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CONFORMED COPY
EXHIBIT 10.4
CATALYTICA, INC.
CATALYTICA PHARMACEUTICALS, INC.
$200,000,000
Credit Agreement
July 31, 1997
The Lenders Party Hereto
The Chase Manhattan Bank
as Administrative Agent
and as Documentation Agent
Chase Securities Inc.
as Arranger
[CHASE LOGO]
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TABLE OF CONTENTS
Page
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ARTICLE I
Definitions
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SECTION 1.01. Defined Terms 2
SECTION 1.02. Classification of Loans and Borrowings 24
SECTION 1.03. Terms Generally 24
SECTION 1.04. Accounting Terms; GAAP 24
ARTICLE II
The Credits
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SECTION 2.01. Commitments.............................................. 25
SECTION 2.02. Loans and Borrowings..................................... 25
SECTION 2.03. Requests for Borrowings.................................. 26
SECTION 2.04. Letters of Credit........................................ 26
SECTION 2.05. Funding of Borrowings.................................... 30
SECTION 2.06. Interest Elections....................................... 31
SECTION 2.07. Termination and Reduction of Commitments................. 32
SECTION 2.08. Repayment of Loans; Evidence of Debt..................... 33
SECTION 2.09. Amortization of Term Loans............................... 34
SECTION 2.10. Prepayment of Loans...................................... 35
SECTION 2.11. Fees..................................................... 36
SECTION 2.12. Interest................................................. 37
SECTION 2.13. Alternate Rate of Interest............................... 37
SECTION 2.14. Increased Costs.......................................... 38
SECTION 2.15. Break Funding Payments................................... 39
SECTION 2.16. Taxes.................................................... 39
SECTION 2.17. Payments Generally; Pro Rata Treatment; Sharing of
Setoffs................................................ 41
SECTION 2.18. Mitigation Obligations; Replacement of Lenders........... 42
ARTICLE III
Representations and Warranties
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SECTION 3.01. Organization; Powers......................................43
SECTION 3.02. Authorization; Enforceability.............................43
SECTION 3.03. Governmental Approvals; No Conflicts......................43
SECTION 3.04. Financial Condition; No Material Adverse Change...........44
SECTION 3.05. Properties................................................44
SECTION 3.06. Litigation and Environmental Matters......................45
SECTION 3.07. Compliance with Laws and Agreements.......................45
SECTION 3.08. Investment and Holding Company Status.....................46
SECTION 3.09. Taxes.....................................................46
SECTION 3.10. ERISA.....................................................46
SECTION 3.11. Disclosure................................................46
SECTION 3.12. Subsidiaries..............................................46
SECTION 3.13. Insurance.................................................47
SECTION 3.14. Labor Matters.............................................47
SECTION 3.15. Solvency..................................................47
SECTION 3.16. Security Documents........................................47
SECTION 3.17. Federal Reserve Regulations...............................48
ARTICLE IV
Conditions
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SECTION 4.01. Effective Date............................................49
SECTION 4.02. Each Credit Event.........................................54
ARTICLE V
Affirmative Covenants
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SECTION 5.01. Financial Statements and Other Information................55
SECTION 5.02. Notices of Material Events................................56
SECTION 5.03. Information Regarding Collateral..........................57
SECTION 5.04. Existence; Conduct of Business............................58
SECTION 5.05. Payment of Obligations....................................58
SECTION 5.06. Maintenance of Properties.................................58
SECTION 5.07. Insurance.................................................58
SECTION 5.08. Casualty and Condemnation.................................59
SECTION 5.09. Books and Records; Inspection and Audit Rights............59
SECTION 5.10. Compliance with Laws......................................60
SECTION 5.11. Use of Proceeds and Letters of Credit.....................60
SECTION 5.12. Additional Subsidiaries...................................60
SECTION 5.13. Further Assurances...................................... 60
ARTICLE VI
Negative Covenants
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SECTION 6.01. Indebtedness; Certain Equity Securities................. 61
SECTION 6.02. Liens................................................... 62
SECTION 6.03. Fundamental Changes..................................... 63
SECTION 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions..................................... 64
SECTION 6.05. Asset Sales............................................. 65
SECTION 6.06. Sale and Lease-Back Transactions........................ 66
SECTION 6.07. Hedging Agreements...................................... 66
SECTION 6.08. Restricted Payments..................................... 66
SECTION 6.09. Transactions with Affiliates............................ 67
SECTION 6.10. Restrictive Agreements.................................. 67
SECTION 6.11. Sterile Facility Pay-Out................................ 67
SECTION 6.12. Amendment of Material Documents......................... 68
SECTION 6.13. Capital Expenditures.................................... 68
SECTION 6.14. Leverage Ratio.......................................... 68
SECTION 6.15. Consolidated Interest Expense Coverage Ratio............ 69
ARTICLE VII
Events of Default............................ 69
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ARTICLE VIII
The Administrative Agent......................... 72
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ARTICLE IX
Miscellaneous
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SECTION 9.01. Notices................................................. 74
SECTION 9.02. Waivers; Amendments..................................... 74
SECTION 9.03. Expenses; Indemnity; Damage Waiver...................... 75
SECTION 9.04. Successors and Assigns.................................. 77
SECTION 9.05. Survival................................................ 79
SECTION 9.06. Counterparts; Integration; Effectiveness................ 79
SECTION 9.07. Severability............................................ 80
SECTION 9.08. Right of Setoff........................................ 80
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of
Process.......................................... 80
SECTION 9.10. Waiver of Jury Trial................................... 81
SECTION 9.11. Headings............................................... 81
SECTION 9.12. Confidentiality........................................ 81
SECTION 9.13. Interest Rate Limitation............................... 82
SCHEDULES:
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Schedule 1.01(a) - Mortgaged Properties
Schedule 2.01 - Commitments
Schedule 3.05 - Real Property
Schedule 3.06 - Disclosed Matters
Schedule 3.12 - Subsidiaries
Schedule 3.13 - Insurance
Schedule 3.16(d) - Mortgage Filing Offices
Schedule 6.01 - Existing Indebtedness
Schedule 6.02 - Existing Liens
Schedule 6.04 - Existing Investments
Schedule 6.10 - Existing Restrictions
EXHIBITS:
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Exhibit A - Form of Assignment and Acceptance
Exhibit B - Form of Opinion of Borrower's Counsel
Exhibit C - Form of Opinion Local Counsel
Exhibit D - Form of Parent Guarantee Agreement
Exhibit E - Form of Guarantee Agreement
Exhibit F - Form of Indemnity, Subrogation and
Contribution Agreement
Exhibit G - Form of Pledge Agreement
Exhibit H - Form of Security Agreement
Exhibit I - Form of Mortgage
CREDIT AGREEMENT dated as of July 31, 1997, among
CATALYTICA, INC., a Delaware corporation, CATALYTICA
PHARMACEUTICALS, INC., a Delaware corporation, as Borrower, the
LENDERS party hereto, and THE CHASE MANHATTAN BANK, as
Administrative Agent and as Documentation Agent.
Pursuant to an Asset Purchase Agreement dated as of June 25, 1997 (the
"Asset Purchase Agreement"), among Catalytica (such term and each other
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capitalized term used but not defined herein having the meaning assigned to it
in Article I), the Borrower and GWI, the Borrower will purchase the Acquired
Facilities for consideration (the "Purchase Price") consisting of (a)
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$246,600,000 in cash (subject to adjustments as provided in the Asset Purchase
Agreement) payable by the Borrower to GWI, (b) the issuance to GWI on the
Effective Date of (i) 250,000 shares of the Junior Preferred Stock and (ii) the
Warrants and (c) the Sterile Facility Pay-Out.
In connection with the Acquisition; (a) the Borrower will receive an
aggregate cash amount of not less than $120,000,000 pursuant to the Equity
Financing from MSCP (through Catalytica); (b) the Borrower will enter into a
Supply Agreement with GWI. Pursuant to the terms of the Supply Agreement, GWI
will be required to pay to the Borrower revenues of at least $427,600,000 in the
aggregate (plus certain of the Borrower's costs incurred in connection with the
Supply Agreement) during a four and one-half year term, upon the terms and
subject to the conditions set forth in the Supply Agreement; and (c) Catalytica
will issue 150,000 shares of common stock of Catalytica to ▇▇▇▇▇▇ Brothers Inc.
in exchange for services rendered to Catalytica in connection with the
Transactions.
The Borrower has requested the Lenders to extend credit in the form of (a)
Term Loans on the Effective Date, in an aggregate principal amount not in excess
of $125,000,000, and (b) Revolving Loans at any time and from time to time prior
to the Maturity Date, in an aggregate principal amount at any time outstanding
not in excess of $75,000,000 less the LC Exposure at such time. The Borrower
has requested the Issuing Bank to issue letters of credit, in an aggregate face
amount at any time outstanding not in excess of $20,000,000, to support payment
obligations incurred in the ordinary course of business by the Borrower.
The proceeds of the Term Loans, together with up to $14,600,000 in
principal amount of Revolving Loans and the proceeds of the Equity Financing,
will be used only for the payment of (a) the cash portion of the Purchase Price,
(b) the Existing Indebted ness and (c) up to $8,000,000 in cash fees and
expenses payable in connection with the Transactions. The proceeds of the
Revolving Loans (other than Revolving Loans used for
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the purposes specified in the preceding sentence) are to be used for general
corporate purposes.
The Lenders are willing to extend such credit to the Borrower and the
Issuing Bank is willing to issue letters of credit for the account of the
Borrower on the terms and subject to the conditions set forth herein.
Accordingly, the parties hereto agree as follows:
ARTICLE I
Definitions
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SECTION 1.01. Defined Terms. As used in this Agreement, the
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following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to
---
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"Acquired EBITDA" means, with respect to any Acquired Entity or
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Business or any Sold Entity or Business for any period, the sum of the amounts
for such period of net income or loss of such Acquired Entity or Business or
Sold Entity or Business determined on a consolidated basis in accordance with
GAAP, plus, without duplication and to the extent deducted from revenues in
determining such consolidated net income or loss, the sum of (a) the aggregate
amount of interest expense, both expensed and capitalized (including the
interest component in respect of Capital Lease Obligations but excluding
capitalized interest included as an addition to property, plant and equipment or
other capital expenditure for tangible assets in accordance with GAAP), accrued
or paid by such Acquired Entity or Business or Sold Entity or Business and its
subsidiaries during such period, in each case as determined on a consolidated
basis in accordance with GAAP, (b) the aggregate amount of letter of credit fees
paid during such period, (c) the aggregate amount of income tax expense for such
period, (d) all amounts attributable to depreciation, amortization and other
similar non-cash charges for such period and (e) all extraordinary charges
during such period, and minus, without duplication and to the extent added to
revenues in determining such consolidated net income or loss for such period,
all extraordinary gains during such period, with all of the foregoing determined
on a consolidated basis with respect to such Acquired Entity or Business or Sold
Entity or Business in accordance with GAAP.
"Acquired Entity or Business" has the meaning assigned to such term in
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the definition of Adjusted Consolidated EBITDA.
"Acquired Facilities" means (a) certain real property consisting of 17
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separate parcels of land consisting of approximately 582 acres, located in
Greenville,
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North Carolina, including (i) all rights, privileges and easements appurtenant
to such property and (ii) all the improvements and fixtures located on such
property, (b) certain machinery, equipment, furniture, fixtures, transportation,
maintenance and distribution equipment, waste treatment facilities, computers,
analytical equipment, instruments, communication equipment, control systems,
spare parts, supplies, materials and other items of tangible personal property,
(c) certain motor vehicles and (d) certain intellectual and other property, in
each case as specified in the Asset Purchase Agreement.
"Acquisition" means the acquisition, pursuant to the Asset Purchase
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Agreement, by the Borrower from GWI of the Acquired Facilities for consideration
consisting of (a) $246,600,000 in cash (subject to adjustments as provided in
the Asset Purchase Agreement) payable by the Borrower to GWI, (b) the issuance
to GWI on the Effective Date of (i) 250,000 shares of the Junior Preferred Stock
and (ii) the Warrants and (c) the payment by the Borrower to GWI from time to
time after the Effective Date of the Sterile Facility Pay-Out.
"Acquisition Documents" means the Asset Purchase Agreement, the Junior
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Preferred Purchase Agreement, the Warrant Purchase Agreement, the Investment
Agreement, the Share Exchange Agreement, the Supply Agreement and any other
document entered into in connection with the Acquisition to which the Borrower,
Catalytica, MSCP or GWI is a party.
"Adjusted Consolidated EBITDA" means, for any period, Consolidated
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EBITDA for such period, calculated by (a) including in the determination thereof
the Acquired EBITDA of any Person, property, business or asset in Catalytica's,
the Borrower's or any Subsidiary's line of business acquired pursuant to a
transaction permitted under Section 6.04 and not subsequently sold, transferred
or otherwise disposed of (but not including the Acquired EBITDA of any related
Person, property, business or assets to the extent not so acquired) by
Catalytica, the Borrower or any of the Subsidiaries during such period (each
such Person, property, business or asset in Catalytica's, the Borrower's or any
Subsidiary's line of business acquired and not subsequently so disposed of, an
"Acquired Entity or Business"), based on the actual Acquired EBITDA of such
Acquired Entity or Business for such period (including the portion thereof
occurring prior to such acquisition) and (b) excluding in the determination
thereof the Acquired EBITDA of any Person, property, business or asset sold,
transferred or otherwise disposed of by Catalytica, the Borrower or any of the
Subsidiaries during such period (each such Person, property, business or asset
so sold or disposed of, a "Sold Entity or Business") based on the actual
Acquired EBITDA of such Sold Entity or Business for such period (including the
portion thereof occurring prior to such sale, transfer or disposition).
"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing
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for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the
4
next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied
by (b) the Statutory Reserve Rate.
"Administrative Agent" means The Chase Manhattan Bank, in its capacity
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as administrative agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative Questionnaire
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in a form supplied by the Administrative Agent.
"Advanced Sensor" means Advanced Sensor Devices, Inc., a California
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corporation.
"Advanced Technologies" means Catalytica Advanced Technologies, Inc.,
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a Delaware corporation.
"Advisory Compensation" means the issuance by Catalytica of 150,000
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shares of common stock of Catalytica to ▇▇▇▇▇▇ Brothers Inc. for services
rendered in connection with the Acquisition.
"Affiliate" means, with respect to a specified Person, another Person
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that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"Alternate Base Rate" means, for any day, a rate per annum equal to
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the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate
in effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect
on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a
change in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate, the Base CD Rate or the Federal Funds Effective Rate, respectively.
"Applicable Percentage" means, with respect to any Revolving Lender,
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the percentage of the total Revolving Commitments represented by such Lender's
Revolving Commitment. If the Revolving Commitments have terminated or expired,
the Applicable Percentages shall be determined based upon the Revolving
Commitments most recently in effect, giving effect to any assignments made in
accordance with Section 9.04.
"Applicable Rate" means, for any day with respect to any ABR Loan or
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Eurodollar Loan, or with respect to the commitment fees payable hereunder, as
the case may be, the applicable rate per annum set forth below under the caption
"ABR Spread", "Eurodollar Spread" or "Commitment Fee Rate", as the case may be,
based upon the Leverage Ratio as of the most recent determination date; provided
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that until the third day after the delivery to the Administrative Agent,
pursuant to Section 5.01, of Catalytica's
5
consolidated financial statements for Catalytica's first four full fiscal
quarters after the Effective Date, the "Applicable Rate" shall be the applicable
rate per annum set forth below in Category 3:
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ABR Eurodollar Commitment Fee
Leverage Ratio: --- ---------- --------------
--------------- Spread Spread Rate
------ ------ ----
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Category 1
---------- .75% 1.75%
Equal to or greater than 4.00 to 1.00
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Category 2
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Less than 4.00 to 1.00 but equal to or greater .50% 1.50%
than 3.50 to 1.00
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Category 3
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Less than 3.50 to 1.00 but equal to or greater .25% 1.25%
than 3.00 to 1.00
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Category 4
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Less than 3.00 to 1.00 but equal to or greater 0.00% 1.00%
than 2.50 to 1.00
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Category 5
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Less than 2.50 to 1.00 but equal to or greater 0.00% .75%
than 2.00 to 1.00
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Category 6
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Less than 2.00 to 1.00 0.00% .50% .20%
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For purposes of the foregoing, (a) the Leverage Ratio shall be
determined as at the last day of each fiscal quarter of Catalytica's fiscal year
based upon Catalytica's consolidated financial statements delivered pursuant to
Section 5.01(a) or (b) and (b) each change in the Applicable Rate resulting from
a change in the Leverage Ratio shall be effective during the period commencing
on and including the third day (such day, the "Applicable Rate Determination
Date") after the date of delivery to the Administrative Agent of such
consolidated financial statements indicating such change and ending on the date
immediately preceding the effective date of the next such change; provided that
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the Leverage Ratio shall be deemed to be in Category 1 (i) at any time that an
Event of Default (other than an Event of Default described in paragraph (e) of
Article VII) has occurred and is continuing or (ii) if Catalytica fails to
deliver the consolidated financial statements required to be delivered by it
pursuant to Section 5.01(a) or (b), during the period from the expiration of the
time for delivery thereof until such consolidated financial statements are
delivered.
"Assessment Rate" means, for any day, the annual assessment rate in
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effect on such day that is payable by a member of the Bank Insurance Fund
classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in dollars at the
offices of such member in the United States; provided that
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if, as a result of any change in any law, rule or regulation, it is no longer
possible to determine the Assessment Rate as aforesaid, then the Assessment Rate
shall be such annual rate as shall be determined by the Administrative Agent to
be representative of the cost of such insurance to the Lenders.
"Asset Purchase Agreement" means the Asset Purchase Agreement dated as
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of June 25, 1997, among GWI, the Borrower and Catalytica.
"Assignment and Acceptance" means an assignment and acceptance entered
-------------------------
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.04), and accepted by the Administrative Agent, in the form
of Exhibit A or any other form approved by the Administrative Agent.
"Base CD Rate" means the sum of (a) the Three-Month Secondary CD Rate
------------
multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.
"Board" means the Board of Governors of the Federal Reserve System of
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the United States of America.
"Borrower" means Catalytica Pharmaceuticals, Inc., a Delaware
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corporation.
"Borrowing" means Loans of the same Class and Type, made, converted or
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continued on the same date and, in the case of Eurodollar Loans, as to which a
single Interest Period is in effect.
"Borrowing Request" means a request by the Borrower for a Borrowing or
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Borrowings in accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or other
------------
day on which commercial banks in New York City are authorized or required by law
to remain closed; provided that, when used in connection with a Eurodollar Loan,
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the term "Business Day" shall also exclude any day on which banks are not open
------------
for dealings in dollar deposits in the London interbank market.
"Capital Expenditures" means, for any period, without duplication, (a)
--------------------
the additions to property, plant and equipment and other capital expenditures
for tangible assets of Catalytica and its consolidated subsidiaries that are (or
would be) set forth in a consolidated statement of cash flows of Catalytica as
additions to property, plant and equipment or other capital expenditures for
such period prepared in accordance with GAAP and (b) Capital Lease Obligations
with respect to property, plant and equipment and other tangible assets that are
incurred by Catalytica and its consolidated subsidiaries during such period.
7
"Capital Lease Obligations" of any Person means the obligations of
-------------------------
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Catalytica" means Catalytica, Inc., a Delaware corporation.
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"Catalytica Bayview" means Catalytica Bayview, Inc., a Delaware
------------------
corporation.
"Catalytica Combustion" means Catalytica Combustion Systems, Inc., a
---------------------
Delaware corporation.
"Catalytica Combustion Release Date" means, so long as no Event of
----------------------------------
Default or Default that upon lapse of time would become an Event of Default
under paragraph (b) of Article VII has occurred and is continuing, the date on
which (a) Catalytica Combustion has received at least $10,000,000 in Net
Proceeds from the issuance after the date of this Agreement of its capital stock
to any Person other than Catalytica or its subsidiaries, (b) Catalytica
Combustion and its subsidiaries have repaid in full all Indebtedness arising
after the date of this Agreement and owed by any of them to, and returned in
full the amount of any investment made in any of them after the date of this
Agreement by, Catalytica, the Borrower or any Subsidiary (other than Catalytica
Combustion and its subsidiaries) and (c) all Guarantees by Catalytica, the
Borrower or any Subsidiary (other than Catalytica Combustion and its
subsidiaries) of obligations of Catalytica Combustion or any of its subsidiaries
(other than any such Guarantees that (i) constitute Indebtedness permitted by
Section 6.01 and (ii) are permitted under Section 6.04(i)) shall have been
irrevocably released in full.
"CERCLA" means the Comprehensive Environmental Response, Compensation,
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and Liability Act, 42 U.S.C. (S) 9601 et seq.
"Change in Control" means (a)(i) at any time, the acquisition of
-----------------
ownership, directly or indirectly, beneficially or of record, by any Person or
group (within the meaning of the Securities Exchange Act of 1934 and the rules
of the Securities and Exchange Commission thereunder as in effect on the date
hereof) other than MSCP and its Affiliates, of shares representing more than 30%
of the aggregate ordinary voting power represented by the issued and outstanding
capital stock of Catalytica and (ii) MSCP and its Affiliates owning, directly or
indirectly, less than 30% of the aggregate ordinary voting power represented by
the issued and outstanding capital stock of
8
Catalytica; (b) at any time on or before July 31, ▇▇▇▇, ▇▇▇▇ and its Affiliates
cease to be the beneficial owners (within the meaning of the Securities Exchange
Act of 1934 and the rules of the Securities and Exchange Commission thereunder
as in effect on the date hereof) of at least 16.5 million shares of Catalytica
common stock (adjusted for stock splits, reverse stock splits and other similar
transactions); (c) after July 31, 1999, and solely as of the last day of the
month immediately preceding the date on which MSCP and its Affiliates initially
cease to be the beneficial owners (within the meaning of the Securities Exchange
Act of 1934 and the rules of the Securities and Exchange Commission thereunder
as in effect on the date hereof) of at least 16.5 million shares of Catalytica
common stock (adjusted for stock splits, reverse stock splits and other similar
transactions), (i) the aggregate principal amount of Loans outstanding as of
such day minus the amount of cash and Permitted Investments set forth (or that
would be set forth) on a consolidated balance sheet of Catalytica, the Borrower
and the Subsidiaries as of such day, determined on a consolidated basis in
accordance with GAAP, is greater than or equal to $60,000,000 or (ii) the ratio
of (A) the consolidated current assets of Catalytica, the Borrower and the
Subsidiaries set forth (or that would be set forth) on a consolidated balance
sheet of Catalytica, the Borrower and the Subsidiaries as of such day,
determined on a consolidated basis in accordance with GAAP, to (B) the aggregate
principal amount of Loans outstanding as of such day is less than or equal to
1.5 to 1.0; or (d) at any time, occupation of a majority of the seats (other
than vacant seats) on the board of directors of Catalytica by Persons who were
neither (i) nominated or appointed by the board of directors of Catalytica nor
(ii) nominated or appointed by directors so nominated or appointed.
"Change in Law" means (a) the adoption of any law, rule or regulation
-------------
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender or the Issuing
Bank (or, for purposes of Section 2.14(b), by any lending office of such Lender
or by such Lender's or the Issuing Bank's holding company, if any) with any
request, guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
"Class", when used in reference to any Loan or Borrowing, refers to
-----
whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans
or Term Loans and, when used in reference to any Commitment, refers to whether
such Commitment is a Revolving Commitment or Term Commitment.
"Code" means the Internal Revenue Code of 1986, as amended from time
----
to time.
"Collateral" means any and all "Collateral", as defined in any
----------
applicable
9
Security Document.
"Commitment" means a Revolving Commitment or Term Commitment, or any
----------
combination thereof (as the context requires).
"Commitment Letter" means the Commitment Letter dated June 25, 1997,
-----------------
among The Chase Manhattan Bank, Chase Securities Inc. and Catalytica, Inc.
"Consolidated Cash Interest Income" means, for any period, the cash
---------------------------------
interest income of Catalytica, the Borrower and the Subsidiaries during such
period, determined on a consolidated basis in accordance with GAAP.
"Consolidated EBITDA" means, for any period, Consolidated Net Income
-------------------
for such period, plus, without duplication and to the extent deducted from
revenues in determining Consolidated Net Income, the sum of (a) the aggregate
amount of Consolidated Interest Expense for such period, (b) the aggregate
amount of letter of credit fees paid during such period, (c) the aggregate
amount of income tax expense for such period, (d) all amounts attributable to
depreciation, amortization and other similar non-cash charges for such period
and (e) all extraordinary charges during such period, and minus, without
duplication and to the extent added to revenues in determining Consolidated Net
Income for such period, all extraordinary gains during such period, with all of
the foregoing determined on a consolidated basis with respect to Catalytica, the
Borrower and the Subsidiaries in accordance with GAAP.
"Consolidated Interest Expense" means, for any period, the interest
-----------------------------
expense, both expensed and capitalized (including the interest component in
respect of Capital Lease Obligations but excluding capitalized interest included
as a Capital Expenditure), accrued or paid by Catalytica, the Borrower and the
Subsidiaries during such period, determined on a consolidated basis in
accordance with GAAP.
"Consolidated Net Income" means, for any period, net income or loss of
-----------------------
Catalytica, the Borrower and the Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, provided that, except for purposes
of the definition of the term "Leverage Ratio", there shall be excluded the
income (or loss) of any Person accrued prior to the date it becomes a subsidiary
or is merged into or consolidated with Catalytica, the Borrower or any of the
Subsidiaries or the date that Person's assets are acquired by Catalytica or any
of its subsidiaries.
"Control" means the possession, directly or indirectly, of the power
-------
to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
----------- ----------
10
"Deed of Easement" means the Deed of Easement dated as of July [ ],
----------------
1997, among the Borrower and GWI.
"Default" means any event or condition that constitutes an Event of
-------
Default or that upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Disclosed Matters" means the actions, suits and proceedings and the
-----------------
environmental matters disclosed in Schedule 3.06.
"dollars" or "$" refers to lawful money of the United States of
------- -
America.
"Effective Date" means the date on which the conditions specified in
--------------
Section 4.01 are satisfied (or waived in accordance with Section 9.02).
"Environmental Laws" means all laws, rules, regulations, codes,
------------------
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by or with any Governmental
Authority, relating in any way to the environment, preservation or reclamation
of natural resources, the handling, treatment, storage, disposal, Release or
threatened Release of any Hazardous Material or to health and safety matters
arising in connection with Hazardous Materials.
"Environmental Liability" means any liability, contingent or otherwise
-----------------------
(including any liability for damages, natural resource damage, costs of
environmental investigation, monitoring or remediation, administrative oversight
costs, fines, penalties or indemnities), of Catalytica, the Borrower or any
Subsidiary directly or indirectly resulting from or based upon (a) violation of
any Environmental Law, (b) the generation, use, handling, transportation,
storage, treatment or disposal of any Hazardous Materials, (c) exposure to any
Hazardous Materials, (d) the Release or threatened Release of any Hazardous
Materials into the environment or (e) any contract, agreement or other
consensual arrangement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.
"Equity Financing" means (a) the contribution by MSCP to Catalytica of
----------------
an aggregate cash amount of not less than $120,000,000 in exchange for MSCP
Stock and (b) the contribution by Catalytica to the Borrower as common equity of
the amount so received by Catalytica.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
11
"ERISA Affiliate" means any trade or business (whether or not incor
---------------
porated) that, together with the Borrower, is treated as a single employer under
Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of
ERISA and Section 412 of the Code, is treated as a single employer under Section
414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in Section
-----------
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability (other than for premiums under Section 4007 (a) of ERISA) under Title
IV of ERISA with respect to the termination of any Plan; (e) the receipt by the
Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any
notice relating to an intention to terminate any Plan or Plans or to appoint a
trustee to administer any Plan; (f) the incurrence by the Borrower or any of its
ERISA Affiliates of any liability with respect to the withdrawal or partial
withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the
Borrower or any ERISA Affiliate of any notice, or the receipt by any
Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing, refers
----------
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such term in Article
----------------
VII.
"Excess Cash Flow" means, for any period, the sum (without
----------------
duplication) of:
(a) the Consolidated Net Income for such period, adjusted to exclude
any gains or losses attributable to Prepayment Events; plus
----
(b) depreciation, amortization and other non-cash charges or losses
deducted in determining Consolidated Net Income for such period; plus
----
(c) the sum of (i) the amount, if any, by which Net Working Capital
decreased during such period plus (ii) the amount, if any, by which the con
solidated deferred revenues of Catalytica and its consolidated subsidiaries
12
increased during such period plus (iii) the aggregate principal amount of
Capital Lease Obligations and other Indebtedness incurred during such
period to finance Capital Expenditures, to the extent that mandatory
principal payments in respect of such Indebtedness would not be excluded
from clause (f) below when made; minus
-----
(d) the sum of (i) any non-cash gains included in determining Con
solidated Net Income for such period plus (ii) the amount, if any, by which
Net Working Capital increased during such period plus (iii) the amount, if
any, by which the consolidated deferred revenues of Catalytica and its
consolidated subsidiaries decreased during such period; minus
-----
(e) Capital Expenditures for such period, except to the extent such
Capital Expenditures (i) are financed with the proceeds of asset
dispositions (including casualty and condemnation events) or (ii) result
from an exchange of assets; minus
-----
(f) the aggregate principal amount of Indebtedness repaid or prepaid
by Catalytica and its consolidated subsidiaries during such period,
excluding (i) Indebtedness in respect of Revolving Loans and Letters of
Credit (other than to the extent that the Revolving Commitments are
permanently reduced by such repayments or prepayments), (ii) Term Loans
prepaid pursuant to Section 2.10(b) or (c), (iii) repayments or prepayments
of Indebtedness financed by incurring other Indebtedness, to the extent
that mandatory principal payments in respect of such other Indebtedness
would, pursuant to this clause (f), be deducted in determining Excess Cash
Flow when made, (iv) Indebtedness referred to in clauses (iii) and (iv) of
Section 6.01(a) and (v) Indebtedness referred to in clause (vii) of Section
6.01(a) that can be reborrowed at the election of the borrowing entity.
"Excluded Taxes" means, with respect to the Administrative Agent, any
--------------
Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of the Borrower hereunder, (a) income or franchise
Taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits Taxes imposed by the United States of America or any similar Tax imposed
by any other jurisdiction under the laws of which such recipient is organized or
in which its principal office is located or, in the case of any Lender, in which
its applicable lending office is located and (c) in the case of a Foreign Lender
(other than an assignee pursuant to a request by the Borrower under Section
2.18(b)), any withholding Tax that is imposed on amounts payable to such Foreign
Lender under this
13
Agreement because of its failure to comply with Section 2.16(e) unless (and to
the extent that) (i) such withholding Tax liability arises or is increased by
reason of a Change in Law occurring after such Foreign Lender becomes a Lender
under this Agreement or (ii) such Foreign Lender (or its assignor, if any) was
entitled, at the time of designation of a new lending office or assignment, to
receive additional amounts from the Borrower with respect to such withholding
Tax liability pursuant to Section 2.16(a).
"Existing Indebtedness" means the principal of and interest on and all
---------------------
other amounts (including prepayment penalties) due with respect to the Existing
Security and Loan Agreement.
"Existing Loan and Security Agreement" means the Loan and Security
------------------------------------
Agreement dated as of November 18, 1994, among Catalytica Bayview and Silicon
Valley Bank, as amended by the Loan Modification Agreement dated as of November
30, 1995, and the Amendment to the Loan and Security Agreement dated as of
September 24, 1996.
"Existing Preferred Stock" means (a) the 3,400,000 shares of Series A
------------------------
Preferred Stock of the Borrower and (b) the 150,000 shares of Series B Preferred
Stock of the Borrower.
"FD&C Act" means the Federal Drug and Cosmetic Act, as amended, and
--------
the rules and regulations thereunder.
"Federal Funds Effective Rate" means, for any day, the weighted
----------------------------
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Financial Officer" means the chief financial officer, principal
-----------------
accounting officer, treasurer or controller of the Borrower or of Catalytica, as
the case may be.
"Financing Transactions" means (a) the execution, delivery and
----------------------
performance by each Loan Party of the Loan Documents to which it is to be a
party, the borrowing of Loans and the issuance of Letters of Credit hereunder
and (b) the Equity Financing.
"Foreign Lender" means any Lender that is organized under the laws of
--------------
a jurisdiction other than the United States of America, a State thereof or the
District of
14
Columbia.
"Foreign Subsidiary" means any Subsidiary that is organized under the
------------------
laws of a jurisdiction other than the United States of America or any State
thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles in the United
----
States of America.
"Governmental Authority" means the government of the United States of
----------------------
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guarantee" of or by any Person (the "guarantor") means any
--------- ---------
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
---------------
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided that the term "Guarantee" shall not include
--------
endorsements for collection or deposit in the ordinary course of business.
"Guarantee Agreement" means the Guarantee Agreement, substantially in
-------------------
the form of Exhibit E, made by Catalytica and the Subsidiary Loan Parties in
favor of the Administrative Agent for the benefit of the Secured Parties.
"Guaranteed Revenues" shall have the meaning assigned to such term in
-------------------
the Supply Agreement.
"GWI" means Glaxo Wellcome Inc., a North Carolina corporation.
---
"Hazardous Materials" means all explosive or radioactive substances or
-------------------
wastes and all hazardous or toxic substances, wastes or other pollutants,
including
15
petroleum or petroleum distillates, asbestos or asbestos containing materials,
poly chlorinated biphenyls, radon gas, infectious or medical wastes and all
other substances or wastes of any nature regulated pursuant to any Environmental
Law, including any material listed as a hazardous substance under Section
101(14) of CERCLA.
"Hedging Agreement" means any interest rate protection agreement,
-----------------
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement.
"Inactive Subsidiary" means any Subsidiary that (a) has total assets
-------------------
not in excess of $50,000, (b) conducts no business and (c) has no Indebtedness
other than (in the case of Advanced Sensor) Indebtedness owed to a Loan Party.
"Indebtedness" of any Person means, without duplication, (a) all
------------
obliga tions of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
under conditional sale or other title retention agreements relating to property
acquired by such Person, (d) all obligations of such Person incurred, issued or
assumed as the deferred purchase price of property or services (excluding
current accounts payable incurred in the ordinary course of business and the
Sterile Facility Pay-Out), (e) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the Indebtedness secured thereby has been assumed
(provided that if the obligations so secured have not been assumed by such
Person, such obligations shall be deemed to be in an amount equal to the lesser
of (i) the fair market value of such property, as determined in good faith by
the board of directors of such Person, and (ii) the amount of such obligations),
(f) all Guarantees by such Person of Indebtedness of others, (g) all Capital
Lease Obligations of such Person, (h) all obligations, contingent or otherwise,
of such Person as an account party in respect of letters of credit and letters
of guaranty and (i) all obligations, contingent or otherwise, of such Person in
respect of bankers' acceptances. The Indebtedness of any Person shall include
the Indebtedness of any other entity (including any partnership in which such
Person is a general partner) to the extent such Person is legally liable
therefor as a result of such Person's ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
-----------------
"Indemnity, Subrogation and Contribution Agreement" means the
-------------------------------------------------
Indemnity, Subrogation and Contribution Agreement, substantially in the form of
Exhibit F, among the Borrower, the Subsidiary Loan Parties and the
Administrative
16
Agent.
"Information Memorandum" means the Confidential Information Memorandum
----------------------
dated July 1997, relating to the Borrower and the Transactions.
"Interest Election Request" means a request by the Borrower to convert
-------------------------
or continue a Revolving Borrowing or Term Borrowing in accordance with Section
2.06.
"Interest Payment Date" means (a) with respect to any ABR Loan, the
---------------------
last Business Day of each March, June, September and December and (b) with
respect to any Eurodollar Loan, the last day of the Interest Period applicable
to the Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an Interest Period of more than three months' duration, each
Business Day prior to the last day of such Interest Period that occurs at
intervals of three months' duration after the first day of such Interest Period.
"Interest Period" means, with respect to any Eurodollar Borrowing, the
---------------
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter or, subject to availability from all Lenders as determined by the
Administrative Agent, nine or twelve months thereafter, as the Borrower may
elect; provided, that (i) if any Interest Period would end on a day other than a
--------
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day and (ii) any Interest Period that commences on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the last calendar month of such Interest Period) shall end
on the last Business Day of the last calendar month of such Interest Period.
For purposes hereof, the date of a Borrowing initially shall be the date on
which such Borrowing is made and thereafter shall be the effective date of the
most recent Interest Rate Election for such Borrowing.
"Investment Agreement" means the Investment Agreement dated as of June
--------------------
25, 1997, between Catalytica and MSCP.
"Issuing Bank" means The Chase Manhattan Bank, in its capacity as the
------------
issuer of Letters of Credit hereunder, and its successors in such capacity as
provided in Section 2.04(i). The Issuing Bank may, in its discretion, arrange
for one or more Letters of Credit to be issued by Affiliates of the Issuing
Bank, in which case the term "Issuing Bank" shall include any such Affiliate
with respect to Letters of Credit issued by such Affiliate; provided that, at
--------
the time any such Letter of Credit is issued by any such Affiliate, demand
deposits made with such Affiliate shall have a credit rating of not less
17
than the credit rating of demand deposits made with The Chase Manhattan Bank.
"Junior Preferred Purchase Agreement" means the Stock Purchase
-----------------------------------
Agreement dated as of June 25, 1997, among the Borrower, Catalytica and GWI.
"Junior Preferred Stock" means the Series 1 Junior Preferred Stock of
----------------------
the Borrower.
"LC Availability Period" means the period from and including the
----------------------
Effective Date to but excluding the earlier of (a) the date that is five
Business Days prior to the Maturity Date and (b) the date of termination of the
Revolving Commitments.
"LC Disbursement" means a payment made by the Issuing Bank pursuant to
---------------
a Letter of Credit.
"LC Exposure" means, at any time, the sum of (a) the aggregate undrawn
-----------
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed (from the
proceeds of a Borrowing or otherwise) by or on behalf of the Borrower at such
time. The LC Exposure of any Revolving Lender at any time shall be its
Applicable Percentage of the total LC Exposure at such time.
"Lenders" means the Persons listed on Schedule 2.01 and any other
-------
Person that shall have become a party hereto pursuant to an Assignment and
Acceptance permitted under Section 9.04, other than any such Person that ceases
to be a party hereto pursuant to an Assignment and Acceptance.
"Letter of Credit" means any letter of credit issued pursuant to this
----------------
Agreement.
"Leverage Ratio" means, on any date, the ratio of (a) Total Debt as of
--------------
such date minus cash and Permitted Investments in excess of $1,000,000 set forth
-----
(or that would be set forth) on a consolidated balance sheet of Catalytica, the
Borrower and the Subsidiaries as of such date to (b) Adjusted Consolidated
EBITDA for the period of four consecutive fiscal quarters (except as otherwise
specified in Section 6.14(a) or (b)) of Catalytica most recently ended as of
such date, all determined on a consolidated basis in accordance with GAAP.
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
---------
Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes
18
of providing quotations of interest rates applicable to dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period, as the rate for dollar
deposits with a maturity comparable to such Interest Period. In the event that
such rate is not available at such time for any reason, then the "LIBO Rate"
---------
with respect to such Eurodollar Borrowing for such Interest Period shall be the
rate at which dollar deposits of $5,000,000 and for a maturity comparable to
such Interest Period are offered by the principal London office of the
Administrative Agent in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed of
----
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Loan Documents" means this Agreement, the Letters of Credit, the
--------------
Parent Guarantee Agreement, the Guarantee Agreement, the Indemnity, Subrogation
and Contribution Agreement and the Security Documents.
"Loan Parties" means Catalytica, the Borrower and the Subsidiary Loan
------------
Parties.
"Loans" means the loans made and to be made by the Lenders to the
-----
Borrower pursuant to this Agreement.
"Margin Stock" shall have the meaning assigned to such term in
------------
Regulation U.
"Material Adverse Effect" means a material adverse effect on (a) the
-----------------------
business, assets, operations, properties, financial condition, contingent
liabilities (including but not limited to potential environmental liabilities),
prospects or material agreements of or relating to Catalytica, the Borrower and
the Subsidiaries taken as a whole, (b) the ability of any Loan Party to perform
any of its material obligations under any Loan Document or (c) the material
rights of or benefits available to the Lenders under any Loan Document.
"Material GWI Occupancy" means, as of the date of any Borrowing, that
----------------------
(a) GWI has been occupying a portion of the Acquired Facilities pursuant to the
Deed of
19
Easement for a period of at least fifteen consecutive days immediately prior to
the date of such Borrowing and, as a result thereof, the Guaranteed Revenues
could reasonably be expected to be reduced by at least $10,000,000, taking into
reasonable account all pertinent factors, and (b) the Guaranteed Revenues that
are to be paid after such date exceed $50,000,000.
"Material Indebtedness" means Indebtedness (other than the Loans and
---------------------
Letters of Credit), or obligations in respect of one or more Hedging Agreements,
of any one or more of Catalytica, the Borrower and the Subsidiaries in an
aggregate principal amount exceeding $3,000,000. For purposes of determining
Material Indebtedness, the "principal amount" of the obligations of Catalytica,
the Borrower or any Subsidiary in respect of any Hedging Agreement at any time
shall be the maximum aggregate amount (giving effect to any netting agreements)
that Catalytica, the Borrower or such Subsidiary would be required to pay if
such Hedging Agreement were terminated at such time.
"Maturity Date" means December 31, 2001.
-------------
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
-------
"Mortgage" means a mortgage, deed of trust, assignment of leases and
--------
rents, leasehold mortgage or other security document, substantially in the form
of Exhibit I, granting a Lien on any Mortgaged Property to secure the
Obligations. Each Mortgage shall be satisfactory in form and substance to the
Administrative Agent.
"Mortgaged Property" means, initially, each parcel of real property
------------------
and the improvements thereto owned by a Loan Party (other than a Non-Borrower
Subsidiary) that is identified on Schedule 1.01(a), and includes each other
parcel of real property and improvements thereto with respect to which a
Mortgage is granted pursuant to Section 5.12 or 5.13.
"MSCP" means (a) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital Partners III, L.P., a Delaware
----
limited partnership, (b) MSCP III 892 Investors L.P., a Delaware limited
partnership, and (c) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital Investors, L.P., a Delaware limited
partnership.
"MSCP Redemption" means the use of the Net Proceeds received by
---------------
Catalytica from either (a) the exercise after the Effective Date of warrants
issued to Catalytica's stockholders to acquire shares of Catalytica's common
stock or (b) the sale in a public offering of shares of Catalytica's common
stock or from any combination of (a) and (b) above to redeem, at any time after
the Effective Date and on or prior to July 31, 1998, in accordance with the
terms of the MSCP Stock, shares of MSCP Stock for an aggregate redemption price
equal to the lesser of (a) $25,000,000 and (b) the amount of such net proceeds,
provided that, at the time of such redemption, no Default has occurred
20
and is continuing.
"MSCP Stock" means convertible Class A Common Stock and Class B Common
----------
Stock issued by Catalytica to MSCP pursuant to the Investment Agreement.
"Multiemployer Plan" means a multiemployer plan as defined in Section
------------------
4001(a)(3) of ERISA.
"Net Proceeds" means, with respect to any event or series of related
------------
events (other than (1) any sale, transfer or other disposition or any series of
related sales, transfers or other dispositions of any property or assets if the
aggregate proceeds from such sale, transfer or other disposition or from such
series of related sales, transfers or other dispositions are not in excess of
$500,000 and (2) other dispositions resulting in aggregate proceeds of not in
excess of $2,000,000 in any fiscal year) (a) the cash proceeds received in
respect of such event or series of events, including (i) any cash received in
respect of any non-cash proceeds, but only as and when received, (ii) in the
case of a casualty, insurance proceeds in excess of $2,000,000, and (iii) in the
case of a condemnation or similar event, condemnation awards and similar
payments in excess of $2,000,000; in each case net of (b) the sum of (i) all
fees and out-of-pocket expenses reasonably incurred (and payable during the year
in which such event occurred or the next succeeding year) or paid by Catalytica,
the Borrower and/or the Subsidiaries to third parties in connection with such
event, (ii) in the case of a sale, transfer or other disposition of an asset
(including pursuant to a sale and leaseback transaction or a casualty or other
insured damage or condemnation or similar proceeding), the amount of all
payments required to be made by Catalytica, the Borrower and the Subsidiaries as
a result of such event to repay Indebtedness (other than Loans) secured by such
asset or otherwise subject to mandatory prepayment as a result of such event,
and (iii) the amount of all taxes that are directly attributable to such event
and are paid (or reasonably estimated to be payable) by Catalytica, the Borrower
and/or the Subsidiaries, and the amount of any reserves established by
Catalytica, the Borrower and/or the Subsidiaries to fund contingent liabilities
reasonably estimated to be payable in connection with such event, in each case
during the year in which such event occurred or the next succeeding year (as
determined reasonably and in good faith by the chief financial officer of the
Borrower, provided that, to the extent and at the time any such unexpended
--------
amounts are released from any such reserve, such amounts shall constitute Net
Proceeds); provided, however, that, with respect to any sale, transfer or other
-------- -------
disposition of an asset (including pursuant to a sale and leaseback transaction
or, subject to Section 5.08, a casualty or other insured damage or condemnation
or similar proceeding), if (A) the Borrower intends, and (B) in the case of any
such sale, transfer or other disposition the proceeds of which exceed
$5,000,000, the Borrower delivers a certificate of a Financial Officer to the
Administrative Agent at the time of such sale, transfer or other disposition
setting forth the Borrower's intent, to use the proceeds of such sale, transfer
or other disposition to
21
acquire or repair assets to be used in the same line of business within 365 days
of receipt of such proceeds, and no Event of Default shall have occurred and
shall be continuing at the time of such sale, transfer or other disposition or
at the proposed time of the application of such proceeds, such proceeds shall
not constitute Net Proceeds except (x) to the extent not so used at the end of
such 365-day period or (y) in the case of insurance proceeds from a casualty, if
the Borrower shall deliver a certificate of a Financial Officer to the
Administrative Agent before the end of such 365-day period certifying that the
Borrower has begun (and is diligently proceeding with) repairing, restoring or
replacing such assets within 365 days after the end of the first such 365-day
period, to the extent such proceeds are not so used at the end of such second
365-day period, at which time such proceeds shall be deemed Net Proceeds at the
end of the second such 365-day period.
"Net Working Capital" means, at any date, (a) the consolidated current
-------------------
assets of Catalytica and its consolidated subsidiaries as of such date
(excluding cash and Permitted Investments) minus (b) the consolidated current
liabilities of Catalytica and its consolidated subsidiaries as of such date
(excluding current liabilities in respect of Indebtedness), in each case as
determined in accordance with GAAP. Net Working Capital at any date may be a
positive or negative number. Net Working Capital increases when it becomes more
positive or less negative and decreases when it becomes less positive or more
negative.
"Non-Borrower Subsidiary" means any Subsidiary other than any
-----------------------
subsidiary of the Borrower.
"Obligations" has the meaning assigned to such term in (a) the
-----------
Security Agreement and (b) the Pledge Agreement.
"Operating Lease" means, as applied to any Person, any lease
---------------
(including leases that may be terminated by the lessee at any time) by such
person of any property (whether real, personal or mixed) that is not required to
be classified and accounted for as a capital lease on such person's balance
sheet in accordance with GAAP, other than any such lease under which such person
is the lessor.
"Other Taxes" means any and all current or future stamp or documentary
-----------
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.
"Parent Guarantee Agreement" means the Parent Guarantee Agreement,
--------------------------
substantially in the form of Exhibit D, made by Catalytica in favor of the
Administrative Agent for the benefit of the Secured Parties.
22
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
----
defined in ERISA and any successor entity performing similar functions.
"Perfection Certificate" means a certificate in the form of Annex 2 to
----------------------
the Security Agreement or any other form approved by the Administrative Agent.
"Permitted Encumbrances" means:
----------------------
(a) Liens imposed by law for Taxes that are not yet delinquent or are
being contested in compliance with Section 5.04;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
and other like Liens imposed by law, arising in the ordinary course of
business and securing obligations that are not overdue by more than 30 days
or are being contested in compliance with Section 5.04;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other
social security laws and other similar laws and regulations;
(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature, in each case in the ordinary course
of business;
(e) judgment liens in respect of judgments that do not constitute an
Event of Default under clause (k) of Article VII;
(f) easements, zoning restrictions, restrictions on use, rights-of-
way, encumbrances not securing monetary obligations and covered by title
insurance and similar encumbrances on real property imposed by law or
arising in the ordinary course of business that do not secure any monetary
obligations and do not materially detract from the value of the affected
property or materially interfere with the ordinary conduct of business of
Catalytica, the Borrower or any Subsidiary;
(g) Liens of sellers of goods arising under Article 2 of the Uniform
Commercial Code or other provisions of applicable law in the ordinary
course of business, covering only the goods sold and securing only the
unpaid purchase price therefor; and
(h) exceptions and encumbrances covered in Schedule B to title
insurance policies being issued to insure the Lien of each Mortgage.
23
provided that the term "Permitted Encumbrances" shall not include any Lien
--------
securing Indebtedness.
"Permitted Investments" means:
---------------------
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed
by the full faith and credit of the United States of America), in each case
maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, a
credit rating of A1 or better from S&P or P1 or better from Moody's;
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within one year from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts
issued or offered by, any domestic office of any commercial bank that has a
combined capital and surplus and undivided profits of not less than
$250,000,000 or a rating of A1 or better from S&P or P1 or better from
Moody's;
(d) readily marketable direct obligations of any State of the United
States of America or any political subdivision of any such State having, at
such date of acquisition, a rating of at least AA by S&P and Aa2 by
Moody's, in each case maturing within one year after the date of
acquisition thereof;
(e) fully collateralized repurchase agreements with a term of not more
than 30 days for securities described in clause (a) above and entered into
with a financial institution (whether or not a commercial bank) satisfying
the criteria described in clause (c) above; and
(f) other investment instruments approved in writing by the Required
Lenders.
"Person" means any natural person, corporation, limited liability
------
company, trust, joint venture, association, company, limited partnership,
partnership, Governmental Authority or other entity.
"Pfizer" means Pfizer, Inc., a Delaware corporation.
------
24
"Plan" means any employee pension benefit plan (other than a
----
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Pledge Agreement" means the Pledge Agreement, substantially in the
----------------
form of Exhibit G, among Catalytica, the Borrower, the Subsidiaries that are
party thereto and the Administrative Agent for the benefit of the Secured
Parties.
"Prepayment Event" means:
----------------
(a) any sale, transfer or other disposition (including pursuant to a
sale and leaseback transaction) of any property or asset of Catalytica, the
Borrower or any Subsidiary, other than dispositions described in Section
6.05 (other than Section 6.05(c)); or
(b) any casualty or other insured damage to, or any taking under power
of eminent domain or by condemnation or similar proceeding of, any property
or asset of Catalytica, the Borrower or any Subsidiary; or
(c) the incurrence by Catalytica, the Borrower or any Subsidiary of
any Indebtedness, other than Indebtedness permitted by Section 6.01(a).
"Prime Rate" means the rate of interest per annum publicly announced
----------
from time to time by The Chase Manhattan Bank as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.
"Register" has the meaning set forth in Section 9.04(c).
--------
"Regulation G" shall mean Regulation G of the Board as from time to
------------
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation U" shall mean Regulation U of the Board as from time to
------------
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation X" shall mean Regulation X of the Board as from time to
------------
time in effect and all official rulings and interpretations thereunder or
thereof.
"Related Parties" means, with respect to any specified Person, such
---------------
Person's Affiliates and the respective directors, officers, employees, agents
and advisors
25
of such Person and of such Person's Affiliates.
"Release" has the meaning set forth in Section 101(22) of CERCLA.
-------
"Required Lenders" means, at any time, Lenders having Revolving
----------------
Exposures, Term Loans and unused Commitments representing more than 50% of the
sum of the total Revolving Exposures, outstanding Term Loans and unused
Commitments at such time.
"Restricted Payment" means any dividend or other distribution (whether
------------------
in cash, securities or other property) with respect to any shares of any class
of capital stock of Catalytica, the Borrower or any Subsidiary, or any payment
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancelation or termination of (a) any such shares of capital stock
of Catalytica, the Borrower or any Subsidiary or (b) any option, warrant or
other right to acquire any such shares of capital stock of Catalytica, the
Borrower or any Subsidiary.
"Revolving Availability Period" means the period from and including
-----------------------------
the Effective Date to but excluding the earlier of the Maturity Date and the
date of termination of the Revolving Commitments.
"Revolving Commitment" means, with respect to each Lender, the
--------------------
commitment, if any, of such Lender to make Revolving Loans and to acquire
participa tions in Letters of Credit hereunder, expressed as an amount
representing the maximum aggregate amount of such Lender's Revolving Exposure
hereunder, as such commitment may be (a) reduced from time to time pursuant to
Section 2.08 and (b) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 9.04. The initial amount
of each Lender's Revolving Commitment is set forth on Schedule 2.01, or in the
Assignment and Acceptance pursuant to which such Lender shall have assumed its
Revolving Commitment, as applicable. The initial aggregate amount of the
Lenders' Revolving Commitments is $75,000,000.
"Revolving Exposure" means, with respect to any Lender at any time,
------------------
the sum of the outstanding principal amount of such Lender's Revolving Loans and
its LC Exposure at such time.
"Revolving Lender" means a Lender with a Revolving Commitment or, if
----------------
the Revolving Commitments have terminated or expired, a Lender with Revolving
Exposure.
"Revolving Loan" means a Loan made pursuant to clause (b) of
--------------
26
Section 2.01.
"S&P" means Standard & Poor's Ratings Service.
---
"Secured Parties" shall have the meaning assigned to such term in the
---------------
Security Agreement.
"Security Agreement" means the Security Agreement, substantially in
------------------
the form of Exhibit H, among Catalytica, the Borrower, each Subsidiary Loan
Party that is a subsidiary of the Borrower and the Administrative Agent for the
benefit of the Secured Parties.
"Security Documents" means the Security Agreement, the Pledge
------------------
Agreement, the Mortgages and each other security agreement or other instrument
or document executed and delivered pursuant to Section 5.12 or 5.13 to secure
any of the Obligations.
"Share Exchange Agreement" means the share exchange agreement dated as
------------------------
of June 25, 1997, among Catalytica, the Borrower and GWI.
"Sold Entity or Business" has the meaning assigned to such term in the
-----------------------
definition of Adjusted Consolidated EBITDA.
"Statutory Reserve Rate" means a fraction (expressed as a decimal),
----------------------
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject (a) with
respect to the Base CD Rate, for new negotiable nonpersonal time deposits in
dollars of over $100,000 with maturities approximately equal to three months and
(b) with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Board). Such
reserve percentages shall include those imposed pursuant to such Regulation D or
any successor regulation or law. Eurodollar Loans shall be deemed to constitute
eurocurrency funding and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets that may be available
from time to time to any Lender under such Regulation D or any comparable
regulation. The Statutory Reserve Rate shall be adjusted automatically on and
as of the effective date of any change in any reserve percentage.
"Sterile Facility Pay-Out" means the Borrower's payments to GWI from
------------------------
time to time after the Effective Date of an aggregate amount of up to
$25,000,000, as provided in Exhibit F to the Asset Purchase Agreement; provided
--------
that such payments
27
shall be subject to the limitations set forth in Section 6.11.
"Sterile Products Facility" means the building included in the
-------------------------
Acquired Facilities used predominantly for the manufacture of sterile products.
"Subordinated Indebtedness" means any Indebtedness of the Borrower or
-------------------------
any Subsidiary that is subordinated in any manner in right of payment to any of
the Obligations.
"subsidiary" means, with respect to any Person (the "parent") at any
---------- ------
date, any corporation, limited liability company, limited partnership,
partnership, association or other entity the accounts of which would be
consolidated with those of the parent in the parent's consolidated financial
statements if such financial statements were prepared in accordance with GAAP as
of such date, as well as any other corporation, limited liability company,
limited partnership, partnership, association or other entity (a) of which
securities or other ownership interests representing more than 50% of the equity
or more than 50% of the ordinary voting power or, in the case of a partnership,
more than 50% of the general partnership interests are, as of such date, owned,
controlled or held, or (b) that is, as of such date, otherwise Controlled, by
the parent or one or more subsidiaries of the parent or by the parent and one or
more subsidiaries of the parent.
"Subsidiary" means any subsidiary of Catalytica other than the
----------
Borrower, provided, however, that Genxon/tm Power Systems, LLC shall be deemed
-------- -------
not to be a Subsidiary.
"Subsidiary Loan Party" means any Subsidiary that is not (a) a Foreign
---------------------
Subsidiary or (b) an Inactive Subsidiary, provided, however, that Catalytica
-------- -------
Combustion and its subsidiaries shall be deemed not to be Subsidiary Loan
Parties after the Catalytica Combustion Release Date.
"Supply Agreement" means the Supply Agreement dated as of July 31,
----------------
1997, among Catalytica, the Borrower and GWI.
"Taxes" means any and all present or future taxes, levies, imposts,
-----
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Term Commitment" means, with respect to each Lender, the commit ment,
---------------
if any, of such Lender to make a Term Loan hereunder on the Effective Date,
expressed as an amount representing the maximum principal amount of the Term
Loan to be made by such Lender hereunder, as such commitment may be (a) reduced
from time to time pursuant to Section 2.07 and (b) reduced or increased from
time to time pursuant to assignments by or to such Lender pursuant to Section
9.04. The initial amount of each
28
Lender's Term Commitment is set forth on Schedule 2.01, or in the Assignment and
Acceptance pursuant to which such Lender shall have assumed its Term Commitment.
The initial aggregate amount of the Lenders' Term Commitments is $125,000,000.
"Term Loan" means a Loan made pursuant to clause (a) of Section 2.01.
---------
"Term Loan Lender" means a Lender with a Term Commitment or an
----------------
outstanding Term Loan.
"Three-Month Secondary CD Rate" means, for any day, the secondary
-----------------------------
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day is not a Business Day, the next preceding Business
Day) by the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release H.15(519) during the
week following such day) or, if such rate is not so reported on such day or such
next preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York City
received at approximately 10:00 a.m., New York City time, on such day (or, if
such day is not a Business Day, on the next preceding Business Day) by the
Administrative Agent from three negotiable certificate of deposit dealers of
recognized standing selected by it.
"Total Debt" means, as of any date of determination, without
----------
duplication, the aggregate principal amount of Indebtedness of Catalytica, the
Borrower and the Subsidiaries outstanding as of such date, determined on a
consolidated basis in accordance with GAAP (other than Indebtedness of the type
referred to in clause (h) of the definition of the term "Indebtedness", except
to the extent of any unreimbursed drawings thereunder).
"Transactions" means the Acquisition, the Financing Transactions, the
------------
execution of the Supply Agreement, the Advisory Compensation and the other
transactions contemplated by the Acquisition Documents.
"Type", when used in reference to any Loan or Borrowing, refers to
----
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate
Base Rate.
"Warrant Purchase Agreement" means the Warrant Purchase Agreement
--------------------------
dated as of June 25, 1997, among Catalytica, the Borrower and GWI.
"Warrants" means the warrants to purchase 2,000,000 shares of
--------
Catalytica's common stock issued to GWI pursuant to the Warrant Purchase
Agreement.
29
"Withdrawal Liability" means liability to a Multiemployer Plan as a
--------------------
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowings. For purposes
---------------------------------------
of this Agreement, Loans may be classified and referred to by Class (e.g., a
----
"Revolving Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type
----
(e.g., a "Eurodollar Revolving Loan"). Borrowings also may be classified and
-----
referred to by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a
---- ----
"Eurodollar Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving
----
Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms herein shall
----------------
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including"
shall be deemed to be followed by the phrase "without limitation". The word
"will" shall be construed to have the same meaning and effect as the word
"shall". Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person's successors and permitted assigns, (c) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) unless
otherwise more definitely identified, all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly
-----------------------
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided
--------
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied
30
immediately before such change shall have become effective until such notice
shall have been withdrawn or such provision amended in accordance herewith.
ARTICLE II
The Credits
-----------
SECTION 2.01. Commitments. Subject to the terms and conditions set
------------
forth herein, each Lender agrees (a) to make a Term Loan to the Borrower on the
Effective Date in a principal amount not exceeding its Term Commitment and (b)
to make Revolving Loans to the Borrower from time to time during the Revolving
Availability Period in an aggregate principal amount that will not result in
such Lender's Revolving Exposure exceeding such Lender's Revolving Commitment.
Within the foregoing limits and subject to the terms and conditions set forth
herein, the Borrower may borrow, prepay and reborrow Revolving Loans. Amounts
repaid in respect of the Term Loans may not be reborrowed.
SECTION 2.02. Loans and Borrowings. (a) Each Loan shall be made as
---------------------
part of a Borrowing consisting of Loans of the same Class and Type made by the
Lenders ratably in accordance with their respective Commitments of the
applicable Class. The failure of any Lender to make any Loan required to be
made by it shall not relieve any other Lender of its obligations hereunder;
provided that the Commitments of the Lenders are several and no Lender shall be
--------
responsible for any other Lender's failure to make Loans as required.
(b) Subject to Section 2.13, each Revolving Borrowing and Term
Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the
Borrower may request for such Borrowing in accordance herewith. Each Lender at
its option may make any Eurodollar Loan by causing any domestic or foreign
branch or Affiliate of such Lender to make such Loan; provided that (i) such
--------
branch or Affiliate is subject to the provisions of Section 2.18, (ii) the
Borrower shall have no obligation under Section 2.14 or 2.16 to pay any amount
on account of any Lender causing any Loan to be made through any such branch or
Affiliate in excess of any such amount that the Borrower would have been
required to pay had such Lender made such Loan itself and (iii) any exercise of
such option shall not affect the obligation of the Borrower to repay such Loan
in accordance with the terms of this Agreement.
(c) At the commencement of each Interest Period for any Eurodollar
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 and not less than $5,000,000. At the time that each ABR
Revolving Borrowing is made, such Borrowing shall be in an aggregate amount that
is an integral
31
multiple of $1,000,000; provided that an ABR Revolving Borrowing may be in an
--------
aggregate amount that is equal to the entire unused balance of the total
Revolving Commitments or that is required to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.04(e). Borrowings of more than one
Type and Class may be outstanding at the same time; provided that there shall
--------
not at any time be more than a total of 15 Eurodollar Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request, or to elect to convert or continue,
any Borrowing if the Interest Period requested with respect thereto would end
after the Maturity Date.
SECTION 2.03. Requests for Borrowings. To request a Revolving
------------------------
Borrowing or Term Borrowing, the Borrower shall notify the Administrative Agent
of such request by telephone (a) in the case of a Eurodollar Borrowing, not
later than 11:00 a.m., New York City time, three Business Days before the date
of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than
10:00 a.m., New York City time, on the date of the proposed Borrowing. Each
such telephonic Borrowing Request shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy to the Administrative Agent of a written
Borrowing Request in a form approved by the Administrative Agent (which approval
shall not be unreasonably withheld) and signed by the Borrower. Each such
telephonic and written Borrowing Request shall specify the following information
in compliance with Section 2.02:
(i) whether the requested Borrowing is to be a Revolving Borrowing or
Term Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) the date of such Borrowing, which shall be a Business Day;
(iv) whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing;
(v) in the case of a Eurodollar Borrowing, the initial Interest Period
to be applicable thereto, which shall be a period contemplated by the
definition of the term "Interest Period"; and
(vi) the location and number of the Borrower's account to which funds
are to be disbursed, which shall comply with the requirements of Section
2.05.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any
32
requested Eurodollar Revolving Borrowing, then the Borrower shall be deemed to
have selected an Interest Period of one month's duration. Promptly following
receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender's Loan to be made as part of the requested Borrowing.
SECTION 2.04. Letters of Credit. (a) General. Subject to the terms
------------------ --------
and conditions set forth herein, the Borrower may request the issuance of
Letters of Credit for its own account, in a form reasonably acceptable to the
Administrative Agent and the Issuing Bank, at any time and from time to time
during the LC Availability Period. In the event of any inconsistency between
the terms and conditions of this Agreement and the terms and conditions of any
form of letter of credit application or other agreement submitted by the
Borrower to, or entered into by the Borrower with, the Issuing Bank relating to
any Letter of Credit, the terms and conditions of this Agreement shall control.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
----------------------------------------------------------
Conditions. To request the issuance of a Letter of Credit (or the amendment,
-----------
renewal or extension of an outstanding Letter of Credit), the Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Bank) to the Issuing
Bank and the Administrative Agent (reasonably in advance of the requested date
of issuance, amendment, renewal or extension) a notice requesting the issuance
of a Letter of Credit, or identifying the Letter of Credit to be amended,
renewed or extended, and specifying the date of issuance, amendment, renewal or
extension (which shall be a Business Day), the date on which such Letter of
Credit is to expire (which shall comply with paragraph (c) of this Section), the
amount of such Letter of Credit, the name and address of the beneficiary thereof
and such other information as shall be necessary to prepare, amend, renew or
extend such Letter of Credit. If requested by the Issuing Bank, the Borrower
also shall submit a letter of credit application on the Issuing Bank's standard
form in connection with any request for a Letter of Credit. A Letter of Credit
shall be issued, amended, renewed or extended only if (and upon issuance,
amendment, renewal or extension of each Letter of Credit the Borrower shall be
deemed to represent and warrant that), after giving effect to such issuance,
amendment, renewal or extension (i) the LC Exposure shall not exceed $20,000,000
and (ii) the total Revolving Exposures shall not exceed the total Revolving
Commitments.
(c) Expiration Date. Each Letter of Credit shall expire at or prior
----------------
to the close of business on the earlier of (i) the date one year after the date
of the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) the date
that is five Business Days prior to the Maturity Date; provided that any Letter
--------
of Credit issued in respect of workmen's compensation obligations may provide
for the automatic renewal thereof for additional
33
one-year periods (which shall in no event extend beyond the date referred to in
clause (ii) above) if the Issuing Bank does not notify the beneficiary thereof
that such Letter of Credit will not be extended.
(d) Participations. By the issuance of a Letter of Credit (or an
---------------
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank or the Lenders, the Issuing Bank
hereby grants to each Revolving Lender, and each Revolving Lender hereby
acquires from the Issuing Bank, a participation in such Letter of Credit equal
to such Lender's Applicable Percentage of the aggregate amount available to be
drawn under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to
pay to the Administrative Agent, for the account of the Issuing Bank, such
Lender's Applicable Percentage of each LC Disbursement made by the Issuing Bank
and not reimbursed by the Borrower on the date due as provided in paragraph (e)
of this Section, or of any reimbursement payment required to be refunded to the
Borrower for any reason. Each Lender acknowledges and agrees that its
obligation to acquire participations pursuant to this paragraph in respect of
Letters of Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement. If the Issuing Bank shall make any LC
--------------
Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such
LC Disbursement by paying to the Administrative Agent an amount equal to such LC
Disbursement not later than 1:00 p.m., New York City time, on the date that such
LC Disbursement is made, if the Borrower shall have received notice of such LC
Disbursement prior to 10:00 a.m., New York City time, on such date, or, if such
notice has not been received by the Borrower prior to such time on such date,
then not later than 1:00 p.m., New York City time, on (i) the Business Day that
the Borrower receives such notice, if such notice is received prior to 10:00
a.m., New York City time, on the day of receipt, or (ii) the Business Day
immediately following the day that the Borrower receives such notice, if such
notice is not received prior to such time on the day of receipt; provided that
--------
the Borrower may, subject to the conditions to borrowing set forth herein,
request in accordance with Section 2.03 that such payment be financed with an
ABR Revolving Borrowing in an equivalent amount and, to the extent so financed,
the Borrower's obligation to make such payment shall be discharged and replaced
by the resulting ABR Revolving Borrowing. If the Borrower fails to make such
payment when due, the Administrative Agent shall notify each Revolving Lender of
the applicable LC Disbursement, the payment then due from the Borrower in
respect thereof and such Lender's Applicable Percentage thereof. Promptly
following receipt of such notice, each
34
Revolving Lender shall pay to the Administrative Agent its Applicable Percentage
of the payment then due from the Borrower, in the same manner as provided in
Section 2.05 with respect to Loans made by such Lender (and Section 2.05 shall
apply, mutatis mutandis, to the payment obligations of the Revolving Lenders),
----------------
and the Administrative Agent shall promptly pay to the Issuing Bank the amounts
so received by it from the Revolving Lenders. Promptly following receipt by the
Administrative Agent of any payment from the Borrower pursuant to this
paragraph, the Administrative Agent shall distribute such payment to the Issuing
Bank or, to the extent that Revolving Lenders have made payments pursuant to
this paragraph to reimburse the Issuing Bank, then to such Lenders and the
Issuing Bank as their interests may appear. Any payment made by a Revolving
Lender pursuant to this paragraph to reimburse the Issuing Bank for any LC
Disbursement (other than the funding of ABR Revolving Loans as contemplated
above) shall not constitute a Loan and shall not relieve the Borrower of its
obligation to reimburse such LC Disbursement.
(f) Obligations Absolute. The Borrower's obligation to reimburse LC
---------------------
Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrower's obligations hereunder.
Neither the Administrative Agent, the Lenders nor the Issuing Bank, nor any of
their Related Parties, shall have any liability or responsibility by reason of
or in connection with the issuance or transfer of any Letter of Credit or any
payment or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
Issuing Bank. Notwithstanding the Borrower's obligation to reimburse LC
Disbursements, the foregoing shall not be construed to excuse the Issuing Bank
from liability to the Borrower to the extent of any direct damages (as opposed
to consequential damages, claims in respect of which are hereby waived by the
Borrower to the extent permitted by applicable law) suffered by the Borrower
that are caused by the Issuing Bank's failure to exercise care when determining
whether drafts and other documents presented under a Letter of Credit comply
with the
35
terms thereof. The parties hereto expressly agree that, in the absence of gross
negligence or wilful misconduct on the part of the Issuing Bank (as finally
determined by a court of competent jurisdiction), the Issuing Bank shall be
deemed to have exercised care in each such determination. In furtherance of the
foregoing and without limiting the generality thereof, the parties agree that,
with respect to documents presented that appear on their face to be in
substantial compliance with the terms of a Letter of Credit, the Issuing Bank
may, in its sole discretion, either accept and make payment upon such documents
without responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.
(g) Disbursement Procedures. The Issuing Bank shall, promptly
------------------------
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit. The Issuing Bank shall promptly
notify the Administrative Agent and the Borrower by telephone (confirmed by
telecopy) of such demand for payment and whether the Issuing Bank has made or
will make an LC Disbursement thereunder; provided that any failure to give or
--------
delay in giving such notice shall not relieve the Borrower of its obligation to
reimburse the Issuing Bank and the Revolving Lenders with respect to any such LC
Disbursement.
(h) Interim Interest. If the Issuing Bank shall make any LC
-----------------
Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR Revolving Loans;
provided that, if the Borrower fails to reimburse such LC Disbursement when due
--------
pursuant to paragraph (e) of this Section, then Section 2.12(c) shall apply.
Interest accrued pursuant to this paragraph shall be for the account of the
Issuing Bank, except that interest accrued on and after the date of payment by
any Revolving Lender pursuant to paragraph (e) of this Section to reimburse the
Issuing Bank shall be for the account of such Lender to the extent of such
payment.
(i) Replacement of the Issuing Bank. The Issuing Bank may be
--------------------------------
replaced at any time by written agreement among the Borrower, the Administrative
Agent, the replaced Issuing Bank and the successor Issuing Bank. The
Administrative Agent shall notify the Lenders of any such replacement of the
Issuing Bank. At the time any such replacement shall become effective, the
Borrower shall pay all unpaid fees accrued for the account of the replaced
Issuing Bank pursuant to Section 2.11(b). From and after the effective date of
any such replacement, (i) the successor Issuing Bank shall have all the rights
and obligations of the Issuing Bank under this Agreement with respect to Letters
of Credit to be issued thereafter and (ii) references herein to the term
"Issuing Bank" shall be deemed to refer to such successor or to any previous
Issuing Bank, or to such successor
36
and all previous Issuing Banks, as the context shall require. After the
replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain
a party hereto and shall continue to have all the rights and obligations of an
Issuing Bank under this Agreement with respect to Letters of Credit issued by it
prior to such replacement, but shall not be required to issue additional Letters
of Credit.
(j) Cash Collateralization. If any Event of Default shall occur and
-----------------------
be continuing, on the Business Day that the Borrower receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Revolving Lenders with LC Exposure representing greater
than 50% of the total LC Exposure) demanding the deposit of cash collateral
pursuant to this paragraph, the Borrower shall deposit in an account with the
Administrative Agent, in the name of the Administrative Agent and for the
benefit of the Lenders, an amount in cash equal to the LC Exposure as of such
date plus any accrued and unpaid interest thereon; provided that the obligation
--------
to deposit such cash collateral shall become effective immediately, and such
deposit shall become immediately due and payable, without demand or other notice
of any kind, upon the occurrence of any Event of Default with respect to the
Borrower described in clause (i) or (j) of Article VII. Each such deposit shall
be held by the Administrative Agent as collateral for the payment and
performance of the obligations of the Borrower under this Agreement. The
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account. Other than any interest
earned on the investment of such deposits, which investments shall be made at
the option and sole discretion of the Administrative Agent and at the Borrower's
risk and expense, such deposits shall not bear interest. Interest or profits,
if any, on such investments shall accumulate in such account. Moneys in such
account shall be applied by the Administrative Agent to reimburse the Issuing
Bank for LC Disbursements for which it has not been reimbursed and, to the
extent not so applied, shall be held for the satisfaction of the reimbursement
obligations of the Borrower for the LC Exposure at such time or, if the maturity
of the Loans has been accelerated (but subject to the consent of Revolving
Lenders with LC Exposure representing greater than 50% of the total LC
Exposure), be applied to satisfy other obligations of the Borrower under this
Agreement. If the Borrower is required to provide an amount of cash collateral
hereunder as a result of the occurrence of an Event of Default, such amount (to
the extent not applied as aforesaid) shall be returned to the Borrower within
three Business Days after all Events of Default have been cured or waived.
SECTION 2.05. Funding of Borrowings. (a) Each Lender shall make
----------------------
each Loan to be made by it hereunder on the proposed date thereof by wire
transfer of immediately available funds by 12:00 noon, New York City time, to
the account of the Administrative Agent most recently designated by the
Administrative Agent for such purpose by notice to the Lenders. The
Administrative Agent will make such Loans available to the Borrower by promptly
crediting the amounts so received, in like funds, to
37
an account of the Borrower maintained with the Administrative Agent in New York
City and designated by the Borrower in the applicable Borrowing Request on or
before the close of business on the proposed date of the Borrowing; provided
--------
that ABR Revolving Loans made to finance the reimbursement of an LC Disbursement
as provided in Section 2.04(e) shall be remitted by the Administrative Agent to
the Issuing Bank.
(b) Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then such
amount shall not be deemed a Loan under this Agreement and the applicable Lender
and the Borrower severally agree to pay to the Administrative Agent forthwith on
demand such corresponding amount with interest thereon, for each day from and
including the date such amount is made available to the Borrower to but
excluding the date of payment to the Administrative Agent, at (i) in the case of
such Lender, the greater of the Federal Funds Effective Rate and a rate
determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation or (ii) in the case of the Borrower, the interest rate
applicable to ABR Loans. If such Lender pays such amount to the Administrative
Agent, then such amount shall constitute such Lender's Loan included in such
Borrowing.
SECTION 2.06. Interest Elections. (a) Each Revolving Borrowing and
-------------------
Term Borrowing initially shall be of the Type specified in the applicable
Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an
initial Interest Period as specified in such Borrowing Request. Thereafter, the
Borrower may elect to convert such Borrowing to a different Type or to continue
such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest
Periods therefor, all as provided in this Section. The Borrower may elect
different options with respect to different portions of the affected Borrowing,
in which case each such portion shall be allocated ratably among the Lenders
holding the Loans comprising such Borrowing, and the Loans comprising each such
portion shall be considered a separate Borrowing.
(b) To make an election pursuant to this Section, the Borrower shall
notify the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower were
requesting a Revolving Borrowing of the Type resulting from such election to be
made on the effective date of such election. Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Interest Election
Request in a form approved by the
38
Administrative Agent and signed by the Borrower.
(c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02 and paragraph
(f) of this Section:
(i) the Borrowing to which such Interest Election Request applies
and, if different options are being elected with respect to different
portions thereof, the portions thereof to be allocated to each resulting
Borrowing (in which case the information to be specified pursuant to
clauses (iii) and (iv) below shall be specified for each resulting
Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of the
term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election
Request with respect to a Eurodollar Borrowing prior to the end of the Interest
Period applicable thereto, then, unless such Borrowing is repaid as provided
herein, at the end of such Interest Period such Borrowing shall be converted to
an ABR Borrowing. Notwith standing any contrary provision hereof, if an Event
of Default has occurred and is continuing and the Administrative Agent, at the
request of the Required Lenders, so notifies the Borrower, then, so long as an
Event of Default is continuing (i) no out standing Borrowing may be converted
to or continued as a Eurodollar Borrowing and (ii) unless repaid, each
Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the
Interest Period applicable thereto.
(f) A Borrowing of any Class may not be converted to or continued as
a Eurodollar Borrowing if after giving effect thereto (i) the Interest Period
therefor would
39
commence before and end after a date on which any principal of the Loans of such
Class is scheduled to be repaid and (ii) the sum of the aggregate principal
amount of out standing Eurodollar Borrowings of such Class with Interest Periods
ending on or prior to such scheduled repayment date plus the aggregate principal
amount of outstanding ABR Borrowings of such Class would be less than the
aggregate principal amount of Loans of such Class required to be repaid on such
scheduled repayment date.
SECTION 2.07. Termination and Reduction of Commitments.
-----------------------------------------
(a) Unless previously terminated, (i) the Term Commitments shall
terminate at 5:00 p.m., New York City time, on the Effective Date and (ii) the
Revolving Commitments shall terminate on the Maturity Date.
(b) The Borrower may at any time terminate, or from time to time
reduce, the Commitments of any Class; provided that (i) each reduction of the
--------
Commitments of any Class shall be in an amount that is an integral multiple of
$500,000 and not less than $1,000,000 and (ii) the Borrower shall not terminate
or reduce the Revolving Commitments if, after giving effect to any concurrent
prepayment of the Revolving Loans in accordance with Section 2.10, the sum of
the Revolving Exposures would exceed the total Revolving Commitments.
(c) The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Commitments under paragraph (b) of this
Section at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any such notice, the Administrative
Agent shall advise the Lenders of the contents thereof. Each notice delivered
by the Borrower pursuant to this Section shall be irrevocable; provided that a
--------
notice of termination of the Revolving Commitments delivered by the Borrower may
state that such notice is conditioned upon the effectiveness of other credit
facilities, in which case such notice may be revoked by the Borrower (by notice
to the Administrative Agent on or prior to the specified effective date) if such
condition is not satisfied. Any termination or reduction of the Commitments of
any Class shall be permanent. Each reduction of the Commitments of any Class
shall be made ratably among the Lenders in accordance with their respective
Commitments of such Class.
SECTION 2.08. Repayment of Loans; Evidence of Debt. (a) The
-------------------------------------
Borrower hereby unconditionally promises to pay (i) to the Administrative Agent
for the account of each Lender the then unpaid principal amount of each
Revolving Loan of such Lender on the Maturity Date and (ii) to the
Administrative Agent for the account of each Lender the then unpaid principal
amount of each Term Loan of such Lender as provided in Section 2.09.
(b) Each Lender shall maintain in accordance with its usual practice
an
40
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder.
(c) The Administrative Agent shall maintain accounts in which it
shall record (i) the amount of each Loan made hereunder, the Class and Type
thereof and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder for the account of the Lenders and each
Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph
(b) or (c) of this Section shall be prima facie evidence of the existence and
----- -----
amounts of the obligations recorded therein; provided that the failure of any
--------
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans of any Class made by it be
evidenced by a promissory note. In such event, the Borrower shall prepare,
execute and deliver to such Lender a promissory note payable to the order of
such Lender (or, if requested by such Lender, to such Lender and its registered
assigns) in accordance with the terms of this Agreement and in a form approved
by the Administrative Agent. There after, the Loans evidenced by such
promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).
SECTION 2.09. Amortization of Term Loans. (a) Subject to adjustment
---------------------------
pursuant to paragraph (c) of this Section, the Borrower shall repay Term
Borrowings on each date set forth below in the aggregate principal amount set
forth opposite such date:
Date Amount
---- ------
September 30, 1998 $25,000,000.00
December 31, 1998 $25,000,000.00
March 31, 1999 $ 9,375,000.00
June 30, 1999 $ 9,375,000.00
September 30, 1999 $ 9,375,000.00
December 31, 1999 $ 9,375,000.00
March 31, 2000 $ 5,000,000.00
June 30, 2000 $ 5,000,000.00
41
September 30, 2000 $ 5,000,000.00
December 31, 2000 $ 5,000,000.00
March 31, 2001 $ 4,375,000.00
June 30, 2001 $ 4,375,000.00
September 30, 2001 $ 4,375,000.00
December 31, 2001 $ 4,375,000.00
(b) To the extent not previously paid, all Term Loans shall be due
and payable on the Maturity Date.
(c) If the initial aggregate amount of the Lenders' Term Commitment
exceeds the aggregate principal amount of Term Loans that are made on the
Effective Date, then the scheduled repayments of Term Borrowings to be made
pursuant to this Section shall be reduced ratably by an aggregate amount equal
to such excess. Any prepayment of a Term Borrowing shall be applied to reduce
the subsequent scheduled repayments of the Term Borrowings to be made pursuant
to this Section ratably; provided that (i) any prepayment made pursuant to
--------
Section 2.10(a) shall be applied, first, to reduce the next two scheduled
repayments of the Term Borrowings to be made pursuant to this Section in order
of maturity (to the extent that such scheduled repayments would otherwise occur
within 12 months of such prepayment made pursuant to Section 2.10(a)) unless and
until such next two scheduled repayments have been eliminated as a result of
reductions hereunder and, second, to reduce the remaining scheduled repayments
of the Term Borrowings to be made pursuant to this Section ratably and (ii) any
prepayment made pursuant to Section 2.10(c) shall be applied, first, to reduce
the scheduled repayments of the Term Borrowings to be made pursuant to this
Section on the last day of each of the next four succeeding fiscal quarters
ending after the date of such prepayment in order of maturity unless and until
such next scheduled repayments have been eliminated as a result of reductions
hereunder and, second, to reduce the remaining scheduled repayments of the Term
Borrowings to be made pursuant to this Section ratably.
(d) Prior to any repayment of any Term Borrowings hereunder, the
Borrower shall select the Borrowing or Borrowings to be repaid and shall notify
the Administrative Agent by telephone (confirmed by telecopy) of such selection
not later than 11:00 a.m., New York City time, three Business Days before the
scheduled date of such repayment; provided that each repayment of Term
--------
Borrowings shall be applied to repay any outstanding ABR Term Borrowings before
any other Borrowings. Each repayment of a Borrowing shall be applied ratably to
the Loans included in the repaid Borrowing. Repayments of Term Borrowings shall
be accompanied by accrued interest on the amount repaid.
SECTION 2.10. Prepayment of Loans. (a) The Borrower shall have the
--------------------
right at any time and from time to time to prepay any Borrowing in whole or in
part,
42
subject to the requirements of this Section.
(b) In the event and on each occasion that any Net Proceeds are
received by or on behalf of Catalytica, the Borrower or any Subsidiary in
respect of any Prepayment Event, the Borrower shall, within three Business Days
after such Net Proceeds are received, prepay Term Borrowings in an aggregate
amount equal to such Net Proceeds.
(c) Following the end of each fiscal year of the Borrower, commencing
with the fiscal year ending December 31, 1998, the Borrower shall prepay Term
Borrowings in an aggregate amount equal to 75% of Excess Cash Flow (i) for the
period from the Effective Date through December 31, 1998 (in the case of the
fiscal year ending December 31, 1998), and (ii) for each fiscal year thereafter.
Each prepayment pursuant to this paragraph shall be made on or before the date
on which financial statements are delivered pursuant to Section 5.01 with
respect to the fiscal year for which (or the fiscal year included in the period
for which) Excess Cash Flow is being calculated (and in any event within 90 days
plus 3 Business Days after the end of such fiscal year). The portion of Excess
Cash Flow that is not required to be applied to prepay Term Borrowings pursuant
to this Section 2.10(c) may be used for general corporate and other purposes,
subject to the terms and conditions of this Agreement.
(d) Prior to any optional or mandatory prepayment of Borrowings
hereunder, the Borrower shall select the Borrowing or Borrowings to be prepaid
and shall specify such selection in the notice of such prepayment pursuant to
paragraph (e) of this Section; provided that each prepayment of Borrowings of
--------
any Class shall be applied to prepay ABR Borrowings of such Class before any
other Borrowings of such Class.
(e) The Borrower shall notify the Administrative Agent by telephone
(confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York City
time, three Business Days before the date of prepayment or (ii) in the case of
prepayment of an ABR Borrowing, not later than 10:00 a.m., New York City time,
on the date of prepayment. Each such notice shall be irrevocable and shall
specify the prepayment date, the principal amount of each Borrowing or portion
thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably
detailed calculation of the amount of such prepayment; provided that, if a
--------
notice of optional prepayment is given in connection with a conditional notice
of termination of the Revolving Commitments as contemplated by Section 2.07,
then such notice of prepayment may be revoked if such notice of termination is
revoked in accordance with Section 2.07. Promptly following receipt of any such
notice, the Administrative Agent shall advise the Lenders of the contents
thereof. Each partial prepayment of any Borrowing shall be in an amount that
would be permitted in the case of an advance of a Borrowing of the same Type as
provided in
43
Section 2.02(c), except as necessary to apply fully the required amount of a
mandatory prepayment. Each prepayment of a Borrowing shall be applied ratably to
the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by
accrued interest to the extent required by Section 2.12.
SECTION 2.11. Fees. (a) The Borrower agrees to pay to the
-----
Administrative Agent for the account of each Lender a commitment fee, which
shall accrue at the Applicable Rate on the average daily unused amount of the
Revolving Commitment of such Lender during the period from and including the
Effective Date to but excluding the date on which such Commitment terminates.
Accrued commitment fees shall be payable in arrears on the last Business Day of
March, June, September and December of each year and on the date on which the
Revolving Commitments terminate, commencing on the first such date to occur
after the date hereof. All commitment fees shall be computed on the basis of a
year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). For purposes of computing
commitment fees with respect to Revolving Commitments, a Revolving Commitment of
a Lender shall be deemed to be used to the extent of the outstanding Revolving
Loans and LC Exposure of such Lender.
(b) The Borrower agrees to pay (i) to the Administrative Agent for
the account of each Revolving Lender a participation fee with respect to its
participations in Letters of Credit, which shall accrue at the same Applicable
Rate as interest on Eurodollar Revolving Loans on the average daily amount of
such Lender's LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the
Effective Date to but excluding the later of the date on which such Lender's
Revolving Commitment terminates and the date on which such Lender ceases to have
any LC Exposure, and (ii) to the Issuing Bank a fronting fee, which shall accrue
at the rate of 3/8 of 1% per annum on the average daily amount of the LC
Exposure (excluding any portion thereof attributable to unreimbursed LC Disburse
ments) during the period from and including the Effective Date to but excluding
the later of the date of termination of the Revolving Commitments and the date
on which there ceases to be any LC Exposure, as well as the Issuing Bank's
standard fees with respect to the issuance, amendment, renewal or extension of
any Letter of Credit or processing of drawings thereunder. Participation fees
and fronting fees accrued through and including the last Business Day of March,
June, September and December of each year shall be payable on the third Business
Day following such last day, commencing on the first such date to occur after
the Effective Date; provided that all such fees shall be payable on the date on
--------
which the Revolving Commitments terminate and any such fees accruing after the
date on which the Revolving Commitments terminate shall be payable on demand.
Any other fees payable to the Issuing Bank pursuant to this paragraph shall be
payable within 10 days after demand. All participation fees and fronting fees
shall be computed on the basis of a year of 360 days and shall be payable for
the actual number of days elapsed
44
(including the first day but excluding the last day).
(c) The Borrower agrees to pay to the Administrative Agent, for its
own account, fees payable in the amounts and at the times separately agreed upon
between the Borrower and the Administrative Agent.
(d) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to the Issuing
Bank, in the case of fees payable to it) for prompt distribution, in the case of
commitment fees and participation fees, to the Lenders entitled thereto. Fees
paid shall not be refundable under any circumstances other than manifest error.
SECTION 2.12. Interest. (a) The Loans comprising each ABR Borrowing
---------
shall bear interest at the Alternate Base Rate plus the Applicable Rate.
(b) The Loans comprising each Eurodollar Borrowing shall bear
interest at the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing plus the Applicable Rate.
(c) Notwithstanding the foregoing, if any principal of or interest on
any Loan or any fee or other amount payable by the Borrower hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable to such Loan as provided in the preceding paragraphs
of this Section or (ii) in the case of any other amount, 2% plus the rate
applicable to ABR Revolving Loans as provided in paragraph (a) of this Section.
(d) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan and, in the case of Revolving Loans, upon
termination of the Revolving Commitments; provided that (i) interest accrued
--------
pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in
the event of any repayment or prepayment of any Loan (other than a prepayment of
an ABR Revolving Loan prior to the end of the Revolving Availability Period),
accrued interest on the principal amount repaid or prepaid shall be payable on
the date of such repayment or prepayment and (iii) in the event of any
conversion of any Eurodollar Loan prior to the end of the current Interest
Period therefor, accrued interest on such Loan shall be payable on the effective
date of such conversion.
(e) All interest hereunder shall be computed on the basis of a year
of 360 days, except that interest computed by reference to the Alternate Base
Rate at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis
45
of a year of 365 days (or 366 days in a leap year), and in each case shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day). The applicable Alternate Base Rate or Adjusted LIBO
Rate shall be determined by the Administrative Agent, and such determination
shall be conclusive absent manifest error.
SECTION 2.13. Alternate Rate of Interest. If prior to the
---------------------------
commencement of any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or
(b) the Administrative Agent is advised by the Required Lenders that
the Adjusted LIBO Rate for such Interest Period will not adequately and
fairly reflect the cost to such Lenders (or Lender) of making or
maintaining their Loans (or its Loan) included in such Borrowing for such
Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.
SECTION 2.14. Increased Costs. (a) If any Change in Law shall:
----------------
(i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of,
or credit extended by, any Lender (except any such reserve requirement
reflected in the Adjusted LIBO Rate) or the Issuing Bank; or
(ii) impose on any Lender or the Issuing Bank or the London interbank
market any other condition (other than imposition of Taxes) affecting this
Agreement or Eurodollar Loans made by such Lender or any Letter of Credit
or participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or the
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest
46
or otherwise), then the Borrower will pay to such Lender or the Issuing Bank, as
the case may be, such additional amount or amounts as will compensate such
Lender or the Issuing Bank, as the case may be, for such additional costs
incurred or reduction suffered.
(b) If any Lender or the Issuing Bank determines that any Change in
Law regarding capital requirements has or would have the effect of reducing the
rate of return on such Lender's or the Issuing Bank's capital or on the capital
of such Lender's or the Issuing Bank's holding company, if any, as a consequence
of this Agreement or the Loans made by, or participations in Letters of Credit
held by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a
level below that which such Lender or the Issuing Bank or such Lender's or the
Issuing Bank's holding company could have achieved but for such Change in Law
(taking into consideration such Lender's or the Issuing Bank's policies and the
policies of such Lender's or the Issuing Bank's holding company with respect to
capital adequacy), then from time to time the Borrower will pay to such Lender
or the Issuing Bank, as the case may be, such additional amount or amounts as
will compensate such Lender or the Issuing Bank or such Lender's or the Issuing
Bank's holding company for any such reduction suffered.
(c) A certificate of a Lender or the Issuing Bank setting forth the
amount or amounts necessary to compensate such Lender or the Issuing Bank or its
holding company, as the case may be, as specified in paragraph (a) or (b) of
this Section shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender or the Issuing Bank, as the
case may be, the amount shown as due on any such certificate (absent manifest
error) within 10 days after receipt thereof.
(d) Failure or delay on the part of any Lender or the Issuing Bank to
demand compensation pursuant to this Section shall not constitute a waiver of
such Lender's or the Issuing Bank's right to demand such compensation; provided
--------
that the Borrower shall not be required to compensate a Lender or the Issuing
Bank pursuant to this Section for any increased costs or reductions incurred
more than 180 days prior to the date that such Lender or the Issuing Bank, as
the case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender's or the Issuing Bank's
intention to claim compensation therefor; provided further that, if the Change
-------- -------
in Law giving rise to such increased costs or reductions is retroactive, then
the 180-day period referred to above shall be extended to include the period of
retroactive effect thereof.
SECTION 2.15. Break Funding Payments. In the event of (a) the
-----------------------
payment of any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Revolving Loan or Term Loan on the
47
date specified in any notice delivered pursuant hereto (regardless of whether
such notice may be revoked under Section 2.10(g) and is revoked in accordance
therewith), or (d) the assignment of any Eurodollar Loan other than on the last
day of the Interest Period applicable thereto as a result of a request by the
Borrower pursuant to Section 2.18, then, in any such event, the Borrower shall
compensate each Lender for the loss, cost and expense attributable to such
event. In the case of a Eurodollar Loan, such loss, cost or expense to any
Lender shall be deemed to include an amount determined by such Lender to be the
excess, if any, of (i) the amount of interest that would have accrued on the
principal amount of such Loan had such event not occurred, at the Adjusted LIBO
Rate that would have been applicable to such Loan, for the period from the date
of such event to the last day of the then current Interest Period therefor (or,
in the case of a failure to borrow, convert or continue, for the period that
would have been the Interest Period for such Loan), over (ii) the amount of
interest that would accrue on such principal amount for such period at the
interest rate that such Lender would bid were it to bid, at the commencement of
such period, for dollar deposits of a comparable amount and period from other
banks in the Eurodollar market. A certifi cate of any Lender setting forth any
amount or amounts that such Lender is entitled to receive pursuant to this
Section shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender the amount shown as due on
any such certificate (absent manifest error) within 10 days after receipt
thereof.
SECTION 2.16. Taxes. (a) Any and all payments by or on account of
------
any obligation of the Borrower hereunder or under any other Loan Document shall
be made free and clear of and without deduction for any Indemnified Taxes or
Other Taxes; provided that if the Borrower shall be required to deduct any
--------
Indemnified Taxes or Other Taxes from such payments, then, to the extent
permitted by law, (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent, Lender or
Issuing Bank (as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Borrower shall make
such deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent, each
Lender and the Issuing Bank, within 10 days after written demand therefor, for
the full amount of any Indemnified Taxes or Other Taxes paid by the
Administrative Agent, such Lender or the Issuing Bank, as the case may be, on or
with respect to any payment by or on account of any obligation of the Borrower
hereunder or under any other Loan Document (including Indemnified Taxes or Other
Taxes imposed or asserted on or attributable to
48
amounts payable under this Section) and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto from causes other than the
breach of the Loan Documents or the gross negligence of the party demanding
reimbursement, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
A certificate as to the amount of such payment or liability delivered to the
Borrower by a Lender or the Issuing Bank, or by the Administrative Agent on its
own behalf or on behalf of a Lender or the Issuing Bank, shall be conclusive
absent manifest error.
(d) If any Indemnified Taxes or Other Taxes are incorrectly or
illegally imposed or asserted, the Borrower and Lender agree to reasonably
cooperate to contest such Taxes.
(e) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
(f) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by applicable
law after receipt of written notice from the Borrower, such properly completed
and executed documentation prescribed by applicable law or reasonably requested
by the Borrower as will permit such payments to be made without withholding or
at a reduced rate.
(g) If the Administrative Agent or Lender (or Transferee) receives a
refund solely in respect of Taxes or Other Taxes, it shall pay over such refund
to the Borrower to the extent that it has already received indemnity payments or
additional amounts pursuant to this Section 2.18 with respect to such Taxes or
Other Taxes giving rise to the refund, net of all out-of-pocket expenses and
without interest (other than interest paid by the relevant Governmental
Authority with respect to such refund); provided, however, that the Borrower
-------- -------
shall, upon request of the Administrative Agent or Lender (or Transferee), repay
such refund (plus penalties, interest or other charges imposed by the relevant
Governmental Authority) to the Administrative Agent or Lender (or Transferee) if
the Administrative Agent or Lender (or Transferee) is required to repay such
refund to such Governmental Authority. Nothing contained herein shall require
the Administrative Agent or Lender (or Transferee) to make its tax returns (or
any other information relating to its taxes which it deems confidential)
available to the Borrower or
49
any other person.
SECTION 2.17. Payments Generally; Pro Rata Treatment; Sharing of
--------------------------------------------------
Setoffs. (a) The Borrower shall make each payment required to be made by it
--------
hereunder or under any other Loan Document (whether of principal, interest, fees
or reimbursement of LC Disbursements, or of amounts payable under Section 2.14,
2.15 or 2.16, or otherwise) prior to 1:00 p.m., New York City time, on the date
when due, in immediately available funds, without set-off or counterclaim. Any
amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent c/o The Loan and Agency Services Group
at its offices at One Chase ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇▇▇, except payments to be made directly to the Issuing Bank as expressly
provided herein and except that payments pursuant to Sections 2.14, 2.15, 2.16
and 9.03 shall be made directly to the Persons entitled thereto and payments
pursuant to other Loan Documents shall be made to the Persons specified therein.
The Administrative Agent shall distribute promptly any such payments received by
it for the account of any other Person to the appropriate recipient promptly
following receipt thereof. If any payment under any Loan Document shall be due
on a day that is not a Business Day, the date for payment shall be extended to
the next succeeding Business Day, and, in the case of any payment accruing
interest, interest thereon shall be payable for the period of such extension.
All payments under each Loan Document shall be made in dollars.
(b) If at any time insufficient funds are received by and available
to the Administrative Agent to pay fully all amounts of principal, unreimbursed
LC Disburse ments, interest and fees then due hereunder, such funds shall be
applied (i) first, towards payment of interest and fees then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
interest and fees then due to such parties, and (ii) second, towards payment of
principal and unreimbursed LC Disbursements then due hereunder, ratably among
the parties entitled thereto in accordance with the amounts of principal and
unreimbursed LC Disbursements then due to such parties.
(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans, Term Loans or participations in LC
Disbursements resulting in such Lender receiving payment of a greater proportion
of the aggregate amount of its Revolving Loans, Term Loans and participations in
LC Disbursements and accrued interest thereon than the proportion received by
any other Lender, then the Lender receiving such greater proportion shall
purchase (for cash at face value) participations in the Revolving Loans, Term
Loans and participations in LC Disbursements of other Lenders to the extent
necessary so that the benefit of all such payments shall be shared by
50
the Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Revolving Loans, Term Loans and
participations in LC Disbursements; provided that (i) if any such participations
--------
are purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by the Borrower pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or participations
in LC Disbursements to any assignee or participant, other than to the Borrower,
any Subsidiary or any Affiliate thereof (as to which the provisions of this
paragraph shall apply). The Borrower consents to the foregoing and agrees, to
the extent it may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against the Borrower rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of the Borrower
in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders or the Issuing Bank hereunder that the
Borrower will not make such payment, the Administrative Agent may assume that
the Borrower has made such payment on such date in accordance herewith and may,
in reliance upon such assumption, distribute to the Lenders or the Issuing Bank,
as the case may be, the amount due. In such event, if the Borrower has not in
fact made such payment, then each of the Lenders or the Issuing Bank, as the
case may be, severally agrees to repay to the Administrative Agent forthwith on
demand the amount so distributed to such Lender or Issuing Bank with interest
thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to the Administrative Agent, at the
greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation provided, however, that the Borrower shall not be required to
-------- -------
reimburse any Lender for the payment of any such interest.
(e) If any Lender shall fail to make any payment required to be made
by it pursuant to Section 2.04(d) or (e), 2.05(b), 2.17(d) or 9.03(c), then the
Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the Administrative
Agent for the account of such Lender to satisfy such Lender's obligations under
such Sections until all such unsatisfied obligations are fully paid.
SECTION 2.18. Mitigation Obligations; Replacement of Lenders. (a)
-----------------------------------------------
If any Lender requests compensation under Section 2.14, or if the Borrower is
required to
51
pay any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 2.16, then such Lender shall use
reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the judgment of such
Lender, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 2.14 or 2.16, as the case may be, in the future and
(ii) would not subject such Lender to any unreimbursed cost or expense and would
not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to
pay all reasonable costs and expenses incurred by any Lender in connection with
any such designation or assignment.
(b) If any Lender requests compensation under Section 2.14, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.16,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.04), all its interests, rights and obligations under this Agreement to
an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment, or any other party); provided that
--------
(i) the Borrower shall have received the prior written consent of the
Administrative Agent (and, if a Revolving Commitment is being assigned, the
Issuing Bank), which consent shall not unreasonably be withheld, (ii) such
Lender shall have received payment of an amount equal to the outstanding
principal of its Loans and participations in LC Disbursements, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder, from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrower (in the case of all other amounts) and (iii) in the case
of any such assignment resulting from a claim for compensation under Section
2.14 or payments required to be made pursuant to Section 2.16, such assignment
will result in a reduction in such compensation or payments. A Lender shall not
be required to make any such assignment and delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the
Borrower to require such assignment and delegation cease to apply.
ARTICLE III
Representations and Warranties
------------------------------
Each of Catalytica and the Borrower represents and warrants to the
Lenders that:
52
SECTION 3.01. Organization; Powers. Each of Catalytica, the Borrower
---------------------
and the Subsidiaries is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, has all requisite power
and authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.
SECTION 3.02. Authorization; Enforceability. The Transactions to be
------------------------------
entered into by each Loan Party are within such Loan Party's corporate powers
and have been duly authorized by all necessary corporate and, if required,
stockholder action. This Agreement has been duly executed and delivered by each
of Catalytica and the Borrower and constitutes, and each other Loan Document to
which any Loan Party is to be a party, when executed and delivered by such Loan
Party, will constitute, a legal, valid and binding obligation of Catalytica, the
Borrower or such Loan Party (as the case may be), enforceable in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding
in equity or at law.
SECTION 3.03. Governmental Approvals; No Conflicts. The Trans
-------------------------------------
actions (a) do not require any material consent or approval of, registration or
filing with, or any other action by, any Governmental Authority, except (i) as
required by the FD&C Act in connection with the Acquisition, (ii) as required
for the Borrower to operate the Acquired Facilities (including environmental
permits and any other permits) and (iii) such as have been obtained or made and
are in full force and effect and except filings necessary to perfect Liens
created under the Loan Documents, (b) will not violate any applicable law or
regulation material to Catalytica, the Borrower and the Subsidiaries, taken as a
whole, or the charter, by-laws or other organizational documents of Catalytica,
the Borrower or any of the Subsidiaries or any order of any Governmental
Authority, (c) will not violate or result in a default under any indenture,
agreement (including any Acquisition Document) or other instrument binding upon
Catalytica, the Borrower or any of the Subsidiaries or its assets and material
to Catalytica, the Borrower and the Subsidiaries, taken as a whole, or, except
as specifically contemplated by the Acquisition Documents, give rise to a right
thereunder to require any payment in excess of $3,000,000 to be made by
Catalytica, the Borrower or any of the Subsidiaries, and (d) will not result in
the creation or imposition of any Lien on any material asset of Catalytica, the
Borrower or any of the Subsidiaries, except Liens created under the Loan
Documents, Liens created by the Deed of Easement and the Liens described in
Schedule 6.02 that have been created in connection with the Transactions.
SECTION 3.04. Financial Condition; No Material Adverse Change.
------------------------------------------------
53
(a) Catalytica has heretofore furnished to the Lenders its consolidated balance
sheet and statements of income, stockholders equity and cash flows (i) as of and
for the fiscal year ended December 31, 1996, reported on by Ernst & Young LLP,
independent public accountants, and (ii) as of and for the fiscal quarter and
the portion of the fiscal year ended March 31, 1997, certified by its chief
financial officer. Such financial statements present fairly, in all material
respects, the financial position and results of operations and cash flows of
Catalytica and its consolidated subsidiaries as of such dates and for such
periods in accordance with GAAP as consistently applied by Catalytica, subject
to year-end audit adjustments and the absence of footnotes in the case of the
statements referred to in clause (ii) above.
(b) Catalytica has heretofore furnished to the Lenders its pro forma
consolidated balance sheet as of June 30, 1997, prepared giving effect to the
Transactions as if the Transactions had occurred on such date. Such pro forma
consolidated balance sheet (i) has been prepared in good faith based on the same
assumptions used to prepare the pro forma financial statements included in the
Information Memorandum (which assumptions are believed by Catalytica and the
Borrower to be reasonable under the circumstances at such time and on the date
of this Agreement), (ii) is consistent in all material respects with the
forecasts and other information previously provided to the Lenders, (iii) is
based on the best information available to Catalytica and the Borrower after due
inquiry, (iv) accurately reflects all adjustments necessary to give effect to
the Transactions and (v) presents fairly, in all material respects, the pro
forma financial position of the Borrower and its consolidated Subsidiaries as of
June 30, 1997, as if the Transactions had occurred on such date.
(c) Except as disclosed in the financial statements referred to above
or the notes thereto or in the Information Memorandum and except for the
Disclosed Matters, after giving effect to the Transactions, none of Catalytica,
the Borrower or the Subsidiaries has, as of the Effective Date, any material
contingent liabilities, unusual long-term commitments or unrealized losses.
(d) Since December 31, 1996 (or, in the case of the Acquired
Facilities, since June 25, 1997), there has been no material adverse change in
the business, assets, operations, properties, condition, financial or otherwise,
contingent liabilities (including potential environmental liabilities),
prospects or material agreements of or relating to Catalytica, the Borrower, the
Subsidiaries and the Acquired Facilities, taken as a whole.
SECTION 3.05. Properties. (a) Each of Catalytica, the Borrower and
-----------
the Subsidiaries has good title to, or valid leasehold interests in, all its
real and personal property material to its business (including its Mortgaged
Properties), except for Liens permitted by Section 6.02 and minor defects in
title that do not materially interfere with its ability to conduct its business
as currently conducted.
54
(b) Each of Catalytica, the Borrower and the Subsidiaries owns, or is
licensed to use, all trademarks, tradenames, copyrights, patents and other
intellectual property material to the business of Catalytica, the Borrower and
the Subsidiaries, taken as a whole, and the use thereof by Catalytica, the
Borrower and the Subsidiaries does not infringe upon the rights of any other
Person, except for any such infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
(c) Schedule 3.05 sets forth the address of each real property that
is owned or material real property that is leased by Catalytica, the Borrower or
any of the Subsidiaries as of the Effective Date after giving effect to the
Transactions.
(d) As of the Effective Date, none of Catalytica, the Borrower or any
of the Subsidiaries has received notice of, or has knowledge of, any pending or
contem plated condemnation proceeding affecting any Mortgaged Property or any
sale or disposition thereof in lieu of condemnation. Neither any Mortgaged
Property nor any interest therein is subject to any material right of first
refusal, option or other contractual right to purchase such Mortgaged Property
or interest therein.
SECTION 3.06. Litigation and Environmental Matters. (a) There are
-------------------------------------
no actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of Catalytica or the Borrower,
threatened against or affecting Catalytica, the Borrower or any of the
Subsidiaries (i) as to which there is a reasonable possibility of an adverse
determination and that, if adversely determined, could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect (other
than the Disclosed Matters) or (ii) that involve any of the Loan Documents or
the Transactions.
(b) Except for the Disclosed Matters and except with respect to any
other matters that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, none of Catalytica, the
Borrower or any of the Subsidiaries (i) has failed to comply with any
Environmental Law or to obtain, maintain or comply with any permit, license or
other approval required under any Environmental Law, (ii) has become subject to
any Environmental Liability, (iii) has received notice of any claim against it
of any Environmental Liability or (iv) knows of any basis for any Environmental
Liability against it.
(c) Since the date of this Agreement, there has been no change in the
status of the Disclosed Matters that, individually or in the aggregate, has
resulted in (i) a Material Adverse Effect or (ii) a material increase in the
likelihood that a Material Adverse Effect is reasonably likely to occur.
55
SECTION 3.07. Compliance with Laws and Agreements. Each of
------------------------------------
Catalytica, the Borrower and the Subsidiaries is in compliance with all laws,
regulations and orders of any Governmental Authority applicable to it or its
property and all indentures, agreements and other instruments binding upon it or
its property, except where the failure to be in such compliance, individually or
in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect.
SECTION 3.08. Investment and Holding Company Status. None of
--------------------------------------
Catalytica, the Borrower or any of the Subsidiaries is (a) an "investment
company" as defined in, or subject to regulation under, the Investment Company
Act of 1940 or (b) a "holding company" as defined in, or subject to regulation
under, the Public Utility Holding Company Act of 1935.
SECTION 3.09. Taxes. Each of Catalytica, the Borrower and the
------
Subsidiaries has timely filed or caused to be filed all Tax returns and reports
required to have been filed and has paid or caused to be paid all Taxes required
to have been paid by it, except (a) Taxes that are being contested in good faith
by appropriate proceedings and for which Catalytica, the Borrower or such
Subsidiary, as applicable, has set aside on its books adequate reserves or (b)
to the extent that the failure to do so could not reasonably be expected to
result in a Material Adverse Effect.
SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably
------
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $3,000,000 the fair market value of the assets of such Plan, and the
present value of all accumulated benefit obligations of all underfunded Plans
(based on the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed by more than $3,000,000 the fair
market value of the assets of all such underfunded Plans.
SECTION 3.11. Disclosure. The Borrower has disclosed to the Lenders
-----------
all agreements, instruments and corporate or other restrictions to which
Catalytica, the Borrower or any of the Subsidiaries is subject, and all other
matters known to any of them, that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect. Neither the
Information Memorandum nor any of the other reports, financial statements,
certificates or other information furnished by or on behalf of any Loan Party to
the Administrative Agent or any Lender in connection with the
56
negotiation of this Agreement or any other Loan Document or delivered hereunder
or thereunder (as modified or supplemented by other information so furnished
prior to the time when this representation is being made or deemed made)
considered as a whole contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading in any material
respect; provided that, with respect to projected financial information,
--------
Catalytica and the Borrower represent only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.
SECTION 3.12. Subsidiaries. (a) As of the Effective Date,
-------------
Catalytica does not have any direct subsidiaries other than the Borrower,
Catalytica Combustion and Advanced Technologies. Schedule 3.12 sets forth the
name of, and the ownership interest of Catalytica, the Borrower and each of the
Subsidiaries in, each of their respective subsidiaries and identifies each
Subsidiary that is a Subsidiary Loan Party, in each case as of the Effective
Date.
(b) Advanced Sensor is an Inactive Subsidiary, or if such Subsidiary
ceases to be an Inactive Subsidiary, it has complied with Section 5.14. As of
the Effective Date, Advanced Sensor is the only Inactive Subsidiary.
SECTION 3.13. Insurance. Schedule 3.13 sets forth a description of
----------
all insurance maintained by or on behalf of the Borrower and the Subsidiaries as
of the Effective Date. As of the Effective Date, all due and payable, material
premiums in respect of such insurance have been paid.
SECTION 3.14. Labor Matters. As of the Effective Date, there are no
--------------
strikes, lockouts or slowdowns against Catalytica, the Borrower or any
Subsidiary pending or, to the knowledge of Catalytica or the Borrower,
threatened. The hours worked by and payments made to employees of Catalytica,
the Borrower and the Subsidiaries have not been in violation of the Fair Labor
Standards Act or any other applicable Federal, state, local or foreign law
dealing with such matters, except for such violations that, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect. All payments due from Catalytica, the Borrower or any Subsidiary, or
for which any claim may be made against Catalytica, the Borrower or any
Subsidiary, on account of wages and employee health and welfare insurance and
other benefits that are, individually or in the aggregate, material to
Catalytica, the Borrower and the Subsidiaries, taken as a whole, have been paid
or accrued as a liability on the books of Catalytica, the Borrower or such
Subsidiary. The consummation of the Transactions will not give rise to any
right of termination or right of renegotiation on the part of any union under
any collective bargaining agreement to which Catalytica, the Borrower or any
Subsidiary is bound.
57
SECTION 3.15. Solvency. Immediately after the consummation of the
---------
Transactions to occur on the Effective Date and immediately following the making
of each Loan made on the Effective Date and after giving effect to the
application of the proceeds of such Loans, (a) the fair value of the assets of
the Loan Parties, taken as a whole, at a fair valuation, will exceed their debts
and liabilities, subordinated, contingent or otherwise; (b) the present fair
saleable value of the property of the Loan Parties, taken as a whole, will be
greater than the amount that will be required to pay the probable liability of
their debts and other liabilities, subordinated, contingent or otherwise, as
such debts and other liabilities become absolute and matured; (c) the Loan
Parties, taken as a whole, will be able to pay their debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured; and (d) the Loan Parties, taken as a whole, will not have
unreasonably small capital with which to conduct the business in which they are
engaged as such business is now conducted and is proposed to be conducted
following the Effective Date.
SECTION 3.16. Security Documents. (a) The Pledge Agreement is
-------------------
effective to create in favor of the Administrative Agent, for the ratable
benefit of the Secured Parties, a legal, valid and enforceable security interest
in the Collateral (as defined in the Pledge Agreement) and, when the Collateral
is delivered to the Administrative Agent and duly endorsed, the Pledge Agreement
shall create a fully perfected Lien on, and security interest in, all right,
title and interest of the pledgor thereunder in such Collateral, in each case
prior and superior in right to any other person, other than with respect to
Liens that are permitted by Section 6.02 and have a priority as a matter of law.
(b) The Security Agreement is effective to create in favor of the
Administrative Agent, for the ratable benefit of the Secured Parties, a legal,
valid and enforceable security interest in the Collateral (as defined in the
Security Agreement) and, when financing statements in appropriate form are filed
in the offices specified on Schedule 6 to the Perfection Certificate, such
security interest shall constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the grantors thereunder in such
Collateral (other than the Intellectual Property (as defined in the Security
Agreement) in which a security interest may be perfected by filing, recording or
registering a security agreement, financing statement or analogous document in
the United States Patent and Trademark Office or the United States Copyright
Office, as applicable), to the extent a security interest in such Collateral may
be perfected by the filing of financing statements, in each case prior and
superior in right to any other person, other than with respect to Liens that are
permitted by Section 6.02 and have a priority as a matter of law.
(c) When the Security Agreement is filed in the United States Patent
and Trademark Office and the United States Copyright Office, the security
interest created
58
thereunder shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the Loan Parties (other than the Non-Borrower
Subsidiaries) in the Intellectual Property (as defined in the Security
Agreement) in which a security interest may be perfected by filing, recording or
registering a security agreement, financing statement or analogous document in
the United States Patent and Trademark Office or the United States Copyright
Office, as applicable, in each case prior and superior in right to any other
person, other than with respect to Liens expressly permitted by Section 6.02 (it
being understood that subsequent recordings in the United States Patent and
Trademark Office and the United States Copyright Office may be necessary to
perfect a lien on registered trademarks, trademark applications and copyrights
acquired by the Loan Parties after the date hereof).
(d) The Mortgages are effective to create, subject to the exceptions
listed in or covered by each title insurance policy covering such Mortgages and
the Liens on the Mortgaged Properties described in Schedule 6.02, in favor of
the Administrative Agent, for the ratable benefit of the Secured Parties, a
legal, valid and enforceable Lien on all of the right, title and interest of the
respective grantors under the Mortgages in and to the Mortgaged Properties
thereunder and the proceeds thereof in which a Lien may be perfected by the
filing of a mortgage, and when the Mortgages are recorded in the offices
specified on Schedule 3.16(d), each such Lien shall constitute a Lien on, and
security interest in, all right, title and interest of such grantors in such
Mortgaged Properties and the proceeds thereof in which a Lien may be perfected
by the filing of a mortgage, in each case prior and superior in right to any
other person, other than with respect to the rights of persons pursuant to Liens
that are permitted by Section 6.02 and have a priority as a matter of law.
SECTION 3.17. Federal Reserve Regulations. (a) Neither Catalytica,
----------------------------
the Borrower nor any of the Subsidiaries is engaged principally, or as one of
its important activities, in the business of extending credit for the purpose of
buying or carrying Margin Stock.
(b) No part of the proceeds of any Loan or any Letter of Credit will
be used, whether directly or indirectly, and whether immediately, incidentally
or ultimately, for any purpose that entails a violation of, or that is
inconsistent with, the provisions of the Regulations of the Board, including
Regulation G, U or X.
ARTICLE IV
Conditions
----------
SECTION 4.01. Effective Date. The obligations of the Lenders to make
---------------
59
Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not
become effective until the date on which each of the following conditions is
satisfied (or waived in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have received
from each party hereto either (i) a counterpart of this Agreement signed on
behalf of such party or (ii) written evidence satisfactory to the
Administrative Agent (which may include telecopy transmission of a signed
signature page of this Agreement) that such party has signed a counterpart
of this Agreement.
(b) The Administrative Agent shall have received a favorable written
opinion (addressed to the Administrative Agent and the Lenders and dated
the Effective Date) of each of (i) Wilson, Sonsini, ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇,
counsel for Catalytica and the Borrower, substantially in the form of
Exhibit B and (ii) local counsel in each jurisdiction where a Mortgaged
Property is located, substantially in the form of Exhibit C, and, in the
case of each such opinion required by this paragraph, covering such other
matters relating to the Loan Parties, the Loan Documents or the
Transactions as the Required Lenders shall reasonably request. The Borrower
hereby requests such counsel to deliver such opinions.
(c) The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably
request relating to the organization, existence and good standing of each
Loan Party, the authorization of the Transactions and any other legal
matters relating to the Loan Parties, the Loan Documents or the
Transactions, all in form and substance satisfactory to the Administrative
Agent and its counsel.
(d) The Administrative Agent shall have received a certificate, dated
the Effective Date and signed by the President, a Vice President or a
Financial Officer of the Borrower, confirming compliance with the
conditions set forth in paragraphs (a) and (b) of Section 4.02.
(e) The Administrative Agent shall have received all fees and other
amounts due and payable on or prior to the Effective Date, including, to
the extent invoiced, reimbursement or payment of all out-of-pocket expenses
required to be reimbursed or paid by any Loan Party hereunder or under any
other Loan Document.
(f) The Administrative Agent shall have received counterparts of the
Pledge Agreement signed on behalf of Catalytica, the Borrower and each
Subsidiary Loan Party (unless such required signatory does not own Pledged
Securities, as such term is defined in the Pledge Agreement), together with
stock
60
certificates representing all the outstanding shares of capital stock of
the Borrower and each Subsidiary owned by or on behalf of any Loan Party as
of the Effective Date after giving effect to the Transactions (except that
stock certificates representing shares of common stock of a Foreign
Subsidiary may be limited to 65% (or such smaller percentage as may be
necessary to avoid adverse tax consequences to the Loan Parties) of the
outstanding shares of common stock of such Foreign Subsidiary), promissory
notes evidencing all intercompany Indebtedness owed to any Loan Party by
Catalytica, the Borrower or any Subsidiary as of the Effective Date after
giving effect to the Transactions and undated stock powers and instruments
of transfer, endorsed in blank, with respect to such stock certificates and
intercompany promissory notes.
(g) The Administrative Agent shall have received counterparts of the
Security Agreement signed on behalf of Catalytica, the Borrower and each
Subsidiary Loan Party that is a subsidiary of the Borrower, together with
the following:
(i) all documents and instruments, including Uniform Commercial
Code financing statements, required by law or reasonably requested by
the Administrative Agent to be filed, registered or recorded to create
or perfect the Liens intended to be created under the Security
Agreement; and
(ii) a completed Perfection Certificate dated the Effective Date
and signed by an executive officer(s) or Financial Officer(s) of
Catalytica and the Borrower, together with all attachments
contemplated thereby, including the results of a search of the Uniform
Commercial Code (or equivalent) filings made with respect to
Catalytica, the Borrower and the Subsidiary Loan Parties that are
subsidiaries of the Borrower in the jurisdictions contemplated by the
Perfection Certificate and copies of the financing statements (or
similar documents) disclosed by such search and evidence reasonably
satisfactory to the Administrative Agent that the Liens indicated by
such financing statements (or similar documents) are permitted by
Section 6.02 or have been released.
(h) The Administrative Agent shall have received (i) counterparts of
a Mortgage with respect to each Mortgaged Property signed on behalf of the
record owner of such Mortgaged Property, (ii) a policy or policies of title
insurance issued by a nationally recognized title insurance company,
insuring the Lien of each such Mortgage as a valid Lien on the Mortgaged
Property described therein, free of any other Liens except as permitted by
Section 6.02, in form and substance reasonably acceptable to the
Administrative Agent, together with such endorsements, coinsurance and
reinsurance as the Administrative Agent or the
61
Required Lenders may reasonably request, (iii) such surveys as may be
required pursuant to such Mortgages or as the Administrative Agent or the
Required Lenders may reasonably request, (iv) evidence in form and
substance reasonably acceptable to the Administrative Agent that each
improvement on the Mortgaged Properties may be legally occupied for the use
being made or intended to be made of such improvement and (v) written
confirmation from the applicable zoning commission or other appropriate
Governmental Authority stating that with respect to each Mortgaged Property
as built it complies with existing land use and zoning ordinances,
regulations and restrictions applicable to such Mortgaged Property.
(i) The Administrative Agent shall have received (i) counterparts of
the Parent Guarantee Agreement signed on behalf of Catalytica, (ii)
counterparts of the Guarantee Agreement signed on behalf of each Subsidiary
Loan Party and (iii) counterparts of the Indemnity, Subrogation and
Contribution Agreement signed on behalf of the Borrower and each Subsidiary
Loan Party, and each of the Parent Guarantee Agreement, the Guarantee
Agreement and the Indemnity, Subrogation and Contribution Agreement shall
be in full force and effect.
(j) The Administrative Agent shall have received a letter
satisfactory in form and substance to it, from ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, that the
insurance of Catalytica, the Borrower and the Subsidiaries required by
Section 5.07 is in effect.
(k) The Lenders shall have received, and shall be reasonably
satisfied with the results of, an environmental report prepared by Pilko &
Associates, Inc. with respect to any Environmental Liabilities that may be
attributable to such properties or operations as have been specified by the
Administrative Agent for review.
(l) Catalytica shall have received gross cash proceeds of not less
than $120,000,000 from the Equity Financing. Catalytica shall have
contributed all such cash proceeds to the Borrower as common equity.
(m) The Acquisition shall be consummated on the Effective Date in
accordance with applicable law and the Asset Purchase Agreement and the
other Acquisition Documents (without giving effect to any waivers thereof
or changes therein that are adverse to the Lenders and not approved by the
Lenders).
(n) The Lenders shall be reasonably satisfied with (i) the
Acquisition Documents and any waivers or amendments thereto, (ii) the
corporate and capital structure and equity ownership of Catalytica, the
Borrower and the Subsidiaries after giving effect to the Transactions (it
being understood that such corporate and capital structure and equity
ownership are, to the extent specifically described in
62
this Agreement, satisfactory), including the terms and conditions of the
MSCP Stock, the Existing Preferred Stock, the Junior Preferred Stock and
the Warrants, and (iii) all legal, tax and accounting matters relating to
the Transactions.
(o) The Lenders shall be reasonably satisfied as to the amount and
nature of any Environmental Liabilities and employee health and safety
exposures to which the Borrower and the Subsidiaries may be subject, and
the plans of the Borrower with respect thereto, after giving effect to the
Transactions and the consummation of the other transactions contemplated
hereby.
(p) All material consents and approvals required to be obtained from
and all material registrations and filings with any Governmental Authority
or other Person in connection with the Acquisition and the other
Transactions (including (i) all registrations and filings required by the
FD&C Act (other than those that are not required to be made until after the
Effective Date) and (ii) all environmental permits and other permits
referred to in Section 3.03) shall have been obtained, all applicable
waiting periods and appeal periods shall have expired, in each case without
the imposition of any materially burdensome conditions and there shall be
no action by any Governmental Authority, actual or threatened, that has a
reasonable likelihood of restraining, preventing or imposing materially
burdensome conditions on the Transactions or the other transactions
contemplated hereby. The Administrative Agent shall have received copies
of the Acquisition Documents and all certificates, opinions and other
documents delivered thereunder, certified by a Financial Officer as
complete and correct.
(q) The Lenders shall have received (i) audited consolidated balance
sheets and related statements of income, stockholders' equity and cash
flows for Catalytica for the three fiscal years ended prior to the
Effective Date, (ii) unaudited consolidating balance sheets and related
statements of income, stockholders' equity and cash flows for Catalytica
for fiscal years 1995 and 1996 and (iii) unaudited consolidated and
consolidating balance sheets and related statements of income,
stockholders' equity and cash flows for Catalytica for the fiscal quarters
ended March 31, 1997, and June 30, 1997, which financial statements shall
not be materially inconsistent with the financial statements or forecasts
previously provided to the Lenders. After giving effect to the
Transactions, none of Catalytica, the Borrower nor any of the Subsidiaries
shall have outstanding any shares of preferred stock or any Indebtedness,
other than (i) Indebtedness incurred under the Loan Documents, (ii)
Indebtedness set forth on Schedule 6.01, (iii) the Junior Preferred Stock
and (v) the Existing Preferred Stock. The aggregate amount of fees and
expenses (including underwriting discounts and commissions) payable or
otherwise borne by Catalytica, the Borrower and its subsidiaries in
connection with the Transactions shall not exceed
63
$8,000,000.
(r) The Administrative Agent shall have received a solvency
certificate from a Financial Officer of Catalytica, in form and substance
reasonably satisfactory to the Lenders, with respect to the solvency of the
Loan Parties on a consolidated basis after giving effect to the
Transactions.
(s) The Administrative Agent shall have received a Borrowing Request
executed by the Borrower.
(t) The Administrative Agent shall be reasonably satisfied with any
arrangements for the retention of qualified management of Catalytica and
the Borrower after giving effect to the Transactions.
(u) Substantially simultaneously with or prior to the initial
borrowing under this Agreement, (i) the Existing Indebtedness shall have
been repaid in full, (ii) all commitments to lend under the Existing
Security and Loan Agreement shall have been permanently terminated and
(iii) all obligations under or relating to the Existing Security and Loan
Agreement (other than indemnification and similar obligations that
customarily survive a termination) and all security interests related
thereto shall have been discharged, and the Administrative Agent shall have
received or substantially simultaneously with or prior to the initial
borrowing under this Agreement shall receive satisfactory evidence of such
repayment, termination and discharge.
(v) Catalytica and the Borrower shall have entered into the Supply
Agreement, which shall be legally binding on the parties thereto and in
full force and effect, in the form previously approved by the
Administrative Agent (subject to changes that are not adverse to the
Lenders), and the Lenders shall be reasonably satisfied with the terms and
conditions of the Supply Agreement (including, without limitation, the
amounts of guaranteed revenues thereunder and the payment terms thereunder,
the duration thereof and the termination provisions thereof).
(w) The Lenders shall have received a report from Ernst & Young LLP,
in form and substance reasonably satisfactory to the Administrative Agent,
with respect to the historical cost structure of the Acquired Facilities.
(x) The Lenders shall have received a report from ▇▇▇▇▇▇▇▇▇▇▇ &
Company, LLC, in form and substance reasonably satisfactory to the
Administrative Agent, with respect to the benefits and benefit savings to
be realized by the Borrower and the Acquired Facilities following the
consummation
64
of the Acquisition.
(y) The Administrative Agent shall be reasonably satisfied with all
the material agreements of Catalytica and the Subsidiaries with their
respective customers and suppliers (including but not limited to any supply
contracts in addition to the Supply Agreement to be entered into with GWI
or any of its subsidiaries in connection with the Acquisition), after
giving effect to the Transactions.
(z) There shall be no litigation or administrative proceeding that
would reasonably be expected to have a Material Adverse Effect.
(aa) The Lenders shall be reasonably satisfied in all respects with
the tax position and the contingent tax and other liabilities of
Catalytica, the Borrower and the Subsidiaries after giving effect to the
Transactions and the other transactions contemplated hereby, and with the
plans of Catalytica with respect thereto.
(bb) The Administrative Agent shall be reasonably satisfied with the
sufficiency of amounts available under the Revolving Commitments to meet
the ongoing working capital requirements of the Borrower and its
subsidiaries following the consummation of the Transactions and the other
transactions contemplated hereby.
(cc) The Administrative Agent shall have received such information,
satisfactory in form and substance to the Administrative Agent, regarding
the value of the real property, personal property and other assets of
Catalytica and the Subsidiaries after giving effect to the Transactions as
shall be reasonably requested by the Administrative Agent.
(dd) The Administrative Agent shall have received updated financial
projections for Catalytica, the Borrower and the Subsidiaries after giving
effect to the Transactions, as of the Effective Date, certified in writing
by a Financial Officer of Catalytica. Such projections shall (a) be in the
same form, and cover the same fiscal periods, as the base case projections
that were included in the Information Memorandum (the "Existing
Projections"), (b) be based on the same assumptions as the assumptions used
in preparing the Existing Projections (which assumptions shall be
reasonable under the circumstances as of the Effective Date) and (c)
project Consolidated EBITDA for Catalytica, the Borrower and the
Subsidiaries after giving effect to the Transactions for the future periods
covered thereby in amounts not less than the projected Consolidated EBITDA
of such operations for such periods set forth in the Existing Projections.
65
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans and
of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 9.02) at or prior to 3:00 p.m., New York City time, on
September 30, 1997 (and, in the event such conditions are not so satisfied or
waived, the Commitments shall terminate at such time).
SECTION 4.02. Each Credit Event. The obligation of each Lender to
------------------
make a Loan on the occasion of any Borrowing, and of the Issuing Bank to issue,
amend, renew or extend any Letter of Credit, is subject to the satisfaction of
the following conditions:
(a) The representations and warranties of each Loan Party set forth
in the Loan Documents shall be true and correct on and as of the date of
such Borrowing or the date of issuance, amendment, renewal or extension of
such Letter of Credit, as applicable, except to the extent that such
representations and warranties expressly relate to an earlier date, in
which case such representations and warranties, shall, to such extent, be
true and correct as of such earlier date.
(b) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter
of Credit, as applicable, no Default shall have occurred and be continuing.
(c) On the date of such Borrowing, no Material GWI Occupancy is
continuing.
(d) No default shall have occurred and be continuing under the Supply
Agreement (i) that enables or permits GWI to terminate the Supply
Agreement, if at the time the Guaranteed Revenues that are to be paid after
such date exceed $50,000,000, or (ii) that enables or permits the Borrower
to terminate the Supply Agreement, if at the time the Guaranteed Revenues
that are to be paid after such date exceed $50,000,000, and GWI has not
paid in excess of $25,000,000 due and owed to the Borrower under the Supply
Agreement.
Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by Catalytica
and the Borrower on the date thereof as to the matters specified in paragraphs
(a) and (b) of this Section.
ARTICLE V
66
Affirmative Covenants
---------------------
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder and all
other expenses or amounts payable under any Loan Document shall have been paid
in full and all Letters of Credit shall have expired or terminated and all LC
Disbursements shall have been reimbursed, each of Catalytica and the Borrower
covenants and agrees with the Lenders that:
SECTION 5.01. Financial Statements and Other Information. Catalytica
-------------------------------------------
will furnish to the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year of Catalytica,
its audited consolidated and unaudited consolidating balance sheet and
related statements of operations, stockholders' equity and cash flows as of
the end of and for such year, setting forth in each case in comparative
form the figures for the previous fiscal year, in the case of such
consolidated financial statements, reported on by Ernst & Young LLP or
other independent public accountants of recognized national standing
(without a "going concern" or like qualification or exception and without
any qualification or exception as to the scope of such audit) to the effect
that such consolidated financial statements present fairly in all material
respects the financial condition and results of operations of Catalytica
and its consolidated subsidiaries on a consolidated basis in accordance
with GAAP consistently applied;
(b) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of Catalytica, its consolidated and
consolidating balance sheet and related statements of operations,
stockholders' equity and cash flows as of the end of and for such fiscal
quarter and the then elapsed portion of the fiscal year, setting forth in
each case in comparative form the figures for the corresponding period or
periods of (or, in the case of the balance sheet, as of the end of) the
previous fiscal year, all certified by one of its Financial Officers as
presenting fairly in all material respects the financial condition and
results of operations of Catalytica and its consolidated subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes;
(c) within 30 days after the end of each of the first two fiscal
months of each fiscal quarter of Catalytica, its consolidated and
consolidating balance sheet and related statements of operations,
stockholders' equity and cash flows as of the end of and for such fiscal
month and the then elapsed portion of the fiscal year, all
67
certified by one of its Financial Officers as presenting in all material
respects the financial condition and results of operations of Catalytica
and its consolidated subsidiaries on a consolidated basis in accordance
with GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes;
(d) concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial Officer of the
Borrower (i) certifying as to whether a Default of which Catalytica or the
Borrower is aware has occurred and is continuing and, if such a Default has
occurred and is continuing, specifying the details thereof and any action
taken or proposed to be taken with respect thereto, (ii) setting forth
reasonably detailed calculations demonstrating compliance with Sections
6.13, 6.14 and 6.15 and (iii) stating whether any change in GAAP or in the
application thereof not previously disclosed to the Lenders has occurred
since the date of Catalytica's audited financial statements referred to in
Section 3.04 and, if any such change has occurred, specifying the effect of
such change on the financial statements accompanying such certificate;
(e) concurrently with any delivery of financial statements under
clause (a) above, a certificate of the accounting firm that reported on
such financial statements stating whether they obtained knowledge during
the course of their examination of such financial statements of any Default
(which certificate may be limited to the extent required by accounting
rules or guidelines);
(f) (i) at least 30 days prior to the commencement of each fiscal
year of Catalytica and the Borrower, a detailed preliminary consolidated
budget for such fiscal year (including a projected consolidated balance
sheet and related statements of projected operations and cash flow as of
the end of and for such fiscal year), (ii) within one month after the end
of the prior fiscal year, a final version of such preliminary budget and
(iii) promptly when available, any significant revisions of any such
budget;
(g) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
Catalytica, the Borrower or any Subsidiary with the Securities and Exchange
Commission, or any Governmental Authority succeeding to any or all of the
functions of said Commission, or with any national securities exchange, as
the case may be; and
(h) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of
Catalytica, the
68
Borrower or any Subsidiary (including information for each of Catalytica's
and the Borrower's business lines), or compliance with the terms of any
Loan Document, as the Administrative Agent or any Lender may reasonably
request.
SECTION 5.02. Notices of Material Events. Catalytica and the
---------------------------
Borrower will furnish to the Administrative Agent and each Lender prompt written
notice of the following events of which Catalytica, the Borrower or any
Subsidiary is aware:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting
Catalytica, the Borrower or any Affiliate thereof that, if adversely
determined, could reasonably be expected to result in a Material Adverse
Effect;
(c) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to
result in liability of Catalytica, the Borrower and the Subsidiaries in an
aggregate amount exceeding $3,000,000;
(d) the occurrence of a Material GWI Occupancy or the existence of
circumstances giving either party to the Supply Agreement the right to
terminate the Supply Agreement; and
(e) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of Catalytica setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
SECTION 5.03. Information Regarding Collateral. (a) The Borrower
---------------------------------
will furnish to the Administrative Agent prompt written notice of any change (i)
in any Loan Party's corporate name or in any trade name used to identify it in
the conduct of its business or in the ownership of its properties, (ii) in the
location of any Loan Party's chief executive office, its principal place of
business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by it
is located (including the establishment of any such new office or facility),
(iii) in any Loan Party's identity or corporate structure or (iv) in any Loan
Party's Federal Taxpayer Identification Number. Each of Catalytica and the
Borrower agrees not to effect or permit any change referred to in the preceding
sentence unless all filings have been made under the Uniform Commercial Code or
otherwise that are required in order
69
for the Administrative Agent to continue at all times following such change to
have a valid, legal and perfected security interest in all the Collateral. The
Borrower also agrees promptly to notify the Administrative Agent if any material
portion of the Collateral is damaged or destroyed.
(b) Each year, at the time of delivery of annual financial statements
with respect to the preceding fiscal year pursuant to clause (a) of Section
5.01, the Borrower shall deliver to the Administrative Agent a certificate of a
Financial Officer of the Borrower (i) setting forth the information required
pursuant to Section 2 of the Perfection Certificate or confirming that there has
been no change in such information since the date of the Perfection Certificate
delivered on the Effective Date or the date of the most recent certificate
delivered pursuant to this Section and (ii) certifying that all Uniform
Commercial Code financing statements (including fixture filings, as applicable)
or other appropriate filings, recordings or registrations, including all
refilings, rerecordings and reregistrations, containing a description of the
Collateral have been filed of record in each governmental, municipal or other
appropriate office in each jurisdiction identified pursuant to clause (i) above
to the extent necessary to protect and perfect the security interests under the
Security Agreement for a period of not less than 18 months after the date of
such certificate (except as noted therein with respect to any continuation
statements to be filed within such period).
SECTION 5.04. Existence; Conduct of Business. Each of Catalytica and
-------------------------------
the Borrower will, and will cause each of the Subsidiaries to, do or cause to be
done all things necessary to preserve, renew and keep in full force and effect
its legal existence and the rights, licenses, permits, privileges, franchises,
patents, copyrights, trademarks and trade names material to the conduct of its
business; provided that the foregoing shall not prohibit any merger,
--------
consolidation, liquidation or dissolution permitted under Section 6.03.
SECTION 5.05. Payment of Obligations. Each of Catalytica and the
-----------------------
Borrower will, and will cause each of the Subsidiaries to, pay its Indebtedness
and other obligations, including Tax liabilities, before the same shall become
delinquent or in default, except where the failure to make payment could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 5.06. Maintenance of Properties. Each of Catalytica and the
--------------------------
Borrower will, and will cause each of the Subsidiaries to, keep and maintain all
property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted.
SECTION 5.07. Insurance. (a) Each of Catalytica and the Borrower
----------
will, and will cause each of the Subsidiaries to, maintain, with financially
sound and reputable
70
insurance companies:
(i) insurance, in such amounts and with such deductibles and self-
insured retention as are customarily maintained by companies in the same or
similar business operating in the same or similar locations; and
(ii) such other insurance as may be required by law.
(b) Fire and extended coverage policies (and any policies required to
be maintained pursuant to paragraph (c) below) maintained with respect to any
Collateral shall be endorsed or otherwise amended to include (i) a non-
contributing mortgage clause (regarding improvements to real property) and
lenders' loss payable clause (regarding personal property), in each case in
favor of the Administrative Agent and providing for losses thereunder to be
payable to the Administrative Agent or its designee, (ii) a provision to the
effect that neither the Borrower, the Administrative Agent nor any other party
shall be a coinsurer and (iii) such other provisions as the Administrative Agent
may reasonably require from time to time to protect the interests of the
Lenders. Commercial general liability policies shall be endorsed to name the
Administrative Agent as an additional insured. Business interruption policies
shall name the Administrative Agent as loss payee. Each such policy referred to
in this paragraph also shall provide that it shall not be canceled, modified or
not renewed (i) by reason of nonpayment of premium except upon not less than 10
days' prior written notice thereof by the insurer to the Administrative Agent
(giving the Administrative Agent the right to cure defaults in the payment of
premiums) or (ii) for any other reason except upon not less than 30 days' prior
written notice thereof by the insurer to the Administrative Agent. The Borrower
shall deliver to the Administrative Agent, prior to the cancelation,
modification or nonrenewal of any such policy of insurance, a copy of a renewal
or replacement policy (or other evidence of renewal of a policy previously
delivered to the Administrative Agent) together with evidence satisfactory to
the Administrative Agent of payment of the premium therefor.
(c) If at any time the area in which any Mortgaged Property is
located is designated (i) a "flood hazard area" in any Flood Insurance Rate Map
published by the Federal Emergency Management Agency (or any successor agency),
the Borrower shall obtain flood insurance in such total amount as is customarily
maintained by companies in the same or similar business with respect to similar
properties, and otherwise comply with the National Flood Insurance Program as
set forth in the Flood Disaster Protection Act of 1973, as amended from time to
time, or (ii) a "Zone 1" area, the Borrower shall obtain earthquake insurance in
such total amount as is customarily maintained by companies in the same or
similar business with respect to similar properties.
SECTION 5.08. Casualty and Condemnation. (a) The Borrower will
--------------------------
71
furnish to the Administrative Agent and the Lenders prompt written notice of any
casualty or other insured damage to any portion of any Collateral having a fair
market value (as determined in good faith by the board of directors of the
Borrower) in excess of $2,000,000 or the commencement of any action or
proceeding for the taking of any Collateral or any part thereof or interest
therein having a fair market value (as determined in good faith by the board of
directors of the Borrower) in excess of $2,000,000 under power of eminent domain
or by condemnation or similar proceeding.
(b) If any event described in paragraph (a) of this Section results
in Net Proceeds (whether in the form of insurance proceeds, condemnation award
or otherwise), the Administrative Agent is authorized to collect such Net
Proceeds and, if received by Catalytica, the Borrower or any Subsidiary, such
Net Proceeds shall be paid over to the Administrative Agent; provided that (i)
to the extent the aggregate Net Proceeds in respect of such event (other than
proceeds of business income insurance) are less than or equal to $15,000,000,
such Net Proceeds shall be paid over to the Borrower unless an Event of Default
has occurred and is continuing, and (ii) all proceeds of business income
insurance shall be paid over to the Borrower unless an Event of Default has
occurred and is continuing. All such Net Proceeds retained by or paid over to
the Administrative Agent shall be held by the Administrative Agent and released
from time to time to pay the costs of repairing, restoring or replacing the
affected property in accordance with the terms of the applicable Security
Document, subject to the provisions of the applicable Security Document
regarding application of such Net Proceeds during a Default.
(c) If any Net Proceeds retained by or paid over to the
Administrative Agent as provided above continue to be held by the Administrative
Agent on the date that is 365 days after the receipt of such Net Proceeds, then
such Net Proceeds shall be applied to prepay Term Borrowings as provided in
Section 2.10(b), except as otherwise provided in the definition of the term Net
Proceeds.
SECTION 5.09. Books and Records; Inspection and Audit Rights. Each
-----------------------------------------------
of Catalytica and the Borrower will, and will cause each of the Subsidiaries to,
keep proper books of record and account in which full, true and correct entries
are made of all dealings and transactions in relation to its business and
activities. Each of Catalytica and the Borrower will, and will cause each of
the Subsidiaries to, permit any representatives designated by the Administrative
Agent or any Lender, upon reasonable prior notice, to visit and inspect its
properties, to examine and make extracts from its books and records, and to
discuss its affairs, finances and condition with its officers and independent
accountants, all at such reasonable times and as often as reasonably requested
(but not more frequently than one time each year if no Default exists), subject
to the right of Catalytica and the Borrower to have a representative present.
SECTION 5.10. Compliance with Laws. Each of Catalytica and the
---------------------
72
Borrower will, and will cause each of the Subsidiaries to, comply with all laws,
rules, regulations and orders (including but not limited to (i) registration as
required by the FD&C Act and (ii) maintenance of permits required under
Environmental Laws and any other permits as required in connection with the
Acquired Facilities) of any Govern mental Authority applicable to it or its
property, except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.
SECTION 5.11. Use of Proceeds and Letters of Credit. The proceeds of
--------------------------------------
the Loans will be used only for the purposes set forth in the fourth paragraph
of the preliminary statement. No part of the proceeds of any Loan will be used,
whether directly or indirectly, for any purpose that entails a violation of any
of the Regulations of the Board, including Regulations G, U and X. Letters of
Credit will be issued only for ordinary course purposes.
SECTION 5.12. Additional Subsidiaries. If any additional Subsidiary
------------------------
that is not an Inactive Subsidiary is formed or acquired after the Effective
Date, the Borrower will notify the Administrative Agent and the Lenders thereof
and (a) if such Subsidiary is a Subsidiary Loan Party, the Borrower will cause
such Subsidiary to become a party to the Guarantee Agreement and the Indemnity,
Subrogation and Contribution Agreement in the manner provided therein within
three Business Days after such Subsidiary is formed or acquired, (b) if such
Subsidiary is a Subsidiary Loan Party that is a subsidiary of the Borrower, the
Borrower will cause such Subsidiary to become a party to each applicable
Security Document in the manner provided therein within three Business Days
after such Subsidiary is formed or acquired and promptly take such actions to
create and perfect Liens on such Subsidiary's assets to secure the Obligations
as the Administrative Agent or the Required Lenders shall reasonably request,
and (c) if any shares of capital stock or Indebtedness of any additional
Subsidiary are owned by or on behalf of any Loan Party, the Borrower will cause
such shares and promissory notes evidencing such Indebtedness to be pledged
pursuant to the Pledge Agreement within three Business Days after such
Subsidiary is formed or acquired (except that, if such Subsidiary is a Foreign
Subsidiary, shares of common stock of such Subsidiary to be pledged pursuant to
the Pledge Agreement may be limited to 65% (or such lesser percentage as is
necessary to avoid adverse tax consequences to any Loan Party) of the
outstanding shares of common stock of such Subsidiary).
SECTION 5.13. Further Assurances. (a) Each of Catalytica and the
-------------------
Borrower will, and will cause each Subsidiary Loan Party to, execute any and all
further documents, financing statements, agreements and instruments, and take
all such further actions (including the filing and recording of financing
statements, fixture filings, mortgages, deeds of trust and other documents),
that may be required under any
73
applicable law, or which the Administrative Agent or the Required Lenders may
reasonably request, to effectuate the transactions contemplated by the Loan
Documents or to grant, preserve, protect or perfect the Liens created or
intended to be created by the Security Documents or the validity or priority of
any such Lien, all at the expense of the Loan Parties. Catalytica and the
Borrower also agree to provide to the Administrative Agent, from time to time
upon request, evidence reasonably satisfactory to the Administrative Agent as to
the perfection and priority of the Liens created or intended to be created by
the Security Documents.
(b) If any material assets (including any real property or
improvements thereto or any interest therein) are acquired by Catalytica, the
Borrower or any Subsidiary that is a subsidiary of the Borrower after the
Effective Date (other than assets constituting Collateral under the Security
Agreement that become subject to the Lien of the Security Agreement upon
acquisition thereof), the Borrower will notify the Administrative Agent and the
Lenders thereof, and, if requested by the Administrative Agent or the Required
Lenders, the Borrower will cause such assets to be subjected to a Lien securing
the Obligations and will take, and cause such Subsidiary Loan Parties to take,
such actions as shall be necessary or reasonably requested by the Administrative
Agent to grant and perfect such Liens, including actions described in paragraph
(a) of this Section, all at the expense of the Borrower.
ARTICLE VI
Negative Covenants
------------------
Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full
and all Letters of Credit have expired or terminated and all LC Disbursements
shall have been reimbursed, each of Catalytica and the Borrower covenants and
agrees with the Lenders that:
SECTION 6.01. Indebtedness; Certain Equity Securities. (a)
----------------------------------------
Catalytica and the Borrower will not, and Catalytica and the Borrower will not
permit any Subsidiary to, create, incur, assume or permit to exist any
Indebtedness, except:
(i) Indebtedness created under the Loan Documents;
(ii) Indebtedness existing on the date hereof and set forth in
Schedule 6.01 and extensions, renewals and replacements of any such
Indebtedness that do not
74
increase the outstanding principal amount thereof by more than 5% or result
in an earlier maturity date or decreased weighted average life thereof;
(iii) Indebtedness arising from loans and advances permitted by
Section 6.04(e);
(iv) Guarantees by one Loan Party or Subsidiary of Indebtedness of
another Loan Party or Subsidiary; provided that (A) Guarantees by
--------
Catalytica, the Borrower or any Subsidiary Loan Party of Indebtedness of
any Subsidiary that is not a Loan Party, (B) Guarantees by Catalytica, the
Borrower or any subsidiary of the Borrower of Indebtedness of Non-Borrower
Subsidiaries and (C) Guarantees by Catalytica Combustion or Advanced
Technologies of Indebtedness of other Non-Borrower Subsidiaries all shall
be subject to Section 6.04;
(v) Indebtedness of the Borrower or any Subsidiary incurred to
finance Capital Expenditures, including Capital Lease Obligations and any
Indebtedness assumed in connection Capital Expenditures or secured by a
Lien on any fixed or capital assets prior to the acquisition thereof, and
extensions, renewals and replacements of any such Indebtedness that do not
increase the outstanding principal amount thereof by more than 5% or result
in an earlier maturity date or decreased weighted average life thereof;
provided that (A) such Indebtedness is incurred prior to or within 90 days
--------
after the completion of such Capital Expenditures and (B) the aggregate
principal amount of Indebtedness permitted by this clause (v) shall not
exceed $25,000,000 at any time outstanding;
(vi) Indebtedness of any Person that becomes a Subsidiary after the
date hereof; provided that (A) such Indebtedness exists at the time such
--------
Person becomes a Subsidiary or is created in contemplation of or in
connection with such Person becoming a Subsidiary and (B) the aggregate
principal amount of Indebtedness permitted by this clause (vi) shall not
exceed $10,000,000 at any time outstanding;
(vii) other unsecured Indebtedness in an aggregate principal amount
not exceeding $25,000,000 at any time outstanding; and
(viii) after the Catalytica Combustion Release Date, other
Indebtedness of Catalytica Combustion or its subsidiaries in an aggregate
principal amount not exceeding $20,000,000 at any time outstanding.
(b) Neither Catalytica nor the Borrower will, nor will they permit
any Subsidiary to, issue any preferred stock or be or become (except to the
extent permitted by Section 6.08)) liable in respect of any obligation
(contingent or otherwise) to purchase,
75
redeem, retire, acquire or make any other payment in respect of any shares of
capital stock of Catalytica, the Borrower or any Subsidiary or any option,
warrant or other right to acquire any such shares of capital stock other than
(i) the issuance of the Junior Preferred Stock by the Borrower pursuant to the
Junior Preferred Purchase Agreement, (ii) the issuance of Series C Preferred
Stock by the Borrower pursuant to the Share Exchange Agreement, (iii) the
redemption of the MSCP Stock upon a change of control as defined in the
Investment Agreement or in connection with any obligation to repurchase at any
time after July 1, 2005, the Class A Common Stock and the Class B Common Stock,
as described in the Investment Agreement, and (iv) the redemption of the Series
B Preferred Stock of the Borrower on or after October 1, 2002, in accordance
with the terms of such Preferred Stock and (v) the issuance of capital stock of
Catalytica Combustion.
SECTION 6.02. Liens. Catalytica and the Borrower will not, and
------
Catalytica and the Borrower will not permit any Subsidiary to, create, incur,
assume or permit to exist any Lien on any property or asset now owned or
hereafter acquired by it, or assign or sell any income or revenues (including
accounts receivable) or rights in respect of any thereof, except:
(a) Liens created under the Loan Documents;
(b) Permitted Encumbrances;
(c) Liens created under the Deed of Easement;
(d) any Lien on any property or asset of Catalytica, the Borrower or
any Subsidiary existing on the date hereof and set forth in Schedule 6.02;
provided that (i) such Lien shall not apply to any other property or asset
--------
of Catalytica, the Borrower or any Subsidiary and (ii) such Lien shall
secure only those obligations that it secures on the date hereof and
extensions, renewals and replacements thereof that do not increase the
outstanding principal amount thereof by more than 5%;
(e) any Lien existing on any property or asset prior to the
acquisition thereof by Catalytica, the Borrower or any Subsidiary or
existing on any property or asset of any Person that becomes a Subsidiary
after the date hereof prior to the time such Person becomes a Subsidiary;
provided that (i) such Lien is not created in contemplation of or in
--------
connection with such acquisition or such Person becoming a Subsidiary, as
the case may be, (ii) such Lien shall not apply to any other property or
assets of Catalytica, the Borrower or any Subsidiary and (iii) such Lien
shall secure only those obligations that it secures on the date of such
acquisition or the date such Person becomes a Subsidiary, as the case may
be, and extensions, renewals and replacements thereof that do not increase
the
76
outstanding principal amount thereof by more than 5%;
(f) Liens on fixed or capital assets acquired, constructed or improved
by Catalytica, the Borrower or any Subsidiary; provided that (i) such
--------
security interests secure Indebtedness permitted by clause (v) of Section
6.01(a), (ii) such security interests and the Indebtedness secured thereby
are incurred prior to or within 90 days after such acquisition or the
completion of such construction or improvement, (iii) the Indebtedness
secured thereby does not exceed the cost of acquiring, constructing or
improving such fixed or capital assets and (iv) such security interests
shall not apply to any other property or assets of Catalytica, the Borrower
or any Subsidiary; and
(g) after the Catalytica Combustion Release Date, Liens on assets of
Catalytica Combustion and its subsidiaries securing Indebtedness permitted
by Section 6.01(a)(viii).
SECTION 6.03. Fundamental Changes. (a) Catalytica and the Borrower
--------------------
will not and will not permit any Subsidiary to, merge into or consolidate with
any other Person, or permit any other Person to merge into or consolidate with
it, or liquidate or dissolve, except that, if at the time thereof and
immediately after giving effect thereto no Event of Default shall have occurred
and be continuing (i) any Subsidiary may merge into the Borrower in a
transaction in which the Borrower is the surviving corporation, (ii) any
Subsidiary may merge into any Subsidiary Loan Party in a transaction in which
the surviving entity is a Subsidiary Loan Party, (iii) any Subsidiary that is
not a Loan Party may merge into any Subsidiary that is not a Loan Party and (iv)
any Subsidiary may liquidate or dissolve if the Borrower determines in good
faith that such liquidation or dissolution is in the best interests of the
Borrower and is not materially disadvantageous to the Lenders; provided that any
--------
such merger involving a Person that is not a wholly owned Subsidiary immediately
prior to such merger shall not be permitted unless also permitted by Section
6.04.
(b) Catalytica and the Borrower will not, and will not permit any of
the Subsidiaries to, engage to any material extent in any business other than
businesses of the type conducted by Catalytica, the Borrower and the
Subsidiaries on the date of execution of this Agreement and businesses
reasonably related thereto.
SECTION 6.04. Investments, Loans, Advances, Guarantees and
--------------------------------------------
Acquisitions. Catalytica and the Borrower will not, and will not permit any of
-------------
the Subsidiaries to, purchase, hold or acquire (including pursuant to any merger
with any Person that was not a wholly owned Subsidiary prior to such merger) any
capital stock, evidences of indebtedness or other securities (including the
purchase or exercise of any option, warrant or other right to acquire any of the
foregoing) of, make or permit to exist
any loans or advances to, Guarantee any obligations of, or make or permit to
exist any investment or any other interest in, any other Person, or purchase or
otherwise acquire (in one transaction or a series of transactions) any assets of
any other Person constituting a business unit, except:
(a) the Acquisition;
(b) Permitted Investments;
(c) investments existing on the date hereof and set forth on Schedule
6.04, to the extent such investments would not be permitted under any other
clause of this Section;
(d) subject to the final paragraph of this Section, investments by
Catalytica, the Borrower and the Subsidiaries in Catalytica, the Borrower
and the Subsidiaries; provided that any shares of capital stock issued in
--------
connection with such investments shall be pledged pursuant to the Pledge
Agreement (subject to the limitations applicable to common stock of a
Foreign Subsidiary referred to in Section 5.12);
(e) subject to the final paragraph of this Section, loans or advances
made by Catalytica, the Borrower and the Subsidiaries to Catalytica, the
Borrower and the Subsidiaries; provided that any such loans and advances
--------
made by a Loan Party shall be evidenced by a promissory note pledged
pursuant to the Pledge Agreement;
(f) Subject to the final paragraph of this Section, Guarantees
constituting Indebtedness permitted by Section 6.01;
(g) investments, securities or other interests received in connection
with the bankruptcy or reorganization of, or settlement of delinquent
accounts and disputes with, customers and suppliers, in each case in the
ordinary course of business;
(h) loans and advances to officers, directors and employees of
Catalytica and its subsidiaries made in the ordinary course of business and
not exceeding $2,500,000 in the aggregate at any time outstanding; and
(i) investments, loans, advances and Guarantees not otherwise
permitted above so long as the amount of such investments, loans, advances
and Guarantees does not exceed $15,000,000 in the aggregate at any time
outstanding.
78
Notwithstanding the provisions of Section 6.04(d), (e) and (f), (a)
the amount of (i) investments by the Loan Parties made after the Effective Date
in subsidiaries that are not Loan Parties, (ii) loans and advances by Loan
Parties made after the Effective Date to Subsidiaries that are not Loan Parties
and (iii) Guarantees entered into by any Loan Party after the Effective Date of
Indebtedness of Subsidiaries that are not Loan Parties shall not exceed
$5,000,000 in the aggregate at any time outstanding, (b) the amount of (i)
investments made by Catalytica, the Borrower or any subsidiary of the Borrower
after the Effective Date in Catalytica Combustion or any of its subsidiaries,
(ii) loans and advances made by Catalytica, the Borrower or any subsidiary of
the Borrower after the Effective Date to Catalytica Combustion or any of its
subsidiaries and (iii) Guarantees entered into by Catalytica, the Borrower or
any subsidiary of the Borrower after the Effective Date of Indebtedness of
Catalytica Combustion or any of its subsidiaries shall not exceed $5,000,000 in
the aggregate in any fiscal year of Catalytica, provided that any portion of
such amount not used in such fiscal year (including any portion attributable to
this proviso) will be added to the permitted amount for the succeeding fiscal
year, (c) the aggregate amount of (i) investments made by Catalytica, the
Borrower or any subsidiary of the Borrower after the Effective Date in Advanced
Technologies or any of its subsidiaries, (ii) loans and advances made by
Catalytica, the Borrower or any subsidiary of the Borrower after the Effective
Date to Advanced Technologies or any of its subsidiaries and (iii) Guarantees
entered into by Catalytica, the Borrower or any subsidiary of the Borrower after
the Effective Date of Indebtedness of Advanced Technologies or any of its
subsidiaries shall not exceed $1,000,000 in the aggregate in any fiscal year of
Catalytica, provided that any portion of such amount not used in such fiscal
year (including any portion attributable to this proviso) will be added to the
permitted amount for the succeeding fiscal year, (d) none of Catalytica, the
Borrower or any subsidiary of the Borrower shall after the Effective Date make
any investment in or loan or advance to or Guarantee any Indebtedness of any
Non-Borrower Subsidiary other than Catalytica Combustion, Advanced Technologies
and their respective subsidiaries, (e) none of Catalytica Combustion, Advanced
Technologies or any of their subsidiaries shall make after the Effective Date
any investment in or loan or advance to or Guarantee any Indebtedness of any
other Non-Borrower Subsidiaries other than their respective subsidiaries and (f)
on and after the Catalytica Combustion Release Date, none of Catalytica, the
Borrower or any Subsidiary other than Catalytica Combustion and its subsidiaries
shall make any investment in or loan or advance to or Guarantee any Indebtedness
of Catalytica Combustion or any of its subsidiaries.
SECTION 6.05. Asset Sales. Catalytica and the Borrower will not, and
------------
will not permit any of the Subsidiaries to, sell, transfer, lease or otherwise
dispose of any asset, including any capital stock, nor will Catalytica or the
Borrower permit the Borrower or any Subsidiary to issue any additional shares of
its capital stock or other ownership interest in the Borrower or such
Subsidiary, as the case may be, except:
79
(a) sales or leases of inventory, used or surplus furniture, used or
surplus equipment and Permitted Investments in the ordinary course of
business;
(b) sales, transfers and dispositions to Catalytica, the Borrower or a
Subsidiary; provided that any such sales, transfers or dispositions
--------
involving a Subsidiary that is not a Loan Party shall be made in compliance
with Section 6.09;
(c) sales, transfers and dispositions of assets (other than capital
stock of the Borrower or a Subsidiary) that are not permitted by any other
clause of this Section; provided that the aggregate fair market value of
--------
all assets sold, transferred or otherwise disposed of in reliance upon this
clause (c) shall not exceed $10,000,000 during any fiscal year of the
Borrower or $25,000,000 during the term of this Agreement; provided that
(i) all sales, transfers, leases and other dispositions permitted pursuant
to this Section 6.05(c) shall be made for fair value and for consideration
at least 75% of which is cash, (ii) Catalytica and its subsidiaries may
sell, transfer, lease or otherwise dispose of assets having an aggregate
value of $2,000,000 in each fiscal year of Catalytica without regard to
clause (i) of this proviso solely for non-cash consideration or for
consideration less than 75% of which is cash, and (iii) any such sale,
transfer or other disposition may be made for consideration consisting of
assets to be used in the same line of business as the assets disposed of
without regard to clause (i) of this proviso.
(d) issuances by the Borrower of Junior Preferred Stock and Series C
Preferred Stock in accordance with the Acquisition Documents;
(e) issuances of capital stock by Catalytica Combustion;
(f) Restricted Payments permitted by Section 6.08; and
(g) issuances of the capital stock of any Subsidiary (i) pro rata to
the holders of such Subsidiary's capital stock or (ii) to any Loan Party;
provided that such capital stock issued to a Loan Party shall be pledged
--------
pursuant to the Pledge Agreement.
SECTION 6.06. Sale and Lease-Back Transactions. Enter into any
---------------------------------
arrangement, directly or indirectly, with any person whereby it shall sell or
transfer any property, real or personal, used or useful in its business, whether
now owned or hereafter acquired, and thereafter rent or lease such property or
other property which it intends to use for substantially the same purpose or
purposes as the property being sold or transferred, provided that, subject to
Section 6.05, the Borrower and the Subsidiaries may enter into any such
transaction to the extent the Capital Lease Obligation and Liens
80
associated therewith would be permitted by Sections 6.01(a)(v) and 6.02.
SECTION 6.07. Hedging Agreements. Catalytica and the Borrower will
-------------------
not, and will not permit any of the Subsidiaries to, enter into any Hedging
Agreement, other than Hedging Agreements entered into in the ordinary course of
business to hedge or mitigate risks to which Catalytica, the Borrower or any
Subsidiary is exposed in the conduct of its business or the management of its
interest rate exposures and similar liabilities.
SECTION 6.08. Restricted Payments. Catalytica and the Borrower will
--------------------
not, and will not permit any Subsidiary to, declare or make, or agree to pay or
make, directly or indirectly, any Restricted Payment, except (a) Catalytica and
its subsidiaries may declare and pay dividends pro rata to their stockholders
with respect to their capital stock payable solely in additional shares of their
capital stock, (b) the Borrower and the Subsidiaries may declare and pay
dividends to Loan Parties, (c) after the Catalytica Combustion Release Date,
Catalytica Combustion and its subsidiaries may declare and pay dividends ratably
with respect to their capital stock (d) Catalytica may effect the MSCP
Redemption and (e) Catalytica may make Restricted Payments, not exceeding
$2,000,000 during any fiscal year, with respect to stock option plans or other
benefit plans for management or employees of Catalytica, the Borrower and the
Subsidiaries approved by their respective boards of directors.
SECTION 6.09. Transactions with Affiliates. Catalytica and the
-----------------------------
Borrower will not, and will not permit any Subsidiary to, sell, lease or
otherwise transfer any property or assets to, or purchase, lease or otherwise
acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except (a) transactions that are at
prices and on terms and conditions not less favorable to Catalytica, the
Borrower or such Subsidiary than could be obtained on an arm's-length basis from
unrelated third parties, (b) subject to Section 6.04 and the other provisions of
this Article VI, transactions between or among Catalytica, the Borrower and the
Subsidiary Loan Parties not involving any other Affiliate, (c) any Restricted
Payment permitted by Section 6.08 and (d) payments in respect of Taxes made by
the Borrower or any of the Subsidiaries to Catalytica.
SECTION 6.10. Restrictive Agreements. Catalytica and the Borrower
-----------------------
will not, and will not permit any Subsidiary to, directly or indirectly, enter
into, incur or permit to exist any agreement or other arrangement that
prohibits, restricts or imposes any condition upon (a) the ability of
Catalytica, the Borrower or any Subsidiary to create, incur or permit to exist
any Lien upon any of its property or assets, or (b) the ability of any
Subsidiary to pay dividends or other distributions with respect to any shares of
its capital stock or to make or repay loans or advances to the Borrower or any
other Subsidiary or to Guarantee Indebtedness of the Borrower or any other
Subsidiary; provided that (i) the foregoing shall not apply to restrictions and
--------
conditions imposed by
81
law or by any Loan Document, (ii) the foregoing shall not apply to restrictions
and conditions existing on the date hereof identified on Schedule 6.10 (but
shall apply to any amendment or modification expanding the scope of any such
restriction or condition), (iii) the foregoing shall not apply to customary
restrictions and conditions contained in agreements relating to the sale of a
Subsidiary pending such sale, provided such restrictions and conditions apply
only to the Subsidiary that is to be sold and such sale is permitted hereunder,
(iv) clause (a) of the foregoing shall not apply to restrictions or conditions
imposed by any agreement relating to secured Indebtedness permitted by this
Agreement if such restrictions or conditions apply only to the property or
assets securing such Indebtedness and (v) clause (a) of the foregoing shall not
apply to customary provisions in leases restricting the assignment thereof.
SECTION 6.11. Sterile Facility Pay-Out. The Borrower will not make
------------------------
any payment to GWI in connection with the Sterile Facility Pay-Out at any time
when (a) an Event of Default has occurred or (b) a failure by the Borrower to
make any payment when due under this Agreement has occurred, provided that all
--------
such payments in connection with the Sterile Facility Pay-Out that were deferred
following the occurrence of an Event of Default or during the continuance of a
payment default under this Agreement, together with interest thereon at the rate
of 10% per annum from the date originally due to the date actually paid, may be
made (i) upon 60 days following the waiver, as provided in Section 9.02, of all
such Events of Default or (ii) immediately upon the cure of all such payment
defaults, provided that the Borrower's Obligations have not been declared to be
or become immediately due and payable pursuant to Article VII or that any such
acceleration of such Obligations has been duly rescinded.
SECTION 6.12. Amendment of Material Documents. (a) Catalytica and
--------------------------------
the Borrower will not, and will not permit any Subsidiary to, amend, modify or
waive any of its rights under (i) its certificate of incorporation, by-laws or
other organizational documents, (ii) the Asset Purchase Agreement, (iii) the
Environmental Agreement dated June 22, 1997, between GWI and Catalytica or (iv)
the other Acquisition Documents (other than the Supply Agreement), except for
amendments, modifications or waivers that are not materially adverse to the
Lenders.
(b) The Borrower will not (i) amend the Supply Agreement to reduce
the amounts of the Guaranteed Revenues or extend the scheduled date of payment
of any Guaranteed Revenues, or (ii) otherwise amend, modify or waive any of its
rights under the Supply Agreement, except for amendments, modifications or
waivers under this clause (ii) that are not materially adverse to the Lenders.
SECTION 6.13. Capital Expenditures. Catalytica and the Borrower will
---------------------
not permit the aggregate amount of Capital Expenditures (other than the
reinvestment in accordance with the definition of Net Proceeds of the proceeds
of dispositions of assets)
82
made by Catalytica, the Borrower and the Subsidiaries in any fiscal year to
exceed the amount (the "Base Amount") set forth below opposite such year:
Fiscal Year Amount
----------- -----------
1997 $ 9,500,000
1998 $25,000,000
1999 $27,500,000
2000 $22,500,000
2001 $15,000,000
The amount of permitted Capital Expenditures set forth above in respect of any
fiscal year shall be increased by the lesser of (a) the Base Amount for the
immediately preceding fiscal year and (b) the difference between (i) the sum of
the Base Amount for the immediately preceding fiscal year and the unused Base
Amount for the second preceding fiscal year and (ii) the amount of Capital
Expenditures made during the immediately preceding fiscal year.
SECTION 6.14. Leverage Ratio. Catalytica will not permit (a) as of
--------------
March 31, 1998, the Leverage Ratio, which shall be calculated using Adjusted
Consolidated EBITDA for the two-fiscal-quarter period ending March 31, 1998,
multiplied by two, to be in excess of the ratio 4.50 to 1.00, (b) as of June 30,
1998, the Leverage Ratio, which shall be calculated using Adjusted Consolidated
EBITDA for the three-fiscal-quarter period ending June 30, 1998, multiplied by
4/3, to be in excess of the ratio 4.25 to 1.00 or (c) as of the end of any four-
fiscal-quarter period ending on any date or during any period set forth below,
the Leverage Ratio to be in excess of the ratio set forth below opposite such
period:
Period Amount
------ ------------
September 30, 1998 4.00 to 1.00
December 31, 1998 3.50 to 1.00
March 31, 1999 3.50 to 1.00
June 30, 1999 and thereafter 3.00 to 1.00
SECTION 6.15. Consolidated Interest Expense Coverage Ratio.
---------------------------------------------
Catalytica will not permit the ratio of (a) Consolidated EBITDA of Catalytica
and the Subsidiaries to (b) Consolidated Interest Expense less Consolidated Cash
Interest Income (i) for the two-fiscal-quarter period ending March 31, 1998, to
be less than 2.50 to 1.00, (ii) for the three-fiscal-quarter period ending June
30, 1998, to be less than 2.75 to 1.00 or (iii) for any four-fiscal-quarter
period ending on any date during any period set forth below to be less than the
ratio set forth below opposite such period:
83
Period Ratio
------ -----
September 30, 1998 3.00 to 1.00
December 31, 1998 and thereafter 3.50 to 1.00
ARTICLE VII
Events of Default
-----------------
If any of the following events ("Events of Default") shall occur:
-----------------
(a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the
same shall become due and payable, whether at the due date thereof or at a
date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or any fee
or any other amount (other than an amount referred to in clause (a) of this
Article) payable under this Agreement or any other Loan Document, when and
as the same shall become due and payable, and such failure shall continue
unremedied for a period of five Business Days;
(c) any representation or warranty that is qualified as to materiality
and made or deemed made by or on behalf of Catalytica, the Borrower or any
Subsidiary in or in connection with any Loan Document or any amendment or
modification thereof or waiver thereunder, or in any report, certificate,
financial statement or other document furnished pursuant to or in
connection with any Loan Document or any amendment or modification thereof
or waiver thereunder, shall prove to have been incorrect when made or
deemed made or any such representation or warranty that is not qualified as
to materiality shall prove to have been incorrect in any material respect
when made or deemed made;
(d) Catalytica or the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in Section 5.02, 5.04 (with
respect to the existence of Catalytica or the Borrower) or 5.11 or in
Article VI;
(e) any Loan Party shall fail to observe or perform any covenant,
condition or agreement contained in any Loan Document (other than those
specified in clause (a), (b) or (d) of this Article), and such failure
shall continue unremedied for a period of 30 days after notice thereof from
the Administrative Agent to the Borrower (which notice will be given at the
request of any Lender);
84
(f) Catalytica, the Borrower or any Subsidiary shall fail to make any
payment (whether of principal or interest and regardless of amount) in
respect of any Material Indebtedness, when and as the same shall become due
and payable;
(g) the Supply Agreement shall cease to be in full force and effect
for any reason prior to December 31, 2001, if at the time the Guaranteed
Revenues that are to be paid after such date exceed $50,000,000;
(h) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables
or permits the holder or holders of any Material Indebtedness or any
trustee or agent on its or their behalf to cause any Material Indebtedness
to become due, or to require the prepayment, repurchase, redemption or
defeasance thereof, prior to its scheduled maturity; provided that this
--------
clause (h) shall not apply to secured Indebtedness that becomes due as a
result of the voluntary sale or transfer of the property or assets securing
such Indebtedness;
(i) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other
relief in respect of Catalytica, the Borrower or any Subsidiary or its
debts, or of a substantial part of its assets, under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or
hereafter in effect or (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for Catalytica,
the Borrower or any Subsidiary or for a substantial part of its assets,
and, in any such case, such proceeding or petition shall continue
undismissed for 60 days or an order or decree approving or ordering any of
the foregoing shall be entered;
(j) Catalytica, the Borrower or any Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation,
reorganization or other relief under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in
effect, (ii) consent to the institution of, or fail to contest in a timely
and appropriate manner, any proceeding or petition described in clause (i)
of this Article, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official
for Catalytica, the Borrower or any Subsidiary or for a substantial part of
its assets, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general
assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;
(k) Catalytica, the Borrower or any Subsidiary shall become unable,
admit
85
in writing its inability or fail generally to pay its debts as they
become due;
(l) one or more judgments for the payment of money in an aggregate
amount in excess of $3,000,000 shall be rendered against Catalytica, the
Borrower, any Subsidiary or any combination thereof and the same shall
remain undischarged for a period of 30 consecutive days during which
execution shall not be effectively stayed, or any action shall be legally
taken by a judgment creditor to attach or levy upon any assets of
Catalytica, the Borrower or any Subsidiary to enforce any such judgment;
(m) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in liability of the
Borrower and the Subsidiaries in an aggregate amount exceeding (i)
$3,000,000 in any year or (ii) $3,000,000 for all periods;
(n) there shall have been a failure on the part of GWI to undertake a
"Seller Obligatory Remediation" or to indemnify Catalytica, the Borrower or
any Subsidiary for an "Environmental Claim" or "Third Party Claim", as
those terms are defined in the Asset Purchase Agreement, or to conduct any
remediation required at the "RFI SWMUs" as that term is defined in the
Environmental Agreement dated June 22, 1997, between GWI and Catalytica (i)
which individually or in the aggregate could reasonably be expected to
result in liability of Catalytica, the Borrower and the Subsidiaries in an
aggregate amount exceeding $5,000,000 in any year or $10,000,000 for all
periods, taking into account the proceeds of any insurance coverage
actually received by Catalytica, the Borrower or any Subsidiary or the
amount of any such liability for which coverage has been definitively and
unambiguously acknowledged, without reservation of rights, by the
appropriate insurance carrier and (ii) which GWI refuses to or will not
correct at the conclusion of the dispute resolution procedure set forth in
Section 4.7 of the Environmental Agreement, or for which GWI refuses to
accept responsibility for thirty (30) days after the conclusion of the
procedure for defense and indemnity set forth in Section 12.4(c) of the
Asset Purchase Agreement, as applicable;
(o) (i) Any Loan Document shall, at any time, cease to be in full
force and effect (unless released by the Administrative Agent, at the
direction of the Required Lenders or as otherwise permitted under this
Agreement) or shall be declared null and void, or the validity or
enforceability in any material respect thereof shall be contested by any
Loan Party or (ii) any Lien purported to be created under any Security
Document shall cease to be a valid and perfected Lien on any material
amount of Collateral or shall be asserted by any Loan Party not to
86
be a valid and perfected Lien on any Collateral, in each case with the
priority required by the applicable Security Document, except (A) as a
result of the sale or other disposition of the applicable Collateral in a
transaction permitted under the Loan Documents or (B) as a result of the
Administrative Agent's failure to maintain possession of any stock
certificates, promissory notes or other instruments delivered to it under
the Pledge Agreement; or
(p) a Change in Control shall occur;
then, and in every such event (other than an event with respect to the Borrower
described in clause (i) or (j) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent shall, at the
request of the Required Lenders, by notice to the Borrower, take either or both
of the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and (ii)
declare the Loans then outstanding to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations of the Borrower accrued hereunder, shall become due
and payable immediately, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Borrower; and in case of any
event with respect to the Borrower described in clause (i) or (j) of this
Article, the Commitments shall automatically terminate and the principal of the
Loans then outstanding, together with accrued interest thereon and all fees and
other obligations of the Borrower accrued hereunder, shall automatically become
due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower.
ARTICLE VIII
The Administrative Agent
------------------------
Each of the Lenders and the Issuing Bank hereby irrevocably appoints
the Administrative Agent as its agent and authorizes the Administrative Agent to
take such actions on its behalf and to exercise such powers as are delegated to
the Administrative Agent by the terms of the Loan Documents, together with such
actions and powers as are reasonably incidental thereto.
The bank serving as the Administrative Agent hereunder shall have the
same rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business
87
with Catalytica, the Borrower or any Subsidiary or other Affiliate thereof as if
it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations
except those expressly set forth in the Loan Documents. Without limiting the
generality of the foregoing, (a) the Administrative Agent shall not be subject
to any fiduciary or other implied duties, regardless of whether a Default has
occurred and is continuing, (b) the Administrative Agent shall not have any duty
to take any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated by the Loan Documents
that the Administrative Agent is required to exercise in writing by the Required
Lenders (or such other number or percentage of the Lenders as shall be necessary
under the circumstances as provided in Section 9.02), and (c) except as
expressly set forth in the Loan Documents, the Administrative Agent shall not
have any duty to disclose, and shall not be liable for the failure to disclose,
any information relating to Catalytica, the Borrower or any of the Subsidiaries
that is communicated to or obtained by the bank serving as Administrative Agent
or any of its Affiliates in any capacity. The Administrative Agent shall not be
liable for any action taken or not taken by it with the consent or at the
request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section
9.02) or in the absence of its own gross negligence or wilful misconduct. The
Administrative Agent shall be deemed not to have knowledge of any Default unless
and until written notice thereof is given to the Administrative Agent by
Catalytica, the Borrower or a Lender, and the Administrative Agent shall not be
responsible for or have any duty to ascertain or inquire into (i) any statement,
warranty or representation made in or in connection with any Loan Document, (ii)
the contents of any certificate, report or other document delivered thereunder
or in connection therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth in any Loan
Document, (iv) the validity, enforceability, effectiveness or genuineness of any
Loan Document or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article IV or elsewhere in any Loan
Document, other than to confirm receipt of items expressly required to be
delivered to the Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.
88
The Administrative Agent may perform any and all its duties and
exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of each Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor
Administrative Agent as provided in this paragraph, the Administrative Agent may
resign at any time by notifying the Lenders, the Issuing Bank and the Borrower.
Upon any such resignation, the Required Lenders shall have the right, with the
approval, unless an Event of Default has occurred or is continuing, of the
Borrower, to appoint a successor. If no successor shall have been so appointed
by the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation, then
the retiring Administrative Agent may, on behalf of the Lenders and the Issuing
Bank, appoint a successor Administrative Agent that shall be a bank with an
office in New York, New York, or an Affiliate of any such bank. Upon the
acceptance of its appointment as Administrative Agent hereunder by a successor,
such successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. The fees payable by the Borrower to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. After the Administrative Agent's
resignation hereunder, the provisions of this Article and Section 9.03 shall
continue in effect for the benefit of such retiring Administrative Agent, its
sub-agents and their respective Related Parties in respect of any actions taken
or omitted to be taken by any of them while it was acting as Administrative
Agent.
Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document or related agreement or any document furnished hereunder
or thereunder.
ARTICLE IX
89
Miscellaneous
-------------
SECTION 9.01. Notices. Except in the case of notices and other
--------
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to Catalytica or the Borrower, to it at Catalytica, ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention of ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇);
(b) if to the Administrative Agent, to The Chase Manhattan Bank, Loan
and Agency Services Group, One Chase ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇▇ ▇▇▇▇▇▇ (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇),
with a copy to The Chase Manhattan Bank, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention of ▇▇▇▇ ▇▇▇▇▇▇ (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇);
(c) if to the Issuing Bank, to The Chase Manhattan Bank, Loan and
Agency Services Group, One Chase ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇▇ ▇▇▇▇▇▇ (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇) with a
copy to The Chase Manhattan Bank, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention of ▇▇▇▇ ▇▇▇▇▇▇ (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇); and
(d) if to any other Lender, to it at its address (or telecopy number)
set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the
--------------------
Administrative Agent, the Issuing Bank or any Lender in exercising any right or
power hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agent, the
Issuing Bank and the Lenders hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of any Loan Document or
90
consent to any departure by any Loan Party therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) of this Section,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. Without limiting the generality of the
foregoing, the making of a Loan or issuance of a Letter of Credit shall not be
construed as a waiver of any Default, regardless of whether the Administrative
Agent, any Lender or the Issuing Bank may have had notice or knowledge of such
Default at the time.
(b) Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except, in the
case of this Agreement, pursuant to an agreement or agreements in writing
entered into by Catalytica, the Borrower and the Required Lenders or, in the
case of any other Loan Document, pursuant to an agreement or agreements in
writing entered into by the Administrative Agent and the Loan Party or Loan
Parties that are parties thereto, in each case with the consent of the Required
Lenders; provided that no such agreement shall (i) increase the Commitment of
--------
any Lender without the written consent of such Lender, (ii) reduce the principal
amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or
reduce any fees payable hereunder, without the written consent of each Lender
affected thereby, (iii) postpone the scheduled date of payment of the principal
amount of any Loan or LC Disbursement, or any interest thereon, or any fees
payable hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of any Commitment, without the written
consent of each Lender affected thereby, (iv) change Section 2.17(b) or (c) in a
manner that would alter the pro rata sharing of payments required thereby,
without the written consent of each Lender, (v) change any of the provisions of
this Section or the definition of the term "Required Lenders" or any other
provision of any Loan Document specifying the number or percentage of Lenders
(or Lenders of any Class) required to waive, amend or modify any rights
thereunder or make any determination or grant any consent thereunder, without
the written consent of each Lender (or each Lender of such Class, as the case
may be), (vi) release Catalytica or any Subsidiary Loan Party (other than
Catalytica Combustion and any of its subsidiaries) from its Guarantee
obligations under the Guarantee Agreement (except as expressly provided in the
Guarantee Agreement), or limit its liability in respect of such Guarantee
obligations, without the prior written consent of each Lender, (vii) release all
or any substantial part of the Collateral (other than Collateral pledged by
Catalytica Combustion or its subsidiaries under the Pledge Agreement) from the
Liens of the Security Documents, without the prior written consent of each
Lender or (viii) change any provisions of any Loan Document in a manner that by
its terms adversely affects the rights in respect of payments due to Lenders
holding Loans of any Class differently than those holding Loans of any other
Class, without the prior written consent of Lenders holding a majority in
interest of the outstanding Loans and unused Commitments of each affected Class;
provided further that (A) no such agreement shall amend, modify or otherwise
----------------
affect the rights or duties of the Administrative Agent
91
or the Issuing Bank without the prior written consent of the Administrative
Agent or the Issuing Bank, as the case may be, and (B) any waiver, amendment or
modification of this Agreement that by its terms affects the rights or duties
under this Agreement of the Revolving Lenders (but not the Term Loan Lenders) or
the Term Loan Lenders (but not the Revolving Lenders) may be effected by an
agreement or agreements in writing entered into by Catalytica, the Borrower and
the requisite percentage in interest of the affected Class of Lenders.
SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower
-----------------------------------
shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates, including the reasonable fees, charges
and disbursements of counsel for the Administrative Agent, in connection with
the syndication of the credit facilities provided for herein, the preparation
and administration of the Loan Documents or any amendments, modifications or
waivers of the provisions thereof (whether or not the transactions contemplated
hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket
expenses incurred by the Issuing Bank in connection with the issuance,
amendment, renewal or extension of any Letter of Credit or any demand for
payment thereunder and (iii) all out-of-pocket expenses incurred by the
Administrative Agent, the Issuing Bank or any Lender, including the fees,
charges and disbursements of any counsel for the Administrative Agent, the
Issuing Bank or any Lender, in connection with the enforcement or protection of
its rights in connection with the Loan Documents, including its rights under
this Section, or in connection with the Loans made or Letters of Credit issued
hereunder, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters of
Credit.
(b) The Borrower shall indemnify the Administrative Agent, the
Issuing Bank and each Lender, and each Related Party of any of the foregoing
Persons (each such Person being called an "Indemnitee") against, and hold each
----------
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses, including the fees, charges and disbursements of any counsel
for any Indemnitee, incurred by or asserted against any Indemnitee arising out
of, in connection with, or as a result of (i) the execution or delivery of any
Loan Document or any other agreement or instrument contemplated hereby, the
performance by the parties to the Loan Documents of their respective obligations
thereunder or the consummation of the Transactions or any other transactions
contemplated hereby, (ii) any Loan or Letter of Credit or the use of the
proceeds therefrom (including any refusal by the Issuing Bank to honor a demand
for payment under a Letter of Credit if the documents presented in connection
with such demand do not strictly comply with the terms of such Letter of
Credit), (iii) any actual or alleged presence or Release of Hazardous Materials
on, under or from any Mortgaged Property or any other property currently or
formerly owned or operated by the Borrower or any of the Subsidiaries, or any
Environmental Liability related in any way to the
92
Borrower or any of the Subsidiaries, or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; provided that such indemnity shall not, as to
--------
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses resulted from the gross negligence or wilful
misconduct of such Indemnitee or any Affiliate of such Indemnitee (or of any
officer, director, employee, advisor or agent of such Indemnitee or any such
Indemnitee's Affiliates).
(c) To the extent that the Borrower fails to pay any amount required
to be paid by it to the Administrative Agent or the Issuing Bank under paragraph
(a) or (b) of this Section, each Lender severally agrees to pay to the
Administrative Agent or the Issuing Bank, as the case may be, such Lender's pro
rata share (determined as of the time that the applicable unreimbursed expense
or indemnity payment is sought) of such unpaid amount; provided that the
--------
unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against the
Administrative Agent or the Issuing Bank in its capacity as such. For purposes
hereof, a Lender's "pro rata share" shall be determined based upon its share of
the sum of the total Revolving Exposures, outstanding Term Loans and unused
Commitments at the time.
(d) To the extent permitted by applicable law, Catalytica and the
Borrower shall not assert, and each hereby waives, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement or any agreement or
instrument contemplated hereby, the Transactions, any Loan or Letter of Credit
or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable promptly
after written demand therefor.
SECTION 9.04. Successors and Assigns. (a) The provisions of this
-----------------------
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby (including any
Affiliate of the Issuing Bank that issues any Letter of Credit), except that the
Borrower may not assign or other wise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by the Borrower without such consent shall be null and
void). Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby (including any Affiliate of the Issuing
Bank that issues any Letter of Credit) and, to the extent expressly contemplated
hereby, the Related Parties of each of the Administrative Agent, the Issuing
Bank and the Lenders) any legal or equitable right, remedy or claim under or by
reason of this Agreement.
93
(b) Any Lender may assign to one or more assignees all or a portion
of its rights and obligations under this Agreement (including all or a portion
of its Commit ment and the Loans at the time owing to it); provided that (i)
--------
except in the case of an assignment to a Lender or an Affiliate of a Lender,
each of the Borrower and the Administrative Agent (and, in the case of an
assignment of all or a portion of a Revolving Commitment or any Lender's
obligations in respect of its LC Exposure, the Issuing Bank) must give their
prior written consent to such assignment (which consent shall not be
unreasonably withheld), (ii) except in the case of an assignment to a Lender or
an Affiliate of a Lender or an assignment of the entire remaining amount of the
assigning Lender's Commitment or Loans, the amount of the Commitment or Loans of
the assigning Lender subject to each such assignment (determined as of the date
the Assignment and Acceptance with respect to such assignment is delivered to
the Administrative Agent) shall not be less than $5,000,000 unless each of the
Borrower and the Administrative Agent otherwise consent, (iii) each partial
assignment shall be made as an assignment of a proportionate part of all the
assigning Lender's rights and obligations under this Agreement, except that this
clause (iii) shall not be construed to prohibit the assignment of a
proportionate part of all the assigning Lender's rights and obligations in
respect of one Class of Commitments or Loans, (iv) the parties to each
assignment shall execute and deliver to the Administrative Agent an Assignment
and Acceptance, together with a processing and recordation fee of $3,500,
provided, however, that the Borrower shall not be required to reimburse any such
-------- -------
party for the payment of such fee, and (v) the assignee, if it shall not be a
Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire; and provided further that any consent of the Borrower otherwise
----------------
required under this paragraph shall not be required if an Event of Default under
clause (i) or (j) of Article VII has occurred and is continuing. Subject to
acceptance and recording thereof pursuant to paragraph (d) of this Section, from
and after the effective date specified in each Assignment and Acceptance the
permitted assignee thereunder shall be a party hereto and, to the extent of the
interest which is permitted to be assigned and is assigned by such Assignment
and Acceptance, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of the
interest so assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.14, 2.15, 2.16 and 9.03). Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (e) of this Section.
(c) The Administrative Agent, acting for this purpose as an agent of
the
94
Borrower, shall maintain at one of its offices in The City of New York a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
--------
the Register shall be conclusive absent manifest error, and Catalytica, the
Borrower, the Administrative Agent, the Issuing Bank and the Lenders may treat
each Person whose name is recorded in the Register pursuant to the terms hereof
as a Lender hereunder for all purposes of this Agreement, notwithstanding notice
to the contrary. The Register shall be available for inspection by the
Borrower, the Issuing Bank and any Lender, at any reasonable time and from time
to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and a permitted assignee, the assignee's
completed Administrative Questionnaire (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) of this Section and any written consent to such assignment required by
paragraph (b) of this Section, the Administrative Agent shall accept such
Assignment and Acceptance and record the information contained therein in the
Register. No assignment shall be effective for purposes of this Agreement
unless it has been recorded in the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Borrower, the
Administrative Agent or the Issuing Bank, sell participations to one or more
banks or other entities (a "Participant") in all or a portion of such Lender's
-----------
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it); provided that (i) such Lender's
--------
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) Catalytica, the Borrower, the Administrative Agent,
the Issuing Bank and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce the Loan Documents and to approve any amendment,
modification or waiver of any provision of the Loan Documents; provided that
--------
such agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.02(b) that affects such Participant.
Subject to paragraph (f) of this Section, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.14, 2.15 and 2.16 to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section. To the extent permitted
by law, each Participant also shall be entitled to the benefits of Section 9.08
as though it were a Lender, provided such
95
Participant agrees to be subject to Section 2.18(c) as though it were a Lender.
(f) A Participant shall not be entitled to receive any greater
payment under Section 2.14 or 2.16 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrower's prior written consent. A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 2.16 unless
the Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrower, to comply with Section
2.16(e) as though it were a Lender.
(g) Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement to secure obligations
of such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of
--------
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.
SECTION 9.05. Survival. All covenants, agreements, representations
---------
and warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Administrative Agent, the Issuing
Bank or any Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid or any Letter of Credit is outstanding and
so long as the Commitments have not expired or terminated. The provisions of
Sections 2.14, 2.15, 2.16 and 9.03 and Article VIII shall survive and remain in
full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or termination
of the Letters of Credit and the Commitments or the termination of this
Agreement or any provision hereof.
SECTION 9.06. Counterparts; Integration; Effectiveness. This
-----------------------------------------
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement,
the other Loan Document and any separate letter agreements with respect to fees
payable to the Administrative Agent
constitute the entire contract among the parties relating to the subject matter
hereof and supersede any and all previous agreements and understandings, oral or
written, relating to the subject matter hereof. Except as provided in Section
4.01, this Agreement shall become effective when it shall have been executed by
the Administra tive Agent and when the Administrative Agent shall have received
counterparts hereof that, when taken together, bear the signatures of each of
the other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
Delivery of an executed counterpart of a signature page of this Agreement by
telecopy shall be effective as delivery of a manually executed counterpart of
this Agreement.
SECTION 9.07. Severability. Any provision of this Agreement held to
-------------
be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 9.08. Right of Setoff. If an Event of Default shall have
----------------
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations at any time
owing by such Lender or Affiliate to or for the credit or the account of the
Borrower against any of and all the obligations of the Borrower now or hereafter
existing under this Agreement held by such Lender, irrespective of whether or
not such Lender shall have made any demand under this Agreement and although
such obligations may be unmatured. The rights of each Lender under this Section
are in addition to other rights and remedies (including other rights of setoff)
that such Lender may have.
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of
--------------------------------------------------
Process. (a) This Agreement shall be construed in accordance with and governed
--------
by the law of the State of New York.
(b) Each of Catalytica and the Borrower hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to any Loan Document, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the
97
extent permitted by law, in such Federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement or any other Loan
Document shall affect any right that the Administrative Agent, the Issuing Bank
or any Lender may otherwise have to bring any action or proceeding relating to
this Agreement or any other Loan Document against Catalytica, the Borrower or
its properties in the courts of any jurisdiction.
(c) Each of Catalytica and the Borrower hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection that it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
any other Loan Document in any court referred to in paragraph (b) of this
Section. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01 (including by
telecopy, provided that written confirmation of any such telecopy shall be
delivered by certified or registered mail following such service of process).
Nothing in this Agreement or any other Loan Document will affect the right of
any party to this Agreement to serve process in any other manner permitted by
law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
---------------------
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANS ACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. Headings. Article and Section headings and the Table
---------
of Contents used herein are for convenience of reference only, are not part of
this Agree ment and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
98
SECTION 9.12. Confidentiality. Each of the Administrative Agent, the
----------------
Issuing Bank and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and agree to keep such Information confidential in
accordance with this Section), (b) to the extent requested by any regulatory
authority, (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) to any other party to this Agreement,
(e) in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to any
assignee of or Participant in, or any prospective assignee of or Participant in,
any of its rights or obligations under this Agreement, (g) with the consent of
the Borrower or (h) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this Section or (ii) becomes
available to the Administrative Agent, the Issuing Bank or any Lender on a non
confidential basis from a source other than Catalytica, the Borrower or any
Subsidiary. For the purposes of this Section, "Information" means all
-----------
information received from Catalytica, the Borrower or any Subsidiary relating to
Catalytica, the Borrower or such Subsidiary or its business, other than any such
information that is available to the Administrative Agent, the Issuing Bank or
any Lender on a nonconfidential basis prior to disclosure by Catalytica, the
Borrower or such Subsidiary; provided that, in the case of information received
--------
from Catalytica, the Borrower or any Subsidiary after the date hereof, such
information is clearly identified at the time of delivery as confidential;
provided further that all information received from the Asset Purchase Agreement
-------- -------
or Supply Agreement shall be subject to Section 8.6 of the Asset Purchase
Agreement and Section XXII of the Supply Agreement, as applicable. Any Person
required to maintain the confidentiality of Information as provided in this
Section shall be considered to have complied with its obligation to do so if
such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.
SECTION 9.13. Interest Rate Limitation. Notwithstanding anything
-------------------------
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts that are treated as interest
on such Loan under applicable law (collectively the "Charges"), shall exceed the
-------
maximum lawful rate (the "Maximum Rate") that may be contracted for, charged,
------------
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges
99
that would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section shall be cumulated and the interest and
Charges payable to such Lender in respect of other Loans or periods shall be
increased (but not above the Maximum Rate therefor) until such cumulated amount,
together with interest thereon at the Federal Funds Effective Rate to the date
of repayment, shall have been received by such Lender.
100
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
CATALYTICA, INC.,
by
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer and
Vice President
CATALYTICA PHARMACEUTICALS, INC.,
by
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer and
Vice President
THE CHASE MANHATTAN BANK,
individually and as Administrative Agent,
by
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
-------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
Title: Vice President
101
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY,
by
/s/ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
-------------------
Name: ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Title: Vice President and Manager
BANQUE PARIBAS,
by
/s/ ▇▇▇ ▇. ▇▇▇▇▇
----------------
Name: ▇▇▇ ▇. ▇▇▇▇▇
Title: Assistant Vice President
by
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: General Manager Western
Region
COMERICA BANK,
by
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Corporate Banking Officer
COOPERATIVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND", NEW
YORK BRANCH,
by
/s/ ▇▇▇ ▇▇▇▇▇
-------------
Name: ▇▇▇ ▇▇▇▇▇
102
Title: Senior Credit Officer
by
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Vice President
DRESDNER BANK AG, New York Branch
and Grand Cayman Branch,
by
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Assistant Vice President
by
/s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Assistant Treasurer
FIRST UNION NATIONAL BANK,
by
/s/ ▇▇▇▇▇▇ ▇. Cambem
--------------------
Name: ▇▇▇▇▇▇ ▇. Cambem
Title: Vice President
FLEET NATIONAL BANK,
by
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
NATEXIS BANQUE (previously known as
Banque Francaise Du Commerce Exterieur),
by
103
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-----------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
by
/s/ ▇▇▇▇▇▇ Touffu
-----------------
Name: ▇▇▇▇▇▇ Touffu
Title: First VP and Regional
Manager
THE BANK OF NOVA SCOTIA,
by
/s/ ▇▇▇▇ ▇▇▇▇▇
--------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Senior Regional Manager
THE INDUSTRIAL BANK OF JAPAN,
LIMITED,
by
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: General Manager
THE MITSUBISHI TRUST AND
BANKING CORPORATION,
by
/s/ Genichiro Chiba
-------------------
Name: Genichiro Chiba
Title: Deputy General Manager
THE ROYAL BANK OF SCOTLAND
PLC,
by
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President & Deputy
Manager
UNION BANK OF CALIFORNIA, N.A.,
by
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
104
Title: Vice President
WACHOVIA BANK, N.A.,
by
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Senior Vice President
