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Exhibit
10.36
REVOLVING CREDIT
AGREEMENT
between
MISSOURI STATE BANK AND
TRUST COMPANY,
as Lender
and
ACCENTIA,
INC.,
as Borrower
Dated as of MARCH 30,
2004
REVOLVING CREDIT
AGREEMENT
THIS REVOLVING CREDIT
AGREEMENT (the “Agreement”) made and entered into as of
this 30th day of March, 2004 by and between Accentia, Inc. (the
“Borrower”), having an address of 5310 Cypress Center
Drive, Tampa, Florida and Missouri State Bank and Trust Company, a
Missouri state banking corporation (“Lender”), having
an address of 12452 Olive Street Road, Creve Coeur, Missouri
63141.
W I T N E S S E T
H:
WHEREAS, Borrower desires to
obtain a loan of up to $2,500,000 (the “Loan”) from
Lender on a revolving credit basis.
WHEREAS, subject to, and in
reliance upon, the terms and conditions of this Agreement and the
representations and warranties made herein, all of which terms,
conditions, representations and warranties are material and being
relied on by Lender, Lender is willing to make the Loan to
Borrower.
NOW, THEREFORE, in
consideration of the premises, the mutual covenants and agreements
hereinafter set forth, and other good and valuable considerations,
the receipt and sufficiency of which are hereby acknowledged, and
each intending to be legally bound hereby, the parties agree as
follows:
SECTION I. DEFINITIONS
As used herein:
“ACCOUNT
DEBTOR” shall mean any Person who is and/or may become
obligated to Borrower and the Subsidiaries under or on account of
any of the Accounts.
“ACCOUNTS”
shall mean all trade accounts receivable of Borrower and the
Subsidiaries which have been invoiced by Borrower and the
Subsidiaries.
“AFFILIATE” shall mean any Person (a) which
directly or indirectly through one or more intermediaries controls,
is controlled by or is under common control with Borrower or any
Subsidiary, (b) which directly or indirectly through one or more
intermediaries beneficially owns or holds or has the power to
direct the voting power of Twenty-Five Percent (25%) or more of any
class of capital stock or other equity interests of Borrower or any
Subsidiary, (c) which has Twenty-Five Percent (25%) or more of any
class of its capital stock or other equity interests beneficially
owned or held, directly or indirectly, by Borrower or any
Subsidiary or (d) who is a director, officer or manager of Borrower
or any Subsidiary. For purposes of this definition,
“control” shall mean the power to direct the management
and policies of a Person, directly or indirectly, whether through
the ownership of voting securities, by contract or
otherwise.
“AGREEMENT” means this Agreement including
any amendments hereto or modifications or restatements hereof and
any supplements hereto.
“BORROWER”
means Accentia, Inc., a Delaware.
“BORROWING
BASE” shall mean as of the date of any determination
thereof, the lesser of $2,500,000 or Seventy-Five Percent (75%) of
the aggregate face amount of all Eligible Accounts of Borrower and
the Subsidiaries as of the date of computation thereof which are
listed (or which in accordance with GAAP should be listed on the
books of Borrower and such Subsidiaries as of such
date).
“BORROWING BASE
CERTIFICATE” shall have the meaning ascribed thereto in
Section 2.01(b).
“CAPITAL
EXPENDITURE” shall mean any expenditure to purchase or
otherwise acquire a fixed asset (other than a Capitalized Lease
Obligation) which, in accordance with GAAP, is required to be
capitalized on the balance sheet of the Person making the
same.
“CAPITALIZED
LEASE” shall mean any lease of Property, whether real
and/or personal, by Borrower or any Subsidiary as lessee, which, in
accordance with GAAP, is required to be capitalized on the balance
sheet of such Person.
“CAPITALIZED LEASE
OBLIGATIONS” shall mean, as of the date of any
determination thereof, the amount of the aggregate rental
obligations due and to become due under all Capitalized Leases,
under which Borrower or any Subsidiary is a lessee, which would be
reflected as a liability on the balance sheet of Borrower and its
Subsidiaries, on a consolidated basis, in accordance with
GAAP.
“CERCLA”
shall mean the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986, 42 U.S.C. §9601 et
seg ., and as the same may from time to time be further
amended.
“CHANGE OF CONTROL
EVENT” shall occur if, at any time, Frank E.
O’Donnell, Jr., M.D. ceases to (i) be the President of
Borrower, (ii) to a Director of Borrower and the owner of at least
66-2/3% of the issued and outstanding stock of the Borrower, and
(iii) have the power to direct the management and policies of the
Borrower.
“CLOSING
DATE” means March 30, 2004, or such later date as Loan
proceeds are advanced hereunder.
“CODE”
shall mean the Internal Revenue Code of 1986, as amended, and any
successor statute of similar import, together with the regulations
thereunder, in each case as in effect from time to time. References
to sections of the Code shall be construed to also refer to any
successor sections.
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“COLLATERAL” means any Property of Borrower
or Subsidiaries which now or at any time hereafter secures the
payment or performance of any of the Obligations, including,
without limitation, all Collateral described in the Security
Agreement, and all proceeds, substitutes, replacements, accretions,
accessions and products of any of the foregoing; any and all other
collateral now or hereafter providing security for the Loan and all
other property, rights and interests described in Section 2.07
hereof.
“CONSOLIDATED
INDEBTEDNESS” shall mean, as of the date of any
determination thereof, all Indebtedness of Borrower and all
Subsidiaries as of such date, determined on a consolidated basis
and in accordance with GAAP.
“DEFAULT”
shall mean any event or condition the occurrence of which would,
with the lapse of time or the giving of notice or both, become an
Event of Default.
“DISTRIBUTIONS” in respect of any
corporation or other entity shall mean dividends or other
distributions in cash or Property on or in respect of the capital
stock of such entity.
“DOMESTIC BUSINESS
DAY” shall mean any day except a Saturday, Sunday or
legal holiday observed by the Lender.
“ELIGIBLE
ACCOUNTS” shall mean all Accounts of Borrower arising in
the ordinary course of Borrower’s business from the sale of
goods or the rendering of services which the Lender, in its
reasonable credit judgment, deems to be an Eligible Account.
Eligible Accounts shall not include the following: (a) Accounts
which remain unpaid for more than ninety (90) days after their
original invoice dates and Accounts which are not due and payable
within ninety (90) days after their original invoice dates; (b)
Accounts with respect to which the Account Debtor is a shareholder
of Borrower or an Affiliate; (c) Accounts with respect to which
payment by the Account Debtor is or may be conditional and Accounts
commonly known as bill and hold Accounts or Accounts of a similar
or like arrangement; (d) Accounts with respect to which the Account
Debtor is not a resident or citizen of or otherwise located in the
continental United States of America, unless such Accounts are
backed in full by an irrevocable letter of credit in form and
substance satisfactory to the Lender issued by a domestic
commercial bank acceptable to the Lender; (e) Accounts with respect
to which the Account Debtor is the United States of America, any
state of the United States or any other governmental body or any
department, agency or instrumentality of any of the foregoing,
unless such Accounts are duly assigned to the Lender in accordance
with all applicable governmental and regulatory rules and
regulations (including, without limitation, the Federal Assignment
of Claims Act of 1940, as amended, if applicable) so that the
Lender is recognized by the Account Debtor to have all of the
rights of an assignee of such Accounts; (f) Accounts which are not
invoiced (and dated as of such date) and sent to the Account Debtor
thereof concurrently with or not later than five (5) days after the
shipment and delivery to said Account Debtor of the goods giving
rise thereto or the performance of the services giving rise
thereto; (g) Accounts arising from a consignment sale, a
“sale on approval” or a “sale or return”;
(h) Accounts which are subject to any dispute, offset,
counterclaim, discount or other claim or defense on the part of the
Account Debtor or to any claim on the part of the Account Debtor
contesting or denying liability under such Account; (i) the Account
Debtor has commenced a voluntary case under the federal bankruptcy
laws, as now
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constituted or hereafter amended, or
made an assignment for the benefit of creditors, or a decree or
order for relief has been entered by a court having jurisdiction in
the premises in respect of the Account Debtor in an involuntary
case under the federal bankruptcy laws, as now constituted or
hereafter amended, or any other petition or other application for
relief under the federal bankruptcy laws has been filed against the
Account Debtor, or if the Account Debtor has failed, suspended
business, ceased to be solvent, or consented to or suffered a
receiver, trustee, liquidator or custodian to be appointed for it
or for all or a significant portion of its assets or affairs; (j)
Accounts which are not subject to a first priority perfected
security interest in favor of the Lender.
“ENVIRONMENTAL
CLAIM” shall mean any administrative, regulatory or
judicial action, judgment, order, consent decree, suit, demand,
demand letter, claim, Lien, notice of non-compliance or violation,
investigation or other proceeding arising (a) pursuant to any
Environmental Law or governmental or regulatory approval issued
under any such Environmental Law, (b) from the presence, use,
generation, storage, treatment, Release, threatened Release,
disposal, remediation or other existence of any Hazardous
Substance, (c) from any removal, remedial, corrective or other
response action pursuant to an Environmental Law or the order of
any governmental or regulatory authority or agency, (d) from any
third party seeking damages, contribution, indemnification, cost
recovery, compensation, injunctive or other relief in connection
with a Hazardous Substance or arising from alleged injury or threat
of injury to health, safety, natural resources or the environment
or (e) from any Lien against any Property owned, leased or operated
by Borrower or any Subsidiary in favor of any governmental or
regulatory authority or agency in connection with a Release,
threatened Release or disposal of a Hazardous Substance.
“ENVIRONMENTAL
LAW” shall mean any Federal, state, local, foreign or
other statute, law, rule, regulation, order, consent decree,
judgment, permit, license, code, covenant, deed restriction, common
law, treaty, convention, ordinance or other requirement relating to
public health, safety or the environment, including, without
limitation, those relating to Releases, discharges or emissions to
air, water, land or groundwater, to the withdrawal or use of
groundwater, to the use and handling of polychlorinated biphenyls
or asbestos, to the disposal, treatment, storage or management of
hazardous or solid waste, Hazardous Substances or crude oil, or any
fraction thereof, to exposure to toxic or hazardous materials, to
the handling, transportation, discharge or release of gaseous or
liquid Hazardous Substances and any rule, regulation, order, notice
or demand issued pursuant to such law, statute or ordinance, in
each case applicable to any of the Property owned, leased or
operated by the Borrower or any Subsidiary or the operation,
construction or modification of any such Property, including,
without limitation, the following: CERCLA, the Solid Waste Disposal
Act, as amended by the Resource Conservation and Recovery Act of
1976 and the Hazardous and Solid Waste Amendments of 1984, the
Hazardous Materials Transportation Act, as amended, the Federal
Water Pollution Control Act, as amended by the Clean Water Act of
1976, the Safe Drinking Water Control Act, the Clean Air Act of
1966, as amended, the Toxic Substances Control Act of 1976, the
Occupational Safety and Health Act of 1970, as amended, the
Emergency Planning and Community Right-to-Know Act of 1986, the
National Environmental Policy Act of 1975, the Oil Pollution Act of
1990 and any similar or implementing state or local law, and any
state or local statute and any further amendments to these laws
providing for financial responsibility for
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cleanup or other actions with respect to
the Release or threatened Release of Hazardous Substances or crude
oil, or any fraction thereof and all rules, regulations, guidance
documents and publication promulgated thereunder.
“ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with
the regulations thereunder, in each case as in effect from time to
time. References to sections of ERISA shall be construed to also
refer to any successor sections.
“ERISA
AFFILIATE” shall mean any corporation, trade or business
that is, along with Borrower, any of the Borrower or any
Subsidiary, a member of a controlled group of corporations or a
controlled group of trades or businesses, as described in Sections
414(b) and 414(c), respectively, of the Code or Section 4001 of
ERISA.
“ERISA
EVENT” means (a) a Reportable Event with respect to a
Pension Plan; (b) a withdrawal by the Borrower or any ERISA
Affiliate from a Pension Plan subject to Section 4063 of ERISA
during a plan year in which it was a substantial employer (as
defined in Section 4001(a)(2) of ERISA) or a substantial cessation
of operations which is treated as such a withdrawal; (c) a complete
or partial withdrawal by the Borrower or any ERISA Affiliate from a
Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (d) the filing of a notice of intent to terminate,
the treatment of a Pension Plan amendment as a termination under
Section 4041 or 4041A of ERISA, or the commencement of proceedings
by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e)
an event or condition which might reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Pension Plan
or Multiemployer Plan; or (f) the imposition of any liability
exceeding Fifty Thousand and 00/100 Dollars ($50,000.00) under
Title IV of ERISA, other than PBGC premiums due but not delinquent
under Section 4007 of ERISA, upon the Borrower or any ERISA
Affiliate.
“EVENT OF
DEFAULT” shall have the meaning ascribed thereto in
Section 5.01.
“FINANCIAL
STATEMENTS” means balance sheets and statements of income
and capital accounts for Borrower and the Subsidiaries for the
applicable fiscal year.
“GAAP”
shall mean, at any time, generally accepted accounting principles
at such time in the United States.
“GUARANTEE” by any Person shall mean any
obligation (other than endorsements of negotiable instruments for
deposit or collection in the ordinary course of business),
contingent or otherwise, of such Person guaranteeing, or hi effect
guaranteeing, any Indebtedness, liability, dividend or other
obligation of any other Person (the “primary obligor”)
in any manner, whether directly or indirectly, including, without
limitation, all obligations incurred through an agreement,
contingent or otherwise, by such Person: (a) to purchase such
Indebtedness or obligation or any Property constituting security
therefor, (b) to advance or supply funds (i) for the purchase or
payment of such Indebtedness or obligation, (ii) to maintain
working capital or other balance sheet condition or otherwise to
advance or make available funds for the purchase
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or payment of such Indebtedness or
obligation, (iii) to lease property or to purchase securities or
other property or services primarily for the purpose of assuring
the owner of such Indebtedness or obligation of the ability of the
primary obligor to make payment of the Indebtedness or obligation
or (iv) otherwise to assure the owner of the Indebtedness or
obligation of the primary obligor against loss in respect thereof.
For the purposes of all computations made under this Agreement, a
Guarantee in respect of any Indebtedness for borrowed money shall
be deemed to be Indebtedness equal to the then outstanding
principal amount of such Indebtedness for borrowed money which has
been guaranteed or such lesser amount to which the maximum exposure
of the guarantor shall have been specifically limited, and a
Guarantee in respect of any other obligation or liability or any
dividend shall be deemed to be Indebtedness equal to the amount of
such obligation, liability or dividend required to be shown as a
liability under GAAP on the balance sheet of such Person or such
lesser amount to which the maximum exposure of the guarantor shall
have been specifically limited. Guarantee when used as a
verb shall have a correlative meaning.
“GUARANTORS” shall mean Francis
O’Donnell, Jr. and The Francis E. O’Donnell, Jr.
Irrevocable Trust No. 1, dated May 25, 1990.
“HAZARDOUS
SUBSTANCE” shall mean any hazardous or toxic material,
substance or waste, pollutant or contaminant which is regulated
under any Environmental Law or any other statute, law, ordinance,
rule or regulation of any Federal, state, local, foreign or other
body, instrumentality, agency, authority or official having
jurisdiction over any of the Property owned, leased or operated by
Borrower or any Subsidiary or its use, including, without
limitation, any material, substance or waste which is: (a) defined
as a hazardous substance under Section 311 of the Federal Water
Pollution Control Act (33 U.S.C. §§1317), as amended; (b)
regulated as a hazardous waste under Section 1004 or Section 3001
of the Federal Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act (42 U.S.C. §§6901 et
seq .), as amended; (c) defined as a hazardous substance
under Section 101 of the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. §§9601
et seq .), as amended; or (d) defined or regulated as
a hazardous substance or hazardous waste under any rules or
regulations promulgated under any of the foregoing
statutes.
“INDEBTEDNESS” shall mean, with respect to
any Person, without duplication, all indebtedness, liabilities and
obligations of such Person which in accordance with GAAP are
required to be classified upon a balance sheet of such Person as
liabilities of such Person, and in any event shall include all (a)
obligations of such Person for borrowed money or which have been
incurred in connection with the purchase or other acquisition of
Property, (b) obligations secured by any Lien (other than
mechanics’, materialman’s, architect’s, or
similar Lien arising in the ordinary course of a construction
business) on, or payable out of the proceeds of or production from,
any Property owned by such Person, whether or not such Person has
assumed or become liable for the payment of such obligations, (c)
indebtedness, liabilities and obligations of third parties,
including joint ventures and partnerships of which such Person is a
venturer or general partner, recourse to which may be had against
such Person, (d) obligations created or arising under any
conditional sale or other title retention agreement with respect to
Property acquired by such Person, notwithstanding the fact that the
rights and remedies of the seller, lender or lessor under such
agreement in the event of default are limited to repossession or
sale
6
of such Property, (e) Capitalized Lease
Obligations of such Person, (f) the aggregate undrawn face amount
of all letters of credit issued for the account of and/or upon the
application of such Person together with all unreimbursed drawings
with respect thereto, and (g) trade account payables and all other
liabilities of such Person as defined by GAAP.
“INTERCOMPANY
DOCUMENTS” are the following: Intercompany Revolving
Credit Agreement by and between Borrower and the Subsidiaries,
Intercompany Notes from each of the Subsidiaries evidencing such
Subsidiary’s borrowing under the Intercompany Revolving
Credit Agreement and the Intercompany Security Agreement from each
Subsidiary to Borrower securing the indebtedness of such Subsidiary
to Borrower and the UCC-l’s relative thereto.
“INTERCOMPANY NOTE
PLEDGE AGREEMENT” shall mean that agreement whereby
Borrower pledges to Lender all of its right, title and interest in
the Intercompany Notes.
“INTEREST
RATE” shall mean the Prime Rate plus one percent
(1%).
“INVESTMENT” shall mean any investment by
Borrower or any Subsidiary in any Person, whether payment therefor
is made in cash or capital stock of Borrower or any Subsidiary, and
whether such investment is by acquisition of stock or Indebtedness,
or by loan, advance, transfer of Property out of the ordinary
course of business, capital contribution, equity or profit sharing
interest or extension of credit on terms other than those normal in
the ordinary course of business or otherwise.
“LAWS”
means all ordinances, statutes, rules, regulations, orders,
injunctions, writs or decrees of any government or political
subdivision or agency or authority thereof (including, without
limitation, the states of Missouri, Illinois and Delaware), or of
any court or similar entity having jurisdiction over Borrower or
the Collateral.
“LIEN”
shall mean any interest in Property securing an obligation owed to,
or a claim by, a Person other than the owner of the Property,
whether such interest is based on common law, statute or contract,
including, without limitation, any security interest, mortgage,
deed of trust, pledge, hypothecation, judgment lien or other lien
or encumbrance of any kind or nature whatsoever, any conditional
sale or trust receipt, any lease, consignment or bailment for
security purposes and any Capitalized Lease. The term
“Lien” shall include reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases and other title exceptions and encumbrances
affecting Property.
“LOAN”
shall mean that certain revolving credit loan of up to $2, 500,000
to be made by Lender to Borrower, pursuant to this
Agreement.
“LOAN
DOCUMENTS” means this Agreement, the Note, the Security
Agreement and all financing statements hi connection therewith, and
any and all other documents or instruments now or hereafter
evidencing or securing the Loan, and all those documents specified
in Section 2.07 hereof and each and every other document to be
delivered from time to time pursuant to this Agreement with respect
to the Loan or otherwise.
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“LOCK BOX
ACCOUNT” shall have the meaning ascribed to that term in
Section 2.07 hereof.
“LOCK BOX
AGREEMENT” shall have the meaning ascribed to that term
in Section 2.07 hereof.
“MATERIAL ADVERSE
EFFECT” shall mean (a) a material adverse effect on the
Properties, assets, liabilities, business, operations, prospects,
income or condition (financial or otherwise) of the Borrower and
its Subsidiaries taken as a whole, (b) material impairment of
Borrower’s ability to perform any of its obligations under
this Agreement, the Note, or any of the other Loan Documents or (c)
material impairment of the enforceability of the rights of, or
benefits available to, the Lender under this Agreement, the Note,
or any of the other Loan Documents.
“MATURITY
DATE” means the second anniversary of the date of the
Note.
“MULTI-EMPLOYER
PLAN” shall mean a “multi-employer plan” as
defined in Section 4001(a)(3) of ERISA which is maintained for
employees of Borrower, any Subsidiary or any ERISA Affiliate or to
which Borrower, any Subsidiary or any ERISA Affiliate has
contributed in the past or currently contributes.
“NET
WORTH” shall mean the sum of the following items as shown
on the consolidated balance sheet of Borrower and its Subsidiaries:
(i) common stock, plus (ii) retained earnings, plus (iii) paid in
capital, minus (iv) treasury stock, and minus (v) contract rights,
licenses, patents, trademarks, trade names, good will and other
similar assets.
“NOTE”
means the Revolving Credit Note delivered to Lender, a copy of
which is attached hereto as Exhibit A .
“NOTICE OF REVOLVING
CREDIT BORROWING” shall have the meaning ascribed thereto
in Section 2.02.
“OBLIGATIONS” means any and all present and
future indebtedness, liabilities and obligations of Borrower to
Lender respecting this Loan, including, without limitation, the
following obligations of Borrower:
A. To pay the principal of
and interest on the Note in accordance with the terms thereof and
to satisfy all of its other obligations and liabilities to Lender
under the Loan Documents;
B. To repay to Lender all
amounts advanced by Lender hereunder, or under any of the other
Loan Documents; and
C. To reimburse Lender, on
demand, for all of Lender’s expenses and costs, including the
reasonable fees and expenses of its counsel, agents and advisors,
in
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connection with the Loan and
enforcement of the Loan Documents, or any of them, whether or not
litigation is commenced.
“OBLIGOR”
shall mean the Borrower, each Guarantor and each other Person who
is or shall at any time hereafter become primarily or secondarily
liable on any of the Obligations or who grants the Lender a Lien
upon any of the Property of such Person as security for any of the
Obligations.
“OCCUPATIONAL SAFETY
AND HEALTH LAWS” shall mean the Occupational Safety and
Health Act of 1970, as amended, and any other Federal, state or
local statute, law, ordinance, code, rule, regulation, order or
decree regulating, relating to or imposing liability or standards
of conduct concerning employee health and/or safety, as now or at
any time hereafter in effect.
“OPERATING
LEASE” shall mean any lease of Property, whether real
and/or personal, by a Person as lessee which is not a Capitalized
Lease.
“OPERATING LEASE
EXPENSE” shall mean, for the period in question, the
aggregate amount of all Operating Lease Expenses during such
period, determined in accordance with GAAP.
“OPERATING LEASE
EXPENSES” shall mean with respect to any Person, for the
period in question, the aggregate amount of rental and other
expenses incurred by such Person in respect of Operating Leases
during such period, all determined in accordance with
GAAP.
“PBGC”
shall mean the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
“PENSION
PLAN” shall mean a “pension plan,” as such
term is defined in Section 3(2) of ERISA, which is established or
maintained by Borrower, any Subsidiary or any ERISA Affiliate,
other than a Multi-Employer Plan.
“PERSON”
shall mean any individual, sole proprietorship, partnership, joint
venture, limited liability company, trust, unincorporated
organization, association, corporation, institution, entity or
government (whether national, Federal, state, county, city,
municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department
thereof).
“PRIME
RATE” shall mean the interest rate announced from time to
time by Lender as its “prime rate” on commercial loans
(which rate shall fluctuate as and when said prime rate shall
change). Borrower acknowledges that such “prime rate”
is a reference rate and does not necessarily represent the lowest
or best rate offered by Lender to its customers.
“PROPERTY”
shall mean any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
Properties shall mean the plural of Property. For purposes
of this Agreement, Borrower and each Subsidiary shall be deemed to
be the owner of
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any Property which it has acquired or
holds subject to a conditional sale agreement, financing lease or
other arrangement pursuant to which title to the Property has been
retained by or vested in some other Person for security
purposes.
“RCRA”
shall mean the Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act of 1976 and Hazardous and Solid Waste
Amendments of 1984, 42 U.S.C. §§6901 et seq
., and any future amendments.
“RELEASE”
shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or
disposing into the environment, including, without limitation, the
abandonment or discarding of barrels, drums, containers, tanks
and/or other receptacles containing (or containing traces of) any
Hazardous Substance.
“REPORTABLE
EVENT” shall have the meaning given to such term in
ERISA.
“REVOLVING CREDIT
AVAILABILITY” shall mean the amount identified as
“Revolving Credit Availability” on the most recent
Borrowing Base Certificate (in the form of Exhibit C
attached hereto) delivered to Lender in accordance with Section
2.01 below.
“REVOLVING CREDIT
LOANS” shall have the meaning ascribed thereto in Section
2.01(a).
“REVOLVING CREDIT
PERIOD” shall mean the period commencing on the date of
this Agreement and ending March 30, 2005.
“SECURITY
AGREEMENT” shall mean that certain Assignment of Security
Agreement and Collateral dated as of the date hereof and executed
by the Borrower in favor of the Lender, in the form of Exhibit
B attached hereto, as the same may from time to time be
amended, modified, extended, renewed or restated, by an instrument
in writing signed by all parties thereto.
“SUBSIDIARY” shall mean any corporation or
other entity of which more than Fifty Percent (50%) of the issued
and outstanding capital stock or other equity interests entitled to
vote for the election of directors or persons performing similar
functions (other than by reason of default in the payment of
dividends or other distributions) is at the time owned directly or
indirectly by Borrower and/or any Subsidiary.
“TOTAL OUTSTANDING
REVOLVING CREDIT LOANS” shall mean, as of any date, the
aggregate principal amount of all Revolving Credit Loans
outstanding as of such date.
“UNLIMITED
GUARANTY” shall mean that Continuing Contract of
Guaranty, dated as of even date herewith, and executed and
delivered by the Guarantors.
“VOTING
STOCK” shall mean, with respect to any corporation, any
shares of stock of such corporation whose holders are entitled
under ordinary circumstances to vote for the election of directors
of such corporation (irrespective of whether at the time stock of
any other class or classes shall have or might have voting power by
reason of the happening of any contingency).
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“WELFARE
PLAN” shall mean a “welfare plan” as such
term is defined in Section 3(1) of ERISA, which is established or
maintained by Borrower, any Subsidiary or any ERISA Affiliate,
other than a Multi-Employer Plan.
1.02. Accounting Terms and
Determinations. Except as otherwise specified in this
Agreement, all accounting terms used in this Agreement shall be
interpreted, all accounting determinations under this Agreement
shall be made and all financial statements required to be delivered
under this Agreement shall be prepared in accordance with GAAP as
in effect from time to time, applied on consistent basis (except
for changes approved by Lender and by Borrower’s independent
certified public accountants).
SECTION II. THE LOAN TERMS
2.01. Loan
.
(a) Subject to compliance by
Borrower with all of the terms and conditions hereinafter set
forth, and predicated on the representations and warranties of
Borrower hereunder, all of which are material and are being relied
upon by Lender, being true and complete as of closing and as of
each date of funding, and so long as no Default or Event of Default
has occurred and is continuing, during the Revolving Credit Period,
Lender agrees to advance funds to Borrower (a “Revolving
Credit Loan”), from time to time, pursuant to Section 2.03,
not to exceed, in the aggregate, the from time to time, Borrowing
Base. Within the foregoing limits, Borrower may borrow under this
Section 2.01(a), prepay under Section 2.05 and reborrow at any time
during the Revolving Credit Period under this Section 2.01 (a). All
advances not paid prior to the last day of the Revolving Credit
Period, together with all accrued and unpaid interest thereon and
all fees and other amounts owing by Borrower to the Lender with
respect thereto, shall be due and payable on the last day of the
Revolving Credit Period.
(b) Borrower shall deliver to
Lender as soon as possible following the execution of this
Agreement (with respect to the month ended March 31, 2004) and on
the thirtieth (30th) day of each month thereafter commencing April,
2004, a Borrowing Base Certificate in the form of Exhibit C
attached hereto and incorporated herein by reference (a
“Borrowing Base Certificate”) (together with such
supporting information as the Lender may reasonably request in
connection therewith) setting forth:
(i) the Borrowing Base and
its components as of the end of the immediately preceding
month;
(ii) the aggregate principal
amount of all Revolving Credit Loans outstanding as of the end of
the immediately preceding month; and
(iii) the aggregate undrawn
face amount of all Letters of Credit outstanding as of the end of
the immediately preceding month plus all unreimbursed
drawings with respect thereto.
11
The Borrowing Base shown in such
Borrowing Base Certificate shall be and remain the Borrowing Base
hereunder until the next Borrowing Base Certificate is delivered to
the Lender, at which time the Borrowing Base shall be the amount
shown in such subsequent Borrowing Base Certificate. Each Borrowing
Base Certificate shall be certified (subject to normal year-end
adjustments) as being true, correct and complete in all material
respects by the President or the chief financial officer of
Borrower.
(c) If at any time the Total
Outstanding Revolving Credit Loans are greater than the Borrowing
Base as shown on the most recent Borrowing Base Certificate,
Borrower shall be automatically required (without demand or notice
of any kind by the Lender, all of which are hereby expressly waived
by Borrower) to immediately repay the Revolving Credit Loans and/or
surrender for cancellation the outstanding Letters of Credit, in
either case in an amount sufficient to reduce the amount of the
Total Outstanding Credit Loans to the amount of the Borrowing Base,
and to reduce the Letter of Credit Obligations to the Letter of
Credit Sublimit.
2.02. Method of
Borrowing .
(a) Borrower shall give
notice (a “Notice of Revolving Credit Borrowing”) to
the Lender by 10:00 a.m. (St. Louis time) on the Domestic Business
Day of each Revolving Credit Loan to be made to Borrower,
specifying:
(i) the date of such
Revolving Credit Loan, which shall be a Domestic Business Day;
and
(ii) the aggregate principal
amount of such Revolving Credit Loan.
Such Notice of Revolving Credit
Borrowing may be delivered by fax or e-mail, or by
telephone.
(b) A Notice of Revolving
Credit Borrowing shall not be revocable by Borrower.
(c) Not later than 2:00 p.m.
(St. Louis time) on the date of each Revolving Credit Loan, Lender
shall make available such Revolving Credit Loan, in Federal or
other funds immediately available in St. Louis, Missouri, to the
Borrower by crediting such funds to a demand deposit account of
Borrower at Lender.
(d) Borrower hereby
irrevocably authorizes Lender to rely on telephonic, telegraphic,
telecopy, telex or written instructions of any person identifying
himself or herself as one of the individuals listed on Schedule
2.02 attached hereto (or any other individual from time to time
authorized to act on behalf of Borrower pursuant to a resolution
adopted by the Board of Directors of Borrower and certified by the
Secretary of Borrower and delivered to the Lender) (each, an
“Authorized Person”) with respect to any request to
make a Revolving Credit Loan or a repayment hereunder, and on any
signature which the Lender believes to be genuine, and Borrower
shall be bound thereby in the same manner as if such individual
were actually
12
indemnify the Lender and to hold the
Lender harmless from and against any and all claims, demands,
damages, liabilities, losses, costs and expenses (including,
without limitation, reasonable attorneys’ fees and expenses)
relating to or arising out of or in connection with the acceptance
of instructions purportedly given by any Authorized Person for
making Revolving Credit Loans or repayments hereunder.
2.03. The Note . The
Revolving Credit Loan shall be evidenced by and payable as to
principal and interest in accordance with the terms of a recourse,
negotiable revolving credit promissory note of Borrower (the
“Note”), dated as of the date hereof, being in the
original principal amount of $2, 500,000, and substantially in the
form of Exhibit A attached hereto and incorporated by
reference herein. Lender shall record in its books and records the
date, amount, type and maturity of each Revolving Credit Loan made
by it and the date and amount of each payment of principal and/or
interest made by Borrower with respect thereto; provided, however,
that the obligation of Borrower to repay each Revolving Credit Loan
made to Borrower under this Agreement shall be absolute and
unconditional, notwithstanding any failure of Lender to make any
such recordation or any mistake by Lender in connection with any
such recordation. The books and records of Lender showing the
account between Lender and Borrower shall be conclusive evidence of
the items set forth therein in the absence of demonstrable
error.
2.04. Interest Rates and
Interest Payments . So long as no Event of Default has occurred
and is continuing, the Revolving Credit Loan shall bear interest on
the outstanding principal amount thereof, for each day from the
date such Revolving Credit Loan is made until it becomes due, at
the Interest Rate. So long as any Event of Default has occurred and
is continuing, the Revolving Credit Loan shall bear interest on the
outstanding principal amount thereof, at a per annum rate equal to
the Prime Rate plus five percent (5%). Such interest shall be
payable monthly in arrears on the thirtieth (30 th
) day of each
month, commencing on the later of April 30, 2004, and at the
maturity of the Note (whether by reason of acceleration or
otherwise). From and after the maturity of the Note, whether by
reason of acceleration or otherwise, the Revolving Credit Loan
shall bear interest, payable on demand, for each day until paid at
a rate per annum equal to the Prime Rate plus five percent (5%).
Interest shall be computed on the basis of a year of 360 days and
paid for the actual number of days elapsed.
2.05. Voluntary
Prepayments . Borrower may upon notice to the Lender, pay,
without penalty or premium, the Revolving Credit Loan, in whole at
any time, or in part from time to time.
2.06. Mandatory
Prepayments . The Borrower is required to prepay the Note (or,
as regards Letter of Credit Obligations, to surrender for
cancellation the applicable outstanding Letters of Credit)
whenever, and as often as may be necessary to keep, the unpaid
principal balance thereof from exceeding the Borrowing
Base.
2.07. Collateral for
Obligations of Borrower to Lender; Establishment of Lock Box
Arrangement .
(a) To secure and provide for
the prompt payment of, or on account of, all Obligations hereunder,
Borrower agrees to and does hereby assign, transfer and convey, and
grant to
13
Lender a continuing security
interest and lien, all in form acceptable to Lender, in and to the
Collateral. Borrower shall execute or cause to be executed any and
all documents reasonably requested from time to time by Lender
(such documents to be in form and substance reasonably satisfactory
to Lender) to perfect Lender’s security interest or lien in
the Collateral, including but not limited to this Agreement, the
Note, the Security Agreement, the Intercompany Note Pledge
Agreement and such Uniform Commercial Code financing statements,
collateral schedules, stock powers, original stock certificates and
other documents as Lender may require in connection
therewith.
(b) Borrower will instruct
its Account Debtors, if any, and shall cause each of its
Subsidiaries to instruct such Subsidiary’s Account Debtors to
remit all accounts payable to a lock box account established with
Lender (the “Lock Box Account”) to which Lender shall
have sole access and control. All deposits to such Lock Box Account
shall constitute additional Collateral and shall not be deemed
payment of the Obligations. Until such time as an uncured Event of
Default occurs, such payables so received will be deposited daily
by Lender into the account of each such Subsidiary with Lender.
Upon the occurrence of an uncured Event of Default Lender shall
apply the payables as it so elects. The parties hereto and the
Subsidiaries agree to enter into a lock box agreement,
substantially in the form of Exhibit F attached hereto (the
“Lock Box Agreement”).
2.08. Conditions Precedent
to the Closing of this Loan . Set forth below is a list of the
documents to be executed and delivered, and the actions to be
taken, all of which are conditions precedent to the closing of this
Loan, as follows:
(a) This Agreement and the
Note, each duly executed by Borrower;
(b) The Security Agreement in
the form of Exhibit B and Intercompany Note Pledge Agreement
in the form of Exhibit D hereto and such Uniform Commercial
Code financing statements, collateral schedules, stock powers,
original stock certificates and other documents as Lender may
require in connection therewith, each duly executed by
Borrower;
(c) The Unlimited
Guaranty:
(d) Completion by Lender of
its review of all material, licenses, contracts and contingent
liabilities;
(e) A copy of the resolutions
of the Board of Directors of the Borrower duly adopted, which
authorize the execution, delivery and performance of this
Agreement, the Note, the Security Agreement, the Intercompany Note
Pledge Agreement and the other Loan Documents to be executed by
Borrower, certified by its secretary;
(f) A copy of the resolutions
of the board of Directors of each Subsidiary duly adopted which
authorize the execution, delivery and performance of the
Intercompany
14
Documents, certified by the
secretary thereof (or comparable officer in the case of a
Subsidiary which is not a corporation);
(g) A copy of the Certificate
and Articles of Incorporation of Borrower and any amendments
thereto, the By-laws of Borrower, and an incumbency certificate,
certified by the Secretary of Borrower, and Certificates of Good
Standing of Borrower in the State of its incorporation;
(h) For each Subsidiary, a
copy of the Certificate and Articles of Incorporation of such
Subsidiary and any amendments thereto, the By-Laws of such
Subsidiary, and an incumbency certificate, all certified by the
Secretary of such Subsidiary and a Certificate of Good Standing for
such Subsidiary in the State of its incorporation;
(i) The initial Borrowing
Base Certificate and the Notice of Revolving Credit Borrowing
required by Sections 2.01(b) and 2.02;
(j) Evidence of the proper
filing of UCC-1 Financing Statement perfecting the first priority
security interests in favor of the Lender in the
Collateral;
(k) A Subordination Agreement
executed by Harbinger Mezzanine Partners, L.P.
(“Harbinger”) and Lender whereby Harbinger subordinates
its security interest in the accounts receivable of TEAMM
Pharmaceuticals, Inc. (the “TEAMM Collateral”) to that
of Lender’s security interest in the same;
(l) Amendments to the
UCC-1’s filed by Harbinger subordinating its security
interest in the TEAMM Collateral in and to that of
Lender;
(m) Evidence satisfactory to
the Lender that the insurance required of this Agreement and the
other Loan Documents is in full force and effect together with loss
payable endorsements in form and substance satisfactory to the
Lender, duly executed by the insurance company;
(n) copies of all financial
statements and other Exhibits and Schedules required by this
Agreement and the other Loan Documents, together with a compliance
certificate executed by the chief financial officer of Borrower
evidencing that, after giving effect to the transactions hereunder
Borrower and any Subsidiaries, on a consolidated basis, will be in
compliance with the covenants set out in Section 4.15;
(o) Such other agreements,
documents, instruments and certificates as the Lender may
reasonably request.
15
SECTION III. REPRESENTATIONS AND
WARRANTIES
Borrower hereby represent and
warrant to Lender that:
3.01. Existence and
Power. Borrower and each Subsidiary: (a) is duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its organization; (b) has all requisite
corporate or other powers required to carry on its business as now
conducted; (c) has all requisite governmental and regulatory
licenses, authorizations, consents and approvals required to carry
on its business as now conducted, except such licenses,
authorizations, consents and approvals the failure to have could
not reasonably be expected to have a Material Adverse Effect; and
(d) is qualified to transact business as a foreign corporation (or
applicable other entity) in, and is in good standing under the laws
of, all jurisdictions in which it is required by applicable law to
maintain such qualification and good standing except for those
states in which the failure to qualify or maintain good standing
could not reasonably be expected to have a Material Adverse
Effect.
3.02. Authorization.
The execution, delivery and performance by Borrower of this
Agreement, the Note, and the other Loan Documents to which each is
a party are within the powers of Borrower and have been duly
authorized by all necessary corporate or other action.
3.03. Binding Effect.
This Agreement, the Note, the Security Agreement and the other Loan
Documents to which a Borrower is a party and which have been
executed contemporaneously with or prior to the execution of this
Agreement have been duly executed and delivered by Borrower and
constitute the legal, valid and binding obligations of Borrower
enforceable in accordance with their respective terms, except as
such enforceability may be limited by (a) bankruptcy, insolvency or
other similar laws affecting creditors’ rights generally and
(b) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
and the other Loan Documents to which Borrower is a party which
were not executed contemporaneously with or prior to the execution
of this Agreement, when executed and delivered in accordance with
this Agreement, will constitute the legal, valid and binding
obligations of Borrower enforceable in accordance with their
respective terms, except as such enforceability may be limited by
(a) bankruptcy, insolvency or other similar laws affecting
creditors’ rights generally and (b) general principles of
equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
3.04. Financial
Statements. Borrower and the Subsidiaries have furnished Lender
with the following financial statements, identified by the chief
financial officer of, respectively, Borrower and each such
Subsidiary: (a) balance sheets and statements of income, retained
earnings and cash flows of such party as of and for the fiscal year
ended September 30, 2003 . all certified by the independent
certified public accountant of such party, which financial
statements have been prepared in accordance with GAAP consistently
applied; and (b) unaudited balance sheets and statements of income,
retained earnings and cash flows of such party as of and for the
month ended February 29, 2004 , certified by the chief
financial officer of such party as being true, correct and complete
in all material respects and that such financial statements have
been prepared in accordance with GAAP consistently applied.
Borrower and each Subsidiary hereby represents
16
and warrants to Lender that (a) said
financial statements fairly present the condition of Borrower and
such Subsidiary as of the dates thereof, (b) there has been no
material adverse change in the condition or operation, financial or
otherwise, of Borrower and such Subsidiary from the condition or
operation, financial or otherwise, of Borrower and such Subsidiary
from that set forth in the information furnished as of February 29,
2004, and (c) neither Borrower nor any Subsidiary had any direct or
contingent liabilities which were not disclosed on said financial
statements or the notes thereto (to the extent such disclosure is
required by GAAP).
3.05. Litigation.
Except as disclosed on Schedule 3.05 attached hereto, there
is no action or proceeding pending or, to the knowledge of
Borrower, threatened against or affecting Borrower or any
Subsidiary before any court, arbitrator or any governmental,
regulatory or administrative body, agency, instrumentality,
authority or official which, if determined adversely against
Borrower or any Subsidiary, could reasonably be expected to have a
Material Adverse Effect. Neither Borrower nor any Subsidiary is in
default with respect to any order, writ, injunction, decision or
decree of any court, arbitrator or any governmental, regulatory or
administrative body, agency, instrumentality, authority or
official, a default under which could reasonably be expected to
have a Material Adverse Effect. There are no outstanding judgments
against Borrower or any Subsidiary.
3.06. Pension and Welfare
Plans. Each Pension Plan and Welfare Plan complies in all
material respects with ERISA and all other applicable statutes and
governmental and regulatory rules and regulations; no Reportable
Event has occurred and is continuing with respect to any Pension
Plan; neither Borrower nor any Subsidiary nor any ERISA Affiliate
has withdrawn from any Multi-Employer Plan in a “complete
withdrawal” or a “partial withdrawal” as defined
in Sections 4203 or 4205 of ERISA, respectively; neither Borrower
nor any Subsidiary nor any ERISA Affiliate has entered into an
agreement pursuant to Section 4204 of ERISA; neither Borrower nor
any Subsidiary nor any ERISA Affiliate has any withdrawal liability
with respect to a Multi-Employer Plan; no steps have been
instituted by Borrower or any Subsidiary or any ERISA Affiliate to
terminate any defined benefit Pension Plan; no condition exists or
event or transaction has occurred in connection with any Pension
Plan, any Pension Plan that is subject to Section 302 of ERISA,
Multi-Employer Plan or Welfare Plan which could result in the
incurrence by Borrower or any Subsidiary or any ERISA Affiliate of
any material liability, fine or penalty; and neither Borrower nor
any Subsidiary nor any ERISA Affiliate is a “contributing
sponsor” as defined in Section 4001(a)(13) of ERISA of a
“single-employer plan” as defined in Section
4001(a)(15) of ERISA which has two or more contributing sponsors at
least two of whom are not under common control. Except as disclosed
on the consolidated financial statements of Borrower and its
Subsidiaries delivered by Borrower to Lender, neither Borrower nor
any Subsidiary nor any ERISA Affiliate has any unfunded liability
with respect to any Welfare Plan.
3.07. Tax Returns and
Payment. Borrower and each Subsidiary have filed all Federal,
state, local and other income and other tax returns which are
required to be filed and has paid all taxes which have become due
and payable pursuant to such returns and all other taxes,
assessments, fees and other governmental charges upon Borrower or
such Subsidiary, as the case may be, and upon their Properties,
income and franchises which have become due and payable by Borrower
or such Subsidiary, as the case may be, except those wherein the
amount,
17
applicability or validity are being
contested by Borrower or such Subsidiary, as the case may be, by
appropriate proceedings being diligently conducted in good faith
and in respect of which adequate reserves in accordance with GAAP
have been established. There is no asserted or assessed (or to the
knowledge of Borrower, proposed) tax deficiency against Borrower or
any Subsidiary which, if determined adversely against Borrower or
any Subsidiary, could reasonably be expected to have a Material
Adverse Effect.
3.08. Subsidiaries .
Borrower has no Subsidiary other than as identified on Schedule
3.08 attached hereto. Schedule 3.08 correctly sets forth
the jurisdiction of organization, the number of shares of each
class of common and preferred stock (or other ownership interests)
authorized for such corporation, the number of outstanding and the
percentage of the outstanding shares of each such class owned,
directly or indirectly, by Borrower. All of the issued and
outstanding capital stock of each Subsidiary is duly authorized,
validly issued and fully paid and nonassessable. Except as
disclosed on Schedule 3.08 attached hereto, the Borrower
does not own or hold, directly or indirectly, any capital stock or
equity security of, or any equity interest in, any corporation or
business. Borrower may at any time amend, modify or supplement
Schedule 3.08 by notifying Lender in writing of any changes
thereto, including any formation, acquisition, merger or
liquidation of any Subsidiary or any change in the capitalization
of any Subsidiary, in each case, in accordance with the terms of
this Agreement, and thereby the representations and warranties
contained in this Section 3.08 shall be amended accordingly so long
as such amendment, modification or supplement is made within thirty
(30) days after the occurrence of any such changes in the facts
stated therein and that such changes reflect transactions that are
permitted under this Agreement.
3.09. Compliance With
Other Instruments; None Burdensome . Neither the Borrower nor
any Subsidiary is a party to any contract, agreement, document or
instrument or subject to any charter or other corporate restriction
which could reasonably be expected to have a Material Adverse
Effect and which is not disclosed on the financial statements
heretofore submitted to Lender; neither the execution and delivery
of the Loan Documents, the consummation of the transactions therein
contemplated or the compliance with the provisions thereof by the
Borrower will violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on Borrower, or any
of the provisions of the Certificate of Incorporation or Bylaws (or
equivalent) of Borrower or any of the provisions of any indenture,
agreement, document, instrument or undertaking to which Borrower is
a party or subject, or by which Borrower or any Property of
Borrower is bound, or conflict with or constitute a default
thereunder or result in the creation or imposition of any Lien
pursuant to the terms of any such indenture, agreement, document,
instrument or undertaking (other than in favor of Lender pursuant
to the Loan Documents). No order, consent, approval, license,
authorization or validation of, or filing, recording or
registration with, or exemption by, any governmental, regulatory,
administrative or public body or authority, or any subdivision
thereof, or any other Person is required to authorize, or is
required in connection with, the execution, delivery or performance
of, or the legality, validity, binding effect or enforceability of,
any of the Loan Documents.
3.10. Other Indebtedness,
Guarantees and Capitalized Leases . Except as disclosed on
Schedule 3.10 attached hereto, neither Borrower nor any
Subsidiary is a borrower, guarantor or obligor with respect to, or
a lessee under, any Indebtedness, Guarantees or Capitalized
Leases
18
other than the Obligations. Borrower may
at any time amend, modify or supplement Schedule 3.10 by
notifying Lender in writing of any changes thereto, and thereby the
representations and warranties contained in this Section 3.10 shall
be amended accordingly so long as such amendment, modification or
supplement is made within thirty (30) days after the occurrence of
any such changes in the facts stated therein and that such changes
reflect transactions that are permitted under this
Agreement.
3.11. Labor Matters .
Neither Borrower nor any Subsidiary is a party to any labor dispute
which could reasonably be expected to have a Material Adverse
Effect. There are no strikes or walkouts relating to any labor
contract to which Borrower or any Subsidiary is subject which could
reasonably be expected to have a Material Adverse Effect. Hours
worked and payments made to the employees of Borrower and its
Subsidiaries have not been in violation of (a) the Fair Labor
Standards Act or (b) any other applicable law dealing with such
matters, the violation of which could reasonably be expected to
have a Material Adverse Effect. All payments due from the Borrower
or any Subsidiary, or for which any claim may be made against any
of them, in respect of wages, employee health and welfare insurance
and/or other benefits have been paid or accrued as a liability on
their respective books.
3.12. Title to
Property . Borrower and each Subsidiary is the sole owner of,
or has the legal right to use and occupy, all Property it claims to
own or which is necessary for Borrower or such Subsidiary to
conduct its business. Each of the Borrower and each Subsidiary
enjoys peaceful and undisturbed possession in all material respects
under all leases under which it is operating as a
lessee.
3.13. Regulation U .
The Borrower is not engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of
Regulation U of The Board of Governors of the Federal Reserve
System, as amended) and no part of the proceeds of any Loan will be
used, whether directly or indirectly, and whether immediately,
incidentally or ultimately (a) to purchase or carry margin stock or
to extend credit to others for the purpose of purchasing or
carrying margin stock, or to refund or repay indebtedness
originally incurred for such purpose or (b) for any purpose which
entails a violation of, or which is inconsistent with, the
provisions of any of the Regulations of The Board of Governors of
the Federal Reserve System, including, without limitation,
Regulations U, T or X thereof, as amended. If requested by the
Lender, Borrower shall furnish to the Lender a statement in
conformity with the requirements of Federal Reserve Form U-l
referred to in Regulation U.
3.14. Multi-Employer
Pension Plan Amendments Act of 1980 . Borrower and each
Subsidiary is in compliance with the Multi-Employer Pension Plan
Amendments Act of 1980, as amended (“MEPPAA”), and has
no liability for pension contributions pursuant to
MEPPAA.
3.15. Investment Company
Act of 1940; Public Utility Holding Company Act of 1935 .
Borrower is not an “investment company” as that term is
defined in, and is not otherwise subject to regulation under, the
Investment Company Act of 1940, as amended. Borrower is not a
“holding company” as that term is defined in, and is
not otherwise subject to regulation under, the Public Utility
Holding Company Act of 1935, as amended.
19
3.16. Patents, Trademarks,
Copyrights, Licenses, Etc . Except as disclosed on Schedule
3.16 attached hereto, neither Borrower nor any Subsidiary has
any patents, patent applications, patent rights, trademarks,
trademark applications, trademark rights, copyrights, licenses or
other intellectual property which are material to the business of
Borrower or any Subsidiary. Borrower may at any time amend, modify
or supplement Schedule 3.16 by notifying the Lender in
writing of any changes thereto, and thereby the representations and
warranties contained in the first sentence of this Section 3.16
shall be amended accordingly so long as such amendment,
modification or supplement is made within thirty (30) days after
the occurrence of any such changes in the facts stated therein and
that such changes reflect transactions that are permitted under
this Agreement. Borrower and each Subsidiary possesses all patents,
patent rights, trademarks, trademark rights, trade names, trade
name rights, copyrights, licenses and other intellectual property
necessary to conduct its business as presently conducted without
conflict with any patent, patent right, trademark, trademark right,
trade name, copyright, license or other intellectual property of
any other Person, except where the failure to possess the same
could not reasonably be expected to have a Material Adverse
Effect.
3.17. Environmental and
Safety and Health Matters . Except as disclosed on Schedule
3.17 attached hereto: (i) the operations of Borrower and each
Subsidiary comply with all applicable Environmental Laws and all
applicable Occupational Safety and Health Laws, the violation or
noncompliance with which could reasonably be expected to have a
Material Adverse Effect; (ii) none of the operations of the
Borrower or any Subsidiary is subject to any Environmental Claim or
any judicial, governmental, regulatory or administrative proceeding
alleging the violation of any Occupational Safety and Health Law,
which, if determined adversely against Borrower or Subsidiary,
could reasonably be expected to have a Material Adverse Effect;
(iii) none of the operations of the Borrower or any Subsidiary is
the subject of any Federal or state investigation evaluating
whether any remedial action is needed to respond to any Release of
Hazardous Substances or any unsafe or unhealthful condition at any
premises owned, leased or operated by Borrower or any Subsidiary,
which, if determined adversely to Borrower or such Subsidiary,
could reasonably be expected to have a Material Adverse Effect;
(iv) neither Borrower nor any Subsidiary has filed any notice under
any Environmental Law or Occupational Safety and Health Law
indicating or reporting (A) any past or present spillage, leakage
or Release into the environment of, or treatment, storage or
disposal of, any Hazardous Substance or (B) any unsafe or
unhealthful condition at any premises owned, leased or operated by
Borrower or any Subsidiary; and (v) neither the Borrower nor any
Subsidiary has any material contingent liability in connection with
(A) any spillage, disposal or Release into the environment of, or
otherwise with respect to, any Hazardous Substances or (B) any
unsafe or unhealthful condition at any premises owned, leased or
operated by Borrower or such Subsidiary.
3.18. No Default . No
Default or Event of Default under this Agreement has occurred and
is continuing. There is no existing default or event of default
under or with respect to any indenture, contract, agreement, lease
or other instrument to which Borrower or any Subsidiary is a party
or by which any Property of Borrower or any Subsidiary is bound or
affected, a default under which could reasonably be expected to
have a Material Adverse Effect. Each of the Borrower and each
Subsidiary has and is in full compliance with and in good standing
with respect to all governmental and/or regulatory permits,
licenses, certificates, consents and
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franchises necessary to continue to
conduct its business as previously conducted by it and to own or
lease and operate its Properties as now owned or leased by it, the
failure to have or noncompliance with which could reasonably be
expected to have a Material Adverse Effect, and, to the best of
Borrower’s knowledge, none of said permits, certificates,
consents or franchises contain any term, provision, condition or
limitation more burdensome than such as are generally applicable to
Persons engaged in the same or similar business as either of the
Borrower or such Subsidiary, as the case may be. Neither Borrower
nor any Subsidiary is in violation of any applicable statute, law,
rule, regulation or ordinance of the United States of America, of
any state, city, town, municipality, county or of any other
jurisdiction, or of any agency thereof, a violation of which could
reasonably be expected to have a Material Adverse
Effect.
3.19. Government
Contracts . Neither Borrower nor any Subsidiary is a party to
or bound by any supply or purchase agreements with the Federal
government or any state or local government or any agency thereof,
the termination or cancellation of which could reasonably be
expected to have a Material Adverse Effect.
3.20. Purchase and Other
Commitments and Outstanding Bids. No material purchase or other
commitment of Borrower or any Subsidiary is in excess of the
normal, ordinary and usual requirements of its business, or was
made at any price in excess of the then current market price, or,
to the best of Borrower’s knowledge, contains terms and
conditions more onerous than those usual and customary in the
applicable industry. There is no material outstanding bid, sales
proposal, contract or unfilled order of the Borrower or any
Subsidiary which (a) will, or could if accepted, require the
Borrower or any Subsidiary to supply goods or services at a cost to
Borrower or any Subsidiary in excess of the revenues to be received
therefor or (b) quotes prices which do not include a markup over
reasonably estimated costs consistent with past markups on similar
business based on market conditions current at that
time.
3.21. Real Property .
Schedule 3.21 attached hereto sets forth a true, correct and
complete list of all real property owned or leased by Borrower or
any Subsidiary (and, for each parcel of real property, stating
whether it is owned or leased and whether it is a manufacturing
facility, a distribution facility or a sales office and, if it is
leased facility, the basic terms of the lease (i.e. name and
address of landlord, term of lease and amount of rent and other
payments). Borrower may at any time amend, modify or supplement
Schedule 3.21 by notifying Lender in writing of any changes
thereto, and thereby the representations and warranties contained
in the first sentence of this Section 3.21 shall be amended
accordingly so long as such amendment, modification or supplement
is made within thirty (30) days after the occurrence of any such
changes in the facts stated therein and that such changes reflect
transactions that are permitted under this Agreement.
3.22. Disclosure .
Neither this Agreement nor any of the Exhibits or Schedules hereto
nor any certificate or other data furnished to Lender in writing by
or on behalf of the Borrower or any Subsidiary in connection with
the transactions contemplated by this Agreement contains any untrue
or incorrect statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or
therein not misleading. To the best knowledge of Borrower, there is
no fact peculiar to Borrower or any Subsidiary which presently has
a Material Adverse Effect or in the future (so far as Borrower can
now foresee) could reasonably be expected to have
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a Material Adverse Effect, which has not
heretofore been disclosed in writing by the Borrower to the
Lender.
3.23. Borrower’s
Capital. The authorized capital of Borrower is as set out on
Schedule 3.23 attached hereto.
SECTION IV. BORROWER’S
COVENANTS
Borrower covenants and agrees
that, so long as Lender has any obligation to make a Revolving
Credit Loan hereunder and/or any of the Obligations remain
unsatisfied, it will comply with the following
covenants:
4.01. Information .
Borrower will deliver or cause to be delivered to the
Lender:
(a) as soon as available and
in any event within one hundred (120) days after the end of each
fiscal year of Borrower, the balance sheet of Borrower as of the
end of such fiscal year and the related statement of income,
retained earnings and cash flows for such fiscal year, setting
forth in each case, in comparative form, the figures for the
previous fiscal year, all such financial statements to be prepared
on a consolidated basis for Borrower and all of its Subsidiaries in
accordance with GAAP consistently applied and audited by and
accompanied by the unqualified opinion of independent certified
public accountants selected by Borrower and reasonably acceptable
to the Lender together with (i) a supplemental unaudited income
statement with all consolidating entries through and including
gross profits, (ii) a certificate from such accountants to the
effect that, in making the examination necessary for the signing of
such annual audit report, such accountants have not become aware of
any Default or Event of Default that has occurred and is
continuing, or, if such accountants have become aware of any such
event, describing it and the steps, if any, being taken to cure it
and (iii) the computations of such accountants evidencing
compliance with the financial covenants contained in Section 4.15
of this Agreement;
(b) as soon as available and
in any event within thirty (30) days after the end of each month,
the balance sheet of Borrower as of the end of such month and the
related statement of income, retained earnings and cash flows for
such month and for the portion of Borrower’s fiscal year
ended at the end of such month, on a consolidated basis for
Borrower and all of its Subsidiaries setting forth in each case in
comparative form, (i) the figures for the corresponding month and
the corresponding portion of Borrower’s previous fiscal year,
and (ii) Borrower’s budgeted projections for such month and
for the portion of Borrower’s fiscal year ended at the end of
such month, all in reasonable detail and satisfactory in form to
the Lender and accompanied by a supplemental income statement with
all consolidating entries through and including gross profits and
certified (subject to normal year-end adjustments and footnote
disclosures) as to fairness of presentation, GAAP and consistency
by the President, Chief Operating Officer or the chief financial
officer of Borrower;
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(c) thirty (30) days after
the end of each calendar quarter, a certificate of the President,
Chief Operating Officer or the chief financial officer of Borrower
in the form attached hereto as Exhibit D and incorporated
herein by reference, accompanied by supporting financial work
sheets where appropriate, (i) evidencing Borrower’s
compliance with the financial covenants contained in Section 4.15
of this Agreement, (ii) stating whether there exists on the date of
such certificate any Default or Event of Default and, if any
Default or Event of Default then exists, setting forth the details
thereof and the action which Borrower is taking or proposes to take
with respect thereto and (iii) certifying that all of the
representations and warranties of Borrower and/or any other Obligor
contained in this Agreement and/or in any of the other Loan
Documents are true and correct in all material respects on and as
of the date of such certificate as if made on and as of the date of
such certificate;
(d) as soon as available and
in any event within ninety (90) days after the beginning of each
fiscal year of Borrower, a copy of the federal income tax return of
Borrower for the prior fiscal year;
(e) with reasonable
promptness, such further information regarding the business,
affairs and financial condition of Borrower or any Subsidiary as
the Lender may from time to time reasonably request; and
(f) within thirty (30) days
after the end of each month, a Borrowing Base Certificate as of the
end of the preceding month.
4.02. Payment of
Indebtedness . Borrower will, and will cause each Subsidiary
to, (i) pay and discharge any and all Indebtedness payable or
Guaranteed by Borrower or such Subsidiary, as the case may be, and
any interest or premium thereon, when due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or
otherwise) in accordance with the agreement, document or instrument
relating to such Indebtedness or Guarantee (provided, however, that
neither Borrower nor any Subsidiary shall be required to pay any
such Indebtedness consisting of trade accounts payable the payment
of which is being contested in good faith and by appropriate
proceedings being diligently conducted and for which adequate
reserves in accordance with GAAP have been provided, except that
Borrower or such Subsidiary, as the case may be, shall pay or cause
to be paid all such trade accounts payable forthwith upon the
commencement of proceedings to foreclose any Lien which is attached
as security therefor, unless such foreclosure is stayed by the
filing of an appropriate bond in a manner reasonably satisfactory
to the Lender) and (ii) perform, observe and discharge in all
material respects all covenants, conditions and obligations which
are imposed upon Borrower or such Subsidiary, as the case may be,
by any and all agreements, documents, instruments and indentures
evidencing, securing or otherwise relating to such Indebtedness or
Guarantee.
4.03. Maintenance of Books
and Records; Consultations and Inspections . Borrower will, and
will cause each Subsidiary to, maintain books and records
sufficient to permit the preparation of financial statements in
accordance with GAAP and in which true, correct and
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complete entries shall be made of all
dealings and transactions in relation to its business. Borrower
will, and will cause each Subsidiary to, permit the Lender (and any
Person appointed by the Lender) to discuss the affairs, finances
and accounts of Borrower and each Subsidiary with the officers of
Borrower and each Subsidiary and, upon oral or written notice to
Borrower, its independent public accountants, all at such
reasonable times and as often as Lender may from time to time
reasonably request. Borrower will also permit, and will cause each
Subsidiary to permit, inspection of its Properties, books and
records by the Lender during normal business hours and at other
reasonable times. Borrower will reimburse the Lender upon demand
for all reasonable costs and expenses incurred by the Lender in
connection with any such inspection conducted by the Lender while
any Default or Event of Default under this Agreement has occurred
and is continuing. Borrower irrevocably authorizes Lender to, upon
oral or written notice to Borrower, communicate directly with their
independent public accountants and irrevocably authorize and direct
such accountants to disclose to the Lender any and all information
with respect to the business and financial condition of Borrower
and its Subsidiaries as the Lender may from time to time reasonably
request in writing.
4.04. Payment of Taxes
. Borrower will, and will cause each Subsidiary to, duly file all
Federal, state and local income tax returns and all other tax
returns and reports of Borrower or such Subsidiary, as the case may
be, which are required to be filed and duly pay and discharge
promptly all taxes, assessments and other governmental charges
imposed upon it or any of its Property; provided, however, that
neither Borrower nor any Subsidiary shall be required to pay any
such tax, assessment or other governmental charge the payment of
which is being contested in good faith and by appropriate
proceedings being diligently conducted and for which adequate
reserves in accordance with GAAP have been provided, except that
Borrower or such Subsidiary, as the case may be, shall pay or cause
to be paid all such taxes, assessments and governmental charges
forthwith upon the commencement of proceedings to foreclose any
Lien which is attached as security therefor, unless such
foreclosure is stayed by the filing of an appropriate bond in a
manner reasonably satisfactory to the Lender.
4.05. Payment of
Claims . Borrower will, and will cause each Subsidiary to,
promptly pay and discharge (i) all trade accounts payable in
accordance with its usual and customary business practices as in
effect on the date of this Agreement (but in no event later than
thirty (30) days after the due date thereof) and (ii) all claims
for work, labor or materials which if unpaid does or could
reasonably be expected to become a Lien upon any of its Property;
provided, however, that neither Borrower nor any Subsidiary shall
be required to pay any such account payable or claim the payment of
which is being contested in good faith and by appropriate
proceedings being diligently conducted and for which adequate
reserves in accordance with GAAP have been provided, except that
Borrower or such Subsidiary, as the case may be, shall pay or cause
to be paid all such accounts payable and claims forthwith upon the
commencement of proceedings to foreclose any Lien which is attached
as security therefor, unless such foreclosure is stayed by the
filing of an appropriate bond in a manner reasonably satisfactory
to the Lender.
4.06. Corporate
Existence . Borrower will, and will cause each Subsidiary to,
do all things necessary to (i) preserve and keep in full force and
effect at all times its corporate or other existence and all
permits, licenses, franchises and other rights material to its
business, be duly
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qualified to do business and be in good
standing in all jurisdictions where the nature of its business or
its ownership of Property requires such qualification except for
those jurisdictions in which the failure to qualify or be in good
standing could not reasonably be expected to have a Material
Adverse Effect.
4.07. Maintenance of
Property . Borrower will, and will cause each Subsidiary
to,
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