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EXHIBIT 10.28
FOURTH AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS FOURTH AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is made as of
this 7th day of August, 1998, by and among FLEET CAPITAL CORPORATION ("Lender"),
a Rhode Island corporation with an office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇; and D & K HEALTHCARE RESOURCES, INC., a Delaware corporation
("D&K") and JARON, INC., a Florida corporation ("Jaron"), and each of which with
its chief executive office and principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. (D&K and Jaron are sometimes hereinafter
referred to collectively as the "Borrowers" and individually as a "Borrower").
Capitalized terms used in this Agreement have the meanings assigned to them in
Appendix A, General Definitions. Accounting terms not otherwise specifically
defined herein shall be construed in accordance with GAAP consistently applied.
PRELIMINARY STATEMENT
A. D&K, certain of its former subsidiaries, and Lender entered into that
certain Third Amended and Restated Loan and Security Agreement dated as of March
3, 1995 (as amended from time to time, the "Third Restated Loan Agreement").
B. D&K owns all the issued and outstanding shares of stock of Jaron, and
now D&K and Jaron wish to provide for a credit facility for their respective
working capital needs.
C. Contemporaneously herewith, D&K, its subsidiary, D&K Receivables
Corporation ("Receivables"), and certain other subsidiaries of D&K are entering
into a Purchase and Sale Agreement relating to transfer of certain of their
Accounts and related rights to Receivables, and D&K, Receivables, Blue Keel
Funding, LLC ("Blue Keel") and Fleet National Bank ("Bank") are entering into a
Receivables Purchase Agreement pursuant to which the Bank for the benefit of
Blue Keel will purchase an interest in such Accounts and related rights from
Receivables. Lender is providing liquidity for such transaction pursuant to a
Liquidity Agreement among Blue Keel, Bank, and Lender. (The transactions to be
carried out pursuant to the Purchase and Sale Agreement, the Receivables
Purchase Agreement, and the Liquidity Agreement are hereinafter referred to as
the "Securitization," and such Agreements, together with any and all other
documents, instruments and agreements executed and delivered in connection
therewith [as well as all amendments, modifications, extensions, renewals or
successor facilities], are hereinafter collectively referred to as the
"Securitization Documents").
D. Borrowers have requested Lender's consent to the Securitization, and in
connection therewith Lender and Borrowers now desire to amend and restate the
Third Restated Loan Agreement in its entirety.
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SECTION
1. CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lender agrees to make a Total Credit Facility of up to $75,000,000
available upon Borrower's request therefor, as follows:
2. Revolving Credit Loans.
1. Loans and Reserves. Lender agrees, for so long as no Default or Event of
Default exists, to make Revolving Credit Loans to Borrowers from time to
time, as requested by D&K for itself or as agent for the Borrowers in the
manner set forth in subsection 3.1.1 hereof, up to a maximum principal amount
at any time outstanding equal to the Borrowing Base at such time minus
reserves, if any. Lender shall have the right to establish reserves in such
amounts, and with respect to such matters, as Lender shall deem necessary or
appropriate, against the amount of Revolving Credit Loans which Borrowers may
otherwise request under this subsection, including, without limitation, with
respect to (i) price adjustments, damages, unearned discounts, returned
products or other matters for which credit memoranda are issued in the
ordinary course of Borrowers' business; (ii) shrinkage, spoilage and
obsolescence of Inventory; (iii) slow moving Inventory; (iv) other sums
chargeable against Borrowers' Loan Account as Revolving Credit Loans under
any section of this Agreement; (v) amounts owing by any Borrower to any
Person to the extent secured by a Lien on, or trust over, any Property of
such Borrower; and (vi) such other matters, events, conditions or
contingencies as to which Lender, in its sole credit judgment, determines
reserves should be established from time to time hereunder. Borrowers may,
from time to time, enter into contracts or hedging programs, which provide
certain protections with respect to interest rate fluctuations. Lender may,
from time to time (but has no obligation to), provide certain limited
financial assurance to the provider of such products. In addition to the
foregoing, and notwithstanding anything herein to the contrary, if Lender
provides any such assurances, (w) and (A) such assurances are in favor of a
Person other than the Bank, or (B) a Default or Event of Default exists at
any time, Lender may, in its sole discretion, establish reserves for any and
all obligations, direct or indirect, liquidated or contingent, incurred by
Lender in connection with Borrowers, or either of them obtaining or Lender
guaranteeing any interest rate protection or hedging products (such
obligations of Lender are sometimes herein collectively referred to as
"Interest Rate Protection Obligations"), and (x) without, in any way limiting
any liability or other obligations which Borrowers shall have to Lender under
any other document, instrument or agreement, Borrowers shall be jointly and
severally liable to Lender to reimburse Lender for all Interest Rate
Protection Obligations incurred by Lender in connection with such products
and Lender may reimburse itself for any Interest Rate Protection Obligations
by making a Revolving Credit Loan without request, approval or consent of
Borrowers, and (y) the obligations of Borrowers to reimburse Lender for
Interest Rate Protection Obligations are, without limitation, "Obligations",
as defined in this Agreement, and (z) no Interest Rate Protection Obligations
shall extend beyond the Original Term.
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0.0.1. Use of Proceeds. The Revolving Credit Loans shall be used
solely for the expenses incurred in connection with closing this loan
transaction and the Securitization and for Borrowers' general operating capital
needs in a manner consistent with the provisions of this Agreement and all
applicable law.
0.1. Letters of Credit; LC Guaranties. Lender agrees, for so long as no
Default or Event of Default exists and if requested by D&K on its own behalf or
as agent for any Borrower, to (i) issue its, or cause to be issued its
Affiliate's, Letters of Credit for the account of any Borrower or (ii) execute
LC Guaranties by which Lender or its Affiliate shall guaranty the payment or
performance by any Borrower of its reimbursement obligations with respect to
Letters of Credit and letters of credit issued for Borrower's account by other
Persons in support of such Borrower's obligations (other than obligations for
the repayment of Money Borrowed), provided that the LC Amount at any time shall
not exceed $1,000,000. No Letter of Credit or LC Guarantee may have an
expiration date that is after the last day of the Original Term. Any amounts
paid by Lender under any LC Guaranty or in connection with any Letter of Credit
shall be treated as Revolving Credit Loans, shall be secured by all of the
Collateral and shall bear interest and be payable at the same rate and in the
same manner as Revolving Credit Loans.
0.1. All Loans to Constitute One Obligation; Joint and Several Liability.
All Loans and all other Obligations of the Borrowers hereunder shall constitute
one general obligation of Borrowers, and shall be secured by Lender's security
interest in and Lien upon all of the Collateral, and by all other security
interests and Liens heretofore, now or at any time or times hereafter granted by
any Borrower to Lender. The Borrowers shall be primarily and jointly and
severally liable for all Obligations hereunder. If and to the extent a Borrower
shall be deemed a guarantor of the other Borrowers hereunder, such Borrower's
joint liability for any Loans made to the other Borrowers shall be deemed to be
a guaranty of payment and performance, and not of collection. To the fullest
extent permitted by law, each Borrower hereby waives promptness, diligence,
notice of acceptance, and any other notices of any nature whatsoever with
respect to any of the Obligations, and any requirement that the Lender protect,
secure, perfect or insure any security interest or Lien on any property subject
thereto or exhaust any right or take any action against the other Borrowers or
any other Person or entity or any Collateral. Each Borrower hereby agrees that
it will not exercise any rights which it may acquire by way of subrogation
hereunder, by any payment made hereunder or otherwise, until all of the
Obligations shall have been paid in full and Lender shall be under no duty to
extend credit to or for the benefit of any Borrower. If any amount shall be paid
to a Borrower on account of such subrogation rights at any time when all of the
Obligations shall not have been paid in full, such amount(s) shall be held in
trust for the sole benefit of Lender and shall forthwith be paid to Lender to be
applied to the Obligations, whether matured or unmatured, in accordance with the
terms of this Agreement. If (i) any Borrower shall make payment to Lender of all
or any part of the Obligations and (ii) all the Obligations shall be paid in
full and Lender shall be under no duty to extend credit to or for the benefit of
any Borrower, then Lender will, at such Borrower's request, execute and deliver
to
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such Borrower appropriate documents, without recourse and without representation
or warranty, necessary to evidence the transfer by subrogation to such Borrower
of an interest in the Obligations resulting from such payment by such Borrower.
The liability of each Borrower under this Section shall be absolute and
unconditional irrespective of:
(i) any change in the time, manner or place of payment of, or in
any other term of, any of the Obligations, or any other amendment or waiver
of or any consent to departure from this Agreement;
(ii) any exchange, release or non-perfection of any Collateral or
any release or amendment or waiver of or consent to departure from any
other guaranty, for all or any of the Obligations; and
(iii) any other circumstance which might otherwise constitute a
defense available to, or discharge of, a Borrower or a guarantor of the
Obligations.
1. Appointment of D&K as Agent.
0.1. Appointment of Agent. Jaron hereby appoints its parent
corporation, D&K, as its agent and attorney-in-fact to take any action, execute
any document or instrument, consent or agree to any modification or amendment
hereto or waiver of or departure from any of the terms hereof, to perform any
Obligation of any Borrower hereunder, and to give or receive any notice by or
to any Borrower hereunder. Without limiting the generality of the foregoing,
D&K may request Loans or incur any other Obligation for the account of any
Borrower, may elect on behalf of the Borrowers to have interest accrued
pursuant to Section 2.1.3 hereof, shall prepare and deliver to Lender all
reports concerning the Collateral and all financial statements required by this
Agreement, and each Borrower shall be fully bound by the statements and actions
of D&K acting as agent hereunder. Lender shall be entitled to rely absolutely
and without duty of inquiry or investigation upon any agreement, request,
communication or other notice given by D&K hereunder. Any notice given by
Lender to D&K shall be deemed given to all Borrowers, whether or not this
Agreement specifically so provides. This appointment of D&K as agent shall be
irrevocable, and Lender shall have no duty to act in accordance with any
direction given by any other Borrower. This provision is intended, among other
things, to protect Lender against inconsistent directions given by individual
Borrowers. It shall be a condition to Lender's obligations hereunder that each
Borrower shall at all times have appointed a single entity as its agent, which
agent shall be acceptable to Lender in its sole discretion.
0.1. Revolving Credit Loans. Jaron directs the Lender to disburse the
proceeds of the Revolving Credit Loans to or at the direction of D&K as its
agent, as specifically set forth in Section 1.4.1 above. From time to time, D&K
may further distribute certain proceeds of the Revolving Loans to Jaron. D&K
shall maintain detailed accountings and records of all
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disbursements and payments made by Jaron with respect to the proceeds of the
Revolving Credit Loans. Not in any way in limitation of any other provisions set
forth herein, such books and records may be reviewed and copied by Lender, and
D&K shall provide copies of the same upon demand by Lender. Accounts receivable
carried on the books of D&K with respect to such distributions shall not be sold
pursuant to the Securitization Documents and shall be secured by the Jaron
Security Agreement and appropriate UCC-1 financing statements, executed and
delivered by Jaron, which shall constitute a lien on all of the Collateral of
Jaron subject only to the lien of Lender on the Collateral subject to the terms
hereof. Such accounts receivables and the collateral securing the same,
including all rights under or in connection the Jaron Security Agreement, shall,
in any event, be included in the Collateral and all financing statements
perfecting the subordinate lien of D&K shall be assigned, of record, to Lender.
0.1. Consent to Securitization and Securitization Documents. Lender
hereby consents to the Securitization and the Securitization Documents.
SECTION
1. INTEREST, FEES AND CHARGES
1. Interest.
0.1. INTEREST RATE. The Borrowers shall pay interest on the unpaid
principal amount of each Revolving Credit Loan and any other Obligation for
payment of money from the due date at the applicable interest rates set forth
below.
0.1. LIBO RATE LOANS. So long as no Default or Event of Default exists
hereunder, and except to the extent that D&K, on its own behalf and as agent for
Jaron, shall elect to pay interest on any Revolving Credit Loan pursuant to
Section 2.1.3 below, the Borrowers shall pay interest on (i) each Revolving
Credit Loan, from and including the date of such Loan and (ii) any other
Obligation under the Loan Documents for the payment of money from the due date
thereof, in either case at a fluctuating interest rate per annum in effect from
time to time equal to the LIBO Rate plus the Applicable Margin with respect to
the LIBO Rate. The foregoing rate of interest shall be increased or decreased,
as the case may be, by an amount equal to any increase or decrease in the LIBO
Rate, with such adjustments to be effective as of the opening of business on the
day that any such change in the LIBO Rate becomes effective. The LIBO Rate in
effect on the Closing Date shall be the LIBO Rate effective as of the opening of
business on the Closing Date.
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0.1. BASE RATE LOANS D&K, on its own behalf and as agent for Jaron, may
from time to time elect to have the interest on all (but not a portion of) the
outstanding Revolving Credit Loans determined and payable at a floating rate
equal to the Base Rate plus the Applicable Margin with respect to the Base Rate
by written notice to the Lender, such notice to be received by the Lender before
10:00 a.m. (Milwaukee, Wisconsin time) on the day on which such conversion is to
take effect. Notwithstanding any election by Borrowers, upon and after the
occurrence of an Event of Default, and during the continuation thereof, Lender
may at its sole option elect to have the interest of the outstanding Revolving
Credit Loans determined and payable at the Default Rate. After the date hereof,
the foregoing rate of interest shall be increased or decreased, as the case may
be, by an amount equal to any increase or decrease in the Base Rate, with such
adjustments to be effective as of the opening of business on the day that any
such change in the Base Rate becomes effective. The Base Rate in effect on the
date of the election to have the Revolving Credit Loans bear interest at the
Base Rate plus the Applicable Margin shall be the Base Rate effective as of the
opening of business on such date.
0.1. ILLEGALITY; IMPRACTICALITY. If it shall become unlawful for Bank,
Lender or any Participating Lender to obtain funds in the London interbank
market in order to fund or maintain LIBO Rate Loans or otherwise to perform its
obligations hereunder with respect to any such Loans, upon at least five (5)
Business Days' notice by Lender to D&K the rate of interest on all such LIBO
Rate Loans shall thereupon be determined under Section 2.1.3, and the right of
D&K, on its own behalf and as agent for Jaron, to have interest accrue on any
Loan at the LIBO Rate plus the percentage set forth herein shall thereupon
terminate. Notwithstanding any other provision of this Agreement to the
contrary, if, during any period in which interest at the LIBO Rate plus a
percentage is to be charged on any Loan, (i) deposits in U.S. dollars for
thirty-day periods are not available to the Bank in the London interbank market,
or (ii) the LIBO Rate plus the percentage set forth herein will not adequately
and fairly reflect the cost to Lender or any Participating Lender of making or
maintaining the related LIBO Rate Loan, or (iii) by reason of national or
international financial, political or economic conditions or by reason of any
applicable law, treaty, rule or regulation (whether domestic or foreign) now or
hereafter in effect, or the interpretation or administration thereof by any
governmental authority, or compliance by the Bank, Lender or any Participating
Lender with any request or directive of such authority (whether or not having
the force of law), including without limitation exchange controls, it is
impracticable, unlawful or impossible for Bank, Lender or any Participating
Lender to make or continue the relevant LIBO Rate Loan, then D&K, on its own
behalf and as agent for Jaron, shall not be entitled, so long as such
circumstances continue, to continue to have interest accrue on any Loan be at
the LIBO Rate plus the Applicable Margin with respect to the LIBO Rate.
0.1. INCREASED COSTS. If, on or after the date hereof, the introduction
of or any change in, or in the interpretation of, any law or regulation or the
compliance by Lender
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or any Participating Lender with any guideline or request from any central bank
or other governmental authority (whether or not having the force of law) shall:
(i) impose, modify or deem applicable any reserve, special deposit
or similar requirement against all or any assets held by, deposits or
accounts with, or credit extended by or to, Lender or any Participating
Lender, or impose on Bank, Lender, any Participating Lender or the London
interbank market any other condition affecting the LIBO Rate Loans, or its
obligation to make LIBO Rate Loans; or
(ii) subject Bank, Lender or any Participating Lender to, or
cause the termination or reduction of a previously granted exemption with
respect to, any tax, levy, impost, deduction, charge or withholding with
respect to the LIBO Rate Loans, the Note or Lender's obligation to make
LIBO Rate Loans, or change the basis of taxation of payment to Lender or
any Participating Lender of the principal of or interest on its Loans or
any other amounts under this Agreement (except for a change in the rate of
tax on the overall net income of Lender or any Participating Lender
imposed by any applicable jurisdiction),
and the result of any of the foregoing events is to increase the cost to Bank,
Lender or any Participating Lender of agreeing to make or making, funding, or
maintaining its LIBO Rate Loans, or to reduce the amount of any sums received or
receivable by Lender under this Agreement or the Note, then, the Borrowers shall
from time to time, not later than thirty (30) days after Lender's demand
therefor, pay such additional amounts as will compensate Lender for such
increased cost or reduced amount. A certificate of Lender submitted to D&K,
setting forth the amounts of such increased costs or reduced amount and the
additional amounts to be paid to Lender or any Participating Lender (as
applicable) under this Section shall be conclusive in the absence of manifest
error.
0.0.1. MINIMUM INTEREST RATE. Notwithstanding the foregoing, in no
event shall the per annum rate of interest on any Revolving Credit Loan be less
than five percent (5.0%). Interest in all cases shall be calculated on a daily
basis (computed on the actual number of days elapsed over a year of 360 days),
commencing on the date hereof.
0.0.1. DEFAULT RATE. Upon and after the occurrence of an Event of
Default, and during the continuation thereof, the principal amount of the
Obligations under this Loan Agreement shall bear interest, calculated daily
(computed on the actual days elapsed over a year of 360 days), at a fluctuating
rate per annum equal to three and one-quarter percent (3.25%) above the interest
rate that would otherwise apply under Sections 2.1.2 and 2.1.3 hereof (the
"Default Rate").
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0.0.1. Usury. In no contingency or event whatsoever shall the aggregate
of all amounts deemed interest hereunder and charged or collected pursuant to
the terms of this Agreement exceed the highest rate permissible under any law
which a court of competent jurisdiction shall, in a final determination, deem
applicable hereto. In the event that such a court determines that Lender has
charged or received interest hereunder in excess of the highest applicable rate,
Lender shall apply any such excess to any Obligation hereunder then due and
payable and shall promptly refund amounts not so applied to Borrowers and such
rate shall automatically be reduced to the maximum rate permitted by such law.
0.1. Computation of Interest and Fees. Interest, Letter of Credit and LC
Guaranty fees, unused line fees and collection charges hereunder shall be
calculated daily and shall be computed on the actual number of days elapsed over
a year of 360 days. For the purpose of computing interest hereunder, all items
of payment received by Lender shall be deemed applied by Lender on account of
the Obligations (subject to final payment of such items) on the same Business
Day as receipt by Lender of such items in Lender's account located in Chicago,
Illinois.
0.1. Letter of Credit and LC Guaranty Fees. Borrowers shall pay to
Lender:
(i) for standby Letters of Credit and LC Guaranties of standby
Letters of Credit, a fee equal to 1.375% per annum of the aggregate face
amount of such Letters of Credit and LC Guaranties outstanding from time to
time during the term of this Agreement, which fee shall be deemed fully
earned upon issuance of each such Letter of Credit or LC Guaranty and shall
be due and payable upon the issuance of such Letter of Credit or execution
of such LC Guaranty, plus all normal and customary charges associated with
the issuance thereof, which charges shall be deemed fully earned upon
issuance of each such Letter of Credit or LC Guaranty, shall be due and
payable on the first Business Day of each month and shall not be subject to
rebate or proration upon the termination of this Agreement for any reason;
and
(ii) for documentary Letters of Credit and LC Guaranties of
documentary Letters of Credit, a fee equal to 1.375% per annum of the face
amount of each such Letter of Credit or LC Guaranty, and an additional fee
equal to 1.375% per annum of the face amount of such Letter of Credit or LC
Guaranty for each renewal and each extension thereof plus the normal and
customary charges associated with the issuance and administration of each
such Letter of Credit or LC Guaranty (which fees and charges shall be fully
earned upon issuance, renewal or extension (as the case may be) of each
such Letter of Credit or LC Guaranty, shall be due and payable on the first
Business Day of each month, and shall not be subject to rebate or proration
upon the termination of this Agreement for any reason).
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0.1. Reimbursement of Expenses. If, at any time or times regardless of
whether or not an Event of Default then exists, Lender incurs legal or
accounting expenses or any other costs or out-of-pocket expenses in connection
with (i) the negotiation and preparation of this Agreement or any of the other
Loan Documents, any amendment of or modification of this Agreement or any of the
other Loan Documents; (ii) the administration of this Agreement or any of the
other Loan Documents and the transactions contemplated hereby and thereby; (iii)
any litigation, contest, dispute, suit, proceeding or action (whether instituted
by Lender, any Borrower or any other Person) in any way relating to the
Collateral, this Agreement or any of the other Loan Documents or Borrowers'
affairs; (iv) any attempt to enforce any rights of Lender against any Borrower
or any other Person which may be obligated to Lender by virtue of this Agreement
or any of the other Loan Documents, including, without limitation, the Account
Debtors; or (v) any attempt to inspect, verify, protect, preserve, restore,
collect, sell, liquidate or otherwise dispose of or realize upon the Collateral;
then all such legal and accounting expenses, other costs and out of pocket
expenses of Lender shall be charged to Borrowers. All amounts chargeable to
Borrowers under this Section shall be Obligations secured by all of the
Collateral, shall be payable on demand to Lender or to such Participating
Lender, as the case may be, and shall bear interest from the date such demand is
made until paid in full at the rate applicable to Revolving Credit Loans from
time to time. Borrowers shall also reimburse Lender for expenses incurred by
Lender in its administration of the Collateral to the extent and in the manner
provided in Section 6 hereof.
SECTION
1. LOAN ADMINISTRATION.
0.1. Manner of Borrowing Revolving Credit Loans. Borrowings under the
credit facility established pursuant to Section 1 hereof shall be as follows:
0.0.1. Loan Requests. A request for a Revolving Credit Loan shall be
made, or shall be deemed to be made, in the following manner: (i) D&K on its own
behalf or as agent for any Borrower may give Lender notice of its intention to
borrow, in which notice D&K shall specify the amount of the proposed borrowing
and the proposed borrowing date, no later than 11:00 a.m. central time on the
proposed borrowing date, provided, however, that no such request may be made at
a time when there exists a Default or an Event of Default; and (ii) the becoming
due of any amount required to be paid under this Agreement, whether as interest
or for any other Obligation, shall be deemed irrevocably to be a request for a
Revolving Credit Loan on the due date in the amount required to pay such
interest or other Obligation. As an accommodation to D&K, Lender may permit
telephonic requests for loans and electronic transmittal of instructions,
authorizations, agreements or reports to Lender by D&K. Unless D&K specifically
directs Lender in writing not to accept or act upon telephonic or electronic
communications from any Borrower, Lender shall have no liability to any Borrower
for any loss or damage suffered by such Borrower as a result of Lender's
honoring
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of any requests, execution of any instructions, authorizations or agreements or
reliance on any reports communicated to it telephonically or electronically and
purporting to have been sent to Lender by D&K, for itself or as agent for any
Borrower, and Lender shall have no duty to verify the origin of any such
communication or the authority of the person sending it.
0.0.1. Disbursement. Borrowers hereby irrevocably authorize Lender to
disburse the proceeds of each Revolving Credit Loan requested, or deemed to be
requested, pursuant to this subsection as follows: (i) the proceeds of each
Revolving Credit Loan requested under subsection 3.1.1(i) shall be disbursed by
Lender in lawful money of the United States of America in immediately available
funds, in the case of the initial borrowing, in accordance with the terms of the
written disbursement letter from D&K, for itself and as agent for the Borrower,
and in the case of each subsequent borrowing, by wire transfer to such bank
account as may be agreed upon by D&K, for itself or as agent for any Borrower
and Lender from time to time or elsewhere if pursuant to a written direction
from D&K, for itself or as agent for any Borrower; and (ii) the proceeds of each
Revolving Credit Loan requested under subsection 3.1.1(ii) shall be disbursed by
Lender by way of direct payment of the relevant interest or other Obligation.
0.0.1. Authorization. Borrowers hereby irrevocably authorize Lender, in
Lender's sole discretion, to advance to Borrowers, and to charge to Borrowers'
Loan Account hereunder as a Revolving Credit Loan, a sum sufficient to pay all
interest accrued on the Obligations during the immediately preceding month and
to pay all costs, fees and expenses at any time owed by any Borrower to Lender
hereunder.
0.1 Payments. Except where evidenced by notes or other instruments issued
or made by any Borrower to Lender specifically containing payment provisions
which are in conflict with this Section (in which event the conflicting
provisions of said notes or other instruments shall govern and control), the
Obligations shall be payable as follows:
0.0.1. Principal. Principal payable on account of Revolving Credit
Loans shall be payable by Borrowers to Lender immediately upon the earliest of
(i) the receipt by Lender or Borrower of any proceeds of any of the Collateral
(after any prior liens thereon are paid in full), to the extent of said
proceeds, (ii) the occurrence of an Event of Default in consequence of which
Lender elects to accelerate the maturity and payment of the Obligations, or
(iii) termination of this Agreement pursuant to Section 4 hereof; provided,
however, that if an Overadvance shall exist at any time, Borrowers shall, on
demand, repay the Overadvance.
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0.0.1. Interest. Interest accrued on account of Revolving Credit Loans
shall be due on the earliest of (1) the first calendar day of each month (for
the immediately preceding month), computed through the last calendar day of the
preceding month, (2) the occurrence of an Event of Default in consequence of
which Lender elects to accelerate the maturity and payment of the Obligations or
(3) termination of this Agreement pursuant to Section 4 hereof.
0.0.1. Costs, Fees and Charges. Costs, fees and charges payable
pursuant to this Agreement shall be payable by Borrower as and when provided in
Section 2 hereof, to Lender or to any other Person designated by Lender in
writing.
0.0.1. Other Obligations. The balance of the Obligations requiring the
payment of money, if any, shall be payable by Borrowers to Lender as and when
provided in this Agreement, the Other Agreements or the Security Documents, or
on demand, whichever is later.
0.1. Prepayments.
0.0.1. Proceeds of Sale, Loss, Destruction or Condemnation of
Collateral. If any of the Collateral is lost, damaged or destroyed or taken by
condemnation, Borrower shall pay to Lender, unless otherwise agreed by Lender,
as and when received by Borrower and as a mandatory prepayment of the Loans, a
sum equal to the proceeds (including insurance payments) received by Borrowers
from such sale, damage, loss, destruction or condemnation.
0.0.1. Other Mandatory Prepayments. Borrowers shall pay to Lender,
unless otherwise agreed by Lender, as and when received by Borrower and as a
mandatory prepayment of the Loans, a sum equal to the proceeds received by
Borrowers as a result of any tax refund, indemnity payment, pension reversion or
issuance of additional debt or equity of the Borrowers.
0.1. Application of Payments and Collections. All items of payment received
by Lender by 12:00 noon, central time, on any Business Day shall be deemed
received on that Business Day. All items of payment received after 12:00 noon,
central time, on any Business Day shall be deemed received on the following
Business Day. Borrowers irrevocably waive the right to direct the application of
any and all payments and collections at any time or times hereafter received by
Lender from or on behalf of Borrowers, and Borrowers do hereby irrevocably agree
that Lender shall have the continuing exclusive right to apply and reapply any
and all such payments and collections received at any time or times hereafter by
Lender or
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its agent against the Obligations, in such manner as Lender may deem advisable,
notwithstanding any entry by Lender upon any of its books and records. If as the
result of collections of Accounts as authorized by this Agreement a credit
balance exists in the Loan Account, such credit balance shall not accrue
interest in favor of Borrowers, but shall be available to Borrowers at any time
or times for so long as no Default or Event of Default exists.
0.1. All Loans to Constitute One Obligation. The Loans shall constitute one
general Obligation of Borrowers, and shall be secured by Lender's Lien upon all
of the Collateral.
0.1. Loan Account. Lender shall enter all Loans as debits to the Loan
Account and shall also record in the Loan Account all payments made by Borrowers
on any Obligations and all proceeds of Collateral which are finally paid to
Lender, and may record therein, in accordance with customary accounting
practice, other debits and credits, including interest and all charges and
expenses properly chargeable to Borrowers.
0.1. Statements of Account. Lender will account to D&K monthly with a
statement of Loans, charges and payments made pursuant to this Agreement, and
such account rendered by Lender shall be deemed final, binding and conclusive
upon Borrowers unless Lender is notified by D&K in writing to the contrary
within 60 days of the date each accounting is mailed to D&K. Such notice shall
only be deemed an objection to those items specifically objected to therein.
SECTION
1. TERM AND TERMINATION
0.1. Term of Agreement. Subject to Lender's right to cease making Loans
to Borrowers upon or after the occurrence of any Default or Event of Default,
this Agreement shall be in effect for a period from the date hereof, through and
including August 6, 2001 (the "Original Term").
0.1. Termination.
0.0.1. Termination by Lender. Lender may terminate this Agreement
without notice upon or after the occurrence of an Event of Default.
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0.0.1. Termination by Borrower. Upon at least 30 days prior written
notice to Lender, D&K in its own behalf and as agent for the Borrowers, may, at
its option, terminate this Agreement; provided, however, no such termination
shall be effective until Borrowers have paid all of the Obligations in
immediately available funds and all Letters of Credit and LC Guaranties have
expired or have been secured by cash collateral to Lender's satisfaction. Any
notice of termination given by D&K shall be irrevocable unless Lender otherwise
agrees in writing, and Lender shall have no obligation to make any Loans or
issue or procure any Letters of Credit or LC Guaranties on or after the
termination date stated in such notice. Borrowers may elect to terminate this
Agreement in its entirety only, and no Borrower may terminate this Agreement or
its liability hereunder unless all Borrowers terminate this Agreement. No
section of this Agreement or type of Loan available hereunder may be terminated
singly.
0.0.1. Termination Charges. At the effective date of termination of
this Agreement prior to the end of the Original Term for any reason, Borrowers
shall pay to Lender (in addition to the then outstanding principal, accrued
interest and other charges owing under the terms of this Agreement and any of
the other Loan Documents) as liquidated damages for the loss of the bargain and
not as a penalty, an amount equal to 1.0% of the average of each month's Average
Monthly Loan Balance for the period from the date of this Agreement through the
effective date of such termination, provided, however, that the termination fee
shall not be less than $400,000 or more than $450,000, regardless of the Average
Monthly Loan Balance. If termination occurs on the last day of the Original Term
or any extension of the Original Term (provided, that Lender has no obligation
to extend the Original Term), no termination charge shall be payable.
0.0.1 Effect of Termination. All of the Obligations shall be
immediately due and payable upon the termination date stated in any notice of
termination of this Agreement. All undertakings, agreements, covenants,
warranties and representations of Borrowers contained in the Loan Documents
shall survive any such termination and Lender shall retain its Liens in the
Collateral and all of its rights and remedies under the Loan Documents
notwithstanding such termination until Borrowers have irrevocably paid
the Obligations to Lender, in full, in immediately available funds, together
with the applicable termination charge, if any. Notwithstanding the payment in
full of the Obligations, Lender shall not be required to terminate its security
interests in the Collateral unless, with respect to any loss or damage Lender
may incur as a result of dishonored checks or other items of payment received by
Lender from Borrowers or any Account Debtor and applied to the Obligations,
Lender shall, at its option, (i) have received a written agreement, executed by
Borrowers and by any Person whose loans or other advances to Borrowers are used
in whole or in part to satisfy the Obligations, indemnifying Lender from any
such loss or damage; or (ii) have retained such monetary reserves and Liens on
the Collateral for such period of time as
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Lender, in its reasonable discretion, may deem necessary to protect Lender from
any such loss or damage.
SECTION
1. SECURITY INTERESTS
0.1. Security Interest in Collateral. To secure the prompt payment and
performance to Lender of the Obligations, Borrowers hereby grant to Lender a
continuing Lien upon all of the following Property and interests in Property of
each of the Borrowers (but specifically excluding any Accounts and General
Intangibles and related rights which are, from time to time, owned or purported
to be owned by, or are subject to a security interest for the benefit of, a
party other than either of the Borrowers as a result of a transfer pursuant to
the Securitization Documents), whether now owned or existing or hereafter
created, acquired or arising and wheresoever located:
(i) Accounts;
(ii) Inventory;
(iii) General Intangibles;
(iv) Investment Property;
(v) All monies and other Property of any kind now or at any time
or times hereafter in the possession or under the control of Lender or a
bailee or Affiliate of Lender;
(vi) All accessions to, substitutions for and all replacements,
products and cash and non-cash proceeds of (i) through (v) above,
including, without limitation, proceeds of and unearned premiums with
respect to insurance policies insuring any of the Collateral; and
(vii) All books and records (including, without limitation,
customer lists, credit files, computer programs, print-outs, and other
computer materials and records and all records of purchases and sales of
prescription drugs and controlled substances required to be kept by the
Federal or any state government or agency thereof) of Borrower pertaining
to any of (i) through (vi) above.
1. Lien Perfection; Further Assurances. Borrowers shall execute such UCC-1
financing statements as are required by the Code and such other instruments,
assignments or documents as are necessary to perfect Lender's Lien upon any of
the Collateral and shall take such other action as may be required to perfect or
to continue the perfection of Lender's Lien upon the Collateral.
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Unless prohibited by applicable law, each Borrower hereby authorizes Lender to
execute and file any such financing statement on Borrower's behalf. The parties
agree that a carbon, photographic or other reproduction of this Agreement shall
be sufficient as a financing statement and may be filed in any appropriate
office in lieu thereof. At Lender's request, Borrowers shall also promptly
execute or cause to be executed and shall deliver to Lender any and all
documents, instruments and agreements deemed necessary by Lender to give effect
to or carry out the terms or intent of the Loan Documents.
SECTION
1. COLLATERAL ADMINISTRATION
1. General
0.1. Location of Collateral. All Collateral, other than Inventory in
transit and motor vehicles, will at all times be kept by Borrowers and their
respective Subsidiaries at one or more of the business locations set forth in
EXHIBIT B hereto and shall not, without the prior written approval of Lender, be
moved therefrom except, prior to an Event of Default and Lender's acceleration
of the maturity of the Obligations in consequence thereof, for (i) sales of
Inventory in the ordinary course of business; and (ii) the storage of Inventory
at locations within the continental United States other than those shown on
EXHIBIT B if (A) Borrowers give Lender written notice of the new storage
location at least thirty (30) days prior to storing Inventory at such location,
(B) Lender's security interest in such Inventory is and continues to be a duly
perfected, first priority Lien thereon (subject only to Permitted Liens), (C)
neither Borrowers' nor Lender's right of entry upon the premises where such
Inventory is stored, or its right to remove the Inventory therefrom, in any way
is restricted, (D) the owner of such premises agrees in writing pursuant to a
waiver agreement, in form and substance acceptable to Lender, among other
things, not to assert any landlord's, bailee's or other Lien in respect of the
Inventory for unpaid rent or storage charges, and (E) all negotiable documents
and receipts in respect of any Collateral maintained at such premises are
delivered promptly to Lender.
0.1. Insurance of Collateral. Borrowers shall maintain and pay for
insurance upon all Collateral wherever located and with respect to Borrowers'
business, covering casualty, hazard, public liability and such other risks in
such amounts and with such insurance companies as are reasonably satisfactory to
Lender. Borrowers shall deliver the originals of such policies to Lender with
satisfactory lender's loss payable endorsements, naming Lender as sole loss
payee, assignee or additional insured, as appropriate. Each policy of insurance
or endorsement shall contain a clause requiring the insurer to give not less
than 30 days prior written notice to Lender in the event of cancellation of the
policy for any reason whatsoever and a clause specifying that the interest of
Lender shall not be impaired or invalidated by any act or neglect of Borrowers
or the owner of the Property or by the occupation of the premises for purposes
more hazardous than are permitted by said policy.
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In the event Borrowers, at any time, fail to provide Lender with evidence of the
insurance coverage as required by this Agreement, Lender may, but shall not be
obligated to, purchase the insurance coverage at Borrowers' expense to protect
Lender's interests in the Collateral. Such insurance may, but need not, protect
Borrowers' interests. The insurance coverage that Lender purchases on behalf of
Borrowers may not pay any claim that Borrowers make or any claim that is made
against Borrowers in connection with the Collateral. Borrowers may later cancel
any insurance coverage purchased by Lender, but only after providing Lender with
evidence that insurance coverage has been obtained as provided for in this
Agreement. In the event Lender purchases all or any portion of the insurance
coverage for the Collateral or as otherwise required hereunder, Borrowers will
be responsible for all costs and expenses of such insurance coverage, with the
purchase of the insurance coverage including, but not limited to interest and
any other charges imposed by Lender in connection with the purchase of the
insurance coverage until the effective date of the cancellation or expiration of
the insurance coverage. The costs and expenses of any insurance coverage
purchased by Lender shall be added to the Obligations. Borrowers acknowledge
that the costs and expenses of the insurance coverage purchased by Lender
pursuant hereto may be more than the cost of insurance Borrowers may be able to
obtain on their own. Borrowers shall deliver to Lender in kind, all instruments
representing proceeds of insurance received by Borrowers. Borrowers agree to
deliver to Lender, promptly as rendered, true copies of all reports made in any
reporting forms to insurance companies.
Pursuant to Mo. Rev. Stat. Section 427.120, Borrower acknowledges receipt of the
following notice: "Unless you [Borrower] provide evidence of the insurance
coverage required by your agreement with us [Lender], we may purchase insurance
at you expense to protect our interests in your collateral. This insurance may,
but need not, protect your interests. The coverage that we purchase may not pay
any claim that you make or any claim that is made against you in connection with
the collateral. You may later cancel any insurance purchased by us, but only
after providing evidence that you have obtained insurance as required by our
agreement. If we purchase insurance for the collateral, you will be responsible
for the costs of that insurance, including the insurance premium, interest and
any other charges we may impose in connection with the placement of the
insurance, until the effective date of the cancellation or expiration of the
insurance. The costs of the insurance may be added to your total outstanding
balance or obligation. The costs of the insurance may be more than the cost of
insurance you may be able to obtain on your own."
0.1. Protection of Collateral. All expenses of protecting, storing,
warehousing, insuring, handling, maintaining and shipping the Collateral, and
any and all excise, property, sales, and use taxes imposed by any state,
federal, or local authority on any of the Collateral or in respect of the sale
thereof shall be borne and paid by Borrowers. If Borrowers fail to promptly pay
any portion thereof when due, Lender may, at its option, but shall not be
required to, pay the same and charge Borrowers therefor. Lender shall not be
liable or responsible in any way for the safekeeping of any of the Collateral or
for any loss or damage thereto (except for reasonable care
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in the custody thereof while any Collateral is in Lender's actual possession) or
for any diminution in the value thereof, or for any act or default of any
warehouseman, carrier, forwarding agency, or other person whomsoever, but the
same shall be at Borrowers' sole risk.
1. Administration of Inventory.
0.1. Records and Reports of Inventory. Borrowers shall keep accurate
and complete records of all Inventory. Borrowers shall furnish to Lender
Inventory reports in form and detail satisfactory to Lender at such times as
Lender may request, but at least once each week, not later than each Monday, for
the immediately preceding week, or more frequently if requested by Lender.
Borrowers shall conduct a physical inventory no less frequently than annually
and shall provide to Lender a report based on each such physical inventory
promptly thereafter, together with such supporting information as Lender shall
request. No Inventory will at any time be misbranded or adulterated, and all
Inventory shall bear all labels and warnings required by all federal or state
laws, rules and regulations.
0.1. Returns of Inventory. If at any time or times hereafter any
Account Debtor returns to Borrowers any Inventory the shipment of which
generated an Account on which such Account Debtor is obligated in excess of
$250,000, Borrowers shall immediately notify Lender of the same, specifying the
reason for such return and the location, condition and intended disposition of
the returned Inventory.
1. Payment of Charges. All amounts chargeable to Borrowers under Section 6
hereof shall be Obligations secured by all of the Collateral, shall be payable
on demand and shall bear interest from the date such advance was made until paid
in full at the rate applicable to Revolving Credit Loans from time to time.
SECTION
1. REPRESENTATIONS AND WARRANTIES
1. General Representations and Warranties. To induce Lender to enter into
this Agreement and to make advances hereunder, Borrowers jointly and severally
warrant, represent and covenant to Lender that:
0.1 Organization and Qualification. Each Borrower and each of their
respective Subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation. Each
Borrower and each of their respective Subsidiaries is duly qualified and is
authorized to do business and is in good standing as a foreign corporation in
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each state or jurisdiction listed on EXHIBIT C hereto and in all other states
and jurisdictions where the character of its Properties or the nature of its
activities make such qualification necessary and in which the failure of such
Borrower or any of its Subsidiaries to be so qualified would have a material
adverse effect on the financial condition, business or Properties of such
Borrower or any of its Subsidiaries.
0.1. Corporate Power and Authority. Each Borrower and each of their
respective Subsidiaries is duly authorized and empowered to enter into, execute,
deliver and perform this Agreement and each of the other Loan Documents to which
it is a party. The execution, delivery and performance of this Agreement and
each of the other Loan Documents have been duly authorized by all necessary
corporate action and do not and will not (i) require any consent or approval of
the shareholders of any Borrower or any of its Subsidiaries; (ii) contravene any
Borrower's or any of its Subsidiaries' charter, articles or certificate of
incorporation or by-laws; (iii) violate, or cause any Borrower or any of its
Subsidiaries to be in default under, any provision of any law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award in effect
having applicability to such Borrower or any of its Subsidiaries; (iv) result in
a breach of or constitute a default under any indenture or loan or credit
agreement or any other agreement, lease or instrument to which any Borrower or
any of its Subsidiaries is a party or by which it or its Properties may be bound
or affected; or (v) result in, or require, the creation or imposition of any
Lien (other than Permitted Liens) upon or with respect to any of the Properties
now owned or hereafter acquired by any Borrower or any of its Subsidiaries.
0.1. Legally Enforceable Agreement. This Agreement is, and each of the
other Loan Documents when delivered under this Agreement will be, a legal, valid
and binding joint and several obligation of each Borrower and each of their
respective Subsidiaries enforceable against each such entity in accordance with
its respective terms.
0.1. Capital Structure. EXHIBIT D hereto states (i) the correct name of
each of the Subsidiaries of each Borrower, its jurisdiction of incorporation and
the percentage of its Voting Stock owned by such Borrower, (ii) the name of all
of each Borrower's corporate or joint venture Affiliates and the nature of the
affiliation, (iii) the number, nature and holder of all outstanding Securities
of each Borrower and each Subsidiary of such Borrower and (iv) the number of
authorized, issued and treasury shares of each Borrower and each Subsidiary of
such Borrower. Each Borrower has good title to all of the shares it purports to
own of the stock of each of its Subsidiaries, free and clear in each case of any
Lien other than Permitted Liens. All such shares have been duly issued and are
fully paid and non-assessable. There are no outstanding options to purchase, or
any rights or warrants to subscribe for, or any commitments or agreements to
issue or sell, or any Securities or obligations convertible into, or any powers
of attorney relating to, shares of the capital stock of any Borrower or any of
its Subsidiaries. There are no outstanding agreements or instruments binding
upon any of any Borrower's shareholders relating to the ownership of its shares
of capital stock.
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0.1. Corporate Names. Neither Borrowers nor any of their respective
Subsidiaries has been known as or used any corporate, fictitious or trade names
except those listed on EXHIBIT E hereto. Except as set forth on EXHIBIT E,
neither Borrowers nor any of their respective Subsidiaries has been the
surviving corporation of a merger or consolidation or acquired all or
substantially all of the assets of any Person.
0.1. Business Locations; Agent for Process. Each Borrower's and its
Subsidiaries' chief executive office and other places of business are as listed
on EXHIBIT B hereto. During the preceding one-year period, neither Borrowers nor
any of their respective Subsidiaries has had an office, place of business or
agent for service of process other than as listed on EXHIBIT B. Except as shown
on EXHIBIT B, no Inventory is stored with a bailee, warehouseman or similar
party, nor is any Inventory consigned to any Person.
0.1. Title to Properties; Priority of Liens. Each Borrower and its
Subsidiaries has good, indefeasible and marketable title to and fee simple
ownership of, or valid and subsisting leasehold interests in, all of its real
Property, and good title to all of the Collateral and all of its other Property,
in each case, free and clear of all Liens except Permitted Liens. Each Borrower
has paid or discharged all lawful claims, which, if unpaid, might become a Lien
against any of Borrower's Properties that is not a Permitted Lien. The Liens
granted to Lender under Section 5 hereof are first priority Liens, subject only
to Permitted Liens.
0.1. Financial Statements; Fiscal Year. The consolidated and
consolidating balance sheets of Borrowers and such other Persons described
therein (including the accounts of all Subsidiaries of Borrowers for the
respective periods during which a Subsidiary relationship existed) as of June
30, 1997, and the related statements of income, changes in stockholder's equity,
and changes in financial position for the periods ended on such dates, have been
prepared in accordance with GAAP, and present fairly the financial positions of
Borrowers and such Persons at such dates and the results of Borrowers'
operations for such periods. Since June 30, 1997, there has been no material
change in the condition, financial or otherwise, of Borrower and such other
Persons as shown on the Consolidated balance sheet as of such date and no change
in the aggregate value of Equipment and real Property owned by any Borrower or
such other Persons, except changes in the ordinary course of business, none of
which individually or in the aggregate has been materially adverse. The fiscal
year of each Borrower and its Subsidiaries ends on June 30 of each year.
0.1. Full Disclosure. The financial statements referred to in
subsection 7.1.8 hereof do not, nor does this Agreement or any other written
statement of Borrowers to Lender, contain any untrue statement of a material
fact or omit a material fact necessary to make the
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statements contained therein or herein not misleading. There is no fact
which Borrowers have failed to disclose to Lender in writing which materially
affects adversely or, so far as Borrowers can now foresee, will materially
affect adversely the Properties, business, prospects, profits or condition
(financial or otherwise) of any Borrowers or any of its Subsidiaries or the
ability of any Borrowers or its Subsidiaries to perform this Agreement or the
other Loan Documents.
0.1. Solvent Financial Condition. Each Borrower and its Subsidiaries is
now and, after giving effect to the Loans to be made and the Letters of Credit
and LC Guaranties to be issued hereunder, at all times will be, Solvent.
0.1. Surety Obligations. No Borrower nor any of its Subsidiaries is
obligated as surety or indemnitor under any surety or similar bond or other
contract issued or entered into any agreement to assure payment, performance or
completion of performance of any undertaking or obligation of any Person.
0.1. Taxes. D&K's federal tax identification number is ▇▇-▇▇▇▇▇▇▇.
Jaron's federal tax identification number is ▇▇-▇▇▇▇▇▇▇. The federal tax
identification number of each of Borrowers' Subsidiaries is shown on EXHIBIT F
hereto. Each Borrower and each of its Subsidiaries has filed all federal, state
and local tax returns and other reports it is required by law to file and has
paid, or made provision for the payment of, all taxes, assessments, fees, levies
and other governmental charges upon it, its income and Properties as and when
such taxes, assessments, fees, levies and charges that are due and payable,
unless and to the extent any thereof are being actively contested in good faith
and by appropriate proceedings and Borrowers maintain reasonable reserves on its
books therefor. The provision for taxes on the books of Borrowers and their
Subsidiaries are adequate for all years not closed by applicable statutes, and
for its current fiscal year.
0.1. Brokers. There are no claims for brokerage commissions, finder's
fees or investment banking fees in connection with the transactions contemplated
by this Agreement.
0.1. Patents, Trademarks, Copyrights and Licenses. Each Borrower and
its Subsidiaries owns or possesses all the patents, trademarks, service marks,
trade names, copyrights and licenses necessary for the present and planned
future conduct of its business without any known conflict with the rights of
others. All such patents, trademarks, service marks, tradenames, copyrights,
licenses and other similar rights are listed on EXHIBIT G hereto.
0.1. Governmental Consents. Each Borrower and its Subsidiaries has, and
is in good standing with respect to, all governmental consents, approvals,
licenses, authorizations,
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permits, certificates, inspections and franchises necessary to continue to
conduct its business as heretofore or proposed to be `conducted by it and to own
or lease and operate its Properties as now owned or leased by it.
0.1. Compliance with Laws. Each Borrower and its Subsidiaries has duly
complied with, and its Properties, business operations and leaseholds are in
compliance in all material respects with, the provisions of all federal, state
and local laws, rules and regulations applicable to such Borrower or such
Subsidiary, as applicable, its Properties or the conduct of its business and
there have been no citations, notices or orders of noncompliance issued to such
Borrower or any of its Subsidiaries under any such law, rule or regulation. Each
Borrower and its Subsidiaries has established and maintains an adequate
monitoring system to insure that it remains in compliance with all federal,
state and local laws, rules and regulations applicable to it. No Inventory has
been produced in violation of the Fair Labor Standards Act (29 U.S.C. Section
201 et seq.), as amended.
0.1. Restrictions. No Borrower nor any of such Borrower's Subsidiaries
is a party or subject to any contract, agreement, or charter or other corporate
restriction, which materially and adversely affects its business or the use or
ownership of any of its Properties. No Borrower nor any of such Borrower's
Subsidiaries is a party or subject to any contract or agreement which restricts
its right or ability to incur Indebtedness, other than as set forth on Exhibit H
hereto, none of which prohibit the execution of or compliance with this
Agreement or the other Loan Documents by such Borrower or any of its
Subsidiaries, as applicable.
0.1. Litigation. Except as set forth on EXHIBIT I hereto, there are no
actions, suits, proceedings or investigations pending, or to the knowledge of
any Borrower, threatened, against or affecting any Borrower or any of its
Subsidiaries, or the business, operations, Properties, prospects, profits or
condition of any Borrower or any of its Subsidiaries. No Borrower nor any of its
Subsidiaries is in default with respect to any order, writ, injunction,
judgment, decree or rule of any court, governmental authority or arbitration
board or tribunal.
0.1. No Defaults. No event has occurred and no condition exists which
would, upon or after the execution and delivery of this Agreement or Borrowers'
performance hereunder, constitute a Default or an Event of Default. No Borrower
nor any of its Subsidiaries is in default, and no event has occurred and no
condition exists which constitutes, or which with the passage of time or the
giving of notice or both would constitute, a default in the payment of any
Indebtedness to any Person for Money Borrowed.
0.1. Leases. EXHIBIT J hereto is a complete listing of all capitalized
leases of each Borrower and its Subsidiaries and EXHIBIT K hereto is a complete
listing of all operating
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leases of each Borrower and its Subsidiaries. Each Borrower and its Subsidiaries
is in full compliance with all of the terms of each of its respective
capitalized and operating leases.
0.1. Pension Plans. Except as disclosed on EXHIBIT L hereto, no
Borrower nor any of its Subsidiaries has any Plan. Each Borrower and each of its
Subsidiaries is in full compliance with the requirements of ERISA and the
regulations promulgated thereunder with respect to each Plan. No fact or
situation that could result in a material adverse change in the financial
condition of any Borrower or any of its Subsidiaries exists in connection with
any Plan. No Borrower nor any of its Subsidiaries has any withdrawal liability
in connection with a Multiemployer Plan.
O.1. Trade Relations. There exists no actual or threatened termination,
cancellation or limitation of, or any modification or change in, the business
relationship between any Borrower or any of its Subsidiaries and any customer or
any group of customers whose purchases individually or in the aggregate are
material to the business of such Borrower or any of its Subsidiaries, or with
any material supplier, and there exists no present condition or state of facts
or circumstances which would materially affect adversely any Borrower or any of
its Subsidiaries or prevent any Borrower or any of its Subsidiaries from
conducting such business after the consummation of the transaction contemplated
by this Agreement in substantially the same manner in which it has heretofore
been conducted.
0.1. Labor Relations. Except as described on EXHIBIT M hereto, no
Borrower nor any of its Subsidiaries is a party to any collective bargaining
agreement. There are no material grievances, disputes or controversies with any
union or any other organization of any Borrower's or any of its Subsidiaries'
employees, or threats of strikes, work stoppages or any asserted pending demands
for collective bargaining by any union or organization.
0.1. Environmental Matters. Except as described in EXHIBIT N, each
Borrower and its Subsidiaries and/or each property, operations and facility that
any Borrower or any Subsidiary may own, operate or control (i) is in compliance
with, in all material respects, all applicable Environmental Laws; (ii) is not
subject to any judicial or administrative proceeding or order alleging the
violation of any Environmental Law; (iii) has not received any written notice
(A) that it may be in violation of any Environmental Law, (B) threatening the
commencement of any proceeding relating to any Adverse Environmental Condition,
(C) alleging that it is or may be responsible (in whole or in part) for any
Adverse Environmental Condition, or (D) ordering or directing any Borrower or
any Subsidiary to take any action or refrain from taking any action because of
an Adverse Environmental Condition; (iv) to the best of each Borrower's
knowledge, is not the subject of any federal, state or local investigation
evaluating whether any investigation, remedial action or other response is
needed to respond to an Adverse Environmental Condition; and (v) has not filed
any notice indicating or reporting any Adverse Environmental Condition
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except for such notices or reports required by Environmental Laws as a result of
routine business operations.
0.1. Securitization. No default has occurred under any of the
Securitization Documents
0.1. ▇▇▇▇▇▇▇ Subordinated Note. The ▇▇▇▇▇▇▇ Subordinated Note was
retired and paid in full, and cancelled by ▇▇▇▇▇ ▇▇▇▇▇▇▇, effective June 30,
1998, in exchange for the issuance of common stock of D&K. D&K has no
Indebtedness to ▇▇▇▇▇ ▇▇▇▇▇▇▇.
1. Continuous Nature of Representations and Warranties. Each representation
and warranty contained in this Agreement and the other Loan Documents shall be
continuous in nature and shall remain accurate, complete and not misleading at
all times during the term of this Agreement, except for changes in the nature of
any Borrower's or its Subsidiaries' business or operations that would render the
information in any exhibit attached hereto either inaccurate, incomplete or
misleading, so long as Lender has consented to such changes or such changes are
expressly permitted by this Agreement.
1. Survival of Representations and Warranties. All representations and
warranties of Borrowers contained in this Agreement or any of the other Loan
Documents shall survive the execution, delivery and acceptance thereof by Lender
and the parties thereto and the closing of the transactions described therein or
related thereto.
SECTION
1 COVENANTS AND CONTINUING AGREEMENTS
1. Affirmative Covenants. During the term of this Agreement, and thereafter
for so long as there are any Obligations to Lender, each Borrower covenants
that, unless otherwise consented to by Lender in writing, it shall:
0.1. Visits and Inspections. Permit representatives of Lender, from
time to time, as often as may be reasonably requested, but only during normal
business hours, to visit and inspect the Properties of each Borrower and each of
its Subsidiaries, inspect, audit (which shall, prior to a Default, be at
Lender's cost) and make extracts from its books and records, and discuss with
its officers, its employees and its independent accountants, such Borrower's and
each of its Subsidiaries' business, assets, liabilities, financial condition,
business prospects and results of operations.
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0.1. Notices. Promptly notify Lender in writing of the occurrence of
any event or the existence of any fact which renders any representation or
warranty in this Agreement or any of the other Loan Documents inaccurate,
incomplete or misleading.
0.1. Financial Statements. Keep, and cause each Subsidiary to keep,
adequate records and books of account with respect to its business activities in
which proper entries are made in accordance with GAAP reflecting all its
financial transactions; and cause to be prepared and furnished to Lender and to
each Participating Lender the following (all to be prepared in accordance with
GAAP applied on a consistent basis, unless such Borrower's certified public
accountants concur in any change therein and such change is disclosed to Lender
and is consistent with GAAP):
(i) not later than 90 days after the close of each fiscal year of
Borrowers, unqualified audited financial statements of each Borrower and
its Subsidiaries as of the end of such year, on a Consolidated and
consolidating basis, certified by a firm of independent certified public
accountants of recognized standing selected by Borrowers but acceptable to
Lender (except for a qualification for a change in accounting principles
with which the accountant concurs);
(ii) not later than 30 days after the end of each month hereafter,
including the last month of each Borrower's fiscal year, unaudited interim
financial statements of each Borrower and its Subsidiaries as of the end of
such month and of the portion of such Borrower's financial year then
elapsed, on a Consolidated and consolidating basis, certified by the
principal financial officer of such Borrower as prepared in accordance with
GAAP and fairly presenting the Consolidated financial position and results
of operations of each Borrower and its Subsidiaries for such month and
period subject only to changes from audit and year-end adjustments and
except that such statements need not contain notes;
(iii) as soon as possible, but no later than 30 days after the
close of each fiscal year of the Borrowers, quarterly Projections for all
Borrowers for the following year on a consolidated and consolidating basis;
(iv) promptly after the sending or filing thereof, as the case may
be, copies of any proxy statements, financial statements or reports which
any Borrower has made available to its shareholders and copies of any
regular, periodic and special reports or registration statements which any
Borrower files with the Securities and Exchange Commission or any
governmental authority which may be substituted therefor, or any national
securities exchange;
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(v) promptly after the filing thereof, copies of any annual report
to be filed with ERISA in connection with each Plan; and
(vi) such other data and information (financial and otherwise) as
Lender, from time to time, may reasonably request, bearing upon or related
to the Collateral or any Borrower's and any of such Borrower's
Subsidiaries' financial condition or results of operations.
Concurrently with the delivery of the financial statements described in
clause (i) of this subsection, each Borrower shall forward to Lender a copy of
the accountants' letter to such Borrower's management that is prepared in
connection with such financial statements and also shall cause to be prepared
and shall furnish to Lender a certificate of the aforesaid certified public
accountants certifying to Lender that, based upon their examination of the
financial statements of such Borrower and its Subsidiaries performed in
connection with their examination of said financial statements, they are not
aware of any Default or Event of Default, or, if they are aware of such Default
or Event of Default, specifying the nature thereof, and acknowledging, in a
manner satisfactory to Lender, that they are aware that Lender is relying on
such financial statements in making its decisions with respect to the Loans.
Concurrently with the delivery of the financial statements described in clauses
(i) and (ii) of this subsection, or more frequently if requested by Lender, each
Borrower shall cause to be prepared and furnished to Lender a Compliance
Certificate in the form of EXHIBIT O hereto executed by the Chief Financial
Officer of such Borrower.
0.0.1. Landlord and Storage Agreements. Provide Lender with copies of
all agreements between any Borrower or any of its Subsidiaries and any landlord
or warehouseman which owns any premises at which any Inventory may, from time to
time, be kept.
0.0.1. Year 2000. Take all action necessary to assure that at all times
Borrowers' computer-based systems are able to process data effectively,
including dates after December 31, 1999. At Lender's request, Borrowers shall
provide to Lender assurance reasonably acceptable to Lender that Borrowers'
computer-based systems are or will be, prior to June 20, 1999, year 2000
compatible.
0.0.1 Subordinations. Provide Lender with a debt subordination
agreement, in form and substance satisfactory to Lender, executed by such
Borrower and any Person who is an officer, director or Affiliate of such
Borrower to whom such Borrower is or hereafter becomes indebted for Money
Borrowed, subordinating in right of payment and claim all of such Indebtedness
and any future advances thereon to the full and final payment and performance of
the Obligations.
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0.0.1. Further Assurances. At Lender's request, promptly execute or
cause to be executed and delivered to Lender any and all documents, instruments
and agreements deemed necessary by Lender to perfect or to continue the
perfection of Lender's Liens, to facilitate the collection of the Collateral or
otherwise to give effect to or carry out the terms or intent of this Agreement
or any of the other Loan Documents. Without limiting the generality of the
foregoing, if any of the Accounts, the face value of which exceeds $10,000,
arises out of a contract with the United States of America, or any department,
agency, subdivision or instrumentality thereof, Borrowers shall promptly notify
Lender thereof in writing and shall execute any instruments and take any other
action required or requested by Lender to comply with the provisions of the
Federal Assignment of Claims Act.
0.0.1 Compliance with Subordination Agreements and Intercreditor
Agreement. Comply at all times (within any applicable grace or cure period) with
all the terms of the Subordination Agreements and the Intercreditor Agreement,
to the extent not inconsistent with this Agreement.
0.0.1 Retirement of Jaron Indebtedness to Capital Business Credit,
Inc.. Retire and irrevocably pay in full all of Jaron's outstanding Indebtedness
to Capital Business Credit, Inc. on or before August 31, 1998.
0.1. Negative Covenants. During the term of this Agreement, and thereafter
for so long as there are any Obligations to Lender, each Borrower covenants
that, unless Lender has first consented thereto in writing, it will not:
0.0.1. Mergers; Consolidations; Acquisitions. Except as otherwise
provided in this Section 8.2.1, merge or consolidate, or permit any Subsidiary
of any Borrower to merge or consolidate, with any Person; nor acquire, nor
permit any of its Subsidiaries to acquire, all or any substantial part of the
Properties of any Person; provided that the consolidation of PBI with D&K shall
not constitute a violation of this covenant so long as such consolidation does
not involve a merger and so long as D&K does not become directly or indirectly
liable for any Indebtedness of PBI; and further provided that the Borrowers may
make acquisitions of the Properties of any Person so long as the aggregate
purchase price (however structured or denominated) for all acquisitions by the
Borrowers for any fiscal year does not exceed $2,000,000.
0.0.1. Loans. Make, or permit any Subsidiary of any Borrower to make,
any loans or other advances of money (other than pursuant to the Securitization
Documents, and
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other than for salary, travel advances, advances against commissions and other
similar advances in the ordinary course of business) to any Person in excess of
$100,000.
0.0.1. Total Indebtedness. Create, incur, assume, or suffer to exist,
or permit any Subsidiary of any Borrower to create, incur or suffer to exist,
any Indebtedness, except:
(i) Obligations owing to Lender;
(ii) Subordinated Debt existing on the date of this Agreement;
(iii) Indebtedness of any Subsidiary of any Borrower to such
Borrower;
(iv) accounts payable to trade creditors and current operating
expenses (other than for Money Borrowed) which are not aged more than
60 days from billing date or more than 30 days from the due date, in
each case incurred in the ordinary course of business and paid within
such time period, unless the same are being actively contested in good
faith and by appropriate and lawful proceedings; and Borrower or such
Subsidiary shall have set aside such reserves, if any, with respect
thereto as are required by GAAP and deemed adequate by Borrower or such
Subsidiary and its independent accountants;
(v) Obligations to pay Rentals permitted by subsection
8.2.13;
(vi) Permitted Purchase Money Indebtedness;
(vii)contingent liabilities arising out of endorsements of
checks and other negotiable instruments for deposit or collection in
the ordinary course of business;
(viii) Indebtedness pursuant to the Securitization Documents;
(ix) Until August 31, 1998, Indebtedness of Jaron, Inc. to
Capital Business Credit, Inc., in an amount of up to $10,000,000; and
(x) the Indebtedness to Magna Bank, N.A., which is subject
to the Intercreditor Agreement.
0.0.1. Affiliate Transactions. Enter into, or be a party to, or permit
any Subsidiary of any Borrower to enter into or be a party to, any transaction
with any Affiliate of such Borrower or stockholder, except in the ordinary
course of and pursuant to the reasonable requirements of such Borrower's or such
Subsidiary's business and upon fair and reasonable terms which are fully
disclosed to Lender and are no less favorable to such Borrower than would obtain
in a comparable arm's length transaction with a Person not an Affiliate or
stockholder of such Borrower or such Subsidiary. The parties hereto acknowledge
that the conduct by
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Borrowers or their Subsidiaries of the transactions contemplated by and in
accordance with the Securitization Documents shall not violate the provisions of
this Section.
0.0.1. Limitation on Liens. Create or suffer to exist, or permit any
Subsidiary of any Borrower to create or suffer to exist, any Lien upon any of
its Property, income or profits, whether now owned or hereafter acquired,
except:
(i) Liens at any time granted in favor of Lender;
(ii) Liens for taxes (excluding any Lien imposed pursuant to any
of the provisions of ERISA) not yet due, or being contested in the manner
described in subsection 7.1.12 hereto, but only if in Lender's judgment
such Lien does not adversely affect Lender's rights or the priority of
Lender's Lien in the Collateral;
(iii) Liens arising in the ordinary course of Borrower's business
by operation of law or regulation, but only if payment in respect of any
such Lien is not at the time required and such Liens do not, in the
aggregate, materially detract from the value of the Property of Borrower or
materially impair the use thereof in the operation of Borrower's business;
(iv) Purchase Money Liens securing Permitted Purchase Money
Indebtedness;
(v) Liens securing Indebtedness of one of Borrower's Subsidiaries
to Borrower or another such Subsidiary;
(vi) such other Liens as appear on EXHIBIT O hereto;
(vii) Liens arising out of the Securitization Documents; and
(viii) such other Liens as Lender may hereafter approve in
writing.
0.0.1. Subordinated and Intercreditor Debt. Make, or permit any
Subsidiary of any Borrower to make, any payment of any part or all of any
Subordinated Debt or take any other action or omit to take any other action in
respect of any Subordinated Debt, except in accordance with the Subordination
Agreement relative thereto. Make, or permit any Subsidiary of any Borrower to
make, any amendment to the documents executed in connection with D&K's
Indebtedness to Magna Bank, N.A. which is subject to the Intercreditor Agreement
which would increase the amount or extend the maturity thereof.
0.0.1. Distributions. Declare or make, or permit any Subsidiary of
Borrower to declare or make, any Distributions, except for dividends of Jaron to
D&K, provided that not less
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than 5 business days prior to the payment of such dividend, D&K shall give
Lender written notice describing the amount of such dividend.
0.0.1. Capital Expenditures. Make Capital Expenditures (including,
without limitation, by way of capitalized leases) which, in the aggregate, as to
Borrower and its Subsidiaries, exceed $1,500,000 during any fiscal year of
Borrowers.
0.0.1. Disposition of Assets. Sell, lease or otherwise dispose of any
of, or permit any Subsidiary of any Borrower to sell, lease or otherwise dispose
any of, its Properties, including any disposition of Property as part of a sale
and leaseback transaction, to or in favor of any Person, except (i) sales of
Inventory in the ordinary course of business for so long as no Event of Default
exists hereunder, (ii) disposition of worn out, obsolete or damaged Equipment in
the ordinary course of business, (iii) transfer of Property to a Borrower by a
Subsidiary of such Borrower, (iv) dispositions expressly authorized by this
Agreement or (v) dispositions under or pursuant to the Securitization.
0.0.1. Stock of Subsidiaries. Permit any of its Subsidiaries to issue
any additional shares of its capital stock except director's qualifying shares.
0.0.1. ▇▇▇▇-and-Hold Sales, Etc. Make a sale to any customer on a
▇▇▇▇-and-hold, guaranteed sale, sale and return, sale on approval or consignment
basis, or any sale on a repurchase or return basis.
0.0.1 Restricted Investment. Make or have, or permit any Subsidiary of
any Borrower to make or have, any Restricted Investment.
0.0.1. Leases. Become, or permit any of its Subsidiaries to become, a
lessee under any operating lease (other than a lease under which a Borrower or
any of its Subsidiaries is lessor) of Property if the aggregate Rentals payable
during any current or future period of 12 consecutive months under the lease in
question and all other leases under which Borrowers or any of their Subsidiaries
is then lessee would exceed $1,000,000. The term "Rentals" means, as of the date
of determination, all payments, which the lessee is required to make by the
terms of any lease.
0.0.1. Tax Consolidation. File or consent to the filing of any
consolidated income tax return with any Person other than a Subsidiary of D&K.
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0.0.1. Amendment of Securitization Documents. Request any waiver of or
consent to any default under the terms of the Securitization Documents.
0.0.1. API. Permit API, as a Subsidiary of D&K, to own any property
other than the real property currently owned by such Subsidiary.
0.1. Specific Financial Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender, each Borrower
covenants that, unless otherwise consented to by Lender in writing, it and all
other Borrowers shall (all financial covenants being computed on a consolidated
basis):
(A) Current Ratio. Maintain at all times a ratio of Consolidated
Current Assets to Consolidated Current Liabilities of not less than 1.25 to 1.0.
For purposes of computing the ratio contemplated herein, the amount of
Borrowers' Inventory comprising Consolidated Current Assets shall be computed on
a first in, first out basis in accordance with GAAP.
(B) Interest Coverage Ratio. Maintain at all times for each period of
three (3) consecutive months (computed on a rolling-basis commencing with the
three month period ending March 31, 1995) a ratio of Net Cash Flow plus Interest
Expense to Interest Expense of not less than 1.75 to 1.00.
(C) Debt Service Coverage Ratio. Maintain for each fiscal year of
Borrowers a ratio of Net Cash Flow minus Capital Expenditures not financed by
Permitted Purchase Money Indebtedness to Debt Service of not less than 1.0 to
1.0.
(D) Maintenance of Capital Base. Maintain at all times during the
periods specified below a Capital Base in an amount not less than the amount
shown below for the period corresponding thereto:
Period Amount
July 1, 1998 through June 30, 1999 $10,000,000
July 1, 1999 through June 30, 2000 $12,500,000
July 1, 2000 and thereafter $15,000,000
SECTION
1. CONDITIONS PRECEDENT
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Notwithstanding any other provision of this Agreement or any of the other
Loan Documents, and without affecting in any manner the rights of Lender under
the other sections of this Agreement, Lender shall not be required to make any
Loan under this Agreement unless and until each of the following conditions has
been and continues to be satisfied:
0.1. Documentation. Lender shall have received, in form and substance
satisfactory to Lender and its counsel, a duly executed copy of this Agreement
and the other Loan Documents, together with such additional documents,
instruments, certificates and opinions of Borrowers' counsel as Lender and its
counsel shall require in connection therewith from time to time, all in form and
substance satisfactory to Lender and its counsel, including without limitation,
the Jaron Security Agreement along with all filed copies of all UCC-1 Financing
Statements naming D&K as the secured party, and assigned to Lender.
0.1. No Default. No Default or Event of Default shall exist.
0.1. Other Loan Documents. Each of the conditions precedent set forth in
the other Loan Documents shall have been satisfied.
0.1. No Litigation. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or to
obtain damages in respect of, or which is related to or arises out of this
Agreement or the consummation of the transactions contemplated hereby.
0.1. Securitization. The Securitization shall have been consummated
substantially in accordance with the terms of the Securitization Documents.
0.1. Environmental. Lender shall be satisfied as to the existing and
potential liability of the Borrowers and their respective Subsidiaries with
respect to any environmental matters including, without limitation, compliance
with Environmental Laws and regulations.
0.1. No Material Adverse Change. There shall have occurred no material
adverse change in the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Borrower or its Subsidiaries since
June 30, 1997.
0.1. Fee Letter. Borrowers shall have paid to Lender the fees payable under
the Fee Letter which are due and payable on the Closing Date.
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SECTION
1. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
0.1. Events of Default. The occurrence of one or more of the following
events shall constitute an "Event of Default":
0.0.1. Default under Securitization Documents. Any default, liquidation
event, or termination (other than a voluntary termination by Borrower), or any
event giving rise to a right of liquidation or termination, shall occur under
the Securitization Documents.
0.0.1. Payment of Other Obligations. Borrowers shall fail to pay any of
the Obligations within ten (10) days after the due date thereof (whether due at
stated maturity, on demand, upon acceleration or otherwise).
0.0.1. Misrepresentations. Any representation, warranty or other
statement made or furnished to Lender by or on behalf of any Borrower or any
Subsidiary of any Borrower in this Agreement, any of the other Loan Documents or
any instrument, certificate or financial statement furnished in compliance with
or in reference thereto proves to have been false or misleading in any material
respect when made or furnished or when reaffirmed pursuant to Section 7.2
hereof.
0.0.1. Breach of Specific Covenants. Any Borrower shall fail or neglect
to perform, keep or observe any covenant contained in Sections 5.2, 6.1.1, 6.2,
8.1.1, 8.1.3, 8.1.8, 8.1.9, 8.2, or 8.3 hereof on the date that such Borrower is
required to perform, keep or observe such covenant.
0.0.1. Breach of Other Covenants. Any Borrower shall fail or neglect to
perform, keep or observe any covenant contained in this Agreement (other than a
covenant which is dealt with specifically elsewhere in Section 10.1 hereof) and
the breach of such other covenant is not cured to Lender's satisfaction within
30 days after the sooner to occur of D&K's receipt of notice of such breach from
Lender or the date on which such failure or neglect first becomes known to any
officer of such Borrower.
0.0.1. Default Under Security Documents/Other Agreements. Any event of
default shall occur under, or any Borrower shall default in the performance or
observance of any
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term, covenant, condition or agreement contained in, any of the Security
Documents; or the Other Agreements and such default shall continue beyond any
applicable grace period.
0.0.1. Other Defaults. There shall occur any default or event of
default on the part of any Borrower under any agreement, document or instrument
to which such Borrower is a party or by which such Borrower or any of its
Property is bound, creating or relating to any Indebtedness in excess of $10,000
(other than the Obligations) if the payment or maturity of such Indebtedness is
accelerated in consequence of such event of default or demand for payment of
such Indebtedness is made.
0.0.1. Uninsured Losses. Any material loss, theft, damage or
destruction of any of the Collateral not fully covered (subject to such
deductibles as Lender shall have permitted) by insurance.
0.0.1. Insolvency and Related Proceedings. Any Borrower shall cease to
be Solvent or shall suffer the appointment of a receiver, trustee, custodian or
similar fiduciary, or shall make an assignment for the benefit of creditors, or
any petition for an order for relief shall be filed by or against any Borrower
under the Bankruptcy Code (if against any Borrower, the continuation of such
proceeding for more than 60 days), or any Borrower shall make any offer of
settlement, extension or composition to their respective unsecured creditors
generally.
0.0.1. Business Disruption; Condemnation. There shall occur a cessation
of a substantial part of the business of any Borrower, or any Subsidiary of any
Borrower for a period which significantly affects Borrower's capacity to
continue its business, on a profitable basis; or any Borrower or any Subsidiary
of any Borrower shall suffer the loss or revocation of any material license or
permit now held or hereafter acquired by any Borrower or such Subsidiary which
is necessary to the continued or lawful operation of its business; or any
Borrower shall be enjoined, restrained or in any way prevented by court,
governmental or administrative order from conducting all or any material part of
its business affairs; or any material lease or agreement pursuant to which any
Borrower leases, uses or occupies any Property shall be canceled or terminated
prior to the expiration of its stated term; or any part of the Collateral shall
be taken through condemnation or the value of such Property shall be impaired
through condemnation.
0.0.1. ERISA. A Reportable Event shall occur which Lender, in its sole
discretion, shall determine in good faith constitutes grounds for the
termination by the Pension Benefit Guaranty Corporation of any Plan or for the
appointment by the appropriate United States district court of a trustee for any
Plan, or if any Plan shall be terminated or any such trustee shall be requested
or appointed, or if any Borrower, or any Subsidiary of any Borrower is in
"default" (as defined in Section 4219(c)(5) of ERISA) with respect to payments
to a Multiemployer Plan
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resulting from such Borrower's, such Subsidiary's or such Guarantor's complete
or partial withdrawal from such Plan.
0.0.1. Challenge to Agreement. Any Borrower, or any Subsidiary of any
Borrower, or any Affiliate of any of them, shall challenge or contest in any
action, suit or proceeding the validity or enforceability of this Agreement, or
any of the other Loan Documents, the legality or enforceability of any of the
Obligations or the perfection or priority of any Lien granted to Lender.
0.0.1. Repudiation of or Default Under Guaranty. Any Guarantor shall
revoke or attempt to revoke any guaranty signed by such Guarantor, or shall
repudiate such Guarantor's liability thereunder or shall be in default under the
terms thereof.
0.0.1. Criminal Forfeiture. Any Borrower, or any Subsidiary of any
Borrower shall be criminally indicted or convicted under any law that could lead
to a forfeiture of any Property of Borrower, any Subsidiary of Borrower or any
Guarantor.
0.0.1. Change of Management. ▇▇▇▇▇▇▇▇▇ shall cease to be employed by
D&K as its Chief Executive Officer, and to perform the duties ordinarily
attendant to such office.
0.0.1. Judgments. Any money judgment, writ of attachment or similar
process in an amount in excess of $1,000,000 is filed against any Borrower or
any Subsidiary of any Borrower, or any of their respective Property.
0.1. Acceleration of the Obligations. Without in any way limiting the
right of Lender to demand payment of any portion of the Obligations payable on
demand in accordance with this Agreement, upon or at any time after the
occurrence of an Event of Default, all or any portion of the Obligations shall,
at the option of Lender and without presentment, demand, protest or further
notice by Lender, become at once due and payable and Borrowers shall forthwith
pay to Lender, the full amount of such Obligations, provided, that upon the
occurrence of an Event of Default specified in subsection 10.1.9 hereof
(relating to insolvency), all of the Obligations shall become automatically due
and payable without declaration, notice or demand by Lender. In connection with
any Letter of Credit issued or guaranteed pursuant to this Agreement, Borrowers
shall deliver to Lender cash collateral to be held interest-free by Lender in
the aggregate maximum amount of all letters of Credit then issued and
outstanding. If Borrowers fail to so deliver cash collateral, Lender may sell
Collateral pursuant to this Agreement and hold the proceeds thereof as cash
collateral.
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0.1. Other Remedies. Upon and after the occurrence of an Event of Default,
Lender shall have and may exercise from time to time the following rights and
remedies:
0.0.1. All of the rights and remedies of a secured party under the Code
or under other applicable law, and all other legal and equitable rights to which
Lender may be entitled, all of which rights and remedies shall be cumulative and
shall be in addition to any other rights or remedies contained in this Agreement
or any of the other Loan Documents, and none of which shall be exclusive.
0.0.1. The right to take immediate possession of the Collateral, and to
(i) require Borrowers to assemble the Collateral, at Borrowers' expense, and
make it available to Lender at a place designated by Lender which is reasonably
convenient to both parties, and (ii) enter any premises where any of the
Collateral shall be located and to keep and store the Collateral on said
premises until sold (and if said premises be the Property of a Borrower, such
Borrower agrees not to charge Lender for storage thereof).
0.0.1. The right to sell or otherwise dispose of all or any Collateral
in its then condition, or after any further manufacturing or processing thereof,
at public or private sale or sales, with such notice as may be required by law,
in lots or in bulk, for cash or on credit, all as Lender, in its sole
discretion, may deem advisable. Borrowers agree that 10 days written notice to
D&K of any public or private sale or other disposition of Collateral shall be
reasonable notice thereof, and such sale shall be at such locations as Lender
may designate in said notice. Lender shall have the right to conduct such sales
on Borrowers' premises, without charge therefor, and such sales may be adjourned
from time to time in accordance with applicable law. Lender shall have the right
to sell, lease or otherwise dispose of the Collateral, or any part thereof, for
cash, credit or any combination thereof, and Lender may purchase all or any part
of the Collateral at public or, if permitted by law, private sale and, in lieu
of actual payment of such purchase price, may set off the amount of such price
against the Obligations. The proceeds realized from the sale of any Collateral
may be applied, after allowing 1 Business Day for collection, first to the
costs, expenses and attorneys' fees incurred by Lender in collecting the
Obligations, in enforcing the rights of Lender under the Loan Documents and in
collecting, retaking, completing, protecting, removing, storing, advertising for
sale, selling and delivering any Collateral, second to the interest due upon any
of the Obligations; and third, to the principal of the Obligations. If any
deficiency shall arise, Borrowers shall remain jointly and severally liable to
Lender therefor. In the event of a sale of Collateral on credit terms, the
Borrowers' Obligations shall be reduced only to the extent that Lender receives
cash payment in respect of such credit sale.
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0.0.1. Lender is hereby granted a license or other right to use,
without charge, Borrowers' labels, patents, copyrights, rights of use of any
name, trade secrets, tradenames, trademarks and advertising matter, or any
Property of a similar nature, as it pertains to the Collateral, in advertising
for sale and selling any Collateral and Borrowers' rights under all licenses and
all franchise agreements shall inure to Lender's benefit.
0.0.1. Lender may, at its option, require Borrowers to deposit with
Lender funds equal to the LC Amount and, if Borrower fails to promptly make such
deposit, Lender may advance such amount as a Revolving Credit Loan (whether or
not an Overadvance is created thereby). Any such deposit or advance shall be
held by Lender as a reserve to fund future payments on such LC Guaranties and
future drawings against such Letters of Credit. At such time as all LC
Guaranties have been paid or terminated and all Letters of Credit have been
drawn upon or expired, any amounts remaining in such reserve shall be applied
against any outstanding Obligations, or, if all Obligations have been
indefeasibly paid in full, returned to Borrowers.
0.1. Remedies Cumulative; No Waiver. All covenants, conditions, provisions,
warranties, guaranties, indemnities, and other undertakings of Borrowers
contained in this Agreement and the other Loan Documents, or in any document
referred to herein or contained in any agreement supplementary hereto or in any
schedule or in any guaranty given to Lender or contained in any other agreement
between Lender and any Borrower, heretofore, concurrently, or hereafter entered
into, shall be deemed cumulative to and not in derogation or substitution of any
of the terms, covenants, conditions, or agreements of Borrowers herein
contained. The failure or delay of Lender to require strict performance by any
Borrower of any provision of this Agreement or to exercise or enforce any
rights, Liens, powers, or remedies hereunder or under any of the aforesaid
agreements or other documents or security or Collateral shall not operate as a
waiver of such performance, Liens, rights, powers and remedies, but all such
requirements, Liens, rights, powers, and remedies shall continue in full force
and effect until all Loans and all other Obligations owing or to become owing
from Borrowers to Lender shall have been fully satisfied. None of the
undertakings, agreements, warranties, covenants and representations of Borrowers
contained in this Agreement or any of the other Loan Documents and no Event of
Default by any Borrower under this Agreement or any other Loan Documents shall
be deemed to have been suspended or waived by Lender, unless such suspension or
waiver is by an instrument in writing specifying such suspension or waiver and
is signed by a duly authorized representative of Lender and directed to D&K, as
agent for the Borrowers.
SECTION
1. MISCELLANEOUS
0.1. Power of Attorney. Borrowers hereby irrevocably designate, make,
constitute and appoint Lender (and all Persons designated by Lender) as
Borrowers' true and lawful attorney
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(and agent-in-fact) and Lender, or Lender's agent, may, without notice to any
Borrower and in either any Borrower's or Lender's name, but at the cost and
expense of Borrowers:
0.0.1. At such time or times upon or after the occurrence of a Default
or an Event of Default as Lender or said agent, in its sole discretion, may
determine, endorse any Borrower's name on any checks, notes, acceptances,
drafts, money orders or any other evidence of payment or proceeds of the
Collateral which come into the possession of Lender or under Lender's control.
0.0.1. At such time or times upon or after the occurrence of an Event
of Default as Lender or its agent in its sole discretion may determine: (i)
demand payment of any Accounts which are part of the Collateral from the Account
Debtors, enforce payment of such Accounts by legal proceedings or otherwise, and
generally exercise all of Borrower's rights and remedies with respect to the
collection of such Accounts; (ii) settle, adjust, compromise, discharge or
release any of such Accounts or other Collateral or any legal proceedings
brought to collect any of such Accounts or other Collateral; (iii) sell or
assign any of such Accounts and other Collateral upon such terms, for such
amounts and at such time or times as Lender deems advisable; (iv) take control,
in any manner, of any item of payment or proceeds relating to any Collateral;
(v) prepare, file and sign any Borrower's name to a proof of claim in bankruptcy
or similar document against any Account Debtor of an Account which is part of
the Collateral or to any notice of lien, assignment or satisfaction of lien or
similar document in connection with any of the Collateral; (vi) receive, open
and dispose of all mail addressed to any Borrower and to notify postal
authorities to change the address for delivery thereof to such address as Lender
may designate; (vii) endorse the name of any Borrower upon any of the items of
payment or proceeds relating to any Collateral and deposit the same to the
account of Lender on account of the Obligations; (viii) endorse the name of any
Borrower upon any chattel paper, document, instrument, invoice, freight ▇▇▇▇,
▇▇▇▇ of lading or similar document or agreement relating to the Accounts,
Inventory and any other Collateral; (ix) use any Borrower's stationery and sign
the name of any Borrower to verifications of the Accounts which are part of the
Collateral and notices thereof to Account Debtors; (x) use the information
recorded on or contained in any data processing equipment and computer hardware
and software relating to the Accounts, Inventory, Investment Property, and any
other Collateral; (xi) make and adjust claims under policies of insurance; and
(xii) do all other acts and things necessary, in Lender's determination, to
fulfill Borrowers' obligations under this Agreement.
0.0.1. Indemnity. Borrowers hereby jointly and severally agree to
indemnify and hold harmless each Indemnified Party from and against any
liability, loss, damage, suit, action or proceeding ever suffered or incurred by
such Indemnified Party (including reasonable attorneys fees and legal expenses)
arising out of or in connection with the Securitization Documents or the closing
of the transaction described therein, or as a result of any Borrower's failure
to observe, perform or discharge Borrower's duties hereunder. In addition,
Borrowers shall jointly and
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severally be obligated to defend each Indemnified Party against and save it
harmless from all claims of any Person with respect to the Collateral. Without
limiting the generality of the foregoing, these indemnities shall extend to any
claims asserted against any Indemnified Party by any Person under any
Environmental Laws or similar laws by reason of any Borrower's or any other
Person's failure to comply with laws applicable to solid or hazardous waste
materials or other toxic substances. Notwithstanding any contrary provision in
this Agreement, the obligation of Borrowers under this Section shall survive the
payment in full of the Obligations and the termination of this Agreement.
0.0.1. Modification of Agreement; Sale of Interest. This Agreement may
not be modified, altered or amended, except by an agreement in writing signed by
Borrowers and Lender. Borrowers may not sell, assign or transfer any interest in
this Agreement, any of the other Loan Documents, or any of the Obligations, or
any portion thereof, including, without limitation, Borrowers' rights, title,
interests, remedies, powers, and duties hereunder or thereunder. Borrowers
hereby consent to Lender's participation, sale, assignment, transfer or other
disposition, at any time or times hereafter, of this Agreement and any of the
other Loan Documents, or of any portion hereof or thereof, including, without
limitation, Lender's rights, title, interests, remedies, powers, and duties
hereunder or thereunder. In the case of an assignment, the assignee shall have,
to the extent of such assignment, the same rights, benefits and obligations as
it would if it were "Lender" hereunder and in the case of a total assignment
Lender shall be relieved of all obligations hereunder upon any such assignments.
Each Borrower agrees that it will use its best efforts to assist and cooperate
with Lender in any manner reasonably requested by Lender to effect the sale of
participations in or assignments of any of the Loan Documents or any portion
thereof or interest therein, including, without limitation, assisting in the
preparation of appropriate disclosure documents. Each Borrower further agrees
that Lender may disclose credit information regarding such Borrower and its
Subsidiaries to any potential participant or assignee.
0.0.1. Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
0.1. Successors and Assigns. This Agreement, the Other Agreements and the
Security Documents shall be binding upon and inure to the benefit of the
successors and assigns of Borrowers and Lender permitted hereunder.
0.1. Cumulative Effect; Conflict of Terms. The provisions of the Other
Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement.
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Except as otherwise provided in Section 3.2 hereof and except as otherwise
provided in any of the other Loan Documents by specific reference to the
applicable provision of this Agreement, if any provision contained in this
Agreement is in direct conflict with, or inconsistent with, any provision in any
of the other Loan Documents, the provision contained in this Agreement shall
govern and control.
0.1. 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 and delivered shall be deemed to be an original
and all of which counterparts taken together shall constitute but one and the
same instrument, subject to Section 11.14.
0.1. Notice. Except as otherwise provided herein, all notices, requests and
demands to or upon a party hereto, to be effective, shall be in writing and
shall be sent by certified or registered mail, return receipt requested, by
personal delivery against receipt, by overnight courier or by facsimile and,
unless otherwise expressly provided herein, shall be deemed to have been validly
served, given or delivered immediately when delivered against receipt, one
Business Day after deposit in the mail, postage prepaid, or with an overnight
courier or, in the case of facsimile notice, when sent, addressed as follows:
If to Lender: Fleet Capital Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Loan Administration Manager
Facsimile No.: 414/798-4882
With a copy to: Husch & Eppenberger, LLC
▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile No.: 314/421-0239
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If to Borrowers: D & K Healthcare Resources, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile No.:314/727-5759
With a copy to: Armstrong, Teasdale, Schlafly & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile No.:314/621-5065
or to such other address as each party may designate for itself by no
in accordance with this Section; provided, however, that any notice, request or
demand to or upon Lender pursuant to subsection 3.1.1 or 4.2.2 hereof shall not
be effective until received by Lender.
0.1. Lender's Consent. Whenever Lender's consent is required to be obtained
under this Agreement, any of the Other Agreements or any of the Security
Documents as a condition to any action, inaction, condition or event, Lender
shall be authorized to give or withhold such consent in its sole and absolute
discretion and to condition its consent upon the giving of additional collateral
security for the Obligations, the payment of money or any other matter.
0.1. Credit Inquiries. Each Borrower hereby authorizes and permits Lender
to respond to usual and customary credit inquiries from third parties concerning
such Borrower or any of its Subsidiaries, subject to Section 11.14.
0.1. Time of Essence. Time is of the essence of this Agreement, the Other
Agreements and the Security Documents.
0.1. Entire Agreement. This Agreement and the other Loan Documents,
together with all other instruments, agreements and certificates executed by the
parties in connection therewith or with reference thereto, embody the entire
understanding and agreement between the parties hereto and thereto with respect
to the subject matter hereof and thereof and supersede all prior agreements,
understandings and inducements, whether express or implied, oral or written.
0.1. Interpretation. No provision of this Agreement or any of the other
Loan Documents shall be construed against or interpreted to the disadvantage of
any party hereto by
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any court or other governmental or judicial authority by reason of such party
having or being deemed to have structured or dictated such provision.
0.1. GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN NEGOTIATED,
EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN CHICAGO,
ILLINOIS. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF ILLINOIS: PROVIDED, HOWEVER, THAT IF ANY OF THE
COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN ILLINOIS, THE LAWS OF
SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR FORECLOSURE
OF LENDER'S LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT OF LENDER'S OTHER
REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH
JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF ILLINOIS. AS
PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT
OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF ANY BORROWER OR LENDER,
EACH BORROWER HEREBY CONSENTS AND AGREES THAT ANY STATE OR FEDERAL COURT LOCATED
IN THE CITY OR COUNTY OF ST. LOUIS, MISSOURI, SHALL HAVE EXCLUSIVE JURISDICTION
TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY BORROWER AND LENDER
PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS
AGREEMENT. EACH BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH
BORROWER HEREBY WAIVES ANY OBJECTION WHICH SUCH BORROWER MAY HAVE BASED UPON
LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. EACH BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO ANY BORROWER AT THE ADDRESS SET FORTH
IN THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
EARLIER OF SUCH BORROWER'S ACTUAL RECEIPT THEREOF OR 3 DAYS AFTER DEPOSIT IN THE
U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR
OPERATE TO AFFECT THE RIGHT OF LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY LENDER OF ANY JUDGMENT OR
ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF
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ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM
OR JURISDICTION.
0.1. WAIVERS BY BORROWERS. EACH BORROWER WAIVES (i) THE RIGHT TO TRIAL BY
JURY (WHICH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS,
THE OBLIGATIONS OR THE COLLATERAL: (ii) PRESENTMENT, DEMAND AND PROTEST AND
NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE,
COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER,
ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND GUARANTIES
AT ANY TIME HELD BY LENDER ON WHICH EACH BORROWER MAY IN ANY WAY BE LIABLE AND
HEREBY RATIFIES AND CONFIRMS WHATEVER LENDER MAY DO IN THIS REGARD; (iii) NOTICE
PRIOR TO TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY
WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING LENDER TO EXERCISE ANY OF
LENDER'S REMEDIES; (iv) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION
LAWS; AND (v) NOTICE OF ACCEPTANCE HEREOF. EACH BORROWER ACKNOWLEDGES THAT THE
FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO LENDER'S ENTERING INTO THIS
AGREEMENT AND THAT LENDER IS RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE
DEALINGS WITH BORROWER. EACH BORROWER WARRANTS AND REPRESENTS THAT IT HAS
REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND
VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.
0.1. Private Sale; Commercial Reasonableness. The Borrowers acknowledge
that a significant portion of the Collateral consists of prescription drugs and
controlled substances that are subject to applicable federal and state
regulations which, among other things, restrict the right to sell and purchase
such drugs and controlled substances to certain licensed or otherwise authorized
Persons. In view of these restrictions on the ability to sell and purchase such
Collateral, the Borrowers acknowledge that a public sale of such Collateral
under the UCC would be legally impossible or otherwise impractical. Accordingly,
the Borrowers agree that a private sale of any such Collateral, and any other
Collateral sold in connection therewith, shall not be deemed a commercially
unreasonable sale under the UCC by virtue of the Lender selling, or offering to
sell, such Collateral only to Persons who are licensed or otherwise authorized
to purchase such Collateral. The Borrowers further recognize that, in connection
with the disposition of such Collateral subject to federal and state
regulations, the Lender may incur
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additional costs and expenses such as, by way of example and not as a
limitation, obtaining certain federal and state licenses or other authorizations
to permit the Lender to sell or purchase such Collateral, retaining the services
of auctioneers or other persons licensed or otherwise authorized to dispose of
such Collateral, retaining legal counsel and experts in the area of prescription
drugs and controlled substances to advise Lender on the disposition of such
Collateral, and verifying that any purchasers of such Collateral are licensed or
otherwise authorized to acquire such Collateral. Any such reasonable additional
costs and expenses incurred by the Lender shall be added to the Obligations and
be payable on demand and shall not affect the commercial reasonableness of any
such sale. Borrowers hereby agree to cooperate with any such sale to the extent
reasonably requested by Lender.
0.1. Confidentiality. Lender agrees to take and to cause its Affiliates to
take normal and reasonable precautions and exercise due care to maintain the
confidentiality of all information identified as "confidential" or "secret" by
Borrower and provided to it by the Borrower or any Subsidiary, under this
Agreement or any other Loan Document, and neither such Lender nor any of its
Affiliates shall use any such information other than in connection with or in
enforcement of this Agreement and the others Loan Documents or in connection
with other business now or hereafter existing or contemplated with the Borrower
or any Subsidiary; except to the extent such information (i) was or becomes
generally available to the public other than as a result of disclosure by
Lender, or (ii) was or becomes available on a non-confidential basis from a
source other than the Borrower, provided that such source is not bound by a
confidentiality agreement with the Borrower or any Subsidiary known to Lender;
provided, however that any Lender may disclose such information (A) at the
request or pursuant to any requirement of any governmental authority to which
Lender is subject or in connection with an examination of Lender by any such
authority; (B) pursuant to subpoena or other court process; (C) when required to
do so in accordance with the provisions of any applicable requirement of law;
(D) to the extent reasonably required in connection with any litigation or
proceeding to which the Lender or any of their respective Affiliates may be
party; (E) to the extent reasonably required in connection with the exercise of
any remedy hereunder or under any other Loan Document; (F) to Lender's
independent auditors and other professional advisors; (G) to any participant or
assignee, actual or potential, provided that such Person agrees in writing to
keep such information confidential to the same extent required of the Lender
hereunder; (H) as to any Lender or its Affiliate, as expressly permitted under
the terms of any other document or agreement regarding confidentiality to which
the Borrower or any Subsidiary is party or is deemed party with Lender or Such
Affiliate; and (I) to its Affiliates.
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IN WITNESS WHEREOF, this Agreement has been duly executed on the day and
year specified at the beginning of this Agreement.
D & K HEALTHCARE RESOURCES, INC.
By: ________________________________
Name:
Title:
JARON, INC.
By: ________________________________
Name:
Title:
FLEET CAPITAL CORPORATION
By: ________________________________
Name:
Title:
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APPENDIX A
GENERAL DEFINITIONS
When used in the Loan and Security Agreement dated as of August 7,
1998, by and among Fleet Capital Corporation, D & K Healthcare Resources, Inc.,
and Jaron, Inc., the following terms shall have the following meanings (terms
defined in the singular to have the same meaning when used in the plural and
vice versa):
Account Debtor - any Person who is or may become obligated under or on
account of an Account.
Accounts - all Accounts (as defined in the Code), contract rights,
chattel paper, instruments and documents, whether now owned or hereafter created
or acquired by Borrower or in which Borrower now has or hereafter acquires any
interest.
Adjusted Net Earnings From Operations - with respect to any fiscal
period, means the net earnings (or loss) after provision for income taxes for
such fiscal period of a Borrower, as reflected on the financial statement of
such Borrower supplied to Lender pursuant to the Agreement, but excluding:
(i) any gain or loss arising from the sale of capital
assets;
(ii) any gain arising from any write-up of assets;
(iii) earnings of any Subsidiary of any Borrower accrued
prior to the date it became a Subsidiary;
(iv) earnings of any corporation, substantially all the
assets of which have been acquired in any manner by a Borrower,
realized by such corporation prior to the date of such acquisition;
(v) net earnings of any business entity (other than a
Subsidiary of a Borrower) in which Borrower has an ownership interest
unless such net earnings shall have actually been received by a
Borrower in the form of cash distributions;
(vi) any portion of the net earnings of any Subsidiary of a
Borrower which for any reason is unavailable for payment of dividends
to such Borrower;
(vii) the earnings of any Person to which any assets of a
Borrower shall have been sold, transferred of disposed of, or into
which a Borrower shall have merged, or been a party to any
consolidation or other form of reorganization, prior to the date of
such transaction;
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(viii) any gain arising from the acquisition of any Securities
of a Borrower; and
(ix) any gain arising from extraordinary or non-recurring
items.
Adverse Environmental Condition shall mean (i) any release, spill,
emission, leaking, pumping, injection, presence, deposit, abandonment,
disposal, discharge, dispersal, emission, leaching or migration in, into,
on, or emanating from the indoor or outdoor environment (including, without
limitation, the air, ground, water, groundwater, or any surface) of any
substance, chemical, material, pollutant, hazardous material, gas, odor or
audible noise related to the conduct of a Borrower's or any of its
Subsidiaries' businesses; (ii) any complaint, citation, notice of violation,
request for information, claim, demand or order by any governmental
authority or any person for the personal injury, property damage, damage to
the environment, or adverse effect on the environmental resulting from (i)
above; and (iii) the violation, or alleged violation of, or liability under
any applicable Environmental Law, permits, approvals, directives,
injunctions, orders, licenses or judgments of, by or from any governmental
authority, agency, person or court relating to environmental matters
connected with any Borrower's or any of its Subsidiaries' businesses.
Affiliate - a Person (other than a Subsidiary): (i) which directly or
indirectly through one or more intermediaries Controls, or is Controlled by,
or is under common Control with, a Person; (ii) which beneficially owns or
holds 5% or more of any class of the Voting Stock of a Person; or (iii) 5%
or more of the Voting Stock (or in the case of a Person which is not a
corporation, 5% or more of the equity interest) of which is beneficially
owned or held by a Person or a Subsidiary of a Person.
Agreement - the Fourth Amended and Restated Loan and Security Agreement
referred to in the first sentence of this Appendix A, all Exhibits thereto
and this Appendix A.
API - Associated Pharmacies, Inc.
Applicable Margin - for any period or date, the margin with respect to
the Base Rate or the LIBO Rate as applicable, set forth in the chart below
corresponding to the Interest Coverage Ratio for the immediately preceding
12 month period ending each December 31 and June 30, as reflected by the
most recently delivered financial statements for the period ending on such
date, of Borrowers and their Subsidiaries pursuant to Section 8.1.3(i) (for
the twelve month periods ending on June 30 of each year) and pursuant to
Section 8.1.3(ii) (for the twelve month periods ending on December 31 of
each year). The Applicable Margin shall be effective from and after the date
of delivery of such financial statements:
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Interest Coverage
Ratio for preceding Applicable Margin Applicable Margin
twelve month period Base Rate LIBO Rate
============================== ================================== ==================================
< 1.75 to 1.0 1.00% 2.25%
< 2.00 to 1.0 and 0.75% 2.00%
> 1.75 to 1.0
-
< 2.50 to 1.0 and 0.50% 1.70%
> 2.00 to 1.0
-
<3.00 to 1.0 and 0.00% 1.50%
>2.50 to 1.0
-
>3.00 to 1.0 0.00% 1.25%
-
------------------------------ ---------------------------------- ----------------------------------
In calculating the Interest Coverage Ratio, Lender will calculate numbers to
hundredths, and amounts of .05 or greater will be rounded up to the next tenth.
For example (and not by way of limitation) 2.45 shall be rounded to 2.5, but
2.44 shall be rounded to 2.4.
▇▇▇▇▇▇▇▇▇ - ▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ III.
Average Monthly Loan Balance - The amount obtained by adding the unpaid
balance of all Loans owing by the Borrowers to Lender at the end of each day
for each day during the month in question and by dividing such sum by the
number of days in such month.
Bank - Fleet National Bank.
Base Rate - the rate of interest generally announced or quoted by Bank
from time to time as its base rate for commercial loans, whether or not such
rate is the lowest rate charged by Bank to its most preferred borrowers; and
if such base rate for commercial loans is discontinued by Bank as a
standard, a comparable reference rate designated by Bank as a substitute
therefor shall be the Base Rate.
Borrowing Base - as at any date of determination thereof, an amount
equal to the lesser of:
(i) $75,000,000; or
3
48
(ii) an amount equal to 60% of the value of Eligible
Inventory at such date calculated on the basis of the lower of cost or
market with the cost of raw materials and finished goods calculated on
a first-in, first-out basis,
MINUS
an amount equal to the sum of (A) the face amount of all letters of credit
issued or guaranteed by Lender or any Affiliate of Lender for the account of a
Borrower and outstanding at such date, and (B) any amounts which Lender may be
obligated to pay in the future for the account of a Borrower.
Notwithstanding anything else herein to the contrary, Advances to or on
behalf of Jaron will be limited at all times to the sum of 60% of the value of
Jaron's Eligible Inventory, calculated as set forth above, MINUS the aggregate
amount of Indebtedness of Jaron to D&K.
Business Day - any day excluding Saturday, Sunday and any day which is
a legal holiday under the laws of the State of Missouri or the State of Illinois
or is a day on which banking institutions located in either of such states are
closed.
Capital Base - At any date means the sum of (i) Consolidated Tangible
Net Worth, plus (ii) the principal amount of Subordinated Debt.
Capital Expenditures - expenditures made and liabilities incurred for
the acquisition of any fixed assets or improvements, replacements, substitutions
or additions thereto which have a useful life of more than one year, including
the total payments with respect to Capitalized Lease Obligations.
Capitalized Lease Obligation - any Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.
Closing Date - the date on which all of the conditions precedent in
Section 9 of the Agreement are satisfied and the initial Loan is made or the
initial Letter of Credit or LC Guaranty is issued under the Agreement.
Code - the Uniform Commercial Code as adopted and in force in the State
of Illinois, as from time to time in effect.
Collateral - all of the Property and interests in Property described in
Section 5 of the Agreement, and all other Property and interests in Property
that now or hereafter secure the payment and performance of any of the
Obligations.
4
49
Consolidated - the consolidation in accordance with GAAP of the
accounts or other items as to which such term applies.
Control - means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of Voting Stock, by contract, or otherwise.
Current Assets - at any date means the amount at which all of the
current assets of a Person would be properly classified as current assets shown
on a balance sheet at such date in accordance with GAAP, except that amounts due
from Affiliates and investments in Affiliates and prepaid expenses shall be
excluded therefrom.
Current Liabilities - at any date means the amount at which all of the
current liabilities of a Person would be properly classified as current
liabilities on a balance sheet at such date in accordance with GAAP excluding
the Loans.
Debt Service - for any period, all scheduled principal payments payable
on Indebtedness, whether at maturity or regularly scheduled payments, mandatory
prepayments, by acceleration or otherwise.
Default - an event or condition the occurrence of which would, with the
lapse of time or the giving of notice, or both, become an Event of Default.
Default Rate - as defined in subsection 2.1.2 of the Agreement.
Distribution - in respect of any corporation means and includes: (i)
the payment of any dividends or other distributions on capital stock of the
corporation (except distributions in such stock) and (ii) the redemption or
acquisition of Securities unless made contemporaneously from the net proceeds of
the sale of Securities.
Eligible Inventory - such Inventory of a Borrower (other than packaging
materials and supplies) which Lender, in its sole credit judgment, deems to be
Eligible Inventory. Without limiting the generality of the foregoing, no
Inventory shall be Eligible Inventory if:
(i) it is not raw materials or finished goods, or
work-in-process that is, in Lender's opinion, readily marketable in its
current form; or
(ii) it is not in good, new and saleable condition; or
(iii) it is slow-moving, obsolete or unmerchantable; or
(iv) it does not meet all standards imposed by any
governmental agency or authority; or
5
50
(v) it does not conform in all respects to the warranties
and representations set forth in the Agreement; or
(vi) it is not at all times subject to Lender's duly
perfected, first priority security interest and no other Lien except a
Permitted Lien;
(vii) it is not situated at a location in compliance with
the Agreement;
(viii) it consists of supplies or labels; or
(ix) in the case of Jaron, no Inventory shall be Eligible
Inventory while Jaron has any Indebtedness outstanding to Capital
Business Credit, Inc., has any commitment for credit from Capital
Business Credit, Inc., or any financing statement naming Capital
Business Credit, Inc. as secured party and Jaron as debtor remains
filed in any filing office.
Environmental Laws - all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidances, orders and consent
decrees relating to health, safety and environmental matters.
Equipment - all machinery, apparatus, equipment, fittings, furniture,
fixtures, motor vehicles and other tangible personal Property (other than
Inventory) of every kind and description used in any Borrower's operations or
owned by any Borrower in which any Borrower has an interest, whether now owned
or hereafter acquired by any Borrower and wherever located, and all parts,
accessories and special tools and all increases and accessions thereto and
substitutions and replacements thereof.
ERISA - the Employee Retirement Income Security Act of 1974, as
amended, and all rules and regulations from time to time promulgated thereunder.
Event of Default - as defined in Section 10.1 of the Agreement.
Fee Letter - that certain fee letter from Borrowers to Lenders dated on
or about the Closing Date.
GAAP - generally accepted accounting principles in the United States of
America in effect from time to time.
General Intangibles - all General Intangibles (as defined in the Code)
of Borrower, whether now owned or hereafter created or acquired by the Borrower,
including, without limitation, all choses in action, causes of action, corporate
or other business records, deposit accounts, inventions, designs, patents,
patent applications, trademarks, trade names, trade secrets, goodwill,
copyrights, registrations, licenses, franchises, customer lists, tax refund
claims, computer programs, all claims under guaranties, security interests
6
51
or other security held by or granted to Borrower to secure payment of any of the
Accounts by an account debtor, all rights to indemnification and all other
intangible property of every kind and nature (other than Accounts).
Guarantor - Any Person who may hereafter guarantee payment or
performance of the whole or any part of the Obligations.
Indebtedness - as applied to a Person means, without duplication
(i) all items which in accordance with GAAP would be
included in determining total liabilities as shown on the liability
side of a balance sheet of such Person as at the date as of which
Indebtedness is to be determined, including, without limitation,
Capitalized Lease Obligations,
(ii) all obligations of other Persons which such Person has
guaranteed,
(iii) all reimbursement obligations in connection with
letters of credit or letter of credit guaranties issued for the account
of such Person, and
(iv) in the case of any Borrower (without duplication), the
Obligations.
Indemnified Parties - the Lender and any Participating Lender and each
of their respective Affiliates and their respective officers, directors,
employees, agents and advisors.
Intercreditor Agreement - that certain Intercreditor Agreement between
Lender and Magna Bank, N.A., predecessor to Magna Bank, N.A., relating to a loan
made by such Bank to D&K in the original principal amount of $1,495,000, as the
same may be amended, restated, extended or modified from time to time.
Interest Coverage Ratio - with respect to any period of determination,
the ratio of Consolidated (i) Net Cash Flow for such period to (ii) Interest
Expense for such period, all as determined in accordance with GAAP.
Interest Expense - with respect to any fiscal period, the sum of (i)
the interest expense incurred for such period as determined in accordance with
GAAP, plus (ii) the Letter of Credit and LC Guaranty fees owing for such period,
and (iii) the Earned Discount charged under and defined in the Securitization
Documents.
Inventory - all of Borrower's Inventory (as defined in the Code),
whether now owned or hereafter acquired including, but not limited to, all goods
intended for sale or lease by Borrower, or for display or demonstration; all
work in process; all raw materials and other materials and supplies of every
nature and description used or which might be used in connection with the
manufacture, printing, packing, shipping, advertising, selling, leasing or
furnishing of such goods or otherwise used or consumed in Borrower's
7
52
business; and all documents evidencing and General Intangibles relating to any
of the foregoing, whether now owned or hereafter acquired by Borrower.
Investment Property - all of the Borrower's Investment Property (as
defined in the Code), whether now owned or hereafter acquired, including but not
limited to all securities, security entitlements, securities accounts, commodity
contracts, commodity accounts, stocks, bonds, mutual fund shares, money market
shares, and U.S. Government securities.
Jaron SecurityAgreement - that certain security agreement from Jaron,
in favor of D&K, securing Jaron's open account with D&K with respect to proceeds
of the Revolving Credit Loans pursuant to Section 1.4 of the Agreement.
LC Amount - at any time, the aggregate undrawn face amount of all
Letters of Credit and LC Guaranties then outstanding.
LC Guaranty - any guaranty pursuant to which Lender or any Affiliate of
Lender shall guaranty the payment or performance by Borrower of its
reimbursement obligation under any letter of credit.
Legal Requirement - any requirement imposed on Lender by any law,
regulation, order, interpretation, ruling or official directive (whether or not
having the force of law) of any board, central bank or governmental or
administrative agency, institution or authority.
Letter of Credit - any letter of credit issued by Lender or any of
Lender's Affiliates for the account of Borrower.
LIBO Rate - a fluctuating interest rate per annum equal to the rate
(rounded upwards, if necessary, to the next higher 1/16 of 1%) at which deposits
of U.S. Dollars approximately equal in principal amount to the outstanding
amount of Revolving Credit Loans are offered to Lender for a 30-day period by
Bank in the London interbank foreign currency deposits market at approximately
11:00 a.m., London time, on any Business Day. Each determination by Lender of
any LIBO Rate shall, in the absence of manifest error, be conclusive. The
foregoing notwithstanding, in the event deposits of U.S. dollars are not offered
to Lender by Bank for a 30-day period in the London Interbank foreign currency
deposits markets, then LIBO Rate shall mean London Interbank offered rate for a
30-day period as published from time to time by the Wall Street Journal, or if
not published in the Wall Street Journal, the Financial Times of London.
Lien - any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such interest
is based on common law, statute or contract. The term "Lien" shall also include
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions and encumbrances
affecting Property. For the purpose of the
8
53
Agreement, Borrowers shall be deemed to be the owner of any Property which it
has acquired or holds subject to a conditional sale agreement or other
arrangement pursuant to which title to the Property has been retained by or
vested in some other Person for security purposes.
Loan Account - the loan account established on the books of Lender
pursuant to Section 3.6 of the Agreement.
Loan Documents - the Agreement, the Other Agreements and the Security
Documents.
Loans - all loans and advances of any kind made by Lender pursuant to
the Agreement.
Money Borrowed - means (i) Indebtedness arising from the lending of
money by any Person to a Borrower; (ii) Indebtedness, whether or not in any such
case arising from the lending by any Person of money to a Borrower, (A) which is
represented by notes payable or drafts accepted that evidence extensions of
credit, (B) which constitutes obligations evidenced by bonds, debentures, notes
or similar instruments, or (C) upon which interest charges are customarily paid
(other than accounts payable) or that was issued or assumed as full or partial
payment for Property; (iii) Indebtedness that constitutes a Capitalized Lease
Obligation; (iv) reimbursement obligations with respect to letters of credit or
guaranties of letters of credit and (v) Indebtedness of a Borrower under any
guaranty of obligations that would constitute Indebtedness for Money Borrowed
under clauses (i) through (iii) hereof, if owed directly by such Borrower.
Multiemployer Plan - has the meaning set forth in Section 4001(a)(3) of
ERISA. Net Cash Flow - For any period means Consolidated Adjusted Net Earnings
from Operations during such period, plus amounts deducted in the computation
thereof for depreciation, amortization and deferred taxes, plus or minus, as the
case may be, the net change in the D&K's Consolidated LIFO reserve during such
period.
Obligations - all Loans and all other advances, debts, liabilities,
obligations, covenants and duties, together with all interest, fees and other
charges thereon, owing, arising, due or payable from any Borrower to Lender of
any kind or nature, present or future, whether or not evidenced by any note,
guaranty or other instrument, whether arising under the Agreement or any of the
other Loan Documents or otherwise whether direct or indirect (including those
acquired by assignment), absolute or contingent, primary or secondary, due or to
become due, now existing or hereafter arising and however acquired, and any
replacements, renewals, extensions or other modifications of any of them.
Original Term - as defined in Section 4.1 of the Agreement.
9
54
Other Agreements - any and all agreements, instruments and documents
(other than the Agreement and the Security Documents), heretofore, now or
hereafter executed by any Borrower, any Subsidiary of any Borrower or any other
third party and delivered to Lender in respect of the transactions contemplated
by the Agreement, including, without limitation, the Jaron Security Agreement
and the Fee Letter.
Overadvance - the amount, if any, by which the outstanding principal
amount of Revolving Credit Loans plus the LC Amount exceeds the Borrowing Base.
Participating Lender - each Person who shall be granted the right by
Lender to participate in any of the Loans described in the Agreement and who
shall have entered into a participation agreement in form and substance
satisfactory to Lender.
PBI - Pharmaceutical Buyers, Inc., an Arkansas corporation.
Permitted Liens - any Lien of a kind specified in subsection 8.2.5 of
the Agreement.
Permitted Purchase Money Indebtedness - Purchase Money Indebtedness of
a Borrower incurred after the date hereof which is secured by a Purchase Money
Lien and which, when aggregated with the principal amount of all other such
Indebtedness and Capitalized Lease Obligations of all Borrowers at the time
outstanding, does not exceed $1,000,000. For the purposes of this definition,
the principal amount of any Purchase Money Indebtedness consisting of
capitalized leases shall be computed as a Capitalized Lease Obligation.
Person - an individual, partnership, corporation, limited liability
company, joint stock company, land trust, business trust, or unincorporated
organization, or a government or agency or political subdivision thereof.
Plan - an employee benefit plan now or hereafter maintained for
employees of Borrower that is covered by Title IV of ERISA.
▇▇▇▇▇▇▇ Subordinated Note - that certain Promissory Note in the face
amount of $1,000,000 given by D&K to ▇▇▇▇▇ ▇▇▇▇▇▇▇ and dated March 17, 1998, as
the same may be amended or restated from time to time, which such note was
retired and paid in full, effective June 30, 1998.
Projections - Borrowers' forecasted Consolidated and consolidating (a)
balance sheets, (b) profit and loss statements, (c) cash flow statements, and
(d) capitalization statements, all prepared on a consistent basis with
Borrowers' historical financial statements, together with appropriate supporting
details and a statement of underlying assumptions.
10
55
Property - any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.
Purchase Money Indebtedness - means and includes (i) Indebtedness
(other than the Obligations) for the payment of all or any part of the purchase
price of any fixed assets, (ii) any Indebtedness (other than the Obligations)
incurred at the time of or within 10 days prior to or after the acquisition of
any fixed assets for the purpose of financing all or any part of the purchase
price thereof, and (iii) any renewals, extensions or refinancings thereof, but
not any increases in the principal amounts thereof outstanding at the time.
Purchase Money Lien - a Lien upon fixed assets which secures Purchase
Money Indebtedness, but only if such Lien shall at all times be confined solely
to the fixed assets the purchase price of which was financed through the
incurrence of the Purchase Money Indebtedness secured by such Lien.
Rentals - as defined in subsection 8.2.13 of the Agreement.
Reportable Event - any of the events set forth in Section 4043(b) of
ERISA.
Restricted Investment - any investment made in cash or by delivery of
Property to any Person, whether by acquisition of stock, Indebtedness or other
obligation or Security, or by loan, advance or capital contribution, or
otherwise, or in any Property except the following:
(i) investments in one or more Subsidiaries of any Borrower
to the extent existing on the Closing Date;
(ii) Property to be used in the ordinary course of business;
(iii) Current Assets arising from the sale of goods and
services in the ordinary course of business of a Borrower and its
Subsidiaries;
(iv) investments in direct obligations of the United States
of America, or any agency thereof or obligations guaranteed by the
United States of America, provided that such obligations mature within
one year from the date of acquisition thereof;
(v) investments in certificates of deposit maturing within
one year from the date of acquisition issued by a bank or trust company
organized under the laws of the United States or any state thereof
having capital surplus and undivided profits aggregating at least
$100,000,000;
(vi) investments made under and pursuant to the
Securitization Documents; and
11
56
(vii) investments in commercial paper given the highest
rating by a national credit rating agency and maturing not more than
270 days from the date of creation thereof.
Revolving Credit Facility - means the amounts available to be borrowed
under Section 1.1 of the Agreement.
Revolving Credit Loan - a Loan made by Lender as provided in Section
1.1 of the Agreement.
Security - shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
Security Documents - All the instruments and agreements now or at any
time hereafter securing the whole or any part of the Obligations.
Solvent - as to any Person, such Person (i) owns Property whose fair
saleable value is greater than the amount required to pay all of such Person's
Indebtedness (including contingent debts), (ii) is able to pay all of its
Indebtedness as such Indebtedness matures and (iii) has capital sufficient to
carry on its business and transactions and all business and transactions in
which it is about to engage.
Subordinated Debt - Indebtedness of Borrower that is subordinated to
the Obligations in a manner satisfactory to Lender, including, without
limitation, the Promissory Note of D&K in favor of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as agent,
issued in connection with the purchase of Northern Drug Company.
Subordination Agreements - the Subordination Agreements relating to
each of the notes evidencing the Subordinated Debt between Lender and the
holders of such notes.
Subsidiary - any corporation of which a Person owns, directly or
indirectly through one or more intermediaries, more than 50% of the Voting Stock
at the time of determination.
Tangible Assets - All assets except:
(i) any surplus resulting from any write-up of assets after
June 30, 1997;
(ii) deferred assets, other than prepaid insurance and
prepaid taxes;
(iii) patents, copyrights, trademarks, trade names,
non-compete agreements, franchises and other similar intangibles;
12
57
(iv) goodwill, including any amounts, however designated on
a Consolidated balance sheet of a Person and its Subsidiaries,
representing the excess of the purchase price paid for assets or stock
over the value assigned thereto on the books of such Person;
(v) restricted Investments;
(vi) unamortized debt discount and expense;
(vii) assets located and notes and receivables due from
obligors outside of the United States of America; and
(viii) accounts, notes, and other receivables due from
Affiliates or employees.
Tangible Net Worth - At any date means a sum equal to: (i) the net book
value (after deducting related depreciation, obsolescence, amortization,
valuation, and other proper reserves) at which the Tangible Assets of a
Person would be shown on a balance sheet at such date in accordance with
GAAP, plus (ii) such Person's LIFO reserve at such date (computed in
accordance with GAAP) minus (iii) the amount at which such Person's
liabilities (other than capital stock and surplus) would be shown on such
balance sheet in accordance with GAAP, and including as liabilities all
reserves for contingencies and other potential liabilities.
Total Credit Facility - $75,000,000.
Voting Stock - Securities of any class or classes of a corporation the
holders of which are ordinarily, in the absence of contingencies, entitled
to elect a majority of the corporate directors (or Persons performing
similar functions).
Other Terms. All other terms contained in the Agreement shall have,
when the context so indicates, the meanings provided for by the Code to the
extent the same are used or defined therein.
Certain Matters of Construction. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. The section titles, table of contents and
list of exhibits appear as a matter of convenience only and shall not affect the
interpretation of the Agreement. All references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations. All references to any of the Loan Documents shall include any and
all modifications thereto and any and all extensions or renewals thereof.
13
58
LIST OF EXHIBITS
Exhibit A Omitted
Exhibit B Borrowers' and each Subsidiary's Business Locations
Exhibit C Jurisdictions in which each Borrower and each Subsidiary is Authorized to do Business
Exhibit D Capital Structure of Borrowers
Exhibit E Corporate Names
Exhibit F Tax Identification Numbers of Subsidiaries
Exhibit G Patents, Trademarks, Copyrights and Licenses
Exhibit H Contracts Restricting Borrowers' Right to Incur Debts
Exhibit I Litigation
Exhibit J Capitalized Leases
Exhibit K Operating Leases
Exhibit L Pension Plans
Exhibit M Labor Contracts
Exhibit N Environmental Matters
Exhibit O Compliance Certificate
Exhibit P Permitted Liens
14
59
EXHIBIT B
BUSINESS LOCATIONS
1. Each Borrower currently has the following business locations, and no
others:
Chief Executive Office:
Other Locations:
2. Each Borrower maintains its books and records relating to Accounts and
General Intangibles at:
3. Each Borrower maintains Inventory at the following locations owned or
leased by such Borrower:
Address Owner
4. Each Borrower has had no office, place of business or agent for process
located in any county other than as set forth above, except:
5. Each Subsidiary currently has the following business locations, and no
others:
Chief Executive Office:
Other Locations:
6. Each Subsidiary maintains its books and records relating to Accounts
and General Intangibles at:
1
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7. Each Borrower maintains Inventory at the following locations owned or
leased by such Borrower:
Address Owner
8. Each Subsidiary has had no office, place of business or agent for
process located in any county other than as set forth above, except:
9. The following bailees, warehouseman, similar parties and consignees
hold inventory of any Borrower or any Subsidiary:
============================================================================================================================
Name and Address of Party Nature of Relationship Amount of Inventory Owner of Inventory
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
============================================================================================================================
2
61
EXHIBIT C
JURISDICTIONS IN WHICH EACH BORROWER
AND ITS SUBSIDIARIES
ARE AUTHORIZED TO DO BUSINESS
--------------------------------------------------------------------------------
Name of Entity Jurisdictions
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1
62
EXHIBIT D
CAPITAL STRUCTURE
1. The classes and number of authorized shares of each Borrower and each
Subsidiary and the record owner of such shares are as follows:
Borrowers:
==========================================================================================
Class of Stock Number of Shares Record Owners Number of Shares
Issued and Authorized but
Outstanding Unissued
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
==========================================================================================
Subsidiaries:
==========================================================================================
Class of Stock Number of Shares Record Owners Number of Shares
Issued and Authorized but
Outstanding Unissued
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
==========================================================================================
2. The number, nature and holder of all other outstanding Securities of
each Borrower and each Subsidiary are as follows:
3. The correct name and jurisdiction of incorporation of each Subsidiary
of each Borrower and the percentage of its issued and outstanding
shares owned by each Borrower are as follows:
1
63
====================================================================================
Name Jurisdiction of Incorporation Percentage of Shares Owned by Borrower
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
====================================================================================
4. The name of each of any Borrower's corporate or joint venture
Affiliates and the nature of the affiliation are as follows:
2
64
EXHIBIT E
CORPORATE NAMES
1. D&K's correct corporate name, as registered with the Secretary of State
of the State of Delaware, is:
2. In the conduct of its business, D&K has used the following names:
3. Of D&K's Subsidiaries, the correct corporate name, as registered with
the Secretary of State of the State of its incorporation of each, is:
4. In the conduct of its business, each Subsidiary of D&K has used the
following names:
5. Jaron's correct corporate name, as registered with the Secretary of
State of the State of Florida, is:
6. In the conduct of its business, Jaron has used the following names:
7. Of Jaron's Subsidiaries, the correct corporate name, as registered with
the Secretary of State of the State of its incorporation of each, is:
8. In the conduct of its business, each Subsidiary of Jaron has used the
following names:
1
65
EXHIBIT F
TAX IDENTIFICATION NUMBERS OF SUBSIDIARIES
Subsidiary Number
1
66
EXHIBIT G
PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES
1. Each Borrower's and each Subsidiaries' patents:
==================================================================================================
Patent Owner Status in Patent Federal Registration Date
Office Registration
Number
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
==================================================================================================
2. Each Borrower's and each Subsidiaries' trademarks:
==================================================================================================
Patent Owner Status in Patent Federal Registration Date
Office Registration
Number
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
==================================================================================================
3. Each Borrower's and each Subsidiaries' copyrights:
==================================================================================================
Patent Owner Status in Patent Federal Registration Date
Office Registration
Number
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
==================================================================================================
1
67
4. Each Borrower's and each Subsidiaries' licenses (other than routine
business licenses, authorizing them to transact business in local
jurisdictions):
=======================================================================================================================
Name of License Nature of License Licensor Term of License
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
=======================================================================================================================
2
68
EXHIBIT H
CONTRACTS RESTRICTING ANY BORROWER'S RIGHT TO INCUR DEBTS
Contracts that restrict the right of any Borrower to incur
Indebtedness:
========================================================================================================================
Title of Contract Identity of Parties Nature of Restriction Term of Contract
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
========================================================================================================================
1
69
EXHIBIT I
LITIGATION
1. Actions, suits, proceedings and investigations pending against any
Borrower or any Subsidiary:
===========================================================================================================================
Title of Action Nature of Action Complaining Parties Jurisdiction or Tribunal
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
===========================================================================================================================
2. The only threatened actions, suits, proceedings or investigations of
which any Borrower or any Subsidiary is aware are as follows:
1
70
EXHIBIT J
CAPITALIZED LEASES
Each Borrower and each Subsidiary has the following capitalized leases:
========================================================================================================================
Lessee Lessor Term of Lease Property Covered
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
========================================================================================================================
1
71
EXHIBIT K
OPERATING LEASES
Each Borrower and each Subsidiary has the following operating leases:
========================================================================================================================
Lessee Lessor Term of Lease Property Covered
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
========================================================================================================================
1
72
EXHIBIT L
PENSION PLANS
Each Borrower and each Subsidiary has the following Plans:
================================================================================
Party Type of Plan
--------------------------------------------------------------------------------
Borrower
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
[Subsidiaries]
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
================================================================================
1
73
EXHIBIT M
COLLECTIVE BARGAINING AGREEMENTS; LABOR CONTROVERSIES
1. Each Borrower and each Subsidiary is a party to the following
collective bargaining agreements:
================================================================================
Type of Agreement Parties Term of Agreement
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
================================================================================
2. Material grievances, disputes of controversies with employees are as
follows:
================================================================================
Parties Involved Nature of Grievance,
Dispute or Controversy
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3. Threatened strikes, work stoppages and asserted pending demands for
collective bargaining are as follows:
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Parties Involved Nature of Matter
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EXHIBIT N
ENVIRONMENTAL MATTERS
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EXHIBIT O
COMPLIANCE CERTIFICATE
[Letterhead of D&K]
__________________, 19__
Fleet Capital Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Loan Administration Manager
The undersigned, the chief financial officer of D & K Healthcare
Resources, Inc., a Delaware corporation ("D&K"), gives this certificate to Fleet
Capital Corporation ("Lender") in accordance with the requirements of subsection
8.1.2 of that certain Loan and Security Agreement dated ______________, 19__,
among D&K, Jaron, Inc. (collectively with D&K, the "Borrowers") and Lender
("Loan Agreement"). Capitalized terms used in this Certificate, unless otherwise
defined herein, shall have the meanings ascribed to them in the Loan Agreement.
1. Based upon my review of the balance sheets and statements of income
of Borrowers for the [fiscal year] [quarterly period] ending __________________,
19__, copies of which are attached hereto, I hereby certify that:
(a) The Current Ratio is ____ to 1;
(b) The Interest Coverage Ratio is ____ to ____;
(c) Debt Service Coverage Ratio is ____ to ____;
(d) Capital Base is $_______; and
(e) Capital Expenditures during the period and for the fiscal
year to date total $__________ and $__________, respectively.
2. No Default exists on the date hereof, other than:
________________________________________________ [if none, so state]; and
3. No Event of Default exists on the date hereof, other than
____________________________________________________ [if none, so state].
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Very truly yours,
__________________________
Chief Financial Officer
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EXHIBIT P
PERMITTED LIENS
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Secured Party Nature of Lien
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--------------------------------------------------
D & K HEALTHCARE RESOURCES, INC.
AND
JARON, INC.
--------------------------------------------------
==================================================
FOURTH AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Dated: as of August 7, 1998
$75,000,000.00
==================================================
================================================================================
FLEET CAPITAL CORPORATION
================================================================================
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TABLE OF CONTENTS
Page
----
SECTION 1. CREDIT FACILITY............................................................2
1.1 Revolving Credit Loans...................................................2
1.2 Letters of Credit; LC Guaranties.........................................3
1.3 All Loans to Constitute One Obligation; Joint and Several Liability......3
1.4 Appointment of D&K as Agent..............................................4
SECTION 2. INTEREST, FEES AND CHARGES.................................................5
2.1 Interest.................................................................5
2.2 Computation of Interest and Fees.........................................7
2.5 Letter of Credit and LC Guaranty Fees....................................7
2.7 Reimbursement of Expenses................................................8
SECTION 3. LOAN ADMINISTRATION........................................................8
3.1 Manner of Borrowing Revolving Credit Loans...............................8
3.2 Payments.................................................................9
3.3 Prepayments.............................................................10
3.4 Application of Payments and Collections.................................10
3.5 All Loans to Constitute One Obligation..................................10
3.6 Loan Account............................................................11
3.7 Statements of Account...................................................11
SECTION 4. TERM AND TERMINATION......................................................11
4.1 Term of Agreement.......................................................11
4.2 Termination.............................................................11
SECTION 5. SECURITY INTERESTS.......................................................12
5.1 Security Interest in Collateral.........................................12
5.2 Lien Perfection; Further Assurances.....................................13
SECTION 6. COLLATERAL ADMINISTRATION.................................................13
6.1 General.................................................................13
6.2 Administration of Inventory.............................................15
6.3 Payment of Charges......................................................15
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SECTION 7. REPRESENTATIONS AND WARRANTIES............................................15
7.1 General Representations and Warranties..................................15
7.2 Continuous Nature of Representations and Warranties.....................20
7.3 Survival of Representations and Warranties..............................20
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS.......................................21
8.1 Affirmative Covenants...................................................21
8.2 Negative Covenants......................................................23
8.3 Specific Financial Covenants............................................26
SECTION 9. CONDITIONS PRECEDENT......................................................27
9.1 Documentation...........................................................27
9.2 No Default..............................................................27
9.3 Other Loan Documents....................................................27
9.4 No Litigation...........................................................27
9.5 Securitization..........................................................27
9.6. Environmental..........................................................28
9.7. No Material Adverse Change.............................................28
9.8. Fee Letter.............................................................28
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT........................28
10.1 Events of Default......................................................28
10.2 Acceleration of the Obligations........................................30
10.3 Other Remedies.........................................................30
10.4 Remedies Cumulative; No Waiver.........................................31
SECTION 11. MISCELLANEOUS............................................................32
11.1 Power of Attorney......................................................32
11.2 Indemnity..............................................................33
11.3 Modification of Agreement; Sale of Interest............................33
11.4 Severability...........................................................33
11.5 Successors and Assigns.................................................34
11.6 Cumulative Effect; Conflict of Terms...................................34
11.7 Execution in Counterparts..............................................34
11.8 Notice.................................................................34
11.9 Lender's Consent.......................................................35
11.10 Credit Inquiries......................................................35
11.11 Time of Essence.......................................................35
11.12 Entire Agreement......................................................35
11.13 Interpretation........................................................35
11.14 GOVERNING LAW; CONSENT TO FORUM.......................................35
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11.15 WAIVERS BY BORROWERS..................................................36
11.16. Private Sale; Commercial Reasonableness..............................37
11.14 Confidentiality.......................................................38
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