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EXHIBIT 10.17
EXECUTION COPY
REVOLVING CREDIT LOAN AGREEMENT
dated as of November 21, 2003 by and among
HARVARD BIOSCIENCE, INC .
(the “ Borrower ”),
THE LENDERS THAT ARE SIGNATORIES HERETO
(the “ Lenders ”),
and BROWN BROTHERS HARRIMAN & CO.
(the “ Agent ”)
TABLE OF CONTENTS
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Exhibit A - Compliance Certificate Exhibit B - Revolving Credit Note Exhibit C - Pro-forma Compliance Certificate Exhibit D - Solvency Certificate Exhibit E - Borrowing Request
Schedule 1.1 - Commitments Schedule 3.2 - Subsidiaries Schedule 3.8 - Indebtedness, Liens and Investments, etc. Schedule 3.9 - Real Estate Leases Schedule 3.10 - Litigation Schedule 3.13 - Eligible Inventory Schedule 3.16 - ERISA Schedule 3.18 - Hazardous Material Schedule 3.21 - Trade and Other Names Schedule 3.24 - Depository and Other Accounts Schedule 3.26 - Insurance Policies Schedule 3.27 - Employment and Labor Agreements Schedule 4.1(e) - Termination of Financing Statements
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REVOLVING CREDIT LOAN AGREEMENT dated as of November 21, 2003 by and among Harvard Bioscience, Inc., a Delaware corporation (the “ Borrower ”) and the Lenders from time to time party hereto, including Brown Brothers Harriman & Co. (both in its capacity as a “ Lender ” and in its capacity as “ Agent ” for itself and the other Lenders), and Fleet National Bank (as a “Lender” and, collectively with Brown Brothers Harriman & Co. the “Lenders”). Certain other terms used herein are defined in Section 2 (LIBOR Provisions) and in Section 9.
For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower and the Lenders hereby agree as follows:
Section 1. Amount and Terms of the Credit .1.1. Recitals ; Maximum Line Commitment . The Borrower wishes to establish a revolving credit facility (the “ Line of Credit ”) with the Lenders in an aggregate principal amount at any one time outstanding not in excess of Twenty Million Dollars ($20,000,000) (the “ Maximum Line Commitment ”), to expire November 21, 2006 (the “ Maturity Date ”).The Lenders, severally in accordance with their respective Commitments set forth on Schedule 1.1 , are willing to establish such Line of Credit, subject to the terms and conditions hereafter set forth.
1.2. Revolving C redit Loans; Reborrowings; Compliance Certificates .(a) Establishment of Line of Credit . Subject to the terms and conditions hereof, and in reliance upon the representations and warranties contained herein, the Lenders hereby establish the Line of Credit in an aggregate principal amount at any one time outstanding not to exceed the Maximum Line Commitment. Under the Line of Credit, subject to the terms and conditions hereof, the Borrower may borrow, from time to time, an aggregate principal amount at any time not in excess of the Maximum Line Commitment. Each such borrowing pursuant to the Line of Credit is herein called a “ Revolving Credit Loan ” or a “ Loan ” and such borrowings are collectively called the “ Revolving Credit Loans ” or the “ Loans ”.(b) Mechanics of Revolving Credit Loans . Each Revolving Credit Loan shall be made by the Lenders, severally in accordance with their respective Commitments and in such amounts (not in excess of the Maximum Line Commitment) as the Borrower shall request. Revolving Credit Loans shall be effected at the principal banking office of the Agent at 40 Water Street, Boston, Massachusetts 02109-3661, and shall be made at such times as the Borrower may request upon one (1) Banking Day’s prior notice to the Agent in the case of any borrowing for which interest is calculated using the Base Rate (collectively, “ Base Rate Loans ”) and three (3) Banking Days’ prior notice in the case of any borrowing for which interest is calculated using the LIBOR Rate (collectively, “LIBOR Portions”). Each borrowing request shall be in the form attached hereto as Exhibit E (the “ Borrowing Request ”). Each Borrowing Request may be sent to the Agent by facsimile. The Lenders will use their best efforts to fund requests for Revolving Credit Loans on the requested Banking Day. In the event that notwithstanding its best efforts, the Lenders are unable to fund a requested Revolving Credit Loan on the requested Banking Day, the Lenders shall have no liability whatsoever for such failure to fund and will fund such Revolving Credit Loan on the next Banking Day. The Lenders shall make each Revolving
Credit Loan hereunder by crediting the amount of such Revolving Credit Loan to the Borrower’s operating account (Account No. 8142333) with the Agent (together with any other account from time to time designated by the Borrower for the purpose of effecting Revolving Credit Loans, the “ Operating Account ”).(c) Reborrowings . The Borrower may, at its option, from time to time prepay all or any portion of the Revolving Credit Loans made from time to time hereunder, subject at all times to payment of any applicable LIBOR Premium, compliance with the provisions of subsection 5.10, and, subject to compliance with subsection 4.3, the Borrower may reborrow from time to time hereunder amounts so paid up to the amount of the Maximum Line Commitment.1.3. Revolving Credit Notes . The Revolving Credit Loans shall be evidenced by revolving credit promissory notes of the Borrower payable to the order of each Lender, in a principal amount equal to each Lender’s Commitment and in the form attached hereto as Exhibit B (the “ Revolving Credit Notes ” or the “ Notes ”).1.4. Intere st; Applicable Margins .(a) The Revolving Credit Notes shall bear interest (computed on the basis of the actual number of days elapsed over a 360-day year) on the unpaid principal amount thereof until paid in full at the rate or rates per annum determined as follows:(i) The per annum rate for any portion of the outstanding principal balance of the Revolving Credit Notes which is not then subject to a LIBOR Option shall be equal to the Applicable Base Rate Margin (as hereinafter defined in subsection 1.4(c)) plus the Base Rate; and(ii) The per annum rate for any LIBOR Portion shall be equal to the Applicable LIBOR Margin (as hereinafter defined in subsection 1.4(c)) plus the LIBOR Rate.(b) Interest on any portion of the Revolving Credit Notes accruing interest based on the Base Rate shall be payable monthly in arrears on the first day of each month, commencing on the first such date next succeeding the date of issuance of the Revolving Credit Notes, and interest on any LIBOR Portion of the Revolving Credit Notes shall be payable on the earlier to occur of (i) the last day of the LIBOR Period applicable to such LIBOR Portion or (ii) the 90th day of such LIBOR Period, and at maturity (whether by acceleration or otherwise). Each change in the rate of interest payable on any portion of the outstanding principal balance of the Revolving Credit Notes which is not then subject to a LIBOR Option shall take effect simultaneously with the corresponding change in the Base Rate. Notwithstanding anything contained herein or in any other Loan Document to the contrary, in no event shall the amount paid or agreed to be paid by the Borrower as interest on the Revolving Credit Loans exceed the highest lawful rate permissible under any law applicable thereto.(c) Applicable Margin . For the purpose of this subsection 1.4, the “ Applicable Margin ” shall be determined as follows:2
(i) subject to the provisions of subparagraph (iii) hereof, from and after the Closing Date, until the first Interest Adjustment Date, and thereafter from and after each Interest Adjustment Date until the next Interest Adjustment Date, the Applicable Margin for Base Rate Revolving Credit Loans (the “ Applicable Base Rate Margin ”) and for Revolving Credit Loans subject to a LIBOR Option (the “ Applicable LIBOR Margin ”) shall be the respective amounts set forth in the following table opposite the applicable ratio of outstanding Total Funded Debt to Adjusted EBITDA:
The Applicable Margin in effect from the Closing Date until the first Interest Adjustment Date shall be 0% (in the case of the Applicable Base Rate Margin) or 2.50% (in the case of the Applicable LIBOR Margin).
(ii) As used herein, the term “ Interest Adjustment Date ” shall mean (A) the first day of the first month after the date on which each of the quarterly compliance certificates (together with quarterly unaudited financial statements for such quarter) required to be delivered under subsection 5.1 (the “ Required Financial Statements ”) with respect to the then most recently ended quarter were due, if the foregoing table indicates an upward adjustment of the Applicable Margin, or (B) the later of such date or the first day of the first month after the date that all of the Required Financial Statements for such quarter shall have been received by the Agent, if the foregoing table indicates a downward adjustment of the Applicable Margin.(iii) The determination of the Applicable Margin hereunder as of any Interest Adjustment Date shall be based on unaudited quarterly financial statements and compliance certificates as provided above, provided , that in the event of any discrepancy between computations based upon any compliance certificates and the related audited financial statements furnished pursuant to subsection 5.1 (the “ Audited Financial Statements ”) the computation based upon the Audited Financial Statements shall govern (retroactive to the most recent Interest Adjustment Date). In the event of a retroactive correction in the determination of the Applicable Margin in favor of the Lenders, the amount of3
interest thereby overdue and payable by the Borrower shall be paid to the Agent for the account of each Lender in accordance with and proportionate to such Lender’s Commitment within five (5) Banking Days after the date of such retroactive correction. Notwithstanding any of the foregoing, upon any upward adjustment of the Applicable Margin, there shall be no subsequent downward adjustment of the Applicable Margin until the first day of the first month after the ratio of outstanding Total Funded Debt to Adjusted EBITDA would result in such downward adjustment as of the end of a subsequent fiscal quarter. Notwithstanding anything to the contrary set forth in this Agreement, no downward adjustment of the Applicable Margin shall occur if, at the time such downward adjustment would otherwise be made, there shall exist any Event of Default, provided that such downward adjustment shall be made on the first day of the first month after the date on which any Event of Default preventing such downward adjustment shall have been cured in accordance with Section 12, assuming that no other Event of Default exists at the time of such downward adjustment.1.5. Fee s .(a) Unused Line Fee . The Borrower shall pay the Agent for the ratable benefit of the Lenders an unused line fee (the “ Unused Line Fee ”) for the period commencing on the Closing Date to and including the Maturity Date, or the earlier date of termination of the Line of Credit hereunder, in an amount equal to the applicable per annum rate set forth below (computed on the basis of the actual number of days elapsed over a 360-day year) of the average daily unused portion of the Maximum Line Commitment. The Unused Line Fee shall be paid quarterly in arrears on the last day of each March, June, September and December of each year, commencing on the first such date next succeeding the Closing Date, and on the date of termination of the Line of Credit.
(b) Changes Affecting Unused Line Fee . If any change in any requirement imposed upon any Lender by any law of the United States of America or by any regulation, order, interpretation, ruling or official directive (whether or not having the force of law) of the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation or any other board or governmental or administrative agency of the United States of America shall impose, increase, modify or deem applicable any reserve, special deposit, assessment or other requirement against the commitment of such Lender hereunder, and the result of the4
foregoing, in the reasonable determination of such Lender, is to impose an increased cost on such Lender that is attributable to the maintaining of the commitment, then the Unused Line Fee payable to such Lender shall be increased on the same basis as such fees are increased for all similar commitments maintained by such Lender, for so long as the increased cost is imposed on such Lender, to the extent reasonably determined by such Lender to be necessary to compensate such Lender for such increased cost. The determination by such Lender of the amount of such cost, if done in good faith, shall, in the absence of manifest error, be conclusive, and at the Borrower’s request such Lender shall demonstrate the basis for such determination.(c) Origination Fee . The Borrower shall pay to the Agent, for the accounts of the Lenders on a pro rata basis, an origination fee (the “ Origination Fee ”) in an aggregate amount of One Hundred Thousand Dollars ($100,000) on the Closing Date. No portion of the Origination Fee paid to the Agent, for the accounts of the Lenders, shall under any circumstances be refunded to the Borrower.(d) Agent Fee . The Borrower shall pay to the Agent (for its own account) on the Closing Date and on each anniversary thereafter during the term of the Agreement an annual fee of Ten Thousand Dollars ($10,000), which shall be fully earned and payable on the Closing Date and on each anniversary of the Closing Date.1.6. Subsidi ary Guaranties and Pledge Agreement .(a) The Notes and all other Obligations of the Borrower hereunder and/or under the other Loan Documents shall be secured by and entitled to the benefits of unconditional payment and performance guaranties from all Subsidiaries of the Borrower organized under the laws of any state in the United States (collectively, the “ US Subsidiaries ” and each a “ US Subsidiary ”). The Subsidiary Guaranties (collectively, the “ Subsidiary Guaranties ”) will be satisfactory in form and substance to the Agent.(b) Subsidiary Pledge Agreements(s) . The Notes and all other Obligations of the Borrower hereunder and/or under the other Loan Documents shall be further secured by and entitled to the benefits of one or more pledge agreements of the Borrower in favor of the Agent (collectively, the “ Pledge Agreement ”) pursuant to which the Borrower will pledge to the Agent sixty-five percent (65%) of the outstanding capital stock or other equity interests held by the Borrower in each of its directly owned Subsidiaries which is not a US Subsidiary (each a “ Foreign Subsidiary ” and collectively, the “ Foreign Subsidiaries ”). Within ten (10) Banking Days after demand by Agent following the occurrence and during the continuance of an Event of Default, Borrower will deliver to the Agent all Pledged Collateral (as defined in the Pledge Agreement) and other instruments (including stock powers) referenced in the Pledge Agreement, and will certify as to the accuracy (as of the date of such delivery) of all information set forth on the Schedules to such Pledge Agreement.1.7. Rese rved .1.8. Default Ra te of Interest . In the event of any Event of Default, including but not limited to the Borrower’s failure to make any payment of principal of or interest on the Notes when due, whether at maturity or at a date fixed for the payment of any installment or
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prepayment thereof or by declaration, acceleration or otherwise, interest on the full outstanding balance of principal and (to the extent permitted by law) interest on the Notes shall, during the continuance of such Event of Default, be payable on demand at a rate per annum equal to two percent (2%) above the rate otherwise applicable to each Note hereunder. Interest shall accrue at such default rate until the Event of Default is cured by the Borrower or waived by the Lenders in accordance with the provisions of Section 12 below.1.9. Notations . Prior to any sale or other disposition of any Note by any Lender, such Lender shall make a notation on such Note (or on a paper annexed thereto) of the unpaid principal amount thereof at the time outstanding, the last date to which interest has been paid thereon and the amount of unpaid interest accrued thereon to the date of such sale or disposition. Upon payment in full of the principal of and interest on the Note, such Note shall be cancelled and returned to the Borrower, provided that the Revolving Credit Note shall not be cancelled or returned so long as the Lender shall be obligated to make Revolving Credit Loans hereunder.1.10. Form an d Terms of Payment . All payments by the Borrower of principal of or interest on the Notes due to the Lenders pursuant to the Loan Documents shall be made as described below. All other payments shall be made to the Agent for the account of each Lender in accordance with and proportionate to such Lender’s Commitment at the address hereinafter set forth in this Agreement (or at such other address as the Agent shall have furnished to the Borrower in writing) and shall be made in immediately available funds free of any counterclaim, set-off or charge. The Borrower hereby authorizes the Agent to charge, on the first Banking Day of each month, the Borrower’s Operating Account or any other deposit accounts from time to time maintained by the Borrower with the Agent for the purpose of effecting payments of principal and interest on the Loans. Any other amounts due to the Lenders from the Borrower under the Loan Documents or otherwise shall be billed to the Borrower. If such amounts are not paid by the date specified in any such bill, the Agent is authorized to effect such payment by charging the Operating Account or any other deposit accounts from time to time maintained by the Borrower with the Agent and giving prompt notice thereof to Borrower. If any payment due to the Agent shall become due on a day which is not a Banking Day, such payment may be made on the next succeeding Banking Day and such extension shall be included in computing interest in connection with such payment. All payments made by Borrower hereunder or under any Note or other Loan Document will be made without setoff, counterclaim, or other defense. Except as required by applicable law, all such payments will be made free and clear of, and without deduction or withholding for, any present or future taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature now or hereafter imposed by any jurisdiction (other than the United States) or by any political subdivision or taxing authority thereof or therein (other than of the United States) with respect to such payments (but excluding, any tax imposed by any jurisdiction or by any political subdivision or taxing authority thereof or therein (i) measured by or based on the net income or net profits of a Lender, or (ii) to the extent that such tax results from a change in the circumstances of the Lender, including a change in the residence, place of organization, or principal place of business of the Lender, or a change in the branch or lending office of the Lender participating in the transactions set forth herein) and all interest, penalties or similar liabilities with respect thereto (all such non-excluded taxes, levies, imposts, duties, fees, assessments or other charges being referred to collectively as “ Taxes ”). If any Taxes are so levied or imposed, Borrower agrees to pay the full amount of such Taxes, and such additional amounts as may be necessary so that every payment of all amounts due under
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this Agreement or under any Note, including any amount paid pursuant to this subsection 1.10 after withholding or deduction for or on account of any Taxes, will not be less than the amount provided for herein; provided , however , that Borrower shall not be required to increase any such amounts payable to Agent or any Lender (i) that is not organized under the laws of the United States, if such Person fails to comply with the other requirements of subsection 16.11, or (ii) if the increase in such amount payable results from Agent’s or such Lender’s own willful misconduct or gross negligence. Borrower will furnish to Agent as promptly as possible after the date the payment of any Taxes is due pursuant to applicable law certified copies of tax receipts evidencing such payment by Borrower.1.11. Pro-forma Co mpliance Certificate . On or before the Closing Date, the Borrower shall deliver to the Agent the Pro-forma Compliance Certificate (the “ Pro-forma Compliance Certificate ”). The Pro-forma Compliance Certificate shall be in the form of the Compliance Certificate attached hereto as Exhibit C , and shall be completed by the Borrower so as to give effect to consummation of this Agreement (including the making of the initial Loans hereunder).1.12. Capital Ad equacy . If after the date of this Agreement, any Lender shall have reasonably determined that the adoption or implementation of any applicable law, rule or regulation regarding capital requirements for banks or bank holding companies, or any change therein (including, without limitation, any change according to a prescribed schedule of increasing requirements, whether or not known on the date of this Agreement), or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by such Lender with any request or directive of any such Person regarding capital adequacy (whether or not having the force of law) has the effect of reducing the return on such Lender’s capital to a level below that which such Lender could have achieved (taking into consideration such Lender’s policies with respect to capital adequacy immediately before such adoption, implementation, change or compliance) but for such adoption, implementation, change or compliance as a consequence of its Commitment to make Loans hereunder by any amount reasonably deemed by such Lender to be material, the Borrower shall pay to such Lender as an additional fee from time to time on demand such amount as such Lender shall have reasonably determined to be necessary to compensate it for such reduction. The determination by such Lender of such amount, if done on the basis of any reasonable averaging and attribution methods, shall in the absence of manifest error be conclusive, and at the Borrower’s request, such Lender shall demonstrate the basis of such determination.1.13. Reserved .1.14. Use of P roceeds . The Borrower will use the proceeds of the Loans as follows: (i) on the Closing Date to repay in full all amounts outstanding under a certain demand promissory note dated March 11, 2003 made by the Borrower in favor of the Agent, in an original principal amount of $6,000,000 (the “ First Demand Note ”) and a second demand promissory note dated October 10, 2003 made by the Borrower in favor of the Agent in an original principal amount of $6,500,000 (the “ Second Demand Note ” and, together with the First Demand Note, the “ Demand Notes ”) and (ii) from and after the Closing Date, the proceeds of the Revolving Credit Loans shall be used to fund Permitted Acquisitions, ongoing working capital needs and other general corporate purposes of the Borrower and its Subsidiaries, including closing costs relating to this
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Agreement. On the Closing Date, the Agent shall return the Demand Notes to the Borrower marked “cancelled”. The Borrower will not, and will not permit any Subsidiary to, directly or indirectly, use any part of such proceeds ( i ) for the purpose of making any Restricted Payment except with the prior written consent of the Agent, ( ii ) for the purpose of purchasing or carrying any margin stock within the meaning of Regulation U (12 CFR Part 221) of the Board of Governors of the Federal Reserve System, or ( iii ) for any other purpose which would violate any provision of this Agreement or of any applicable statute, regulation, order or restriction.Section 2. LIBOR Pr ovisions .2.1. LIBO R Option . Subject to the provisions of this Section 2, the Borrower shall have the right to have the interest on all or any portion of the principal amount of the Revolving Credit Loans based on a LIBOR Rate.2.2. Certain Def initions . As used herein, the following terms have the following respective meanings:Banking Day : (i) when used with respect to the LIBOR Option, a day on which dealings may be effected in deposits of US dollars in the London interbank foreign currency deposits market and on which banks may conduct business in London, England and Boston, Massachusetts, and (ii) when used with respect to the other provisions of this Agreement, any day excluding Saturday and Sunday and excluding any other day which shall be in Boston, Massachusetts, a legal holiday or a day on which banking institutions are authorized by law to close.
Board : the Board of Governors of the Federal Reserve System of the United States.
Legal Requirement : any requirement imposed upon the Agent or any Lender by any law of the United States of America or the United Kingdom or by any regulation, order, interpretation, ruling or official directive (whether or not having the force of law) of the Board, the Bank of England or any other board, central bank or governmental or administrative agency, institution or authority of the United States of America, the United Kingdom or any political subdivision of either thereof.
LIBOR Option : the option granted pursuant to this Section 2 to have the interest on all or any portion of the principal amount of the Loans based on a LIBOR Rate.
LIBOR Period : any period, selected as provided below in this Section 2, of 30, 60 or 90 days, commencing on any Banking Day; provided , however, that no LIBOR Period with respect to any LIBOR Portion shall extend beyond the Maturity Date. At the commencement of the LIBOR Period, the Agent shall notify the Borrower of the termination date of such LIBOR Period. If any LIBOR Period so selected would otherwise end on a date which is not a Banking Day, such LIBOR Period shall instead end on the next preceding or succeeding Banking Day as determined by the Agent in accordance with the then current banking practice in London. Each determination by the Agent of any LIBOR Period shall, in the absence of manifest error, be conclusive, and at the Borrower’s request the Agent shall demonstrate the basis for such determination.
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LIBOR Portion : that portion of the Revolving Credit Loans specified in a LIBOR Request (including any portion of such Revolving Credit Loans which are being borrowed by the Borrower concurrently with such LIBOR Request) which is not less than $100,000 and is an integral multiple of $100,000, and which, as of the date of the LIBOR Request specifying such LIBOR Portion, has met the conditions for basing interest on the LIBOR Rate in subsection 2.3 hereof and the LIBOR Period of which has commenced and not terminated.
LIBOR Premium : With respect to the prepayment of any LIBOR Portion of any Revolving Credit Loans prior to the end of the applicable LIBOR Period, an amount equal to the product of (i) the excess, if any, of the original LIBOR Rate on the amount so prepaid over the LIBOR Rate of interest on Eurodollar deposits in effect on the date of such prepayment and having a maturity date approximating the last Banking Day of the applicable LIBOR Period, multiplied by (ii) the principal amount so prepaid, multiplied by (iii) a fraction, the numerator of which is the number of days remaining in the related LIBOR Period and the denominator of which is 360. If the result of clause (i) is less than or equal to zero, there shall be no LIBOR Premium.
LIBOR Rate : with respect to any LIBOR Portion for the related LIBOR Period, an interest rate per annum (rounded upwards, if necessary, to the next higher 1/8 of 1%) equal to the product of (a) the Base LIBOR Rate (as hereinafter defined) and (b) Statutory Reserves. For purposes of this definition, the term “ Base LIBOR Rate ” shall mean the rate (rounded to the nearest 1/8 of 1% or, if there is no nearest 1/8 of 1%, the next higher 1/8 of 1%) at which deposits of US dollars approximately equal in principal amount to the LIBOR Portion and for a maturity equal to the applicable LIBOR Period are offered to the Agent in the London interbank foreign currency deposits market at approximately 11:00 a.m., London time (or, if such rate is not then offered to the Agent, at the rate (rounded as provided above) at which deposits of US dollars approximately equal in principal amount to the LIBOR Portion and for a maturity equal to the applicable LIBOR Period are offered on the Telerate (page 3750) or any successor page), three (3) Banking Days prior to the commencement of such LIBOR Period, for delivery on the first day of such LIBOR Period. Each determination by the Agent of any LIBOR Rate shall, in the absence of manifest error, be conclusive, and at the Borrower’s request, the Agent shall demonstrate the basis for such determination. Promptly upon determining the LIBOR Rate for an applicable LIBOR Period, the Agent shall give written notice of such LIBOR Rate to the Borrower and, if requested by the Borrower, shall provide reasonable details demonstrating the basis for such LIBOR Rate determination.
LIBOR Request : notice in writing (or by telephonic communication confirmed by telex, telecopy or other facsimile transmission on the same day as the telephone request) from the Borrower to the Agent requesting that interest on a LIBOR Portion be based on the LIBOR Rate, specifying: (i) the first day of the LIBOR Period, (ii) the length of the LIBOR Period consistent with the definition of that term, and (iii) a dollar amount of the LIBOR Portion consistent with the definition of that term.
Statutory Reserves : a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including, without limitation, any marginal, special, emergency or supplemental reserves), expressed as a decimal, established by the Board and any other
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banking authority to which any Lender is subject for Eurocurrency Liabilities (as defined in Regulation D of the Board). Such reserve percentages shall include, without limitation, those imposed under such Regulation D. LIBOR Portions of the Revolving Credit Loans shall be deemed to constitute Eurocurrency Liabilities and as such shall be deemed to be subject to such reserve requirements without benefit of or credit for proration, exceptions or offsets which may be available from time to time to the Lenders under such Regulation D. Statutory Reserves shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.
LIBOR Tax : in relation to any LIBOR Portion and the applicable LIBOR Rate, any tax, levy, impost, duty, deduction, withholding or other charges of whatever nature required by any Legal Requirement (i) to be paid by the Lenders and/or (ii) to be withheld or deducted from any payment otherwise required hereby to be made by the Borrower to the Lenders, provided that the term “ LIBOR Tax ” shall not include any taxes imposed upon the net income of the Lenders by the United States of America, the United Kingdom or any political subdivision thereof.
2.3. Conditions for Basi ng Interest on the LIBOR Rate . Upon the condition that:(a) The Agent shall have received a LIBOR Request from the Borrower, at least three (3) Banking Days prior to the first day of the LIBOR Period requested;(b) There shall have occurred no change in applicable law which would make it unlawful for the Agent to obtain deposits of US dollars in the London interbank foreign currency deposits market;(c) As of the date of the LIBOR Request and the first day of the LIBOR Period, there shall exist no Default or Event of Default; and(d) The Agent shall not have determined in good faith that it is unable to determine the LIBOR Rate in respect of the requested LIBOR Period or that it is unable to obtain deposits of US dollars in the London interbank foreign currency deposits market in the applicable amounts and for the requested LIBOR Period; thenthe interest on the LIBOR Portion specified in the LIBOR Request during the LIBOR Period specified in the LIBOR Request will be based on the applicable LIBOR Rate.
2.4. Indemnification for Funding and Other Losses . Each LIBOR Request shall be irrevocable and binding on the Borrower, provided that the Borrower may specify in any such LIBOR Request a maximum LIBOR Rate which they will accept for the related LIBOR Period and the LIBOR Option elected in such LIBOR Request shall not become effective if the applicable LIBOR Rate determined by the Agent shall exceed such specified maximum. Without limiting the generality of subsection 2.5, the Borrower hereby agrees to indemnify the Agent and Lenders against any loss or expense incurred by the Agent or any Lender as a result of any failure on the part of the Borrower (so long as such failure is through no fault of the Agent or Lenders) to fulfill, on or before the date specified in any LIBOR Request, the applicable conditions set forth in this Agreement, including, without limitation, any loss (including loss of anticipated profits) or expense incurred by reason of the liquidation of redeployment of deposits or other funds acquired by the Agent or any Lender to fund or maintain the requested LIBOR
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Portion when interest on such LIBOR Portion, as a result of such failure on the part of the Borrower, is not based on the applicable LIBOR Rate for the requested LIBOR Period.2.5. Change in Applicable Laws, Regulations, etc . If any Legal Requirement shall make it unlawful for any Lender to fund through the purchase of US dollar deposits any LIBOR Portion, or otherwise to give effect to its obligations as contemplated hereby, or shall impose on any Lender any costs based on or measured by the excess above a specified level of the amount of a category of deposits or other liabilities of any Lender which includes deposits by reference to which the LIBOR Rate is determined as provided herein or a category of extensions of credit or other assets of any Lender which includes any LIBOR Portion, or shall impose on any Lender any restrictions on the amount of such a category of liabilities or assets which such Lender may hold, (a) the Lenders by notice thereof to the Borrower may terminate the LIBOR Option, (b) any LIBOR Portion subject thereto shall immediately bear interest thereafter at the rate provided for (with respect to Revolving Credit Loans not subject to a LIBOR Option) in subsection 1.4, and (c) the Borrower shall indemnify the Lenders against any loss, penalty or expense incurred by the Lenders by reason of the liquidation or redeployment of deposits or other funds acquired by the Lenders, to fund or maintain such LIBOR Portion if and to the extent such loss, penalty or expense is caused by the nature of the business of the Borrower and its Subsidiaries or the locations and jurisdictions where the Borrower or its Subsidiaries are operating. Promptly after becoming aware of the occurrence of any event or condition described in this subsection 2.5, the affected Lender(s) shall give written notice thereof to the Borrower and shall provide reasonable details setting fourth the basis for its determination and such other information as shall be reasonably requested by Borrower to confirm the affected Lenders’ determination and computations. A certificate of an officer of such Lender setting forth the amount of such loss, penalty or expense, and the basis therefor shall, in the absence of manifest error, be conclusive.2.6. LIBOR T axes . It is the understanding of the Borrower and the Lenders that the Lenders shall receive payments of amounts of principal of and interest on the Notes (including but not limited to interest with respect to the LIBOR Portions from time to time subject to a LIBOR Option) free and clear of, and without deduction for, any LIBOR Taxes. If (a) any Lender shall be subject to any such LIBOR Tax in respect of any such LIBOR Portion or part thereof or (b) the Borrower shall be required to withhold or deduct any such LIBOR Tax from any such amount, and (c) such LIBOR Tax shall not have existed as of the date of the applicable LIBOR Request, the LIBOR Rate applicable to such LIBOR Portion shall be adjusted by any such Lender to reflect all additional costs incurred by such Lender in connection with the payment by such Lender or the withholding by the Borrower of such LIBOR Tax and the Borrower shall provide each such Lender with a statement detailing the amount of any such LIBOR Tax actually paid by the Borrower. Determination by any affected Lender of the amount of such costs shall, in the absence of manifest error, be conclusive. Promptly upon obtaining knowledge of any such circumstance set forth above, the Lender shall give written notice of such determination to the Borrower and shall provide reasonable details and facts demonstrating the basis for its determination and shall provide such other information as shall be reasonably requested by the Borrower to permit the Borrower to confirm Lender’s computations and determination. If after any such adjustment, any part of any LIBOR Tax paid by a Lender is subsequently recovered by such Lender, the Lender shall reimburse the Borrower to the extent of the amount so recovered. A certificate of an officer of the Lender setting forth the amount of
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such recovery and the basis therefor shall, in the absence of manifest error, be conclusive, and at the Borrower’s request, the Lender shall demonstrate the basis of such determination.Section 3. Representations and Warranties .In order to induce the Lenders to enter into this Agreement and to make the Loans provided for hereunder, the Borrower makes the following representations and warranties, which shall survive the execution and delivery hereof and of the Notes, and which shall be re-made by the Borrower each time the Borrower submits a quarterly Compliance Certificate pursuant to subsection 5.1.
3.1. Organization , Standing, etc. of the Borrower . The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and has all requisite corporate power and authority to own and operate its properties, to carry on its business as now conducted, to enter into this Agreement, the Loan Documents to which it is a party and all other documents to be executed by it in connection with the transactions contemplated hereby, to execute the Pledge Agreement and deliver the Pledged Collateral thereunder, to issue the Notes, and to carry out the terms hereof and thereof.3.2. Sub sidiaries . Schedule 3.2 attached hereto correctly sets forth as to each Subsidiary, its name, the jurisdiction of its incorporation or other formation, the number of shares of its capital stock or other beneficial interest of each class outstanding and the number of such outstanding shares or other beneficial interests owned by the Borrower and/or its Subsidiaries. Each such Subsidiary is a corporation or other entity duly organized, validly existing and, in good standing under the laws of the jurisdiction of its incorporation or other formation, and has all requisite power and authority to own and operate its properties, to carry on its business as now conducted and to enter into such of the Loan Documents, if any, to be executed by it in connection with the transactions contemplated hereby. All of the outstanding capital stock or other beneficial interests of each Subsidiary is validly issued, fully-paid and nonassessable, and is owned by the Borrower or its Subsidiaries as specified in Schedule 3.2 , in each case free of any mortgage, pledge, lien, security interest, charge, option or other encumbrance other than Permitted Liens. The Borrower or a Subsidiary of Borrower own all of the outstanding capital stock or other beneficial interest of each of its Subsidiaries which is not a US Subsidiary free and clear of any mortgage, pledge, lien, security interest, charge, option or other encumbrance.3.3. Qualifica tion . The Borrower and its Subsidiaries are duly qualified or licensed and in good standing as foreign corporations or other entities duly authorized to do business in each jurisdiction in which the character of the properties owned or the nature of the activities conducted makes such qualification or licensing necessary, except where the failure to be so qualified or licensed is not reasonably likely to have a Material Adverse Effect.3.4. Financial Inf ormation; Disclosure; Solvency Certificate; Opening Balance Sheet; Projections, etc .(a) The Borrower has furnished the Lenders with the financial statements and other reports requested by the Agent, and has furnished the Pro-forma Compliance Certificate
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referred to in subsection 1.11, the Opening Balance Sheet and the Solvency Certificate referred to below in this subsection 3.4. Such financial statements and Opening Balance Sheet have been or will be prepared in accordance with GAAP applied on a consistent basis and such financial statements and Opening Balance Sheet fairly present in all material respects the financial position and results of operations of the Borrower and its Subsidiaries on a consolidated basis as of the dates and for the periods indicated. Since December 31, 2002, there has not occurred any event, circumstance or condition which has had or is reasonably likely to have a Material Adverse Effect.(b) Neither this Agreement, the Opening Balance Sheet, the Solvency Certificate, nor any financial statements, reports or other documents or certificates furnished to the Lenders by the Borrower in connection with the transactions contemplated hereby or thereby contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements herein or therein contained not misleading, in light of the circumstances under which they are made, except to the extent that such financial statements, reports or other documents or certificates expressly relate to an earlier date or are affected by the consummation of the transactions contemplated by this Agreement.(c) Without limiting the scope of the Solvency Certificate in the form attached hereto as Exhibit D (the “ Solvency Certificate ”) delivered by the Borrower to the Lenders on the Closing Date, none of the Loans will render the Borrower unable to pay its debts as they become due; the Borrower is not contemplating either the filing of a petition by it under any state or federal bankruptcy or insolvency laws or the liquidation of all or a major portion of its property; and the Borrower does not have any knowledge of any person contemplating the filing of any such petition against it. The Borrower is solvent (within the meanings of all applicable fraudulent transfer or fraudulent conveyance statutes and acts, the federal bankruptcy code and all other applicable laws) and has assets having a fair value in excess of the amount required to pay its probable liabilities on its existing debts (including the Loans and contingent debts) as they become absolute and matured, and has access to adequate capital for the conduct of its business and the ability to pay its debts from time to time incurred therewith as such debts mature.3.5. Licenses ; Franchises, etc . The Borrower and its Subsidiaries have all material authorizations, licenses, permits, approvals and franchises of any public or governmental regulatory body necessary for the conduct of the business of the Borrower and its Subsidiaries as now conducted except where the failure to have the same is not reasonably likely to have a Material Adverse Effect (such authorizations, licenses, permits and franchises, together with any extensions or renewals thereof, being herein sometimes referred to collectively as the “ Licenses ”). All of such Licenses are validly issued and in full force and effect and the Borrower and its Subsidiaries have fulfilled and performed all of their obligations with respect thereto and have full power and authority to operate thereunder.3.6. Material A greements . The Borrower’s most recent form 10-K filed with the SEC, as supplemented by the Borrower’s forms 10-Q and 8-K filed with the SEC thereafter, accurately and completely lists each material agreement and instrument required to be disclosed therein, including but not limited to any material leases, employment agreements or other agreements with management of the Borrower or any Subsidiary, stockholder agreements and all
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other material agreements required to be disclosed therein. Each of the Borrower and its Subsidiaries (as applicable) and, to the best of the Borrower’s knowledge, all third parties to such material agreements, are in material compliance with the terms thereof, and no default or event of default by the Borrower or, to the Borrower’s knowledge, any other party thereto, exists thereunder.3.7. Tax Return s and Payments . The Borrower and its Subsidiaries have filed all tax returns required by law to be filed and have paid all taxes, assessments and other governmental charges levied upon any of their respective properties, assets, income or franchises, other than those (i) not yet delinquent, (ii) not material in aggregate amount, (iii) being or about to be contested as provided in subsection 5.4 and/or (iv) not reasonably likely to have a Material Adverse Effect. The charges, accruals and reserves on the books of the Borrower and its Subsidiaries in respect of their respective taxes are adequate in the opinion of the Borrower, and the Borrower knows of no unpaid assessment for additional taxes or of any basis therefor other than those which in the aggregate, are not reasonably likely to have a Material Adverse Effect.3.8. Indebt edness, Liens and Investments, etc . Other than intercompany Indebtedness, Schedule 3.8 attached hereto correctly describes, as of the date or dates indicated therein, (a) all outstanding Indebtedness of the Borrower and its Subsidiaries in respect of borrowed money, Capital Leases and the deferred purchase price of property; (b) all existing mortgages, liens and security interests in respect of any property or assets of the Borrower or its Subsidiaries; (c) all outstanding investments, loans and advances of the Borrower and its Subsidiaries; and (d) all existing guarantees by the Borrower and its Subsidiaries.3.9. Real Estat e Owned and Leased; Title to Properties; Liens . The Borrower and its Subsidiaries have good and marketable title to or leasehold interests in all of their respective properties and assets, and none of such properties or assets is subject to any mortgage, pledge, lien, security interest, charge or encumbrance except the existing mortgages and security interests, if any, referred to in Schedule 3.8 attached hereto and Permitted Liens. The real property owned by the Borrower and/or its Subsidiaries and the real property leased by the Borrower and/or its Subsidiaries (the “ Real Estate Leases ”) are listed on Schedule 3.9 hereto. The Borrower and its Subsidiaries enjoy quiet possession under all Real Estate Leases to which they are parties as lessees, and all of such Real Estate Leases are valid, subsisting and in full force and effect.3.10. Litigat ion, etc . Except as may be set forth on Schedule 3.10 , there is no action, proceeding or investigation pending or threatened (or any basis therefor known to the Borrower) (i) which questions the validity of this Agreement, the Notes, the Loan Documents, or the other documents executed in connection herewith or therewith, or any action taken or to be taken pursuant hereto or thereto, or (ii) which if adversely determined against the Borrower, would result in liability of the Borrower in an amount which exceeds $250,000.3.11. Authorizati on; Compliance with Other Instruments . The execution, delivery and performance of this Agreement, the Notes and the other Loan Documents, have been duly authorized by all necessary action on the part of the Borrower and its Subsidiaries party thereto, will not result in any violation of or be in conflict with or constitute a default under any term of the charter or by-laws of the Borrower or any Subsidiary party to any of the Loan Documents, or
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of any material agreement, or any material instrument, judgment, decree, order, statute, rule or governmental regulation applicable to the Borrower or any Subsidiary party to any of the Loan Documents or to which the Borrower or any such Subsidiary is a party, as the case may be, or result in the creation of any mortgage, lien, charge or encumbrance upon any of the properties or assets of the Borrower or any such Subsidiary pursuant to any such term, other than the liens created under the Loan Documents. No consent of stockholders of the Borrower is necessary in order to authorize the execution, delivery or performance of this Agreement or the Loan Documents, or the issuance of the Notes other than those consents which have been obtained as of the Closing Date. Neither the Borrower nor any Subsidiary is in violation of any term of its charter or by-laws, or of any material term of any material agreement or instrument to which it is a party, or, of any judgment, decree, order, statute, rule or governmental regulation applicable to it which is reasonably likely to have a Material Adverse Effect.3.12. Eligible Accounts . The Eligible Accounts included the calculation of minimum Working Capital are bona fide existing payment obligations of Account Debtors created by the sale or lease and delivery of Inventory or the rendition of services to such Account Debtors in the ordinary course of Borrower’s and/or its Subsidiaries’ business, owed to Borrower and/or such Subsidiaries without defenses, disputes, offsets, counterclaims, or rights of return or cancellation (other than normal return policies) known to the Borrower or such Subsidiary. As to each Account that is identified by Borrower as an Eligible Account in a Compliance Certificate submitted to Agent, such Account is not excluded as ineligible by virtue of one or more of the excluding criteria set forth in the definition of Eligible Accounts.3.13. Eligible I nventory . All Eligible Inventory included in the calculation of minimum Working Capital is of good and merchantable quality. As to each item of Inventory that is identified by Borrower as Eligible Inventory in a Compliance Certificate submitted to Agent, such Inventory is located at one of the locations set forth on Schedule 3.13 or at such other location identified in writing by Borrower to Agent, or is in transit from one such location to another such location and is not otherwise excluded as ineligible by virtue of one or more of the excluding criteria set forth in the definition of Eligible Inventory.3.14. Governmenta l and Other Third Party Consents . Except for such filings or notices which have already been made or are being made on or prior to the Closing Date, none of the Borrower or any Subsidiary which is a party to any of the Loan Documents is required to obtain any order, consent, approval or authorization of (collectively, the “ Consents ”), or required to make any declaration or filing with, any governmental unit or other regulatory agency or authority (other than the SEC) in connection with (a) the execution and delivery of this Agreement and the issuance and delivery of the Notes pursuant hereto, (b) the execution and delivery of the Loan Documents, (c) the exercise by the Agent of any rights and remedies following an Event of Default (other than the filing of UCC financing statements) or (d) for the purpose of maintaining in full force and effect each of the Licenses and enabling the Borrower to operate thereunder. To the Borrower’s knowledge, no appeal, reconsideration, or rehearing or other review of any Consent has been taken or instituted.3.15. Regulatio n U, etc . Neither the Borrower nor any Subsidiary owns or has any present intention of acquiring any margin stock within the meaning of Regulation U (12 CFR Part 221) of the Board of Governors of the Federal Reserve System (herein called “ margin
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stock ”). None of the proceeds of the Loans will be used, directly or indirectly, by the Borrower or any Subsidiary for the purpose of purchasing or carrying, or for the purpose of reducing or retiring any indebtedness which was originally incurred to purchase or carry, any margin stock or for any other purpose which might constitute the transactions contemplated hereby a “ purpose credit ” within the meaning of said Regulation U, or cause this Agreement to violate Regulation U, Regulation T, Regulation X, or any other regulation of the Board of Governors of the Federal Reserve System or the Securities Exchange Act of 1934, as amended. If requested by the Agent, the Borrower will promptly furnish the Agent with a statement in conformity with the requirements of Federal Reserve Form U-1 referred to in said Regulation U.3.16. Employee Retirement Income Security Act of 1974 . Schedule 3.16 attached hereto sets forth a true, correct and complete list of all employee benefit plans and arrangements of the Borrower, including, without limitation, all pension, profit sharing or similar plans providing for a program of deferred compensation to any employee or any plan subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”). The terms used in this subsection 3.16 and in subsection 5.1 and subsection 6.10 of this Agreement shall have the meanings assigned thereto in the applicable provisions of ERISA and the Internal Revenue Code of 1986, as amended (the “ IRC ”), and the term “ Affiliated Company ” shall mean the Borrower and all corporations, partnerships, trades or businesses (whether or not incorporated) which constitute a controlled group of corporations with the Borrower, a group of affiliated service group or other affiliated group, within the meaning of Section 414(b), Section 414(c), Section 414(m) or Section 414(o), respectively, of the IRC, or Section 4001 of ERISA. The Borrower and each employee benefit plan sponsored by an Affiliated Company and, to the best of the Borrower’s knowledge, each multi-employer plan (as defined in Section 4001(a)(3) of ERISA) to which any Affiliated Company makes contributions, are in material compliance with applicable provisions of ERISA and the IRC. No Affiliated Company has incurred any material liability to the Pension Benefit Guaranty Corporation (“ PBGC ”) or any employee benefit plan on account of any failure to meet the contribution requirements of any such plan, minimum funding requirements or prohibited transactions under ERISA or the IRC, termination of a single employer plan, partial or complete withdrawal from a multi-employer plan, or the insolvency, reorganization or termination of any multi-employer plan, and no event has occurred or conditions exist which present a material risk that any Affiliated Company will incur any material liability on account of any of the foregoing circumstances. The consummation of the transactions contemplated by this Agreement will not result in any prohibited transaction under ERISA or the IRC for which an exemption is not available.3.17. Reser ved .3.18. Environm ental Matters . Neither the Borrower nor any US Subsidiary has ever caused or permitted any Hazardous Material to be disposed of on or under any real property owned, leased or operated by the Borrower and/or any US Subsidiary in material violation of applicable law and no such real property has ever been used (by the Borrower and/or any US Subsidiary or, to the Borrower’s knowledge, by any other Person) as (a) a disposal site or permanent storage site for any Hazardous Material or (b) a temporary storage site for any Hazardous Material, in each instance in material violation of applicable law. Except as may be set forth on Schedule 3.18 , the Borrower has been issued and is in compliance with all material permits, licenses, approvals and other authorizations relating to environmental matters and
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necessary or desirable for its business, and has filed all notifications and reports relating to chemical substances, air emissions, underground storage tanks, effluent discharges and Hazardous Material waste storage, treatment and disposal required in connection with the operation of its businesses. All Hazardous Materials used or generated by the Borrower or any US Subsidiary or any business merged into or otherwise acquired by the Borrower or any US Subsidiary have been generated, accumulated, stored, transported, treated, recycled and disposed of in compliance with all applicable laws and regulations. Neither the Borrower nor any of its US Subsidiaries has any liabilities with respect to Hazardous Materials, and to the knowledge of the Borrower, no facts or circumstances exist which could give rise to liabilities with respect to the violation (whether by the Borrower or any other Person) of any Environmental Law and/or Hazardous Materials, which is reasonably likely to have a Material Adverse Effect.3.19. Paten ts, Trademarks, Intellectual Property . The Borrower owns or otherwise has rights to use all of its material Proprietary Rights and such Proprietary Rights are adequate for the conduct of its business as now conducted, without any known conflict with the rights or claimed rights of others.3.20. Chief E xecutive Offices Principal Place of Business . The chief executive office and principal place of business of the Borrower is, and at all times since April, 1997, has been, located at 84 October Hill Road, Holliston, Massachusetts 01746. The Borrower shall not make any change in the location of its chief executive office without giving the Agent at least thirty (30) days’ prior written notice thereof.3.21. Trade and Other Names . The exact legal name of the Borrower is Harvard Bioscience, Inc. Except as set forth on Schedule 3.21 attached hereto, during the last five years ending on the date hereof, the Borrower has not conducted any business under any other name (including any d/b/a, trade or assumed name).3.22. Securiti es Laws . The Borrower is not a “ holding company ” or a “ subsidiary company ” of a “ holding company ”, or an “ affiliate ” of a “ holding company ” or of a “ subsidiary company ” of a “ holding company ”, as such terms are defined in the Public Utility Holding Company Act of 1935. The Borrower is not an “ investment company ” or a company “ controlled ” by an “ investment company ” within the meaning of the Investment Company Act of 1940.3.23. Loan Doc uments . The representations and warranties of the Borrower and its Subsidiaries contained herein and in the other Loan Documents, are true and correct in all material respects, and the Borrower and its Subsidiaries thereto are in compliance in all material respects with the terms of the Loan Documents to which each is a party.3.24. Depository and Oth er Accounts . Schedule 3.24 attached hereto lists all banks and other financial institutions and depositories at which the Borrower and/or any US Subsidiary maintains (or has caused to be maintained) or will maintain deposit accounts, operating accounts, trust accounts, tax or trust receivable accounts or other accounts of any kind or nature into which funds of the Borrower and/or each US Subsidiary (including funds in which the Borrower or any US Subsidiary maintains a contingent or residual interest) are from time to time deposited, and such Schedule 3.24 correctly identifies the name and address of each depository, the name in
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which each account is held, the purpose of the account and the complete account number. The Borrower will notify the Agent simultaneously with the submission of the quarterly Compliance Certificate, and thereby supplement such Schedule 3.24 as new accounts are established by the Borrower and/or any US Subsidiary. The Borrower hereby authorizes the Agent to attach such supplements to Schedule 3.24 from time to time delivered by the Borrower to Schedule 3.24 attached hereto.3.25. Burdensome Obligations; Future Expenditures . To the Borrower’s knowledge, neither the Borrower nor any of its Subsidiaries is party to or bound by any agreement (including but not limited to the Material Agreements listed on the Borrower’s most recent form 10-K filed with the SEC, as supplemented by the Borrower’s forms 10-Q and 8-K filed with the SEC thereafter), instrument, deed or lease or is subject to any charter, by-law or other restriction, commitment or requirement which, in the opinion of the management of such Person, is so unusual or burdensome as in the foreseeable future to have or cause or create a material risk of having or causing a Material Adverse Effect. Neither the Borrower nor any of its Subsidiaries anticipate that the future expenditures, if any, by the Borrower and its Subsidiaries needed to meet the provisions of any federal, state or foreign governmental statutes, orders, rules or regulations will be so burdensome as to have or cause, or create a material risk of having or causing, a Material Adverse Effect.3.26. Insuran ce Policies . Schedule 3.26 lists all material insurance policies of any kind or nature maintained by or on behalf of the Borrower, as well as a summary of the principal terms of such insurance. All such insurance policies, together with any insurance policies obtained by the Borrower after the Closing Date, are or will be in full force and effect and provide coverage of such risks and in such amounts as is customarily maintained for businesses of the scope and size of the Borrower.3.27. Employmen t and Labor Agreements . Schedule 3.27 accurately and completely describes each employment agreement, agreement for the payment of deferred compensation, severance or so-called change in control agreement covering executive officers of the Borrower, as well as all collective bargaining agreements or other labor agreements covering any employees of the Borrower.Section 4. Conditions of Closing/Lending .4.1. Conditions Precedent to Initial Loan on the Closing Date . The obligation of the Agent and Lenders to execute this Agreement and the obligations of the Lenders to make the initial Loan hereunder is subject to the conditions set forth below:(a) This Agreement, all related Schedules, the Pledge Agreement, the Subsidiary Guaranties, and such other Loan Documents, instruments, schedules, exhibits or certificates as shall be designated by the Agent shall have been executed by the Borrower and the other parties thereto and delivered to the Agent;(b) The Pro-forma Compliance Certificate, based on the Borrower’s September 30, 2003 financial statements shall have been delivered to the Agent;
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(c) The Agent shall have received all other information and documents which the Agent or its counsel reasonably required in connection with the transactions contemplated by this Agreement, such information and documents where appropriate to be certified by the proper officers of the Borrower, its Subsidiaries or governmental authorities.(d) The Agent shall have received from the Borrower a Solvency Certificate, which shall be satisfactory in all respects in the sole discretion of the Agent;(e) The Agent shall have received satisfactory evidence that the Borrower is taking all appropriate steps to terminate the financing statements identified on Schedule 4.1(e) hereto;(f) The Agent shall have received the favorable opinion of Goodwin Procter LLP in form and substance reasonably satisfactory to the Agent and dated as of the Closing Date;(g) The Agent shall have received a completed Compliance Certificate, current through the immediately preceding quarter-end showing the Working Capital in an amount equal to or greater than the Revolving Credit Loans requested on the Closing Date;(h) The Borrower shall have paid in full all invoiced costs and expenses (including reasonable attorneys’ fees) incurred on behalf of the Agent in connection with this Agreement, which amounts may be paid with the proceeds of the initial Revolving Credit Loan;(i) The Borrower shall have paid to the Agent the full amount of the Origination Fee set forth in subsection 1.5(c) and the Agent Fee set forth in subsection 1.5(d) of this Agreement, which amounts may be paid with the proceeds of the initial Revolving Credit Loan;(j) The Agent shall have received a certificate dated as of the Closing Date, signed by the Chief Executive Officer, Chief Financial Officer or such other executive officer of Borrower as may be reasonably acceptable to Agent, certifying that (i) the conditions precedent specified in this subsection 4.1 have been fulfilled; (ii) the representations and warranties of the Borrower and its Subsidiaries contained in this Agreement and in each of the other Loan Documents and the schedules to this Agreement delivered as of the Closing Date, are true, complete and correct as of the Closing Date; (iii) no event or condition has occurred which is reasonably likely to have a Material Adverse Effect; and (iv) as of the Closing Date there is no Default or Event of Default under this Agreement;(k) The Agent shall have received evidence of insurance coverage for the Borrower and each US Subsidiary in compliance with subsection 5.3.Without limiting any other provision of this Agreement, each of the opinions, agreements, certificates, and other conditions precedent listed above must be reasonably satisfactory in all respects to the Agent and its counsel in order for such condition precedent to be deemed satisfied.
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4.2. Reserve d .4.3. Conditions P recedent to Loans on and After the Closing Date .(a) No Default; Representations and Warranties, etc . On the Closing Date and on the effective date of each Compliance Certificate submitted by the Borrower hereunder: (i) the representations and warranties of the Borrower and its Subsidiaries contained in this Agreement and in each of the other Loan Documents shall be true and correct in all material respects on and as of such dates as if they had been made on such dates (except to the extent that such representations and warranties expressly relate to an earlier date or are affected by the consummation of transactions permitted under this Agreement and except that references to financial statements shall be deemed to refer to the most recent audited financial statements delivered to the Agent pursuant to Section 5.1(a) hereof); (ii) the Borrower shall be in compliance in all material respects with all of the terms and provisions set forth herein on its part to be observed or performed on or prior to such dates; (iii) after giving effect to any Loans to be made on such dates, no Default or Event of Default shall have occurred and be continuing; and (iv) since the date of the most recently delivered audited financial statements of the Borrower and its Subsidiaries, no event or condition shall have occurred or exist which is reasonably likely to have a Material Adverse Effect. Each request for a Loan hereunder shall constitute a representation and warranty by the Borrower to the Agent and Lenders that all of the conditions specified in this subsection 4.3(a), have been and continue to be satisfied in all material respects as of the date of each such Loan (except the Borrower and its Subsidiaries shall only be required to confirm their representations and warranties on a quarterly basis in connection with the delivery of a Compliance Certificate). As of the date of each request for a Loan hereunder, the Borrower shall not have knowledge that that it is in violation of subsection 7.3 hereof. The Lenders hereby agree that the Borrower shall be permitted, from time to time, to supplement each of the Schedules provided to the Agent in connection with the execution and delivery of this Agreement and the other Loan Documents with respect to any matter arising after the Closing Date which is not otherwise prohibited by the terms of this Agreement (or with respect to which the Agent has otherwise consented) and which is necessary in order to render the representations and warranties of the Borrower and its Subsidiaries given in the Loan Documents true and correct, provided that any such supplements shall not be required more than once every year and such Schedules shall be deemed automatically updated by information contained in each Compliance Certificate and all SEC filings without the need for any further action on the part of the Borrower or any Subsidiary.(b) The Borrower shall have paid the fees specified in subsection 1.5 and all other amounts (including reimbursement for legal fees) owing from the Borrower to the Agent and Lenders from and after the Closing Date in accordance with the terms hereof.(c) Except in connection with Permitted Acquisitions in accordance with subsection 6.17.B, if any portion of the requested Loan is to be used to fund an acquisition, at least five (5) Banking Days prior to the consummation of any such acquisition, the Borrower shall have delivered to the Agent a certificate, signed by the Chief Executive Officer or Chief Financial Officer of the Borrower, certifying that such acquisition is a Permitted Acquisition under subsection 6.17.A.
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(d) Within thirty (30) days of the Closing Date, the Borrower shall deliver to the Agent evidence of insurance coverage for each Foreign Subsidiary in compliance with subsection 5.3.(e) Within forty-five (45) days of the Closing Date, the Borrower shall deliver to the Agent evidence of the termination of the financing statements identified on Schedule 4.1(e) .Section 5. Affirmative Covenants .So long as any of the Loans shall remain available to the Borrower, and until the principal of and interest on the Notes and all fees due hereunder and all of the Borrower’s obligations to the Agent and Lenders hereunder shall have been paid in full, the Borrower agrees that:
5.1. Financial Sta tements, Field Audits etc . The Borrower will furnish or cause to be furnished to the Agent:(a) Within one hundred twenty (120) days after the end of each fiscal year of the Borrower, (i) the audited consolidated balance sheets of the Borrower and its Subsidiaries as at the end of such year, and (ii) the related audited consolidated statements of income and surplus and cash flows for such year, setting forth in comparative form with respect to such consolidated financial statements figures for the previous fiscal year, all in reasonable detail, together with the opinion thereon of independent public accountants selected by the Borrower with an established national or regional reputation, which opinion shall be in a form generally recognized as unqualified and shall state that such financial statements have been prepared in accordance with GAAP applied on a basis consistent with that of the preceding fiscal year (except for changes, if any, which shall be specified and approved in such opinion) and that the audit by such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards related to reporting;(b) within forty-five (45) days after the end of each of the first three quarterly accounting periods and within sixty (60) days after the end of the fourth quarterly accounting period in each fiscal year of the Borrower, (i) (A) the unaudited consolidated and consolidating balance sheets and related statements of income and surplus for such period and for the period from the beginning of the current fiscal year to the end of such period and (B) consolidated cash flows for the period from the beginning of the current fiscal year to the end of such period, all in reasonable detail and signed by the Chief Financial Officer of the Borrower and (ii) a compliance certificate substantially in the form of Exhibit A attached hereto (the “ Compliance Certificate ”) signed by the Chief Executive Officer, or the Chief Financial Officer, or such other officer of the Borrower as may be acceptable in the sole discretion of the Agent, certifying that the representations and warranties of the Borrower and its Subsidiaries contained herein and in each of the other Loan Documents (as supplemented and updated as provided in subsection 4.3(a) hereof) are true, complete and correct in all material respects as of such date, that no event or condition which constitutes a Default or Event of Default exists, and demonstrating the calculations used to determine compliance with the financial covenants listed in such Compliance Certificate;
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(c) As soon as available, but in any event within 45 days after the end of each quarterly accounting period in each fiscal year of the Borrower, (i) a quarterly summary accounts receivable aging report, in such form as Agent may from time to time reasonably require and (ii) reports detailing such other information as Agent may from time to time reasonably require. All of the reports listed in the foregoing clauses (i) and (ii) shall be in reasonable detail and current through at least the close of business for the immediately preceding quarter and certified by the Chief Executive Officer, or the Chief Financial Officer or such other officer of the Borrower as may be acceptable in the sole discretion of the Agent;(d) On or before January 30 of each fiscal year (commencing January 30, 2004), an annual budget prepared on a quarterly basis for the Borrower and its Subsidiaries for the then current fiscal year, (displaying anticipated balance sheets and statements of income and surplus and cash flows); and promptly upon preparation thereof, any amendments or revisions thereto or any other significant budgets which the Borrower prepares;(e) Promptly upon their becoming available, copies of all 10-Ks and 10-Qs and other periodic or special reports filed by the Borrower or any Subsidiary with the SEC, or any such periodic or special reports filed with any other federal, state or local governmental agency or authority, and copies of any material notices and other material communications from the SEC or from any other federal, state or local governmental agency or authority which specifically relate to the Borrower or any Subsidiary, except in each case for those reports, notices and other communications required by such governmental agencies to be kept confidential;(f) Forthwith upon any officer of the Borrower obtaining knowledge of any condition or event which constitutes a Default or Event of Default, a certificate signed by such officer specifying in reasonable detail the nature and period of existence thereof and what action the Borrower has taken or proposes to take with respect thereto;(g) Promptly upon receipt thereof, copies of all audit reports and management letters, if any, submitted to the Borrower by independent public accountants in connection with each interim or special audit of the books of the Borrower made by such accountants and, upon request by the Agent, copies of all financial statements, reports, notices and proxy statements, if any, sent by the Borrower to its shareholders;(h) Immediately, after the Borrower obtains knowledge thereof, notice of: (i) the institution or commencement of any action, suit, proceeding or investigation by or against or affecting the Borrower or any of its Subsidiaries or any of its or their assets which, if determined adversely to the Borrower, is reasonably likely to have a Material Adverse Effect; (ii) any litigation or proceeding instituted by or against the Borrower, or any judgment, award, decree, order or determination relating to any litigation or proceeding involving the Borrower which is reasonably likely to have a Material Adverse Effect; (iii) the imposition or creation of any lien against any asset of the Borrower except those permitted by this Agreement; (iv) any reportable event under Section 4043 of ERISA for which the notice requirement is not waived by the regulations thereunder, together with a statement of the Borrower’s chief executive officer, chief financial officer and/or controller as to the details thereof and a copy of its notice thereof to the PBGC; and (v) any known release or threat of release of Hazardous Materials on, onto or under
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any site owned or operated by the Borrower or any Subsidiary in material violation of applicable law or the incurrence of any expense or loss in connection therewith or upon the Borrower’s obtaining knowledge of any investigation, action or the incurrence of any expense or loss by any governmental authority in connection with the containment or removal of any Hazardous Materials for which expense or loss the Borrower or any Subsidiary may be liable or potentially responsible;(i) Promptly notify Agent of any material adverse change in the Borrower’s financial condition or of any condition or event which constitutes a Default or an Event of Default under this Agreement or any other Loan Document or any other event or condition which has had or is reasonably likely to have a Material Adverse Effect;(j) The Borrower will permit the Agent to inspect and audit the books and records and any of the properties or assets of the Borrower and its Subsidiaries during normal business hours and, prior to the occurrence of an Event of Default, upon reasonable notice to the Borrower and any such Subsidiary, each such inspection to be at the Borrower’s expense, provided , that the Borrower shall not be responsible for the expenses of such inspections and audits more than two times per fiscal year prior to the occurrence of a Default or Event of Default; and(k) Promptly upon request therefor, all such other information regarding the business, affairs and condition of the Borrower as the Agent may from time to time reasonably request.5.2. Legal Existen ce; Licenses; Compliance with Laws . The Borrower will, and will cause each Subsidiary to: maintain its corporate or other organizational existence and business, except as otherwise permitted pursuant to Section 6.7 hereof; maintain all properties which are reasonably necessary for the conduct of such business, now or hereafter owned, in good repair, working order and condition; take all actions necessary to maintain and keep in full force and effect its rights and franchises, including the Licenses, unless the failure to do so is not reasonably likely to have a Material Adverse Effect; maintain at all times proper books of record and account in which full, true and correct entries shall be made of its transactions in accordance with GAAP and set aside on its books from its earnings for each fiscal year all such proper reserves as shall be required in accordance with GAAP in connection with its business; and comply with all applicable statutes, rules, regulations and orders of, and all applicable restrictions imposed by, all governmental authorities in respect of the conduct of its business and the ownership of its properties in states in which the Borrower desires to continue business operations, except where the failure to comply is not reasonably likely to have a Material Adverse Effect; provided that neither the Borrower nor any Subsidiary shall be required by reason of this subsection to comply therewith at any time while the Borrower or such Subsidiary shall be contesting its obligations to do so in good faith by appropriate proceedings promptly initiated and diligently conducted, and if it shall have set aside on its books such reserves, if any, with respect thereto as are required by GAAP and deemed adequate by the Borrower and its independent public accountants.
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5.3. Insura nce .(a) Business Interruption Insurance . Each of the Borrower and its Subsidiaries shall be covered by or maintain with financially sound and reputable insurers insurance related to interruption of business, either for loss of revenues or for extra expense, in the manner customary for businesses of similar size engaged in similar activities.(b) Property Insurance . Each of the Borrower and its Subsidiaries shall keep its assets which are of an insurable character insured by financially sound and reputable insurers against theft and fraud and against loss or damage by fire, explosion and hazards insured against by extended coverage to the extent, in amounts and with deductibles which are customary for businesses of similar size engaged in similar activities.(c) Liability Insurance . Each of the Borrower and its Subsidiaries shall be covered by or maintain with financially sound and reputable insurers insurance against liability for hazards, risks and liability to persons and property to the extent, in amounts and with deductibles which are customary for businesses of similar size engaged in similar activities.(d) Key Person Life Insurance . The Borrower shall maintain at all times “Key Person” life insurance in the amount of at least $1,000,000 each on the lives of Chane Graziano and David Green.(e) Requirements; Proceeds . Each insurance policy maintained pursuant to this subsection 5.3 shall provide that the Agent shall be notified of any proposed cancellation of such policy at least thirty (30) days in advance of such proposed cancellation. Upon the request of the Agent, copies of all such policies shall be delivered to the Agent. All insured losses under any policy of insurance will be adjusted by the insurer with, and paid to, the Borrower.5.4. Payment o f Taxes . The Borrower will, and will cause each Subsidiary to, pay and discharge promptly as they become due and payable all taxes, assessments and other governmental charges or levies imposed upon it or its income or upon any of its properties or assets, or upon any part thereof, as well as all lawful claims of any kind (including claims for labor, materials and supplies) which, if unpaid, might by law become a lien or a charge upon its property; provided that neither the Borrower nor any Subsidiary shall be required to pay any such tax, assessment, charge, levy or claim if the amount, applicability or validity thereof shall currently be contested in good faith by appropriate proceedings promptly initiated and diligently conducted and if the Borrower or such Subsidiary, as the case may be, shall have set aside on its books such reserves, if any, with respect thereto as are required by GAAP and deemed appropriate by the Borrower and its independent public accountants.5.5. Payment of Oth er Indebtedness, etc . Except as to matters being contested in good faith and by appropriate proceedings, and subject to the provisions of subsection 6.5 (Restricted Payments) hereof, the Borrower will, and will cause each Subsidiary to, pay promptly when due, or in conformance with customary trade terms, all other Indebtedness and obligations incident to the conduct of its business where any failure to pay is reasonably likely to result in a Material Adverse Effect.
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5.6. Further Assu rances . From time to time hereafter, the Borrower will execute and deliver, or will cause to be executed and delivered, such additional instruments, certificates or documents, and will take all such actions, as the Agent may reasonably request, for the purposes of implementing or effectuating the provisions of this Agreement, the Loan Documents or the Notes, provided that, the Borrower shall not be required to effect a public registration of all o | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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