Loan Agreement - Applied Analytical Industries Inc., AAI Applied Analytical Industries Deutschland GmbH & Co. KG and Bank of America NA
AMENDED AND RESTATED LOAN AGREEMENT
among
APPLIED ANALYTICAL INDUSTRIES, INC.
as U.S. Borrower
AAI APPLIED ANALYTICAL INDUSTRIES DEUTSCHLAND GmbH & CO. KG
as German Borrower
CERTAIN SUBSIDIARIES OF THE U.S. BORROWER
as Guarantors
and
BANK OF AMERICA, N.A.
as Bank
Dated as of November 30, 1999
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS......................................................1
1.01 DEFINED TERMS.....................................................1
1.02 ACCOUNTING TERMS..................................................7
ARTICLE II LOANS.............................................................7
2.01 REVOLVING LOANS...................................................7
2.02 REVOLVING NOTE....................................................7
2.03 INTEREST ON REVOLVING LOANS.......................................7
2.04 COMMITMENT FEE....................................................7
2.05 DEUTSCHE MARK LOAN................................................8
ARTICLE III ADDITIONAL PROVISIONS REGARDING REVOLVING LOANS................9
3.01 DEFAULT RATE......................................................9
3.02 PREPAYMENTS.......................................................9
3.03 CAPITAL ADEQUACY.................................................10
3.04 INCREASED COSTS..................................................10
3.05 TAXES, ETC.......................................................11
3.06 PAYMENTS AND COMPUTATIONS........................................11
ARTICLE IV CONDITIONS OF LENDING............................................12
4.01 CONDITIONS TO CLOSING DATE.......................................12
4.02 CONDITIONS TO EACH LOAN..........................................13
4.03 ADDITIONAL CONDITIONS TO THE DEUTSCHE MARK LOAN..................14
ARTICLE V REPRESENTATIONS AND WARRANTIES....................................14
5.01 CORPORATE EXISTENCE AND POWER....................................14
5.02 AUTHORIZATION OF LOAN AGREEMENT..................................14
5.03 NO VIOLATION OF CORPORATE RESTRICTIONS...........................14
5.04 GOVERNMENTAL CONSENTS............................................15
5.05 LITIGATION.......................................................15
5.06 OTHER AGREEMENTS.................................................15
5.07 TAXES............................................................15
5.08 LIENS............................................................15
5.09 ERISA............................................................16
5.10 SUBSIDIARIES.....................................................16
5.11 REGULATION U.....................................................16
5.12 PATENTS AND TRADEMARKS...........................................16
5.13 FINANCIAL INFORMATION PROVIDED...................................16
5.14 ENVIRONMENTAL COMPLIANCE.........................................16
5.15 YEAR 2000 COMPLIANCE.............................................17
ARTICLE VI AFFIRMATIVE COVENANTS............................................17
6.01 AFFIRMATIVE COVENANTS...............................................17
ARTICLE VII NEGATIVE COVENANTS..............................................22
7.01 NEGATIVE COVENANTS...............................................22
ARTICLE VIII EVENTS OF DEFAULT AND ACCELERATION.............................24
8.01 EVENTS OF DEFAULT................................................24
8.02 REMEDIES.........................................................25
ARTICLE IX MISCELLANEOUS....................................................26
9.01 NOTICES..........................................................26
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9.02 WAIVER...........................................................26
9.03 SURVIVAL.........................................................27
9.04 SUCCESSORS AND ASSIGNS...........................................27
9.05 COSTS............................................................27
9.06 AMENDMENT; WAIVER; CONSENTS......................................27
9.07 YEAR.............................................................27
9.08 PAYMENT ON BUSINESS DAY..........................................27
9.09 COUNTERPARTS.....................................................28
9.10 ASSIGNMENT.......................................................28
9.11 TERM.............................................................28
9.12 CAPTIONS.........................................................28
9.13 GOVERNING LAW....................................................28
9.14 ARBITRATION......................................................28
9.15 LOAN DOCUMENTS...................................................29
9.16 BINDING EFFECT; REPLACEMENT OF EXISTING LOAN AGREEMENT;
TERMINATION......................................................30
ARTICLE X GUARANTY..........................................................30
10.01 GUARANTY.........................................................30
10.02 OBLIGATIONS UNCONDITIONAL........................................31
10.03 REINSTATEMENT....................................................32
10.04 CERTAIN ADDITIONAL WAIVERS.......................................32
10.05 REMEDIES.........................................................32
10.06 CONTINUING GUARANTEE.............................................33
10.07 RIGHTS OF CONTRIBUTION...........................................33
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Exhibits
Exhibit 2.02 Form of Revolving Note
Exhibit 2.05 Form of Deutsche Mark Note
Exhibit 5.05 Litigation
Exhibit 5.08 Liens
Exhibit 5.10 Subsidiaries
Exhibit 5.14 Environmental Compliance
Exhibit 6.01(b)(3) Form of Borrowing Base Certificate
Exhibit 6.01(c) Form of Officer's Certificate
Exhibit 7.01(a)(i) Indebtedness
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AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT, dated as of November 30, 1999
(the "Loan Agreement"), is by and between
APPLIED ANALYTICAL INDUSTRIES, INC., a corporation organized and
existing under the laws of the State of Delaware and having its principal place
of business in Wilmington, North Carolina (the "U.S. Borrower");
AAI APPLIED ANALYTICAL INDUSTRIES DEUTSCHLAND GmbH & CO. KG, a
corporation organized and existing under the laws of Germany and having its
principal place of business in Neu-Ulm, Germany (the "German Borrower");
Certain Subsidiaries of the U.S. Borrower from time to time party
hereto (the "Guarantors"); and
BANK OF AMERICA, N.A., a national banking association formerly known as
NationsBank, N.A. organized and existing under the laws of the United States and
having offices in Wilmington, North Carolina (the "Bank").
RECITALS
A. The U.S. Borrower and the Bank are parties to that certain Loan
Agreement dated as of December 30, 1996 (as amended by a First Amendment to Loan
Agreement dated as of February 13, 1998, a Second Amendment to Loan Agreement
dated as of May 19, 1998 and an Amendment and Forbearance Agreement dated as of
August 27, 1999, the "Existing Loan Agreement").
B. The parties hereto desire that the Existing Loan Agreement be
further amended and restated as set forth herein.
C. The Bank has agreed to amend and restate the Existing Loan Agreement
on the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.01 DEFINED TERMS.
For the purposes hereof:
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"Adjusted LIBOR Rate" means the rate as determined by the Bank
at which U.S. dollar deposits in the requested amount and for one month
interest periods are offered to prime banks in the London Interbank
Market, as published weekly by the Federal Reserve Bank of New York in
its H-15 Statistical Release, such rate being adjusted for the cost of
reserve requirements as prescribed by the Federal Reserve System. The
Adjusted LIBOR Rate for any Saturday or Sunday or any other day on
which the London interbank market is not open shall be the Adjusted
LIBOR Rate for the immediately preceding day on which the London
interbank market is open;
"Bank" means Bank of America, N.A. or any successor thereto;
"Borrowers" means, collectively, the U.S. Borrower and the
German Borrower and "Borrower" means any one of them;
"Borrowing Base" means, as of any day, the sum of (a) 80% of
Eligible Receivables plus (b) the lesser of (i) 75% of Fixed Asset
Value and (ii) $32,754,000 minus (c) all indebtedness for borrowed
money, howsoever evidenced, or its equivalent (including but not
limited to leases required to be capitalized under Generally Accepted
Accounting Principles and letters of credit), other than Revolving
Loans outstanding hereunder, incurred by, or issued for the benefit of,
the Credit Parties; provided that (A) in the case of clauses (a) and
(b)(i) above, such amounts shall be as set forth in the most recent
Borrowing Base Certificate delivered to the Bank in accordance with the
terms of Section 6.01(b)(3) and (B) the advance rates set forth above
shall be subject to appraisals conducted from time to time by the Bank
and may be increased or decreased by the Bank at any time and from time
to time in the exercise of its reasonable credit judgment (it being
understood that the U.S. Borrower hereby consents to any such increases
or decreases and acknowledges that decreasing the advance rates or
increasing the reserves may limit or restrict the availability of
Revolving Loans requested by the U.S.
Borrower);
"Borrowing Base Certificate" shall have the meaning assigned
to such term in Section 6.01(b)(3);
"Business Day" means any day not a Saturday, Sunday or legal
holiday on which the Bank is open for business in Wilmington, North
Carolina; provided, however, that with respect to the Deutsche Mark
Loan such day shall also be a day on which dealings between banks are
carried on in U.S. dollar deposits and in Deutsche Marks in the London
interbank market;
"Cash Flow Coverage Ratio" means, for any consecutive four
fiscal quarterly periods of the U.S. Borrower, the ratio for the U.S.
Borrower and its consolidated Subsidiaries of (x) EBITDA minus cash
dividends (each computed for such four consecutive fiscal quarterly
periods) to (y) current maturities of long term debt and capitalized
leases (each computed for such four consecutive fiscal quarterly
periods) plus 20% of the average outstanding principal balance of the
Revolving Loans for such four consecutive fiscal quarterly periods plus
interest expense plus current provision for income taxes (each computed
for such four consecutive fiscal quarterly periods);
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"Closing Date" means the date as of which this Loan Agreement
is executed by the Credit Parties and the Bank;
"Commitment" means the commitment by the Bank to make Loans to
the Borrowers hereunder;
"Consistent Basis" in reference to the application of
Generally Accepted Accounting Principles, means that the accounting
principles observed in the period referred to are comparable in all
material respects to those applied in the most recent preceding period,
except for the impact of implementing new rules or regulations;
"Credit Parties" means the Borrowers and the Guarantors and
"Credit Party" means any one of them;
"Deutsche Mark Loan" means the Loan made pursuant to Section
2.05(a) hereof;
"Deutsche Mark Note" means the promissory note of the German
Borrower executed and delivered as provided in Section 2.05(a) hereof;
"Domestic Subsidiary" means a direct or indirect Subsidiary of
the U.S. Borrower that is domiciled, incorporated or organized under
the laws of any State of the United States of America or the District
of Columbia;
"EBITDA" means, for any period of computation, earnings of the
U.S. Borrower and its consolidated Subsidiaries before interest
expense, provision for income taxes, depreciation and amortization,
other non-cash charges and lease expense under the tax retention
operating lease (or similar agreement) entered into with the Bank or
any of its affiliates;
"Eligible Receivables" means, as of any date of determination
and without duplication, the aggregate book value of all accounts
receivable, receivables, and obligations for payment created or arising
from the sale of inventory or the rendering of services in the ordinary
course of business (collectively, the "Receivables"), owned by or owing
to the U.S. Borrower or any of its Subsidiaries, net of allowances and
reserves for doubtful or uncollectible accounts and sales adjustments
consistent with such Person's internal policies and in any event in
accordance with Generally Accepted Accounting Principles, but excluding
in any event (i) any Receivable which is (a) not subject to a
perfected, first priority lien in favor of the Bank to secure the
Obligations or (b) subject to any other lien that is not permitted
hereunder, (ii) Receivables which are more than 120 days past due or
150 days past invoice date (net of reserves for bad debts in connection
with any such Receivables), (iii) 50% of the book value of any
Receivable not otherwise excluded by clause (ii) above but owing from
an account debtor which is the account debtor on any existing
Receivable then excluded by such clause (ii), unless the exclusion by
such clause (ii) is a result of a legitimate dispute by the account
debtor and the applicable Receivable is no more than 150 days past due,
(iv) Receivables evidenced by
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notes, chattel paper or other instruments, unless such notes, chattel
paper or instruments have been delivered to and are in the possession
of the Bank, (v) Receivables owing by an account debtor which is not
solvent or is subject to any bankruptcy or insolvency proceeding of any
kind, (vi) Receivables which are contingent or subject to offset,
deduction, counterclaim, dispute or other defense to payment, in each
case to the extent of such offset, deduction, counterclaim, dispute or
other defense, (vii) Receivables for which any direct or indirect
Subsidiary or any affiliate of the U.S. Borrower is the account debtor,
(viii) Receivables representing a sale to the government of the United
States or any agency or instrumentality thereof unless the Federal
Assignment of Claims Act has been complied with to the satisfaction of
the Bank with respect to the granting of a security interest in such
Receivable, with or other similar applicable law and (ix) Receivables
which fail to meet such other specifications and requirements as may
from time to time be established by the Bank in its reasonable
discretion;
"Event of Default" shall have the meaning given to said term
in Section 8.01 hereof;
"Fixed Asset Value" means, as of any date of determination and
without duplication, the lower of the aggregate net book value (based
on a FIFO or a moving average cost valuation, consistently applied) or
fair market value (determined on the basis of the most recent appraisal
acceptable to the Bank) of all equipment, fixtures and real estate
owned by the U.S. Borrower and its Domestic Subsidiaries less
appropriate reserves determined in accordance with Generally Accepted
Accounting Principles but excluding in any event (i) any such asset
which is (a) not subject to a perfected, first priority lien in favor
of the Bank to secure the Obligations or (b) subject to any other lien
not permitted hereunder, (ii) any such asset which is not in good
condition or fails to meet standards for sale or use imposed by
governmental agencies, departments or divisions having regulatory
authority over such assets, (iii) any such asset located outside of the
United States, (iv) any such asset which is leased or on consignment,
and (v) any such asset which fails to meet such other specifications
and requirements as may from time to time be established by the Bank in
its reasonable discretion;
"Foreign Subsidiary" means each Subsidiary of the U.S.
Borrower that is not a Domestic Subsidiary;
"Funded Debt" means, without duplication, (i) all interest
bearing obligations of the U.S. Borrower and its consolidated
Subsidiaries including, without limitation, all obligations evidenced
by promissory notes or other similar contracts but excluding such items
as trade payables and accruals and (ii) all outstanding obligations
under the tax retention operating lease (or similar agreements) entered
into with the Bank or any of its affiliates;
"Funded TROL Obligations" means, at any time, the sum of the
then outstanding amount of each of (i) the Loans, (ii) the accrued but
unpaid interest on the Loans, (iii) the Holder Advances, and (iv) the
accrued but unpaid Holder Yield, as each of such capitalized terms is
defined in the Participation Agreement;
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"Generally Accepted Accounting Principles" means those
principles of accounting set forth in pronouncements of the Financial
Accounting Standards Board, the American Institute of Certified Public
Accountants, or which have other substantial authoritative support and
are applicable in the circumstances as of the date of a report, as such
principles are from time to time supplemented and amended;
"German Borrower" shall have the meaning given to said term in
the Recitals hereof;
"German Borrower Obligations" means all obligations of the
German Borrower (in its capacity as such) hereunder, under the Deutsche
Mark Note or otherwise in connection with the Deutsche Mark Loan;
"Guaranteed Obligations" means, without duplication, (a) in
the case of a Guarantor that is a Domestic Subsidiary, all Obligations,
and (b) in the case of the Guarantor that is the U.S. Borrower or a
Foreign Subsidiary, all German Borrower Obligations;
"Guarantors" means, collectively, the U.S. Borrower and each
of its Subsidiaries and "Guarantor" means any one of them;
"Loan Documents" means this Loan Agreement, the Notes and the
Security Documents;
"Loans" means, collectively, the Revolving Loans and the
Deutsche Mark Loan;
"Maturity Date" means May 31, 2000;
"Mortgages" means those mortgage and security agreements to be
given by the U.S. Borrower and/or certain Domestic Subsidiaries
pursuant to Section 6.01(s) to secure the Obligations;
"Notes" means, collectively, the Revolving Note and the
Deutsche Mark Note;
"Obligations" means a collective reference to (a) all
obligations of the U.S. Borrower to the Bank in connection with the
Revolving Loans and (b) all German Borrower Obligations;
"Participation Agreement" means that certain Participation
Agreement, dated as of October 2, 1998 among the U.S. Borrower, First
Security Bank, N.A., as Owner Trustee under the AAI Realty Trust
1998-1, the lenders and holders identified therein and from time to
time party thereto, and NationsBank, N.A. (now known as Bank of
America, N.A.) as Agent, such Participation Agreement comprising part
of the documentation relating to the tax retention operating lease
transaction entered into by the U.S. Borrower;
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"Person" means an individual, a corporation, a partnership, a
joint venture, an association, a joint stock company, a trust, an
unincorporated organization or a government or any agency or political
subdivision thereof;
"Pledge Agreement" means that certain Pledge Agreement dated
as of August 27, 1999 among the U.S. Borrower, the Domestic
Subsidiaries and the Bank, as such agreement may be amended or modified
from time to time;
"Prime Rate" means the rate of interest publicly announced by
the Bank in Charlotte, North Carolina from time to time as its "prime
rate." The Prime Rate is not necessarily the best or lowest rate of
interest offered by the Bank;
"Revolving Loan" means a Loan made pursuant to Section 2.01
hereof;
"Revolving Note" means the promissory note of the U.S.
Borrower executed and delivered as provided in Section 2.02 hereof;
"Revolving Loan Committed Amount" shall have the meaning given
to said term in Section 2.01;
"Security Agreement" means that certain Security Agreement
dated as of August 27, 1999 among the U.S. Borrower, the Domestic
Subsidiaries and the Bank, as such agreement may be amended or modified
from time to time;
"Security Documents" means, collectively, the Mortgages, the
Pledge Agreement, the Security Agreement, each of the agreements and
documents executed by the German Borrower and the other Foreign
Subsidiaries in favor of the Bank to secure the German Borrower
Obligations and each other agreement or document executed by a Credit
Party in favor of the Bank to secure the Obligations, as each such
agreement or document may be amended or modified from time to time;
"Subsidiary" means any corporation, association, partnership,
limited liability company, joint venture or other business entity more
than 50% of the outstanding voting stock or other equity interests of
which at the time is owned or controlled directly or indirectly by the
U.S. Borrower and/or by one or more of its Subsidiaries;
"Tangible Net Worth" means total stockholders' equity of the
U.S. Borrower determined in accordance with Generally Accepted
Accounting Principles on a Consistent Basis, with no upward adjustments
due to a revaluation of assets, minus the book value of assets which
would be treated as intangibles under Generally Accepted Accounting
Principles, including, but not limited to, goodwill, trade-names,
trademarks, copyrights, patents and unamortized debt discount and minus
loans or advances to employees, stockholders, subsidiaries, affiliates
or related companies and minus investment in subsidiaries; and
"U.S. Borrower" shall have the meaning given to said term in
the Recitals hereof.
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1.02 ACCOUNTING TERMS.
All accounting terms not specifically defined herein shall be construed
in accordance with then current Generally Accepted Accounting Principles applied
on a Consistent Basis.
ARTICLE II
LOANS
2.01 REVOLVING LOANS.
Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, the Bank agrees to make
Revolving Loans to the U.S. Borrower, at any time and from time to time until
the Maturity Date, in an aggregate principal amount at any time outstanding not
to exceed the lesser of (i) TWENTY-FIVE MILLION DOLLARS ($25,000,000) (the
"Revolving Loan Committed Amount") and (ii) the Borrowing Base, for purposes of
financing the U.S. Borrower's working capital needs. The U.S. Borrower may
borrow, repay and reborrow hereunder on or after the date hereof and prior to
the Maturity Date, subject to the terms, provisions and limitations set forth
herein. The outstanding principal balance of the Revolving Loans, together with
all accrued but unpaid interest, fees and other charges, shall be due and
payable in full on the Maturity Date.
2.02 REVOLVING NOTE.
The Revolving Loans made by the Bank shall be evidenced by the
Revolving Note duly executed by the U.S. Borrower, dated the Closing Date, in
substantially the form of Exhibit 2.02 attached hereto, payable to the order of
the Bank in a principal amount equal to the Revolving Loan Committed Amount.
2.03 INTEREST ON REVOLVING LOANS.
Subject to section 3.01 hereof, the outstanding principal balance of
the Revolving Loans shall bear interest at a rate equal to the Adjusted LIBOR
Rate plus 2.25%. Interest calculated at the foregoing rate shall be due and
payable monthly in arrears on the last day of each calendar month.
2.04 COMMITMENT FEE.
The U.S. Borrower agrees to pay the Bank a commitment fee in an amount
equal to 0.375% per annum of the average daily unused portion of the Revolving
Loan Committed Amount, such fee to be paid monthly in arrears on the last day of
each calendar month.
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2.05 DEUTSCHE MARK LOAN.
(a) Subject to the terms and conditions hereof, the Bank
agrees to make on or before March 31, 2000 a term loan to the German
Borrower in Deutsche Marks in an aggregate principle amount equal to DM
12,000,000 (the "Deutsche Mark Loan"). Amounts repaid on the Deutsche
Mark Loan may not be reborrowed. The outstanding principal balance of
the Deutsche Mark Loan, together with all accrued but unpaid interest,
fees and other charges, shall be due and payable in full on the
Maturity Date. The proceeds of the Deutsche Mark Loan will be used by
the German Borrower to repay in full loans made to the German Borrower
by its German banks, which loans have been supported by standby letters
of credit issued by the Bank.
(b) The Deutsche Mark Loan shall be made, shall be repaid and
shall bear interest in accordance with the terms of a Promissory Note
dated the Closing Date and executed by the German Borrower in favor of
the Bank in substantially the form of Exhibit 2.05 (the "Deutsche Mark
Note"), the terms of which are incorporated herein by reference.
(c) (i) If, as a result of the implementation of the European
economic and monetary union ("EMU"), (i) any currency
available for borrowing under this Credit Agreement (a
"national currency") ceases to be lawful currency of the state
issuing the same and is replaced by a European single or
common currency (the "Euro") or (ii) any national currency and
the Euro are at the same time both recognized by the central
bank or comparable governmental authority of the state issuing
such currency as lawful currency of such state, then any
amount payable hereunder by any party hereto in such national
currency shall instead be payable in the Euro and the amount
so payable shall be determined by redenominating or converting
such amount into the Euro at the exchange rate officially
fixed by the European Central Bank for the purpose of
implementing the EMU, provided, that to the extent any EMU
legislation provides that an amount denominated either in the
Euro or in the applicable national currency can be paid either
in Euros or in the applicable national currency, each party to
this Loan Agreement shall be entitled to pay or repay such
amount in Euros or in the applicable national currency. Prior
to the occurrence of the event or events described in clause
(i) or (ii) of the preceding sentence, each amount payable
hereunder in any such national currency will, except as
otherwise provided herein, continue to be payable only in that
national currency.
(ii) The Borrowers shall from time to time, at the
request of the Bank, pay to the Bank for the account of the
Bank the amount of any cost or increased cost incurred by, or
of any reduction in any amount payable to or in the effective
return on its capital to, or of interest or other return
foregone by, the Bank or any holding company of the Bank as a
result of the introduction of, changeover to or operation of
the Euro in any applicable state.
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(iii) In addition, this Loan Agreement and the
Deutsche Mark Note (including, without limitation, the
definition of Adjusted LIBOR Rate) will be amended to the
extent determined by the Bank (acting reasonably and in
consultation with the Borrowers) to be necessary to reflect
such implementation of the EMU and change in currency and to
put the Bank and the Borrowers in the same position, so far as
possible, that they would have been in if such implementation
and change in currency had not occurred. Except as provided in
the foregoing provisions of this Section, no such
implementation or change in currency nor any economic
consequences resulting therefrom shall (i) give rise to any
right to terminate prematurely, contest, cancel, rescind,
alter, modify or renegotiate the provisions of this Loan
Agreement or (ii) discharge, excuse or otherwise affect the
performance of any obligations of the German Borrower under
this Loan Agreement, the Deutsche Mark Note or other Loan
Documents.
ARTICLE III
ADDITIONAL PROVISIONS REGARDING REVOLVING LOANS
3.01 DEFAULT RATE.
If a Borrower shall default in the payment when due (subject to
applicable grace periods, if any) of the principal of or interest on any Loan or
any other amount becoming due hereunder, such Borrower shall on demand from time
to time pay interest on any overdue payment of principal and, to the extent
permitted by law, on overdue payments of interest up to the date of actual
payment (after as well as before judgment):
(i) in the case of principal of or interest on a Loan
at a rate equal to 2% per annum above the rate which would otherwise be
payable hereunder; and
(ii) in the case of any other amount payable
hereunder or under any of the other Loan Documents (other than
principal of or interest on any Loan referred to in clause (i) above),
at a rate 2% per annum above the Prime Rate.
3.02 PREPAYMENTS.
(a) Voluntary Prepayments. The Borrowers shall have the right
at any time and from time to time to prepay any Loan in whole or in
part, without premium or penalty; provided, however, partial
prepayments of any Loan shall be applied to principal installments
thereunder in the inverse order of maturities.
(b) Mandatory Prepayments. If at any time the aggregate
outstanding principal amount of Revolving Loans shall exceed the lesser
of (i) the Revolving Loan Committed Amount and (ii) the Borrowing Base,
the U.S. Borrower immediately shall prepay the Revolving Loans in an
amount sufficient to eliminate such excess.
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3.03 CAPITAL ADEQUACY.
(a) In the event that the Bank shall have determined that the
adoption or implementation on or after the Closing Date under the
Existing Loan Agreement of any applicable law, rule, regulation or
guideline regarding capital adequacy, or any change therein, 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 by any court, or
compliance by the Bank (or any lending office of the Bank) with any
request or directive made or issued after the Closing Date regarding
capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on the Bank's capital as a
consequence of its obligations hereunder to a level below that which
the Bank could have achieved but for such adoption, change or
compliance (taking into consideration the Bank's policies as the case
may be, with respect to capital adequacy) by an amount deemed by the
Bank to be material, then from time to time the Borrowers shall pay to
the Bank such additional amount or amounts as will compensate the Bank
for any such reduction suffered; provided, however, that no such
amounts shall be payable with respect to a reduction in rate of return
incurred more than 90 days before the Bank demands compensation under
this Section.
(b) Failure on the part of the Bank to demand compensation for
any reduction in return on capital with respect to any period shall not
constitute a waiver of the Bank's rights to demand compensation for any
reduction in return on capital in such period or in any other period.
The protection of this Section shall be available to the Bank
regardless of any possible contention of invalidity or inapplicability
of the law, regulation or condition which shall have been imposed.
3.04 INCREASED COSTS.
At any time that the Bank shall incur increased costs or reductions in
the amounts received or receivable hereunder with respect to any Loan because of
any change since the Closing Date under the Existing Loan Agreement in any
applicable law, governmental rule, regulation, guideline or order (or in the
interpretation or administration thereof and including the introduction of any
new law or governmental rule, regulation, guideline or order) including without
limitation the imposition, modification or deemed applicability of any reserves,
deposits or similar requirements as related to such Deutsche Mark Loan (such as,
for example, but not limited to, a change in official reserve requirements, but,
in all events, excluding reserves to the extent included in the computation of
the Adjusted LIBOR Rate), then the Borrower shall pay to the Bank within 15 days
after written demand therefor (which demand shall state the basis therefor),
such additional amounts (in the form of an increased rate of, or a different
method of calculating, interest or otherwise as the Bank may determine in its
reasonable discretion) as may be required to compensate the Bank for such
increased costs or reductions in amounts receivable hereunder. Upon determining
in good faith that any additional amounts will be payable pursuant to this
subsection, the Bank will give prompt written notice thereof to the Borrower,
which notice shall set forth in reasonable detail the basis of the calculation
of such additional amounts.
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3.05 TAXES, ETC.
(a) All payments made by a Borrower hereunder, under a Note or
under any Loan Document will be made without set-off, counterclaim,
deduction or other defense. All such payments shall be made free and
clear of and without deduction for any present or future income,
franchise, sales, use, excise, stamp or other taxes, levies, imposts,
deductions, charges, fees, withholdings, restrictions or conditions of
any nature now or hereafter imposed, levied, collected, withheld or
assessed by any jurisdiction (whether pursuant to United States
Federal, state, local or foreign law) or by any political subdivision
or taxing authority thereof or therein, and all interest, penalties or
similar liabilities, excluding taxes on the overall net income of the
Bank (such nonexcluded taxes are hereinafter collectively referred to
as the "Taxes"). If a Borrower shall be required by law to deduct or to
withhold any Taxes from or in respect of any amount payable hereunder,
(i) the amount so payable shall be increased to the extent necessary so
that after making all required deductions and withholdings (including
Taxes on amounts payable to the Bank pursuant to this sentence) the
Bank receives an amount equal to the sum it would have received had no
such deductions or withholdings been made, (ii) such Borrower shall
make such deductions or withholdings, and (iii) such Borrower shall pay
the full amount deducted or withheld to the relevant taxation authority
in accordance with applicable law. Whenever any Taxes are payable by a
Borrower, as promptly as possible thereafter, such Borrower shall send
the Bank an official receipt showing payment. In addition, each
Borrower agrees to pay any present or future taxes, charges or similar
levies which arise from any payment made hereunder or from the
execution, delivery, performance, recordation or filing of, or
otherwise with respect to, this Loan Agreement, the Notes or any other
Loan Document (hereinafter referred to as "Other Taxes").
(b) The U.S. Borrower will indemnify the Bank for the amount
of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this
Section 3.05) paid by the Bank (including penalties, interest and
expenses for nonpayment, late payment or otherwise) arising therefrom
or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted. This indemnification shall be paid
within 30 days from the date on which the Bank makes written demand.
(c) If the U.S. Borrower fails to perform its obligations
under this Section 3.05, the U.S. Borrower shall indemnify the Bank for
any incremental taxes, interest or penalties that may become payable as
a result of any such failure.
3.06 PAYMENTS AND COMPUTATIONS.
Except as otherwise specifically provided herein or in another Loan
Document, all payments hereunder shall be made to the Bank in U.S. dollars in
immediately available funds at its offices in Wilmington, North Carolina not
later than 11:00 a.m. (Wilmington, North Carolina time) on the date when due.
Payments received after such time shall be deemed to have been received on the
next succeeding Business Day. Whenever any payment hereunder shall be stated to
be due
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on a day which is not a Business Day, the due date thereof shall be extended to
the next succeeding Business Day (subject to accrual of interest and fees for
the period of such extension).
ARTICLE IV
CONDITIONS OF LENDING
4.01 CONDITIONS TO CLOSING DATE.
This Loan Agreement shall be and become effective as of the Closing
Date when all of the conditions set forth in this Section 4.01 shall have been
satisfied or waived in writing by the Bank.
(a) Execution of Loan Agreement and Notes. The Bank shall have
received a duly executed original of this Loan Agreement and the Notes.
(b) Closing Certificate. The Bank shall have received a
certificate from the chief financial officer of the U.S. Borrower, in
form and substance satisfactory to the Bank, certifying inter alia that
(i) no Event of Default nor any event which upon notice or lapse of
time or both would constitute such an Event of Default shall have
occurred and be continuing as of the Closing Date, and (ii) the
representations and warranties of the Credit Parties made in or
pursuant to the Loan Documents are true in all material respects on and
as of the Closing Date.
(c) Fees. The U.S. Borrower shall have paid all fees due and
owing to the Bank, including without limitation all reasonable fees and
expenses of the Bank and its counsel actually incurred in connection
with any of the Loan Documents and the transactions contemplated
thereby to the extent invoiced.
(d) Security Agreement and Financing Statements. The Bank
shall have received (i) a duly executed original of an amendment to the
Security Agreement in form and substance acceptable to the Bank, (ii)
executed UCC-1 financing statements from the U.S. Borrower and each
Domestic Subsidiary with respect to each location in which each such
Credit Party has or maintains personal property, and (iii) searches of
Uniform Commercial Code filings in the jurisdiction of the U.S.
Borrower's and each Domestic Subsidiary's chief executive office and
each jurisdiction where any Collateral (as defined in the Security
Agreement) is located or where a filing would need to be made in order
to perfect the Bank's security interest in the Collateral, together
with copies of the financing statements on file in each such
jurisdiction and evidence that no liens exist thereon other than as
expressly approved by the Bank or permitted by the Loan Documents.
(e) Pledge Agreement. The Bank shall have received (i) a duly
executed original of an amendment to the Pledge Agreement in form and
substance acceptable to the Bank, (ii) evidence satisfactory to the
Bank that it has a first priority pledge of 100% of the ownership
interests in each Domestic Subsidiary and a first priority pledge of
65%
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of the ownership interests in each first tier Foreign Subsidiary; (iii)
all stock certificates evidencing the stock pledged to the Bank
pursuant to the Pledge Agreement, together with duly executed in blank
undated stock powers attached thereto, and (iv) evidence and
information satisfactory to the Bank regarding the capital and
ownership structure of the U.S. Borrower and its Subsidiaries.
(f) Guaranty. Each of the Guarantors other than the Foreign
Subsidiaries shall have executed this Loan Agreement.
(g) Corporate Documents. The Bank shall have received, in form
and content satisfactory to the Bank, (i) copies of resolutions of the
board of directors of the U.S. Borrower and each Domestic Subsidiary
approving and adopting the execution and delivery of this Loan
Agreement, the other Loan Documents, and each other document or
instrument executed and delivered in connection herewith, certified by
a secretary or assistant secretary of each such Credit Party to be true
and correct and in force and effect as of the Closing Date; (ii)
incumbency information for the U.S. Borrower and each Domestic
Subsidiary certified by a secretary or assistant secretary to be true
and correct as of the Closing Date; (iii) good standing certificates
from appropriate governmental authorities dated as of a recent date
with respect to the U.S. Borrower and the Domestic Subsidiaries; and
(iv) an opinion of legal counsel to the U.S. Borrower and each Domestic
Subsidiary, which shall cover, among other things, authority, legality,
validity, binding effect and enforceability of the Loan Documents and
the attachment, perfection and validity of liens, addressed to the Bank
and dated as of the Closing Date.
(h) TROL Facility. The Bank shall have received a duly
executed original of an amendment to the Participation Agreement and
the related agreements, such amendment to be in form and substance
acceptable to the Bank, the effect of which is to reduce the Holder
Commitments thereunder to $450,000 and the Lender Commitments
thereunder to $14,550,000, thereby capping the tax retention operating
lease transaction described therein at $15,000,000.
(i) Evidence of Insurance. The Bank shall have received
certificates of insurance of the U.S. Borrower and its Domestic
Subsidiaries evidencing liability and casualty insurance meeting the
requirements set forth in the Loan Documents and naming the Bank as
additional insured, sole loss payee or mortgagee, as appropriate.
4.02 CONDITIONS TO EACH LOAN.
The Bank shall not be obligated to make any Loan hereunder unless (a)
the conditions set forth in Section 4.01 hereof have been satisfied or waived in
writing by the Bank, (b) the representations and warranties contained in Article
V hereof are true and correct as of the date of the making of such Loan and (c)
immediately after the making of such Loan no Event of Default nor any event
which upon notice or lapse of time or both would constitute such an Event of
Default shall have occurred and be continuing.
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4.03 ADDITIONAL CONDITIONS TO THE DEUTSCHE MARK LOAN.
On or prior to the funding date of any installment of the Deutsche Mark
Loan, the Bank shall have received (a) evidence satisfactory to the Bank that
(i) the proceeds of the Deutsche Mark Loan will be used to immediately repay in
full the German Borrower's indebtedness to its German banks and (ii) the letters
of credit previously issued by the Bank to support such indebtedness will be
returned to the Bank for cancellation immediately upon such repayment, (b) such
security documents and evidence of collateral filings as the Bank may request
with respect to the assets of the German Borrower and the other Foreign
Subsidiaries, all such documents and filings to be in form and substance
satisfactory to the Bank and its counsel and (c) such corporate authority
documents, officer's certificates, insurance certificates, legal opinions and
similar documents as the Bank reasonably requests in connection with the
Deutsche Mark Loan, the German Borrower and the Foreign Subsidiaries, all such
documents to be in form and substance satisfactory to the Bank and its counsel.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Each Credit Party hereby represents and warrants to the Bank that:
5.01 CORPORATE EXISTENCE AND POWER.
Such Credit Party is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and is duly
qualified and in good standing as a foreign corporation authorized to do
business in every jurisdiction where the failure to so qualify would have a
material adverse effect on such Person. Further, each Credit Party has all power
and authority to own and operate its properties and to carry on its business as
now conducted.
5.02 AUTHORIZATION OF LOAN AGREEMENT.
Each Credit Party has the power and authority to enter into this Loan
Agreement and to perform its obligations under and consummate the transactions
contemplated by this Loan Agreement and has by proper corporate action duly
authorized the execution and delivery of this Loan Agreement. When executed and
delivered, this Loan Agreement and the other Loan Documents will be valid and
binding obligations of each Credit Party which is a party thereto, enforceable
in accordance with their respective terms.
5.03 NO VIOLATION OF CORPORATE RESTRICTIONS.
Neither the execution and delivery of this Loan Agreement, nor the
performance of the obligations under or consummation of the transactions
contemplated by this Loan Agreement, violates or will violate any law or
governmental order, conflicts or will conflict with any provision of any charter
document or by-law of any Credit Party or any material term or
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provision of any agreement or instrument to which any Credit Party is a party or
by which any Credit Party is bound, or constitutes or will constitute a breach
of or a default under any such agreement or instrument (unless appropriate
written waivers have been received and delivered to the Bank).
5.04 GOVERNMENTAL CONSENTS.
No consent, approval or authorization of, or filing, registration or
qualification with, any governmental authority on the part of any Credit Party
is required as a condition to the execution, delivery or performance of this
Loan Agreement or any of the other Loan Documents by the Credit Parties.
5.05 LITIGATION.
Except as set forth on Exhibit 5.05 attached hereto, there are no
material pending, or to the best knowledge of a Credit Party, threatened, legal
proceedings to which any Credit Party is a party or of which any of its
properties are the subject.
5.06 OTHER AGREEMENTS.
No Credit Party is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
material agreement or instrument to which it is a party.
5.07 TAXES.
Each Credit Party has filed or caused to be filed all federal, state
and local tax returns which are required to be filed by such Credit Party and
has paid or caused to be paid all taxes as shown on said returns or on any
assessment to the extent such taxes have become due, except for taxes which are
being contested in good faith and against which reserves in accordance with
Generally Accepted Accounting Principles will be established. No Credit Party
knows of any proposed material tax assessments against it. No extension of time
for assessment or payment of any federal, state or local tax by a Credit Party
is in effect.
5.08 LIENS.
None of the assets of the Credit Parties is subject to any mortgage,
pledge, title retention lien or other lien, encumbrance or security interest,
except (i) for current taxes not delinquent or taxes being contested in good
faith and by appropriate proceedings, (ii) liens arising in the ordinary course
of business for sums not due or sums being contested in good faith and by
appropriate proceedings, but not involving any borrowed money or the deferred
purchase price of property or services, (iii) mechanics' and materialmen's
liens, reservations, exceptions, encroachments, easements, rights of way,
covenants, conditions, restrictions, leases and other similar title exceptions
or encumbrances affecting real property which do not in the aggregate materially
detract from the value of said properties or materially interfere with their use
in the ordinary conduct of the Credit Parties' business and (iv) to the extent
shown in Exhibit 5.08.
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5.09 ERISA.
No Credit Party has incurred any accumulated unfunded deficiency within
the meaning of the Employee Retirement Income Security Act of 1974 ("ERISA") or
incurred any material liability to the Pension Benefit Guaranty Corporation
("PBGC") established under such Act (or any successor thereto under such Act) in
connection with the employee benefit plans established or maintained by the
Credit Parties. Each Credit Party is in compliance in all material respects with
those provisions of ERISA and the regulations and public interpretations
thereunder which are applicable to the U.S. Borrower and its Subsidiaries. No
Reportable Event (as defined in ERISA) has occurred with respect to any Plan.
5.10 SUBSIDIARIES.
The U.S. Borrower has no Subsidiaries as of the date hereof except as
set forth on Exhibit 5.10 attached hereto.
5.11 REGULATION U.
No Borrower is 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). The proceeds of the Loans will be used
for the purposes described in Article II and not for the purpose of purchasing
or carrying margin stock.
5.12 PATENTS AND TRADEMARKS.
Each Credit Party possesses all of the necessary patents, licenses,
trademarks, trademark rights, tradenames, tradename rights and copyrights
material to conduct its business as now conducted, without known conflict with
any patent, license, trademark, tradename or copyright of any other Person.
5.13 FINANCIAL INFORMATION PROVIDED.
The U.S. Borrower represents that the financial information it has
heretofore furnished to the Bank dated September 30, 1999 with regard to its
operations is true and correct, and presents fairly the financial position of
the U.S. Borrower, and there have been no material adverse changes since that
date.
5.14 ENVIRONMENTAL COMPLIANCE.
Each Credit Party has fully complied with all laws, ordinances,
regulations and orders, including without limitation all zoning, safety and
environmental laws, ordinances, regulations and orders, applicable to its
business or properties and the present uses by such Credit Party of its
properties do not violate any such laws, ordinances, regulations or orders.
There is not currently and in the past there has not been (i) any use,
treatment, storage or disposal of any hazardous
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substance or material or pollutant on any of the such Credit Party's properties,
except as of the date hereof as disclosed on Exhibit 5.14 attached hereto, (ii)
any spill, leakage, discharge or release of any hazardous substance or material
or pollutant thereon or therefrom, or (iii) any off-site disposal by the such
Credit Party of any hazardous substance or material or pollutant in any
location, except as disclosed on Exhibit 5.14 attached hereto.
5.15 YEAR 2000 COMPLIANCE.
The U.S. Borrower has (i) initiated a review and assessment of all
areas within its and each of its Subsidiaries' businesses and operations
(included those affected by suppliers, vendors and customers) that could be
adversely affected by the "Year 2000 Problem" (that is, the risk that computer
applications may not be able to recognize and properly perform date-sensitive
functions after December 31, 1999), (ii) developed a plan and timeline for
addressing the Year 2000 Problem on a timely basis, and (iii) to date,
implemented that plan in accordance with that timetable. Based on the foregoing,
each Credit Party believes that all computer applications (including those of
its suppliers, vendors and customers) that are material to its or any of its
Subsidiaries' business and operations are reasonably expected on a timely basis
to be able to perform properly date-sensitive functions for all dates before and
after January 1, 2000 (that is, be "Year 2000 Compliant"), except to the extent
that a failure to do so could not reasonably be expected to have a material
adverse effect on such Credit Party.
ARTICLE VI
AFFIRMATIVE COVENANTS
6.01 AFFIRMATIVE COVENANTS
Each Credit Party agrees that as long as its obligations hereunder
remain outstanding and until the Commitment hereunder is terminated (unless the
Bank shall otherwise consent in writing), such Credit Party will, and will cause
its Subsidiaries to with respect to the subsections (e) through (o) below:
(a) within ninety (90) days of the end of each fiscal year,
deliver or cause to be delivered to the Bank either (i) the U.S.
Borrower's Annual Report on Form 10-K for such fiscal year or (ii) a
detailed consolidated financial report of the U.S. Borrower and its
Subsidiaries as of the end of such fiscal year (including a balance
sheet, income statement and statements of cash flows and stockholders'
equity) based on Generally Accepted Accounting Principles applied on a
Consistent Basis containing an unqualified opinion of nationally
recognized independent certified public accountants;
(b) deliver or cause to be delivered:
(1) within forty-five (45) days after the end of each
fiscal quarter of each fiscal year, either (i) the copy of
Form 10-Q for such quarter as filed with the Securities and
Exchange Commission or (ii) financial information and reports
as
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of the end of such fiscal quarter (including a balance sheet
and income statement, in form and detail satisfactory to the
Bank) of the U.S. Borrower and its Subsidiaries (in
consolidated form) certified by the chief financial officer of
the U.S. Borrower to be true and correct; and
(2) as soon as available, and in any event within
twenty-five (25) days after the close of each of the first
eleven calendar months of the fiscal year of the U.S.
Borrower, (i) a consolidated balance sheet and income
statement of the U.S. Borrower and its Subsidiaries, as of the
end of such month, together with related consolidated
statements of operations and consolidated statements of
retained earnings and of cash flows for such month, in each
case setting forth in comparative form consolidated figures
for (A) the corresponding period of the preceding fiscal year
and (B) management's proposed budget for such period, all such
financial information to be in form and detail reasonably
acceptable to the Bank, and (ii) an accounts receivable aging,
accounts payable aging, and a collateral value maintenance
calculation, each in form and detail reasonably acceptable to
the Bank.
(3) within twenty-five (25) days after the end of
each calendar month, a certificate as of the end of the
immediately preceding month, substantially in the form of
Exhibit 6.01(b)(3) and certified by chief financial officer of
the U.S. Borrower to be true and correct as of the date
thereof (a "Borrowing Base Certificate").
(c) together with each delivery of financial reports required
by Section 6.01(a) and (b) hereof, deliver or cause to be delivered to
the Bank a statement signed by the chief financial officer of the U.S.
Borrower substantially in the form of Exhibit 6.01(c) hereto, setting
forth that each Credit Party has kept, observed, performed and
fulfilled each and every agreement binding on it contained in this Loan
Agreement and the Loan Documents and is not at the time in default in
the keeping, observance, performance or fulfillment of any of the
terms, provisions and conditions of this Loan Agreement or any of the
Loan Documents and that no Event of Default specified in Article VIII
hereof, nor any event, which, upon notice or lapse of time or both,
would constitute such an Event of Default, has occurred, or if such
Event of Default exists or would occur as the case may be, stating the
nature thereof, the period of existence thereof and what action the
Credit Parties propose to take with respect thereto;
(d) promptly, from time to time, deliver or cause to be
delivered to the Bank a copy of all filings made under the Securities
and Exchange Act of 1934 and such other information regarding the U.S.
Borrower's operations, business affairs and financial condition as the
Bank may reasonably request. The Bank is hereby authorized to deliver a
copy of any such financial information delivered hereunder to the Bank
to any regulatory authority having jurisdiction over the Bank with
appropriate confidential restrictions being noted on any submissions of
such information;
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(e) maintain or cause to be maintained all personal property
material to its business in good working order and condition and make
all needed repairs, replacements and renewals as are necessary to
conduct its business in accordance with prudent business practices;
(f) do or cause to be done all things necessary to preserve
and keep in full force and effect its corporate existence, rights and
franchises;
(g) (i) comply with or contest in good faith all statutes and
governmental regulations of which any Credit Party has knowledge and
the noncompliance of which would have a material adverse effect on the
financial condition of such Credit Party; and (ii) pay all taxes,
assessments, governmental charges, claims for labor, supplies, rent and
any other obligation which, if unpaid, might become a lien against any
of its properties except liabilities being contested in good faith and
against which adequate reserves have been established;
(h) at all times keep its insurable properties insured to such
extent and against such risks, including, without limitation, public
liability insurance, hazard insurance, worker's compensation and other
insurance required by law and is customary with companies of comparable
size in the same or similar business but at all times of the type and
at least in the amount of the present coverage of the Credit Parties;
(i) preserve and protect its patents, licenses trademarks,
trademark rights, tradenames, tradename rights and copyrights and
maintain all of its other material properties and assets used or useful
in the conduct of its business in good repair, working order and
condition and from time to time cause to be made all proper
replacements, betterments and improvements thereto;
(j) keep true books of records and accounts in accordance with
Generally Accepted Accounting Principles applied on a Consistent Basis,
and in which full, true and correct entries will be made of the Credit
Parties' dealings and transactions;
(k) permit any officer of the Bank designated by the Bank to
visit and inspect any of the Credit Parties' properties, books and
financial records at such times as the Bank may reasonably request upon
reasonable notice and during ordinary business hours;
(l) upon the request of the Bank, authorize any officer of the
Bank to discuss its financial statements and financial affairs at any
time and from time to time with the U.S. Borrower's independent
certified public accountants upon reasonable notice and during ordinary
business hours with a representative of the U.S. Borrower present;
(m) deliver to the Bank forthwith, upon any officer of a
Credit Party obtaining knowledge of an Event of Default or an event
which would constitute such an Event of Default but for the requirement
that notice be given or time elapse or both, a certificate signed by
the chief executive officer of the U.S. Borrower specifying the nature
and
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period of existence thereof and what action the Credit Parties propose
to take with respect thereto;
(n) within ten (10) days of the event becoming known to any
officer of a Credit Party, notify the Bank in writing of the occurrence
of any of the following events:
(i) the pendency or commencement of any action, suit
or proceeding at law or in equity under which a party or
parties seek an amount equal to or exceeding $250,000.00;
(ii) any event or condition which shall constitute an
event of default under any other agreement for borrowed money
or any known or potential materially adverse change in any
other material contractual agreement;
(iii) any levy of an attachment, execution or other
process against its assets; and
(iv) any change in any existing agreement or contract
which may materially adversely affect any of its businesses or
affairs, financial or otherwise;
(o) the U.S. Borrower shall (i) at all times, make prompt
payment of all contributions required under all employee benefit plans
("Plans") to meet the minimum funding standard set forth in ERISA (as
defined in Section 5.09) with respect to its Plans; (ii) within thirty
(30) days after the filing thereof, furnish to the Bank copies of each
annual report/return (Form 5500 Series), as well as all schedules and
attachments required to be filed with the Department of Labor and/or
the Internal Revenue Service pursuant to ERISA, and the regulations
promulgated thereunder, in connection with each of its Plans for each
Plan Year (as defined in ERISA); (iii) notify the Bank immediately of
any fact, including, but not limited to, any Reportable Event (as
defined in ERISA) arising in connection with any of its Plans, which
might constitute grounds for termination thereof by the PBGC or for,
the appointment by the appropriate United States District Court of a
trustee to administer such Plan, together with a statement, if
requested by the Bank, as to the reason therefor and the action, if
any, proposed to be taken with respect thereof; and (iv) furnish to the
Bank, upon its request, such additional information concerning any of
the U.S. Borrower's Plans as may be reasonably requested;
(p) satisfy or cause to be satisfied the following financial
tests:
(i) the U.S. Borrower will maintain as of the end of
each fiscal quarter (commencing with the fiscal quarter ending
December 31, 1999) Tangible Net Worth of not less than
$40,000,000.00;
(ii) the U.S. Borrower shall maintain a Cash Flow
Coverage Ratio computed as of the last day of each fiscal
quarter (commencing with the fiscal quarter ending December
31, 1999) of (A) with respect to the fiscal quarter
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ending December 31, 1999, not less than 1.25 to 1.0 and (B)
with respect to the fiscal quarter ending March 31, 2000, not
less than 1.00 to 1.0;
(iii) the U.S. Borrower shall maintain a ratio of
Funded Debt to EBITDA computed as of the last day of each
fiscal quarter (commencing with the fiscal quarter ending
December 31, 1999) of (A) with respect to the fiscal quarter
ending December 31, 1999 (such ratio to be calculated using
annualized EBITDA for the fiscal quarter then ended, i.e.
EBITDA for the fiscal quarter ending December 31, 1999 times
4), not greater than 5.30 to 1.0 and (B) with respect to the
fiscal quarter ending March 31, 2000 (such ratio to be
calculated using annualized EBITDA for the two fiscal quarter
period then ended, i.e. aggregate EBITDA for the fiscal
quarters ending December 31, 1999 and March 31, 2000 times 2),
not greater than 3.90 to 1.0; and
(iv) the U.S. Borrower shall maintain at all times
Eligible Receivables such that, on each day, the product of
(A) Eligible Receivables times (B) 80% is no less than
$13,000,000.
(q) at any time any Person becomes a Subsidiary of the U.S.
Borrower, the U.S. Borrower shall promptly (but in any event within 30
days after the date thereof or within such longer period of time as
agreed to by the Bank): (a) notify the Bank thereof, (b) cause such
Subsidiary to become a Guarantor hereunder by execution of a joinder
agreement in form and substance satisfactory to the Bank, (c) cause
such Subsidiary to pledge its material assets to the Bank pursuant to
security documents in form and substance satisfactory to the Bank and
(d) deliver to the Bank with the joinder agreement and other documents
referred to above, such supporting resolutions, incumbency
certificates, corporate formation and organizational documentation and
opinions of counsel as the Bank may reasonably request;
(r) the Credit Parties will, and will cause each of their
respective Subsidiaries to, take all actions reasonably necessary to
assure that the Credit Parties' computer based systems (which if not
functional would have a material adverse effect on the Credit Parties)
are able to operate and effectively process data in a manner that is
Year 2000 Compliant (as defined in Section 5.15). At the request of the
Bank, the Credit Parties shall provide information to the Bank
concerning the Credit Parties' Year 2000 compliance; and
(s) within 30 days from the Closing Date, the Credit Parties
shall (i) execute and provide for the recordation of the Mortgages and
UCC financing statements evidencing the Bank's liens pursuant to the
Mortgages, (ii) perform all other acts reasonably necessary to perfect
the Bank's liens, (iii) arrange for title insurance acceptable to the
Bank in respect of the properties covered by the Mortgages, and (iv)
deliver to the Bank opinions of local counsel, satisfactory in form and
substance to the Bank, concerning the Mortgages and related UCC
financing statements and the perfection of the Bank's interest therein.
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ARTICLE VII
NEGATIVE COVENANTS
7.01 NEGATIVE COVENANTS
Each Credit Party agrees that as long as its obligations hereunder
remain outstanding and until the Commitment is terminated (unless the Bank shall
otherwise consent in writing), no Credit Party shall:
(a) incur, create, assume or permit to exist any indebtedness
for borrowed money, howsoever evidenced, or its equivalent (including
but not limited to leases required to be capitalized under Generally
Accepted Accounting Principles), except
(i) indebtedness set forth in the financial
statements referred to in Section 5.13 hereof and as set forth
in Exhibit 7.01(a)(i);
(ii) additional indebtedness extended by the Bank;
and
(iii) purchase money indebtedness incurred to finance
the acquisition of equipment on installment contracts with
terms not to exceed 6 months;
(b) incur, create or permit to exist any pledge, lien, charge
or other encumbrance of any nature whatsoever on the property of the
U.S. Borrower or any of its Subsidiaries, whether now owned or
hereafter acquired, other than
(i) liens as disclosed in Exhibit 5.08 hereto;
(ii) any unfiled lien of materialmen, mechanics,
workmen, warehousemen, carriers, landlords or repairmen;
provided that if such a lien shall be perfected and shall not
be contested in good faith, it shall be discharged of record
immediately by payment, bond or otherwise;
(iii) tax liens which are being contested in good
faith, or which constitute liens for taxes the payment of
which is not yet required;
(iv) liens in favor of the Bank;
(v) liens incurred in connection with the purchase
money indebtedness permitted under Section 1.01(a)(iii); and
(vi) liens on assets securing indebtedness or
obligations in amounts less than $10,000.00;
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<PAGE> 27
(c) sell, lease, transfer or otherwise dispose of any of the
properties and assets of the U.S. Borrower or any of its Subsidiaries
to any Person other than sales in the ordinary course of business;
(d) seek or permit dissolution or liquidation of any Credit
Party in whole or in part; provided, however, that any Subsidiary other
than a Borrower that is not material to the U.S. Borrower and its
Subsidiaries taken as a whole may liquidate, wind-up or dissolve itself
(i) into a Credit Party or (ii) otherwise in a transaction in which the
assets of such dissolving Subsidiary become owned by a Credit Party;
(e) guaranty, or become liable for, the obligations of any
other Person other than the Obligations (provided, however, (i) this
shall not prevent the U.S. Borrower or any of its Subsidiaries from
endorsing negotiable instruments for collections in the ordinary course
of business and (ii) this shall not prevent the U.S. Borrower from
entering into (A) those guarantees, endorsements or debt assumptions
for related, affiliate or subsidiary entities of the U.S. Borrower
described on Schedule 7.01(a)(i) or (B) additional guarantees,
endorsements or debt assumptions for related, affiliate or subsidiary
entities of the U.S. Borrower so long as the aggregate amount of such
guaranties, endorsements or debt assumptions shall not exceed
$4,000,000.00 at any time);
(f) make any loans or advances in excess of $500,000.00 in the
aggregate; provided, however, the U.S. Borrower may make loans or
advances to related, affiliate or subsidiary entities of the U.S.
Borrower so long as the aggregate amount of such loans or advances
shall not exceed, at any time, an amount equal to $6,100,000.00 or such
greater amount as the Bank may designate in writing to the U.S.
Borrower;
(g) consolidate with, merge into or be acquired by any Person;
provided, however, a Credit Party shall be permitted to enter into
merger and/or consolidation transactions so long as such Credit Party
is the surviving entity; provided further that, if a Borrower is a
party to any such transaction, such Borrower shall be the surviving
entity;
(h) change the general character of business of the U.S.
Borrower or any of its Subsidiaries or engage in any type of business
not reasonably related to the business of the U.S.
Borrower or any of its Subsidiaries as presently conducted;
(i) (1) pay any cash dividends to the shareholders of the U.S.
Borrower, (2) make any distribution on any shares of any class of the
capital stock of the U.S. Borrower which results in a reduction to
stockholders' equity, (3) apply any Credit Party's property or assets
to the purchase, redemption or other retirement of any shares of any
class of capital stock resulting in a reduction to stockholders' equity
or (4) amend in any way the capital structure of the U.S. Borrower;
(j) create or permit to exist or become effective, directly or
indirectly, any prohibition or restriction on the creation or existence
of any lien upon the assets of the U.S. Borrower or any of its
Subsidiaries other than as set forth herein; or
23
<PAGE> 28
(k) create or permit to exist any Subsidiary unless such
Subsidiary becomes a Guarantor hereunder pursuant to a joinder
agreement.
ARTICLE VIII
EVENTS OF DEFAULT AND ACCELERATION
8.01 EVENTS OF DEFAULT.
Any of the following shall constitute an "Event of Default" under this
Loan Agreement:
(a) Nonpayment. Nonpayment when and as due of any principal,
interest or other payment hereunder or under the Revolving Notes and
the continuation of such nonpayment for a period of five (5) days.
(b) Breach of Covenants. Other than as set forth in Section
8.01(a) hereof, the failure to perform and observe any covenant or
other obligation contained herein or in any other Loan Documents and
the continuation of such failure for a period of thirty (30) days after
receipt of written notice from the Bank thereof.
(c) False Statements. If any representation or warranty made
by a Credit Party in this Loan Agreement, any other Loan Document or in
any document, certificate, statement or report heretofore or hereafter
made shall be untrue in any material respect.
(d) Bankruptcy. In the event that a Borrower or any Guarantor
(1) shall make an assignment for the benefit of
creditors; or
(2) has a petition initiating a proceeding under any
section or chapter of the Bankruptcy Code or its amendments,
filed by or against a Borrower or any Guarantor and, if
against a Borrower or any Guarantor, such petition is not set
aside within ninety (90) days after such filing; or
(3) shall file any proceedings for dissolution or
liquidation; or
(4) has a receiver, trustee or custodian appointed
for all or part of its or his assets; or
(5) seeks to make an adjustment, settlement or
extension of its or his debts with its or his creditors
generally; or
(6) has a notice of an action for enforcement of a
lien filed or recorded or a judgment lien or execution
obtained against it or him in excess of an aggregate of
$50,000.00 which notice of lien is not removed, insured,
reserved for
24
<PAGE> 29
(in amounts satisfactory to the Bank), satisfied, bonded or
contested in good faith within thirty (30) days after any
officer of a Credit Party becomes aware of such lien;
(e) if an event of default occurs under any agreement for
Funded Debt by and between a Credit Party and the Bank which is in
existence as of the date hereof or which is entered into subsequent to
the date hereof;
(f) if a Credit Party in the performance of any other
agreement for Funded Debt between it and any other lender defaults and
such default permits such other lender to accelerate such other
indebtedness of such Credit Party for borrowed money;
(g) any change shall occur with respect to the chief executive
officer management position of the U.S. Borrower; or
(h) any Guarantor shall default in the performance of any
obligation hereunder.
8.02 REMEDIES.
Upon the occurrence of any such Event of Default and after the
applicable grace period, if any, and unless the Bank agrees to waive in writing
such an Event of Default:
(a) Termination of Commitment. The Bank, in its sole
discretion, may terminate the Commitment.
(b) Acceleration of Indebtedness. All of the indebtedness of
any and every kind owing by a Credit Party to the Bank, howsoever
evidenced, now existing or hereafter arising, shall become due and
payable upon written notice to the U.S. Borrower (other than an Event
of Default described in Section 8.01(d) in which case such indebtedness
shall become due and payable immediately without necessity of written
demand) without the necessity of any other demand, presentment, protest
or notice upon a Credit Party, all of which are hereby expressly waived
by the Credit Parties.
(c) Acceleration of Obligations. All of the obligations of the
Credit Parties under the Loan Documents shall thereupon be immediately
due and payable without the necessity of any other demand, presentment,
protest or notice upon a Credit Party, all of which are hereby
expressly waived by the Credit Parties.
(d) Right of Set-Off. Regardless of the adequacy of the
collateral, the Bank shall have the right, immediately and without
further action by it, to set-off against a Note, all money owed by the
Bank in any capacity to a Credit Party, whether or not due, and the
Bank shall be deemed to have exercised such right of set-off and to
have made a charge against any such money immediately upon the
occurrence of such event of default even though such charge is made or
entered on the books of the Bank subsequent thereto.
25
<PAGE> 30
If the Bank exercises its right of set-off described in this paragraph,
it will provide the U.S. Borrower, in adequate detail, a description of
all amounts set-off against a Note.
ARTICLE IX
MISCELLANEOUS
9.01 NOTICES.
All notices and other communications hereunder shall be sufficiently
given and shall be deemed given when delivered or when mailed by registered or
certified mail, postage prepaid, addressed as follows:
(a) if to the Borrower:
Applied Analytical Industries, Inc.
2320 Scientific Park Drive
Wilmington, North Carolina 28405
Attention: Eugene T. Haley
Phone: (910) 254-7000
Telecopy: (910) 815-2354
(b) if to the Bank
Bank of America, N.A.
155 North Front Street
Wilmington, North Carolina 28401
Attention: David Houston
Phone: (910) 251-5325
Telecopy: (910) 251-5251
9.02 WAIVER.
No failure or delay on the part of the Bank in the exercise of any
right, power or privilege hereunder or under any other Loan Document shall
operate as a waiver of any such right, power or privilege nor shall any such
failure or delay preclude any other or further exercise thereof. The rights and
remedies herein provided are cumulative and not exclusive of any rights or
remedies provided by law.
26
<PAGE> 31
9.03 SURVIVAL.
All covenants, agreements, representations and warranties made herein
and in the other Loan Documents shall survive the making by the Bank of the
Loans and the execution and delivery to the Bank of the Loan Documents and shall
continue in full force and effect so long as any of the indebtedness of the
Borrower to the Bank evidenced by the Notes or any obligations under the
Commitment remain outstanding.
9.04 SUCCESSORS AND ASSIGNS.
This Loan Agreement and the Loan Documents shall inure to the benefit
of and be binding upon successors and assigns of the Bank; provided, however, no
Credit Party shall assign any of its rights or obligations hereunder without the
prior written consent of the Bank.
9.05 COSTS.
The U.S. Borrower agrees to pay all reasonable costs and expenses in
connection with the preparation, execution, delivery and administration of the
Loan Documents and any amendments or modifications thereto, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel to the
Bank (including the allocated costs of internal counsel), and, after the
occurrence of an Event of Default, costs and expenses of the Bank in connection
with the enforcement of this Loan Agreement or the other Loan Documents
(including without limitation reasonable attorneys fees) and to hold the Bank
harmless from any and all such costs, expenses and liabilities.
9.06 AMENDMENT; WAIVER; CONSENTS.
No approval, decision, option or action required of the Bank
("Approval") hereunder nor any modification, amendment or waiver ("Waiver") of
any provision of this Loan Agreement or any other Loan Document nor any consent
to any departure by a Credit Party therefrom ("Consent") shall in any event be
effective unless the same shall be in writing signed by the Bank and delivered
in accordance with the provisions of Section 9.01 hereof, and then such
Approval, Waiver or Consent shall be effective only in the specific instance and
for the purpose for which given but any such Approval, Waiver or Consent when
signed shall be effective and binding upon the Bank. No notice to or demand on a
Credit Party in any case shall entitle the recipient any other or further notice
or demand in the same, similar or other circumstances.
9.07 YEAR.
Interest, fees and premiums hereunder shall be computed on the basis of
a three hundred sixty (360) day year for the actual number of days in the
billing period.
9.08 PAYMENT ON BUSINESS DAY.
Should any installment or other payment of the principal of or interest
on the Notes become due and payable on other than a Business Day, the maturity
thereof shall be extended to
27
<PAGE> 32
the next succeeding Business Day thereafter and in the case of an installment of
principal, interest shall be payable thereon at the rate per annum herein
specified during such extension.
9.09 COUNTERPARTS.
This Loan Agreement may be executed in any number of counterparts, each
of which when so executed and delivered shall be deemed an original, and it
shall not be necessary in making proof of this Loan Agreement to produce or
account for more than one such counterpart.
9.10 ASSIGNMENT.
The Bank may, at any time, transfer or assign all or any portion of the
indebtedness evidenced by a Note held by the Bank and the terms hereof shall
extend to any subsequent holder of a Note.
9.11 TERM.
The term of this Loan Agreement shall be until the Bank is no longer
obligated to lend under the Commitment and the Bank has received payment in full
of the unpaid principal and interest of the Notes.
9.12 CAPTIONS.
The captions herein are inserted only as a matter of convenience and
for reference and in no way define, limit or describe the scope of this Loan
Agreement nor the interest of any provisions hereof.
9.13 GOVERNING LAW.
This Loan Agreement and the other Loan Documents and all matters
relating thereto shall be governed by and construed and interpreted in
accordance with the laws of the State of North Carolina. Each Credit Party
hereby submits to the jurisdiction and venue of the state and federal courts of
North Carolina and agrees that the Bank may, at its option, enforce its rights
under the Loan Documents in such courts. The Credit Parties hereby agrees that
both the federal and state courts in Mecklenburg County, North Carolina are a
convenient forum and agrees not to raise as a defense that such courts are not a
convenient forum.
9.14 ARBITRATION.
ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO INCLUDING
BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS INSTRUMENT,
AGREEMENT OR DOCUMENT OR ANY RELATED INSTRUMENTS, AGREEMENTS OR DOCUMENTS,
INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL BE
DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT
(OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND
28
<PAGE> 33
PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF J.A.M.S./ENDISPUTE OR
ANY SUCCESSOR THEREOF ("J.A.M.S."), AND THE "SPECIAL RULES" SET FORTH BELOW. IN
THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON
ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY
TO THIS LOAN AGREEMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED
PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS LOAN
AGREEMENT APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION.
A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE
CITY OF THE BORROWER'S DOMICILE AT TIME OF THE EXECUTION OF THIS INSTRUMENT,
AGREEMENT OR DOCUMENT AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN
ARBITRATOR; IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE
ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL
ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR
ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OR CAUSE, BE
PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60
DAYS.
B. RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION
PROVISION SHALL BE DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE
APPLICABLE STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS
ARBITRATION PROVISION; OR (II) BE A WAIVER BY THE BANK OF THE PROTECTION
AFFORDED TO IT BY 12 U.S.C. SEC. 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW;
OR (III) LIMIT THE RIGHT OF THE BANK HERETO (A) TO EXERCISE SELF HELP REMEDIES
SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B) TO FORECLOSE AGAINST ANY REAL OR
PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR
ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF
POSSESSION OR THE APPOINTMENT OF A RECEIVER. THE BANK MAY EXERCISE SUCH SELF
HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL OR
ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY ARBITRATION
PROCEEDING BROUGHT PURSUANT TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT. NEITHER
THIS EXERCISE OF SELF HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF AN
ACTION FOR FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A
WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO
ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASSIONING RESORT TO SUCH
REMEDIES.
9.15 LOAN DOCUMENTS.
The Bank agrees to provide the U.S. Borrower with copies of all of the
Loan Documents in acceptable electronic format.
29
<PAGE> 34
9.16 BINDING EFFECT; REPLACEMENT OF EXISTING LOAN AGREEMENT;
TERMINATION.
(a) This Loan Agreement shall become effective at such time on
or after the Closing Date when it shall have been executed by the
Credit Parties and the Bank, and thereafter this Loan Agreement shall
be binding upon and inure to the benefit of the Credit Parties and the
Bank and their respective successors and assigns. The Credit Parties
and the Bank each hereby agrees that, at such time as this Loan
Agreement shall have become effective pursuant to the terms of the
immediately preceding sentence, (i) the Existing Loan Agreement
automatically shall be deemed amended, restated and replaced in its
entirety by this Loan Agreement, and all obligations and commitments
outstanding under the Existing Loan Agreement shall be governed by the
terms of this Loan Agreement (as such obligations or commitments may be
modified or amended hereunder) and (ii) the promissory notes executed
by the U.S. Borrower in connection with the Existing Loan Agreement
automatically shall be substituted and replaced by the promissory notes
executed in connection with this Loan Agreement. The Credit Parties
further agree, upon the request of the Bank, to promptly take such
actions, as reasonably requested, as are appropriate to carry out the
intent of this Loan Agreement and the other Loan Documents, including,
but not limited to, such actions as are reasonably necessary to ensure
that the Bank has a perfected security interest in any and all
collateral securing the Credit Parties' obligations hereunder and under
the other Loan Documents, subject to no Liens other than Permitted
Liens.
(b) The term of this Loan Agreement shall commence on the
effective date pursuant to subsection (a) above and shall continue
until no Loans or any other amounts payable hereunder or under any of
the other Loan Documents shall remain outstanding and until the
Commitment hereunder shall have expired or been terminated.
ARTICLE X
GUARANTY
10.01 GUARANTY.
Each of the Guarantors hereby jointly and severally guarantees to the
Bank as hereinafter provided the prompt payment of the Guaranteed Obligations in
full when due (whether at stated maturity, as a mandatory prepayment, by
acceleration or otherwise and after giving effect to any grace periods) strictly
in accordance with the terms hereof. Each of the Guarantors hereby further
agrees that if any of the Guaranteed Obligations are not paid in full when due
(whether at stated maturity, as a mandatory prepayment, by acceleration or
otherwise and after giving effect to any grace periods), such Guarantor will
promptly pay the same, without any demand or notice whatsoever, and that in the
case of any extension of time of payment or renewal of any of the Guaranteed
Obligations, the same will be promptly paid in full when due (whether at
extended maturity, as a mandatory prepayment, by acceleration or otherwise and
after giving effect to any
30
<PAGE> 35
grace periods) in accordance with the terms of such extension or renewal. This
is a guaranty of payment and not of collection.
Notwithstanding any provision to the contrary contained herein or in
any other of the Loan Documents, to the extent the obligations of any Guarantor
as guarantor hereunder shall be adjudicated to be invalid or unenforceable for
any reason (including, without limitation, because of any applicable state or
federal law relating to fraudulent conveyances or transfers) then the
obligations of such Guarantor hereunder shall be limited to the maximum amount
that is permissible under applicable law (whether federal or state and
including, without limitation, the Federal Bankruptcy Code).
10.02 OBLIGATIONS UNCONDITIONAL.
The obligations of the Guarantors under Section 10.01 hereof are
absolute and unconditional, irrespective of the value, genuineness, validity,
regularity or enforceability of this Agreement or any of the other Loan
Documents, or any other agreement or instrument referred to herein or therein or
relating hereto or thereto, or any substitution, release or exchange of any
other guarantee of or security for any of the Guaranteed Obligations, and, to
the fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever which might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor, it being the intent of this
Section 10.02 that the obligations of the Guarantors hereunder shall be absolute
and unconditional under any and all circumstances. Each of the Guarantors agrees
that it shall have no right of subrogation, indemnity, reimbursement or
contribution against a Borrower or any other guarantor for amounts paid under
this Guaranty until such time as the Bank has been paid in full, the Commitment,
if any, has been terminated and no Person or governmental authority shall have
any right to request any return or reimbursement of funds from the Bank in
connection with monies received under the Loan Documents. Without limiting the
generality of the foregoing, it is agreed that, to the fullest extent permitted
by law, the occurrence of any one or more of the following shall not alter or
impair the liability of the Guarantors hereunder which shall remain absolute and
unconditional as described above:
(i) at any time or from time to time, without notice to the
Guarantors, the time for any performance of or compliance with any of
the Guaranteed Obligations shall be extended, or such performance or
compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of
this Agreement or any of the other Loan Documents or any other
agreement or instrument referred to herein or therein or relating
hereto or thereto shall be done or omitted;
(iii) the maturity of any of the Guaranteed Obligations shall
be accelerated, or any of the Guaranteed Obligations shall be modified,
supplemented or amended in any respect, or any right under any of the
Loan Documents or any other agreement or instrument referred to in the
Loan Documents shall be waived or any other guarantee of any of the
Guaranteed Obligations or any security therefor shall be released or
exchanged in whole or in part or otherwise dealt with;
31
<PAGE> 36
(iv) any lien granted to, or in favor of, the Bank as security
for any of the Guaranteed Obligations shall fail to attach or be
perfected or shall be released or discharged in whole or in part; or
(v) any of the Guaranteed Obligations shall be determined to
be void or voidable (including, without limitation, for the benefit of
any creditor of any Guarantor or any other guarantor) or shall be
subordinated to the claims of any Person (including, without
limitation, any creditor of any guarantor).
With respect to its obligations hereunder, each of the Guarantors
hereby expressly waives diligence, presentment, demand of payment, protest and
all notices whatsoever, and any requirement that the Bank exhaust any right,
power or remedy or proceed against any Person under this Agreement or any of the
other Loan Documents or any other agreement or instrument referred to herein or
therein or relating hereto or thereto, or against any other Person under any
other guarantee of, or security for, any of the Guaranteed Obligations.
10.03 REINSTATEMENT.
The obligations of the Guarantors under this Article X shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of any Person in respect of the Guaranteed Obligations is rescinded
or must be otherwise restored by any holder of any of the Guaranteed
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each of the Guarantors agrees that it will
indemnify the Bank on demand for all reasonable costs and expenses (including,
without limitation, fees and expenses of counsel) incurred by the Bank in
connection with such rescission or restoration, including any such costs and
expenses incurred in defending against any claim alleging that such payment
constituted a preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law.
10.04 CERTAIN ADDITIONAL WAIVERS.
Without limiting the generality of the provisions of this Article X,
each Guarantor hereby specifically waives the benefits of N.C. Gen. Stat. ss.ss.
26-7 through 26-9 inclusive. Each of the Guarantors agrees that it shall have no
right of recourse to security for the Guaranteed Obligations, except through the
exercise of the rights of subrogation pursuant to Section 10.02.
10.05 REMEDIES.
Each of the Guarantors agrees that, to the fullest extent permitted by
law, as between the Guarantors, on the one hand, and the Bank, on the other
hand, the Guaranteed Obligations may be declared to be forthwith due and payable
as provided in Article VIII hereof (and shall be deemed to have become
automatically due and payable in the circumstances provided in said Article
VIII) for purposes of Section 10.01 hereof notwithstanding any stay, injunction
or other prohibition preventing such declaration (or preventing the Guaranteed
Obligations from becoming automatically due and payable) as against any other
Person and that, in the event of such declaration (or the Guaranteed Obligations
being deemed to have become automatically due and payable), the Guaranteed
Obligations (whether or not due and payable by any other Person) shall forthwith
32
<PAGE> 37
become due and payable by the Guarantors for purposes of said Section 10.01. The
Guarantors acknowledge and agree that their obligations hereunder are secured in
accordance with the terms of the Security Documents and that the Bank may
exercise remedies thereunder in accordance with the terms thereof.
10.06 CONTINUING GUARANTEE.
The guarantee in this Article X is a continuing guarantee, and shall
apply to all Guaranteed Obligations whenever arising.
10.07 RIGHTS OF CONTRIBUTION.
(a) With respect to the Domestic Subsidiaries in their
capacities as Guarantors, such Guarantors agree among themselves that,
in connection with payments made hereunder, each such Guarantor shall
have contribution rights against the other such Guarantors as permitted
under applicable law. Such contribution rights shall be subordinate and
subject in right of payment to the obligations of such Guarantors under
the Loan Documents and no such Guarantor shall exercise such rights of
contribution until all Guaranteed Obligations have been paid in full
and the Commitment terminated.
(b) With respect to the U.S. Borrower and the Foreign
Subsidiaries in their capacities as Guarantors, such Guarantors agree
among themselves that, in connection with payments made hereunder, each
such Guarantor shall have contribution rights against the other such
Guarantors as permitted under applicable law. Such contribution rights
shall be subordinate and subject in right of payment to the obligations
of such Guarantors under the Loan Documents and no such Guarantor shall
exercise such rights of contribution until all Guaranteed Obligations
have been paid in full and the Commitment terminated.
33
<PAGE> 38
IN WITNESS WHEREOF, the parties hereto have executed or caused this
instrument to be executed under seal as of the day and year first above written.
U.S. BORROWER
AND A GUARANTOR: APPLIED ANALYTICAL INDUSTRIES, INC.
By
------------------------------------
Name:
Title:
GERMAN BORROWER: AAI APPLIED ANALYTICAL INDUSTRIES
DEUTSCHLAND GmbH & CO. KG
By
------------------------------------
Name:
Title:
DOMESTIC SUBSIDIARIES: APPLIED ANALYTICAL INDUSTRIES
LEARNING CENTER, INC.
By
------------------------------------
Name:
Title:
AAI TECHNOLOGIES, INC.
By
------------------------------------
Name:
Title:
AAI PROPERTIES, INC.
By
------------------------------------
Name:
Title:
KANSAS CITY ANALYTICAL SERVICES, INC.
By
------------------------------------
Name:
Title:
<PAGE> 39
MEDICAL & TECHNICAL RESEARCH
ASSOCIATES, INC.
By
------------------------------------
Name:
Title:
AAI JAPAN, INC.
By
------------------------------------
Name:
Title:
FOREIGN SUBSIDIARIES: APPLIED ANALYTICAL INDUSTRIES
ITALY, S.r.l.
By
------------------------------------
Name:
Title:
AAI UK LTD.
By
------------------------------------
Name:
Title:
AAI VERMOGENSVER-
WALTUNGSGESELLSCHAFT mgH
By
------------------------------------
Name:
Title:
L.A.B. VERWALTUNGS-GESELLSCHAFT mbH
By
------------------------------------
Name:
Title:
APPLIED ANALYTICAL INDUSTRIES
DEUTSCHLAND GmbH
By
------------------------------------
Name:
Title:
<PAGE> 40
L.A.B. BENELUX B.V.
By
------------------------------------
Name:
Title:
APPLIED ANALYTICAL INDUSTRIES
FRANCE S.A.R.L.
By
------------------------------------
Name:
Title:
NEOSAN ARZNEIMITTEL-
VERTRIEBSGESELLSCHAFT mbH
By
------------------------------------
Name:
Title:
I.P.A.- INTERNATIONALE PHARMA
AGENTUR GmbH
By
------------------------------------
Name:
Title:
INPHARMCO GESELLSCHAFT zur
VERMARKTUNG VON ARZNEIMITTELN mbH
By
------------------------------------
Name:
Title:
LAB (GREAT BRITAIN) LIMITED
By
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Name:
Title:
PROSCIENTIA HOLDING AG
By
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Name:
Title:
<PAGE> 41
TECHNOPHARM S.A.
By
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Name:
Title:
BANK: BANK OF AMERICA, N.A.
By
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Name:
Title: