF PROPERTY; LIENS; CONDITION OF PROPERTIES. (a) The
Borrower and each Subsidiary has (or, when formed, will have) good title in fee
simple to, a valid leasehold interest in or rights as a permittee or licensee
to, all of its real property, and good title to all of its other Property which
is material to its business, and to the best of the Borrower's current actual
knowledge, none of such Property is subject to any Lien except as permitted by
Section 6.7.
(b) All of the Properties used or useful in the conduct of the
Borrower's business or the business of any Subsidiary are in good repair,
working order and condition (reasonable wear and tear excepted) and suitable for
use in the operation of its businesses currently conducted.
3.8 INTELLECTUAL PROPERTY. The Borrower and each Subsidiary owns, or is
licensed to use, all trademarks, trade names, patents and copyrights necessary
for the conduct of its business as currently conducted except for those the
failure to own or license which could not reasonably be expected to have a
Material Adverse Effect (the "INTELLECTUAL PROPERTY"). To the Borrower's
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knowledge, no claim which could reasonably be expected to have a Material
Adverse Effect has been asserted and is pending by any Person challenging or
questioning the use of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property, nor does the Borrower or any
Subsidiary know of any valid basis for any such claim. To the Borrower's
knowledge, the use of such Intellectual Property by the Borrower and its
Subsidiaries, if any, does not infringe on the rights of any Person, nor, to the
Borrower's knowledge, does the use by other Persons of such Intellectual
Property infringe on the rights of the Borrower or any Subsidiary.
3.9 TAXES. Except as previously disclosed in writing to the Lender, the
Borrower and each Subsidiary has (or, when formed, will have) filed or caused to
be filed all tax returns which are required to be filed and has paid all taxes
shown to be due and payable on said returns or on any assessments made against
it or any of its property and all other taxes, fees or other charges imposed on
it or any of its property by any Governmental Authority (other than any not yet
delinquent or the amount or validity of which are currently being contested in
good faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on the books of the Borrower or such
Subsidiary, as appropriate); and no tax Lien has been filed, and no claim is
being asserted with respect to any such tax, fee or other charge which could
reasonably be expected to have a Material Adverse Effect.
3.10 FEDERAL REGULATIONS. No part of the proceeds of any Loans are
intended to be or will be used, directly or indirectly, for "purchasing" or
"carrying" any Margin Stock within the respective meanings of each of the quoted
terms under Regulation U or for any purpose which violates the provisions of the
Regulations of the Board of Governors of the Federal Reserve System. If
requested by the Lender, the Borrower will furnish to the Lender a statement to
the foregoing effect in conformity with the requirements of Form U-1 referred to
in Regulation U.
3.11 ERISA. No Reportable Event has occurred during the five-year
period prior to the date on which this representation is made with respect to
any Plan which has or would likely result in a Material Adverse Effect. Each
Plan has complied in all material respects with the applicable provisions of
ERISA and the Code. The present value of all accrued benefits under all Single
Employer Plans maintained by the Borrower, any Subsidiary, or any Commonly
Controlled Entity (based on those assumptions used to fund the Plans) did not,
as of the last annual valuation date prior to the date on which this
representation is made, exceed by an amount which could cause a Material Adverse
Effect the value of the assets of such Plans allocable to such accrued benefits.
Neither the Borrower, any Subsidiary, nor any Commonly Controlled Entity has had
a complete or partial withdrawal from any Multiemployer Plan which has or would
likely result in a Material
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Adverse Effect. The present value (determined using actuarial and other
assumptions which are reasonable in respect of the benefits provided and the
employees participating) of the liability of the Borrower, each Subsidiary, if
any, and each Commonly Controlled Entity for post retirement benefits (excluding
benefits required by Section 4980B of the Code) to be provided to their current
and former employees under plans which are welfare benefit plans (as defined in
Section 3(a) of ERISA) does not, in the aggregate, exceed by an amount which
could cause a Material Adverse Effect the assets under all such plans allocable
to such benefits.
3.12 INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT.
Neither the Borrower nor any Subsidiary is an "investment company", or a company
"controlled" by an "investment company", within the meaning of the Investment
Company Act of 1940, as amended (the "INVESTMENT COMPANY ACT"). Neither the
Borrower nor any Subsidiary is a "holding company," or an "affiliate" of a
"holding company" or a "subsidiary company" of a "holding company," within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
3.13 SUBSIDIARIES. As of the Closing Date, the Borrower has those
Subsidiaries listed on Schedule 8 hereto.
3.14 PURPOSE OF LOANS. The proceeds of the Loans are intended to be and
shall be used by the Borrower to finance its operational needs and for general
corporate purposes.
3.15 ENVIRONMENTAL MATTERS. To the Borrower's knowledge after
reasonable inquiry, with respect to such of the Properties as is real property:
(a) Such Properties and all operations at such Properties are
in compliance in all material respects with all applicable Environmental Laws,
and there is no contamination at, under or about such Properties, or violation
of any Environmental Law with respect to such Properties or the business
conducted at such Properties which involves a matter or matters which has caused
or are reasonably likely to cause a Material Adverse Effect.
(b) The Borrower has not received any notice of violation,
alleged violation, non-compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws with regard to any
of such Properties or the business conducted at such Properties which involves a
matter or matters which has caused or are reasonably likely to cause a Material
Adverse Effect, nor does the Borrower have knowledge or reason to believe that
any such notice will be received or is being threatened except insofar as such
notice or threatened notice, or any aggregation thereof, does not involve a
matter or matters that is or are reasonably likely to cause a Material Adverse
Effect.
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(c) No judicial proceedings or governmental or administrative
action is pending, or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which the Borrower or any of its Subsidiaries is named as a
party with respect to such Properties or the business conducted at such
Properties which involves a matter or matters which has caused or are reasonably
likely to cause a Material Adverse Effect, nor are there any consent decrees or
other decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any Environmental Law
with respect to such Properties or such business except insofar as such
proceeding, action, decree, order or other requirement, or any aggregation
thereof, is not reasonably likely to cause a Material Adverse Effect.
3.16 ACCURACY AND COMPLETENESS OF INFORMATION. Unless otherwise
expressly indicated in writing to the Lender, the documents furnished and the
statements made in writing to the Lender by the Borrower in connection with the
negotiation, preparation or execution of this Agreement or any of the other Loan
Documents do not contain any untrue statement of fact material to the
creditworthiness of the Borrower or omit to state any such material fact
necessary in order to make the statements contained therein not misleading, in
either case which has not been corrected, supplemented or remedied by subsequent
documents furnished or statements made in writing to the Lender prior to the
date hereof. The projections and pro forma financial information contained in
such materials are based upon good faith estimates and assumptions believed by
the Borrower to be reasonable at the time made and as of the date of this
Agreement, it being recognized that such projections as to future events are not
to be viewed as facts and that actual results during the period or periods
covered by any such projections may differ from the projected results.
3.17 REAL PROPERTY ASSETS. Schedule 4 sets forth all real property
that, as of the Closing Date, is owned or leased by the Borrower and its
Subsidiaries.
3.18 PERMITS, ETC. Except as set forth on Schedule 3, the Borrower and
its Subsidiaries have (or, when formed, will have) all permits, licenses,
authorizations and approvals required for each of them lawfully to acquire, own,
lease, control, manage or operate their businesses as currently conducted,
except for such permits, licenses, authorizations or approvals required for the
lawful ownership, lease, control, management or operation of their businesses as
currently conducted, the failure to obtain or maintain which will not have a
Material Adverse Effect. Except as set forth in Schedule 5, no condition exists
or event has occurred which, in itself or with the giving of notice or lapse of
time or both, would result in the suspension, revocation, impairment, forfeiture
or non-renewal of any such permit, license, authorization or approval required
for the lawful ownership,
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lease, control, management or operation of their businesses as currently
conducted, and, there is no claim that any thereof is not in full force and
effect, except for such of the immediately preceding matters which are not
likely or reasonably likely to cause a Material Adverse Effect. Except as set
forth on Schedule 5 and for such of the immediately preceding matters and such
of the following matters which are not reasonably likely to cause a Material
Adverse Effect, there are (a) no judgments, decrees or orders issued, or to the
Borrower's knowledge, threatened, by the any court or regulatory Person with
respect to the Borrower or any Subsidiary, (b) no complaints, petitions, filings
or other proceedings pending, or to the Borrower's knowledge, threatened, before
the any court or regulatory Person with respect to the Borrower or any
Subsidiary and (c) no events that have occurred that could reasonably be
expected to result in the imposition of any financial penalty by the any court
or regulatory Person upon the Borrower or any Subsidiary.
3.19 PATENTS, TRADEMARKS, ETC. Schedules A, B and C to the Security
Agreement accurately and completely lists all material patents, trademarks,
service marks, trade names and copyrights owned by or licensed to the Borrower
and its Subsidiaries on the Closing Date.
3.20 COPYRIGHT ACT REQUIREMENTS. The Borrower and its Subsidiaries have
(or, when formed, will have) recorded or deposited with and paid to the United
States Copyright Office, the Registrar of Copyrights, the Patent and Trademark
Office and/or any other licensors of copyrighted materials, all notices,
statements of account, royalty fees and other documents and instruments required
under the terms and conditions of any patent, trademark, service ▇▇▇▇, trade
name and copyright used in the operation of their businesses as currently
conducted and are not liable to any Person for copyright infringement under any
law, rule, regulation, contract or license as a result of their business
operations, all except to the extent that noncompliance with the preceding
requirements would not, in the aggregate, be reasonably expected to have a
Material Adverse Effect.
3.21 NATURE OF BUSINESS. Neither the Borrower nor any of its
Subsidiaries is (or, when formed, will be) engaged in any material business
other than the ownership and provision of clinical research and clinical design
management services for the evaluation and certification of new pharmaceutical
products.
3.22 CAPITAL STOCK OF BORROWER AND ITS SUBSIDIARIES. The Parent is the
direct owner of all of the issued and outstanding Capital Stock of the Borrower
as of the Closing Date. All Capital Stock of the Borrower and its Subsidiaries
has been duly authorized and validly issued and is fully paid and
non-assessable. As of the Closing Date (a) no Capital Stock of the Borrower or
its Subsidiaries carries any preemptive rights, (b) neither the Borrower nor any
Subsidiary is obligated to redeem
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or repurchase any of its Capital Stock, (c) no agreement, arrangement, or plan
exists, except as has been disclosed in writing to the Lender, which could
directly or indirectly affect the capital structure of the Borrower or its
Subsidiaries and (d) there are no outstanding options, rights or warrants for
the acquisition by any Person, directly or indirectly, of shares of the Capital
Stock of the Borrower or its Subsidiaries.
3.23 RANKING OF LOANS. This Agreement and the other Loan Documents to
which the Borrower is a party, when executed, and the Loans, when borrowed are
and will be the direct and general obligations of the Borrower. The Borrower's
obligations hereunder and thereunder rank and will rank at least PARI PASSU in
priority of payment to all other Indebtedness of the Borrower.
3.24 EXECUTIVE OFFICES. The location of the Borrower's executive office
and principal place of business as of the Closing Date is ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
3.25 INSOLVENCY. After giving effect to the funding of Loans on the
Closing Date, the application of the proceeds of such Loans as provided herein,
and the payment of all estimated legal, underwriting, investment banking,
accounting and other fees related hereto and thereto, the Borrower and each
other Loan Party will be Solvent as of and on the Closing Date.
3.26 LABOR MATTERS. As of the Closing Date, there are no strikes or
other labor disputes against the Borrower or any Subsidiary pending, or to the
Borrower's knowledge, threatened against it or any Subsidiary.
3.27 CONDEMNATION. To the Borrower's knowledge no taking of any of the
Properties comprising real property or any part thereof through eminent domain,
conveyance in lieu thereof, condemnation or similar proceeding is pending or, to
the knowledge of the Borrower, threatened by any Governmental Authority which
would reasonably be expected to have a Material Adverse Effect.
3.28 LEASES, LICENSES, PERMITS, SITE USE AGREEMENTS AND OTHER OCCUPANCY
AGREEMENTS. To the Borrower's knowledge, true and complete copies of all
material leases, licenses, permits, site use agreements and any other type of
occupancy permit to which the Borrower or any Subsidiary is (or, when formed,
will be) a party have been delivered to the Lender and are in full force and
effect with no material defaults existing thereunder which individually or in
the aggregate would have a Material Adverse Effect.
SECTION 4. CONDITIONS PRECEDENT
4.1 CONDITIONS TO CLOSING DATE. The agreement of the Lender to make the
Loans requested to be made by it on the Closing Date for the purposes set forth
in Section 3.14, is subject to the satisfaction, immediately prior to or
concurrently with the making
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of the Loans on the Closing Date (except as otherwise expressly provided
hereunder), of the following conditions precedent:
(a) CREDIT AGREEMENT. The Lender shall have received this Agreement,
executed and delivered by an officer of the Borrower as of the Closing Date.
(b) OTHER LOAN DOCUMENTS. The Lender shall have received the Note, the
Guarantees and the Security Agreement, in each case executed and delivered by an
officer of the relevant Loan Party.
(c) LETTER OF GUARANTEE. The Lender shall have received the Letter of
Guarantee executed and delivered by Banque Nationale de Paris (Canada).
(d) INTERCREDITOR AGREEMENT. The Lender shall have received the
Intercreditor Agreement, dated as of February 5, 1998, executed and delivered by
officers of all of the relevant parties thereto.
(e) INCUMBENCY CERTIFICATE. The Lender shall have received an
incumbency certificate of the Borrower, and each other Loan Party, dated the
Closing Date, executed by one of its Responsible Officers or its Secretary or
Assistant Secretary.
(f) CORPORATE PROCEEDINGS. The Lender shall have received a copy of the
resolutions of the Board of Directors of the Borrower and each other Loan Party
authorizing (i) the Loan Documents referred to in Sections 4.1(a) and 4.1(b) and
to which it is or will be a party and (ii) the borrowings contemplated under
Section 2.1 in each case certified by the Secretary or an Assistant Secretary of
the Borrower and each other Loan Party as of the Closing Date, which certificate
states that the resolutions thereby certified have not been amended, modified,
revoked or rescinded and are in full force and effect.
(g) ORGANIZATIONAL DOCUMENTS. The Lender shall have received copies of
the articles of incorporation and by-laws of the Borrower and each other Loan
Party, as of the Closing Date, certified as of the Closing Date as complete and
correct copies thereof by the Secretary or an Assistant Secretary of the
Borrower and each other Loan Party.
(h) COSTS. The Lender shall have received payment or evidence of
payment by the Borrower of all reasonable costs, expenses and taxes (including,
without limitation, those payable pursuant to Section 8.5) accrued and unpaid
and otherwise due and payable on or before the Closing Date by the Borrower
pursuant to this Agreement.
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(i) LEGAL OPINIONS. The Lender shall have received the following
executed legal opinions:
(i) the executed legal opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP,
counsel to the Borrower and the other Loan Parties substantially in the
form of Exhibit D hereto; and
(ii) the executed legal opinion of Pillsbury Madison &
Sutro LLP, counsel to the Lender, in form and substance satisfactory to
the Lender; and
(iii)such other legal opinions as the Lender may
reasonably request.
(j) RECORDING. The Lender shall have received as of the Closing Date
evidence of the recording, or of the provision acceptable to the Lender for the
recording, of all documents reasonably necessary to be recorded in such office
or offices as may be necessary or, in the reasonable opinion of the Lender,
desirable to perfect each Lien purported to be created thereby or to otherwise
protect the rights of the Lender thereunder and evidence of the filing, or of
provision acceptable to the Lender for the filing, of appropriate financing
statements on Form UCC-1, or amendments to existing financing statements on Form
UCC-2 (as the Lender may deem appropriate), naming the Lender as secured party,
duly executed by the applicable Loan Party under the Security Agreement, in such
office or offices as may be necessary or, in the reasonable opinion of the
Lender, desirable to perfect the security interests purported to be created by
any of the Collateral Documents.
(k) LIEN SEARCHES. The Lender shall have received certified copies of
requests for information from all relevant jurisdictions, listing all effective
financing statements which name the Borrower or its Subsidiaries, as applicable,
as debtor, together with copies of such financing statements, none of which,
except for Liens permitted by Section 6.7 or Liens otherwise agreed to in
writing by the Lender, shall cover any of the Collateral.
(l) GOOD STANDING CERTIFICATES. The Lender shall have received
certificates, each dated a recent date, of the Secretary of State of the State
of California and the California Franchise Tax Board, respectively, certifying
as to the existence and good standing of, and the payment of taxes by, the
Borrower and each Subsidiary in such state and listing all charter documents of
the Borrower and each Subsidiary on file with such officials.
(m) NO DEFAULT/REPRESENTATIONS. No Default shall have occurred and be
continuing on the Closing Date or would occur after giving effect to the making
of the Loans requested to be made on the Closing Date and the representations
and warranties contained in this Agreement and each other Loan Document, and the
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representations and warranties contained in each certificate or other writing
delivered to the Lender in satisfaction of the conditions set forth in this
Section 4.1 prior to or on the Closing Date, except to the extent such
representations and warranties expressly relate to an earlier date, shall be
correct in all material respects on and as of the Closing Date, and the Lender
shall have received a certificate of the Borrower to such effect in the form of
Exhibit B, dated as of the Closing Date and executed by a Responsible Officer of
the Borrower.
(n) INSURANCE POLICIES. The Lender shall have received evidence that
the insurance policies provided for in Section 5.5 and in the other Loan
Documents (including but not limited to flood insurance) are in full force and
effect, certified by the insurance broker therefor, together with appropriate
evidence showing the Lender as an additional named insured or loss payee, as
appropriate, all in form and substance reasonably satisfactory to the Lender.
(o) OPERATIONAL CONSENTS. The Lender shall have received evidence, in
form and substance reasonably satisfactory to the Lender, that the Borrower and
its Subsidiaries have obtained all material consents and licenses, in each case
as required by law or necessary for the operation of the Borrower and its
Subsidiaries.
(p) FINANCIAL STATEMENTS. The Lender shall have received the February
28, 1998 balance sheet referred to in Section 3.1(b).
(q) ADDITIONAL PROCEEDINGS. The Lender shall have received such other
approvals, opinions and documents as it may reasonably request and all legal
matters incident to the making of the Loans shall be reasonably satisfactory to
the Lender.
4.2 CONDITIONS TO EACH LOAN. The agreement of the Lender to make Loans,
including Loans to be made on the Closing Date, is subject to the satisfaction,
immediately prior to or concurrently with the making of such Loans of the
following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The following
statements shall be true and the Borrower's acceptance of the proceeds of each
Loan shall be deemed to be a representation and warranty of the Borrower on the
date of such Loan that:
(i) The representations and warranties contained in this
Agreement, each other Loan Document and each certificate or other
writing delivered to the Lenders in connection herewith are correct on
and as of such date in all material respects as though made on and as
of such date except to the extent that such representations and
warranties expressly relate to an earlier date; and
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(ii) No Default has occurred and is continuing or would result
from the making of the Loan to be made on such date.
(b) LEGALITY. The making of such Loan shall not contravene any law,
rule or regulation applicable to the Lender or the Borrower or any other Loan
Party.
(c) BORROWING NOTICE. The Lender shall have received a borrowing notice
for each such Loan pursuant to the provisions of this Agreement from the
Borrower.
SECTION 5. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that from and after the Closing Date, so
long as the Note remains outstanding and unpaid or any other amount is owing to
the Lender hereunder:
5.1 FINANCIAL STATEMENTS. The Borrower shall furnish to the Lender:
(a) except in respect of the fiscal year ended December 31, 1997, which
financial statements will be delivered to the Lender by May 15, 1998, and will
be on a reviewed basis and will include only the Borrower and its Subsidiaries
as at such date, as soon as available, but in any event within 90 days after the
end of each fiscal year of the Borrower, a copy of the audited consolidated and
consolidating balance sheets of Phoenix and its consolidated Subsidiaries, its
Subsidiaries as at the end of such year and the related statements of operations
and retained earnings, stockholders' equity and of cash flows for such year,
setting forth in each case in comparative form the figures for the previous
year, reported on without a "going concern" or like qualification or exception,
or other qualification arising out of the scope of the audit, by the
Accountants; and
(b) as soon as available, but in any event not later than 60 days after
the end of each fiscal quarter of the Borrower, the unaudited consolidated and
consolidating balance sheets of Phoenix and its consolidated Subsidiaries as at
the end of such quarter and the related unaudited statements of operations,
retained earnings, stockholders' equity and of cash flows for such quarter and
the portion of the fiscal year through the end of such quarter, setting forth in
each case in comparative form the figures for the previous year, certified by a
Responsible Officer of the Borrower as being fairly stated in all material
respects (subject to normal year-end audit adjustments);
all such financial statements to be complete and correct in all material
respects and to be prepared in reasonable detail and in accordance with
generally accepted accounting principles in Canada applied consistently
throughout the periods reflected therein and with prior periods (except as
approved by the Accountants or Responsible Officer, as the case may be, and
disclosed therein).
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5.2 CERTIFICATES; OTHER INFORMATION. The Borrower shall:
(a) furnish to the Lender within 15 days after the end of each calendar
month, the "Monthly Declaration of Borrowing Limit" form substantially as set
forth as Exhibit G duly completed and executed, together with a chronological
Accounts Receivable listing based on the billing date and an accounts payable
listing (all in form and substance satisfactory to the Lender) and, upon request
by the Lender, but at least annually concurrently with the delivery of the
financial statements referred to in Section 5.1(a) above, a detailed list of the
Borrower's Accounts Receivable including names, addresses, telephone numbers,
banking locations and any other information which the Lender may request;
(b) furnish to the Lender concurrently with the delivery of the
financial statements referred to in Section 5.1(b) a certificate of a
Responsible Officer of the Borrower stating that, to the best of such Officer's
knowledge, the Borrower and its Subsidiaries during such period have observed or
performed in all material respects all of their agreements, and satisfied in all
material respects every condition, contained in this Agreement and the other
Loan Documents to which the Borrower or any Subsidiary is a party to be
observed, performed or satisfied by it, and that such Responsible Officer has
obtained no knowledge of any Default except as specified in such certificate;
(c) furnish to the Lender within five Business Days after the same are
filed, copies of all financial statements and reports which the Borrower or any
Subsidiary may make to, or file with, the Securities and Exchange Commission or
any successor or analogous Governmental Authority;
(d) furnish to the Lender as soon as available and in any event not
later than August 31 of each fiscal year of the Borrower, a copy of the
projected monthly cash flow and the annual operating budget for the Borrower and
its Subsidiaries for the following fiscal year;
(e) furnish to the Lender as soon as possible and in any event within
five Business Days after a Responsible Officer has knowledge of the occurrence
of a Default or, in the good faith determination of a Responsible Officer of the
Borrower, a Material Adverse Effect, the written statement by a Responsible
Officer of the Borrower, setting forth the details of such Default or Material
Adverse Effect and the action which the Borrower proposes to take with respect
thereto;
(f) furnish to the Lender (i) as soon as possible and in any event
within five days after the Borrower knows or has reason to know that any
Termination Event with respect to any Plan has occurred, a statement of a
Responsible Officer of the Borrower describing such Termination Event and the
action, if any, which
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the Borrower proposes to take with respect thereto, (ii) promptly and in any
event within five Business Days after receipt thereof by the Borrower, any
Subsidiary or any of its or their ERISA Affiliates from the PBGC, copies of each
notice received by the Borrower, any Subsidiary or any of its or their ERISA
Affiliates of the PBGC's intention to terminate any Plan or to have a trustee
appointed to administer any Plan, (iii) promptly and in any event within five
Business Days after the filing thereof with the Internal Revenue Service, copies
of each Schedule B (Actuarial Information) to the annual report (Form 5500
Series) with respect to each Single Employer Plan maintained for or covering
employees of the Borrower or any of its Subsidiaries if the present value of the
accrued benefits under the Plan exceeds its assets by an amount which could
cause a Material Adverse Effect and (iv) promptly and in any event within five
Business Days after receipt thereof by the Borrower, any Subsidiary or any of
its or their ERISA Affiliates from a sponsor of a Multiemployer Plan or from the
PBGC, a copy of each notice received by the Borrower, any Subsidiary or any of
its ERISA Affiliates concerning the imposition or amount of withdrawal liability
under Section 4202 of ERISA or indicating that such Multiemployer Plan may enter
reorganization status under Section 4241 of ERISA;
(g) furnish to the Lender promptly after the commencement thereof, but
in any event not later than five Business Days after service of process with
respect thereto on, or the obtaining of knowledge by, the Borrower, notice of
each action, suit or proceeding before any court or governmental authority or
other regulatory body or any arbitrator as to which there is a reasonable
possibility of a determination that would have a Material Adverse Effect;
(h) furnish to the Lender promptly after the sending or filing thereof,
copies of all statements, reports and other information filed by or on behalf of
the Borrower or any Subsidiary with any relevant regulatory body, the failure of
which to file could reasonably be expected to result in a Material Adverse
Effect;
(i) furnish to the Lender promptly upon receipt thereof, but in any
event not later than five Business Days following such receipt, copies of all
notices and other communications that the Borrower or any Subsidiary shall have
received from any relevant regulatory body with respect to any hearing, order or
dispute directly concerning the Borrower or any Subsidiary that could reasonably
be expected to have a Material Adverse Effect; and
(j) furnish to the Lender promptly such additional financial and other
information as the Lender may from time to time reasonably request.
5.3 PAYMENT OF OBLIGATIONS. The Borrower shall, and shall cause each of
its Subsidiaries to, pay, discharge or otherwise
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satisfy at or before maturity or before they become delinquent, as the case may
be, all its obligations of whatever nature, except where the failure to so
satisfy such obligations would not have a Material Adverse Effect or except
where the amount or validity thereof is currently being contested in good faith
by appropriate proceedings and reserves in conformity with GAAP with respect
thereto have been provided on the books of the Borrower or such Subsidiary, as
applicable.
5.4 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. Subject to
Section 6.6 and except as otherwise permitted pursuant to Section 6.1, the
Borrower shall continue, and shall cause each Subsidiary to continue, to engage
in business of the same general type as conducted by the Borrower or such
Subsidiary as of the Closing Date or as of the date of the formation of such
Subsidiary, as applicable, and preserve, renew and keep in full force and effect
its corporate existence and take all reasonable action to maintain all rights,
registrations, licenses, privileges and franchises necessary or desirable in the
normal conduct of its business, (except to the extent that a failure to maintain
such rights, registrations, licenses, privileges and franchises would not have a
Material Adverse Effect) and comply with all Contractual Obligations and
Requirements of Law (except to the extent that failure to comply therewith would
not, in the aggregate, have a Material Adverse Effect).
5.5 MAINTENANCE OF PROPERTY; INSURANCE. (a) The Borrower shall, and
shall cause each of its Subsidiaries to, keep all property useful or necessary
in its business in good working order and condition (ordinary wear and tear
excepted); maintain with financially sound and reputable insurance companies or
associations insurance on such of its property in at least such amounts and
against such risks as are usually insured against in the same general area by
companies engaged in the same or a similar business; and furnish to the Lender,
upon written request, full information as to the insurance carried. All such
policies of insurance shall contain an endorsement, in form and substance
reasonably satisfactory to the Lender in its sole discretion, showing the Lender
as additional insured or loss payee, as appropriate, or as its interests appear.
Such endorsement, or an independent instrument furnished to the Lender, shall
provide that the insurance companies will give the Lender at least 30 days'
prior written notice before any such policy or policies of insurance shall be
altered or canceled. All policies of insurance required to be maintained under
this Agreement shall be in customary form and with insurers recognized as
adequate by the Lender in its reasonable judgment and all such policies shall be
in such amounts as shall be customary for similar companies in the same or
similar business in the same geographical area. The Borrower shall deliver to
the Lender insurance certificates certified by the Borrower's insurance brokers,
as to the existence and effectiveness of each policy of insurance and evidence
of payment of all premiums then due and payable therefor. In
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addition, the Borrower shall notify the Lender promptly of any occurrence
causing a material loss of any insured Property and the estimated (or actual, if
available) amount of such loss. Further, the Borrower shall maintain all
insurance required under the other Loan Documents.
(b) Each policy for liability insurance shall provide for all losses to
be paid on behalf of the Lender and the Borrower, as their respective interests
may appear, and each policy for property damage insurance shall, to the extent
applicable to equipment and inventory, provide for all losses to be paid
directly to the Lender.
(c) Reimbursement under any liability insurance maintained by the
Borrower or any Subsidiary pursuant to this Section 5.5 may be paid directly to
the Person who shall have incurred liability covered by such insurance. In the
case of any loss involving damage to equipment or inventory as to which Section
5.5(d) is not applicable, the Borrower will make or cause to be made the
necessary repairs to or replacements of such equipment or inventory, and any
proceeds of insurance maintained by the Borrower pursuant to this Section 5.5
shall be paid by the Lender to the Borrower, upon presentation of invoices and
other evidence of obligations, as reimbursement for the costs of such repairs or
replacements.
(d) Upon the actual or constructive total loss of any equipment or
inventory during the continuance of a Default, all insurance proceeds in respect
of such equipment or inventory shall be paid to the Lender and applied in
repayment of the Loans; provided that if no Event of Default or Default has
occurred and is continuing, such proceeds shall be paid to the Borrower to
purchase replacements of such equipment or inventory.
5.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. The
Borrower shall, and shall cause each Subsidiary to, keep proper books of records
and account in which full, true and correct entries in conformity with GAAP and
all Requirements of Law shall be made of all material dealings and transactions
in relation to its business and activities; and upon reasonable notice and at
such reasonable times during usual business hours, permit representatives of the
Lender to visit and inspect any of its properties and examine and make abstracts
from any of its books and records at any reasonable time and as often as may
reasonably be desired and to discuss the business, operations, properties and
financial and other condition of the Borrower and its Subsidiaries with the
Chief Financial Officer of the Borrower and its Subsidiaries and with its
Accountants (provided that the Borrower may, if it so chooses, be present at or
participate in any such discussion).
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5.7 ENVIRONMENTAL LAWS. The Borrower shall, and shall cause
each of its Subsidiaries to:
(i) Comply with, and ensure compliance by all tenants and subtenants,
if any, with, all applicable Environmental Laws and obtain and comply in all
material respects with any and all licenses, approvals, notifications,
registrations or permits required by applicable Environmental Laws except to the
extent that failure to do so could not be reasonably expected to have a Material
Adverse Effect;
(ii) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws except to the extent that the same are being contested in good faith by
appropriate proceedings; and
(iii) Defend, indemnify and hold harmless the Lender, and its
employees, agents, officers and directors, from and against any and all claims,
demands, penalties, fines, liabilities, settlements, damages, costs and expenses
of whatever kind or nature known or unknown, contingent or otherwise, arising
out of, or in any way relating to the violation of, noncompliance with or
liability under any Environmental Laws applicable to the operations of the
Borrower, each Subsidiary or the Borrower's or such Subsidiary's interest in
Properties, or any orders, requirements or demands of Governmental Authorities
related thereto, including, without limitation, reasonable attorneys' and
consultants' fees, investigation and laboratory fees, response costs, court
costs and litigation expenses, except to the extent that any of the foregoing
arise out of the gross negligence or willful misconduct of the party seeking
indemnification therefor. This indemnity shall continue in full force and effect
and survive the termination of this Agreement and payment of the Note.
5.8 USE OF PROCEEDS. The Borrower will use the proceeds of the Loans as
set forth in Section 3.14, and not for the purchasing or carrying of any Margin
Stock.
5.9 COMPLIANCE WITH LAWS, ETC. Except as set forth in Section 5.7
relating specifically to Environmental Laws, the Borrower shall comply in all
material respects with all applicable laws, rules, regulations and orders except
where noncompliance would not reasonably be expected to have a Material Adverse
Effect, such compliance to include, without limitation (a) paying before the
same become delinquent all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or upon any of its Properties and
(b) paying all lawful claims which if unpaid might become a Lien upon any of its
Properties; PROVIDED, HOWEVER, that the Borrower shall not be required to pay
and discharge or to cause to be paid and
- 38 -
discharged any such tax, assessment, charge, levy or claim so long as (i) the
validity or applicability thereof is being contested in good faith by
appropriate proceedings or the failure to pay such tax, assessment, charge, levy
or claim would not have a Material Adverse Effect and (ii) the Borrower shall,
to the extent required by GAAP, have set aside on its books adequate reserves
with respect thereto.
5.10 LEASE AND LICENSE APPROVALS. Except as set forth in Section
5.12(b), the Borrower shall notify the Lender of any leases, licenses, permits
or other Occupancy Agreements relating to real property or real property
interests that the Borrower or any Subsidiary executes or obtains which provide
for the payment of rent or license fees in excess of $1,000,000 in any fiscal
year. The Lender may request that any lease, license or other similar agreement
become part of the Collateral and the Borrower shall provide or cause to be
provided any and all Collateral Documents or other documents to be executed in
connection therewith requested by the Lender and provide the Lender with title
insurance (to the extent applicable) as a condition to approval.
5.11 ACQUISITION OF REAL PROPERTY IN FEE SIMPLE. The Borrower shall
promptly notify the Lender of any documents relating to any fee simple real
property interest acquired by the Borrower or any Subsidiary. The Lender may
request that any such fee simple real property interest of which it receives
such notice shall become part of the Collateral. The Borrower shall provide or
cause to be provided any and all information relating to a real property
interest which the Borrower or any Subsidiary desires to acquire and for which
it is required to provide notice and, if such real property interest shall
become Collateral, the Borrower shall execute any and all Collateral Documents
and other documents to be executed in connection therewith requested by the
Lender and shall provide the Lender with title insurance as a condition to
approval.
5.12 LEASES AND LICENSES. Unless such failure is not reasonably likely
to cause a Material Adverse Effect, the Borrower shall, and shall cause each
Subsidiary to, perform and carry out all of the leases, licenses, permits and
any other occupancy agreements relating to real property or real property
interests (the "OCCUPANCY AGREEMENTS") to be performed by the Borrower or any
Subsidiary and shall appear in and defend any action in which the validity of
any of the Occupancy Agreements relating to any real property or real property
interests is at issue and shall commence and maintain any action or proceeding
necessary to establish or maintain the validity of any of such Occupancy
Agreements and to enforce the provisions thereof. The Borrower shall provide to
the Lender true, correct and complete copies of any information relating to any
of the Occupancy Agreements as the Lender may reasonably request in writing.
Unless such amendment or termination is not likely to cause a Material Adverse
Effect,
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the Borrower shall not, and shall not permit any Subsidiary to, amend in a
materially adverse manner or terminate any of such Material Occupancy
Agreements, without the prior written consent of the Lender, which consent shall
not be unreasonably withheld or delayed. The Borrower shall immediately give
notice to the Lender of any default by it or any of its Subsidiaries or, to the
knowledge of the Borrower, by any other party to an Occupancy Agreement, which
causes or is reasonably likely to cause a Material Adverse Effect. The Borrower
shall not, and shall not permit any Subsidiary to, execute any new Material
Occupancy Agreements without giving prior or concurrent notice to the Lender.
5.13 NOTICES. The Borrower will provide to the Lender, within five
Business Days following receipt by the Borrower, copies of all notices received
by the Borrower or any Subsidiary from the Internal Revenue Service or other
taxing authority relating to any dispute regarding deductions, audits or any
other material matter which, if adversely determined against the Borrower or
such Subsidiary, would have a Material Adverse Effect.
5.14 EMPLOYEE CONTRACTS. The Borrower shall give to the Lender prompt
notice of any material dispute arising out of, or material uncured default
occurring under, any employee contract of the Borrower or any Subsidiary if any
of such contracts shall be terminated or not renewed on substantially similar
terms.
5.15 CONDITIONS SUBSEQUENT. The Borrower will provide to the Lender,
within thirty days of the Closing Date, Mortgages on real property leased by the
Borrower and as more specifically described on Schedule 4, located in Neptune,
New Jersey and Irvine, California, together with appropriate Environmental
Compliance Agreements and such other documents (other than title policies and
environmental phse one reports) as the Lender may reasonably request to perfect
its security interest in such Properties.
SECTION 6. NEGATIVE COVENANTS
The Borrower hereby agrees that from and after the Closing Date, except
with the prior written consent of the Lender, and so long as the Note remains
outstanding and unpaid or any other amount is owing to the Lender hereunder:
6.1 LIMITATION ON FUNDAMENTAL CHANGES. The Borrower shall not, and
shall not permit any Subsidiary to, (a) amend its corporate charter or by-laws
in any way that would have a Material Adverse Effect, (b) permit (to the extent
within its control), vote to or for, or take any other action to commence or
acquiesce to any bankruptcy or similar proceeding, (c) enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution) except any merger, consolidation or
amalgamation between or among the Loan Parties; PROVIDED THAT such Loan Party
shall give the Lender
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thirty days' prior written notice thereof and shall comply with all reasonable
actions requested by the Lender to protect and maintain its security interests
and Liens granted pursuant to the Loan Documents or (d) except as permitted
hereby, convey, sell, lease, assign, transfer or otherwise dispose of, all or
substantially all of its property, business or assets other than in connection
with a consolidation of its operations including without limitation a cessation
of operations in one or more locations so long as such cessation does not affect
a substantial portion of the Borrower's and its Subsidiaries' business, taken as
a whole.
6.2 LIMITATION ON RESTRICTED PAYMENTS. The Borrower shall not declare
or pay any dividend in cash or in stock on, or make any payment on account of,
or set apart assets for a sinking or other analogous fund for, the purchase,
redemption, defeasance, retirement or other acquisition of, any shares of any
class of Capital Stock of the Borrower or any warrants or options to purchase
any such Capital Stock, whether now or hereafter outstanding (the foregoing
being "RESTRICTED PAYMENTS") other than (a) Restricted Payments in favor of any
Guarantor and (b) other Restricted Payments in amounts not to exceed $1,000,000
in the aggregate in any twelve-month period.
6.3 TRANSACTIONS WITH AFFILIATES. The Borrower shall not, and shall not
permit any Subsidiary to, enter into any transaction, including, without
limitation, any purchase, sale, lease or exchange of property or the rendering
of any service, with any Subsidiary (other than wholly-owned Subsidiaries or
wholly-owned subsidiaries of any Guarantor) or any other Affiliate, unless such
transaction (a) is otherwise permitted under this Agreement or (b) is in the
ordinary course of the Borrower's or such Subsidiary's business and is upon
terms no less favorable to the Borrower or such Subsidiary, than it would obtain
in a comparable arm's length transaction with a Person not an Affiliate.
6.4 FISCAL YEAR. The Borrower shall not permit the fiscal year of the
Borrower or any Subsidiary to end on a day other than December 31, except a
change may be made to conform the fiscal year end to the Parent's fiscal year
end.
6.5 UNFUNDED LIABILITIES. The Borrower shall not permit to exist, at
any time, unfunded liabilities which, in the aggregate, for any and all Plans
maintained for or covering employees of the Borrower or any of its Subsidiaries
are an amount which has resulted or would likely result in a Material Adverse
Effect.
6.6 LINE OF BUSINESS. Neither the Borrower nor any of its Subsidiaries
shall engage in any material business other than the provisions of clinical
research and clinical design management services for the evaluation and
certification of new pharmaceutical products or services related thereto.
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6.7 LIMITATION ON LIENS. The Borrower shall not, and shall not permit
any Subsidiary to, create, incur, assume or suffer to exist any Lien upon any of
its Property, assets or revenues, whether now owned or hereafter acquired,
except for:
(a) Liens created hereunder or under any of the other Loan Documents;
(b) Liens for taxes not yet delinquent or which are being contested in
good faith by appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of the Borrower or a Subsidiary, as
applicable, in conformity with GAAP;
(c) Liens created by operation of law not securing the payment of
Indebtedness from money borrowed or guaranteed, including carriers',
warehousemen's, mechanics', materialmen's, repairmen's or other like Liens
arising in the ordinary course of business which are not overdue for a period of
more than 45 days or which are being contested in good faith by appropriate
proceedings;
(d) Pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposit
securing liability to insurance carriers under insurance or self-insurance
arrangements;
(e) Deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
(f) Easements, rights of way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, would not cause a Material Adverse Effect;
(g) Liens in existence on the Closing Date listed on Schedule 2,
provided that no such Lien is spread to cover any additional property after the
Closing Date and that the amount of Indebtedness secured thereby is not
increased; and
(h) Liens securing capital expenditures incurred by Phoenix and all of
its Subsidiaries not to exceed an aggregate amount of $15,000,000 in fiscal year
1998 and of $10,000,000 in fiscal year 1999.
6.8 LIMITATION ON LOANS AND ADVANCES. The Borrower shall not, and shall
not permit any Subsidiary to, make any advance, loan, extension of credit or
capital contribution to any Person, except (a) extensions of trade credit in the
ordinary course of business; (b) advances to employees of the Borrower and its
Subsidiaries for travel, entertainment and relocation expenses in
- 42 -
the ordinary course of business; (c) loans to Subsidiaries or Affiliates; and
(d) as contemplated by the Acquisition Agreement.
SECTION 7. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal on the Note when due
or the Borrower shall fail to pay any other amount payable hereunder within
three days after such amount becomes due; or
(b) Any representation or warranty made by any Loan Party herein or in
any other Loan Document, or which is contained in any certificate, document or
financial or other statement furnished at any time under or in connection with
this Agreement or any other Loan Document shall prove to have been incorrect in
any material respect when made; or
(c) The Borrower shall default in the observance or performance of any
agreement contained in Section 5 or Section 6; or
(d) Any Loan Party shall default in the observance or performance of
any other agreement contained in this Agreement or the other Loan Documents
(other than as provided in paragraphs (a) through (c) of this Section), and such
default shall continue unremedied for a period of twenty Business Days after the
earlier of (i) notice thereof from the Lender to the Borrower and (ii) actual
knowledge thereof by a senior officer of such Loan Party; or any provision of
any Loan Document shall at any time for any reason be declared null and void by
a court; or
(e) The validity or enforceability of any Loan Document shall at any
time be contested by any Loan Party in writing, or a proceeding shall be
commenced by any Loan Party or by any Governmental Authority or other Person
having jurisdiction over any Loan Party, seeking to establish the invalidity or
unenforceability thereof, or any Loan Party shall deny in writing that it has
any liability or obligation purported to be created under any Loan Document; or
(f) Any Guarantee or the Letter of Guarantee shall cease, for any
reason to be in full force and effect; or
(g) The Borrower or any Loan Party shall (i) default in any payment of
principal or interest, regardless of the amount, due in respect of any (A)
Indebtedness (other than the Note), or (B) any Guarantee Obligation, if such
default is reasonably likely to cause a Material Adverse Effect or (ii) default
in the observance or performance of any other agreement or condition relating to
any such Indebtedness or Guarantee Obligation or contained in any instrument or
agreement evidencing, securing or relating thereto,
- 43 -
if the effect of such default referred to in this clause (ii) is to cause, or to
permit the holder thereof to cause, such Indebtedness or Guarantee Obligation to
become or be declared due and payable prior to its stated maturity or the stated
maturity of any underlying obligation, as the case may be, and if the effect of
such default referred to in this clause (ii) is to cause a Material Adverse
Effect; or
(h) (i) The Borrower or any other Loan Party shall commence any
voluntary case, proceeding or other action (A) under any existing or future law
of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian or other similar official
for it or for all or any substantial part of its assets, or the Borrower or any
other Loan Party shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against the Borrower or any other
Loan Party any involuntary case, proceeding or other action of a nature referred
to in clause (i) above which (A) results in the entry of an order for relief or
any such adjudication or appointment and (B) remains undismissed, undischarged,
unstayed or unbonded for a period of 60 days; or (iii) there shall be commenced
against the Borrower or any other Loan Party any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets which results
in the entry of an order for any such relief which shall not have been vacated,
discharged, stayed or bonded pending appeal within 60 days from the entry
thereof; or (iv) the Borrower or any other Loan Party shall take any action in
writing in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above;
or (v) the Borrower or any other Loan Party shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as they
become due or there shall be a general assignment for the benefit of creditors;
or
(i) (i) Any Person shall engage in any non-exempt "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan which would subject the Borrower or any Loan Party to any
tax, penalty, or other liabilities in the aggregate exceeding $1,000,000, (ii)
any "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan, (iii) a Reportable
Event shall occur with respect to, or proceedings shall commence to have a
trustee appointed, or a trustee shall be appointed, to administer or to
terminate any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee would reasonably be expected to result
in the termination of such Plan for purposes of Title IV of ERISA, (iv) any
Single Employer Plan shall terminate for purposes of Title IV of ERISA (other
than a standard termination) or (v) the Borrower or any Commonly Controlled
Entity would reasonably be
- 44 -
expected to incur any liability in connection with a withdrawal from, or the
Insolvency or Reorganization of, a Multiemployer Plan; and in each case
regarding clauses (ii) through (v) above, such event or condition, together with
all other such events or conditions, if any, would reasonably be expected to
cause a Material Adverse Effect; or
(j) One or more judgments or decrees shall be entered against the
Borrower or any other Loan Party that in the aggregate are reasonably likely to
have a Material Adverse Effect, and that portion of such judgements or decrees
the failure to vacate, discharge, stay or bond pending appeal would be
reasonably likely to have a Material Adverse Effect shall not have been vacated,
discharged, stayed or bonded pending appeal within sixty days from the entry
thereof or in any event five days before the date of any sale pursuant to such
judgment or decree or any non-monetary judgment or order shall be entered
against the Borrower or any other Loan Party that is reasonably likely to have a
Material Adverse Effect and either (i) enforcement proceedings shall have been
commenced by any Person upon such judgment which has not been stayed pending
appeal or (ii) there shall be any period of ten consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
(k) The Parent shall cease to own directly or indirectly and
beneficially 100% of the Capital Stock and Voting Power of the Borrower; or
Phoenix shall cease to own 100% of the Capital Stock and Voting Power of the
Parent; or
(l) There shall occur any default in the material observance or
material performance of the Inter-Lender Agreement or the Letter of Guarantee or
the Inter-Lender Agreement or the Letter or Credit shall terminate or otherwise
no longer be in full force and effect; or
(m) Any material provision of any Loan Document, after delivery thereof
pursuant to the provisions hereof, shall, for any reason other than pursuant to
the terms thereof or an act or omission by the Lender, cease to be valid or
enforceable in accordance with its terms and such cessation shall have a
Material Adverse Effect, or any security interest created under any Loan
Document shall for any reason other than pursuant to the terms thereof or an act
or omission by the Lender, cease to be a valid and perfected first priority
(except for any Lien or security interests permitted under any of the Loan
Documents or which have priority by operation of law) security interest or Lien
(except as otherwise stated or permitted herein or therein) in any material
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portion of the Collateral or the Property purported to be covered thereby;
then, and in any such event, notwithstanding that the Lender may make demand
hereunder at any time, (A) if such event is an Event of Default specified in
paragraph (h) above, automatically the Loans made to the Borrower hereunder
(with accrued interest thereon, including interest accrued after the filing of a
petition initiating any proceeding referred to in paragraph (h) above) and all
other Obligations shall immediately become due and payable, and (B) if such
event is any other Event of Default, the Lender may, by notice of default to the
Borrower, declare the Loans (with accrued interest thereon) and all other
Obligations under this Agreement and the Note to be due and payable forthwith,
whereupon the same shall immediately become due and payable. In all cases the
Lender may enforce any or all of the Liens and security interests and other
rights and remedies created pursuant to any Loan Document or available at law or
in equity. Except as expressly provided above in this Section, presentment,
demand, protest and all other notices of any kind are hereby expressly waived by
the Borrower.
SECTION 8. MISCELLANEOUS
8.1 AMENDMENTS AND WAIVERS. Neither this Agreement, nor the Note, nor
any other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
Section. With the prior written consent of the Lender and the Borrower (and, in
the case of any Loan Document other than this Agreement, the relevant Loan
Party), the Borrower (or such Loan Party, as the case may be) may, from time to
time, enter into written amendments, supplements or modifications hereto and to
the other Loan Documents for the purposes of adding any provisions to this
Agreement or the other Loan Documents or changing in any manner the rights of
the Lender, the Borrower or any other Loan Party hereunder or thereunder or
waiving, on such terms and conditions as may be specified in such instrument,
any of the requirements of this Agreement or the Note or the other Loan
Documents or any Default and its consequences. Any such waiver and any such
amendment, supplement or modification shall apply equally to the Lender and
shall be binding upon the Borrower, the other Loan Parties, the Lender and all
future holders of the Note. In the case of any waiver, the Borrower, the other
Loan Parties and the Lender, shall be restored to their former position and
rights hereunder and under the outstanding Note and any other Loan Documents,
and any Default waived shall be deemed to be cured and not continuing; but no
such waiver shall extend to any subsequent or other Default, or impair any right
consequent thereon.
8.2 NOTICES. All notices, requests and demands or other communications
to or upon the respective parties hereto to be effective shall be in writing
(including by telecopy), and, unless
- 46 -
otherwise expressly provided herein, shall be deemed to have been duly given or
made when delivered by hand, or 3 days after being deposited in the United
States mail, certified and postage prepaid and return receipt requested, or, in
the case of telecopy notice, when received, in each case addressed to the
parties at their addresses as set forth on the signature pages hereof or to such
other address as may be hereafter notified by the respective parties hereto;
PROVIDED that any notice, request or demand to or upon the Lender pursuant to
Section 2.1, 2.2, 2.3 or 2.4 or any notice to the Borrower pursuant to Section 7
shall not be effective until received.
8.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no delay
in exercising, on the part of the Lender, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
8.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made hereunder and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of this Agreement (but shall not be deemed to be restated unless
otherwise expressly provided for).
8.5 PAYMENT OF EXPENSES AND TAXES. The Borrower agrees, whether or not
the transactions contemplated hereby are consummated, (a) to pay or reimburse
the Lender for all its reasonable costs and out-of-pocket expenses incurred in
connection with the preparation and execution of, and any amendment, supplement
or modification to, this Agreement and the Note and the other Loan Documents and
any other documents prepared in connection herewith or therewith, and the
consummation and administration of the transactions contemplated hereby and
thereby (including the transactions to occur on the Closing Date), including,
without limitation, the reasonable fees and disbursements of outside counsel to
the Lender and as to any amendment, supplement or modification to this Agreement
or any other Loan Document and the administration of the transactions
contemplated thereby, (b) after the occurrence and during the continuance of a
Default, to pay or reimburse the Lender, for all its reasonable costs and
out-of-pocket expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the other Loan Documents and
any such other documents or in connection with any refinancing or restructuring
of the credit arrangements provided under this Agreement in the nature of a
"work-out" or of any insolvency or bankruptcy proceeding, including, without
limitation, reasonable legal fees and disbursements of outside counsel to the
Lender, (c) to pay,
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and indemnify and hold harmless Lender from, any and all recording and filing
fees and any and all liabilities with respect to, or resulting from any delay in
paying, stamp, excise and other taxes (but not including Excluded Taxes), if
any, which may be payable or determined to be payable in connection with the
execution and delivery of, or consummation or administration of any of the
transactions contemplated by, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, this Agreement, the Note, the
other Loan Documents and any such other documents and (d) to pay, and indemnify
and hold harmless the Lender from and against, any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs
(including, without limitation, the reasonable legal fees and disbursements of
outside counsel to the Lender), expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance and
administration of this Agreement, the Note, the other Loan Documents or the use
of the proceeds of the Loans and any such other documents (all the foregoing,
collectively, the "indemnified liabilities"), PROVIDED, that the Borrower shall
have no obligation hereunder to the Lender with respect to indemnified
liabilities arising from the gross negligence or willful misconduct of the
Lender or its agents or attorneys-in-fact. The agreements in this Section shall
survive repayment of the Note and all other amounts payable hereunder.
8.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the Borrower, the Lender, all future holders of the Note
and their respective successors and assigns, except that the Borrower may not
assign, transfer or delegate any of its rights or obligations under this
Agreement without the prior written consent of the Lender. The Lender may assign
or participate its interest hereunder, without cost or expense to the Borrower
or any other Loan Party.
8.7 COUNTERPARTS. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument.
8.8 SEVERABILITY. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.9 INTEGRATION. This Agreement, together with the other Loan
Documents, represents the entire agreement of the Borrower and the Lender with
respect to the subject matter hereof, and there are no promises, undertakings,
representations or warranties
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by the Lender relative to the subject matter hereof not expressly set forth or
referred to herein or in the other Loan Documents.
8.10 GOVERNING LAW. THIS AGREEMENT AND THE NOTE AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
CALIFORNIA (WITHOUT REFERENCE TO ITS CHOICE OF LAW RULES).
8.11 CLAIMS OR CONTROVERSIES SUBJECT TO JUDICIAL REFERENCE.
(a) SUBMISSION TO JUDICIAL REFERENCE. Any claim or controversy
alleged in or subject to a lawsuit between or among the parties to this
Agreement (collectively, the "Parties" and individually, a "Party") which arises
out of or relates to this Agreement, or any negotiations, correspondence or
communications, whether or not incorporated or integrated into or relating to
this Agreement, including but not limited to any claim or controversy which
arises out of or is based upon an alleged tort, shall, at the written request of
any Party, be determined by a reference in accordance with California Code of
Civil Procedure Sections 638 ET SEQ. In connection with such reference, the
Parties hereby expressly, intentionally and deliberately waive any right they
may otherwise have to trial by jury of such claim or controversy.
(b) SELECTION OF REFEREE. Within 30 days after commencement by
any Party of any lawsuit subject to this Agreement, each Party shall provide the
other with a list of three potential referees acceptable to it. If the lists
have one or more referees in common, the person having the highest position on
each list shall be the referee hereunder. If such lists do not have a common
referee, the Parties shall select pursuant to the Commercial Rules of the
American Arbitration Association ("AAA") a single neutral referee and submit by
stipulation such referee to the court for an order of reference of such claim or
controversy. However, the referee selected must be a retired state or federal
court judge with at least five years of judicial experience in civil matters. In
the event that the Parties do not submit such stipulation to the court within
such 30 day period, any Party may move the court pursuant to this Agreement for
an order of reference of such claim or controversy to a single neutral referee
having such qualifications. The Parties shall equally bear the fees and expenses
of the referee unless the referee otherwise provides in the award.
(c) POWERS OF AND LIMITATIONS ON THE REFEREE. The Referee
shall have the powers provided by Title 9 of the California Code of Civil
Procedure Sections 1280 ET SEQ. (the "California Arbitration Act") and the
Commercial Rules of the AAA except as provided in this Agreement, including
without limitation
the following:
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(1) The referee shall determine all challenges to the
legality and/or enforceability of this Agreement.
(2) The referee shall apply the rules of evidence to
the same extent as they would be applied in a court of law.
(3) Subject to the provisions of this Agreement, the
referee may order any remedy or relief, including without limitation judicial
foreclosure, a deficiency judgment or equitable relief, and give effect to all
legal and equitable defenses, including without limitation statutes of
limitation, the statute of frauds, waiver and estoppel.
(4) The Parties shall have the right to conduct
discovery with respect to any dispute, controversy or issue arising out of or
resulting from this Agreement pursuant to the provisions of California Code of
Civil Procedure Section 1283.05, which provisions are incorporated herein by
reference and made a part hereof.
(5) The referee shall determine the time of the
hearing. The hearing shall take place in Los Angeles, California. The hearing
must be commenced within 60 days after completion of discovery, unless the
referee grants a continuance upon a showing of good cause by any Party. At least
14 days before the date set for hearing, the Parties shall exchange copies of
exhibits to be offered as evidence, and lists of witnesses who will testify, at
such hearing. Once commenced, the hearing shall proceed day to day until
completed, unless the referee grants a continuance upon a showing of good cause
by any Party. Any Party may cause to be prepared, at its expense, a written
transcription or electronic recordation of such hearing.
(6) Any award by the referee shall be set forth in a
statement of decision supported by written findings of fact and conclusions of
law which the referee shall concurrently deliver to the Parties.
(7) The referee shall have the authority to award in
the referee's discretion reasonable attorneys' fees and costs to the prevailing
party.
(8) The provisions of California Civil Code Sections
47 ET SEQ. shall apply to the judicial reference to the same extent as they
would apply to a judicial proceeding subject to such provisions.
(9) The laws of the State of California shall govern
the judicial reference pursuant to this Agreement.
(d) PROVISIONAL REMEDIES, SELF-HELP AND FORECLOSURE. No
provision of this Section 8.11 shall limit the right of either Party (i) to
exercise any self-help remedies or seek specific
- 50 -
performance in each case, in accordance with applicable law, (ii) to foreclose
upon or sell any collateral, by power of sale or otherwise, in accordance with
applicable law, or (iii) to obtain or oppose provisional remedies or necessary
procedural orders from a court of competent jurisdiction, including without
limitation appointment of a receiver, before, after or during the pendency of
the judicial reference. The exercise of, or opposition to, any such remedy does
not waive the right of any Party to judicial reference pursuant to this
Agreement.
(e) MISCELLANEOUS. Judgment upon the award of the referee
shall be final and binding (subject to vacation or correction in the amounts set
forth, respectively, in California Code of Civil Procedure Sections 1286.2,
1286.4, 1286.6 and 1286.8) and may be entered in any court of competent
jurisdiction in accordance with California Code of Civil Procedure Sections 644
and 645 and no party shall take any action to contest such award or judgment
except as set forth above. In the event that multiple claims are asserted, some
of which are found not subject to this Agreement, the Parties agree to stay the
proceedings of the claims not subject to this Agreement until all other claims
are resolved in accordance with this Agreement. In the event that claims are
asserted against multiple parties, some of whom are not subject to this
Agreement, the Parties agree to sever the claims subject to this Agreement and
resolve them in accordance with this Agreement.
8.12 ACKNOWLEDGEMENTS. The Borrower hereby acknowledges
that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) the Lender has no fiduciary relationship to the Borrower solely by
virtue of any of the Loan Documents, and the relationship pursuant to the Loan
Documents between the Lender, on one hand, and the Borrower on the other hand,
is solely that of creditor and debtor; and
(c) no joint venture exists among the Lender and the Borrower.
8.13 HEADINGS. Section headings herein are included for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose.
8.14 CONFLICT OF TERMS. Except as otherwise provided in this Agreement
or any of the other Loan Documents by specific reference to the applicable
provisions of this Agreement, if any provision contained in this Agreement is in
conflict with, or inconsistent with, any provision in any of the other Loan
Documents, the provision contained in this Agreement shall govern and control.
- 51 -
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in Los Angeles, California by their proper and duly
authorized officers as of the day and year first above written.
IBRD-ROSTRUM GLOBAL INC.
By: /s/ ▇▇▇▇-▇▇▇▇ ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇-▇▇▇▇ ▇▇▇▇▇
------------------------
Title: Secretary & Treasurer
------------------------
Address for Notices:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇▇▇▇ (▇▇▇▇▇▇▇▇), ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇-▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
BANQUE NATIONALE DE PARIS
Los Angeles Branch
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------
Title: Vice President
-------------------------
By: /s/ Stephane Ronze
------------------------------
Name: Stephane Ronze
------------------------
Title: Assistant Vice President
------------------------
Address for Notices:
Banque Nationale de Paris
▇▇▇ ▇▇. ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Applicable Lending Office for
Reference Rate Loans:
▇▇▇ ▇▇. ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Applicable Lending Office for
LIBOR Loans:
▇▇▇ ▇▇. ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
EXHIBIT A
FORM OF REVOLVING NOTE
Los Angeles, California
$7,000,000 March 13, 1998
FOR VALUE RECEIVED, the undersigned, IBRD-ROSTRUM GLOBAL, INC. (U.S.)
INC., a Delaware corporation (the "BORROWER"), hereby unconditionally promises
to pay to the order of BANQUE NATIONALE DE PARIS, Los Angeles Branch (the
"LENDER"), in lawful money of the United States and in immediately available
funds, the aggregate unpaid principal amount of the Loans made by the Lender to
the undersigned pursuant to Section 2.1(a) of the Revolving Credit Agreement (as
hereinafter defined), ON DEMAND. Such payment shall be made for the account of
the Lender at the office of Banque Nationale de Paris, Los Angeles Branch,
located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ or at
such other office as the holder of this Note may notify the undersigned. The
undersigned further agrees to pay interest in like money at such office or such
other office on the unpaid principal amount hereof from time to time from the
date hereof at the rates per annum and on the dates specified in Sections 2.5
and 2.6 of the Revolving Credit Agreement until paid in full (both before and
after judgment to the extent permitted by law).
This Note is the Note referred to in the Revolving Credit Agreement
dated as of March 13, 1998 (as amended, supplemented or otherwise modified from
time to time, the "REVOLVING CREDIT AGREEMENT"), between the undersigned and the
Lender, and is entitled to the benefits thereof and of the other Loan Documents
and is subject to optional and mandatory prepayment in whole or in part as
provided therein. Capitalized terms used herein which are defined in the
Revolving Credit Agreement shall have such meanings unless otherwise defined
herein.
Notwithstanding that the Lender may make demand hereunder at any time,
upon the occurrence of any one or more of the Events of Default specified in the
Revolving Credit Agreement, all amounts then remaining unpaid on this Note shall
become, or may be declared to be, immediately due and payable, all as provided
therein.
-1-
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA (WITHOUT REFERENCE TO ITS
CHOICE OF LAW RULES).
IBRD-ROSTRUM GLOBAL INC.
By:________________________________
Name:______________________________
Title:_____________________________
-2-
EXHIBIT G
MONTHLY DECLARATION OF BORROWING LIMIT
TO: Banque Nationale de Paris, Los Angeles Branch, (the
"Bank").
According to the authorized line of credit (established by the
Revolving Credit Agreement with the Bank dated as of March 13, 1998) the
undersigned Borrower hereby informs the Bank that the maximum amount available
to it in the next month, as calculated by the Borrower, has been calculated as
indicated below with all reports attached hereto as at _________________, 19___.
ACCOUNTS RECEIVABLE
Total Accounts Receivable (aged
list attached) $________
SUBTRACT the following
accounts:
o accounts that are partly or
entirely unpaid after -________
90 days
o holdbacks/accounts excluded
from margin
provisions/credit
notes/intercompany -
accounts/sums due from __________
management
o lesser amount due from or
owed to suppliers on -________
receivable list
o doubtful accounts; -________
o any other accounts excluded
by the Bank and specified in
writing to the Borrower -________
Total Eligible Accounts Receivable =$________
Margin percentage applicable: x 80%
Lending value of Accounts Receivable =$________(1)
-1-
PROGRESS ▇▇▇▇▇▇▇▇
Cost and estimated profits $________
in excess of progress ▇▇▇▇▇▇▇▇
on contracts in progress
Progress ▇▇▇▇▇▇▇▇ in =$_______
excess of costs and estimated
profit on contracts in progress
=$_______(2)
CLAIMS TO BE DEDUCTED
Wages: $________
Rent: +________
Total contributions to a social
plan (unemployment insurance,
pension plan, medical plan,
worker's compensation, etc...) +________
Fiscal obligations (income tax,
deductions at source, sales tax,
etc...); +________
Other sums payable to the
government or one of its agencies
(Identify):
-------------------------- +________
Total claims to be deducted =$________(3)
BORROWING LIMIT
Net lending value of Eligible =$______(4=1+2-3)
Accounts Receivable and Progress
▇▇▇▇▇▇▇▇
Authorized credit amount =$________(5)
Global Borrowing limit (the lesser
of 4 or 5) =$________(6)
ORDERS ON HAND: Present season to ship =$________
ORDERS ON HAND: Next season =$________
ACCOUNTS PAYABLE =$________
SALES - CURRENT MONTH =$________
SALES - YEAR TO DATE =$________
-2-
The Borrower hereby certifies to the Bank that all the information herein and on
any accompanying reports is complete and accurate in all respects. In addition,
the Borrower certifies that all sums owed to privileged and preferred creditors,
including federal and provincial government agencies have been paid and that the
sums specified above as claims to be deducted are current amounts owing.
Date:__________________________
IBRD-ROSTRUM GLOBAL INC.
(The Borrower)
By: By:
----------------------------- -------------------------
(authorized signature) (authorized signature)
-3-
