Document:

ex10_3.htm

Exhibit 10.3

 

CREDIT AGREEMENT

 

among

 

BUTLER ANIMAL HEALTH SUPPLY, LLC,

 

as Borrower,

 

The Several Lenders

 

from Time to Time Parties Hereto,

 

 

JPMORGAN CHASE BANK, N.A.,

 

as Administrative Agent,

 

 

Dated as of December 31, 2009

 

 

 

J.P. MORGAN SECURITIES INC.,

 as Sole Lead Arranger and Sole Bookrunner

 

  

  

  

 

TABLE OF CONTENTS

Page

 

	
SECTION 1. DEFINITIONS

	
1

	  	  	  
	
1.1

	
Defined Terms

	
1

	
1.2

	
Other Definitional Provisions

	
26

	  	  	  
	
SECTION 2. AMOUNT AND TERMS OF TERM LOANS

	
27

	  	  	  
	
2.1

	
Term Loans

	
27

	
2.2

	
Procedure for Term Loan Borrowing

	
27

	
2.3

	
Repayment of Term Loans

	
28

	  	  	  
	
SECTION 3. AMOUNT AND TERMS OF REVOLVING COMMITMENTS

	
28

	  	  	  
	
3.1

	
Revolving Commitments

	
28

	
3.2

	
Procedure for Revolving Loan Borrowing

	
28

	
3.3

	
Swingline Commitment

	
29

	
3.4

	
Procedure for Swingline Borrowing; Refunding of Swingline Loans

	
29

	
3.5

	
Commitment Fees, etc.

	
31

	
3.6

	
Termination or Reduction of Revolving Commitments

	
31

	
3.7

	
L/C Commitment

	
31

	
3.8

	
Procedure for Issuance of Letter of Credit

	
32

	
3.9

	
Fees and Other Charges

	
32

	
3.10

	
L/C Participations

	
32

	
3.11

	
Reimbursement Obligation of the Borrower

	
33

	
3.12

	
Obligations Absolute

	
34

	
3.13

	
Letter of Credit Payments

	
34

	
3.14

	
Applications

	
35

	  	  	  
	
SECTION 4. GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT

	
35

	  	  	  
	
4.1

	
Optional Prepayments

	
35

	
4.2

	
Mandatory Prepayments and Commitment Reductions

	
35

	
4.3

	
Conversion and Continuation Options

	
36

	
4.4

	
Limitations on Eurodollar Tranches

	
37

	
4.5

	
Interest Rates and Payment Dates

	
37

	
4.6

	
Computation of Interest and Fees

	
38

	
4.7

	
Inability to Determine Interest Rate

	
38

	
4.8

	
Pro Rata Treatment and Payments

	
39

	
4.9

	
Requirements of Law

	
40

	
4.10

	
Taxes

	
41

	
4.11

	
Indemnity

	
44

	
4.12

	
Change of Lending Office

	
45

	
4.13

	
Mitigation Obligations; Replacement of Lenders

	
45

 

  

i

  

 

TABLE OF CONTENTS

(continued)

Page

 

	
4.14

	
Evidence of Debt

	
45

	
4.15

	
Illegality

	
46

	
4.16

	
Defaulting Lender

	
46

	  	  	  
	
SECTION 5. REPRESENTATIONS AND WARRANTIES

	
48

	  	  	  
	
5.1

	
Financial Condition

	
48

	
5.2

	
No Change

	
50

	
5.3

	
Corporate Existence; Compliance with Law

	
50

	
5.4

	
Power; Authorization; Enforceable Obligations

	
50

	
5.5

	
No Legal Bar

	
51

	
5.6

	
Litigation

	
51

	
5.7

	
No Default

	
51

	
5.8

	
Ownership of Property; Liens

	
51

	
5.9

	
Intellectual Property

	
51

	
5.10

	
Taxes

	
51

	
5.11

	
Federal Regulations

	
52

	
5.12

	
Labor Matters

	
52

	
5.13

	
ERISA

	
52

	
5.14

	
Investment Company Act; Other Regulations

	
53

	
5.15

	
Subsidiaries

	
53

	
5.16

	
Use of Proceeds

	
53

	
5.17

	
Environmental Matters

	
53

	
5.18

	
Accuracy of Information, etc.

	
54

	
5.19

	
Security Documents

	
55

	
5.20

	
Solvency

	
55

	
5.21

	
Deposit and Disbursement Accounts

	
55

	
5.22

	
Certain Documents

	
55

	
5.23

	
Holdings

	
55

	
5.24

	
Foreign Assets Control Regulations

	
56

	
5.25

	
Anti-Terrorism Laws

	
56

	  	  	  
	
SECTION 6. CONDITIONS PRECEDENT

	
57

	  	  	  
	
6.1

	
Conditions to Initial Extension of Credit

	
57

	
6.2

	
Conditions to Each Extension of Credit

	
59

	  	  	  
	
SECTION 7. AFFIRMATIVE COVENANTS

	
59

	  	  	  
	
7.1

	
Financial Statements

	
59

	
7.2

	
Certificates; Other Information

	
60

	
7.3

	
Payment of Obligations

	
61

	
7.4

	
Maintenance of Existence; Compliance

	
61

	
7.5

	
Maintenance of Property; Insurance

	
61

	
7.6

	
Inspection of Property; Books and Records; Discussions

	
61

	
7.7

	
Notices

	
62

 

  

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TABLE OF CONTENTS

(continued)

 

Page

	
7.8

	
Environmental Laws

	
63

	
7.9

	
Interest Rate Protection

	
63

	
7.10

	
Additional Collateral, etc.

	
63

	
7.11

	
Maintenance of Ratings

	
65

	
7.12

	
Patriot Act Compliance

	
65

	
7.13

	
Landlord Waivers; Bailee Letters

	
65

	
7.14

	
Further Assurances

	
65

	  	  	  
	
SECTION 8. NEGATIVE COVENANTS

	
66

	  	  	  
	
8.1

	
Financial Condition Covenants

	
66

	
8.2

	
Indebtedness

	
67

	
8.3

	
Liens

	
69

	
8.4

	
Fundamental Changes

	
71

	
8.5

	
Disposition of Property

	
71

	
8.6

	
Restricted Payments

	
71

	
8.7

	
Capital Expenditures

	
72

	
8.8

	
Investments

	
72

	
8.9

	
Transactions with Affiliates

	
73

	
8.10

	
Sales and Leasebacks

	
74

	
8.11

	
Hedge Agreements

	
74

	
8.12

	
Changes in Fiscal Periods

	
74

	
8.13

	
Negative Pledge Clauses

	
75

	
8.14

	
Clauses Restricting Subsidiary Distributions

	
75

	
8.15

	
Lines of Business

	
76

	
8.16

	
Amendments to Material Contracts and Transaction Documentation

	
76

	
8.17

	
Additional Deposit Accounts

	
76

	
8.18

	
Optional Payments and Modifications of Certain Debt Instruments

	
77

	  	  	  
	
SECTION 9. EVENTS OF DEFAULT

	
77

	  	  	  
	  	  	  
	
SECTION 10. THE AGENTS

	
80

	  	  	  
	
10.1

	
Appointment

	
80

	
10.2

	
Delegation of Duties

	
81

	
10.3

	
Exculpatory Provisions

	
81

	
10.4

	
Reliance by Agents

	
81

	
10.5

	
Notice of Default

	
82

	
10.6

	
Non-Reliance on Agents and Other Lenders

	
82

	
10.7

	
Indemnification

	
82

	
10.8

	
Agent in Its Individual Capacity

	
83

	
10.9

	
Successor Administrative Agent

	
83

	
10.10

	
Agents Generally

	
84

	
10.11

	
The Lead Arranger

	
84

 

  

iii

  

 

TABLE OF CONTENTS

(continued)

Page

	
SECTION 11. MISCELLANEOUS

	
84

	  	  	  
	
11.1

	
Amendments and Waivers

	
84

	
11.2

	
Notices

	
87

	
11.3

	
No Waiver; Cumulative Remedies

	
88

	
11.4

	
Survival of Representations and Warranties

	
88

	
11.5

	
Payment of Expenses and Taxes

	
88

	
11.6

	
Successors and Assigns; Participations and Assignments

	
89

	
11.7

	
Adjustments; Set-off

	
93

	
11.8

	
Counterparts

	
94

	
11.9

	
Severability

	
94

	
11.10

	
Integration

	
94

	
11.11

	
GOVERNING LAW

	
95

	
11.12

	
Submission To Jurisdiction; Waivers

	
95

	
11.13

	
Acknowledgments

	
95

	
11.14

	
Releases of Guarantees and Liens

	
96

	
11.15

	
Confidentiality

	
96

	
11.16

	
WAIVERS OF JURY TRIAL

	
97

 

  

iv

  

 

	
SCHEDULES:

	
1.1

	 	
Commitments

	
5.1(b)(i)

	 	
Exceptions to NLS Financials

	
5.1(b)(ii)-1

	 	
Exceptions to Core Vet Financials

	
5.1(b)(ii)-2

	 	
Schein Allocation Methodologies

	
5.1(b)(ii)-3

	 	
Global SG&A Costs

	
5.4

	 	
Consents, Authorizations, Filings and Notices

	
5.15

	 	
Subsidiaries

	
5.19(a)

	 	
UCC Filing Jurisdictions

	
5.21

	 	
Deposit Accounts

	
6.1(c)

	 	
Governmental and Third Party Approvals

	
8.2(d)

	 	
Existing Indebtedness

	
8.3(f)

	 	
Existing Liens

	
8.6

	 	
Calculation of Permitted Tax Distributions

	
8.8(i)

	 	
Existing Investments

	
8.9(h)

	 	
Transactions with Affiliates

	
8.16

	 	
Material Contracts

	  	 	  
	
EXHIBITS:

	
A

	 	
Form of Assignment and Assumption

	
B

	 	
Form of Compliance Certificate

	
C

	 	
Form of Exemption Certificate

	
D-1

	 	
Form of Term Note

	
D-2

	 	
Form of Revolving Note

	
D-3

	 	
Form Swingline Note

	
E

	 	
Form of Closing Certificate

 

  

 

  

 

CREDIT AGREEMENT, dated as of December 31, 2009 among (a) BUTLER ANIMAL HEALTH SUPPLY, LLC, a Delaware limited liability company (the “Borrower”), (b) the several banks and other financial institutions or entities from time to time parties to this Agreement (the “Lenders”) and (c) JPMORGAN CHASE BANK, N.A., as administrative agent (in such capacity, the “Administrative Agent”).

 

W I T N E S S E T H:

 

WHEREAS, the Borrower intends to participate in a series of transactions, pursuant to which Schein (such term and other terms defined in Section 1.1 being used with their respective defined meaning) will form Newco and contribute the Schein Assets in exchange for 100% of the common stock of Newco.  Newco, Schein, Butler, Oak Hill and other Affiliates will enter into the Transaction Agreement, pursuant to which Butler will merge with and into Newco with Newco as the surviving entity (the “Merger”).  In consideration for the Merger and additional consideration to be paid by Schein, Oak Hill, as the sole shareholder of Butler, will own approximately 29.5% of Newco common stock and will receive a demand note from Newco.  Schein will own approximately 70.5% of Newco common stock.  Newco will contribute the Schein Assets to Holdings, in exchange for additional membership interests in Holdings. Holdings will contribute the Schein Assets to the Borrower, and the Borrower will enter into this Agreement and use the proceeds to (a) prepay in full the Borrower’s existing credit facilities and (b) make a distribution to Holdings of approximately $125,000,000 (subject to the post closing adjustments set forth in Section 1.8 of the Transaction Agreement) (the “Closing Date Distribution”).  Holdings will use the proceeds of the distribution from the Borrower to either redeem certain of its membership interests or to pay distributions on them; and

 

WHEREAS, after giving effect to the transactions (i) Oak Hill will hold directly or indirectly approximately 21.3% of the membership interests of Holdings, (ii) Burns will hold directly or indirectly approximately 21.3% of the membership interests of Holdings and (iii) Schein will hold directly or indirectly 50.1% of the membership interests of Holdings.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, and for other good and valuable consideration, the parties hereto agree as follows:

 

SECTION 1.

 

DEFINITIONS

 

1.1 Defined Terms. As used in this Agreement, the terms listed in this Section 1.1 shall have the respective meanings set forth in this Section 1.1.

 

“Administrative Agent”: as defined in the preamble to this Agreement.

 

“Affiliate”: as to any Person, any other Person that, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” of a Person means the power, directly or indirectly, either to (a) vote 10% or more of the securities having ordinary voting power for the election of directors (or persons 

 

  

  

  

 

performing similar functions) of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.

 

“Agents”: the collective reference to the Lead Arranger and the Administrative Agent, which term shall include, for purposes of Section 10 only, the Issuing Lender and the Swingline Lender.

 

“Aggregate Exposure”: with respect to any Lender at any time, an amount equal to the sum of (i) the aggregate then unpaid principal amount of such Lender’s Term Loans and (ii) the amount of such Lender’s Revolving Commitment then in effect or, if the Revolving Commitments have been terminated, the amount of such Lender’s Revolving Extensions of Credit then outstanding.

 

“Aggregate Exposure Percentage”: with respect to any Lender at any time, the ratio (expressed as a percentage) of such Lender’s Aggregate Exposure at such time to the Aggregate Exposure of all Lenders at such time.

 

“Agreement”: this Credit Agreement.

 

“Anti-Terrorism Laws”: as defined in Section 5.25(a).

 

“Applicable Margin”:  (a) for any Revolving Loan or Swingline Loan, the rate per annum set forth under the relevant column heading in the grid below under the caption “Revolving Loans and Swingline Loans” and (b) for any Term Loan, the rate per annum set forth under the relevant column heading in the grid below under the caption “Term Loans”:

 

	
Revolving Loans and Swingline Loans

	 
	
Consolidated Leverage Ratio

	 	
Applicable Margin for Eurodollar Revolving Loans and Swingline Loans

	 	 	
Applicable Margins for Base Rate Revolving Loans and Swingline Loans

	 
	
Greater than or equal to 3.25:1.00

	 	 	3.50	%	 	 	2.50	%
	
Less than 3.25 but greater than or equal to 2.75:1.00

	 	 	3.25	%	 	 	2.25	%
	
Less than 2.75:1.00

	 	 	3.00	%	 	 	2.00	%

	
Term Loans

	 
	
Consolidated Leverage Ratio

	 	
Applicable Margin for Eurodollar Term Loans

	 	 	
Applicable Margins for Base Rate Term Loans

	 
	
Greater than or equal to 2.50:1.00

	 	 	3.50	%	 	 	2.50	%
	
Less than 2.50:1.00

	 	 	3.25	%	 	 	2.25	%

 

For the purposes of the Pricing Grid, changes in the Applicable Margin resulting from changes in the Consolidated Leverage Ratio shall become effective on the date that is three 

 

  

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Business Days after the date on which financial statements are delivered to the Administrative Agent and the Lenders pursuant to Section 7.1 and shall remain in effect until the next changes to be effected pursuant to this paragraph. If any financial statements referred to above are not delivered within the time periods specified in Section 7.1, then, until the date that is three Business Days after the date on which such financial statements are delivered, the highest rate set forth in each column of the Pricing Grid above shall apply. In addition, at all times while an Event of Default shall have occurred and be continuing, the highest rate set forth in each column of the Pricing Grid shall apply. Each determination of the Consolidated Leverage Ratio pursuant to the Pricing Grid shall be made in a manner consistent with the determination thereof pursuant to Section 8.1(a).  Until the first adjustment in any Applicable Margin pursuant to the preceding sentences in this definition, the Applicable Margin shall be the highest rate in the applicable Pricing Grid.

 

“Applicable Percentage”: with respect to any Lender, the percentage of the total Commitments represented by such Lender’s Commitment.  If the Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Commitments most recently in effect, giving effect to any assignments and to any Lender’s status as a Defaulting Lender at the time of determination.

 

“Application”: an application, in such form as the Issuing Lender may reasonably specify from time to time, requesting the Issuing Lender to open a Letter of Credit.

 

“Approved Fund”: as defined in Section 11.6(b)(ii).

 

“Asset Sale”: any Disposition of Property or series of related Dispositions of Property (excluding any such Disposition permitted by any clause of Section 8.5) that yields gross proceeds to any Group Member (valued at the initial principal amount thereof in the case of non-cash proceeds consisting of notes or other debt securities and valued at fair market value in the case of other non-cash proceeds) in excess of $1,000,000.

 

“Assignee”: as defined in Section 11.6(b).

 

“Assignment and Assumption”: an Assignment and Assumption, substantially in the form of Exhibit A.

 

“Available Revolving Commitment”: as to any Revolving Lender at any time, an amount equal to the excess, if any, of (a) such Lender’s Revolving Commitment then in effect over (b) such Lender’s Revolving Extensions of Credit then outstanding; provided that, in calculating any Lender’s Revolving Extensions of Credit for the purpose of determining such Lender’s Available Revolving Commitment pursuant to Section 3.5, the aggregate principal amount of Swingline Loans then outstanding shall be deemed to be zero.

 

“Base Rate”: for any day, a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 0.50% and (c) the Eurodollar Rate for a Eurodollar Loan with a one-month interest period plus 1.0%. For purposes hereof: “Prime Rate” shall mean the rate of interest per annum publicly announced from time to time by the Administrative Agent as its prime rate in effect at its principal office in New York City (the 

 

  

3

  

 

Prime Rate not being intended to be the lowest rate of interest charged by the Administrative Agent in connection with extensions of credit to debtors). Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective as of the opening of business on the effective day of such change in the Prime Rate or the Federal Funds Effective Rate, respectively.

 

“Base Rate Loans”: Loans the rate of interest applicable to which is based upon the Base Rate.

 

“Benefitted Lender”: as defined in Section 11.7(a).

 

“Board”: the Board of Governors of the Federal Reserve System of the United States (or any successor).

 

“Borrower”: as defined in the preamble to this Agreement.

 

“Borrowing Date”: any Business Day specified by the Borrower as a date on which the Borrower requests the relevant Lenders to make Loans hereunder.

 

“Burns”: Burns Veterinary Supply, Inc.

 

 “Business”: as defined in Section 5.17(b).

 

“Business Day”: a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close; provided that with respect to notices and determinations in connection with, and payments of principal and interest on, Eurodollar Loans, such day is also a day for trading by and between banks in Dollar deposits in the interbank eurodollar market.

 

“Butler”: W.A. Butler Company.

 

“Capital Expenditures”: for any period, with respect to any Person, the aggregate of all expenditures by such Person and its Subsidiaries for the acquisition or leasing (pursuant to a capital lease) of fixed or capital assets or additions to equipment (including replacements, capitalized repairs and improvements during such period) that are capitalized under GAAP on a consolidated balance sheet of such Person and its Subsidiaries.

 

“Capital Lease Obligations”: as to any Person, the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP and, for the purposes of this Agreement, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP.

 

“Capital Stock”: any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing.

 

  

4

  

 

“Cash Equivalents”: (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition; (b) certificates of deposit, time deposits, eurodollar time deposits or overnight bank deposits having maturities of 365 days or less from the date of acquisition issued by any Lender or by any commercial bank organized under the laws of the United States or any state thereof having combined capital and surplus of not less than $250,000,000; (c) commercial paper of an issuer rated at least A-1 by S&P or P-1 by Moody’s, or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally, and maturing within six months from the date of acquisition; (d) repurchase obligations of any Lender or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than 30 days, with respect to securities issued or fully guaranteed or insured by the United States government; (e) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P or A-1 by Moody’s; (f) securities with maturities of six months or less from the date of acquisition backed by standby letters of credit issued by any Lender or any commercial bank satisfying the requirements of clause (b) of this definition; or (g) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition or (h) money market funds that (i) comply with the criteria set forth in Securities and Exchange Commission Rule 2a-7 under the Investment Company Act of 1940, as amended, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of at least $5,000,000,000.

 

“Change of Control”: an event or series of events by which:

 

(a)  prior to a Qualifying IPO, the Permitted Investors shall cease to own and control, of record and beneficially, either directly or indirectly, an amount of Capital Stock of Holdings representing at least a majority of the combined voting power of all of the Capital Stock of Holdings entitled to vote for members of the board of managers or equivalent governing body of Holdings on a fully-diluted basis;

 

(b)  any “person” or “group” (as such terms are used in Sections13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) other than the Permitted Investors becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person or group shall be deemed to have “beneficial ownership” of all Capital Stock that such person or group has the right to acquire (such right, an “option right”), whether such right is exercisable immediately or only after the passage of time whether by means of options, warrants or otherwise), directly or indirectly, of (i) prior to a Qualifying IPO, more of the Capital Stock of Holdings entitled to vote for members of the board of managers or equivalent governing body of Holdings on a fully-diluted basis (including by taking into account all such Capital Stock that such “person” or “group” has the right to acquire 

 

  

5

  

 

pursuant to any option right) than is held by the Permitted Investors or (ii) following a Qualifying IPO, (A) 33-1/3% or more of the Capital Stock of Holdings entitled to vote for members of the board of managers or equivalent governing body of Holdings on a fully-diluted basis (including by taking into account all such Capital Stock that such “person” or “group” has the right to acquire pursuant to any option, warrant or other right) or (B) more of such Capital Stock of Holdings on a fully-diluted basis (including by taking into account all such Capital Stock that such “person” or “group” has the right to acquire pursuant to any option right) than the Permitted Investors;

 

(c)  the board of managers or equivalent governing body of Holdings shall cease to consist of a majority of Continuing Directors; or

 

(d)  Holdings shall cease, directly or indirectly, to own and control, of record and beneficially, 100% of each class of outstanding Capital Stock of the Borrower free and clear of all Liens (except Liens created by the Guarantee and Collateral Agreement).

 

For the avoidance of doubt, it is understood that any event or series of events that result in 100% ownership of the membership interests of Holdings by Schein shall not constitute a Change of Control.

 

“Closing Date”: the date on which the conditions precedent set forth in Section 6.1 shall have been satisfied, which date is December 31, 2009.

 

“Closing Date Distribution”: as defined in the recitals hereto.

 

“Code”: the Internal Revenue Code of 1986, as amended from time to time.

 

“Collateral”: all property of the Loan Parties, now owned or hereafter acquired, upon which a Lien is purported to be created by any Security Document.

 

 “Commitment”: as to any Lender, the sum of the Term Commitment and the Revolving Commitment of such Lender.

 

“Commitment Fee Rate”: 0.75% per annum.

 

“Commonly Controlled Entity”: an entity, whether or not incorporated, that is under common control with the Borrower within the meaning of Section 4001 of ERISA or is part of a group that includes the Borrower and that is treated as a single employer under Section 414 of the Code.

 

“Compliance Certificate”: a certificate duly executed by a Responsible Officer substantially in the form of Exhibit B.

 

“Conduit Lender”: any special purpose entity organized and administered by any Lender for the purpose of making Loans otherwise required to be made by such Lender and designated by such Lender in a written instrument, subject to the consent of the Administrative Agent and the Borrower (which consent shall not be unreasonably withheld); provided; that the designation by any Lender of a Conduit Lender shall not relieve the designating Lender of any of 

 

  

6

  

 

its obligations to fund a Loan under this Agreement if, for any reason, its Conduit Lender fails to fund any such Loan, and the designating Lender (and not the Conduit Lender) shall have the sole right and responsibility to deliver all consents and waivers required or requested under this Agreement with respect to its Conduit Lender; provided, further, that no Conduit Lender shall (a) be entitled to receive any greater amount pursuant to Section 4.9, 4.10, 4.11 or 11.5 than the designating Lender would have been entitled to receive in respect of the extensions of credit made by such Conduit Lender or (b) be deemed to have any Commitment.

 

“Confidential Information Memorandum”: the Confidential Information Memorandum dated December, 2009 and furnished to the Lenders.

 

“Consolidated Current Assets”: at any date, all amounts (other than cash and Cash Equivalents) that would, in conformity with GAAP, be set forth opposite the caption “total current assets” (or any like caption) on a consolidated balance sheet of the Consolidated Group at such date.

 

“Consolidated Current Liabilities”: at any date, all amounts that would, in conformity with GAAP, be set forth opposite the caption “total current liabilities” (or any like caption) on a consolidated balance sheet of the Consolidated Group at such date, but excluding (a) the current portion of any Funded Debt of the Consolidated Group and (b) without duplication of clause (a) above, all Indebtedness consisting of Revolving Loans or Swingline Loans to the extent otherwise included therein.

 

“Consolidated EBITDA”: for any period, Consolidated Net Income for such period plus, without duplication and to the extent reflected as a charge in the statement of such Consolidated Net Income for such period, the sum of (a) income tax expense, (b) interest expense, amortization or writeoff of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with Indebtedness (including the Loans), (c) depreciation and amortization expense, (d) amortization and impairment of intangibles (including, but not limited to, goodwill) and organization costs, (e) any extraordinary charges or losses determined in accordance with GAAP, (f) any non-recurring charges or losses not to exceed $5,000,000 during any period of twelve (12) consecutive months, (g) any reasonable non-recurring costs and expenses incurred (i) related to the consummation of any Permitted Acquisition or (ii) in connection with any proposed acquisition (s) in an aggregate amount not to exceed $4,000,000 during any period of twelve (12) consecutive months, (h) any costs and expenses or other charges or losses incurred in connection with the integration of the Borrower and the Schein Assets (including, without limitation, any duplicative costs associated with any transition services arrangement and any restructuring costs) not to exceed $11,000,000 in 2010, $6,000,000 in 2011, $1,000,000 in 2012 and $16,000,000 in the aggregate, (i) any costs and expenses or extraordinary charges or losses incurred in connection with the integration of any Permitted Acquisition in an aggregate amount not to exceed $2,000,000 per such acquisition, (j) any fees, costs and expenses payable in connection with the Transactions and the financing thereof, (k) non-cash compensation expenses arising from the issuance of stock, options to purchase stock and stock appreciation rights to the management of the Consolidated Group, (l) any increase in the value of inventory in connection with the Transactions, and (m) any other non-cash charges, non-cash expenses or non-cash losses of the Consolidated Group for such period (excluding any such charge, expense or loss incurred in the ordinary course of business 

 

  

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that constitutes an accrual of or a reserve for cash charges for any future period); provided, however, that cash payments made in such period or in any future period in respect of such non-cash charges, expenses or losses (excluding any such charge, expense or loss incurred in the ordinary course of business that constitutes an accrual of or a reserve for cash charges for any future period) shall be subtracted from Consolidated Net Income in calculating Consolidated EBITDA in the period when such payments are made, and minus, to the extent included in the statement of such Consolidated Net Income for such period, the sum of (a) interest income (other than late fees received with respect to customer receivables), (b) any extraordinary income or gains determined in accordance with GAAP and (c) any other non-cash income (excluding any items that represent the reversal of any accrual of, or cash reserve for, anticipated cash charges in any prior period that are described in the parenthetical to clause (m) above), all as determined on a consolidated basis. For the purposes of calculating Consolidated EBITDA for any period of four consecutive fiscal quarters (each, a “Reference Period”) pursuant to any determination of the Consolidated Leverage Ratio, (i) if at any time during such Reference Period any member of the Consolidated Group shall have made any Material Disposition, the Consolidated EBITDA for such Reference Period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the property that is the subject of such Material Disposition for such Reference Period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such Reference Period and (ii) if during such Reference Period the Borrower or any Subsidiary shall have made a Material Acquisition, Consolidated EBITDA for such Reference Period shall be calculated after giving pro forma effect thereto as if such Material Acquisition occurred on the first day of such Reference Period. As used in this definition, “Material Acquisition” means any acquisition of property or series of related acquisitions of property that (a) constitutes assets comprising all or substantially all of an operating unit of a business or constitutes all or substantially all of the common stock of a Person and (b) involves the payment of consideration by any member of the Consolidated Group in excess of $1,000,000; and “Material Disposition” means any Disposition of property or series of related Dispositions of property that yield gross proceeds to any member of the Consolidated Group in excess of $1,000,000.  Notwithstanding the foregoing, for the purposes of this Agreement, Consolidated EBITDA for the fiscal quarters ending June 30, 2009, September 30, 2009 and December 31, 2009 shall be deemed to be $21,902,000, $21,239,000 and $17,402,000, respectively

 

 “Consolidated Group”: the collective reference to Holdings, the Borrower and their Subsidiaries.

 

“Consolidated Interest Coverage Ratio”: for any period, the ratio of (a) Consolidated EBITDA for such period to (b) Consolidated Interest Expense for such period.

 

“Consolidated Interest Expense”: for any period, total cash interest expense (including that attributable to Capital Lease Obligations) of the Consolidated Group for such period with respect to all outstanding Indebtedness of the Consolidated Group (including all cash commissions, discounts and other fees and charges paid with respect to letters of credit and bankers’ acceptance financing and net costs under Hedge Agreements in respect of interest rates to the extent such net costs are allocable to such period in accordance with GAAP).

 

  

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“Consolidated Leverage Ratio”: as at the last day of any fiscal quarter, the ratio of (a) Consolidated Total Debt on such day to (b) Consolidated EBITDA for the most recent period of four fiscal quarters of the Borrower then ended.

 

“Consolidated Net Income”: for any period, the consolidated net income (or loss) of the Consolidated Group, determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded (a) the income (or deficit) of any Person accrued prior to the date it becomes a Subsidiary of the Borrower or Holdings or is merged into or consolidated with any member of the Consolidated Group, (b) the income (or deficit) of any Person (other than a Subsidiary of the Borrower or Holdings) in which any member of the Consolidated Group has an ownership interest, except to the extent that any such income is actually received by any member of the Consolidated Group in the form of dividends or similar distributions, and (c) the undistributed earnings of any Subsidiary of the Borrower or Holdings that is not a Guarantor to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any Contractual Obligation (other than under any Loan Document) or Requirement of Law applicable to such Subsidiary.

 

“Consolidated Total Debt”: at any date, the aggregate principal amount of all Indebtedness of the Consolidated Group at such date, determined on a consolidated basis in accordance with GAAP.

 

“Consolidated Working Capital”: at any date, the difference between Consolidated Current Assets on such date minus Consolidated Current Liabilities on such date.

 

“Continuing Directors”: the managers of Holdings on the Closing Date, and each other manager, if, in each case, such other manager’s nomination for election to the board of managers of Holdings is recommended by a majority of the then Continuing Directors or such other manager receives the vote of the Permitted Investors in his or her election by the equity holders of Holdings.

 

“Contractual Obligation”: as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

 

“Control Agreements”: collectively, each tri-party blocked account agreement by and among the Administrative Agent, the applicable Loan Party, and each bank which maintains an account of such Loan Party listed on Schedule 5.21 (other than payroll accounts), in form and substance reasonably acceptable to Administrative Agent.

 

“Control Investment Affiliate”: as to any Person, any other Person that (a) directly or indirectly, is in control of, is controlled by, or is under common control with, such Person, (b) either (x) is organized by such Person primarily for the purpose of making equity or debt investments in one or more companies or (y) is a Subsidiary of such Person, and (c) shall only include “downstream” subsidiaries or entities of such Person. For purposes of this definition, “control” of a Person means the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person whether by contract or otherwise.

 

“Core Vet Business”: as defined in the Transaction Agreement.

 

  

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“Core Vet Financials”: as defined in Section 5.1(b)(ii).

 

“Darby”: collectively, Darby Group Companies, Inc., and its Affiliates.

 

“Default”: any of the events specified in Section 9, whether or not any requirement for the giving of notice, the lapse of time, or both, has been satisfied.

   

“Defaulting Lender”: any Lender, as determined by the Administrative Agent, that has (a) failed to fund any portion of its Loans or participations in Letters of Credit within three Business Days of the date required to be funded by it hereunder, (b) notified the Borrower, the Administrative Agent, the Issuing Lender or any Lender in writing that it does not intend to comply with any of its funding obligations under this Agreement or has made a public statement to the effect that it does not intend to comply with its funding obligations under this Agreement or under other agreements in which it commits to extend credit, (c) failed, within three Business Days after request by the Administrative Agent, to confirm that it will comply with the terms of this Agreement relating to its obligations to fund prospective Loans and participations in then outstanding Letters of Credit, (d) otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within three Business Days of the date when due, unless the subject of a good faith dispute, or (e) in the case of a Revolving Lender, (i) become or is insolvent or has a parent company that has become or is insolvent or (ii) become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or has a parent company that has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment.

 

“Disposition”: with respect to any Property, any sale, lease, sale and leaseback, assignment, conveyance, transfer or other disposition thereof. The terms “Dispose” and “Disposed of” shall have correlative meanings.

 

“Dollars” and “$”: dollars in lawful currency of the United States.

 

“Domestic Subsidiary”: any Subsidiary of the Borrower organized under the laws of any jurisdiction within the United States.

 

“ECF Percentage”:  75%; provided, that, with respect to each fiscal year of the Borrower ending on or after December 31, 2010, the ECF Percentage shall be reduced to (i) 50% if the Consolidated Leverage Ratio as of the last day of such fiscal year is less than 3.25 to 1.00 and is not less than 2.75 to 1.00, (ii) 25% if the Consolidated Leverage Ratio as of the last day of such fiscal year is less than 2.75 to 1.00 and is not less than 2.25 to 1.00 and (iii) 0% if the Consolidated Leverage Ratio as of the last day of such fiscal year is less than 2.25 to 1.00.

 

“Environmental Laws”: any and all applicable and binding foreign, Federal, state, local or municipal laws (including common law), rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any Governmental Authority regulating, relating to or imposing

 

  

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 liability or standards of conduct concerning protection of human health or the environment, as now or may at any time hereafter be in effect.

 

“ERISA”: the Employee Retirement Income Security Act of 1974, as amended from time to time.

 

“Eurocurrency Reserve Requirements”: for any day as applied to a Eurodollar Loan, the aggregate (without duplication) of the maximum rates (expressed as a decimal fraction) of reserve requirements in effect on such day (including basic, supplemental, marginal and emergency reserves under any regulations of the Board or other Governmental Authority having jurisdiction with respect thereto) dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board) maintained by a member bank of the Federal Reserve System.

 

“Eurodollar Base Rate”: with respect to each day during each Interest Period pertaining to a Eurodollar Loan, the higher of (a) the rate per annum determined on the basis of the rate for deposits in Dollars for a period equal to such Interest Period commencing on the first day of such Interest Period appearing on the Reuters Screen LIBOR01 Page as of 11:00 A.M., London time, two Business Days prior to the beginning of such Interest Period and (b) 2.0%.  In the event that such rate does not appear on such page (or otherwise on such screen), the “Eurodollar Base Rate” shall be determined by reference to such other comparable publicly available service for displaying eurodollar rates as may be selected by the Administrative Agent or, in the absence of such availability, by reference to the rate at which the Administrative Agent is offered Dollar deposits at or about 11:00 A.M., New York City time, two Business Days prior to the beginning of such Interest Period in the interbank eurodollar market where its eurodollar and foreign currency and exchange operations are then being conducted for delivery on the first day of such Interest Period for the number of days comprised therein.

 

“Eurodollar Loans”: Loans to which the rate of interest applicable is based upon the Eurodollar Rate.

 

“Eurodollar Rate”: with respect to each day during each Interest Period pertaining to a Eurodollar Loan, a rate per annum determined for such day in accordance with the following formula (rounded upward to the nearest 1/100th of 1%):

 

Eurodollar Base Rate

1.00 - Eurocurrency Reserve Requirements

 

“Eurodollar Tranche”: the collective reference to Eurodollar Loans under a particular Facility the then current Interest Periods with respect to all of which begin on the same date and end on the same later date (whether or not such Loans shall originally have been made on the same day).

 

“Event of Default”: any of the events specified in Section 9, provided that any requirement for the giving of notice, the lapse of time, or both, has been satisfied.

 

“Excess Cash Flow”: for any fiscal year of Holdings and the Borrower, the excess, if any, of (a) the sum, without duplication, of (i) Consolidated Net Income for such fiscal

 

  

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 year, (ii) the amount of all non-cash charges (including depreciation and amortization) deducted in arriving at such Consolidated Net Income, (iii) decreases in Consolidated Working Capital for such fiscal year and (iv) the aggregate net amount of non-cash loss on the Disposition of Property by Holdings, the Borrower and their Subsidiaries during such fiscal year (other than sales of inventory in the ordinary course of business), to the extent deducted in arriving at such Consolidated Net Income, over (b) the sum, without duplication, of (i) the amount of all non-cash credits included in arriving at such Consolidated Net Income, (ii) the aggregate amount actually paid by Holdings, the Borrower and their Subsidiaries in cash during such fiscal year on account of Capital Expenditures and Permitted Acquisitions (excluding the principal amount of Indebtedness incurred to finance such expenditures (but including repayments of any such Indebtedness incurred during such period or any prior period) and any such expenditures financed with the proceeds of any Reinvestment Deferred Amount), (iii) the aggregate amount of all regularly scheduled principal payments of Funded Debt (including the Term Loans) of Holdings, the Borrower and their Subsidiaries made during such fiscal year (other than in respect of any revolving credit facility to the extent there is not an equivalent permanent reduction in commitments thereunder), (iv) increases in Consolidated Working Capital for such fiscal year, (v) the amount of any tax distributions paid by Holdings during such fiscal year, (vi) the aggregate amount of all prepayments of Revolving Loans and Swingline Loans during such fiscal year to the extent accompanying permanent reductions of the Revolving Commitments and (vii) the aggregate net amount of non-cash gain on the Disposition of Property by Holdings, the Borrower and their Subsidiaries during such fiscal year (other than sales of inventory in the ordinary course of business), to the extent included in arriving at such Consolidated Net Income.

 

“Excess Cash Flow Application Date”: as defined in Section 4.2.

 

“Exchange Act”: as defined in the definition of “Change of Control”.

 

“Excluded Foreign Subsidiary”: any Foreign Subsidiary in respect of which either (a) the pledge of all of the Capital Stock of such Subsidiary as Collateral or (b) the guarantee by such Subsidiary of the Obligations, would, in the good faith judgment of the Borrower, result in adverse tax consequences to the Borrower.

 

“Excluded Indebtedness”: all Indebtedness permitted by clauses (a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (l) and (m) of Section 8.2.

 

“Executive Order”: as defined in Section 5.25(a).

 

“Facility”: each of (a) the Term Commitments and the Term Loans made thereunder (the “Term Facility”) and (b) the Revolving Commitments and the extensions of credit made thereunder (the “Revolving Facility”).

 

“Federal Funds Effective Rate”: for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for the day of such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it.

 

  

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“Foreign Subsidiary”: any Subsidiary of the Borrower that is not a Domestic Subsidiary.

 

“Funded Debt”: as to any Person, all Indebtedness of such Person that matures more than one year from the date of its creation or matures within one year from such date but is renewable or extendible, at the option of such Person, to a date more than one year from such date or arises under a revolving credit or similar agreement that obligates the lender or lenders to extend credit during a period of more than one year from such date, including all current maturities and current sinking fund payments in respect of such Indebtedness whether or not required to be paid within one year from the date of its creation and, in the case of the Borrower, Indebtedness in respect of the Loans.

 

“Funding Office”: the office of the Administrative Agent specified in Section 11.2 or such other office as may be specified from time to time by the Administrative Agent as its funding office by written notice to the Borrower and the Lenders.

 

“GAAP”: generally accepted accounting principles in the United States as in effect from time to time, except that for purposes of the definitions of “Consolidated Leverage Ratio” and “Excess Cash Flow” and Section 7.1, GAAP shall be determined on the basis of such principles in effect on the date hereof and consistent with those used in the preparation of the most recent audited financial statements referred to in Section 5.1(a) (except that inventory expense shall be calculated on a FIFO basis rather than a LIFO basis or, if not so calculated, adjustments shall be made to calculations of inventory expense to achieve the same effect).  In the event that any “Accounting Change” (as defined below) shall occur and such change results in a change in the method of calculation of financial covenants, standards or terms in this Agreement, then the Borrower and the Administrative Agent agree to enter into negotiations in order to amend such provisions of this Agreement so as to reflect equitably such Accounting Changes with the desired result that the criteria for evaluating the Borrower’s financial condition shall be the same after such Accounting Changes as if such Accounting Changes had not been made.  Until such time as such an amendment shall have been executed and delivered by the Borrower, the Administrative Agent and the Required Lenders, all financial covenants, standards and terms in this Agreement shall continue to be calculated or construed as if such Accounting Changes had not occurred.  “Accounting Changes” refers to changes in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants or, if applicable, the SEC.

 

“Governmental Authority”: any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange or any self-regulatory organization (including the National Association of Insurance Commissioners).

 

“Group Members”: the collective reference to the Borrower, Holdings and their respective Subsidiaries.

 

  

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Guarantee and Collateral Agreement”: the Guarantee and Collateral Agreement, dated as of December 31, 2009, by the Borrower and each Guarantor in favor of, or for the benefit of, the Administrative Agent for the benefit of the Secured Parties.

 

“Guarantee Obligation”: as to any Person (the “guaranteeing person”), any obligation, including a reimbursement, counterindemnity or similar obligation, of the guaranteeing Person that guarantees or in effect guarantees, or which is given to induce the creation of a separate obligation by another Person (including any bank under any letter of credit) that guarantees or in effect guarantees, any Indebtedness, leases, dividends or other obligations (the “primary obligations”) of any other third Person (the “primary obligor”)  in any manner, whether directly or indirectly, including any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall be such guaranteeing person’s maximum reasonably anticipated liability in respect thereof as determined by the Borrower in good faith.

 

“Guarantors”: collectively, Holdings and each Subsidiary of the Borrower other than any Excluded Foreign Subsidiary.

 

“Hedge Agreements”: any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, managers, officers, employees or consultants of the Borrower or the Subsidiaries shall be a Hedge Agreement.

 

“Holdings”: Butler Animal Health Holding Company LLC.

 

“Indebtedness”: of any Person at any date, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services (other than current trade payables incurred in the ordinary course of such Person’s business), (c) all obligations of such Person evidenced by notes,

 

  

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bonds, debentures or other similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all Capital Lease Obligations of such Person, (f) all reimbursement and other obligations of such Person, contingent or otherwise, as an account party or applicant under or in respect of bankers’ acceptances, letters of credit, surety bonds (other than surety bonds required by any Governmental Authority to be posted by a pharmaceutical distributor so long as such Person has no additional reimbursement obligations, contingent or otherwise, thereunder) or similar arrangements, (g) the liquidation value of all redeemable preferred Capital Stock of such Person having a redemption date at least 6 months after the Termination Date, (h) all Guarantee Obligations of such Person in respect of obligations of the kind referred to in clauses (a) through (g) above, (i) all obligations of the kind referred to in clauses (a) through (h) above secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any Lien on property (including accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation, and (j) for the purposes of Sections 8.2 and 9(e) only, all obligations of such Person in respect of Hedge Agreements. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness expressly provide that such Person is not liable therefor.

 

“Insolvency”: with respect to any Multiemployer Plan, the condition that such plan is insolvent within the meaning of Section 4245 of ERISA.

 

“Insolvent”: pertaining to a condition of Insolvency.

 

“Intellectual Property”: the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including copyrights, patents, trademarks, domain names, technology, know-how and processes, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom.

 

“Interest Payment Date”: (a) as to any Base Rate Loan (other than any Swingline Loan), the last day of each March, June, September and December to occur while such Loan is outstanding and the final maturity date of such Loan, (b) as to any Eurodollar Loan having an Interest Period of three months or less, the last day of such Interest Period, (c) as to any Eurodollar Loan having an Interest Period longer than three months, each day that is three months, or a whole multiple thereof, after the first day of such Interest Period and the last day of such Interest Period, (d) as to any Loan (other than any Revolving Loan that is a Base Rate Loan and any Swingline Loan), the date of any repayment or prepayment made in respect thereof and (e) as to any Swingline Loan, the day that such Loan is required to be repaid.

 

“Interest Period”: as to any Eurodollar Loan, (a) initially, the period commencing on the borrowing or conversion date, as the case may be, with respect to such Eurodollar Loan and ending one, two, three or six months (or, if agreed to by all Lenders under the relevant

 

  

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Facility, nine or twelve months) thereafter, as selected by the Borrower in its notice of borrowing or notice of conversion, as the case may be, given with respect thereto; and (b) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such Eurodollar Loan and ending one, two, three or six months (or, if agreed to by all Lenders under the relevant Facility, nine or twelve months) thereafter, as selected by the Borrower by irrevocable notice to the Administrative Agent not later than 11:00 A.M., New York City time, on the date that is three Business Days prior to the last day of the then current Interest Period with respect thereto; provided that, all of the foregoing provisions relating to Interest Periods are subject to the following:

 

(i)             if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day;

 

(ii)            the Borrower may not select an Interest Period under a particular Facility that would extend beyond the Revolving Termination Date or beyond the date final payment is due on the Term Loans;

 

(iii)           any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month; and

 

(iv)           the Borrower shall select Interest Periods so as not to require a payment or prepayment of any Eurodollar Loan during an Interest Period for such Loan.

 

“Investments”: as defined in Section 8.8.

 

“Issuing Lender”: JPMorgan Chase Bank or any affiliate thereof in its capacity as issuer of any Letter of Credit.

 

“JPMorgan Chase Bank”: JPMorgan Chase Bank, N.A.

 

“L/C Commitment”: $10,000,000.

 

“L/C Disbursement”:  a payment by the applicable Issuing Lender pursuant to an applicable Letter of Credit.  

 

“L/C Exposure”: with respect to any Revolving Lender at any time, an amount equal to the aggregate amount of such Revolving Lender’s portion of the L/C Obligations at such time.  

 

“L/C Fee Payment Date”: the last day of each March, June, September and December and the last day of the Revolving Commitment Period.

 

  

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“L/C Obligations”: at any time, an amount equal to the sum of (a) the aggregate then undrawn and unexpired amount of the then outstanding Letters of Credit and (b) the aggregate amount of drawings under Letters of Credit that have not then been reimbursed pursuant to Section 3.11.

 

“L/C Participants”: the collective reference to all the Revolving Lenders other than the Issuing Lender.

 

“Lead Arranger”: JPMorgan Chase Bank.

 

“Lenders”: as defined in the preamble to this Agreement; provided, that unless the context otherwise requires, each reference herein to the Lenders shall be deemed to include any Conduit Lender.

 

“Letters of Credit”: as defined in Section 3.7(a).

 

“Lien”: any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement and any capital lease having substantially the same economic effect as any of the foregoing).

 

“Liquidity”: cash on-hand and funds to be drawn under the Revolving Loan subject to the requirements of Sections 6.2 and 8.1.

 

“Loan”: any loan made by any Lender pursuant to this Agreement.

 

“Loan Documents”: this Agreement, the Security Documents and the Notes and any amendment, waiver, supplement or other modification to any of the foregoing which expressly provides that it is a “Loan Document”.

 

“Loan Parties”: each Group Member that is a party to a Loan Document.

 

“Majority Facility Lenders”: with respect to any Facility, the holders of more than 50% of the aggregate unpaid principal amount of the Term Loans or the Total Revolving Extensions of Credit, as the case may be, outstanding under such Facility (or, in the case of the Revolving Facility, prior to any termination of the Revolving Commitments, the holders of more than 50% of the Total Revolving Commitments).

 

“Material Adverse Effect”: a material adverse effect on (a) the business, operations, property or condition (financial or otherwise) of the Borrower and its Subsidiaries, taken as a whole, or (b) the validity or enforceability of this Agreement or any of the other Loan Documents or the rights or remedies of the Agents or the Lenders hereunder or thereunder or the validity, perfection or priority of the Administrative Agent’s Liens upon the Collateral.

 

“Material Contract”: each agreement identified on Schedule 8.16 to this Agreement.

 

  

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“Materials of Environmental Concern”: any gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products or any hazardous or toxic substances, materials or wastes, defined or regulated as such in or under any Environmental Law, including asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.

 

“Moody’s”: Moody’s Investors Service, Inc, or any successor or assignee.

 

“Mortgages”: each of the mortgages and deeds of trust made by each Loan Party in favor of, or for the benefit of, the Administrative Agent for the benefit of the Secured Parties, in form and substance reasonably satisfactory to the Agents (with such changes thereto as shall be advisable under the law of the jurisdiction in which such mortgage or deed of trust is to be recorded).

 

“Multiemployer Plan”: a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

 

“Net Cash Proceeds”: (a) in connection with any Asset Sale or any Recovery Event, the proceeds thereof in the form of cash and Cash Equivalents (including any such proceeds received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or by the Disposition of any non-cash consideration received in connection therewith or otherwise, but only as and when received) of such Asset Sale or Recovery Event, net of (i) attorneys’ fees, accountants’ fees, investment banking fees, amounts required to be applied to the repayment of Indebtedness secured by a Lien expressly permitted hereunder on any asset that is the subject of such Asset Sale or Recovery Event (other than any Lien pursuant to a Security Document), (ii) other customary fees and expenses actually incurred in connection therewith, (iii) taxes paid or reasonably estimated to be payable as a result thereof (taking into account any amounts, if any, distributed or to be distributed to the members of Holdings with respect to taxes in connection with such Asset Sale or Recovery Event in accordance with Schedule 8.6) and (iii) the amount of any reserves established by the Borrower or its Subsidiaries to fund contingent liabilities reasonably estimated to be payable in connection therewith and (b) in connection with any issuance or sale of Capital Stock, any capital contribution or any incurrence of Indebtedness, the cash proceeds received from such issuance, contribution or incurrence, net of attorneys’ fees, investment banking fees, accountants’ fees, underwriting discounts and commissions and other customary fees and expenses actually incurred in connection therewith.  Any Net Cash Proceeds shall include a deduction for tax distributions in respect of any realized gains assuming corporate tax rates (at applicable federal, state and local levels); provided that, at the option of the Borrower, such deduction on up to 29% of such gain may be calculated using individual tax rates (at applicable federal, state and local levels).

 

“Newco”: Winslow Acquisition Company.

 

“NLS”: National Logistics Services, LLC.

 

”NLS Financials”: as defined in Section 5.1(b)(i).

 

“Non-Consenting Lenders”: as defined in Section 11.1.

 

  

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“Non-Excluded Taxes”: as defined in Section 4.10(a).

 

“Non-U.S. Lender”: as defined in Section 4.10(d).

 

“Notes”: the collective reference to any promissory notes evidencing Loans.

 

“Oak Hill”: collectively, Oak Hill Capital Partners II, L.P., and its Affiliates.

 

“Obligations”: the unpaid principal of and interest on (including interest accruing after the maturity of the Loans and Reimbursement Obligations and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) the Loans and all other obligations and liabilities of the Borrower to any Agent or to any Lender (or, in the case of Specified Hedge Agreements and any Specified Cash Management Agreements, any affiliate of any Lender, any Qualified Counterparty), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, any other Loan Document, the Letters of Credit, any Specified Hedge Agreement and any Specified Cash Management Agreement or any other document made, delivered or given in connection herewith or therewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses (including all fees, charges and disbursements of counsel to any Agent or to any Lender that are required to be paid by the Borrower pursuant hereto) or otherwise; provided that any release of Collateral or Guarantors effected in the manner permitted by this Agreement shall not require the consent of holders of obligations under Specified Hedge Agreements and Specified Cash Management Agreements.

 

“Other Taxes”: any and all present or future stamp or documentary taxes or any other excise or property taxes, similar charges or similar levies arising from any payment made hereunder or under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.

 

“Participant”: as defined in Section 11.6(c).

 

“PBGC”: the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA (or any successor).

 

“PPA”: the Pension Protection Act of 2006.

 

“Permitted Acquisitions”: any acquisition by the Borrower or any of its Subsidiaries, whether by purchase, merger or otherwise, of all of the assets or Capital Stock of, or a business line or a division of, any Person; provided that (i) such acquisition was not preceded by, or effected pursuant to, an unsolicited or hostile offer by the acquirer or an Affiliate of the acquirer; (ii) immediately prior to and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing or would result therefrom; (iii) such acquisition is made in accordance with all applicable Requirements of Law and material Contractual Obligations, and all material consents and approvals required by applicable Requirement of Law and material Contractual Obligations have been obtained; (iv) the Borrower’s Liquidity after giving pro forma effect to such acquisition and all Loans funded in connection therewith shall 

 

  

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have exceeded $10,000,000; (v) the Consolidated Group shall be in compliance with the covenants contained in Section 8.1, both immediately before and after giving effect to such acquisition on a pro forma basis as of the most recently ended fiscal quarter for which a Compliance Certificate has been delivered pursuant to Section 7.2; (vi) the provisions of Section 7.10 are complied with in respect of such acquisition; (vii) after giving pro forma effect to the acquisition and all Indebtedness assumed, incurred or repaid in connection with the acquisition, the Consolidated Leverage Ratio on the date of the acquisition (based on Consolidated EBITDA determined on a pro forma basis, as set forth in the definition of “Consolidated EBITDA”, as of the most recently ended fiscal quarter of the Borrower for which financial statements have then been delivered) shall be either (x) if the maximum Consolidated Leverage Ratio on the date of the acquisition is greater than 2.5:1.0, 0.50:1.0 lower than the maximum Consolidated Leverage Ratio applicable under Section 8.1(a) or (y) if the maximum Consolidated Leverage Ratio on the date of the acquisition is equal to or less than 2.5:1.0, 0.25:1.0 lower than the maximum Consolidated Leverage Ratio applicable under Section 8.1(a), and in either case, the Administrative Agent shall have received a Compliance Certificate pursuant to Section 7.2 accompanied by such supporting information as the Administrative Agent may reasonably request; and (viii) any Person or assets or division as acquired in accordance herewith shall be in primarily the same business or lines of business as the Borrower or reasonably related thereto.

 

“Permitted Investors”: the collective reference to the Sponsors and their Control Investment Affiliates.

 

“Person”: an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.

 

“Plan”: at a particular time, any employee pension benefit plan (other than a Multiemployer Plan) that is subject to Title IV of ERISA or Section 412 of the Code or Section 302 of the ERISA and in respect of which the Borrower or any Commonly Controlled Entity is (or, if such Plan were terminated, would under Section 4062 or 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

 

“Pricing Grid”: (a) with respect to Revolving Loans and Swingline Loans, the grid set forth in the definition of “Applicable Margin” under the caption “Revolving Loans and Swingline Loans”, and (b) with respect to Term Loans, the grid set forth in the definition of “Applicable Margin” under the caption “Term Loans”.

 

“Prime Rate”: as defined in the definition of “Base Rate”.

 

“Pro Forma Balance Sheet”: as defined in Section 5.1(c).

 

“Prohibited Transaction”: as defined in Section 406 of ERISA and Section 4975(f)(3) of the Code.

 

“Projections”: as defined in Section 7.2(c).

 

“Properties”: as defined in Section 5.17(a).

 

  

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“Property”: any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible, including, without limitation, Capital Stock.

 

“Purchase Money Obligation”: for any Person, the obligations of such Person in respect of Indebtedness (including Capital Lease Obligations) incurred for the purpose of financing all or any part of the purchase price of any property (including Capital Stock of any Person) or the cost of installation, construction or improvement of any property and any refinancing thereof; provided, however, that the amount of Indebtedness does not exceed the cost of such acquisition, installation, construction or improvement, as the case may be.

 

“Qualified Counterparty”: with respect to any Specified Hedge Agreement or Specified Cash Management Agreement, any counterparty thereto that, at the time such Specified Hedge Agreement or Specified Cash Management Agreement was entered into, was a Lender, an Affiliate of a Lender, the Administrative Agent or an Affiliate of the Administrative Agent.

 

 “Qualifying IPO”: Holdings’ first underwritten public offering of its common Capital Stock pursuant to a registration statement under the Securities Act of 1933, as amended, that (i) results in gross proceeds of at least $50,000,000 and (ii) results in the listing or quotation of Holdings’ common Capital Stock on a recognized United States or international securities exchange.

 

“Recovery Event”: any settlement of or payment in excess of $500,000 in respect of any property or casualty insurance claim or any condemnation proceeding relating to any asset of any Group Member.

 

“Refunded Swingline Loans”: as defined in Section 3.4(b).

 

“Refunding Date”: as defined in Section 3.4(c).

 

“Register”: as defined in Section 11.6(b).

 

“Regulation U”: Regulation U of the Board as in effect from time to time.

 

“Reimbursement Obligation”: the obligation of the Borrower to reimburse the Issuing Lender pursuant to Section 3.11 for amounts drawn under Letters of Credit.

 

“Reinvestment Deferred Amount”: with respect to any Reinvestment Event, the aggregate Net Cash Proceeds received by any Group Member in connection therewith that are not applied to prepay the Term Loans or reduce the Revolving Commitments pursuant to Section 4.2(b) as a result of the delivery of a Reinvestment Notice.

 

“Reinvestment Event”: any Asset Sale or Recovery Event in respect of which the Borrower has delivered a Reinvestment Notice.

 

“Reinvestment Notice”: a written notice executed by a Responsible Officer stating that no Event of Default has occurred and is continuing and that the Borrower (directly or

 

  

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indirectly through a Subsidiary) intends and expects to use all or a specified portion of the Net Cash Proceeds of an Asset Sale or Recovery Event to acquire or repair assets useful in its business.

 

“Reinvestment Prepayment Amount”: with respect to any Reinvestment Event, the Reinvestment Deferred Amount relating thereto less any amount expended prior to the relevant Reinvestment Prepayment Date to acquire or repair assets useful in the Borrower’s business.

 

“Reinvestment Prepayment Date”: with respect to any Reinvestment Event, the earlier of (a) the date occurring twelve months after such Reinvestment Event and (b) the date on which the Borrower shall have determined not to, or shall have otherwise ceased to, acquire or repair assets useful in the Borrower’s business with all or any portion of the relevant Reinvestment Deferred Amount.

 

“Reorganization”: with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA.

 

“Reportable Event”: any of the events set forth in Section 4043(b) of ERISA, other than those events as to which the thirty day notice period is waived under subsection .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC Reg. § 4043.

 

“Required Lenders”: at any time, the holders of more than 50% of the sum of (i) the aggregate unpaid principal amount of the Term Loans then outstanding and (ii) the Total Revolving Commitments then in effect or, if the Revolving Commitments have been terminated, the Total Revolving Extensions of Credit then outstanding.

 

“Requirement of Law”: as to any Person, the certificate of incorporation and by-laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

 

“Responsible Officer”: the chief executive officer, president or chief financial officer of the Borrower, but in any event, with respect to financial matters, the chief financial officer of the Borrower.

 

“Restricted Payments”: as defined in Section 8.6.

 

“Revolving Commitment”: as to any Lender, the obligation of such Lender, if any, to make Revolving Loans and participate in Swingline Loans and Letters of Credit in an aggregate principal and/or face amount not to exceed the amount set forth under the heading “Revolving Commitment” under such Lender’s name on Schedule 1.1 or in the Assignment and Assumption pursuant to which such Lender became a party hereto, as the same may be changed from time to time pursuant to the terms hereof. The original amount of the Total Revolving Commitments is $30,000,000.

 

  

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“Revolving Commitment Period”: the period from and including the Closing Date to the Revolving Termination Date.

 

“Revolving Extensions of Credit”: as to any Revolving Lender at any time, an amount equal to the sum of (a) the aggregate principal amount of all Revolving Loans held by such Lender then outstanding, (b) such Lender’s Revolving Percentage of the L/C Obligations then outstanding and (c) such Lender’s Revolving Percentage of the aggregate principal amount of Swingline Loans then outstanding.

 

“Revolving Facility”: as defined in the definition of “Facility”.

 

“Revolving Lender”: each Lender that has a Revolving Commitment or that holds Revolving Loans.

 

“Revolving Loans”: as defined in Section 3.1(a).

 

“Revolving Percentage”: as to any Revolving Lender at any time, the percentage which such Lender’s Revolving Commitment then constitutes of the Total Revolving Commitments (or, at any time after the Revolving Commitments shall have expired or terminated, the percentage which the aggregate principal amount of such Lender’s Revolving Loans then outstanding constitutes of the aggregate principal amount of the Revolving Loans then outstanding); provided, that, in the event that the Revolving Loans are paid in full prior to the reduction to zero of the Revolving Extensions of Credit, the Revolving Percentages shall be determined in a manner designed to ensure that the other outstanding Revolving Extensions of Credit shall be held by the Revolving Lenders on a comparable basis.

 

“Revolving Termination Date”: December 31, 2014.

 

“S&P”: Standard & Poor’s Ratings Group, a division of McGraw-Hill, Inc. or any successor or assignee.

 

“Schein”: Henry Schein, Inc.

 

“Schein Assets”: the meaning of “Contributed Assets” as defined in the Transaction Agreement.

 

“Schein Business”: the meaning of “Contributed Schein Vet Business” as defined in the Transaction Agreement.

 

 “SEC”: the Securities and Exchange Commission, any successor thereto and any analogous Governmental Authority.

 

“Secured Parties”: the collective reference to the Lenders, the Administrative Agent, the Qualified Counterparties, the Issuing Lender and the Swingline Lender.

 

“Security Documents”: the collective reference to the Guarantee and Collateral Agreement, the Control Agreements, the Mortgages and all other security documents hereafter delivered to the Administrative Agent granting a Lien on any property of any Person to secure 

 

  

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the obligations and liabilities of any Loan Party to any Secured Party under any Loan Document or under any Specified Hedge Agreement or Specified Cash Management Agreement.

 

“Solvent”: when used with respect to any Person, means that, as of any date of determination, (a) the amount of the “present fair saleable value” of the assets of such Person will, as of such date, exceed the amount of all “liabilities of such Person, contingent or otherwise”, as of such date, as such quoted terms are determined in accordance with applicable federal and state laws governing determinations of the insolvency of debtors, (b) the present fair saleable value of the assets of such Person will, as of such date, be greater than the amount that will be required to pay the liability of such Person on its debts as such debts become absolute and matured, (c) such Person will not have, as of such date, an unreasonably small amount of capital with which to conduct its business and (d) such Person will be able to pay its debts as they mature. For purposes of this definition, (i) “debt” means liability on a “claim”, and (ii) “claim” means any (x) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured or unsecured.

 

“Specified Cash Management Agreement”:  any agreement providing for treasury, depositary, purchasing card or cash management services, including in connection with any automated clearing house transfers of funds or any similar transactions between the Borrower or any Guarantor and any Lender or affiliate thereof.

 

“Specified Hedge Agreement”: any Hedge Agreement (a) entered into by (i) the Borrower or any of its Subsidiaries and (ii) Qualified Counterparty, as counterparty, and (b) that has been designated by such Qualified Counterparty and the Borrower, by notice to the Administrative Agent, as a Specified Hedge Agreement. The designation of any Hedge Agreement as a Specified Hedge Agreement shall not create in favor of any Qualified Counterparty that is a party thereto any rights in connection with the management or release of any Collateral or of the obligations of any Guarantor under the Guarantee and Collateral Agreement.

 

“Sponsors”: collectively, Oak Hill, Darby and Schein.

 

“Subordinated Debt”:  any Indebtedness that is subordinated in right of payment to the Obligations.

 

“Subsidiary”: as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.

 

  

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“Swingline Commitment”: the obligation of the Swingline Lender to make Swingline Loans pursuant to Section 3.3 in an aggregate principal amount at any one time outstanding not to exceed $5,000,000.

 

“Swingline Lender”: JPMorgan Chase Bank, or any other Lender designated by the Administrative Agent and the Borrower.

 

“Swingline Loans”: as defined in Section 3.3(a).

 

“Swingline Participation Amount”: as defined in Section 3.4(c).

 

“Term Commitment”: as to any Lender, the obligation of such Lender, if any, to make a Term Loan to the Borrower hereunder on the Closing Date in a principal amount not to exceed the amount set forth under the heading “Term Commitment” under such Lender’s name on Schedule 1.1 or in the Assignment and Assumption pursuant to which such Lender became a party hereto, as the same may be changed from time to time pursuant to the terms hereof. The original aggregate amount of the Term Commitments is $320,000,000.

 

“Term Facility”: as defined in the definition of “Facility”.

 

“Term Lender”: each Lender that has a Term Commitment or that holds a Term Loan.

 

“Term Loan”: as defined in Section 2.1.

 

“Term Percentage”: as to any Term Lender at any time, the percentage which such Lender’s Term Commitment then constitutes of the aggregate Term Commitments (or, at any time after the Closing Date, the percentage which the aggregate principal amount of such Lender’s Term Loans then outstanding constitutes of the aggregate principal amount of the Term Loans then outstanding).

 

“Term Termination Date”: December 31, 2015.

 

“Total Revolving Commitments”: at any time, the aggregate amount of the Revolving Commitments then in effect.

 

“Total Revolving Extensions of Credit”: at any time, the aggregate amount of the Revolving Extensions of Credit of the Revolving Lenders outstanding at such time.

 

“Transactions”: the transactions described in the recitals hereto.

 

“Transaction Agreement”: the Omnibus Agreement, dated as of November 29, 2009, among Schein, National Logistics Services, LLC, Newco, Holdings, the Borrower, Oak Hill, Butler, Darby, Burns and the Management Members party thereto, as in effect on the Closing Date or as may be amended, waived or otherwise modified in accordance with Section 8.16.

 

  

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“Transaction Documentation”: collectively, the Transaction Agreement and all disclosure schedules, exhibits and annexes thereto and all side letters and agreements affecting the terms thereof or entered into in connection therewith.

 

“Transferee”: any Assignee or Participant.

 

“Type”: as to any Loan, its nature as a Base Rate Loan or a Eurodollar Loan.

 

“United States”: the United States of America.

 

“Wholly Owned Subsidiary”: as to any Person, any other Person all of the Capital Stock of which (other than directors’ qualifying shares required by law) is owned by such Person directly and/or through other Wholly Owned Subsidiaries.

 

“Wholly Owned Guarantor”: any Guarantor that is a Wholly Owned Subsidiary of the Borrower.

 

“Withdrawal Liability”: liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Title IV of ERISA.

 

1.2 Other Definitional Provisions.  (a)  Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in the other Loan Documents or any certificate or other document made or delivered pursuant hereto or thereto.

 

(b) As used herein and in the other Loan Documents, and any certificate or other document made or delivered pursuant hereto or thereto, (i) accounting terms relating to any Group Member not defined in Section 1.1 and accounting terms partly defined in Section 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP, (ii) the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”, (iii) the word “incur” shall be construed to mean incur, create, issue, assume, become liable in respect of or suffer to exist (and the words “incurred” and “incurrence” shall have correlative meanings), (iv) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, Capital Stock, securities, revenues, accounts, leasehold interests and contract rights and (v) references to agreements or other Contractual Obligations shall, unless otherwise specified, be deemed to refer to such agreements or Contractual Obligations as amended, supplemented, restated or otherwise modified from time to time (subject to any applicable restrictions hereunder).

 

(c) The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, Schedule and Exhibit references are to this Agreement unless otherwise specified.

 

(d) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

 

  

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(e) Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP; provided that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.  Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, without giving effect to any election under Statement of Financial Accounting Standards 159 (or any other Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of Holdings, the Borrower or any Subsidiary at “fair value”, as defined therein

 

(f) To the extent that Holdings, the Borrower or any Subsidiary shall change its fiscal year end to the fiscal year end of Schein or change its methodology for determining fiscal quarters to Schein’s methodology as of the date hereof for determining Schein’s fiscal quarters, any references herein (including Section 8.1) or any other Loan Document to fiscal quarters or fiscal years ended on a specified date (from and after the date of such change) shall be deemed modified to refer to the applicable corresponding Schein fiscal quarter or fiscal year, as the case may be.

 

SECTION 2.

 

AMOUNT AND TERMS OF TERM LOANS

 

2.1 Term Loans.  (a)  On the Closing Date, subject to the terms and conditions of this Agreement, each Term Lender severally agrees to make a term loan to the Borrower (a “Term Loan”) in an amount not to exceed the amount of the Term Commitment of such Lender, the proceeds of which shall be utilized to finance a portion of the Transactions and to pay related fees and expenses.

 

(b) The Term Loans may from time to time be Eurodollar Loans or Base Rate Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.2 and 4.3.

 

2.2 Procedure for Term Loan Borrowing. The Borrower shall give the Administrative Agent irrevocable notice (which notice must be received by the Administrative Agent prior to 10:00 A.M., New York City time, one Business Day prior to the anticipated Closing Date) requesting that the Term Lenders make the Term Loans on the Closing Date and specifying the amount to be borrowed and the Type of Loan. The Term Loans made on the Closing Date shall initially be Eurodollar Loans with an Interest Period of one month. Upon receipt of such notice the Administrative Agent shall promptly notify each Term Lender thereof. Not later than 12:00 noon, New York City time, on the Closing Date each Term Lender shall 

 

  

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make available to the Administrative Agent at the Funding Office an amount in immediately available funds equal to the Term Loan or Term Loans to be made by such Lender. The Administrative Agent shall credit the account of the Borrower on the books of such office of the Administrative Agent with the aggregate of the amounts made available to the Administrative Agent by the Term Lenders in immediately available funds.

 

2.3 Repayment of Term Loans.  The Term Loan of each Lender shall mature and be repaid (i) during the period commencing March 31, 2010 and ending September 30, 2015, in 23 equal consecutive quarterly installments each in the amount of one quarter of one percent (0.25%) per annum of the original aggregate amount of the Term Commitments and a final installment equal to the remaining unpaid principal balance of the Term Loans on the Term Termination Date.

 

SECTION 3.

 

AMOUNT AND TERMS OF REVOLVING COMMITMENTS

 

3.1 Revolving Commitments.  (a)  Subject to the terms and conditions hereof, each Revolving Lender severally agrees to make revolving credit loans (“Revolving Loans”) to the Borrower from time to time during the Revolving Commitment Period in an aggregate principal amount at any one time outstanding which, when added to such Lender’s Revolving Percentage of the sum of (i) the L/C Obligations then outstanding and (ii) the aggregate principal amount of the Swingline Loans then outstanding, does not exceed the amount of such Lender’s Revolving Commitment. During the Revolving Commitment Period the Borrower may use the Revolving Commitments by borrowing, prepaying and reborrowing the Revolving Loans in whole or in part, all in accordance with the terms and conditions hereof. The Revolving Loans may from time to time be Eurodollar Loans or Base Rate Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 3.2 and 4.3.

 

(b) The Borrower agrees to repay all outstanding Revolving Loans on the Revolving Termination Date.

 

3.2 Procedure for Revolving Loan Borrowing. The Borrower may borrow under the Revolving Commitments during the Revolving Commitment Period on any Business Day, provided that the Borrower shall give the Administrative Agent irrevocable notice (which notice must be received by the Administrative Agent prior to 12:00 noon, New York City time, (a) three Business Days prior to the requested Borrowing Date, in the case of Eurodollar Loans, or (b) one Business Day prior to the requested Borrowing Date, in the case of Base Rate Loans) (provided that any such notice of a borrowing of Base Rate Loans to finance payments required to be made pursuant to Section 3.11 may be given not later than 10:00 A.M., New York City time, on the date of the proposed borrowing), specifying (i) the aggregate amount and Types of Revolving Loans to be borrowed, (ii) in the event more than one Type of Revolving Loans, the respective amounts of each such Type of Revolving Loan, (iii) the requested Borrowing Date and (iv) in the case of Eurodollar Loans, the respective amounts of each such Type of Loan and the respective lengths of the initial Interest Period therefor.  Each borrowing under the Revolving Commitments shall be in an amount equal to (x) in the case of Base Rate Loans, $1,000,000 or a whole multiple of $100,000 in excess thereof (or, if the then aggregate Available Revolving 

 

  

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Commitments are less than $1,000,000, such lesser amount) and (y) in the case of Eurodollar Loans, $2,000,000 or a whole multiple of $100,000 in excess thereof; provided, that (x) the Swingline Lender may request, on behalf of the Borrower, borrowings under the Revolving Commitments that are Base Rate Loans in other amounts pursuant to Section 3.4 and (y) borrowings of Base Rate Loans pursuant to Section 3.11 shall not be subject to the foregoing minimum amounts. Upon receipt of any such notice from the Borrower, the Administrative Agent shall promptly notify each Revolving Lender thereof. Each Revolving Lender will make the amount of its pro rata share of each borrowing available to the Administrative Agent for the account of the Borrower at the Funding Office prior to 12:00 noon, New York City time, on the Borrowing Date requested by the Borrower in funds immediately available to the Administrative Agent. Such borrowing will then be made available to the Borrower by the Administrative Agent crediting the account of the Borrower on the books of such office with the aggregate of the amounts made available to the Administrative Agent by the Revolving Lenders and in like funds as received by the Administrative Agent.  No more than $5,000,000 of Revolving Loans shall be made on the Closing Date.

 

3.3 Swingline Commitment.  (a)  Subject to the terms and conditions hereof, the Swingline Lender agrees to make a portion of the credit otherwise available to the Borrower under the Revolving Commitments from time to time during the Revolving Commitment Period by making swing line loans (“Swingline Loans”) to the Borrower; provided that (i) the aggregate principal amount of Swingline Loans outstanding at any time shall not exceed the Swingline Commitment then in effect (notwithstanding that the Swingline Loans outstanding at any time, when aggregated with the Swingline Lender’s other outstanding Revolving Loans hereunder, may exceed the Swingline Commitment then in effect) and (ii) the Borrower shall not request, and the Swingline Lender shall not make, any Swingline Loan if, after giving effect to the making of such Swingline Loan, the aggregate amount of the Available Revolving Commitments would be less than zero. During the Revolving Commitment Period, the Borrower may use the Swingline Commitment by borrowing, repaying and reborrowing, all in accordance with the terms and conditions hereof. Swingline Loans shall be Base Rate Loans only.

 

(b) The Borrower shall repay to the Swingline Lender the then unpaid principal amount of each Swingline Loan on the earlier of the Revolving Termination Date and the first date after such Swingline Loan is made that is the 15th or last day of a calendar month and is at least three Business Days after such Swingline Loan is made.

 

3.4 Procedure for Swingline Borrowing; Refunding of Swingline Loans.  (a)  Whenever the Borrower desires that the Swingline Lender make Swingline Loans it shall give the Swingline Lender irrevocable telephonic notice confirmed promptly in writing (which telephonic notice must be received by the Swingline Lender not later than 1:00 P.M., New York City time, on the proposed Borrowing Date), specifying (i) the aggregate amount of Swingline Loans to be borrowed and (ii) the requested Borrowing Date (which shall be a Business Day during the Revolving Commitment Period). Each borrowing under the Swingline Commitment shall be in an amount equal to $500,000 or a whole multiple of $100,000 in excess thereof. Not later than 3:00 P.M., New York City time, on the Borrowing Date specified in a notice in respect of Swingline Loans, the Swingline Lender shall make available to the Administrative Agent at the Funding Office an amount in immediately available funds equal to the amount of the Swingline Loan to be made by the Swingline Lender. The Administrative Agent shall make the 

 

  

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proceeds of such Swingline Loan available to the Borrower on such Borrowing Date by depositing such proceeds in the account of the Borrower with the Administrative Agent on such Borrowing Date in immediately available funds.

 

(b) The Swingline Lender, at any time and from time to time in its sole and absolute discretion may, on behalf of the Borrower (which hereby irrevocably directs the Swingline Lender to act on its behalf), on one Business Day’s notice given by the Swingline Lender no later than 12:00 noon, New York City time, request each Revolving Lender to make, and each Revolving Lender hereby agrees to make, a Revolving Loan, in an amount equal to such Revolving Lender’s Revolving Percentage of the aggregate amount of the Swingline Loans (the “Refunded Swingline Loans”) outstanding on the date of such notice, to repay the Swingline Lender. Each Revolving Lender shall make the amount of such Revolving Loan available to the Administrative Agent at the Funding Office in immediately available funds, not later than 10:00 A.M., New York City time, one Business Day after the date of such notice. The proceeds of such Revolving Loans shall be immediately made available by the Administrative Agent to the Swingline Lender for application by the Swingline Lender to the repayment of the Refunded Swingline Loans and all of the Borrower’s obligations with respect to such Swingline Loans shall be deemed satisfied in full. The Borrower irrevocably authorizes the Swingline Lender to charge the Borrower’s accounts with the Administrative Agent (up to the amount available in each such account) in order to immediately pay the amount of such Refunded Swingline Loans to the extent amounts received from the Revolving Lenders are not sufficient to repay in full such Refunded Swingline Loans.

 

(c) If prior to the time a Revolving Loan would have otherwise been made pursuant to Section 3.4(b), one of the events described in Section 9(f) shall have occurred and be continuing with respect to the Borrower or if for any other reason, as determined by the Swingline Lender in its sole discretion, Revolving Loans may not be made as contemplated by Section 3.4(b), each Revolving Lender shall, on the date such Revolving Loan was to have been made pursuant to the notice referred to in Section 3.4(b) (the “Refunding Date”), purchase for cash an undivided participating interest in the then outstanding Swingline Loans by paying to the Swingline Lender an amount (the “Swingline Participation Amount”) equal to (i) such Revolving Lender’s Revolving Percentage times (ii) the sum of the aggregate principal amount of Swingline Loans then outstanding that were to have been repaid with such Revolving Loans.

 

(d) Whenever, at any time after the Swingline Lender has received from any Revolving Lender such Lender’s Swingline Participation Amount, the Swingline Lender receives any payment on account of the Swingline Loans, the Swingline Lender will distribute to such Lender its Swingline Participation Amount (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s participating interest was outstanding and funded and, in the case of principal and interest payments, to reflect such Lender’s pro rata portion of such payment if such payment is not sufficient to pay the principal of and interest on all Swingline Loans then due); provided, however, that in the event that such payment received by the Swingline Lender is required to be returned, such Revolving Lender will return to the Swingline Lender any portion thereof previously distributed to it by the Swingline Lender.

 

  

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(e) Each Revolving Lender’s obligation to make the Loans referred to in Section 3.4(b) and to purchase participating interests pursuant to Section 3.4(c) shall be absolute and unconditional and shall not be affected by any circumstance, including (i) any setoff, counterclaim, recoupment, defense or other right that such Revolving Lender or the Borrower may have against the Swingline Lender, the Borrower or any other Person for any reason whatsoever; (ii) the occurrence or continuance of a Default or an Event of Default or the failure to satisfy any of the other conditions specified in Section 6; (iii) any adverse change in the condition (financial or otherwise) of the Borrower; (iv) any breach of this Agreement or any other Loan Document by the Borrower, any other Loan Party or any other Revolving Lender; or (v) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing.

 

3.5 Commitment Fees, etc.  (a)  The Borrower agrees to pay to the Administrative Agent for the account of each Revolving Lender a commitment fee for the period from and including the date hereof to but excluding the last day of the Revolving Commitment Period, computed at the Commitment Fee Rate on the average daily amount of the Available Revolving Commitment of such Lender during the period for which payment is made, payable quarterly in arrears on the last day of each March, June, September and December and on the Revolving Termination Date, commencing on the first of such date to occur after the date hereof.

 

(b) The Borrower agrees to pay to the Administrative Agent the fees in the amounts and on the dates as set forth in any fee agreements with the Administrative Agent and to perform any other obligations contained therein.

 

(c) The Borrower agrees to pay to the Lead Arranger the fees in the amounts and on the dates as set forth in any fee agreements with the Lead Arranger and to perform any other obligations contained therein.

 

3.6 Termination or Reduction of Revolving Commitments. The Borrower shall have the right, upon not less than three Business Days’ notice to the Administrative Agent, to terminate the Revolving Commitments or, from time to time, to reduce the amount of the Revolving Commitments without premium or penalty; provided that no such termination or reduction of Revolving Commitments shall be permitted if, after giving effect thereto and to any prepayments of the Revolving Loans and Swingline Loans made on the Closing Date thereof, the Total Revolving Extensions of Credit would exceed the Total Revolving Commitments. Any such reduction shall be in an amount equal to $1,000,000, or a whole multiple thereof, and shall reduce permanently the Revolving Commitments then in effect.

 

3.7 L/C Commitment.  (a)  Subject to the terms and conditions hereof, the Issuing Lender, in reliance on the agreements of the other Revolving Lenders set forth in Section 3.10(a), agrees to issue letters of credit (“Letters of Credit”) for the account of the Borrower (or any Subsidiary of the Borrower) on any Business Day during the Revolving Commitment Period in such form as may be reasonably approved from time to time by the Issuing Lender; provided that the Issuing Lender shall have no obligation to issue any Letter of Credit if, after giving effect to such issuance, (i) the L/C Obligations would exceed the L/C Commitment or (ii) the aggregate amount of the Available Revolving Commitments would be less than zero. Each Letter of Credit shall (i) be denominated in Dollars, (ii) have a face amount of at least $50,000 (unless otherwise 

 

  

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agreed by the Issuing Lender) and (iii) expire no later than the earlier of (x) the first anniversary of its date of issuance and (y) the date that is five Business Days prior to the Revolving Termination Date, provided that any Letter of Credit with a one-year term may provide for the renewal thereof for additional periods not to exceed one year (which shall in no event extend beyond the date referred to in clause (y) above).

 

(b) The Issuing Lender shall not at any time be obligated to issue any Letter of Credit hereunder if such issuance would conflict with, or cause the Issuing Lender or any L/C Participant to exceed any limits imposed by, any applicable Requirement of Law.

 

3.8 Procedure for Issuance of Letter of Credit. The Borrower may from time to time request that the Issuing Lender issue a Letter of Credit by delivering to the Issuing Lender at its address for notices specified herein an Application therefor, completed to the reasonable satisfaction of the Issuing Lender, and such other certificates, documents and other papers and information as the Issuing Lender may reasonably request. Upon receipt of any Application, the Issuing Lender will notify the Administrative Agent of the amount, the beneficiary and the requested expiration of the requested Letter of Credit, and upon receipt of confirmation from the Administrative Agent that after giving effect to the requested issuance, the Available Revolving Commitments would not be less than zero, the Issuing Lender will process such Application and the certificates, documents and other papers and information delivered to it in connection therewith in accordance with its customary procedures and shall promptly issue the Letter of Credit requested thereby (but in no event shall the Issuing Lender be required to issue any Letter of Credit earlier than three Business Days after its receipt of the Application therefor and all such other certificates, documents and other papers and information relating thereto) by issuing the original of such Letter of Credit to the beneficiary thereof or as otherwise may be agreed to by the Issuing Lender and the Borrower. The Issuing Lender shall furnish a copy of such Letter of Credit to the Borrower (with a copy to the Administrative Agent) promptly following the issuance thereof. The Issuing Lender shall promptly furnish to the Administrative Agent, which shall in turn promptly furnish to the Lenders, notice of the issuance of each Letter of Credit (including the amount thereof).

 

3.9 Fees and Other Charges.  (a)  The Borrower will pay a fee on the face amount of all outstanding Letters of Credit at a per annum rate equal to the Applicable Margin then in effect with respect to Eurodollar Loans under the Revolving Facility, shared ratably among the Revolving Lenders and payable quarterly in arrears on each L/C Fee Payment Date after the issuance date. In addition, the Borrower agrees to pay the Issuing Lender for its own account a fronting fee of 0.25% per annum on the undrawn and unexpired amount of each Letter of Credit as agreed by the Borrower and the Issuing Lender, payable quarterly in arrears on each L/C Fee Payment Date after the issuance date.

 

(b) In addition to the foregoing fees, the Borrower agrees to pay or reimburse the Issuing Lender for such normal and customary costs and expenses as are incurred or charged by the Issuing Lender in issuing, negotiating, effecting payment under, amending or otherwise administering any Letter of Credit.

 

3.10 L/C Participations.  (a)  The Issuing Lender irrevocably agrees to grant and hereby grants to each L/C Participant, and, to induce the Issuing Lender to issue Letters of 

 

  

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Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase and hereby accepts and purchases from the Issuing Lender, on the terms and conditions set forth below, for such L/C Participant’s own account and risk an undivided interest equal to such L/C Participant’s Revolving Percentage in the Issuing Lender’s obligations and rights under and in respect of each Letter of Credit issued hereunder and the amount of each draft paid by the Issuing Lender thereunder. Each L/C Participant unconditionally and irrevocably agrees with the Issuing Lender that, if a draft is paid under any Letter of Credit for which the Issuing Lender is not reimbursed in full by the Borrower in accordance with the terms of this Agreement, such L/C Participant shall pay to the Administrative Agent upon demand of the Issuing Lender an amount equal to such L/C Participant’s Revolving Percentage of the amount of such draft, or any part thereof, that is not so reimbursed. The Administrative Agent shall promptly forward such amounts to the Issuing Lender.

 

(b) If any amount required to be paid by any L/C Participant to the Administrative Agent for the account of the Issuing Lender pursuant to Section 3.10(a) in respect of any unreimbursed portion of any payment made by the Issuing Lender under any Letter of Credit is paid to the Administrative Agent for the account of the Issuing Lender within three Business Days after the date such payment is due, such L/C Participant shall pay to the Administrative Agent for the account of the Issuing Lender on demand an amount equal to the product of (i) such amount, times (ii) the daily average Federal Funds Effective Rate during the period from and including the date such payment is required to the date on which such payment is immediately available to the Issuing Lender, times (iii) a fraction the numerator of which is the number of days that elapse during such period and the denominator of which is 360. If any such amount required to be paid by any L/C Participant pursuant to Section 3.10(a) is not made available to the Administrative Agent for the account of the Issuing Lender by such L/C Participant within three Business Days after the date such payment is due, the Issuing Lender shall be entitled to recover from such L/C Participant, on demand, such amount with interest thereon calculated from such due date at the rate per annum applicable to Base Rate Loans under the Revolving Facility. A certificate of the Issuing Lender submitted to any L/C Participant with respect to any amounts owing under this Section shall be conclusive in the absence of manifest error.

 

(c) Whenever, at any time after the Issuing Lender has made payment under any Letter of Credit and has received from any L/C Participant its pro rata share of such payment in accordance with Section 3.10(a), the Administrative Agent or the Issuing Lender receives any payment related to such Letter of Credit (whether directly from the Borrower or otherwise, including proceeds of collateral applied thereto by the Issuing Lender), or any payment of interest on account thereof, the Administrative Agent or the Issuing Lender, as the case may be, will distribute to such L/C Participant its pro rata share thereof; provided, however, that in the event that any such payment received by Administrative Agent or the Issuing Lender, as the case may be, shall be required to be returned by the Administrative Agent or the Issuing Lender, such L/C Participant shall return to the Administrative Agent for the account of the Issuing Lender the portion thereof previously distributed by the Administrative Agent or the Issuing Lender, as the case may be, to it.

 

3.11 Reimbursement Obligation of the Borrower. If any draft is paid under any Letter of Credit, the Borrower shall reimburse the Issuing Lender for the amount of (a) the draft 

 

  

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so paid and (b) any taxes, fees, charges or other costs or expenses incurred by the Issuing Lender in connection with such payment, not later than 12:00 noon, New York City time, on (i) the Business Day that the Borrower receives notice of such draft, if such notice is received on such day prior to 10:00 A.M., New York City time, or (ii) if clause (i) above does not apply, the Business Day immediately following the day that the Borrower receives such notice.  Each such payment shall be made to the Issuing Lender at its address for notices referred to herein in Dollars and in immediately available funds.  Interest shall be payable on any such amounts from and including the date on which the relevant draft is paid but excluding the date payment is made in full at the rate set forth in (i) until the Business Day next succeeding the date of the relevant notice, Section 4.5(b) and (ii) thereafter, Section 4.5(c).  Each drawing under any Letter of Credit shall (unless (x) Borrower directly reimburses the Issuing Lender in accordance with this Section 3.11 or (y) an event of the type described in clause (i) or (ii) of Section 9(f) shall have occurred and be continuing with respect to the Borrower, in which case the procedures specified in Section 3.10 for funding by L/C Participants shall apply) constitute a request by the Borrower to the Administrative Agent for a borrowing pursuant to Section 3.2 of Base Rate Loans (or, at the option of the Administrative Agent and the Swingline Lender in their sole discretion, a borrowing pursuant to Section 3.4 of Swingline Loans) in the amount of such drawing. The Borrowing Date with respect to such borrowing shall be the first date on which a borrowing of Revolving Loans (or, if applicable, Swingline Loans) could be made, pursuant to Section 3.2 or, if applicable, Section 3.4), if the Administrative Agent had received a notice of such borrowing at the time the Administrative Agent receives notice from the Issuing Lender of such drawing under such Letter of Credit.

 

3.12 Obligations Absolute. The Borrower’s obligations under Section 3.11 shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment that the Borrower may have or have had against the Issuing Lender, any beneficiary of a Letter of Credit or any other Person. The Borrower also agrees with the Issuing Lender that the Issuing Lender shall not be responsible for, and the Borrower’s Reimbursement Obligations under Section 3.11 shall not be affected by, among other things, the validity or genuineness of documents or of any endorsements thereon, even if such documents shall in fact prove to be invalid, fraudulent or forged, or any dispute between or among the Borrower and any beneficiary of any Letter of Credit or any other party to which such Letter of Credit may be transferred or any claims whatsoever of the Borrower against any beneficiary of such Letter of Credit or any such transferee. The Issuing Lender shall not be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit, except for errors or omissions found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Issuing Lender. The Borrower agrees that any action taken or omitted by the Issuing Lender under or in connection with any Letter of Credit or the related drafts or documents, if done in the absence of gross negligence or willful misconduct, shall be binding on the Borrower and shall not result in any liability of the Issuing Lender to the Borrower.

 

3.13 Letter of Credit Payments. If any draft shall be presented for payment under any Letter of Credit, the Issuing Lender shall promptly notify the Borrower of the date and amount thereof. The responsibility of the Issuing Lender to the Borrower in connection with any draft presented for payment under any Letter of Credit shall, in addition to any payment 

 

  

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obligation expressly provided for in such Letter of Credit, be limited to determining that the documents (including each draft) delivered under such Letter of Credit in connection with such presentment are substantially in conformity with such Letter of Credit.

 

3.14 Applications. To the extent that any provision of any Application related to any Letter of Credit is inconsistent with the provisions of this Section 3, the provisions of this Section 3 shall apply.

 

SECTION 4.

 

GENERAL PROVISIONS APPLICABLE

 

TO LOANS AND LETTERS OF CREDIT

 

4.1 Optional Prepayments.  The Borrower may at any time and from time to time prepay the Revolving Loans and the Term Loans, in whole or in part, without premium or penalty, upon irrevocable notice delivered to the Administrative Agent no later than 12:00 noon, New York City time, three Business Days prior thereto, in the case of Eurodollar Loans, and no later than 12:00 noon, New York City time, one Business Day prior thereto, in the case of Base Rate Loans, which notice shall specify the date and amount of prepayment and whether the prepayment is of Eurodollar Loans or Base Rate Loans; provided, that if a Eurodollar Loan is prepaid on any day other than the last day of the Interest Period applicable thereto, the Borrower shall also pay any amounts owing pursuant to Section 4.11; provided further, that any such notice of prepayment delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities to refinance the Obligations, in which case such notice of prepayment may be revoked by the Borrower if such condition is not satisfied. Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof. If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein, together with (except in the case of Revolving Loans that are Base Rate Loans and Swingline Loans) accrued interest to such date on the amount prepaid. Partial prepayments of the Term Loans and Revolving Loans shall be in an aggregate principal amount of $1,000,000 or a whole multiple of $100,000 in excess thereof. Partial prepayments of Swingline Loans shall be in an aggregate principal amount of $100,000 or a whole multiple thereof.

 

4.2 Mandatory Prepayments and Commitment Reductions.  (a)  If any Indebtedness shall be incurred by any Group Member (other than Excluded Indebtedness), an amount equal to 100% of the Net Cash Proceeds thereof shall be applied on the date of such issuance, incurrence or contribution toward the prepayment of the Term Loans and the reduction of the Revolving Commitments as set forth in Section 4.2(d).

 

(b) If on any date any Group Member shall receive Net Cash Proceeds from any Asset Sale or Recovery Event then, unless a Reinvestment Notice shall be delivered in respect thereof, 100% of the Net Cash Proceeds thereof shall be applied on such date toward the prepayment of the Term Loans and the reduction of the Revolving Commitments as set forth in Section 4.2(d); provided that, notwithstanding the foregoing, on each Reinvestment Prepayment Date, an amount equal to the Reinvestment Prepayment Amount with respect to the relevant 

 

  

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Reinvestment Event shall be applied toward the prepayment of the Loans as set forth in Section 4.2(d).

 

(c) If, for any fiscal year of the Borrower, commencing with the fiscal year ending December 31, 2010, there shall be Excess Cash Flow, the Borrower shall, on the relevant Excess Cash Flow Application Date, apply the difference between (i) the ECF Percentage of such Excess Cash Flow and (ii) all optional prepayments of the Term Loans during such fiscal year toward the prepayment of the Term Loans and the reduction of the Revolving Commitments. Each such prepayment and commitment reduction shall be made on a date (an “Excess Cash Flow Application Date”) no later than five Business Days after the earlier of (A) the date on which the financial statements of the Borrower referred to in Section 7.1(a), for the fiscal year with respect to which such prepayment is made, are required to be delivered to the Lenders and (B) the date such financial statements are actually delivered.

 

(d) Amounts to be applied in connection with mandatory prepayments and commitment reductions made pursuant to Section 4.2(a), (b) and (c) shall be applied, first, to the prepayment of the Term Loans in accordance with Section 4.8(b) and second, to reduce permanently the Revolving Commitments. Any such reduction of the Revolving Commitments shall be accompanied by prepayment of the Revolving Loans and/or Swingline Loans to the extent, if any, that the Total Revolving Extensions of Credit exceed the amount of the Total Revolving Commitments as so reduced; provided that if the aggregate principal amount of Revolving Loans and Swingline Loans then outstanding is less than the amount of such excess (because L/C Obligations constitute a portion thereof), the Borrower shall, to the extent of the balance of such excess, replace outstanding Letters of Credit and/or deposit an amount in cash in a cash collateral account established with the Administrative Agent for the benefit of the Lenders on terms and conditions satisfactory to the Administrative Agent. The application of any prepayment pursuant to Section 4.2 shall be made, first, to Base Rate Loans and, second, to Eurodollar Loans. Each prepayment of the Loans under Section 4.2 (except in the case of Revolving Loans that are Base Rate Loans and Swingline Loans) shall be accompanied by accrued interest to the date of such prepayment on the amount prepaid.

 

4.3 Conversion and Continuation Options.  (a)  The Borrower may elect from time to time to convert Eurodollar Loans to Base Rate Loans by giving the Administrative Agent prior irrevocable notice of such election no later than 12:00 noon, New York City time, on the Business Day preceding the proposed conversion date, provided that any such conversion of Eurodollar Loans may only be made on the last day of an Interest Period with respect thereto. The Borrower may elect from time to time to convert Base Rate Loans to Eurodollar Loans by giving the Administrative Agent prior irrevocable notice of such election no later than 12:00 noon, New York City time, on the third Business Day preceding the proposed conversion date (which notice shall specify the length of the initial Interest Period therefor), provided that no Base Rate Loan under a particular Facility may be converted into a Eurodollar Loan when any Event of Default has occurred and is continuing and the Administrative Agent or the Majority Facility Lenders in respect of such Facility have determined in its or their sole discretion not to permit such conversions. Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof.

 

  

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(b) Any Eurodollar Loan may be continued as such upon the expiration of the then current Interest Period with respect thereto by the Borrower giving irrevocable notice to the Administrative Agent, in accordance with the applicable provisions of the term “Interest Period” set forth in Section 1.1, of the length of the next Interest Period to be applicable to such Loans; provided that no Eurodollar Loan under a particular Facility may be continued as such when any Event of Default has occurred and is continuing and the Administrative Agent has or the Majority Facility Lenders in respect of such Facility have determined in its or their sole discretion not to permit such continuations; provided, further, that if the Borrower shall fail to give any required notice as described above in this paragraph or if such continuation is not permitted pursuant to the preceding proviso such Eurodollar Loans shall be automatically converted to Base Rate Loans on the last day of such then expiring Interest Period. Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof.

 

4.4 Limitations on Eurodollar Tranches. Notwithstanding anything to the contrary in this Agreement, all borrowings, conversions and continuations of Eurodollar Loans hereunder and all selections of Interest Periods hereunder shall be in such amounts and be made pursuant to such elections so that, (a) after giving effect thereto, the aggregate principal amount of the Eurodollar Loans comprising each Eurodollar Tranche shall be equal to $2,000,000 or a whole multiple of $100,000 in excess thereof and (b) no more than ten Eurodollar Tranches shall be outstanding at any one time.

 

4.5 Interest Rates and Payment Dates.  (a)  Each Eurodollar Loan shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to the Eurodollar Rate determined for such day plus the Applicable Margin.

 

(b) Each Base Rate Loan shall bear interest at a rate per annum equal to the Base Rate plus the Applicable Margin.

 

(c) (i) If all or a portion of the principal amount of any Loan or Reimbursement Obligation shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), all outstanding Loans and Reimbursement Obligations (whether or not overdue) shall bear interest at a rate per annum equal to (x) in the case of the Loans, the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this Section plus 2% or (y) in the case of Reimbursement Obligations, the rate applicable to Base Rate Loans under the Revolving Facility plus 2%, and (ii) if all or a portion of any interest payable on any Loan or Reimbursement Obligation or any commitment fee or other amount payable hereunder shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum equal to the rate then applicable to Base Rate Loans under the relevant Facility plus 2% (or, in the case of any such other amounts that do not relate to a particular Facility, the rate then applicable to Base Rate Loans under the Revolving Facility plus 2%), in each case, with respect to clauses (i) and (ii) above, from the date of such non-payment until such amount is paid in full (after as well as before judgment).

 

(d) Interest shall be payable in arrears on each Interest Payment Date; provided that interest accruing pursuant to paragraph (c) of this Section shall be payable from time to time on demand.

 

  

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(e) In the event that the information contained in any certificate delivered in accordance with the definition of “Applicable Margin” is shown to be inaccurate, and such inaccuracy, if corrected, would have led to the application of a higher Applicable Margin for any period (an “Applicable Period”) than the Applicable Margin actually applied for such Applicable Period, then (i) the Borrower shall immediately deliver to the Administrative Agent a correct certificate for such Applicable Period, (ii) the Applicable Margin shall be determined as if the Applicable Margin were the corrected level in the Pricing Grid for such Applicable Period, and (iii) the Borrower shall immediately deliver to the Administrative Agent full payment in respect of the accrued additional interest on the applicable Loans as a result of such increased Applicable Margin for such Applicable Period, which payment shall be promptly delivered to the Administrative Agent and applied by the Administrative Agent in accordance herewith (it being understood that nothing in this Section 4.5(e) shall limit the rights of the Administrative Agent and Lenders to exercise their rights under Section 4.5(c) or Section 9).

 

4.6 Computation of Interest and Fees.  (a)  Interest and fees payable pursuant hereto shall be calculated on the basis of a 360-day year for the actual days elapsed, except that with respect to Base Rate Loans the rate of interest of which is calculated on the basis of the Prime Rate, the interest thereon shall be calculated on the basis of a 365- (or 366-, as the case may be) day year for the actual days elapsed. The Administrative Agent shall as soon as practicable notify the Borrower and the relevant Lenders of each determination of a Eurodollar Rate. Any change in the interest rate on a Loan resulting from a change in the Base Rate or the Eurocurrency Reserve Requirements shall become effective as of the opening of business on the day on which such change becomes effective. The Administrative Agent shall as soon as practicable notify the Borrower and the relevant Lenders of the effective date and the amount of each such change in interest rate.

 

(b) Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Borrower and the Lenders in the absence of manifest error. The Administrative Agent shall, at the request of the Borrower, deliver to the Borrower a statement showing the quotations used by the Administrative Agent in determining any interest rate pursuant to Section 4.5(a).

 

4.7 Inability to Determine Interest Rate. If prior to the first day of any Interest Period:

 

(a) the Administrative Agent shall have determined (which determination shall be conclusive and binding upon the Borrower absent manifest error) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for such Interest Period, or

 

(b) the Administrative Agent shall have received notice from the Majority Facility Lenders in respect of the relevant Facility that the Eurodollar Rate determined or to be determined for such Interest Period will not adequately and fairly reflect the cost to such Lenders (as conclusively certified by such Lenders) of making or maintaining their affected Loans during such Interest Period, 

 

  

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then the Administrative Agent shall give telecopy or telephonic notice thereof to the Borrower and the relevant Lenders as soon as practicable thereafter. If such notice is given (x) any Eurodollar Loans under the relevant Facility requested to be made on the first day of such Interest Period shall be made as Base Rate Loans, (y) any Loans under the relevant Facility that were to have been converted on the first day of such Interest Period to Eurodollar Loans shall be continued as Base Rate Loans and (z) any outstanding Eurodollar Loans under the relevant Facility shall be converted, on the last day of the then-current Interest Period, to Base Rate Loans. Until such notice has been withdrawn by the Administrative Agent, no further Eurodollar Loans under the relevant Facility shall be made or continued as such, nor shall the Borrower have the right to convert Loans under the relevant Facility to Eurodollar Loans.

 

4.8 Pro Rata Treatment and Payments.  (a)  Each borrowing by the Borrower from the Lenders hereunder, each payment by the Borrower on account of any commitment fee and any reduction of the Commitments of the Lenders shall be made pro rata according to the respective Term Percentages or Revolving Percentages, as the case may be, of the relevant Lenders.

 

(b) Each payment (including each mandatory prepayment made pursuant to Section 4.2) by the Borrower on account of principal of and interest on the Term Loans shall be made pro rata according to the respective outstanding principal amounts of the Term Loans then held by the Term Lenders. The amount of each principal prepayment of the Term Loans shall be applied to reduce the then remaining installments of the Term Loans pro rata based upon the then remaining principal amount thereof. Amounts repaid or prepaid on account of the Term Loans may not be reborrowed, except that optional prepayments of the Term Loans made pursuant to Section 4.1 shall be applied to the installments thereof at the Borrower’s discretion.

 

(c) Each payment (including each mandatory prepayment made pursuant to Section 4.2) by the Borrower on account of principal of and interest on the Revolving Loans shall be made pro rata according to the respective outstanding principal amounts of the Revolving Loans then held by the Revolving Lenders.

 

(d) All payments (including prepayments) to be made by the Borrower hereunder, whether on account of principal, interest, fees or otherwise, shall be made without setoff or counterclaim and shall be made prior to 12:00 noon, New York City time, on the due date thereof to the Administrative Agent, for the account of the Lenders, at the Funding Office, in Dollars and in immediately available funds. The Administrative Agent shall distribute such payments to each relevant Lender promptly upon receipt in like funds as received, net of any amounts owing by such Lender pursuant to Section 10.7. If any payment hereunder (other than payments on the Eurodollar Loans) becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day. If any payment on a Eurodollar Loan becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day unless the result of such extension would be to extend such payment into another calendar month, in which event such payment shall be made on the immediately preceding Business Day. In the case of any extension of any payment of principal pursuant to the preceding two sentences, interest thereon shall be payable at the then applicable rate during such extension.

 

  

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(e) Unless the Administrative Agent shall have been notified in writing by any Lender prior to a borrowing that such Lender will not make the amount that would constitute its share of such borrowing available to the Administrative Agent, the Administrative Agent may assume that such Lender is making such amount available to the Administrative Agent, and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower a corresponding amount. If such amount is not made available to the Administrative Agent by the required time on the Borrowing Date therefor, such Lender shall pay to the Administrative Agent, on demand, such amount with interest thereon at a rate equal to the greater of (i) the Federal Funds Effective Rate and (ii) a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation for the period until such Lender makes such amount immediately available to the Administrative Agent. A certificate of the Administrative Agent submitted to any Lender with respect to any amounts owing under this paragraph shall be conclusive in the absence of manifest error. If such Lender’s share of such borrowing is not made available to the Administrative Agent by such Lender within three Business Days of such Borrowing Date, the Administrative Agent shall also be entitled to recover such amount with interest thereon at the rate per annum applicable to Base Rate Loans under the relevant Facility, on demand, from the Borrower.

 

(f) Unless the Administrative Agent shall have been notified in writing by the Borrower prior to the date of any payment due to be made by the Borrower hereunder that the Borrower will not make such payment to the Administrative Agent, the Administrative Agent may assume that the Borrower is making such payment, and the Administrative Agent may, but shall not be required to, in reliance upon such assumption, make available to the Lenders their respective pro rata shares of a corresponding amount. If such payment is not made to the Administrative Agent by the Borrower within three Business Days after such due date, the Administrative Agent shall be entitled to recover, on demand, from each Lender to which any amount which was made available pursuant to the preceding sentence, such amount with interest thereon at the rate per annum equal to the daily average Federal Funds Effective Rate. Nothing herein shall be deemed to limit the rights of the Administrative Agent or any Lender against the Borrower.

 

4.9 Requirements of Law.  (a)  If the adoption of or any change in any Requirement of Law or in the interpretation or application thereof or compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the date hereof:

 

(i) shall subject any Lender to any tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, any Application or any Eurodollar Loan made by it, or change the basis of taxation of payments to such Lender in respect thereof (except for Non-Excluded Taxes covered by Section 4.10 and changes in the rate of tax on the overall net income of such Lender);

 

(ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender that is not otherwise included in the determination of the Eurodollar Rate hereunder; or

 

  

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(iii) shall impose on such Lender any other condition;

 

and the result of any of the foregoing is to increase the cost to such Lender, by an amount that such Lender in its commercially reasonable judgment deems to be material, of making, converting into, continuing or maintaining Eurodollar Loans or issuing or participating in Letters of Credit, or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the Borrower shall promptly pay such Lender, upon its demand, any additional amounts necessary to compensate such Lender for such increased cost or reduced amount receivable. If any Lender becomes entitled to claim any additional amounts pursuant to this paragraph, it shall promptly notify the Borrower (with a copy to the Administrative Agent) of the event by reason of which it has become so entitled.

 

(b) If any Lender shall have determined that the adoption of or any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by such Lender or any corporation controlling such Lender with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the date hereof shall have the effect of reducing the rate of return on such Lender’s or such corporation’s capital as a consequence of its obligations hereunder or under or in respect of any Letter of Credit to a level below that which such Lender or such corporation could have achieved but for such adoption, change or compliance (taking into consideration such Lender’s or such corporation’s policies with respect to capital adequacy) by an amount deemed by such Lender in its commercially reasonable judgment to be material, then from time to time, after submission by such Lender to the Borrower (with a copy to the Administrative Agent) of a written request therefor, the Borrower agrees to pay to such Lender such additional amount or amounts as will compensate such Lender or such corporation for such reduction.

 

(c) A certificate setting forth in reasonable detail the calculation of the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified in Section 4.9(a) or 4.9(b), shall be submitted by any Lender to the Borrower (with a copy to the Administrative Agent) and shall be conclusive in the absence of manifest error. Notwithstanding anything to the contrary in this Section 4.9, the Borrower shall not be required to compensate a Lender pursuant to this Section 4.9 for any amounts incurred more than six months prior to the date that such Lender notifies the Borrower of such Lender’s intention to claim compensation therefor; provided that, if the circumstances giving rise to such claim have a retroactive effect, then such six-month period shall be extended to include the period of such retroactive effect. The obligations of the Borrower pursuant to this Section shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

 

4.10 Taxes.  (a)  Except as otherwise required by law, all payments made by the Borrower under this Agreement shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding net income taxes, franchise taxes (imposed in lieu of net income taxes), United States backup withholding taxes imposed under Section 3406 of the Code and branch profits taxes imposed on any Agent or any 

 

  

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Lender as a result of a present or former connection between such Agent or such Lender and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from such Agent or such Lender having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or any other Loan Document). If any such non-excluded taxes, levies, imposts, duties, charges, fees, deductions or withholdings (“Non-Excluded Taxes”) or Other Taxes are required to be withheld from any amounts payable to any Agent or any Lender hereunder, the amounts so payable to such Agent or such Lender shall be increased to the extent necessary to yield to such Agent or such Lender (after payment of all Non-Excluded Taxes and Other Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement, provided, however, that the Borrower shall not be required to increase any such amounts payable to any Lender with respect to any Non-Excluded Taxes (i) that are attributable to such Lender’s failure to comply with the requirements of paragraph (d) of this Section or (ii) that are United States withholding taxes imposed on amounts payable to such Lender at the time such Lender becomes a party to this Agreement, except to the extent that such Lender’s assignor (if any) was entitled, at the time of assignment, to receive additional amounts from the Borrower with respect to such Non-Excluded Taxes pursuant to this paragraph.

 

(b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

 

(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the Borrower, as promptly as possible thereafter the Borrower shall send to the Administrative Agent for its own account or for the account of the relevant Agent or Lender, as the case may be, appropriate evidence of payment thereof. If the Borrower fails to pay any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing authority or fails to provide to the Administrative Agent the required evidence of payment, the Borrower shall indemnify the Agents and the Lenders for any incremental taxes, interest or penalties that may become payable by any Agent or any Lender as a result of any such failure.  The Borrower shall indemnify any Agent and each Lender, within 10 days after written demand therefor, for the full amount of any Non-Excluded Taxes or Other Taxes (including Non-Excluded Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by such Agent or such Lender, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Non-Excluded Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Administrative Agent) or by the Administrative Agent, on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

 

(d) Any Lender that is entitled to an exemption from or reduction of any applicable withholding tax with respect to payments hereunder or under any other Loan Document shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate of withholding.  In addition, any Lender, if requested by the Borrower or the Administrative Agent, shall deliver such other 

 

  

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documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.  Notwithstanding anything to the contrary in the preceding two sentences, in the case of any withholding tax other than U.S. federal withholding tax, the completion, execution and submission of such forms shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

 

Without limiting the generality of the foregoing, any Lender that is not a “U.S. person” as defined by section 7701(a)(30) of the Code (a “Non-U.S. Lender”) shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Non-U.S. Lender becomes a Lender under this Agreement (and from time to time thereafter upon the request of the Borrower or the Administrative Agent), whichever of the following is applicable:

 

(i) duly completed copies of Internal Revenue Service Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the United States of America is a party,

 

(ii) duly completed copies of Internal Revenue Service Form W-8ECI,

 

(iii) in the case of a Non-U.S. Lender claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, (x) a certificate substantially in the Form of Exhibit C to the effect that (A) such Non-U.S. Lender is not (i) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (ii) a “10 percent shareholder” of the Borrower within the meaning of section 881(c)(3)(B) of the Code or (iii) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code and (D) the interest payments in question are not effectively connected with a United States trade or business conducted by such Lender (a “U.S. Tax Compliance Certificate”) and (y) duly completed copies of  Internal Revenue Service Form W-8BEN,

 

(iv) to the extent a Non-U.S. Lender is not the beneficial owner (for example, where the Non-U.S. Lender is a partnership or participating Lender granting a typical participation), an Internal Revenue Service Form W-8IMY, accompanied by a Form W-8ECI, W-8BEN, U.S. Tax Compliance Certificate, Form W-9, and/or other certification documents from each beneficial owner, as applicable, or

 

(v) any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in United States federal withholding tax duly completed together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower or Administrative Agent to determine the withholding or deduction required to be made.

 

  

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Each Lender agrees that if any form or certification previously delivered by it expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.

 

(e) Each Lender shall indemnify the Administrative Agent within 10 days after demand therefor, for the full amount of any taxes, levies, imposts, duties, charges, fees, deductions or withholdings attributable to such Lender that are payable or paid by the Administrative Agent, and reasonable expenses arising therefrom or with respect thereto, whether or not such taxes, levies, imposts, duties, charges, fees, deductions or withholdings were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error.

 

(f) If any Administrative Agent or any Lender has received a refund (as determined by the Administrative Agent or Lender, respectively, which determination shall be conclusive absent manifest error) of any Non-Excluded Taxes or Other Taxes (whether directly paid to the Lender or the Administrative Agent, as applicable, or applied to reduce another tax liability) as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section 4.10, it shall pay over such refund to the Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 4.10 with respect to the Non-Excluded Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of such Agent or such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided, that the Borrower, upon the request of such Agent or such Lender, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to such Agent or such Lender in the event such Agent or such Lender is required to repay such refund to such Governmental Authority. This paragraph shall not be construed to require any Agent or any Lender to make available its tax returns (or any other information relating to its taxes which it deems confidential) to the Borrower or any other Person.

 

(g) The agreements in this Section shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

 

4.11 Indemnity. The Borrower agrees (without duplication of amounts indemnified under Section 4.10 or Section 11.5) to indemnify each Lender and to hold each Lender harmless from any loss or expense that such Lender may sustain or incur as a consequence of (a) default by the Borrower in making a borrowing of, conversion into or continuation of Eurodollar Loans after the Borrower has given a notice requesting the same in accordance with the provisions of this Agreement, (b) default by the Borrower in making any prepayment of or conversion from Eurodollar Loans after the Borrower has given a notice thereof in accordance with the provisions of this Agreement or (c) the making of a prepayment of Eurodollar Loans on a day that is not the last day of an Interest Period with respect thereto. Such indemnification shall be limited to an amount equal to the excess, if any, of (i) the amount of interest that would have accrued on the amount so prepaid, or not so borrowed, converted or continued, for the period from the date of such prepayment or of such failure to borrow, convert 

 

  

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or continue to the last day of such Interest Period (or, in the case of a failure to borrow, convert or continue, the Interest Period that would have commenced on the date of such failure) in each case at the applicable rate of interest for such Loans provided for herein (excluding, however, the Applicable Margin included therein, if any) over (ii) the amount of interest (as reasonably determined by such Lender) that would have accrued to such Lender on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank eurodollar market. A certificate as to any amounts payable pursuant to this Section submitted to the Borrower by any Lender shall be conclusive in the absence of manifest error. This covenant shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

 

4.12 Change of Lending Office. Each Lender agrees that, upon the occurrence of any event giving rise to the operation of Section 4.9, 4.10(a) or 4.15 with respect to such Lender, it will, if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of such Lender) to designate another lending office for any Loans affected by such event with the object of avoiding the consequences of such event; provided that such designation is made on terms that, in the sole judgment of such Lender, cause such Lender and its lending office(s) to suffer no economic, legal or regulatory disadvantage; provided, further that nothing in this Section shall affect or postpone any of the obligations of the Borrower or the rights of any Lender pursuant to Section 4.9, 4.10(a) or 4.15.

 

4.13 Mitigation Obligations; Replacement of Lenders. The Borrower shall be permitted to replace any Lender that (a) requests reimbursement for amounts owing pursuant to Section 4.9 or 4.10(a), (b) becomes a Defaulting Lender or (c) is a Non-Consenting Lender in accordance with Section 11.1; provided that (i) such replacement does not conflict with any Requirement of Law, (ii) no Event of Default shall have occurred and be continuing at the time of such replacement, (iii) prior to any such replacement, such Lender shall have not taken action under Section 4.12 so as to eliminate the continued need for payment of amounts owing pursuant to Section 4.9 or 4.10(a), (iv) the replacement financial institution shall purchase, at par, all Loans and other amounts owing to such replaced Lender on or prior to the date of replacement, (v) the Borrower shall be liable to such replaced Lender under Section 4.11 if any Eurodollar Loan owing to such replaced Lender shall be purchased other than on the last day of the Interest Period relating thereto, (vi) the replacement financial institution, if not already a Lender, shall be reasonably satisfactory to the Administrative Agent, (vii) the replaced Lender shall be obligated to make such replacement in accordance with the provisions of Section 11.6 (including any applicable processing fees associated with such replacement), (viii) until such time as such replacement shall be consummated, the Borrower agrees to pay all additional amounts (if any) required pursuant to Section 4.9 or 4.10(a), as the case may be, and (ix) any such replacement shall not be deemed to be a waiver of any rights that the Borrower, the Administrative Agent or any other Lender shall have against the replaced Lender.

 

4.14 Evidence of Debt.  (a)  Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing indebtedness of the Borrower to such Lender resulting from each Loan of such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement.

 

  

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(b) The Administrative Agent, on behalf of the Borrower, shall maintain the Register pursuant to Section 11.6(b), and a subaccount therein for each Lender, in which shall be recorded (i) the amount of each Loan made hereunder and any Note evidencing such Loan, the type of such Loan and each Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) both the amount of any sum received by the Administrative Agent hereunder from the Borrower and each Lender’s share thereof.

 

(c) The entries made in the Register and the accounts of each Lender maintained pursuant to Section 4.14(a) shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the obligations of the Borrower therein recorded; provided, however, that the failure of any Lender or the Administrative Agent to maintain the Register or any such account, or any error therein, shall not in any manner affect the obligation of the Borrower to repay (with applicable interest) the Loans made to the Borrower by such Lender in accordance with the terms of this Agreement.

 

(d) The Borrower agrees that, upon the request to the Administrative Agent by any Lender, the Borrower will execute and deliver to such Lender a promissory note of the Borrower evidencing any Term Loans, Revolving Loans or Swingline Loans, as the case may be, of such Lender, substantially in the forms of Exhibit D-1, D-2 or D-3, respectively, with appropriate insertions as to date and principal amount.

 

4.15 Illegality. Notwithstanding any other provision herein, if the adoption of or any change in any Requirement of Law or in the interpretation or application thereof shall make it unlawful for any Lender to make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and convert Base Rate Loans to Eurodollar Loans shall forthwith be canceled and (b) such Lender’s then outstanding Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans on the respective last days of the then current Interest Periods with respect to such Eurodollar Loans or within such earlier period as required by law. If any such conversion of a Eurodollar Loan occurs on a day which is not the last day of the then current Interest Period with respect thereto, the Borrower agrees to pay to such Lender such amounts, if any, as may be required pursuant to Section 4.11.

 

4.16   Defaulting Lender. Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:

 

(a)           Fees shall cease to accrue on the unfunded portion of the Commitment of such Defaulting Lender pursuant to Section 3.5;

 

(b)           The Aggregate Exposure of such Defaulting Lender shall not be included in determining whether all Lenders or the Required Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to Section 11.1), provided that any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender which affects such Defaulting Lender differently than other affected Lenders shall require the consent of such Defaulting Lender;

 

  

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(c)           If any Swingline Exposure or L/C Exposure exists at the time a Revolving Lender becomes a Defaulting Lender then:

 

(i)           all or any part of such Swingline Exposure and L/C Exposure shall be reallocated among the non-Defaulting Lenders in accordance with their respective Applicable Percentages but only to the extent (x) the sum of all non-Defaulting Lenders’ Revolving Credit Exposures plus such Defaulting Lender’s Swingline Exposure and L/C Exposure does not exceed the total of all non-Defaulting Lenders’ Revolving Commitments and (y) the conditions set forth in Section 6.2 are satisfied at such time;

 

(ii)           if the reallocation described in clause (i) above cannot, or can only partially, be effected, the Borrower shall within one Business Day following notice by the Administrative Agent (x) first, prepay such Swingline Exposure and (y) second, cash collateralize such Defaulting Lender’s L/C Exposure (after giving effect to any partial reallocation pursuant to clause (i) above) in accordance with the procedures set forth in Section 9 for so long as such L/C Exposure is outstanding;

 

(iii)           if the Borrower cash collateralizes any portion of such Defaulting Lender’s L/C Exposure pursuant to this Section 4.16(c), the Borrower shall not be required to pay any fees to such Defaulting Lender pursuant to Section3.9 with respect to such Defaulting Lender’s L/C Exposure during the period such Defaulting Lender’s L/C Exposure is cash collateralized;

 

(iv)            if the L/C Exposure of the non-Defaulting Lenders is reallocated pursuant to this Section 4.16(c), then the fees payable to the Lenders pursuant to Section3.5 and Section 3.9 shall be adjusted in accordance with such non-Defaulting Lenders’ Applicable Percentages; or

 

(v)           if any Defaulting Lender’s L/C Exposure is neither cash collateralized nor reallocated pursuant to this Section 4.16(c), then, without prejudice to any rights or remedies of the Issuing Lender or any Lender hereunder, all letter of credit fees payable under Section 3.9 with respect to such Defaulting Lender’s L/C Exposure shall be payable to the Issuing Lender until such L/C Exposure is cash collateralized and/or reallocated;

 

(d)           so long as any Revolving Lender is a Defaulting Lender, the Swingline Lender shall not be required to fund any Swingline Loan and the Issuing Lender shall not be required to issue, amend or increase any Letter of Credit, unless it is satisfied that the related exposure will be 100% covered by the Revolving Commitments of the non-Defaulting Lenders in a manner consistent with this Section 4.16(c)(i)  and/or cash collateral will be provided by the Borrower in accordance with this Section 4.16(c); and

 

(e)           so long as any Lender is a Defaulting Lender, any amount payable to such Defaulting Lender hereunder (whether on account of principal, interest, fees or otherwise and including any amount that would otherwise be payable to such Defaulting Lender pursuant to Section 4.8 but excluding Section 4.13) shall, in lieu of being distributed to such Defaulting Lender, be retained by the Administrative Agent in a segregated account and, subject to any applicable requirements of law, be applied at such time or times as may be determined by the 

 

  

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Administrative Agent (i) first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder, (ii) second, pro rata, to the payment of any amounts owing by such Defaulting Lender to the Issuing Lender or Swingline Lender hereunder, (iii) third, if such Defaulting Lender is a Revolving Lender and the Administrative Agent so determines or is requested by an Issuing Lender or Swingline Lender, held in such account as cash collateral for future funding obligations of the Defaulting Lender in respect of any existing or future participating interest in any Swingline Loan or Letter of Credit, (iv) fourth, to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent, (v) fifth, if such Defaulting Lender is a Revolving Lender and the Administrative Agent and the Borrower so determine, held in such account as cash collateral for future funding obligations of the Defaulting Lender in respect of any Loans under this Agreement, (vi) sixth, to the payment of any amounts owing to the Lenders or an Issuing Lender or Swingline Lender as a result of any judgment of a court of competent jurisdiction obtained by any Lender or such Issuing Lender or Swingline Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement, (vii) seventh, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement, and (viii) eighth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if such Defaulting Lender is a Revolving Lender and such payment is (x) a prepayment of the principal amount of any Loans or reimbursement obligations in respect of L/C Disbursements which such Defaulting Lender has funded its participation obligations and (y) made at a time when the conditions set forth in Section 6.2 are satisfied, such payment shall be applied solely to prepay the Loans of, and reimbursement obligations owed to, all non-Defaulting Lenders pro rata prior to being applied to the prepayment of any Loans, or reimbursement obligations owed to, such Defaulting Lender.

 

                      In the event that the Administrative Agent, the Borrower, the Issuing Lender and the Swingline Lender (as applicable) each agrees that a Defaulting Lender which is a Revolving Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the Swingline Exposure and L/C Exposure of the Lenders shall be readjusted to reflect the inclusion of such Lender’s Commitment and on such date such Lender shall purchase at par such of the Loans of the other Lenders (other than Swingline Loans) as the Administrative shall determine may be necessary in order for such Lender to hold such Loans in accordance with its Applicable Percentage.

 

SECTION 5.

 

REPRESENTATIONS AND WARRANTIES

 

To induce the Agents and the Lenders to enter into this Agreement and to make the Loans and issue or participate in the Letters of Credit, Holdings and the Borrower hereby jointly and severally represent and warrant to each Agent and each Secured Party that:

 

5.1 Financial Condition.  There have been furnished to each Lender:

 

  

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(a) (i) The audited balance sheets of Holdings and its Subsidiaries as of December 31, 2006, December 31, 2007 and December 31, 2008 and audited consolidated statements of income for the fiscal years then ended and (ii) the unaudited consolidated balance sheets of Holdings and its Subsidiaries as of September 30, 2008 and September 30, 2009 and the related unaudited consolidated statements of income for the nine-month periods ended on such dates (and, in the case of the consolidated balance sheet as of September 30, 2009, the twelve-month period ended on such date) present fairly in all material respects the consolidated financial condition of Holdings and its Subsidiaries as at such dates and the results of their operations for the periods then ended. All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as otherwise stated therein or in the case of unaudited financial statements for the omission of footnotes and subject to year end adjustments, which adjustments are, individually and in the aggregate, immaterial).

 

(b) (i) The unaudited balance sheets of NLS as of December 29, 2007 and December 27, 2008, and unaudited statements of income for the fiscal years then ended and the unaudited balance sheet of NLS as of September 26, 2009, and an unaudited statement of income for the twelve fiscal month period then ended (collectively, the “NLS Financials”).  Except as set forth on Schedule 5.1(b)(i), to the best knowledge of the Borrower, the NLS Financials fairly present, in all material respects, the financial condition of NLS as of the dates thereof and results of operations of NLS for the periods shown therein, and were derived from the books and records of NLS in conformity with GAAP consistently applied during the periods covered thereby (except as otherwise stated therein and for the omission of footnotes and subject to year end and other audit adjustments, which adjustments are, individually and in the aggregate, immaterial); and

 

(ii) (1) unaudited statement of contributed assets and assumed liabilities of the Core Vet Business as of December 29, 2007 and December 27, 2008, and unaudited statements of income for the fiscal years then ended, and (2) unaudited statement of contributed assets and assumed liabilities as of September 26, 2009, and an unaudited statement of income for the twelve fiscal month period then ended (collectively, the “Core Vet Financials”). Except as set forth on Schedule 5.1(b)(ii)-1, (A) the Core Vet Financials have been derived from the accounting records that underlie the consolidated financial statements of Schein as prepared as of the date hereof, which have been prepared in accordance with GAAP consistently applied during the periods covered thereby (except as otherwise stated therein or in the case of unaudited financial statements, subject to year end and other audit adjustments, which adjustments are, individually and in the aggregate, immaterial), (B) the net sales and direct costs have been determined in accordance with GAAP, consistently applied, (C) all other expenses reflected on the Core Vet Financials were determined and allocated in accordance with the principles, assumptions and methodologies on Schedule 5.1(b)(ii)-2 (the “Schein Allocation Methodologies”), which have been consistently applied to the Core Vet Financials, (D) Schein has not made any material mathematical error in applying the Schein Allocation Methodologies, and (E) none of the expenses under the category “Global SG&A Costs” on Schedule 5.1(b)(ii)-3, other than “Corporate Overhead”, contains any material costs or expenses that directly support the Core Vet Business.  The income statements in the Core Vet Financials fairly present, in all material respects, the results of operations of the Core Vet Business for the periods shown therein, in accordance with the application of the Schein Allocation Methodologies and the 

 

  

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immediately preceding sentence.  To the best knowledge of the Borrower, the Core Vet Financials have been prepared in good faith based on appropriate allocation methodologies that provide a reasonable and reasonably accurate presentation in the context of the Transactions.

 

(c) (i) The unaudited pro forma consolidated balance sheet (the “Pro Forma Balance Sheet”) of the Borrower as at September 30, 2009, (ii) the pro forma consolidated statements of income for the fiscal years ended December 31, 2007 and December 31, 2008, respectively, (iii) the pro forma consolidated statement of income for the twelve fiscal month period ended September 30, 2009 and (iv) the pro forma consolidated statement of income for the nine-month periods ended September 30, 2008 and September 30, 2009, respectively, to the extent prepared in reliance on the financial statements set forth in Section 5.1(b), to the best knowledge of the Borrower present fairly the pro forma consolidated financial condition of the Borrower as at such dates and the pro forma results of its operations for such periods, after giving effect (as if such events had occurred on October 1, 2008) to the Transactions (and, in the case of such balance sheet, the financing thereof).  The Pro Forma Balance Sheet has been prepared based on the best information available to the Borrower as of the date of delivery thereof and as at September 30, 2009, assuming the events specified in the preceding sentence had actually occurred at such date.

 

5.2 No Change. Since September 30, 2009, there has been no development or event that has had or could reasonably be expected to have a Material Adverse Effect.

 

5.3 Corporate Existence; Compliance with Law. Each Group Member (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) has the power and authority, and the legal right, to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged, (c) is duly qualified as a foreign corporation or other entity and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification except to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect and (d) is in compliance with all Requirements of Law except to the extent that the failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

5.4 Power; Authorization; Enforceable Obligations. Each Loan Party has the power and authority, and the legal right, to make, deliver and perform the Loan Documents to which it is a party and, in the case of the Borrower, to obtain extensions of credit hereunder. Each Loan Party has taken all necessary organizational action to authorize the execution, delivery and performance of the Loan Documents to which it is a party and, in the case of the Borrower, to authorize the extensions of credit on the terms and conditions of this Agreement. No consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or any other Person is required in connection with the extensions of credit hereunder or with the execution, delivery, performance, validity or enforceability of this Agreement or any of the Loan Documents, except (i) consents, authorizations, filings and notices described in Schedule 5.4, which consents, authorizations, filings and notices have been obtained or made and are in full force and effect and (ii) the filings referred to in Section 5.19. Each Loan Document has been duly executed and delivered on behalf of each Loan Party party thereto. This Agreement constitutes, and each other Loan Document constitutes, a legal, valid and binding 

 

  

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obligation of each Loan Party party thereto, enforceable against each such Loan Party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).

 

5.5 No Legal Bar. The execution, delivery and performance of this Agreement and the other Loan Documents, the issuance of Letters of Credit, the borrowings hereunder and the use of the proceeds thereof will not violate any Requirement of Law or any Contractual Obligation of any Group Member and will not result in, or require, the creation or imposition of any Lien on any of their respective properties or revenues pursuant to any Requirement of Law or any such Contractual Obligation (other than the Liens created by the Security Documents). No Requirement of Law or Contractual Obligation applicable to the Borrower or any of its Subsidiaries could reasonably be expected to have a Material Adverse Effect.

 

5.6 Litigation. No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of the Borrower, threatened by or against any Group Member or against any of their respective properties or revenues (a) with respect to any of the Loan Documents or any of the transactions contemplated hereby or thereby, or (b) that could reasonably be expected to have a Material Adverse Effect.

 

5.7 No Default. No Group Member is in default under or with respect to any of its Contractual Obligations in any respect that could reasonably be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing.

 

5.8 Ownership of Property; Liens. As of the Closing Date, each Group Member has a valid leasehold interest in all of its real property, and good title to, or a valid leasehold interest in, all of its other property, and none of such property is subject to any Lien except as permitted by Section 8.3.

 

5.9 Intellectual Property. Each Group Member owns, or is licensed or otherwise has the right to use, all Intellectual Property, free of material Liens, necessary for the conduct of its business as currently conducted.  No material claim, litigation, investigation or other proceeding has been asserted and is pending, or to the knowledge of the Borrower, threatened by any Person involving any material Intellectual Property owned by any Group Member, or the validity or enforceability of any such Intellectual Property, nor does the Borrower know of any valid basis for any such claim.  To the knowledge of the Borrower, the conduct of each Group Member’s business and the use of owned and licensed Intellectual Property by each Group Member as currently used does not infringe, misappropriate or otherwise violate the Intellectual Property rights of any Person in any material respect.

 

5.10 Taxes. Each Group Member has filed or caused to be filed all Federal, state and other material tax returns that are required to be filed and has paid all taxes shown to be due and payable on said returns or on any assessments made against it or any of its property and all other taxes, fees or other charges imposed on it or any of its property by any Governmental Authority (other than any such taxes, fees or charges, the amount or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which reserves in 

 

  

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conformity with GAAP have been provided on the books of the Borrower, Holdings or their Subsidiaries, as the case may be); no tax Lien has been filed, and, to the knowledge of the Borrower, no claim is being asserted, with respect to any such tax, fee or other charge.

 

5.11 Federal Regulations. No part of the proceeds of any Loans, and no other extensions of credit hereunder, will be used (a) for “buying” or “carrying” any “margin stock” within the respective meanings of each of the quoted terms under Regulation U as now and from time to time hereafter in effect or (b) for any purpose that violates the provisions of the Regulations of the Board.  No more than 25% of the assets of the Group Members consist of “margin stock” as so defined.  If requested by any Lender or the Administrative Agent, the Borrower will furnish to the Administrative Agent and each Lender a statement to the foregoing effect in conformity with the requirements of FR Form G-3 or FR Form U-1, as applicable, referred to in Regulation U.

 

5.12 Labor Matters. Except as, in the aggregate, could not reasonably be expected to have a Material Adverse Effect: (a) there are no strikes or other labor disputes against any Group Member pending or, to the knowledge of the Borrower, threatened; (b) hours worked by and payments made to employees of each Group Member have not been in violation of the Fair Labor Standards Act or any other applicable Requirement of Law dealing with such matters; and (c) all payments due from any Group Member on account of employee health and welfare insurance have been paid or accrued as a liability on the books of the relevant Group Member.

 

5.13 ERISA. During the five-year period prior to the date on which this representation is made or deemed made, and except as would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect to the Borrower or any Commonly Controlled Entity: (a) each Plan has complied in all material respects with the applicable provisions of ERISA and the Code; (b) no Reportable Event or non-exempt Prohibited Transaction has occurred; (c) prior to the effective date of the PPA, no “accumulated funding deficiency” (within the meaning of Section 412 of the Code or Section 302 of ERISA), and on and after the effective date of the PPA, no failure to satisfy the minimum funding standards (within the meaning of Sections 412 or 430 of the Code or Section 302 of ERISA) with respect to any Plan, whether or not waived, has occurred; (d) there has been no filing pursuant to Section 412(c) of the Code or Section 302(c) ERISA of an application for a waiver of the minimum funding standard with respect to any Plan, no failure to make by its due date a required installment under Section 430(j) of the Code with respect to any Plan, or failure by Borrower or any Commonly Controlled Entity to make a required contribution to a Multiemployer Plan; (e) neither Borrower nor any Commonly Controlled Entity has incurred any liability under Title IV of ERISA with respect to the termination of any Plan, including but not limited to the imposition of any Lien in favor of the PBGC or any Plan; (f) there has been no determination that any Plan is, or is expected to be, in “at risk” status within the meaning of Section 430 of the Code or Section 303 of ERISA; (g) neither Borrower nor any Commonly Controlled Entity has received any notice from the PBGC or a plan administrator of any notice relating an intention to terminate any Plan or to appoint a trustee to administer any Plan under Section 4042 of ERISA; (h) neither Borrower nor any Commonly Controlled Entity has incurred any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; and (i) neither Borrower nor any Commonly Controlled Entity has received any notice, or sent any notice to any 

 

  

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Multiemployer Plan, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, Insolvent, in Reorganization or in endangered or critical status within the meaning of Section 432 of the Code or Section 305 or Title IV of ERISA.

 

5.14 Investment Company Act; Other Regulations. No Loan Party is an “investment company”, or a company “controlled” by a Person required to register as an “investment company”, within the meaning of the Investment Company Act of 1940, as amended. No Loan Party is subject to regulation under any Requirement of Law (other than Regulation X of the Board) that limits its ability to incur Indebtedness.

 

5.15 Subsidiaries. Except as disclosed to the Administrative Agent by the Borrower in writing from time to time after the Closing Date, (a) Schedule 5.15 sets forth the name and jurisdiction of incorporation of each Subsidiary and, as to each such Subsidiary, the percentage of each class of Capital Stock owned by any Loan Party and (b) there are no outstanding subscriptions, options, warrants, calls, rights or other agreements or commitments (other than stock options granted to employees or directors and directors’ qualifying shares) of any nature relating to any Capital Stock of the Borrower or any Subsidiary, except as created by the Loan Documents.

 

5.16 Use of Proceeds. The proceeds of the Term Loans shall be used to finance a portion of the Transactions and to pay related fees and expenses. The proceeds of the Revolving Loans, together with the proceeds of the Swingline Loans and the Letters of Credit, shall be used to pay a portion of the fees and expenses relating to the Transactions and to finance working capital needs and for general corporate purposes of the Borrower and its Subsidiaries.

 

5.17 Environmental Matters. Except as, in the aggregate, could not reasonably be expected to have a Material Adverse Effect:

 

(a) the facilities and properties currently leased, owned or operated by any Group Member (the “Properties”) do not contain, and, to the Borrower’s knowledge, have not previously contained, any Materials of Environmental Concern in amounts or concentrations or under circumstances that constitute or constituted a violation of, or could reasonably be expected to give rise to liability to any Group Member under, any Environmental Law;

 

(b) no Group Member has received or is aware of any notice of violation, alleged violation, non-compliance, liability or potential liability regarding environmental matters or compliance with Environmental Laws with regard to any of the Properties or the business operated by any Group Member (the “Business”), nor does the Borrower have knowledge or reason to believe that any such notice will be received or is being threatened;

 

(c) Materials of Environmental Concern have not been transported or disposed of by any Group Member nor has any Group Member arranged for the disposal of any Materials of Environmental Concern in violation of, or in a manner or to a location that could reasonably be expected to give rise to liability under, any Environmental Law, nor have any Materials of Environmental Concern been generated, treated, stored or disposed of at, on or under any of the Properties or any formerly leased, owned or operated facility or property, by 

 

  

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any Group Member or, to the Borrower’s knowledge, any other Person in violation of, or in a manner that could reasonably be expected to give rise to liability of any Group Member under, any applicable Environmental Law;

 

(d) no judicial proceeding or governmental or administrative action is pending or, to the knowledge of the Borrower, threatened, under any Environmental Law to which any Group Member is or will be named as a party with respect to the Properties or the Business, nor is any Group Member subject to any consent decrees or other decrees, consent orders, administrative orders or other orders, that remain outstanding or unresolved under any Environmental Law with respect to the Properties or the Business;

 

(e) there has been no release or threat of release of Materials of Environmental Concern at or from the Properties, or any formerly leased, owned or operated facility or property, or arising from or related to the operations of any Group Member in connection with the Properties or otherwise in connection with the Business, in amounts or in a manner that could reasonably be expected to give rise to liability to any Group Member under Environmental Laws;

 

(f) all Group Members, the Properties and all operations at the Properties are in compliance, and, to the Borrower’s knowledge, have been in compliance, with all applicable Environmental Laws; and

 

(g) no Group Member has assumed any liability of any other Person under Environmental Laws.

 

5.18 Accuracy of Information, etc. No statement or information contained in this Agreement, any other Loan Document, the Confidential Information Memorandum or any other document, certificate or statement furnished by or on behalf of any Loan Party to the Administrative Agent or the Lenders, for use in connection with the transactions contemplated by this Agreement or the other Loan Documents, contained as of the date such statement, information, document or certificate was so furnished (and, in the case of the Confidential Information Memorandum, as of the date of this Agreement), any untrue statement of a material fact or omitted to state a material fact necessary to make the statements contained herein or therein not misleading. The projections and pro forma financial information contained in the materials referenced above (including the projections for the Borrower and its Subsidiaries on a quarterly basis for 2010 and 2011 and on an annual basis for 2012 through 2015) are based upon good faith estimates and assumptions believed by management of the Borrower to be reasonable at the time made, it being recognized by the Lenders that such financial information as it relates to future events is not to be viewed as fact and that actual results during the period or periods covered by such financial information may differ from the projected results set forth therein by a material amount. As of the Closing Date, (i) the representations and warranties contained in the Transaction Documentation made by or on behalf of any Loan Party were true and correct in all material respects and (ii) to the knowledge of the Borrower, the representations and warranties contained in the Transaction Documentation made by or on behalf of Persons other than the Loan Parties were true and correct in all material respects. There is no fact known to any Loan Party that could reasonably be expected to have a Material Adverse Effect that has not been expressly disclosed herein, in the other Loan Documents, in the Confidential Information 

 

  

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Memorandum or in any other documents, certificates and statements furnished to the Administrative Agent and the Lenders for use in connection with the transactions contemplated hereby and by the other Loan Documents.

 

5.19 Security Documents.  (a)  The Guarantee and Collateral Agreement is effective to create in favor of the Administrative Agent, for the benefit of the Secured Parties, a legal, valid and enforceable security interest in the Collateral described therein and proceeds thereof. In the case of the Pledged Stock and Pledged Notes (as each is defined in the Guarantee and Collateral Agreement) described in the Guarantee and Collateral Agreement, when certificates (if any) and promissory notes representing such Pledged Stock and Pledged Notes, respectively, are delivered to the Administrative Agent (together with a properly completed and signed stock power or endorsement), and in the case of the other Collateral described in the Guarantee and Collateral Agreement, when financing statements and other filings specified on Schedule 5.19(a) in appropriate form are filed in the offices specified on Schedule 5.19(a), to the extent perfection can be accomplished by filing in such offices, the Guarantee and Collateral Agreement shall constitute a fully perfected first priority Lien on, and security interest in, all right, title and interest of the Loan Parties in such Collateral and the proceeds thereof, as security for the Obligations (as defined in the Guarantee and Collateral Agreement), in each case prior and superior in right to any other Person (except, in the case of Collateral other than Pledged Stock and Pledged Notes, Liens permitted by Section 8.3 which are entitled to priority as a matter of law).

 

(b) When executed and delivered, each of the Control Agreements will be effective to create in favor of the Administrative Agent, for the benefit of the Secured Parties, a legal, valid and enforceable security interest in each of the deposit accounts (other than payroll or benefit accounts) identified as such on Schedule 5.21.

 

5.20 Solvency. Each Loan Party is, and after giving effect to the Transactions and the incurrence of all Indebtedness and obligations being incurred in connection herewith and therewith will be and will continue to be, Solvent.

 

5.21 Deposit and Disbursement Accounts. As of the Closing Date, Schedule 5.21 lists all banks and other financial institutions at which any Loan Party maintains deposit or other accounts, and such Schedule 5.21 correctly identifies the name, address and telephone number of each depository, the name in which the account is held, a description of the purpose of the account, and the complete account number therefor.

 

5.22 Certain Documents. The Borrower has delivered to the Administrative Agent a complete and correct copy of the Transaction Documentation, including any amendments, supplements or modifications with respect to any of the foregoing.

 

5.23 Holdings.  After giving effect to the consummation of the Transactions, Holdings does not engage in any trade or business or own or hold any assets (other than its interest in the Borrower and de minimus assets), and has not incurred any Indebtedness or Guarantee Obligations or other liabilities other than pursuant to the Loan Documents.

 

  

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5.24 Foreign Assets Control Regulations. The Borrower is not, and to the knowledge of the Borrower, none of its Affiliates is, or will be after consummation of the Transactions contemplated by the Loan Documents and application of the proceeds of the Loans, by reason of being a “national” of a “designated foreign country” or a “specially designated national” within the meaning of the Regulations of the Office of Foreign Assets Control, United States Treasury Department (31 C.F.R., Subtitle B, Chapter V), or for any other reason, in violation of, any United States Federal statute or Presidential Executive Order concerning trade or other relations with any foreign country or any citizen or national thereof or the ownership or operation of any property.

 

5.25 Anti-Terrorism Laws.

 

(a) The Borrower is not and, to the knowledge of the Borrower, none of its Affiliates is in violation of any laws relating to terrorism or money laundering (“Anti-Terrorism Laws”), including Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001 (the “Executive Order”), and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107- 56.

 

(b) The Borrower is not, and to the knowledge of the Borrower, no Affiliate or broker or other agent of the Borrower acting or benefiting in any capacity in connection with the Loans is, any of the following:

 

(i)           a Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order;

 

(ii)           a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order;

 

(iii)           a Person with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law; or

 

(iv)           a Person that commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order.

 

(c) The Borrower does not, and to the knowledge of the Borrower, no broker or other agent of the Borrower acting in any capacity in connection with the Loans, (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Person described in paragraph (b) above, (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order or (iii) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.

 

  

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SECTION 6.

 

CONDITIONS PRECEDENT

 

6.1 Conditions to Initial Extension of Credit. The agreement of each Lender to make the initial extension of credit requested to be made by it on the Closing Date is subject to the satisfaction or waiver, prior to or concurrently with the making of such extension of credit on the Closing Date, of the following conditions precedent:

 

(a) Credit Agreement; Guarantee and Collateral Agreement.  The Administrative Agent shall have received (i) this Agreement, executed and delivered by the Administrative Agent, the Borrower and each Person listed on Schedule 1.1, (ii) the Guarantee and Collateral Agreement, executed and delivered by the Borrower and each Guarantor and (iii) an Acknowledgement and Consent in the form attached to the Guarantee and Collateral Agreement, executed and delivered by each Issuer (as defined therein), if any, that is not a Loan Party.

 

(b) Transactions, etc.  In each case the following shall have occurred:

 

(i)  The Transactions shall have been consummated in accordance with all material applicable law and no provision of the Transaction Documentation shall have been waived, amended, supplemented or otherwise modified in any manner that is materially adverse to the interests of the Lenders without approval of the Administrative Agent; and

 

(ii)  The Administrative Agent shall have received (1) satisfactory evidence that the existing credit agreement dated as of July 1, 2005, as amended and restated as of January 22, 2007, among the Borrower, Butler, Holdings, the several lenders parties thereto, Wells Fargo Bank, N.A., as syndication agent, J.P. Morgan Securities Inc. (as successor to Bear Stearns & Co. Inc.), as lead arranger and JPMorgan Chase Bank (as successor to Bear Stearns Corporate Lending Inc.), as administrative agent, shall have been terminated and all amounts thereunder shall have been paid in full, (2) evidence that satisfactory arrangements shall have been made for the termination of all Liens granted in connection therewith and (3) evidence that satisfactory arrangements shall have been made for the termination of all Liens granted in connection with the Schein Assets.

 

(c) Approvals. The governmental and third party approvals set forth on Schedule 6.1(c) shall have been obtained and be in full force and effect, and all applicable waiting periods shall have expired without any action being taken or threatened by any competent authority that would restrain, prevent or otherwise impose adverse conditions on the financing contemplated hereby.

 

(d) Lien Searches. The Administrative Agent shall have received the results of a recent lien search in each of the domestic jurisdictions where assets of each Loan Party are located, and such search shall reveal no Liens on any of the assets of the Loan Parties except for 

 

  

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liens permitted by Section 8.3 or discharged on or prior to the Closing Date pursuant to documentation satisfactory to the Administrative Agent.

 

(e) Closing Certificate; Certified Certificate of Incorporation; Good Standing Certificates. The Administrative Agent shall have received (i) a certificate of each Loan Party, dated the Closing Date, substantially in the form of Exhibit E, with appropriate insertions and attachments including the certificate of formation or appropriate formation documents of each Loan Party certified by the relevant authority of the jurisdiction of organization of such Loan Party, and (ii) a long form good standing certificate for each Loan Party from its jurisdiction of organization.

 

(f) Representations and Warranties. Each of the representations and warranties (to the extent applicable on the Closing Date) made by any Loan Party in or pursuant to the Loan Documents shall be true and correct in all material respects on and as of such date as if made on and as of such date.

 

(g) Legal Opinions. The Administrative Agent shall have received the executed legal opinion of Paul, Weiss, Rifkind, Wharton & Garrison LLP, counsel to the Borrower and its Subsidiaries, in form and substance reasonably acceptable to the Administrative Agent.

 

(h) Fees. The Lenders and the Agents shall have received all fees required to be paid, and all expenses for which invoices have been presented (including the reasonable fees and expenses of legal counsel), on or before the Closing Date.

 

(i) Solvency Certificate. The Administrative Agent shall have received a solvency certificate, in form and substance satisfactory to the Administrative Agent, from the chief financial officer or other authorized officer of the Borrower.

 

(j) Filings, Registrations and Recordings.  Each document (including any Uniform Commercial Code financing statement) required by the Security Documents or under law or reasonably requested by the Administrative Agent to be filed, registered or recorded in order to create in favor of the Administrative Agent, for the benefit of the Lenders, a perfected Lien on the Collateral described therein, prior and superior in right to any other Person (other than with respect to Liens expressly permitted by Section 8.3), shall be in proper form for filing, registration or recordation.

 

(k) Insurance.  The Administrative Agent shall have received insurance certificates satisfying the requirements of Section 5.3(b) of the Guarantee and Collateral Agreement.

 

(l) Ratings.  The Administrative Agent shall have received evidence that the Borrower has obtained a corporate rating of at least B2 from Moody’s and B from S&P, and the Facilities shall have received a facility rating of at least B2 from Moody’s and B from S&P, in each case with stable or better outlook.

 

(m) Other Documents. The Administrative Agent shall have received such other documents, instruments and certificates as it shall reasonably require.

 

  

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6.2 Conditions to Each Extension of Credit. The agreement of each Lender to make any extension of credit requested to be made by it on any date (including its initial extension of credit on the Closing Date) is subject to the satisfaction of the following conditions precedent:

 

(a) Representations and Warranties. Each of the representations and warranties made by any Loan Party in or pursuant to the Loan Documents shall be true and correct in all material respects on and as of such date as if made on and as of such date, except for any representation and warranty that expressly relates to an earlier date, in which case such representation and warranty shall be true and correct as of such date.

 

(b) No Default. No Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the extensions of credit requested to be made on such date.

 

Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower hereunder shall constitute a representation and warranty by the Borrower as of the date of such extension of credit that the conditions contained in this Section 6.2 have been satisfied.

 

SECTION 7.

 

AFFIRMATIVE COVENANTS

 

The Borrower hereby agrees that, so long as the Commitments remain in effect, any Letter of Credit remains outstanding or any Loan or other amount is owing to any Lender or Agent hereunder, the Borrower shall and shall cause each of its Subsidiaries to:

 

7.1 Financial Statements. Furnish to the Administrative Agent and each Lender:

 

(a) as soon as available, but in any event within 90 days after the end of each fiscal year of the Borrower, a copy of the audited consolidated balance sheet of the Consolidated Group as at the end of such year and the related audited consolidated statements of income and of cash flows for such year, setting forth in each case in comparative form the figures for the previous year, reported on without a “going concern” or like qualification or exception, or qualification arising out of the scope of the audit, by independent certified public accountants of nationally recognized standing; and

 

(b) as soon as available, but in any event not later than 45 days after the end of each of the first three quarterly periods of each fiscal year of the Consolidated Group, the unaudited consolidated balance sheet of the Consolidated Group as at the end of such quarter and the related unaudited consolidated statements of income and of cash flows for such quarter and the portion of the fiscal year through the end of such quarter, setting forth in each case in comparative form the figures for the previous year, certified by a Responsible Officer as being fairly stated in all material respects (subject to normal year-end audit adjustments).

 

All such financial statements shall be complete and correct in all material respects and shall be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the 

 

  

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periods reflected therein and with prior periods (except as approved by such accountants or officer, as the case may be, and disclosed therein).

 

7.2 Certificates; Other Informati. Furnish to the Administrative Agent and each Lender (or, in the case of clause (g), to the relevant Lender):

 

(a) concurrently with the delivery of the financial statements referred to in Section 7.1(a), a certificate of the independent certified public accountants reporting on such financial statements stating that in making the examination necessary therefor no knowledge was obtained of any Default or Event of Default with respect to any financial and/or accounting matters, including Borrower’s noncompliance with any financial covenants set forth in this Agreement, except as specified in such certificate;

 

(b) concurrently with the delivery of any financial statements pursuant to Section 7.1, (i) a certificate of a Responsible Officer stating that, to the best of such Responsible Officer’s knowledge, each Loan Party during such period has observed or performed all of its covenants and other agreements, and satisfied every condition, contained in this Agreement and the other Loan Documents to which it is a party to be observed, performed or satisfied by it, and that such Responsible Officer has obtained no knowledge of any Default or Event of Default except as specified in such certificate and (ii) in the case of quarterly or annual financial statements, (x) a Compliance Certificate containing all information and calculations necessary for determining compliance by each Group Member with the provisions of this Agreement referred to therein as of the last day of the fiscal quarter or fiscal year of the Borrower, as the case may be, and (y) to the extent not previously disclosed to the Administrative Agent, (1) a description of any change in the jurisdiction of organization of any Loan Party, (2) a list of any Intellectual Property acquired by or exclusively licensed to any Loan Party and (3) a description of any Person that has become a Group Member, in each case since the date of the most recent report delivered pursuant to this clause (y) (or, in the case of the first such report so delivered, since the Closing Date);

 

(c) as soon as available, and in any event no later than 60 days after the end of each fiscal year of the Borrower, a detailed consolidated budget for the following fiscal year (including a projected consolidated balance sheet of the Borrower and its Subsidiaries as of the end of the following fiscal year, the related consolidated statements of projected cash flow, projected changes in financial position and projected income and a description of the underlying assumptions applicable thereto), and, as soon as available, significant revisions, if any, of such budget and projections with respect to such fiscal year (collectively, the “Projections”), which Projections shall in each case be accompanied by a certificate of a Responsible Officer stating that such Projections are based on reasonable estimates, information and assumptions and that such Responsible Officer has no reason to believe that such Projections are incorrect or misleading in any material respect;

 

(d) if the Borrower or Holdings is not then a reporting company under the Exchange Act, as amended, within 45 days after the end of each fiscal quarter of the Borrower (or 90 days, in the case of the last fiscal quarter of any fiscal year), a narrative discussion and analysis of the financial condition and results of operations of the Borrower and its Subsidiaries for such fiscal quarter and for the period from the beginning of the then current fiscal year to the 

 

  

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end of such fiscal quarter, as compared to the portion of the Projections covering such periods and to the comparable periods of the previous year;

 

(e) no later than 3 Business Days prior to the effectiveness thereof, copies of substantially final drafts of any proposed amendment, supplement, waiver or other modification with respect to the Transaction Documentation;

 

(f) within 5 days after the same are sent, copies of all financial statements and reports that the Borrower sends to the holders of any class of its debt securities or public equity securities and, within 5 days after the same are filed, copies of all financial statements and reports that the Borrower may make to, or file with, the SEC; and

 

(g) promptly, such additional financial and other information as any Lender may from time to time reasonably request.

 

7.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all its material obligations of whatever nature, except where the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto have been provided on the books of the relevant Group Member.

 

7.4 Maintenance of Existence; Compliance.  (a) (i) Preserve, renew and keep in full force and effect its organizational existence and (ii) take all reasonable action to maintain all rights, privileges and franchises necessary or desirable in the normal conduct of its business, except, in each case, as otherwise permitted by Section 8.4 and except, in the case of clause (ii) above, to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (b) comply with all Contractual Obligations and Requirements of Law except to the extent that failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

7.5 Maintenance of Property; Insurance.  (a) Keep all property useful and necessary in its business in good working order and condition, ordinary wear and tear excepted, and (b) maintain with financially sound and reputable insurance companies insurance on all its property in at least such amounts and against at least such risks (but including in any event public liability, product liability and business interruption) as are usually insured against in the same general area by companies engaged in the same or a similar business.

 

7.6 Inspection of Property; Books and Records; Discussions.  (a) Keep proper books of records and accounts in which full, true and correct entries in conformity with GAAP and all Requirements of Law shall be made of all dealings and transactions in relation to its business and activities and (b) permit representatives designated by any Lender upon reasonable prior notice to visit and inspect any of its properties and examine and make abstracts from any of its books and records at any reasonable time during normal business hours and as often as may reasonably be desired and to discuss the business, operations, properties and financial and other condition of the Group Members in the presence of an officer or other representative of the Borrower with officers and employees of the Group Members and with their independent certified public accountants.

 

  

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7.7 Notices. Promptly give notice to the Administrative Agent and each Lender of:

 

(a) the occurrence of any Default or Event of Default;

 

(b) any (i) default or event of default under any Contractual Obligation of any Group Member or (ii) litigation, investigation or proceeding that may exist at any time between any Group Member and any Governmental Authority, that in either case could reasonably be expected to have a Material Adverse Effect;

 

(c) any litigation or proceeding affecting any Group Member (i) in which the amount involved is $2,000,000 or more and not covered by insurance, (ii) in which injunctive or similar relief is sought or (iii) which relates to any Loan Document;

 

(d) the following events that could in any case reasonably be expected to have a Material Adverse Effect, as soon as possible and in any event within 30 days after the Borrower or any Commonly Controlled Entity knows or has reason to know thereof:  (i) the occurrence of a Reportable Event or non-exempt Prohibited Transaction; (ii) a failure to satisfy the minimum funding standards (within the meaning of Sections 412 or 430 of the Code or Section 302 of ERISA) with respect to any Plan, whether or not waived, or a filing pursuant to Section 402(c) of the Code or Section 302(c) ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (iii) a failure to make by its due date a required installment under Section 430(j) of the Code with respect to any Plan, or a failure by Borrower or any Commonly Controlled Entity to make a required contribution to a Multiemployer Plan; (iv) the incurrence by Borrower or any Commonly Controlled Entity of liability under Title IV of ERISA with respect to the termination of any Plan, including but not limited to the imposition of any Lien in favor of the PBGC or any Plan; (v) the determination that any Plan is, or is expected to be, in “at risk” status within the meaning of Section 430 of the Code or Section 303 of ERISA; (vi) the receipt by Borrower or any Commonly Controlled Entity of any notice from the PBGC or a plan administrator relating an intention to terminate any Plan or to appoint a trustee to administer any Plan under Section 4042 of ERISA; (vii) the incurrence by Borrower or any Commonly Controlled Entity of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (viii) the receipt by  Borrower or any Commonly Controlled Entity of any notice, or sending by Borrower or any Commonly Controlled Entity of  any notice to any Multiemployer Plan, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, Insolvent, in Reorganization or in endangered or critical status within the meaning of Section 432 of the Code or Section 305 or Title IV of ERISA;

 

(e) copies of any documents described in Sections 101(k) or 101(l) of ERISA that Borrower or any Commonly Controlled Entity may request and has actually received with respect to any Multiemployer Plan; provided, that if the Borrower or any Commonly Controlled Entity has not requested such documents or notices from the administrator or sponsor of the applicable Multiemployer Plan, then, upon reasonable request of the Administrative Agent, the Borrower and/or its Commonly Controlled Entities shall promptly make a request for such documents or notices from such administrator or sponsor and the Borrower shall provide copies of such documents and notices to the Administrative Agent promptly after receipt thereof, if and 

 

  

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to the extent such documents are actually received by the Borrower; and further provided, that the rights granted to the Administrative Agent in this section shall be exercised not more than once during a 12-month period; and

 

(f) any development or event that has had or could reasonably be expected to have a Material Adverse Effect.

 

Each notice pursuant to this Section 7.7 shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action the Borrower or the relevant Subsidiary proposes to take with respect thereto.

 

7.8 Environmental Laws.  (a)  Comply in all material respects with, and ensure compliance in all material respects by all tenants and subtenants of any Property, including any future Property to be acquired by any Group Member prior to the Term Termination Date, if any, with, all applicable Environmental Laws, and obtain and comply in all material respects with and maintain, and ensure that all tenants and subtenants obtain and comply in all material respects with and maintain, any and all licenses, approvals, notifications, registrations or permits required by applicable Environmental Laws for the operation of the Business.  For purposes of this Section 7.8(a), noncompliance with any of the foregoing shall be deemed not to constitute a breach of this covenant if upon learning of any actual or alleged noncompliance, such Group Member shall promptly undertake reasonable efforts to achieve compliance and provided that any failure to comply with any of the foregoing would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(b) Conduct and complete all investigations, studies, sampling and testing, and all remedial, removal and other actions required under Environmental Laws with respect to the Property or the Business.

 

7.9 Interest Rate Protection. Within 90 days after the Closing Date, enter into, and thereafter maintain, Hedge Agreements to the extent necessary to provide that at least 50% of the aggregate principal amount of the Term Loans is subject to either a fixed interest rate or interest rate protection for a period of not less than two years, which Hedge Agreements shall have terms and conditions reasonably satisfactory to the Administrative Agent.

 

7.10 Additional Collateral, etc.  (a)  With respect to any property acquired after the Closing Date by any Group Member (other than (x) any property described in paragraph (c) or (d) below and any interest in real property, (y) any property subject to a Lien expressly permitted by Section 8.3(g) or 8.3(j) and (z) property acquired by any Excluded Foreign Subsidiary) as to which the Administrative Agent, for the benefit of the relevant Secured Parties, does not have a perfected Lien, promptly (i) execute and deliver to the Administrative Agent such amendments to the Guarantee and Collateral Agreement or such other documents as the Administrative Agent deems necessary or advisable to grant to the Administrative Agent, for the benefit of the relevant Secured Parties, a first priority security interest in such property and (ii) take all actions necessary or advisable to grant to the Administrative Agent, for the benefit of the relevant Secured Parties, a first priority security interest in such property, including the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by the 

 

  

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Guarantee and Collateral Agreement or by law or as may be requested by the Administrative Agent.

 

(b) With respect to any fee interest in any real property having a value (together with improvements thereof) of at least $1,000,000 acquired after the Closing Date by any Group Member (other than (x) any such real property subject to a Lien expressly permitted by Section 8.3(g) or 8.3(j) and (y) real property acquired by any Excluded Foreign Subsidiary), promptly (i) execute and deliver a Mortgage, in favor of the Administrative Agent, in form and substance reasonably satisfactory to the Administrative Agent, for the benefit of the Secured Parties, covering such real property, which shall grant to the Administrative Agent for the benefit of the Secured Parties a first priority security interest in such property, (ii) if requested by the Administrative Agent, provide the Lenders with (x) title and extended coverage insurance covering such real property in an amount at least equal to the purchase price of such real property (or such other amount as shall be reasonably specified by the Administrative Agent) as well as a current ALTA survey thereof, together with a surveyor’s certificate and (y) any consents or estoppels reasonably deemed necessary or advisable by the Administrative Agent in connection with such Mortgage, each of the foregoing in form and substance reasonably satisfactory to the Administrative Agent and (iii) if requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent.

 

(c) With respect to any new Subsidiary (other than an Excluded Foreign Subsidiary) created or acquired after the Closing Date by any Group Member (which, for the purposes of this paragraph (c), shall include any existing Subsidiary that ceases to be an Excluded Foreign Subsidiary), promptly (i) execute and deliver to the Administrative Agent such amendments to the Guarantee and Collateral Agreement as the Administrative Agent deems necessary or advisable to grant to the Administrative Agent, for the benefit of the relevant Secured Parties, a perfected first priority security interest in the Capital Stock of such new Subsidiary that is owned by any Group Member, in the case of the Secured Parties, (ii) deliver to the Administrative Agent the certificates, if any, representing such Capital Stock, together with undated stock powers, in blank, executed and delivered by a duly authorized officer of the relevant Group Member, (iii) cause such new Subsidiary (A) to become a party to the Guarantee and Collateral Agreement, (B) to take such actions necessary or advisable to grant to the Administrative Agent for the benefit of the relevant Secured Parties a perfected first priority security interest in the Collateral described in the Guarantee and Collateral Agreement with respect to such new Subsidiary, including the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by the Guarantee and Collateral Agreement or by law or as may be requested by the Administrative Agent and (C) to deliver to the Administrative Agent a certificate of such Subsidiary, substantially in the form of Exhibit E, with appropriate insertions and attachments, and (iv) if requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent.

 

(d) With respect to any new Excluded Foreign Subsidiary created or acquired after the Closing Date by any Group Member (other than by any Group Member that is an 

 

  

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Excluded Foreign Subsidiary), promptly (i) execute and deliver to the Administrative Agent such amendments to the Guarantee and Collateral Agreement as the Administrative Agent deems necessary or advisable to grant to the Administrative Agent, for the benefit of the Secured Parties, a perfected first priority security interest in the Capital Stock of such new Subsidiary that is owned by any such Group Member (provided that in no event shall more than 65% of the total outstanding Capital Stock of any such new Subsidiary be required to be so pledged), (ii) deliver to the Administrative Agent the certificates, if any, representing such Capital Stock, together with undated stock powers, in blank, executed and delivered by a duly authorized officer of the relevant Group Member, as the case may be, and take such other action as may be necessary or, in the opinion of the Administrative Agent, desirable to perfect the Administrative Agent’s security interest therein, and (iii) if requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent.

 

7.11 Maintenance of Ratings.  At all times use commercially reasonable efforts to maintain ratings issued by Moody’s and S&P with respect to the Facilities.

 

7.12 Patriot Act Compliance. Provide such information and take such actions as are reasonably required by the Administrative Agent or any Lender in order to assist the Administrative Agent and Lenders with compliance with the USA Patriot Act, Title III of Pub. L. 107-56, signed into law October 26, 2001, as amended.

 

7.13 Landlord Waivers; Bailee Letters. As reasonably requested by the Administrative Agent and to the extent not otherwise delivered pursuant to Sections 6.1 and 6.2, the Borrower shall use commercially reasonable efforts to obtain a landlord’s agreement or bailee letter, as applicable, from the lessor of each leased property or bailee with respect to any warehouse, processor or converter facility or other location where Collateral having a fair market value in the aggregate equal to at least $1,000,000 is reasonably likely to be stored or located for more than a temporary period, which agreement or letter shall be reasonably satisfactory in form and substance to the Administrative Agent.

 

7.14 Further Assurances. From time to time execute and deliver, or cause to be executed and delivered, such additional instruments, certificates or documents, and take all such actions, as the Administrative Agent may reasonably request for the purposes of implementing or effectuating the provisions of this Agreement and the other Loan Documents, or of more fully perfecting or renewing the rights of the Administrative Agent and the Secured Parties with respect to the Collateral (or with respect to any additions thereto or replacements or proceeds thereof or with respect to any other property or assets hereafter acquired by the Borrower or any Subsidiary which may be deemed to be part of the Collateral) pursuant hereto or thereto. Upon the exercise by the Administrative Agent or any Lender of any power, right, privilege or remedy pursuant to this Agreement or the other Loan Documents which requires any consent, approval, recording qualification or authorization of any Governmental Authority, the Borrower will execute and deliver, or will cause the execution and delivery of, all applications, certifications, instruments and other documents and papers that the Administrative Agent or such Lenders may be required to obtain from the Borrower or any of its Subsidiaries for such governmental consent, approval, recording, qualification or authorization.

 

  

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SECTION 8.

 

NEGATIVE COVENANTS

 

The Borrower hereby agrees that, so long as the Commitments remain in effect, any Letter of Credit remains outstanding or any Loan or other amount is owing to any Lender or Agent hereunder, the Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly:

 

8.1 Financial Condition Covenants

 

(a) Consolidated Leverage Ratio. Permit the Consolidated Leverage Ratio as at the last day of any fiscal quarter ending as set forth below to exceed the ratio set forth below opposite such fiscal quarter:

 

 

	
Fiscal Quarter

	
Consolidated

Leverage Ratio

	  	  
	
March 31, 2010

	
4.75:1.00

	
June 30, 2010

	
4.75:1.00

	
September 30, 2010

	
4.75:1.00

	
December 31, 2010

	
4.75:1.00

	  	  
	
March 31, 2011

	
4.50:1.00

	
June 30, 2011

	
4.50:1.00

	
September 30, 2011

	
4.25:1.00

	
December 31, 2011

	
4.25:1.00

	  	  
	
March 31, 2012

	
3.75:1.00

	
June 30, 2012

	
3.75:1.00

	
September 30, 2012

	
3.50:1.00

	
December 31, 2012

	
3.25:1.00

	  	  
	
March 31, 2013

	
3.00:1.00

	
June 30, 2013

	
2.75:1.00

	
September 30, 2013

	
2.50:1.00

	
December 31, 2013

	
2.50:1.00

	  	  
	
March 31, 2014

	
2.50:1.00

	
June 30, 2014

	
2.50:1.00

	
September 30, 2014

	
2.50:1.00

	
December 31, 2014

	
2.50:1.00

	  	  
	
March 31, 2015

	
2.50:1.00

	
June 30, 2015

	
2.50:1.00

	
September 30, 2015

	
2.50:1.00

	
December 31, 2015

	
2.50:1.00

 

  

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Fiscal Quarter

	
Consolidated

Leverage Ratio

	 	 
	
December 31, 2015

	
2.50:1.00

 

(b) Consolidated Interest Coverage Ratio. Permit the Consolidated Interest Coverage Ratio for any period of four consecutive fiscal quarters of the Consolidated Group (or, if less, the number of full fiscal quarters subsequent to the Closing Date) ending with any fiscal quarter set forth below to be less than the ratio set forth below opposite such fiscal quarter:

 

	
Fiscal Quarter

	
Consolidated Interest

Coverage Ratio

	  	  
	
March 31, 2010

	
3.50:1.00

	
June 30, 2010

	
3.50:1.00

	
September 30, 2010

	
3.50:1.00

	
December 31, 2010

	
3.50:1.00

	  	  
	
March 31, 2011

	
3.75:1.00

	
June 30, 2011

	
4.00:1.00

	
September 30, 2011

	
4.25:1.00

	
December 31, 2011

	
4.25:1.00

	  	  
	
March 31, 2012

	
4.50:1.00

	
June 30, 2012

	
4.50:1.00

	
September 30, 2012

	
4.50:1.00

	
December 31, 2012

	
4.50:1.00

	  	  
	
March 31, 2013

	
4.50:1.00

	
June 30, 2013

	
4.50:1.00

	
September 30, 2013

	
4.75:1.00

	
December 31, 2013

	
5.00:1.00

	  	  
	
March 31, 2014

	
5.00:1.00

	
June 30, 2014

	
5.00:1.00

	
September 30, 2014

	
5.00:1.00

	
December 31, 2014

	
5.00:1.00

	  	  
	
March 31, 2015

	
5.00:1.00

	
June 30, 2015

	
5.00:1.00

	
September 30, 2015

	
5.00:1.00

	
December 31, 2015

	
5.00:1.00

 

8.2 Indebtedness. Create, issue, incur, assume, become liable in respect of or suffer to exist any Indebtedness, except:

 

  

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(a) Indebtedness of any Loan Party pursuant to any Loan Document;

 

(b) Indebtedness (i) of the Borrower to any Subsidiary, (ii) of any Wholly Owned Guarantor to the Borrower or any other Guarantor, (iii) of any Foreign Subsidiary to any other Foreign Subsidiary and (iv) subject to Section 8.8(h), of any Foreign Subsidiary to the Borrower or any Wholly Owned Guarantor;

 

(c) Guarantee Obligations incurred in the ordinary course of business by the Borrower or any of its Subsidiaries of obligations of the Borrower, any Wholly Owned Guarantor and, subject to Section 8.8(h), of any Foreign Subsidiary;

 

(d) Indebtedness outstanding on the date hereof and listed on Schedule 8.2(d) and any refinancings, refundings, renewals or extensions thereof (without increasing, or shortening the maturity of, the principal amount thereof);

 

(e) Indebtedness in respect of Purchase Money Obligations and any refinancings or renewals thereof (in an aggregate principal amount not to exceed $10,000,000 at any one time outstanding;

 

(f) Hedge Agreements permitted under Section 8.11; and

 

(g) additional Indebtedness of the Borrower or any of its Subsidiaries in an aggregate principal amount (for the Borrower and all Subsidiaries) not to exceed $10,000,000 at any one time outstanding.

 

(h) Indebtedness of a Person in an aggregate amount not to exceed $10,000,000 at any time outstanding whose Capital Stock or assets are acquired in a Permitted Acquisition and any refinancing thereof; provided that such Indebtedness was not incurred in connection with, or in anticipation of such Permitted Acquisition;

 

(i) contingent liabilities in an aggregate amount not to exceed $10,000,000 at any time outstanding in respect of any indemnification, adjustment of purchase price, earn out, non-compete, consulting, deferred compensation and similar obligations of the Borrower or their Subsidiaries incurred in connection with any Permitted Acquisition or the Disposition of any business or property;

 

(j) without duplication of Indebtedness permitted under clause (i) above, Indebtedness representing deferred compensation to employees of the Borrower and its Subsidiaries made in the ordinary course of business in an aggregate amount not to exceed $2,500,000 (net of investment reserves in respect of such deferred compensation) at any time outstanding;

 

(k) Indebtedness incurred in the ordinary course and owed to any Person providing property, casualty or liability insurance to the Borrower or its Subsidiaries, so long as such Indebtedness shall not be in excess of the amount of the unpaid cost of, and shall be incurred only to defer the cost of, such insurance for the year in which such Indebtedness is incurred and such Indebtedness shall only be outstanding during such year;

 

  

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(l) Indebtedness not to exceed $200,000 at any time outstanding arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five Business Days of the incurrence thereof;

 

(m) Indebtedness in respect of bid, performance or surety bonds, workers’ compensation claims, self-insurance obligations and bankers’ acceptances issued for the account of the Borrower or any of their Subsidiaries in the ordinary course of business, including guarantees or obligations of the Borrower or any of their Subsidiaries with respect to letters of credit supporting such bid, performance or surety bonds, workers’ compensation claims, self-insurance obligations and bankers’ acceptances; and

 

(n) unsecured Indebtedness of the Borrower that is subordinated in right of payment to the prior payment in full of the Obligations, pursuant to terms and conditions reasonably satisfactory to the Administrative Agent, and (ii) unsecured Guarantee Obligations of any Subsidiary that is a Guarantor in respect of such Indebtedness so long as such Guarantee Obligations are subordinated to the same extent as the obligations of the Borrower in respect of such Indebtedness; provided that (x) there are no scheduled payments of principal on such Indebtedness prior to the date six months after the Term Termination Date and (y) after giving effect to such Indebtedness and the Borrower’s use of the proceeds thereof, the Borrower shall be in compliance with the financial covenants set forth in Section 8.1.

 

8.3 Liens. Create, incur, assume or suffer to exist any Lien upon any of its property, whether now owned or hereafter acquired, except for:

 

(a) Liens for taxes, assessments, government charges or levies not yet due or that are being contested in good faith by appropriate proceedings, provided that adequate reserves with respect thereto are maintained on the books of the Borrower or its Subsidiaries, as the case may be, in conformity with GAAP;

 

(b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business that are not overdue for a period of more than 45 days or that are being contested in good faith by appropriate proceedings;

 

(c) pledges or deposits in connection with workers’ compensation, unemployment insurance and other social security legislation and deposits made to secure liability to insurance carriers;

 

(d) deposits to secure the performance of bids, trade contracts (other than for borrowed money), sales, leases, statutory or regulatory obligations, self insurance obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

 

(e) easements, rights-of-way, restrictions, licenses and other similar encumbrances incurred in the ordinary course of business that, in the aggregate, are not substantial in amount and that do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the Borrower or any of its Subsidiaries;

 

  

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(f) Liens in existence on the date hereof listed on Schedule 8.3(f), securing Indebtedness permitted by Section 8.2(d); provided that no such Lien shall attach to any additional property after the Closing Date and that the amount of Indebtedness secured thereby is not increased;

 

(g) Liens securing Indebtedness of the Borrower or any Subsidiary incurred pursuant to Section 8.2(e) or 8.2(f); provided that (i) such Liens shall be created substantially simultaneously with the acquisition of such assets, (ii) such Liens do not at any time encumber any property other than the property financed by such Indebtedness and (iii) the amount of Indebtedness secured thereby is not increased;

 

(h) Liens created pursuant to the Loan Documents;

 

(i) any interest or title of a lessor or lessee under any lease entered into by the Borrower or any Subsidiary in the ordinary course of its business and covering only the assets so leased;

 

(j) Liens not otherwise permitted by this Section so long as neither (i) the aggregate outstanding principal amount of the obligations secured thereby nor (ii) the aggregate fair market value (determined as of the date such Lien is incurred) of the assets subject thereto exceeds (as to the Borrower and all Subsidiaries) $5,000,000 at any one time;

 

(k) Liens upon inventory or other goods securing obligations in respect of bankers’ acceptances or documentary letters of credit issued or created to facilitate the shipment or storage of such inventory or other goods;

 

(l) customary set-off rights or similar rights and remedies of applicable banks to the extent permitted under the Control Agreements, if applicable;

 

(m) Liens arising from judgments, decrees or attachments in circumstances not constituting an Event of Default;

 

(n) any Lien on any asset of the Borrower existing as of the date hereof as set forth on Schedule 8.3(f), including renewals and replacements thereof; provided that the principal amount of the Indebtedness secured by such Lien is not increased, the terms of such Indebtedness are not less favorable to the Borrower than the terms of the Indebtedness so renewed or replaced, and such Lien does not attach to any other property;

 

(o) Liens arising from precautionary Uniform Commercial Code financing statements by lessors in connection with operating leases;

 

(p) leases and subleases granted to third Persons in the ordinary course of business; and

 

(q) Liens securing Indebtedness incurred pursuant to Section 8.2(i).

 

  

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8.4 Fundamental Changes. Enter into any merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or Dispose of, all or substantially all of its property or business, except that:

 

(a) any Subsidiary of the Borrower may be merged or consolidated with or into the Borrower (provided that the Borrower shall be the continuing or surviving corporation) or with or into any Wholly Owned Guarantor (provided that the Wholly Owned Guarantor shall be the continuing or surviving corporation); and

 

(b) any Subsidiary of the Borrower may Dispose of any or all of its assets (upon voluntary liquidation or otherwise) to the Borrower or any Wholly Owned Guarantor, or subject to Section 8.8(h) in a Foreign Subsidiary;

 

(c) any Subsidiary may merge with another Person to effect a transaction permitted under Section 8.8;

 

(d) Permitted Acquisitions; and

 

(e) transactions permitted under Section 8.5 shall be permitted.

 

8.5 Disposition of Property. Dispose of any of its property, whether now owned or hereafter acquired, or, in the case of any Subsidiary, issue or sell any shares of such Subsidiary’s Capital Stock to any Person, except:

 

(a) the Disposition of obsolete or worn out property in the ordinary course of business;

 

(b) the sale of inventory in the ordinary course of business;

 

(c) Dispositions permitted by Section 8.4(b);

 

(d) the sale or issuance of any Subsidiary’s Capital Stock to the Borrower or any Wholly Owned Guarantor;

 

(e) the Disposition of property having a fair market value not to exceed $3,000,000 in the aggregate for any fiscal year of the Borrower; and

 

(f) the Disposition of leased properties of any Group Member not necessary for the conduct or the operation of the business of such Group Member consistent with terms disclosed to the Administrative Agent.

 

8.6 Restricted Payments. Declare or pay any dividend (other than dividends payable solely in common stock of the Person making such dividend) on, or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of, any Capital Stock of any Group Member, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of the Borrower or any Subsidiary (collectively, “Restricted Payments”), except that:

 

  

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(a) any Subsidiary may make Restricted Payments to the Borrower or any Wholly Owned Guarantor;

 

(b) the Borrower may make the Closing Date Distribution;

 

(c) the Borrower may pay dividends or make other Restricted Payments to Holdings in an aggregate amount since the date hereof equal to the sum of (i) $10,000 and (ii) the portion of the Excess Cash Flow of the Borrower for each completed fiscal year of the Borrower not required to be paid as a mandatory prepayment pursuant to Section 4.2; provided that no such Restricted Payment shall be made if a Default or Event of Default shall have occurred and be continuing or would result after giving pro forma effect to such Restricted Payment;

 

(d) the Borrower may pay dividends to Holdings to permit Holdings to (i) pay corporate overhead expenses incurred in the ordinary course of business not to exceed $1,000,000 in any fiscal year, (ii) pay any taxes that are due and payable by Holdings and the Borrower as part of a consolidated group not to exceed the amount of taxes that the Borrower and its Subsidiaries would have paid as a stand-alone group and (iii) so long as Borrower is treated, for U.S. federal income tax purposes, as a partnership or an entity disregarded as separate from its owner, pay the amounts necessary to make distributions described in Section 8.6(f) to the extent such distributions are attributable to the net income of the Borrower that is allocated to Holdings (determined as if the Borrower were a stand-alone partnership in the event the Borrower is a disregarded entity);

 

(e) the Borrower may purchase or redeem Capital Stock of any Group Member from deceased or terminated directors, managers and former and existing employees in an aggregate amount not to exceed $5,000,000 in any fiscal year; provided that no Default or Event of Default shall have occurred and be continuing or would result after giving pro forma effect to such Restricted Payment; and

 

(f) so long as Holdings is treated as a partnership for tax purposes, Holdings may make cash distributions to each of its members from time to time in an amount not exceeding the amount of income taxes deemed payable by its members with respect to the net income of Holdings calculated as set forth on Schedule 8.6.

 

8.7 Capital Expenditures. Make or commit to make any Capital Expenditure, except Capital Expenditures of the Consolidated Group in the ordinary course of business not exceeding $7,500,000 in the aggregate during any fiscal year; provided, that up to 100% of any such amount, if not so expended in the fiscal year for which it is permitted, may be carried over for expenditure in the next succeeding fiscal year (provided that such excess carryover may only be used after the amounts permitted to be expended in such fiscal year have been used and such carryover may only be used during such fiscal year).

 

8.8 Investments. Make any advance, loan, extension of credit (by way of guaranty or otherwise) or capital contribution to, or purchase any Capital Stock, bonds, notes, debentures or other debt securities of, or any assets constituting a business unit of, or make any other investment in, any Person (all of the foregoing, “Investments”), except:

 

  

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(a) extensions of trade credit in the ordinary course of business;

 

(b) Investments in Cash Equivalents;

 

(c) Guarantee Obligations permitted by Section 8.2(c);

 

(d) loans and advances to employees of any Group Member of the Borrower in the ordinary course of business (including for travel, entertainment and relocation expenses) in an aggregate amount for all Group Members not to exceed $500,000 at any one time outstanding;

 

(e) the Transactions;

 

(f) Investments in assets useful in the business of the Borrower and its Subsidiaries made by the Borrower or any of its Subsidiaries with the proceeds of any Reinvestment Deferred Amount;

 

(g) intercompany Investments by any Group Member in the Borrower or any Person that, prior to and after giving effect to such Investment, is a Guarantor;

 

(h) in addition to Investments otherwise expressly permitted by this Section, Investments by the Borrower or any of its Subsidiaries in an aggregate amount (valued at cost) not to exceed $7,500,000 during the term of this Agreement;

 

(i) Investments existing on the date hereof as identified on Schedule 8.8(i);

 

(j) Investments made by the Borrower or any of its Subsidiaries for the purpose of consummating Permitted Acquisitions;

 

(k) deposits made in the ordinary course of business to secure the performance of leases not to exceed $1,000,000;

 

(l) Investments received in connection with the bankruptcy or reorganization of suppliers or customers and in settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business;

 

(m) Investments arising out of the receipt by the Borrower or any of their Subsidiaries of non-cash consideration for any Disposition permitted by Section 8.5 in an aggregate amount not to exceed $2,500,000 at any time outstanding; and

 

(n) transactions expressly permitted by Section 8.2, 8.4, 8.5, 8.6, 8.8 or 8.9(j).

 

8.9 Transactions with Affiliates. Enter into any transaction, including any purchase, sale, lease or exchange of property, the rendering of any service or the payment of any management, advisory or similar fees, with any Affiliate (other than the Borrower or any Wholly Owned Guarantor) unless such transaction is:

 

(a) otherwise permitted under this Agreement;

 

(b) in the ordinary course of business of the relevant Group Member;

 

  

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(c) upon fair and reasonable terms no less favorable to the relevant Group Member, than it would obtain in a comparable arm’s length transaction with a Person that is not an Affiliate;

 

(d) [intentionally deleted];

 

(e) the provision of services by Schein and its Control Investment Affiliates to the Borrower and its Subsidiaries pursuant to the Transaction Agreement;

 

(f) compensation (including indemnities and reimbursement of reasonable expenses which are customary and ordinary in light of the Borrower’s industry and size) of officers and the directors and managers of the Borrower;

 

(g) benefit arrangements in the ordinary course (including for the payment of reasonable fees and compensation) with any employee, consultant, officer or director of any Group Member; provided that such arrangements have been disclosed to the Administrative Agent and Lenders prior to the Closing Date, and such arrangements are not modified without the consent of Required Lenders;

 

(h) transactions in existence on the date hereof as identified on Schedule 8.9(h);

 

(i) any transaction on the Closing Date constituting part of the Transactions;

 

(j) loans or advances to employees in the ordinary course of business not to exceed $200,000 individually and $1,000,000 in the aggregate at any time outstanding; or

 

(k) transactions expressly permitted by Section 8.2, 8.4, 8.5, 8.6 and 8.8.

 

8.10 Sales and Leasebacks. Enter into any arrangement with any Person providing for the leasing by any Group Member of real or personal property that has been or is to be sold or transferred by such Group Member to such Person or to any other Person to whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of such Group Member, unless such sale and any resulting Indebtedness and/or Liens are expressly permitted hereunder.

 

8.11 Hedge Agreements. Enter into any Hedge Agreement, except (a) Hedge Agreements entered into to hedge or mitigate risks to which the Borrower or any Subsidiary has actual exposure (other than those in respect of Capital Stock) and (b) Hedge Agreements entered into in order to effectively cap, collar or exchange interest rates (from fixed to floating rates, from one floating rate to another floating rate or otherwise) with respect to any interest-bearing liability or investment of the Borrower or any Subsidiary.

 

8.12 Changes in Fiscal Periods. Permit the fiscal year of the Borrower to end on a day other than December 31 or change the Borrower’s method of determining fiscal quarters; provided that Borrower shall be permitted to change (x) its fiscal year to the fiscal year of Schein as determined in accordance with Schein’s methodology as of the date hereof and (y) its 

 

  

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methodology of determining fiscal quarters to be consistent with the methodology of Schein for determining Schein’s fiscal quarters.

 

8.13 Negative Pledge Clauses. Enter into or suffer to exist or become effective any agreement that prohibits, limits or imposes any condition upon the ability of any Group Member to create, incur, assume or suffer to exist any Lien upon any of its property or revenues, whether now owned or hereafter acquired, to secure its obligations under the Loan Documents or any refinancing thereof other than:

 

(a) this Agreement and the other Loan Documents;

 

(b) any agreements governing any Purchase Money Obligations otherwise permitted hereby (in which case, any prohibition or limitation shall only be effective against the assets financed thereby);

 

(c) any prohibition or limitation that (1) exists pursuant to applicable law, (2) restricts subletting or assignment of any lease governing a leasehold interest of the Borrower or its Subsidiaries, or (3) is imposed by any amendments or refinancings that are otherwise permitted by this Agreement or the Loan Documents; provided that such amendments and refinancings are no more materially restrictive with respect to such prohibitions and limitations than those prior to such amendment or refinancing;

 

(d) any other agreement that does not restrict in any manner (directly or indirectly) Liens created pursuant to the Loan Documents on any Collateral securing the Obligations and does not require the direct or indirect granting of any Lien securing any Indebtedness or other obligation by virtue of the granting of Liens on or pledge of property of any Loan Party to secure the Obligations; and

 

(e) any prohibition or limitation that (1) consists of customary restrictions and conditions contained in any agreement relating to the Disposition of any property permitted under Section 8.5 pending the consummation of such sale or (2) exists in any agreement in effect at the time any Person becomes a Subsidiary of the Borrower, so long as such agreement was not entered into in contemplation of such Person becoming a Subsidiary.

 

8.14 Clauses Restricting Subsidiary Distributions. Enter into or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Subsidiary of the Borrower to (a) make Restricted Payments in respect of any Capital Stock of such Subsidiary held by, or pay any Indebtedness owed to, the Borrower or any other Subsidiary of the Borrower, (b) make loans or advances to, or other Investments in, the Borrower or any other Subsidiary of the Borrower or (c) transfer any of its assets to the Borrower or any other Subsidiary of the Borrower, except for such encumbrances or restrictions existing under or by reason of (i) any restrictions existing under the Loan Documents, (ii) any restrictions with respect to a Subsidiary imposed pursuant to an agreement that has been entered into in connection with the Disposition of all or substantially all of the Capital Stock or assets of such Subsidiary, (iii) applicable law, (iv) customary provisions restricting subletting or assignment of any lease governing a leasehold interest of a Subsidiary, (v) any Lien permitted by Section 8.3 restricting the transfer of the property subject thereto, (vi) customary provisions in partnership

 

  

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agreements, limited liability company organizational governance documents, asset sales and stock sale agreements and other similar agreements entered into in the ordinary course of business that restrict the transfer of ownership interests in such partnership, limited liability company or similar person, (vii) any encumbrances or restrictions imposed by any amendments or refinancings that are otherwise permitted by this Agreement or the Loan Documents; provided that such amendments or refinancings are no more materially restrictive with respect to such encumbrances and restrictions than those prior to such amendment or refinancings, (viii) customary provisions restricting assignment of any agreement entered into by a Subsidiary in the ordinary course of business, (ix) customary restrictions and conditions contained in any agreement relating to the Disposition of any property permitted under Section 8.5 pending the consummation of such sale, (x) any agreement applicable to such Subsidiary in effect at the time such Subsidiary becomes a Subsidiary of the Borrower, so long as such agreement was not entered into in connection with or in contemplation of such person becoming a Subsidiary of such Borrower, (xi) restrictions on cash or other deposits or net worth imposed by suppliers or landlords under contracts entered into in the ordinary course of business, (xii) any instrument governing Indebtedness assumed in connection with any Permitted Acquisition, which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person or the properties or assets of the Person so acquired.

 

8.15 Lines of Business. Enter into any business, either directly or through any Subsidiary, except for those businesses in which the Borrower and its Subsidiaries are engaged on the date of this Agreement or that are reasonably related thereto.

 

8.16 Amendments to Material Contracts and Transaction Documentation.  (a) Amend, supplement or otherwise modify (pursuant to a waiver or otherwise) the terms and conditions of the indemnities and licenses furnished to the Borrower or any of its Subsidiaries pursuant to the Transaction Documentation such that after giving effect thereto such indemnities or licenses shall be materially less favorable to the interests of the Loan Parties or the Lenders with respect thereto, (b) otherwise amend, supplement or otherwise modify the terms and conditions of the Transaction Agreement in a manner adverse to any Agent or Lender, as may be determined in the reasonable discretion of the Agents or (c) otherwise amend, supplement or otherwise modify the terms and conditions of any Material Contract or the Transaction Documentation (other than the Transaction Agreement) or any such other documents except for any such amendment, supplement or modification that (i) becomes effective after the Closing Date and (ii) could not reasonably be expected to have a Material Adverse Effect.

 

8.17 Additional Deposit Accounts. Create or replace any deposit account listed on Schedule 5.21 (other than payroll or benefit accounts) unless (i) the Administrative Agent shall have consented in writing in advance to the addition or replacement of such account with the relevant bank, (ii) prior to the time of the opening of any such new account, the applicable Loan Party and such bank shall have executed and delivered to the Administrative Agent a tri-party blocked account agreement, in form and substance satisfactory to the Administrative Agent, and (iii) prior to the time of the opening of such new account, the Loan Parties shall have delivered to the Administrative Agent an updated Schedule 5.21 (together with any amendments or supplements to the schedules to the Guarantee and Collateral Agreement) reflecting the additional or subtracted account.

 

  

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8.18 Optional Payments and Modifications of Certain Debt Instruments. (a)  Make or offer to make any optional or voluntary payment, prepayment, repurchase or redemption of or otherwise optionally or voluntarily defease or segregate funds with respect to any Subordinated Debt; (b) amend, modify, waive or otherwise change, or consent or agree to any amendment, modification, waiver or other change to, any of the terms of any Subordinated Debt if the effect of such amendment, modification, waiver or other change is to increase the interest rate on any Subordinated Debt, change (to earlier dates) any dates on which payments of principal or interest are due thereon, change any event of default or condition to an event of default with respect thereto (other than to eliminate any such event of default or increase any grace period related thereto or otherwise make such event of default or condition less restrictive or burdensome on the Borrower), change the redemption, prepayment or defeasance provisions thereof, change the subordination provisions of any Subordinated Debt (or any guarantee thereof), or to increase materially the obligations of the Borrower thereunder or to confer any additional rights on the holders of any Subordinated Debt (or a trustee or other representative on their behalf) that would be adverse in any material respect to any Loan Party or the Lenders, or require the payment of a consent fee; or (c) designate any Indebtedness (other than obligations of the Loan Parties pursuant to the Loan Documents) as “Designated Senior Debt” (or any other defined term having a similar purpose) for the purposes of any document governing any Subordinated Debt.

 

SECTION 9.

 

EVENTS OF DEFAULT

 

If any of the following events shall occur and be continuing:

 

(a) the Borrower shall fail to pay any principal of any Loan or Reimbursement Obligation when due in accordance with the terms hereof; or the Borrower shall fail to pay any interest on any Loan or Reimbursement Obligation, or any other amount payable hereunder or under any other Loan Document, within five Business Days after any such interest or other amount becomes due in accordance with the terms hereof; or

 

(b) any representation or warranty made or deemed made by any Loan Party herein or in any other Loan Document or that is contained in any certificate, document or financial or other statement furnished by it at any time under or in connection with this Agreement or any such other Loan Document shall prove to have been inaccurate in any material respect on or as of the date made or deemed made; or

 

(c) (i) any Loan Party shall default in the observance or performance of any agreement contained in clause (i) or (ii) of Section 7.4(a) (with respect to the Borrower only), Section 7.7(a) or Section 8 of this Agreement or Sections 5.6 and 5.8(b) of the Guarantee and Collateral Agreement or (ii) an “Event of Default” under and as defined in any Mortgage shall have occurred and be continuing; or

 

(d) any Loan Party shall default in the observance or performance of any other agreement contained in this Agreement or any other Loan Document (other than as provided in paragraphs (a) through (c) of this Section), and such default shall continue unremedied for a 

 

  

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period of 30 days after notice to the Borrower from the Administrative Agent or the Required Lenders; or

 

(e) any Group Member (i) defaults in making any payment of any principal of any Indebtedness (including any Guarantee Obligation, but excluding the Loans) on the scheduled or original due date with respect thereto; or (ii) defaults in making any payment of any interest on any such Indebtedness beyond the period of grace, if any, provided in the instrument or agreement under which such Indebtedness was created; or (iii) defaults in the observance or performance of any other agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or beneficiary of such Indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to cause, with the giving of notice if required, such Indebtedness to become due prior to its stated maturity or to become subject to a mandatory offer to purchase by the obligor thereunder or (in the case of any such Indebtedness constituting a Guarantee Obligation) to become payable; provided, that a default, event or condition described in clause (i), (ii) or (iii) of this paragraph (e) shall not at any time constitute an Event of Default unless, at such time, one or more defaults, events or conditions of the type described in clauses (i), (ii) and (iii) of this paragraph (e) shall have occurred and be continuing with respect to Indebtedness the outstanding principal amount of which exceeds in the aggregate $10,000,000; or

 

(f) (i) any Group Member shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or any Group Member shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against any Group Member any case, proceeding or other action of a nature referred to in clause (i) above that (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be commenced against any Group Member any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets that results in the entry of an order for any such relief that shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) any Group Member shall take any formal action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) any Group Member shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or

 

(g) (i) a Reportable Event or non-exempt Prohibited Transaction with respect to any Plan; (ii) a failure to satisfy the minimum funding standards (within the meaning of Sections 412 or 430 of the Code or Section 302 of ERISA) with respect to any Plan, whether or not waived, or a filing pursuant to Section 402(c) of the Code or Section 302(c) ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (iii) a failure to make by its due date a required installment under Section 430(j) of the Code with respect to 

 

  

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any Plan, or a failure by Borrower or any Commonly Controlled Entity to make a required contribution to a Multiemployer Plan; (iv) the incurrence by Borrower or any Commonly Controlled Entity of liability under Title IV of ERISA with respect to the termination of any Plan, including but not limited to the imposition of any Lien in favor of the PBGC or any Plan; (v) the determination that any Plan is, or is expected to be, in “at risk” status within the meaning of Section 430 of the Code or Section 303 of ERISA; (vi) the receipt by Borrower or any Commonly Controlled Entity of any notice from the PBGC or a plan administrator relating an intention to terminate any Plan or to appoint a trustee to administer any Plan under Section 4042 of ERISA; (vii) a trustee shall be appointed by a United States district court to administer any Plan; (viii) the incurrence by Borrower or any Commonly Controlled Entity of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; (ix) the receipt by  Borrower or any Commonly Controlled Entity of any notice, or sending by Borrower or any Commonly Controlled Entity of  any notice to any Multiemployer Plan, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, Insolvent, in Reorganization or in endangered or critical status within the meaning of Section 432 of the Code or Section 305 or Title IV of ERISA; or (x) any other event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) through (x) above, such event or condition, together with all other such events or conditions, if any, could reasonably be expected to have a Material Adverse Effect; or

 

(h) one or more judgments or decrees shall be entered against any Group Member involving in the aggregate a liability (not paid or fully covered by insurance as to which the relevant insurance company has acknowledged coverage) of $10,000,000 or more, and all such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 30 days from the entry thereof; or

 

(i) any of the Security Documents shall cease, for any reason, to be in full force and effect, or any Loan Party or any Affiliate of any Loan Party shall so assert, or any Lien created by any of the Security Documents shall cease to be enforceable and of the same effect and priority purported to be created thereby, or any Loan Party or any Affiliate of any Loan Party shall so assert; or

 

(j) the guarantee contained in Section 2 of the Guarantee and Collateral Agreement shall cease, for any reason, to be in full force and effect or any Loan Party or any Affiliate of any Loan Party shall so assert; or

 

(k) any Change of Control shall occur; or

 

(l) Holdings shall (i) conduct, transact or otherwise engage in, or commit to conduct, transact or otherwise engage in, any business or operations other than those incidental to its ownership of the Capital Stock of the Borrower and its Subsidiaries, (ii) incur, create, assume or suffer to exist any Indebtedness or other liabilities or financial obligations, except (x) nonconsensual obligations imposed by operation of law, (y) obligations pursuant to the Loan Documents to which it is a party and (z) obligations with respect to its Capital Stock, or (iii) own, lease, manage or otherwise operate any properties or assets (including cash (other than cash received in connection with dividends made by the Borrower in accordance with Section 8.6 

 

  

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pending application in the manner contemplated by said Section) and Cash Equivalents) other than the ownership of shares of Capital Stock of the Borrower; 

 

then, and in any such event, (A) if such event is an Event of Default specified in clause (i) or (ii) of paragraph (f) above with respect to the Borrower, automatically the Commitments shall immediately terminate and the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents (including all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) shall immediately become due and payable, and (B) if such event is any other Event of Default, either or both of the following actions may be taken: (i) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower declare the Revolving Commitments to be terminated forthwith, whereupon the Revolving Commitments shall immediately terminate; and (ii) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower, declare the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents (including all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) to be due and payable forthwith, whereupon the same shall immediately become due and payable. With respect to all Letters of Credit with respect to which presentment for honor shall not have occurred at the time of an acceleration pursuant to this paragraph, the Borrower shall at such time deposit in a cash collateral account opened by the Administrative Agent an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit. Amounts held in such cash collateral account shall be applied by the Administrative Agent to the payment of drafts drawn under such Letters of Credit, and the unused portion thereof after all such Letters of Credit shall have expired or been fully drawn upon, if any, shall be applied to repay other obligations of the Borrower hereunder and under the other Loan Documents and the Specified Hedge Agreements. After all such Letters of Credit shall have expired or been fully drawn upon, all Reimbursement Obligations shall have been satisfied and all other obligations of the Borrower hereunder and under the other Loan Documents and the Specified Hedge Agreements shall have been paid in full, the balance, if any, in such cash collateral account shall be returned to the Borrower (or such other Person as may be lawfully entitled thereto). Except as expressly provided above in this Section, presentment, demand, protest and all other notices of any kind are hereby expressly waived by the Borrower.

 

SECTION 10.

 

THE AGENTS

 

10.1 Appointment. Each Lender hereby irrevocably designates and appoints the Administrative Agent as the agent of such Lender under this Agreement and the other Loan Documents, and each such Lender irrevocably authorizes the Administrative Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and the other Loan Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any 

 

  

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provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Administrative Agent.

 

10.2 Delegation of Duties. Each Agent may execute any of its duties under this Agreement and the other Loan Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. No Agent shall be responsible for the negligence or misconduct of any agents or attorneys in-fact selected by it with reasonable care.

 

10.3 Exculpatory Provisions. Neither any Agent nor any of their respective officers, directors, employees, agents, advisors, attorneys-in-fact or affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or any other Loan Document (except to the extent that any of the foregoing are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from its or such Person’s own gross negligence or willful misconduct) or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by any Loan Party or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Agents under or in connection with, this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or for any failure of any Loan Party a party thereto to perform its obligations hereunder or thereunder. The Agents shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of any Loan Party.

 

10.4 Reliance by Agents. Each Agent shall be entitled to rely, and shall be fully protected in relying, upon any instrument, writing, resolution, notice, consent, certificate, affidavit, letter, telecopy, telex, teletype or e-mail message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including counsel to the Borrower), independent accountants and other experts selected by such Agent. The Administrative Agent may deem and treat the payee of any Note as the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent. Each Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders (or, if so specified by this Agreement, all Lenders) as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. The Agents shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with a request of the Required Lenders (or, if so specified by this Agreement, all Lenders), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans.

 

  

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10.5 Notice of Default.  (a)  No Agent shall be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless such Agent has received notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default”. In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give notice thereof to the Lenders and, with respect to any such notice received from any Lender, the Borrower.

 

(b) The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders (or, if so specified by this Agreement, all Lenders or any other instructing group of Lenders specified by this Agreement); provided that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders.

 

10.6 Non-Reliance on Agents and Other Lenders. Each Lender expressly acknowledges that neither the Agents nor any of their respective officers, directors, employees, agents, advisors, attorneys-in-fact or affiliates have made any representations or warranties to it and that no act by any Agent hereafter taken, including any review of the affairs of a Loan Party or any affiliate of a Loan Party, shall be deemed to constitute any representation or warranty by any Agent to any Lender. Each Lender represents to the Agents that it has, independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of the Loan Parties and their affiliates and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Loan Parties and their affiliates. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of any Loan Party or any affiliate of a Loan Party that may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, advisors, attorneys-in-fact or affiliates.

 

10.7 Indemnification. Lenders agree to indemnify each Agent and its officers, directors, employees, affiliates, agents, advisors and controlling persons (each, an “Agent Indemnitee”) (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), ratably according to their respective Aggregate Exposure Percentages in effect on the date on which indemnification is sought under this Section 10.7 (or, if indemnification is sought after the date upon which the Commitments shall have terminated and the Loans shall have been paid in full, ratably in accordance with such Aggregate Exposure 

 

  

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Percentages immediately prior to such date), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time (whether before or after the payment of the Loans) be imposed on, incurred by or asserted against such Agent Indemnitee in any way relating to or arising out of, the Commitments, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by such Agent Indemnitee under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements that are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from such Agent Indemnitee’s gross negligence or willful misconduct; and provided, further, to the extent any indemnification of the Issuing Lender or the Swingline Lender is required pursuant to this Section 10.7 as a result of any action, judgment or suit against such Person solely in its capacity as Issuing Lender or Swingline Lender, such indemnification shall be limited to the Revolving Lenders only. The agreements in this Section 10.7 shall survive the payment of the Loans and all other amounts payable hereunder.

 

10.8 Agent in Its Individual Capacity. Each Agent and its affiliates may make loans to, accept deposits from and generally engage in any kind of business with any Loan Party as though such Agent were not an Agent. With respect to its Loans made or renewed by it and with respect to any Letter of Credit issued or participated in by it, each Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as though it were not an Agent, and the terms “Lender” and “Lenders” shall include each Agent in its individual capacity.

 

10.9 Successor Administrative Agent. Subject to this Section 10.9, the Administrative Agent may resign as Administrative Agent upon 180 days’ notice to the Lenders and the Borrower. If the Administrative Agent shall resign as Administrative Agent under this Agreement and the other Loan Documents, then the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders, which successor agent shall (unless an Event of Default under Section 9(a) or Section 9(f) with respect to the Borrower shall have occurred and be continuing) be subject to approval by the Borrower (which approval shall not be unreasonably withheld or delayed), whereupon such successor agent shall succeed to the rights, powers and duties of the Administrative Agent, and the term “Administrative Agent” shall mean such successor agent effective upon such appointment and approval, and the former Administrative Agent’s rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement or any holders of the Loans. If no successor agent has accepted appointment as Administrative Agent by the date that is 180 days following a retiring Administrative Agent’s notice of resignation, the retiring Administrative Agent’s resignation shall nevertheless thereupon become effective and the Lenders shall assume and perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above; provided, however, that the Administrative Agent may resign upon 30 days’ notice to the Lenders and the Borrower in the event that such resignation is upon the request or demand of any Governmental Authority or in response to any order of any court or other Governmental Authority or as may otherwise be required pursuant to any 

 

  

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Requirement of Law, and in such case if no successor agent has accepted appointment as Administrative Agent by the date that is 30 days following the retiring Administrative Agent’s notice of resignation, the retiring Administrative Agent’s resignation shall nevertheless thereupon become effective and the Lenders shall assume and perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above. After any retiring Administrative Agent’s resignation as Administrative Agent, the provisions of this Section 10 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement and the other Loan Documents.

 

10.10 Agents Generally. Except as expressly set forth herein, no Agent shall have any duties or responsibilities hereunder in its capacity as such.

 

10.11 The Lead Arranger. The Lead Arranger, in its capacity as such, shall have no duties or responsibilities, and shall incur no liability, under this Agreement and the other Loan Documents.

 

 

SECTION 11.

 

MISCELLANEOUS

 

11.1 Amendments and Waivers. Neither this Agreement nor any other Loan Document, or any terms hereof or thereof, may be amended, supplemented or modified except in accordance with the provisions of this Section 11.1. The Required Lenders and each Loan Party party to the relevant Loan Document may, or, with the written consent of the Required Lenders, the Administrative Agent and each Loan Party party to the relevant Loan Document may, from time to time, (a) enter into written amendments, supplements or modifications hereto and to the other Loan Documents for the purpose of adding any provisions to this Agreement or the other Loan Documents or changing in any manner the rights of the Lenders or of the Loan Parties hereunder or thereunder or (b) waive, on such terms and conditions as the Required Lenders or the Administrative Agent, as the case may be, may specify in such instrument, any of the requirements of this Agreement or the other Loan Documents or any Default or Event of Default and its consequences; provided, however, that no such waiver and no such amendment, supplement or modification shall:

 

(i) forgive or reduce the principal amount or extend the final scheduled date of maturity of any Loan, extend the scheduled date of any amortization payment in respect of any Term Loan, reduce the stated rate of any interest or fee payable hereunder (except (x) in connection with the waiver of applicability of any post-default increase in interest rates, which waiver shall be effective with the consent of the Majority Facility Lenders of each adversely affected Facility and (y) that any amendment or modification of defined terms used in the financial covenants in this Agreement shall not constitute a reduction in the rate of interest or fees for purposes of this clause (i)) or extend the scheduled date of any payment thereof, or increase the amount or extend the expiration date of any Lender’s Revolving Commitment, in each case without the written consent of each Lender directly affected thereby;

 

  

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(ii) eliminate or reduce the voting rights of any Lender under this Section 11.1 without the written consent of such Lender;

 

(iii) reduce any percentage specified in the definition of Required Lenders or consent to the assignment or transfer by the Borrower of any of their rights and obligations under this Agreement and the other Loan Documents, in each case without the written consent of all Lenders;

 

(iv) release all or substantially all of the Collateral under the Security Documents or release all or substantially all of the Guarantors or any significant Guarantor from its obligations under the Guarantee and Collateral Agreement, in each case without the written consent of all Lenders;

 

(v) amend, modify or waive any provision of any Security Document without the written consent of all Lenders;

 

(vi) amend, modify or waive any condition precedent to any extension of credit under the Revolving Facility set forth in Section 6.2 (excluding in connection with any waiver of an existing Default or Event of Default) without the written consent of the Majority Facility Lenders with respect to the Revolving Facility;

 

(vii) amend, modify or waive any provision of Section 4.8 without the written consent of the Majority Facility Lenders in respect of each Facility adversely affected thereby;

 

(viii) change the application of Net Cash Proceeds or Excess Cash Flow to be applied to prepay Loans under Section 4.2(c) without the written consent of the Majority Facility Lenders with respect to each Facility;

 

(ix) reduce the percentage specified in the definition of Majority Facility Lenders with respect to any Facility without the written consent of all Lenders under such Facility;

 

(x) amend, modify or waive any provision of Section 10 without the written consent of each Agent adversely affected thereby;

 

(xi) amend, modify or waive any provision of Section 3.3 or 3.4 without the written consent of the Swingline Lender; or

 

(xii) amend, modify or waive any provision of Sections 3.7 to 3.14 without the written consent of the Issuing Lender.

 

Any such waiver and any such amendment, supplement or modification shall apply equally to each of the Lenders and shall be binding upon the Loan Parties, the Lenders, the Agents and all future holders of the Loans. In the case of any waiver, the Loan Parties, the Lenders and the Agents shall be restored to their former position and rights hereunder and under the other Loan Documents, and any Default or Event of Default waived shall be deemed to be 

 

 

  

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cured and not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon.

 

Notwithstanding the foregoing, this Agreement may be amended (or amended and restated) with the written consent of the Required Lenders, the Administrative Agent and the Borrower (a) to add one or more additional credit facilities to this Agreement and to permit the extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof (collectively, the “Additional Extensions of Credit”) to share ratably in the benefits of this Agreement and the other Loan Documents with the Term Loans and Revolving Extensions of Credit and the accrued interest and fees in respect thereof and (b) to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders and Majority Facility Lenders; provided that no such amendment shall permit the Additional Extensions of Credit to share ratably with or with preference to the Term Loans in the application of mandatory prepayments without the consent of the Majority Facility Lenders under each Facility (other than the Revolving Facility) or otherwise to share ratably with or with preference to the Revolving Extensions of Credit without the consent of the Majority Facility Lenders under the Revolving Facility.

 

Further, notwithstanding anything to the contrary herein, the provisions of Section 4.16 may not be amended, modified or waived without the written consent of the Administrative Agent, the Issuing Lender and the Required Lenders.  Further, notwithstanding the foregoing (but in accordance with Section 4.16(b)), no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder.

 

In addition, notwithstanding the foregoing, this Agreement may be amended with the written consent of the Administrative Agent, the Borrower and the Lenders providing the relevant Replacement Term Loans (as defined below) to permit the refinancing of all outstanding Term Loans (“Refinanced Term Loans”) with a replacement “B” term loan tranche hereunder (“Replacement Term Loans”), provided that (a) the aggregate principal amount of such Replacement Term Loans shall not exceed the aggregate principal amount of such Refinanced Term Loans, (b) the Applicable Margin for such Replacement Term Loans shall not be higher than the Applicable Margin for such Refinanced Term Loans, (c) the weighted average life to maturity of such Replacement Term Loans shall not be shorter than the weighted average life to maturity of such Refinanced Term Loans at the time of such refinancing and (d) all other terms applicable to such Replacement Term Loans shall be substantially identical to, or less favorable to the Lenders providing such Replacement Term Loans than, those applicable to such Refinanced Term Loans, except to the extent necessary to provide for covenants and other terms applicable to any period after the latest final maturity of the Term Loans in effect immediately prior to such refinancing.

 

If, in connection with any proposed amendment, modification, waiver or termination requiring the consent of more than the Required Lenders, the consent of Required Lenders is obtained, but the consent of other Lenders whose consent is required is not obtained (any such Lender whose consent is not obtained being referred to as a “Non-Consenting Lender”), then either (x) the Administrative Agent or (y) a Person reasonably acceptable to the Administrative Agent who shall provide its consent to the proposed amendment, modification, waiver or termination in question, shall have the right to purchase from such Non-Consenting Lenders, and such Non-Consenting Lenders agree that they shall, upon the Administrative Agent’s request, sell and assign to the Administrative Agent or such Person, all of the Loans of such Non-Consenting 

 

  

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Lenders for an amount equal to the principal balance of all Loans held by such Non-Consenting Lenders and all accrued interest and fees with respect thereto through the date of sale, such purchase and sale to be consummated pursuant to an executed Assignment and Assumption; provided that the Administrative Agent is not the Non-Consenting Lender whose Loans are being assigned. In addition to the foregoing, the Borrower may replace any Non-Consenting Lender pursuant to Section 4.13.

 

11.2 Notices. Except with respect to notices and other communications expressly permitted to be given by telephone, all notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by telecopy), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered, or three Business Days after being deposited in the mail, postage prepaid, or, in the case of telecopy notice, when received, addressed as follows in the case of the Borrower and the Agents, and as set forth in an administrative questionnaire delivered to the Administrative Agent in the case of the Lenders, or to such other address as may be hereafter notified by the respective parties hereto:

 

	 	
If to the Borrower:

	
Butler Animal Health Supply, LLC

	 	  	
400 Metro Place North

	 	  	
Dublin, OH 43017

	 	  	
Attention: Leo E. McNeil

	 	  	
Telecopy: (614) 659-1653

	 	  	
Telephone: (614) 659-1652

	 	  	  
	 	
with a copy to:

	
Paul, Weiss, Rifkind, Wharton & Garrison LLP

	 	  	
1285 Avenue of the Americas

	 	  	
New York, NY 10019

	 	
.

	
Attention: Eric Goodison, Esq

	 	  	
Telecopy: (212) 757-3990

	 	  	
Telephone: (212) 373-3000

	 	  	  
	 	
with a copy to:

	
Salon Marrow Dyckman Newman& Broudy, LLP

	 	  	
292 Madison Avenue

	 	  	
New York, New York 10017

	 	  	
Attention: Joel Salon, Esq.

	 	  	
Telecopy: (212) 661-3339

	 	  	
Telephone: (212) 661-7100

	 	  	  
	 	
with a copy to:

	
Proskauer Rose LLP

	 	  	
1585 Broadway

	 	  	
New York, NY 10036

	 	
 

	
Attention: Steven L. Kirshenbaum, Esq

	 	  	
Telecopy: (212) 969-2900

 

  

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with a copy to:

	
Henry Schein, Inc.

	 	  	
135 Duryea Road

	 	  	
Melville, NY 11747

	 	  	
Attention: General Counsel

	 	  	
Facsimile: (631) 843-5660

	 	  	  
	 	
If to the Administrative Agent:

	
JPMorgan Loan & Agency Services

	 	  	
1111 Fannin Street, Floor 10

	 	  	
Houston, TX 77002

	 	  	
Attention: Amanda Brewer

	 	  	
Telecopy: (713) 750-2956

	 	  	
Telephone: (713) 427-0002

 

; provided that any notice, request or demand to or upon any Agent, the Issuing Lender or the Lenders shall not be effective until received.

 

Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Section 2 unless otherwise agreed by the Administrative Agent and the applicable Lender. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

 

11.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of any Agent or any Lender, any right, remedy, power or privilege hereunder or under the other Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

 

11.4 Survival of Representations and Warranties. All representations and warranties made hereunder, in the other Loan Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans and other extensions of credit hereunder.

 

11.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay or reimburse each Agent for all its reasonable out-of-pocket costs and expenses incurred in connection with the development, preparation and execution of, and any amendment, supplement or modification to, this Agreement and the other Loan Documents and any other documents prepared in connection herewith or therewith, and the consummation and administration of the transactions contemplated hereby and thereby, including the reasonable fees and disbursements of counsel to such Agent and filing and recording fees and expenses, with statements with respect to the foregoing to be submitted to the Borrower prior to the Closing Date (in the case of amounts to be paid on the Closing Date) and from time to time thereafter on a quarterly basis or such other periodic basis as such Agent shall deem appropriate, (b) to pay or reimburse each 

 

  

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Lender and Agent for all its reasonable out-of-pocket costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement, the other Loan Documents and any such other documents, including the reasonable fees and disbursements of counsel (including the allocated fees and expenses of in-house counsel) to each Lender and of counsel to such Agent, (c) to pay, indemnify, and hold each Lender and Agent harmless (without duplication of amounts indemnified under Section 4.10 or 4.11) from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other taxes, if any, that may be payable or determined to be payable in connection with the execution and delivery of, or consummation or administration of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, the other Loan Documents and any such other documents, and (d) to pay, indemnify, and hold each Lender and Agent and their respective officers, directors, employees, affiliates, agents, trustees, advisors and controlling persons (each, an “Indemnitee”) harmless (without duplication of amounts indemnified under Section 4.10 or 4.11) from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement, the other Loan Documents (regardless of whether any Loan Party is or is not a party to any such actions or suits) and any such other documents, including any of the foregoing relating to the use of proceeds of the Loans or the violation of, noncompliance with or liability under, any Environmental Law applicable to the operations of any Group Member or any facility or property at any time leased, owned or operated or in any way used by any Group Member and the reasonable fees and expenses of legal counsel in connection with claims, actions or proceedings by any Indemnitee against any Loan Party under any Loan Document (all the foregoing in this clause (d), collectively, the “Indemnified Liabilities”); provided that the Borrower shall have no obligation hereunder to any Indemnitee with respect to Indemnified Liabilities to the extent such Indemnified Liabilities are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of such Indemnitee. Without limiting the foregoing, to the extent permitted by applicable law, and except with respect to any Indemnitee, to the extent involving Indemnified Liabilities subject to the above proviso concerning gross negligence or willful misconduct by such Indemnitee, the Borrower agrees not to assert and to cause its Subsidiaries not to assert, and hereby waives and agrees to cause its Subsidiaries to waive, all rights for contribution or any other rights of recovery with respect to all claims, demands, penalties, fines, liabilities, settlements, damages, costs and expenses of whatever kind or nature, under or related to Environmental Laws, that any of them might have by statute or otherwise against any Indemnitee. All amounts due under this Section 11.5 shall be payable not later than 10 Business Days after written demand therefor. Statements payable by the Borrower pursuant to this Section 11.5 shall be submitted to Leo E. McNeil at the address of the Borrower set forth in Section 11.2, or to such other Person or address as may be hereafter designated by the Borrower in a written notice to the Administrative Agent. The agreements in this Section 11.5 shall survive repayment of the Loans and all other amounts payable hereunder.

 

11.6 Successors and Assigns; Participations and Assignments.  (a)  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any affiliate of the Issuing Lender that issues any Letter of Credit), except that (i) the Borrower may not assign or 

 

  

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otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section 11.6.

 

(b) (i)           Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more assignees (each, an “Assignee”) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld) of:

 

(A) the Borrower, provided that no consent of the Borrower shall be required for an assignment to a Lender, an affiliate of a Lender, an Approved Fund (as defined below) or, if an Event of Default has occurred and is continuing, any other Person; and

 

(B) the Administrative Agent, provided that no consent of the Administrative Agent shall be required for an assignment of all or any portion of a Term Loan to a Lender, an affiliate of a Lender or an Approved Fund; and

 

(C) in the case of any assignment of a Revolving Commitment, the Issuing Lender and the Swingline Lender.

 

 

(ii) Assignments shall be subject to the following additional conditions:

 

(A) except in the case of an assignment to a Lender, an affiliate of a Lender or an Approved Fund or an assignment of the entire remaining amount of the assigning Lender’s Commitments or Loans under any Facility, the amount of the Commitments or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date) shall not be less than $5,000,000 (or in the case of the Term Facility, $1,000,000) unless the Borrower and the Administrative Agent otherwise consent; provided that (1) no such consent of the Borrower shall be required if an Event of Default has occurred and is continuing and (2) such amounts shall be aggregated in respect of each Lender and its affiliates or Approved Funds, if any;

 

(B) (1) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500 and (2) the assigning Lender shall have paid in full any amounts owing by it to the Administrative Agent;

 

(C) the Assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an administrative questionnaire in which the Assignee designates one or more credit contacts to whom all syndicate-level information (which may contain material non-public information about the Borrower and its 

 

  

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Affiliates and their related parties or their respective securities) will be made available and who may receive such information in accordance with the assignee’s compliance procedures and applicable laws, including federal and state securities laws;

 

(D) the Assignee shall not be a competitor of the Borrower or an affiliate of any such competitor; and

 

(E) in the case of an assignment by a Lender to a related CLO (as defined below) managed or administered by such Lender or an Affiliate of such Lender, the assigning Lender shall retain the sole right to approve any amendment, modification or waiver of any provision of this Agreement and the other Loan Documents, provided that the Assignment and Assumption between such Lender and such CLO may provide that such Lender will not, without the consent of such CLO, agree to any amendment, modification or waiver that (1) requires the consent of each Lender directly affected thereby pursuant to the proviso to the second sentence of Section 11.1 and (2) directly affects such CLO.

 

For the purposes of this Section 11.6, the terms “Approved Fund”, “CLO” and “competitor” have the following meanings:

 

“Approved Fund” means (a) with respect to any Lender, a CLO managed or administered by such Lender or an Affiliate of such Lender, and (b) with respect to any Lender that is a fund which invests in bank loans and similar extensions of credit, any other fund that invests in bank loans and similar extensions of credit and is managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor.

 

“CLO” means any entity (whether a corporation, partnership, trust or otherwise) that is engaged in making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course.

 

“competitor” means (a) a Person engaged primarily in the same or similar line of business as the Borrower, and (b) a Person (i) holding more than 5% or more of the voting rights of a competitor of the Borrower or (ii) having direct or indirect control or being under common control of a competitor of the Borrower.

 

(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(v) below, from and after the effective date specified in each Assignment and Assumption, the Assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 4.9, 4.10, 4.11 and 10.7). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 

 

  

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11.6 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c) of this Section.

 

(iv) The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices in New York City a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amount of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent, the Issuing Lender and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower, the Issuing Lender and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

 

(v) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an Assignee, the Assignee’s completed administrative questionnaire (unless the Assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section, and any written consent to such assignment required by paragraph (b) of this Section 11.6, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

 

(c)   (i)  Any Lender may, without the consent of the Borrower or the Administrative Agent, sell participations to one or more banks or other entities (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations (c) no Participant shall be a competitor of the Borrower or an affiliate of any such competitor and (D) the Borrower, the Administrative Agent, the Issuing Lender, the Swingline Lender and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver that (1) requires the consent of each Lender directly affected thereby pursuant to the proviso to the second sentence of Section 11.1 and (2) directly affects such Participant. Subject to paragraph (c)(ii) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 4.9, 4.10 and 4.11 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section 11.6. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 11.7(b) as though it were a Lender, provided such Participant shall be subject to Section 11.7(a) as though it were a Lender.  Each Lender that sells a participation shall, acting solely for this purpose as an agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal 

 

  

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amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under this Agreement (the “Participant Register”).  The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.

 

(ii) A Participant shall not be entitled to receive any greater payment under Section 4.9 or 4.10 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent. Any Participant that is a Non-U.S. Lender shall not be entitled to the benefits of Section 4.10 unless such Participant complies with Section 4.10(d).

 

(d) Any Lender may, without the consent of the Borrower or the Administrative Agent, at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section 11.6(d) shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or Assignee for such Lender as a party hereto. In the case of any Lender that is a fund that invests in bank loans, such Lender may, without the consent of the Borrower or the Administrative Agent, collaterally assign or pledge all or any portion of its rights under this Agreement, including the Loans or Notes or any other instrument evidencing its rights as a Lender under this Agreement, to any holder or, trustee for, or any other representative of holders of, obligations owed or securities issued, by such fund, as security for such obligations or securities; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or Assignee for such Lender as a party hereto.

 

(e) The Borrower, upon receipt of written notice from the relevant Lender, agree to issue Notes to any Lender requiring Notes to facilitate transactions of the type described in paragraph (d) above.

 

(f) Notwithstanding the foregoing, any Conduit Lender may assign any or all of the Loans it may have funded hereunder to its designating Lender without the consent of the Borrower or the Administrative Agent and without regard to the limitations set forth in Section 11.6(b). The Borrower, each Lender and the Administrative Agent hereby confirms that it will not institute against a Conduit Lender or join any other Person in instituting against a Conduit Lender any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding under any state bankruptcy or similar law, for one year and one day after the payment in full of the latest maturing commercial paper note issued by such Conduit Lender; provided, however, that each Lender designating any Conduit Lender hereby agrees to indemnify, save and hold harmless each other party hereto for any loss, cost, damage or expense arising out of its inability to institute such a proceeding against such Conduit Lender during such period of forbearance.

 

11.7 Adjustments; Set-off.  (a)  Except to the extent that this Agreement expressly provides for payments to be allocated to a particular Lender or to the Lenders under a 

 

  

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particular Facility, if any Lender (a “Benefitted Lender”) shall receive any payment of all or part of the Obligations owing to it (other than in connection with an assignment made pursuant to Section 11.6), or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 9(f), or otherwise), in a greater proportion than any such payment to or collateral received by any other Lender, if any, in respect of the Obligations owing to such other Lender, such Benefitted Lender shall purchase for cash from the other Lenders a participating interest in such portion of the Obligations owing to each such other Lender, or shall provide such other Lenders with the benefits of any such collateral, as shall be necessary to cause such Benefitted Lender to share the excess payment or benefits of such collateral ratably with each of the Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such Benefitted Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest.

 

(b) In addition to any rights and remedies of the Lenders provided by law, each Lender shall have the right, without prior notice to the Borrower, any such notice being expressly waived by the Borrower to the extent permitted by applicable law, upon any amount becoming due and payable by the Borrower hereunder (whether at the stated maturity, by acceleration or otherwise), to set off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Lender or any branch or agency thereof to or for the credit or the account of the Borrower. Each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such setoff and application made by such Lender; provided that the failure to give such notice shall not affect the validity of such setoff and application.

 

11.8 Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed signature page of this Agreement by e-mail or facsimile transmission shall be effective as delivery of a manually executed counterpart hereof. A set of the copies of this Agreement signed by all the parties shall be lodged with the Borrower and the Administrative Agent.

 

11.9 Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

11.10 Integration. This Agreement and the other Loan Documents represent the entire agreement of the Borrower, the Agents and the Lenders with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by any Agent or any Lender relative to subject matter hereof not expressly set forth or referred to herein or in the other Loan Documents.

 

  

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11.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.

 

11.12 Submission To Jurisdiction; Waivers. The Borrower hereby irrevocably and unconditionally:

 

(a) submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the courts of the State of New York, the courts of the United States for the Southern District of New York, and appellate courts from any thereof;

 

(b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;

 

(c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to the Borrower, at the address set forth in Section 11.2 or at such other address of which the Administrative Agent shall have been notified pursuant thereto;

 

(d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and

 

(e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section any special, exemplary, punitive or consequential damages.

 

11.13 Acknowledgments. The Borrower hereby acknowledges that:

 

(a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents;

 

(b) no Agent or Lender has any fiduciary relationship with or duty to the Borrower arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between the Agents and Lenders, on one hand, and the Borrower, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and

 

(c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Lenders or among the Borrower and the Lenders.

 

  

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11.14 Releases of Guarantees and Liens.  (a)  Notwithstanding anything to the contrary contained herein or in any other Loan Document, the Administrative Agent is hereby irrevocably authorized by each Lender (without requirement of notice to or consent of any Lender except as expressly required by Section 11.1) to take any action requested by the Borrower having the effect of releasing any Collateral or Guarantee Obligations (i) to the extent necessary to permit consummation of any transaction not prohibited by any Loan Document or that has been consented to in accordance with Section 11.1 or (ii) under the circumstances described in paragraph (b) below.

 

(b) At such time as the Term Loans, the Revolving Loans, the Swingline Loans, the Reimbursement Obligations and the other obligations to the Administrative Agent and the Lenders under the Loan Documents (other than obligations under or in respect of Hedge Agreements) shall have been paid in full, the Commitments under the Term Facility and the Revolving Facility have been terminated, no Letters of Credit shall be outstanding and the obligations to any Qualified Counterparty under or in respect of Specified Hedge Agreements shall have been cash collateralized or paid in full, the Collateral shall be released from the Liens created by the Security Documents, and the Security Documents and all obligations (other than those expressly stated to survive such termination) of the Administrative Agent and each Loan Party under the Security Documents shall terminate, all without delivery of any instrument or performance of any act by any Person, provided that the Administrative Agent agrees upon such termination to promptly deliver to the Borrower UCC-3 termination statements, releases of Intellectual Property security instruments, discharges of existing Mortgages, and other release and termination documents as are reasonably requested by such Borrower to discharge the Liens as a matter of public record.

 

11.15 Confidentiality. Each Agent and each Lender agrees to keep confidential all non-public information provided to it by any Loan Party pursuant to or in connection with this Agreement that is designated by such Loan Party as confidential; provided that nothing herein shall prevent any Agent or any Lender from disclosing any such information (a) to any Agent, any other Lender or any Affiliate of a Lender, (b) subject to an agreement to comply with the provisions of this Section 11.15, to any actual or prospective Transferee or any direct or indirect counterparty to any Hedge Agreement (or any professional advisor to such counterparty), (c) to its employees, directors, agents, attorneys, accountants and other professional advisors or those of any of its affiliates, (d) upon the request or demand of any Governmental Authority, (e) in response to any order of any court or other Governmental Authority or as may otherwise be required pursuant to any Requirement of Law, (f) if requested or required to do so in connection with any litigation or similar proceeding, (g) that has been publicly disclosed, (h) to the National Association of Insurance Commissioners or any similar organization or any nationally recognized rating agency that requires access to information about a Lender’s investment portfolio in connection with ratings issued with respect to such Lender, (i) in connection with the exercise of any remedy hereunder or under any other Loan Document, or (j) if agreed by the Borrower in its sole discretion, to any other Person; provided that prior to disclosure pursuant to clauses (d), (e) or (f) above, the relevant party shall give reasonable prior notice of such disclosure to the Borrower to give the Borrower an opportunity to seek a protective order.

 

Each Lender acknowledges that information furnished to it pursuant to this Agreement or the other Loan Documents may include material non-public information 

 

  

96

  

 

concerning the Borrower and its Affiliates and their related parties or their respective securities, and confirms that it has developed compliance procedures regarding the use of material non-public information and that it will handle such material non-public information in accordance with those procedures and applicable law, including Federal and state securities laws.

 

All information, including requests for waivers and amendments, furnished by the Borrower or the Agents pursuant to, or in the course of administering, this Agreement or the other Loan Documents will be syndicate-level information, which may contain material non-public information about the Borrower and its Affiliates and their related parties or their respective securities.  Accordingly, each Lender represents to the Borrower and the Agents that it has identified in its administrative questionnaire a credit contact who may receive information that may contain material non-public information in accordance with its compliance procedures and applicable law, including Federal and state securities laws.

 

11.16 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENTS AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

  

97

  

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.

 

	 	BUTLER ANIMAL HEALTH SUPPLY, LLC, as Borrower
	 	 
	 	By: 	/s/Leo E. McNeil
	  	  	
Name: Leo E. McNeil

Title: Executive Vice President and Chief Financial Officer

 

 

	  	
J.P. MORGAN SECURITIES INC., as Sole Lead Arranger and Sole Bookrunner

	 	By:	/s/Stathis Karanikolaidis
	  	  	
Name: Stathis Karanikolaidis

Title: Executive Director

 

 

	  	
JPMORGAN CHASE BANK, N.A., as Administrative Agent and Lender

	 	
By:

	/s/ Barbara R. Marks
	 	 	 
	  	  	
Name: Barbara R. Marks

Title: Executive Director

 

 

	  	
THE BANK OF TOKYO-MITSUBISHI,

as Lender

	 	 
	 	
By:

	/s/ Brian McNany
	  	  	
Name: Brian McNany

Title: Assistant Vice President

 

 

	  	
TORONTO DOMINION (NEW YORK) LLC

As Lender

	 	 
	 	By:	/s/Debbi L. Brito
	  	  	
Name: Debbi L. Brito

Title: Authorized Signatory

 

 

[Signature Page to the Butler Credit Agreement]

 

  

  

  

 

	 	
RAYMOND JAMES BANK FSB,

as Lender

	 	 	 
	 	By:	/s/ Steven Paley
	  	  	
Name: Steven Paley

Title: Senior Vice President

 

 

	  	
THE HUNTINGTON NATIONAL BANK

as Lender

	 	 
	 	By:	/s/Jeff D. Blendick
	  	  	
Name: Jeff D. Blendick

Title: Vice President

 

 

	  	
U.S. BANK N.A., as Lender

	 	 
	 	By:	/s/Nathan M. Hall
	  	  	
Name: Nathan M. Hall

Title: AVP

 

 

	  	
HS FINANCE COMPANY, LLC, as Lender

	 	 
	 	By:	/s/Steven Paladino
	  	  	
Name: Steven Paladino

Title: Manager

 

  

  

  

 

Schedule 1.1

Commitments

	
Lender

	 	
Revolving Commitment

($ millions)

	 	 	
Term 

Commitment

($ millions)

	 
	
JP Morgan Chase & Co.

	 	 7.50	 	 	 248.50	 
	
Toronto Dominion Bank

	 	 4.50	 	 	 8.00	 
	
Huntington National Bank

	 	 4.50	 	 	 5.00	 
	
Raymond James Bank

	 	 4.50	 	 	 8.00	 
	
U.S. Bank National Association

	 	 4.50	 	 	 5.00	 
	
Bank of Tokyo-Mitsubishi

	 	 4.50	 	 	 8.00	 
	
HS Finance Company, LLC

	 	 0.00	 	 	 37.50	 

  

  

  

Schedule 5.1(b)(i)

Exceptions to NLS Financials

The following items modify the representations contained in Section 5.1(b)(i):

	
  

	
a.

	
Insurance charges are allocated to National Logistics Services, LLC (“NLS”) from Henry Schein, Inc.’s (“Schein”) corporate risk management group.

	
  

	
b.

	
Expenses related to the HR resources function at NLS are charged through an intercompany transaction.

	
  

	
c.

	
Rebates, which are managed by Schein on a company-wide basis, are allocated to NLS.

	
  

	
d.

	
Medical administration allocation charges are included in the NLS financials. These charges reflect an allocation of costs and expenses of certain Schein medical executives.

	
  

	
e.

	
NLS employees are a part of Schein’s global benefits plan programs which are managed at the corporate level, as such certain portions of employee benefit costs are allocated to NLS.

	
  

	
f.

	
Inventories are not adjusted for vendor rebates.

 

  

  

  

Schedule 5.1(b)(ii)-1

Exceptions to Core Vet Financials

With regard to Section 5.1(b)(ii)-1, see ** on Schedule 5.1(b)(ii)-2.

Inventories exclude any inventory reserves and any adjustments for purchase discounts and vendor rebates.

  

  

  

Schedule 5.1(b)(ii)-2

Schein Allocation Methodologies

The Core Vet Financials were prepared in connection with the Transaction and are derived from the books and records of Schein.  As such, the Core Vet Financials are subject to Schein’s allocation methodologies including:

Costs allocated include elements of selling, general & administrative expenses, and certain elements within total costs of goods sold.

Certain expenses, including Purchasing, are allocated on a percentage of sales.

Certain expenses are allocated based on invoice “lines”, including: Distribution, Customer Service, Financial Operations and Other G&A.

** Other charges are based on direct activity, including finance charges (credit card) and telecom expenses.

  

  

  

 

Schedule 5.1(b)(ii)-3

Global SG&A Costs

For the fiscal year 2008, Schein’s SG&A expenses, on a global basis (“Global SG&A Costs”) were allocated substantially as follows:

Henry Schein, Inc.

Summary of SG&A Expenses

$$ in millions

	
Global SG&A costs

	 	 	1,442	 
	
Less Technology

	 	 	(40	)
	
Global SG&A costs – Healthcare Distribution Segment

	 	 	1,402	 
	
Less:

	 	 	 	 
	
International

	 	 	(588	)
	
Dental

	 	 	(367	)
	
Medical

	 	 	(130	)
	
Other non-vet US Businesses

	 	 	(72	)
	
 (1) Corporate

	 	 	(123	)
	
Subtotal, ex-Animal Health & Infrastructure costs

	 	 	122	 
	  	 	 	 	 
	
NLS/Avimark

	 	 	(25	)
	
HSAH Divisional

	 	 	(7	)
	
Infrastructure costs subject to allocation

	 	 	90	 
	  	 	 	 	 

	
(1)

	
Corporate costs include the following functions which do not provide services or benefits to HSAH or such services are provided by NLS:

Corporate Business Development

Corporate Finance & Accounting

Corporate Legal & Regulatory

Corporate Human Resources

Corporate Information Services

Corporate Executive Administration

These functions have approximately 550 people associated with them.

 

  

  

  

Schedule 5.4

Consents, Authorizations, Filings and Notices

NONE.

 

 

  

  

  

Schedule 5.15

Subsidiaries

Butler Animal Health Holding Company LLC

	
 

Subsidiary

	
Jurisdiction and 

Entity Type

	
# of Units 

Owned

	
Total Units 

Outstanding

	
% of 

Interest

	
Butler Animal Health Supply, LLC

	
Delaware limited liability company

	
N/A

	
N/A

	
100%

Butler Animal Health Supply, LLC

NONE.

  

  

  

Schedule 5.19(a)

UCC Filing Jurisdictions

	
Entity

	
Jurisdiction

	
Filing Office

	
Butler Animal Health Holding Company LLC

	
Delaware

	
Secretary of State of Delaware

	
Butler Animal Health Supply, LLC

	
Delaware

	
Secretary of State of Delaware

 

  

  

  

Schedule 5.21

Deposit Accounts

	 	 	
Type of Account

	 	
Name & Address of

Financial Institutions

	
Grantor

	 	 	 	 
	
Butler Animal Health

Holding Company LLC

	 	
Deposit (Operating)

	 	
JPMorgan Chase Bank

100 East Broad Street

Columbus, OH 43271

	 	 	 	 	 
	 	 	 	 	 
	
Grantor

	 	
Type of Account

	 	
Name & Address of

Financial Institutions

	 	 	 	 	 
	
Butler Animal Health Supply, LLC

	 	
Deposit: (i) Operating; (ii)

Secured Interest and (iii)

Controlled Disbursement

	 	
Harris Bank, N.A.

111 West Monroe Street

Chicago, IL 60603

	 	 	 	 	 
	   

 

	 	
Deposit (Local Account)

	 	
JPMorgan Chase Bank

100 East Broad Street

Columbus, OH 43271

	 	 	 	 	 
	
 

	 	
Benefit (Dental Claims

(MetLife) and Medical Claims

(United Healthcare))

	 	
JPMorgan Chase Bank

177 South Commons Drive

Aurora, IL 60504

	 	 	 	 	 
	  	 	
Benefit (Benefit Claims

(Cigna))

	 	
Citibank Delaware

One Penn’s Way

New Castle, DE 19720

	 	 	 	 	 
	  	 	
Credit Card Processing

	 	
United Bank & Trust Company

100 United Drive

Versailles, KY 40383

 

  

  

  

Schedule 6.1(c)

Governmental and Third Party Approvals

NONE.

  

  

  

Schedule 8.2(d)

Existing Indebtedness

NONE.

  

  

  

Schedule 8.3(f)

 

Existing Liens

NONE.

  

  

  

Schedule 8.6

Calculation of Permitted Tax Distributions

The amount of Tax Distributions which are permitted for any period shall be equal to the amount computed for such period as the total U.S. federal, state and local income and franchise taxes, including interest, additions to taxes and penalties thereto (which are not imposed as a result of any member of Holdings’ failure to file any tax returns or to pay taxes when due) for which the members of Holdings would be liable if (x) the members’ income were only items of income, gain, loss, deduction or credit allocated to them by Holdings for the period beginning on the first day of such period and ending on the last day of such period (“Member Income”) and (y) the tax rates applied to such Member Income were the Applicable Tax Rates described below.

 

For purposes of the foregoing:

 

(a)  “Applicable Tax Rate” means, for a Member, (x) the Corporate Tax Rate or (y) the Individual Tax Rate, but only if such Member is (A) an individual or (B) a (i) pass-through tax entity such that its income is taxed to its owners and (ii) one or more of its ultimate owners is an individual or a trust for the benefit of one or more individuals that is required to report income of Holdings on his or its tax return and the Individual Tax Rate is greater than the Corporate Rate.

 

(b)  “Corporate Tax Rate” means the highest marginal corporate U.S. federal rates imposed by Section 11 of the Code and by the equivalent provisions of state and local corporate income and franchise tax law (taking into account the allocation and apportionment of Holdings’ income to each state and/or locality, to which Holdings’ income is ultimately allocated or apportioned).

 

(c)  “Individual Tax Rate” means the greater of (i) the highest marginal combined United States federal and state individual income tax rate for an individual resident in the State of New York (adjusted for deductibility or credit of state income taxes from federal taxes) and (ii) the highest marginal combined United States federal, state and local individual income tax rate for an individual resident in Dublin, Ohio (adjusted for the deductibility or credit of state and local income taxes from federal and/or state taxes).

 

(d)  For federal income tax purposes, the benefits of the deductibility of state income taxes in effect for any period will be taken into account including any applicable limitations thereon.

 

(e)  Computations shall be made on an annual basis, but interim calculations may be made on a good faith basis to permit Tax Distributions to Members to make estimated tax payments from time to time.

 

(f)  Tax Distributions shall take into account adjustments to Member Income as reflected on filed original or amended tax returns of Holdings or as a result of the final resolution of an audit by a governmental authority with respect to Holdings.  If Member Income is decreased pursuant to the previous sentence, then each Member shall reimburse Holdings in an amount equal to the Tax Distribution previously made that is attributable to such decrease by offsetting the next succeeding Tax Distribution that follows the date on which such decrease is finally determined, with any remaining reimbursement, if any, to be applied to succeeding Tax Distributions until such amount has been fully reimbursed.

  

  

  

Schedule 8.8(i)

Existing Investments

NONE.

  

  

  

Schedule 8.9(h)

Transactions with Affiliates

Omnibus Agreement, dated as of November 29, 2009, by and among Henry Schein, Inc., National Logistics Services, LLC, Winslow Acquisition Company, Butler Animal Health Holding Company LLC, Butler Animal Health Supply, LLC, Oak Hill Capital Partners II, L.P., Oak Hill Capital Management Partners II, L.P., W.A. Butler Company, Darby Group Companies, Inc., Burns Veterinary Supply, Inc. and the Management Members party thereto; and the other Transaction Documents (as defined in the Omnibus Agreement).

 

Contribution Agreement, dated as of November 29, 2009, by and among Oak Hill Capital Partners, II, L.P., Oak Hill Capital Management Partners II, L.P., Burns Veterinary Supply, Inc., Butler Animal Health Holding Company LLC and the Management Members party thereto.

  

  

  

Schedule 8.16

Material Contracts

The contracts identified in Schedule 8.9(h) hereof.

  

  

  

 

EXHIBIT A

 

FORM OF

ASSIGNMENT AND ASSUMPTION

 

Reference is made to the Credit Agreement, dated as of December 31, 2009 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Butler Animal Health Supply, LLC (the “Borrower”), the Lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent for the Lenders (in such capacity, the “Administrative Agent”).  Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

The Assignor identified on Schedule l hereto (the “Assignor”) and the Assignee identified on Schedule l hereto (the “Assignee”) agree as follows:

 

1. The Assignor hereby irrevocably sells and assigns to the Assignee without recourse to the Assignor, and the Assignee hereby irrevocably purchases and assumes from the Assignor without recourse to the Assignor, as of the Effective Date (as defined below), the interest described in Schedule 1 hereto (the “Assigned Interest”) in and to the Assignor’s rights and obligations under the Credit Agreement with respect to those credit facilities contained in the Credit Agreement as are set forth on Schedule 1 hereto (individually, an “Assigned Facility”; collectively, the “Assigned Facilities”), in a principal amount for each Assigned Facility as set forth on Schedule 1 hereto.

 

2. The Assignor (a) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or with respect to the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement, any other Loan Document or any other instrument or document furnished pursuant thereto, other than that the Assignor has not created any adverse claim upon the interest being assigned by it hereunder and that such interest is free and clear of any such adverse claim and (b) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower, any of its Subsidiaries, any of its Affiliates or any other obligor or the performance or observance by the Borrower, any of its Subsidiaries, any of its Affiliates or any other obligor of any of their respective obligations under the Credit Agreement or any other Loan Document or any other instrument or document furnished pursuant hereto or thereto.

 

3. The Assignee (a) represents and warrants that it is legally authorized to enter into this Assignment and Assumption; (b) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements delivered pursuant to Section 5.1 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption; (c) agrees that it will, independently and without reliance upon the Assignor, the Agents or any Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement, the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; (d) appoints and authorizes the Agents to take such action as agent on its behalf and to exercise such powers and discretion under the Credit Agreement, the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto as are delegated to the Agents by the terms thereof, together with such powers as are incidental thereto; (e) agrees that it will be bound by the provisions of the Credit Agreement and will perform in accordance with its terms all the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender including, if it is organized under the laws of a jurisdiction outside the United States, its obligation pursuant to Section 4.10(d) of the Credit Agreement; (f) confirms that it is a financial institution or an entity that has and will continue to have the ability to fund Loans in the ordinary course of its business; and (g) confirms that it is not a competitor of the Borrower or an Affiliate of any such competitor.

 

  

  

  

 

4. The effective date of this Assignment and Assumption shall be the Effective Date of Assignment described in Schedule 1 hereto (the “Effective Date”).  Following the execution of this Assignment and Assumption, it will be delivered to the Administrative Agent for acceptance by it and recording by the Administrative Agent pursuant to the Credit Agreement, effective as of the Effective Date (which shall not, unless otherwise agreed to by the Administrative Agent, be earlier than five Business Days after the date of such acceptance and recording by the Administrative Agent).

 

5. Upon such acceptance and recording, from and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to the Effective Date and to the Assignee for amounts which have accrued subsequent to the Effective Date.

 

6. From and after the Effective Date, (a) the Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment and Assumption, have the rights and obligations of a Lender thereunder and under the other Loan Documents and shall be bound by the provisions thereof and (b) the Assignor shall, to the extent provided in this Assignment and Assumption, relinquish its rights and be released from its obligations under the Credit Agreement.

 

7. THIS ASSIGNMENT AND ASSUMPTION SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Assumption to be executed as of the date first above written by their respective duly authorized officers on Schedule 1 hereto.

 

  

  

  

 

Schedule 1

to Assignment and Assumption with respect to

the Credit Agreement, dated as of December 31, 2009,

among Butler Animal Health Supply, LLC, as Borrower,

the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent

 

Name of Assignor: _________________________

 

Name of Assignee: _________________________

 

Effective Date of Assignment: _________________

 

 

 

	Credit Facility Assigned	Principal

Amount Assigned

	
Commitment Percentage Assigned1

	 	 	 
	
[Revolving Loans][Term Loans]

	$__________	  _____.__________%

 

	 	 
	[Name of Assignee]	 	 	[Name of Assignor]	 
	 	 	 	 	 
	By:	 	 	 	By: 	 	 
	Name:	 	 	Name: 	 
	Title:	 	 	Title:	 
	 	 	 	 	 
	
Accepted for Recordation in the Register:

	 	
Required Consents (if any):

	 
	 	 	 	 	 
	JPMorgan Chase Bank, N.A., as 

Administrative Agent

	 	
[Butler Animal Health Supply, LLC]

	 
	 	 	 	 	 
	By:	 	 	 	By: 	 	 
	Name: 	 	 	Name: 	 
	
Title:

	 	 	
Title:

	 
	 	 	 	 	 
	 	 	 	[JPMorgan Chase Bank, N.A., as 

Administrative Agent]

	 
	 	 	 	 	 
	 	 	 	By: 	 	 
	 	 	 	Name: 	 
	 	 	 	
Title:

	 

 

___________________________

1 Calculate the Commitment Percentage to at least 15 decimal places and show as a percentage of the aggregate commitments of all Lenders.

 

  

  

  

 

EXHIBIT B

 

FORM OF

COMPLIANCE CERTIFICATE

 

This Compliance Certificate is delivered pursuant to Section 7.2(b) of the Credit Agreement, dated as of December 31, 2009 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Butler Animal Health Supply, LLC (the “Borrower”), the Lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “Administrative Agent”).  Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

1. I am the duly elected, qualified and acting Chief Financial Officer of the Borrower.

 

2. I have reviewed and am familiar with the contents of this Certificate.

 

3. I have reviewed the terms of the Credit Agreement and the other Loan Documents and have made or caused to be made under my supervision, a review in reasonable detail of the transactions and condition of the Group Members during the accounting period covered by the financial statements attached hereto as Attachment 1 (the “Financial Statements”).  Such review did not disclose the existence during or at the end of the accounting period covered by the Financial Statements, and I have no knowledge of the existence, as of the date of this Certificate, of any condition or event which constitutes a Default or Event of Default[, except as set forth below].

 

4. Attached hereto as Attachment 2 are the computations showing compliance with the covenants set forth in Sections 8.1(a) and 8.1(b) of the Credit Agreement.

 

  

  

  

 

IN WITNESS WHEREOF, the undersigned has executed this Certificate on behalf of the Borrower as of this _____ day of ____, 20__.

 

	 	
BUTLER ANIMAL HEALTH SUPPLY, LLC

	 
	 	 	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	Name: 	 
	 	 	Title: 	 

 

  

  

  

 

Attachment 1

to Compliance Certificate

 

[Attach Financial Statements]

 

  

  

  

 

Attachment 2

to Compliance Certificate

 

The information described herein is as of ______, ____, and pertains to the period from _________, ____ to ________________ __, ____.

 

 

[Set forth Covenant Calculations]

 

  

  

  

 

EXHIBIT C

 

FORM OF EXEMPTION CERTIFICATE

 

Reference is made to the Credit Agreement, dated as of December 31, 2009 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among  Butler Animal Health Supply, LLC (the “Borrower”), the Lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “Administrative Agent”).  Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.  ______________________ (the “Non-U.S. Lender”) is providing this certificate pursuant to Section 4.10(d) of the Credit Agreement.  The Non-U.S. Lender hereby represents and warrants that:

 

1.  The Non-U.S. Lender is the sole record and beneficial owner of the Loans in respect of which it is providing this certificate.

 

2.  The Non-U.S. Lender is not a “bank” for purposes of Section 881(c)(3)(A) of the Internal Revenue Code of 1986, as amended (the “Code”).  In this regard, the Non-U.S. Lender further represents and warrants that:

 

	 	
(a)  

	
the Non-U.S. Lender is not subject to regulatory or other legal requirements as a bank in any jurisdiction; and

 

	 	
(b  

	
the Non-U.S. Lender has not been treated as a bank for purposes of any tax, securities law or other filing or submission made to any Governmental Authority, any application made to a rating agency or qualification for any exemption from tax, securities law or other legal requirements.

 

3.  The Non-U.S. Lender is not a 10-percent shareholder of the Borrower within the meaning of Section 881(c)(3)(B) of the Code.

 

4.  The Non-U.S. Lender is not a controlled foreign corporation receiving interest from a related person within the meaning of Section 881(c)(3)(C) of the Code.

 

IN WITNESS WHEREOF, the undersigned has duly executed this certificate.

 

	 	
[NAME OF NON-U.S. LENDER]

	 
	 	 	 	 
	 	 	 	 
	 	 	 	 	 
	
 

	
By: 

	 	 	 
	 	 	Name: 	 	 
	 	 	Title: 	 	 
	 	 	 	 	 
	 	 	 	Date:	 	 
	 	 	 	 	 

  

  

  

 

EXHIBIT D-1

 

FORM OF TERM NOTE

 

THIS NOTE AND THE OBLIGATIONS REPRESENTED HEREBY MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE CREDIT AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS NOTE AND THE OBLIGATIONS REPRESENTED HEREBY MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT.

 

 

	$______________ 	 New York, New York 
	 	  _________, 20__

 

FOR VALUE RECEIVED, BUTLER ANIMAL HEALTH SUPPLY, LLC, a Delaware limited liability company (the “Borrower”), hereby unconditionally promises to pay to [__________] (the “Lender”) or its registered assigns at the Funding Office specified in the Credit Agreement (as hereinafter defined) in lawful money of the United States and in immediately available funds, the principal amount of (a) [___________] DOLLARS ($[_____]), or, if less, (b) the unpaid principal amount of the Term Loan of the Lender outstanding under the Credit Agreement. The principal amount shall be paid, in the amounts and on the dates specified in Section 2.3 of the Credit Agreement. The Borrower further agrees to pay interest in like money at such Funding Office on the unpaid principal amount hereof from time to time outstanding at the rates and on the dates specified in Section 4.5 of the Credit Agreement.

 

The holder of this Term Note (this “Note”) is authorized to endorse on the schedules annexed hereto and made a part hereof or on a continuation thereof which shall be attached hereto and made a part hereof the date, Type and amount of the Term Loan and the date and amount of each payment or prepayment of principal with respect thereto, each conversion of all or a portion thereof to another Type, each continuation of all or a portion thereof as the same Type and, in the case of Eurodollar Loans, the length of each Interest Period with respect thereto. Each such endorsement shall constitute prima facie evidence of the accuracy of the information endorsed. The failure to make any such endorsement or any error in any such endorsement shall not affect the obligations of the Borrower in respect of the Term Loan.

 

This Note (a) is one of the Notes evidencing the Term Loan under the Credit Agreement, dated as of December 31, 2009 (as may be amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among the Borrower, the several banks and other financial institutions or entities from time to time parties to the Credit Agreement as lenders, J.P. Morgan Securities Inc., as sole lead arranger and sole bookrunner, and JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “Administrative Agent”), (b) is subject to the provisions of the Credit Agreement and (c) is subject to optional and mandatory prepayment in whole or in part as provided in the Credit Agreement. This Note is secured and guaranteed as provided in the Loan Documents. Reference is hereby made to the Loan Documents for a description of the properties and assets in which a security interest has been granted, the nature and extent of the security and the guarantees, the terms and conditions upon which the security interests and each guarantee were granted and the rights of the holder of this Note in respect thereof.

 

  

  

  

 

Upon the occurrence of any one or more of the Events of Default, all principal and all accrued interest then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable, all as provided in the Credit Agreement.

 

All parties now and hereafter liable with respect to this Note, whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive presentment, demand, protest and all other notices of any kind.

 

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN OR IN THE CREDIT AGREEMENT, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AND IN ACCORDANCE WITH THE REGISTRATION AND OTHER PROVISIONS OF SECTION 11.6 OF THE CREDIT AGREEMENT.

 

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

	 	
BUTLER ANIMAL HEALTH SUPPLY, LLC

	 	 	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	Name: 	 
	 	 	Title: 	 

 

  

  

  

 

Schedule A

to Term Note

 

LOANS, CONVERSIONS AND REPAYMENTS OF BASE RATE LOANS

 

	
Date

	
Amount of Base Rate Loans

	
Amount Converted to Base Rate Loans

	
Amount of Principal of Base Rate Loans Repaid

	
Amount of Base Rate Loans Converted to Eurodollar Loans

	
Unpaid Principal Balance of Base Rate Loans

	
Notation Made By

	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  

  

  

  

 

Schedule B

to Term Note

 

LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS

 

	
Date

	
Amount of Eurodollar Loans

	
Amount Converted to Eurodollar Loans

	
Interest Period and Eurodollar Rate with Respect Thereto

	
Amount of Principal of Eurodollar Loans Repaid

	
Amount of Eurodollar Loans Converted to Base Rate Loans

	
Unpaid Principal Balance of Eurodollar Loans

	
Notation Made By

	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  

  

  

  

 

EXHIBIT D-2

 

FORM OF REVOLVING NOTE

 

THIS NOTE AND THE OBLIGATIONS REPRESENTED HEREBY MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE CREDIT AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS NOTE AND THE OBLIGATIONS REPRESENTED HEREBY MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT.

 

	$______________ 	  New York, New York
	 	 _________, 20__ 

 

FOR VALUE RECEIVED, BUTLER ANIMAL HEALTH SUPPLY, LLC, a Delaware limited liability company (the “Borrower”), hereby unconditionally promises to pay to [__________] (the “Lender”) or its registered assigns at the Funding Office specified in the Credit Agreement (as hereinafter defined) in lawful money of the United States and in immediately available funds, the principal amount of (a) [__________] DOLLARS ($[_____]), or, if less, (b) the unpaid principal amount of all Revolving Loans of the Lender outstanding under the Credit Agreement. The principal amount shall be paid in the amounts and on the dates specified in Section 3.1 of the Credit Agreement. The Borrower further agrees to pay interest in like money at such Funding Office on the unpaid principal amount hereof from time to time outstanding at the rates and on the dates specified in Section 4.5 of the Credit Agreement.

 

The holder of this Revolving Note (this “Note”) is authorized to endorse on the schedules annexed hereto and made a part hereof or on a continuation thereof which shall be attached hereto and made a part hereof the date, Type and amount of each Revolving Loan and the date and amount of each payment or prepayment of principal with respect thereto, each conversion of all or a portion thereof to another Type, each continuation of all or a portion thereof as the same Type and, in the case of Eurodollar Loans, the length of each Interest Period with respect thereto. Each such endorsement shall constitute prima facie evidence of the accuracy of the information endorsed. The failure to make any such endorsement or any error in any such endorsement shall not affect the obligations of the Borrower in respect of the Revolving Loans.

 

This Note (a) is one of the Notes evidencing the Revolving Loans under the Credit Agreement, dated as of December 31, 2009 (as may be amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among the Borrower, the several banks and other financial institutions or entities from time to time parties to the Credit Agreement as lenders, J.P. Morgan Securities Inc., as sole lead arranger and sole bookrunner,  and JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “Administrative Agent”), (b), is subject to the provisions of the Credit Agreement and (c) is subject to optional and mandatory prepayment in whole or in part as provided in the Credit Agreement. This Note is secured and guaranteed as provided in the Loan Documents. Reference is hereby made to the Loan Documents for a description of the properties and assets in which a security interest has been granted, the nature and extent of the security and the guarantees, the terms and conditions upon which the security interests and each guarantee were granted and the rights of the holder of this Note in respect thereof.

 

  

  

  

 

Upon the occurrence of any one or more of the Events of Default, all principal and all accrued interest then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable, all as provided in the Credit Agreement.

 

All parties now and hereafter liable with respect to this Note, whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive presentment, demand, protest and all other notices of any kind.

 

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN OR IN THE CREDIT AGREEMENT, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AND IN ACCORDANCE WITH THE REGISTRATION AND OTHER PROVISIONS OF SECTION 11.6 OF THE CREDIT AGREEMENT.

 

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

	 	BUTLER ANIMAL HEALTH SUPPLY, LLC
	 	 	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	Name: 	 
	 	 	Title: 	 
	 	 	 	 

 

  

  

  

 

Schedule A

to Revolving Note

 

LOANS, CONVERSIONS AND REPAYMENTS OF BASE RATE LOANS

 

	
Date

	
Amount of Base Rate Loans

	
Amount Converted to Base Rate Loans

	
Amount of Principal of Base Rate Loans Repaid

	
Amount of Base Rate Loans Converted to Eurodollar Loans

	
Unpaid Principal Balance of Base Rate Loans

	
Notation Made By

	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  

 

  

  

  

 

Schedule B

to Revolving Note

 

LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS

	
Date

	
Amount of Eurodollar Loans

	
Amount Converted to Eurodollar Loans

	
Interest Period and Eurodollar Rate with Respect Thereto

	
Amount of Principal of Eurodollar Loans Repaid

	
Amount of Eurodollar Loans Converted to Base Rate Loans

	
Unpaid Principal Balance of Eurodollar Loans

	
Notation Made By

	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  

  

  

  

EXHIBIT D-3

 

FORM OF SWINGLINE NOTE

 

THIS NOTE AND THE OBLIGATIONS REPRESENTED HEREBY MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE CREDIT AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS NOTE AND THE OBLIGATIONS REPRESENTED HEREBY MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT.

 

	$______________ 	  New York, New York
	 	  _________, 20__

 

FOR VALUE RECEIVED, BUTLER ANIMAL HEALTH SUPPLY, LLC, a Delaware limited liability company (the “Borrower”), hereby unconditionally promises to pay to [__________] (the “Lender”) or its registered assigns at the Funding Office specified in the Credit Agreement (as hereinafter defined) in lawful money of the United States and in immediately available funds, the principal amount of (a) [__________] DOLLARS ($[_____]), or, if less, (b) the unpaid principal amount of all Swingline Loans of the Lender outstanding under the Credit Agreement. The principal amount shall be paid in the amounts and on the dates specified in Section 3.3 of the Credit Agreement. The Borrower further agrees to pay interest in like money at such Funding Office on the unpaid principal amount hereof from time to time outstanding at the rates and on the dates specified in Section 4.5 of the Credit Agreement.

 

The holder of this Swingline Note (this “Note”) is authorized to endorse on the schedules annexed hereto and made a part hereof or on a continuation thereof which shall be attached hereto and made a part hereof the date, amount of each Swingline Loan and the date and amount of each payment or prepayment of principal with respect thereto. Each such endorsement shall constitute prima facie evidence of the accuracy of the information endorsed. The failure to make any such endorsement or any error in any such endorsement shall not affect the obligations of the Borrower in respect of the Swingline Loans.

 

This Note (a) evidences the Swingline Loans under the Credit Agreement, dated as of December 31, 2009 (as may be amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among the Borrower, the several banks and other financial institutions or entities from time to time parties to the Credit Agreement as lenders, J.P. Morgan Securities Inc., as sole lead arranger and sole bookrunner, and JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “Administrative Agent”), (b) is subject to the provisions of the Credit Agreement and (c) is subject to optional and mandatory prepayment in whole or in part as provided in the Credit Agreement. This Note is secured and guaranteed as provided in the Loan Documents. Reference is hereby made to the Loan Documents for a description of the properties and assets in which a security interest has been granted, the nature and extent of the security and the guarantees, the terms and conditions upon which the security interests and each guarantee were granted and the rights of the holder of this Note in respect thereof.

 

  

  

  

 

Upon the occurrence of any one or more of the Events of Default, all principal and all accrued interest then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable, all as provided in the Credit Agreement.

 

All parties now and hereafter liable with respect to this Note, whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive presentment, demand, protest and all other notices of any kind.

 

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN OR IN THE CREDIT AGREEMENT, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AND IN ACCORDANCE WITH THE REGISTRATION AND OTHER PROVISIONS OF SECTION 11.6 OF THE CREDIT AGREEMENT.

 

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

	 	BUTLER ANIMAL HEALTH SUPPLY, LLC
	 	 	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	Name: 	 
	 	 	Title: 	 
	 	 	 	 

 

  

  

  

 

Schedule A

to Swingline Note

 

LOANS, CONVERSIONS AND REPAYMENTS OF BASE RATE LOANS

 

	
Date

	
Amount of Swingline Loans

	
Amount of Principal of Swingline Loans Repaid

	
Unpaid Principal Balance of Base Rate Loans

	
Notation Made By

	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  

 

  

  

  

 

EXHIBIT E

 

FORM OF

CLOSING CERTIFICATE

 

Pursuant to Section 6.1(e) of the Credit Agreement, dated as of December 31, 2009 (the “Credit Agreement”; terms defined therein being used herein as therein defined), among Butler Animal Health Supply, LLC (the “Borrower”), the Lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “Administrative Agent”), the undersigned [INSERT TITLE OF OFFICER] of [INSERT NAME OF LOAN PARTY] (the “Certifying Loan Party”) hereby certifies on behalf of the Certifying Loan Party, and not in any individual capacity, as follows:

 

1. The representations and warranties of the Certifying Loan Party set forth in each of the Loan Documents to which it is a party or which are contained in any certificate furnished by or on behalf of the Certifying Loan Party pursuant to any of the Loan Documents to which it is a party are true and correct in all material respects on and as of the date hereof with the same effect as if made on the date hereof, except for representations and warranties expressly stated to relate to a specific earlier date, in which case such representations and warranties were true and correct as of such earlier date.

 

2. ___________________ is the duly elected and qualified Corporate Secretary of the Certifying Loan Party and the signature set forth for such officer below is such officer’s true and genuine signature.

 

3. No Default or Event of Default has occurred and is continuing as of the date hereof or after giving effect to the Loans to be made on the date hereof and the use of proceeds thereof.  [Borrower only]

 

4. The conditions precedent set forth in Section 6.1 of the Credit Agreement were satisfied as of the Closing Date.

 

The undersigned Corporate Secretary of the Certifying Loan Party certifies as follows:

 

1. There are no liquidation or dissolution proceedings pending or to my knowledge threatened against the Certifying Loan Party, nor has any other event occurred adversely affecting or threatening the continued corporate existence of the Certifying Loan Party.

 

2. The Certifying Loan Party is a [corporation duly incorporated][limited liability company duly formed], validly existing and in good standing, if applicable, under the laws of the jurisdiction of its organization.

 

3. Attached hereto as Annex 1 is a true and complete copy of resolutions duly adopted by the Board of Directors/Board of Managers/Sole Member of the Certifying Loan Party on _________________; such resolutions have not in any way been amended, modified, revoked or rescinded, have been in full force and effect since their adoption to and including the date hereof and are now in full force and effect and are the only corporate proceedings of the Certifying Loan Party now in force relating to or affecting the matters referred to therein.

 

  

  

  

 

4. Attached hereto as Annex 2 is a true and complete copy of the [By-Laws][Operating Agreement][other organizational or governing document] of the Certifying Loan Party as in effect on the date hereof.

 

5. Attached hereto as Annex 3 is a true and complete copy of the [Certificate of Incorporation][Articles of Incorporation][other formation document] of the Certifying Loan Party as in effect on the date hereof.

 

6. Attached hereto as Annex 4 is a true and complete copy of the certificate of good standing of the Certifying Loan Party for its jurisdiction of [incorporation][formation].

 

[7.      Attached hereto as Annex 5 are true and complete copies of the foreign qualifications of the Certifying Loan Party.]

 

[7.][8.]  The following persons are now duly elected and qualified officers of the Certifying Loan Party holding the offices indicated next to their respective names below, and the signatures appearing opposite their respective names below are the true and genuine signatures of such officers, and each of such officers is duly authorized to execute and deliver on behalf of the Certifying Loan Party each of the Loan Documents to which it is a party and any certificate or other document to be delivered by the Certifying Loan Party pursuant to the Loan Documents to which it is a party:

 

 

	 Name	 Office	 Signature
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 

 

IN WITNESS WHEREOF, the undersigned have hereunto set our names as of the date set forth below.

 

 

	 	 	 
	Name:	 	Name:
	Title: 	 	Title:  Corporate Secretary

 

 

Date:  December 31, 2009

 

  

  

  

 

ANNEX 1

 

[Board/Manager/Sole Member Resolutions ]

 

  

  

  

 

ANNEX 2

 

[By-Laws/Operating Agreement/other organizational or governing document]

 

  

  

  

ANNEX 3

 

[Certificate of Incorporation/Articles of Incorporation/other formation document]

 

  

  

  

 

ANNEX 4

 

[Good Standing Certificate]

 

  

  

  

 

ANNEX 5

 

[Foreign Qualifications]exhibit_4-05.htm

  

  

Exhibit 4.05

Form S-8  

SILICON IMAGE, INC.

EMPLOYEE STOCK PURCHASE PLAN

1.  Establishment of Plan.  Silicon Image, Inc. (the "Company") proposes to grant options for pur­chase of the Company's Common Stock to eligible employees of the Company and its Participating Subsidiaries (as hereinafter defined) pursuant to this Employee Stock Purchase Plan (this "Plan").  For purposes of this Plan, "Parent Corporation" and "Subsidiary" shall have the same meanings as "parent corporation" and "subsidiary corporation" in Sections 424(e) and 424(f), respectively, of the Internal Revenue Code of 1986, as amended (the "Code").  "Participating Subsidiaries" are Parent Corporations or Sub­sidiaries that the Board of Directors of the Company (the "Board") designates from time to time as corporations that shall participate in this Plan.  The Company intends this Plan to qualify as an "employee stock purchase plan" under Section 423 of the Code (including any amendments to or replacements of such Section ("Section 423")), and this Plan shall be so construed.  Any term not expressly defined in this Plan but defined for purposes of Section 423 shall have the same definition herein.  As of the amendment and restatement of the Plan on May 18, 2011, a total of 3,555,230 shares of the Company's Common Stock is reserved for issuance under this Plan.  In addition, on each January 1 (commencing with January 1, 2012) the aggregate number of shares of the Company’s Common Stock reserved for issuance under the Plan shall be increased automatically by a number of shares equal to 1% of the total number of outstanding shares of the Company Common Stock on the immediately preceding December 31; provided, that the Board or the Committee may in its sole discretion reduce the amount of the increase in any particular year; and, provided further, that the aggregate number of shares issued over the term of this Plan shall not exceed 11,000,000 shares.  Such number shall be subject to adjustments effected in accordance with Section 14 of this Plan.

2.  Purpose.  The purpose of this Plan is to provide eligible employees of the Company and Participating Subsidiaries with a convenient means of acquiring an equity interest in the Company through payroll deductions, to enhance such employees' sense of participation in the affairs of the Company and Participating Subsidiaries, and to provide an incentive for continued employment.

3.  Administration.  This Plan shall be administered by the Compensation Committee of the Board (the "Committee").  Subject to the provisions of this Plan and the limitations of Section 423 or any successor provision in the Code, all questions of interpretation or application of this Plan shall be determined by the Committee and its decisions shall be final and binding upon all partici­pants.  Members of the Committee shall receive no compensation for their services in connection with the administration of this Plan, other than standard fees as established from time to time by the Board for services rendered by Board members serving on Board committees.  All expenses incurred in connection with the administration of this Plan shall be paid by the Company.

4.  Eligibility.  Any employee of the Company or the Participating Subsidiaries is eligible to participate in an Offering Period (as hereinafter defined) under this Plan except the following:

(a) employees who are not employed by the Company or a Participating Subsidiary (10) days before the beginning of such Offering Period;

 

(b)  employees who are customarily employed for twenty (20) hours or less per week;

 

(c)  employees who are customarily employed for five (5) months or less in a calendar year;

 

(d)  employees who, together with any other person whose stock would be attributed to such employee pursuant to Section 424(d) of the Code, own stock or hold options to purchase stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or any of its Participating Subsidiaries or who, as a result of being granted an option under this Plan with respect to such Offering Period, would own stock or hold options to purchase stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or any of its Participating Subsidiaries; and

 

(e)  individuals who provide services to the Company or any of its Participating Subsidiaries as independent contractors who are reclassified as common law employees for any reason except for federal income and employment tax purposes.

5.  Offering Dates. The offering periods of this Plan (each, an "Offering Period") shall be of approximately six (6) months duration.  The first such Offering Period under the Plan as amended and restated in 2011, shall commence on August 16, 2011, and end on the last business day to occur on or before February 15, 2012, and subsequent Offering Periods shall commence on each February 16 and August 16 thereafter.  The Offering Period that commenced on February 16, 2011, shall continue under its terms and end on August 15, 2011.  Each Offering Period shall consist of a single purchase period (a "Purchase Period") during which payroll deductions of the participants are accumulated under this Plan.  The first business day of each Offering Period is referred to as the "Offering Date".  The last business day of each Offering Period is referred to as the "Purchase Date" and is the end of the Purchase Period.  The Committee shall have the power to change the duration of Offering Periods with respect to offerings without stockholder approval.

6.  Participation in this Plan.  Eligible employees may become participants in an Offering Period under this Plan on the first Offering Date of such Offering Period after satisfying the eligibility requirements by delivering a subscription agreement to the Company not later than five (5) days before such Offering Date.  Notwithstanding the foregoing, the Committee may set a later time for filing the subscription agreement authorizing payroll deduc­tions for all eligible employees with respect to a given Offering Period.  An eligible employee who does not deliver a subscription agreement to the Company by such date after becoming eligible to participate in such Offering Period shall not participate in that Offering Period or any subsequent Offering Period unless such employee enrolls in this Plan by filing a subscription agreement with the Company not later than five (5) days preceding a subsequent Offering Date (or such later time as the Committee may establish).  Once an employee becomes a participant in an Offering Period, such employee will automatically participate in the Offering Period commencing immediately following the last day of the prior Offering Period and is not required to file another subscription agreement to continue participation in this Plan other than following a withdrawal from participation as set forth in Section 11 below.

  

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7.  Grant of Option on Enrollment.  Enrollment by an eligible employee in this Plan with respect to an Offering Period will constitute the grant (as of the Offering Date) by the Company to such employee of an option to purchase on the Purchase Date up to that number of shares of  Common Stock of the Company determined by divid­ing (a) the amount accumulated in such employee's payroll deduction account during such Offering Period by (b) the lower of (i) eighty-five percent (85%) of the fair market value of a share of the Company's Common Stock on the Offering Date (but in no event less than the par value of a share of the Company's  Common Stock), or (ii) eighty-five percent (85%) of the fair market value of a share of the Company's  Common Stock on the Purchase Date (but in no event less than the par value of a share of the Company's  Common Stock), provided, however, that the number of shares of the Company's  Common Stock subject to any option granted pursuant to this Plan shall not exceed the lesser of (x) the maximum number of shares set by the Committee pursuant to Section 10(c) below with respect to the applicable Purchase Date, or (y) the maximum number of shares which may be purchased pursuant to Section 10(b) below with respect to the applicable Purchase Date.  The fair market value of a share of the Com­pany's  Common Stock shall be determined as provided in Section 8 below.

8.  Purchase Price.  The purchase price per share at which a share of Common Stock will be sold in any Offering Period shall be eighty-five percent (85%) of the lesser of:

(a)  The fair market value on the Offering Date; or

(b)  The fair market value on the Purchase Date.

 

For purposes of this Plan, the term "Fair Market Value" means, as of any date, the value of a share of the Company's Common Stock determined as follows:

	
  

	
(a)

	
if such Common Stock is publicly traded and is then listed on a national securities exchange, its closing price on the date of determination on the principal national securities exchange on which the  Common Stock is listed or admitted to trading as reported by The Wall Street Journal or other source designated by the Board or Committee;

	
  

	
(b)

	
if such Common Stock is publicly traded but is not listed or admitted to trading on a national securities exchange, the average of the closing bid and asked prices on the date of determination as reported in The Wall Street Journal or other source designated by the Board or Committee; or

	
  

	
(c)

	
if none of the foregoing is applicable, by the Board or Committee in good faith.

9.  Payment Of Purchase Price; Changes In Payroll Deductions; Issuance Of Shares.

(a)  The purchase price of the shares is accumulated by regular payroll deductions made during each Offering Period.  The deductions are made as a percentage of the participant's compensation in one percent (1%) increments not less than one percent (1%), nor greater than fifteen percent (15%) or such lower limit set by the Committee.  Compensation shall mean all W-2 cash compensation, including, but not limited to, base salary, wages, commissions, overtime, shift premiums and bonuses, plus draws against commissions, provided, however, that for purposes of determining a participant's compensation, any election by such participant to reduce his or her regular cash remuneration under Sections 125 or 401(k) of the Code shall be treated as if the participant did not make such election.  Payroll deductions shall commence on the first payday of the Offer­ing Period and shall continue to the end of the Offering Period unless sooner altered or terminated as provided in this Plan.

(b)  A participant may prospectively increase or decrease the rate of payroll deductions for any upcoming Offering Period by filing with the Company a new authorization for payroll deductions not later than fifteen (15) days before the beginning of such Offering Period.

(c)  A participant may decrease, but not increase, his or her payroll deduction percentage (including to zero) during a Purchase Period by filing with the Company a new authorization regarding upcoming payroll deductions.  Such decrease shall be effective as soon as administratively practicable after the Company's receipt of the request.  Only one such change may be made effective during any Purchase Period.

(d)  All payroll deductions made for a participant are credited to his or her account under this Plan and are deposited with the general funds of the Company.  No interest accrues on the payroll deductions.  All payroll deductions received or held by the Company may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions.

(e)  On each Purchase Date, so long as this Plan remains in effect, and provided that the participant has not timely submitted a signed and completed withdrawal form before that date as provided in Section 11 below, the Company shall apply the funds then in the participant's account to the purchase of whole shares of Common Stock reserved under the option granted to such participant with respect to the Offering Period to the extent that such option is exercisable on the Purchase Date.  The purchase price per share shall be as specified in Section 8 of this Plan.  Any cash remaining in a participant's account after such purchase of shares shall be refunded to such participant in cash, without interest; provided, however that any amount remaining in such participant's account on a Purchase Date which is less than the amount necessary to purchase a full share of Common Stock of the Company shall be carried forward, without inter­est, into the next Offering Period.  In the event that this Plan has been over­sub­scribed, all funds not used to purchase shares on the Purchase Date shall be returned to the participant, without interest.  No Common Stock shall be purchased on a Purchase Date on behalf of any employee whose participation in this Plan has terminated prior to such Purchase Date.

(f)  As promptly as practicable after the Purchase Date, the Company shall issue shares for the participant's benefit representing the shares purchased upon exercise of his or her option.

(g)  A participant's option to purchase shares hereunder is exercisable only by him or her.  The participant will have no interest or voting right in shares covered by his or her option until such option has been exercised.

 

 

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10.  Limitations on Shares to be Purchased.

(a)  No participant shall be entitled to purchase stock under this Plan at a rate which, when aggregated with his or her rights to purchase stock under all other employee stock purchase plans of the Company or any Subsidiary, exceeds $25,000 in fair market value, determined as of the Offering Date (or such other limit as may be imposed by the Code) for each calendar year in which the employee participates in this Plan.  The Company shall automatically suspend the payroll deductions of any participant as necessary to enforce such limit provided that when the Company automatically resumes such payroll deductions, the Company must apply the rate in effect immediately prior to such suspension.

(b)  No more than twice the number of Shares that the participant’s contributions in an Offering Period could have purchased using as the purchase price eighty-five percent (85%) of the Fair Market Value of a Share on the Offering Date of that Offering Period may be purchased by that participant on the Purchase Date of that Offering Period.

(c)  No participant shall be entitled to purchase more than the Maximum Share Amount (as defined below) on any single Purchase Date.  Not less than thirty (30) days prior to the commencement of any Offering Period, the Committee may, in its sole discretion, set a maximum number of shares which may be purchased by any employee at any single Purchase Date (hereinafter the "Maximum Share Amount").  Until otherwise determined by the Committee, there shall be no Maximum Share Amount.  In no event shall the Maximum Share Amount exceed the amounts permitted under Section 10(b) above.  If a new Maximum Share Amount is set, then all participants must be notified of such Maximum Share Amount prior to the commencement of the next Offering Period.  The Maximum Share Amount shall continue to apply with respect to all succeeding Purchase Dates and Offering Periods unless revised by the Committee as set forth above.

(d)  If the number of shares to be purchased on a Purchase Date by all employees participating in this Plan exceeds the number of shares then available for issuance under this Plan, then the Company will make a pro rata allocation of the remaining shares in as uniform a manner as shall be reasonably practicable and as the Committee shall determine to be equitable.  In such event, the Company shall give written notice of such reduction of the num­ber of shares to be purchased under a participant's option to each participant affected.

(e)  Any payroll deductions accumulated in a participant's account which are not used to purchase stock due to the limitations in this Section 10 shall be returned to the participant as soon as practicable after the end of the applicable Offering Period, without interest.

 

11.  Withdrawal.

 

(a)  Each participant may withdraw from an Offering Period under this Plan by signing and delivering to the Company a written notice to that effect on a form provided for such purpose.  Such withdrawal may be elected at any time at least fifteen (15) days prior to the end of an Offering Period.

 

(b)  Upon withdrawal from this Plan, the accumulated payroll deductions shall be returned to the withdrawn participant, without interest, and his or her interest in this Plan shall terminate.  In the event a participant vol­untarily elects to withdraw from this Plan, he or she may not resume his or her participation in this Plan during the same Offering Period, but he or she may participate in any Offering Period under this Plan which commences on a date subsequent to such withdrawal by filing a new authorization for payroll deductions in the same manner as set forth in Section 6 above for initial participation in this Plan.

 

12.  Termination of Employment.  Termination of a participant's employment for any reason, including retirement, death or the failure of a participant to remain an eligible employee of the Company or of a Participating Subsidiary, immediately terminates his or her participation in this Plan.  In such event, the payroll deductions credited to the participant's account will be returned to him or her or, in the case of his or her death, to his or her legal representative, without interest.  For purposes of this Section 12, an employee will not be deemed to have termi­nated employment or failed to remain in the continuous employ of the Company or of a Participating Subsidiary in the case of sick leave, military leave, or any other leave of absence approved by the Board; provided that such leave is for a period of not more than ninety (90) days or reemployment upon the expiration of such leave is guaranteed by con­tract or statute.

13.  Return of Payroll Deductions.  In the event a participant's interest in this Plan is terminated by withdrawal, termination of employment or otherwise, or in the event this Plan is terminated by the Board, the Company shall deliver to the participant all payroll deductions credited to such participant's account.  No interest shall accrue on the payroll deductions of a participant in this Plan.

 

  

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14.  Capital Changes.  Subject to any required action by the stockholders of the Company, the number of shares of  Common Stock covered by each option under this Plan which has not yet been exercised and the number of shares of  Common Stock which have been authorized for issuance under this Plan but have not yet been placed under option (collectively, the "Reserves"), as well as the price per share of Common Stock covered by each option under this Plan which has not yet been exercised, shall be proportionately adjusted for any increase or decrease in the number of issued and outstanding shares of Common Stock of the Company resulting from a stock split or the pay­ment of a stock dividend (but only on the Common Stock) or any other increase or decrease in the number of issued and outstanding shares of Common Stock effected without receipt of any consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been "effected without receipt of consideration".  Such adjustment shall be made by the Committee, whose determination shall be final, binding and conclusive.  Except as expressly provided herein, no issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an option.

In the event of the proposed dissolution or liquidation of the Company, the Offering Period will terminate immediately prior to the consummation of such proposed action, unless otherwise provided by the Committee.  The Committee may, in the exercise of its sole discretion in such instances, declare that this Plan shall terminate as of a date fixed by the Committee and give each participant the right to purchase shares under this Plan prior to such termination or return each participant’s funds on deposit without interest.  In the event of (i) a merger or consolidation in which the Company is not the surviving corporation (other than a merger or consolidation with a wholly-owned subsidiary, a reincorporation of the Company in a different jurisdiction, or other transaction in which there is no substantial change in the stockholders of the Company or their relative stock holdings and the options under this Plan are assumed, converted or replaced by the successor corporation, which assumption will be binding on all participants), (ii) a merger in which the Company is the surviving corporation but after which the stockholders of the Company immediately prior to such merger (other than any stockholder that merges, or which owns or controls another corporation that merges, with the Company in such merger) cease to own their shares or other equity interest in the Company, (iii) the sale of all or substantially all of the assets of the Company or (iv) the acquisition, sale, or transfer of more than 50% of the outstanding shares of the Company by tender offer or similar transaction, the Plan shall terminate as of a date fixed by the Committee and the date of such termination shall be the final Purchase Date for all Offering Periods then in effect.

The Committee may, if it so determines in the exercise of its sole discretion, also make provision for adjusting the Reserves, as well as the price per share of Common Stock covered by each outstanding option, in the event that the Company effects one or more reorganizations, recapitalizations, rights offerings or other increases or reductions of shares of its outstanding Common Stock, or in the event of the Company being consolidated with or merged into any other corporation.

15.  Nonassignability.  Neither payroll deductions credited to a participant's account nor any rights with regard to the exercise of an option or to receive shares under this Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution or as provided in Section 22 below) by the participant.  Any such attempt at assignment, transfer, pledge or other disposition shall be void and without effect.

16.  Reports.  Individual accounts will be maintained for each participant in this Plan.  Each participant shall receive promptly after the end of each Offering Period a report of his or her account setting forth the total payroll deductions accumulated, the number of shares purchased, the per share price thereof and the remaining cash balance, if any, carried forward to the next Offering Period.

17.  Notice of Disposition.  Each participant shall notify the Company in writing if the participant disposes of any of the shares purchased in any Offering Period pursuant to this Plan if such disposition occurs within two (2) years from the Offering Date (the "Notice Period").  The Company may, at any time during the Notice Period, place a legend or legends on any certificate representing shares acquired pursuant to this Plan requesting the Company's transfer agent to notify the Company of any transfer of the shares.  The obligation of the participant to provide such notice shall continue notwithstanding the placement of any such legend on the certificates.

18.  No Rights to Continued Employment.  Neither this Plan nor the grant of any option hereunder shall confer any right on any employee to remain in the employ of the Company or any Participating Subsidiary, or restrict the right of the Company or any Participating Subsidiary to terminate such employee's employment.

 

19.  Equal Rights And Privileges.  All eligible employees shall have equal rights and privileges with respect to this Plan so that this Plan qualifies as an "employee stock purchase plan" within the meaning of Section 423 or any successor provision of the Code and the related regulations.  Any provision of this Plan which is inconsistent with Section 423 or any successor provision of the Code shall, without further act or amendment by the Company, the Committee or the Board, be reformed to comply with the requirements of Section 423.  This Section 19 shall take precedence over all other provisions in this Plan.

20.  Notices.  All notices or other communications by a participant to the Company under or in connection with this Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof.

21.  Term; Stockholder Approval.  This Plan was first adopted by the Board on July 20, 1999, as the Silicon Image, Inc. 1999 Employee Stock Purchase Plan, and amended and restated on April 3, 2008 and May 18, 2011 as the Silicon Image, Inc. Employee Stock Purchase Plan.  When required by applicable law or Section 423, this Plan shall be submitted for approval by the stockholders of the Company, in any manner required, or permitted, by applicable law.  No purchase of shares that are subject to such approval before becoming available under this Plan shall occur prior to stock­holder approval of such shares and the Board or Committee may delay any Purchase Date and postpone the commencement of any Offering Period subsequent to such Purchase Date as deemed necessary or desirable to obtain such approval (provided that if a Purchase Date would occur more than twenty-seven (27) months after commencement of the Offering Period to which it relates, then such Purchase Date shall not occur and instead such Offering Period shall terminate without the purchase of shares and participants in such Offering Period shall be refunded their contributions without interest).  This Plan shall continue until the earlier to occur of (a) termination of this Plan by the Board (which termination may be effected by the Board at any time), or (b) issuance of all of the shares of Common Stock reserved for issuance under this Plan, or (c) August 15, 2018.

 

  

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22.  Designation of Beneficiary.

(a)  A participant may file a written designation of a beneficiary who is to receive any shares and cash, if any, from the participant's account under this Plan in the event of such participant's death subsequent to the end of a Purchase Period but prior to delivery to him of such shares and cash.  In addition, a participant may file a written designation of a beneficiary who is to receive any cash from the participant's account under this Plan in the event of such participant's death prior to a Purchase Date.

(b)  Such designation of beneficiary may be changed by the participant at any time by written notice.  In the event of the death of a participant and in the absence of a beneficiary validly designated under this Plan who is living at the time of such participant's death, the Company shall deliver such shares or cash to the executor or admin­istrator of the estate of the participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such shares or cash to the spouse or to any one or more dependents or relatives of the participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate.

23.  Conditions Upon Issuance of Shares; Limitation on Sale of Shares.  Shares shall not be issued with respect to an option unless the exercise of such option and the issuance and delivery of such shares pursuant thereto shall comply with all applicable provisions of law, domestic or foreign, including, without limitation, the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the rules and regulations promulgated thereunder, and the requirements of any stock exchange or automated quotation system upon which the shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance.

24.  Applicable Law.  The Plan shall be governed by the substantive laws (excluding the conflict of laws rules) of the State of California.

25.  Amendment or Termination of this Plan.  The Board may at any time amend, terminate or extend the term of this Plan, except that any such termination cannot affect options previously granted under this Plan, nor may any amendment make any change in an option previously granted which would adversely affect the right of any par­ticipant, nor may any amendment be made without approval of the stockholders of the Company obtained in accor­dance with Section 21 above within twelve (12) months of the adoption of such amendment (or earlier if required by Section 21) if such amendment would:

 

(a)         increase the number of shares that may be issued under this Plan; or

 

(b)         change the designation of the employees (or class of employees) eligible for participation in this Plan.

 

Notwithstanding the foregoing, the Board may make such amendments to the Plan as the Board determines to be advisable, if the continuation of the Plan or any Offering Period would result in financial accounting treatment for the Plan that is different from the financial accounting treatment in effect on the date this Plan was adopted by the Board.

  

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