COPY AS EXECUTED WITH EXHIBITS D, E
AND F AS SEPARATELY EXECUTED
$325,000,000
CREDIT AGREEMENT
Dated as of May 29, 1998
Among
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.,
as Borrower,
THE INITIAL LENDERS NAMED HEREIN,
and
BANQUE NATIONALE DE PARIS,
as Administrative Agent, Swing Line Bank, Initial Issuing Bank and Arranger,
NATIONSBANK, N.A.,
as Syndication Agent,
and
CREDIT SUISSE FIRST BOSTON,
as Documentation Agent
TABLE OF CONTENTS
Section Page
------- ----
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.01. Certain Defined Terms ............................................................ 2
1.02. Computation of Time Periods; Other Definitional Provisions .......................33
1.03. Accounting Terms .................................................................33
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
2.01. The Advances and Letters of Credit ...............................................33
2.02. Making the Advances ..............................................................35
2.03. Issuance of and Drawings and Reimbursement Under Letters of Credit ...............37
2.04. Repayment of Advances ............................................................38
2.05. Termination or Reduction of the Commitments ......................................41
2.06. Prepayments ......................................................................42
2.07. Interest .........................................................................46
2.08. Fees .............................................................................46
2.09. Conversion of Advances ...........................................................47
2.10. Increased Costs, Etc. ............................................................48
2.11. Payments and Computations ........................................................49
2.12. Taxes ............................................................................50
2.13. Sharing of Payments, Etc. ........................................................52
2.14. Use of Proceeds ..................................................................53
2.15. Defaulting Lenders ...............................................................53
2.16. Evidence of Debt .................................................................56
ARTICLE III
CONDITIONS OF LENDING
3.01. Conditions Precedent to Initial Extension of Credit ..............................57
3.02. Conditions Precedent to Each Borrowing, Swing Line Advance and Issuance ..........62
3.03. Additional Conditions to the Additional Term Advance .............................63
3.04. Determinations Under Section 3.01 ...............................................64
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.01. Representations and Warranties of the Borrower ....................................65
ARTICLE V
COVENANTS
5.01. Affirmative Covenants .............................................................71
5.02. Negative Covenants ................................................................76
5.03. Reporting Requirements ............................................................84
5.04. Financial Covenants ...............................................................88
ARTICLE VI
EVENTS OF DEFAULT
6.01. Events of Default .................................................................92
6.02. Actions in Respect of the Letters of Credit Upon Default ..........................95
ARTICLE VII
THE AGENTS
7.01. Authorization and Action ..........................................................96
7.02. Agents' Reliance, Etc. ............................................................96
7.03. BNP, NationsBank, CSFB and Affiliates .............................................97
7.04. Lender Party Credit Decision ......................................................97
7.05. Indemnification ...................................................................97
7.06. Successor Administrative Agents ...................................................99
7.07. Documentation Agent, Arranger and Syndication Agent ...............................99
ARTICLE VIII
MISCELLANEOUS
8.01. Amendments, Etc. ..................................................................99
8.02. Notices, Etc. ....................................................................100
8.03. No Waiver; Remedies ..............................................................101
8.04. Costs and Expenses ..............................................................101
8.05. Right of Setoff ..................................................................102
8.06. Binding Effect ...................................................................103
8.07. Assignments and Participations ...................................................103
8.08. Execution in Counterparts ........................................................106
8.09. No Liability of the Issuing Bank .................................................106
8.10. Jurisdiction, Etc. ...............................................................106
8.11. Governing Law ....................................................................107
8.12. Waiver of Jury Trial .............................................................107
ii
SCHEDULES
Schedule I - Commitments and Applicable Lending Offices
Schedule II - EBITDA
Schedule III - Capital Expenditures
Schedule 2.14 - Refinancing Debt
Schedule 3.01(i) - Surviving Debt
Schedule 3.01(k)(iv) - Jurisdictions
Schedule 3.01(k)(vii)(B) - UCC Filings
Schedule 3.01(k)(vii)(H) - Blocked Accounts
Schedule 3.01(k)(vii)(I) - Landlord Consents
Schedule 3.01(k)(ix) - Subsidiary Guarantors
Schedule 4.01(b) - Subsidiaries
Schedule 4.01(d) - Authorizations, Approvals, Actions, Notices and Filings
Schedule 4.01(n) - Plans, Multiemployer Plans and Welfare Plans
Schedule 4.01(w) - Environmental Disclosure
Schedule 4.01(aa) - Open Years
Schedule 4.01(cc) - Tax Liabilities
Schedule 4.01(gg) - Existing Debt
Schedule 4.01(hh) - Owned Real Property
Schedule 4.01(ii) - Investments
Schedule 4.01(jj) - Intellectual Property
Schedule 5.01(e) - Shell Subsidiaries
Schedule 5.02(a)(iii) - Existing Liens
Schedule 5.02(d) - Permitted Asset Sales (to permit sale of imaging centers of Mediq
Diagnostic)
iii
Exhibit A-1 - Form of Term Note
Exhibit A-2 - Form of Acquisition Note
Exhibit A-3 - Form of Revolving Credit Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Assignment and Acceptance
Exhibit D - Form of Security Agreement
Exhibit E - Form of Mortgage
Exhibit F - Form of Subsidiary Guaranty
Exhibit G - Form of Borrowing Base Certificate
Exhibit H-1 - Form of Opinion of Counsel to the Loan Parties
Exhibit H-2 - Form of Opinion of Local Counsel to the Loan Parties
Exhibit I - Form of Solvency Opinion
Exhibit J-1 - Form of Borrower Solvency Certificate
Exhibit J-2 - Form of Guarantor Solvency Certificate
iv
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of May 29, 1998 among MEDIQ/PRN LIFE SUPPORT
SERVICES, INC., a Delaware corporation (the "Borrower") the banks, financial
institutions and other institutional lenders listed on the signature pages
hereof as the Initial Lenders (the "Initial Lenders"), Banque Nationale de Paris
("BNP"), as administrative agent (the "Administrative Agent"), as the initial
issuing bank (the "Initial Issuing Bank"), as the swing line bank (the "Swing
Line Bank"), and as advisor and arranger (the "Arranger"), NationsBank, N.A.
("NationsBank"), as syndication agent (the "Syndication Agent"), and Credit
Suisse First Boston ("CSFB"), as documentation agent (the "Documentation Agent",
and, together with the Administrative Agent, the Syndication Agent and any
successors appointed pursuant to Article VIII hereof, the "Agents") for the
Lender Parties (as hereinafter defined).
PRELIMINARY STATEMENTS:
(1) The Borrower is a wholly owned subsidiary of MEDIQ Incorporated, a
Delaware corporation (the "Company").
(2) MQ Acquisition Corporation, a Delaware corporation ("MQ Acquisition"),
was organized by Bruckmann, Xxxxxx, Xxxxxxxx & Co., L.P., a Delaware limited
partnership ("BRS" and, together with certain other Persons affiliated with BRS,
other co-investors selected by BRS and certain members of management of the
Company, the "Investors"), to acquire in a recapitalization transaction (the
"Recapitalization") all of the common stock (other than the "Rolled Shares" as
defined in the Rollover Agreement referred to below) of the Company from the
existing common and preferred shareholders of the Company (the "Sellers") in
accordance with the terms of an Agreement and Plan of Merger dated as of January
14, 1998 between MQ Acquisition and the Company (as amended, supplemented or
otherwise modified in accordance with its terms, to the extent permitted under
the Loan Documents (as hereinafter defined), the "Merger Agreement").
(3) Pursuant to the Merger Agreement, MQ Acquisition has agreed to the
Recapitalization and to consummate a merger (the "Merger") with the Company in
which the Company will be the surviving corporation ("MEDIQ") and the Investors
will, together with the holders of the Rolled Shares, in the aggregate, own all
of the shares of common stock and a majority of the shares of Series A, B and C
Preferred Stock referred to below to be issued by MEDIQ.
(4) The Borrower has entered into an Asset Purchase Agreement dated as of
April 24, 1998 (the "Asset Purchase Agreement") with CH Industries, Inc.,
("CHI") certain direct and indirect Subsidiaries of CHI and certain other
parties (collectively, the "CHI Sellers") pursuant to which the Borrower agreed
to purchase certain assets (the "CH Assets") from the CHI Sellers (the "CH
Acquisition").
(5) The Borrower has requested that, in connection with the consummation of
the Recapitalization, the CH Acquisition and the Merger, the Lender Parties lend
to the Borrower up to $325,000,000 to finance the cash consideration payable in
connection with the Merger, in part, and the CH Acquisition, pay transaction
fees and expenses in connection with the Merger, the CH Acquisition and the
other transactions contemplated hereby, refinance certain Existing Debt (as
hereinafter defined) of the Borrower and that, from time to time, the Lender
Parties lend to the Borrower and issue Letters of Credit for the benefit of the
Borrower to provide working capital for the Borrower and its Subsidiaries and
for other general corporate purposes permitted by this Agreement.
(6) The Lender Parties have indicated their willingness to agree to lend
such amounts on the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Acquisition Advance" has the meaning specified in Section 2.01(b).
"Acquisition Borrowing" means a borrowing consisting of simultaneous
Acquisition Advances of the same Type made by the Acquisition Lenders.
"Acquisition Commitment" means, with respect to any Acquisition Lender at
any time, the amount set forth opposite such Lender's name on Schedule I hereto
under the caption "Acquisition Commitment" or, if such Lender has entered into
one or more Assignments and Acceptances, the amount set forth for such Lender in
the Register maintained by the Administrative Agent pursuant to Section 8.07(d)
as such Lender's "Acquisition Commitment", as such amount may be reduced at or
prior to such time pursuant to Section 2.05.
"Acquisition Facility" means, at any time, the aggregate amount of the
Acquisition Lenders' Acquisition Commitments at such time.
"Acquisition Lender" means any Lender that has an Acquisition Commitment.
"Acquisition Note" means a promissory note of the Borrower payable to the
order of any Acquisition Lender, in substantially the form of Exhibit A-2
hereto, evidencing the indebtedness of the Borrower to such Lender resulting
from the Acquisition Advances made by such Lender to the extent required to be
issued pursuant to Section 2.16.
"Acquisition Reduction Amount" has the meaning specified in Section
2.06(b)(vi).
2
"Administrative Agent" has the meaning specified in the recital of parties
to this Agreement.
"Administrative Agent's Account" means the account of the Administrative
Agent maintained by the Administrative Agent at the Federal Reserve Bank of New
York, 00 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, ABA No. 000000000, for
further credit to Account No. 750420-701-03, or such other account maintained by
the Administrative Agent and designated by the Administrative Agent in a written
notice to the Lender Parties and the Borrower.
"Advance" means a Term Advance, an Acquisition Advance, a Revolving Credit
Advance, a Swing Line Advance or a Letter of Credit Advance.
"Affiliate" means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person. For purposes of this
definition, the term "control" (including the terms "controlling", "controlled
by" and "under common control with") of a Person means the possession, direct or
indirect, of the power to vote 5% or more of the Voting Stock of such Person or
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of Voting Stock, by contract or otherwise.
"Agents" has the meaning specified in the recital of parties to this
Agreement.
"Applicable Lending Office" means, with respect to each Lender Party, such
Lender Party's Domestic Lending Office in the case of a Base Rate Advance and
such Lender Party's Eurodollar Lending Office in the case of a Eurodollar Rate
Advance.
"Applicable Margin" means (a) with respect to Advances outstanding under
the Acquisition Facility or the Revolving Credit Facility, a percentage per
annum determined by reference to the Leverage Ratio as set forth below:
3
Leverage Ratio Base Rate Advances Eurodollar Rate Advances
-------------- ------------------ ------------------------
Level I
Less than 4.50:1.00 0.50% 1.75%
Level II
Less than 5.25:1.00 0.75% 2.00%
But greater than or equal
to 4.50:1.00
Level III
1.00% 2.25%
Less than 6.00:1.00 but
greater than or equal
to 5.25:1.00
Level IV
Greater than 1.25% 2.50%
6.00:1.00
4
and (b) with respect to Advances outstanding under the Term Facility, a
percentage per annum determined by reference to the Leverage Ratio as set forth
below:
Leverage Ratio Base Rate Advances Eurodollar Rate Advances
-------------- ------------------ ------------------------
Level I
Less than 4.50:1.00 1.00% 2.25%
Level II
Less than 5.25:1.00
But greater than or equal 1.25% 2.50%
to 4.50:1.00
Level III
Less than 6.00:1.00 but 1.50% 2.75%
greater than or equal
to 5.25:1.00
Level IV
Greater than 1.75% 3.00%
6.00:1.00
The Applicable Margin for each Advance shall be determined by reference to the
Leverage Ratio in effect from time to time; provided, however, that (A) no
change in the Applicable Margin shall be effective until three Business Days
after the date on which the Administrative Agent receives financial statements
pursuant to Section 5.03(c) or (d), or, as applicable, 5.02(e)(ii)(B)(3) and a
certificate of the chief financial officer of the Borrower and its Subsidiaries
demonstrating such ratio and (B) if the Borrower and its Subsidiaries has not
submitted to the Administrative Agent the information described in clause (A) of
this proviso as and when required under Section 5.03(c) or (d), as the case may
be, the Applicable Margin shall be at Level IV, for so long as such information
has not been received by the Administrative Agent. Until the delivery of
financial statements for the quarter ended September 30, 1998, the Applicable
Margin shall be no less than Level III.
"Applicable Percentage" means, as of any date, a percentage per annum
determined by reference to the Leverage Ratio as set forth below:
5
Leverage Ratio Applicable Percentage
-------------- ---------------------
Level I
Less than or equal to 0.375%
4.875:1.00
Level II
Greater than 4.875:1.00 0.500%
The Applicable Percentage for each Advance shall be determined by reference to
the Leverage Ratio in effect from time to time; provided, however, that (A) no
change in the Applicable Percentage shall be effective until three Business Days
after the date on which the Administrative Agent receives financial statements
pursuant to Section 5.03(c) or (d), or, as applicable, 5.02(e)(ii)(B)(3) and a
certificate of the chief financial officer of the Borrower and its Subsidiaries
demonstrating such ratio and (B) if the Borrower and its Subsidiaries has not
submitted to the Administrative Agent the information described in clause (A) of
this proviso as and when required under Section 5.03(c) or (d), as the case may
be, the Applicable Percentage shall be at Level II, for so long as such
information has not been received by the Administrative Agent. Until the
delivery of financial statements for the quarter ended September 30, 1998, the
Applicable Percentage shall be no less than Level II.
"Application Date" has the meaning specified in Section 2.06(b)(vii).
"Appropriate Lender" means, at any time, with respect to (a) any of the
Term, Acquisition or Revolving Credit Facilities, a Lender that has a Commitment
with respect to such Facility at such time, (b) the Letter of Credit Facility,
(i) the Issuing Bank and (ii) if the other Revolving Credit Lenders have made
Letter of Credit Advances pursuant to Section 2.03(c) that are outstanding at
such time, each such other Revolving Credit Lender and (c) the Swing Line
Facility, (i) the Swing Line Bank and (ii) if the other Revolving Credit Lenders
have made Swing Line Advances pursuant to Section 2.02(b) that are outstanding
at such time, each such other Revolving Credit Lender.
"Approved Fund" means, with respect to any Lender Party that is a fund that
invests in bank loans, any other fund, trust or any other entity that invests in
bank loans and is advised or managed by the same investment advisor as such
Lender Party or by an Affiliate of such investment advisor.
"Arranger" has the meaning specified in the recital of parties to this
Agreement.
"Asset Purchase Agreement" has the meaning specified in the Preliminary
Statements.
"Asset Sale Offer" has the meaning specified in Section 2.06(b)(vii).
"Assignment and Acceptance" means an assignment and acceptance entered into
by a Lender Party and an Eligible Assignee and accepted by the Administrative
Agent, in accordance with Section 8.07 and in substantially the form of Exhibit
C hereto.
6
"Available Amount" of any Letter of Credit means, at any time, the maximum
amount available to be drawn under such Letter of Credit at such time (assuming
compliance at such time with all conditions to drawing).
"Bank Hedge Agreement" means any interest rate Hedge Agreement required or
permitted under Article V that is entered into by and between the Borrower and
any Hedge Bank.
"Base Rate" means a fluctuating interest rate per annum in effect from time
to time, which rate per annum shall at all times be equal to the higher of:
(a) the rate of interest announced publicly by BNP in New York, New
York, from time to time, as its prime rate (and such term shall not be
construed to be its best or most favorable rate); and
(b) 1/2 of 1% per annum above the Federal Funds Rate.
"Base Rate Advance" means an Advance that bears interest as provided in
Section 2.07(a)(i).
"BNP" has the meaning specified in the recital of parties to this
Agreement.
"Borrower" has the meaning specified in the recital of parties to this
Agreement.
"Borrower Group" has the meaning specified in Section 5.02(f).
"Borrower's Account" means the account of the Borrower maintained by the
Borrower with BNP at its office at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Account No. 202330-001-48, or such other account as the Borrower and the
Administrative Agent may from time to time designate as the "Borrower's
Account".
"Borrowing" means a Term Borrowing, an Acquisition Borrowing, a Swing Line
Borrowing or a Revolving Credit Borrowing.
"Borrowing Base Certificate" means a certificate in substantially the form
of Exhibit G hereto, duly certified by the chief financial officer of the
Borrower.
"BRS" has the meaning specified in the Preliminary Statements.
"BRS Group" means BRS together with all funds for which BRS is a general
partner or otherwise controls, advises, sponsors or acts as manager.
"BRS Management Agreement" means the Management Agreement dated as of May
29, 1998 between the Borrower and BRS.
"Business Day" means a day of the year on which banks are not required or
authorized by law to close in New York City and, if the applicable Business Day
relates to any Eurodollar Rate Advances, on which dealings are carried on in the
London interbank market.
7
"Canadian Subsidiary" means any wholly owned Subsidiary of the Borrower
organized under the laws of Canada or of a province of Canada.
"Capital Expenditures" means, for any Person for any period, the sum of,
without duplication, (a) all cash expenditures made, directly or indirectly, by
such Person or any of its Subsidiaries during such period for equipment, fixed
assets, real property or improvements, or for replacements or substitutions
therefor or additions thereto, that have been or should be, in accordance with
GAAP, reflected as additions to property, plant or equipment on a Consolidated
balance sheet of such Person (other than the use of insurance proceeds for any
such expenditure for the replacement of any item listed in this clause (a)) plus
(b) the aggregate principal amount of all Debt (including Obligations under
Capitalized Leases and Obligations secured by purchase money Liens permitted
under Section 5.02(a)(v)) assumed or incurred in connection with any such
expenditures less (c) the aggregate amount of any Investments permitted under
Section 5.02(e)(ii)(B) made after the date hereof that would otherwise qualify
as Capital Expenditures less (d) sales of rental equipment in the ordinary
course of business.
"Capitalized Leases" means all leases that have been or should be, in
accordance with GAAP, recorded as capitalized leases.
"Carryover Amount" has the meaning specified in Section 5.04(e).
"Cash Collateral Account" has the meaning specified in the Security
Agreement.
"Cash Equivalents" means any of the following, to the extent owned by the
Borrower or any of its Subsidiaries free and clear of all Liens other than Liens
created under the Collateral Documents or to the extent permitted by Section
5.02(a) and having a maturity of not greater than 180 days from the date of
acquisition thereof: (a) readily marketable direct obligations of the Government
of the United States or any agency or instrumentality thereof or obligations
unconditionally guaranteed by the full faith and credit of the Government of the
United States, (b) insured certificates of deposit of or time deposits with any
commercial bank that is a Lender Party or a member of the Federal Reserve
System, issues (or the parent of which issues) commercial paper rated as
described in clause (c), is organized under the laws of the United States or any
state thereof and has combined capital and surplus of at least $1 billion, (c)
commercial paper in an aggregate amount of no more than $5,000,000 per issuer
outstanding at any time, issued by any corporation organized under the laws of
any state of the United States and rated at least "Prime-1" (or the then
equivalent grade) by Xxxxx'x Investors Service, Inc. or "A-1" (or the then
equivalent grade) by Standard & Poor's Ratings Group, a division of the McGraw
Hill Companies, Inc., or (d) money market or mutual funds that invest solely in
Cash Equivalents of the types described in clauses (a), (b) and (c) above.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended from time to time.
"CERCLIS" means the Comprehensive Environmental Response, Compensation and
Liability Information System maintained by the U.S. Environmental Protection
Agency.
"CH Acquisition" has the meaning specified in the Preliminary Statements.
8
"CH Acquisition Closing Date" has the meaning specified in Section 3.03.
"CH Assets" has the meaning specified in the Preliminary Statements.
"CHI" has the meaning specified in the Preliminary Statements.
"CHI Sellers" has the meaning specified in the Preliminary Statements.
"Citibank Account" means the account in the name of the Borrower maintained
with Citibank, N.A. for purposes of funding certain obligations under the
Borrower's health plan.
"Collateral" means all "Collateral" referred to in the Collateral Documents
and all other property that is or is intended to be subject to any Lien in favor
of the Administrative Agent for the benefit of the Secured Parties.
"Collateral Documents" means the Security Agreement, the Mortgage, the
landlord consents from the Persons listed on Schedule 3.01(k)(vii)(I) and any
other document or agreement that creates or purports to create a Lien in favor
of the Administrative Agent for the benefit of the Secured Parties.
"Commitment" means a Term Commitment, an Acquisition Commitment, a
Revolving Credit Commitment, a Swing Line Commitment or a Letter of Credit
Commitment.
"Company" has the meaning specified in the Preliminary Statements.
"Consolidated" refers, with respect to any Person, to the consolidation of
accounts of such Person and its Subsidiaries in accordance with GAAP.
"Conversion", "Convert" and "Converted" each refer to a conversion of
Advances of one Type into Advances of the other Type pursuant to Section 2.09 or
2.10.
"CSFB" has the meaning specified in the recital of parties to this
Agreement.
"Conversion Date" means the last day of the calendar month in the month
that is the 18th month following the month in which the Initial Extension of
Credit occurred.
"Current Assets" of any Person means all assets of such Person that would,
in accordance with GAAP, be classified as current assets of a company conducting
a business the same as or similar to that of such Person, after deducting
adequate reserves in each case in which a reserve is proper in accordance with
GAAP.
"Current Liabilities" of any Person means (a) all Debt of such Person that
by its terms is payable on demand or matures within one year after the date of
determination other than Funded Debt and (b) all other items that in accordance
with GAAP would be classified as current liabilities of a company conducting a
business the same as or similar to that of such Person.
9
"Debt" of any Person means, without duplication, (a) all indebtedness of
such Person for borrowed money, (b) all Obligations, contingent or otherwise, of
such Person for the deferred purchase price of property or services (other than
trade payables not overdue by more than 60 days incurred in the ordinary course
of such Person's business), (c) all Obligations, contingent or otherwise, of
such Person evidenced by notes, bonds, debentures or other similar instruments,
(d) all Obligations, contingent or otherwise, of such Person created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (e) all Obligations, contingent or
otherwise, of such Person as lessee under Capitalized Leases, (f) all
Obligations, contingent or otherwise, of such Person under acceptance, letter of
credit or similar facilities, (g) all Obligations, contingent or otherwise, of
such Person to purchase, redeem, retire, defease or otherwise make any payment
in respect of any capital stock of or other ownership or profit interest in such
Person or any other Person or any warrants, rights or options to acquire such
capital stock, valued, in the case of Redeemable Preferred Stock, at the greater
of its voluntary or involuntary liquidation preference plus accrued and unpaid
dividends, (h) all Obligations of such Person in respect of Hedge Agreements
(other than for purposes of calculating the financial covenants in Section
5.04), (i) all Debt of others referred to in clauses (a) through (h) above or
clause (j) below guaranteed directly or indirectly in any manner by such Person,
or in effect guaranteed directly or indirectly by such Person through an
agreement (1) to pay or purchase such Debt or to advance or supply funds for the
payment or purchase of such Debt, (2) to purchase, sell or lease (as lessee or
lessor) property, or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such Debt or to assure the holder of such
Debt against loss, (3) to supply funds to or in any other manner invest in the
debtor (including any agreement to pay for property or services irrespective of
whether such property is received or such services are rendered) or (iv)
otherwise to assure a creditor against loss, and (j) all Debt referred to in
clauses (a) through (i) above and other payment obligations of another Person
secured by (or for which the holder of such Debt has an existing right,
contingent or otherwise, to be secured by) any Lien on property (including,
without limitation, accounts and contract rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of such
Debt.
"Declining Lender" has the meaning specified in Section 2.06(c).
"Default" means any Event of Default or any event that would constitute an
Event of Default but for the requirement that notice be given or time elapse or
both.
"Defaulted Advance" means, with respect to any Lender Party at any time,
the portion of any Advance required to be made by such Lender Party to the
Borrower pursuant to Section 2.01 or 2.02 at or prior to such time which has not
been made by such Lender Party or by the Administrative Agent for the account of
such Lender Party pursuant to Section 2.02(e) as of such time. In the event that
a portion of a Defaulted Advance shall be deemed made pursuant to Section
2.15(a), the remaining portion of such Defaulted Advance shall be considered a
Defaulted Advance originally required to be made pursuant to Section 2.01 on the
same date as the Defaulted Advance so deemed made in part.
"Defaulted Amount" means, with respect to any Lender Party at any time, any
amount required to be paid by such Lender Party to the Agents or any other
Lender Party hereunder or under any other Loan Document at or prior to such time
which has not been so paid as of such time,
10
including, without limitation, any amount required to be paid by such Lender
Party to (a) the Issuing Bank pursuant to Section 2.03(c) to purchase a portion
of a Letter of Credit Advance made by the Issuing Bank, (b) the Administrative
Agent pursuant to Section 2.02(e) to reimburse the Administrative Agent for the
amount of any Advance made by the Administrative Agent for the account of such
Lender Party, (c) any other Lender Party pursuant to Section 2.13 to purchase
any participation in Advances owing to such other Lender Party and (d) the
Administrative Agent or the Issuing Bank pursuant to Section 7.05 to reimburse
the Administrative Agent or the Issuing Bank for such Lender Party's ratable
share of any amount required to be paid by the Lender Parties to the
Administrative Agent or the Issuing Bank as provided therein. In the event that
a portion of a Defaulted Amount shall be deemed paid pursuant to Section
2.15(b), the remaining portion of such Defaulted Amount shall be considered a
Defaulted Amount originally required to be paid hereunder or under any other
Loan Document on the same date as the Defaulted Amount so deemed paid in part.
"Defaulting Lender" means, at any time, any Lender Party that, at such time
(a) owes a Defaulted Advance or a Defaulted Amount or (b) shall take any action
or be the subject of any action or proceeding of a type described in Section
6.01(f).
"Discount Debenture Indenture" means the Indenture dated as of May 15, 1998
between MEDIQ, as issuer, and United States Trust Company of New York, as
trustee, pursuant to which the Discount Debentures are issued.
"Discount Debentures" means the senior discount debentures due 2009 of
MEDIQ issued pursuant to the Discount Debenture Indenture including senior
discount debentures issued in exchange therefor pursuant to the terms of the
Registration Rights Agreement entered into by the Borrower and MEDIQ on the date
of issuance.
"Documentation Agent" has the meaning specified in the recital of parties
to this Agreement.
"Domestic Lending Office" means, with respect to any Lender Party, the
office of such Lender Party specified as its "Domestic Lending Office" opposite
its name on Schedule I hereto or in the Assignment and Acceptance pursuant to
which it became a Lender Party, as the case may be, or such other office of such
Lender Party as such Lender Party may from time to time specify to the Borrower
and the Administrative Agent.
"EBITDA" means, for any period, the sum, determined on a Consolidated
basis, of (a) net income (or net loss), (b) Interest Expense, (c) income tax
expense, (d) depreciation expense, (e) amortization expense, (f) noncash charges
incurred in connection with stock options granted to employees of the Borrower,
(g) extraordinary or unusual losses deducted in calculating net income less
extraordinary or unusual gains added in calculating net income, (h) fees paid
under the BRS Management Agreement and (i) all one-time expenses of the Borrower
and its Subsidiaries incurred in connection with Investments made pursuant to
Section 5.02(e)(ii)(B) for acquisition expenses, lease related expenses,
facility closure expenses and professional and other fees, in each case of the
Borrower and its Subsidiaries determined in accordance with GAAP for such
period; provided that, for each month in any Rolling Period ending prior to one
year after the date of the Initial Extension of Credit, EBITDA for each month
prior to the date of the Initial Extension of Credit shall be the amount for
such month as set forth on Schedule II hereto.
11
"Eligible Assignee" means with respect to any Facility: (i) a Lender; (ii)
an Affiliate or any Approved Fund of a Lender; (iii) a commercial bank organized
under the laws of the United States, or any State thereof, and having a combined
capital and surplus of at least $500,000,000; (iv) a savings and loan
association or savings bank organized under the laws of the United States, or
any State thereof, and having a combined capital and surplus of at least
$500,000,000; (v) a commercial bank organized under the laws of any other
country that is a member of the OECD or has concluded special lending
arrangements with the International Monetary Fund associated with its General
Arrangements to Borrow or a political subdivision of any such country, and
having a combined capital and surplus of at least $500,000,000, so long as such
bank is acting through a branch or agency located in the United States; (vi) a
finance company, insurance company or other financial institution or fund
(whether a corporation, partnership, trust or other entity) that is engaged in
making, purchasing or otherwise investing in commercial loans in the ordinary
course of its business and having a combined capital and surplus of at least
$250,000,000; and (vii) any other Person approved by the Administrative Agent
and, so long as no Default has occurred and is continuing at the time any
assignment is effected pursuant to Section 8.07, the Borrower and, with respect
to any Eligible Assignee that becomes a Revolving Credit Lender, the Issuing
Bank, any such approval not to be unreasonably withheld or delayed; provided,
however, that neither any Loan Party nor any Affiliate of a Loan Party shall
qualify as an Eligible Assignee under this definition.
"Eligible Canadian Inventory" means Eligible Inventory of any Canadian
Subsidiary of the Borrower.
"Eligible Canadian Receivables" means Eligible Receivables of any Canadian
Subsidiary of the Borrower.
"Eligible Collateral" means, collectively, Eligible Inventory and Eligible
Receivables.
"Eligible Inventory" means any Inventory owned by the Borrower and its
wholly owned U.S. Subsidiaries and Canadian Subsidiaries free and clear of all
Liens (other than Permitted Liens and Liens in favor of the Secured Parties
securing the Secured Obligations) other than the following:
(a) Inventory consisting of "perishable agricultural commodities"
within the meaning of the Perishable Agricultural Commodities Act of 1930,
as amended, and the regulations thereunder, or on which a Lien has arisen
or may arise in favor of agricultural producers under comparable state or
local laws;
(b) Inventory located on leaseholds as to which the lessor has not
entered into a consent and agreement providing the Administrative Agent
with the right to receive notice of default, the right to repossess such
Inventory at any reasonable time pursuant to such consent and agreement and
such other rights as may be reasonably acceptable to the Administrative
Agent;
(c) Inventory that is obsolete, unusable or otherwise unavailable for
sale;
(d) Inventory with respect to which the representations and warranties
set forth in Section 8 of the Security Agreement applicable to Inventory
are not true and correct;
12
(e) Inventory consisting of promotional, marketing, packaging or
shipping materials and supplies;
(f) Inventory that fails to meet all standards imposed by any
governmental agency, or department or division thereof, having regulatory
authority over such Inventory or its use or sale;
(g) Inventory that is subject to any licensing, patent, royalty,
trademark, trade name or copyright agreement with any third party from whom
any Loan Party or any of their Subsidiaries has received written notice of
a dispute in respect of any such agreement;
(h) Inventory located outside the United States or Canada;
(i) Inventory that is not in the possession of or under the sole
control of the Borrower or any of its wholly owned U.S. Subsidiaries or
Canadian Subsidiaries or not in a leased facility in respect of which the
owner has entered into a consent and agreement as may be reasonably
acceptable to the Administrative Agent;
(j) Inventory consisting of work in progress;
(k) Inventory in respect of which the Security Agreement, after giving
effect to the related filings of financing statements that have then been
made, if any, does not or has ceased to create a valid and perfected first
priority lien or security interest in favor of the Secured Parties securing
the Secured Obligations and as to which no other Liens exist, other than
Permitted Liens; and
(l) Inventory not recorded under a perpetual inventory system
reasonably acceptable to the Administrative Agent.
The value of such Eligible Inventory shall be its book value determined in
accordance with GAAP on a basis consistent with current practice of the Borrower
and its wholly owned U.S. Subsidiaries unless the Administrative Agent
determines, in its reasonable discretion that such Eligible Inventory shall be
valued at a lower value.
"Eligible Receivables" means any Receivables owned by the Borrower and any
of its wholly owned U.S. Subsidiaries and Canadian Subsidiaries free and clear
of all Liens (other than Permitted Liens and Liens in favor of the Secured
Parties securing the Secured Obligations) other than the following:
(a) Receivables that do not arise out of sales of goods or rendering
of services in the ordinary course of the business of the Borrower or any
of its wholly owned Subsidiaries;
(b) Receivables on terms other than those normal or customary in the
business of the Borrower or any of its wholly owned U.S. Subsidiaries or
Canadian Subsidiaries;
13
(c) Receivables owing from any Person that is an Affiliate of the
Borrower or any of its wholly owned U.S. Subsidiaries or Canadian
Subsidiaries;
(d) Receivables more than 120 days past the original invoice date;
(e) Receivables owing from any Person from which an aggregate amount
of more than 50% of the Receivables owing are more than 120 days past the
original invoice date;
(f) Receivables owing from any Person that has asserted any claim,
demand or liability against any Loan Party, whether by action, suit,
counterclaim or other judicial or arbitral proceeding;
(g) Receivables owing from any Person that shall take or be the
subject of any action or proceeding of a type described in Section 6.01(f);
(h) Receivables (i) owing from any Person that is also a supplier to
or creditor of any Loan Party to the extent of the amount of any right of
setoff, unless such Person has waived all rights of setoff in a manner
acceptable to the Administrative Agent or (ii) representing any
manufacturer's or supplier's credits, discounts, incentive plans or similar
arrangements entitling any Loan Party to discounts on future purchases
therefrom;
(i) Receivables arising out of sales to account debtors outside the
United States or Canada, unless backed by a letter of credit issued by a
bank organized under the laws of the United States or Canada, or any State
thereof, and having a combined capital and surplus of at least
$500,000,000;
(j) Receivables arising out of sales on a xxxx-and-hold, guaranteed
sale, sale-or-return, sale on approval or consignment basis or subject to
any right of return, setoff or charge-back;
(k) Receivables owing from an account debtor that is an agency,
department or instrumentality of the United States, any State thereof or
Canada; and
(l) Receivables in respect of which the Security Agreement, after
giving effect to the related filings of financing statements that have then
been made, if any, does not or has ceased to create a valid and perfected
first priority lien or security interest in favor of the Secured Parties
securing the Secured Obligations and as to which no other Liens exist,
other than Permitted Liens.
The value of such Eligible Receivables shall be their book value determined in
accordance with GAAP unless the Administrative Agent determines, in its
reasonable discretion, that such Eligible Receivables shall be valued at a lower
value.
"Environmental Action" means any action, suit, demand, demand letter,
claim, notice of non-compliance or violation, notice of liability or potential
liability, investigation, proceeding, consent
14
order or consent agreement relating in any way to any Environmental Law, any
Environmental Permit or Hazardous Material or arising from alleged injury or
threat to health, safety or the environment, including, without limitation, (a)
by any governmental or regulatory authority for enforcement, cleanup, removal,
response, remedial or other actions or damages and (b) by any governmental or
regulatory authority or third party for damages, contribution, indemnification,
cost recovery, compensation or injunctive relief.
"Environmental Law" means any federal, state, local or foreign statute,
law, ordinance, rule, regulation, code, order, writ, judgment, injunction,
decree or judicial or agency interpretation, policy or guidance relating to
pollution or protection of the environment, health, safety or natural resources,
including, without limitation, those relating to the use, handling,
transportation, treatment, storage, disposal, release or discharge of Hazardous
Materials.
"Environmental Permit" means any permit, approval, identification number,
license or other authorization required under any Environmental Law.
"Equity Group" means the Health Care Group, the BRS Group and the Xxxxx
Group.
"Equivalent" in U.S. Dollars of any foreign currency on any date means the
equivalent in U.S. Dollars of such foreign currency determined by using the
quoted spot rate for an equivalent amount at which BNP's principal office in New
York City offers to exchange U.S. Dollars for such foreign currency in New York
City prior to 11:00 A.M. (New York City time) on such date as is required
pursuant to the terms of this Agreement, and the "Equivalent" in any foreign
currency of U.S. Dollars means the equivalent in such foreign currency of U.S.
Dollars determined by using the quoted spot rate for an equivalent amount at
which BNP's principal office in London offers to exchange such foreign currency
for U.S. Dollars in New York City prior to 11:00 A.M. (New York City time) on
such date as is required pursuant to the terms of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated thereunder.
"ERISA Affiliate" means any Person that for purposes of Title IV of ERISA
is a member of the controlled group of any Loan Party, or under common control
with any Loan Party, within the meaning of Section 414 of the Internal Revenue
Code.
"ERISA Event" means (a) (i) the occurrence of a reportable event, within
the meaning of Section 4043 of ERISA, with respect to any Plan unless the 30-day
notice requirement with respect to such event has been waived by the PBGC; or
(ii) the requirements of subsection (1) of Section 4043(b) of ERISA (without
regard to subsection (2) of such Section) are met with respect to a contributing
sponsor, as defined in Section 4001(a)(13) of ERISA, of a Plan, and an event
described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA
is reasonably expected to occur with respect to such Plan within the following
30 days; (b) the application for a minimum funding waiver with respect to a
Plan; (c) the provision by the administrator of any Plan of a notice of intent
to terminate such Plan, pursuant to Section 4041(a)(2) of ERISA (including any
such notice with respect to a plan amendment referred to in Section 4041(e) of
ERISA); (d) the cessation of operations at a facility of any Loan Party or any
ERISA Affiliate in the circumstances described in
15
Section 4062(e) of ERISA; (e) the withdrawal by any Loan Party or any ERISA
Affiliate from a Multiple Employer Plan during a plan year for which it was a
substantial employer, as defined in Section 4001(a)(2) of ERISA; (f) the
conditions for imposition of a lien under Section 302(f) of ERISA shall have
been met with respect to any Plan; (g) the adoption of an amendment to a Plan
requiring the provision of security to such Plan, pursuant to Section 307 of
ERISA; or (h) the institution by the PBGC of proceedings to terminate a Plan
pursuant to Section 4042 of ERISA, or the occurrence of any event or condition
described in Section 4042 of ERISA that constitutes grounds for the termination
of, or the appointment of a trustee to administer, such Plan; provided, however,
that the occurrence of the event or condition described in Section 4042(a)(4) of
ERISA shall be an ERISA Event only if the PBGC has given notice that it intends
to institute proceedings to terminate a Plan pursuant to such Section.
"Eurocurrency Liabilities" has the meaning specified in Regulation D of the
Board of Governors of the Federal Reserve System, as in effect from time to
time.
"Eurodollar Lending Office" means, with respect to any Lender Party, the
office of such Lender Party specified as its "Eurodollar Lending Office"
opposite its name on Schedule I hereto or in the Assignment and Acceptance
pursuant to which it became a Lender Party (or, if no such office is specified,
its Domestic Lending Office), or such other office of such Lender Party as such
Lender Party may from time to time specify to the Borrower and the
Administrative Agent.
"Eurodollar Rate" means, for any Interest Period for all Eurodollar Rate
Advances comprising part of the same Borrowing, an interest rate per annum equal
to the rate per annum obtained by dividing (a) the average of the respective
rates per annum (rounded upward to the next whole multiple of 1/16th of 1%)
posted by each of the principal London offices of banks posting rates as
displayed on the Telerate screen, page 3750 or such other page as may replace
such page on such service for the purpose of displaying the London interbank
offered rate of major banks for deposits in U.S. Dollars, at approximately 11:00
A.M. (London time) two Business Days before the first day of such Interest
Period for deposits in an amount substantially equal to BNP's Eurodollar Rate
Advance comprising part of such Borrowing to be outstanding during such Interest
Period (or, if BNP shall not have such a Eurodollar Rate Advance, $1,000,000)
and for a period equal to such Interest Period by (b) a percentage equal to 100%
minus the Eurodollar Rate Reserve Percentage for such Interest Period.
"Eurodollar Rate Advance" means an Advance that bears interest as provided
in Section 2.07(a)(ii).
"Eurodollar Rate Reserve Percentage" for any Interest Period for all
Eurodollar Rate Advances comprising part of the same Borrowing means the reserve
percentage applicable two Business Days before the first day of such Interest
Period under regulations issued from time to time by the Board of Governors of
the Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, any emergency, supplemental
or other marginal reserve requirement) for a member bank of the Federal Reserve
System in New York City with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities (or with respect to any other category of
liabilities that includes deposits by reference to which the interest rate on
Eurodollar Rate Advances is determined) having a term equal to such Interest
Period.
16
"Events of Default" has the meaning specified in Section 6.01.
"Excess Amount" has the meaning specified in Section 5.04(e).
"Excess Cash Flow" means, for any period, the sum of (a) Consolidated net
income (or loss) of the Borrower and its Subsidiaries for such period plus (b)
an amount equal to the aggregate amount of all noncash charges (including
paid-in-kind interest accrued and accretion of original issue discount, if any,
on the Subordinated Notes) deducted in arriving at Consolidated net income (or
loss) for each such period plus (c) an amount (whether positive or negative)
equal to the change in deferred tax assets and liabilities of the Borrower and
its Subsidiaries for such period plus (d) an amount (whether positive or
negative) equal to the change in Consolidated Current Liabilities (only to the
extent not duplicated herein) of the Borrower and its Subsidiaries during such
period less (e) an amount equal to the aggregate amount of all noncash credits
included in arriving at such Consolidated net income (or loss) less (f) an
amount (whether positive or negative) equal to the change in Consolidated
Current Assets (excluding cash and Cash Equivalents) of the Borrower and its
Subsidiaries during such period less (g) an amount equal to the amount of all
Capital Expenditures of the Borrower and its Subsidiaries paid in cash during
such period to the extent permitted by this Agreement less (h) an amount equal
to the aggregate amount of all regularly scheduled principal payments of Funded
Debt made during such period, together with any optional prepayments of Term
Advances or Acquisition Advances made during such period in accordance with
Section 2.06(a) less (i) an amount equal to the aggregate amount of Consolidated
net income of the Borrower and its Subsidiaries resulting from any transaction
(other than asset sales in the ordinary course of business) creating Net Cash
Proceeds or Extraordinary Receipts for such period to the extent included in
pretax income of the Borrower and its Subsidiaries for such period less (j)
Investments in cash permitted by Section 5.02(e)(ii)(B) less (k) an amount
(whether positive or negative) equal to the difference between Consolidated
Current Assets and Consolidated Current Liabilities attributable to such
Investments on the date of any such Investment excluding cash and Cash
Equivalents less (l) dividends or advances paid to MEDIQ to pursuant to Section
5.02(f) plus (m) any cash received in respect of any Obligations secured by
purchase money Liens or Obligations under Capitalized Leases.
"Existing Debt" means Debt of the Borrower and its Subsidiaries outstanding
immediately before the Merger.
"Extraordinary Receipt" means any cash received by or paid to or for the
account of any Person not in the ordinary course of business, including, without
limitation, tax refunds, pension plan reversions, proceeds of insurance
(including, without limitation, the key man life insurance referred to in
Section 5.01(r) but excluding proceeds of business interruption insurance to the
extent such proceeds constitute compensation for lost earnings), condemnation
awards (and payments in lieu thereof) and cash received by any Loan Party from
the repayment of the NutraMax Note; provided, however, that an Extraordinary
Receipt shall not include cash receipts received from proceeds of insurance to
the extent that such proceeds (A) in respect of loss or damage to equipment,
fixed assets or real property are applied (or in respect of which expenditures
were previously incurred) to replace or repair the equipment, fixed assets or
real property in respect of which such proceeds were received in accordance with
the terms of the Loan Documents, so long as such application is made (or such
expenditures were incurred) within six months after the occurrence of such
damage or loss or (B) are received by a Person in respect of any third party
claim against such Person and applied to pay (or
17
reimburse such Person for its prior payment of) such claim and the costs and
expenses of such Person with respect thereto.
"Facility" means the Term Facility, the Acquisition Facility, the Revolving
Credit Facility, the Swing Line Facility or the Letter of Credit Facility.
"Federal Funds Rate" means, for any period, a fluctuating interest rate per
annum equal for each day during such period (i) to the rate published by the
Telerate service on page five of its daily report as the "ASK" rate as of 10:00
A.M. (New York City time) for such day (or, if such day is not a Business Day,
for the immediately preceding Business Day) or (ii) if the Telerate service
shall cease to publish or otherwise shall not publish such rates for any day
that is a Business Day, to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding 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 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.
"Fiscal Year" means a fiscal year of the Borrower and its Consolidated
Subsidiaries ending on September 30 in any calendar year.
"Fixed Charge Coverage Ratio" means, with respect to the Borrower and its
Subsidiaries, taken as a whole, for any Rolling Period, the ratio of (a)
Consolidated EBITDA for the Borrower and its Subsidiaries for such Rolling
Period less the sum of (i) Capital Expenditures of the Borrower and its
Subsidiaries during such Rolling Period and (ii) income taxes of the Borrower
and its Subsidiaries that have been paid in cash or distributed by dividend to
MEDIQ during such Rolling Period to (b) the sum of (i) Interest Expense of the
Borrower and its Subsidiaries for such Rolling Period (other than paid-in-kind
interest accrued and accretion of original issue discount, if any, in respect of
the Subordinated Notes), (ii) regularly scheduled principal payments of Funded
Debt of the Borrower and its Subsidiaries for such Rolling Period and (iii) any
dividends or advances paid to MEDIQ by the Borrower and its Subsidiaries which
are not otherwise included in the calculation of EBITDA of the Borrower and its
Subsidiaries. For purposes of this definition, the amount of Capital
Expenditures referred to in clause (a)(i) above shall equal $4,000,000 for the
Rolling Period ending on September 30, 1998, $8,000,000 for the Rolling Period
ending on December 31, 1998 and $12,000,000 for the Rolling Period ending on
March 31, 1999.
"Foreign Subsidiary" means a Subsidiary that is organized under the laws of
a jurisdiction other than the United States or any State thereof or the District
of Columbia.
"Funded Debt" of any Person means Debt of such Person that by its terms
matures more than one year after the date of creation or matures within one year
from such date but is renewable or extendible, at the option of such Person, to
a date more than one year after such date or arises under a revolving credit or
similar agreement that obligates the lender or lenders to extend credit during a
period of more than one year after such date, including, without limitation, all
amounts of Funded Debt of such Person required to be paid or prepaid within one
year after the date of determination.
"Xxxxx Group" means Xxxxx Partners III, L.P. together with all funds for
which Xxxxx Partners III, L.P. is a general partner or otherwise controls,
advises, sponsors or acts as manager.
18
"GAAP" has the meaning specified in Section 1.03.
"Hazardous Materials" means (a) petroleum or petroleum products,
by-products or breakdown products, radioactive materials, asbestos-containing
materials, polychlorinated biphenyls and radon gas and (b) any other chemicals,
materials or substances designated, classified or regulated as hazardous or
toxic or as a pollutant or contaminant under any Environmental Law.
"Health Care Group" means Health Care Capital Partners, L.P. and Health
Care Executive Partners, L.P. together with all funds for which Health Care
Capital Partners, L.P. or Health Care Executive Partners, L.P. is a general
partner or otherwise controls, advises, sponsors or acts as manager.
"Hedge Agreements" means interest rate swap, cap or collar agreements,
interest rate future or option contracts, currency swap agreements, currency
future or option contracts and other hedging agreements.
"Hedge Bank" means any Lender Party or any of its Affiliates in its
capacity as a party to a Bank Hedge Agreement.
"Indemnified Costs" has the meaning specified in Section 7.05(a).
"Indemnified Party" has the meaning specified in Section 8.04(b).
"Information Memorandum" means the Offering Circular relating to the Senior
Subordinated Notes and the Discount Debentures dated May 21, 1998.
"Initial Extension of Credit" means the earlier to occur of the initial
Borrowing hereunder and the initial issuance of a Letter of Credit hereunder.
"Initial Issuing Bank" has the meaning specified in the recital of parties
to this Agreement.
"Initial Lenders" has the meaning specified in the recital of parties to
this Agreement.
"Insufficiency" means, with respect to any Plan, the amount, if any, of its
unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.
"Interest Coverage Ratio" means, with respect to the Borrower and its
Subsidiaries, taken as a whole, for any Rolling Period, the ratio of (a)
Consolidated EBITDA of the Borrower and its Subsidiaries for such Rolling Period
to (b) Interest Expense of the Borrower and its Subsidiaries for such Rolling
Period (other than paid-in-kind interest accrued and accretion of original issue
discount, if any, in respect of the Subordinated Notes) and any dividends paid
to MEDIQ to pay interest on obligations of MEDIQ by the Borrower and its
Subsidiaries.
"Interest Expense" means, with respect to any Person for any period,
interest expense (including the interest component on obligations under
Capitalized Leases), whether paid or accrued, on all Debt of such Person and its
Subsidiaries for such period, including, without limitation and without
duplication, (a) interest expense in respect of Debt resulting from Advances,
(b) interest expense in respect of the Subordinated Notes, (c) commissions,
discounts and other fees and charges
19
payable in connection with letters of credit (including, without limitation, any
Letters of Credit), (d) any net payment payable in connection with Hedge
Agreements less any net credits received in connection with Hedge Agreements,
(e) accretion of original issue discount, and (f) all other noncash interest but
excluding amortization with respect to deferred financing fees.
"Interest Period" means, for each Eurodollar Rate Advance comprising part
of the same Borrowing, the period commencing on the date of such Eurodollar Rate
Advance or the date of the Conversion of any Base Rate Advance into such
Eurodollar Rate Advance, and ending on the last day of the period selected by
the Borrower pursuant to the provisions below and, thereafter, each subsequent
period commencing on the last day of the immediately preceding Interest Period
and ending on the last day of the period selected by the Borrower pursuant to
the provisions below. The duration of each such Interest Period shall be one,
two, three or six months, as the Borrower may, upon notice received by the
Administrative Agent not later than 11:00 A.M. (New York City time) on the third
Business Day prior to the first day of such Interest Period, select; provided,
however, that:
(a) the Borrower may not select any Interest Period with respect to
any Eurodollar Rate Advance under a Facility that ends after any principal
repayment installment date for such Facility unless, after giving effect to
such selection, the aggregate principal amount of Base Rate Advances and of
Eurodollar Rate Advances having Interest Periods that end on or prior to
such principal repayment installment date for such Facility shall be at
least equal to the aggregate principal amount of Advances under such
Facility due and payable on or prior to such date;
(b) Interest Periods commencing on the same date for Eurodollar Rate
Advances comprising part of the same Borrowing shall be of the same
duration;
(c) whenever the last day of any Interest Period would otherwise occur
on a day other than a Business Day, the last day of such Interest Period
shall be extended to occur on the next succeeding Business Day, provided,
however, that, if such extension would cause the last day of such Interest
Period to occur in the next following calendar month, the last day of such
Interest Period shall occur on the immediately preceding Business Day; and
(d) whenever the first day of any Interest Period occurs on a day of
an initial calendar month for which there is no numerically corresponding
day in the calendar month that succeeds such initial calendar month by the
number of months equal to the number of months in such Interest Period,
such Interest Period shall end on the last Business Day of such succeeding
calendar month.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated and rulings issued
thereunder.
"Inventory" means all Inventory referred to in Section 1(d) of the Security
Agreement.
"Investors" has the meaning specified in the Preliminary Statements.
"Investment" means any loan or advance to any Person, any purchase or other
acquisition of any capital stock or other
20
ownership or profit interest, warrants, rights, options, obligations or other
securities or the assets comprising a business or an operating division of a
business, any capital contribution to such Person or any other direct or
indirect investment in such Person, including, without limitation, any
arrangement pursuant to which the investor incurs Debt of the types referred to
in clause (i) or (j) of the definition of "Debt" in respect of such Person.
"Issuing Bank" means the Initial Issuing Bank and each Eligible Assignee to
which a Letter of Credit Commitment hereunder has been assigned pursuant to
Section 8.07.
"L/C Cash Collateral Account" has the meaning specified in the Security
Agreement.
"L/C Related Documents" has the meaning specified in Section 2.04(e)(ii).
"Lender Party" means any Lender, the Swing Line Bank or the Issuing Bank.
"Lenders" means the Initial Lenders and each Person that shall become a
Lender hereunder pursuant to Section 8.07 for so long as such Initial Lender or
Person shall be a party to this Agreement.
"Letters of Credit" has the meaning specified in Section 2.01(e).
"Letter of Credit Advance" means an advance made by the Issuing Bank or any
Revolving Credit Lender pursuant to Section 2.03(c).
"Letter of Credit Agreement" has the meaning specified in Section 2.03(a).
"Letter of Credit Commitment" means, with respect to the Issuing Bank at
any time, the amount set forth opposite the Issuing Bank's name on Schedule I
hereto under the caption "Letter of Credit Commitment" or, if the Issuing Bank
has entered into an Assignment and Acceptance, set forth for the Issuing Bank in
the Register maintained by the Administrative Agent pursuant to Section 8.07(d)
as the Issuing Bank's "Letter of Credit Commitment", as such amount may be
reduced at or prior to such time pursuant to Section 2.05.
"Letter of Credit Facility" means, at any time, an amount equal to the
amount of the Issuing Bank's Letter of Credit Commitment at such time, as such
amount may be reduced at or prior to such time pursuant to Section 2.05.
"Leverage Ratio" means, for any Rolling Period, the ratio of (a) Funded
Debt of the Borrower and its Subsidiaries (other than contingent obligations of
the type described in clause (f) or (h) in the definition of "Debt") as of the
last day of any Rolling Period to (b) Consolidated EBITDA of the Borrower and
its Subsidiaries for such Rolling Period, provided that if any Investment
pursuant to Section 5.02(e)(ii)(A) and (B) shall have occurred, such
Consolidated EBITDA shall include the Pro Forma EBITDA of or attributable to
such Investment, with respect to such Rolling Period.
"Lien" means any lien, security interest or other charge or encumbrance of
any kind, or any other type of preferential arrangement, including, without
limitation, the lien or retained security title of a conditional vendor and any
easement, right of way or other encumbrance on title to real property.
21
"Loan Documents" means (a) for purposes of this Agreement and the Notes, if
any, and any amendment, supplement or modification hereof or thereof, (i) this
Agreement, (ii) the Notes, if any, (iii) the Collateral Documents, (iv) each
Letter of Credit Agreement, (v) the Subsidiary Guaranty, (vi) any other
agreement, document or instrument issued pursuant to or in connection with any
of the foregoing and (vii) the undertaking referred to in Section 3.01(d) and
(b) for purposes of the Collateral Documents, (i) this Agreement, (ii) the
Notes, if any, (iii) the Collateral Documents, (iv) each Letter of Credit
Agreement, (v) the Subsidiary Guaranty, (vi) each Bank Hedge Agreement, (vii)
each agreement entered into between the any Loan Party and the Administrative
Agent or the Issuing Bank with respect to the payment of fees or other amounts
relating to the Facilities, (viii) any other agreement, document or instrument
issued pursuant to or in connection with any of the foregoing and, in each case
as amended, amended and restated, supplemented or otherwise modified from time
to time and (ix) the undertaking referred to in Section 3.01(d).
"Loan Parties" means the Borrower and the Subsidiary Guarantors.
"Loan Value" means an amount equal to the sum of the percentage of the
value of each item of Eligible Collateral of up to the following amounts:
(a) with respect to Eligible Inventory (other than Eligible Canadian
Inventory), up to 50% of the value of such Inventory;
(b) with respect to Eligible Canadian Inventory, up to 50% of the U.S.
Dollar Equivalent of the value of such Inventory;
(c) with respect to Eligible Receivables (other than Eligible Canadian
Receivables), up to 80% of the value of such Receivables; and
(d) with respect to Eligible Canadian Receivables, up to 80% of the
U.S. Dollar Equivalent of the value of such Receivables;
provided, however, that the Administrative Agent may, in its reasonable
discretion based on an analysis of changes in the operations of the Borrower and
its wholly owned U.S. Subsidiaries and Canadian Subsidiaries or credit and
collection experience arising after the date hereof that may dilute the value of
Eligible Collateral, revise from time to time the percentage of the value of any
individual item of Eligible Collateral that shall be used in determining Loan
Value; provided further that any increase in such percentage shall require the
approval of the Required Lenders; provided further that the Loan Value of the
sum of the Eligible Canadian Inventory and the Eligible Canadian Receivables
shall not exceed the amount owing from any Canadian Subsidiary to the Borrower
under any intercompany note to the extent permitted pursuant to Section
5.02(b)(xiii) at such time.
"Margin Stock" has the meaning specified in Regulation U and/or
Regulation G.
"Material Adverse Change" means any material adverse change in the
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower or the Loan Parties and their
Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower or the Loan
22
Parties and their Subsidiaries taken as a whole, (b) the rights and remedies of
the Administrative Agent or any Lender Party under any Loan Document or Related
Document or (c) the ability of the Borrower or the Loan Parties and their
Subsidiaries taken as a whole to perform their Obligations under any Loan
Document or Related Document to which they are or are to become parties.
"MEDIQ" has the meaning specified in the Preliminary Statements.
"Merger" has the meaning specified in the Preliminary Statements.
"Merger Agreement" has the meaning specified in the Preliminary Statements.
"Mortgage" has the meaning specified in Section 3.01(k)(viii).
"MQ Acquisition" has the meaning specified in the recital of parties to
this Agreement.
"Multiemployer Plan" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which any Loan Party or any ERISA Affiliate is making or
accruing an obligation to make contributions, or has within any of the preceding
five plan years made or accrued an obligation to make contributions.
"Multiple Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any Loan
Party or any ERISA Affiliate and at least one Person other than the Loan Parties
and the ERISA Affiliates or (b) was so maintained and in respect of which any
Loan Party or any ERISA Affiliate could have liability under Section 4064 or
4069 of ERISA in the event such plan has been or were to be terminated.
"NationsBank" has the meaning specified in the recital of parties to this
Agreement.
"Net Cash Proceeds" means, with respect to any sale, lease, transfer or
other disposition of any asset other than in the ordinary course of business or
the sale or issuance of any Debt or capital stock or other ownership or profit
interest (including, without limitation, any capital contribution), any
securities convertible into or exchangeable for capital stock or other ownership
or profit interest or any warrants, rights, options or other securities to
acquire capital stock or other ownership or profit interest by any Person, or
any Extraordinary Receipt received by or paid to or for the account of any
Person, the aggregate amount of cash received from time to time (whether as
initial consideration or through payment or disposition of deferred
consideration) by or on behalf of such Person in connection with such
transaction (excluding, without limitation, any cash received in respect of any
Obligations under Capitalized Leases or any Obligations secured by purchase
money Liens included in clause (j) of the definition of "Excess Cash Flow"),
after deducting therefrom only (without duplication) (a) reasonable and
customary brokerage commissions, underwriting fees and discounts, legal fees,
finder's fees and other similar fees and commissions, (b) the amount of taxes
payable in connection with or as a result of such transaction and (c) the amount
of any Debt secured by a Lien on such asset that, by the terms of the agreement
or instrument governing such transaction, is required to be repaid upon such
disposition, in each case to the extent, but only to the extent, that the
amounts so deducted are properly attributable to such transaction or to the
asset that is the subject thereof and are, in the case of clauses (a) and (c),
at the time of receipt of such cash or when otherwise required by the terms of
the particular arrangement or entered into in connection therewith, actually
paid to a Person that is not an Affiliate of such Person or any Loan Party or
any Affiliate of any Loan Party
23
and, in the case of clause (b), on the earlier of the dates on which the tax
return covering such taxes is filed or required to be filed, provided, however,
that in the case of taxes that are deductible under clause (b) but for the fact
that at the time of receipt of such cash, such taxes have not been actually paid
or are not then payable, such Person may deduct an amount (the "Reserved
Amount") equal to the amount reserved in accordance with GAAP as a reasonable
estimate for such taxes, other than taxes for which such Person is indemnified,
provided further, however, that at the time such taxes are paid, an amount equal
to the amount, if any, by which the Reserved Amount exceeds the amount deducted
pursuant to clause (b) above is greater than the amount actually so paid, the
amount of such excess shall constitute "Net Cash Proceeds."
"Note" means a Term Note, an Acquisition Note or a Revolving Credit Note,
in each case to the extent required to be issued pursuant to Section 2.16.
"Notice of Borrowing" has the meaning specified in Section 2.02(a).
"Notice of Issuance" has the meaning specified in Section 2.03(a).
"NPL" means the National Priorities List under CERCLA.
"NutraMax" means NutraMax Products, Inc., a Delaware corporation.
"NutraMax Agreement" means the Stock Purchase Agreement dated as of
September 18, 1996 among the Company, MEDIQ Investment Services, Inc. and
NutraMax.
"NutraMax Letter of Credit" means the letter of credit dated December 30,
1996 and issued by BankBoston N.A. pursuant to the NutraMax Agreement.
"NutraMax Note" means the promissory note issued by NutraMax to MEDIQ
Investment Services, Inc. pursuant to the NutraMax Agreement.
"Obligation" means, with respect to any Person, any payment, performance or
other obligation of such Person of any kind, including, without limitation, any
liability of such Person on any claim, whether or not the right of any creditor
to payment in respect of such claim is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, disputed, undisputed, legal,
equitable, secured or unsecured, and whether or not such claim is discharged,
stayed or otherwise affected by any proceeding referred to in Section 6.01(f).
Without limiting the generality of the foregoing, the Obligations of any Loan
Party under the Loan Documents include (a) the obligation to pay principal,
interest, Letter of Credit commissions, charges, expenses, fees, attorneys' fees
and disbursements, indemnities and other amounts payable by such Loan Party
under any Loan Document, (b) the obligation of such Loan Party to reimburse any
amount in respect of any of the foregoing that any Lender Party, in its sole
discretion, may elect to pay or advance on behalf of such Loan Party and (c) the
obligation to pay the Administrative Agent pursuant to Section 2.08(c).
"OECD" means the Organization for Economic Cooperation and Development.
"Open Year" has the meaning specified in Section 4.01(aa).
"Other Taxes" has the meaning specified in Section 2.12(b).
24
"PBGC" means the Pension Benefit Guaranty Corporation.
"Payment Commitment Date" has the meaning specified in Section
2.06(b)(vii).
"Permitted Encumbrances" has the meaning specified in the Mortgage.
"Permitted Liens" means such of the following as to which no enforcement,
collection, execution, levy or foreclosure proceeding shall have been commenced:
(a) Liens for taxes, assessments and governmental charges or levies to the
extent not required to be paid under Section 5.01(b) hereof; (b) Liens imposed
by law, such as materialmen's, mechanics', carriers', workmen's and repairmen's
Liens and other similar Liens arising in the ordinary course of business
securing obligations that (i) are not overdue for a period of more than 30 days
and (ii) either individually or when aggregated with all other Permitted Liens
outstanding on any date of determination, do not materially affect the use or
value of the property to which they relate; (c) pledges or deposits to secure
obligations under workers' compensation laws or similar legislation or to secure
public or statutory obligations; and (d) easements, rights of way and other
encumbrances (other than mortgages) on title to real property that do not render
title to the property encumbered thereby unmarketable or materially adversely
affect the use of such property for its present purposes.
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
"Pledged Debt" has the meaning specified in Section 1(a)(ii) of the
Security Agreement.
"Pledged Shares" has the meaning specified in Section 1(a)(i) of the
Security Agreement.
"Preferred Stock" means, with respect to any corporation, capital stock
issued by such corporation that is entitled to a preference or priority over any
other capital stock issued by such corporation upon any distribution of such
corporation's assets, whether by dividend or upon liquidation.
"Prepayment Amount" has the meaning specified in Section 5.03(a).
"Prepayment Date" has the meaning specified in Section 5.03(a).
"Prepayment Notice" has the meaning specified in Section 5.03(a).
"Prior Fiscal Year" has the meaning specified in Section 5.04(e).
"Pro Forma EBITDA" means, for any period, the sum of (i) EBITDA, (ii) any
adjustments certified by the chief financial officer of the Borrower that would,
in the reasonable determination of the Borrower, satisfy the requirements of
Rule 11-02(a) of Regulation S-X, as if included in a registration statement
filed with the Securities and Exchange Commission and (iii) any other operating
expense reductions reasonably expected to result from any acquisition of stock
or assets of a related business, if such expected reductions are (1) set forth
in reasonable detail in a plan approved by and set forth in
25
resolutions adopted by the Board of Directors of the Borrower, and (2) limited
to operating expenses specified in such plan (and, if any reductions are set
forth in a range, the lowest amount of such range) that would otherwise have
resulted in the payment of cash within twelve months after the date of
consummation of such transaction, net of any operating expenses (other than
extraordinary items, non-recurring or temporary charges and other similar
one-time expenses) reasonably expected to be incurred to implement such plan
(including, without limitation, personnel, occupancy and transportation
expenses), and that are to be paid in cash during such twelve-month period,
certified by the chief financial officer of the Borrower.
"Pro Rata Share" of any amount means, with respect to any Revolving Credit
Lender at any time, the product of such amount times a fraction the numerator of
which is the amount of such Lender's Revolving Credit Commitment at such time
(or if the Commitments shall have been terminated, such Lender's Revolving
Credit Commitment as in effect immediately prior to such termination) and the
denominator of which is the Revolving Credit Facility at such time (or if the
Commitments shall have been terminated, the Revolving Credit Facility as in
effect immediately prior to such termination).
"Recapitalization" has the meaning specified in the Preliminary Statements.
"Recapture Percentage" means, for purposes of Sections 2.06(b), with
respect to any Fiscal Year of the Borrower and its Subsidiaries, 75% or, if the
Leverage Ratio as at September 30 in any such Fiscal Year is less than 5.0 to
1.0 (but greater than 0.0), 50%.
"Receivables" means all Receivables referred to in Section 1(c) of the
Security Agreement.
"Redeemable" means, with respect to any capital stock or other ownership or
profit interest, Debt or other right or Obligation, any such right or Obligation
that (a) the issuer has undertaken to redeem at a fixed or determinable date or
dates prior to the Termination Date, whether by operation of a sinking fund or
otherwise, or upon the occurrence of a condition not solely within the control
of the issuer or (b) is redeemable at the option of the holder.
"Reduction Amount" has the meaning specified in Section 2.06(b)(v).
"Refinancing Debt" means the Debt identified as such on Schedule 2.14, in
an aggregate amount not to exceed the amount of such Debt set forth therein.
"Register" has the meaning specified in Section 8.07(d).
"Regulation S-X" means Regulation S-X of the Securities Act of 1933, as
amended.
"Regulation G" means Regulation G of the Board of Governors of the Federal
Reserve System, in effect from time to time.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System, as in effect from time to time.
26
"Related Documents" means the Merger Agreement, the other documents
effecting the Recapitalization and the Merger, the Rollover Agreement, the
Stockholder Agreements, the Subordinated Debt Documents, the BRS Management
Agreement and the Stock Option Agreements.
"Required Lenders" means at any time Lenders owed or holding at least a
majority of the sum of (a) the aggregate principal amount of the Advances
outstanding at such time, (b) the aggregate Available Amount of all Letters of
Credit outstanding at such time, (c) the aggregate unused Commitments under the
Term and Acquisition Facilities at such time and (d) the aggregate Unused
Revolving Credit Commitments at such time; provided, however, that if any Lender
shall be a Defaulting Lender at such time, there shall be excluded from the
determination of Required Lenders at such time (A) the aggregate principal
amount of the Advances owing to such Lender (in its capacity as a Lender) and
outstanding at such time, (B) such Lender's Pro Rata Share of the aggregate
Available Amount of all Letters of Credit issued by such Lender and outstanding
at such time, (C) the Unused Revolving Credit Commitment of such Lender at such
time and (D) the unused Commitments under the Term and Acquisition Facilities of
such Lender at such time. For purposes of this definition, the aggregate
principal amount of Swing Line Advances owing to the Swing Line Bank and of
Letter of Credit Advances owing to the Issuing Bank and the Available Amount of
each Letter of Credit shall be considered to be owed to the Revolving Credit
Lenders ratably in accordance with their respective Revolving Credit
Commitments.
"Responsible Officer" means the President, Chief Financial Officer, or any
Senior Vice-President of the Borrower.
"Revolving Credit Advance" has the meaning specified in Section 2.01(c).
"Revolving Credit Borrowing" means a borrowing consisting of simultaneous
Revolving Credit Advances of the same Type made by the Revolving Credit Lenders.
"Revolving Credit Commitment" means, with respect to any Revolving Credit
Lender at any time, the amount set forth opposite such Lender's name on Schedule
I hereto under the caption "Revolving Credit Commitment" or, if such Lender has
entered into one or more Assignment and Acceptances, set forth for such Lender
in the Register maintained by the Administrative Agent pursuant to Section
8.07(d) as such Lender's "Revolving Credit Commitment", as such amount may be
reduced at or prior to such time pursuant to Section 2.05.
"Revolving Credit Facility" means, at any time, the aggregate amount of the
Revolving Credit Lenders' Revolving Credit Commitments at such time.
"Revolving Credit Lender" means any Lender that has a Revolving Credit
Commitment.
"Revolving Credit Note" means a promissory note of the Borrower payable to
the order of any Revolving Credit Lender, in substantially the form of Exhibit
A-3 hereto, evidencing the aggregate indebtedness of the Borrower to such Lender
resulting from the Revolving Credit Advances made by such Lender to the extent
required to be issued pursuant to Section 2.16.
"Rolled Shares" has the meaning specified in the Preliminary Statements.
27
"Rolling Period" means (a) for purposes of determining compliance with the
requirements of Sections 5.04(c) and (d) and 5.02(e)(ii)(B), (i) with respect to
any month ending on or prior to one year following the date of the Initial
Extension of Credit, the period commencing on the date of the Initial Extension
of Credit and ending on the last day of the month immediately prior to the
consecutive 12-month period following such date and (ii) with respect to any
month thereafter, the consecutive 12-month period ending on the last day of such
month and (b) for all other purposes, with respect to any month the consecutive
12-month period ending on the last day of such month.
"Rollover Agreement" means the Rollover Agreement dated as of January 14,
1998 between MQ Acquisition and certain other Persons listed therein.
"Secured Obligations" has the meaning specified in the Security Agreement.
"Secured Parties" means the Agents, the Lender Parties and the Hedge Banks.
"Security Agreement" has the meaning specified in Section 3.01(k)(vii).
"Sellers" has the meaning set forth in the Preliminary Statements.
"Senior Debt" means for any Person all Funded Debt of such Person and its
Subsidiaries other than the Subordinated Notes.
"Senior Leverage Ratio" means, for any Rolling Period, the ratio of (a)
Senior Debt (other than contingent obligations of the type described in clause
(f) or (h) in the definition of "Debt") of the Borrower and its Subsidiaries as
of the last day of such Rolling Period to (b) Consolidated EBITDA of the
Borrower and its Subsidiaries for such Rolling Period, provided that if any
Investment pursuant to Section 5.02(e)(ii)(A) and (B) shall have occurred, such
Consolidated EBITDA shall include the Pro Forma EBITDA of or attributable to
such Investment with respect to any Rolling Period.
"Senior Subordinated Notes" means the senior subordinated notes due 2008
issued by the Borrower outstanding in the original aggregate principal amount of
$190,000,000 including senior subordinated notes issued in exchange therefor
pursuant to the terms of the Registration Rights Agreement entered into by the
Borrower and MEDIQ on the date of issuance.
"Senior Subordinated Note Indenture" means the Indenture dated as of May
15, 0000 xxxxxxx xxx Xxxxxxxx xxx Xxxxxx Xxxxxx Trust Company of New York, as
trustee.
"Series A Preferred Stock" means the Series A 13% Cumulative Compounding
Preferred Stock, par value $.01 per share, of MEDIQ.
"Series B Preferred Stock" means the Series B 13.25% Cumulative Compounding
Perpetual Preferred Stock, par value $.01 per share, of MEDIQ.
"Series C Preferred Stock" means the Series C 13.50% Cumulative Compounding
Preferred Stock, par value $.01 per share, of MEDIQ.
"7.50% Note Indenture" means the Indenture dated as of July 30, 1993
between the Company and First Fidelity Bank, N.A.
28
"7.50% Notes" means the 7.50% exchangeable subordinated debentures due 2003
of the Company in an aggregate principal amount of $10,055,000 immediately after
giving effect to the Merger.
"Single Employer Plan" means a single employer plan, as defined in Section
4001(a)(15) of ERISA, that (a) is maintained for employees of any Loan Party or
any ERISA Affiliate and no Person other than the Loan Parties and the ERISA
Affiliates or (b) was so maintained and in respect of which any Loan Party or
any ERISA Affiliate could have liability under Section 4069 of ERISA in the
event such plan has been or were to be terminated.
"Solvent" and "Solvency" mean, with respect to any Person on a particular
date, that on such date (a) the fair value of the property of such Person is
greater than the total amount of liabilities, including, without limitation,
contingent liabilities, of such Person, (b) the present fair salable value of
the assets of such Person is not less than the amount that will be required to
pay the probable liability of such Person on its debts as they become absolute
and matured, (c) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person's ability to pay such debts
and liabilities as they mature and (d) such Person is not engaged in business or
a transaction, and is not about to engage in business or a transaction, for
which such Person's property would constitute an unreasonably small capital. The
amount of contingent liabilities at any time shall be computed as the amount
that, in the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
"SpectraCair" means a division of the Borrower, formerly MEDIQ PRN/HNE,
LLC, a New Jersey limited liability company acquired by the Company and the
Borrower on September 1, 1997.
"Standby Letter of Credit" means any Letter of Credit issued under the
Letter of Credit Facility, other than a Trade Letter of Credit.
"Stockholder Agreements" means the Stockholder Agreements dated as of
January 14, 1998 between MQ Acquisition and certain other Persons listed
therein.
"Stock Option Agreements" means the Stock Option Agreements dated as of
January 14, 1998 between MQ Acquisition and certain Sellers as listed therein.
"Subordinated Debt" means the Subordinated Notes and any other debt of the
Loan Parties that is subordinated to the Obligations of the Loan Parties under
the Loan Documents on, and that otherwise contains, terms and conditions
satisfactory to the Required Lenders.
"Subordinated Debt Documents" means the 7.50% Note Indenture and the 7.50%
Notes, the Senior Subordinated Note Indenture and the Senior Subordinated Notes,
the Discount Debenture Indenture and the Discount Debentures, and all other
agreements, indentures and instruments delivered in connection with the issuance
of the Subordinated Notes or pursuant to which Subordinated Debt is issued.
"Subordinated Guaranties" means each "Subsidiary Guaranty" as such term is
defined in the Senior Subordinated Note Indenture.
29
"Subordinated Notes" means the 7.50% Notes, the Senior Subordinated Notes
and the Discount Debentures.
"Subsidiary" of any Person means any corporation, partnership, joint
venture, limited liability company, trust or estate of which (or in which) more
than 50% of (a) the issued and outstanding capital stock having ordinary voting
power to elect a majority of the Board of Directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency), (b) the interest in the capital or profits of such limited
liability company, partnership or joint venture or (c) the beneficial interest
in such trust or estate, is at the time directly or indirectly owned or
controlled by such Person, by such Person and one or more of its other
Subsidiaries or by one or more of such Person's other Subsidiaries.
"Subsidiary Guarantors" means all Subsidiaries of the Borrower and each
other Subsidiary of the Borrower that shall be required to execute and deliver a
guaranty pursuant to Section 5.01(m).
"Subsidiary Guaranty" means a guaranty in substantially the form of Exhibit
F (together with each other guaranty delivered pursuant to Section 5.01(m), in
each case as amended, amended and restated, supplemented or otherwise modified
from time to time in accordance with its terms, the "Subsidiary Guaranty").
"Surviving Debt" has the meaning specified in Section 3.01(i).
"Swing Line Advance" means an advance made by (a) the Swing Line Bank
pursuant to Section 2.01(d) or 2.02(b) or (b) any Revolving Credit Lender
pursuant to Section 2.02(b).
"Swing Line Bank" means the Administrative Agent acting in its capacity as
Lender under Section 2.01(d).
"Swing Line Borrowing" means a borrowing consisting of a Swing Line Advance
made by the Swing Line Bank pursuant to Section 2.01(d) or the Revolving Credit
Lenders pursuant to Section 2.02(b).
"Swing Line Commitment" means, with respect to the Swing Line Bank at any
time, the amount set forth opposite the Swing Line Bank's name on Schedule I
hereto under the caption "Swing Line Commitment" or, if the Swing Line Bank has
entered into an Assignment and Acceptance, set forth for the Swing Line Bank in
the Register maintained by the Administrative Agent pursuant to Section 8.07(d)
as the Swing Line Bank's "Swing Line Commitment", as such amount may be reduced
at or prior to such time pursuant to Section 2.05.
"Swing Line Facility" has the meaning specified in Section 2.01(d).
"Syndication Agent" has the meaning specified in the recital of parties to
this Agreement.
"Taxes" has the meaning specified in Section 2.12(a).
"Term Advance" has the meaning specified in Section 2.01(a).
30
"Term Borrowing" means a borrowing consisting of simultaneous Term Advances
of the same Type made by the Term Lenders.
"Term Commitment" means, with respect to any Term Lender, the amount set
forth opposite such Lender's name on Schedule I hereto under the caption "Term
Commitment" or, if such Lender has entered into one or more Assignment and
Acceptances, the aggregate amount set forth for such Lender in the Register
maintained by the Administrative Agent pursuant to Section 8.07(d) as such
Lender's "Term Commitment".
"Termination Date" means (a) for purposes of the Revolving Credit Facility,
the Swing Line Facility and the Letter of Credit Facility, the earlier of (x)
May 31, 2004 and (y) the date of termination in whole of the Term Commitments,
the Swing Line Commitments, the Letter of Credit Commitments and the Revolving
Credit Commitments pursuant to Section 2.05 or 6.01 (the "Commitment Termination
Date"), and (b) for purposes of the Term Facility, the earlier of (x) June 30,
2006 and (y) the Commitment Termination Date, and (c) for purposes of the
Acquisition Facility, the earlier of (x) June 30, 2004 and (y) the Commitment
Termination Date.
"Term Facility" means, at any time, the aggregate amount of the Term
Lenders' Term Commitments at such time.
"Term Lender" means any Lender that has a Term Commitment.
"Term Note" means a promissory note of the Borrower payable to the order of
any Term Lender, in substantially the form of Exhibit A-1 hereto, evidencing the
indebtedness of the Borrower to such Lender resulting from the Term Advances
made by such Lender to the extent required to be issued pursuant to Section
2.16.
"Trade Letter of Credit" means any Letter of Credit that is issued under
the Letter of Credit Facility for the benefit of a supplier of Inventory to the
Borrower or any of its Subsidiaries to effect payment for such Inventory.
"Type" refers to the distinction between Advances bearing interest at the
Base Rate and Advances bearing interest at the Eurodollar Rate.
"Unused Revolving Credit Commitment" means, with respect to any Revolving
Credit Lender at any time, (a) such Lender's Revolving Credit Commitment at such
time minus (b) the sum of (i) the aggregate principal amount of all Revolving
Credit Advances, Swing Line Advances and Letter of Credit Advances made by such
Lender (in its capacity as a Lender) and outstanding at such time, plus (ii)
such Lender's Pro Rata Share of (A) the aggregate Available Amount of all
Letters of Credit outstanding at such time, (B) the aggregate principal amount
of all Letter of Credit Advances made by the Issuing Bank pursuant to Section
2.03(c) and outstanding at such time and (C) the aggregate principal amount of
all Swing Line Advances made by the Swing Line Bank pursuant to Section 2.01(d)
and outstanding at such time.
"U.S. Subsidiary" of any Person means a Subsidiary other than a Foreign
Subsidiary.
"Voting Stock" means capital stock issued by a corporation, or equivalent
interests in any other Person, the holders of which are ordinarily, in the
absence of contingencies, entitled to vote for
31
the election of directors (or persons performing similar functions) of such
Person, even if the right so to vote has been suspended by the happening of such
a contingency.
"Welfare Plan" means a welfare plan, as defined in Section 3(1) of ERISA,
that is maintained for employees of any Loan Party or in respect of which any
Loan Party could have a liability.
"Withdrawal Liability" has the meaning specified in Part I of Subtitle E of
Title IV of ERISA.
"Year 2000 Compliant" means the ability of the software and other
processing capabilities of the Borrower and its Subsidiaries, used to operate
the business (but excluding any rental equipment not manufactured by the
Borrower), correctly to interpret and manipulate all data, in whatever form,
including printed form, screen displays, financial records, calculations and
loan-related data, so as to avoid errors in processing that may otherwise occur
because of the inability of the software or other processing capabilities to
recognize accurately the year 2000 or subsequent dates.
SECTION 1.02. Computation of Time Periods; Other Definitional Provisions.
In this Agreement and the other Loan Documents in the computation of periods of
time from a specified date to a later specified date, the word "from" means
"from and including" and the words "to" and "until" each mean "to but
excluding". References in the Loan Documents to any agreement or contract "as
amended" shall mean and be a reference to such agreement or contract as amended,
amended and restated, supplemented or otherwise modified from time to time in
accordance with its terms.
SECTION 1.03. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles consistent with those applied in the preparation of the
financial statements referred to in Section 4.01(f) ("GAAP").
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
SECTION 2.01. The Advances and Letters of Credit. (a) The Term Advances.
Each Term Lender severally agrees, on the terms and conditions hereinafter set
forth, to make up to two advances (each, a "Term Advance") to the Borrower on
any Business Day during the period from the date hereof until July 30, 1998 in
an amount for either such Advance not to exceed such Lender's unused Term
Commitment at such time. Each Term Borrowing made on the date of the Initial
Extension of Credit shall be in an aggregate amount of $100,000,000 and each
Term Borrowing made in connection with the CH Acquisition shall be in an
aggregate amount not to exceed $50,000,000. Each Term Borrowing shall consist of
Term Advances made simultaneously by the Term Lenders ratably according to their
Term Commitments. Amounts borrowed under this Section 2.01(a) and repaid or
prepaid may not be reborrowed.
(b) The Acquisition Advances. Each Acquisition Lender severally agrees, on
the terms and conditions hereinafter set forth, to make advances (each, an
"Acquisition Advance") to the Borrower from time to time on any Business Day
during the period from the date hereof until the Conversion Date in an amount
for each such Advance not to exceed such Lender's unused Acquisition Commitment
at such time. Each Acquisition Borrowing shall be in an aggregate amount of
$1,000,000 or an integral multiple of $100,000 in excess thereof and shall
consist of Acquisition Advances made simultaneously by the Acquisition Lenders
32
ratably according to their Acquisition Commitments. Amounts borrowed under this
Section 2.01(b) and repaid or prepaid may not be reborrowed.
(c) The Revolving Credit Advances. Each Revolving Credit Lender severally
agrees, on the terms and conditions hereinafter set forth, to make advances
(each, a "Revolving Credit Advance") to the Borrower from time to time on any
Business Day during the period from the date hereof until the Termination Date
in an amount for each such Advance not to exceed such Lender's Unused Revolving
Credit Commitment at such time. Each Revolving Credit Borrowing shall be in an
aggregate amount of $1,000,000 or an integral multiple of $500,000 in excess
thereof (other than a Borrowing the proceeds of which shall be used solely to
repay or prepay in full outstanding Letter of Credit Advances made by the
Issuing Bank) and shall consist of Revolving Credit Advances made simultaneously
by the Revolving Credit Lenders ratably according to their Revolving Credit
Commitments. Within the limits of each Revolving Credit Lender's Unused
Revolving Credit Commitment in effect from time to time, the Borrower may borrow
under this Section 2.01(c), prepay pursuant to Section 2.06(a) and reborrow
under this Section 2.01(c).
(d) The Swing Line Advances. The Borrower may request the Swing Line Bank
to make, and the Swing Line Bank shall make, on the terms and conditions
hereinafter set forth, Swing Line Advances to the Borrower from time to time on
any Business Day during the period from the date hereof until the Termination
Date (i) in an aggregate amount not to exceed at any time outstanding $2,500,000
(the "Swing Line Facility") and (ii) in an amount for each such Swing Line
Borrowing not to exceed the aggregate of the Unused Revolving Credit Commitments
of the Revolving Credit Lenders at such time. No Swing Line Advance shall be
used for the purpose of funding the payment of principal of any other Swing Line
Advance. Each Swing Line Borrowing shall be in an amount of $250,000 or an
integral multiple of $100,000 in excess thereof and shall be made as a Base Rate
Advance. Within the limits of the Swing Line Facility and within the limits
referred to in clause (ii) above, so long as the Swing Line Bank makes Swing
Line Advances, the Borrower may borrow under this Section 2.01(d), repay
pursuant to Section 2.04(d) or prepay pursuant to Section 2.06(a) and reborrow
under this Section 2.01(d).
(e) Letters of Credit. The Issuing Bank agrees, on the terms and conditions
hereinafter set forth, to issue letters of credit (the "Letters of Credit") for
the account of the Borrower from time to time on any Business Day during the
period from the date hereof until 5 days before the Termination Date (i) in an
aggregate Available Amount for all Letters of Credit not to exceed at any time
the Issuing Bank's Letter of Credit Commitment at such time and (ii) in an
Available Amount for each such Letter of Credit not to exceed the lesser of (x)
the Letter of Credit Facility at such time and (y) the Unused Revolving Credit
Commitments of the Revolving Credit Lenders at such time. No Letter of Credit
shall have an expiration date (including all rights of the Borrower or the
beneficiary to require renewal) later than the earlier of 5 days before the
Termination Date and (A) in the case of a Standby Letter of Credit, one year
after the date of issuance thereof and (B) in the case of a Trade Letter of
Credit, 90 days after the date of issuance thereof. Within the limits of the
Letter of Credit Facility, and subject to the limits referred to above, the
Borrower may request the issuance of Letters of Credit under this Section
2.01(e), repay any Letter of Credit Advances resulting from drawings thereunder
pursuant to Section 2.03(c) and request the issuance of additional Letters of
Credit under this Section 2.01(e).
SECTION 2.02. Making the Advances. (a) Except as otherwise provided in
Section 2.03, each Borrowing shall be made on notice, given not later than 11:00
A.M. (New York City time) on the third Business Day prior to the date of the
proposed Borrowing in the case of a Borrowing consisting of Eurodollar Rate
Advances, or the first Business Day prior to the date of the proposed Borrowing
in the case of a Borrowing consisting of Base Rate Advances, by the Borrower to
the Administrative Agent, which shall give
33
to each Appropriate Lender prompt notice thereof by telex or telecopier. Each
such notice of a Borrowing (a "Notice of Borrowing") shall be in writing, or
telex or telecopier, in substantially the form of Exhibit B hereto, specifying
therein the requested (i) date of such Borrowing, (ii) Facility under which such
Borrowing is to be made, (iii) Type of Advances comprising such Borrowing, (iv)
aggregate amount of such Borrowing and (v) in the case of a Borrowing consisting
of Eurodollar Rate Advances, initial Interest Period for each such Advance. Each
Appropriate Lender shall, before 11:00 A.M. (New York City time) on the date of
such Borrowing, make available for the account of its Applicable Lending Office
to the Administrative Agent at the Administrative Agent's Account, in same day
funds, such Lender's ratable portion of such Borrowing in accordance with the
respective Commitments under the applicable Facility of such Lender and the
other Appropriate Lenders. After the Administrative Agent's receipt of such
funds and upon fulfillment of the applicable conditions set forth in Article
III, the Administrative Agent will make such funds available to the Borrower by
crediting the Borrower's Account; provided, however, that, in the case of any
Revolving Credit Borrowing, the Administrative Agent shall first make a portion
of such funds equal to the aggregate principal amount of any Swing Line Advances
and Letter of Credit Advances made by the Swing Line Bank or the Issuing Bank,
as the case may be, and by any other Revolving Credit Lender and outstanding on
the date of such Revolving Credit Borrowing, plus interest accrued and unpaid
thereon to and as of such date, available to the Swing Line Bank and the Issuing
Bank and such other Revolving Credit Lenders for repayment of such Swing Line
Advances and Letter of Credit Advances.
(b) Each Swing Line Borrowing shall be made on notice, given not later than
11:00 A.M. (New York City time) on the date of the proposed Swing Line
Borrowing, by the Borrower to the Swing Line Bank and the Administrative Agent.
Each such notice, which shall be delivered by a Notice of Borrowing, shall be in
writing, by telex or telecopier, in substantially the form of Exhibit B hereto,
specifying therein the requested (i) date of such Borrowing (which shall be a
Business Day), (ii) amount of such Borrowing and (iii) maturity of such
Borrowing (which maturity shall be no later than the seventh day after the
requested date of such Borrowing). The Swing Line Bank will make the amount
thereof available to the Administrative Agent at the Administrative Agent's
Account, in same day funds. After the Administrative Agent's receipt of such
funds and upon fulfillment of the applicable conditions set forth in Article
III, the Administrative Agent will make such funds available to the Borrower by
crediting the Borrower's Account. Upon written demand by the Swing Line Bank
with a copy of such demand to the Administrative Agent, each other Revolving
Credit Lender shall purchase from the Swing Line Bank, and the Swing Line Bank
shall sell and assign to each such other Revolving Credit Lender, such other
Lender's Pro Rata Share of such outstanding Swing Line Advance as of the date of
such demand, by making available for the account of its Applicable Lending
Office to the Administrative Agent for the account of the Swing Line Bank, by
deposit to the Administrative Agent's Account, in same day funds, an amount
equal to the portion of the outstanding principal amount of such Swing Line
Advance to be purchased by such Lender. The Borrower hereby agrees to each such
sale and assignment. Each Revolving Credit Lender agrees to purchase its Pro
Rata Share of an outstanding Swing Line Advance on (i) the Business Day on which
demand therefor is made by the Swing Line Bank, provided that notice of such
demand is given not later than 11:00 A.M. (New York City time) on such Business
Day or (ii) the first Business Day next succeeding such demand if notice of such
demand is given after such time. Upon any such assignment by the Swing Line Bank
to any other Revolving Credit Lender of a portion of a Swing Line Advance, the
Swing Line Bank represents and warrants to such other Lender that the Swing Line
Bank is the legal and beneficial owner of such interest being assigned by it,
but makes no other representation or warranty and assumes no responsibility with
respect to such Swing Line Advance, the Loan Documents or any Loan Party. If and
to the extent that any Revolving Credit Lender shall not have so made the amount
of such Swing Line Advance available to the Administrative Agent, such Revolving
Credit Lender agrees to pay to the Administrative Agent forthwith on demand such
amount together with interest thereon, for each day from the date of demand by
the Swing Line Bank until the date such amount is paid to the Administrative
34
Agent, at the Federal Funds Rate. If such Lender shall pay to the Administrative
Agent such amount for the account of the Swing Line Bank on any Business Day,
such amount so paid in respect of principal shall constitute a Swing Line
Advance made by such Lender on such Business Day for purposes of this Agreement,
and the outstanding principal amount of the Swing Line Advance made by the Swing
Line Bank shall be reduced by such amount on such Business Day.
(c) Anything in subsection (a) above to the contrary notwithstanding, (i)
the Borrower may not select Eurodollar Rate Advances for the initial Borrowing
hereunder and for the period from the date of such initial Borrowing to the
earlier of (x) three months from such date and (y) the completion of syndication
of the Facilities (as shall be specified by the Agents in a written notice to
the Borrower) or for any Borrowing if the aggregate amount of such Borrowing is
less than $5,000,000 or if the obligation of the Appropriate Lenders to make
Eurodollar Rate Advances shall then be suspended pursuant to Section 2.09 or
2.10 and (ii) with respect to Borrowings consisting of Eurodollar Rate Advances,
the Term Advances, the Acquisition Advances and the Revolving Credit Advances
may not be outstanding as part of more than six separate Borrowings in the
aggregate.
(d) Each Notice of Borrowing shall be irrevocable and binding on the
Borrower. In the case of any Borrowing that the related Notice of Borrowing
specifies is to be comprised of Eurodollar Rate Advances, the Borrower shall
indemnify each Appropriate Lender against any loss, cost or expense incurred by
such Lender as a result of any failure to fulfill on or before the date
specified in such Notice of Borrowing for such Borrowing the applicable
conditions set forth in Article III, including, without limitation, any loss
(including loss of anticipated profits), cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Lender to fund the Advance to be made by such Lender as part of such Borrowing
when such Advance, as a result of such failure, is not made on such date.
(e) Unless the Administrative Agent shall have received notice from an
Appropriate Lender prior to the date of any Borrowing under a Facility under
which such Lender has a Commitment that such Lender will not make available to
the Administrative Agent such Lender's ratable portion of such Borrowing, the
Administrative Agent may assume that such Lender has made such portion available
to the Administrative Agent on the date of such Borrowing in accordance with
subsection (a) or (b) of this Section 2.02 and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Lender shall not have so
made such ratable portion available to the Administrative Agent, such Lender and
the Borrower severally agree to repay or pay to the Administrative Agent
forthwith on demand such corresponding amount and to pay interest thereon, for
each day from the date such amount is made available to the Borrower until the
date such amount is repaid or paid to the Administrative Agent, at (i) in the
case of the Borrower, the interest rate applicable at such time under Section
2.07 to Advances comprising such Borrowing and (ii) in the case of such Lender,
the Federal Funds Rate. If such Lender shall pay to the Administrative Agent
such corresponding amount, such amount so paid in respect of principal shall
constitute such Lender's Advance as part of such Borrowing for all purposes.
(f) The failure of any Lender to make the Advance to be made by it as part
of any Borrowing shall not relieve any other Lender of its obligation, if any,
hereunder to make its Advance on the date of such Borrowing, but no Lender shall
be responsible for the failure of any other Lender to make the Advance to be
made by such other Lender on the date of any Borrowing.
SECTION 2.03. Issuance of and Drawings and Reimbursement Under Letters of
Credit. (a) Request for Issuance. Each Letter of Credit shall be issued upon
notice, given not later than 11:00 A.M.
35
(New York City time) on the third Business Day prior to the date of the proposed
issuance of such Letter of Credit, by the Borrower to the Issuing Bank, which
shall give to the Administrative Agent prompt notice thereof by telex or
telecopier. Each such notice of issuance of a Letter of Credit (a "Notice of
Issuance") shall be by telex or telecopier, specifying therein the requested (A)
date of such issuance (which shall be a Business Day), (B) Available Amount of
such Letter of Credit, (C) expiration date of such Letter of Credit, (D) name
and address of the beneficiary of such Letter of Credit and (E) form of such
Letter of Credit, and shall be accompanied by such application and agreement for
letter of credit as the Issuing Bank may specify to the Borrower for use in
connection with such requested Letter of Credit (a "Letter of Credit
Agreement"). If the requested form of such Letter of Credit is acceptable to the
Issuing Bank in its sole discretion, the Issuing Bank will, upon fulfillment of
the applicable conditions set forth in Article III, make such Letter of Credit
available to the Borrower at its office referred to in Section 8.02 or as
otherwise agreed with the Borrower in connection with such issuance. In the
event and to the extent that the provisions of any Letter of Credit Agreement
shall conflict with this Agreement, the provisions of this Agreement shall
govern. The letter of credit issued by BNP for the account of the Borrower under
a predecessor Credit Agreement shall be deemed to constitute a Letter of Credit
issued hereunder.
(b) Letter of Credit Reports. The Issuing Bank shall furnish
(A) to the Administrative Agent on the first Business Day of each week a written
report summarizing issuance and expiration dates of Letters of Credit issued
during the previous week and drawings during such week under all Letters of
Credit, (B) to each Revolving Credit Lender on the first Business Day of each
calendar quarter a written report summarizing issuance and expiration dates of
Letters of Credit issued during the preceding calendar quarter and drawings
during such calendar quarter under all Letters of Credit and (C) to the
Administrative Agent and each Revolving Credit Lender on the first Business Day
of each calendar quarter a written report setting forth the average daily
aggregate Available Amount during the preceding calendar quarter of all Letters
of Credit.
(c) Drawing and Reimbursement. The payment by the Issuing Bank
of a draft drawn under any Letter of Credit shall constitute for all purposes of
this Agreement the making by the Issuing Bank of a Letter of Credit Advance,
which shall be a Base Rate Advance, in the amount of such draft. In the event of
any drawing under a Letter of Credit, the Issuing Bank shall promptly notify the
Administrative Agent, and the Administrative Agent shall promptly notify each
Revolving Credit Lender and each Revolving Credit Lender shall purchase from the
Issuing Bank, and the Issuing Bank shall sell and assign to each such Revolving
Credit Lender, such Lender's Pro Rata Share of such outstanding Letter of Credit
Advance as of the date of such purchase, by making available for the account of
its Applicable Lending Office to the Administrative Agent for the account of the
Issuing Bank, by deposit to the Administrative Agent's Account, in same day
funds, an amount equal to the portion of the outstanding principal amount of
such Letter of Credit Advance to be purchased by such Lender. Promptly after
receipt thereof, the Administrative Agent shall transfer such funds to the
Issuing Bank. The Borrower hereby agrees to each such sale and assignment. Each
Revolving Credit Lender agrees to purchase its Pro Rata Share of an outstanding
Letter of Credit Advance on (i) the Business Day on which notice of the drawing
under the related Letter of Credit is given by the Issuing Bank, provided such
notice is given not later than 1:00 P.M. (New York City time) on such Business
Day or (ii) the first Business Day next succeeding such demand if such notice is
given after such time. Upon any such assignment by the Issuing Bank to any other
Revolving Credit Lender of a portion of a Letter of Credit Advance, the Issuing
Bank represents and warrants to such other Lender that the Issuing Bank is the
legal and beneficial owner of such interest being assigned by it, free and clear
of any Liens, but makes no other representation or warranty and assumes no
responsibility with respect to such Letter of Credit Advance, the Loan Documents
or any Loan Party. If and to the extent that any Revolving Credit Lender shall
not have so made the amount of such Letter of Credit Advance available to the
Administrative Agent, such Revolving
36
Credit Lender agrees to pay to the Administrative Agent forthwith on demand such
amount together with interest thereon, for each day from the date of demand by
the Issuing Bank until the date such amount is paid to the Administrative Agent,
at the Federal Funds Rate for its account or the account of the Issuing Bank, as
applicable. If such Lender shall pay to the Administrative Agent such amount for
the account of the Issuing Bank on any Business Day, such amount so paid in
respect of principal shall constitute a Letter of Credit Advance made by such
Lender on such Business Day for purposes of this Agreement, and the outstanding
principal amount of the Letter of Credit Advance made by the Issuing Bank shall
be reduced by such amount on such Business Day.
(d) Failure to Make Letter of Credit Advances. The failure of
any Lender to make the Letter of Credit Advance to be made by it on the date
specified in Section 2.03(c) shall not relieve any other Lender of its
obligation hereunder to make its Letter of Credit Advance on such date, but no
Lender shall be responsible for the failure of any other Lender to make the
Letter of Credit Advance to be made by such other Lender on such date.
SECTION 2.04. Repayment of Advances. (a) Term Advances. The
Borrower shall repay to the Administrative Agent for the ratable account of the
Term Lenders the aggregate outstanding principal amount of the Term Advances on
the following dates in the amounts indicated, determined as a percentage of the
aggregate amount of Term Advances outstanding on September 30, 1999 (which
amount shall be reduced as a result of the application of prepayments in
accordance with the order of priority set forth in Section 2.06):
Date Amount
---- ------
September 30, 1999 0.25%
December 31, 1999 0.25%
March 31, 2000 0.25%
June 30, 2000 0.25%
September 30, 2000 0.25%
December 31, 2000 0.25%
March 31, 2001 0.25%
June 30, 2001 0.25%
September 30, 2001 0.25%
December 31, 2001 0.25%
March 31, 2002 0.25%
June 30, 2002 0.25%
September 30, 2002 0.25%
December 31, 2002 0.25%
March 31, 2003 0.25%
June 30, 2003 0.25%
September 30, 2003 0.25%
December 31, 2003 0.25%
March 31, 2004 0.25%
37
Date Amount
---- ------
June 30, 2004 0.25%
September 30, 2004 10.00%
December 31, 2004 10.00%
March 31, 2005 10.00%
June 30, 2005 10.00%
September 30, 2005 13.75%
December 31, 2005 13.75%
March 31, 2006 13.75%
June 30, 2006 13.75%
provided, however, that the final principal installment of the Term Facility
shall in any event and in each case be in an amount equal to the aggregate
principal amount of the Term Advances then outstanding.
(b) Acquisition Advances. The Borrower shall repay to the Administrative
Agent for the ratable account of the Acquisition Lenders the aggregate
outstanding principal amount of the Acquisition Advances on the following dates
in the amounts indicated, determined as a percentage of the aggregate amount of
Acquisition Advances outstanding on the Conversion Date (after giving effect to
any prepayments required by Section 2.06(b)(i) or (ii) and which amount shall be
reduced as a result of the application of further prepayments in accordance with
the order of priority set forth in the applicable paragraph of Section 2.06):
Date Amount
---- ------
March 31, 2000 3.75%
June 30, 2000 3.75%
September 30, 2000 3.75%
December 31, 2000 3.75%
March 31, 2001 3.75%
June 30, 2001 3.75%
September 30, 2001 5.00%
December 31, 2001 5.00%
March 31, 2002 5.00%
June 30, 2002 5.00%
September 30, 2002 5.625%
December 31, 2002 5.625%
March 31, 2003 5.625%
June 30, 2003 5.625%
September 30, 2003 8.750%
December 31, 2003 8.750%
March 31, 2004 8.750%
June 30, 2004 8.750%
38
provided, however, that the final principal installment of the Acquisition
Facility shall in any event be in an amount equal to the aggregate principal
amount of the Acquisition Advances then outstanding.
(c) Revolving Credit Advances. The Borrower shall repay to the
Administrative Agent for the ratable account of the Revolving Credit Lenders on
the Termination Date the aggregate outstanding principal amount of the Revolving
Credit Advances then outstanding.
(d) Swing Line Advances. The Borrower shall repay to the Administrative
Agent for the account of the Swing Line Bank and each other Revolving Credit
Lender that has made a Swing Line Advance the outstanding principal amount of
each Swing Line Advance made by each of them on the earlier of the maturity date
specified in the applicable Notice of Swing Line Borrowing (which maturity shall
be no later than the seventh day after the requested date of such Borrowing) and
the Termination Date.
(e) Letter of Credit Advances. (i) The Borrower shall repay to the
Administrative Agent for the account of the Issuing Bank and each other
Revolving Credit Lender that has made a Letter of Credit Advance on the earlier
of the Termination Date and one Business Day after demand the outstanding
principal amount of each Letter of Credit Advance made by each of them.
(ii) The Obligations of the Borrower under this Agreement, any Letter
of Credit Agreement and any other agreement or instrument relating to any
Letter of Credit shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement, such Letter of
Credit Agreement and such other agreement or instrument under all
circumstances, including, without limitation, the following circumstances:
(A) any lack of validity or enforceability of any Loan
Document, any Letter of Credit Agreement, any Letter of Credit or any
other agreement or instrument relating thereto (all of the foregoing
being, collectively, the "L/C Related Documents");
(B) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations of the Borrower in
respect of any L/C Related Document or any other amendment or waiver of
or any consent to departure from all or any of the L/C Related
Documents;
(C) the existence of any claim, set-off, defense or other
right that the Borrower may have at any time against any beneficiary or
any transferee of a Letter of Credit (or any Persons for whom any such
beneficiary or any such transferee may be acting), the Issuing Bank or
any other Person, whether in connection with the transactions
contemplated by the L/C Related Documents or any unrelated transaction;
(D) any statement or any other document presented under a
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(E) payment by the Issuing Bank under a Letter of Credit
against presentation of a draft or certificate that does not strictly
comply with the terms of such Letter of Credit;
39
(F) any exchange, release or non-perfection of any Collateral
or other collateral, or any release or amendment or waiver of or
consent to departure from any guarantee, for all or any of the
Obligations of the Borrower in respect of the L/C Related Documents; or
(G) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, including, without limitation, any
other circumstance that might otherwise constitute a defense available
to, or a discharge of, the Borrower or a guarantor.
SECTION 2.05. Termination or Reduction of the Commitments. (a) Optional.
The Borrower may, upon at least five Business Days' notice to the Administrative
Agent, terminate in whole or reduce in part the unused portions of the Term
Commitments, the Swing Line Commitment and the Letter of Credit Facility, the
Unused Revolving Credit Commitments and the Unused Acquisition Commitments;
provided, however, that each partial reduction of a Facility (i) shall be in an
aggregate amount of $1,000,000 or an integral multiple of $500,000 in excess
thereof and (ii) shall be made ratably among the Appropriate Lenders in
accordance with their Commitments with respect to such Facility.
(b) Mandatory. (i) On the earlier of the Term Borrowings made in connection
with the CH Acquisition and July 30, 1998, after giving effect to each Term
Borrowing, and from time to time thereafter upon each repayment or prepayment of
the Term Advances, the aggregate Term Commitments of the Term Lenders shall be
automatically and permanently reduced, on a pro rata basis, by an amount equal
to the amount by which the aggregate Term Commitments immediately prior to such
reduction exceed the aggregate unpaid principal amount of the Term Advances then
outstanding.
(ii) Prior to the Conversion Date, the aggregate Acquisition Commitments of
the Acquisition Lenders shall be automatically and permanently reduced on the
date on which any prepayment is required to be made pursuant to Section
2.06(b)(i) or (ii) by an amount equal to the Acquisition Reduction Amount,
provided that each such reduction of the Acquisition Facility shall be made
ratably among the Acquisition Lenders in accordance with their Acquisition
Commitments. From and after the Conversion Date, the Acquisition Commitments of
the Acquisition Lenders shall be automatically and permanently reduced, on each
date on which prepayment thereof is required to be made pursuant to Section
2.06(b)(i) or (b)(ii) in an amount equal to the amount by which the aggregate
Acquisition Facility Commitments immediately prior to such reduction exceed the
aggregate unpaid principal amount of the Acquisition Advances then outstanding,
provided that such reduction of the Acquisition Facility shall be made ratably
among the Acquisition Lenders in accordance with their Acquisition Commitments.
(iii) The Revolving Credit Facility shall be automatically and permanently
reduced on each date on which prepayment thereof is required to be made pursuant
to Section 2.06(b)(i) or (ii) in an amount equal to the applicable Reduction
Amount, provided that each such reduction of the Revolving Credit Facility shall
be made ratably among the Revolving Credit Lenders in accordance with their
Revolving Credit Commitments.
(iv) The Swing Line Facility and the Letter of Credit Facility shall each
be automatically and permanently reduced from time to time on the date of each
reduction in the Revolving Credit Facility by the amount, if any, by which each
such Facility exceeds the Revolving Credit Facility after giving effect to such
reduction of the Revolving Credit Facility.
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(v) Upon any payment by the Borrower (A) in respect of principal, or (B) in
respect of principal or interest during a Payment Blockage Period (as defined in
the Senior Subordinated Note Indenture), if no Term Advances shall be
outstanding the aggregate Commitments of the Lenders shall be automatically and
permanently reduced on a pro rata basis, by an amount equal to the amount by
which the aggregate commitments immediately prior to such payment exceed the
aggregate unpaid principal amount of the Advances then outstanding.
SECTION 2.06. Prepayments. (a) Optional. The Borrower may, upon at least
one Business Day's notice in the case of Base Rate Advances and three Business
Days' notice in the case of Eurodollar Rate Advances, in each case to the
Administrative Agent (received not later than 11:00 A.M. (New York City time))
stating the proposed date and aggregate principal amount of the prepayment, and
if such notice is given the Borrower shall, prepay the outstanding aggregate
principal amount of the Advances comprising part of the same Borrowing in whole
or ratably in part, together with accrued interest to the date of such
prepayment on the aggregate principal amount prepaid unless such prepayment is
with respect to a Swing Line Advance or a Revolving Credit Advance which is a
Base Rate Advance; provided, however, that (x) each partial prepayment (other
than prepayments of Swing Line Advances) shall be in an aggregate principal
amount of $1,000,000 or an integral multiple of $500,000 in excess thereof and
(y) if any prepayment of a Eurodollar Rate Advance shall be made other than on
the last day of an Interest Period therefor, the Borrower shall also pay any
amounts owing pursuant to Section 8.04(c). Each such prepayment of any Advances
shall be applied as follows:
first, ratably to the Term Advances and Acquisition Advances,
ratably to the principal installments of the Term Facility and, after
the Conversion Date to the Acquisition Facility,
second, to the extent that no Term Advances or Acquisition
Advances remain outstanding, permanently to reduce the Acquisition
Facility as set forth in Section 2.06(b)(vi), and
third, to the extent that no Term Advances remain outstanding
and the Acquisition Facility has been fully repaid and permanently
reduced in full, permanently to reduce the Revolving Credit Facility as
set forth in Section 2.06(b)(v).
(b) Mandatory. (i) The Borrower shall, no later than the 30th day
following the date on which it delivers the financial statements referred to in
Section 5.03(d) (but in any event within 120 days after the end of each Fiscal
Year), prepay an aggregate principal amount of the Advances comprising part of
the same Borrowings equal to the Recapture Percentage of the amount of Excess
Cash Flow for such Fiscal Year. Each such prepayment of any Advances shall be
applied as follows:
first, ratably to the Term Advances and Acquisition Advances,
ratably to the principal installments of the Term Facility and, after
the Conversion Date to the Acquisition Facility,
second, to the extent that no Term Advances or Acquisition
Advances remain outstanding, permanently to reduce the Acquisition
Facility as set forth in Section 2.06(b)(v), and
41
third, to the extent that no Term Advances remain outstanding
and the Acquisition Facility has been fully repaid and permanently
reduced in full, permanently to reduce the Revolving Credit Facility as
set forth in Section 2.06(b)(v).
(ii) The Borrower shall, on the date of receipt of the Net Cash Proceeds by
any Loan Party or any of its Subsidiaries from (A) the sale, lease, transfer or
other disposition of any assets of any Loan Party or any of its Subsidiaries
(other than any sale, lease, transfer or other disposition of assets pursuant to
Section 5.02(d)), (B) the incurrence or issuance by any Loan Party or any of its
Subsidiaries of any Debt (other than Debt incurred or issued pursuant to Section
5.02(b)), (C) the sale or issuance by any Loan Party or any of its Subsidiaries
of any capital stock or other ownership or profit interest (including, without
limitation, any capital contribution), any securities convertible into or
exchangeable for capital stock or other ownership or profit interest or any
warrants, rights or options to acquire capital stock or other ownership or
profit interest other than the issuance of capital stock to members of
management pursuant to the Management Agreement in an amount not to exceed
$1,000,000 or (D) any Extraordinary Receipt received by or paid to or for the
account of MEDIQ, only with respect to tax refunds received by MEDIQ with
respect to taxes paid by the Borrower, any Loan Party or any of its Subsidiaries
and not otherwise included in clause (A), (B) or (C) above, prepay an aggregate
principal amount of the Advances comprising part of the same Borrowings equal to
the amount of such Net Cash Proceeds; provided, however that such prepayment
shall not be required so long as the aggregate amount of such Net Cash Proceeds
received by any Loan Party or any of its Subsidiaries in any Fiscal Year shall
not exceed $250,000. Each such prepayment shall be applied as follows:
first, ratably to the Term Advances and Acquisition Advances,
ratably to the principal installments of the Term Facility and, after
the Conversion Date to the Acquisition Facility,
second, to the extent that no Term Advances or Acquisition
Advances remain outstanding, permanently to reduce the Acquisition
Facility as set forth in Section 2.06(b)(vi), and
third, to the extent that no Term Advances remain outstanding
and the Acquisition Facility has been fully repaid and permanently
reduced in full, permanently to reduce the Revolving Credit Facility as
set forth in Section 2.06(b)(v).
(iii) The Borrower shall, on each Business Day, prepay an aggregate
principal amount of the Revolving Credit Advances comprising part of the same
Borrowings, the Swing Line Advances and the Letter of Credit Advances equal to
the amount by which (A) the sum of the aggregate principal amount of (x) the
Revolving Credit Advances, (y) the Swing Line Advances and (z) the Letter of
Credit Advances then outstanding plus the aggregate Available Amount of all
Letters of Credit then outstanding exceeds (B) the lesser of the Revolving
Credit Facility and the Loan Value of Eligible Collateral on such Business Day
(as determined based on the most recent Borrowing Base Certificate delivered to
the Lender Parties hereunder).
(iv) The Borrower shall, on each Business Day, pay to the Administrative
Agent for deposit in the L/C Cash Collateral Account an amount sufficient to
cause the aggregate amount on deposit in such Account to equal the amount by
which the aggregate Available Amount of all Letters of Credit then outstanding
exceeds the Letter of Credit Facility on such Business Day.
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(v) Prepayments of the Revolving Credit Facility made pursuant to clause
(i), (ii) or (iii) above shall be applied first ratably to prepay Swing Line
Advances and Letter of Credit Advances then outstanding until such Advances are
paid in full, second to prepay Revolving Credit Advances then outstanding
comprising part of the same Borrowings until such Advances are paid in full and
third deposited in the L/C Cash Collateral Account to cash collateralize 100% of
the Available Amount of the Letters of Credit then outstanding; and, in the case
of prepayments of the Revolving Credit Facility required pursuant to clause (i)
or (ii) above, the amount remaining (if any) after the prepayment in full of the
Revolving Credit Advances then outstanding and the cash collateralization of the
aggregate Available Amount of Letters of Credit then outstanding (the sum of
such prepayment amounts, cash collateralization amounts and remaining amount
being referred to herein as the "Reduction Amount") may be retained by the
Borrower and the Revolving Credit Facility shall be permanently reduced as set
forth in Section 2.05(b)(iii). Upon the drawing of any Letter of Credit for
which funds are on deposit in the L/C Cash Collateral Account, such funds shall
be applied to reimburse the Issuing Bank or Revolving Credit Lenders, as
applicable.
(vi) Prior to the Conversion Date, prepayments of the Acquisition Facility
pursuant to Section 2.06(b)(i) or (ii) shall be applied to prepay Acquisition
Advances then outstanding comprising part of the same Borrowings until such
Acquisition Advances are paid in full and the amount remaining (if any) after
the prepayment in full of the Acquisition Advances then outstanding (the sum of
such prepayment amounts and the remaining amount not required to prepay the
Acquisition Advances being referred to herein as the "Acquisition Reduction
Amount") shall be applied in accordance with Section 2.06(b)(v). In addition,
the Acquisition Facility shall be permanently reduced as set forth in Section
2.05(b)(ii).
(vii) Anything contained in this Section 2.06(b) to the contrary
notwithstanding, (A) if, following the occurrence of any "Asset Disposition" (as
such term is defined in either the Discount Debenture Indenture or the Senior
Subordinated Note Indenture) by any Loan Party or any of its Subsidiaries, the
Borrower is required to commit by a particular date (a "Payment Commitment
Date") to apply or cause its Subsidiaries to apply an amount equal to any of the
"Net Available Cash" (as defined in either such Indenture, as the case may be)
thereof in a particular manner, or to apply by a particular date (an
"Application Date") an amount equal to any such "Net Available Cash" in a
particular manner, in either case in order to excuse the Borrower from being
required to make an offer to the holders of the Senior Subordinated Notes or the
Discount Debentures pursuant to the Senior Subordinated Note Indenture or the
Discount Debenture Indenture, as the case may be, (an "Asset Sale Offer") in
connection with such "Asset Disposition," and the Borrower shall have failed to
so commit or to so apply an amount equal to such "Net Available Cash" at least
30 days before the applicable Payment Commitment Date or Application Date, as
the case may be, or (B) if the Borrower at any other time shall have failed to
apply or commit or cause to be applied an amount equal to any such "Net
Available Cash," and, within 30 days thereafter assuming no further application
or commitment of an amount equal to such "Net Available Cash" the Borrower would
otherwise be required to make an Asset Sale Offer in respect thereof, then in
either such case the Borrower shall immediately apply or cause to be applied an
amount equal to such "Net Available Cash" to the payment of the Advances in the
manner set forth in Section 2.06(b)(ii) in such amounts as shall excuse the
Borrower from making any such Asset Sale Offer.
(viii) All prepayments under this subsection (b) shall be made together
with accrued interest to the date of such prepayment on the principal amount
prepaid, together with any amounts owing pursuant to Section 8.04(c).
43
(c) Term Opt-Out. With respect to any prepayment of the Term Advances, the
Administrative Agent shall ratably pay the Term Lenders; provided, however, that
any Term Lender, at its option, to the extent that any Term Advances are then
outstanding, may elect not to accept such prepayment (such Lender being a
"Declining Lender"), in which event the provisions of the next sentence shall
apply. On the prepayment date, an amount equal to that portion of the prepayment
amount available to prepay Term Lenders (less any amounts that would otherwise
be payable to Declining Lenders) shall be applied ratably to prepay Term
Advances (and, following the Conversion Date, Acquisition Advances) owing to
Term Lenders other than Declining Lenders (and, following the Conversion Date,
Acquisition Lenders) and any amounts that would otherwise have been applied to
prepay Term Advances owing to Declining Lenders shall instead be applied ratably
to prepay the remaining Term Advances (and Acquisition Advances) as provided in
Sections 2.06(a) and (b); provided further that on prepayment in full of Term
Advances owing to Term Lenders other than Declining Lenders (and, following the
Conversion Date, Acquisition Advances owing to Acquisition Lenders), the
remainder of any prepayment amount shall be applied ratably to prepay Term
Advances owing to Declining Lenders. Any Term Lender may elect not to accept its
ratable share of the prepayment referred to in any Prepayment Notice by giving
written notice to the Administrative Agent not later than 11:00 A.M. (New York
City time) on the Business Day immediately preceding the scheduled prepayment
date.
SECTION 2.07. Interest. (a) Scheduled Interest. The Borrower shall pay
interest on the unpaid principal amount of each Advance owing to each Lender
from the date of such Advance until such principal amount shall be paid in full,
at the following rates per annum:
(i) Base Rate Advances. During such periods as such Advance is
a Base Rate Advance, a rate per annum equal at all times to the sum of
(A) the Base Rate in effect from time to time plus (B) the Applicable
Margin in effect from time to time, payable in arrears on March 31,
June 30, September 30 and December 31 during such periods, on the date
such Base Rate Advance shall be Converted, on the date of any
prepayment thereof to the extent required under Section 2.06 and on the
Termination Date, commencing June 30, 1998.
(ii) Eurodollar Rate Advances. During such periods as such
Advance is a Eurodollar Rate Advance, a rate per annum equal at all
times during each Interest Period for such Advance to the sum of (A)
the Eurodollar Rate for such Interest Period for such Advance plus (B)
the Applicable Margin, payable in arrears on the last day of such
Interest Period and, if such Interest Period has a duration of more
than three months, on each day that occurs during such Interest Period
every three months from the first day of such Interest Period and on
the date such Eurodollar Rate Advance shall be Converted or paid in
full.
(b) Default Interest. Upon the occurrence and during the continuance of any
Event of Default, the Administrative Agent may, and upon the request of the
Required Lenders shall, require that the Borrower pay interest on (i) the unpaid
principal amount of each Advance owing to each Lender, payable in arrears on the
dates referred to in clause (a)(i) or (a)(ii) above and on demand, at a rate per
annum equal at all times to 2% per annum above the rate per annum required to be
paid on such Advance pursuant to clause (a)(i) or (a)(ii) above and (ii) to the
fullest extent permitted by law, the amount of any interest, fee or other amount
payable under the Loan Documents that is not paid when due, from the date such
amount shall be due until such amount shall be paid in full, payable in arrears
on the date such amount shall be paid in full and on demand, at a rate per annum
equal at all times to 2% per annum above the rate per annum required to be paid,
in the case of
44
interest, on the Type of Advance on which such interest has accrued pursuant to
clause (a)(i) or (a)(ii) above, and, in all other cases, on Base Rate Advances
pursuant to clause (a)(i) above; provided, however, that following acceleration
of the Advances pursuant to Section 6.01, interest shall accrue and be payable
at the rate required by this Section 2.07(b), whether or not requested by the
Administrative Agent or the Required Lenders. In addition, following a final
judgment with respect to any Obligation of the Loan Parties under the Loan
Documents, interest shall accrue at the higher of the statutory judgment rate or
the rate specified in the preceding sentence, payable on demand.
SECTION 2.08. Fees. (a) Commitment Fee. The Borrower shall pay to the
Administrative Agent for the account of the Lenders a commitment fee, from the
date hereof in the case of each Initial Lender and from the effective date
specified in the Assignment and Acceptance pursuant to which it became a Lender
in the case of each other Lender until the Termination Date, payable in arrears
on March 31, June 30, September 30 and December 31, commencing June 30, 1998,
and on the Termination Date, at the rate per annum equal to the Applicable
Percentage in effect from time to time on the average daily unused portion of
each Appropriate Lender's Term Commitment and on the average daily unused
Acquisition Commitment (prior to the Conversion Date) and on the average daily
Unused Revolving Credit Commitment of such Lender; provided, however, that any
commitment fee accrued with respect to any of the Commitments of a Defaulting
Lender during the period prior to the time such Lender became a Defaulting
Lender and unpaid at such time shall not be payable by the Borrower so long as
such Lender shall be a Defaulting Lender except to the extent that such
commitment fee shall otherwise have been due and payable by the Borrower prior
to such time; and provided further that no commitment fee shall accrue on any of
the Commitments of a Defaulting Lender so long as such Lender shall be a
Defaulting Lender.
(b) Letter of Credit Fees, Etc. (i) The Borrower shall pay to the
Administrative Agent for the account of each Revolving Credit Lender a
commission, payable in arrears on March 31, June 30, September 30 and December
31, commencing June 30, 1998, and on the Termination Date, on such Lender's Pro
Rata Share of the average daily aggregate Available Amount during such quarter
of all Letters of Credit outstanding from time to time at the Applicable Margin
for Eurodollar Rate Advances under the Revolving Credit Facility.
(ii) The Borrower shall pay to the Issuing Bank, for its own account, such
commissions, issuance fees, fronting fees, transfer fees and other fees and
charges in connection with the issuance or administration of each Letter of
Credit as the Borrower and the Issuing Bank shall agree.
(c) Agents' Fees. The Borrower shall pay to each Agent for its own account
such fees as may from time to time be agreed between the Borrower and such
Agent.
SECTION 2.09. Conversion of Advances. (a) Optional. The Borrower may on any
Business Day, upon notice given to the Administrative Agent not later than 11:00
A.M. (New York City time) on the third Business Day prior to the date of the
proposed Conversion and subject to the provisions of Section 2.10, Convert all
or any portion of the Advances of one Type comprising the same Borrowing into
Advances of the other Type; provided, however, that (w) if any Conversion of
Eurodollar Rate Advances into Base Rate Advances is made other than on the last
day of an Interest Period for such Eurodollar Rate Advances the Borrower shall
also pay any amounts owing pursuant to Section 8.04(c), (x) any Conversion of
Base Rate Advances into Eurodollar Rate Advances shall be in an amount not less
than the minimum amount specified in Section 2.02(c), (y) no Conversion of any
Advances shall result in more separate Borrowings than permitted under Section
2.02(c) and
45
(z) each Conversion of Advances comprising part of the same Borrowing under any
Facility shall be made ratably among the Appropriate Lenders in accordance with
their Commitments under such Facility. Each such notice of Conversion shall,
within the restrictions specified above, specify (i) the date of such
Conversion, (ii) the Advances to be Converted and (iii) if such Conversion is
into Eurodollar Rate Advances, the duration of the initial Interest Period for
such Advances. Each notice of Conversion shall be irrevocable and binding on the
Borrower.
(b) Mandatory. (i) On the date on which the aggregate unpaid principal
amount of Eurodollar Rate Advances comprising any Borrowing shall be reduced, by
payment or prepayment or otherwise, to less than $1,000,000, such Advances shall
automatically Convert into Base Rate Advances.
(ii) If the Borrower shall fail to select the duration of any Interest
Period for any Eurodollar Rate Advances in accordance with the provisions
contained in the definition of "Interest Period" in Section 1.01, the
Administrative Agent will forthwith so notify the Borrower and the Appropriate
Lenders, whereupon each such Eurodollar Rate Advance will automatically, on the
last day of the then existing Interest Period therefor, Convert into a Base Rate
Advance.
(iii) Upon the occurrence and during the continuance of any Event of
Default and upon notice from the Administrative Agent to the Borrower, (x) each
Eurodollar Rate Advance will automatically, on the last day of the then existing
Interest Period therefor, Convert into a Base Rate Advance and (y) the
obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate
Advances shall be suspended.
SECTION 2.10. Increased Costs, Etc. (a) If, due to either (i) the
introduction of or any change in or in the interpretation of any law or
regulation or (ii) the compliance with any guideline or request from any central
bank or other governmental authority (whether or not having the force of law),
there shall be any increase in the cost to any Lender Party of agreeing to make
or of making, funding or maintaining Eurodollar Rate Advances or of agreeing to
issue or of issuing or maintaining or participating in Letters of Credit or of
agreeing to make or of making or maintaining Letter of Credit Advances
(excluding for purposes of this Section 2.10 any such increased costs resulting
from (i) Taxes or Other Taxes (as to which Section 2.12 shall govern) and (ii)
changes in the basis of taxation of overall net income or overall gross income
by the United States or by the foreign jurisdiction or state under the laws of
which such Lender Party is organized or has its Applicable Lending Office or any
political subdivision thereof), then the Borrower shall from time to time, upon
demand by such Lender Party (with a copy of such demand to the Administrative
Agent), pay to the Administrative Agent for the account of such Lender Party
additional amounts sufficient to compensate such Lender Party for such increased
cost. A certificate as to the amount of such increased cost, submitted to the
Borrower by such Lender Party, showing in reasonable detail the calculations
used to comprise said increased cost, shall be conclusive and binding for all
purposes, absent manifest error.
(b) If any Lender Party determines that compliance with any law or
regulation or any guideline or request from any central bank or other
governmental authority (whether or not having the force of law) affects or would
affect the amount of capital required or expected to be maintained by such
Lender Party or any corporation controlling such Lender Party and that the
amount of such capital is increased by or based upon the existence of such
Lender Party's commitment to lend or to issue or participate in Letters of
Credit hereunder and other commitments of such type or the issuance or
maintenance of or participation in the Letters of Credit (or similar contingent
obligations), then, upon demand by such Lender Party (with a copy of such demand
to the Administrative Agent), the Borrower shall pay to the Administrative Agent
for the account of such
46
Lender Party, from time to time as specified by such Lender Party, additional
amounts sufficient to compensate such Lender Party in the light of such
circumstances, to the extent that such Lender Party reasonably determines such
increase in capital to be allocable to the existence of such Lender Party's
commitment to lend or to issue or participate in Letters of Credit hereunder or
to the issuance or maintenance of or participation in any Letters of Credit. A
certificate, showing in reasonable detail the calculations used to comprise said
increased cost, as to such amounts submitted to the Borrower by such Lender
Party shall be conclusive and binding for all purposes, absent manifest error.
Each Lender will determine the amount of any additional compensation requested
under this Section 2.10(b) on a basis consistent with that on which it requests
additional compensation from other similar borrowers with whom it has an
agreement similar to the agreement contained in this Section 2.10(b).
(c) If, with respect to any Eurodollar Rate Advances under any Facility,
Lenders owed at least 50% of the then aggregate unpaid principal amount thereof
notify the Administrative Agent that the Eurodollar Rate for any Interest Period
for such Advances will not adequately reflect the cost to such Lenders of
making, funding or maintaining their Eurodollar Rate Advances for such Interest
Period, the Administrative Agent shall forthwith so notify the Borrower and the
Appropriate Lenders, whereupon (i) each such Eurodollar Rate Advance under any
Facility will automatically, on the last day of the then existing Interest
Period therefor, Convert into a Base Rate Advance and (ii) the obligation of the
Appropriate Lenders to make, or to Convert Advances into, Eurodollar Rate
Advances shall be suspended until the Administrative Agent shall notify the
Borrower that such Lenders have determined that the circumstances causing such
suspension no longer exist.
(d) Notwithstanding any other provision of this Agreement, if the
introduction of or any change in or in the interpretation of any law or
regulation shall make it unlawful, or any central bank or other governmental
authority shall assert that it is unlawful, for any Lender or its Eurodollar
Lending Office to perform its obligations hereunder to make Eurodollar Rate
Advances or to continue to fund or maintain Eurodollar Rate Advances hereunder,
then, on notice thereof and demand therefor by such Lender to the Borrower
through the Administrative Agent, (i) each Eurodollar Rate Advance under each
Facility under which such Lender has a Commitment will automatically, upon such
demand, Convert into a Base Rate Advance and (ii) the obligation of the
Appropriate Lenders to make, or to Convert Advances into, Eurodollar Rate
Advances shall be suspended until the Administrative Agent shall notify the
Borrower that such Lender has determined that the circumstances causing such
suspension no longer exist.
SECTION 2.11. Payments and Computations. (a) The Borrower shall make each
payment hereunder irrespective of any right of counterclaim or set-off (except
as otherwise provided in Section 2.15), not later than 11:00 A.M. (New York City
time) on the day when due in U.S. Dollars to the Administrative Agent at the
Administrative Agent's Account in same day funds, with payments being received
by the Administrative Agent after such time being deemed to have been received
on the next succeeding Business Day. The Administrative Agent will promptly
thereafter cause like funds to be distributed (i) if such payment by the
Borrower is in respect of principal, interest, commitment fees or any other
Obligation then payable hereunder to more than one Lender Party, to such Lender
Parties for the account of their respective Applicable Lending Offices ratably
in accordance with the amounts of such respective Obligations then payable to
such Lender Parties and (ii) if such payment by the Borrower is in respect of
any Obligation then payable hereunder to one Lender Party, to such Lender Party
for the account of its Applicable Lending Office, in each case to be applied in
accordance with the terms of this Agreement. Upon its acceptance of an
Assignment and Acceptance and recording of the information contained therein in
the Register pursuant to Section 8.07(d), from and after the effective date of
such Assignment and Acceptance, the Administrative Agent shall make all payments
hereunder in respect of the
47
interest assigned thereby to the Lender Party assignee thereunder, and the
parties to such Assignment and Acceptance shall make all appropriate adjustments
in such payments for periods prior to such effective date directly between
themselves.
(b) If the Administrative Agent receives funds for application to the
Obligations under the Loan Documents under circumstances for which the Loan
Documents do not specify the Advances or the Facility to which, or the manner in
which, such funds are to be applied, the Administrative Agent may, but shall not
be obligated to, elect, with the consent of the Borrower which shall not
unreasonably be withheld, to distribute such funds to each Lender Party ratably
in accordance with such Lender Party's proportionate share of the principal
amount of all outstanding Advances and the Available Amount of all Letters of
Credit then outstanding, in repayment or prepayment of such of the outstanding
Advances or other Obligations owed to such Lender Party, and for application to
such principal installments, as the Administrative Agent shall direct.
(c) After an Event of Default, the Borrower hereby authorizes each Lender
Party, if and to the extent payment owed to such Lender Party is not made when
due hereunder to charge from time to time against any or all of the Borrower's
accounts with such Lender Party any amount so due.
(d) All computations of interest, fees and Letter of Credit commissions
shall be made by the Administrative Agent on the basis of (x) with respect to
the Base Rate, a year of 365 days and (y) for all other purposes, a year of 360
days, in each case for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest, fees or
commissions are payable. Each determination by the Administrative Agent of an
interest rate, fee or commission hereunder shall be conclusive and binding for
all purposes, absent manifest error.
(e) Whenever any payment hereunder shall be stated to be due on a day other
than a Business Day, such payment shall be made on the next succeeding Business
Day, and such extension of time shall in such case be included in the
computation of payment of interest or commitment fee, as the case may be;
provided, however, that, if such extension would cause any payment to be made in
the next following calendar month, such payment shall be made on the next
preceding Business Day and such adjustment of time shall in such case be
reflected in the computation of payment of interest or commitment fee, as the
case may be.
(f) Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to any Lender Party
hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed to each such Lender Party
on such due date an amount equal to the amount then due such Lender Party. If
and to the extent the Borrower shall not have so made such payment in full to
the Administrative Agent, each such Lender Party shall repay to the
Administrative Agent forthwith on demand such amount distributed to such Lender
Party together with interest thereon, for each day from the date such amount is
distributed to such Lender Party until the date such Lender Party repays such
amount to the Administrative Agent, at the Federal Funds Rate.
SECTION 2.12. Taxes. (a) Any and all payments by the Borrower hereunder
shall be made, in accordance with Section 2.11, free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding, in
the case
48
of each Lender Party and the Administrative Agent, taxes that are imposed on its
overall net income by the United States and taxes that are imposed on its
overall net income (and franchise taxes in lieu thereof) by the state or foreign
jurisdiction under the laws of which such Lender Party or the Administrative
Agent (as the case may be) is organized or any political subdivision thereof
and, in the case of each Lender Party, taxes that are imposed on its overall net
income (and franchise taxes in lieu thereof) by the state or foreign
jurisdiction of such Lender Party's Applicable Lending Office or any political
subdivision thereof (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as "Taxes").
If the Borrower shall be required by law to deduct any Taxes from or in respect
of any sum payable hereunder to any Lender Party or the Administrative Agent,
(i) the sum payable by the Borrower shall be increased as may be necessary so
that after the Borrower and the Administrative Agent have made all required
deductions (including deductions applicable to additional sums payable under
this Section 2.12) such Lender Party or the Administrative Agent (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 all such deductions and (iii)
the Borrower shall pay the full amount deducted to the relevant taxation
authority or other governmental authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any present or future stamp,
documentary, excise, property or similar taxes, charges or levies that arise
from any payment made hereunder or from the execution, delivery or registration
of, performance under, or otherwise with respect to this Agreement (hereinafter
referred to as "Other Taxes").
(c) The Borrower shall indemnify each Lender Party and the Administrative
Agent for and hold it harmless against the full amount of Taxes and Other Taxes,
and for the full amount of taxes of any kind imposed by any jurisdiction on
amounts payable under this Section 2.12, paid by such Lender Party or the
Administrative Agent (as the case may be) and any liability (including
penalties, additions to tax, interest and expenses) arising therefrom or with
respect thereto. This indemnification shall be made within 30 days from the date
such Lender Party or the Administrative Agent (as the case may be) makes written
demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the Borrower
shall furnish to the Administrative Agent, at its address referred to in Section
8.02, the original or a certified copy of a receipt evidencing such payment. In
the case of any payment hereunder by or on behalf of the Borrower through an
account or branch outside the United States or on behalf of the Borrower by a
payor that is not a United States person, if the Borrower determines that no
Taxes are payable in respect thereof, the Borrower shall furnish, or shall cause
such payor to furnish, to the Administrative Agent, at such address, an opinion
of counsel acceptable to the Administrative Agent stating that such payment is
exempt from Taxes. For purposes of subsections (d) and (e) of this Section 2.12,
the terms "United States" and "United States person" shall have the meanings
specified in Section 7701 of the Internal Revenue Code.
(e) Each Lender Party organized under the laws of a jurisdiction outside
the United States shall, on or prior to the date of its execution and delivery
of this Agreement in the case of each Initial Lender or Initial Issuing Bank, as
the case may be, and on the date of the Assignment and Acceptance pursuant to
which it becomes a Lender Party in the case of each other Lender Party, and from
time to time thereafter if requested in writing by the Borrower or the
Administrative Agent (but only so long thereafter as such Lender Party remains
lawfully able to do so), provide the Administrative Agent and the Borrower, if
such Lender Party is a "bank" within the meaning of Section 881(c)(3)(A) of the
Code, with Internal Revenue Service form 1001 or 4224, as
49
appropriate, or any successor form prescribed by the Internal Revenue Service,
or (in the case of Lender Party that is claiming exemption from United States
withholding tax under Section 871(h) or 881(c) of the Internal Revenue Code with
respect to payments of "portfolio interest") two accurate and complete signed
original Forms W-8 or any successor form prescribed by the Internal Revenue
Service (and, if such Lender Party delivers Forms W-8, two signed certificates
certifying that such Lender Party is not (i) a "bank" for purposes of Section
881(c) of the Internal Revenue Code, (ii) is not a 10-percent shareholder
(within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code) of the
Borrower, (iii) is not a controlled foreign corporation related to the Borrower
(within the meaning of Section 864(d)(4) of the Internal Revenue Code) and (iv)
is not a conduit entity participating in a conduit financing arrangement (as
defined in Treasury Regulation Section 1.881-3) certifying that such Lender
Party is exempt from or is entitled to a reduced rate of United States
withholding tax on payments under this Agreement, or in the case of a Lender
Party providing Forms W-8, certifying that such Lender Party is a foreign
corporation, partnership or trust. If the forms provided by a Lender Party at
the time such Lender Party first becomes a party to this Agreement indicate a
United States interest withholding tax rate in excess of zero, withholding tax
at such rate shall be considered excluded from Taxes unless and until such
Lender Party provides the appropriate forms certifying that a lesser rate
applies, whereupon withholding tax at such lesser rate only shall be considered
excluded from Taxes for periods governed by such forms; provided, however, that,
if at the date of the Assignment and Acceptance pursuant to which a Lender Party
becomes a party to this Agreement, the Lender Party assignor was entitled to
payments under subsection (a) of this Section 2.12 in respect of United States
withholding tax with respect to interest paid at such date, then, to such
extent, if applicable to the Lender Party Assignee, the term Taxes shall include
(in addition to withholding taxes that may be imposed in the future or other
amounts otherwise includable in Taxes) United States withholding tax, if any,
applicable with respect to the Lender Party assignee on such date. If any form
or document referred to in this subsection (e) requires the disclosure of
information, other than information necessary to compute the tax payable and
information required on the date hereof by Internal Revenue Service form 1001 or
4224 or W-8 (or the related certificate described above), that the Lender Party
reasonably considers to be confidential, the Lender Party shall give notice
thereof to the Borrower and shall not be obligated to include in such form or
document such confidential information.
(f) For any period with respect to which a Lender Party has failed to
provide the Borrower with the appropriate form described in subsection (e) above
(other than if such failure is due to a change in law occurring after the date
on which a form originally was required to be provided or if such form otherwise
is not required under subsection (e) above), such Lender Party shall not be
entitled to indemnification under subsection (a) or (c) of this Section 2.12
with respect to Taxes imposed by the United States; provided, however, that
should a Lender Party become subject to Taxes because of its failure to deliver
a form required hereunder, the Borrower shall take such steps as such Lender
Party shall reasonably request at such Lender Party's expense to assist such
Lender Party to recover such Taxes.
SECTION 2.13. Sharing of Payments, Etc. If any Lender Party shall obtain at
any time any payment (whether voluntary, involuntary, through the exercise of
any right of set-off, or otherwise, other than as a result of an assignment
pursuant to Section 8.07) (a) on account of Obligations due and payable to such
Lender Party hereunder at such time in excess of its ratable share (according to
the proportion of (i) the amount of such Obligations due and payable to such
Lender Party at such time to (ii) the aggregate amount of the Obligations due
and payable to all Lender Parties hereunder at such time) of payments on account
of the Obligations due and payable to all Lender Parties hereunder at such time
obtained by all the Lender Parties at such time or (b) on account of Obligations
owing (but not due and payable) to such Lender Party hereunder at such time in
excess
50
of its ratable share (according to the proportion of (i) the amount of such
Obligations owing to such Lender Party at such time to (ii) the aggregate amount
of the Obligations owing (but not due and payable) to all Lender Parties
hereunder at such time) of payments on account of the Obligations owing (but not
due and payable) to all Lender Parties hereunder at such time obtained by all of
the Lender Parties at such time, such Lender Party shall forthwith purchase from
the other Lender Parties such interests or participating interests in the
Obligations due and payable or owing to them, as the case may be, as shall be
necessary to cause such purchasing Lender Party to share the excess payment
ratably with each of them; provided, however, that if all or any portion of such
excess payment is thereafter recovered from such purchasing Lender Party, such
purchase from each other Lender Party shall be rescinded and such other Lender
Party shall repay to the purchasing Lender Party the purchase price to the
extent of such Lender Party's ratable share (according to the proportion of (i)
the purchase price paid to such Lender Party to (ii) the aggregate purchase
price paid to all Lender Parties) of such recovery together with an amount equal
to such Lender Party's ratable share (according to the proportion of (i) the
amount of such other Lender Party's required repayment to (ii) the total amount
so recovered from the purchasing Lender Party) of any interest or other amount
paid or payable by the purchasing Lender Party in respect of the total amount so
recovered; provided further that, so long as the Obligations under the Loan
Documents shall not have been accelerated, any excess payment received by any
Appropriate Lender shall be shared on a pro rata basis only with other
Appropriate Lenders. The Borrower agrees that any Lender Party so purchasing a
participation from another Lender Party pursuant to this Section 2.13 may, to
the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Lender Party were the direct creditor of the Borrower in the amount of
such participation.
SECTION 2.14. Use of Proceeds. The proceeds of the Advances and issuances
of Letters of Credit shall be available (and the Borrower agrees that it shall
use such proceeds and Letters of Credit) solely as follows:
(a) from Term Advances, to finance, in part, the Recapitalization, the
Merger and the Investment permitted by Section 5.02(e)(ii)(E), to refinance
the Refinancing Debt and to pay transaction fees and expenses in connection
therewith and with the financing contemplated by the Loan Documents;
(b) from Revolving Credit Advances, to finance working capital
requirements of the Borrower and its wholly owned U.S. Subsidiaries and for
other general corporate purposes permitted by the Loan Documents, including
Investments permitted by Section 5.02(e)(ii); and
(c) from Acquisition Advances, to finance from time to time all or a
portion of Investments permitted by Section 5.02(e)(ii)(B), (F) and (G) and
to pay transaction fees and expenses in connection therewith.
SECTION 2.15. Defaulting Lenders. (a) In the event that, at any one time,
(i) any Lender Party shall be a Defaulting Lender, (ii) such Defaulting Lender
shall owe a Defaulted Advance to the Borrower and (iii) the Borrower shall be
required to make any payment hereunder or under any other Loan Document to or
for the account of such Defaulting Lender, then the Borrower may, so long as no
Default shall occur or be continuing at such time and to the fullest extent
permitted by applicable law, set off and otherwise apply the Obligation of the
Borrower to make such payment to or for the account of such Defaulting Lender
against the obligation of such Defaulting Lender to make such Defaulted Advance.
In the event that, on any date, the Borrower shall so set off and otherwise
apply its obligation to make any such payment against the obligation
of such Defaulting Lender
51
to make any such Defaulted Advance on or prior to such date, the amount so set
off and otherwise applied by the Borrower shall constitute for all purposes of
this Agreement and the other Loan Documents an Advance by such Defaulting Lender
made on the date of such set off under the Facility pursuant to which such
Defaulted Advance was originally required to have been made pursuant to Section
2.01. Such Advance shall be considered, for all purposes of this Agreement, to
comprise part of the Borrowing in connection with which such Defaulted Advance
was originally required to have been made pursuant to Section 2.01, even if the
other Advances comprising such Borrowing shall be Eurodollar Rate Advances on
the date such Advance is deemed to be made pursuant to this subsection (a). The
Borrower shall notify the Administrative Agent at any time the Borrower
exercises its right of set-off pursuant to this subsection (a) and shall set
forth in such notice (A) the name of the Defaulting Lender and the Defaulted
Advance required to be made by such Defaulting Lender and (B) the amount set off
and otherwise applied in respect of such Defaulted Advance pursuant to this
subsection (a). Any portion of such payment otherwise required to be made by the
Borrower to or for the account of such Defaulting Lender which is paid by the
Borrower, after giving effect to the amount set off and otherwise applied by the
Borrower pursuant to this subsection (a), shall be applied by the Administrative
Agent as specified in subsection (b) or (c) of this Section 2.15.
(b) In the event that, at any one time, (i) any Lender Party shall be a
Defaulting Lender, (ii) such Defaulting Lender shall owe a Defaulted Amount to
the Administrative Agent or any of the other Lender Parties and (iii) the
Borrower shall make any payment hereunder or under any other Loan Document to
the Administrative Agent for the account of such Defaulting Lender, then the
Administrative Agent may, on its behalf or on behalf of such other Lender
Parties and to the fullest extent permitted by applicable law, apply at such
time the amount so paid by the Borrower to or for the account of such Defaulting
Lender to the payment of each such Defaulted Amount to the extent required to
pay such Defaulted Amount. In the event that the Administrative Agent shall so
apply any such amount to the payment of any such Defaulted Amount on any date,
the amount so applied by the Administrative Agent shall constitute for all
purposes of this Agreement and the other Loan Documents payment, to such extent,
of such Defaulted Amount on such date. Any such amount so applied by the
Administrative Agent shall be retained by the Administrative Agent or
distributed by the Administrative Agent to such other Lender Parties, ratably in
accordance with the respective portions of such Defaulted Amounts payable at
such time to the Administrative Agent and such other Lender Parties and, if the
amount of such payment made by the Borrower shall at such time be insufficient
to pay all Defaulted Amounts owing at such time to the Administrative Agent and
the other Lender Parties, in the following order of priority:
(i) first, to the Administrative Agent for any Defaulted Amounts then
owing to the Administrative Agent, ratably in accordance with such
respective Defaulted Amounts then owing to the Administrative Agent; and
(ii) second, to the Issuing Bank and the Swing Line Bank for any
Defaulted Amounts then owing to them, in their capacities as such, ratably
in accordance with such respective Defaulted Amounts then owing to such
Issuing Bank and such Swing Line Bank; and
(iii) third, to any other Lender Parties for any Defaulted Amounts
then owing to such other Lender Parties, ratably in accordance with such
respective Defaulted Amounts then owing to such other Lender Parties.
52
Any portion of such amount paid by the Borrower for the account of such
Defaulting Lender remaining, after giving effect to the amount applied by the
Administrative Agent pursuant to this subsection (b), shall be applied by the
Administrative Agent as specified in subsection (c) of this Section 2.15.
(c) In the event that, at any one time, (i) any Lender Party shall be a
Defaulting Lender, (ii) such Defaulting Lender shall not owe a Defaulted Advance
or a Defaulted Amount and (iii) the Borrower, the Administrative Agent or any
other Lender Party shall be required to pay or distribute any amount hereunder
or under any other Loan Document to or for the account of such Defaulting
Lender, then the Borrower or such other Lender Party shall pay such amount to
the Administrative Agent to be held by the Administrative Agent, to the fullest
extent permitted by applicable law, in escrow or the Administrative Agent shall,
to the fullest extent permitted by applicable law, hold in escrow such amount
otherwise held by it. Any funds held by the Administrative Agent in escrow under
this subsection (c) shall be deposited by the Administrative Agent in an account
with the Administrative Agent, in the name and under the control of the
Administrative Agent, but subject to the provisions of this subsection (c). The
terms applicable to such account, including the rate of interest payable with
respect to the credit balance of such account from time to time, shall be the
Administrative Agent's standard terms applicable to escrow accounts maintained
with it. Any interest credited to such account from time to time shall be held
by the Administrative Agent in escrow under, and applied by the Administrative
Agent from time to time in accordance with the provisions of, this subsection
(c). The Administrative Agent shall, to the fullest extent permitted by
applicable law, apply all funds so held in escrow from time to time to the
extent necessary to make any Advances required to be made by such Defaulting
Lender and to pay any amount payable by such Defaulting Lender hereunder and
under the other Loan Documents to the Administrative Agent or any other Lender
Party, as and when such Advances or amounts are required to be made or paid and,
if the amount so held in escrow shall at any time be insufficient to make and
pay all such Advances and amounts required to be made or paid at such time, in
the following order of priority:
(i) first, to the Administrative Agent for any amounts then due and
payable by such Defaulting Lender to the Administrative Agent hereunder,
ratably in accordance with such amounts then due and payable to the
Administrative Agent;
(ii) second, to the Issuing Bank and the Swing Line Bank for any
amounts then due and payable to them hereunder, in their capacities as
such, by such Defaulting Lender, ratably in accordance with such amounts
then due and payable to such Issuing Bank and such Swing Line Bank;
(iii) third, to any other Lender Parties for any amount then due and
payable by such Defaulting Lender to such other Lender Parties hereunder,
ratably in accordance with such respective amounts then due and payable to
such other Lender Parties; and
(iv) fourth, to the Borrower for any Advance then required to be made
by such Defaulting Lender pursuant to a Commitment of such Defaulting
Lender.
In the event that any Lender Party that is a Defaulting Lender shall, at any
time, cease to be a Defaulting Lender, any funds held by the Administrative
Agent in escrow at such time with respect to such Lender Party shall be
distributed by the Administrative Agent to such Lender Party and applied by such
Lender Party to the Obligations owing to such Lender Party at such time under
this Agreement and the other Loan Documents ratably in accordance with the
respective amounts of such Obligations outstanding at such time.
53
(d) The rights and remedies against a Defaulting Lender under this Section
2.15 are in addition to other rights and remedies that the Borrower may have
against such Defaulting Lender with respect to any Defaulted Advance and that
any Agent or any Lender Party may have against such Defaulting Lender with
respect to any Defaulted Amount.
SECTION 2.16. Evidence of Debt. (a) Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from each Advance owing to
such Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time hereunder. The Borrower agrees
that upon notice by any Lender Party to the Borrower (with a copy of such notice
to the Administrative Agent) to the effect that a Note is required or
appropriate in order for such Lender to evidence (whether for purposes of
pledge, enforcement or otherwise) the Advances owing to, or to be made by, such
Lender Party, the Borrower shall promptly execute and deliver to such Lender an
Acquisition Note, a Term Note or a Revolving Credit Note, as applicable, payable
to the order of such Lender Party in a principal amount equal to the Acquisition
Commitment, Term Commitment or Revolving Credit Commitment, respectively, of
such Lender Party. All references to Notes in the Loan Documents shall mean
Notes, if any, to the extent issued hereunder.
(b) The Register maintained by the Administrative Agent pursuant to Section
8.07(d) shall include a control account, and a subsidiary account for each
Lender, in which accounts (taken together) shall be recorded (i) the date and
amount of each Borrowing made hereunder, the Type of Advances comprising such
Borrowing and, if appropriate, the Interest Period applicable thereto, (ii) the
terms of each Assignment and Acceptance delivered to and accepted by it, (iii)
the amount of any principal or interest due and payable or to become due and
payable from the Borrower to each Lender Party hereunder, and (iv) the amount of
any sum received by the Administrative Agent from the Borrower hereunder and
each Lender Party's share thereof.
(c) Entries made in good faith by the Administrative Agent in the Register
pursuant to subsection (b) above, and by each Lender Party in its account or
accounts pursuant to subsection (a) above, shall be prima facie evidence of the
amount of principal and interest due and payable or to become due and payable
from the Borrower to, in the case of the Register, each Lender Party and, in the
case of such account or accounts, such Lender Party, under this Agreement,
absent manifest error; provided, however, that the failure of the Administrative
Agent or such Lender Party to make an entry, or any finding that an entry is
incorrect, in the Register or such account or accounts shall not limit or
otherwise affect the obligations of the Borrower under this Agreement.
(d) References herein to Notes shall mean and be references to the
Acquisition Notes, the Term Notes and the Revolving Credit Notes, unless
otherwise specifically indicated, in each case to the extent issued hereunder.
54
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to Initial Extension of Credit. The
obligation of each Lender to make an Advance on the occasion of the Initial
Extension of Credit hereunder is subject to the satisfaction of the following
conditions precedent before or concurrently with the Initial Extension of
Credit:
(a) The Merger Agreement shall be in full force and effect and the
Recapitalization and the Merger shall have been consummated strictly in
accordance with all applicable law and with the terms and conditions of the
Merger Agreement, the Rollover Agreement and the Stockholders Agreements,
without any waiver or amendment not consented to by the Agents and the
Lender Parties of any term, provision or condition set forth therein, and
in compliance with all applicable laws, and the Administrative Agent shall
have received certified copies of a certificate of merger or other
confirmation from the Secretary of State of the State of Delaware of the
consummation of the Merger.
(b) The Lender Parties shall be satisfied (i) with the corporate and
legal structure and capitalization of the Loan Parties, both before and
after giving effect to the Recapitalization, including the terms and
conditions of the charter, bylaws and each class of capital stock of the
Loan Parties and of each agreement or instrument relating to such structure
or capitalization, (ii) that the amount of committed equity and debt
financing shall be sufficient to meet the financing requirements of the
Merger, the Recapitalization and the other transactions contemplated
thereby, (iii) with the terms and conditions of the Loan Documents and the
Related Documents and (iv) that the assets and earnings of the Borrower are
sufficient to support the Obligations of the Borrower under this Agreement
and the timely amortization of all Indebtedness and other Obligations of
the Borrower.
(c) Before and after giving effect to the Merger, the Recapitalization
and the other transactions contemplated by this Agreement, there shall have
occurred no Material Adverse Change since September 30, 1997.
(d) (x) MEDIQ shall have received at least $109,500,000 in gross cash
proceeds from the issuance of common and preferred stock to its equity
investors, $1,763,000 in gross cash proceeds from the issuance of common
and preferred stock to the equity holders of MEDIQ that are members of
management and an additional $14,500,000 in Rolled Shares and (y) evidence
that Xxxxxx X. Xxxxxxx shall have entered into an unconditional
undertaking, for the benefit of the Lender Parties, dated the date hereof,
to purchase common and preferred shares of MEDIQ no later than June 8, 1998
in an amount equal to $2,437,000 minus any amounts contributed by members
of management of MEDIQ (other than Xxxxxx X. Xxxxxxx and Xxx X. Xxxxxx with
respect to purchases made on the date hereof) to purchase common and
preferred shares of MEDIQ prior to such date pursuant to the Investor
Management Agreement to be entered into among certain members of management
of MEDIQ.
(e) MEDIQ shall have received at least $75,000,000 in gross cash
proceeds from the sale of the Discount Debentures.
55
(f) The Borrower shall have received at least $190,000,000 in gross
cash proceeds from the sale of the Senior Subordinated Notes and the
Borrower shall have advanced sufficient funds to MEDIQ to consummate the
Merger.
(g) There shall exist no action, suit, investigation, litigation or
proceeding affecting the Company or any Loan Party or any of their
Subsidiaries pending or threatened before any court, governmental agency or
arbitrator that (i) could reasonably be expected to have a Material Adverse
Effect or (ii) purports to affect the legality, validity or enforceability
of the Merger, the Recapitalization, this Agreement, any Note, any other
Loan Document, any Related Document or the consummation of the transactions
contemplated hereby.
(h) The Lender Parties shall have been given such access to the
management, records, books of account, contracts and properties of the
Company and its Subsidiaries as they shall have requested.
(i) The Existing Debt, other than the Debt identified on Schedule
3.01(i) (the "Surviving Debt"), has been prepaid, redeemed or defeased in
full or otherwise satisfied and extinguished and that all such Surviving
Debt shall be on terms and conditions satisfactory to the Lender Parties.
(j) All accrued fees and expenses of the Administrative Agent and the
Lender Parties (including the accrued fees and expenses of counsel to the
Administrative Agent and of local counsel to the Lender Parties) shall have
been paid.
(k) The Administrative Agent shall have received on or before the day
of the Initial Extension of Credit the following, each dated such day
(unless otherwise specified), in form and substance satisfactory to the
Administrative Agent (unless otherwise specified) and (except for any
Notes) in sufficient copies for each Lender Party:
(i) Notes payable to the order of the Lenders to the extent
requested by any Lender pursuant to Section 2.16.
(ii) Certified copies of the resolutions of the Board of
Directors of the Company and each Loan Party approving the Merger, the
Recapitalization, this Agreement, the Notes, each other Loan Document
and each Related Document to which it is or is to be a party, and of
all documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to the Merger, the
Recapitalization, this Agreement, any Notes, each other Loan Document
and each Related Document and of the transactions contemplated hereby.
(iii) A copy of a certificate of the Secretary of State of the
jurisdiction of its incorporation, dated reasonably near the date of
the Initial Extension of Credit, in each case listing the charter of
the Company and each Loan Party and each amendment thereto on file in
his office and certifying that (A) such charter is a true and correct
copy thereof, (B) such amendments are the only amendments to such
charter on file in his office, (C) such Person has paid all franchise
taxes to the date of such certificate and (D) such Person is duly
incorporated and in good standing under the laws of the state of the
jurisdiction of its incorporation.
56
(iv) A copy of a certificate of the Secretary of State of the
states listed on Schedule 3.01(k)(iv), dated reasonably near the date
of the Initial Extension of Credit, stating that the Company, the
Borrower and each other Loan Party as requested by the Administrative
Agent is duly qualified and in good standing as a foreign corporation
in such states and has filed all annual reports required to be filed
to the date of such certificate.
(v) A certificate of each of the Company and each Loan Party,
signed on behalf of such Person by its President or Senior Vice
President and its Secretary or Assistant Secretary, dated the date of
the Initial Extension of Credit (the statements made in which
certificate shall be true on and as of the date of the Initial
Extension of Credit), certifying as to (A) the absence of any
amendments to the charter of such Person since the date of the
Secretary of State's certificate referred to in Section 3.01(k)(iii),
(B) a true and correct copy of the bylaws of such Person as in effect
on the date of the Initial Extension of Credit, (C) the due
incorporation and good standing of such Person as a corporation
organized under the laws of the jurisdiction of its incorporation and
the absence of any proceeding for the dissolution or liquidation of
such Person, (D) the completeness and accuracy of the representations
and warranties contained in the Loan Documents as though made on and
as of the date of the Initial Extension of Credit and (E) the absence
of any event occurring and continuing, or resulting from the Initial
Extension of Credit, that constitutes a Default.
(vi) A certificate of the Secretary or Assistant Secretary of
each of the Company and each Loan Party certifying the names and true
signatures of the officers of such Persons authorized to sign this
Agreement, any Notes, each other Loan Document and each Related
Document to which they are or are to be parties and the other
documents to be delivered hereunder and thereunder.
(vii) A security agreement in substantially the form of Exhibit D
hereto (together with each other security agreement and security
agreement supplement delivered pursuant to Section 5.01(m), in each
case as amended, amended and restated, supplemented or otherwise
modified from time to time in accordance with its terms, the "Security
Agreement"), duly executed by the Borrower and each other Subsidiary
Guarantor, together with:
(A) certificates representing the Pledged Shares accompanied
by undated stock powers executed in blank and instruments
evidencing the Pledged Debt endorsed in blank,
(B) executed copies of proper financing statements, to be
duly filed on or before the day of the Initial Extension of
Credit under the Uniform Commercial Code of the states listed on
Schedule 3.01(k)(vii)(B) and all other jurisdictions that the
Administrative Agent may reasonably deem necessary or desirable
in order to perfect and protect the Liens created under the
Collateral Documents, covering the Collateral described in the
Security Agreement,
(C) completed requests for information, dated on or before
the date of the Initial Extension of Credit, listing the
financing statements referred to in clause (B)
57
above and all other effective financing statements filed in the
jurisdictions referred to in clause (B) above that name any Loan
Party or the Company and its Subsidiaries as debtor, together
with copies of such other financing statements,
(D) evidence of the completion of all other recordings and
filings of or with respect to the Security Agreement that the
Administrative Agent may deem necessary or desirable in order to
perfect and protect the Liens created thereby,
(E) evidence of the insurance required by the terms of the
Security Agreement,
(F) copies of the Assigned Agreements referred to in the
Security Agreement, together with a consent to such assignment,
in substantially the form of Exhibit B to the Security Agreement,
duly executed by each party to such Assigned Agreements,
(G) executed termination statements (Form UCC-3 or a
comparable form), in proper form to be duly filed on the date of
the Initial Extension of Credit under the Uniform Commercial Code
of all jurisdictions that the Administrative Agent may deem
desirable in order to terminate or amend existing Liens on the
Collateral described in the Security Agreement, except as
contemplated in the Security Agreement,
(H) the Blocked Account Letters referred to in the Security
Agreement, duly executed by each Blocked Account Bank listed on
Schedule 3.01(k)(vii)(H) in form and substance satisfactory to
the Administrative Agent,
(I) Landlord consents, duly executed by each of the Persons
listed on Schedule 3.01(k)(vii)(I) in form and substance
satisfactory to the Administrative Agent, and
(J) evidence that all other action that the Administrative
Agent may deem necessary or desirable in order to perfect and
protect the Liens and security interests created under the
Security Agreement has been taken.
(viii) A mortgage in substantially the form of Exhibit E hereto
and covering the property listed on Schedule 4.01(hh) (together with
each other mortgage delivered pursuant to Section 5.01(m), in each
case as amended, amended and restated, supplemented or otherwise
modified from time to time in accordance with their terms, the
"Mortgage"), duly executed by the Borrower, together with evidence
that the Mortgage has been duly recorded in all filing or recording
offices that the Administrative Agent may deem desirable and all other
action that the Administrative Agent may deem necessary or desirable
including a title search in order to create valid first and subsisting
Liens on the property described in the Mortgage in favor of the
Secured Parties and that all filing and recording expenses and fees
have been paid.
58
(ix) The Subsidiary Guaranty duly executed by each Subsidiary
Guarantor listed on Schedule 3.01(k)(ix).
(x) Certified copies of each of the Related Documents, duly
executed by the parties thereto and in form and substance satisfactory
to the Lender Parties, together with all agreements, instruments and
other documents delivered in connection therewith as the
Administrative Agent shall request.
(xi) Such financial, business and other information regarding the
Company and each Loan Party and its Subsidiaries as the Lender Parties
shall have requested, including, without limitation, information as to
possible contingent liabilities, tax matters, environmental matters,
obligations under Plans, Multiemployer Plans and Welfare Plans,
collective bargaining agreements and other arrangements with
employees, audited Consolidated and unaudited consolidating annual
financial statements (such unaudited consolidating financial
statements prepared in accordance with Regulation S-X and certified by
the chief financial officer of the Company) of the Company and its
Subsidiaries dated September 30, 1995, September 30, 1996 and
September 30, 1997, interim Consolidated and consolidating financial
statements dated December 31, 1997 (such financial statements prepared
in accordance with Regulation S-X and certified by the chief financial
officer of the Company), of the Company and its Subsidiaries and
forecasts prepared by management, in form and substance satisfactory
to the Lender Parties, of Consolidated balance sheets, income
statements and cash flow statements of MEDIQ and its Subsidiaries on a
monthly basis for the first two years following the day of the Initial
Extension of Credit and on an annual basis for each year thereafter
until the Termination Date.
(xii) An opinion, in substantially the form of Exhibit I,
attesting to the Solvency of the Borrower on a Consolidated basis and
MEDIQ on a Consolidated basis, after giving effect to the Merger, the
Recapitalization and the other transactions contemplated hereby, from
Xxxxxx, Xxxxxx & Co.
(xiii) Certificates, in substantially the form of Exhibits J-1
and J-2, attesting to the Solvency of the Borrower on a Consolidated
basis and MEDIQ on a Consolidated basis both before and after giving
effect to the Refinancing and the other transactions contemplated
hereby, signed on behalf of each of the Borrower and MEDIQ by their
respective chief financial officers, attesting to the solvency of the
Borrower on a Consolidated basis and MEDIQ on a Consolidated basis,
respectively.
(xiv) A certificate of the Borrower certifying that no event has
occurred or condition exists related to the real estate located at One
MEDIQ Plaza, Pennsauken, New Jersey that may result in material
liability pursuant to any Environmental Law and that is not disclosed
in the July 22, 1996 Phase I Environmental Site Assessment Report
prepared by Xxxxx Associates, Inc.
(xv) A letter, in form and substance satisfactory to the
Administrative Agent, from MEDIQ to Deloitte & Touche LLP, its
independent certified public accountants, advising such accountants
that the Administrative Agent and the Lender Parties have been
authorized to
59
exercise all rights of MEDIQ and its Subsidiaries to require such
accountants to disclose any and all financial statements and any other
information of any kind that they may have with respect to MEDIQ and
its Subsidiaries and directing such accountants to comply with any
reasonable request of the Administrative Agent or any Lender Party
through the Administrative Agent for such information.
(xvi) Evidence of insurance naming the Administrative Agent as
additional insured and loss payee with such responsible and reputable
insurance companies or associations, and in such amounts and covering
such risks, as is satisfactory to the Lender Parties, including,
without limitation, business interruption insurance, product liability
insurance, and directors and officers insurance.
(xvii) A Borrowing Base Certificate dated as of the most recent
month end prior to the date of the Initial Extension of Credit;
provided, however that if such month end is less than 20 days prior to
the date of the Initial Extension of Credit, such Borrowing Base
Certificate may be dated as of the end of the next preceding month.
(xviii) Favorable opinions of Dechert, Price & Xxxxxxx, special
counsel for the Loan Parties, in substantially the form of Exhibit
X-0, Xxxxxx & Xxxxx, Xxxxx counsel to the Loan Parties, Xxxxx &
Lardner, Florida counsel to the Loan Parties and Jeffer, Mangels,
Xxxxxx & Xxxxxxx, California counsel to the Loan Parties, in
substantially the form of Exhibit H-2.
SECTION 3.02. Conditions Precedent to Each Borrowing, Swing Line Advance
and Issuance. The obligation of each Appropriate Lender to make an Advance
(other than a Letter of Credit Advance made by the Issuing Bank or a Revolving
Credit Lender pursuant to Section 2.03(c) and a Swing Line Advance made by a
Revolving Credit Lender pursuant to Section 2.02(b)) on the occasion of each
Borrowing (including the Initial Extension of Credit), and the obligation of the
Issuing Bank to issue a Letter of Credit (including the initial issuance) and
the obligation of the Swing Line Bank to make Swing Line Advances, shall be
subject to the further conditions precedent that on the date of such Borrowing
(including a Swing Line Borrowing made by the Swing Line Bank), issuance or
Swing Line Borrowing (a) the following statements shall be true (and each of the
giving of the applicable Notice of Borrowing (including a Swing Line Borrowing
made by the Swing Line Bank), Notice of Issuance and the acceptance by the
Borrower of the proceeds of such Borrowing or of such Letter of Credit shall
constitute a representation and warranty by the Borrower that both on the date
of such notice and on the date of such Borrowing or issuance such statements are
true):
(i) the representations and warranties contained in each Loan Document
are correct on and as of such date, before and after giving effect to such
Borrowing or issuance and to the application of the proceeds therefrom, as
though made on and as of such date other than any such representations or
warranties that, by their terms, refer to a specific date other than the
date of such Borrowing or issuance, in which case as of such specific date;
(ii) no event has occurred and is continuing, or would result from
such Borrowing or issuance or from the application of the proceeds
therefrom, that constitutes a Default;
60
(iii) for each Acquisition Borrowing, (x) the Borrower shall be in
compliance with the provisions of Section 5.02(e)(ii)(B), (y) if requested
by the Administrative Agent or the Required Lenders, the Borrower will
provide for the Lender Parties certificates and letters of the type
referred to in Section 3.01(k)(xiii) after giving effect to the application
of proceeds from such Borrowing and (z) the Borrower shall be in compliance
with the covenants set forth in Section 4.03 of the Senior Subordinated
Note Indenture and Section 4.03 of the Discount Debenture Indenture and the
Administrative Agent shall have received a certificate of the chief
financial officer of the Borrower certifying such compliance, together with
a schedule in form satisfactory to the Administrative Agent of the
computations used by the Borrower in determining compliance therewith; and
(iv) for each Revolving Credit Advance, Swing Line Advance or issuance
of any Letter of Credit, the sum of the Loan Values of the Eligible
Collateral (as determined based on the most recent Borrowing Base
Certificate delivered to the Lender Parties hereunder) exceeds the
aggregate principal amount of the Revolving Credit Advances plus Swing Line
Advances plus Letter of Credit Advances to be outstanding plus the
aggregate Available Amount of all Letters of Credit then outstanding after
giving effect to such Advance or issuance, respectively;
and (b) the Administrative Agent shall have received such other approvals,
opinions or documents as the Administrative Agent or the Required Lenders
through the Administrative Agent may reasonably request.
SECTION 3.03. Additional Conditions to the Additional Term Advance. The
obligation of each Appropriate Lender to make the Term Advance in connection
with the CH Acquisition on the occasion of such Term Borrowing is, in addition
to the conditions set forth in Section 3.02, subject to receipt by the
Administrative Agent, on or before the day of the closing of the CH Acquisition
(the "CH Acquisition Closing Date"), the following, each dated such day (unless
otherwise specified), in form and substance satisfactory to the Administrative
Agent (unless otherwise specified) in sufficient copies for each Lender Party:
(a) Completed requests for information, dated on or before the CH
Acquisition Closing Date, listing all effective financing statements filed
in the jurisdiction where the CH Assets are located that affect any of the
CH Assets, together with copies of such financing statements.
(b) Evidence of completion of all recordings and filings of or with
respect to the Security Agreement that the Administrative Agent may deem
necessary or desirable in order to perfect and protect the Liens created
thereby with respect to the CH Assets.
(c) Executed termination statements (Form UCC-3 or a comparable form),
in proper form to be duly filed on the CH Acquisition Closing Date under
the Uniform Commercial Code of all jurisdictions that the Administrative
Agent may deem desirable in order to terminate or amend existing Liens on
the CH Assets.
(d) A certified copy of the Asset Purchase Agreement.
(e) A landlord consent in form and substance satisfactory to the
Administrative Agent with respect to the real estate located at 0000 X-00,
Xxxxxxxxxx, Xxxxx.
61
(f) favorable opinions of Xxxxxx & Xxxxx, special Texas counsel for
the Loan Parties, in form and substance satisfactory to the Administrative
Agent.
(g) (x) certificates and letters of the type referred to in Section
3.01(k)(xiii) after giving effect to the CH Acquisition and (y) a
supplement to the opinion delivered pursuant to Section 3.01(xii) attesting
to the Solvency of the Borrower on a Consolidated basis and MEDIQ on a
Consolidated basis, after giving effect to the CH Acquisition.
(h) Environmental assessment reports, in form and substance
satisfactory to the Lender Parties, from X. XxXxxx Associates, Inc. dated
September 14, 1993 and October 28, 1997 as to any hazards, costs or
liabilities under Environmental Laws to which any Loan Party or any of its
Subsidiaries may be subject solely with respect to the real estate located
at 0000 X. Xxxxxxxx Xxxxxxx (Xxxxxxxxxx 00) Xxxxxxxxxx, Xxxxx, the amount
and nature of which and the Borrower's plans with respect to which shall be
acceptable to the Lender Parties. To the extent either the report or any
other information that may become available to the Lender Parties shall
disclose any hazards, costs or liabilities under Environmental Laws or
otherwise that the Lender Parties deem material, the Lender Parties shall
be satisfied that such hazards, costs or liabilities were adequately
reflected in MEDIQ's financial reserves shown on the financial statements
delivered pursuant to Section 3.01(k)(xi) or that, to the extent not so
reflected, the Borrower has made adequate provision for such hazards, costs
or liabilities.
SECTION 3.04. Determinations Under Section 3.01. For purposes of
determining compliance with the conditions specified in Section 3.01, each
Lender Party shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lender Parties unless an
officer of the Administrative Agent responsible for the transactions
contemplated by the Loan Documents shall have received notice from such Lender
Party prior to the Initial Extension of Credit specifying its objection thereto
and if the Initial Extension of Credit consists of a Borrowing, such Lender
Party shall not have made available to the Administrative Agent such Lender
Party's ratable portion of such Borrowing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower. Each Loan
Party represents and warrants as follows:
(a) Each Loan Party (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) is duly qualified and in good standing as a foreign
corporation in each other jurisdiction in which it owns or leases property
or in which the conduct of its business requires it to so qualify or be
licensed except where the failure to so qualify or be licensed is not
reasonably likely to have a Material Adverse Effect and (iii) has all
requisite corporate power and authority (including, without limitation, all
governmental licenses, permits and other approvals) to own or lease and
operate its properties and to carry on its business as now conducted and as
proposed to be conducted except where the failure to have such corporate
power and authority is not
62
reasonably likely to have a Material Adverse Effect. All of the outstanding
capital stock of the Borrower has been validly issued, is fully paid and
non-assessable and is owned by MEDIQ free and clear of all Liens, except
those created under the Loan Documents.
(b) Set forth on Schedule 4.01(b) hereto is a complete and accurate
list of all Subsidiaries of each Loan Party as of the date hereof, showing
(as to each such Subsidiary) the jurisdiction of its incorporation, the
number of shares of each class of capital stock authorized, and the number
outstanding, on the date hereof and the percentage of the outstanding
shares of each such class owned (directly or indirectly) by such Loan Party
and the number of shares covered by all outstanding options, warrants,
rights of conversion or purchase and similar rights at the date hereof. All
of the outstanding capital stock of all of each Loan Party's Subsidiaries
has been validly issued, is fully paid and non-assessable and is owned by
such Loan Party or one or more of its Subsidiaries free and clear of all
Liens, except those created under the Loan Documents. Each such Subsidiary
(i) is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, (ii) is duly
qualified and in good standing as a foreign corporation in each other
jurisdiction in which it owns or leases property or in which the conduct of
its business requires it to so qualify or be licensed except where the
failure to so qualify or be licensed is not reasonably likely to have a
Material Adverse Effect and (iii) has all requisite corporate power and
authority (including, without limitation, all governmental licenses,
permits and other approvals) to own or lease and operate its properties and
to carry on its business as now conducted and as proposed to be conducted,
except where the failure to have such corporate power and authority is not
reasonably likely to have a Material Adverse Effect.
(c) The execution, delivery and performance by each Loan Party of this
Agreement, any Notes, each other Loan Document and each Related Document to
which it is or is to be a party, and the consummation of the Merger, the
Recapitalization and the other transactions contemplated hereby and
thereby, are within such Loan Party's corporate powers, have been duly
authorized by all necessary corporate action, and do not (i) contravene
such Loan Party's charter or bylaws, (ii) violate any law, rule, regulation
(including, without limitation, Regulation X of the Board of Governors of
the Federal Reserve System), order, writ, judgment, injunction, decree,
determination or award, (iii) conflict with or result in the breach of, or
constitute a default under, any contract, loan agreement, indenture,
mortgage, deed of trust, lease or other instrument binding on or affecting
any Loan Party, any of its Subsidiaries or any of their properties or (iv)
except for the Liens created under the Loan Documents, result in or require
the creation or imposition of any Lien upon or with respect to any of the
properties of any Loan Party or any of its Subsidiaries. No Loan Party or
any of its Subsidiaries is in violation of any such law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award or in
breach of any such contract, loan agreement, indenture, mortgage, deed of
trust, lease or other instrument, the violation or breach of which is
reasonably likely to have a Material Adverse Effect.
(d) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body or any other
third party is required for (i) the due execution, delivery, recordation,
filing or performance by any Loan Party of this Agreement, any Notes, any
other Loan Document or any Related Document to which it is or is to be a
party, or for the consummation of the Merger, the Recapitalization or the
other transactions contemplated hereby or thereby, (ii) the grant by any
Loan Party of the Liens granted by it pursuant to the Collateral Documents,
(iii) the perfection or maintenance of the Liens created under the
Collateral Documents (including the first priority nature
63
thereof) or (iv) the exercise by the Administrative Agent or any Lender
Party of its rights under the Loan Documents or the remedies in respect of
the Collateral pursuant to the Collateral Documents, except for the
authorizations, approvals, actions, notices and filings listed on Schedule
4.01(d) hereto, all of which have been duly obtained, taken, given or made
and are in full force and effect. All applicable waiting periods in
connection with the Merger, the Recapitalization and the other transactions
contemplated hereby and thereby have expired without any action having been
taken by any competent authority restraining, preventing or imposing
materially adverse conditions upon the Merger, the Recapitalization or the
rights of the Loan Parties or their Subsidiaries freely to transfer or
otherwise dispose of, or to create any Lien on, any properties now owned or
hereafter acquired by any of them.
(e) This Agreement has been, and each other Loan Document and each
Related Document when executed and delivered will have been, duly executed
and delivered by each Loan Party party thereto. This Agreement is, and each
other Loan Document and each Related Document when delivered hereunder will
be, the legal, valid and binding obligation of each Loan Party party
thereto, enforceable against such Loan Party in accordance with its terms.
(f) (i) The Consolidated and consolidating balance sheets of the
Company and its Subsidiaries and the Borrower and its Subsidiaries as at
September 30, 1995, September 30, 1996 and September 30, 1997, and the
related Consolidated and consolidating statements of income and
consolidated statements of cash flow of each of the Company and its
Subsidiaries and the Borrower and its Subsidiaries for the Fiscal Years
then ended, accompanied, as to the Consolidated statements, by an
unqualified opinion of Deloitte & Touche LLP, independent public
accountants, or, as to the consolidating statements, duly certified by the
chief financial officers of the Company and the Borrower, and
(ii) The Consolidated and consolidating balance sheets of the Company
and its Subsidiaries and the Borrower and its Subsidiaries as at March 31,
1998, and the related Consolidated and consolidating statements of income
and Consolidated statements of cash flow of each of the Company and its
Subsidiaries and the Borrower and its Subsidiaries for the six months then
ended, duly certified by the chief financial officers of the Company and
the Borrower,
in each case true and correct copies of which have been furnished to the
Lender Parties, fairly present, subject, in the case of clause (ii) to
year-end adjustments, the Consolidated and consolidating financial
condition and the consolidating results of the operations of the Company
and its Subsidiaries and the Borrower and its Subsidiaries as at the dates
or for the periods ended on such dates, all in accordance with generally
accepted accounting principles applied on a consistent basis, and since
September 30, 1997 there has been no Material Adverse Change.
(g) The pro forma condensed Consolidated balance sheet of the Company
and its Subsidiaries at September 30, 1997 and at March 31, 1998, which
were prepared in accordance with Regulation S-X and true and correct copies
of which have been furnished to the Lender Parties, fairly present,
subject, to the pro forma adjustments provided for therein, (A) the pro
forma condensed Consolidated financial condition and the pro forma
condensed Consolidated results of the operations of the Company and its
Subsidiaries giving effect to the acquisition of SpectraCair for the full
Fiscal Year, and (B) the Consolidated and consolidating financial condition
and the consolidating financial condition
64
and the consolidating results of the operations of the Company and its
Subsidiaries, giving effect to the Merger and the Recapitalization in each
case, as at the dates or for the periods ended on such dates, all in
accordance with generally accepted accounting principles applied on a
consistent basis.
(h) The Consolidated forecasted balance sheets, income statements and
cash flow statements of MEDIQ and its Subsidiaries delivered to the
Administrative Agent pursuant to Section 3.01(k)(x) or 5.03 were prepared
in good faith on the basis of the assumptions stated therein, which
assumptions were fair in the light of conditions existing at the time of
delivery of such forecasts and at the time of the Initial Extension of
Credit, and represented, at both such times of delivery, MEDIQ's and the
Borrower's best estimate of their future financial performance.
(i) Neither the Information Memorandum nor any other information,
exhibit or report (excluding any financial projections) furnished by or on
behalf of any Loan Party to the Administrative Agent or any Lender Party,
taken as a whole, contained any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements made
therein not misleading in light of the circumstances under which such
information was provided as of the date such information was furnished and
on the date of the Initial Extension of Credit.
(j) There is no action, suit, investigation, litigation or proceeding
affecting any Loan Party or any of its Subsidiaries, including any
Environmental Action, pending or threatened before any court, governmental
agency or arbitrator that (i) could reasonably be expected to have a
Material Adverse Effect or (ii) purports to affect the legality, validity
or enforceability of the Merger, the Recapitalization, this Agreement, any
Note, any other Loan Document or any Related Document or the consummation
of the transactions contemplated hereby.
(k) No proceeds of any Advance or drawings under any Letter of Credit
will be used to acquire any equity security of a class that is registered
pursuant to Section 12 of the Securities Exchange Act of 1934.
(l) No Loan Party is engaged in the business of extending credit for
the purpose of purchasing or carrying Margin Stock, and no proceeds of any
Advance or drawings under any Letter of Credit will be used to purchase or
carry any Margin Stock or to extend credit to others for the purpose of
purchasing or carrying any Margin Stock.
(m) Following application of the proceeds of each Advance or drawing
under each Letter of Credit, not more than 25% of the value of the assets
(either of the Borrower only or of the Borrower and its Subsidiaries on a
Consolidated basis) subject to the provisions of Section 5.02(a) or 5.02(d)
or subject to any restriction contained in any agreement or instrument
between the Borrower and any Lender Party or any Affiliate of any Lender
Party relating to Debt and within the scope of Section 6.01(e) will be
Margin Stock.
(n) Set forth on Schedule 4.01(n) hereto is a complete and accurate
list of all Plans, Multiemployer Plans and Welfare Plans in effect as of
the date of this Agreement.
65
(o) No ERISA Event has occurred or is reasonably expected to occur
with respect to any Plan which could reasonably be expected to have a
Material Adverse Effect.
(p) As of the last annual actuarial valuation date, the Loan Parties
and the ERISA Affiliates are in compliance with the funding requirements of
the Internal Revenue Code and ERISA with respect to each Plan except where
non compliance with the foregoing is not reasonably likely to have a
Material Adverse Effect.
(q) Schedule B (Actuarial Information) to the most recent annual
report (Form 5500 Series) for each Plan, copies of which have been filed
with the Internal Revenue Service and furnished to the Lender Parties, is
complete and accurate and fairly presents the funding status of such Plan,
and since the date of such Schedule B there has been no material adverse
change in such funding status.
(r) Neither any Loan Party nor any ERISA Affiliate has incurred or is
reasonably expected to incur any Withdrawal Liability to any Multiemployer
Plan.
(s) Neither any Loan Party nor any ERISA Affiliate has been notified
by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or has been terminated, within the meaning of Title IV of
ERISA, and no such Multiemployer Plan is reasonably expected to be in
reorganization or to be terminated, within the meaning of Title IV of ERISA
except where such reorganization or termination could not reasonably be
expected to have a Material Adverse Effect.
(t) Except as set forth in the financial statements referred to in
this Section 4.01 and in Section 5.03, the Loan Parties and their
respective Subsidiaries have no material liability with respect to
"expected post retirement benefit obligations" within the meaning of
Statement of Financial Accounting Standards No. 106.
(u) Neither the business nor the properties of any Loan Party or any
of its Subsidiaries are affected by any fire, explosion, accident, strike,
lockout or other labor dispute, drought, storm, hail, earthquake, embargo,
act of God or of the public enemy or other casualty (whether or not covered
by insurance) that is reasonably likely to have a Material Adverse Effect.
(v) The operations and properties of each Loan Party and each of its
Subsidiaries comply in all material respects with all applicable
Environmental Laws and Environmental Permits, all past claims of
non-compliance with such Environmental Laws and Environmental Permits have
been resolved without ongoing obligations or costs, and no circumstances
exist that could (i) form the basis of an Environmental Action against any
Loan Party or any of its Subsidiaries or any of its properties that is
reasonably likely to have a Material Adverse Effect or (ii) cause any such
property to be subject to any material restrictions on ownership,
occupancy, use or transferability under any Environmental Law that is
reasonably likely to have a Material Adverse Effect.
(w) Except as is disclosed on Schedule 4.01(w), and with respect to
properties not owned by any Loan Party to the extent of the actual
knowledge of any Responsible Officer, none of the properties currently or
formerly owned or operated by any Loan Party or any of its Subsidiaries is
listed or proposed for listing on the NPL or on the CERCLIS or any
analogous foreign, state or local list or is
66
adjacent to any such property; there are no and never have been any
underground or aboveground storage tanks or any surface impoundments,
septic tanks, pits, sumps or lagoons in which Hazardous Materials are being
or have been treated, stored or disposed on any property currently owned or
operated by any Loan Party or any of its Subsidiaries or, to the best of
its knowledge, on any property formerly owned or operated by any Loan Party
or any of its Subsidiaries; there is no asbestos or asbestos-containing
material on any property currently owned or operated by any Loan Party or
any of its Subsidiaries; and Hazardous Materials have not been released,
discharged or disposed of on any property currently or formerly owned or
operated by any Loan Party or any of its Subsidiaries; except, in each
case, where the non-compliance with the foregoing is not reasonably likely
to have a Material Adverse Effect.
(x) Neither any Loan Party nor any of its Subsidiaries is undertaking,
and has not completed, either individually or together with other
potentially responsible parties, any investigation or assessment or
remedial or response action relating to any actual or threatened release,
discharge or disposal of Hazardous Materials at any site, location or
operation, either voluntarily or pursuant to the order of any governmental
or regulatory authority or the requirements of any Environmental Law which
could reasonably be expected to have a Material Adverse Effect; and all
Hazardous Materials generated, used, treated, handled or stored at, or
transported to or from, any property currently or formerly owned or
operated by any Loan Party or any of its Subsidiaries have been disposed of
in a manner not reasonably expected to result in material liability to any
Loan Party or any of its Subsidiaries.
(y) The Collateral Documents create a valid and perfected first
priority security interest in the Collateral (subject to Liens permitted
pursuant to Section 5.02(a)) securing the payment of the Secured
Obligations, and all filings and other actions necessary or desirable to
perfect and protect such security interest have been duly taken. The Loan
Parties are the legal and beneficial owners of the Collateral free and
clear of any Lien, except for the Liens and security interests created or
permitted under the Loan Documents.
(z) Each Loan Party and each of its Subsidiaries and Affiliates has
filed, has caused to be filed or has been included in all tax returns
(federal, state, local and foreign) required to be filed and has paid all
taxes shown thereon to be due, together with applicable interest and
penalties except where being contested in good faith and by proper
proceedings and as to which appropriate reserves are being maintained.
(aa) Set forth on Schedule 4.01(aa) hereto is a complete and accurate
list, as of the date hereof, of each taxable year of each Loan Party and
each of its Subsidiaries and Affiliates for which federal income tax
returns have been filed and for which the expiration of the applicable
statute of limitations for assessment or collection has not occurred by
reason of extension or otherwise (an "Open Year").
(bb) There is no unpaid amount, as of the date hereof, of adjustments
to the federal income tax liability of each Loan Party and each of its
Subsidiaries and Affiliates proposed by the Internal Revenue Service with
respect to Open Years. No issues have been raised by the Internal Revenue
Service in respect of Open Years that, in the aggregate, are reasonably
likely to have a Material Adverse Effect.
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(cc) There is no unpaid amount, as of the date hereof, of adjustments
to the state, local and foreign tax liability of each Loan Party and its
Subsidiaries and Affiliates proposed by all state, local and foreign taxing
authorities (other than amounts arising from adjustments to federal income
tax returns, if any) other than those being contested in good faith with
respect to contests applicable on the date hereof and listed on Schedule
4.01(cc). No issues have been raised by such taxing authorities that, in
the aggregate, are reasonably likely to have a Material Adverse Effect.
(dd) Neither the Merger nor the Recapitalization will be taxable to
MEDIQ or any of its Subsidiaries.
(ee) Neither any Loan Party nor any of its Subsidiaries is an
"investment company," or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended. Neither the
making of any Advances, nor the issuance of any Letters of Credit, nor the
application of the proceeds or repayment thereof by the Borrower, nor the
consummation of the other transactions contemplated hereby, will violate
any provision of such Act or any rule, regulation or order of the
Securities and Exchange Commission thereunder.
(ff) The Borrower and its Subsidiaries and MEDIQ and its Subsidiaries
are Solvent.
(gg) Set forth on Schedule 4.01(gg) hereto is a complete and accurate
list of all Existing Debt (other than Surviving Debt) as of the date
hereof, showing the principal amount outstanding thereunder, the maturity
date thereof and the amortization schedule therefor.
(hh) Set forth on Schedule 4.01(hh) hereto is a complete and accurate
list of all real property owned by any Loan Party or any of its
Subsidiaries as of the date hereof, showing the street address, county or
other relevant jurisdiction, state and record owner. Each Loan Party or
such Subsidiary has good, marketable and insurable fee simple title to such
real property, free and clear of all Liens, other than Liens created or
permitted by the Loan Documents.
(ii) Set forth on Schedule 4.01(ii) hereto is a complete and accurate
list of all Investments held by any Loan Party or any of its Subsidiaries,
showing as of the date hereof the amount, obligor or issuer and maturity,
if any, thereof.
(jj) Set forth on Schedule 4.01(jj) hereto is a complete and accurate
list of all patents, registered trademarks and service marks and registered
copyrights, and all applications therefor and licenses thereof, of each
Loan Party as of the date hereof or any of its Subsidiaries, showing as of
the date hereof the jurisdiction in which registered or issued, the
registration or issuance number and the date of registration or issuance.
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ARTICLE V
COVENANTS
SECTION 5.01. Affirmative Covenants. So long as any Obligation under or in
respect of any Loan Document of any Loan Party shall remain unpaid, any Letter
of Credit shall be outstanding, any Bank Hedge Agreement shall be in effect or
any Lender Party shall have any Commitment hereunder, each Loan Party will:
(a) Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply, in all material respects, with all applicable laws,
rules, regulations and orders, such compliance to include, without
limitation, compliance with ERISA and the Racketeer Influenced and Corrupt
Organizations Chapter of the Organized Crime Control Act of 1970.
(b) Payment of Taxes, Etc. Pay and discharge, and cause each of its
Subsidiaries to pay and discharge, before the same shall become delinquent,
(i) all taxes, assessments and governmental charges or levies imposed upon
it or upon its property and (ii) all lawful claims that, if unpaid, might
by law become a Lien upon its property which is not otherwise permitted
hereunder; provided, however, that neither any Loan Party nor any of its
Subsidiaries shall be required to pay or discharge any such tax,
assessment, charge or claim (x) that is being contested in good faith and
by proper proceedings and as to which appropriate reserves are being
maintained, or (y) in respect of which the Lien resulting therefrom, if
any, attaches to its property and becomes enforceable against its other
creditors, to the extent that the aggregate amount of all such taxes,
assessments, charges or claims does not exceed $250,000.
(c) Compliance with Environmental Laws. Comply, and cause each of its
Subsidiaries and all lessees and other Persons operating or occupying its
properties to comply, in all material respects, with all applicable
Environmental Laws and Environmental Permits; obtain and renew and cause
each of its Subsidiaries to obtain and renew all Environmental Permits
necessary for its operations and properties, except if the failure to
obtain or renew such Environmental Permit is not reasonably likely to have
a Material Adverse Effect; and conduct, and cause each of its Subsidiaries
to conduct, any investigation, study, sampling and testing, and undertake
any cleanup, removal, remedial or other action necessary to remove and
clean up all Hazardous Materials from any of its properties, in accordance
with the requirements of all Environmental Laws, except if the failure to
remove or clean up such Hazardous Materials is not reasonably likely to
have a Material Adverse Effect; provided, however, that no Loan Party or
any of its Subsidiaries shall be required to undertake any such cleanup,
removal, remedial or other action to the extent that its obligation to do
so is being contested in good faith and by proper proceedings and
appropriate reserves are being maintained with respect to such
circumstances.
(d) Maintenance of Insurance. Maintain, and cause each of its
Subsidiaries to maintain, insurance with responsible and reputable
insurance companies or associations in such amounts and covering such risks
as is usually carried by companies engaged in similar businesses and owning
similar properties in the same general areas in which such Loan Party or
such Subsidiary operates.
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(e) Preservation of Corporate Existence, Etc. Preserve and maintain,
and cause each of its Subsidiaries (other than those set forth on Schedule
5.01(e)) to preserve and maintain, its corporate existence, rights (charter
and statutory), permits, licenses, approvals, privileges and franchises,
except if the failure to preserve and maintain such permits, approvals or
licenses is not reasonably likely to have a Material Adverse Effect;
provided, however, that such Loan Party may consummate any merger or
consolidation permitted under Section 5.02(c).
(f) Visitation Rights. At any reasonable time and from time to time,
upon reasonable prior notice, permit the Administrative Agent or any of the
Lender Parties or any agents or representatives thereof, to examine and
make copies of and abstracts from the records and books of account of, and
visit the properties of, such Loan Party and any of its Subsidiaries, and
to discuss the affairs, finances and accounts of such Loan Party and any of
its Subsidiaries with any of their officers or directors and with their
independent certified public accountants.
(g) Preparation of Environmental Reports. At the request of the
Administrative Agent at the following times: (i) upon the occurrence and
continuance of an Event of Default, (ii) upon the acquisition of real
property by any Loan Party or any of its Subsidiaries and (iii) at any time
when the Lenders have reason to believe that a condition exists or an event
has occurred with respect to any properties owned or operated by the Loan
Parties and their Subsidiaries that may result in material liability,
provide to the Lender Parties within 90 days after such request, at the
expense of the Borrower, a Phase I environmental site assessment report for
any of its or its Subsidiaries' owned properties described in such request,
prepared by an environmental consulting firm acceptable to the
Administrative Agent (and, if based upon the recommendation of such
environmental consulting firm, a Phase II environmental site assessment
report) indicating the presence or absence of Hazardous Materials and the
estimated cost of any compliance, removal or remedial action in connection
with any Hazardous Materials on such properties; without limiting the
generality of the foregoing, if the Administrative Agent determines at any
time that a material risk exists that any such report will not be provided
within the time referred to above, upon at least 10 days' written notice to
the Borrower, the Administrative Agent may retain an environmental
consulting firm to prepare such report at the expense of the Borrower, and
such Loan Party hereby grants and agrees to cause any Subsidiary that owns
any property described in such request to grant at the time of such
request, to the Administrative Agent or to any Lender Party who makes such
request through the Administrative Agent, such firm and any agents or
representatives thereof an irrevocable non-exclusive license, subject to
the rights of tenants, to enter onto their respective properties to
undertake such an assessment.
(h) Keeping of Books. Keep, and cause each of its Subsidiaries to
keep, proper books of record and account, in which full and correct entries
shall be made of all financial transactions and the assets and business of
such Loan Party and each such Subsidiary in accordance with generally
accepted accounting principles.
(i) Maintenance of Properties, Etc. Maintain and preserve, and cause
each of its Subsidiaries to maintain and preserve, all of its properties
that are reasonably required in the conduct of its business in good working
order and condition, ordinary wear and tear excepted, and except for
properties that have become obsolete or no longer fit for their intended
purposes.
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(j) Compliance with Terms of Leaseholds. Make all payments and
otherwise perform all obligations in respect of all leases of real property
to which such Loan Party or any of its Subsidiaries is a party, keep such
leases in full force and effect and not allow such leases to lapse or be
terminated or any rights to renew such leases to be forfeited or canceled,
except if the failure to make such payment, perform such obligations or
keep such leases in full force and effect is not reasonably likely to have
a Material Adverse Effect.
(k) Performance of Related Documents. Perform and observe, in all
material respects, all of the terms and provisions of each Related Document
to be performed or observed by it, maintain each such Related Document in
full force and effect, enforce such Related Document in accordance with its
terms, take all such action to such end as may be from time to time
reasonably requested by the Administrative Agent and, upon request of the
Administrative Agent, make to each other party to each such Related
Document such demands and requests for information and reports or for
action as such Loan Party is entitled to make under such Related Document.
(l) Transactions with Affiliates. Conduct, and cause each of its
Subsidiaries to conduct, all transactions otherwise permitted under the
Loan Documents with any of their Affiliates on terms that are fair and
reasonable and no less favorable to such Loan Party or its Subsidiaries
than it would obtain in a comparable arm's-length transaction with a Person
not an Affiliate; provided, that so long as no Default shall have occurred
and be continuing, (i) fees under the Management Agreement may be paid and
(ii) payments permitted pursuant to Section 5.02(f) may be made.
(m) Covenant to Give Security. Upon (x) the request of the
Administrative Agent, (y) the formation or acquisition of any new direct or
indirect Subsidiary of any Loan Party or (z) the acquisition of any
property by any Loan Party, and such property, in the judgment of the
Administrative Agent, shall not already be subject to a perfected first
priority security interest in favor of the Administrative Agent for the
benefit of the Secured Parties, then the Borrower shall, in each case at
the Borrower's expense:
(i) within 10 days after the formation or acquisition of a
Subsidiary, cause each such Subsidiary and each direct and
indirect Subsidiary of such Subsidiary to duly execute and
deliver to the Administrative Agent a guaranty or guaranty
supplement, in form and substance satisfactory to the
Administrative Agent, (unless, in the case of any Foreign
Subsidiary, such guaranty would result in adverse tax
consequences to the Loan Parties) guaranteeing all the
Obligations of the Loan Parties under the Loan Documents,
(ii) within 10 days after such request, formation or
acquisition, furnish to the Administrative Agent a description of
the real and personal properties of the Borrower and its
Subsidiaries in detail satisfactory to the Administrative Agent,
(iii) within 15 days after such request, formation or
acquisition, duly execute and deliver, and cause each such
Subsidiary, and cause each direct and indirect Subsidiary of such
Subsidiary to duly execute and deliver to the Administrative
Agent mortgages, pledges, assignments, security agreement
supplements and other security agreements, as specified by and in
form and substance satisfactory to the Administrative Agent,
(unless, in the case of any Foreign Subsidiary, such mortgage,
pledge, assignment or security interest would result in
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adverse tax consequences to the Loan Parties) securing payment of
all the Obligations of the Loan Parties under the Loan Documents
and constituting first priority (other than with respect to
Permitted Liens) Liens on all such properties,
(iv) within 30 days after such request, formation or
acquisition, duly execute and deliver, and cause each such
Subsidiary, and cause each direct and indirect Subsidiary of such
Subsidiary to take whatever action (including, without
limitation, the recording of mortgages, the filing of Uniform
Commercial Code financing statements, the giving of notices and
the endorsement of notices on title documents) may be necessary
or advisable in the opinion of the Administrative Agent (unless,
in the case of any Foreign Subsidiary, such action would result
in adverse tax consequences to the Loan Parties) to vest in the
Administrative Agent (or in any representative of the
Administrative Agent designated by it) valid and subsisting first
priority (other than with respect to Permitted Liens) Liens on
the properties purported to be subject to the mortgages, pledges,
assignments, security agreement supplements and other security
agreements delivered pursuant to this Section 5.01(m),
enforceable against all third parties in accordance with their
terms,
(v) within 60 days after such request, formation or
acquisition, deliver to the Administrative Agent, upon the
request of the Administrative Agent in its sole discretion, a
signed copy of a favorable opinion, addressed to the
Administrative Agent and the other Secured Parties, of counsel
for the Loan Parties reasonably acceptable to the Administrative
Agent as to the matters contained in clauses (i), (iii) and (iv)
above, as to such mortgages, pledges, assignments, security
agreement supplements and other security agreements being legal,
valid and binding obligations of each such Loan Party enforceable
in accordance with their terms, as to the perfection of the
security interest created by such mortgage, pledge, assignment,
security agreement supplements or other security agreement and as
to such other matters as the Administrative Agent may reasonably
request,
(vi) at any time and from time to time, promptly execute and
deliver any and all further instruments and documents and take
all such other action as the Administrative Agent may deem
necessary or desirable in obtaining the full benefits of, or in
perfecting and preserving the Liens of, such guaranties,
mortgages, pledges, assignments, security agreement supplements
and security agreements, and
(vii) promptly upon organizing and within five days after
acquiring any Foreign Subsidiary, each Loan Party shall pledge to
the Administrative Agent on behalf of the Secured Parties 100%
(or 65% if such pledge would result in adverse tax consequences
to the Loan Parties) of the total outstanding shares or other
ownership interests of such Person owned by such Loan Party.
(n) Interest Rate Hedging. Enter into prior to July 15, 1998, and
maintain at all times thereafter, interest rate Hedge Agreements with
Persons acceptable to the Administrative Agent, covering a notional amount
of not less than 50% of the Term Facility on terms acceptable to the
Administrative Agent.
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(o) Further Assurances. (i) promptly upon the reasonable request by
the Administrative Agent, or any Lender Party through the Administrative
Agent, correct any material defect or error that may be discovered in any
Loan Document or in the execution, acknowledgment, filing or recordation
thereof;
(ii) promptly upon the reasonable request by the
Administrative Agent, or any Lender Party through the
Administrative Agent, do, execute, acknowledge, deliver, record,
re-record, file, refile, register and re-register any and all
such further acts, deeds, conveyances, pledge agreements,
mortgages, deeds of trust, trust deeds, assignments, financing
statements and continuations thereof, termination statements,
notices of assignment, transfers, certificates, assurances and
other instruments as the Administrative Agent, or any Lender
Party through the Administrative Agent, may reasonably require
from time to time in order to (A) carry out more effectively the
purposes of the Loan Documents, (B) to the fullest extent
permitted by applicable law, subject any Loan Party's or any of
its Subsidiaries' properties, assets, rights or interests to the
Liens now or hereafter intended to be covered by any of the
Collateral Documents, (C) perfect and maintain the validity,
effectiveness and priority of any of the Collateral Documents and
any of the Liens intended to be created thereunder and (D)
assure, convey, grant, assign, transfer, preserve, protect and
confirm more effectively unto the Administrative Agent and the
Lender parties the rights granted or now or hereafter intended to
be granted to the Administrative Agent and the Lender Parties
under any Loan Document or under any other instrument executed in
connection with any Loan Document to which any Loan Party or any
of its Subsidiaries is or is to be a party; and
(iii) prior to incurring any Debt that would qualify as
"Designated Senior Indebtedness" (as defined in the Senior
Subordinated Note Indenture), obtain the consent of the holders
of such Debt to designate the Administrative Agent as the
"Representative" (as defined in the Senior Subordinated Note
Indenture) of all "Designated Senior Indebtedness" so long as any
Obligation under or in respect of any Loan Document of any Loan
Party shall remain unpaid, any Letter of Credit shall be
outstanding, any Bank Hedge Agreement shall be in effect or any
Lender Party shall have any Commitment hereunder.
(p) Syndication. Take all actions which BNP may reasonably request to
assist it in forming a syndicate acceptable to it including, but not
limited to: (i) making senior management of the Loan Parties and BRS
available to participate in informational meetings with potential lenders
at such times and places as BNP may reasonably request; and (ii) timely
providing BNP with all information reasonably deemed necessary by it to
successfully complete the syndication, including, without limitation, a
summary of the operating prospects (including financial projections) of the
Loan Parties and their Subsidiaries.
(q) Year 2000 Compliance. Be, and cause each of its Subsidiaries to
be, Year 2000 Compliant with respect to its internal accounting procedures,
in all material respects, on or before December 31, 1998 and at all times
thereafter.
(r) Key Man Life Insurance. So long as available at commercially
reasonable terms, as soon as practicable and in any event within 90 days
after the date of the Initial Extension of Credit, on terms and conditions
reasonably satisfactory to the Administrative Agent, obtain key man life
insurance of at least $10,000,000 for the chief executive officer of the
Borrower, naming the Administrative Agent
73
as insured, with such responsible and reputable insurance company or
association as is satisfactory to the Administrative Agent.
SECTION 5.02. Negative Covenants. So long as any Obligation under or in
respect of any Loan Document of any Loan Party shall remain unpaid, any Letter
of Credit shall be outstanding, any Bank Hedge Agreement shall be in effect or
any Lender Party shall have any Commitment hereunder, no Loan Party will, at any
time:
(a) Liens, Etc. Create, incur, assume or suffer to exist, or permit
any of its Subsidiaries to create, incur, assume or suffer to exist, any
Lien on or with respect to any of its properties of any character
(including, without limitation, accounts) whether now owned or hereafter
acquired, or sign or file or suffer to exist, or permit any of its
Subsidiaries to sign or file or suffer to exist, under the Uniform
Commercial Code of any jurisdiction, a financing statement that names such
Loan Party or any of its Subsidiaries as debtor, or sign or suffer to
exist, or permit any of its Subsidiaries to sign or suffer to exist, any
security agreement authorizing any secured party thereunder to file such
financing statement, or assign, or permit any of its Subsidiaries to
assign, any accounts or other right to receive income, excluding, however,
from the operation of the foregoing restrictions the following:
(i) Liens created under the Loan Documents;
(ii) Permitted Liens;
(iii) Liens existing on the date hereof and described on Schedule
5.02(a)(iii) hereto, each in an amount and for a duration not to
exceed the amount and duration of such Lien listed on such Schedule;
(iv) Liens arising in connection with Capitalized Leases
permitted under Sections 5.02(b)(iii) and (iv), provided that no such
Lien shall extend to or cover any Collateral or assets other than the
assets subject to such Capitalized Leases;
(v) purchase money Liens upon or in real property or equipment
acquired or any other property the purchase of which constitutes a
Capital Expenditure or held by the Borrower or any of its Subsidiaries
in the ordinary course of business to secure the purchase price of
such property or equipment or to secure Debt incurred solely for the
purpose of financing the acquisition of any such property or equipment
to be subject to such Liens, or Liens existing on any such property or
equipment at the time of acquisition (other than any such Liens
created in contemplation of such acquisition that do not secure the
purchase price), or such Liens placed on such property or equipment
within six months of the time of such acquisition (so long as such
transactions are consistent with past business practices), or
extensions, renewals or replacements of any of the foregoing for the
same or a lesser amount; provided, however, that no such Lien shall
extend to or cover any property other than the property or equipment
being acquired, and no such extension, renewal or replacement shall
extend to or cover any property not theretofore subject to the Lien
being extended, renewed or replaced; and provided further that the
aggregate principal amount of the Debt secured by Liens permitted by
this clause (v)
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shall not exceed the amount permitted under Section 5.02(b)(iv)
at any time outstanding and that any such Debt shall not otherwise be
prohibited by the terms of the Loan Documents;
(vi) the filing of financing statements solely as a precautionary
measure in connection with operating leases;
(vii) the replacement, extension or renewal of any Lien permitted
by clause (iii) above upon or in the same property theretofore subject
thereto or the replacement, extension or renewal (without increase in
the amount or change in any direct or contingent obligor) of the Debt
secured thereby; and
(viii) Liens arising in connection with any judgment or order for
the payment of money in an amount not to exceed $1,000,000 rendered
against any Loan Party or any of its Subsidiaries, provided, that
enforcement proceedings shall not have been commenced by any creditor
upon such judgment or order and provided further, that there shall not
have occurred a period of 10 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal
or otherwise, shall not be in effect.
(b) Debt. Create, incur, assume or suffer to exist, or permit any of
its Subsidiaries to create, incur, assume or suffer to exist, any Debt
other than:
(i) Debt under the Loan Documents,
(ii) Debt in respect of Hedge Agreements designed to hedge
against fluctuations in interest rates or foreign exchange rates
incurred in the ordinary course of business and consistent with
prudent business practice in an aggregate notional amount not to
exceed $125,000,000 for interest rate Hedge Agreements at any time
outstanding,
(iii) Capitalized Leases assumed pursuant to an Investment
permitted pursuant to Section 5.02(e)(ii)(B), so long as such
Capitalized Leases are not entered into in contemplation of such
Investment,
(iv) Capitalized Leases, so long as the aggregate principal
amount of such Capitalized Leases outstanding at any time plus the
aggregate principal amount of Liens permitted pursuant to Section
5.02(a)(v) outstanding at any time shall not exceed $10,000,000,
(v) Debt assumed or incurred in connection with Capital
Expenditures secured by Liens permitted by Section 5.02(a)(v),
(vi) unsecured Debt in an aggregate amount not to exceed
$3,000,000,
(vii) Surviving Debt,
(viii) Debt under the Senior Subordinated Notes and, with respect
to Loan Parties which are Subsidiaries of the Borrower, Subordinated
Guaranties,
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(ix) Debt consisting of take-or-pay contracts assumed by the
Borrower in connection with the acquisition of SpectraCair in an
aggregate amount not to exceed $7,500,000,
(x) Debt in respect of indemnities given by the Borrower in
connection with Investments permitted pursuant to Section
5.02(e)(ii)(B) and divestitures permitted pursuant to Section 5.02(f),
so long as such indemnities are customary for comparable transactions
and consistent with prior practice of the Borrower,
(xi) indorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business,
(xii) any Guaranty of Obligations under the Loan Documents,
(xiii) Debt to the Borrower or to its wholly owned U.S.
Subsidiaries, subject in each case to the extent permitted by Section
5.02(e)(ii)(A) and (B); provided that such Debt shall (x) constitute
Pledged Debt and (y) shall be evidenced by promissory notes in form
and substance satisfactory to the Administrative Agent and such
promissory notes shall be pledged as security for the Obligations
under the Loan Documents to the holder thereof, and
(xiv) subordinated Debt incurred solely in connection with an
Investment made pursuant to Section 5.02(e)(ii)(B), provided that (1)
such Debt shall mature not earlier than two years following the
Termination Date and shall not bear cash interest until such date, (2)
such Debt shall contain subordination terms acceptable to the Required
Lenders, (3) after giving effect to the incurrence of such Debt, the
Borrower shall be in compliance with the financial ratios referred to
in Section 5.02(e)(ii)(B) and (4) such Debt shall otherwise be on
terms acceptable to the Administrative Agent.
(c) Mergers, Etc. Merge into or consolidate with any Person or permit
any Person to merge into it, or permit any of its Subsidiaries to do so,
except that (i) any wholly owned Subsidiary of the Borrower may merge into
or consolidate with the Borrower or any other such Subsidiary, so long as
the surviving Person is the Borrower or, if the merger or consolidation is
with a Subsidiary other than the Borrower, such surviving Person is a
wholly owned U.S. Subsidiary of the Borrower, (ii) any wholly owned
Subsidiary of the Borrower may merge or consolidate with any Person to
effect the acquisition of such Person or its property in a transaction
permitted under Section 5.02(e)(ii)(A) and (B), so long as the surviving
Person is the Borrower or becomes a wholly owned U.S. Subsidiary of the
Borrower and complies with Section 5.01(m), and (iii) the Borrower may
merge into (A) any wholly owned U.S. Subsidiary of the Borrower acquired
pursuant to Section 5.02(e)(ii)(A) and (B), or (B) any wholly owned U.S.
Subsidiary previously merged or consolidated with any other wholly owned
Subsidiary acquired pursuant to Section 5.02(e)(ii)(A) and (B), so long as
the Person surviving such merger is the Borrower.
(d) Sales, Etc. of Assets. Sell, lease, transfer or otherwise dispose
of, or permit any of its Subsidiaries to sell, lease, transfer or otherwise
dispose of, any assets other than in the ordinary course of business, or
grant any option or other right to purchase, lease or otherwise acquire any
assets other
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than Inventory or rental equipment to be sold or leased in the
ordinary course of its business, except in a transaction authorized by
subsection (c) of this Section and as set forth on Schedule 5.02(d).
(e) Investments. Make or hold, or permit any of its Subsidiaries to
make or hold, any Investment, except, so long as no Default shall have
occurred and be continuing at the time of any action described below or
would result therefrom:
(i) in the case of any Loan Party,
(A) Investments existing on the date hereof and
described on Schedule 4.01(ii) hereto,
(B) loans and advances by any Loan Party to employees
(x) in the ordinary course of the business of the Borrower
as presently conducted in an aggregate principal amount not
to exceed $500,000 at any time outstanding and (y) in order
to permit equity holders that are members of senior
management to purchase stock in MEDIQ, provided that the
proceeds of such stock received by MEDIQ are promptly
contributed to the Borrower, and
(C) Investments in (x) demand deposit accounts
maintained in the ordinary course of business with any
Person of the type referred to in clause (i), (ii), (iii),
(iv) or (v) of the definition of "Eligible Assignee", (y)
Cash Equivalents, and (z) the Citibank Account; and
(ii) in the case of the Borrower,
(A) loans and advances by the Borrower to any Canadian
Subsidiary in an aggregate amount, together with Investments
permitted by clauses (B) and (G) of this Section 5.02(e)(ii)
in any Canadian Subsidiary or entity organized under the
laws of Canada, not to exceed $10,000,000 at any one time
outstanding;
(B) Investments directly by the Borrower or through a
wholly-owned U.S. Subsidiary to the extent permitted
pursuant to Section 5.02(e)(ii)(F) or Canadian Subsidiary in
100% of the capital stock of any Person organized under the
laws of the of United States or any State hereof or the
District of Columbia to the extent permitted pursuant to
Section 5.02(e)(ii)(F) or a province of Canada or in the
assets comprising a business or an operating division of a
business of any Person; provided that amounts invested
pursuant to this clause (B) in entities organized under the
laws of Canada, together with loans and advances permitted
by clause (A) of this Section 5.02(e)(ii) shall not exceed
the amount set forth in such clause (A), provided further
that:
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(1) such Investments are in the same or similar lines
of business in which the Borrower is involved on the date
hereof and after giving effect thereto, the capital stock or
the assets, as the case may be, acquired in connection with
such Investment are owned directly by the Borrower,
(2) for the Rolling Period ended as at the end of the
most recent period for which financial statements were
required to be furnished to the Administrative Agent
pursuant to Section 5.03(b), (c) or (d) and calculated
immediately before and after giving effect to such
Investment, (x) the Leverage Ratio shall not be more than
the lesser of 6.00:1.00 and the ratio set forth in Section
5.04(a) and (y) the Senior Leverage Ratio shall not be more
than the lesser of 3.50:1.00 and the ratio set forth in
Section 5.04(b), in each case, for such Rolling Period,
(3) the Administrative Agent has received (i) the
financial statements for such business or operating
division, (ii) the pro forma Consolidated balance sheet of
the Borrower and its Subsidiaries and such business or
operating division, in each case as of the most recently
ended Rolling Period and (iii) a schedule setting forth the
Pro Forma EBITDA for such business or operating division, on
a monthly basis for the most recently ended Rolling Period;
(C) Investments by the Borrower in Hedge Agreements
permitted under Section 5.02(b)(ii);
(D) Investments evidenced by promissory notes issued to
the Borrower, in the ordinary course of business, with
respect to amounts due to the Borrower;
(E) the CH Acquisition;
(F) Investments by the Borrower in wholly-owned U.S.
Subsidiaries; provided, however, that the aggregate
outstanding amount of equity Investments pursuant to this
clause (F) shall not exceed $10,000,000 at any one time
outstanding; and provided further, that any such additional
Investments that are for Investments described in Section
5.02(e)(ii)(B) shall meet all of the conditions set forth in
such Section;
(G) Investments in joint ventures in an amount not to
exceed $5,000,000; provided, however, that the aggregate
amount of Investments made pursuant to this clause (G)
together with the aggregate amount of Investments made
pursuant to clause (A) above of this Section
5.02(e)(ii)shall not exceed $10,000,000 at any one time
outstanding; and provided further, that any such Investments
that are for Investments described in Section 5.02(e)(ii)(B)
shall meet all of the conditions set forth in such Section;
and
78
(H) Investments in MEDIQ pursuant to Section 5.02(f).
(f) Restricted Payments. Declare or pay any dividends, purchase,
redeem, retire, defease or otherwise acquire for value any of its capital
stock or any warrants, rights or options to acquire such capital stock, now
or hereafter outstanding, return any capital to its stockholders as such,
make any distribution of assets, capital stock, warrants, rights, options,
obligations or securities to its stockholders as such or issue or sell any
capital stock or any warrants, rights or options to acquire such capital
stock, or, in the case of the Borrower, permit any of its Subsidiaries to
purchase, redeem, retire, defease or otherwise acquire for value any
capital stock of such Loan Party or any warrants, rights or options to
acquire such capital stock or to issue or sell any capital stock or any
warrants, rights or options to acquire such capital stock, except that any
Subsidiary of the Borrower may declare and pay cash dividends to the
Borrower, and, so long as no Default shall have occurred and be continuing
at the time of any action described below or would result therefrom:
(i) the Borrower may pay or advance funds as and when needed to
MEDIQ (x) for operating expenses in the ordinary course of MEDIQ's
business, including, without limitation, expenses related to
severance, insurance (including health insurance), pension benefits,
401(k) plans and any other expenses of the Borrower and its
Subsidiaries that for administrative convenience are consolidated and
paid by MEDIQ, and (y) to pay the BRS management fee to the extent
permitted by Section 5.01(l); provided, that if MEDIQ shall acquire
any assets other than the stock of the Borrower, the Borrower shall
only be permitted to pay or advance funds as and when needed to MEDIQ
up to an amount not to exceed the total fair share of such fees and
expenses of the Borrower or the Borrower and each of its direct or
indirect Subsidiaries (collectively, the "Borrower Group");
(ii) the Borrower may pay cash dividends or advance funds as and
when needed in order to permit MEDIQ to make payments of taxes for
each Fiscal Year; provided, that if MEDIQ shall acquire any assets
other than the capital stock of the Borrower, the Borrower may pay
cash dividends or advance funds as and when needed in order to permit
MEDIQ to make payments of taxes for each Fiscal Year solely in an
amount not to exceed the total tax liability that the Borrower or the
Borrower Group, would have incurred if the Borrower or the Borrower
Group had filed a separate federal income tax return or separate
consolidated federal income tax return, as the case may be, for such
Fiscal Year; provided further, that the maximum tax liability of the
Borrower or the Borrower Group, as the case may be, shall not exceed
the tax liability calculated as if the Borrower or the Borrower Group
had filed a separate federal income tax return, or separate
consolidated federal income tax return taking into account such losses
and credits as may be attributable to the taxable years prior to the
date of the Initial Extension of Credit; provided further that if on
the basis of the computations of the separate tax liability made by
the Borrower or the Borrower Group, the Borrower or the Borrower Group
would have had a claim for refund of federal income taxes, then MEDIQ
shall pay to the Borrower an amount equal to the refund that the
Borrower would have been entitled to obtain from the Internal Revenue
Service;
(iii) the Borrower may pay cash dividends or advance funds
directly or indirectly to MEDIQ to permit MEDIQ to (x) prepay the
7.50% Notes, (y) to make scheduled interest
79
payments on the Discount Debentures and the 7.50% Notes and (z)
to redeem the Series A Preferred Stock from the trustee of its 401(k)
plan in an aggregate amount not to exceed $450,000;
(iv) the Borrower may redeem the capital stock of MEDIQ from its
employees in an aggregate amount not to exceed $1,500,000 ,on an
annual basis, net of any amounts received from employees upon the sale
of capital stock of MEDIQ which are contributed to the Borrower; and
(v) the Borrower may pay additional cash dividends or advance
funds to MEDIQ in an aggregate amount not to exceed $250,000.
(g) Change in Nature of Business. Make, or permit any of its
Subsidiaries to make, any material change in the nature of its business as
carried on at the date hereof.
(h) Charter Amendments. Amend, or permit any of its Subsidiaries to
amend, its certificate of incorporation or bylaws, unless such change would
not have a Material Adverse Effect or does not adversely affect the rights
and remedies of the Administrative Agent or any Lender Party under any Loan
Document or any Related Document.
(i) Accounting Changes. Make or permit, or permit any of its
Subsidiaries to make or permit, any change in (i) accounting policies or
reporting practices, except as required by generally accepted accounting
principles or (ii) Fiscal Year.
(j) Prepayments, Etc., of Debt. (i) Prepay, redeem, purchase, defease
or otherwise satisfy prior to the scheduled maturity thereof in any manner,
or make any payment in violation of any subordination terms of, any Debt,
other than:
(x) the prepayment of the Advances in accordance with the
terms of this Agreement, and
(y) if before and after giving effect to any such
prepayment, redemption, purchase, defeasance or other
satisfaction, no Default has occurred or would result therefrom,
the 7.5% Notes, or
(ii) amend, modify or change in any manner any term or condition
of the Subordinated Notes, or permit any of its Subsidiaries to do any
of the foregoing other than to prepay any Debt payable to the
Borrower.
(k) Amendment, Etc., of Related Documents. Cancel or terminate any
Related Document or consent to or accept any cancellation or termination
thereof, amend, modify or change in any manner any term or condition of any
Related Document or give any consent, waiver or approval thereunder, waive
any default under or any breach of any term or condition of any Related
Document, agree in any manner to any other amendment, modification or
change of any term or condition of any Related Document or take any other
action in connection with any Related Document that would impair the value
80
of the interest or rights of the Borrower thereunder or that would impair
the rights or interests of the Administrative Agent or any Lender Party, or
permit any of its Subsidiaries to do any of the foregoing.
(l) Section 338 Election. Make an election under Section 338(g) of the
Internal Revenue Code with respect to the Merger.
(m) Negative Pledge. Enter into or suffer to exist, or permit any of
its Subsidiaries to enter into or suffer to exist, any agreement
prohibiting or conditioning the creation or assumption of any Lien upon any
of its property or assets other than (i) in favor of the Secured Parties or
(ii) in connection with (A) any Surviving Debt, (B) any Debt secured by
purchase money Liens and Capitalized Leases, in each case, to the extent
permitted under Sections 5.02(b)(iii) and (iv), respectively, or (C) in
connection with the Discount Debentures and the Senior Subordinated Notes.
(n) Partnerships. Become a general partner in any general or limited
partnership or joint venture, or permit any of its Subsidiaries to do so.
(o) Other Transactions. Engage, or permit any of its Subsidiaries to
engage, in any transaction involving commodity options or futures contracts
or any similar speculative transactions (including, without limitation,
take-or-pay contracts) except for Hedge Agreements permitted under Section
5.02(b)(ii) and take-or-pay contracts permitted under Section 5.02(b)(ix).
SECTION 5.03. Reporting Requirements. So long as any Obligation under or in
respect of any Loan Document of any Loan Party shall remain unpaid, any Letter
of Credit shall be outstanding, any Bank Hedge Agreement shall be in effect or
any Lender Party shall have any Commitment hereunder, the Borrower will furnish
to the Lender Parties (except for the notice required under Section 5.03(a),
which shall be given to the Administrative Agent):
(a) Default and Prepayment Notices. As soon as possible and (i)
in any event within two Business Days after the occurrence of each
Default or any event, development or occurrence reasonably likely to
have a Material Adverse Effect continuing on the date of such
statement, a statement of a Responsible Officer setting forth details
of such Default, event, development or occurrence and the action that
the Borrower has taken and proposes to take with respect thereto, and
(ii) in any event no later than 11:00 A.M. (New York City time) at
least three Business Days before any prepayment of Term Advances is to
be made by the Borrower pursuant to Section 2.06 (the "Prepayment
Date"), written notice of the principal amount of such prepayment (the
"Prepayment Amount") and the applicable Prepayment Date. Each such
notice (a "Prepayment Notice") shall be by telex or telecopier or
otherwise as provided in Section 8.02.
(b) Monthly Financials. As soon as available and in any event
within 30 days after the end of each month (other than for each month
on which a fiscal quarter is also ending, in which event such
financials shall be delivered within 45 days), commencing June 30,
1998, Consolidated and consolidating balance sheets the Borrower and
its Subsidiaries as of the end of such month and Consolidated and
consolidating statements of income of the Borrower and its
Subsidiaries and Consolidated statements of cash flow of the Borrower
and its Subsidiaries for the period commencing at the end of the
previous month and ending with the end of such month and Consolidated
and consolidating statements of income
81
of the Borrower and its Subsidiaries and Consolidated statements of
cash flow of each of the Borrower and its Subsidiaries for the period
commencing at the end of the previous Fiscal Year and ending with the
end of such month, setting forth in each case in comparative form the
corresponding figures for the corresponding month of the preceding
Fiscal Year and the corresponding figures for the corresponding month
of the current annual forecast, all in reasonable detail and duly
certified (subject to year-end audit adjustments) by the chief
financial officers of the Borrower, together with (i) a certificate of
the chief financial officers of the Borrower stating that no Default
has occurred and is continuing or, if a Default has occurred and is
continuing, a statement as to the nature thereof and the action that
the Borrower has taken and proposes to take with respect thereto, and
(ii) in the event of any change from GAAP in the generally accepted
accounting principles used in the preparation of such financial
statements, a statement of reconciliation conforming such financial
statements to GAAP.
(c) Quarterly Financials. As soon as available and in any event
within 50 days after the end of each quarter of each Fiscal Year,
Consolidated balance sheets of MEDIQ and its Subsidiaries as of the
end of such quarter and Consolidated and consolidating statements of
income and Consolidated statements of cash flow of MEDIQ and its
Subsidiaries and the Borrower and its Subsidiaries for the period
commencing at the end of the previous fiscal quarter and ending with
the end of such fiscal quarter and Consolidated and consolidating
statements of income and a Consolidated and consolidating statements
of cash flow of MEDIQ and its Subsidiaries and the Borrower and its
Subsidiaries for the period commencing at the end of the previous
Fiscal Year and ending with the end of such quarter, setting forth in
each case in comparative form the corresponding figures for the
corresponding period of the preceding Fiscal Year, all in reasonable
detail and duly certified (subject to year-end audit adjustments) by
the chief financial officers of MEDIQ and the Borrower as having been
prepared in accordance with generally accepted accounting principles
consistent with those applied in the most recent annual audit,
together with (i) a certificate of said officers stating that no
Default has occurred and is continuing or, if a Default has occurred
and is continuing, a statement as to the nature thereof and the action
that MEDIQ or the Borrower has taken and proposes to take with respect
thereto, (ii) a schedule in form satisfactory to the Administrative
Agent of the computations used by MEDIQ and the Borrower in
determining compliance with the covenants contained in Sections
5.04(a) through (d) and (iii) in the event of any change from GAAP in
the generally accepted accounting principles used in the preparation
of such financial statements, a statement of reconciliation conforming
such financial statements to GAAP.
(d) Annual Financials. As soon as available and in any event
within 95 days after the end of each Fiscal Year, a copy of the annual
audit report for such year for MEDIQ and its Subsidiaries and the
Borrower and its Subsidiaries, including therein Consolidated balance
sheets of MEDIQ and its Subsidiaries and the Borrower and its
Subsidiaries as of the end of such Fiscal Year and Consolidated and
consolidating statements of income and Consolidated statements of cash
flow of MEDIQ and its Subsidiaries and the Borrower and its
Subsidiaries for such Fiscal Year, accompanied as to such Consolidated
statements, by an opinion acceptable to the Required Lenders of
Deloitte & Touche LLP or other independent public accountants of
recognized standing reasonably acceptable to the Required Lenders,
together with (i) a certificate of the chief financial officers of
MEDIQ and the Borrower stating that no Default has occurred and is
continuing or, if a default has occurred and is continuing, a
statement as to the nature thereof and the action that MEDIQ or the
Borrower has taken and proposes to take with respect thereto, (ii) a
schedule in form satisfactory to the Administrative Agent of the
computations used
82
by MEDIQ and the Borrower in determining compliance with the
covenants contained in Sections 5.04(a) through (c) and (iii) in the
event of any change from GAAP in the generally accepted accounting
principles used in the preparation of such financial statements, a
statement of reconciliation conforming such financial statements to
GAAP.
(e) Annual Forecasts. As soon as available and in any event no
later than the end of each Fiscal Year, forecasts prepared by
management of MEDIQ, in form satisfactory to the Administrative Agent,
of Consolidated balance sheets, income statements and cash flow
statements on a monthly basis for the Fiscal Year following such
Fiscal Year then ended.
(f) ERISA Events and ERISA Reports. (i) Promptly and in any event
within 10 days after any Loan Party or any ERISA Affiliate knows or
has reason to know that any ERISA Event which could reasonably be
expected to have a Material Adverse Effect has occurred, a statement
of the chief financial officer of MEDIQ describing such ERISA Event
and the action, if any, that such Loan Party or such ERISA Affiliate
has taken and proposes to take with respect thereto and (ii) on the
date any records, documents or other information must be furnished to
the PBGC with respect to any Plan pursuant to Section 4010 of ERISA, a
copy of such records, documents and information.
(g) Plan Terminations. Promptly and in any event within two
Business Days after receipt thereof by any Loan Party or any ERISA
Affiliate, copies of each notice from the PBGC stating its intention
to terminate any Plan or to have a trustee appointed to administer any
Plan.
(h) Actuarial Reports. Promptly upon receipt thereof by any Loan
Party or any ERISA Affiliate, a copy of the most recent actuarial
valuation report of each Plan.
(i) Plan Annual Reports. Promptly and in any event within 30 days
after the filing thereof with the Internal Revenue Service, copies of
each Schedule B (Actuarial Information) to the annual report (Form
5500 Series) with respect to each Plan.
(j) Multiemployer Plan Notices. Promptly and in any event within
five Business Days after receipt thereof by any Loan Party or any
ERISA Affiliate from the sponsor of a Multiemployer Plan, copies of
each notice concerning (i) the imposition of Withdrawal Liability by
any such Multiemployer Plan, (ii) the reorganization or termination,
within the meaning of Title IV of ERISA, of any such Multiemployer
Plan or (iii) the amount of liability incurred, or that may be
incurred, by such Loan Party or any ERISA Affiliate in connection with
any event described in clause (i) or (ii) except where such imposition
or reorganization could not reasonably be expected to have a Material
Adverse Effect.
(k) Litigation. Promptly after the commencement thereof, notice
of all actions, suits, investigations, litigation and proceedings
before any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, affecting any
Loan Party or any of its Subsidiaries of the type described in Section
4.01(j) or such action, suit, investigation, litigation or proceeding
alleges monetary damages in excess of $1,000,000.
(l) Securities Reports. Promptly after the sending or filing
thereof, copies of all proxy statements, financial statements and
reports that any Loan Party or any of its Subsidiaries sends to its
83
stockholders, and copies of all regular, periodic and special
reports, and all registration statements, that any Loan Party or any
of its Subsidiaries files with the Securities and Exchange Commission
or any governmental authority that may be substituted therefor, or
with any national securities exchange.
(m) Creditor Reports. Promptly after the furnishing thereof,
copies of any statement or report furnished to any other holder of the
securities of any Loan Party or of any of its Subsidiaries (including,
without limitation, the holders of the Subordinated Notes) pursuant to
the terms of any indenture, loan or credit or similar agreement and
not otherwise required to be furnished to the Lender Parties pursuant
to any other clause of this Section 5.03.
(n) Agreement Notices. Promptly upon receipt thereof, copies of
all notices, requests and other documents received by any Loan Party
or any of its Subsidiaries under or pursuant to any Related Document
or indenture, loan or credit or similar agreement regarding or related
to any breach or default by any party thereto or any other event that
could materially impair the value of the interests or the rights of
any Loan Party or any of its Subsidiaries or otherwise have a Material
Adverse Effect and copies of any amendment, modification or waiver of
any provision of the NutraMax Note, the NutraMax Letter of Credit, any
Related Agreement or indenture, loan or credit or similar agreement
and, from time to time upon request by the Administrative Agent, such
information and reports regarding the Related Documents as the
Administrative Agent may reasonably request.
(o) Revenue Administrative Agent Reports. Within 10 days after
receipt, copies of all Revenue Administrative Agent Reports (Internal
Revenue Service Form 886), or other written proposals of the Internal
Revenue Service, that propose, determine or otherwise set forth
positive adjustments to the Federal income tax liability of the
affiliated group (within the meaning of Section 1504(a)(1) of the
Internal Revenue Code) of which the Borrower is a member aggregating
$250,000 or more.
(p) Environmental Conditions. Promptly after the assertion or
occurrence thereof, notice of any Environmental Action against or of
any condition or occurrence on any property of any Loan Party or any
of its Subsidiaries that results in a material noncompliance by any
Loan Party or any of its Subsidiaries with any Environmental Law or
Environmental Permit that (i) could be reasonably expected to have a
Material Adverse Effect or (ii) cause any property described in the
Mortgage to be subject to any restrictions on ownership, occupancy,
use or transferability under any Environmental Law.
(q) Real Property. As soon as available and in any event within
30 days after the end of each Fiscal Year, a report supplementing
Schedule 4.01(hh), including an identification of all owned real
property disposed of by the Loan Parties or any of their Subsidiaries
during such Fiscal Year, a list and description (including the street
address, county or other relevant jurisdiction, state, record owner,
book value thereof) of all real property acquired during such Fiscal
Year and a description of such other changes in the information
included in such Schedules as may be necessary for such Schedule to be
accurate and complete.
(r) Insurance. As soon as available and in any event within 30
days after the end of each Fiscal Year, a report summarizing the
insurance coverage (specifying type, amount and carrier) in effect for
the Loan Parties and their Subsidiaries and containing such additional
information as any Lender Party (through the Administrative Agent) may
reasonably specify.
84
(s) Borrowing Base Certificate. As soon as available and in any
event within 20 days after the end of each month, a Borrowing Base
Certificate, as at the end of such month, certified by the chief
financial officer of the Borrower.
(t) Management Letter. Upon receipt, a copy of any management
letter prepared with respect to such Fiscal Year prepared by the
accounting firm that delivered the opinion referred to in Section
5.02(d) for such Fiscal Year.
(u) Other Information. Such other information respecting the
business, condition (financial or otherwise), operations, performance,
properties or prospects of any Loan Party or any of its Subsidiaries
as any Lender Party (through the Administrative Agent) may from time
to time reasonably request.
SECTION 5.04. Financial Covenants. So long as any Obligation under or in
respect of any Loan Document of any Loan Party shall remain unpaid, any Letter
of Credit shall be outstanding, any Bank Hedge Agreement shall be in effect or
any Lender Party shall have any Commitment hereunder, the Borrower and it
Subsidiaries will:
(a) Leverage Ratio. Maintain on a Consolidated basis for itself
and its Subsidiaries a Leverage Ratio for each Rolling Period ended as
at the end of the quarter (of the Fiscal Year) ending on the date set
forth below of not more than the amount set forth below for such
Rolling Period:
Rolling Period Ending On Ratio
------------------------ -----
September 30, 1998 6.35:1.00
December 31, 1998 6.35:1.00
March 31, 1999 6.35:1.00
June 30, 1999 6.25:1.00
September 30, 1999 6.25:1.00
December 31, 1999 6.00:1.00
March 31, 2000 5.75:1.00
June 30, 2000 5.50:1.00
September 30, 2000 5.25:1.00
December 31, 2000 5.00:1.00
March 31, 2001 4.75:1.00
June 30, 2001 4.50:1.00
September 30, 2001 4.25:1.00
December 31, 2001 4.00:1.00
March 31, 2002 4.00:1.00
June 30, 2002 4.00:1.00
September 30, 2002 4.00:1.00
December 31, 2002 4.00:1.00
85
March 31, 2003 4.00:1.00
June 30, 2003 4.00:1.00
September 30, 2003 4.00:1.00
December 31, 2003 4.00:1.00
March 31, 2004 4.00:1.00
June 30, 2004 4.00:1.00
September 30, 2004 4.00:1.00
December 31, 2004 4.00:1.00
March 31, 2005 4.00:1.00
June 30, 2005 4.00:1.00
September 30, 2005 4.00:1.00
December 31, 2005 4.00:1.00
March 31, 2006 4.00:1.00
June 30, 2006 4.00:1.00
(b) Senior Leverage Ratio. Maintain on a Consolidated basis for
itself and its Subsidiaries a Senior Leverage Ratio for each Rolling
Period ended as at the end of the quarter (of the Fiscal Year) ending
on the date set forth below of not more than the amount set forth
below for such Rolling Period:
Rolling Period Ending On Ratio
------------------------ -----
September 30, 1998 3.75:1.00
December 31, 1998 3.75:1.00
March 31, 1999 3.75:1.00
June 30, 1999 3.75:1.00
September 30, 1999 3.50:1.00
December 31, 1999 3.50:1.00
March 31, 2000 3.25:1.00
June 30, 2000 3.25:1.00
September 30, 2000 3.25:1.00
December 31, 2000 3.00:1.00
March 31, 2001 3.00:1.00
June 30, 2001 2.75:1.00
September 30, 2001 2.75:1.00
December 31, 2001 2.50:1.00
March 31, 2002 2.50:1.00
June 30, 2002 2.25:1.00
September 30, 2002 2.25:1.00
December 31, 2002 2.25:1.00
86
March 31, 2003 2.25:1.00
June 30, 2003 2.25:1.00
September 30, 2003 2.25:1.00
December 31, 2003 2.25:1.00
March 31, 2004 2.25:1.00
June 30, 2004 2.25:1.00
September 30, 2004 2.25:1.00
December 31, 2004 2.25:1.00
March 31, 2005 2.25:1.00
June 30, 2005 2.25:1.00
September 30, 2005 2.25:1.00
December 31, 2005 2.25:1.00
March 31, 2006 2.25:1.00
June 30, 2006 2.25:1.00
(c) Fixed Charge Coverage Ratio. Maintain on a Consolidated basis
for itself and its Subsidiaries a Fixed Charge Coverage Ratio for each
Rolling Period ended as at the end of each quarter (of the Fiscal
Year) ending on the date set forth below of not less than the amount
set forth below for such Rolling Period:
Rolling Period Ending On Ratio
------------------------ -----
December 31, 1998 1.00:1.00
March 31, 1999 1.05:1.00
June 30, 1999 1.05:1.00
September 30, 1999 1.10:1.00
December 31, 1999 1.10:1.00
March 31, 2000 1.10:1.00
June 30, 2000 1.10:1.00
September 30, 2000 1.15:1.00
December 31, 2000 1.15:1.00
March 31, 2001 1.15:1.00
June 30, 2001 1.15:1.00
September 30, 2001 1.15:1.00
December 31, 2001 1.15:1.00
March 31, 2002 1.15:1.00
June 30, 2002 1.15:1.00
September 30, 2002 1.15:1.00
December 31, 2002 1.15:1.00
87
March 31, 2003 1.15:1.00
June 30, 2003 1.15:1.00
September 30, 2003 1.15:1.00
December 31, 2003 1.15:1.00
March 31, 2004 1.15:1.00
June 30, 2004 1.15:1.00
September 30, 2004 1.15:1.00
December 31, 2004 1.15:1.00
March 31, 2005 1.05:1.00
June 30, 2005 1.05:1.00
September 30, 2005 1.05:1.00
December 31, 2005 1.05:1.00
March 31, 2006 1.05:1.00
June 30, 2006 1.05:1.00
(d) Interest Coverage Ratio. Maintain on a Consolidated basis for
itself and its Subsidiaries an Interest Coverage Ratio for each
Rolling Period ended as at the end of the quarter (of the Fiscal Year)
ending on the date set forth below of not less than the amount set
forth below for such Rolling Period:
Rolling Period Ending On Ratio
------------------------ -----
December 31, 1998 1.50:1.00
March 31, 1999 1.70:1.00
June 30, 1999 1.70:1.00
September 30, 1999 1.70:1.00
December 31, 1999 1.80:1.00
March 31, 2000 1.90:1.00
June 30, 2000 2.00:1.00
September 30, 2000 2.00:1.00
December 31, 2000 2.00:1.00
March 31, 2001 2.25:1.00
June 30, 2001 2.25:1.00
September 30, 2001 2.50:1.00
December 31, 2001 2.50:1.00
March 31, 2002 2.50:1.00
June 30, 2002 2.50:1.00
September 30, 2002 2.50:1.00
December 31, 2002 2.50:1.00
88
March 31, 2003 2.50:1.00
June 30, 2003 2.50:1.00
September 30, 2003 2.50:1.00
December 31, 2003 2.50:1.00
March 31, 2004 2.50:1.00
June 30, 2004 2.50:1.00
September 30, 2004 2.50:1.00
December 31, 2004 2.50:1.00
March 31, 2005 2.50:1.00
June 30, 2005 2.50:1.00
September 30, 2005 2.50:1.00
December 31, 2005 2.50:1.00
March 31, 2006 2.50:1.00
June 30, 2006 2.50:1.00
(e) Capital Expenditures. Not make, or permit any of its
Subsidiaries to make, any Capital Expenditures that would cause the
aggregate of all such Capital Expenditures made by MEDIQ and its
Subsidiaries in any Fiscal Year to exceed the amount set forth on
Schedule III hereto for such Fiscal Year; provided, however, that if
any Investment pursuant to Section 5.02(e)(ii)(A), (B), (E) and (F)
shall have occurred, for each increment of $3,000,000 of Pro Forma
EBITDA, as determined at any time during such Fiscal Year on a
historical basis for the twelve month period ending on the date of
such determination, attributable to all such Investments, the amount
specified above shall be increased by an increment of $1,000,000, so
long as such total amount shall not exceed $5,000,000; provided
further that if, at the end of any Fiscal Year (the "Prior Fiscal
Year"), the amount specified above for such Fiscal Year exceeds the
amount of Capital Expenditures made by the Borrower during such Fiscal
Year (the amount of such excess being the "Excess Amount"), the
Borrower and its Subsidiaries shall be entitled to make additional
Capital Expenditures in the succeeding Fiscal Year in an amount (such
amount being referred to herein as the "Carryover Amount") equal to
the lesser of (i) the Excess Amount and (ii) 1/2 of the amount
specified above for the Prior Fiscal Year.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following events ("Events of
Default") shall occur and be continuing:
(a) the Borrower or any other Loan Party shall fail to pay any
principal of any Advance when the same becomes due and payable, or the
Borrower or any other Loan Party shall fail to pay any interest on any
Advance or make any other payment under any Loan Document within two
Business Days after the same becomes due and payable; or
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(b) any representation or warranty made by any Loan Party (or any
of its officers) under or in connection with any Loan Document shall
prove to have been incorrect in any material respect when made; or
(c) any Loan Party shall fail to perform or observe any term,
covenant or agreement contained in Xxxxxxx 0.00, 0.00, 0.00(x), (x),
(x), (x), (x) or (n), 5.02, 5.03 or 5.04; or
(d) any Loan Party shall fail to perform or observe any other
term, covenant or agreement contained in any Loan Document on its part
to be performed or observed if such failure shall remain unremedied
for 15 days after the earlier of the date on which (A) a Responsible
Officer of the Borrower becomes aware of such failure or (B) written
notice thereof shall have been given to the Borrower by the
Administrative Agent or any Lender Party; or
(e) any Loan Party or any of its Subsidiaries shall fail to pay
any principal of, premium or interest on or any other amount payable
in respect of any Debt that is outstanding in a principal or notional
amount of at least $1,000,000 either individually or in the aggregate
(but excluding Debt outstanding hereunder) of such Loan Party or such
Subsidiary (as the case may be), when the same becomes due and payable
(whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise), and such failure shall continue after the
applicable grace period, if any, specified in the agreement or
instrument relating to such Debt; or any other event shall occur or
condition shall exist under any agreement or instrument relating to
any such Debt and shall continue after the applicable grace period, if
any, specified in such agreement or instrument, if the effect of such
event or condition is to accelerate, or to permit the acceleration of,
the maturity of such Debt or otherwise to cause, or to permit the
holder thereof to cause, such Debt to mature; or any such Debt shall
be declared to be due and payable or required to be prepaid or
redeemed (other than by a regularly scheduled required prepayment or
redemption), purchased or defeased, or an offer to prepay, redeem,
purchase or defease such Debt shall be required to be made, in each
case prior to the stated maturity thereof; or
(f) any Loan Party or any of its Subsidiaries shall generally not
pay its debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be
instituted by or against any Loan Party or any of its Subsidiaries
seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, or other similar official for it
or for any substantial part of its property and, in the case of any
such proceeding instituted against it (but not instituted by it) that
is being diligently contested by it in good faith, either such
proceeding shall remain undismissed or unstayed for a period of 30
days or any of the actions sought in such proceeding (including,
without limitation, the entry of an order for relief against, or the
appointment of a receiver, trustee, custodian or other similar
official for, it or any substantial part of its property) shall occur;
or any Loan Party or any of its Subsidiaries shall take any corporate
action to authorize any of the actions set forth above in this
subsection (f); or
(g) any judgment or order for the payment of money in excess of
$1,000,000 (to the extent not fully paid or discharged) shall be
rendered against any Loan Party or any of its Subsidiaries and
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either (i) enforcement proceedings shall have been commenced by
any creditor upon such judgment or order or (ii) there shall be any
period of 10 consecutive days during which a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise,
shall not be in effect; or
(h) any non-monetary judgment or order shall be rendered against
any Loan Party or any of its Subsidiaries that could have a Material
Adverse Effect, and there shall be any period of 10 consecutive days
during which a stay of enforcement of such judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect; or
(i) any provision of any Loan Document after delivery thereof
pursuant to Section 3.01 or 5.01(m) shall for any reason cease to be
valid and binding on or enforceable against any Loan Party to it, or
any such Loan Party shall so state in writing; or
(j) any Collateral Document after delivery thereof pursuant to
Section 3.01 or 5.01(m) shall for any reason (other than pursuant to
the terms thereof) cease to create a valid and perfected first
priority lien on and security interest in the Collateral purported to
be covered thereby except as permitted hereunder; or
(k) (i) the Equity Group shall cease to be the record and
beneficial owner of at least 51% (on a fully diluted basis) of the
total number of shares of capital stock of MEDIQ issued and
outstanding or the BRS Group shall cease to be the record and
beneficial owner of at least 35% (on a fully diluted basis) of the
total number of shares of capital stock of MEDIQ issued and
outstanding; (ii) any Person or two or more Persons acting in concert
other than the Equity Group shall have acquired by contract or
otherwise, or shall have entered into a contract or arrangement that,
upon consummation, will result in its or their acquisition of the
power to exercise, directly or indirectly, a controlling influence
over the management or policies of MEDIQ; (iii) MEDIQ shall cease to
own 100% of the capital stock of the Borrower; (iv) any member of the
Equity Group shall create, incur, assume or suffer to exist any Lien
on the shares of common stock of MEDIQ owned by it (other than Liens
consisting of restrictions on the transfer of such stock contained in
the shareholders agreements of MEDIQ) which would not permit at least
51% (on a fully diluted basis) of the total number of shares of
capital stock of MEDIQ issued and outstanding to be free of any such
Lien or any member of the BRS Group shall create, incur, assume or
suffer to exist any Lien on the shares of common stock of MEDIQ owned
by it (other than Liens consisting of restrictions on the transfer of
such stock contained in the shareholders agreements of MEDIQ) which
would not permit at least 35% (on a fully diluted basis) of the total
number of shares of capital stock of MEDIQ issued and outstanding to
be free of any such Lien; or (v) any other event which would
constitute a "Change of Control" under the Senior Subordinated Note
Indenture or the Discount Debenture Indenture; or
(l) any ERISA Event shall have occurred with respect to a Plan
and the sum (determined as of the date of occurrence of such ERISA
Event) of the Insufficiency of such Plan and the Insufficiency of any
and all other Plans with respect to which an ERISA Event shall have
occurred and then exist (or the liability of the Loan Parties and the
ERISA Affiliates related to such ERISA Event) exceeds $1,000,000; or
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(m) any Loan Party or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred
Withdrawal Liability to such Multiemployer Plan in an amount that,
when aggregated with all other amounts required to be paid to
Multiemployer Plans by the Loan Parties and the ERISA Affiliates as
Withdrawal Liability (determined as of the date of such notification),
exceeds $250,000 or requires payments exceeding $50,000 per annum; or
(n) any Loan Party or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or is being terminated, within
the meaning of Title IV of ERISA, and as a result of such
reorganization or termination the aggregate annual contributions of
the Loan Parties and the ERISA Affiliates to all Multiemployer Plans
that are then in reorganization or being terminated have been or will
be increased over the amounts contributed to such Multiemployer Plans
for the plan years of such Multiemployer Plans immediately preceding
the plan year in which such reorganization or termination occurs by an
amount exceeding $50,000;
then, and in any such event, the Administrative Agent (i) shall at the request,
or may with the consent, of the Required Lenders, by notice to the Borrower,
declare the Commitments of each Lender Party and the obligation of each Lender
to make Advances (other than Letter of Credit Advances by the Issuing Bank or a
Revolving Credit Lender pursuant to Section 2.03(c) and Swing Line Advances by a
Revolving Credit Lender pursuant to Section 2.02(b)) and of the Issuing Bank to
issue Letters of Credit to be terminated, whereupon the same shall forthwith
terminate, and (ii) shall at the request, or may with the consent, of the
Required Lenders, by notice to the Borrower, declare the Advances, all interest
thereon and all other amounts payable under this Agreement, the Notes, if any,
and the other Loan Documents to be forthwith due and payable, whereupon the
Advances, all such interest and all such amounts shall become and be forthwith
due and payable, without presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waived by the Borrower; provided,
however, that, in the event of an actual or deemed entry of an order for relief
with respect to any Loan Party or any of its Subsidiaries under the Federal
Bankruptcy Code, (x) the Commitments of each Lender Party and the obligation of
each Lender to make Advances (other than Letter of Credit Advances by the
Issuing Bank or a Revolving Credit Lender pursuant to Section 2.03(c) and Swing
Line Advances by a Revolving Credit Lender pursuant to Section 2.02(b) and of
the Issuing Bank to issue Letters of Credit shall automatically be terminated
and (y) the Advances, all such interest and all such amounts shall automatically
become and be due and payable, without presentment, demand, protest or any
notice of any kind, all of which are hereby expressly waived by the Borrower.
SECTION 6.02. Actions in Respect of the Letters of Credit Upon Default. If
any Event of Default shall have occurred and be continuing, the Administrative
Agent may, and upon the request of the Required Lenders shall, irrespective of
whether it is taking any of the actions described in Section 6.01 or otherwise,
make demand upon the Borrower to, and forthwith upon such demand the Borrower
will, pay to the Administrative Agent on behalf of the Lender Parties in same
day funds at the Administrative Agent's office designated in such demand, for
deposit in the L/C Cash Collateral Account, an amount equal to the aggregate
Available Amount of all Letters of Credit then outstanding. If at any time the
Administrative Agent determines that any funds held in the L/C Cash Collateral
Account are subject to any right or claim of any Person other than the
Administrative Agent and the Lender Parties or that the total amount of such
funds is less than the aggregate Available Amount of all Letters of Credit, the
Borrower will, forthwith upon demand by the Administrative Agent, pay to the
Administrative Agent, as additional funds to be deposited and held in the L/C
Cash Collateral Account, an amount equal to the excess of (a) such aggregate
Available Amount over (b) the total amount of
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funds, if any, then held in the L/C Cash Collateral Account that the
Administrative Agent determines to be free and clear of any such right and
claim. Upon the drawing of any Letter of Credit for which funds are on deposit
in the L/C Cash Collateral Account, such funds shall be applied to reimburse the
Issuing Bank or Revolving Credit Lenders, as applicable, to the extent permitted
by applicable law.
ARTICLE VII
THE AGENTS
SECTION 7.01. Authorization and Action. Each Lender Party (in its
capacities as a Lender, the Issuing Bank (if applicable) and a potential Hedge
Bank) hereby appoints and authorizes each Agent to take such action as agent on
its behalf and to exercise such powers and discretion under this Agreement and
the other Loan Documents as are delegated to such Agent by the terms hereof and
thereof, together with such powers and discretion as are reasonably incidental
thereto. As to any matters not expressly provided for by the Loan Documents
(including, without limitation, enforcement or collection of the Debt resulting
from the Advances), no Agent shall be required to exercise any discretion or
take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the
instructions of the Required Lenders, and such instructions shall be binding
upon all Lender Parties and all holders of Notes; provided, however, that no
Agent shall be required to take any action that exposes such Agent to personal
liability or that is contrary to this Agreement or applicable law. The
Administrative Agent agrees to give to each Lender Party prompt notice of each
notice given to it by the Borrower pursuant to the terms of this Agreement.
SECTION 7.02. Agents' Reliance, Etc. None of the Agents nor any of their
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with the Loan
Documents, except for its or their own gross negligence or willful misconduct as
found in a final, non appealable judgment by a court of competent jurisdiction.
Without limitation of the generality of the foregoing, each Agent: (a) may treat
the Lender that made any Advance as the holder of the Debt resulting therefrom
until the Administrative Agent receives and accepts an Assignment and Acceptance
entered into by such Lender, as assignor, and an Eligible Assignee, as assignee,
as provided in Section 8.07; (b) may consult with legal counsel (including
counsel for any Loan Party), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any Lender
Party and shall not be responsible to any Lender Party for any statements,
warranties or representations (whether written or oral) made in or in connection
with the Loan Documents; (d) shall not have any duty to ascertain or to inquire
as to the performance or observance of any of the terms, covenants or conditions
of any Loan Document on the part of any Loan Party or to inspect the property
(including the books and records) of any Loan Party; (e) shall not be
responsible to any Lender Party for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any Lien or security interest created or purported to be created
under or in connection with, any Loan Document or any other instrument or
document furnished pursuant thereto; and (f) shall incur no liability under or
in respect of any Loan Document by acting upon any notice, consent, certificate
or other instrument or writing (which may be by telegram, telecopy or telex)
believed by it to be genuine and signed or sent by the proper party or parties.
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SECTION 7.03. BNP, NationsBank, CSFB and Affiliates. With respect to its
Commitments, the Advances made by it and the Notes issued to it, each of BNP,
NationsBank and CSFB shall have the same rights and powers under the Loan
Documents as any other Lender Party and may exercise the same as though it were
not an Agent; and the term "Lender Party" or "Lenders Parties" shall, unless
otherwise expressly indicated, include BNP in its individual capacity. Each of
BNP, NationsBank and CSFB and its affiliates may accept deposits from, lend
money to, act as trustee under indentures of, accept investment banking
engagements from and generally engage in any kind of business with, any Loan
Party, any of its Subsidiaries and any Person who may do business with or own
securities of any Loan Party or any such Subsidiary, all as if BNP, NationsBank
and CSFB were not Agents and without any duty to account therefor to the Lender
Parties.
SECTION 7.04. Lender Party Credit Decision. Each Lender Party acknowledges
that it has, independently and without reliance upon any Agent or any other
Lender Party and based on the financial statements referred to in Section 4.01
and such other documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Lender Party
also acknowledges that it will, independently and without reliance upon any
Agent or any other Lender Party and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement.
SECTION 7.05. Indemnification. (a) Each Lender Party severally agrees to
indemnify each of the Agents (to the extent not promptly reimbursed by the
Borrower) from and against such Lender Party's ratable share (determined as
provided below) of any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever (including, without limitation, reasonable fees and
expenses of counsel) that may be imposed on, incurred by, or asserted against
such Agent in any way relating to or arising out of the Loan Documents or any
action taken or omitted by such Agent under the Loan Documents (collectively,
the "Indemnified Costs"); provided, however, that no Lender Party shall be
liable for any portion of such Indemnified Costs resulting from such Agent's
gross negligence or willful misconduct as found in a final, non appealable
judgment by a court of competent jurisdiction. Without limitation of the
foregoing, each Lender Party agrees to reimburse such Agent promptly
upon demand for its ratable share of any costs and expenses (including, without
limitation, fees and expenses of counsel) payable by the Borrower under Section
8.04, to the extent that such Agent is not promptly reimbursed for such costs
and expenses by the Borrower. For purposes of this Section 7.05, the Lender
Parties' respective ratable shares of any amount shall be determined, at any
time, according to the sum of (a) the aggregate principal amount of the Advances
outstanding at such time and owing to the respective Lender Parties, (b) their
respective Pro Rata Shares of the aggregate Available Amount of all Letters of
Credit outstanding at such time, (c) the aggregate unused portions of their
respective Term Commitments at such time and (d) their respective unused
Acquisition Commitments and Unused Revolving Credit Commitments at such time. In
the event that any Defaulted Advance shall be owing by any Defaulting Lender at
any time, such Lender Party's Commitment with respect to the Facility under
which such Defaulted Advance was required to have been made shall be considered
to be unused for the purposes of this Section 7.05(a) to the extent of the
amount of such Defaulted Advance. In the case of any investigation, litigation
or proceeding giving rise to any Indemnified Costs, this Section 7.05 applies
whether any such investigation, litigation or proceeding is brought by an Agent,
any Lender, any other Lender Party or a third party. The failure of any Lender
Party to reimburse an Agent promptly upon demand for its ratable share of any
amount required to be paid by the Lender Party to such Agent as provided herein
shall not relieve any other Lender Party of its obligation hereunder to
reimburse any Agent for its ratable share of such amount, but no Lender Party
shall be responsible for the failure of any other Lender Party to reimburse any
Agent for such other Lender Party's
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ratable share of such amount. Without prejudice to the survival of any other
agreement of any Lender Party hereunder, the agreement and obligations of each
Lender Party contained in this Section 7.05(a) shall survive the payment in full
of principal, interest and all other amounts payable hereunder and under the
other Loan Documents.
(b) Each Lender severally agrees to indemnify the Issuing Bank (to the
extent not promptly reimbursed by the Borrower) from and against such
Lender's ratable share (determined as provided below) of any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever
that may be imposed on, incurred by, or asserted against the Issuing Bank
in any way relating to or arising out of the Loan Documents or any action
taken or omitted by the Issuing Bank under the Loan Documents; provided,
however, that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Issuing Bank's
gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender agrees to reimburse the Issuing Bank promptly upon
demand for its ratable share of any costs and expenses (including, without
limitation, fees and expenses of counsel) payable by the Borrower under
Section 8.04, to the extent that the Issuing Bank is not promptly
reimbursed for such costs and expenses by the Borrower. For purposes of
this Section 7.05(b), the Lender Parties' respective ratable shares of any
amount shall be determined, at any time, according to the sum of (a) the
aggregate principal amount of the Advances outstanding at such time and
owing to the respective Lender Parties, (b) their respective Pro Rata
Shares of the aggregate Available Amount of all Letters of Credit
outstanding at such time, (c) their respective unused portions of their
Term Commitments at such time and (d) their respective Unused Acquisition
Commitments and Unused Revolving Credit Commitments at such time. In the
event that any Defaulted Advance shall be owing by any Defaulting Lender at
any time, such Lender Party's Commitment with respect to the Facility under
which such Defaulted Advance was required to have been made shall be
considered to be unused for purposes of this Section 7.05(b) to the extent
of the amount of such Defaulted Advance. The failure of any Lender Party to
reimburse the Issuing Bank promptly upon demand for its ratable share of
any amount required to be paid by the Lender Parties to the Issuing Bank as
provided herein shall not relieve any other Lender Party of its obligation
hereunder to reimburse the Issuing Bank for its ratable share of such
amount, but no Lender Party shall be responsible for the failure of any
other Lender Party to reimburse the Issuing Bank for such other Lender
Party's ratable share of such amount. Without prejudice to the survival of
any other agreement of any Lender Party hereunder, the agreement and
obligations of each Lender Party contained in this Section 7.05(b) shall
survive the payment in full of principal, interest and all other amounts
payable hereunder and under the other Loan Documents.
SECTION 7.06. Successor Administrative Agents. The Administrative Agent may
resign at any time by giving written notice thereof to the Lender Parties and
the Borrower and may be removed at any time with or without cause by the
Required Lenders. Upon any such resignation or removal, the Required Lenders
shall have the right to appoint a successor Administrative Agent. If no
successor Administrative Agent shall have been so appointed by the Required
Lenders, and shall have accepted such appointment, within 30 days after the
retiring Administrative Agent's giving of notice of resignation or the Required
Lenders' removal of the retiring Administrative Agent, then the retiring
Administrative Agent may, on behalf of the Lender Parties, appoint a successor
Administrative Agent, which shall be a commercial bank organized under the laws
of the United States or of any state thereof and having a combined capital and
surplus of at least $250,000,000. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent and upon the
execution and filing or recording of such financing statements, or amendments
thereto, and such amendments or
95
supplements to the Mortgage, and such other instruments or notices, as may be
necessary or desirable, or as the Required Lenders may request, in order to
continue the perfection of the Liens granted or purported to be granted by the
Collateral Documents, such successor Administrative Agent shall succeed to and
become vested with all the rights, powers, discretion, privileges and duties of
the retiring Administrative Agent, and the retiring Administrative Agent shall
be discharged from its duties and obligations under the Loan Documents. After
any retiring Administrative Agent's resignation or removal hereunder as
Administrative Agent, the provisions of this Article VIII shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement.
SECTION 7.07. Documentation Agent, Arranger and Syndication Agent. Neither
the Documentation Agent nor the Syndication Agent shall have duties except as
specifically provided by this Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc. No amendment or waiver of any provision of
this Agreement or any Notes or any other Loan Document, nor consent to any
departure by any Loan Party therefrom, shall in any event be effective unless
the same shall be in writing and signed (or, in the case of the Collateral
Documents, consented to) by the Required Lenders, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that (a) no amendment, waiver or
consent shall, unless in writing and signed by all of the Lenders, (other than
any Lender Party that is, at such time, a Defaulting Lender) do any of the
following at any time: (i) waive any of the conditions specified in Section 3.01
or, in the case of the Initial Extension of Credit, Section 3.02, (ii) change
the number of Lenders or the percentage of (x) the Commitments, (y) the
aggregate unpaid principal amount of the Advances or (z) the aggregate Available
Amount of outstanding Letters of Credit that, in each
case, shall be required for the Lenders or any of them to take any action
hereunder, (iii) release all or substantially all of the Collateral in any
transaction or series of related transactions or permit the creation,
incurrence, assumption or existence of any Lien on all or substantially all of
the Collateral in any transaction or series of related transactions to secure
any Obligations other than Obligations owing to the Secured Parties under the
Loan Documents or (iv) amend this Section 8.01 and (b) no amendment, waiver or
consent shall, unless in writing and signed by the Required Lenders and each
Lender that has a Commitment under the Term Facility, the Acquisition Facility
or Revolving Credit Facility if affected by such amendment, waiver or consent,
(i) increase the Commitments of such Lender or subject such Lender to any
additional obligations, (ii) reduce the principal of, or interest on, the
Advances payable to such Lender or any fees or other amounts payable hereunder
to such Lender, (iii) postpone any date fixed for any payment of principal of,
or interest on, the Advances payable to such Lender or any fees or other amounts
payable hereunder to such Lender or (iv) change the order of application of any
prepayment set forth in Section 2.06 in any manner that materially affects such
Lender; provided further that no amendment, waiver or consent shall, unless in
writing and signed by the Swing Line Bank or the Issuing Bank, as the case may
be, in addition to the Lenders required above to take such action, affect the
rights or obligations of the Swing Line Bank or the Issuing Bank, as the case
may be, under this Agreement; and provided further that no amendment, waiver or
consent shall, unless in writing and signed by any Agent in addition to the
Lenders required above to take such action, affect the rights or duties of such
Agent under this Agreement or the other Loan Documents.
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(b) Each Lender Party grants (x) to the Administrative Agent the right
to purchase all (but not less than all) of such Lender Party's Commitments
and Advances owing to it and all of its rights and obligations hereunder
and under the other Loan Documents at a price equal to the aggregate amount
of outstanding Advances owed to such Lender Party (together with all
accrued and unpaid interest and fees owed to such Lender), and (y) so long
as no Default has occurred and is continuing, to the Borrower the right to
cause an assignment of all (but not less than all) of such Lender Party's
Commitments and Advances owing to it and all of its rights and obligations
hereunder and under the other Loan Documents, which right may be exercised
by the Administrative Agent or the Borrower, as the case may be, if such
Lender Party refuses to execute any amendment, waiver or consent which
requires the written consent of all the Lenders and to which the Required
Lenders, the Administrative Agent and the Borrower have agreed. Each Lender
Party agrees that if the Administrative Agent or the Borrower, as the case
may be, exercises its option hereunder, it shall promptly execute and
deliver all agreements and documentation necessary to effectuate such
assignment as set forth in Section 8.07.
SECTION 8.02. Notices, Etc. All notices and other communications provided
for hereunder shall be in writing (including telegraphic, telecopy or telex
communication) and mailed, telegraphed, telecopied, telexed or delivered by an
overnight courier of nationally recognized standing, if to the Borrower or any
other Loan Party, at its address at Xxx XXXXX Xxxxx, Xxxxxxxxxx, Xxx Xxxxxx
00000, Attention: Chief Financial Officer and General Counsel, telecopier number
(000) 000-0000; if to any Initial Lender or any Initial Issuing Bank, at its
Domestic Lending Office specified opposite its name on Schedule I hereto; if to
any other Lender Party, at its Domestic Lending Office specified in the
Assignment and Acceptance pursuant to which it became a Lender Party; if to BNP,
at its address at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Structured Finance Group, telecopier number (000) 000-0000; if to NationsBank,
at its address at 0 XxxxxxxXxxx Xxxxx, 0xx Xxxxx, Xxxxxxxxx, XX 00000-0000,
Attention: Health Care Finance Group, telecopier number (000) 000-0000 with a
copy to NationsBank, N.A., 000 Xxxxx Xxxxx Xxxxxx, XxxxxxxXxxx Corporate Center,
Xxxxxxxxx, XX 00000, Attention: Health Care Finance Group, telecopier number
(000) 000-0000 and if to CSFB, at its address at Eleven Madison Avenue, New
York, New York, Attention: Corporate Banking Group, telecopier number (212)
325-8309; or, as to each party, at such other address as shall be designated by
such party in a written notice to the other parties. All such notices and
communications shall, when mailed, telegraphed, telecopied, telexed or sent by
courier, be effective when deposited in the mails, delivered to the telegraph
company, transmitted by telecopier, confirmed by telex answerback or delivered
to the overnight courier, respectively, except that notices and communications
to the Administrative Agent pursuant to Article II, III or VIII shall not be
effective until received by the Administrative Agent. Delivery by telecopier of
an executed counterpart of any amendment or waiver of any provision of this
Agreement or the Notes or of any Exhibit hereto to be executed and delivered
hereunder shall be effective as delivery of a manually executed counterpart
thereof.
SECTION 8.03. No Waiver; Remedies. No failure on the part of any Lender
Party or any Agent to exercise, and no delay in exercising, any right hereunder
or under any Note shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
SECTION 8.04. Costs and Expenses. (a) The Borrower agrees to pay on demand
(i) all reasonable costs and expenses of the Administrative Agent in connection
with the preparation, execution, delivery, administration, modification and
amendment of the Loan Documents (including, without limitation,
97
(A) all due diligence, collateral review, syndication, transportation, computer,
duplication, appraisal, audit, insurance, consultant, search, filing and
recording fees and expenses and (B) the reasonable fees and expenses of counsel
for the Administrative Agent with respect thereto, with respect to advising the
Administrative Agent as to its rights and responsibilities, or the perfection,
protection or preservation of rights or interests, under the Loan Documents,
with respect to negotiations with any Loan Party or with other creditors of any
Loan Party or any of its Subsidiaries arising out of any Default or any events
or circumstances that may give rise to a Default and with respect to presenting
claims in or otherwise participating in or monitoring any bankruptcy, insolvency
or other similar proceeding involving creditors' rights generally and any
proceeding ancillary thereto) and (ii) all reasonable costs and expenses of the
Agents, the Arranger, and the Lender Parties in connection with the enforcement
of the Loan Documents, whether in any action, suit or litigation, any
bankruptcy, insolvency or other similar proceeding affecting creditors' rights
generally (including, without limitation, the reasonable fees and expenses of
counsel for the Administrative Agent and each Lender Party with respect
thereto).
(b) The Borrower agrees to indemnify and hold harmless each Agent,
each Lender Party and each of their Affiliates and their officers,
directors, employees, agents and advisors (each, an "Indemnified Party")
from and against any and all Indemnified Costs that may be incurred by or
asserted or awarded against any Indemnified Party, in each case arising out
of or in connection with or by reason of, or in connection with the
preparation for a defense of, any investigation, litigation or proceeding
arising out of, related to or in connection with (i) the Facilities, the
actual or proposed use of the proceeds of the Advances or the Letters of
Credit, the Loan Documents or any of the transactions contemplated thereby,
including, without limitation, any acquisition or proposed acquisition
(including, without limitation, the Merger, the Recapitalization and any of
the other transactions contemplated hereby) by the equity investors of
MEDIQ or any of their Subsidiaries or Affiliates of all or any portion of
the stock or debt securities or substantially all the assets of the Company
or any of its Subsidiaries or (ii) the actual or alleged presence of
Hazardous Materials on any property of any Loan Party or any of its
Subsidiaries or any Environmental Action relating in any way to any Loan
Party or any of its Subsidiaries except to the extent such Indemnified
Costs are found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party's gross
negligence or willful misconduct. The Borrower also agrees not to assert
any claim against any Agent, any Lender Party or any of their Affiliates,
or any of their respective officers, directors, employees, attorneys and
agents, on any theory of liability, for special, indirect, consequential or
punitive damages arising out of or otherwise relating to the Facilities,
the actual or proposed use of the proceeds of the Advances or the Letters
of Credit, the Loan Documents or any of the transactions contemplated
thereby. In the case of an investigation, litigation or other proceeding to
which the indemnity in this Section 8.04(b) applies, such indemnity shall
be effective whether or not such investigation, litigation or proceeding is
brought by any Loan Party, its directors, shareholders or creditors or an
Indemnified Party or any Indemnified Party is otherwise a party thereto and
whether or not the transactions contemplated hereby are consummated.
(c) If any payment of principal of, or Conversion of, any Eurodollar
Rate Advance is made by the Borrower to or for the account of a Lender
Party other than on the last day of the Interest Period for such Advance,
as a result of a payment or Conversion pursuant to Section 2.06, 2.09(b)(i)
or 2.10(d), acceleration of the maturity of the Advances pursuant to
Section 6.01 or for any other reason or by an Eligible Assignee to a Lender
Party other than on the last day of the Interest Period for such Advance
upon an assignment of rights and obligations under this Agreement pursuant
to Section 8.07 as a result of a demand by the Borrower pursuant to Section
8.07(a), the Borrower shall, upon demand by such Lender Party (with a copy
of such demand to the Administrative Agent), pay to the Administrative
Agent for the account of such Lender Party any amounts
98
required to compensate such Lender Party for any additional losses, costs or
expenses that it may reasonably incur as a result of such payment, including,
without limitation, any loss (including loss of anticipated profits), cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by any Lender Party to fund or maintain such Advance.
(d) If any Loan Party fails to pay when due any costs, expenses or
other amounts payable by it under any Loan Document, including, without
limitation, fees and expenses of counsel and indemnities, such amount may
be paid on behalf of such Loan Party by the Administrative Agent or any
Lender Party, in its sole discretion.
(e) Without prejudice to the survival of any other agreement of any
Loan Party hereunder or under any other Loan Document, the agreements and
obligations of the Borrower contained in Sections 2.10 and 2.12 and this
Section 8.04 shall survive the payment in full of principal, interest and
all other amounts payable hereunder and under any of the other Loan
Documents.
SECTION 8.05. Right of Setoff. Upon (a) the occurrence and during the
continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 6.01 to authorize the
Administrative Agent to declare the Advances due and payable pursuant to the
provisions of Section 6.01, each Lender Party and each of its respective
Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and otherwise apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender Party or such
Affiliate to or for the credit or the account of the Borrower against any and
all of the Obligations of the Borrower now or hereafter existing under this
Agreement and the Note or Notes (if any) held by such Lender Party, irrespective
of whether such Lender Party shall have made any demand under this Agreement or
such Note or Notes and although such obligations may be unmatured. Each Lender
Party agrees promptly to notify the Borrower after any such set-off and
application; provided, however, that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of each Lender
Party and its respective Affiliates under this Section are in addition to other
rights and remedies (including, without limitation, other rights of setoff) that
such Lender Party and its respective Affiliates may have.
SECTION 8.06. Binding Effect. This Agreement shall become effective when it
shall have been executed by the Borrower and each Agent and when each Agent
shall have been notified by each Initial Lender and the Initial Issuing Bank
that such Initial Lender and the Initial Issuing Bank has executed it and
thereafter shall be binding upon and inure to the benefit of the Borrower, each
Agent and each Lender Party and their respective successors and assigns, except
that the Borrower shall not have the right to assign its rights hereunder or any
interest herein without the prior written consent of the Lender Parties.
SECTION 8.07. Assignments and Participations. (a) Each Lender may and, so
long as no Default has occurred and is continuing, if demanded by the Borrower
(following a demand by such Lender pursuant to Section 2.10 or 2.12) upon at
least 10 Business Days' notice to such Lender and the Administrative Agent, will
assign to one or more Eligible Assignees all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitment or Commitments, the Advances owing to it and the Note
or Notes held by it); provided, however, that (i) each such assignment shall be
of a uniform, and not a varying, percentage of all rights and obligations under
and in respect of one or more Facilities, (ii) except in the case of an
assignment to a Person that, immediately prior to such assignment, was a Lender
or
99
an Affiliate or Approved Fund of a Lender or an assignment of all of a Lender's
rights and obligations under this Agreement, the aggregate amount of the
Commitments being assigned to such Eligible Assignee pursuant to such assignment
(determined as of the date of the Assignment and Acceptance with respect to such
assignment) shall in no event be less than $5,000,000, or such other amount as
the Administrative Agent and the assigning Lender and, so long as no Event of
Default has occurred and is continuing, the Borrower shall agree, and shall be
in an integral multiple of $500,000, or, if the aggregate amount of the
Commitment of such assigning Lender is less than $5,000,000, all of such
Lender's Commitment, (iii) each such assignment shall be to an Eligible
Assignee, (iv) each such assignment made as a result of a demand by the Borrower
pursuant to this Section 8.07(a) shall be arranged by the Borrower after
consultation with the Administrative Agent and shall be either an assignment of
all of the rights and obligations of the assigning Lender under this Agreement
or an assignment of a portion of such rights and obligations made concurrently
with another such assignment or other such assignments that together cover all
of the rights and obligations of the assigning Lender under this Agreement, (v)
no Lender shall be obligated to make any such assignment as a result of the
demand by the Borrower pursuant to this Section 8.07(a) unless and until such
Lender shall have received one or more payments from either the Borrower or one
or more Eligible Assignees in an aggregate amount at least equal to the
aggregate outstanding principal amount of the Advances owing to such Lender,
together with accrued interest thereon to the date of payment of such principal
amount and all other amounts payable to such Lender under this Agreement, (vi)
no such assignments shall be permitted without the consent of the Administrative
Agent until the Administrative Agent shall have notified the Lender Parties that
syndication of the Commitments hereunder has been completed as determined by the
Agents, and (vii) the parties to each such assignment shall execute and deliver
to the Administrative Agent, for its acceptance and recording in the Register,
an Assignment and Acceptance, together with any Note or Notes subject to such
assignment and a processing and recordation fee of $3,000; provided, however,
that such fee shall not be required if any such assignment was made by a Lender
to an Affiliate of such Lender.
(b) Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in such Assignment and Acceptance, (x)
the assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Lender or
Issuing Bank, as the case may be, hereunder and (y) the Lender or Issuing
Bank assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance
covering all or the remaining portion of an assigning Lender's or Issuing
Bank's rights and obligations under this Agreement, such Lender or Issuing
Bank shall cease to be a party hereto).
(c) By executing and delivering an Assignment and Acceptance, each
Lender Party assignor thereunder and each assignee thereunder confirm to
and agree with each other and the other parties thereto and hereto as
follows: (i) other than as provided in such Assignment and Acceptance, such
assigning Lender Party makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or any other
Loan Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of, or the perfection or priority of any
Lien or security interest created or purported to be created under or in
connection with, this Agreement or any other Loan Document or any other
instrument or document furnished pursuant hereto or thereto; (ii) such
assigning Lender Party makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or
any other Loan Party or the performance or observance by any Loan Party of
any of its obligations under any Loan Document or any other instrument or
document furnished pursuant thereto; (iii) such
100
assignee confirms that it has received a copy of this Agreement, together
with copies of the financial statements referred to in Section 4.01 and
such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such Assignment and
Acceptance; (iv) such assignee will, independently and without reliance
upon the Administrative Agent, such assigning Lender Party or any other
Lender Party and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (v) such assignee
confirms that it is an Eligible Assignee; (vi) such assignee appoints and
authorizes the Administrative Agent to take such action as agent on its
behalf and to exercise such powers and discretion under the Loan Documents
as are delegated to the Administrative Agent by the terms hereof, together
with such powers and discretion as are reasonably incidental thereto; and
(vii) such assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement are
required to be performed by it as a Lender or Issuing Bank, as the case may
be.
(d) The Administrative Agent shall maintain at its address referred to
in Section 8.02 a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and
addresses of the Lender Parties and the Commitment under each Facility of,
and principal amount of the Advances owing under each Facility to, each
Lender Party from time to time (the "Register"). The entries in the
Register shall be conclusive and binding for all purposes, absent manifest
error, and the Borrower, the Agents and the Lender Parties may treat each
Person whose name is recorded in the Register as a Lender Party hereunder
for all purposes of this Agreement. The Register shall be available for
inspection by the Borrower or any Lender Party at any reasonable time and
from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender Party and an assignee, together with any Note or Notes
requested by the Assignee subject to such assignment, the Administrative
Agent shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit C hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register
and (iii) give prompt notice thereof to the Borrower. In the case of any
assignment by a Lender, within five Business Days after its receipt of such
notice, the Borrower, at its own expense, shall execute and deliver to the
Administrative Agent in exchange for the surrendered Note or Notes, if any,
a new Note to the order of such Eligible Assignee, if requested by such
Eligible Assignee, in an amount equal to the Commitment assumed by it under
a Facility pursuant to such Assignment and Acceptance and, if the assigning
Lender has retained a Commitment hereunder under such Facility, a new Note,
if requested by such Lender, to the order of the assigning Lender in an
amount equal to the Commitment retained by it hereunder. Such new Note or
Notes, if requested, shall be in an aggregate principal amount equal to the
aggregate principal amount of such Lender's or Eligible Assignee's
Commitment hereunder, as the case may be, shall be dated the effective date
of such Assignment and Acceptance and shall otherwise be in substantially
the form of Exhibit X-0, X-0 or A-3 hereto, as the case may be.
(f) The Issuing Bank may assign to an Eligible Assignee all of its
rights and obligations under the undrawn portion of its Letter of Credit
Commitment at any time.
(g) Each Lender Party may sell participations in or to all or a
portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of its Commitments, the Advances owing
to it and any Note or Notes held by it) to any Person other than any Loan
Party or any of its Subsidiaries or Affiliates; provided, however, that (i)
such Lender Party's obligations under this Agreement
101
(including, without limitation, its Commitments) shall remain unchanged,
(ii) such Lender Party shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) such Lender Party
shall remain the holder of such Advances and any such Note for all purposes
of this Agreement, (iv) the Borrower, the Agents and the other Lender
Parties shall continue to deal solely and directly with such Lender Party
in connection with such Lender Party's rights and obligations under this
Agreement and (v) no participant under any such participation shall have
any right to approve any amendment or waiver of any provision of any Loan
Document, or any consent to any departure by any Loan Party therefrom,
except to the extent that such amendment, waiver or consent would reduce
the principal of, or interest on, the Advances or any fees or other amounts
payable hereunder, in each case to the extent subject to such
participation, postpone any date fixed for any payment of principal of, or
interest on, the Advances or any fees or other amounts payable hereunder,
in each case to the extent subject to such participation, or release all or
substantially all of the Collateral.
(h) Any Lender Party may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
Section 8.07, disclose to the assignee or participant or proposed assignee
or participant, any information relating to the Borrower furnished to such
Lender Party by or on behalf of the Borrower.
(i) Notwithstanding any other provision set forth in this Agreement,
any Lender Party may at any time pledge, assign or create a security
interest in all or any portion of its rights under this Agreement
(including, without limitation, the Advances owing to it and the Note or
Notes held by it) in favor of (i) any Federal Reserve Bank in accordance
with Regulation A of the Board of Governors of the Federal Reserve System
or (ii) to secure obligations of such Lender Party; provided, that no such
pledge or assignment or creation of a security interest shall release a
Lender Party from any of its obligations hereunder or substitute any such
pledgee or assignee for such Lender Party as a party hereto.
SECTION 8.08. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of a manually executed counterpart of
this Agreement.
SECTION 8.09. No Liability of the Issuing Bank. The Borrower assumes all
risks of the acts or omissions of any beneficiary or transferee of any Letter of
Credit with respect to its use of such Letter of Credit. Neither the Issuing
Bank nor any of its officers or directors shall be liable or responsible for:
(a) the use that may be made of any Letter of Credit or any acts or omissions of
any beneficiary or transferee in connection therewith; (b) the validity,
sufficiency or genuineness of documents, or of any endorsement thereon, even if
such documents should prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (c) payment by the Issuing Bank against presentation of
documents that do not comply with the terms of a Letter of Credit, including
failure of any documents to bear any reference or adequate reference to the
Letter of Credit; or (d) any other circumstances whatsoever in making or failing
to make payment under any Letter of Credit, except that the Borrower shall have
a claim against the Issuing Bank, and the Issuing Bank shall be liable to the
Borrower, to the extent of any direct, but not consequential, damages suffered
by the Borrower that the Borrower proves were caused by (i) the Issuing Bank's
willful misconduct or gross negligence as determined in a final, non appealable
judgment by a court of competent jurisdiction in determining whether documents
presented under any Letter of Credit comply with the terms of the Letter of
Credit or (ii) the Issuing Bank's willful failure to make lawful
102
payment under a Letter of Credit after the presentation to it of a draft
and certificates strictly complying with the terms and conditions of the
Letter of Credit. In furtherance and not in limitation of the foregoing,
the Issuing Bank may accept documents that appear on their face to be in
order, without responsibility for further investigation, regardless of any
notice or information to the contrary.
SECTION 8.10. Jurisdiction, Etc. (a) Each of the parties hereto hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of any New York State court or federal court of the
United States of America sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of or relating to this
Agreement or any of the other Loan Documents to which it is a party, 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 any such New York State
court or, to the 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 shall
affect any right that any party may otherwise have to bring any action or
proceeding relating to this Agreement or any of the other Loan Documents in the
courts of any jurisdiction.
(b) Each of the parties hereto 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 of
the other Loan Documents to which it is a party in any New York State or
federal court. 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.
SECTION 8.11. Governing Law. This Agreement and the Notes shall be governed
by, and construed in accordance with, the laws of the State of New York.
SECTION 8.12. Waiver of Jury Trial. Each of the Loan Parties, the Agents
and the Lender Parties irrevocably waives all right to trial by jury in any
action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to any of the Loan Documents, the Advances
or the actions of any Agent or any Lender Party in the negotiation,
administration, performance or enforcement thereof.
103
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.,
as Borrower
By
-----------------------------------------------
Title:
BANQUE NATIONALE DE PARIS, as
Administrative Agent, Swing Line Bank, Initial
Issuing Bank, Arranger and Initial Lender
By
-----------------------------------------------
Name:
Title:
By
-----------------------------------------------
Name:
Title:
NATIONSBANK, N.A., as
Syndication Agent and Initial Lender
By
-----------------------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON, as
Documentation Agent and Initial Lender
By
-----------------------------------------------
Name:
Title:
By
-----------------------------------------------
Name:
Title:
Additional Initial Lenders
TRANSAMERICA BUSINESS CREDIT CORPORATION
By
-----------------------------------------------
Name:
Title:
THE TRAVELERS INSURANCE COMPANY
By
-----------------------------------------------
Name:
Title:
ABN AMRO BANK N.V.
By
-----------------------------------------------
Name:
Title:
By
-----------------------------------------------
Name:
Title:
XXXXXXX XXXXX SENIOR FLOATING RATE FUND, INC.
By
-----------------------------------------------
Name:
Title:
KZH-ING-2 CORPORATION
By
-----------------------------------------------
Name:
Title:
FLEET NATIONAL BANK
By
-----------------------------------------------
Name:
Title:
SUMMIT BANK
By
-----------------------------------------------
Name:
Title:
US TRUST
By
-----------------------------------------------
Name:
Title:
SANWA BUSINESS CREDIT CORPORATION
By
-----------------------------------------------
Name:
Title:
BANKBOSTON, N.A.
By
-----------------------------------------------
Name:
Title:
CREDITANSTALT CORPORATE FINANCE, INC.
By
-----------------------------------------------
Name:
Title:
By
-----------------------------------------------
Name:
Title:
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
By
-----------------------------------------------
Name:
Title:
TRUST COMPANY OF THE WEST
By
-----------------------------------------------
Name:
Title:
BHF-BANK AKTIENGESELLSCHAFT
By
-----------------------------------------------
Name:
Title:
By
-----------------------------------------------
Name:
Title:
XXXXXX FINANCIAL, INC.
By
-----------------------------------------------
Name:
Title:
GENERAL ELECTRIC CAPITAL CORPORATION
By
-----------------------------------------------
Name:
Title:
XXX XXXXXX AMERICAN PRIME RATE INCOME
By
-----------------------------------------------
Name:
Title:
KZH-IV CORPORATION
By
-----------------------------------------------
Name:
Title:
DEEPROCK & COMPANY
By: Xxxxx Xxxxx Management,
as Investment Advisors
By
-----------------------------------------------
Name:
Title:
KZH-CRESCENT CORPORATION
By
-----------------------------------------------
Name:
Title:
KZH-CRESCENT-2 CORPORATION
By
-----------------------------------------------
Name:
Title:
CRESCENT/MACH I PARTNERS, L.P.
By: TCW Asset Management Company
Its Investment Manager
By
-----------------------------------------------
Name:
Title:
NEW YORK LIFE INSURANCE COMPANY
By
-----------------------------------------------
Name:
Title:
EXHIBIT A-1 TO THE
CREDIT AGREEMENT
FORM OF TERM NOTE
$___________ Dated: _________, 1998
FOR VALUE RECEIVED, the undersigned, MEDIQ/PRN LIFE SUPPORT SERVICES, INC.,
a Delaware corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of
___________ (the "Lender") for the account of its Applicable Lending Office (as
defined in the Credit Agreement referred to below) the principal amount of the
Term Advances (as defined below) owing to the Lender by the Borrower pursuant to
the Credit Agreement dated as of May 29, 1998 (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"; terms defined
therein being used herein as therein defined) among the Borrower, the Lender and
certain other lender parties party thereto, Banque Nationale de Paris, as
Administrative Agent, Initial Issuing Bank, Swing Line Bank and Arranger,
NationsBank, N.A., as Syndication Agent, and Credit Suisse First Boston, as
Documentation Agent, on the dates and in the amounts specified in the Credit
Agreement.
The Borrower promises to pay interest on the unpaid principal amount of
each Term Advance from the date of such Term Advance until such principal amount
is paid in full, at such interest rates, and payable at such times, as are
specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to Banque Nationale de Paris, as Administrative Agent, at the
Administrative Agent's Account, in same day funds. Each Term Advance owing to
the Lender by the Borrower and the maturity thereof, and all payments made on
account of principal thereof, shall be recorded by the Lender and, prior to any
transfer hereof, endorsed on the grid attached hereto, which is part of this
Promissory Note.
This Promissory Note is one of the Notes referred to in, and is entitled to
the benefits of, the Credit Agreement. The Credit Agreement, among other things,
(i) provides for the making of advances (the "Term Advances") by the Lender to
the Borrower in an amount not to exceed the U.S. dollar amount first above
mentioned, the indebtedness of the Borrower resulting from each such Term
Advance being evidenced by this Promissory Note, and (ii) contains provisions
for acceleration of the maturity hereof upon the happening of certain stated
events and also for prepayments on account of principal hereof prior to the
maturity hereof upon the terms and conditions therein specified. The Obligations
of the Borrower under this Promissory Note, and the Obligations of the other
Loan Parties under the Loan Documents, are secured by the Collateral as provided
in the Loan Documents.
MEDIQ/PRN LIFE SUPPORT
SERVICES, INC.
By
--------------------------------
Name:
Title:
2
EXHIBIT A-2 TO THE
CREDIT AGREEMENT
FORM OF ACQUISITION NOTE
$___________ Dated: _________, 1998
FOR VALUE RECEIVED, the undersigned, MEDIQ/PRN LIFE SUPPORT SERVICES, INC.,
a Delaware corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of
___________ (the "Lender") for the account of its Applicable Lending Office (as
defined in the Credit Agreement referred to below) the principal amount of the
Acquisition Advances (as defined below) owing to the Lender by the Borrower
pursuant to the Credit Agreement dated as of May 29, 1998 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement";
terms defined therein being used herein as therein defined) among the Borrower,
the Lender and certain other lender parties party thereto, Banque Nationale de
Paris, as Administrative Agent, Initial Issuing Bank, Swing Line Bank and
Arranger, NationsBank, N.A., as Syndication Agent, and Credit Suisse First
Boston, as Documentation Agent, on the dates and in the amounts specified in the
Credit Agreement.
The Borrower promises to pay interest on the unpaid principal amount of
each Acquisition Advance from the date of such Acquisition Advance until such
principal amount is paid in full, at such interest rates, and payable at such
times, as are specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to Banque Nationale de Paris, as Administrative Agent, at the
Administrative Agent's Account, in same day funds. Each Acquisition Advance
owing to the Lender by the Borrower and the maturity thereof, and all payments
made on account of principal thereof, shall be recorded by the Lender and, prior
to any transfer hereof, endorsed on the grid attached hereto, which is part of
this Promissory Note.
This Promissory Note is one of the Notes referred to in, and is entitled to
the benefits of, the Credit Agreement. The Credit Agreement, among other things,
(i) provides for the making of advances (the "Acquisition Advances") by the
Lender to the Borrower in an amount not to exceed the U.S. dollar amount first
above mentioned, the indebtedness of the Borrower resulting from each such
Acquisition Advance being evidenced by this Promissory Note, and (ii) contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated
events and also for prepayments on account of principal hereof prior to the
maturity hereof upon the terms and conditions therein specified. The Obligations
of the Borrower under this Promissory Note, and the Obligations of the other
Loan Parties under the Loan Documents, are secured by the Collateral as provided
in the Loan Documents.
MEDIQ/PRN LIFE SUPPORT
SERVICES, INC.
By
--------------------------------
Name:
Title:
2
ADVANCES AND PAYMENTS OF PRINCIPAL
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Amount of Amount of Unpaid
Acquisition Principal Paid Principal Notation
Date Advance or Prepaid Balance Made By
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3
EXHIBIT A-3 TO THE
CREDIT AGREEMENT
FORM OF REVOLVING CREDIT NOTE
$___________ Dated: ________, 1998
FOR VALUE RECEIVED, the undersigned, MEDIQ/PRN LIFE SUPPORT SERVICES, INC.,
a Delaware corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of
____________ (the "Lender") for the account of its Applicable Lending Office (as
defined in the Credit Agreement referred to below) the aggregate principal
amount of the Revolving Credit Advances (as defined below) owing to the Lender
by the Borrower pursuant to the Credit Agreement dated as of May 29, 1998 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"; terms defined therein being used herein as therein defined) among
the Borrower, the Lender and certain other lender parties party thereto, Banque
Nationale de Paris, as Administrative Agent, Initial Issuing Bank, Swing Line
Bank and Arranger, NationsBank, N.A., as Syndication Agent, and Credit Suisse
First Boston, as Documentation Agent, on the Termination Date.
The Borrower promises to pay interest on the unpaid principal amount of
each Revolving Credit Advance from the date of such Revolving Credit Advance
until such principal amount is paid in full, at such interest rates, and payable
at such times, as are specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to Banque Nationale de Paris, as Administrative Agent, at the
Administrative Agent's Account, in same day funds. Each Revolving Credit Advance
owing to the Lender by the Borrower and the maturity thereof, and all payments
made on account of principal thereof, shall be recorded by the Lender and, prior
to any transfer hereof, endorsed on the grid attached hereto, which is part of
this Promissory Note.
This Promissory Note is one of the Notes referred to in, and is entitled to
the benefits of, the Credit Agreement. The Credit Agreement, among other things,
(i) provides for the making of advances (the "Revolving Credit Advances") by the
Lender to the Borrower from time to time in an aggregate amount not to exceed at
any time outstanding the U.S. dollar amount first above mentioned, the
indebtedness of the Borrower resulting from each such Revolving Credit Advance
being evidenced by this Promissory Note, and (ii) contains provisions for
acceleration of the maturity hereof upon the happening of certain stated events
and also for prepayments on account of principal hereof prior to the maturity
hereof upon the
terms and conditions therein specified. The Obligations of the Borrower under
this Promissory Note, and the Obligations of the other Loan Parties under the
Loan Documents, are secured by the Collateral as provided in the Loan Documents.
MEDIQ/PRN LIFE SUPPORT
SERVICES, INC.
By_____________________________________________
Name:
Title:
ADVANCES AND PAYMENTS OF PRINCIPAL
Amount of
Working Amount of Unpaid
Capital Principal Paid Principal Notation
Date Advance or Prepaid Balance Made By
EXHIBIT B TO THE
CREDIT AGREEMENT
FORM OF NOTICE OF BORROWING
Banque Nationale de Paris,
as Administrative Agent under the
Credit Agreement referred to below
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000 [Date]
Attention: Xx. Xxxxxxxx Xxxxxxxx
Ladies and Gentlemen:
The undersigned, MEDIQ/PRN Life Support Services, Inc., a Delaware
corporation (the "Borrower"), refers to the Credit Agreement dated as of
_______, 1998 (as amended, supplemented or otherwise modified from time to time,
the "Credit Agreement", the terms defined therein being used herein as therein
defined), among the Borrower, MEDIQ Incorporated, a Delaware corporation (the
"Parent Guarantor"), the lender parties party thereto (the "Lender Parties"),
Banque Nationale de Paris, as Administrative Agent, Initial Issuing Bank, Swing
Line Bank and Arranger, NationsBank N.A., as Syndication Agent, and Credit
Suisse First Boston, as Documentation Agent, and hereby gives you notice,
irrevocably, pursuant to Section 2.02 of the Credit Agreement, that the Borrower
hereby requests a Borrowing under the Credit Agreement, and in that connection
sets forth below the information relating to such Borrowing (the "Proposed
Borrowing") as required by Section 2.02(a) of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing is _________ __, ____.
(ii) The Facility under which the Proposed Borrowing is requested is
the ___________________ Facility.
(iii) The Type of Advances comprising the Proposed Borrowing is [Base
Rate Advances] [Eurodollar Rate Advances].
(iv) The aggregate amount of the Proposed Borrowing is $__________.
[(v) The initial Interest Period for each Eurodollar Rate Advance made
as part of the Proposed Borrowing is __________ month[s].]
The Borrower hereby certifies that the following statements are true on the
date hereof, and will be true on the date of the Proposed Borrowing:
(A) the representations and warranties contained in each Loan Document
are correct on and as of such date, before and after giving effect to the
Proposed Borrowing and to the application of the proceeds therefrom, as
though made on and as of such date other than any such representations or
warranties that, by their terms, refer to a specific date other than the
date of the Proposed Borrowing, in which case as of such specific date;
[and]
(B) no event has occurred and is continuing, or would result from the
Proposed Borrowing or from the application of the proceeds therefrom, that
constitutes a Default[;and] [.]
[(C) for each Revolving Credit Advance or Swing Line Advance, the sum
of the Loan Values of the Eligible Collateral (as determined based on the
most recent Borrowing Base Certificate delivered to the Lender Parties
under the Credit Agreement) exceeds the aggregate principal amount of the
Revolving Credit Advances plus Swing Line Advances plus Letter of Credit
Advances to be outstanding plus the aggregate Available Amount of all
Letters of Credit then outstanding after giving effect to the Proposed
Borrowing, as follows:]
(1) Total Revolving Credit Commitments _____________
(2) Total Borrowing Base Availability from the
most recent Borrowing Base Certificate _____________
(3) Lesser of (1) and (2) _____________
(4) Revolving Credit Advances Outstanding _____________
(5) Swing Line Advances Outstanding _____________
(6) Letter of Credit Advances Outstanding _____________
(7) Available Amount of all Letters of
Credit then Outstanding _____________
(8) Total Revolving Credit Availability
[(3) less (4) less (5) less (6) less (7)] _____________
2
(9) Revolving Credit Advance
permitted under Section 2.01(a) _____________
Very truly yours,
MEDIQ/PRN LIFE SUPPORT
SERVICES, INC.
By_________________________________
Title:
EXHIBIT C TO THE
CREDIT AGREEMENT
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of ________, 1998 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement") among MEDIQ/PRN LIFE SUPPORT SERVICES, INC., a Delaware corporation
(the "Borrower"),MEDIQ Incorporated, a Delaware corporation, as Parent
Guarantor, the Lender Parties (as defined in the Credit Agreement), Banque
Nationale de Paris, as Administrative Agent, Initial Issuing Bank, Swing Line
Bank and Arranger, NationsBank N.A., as Syndication Agent, and Credit Suisse
First Boston, as Documentation Agent. Terms defined in the Credit Agreement are
used herein with the same meaning.
The "Assignor" and the "Assignee" referred to on Schedule 1 hereto agree as
follows:
1. The Assignor hereby sells and assigns to the Assignee, and the Assignee
hereby purchases and assumes from the Assignor, an interest in and to the
Assignor's rights and obligations under the Credit Agreement as of the date
hereof equal to the uniform percentage interest specified on Schedule 1 hereto
of all outstanding rights and obligations under the Credit Agreement Facility or
Facilities specified on Schedule 1 hereto. After giving effect to such sale and
assignment, the Assignee's Commitments and the amount of the Advances owing to
the Assignee will be as set forth on Schedule 1 hereto.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Loan Documents
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of, or the perfection or priority of any lien or security interest
created or purported to be created under or in connection with, the Loan
Documents or any other instrument or document furnished pursuant thereto; (iii)
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of any Loan Party or the performance or observance by
any Loan Party of any of its obligations under any Loan Document or any other
instrument or document furnished pursuant thereto; and (iv) attaches the Note or
Notes held by the Assignor and requests that the Administrative Agent exchange
such Note or Notes for a new Note or Notes payable to the order of the Assignee
in an amount equal to the Commitments assumed by the Assignee pursuant hereto or
new Notes payable to the order of the Assignee in an amount equal to the
Commitments assumed by the Assignee pursuant hereto and the Assignor in an
amount equal to the Commitments retained by the Assignor under the Credit
Agreement, respectively, as specified on Schedule 1 hereto.
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 4.01 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will, independently and without
reliance upon the Administrative Agent, the Assignor or any other Lender Party
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Credit Agreement; (iii) confirms that it is an Eligible Assignee; (iv)
appoints and authorizes the Administrative Agent to take such action as agent on
its behalf and to exercise such powers and discretion under the Loan Documents
as are delegated to the Administrative Agent by the terms thereof, together with
such powers and discretion as are reasonably incidental thereto; (v) agrees that
it will perform in accordance with their terms all of the obligations that by
the terms of the Credit Agreement are required to be performed by it as a Lender
Party; and (vi) attaches any U.S. Internal Revenue Service forms required under
Section 2.12 of the Credit Agreement.
4. Following the execution of this Assignment and Acceptance, it will be
delivered to the Administrative Agent for acceptance and recording by the
Administrative Agent. The effective date for this Assignment and Acceptance (the
"Effective Date") shall be the date of acceptance hereof by the Administrative
Agent, unless otherwise specified on Schedule 1 hereto, but in no event before
recording.
5. Upon such acceptance and recording by the Administrative Agent, as of
the Effective Date, (i) the Assignee shall be a party to the Credit Agreement
and, to the extent provided in this Assignment and Acceptance, have the rights
and obligations of a Lender Party thereunder and (ii) the Assignor shall, to the
extent provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement (and, if the Assignment
and Acceptance covers all or the remaining portion of the Assignor's rights and
obligations under the Credit Agreement, such Assignor shall cease to be a party
thereto).
6. Upon such acceptance and recording by the Administrative Agent, from and
after the Effective Date, the Administrative Agent shall make all payments under
the Credit Agreement and the Notes in respect of the interest assigned hereby
(including, without limitation, all payments of principal, interest and
commitment fees with respect thereto) to the Assignee. The Assignor and Assignee
shall make all appropriate adjustments in payments under the Credit Agreement
and the Notes for periods prior to the Effective Date directly between
themselves.
7. This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of New York.
8. This Assignment and Acceptance may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one
C-2
and the same agreement. Delivery of an executed counterpart of Schedule 1 to
this Assignment and Acceptance by telecopier shall be effective as delivery of a
manually executed counterpart of this Assignment and Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule 1 to
this Assignment and Acceptance to be executed by their officers thereunto duly
authorized as of the date specified thereon.
C-3
SCHEDULE 1
to
ASSIGNMENT AND ACCEPTANCE
As to each _______ Facility in respect of which an interest is being assigned:
Percentage interest assigned: __________%
Assignee's Commitment: $__________
Aggregate outstanding principal amount of Advances assigned: $__________
Principal amount of Note payable to Assignee: $__________
Principal amount of Note payable to Assignor: $__________
Effective Date (if other than date of acceptance by Agent):
_________ __, ____ 1
[NAME OF ASSIGNOR], as Assignor
By_____________________________
Title:
Dated: _________ __, ____
[NAME OF ASSIGNEE], as Assignee
By_____________________________
Title:
Dated:__________________, ____
Domestic Lending Office:
Eurodollar Lending Office:
--------
1 This date should be no earlier than five Business Days after the
delivery of this Assignment and Acceptance to the Administrative Agent.
Schedule I-2
ACCEPTED 2[AND APPROVED] this
______ day of _________, _____
BANQUE NATIONALE DE PARIS,
as Administrative Agent
By_____________________________
Title:
By_____________________________
Title:
2[APPROVED this ___ day of ______, _____
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
By_____________________________
Title:]
--------
2 Required if the Assignee is an Eligible Assignee solely by reason of
clause (vii) of the definition of Eligible Assignee.
EXHIBIT D TO THE
CREDIT AGREEMENT
AS SEPARATELY
EXECUTED
SECURITY AGREEMENT
Dated May 29, 1998
from
THE PERSONS LISTED ON THE SIGNATURE PAGES HEREOF
as Grantors
to
BANQUE NATIONALE DE PARIS
as Administrative Agent
TABLE OF CONTENTS
Section Page
------- ----
1. Grant of Security....................................................... 1
2. Security for Obligations................................................ 6
3. Grantors Remain Liable.................................................. 7
4. Delivery and Control of Security Collateral, Account Collateral,
Agreement Collateral and Receivables.................................. 7
5. Maintaining the L/C Cash Collateral Account............................. 8
6. Maintaining the Blocked Accounts........................................ 8
7. Investing of Amounts in the L/C Cash Collateral Account................. 9
8. Representations and Warranties.......................................... 9
9. Further Assurances......................................................14
10. As to Equipment and Inventory...........................................15
11. As to Intellectual Property Collateral..................................16
12. Insurance...............................................................17
13. Place of Perfection; Records; Collection of Receivables.................18
14. Voting Rights; Dividends; Etc...........................................19
15. As to the Assigned Agreements...........................................20
16. Transfers and Other Liens; Additional Shares............................20
17. Administrative Agent Appointed Attorney-in-Fact.........................21
18. Administrative Agent May Perform........................................21
19. The Administrative Agent's Duties.......................................21
20. Remedies................................................................22
21. Indemnity and Expenses..................................................23
22. Security Interest Absolute..............................................23
23. Amendments; Waivers; Etc................................................24
24. Addresses for Notices...................................................24
25. Continuing Security Interest; Assignments...............................25
26. Release and Termination.................................................25
27. The Mortgages...........................................................26
28. Execution in Counterparts...............................................26
29. Governing Law...........................................................26
i
Section Page
------- ----
Schedule I - Initial Pledged Shares and Initial Pledged Debt
Schedule II - Assigned Agreements
Schedule III - Locations of Equipment and Inventory
Schedule IV - Intellectual Property
Schedule V - Blocked Accounts and Other Bank Accounts
Exhibit A - Form of Blocked Account Letter
Exhibit B - Form of Consent and Agreement
Exhibit C - Form of Security Agreement Supplement
Exhibit D - Form of Intellectual Property Security Agreement
ii
SECURITY AGREEMENT
SECURITY AGREEMENT dated May 29, 1998 made by the Persons listed on the
signature pages hereof and the Additional Grantors (as defined in Section 23(b))
(such Persons so listed and the Additional Grantors being, collectively, the
"Grantors") to BANQUE NATIONALE DE PARIS ("BNP"), as administrative agent (the
"Administrative Agent") for the Secured Parties (as defined in the Credit
Agreement referred to below).
PRELIMINARY STATEMENTS.
(1) MEDIQ/PRN Life Support Services, Inc., a Delaware corporation (the
"Borrower") has entered into a Credit Agreement dated as of May 29, 1998 (said
Agreement, as it may hereafter be amended, supplemented or otherwise modified
from time to time, being the "Credit Agreement"), with BNP, as Administrative
Agent, Swing Line Bank, Initial Issuing Bank and Arranger, NationsBank, N.A., as
Syndication Agent, and Credit Suisse First Boston, as Documentation Agent and
the Lender Parties party thereto. Capitalized terms used herein and not
otherwise defined are used herein as defined in the Credit Agreement.
(2) It is a condition precedent to the making of Advances and the issuance
of Letters of Credit by the Lender Parties under the Credit Agreement that each
Grantor shall have granted the assignment and security interest and made the
pledge and assignment contemplated by this Agreement.
(3) Each Grantor is the owner of the shares of stock set forth opposite
such Grantor's name in Part I of Schedule I hereto and issued by the
corporations indicated therein and of the indebtedness set forth opposite such
Grantor's name in Part II of Schedule I hereto and issued by the obligors
indicated therein.
(4) The Borrower has opened a non-interest bearing cash collateral account
(the "L/C Cash Collateral Account") with BNP at its office at 000 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Account No. 200875-001-77, in the name of the Borrower
but under the sole control and dominion of the Administrative Agent and subject
to the terms of this Agreement.
(5) Each Grantor will derive substantial direct and indirect benefit from
the transactions contemplated by the Credit Agreement.
(6) Unless otherwise defined in this Agreement or in the Credit Agreement,
terms defined in Article 8 or 9 of the Uniform Commercial Code in effect in the
State of New York ("N.Y. Uniform Commercial Code") are used in this Agreement as
such terms are defined in such Article 8 or 9.
NOW, THEREFORE, in consideration of the premises and in order to induce the
Lender Parties to make Advances and to issue Letters of Credit under the Credit
Agreement and to induce the Hedge Banks to enter into Bank Hedge Agreements with
the Borrower from time to time, each Grantor hereby agrees with the
Administrative Agent for the ratable benefit of the Secured Parties as follows:
SECTION 1. Grant of Security. Each Grantor hereby assigns and pledges to
the Administrative Agent for the ratable benefit of the Secured Parties, and
hereby grants to the Administrative Agent for the ratable benefit of the Secured
Parties a security interest in, the following, in each case, as to each
type of property described below, whether now owned or hereafter acquired by
such Grantor, wherever located and whether now or hereafter existing (the
"Collateral"):
(a) All of the following (the "Security Collateral"):
(i) the shares of stock set forth opposite such Grantor's name in Part
I of Schedule I hereto and issued by the corporations indicated therein
(collectively referred to herein as the "Initial Pledged Shares", and
together with the shares referred to in clause (iii) below, the "Pledged
Shares"), together with the certificates representing such Initial Pledged
Shares and all dividends, cash, instruments and other property from time to
time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such Initial Pledged Shares;
(ii) the indebtedness (whether or not evidenced by instruments) set
forth opposite such Grantor's name in Part II of Schedule I hereto and
issued by the obligors indicated therein (collectively referred to herein
as the "Initial Pledged Debt", and together with the indebtedness referred
to in clause (iv) below, the "Pledged Debt") and the instruments (if any)
evidencing such Initial Pledged Debt, all security therefor and all
interest, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or
all of such Initial Pledged Debt;
(iii) all additional shares of stock of any issuer of any Initial
Pledged Shares or of any other Loan Party or any Subsidiary of any Loan
Party or of any other Person from time to time acquired by such Grantor in
any manner, and all additional shares of stock of each other Subsidiary of
such Grantor to the extent required pursuant to Section 5.01(m) of the
Credit Agreement, together with the certificates representing such
additional shares and all dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of such shares, provided, however, that
such Grantor shall only be required to pledge 65% of the total outstanding
shares of stock or other equity interest owned by it in any Foreign
Subsidiary, if such pledge, would result in adverse tax consequences such
Grantor;
(iv) all additional indebtedness from time to time owed to such
Grantor by any obligor of the Initial Pledged Debt (whether or not
evidenced by instruments) and the instruments evidencing such indebtedness
(if any), and all additional indebtedness owed to such Grantor by any other
obligor to the extent required pursuant to Section 5.01(m) of the Credit
Agreement, all security therefor and all interest, cash, instruments and
other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such
indebtedness; and
(v) all investment property (including, without limitation, all (A)
securities, whether certificated or uncertificated, (B) security
entitlements, as defined in Section 8- 102(a)(17) of the N.Y. Uniform
Commercial Code or, in the case of any U.S. Treasury book-entry securities,
as defined in 31 C.F.R. Section 357.2, or, in the case of any U.S. federal
agency book-entry securities, as defined in the corresponding U.S. federal
regulations governing such book-entry securities, (C) securities accounts,
(D) commodity contracts and
2
(E) commodity accounts) in which the Grantor has or acquires from time to
time any right, title or interest in any manner, and the certificates or
instruments, if any, representing or evidencing such investment property,
and all dividends, interest, distributions, value, cash, instruments and
other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such investment
property;
(vi) within five days after acquiring or organizing any foreign
Subsidiary or joint venture or any domestic joint venture, (A) in the case
of any foreign Subsidiary or joint venture, 65% of the total outstanding
shares or other ownership interests of such Person held by such Grantor and
(B) in the case of any domestic joint venture, 100% of the shares or other
ownership interests of such Person held by such Grantor;
(b) All of the following (collectively, the "Account Collateral"):
(i) the L/C Cash Collateral Account, all funds held therein and all
certificates and instruments, if any, from time to time representing or
evidencing the L/C Cash Collateral Account;
(ii) all Blocked Accounts (as hereinafter defined), all funds held
therein and all certificates and instruments, if any, from time to time
representing or evidencing the Blocked Accounts;
(iii) all other deposit accounts of such Grantor, all funds held
therein and all certificates and instruments, if any, from time to time
representing or evidencing such deposit accounts;
(iv) all Collateral Investments (as hereinafter defined) from time to
time and all certificates and instruments, if any, from time to time
representing or evidencing the Collateral Investments;
(v) all notes, certificates of deposit, deposit accounts, checks and
other instruments from time to time hereafter delivered to or otherwise
possessed by the Administrative Agent for or on behalf of such Grantor,
including, without limitation, those delivered to or possessed in
substitution for or in addition to any or all of the then existing Account
Collateral; and
(vi) all interest, dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of the then existing Account Collateral;
(c) All of such Grantor's right, title and interest, in and to all
equipment in all of its forms (including, without limitation, (i) all adult and
infant ventilators, portable volume ventilators, adult, infant, neonatal and
fetal monitors, infant apnea monitors, phototherapy units, pediatric aerosol
tents, compressors, infusion and suction pumps and poles, incubators, infant
warmers, pulse oximeters, sequential compression devices and all other medical
equipment of every kind and nature, and (ii) all machinery, equipment, office
machinery, furniture, computers, computer hardware,
3
automotive equipment, trucks and motor vehicles), wherever located, all fixtures
and all parts thereof and all accessions and additions thereto, parts and
appurtenances thereof, substitutions therefor and replacements thereof (any and
all such equipment, fixtures, accessions, additions, parts, appurtenances,
substitutions and replacements being the "Equipment");
(d) All of such Grantor's right, title and interest, in and to all
inventory in all of its forms, wherever located (including, but not limited to,
(i) all medical equipment and raw materials and work in process therefor,
finished goods thereof and materials used or consumed in the manufacture,
production or preparation thereof, (ii) goods in which such Grantor has an
interest in mass or a joint or other interest or right of any kind (including,
without limitation, goods in which such Grantor has an interest or right as
consignee) and (iii) goods that are returned to or repossessed by such Grantor),
and all accessions thereto and products thereof and documents therefor (any and
all such inventory, accessions, products and documents being the "Inventory");
(e) All of such Grantor's right, title and interest, in and to all
accounts, contract rights, chattel paper, instruments, deposit accounts and
general intangibles and all other obligations of any kind, now or hereafter
existing, whether or not arising out of or in connection with the sale or lease
of goods or the rendering of services and whether or not earned by performance
(including, without limitation, any rights with respect to workers' compensation
or other deposits made by such Grantor and any rights to receive tax refunds or
other refunds, reimbursements and payments from any federal, state or local
government or any political subdivision, agency or instrumentality thereof), and
all rights now or hereafter existing in and to all security agreements, leases
and other contracts securing or otherwise relating to any such accounts,
contract rights, chattel paper, instruments, deposit accounts, general
intangibles or obligations (any and all such accounts, contract rights, chattel
paper, instruments, deposit accounts, general intangibles and obligations, to
the extent not referred to in clause (a), (b), (f) or (g) of this Section 1,
being the "Receivables", and any and all such leases, security agreements and
other contracts being the "Related Contracts");
(f) All of such Grantor's right, title and interest in and to each of the
agreements listed on Schedule II hereto, and each Hedge Agreement to which such
Grantor is now or may hereafter become a party, in each case as such agreements
may be amended, supplemented or otherwise modified from time to time
(collectively, the "Assigned Agreements"), including, without limitation, (i)
all rights of such Grantor to receive moneys due and to become due under or
pursuant to the Assigned Agreements, (ii) all rights of such Grantor to receive
proceeds of any insurance, indemnity, warranty or guaranty with respect to the
Assigned Agreements, (iii) claims of such Grantor for damages arising out of or
for breach of or default under the Assigned Agreements and (iv) the right of
such Grantor to terminate the Assigned Agreements, to perform thereunder and to
compel performance and otherwise exercise all remedies thereunder (all such
Collateral being the "Agreement Collateral");
(g) All of such Grantor's right, title and interest in and to the following
(collectively, the "Intellectual Property Collateral"):
(i) all United States, international, and foreign patents, patent
applications and statutory invention registrations, including, without
limitation, reissues, divisions, continuations, continuations-in-part,
extensions and reexaminations thereof, all inventions
4
therein, all rights therein provided by international treaties or
conventions and all improvements thereto, and all other rights of any kind
whatsoever of such Grantor accruing thereunder or pertaining thereto,
including, without limitation, the patents and patent applications set
forth on Schedule IV hereto (the "Patents");
(ii) all trademarks (including service marks), certification marks,
collective marks, trade dress, logos, domain names, product configurations,
trade names, business names, corporate names, and other source identifiers,
whether or not registered, whether currently in use or not, including all
common law rights, and registrations and applications for registration
thereof, including, but not limited to, all marks registered in the U.S.
Patent and Trademark Office or in any office or agency of any State or
Territory thereof or any foreign country, and all rights therein provided
by international treaties or conventions, all reissues, extensions and
renewals of any of the foregoing, together in each case with the goodwill
of the business connected therewith and symbolized thereby, and all rights
corresponding thereto throughout the world and all other rights of any kind
whatsoever of such Grantor accruing thereunder or pertaining thereto, and
including, without limitation, the registrations and applications set forth
on Schedule IV hereto, but excluding any United States intent-to-use
trademark application prior to the filing of a Statement of Use or
Amendment to Allege Use in connection therewith to the extent that a valid
security interest may not be taken in such an intent-to-use trademark
application under applicable law (the "Trademarks");
(iii) all copyrights, copyright applications, copyright registrations
and like protections in each work of authorship, whether statutory or
common law, whether published or unpublished, any renewals or extensions
thereof, all copyrights of works based on, incorporated in, derived from,
or relating to works covered by such copyrights, including, without
limitation, each copyright registration and copyright application set forth
in Schedule IV hereto, and including, without limitation, all rights
corresponding thereto throughout the world and all other rights of any kind
whatsoever of such Grantor accruing thereunder or pertaining thereto (the
"Copyrights");
(iv) confidential and proprietary information, including know-how,
trade secrets, manufacturing and production processes and techniques,
inventions, research and development information, technical data,
financial, marketing and business data, pricing and cost information,
business and marketing plans, and customer and supplier lists and
information (the "Trade Secrets");
(v) all computer software programs and data bases (including source
code, object code and all related applications and data files), firmware,
and documentation and materials relating thereto, and all rights with
respect to the foregoing, including, without limitation, any and all
options, warranties, service contracts, program services, test rights,
maintenance rights, improvement rights, renewal rights and indemnifications
and any substitutions, replacements, additions or model conversions of any
of the foregoing (the "Computer Software");
(vi) all license agreements, permits, authorizations, and franchises,
whether with respect to the Computer Software, Patents, Trademarks,
Copyrights, Trade Secrets, or with
5
respect to the computer software, patents, trademarks, copyrights, trade
secrets or other proprietary right of any other Person, including, without
limitation, the license agreements listed set forth in Schedule IV, and all
income, royalties, and other payments now or hereafter due and/or payable
to such Grantor with respect thereto, subject, in each case, to the terms
of such license agreements, permits, authorizations, and franchises,
including, without limitation, terms requiring consent to a grant of a
security interest (the "Licenses");
(vii) any and all claims for damages for past, present and future
infringement, misappropriation or breach with respect to the Computer
Software, Patents, Trademarks, Copyrights, Trade Secrets or Licenses, with
the right, but not the obligation to xxx for and collect, or otherwise
recover, such damages; and
(viii) any and all proceeds of the foregoing.
(h) All other general intangibles of such Grantor (other than general
intangibles for moneys due or to become due which are covered by Section 1(e)
above, including, without limitation, (i) all partnership, corporate and other
interests in and to any Person (other than any Security Collateral), and (ii)
all governmental permits, licenses (and any subsequent renewals thereof),
franchises, registrations, authorizations and approvals; and
(i) All proceeds of any and all of the foregoing Collateral
(including, without limitation, proceeds that constitute property of the
types described in clauses (a) through (h) of this Section 1) and, to the
extent not otherwise included, all (i) payments under insurance (whether or
not the Administrative Agent is the loss payee thereof), or any indemnity,
warranty or guaranty, payable by reason of loss or damage to or otherwise
with respect to any of the foregoing Collateral, and (ii) cash.
The foregoing shall not attach to items in which a purchase money lien permitted
under the Credit Agreement in favor of any Person (other than the Administrative
Agent) has been granted if the documents relating to such lien do not permit
other liens, or to any general intangible which specifically prohibits
assignment thereof but only to the extent of such prohibition.
SECTION 2. Security for Obligations. This Agreement secures, in the case of
each Grantor, the payment of all Obligations of such Grantor now or hereafter
existing under the Loan Documents, whether direct or indirect, absolute or
contingent, including any extensions, modifications, substitutions, amendments
and renewals thereof, whether for principal (including reimbursement for amounts
drawn under Letters of Credit), interest, premiums, penalties, fees,
indemnifications, contract causes of action, costs, expenses or otherwise (all
such Obligations secured hereby being the "Secured Obligations"). Without
limiting the generality of the foregoing, this Agreement secures, as to each
Grantor, the payment of all amounts that constitute part of the Secured
Obligations of such Grantor and that would be owed by such Grantor to the
Secured Parties under the Loan Documents but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving such Grantor.
SECTION 3. Grantors Remain Liable. Anything contained herein to the
contrary notwithstanding, (a) each Grantor shall remain liable under the
contracts and agreements included in the Collateral to the extent set forth
therein to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by the
Administrative Agent of any of its
6
rights hereunder shall not release any Grantor from any of its duties or
obligations under the contracts and agreements included in the Collateral, and
(c) no Secured Party shall have any obligation or liability under the contracts
and agreements included in the Collateral by reason of this Agreement or any
other Loan Document, nor shall any Secured Party be obligated to perform any of
the obligations or duties of any Grantor thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.
SECTION 4. Delivery and Control of Security Collateral, Account Collateral,
Agreement Collateral and Receivables. (a) All certificates or instruments
representing or evidencing any Security Collateral, Account Collateral,
Agreement Collateral or Receivables (and, to the extent requested by the
Administrative Agent, representing or evidencing any other Collateral) shall be
delivered to and held by or on behalf of the Administrative Agent pursuant
hereto and shall be in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or assignment in blank, all
in form and substance satisfactory to the Administrative Agent; provided,
however, that this Section 4 shall not apply to any certificate of title
representing automotive equipment, trucks and motor vehicles referred to in
Section 1(c). Upon and after an Event of Default which is continuing, the
Administrative Agent shall have the right, at any time in its discretion and
without notice to any Grantor, to transfer to or to register in the name of the
Administrative Agent or any of its nominees any or all of the Security
Collateral and Account Collateral, subject only to the revocable rights
specified in Section 14(a) and similar rights with respect to certificates or
investments representing Account Collateral. In addition, upon and after an
Event of Default, the Administrative Agent shall have the right at any time to
exchange certificates or instruments representing or evidencing the Security
Collateral or Account Collateral for certificates or instruments of smaller or
larger denominations.
(b) With respect to any Security Collateral that constitutes a security and
is not represented or evidenced by a certificate or an instrument, such Grantor
shall cause the issuer thereof either (i) to register the Administrative Agent
as the registered owner of such security or (ii) to agree in writing with such
Grantor and the Administrative Agent that such issuer will comply with
instructions with respect to such security originated by the Administrative
Agent without further consent of such Grantor, such agreement to be in form and
substance satisfactory to the Administrative Agent.
(c) With respect to any Security Collateral that constitutes a security
entitlement, such Grantor shall cause the securities intermediary with respect
to such security entitlement either (i) to identify in its records the
Administrative Agent as having such security entitlement against such securities
intermediary or (ii) to agree in writing with such Grantor and the
Administrative Agent that such securities intermediary will comply with
entitlement orders (that is, notifications communicated to such securities
intermediary directing transfer or redemption of the financial asset to which
such Grantor has a security entitlement) originated by the Administrative Agent
without further consent of such Grantor, such agreement to be in form and
substance satisfactory to the Administrative Agent.
(d) With respect to any Security Collateral that constitutes a commodity
contract, such Grantor shall cause the commodity intermediary with respect to
such commodity contract to agree in writing with such Grantor and the
Administrative Agent that such commodity intermediary will apply any value
distributed on account of such commodity contract as directed by the
Administrative Agent without further consent of such Grantor, such agreement to
be in form and substance satisfactory to the Administrative Agent.
7
(e) With respect to any Security Collateral that constitutes a securities
account or a commodity account, such Grantor will, in the case of a securities
account, comply with subsection (c) of this Section 4 with respect to all
security entitlements carried in such securities account and, in the case of a
commodity account, comply with subsection (d) of this Section 4 with respect to
all commodity contracts carried in such commodity account.
SECTION 5. Maintaining the L/C Cash Collateral Account. So long as any
Advance shall remain unpaid, any Letter of Credit or Bank Hedge Agreement shall
be outstanding or any Lender Party shall have any Commitment under the Credit
Agreement:
(a) The Borrower will maintain the L/C Cash Collateral Account with
BNP.
(b) It shall be a term and condition of the L/C Cash Collateral
Account, notwithstanding any term or condition to the contrary in any other
agreement relating to the L/C Cash Collateral Account, and except as
otherwise provided by the provisions of Section 20, that no amount
(including interest on Collateral Investments) shall be paid or released to
or for the account of, or withdrawn by or for the account of, the Borrower
or any other Person from the L/C Cash Collateral Account.
The L/C Cash Collateral Account shall be subject to such applicable laws, and
such applicable regulations of the Board of Governors of the Federal Reserve
System and of any other appropriate banking or governmental authority, as may
now or hereafter be in effect.
SECTION 6. Maintaining the Blocked Accounts. So long as any Advance shall
remain unpaid, any Letter of Credit or Bank Hedge Agreement shall be outstanding
or any Lender Party shall have any Commitment under the Credit Agreement:
(a) Each Grantor shall, to the extent such Grantor shall have at any
time an aggregate amount on deposit in excess of $250,000, maintain blocked
deposit accounts ("Blocked Accounts") only with banks ("Blocked Account
Banks") that have entered into letter agreements in substantially the form
of Exhibit A (or such other form as the Administrative Agent and such
Grantor shall agree) with such Grantor and the Administrative Agent
("Blocked Account Letters").
(b) At the end of each Business Day, the Grantors required to maintain
Blocked Accounts pursuant to the foregoing paragraph shall deposit all cash
in Blocked Accounts; provided, however, that the provisions of this Section
6(b) shall not apply to (i) the Citibank Account and payments required to
be made thereto and (ii) any deposit account held in the name of the
Borrower at PNC Bank for miscellaneous cash receipts and payments thereto
so long as the aggregate amount on deposit in such accounts shall not
exceed $25,000.
(c) Upon any termination of any Blocked Account Letter or other
agreement with respect to the maintenance of a Blocked Account by any
Grantor required to maintain any Blocked Account pursuant to Section 6(a)
or any Blocked Account Bank, such Grantor shall immediately notify all
Obligors that were making payments to such Blocked Account to make all
future payments to another Blocked Account. Following the occurrence and
during the continuance of an Event of Default, such Grantor agrees to
terminate any or all Blocked Accounts and Blocked Account Letters upon
request by the Administrative Agent.
8
SECTION 7. Investing of Amounts in the L/C Cash Collateral Account. If
requested by the Borrower, the Administrative Agent will, subject to the
provisions of Section 20, from time to time (a) invest amounts on deposit in the
L/C Cash Collateral Account in such Cash Equivalents in the name of the
Administrative Agent or as to which all action required by Section 9 shall have
been taken as the Borrower may select and the Administrative Agent may approve
and (b) invest interest paid on the Cash Equivalents referred to in clause (a)
above, and reinvest other proceeds of any such Cash Equivalents that may mature
or be sold, in each case in such Cash Equivalents in the name of the
Administrative Agent or as to which all actions required by Section 9 shall have
been taken as the Borrower may select and the Administrative Agent may approve
(the Cash Equivalents referred to in clauses (a) and (b) above being
collectively "Collateral Investments"). Interest and proceeds that are not
invested or reinvested in Collateral Investments as provided above shall be
deposited and held in the L/C Cash Collateral Account.
SECTION 8. Representations and Warranties. Each Grantor represents and
warrants as follows:
(a) Such Grantor is the legal and beneficial owner of the Collateral
of such Grantor free and clear of any Lien, claim, option or right of
others, except for the liens and security interests created under this
Agreement or permitted by the Credit Agreement. No effective financing
statement or other instrument similar in effect covering all or any part of
such Collateral (including, without limitation, accounts and general
intangibles relating to the Collateral) or listing such Grantor or any of
its Subsidiaries or any trade name of such Grantor or any of its
Subsidiaries as debtor with respect to Collateral is on file in any
recording office, except such as may have been filed in favor of the
Administrative Agent relating to the Loan Documents or as permitted by
Section 5.02(a) of the Credit Agreement.
(b) The Pledged Shares owned by such Grantor have been duly authorized
and validly issued and are fully paid and non-assessable. The Pledged Debt
held by such Grantor has been duly authorized, authenticated or issued and
delivered, is the legal, valid and binding obligation of the issuers
thereof and is not in default.
(c) The Initial Pledged Shares owned by such Grantor constitute the
percentage of the issued and outstanding shares of stock of the issuers
thereof indicated on Schedule I hereto. The Initial Pledged Debt
constitutes all of the outstanding indebtedness owed to such Grantor for
money borrowed or for the deferred purchase price of property of the
issuers thereof.
(d) As of the date hereof no Grantor owns any of the investment
property.
(e) On the date hereof and thereafter on the most recent date on which
a revised Schedule III is required to be furnished to the Administrative
Agent pursuant to Section 10(d), all of the Equipment and Inventory of such
Grantor, other than such Equipment and Inventory as has been rented or
leased to such Grantor's customers or inventory sold in the ordinary course
of business, is located at the places specified in Schedule III hereto. The
chief place of business and chief executive office of such Grantor and the
office where such Grantor keeps its records concerning the Receivables, and
the original copies of each Assigned Agreement and all originals of all
Related Contracts and all chattel paper, if any, that evidence Receivables
(other than (i) those delivered to the
9
Administrative Agent and (ii) rental contracts located in the ordinary
course of business at the Borrower's branch offices), are located at the
address set forth on the signature pages hereto beneath such Grantor's name
or at such other location permitted by Section 12(a). Such Grantor has
delivered to the Administrative Agent the originals of all agreements,
certificates or instruments representing or evidencing any Collateral and
all security therefor and guaranties thereof, in each case to the extent
that the delivery thereof to the Administrative Agent is required under
Section 4 above. None of the Receivables or Agreement Collateral is
evidenced by a promissory note or other instrument that is required to be
delivered to the Administrative Agent hereunder and has not been so
delivered (other than promissory notes issued to the Borrower with respect
to amounts due to the Borrower, in the ordinary course of business on a
basis consistent with current practice).
(f) The Assigned Agreements to which such Grantor is a party, true and
complete copies of which have been furnished to each Lender Party, have
been duly authorized, executed and delivered by all parties thereto, have
not been amended or otherwise modified, are in full force and effect and
are binding upon and enforceable against all parties thereto in accordance
with their terms. There exists no default under any Assigned Agreement to
which such Grantor is a party by such Grantor, or, to such Grantor's
knowledge, by any other party thereto. Each party to any Assigned Agreement
to which such Grantor is a party (other than such Grantor) has executed and
delivered to such Grantor a consent, in substantially the form of Exhibit B
hereto or otherwise in form and substance satisfactory to the
Administrative Agent, to the assignment of the Agreement Collateral to the
Administrative Agent for the benefit of the Secured Parties pursuant to
this Agreement.
(g) Subject to the provisions of Section 6 allowing for additional
Blocked Accounts, such Grantor has no Blocked Accounts or other deposit
accounts other than the Blocked Accounts listed on Part I of Schedule V
hereto and the other deposit accounts listed on Part II of Schedule V
hereto. Each Grantor has instructed all existing Obligors to make all
payments to a Blocked Account to the extent required by the terms hereof.
(h) This Agreement, the pledge of the Security Collateral pursuant
hereto and the pledge and assignment of the Account Collateral pursuant
hereto, and with respect to the Intellectual Property Collateral, upon
recordation of the Intellectual Property Security Agreements executed
pursuant to Section 11(g) hereof, as applicable, with the U.S. Patent and
Trademark Office, the U.S. Copyright Office and the appropriate state and
local government offices under the Uniform Commercial Code, create in favor
of the Administrative Agent for the benefit of the Secured Parties a valid
and perfected security interest in the Collateral of such Grantor, securing
the payment of the Secured Obligations of such Grantor, to the extent that
such security interests can be created and perfected. Such security
interest is subject in priority only to the prior liens permitted under
Section 5.02(a) of the Credit Agreement. Upon the release of the liens
referred to in the immediately preceding sentence, such security interest
shall be a first priority security interest.
(i) Other than for those Licenses listed on Schedule IV hereto, no
consent of any other Person and no authorization, approval or other action
by, and no notice to or filing with, any governmental authority or
regulatory body or other Person is required (i) for the grant by such
Grantor of the assignment and security interest granted hereby, for the
pledge by such Grantor of any Security Collateral hereunder or for the
execution, delivery or performance of this Agreement by such Grantor, (ii)
for the perfection or maintenance of the pledge, assignment and security
interest created
10
hereunder (including the first priority nature of such pledge, assignment
and security interest, except as otherwise permitted), except for the
filing of financing and continuation statements under the Uniform
Commercial Code, and the recordation of the Intellectual Property Security
Agreements executed pursuant to Section 11(g) hereof, as applicable, with
the U.S. Patent and Trademark Office, the U.S. Copyright Office and the
appropriate state and local government offices under the Uniform Commercial
Code, or (iii) for the exercise by the Administrative Agent of its voting
or other rights provided for in this Agreement or the remedies in respect
of the Collateral pursuant to this Agreement, except as may be required in
connection with the disposition of any portion of the Security Collateral
by laws affecting the offering and sale of securities generally.
(j) There are no conditions precedent to the effectiveness of this
Agreement that have not been satisfied or waived.
(k) Such Grantor has, independently and without reliance upon any
Secured Party and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement, and such Grantor has established adequate means of obtaining
from any other Loan Parties on a continuing basis information pertaining
to, and is now and on a continuing basis will be completely familiar with,
the financial condition, operations, properties and prospects of such other
Loan Parties.
(l) As to itself and its Intellectual Property Collateral:
(i) To the knowledge of such Grantor, the rights of such Grantor
in or to the Intellectual Property Collateral do not conflict with or
infringe upon the rights of any third party, and no claim has been
asserted that the use of such Intellectual Property Collateral does or
may infringe upon the rights of any third party.
(ii) Such Grantor is the exclusive owner of the entire and
unencumbered right, title and interest in and to the Intellectual
Property Collateral or is otherwise entitled to use all such
Intellectual Property Collateral without limitation, subject only to
the license terms of the Licenses and such other agreements,
obligations, orders, and Judgments as may affect the use of such
Intellectual Property Collateral.
(iii) Other than for those Licenses listed on Schedule IV hereto,
to the knowledge of Grantors, there are no other agreements,
obligations, orders or judgments which affect the use of the
Intellectual Property Collateral as of the date of this Agreement.
(iv) To the knowledge of such Grantor, the Intellectual Property
Collateral set forth on Schedule IV hereto includes all of the
material patents, patent applications, trademark registrations and
applications, copyright registrations and applications, and Licenses
owned by such Grantor.
(v) Each of the patents, registered trademarks, registered
service marks and registered copyrights listed on Schedule IV hereto
is subsisting and has not been adjudged invalid or unenforceable in
whole or part, and to such Grantor's knowledge, is valid and
enforceable. Such Grantor is not aware of any uses of any material
item of Intellectual
11
Property Collateral that could be reasonably expected to lead to such
item becoming invalid or unenforceable.
(vi) Such Grantor has performed all acts reasonably necessary and
has paid all required fees and taxes to maintain each and every
patent, registered trademark, registered service xxxx, and registered
copyright listed on Schedule IV hereto in full force and effect, and
to protect and maintain its interest therein.
(vii) To the knowledge of such Grantor, no Actions have been
asserted, are pending, or threatened against such Grantor (i) based
upon or challenging or seeking to deny or restrict the use of any of
the material Intellectual Property Collateral, or (ii) alleging that
any services provided by, processes used by, or products manufactured
or sold by such Grantor infringe any patent, trademark, copyright, or
any other right of any third party. To the knowledge of such Grantor,
no Person is engaging in any activity that infringes upon the material
Intellectual Property Collateral or upon the rights of such Grantor
therein. Except as set forth on Schedule IV hereto, such Grantor has
not granted any license, release, covenant not to xxx, non-assertion
assurance, or other right to any person with respect to any part of
the Intellectual Property Collateral. To the knowledge of such
Grantor, the consummation of the transaction contemplated by this
Agreement will not result in the termination or impairment of any of
the Intellectual Property Collateral.
(viii) With respect to each material license of the Licenses: (A)
to the knowledge of such Grantor, such license is valid and binding
and in full force and effect and represents the entire agreement
between the respective licensor and licensee with respect to the
subject matter of such license; (B) except as specified in Schedule
IV, such license will not cease to be valid and binding and in full
force and effect on terms identical to those currently in effect as a
result of the rights and interest granted herein, nor will the grant
of such rights and interest constitute a breach or default under such
license or otherwise give the licensor or licensee a right to
terminate such license; (C) such Grantor has not received any notice
of termination or cancellation under such license; (D) such Grantor
has not received any notice of a material breach or default under such
license, which breach or default has not been cured; (E) such Grantor
has not granted to any other third party any rights, adverse or
otherwise, under such license; and (F) neither such Grantor, nor, to
the knowledge of such Grantor, any other party to such license is in
breach or default in any material respect, and, to the knowledge of
such Grantor, no event has occurred that, with notice or lapse of time
would constitute such a breach or default or permit termination,
modification or acceleration under such license.
(ix) Consistent with its reasonable business judgment, such
Grantor will use such reasonable efforts as it reasonably deems
appropriate to protect, defend, and maintain the validity and
enforceablity of the material Intellectual Property Collateral, and
will use reasonable efforts to detect material infringements of the
material Intellectual Property Collateral, provided, however, that
nothing herein shall be construed as to prevent such Grantor from
abandoning or ceasing to protect any Intellectual Property Collateral
consistent with the terms of Section 11(b).
12
(x) To the knowledge of such Grantor, (A) none of the material
Trade Secrets of such Grantor has been used, divulged, disclosed or
appropriated to the detriment of such Grantor for the benefit of any
other Person other than such Grantor; (B) no employee, independent
contractor or agent of such Grantor has misappropriated any trade
secrets of any other Person in the course of the performance of his or
her duties as an employee, independent contractor or agent of such
Grantor; and (C) no employee, independent contractor or agent of such
Grantor is in material default or breach of any term of any employment
agreement, non-disclosure agreement, assignment of inventions
agreement or similar agreement or contract relating in any way to the
protection, ownership, development, use or transfer of such Grantor's
Intellectual Property Collateral.
(xi) No actions have been asserted, are pending, or threatened
against such Grantor challenging or seeking to deny or restrict the
use by such Grantor of any of the material licensed Intellectual
Property Collateral, or alleging that any material licensed
Intellectual Property Collateral is being licensed, sublicensed or
used in violation of any patent, trademark, copyright or any other
right of any third party.
SECTION 9. Further Assurances. (a) Each Grantor agrees that from time to
time, at the expense of such Grantor, such Grantor will promptly execute and
deliver all further instruments and documents, and take all further action, that
such Grantor believes may be necessary or reasonably desirable, or that the
Administrative Agent may reasonably request, in order to perfect and protect any
pledge, assignment or security interest granted or purported to be granted
hereby or to enable the Administrative Agent to exercise and enforce its rights
and remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, each Grantor will: (i) xxxx conspicuously (A) each
invoice issued in connection with the rental or lease of any Equipment or
Inventory with the following legend: "THIS EQUIPMENT MAY BE SUBJECT TO A
SECURITY INTEREST GRANTED TO BANQUE NATIONALE DE PARIS AS ADMINISTRATIVE AGENT"
and (B) each Assigned Agreement of such Grantor included in the Collateral, and
each of its records pertaining to the Collateral, with a legend, in form and
substance satisfactory to the Administrative Agent, indicating that such
Collateral is subject to the security interest granted hereby, (ii) if any
Collateral shall be evidenced by a promissory note or other instrument (other
than promissory notes permitted pursuant to Section 5.02(e)(ii)(D) of the Credit
Agreement), deliver and pledge to the Administrative Agent for the benefit of
the Secured Parties hereunder such note or instrument duly indorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
and substance satisfactory to the Administrative Agent, (iii) subject to the
provisos at the end of Section 1(a)(vii), deliver and pledge to the
Administrative Agent for the benefit of the Secured Parties hereunder
certificates representing the Pledged Shares accompanied by undated stock powers
executed in blank and evidence that all other action that the Administrative
Agent may deem necessary or reasonably desirable in order to perfect and protect
the liens and security interests created under this Agreement has been taken and
(iv) execute and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
reasonably desirable, or as the Administrative Agent may reasonably request, in
order to perfect and preserve the pledge, assignment and security interests
granted or purported to be granted hereunder.
(b) Each Grantor hereby authorizes the Administrative Agent to file one or
more financing or continuation statements, and amendments thereto, relating to
all or any part of the Collateral without the signature of such Grantor where
permitted by law. A photocopy or other reproduction of this
13
Agreement or any financing statement covering the Collateral or any part thereof
shall be sufficient as a financing statement where permitted by law.
(c) Each Grantor will furnish to the Administrative Agent from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Administrative Agent
may reasonably request, all in reasonable detail.
(d) The Borrower will furnish to the Administrative Agent, at any time
within six months prior to the fifth anniversary of the date hereof, opinions of
local counsel in Texas, California, New Jersey and Florida substantially in the
form of Exhibit H-2 to the Credit Agreement and acceptable to the Required
Lenders to the effect that all financing or continuation statements have been
filed, and all other action has been taken, to perfect and validate continuously
from the date hereof the pledge, assignment and security interests granted
hereunder in such jurisdiction (excluding, in the case of perfection, any
Collateral in which a security interest may not be perfected by the filing of a
financing statement under the Uniform Commercial Code of any jurisdiction).
SECTION 10. As to Equipment and Inventory. Each Grantor shall:
(a) On the date hereof and thereafter on the most recent date on which
a revised Schedule III is required to be furnished to the Administrative
Agent pursuant to Section 10(d), all of the Equipment and Inventory of such
Grantor, other than such Equipment and Inventory as has been rented or
leased to such Grantor's customers, shall be located at the places
specified in Schedule III hereto or at such other places in jurisdictions
where all action required by Section 9 shall have been taken with respect
to such Equipment and Inventory.
(b) Cause all of its Equipment and Inventory to be maintained and
preserved, as is reasonably required in the conduct of its business, in
good working order and condition, excluding (i) ordinary wear and tear and
(ii) properties that have become obsolete or no longer fit for their
intended purposes, and shall forthwith, or in the case of any loss or
damage to any of such Equipment or Inventory as soon as practicable after
the occurrence thereof, make or cause to be made all repairs, replacements
and other improvements in connection therewith which are necessary or
desirable to such end.
(c) Pay promptly when due all property and other taxes, assessments
and governmental charges or levies imposed upon, and all claims (including
claims for labor, materials and supplies) against, the Equipment and
Inventory; provided, however, that such Grantor shall not be required to
pay or discharge any such tax, assessment, charge, levy or claim (x) that
is being contested in good faith and by proper proceedings and as to which
appropriate reserves are being maintained, or (y) in respect of which the
Lien resulting therefrom, if any, attaches to its property and becomes
enforceable against its other creditors, to the extent that the aggregate
amount of all such taxes, assessments, charges or claims does not exceed
$250,000.
(d) Furnish to the Administrative Agent, at the same time as the
quarterly financial statements are required to be furnished to the
Administrative Agent pursuant to Section 5.03(c) of the Credit Agreement,
unless no revisions are required, a revised Schedule III specifying each
place where the Equipment and Inventory
14
of such Grantor is located excluding such Equipment or Inventory rented or
leased to such Grantor's customers. Such revised Schedule III shall be
deemed to replace the then existing Schedule III and shall be of full force
and effect as of the date of delivery of such Schedule to the
Administrative Agent.
(e) In the event that Equipment and/or Inventory of the Grantors with
a book value equal to or greater than 10% of the aggregate book value of
all Equipment and Inventory of the Grantors' is relocated, in one move or
in a series of moves, from one county to another, furnish within five
Business Days after such relocation notice of such relocation to the
Administrative Agent (such notice to include the percentage book value of
the relocated Equipment and Inventory and the old and new locations of such
Equipment and Inventory).
(f) For each leased location at which at any time Equipment and
Inventory of the Grantors with a book value equal to or greater than 10% of
the aggregate book value of the Equipment and Inventory is located, use its
good faith efforts to furnish at such time to the Administrative Agent a
landlord access letter or consent on terms and conditions reasonably
acceptable to the Administrative Agent.
SECTION 11. As to Intellectual Property Collateral:
(a) Each Grantor agrees that, should it obtain an ownership interest
in any item of the type set forth in Section 1(g) hereof which is not now a
part of the Intellectual Property Collateral (the "After-Acquired
Intellectual Property"), (i) the provisions of Section 1 shall
automatically apply thereto, (ii) any such After-Acquired Intellectual
Property, and in the case of trademarks, the goodwill of the business
connected therewith or symbolized thereby, shall automatically become part
of the Intellectual Property Collateral, and (iii) it shall give written
notice of any such item which would otherwise be included on Schedule IV
hereto to the Administrative Agent on a semi-annual basis, provided that
failure to give such notice shall not be deemed an Event of Default nor
shall it limit the Administrative Agent's interest in such Collateral in
any way. Each Grantor authorizes the Administrative Agent to modify this
Agreement by amending Schedule IV hereto and to modify the Exhibits of any
Intellectual Property Security Agreement (and will cooperate with the
Administrative Agent in effecting either such amendment) executed pursuant
to Section 11(g) hereof to include any After-Acquired Intellectual Property
which becomes part of the Intellectual Property Collateral under this
Section, and to record any such modified agreement with the U.S. Patent and
Trademark Office, the U.S. Copyright Office, or other governmental
authority.
(b) Consistent with such Grantor's reasonable business judgment and
subject to the last sentence of this subsection, with respect to each
material item of its Intellectual Property Collateral, each Grantor agrees
to take, at its expense, all steps that such Grantor reasonably deems
necessary, including, without limitation, in the U.S. Patent and Trademark
Office, the U.S. Copyright Office or in any court, to (i) maintain each
such material item of Intellectual Property Collateral in full force and
effect, and valid and enforceable, and (ii) pursue the registration and
maintenance of each material patent, trademark, or copyright registration
or application, now or hereafter included in the Intellectual Property
Collateral of such Grantor, including, without limitation, the payment of
required fees and taxes, the filing of responses to office actions issued
by the U.S. Patent and Trademark Office and the U.S. Copyright Office, the
filing of applications for renewal or extension, the filing of affidavits
under Sections 8 and 15 of the U.S. Trademark Act, the filing of
divisional, continuation, continuation-in-part, reissue, and renewal
applications or extensions, the payment of maintenance fees, and the
participation in interference, reexamination, opposition, cancellation,
15
infringement and misappropriation proceedings. No Grantor shall, without
the written consent of the Administrative Agent, discontinue use of or
otherwise abandon any Intellectual Property Collateral, or abandon any
right to file an application for letters patent, trademark, or copyright,
unless: (i) such Grantor shall have reasonably determined that such use or
the pursuit or maintenance of such Intellectual Property Collateral is no
longer desirable in the conduct of such Grantor's business, or (ii) the
loss thereof will not have a Material Adverse Effect.
(c) Each Grantor agrees to notify the Administrative Agent at least
annually and in writing if it learns (i) that any patent, registered
trademark, registered service xxxx, or registered copyright listed on
Schedule IV has been declared abandoned, placed in the public domain,
invalid or unenforceable, or of any adverse judicial or administrative
determination regarding such Grantor's ownership of any of the Intellectual
Property Collateral, its right to register the same or to keep and maintain
and enforce the same, or (ii) of the institution of any proceeding
(including, without limitation, the institution of any proceeding in the
U.S. Patent and Trademark Office or any court) regarding any item above.
(d) In the event that any Grantor becomes aware that any material item
of the Intellectual Property Collateral is being infringed or
misappropriated by a third party, such Grantor shall take such actions, at
its expense, as such Grantor deems reasonable and appropriate under the
circumstances to protect such Intellectual Property Collateral, including,
without limitation, suing for infringement or misappropriation and for an
injunction against such infringement or misappropriation.
(e) Except as otherwise provided in this Agreement, no Grantor shall
do or permit any act or knowingly omit to do any act whereby any of its
material Intellectual Property Collateral may lapse or become invalid or
unenforceable or placed in the public domain.
(f) Each Grantor shall take all steps which it deems reasonable and
appropriate under the circumstances to preserve and protect each item of
its Intellectual Property Collateral, including, without limitation, taking
all steps necessary to ensure that all licensed users of any of the
Trademarks use consistent standards of quality.
(g) With respect to its Intellectual Property Collateral, each Grantor
agrees to execute an Intellectual Property Security Agreement substantially
in the form set forth in Exhibit D for recording the security interest
granted to the Secured Parties herein with the U.S. Patent and Trademark
Office, the U.S. Copyright Office, and any other governmental authority.
SECTION 12. Insurance. (a) Each Grantor shall, at its own expense, maintain
insurance with respect to the Equipment and Inventory in such amounts, against
such risks, in such form and with such insurers, as shall be reasonably
satisfactory to the Administrative Agent from time to time. Each policy for
liability insurance shall provide for all losses to be paid on behalf of the
Administrative Agent and such Grantor as their interests may appear, and each
policy for property damage insurance shall provide for all losses (except for
losses of less than $1,000,000 per occurrence) to be paid directly to the
Administrative Agent, except to the extent permitted to be paid to a Grantor
pursuant to Section 12(b). Each such policy shall in addition (i) name such
Grantor and the Administrative Agent as insured parties thereunder (without any
representation or warranty by or obligation upon the Administrative Agent) as
their interests may appear, (ii) contain the agreement by the insurer that any
loss thereunder shall be payable to the Administrative Agent notwithstanding any
action, inaction or breach of representation or warranty by such Grantor, (iii)
provide that
16
there shall be no recourse against the Administrative Agent for payment of
premiums or other amounts with respect thereto and (iv) provide that at least 10
days' prior written notice of cancellation or of lapse shall be given to the
Administrative Agent by the insurer. Each Grantor shall, if so requested by the
Administrative Agent, deliver to the Administrative Agent certificates
evidencing such insurance, make the original policies of such insurance
reasonably available for inspection by the Administrative Agent and, as often as
the Administrative Agent may reasonably request, a report of a reputable
insurance broker with respect to such insurance. Further, each Grantor shall, at
the request of the Administrative Agent, duly exercise and deliver instruments
of assignment of such insurance policies to comply with the requirements of
Section 9 and cause the insurers to acknowledge notice of such assignment.
(b) Reimbursement under any insurance maintained by any Grantor pursuant to
this Section 12 may be paid directly to the Person who shall have incurred
liability covered by such insurance. In case of any loss involving damage to
Equipment or Inventory when subsection (c) of this Section 12 is not applicable,
such Grantor shall make or cause to be made the necessary repairs to or
replacements of such Equipment or Inventory, and any proceeds of insurance
properly received by or released to such Grantor shall be used by such Grantor,
except as otherwise required or permitted hereunder or by the Credit Agreement
to pay or as reimbursement for the cost of such repairs or replacements.
(c) Upon the occurrence and during the continuance of any Event of Default,
all insurance payments in respect of such Equipment or Inventory shall be paid
to and applied by the Administrative Agent as specified in Section 20(b).
SECTION 13. Place of Perfection; Records; Collection of Receivables. (a)
Each Grantor shall keep its chief place of business and chief executive office
and the office where it keeps its records concerning the Collateral; and the
original copies of the Assigned Agreements of such Grantor, and all originals of
all chattel paper which evidences or constitutes Receivables (other than rental
contracts located in the ordinary course of business at the Borrower's branch
offices), at the location therefor specified in Section 8(e) or, upon 30 days'
prior written notice to the Administrative Agent, at such other locations in a
jurisdiction where all actions required by Section 9 shall have been taken with
respect to the Collateral. Each Grantor will hold and preserve such records,
Assigned Agreements and chattel paper and will permit representatives of the
Administrative Agent at any time during normal business hours to inspect and
make abstracts from such records and chattel paper.
(b) Except as otherwise provided in this subsection (b), such Grantor shall
continue to collect, at its own expense, all amounts due or to become due such
Grantor under the Receivables and Related Contracts. In connection with such
collections, upon and after an Event of Default which is continuing, such
Grantor may take (and, following an Event of Default which is continuing at the
Administrative Agent's direction, shall take) such action as such Grantor or the
Administrative Agent may deem necessary or advisable to enforce collection of
the Receivables and Related Contracts; provided, however, that the
Administrative Agent shall have the right upon the occurrence and during the
continuance of an Event of Default and upon written notice to the Borrower of
its intention to do so, to notify the Obligors under any Receivables or Related
Contracts of the assignment of such Receivables or Related Contracts to the
Administrative Agent and to direct such Obligors to make payment of all amounts
due or to become due to such Grantor thereunder directly to the Administrative
Agent and, upon such notification and at the expense of such Grantor, to enforce
collection of any such Receivables or Related Contracts, and to adjust, settle
or compromise the amount or payment thereof, in the same manner and to the same
extent as such Grantor might have done. After receipt by such
17
Grantor of the notice from the Administrative Agent referred to in the proviso
to the preceding sentence, (i) all amounts and proceeds (including instruments)
received by such Grantor in respect of the Receivables or the Related Contracts
shall be received in trust for the benefit of the Administrative Agent
hereunder, shall be segregated from other funds of such Grantor and shall be
forthwith paid over to the Administrative Agent in the same form as so received
(with any necessary indorsement) to be applied as provided by the terms of the
Credit Agreement and (ii) such Grantor shall not adjust, settle or compromise
the amount or payment of any Receivable, release wholly or partly any obligor
thereof, or allow any credit or discount thereon.
SECTION 14. Voting Rights; Dividends; Etc. (a) So long as no Default under
Section 6.01(a) or (f) of the Credit Agreement or Event of Default shall have
occurred and be continuing:
(i) Each Grantor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Security Collateral of such
Grantor or any part thereof for any purpose not inconsistent with the terms
of this Agreement or the other Loan Documents; provided, however, that no
Grantor shall exercise or refrain from exercising any such right if, in the
Administrative Agent's judgment, such action would have a material adverse
effect on the value of the Security Collateral or any part thereof.
(ii) Each Grantor shall be entitled to receive and retain any and all
dividends, interest and other distributions paid in respect of the Security
Collateral of such Grantor if and to the extent that the payment thereof is
not otherwise prohibited by the terms of the Loan Documents; provided,
however, that any and all
(A) dividends, interest and other distributions paid or payable
other than in cash in respect of, and instruments and other property
received, receivable or otherwise distributed in respect of, or in
exchange for, any Security Collateral,
(B) dividends and other distributions paid or payable in cash in
respect of any Security Collateral in connection with a partial or
total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in-surplus, and
(C) cash paid, payable or otherwise distributed in respect of
principal of, or in redemption of, or in exchange for, any Security
Collateral,
shall be, and shall be forthwith delivered to the Administrative Agent to
hold as, Security Collateral except as otherwise required under the Credit
Agreement and shall, if received by any Grantor, be received in trust for
the benefit of the Administrative Agent, be segregated from the other
property or funds of such Grantor and be forthwith delivered to the
Administrative Agent as Security Collateral in the same form as so received
(with any necessary indorsement).
(iii) The Administrative Agent shall execute and deliver (or cause to
be executed and delivered) to each Grantor all such proxies and other
instruments as such Grantor may reasonably request for the purpose of
enabling such Grantor to exercise the voting and other rights that it is
entitled to exercise pursuant to paragraph (i) above and to receive the
dividends or interest payments that it is authorized to receive and retain
pursuant to paragraph (ii) above.
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(b) Upon the occurrence and during the continuance of any Default under
Section 6.01(a) or (f) of the Credit Agreement or Event of Default:
(i) All rights of each Grantor (A) to exercise or refrain from
exercising the voting and other consensual rights that it would otherwise
be entitled to exercise pursuant to Section 14(a)(i) shall, upon notice to
such Grantor by the Administrative Agent, cease, and (B) to receive the
dividends, interest and other distributions that it would otherwise be
authorized to receive and retain pursuant to Section 14(a)(ii) shall
automatically cease, and all such rights shall thereupon become vested in
the Administrative Agent, which shall thereupon have the sole right to
exercise or refrain from exercising such voting and other consensual rights
and to receive and hold as Security Collateral such dividends, interest and
other distributions.
(ii) All dividends, interest and other distributions that are received
by any Grantor contrary to the provisions of paragraph (i) of this Section
14(b) shall be received in trust for the benefit of the Administrative
Agent, shall be segregated from other funds of such Grantor and shall be
forthwith paid over to the Administrative Agent as Security Collateral in
the same form as so received (with any necessary indorsement).
SECTION 15. As to the Assigned Agreements. (a) Each Grantor shall at its
expense:
(i) perform and observe all the terms and provisions of the Assigned
Agreements to be performed or observed by it, maintain the Assigned
Agreements to which it is a party in full force and effect, enforce the
Assigned Agreements in accordance with the terms thereof in each case
consistent with its reasonable business judgment to the extent permitted
under the Credit Agreement and take all such action to such end as may be
reasonably requested from time to time by the Administrative Agent; and
(ii) furnish to the Administrative Agent promptly upon receipt thereof
copies of all notices, requests and other documents received by such
Grantor under or pursuant to the Assigned Agreements to which it is a party
which relate to any material obligation thereunder, and from time to time
(A) furnish to the Administrative Agent such information and reports
regarding the Assigned Agreements and such other Collateral of such Grantor
as the Administrative Agent may reasonably request, and (B) upon request of
the Administrative Agent make to each other party to any Assigned Agreement
to which it is a party such demands and requests for information and
reports or for action as such Grantor is entitled to make thereunder.
(b) Each Grantor agrees that it shall perform and observe in all material
respects and as required pursuant to the Credit Agreement the terms and
provisions of each Assigned Agreement to be performed or observed by it,
maintain each such Assigned Agreement in full force and effect, enforce such
Assigned Agreement in accordance with its terms subject to its reasonable
business judgment take all such action to such end as may be from time to time
reasonably requested by the Administrative Agent.
(c) Each Grantor hereby consents on its behalf and on behalf of its
Subsidiaries to the assignment and pledge to the Administrative Agent for the
ratable benefit of the Secured Parties of each Assigned Agreement to which it is
a party by any other Grantor hereunder.
19
SECTION 16. Transfers and Other Liens; Additional Shares. (a) Each Grantor
agrees that it shall not (i) sell, assign (by operation of law or otherwise),
lease or otherwise dispose of, or grant any option with respect to, any of the
Collateral of such Grantor (other than sales, assignments, options, leases and
other dispositions permitted under the terms of the Credit Agreement including,
without limitation, Section 5.02(d) of the Credit Agreement) or (ii) create or
suffer to exist any Lien upon or with respect to any of the Collateral of such
Grantor, except for the Liens created under the Collateral Documents or
permitted under the Credit Agreement.
(b) Each Grantor agrees that it shall (i) cause each issuer of the Pledged
Shares owned by such Grantor not to issue any stock or other securities in
addition to or in substitution for the Pledged Shares issued by such issuer,
except to such Grantor, and (ii) subject to the provisos at the end of Section
1(a)(vii) and to any other limitation set forth in Section 1(a), pledge
hereunder, immediately upon its acquisition (directly or indirectly) thereof,
any and all additional shares of stock or other securities of each issuer of any
Pledged Shares.
SECTION 17. Administrative Agent Appointed Attorney-in-Fact. Each Grantor
hereby irrevocably appoints for the term that this Agreement is in effect the
Administrative Agent such Grantor's attorney-in-fact, with full authority in the
place and stead of such Grantor and in the name of such Grantor or otherwise,
from time to time in the Administrative Agent's discretion upon the occurrence
and during the continuance of an Event of Default, to take any action and to
execute any instrument that the Administrative Agent may deem necessary or
advisable to accomplish the purposes of this Agreement, including, without
limitation:
(a) to obtain and adjust insurance required to be paid to the
Administrative Agent pursuant to Section 12,
(b) to ask for, demand, collect, xxx for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under or
in respect of any of the Collateral,
(c) to receive, indorse and collect any drafts or other instruments,
documents and chattel paper in connection with clause (a) or (b) above, and
(d) to file any claims or take any action or institute any proceedings
that the Administrative Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce compliance with
the terms and conditions of any Assigned Agreement or the rights of the
Administrative Agent with respect to any of the Collateral.
SECTION 18. Administrative Agent May Perform. If any Grantor fails to
perform any agreement contained herein, the Administrative Agent may, but
without any obligation to do so and without further notice, itself perform, or
cause performance of, such agreement, and the expenses of the Administrative
Agent incurred in connection therewith shall be payable by such Grantor under
Section 20.
SECTION 19. The Administrative Agent's Duties. The powers conferred on the
Administrative Agent hereunder are solely to protect its and the other Secured
Parties' interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the safe custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder, the
Administrative
20
Agent shall have no duty as to any Collateral, as to ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Security Collateral, whether or not the
Administrative Agent or any other Secured Party has or is deemed to have
knowledge of such matters, or as to the taking of any necessary steps to
preserve rights against any parties or any other rights pertaining to any
Collateral. The Administrative Agent shall be deemed to have exercised
reasonable care in the custody and preservation of any Collateral in its
possession if such Collateral is accorded treatment substantially equal to that
which it accords its own property.
SECTION 20. Remedies. If any Event of Default shall have occurred and be
continuing:
(a) The Administrative Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party
upon default under the N.Y. Uniform Commercial Code, whether or not the
N.Y. Uniform Commercial Code applies to the affected Collateral, and also
may (i) require any Grantor to, and each Grantor hereby agrees that it will
at its expense and upon request of the Administrative Agent forthwith,
assemble all or part of the Collateral as directed by the Administrative
Agent and make it available to the Administrative Agent at a place and time
to be designated by the Administrative Agent which is reasonably convenient
to both parties; (ii) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or private
sale, at any of the Administrative Agent's offices or elsewhere, for cash,
on credit or for future delivery, and upon such other terms as the
Administrative Agent may deem commercially reasonable; (iii) occupy any
premises owned or leased by any Grantor where the Collateral or any part
thereof is assembled or located for a reasonable period in order to
effectuate its rights and remedies hereunder or under law, without
obligation to such Grantor in respect of such occupation; and (iv) exercise
any and all rights and remedies of any Grantor under or in connection with
the Assigned Agreements, the Receivables and the Related Contracts or
otherwise in respect of the Collateral, including, without limitation, any
and all rights of such Grantor to demand or otherwise require payment of
any amount under, or performance of any provision of, the Intellectual
Property Collateral, the Assigned Agreements, the Receivables and the
Related Contracts. Each Grantor agrees that, to the extent notice of sale
shall be required by law, at least ten days' notice to such Grantor of the
time and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification. The Administrative
Agent shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given. The Administrative Agent may adjourn any
public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.
(b) Any cash held by the Administrative Agent as Collateral and all
cash proceeds received by the Administrative Agent in respect of any sale
of, collection from, or other realization upon all or any part of the
Collateral may, in the discretion of the Administrative Agent, be held by
the Administrative Agent as collateral for, and/or then or at any time
thereafter applied (after payment of any amounts payable to the
Administrative Agent pursuant to Section 20) in whole or in part by the
Administrative Agent for the ratable benefit of the Secured Parties against
all or any part of the Secured Obligations as permitted or required by the
Credit Agreement. Any surplus of such cash or cash proceeds held by the
Administrative Agent and remaining after payment in full of all the Secured
Obligations shall be paid over to the Grantor or to whomsoever may be
lawfully entitled to receive such surplus.
(c) All payments received by any Grantor under or in connection with
any Assigned Agreement or otherwise in respect of the Collateral shall be
received in trust for the benefit of the
21
Administrative Agent and the other Secured Parties, shall be segregated
from other funds of such Grantor and shall be forthwith paid over to the
Administrative Agent in the same form as so received (with any necessary
indorsement).
(d) The Administrative Agent may, without notice to the Borrower
except as required by law and at any time or from time to time, charge,
set-off and otherwise apply all or any part of the Secured Obligations
against the L/C Cash Collateral Account or any part thereof.
(e) In the event of any sale, assignment, or other disposition of any
of the Intellectual Property Collateral of any Grantor, the goodwill of the
business connected with and symbolized by any Trademarks subject to such
disposition shall be included, and such Grantor shall supply to the
Administrative Agent or its designee such Grantor's know-how and expertise,
and documents and things embodying the same, relating to the manufacture,
distribution, advertising and sale of products or the provision of services
relating to any Intellectual Property Collateral subject to such
disposition, and such Grantor's customer lists and other records and
documents relating to such Intellectual Property Collateral and to the
manufacture, distribution, advertising and sale of such products and
services.
SECTION 21. Indemnity and Expenses. (a) Each Grantor agrees to defend,
protect, indemnify and hold harmless each Secured Party from and against any and
all claims, damages losses and liabilities growing out of or resulting from this
Agreement (including, without limitation, enforcement of this Agreement), except
to the extent that such claims, damages, losses or liabilities resulting from
such Secured Party's gross negligence or willful misconduct as determined by a
final judgment of a court of competent jurisdiction.
(b) Each Grantor will upon demand pay to the Administrative Agent the
amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, that the Administrative
Agent may incur in connection with (i) the administration of this Agreement,
(ii) the custody, preservation, use or operation of, or the sale of, collection
from or other realization upon, any of the Collateral of such Grantor, (iii) the
exercise or enforcement of any of the rights of the Administrative Agent or any
other Secured Party against such Grantor, or (iv) the failure by such Grantor to
perform or observe any of the provisions hereof.
(c) Without prejudice to the survival of any other agreement of any Loan
Party hereunder or under any other Loan Document, the agreements and obligations
of the Grantors contained in this Section 21 shall survive the payment in full
of principal, interest and all other amounts payable hereunder and under any of
the other Loan Documents.
SECTION 22. Security Interest Absolute. The obligations of each Grantor
under this Agreement are independent of the Secured Obligations, and a separate
action or actions may be brought and prosecuted against such Grantor to enforce
this Agreement, irrespective of whether any action is brought against the other
Grantors or whether the other Grantors are joined in any such action or actions.
All rights of the Administrative Agent and the pledge, assignment and security
interest hereunder, and all obligations of each Grantor hereunder, shall be
absolute and unconditional, irrespective of:
(i) any lack of validity or enforceability of any Loan Document, any
Hedge Agreement or any other agreement or instrument relating thereto;
22
(ii) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from any Loan
Document or any Hedge Agreement, including, without limitation, any
increase in the Secured Obligations resulting from the extension of
additional credit to any Grantor or any of its Subsidiaries or otherwise;
(iii) any taking, exchange, release or nonperfection of any other
collateral, or any taking, release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Secured Obligations;
(iv) any manner of application of collateral, or proceeds thereof, to
all or any of the Secured Obligations, or any manner of sale or other
disposition of any collateral for all or any of the Secured Obligations or
any other assets of the Borrower or any of its Subsidiaries;
(v) any change, restructuring or termination of the corporate
structure or existence of any Grantor or any of its Subsidiaries; or
(vi) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, such Grantor or a third-party grantor of a
security interest.
This Agreement shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Secured Obligations is rescinded or
must otherwise be returned by any Secured Party or by any other Person upon the
insolvency, bankruptcy or reorganization of any Loan Party or otherwise, all as
though such payment had not been made.
SECTION 23. Amendments; Waivers; Etc. (a) No amendment or waiver of any
provision of this Agreement, and no consent to any departure by any Grantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Administrative Agent, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. No failure on the part of the Administrative Agent to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right.
(b) Upon the execution and delivery by any Person of a security agreement
supplement in substantially the form of Exhibit C hereto (each a "Security
Agreement Supplement"), (i) such Person shall be referred to as an "Additional
Grantor" and shall be and become a Grantor and each reference in this Agreement
to "Grantor" shall also mean and be a reference to such Additional Grantor, and
(ii) the annexes attached to each Security Agreement Supplement shall be
incorporated into and become a part of and supplement Schedules I, II, III, IV
and V hereto, and the Administrative Agent may attach such annexes as
supplements to such Schedules; and each reference to such Schedules shall mean
and be a reference to such Schedules as supplemented pursuant hereto.
SECTION 24. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic or
telex communication) and, mailed, telecopied, telegraphed, telexed or delivered
to the Borrower or to the Administrative Agent, as the case may
23
be, in each case addressed to it at its address specified in the Credit
Agreement or, as to either party at such other address as shall be designated by
such party in a written notice to each other party complying as to delivery with
the terms of this Section 24. All such notices and other communications shall,
when mailed, telecopied, telegraphed, telexed or cabled, respectively, be
effective when deposited in the mails, telecopied, delivered to the telegraph
company, confirmed by telex answerback or delivered to the cable company,
respectively, addressed as aforesaid.
SECTION 25. Continuing Security Interest; Assignments. This Agreement shall
create a continuing security interest in the Collateral and shall (a) remain in
full force and effect until the latest of the cash payment in full of the
Secured Obligations, the Termination Date and the termination or expiration of
all Bank Hedge Agreements, (b) be binding upon each Grantor, its successors and
assigns and (c) inure, together with the rights and remedies of the
Administrative Agent hereunder, to the benefit of the Secured Parties and their
respective successors, transferees and assigns. Without limiting the generality
of the foregoing clause (c), any Lender Party may assign or otherwise transfer
all or any portion of its rights and obligations under the Credit Agreement
(including, without limitation, all or any portion of its Commitments, the
Advances owing to it and the Note or Notes held by it) to any other Person and
such other Person shall thereupon become vested with all the benefits in respect
thereof granted to such Lender Party herein or otherwise, in each case as
provided in Section 9.07 of the Credit Agreement. No Grantor shall have the
right to assign its rights hereunder or any interest herein without the prior
written consent of the Secured Parties.
SECTION 26. Release and Termination. (a) Upon any sale, lease, transfer or
other disposition of any item of Collateral (including, without limitation, as a
result of the sale, in accordance with the terms of the Loan Documents, of the
Person that owns such Collateral) in accordance with the terms of the Loan
Documents (other than sales or rentals of Equipment and Inventory in the
ordinary course of business), the Administrative Agent will, at such Grantor's
expense, execute and deliver to any Grantor such documents as such Grantor shall
reasonably request to evidence the release of such item of Collateral from the
assignment and security interest granted hereby; provided, however, that (i) at
the time of such request and such release no Event of Default shall have
occurred and be continuing, (ii) the Borrower shall have delivered to the
Administrative Agent, at least five Business Days prior to the date of the
proposed release, a written request for release describing the item of
Collateral and the terms of the sale, lease, transfer or other disposition in
reasonable detail, including the price thereof and any expenses in connection
therewith, together with a form of release for execution by the Administrative
Agent and a certification by the Borrower to the effect that the transaction is
in compliance with the Loan Documents and as to such other matters as the
Administrative Agent may request and (iii) the proceeds of any such sale, lease,
transfer or other disposition required to be applied in accordance with Section
2.06(b)(ii) of the Credit Agreement shall be paid to, or in accordance with the
instructions of, the Administrative Agent at the closing.
(b) With respect to the sale or other disposition of Equipment or Inventory
in the ordinary course of business permitted by the Loan Documents, so long as
at the time of such sale no Event of Default shall have occurred and be
continuing, such sale or other disposition may be made free from the lien of
this Agreement and the other Loan Documents without the necessity of any release
from or consent by the Administrative Agent and no purchaser of any such
property shall be bound to inquire into any question affecting the right of any
Grantor to sell or otherwise dispose of such Equipment or Inventory free from
the lien of this Agreement and the Loan Documents.
24
(c) Upon the latest of the cash payment in full of the Secured Obligations,
the Termination Date and the termination or expiration of all Bank Hedge
Agreements, the pledge, assignment and security interest granted hereby shall
terminate and all rights to the Collateral shall revert to the Grantors. Upon
any such termination, the Administrative Agent will, at the Borrower's expense,
execute and deliver to the Borrower such documents as the Borrower shall
reasonably request to evidence such termination.
SECTION 27. The Mortgages. In the event that any of the Collateral
hereunder is also subject to a valid and enforceable Lien under the terms of any
Mortgage and the terms of such Mortgage are inconsistent with the terms of this
Agreement, then with respect to such Collateral, the terms of such Mortgage
shall be controlling in the case of fixtures and leases, letting and licenses
of, and contracts and agreements relating to the lease of real property, and the
terms of this Agreement shall be controlling in the case of all other
Collateral.
SECTION 28. Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 29. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, except to the
extent that the validity or perfection of the security interest hereunder, or
remedies hereunder, in respect of any particular Collateral are governed by the
laws of a jurisdiction other than the State of New York.
25
IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
By
-----------------------------------------------
Name:
Title:
Address of Chief Executive Office and for Notices:
Xxx XXXXX Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Chief Financial Officer
MEDIQ INVESTMENT SERVICES, INC.
By
-----------------------------------------------
Name:
Title:
Address of Chief Executive Office and for Notices:
0000 Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Chief Financial Officer
MEDIQ MOBILE X-RAY SERVICES, INC.
By
-----------------------------------------------
Name:
Title:
Address of Chief Executive Office and for Notices:
Xxx XXXXX Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Chief Financial Officer
MEDIQ MANAGEMENT SERVICES, INC.
26
By
-----------------------------------------------
Name:
Title:
Address of Chief Executive Office and for Notices:
Xxx XXXXX Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Chief Financial Officer
MEDIQ IMAGING SERVICES, INC.
By
-----------------------------------------------
Name:
Title:
Address of Chief Executive Office and for Notices:
Xxx XXXXX Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Chief Financial Officer
VALUE-MED PRODUCTS, INC.
By
-----------------------------------------------
Name:
Title:
Address of Chief Executive Office and for Notices:
Xxx XXXXX Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Chief Financial Officer
27
AMERICAN CARDIOVASCULAR IMAGING LABS, INC.
By
-----------------------------------------------
Name:
Title:
Address of Chief Executive Office and for Notices:
Xxx XXXXX Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Chief Financial Officer
MEDIQ DIAGNOSTIC CENTERS, INC.
By
-----------------------------------------------
Name:
Title:
Address of Chief Executive Office and for Notices:
Xxx XXXXX Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Chief Financial Officer
MEDIQ DIAGNOSTIC CENTERS-I, INC.
By
-----------------------------------------------
Name:
Title:
Address of Chief Executive Office and for Notices:
Xxx XXXXX Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Chief Financial Officer
28
MDTC HADDON, INC.
By
-----------------------------------------------
Name:
Title:
Address of Chief Executive Office and for Notices:
Xxx XXXXX Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Chief Financial Officer
29
SCHEDULE I
Initial Pledged Shares and Initial Pledged Debt
Initial Pledged Shares
Part I
Initial Pledged Debt
Part II
SCHEDULE II
Assigned Agreements
SCHEDULE III
Locations of Equipment and Inventory
SCHEDULE IV
Intellectual Property
SCHEDULE V
Blocked Accounts and Other Bank Accounts
EXHIBIT A TO THE SECURITY AGREEMENT
FORM OF BLOCKED ACCOUNT LETTER
_________, 1998
[Blocked Account Bank Address]
Attn: [ ]
[Grantor]
Ladies and Gentlemen:
Reference is made to the deposit accounts listed on the attached Schedule I
into which certain monies, instruments and other properties are deposited from
time to time (the "Accounts") maintained with you by [Grantor], a ________
corporation (the "Company"). Pursuant to a Security Agreement dated as of
_______, 1998 (the "Security Agreement"), the Company has granted to Banque
Nationale de Paris, as administrative agent (the "Administrative Agent") for the
Secured Parties referred to in the Credit Agreement dated as of ________, 1998
(the "Credit Agreement") with the Company, a security interest in certain
property of the Company, including, among other things, the following (the
"Account Collateral"): the Accounts, all funds held therein and all certificates
and instruments, if any, from time to time representing or evidencing the
Accounts, all interest, dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the then existing Account Collateral and all proceeds
of any and all of the foregoing Account Collateral and, to the extent not
otherwise included, all (i) payments under insurance (whether or not the
Administrative Agent is the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing Account Collateral and (ii) cash. It is a condition to the
continued maintenance of the Accounts with you that you agree to this letter
agreement.
By signing this letter agreement, you acknowledge notice of the Security
Agreement and confirm to the Administrative Agent that you have received no
notice of any other pledge or assignment of the Accounts. Further, you hereby
agree with the Administrative Agent that:
(a) Notwithstanding anything to the contrary in any other agreement
relating to the Accounts, the Accounts are and will be subject to the terms
and conditions of the Security Agreement, will be maintained solely for the
benefit of the Administrative Agent, will be entitled "Banque Nationale de
Paris, as Administrative Agent, Re: [Grantor]" and will be subject to
written instructions only from an officer of the Administrative Agent.
(b) Upon the written request of the Administrative Agent to you, which
request shall specify that an "Event of Default" under the Credit Agreement
has occurred and is continuing (which writing may be by telex or telecopy
and upon which you may conclusively rely, absent manifest error), you shall
immediately transfer (at the cost and expense of the Company) subject to
your usual deposit terms, all funds then or thereafter deposited in the
Accounts by wire transfer into the Administrative Agent's Account at the
Federal Reserve Bank of New York, 00 Xxxxxxx Xxxxxx, Xxx Xxxx, XX, 00000,
ABA No. 000000000, for further credit to Account No. 750420-701-03.
(c) From and after the date that the Administrative Agent shall have
sent to you a written notice (which writing may be by telex or telecopy and
upon which you may conclusively rely, absent manifest error) that an "Event
of Default" under the Credit Agreement has occurred and until the date, if
any, that the Administrative Agent shall have advised you in writing (which
writing may be by telex or telecopy and upon which you may conclusively
rely, absent manifest error) that no Event of Default is continuing, you
shall not honor any withdrawal or transfer from, or any check, draft or
other item of payment on, the Accounts, other than any withdrawal,
transfer, check, draft or other item made in writing by the Administrative
Agent or bearing the written consent of the Administrative Agent, and, to
the extent of collected funds in the Accounts, you shall honor each such
withdrawal, transfer, check, draft or other item made in writing by the
Administrative Agent or bearing the written consent of the Administrative
Agent.
(d) You will follow your usual operating procedures for the handling
of the Accounts, including any remittance received in the Accounts that
contains restrictive endorsements, irregularities (such as a variance
between the written and numerical amounts), undated or postdated items,
missing signatures, incorrect payees, etc.
(e) You shall furnish to the Administrative Agent, promptly upon the
reasonable written request of the Administrative Agent in each instance,
all information regarding the Accounts, to the extent the same is provided
to the Company, for the period of time specified in such written notice,
and the Company hereby authorizes you to furnish same.
(f) You agree that you will not make, and you hereby waive all of your
rights to make, any charge, debit or offset to the Accounts for any reason
whatsoever, and waive any and all liens, whether contractual or provided
under law, which you may have or hereafter acquire on the Accounts or funds
therein, in each case, other than any charge, offset, debit or lien in
respect of your customary service charges relating to the Accounts.
(g) All service charges and fees with respect to the Accounts shall be
payable by the Company.
(h) After the giving of notice referred to in paragraphs (b) and (c)
above, the Administrative Agent shall be entitled to exercise any and all
rights of the Company in respect of the Accounts, and the undersigned shall
comply in all respects with such exercise.
This letter agreement shall be binding upon you and your successors and
assigns and shall inure to the benefit of the Administrative Agent, the other
Secured Parties and their successors, transferees and assigns. You may terminate
this letter agreement only upon thirty days' prior written notice to the Company
and the Administrative Agent. Upon such termination you shall close the Accounts
and transfer all funds in the Accounts to the Administrative Agent's Account
specified in paragraph (b) above.
2
This letter agreement shall be governed by and construed in accordance with
the laws of the State of New York.
Very truly yours,
[GRANTOR]
By
-----------------------------------------------
Name:
Title:
BANQUE NATIONALE DE
PARIS, as Administrative Agent
By
-----------------------------------------------
Title:
By
-----------------------------------------------
Title:
Acknowledged and agreed to as of
the date first above written:
[BLOCKED ACCOUNT BANK NAME]
By
-----------------------------
-----------------------------
-----------------------------
Title:
3
SCHEDULE I TO EXHIBIT A TO THE
SECURITY AGREEMENT
Accounts
EXHIBIT B TO THE SECURITY AGREEMENT
FORM OF CONSENT AND AGREEMENT
The undersigned hereby acknowledges notice of, and consents to the terms
and provisions of, the Security Agreement dated ________, 1998 (the "Security
Agreement", the terms defined therein being used herein as therein defined) from
MEDIQ/PRN Life Support Services, Inc. (the "Borrower") and certain other parties
thereto (together with the Borrower, the "Grantors") to Banque Nationale de
Paris as agent (the "Administrative Agent") for the Secured Parties referred to
therein, and hereby agrees with the Administrative Agent that:
(a) Upon written notice from the Administrative Agent, the undersigned
will make all payments to be made by it under or in connection with the
__________ Agreement dated _______________, 19__ (the "Assigned Agreement")
between the undersigned and the Borrower in accordance with the
instructions of the Administrative Agent.
(b) All payments referred to in paragraph (a) above shall be made by
the undersigned irrespective of, and without deduction for, any
counterclaim, defense, recoupment or set-off and shall be final, and the
undersigned will not seek to recover from the Administrative Agent or any
Lender for any reason any such payment once made.
(c) The Administrative Agent shall be entitled to exercise any and all
rights and remedies of the Borrower under the Assigned Agreement in
accordance with the terms of the Security Agreement, and the undersigned
shall comply in all respects with such exercise.
(d) The undersigned will not, without the prior written consent of the
Administrative Agent, (i) cancel or terminate the Assigned Agreement or
consent to or accept any cancellation or termination thereof, [or] (ii)
amend or otherwise modify the Assigned Agreement [, or (iii) make any
prepayment of amounts to become due under or in connection with the
Assigned Agreement, except as expressly provided therein].
This Consent and Agreement shall be binding upon the undersigned and its
successors and assigns, and shall inure, together with the rights and remedies
of the Administrative Agent hereunder, to the benefit of the Administrative
Agent, the other Secured Parties and their successors, transferees and assigns.
This Consent and Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
IN WITNESS WHEREOF, the undersigned has duly executed this Consent and
Agreement as of the date set opposite its name below.
Dated: _______________, ____ [NAME OF OBLIGOR]
By
--------------------------------
Name:
Title:
EXHIBIT C TO THE SECURITY AGREEMENT
FORM OF SECURITY AGREEMENT SUPPLEMENT
Banque Nationale de Paris, as Administrative Agent
under the Credit Agreement
referred to below
[Address]
[Date]
Attention: ________________________
Security Agreement dated as of ________, 1998
made by MEDIQ/PRN Life Support Services, Inc. and
the other Grantors to Banque Nationale de Paris, as Administrative Agent
Ladies and Gentlemen:
Reference is made to the above-captioned Security Agreement (such Security
Agreement, as in effect on the date hereof and as it may hereafter be amended,
modified or otherwise supplemented from time to time, being the "Security
Agreement"). The terms defined in the Security Agreement (or in the Credit
Agreement referred to therein) and not otherwise defined herein are used herein
as therein defined.
The undersigned hereby agrees, as of the date first above written, to
become a Grantor under the Security Agreement as if it were an original party
thereto and agrees that each reference in the Security Agreement to "Grantor"
shall also mean and be a reference to the undersigned.
The undersigned hereby assigns and pledges to the Administrative Agent for
the ratable benefit of the Secured Parties, and hereby grants to the
Administrative Agent for the ratable benefit of the Secured Parties as security
for the Secured Obligations a lien on and security interest in, all of the
right, title and interest of the undersigned, whether now owned or hereafter
acquired, in and to the Collateral owned by the undersigned, including, but not
limited to, the property listed on Annex I hereto. Schedules I, II, III, IV and
V to the Security Agreement are hereby supplemented by Annexes I, II, III, IV
and V hereto, respectively. The undersigned hereby certifies that such Annexes
have been prepared by the undersigned in substantially the form of Schedules I,
II, III, IV and V to the Security Agreement and are accurate and complete as of
the date hereof.
The undersigned hereby makes each representation and warranty set forth in
Section 8 of the Security Agreement (as supplemented by the attached Annexes) to
the same extent as each other Grantor and hereby agrees to be bound as a Grantor
by all of the terms and provisions of the Security Agreement to the same extent
as each other Grantor.
This Security Agreement Supplement shall be governed by, and construed in
accordance with, the laws of the State of New York.
Very truly yours,
[NAME OF ADDITIONAL
GRANTOR]
By
--------------------------------
Name:
Title:
Address of Chief Executive
Office and for Notices:
[Address]
Attention: Chief Financial Officer
2
EXHIBIT D TO THE SECURITY AGREEMENT
FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT
This INTELLECTUAL PROPERTY SECURITY AGREEMENT (as may be amended,
supplemented or otherwise modified from time to time, the "IP Security
Agreement") dated ________, 1998, is made by the Persons listed on the signature
pages hereof (collectively, the "Grantors") in favor of BANQUE NATIONALE DE
PARIS ("BNP"), as administrative agent (the "Administrative Agent") for the
Secured Parties (as defined in the Credit Agreement referred to below).
WHEREAS, MEDIQ/PRN Life Support Services, Inc., a Delaware corporation, has
entered into a Credit Agreement dated as of ________, 1998 (as may be amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
with BNP, as Administrative Agent, Swing Line Bank, Initial Issuing Bank and
Arranger, NationsBank, N.A., as Syndication Agent, and Credit Suisse First
Boston, as Documentation Agent and the Lender Parties party thereto. Capitalized
terms used herein and not otherwise defined are used herein as defined in the
Credit Agreement.
WHEREAS, as a condition precedent to the making of Advances and the
issuance of Letters of Credit by the Lender Parties under the Credit Agreement
each Grantor shall have executed that certain Security Agreement by and among
the Grantors and the Administrative Agent dated as of ________, 1998 (as may be
amended, supplemented or otherwise modified from time to time, the "Security
Agreement").
WHEREAS, under the terms of the Security Agreement, Grantors have granted a
security interest in certain intellectual property of Grantors to the
Administrative Agent for the ratable benefit of the Secured Parties, and have
agreed as a condition thereof to execute this IP Security Agreement for
recording with the U.S. Patent and Trademark Office, the United States Copyright
Office, and other governmental entities.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantors agree as follows:
SECTION 1. Grant of Security. Each Grantor hereby grants to the
Administrative Agent for the ratable benefit of the Secured Parties a security
interest in and to all of such Grantor's right, title and interest in and to the
following (the "Collateral"):
(i) The United States, international, and foreign patents, patent
applications, and patent licenses set forth on Exhibit A hereto including
reissues, divisions, continuations, continuations-in-part, extensions and
reexaminations thereof, and all rights therein provided by international
treaties or conventions (the "Patents");
(ii) The United States and foreign trademark and service xxxx
registrations, applications, and licenses set forth on Exhibit B hereto
(the "Trademarks");
(iii) The copyrights, associated United States and foreign copyright
applications and registrations, and copyright licenses set forth on Exhibit
C hereto (the "Copyrights");
(iv) any and all causes of action for past, present and future
infringement or breach of the Patents, Trademarks and Copyrights, with the
right, but not the obligation to xxx for and collect, or otherwise recover,
damages for such infringement or breach; and
(v) any and all proceeds of the foregoing.
SECTION 2. Recordation. Each Grantor authorizes and requests that the
Register of Copyrights, the Commissioner of Patents and Trademarks and any other
applicable government officer record this IP Security Agreement.
SECTION 3. Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
SECTION 4. Conflict Provision. This IP Security Agreement has been entered
into in conjunction with the provisions of the Security Agreement and the Credit
Agreement. The rights and remedies of each party hereto with respect to the
security interest granted herein are without prejudice to, and are in addition
to those set forth in the Security Agreement and the Credit Agreement, all terms
and provisions of which are incorporated herein by reference. In the event that
any provisions of this IP Security Agreement are in conflict with the Security
Agreement or the Credit Agreement, the provisions of the Security Agreement or
the Credit Agreement shall govern.
2
IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
By
-----------------------------------------------
Name:
Title:
Address of Chief Executive Office and for Notices:
Xxx XXXXX Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Chief Financial Officer
MEDIQ INCORPORATED
By
-----------------------------------------------
Name:
Title:
Address of Chief Executive Office and for Notices:
Xxx XXXXX Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Chief Financial Officer
3
PRN HOLDINGS, INC.
By
-----------------------------------------------
Name:
Title:
Address of Chief Executive Office and for Notices:
0000 Xxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Chief Financial Officer
MEDIQ INVESTMENT SERVICES, INC.
By
-----------------------------------------------
Name:
Title:
Address of Chief Executive Office and for Notices:
0000 Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Chief Financial Officer
MEDIQ MANAGEMENT SERVICES, INC.
By
-----------------------------------------------
Name:
Title:
Address of Chief Executive Office and for Notices:
Xxx XXXXX Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Chief Financial Officer
4
MEDIQ SURGICAL EQUIPMENT
SERVICES, INC.
By
-----------------------------------------------
Name:
Title:
Address of Chief Executive Office and for Notices:
Xxx XXXXX Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Chief Financial Officer
VALUE-MED PRODUCTS, INC.
By
-----------------------------------------------
Name:
Title:
Address of Chief Executive Office and for Notices:
Xxx XXXXX Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Chief Financial Officer
5
EXHIBIT E
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT
OF RENTS AND FIXTURE FILING
Dated as of May 29, 1998
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
Mortgagor
to
BANQUE NATIONALE DE PARIS,
as Administrative Agent for the Lender Parties,
as hereinafter defined, Mortgagee
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT
OF RENTS AND FIXTURE FILING
THIS MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND FIXTURE FILING
("Mortgage"), made as of the 29th day of May, 1998, by MEDIQ/PRN LIFE SUPPORT
SERVICES, INC., a Delaware corporation, having its principal office at Xxx Xxxxx
Xxxxx, Xxxxxxxxxx, XX 00000 ("Mortgagor") to BANQUE NATIONALE DE PARIS, having
an office at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Mortgagee").
W I T N E S S E T H:
WHEREAS, Mortagor, MEDIQ Incorporated, has entered into that certain credit
agreement, dated as of May 29, 1998 with the banks, financial institutions and
other institutional lenders listed on the signature pages thereof as the Initial
Lenders, Mortgagee, as administrative agent for the Lender Parties, as defined
in the Credit Agreement, and as the initial issuing bank and NationsBank, N.A.
as syndication agent for the Lender Parties and Credit Suisse First Boston, as
documentation agent for the Lender Parties (said credit agreement, as it may
hereafter be amended or otherwise modified from time to time, being the "Credit
Agreement", the terms defined therein and not otherwise defined herein being
used herein as therein defined); and
WHEREAS, pursuant to the Credit Agreement and subject to the terms and
conditions therein set forth, the Lender Parties have agreed to make Advances to
Mortgagor; and
WHEREAS, the aggregate principal amount of Advances outstanding from time
to time under the Credit Agreement may not exceed $275,000,000, excluding
advances made to protect the lien and security of this Mortgage; and
WHEREAS, to evidence such indebtedness Mortgagor has executed and delivered
the Credit Agreement and certain of the Loan Documents; and
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Mortgagor hereby agrees that to secure the full and final payment
of any and all indebtedness and obligations due and owing or which may hereafter
become due and owing from Mortgagor to Mortgagee (and to the Lender Parties),
whether now existing or hereafter arising, of every nature, type and
description, together with any and all renewals, extensions, substitutions
thereto and modifications thereof and whether absolute or contingent, direct or
indirect, joint or several, matured or unmatured, including without limitation,
all indebtedness and obligations arising at any time and from time to time under
the Credit Agreement and other Loan Documents to be paid with interest thereon
pursuant thereto, Mortgagor hereby gives, grants, bargains, warrants, aliens,
premises, releases, conveys, assigns, transfers, mortgages, hypothecates,
deposits, pledges, sets over and confirms to Mortgagee, ALL that certain real
property, including without limitation all plots, pieces or parcels of land,
situate, lying and being in the Township of Pennsauken, County of Camden, the
State of New Jersey (hereinafter called the "Land"), more particularly bounded
and described in SCHEDULE A hereto annexed and made a part hereof;
TOGETHER, ALSO, with all fixtures, equipment, machinery, chattels,
apparatus and articles of personal property now or hereafter attached to or
located in or upon the Premises (defined below), and used or usable in
connection with any present or future operation or letting of the Premises or
the activities at any time conducted therein and all substitutions and
replacements therefor (hereinafter called "Building Equipment"), including, but
not limited to, furnaces, boilers, oil burners, radiators and piping, coal
stokers, plumbing and bathroom fixtures, refrigeration, air conditioning and
sprinkler systems, wash-tubs, sinks, gas and electric fixtures, stoves, ranges,
awnings, screens, window shades, elevators, motors, dynamos, refrigerators,
kitchen cabinets, incinerators, plants and shrubbery and all other machinery,
vending machines, appliances, fittings, furniture, furnishings and fixtures of
every kind used in the operation of the buildings standing or hereafter erected
on the Premises, together with any and all replacements thereof and additions
thereto, and all right, title and interest of Mortgagor in and to any Building
Equipment which may be subject to any security agreements, as defined in
subdivision (1) (h) of Section 9-105 of the Uniform Commercial Code of the State
of New Jersey (hereinafter called "Security Agreements"), superior in lien to
the lien of this Mortgage; it being understood and agreed that all Building
Equipment is part and parcel of the Premises and appropriated to the use thereof
and, whether affixed or annexed to the Premises or not, shall for the purposes
of this Mortgage, be deemed conclusively to be real estate and mortgaged hereby;
TOGETHER, ALSO, with any and all awards, damages, payments and other
compensation and any and all claims therefor and rights thereto which may result
from taking or injury, including interest thereon, heretofore and hereafter made
to Mortgagor by virtue of the exercise of the power of eminent domain of or any
damage, injury or destruction in any manner caused to the whole or any part of
the Premises or any easement therein, including but not limited to insurance
proceeds, condemnation awards and settlements, any awards for changes of grade
of streets, all of which are hereby assigned to Mortgagee, who is hereby
authorized to collect and receive the proceeds of such items and to give proper
receipts and acquittances therefor, and to apply the same toward the payment of
the mortgage debt, notwithstanding the fact that the amount owing thereon may
not then be due and payable;
TOGETHER, ALSO, with all the estate, right, title, claim or demand
whatsoever of Mortgagor in and to all rents, income, profits and other benefits
to which Mortgagor may now or hereafter be entitled from the property described
above (such granting constituting an absolute and present assignment of such
property, subject to conditional permission of Mortgagor to collect such rents
as provided herein below);
TOGETHER, ALSO with the appurtenances, all estate and rights of Mortgagor
in and to the Premises and all right, title and interest, if any, of Mortgagor,
in and to the land lying in the streets, roads or avenues, open or proposed, in
front of or adjoining the Premises and of, in and to any strips or gores of land
adjoining the Premises;
TOGETHER, ALSO with all right, title and interest of Mortgagor in and to
all agreements, contracts, plans and specifications relative to the construction
of the improvements built or to be built on the Land; the sale including the
proceeds thereof, of the Premises; leasing, brokerage, management, sale and/or
operation of the Premises;
TOGETHER, ALSO, with all and singular the tenements,
hereditaments and appurtenances belonging to the Land or any part thereof, and
the buildings, structures, and improvements thereon, or in any way appertaining
thereto (including, but not limited to, all income, rents, issues and profits
arising therefrom), all streets, alleys, passages, ways, watercourses,
easements, all other rights, liberties and privileges of whatsoever kind or
character, the provisions and remainders, and all the estate, right, title,
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interest, property, possession, claim and demand whatsoever, as well at law as
in equity, of Mortgagor in and to all the foregoing or any or every part thereof
(all Land, buildings, structures, improvements, fixtures, equipment, machinery,
chattels, goods, apparatus, personal property, Building Equipment, tenements,
awards, damages, payments, compensation, claims, rights, rents, income, profits
and other property interests described and enumerated herein are hereinafter
collectively referred to as the "Premises") .
TO HAVE AND TO HOLD the Premises and other property, privileges, rights,
interests and franchises hereby granted or mortgaged, or intended so to be, unto
Mortgagee, its successors and assigns forever;
PROVIDED, HOWEVER, and these presents are upon the condition, that if
Mortgagor shall fully and finally pay or cause to be paid all of the Obligations
on the abovementioned Loan Documents, at the times and in the manner therein and
herein provided, and shall keep, perform and observe all and singular the
covenants, agreements and provisions in the abovementioned Loan Documents and in
this Mortgage expressed to be kept, performed and observed by or on the part of
Mortgagor, then this Mortgage and the estate and rights hereby granted shall
cease, determine and be void but otherwise shall be and remain in full force and
effect.
All capitalized terms used herein not defined herein shall have the
meanings assigned to such terms in the Credit Agreement.
MORTGAGOR'S LIABILITY UNDER THE CREDIT AGREEMENT FOR THE OBLIGATIONS SHALL
NOT EXCEED THE PRINCIPAL AMOUNT OF $275,000,000 THEREOF, PLUS, FROM AND AFTER
THE DEMAND FOR PAYMENT THEREUNDER, INTEREST THEREON AT THE HIGHEST RATE THEN
APPLICABLE TO THE INDEBTEDNESS OF BORROWER TO MORTGAGEE SET FORTH IN THE CREDIT
AGREEMENT, PLUS ANY AND ALL COSTS, EXPENSES AND CHARGES OF COLLECTION THEREUNDER
(INCLUDING, BUT NOT LIMITED TO, ATTORNEYS' FEES AND LEGAL EXPENSES).
AND Mortgagor covenants and agrees with Mortgagee as follows:
1. Payment of Indebtedness. That Mortgagor will pay all indebtedness as
hereinbefore provided and if default shall be made in the payment of the said
indebtedness or in the interest which shall accrue thereon, or of any part of
either, Mortgagee shall have power to sell the Premises, including without
limitation the Building Equipment and other property covered hereby according to
law.
2. Insurance. (a) That Mortgagor will keep the buildings on the Premises
and the Building Equipment insured for the benefit of Mortgagee (i) against loss
by fire, (ii) by means of an extended coverage endorsement, against loss or
damage by windstorm, hail, explosion, riot, riot attending a strike, civil
commotion, aircraft, vehicle and smoke, (iii) against loss of rentals due to any
of the foregoing causes, (iv) against loss by flood if the Premises are located
in an area identified by the Secretary of Housing and Urban Development as an
area having special flood hazards and in which flood insurance has been made
available under the National Flood Insurance Act of 1968, as amended, and (v)
when and to the extent required by Mortgagee, against any other risk insured
against by persons operating like properties in the locality of the Premises;
that Mortgagor will assign and deliver to Mortgagee the policies of such
insurance and the proceeds thereof; that Mortgagor will reimburse Mortgagee for
any premiums paid for insurance made by Mortgagee on Mortgagor's default in
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taking out such insurance, or in so delivering such policies, together with
interest thereon at the rate per annum specified in Article 4 hereof, and the
same shall be added to the indebtedness secured hereby and be secured by this
Mortgage;
(b) that such insurance shall be provided by policies written in terms and
amounts, and by companies, reasonably satisfactory to Mortgagee, and losses
thereunder shall be payable to Mortgagee pursuant to a standard non-contributory
mortgagee endorsement required by Mortgagee, which endorsement may only be
cancelled or modified upon not less than thirty (30) days prior written notice
to Mortgagee. Mortgagee shall not by the fact of approving, disapproving,
accepting, preventing, obtaining or failing to obtain any insurance incur any
liability for or with respect to the amount of insurance carried, the form or
legal sufficiency of insurance contracts, solvency of insurance companies, or
payment or defense of lawsuits, and Mortgagor hereby expressly assume full
responsibility therefor and all liability, if any, with respect thereto.
(c) that regardless of the types or amounts of insurance required and
approved by Mortgagee Mortgagor will deliver to Mortgagee certificates
evidencing all policies of insurance acquired by Mortgagor to insure against any
loss or damage to the Premises, as additional security for the indebtedness
secured hereby;
(d) that Mortgagee shall be entitled to retain and apply the proceeds of
any insurance, whether against fire or other hazard, to the payment of the
indebtedness secured hereby, or, if Mortgagee, in its sole discretion, shall so
elect, Mortgagee may hold any or all of such proceeds for application to payment
of the cost of restoration;
(e) that not less than fifteen (15) days prior to the expiration date of
each policy furnished by Mortgagor pursuant to this Article, Mortgagor will
deliver to Mortgagee a certificate evidencing a renewal policy or policies
marked "premium paid" or accompanied by other evidence of payment satisfactory
to Mortgagee; and
(f) that in the event of a foreclosure of this Mortgage the purchaser of
the Premises shall succeed to all the rights of Mortgagor, including any rights
to the proceeds of insurance and to unearned premiums, in and to all policies of
insurance certificates for which have been delivered to Mortgagee pursuant to
this Article.
3. Premises and Improvements. That no building or other property now or
hereafter covered by the lien of this Mortgage shall be removed, demolished or
materially altered without the prior written consent of Mortgagee, except that
Mortgagor shall have the right, without such consent, to remove and dispose of,
free from the lien of this Mortgage, such Building Equipment as from time to
time may become worn out or obsolete, provided that simultaneously with or prior
to such removal, any such equipment shall be replaced with other equipment of a
value at least equal to that of the replaced equipment and free from any
security agreement, and by such removal and replacement Mortgagor shall be
deemed to have subjected such Building Equipment to lien of this Mortgage.
4. Mortgagee's Optional Performance. That in the event of any default in
the performance of any of Mortgagor's covenants or agreements herein, Mortgagee
may, at the option of Mortgagee, perform the same and the cost thereof, with
interest at a rate per annum equal to the highest rate then applicable to the
indebtedness of Borrower to Mortgagee set forth in the Credit Agreement (but not
4
in excess of the maximum rate allowed by law to be charged to Mortgagor), shall
immediately be due from Mortgagor to Mortgagee and secured by this Mortgage.
5. Taxes, Assessments and Escrows. (a) That Mortgagor will pay all taxes,
assessments, water rates, sewer rents fines, impositions and other claims and/or
charges now or hereafter levied and all charges for utilities with respect to or
against the Premises or any part thereof, and also any and all license fees or
similar charges which may be imposed by the municipality in which the Premises
are situated for the use of walks, chutes, areas and other space beyond the lot
line on or abutting the public sidewalks in front of or adjoining the Premises,
together with any penalties or interest on any of the foregoing (collectively
"Impositions"), and in default thereof Mortgagee may pay the same and Mortgagor
will repay the same with interest thereon at the rate per annum specified in
Article 4 hereof and the same shall be added to the indebtedness secured hereby
and be additionally secured by this Mortgage; that upon request of Mortgagee,
Mortgagor will exhibit to Mortgagee receipts for the payment of all items
specified in this Article within ten (10) days of the date when the same shall
become delinquent. If any law, rule, regulation or ordinance adopted hereafter
by any federal, state or local government, or any department, agency or bureau
thereof, imposes a tax on Mortgagee with respect to the Premises, the value of
Mortgagor's equity therein, the amount of the indebtedness secured hereby, or
this Mortgage, Mortgagee shall have the right at its election from time to time
to give Mortgagor sixty (60) days' written notice to pay such indebtedness
secured hereby, whereupon such indebtedness shall become due, payable and
collectible at the expiration of such period of sixty (60) days, unless prior
thereto, lawfully and without violation of usury or other laws, Mortgagor shall
have paid any such tax in full as the same became due and payable, in which
event such notice shall be deemed to have been rescinded with respect to any
right of Mortgagee hereunder arising by reason of the tax so paid. No prepayment
charge or premium shall apply to the payment of the indebtedness secured hereby
pursuant to any such notice, if the payment is made before the expiration of
such period of sixty (60) days.
(b) That Mortgagee will not permit Mortgagor to claim and Mortgagor will
not claim or demand any credit on or make any deduction from any secured
indebtedness hereunder including without limitation any interest or principal
of, on, or with respect to the Notes, by reason of the payment of any taxes
levied or to be levied upon the Premises or any part thereof during the
continuance of the lien of this Mortgage.
(c) That, after an event of default hereunder, Mortgagee may, at its option
to be exercised by twenty (20) days' written notice to Mortgagor, require that
Mortgagor deposit with Mortgagee, on the first day of each and every month, a
sum equal to one-twelfth (1/12) of the annual real estate taxes, assessments,
water rates, sewer rents and other charges specified in this Article 5
(hereinafter collectively referred to as "taxes") plus one-twelfth (1/12) of the
premiums required to keep in force for one year the insurance specified in
Article 2 hereof. If such deposits shall be so required, Mortgagor shall also
deposit with Mortgagee, at least thirty (30) days prior to the due date of each
installment of such taxes and each insurance premium, such additional amount as
may be determined by Mortgagee in order to provide Mortgagee with funds
sufficient to pay such installment or premium. It is the intention of the
parties that, if such deposits shall be so required, Mortgagor shall deposit
with Mortgagee the necessary funds so that Mortgagee, at all times until the
full payment and satisfaction of this Mortgage, shall have on hand sufficient
deposits covering the accrued amounts of such taxes and insurance premiums. The
amount of such taxes and premiums, when unknown, shall be reasonably estimated
by Mortgagee; any insufficiency to pay such charges when due shall be paid by
Mortgagor to Mortgagee on demand. If permitted by law, the said funds shall bear
no interest and shall not be deemed to be trust funds but may be commingled with
other funds of Mortgagee and no interest shall be payable upon any such funds.
5
(The foregoing sentence shall not apply to any assignee of this Mortgage.)
Mortgagee shall have no obligation to use said funds to pay an installment of
taxes prior to the last day on which payment thereof may be made without penalty
or interest or to pay an insurance premium prior to the due date thereof. If the
whole of said principal sum and interest shall be declared due and payable by
Mortgagee pursuant to Article 20 hereof, all such deposits may, at the option of
Mortgagee, be applied in reduction of said principal sum and/or interest, as
Mortgagee shall elect. Upon an assignment of this Mortgage, Mortgagee shall have
the right to pay over the balance of such deposits in its possession to the
assignee and Mortgagee shall thereupon be completely released from all liability
with respect to such deposits and Mortgagor or owner of the Premises shall look
solely to the assignee or transferee in reference thereto. This provision shall
apply to every transfer of such deposited to a new assignee. Upon full payment
and satisfaction of this Mortgage or at any prior time, at the election of
Mortgagee, the balance of the deposits in its possession shall be paid over to
the record owner of the Premises and no other party shall have any right or
claim thereto in any event. Mortgagor agrees, at Mortgagee's request, to make
the aforesaid deposits with such service or financial institution as Mortgagee
shall from time to time designate.
6. Appointment of Receiver and Other Powers. That Mortgagee shall have the
right in case of failure of Mortgagor to perform any of the acts, covenants, or
conditions in this Mortgage or in the Credit Agreement, upon a complaint filed
or any proper action being commenced for the foreclosure of this Mortgage, to
apply for, and Mortgagee shall be entitled as a matter of right without
consideration of the value of the Premises as security for the amounts due
Mortgagee, or of the solvency of any person or persons obligated for the payment
of such amounts, to the appointment by any competent court or tribunal, without
notice to any party, of a receiver of the rents, issues, and profits of the
Premises, with power to lease the Premises, or such part thereof as may not then
be under lease, and with such other powers as may be deemed necessary, who,
after deducting all proper charges and expenses attending the execution of the
trust as receiver, shall apply the residue of the rents and profits to the
payment and satisfaction of the amount remaining secured hereby, or to any
deficiency which may exist after applying the proceeds of any judicially decreed
sale of the Premises to the payment of the amount due, including interest and
the costs of the foreclosure and sale.
7. Estoppel Certificate. That Mortgagor, within five (5) days upon request
in person or within ten (10) days upon request by mail, will furnish a written
statement duly acknowledged of the amount due on this Mortgage and whether any
offsets or defenses exist against the secured mortgage debt.
8. Notice. That notice and demand or request shall be made in accordance
with the Credit Agreement.
9. Title and Further Assurances. (a) That Mortgagor warrants that Mortgagor
has good title to the Premises, including without limitation the Building
Equipment and other property covered hereby free and clear of all liens and
encumbrances, except for current real property taxes not yet delinquent and this
Mortgage ("Permitted Encumbrances"), and has full power and lawful authority to
mortgage the same; that Mortgagor shall and will make, execute, acknowledge and
deliver, in due form required by applicable law, all such further assurances as
may at any time hereafter be reasonably required to effectuate the mortgaging of
the Premises and other property covered hereby or intended so to be, unto
Mortgagee, its successors or assigns, for the purpose aforesaid, and unto all
and every person or persons deriving any estate, right, title or interest
therein under this Mortgage; and that Mortgagor will warrant and defend title to
the Premises, including without limitation the Building Equipment and said other
6
property against all persons whomsoever claiming the same or any part thereof,
including without limitation all persons claiming by, through or under
Mortgagor.
(b) That Mortgagor shall execute and deliver, from time to time, such
further instruments (including further security agreements and Uniform
Commercial Code financing statements) as may be requested by Mortgagee to
confirm the lien of this Mortgage on any Building Equipment.
(c) That Mortgagor upon request, shall make, execute and deliver any and
all instruments sufficient for the purpose of confirming the assignment to
Mortgagee of awards for the taking by eminent domain of the whole or any part of
the Premises or any easement therein, including any awards for changes of grade
of streets, free, clear and discharged of any encumbrances of any kind or nature
whatsoever.
(d) That Mortgagor shall not further encumber the Premises for debt and
hereby (1) represents as a special inducement to Mortgagee to make the loans
secured hereby that, as of the date hereof, this is a first mortgage and there
are no encumbrances to secure debt junior to this Mortgage and (2) covenants
that there are to be none as of the date when this Mortgage becomes of record
and thereafter will be none, except, in either case, encumbrances having the
prior written consent of Mortgagee.
(e) Mortgagor will promptly perform and observe, or cause to be performed
or observed, all of the terms, covenants and conditions of all instruments of
record affecting the Premises, non-compliance with which may affect the security
of this Mortgage or which may impose any duty or obligation upon Mortgagor or
any other occupant of the Premises or any part thereof, and Mortgagor shall do
or cause to be done all things necessary to preserve intact and unimpaired any
and all easements, appurtenances and other interest and rights in favor of or
constituting any portion of the Premises.
10. Sale by Parcel. That in case of any foreclosure sale, the Premises, or
so much thereof as may be affected by this Mortgage, may be sold in one or more
parcels.
11. Additional Lien. That if any action or proceeding be commenced
(including an action to foreclose this Mortgage or to collect the indebtedness
secured hereby), in which Mortgagee becomes a party or participates, by reason
of being the holder of this Mortgage or the debt secured hereby, all sums paid
by Mortgagee for the expense of so becoming a party or participating (including
reasonable counsel fees and disbursements) shall on notice and demand be paid by
Mortgagor, together with interest thereon at the rate per annum specified in
Article 4 hereof, and shall also be a lien on the Premises, prior to any right
or title to, interest in, or claim upon, the Premises subordinate to the lien of
this Mortgage, and shall be deemed to be additionally secured by this Mortgage
and that in any action or proceeding to foreclose this Mortgage, or to recover
or collect the debt secured hereby, the provisions of law respecting the
recovery of costs, disbursements and allowances shall apply in addition to the
foregoing.
12. Care and Maintenance of Premises. That the Premises and any buildings
on the Premises have not been damaged to any material extent and Mortgagor will
maintain the Premises and the Building Equipment in good condition and repair,
will not commit or suffer any waste thereof or the conduct of any nuisance or
unlawful occupation or business on, or use of, the Premises, and will comply
with, or cause to be complied with, all statutes, ordinances and requirements of
any governmental authority relating to the Premises; that Mortgagor will
promptly repair, restore, replace or rebuild any part of the Premises or the
Building Equipment now or hereafter subject to the lien of this Mortgage which
7
may be damaged or destroyed by any casualty whatsoever or which may be affected
by any proceeding of the character referred to in Article 13; and that Mortgagor
shall not initiate, join in, or consent to any change in any private restrictive
covenant, zoning ordinance, or other public or private restrictions, limiting or
defining the uses which may be made of the Premises or any part thereof.
13. Eminent Domain and Condemnation. The proceeds of any award or claim for
damages, direct or consequential, in connection with any condemnation or other
taking of or damage or injury to the Premises, or any part thereof, or for
conveyance in lieu of condemnation, are hereby assigned to and shall be paid to
Mortgagee. In addition, all causes of action, whether accrued before or after
the date of this Mortgage, of all types for damages or injury or affecting the
Premises or any part thereof, including, without limitation, causes of action
arising in tort or contract and causes of action for fraud or concealment of a
material fact, are hereby assigned to Mortgagee as additional security and the
proceeds shall be paid to Mortgagee. Mortgagee may, at its option, appear in and
prosecute in its own name, any action or proceedings relating to condemnation or
other taking of or damage or injury to the Premises or any portion thereof. If
Mortgagor at any time suspects or has knowledge of any casualty damages to the
Premises or damage in any other manner, Mortgagor will immediately notify
Mortgagee in writing. Mortgagor may participate in any such proceedings and may
join Mortgagee in adjusting any loss covered by insurance.
That notwithstanding any taking by eminent domain or other governmental
action (of which there are no such pending proceedings) causing injury to, or
decrease in value of, the Premises and creating a right to compensation
therefor, including, without limitation, the change of the grade of any street,
Mortgagor shall continue to be fully liable for all indebtedness or liability
secured hereby.
All compensation, awards, proceeds, damages, claims, insurance recoveries,
rights of action and payments which Mortgagor may receive, or to which Mortgagor
may become entitled with respect to the Premises or any part thereof, shall be
paid over to Mortgagee and shall be applied first toward reimbursement of all
costs and expenses of Mortgagee in connection with recovery of the same.
Thereafter the same need not be applied by Mortgagee in reduction of principal
but may be applied in such proportions and priority as Mortgagee, in Mortgagee's
sole discretion, may elect, to the payment of principal, interest or other sums
secured by this Mortgage and/or to payment to Mortgagor, on such terms as
Mortgagee may specify, for the sole purpose of altering, restoring or rebuilding
any part of the Premises which may have been altered, damaged or destroyed as a
result of any such taking or other action; that if, prior to the receipt by
Mortgagee of such award or compensation, the Premises shall have been sold on
foreclosure of this Mortgage, Mortgagee shall have the right to receive said
award or compensation to the extent of any deficiency found to be due upon such
sale, with legal interest thereon, whether or not a deficiency judgment on this
Mortgage shall have been sought or recovered, together with reasonable counsel
fees and the costs and disbursements incurred by Mortgagee in connection with
the collection of such award or compensation. In the event Mortgagee elects to
permit Mortgagor to repair or restore the Premises following any damage or
injury to the Premises, or any part thereof, then the balance of such
compensation, awards, proceeds, damages, claims, insurance recoveries, rights of
action or payments shall be applied to the reimbursement of Mortgagor for
expenses incurred by it in such repair or restoration of the Premises, subject,
however, to the following conditions:
(i) any such work of repair or restoration shall be of such a
character as not to reduce, or otherwise adversely affect, the value of the
buildings, improvements and fixtures on the Premises immediately before
such damage or injury, nor to diminish the general utility of such
buildings, improvements or fixtures for the purposes the same were used
immediately prior to such damage;
8
(ii) such work of repair or restoration shall be commenced as soon as
reasonably possible after such damage or injury occurs and shall be
completed by Mortgagor forthwith and with due diligence;
(iii) such work of repair or restoration shall be done in accordance
with plans, specifications and drawings submitted to and approved by
Mortgagee;
(iv) any such monies made available for such repair or restoration
shall be disbursed in accordance with standard construction lending
practices approved by Mortgagee or in any other manner approved by
Mortgagee; and
(v) in the event such compensation, awards, proceeds, damages, claims,
insurance recoveries, rights of action or payments are insufficient to
complete such repairs or restoration, Mortgagor shall provide the balance
of the cost of such repairs or restoration. Any balance of monies held by
Mortgagee and remaining after completion of such repair or restoration
shall be applied to the payment or prepayment (without premium) of the
indebtedness or liability secured hereby in such order as Mortgagee may
determine.
In the event Mortgagor does not elect to repair or restore the Premises
following any such damage or injury referred to herein, or if Mortgagor elects
to repair or restore the Premises but fails to comply with any of the conditions
hereinabove set forth, then all such compensation, awards, proceeds, damages,
claims, insurance recoveries, rights of action and payments, which remain after
the reimbursement of all costs and expenses of Mortgagee in connection with
recovery of the same, shall be applied, in the sole and absolute discretion of
Mortgagee and without regard to the adequacy of its security hereunder, to the
payment or prepayment (without premium) of the indebtedness or liability secured
hereby. Any application of such amounts or any portion thereof to any
indebtedness secured hereby shall not be construed to or waive any default or
notice of default hereunder or invalidate any act done pursuant to any such
default or notice.
14. Right to Inspect. That Mortgagee and any persons authorized by
Mortgagee shall have the right to enter and inspect the Premises at all
reasonable times and, prior to an event of default hereunder, upon reasonable
notice; and that if, at any time after default by Mortgagor in the performance
of any of the terms, covenants or provisions of this Mortgage, the management or
maintenance of the Premises shall be determined by Mortgagee to be
unsatisfactory, Mortgagor shall employ, for the duration of such default, as
managing agent of the Premises, such person or firm as from time to time shall
be approved by Mortgagee. That Mortgagee and its designated agents shall have
the right to inspect Mortgagor's books and records with respect to the Premises
at all reasonable times.
15. Financial Information. That Mortgagor, in addition to the financial
information required in the Credit Agreement, shall furnish to Mortgagee as
promptly as reasonably possible, such interim financial or other information
with respect to the operation of the Premises and with respect to Mortgagor as
Mortgagee may reasonably request. If Mortgagor shall have leased all or
substantially all of the Premises to another, such statements shall cover the
earnings and expenses in the latest fiscal year of the lessee under such lease.
In the case of such lease, if the lessee shall be an affiliate of Mortgagor,
Mortgagor will also furnish to Mortgagee the lessee's balance sheet as of the
end of the lessee's fiscal year and the lessee's statement of income and surplus
for such fiscal year, all in reasonable detail and stating in comparative form
the figures as of the end of and for the previous fiscal year, and prepared,
9
audited and reported upon by an independent certified public accountant or, if
permitted by Mortgagee, verified by an authorized financial officer of the
lessee.
16. Assignment of Rents. That Mortgagor hereby assigns to Mortgagee the
rents, issues and profits of the Premises, together with all leases, licenses
and other documents evidencing such rents, issues and profits now or hereafter
in effect and any and all deposits held as security under said leases, and
shall, upon demand, deliver to Mortgagee an executed counterpart of each such
lease or other document. Nothing contained in the foregoing sentence shall be
construed to bind Mortgagee to the performance of any of the covenants,
conditions or provisions contained in any such lease or other document or
otherwise to impose any Paragraph 16 obligation on Mortgagee (including, without
limitation, any liability under the covenant of quiet enjoyment contained in any
lease in the event that any tenant shall have been joined as a party defendant
in any action to foreclose this Mortgage and shall have been barred and
foreclosed thereby of all right, title and interest and equity of redemption in
the Premises), except that Mortgagee shall be accountable for money actually
received pursuant to such assignment. Mortgagor hereby further grant to
Mortgagee the right (i) to enter upon and take possession of the Premises for
the purpose of collecting the said rents, issues and profits, (ii) to dispossess
by the usual summary proceedings any tenant defaulting in the payment thereof to
Mortgagee, (iii) to let the Premises, or any part thereof, and (iv) to apply
said rents, issues and profits, after payment of all necessary charges and
expenses, on account of said indebtedness. Such assignment and grant shall
continue in effect until all indebtedness secured by this Mortgage is fully and
finally paid, the execution of this Mortgage constituting and evidencing the
irrevocable consent of Mortgagor to the entry upon and taking possession of the
Premises by Mortgagee pursuant to such grant, whether foreclosure has been
instituted or not and without applying for a receiver. After an event of default
hereunder, Mortgagor shall be entitled to collect and receive the same until the
occurrence of a default by Mortgagor under any of the covenants, conditions or
agreements contained in this Mortgage. Mortgagor agrees to use said rents,
issues and profits in payment of principal and interest becoming due on this
Mortgage and in payment of taxes, assessments, water rates, sewer rents and
carrying charges becoming due against the Premises. Such rights of Mortgagor to
collect and receive said rents, issues and profits may be revoked by Mortgagee
upon any such default by Mortgagor, by giving written notice of such revocation.
17. Rents and Profits. That, in the event of any default under this
Mortgage, Mortgagor will pay monthly in advance to Mortgagee, on its entry into
possession pursuant to Article 16 hereof, or to any receiver appointed to
collect said rents, issues and profits, the fair and reasonable rental value for
the use and occupation of the Premises or of such part thereof as may be in the
possession of Mortgagor, and upon default in any such payment, will vacate and
surrender possession of the Premises or such part thereof, as the case may be,
to Mortgagee or to such receiver and, in default thereof, may be evicted by
summary proceedings or otherwise.
18. Leases. (a) That Mortgagor has no right or power, as against Mortgagee
without its consent, to cancel, abridge or otherwise modify in any material
respect any of the leases or subleases now or hereafter affecting the whole or
any part of the Premises or any of the terms, provisions or covenants thereof,
or to accept prepayments of installments of rent to become due thereunder and
Mortgagor shall not do so without such consent.
(b) That Mortgagor shall not enter into a lease of all or substantially all
of the Premises, unless (i) such lease shall expressly provide that the
leasehold estate created thereby shall be subject and subordinate to all
mortgages on the Premises and to the leasehold estates of subtenants created by
10
existing subleases, notwithstanding any clause in any such sublease purporting
to subordinate such sublease and the rights of the subtenant thereunder to
ground or underlying leases, (ii) such lease shall require that each sublease
thereafter made and each renewal of any existing sublease shall provide that,
(A) in the event of the termination of the underlying lease, the sublease shall
not terminate or be terminable by the subtenant, (B) in the event of any action
for the foreclosure of this Mortgage, the sublease shall not terminate or be
terminable by the subtenant by reason of the termination of the underlying lease
unless the subtenant is specifically named and joined in any such action and
unless a judgment is obtained therein against the subtenant and (C) in the event
that the underlying lease is terminated as aforesaid, the subtenant shall attorn
to the lessor under the underlying lease or to the purchaser at the sale of the
Premises on such foreclosure, as the case may be, and (iii) the lessee in such
lease shall agree, and be authorized by Mortgagor, to direct and require the
subtenants and other occupants of space in the Premises to pay to Mortgagee on
its entry into possession pursuant to Article 16 hereof, or to a receiver
appointed to collect the rents, issues and profits of the Premises, the rents
payable by them under the terms of their subleases or occupancy agreements upon
being notified by Mortgagee of any default under this Mortgage and of
Mortgagee's entry into possession of the Premises, or of the appointment of any
such receiver, with the same force and with like effect as if said lease had not
been entered into and Mortgagor were entitled to receive the said space rents
directly.
19. Lease Assurances. That upon notice and demand, Mortgagor shall, from
time to time, execute, acknowledge and deliver or cause to be executed,
acknowledged and delivered to Mortgagee, in form satisfactory to Mortgagee, one
or more separate assignments (confirmatory of the general assignment provided in
Article 16 hereof) of the lessor's interest in any lease or sublease now or
hereafter affecting the whole or any part of the Premises and which shall also
restrict Mortgagor's right or power, as against Mortgagee, without its consent,
to cancel, abridge or otherwise modify, or accept prepayments of installments of
rent to become due under, any such lease or sublease; that Mortgagor shall pay
to Mortgagee the expenses incurred by Mortgagee in connection with the
preparation and recording of any such instrument; that Mortgagor will (i)
fulfill or perform each and every condition and covenant of each such lease or
sublease to be fulfilled or performed by the lessor thereunder, (ii) give prompt
notice to Mortgagee of any notice of default by the lessor thereunder received
by Mortgagor together with a complete copy of any such notice, and (iii)
enforce, short of termination thereof, the performance or observance of each and
every covenant and condition thereof by the lessee thereunder to be performed or
observed.
20. Default. The following shall constitute events of default hereunder:
(a) failure in the due and punctual payment of any indebtedness or
performance of any obligations secured hereunder, including any principal
or interest or any other amounts required to be paid or due or to become
due under this Mortgage, the Credit Agreement, or under any other
agreement(s) or instrument(s) now or hereafter securing the indebtedness
which is also secured hereunder; or
(b) non-payment of any tax, water rate, sewer rent, assessment or for
twenty (20) days after the same first becomes due and payable; or if
Mortgagor fails to furnish Mortgagee with receipted tax bills or other
proof of payment of the aforesaid items by no later than thirty (30) days
after the dates on which such items must be paid so as not to constitute a
default hereunder; or
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(c) breach, after notice and demand, either in Mortgagor's
responsibility for assigning and delivering the policies of insurance
herein described or referred to, or in reimbursing Mortgagee for premiums
paid on such insurance, as hereinbefore provided; or
(d) the actual or threatened material waste, removal or demolition of
any building or other property on the Premises, except as permitted by
Article 3 after thirty (30) days notice to Mortgagor and its failure to
cure; or
(e) assignment by Mortgagor of the whole or any part of the rents,
issues or profits arising from the Premises to any person without the
written consent of Mortgagee; or
(f) if the buildings on the Premises are not maintained in reasonably
good repair in any material respect after thirty (30) days' notice to
Mortgagor and its failure to cure; or
(g) failure to comply in any material respect with any requirement or
order or notice of violation of law or ordinance issued by any governmental
department claiming jurisdiction over the Premises within thirty (30) days
from the issuance thereof; or
(h) if, on application of Mortgagee, two or more fire insurance
companies lawfully doing business in the State of New Jersey refuse to
issue policies insuring the buildings on the Premises; or
(i) if Mortgagor shall fail to make payment of any other sums required
to be paid hereunder within the period required by specific provision of
this Mortgage or, if no such period is so provided, by not later than ten
(10) days after written notice; or
(j) if, without the prior consent of Mortgagee, the Premises or any
interest therein shall be sold, pledged, hypothecated, contracted to be
sold, leased with an option to purchase, conveyed, alienated or otherwise
disposed of or transferred or further encumbered for debt by Mortgagor; or
(k) if a lien for the performance of work or the supply of materials
is filed against the Premises or any portion thereof which shall not be
discharged or bonded within thirty (30) days from the filing thereof; or
(l) if an Event of Default shall occur under the Credit Agreement.
21. Remedies. Upon any default under paragraph 20, without notice or
presentment, each of which are hereby waived by Mortgagor, and without waiving
any rights and/or remedies Mortgagee may now or hereafter have under or in
connection with the Credit Agreement and under or in connection with any other
agreements Mortgagee may now or hereafter have with or concerning Mortgagor,
Mortgagee shall have the right to and may:
(a) declare the entire principal of all indebtedness secured hereunder
then outstanding (if not then due and payable), and all accrued and unpaid
interest thereon, and all other sums connected therewith, to be due and
payable immediately, and upon any such declaration all indebtedness secured
hereunder and said accrued and unpaid interest and other sums shall become
12
and be immediately due and payable, anything in any of the Loan Documents
or in this Mortgage to the contrary notwithstanding;
(b) personally, or by its agents or attorneys, may enter into and upon
all or any part of the Premises, and each and every part thereof, with or
without force and with or without process of law and may exclude Mortgagor,
its agents and servants wholly therefrom and from having and holding the
same, may use, operate, manage and control the Premises or any part thereof
and all records, documents, leases, books, papers and accounts of Mortgagor
relating thereto and conduct the business thereof, either personally or by
its superintendents, managers, agents, servants, attorneys or receivers;
and likewise, from time to time, at the expense of Mortgagor, Mortgagee may
make all necessary or proper repairs, renewals and replacements and such
useful alterations, additions, betterments and improvements thereto and
thereon as to it may seem advisable; and in every such case Mortgagor
shall, at any time, or times, upon demand of Mortgagee forthwith surrender
possession of the Premises and Mortgagee shall have the right to manage and
operate the Premises and to carry on the business thereof and exercise all
rights and powers of Mortgagor with respect thereto either in the name of
Mortgagor or otherwise as it shall deem best; and Mortgagee shall be
entitled to collect and receive all gross receipts, earnings, revenues,
rents, issues, profits and income of the Mortgaged Property and every part
thereof, all of which shall for all purposes constitute property of
Mortgagee; and after deducting the expenses of conducting the business
thereof and of all maintenance, repairs, renewals, replacements,
alterations, additions, betterments and improvements and amounts necessary
to pay for taxes, assessments, insurance and prior or other proper charges
upon the Premises or any part thereof, as well as just and reasonable
compensation for the services of Mortgagee and for all attorneys, counsel,
agents, clerks, servants and other employees by it properly engaged and
employed, Mortgagee may apply the monies arising as aforesaid in such
manner, in such order and at such times as Mortgagee shall determine in its
discretion to the payment of any indebtedness secured hereby and the
interest thereon, when and as the same shall become payable and/or to the
payment of any other sums required to be paid by Mortgagor under this
Mortgage;
(c) (i) with or without entry, personally or by its agents or
attorneys, insofar as applicable, sell the Premises, including, without
limitation, the Building Equipment or any part thereof to the extent
permitted and pursuant to the procedures provided by law, and all estate,
right, title and interest, claim and demand therein, and right of
redemption thereof, at one or more sales as a single entity or in parcels,
and at such time and place, upon such terms and after such notice thereof
as may be required or permitted by law;
(ii) institute an action of judicial foreclosure on this Mortgage or
institute other proceedings according to law for the foreclosure hereof or
otherwise as may be allowed, at law or in equity, and may prosecute the
same to judgment, execution and sale for the collection of all of the
obligations secured hereby, and all interest with respect thereto, together
with all taxes and insurance premiums advanced by Mortgagee and other sums
payable by Mortgagor hereunder, and all fees, costs and expenses of such
proceedings, including reasonable attorneys' fees and expenses;
(iii) take such steps to protect and enforce its rights, whether by
action, suit or proceeding in equity or at law, for the specific
performance of any covenant, condition or agreement in the Credit Agreement
and/or in this Mortgage or in aid of the execution of any power herein or
therein granted, or for any foreclosure hereunder, or for the enforcement
13
of any other appropriate legal or equitable remedy or otherwise as
Mortgagee shall elect;
(iv) exercise in respect of the Premises consisting of personal
property or fixtures, or both, all of the rights and remedies available to
a secured party upon default under the applicable provisions of the Uniform
Commercial Code in effect in the State of New Jersey; and
(v) exercise any or all other rights and remedies afforded Mortgagee
under the Loan Documents, or at law or in equity.
(d) (i) Mortgagee may adjourn from time to time any sale by it to be
made under or by virtue of this Mortgage by announcement at the time and
place appointed for such sale or for such adjourned sale or sales; and,
except as otherwise provided by any applicable provision of law, Mortgagee,
without further notice or publication, may make such sale at the time and
place to which the same shall be so adjourned.
(ii) Upon any sale, it shall not be necessary for Mortgagee or any
public officer acting under execution or order of court to have present or
constructive possession of any of the Premises.
(iii) The recitals contained in any conveyance made by Mortgagee to
any purchaser at any sale made pursuant hereto or under applicable law
shall be full evidence of the matters therein stated, and all prerequisites
to such sale shall be presumed to have been satisfied and performed.
(iv) To the extent permitted by law, any such sale or sales made under
or by virtue of this Mortgage, or under or by virtue of any judicial
proceedings, shall operate to divest all estate, right, title, interest,
claim and demand whatsoever, either at law or in equity, of Mortgagor in
and to the interest, rights, premises and property sold, and shall be a
perpetual bar, both at law and in equity, against Mortgagor, their
respective successors and assigns, and against any and all persons or
entities claiming the premises and property sold, or any part thereof,
from, through or under Mortgagor and their respective successors or
assigns.
(v) The receipt of Mortgagee for the purchase money paid at any such
sale, or the receipt of any other person authorized to receive the same,
shall be sufficient discharge therefor to any purchaser of the property, or
any part thereof, sold as aforesaid, and no such purchaser, or his
representatives, grantees or assigns, after paying such purchase money and
receiving such receipt, shall be bound to see to the application of such
purchase money or any part thereof upon or for any trust or purpose of this
Mortgage, or be liable for misapplication or nonapplication of any such
purchase money, or any part thereof, or be bound to inquire as to the
authorization, necessity, expediency or regularity of any such sale.
(vi) In case the liens or security interests hereunder, or by the
exercise of any other right or power, shall be foreclosed by Mortgagee's
sale or by other judicial action, the purchaser at any such sale shall
receive, as an incident to his ownership, immediate possession of the
property purchased, and if Mortgagor or its respective successors shall
hold possession of said property, or any part thereof, subsequent to
foreclosure, Mortgagor or its respective successors shall be considered as
tenants at sufferance of the purchaser at foreclosure sale, and anyone
14
occupying the property after demand made for possession thereof shall be
guilty of forcible detainer and shall be subject to eviction and removal,
forcible or otherwise, with or without process of law, and all damages by
reason thereof are hereby expressly waived.
(vii) In the event a foreclosure hereunder shall be commenced by
Mortgagee, Mortgagee may at any time before the sale abandon the suit, and
may then institute suit for the collection of amounts due or to become due
under the Credit Agreement and for the foreclosure of the liens and
security interest hereof. If Mortgagee should institute a suit for the
collection of amounts due or to become due under the Credit Agreement and
for a foreclosure of the liens and security interest hereof, it may at any
time before the entry of a final judgment in said suit dismiss the same and
proceed to sell the Premises, or any part thereof, in accordance with
provisions of this Mortgage.
(viii) Should any default occur hereunder, any reasonable expenses
incurred by Mortgagee in consulting, negotiating, prosecuting, resettling
or settling the claim of Mortgagee, including, without limitation,
reasonable attorneys' fees and disbursements, shall become an additional
obligation of Mortgagor hereunder.
(ix) In the event of any sale made under or by virtue of this Mortgage
the entire principal of, interest on, and all other indebtedness secured
hereunder, if not previously due and payable, immediately thereupon shall,
anything in the Credit Agreement or in this Mortgage to the contrary
notwithstanding, become due and payable.
(x) The purchase money proceeds or avails of any sale made under or by
virtue of this Mortgage, together with any other sums which then may be
held by Mortgagee under this Mortgage, whether under the provisions hereof
or otherwise, shall be applied in accordance with the applicable law and,
to the extent not inconsistent therewith, as follows:
First: To the payment of the reasonable costs and expenses of
such sale, including reasonable compensation to Mortgagee, its agents
and counsel, and of any judicial proceedings wherein the same may be
made, and of all expenses, liabilities and advances made or incurred
by Mortgagee under this Mortgage, including without limitation any
such expenses, liabilities and/or advances to remedy default by
Mortgagor, or to otherwise establish, preserve or enforce any rights
hereunder, together with interest at the rate set forth in Article 4
on all advances made by Mortgagee and all taxes or assessments, except
any taxes, assessments or other charges subject to which the Premises
shall have been sold.
Second: To the payment of the whole amount then due, owing or
unpaid upon indebtedness secured hereunder in accordance with the
provisions of the Credit Agreement, including, without limitation, all
principal and interest due and to become due under or in connection
with the Credit Agreement, with interest on the unpaid principal at
the rate set forth in Article 4 from and after the happening of any
event of default described in paragraph 20, from the due date of any
such payment of principal until the same is paid.
Third: To the payment of any other sums required to be paid by
Mortgagor pursuant to any provision of this Mortgage or the Credit
15
Agreement, all with interest at the rate set forth in Article 4, from
the date such sums were or are required to be paid under this
Mortgage.
Fourth: To the payment of the surplus, if any, to whomsoever may
be lawfully entitled to receive the same.
(xi) Upon any sale made under or by virtue of this Mortgage, by virtue
of judicial proceedings or of a judgment or decree of foreclosure and sale,
Mortgagee may bid for and acquire the Premises or any part thereof and in
lieu of paying cash therefor, and upon compliance with the terms of said
sale, may hold, retain and dispose of such property without further
accountability therefor. Mortgagee may also make settlement for the
purchase price by crediting upon the indebtedness of Mortgagor secured by
this Mortgage the net sales price after deducting therefrom the expense of
the sale and the costs of the action and any other sums which Mortgagee is
authorized to deduct under this Mortgage.
22. Non-Waiver by Mortgagee. That any failure by Mortgagee to insist upon
the strict performance by Mortgagor of any of the terms and provisions hereof
shall not be deemed to be a waiver of any of the terms and provisions hereof,
and Mortgagee, notwithstanding any such failure, shall have the right thereafter
to insist upon the strict performance by Mortgagor of any and all of the terms
and provisions of this Mortgage to be performed by Mortgagor; that neither
Mortgagor nor any other person now or hereafter obligated for the payment of the
whole or any part of the sums now or hereafter secured by this Mortgage shall be
relieved of such obligation by reason of the failure of Mortgagee to comply with
any request of Mortgagor, or of any other person so obligated, to take action to
foreclose this Mortgage or otherwise enforce any of the provisions of this
Mortgage or any obligations secured by this Mortgage, or by reason of the
release, regardless of consideration, of the whole or any part of the security
held for the indebtedness secured by this Mortgage, or by reason of any
agreement or stipulation between any subsequent owner or owners of the Premises
and Mortgagee extending the time of payment or modifying the terms of any
indebtedness secured hereunder or this Mortgage without first having obtained
the consent of Mortgagor or such other person, and in the latter event,
Mortgagor and all such other persons shall continue liable to make such payments
according to the terms of any such agreement of extension or modification unless
expressly released and discharged in writing by Mortgagee; that, regardless of
consideration and without the necessity for any notice to or consent by the
holder of any subordinate lien on the Premises, Mortgagee may release the
obligation of anyone at any time liable for any of the indebtedness secured by
this Mortgage or any part of the security held for the indebtedness without, as
to the security or the remainder thereof, in any way impairing or affecting the
lien hereof or the priority thereof over any subordinate encumbrance; and that
Mortgagee may resort for the payment of the indebtedness secured hereby to any
other security therefor held by Mortgagee in such order and manner as Mortgagee
may elect.
23. Taxation of Mortgagee or Indebtedness. That if at any time the United
States of America, any state thereof or any department, agency, bureau or
governmental subdivision thereof, having jurisdiction, shall require revenue
stamps to be affixed to any indebtedness secured hereunder, or other tax paid on
or in connection therewith, Mortgagor will pay the same with any interest or
penalties imposed in connection therewith.
24. Building Equipment, Fixtures and Personal Property. That Mortgagor
shall execute any and all such documents, including Financing Statements
pursuant to the Uniform Commercial Code of the State of New Jersey as Mortgagee
16
may request, to preserve and maintain the priority of the lien created hereby on
property which may be deemed personal property or fixtures, and Mortgagor shall
pay to Mortgagee on demand any expenses incurred by Mortgagee in connection with
the preparation, execution and filing of any such documents. Mortgagor hereby
authorizes and empowers Mortgagee to execute and file, on Mortgagor's behalf,
all Financing Statements, and refilings and continuations thereof as Mortgagee
deems necessary or advisable to create, preserve and protect the lien granted to
Mortgagee herein. When and if Mortgagor and Mortgagee shall respectively become
Debtor and Secured Party in any Uniform Commercial Code Financing Statement
affecting Building Equipment or other property referred to or described herein,
this Mortgage shall be deemed the Security Agreement as defined in said Uniform
Commercial Code and the remedies for any violation of the covenants, terms and
conditions of the agreements herein contained shall be (i) as prescribed herein,
(ii) by general law or (iii) as to such part of the security which is also
reflected in said Financing Statement, by the specific statutory consequences
now or hereafter enacted and specified in said Uniform Commercial Code, all at
Mortgagee's sole election. The filing of such a Financing Statement in the
records normally having to do with personal property shall never be construed as
in any way derogating from or impairing this declaration and hereby stated
intention of the parties hereto, that all items of Building Equipment and other
property used in connection with the production of income from the Premises
(furniture only excepted) or adapted for use therein or which are described or
reflected in this Mortgage are, and at all times and for all purposes and in all
proceedings, both legal and equitable, shall be, regarded as part of the real
estate irrespective of whether or not (i) any such item is physically attached
to the improvement, serial numbers are used for the better identification of
certain equipment items capable of being thus identified in a recital contained
herein or in any list filed with Mortgagee or (iii) any such item is referred to
or reflected in any such Financing Statement so filed at any time. Similarly,
the mention in any such Financing Statement of (1) the rights in or the proceeds
of any fire and/or hazard insurance policy, (2) any award in eminent domain
proceedings for a taking or for loss of value or (3) the debtor's interest as
lessor in any present or future lease or rights to income growing out of the use
or occupancy of the Premises, whether pursuant to a lease or otherwise, shall
never be construed as in any way altering any of the rights of Mortgagee as
determined by this instrument or impugning the priority of Mortgagee's lien
granted hereby or by any other recorded document, but such mention in the
Financing Statement is declared to be for the protection of Mortgagee in the
event any court or judge shall at any time hold with respect to (1), (2) or (3)
that notice of Mortgagee's priority of interest, to be effective against a
particular class of persons, including but not limited to the Federal government
and any subdivisions or entity of the Federal government, must be filed in the
Uniform Commercial Code records.
25. Certain Waivers. That Mortgagor will not at any time insist upon, or
plead, or in any manner whatever claim or take any benefit or advantage of any
stay or extension or moratorium law, any exemption from execution or sale of the
Premises or any part thereof, wherever enacted, now or at any time hereafter in
force, which may affect the covenants and terms of performance of this Mortgage,
nor claim, take or insist upon any benefit or advantage of any law now or
hereafter in force providing for the valuation or appraisal of the Premises or
any part thereof, prior to any sale or sales thereof which may be made pursuant
to any provision herein, or pursuant to the decree, judgment or order of any
court of competent jurisdiction; nor, after any such sale or sales, claim or
exercise any right under any statute heretofore or hereafter enacted to redeem
the property so sold or any part thereof and Mortgagor hereby expressly waives
all benefit or advantage of any such law or laws and covenants not to hinder,
delay or impede the execution of any power herein granted or delegated to
Mortgagee, but to suffer and permit the execution of every power as though no
such law or laws had been made or enacted. Mortgagor, for itself and all who may
claim under it, waives, to the extent that it lawfully may, all right to have
the Premises marshaled upon any foreclosure hereof.
17
26. Environmental Matters. (a) Definitions for this Section:
(i) "Environmental Laws" means and includes any federal, state or
local law, statute, regulation, charter, fire rule, code or ordinance,
concerning environmental, health or safety matters all as presently in
effect and as the same may hereafter be amended, including, without
limitation, the Industrial Site Recovery Act, as amended, N.J.S.A. 13:lK-6
et seq. ("ISRA"), the Spill Compensation and Control Act, as amended,
N.J.S.A. 58:10-23.11 et seq. (the "Spill Act"), the Federal Safe Drinking
Water Act, as amended, 42 U.S.C.A. ss.300F et seq. ("FSDWA"), the
Comprehensive Environmental Response Compensation and Liability Act, as
amended, 42 U.S.C.A. ss.9601 et seq. ("CERCLA"), the New Jersey Underground
Storage of Hazardous Substances Act, as amended, N.J.S.A. 58:10A-21 et seq.
("USTA"), the Resource Conservation and Recovery Act, as amended, 42
U.S.C.A. ss.6901 et seq ("RCRA"), the Federal Water Pollution Control Act,
as amended, 33 U.S.C.A. ss.1251 et seq. ("FWPCA") and the Federal Clean Air
Act, as amended, 42 U.S.C.A. ss.7401 et seq. ("FCAA"), and the Federal
Toxic Substances Control Act, as amended, 15 U.S.C.A. ss.2601 et seq.
("FTSCA") and any rule, regulation, binding interpretation, binding policy,
permit, order, directive, court order or consent decree issued pursuant to
any of the following activities: (A) the emission, discharge, release or
spilling of any substance into the air, surface water, groundwater, soil or
substrata, (B) the manufacturing, processing, sale, generation, treatment,
storage, disposal, transportation, labeling or other management of any
waste, Hazardous Substance, Hazardous Waste, Pollutant or Contaminant as
those terms are hereinafter defined, or (C) any activity which involves any
Hazardous Substance, as that term is hereinafter defined.
(ii) "Hazardous Substances" means and includes any material or
substance that, whether by its nature or use, is subject to regulation
under any Environmental Laws.
(iii) "Premises" means the mortgaged premises.
(iv) "Release" means releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, disposing
or dumping.
(v) "Notice" means any summons, citation, directive, order, claim,
litigation, investigation, proceeding, judgment, letter or other
communication, written or oral, actual or threatened, from the New Jersey
Department of Environmental Protection ("NJDEP"), the United States
Environmental Protection Agency ("USEPA") or other federal, state or local
agency or authority, or any other entity or any individual, concerning any
intentional or unintentional act or omission which has resulted or which
may result in the Release of Hazardous Substances into the waters or onto
the lands of the State of New Jersey, or into water outside the
jurisdiction of the State of New Jersey or into the environment from or on
the Premises, and shall include the imposition of any lien on the Premises,
pursuant to Environmental Laws, or any violation of any Environmental Law
or any knowledge, after due inquiry and investigation, of any facts which
could give rise to any of the above.
(b) Mortgagor warrants and represents to Mortgagee as follows, knowing that
Mortgagee is relying on in entering into this these representations and
warranties, Mortgage:
18
(i) To the best of Mortgagor's knowledge, after diligent inquiry and
investigation, no lien has been attached to any revenues or any real or
personal property owned by Mortgagor and located in the State of New
Jersey, including, but not limited to the Premises, in connection with any
Environmental Law.
(ii) Mortgagor has received no Notice.
(iii) In connection with the purchase of the Premises, and any other
ISRA-triggering transaction entered into by Mortgagor on or after January
1, 1984, (A) there has been obtained from NJDEP a letter certifying that
the transaction was not subject to the provisions of ISRA, or (B) Mortgagor
required that the party triggering ISRA comply with the provisions of ISRA
to the extent applicable to such transaction, and the party did comply
therewith, or (C) no interruption of Mortgagor's business, or any portion
thereof, will result from any ISRA-related issues and/or by reason of or in
connection with any ISRA compliance activities.
(iv) To the best of Mortgagor's knowledge, after diligent inquiry and
investigation, the Premises are in full compliance with all provisions of
Environmental Laws.
(v) Neither Mortgagor nor any other person or party (including prior
owner(s) or current or prior tenants) has caused or permitted the Premises
to be used to generate, manufacture, refine, transport, treat, store,
handle, dispose, transfer, produce or process Hazardous Substances, or
other hazardous, dangerous, toxic substances, or solid waste, has not
caused or permitted and has no knowledge of the Release of any Hazardous
Substances on or off-site of the Premises except in accordance with all
Environmental Laws.
(c) Mortgagor hereby covenants and agrees with Mortgagee as follows:
(i) If Mortgagor is presently an owner or operator of a "Major
Facility" in the State of New Jersey, or if Mortgagor ever becomes such an
owner or operator, then Mortgagor shall furnish to the NJEP all the
information required by N.J.S.A. 58:10-23.11d.
(ii) Mortgagor shall not cause or permit to exist, as a result of an
intentional or unintentional action or omission on its part, a Release of a
Hazardous Substance into waters of the State of New Jersey or onto the
lands from which it might flow or drain into said waters, or into waters
outside the jurisdiction of the State of New Jersey, where damage may
result to the lands, waters, fish, shellfish, wildlife, biota, air and
other resources owned, managed, held in trust or otherwise controlled by
the State of New Jersey, unless said Release is pursuant to and in
compliance with the conditions of a permit issued by the appropriate
federal and state governmental authorities.
(iii) So long as Mortgagor shall own or operate any real property
located in the State of New Jersey, which is used as a "Major Facility",
Mortgagor shall duly file or cause to be duly filed with the Director of
the Division of Taxation in the New Jersey Department of the Treasury, a
tax report or return and shall pay or make provision for the payment of all
taxes due therewith, all in accordance with and pursuant to N.J.S.A.
58:10-23.11h.
19
(iv) In the event that there shall be filed a lien against the
Premises by NJDEP and/or USEPA, then Mortgagor shall, within thirty (30)
days after the date that Mortgagor is given notice that the lien has been
placed against the Premises or within such shorter period of time in the
event that the State of New Jersey has commenced steps to cause the
Premises to be sold pursuant to the lien, either (A) pay the claim and
remove the lien from the Premises, or (B) furnish a bond satisfactory to
Mortgagee in the amount of the claim out of which the lien arises or a cash
deposit in the amount of the claim out of which the lien arises or other
security reasonably satisfactory to Mortgagee in an amount sufficient to
discharge the claim out of which the lien arises.
(v) If Mortgagor receives any notice of (i) the happening of any event
involving the use, spill, discharge or cleanup of any Hazardous Substances,
any toxic substance or waste or any oil or pesticides on or about the
Premises (a "Hazardous Discharge") or (ii) any complaint, order, citation
or notice with regard to air emissions, water discharges, noise emissions
or any other environmental, health or safety matter affecting Mortgagor or
the Premises (an "Environmental Complaint") from any person or entity,
including, without limitation the NJDEP, then Mortgagor will give immediate
oral and written notice of same to Mortgagee.
(vi) Mortgagor agrees that, as landlord, it shall use its best efforts
to include the language stated below in all non-residential leases (which
shall include renegotiations of existing leases) of all or any portion of
the Premises that it enters into:
"ARTICLE ____: ENVIRONMENTAL OBLIGATIONS OF TENANT"
" -.1 Use of Hazardous Substances. Tenant agrees not to use any Hazardous
Substances at the demised premises unless it has first taken all necessary steps
to obtain any necessary permits governing the use, storage and disposal of such
substances and has made adequate arrangements to use, store and dispose of such
substances safely.
" -.2 Notices. If Tenant receives any notice of the happening of any event
involving the use, spill, discharge or cleanup of any Hazardous Substance, and
toxic substance or waste, or any oil or pesticide on or about the demised
premises or into the sewer, septic system or waste treatment system servicing
the demised premises (any such event is hereinafter referred to as a "Hazardous
Discharge") or of any complaint, order, citation, or notice with regard to air
emissions, water discharges, noise emissions or any other environmental, health
or safety matter affecting Tenant (an "Environmental Complaint") from any person
or entity, including, without limitation, the Department of Environmental
Protection of New Jersey ("DEP") and the United States Environmental Protection
Agency ("EPA"), then Tenant shall give immediate oral and written notice of same
to Landlord and Landlord's mortgagee, detailing all relevant facts and
circumstances.
" -.3 Landlord's Option. (a) Without limiting the foregoing, Landlord shall
have the right, but not the obligation, to exercise any of its rights as
provided in this Lease or to enter onto the Premises or to take such actions as
it deems necessary or advisable to clean up, remove, resolve or minimize the
impact of or otherwise deal with any Hazardous Discharge or Environmental
Complaint upon its receipt of any notice from any person or entity, including,
without limitation, the DEP and the EPA, asserting the happening of a Hazardous
Discharge or an Environmental Complaint on or pertaining to the
20
demised premises. All costs and expenses incurred by Landlord in the exercise of
any such rights shall be deemed to be additional rent hereunder and shall be
payable by Tenant to Landlord upon demand.
" -.4 Insurance. To the extent available at reasonable rates, Tenant shall
at all times during the term of this Lease maintain in full force and effect
environmental impairment insurance satisfactory to Landlord and Landlord's
mortgagee as to carrier, amount, coverage and all other aspects.
" -.5 Default. The occurrence of any of the following events shall
constitute an Event of Default under this Lease:
"(a) If Tenant does not give Landlord notice of a Hazardous Discharge
or an Environmental Complaint on or pertaining to the demised premises
(which may be given in any oral or written form, provided same is followed
with all due dispatch by written notice given by certified mail, return
receipt requested) within three (3) business days of the time Tenant first
receives notice of such Hazardous Discharge or Environmental Complaint; or
"(b) If the DEP, EPA, or any other local, state or federal agency
asserts or creates a lien upon any or all of the demised premises by reason
of the occurrence of a Hazardous Discharge or an Environmental Complaint or
otherwise; or
"(c) If the DEP, EPA or any other local, state or federal agency
asserts a claim against the Tenant, the demised premises or Landlord for
damages or cleanup costs related to a Hazardous Discharge or an
Environmental Complaint on or pertaining to the demised premises; provided,
however, such claim shall not constitute a default if, within five (5) days
of the occurrence giving rise to the claim:
"(i) Tenant can prove to Landlord's satisfaction that Tenant has
commenced and is diligently pursuing either: (x) cure or correction of
the event which constitutes the basis for the claim, and continues
diligently to pursue such cure or correction to completion, or (y)
proceedings for an injunction, a restraining order or other
appropriate emergent relief preventing such agency or agencies from
asserting such claim, which relief is granted within ten (10) days of
the occurrence giving rise to the claim and the emergent relief is not
thereafter dissolved or reversed on appeal; and
"(ii) In either of the foregoing events, Tenant has posted a
bond, letter of credit or other security satisfactory in form,
substance and amount to Landlord and the agency or entity asserting
the claim to secure the proper and complete cure or correction of the
event which constitutes the basis for the claim.
" -.6 Indemnification. Tenant hereby agrees to defend, indemnify and hold
Landlord and Landlord's mortgagee, their agents, employees and contractors
harmless from and against any and all claims, losses, liabilities, damages and
expenses (including, without limitation, consequential damages, cleanup costs
and reasonable attorney's fees arising by reason of any of the aforesaid or any
action against Tenant under this indemnity) arising directly or indirectly from,
out of or by reason of any Hazardous Discharge or Environmental Complaint or
ISRA occurring either (i) during or attributable to the period
21
of this Lease and any other period of possession of the demised premises by
Tenant or (ii) by reason of or attributable to Tenant's operations.
" -.7 ISRA Compliance. (a) If Tenant's operations on the Premises now or
hereafter constitute an "Industrial Establishment" subject to the requirements
of the New Jersey Industrial Site Recovery Act, N.J.S.A. 13:1k-6 et seq., and
the regulations pertaining thereto, N.J.A.C. 26B-1.1 et seq., as same may be
amended from time to time ("ISRA"), then prior to the expiration or sooner
termination of this Lease and upon any and every condemnation, assignment or
sublease (if permitted), change in ownership or control of Tenant or any other
closure or transfer by, Landlord or Tenant covered by ISRA, Tenant shall comply
with all requirements of ISRA pertaining to an Industrial Establishment closing
or transferring operations, at its sole cost and expense, to the satisfaction of
the DEPE and Landlord. Without limiting the foregoing, Tenant's obligations
shall include (i) the proper filing of the Initial Notice to the DEPE required
by ISPA, (ii) the performance to DEPE's and Landlord's satisfaction of all air,
soil, ground water and surface water sampling and tests required by ISRA, and
(iii) either (x) obtaining an approved "Negative Declaration" from the DEPE,
without qualification, or (y) obtaining a non-qualified final DEPE approval of
the complete implementation of all necessary cleanups and post cleanup sampling
pursuant to an approved final Cleanup Plan for the Premises, accomplished to
Landlord's reasonable satisfaction. Tenant shall immediately provide Landlord
with copies of all correspondence, reports, test results, notices, orders,
findings, declarations and other materials pertinent to Tenant's compliance and
DEPE's requirements under ISRA, as any of same are issued or received by Tenant
from time to time.
"(b) In no event shall any remedial action work plan or any remediation
required to be conducted by Tenant under ISRA, the Spill Act or any other state
or federal law involve or permit engineering or institutional controls, on,
under or about the demised premises, or any part thereof, including without
limitation, capping, a notice of contamination recorded on the land records, any
use or excess restriction or the posting of signs and in all respects, all
remedial remediation shall meet then current residential standards.
"(c) In the event that Landlord has reason to believe that there has been a
Hazardous Discharge on or about the demised premises, then notwithstanding that
Tenant is not obligated to comply with subparagraph ____.5(a) above for any
reason, including without limitation because Tenant is not an "Industrial
Establishment," then at least thirty (30) but not more than sixty (60) days
prior to the expiration or sooner termination of this Lease, Tenant shall:
"(i) prepare a detailed air, soil, ground water and surface water
sampling plan for the demised premises in form and substance satisfactory
to the Landlord;
"(ii) implement the landlord-approved sampling plan;
"(iii) submit the results of the sampling plan to the Landlord; and
"(iv) after the Landlord's review of the results of the sampling plan,
comply with Landlord's requirements for additional testing and/or cleanup
and site detoxification of any and all toxic or hazardous wastes or
substances identified by reason of the sampling plan, or conduct additional
testing, including, without limitation, any of Landlord's requirements
corresponding to those which the DEP could require under ISRA if same
applied to Tenant and/or the demised premises. All costs associated with
Tenant's compliance with this Article, including, without limitation,
22
Landlord's costs in reviewing the sampling plan and test results and
developing a plan for and monitoring the cleanup and site detoxification,
shall be additional rent to be paid by Tenant to Landlord upon demand. Upon
completion of the cleanup and site detoxification to Landlord's
satisfaction expressed in writing, Tenant's obligations under this
subparagraph ____.5(b) shall cease.
" -.8 Performance by Landlord. In the event of Tenant's failure to comply
in full with this Article, Landlord may, at its option, perform any or all of
Tenant's obligations as aforesaid and all costs and expenses incurred by
Landlord in exercise of this right shall be deemed to be additional rent payable
on demand.
" -.9 General. This Article shall survive the expiration or termination of
the Lease."
(d) With regard to CERCLA and the Spill Act, Mortgagor agrees that if NJDEP
and/or USEPA shall serve upon Mortgagor a directive to remove or arrange for the
removal of any "Hazardous Substances" on the Premises, the repayment of the
indebtedness secured by this Mortgage may, at Mortgagee's election, be
accelerated, in the event that Mortgagor shall not comply with the directive
within thirty (30) days from its date or such other period as described therein,
to the satisfaction of NJDEP and/or USEPA, as applicable; provided, however,
that if Mortgagor shall furnish a bond, cash or other security reasonably
satisfactory to Mortgagee in an amount sufficient to pay the costs of taking the
actions required by said directive, then the debt shall not be accelerated.
(e) Mortgagor agrees to comply promptly with all applicable laws, rules
regulations and orders including, without limitation, Environmental Laws, and to
immediately notify Mortgagee, in writing, of (i) the discovery, discharge, or
release of any Hazardous Substances for which Mortgagor is in any way
responsible under CERCLA or the Spill Act or any similar federal or state
statute; or (ii) the use or proposed use of the Premises as a "Major Facility".
(f) Mortgagor agrees to indemnify, defend and hold harmless Mortgagee, its
agents, employees and contractors against any penalties, obligations, damages,
actions, judgments, suits, claims, disbursements, losses or liabilities, costs
or expenses of any kind (including, without limitation, reasonable attorneys'
fees and disbursements) which the Indemnitees may sustain as a result of or on
account of (1) any lien imposed upon the Premises pursuant to CERCLA or the
Spill Act or any amendments thereto; or (2) any other Environmental Law
governing Mortgagor or the Premises; or (3) the presence of asbestos- containing
materials at the Premises; or (4) the past, present or future operations of
Mortgagor or any of Mortgagor's subsidiaries or any of its or their predecessors
in interest. The provisions of this paragraph shall survive any transfer of the
Premises, including a transfer after a foreclosure of this Mortgage, and
delivery of the deed effecting such transfer, or a satisfaction, discharge,
release or termination of this Mortgage; and shall apply notwithstanding any
negligent or contributory conduct by or on the part of Mortgagee, its agents,
employees, contractors, third parties or other parties.
(g) In the event that there has been, or Mortgagee reasonably believes that
there has been, a Release of a Hazardous Substance at the Premises, Mortgagor
shall promptly arrange for an environmental audit and tests, as set forth in
subparagraph (j) below, of such representative soil, air and/or water samples of
the Premises as Mortgagee may require. Mortgagor agrees that the repayment of
the indebtedness secured hereby may, at Mortgagee's election, be accelerated if
Mortgagee shall have determined that, based on such soil, air and/or water
samples, there exists a violation under any applicable Environmental Law and
23
Mortgagor shall not, within thirty (30) days (or a shorter period of time if
Mortgagee or its counsel shall determine, in their sole discretion, that such
shorter period is necessary to comply with any applicable law, rule or
regulation) of notice from Mortgagee that such violation exists, have remedied
such violation.
(h) At the option of Mortgagee, it shall constitute an Event of Default if
the effect of any Environmental Law that is modified or enacted after the date
hereof is to materially increase the liability that may be imposed on Mortgagee
as a result of any violation of an Environmental Law by Mortgagor or in respect
of the Premises.
(i) In addition to the rights of Mortgagee set forth above, all costs and
expenses incurred by Mortgagee pursuant to the terms of this Section shall be
paid by Mortgagor to Mortgagee upon demand, with interest at the rate set forth
in Article 4 hereof or at the maximum interest rate which Mortgagor may by law
pay, whichever is lower, for the period after notice from Mortgagee that such
cost or expense was incurred to the date of payment to Mortgagee. All such costs
and expenses incurred by Mortgagee pursuant to the terms of this Section, with
interest, shall be deemed to be secured by this Mortgage.
(j) Mortgagee may require that Mortgagor, at Mortgagor's expense, from time
to time promptly cause such audits, tests and procedures as Mortgagee deems
appropriate to be conducted, by such professionals and otherwise in a manner
satisfactory to Mortgagee, for the purpose of ensuring compliance with all
Environmental Laws. The results of such audits, tests and procedures shall be
promptly submitted to Mortgagee in writing and certified as true and complete by
such professionals. Such audits, tests and procedures shall be commenced
promptly after not less than ten (10) days notice from Mortgagee.
27. No Merger. In the event the holder of this Mortgage shall acquire the
fee title to the Premises or any part thereof or a leasehold interest, or any
other interest in the Premises, or any part thereof, by foreclosure or
otherwise, Mortgagor agrees that the title to the Premises or such leasehold or
any other interest in the Premises or any part thereof, shall not merge with the
interests conveyed and mortgaged hereunder as a result of such acquisition or
for any other reason, but shall remain separate and distinct states for all
purposes; provided, however, that in such event the holder of this Mortgage may,
at its option, elect to merge such interests.
28. Joint and Several Liability. That if Mortgagor consists of more than
one party, such parties shall be jointly and severally liable under any and all
obligations, covenants and agreements of Mortgagor contained herein.
29. Rights Cumulative. That the rights of Mortgagee arising under the
clauses and covenants contained in this Mortgage shall be separate, distinct and
cumulative and none of them shall be in exclusion of the others; that no act of
Mortgagee shall be construed as an election to proceed under any one provision
herein to the exclusion of any other provision, anything herein or otherwise to
the contrary notwithstanding.
30. Construction. That wherever used in this Mortgage, unless the context
clearly indicates a contrary intent or unless otherwise specifically provided
herein, the word "lease" shall mean "tenancy, subtenancy, lease or sublease",
the word "Mortgagor" shall mean "Mortgagor and any subsequent owner or owners of
the Premises" and shall be construed as if it read "Mortgagors" whenever the
sense of any agreement or instrument secured hereunder so requires, the word
"Mortgagee" shall mean "Mortgagee or any subsequent holder or holders of this
24
Mortgage", the word "person" shall mean "an individual, corporation, partnership
or unincorporated association", and the word "Premises" shall mean any, all or
either of the parcels described in SCHEDULE A hereto, together with all Building
Equipment, condemnation awards and any other rights or property interests at any
time made subject to the lien of this Mortgage by the terms hereof. To the
extent there is any inconsistency between the terms of this Mortgage and the
terms of the Credit Agreement, except for the remedy provisions hereunder, the
terms thereof shall govern.
31. No Oral Modification. That this Mortgage cannot be changed or
terminated orally.
32. No Impairment. That Mortgagor: shall keep this Mortgage a valid
mortgage lien upon the Premises; shall not at any time create or allow to accrue
or exist any debt, lien or charge which would be prior to or on a parity with
the lien of this Mortgage upon any part of the Premises; and shall not cause or
permit the lien of this Mortgage to be diminished or impaired in any way.
33. Fees and Expenses. That Mortgagor shall pay all fees and charges
incurred in the procuring and making of the loans secured by this Mortgage,
including, without limitation, the reasonable fees and disbursements of
Mortgagee's attorneys, charges for appraisals, fees and expenses relating to
examination of title, title insurance premiums, surveys and mortgage recording
documents, transfer or other similar taxes and revenue stamps, and in default
thereof Mortgagee may pay the same and Mortgagor will repay the same with
interest thereon at the rate per annum specified in Article 4 hereof and the
same shall be added to the indebtedness secured hereby and be secured by this
Mortgage.
34. Governing Law. This Mortgage shall, in all respects, be governed,
construed, applied and enforced in accordance with the laws of the State of New
Jersey.
35. Severability. In case any one or more of the covenants, agreements,
terms or provisions contained in this Mortgage and Security Agreement or related
documents shall be invalid, illegal or unenforceable in any respect, the
validity of the remaining covenants, agreements, terms or provisions contained
herein and in the related documents shall be in no way affected, prejudiced or
disturbed thereby.
25
36. Binding Effect. The covenants contained in this Mortgage shall run with
the land and bind Mortgagor, the heirs, personal representatives, successors and
assigns of Mortgagor and all subsequent encumbrances, tenants and subtenants of
the Premises and shall enure to the benefit of Mortgagee and their respective
successors and assigns.
37. Headings. The headings of this Mortgage are for the convenience of
reference only and are not to be considered a part hereof, and shall not limit
or expand or otherwise affect any of the terms hereof.
26
BOTH MORTGAGOR AND MORTGAGEE HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION
WITH THIS INSTRUMENT, INCLUDING, BUT NOT LIMITED TO, ALL TORT ACTIONS.
IN WITNESS WHEREOF, this Mortgage has been duly executed by Mortgagor the
day and year first above written.
Mortgagor:
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
By:__________________________________
Name:
Title:
27
ACKNOWLEDGMENT
STATE OF _________ )
) ss.:
COUNTY OF _______ )
I CERTIFY that on May ___, 1998, ____________ personally came before me and
this person acknowledged under oath, to my satisfaction that:
(a) this person signed, sealed and delivered the attached document as
______________ of MEDIQ/PRN Life Support Services, Inc. the corporation named in
this document; and
(b) this document was signed and made by the corporation as its voluntary
act and deed by virtue of authority from its Board of Directors.
___________________________
Notary Public
SCHEDULE A
DESCRIPTION OF MORTGAGED PREMISES
Schedule A
Legal Description
All the real property located in the Township of Pennsauken, County of Camden,
State of New Jersey and more particularly described as follows:
Tract #1
BEGINNING at a point in the Northeasterly line of Suckle Highway (60 feet wide)
said point being distant 834.59 feet measured South 24 degrees 41 minutes 20
seconds East along the Northeasterly line of said Suckle Highway from the
Southeasterly line of National Highway (60 feet wide): and running thence
1. North 65 degrees 18 minutes 40 seconds East a distance of
550.00 feet to a point; thence
2. South 24 degrees 41 minutes 20 seconds East a distance of
395.99 feet to a point corner to lands of Pacific Coast Realty
Corporation of Delaware; thence
3. along same South 65 degrees 18 minutes 40 seconds West a
distance of 550.00 feet to a point in the Northeasterly line
of said Suckle Highway; thence
4. along same North 24 degrees 41 minutes 20 seconds West a
distance of 396.00 feet, to the point or place of BEGINNING.
Tract #2
BEGINNING at a point in the Northeasterly line of Suckle Highway (60.00 feet
wide) said point being distant 1255.59 feet measured South 24 degrees 41 minutes
20 seconds East along the Northeasterly line of said Suckle Highway from the
intersection of same with the Southwesterly line of National Highway (60.00 feet
wide), said beginning point also being corner to lands of Pacific Coast Realty
Corporation of Delaware: and running thence
1. along said lands North 65 degrees 18 minutes 40 seconds East a
distance of 330.00 feet to a point corner to same; thence
2. still along said lands South 24 degrees 41 minutes 20 seconds
East a distance of 60.00 feet to a point in same; thence
3. South 65 degrees 18 minutes 40 seconds West a distance of
330.00 feet to a point in the Northeasterly line of said
Suckle Highway; thence
4. along said highway North 24 degrees 41 minutes 20 seconds West
a distance of 60.00 feet, to the point or place of BEGINNING.
Tract #3
BEGINNING at a point in the Northeasterly line of Suckle Highway (60 feet wide)
said point being distant 1315.59 feet measured South 24 degrees 41 minutes 20
seconds East along the Northeasterly line of said Suckle Highway from the
intersection of same with the Southeasterly line of National Highway (60.00 feet
wide): and running thence
1. North 65 degrees 18 minutes 40 seconds East a distance of
330.00 feet to a point in line of lands of Pacific Coast
Realty Corporation of Delaware; thence
2. along same South 24 degrees 41 minutes 40 seconds East a
distance of 309.81 feet to a point in the Northwesterly line
of New Jersey State Highway Route No. 130 (93.00 feet wide);
thence
3. along same South 65 degrees 18 minutes 40 seconds West a
distance of 169.00 feet to a point corner to same; thence
4. North 24 degrees 41 minutes 20 seconds West measured along the
Northeasterly line of said State Highway a distance of 2.50
feet to a point of curve; thence
5. in a general Westerly direction curving to the right with a
radius of 190.00 feet an arc distance of 166.36 feet to a
point of compound curve in the curved Northeasterly line of
said Xxxxx Xx. 000; thence
6. in a general Northwesterly direction curving to the right with
a radius of 65.00 feet an arc distance of 45.15 to a point of
tangency in the Northeasterly line of said Suckle Highway;
thence
7. along same North 24 degrees 41 minutes 20 seconds West a
distance of 197.37 feet, to the point or place of BEGINNING.
Together with a 25 foot wide easement for ingress and egress lying between
Tracts #1 and #2 for so long as the Tracts south and north of the 25 foot
easement are in common ownership as set forth and reserved in Deed Book 2907,
Page 82.
Being described in accordance with a survey made by Xxxxxx X. Xxxxxx P.L.S.
dated September 20, 1994 except for the beginning point distances from the
Southeasterly line of National Highway (60 feet wide) which were not indicated
on the survey.
FOR INFORMATION ONLY: Being known as Xxx 0X, 0XX, 0XXX Xxxxx 251 as shown on the
tax assessment map of the Township of Pennsauken.
2
EXHIBIT F
SUBSIDIARY GUARANTY
Subsidiary Guaranty dated ________, 1998 made by the parties listed on the
signature pages hereof (together with the Additional Subsidiary Guarantors as
defined in Section 8(b), each a "Subsidiary Guarantor"), in favor of the Secured
Parties (as defined in the Credit Agreement referred to below).
PRELIMINARY STATEMENT. The Lender Parties, Banque Nationale de Paris, as
Administrative Agent, Initial Issuing Bank, Swing Line Bank and Arranger,
NationsBank N.A., as Syndication Agent, and Credit Suisse First Boston, as
Documentation Agent, are parties to a Credit Agreement dated as of ________,
1998 (said Agreement, as it may hereafter be amended, supplemented or otherwise
modified from time to time, being the "Credit Agreement", the terms defined
therein and not otherwise defined herein being used herein as therein defined)
with MEDIQ/PRN Life Support Services, Inc., a Delaware corporation (the
"Borrower"), and MEDIQ Incorporated, a Delaware corporation (the "Parent
Guarantor"). Each Subsidiary Guarantor may receive a portion of the proceeds of
the Advances under the Credit Agreement and will derive substantial direct and
indirect benefit from the transactions contemplated by the Credit Agreement. It
is a condition precedent to the making of Advances and the issuance of Letters
of Credit by the Lender Parties under the Credit Agreement and the entry by the
Hedge Banks into Bank Hedge Agreements with the Borrower from time to time that
each Subsidiary Guarantor shall have executed and delivered this Subsidiary
Guaranty.
NOW, THEREFORE, in consideration of the premises and in order to induce the
Lender Parties to make Advances and to issue Letters of Credit under the Credit
Agreement, each Subsidiary Guarantor, jointly and severally with each other
Subsidiary Guarantor, hereby agrees as follows:
Section 1. Subsidiary Guaranty; Limitation of Liability. (a) Each
Subsidiary Guarantor hereby absolutely, unconditionally and irrevocably
guarantees the punctual payment when due, whether at stated maturity, by
acceleration or otherwise, of all Obligations of each other Loan Party now or
hereafter existing under the Loan Documents, whether for principal, interest,
fees, expenses or otherwise (such Obligations being the "Guaranteed
Obligations"), and agrees to pay any and all reasonable expenses (including
counsel fees and expenses) incurred by the Administrative Agent or any other
Secured Party in enforcing any rights under this Subsidiary Guaranty or any
other Loan Document. Without limiting the generality of the foregoing, each
Subsidiary Guarantor's liability shall extend to all amounts that constitute
part of the Guaranteed Obligations and would be owed by any other Loan Party to
the Administrative Agent or any other Secured Party under the Loan Documents but
for the fact that they are unenforceable or not allowable due to the existence
of a bankruptcy, reorganization or similar proceeding involving such Loan Party.
(b) (i) Each Subsidiary Guarantor and by its acceptance of this
Subsidiary Guaranty, the Administrative Agent and each other Secured Party,
hereby confirms that it is the intention of all such parties that this
Subsidiary Guaranty not constitute a fraudulent transfer or conveyance for
purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar federal or state law to the
extent applicable to this Subsidiary Guaranty. To effectuate the foregoing
intention, the Administrative Agent, the other Secured Parties and the
Subsidiary Guarantors hereby irrevocably agree that the Obligations of each
Subsidiary Guarantor under this Subsidiary Guaranty shall not exceed the
greater of (A) the net benefit realized by such Subsidiary Guarantor from
the proceeds of the Advances made from time to time by the Borrower to such
Subsidiary Guarantor or any subsidiary of such Subsidiary Guarantor and (B)
the maximum amount that will, after giving effect to such maximum amount
and all other contingent and fixed liabilities of such Subsidiary Guarantor
that are relevant under such laws, and after giving effect to any
collections from, rights to receive contribution from or payments made by
or on behalf of any other Subsidiary Guarantor in respect of the
Obligations of such other Subsidiary Guarantor under this Subsidiary
Guaranty, result in the Obligations of such Subsidiary Guarantor under this
Subsidiary Guaranty not constituting a fraudulent transfer or conveyance.
For purposes hereof, "Bankruptcy Law" means Title 11, U.S. Code, or any
similar Federal or state law for the relief of debtors.
(ii) Each Subsidiary Guarantor agrees that in the event any payment
shall be required to be made to the Secured Parties under this Subsidiary
Guaranty or any other guaranty, such Subsidiary Guarantor will contribute,
to the maximum extent permitted by law, such amounts to each other
Subsidiary Guarantor and each other guarantor so as to maximize the
aggregate amount paid to the Secured Parties under the Loan Documents.
Section 2. Subsidiary Guaranty Absolute. Each Subsidiary Guarantor
guarantees that the Guaranteed Obligations will be paid strictly in accordance
with the terms of the Loan Documents, regardless of any law, regulation or order
now or hereafter in effect in any jurisdiction affecting any of such terms or
the rights of the Administrative Agent or any other Secured Party with respect
thereto but subject, however, to the provisions of Section 1 hereof. The
Obligations of each Subsidiary Guarantor under this Subsidiary Guaranty are
independent of the Guaranteed Obligations or any other Obligations of any other
Loan Party under the Loan Documents, and a separate action or actions may be
brought and prosecuted against such Subsidiary Guarantor to enforce this
Subsidiary Guaranty, irrespective of whether any action is brought against the
Borrower or any other Loan Party or whether the Borrower or any other Loan Party
is joined in any such action or actions. The liability of each Subsidiary
Guarantor under this Subsidiary Guaranty shall be irrevocable, absolute and
2
unconditional irrespective of, and each Subsidiary Guarantor hereby irrevocably
waives any defenses it may now or hereafter have in any way relating to, any or
all of the following:
(a) any lack of validity or enforceability of any Loan Document or any
agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed Obligations or any other
Obligations of any other Loan Party under the Loan Documents, or any other
amendment or waiver of or any consent to departure from any Loan Document,
including, without limitation, any increase in the Guaranteed Obligations
resulting from the extension of additional credit to any Loan Party or any
of its Subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any Collateral,
or any taking, release or amendment or waiver of or consent to departure
from any other guaranty, for all or any of the Guaranteed Obligations;
(d) any manner of application of Collateral, or proceeds thereof, to
all or any of the Guaranteed Obligations, or any manner of sale or other
disposition of any Collateral for all or any of the Guaranteed Obligations
or any other Obligations of any other Loan Party under the Loan Documents
or any other assets of any Loan Party or any of its Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of any Loan Party or any of its Subsidiaries;
(f) any failure of any Secured Party to disclose to any Loan Party or
such Subsidiary Guarantor any information relating to the financial
condition, operations, properties or prospects of any other Loan Party now
or in the future known to any Secured Party (such Subsidiary Guarantor
waiving any duty on the part of the Secured Parties to disclose such
information); or
(g) any other circumstance (including, without limitation, any statute
of limitations) or any existence of or reliance on any representation by
the Administrative Agent or any other Secured Party that might otherwise
constitute a defense available to, or a discharge of, the Borrower, any
Subsidiary Guarantor or any other guarantor or surety.
This Subsidiary Guaranty shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Guaranteed Obligations is
rescinded or must otherwise be returned by any Secured Party or any other Person
upon the insolvency, bankruptcy or
3
reorganization of the Borrower or any other Loan Party or otherwise, all as
though such payment had not been made.
Section 3. Waiver. (a) Each Subsidiary Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Guaranteed Obligations and this Subsidiary Guaranty and any requirement that the
Administrative Agent, or any other Secured Party protect, secure, perfect or
insure any Lien or any property subject thereto or exhaust any right or take any
action against any Loan Party or any other Person or any Collateral. Each
Subsidiary Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by the Loan Documents and
that the waiver set forth in this Section 3 is knowingly made in contemplation
of such benefits.
(b) Each Subsidiary Guarantor hereby waives any right to revoke this
Subsidiary Guaranty, and acknowledges that this Subsidiary Guaranty is
continuing in nature and applies to all Guaranteed Obligations, whether existing
now or in the future.
Section 4. Subrogation. No Subsidiary Guarantor will exercise any rights
that it may now or hereafter acquire against any Loan Party or any other insider
guarantor that arise from the existence, payment, performance or enforcement of
such Subsidiary Guarantor's Obligations under this Subsidiary Guaranty or any
other Loan Document, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of the Administrative Agent or any other
Secured Party against any Loan Party or any other insider guarantor or any
Collateral, whether or not such claim, remedy or right arises in equity or under
contract, statute or common law, including, without limitation, the right to
take or receive from any Loan Party or any other insider guarantor, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim, remedy or right, unless and until
all of the Obligations and all other amounts payable under this Subsidiary
Guaranty shall have been paid in full in cash and the Commitments shall have
expired or terminated. If any amount shall be paid to any Subsidiary Guarantor
in violation of the preceding sentence at any time prior to the later of the
payment in full in cash of the Guaranteed Obligations and all other amounts
payable under this Subsidiary Guaranty and the Termination Date, such amount
shall be held in trust for the benefit of the Administrative Agent and the other
Secured Parties and shall forthwith be paid to the Administrative Agent to be
credited and applied to the Guaranteed Obligations and all other amounts payable
under this Subsidiary Guaranty, whether matured or unmatured, in accordance with
the terms of the Loan Documents, or to be held as Collateral for any Guaranteed
Obligations or other amounts payable under this Subsidiary Guaranty thereafter
arising. If (i) any Subsidiary Guarantor shall make payment to the
Administrative Agent or any other Secured Party of all or any part of the
Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other
amounts payable under this Subsidiary Guaranty shall be paid in full in cash and
(iii) the Termination Date shall
4
have occurred, the Administrative Agent and the other Secured Parties will, at
such Subsidiary Guarantor's request and expense, execute and deliver to such
Subsidiary Guarantor appropriate documents, without recourse and without
representation or warranty, necessary to evidence the transfer by subrogation to
such Subsidiary Guarantor of an interest in the Guaranteed Obligations resulting
from such payment by such Subsidiary Guarantor.
Section 5. Payments Free and Clear of Taxes, Etc. (a) Any and all payments
made by each Subsidiary Guarantor hereunder shall be made, in accordance with
Section 2.11 of the Credit Agreement, free and clear of and without deduction
for any and all present or future Taxes. If any Subsidiary Guarantor shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder to any Secured Party or the Administrative Agent, (i) the sum payable
by such Subsidiary Guarantor shall be increased as may be necessary so that
after such Subsidiary Guarantor and the Administrative Agent have made all
required deductions (including deductions applicable to additional sums payable
under this Section 5) such Secured Party or the Administrative Agent (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions been made, (ii) such Subsidiary Guarantor shall make all such
deductions and (iii) such Subsidiary Guarantor shall pay the full amount
deducted to the relevant taxation authority or other governmental authority in
accordance with applicable law.
(b) In addition, each Subsidiary Guarantor agrees to pay any present or
future Other Taxes.
(c) Each Subsidiary Guarantor shall indemnify the Administrative Agent and
each other Secured Party for and hold it harmless against the full amount of
Taxes and Other Taxes, (including, without limitation, any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section 5) paid by the
Administrative Agent or such other Secured Party (as the case may be) and any
liability (including penalties, additions to tax, interest and expenses) arising
therefrom or with respect thereto. This indemnification shall be made within 30
days from the date the Administrative Agent or such other Secured Party (as the
case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, such Subsidiary
Guarantor shall furnish to the Administrative Agent, at its address referred to
in Section 9.02 of the Credit Agreement, the original or a certified copy of a
receipt evidencing such payment. If no Taxes are payable in respect of any
payment hereunder by any Subsidiary Guarantor through an account or branch
outside the United States or by or on behalf of such Subsidiary Guarantor by a
payor that is not a United States person, such Subsidiary Guarantor shall
furnish, or shall cause such payor to furnish, to the Administrative Agent, a
certificate from each appropriate taxing authority or authorities, or an opinion
of counsel acceptable to the Administrative Agent, in either case stating that
such payment is exempt from or not subject to
5
Taxes. For purposes of this subsection (d) and subsection (e), the terms "United
States" and "United States person" shall have the meanings specified in Section
7701 of the Internal Revenue Code.
(e) Without prejudice to the survival of any other agreement of any
Subsidiary Guarantor hereunder, the agreements and obligations of each
Subsidiary Guarantor contained in this Section 5 shall survive the payment in
full of the Guaranteed Obligations and all other amounts payable under this
Subsidiary Guaranty.
Section 6. Representations and Warranties. Each Subsidiary Guarantor hereby
represents and warrants as follows:
(a) Such Subsidiary Guarantor (i) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation, (ii) is duly qualified and in good standing as a foreign
corporation in each other jurisdiction in which it owns or leases property
or in which the conduct of its business requires it to so qualify or be
licensed except where the failure to so qualify or be licensed is not
reasonably likely to have a Material Adverse Effect and (iii) has all
requisite corporate power and authority (including, without limitation, all
governmental licenses, permits and other approvals) to own or lease and
operate its properties and to carry on its business as now conducted and as
proposed to be conducted except where the failure to have such corporate
power and authority is not reasonably likely to have a Material Adverse
Effect. All of the outstanding Capital Stock of such Subsidiary Guarantor
has been validly issued, is fully paid and non-assessable and each
Subsidiary Guarantor is owned by a Loan Party, free and clear of all Liens,
except those created under the Loan Documents.
(b) The execution, delivery and performance by such Subsidiary
Guarantor of this Subsidiary Guaranty are within such Subsidiary
Guarantor's corporate powers, have been duly authorized by all necessary
corporate action, and do not (i) contravene such Subsidiary Guarantor's
charter or bylaws, (ii) violate any law, rule, regulation (including,
without limitation, Regulation X of the Board of Governors of the Federal
Reserve System), order, writ, judgment, injunction, decree, determination
or award, (iii) conflict with or result in the breach of, or constitute a
default under, any contract, loan agreement, indenture, mortgage, deed of
trust, lease or other instrument binding on or affecting such Subsidiary
Guarantor, any of its Subsidiaries or any of its or their properties or
(iv) except for the Liens created under the Loan Documents, result in or
require the creation or imposition of any Lien upon or with respect to any
of the properties of such Subsidiary Guarantor or any of its Subsidiaries.
Neither such Subsidiary Guarantor nor any of its Subsidiaries is in
violation of any such law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award or in
6
breach of any such contract, loan agreement, indenture, mortgage, deed of
trust, lease or other instrument, the violation or breach of which is
reasonably likely to have a Material Adverse Effect.
(c) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body or any other
third party is required for (i) the due execution, delivery, recordation,
filing or performance by such Subsidiary Guarantor of this Subsidiary
Guaranty or any other Loan Document to which such Subsidiary Guarantor is a
party and (ii) the exercise by the Administrative Agent or any Secured
Party of its rights under this Subsidiary Guaranty or any other Loan
Document to which such Subsidiary Guarantor is a party.
(d) There is no action, suit, investigation, litigation or proceeding
affecting such Subsidiary Guarantor, including any Environmental Action,
pending or threatened before any court, governmental agency or arbitrator
that (i) could have a Material Adverse Effect or (ii) purports to affect
the legality, validity or enforceability of this Subsidiary Guaranty or any
other Loan Document to which such Subsidiary Guarantor is a party.
(e) This Subsidiary Guaranty and each other Loan Document to which it
is a party when executed and delivered will have been duly executed and
delivered by such Subsidiary Guarantor. Each of this Subsidiary Guaranty
and each other Loan Document to which it is a party is the legal, valid and
binding obligation of such Subsidiary Guarantor, enforceable against such
Subsidiary Guarantor in accordance with its terms.
(f) There are no conditions precedent to the effectiveness of this
Subsidiary Guaranty that have not been satisfied or waived.
(g) Such Subsidiary Guarantor has, independently and without reliance
upon the Administrative Agent or any Lender Party and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Subsidiary Guaranty, and such
Subsidiary Guarantor has established adequate means of obtaining from any
other Loan Parties on a continuing basis information pertaining to, and is
now and on a continuing basis will be completely familiar with, the
financial condition, operations, properties and prospects of such other
Loan Parties.
Section 7. Covenants. Each Subsidiary Guarantor covenants and agrees that,
so long as any part of the Guaranteed Obligations shall remain unpaid, any
Letter of Credit shall be outstanding or any Lender Party shall have any
Commitment, such Subsidiary Guarantor will at all times perform or observe, and
will cause each of its Subsidiaries to perform or
7
observe, all of the terms, covenants and agreements that the Loan Documents
state that the Borrower is to cause such Subsidiary Guarantor or such
Subsidiaries to perform or observe.
Section 8. Amendments, Etc. (a) No amendment or waiver of any provision of
this Subsidiary Guaranty and no consent to any departure by any Subsidiary
Guarantor therefrom shall in any event be effective unless the same shall be in
writing and signed by the Administrative Agent and the Required Lenders, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given; provided, however, that no amendment,
waiver or consent shall, unless in writing and signed by all of the Secured
Parties (other than any Lender Party that is, at such time, aDefaulting Lender),
(i) reduce or limit the liability of such Subsidiary Guarantor hereunder or
release any Subsidiary Guarantor hereunder, (ii) postpone any date fixed for
payment hereunder or (iii) amend this Section 8.
(b) Upon the execution and delivery by any Person of a guaranty supplement
in substantially the form of Exhibit A hereto (each a "Guaranty Supplement"),
such Person shall be referred to as an "Additional Subsidiary Guarantor" and
shall be and become a Subsidiary Guarantor, and each reference in this Agreement
to "Subsidiary Guarantor" shall also mean and be a reference to such Additional
Subsidiary Guarantor.
(c) (i) With the consent of the Required Lenders or (ii) upon the merger,
consolidation, sale or liquidation of any Subsidiary Guarantor in accordance
with the terms of the Credit Agreement, the Administrative Agent will, at such
Subsidiary Guarantor's expense, execute and deliver to such Subsidiary Guarantor
such documents as such Subsidiary Guarantor shall reasonably request to evidence
the release of such Subsidiary Guarantor from its obligations under this
Guaranty; provided, however, as to clause (ii) above, that (x) at the time of
such request and such release no Default shall have occurred and be continuing,
(y) such Subsidiary Guarantor shall have delivered to the Administrative Agent,
at least five Business Days prior to the date of the proposed release (or such
shorter period of time as may be acceptable to the Administrative Agent), a
written request for release identifying such Subsidiary Guarantor and, the terms
of the sale, liquidation, merger or consolidation in reasonable detail,
including, in the case of a sale, the price thereof and any expenses in
connection therewith, together, in all cases, with a form of release for
execution by the Administrative Agent and a certification by the Parent
Guarantor to the effect that the sale, liquidation, merger or consolidation, as
the case may be, is in compliance with the terms of the Credit Agreement and as
to such other matters as the Administrative Agent may reasonably request and (z)
in the case of a sale, any proceeds of any such sale required to be applied to
the prepayment of Advances or reduction of Commitments in accordance with the
terms of the Credit Agreement shall be so applied; provided further as to any
merger or consolidation in which the surviving corporation thereof is a
Subsidiary of the Parent Guarantor, such surviving
8
corporation shall have assumed in a form satisfactory to the Administrative
Agent the Guaranteed Obligations of such Subsidiary Guarantor.
Section 9. Notices, Etc. All notices and other communications provided for
hereunder shall be in writing (including telegraphic, telecopy or telex
communication) and mailed, telegraphed, telecopied, telexed or delivered to it,
if to any Subsidiary Guarantor, to the address set forth below such Subsidiary
Guarantor's signature on the signature pages hereof, or, in the case of any
Additional Subsidiary Guarantor, on the applicable Guaranty Supplement, if to
any Agent or any Lender Party, at its address specified in the Credit Agreement,
or at its address specified in the Assignment and Acceptance pursuant to which
it became a Lender Party, or as to any party at such other address as shall be
designated by such party in a written notice to each other party. All such
notices and other communications shall, when mailed, telegraphed, telecopied,
telexed or sent by courier, be effective when deposited in the mails, delivered
to the telegraph company, transmitted by telecopier, confirmed by telex
answerback or delivered to the overnight courier, respectively. Delivery by
telecopier of an executed counterpart of any amendment or waiver of any
provision of this Subsidiary Guaranty shall be effective as delivery of a
manually executed counterpart thereof.
Section 10. No Waiver; Remedies. No failure on the part of the
Administrative Agent or any other Secured Party to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Section 11. Right of Set-off. Upon (a) the occurrence and during the
continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 6.01 of the Credit Agreement to
authorize the Administrative Agent to declare the Notes, if any, due and payable
pursuant to the provisions of said Section 6.01, each Lender Party and each of
its respective Affiliates is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and otherwise apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by such Lender Party or
such Affiliate to or for the credit or the account of any Subsidiary Guarantor
against any and all of the Obligations of such Subsidiary Guarantor now or
hereafter existing under this Subsidiary Guaranty, irrespective of whether such
Lender Party shall have made any demand under this Subsidiary Guaranty and
although such Obligations may be unmatured. Each Lender Party agrees promptly to
notify such Subsidiary Guarantor after any such set-off and application;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Lender Party and
its respective Affiliates under this Section are in addition to other rights and
remedies (including, without limitation, other rights of set-off) that such
Lender Party and its respective Affiliates may have.
9
Section 12. Indemnification. Without limitation on any other Obligations of
any Subsidiary Guarantor or remedies of the Secured Parties under this
Subsidiary Guaranty, each Subsidiary Guarantor shall, to the fullest extent
permitted by law, indemnify, defend and save and hold harmless each Secured
Party from and against, and shall pay on demand, any and all losses,
liabilities, damages, costs, expenses and charges (including the fees and
disbursements of such Secured Party's legal counsel) suffered or incurred by
such Secured Party as a result of any failure of any Guaranteed Obligations to
be the legal, valid and binding obligations of any Loan Party enforceable
against such Loan Party in accordance with their terms.
Section 13. Continuing Subsidiary Guaranty; Assignments under the Credit
Agreement. This Subsidiary Guaranty is a continuing guaranty and shall (a)
remain in full force and effect until the later of the payment in full in cash
of the Guaranteed Obligations and all other amounts payable under this
Subsidiary Guaranty and the Termination Date, (b) be binding upon each
Subsidiary Guarantor, its successors and assigns and (c) inure to the benefit of
and be enforceable by the Administrative Agent and the other Secured Parties and
their successors, transferees and assigns. Without limiting the generality of
the foregoing clause (c), any Secured Party may assign or otherwise transfer all
or any portion of its rights and obligations under the Credit Agreement
(including, without limitation, all or any portion of its Commitments, the
Advances owing to it and the Note or Notes, if any, held by it) to any other
Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Secured Party herein or otherwise,
in each case as and to the extent provided in Section 9.07 of the Credit
Agreement. No Subsidiary Guarantor shall have the right to assign its
obligations hereunder or any interest herein without the prior written consent
of the Secured Parties.
Section 14. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc. (a)
This Subsidiary Guaranty shall be governed by, and construed in accordance with,
the laws of the State of New York.
(b) Each Subsidiary Guarantor hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of any
New York State court or federal court of the United States of America sitting in
New York City, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Subsidiary Guaranty or any of the
other Loan Documents to which it is or is to be a party, or for recognition or
enforcement of any judgment, and each Subsidiary Guarantor hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in any such New York State court or, to
the extent permitted by law, in such federal court. Each Subsidiary Guarantor
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
10
Subsidiary Guaranty shall affect any right that any party may otherwise have to
bring any action or proceeding relating to this Subsidiary Guaranty or any of
the other Loan Documents to which it is or is to be a party in the courts of any
jurisdiction.
(c) Each Subsidiary Guarantor 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 Subsidiary Guaranty or any of the
other Loan Documents to which it is or is to be a party in any New York State or
federal court. Each Subsidiary Guarantor 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 Subsidiary Guarantor hereby irrevocably waives all right to trial
by jury in any action, proceeding or counterclaim (whether based on contract,
tort or otherwise) arising out of or relating to any of the Loan Documents, the
transactions contemplated thereby or the actions of the Administrative Agent or
any other Secured Party in the negotiation, administration, performance or
enforcement thereof.
IN WITNESS WHEREOF, each Subsidiary Guarantor has caused this Subsidiary
Guaranty to be duly executed and delivered by its officer thereunto duly
authorized as of the date first above written.
MEDIQ INVESTMENT SERVICES, INC.
By __________________________
Name:
Title:
MEDIQ MANAGEMENT SERVICES, INC.
By __________________________
Name:
Title:
11
MEDIQ SURGICAL EQUIPMENT
SERVICES, INC.
By __________________________
Name:
Title:
VALUE-MED PRODUCTS, INC.
By __________________________
Name:
Title:
MEDIQ MOBILE X-RAY SERVICES, INC.
By __________________________
Name:
Title:
HEALTH EXAMINETICS, INC.
By __________________________
Name:
Title:
THERA-KINETICS ACQUISITION
CORPORATION
By __________________________
Name:
Title:
12
MDTC HADDON, INC.
By __________________________
Name:
Title:
MEDIQ DIAGNOSTIC CENTERS, INC.
By __________________________
Name:
Title:
MEDIQ DIAGNOSTICS CENTERS-I INC.
By __________________________
Name:
Title:
MEDIQ IMAGING SERVICES, INC.
By ___________________________
Name:
Title:
AMERICAN CARDIOVASCULAR
IMAGING LABS, INC.
By __________________________
Name:
Title:
13
ALPHA HEALTH CONSULTANTS, INC.
By __________________________
Name:
Title:
P. I. CORPORATION
By __________________________
Name:
Title:
MEDIQ SERVICES, INC.
By __________________________
Name:
Title:
MEDIQ HOME THERAPY SERVICES OF
ARIZONA, INC.
By __________________________
Name:
Title:
14
EXHIBIT A
to
Subsidiary Guaranty
FORM OF SUBSIDIARY GUARANTY SUPPLEMENT
_________, 19__
Banque Nationale de Paris,
as Agent
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Structured Finance Group
Subsidiary Guaranty dated ________ __, 199_
made by __________ in favor of
the Secured Parties referred to therein
Ladies and Gentlemen:
Reference is made to the above-captioned Subsidiary Guaranty (as amended,
supplemented or otherwise modified, the "Subsidiary Guaranty"). Unless otherwise
defined herein, terms defined in the Subsidiary Guaranty and in the Credit
Agreement referred to therein are used herein as therein defined.
The undersigned affirms that it may receive a portion of the proceeds of
the Advances under the Credit Agreement and will derive substantial direct and
indirect benefit from the transactions contemplated by the Credit Agreement, in
consideration for the execution and delivery of this Subsidiary Guaranty
Supplement.
15
The undersigned hereby agrees, as of the date first above written, to
become a Subsidiary Guarantor under the Subsidiary Guaranty as if it were an
original party thereto and agrees that each reference in the Subsidiary Guaranty
to a "Subsidiary Guarantor" shall also mean and be a reference to the
undersigned.
The undersigned hereby absolutely, unconditionally and irrevocably
guarantees the punctual payment when due, whether at stated maturity, by
acceleration or otherwise, of all Guaranteed Obligations of each other Loan
Party now or hereafter existing under the Loan Documents, whether for principal,
interest, fees, expenses or otherwise, and agrees to pay any and all reasonable
expenses (including counsel fees and other expenses) incurred by the Agent or
any other Secured Party in enforcing any rights under the Subsidiary Guaranty or
any other Loan Document.
The undersigned hereby makes each representation and warranty set forth in
Section 6 of the Subsidiary Guaranty to the same extent as each other Subsidiary
Guarantor and hereby agrees to be bound as a Subsidiary Guarantor by all of the
terms and provisions of the Subsidiary Guaranty to the same extent as all other
Subsidiary Guarantors.
This letter shall be governed by and construed in accordance with the laws
of the State of New York.
Very truly yours,
[NAME OF ADDITIONAL
SUBSIDIARY GUARANTOR]
By
Name:
Title:
Address:
16
EXHIBIT G TO THE
CREDIT AGREEMENT
BORROWING BASE CERTIFICATE
To: Banque Nationale de Paris
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xx. Xxxx Xxxxxxxxx
Telecopy: (000) 000-0000
MEDIQ/PRN Life Support Services, Inc.
Date: ___________________
(1) Inventory Net Availability
[Total from Schedule I] $__________
(2) Accounts Receivable Net Availability
[Total from Schedule II] $__________
(3) Total Borrowing Base Availability
[1 plus 2] $__________
(4) Revolving Credit Facility $__________
(5) The lesser of (3) and (4) $__________
(6) Revolving Credit Advances Outstanding $__________
(7) Aggregate Principal Amount of
Letter of Credit Advances Outstanding $__________
(8) Total Available Amount of all
Letters of Credit Outstanding
a. Standby Letters of Credit $__________
b. Trade Letters of Credit $__________
c. Total Letters of Credit [(a) + (b)] $__________
(9) Swing Line Advances Outstanding $__________
(10) Total Revolving Credit Availability
[(5) less (6) less (7) less (8) less (9)] $__________
This report is submitted pursuant to the Credit Agreement dated as of
________, 1998 among MEDIQ/PRN Life Support Services, Inc., a Delaware
corporation (the "Borrower"), MEDIQ Incorporated, a Delaware corporation (the
"Parent Guarantor"), the lender parties (the "Lender Parties") that are, or may
from time to time become, party thereto, Banque Nationale de Paris, as
administrative agent (the "Administrative Agent"), Swing Line Bank, Initial
Issuing Bank, and Arranger, NationsBank, N.A., as Syndication Agent, and Credit
Suisse First Boston, as Documentation Agent. All of the current accounts
referred to in this report (the "Accounts") have been assigned to the
Administrative Agent and the Administrative Agent has been granted a security
interest in the Accounts pursuant to the Loan Documents. Unless otherwise
indicated, capitalized terms used herein have the meanings ascribed to them in
the Credit Agreement.
The undersigned hereby certifies that (i) the amounts and the
representations set forth above are true and correct in all material respects,
(ii) the calculations determined herein are determined in accordance with the
Credit Agreement and (iii) except as noted, none of the Accounts referred to in
this report fall within the ineligible or prohibited categories as noted in the
Credit Agreement. We further confirm the above mentioned assignment and grant of
security interest in the Accounts to the Administrative Agent.
MEDIQ/PRN LIFE SUPPORT
SERVICES, INC.
Date: By:
------------------ -------------------------------
Name:
Title:
2
SCHEDULE I
MEDIQ/PRN Life Support Services, Inc.
Inventory Net Availability
(a) Gross Inventory __________
Less: Ineligible Inventory
(b) Inventory consisting of "perishable agricultural
commodities" within the meaning of the Perishable
Agricultural Commodities Act of 1930, as amended, and the
regulations thereunder, or on which a Lien has arisen or
may arise in favor of agricultural producers under
comparable state or local laws __________
(c) Inventory located on leaseholds as to which the lessor
has not entered into a consent and agreement providing
the Administrative Agent with the right to receive notice
of default, the right to repossess such Inventory at any
reasonable time pursuant to such consent and agreement
and such other rights as may be reasonably acceptable to
the Administrative Agent __________
(d) Inventory that is obsolete, unusable or otherwise
unavailable for sale __________
(e) Inventory with respect to which the representations and
warranties set forth in Section 8 of the Security
Agreement applicable to Inventory are not true and
correct __________
(f) Inventory consisting of promotional, marketing, packaging
or shipping materials and supplies __________
(g) Inventory that fails to meet all standards imposed by any
governmental agency, or department or division thereof,
having regulatory authority over such Inventory or its
use or sale __________
3
(h) Inventory that is subject to any licensing, patent,
royalty, trademark, trade name or copyright agreement
with any third party from whom any Loan Party or any of
their Subsidiaries has received written notice of a
dispute in respect of any such agreement __________
(i) Inventory located outside the United States __________
(j) Inventory that is not in the possession of or under the
sole control of the Borrower or any of its wholly owned
U.S. Subsidiaries or not in a leased facility in respect
of which the owner has entered into a consent and
agreement as may be reasonably acceptable to the
Administrative Agent __________
(k) Inventory consisting of work in progress __________
(l) Inventory in respect of which the Security Agreement,
after giving effect to the related filings of financing
statements that have then been made, if any, does not or
has ceased to create a valid and perfected first priority
lien or security interest in favor of the Secured Parties
securing the Secured Obligations and as to which no other
Liens exist, other than Permitted Liens __________
(m) Inventory not recorded under a perpetual inventory system
reasonably acceptable to the Administrative Agent __________
(n) Total Ineligible Inventory
[sum of (b) through (m)] __________
(o) Total Eligible Inventory
[(a) less (n)] __________
Net Inventory Availability at 50% of
Eligible Inventory [(o) multiplied by 50%] __________
__________
4
SCHEDULE II
MEDIQ/PRN Life Support Services, Inc.
Accounts Receivable Net Availability
(a) Gross Receivables _________
Less: Ineligible Receivables
(b) Receivables that do not arise out of sales of goods or
rendering of services in the ordinary course of the
business of the Borrower or any of its wholly owned
Subsidiaries _________
(c) Receivables on terms other than those normal or customary
in the business of the Borrower or any of its wholly
owned U.S. Subsidiaries __________
(d) Receivables owing from any Person that is an Affiliate of
the Borrower or any of its wholly owned U.S. Subsidiaries __________
(e) Receivables more than 120 days past the original invoice
date __________
(f) Receivables owing from any Person from which an aggregate
amount of more than 50% of the Receivables owing are more
than 120 days past the original invoice date __________
(g) Receivables owing from any Person that has asserted any
claim, demand or liability against any Loan Party,
whether by action, suit, counterclaim or other judicial
or arbitral proceeding __________
(h) Receivables owing from any Person that shall take or be
the subject of any action or proceeding of a type
described in Section 6.01(f) __________
(i) Receivables (i) owing from any Person that is also a
supplier to or creditor of any Loan Party to the extent
of the amount of any right of setoff, unless such Person
has waived all rights of setoff in a manner acceptable to
the Administrative Agent or (ii) representing any
manufacturer's or supplier's credits, discounts,
incentive plans or similar arrangements entitling any
Loan Party to discounts on future purchases therefrom __________
(j) Receivables arising out of sales to account debtors
outside the United States or Canada, unless backed by a
letter of credit issued by a bank organized under the
laws of the United States or Canada, or any State
thereof, and having a combined capital and surplus of at
least $500,000,000 __________
(k) Receivables arising out of sales on a xxxx-and-hold,
guaranteed sale, sale-or-return, sale on approval or
consignment basis or subject to any right of return,
set-off or charge-back __________
(l) Receivables owing from an account debtor that is an
agency, department or instrumentality of the United
States or any State thereof __________
(m) Receivables in respect of which the Security Agreement,
after giving effect to the related filings of financing
statements that have then been made, if any, does not or
has ceased to create a valid and perfected first priority
lien or security interest in favor of the Secured Parties
securing the Secured Obligations and as to which no other
Liens exist, other than Permitted Liens __________
(n) Total Ineligible Receivables
[(sum of (b) through (m)] __________
(o) Eligible Receivables
[(a) less (n)] __________
Net Availability at 80% of
Eligible Receivables [(o) multiplied by 80%] __________
__________
2
EXHIBIT H-1
LAW OFFICES OF
DECHERT PRICE & XXXXXX
[DECHERT PRICE & XXXXXX LETTERHEAD]
May 29, 1998
To the Lender Parties to the Credit
Agreement referred to below and to
Banque Nationale de Paris as
Administrative Agent, Swing Line Bank,
Initial Issuing Bank and Arranger, and
NationsBank, N.A., as Syndication Agent
and Credit Suisse First Boston, as
Documentation Agent
Re: MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
-------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to the MEDIQ/PRN Life Support Services,
Inc., a Delaware Corporation (the "Borrower") and the other Loan Parties in
connection with the preparation, execution and delivery of the Credit Agreement
dated as of May 29, 1998 (the "Credit Agreement") among the Borrower, the Lender
Parties party thereto, Banque Nationale de Paris, as Administrative Agent, Swing
Line Bank, Initial Issuing Bank and Arranger, NationsBank, N.A., as Syndication
Agent and Credit Suisse First Boston, as Documentation Agent.
This opinion is furnished to you pursuant to Section 3.01(k) (xviii)
of the Credit Agreement. Terms defined in the Credit Agreement and in the
Security Agreement referred to therein are used herein as therein defined.
The documents set forth on Schedule I are referred to herein as the
"Financing Statement."
Lender Parties,
Banque Nationale de Paris,
NationsBank, N.A. and Credit
Suisse First Boston, as Agents
May 29, 1998
Page 2
In connection with our representation as described above, we have
reviewed executed copies of the following documents (collectively, the "Loan
Documents"), each dated on or about the date hereof.
1. the Credit Agreement;
2. the Notes;
3. the Subsidiary Guaranty;
4. the Security Agreement; and
5. the Mortgage.
We have also examined the originals, or copies certified to our
satisfaction, of the documents listed in a certificate of an officer of the
Borrower, dated the date hereof (the "Certificate"), certifying that the
documents listed therein are all of the indentures, loan or credit agreements,
guarantees, mortgages, security agreements, bonds and notes and other agreements
or instruments, and all of the orders, writs, judgments, injunctions, decrees,
determinations and awards, that affect or purport to affect the obligations of
such Loan Party or any of its Subsidiaries under any Loan Document or the right
of such Loan Party or any of its Subsidiaries to borrow money, to guarantee the
obligations of other Persons, to create Liens on its property or to consummate
the transactions contemplated by the Loan Documents.
In rendering this opinion we have examined in addition to the Loan
Documents, such other documents and records pertaining to our clients as in our
judgment are necessary or appropriate to enable us to render the opinions
expressed below. As to matters of fact material to our opinions, we have relied
upon representations of the Loan Parties in the Loan Documents, and on
certificates of officers of the Loan Parties, and of public officials, and we
have made no independent inquiry into the accuracy of such representations.
For purposes of this opinion, we have assumed that:
(a) The execution and delivery of the Loan Documents and other documents
reviewed by us, and the entry into and performance of the transactions
contemplated by the Loan Documents, by all parties (other than the Loan Parties)
have been duly authorized by all necessary actions and constitute the valid and
binding obligations of all parties other than the Loan Parties.
(b) All natural persons who are signatories to the Loan Documents were
legally competent at the time of execution; all signatures on the Loan Documents
and other documents
Lender Parties,
Banque Nationale de Paris,
NationsBank, N.A. and Credit
Suisse First Boston, as Agents
May 29, 1998
Page 3
reviewed by us of parties other than the Loan Parties are genuine; the copies of
all documents submitted to us are accurate and complete and conform to
originals.
Our opinions set forth herein are based on our consideration of only
those statutes, rules, regulations and judicial decisions which, in our
experience, are normally applicable to or normally relevant in connection with
transactions of the type contemplated in the Loan Documents. Whenever our
opinion with respect to the existence or absence of facts is indicated to be
based on our knowledge or awareness, we are referring to the conscious awareness
of the Dechert Price & Xxxxxx attorneys who have rendered legal services to the
Loan Parties in connection with the transactions contemplated by the Loan
Documents, which knowledge has been obtained by such attorneys in their capacity
as such. Except as expressly set forth herein, we have not undertaken any
independent investigation to determine the existence or absence of such facts
and no inference as to our knowledge concerning such facts should be drawn from
the fact that such representation has been undertaken by us.
For purposes of paragraph 6 below, we have assumed (1) that the Loan
Parties have rights in the Collateral as to which our opinion is expressed,
within the meaning of the New Jersey Uniform Commercial Code (the "Code"), (2)
that the proceeds of the Advances have been disbursed to or as directed by the
Borrower, and (3) that all Collateral (as defined in the Security Agreement)
consisting of fixtures (as defined in the Code) is located in Camden County, New
Jersey. For purposes of paragraphs 6, 7 and 8 below, we have assumed that the
descriptions of the real estate in the Mortgage and in the Financing Statements
to be filed as fixture filings is an accurate and complete description of all
real estate on which any fixtures included in the Collateral are located.
Based upon the foregoing and upon such investigation as we have deemed
necessary, and subject to the qualifications set forth in this letter, we are of
the following opinion:
1. Each Loan Party (a) is a corporation validly existing and in good
standing under the laws of the State of its organization, and (b) has all
necessary corporate power to own or lease and operate its properties and to
carry on its business as, to our knowledge, it is now conducted and as proposed
to be conducted.
2. The execution, delivery and performance by each Loan Party of the
Credit Agreement, the Notes, and each other Loan Document to which it is a
party, and the other transactions contemplated by the Credit Agreement are
within such Loan Party's corporate powers, have been duly authorized by all
necessary corporate action, and do not as to each Loan Party (a) contravene such
Loan Party's charter or bylaws, (b) violate any law (including, without
limitation, the Securities Exchange Act of 1934 and the Racketeer Influenced and
Corrupt Organizations Chapter of the Organized Crime Control Act of 1970), rule,
regulation (including,
Lender Parties,
Banque Nationale de Paris,
NationsBank, N.A. and Credit
Suisse First Boston, as Agents
May 29, 1998
Page 4
without limitation, Regulation X of the Board of Governors of the Federal
Reserve System, subject to the assumptions contained in paragraph 12 below) or
any order, writ, judgment, injunction, decree, determination or award listed in
the Certificate, (c) conflict with or result in the breach of, or constitute a
default under, any agreement or instrument listed in the Certificate or (d)
except for the Liens created by the Collateral Documents, result in or require
the creation or imposition of any Lien upon or with respect to any of the
properties of any Loan Party or any of its Subsidiaries under any agreement or
instrument listed in the Certificate.
3. The Credit Agreement and the Loan Documents have been duly executed
and delivered by each Loan Party thereto.
4. Each Loan Document constitutes the legal, valid and binding
obligations of each Loan Party thereto, in each case enforceable against such
Loan Party in accordance with its respective terms.
5. No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body of the State of
Delaware, the State of New Jersey or the United States of America, or any third
party that is party to any agreement or instrument listed in the Certificate to
which any of the Loan Parties is a party is required for (a) the due execution,
delivery, recordation, filing or performance by any Loan Party of any Loan
Documents to which it is a party, or for the consummation transactions
contemplated thereby, (b) the grant by any Loan Party of the Liens granted by it
pursuant to the Security Agreement and the Mortgage, (c) the perfection or
maintenance of Liens created by the Security Agreement and the Mortgage, or (d)
the exercise by any Agent or any Lender Party of its rights under the Loan
Documents or the remedies in respect of the Collateral pursuant to the Security
Agreement and the Mortgage, except for (i) in the case of clause (a) above, the
authorizations, approvals, actions, notices and filings listed on Schedule
4.0(1)(d) to the Credit Agreement, all of which have been duly obtained, taken,
given or made and are in full force and effect, (ii) in the case of the Security
Collateral (as defined in the Security Agreement), as may be required in
connection with any disposition of any portion of the Security Collateral by
laws affecting the offering and sale of securities generally, and (iii) in the
case of the exercise of remedies in respect of Collateral subject to the
Mortgage and the Fixtures, the exercise of such remedies requiring prior court
approval.
6. (a) The Security Agreement creates in favor of the Administrative
Agent a security interest under the Code in (1) so much of the inventory and
equipment (as those terms are defined in the Code) of the Loan Parties executing
the Security Agreement as is located in New Jersey, (2) the accounts, general
intangibles, chattel paper, and documents (as those terms are defined in the
Code) of such Loan Parties whose chief executive offices are located in New
Jersey, and (3) the Pledged Shares and the Pledged Debt.
Lender Parties,
Banque Nationale de Paris,
NationsBank, N.A. and Credit
Suisse First Boston, as Agents
May 29, 1998
Page 5
(b) Assuming that Financing Statements have been filed in the offices
listed on Schedule I, the security interest referred to in paragraph 6(a)(1) and
(2) in property of the Loan Parties identified as debtors on Schedule I is
perfected, to the extent a security interest in the property described in
paragraph 6(a)(1) and (2) can be perfected by filing financing statements under
the Code. The Administrative Agent's having possession and control of the
certificates representing the Pledged Shares and stock powers executed in blank
with respect to such Pledged Shares and instruments representing the Pledged
Debt and endorsements in blank with respect to the Pledged Debt results in the
perfection of such security interest in such Security Collateral.
7. The Mortgage creates a valid mortgage lien in favor of the
Administrative Agent (the "Mortgage Lien") on the Premises referred to therein,
and the Mortgage creates valid security interests in any goods located or to be
located thereon that now or may hereafter constitute "fixtures" within the
meaning of Article 9 of the Code (such goods being hereinafter referred to as
the "Fixtures"), in each case as security for the payment of the Secured
Obligations referred to therein, whether for principal, interest, fees,
commissions or otherwise. The Mortgage (including the acknowledgments) is in
appropriate form for recording in the State of New Jersey and upon due
recordation and indexing in the recording offices identified in Schedule II
hereto and will result in the perfection of the Mortgage Lien.
8. Filing of a Financing Statement to be filed as a fixture filing
pursuant to the Code, will result in the perfection of the security interests in
the Fixtures (the "Fixture Liens"), and no other or further or subsequent
filing, refiling, recording, re-recording, registration or reregistration of the
Mortgage or the Financing Statements or any other instrument will be necessary
to continue the Mortgage Liens or the perfection of the Fixture Liens other than
filing of continuation statements as required by the Code.
9. The criminal usury statute in effect in the State of New Jersey
provides, in pertinent part, that any loan made to a corporation with an
interest rate which exceeds fifty percent (50%) per annum shall not be a rate
authorized or permitted by law. The provisions of the Loan Documents would not
violate any applicable law in the State of Jersey relating to usury (to the
extent such laws are applicable to the Loan Documents) provided that the amount
of interest in any payments in nature of interest under the Loan Documents do
not exceed fifty percent (50%) in any year.
10. Neither any Loan Party nor any of its Subsidiaries is an "investment
company," or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the Investment
Company Act of 1940, as amended.
Lender Parties,
Banque Nationale de Paris,
NationsBank, N.A. and Credit
Suisse First Boston, as Agents
May 29, 1998
Page 6
11. Assuming Advances are made in accordance with the terms of the Credit
Agreement and undertakings of the Borrower in accordance with the Notice of
Borrowing, that the Lenders comply with the record-keeping requirements of
Regulations U and of Regulation G of the Board of Governors of the Federal
Reserve System ("Regulation U" and "Regulation G", respectively), and that any
Lenders that are G Lenders within the meaning of Regulation G have registered as
such under Regulation G, Advances under the Credit Agreement will not violate
Regulation U or Regulation G.
12. The provisions in the Loan Documents stating that they are governed
by New York law are enforceable as a matter of New Jersey law, except with
respect to (i) the perfection and effect of perfection of the Liens created
under the Loan Documents and the application of remedies in enforcing such Liens
with respect to property located in New Jersey, (ii) the remedies available in
New Jersey with respect to property located in New Jersey, and (iii) the
procedural rules governing or affecting any action in New Jersey to enforce the
Loan Documents, subject in all instances to the assumptions that the applicable
law of New York will not violate the public policy of New Jersey (including
public policy as expressed in its usury laws) and that New York has a
substantial relation to the parties in the transactions contemplated by the Loan
Documents.
13. To the best of our knowledge except as set forth in the Information
Memorandum, there is no action, suit, investigation, litigation or proceeding
affecting any Loan Party or any of its Subsidiaries pending or threatened before
any court, governmental agency or arbitrator that (a) would be reasonably likely
to have a Material Adverse Effect or (b) purports to affect the legality,
validity or enforceability of the Credit Agreement, any Note, any other Loan
Document or any Related Document or the consummation of the transactions
contemplated by the Credit Agreement.
The opinions set forth above are subject to the following qualifications:
(a) The opinions expressed herein are limited by principles of equity
which may limit the availability of certain rights and remedies and do not
reflect the effect of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
debtors' obligations or creditors' rights generally. The opinions expressed
above also do not reflect the effect of laws and equitable doctrines (including
requirements that the parties to agreements act reasonably and in good faith
and, with respect to collateral, in a commercially reasonable manner, and give
reasonable notice prior to exercising rights and remedies) which may limit the
availability of any particular remedy but which will not, in our judgment, make
the remedies available to Administrative Agent or Lender Parties under the
Collateral Documents inadequate for the practical realization of the benefits of
the security
Lender Parties,
Banque Nationale de Paris,
NationsBank, N.A. and Credit
Suisse First Boston, as Agents
May 29, 1998
Page 7
provided for in the Collateral Documents, except for the economic consequence of
any delay which may be imposed thereby or result therefrom, and except that we
express no opinion as to the rights of any of the parties to the Loan Documents
to accelerate the due dates of any payment due thereunder or to exercise other
remedies available to them on the happening of a non-material breach of any such
document or agreement.
(b) Without limiting the generality of the foregoing, we express no
opinion with respect to: (1) the availability of specific performance or other
equitable remedies for noncompliance with any of the provisions contained in the
Loan Documents; (2) the enforceability of provisions in the Loan Documents
purporting to waive the effect of applicable laws to the extent such laws do not
permit such waiver; or (3) the effectiveness of any power-of-attorney given
under the Loan Documents which is intended to bind successors and assigns which
have not granted such powers by a power-of-attorney specifically executed by
them.
(c) We have made no examination of and express no opinion with respect
to: (1) the title to, ownership of or rights in personal property or fixtures;
(2) except as set forth in paragraphs 6 and 8 above the accuracy or sufficiency
of any descriptions of Collateral in any security agreement or financing
statements; (3) the validity or ownership of any trademarks, patents or
licenses; (4) the existence or absence of any liens, charges or encumbrances on
any Collateral and (5) except as set forth in paragraphs 6, 7 and 8 above, the
perfection or priority of any lien or security interest.
Our opinions expressed herein are limited to the General Corporation Law
of the State of Delaware, the laws of the States of New York and New Jersey and
the federal laws of the United States.
Our opinions are limited to the specific issues addressed and are limited
in all respects to laws and facts existing on the date hereof. By rendering our
opinions, we do not undertake to advise you of any changes in such laws or facts
which may occur after the date hereof.
The opinions set forth herein are expressed solely for your benefit and
for the benefit of any other parties which may subsequently become Lender
Parties under the Credit Agreement.
Very truly yours,
EXHIBIT H-2 FORM OF OPINION
OF COUNSEL TO THE LOAN PARTIES
XXXXXX AND XXXXX, LLP
May 29, 1998
To the Initial Lenders party to the Credit
Agreement referred to below and to
Banque Nationale de Paris, NationsBank, N.A.,
and Credit Suisse First Boston,
as Agents for such Initial Lenders
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
Ladies and Gentlemen:
We have acted as special Texas counsel to MEDIQ/PRN Life Support
Services, Inc., a Delaware corporation (the "Borrower") with respect to the
preparation of the Security Agreement (hereinafter defined) in connection with
that certain financing transaction contemplated by the Credit Agreement dated as
of May 29, 1998 (the "Credit Agreement") among the Borrower, certain other Loan
Parties, and each of you. Capitalized terms used herein shall, unless otherwise
provided herein, have the respective meanings set forth in the Credit Agreement.
Scope of Examination and General
Assumptions and Qualifications
For the purpose of rendering the opinions expressed below, we have
reviewed copies marked "S&S Draft' dated as of May 22, 1998, of the following
(collectively, the "Opinion Documents"):
(i) The Credit Agreement; provided that, at your request, our review
has been limited to the following specific Sections thereof: Section 8.11
(with respect to the governing law provisions) and Section 1.01 (with
respect to definitions incorporated by reference and utilized in the
Security Agreement).
(ii) The Security Agreement (herein so called) by and between the
Borrower, certain other Loan Parties, and Banque Nationale de Paris (in its
capacity as Administrative Agent, 'Administrative Agent"); and
(iii) The form of Uniform Commercial Code - Financing Statement
Change-Form UCC-3 (in the form of Annex A hereto) amending the financing
statement previously filed with respect to the Credit Agreement, dated
October 1, 1996, among Borrower, Agents, and certain other Loan Parties and
Initial Lenders party thereto (the
XXXXXX AND XXXXX, LLP
May 29, 1998
Page 2
"Former Credit Agreement"), under the Uniform Commercial Code as in
effect in the State of Texas (the "UCC") to be executed by the Borrower, as the
debtor, and Administrative Agent, as secured party, to be filed with the
Secretary of the state of Texas at the address indicated on Schedule I hereto
(the "Financing Statement").
As used herein, the term "Collateral" shall mean the non-fixture
"Equipment" and "Inventory" (as such terms are defined and described in the
Security Agreement) which are located in the State of Texas at the time of
perfection of the security interest therein.
In making such examination, we have assumed (i) the authenticity of all
documents submitted to us as originals, (ii) the conformity to original
documents of all documents submitted to us as copies, (iii) the due execution
and delivery, pursuant to due authorization, by authorized officers of the
respective parties thereto of the Opinion Documents submitted to us as drafts,
with all blanks properly completed, (iv) the proper attachment of all exhibits
to the Opinion Documents with all blanks properly completed, (v) each of the
Opinion Documents, when duly executed and delivered, will be or are in forms
identical in all material respects to those furnished to and examined by us as
final drafts, (vii) the correctness and accuracy of all the facts set forth in
all certificates and reports identified in this opinion, and (viii)
Administrative Agent is the valid and duly authorized agent and representative
of the Lenders.
We are qualified to practice law in the State of Texas, and our opinions
set forth below are limited solely to matters governed by the laws of the State
of Texas; we express no opinion as to questions concerning the laws of any other
jurisdiction.
Specific Limitations and Qualifications on
Opinions Regarding Perfection of Liens
and Security Interests in the Collateral
With respect to the opinions expressed below regarding the perfection of
your liens and security interests in the Collateral, we advise you that:
1. We express no opinion regarding (i) the accuracy or completeness of
any Collateral descriptions contained in the Opinion Documents, (ii) title to
the Collateral, (iii) the creation or perfection of your liens and security
interests in the Collateral insofar as the laws of a jurisdiction other than the
State of Texas govern the creation or perfection of such liens and security
interests, (iv) the creation or perfection of your liens and security interests
in any Collateral that is not described in the Security Agreement, or (v) the
priority of your liens and security interests in the Collateral.
XXXXXX AND XXXXX, LLP
May 29, 1998
Page 3
2. We have assumed the following facts concerning the Collateral and the
Borrower: (i) the Borrower has good and sufficient title to the Collateral
described in the Security Agreement to which it is a party; (ii) the Borrower
has "rights in" (as that term is used in Section 9.203 of the UCC) the
Collateral described in the Security Agreement to which it is a party; (iii)
value has been given within the meaning of Section 9.203 of the UCC; (iv) the
information set forth in Section 8 of the Security Agreement as to the location
of the Equipment and Inventory, and as to the chief place of business of the
Borrower is accurate and complete; (v) the addresses of Administrative Agent and
the Borrower are correctly set forth in the Financing Statement; (vi) the
Borrower has not changed its name, whether by amendment of its charter, by
reorganization, or otherwise within the past four months; (vii) the Borrower has
not changed its chief executive office, chief place of business, or office where
it keeps its records concerning the Receivables within the past four months;
(viii) no Collateral will constitute fixtures under the laws of the State of
Texas; and (ix) all information in the Financing Statement with respect to the
"Original Financing Statement Number" and the "Original Date Filed" accurately
and completely reflects the financing statement previously filed with the
Secretary of State of the State of Texas in connection with the Former Credit
Agreement.
3. With respect to the opinions expressed in Paragraph 1 below, we
express no opinion as to the perfection of any security interests purportedly
granted by the Security Documents in any property (real, personal, or mixed),
other than the Collateral, expressly excluding any opinion as to the perfection
of liens with respect to the following (and we call your attention to the fact
that the security interest of the Administrative Agent (for the benefit of
Lenders) in certain of such property may not be perfected by filing financing
statements under the UCQ: (i) causes of action; (ii) any property or Collateral
subject to the jurisdiction of a regulatory body or agency whose consent is
required before such property may be subject to any lien; (iii) letters of
credit; (iv) any property or Collateral that consists or will consist of
consumer goods, farm products, crops, timber, minerals, and the like (including
oil and gas), or accounts resulting from the sale thereof, beneficial interests
in a trust or decedent's estate, or goods or items which are subject to (a) a
statute or treaty of the United States which provides for a national or
international registration or a national or international certificate of title
for the perfection of a security interest therein or which specifies a place of
filing different from that specified in the UCC for filing to perfect such
security interest, or (b) a certificate of title statute of any jurisdiction;
(v) any interest in or claim in or under any policy of insurance or unearned
premium, except a claim to proceeds payable by reason of loss or damage under
insurance policies maintained by the Borrower with respect to the Collateral as
required by and in compliance with Section 12 of the Security Agreement; or (vi)
other property transactions excluded from the coverage of the UCC pursuant to
Sections 9.102 and 9.104 thereof.
4. We advise you that (a) the continuation of any security interests and
perfection of any security interests in Collateral consisting of proceeds is
limited to the extent set forth
XXXXXX AND XXXXX, LLP
May 29, 1998
Page 4
in Section 9.306 of the UCC, and (b) in the case of property which becomes
Collateral after the date hereof, Section 552 of the Federal Bankruptcy Code
limits the extent to which property acquired by a debtor after the commencement
of a case under the Federal Bankruptcy Code may be subject to a security
interest arising from a security agreement entered into by the debtor before the
commencement of the case.
5. We further advise you that: (a) the perfection of the security
interests evidenced by the Financing Statement will lapse five years after the
date of filing unless a continuation statement complying with the UCC is filed
with the filing office in which such Financing Statement was filed not more than
six months prior to the expiration of a five year period dating from the date of
filing of the Financing Statement (or otherwise within the time permitted by
Section 9.403 of the UCC) and subsequent continuation statements must be filed
within six months prior to the end of each subsequent five year period; (b) the
perfection of the security interests evidenced by the Financing Statement as to
any Collateral acquired by the Borrower more than four months after the Borrower
changes its name, identity, or corporate structure so as to make the Financing
Statement seriously misleading, unless a new appropriate financing statement
indicating the new name, identity, or corporate structure of the Borrower is
properly filed before the expiration of such four months; and (c) the perfection
of the security interests in the Collateral evidenced by the Financing Statement
becomes ineffective four months after the Borrower moves the Collateral from the
State of Texas (or upon such earlier date as the perfection of the security
interest in Texas expires), unless appropriate actions are taken in the new
jurisdiction to perfect such security interest in the Collateral on or before
the earlier of the expiration of such four month period or the expiration of the
original Financing Statement filing in the State of Texas relating to such
Collateral.
6. We also note that a security interest in after-acquired property may
attach and become enforceable and may become perfected only when the debtor has
obtained rights in such Collateral.
7. We note that the liens and security interests granted under the
Security Agreement attach only to the extent of the rights of the Borrower in
the properties described therein.
8. Despite the proper perfection of your security interests evidenced by
the Collateral, as described in our opinion below, the continued enforceability
and perfection of the security interests created under the Security Agreement
may be limited by various subsequent facts, events, or circumstances, including,
without limitation, those described in Article 9 of the UCC (e.g., UCC Sections
9.103, 9.306, 9.307, 9.308, 9.314, 9.315, 9.402(g), and 9.403), and we do not
opine as to the continued perfection or validity of such security interest.
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May 29, 1998
Page 5
Specific Limitations and Qualifications on
Opinions Regarding Choice of Law
The Opinion Documents provide that the laws of the State of New York
shall govern the interpretation and enforceability of the Security Agreement and
issues relative to usury in the Opinion Documents. Section 35.51 of the UCC
provides that if parties agree in writing that the law of a particular
jurisdiction governs an issue relating to the transaction (including the
validity or enforceability of any agreement relating to the transaction or a
provision of the agreement) and the transaction bears a "reasonable relation" to
that jurisdiction, then the law, other than the conflict of laws rules, of that
jurisdiction governs the issue regardless of whether the application of that law
is contrary to a fundamental or public policy of the State of Texas or of any
other jurisdiction. Section 35.51 of the UCC provides that a transaction bears a
"reasonable relation" to a particular jurisdiction if the transaction, the
subject matter of the transaction, or a party to the transaction is reasonably
related to that jurisdiction. In addition, Section 35.51 of the UCC contains
specific factual criteria, the presence of any one of which will satisfy the
"reasonable relation" test. Accordingly, for purposes of the opinion set forth
in Paragraph 4 below, and in light of the factual criteria specified in Section
35.51 of the UCC, we have assumed the following facts:
(a) Administrative Agent and one or more of the Lenders have their
principal place of business and chief executive offices in New York;
(b) a portion of the initial advances under the Credit Agreement will
be funded from, and payable to, Administrative Agent at its location in New
York;
(c) the Lenders have committed to extend to Borrower loans in an
amount exceeding $1,000,000 in the aggregate; and
(d) the choice of governing law contained in the Loan Documents was
willingly and knowingly agreed to by all parties thereto.
The statute also provides that Texas law will in any event govern whether
a qualified transaction ". . . transfers or creates an interest in real property
for security purposes or otherwise, the nature of an interest in real property
that is transferred or created by the transaction, the method for foreclosure of
a lien on real property, the nature of an interest in real property that results
from foreclosure, or the manner and effect of recording or failing to record
evidence of a transaction that transfers or creates an interest in real
property; . . ." For purposes of this opinion, the matters outlined in this
paragraph for which Texas law must govern shall be referred to as the "Mandatory
Texas Issues."
XXXXXX AND XXXXX, LLP
May 29, 1998
Page 6
We note that the determination of applicable law as to specific issues
may vary from the choice of law expressed in the Opinion Documents, where
another statute of the State of Texas or a statute of the United States provides
that such issue is governed by the law of a particular jurisdiction. For
example, notwithstanding the choice of law contained in the Loan Documents,
certain matters pertaining to the power and authority of corporations will be
governed by the law of the jurisdiction of incorporation of each such
corporation.
Opinions
Based upon the foregoing and upon such investigation as we have deemed
necessary, we are of the following opinion:
1. The Financing Statement is in proper form under the UCC for filing
in the filing office indicated on Schedule I hereto. The due filing and
indexing of the Financing Statement in the office listed on Schedule I, and
the payment of all necessary filing fees related thereto, will result in
the perfection of security interests in the Collateral in which a security
interest has been created under the Security Agreement.
2. No state or local mortgage recording tax, document tax, stamp tax,
or other fees, taxes, or governmental charges (other than statutory fees
for filing and recording the Financing Statement) are required to be paid
in Texas in connection with any of the transactions referred to in this
opinion; provided, that we express no opinion herein with respect to
whether any Agent or Lender is or may be subject to the payment of
franchise taxes in connection therewith. Any mortgage, documentary,
recording or filing taxes or charges that are to be paid at the time of the
recording or filing of the Financing Statements are nominal charges and are
not based upon the amount of the financing or the value of the property
encumbered.
3. In any action or proceeding arising out of or relating to any
Opinion Document in any court of the State of Texas or in any federal court
sitting in the State of Texas, such court would recognize and give effect
to a governing law provision of such Opinion Document wherein the parties
thereto agree (to the extent set forth in such Opinion Document) that such
Opinion Document shall be governed by, and be construed in accordance with,
the laws of the State of New York (except as to issues of perfection and
priority of laws and security interests on personal property and except
with respect to the Mandatory Texas Issues); provided that, such court may
apply the law of another jurisdiction with respect to an issue that another
statute of the State of Texas, or a statute of the United States provides
is governed by the law of a particular jurisdiction. Without limiting the
generality of the foregoing, a court of the State of Texas or a federal
court sitting in the State of Texas would apply the usury law of the
XXXXXX AND XXXXX, LLP
May 29, 1998
Page 7
State of New York to an Opinion Document which provides that such
Opinion Document shall be governed by, and construed in accordance with,
the laws of the State of New York.
This opinion (i) has been furnished to you at your request, and we
consider it to be a confidential communication that may not be furnished,
reproduced, distributed or disclosed to anyone, other than Eligible Assignees,
without our prior written consent, (ii) is rendered solely for your information
and assistance in connection with the above transaction, and may not be relied
upon by any other person (other than Eligible Assignees) or for any other
purpose without our prior written consent, (iii) is rendered as of the date
hereof, and we undertake no, and hereby disclaim any kind of obligation to
advise you of any changes for any new developments that might affect any matters
or opinions set forth herein, and (iv) is limited to the matters stated herein
and no opinions may be inferred or implied beyond the matters expressly stated
herein.
Very truly yours,
[JEFFER, MANGELS, XXXXXX & MARMARO LLP LETTERHEAD]
May 29, 1998
To the Initial Lenders party to the Credit
Agreement listed on Schedule I below and to
Banque Nationale de Paris, NationsBank, N.A.,
and Credit Suisse First Boston,
as Agents for such Initial Lenders
Re: MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
-------------------------------------
Ladies and Gentlemen:
We have acted as special counsel in the State of California to MEDIQ/PRN
Life Support Services, Inc. (the "Borrower") in connection with certain aspects
of the preparation, execution and delivery of that certain Credit Agreement,
dated May 29, 1998 (the "Credit Agreement"), among Borrower and each of you. We
are rendering this opinion to you pursuant to the terms of the Credit Agreement.
Unless otherwise defined herein, capitalized terms have the meanings ascribed to
them in the Credit Agreement.
We have not participated in the negotiation or preparation of any
documents or rendered any advice to Borrower or any other party in connection
with the Credit Documents (as defined below) or the transactions contemplated
thereby. Further, we have rendered this opinion based solely upon our review of
the Documents (as defined below), and upon our examination of such statutes,
decisions and matters of law as we deem necessary to express the opinion set
forth below.
In connection with this opinion, we have examined and relied upon
originals or copies, certified or otherwise identified to our satisfaction as
being true copies, of the following documents, or specific excerpts of documents
hereinafter described (collectively, the "Documents")
(a) Each of Sections 2.0.7, 2.09, 2.10 and 2.11 of the Credit Agreement;
JEFFER, MANGELS, XXXXXX & XXXXXXX LLP
May 29, 1998
Page 2
(b) That certain Security Agreement, dated May 29, 1998 (the "Security
Agreement"), from Borrower and other parties listed on the signature pages
thereof, as grantors, to Banque Nationale de Paris, as Administrative Agent for
the Secured Parties (the "Administrative Agent"); and
(c) UCC-2 amendment statement (the "Amendment Statement") under the
Uniform Commercial Code as in effect in the State of California (the "UCC"),
executed by Borrower in favor of the Administrative Agent, amending the original
financing statement therein described (the "Financing Statement") which was
previously filed with respect to the Credit Agreement dated October 1, 1996,
among Borrower, the Company, the Administrative Agent, and the Syndication
Agent, which Amendment Statement is to be filed in the filing office listed on
Schedule II hereto.
The Documents, together with the entire Credit Agreement, are sometimes
collectively referred to herein as the "Credit Documents".
In our review and examination of the Documents, we have assumed (i) the
genuineness of all signatures; (ii) the authenticity of all documents submitted
to us as originals and the conformity to authentic original documents of all
documents submitted to us as certified, conformed or photostatic copies, and the
due execution and delivery thereof by all parties thereto, pursuant to due
authorization, where due execution and delivery are requisite to the
effectiveness thereof; (iii) that all signatories have adequate power and
authority and have taken all necessary actions to execute and deliver the Credit
Documents; and (iv) that each person signing on behalf of the parties executing
the Credit Documents is a competent adult person not operating under any legal
disability, duress or having been defrauded in the execution of the Credit
Documents.
For purposes of this opinion, we have made the following additional
assumptions:
(a) There are no documents, understandings or agreements between or
among the parties to the Credit Documents which would expand or otherwise
modify the obligations of the respective parties to the Credit Documents
regarding the transactions contemplated thereby and which would have an
adverse effect on the opinions rendered herein;
(b) The Credit Documents constitute legal, valid and binding
obligations of the parties thereto enforceable against such parties in
accordance with their terms;
(c) Value has been given to the Borrower and the Borrower has acquired
rights in the Collateral;
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May 29, 1998
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(d) The representations and warranties of the Borrower in the Credit
Documents are true and correct in all respects;
(e) (i) Payments on the Notes (as defined in the Credit Agreement)
will be delivered to the Administrative Agent at its offices in New York,
(ii) the Administrative Agent's principal place of business in the United
States is in New York, and the Administrative Agent transacts business in
New York, (iii) Borrower's principal place of business is in New Jersey,
(iv) neither Borrower nor its controlling entity is organized under the
laws of the State of California and neither has its principal place of
business in the State of California, (v) a substantial part of the assets
of Borrower is located outside the State of California, and (vi) material
and substantial negotiations in the finalization of the terms of the Credit
Documents have taken place in New York; and
(f) (i) The selection of New York law was made by you and the Loan
Parties (as defined in the Credit Agreement) in good faith and not as a
device to evade the usury laws of California or any other state, (ii) you
and the Loan Parties freely agreed in the course of arms length
negotiations that New York law would apply to the Credit Documents, (iii)
you and Borrower desired to have the laws of a single state govern all
Advances to be made by you to Borrower pursuant to the Credit Agreement,
and (iv) Lenders, did not possess any superior bargaining power or use any
oppressive methods to cause the Borrower or any other party to the Credit
Documents to agree to select New York law to govern the Credit Documents.
We have noted that all Credit Documents select New York law to govern the
respective rights and obligations of the parties thereunder, thus reflecting the
intent of the parties to be so governed (except as to matters under the Security
Agreement respecting validity or perfection of the security interest thereunder,
or remedies thereunder, in respect of any particular Collateral that are
governed by the law of a jurisdiction other than the State of New York), and we
are not opining with respect to the laws of the State of New York.
We have also assumed that:
(A) None of the Collateral consists or will consist of consumer goods,
farm products, crops, timber, minerals and the like (including oil and gas)
or accounts resulting from the sale thereof, beneficial interests in a
trust or a decedent's estate, letters of credit or items that are subject
to (i) a statute or treaty of the United States that provides for a
national or international registration or a national or international
certificate of title for the perfection of a security interest therein or
that specifies a place of filing different from that specified in the UCC
of any jurisdiction for filing to perfect such security interest or (ii) a
certificate of title statute;
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May 29, 1998
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(B) Borrower has not changed its name, whether by amendment of its
charter, by reorganization or otherwise within the past four months;
(C) Borrower has not changed its chief executive office, chief place
of business or office where it keeps its records concerning the Receivables
within the past four months; and
(D) No Collateral consisting of goods will constitute fixtures under
the law of the State of California.
On the basis of the foregoing, and in reliance thereon, and subject to
the qualifications set forth herein, we are of the opinion that:
1. The Amendment Statement is in suitable form for filing, and upon the
filing thereof pursuant to the UCC in the filing office listed on Schedule II
hereto, will amend the Financing Statement as therein provided with respect to
the security interest granted by the Borrower to the Administrative Agent,
pursuant to the Security Agreement, in the Equipment and Inventory located in
the State of California at this date, to the extent that a security interest in
such Collateral described in the Amendment Statement can be perfected by the
filing of a financing statement in the State of California.
Our opinion in this paragraph 1 is subject to the following
qualifications:
(i) In the case of proceeds, continuation of perfection of the
Administrative Agent's security interest therein is limited to the extent
set forth in Section 9306 of the UCC;
(ii) Division 9 of the UCC requires the filing of continuation
statements within the period of six months prior to the expiration of five
years from the date of the original filing of the Financing Statement in
order to maintain the effectiveness of the filings referred to in this
paragraph;
(iii) In the case of property that becomes Collateral after the date
hereof, Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Bankruptcy Code limits the extent
to which property acquired by a debtor after the commencement of a case
under the United States Bankruptcy Code may be subject to a security
interest arising from a security agreement entered into by the debtor
before the commencement of such case;
(iv) To the extent Collateral is added by the Amendment Statement, the
Amendment Statement is effective as to the added Collateral only from the
date the Amendment Statement is filed; and
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May 29, 1998
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(v) The filing of the Amendment Statement does not extend the period
of effectiveness of the Financing Statement.
We call to your attention that the perfection of the above security
interests will be terminated as to any Collateral acquired by the Borrower more
than four months after the Borrower so changes its name, identity or corporate
structure as to make the Financing Statement seriously misleading, unless a new
appropriate financing statement or an appropriate amendment to the Financing
Statement is properly filed before the acquisition of such Collateral by the
Borrower.
2. Aside from nominal filing fees required in connection with the filing
of the Amendment Statement, no other taxes or governmental fees or charges are
required to be paid in connection with the execution and delivery of the
Security Agreement or the execution, delivery or filing of the Amendment
Statement in the State of California.
3. You have asked us to render an opinion concerning the application of
California usury law to Sections 2.07, 2.09, 2.10 and 2.11 of the Credit
Agreement, without regard for any provisions thereof limiting the payment of
interest or any other sums thereunder to the highest rate permitted by
applicable law. Those sections provide for a variable interest rate which may,
from time to time, exceed the maximum rate of interest permitted by Article XV,
Section 1 of the California Constitution, which currently is ten percent per
annum.
Article XV, Section 1 of the California Constitution provides, and
permits the California Legislature to provide, for certain lenders (such as
banks and licensed financed companies) and transactions to be exempt from usury
limitations. We are not aware of facts that would indicate all of the Lenders or
the Advances are subject to these exemptions.
The lawfulness of a variable interest rate is based upon whether the
parties entered into the variable rate agreement in good faith and without
intent to avoid the usury laws. In XxXxxxxxx x. Xxxxxxx Lynch, Pierce, Xxxxxx &
Xxxxx, Inc., 21 Cal.3d 365 (1978), a securities brokerage firm's practice of
charging a variable rate of interest based on the federal call money rate,
combined with a one and a half percent service charge on the account, was upheld
as not violative of the maximum interest rate allowed by Article XX, Section 22
(which was re-numbered Article XV, Section 1 after 1976) of the California
Constitution when an increase in the federal call money rate resulted in the
imposition of a total interest rate in excess of the ten percent maximum for a
period of two months. The trial court held that in the case of a variable
interest rate the lawfulness of the interest under Article XX, Section 22
depended upon the average interest charge over the full term of the loan, and
that the fact that the interest rate exceeded ten percent for a brief period did
not make the variable interest rate unlawful.
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May 29, 1998
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Rejecting the trial court's holding, the California Supreme Court
reversed and remanded the case, holding that the fact that the average interest
charge on a variable rate loan does not exceed the maximum rate is not in itself
sufficient to establish that the loan complies with the usury laws if the
interest charged for a particular period of forbearance exceeds the legal limit.
The Court reasoned that no agreed total profit to the lender can be averaged
over the entire period of the loan, for the interest payable for each portion of
the loan term is the compensation to the lender for its forbearance from
requiring immediate payment of the principal sum during that specific portion of
the term. Citing the Court in Arneill Ranch x. Xxxxx, 64 Cal.App.3d 277 (1976),
the California Supreme Court in XxXxxxxxx stated:
As Arneill Rang explained [citation omitted], when an
agreement provides for a variable-interest rate, no agreed
total profit to the lender can be averaged over the entire
period of the loan. Under such circumstances, the interest
payable for each portion of the loan term is the compensation
to the lender for his forbearance from requiring immediate
payment of the principal sum during that specific portion of
the term. Thus the fact that the average interest charge on a
variable-rate loan does not exceed the maximum rate is not in
itself sufficient to establish that the loan complies with
the usury laws if the interest charged for a particular
period of forbearance exceeds the legal limit.
21 Cal.3d at 377.
The Court in XxXxxxxxx proceeded to cite additional appellate opinions
pertaining to the legality of a variable interest agreement containing
contingencies which may cause the interest rate to exceed the constitutional
limit, and concluded that the variable interest agreement would be upheld if the
transaction was consummated in good faith without the intent to avoid the usury
laws. Id. at 378.
California usury law only limits the charges that can be imposed when the
borrower performs its obligations contained in the loan documents, and does not
apply to costs or charges imposed on the borrower as a result of his default.
Xxxxxx & Starr, Real Estate Law 2d ss.10:22. The law considers the borrower's
default as "voluntary" even though it may be caused by the borrower's economic
hardship, and, therefore, the usury laws do not apply to default rates of
interest which might be in excess of the legal limit. Xxxxxxx x. Xxxxx, 96 Cal.
App. 111, 117-118 (1929). In other words, a loan which is valid at its inception
cannot be rendered usurious by the acts of the borrower. Further, California
courts have stated that
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May 29, 1998
Page 7
costs and charges incurred by the borrower because of its default are not
"interest" for the loan of money, but an expense the borrower has imposed on
itself by its own voluntary act. Xxxxx x. Xxxxx-Xxxxxx, 52 Cal.2d 834 (1959);
American Title Ins. & Trust Co. x. Xxxx, 12 Xxx.Xxx. 3d 592, 596-597 (1970) (a
late charge imposed on a borrower who fails to pay an installment promptly as
required by the note is not "interest" and will not render an otherwise valid
loan usurious). Accordingly, the fact that a default rate of interest might
exceed the legal limit does make usurious a loan which is otherwise usurious.
The violation of California usury law may result in the forfeiture of all
future interest, not just the excess over the maximum rate, and also in the
recovery by the borrower of (a) interest paid within two years preceding the
commencement of any action (where the borrower commences the action against the
lender), or (b) all interest paid on the debt from the commencement of the loan
(where the lender brings an action to collect the debt or enforce its security,
and the borrower counterclaims), and (c) at the discretion of a court, treble
the amount of interest paid during the year preceding the commencement of the
action. In addition, payment of the principal amount of a usurious loan cannot
be declared due because of non-payment of interest. In an appropriate case,
where the lender's conduct is oppressive, fraudulent or malicious, the borrower
may also be able to recover punitive damages. Usury may also be prosecuted as a
felony in California, although we believe criminal prosecution is unlikely in
cases of commercial financings.
4. You have asked for our opinion with respect to the following
concerning the choice of law provisions of the Credit Documents: (a) generally
whether a California court would honor the contractual choice of New York law,
and (b) specifically, whether a California court would choose to apply
California usury law to the Advances.
With respect to the general question of application of New York law, the
California Supreme Court enunciated the standards for determining whether a
contractual choice of law provision will be honored in the case of Nedlloyd
Lines B.V, v. The Superior Court of San Mateo County, 3 Cal.4th 459, 11
Cal.Rptr.2d 330 (1992). In that case, the California Supreme Court adopted the
standards of the Restatement of Conflicts of Law, 2nd ("Restatement"), Section
187 for purposes of deciding such issues. The standards established by the
Nedlloyd court provide that the chosen law will apply unless:
(a) the chosen state has no substantial relationship to the
parties or the transaction and there is no other reasonable
basis for the parties' choice, or (b) the application of the
law of the chosen state would be contrary to a fundamental
policy of a state which has a materially greater interest
than the chosen state in the determination of the particular
issue and which, under
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May 29, 1998
Page 8
the rule of [Restatement] ss. 188, would be the state of the
applicable law in the absence of an effective choice of law
by the parties.
Nedlloyd, 3 Cal.Ath at 465.
As described below, based upon the assumptions stated on pages 2-3 hereof
(subparagraphs (e) and (f)), it is our opinion that in the case of the Advances,
a substantial relationship with the State of New York or other reasonable basis
for choice of the laws of New York exists. However, with respect to the second
prong of the standards articulated in the Restatement and adopted in Nedlloyd,
the determination of the law to be applied is dependent upon the particular
issue before the court and the respective public policies of the state of the
chosen law and the other state or states involved. Consequently, it is our
opinion that a California court should honor the choice of New York law with
respect to a particular issue related to the Advances, if the application of the
laws of New York would not be contrary to a fundamental policy of the other
state which has a materially greater interest than New York in the determination
of the particular issue.
We next address the specific issue of whether a California court would
choose to apply California usury law to the Advances. We have both analyzed the
application of the California usury laws to the Advances (as provided in
Paragraph 3 above) and investigated the California choice of law and conflict
rules and policies related thereto in order to determine whether a California
court would apply the usury laws of California to the Advances.
In the absence of an exemption, we have assumed, for purposes of this
Paragraph 4, and based on our analysis in Paragraph 3, that the interest rate
payable on the Notes may exceed the maximum rate of interest that the Notes
could bear under the California usury laws.
We now turn to the issue of whether with respect to the specific issue of
usury, a California court would choose to apply California law to the Advances.
Whether a particular choice of law selected by the parties to a contract
will be honored by a California court with regard to a particular issue raised
is a question of fact in each case, Mencor Enterprises. Inc. v. Hets Equities
Corporation, 190 Cal.App.3d 432, 441 (1987). The determination will be made
based upon the two-prong test described above as delineated in the Restatement
Section 187 and adopted by the California Supreme Court in Nedlloyd. With
respect to issues of usury, Restatement Section 203 will also likely be
considered by a California court addressing the issue.
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In regard to the first test of the Restatement Section 187, ie., whether
the chosen state has a substantial relationship to the parties and/or the
transaction, the existence of such a relationship has been found where the
jurisdiction designated by the parties has had certain contacts with the
transaction such as the place where the last act necessary to establish a
contract was formed, the domicile of the lender, the residence of the borrower,
location of performance (receipt of payments), the place where the contract was
made, and other similar factors. See Nedlloyd, 3 Cal.4th at 467; Gamer x. XxXxxx
Xxxxx Xxxxxx. Inc., 65 Cal.App.3d 280, 288, 135 Cal.Rptr. 230, 234 (1976);
Rochester Capital Leasing Corp. v. K & L Litho Corp., 13 Cal.App.3d 697, 703,
91 Cal.Rptr. 827, 830; Ury v. Jewelers Acceptance Corp., 227 Cal.App.2d 11, 15,
38 Cal.Rptr. 376, 379 (1964); Sarlot-Kantarjian v. First Penn. Mortgage Trust,
599 F.2d 915, 917 (9th Cir. 1979). In the case of the Advances, it appears that
New York will have substantial contact with the transaction given the fact that,
among other things, the Administrative Agent has its principal place of business
in the United States in New York, payments of the Notes will be made to the
Administrative Agent in New York and material and substantial negotiations
respecting the terms of the Credit Documents have taken place in or from New
York.
The second prong of the Restatement's test and of California's
contractual choice of law rule regards public policy. The determination of
whether the provisions in question violate a California fundamental policy with
respect to usury is based upon a factual review requiring an evidentiary
hearing. Mencor Enterprises, 190 Cal.App.3d at 441. California courts of appeal
are in conflict as to whether the State of California has a strong public policy
against enforcing contracts valid under the chosen state law but usurious under
California law. Mencor Enterprises, 190 Cal.App.3d at 440 ("California has a
strong policy against usury . . . " (citing Gamer x. XxXxxx Xxxxx Xxxxxx. Inc.,
65 Cal.App.3d 280, 287); contra Ury v. Jewelers Acceptance Corp., 227
Cal.App.2d 11; 20, 38 Cal.Rptr. 346 (1964) (concluding that California does not
have a strong public policy against enforcing contracts valid under chosen law
but usurious under California law). In any case, California courts of appeal
that have passed judgment on this issue have considered several factors in
determining whether contractual choice of law provisions violate California
public policy with respect to usury. These factors include:
A. Whether the laws of the chosen state were selected "in good faith
and not as a device to evade the usury laws of California." Ury v.
Jewelers Acceptance Corp., 227 Cal.App.2d 11, 15, 38 Cal.Rptr. 376
(1964);
B. Whether both parties dealt with each other with the chosen "usury
laws before their eyes." Id. at 15;
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C. Whether the choice of law provision contravenes the stated
California usury policy of protecting persons against the oppressive use of
superior bargaining power. Mencor Enterprises, 190 Cal.App.3d at 437; and
D. Whether the amount of interest charged is so excessive as to offend
California's fundamental policy with respect to usury. Id. at 442.
Based on the assumptions set forth in this opinion, we have concluded
that the Credit Documents are not so one-sided as to violate the California
public policy against oppression of parties of unequal bargaining strength.
Furthermore, it is our opinion (based solely upon the assumptions set forth
above in this opinion) that the laws of the State of New York have been freely
chosen by you and the Borrower to govern the Advances, have been selected by you
and the Borrower in good faith and that the actions of you and the Borrower are
free of any purposeful intent to evade California usury law.
We believe it unlikely that a California court of competent jurisdiction
to which the matter was properly presented would find that the amounts due under
the Credit Documents would be subject to California's usury laws inasmuch as
California does not have a strong public policy requiring the application of
California usury law to the Advances for the following reasons, among others:
(i) Neither Borrower nor its controlling entity is organized under the
laws of or domiciled in the State of California;
(ii) The only relationship to the State of California is the location
of one of the Borrower's warehouses and a certain amount of the Collateral;
(iii) The interest rates under the Credit Agreement are not
unconscionable;
(iv) The Loan Parties are sophisticated in commercial transactions;
(v) No negotiations of the terms of the Credit Documents were
conducted in California;
(vi) None of the Agents has its principal place of business in the
State of California; and
(vii) None of the Advances are being funded in the State of
California.
JEFFER, MANGELS, XXXXXX & MARMARO LLP
May 29, 1998
Page 11
Our opinion set forth in paragraph 1 above is subject to further
qualifications that we express no opinion as to:
(i) Borrower's rights in or title to any Collateral;
(ii) The validity or perfection of the security interests referred to
in Paragraph 1 above as they relate to any interest in or claim in or under
any policy of insurance, except a claim to proceeds payable by reason of
loss or damage under insurance policies maintained by the Borrower with
respect to Equipment and Inventory as required by and in compliance with
Section 12 of the Security Agreement;
(iii) Except as expressly set forth in Paragraph 1 above, the
perfection of your security interest in any other Collateral, or the
priority of your security interest in any of the Collateral; and
(iv) We express no opinion as to the creation of any security interest
in (or other lien on) any personal property collateral to the extent that,
pursuant to Section 9104 of the UCC, the UCC does not apply thereto.
With respect to our opinion in Paragraph 1 above, we wish to point out
that the Ninth Circuit Court of Appeals, in Chemical Bank v. Security Pacific
National Bank, 20 F.3d 375 (9th Cir. 1994), suggested that each loan
participant or lender must be named in a financing statement in order for the
security interest in favor of that participant or lender to be perfected.
We are licensed to practice law only in the State of California.
Accordingly, the foregoing opinion applies only with respect to the laws of
California and federal law, and we express no opinion with respect to the laws
of any other jurisdiction.
This opinion is being rendered to you and is intended solely for your
benefit and any party as to which we are notified to whom the Lenders have
assigned all or any part of the Advances in accordance with the Credit
Agreement, for use in connection with the matters addressed herein. We wish to
advise you that we have in the past represented, and are currently representing,
several of the participant Lenders in transactions wholly unrelated to the
transactions contemplated by the Credit Agreement; we are not acting as counsel
to any of the Lenders in connection with the Credit Documents. By acceptance of
this letter, those Lenders which we have represented or currently represent
consent to our representation of the Borrower in connection with all
transactions contemplated by the Credit Documents. This opinion may not be
relied upon by any other person or entity for any purpose, without our prior
written consent. This opinion is stated as of the date hereof, and we assume no
responsibility to advise you or any other person or entity of (x) circumstances
affecting the
JEFFER, MANGELS, XXXXXX & XXXXXXX LLP
May 29, 1998
Page 12
continuation or perfection of any security interest, other than those expressly
described herein, or (y) changes which may hereafter be brought to our
attention.
Very truly yours,
[XXXXX & LARDNER LETTERHEAD]
May 29, 1998
To the Initial Lenders party to the Credit
Agreement referred to below and to Banque
Nationale de Paris, NationsBank, N.A. and Credit
Suisse First Boston, as Agents for such Initial
Lenders
Re: MEDIQ/PRN Life Support Services, Inc.
-------------------------------------
Ladies and Gentlemen:
This opinion is furnished to you in connection with certain financing
transactions made pursuant to a Credit Agreement dated as of May 29, 1998 (the
"Credit Agreement") among MEDIQ/PRN Life Support Services, Inc. (the "Borrower")
and each of you. Unless otherwise defined herein, capitalized terms used herein
shall have the same meaning ascribed thereto in the Security Agreement referred
to in the Credit Agreement.
We have acted as special counsel in the State of Florida to the Loan
Parties in connection with the preparation, execution and delivery of the
Security Agreement. We have called to your attention that we have previously
represented, and may hereafter represent, certain of the addressees referenced
above in connection with matters unrelated to the Borrower or the transactions
contemplated by the Credit Agreement.
In that connection, we have examined counterparts of the Security
Agreement executed by each of the parties thereto, each of Sections 2.07, 2.09,
2.10 and 2.11 of the Credit Agreement, and copies of financing statements (the
"Financing Statements") under the Uniform Commercial Code as in effect in the
State of Florida (the "UCC") amending the financing statements previously filed
with respect to the Credit Agreement dated October 1, 1996 among the Borrower,
MEDIQ, the Administrative Agent and the Syndication Agent, naming the Loan
Parties listed in Schedule I hereto as debtors and the Administrative Agent as
secured party, which Financing Statements are to be filed in the filing offices
listed on Schedule II hereto.
May 29, 1998
Page 2
In our examination of the documents referred to above, we have assumed
(i) the due execution and delivery, pursuant to due authorization, of each of
the documents referred to above, in the form submitted to us marked "Execution
Copies," by all parties thereto, (ii) the authenticity of all such documents
submitted to us as originals, and (iii) the conformity to originals of all such
documents submitted to us as copies.
In rendering the opinions expressed below, we have relied upon those
representations and warranties made to you by the Loan Parties as set forth in
Section 8 of the Security Agreement as to the location of the Equipment and
inventory. We have assumed that:
(A) none of the Collateral consists or will consist of consumer goods,
farm products, crops, timber, minerals and the like (including oil and gas)
or accounts resulting from the sale thereof, beneficial interests in a
trust or a decedent's estate, letters of credit or items that are subject
to (1) a statute or treaty of the United States that provides for a
national or international registration or a national or international
certificate of title for the perfection of a security interest therein or
that specifies a place of filing different from that specified in the UCC
of any jurisdiction for filing to perfect such security interest or (2) a
certificate of title statute;
(B) no Loan Party has changed its name, identity or corporate
structure, whether by amendment of its charter, by reorganization or
otherwise, within the past four months;
(C) the Financing Statements contain the correct corporate names of
the debtors and the secured party listed thereon and a mailing address of
the secured party from which information concerning the security interest
can be obtained;
(D) no Loan Party has changed its chief executive office, chief place
of business or office where it keeps its records concerning the Receivables
within the past four months;
(E) no Collateral consists of goods which constitute fixtures under
the law of the State of Florida;
(F) the Secured Obligations and the Loan Documents have been
negotiated in New York, the pricing and credit terms were established in
New York, the Loan Documents will be executed, delivered and held in New
York, the proceeds of the loan will be disbursed in New York and repaid in
New York, a portion of the Collateral is located in New York, and the
Administrative Agent maintains its principal domestic offices in New York;
and
(G) the Loan Documents will be made, executed and delivered outside
the State of Florida, and be held outside of the State of Florida; and that
the Administrative Agent will
May 29, 1998
Page 3
not record or file the Security Agreement, any mortgage, trust deed or
other security agreement or other evidence of indebtedness in the State of
Florida (other than the Financing Statements).
Based upon the foregoing and upon such investigation as we have deemed
necessary, we are of the following opinion:
1. The Financing Statements are in appropriate form to be accepted for
filing in the filing office listed on Schedule II hereto, and assuming a valid
security interest has been created in the Equipment and Inventory pledged
pursuant to the Security Agreement and that such security interest has attached,
upon the filing of the Financing Statements pursuant to the UCC in the filing
office listed on Schedule II hereto, will result in the perfection of such
security interest in the Equipment and Inventory located in the State of
Florida.
Our opinion in this paragraph 1 is subject to the following
qualifications:
(a) Perfection of the Administrative Agent's security interest in
proceeds is limited to the extent set forth in Section 9-306 of the UCC;
(b) In the case of all Collateral in which the security interest of
the Administrative Agent has been perfected by the filing of Financing
Statements, Article 9 of the UCC requires the filing of continuation
statements within the period of six months prior to the expiration of five
years from the date of the original filings in order to maintain the
effectiveness of the filings referred to in this paragraph;
(c) In the case of property that becomes Collateral after the date
hereof, Section 552 of the Federal Bankruptcy Code limits the extent to
which property acquired by a debtor after the commencement of a case under
the Federal Bankruptcy Code may be subject to a security interest arising
from a security agreement entered into by the debtor before the
commencement of such case;
(d) In the case of Collateral which consists of goods which are mobile
or which are of a type normally used in more than one jurisdiction (such as
motor vehicles, trailers, rolling stock, airplanes, shipping containers,
road building and construction machinery and commercial harvesting
machinery and the like) if the goods are equipment or inventory leased or
held for lease to others, the law (including the conflict of law rules) of
the jurisdiction in which the debtor is located governs the perfection and
effect of perfection or non-perfection of the security interest, and we
express no opinion as to the perfection of the Administrative Agent's
security interest in any such Collateral;
(e) We express no opinion herein as to the (i) perfection of any
security interest in consigned goods, (ii) perfection of any security
interest for which the State of
May 29, 1998
Page 4
Florida is not the proper state for filing under the UCC; and (iii)
matters excluded from Article 9 of the UCC by virtue of Section 9-104; and
(f) We express no opinion as to:
(1) any Loan Party's rights in or title to any Collateral; and
(2) the validity or Perfection of the security interests referred
to in paragraph 1 above as they relate to any interest in or claim in
or under any policy of insurance, except a claim to proceeds payable
by reason of loss or damage under insurance policies maintained by the
Loan Parties with respect to Equipment and Inventory as required by
and in compliance with Section 12 of the Security Agreement
We call to your attention that the perfection of the above security
interests will be terminated as to any Collateral acquired by a Loan Party more
than four months after such Loan Party so changes its name, identity or
corporate structure as to make the Financing Statements seriously misleading,
unless new appropriate financing statements indicating the new name, identity or
corporate structure of such Loan Party are properly filed before the expiration
of such four months.
2. Upon payment of nominal filing fees due upon recordation of the
Financing Statements, all taxes and governmental fees and charges, the payment
of which is required in connection with the execution and delivery of the
Security Agreement or the execution, delivery or filing of the Financing
Statements in the State of Florida, shall have been paid.
We call to your attention that any sale, transfer or assignment of the
Loan Documents in the State of Florida would subject the Loan Documents to
Florida documentary stamp tax pursuant to Chapter 201, Florida Statutes.
3. Assuming that Sections 2.07, 2.09, 2.10 and 2.11 of the Credit
Agreement (collectively, the "Interest Provisions") are governed by the law of
the State of Florida for the purpose of the opinion set forth in this paragraph
3, and assuming further that all interest, including all charges, fees and
penalties in the nature of interest, charged or paid in respect of the Secured
Obligations will not exceed, in the aggregate, 25% per annum simple interest on
the actual principal outstanding from time to time, without regard for any
provisions thereof limiting the payment of interest or any other sums thereunder
to the highest rate permitted by applicable law, the Interest Provisions do not
violate any applicable law of the State of Florida relating to usury.
May 29, 1998
Page 5
4. Based upon the facts described in paragraph (G) in the assumptions set
forth above, in any action or proceeding arising out of or relating to any Loan
Document in any court of the State of Florida or in any federal court sitting in
the State of Florida, such court would (except where the application of New York
law will violate Florida public policy) recognize and give effect to a governing
law provision of such Loan Document selecting the laws of the State of New York
(except as to issues of perfection and priority of laws and security interests
on personal property) as the governing law thereof and will apply the laws of
the State of New York, rather than the laws of the State of Florida, to the
construction thereof. We note, however, that the court's decision to enforce the
provisions in the Loan Documents selecting the law of New York as the governing
law turn on questions of fact and there can be no assurance that a court will
not reach a different conclusion based on the facts and circumstances present in
any particular case.
We are licensed to practice only in the State of Florida and no
opinion is expressed herein with respect to any laws other than the laws of
the State of Florida and the United States of America.
A copy of this letter may be delivered by you to any Eligible Assignee in
accordance with the provisions of the Credit Agreement and such Eligible
Assignee may rely on the opinions expressed above as of this opinion letter were
addressed and delivered to such Eligible Assignee on the date hereof.
Very truly yours,
EXHIBIT I FORM OF
SOLVENCY OPINION
[XXXXXX, XXXXXX & CO. LETTERHEAD]
May 29, 1998
Board of Directors
MEDIQ/PRN LIFE SUPPORT SERVICES, INC. and
MEDIQ INCORPORATED,
BANQUE NATIONALE DE PARIS,
as Administrative Agent and Initial Issuing Bank,
and the Lender Parties to
the Credit Agreement referred to below
Ladies and Gentlemen:
This letter is furnished at the request of MEDIQ/PRN Life Support Services, Inc.
(the "Borrower"), a wholly owned subsidiary of MEDIQ Incorporated (the
"Company"), pursuant to Section 3.01(k)(xii) of the $325.0 million Credit
Agreement (the "Credit Agreement"), dated as of May 29, 1998, among the
Borrower, the banks, financial institutions and other institutional lenders that
from time to time are parties to the Credit Agreement (collectively the "Lender
Parties" and individually as a "Lender Party"), Banque Nationale de Paris as
administrative agent (the "Administrative Agent"), Nationsbank, N.A. as
syndication agent (the "Syndication Agent"), and Credit Suisse First Boston as
documentation agent (the "Documentation Agent"). Unless defined herein, all
defined terms are as defined in the Credit Agreement.
Pursuant to the Merger Agreement between MQ Acquisition (a Delaware limited
partnership organized by BRS) and the Company, MQ Acquisition will acquire in a
recapitalization transaction (the "Recapitalization") all of the common stock
(other than the Rolled Shares) of the Company from the existing common and
preferred shareholders of the Company. Also pursuant to the Merger Agreement, MQ
Acquisition and the Company will consummate a merger (the "Merger") in which the
Company will be the surviving corporation ("MEDIQ") and the Investors will,
together with the holders of the Rolled Shares, in the aggregate, own all the
shares of common stock and a majority of the shares of the Series A, B and C
Preferred Stock of MEDIQ.
The Borrower has entered into an Asset Purchase Agreement dated as of April 24,
1998 with CH Industries, Inc., certain direct and indirect Subsidiaries of CHI
and certain other parties, pursuant
Board of Directors
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
MEDIQ INCORPORATED
May 29, 1998
Page 2
to which the Borrower agreed to purchase certain assets from the CHI Sellers
(the "CH Acquisition").
The Recapitalization, the Merger and the CH Acquisition will be financed by: (a)
$109.5 million of gross proceeds from the issuance of common and preferred stock
by MQ Acquisition to the Investors; (b) $75.0 million of gross proceeds from the
issuance by MEDIQ of the Discount Debentures; (c) $190.0 million of gross
proceeds from the issuance by the Borrower of the Senior Subordinated Notes; (d)
$201.0 million in Borrowings under the Credit Agreement; and (e) existing cash
of the Borrower of $4.0 million.
Proceeds from the above sources will be used to: (a) pay the net cash portion of
the merger consideration of $352.0 million; (b) refinance existing debt of the
Borrower of approximately $138.9 million; (c) pay the purchase consideration of
the CH Acquisition of approximately $50.0 million; and (d) pay transaction fees
and expenses of approximately $38.6 million.
The Credit Agreement consists of: (a) a $200.0 million Term Facility which will
be comprised of a $150.0 million Advance on the date of the Initial Extension of
Credit and a second Advance not to exceed $50.0 million prior to July 30, 1998
in connection with the CH Acquisition; (b) a $50.0 million Revolving Credit
Facility which includes a sublimit for Letter of Credit Advances in an aggregate
amount not to exceed $7.5 million and a sublimit for Swing Line Advances in an
aggregate amount not to exceed $2.5 million; and (c) a $75.0 million Acquisition
Facility which, on the Conversion Date, converts to an amortizing term facility.
The proceeds from the Term Advances will be used, to finance, in part, the
Recapitalization, the Merger and the CH Acquisition, to refinance the
Refinancing Debt and to pay transaction fees and expenses in connection
therewith and with the financing contemplated by the Loan Documents. The
proceeds from Revolving Credit Advance will be used to finance working capital
requirements of the Borrower and its wholly owned U.S. Subsidiaries and for
general corporate purposes permitted by the Loan Documents. The proceeds from
Acquisition Advances will be used to finance from time to time all or a portion
of Investments permitted by Sections 5.02(e)(ii)(B), (F) and (G) of the Credit
Agreement and to pay transaction fees and expenses in connection therewith.
Borrowings under the Credit Agreement may be Eurodollar Rate Advances, Base Rate
Advances or a combination thereof.
Interest on outstanding Base Rate Advances shall be payable commencing June 30,
1998, (a) in arrears quarterly on the last Business Day of each March, June,
September and December, (b) on the date of any prepayment thereof to the extent
required under Section 2.06(b) of the Credit Agreement and (c) on the
Termination Date, at a rate per annum equal at all times to the sum of
Board of Directors
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
MEDIQ INCORPORATED
May 29, 1998
Page 3
(a) the Base Rate in effect from time to time plus (b) the Applicable Margin in
effect from time to time. Interest on outstanding Eurodollar Rate Advances shall
be payable in arrears on the last day of such Interest Period and, if such
Interest Period has a duration of more than three months, on each day that
occurs during such Interest Period every three months from the first day of such
Interest Period and on the date such Eurodollar Rate Advance shall be Converted
or paid in full, at a rate per annum equal at all times to the sum of (a) the
Eurodollar Rate for such Interest Period plus (b) the Applicable Margin in
effect on the first day of such Interest Period.
The Term Advances shall be repaid by the Borrower commencing on September 30,
1999 in twenty eight consecutive quarterly installments on the dates and in the
amounts contained in Section 2.04(a) of the Credit Agreement, determined as a
percentage of the aggregate amount of Term Advances outstanding on September 30,
1999. The Acquisition Advances shall be repaid by the Borrower commencing March
31, 2000 on the dates and in the amounts indicated in Section 2.04(b) of the
Credit Agreement, determined as a percentage of the aggregate amount of
Acquisition Advances outstanding on the Conversion Date. The Revolving Credit
Advances, Swing Line Advances and Letter of Credit Advances shall be payable in
full on the Termination Date. The Borrower may also be subject to certain
mandatory commitment reductions and prepayments in accordance with Sections
2.05(b) and 2.06(b) of the Credit Agreement, respectively. The Borrower may
terminate in whole or reduce in part the unused portions of the Term
Commitments, the Swing Line Commitment, the Letter of Credit Facility, the
Revolving Credit Commitments and the Acquisition Commitments subject to various
terms and conditions as outlined in Section 2.05(a) of the Credit Agreement.
The Borrowings will be secured by: (i) first perfected liens on certain present
and future assets and property of the Borrower, including accounts receivable,
inventory, hedge agreements, cash, bank accounts, equity investments, property,
plant and equipment, intangibles, and other personal, intellectual and real
property (each of the aforementioned subject to any escrow balances or liens
required in connection with the sale of NutraMax); and (ii) a pledge of stock of
all existing and future domestic, and to the extent that no adverse tax
consequences would result, foreign subsidiaries of the Borrower. Borrowings will
be guaranteed by all existing and future subsidiaries of the Borrower and by
MEDIQ.
The Borrower will issue the Senior Subordinated Notes in an aggregate principal
amount of $190.0 million. The Senior Subordinated Notes will mature on the tenth
anniversary of the date of issuance and will bear interest from the date of
issuance at the then prevailing market rate, which interest will be payable
semi-annually. The Senior Subordinated Notes will be senior subordinated
obligations of the Borrower, subordinate to all existing and future senior
indebtedness, including indebtedness under the Credit Agreement. The Senior
Subordinated Notes will be unconditionally guaranteed by each subsidiary of the
Borrower that guarantees advances under the Credit Agreement.
Board of Directors
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
MEDIQ INCORPORATED
May 29, 1998
Page 4
In July 1993, the Company issued an aggregate of $34.5 million principal amount
of exchangeable debentures (the "Exchangeable Debentures"). As of the Closing
Date (as defined below), there will be approximately $10.1 million in principal
amount of Exchangeable Debentures still outstanding. The Exchangeable Debentures
mature on July 15, 2003. Interest on the Exchangeable Debentures accrues at a
rate of 7.5% annually and is payable semiannually. The Exchangeable Debentures
are general unsecured obligations of the Company and are subordinated to all
existing and future "Senior Indebtedness" as defined in the "Exchangeable
Debenture Indenture".
The Company will issue the Discount Debentures for aggregate gross proceeds of
$75.0 million. The Discount Debentures will (i) mature on the eleventh
anniversary of their date of issuance, (ii) be issued at a substantial original
issue discount, and (iii) accrete in value until five years after the date of
issuance. During the first five year period there will be no payment of
interest. Thereafter interest will accrue and be payable semi-annually. The
Discount Debentures will be senior obligations of the Company, ranking pari
passu in right of payment with all existing and future senior obligations of the
Company and will rank senior to all future subordinated debt of the Company.
The issuances of the Senior Subordinated Notes and the Discount Debentures is
expected to be consummated on the Closing Date. In the event that the issuances
are not completed by the Closing Date, the Company and the Borrower have
received commitments for bridge financing until such time as the issuances can
be consummated.
We have been provided with an estimated pro forma closing balance sheet of
MEDIQ, dated May 26, 1998 (the "Pro Forma Balance Sheet") which was prepared by
management of the Entities (as defined below). The Pro Forma Balance Sheet
indicates that MEDIQ's capitalization on the closing date (the "Closing Date"),
after giving effect to the Recapitalization, the Merger, the CH Acquisition and
all financings related thereto (collectively, the "Transactions"), will be
comprised of approximately $31.5 million of current liabilities, $478.9 million
of long-term debt, $24.2 million of other liabilities and total stockholders'
equity of negative $350.5 million. Management of the Entities has informed us
that the foregoing amounts were determined in accordance with generally accepted
accounting principles ("GAAP") and do not necessarily reflect fair market value.
Management of the Entities did not prepare a pro forma balance sheet of the
Borrower. Management of the Entities has informed us that if a pro forma balance
sheet of the Borrower on the Closing Date and after giving effect to the
Transactions were prepared, there would be no material difference between the
Pro Forma Balance Sheet described above and the pro forma balance sheet of the
Borrower except for those differences disclosed in "Footnote H to the Pro
Board of Directors
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
MEDIQ INCORPORATED
May 29, 1998
Page 5
Forma Condensed Consolidated Balance Sheets" on page 44 of the "Confidential
Offering Circular for the Senior Subordinated Notes". Giving effect to these
differences, the pro forma balance sheet of the Borrower as of the Closing Date
and after giving effect to the Transactions, if such a balance sheet were
prepared, would indicate that the Borrower's capitalization as of the Closing
Date and after giving effect to the Transactions will be comprised of $30.9
million of current liabilities, $390.4 million of long term debt, $27.1 million
of other liabilities and total stockholders' equity of negative $128.2 million.
Xxxxxx, Xxxxxx & Co., Inc. has been requested to provide its opinion that, on
the Closing Date as contemplated herein and after giving effect to the
Transactions, with respect to MEDIQ and the Borrower (individually, as an
"Entity" and together, as the "Entities") each on a consolidated basis:
1) the aggregate value of each Entity's assets, at fair value and
present fair saleable value, exceeds: (a) its total liabilities
(including contingent, subordinated, unmatured and unliquidated
liabilities); and (b) the amount required to pay such
liabilities as they become absolute and matured in the normal
course of business;
2) such Entity has the ability to pay its debts and liabilities
(including contingent, subordinated, unmatured and unliquidated
liabilities) as they become absolute and matured in the normal
course of business; and
3) such Entity does not have an unreasonably small amount of
capital with which to conduct its business.
In evaluating the foregoing, the subject phrases and the definitions ascribed
thereto are as follows:
"aggregate value of each Entity's assets" - All assets of each
Entity, recorded on a consolidated basis, including, without
limitation, all current assets, all fixed assets such as property,
equipment and all intangible assets including contracts, tradenames,
trademarks, backlog and other intangible assets including those in
the nature of goodwill and going concern value.
"fair value" - The total amount at which the assets of each Entity,
recorded on a consolidated basis, would likely sell as part of a
going concern and for continued use as part of a going concern,
within a commercially reasonable period of time, between one or more
willing buyers and a willing seller with neither party being
Board of Directors
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
MEDIQ INCORPORATED
May 29, 1998
Page 6
under any compulsion to buy or sell and with all parties having
reasonable knowledge of all facts.
"present fair saleable value" - The price that could be obtained by an
independent willing seller from an independent willing buyer with
reasonable promptness in an arms-length transaction under present
conditions for the sale of comparable business enterprises.
"liabilities (including - contingent, subordinated. unmatured and
unliquidated liabilities)" - The pro forma debts and liabilities of
each Entity, recorded on a consolidated basis, as of the Closing Date,
as set forth on the Pro Forma Balance Sheet, including all fees,
expenses, and the principal amount of indebtedness being incurred in
the Transactions through borrowings under the Credit Agreement and such
Entity's estimated amount of reasonably anticipated liabilities that
may result from contingencies, which liabilities may or may not meet
the criteria for accrual under Statement of Financial Accounting
Standards ("FAS") No. 5 and, therefore, may not be included in
liabilities under GAAP, including: a) pending litigation, asserted
claims and assessments, guarantees, and other contingent liabilities
including, without limitation, employee benefit plan liabilities
relating to retiree benefits identified to us by responsible officers
of the Entities; as well as b) contingent liabilities relating to
environmental matters identified to us by responsible officers of the
Entities.
We have undertaken certain analyses and procedures relating to the preparation
of the requested opinion. The procedures undertaken, none of which extended
past the date of this letter, consisted solely of the following:
1. Read the Credit Agreement, dated as of May 29, 1998 (draft
5/26/98). Read the available Exhibits and Schedules thereto.
2. Read the information memorandum for the Company, prepared by the
Agents, dated May 1998.
3. Read Amendment No. 3 to Form S-4 for the Company filed with the
Securities and Exchange Commission on April 28, 1998.
4. Read the multi-year financial model for MEDIQ dated May 26, 1998
(the "Projections"), which includes the Pro Forma Balance Sheet,
that was prepared by management of the Entities and is contained
in the information memorandum prepared by the Agents. In this
regard, made
Board of Directors
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
MEDIQ INCORPORATED
May 29, 1998
Page 7
inquiries to certain officials of the Entities who have
responsibility for financial and accounting matters, with respect
to those assumptions which have been made in formulating the
Projections.
5. Performed a valuation of the Entities, on a consolidated basis,
using current standards of valuation including the discounted free
cash flow and comparable market multiples approaches, as a going
concern after giving effect to the Transactions.
6. Read the audited financial statements of the Company for the years
ending September 30, 1994 through 1997, audited by Deloitte &
Touche LLP, contained in the Company's form 10-K filings. In this
regard, officials of the Company have informed us that no other
audited financial statements for any date or period subsequent to
September 30, 1997 were available.
7. Read the audited financial statements of the Borrower for the years
ending September 30, 1995 through 1997, audited by Deloitte &
Touche LLP. In this regard, officials of the Borrower have informed
us that no other audited financial statements for any date or
period subsequent to September 30, 1997 were available.
8. Read the unaudited interim financial statements of the Company for
the six months ended March 31, 1998 contained in the Company's form
IO-Q filing. In this regard, officials of the Company have informed
us that no other unaudited interim financial statements for any
date or period subsequent to March 31, 1998 were available.
9. Read the unaudited interim financial statements of the Borrower for
the six months ended March 31, 1998. In this regard, officials of
the Borrower have informed us that no other unaudited interim
financial statements for any date or period subsequent to March 31,
1998 were available.
10. Read the Pro Forma Balance Sheet prepared by management of the
Entities. With respect to the amounts shown in the Pro Forma
Balance Sheet and accompanying notes and schedules thereto, we have
made inquiries of certain officers of the Entities who have
responsibility for financial and accounting matters regarding:
a) The basis for the assumptions and the information presented
in the Pro Forma Balance
Board of Directors
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
MEDIQ INCORPORATED
May 29, 1998
Page 8
Sheet and the consistency of such assumptions and
information with the Transactions and related indebtedness,
including the Credit Agreement.
b) Whether the Pro Forma Balance Sheet includes all material
assets and liabilities which it is anticipated will have to
be recorded under GAAP after giving effect to the
Transactions.
Based upon the foregoing, nothing has come to our attention which
leads us to believe that the assumptions underlying the Pro Forma
Balance Sheet are unreasonable or that the Pro Forma Balance Sheet
does not in fact include all such GAAP assets and liabilities.
11. Read the Offering Circular for the Senior Subordinated Notes
dated May 21,1998.
12. Read the Asset Purchase Agreement dated as of April 24, 1998 by
and among CH Industries, Inc. and the Borrower.
13. Inquired of certain officers of the Entities, as appropriate, who
have responsibility for financial and accounting matters regarding:
a) Whether they were aware of any material liabilities or loss
contingencies that are required to be accrued or disclosed
by Statement of FAS No. 5 or that would be material to the
Entities, whether or not required to be disclosed under FAS
No. 5, or any unasserted claims or assessments that their
legal counsel has advised them are probable of assertion and
must be disclosed in accordance with FAS No. 5; and
b) Whether they were aware of any events or conditions that,
as of the date thereof, would cause MEDIQ or the Borrower
after giving effect to the Transactions, not to be Solvent,
Board of Directors
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
MEDIQ INCORPORATED
May 29, 1998
Page 9
as defined in Section 1.01 of the Credit Agreement.
14. Read the executive summaries of the Environmental Due Diligence
Report on the Cardio Systems Site, dated October 28, 1997, and the
Environmental Site Assessment Report on the Carrollton, Texas
facility dated September 14, 1993, prepared by X. XxXxxx &
Associates, Inc.
15. Conducted interviews with those individuals responsible for the
management of the Entities for the purpose of reviewing their
operations and reviewing such operations in terms of their past
operating results, markets served and their ability to attain
operating results consistent with the forecasted results.
16. Conducted interviews with those responsible for the legal affairs
of the Entities regarding any litigation to which the Entities are
currently a party and any claims or causes of actions which may be
probable of legal assertion against them which would be reasonably
likely to have a material adverse effect on the business condition
(financial or otherwise), operations, performance, properties or
prospects of the Entities. We further discussed whether the
Entities are currently involved in, or are expected to be involved
in, any investigation or enforcement action by any governmental
body which may result in the imposition of any sanctions, fines, or
penalties, the effect of which could have a material adverse effect
on the business condition (financial or otherwise), operations,
performance, properties or prospects of the Entities.
17. Conducted interviews with the Entities' management to discuss their
assertions concerning contingent liabilities that are not recorded
in the Pro Forma Balance Sheet or the Projections.
18. Read the road show presentation prepared for the Company dated
May 1998.
19. Read the minutes of the meetings of the board of directors of
the Company from July 28, 1994 through May 21, 1998. Read the
minutes of the meetings of the board of directors of the Borrower
from January 3, 1994 through January 5, 1998.
Board of Directors
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
MEDIQ INCORPORATED
May 29, 1998
Page 10
We have not made any independent investigation in rendering this opinion other
than the examination described. Our opinion is, therefore, qualified by the
scope of that examination.
Based solely upon the foregoing, and subject to the other qualifications set
forth below, on the Closing Date and after giving effect to the Transactions and
other transactions contemplated therewith, we are of the opinion, with respect
to each Entity on a consolidated basis, that:
1) the aggregate value of each Entity's assets, at a fair value and
at present fair saleable value exceeds: (a) its total liabilities
(including contingent, subordinated, unmatured and unliquidated
liabilities); and (b) the amount required to pay such liabilities
as they become absolute and matured in the normal course of
business;
2) each Entity has the ability to pay its debts and liabilities
(including contingent, subordinated, unmatured and unliquidated
liabilities) as they become absolute and matured in the normal
course of business; and
3) each Entity does not have an unreasonably small amount of capital
with which to conduct its business.
In rendering the opinion set forth above, we call to your attention that
management of the Company has prepared Projections that do not extend to the
periods in which the Senior Subordinated Notes, Discount Debentures, Series A
Preferred Stock and Series C Preferred Stock mature. Management of the Company
believes that the amounts due under the Senior Subordinated Notes, Discount
Debentures, Series A Preferred Stock and Series C Preferred Stock at the time of
their respective maturities will be repaid through cash flows from operations, a
new financing, merger, sale of assets and/or sale of the Borrower's or MEDIQ's
common equity. We have assumed, with your consent, that the remaining amounts
under the Senior Subordinated Notes, Discount Debentures, Series A Preferred
Stock and Series C Preferred Stock will be repaid at the time of their
respective maturities through cash flows from operations, a new financing,
merger, sale of assets and/or sale of the Borrower's or MEDIQ's common equity.
We offer no opinion as to the ability of the Entities to pay such amounts or
otherwise raise funds in a timely manner or that the proceeds therefrom will be
sufficient to make all such payments when due.
In rendering the above opinion, we have relied upon certain past and current
unaudited financial information which has not been independently verified and
for which we assume no responsibility as to its accuracy. Further, we have
assumed good title to the assets of each Entity, and have made no inspection of
those assets for the purpose of determining the value of such assets, both
Board of Directors
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
MEDIQ INCORPORATED
May 29, 1998
Page 11
of which we expressly disclaim responsibility for in connection with the
rendering of this opinion.
This letter is intended solely for use of the addressees in connection with the
Transactions and is not to be relied upon by any other person or entity or for
any other purpose without our prior written consent. This letter is not to be
disclosed or otherwise circulated, quoted or referred to any persons or entities
other than the addressees and successor Agents pursuant to Section 8.07 of the
Credit Agreement without our written consent (which will not be unreasonably
withheld). Notwithstanding anything to the contrary in the immediately preceding
sentence, our consent shall not be required for any of the following: (i)
submitting information copies of this opinion to counsel or advisors to the
Agents, the Lender Parties or the Entities; (ii) furnishing this opinion upon
the demand or order of any court, administrative agency or regulatory body or as
may be required in response to any summons or subpoena; (iii) attaching this
opinion as an exhibit to the Credit Agreement; (iv) furnishing this opinion as
may be required or ordered in, or as may be necessary, to protect the Agents',
the Lender Parties' and, the Entities' interest in, any litigation, governmental
proceeding or investigation pertaining to the Credit Agreement, or related
transactions to which the Agents, any Lender Party or the Entities are or may be
subject; or (v) furnishing this opinion to a governmental agency as otherwise
required by any law, order, regulation or ruling applicable to such Agent,
Lender Party or Entity.
This letter is also delivered with the explicit understanding that it is based
on current standards of valuation and assessment and that standards of valuation
and assessment may change in the future. We disclaim any responsibility for any
impact any such changes may have on the valuation or assessment of the Entities
described in this letter. Except as contemplated by the Projections referred to
in paragraph 4, unforeseen future events which may change the current or
projected value of the Entities do not apply and have not been factored into the
opinion expressed in this letter.
This letter is a financial opinion only. We make no representations regarding
questions of legal interpretation and expressly disclaim that it be construed in
any way as a legal opinion. This opinion is delivered to each recipient subject
to the conditions, scope of the engagement, limitations and understandings set
forth in this opinion and subject to the understanding that the obligations of
Xxxxxx, Xxxxxx & Co., Inc. in the Transactions are solely corporate obligations
and no officer, director, employee, agent, shareholder or controlling person of
Xxxxxx, Xxxxxx & Co., Inc. shall be subject to any personal liability whatsoever
to any person, nor will any such claim be asserted by or on behalf of the
Entities or any of their Subsidiaries or Affiliates. Further it is understood
that in no event, regardless of the legal theory advanced, shall Xxxxxx, Xxxxxx
& Co., Inc. be held responsible to the Entities or any of their Subsidiaries or
Affiliates other than for its gross negligence, bad faith, willful misconduct or
reckless disregard of its obligations.
Board of Directors
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
MEDIQ INCORPORATED
May 29, 1998
Page 12
We have no obligation to update or revise this letter for any events occurring
subsequent to the date of this letter.
Very truly yours,
XXXXXX, XXXXXX & CO.
EXHIBIT J-1 TO
THE CREDIT
AGREEMENT
SOLVENCY CERTIFICATE
OF MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
I, Xxx X. Xxxxxx, Senior Vice President and Chief Financial Officer of
MEDIQ/PRN Life Support Services, Inc., a Delaware corporation (the "Borrower"),
hereby certify that I am the Senior Vice President and Chief Financial Officer
of the Borrower, that I am familiar with its properties, businesses, assets,
finances and operations and that I am duly authorized to execute this Solvency
Certificate on behalf of the Borrower, which is being delivered pursuant to
Section 3.01(k)(xiv) of the Credit Agreement dated as of ______, 1998 (as it may
be hereafter amended, supplemented or otherwise modified from time to time in
accordance with its terms, the "Credit Agreement") among the Borrower, MEDIQ
Incorporated, a Delaware corporation (the "Parent Guarantor"), the lender
parties from time to time party thereto (the "Lender Parties"), Banque Nationale
de Paris, as administrative agent (the "Administrative Agent") for the Lender
Parties, Swing Line Bank, Initial Issuing Bank, and Arranger, NationsBank, N.A.
as syndication agent (the "Syndication Agent"), and Credit Suisse First Boston,
as documentation agent (the "Documentation Agent" and, together with the
Syndication Agent and the Administrative Agent, the "Agents") for the Lender
Parties. Unless otherwise defined herein, capitalized terms defined in the
Credit Agreement are used herein as therein defined.
I further certify that I am familiar with the properties, businesses and
assets of the Borrower and have carefully reviewed the Loan Documents, the
Related Documents and the contents of this Solvency Certificate and, in
connection herewith, have made such investigation and inquiries as I deem
necessary and prudent therefor. I further certify, as the Senior Vice President
and Chief Financial Officer of the Borrower, that the financial information and
assumptions which underlie and form the basis for the representations made in
this Solvency Certificate were reasonable when made and were made in good faith
and continue to be reasonable as of the date hereof.
To secure, among other things, the payment of the Borrower's Obligations
under the Loan Documents, the Borrower has granted a security interest in
certain Collateral, now owned or hereafter acquired by it, pursuant to the
Collateral Documents.
The Borrower understands that the Agents and the Lender Parties are relying
on the truth and accuracy of this Solvency Certificate in connection with the
transactions contemplated by the Loan Documents.
I do hereby further certify, as the Senior Vice President and Chief
Financial Officer of the Borrower, that:
1. On the date hereof, both before and after giving effect to the
consummation of the transactions contemplated by the Credit Agreement, the other
Loan Documents and the Related Documents, the fair value of any and all property
of the Borrower is greater than the total amount of liabilities (including
contingent, subordinated, absolute, fixed, matured or unmatured and liquidated
or unliquidated liabilities) of the Borrower.
2. On the date hereof, both before and after giving effect to the
consummation of the transactions contemplated by the Credit Agreement, the other
Loan Documents and the Related Documents, the present fair saleable value of the
assets of the Borrower exceeds the amount that will be required to pay the
probable liabilities of the Borrower on its debts as they become absolute and
matured.
3. On the date hereof, both before and after giving effect to the
consummation of the transactions contemplated by the Credit Agreement, the other
Loan Documents and the Related Documents, the Borrower is not engaged in
business or in a transaction, and is not about to engage in business or in a
transaction, for which its capital would constitute unreasonably small capital
(after giving due consideration to the prevailing practice in the industry in
which it is engaged).
4. The Borrower does not intend or believe that it will incur debts and
liabilities that will be beyond its ability to pay as such debts or liabilities
mature.
5. The Borrower does not intend, in consummating the transactions
contemplated by the Credit Agreement, the other Loan Documents, or the Related
Documents, to hinder, delay or defraud either present or future creditors or any
other Person to which the Borrower is or will become, on or after the date
hereof, indebted.
6. In reaching the conclusions set forth in this Solvency Certificate, I
have considered, on behalf of the Borrower, among other things:
(a) the cash and other assets of the Borrower reflected in the
Financial Statements of the Borrower;
2
(b) all contingent liabilities of the Borrower including, without
limitation, any claims arising out of pending or threatened litigation
against the Borrower, and in so doing, the Borrower has computed the amount
of such liabilities as the amount that, in light of all the facts and
circumstances existing on the date hereof, represents the amount that can
reasonably be expected to become an actual or matured liability (the
"Contingent Liabilities");
(c) all obligations and liabilities of the Borrower, whether matured
or unmatured, liquidated or unliquidated, disputed or undisputed, secured
or unsecured, subordinated, absolute, fixed or contingent (other than
Contingent Liabilities);
(d) historical and anticipated growth in sales volume of the Borrower
and income stream generated by the Borrower as reflected in, among other
things, the cash flow statements delivered as part of the Financial
Statements;
(e) the customary terms and trade payables of the Borrower;
(f) the amount of the credit extended by and to customers of the
Borrower;
(g) the amortization requirements of the Credit Agreement and the
Related Documents, the anticipated interest payable on the Advances and
fees payable under the Credit Agreement;
(h) the level of capital customarily maintained by the Borrower and
other entities engaged in the same or similar business as the business of
the Borrower; and
(i) the environmental assessment reports delivered pursuant to Section
3.01(k)(xv) of the Credit Agreement.
Delivery of an executed counterpart of a signature page to this Solvency
Certificate by telecopier shall be effective as delivery of a manually executed
counterpart of this Solvency Certificate.
I have given this Solvency Certificate (a) solely in my capacity as an
officer of the Borrower and not individually and (b) on the understanding, and
subject to the condition, that I will have no personal liability on account of
having given this Solvency Certificate.
3
IN WITNESS WHEREOF, the undersigned has executed this Certificate on behalf
of the Borrower this ___ day of _______, 1998.
By_________________________________
Name: Xxx X. Xxxxxx
Title: Senior Vice Presient and
Chief Financial Officer
4
EXHIBIT J-2 TO
THE CREDIT
AGREEMENT
FORM OF SOLVENCY CERTIFICATE
OF MEDIQ INCORPORATED
I, Xxxxxxx X. Xxxxxxx, Chief Financial Officer of MEDIQ Incorporated, a
Delaware corporation ("MEDIQ"), hereby certify that I am the Chief Financial
Officer of MEDIQ, that I am familiar with the properties, businesses, assets,
finances and operations of MEDIQ and its Subsidiaries (collectively, the
"Company"), and that I am duly authorized to execute this Solvency Certificate
on behalf of MEDIQ, which is being delivered pursuant to Section 3.01(k)(xiv) of
the Credit Agreement dated as of ________, 1998 (as it may be hereafter amended,
supplemented or otherwise modified from time to time in accordance with its
terms, the "Credit Agreement") among MEDIQ/PRN Life Support Services, Inc., a
Delaware corporation (the "Borrower"), MEDIQ (the "Parent Guarantor"), the
lender parties from time to time party thereto (the "Lender Parties"), Banque
Nationale de Paris, as administrative agent (the "Administrative Agent") for the
Lender Parties, Swing Line Bank, Initial Issuing Bank, and Arranger,
NationsBank, N.A. as syndication agent (the "Syndication Agent"), and Credit
Suisse First Boston, as documentation agent (the "Documentation Agent" and,
together with the Syndication Agent and the Administrative Agent, the "Agents")
for the Lender Parties. Unless otherwise defined herein, capitalized terms
defined in the Credit Agreement are used herein as therein defined.
I further certify that I am familiar with the properties, businesses and
assets of the Company and have carefully reviewed the Loan Documents, the
Related Documents and the contents of this Solvency Certificate and, in
connection herewith, have made such investigation and inquiries as I deem
necessary and prudent therefor. I further certify, as the Senior Vice President
and Chief Financial Officer of MEDIQ, that the financial information and
assumptions which underlie and form the basis for the representations made in
this Solvency Certificate were reasonable when made and were made in good faith
and continue to be reasonable as of the date hereof.
To secure, among other things, the payment of the Company's Obligations
under the Loan Documents, the Company has granted a security interest in certain
Collateral, now owned or hereafter acquired by it, pursuant to the Collateral
Documents.
The Company understands that the Agents and the Lender Parties are relying
on the truth and accuracy of this Solvency Certificate in connection with the
transactions contemplated by the Loan Documents.
I do hereby further certify, as the Senior Vice President and Chief
Financial Officer of MEDIQ, that:
1. Attached hereto as Annex A are the projected consolidated financial
statements of the Company on a monthly basis for the first two years following
the day of the Initial Extension of Credit and on an annual basis for each year
thereafter until the Final Maturity Date (the "Projected Financial Statements")
prepared by management in good faith. The Projected Financial Statements fairly
present the best estimate of the future financial performance of the Company and
are reasonable in light of the business conditions existing on the date hereof,
although actual results during the periods covered by the Projected Financial
Statements may differ materially from the projected results stated therein.
2. On the date hereof, both before and after giving effect to the
consummation of the transactions contemplated by the Credit Agreement, the other
Loan Documents and the Related Documents, the fair value of any and all property
of the Company is greater than the total amount of liabilities (including
contingent, subordinated, absolute, fixed, matured or unmatured and liquidated
or unliquidated liabilities) of the Company.
3. On the date hereof, both before and after giving effect to the
consummation of the transactions contemplated by the Credit Agreement, the other
Loan Documents and the Related Documents, the present fair saleable value of the
assets of the Company exceeds the amount that will be required to pay the
probable liabilities of the Company on debts as they become absolute and
matured.
4. On the date hereof, both before and after giving effect to the
consummation of the transactions contemplated by the Credit Agreement, the other
Loan Documents and the Related Documents, the Company is not engaged in any
business or transaction, and is not about to engage in any business or
transaction, for which the capital of the Company would constitute unreasonably
small capital (after giving due consideration to the prevailing practice in the
industry in which the Company is engaged).
5. The Company does not intend or believe that it will incur debts and
liabilities that will be beyond its ability to pay as such debts or liabilities
mature.
6. The Company does not intend, in consummating the transactions
contemplated by the Credit Agreement, the other Loan Documents, or the Related
Documents, to hinder, delay or defraud either present or future creditors or any
other Person to which the Company is or will become, on or after the date
hereof, indebted.
7. In reaching the conclusions set forth in this Solvency Certificate, I
have considered, on behalf of the Company, among other things:
2
(a) the cash and other assets of the Company;
(b) all contingent liabilities of the Company including, without
limitation, any claims arising out of pending or threatened litigation against
the Company, and in so doing, the Company has computed the amount of such
liabilities as the amount that, in light of all the facts and circumstances
existing on the date hereof, represents the amount that can reasonably be
expected to become an actual or matured liability (the "Contingent
Liabilities");
(c) all obligations and liabilities of the Company, whether matured or
unmatured, liquidated or unliquidated, disputed or undisputed, secured or
unsecured, subordinated, absolute, fixed or contingent (other than Contingent
Liabilities);
(d) historical and anticipated growth in sales volume of the Company and
income stream generated by the Company as reflected in, among other things, the
cash flow statements delivered as part of the Projected Financial Statements;
(e) the customary terms and trade payables of the Company;
(f) the amount of the credit extended by and to customers of the Company;
(g) the amortization requirements of the Credit Agreement and the Related
Documents, the anticipated interest payable on the Advances and fees payable
under the Credit Agreement;
(h) the level of capital customarily maintained by the Company and other
entities engaged in the same or similar business as the business of the Company;
(i) the environmental assessment reports delivered pursuant to Section
3.01(k)(xv) of the Credit Agreement; and
(j) the Projected Financial Statements.
Delivery of an executed counterpart of a signature page to this Solvency
Certificate by telecopier shall be effective as delivery of a manually executed
counterpart of this Solvency Certificate.
I have given this Solvency Certificate (a) solely in my capacity as an
officer of MEDIQ and not individually and (b) on the understanding, and subject
to the condition, that I will have no personal liability on account of having
given this Solvency Certificate.
3
IN WITNESS WHEREOF, the undersigned has executed this Certificate on behalf
of the Company this ___ day of ________, 1998.
By
--------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Financial Officer
4
