EXHIBIT 10.4
EXECUTION VERSION
CREDIT AGREEMENT
DATED AS OF SEPTEMBER 27, 1997
AMONG
BEI TECHNOLOGIES, INC.
AS BORROWER
BEI SENSORS & SYSTEMS COMPANY, INC.,
AS BORROWER
DEFENSE SYSTEMS COMPANY, INC.,
AS SUBSIDIARY GUARANTOR
THE LENDERS LISTED HEREIN,
AS LENDERS
CANADIAN IMPERIAL BANK OF COMMERCE,
NEW YORK AGENCY,
AS AGENT
CANADIAN IMPERIAL BANK OF COMMERCE,
AS DESIGNATED ISSUER
AND
CIBC WOOD GUNDY SECURITIES CORP.,
AS ARRANGER
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.1 Defined Terms..................................................... 1
1.2 Other Definitional Provisions..................................... 14
ARTICLE II
THE LOANS
2.1 The Revolving Loans............................................... 15
2.2 Repayment......................................................... 17
2.3 Interest Rate and Payment Dates................................... 18
2.4 Continuation and Conversion Options............................... 19
2.5 Letters of Credit................................................. 20
ARTICLE III
GENERAL PROVISIONS CONCERNING THE LOANS
3.1 Use of Proceeds.................................................. 25
3.2 Post Maturity Interest........................................... 25
3.3 Computation of Interest.......................................... 25
3.4 Payments......................................................... 25
3.5 Payment on Non-Business Days..................................... 26
3.6 Reduced Return................................................... 26
3.7 Indemnities...................................................... 27
3.8 Funding Sources.................................................. 28
3.9 Taxes............................................................ 28
3.10 Sharing of Payments Etc.......................................... 31
3.11 Inability to Determine Interest Rate............................. 31
3.12 Illegality....................................................... 32
3.13 Change of Booking Office......................................... 32
3.14 Right to Replace Lender.......................................... 32
ARTICLE IV
CONDITIONS OF LENDING
4.1 Conditions Precedent to Initial Loans............................ 33
4.2 Conditions Precedent to Each Borrowing........................... 34
4.3 Conditions Precedent to Each Letter of Credit.................... 34
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties.................................... 35
1.1-i
ARTICLE VI
COVENANTS
6.1 Affirmative Covenants............................................. 38
6.2 Negative Covenants................................................ 42
ARTICLE VII
EVENTS OF DEFAULT
7.1 Events of Default................................................. 47
ARTICLE VIII
GUARANTEE
8.1 Guarantee......................................................... 50
8.2 No Subrogation, Contribution, Reimbursement or
Indemnity......................................................... 50
8.3 Amendments Etc., with Respect to the Obligations.................. 51
8.4 Guarantee Absolute and Unconditional.............................. 51
8.5 Reinstatement..................................................... 53
ARTICLE IX
THE AGENT
9.1 Authorization and Action.......................................... 53
9.2 Agent's Reliance, Etc............................................. 54
9.3 Canadian Imperial Bank of Commerce. and Affiliates................ 54
9.4 Lender Credit Decision............................................ 54
9.5 Indemnification................................................... 55
9.6 Successor Agent................................................... 55
ARTICLE X
MISCELLANEOUS
10.1 Amendment. Etc.................................................... 56
10.2 Notices. Etc...................................................... 56
10.3 Right of Setoff; Deposit Accounts................................. 56
10.4 No Waiver; Remedies............................................... 57
10.5 Costs and Expenses................................................ 57
10.6 Additional Lenders; Assignments: Participations................... 57
10.7 Effectiveness; Binding Effect; Governing Law...................... 59
10.8 Waiver of Jury Trial.............................................. 60
10.9 Consent to Jurisdiction; Venue; Agent for Service of Process...... 60
10.10 Entire Agreement.................................................. 61
10.11 Separability of Provisions........................................ 61
10.12 Obligations Several............................................... 61
1.1-ii
10.13 Survival of Certain Agreements................................... 61
10.14 Execution in Counterparts........................................ 61
EXHIBIT A [FORM OF PROMISSORY NOTE]........................................ A-1
EXHIBIT B [FORM OF NOTICE OF BORROWING].................................... B-1
EXHIBIT C [FORM OF NOTICE OF CONVERSION/CONTINUATION]...................... C-1
EXHIBIT D [FORM OF COMPLIANCE CERTIFICATE]................................. D-1
EXHIBIT E [FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT].................... E-1
1.1-iii
CREDIT AGREEMENT
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This Credit Agreement dated as of September 27, 1997 and effective as
of the Effective Date is entered into among BEI Technologies, Inc., a Delaware
corporation and BEI Sensors & Systems Company, Inc., a Delaware corporation
(each a "Borrower" and collectively the "Borrowers"), Defense Systems Company,
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Inc., a Delaware corporation (the "Subsidiary Guarantor"), the financial
--------------------
institution named on the signature pages hereof (each a "Lender" and
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collectively the "Lenders"), Canadian Imperial Bank of Commerce, New York
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Agency, as Agent for the Lenders (the "Agent"), and Canadian Imperial Bank of
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Commerce, as the designated issuer of letters of credit hereunder.
RECITALS
The Borrowers desire that the Lenders extend certain credit facilities
to the Borrowers for working capital and other general corporate purposes; and
WHEREAS, the Lenders desire to extend certain credit facilities to the
Borrowers on the terms and conditions contained herein;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the Borrowers, the Lenders, the Agent
and Canadian Imperial Bank of Commerce agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms
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have the following meanings:
"Acquisition": As defined in Section 6.2(i).
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"Adjusted Consolidated Net Losses": For any period, the sum of the
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amounts for such period of (i) Consolidated Net Loss, plus (ii) any expenses or
----
charges related to the discontinued operations of Defense Systems Company, Inc.,
but not in excess of $3,500,000, all of the foregoing as determined on a
consolidated basis for BEI and its consolidated Subsidiaries in accordance with
GAAP.
"Affiliate": As applied to any Person, any Person directly or
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indirectly controlling, controlled by or under common control with, that Person.
For the purposes of this definition, "control" (including with the correlative
meanings, the terms "controlling", "controlled by" and "under common control
with"),
as applied to any Person, means the possession, directly or indirectly, of power
to direct or cause the direction of the management and policies of that Person,
whether through the ownership of voting securities or by contract or otherwise.
"Agent": As defined in the introductory paragraph of this Agreement.
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"Agreement": This Credit Agreement, as amended, supplemented or
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modified from time to time.
"Applicable Margin": With respect to any Eurodollar Rate Loan at any
-----------------
time, the per annum margin which is determined pursuant to the Pricing Grid and
added to the Eurodollar Rate with respect to each Eurodollar Rate Loan. The
Applicable Margins shall be determined as provided in the Pricing Grid and may
change for each Pricing Period.
"Assignment and Acceptance Agreement": An Assignment and Acceptance
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Agreement substantially in the form of Exhibit E.
"Available Revolving Commitment: At any time, the Revolving Loan
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Commitment minus the sum of (i) the aggregate principal amount of outstanding
Revolving Loans, plus (ii) the Letter of Credit Usage plus (iii) the aggregate
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principal amount outstanding under the Prior Credit Agreement.
"Base Rate": The higher of (i) the rate of interest announced from
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time to time by Canadian Imperial Bank of Commerce in New York, New York as its
Prime Commercial Lending Rate or (ii) the sum of one-half of one percent (1/2 of
1%) plus the Federal Funds Rate on the day prior to the date on which the Base
----
Rate is to be determined. The Prime Commercial Lending Rate is a reference
rate; the Agent and Canadian Imperial Bank of Commerce may make loans at, above
or below the Prime Commercial Lending Rate.
"Base Rate Loans": Loans hereunder at such time as they accrue
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interest at a rate based upon the Base Rate.
"BEI": BEI Technologies, Inc., a Delaware corporation.
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"Borrower" and "Borrowers": As defined in the introductory paragraph
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of this Agreement.
"Borrowing": As defined in Section 2.1.
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"Business Day": A day other than a Saturday, Sunday or day on which
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commercial banks in New York, New York are authorized or required by law to
close.
"Capital Lease": As applied to any Person, any lease of any property
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(whether real, personal or mixed) by that Person as lessee which would, in
accordance with GAAP, be required to be
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accounted for as a capital lease on the balance sheet of that Person.
"Cash Equivalents" shall mean:
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(a) Direct obligations of, or obligations the principal and
interest on which are unconditionally guaranteed by, the United States
of America or obligations of any agency of the United States of America
to the extent such obligations are backed by the full faith and credit
of the United States of America, in each case maturing within one year
from the date of acquisition thereof;
(b) Certificates of deposit maturing within one year from the date
of acquisition thereof issued by a commercial bank or trust company
organized under the laws of the United States of America or a state
thereof or that is a Lender, provided that (A) such deposits are
denominated in Dollars, (B) such bank or trust company has capital,
surplus and undivided profits of not less than $100,000,000 and (C)
such bank or trust company has certificates of deposit or other debt
obligations rated at least A-1 (or its equivalent) by Standard and
Poor's Ratings Group or P-1 (or its equivalent) by ▇▇▇▇▇'▇ Investors
Service, Inc.;
(c) Open market commercial paper maturing within 270 days from the
date of acquisition thereof issued by a corporation organized under the
laws of the United States of America or a state thereof, provided such
commercial paper is rated at least A-1 (or its equivalent) by Standard
and Poor's Ratings Group or P-1 (or its equivalent) by ▇▇▇▇▇'▇
Investors Service, Inc.; and
(d) Any repurchase agreement entered into with a commercial bank
or trust company organized under the laws of the United States of
America or a state thereof or that is a Lender, provided that (A) such
bank or trust company has capital, surplus and undivided profits of not
less than $100,000,000, (B) such bank or trust company has certificates
of deposit or other debt obligations rated at least A-1 (or its
equivalent) by Standard and Poor's Ratings Group or P-1 (or its
equivalent) by ▇▇▇▇▇'▇ Investors Service, Inc., (C) the repurchase
obligations of such bank or trust company under such repurchase
agreement are fully secured by a perfected security interest in a
security or instrument of the type described in clause (i), (ii) or
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(iii) above and (D) such security or instrument so securing the
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repurchase obligations has a fair market value at the time such
repurchase agreement is entered into of not less than 100% of such
repurchase obligations.
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"Closing Date": The date, after the Effective Date, on which the
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initial Loans are made.
"Commitment": The obligation of each Lender to make Loans to the
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Borrowers, and to reimburse the Issuing Bank for the unreimbursed portion of
Letters of Credits, each pursuant to Article II in the amount or amounts
referred to therein.
"Commitment Fee Percentage": With respect to the daily unused portion
-------------------------
of the Revolving Commitment, a per annum rate which is determined pursuant to
the Pricing Grid.
"Compliance Certificate": A Compliance Certificate substantially in
----------------------
the form of Exhibit C.
"Consolidated Capital Expenditures": For any period, the dollar amount
---------------------------------
of purchases of property, plant and equipment reflected in the consolidated
statement of cash flow of BEI and its consolidated Subsidiaries for such period,
excluding, however, expenditures of insurance proceeds received as the result of
drainage or destruction of the property being replaced.
"Consolidated EBITDA": For any period, the sum of the amounts for such
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period of four consecutive fiscal quarters, without duplication, (i)
Consolidated Net Income (or Consolidated Net Losses), plus (ii) Consolidated
----
Interest Expense, plus (iii) provisions for taxes based on income, plus (iv)
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depreciation expense, plus (v) amortization expense, plus (vi) the lesser of
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(A) all out-of-pocket expenses incurred during calendar year 1997 in connection
with the creation of BEI and the divestiture of BEI Sensors & Systems Company,
Inc. and Defense Systems Company from BEI Electronics, Inc. and (B) $1,250,000.
"Consolidated Interest Expense": For any period, all interest expense
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(including that attributable to Capital Leases in accordance with GAAP) of BEI
and its consolidated Subsidiaries during such period with respect to all Debt of
BEI and its consolidated Subsidiaries, excluding all capitalized interest.
"Consolidated Net Income": For any period, the net income (or loss)
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after income taxes for such period of BEI and its consolidated Subsidiaries on a
consolidated basis determined in accordance with GAAP.
"Consolidated Net Losses": For any period, the net loss after income
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taxes for such period of BEI and its consolidated Subsidiaries on a consolidated
basis determined in accordance with GAAP.
"Consolidated Tangible Net Worth": For any period, the sum of
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stockholders' equity of BEI and its consolidated Subsidiaries less Intangible
----
Assets as shown on the consolidated balance sheet of BEI and its consolidated
Subsidiaries; provided, however that Intangible Assets acquired after
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September 27, 1997
4
in an aggregate amount not to exceed $2,000,000 shall not be included in the
calculation of Intangible Assets.
"Contingent Obligation": As applied to any Person, any direct or
---------------------
indirect liability, contingent or otherwise, of that Person (i) with respect to
any Debt, lease, dividend or other obligation of another Person if the primary
purpose or intent thereof by the Person including the Contingent Obligation is
to provide assurance that such obligation of another will be paid or discharged,
or that any agreements relating thereto will be complied with, or that the
holders of such obligation will be protected (in whole or in part) against loss
in respect thereof, (ii) with respect to any letter of credit issued for the
account of that Person or as to which that Person is otherwise liable for
reimbursement of drawings, or (iii) with respect to any Interest Rate Agreements
or Currency Agreements. Contingent Obligations shall include (a) the direct or
indirect guaranty, endorsement (otherwise than for collection or deposit in the
ordinary course of business), co-making, discounting with recourse or sale with
recourse by such Person of the obligation of another, (b) the obligation to make
take-or-pay or similar payment if required regardless of nonperformance by any
other party or parties to an agreement, and (c) any liability of that Person for
the obligation of another through any agreement (contingent or otherwise) (x) to
purchase, repurchase or otherwise acquire such obligation or any security
therefor, or to provide funds for the payment or discharge of such obligation
(whether in the form of loans, advances, stock purchases, capital contributions
or otherwise) or (y) to maintain the solvency or any balance sheet item, level
of income or financial condition of another if, in the case of any agreement
described under subclause (x) or (y) of this sentence, the primary purpose or
intent thereof is as described in the preceding sentence. The amount of any
Contingent Obligation shall be equal to the amount of the obligation so
guaranteed or otherwise supported or, if less, the amount to which such
Contingent Obligation is specifically limited.
"Currency Agreement": As applied to any Person, any foreign exchange
------------------
contract, currency swap agreement, futures contract, option contract, synthetic
cap or other similar agreement or arrangement designed to protect that Person
against fluctuations in currency values.
"Debt": As applied to any Person, (i) all indebtedness for borrowed
----
money, (ii) that portion of obligations with respect to Capital leases which is
properly classified as a liability on a balance sheet in accordance with GAAP,
(iii) notes payable and drafts accepted representing extensions of credit
whether or not representing obligations for borrowed money, (iv) any obligation
owed for all or any part of the deferred purchase price of property or services
which purchase price is (a) due more than twelve months from the date of
incurrence of the obligation in respect hereof, or (b) evidenced by a note or
similar written
5
instrument and (v) all indebtedness secured by any Lien on any property or asset
owned or held by that Person regardless of whether the indebtedness secured
thereby shall have been assumed by that Person or is non recourse to the credit
of that Person.
"Debt/Consolidated EBITDA Ratio": As applied to BEI and its
------------------------------
consolidated Subsidiaries at the end of any fiscal quarter of BEI, the ratio,
determined on a consolidated basis in accordance with GAAP, of (a) the Debt of
BEI and its Consolidated Subsidiaries at such time to (b) the Consolidated
EBITDA for the consecutive four-quarter period which ended on the last day of
such fiscal quarter.
"Designated Issuer": Canadian Imperial Bank of Commerce, or such other
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Lender as is designated by BEI and approved by Agent.
"Disclosure Letter": The Disclosure Letter dated as of September 27,
-----------------
1997 delivered by the Borrowers and the Subsidiary Guarantor to the Agent and
each Lender prior to the execution and delivery of this Agreement.
"Dollars and $": Dollars in lawful currency of the United States of
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America.
"Effective Date": The day after the date of distribution of the stock
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of the Borrowers to the shareholders of BEI Electronics, Inc.
"Employee Benefit Plan": Any Pension Plan, any employee welfare
---------------------
benefit plan, or any other employee benefit plan which is described in Section
3(3) of ERISA and which is maintained for employees of any of the Borrowers or
any ERISA Affiliate of any of the Borrowers.
"Equity Issuance": As applied to any Person, the sale or issuance by
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such Person of (i) any capital stock of such Person, (ii) any options, warrants
or other similar rights exercisable in respect of such capital stock, or (iii)
any other security or instrument representing an equity interest (or the right
to obtain an equity interest) in such Person.
"ERISA": The Employee Retirement Income Security Act of 1974, as
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amended from tone to time and any successor statute.
"ERISA Affiliate": As applied to any Person, (i) any corporation which
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is, or was at any time, a member of a controlled group of corporations within
the meaning of Section 414(b) of the Internal Revenue Code of which that Person
is, or was at any time, a member; (ii) any trade or business (whether or not
incorporated) which is, or was at any time, a member of a group of trades or
businesses under common control within the meaning of Section 414(c) of the
Internal Revenue Code of which that Person is, or was at any time, a member; and
(iii) any
6
member of an affiliated service group within the meaning of Section 414(m) or
(o) of the Internal Revenue Code of which that Person, any corporation described
in clause (i) above or any trade or business described in clause (ii) above is,
or was at any time, a member.
"ERISA Event": (i) The occurrence of an act or omission which could
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give rise to the imposition on BEI or any of its ERISA Affiliates of fines,
penalties, taxes or related charges under Chapter 43 of the Internal Revenue
Code or under Section 409 or 502(c), (i) or (l) or 4071 of ERISA in respect of
any Employee Benefit Plan; (ii) the assertion of a material claim (other than
routine claims for benefits) against any Employee Benefit Plan other than a
Multiemployer Plan or the assets thereof, or against BEI or any of its ERISA
Affiliates in connection with any such Employee Benefit Plan; or (iii) receipt
from the Internal Revenue Service of notice of the failure of any Employee
Benefit Plan intended to be qualified under Section 401(a) of the Internal
Revenue Code to qualify under Section 401(a) of the Internal Revenue Code, or
the failure of any trust forming part of any Employee Benefit Plan to qualify
for exemption from taxation under Section 501(a) of the Internal Revenue Code.
"Eurodollar Business Day": A day which is a Business Day and a day on
-----------------------
which dealings in Dollar deposits may be carried out in the London interbank
market.
"Eurodollar Rate": For each Interest Period, the rate equal to (a)(i)
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the rate of interest per annum determined by the Agent to be the rate of
interest per annum appearing on the Telerate display page 3750 (or such other
display page on the Telerate System as may replace such page) for Dollar
deposits in an amount substantially equal to the proposed Eurodollar Rate Loan
to be made, continued or converted by the Agent, in its individual capacity, and
having a maturity comparable to such Interest Period, at approximately 11:00
a.m. (London time) two (2) Eurodollar Business Days prior to the commencement of
such Interest Period, subject to clause (ii) below; or (ii) if for any reason
the rate is not available as provided in the preceding clause (i), the
"Eurodollar Rate" instead means the rate of interest per annum determined by the
Agent, on the basis of quotations furnished to it by the Lenders to be the
average (rounded upward, if necessary, to the nearest 1/16 of 1 percent) of the
rates in which deposits in Dollars are offered to prime banks by the principal
office of such Lenders in the London interbank market, at approximately 11:00
a.m. (London time), two (2) Eurodollar Business Days before the first day of
such Interest Period, in an approximate amount of the Eurodollar Rate Loan to be
made by the Lenders and for a period of time comparable to such Interest Period,
divided by (B) a number equal to 100 minus the aggregate (but without
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duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day which is two (2) Eurodollar Business Days
7
following such payment (including basic, supplemental, marginal and emergency
reserves under any regulations of the Board of Governors of the Federal Reserve
System or other governmental authority having jurisdiction with respect thereto,
as in effect at the time the Agent quotes the rate to the Borrowers) for the
Eurocurrency funding of domestic assets (currently referred to as "Eurocurrency
liabilities" in Regulation D of such Board) which are required to be maintained
by a member bank of such System (such rate to be adjusted to the next higher
1/16 of 1%). If a Lender does not provide its offered quotation to the Agent,
the Eurodollar Rate shall be determined on the basis of the rates quoted by the
remaining Lenders. The determination of the Eurodollar Rate by the Agent shall
be conclusive in the absence of manifest error.
"Eurodollar Rate Loans": Loans hereunder at such time as they accrue
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interest at a rate based upon the Eurodollar Rate.
"Eurodollar Reinvestment Rate": In the event of a claim under clause
----------------------------
(iv) of Section 3.7(b) as a result of payment of a Eurodollar Rate Loan on a day
other than the last day of the Interest Period for such Loan, (i) the rate of
interest determined by the Agent to be the interest rate per annum at which U.S.
dollar deposits for the period of time approximately equal to the period
remaining on the then applicable Interest Period and in the approximate amount
of the payment made pursuant to clause (iv) would be offered by the Agent to
prime banks in the interbank Eurodollar market as of 11:00 A.M., New York time,
on the day which is two (2) Eurodollar Business Days following such payment,
divided by (ii) a number equal to 100 minus the aggregate (but without
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duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day which is two (2) Eurodollar Business Days
following such payment (including basic, supplemental, marginal and emergency
reserves under any regulations of the Board of Governors of the Federal Reserve
System or other governmental authority having jurisdiction with respect thereto,
as in effect at the time the Agent quotes the rate to the Borrowers) for the
Eurocurrency funding of domestic assets (currently referred to as "Eurocurrency
liabilities" in Regulation D of such Board) which are required to be maintained
by a member bank of such System (such rate to be adjusted to the next higher
1/16 of 1%).
"Federal Funds Rate": On any day, a fluctuating interest rate per
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annual equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York, or
if such rate is not so published for any day which is a Business Day, the
average of the quotations for such day on such transactions received by the
Agent from three Federal funds brokers of recognized standing selected by it.
8
"GAAP": Generally accepted accounting principles set forth in the
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opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession and as reflected in the audited financial statements of BEI and its
consolidated Subsidiaries accompanied by an unqualified report and opinion
thereon of nationally recognized independent certified public accountants.
"Guarantor": As defined in Section 8.1.
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"Intangible Assets": At any date of determination, all amount included
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in Other Non Current Assets on the consolidated financial statements of BEI and
its consolidated Subsidiaries, including all goodwill, patents, copyrights,
trademarks, tradenames, acquired technology or similar items, but excluding land
and buildings held for expansion, investments in stock of other companies, long
term deposits and any other tangible assets.
"Interest Payment Date": As to any Base Rate Loan until payment in
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full, the last day of each March, June, September and December, commencing on
the first of such days to occur after such Base Rate Loan is made, and the
Maturity Date. As to any Eurodollar Rate Loan with an Interest Period of three
months or less until payment in full, the last day of such Interest Period and
the Maturity Date, and as to any Eurodollar Rate Loan with an Interest Period in
excess of three months until payment in full, (i) the same day of each three
months following the beginning of such Interest Period, (ii) the last day of
such Interest Period and (iii) the Maturity Date.
"Interest Period": With respect to any Eurodollar Rate Loan:
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(i) initially, the period commencing on, as the case may be, the
Borrowing or conversion date with respect to such Eurodollar Rate Loan and
ending one, two, three or six months thereafter as selected by the Borrower
requesting the Eurodollar Rate Loan in its Notice of Borrowing as provided in
Section 2.1(b) or its Notice of Conversion/Continuation as provided in Section
2.4; and
(ii) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Eurodollar Rate Loan and ending
one, two, three or six months thereafter as selected by the Borrower requesting
the Eurodollar Rate Loan in its Notice of Conversion/Continuation as provided in
Section 2.4; provided, that all of the foregoing provisions relating to Interest
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Periods are subject to the following:
9
(a) if any Interest Period for a Eurodollar Rate Loan would
otherwise end on a day which is not a Eurodollar Business Day, that Interest
Period shall be extended to the next succeeding Eurodollar 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 Eurodollar Business Day;
(b) no Borrower may select an Interest Period with respect to
any portion of principal of a Eurodollar Rate Loan which extends beyond a date
on which such Borrower is required to make a scheduled payment of that portion
of principal; and
(c) there shall be no more than six Interest Periods with
respect to Eurodollar Rate Loans outstanding at any time.
"Interest Rate Agreement": As applied to any Person, an interest rate
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swap, cap or collar agreement or solar arrangement designed to protect that
Person against fluctuations in interest rates.
"Internal Revenue Code": The Internal Revenue Code of 1986, as amended
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to the date hereof and from time to time thereafter.
"Investment": As applied to any Person, (i) any direct or indirect
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purchase or other acquisition of, or of a beneficial interest in, capital stock,
bonds, notes, debentures, partnership or other ownership interests or other
securities of, another Person, or (ii) any direct or indirect loan, extension of
credit, advance (other than advances to employees for moving, entertainment and
travel expenses, drawing accounts and similar expenditures in the ordinary
course of business) or capital contribution to any other Person, including all
indebtedness and accounts receivable from the other Person that are not current
assets or did not arise from sales to that other Person in the ordinary course
of business. The amount of any Investment shall be the original cost of such
investment plus the cost of all additions thereto, without any adjustment for
increases or decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment.
"Issuing Bank": The Designated Issuer as issuer of any Letter of
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Credit hereunder.
"Lender" and "Lenders": As defined in the introductory paragraph of
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this Agreement.
"Letter of Credit" or "Letters of Credit": Any standby letter of
---------------- -----------------
credit or similar instrument issued or to be issued by the Issuing Bank, in
Dollars, for the account of a Borrower pursuant to Section 2.5 for the purpose
of supporting performance
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bonds or other obligations incurred in the ordinary course of business.
"Letter of Credit Usage": At any date of determination, the sum of (i)
----------------------
the maximum aggregate amount that is or at any time thereafter may become
available for drawing under all Letters of Credit then outstanding and (ii) the
aggregate amount of all drawings under Letters of Credit honored by the Issuing
Bank and not theretofore reimbursed by the Borrowers.
"Lien": Any lien, mortgage, deed of trust, pledge, security interest,
----
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest).
"Loans": Revolving Loans, in Dollars, made to a Borrower pursuant to
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Section 2.1.
"Loan Documents": This Agreement, the Notes, the Letters of Credit and
--------------
each letter of credit application, guaranty and other document required by the
Agent or any Lender in connection with this Agreement and/or the credit extended
hereunder.
"Majority Lenders": As of any date of determination, Lenders owed at
----------------
least fifty-one percent (51%) of the then aggregate unpaid principal amount of
the Notes, or, if no unpaid principal amount of the Notes is outstanding, then
lenders having at least fifty-one percent (51%) of the Commitments.
"Maturity Date": September 27, 2000.
-------------
"Multi-employer Plan": A "multi employer plan" as defined in Section
-------------------
4001(a)(3) of ERISA which is maintained for employees of any Borrower or any
ERISA Affiliate of any Borrower.
"Net Proceeds": With respect to any Equity Issuance, the gross
------------
proceeds received by the issuer from the issuance less all legal and accounting
expenses, commissions and other fees and expenses incurred or to be incurred and
all federal, state, local and foreign taxes assessed in connection therewith.
"Notice of Borrowing": A notice substantially in the form of
-------------------
Exhibit B.
"Notice of Conversion/Continuation": A notice substantially in the
---------------------------------
form of Exhibit C.
"Note" and "Notes": The Revolving Notes.
---- -----
"Obligations": All obligations of the Borrowers from time to time owed
-----------
to the Agent, the Lenders or any of them under
11
the Loan Documents, whether for principal, interest, fees, expenses,
indemnification or otherwise.
"Other Taxes": As defined in Section 3.9.
-----------
"Pension Plan": Any employee plan which is subject to Section 412 of
------------
the Internal Revenue Code and which is maintained for employees of any Borrower
or any ERISA Affiliate of any Borrower, other than a Multiemployer Plan.
"Permitted Liens": The following types of Liens (other than any such
---------------
Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue
Code or by ERISA):
(i) Liens for taxes, assessments or governmental charges or claims to
the extent not yet delinquent or being contested in good ▇▇▇▇ and for which
appropriate reserves have been made in accordance with GAAP;
(ii) statutory Liens of landlords and Liens of carriers, warehouse men,
mechanics and material men and other Liens imposed by law incurred in the
ordinary course of business securing obligations that are not yet delinquent or
are being contested in good faith and for which appropriate reserves have been
made in accordance with GAAP;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, trade contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of borrowed
money);
(iv) easements, reservations, rights-of-way, restrictions, minor
defects or irregularities in title and other similar charges or encumbrances
affecting real property not interfering in any material respect with the use or
value of such property;
(v) any attachment or judgment lien not constituting an Event of
Default under Section 7.1(h);
(vi) Liens which constitute rights of set-off of a customary nature or
bankers' Liens with respect to amounts on deposit, arising by operation of law;
and
(vii) Liens relating to advance or progress payments under government
contracts; provided any such Lien encumbers only the inventory purchased with
such advance or progress payments.
"Person": An individual, partnership, corporation, business trust,
------
joint stock company, trust, unincorporated
12
association, joint venture, governmental authority or other entity of whatever
nature.
"Potential Event of Default": A condition or event which, after notice
--------------------------
or lapse of time or both, would constitute an Event of Default if that condition
or event were not cured or removed within any applicable grace or cure period.
"Pricing Grid: Schedule 1.1.
------------
"Pricing Period": (a) The period commencing on the date of this
--------------
Agreement and ending on December 31, 1997, and (b) each of the following time
periods:
(i) January 1st through and including February 28th or 29th
(as applicable);
(ii) March 1st through and including May 31st;
(iii) June 1st through and including August 31st; and
(iv) September 1st through and including December 31st.
"Prior Credit Agreement": Credit Agreement dated as of June 1, 1993,
----------------------
(as amended), by and among the BEI Sensors & Systems Company, Inc., the lenders
named therein, CIBC Inc., and Canadian Imperial Bank of Commerce.
"Quick Ratio": As applied to BEI and its consolidated Subsidiaries at
-----------
any time, the ratio, determined on a consolidated basis in accordance with GAAP,
of:
(a) The sum at such time of all (i) cash of BEI and its
consolidated Subsidiaries; (ii) Cash Equivalents of BEI and its
consolidated Subsidiaries; and (iii) accounts receivable of BEI and its
consolidated Subsidiaries, less all reserves therefor; provided,
--------
however, that in computing the foregoing sum, there shall be excluded
-------
therefrom any cash, Cash Equivalent or accounts receivable subject to a
security interest in favor of any Person other than any Lender;
to
--
(b) The current liabilities of BEI and its consolidated
Subsidiaries as reported in the financial statements of BEI in
accordance with GAAP.
13
"Regulations G, T, U and X": Regulations G, T, U and X, respectively,
-------------------------
promulgated by the Board of Governors of the Federal Reserve System, as amended
from time to time, and any successors thereto.
"Requirement": As defined in Section 3.6.
-----------
"Revolving Commitment": The amount of $25,000,000 as such amount may
--------------------
be reduced pursuant to Sections 2.1(c). The initial Commitment of each Lender
is set forth opposite such Lender's name on the signature page hereof. As of
the Maturity Date, the Lenders' obligation to make Revolving Loans after such
date shall expire and the amount of the Revolving Commitment shall be reduced to
an amount equal to the Letter of Credit Usage as at such date.
"Revolving Loans": As defined in Section 2.1(a).
---------------
"Revolving Note": As defined in Section 2.1(d).
--------------
"S.E.C.": The United States Securities and Exchange Commission and any
------
successor institution or body which performs the functions or substantially all
of the functions thereof.
"Subsidiary": A corporation, partnership, association, joint venture
----------
or other business entity of which more than 50% of the total voting power of
shares of stock or other ownership interests entitled (without regard to the
occurrence of any contingency) to vote in the election of Person or Persons
(whether directors, managers, trustees or other Persons performing similar
functions) having the power to direct or cause the direction of the management
and policies thereof are at the time owned, directly, or indirectly through one
or more intermediaries, or both, by any Borrower.
"Subsidiary Guarantor": As defined in the introductory paragraph of
--------------------
this Agreement.
"Taxes": As defined in Section 3.9.
-----
1.2 Other Definitional Provisions.
-----------------------------
(a) All terms defined in this Agreement shall have the defined
meanings when used in the Notes or any certificate or other document made or
delivered pursuant hereto.
(b) As used herein and in the Notes, and any certificate or other
document made or delivered pursuant hereto, accounting terms 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.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this
14
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement, and section, subsection, schedule and exhibit
references are to this Agreement unless otherwise specified.
(d) The terms defined in Section 1.1 include the plural as well as the
singular. Pronouns of either gender or neuter shall include, as appropriate,
the other pronoun forms. The terms "includes" and "including" shall not be
construed to imply any limitation.
ARTICLE II
THE LOANS
2.1 The Revolving Loans.
-------------------
(a) The Revolving Commitment. Each Lender agrees, severally and
------------------------
not jointly, on the terms and conditions hereinafter set forth, to make loans
("Revolving Loans") to the Borrowers from time to time during the period from
---------------
the date hereof to and including the Maturity Date in an aggregate amount not to
exceed the amount set opposite such Lenders name on the signature pages hereof,
as such amount may be reduced pursuant to Sections 2.1(c). Each borrowing under
this Section 2.1(a) (a "Borrowing") shall be in a minimum amount of $500,000 or
---------
in an integral multiple of $100,000 in excess hereof; provided that a Eurodollar
Rate Loan shall be in a minimum amount of $1,000,000 or in an integral multiple
of $1,000,000 in excess hereof. Each Borrowing shall be made on the same day by
the Lenders ratably according to their respective Commitments. Within the
limits of the Revolving Commitment and prior to the Maturity Date, the Borrowers
may borrow, repay pursuant to Section 2.2(b) and reborrow under this Section;
provided that at no time shall the sum of (i) the aggregate principal amount of
outstanding Revolving Loans plus (ii) the Letter of Credit Usage exceed the
----
Available Revolving Commitment at such time.
(b) Making the Revolving Loans.
--------------------------
(i) The Borrowers may borrow under the Revolving Commitment
on any Business Day if the Borrowing is to consist of a Base Rate Loan and on
any Eurodollar Business Day if the Borrowing is to consist of a Eurodollar Rate
Loan. Whenever the Borrowers desire that the Lenders make Revolving Loans
hereunder they shall deliver an irrevocable Notice of Borrowing to the Agent no
later than 12:30 P.M., New York time, (i) three (3) Eurodollar Business Days
prior to the requested Borrowing date in the case of a Eurodollar Rate Loan and
(ii) on or before the requested Borrowing date in the case of a Base Rate Loan,
specifying (A) the amount of the proposed Borrowing, (B) the requested date of
the Borrowing, (C) whether the Borrowing is to consist of a Eurodollar Rate Loan
or a Base Rate Loan, (D) if the
15
Loan is to be a Eurodollar Rate Loan, the length of the Interest Period
therefor, (E) the Borrower or Borrowers that are to receive the proceeds of such
Borrowing and (F) the amount of proceeds to be received by each such Borrower.
Promptly following receipt of such notice, the Agent shall notify each Lender of
the date of the Loan, whether the Loan will be a Base Rate Loan or a Eurodollar
Rate Loan, the amount of that Lender's pro rata share of the Loan and, if the
Loan is a Eurodollar Rate Loan of the applicable Interest Period. Not later
than 2:00 P.M., New York time, on the date specified for any Loan, each Lender
shall deposit immediately available funds in the amount of its pro rata share of
the Loan to the account of the Agent set forth on the signature pages hereof.
Upon satisfaction of the applicable conditions set forth in Article IV, the
Agent will make available the proceeds of all such Loans to the applicable
Borrower or Borrowers by crediting the account of such Borrower or Borrowers on
the books of the Agent, or as otherwise directed by such Borrower or Borrowers.
(ii) The Notice of Borrowing may be given by telex or
facsimile transmission or telephonically; provided, however, that the Borrowers
shall promptly deliver to the Agent an original written Notice of Borrowing
initially given telephonically. Any conflict regarding a notice or between an
oral notice and a written notice applicable to the same Borrowing shall be
conclusively determined by the Agent's books and records. The Agent shall not
incur any liability to the Borrowers in acting upon any notice of Borrowing
which the Agent believes reasonably and in good faith to have been given by a
Person duly authorized to borrow on behalf of any of the Borrowers.
(iii) Unless the Agent shall have received notice from
a Lender prior to the date of any Borrowing that such Lender will not make
available to the Agent such Lender's ratable portion of such Borrowing, the
Agent may assume that such Lender has made such portion available to the Agent
on the date of such Borrowing in accordance with subsection (1) of this Section
2.1(b) and the Agent may, in reliance upon such assumption, make available to
the applicable Borrower or Borrowers on such date a corresponding amount. If
and to the extent that such Lender shall not have so made such ratable portion
available to the Agent, such Lender and the applicable Borrower or Borrowers
severally agree to repay to the Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date such amount is
made available to the applicable Borrower or Borrowers until the date such
amount is repaid to the Agent, at (i) in the case of a Borrower, the interest
rate applicable at the time to such Borrowing and (ii) in the case of such
Lender, the Federal Funds Rate. If such Lender shall repay to the Agent such
corresponding amount, such amount so repaid shall constitute such Lender's pro
rata share of such Borrowing for purposes of this Agreement. The failure of any
Lender to make available its pro rata share of any
16
Borrowing shall not relieve any other Lender of its obligation, if any,
hereunder, to make available its pro rata share of such Borrowing on the date of
such Borrowing, but no Lender shall be responsible for the failure of any other
Lender to make available its pro rata share of any Borrowing on the date of any
Borrowing.
(c) Voluntary Reduction of the Revolving Commitment. The Borrowers
-----------------------------------------------
shall have the right, upon at least two (2) Business Days' written notice to the
Agent, to terminate in whole or reduce in part the unused portion of the
Revolving Commitment, without premium or penalty, provided that each partial
--------
reduction shall be in the aggregate amount of $1,000,000 or in an integral
multiple of $1,000,000 in excess thereof and that such reduction shall not
reduce the Revolving Commitment to an amount less than the amount outstanding
hereunder on the effective date of the reduction.
(d) Revolving Notes. The Revolving Loans made by the Lenders pursuant
---------------
hereto shall be evidenced by promissory notes of the Borrowers, substantially in
the form of Exhibit A, with any appropriate insertions (the "Revolving Notes"),
---------------
payable to the order of each Lender and representing the obligation of the
Borrowers to pay the aggregate unpaid principal amount of all Revolving Loans
made by that Lender, with interest thereon as prescribed in Section 2.3. Each
Lender is hereby authorized to record in its books and records and on any
schedule annexed to its Revolving Note the date and amount of each Revolving
Loan made by that Lender, and the date and amount of each payment of principal
thereof, and any such recordation shall constitute prima facie evidence of the
----- -----
accuracy of the information so recorded; provided that failure by any Lender to
--------
effect such recordation shall not affect the Borrowers' obligations hereunder.
(e) Commitment Fee. The Borrowers agree to pay to the Agent for the
--------------
ratable benefit of the Lenders a commitment fee on the average daily unused
portion of the Revolving Commitment from the date hereof until the Maturity Date
at a rate equal to the Commitment Fee Percentage. The Commitment Fee Percentage
shall be determined as provided in the Pricing Grid and may change for each
Pricing Period. Such commitment fees shall be payable on each Interest Payment
Date, commencing on the first such date occurring after the date of this
Agreement, and on the Maturity Date. For the purposes of calculating a
commitment fee, the Letter of Credit Usage shall be deemed a usage of the
Revolving Commitment. The commitment fee shall be calculated on the basis of a
365 or 366 day year, as the case may be, for the actual days elapsed.
(f) Other Fees. The Borrowers shall pay to the Agent such other fees
----------
at such times as have been separately agreed to in writing between the parties.
17
2.2 Repayment.
---------
(a) Mandatory Repayments. The aggregate principal amount of the
--------------------
Revolving Loans outstanding on the Maturity Date, together with accrued interest
thereon, shall be due and payable in full on the Maturity Date.
(b) Optional Prepayments. Any Borrower may at its option prepay the
--------------------
Loans, in whole or in part, at any time and from time to time, provided that,
--------
with respect to the prepayment of any Eurodollar Rate Loan, the Agent shall have
received from such Borrower written notice of any such prepayment at least one
(1) Business Day prior to the date of the proposed prepayment if such date is
not the last day of the then current Interest Period for each Loan being
prepaid, in each case specifying the date and the amount of prepayment. Partial
prepayments hereunder shall be in an aggregate principal amount of the lesser of
(a) $1,000,000 or any integral multiple of $100,000 in excess thereof and (b)
the outstanding balance of the Loan being prepaid.
(c) Mandatory Prepayment. If, at any time, the sum of the aggregate
--------------------
principal amount of outstanding Revolving Loans plus the Letter of Credit Usage
exceeds the Revolving Commitment then in effect, the Borrowers shall immediately
repay Revolving Loans in an amount equal to the excess; provided, however, that
-------- -------
if after repayment pursuant to this subsection of all Revolving Loans then
outstanding, the Letter of Credit Usage shall exceed the Revolving Commitment
then in effect, the Borrowers shall immediately deliver to the Agent, to hold as
cash collateral as security for the obligations of the Borrowers to reimburse
the Issuing Bank for the amount of any drawings honored under any outstanding
Letters of Credit, an amount such that the Letter of Credit Usage minus that
-----
amount that is less than or equal to the Revolving Commitment then in effect;
provided that in lieu of furnishing such cash collateral as aforesaid, the
--------
Borrowers may deliver outstanding Letters of Credit for cancellation, so that
the resulting Letter of Credit Usage is less than or equal to the Revolving
Commitment then in effect. If, at any time after such cash collateral is
delivered to the Agent, the Revolving Commitment then in effect exceeds (i) the
aggregate principal amount of Revolving Loans outstanding (ii) the Letter of
Credit Usage minus the cash collateral delivered to the Agent, then a portion of
-----
the cash collateral held by the Agent for the purposes described above shall be
paid to the Borrowers immediately, in the amount by which the Revolving
Commitment exceeds the sum of clauses (i) and (ii) specified above. Any amount
delivered to the Agent pursuant to this Section shall be held in an interest
bearing account established by the Agent and any interest paid on such account
shall be paid by the Agent to the Borrowers promptly following receipt thereof
by the Agent; provided, however, that noting herein shall require the Agent to
-------- -------
obtain any particular rate of interest on such account.
18
2.3 Interest Rate and Payment Dates.
-------------------------------
(a) Payment of Interest. Interest with respect to each Loan shall be
-------------------
payable in arrears on each Interest Payment Date for such Loan, on the Maturity
Date and on the date of any prepayment of any Eurodollar Rate Loan.
(b) Interest Rates. The Borrowers shall pay interest on the unpaid
--------------
principal amount of each Loan from the date of such Loan until the maturity
thereof, at one of the following rates per annum:
(i) With respect to Base Rate Loans, at a rate per annum equal to
the Base Rate; and
(ii) With respect to Eurodollar Rate Loans, at a rate per annum
equal at all times during each Interest Period for such Eurodollar Rate Loan to
the Eurodollar Rate for such Interest Period plus the Applicable Margin
----
therefor, as the Applicable Margin shall change from time to time.
2.4 Continuation and Conversion Options. Any Borrower may elect from time
-----------------------------------
to time to convert its outstanding Loans from Loans bearing interest at a rate
determined by reference to one basis to Loans bearing interest at a rate
determined by reference to an alternative basis by giving the Agent (i)
irrevocable written notice in the form of a Notice of Conversion/Continuation of
an election to convert Eurodollar Rate Loans to Base Rate Loans and (ii) at
least three (3) Eurodollar Business Days' prior irrevocable written notice in
the form of a Notice of Conversion/Continuation of an election to convert Base
Rate Loans to Eurodollar Rate Loans, provided that any conversion of Eurodollar
--------
Rate Loans shall only be made on the last day of an Interest Period with respect
thereto, provided, further that no Loan may be converted to a Eurodollar Rate
-------- -------
Loan so long as an Event of Default or Potential Event of Default has occurred
and is continuing. Any Borrower may elect from time to time to continue its
outstanding Eurodollar Rate Loans upon the expiration of the Interest Period(s)
applicable thereto by giving to the Agent at least three (3) Eurodollar Business
Days' prior irrevocable written notice of continuation in the form of a Notice
of Conversion/Continuation of a Eurodollar Rate Loan and the succeeding Interest
Period(s) of such continued Loan or Loans will commence on the last day of the
Interest Period of the Loan to be continued, provided that no Loan may be
--------
continued as a Eurodollar Rate Loan so long as an Event of Default or Potential
Event of default has occurred and is continuing. Each notice electing to
convert or continue a Loan shall be in the form of a Notice of
Conversion/Continuation and shall specify: (i) the proposed
conversion/continuation date; (ii) the amount of the Loan to be
converted/continued; (iii) the nature of the proposed continuation/conversion;
(iv) in the case of a conversion to, or continuation of, a Eurodollar Rate Loan,
the requested Interest
19
Period; and (v) the Borrower electing to convert or continue the Loan; and shall
certify that no Event of Default or Potential Event of Default has occurred and
is continuing. On the date on which such conversion or continuation is being
made each Lender shall take such action as is necessary to effect such
conversion or continuation. In the event that no notice of continuation or
conversion is received by the Agent with respect to outstanding Eurodollar Rate
Loans, upon expiration of the Interest Period(s) applicable thereto, such Loans
shall convert to Base Rate Loans. Subject to the limitations set forth in this
Section and in the definition of Interest Period, all or any part of outstanding
Loans may be converted or continued as provided herein, provided that partial
---------
conversions or continuations with respect to Eurodollar Rate Loans shall be in
an aggregate minimum amount of $1,000,000 and in an integral multiple of
$1,000,000 in excess hereof.
2.5 Letters of Credit.
-----------------
(a) Letters of Credit. The Borrowers may request from time to time
-----------------
during the period from the date hereof through the Maturity Date that the
Issuing Bank issue Letters of Credit for the account of any of the Borrowers,
provided, however, as follows:
-------- -------
(i) The aggregate amount available for drawing under all Letters
of Credit at any time outstanding shall not exceed the lesser of Three Million
Dollars ($3,000,000) or the Available Revolving Commitment at such time;
(ii) Each Letter of Credit issued hereunder shall be in Dollars;
(iii) Each Letter of Credit shall be governed by the Uniform
Customs and Practices for Documentary Credits as most recently published by the
International Chamber of Commerce (the "UCP") prior to the date of issuance of
---
such Letter of Credit and the terms of the UCP are hereby incorporated by
reference with respect to each Letter of Credit; and
(iv) In no event shall the Issuing Bank issue any Letter of Credit
having an expiration date beyond the lesser of one (1) year or the Maturity
Date.
(b) Request for Issuance: Payments Under Letters of Credit. Whenever
-------------------------------------------------------
any Borrower requests that the Issuing Bank issue a Letter of Credit, it shall
deliver to the Issuing Bank an executed application for such Letter of Credit in
the form customarily required by the Issuing Bank and the form of the Letter of
Credit requested, together with such other information or materials as the
Issuing Bank may request with respect to such Letter of Credit no later than
1:00 P.M., New York time, at least three (3) Business Days in advance of the
proposed date of issuance. IN DETERMINING WHETHER TO PAY UNDER
20
ANY LETTER OF CREDIT, THE ISSUING BANK SHALL BE RESPONSIBLE ONLY TO DETERMINE
THAT THE DOCUMENTS AND CERTIFICATES REQUIRED TO BE DELIVERED UNDER THAT LETTER
OF CREDIT HAVE BEEN DELIVERED AND THAT THEY COMPLY ON THEIR FACE WITH THE
REQUIREMENTS OF THAT LETTER OF CREDIT.
(c) Issuance of Letters of Credit. If the Issuing Bank elects to
-----------------------------
issue the requested Letter of Credit and upon the satisfaction of all relevant
conditions set forth in Sections 4.1 and 4.3, the Issuing Bank shall issue a
Letter of Credit by delivering the Letter of Credit to the beneficiary, and
shall promptly notify the Agent and the Lenders of the amount and terms thereof.
Any Letter of Credit issued hereunder shall be governed by the terms and
provisions hereof as well as by the terms and provisions of the application
executed in connection therewith pursuant to Section 2.5(b). If the Issuing Bank
declines to issue the requested Letter of Credit it shall promptly so notify the
Borrower requesting such Letter of Credit and such Borrower shall withdraw its
application therefor.
(d) Participation by Lenders in Letters of Credit.
---------------------------------------------
(i) The Issuing Bank irrevocably agrees to grant and hereby
grants to each Lender, and, to induce the Issuing Bank to issue Letters of
Credit hereunder, each Lender irrevocably severally agrees to accept and
purchase and hereby severally accepts and purchases from the Issuing Bank, on
the terms and conditions hereinafter stated, for such Lender's own account and
risk an undivided interest equal to Lender's ratable share of the Revolving
Commitment in the Issuing Bank's obligations and rights under each Letter of
Credit issued hereunder by the Issuing Bank and each amount paid by the Issuing
Bank thereunder. Each Lender unconditionally and irrevocably severally agree
with the Issuing Bank that, if any amount is paid under any Letter of Credit for
which the Issuing Bank is not reimbursed in full by the Borrowers in accordance
with the terms of this Agreement, such Lender shall pay to the Agent, for the
account of the Issuing Bank, upon demand at the Agent's address for notices, an
amount equal to such Lender's pro rata share of such payment, or any part
thereof, which is not so reimbursed; such amount shall be due on the Business
Day upon which such demand shall be given, if such demand is given on or before
2:00 p.m., New York City time, on such day and, if such demand shall be given
later than such time, such amount shall be due on the next succeeding Business
Day. The Agent shall promptly pay over to the Issuing Bank all amounts so
received by it.
(ii) If any amount required to be paid by any Lender to the
Issuing Bank in respect of any unreimbursed portion of any payment made by the
Issuing Bank under any Letter of Credit is paid to the Agent for the account of
the Issuing Bank within three Business Days after the date such payment is due,
such Lender shall pay to the Issuing Bank on demand an
21
amount equal to the product of (A) such amount, times (B) the Federal Funds 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 Bank, times
(C) a fraction the numerator of which is the number of days that elapsed during
such period and the denominator of which is 360. If any such amount required to
be paid by any Lender is not in fact made available to the Agent for the account
of the Issuing Bank after the date such payment is due, the Issuing Bank shall
be entitled to recover from such Lender, on demand, such amount with interest
thereon calculated from such due date at the rate per annum then applicable to
Base Rate Loans hereunder. A certificate of the Issuing Bank submitted to any
Lender with respect to any amounts owing under this section shall be conclusive
in the absence of manifest error.
(iii) Whenever, at any time after the Issuing Bank has made
payment under any Letter of Credit and has received from any Lender its pro rata
share of such payment in accordance with this section, the Issuing Bank receives
any payment relate to the Letter of Credit (whether directly from any Borrower
or otherwise), or any payment on interest on account thereof, the Issuing Bank
will pay to the Agent for distribution to such Lender its pro rata share
thereof; provided, however, that in the event that any such payment received by
-------- -------
the Issuing Bank shall be required to be returned by the Issuing Bank, such
Lender shall return to the Issuing Bank the portion thereof previously
distributed by the Issuing Bank to it.
(e) Reimbursement of Amounts Drawn Under Letter of Credit. The
-----------------------------------------------------
Issuing Bank shall notify the Borrowers and the Agent of a request for a drawing
under a Letter of Credit promptly after receipt thereof by the Issuing Bank;
provided, however, that the failure to so notify the Borrowers will not relieve
-------- -------
the Borrowers from any obligation to reimburse the Issuing Bank hereunder, and
the Borrower for whose account the Letter of Credit was issued shall reimburse
the Issuing Bank for sum amount in immediately available funds prior to 3:00
P.M., New York time, on the date of the drawing. In the event that the
applicable Borrower shall fail to so reimburse the Issuing Bank, the Issuing
Bank shall promptly notify the Agent who shall promptly notify each Lender. The
Agent shall pay to the Issuing Bank the amount of the unpaid Letter of Credit
and, thereafter, the Borrower for whose account the Letter of Credit was issued
and the Lenders shall be obligated to reimburse the Agent in respect of such
Letter of Credit prior to 3;00 P.M., New York time, on the date of any such
notice, each Lender shall make a payment under its participation in such Letter
of Credit (which, except as provided in Section 2.5(f)(iii), shall constitute a
Revolving Loan to the Borrower for whose account the Letter of Credit was
issued) in an amount equal to that Lender's ratable share of the unreimbursed
amount of such drawing, by depositing immediately available funds in such amount
in the account of the Agent set forth on the signature pages hereof. The Agent
shall
22
promptly pay to the Issuing Bank the proceeds of such Revolving Loans, which
shall be used by the Issuing Bank to repay the unreimbursed amount. Such
Revolving Loans shall be evidenced by the Revolving Notes and shall initially be
Base Rate Loans. The obligation of each Lender to reimburse the Issuing Bank is
absolute and unconditional and shall not be affected by the occurrence of an
Event of Default or any other occurrence or event. Any such reimbursement shall
not relieve or otherwise impair the obligation of the Borrower for whose account
the Letter of Credit was issued to reimburse the Issuing Bank for the amount of
any payment made by the Issuing Bank under such Letter of Credit as set forth
herein. If any Lender fails to make available to the Agent the amount of such
Lender's participation in such Letter of Credit as provided above, the Issuing
Bank shall be entitled to recover such amount on demand from such Lender
together with interest thereon, for each day from the date of notice to such
Lender to the date such amount is paid to the Issuing Bank at a rate which is at
all times equal to three percent (3%) per annum in excess of the Base Rate in
effect from time to time; provided that if the failure to pay is solely the
result of an administrative error (which determination shall be made by the
Agent in its sole discretion) or is solely the result of the Lender receiving
notice too late in the day to make payment to the Agent on that day, then the
interest rate for the first day of such delay shall be the Federal Funds Rate.
(f) Compensation. The Borrowers agree to pay the following amount to
------------
the Agent for the account of the Issuing Bank with respect to Letters of Credit:
(i) with respect to each Letter of Credit, payable on the date of
issuance of such Letter of Credit and on the date of any extension or amendment
to such Letter of Credit, a nonrefundable Letter of Credit fee for the account
of the Issuing Bank equal to one-quarter of one percent (1/4 of 1%) per annum of
the stated amount of such Letter of Credit;
(ii) with respect to each Letter of Credit, a Letter of Credit fee
for the ratable benefit of the Lenders at the rate of one percent (1%) per annum
on the stated amount of the letter of Credit for the period from and including
the date of issuance of the Letter of Credit to and including the date such
Letter of Credit is drawn in full, expires or is terminated, payable quarterly
in arrears on the last Business Day of each March, June, September and
December;
(iii) with respect to drawings made under any Letter of Credit, to
the extent a Revolving Loan is not made to reimburse the Issuing Bank for each
such drawing, interest, payable on demand, on the amount paid by the Issuing
Bank in respect of each such drawing from the date of the drawing through the
date such amount is reimbursed by the Borrower for whose account the Letter of
Credit was issued at a rate which is at all
23
times equal to three percent (3%) per annum in excess of the Base Rate in effect
from time to time; and
(iv) with respect to the amendment or transfer of each Letter of
Credit and each drawing made thereunder documentary and processing charges for
the account of the Issuing Bank in accordance with the Issuing Bank's standard
schedule for such charges in effect at the time of amendment, transfer or
drawing, as the case may be, or other agreed upon rate.
(g) Obligations Absolute. The obligation of the Lenders under Section
--------------------
2.5(e) shall be unconditional and irrevocable and shall be paid strictly in
accordance with the terms of this Agreement under all circumstances including
the following circumstances:
(i) any lack of validity or enforceability of any Letter of
Credit;
(ii) the existence of any claim, set-off, defense or other right
which any Borrower may have at any time against the beneficiary or any
transferee of the Letter of Credit (or any Persons for whom any such transferee
may be acting), the Issuing Bank, the Agent or any other Person, whether in
connection with this Agreement, the transactions contemplated herein or any
unrelated transaction (including any underlying transaction between any Borrower
and the beneficiary for which the Letter of Credit was procured);
(iii) any draft, certificate or any other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect; or
(iv) payment against any draft, document or other demand for
payment that does not comply with the terns of the Letter of Credit, provided
that such payment does not constitute gross negligence or willful misconduct on
the part of the Issuing Bank as determined by a final judgment of a court of
competent jurisdiction; or
(v) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing.
(h) Payments Avoided. If any payment received on account of any
----------------
reimbursement obligation in respect of a Letter of Credit and distributed to a
Lender as a participant under this Section 2.5 is hereafter set aside, avoided
or recovered from the Issuing Bank in connection with any receivership,
liquidation, reorganization or bankruptcy proceeding relating to any Borrower,
each Lender that received a distribution in respect of such payment shall, upon
demand by the Agent, pay to the Issuing Bank the amount of such distribution
received by such Lender.
24
(i) Issuing Bank. The Designated Issuer, to the extent that it issues
------------
Letters of Credit hereunder, shall be fully protected for its actions hereunder
and have all of the benefits and immunities provided to a Lender hereunder.
ARTICLE III
GENERAL PROVISIONS CONCERNING THE LOANS
3.1 Use of Proceeds. The proceeds of the Loans hereunder shall be
---------------
used by the Borrowers for general corporate purposes
3.2 Post Maturity Interest. Notwithstanding anything to the contrary
----------------------
contained in Section 2.3, if all or a portion of the principal amount of any of
the Loans made hereunder or any interest accrued thereon shall not be paid when
due (whether at the stated maturity, by acceleration or otherwise), any such
overdue amount shall bear interest at a rate per annum which is equal to the
greater of (a) two percent (2%) above the highest rate which would otherwise be
applicable pursuant to Section 2.3 and (b) three percent (3%) above the Base
Rate, from the date of such nonpayment until paid in full (after as well as
before judgment), payable on demand. In addition, such Loan, if a Eurodollar
Rate Loan, shall be converted to a Base Rate Loan at the end of the then current
Interest Period therefor.
3.3 Computation of Interest.
-----------------------
(a) Calculations. Interest in respect of the Base Rate Loans and
------------
all fees payable by the Borrowers hereunder shall be calculated on the basis of
a 365 or 366 day year, as the case may be, for the actual days elapsed. Interest
in respect of the Eurodollar Rate Loans shall be calculated on the basis of a
360 day year for the actual days elapsed. Interest payable pursuant to Section
2.5 shall be calculated on the basis of a 365 or 366, as the case may be, day
year for the actual days elapsed. Any change in the interest rate on a Base Rate
Loan resulting from a change in the Base Rate shall become effective as of the
opening of business on the day on which such change in the Base Rate shall
become effective. Any change in the interest rate as a result of a change in the
Debt/Consolidated EBITDA Ratio shall be effective for each Loan on the first day
of each Pricing Period. In computing interest on any Loan, the date of the
making of the Loan shall be included and the date of payment shall be excluded;
provided that if a Loan is repaid on the same day on which it is made, one day's
--------
interest shall be paid on that Loan.
(b) Determination by Agent. Each determination of an interest
----------------------
rate or fee by the Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrowers in the absence of manifest error.
25
3.4 Payments. The Borrowers shall make each payment of principal,
--------
interest and fees hereunder and under the Notes, without set-off or
counterclaim, not later than 3:00 P.M., New York time, on the day when due in
lawful money of the United States of America to the Agent at the office of the
Agent designated from time to time in immediately available funds; funds
received by the Agent after that time shall be deemed to have been paid by the
Borrowers on the next succeeding Business Day. Each Borrower hereby authorizes
the Agent to charge its accounts with the Agent in order to cause timely payment
to be made to the Agent of all principal, interest, fees and expenses due
hereunder (subject to sufficient funds being available in its accounts for that
purpose). The Agent shall notify the Borrowers one (1) Business Day prior to the
date of any charge under this Section 3.4; provided, however, that the failure
-------- -------
to so notify the Borrowers will not affect the Agent's right to charge such
accounts. The Agent shall promptly pay to each Lender its pro rata share of each
payment received by the Agent. All prepayments shall be applied to payment of
accrued interest on the principal amount prepaid before application to
principal. Any mandatory prepayment shall be applied first to Base Rate Loans
to the full extent thereof before application to Eurodollar Rate Loans.
3.5 Payment on Non-Business Days. Whenever any payment to be made
----------------------------
hereunder or under the Notes shall be stated to be due on a day which is not a
Business Day, such payment may be made on the next succeeding Business Day and,
with respect to payments of principal, interest thereon shall be payable at the
then applicable rate during such extension
3.6 Reduced Return. If any Lender or the Issuing Bank shall have
--------------
determined that any law, regulation, rule or regulatory requirement applicable
to financial institutions generally regarding capital adequacy ("Requirement"),
-----------
or any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Lender
or the Issuing Bank with any request or directive regarding capital adequacy
(applicable to financial institutions generally whether or not having the force
of law) of any such authority, central bank or comparable agent, has or would
have the effect of reducing the rate of return on such Lender's or the Issuing
Bank's capital as a consequence of its Commitment and obligations hereunder, the
Letters of Credit issued hereunder or its obligation to purchase a participation
in the Letters of Credit to a level below that which would have been achieved
but for such Requirement, change or compliance (taking into consideration such
Lender's or the Issuance Bank's, as the case may be, polices with respect to
capital adequacy) by an amount deemed by such Lender or the Issuing Bank, as the
case may be, to be material (which amount shall be determined by such Lender's
or the Issuing Bank's, as the case may be, reasonable allocation of the
26
aggregate of such reductions resulting from such events) then from time to time,
within five (5) Business Days after demand by such Lender or the Issuing Bank,
as the case may be, the Borrowers shall pay to that Lender or the Issuing Bank,
as the case may be, such additional amount or amounts as will compensate that
Lender or the Issuing Bank, as the case may be, for such reduction.
3.7 Indemnities.
-----------
(a) General. Whether or not the transactions contemplated hereby
-------
shall be consummated, the Borrowers agree to indemnify, pay and hold the Agent,
the Issuing Bank and each Lender, and the shareholders, officers, directors,
employees and agents of the Agent, the Issuing Bank and each Lender (each, an
"Indemnified Person"), harmless from and against any and all claims,
------------------
liabilities, losses, damages, costs and expenses (whether or not any of the
foregoing Persons is a party to any ligation), including reasonable attorneys'
fees and costs (including the reasonable estimate of the allocated cost of in-
house legal counsel and staff) and including costs of investigation, document
production, attendance at a deposition, or other discovery, with respect to or
arising out of any proposed acquisition by BEI or any of its Subsidiaries of any
Person or any securities (including a self-tender), this Agreement or any use of
proceeds hereunder, the issuance of any Letter of Credit or the failure by the
Issuing Bank to honor a drawing under a Letter of Credit as a result of any act
or omission of any government or governmental authority, or any claim, demand,
action or cause of action being asserted against BEI or any of its Subsidiaries,
whether or not any Indemnified Person is a party thereto (collectively, the
"Indemnified Liabilities"), except to the extent such Indemnified Liabilities
------------------------
result from the gross negligence or willful misconduct of any such Indemnified
Person. If any claim is made, or any action, suit or proceeding is brought,
against any Indemnified Person, the Indemnified Person shall notify the
Borrowers of such claim or of the commencement of such action, suit or
proceeding, and the Borrowers at their option may, or at the request of the
Indemnified Person will, control and direct the defense of such action, suit or
proceeding, employing counsel selected by the Borrowers and reasonably
satisfactory to the Indemnified Person, and pay the fees and expenses of such
counsel; provided, however, that any Indemnified Person may at its own expense
-------- -------
retain separate counsel to participate in such defense. To the extent that the
undertaking to indemnify, pay and hold harmless set forth in his Section 3.7 may
be unenforceable because it is violative of any law or public policy, the
Borrowers shall contribute the maximum portion which they are permitted to pay
and satisfy under applicable law, to the payment and satisfaction of all
Indemnified Liabilities incurred by any Indemnified Person.
(b) Funding Losses. The Borrowers agree to indemnify each Lender and
--------------
to hold each Lender harmless from any loss or
27
expense, including any such loss or expense arising from interest or fees
payable by such Lender to Lenders of funds obtained by it in order to maintain
its Eurodollar Rate Loans hereunder, which such Lender may sustain or incur as a
consequence of (i) default by any Borrower in payment of the principal amount of
or interest on the Eurodollar Rate Loans of such Lender, (ii) default by any
Borrower in making a conversion or continuation after such Borrower has given a
notice thereof (other than pursuant to Section 3.13), (iii) default by any
Borrower in making any prepayment after such Borrower has given a notice of
prepayment, or (iv) any Borrower making any payment of a Eurodollar Rate Loan on
a day other than the last day of the Interest Period for such Loan (other than
pursuant to Section 3.13). For purposes of this Section 3.7, it shall be
assumed that the affected Lender had funded or would have funded 100%, as the
case may be, of each Eurodollar Rate Loan in the inter bank Eurodollar market
for a corresponding amount and term. In the event any Lender makes a claim for
payment under clause (iv) of this Section 3.7(b), the Borrowers shall be
credited with a reinvestment rate equal to the Eurodollar Reinvestment Rate.
Each Lender making a claim for payment under this Section 3.7(b) shall submit to
the Agent, who shall promptly transmit it to the Borrowers, an invoice for the
amount claimed to be owed by the Borrowers, showing in reasonable detail the
calculations necessary to determine the amount. The determination of such
amount by such Lender shall be presumed correct in the absence of manifest
error.
3.8 Funding Sources. Nothing in this Agreement shall be deemed to
---------------
obligate any Lender to obtain the funds for any Loan in any particular place or
manner or to constitute a representation by any Lender that it has obtained or
will obtain the funds for any Loan in any particular place or manner.
3.9 Taxes.
-----
(a) Payments. Any and all payments by the Borrowers hereunder
--------
shall be made free and clear of and without deduction for any and all taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, arising under any law, rule or regulation of the United States
or any state or political subdivision hereof, excluding, in the case of each
---------
Lender, the Agent, each assignee, each participant and the Issuing Bank, taxes
imposed on its net income, and franchise taxes imposed on it, by the
jurisdiction under the laws of which such Lender, Agent, assignee, participant
or Issuing Bank (as the case may be) is organized or any political subdivision
thereof and, in the case of each Lender, the Agent, each assignee, each
participant or the Issuing Bank, taxes imposed on its net income, and franchise
taxes imposed on it, by the jurisdiction of the office or branch in which such
Lender, Agent, assignee, participant or Issuing Bank books the Loans or the
Letters of Credit or in which it is deemed to be doing business or any political
subdivision thereof (all such non-excluded taxes, levies, imposts, deductions,
charges,
28
withholdings and liabilities being hereinafter referred to as "Taxes"). If the
-----
Borrowers shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder to any Lender, the Agent, any assignee, any participant or
the Issuing Bank, (i) the sum payable shall be increased as may be necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section 3.9) such Lender, Agent, assignee,
participant or Issuing Bank, as the case may be, receives an amount equal to the
sum it would have received had no such deductions been made, (ii) the Borrowers
shall make such deductions and (iii) the Borrowers shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable law; provided that the Borrowers shall not be required pursuant
to clause (i) above to increase the sum payable to any Lender, Agent, assignee,
participant or Issuing Bank organized under the laws of a jurisdiction outside
of the United States if such Lender, Agent, assignee, participant or Issuing
Bank, as the case may be, shall have failed to provide the forms referred to in
Section 3.9(e).
(b) Other Taxes. In addition, the Borrowers agree to pay any present
-----------
or future stamp or documentary taxes or any other taxes or property taxes,
charges or similar levies arising under any laws, rule or regulation of the
United States or any state or political subdivision hereof which arise from any
payment made hereunder or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement, other than taxes, levies, impose,
deductions, charges or withholdings excluded under Section 3.4 (hereinafter
referred to as "Other Taxes").
-----------
(c) Indemnity. The Borrowers will indemnify each Lender, the Agent,
---------
each assignee, each participant and the Issuing Bank for the full amount of
Taxes or Other Taxes (including any Taxes or Other Taxes unposed by any
jurisdiction on amounts payable under this Section 3.9), paid by such Lender,
Agent, assignee, participant or Issuing Bank (as the case may be) and any
liability (including penalties, interest and expenses) arising therefrom or with
respect hereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. Each Lender, the Agent, each assignee, each participant and
the Issuing Bank, as the case may be, shall notify the Agent, who shall promptly
notify the Borrowers, of the imposition of any such Taxes or Other Taxes within
a reasonable period of time prior to the required payment date of any such Taxes
or Other Taxes: provided, however that the failure to so notify the Borrowers
-------- -------
will not relieve the Borrowers from any liability hereunder. If the Borrowers
and the affected Lender, Agent, assignee, participant or Issuing Bank, as the
case may be, determining in good faith that the Taxes or Other Taxes are not
correctly or legally asserted, upon Borrowers written request such affected
party agrees to use reasonable efforts to contest the imposition of such Taxes
or Other Taxes, and, in the event of
29
any such contest, the Borrowers shall indemnify, pay and hold the affected party
harmless from and against any and all claims, liabilities, losses, damages,
costs and expenses, including attorneys' fees and costs, incurred by the
affected party in connection with or arising out of such contest within five (5)
Business Days of receipt by any Borrower of a statement from the affected party
setting forth a calculation of the unpaid losses, damages, costs or expenses
incurred to the date of such statement; provided, however, that no affected
-------- -------
party shall be required under this Section 3.9(c) to initiate any action or
proceeding before any court or administrative agency. If any Lender, the Agent,
any assignee, any participant or the Issuing Bank makes a claim for payment
under this Section 3.9(c), it shall submit to the Agent, who shall promptly
transmit it to the Borrowers, an invoice for the amount claimed to be owed by
the Borrowers, showing in reasonable detail the calculations necessary to
determine the amount. The determination of such amount by such Lender, Agent,
assignee, participant or Issuing Bank (as the case may be) shall be presumed
correct in the absence of manifest error. This indemnification shall be made
within thirty (30) days from the date such Lender, Agent, assignee, participant
or Issuing Bank (as the case may be) makes written demand therefor. Each Lender,
the Agent, each assignee, each participant and the Issuing Bank agrees to
reimburse the Borrowers for amounts paid by the Borrowers pursuant to this
Section 3.9 to the extent that such Lender, Agent, assignee, participant or
Issuing Bank actually recovers all or any portion of such amounts from the
applicable taxing authority which recovery is specifically designated by such
taxing authority as being applicable to such amounts.
(d) Evidence of Payment. Within sixty (60) days after the date of any
-------------------
payment of Taxes, the Borrowers will furnish to the Agent, at its address
referred to in Section 10.2, the original or a certified copy of a receipt
evidencing payment thereof or other evidence of the payment hereof satisfactory
to the Agent.
(e) IRS Forms. Prior to the date of the initial Borrowing (and from
---------
time to time hereafter if requested by the Borrowers or the Agent) each Lender,
Agent, assignee, participant and Issuing Bank organized under the laws of a
jurisdiction outside the United States shall provide the Agent and the Borrowers
with the forms prescribed by the Internal Revenue Service of the United States
certifying as to the status of such Lender, Agent, assignee, participant or
Issuing Bank for purposes of determining exemption from United States
withholding taxes with respect to all payments to be made to such Lender, Agent,
assignee, participant or Issuing Bank hereunder or other documents satisfactory
to the Borrowers and the Agent indicating that all payments to be made to such
Lender, Agent, assignee, participant or Issuing Bank hereunder are subject to
such taxes at a rate reduced by an applicable tax treaty. Unless the Borrowers
and the Agent have received forms or other documents
30
satisfactory to them indicating that payments hereunder are not subject to
United States withholding tax, the Borrowers or the Agent shall withhold taxes
from such payments at the applicable statutory rate or such lower rate as
provided in an applicable tax treaty in the case of payments to or for any
Lender, assignee, participant or Issuing Bank organized under the laws of a
jurisdiction outside the United States.
3.10 Sharing of Payments Etc. If any Lender shall obtain any payment
-----------------------
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) on account of the Loans owing to it in excess of its ratable share
of payments on account of the Loans obtained by all the Lenders, then such
Lender shall forthwith purchase from the other Lenders such participations in
the Loans owing to them as shall be necessary to cause such purchasing Lender to
share the excess payment ratably with each of them; provided, however, that if
-------- -------
all or any portion of such excess payment is thereafter recovered from such
purchasing Lender, such purchase from each Lender shall be rescinded and such
Lender shall repay to the purchasing Lender the purchase price to the extent of
such recovery together with an amount equal to such Lender's ratable share
(according to the proportion of (i) the amount of such Lender's required
repayment to (ii) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered. The Borrowers agree at any Lender so
purchasing a participation from another Lender pursuant to this Section 3.10 or
any other provision of this Agreement may, to the fullest extent permitted by
law, exercise all of its rights of payment (including the right to set-off) with
respect to such participation as fully as if such Lender were the direct
creditor of the Borrowers in the amount of such participation.
3.11 Inability to Determine Interest Rate. In the event that the
------------------------------------
Agent or any Lender shall have determined (which determination shall be
conclusive and binding upon the Borrowers) that by reason of circumstances
affecting the inter bank Eurodollar market, adequate and reasonable means do not
exist for ascertaining the Eurodollar Rate applicable pursuant to Section 2.3
for any Interest Period with respect to a Eurodollar Rate Loan that will result
from a requested Eurodollar Rate Loan or that such rate of interest does not
adequately cover the cost of funding such Loan, and the result of any of the
foregoing is to increase the cost to any Lender or the Issuing Bank of making,
receiving or maintaining its Revolving Commitment or Eurodollar Rate Loans or of
issuing, renewing or maintaining the Letters of Credit or purchasing a
participation therein, or to reduce any amount receivable thereunder (which
increase or reduction shall be determined by such Lender's or the Issuing
Bank's, as the case may be, reasonable allocation of the aggregate of such cost
increases or reduced amounts receivable resulting from such events), then, in
any such case, the Borrowers shall pay to such Lender or the Issuing Bank, as
the case may be, within three (3)
31
Business Days of its demand, any additional amounts necessary to compensate such
Lender or the Issuing Bank, as the case may be, for such additional cost or
reduced amount receivable as determined by such Lender or the Issuing Bank, as
the case may be, with respect to this Agreement if any Lender or the Issuing
Bank becomes entitled to claim any additional amounts pursuant to this Section
3.12, it shall notify the Borrowers of the event by reason of which it has
become so entitled. A statement incorporating the calculation as to any
additional amounts payable pursuant to the foregoing sentence submitted by the
affected Lender or the Issuing Bank, as the case may be, to the Borrowers shall
be conclusive in the absence of manifest error.
3.12 Illegality. Notwithstanding any other provisions herein, if any
----------
law, regulation, treaty or directive or any change rein or in the interpretation
or application thereof shall make it unlawful, impossible or impracticable for
any Lender to make or maintain Eurodollar Rate Loans as contemplated by this
Agreement, (a) the commitment of such Lender hereunder to make Eurodollar Rate
Loans or convert Base Rate Loans to Eurodollar Rate Loans shall forthwith be
cancelled and (b) such Lender's Loans then outstanding as Eurodollar Rate Loans,
if any, shall be converted automatically to Base Rate Loans on the next
succeeding Interest Payment Date or within such earlier period as allowed by
law. The Borrowers hereby agree to pay any Lender, within three (3) Business
Days of its demand, any additional amounts necessary to compensate such Lender
for any costs (excluding loss of anticipated profits) incurred by such Lender in
making any conversion in accordance with this Section 3.13, including any
interest or fees payable by such Lender to lenders of funds obtained by it in
order to make or maintain its Eurodollar Rate Loans hereunder. Each Lender
making a claim for payment under this Section 3.13 shall submit to the Agent,
who shall promptly transmit it to the Borrowers, an invoice for the amount
claimed to be owed by the Borrowers, showing in reasonable detail the
calculations necessary to determine the amount. The determination of such
amount by such Lender shall be presumed correct in the absence of manifest
error.
3.13 Change of Booking Office. Any Lender claiming any additional
------------------------
amounts payable pursuant to Section 3.9 or 3.12 shall use its reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions) to
change the jurisdiction of the office or branch in which it books the Loans if
the making of such a change would avoid the need for, or reduce the amount of,
any such additional amounts which may thereafter accrue and would not, in the
reasonable judgment of such Lender, be otherwise disadvantageous to such Lender;
provided, however, that such Lender shall not be obligated to use such other
-------- -------
office or branch pursuant to this Section 3.14 unless the Borrowers agree to pay
all reasonable expenses incurred by such Lender in using such other office or
branch.
32
3.14 Right to Replace Lender. If the Borrowers shall, as a result of
-----------------------
the requirements of Section 3.6 or 3.12, be required to pay any Lender the
additional costs referred to in such Section, the Borrowers shall have the right
to substitute another financial institution satisfactory to the Agent (whose
approval will not be unreasonably withheld) for such Lender which has submitted
an invoice for such additional costs. Any such substitution shall be on terms
and conditions satisfactory to the Agent. Until such time as such substitution
shall be consummated, the Borrowers shall continue to pay any additional costs
invoiced by such Lender and shall continue to pay all other amounts payable to
such Lender hereunder. Upon any such substitution, the Borrowers shall pay or
cause to be paid to the Lender that is being replaced all principal, interest
(to the date of such substitution) and other amounts owing hereunder to such
Lender.
ARTICLE IV
CONDITIONS OF LENDING
4.1 Conditions Precedent to Initial Loans. The obligation of each
-------------------------------------
Lender to make its initial Loan is subject to the conditions precedent that:
(a) The Agent shall have received on or before the day of the
initial Borrowing the following, each dated such day (except for the document
referred to in clause (ii)), in form and substance satisfactory to the Agent and
(except for the Notes) in sufficient copies for each Lender;
(i) The Notes issued by the Borrowers to the order of each
Lender;
(ii) Copies of the Articles, Certificate of Incorporation,
partnership agreement or other organizational document of each Borrower and the
Subsidiary Guarantor, certified as of a recent date by the Secretary of State of
its state of formation or incorporation;
(iii) Copies of the Bylaws, if any, of each Borrower and
the Subsidiary Guarantor, certified by the Secretary or an Assistant Secretary
of such Borrower or the Subsidiary Guarantor;
(iv) Copies of resolutions of the Board of Directors or
other authorizing documents of each Borrower and the Subsidiary Guarantor,
approving the Loan Documents and the Borrowings hereunder, certified by the
Secretary or an Assistant Secretary of each Borrower or the Subsidiary
Guarantor;
(v) An incumbency certificate executed by the Secretary or
an Assistant Secretary of each Borrower and the Subsidiary Guarantor or
equivalent document, certifying the names
33
and signatures of the officers of such Borrower, the Subsidiary Guarantor or
other Persons authorized to sign the Loan Documents and the other documents to
be delivered hereunder;
(vi) Executed copies of all Loan Documents;
(vii) A pro forma Compliance Certificate as of the end of
June, 1997; and
(viii) A favorable opinion of counsel to the Borrowers and
the Subsidiary Guarantor, in such form and substance, and with respect to such
matters, as any Lender may reasonably request.
(b) The Borrowers shall have paid to the Agent, for distribution (as
appropriate) to the Agent and the Lenders, all fees payable on or prior to the
Closing Date.
(c) All corporate and legal proceedings and all instruments and
documents in connection with the transactions contemplated by this Agreement
shall be reasonably satisfactory in content, form and substance to the Agent and
its counsel, and each Lender, and the Agent and the Agent's counsel shall have
received any and all further information and documents which the Agent or such
counsel may reasonably have requested in connection therewith, such documents
where appropriate to be certified by proper corporate or governmental
authorities.
4.2 Conditions Precedent to Each Borrowing. The obligation of each
--------------------------------------
Lender to make a Loan on the occasion of each Borrowing (including the Initial
Borrowing) shall be subject to the further conditions precedent that on the date
of such Borrowing the following statements shall be true and the Agent shall
have received the Notice of Borrowing required by Section 2.1(b), which notice
shall include a certification by the Borrowers that:
(a) the representations and warranties contained in Section 5.1 are
true and correct in all material respects on and as of the date of such
Borrowing as though made on and as of such date except to the extent such
representations or warranties specifically relate to an earlier date in which
case they were true and correct in all material respects as of such earlier
date,
(b) no event has occurred and is continuing, or would result from such
Borrowing, which constitutes an Event of Default or Potential Event of Default,
and
(c) all Loan Documents are in full force and effect.
34
4.3 Conditions Precedent to Each Letter of Credit. The issuance of any
---------------------------------------------
Letter of Credit hereunder is subject to the prior or concurrent
satisfaction of all of the following conditions:
(a) On or before the date of issuance of the initial Letter of Credit,
each of the conditions set forth in Section 4.1 shall have been satisfied or
waived and the initial loans shall have been made hereunder.
(b) On or before the date of issuance, the Issuing Bank shall have
received the executed application for such Letter of Credit in the form
customarily required by the Issuing Bank and all other information specified in
Section 2.5(b) and such other documents as the Issuing Bank may reasonably
require in connection with the issuance of such Letter of Credit.
(c) On the date of issuance, all conditions precedent described in
Section 4.2 shall be satisfied to the same extent as though the issuance of such
Letter of Credit were the making of a Loan and the date of issuance of such
Letter of Credit were the date of a Borrowing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties. The Borrowers represent and
------------------------------
warrant as follows:
(a) Organization. Each Borrower and each of its Subsidiaries are duly
------------
organized, validly existing and in good standing under the laws of their
respective states of formation. The Borrowers and their respective Subsidiaries
are also duly authorized, qualified and licensed in all applicable
jurisdictions, and under all applicable laws, regulations, ordinances or orders
of public authorities, to carry on their respective businesses in the locations
and in the manner presently conducted.
(b) Authorizations. The execution, delivery and performance by the
--------------
Borrowers and the Subsidiary Guarantor of the Loan Documents, and the making of
Borrowings hereunder, are within each such Person's corporate or partnership
powers, as the case may be, have been duly authorized by all necessary corporate
or partnership action, as the case may be, and do not contravene (i) such
Person's charter, by-laws or other organizational documents or (ii) any law or
regulation (including Regulations G, T, U and X) or any contractual restriction
binding on or affecting any such Person.
35
(c) Governmental Consents. No authorization or approval or other
---------------------
action by, and no notice to or filing with, any governmental authority or
regulatory body (except routine reports required pursuant to the Securities
Exchange Act of 1934, as amended (if such act is applicable to any of the
Borrowers or the Subsidiary Guarantor), which reports will be made in the
ordinary course of business) is required for the due execution, delivery and
performance by the Borrowers and the Subsidiary Guarantor of the Loan Documents.
(d) Validity. The Loan Documents are the binding obligations of the
--------
Borrowers and the Subsidiary Guarantor, enforceable in accordance with their
respective terms; except in each case as such enforceability may be limited by
bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar
laws of general application and equitable principles relating to or affecting
creditors' rights.
(e) Financial Condition. The 1997 balance sheets of BEI Electronics,
-------------------
Inc. and its consolidated Subsidiaries as at fiscal June 1997 and fiscal
September 1996, and the related statements of income and retained earnings of
BEI Electronics, Inc. and its consolidated Subsidiaries for the fiscal year and
fiscal quarter then ended, and the information set forth in each of the Form 10-
Q filed on August 12, 1997 with the Securities and Exchange Commission under the
heading "Discontinued Operations -Technologies" and the Form 10 filed on July 3,
1997 (as amended) with the Securities and Exchange Commission with respect to
BEI, copies of which have been furnished to each Lender, fairly present the
financial condition of BEI and its consolidated Subsidiaries as at such dates
and the results of the operations of BEI and its consolidated Subsidiaries for
the respective periods ended on such dates, all in accordance with GAAP,
consistency applied, and since fiscal June 1997 there has been no material
adverse change in the business, operations, properties, assets, prospects or
condition (financial or otherwise) of BEI and its Subsidiaries, taken as a
whole.
(f) Litigation. Except as set forth in the Disclosure Letter, as of
----------
the date hereof and as of the Closing Date, there is no pending or threatened
action or proceeding affecting BEI or any of its Subsidiaries before any court,
governmental agency or arbitrator, which may have a material adverse effect on
any Borrower's or the Subsidiary Guarantor's ability to perform its obligations
under the Loan Documents, having regard for its other financial obligations.
36
(g) Employee Benefit Plans. The Borrowers and each of their respective
----------------------
ERISA Affiliates (including the Subsidiary Guarantor) is in compliance in all
material respects with any applicable provisions of ERISA and the regulations
and published interpretations thereunder with respect to all Employee Benefit
Plans. None of the Borrowers nor any of their respective ERISA Affiliates
(including the Subsidiary Guarantor) maintains, or has at any time maintained or
contributed to, a Pension Plan and no employee of any of the Borrowers or of any
of their respective ERISA Affiliates (including the Subsidiary Guarantor)
participates in a Multiemployer Plan.
(h) Disclosure. No representation or warranty of the Borrowers or the
----------
Subsidiary Guarantor contained in this Agreement or any other document,
certificate or written statement furnished to the Agent or any Lender by or on
behalf of such Person for use in connection with the transactions contemplated
by this Agreement contains any untrue statement of a material fact or omits to
state a material fact (known to the Borrowers or the Subsidiary Guarantor in the
case of any document not furnished by them) necessary in order to make the
statements contained herein or therein not misleading. There is no fact known
to the Borrowers or the Subsidiary Guarantor (other than matters of a general
economic nature) which materially adversely affect the business, operations,
properties, assets, prospects or condition (financial or otherwise) of any
Borrower and its Subsidiaries, taken as a whole, which has not been disclosed
herein or in such other documents, certificates and statements furnished to the
Agent or any Lender for use in connection with the transactions contemplated
hereby.
(i) Margin Stock. The aggregate value of all margin stock (as defined
------------
in Regulation U) directly or indirectly owned by each Borrower is less than 25%
of the aggregate value of such Borrower's assets. No proceeds of any Loan will
be used to purchase or carry any margin stock or to extend credit to others for
the purpose of purchasing or carrying any margin stock.
(j) Environmental Matters. Except as set forth in the Disclosure
---------------------
Letter, as of the date hereof and as of the Closing Date to the best of their
knowledge, neither BEI nor any of its Subsidiaries, nor any of their respective
officers, employees, representatives or agents, nor any other Person, has
treated, stored, processed, discharged, spilled, or otherwise disposed of any
substance defined as hazardous or toxic by any applicable federal, state or
local law, rule, regulation, order or directive, or any waste or by-product
thereof, at any real property or any other facility owned, leased or used by BEI
or any of its Subsidiaries, in violation of any applicable statutes,
regulations, ordinances or directives of any governmental authority or court,
which violations may result in liability to BEI or any of its Subsidiaries or
any of their respective officers, employees, representatives, agents or
shareholders in an amount exceeding $500,000 for all such violations; and the
37
unresolved violations set forth in said Disclosure Letter will not result in
uninsured liability to BEI or any of its Subsidiaries or any of their respective
officers, employees, representatives, agents or shareholders in an amount
exceeding $500,000 for all such unsatisfied claims or demand. Except as set
forth in said Disclosure Letter, no employee or other Person has ever made a
claim or demand against BEI or any of its Subsidiaries based on alleged damage
to health caused by any such hazardous or toxic substance or by any waste or
byproduct thereof; and the unsatisfied claims or demands against BEI or any of
its Subsidiaries set forth in said Disclosure Letter will not result in
uninsured liability to BEI or any of its Subsidiaries or any of their respective
officers, employees, representatives, agents or shareholders in an amount
exceeding $500,000 for all such unsatisfied claims or demands. Except as set
forth in said Disclosure Letter, neither BEI nor any of its Subsidiaries has
been charged by any governmental authority with improperly using, handling,
storing, discharging or disposing of any such hazardous or toxic substance or
waste or by-product thereof or with causing or permitting any pollution of any
body of water; and the outstanding charges set forth in said Disclosure Letter
will not result in liability to BEI or any of its Subsidiaries or any of their
respective officers, employees, representatives, agents or shareholders in an
amount exceeding $500,000 for all such outstanding charges.
(k) Employee Matters. As of the date hereof and as of Closing Date,
----------------
there is no strike or work stoppage in existence or threatened involving any of
the Borrowers or the Subsidiary Guarantor that may materially adversely affect
the financial condition or operations of such Borrower or the Subsidiary
Guarantor or that may have a material adverse effect on such Borrower's or the
Subsidiary Guarantor's ability to perform its obligations under the Loan
Documents, having regard for its other financial obligations.
(l) Deposit Accounts. Set forth in the Disclosure Letter is a true and
----------------
complete list of all deposit accounts maintained by BEI or any of its
Subsidiaries as of the date hereof.
ARTICLE VI
COVENANTS
6.1 Affirmative Covenants. So long as any Note shall remain unpaid,
---------------------
any Letter of Credit shall remain outstanding or unreimbursed or any Lender
shall have any Commitment hereunder, the Borrowers will, unless the Majority
Lenders shall otherwise consent in writing:
(a) Financial Information. Furnish to each Lender and the
---------------------
Agent;
38
(i) as soon as available, but in any event within ninety (90)
days after the end of each fiscal year of BEI, a copy of the Annual Report on
Form 10-K for such fiscal year filed by BEI and its consolidated Subsidiaries
with the S.E.C., accompanied by an unqualified report and opinion thereon of
independent certified public accountant acceptable to the Agent, all financial
statements contained therein to be complete and correct in all material respects
and in accordance with GAAP applied consistently throughout the fiscal year
(except as approved by such accountants and disclosed therein);
(ii) as soon as available, but in any event within forty-five
(45) days after the end of each of the first three fiscal quarters of BEI, a
copy of the Quarterly Report on Form 10-Q for such fiscal quarter filed by BEI
and its consolidated Subsidiaries with the S.E C., certified by a duly
authorized officer of BEI as being fairly stated in all material respects
subject to year end and audit adjustments, all financial statements contained
therein to be complete and correct in all material respects and in accordance
win GAAP, subject to normal year end and audit adjustments and the absence of
footnotes, applied consistency throughout the period reflected therein (except
as approved by such accountants and disclosed therein);
(iii) together with each delivery of financial statements of BEI
and its Subsidiaries pursuant to subdivisions (i) and (ii) above, (A) an
officers' certificate stating that the signers have reviewed the terms of the
Loan Documents and have made, or caused to be made under their supervision, a
review in reasonable detail of the transactions and condition of BEI and its
Subsidiaries during the accounting period covered by such financial statements
and that such review has not disclosed the existence during or at the end of
such accounting period, and that the signers do not have knowledge of the
existence as at the date of the officers' certificate, of any condition or event
which constitutes an Event of Default or Potential Event of Default, or, if any
such condition or event existed or exists, specifying the nature and period of
existence thereof and what action the Borrowers have taken, are taking and
propose to take with respect thereto; and (B) a Compliance Certificate in the
form of Exhibit C demonstrating in reasonable detail compliance during and at
the end of such accounting periods with the restrictions contained in Sections
6.2(a), 6.2(b), 6.2(c), 6.2(d), and 6.2(e) as of the end of the fiscal period
covered thereby;
(iv) promptly upon receipt hereof, a copy of the management
letter submitted to the audit committee of the board of directors of BEI by
independent certified public accountant in connection with each annual audit of
the financial statements of BEI and its consolidated Subsidiaries made by such
accountants; and
39
(v) substantially concurrent with the sending or filing hereof,
copies of all reports which any Borrower sends to a majority of its security
holders, and copies of all reports and registration statements which BEI or any
of its Subsidiaries files with the S.E.C. or any national securities exchange.
(b) Notices and Information. Deliver to the Agent and each Lender:
-----------------------
(i) promptly upon any officer of any Borrower obtaining
knowledge (A) of any condition or event which constitutes an Event of Default or
Potential Event of Default, (B) that any Person has given any notice to BEI or
any Subsidiary of BEI or taken any other action with respect to a claimed
default or event or condition of the type referred to in Section 7.1(f), (C) of
the institution of any litigation involving an alleged liability (including
possible forfeiture of property) of BEI or any of its Subsidiaries equal to or
greater than $1,000,000 or any adverse determination in any litigation involving
a potential liability of BEI or any of in Subsidiaries equal to or greater than
$1,000,000, or (D) of a material adverse change in the business, operations,
properties, assets or condition (financial or otherwise) of BEI and its
Subsidiaries, taken as a whole, an officers' certificate specifying the nature
and period of existence of any such condition or event, or specifying the notice
given or action taken by such holder or Person and the nature of such claimed
default, Event of Default, Potential Event of Default, event or condition, and
what action such Borrower has taken, is taking and proposes to take with respect
hereto:
(ii) promptly upon any Borrower becoming aware of the occurrence
of or forthcoming occurrence of any ERISA Event, a written notice specifying the
nature thereof, what action such Borrower has taken, is taking or proposes to
take with respect thereto, and, when known, any action taken or threatened by
the Internal Revenue Service, the Department of Labor, or the Pension Benefit
Guaranty Corporation with respect thereto;
(iii) promptly, but in any event within thirty (30) days after
receipt thereof, a copy of any notice, summons, citation, directive, letter or
other form of communication from any governmental authority or court in any way
concerning any action or omission on the part of BEI or any of its Subsidiaries
in connection with any substance defined as toxic or hazardous by any applicable
federal, state or local law, rule, regulation, order or directive or any waste
or by product thereof, or conceding the filing of a lien upon, against or in
connection with BEI, its Subsidiaries, or any of their leased or owned real or
personal property, in connection with a Hazardous Substance Superfund or a Post-
Closure Liability Fund as maintained pursuant to 9507 of the Internal Revenue
Code if such
40
act or omission may result in liability in an amount exceeding $500,000 for all
such acts or omissions or if any such Lien, together with all other such Liens,
is based upon or against property the fair market value of which exceeds
$500,000 in the aggregate;
(iv) promptly following the establishment of any deposit account
by BEI or any of its Subsidiaries, which BEI or such Subsidiary anticipates will
have a cash balance from time to time in excess of $100,000, a notice setting
forth the name of the financial institution with which such account has been
established, the applicable account number and the Borrower or Subsidiary
establishing such account; and
(v) promptly, but in any event within ten (10) days after
request, such other information and data with respect to BEI or any of its
Subsidiaries as from time to time may be reasonably requested by the Agent or
any Lender.
(c) Corporate Existence. Etc. At all times presence and keep in
------------------------
full force and effect their and their respective Subsidiaries' respective
corporate existences and rights and franchises material to their respective
businesses and those of each of their respective Subsidiaries; provided, however
-------- -------
that the corporate existence of any Subsidiary of any Borrower may be terminated
if such termination is in the best interest of the Borrowers and is not
materially disadvantageous to the holder of any Note.
(d) Payment of Tax and Claims. Pay, and cause each of their
-------------------------
respective Subsidiaries to pay, all taxes, assessments and other governmental
charges imposed upon any of them or any of their respective properties or assets
or in respect of any of their respective franchises, business, income or
property before any penalty or interest accrues thereon, and all claims
(including claims for labor, services, materials and supplies) for sums which
have become due and payable and which by law have or may become a lien upon any
of their respective properties or assets, prior to the time when any penalty or
fine shall be incurred with respect thereto; provided that no such charge or
--------
claim need be paid if being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted and if such reserve or other
appropriate provision, if any, as shall be required in accordance win GAAP shall
have been made therefor.
(e) Maintenance of Properties; Insurance. Maintain or cause to be
------------------------------------
maintained in good repair, working order and condition all material properties
used or useful in the business of the Borrowers and their respective
Subsidiaries and from time to time make or cause to be made all appropriate
repairs, renewals and replacements thereof. The Borrowers will maintain or cause
to be maintained, with financially sound and reputable insurers, insurance with
respect to their properties
41
and business and the properties and business of their respective Subsidiaries
against loss or damage of the kinds customarily insured against by corporations
of established reputation engaged in the same or similar businesses and
similarly situated, of such types and in such amounts as are customarily carried
under similar circumstances by such other corporations.
(f) Inspection. Permit any authorized representatives designated by
----------
the Agent or any Lender to visit and inspect any of the properties of BEI or any
of its Subsidiaries, including its and their financial and accounting records,
and to make copies and take extracts therefrom, and to discuss its and their
affairs, finances and accounts with its and their officers and independent
public accountants, all at such reasonable times during normal business hours
and as open as may be reasonably requested.
(g) Compliance with Laws Etc. Exercise, and cause each of their
------------------------
respective Subsidiaries to exercise, all due diligence in order to comply with
the requirements of all applicable laws, rules, regulations and orders of any
governmental authority, including all environmental laws, rules, regulations and
orders, noncompliance with which would materially adversely affect the business,
properties, assets, operations, prospects or condition (financial or otherwise)
of any Borrower and its Subsidiaries, taken as a whole.
6.2 Negative Covenants. So long as any Note shall remain unpaid, any
------------------
Letter of Credit shall remain outstanding or unreimbursed or any Lender shall
have any Commitment hereunder, the Borrowers will not, without the written
consent of the Majority Lenders:
(a) Debt/Consolidated EBITDA Ratio. Permit the Debt/Consolidated
------------------------------
EBITDA Ratio at any time to be greater than 3.00 to 1.00.
(b) Consolidated Tangible Net Worth. Permit Consolidated Tangible Net
-------------------------------
Worth as at the end of any fiscal quarter of BEI to be less than the sum of (i)
$28,149,000, plus (ii) 75% of positive Consolidated Net Income for each fiscal
quarter of BEI commencing with the fiscal quarter ending December 27, 1997 plus
(iii) 100% of the Net Proceeds of any Equity Issuance by BEI after September 30,
1997 excluding Equity Issuances arising from the exercise of stock options.
(c) Quick Ratio. Permit the Quick Ratio at any time to be less than
-----------
.80 to 1.00.
(d) Interest Coverage Ratio. As of the end of any fiscal quarter of
-----------------------
BEI, permit the ratio of (i) Consolidated EBITDA for the four fiscal quarters
then ended minus all Consolidated Capital Expenditures to (ii) Consolidated
Interest Expense for such four fiscal quarters to be less 2.00 to 1.00.
42
(e) Consolidated Net Income.
-----------------------
(i) Permit Adjusted Consolidated Net Losses for any fiscal
quarter to be greater than the greater of (A) $3,000,000 or (B) five percent
(5%) of Tangible Net Worth (as measured on the Closing Date).
(ii) Permit Adjusted Consolidated Net Losses for any two
consecutive fiscal quarters.
(iii) Permit the cumulative Consolidated Net Income for any
consecutive four fiscal quarters to be less than $1.00.
(f) Liens, Etc. Create or suffer to exist, or permit any of their
----------
respective Subsidiaries to create or suffer to exist, any Lien upon or with
respect to any of its properties, whether now owned or hereafter acquired, other
than:
(i) Liens existing on the date hereof and set forth in the
Disclosure Letter,
(ii) Permitted Liens;
(iii) Liens (including chattel mortgages) upon or in any real
property or fixed assets acquired or leased by any Borrower or any of its
Subsidiaries in the ordinary course of business to secure (A) Debt incurred
solely for the purpose of financing the acquisition of such property or assets
or (B) Capital Leases, in each case permitted under Section 6.2(g)(vi); provided
any such Lien encumbers only the property or assets so acquired or leased; and
(iv) all renewals, refundings, refinancings and extensions of
any such Liens described in clause (i) above; provided that the principal amount
--------
secured is not increased and that such Lien is not extended to other property.
(g) Debt. Create or suffer to exist, or permit any of their
----
respective Subsidiaries to create or suffer to exist, any Debt, other than:
(i) Debt existing on the Closing Date and set forth in the
Disclosure Letter (as supplemented on the Closing Date);
(ii) Debt owed to the Lenders hereunder;
(iii) Debt of a wholly-owned Subsidiary of any Borrower to
another wholly-owned Subsidiary of such Borrower or to such Borrower, Debt of
any Borrower to a wholly-owned Subsidiary of such Borrower, Debt of ▇▇▇▇▇, Inc.,
a Delaware corporation ("▇▇▇▇▇") to BEI and Debt of BEI to ▇▇▇▇▇;
-----
43
(iv) Contingent Obligations permitted under Section 6.2(k);
(v) reimbursement obligations with respect to Letters of Credit
issued hereunder in accordance with Section 2.5 and letters of credit permitted
under Section 6.2(k)(v);
(vi) Capital Leases and Debt incurred to finance the acquisition
of specific real property or fixed assets not in excess of $3,000,000 in the
aggregate at any one time outstanding; and
(vii) all renewals or extensions of any such Debt described in
clause (i) above, provided that the terms thereof are substantially the same as
those set forth in the documents evidencing such Debt as in effect on the date
hereof in the case of Debt described in clause (i).
(h) Dividends, Etc. Declare or pay any dividends, purchase or
--------------
otherwise acquire for value any of their respective capital stock now or
hereafter outstanding, or make any distribution of assets to their respective
stockholders as such, or permit any of their respective Subsidiaries to declare
or pay any dividends, purchase or otherwise acquire for value any stock of any
Borrower or any of their respective capital stock now or hereafter outstanding,
or make any distribution of assets to their respective stockholders as such,
except that (i) Borrower or any Subsidiary of any Borrower may declare and
deliver dividends and distributions payable in shares of its capital stock; (ii)
any wholly-owned Subsidiary of any Borrower may declare and pay cash dividends
to such Borrower, may purchase or acquire for value any stock of such Borrower
or any of such wholly-owned Subsidiary's capital stock now or hereafter
outstanding and may make distributions of assets to its stockholders as such;
and (iii) Borrower may declare and deliver dividends and distributions through
the Maturity Date in an aggregate amount not to exceed $2,000,000.
(i) Consolidation, Merger. Consolidate or merge with any other
---------------------
Person, liquidate, wind-up or dissolve themselves or acquire by purchase or
otherwise all or substantially all of the business, property or fixed assets of,
or stock or other evidence of beneficial ownership of, any Person, or permit any
of their respective Subsidiaries to do any of the foregoing, except that:
(i) any Subsidiary of any Borrower may be merged or consolidated
with or into such Borrower or any wholly-owned Subsidiary of such Borrower, or
be liquidated, wound up or dissolved, or all or any substantial part of its
business, property or assets may be conveyed, sold, leased, transferred or
otherwise disposed of, in one transaction or a series of transactions, to such
Borrower or any wholly-owned Subsidiary of
44
such Borrower; provided that, in the case of such a merger or consolidation,
such Borrower or such wholly-owned Subsidiary shall be the continuing or
surviving corporation:
(ii) any Borrower or any wholly-owned Subsidiary of a Borrower
may acquire the business, property, fixed assets or stock of Persons in a
related business (each, an "Acquisition"), provided that (i) immediately
----------- --------
following the consummation of any such Acquisition there shall exist no
condition or event that constitutes an Event of Default or a Potential Event of
Default, (ii) the fair market value of the consideration (whether in the form of
cash, assumed liabilities, or debt or equity securities of any Borrower or any
Subsidiary of a Borrower) paid in any such Acquisition does not exceed
$2,500,000 and (iii) the aggregate fair market value of the consideration
(whether in the form of cash, assumed liabilities, or debt or equity securities
of any Borrower or any Subsidiary of a Borrower) paid in all such Acquisitions
during any fiscal year of BEI does not exceed $12,000,000 in the aggregate; and
(iii) any Borrower or any wholly-owned Subsidiary of a
Borrower may make any Acquisition approved by Majority Lenders, which approval
shall not be unreasonably withheld.
(j) Investments. Make or permit to remain outstanding, or permit any
-----------
of their respective Subsidiaries to make or permit to remain outstanding, any
Investment, except that the Borrower and their Subsidiaries may:
(i) continue to own Investments existing on the date hereof and
set forth in the Disclosure Letter;
(ii) own, purchase or acquire certificates of deposit by any
Lender, commercial paper ranked Moody's P-I, municipal bonds rated ▇▇▇▇▇'▇ ▇▇ or
better, direct obligations of the United States of America or its agencies, and
obligations guaranteed by the United States of America;
(iii) acquire and own stock, obligations or securities received
from customers in connection with debts created in the ordinary course of
business owing to a Borrower or a Subsidiary of a Borrower;
(iv) continue to own the existing capital stock of their
respective Subsidiaries;
(v) make or permit to remain outstanding intercompany loans to
the extent permitted under Section 6.2(g)(iii);
(vi) make any Acquisition permitted by Section 6.20(i);
45
(vii) make additional Investments in any Borrower or any of
their respective wholly-owned Subsidiaries;
(viii) purchase or otherwise acquire capital stock to the extent
permitted under Sections 6.2(h);
(ix) make deposits with vendors representing advance payments
made in the ordinary course of business; and
(x) make Investment not otherwise permitted by clauses (i)
through (ix) above, not in excess of $1,000,000 in the aggregate at any one
time.
(k) Contingent Obligations. Create or become or remain liable, or
----------------------
permit any of their respective Subsidiaries to create or become or remain
liable, with respect to any Contingent Obligation, except that the Borrowers and
their Subsidiaries may:
(i) remain liable with respect to Contingent Obligations
existing on the date hereof and set forth in the Disclosure Letter;
(ii) enter into Interest Rate Agreements and Currency Agreements
in an aggregate notional principal amount not to exceed at any time the
aggregate principal amount of all then outstanding Debt of BEI ant its
Subsidiaries, provided that all such arrangements are entered into in connection
with bona fide hedging operations and not for speculation;
(iii) endorse negotiable instruments for deposit or collection
or similar transactions in the ordinary course of business;
(iv) become or remain liable with respect to Letters of Credit
issued pursuant to Section 2.5;
(v) become and remain liable with respect to documentary letters
of credit issued for the account of Borrower or any Subsidiary of any Borrower
not to exceed $1,000,000 at any time;
(vi) become and remain liable with respect to any guarantee of
any Debt of any Borrower or any Subsidiary of a Borrower; and
(vii) become and remain liable with respect to Contingent
Obligations not otherwise permitted by clauses (i) through (vi) above, not in
excess of $1,500,000 in the aggregate at any one time.
(l) Asset Sales. Convey, sell, lease, transfer or otherwise dispose
-----------
of, or permit any of their respective Subsidiaries to convey, sell, lease,
transfer or otherwise
46
dispose of, in one transaction or a series of transactions, (i) all or any part
of their or their respective Subsidiaries' business, property or fixed assets
outside of the ordinary course of business, whether now owned or hereafter
acquired, or (ii) any capital stock or debt of any of their respective
Subsidiaries, except:
(i) The Borrowers and their respective Subsidiaries may convey,
sell, lease, transfer or otherwise dispose of business, property or fixed assets
the fair market value of which does not exceed $2,500,000 in the aggregate in
any fiscal year;
(ii) The Borrowers and their respective Subsidiaries may convey,
sell, lease, transfer or otherwise dispose of fixed assets in the ordinary
course of business; and
(iii) Any Subsidiary of any Borrower may sell, lease or transfer
assets to such Borrower or to any wholly-owned Subsidiary of such Borrower.
(m) Transactions with Shareholders and Affiliates. Enter into, or
---------------------------------------------
permit any of their respective Subsidiaries to enter into, any transaction
including the purchase, sale, lease or exchange of any property or the rendering
of any service) with any holder of 5% or more of any class of equity securities
of any Borrower, or with any Affiliate of any Borrower or any such holder (other
than another Borrower or a wholly-owned Subsidiary of a Borrower), on terms that
(when taken in the light of any related or series of transactions of which such
transaction is a part (if any)) are less favorable to any Borrower or any such
Subsidiary than those which might be obtained at the time from Persons who are
not such a holder or Affiliate.
(n) Agreements Restricting Payment of Dividends. Permit any of their
-------------------------------------------
respective Subsidiaries to enter into any agreement restricting the ability of
such Subsidiary to declare, order, pay or make or set apart any sum for any
dividends or other distributions on account of any shares of any class of its
stock.
(o) Restrictive Agreements. Agree with any Person, or permit any of
----------------------
their respective Subsidiaries to agree with any Person, that any Borrower or
such Subsidiary will not create, incur or suffer to exist any Liens on its
properties.
ARTICLE VII
EVENTS OF DEFAULT
7.1 Events of Default. If any of the following events ("Event of
----------------- --------
Default") shall occur and be continuing:
-------
47
(a) Any Borrower shall fail to pay any installment of the principal of
any Note when due, to pay when due any amount payable in reimbursement of the
Issuing Bank in respect of a drawing under a Letter of Credit, or to pay any
installment of interest on any Note or other amount payable hereunder within
three (3) Business Days of the date when due; or
(b) Any representation or warranty made by the Borrowers herein or by
the Borrowers (or any of their officers) in connection with this Agreement shall
prove to have been incorrect in any material respect when made; or
(c) The Borrowers shall fail to perform or observe any term, covenant
or agreement contained Section 3.1, 6.1(b)(i), 6.1(c) or 6.2 on their part to be
performed or observed; or
(d) The Borrowers or the Subsidiary Guarantor shall fail to perform or
observe any term, covenant or agreement contained in this Agreement or any other
Loan Document other than those referred to in Sections 7.1(a), 7.1(b), and
7.1(c) above on their part to be performed or observed and any such failure
shall remain unremedied or uncured for thirty (30) days after any Borrower knows
of such failure, or, with respect to Section 6.1(a)(iii)(B) only, such failure
shall remain unremedied or uncured at the beginning of the next succeeding
Pricing Period; or
(e) The Borrowers or the Subsidiary Guarantor shall default in the
performance of or compliance with any term contained in any Loan Document other
than this Agreement and such default shall not have been remedied or waived
within any applicable grace period; or
(f) (i) BEI or any of its Subsidiaries shall (A) fail to pay any
principal of, or premium or interest on, any Debt, the aggregate outstanding
principal amount of which is at least $500,000 (excluding Debt evidenced by the
Notes), when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) and such failure shall continue after the
applicable grace period, if any, specified in the agreement or instrument
relating to such Debt, or (B) fail to perform or observe any term, covenant or
condition on its part to be performed or observed under any agreement or
instrument relating to any such Debt, when required to be performed or observed,
and such failure shall continue after the applicable grace period, if any,
specified in such agreement or instrument; or
(g) (i) BEI or any of its Subsidiaries 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
48
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 or other similar official for it
or for all or any substantial part of its assets, or BEI or any of its
Subsidiaries shall make a general assignment for the benefit of its creditors;
or (ii) there shall be commenced against BEI or any of its Subsidiaries any
case, proceeding or other action of a nature referred to in clause (i) above
which (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 sixty (60) days; or (iii) there shall be commenced against BEI or any of its
Subsidiaries 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 which results in the entry of an order for any
such relief which shall not have been vacated, discharged, or stayed or bonded
pending appeal within sixty (60) days from the entry thereof; or (iv) BEI or any
of its Subsidiaries shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth in clause
(i), (ii) and (iii) above; or (v) BEI or any of its Subsidiaries shall generally
not, or shall be unable to, or shall admit in writing its inability to, pay its
debts as they become due; or
(h) One or more judgments or decrees shall be entered against BEI or
any of its Subsidiaries involving in the aggregate a liability (not paid or
fully covered by insurance) equal to or greater than $1,000,000 and all such
judgments or decrees shall not have been vacated, discharged, or stayed or
bonded pending appeal within thirty (30) days from the entry hereof; or
(i) There shall occur one or more ERISA Events which individually or
in the aggregate results in or might reasonably be expected to result in
liability of BEI or any of its ERISA Affiliates in excess of $1,000,000 during
the term of this Agreement; or
(j) There shall be instituted against BEI or any of its Subsidiaries
any proceeding for which forfeiture of any property of material value is a
potential penalty;
THEN (i) upon the occurrence of any Event of Default described in cause (g)
above, the Commitment and any obligation of the Issuing Bank to issue any Letter
of Credit shall immediately terminate and all Loans hereunder together with
accrued interest thereon, an amount equal to the Letter of Credit Usage and all
other amounts owing under this Agreement, the Notes, the Letters of Credit, and
the other Loan Documents shall automatically become due and payable) and (ii)
upon the occurrence of any other Event of Default, the Agent shall at the
request, or may with the
49
consent, of the Majority Lenders, by notice to the Borrowers declare the
Commitment and any obligation to issue any Letter of Credit to be terminated
forthwith, whereupon the Commitment and any obligation of the Issuing Bank to
issue any Letter of Credit shall immediately terminate, and/or, by notice to the
Borrowers, declare the Loans hereunder, with accrued interest thereon, an amount
equal to the Letter of Credit Usage, and all other amounts owing under this
Agreement, the Notes, the Letters of Credit and the other Loan Documents to be
due and payable forthwith, whereupon the same shall immediately become due and
payable. Except as expressly provided above in this Section, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.
So long as any Letter of Credit shall remain outstanding, any amounts received
by the Issuing Bank, may be held as cash collateral for the obligation of the
Borrower for whose benefit the Letter of Credit was issued to reimburse the
Issuing Bank in event of any drawing under any Letter of Credit. In the event
any Letter of Credit in respect of which the Borrowers have deposited cash
collateral with the Issuing Bank is cancelled or expires, the cash collateral
shall be applied first to the reimbursement of the Issuing Bank for any drawings
------
thereunder, and second to the payment of any outstanding obligations of the
------
Borrowers hereunder or under any other Loan Document.
ARTICLE VIII
GUARANTEE
8.1 Guarantee. Each Borrower and the Subsidiary Guarantor (for
---------
purposes of this Article VII, each a "Guarantor") hereby unconditionally and
---------
irrevocably guarantees to the Agent and the Lenders, the prompt and complete
payment and performance by each of the Borrowers or other Borrowers (as
applicable) when due (whether at the stated maturity, by acceleration or
otherwise) of the Loans and other Obligations owing to the Agent and the Lenders
by the Borrowers or the other Borrowers (as applicable). This Guarantee shall
remain in full force and effect until the Obligations of the Borrowers are
indefeasibly paid in full, notwithstanding that from time to time prior thereto
any Borrower may be free from any Obligations. No payment or payments made by
any Borrower or any other Person or received or collected by the Agent or any
Lender from any Borrower or any other Person by virtue of any action or
proceeding or any offset or appropriation or application, at any time or from
time to time, in reduction of or in payment of the Obligations of the Borrowers
shall be deemed to modify, reduce, release or otherwise affect the liability of
each Guarantor under this Guarantee, and each Guarantor shall remain obligated
under this Guarantee, notwithstanding any such payment or payments, until the
Obligations of the Borrowers are indefeasibly paid in full.
50
8.2 No Subrogation, Contribution, Reimbursement or Indemnity.
--------------------------------------------------------
Notwithstanding anything to the contrary in this Guarantee, each Guarantor
hereby irrevocably waives all rights which may have arisen in connection with
this Guarantee to be subrogated to any of the rights (whether contractual, under
the Bankruptcy Code, including Section 509 hereof, under common law or
otherwise) of the Agent or any Lender against any Borrower or any other Borrower
(as applicable) for the payment of the Obligations. Each Guarantor hereby
further irrevocably waives all contractual, common law, statutory or other
rights of reimbursement, contribution, exoneration or indemnity (or any similar
right) from or against any Borrower or any other Borrower (as applicable) or any
other Person which may have arisen in connection with this Guarantee. So long
as the Obligations of any of the Borrowers remain outstanding, if any amount
shall be paid by or on behalf of any Borrower to any Guarantor on account of any
of the rights waived in this subsection, such amount shall be held by such
Guarantor in trust, segregated from other funds of such Guarantor and shall,
forthwith upon receipt by such Guarantor, be turned over to the Agent in the
exact form received by such Guarantor (duly indorsed by such Guarantor to the
Agent, if required), to be applied against the obligations of the Borrower or
the other Borrowers (as applicable), whether matured or unmatured, in such order
as the Agent may determine. The provisions of this Section shall survive the
payment in full of the Obligations of the Borrowers.
8.3 Amendments Etc., with Respect to the Obligations. Each Guarantor
------------------------------------------------
shall remain obligated under this Guarantee notwithstanding that, without any
reservation of rights against such Guarantor, and without notice to or further
assent by such Guarantor, any demand for payment of any of the Obligations made
by the Agent or any Lender may be rescinded by the Agent or such Lender, and any
of the Obligations continued, and the obligation, or the liability of any other
party upon or for any part thereof, or any collateral security or guarantee
therefor or right of offset with respect thereto, may, from time to time, in
whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by the Agent or any Lender, and
this Agreement and the other Loan Documents may be amended, modified,
supplemented or terminated, in whole or in part, as the Agent or the Lenders (or
the Majority Lenders, as the case may be) may deem advisable from time to time
in accordance with the provisions of Section 10.1, and any collateral security,
guarantee or right of set-off at any time held by the Agent or any Lender for
the payment of the Obligations may be sold, exchanged, Waived, surrendered or
released. Neither the Agent nor any Lender shall have any obligation to
protect, secure, perfect or insure any Lien at any time held by it as security
for the Obligations or for the obligations of any Guarantor under this Guarantee
or any property subject thereto.
51
8.4 Guarantee Absolute and Unconditional. Each Guarantor waives any
------------------------------------
and all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Agent or any Lender upon
this Guarantee or acceptance of this Guarantee; the Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or incurred
in reliance upon this Guarantee; and all dealings between the Borrowers, on the
one hand, and the Agent and the Lenders, on the other, shall likewise be
conclusively presumed to have been had or consummated in reliance upon this
Guarantee. Each Guarantor waives:
(a) diligence, presentment, protest, notice of intent to
accelerate, notice of acceleration, demand for payment and notice of default or
nonpayment to or upon any of the Borrowers or any other Borrowers (as
applicable) or the Guarantor with respect to the Obligations;
(b) any right to require the Agent or the Lenders, as a
condition of payment or performance by the Guarantor, to (i) proceed against the
Borrowers or the other Borrowers (as applicable), any other guarantor of the
Obligations or any other Person, (ii) proceed against or exhaust any security
held from the Borrowers or the other Borrowers (as applicable), any other
guarantor of the Obligations or any other Person, (iii) proceed against or have
resort to any balance of any deposit account or credit on the books of the Agent
or any Lender in favor of the Borrowers or any other Borrowers (as applicable)
or any other Person, or (iv) pursue any other remedy in the power of the Agent
or any Lender whatsoever;
(c) any defense arising by reason of the incapacity, lack of
authority or any disability or other defense of any Borrower or any other
Borrower (as applicable), including any defense based on or arising out of the
lack of validity or the unenforceability of the Obligations or any agreement or
instrument relating hereto or by reason of the cessation of the liability of any
Borrower or any other Borrower (as applicable) from any cause other than
indefeasible payment in full of the Obligations;
(d) any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither larger in amount nor in
other respect more burdensome than that of the principal;
(e) any defense based upon the Agent's or any Lender's errors or
omissions in the administration of the Obligations, except behavior which
amounts to bad faith;
(f) (i) any principles or provisions of law, statutory or
otherwise, which are or might be in conflict with the terms of this Article VIII
and any legal or equitable discharge of such Guarantor's obligations hereunder,
(ii) the
52
benefit of any statute of limitations effecting such Guarantor's liability
hereunder or the enforcement hereof, (iii) any rights to set-offs, recoupments
and counterclaims, and (iv) promptness, diligence and any requirement that the
Agent or any Lender protect, secure, perfect or insure any security interest or
lien or any property subject thereto;
(g) notices of any renewal, extension or modification of the
Obligations or any Loan Document; and
(h) any defenses or benefits that may be derived from or
afforded by applicable law which limit the liability of or exonerate guarantors
or sureties, or which may conflict with the terms of this Article VIII,
including (if and to the extent applicable) the provisions of California Civil
Code Sections 2809, 2810, 2819, 2839, 2845, 2846, 2849, 2850, 2899 and 3433.
This Guarantee shall be construed as a continuing, absolute and
unconditional guarantee of payment without regard to (a) the validity or
enforceability of this Agreement, any other Loan Document, any of the
Obligations or any collateral security therefor or guarantee or right of set-off
with respect thereto at any time or from time to time held by the Agent or any
Lender, (b) any defense, offset or counterclaim (other than a defense of payment
or performance) which may at any time be available to or be asserted by any of
the Borrowers against the Agent or any Lender or (c) any other circumstance
whatsoever (with or without notice to or knowledge of any of the Borrowers)
which constitutes, or might be construed to constitute, an equitable or legal
discharge of any of the Borrowers or any of the other Borrowers (as applicable)
for the Obligations of such Borrower, or of the Guarantor under this Guarantee,
in bankruptcy or in any other instance.
8.5 Reinstatement. This Guarantee shall continue to be effective,
-------------
or be reinstated, as the case may be, if at any time payment, or any part
thereof, of any of the Obligations of any Borrower is rescinded or must
otherwise be restored or returned by the Agent or any Lender upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of such
Borrower or upon or as a result of the appointment of a receiver, intervener or
conservator of, or trustee or similar officer for, such Borrower or any
substantial part of any of its property, or otherwise, all as such payments had
not been made.
ARTICLE IX
THE AGENT
9.1 Authorization and Action. Each Lender hereby appoints and
------------------------
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof, together with
53
such powers as are reasonably incidental thereto. As to any matters not
expressly provided for by this Agreement (including enforcement or collection of
the Notes), the Agent shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Majority Lenders, and such instructions shall be binding upon all Lenders
and all holders of Notes; provided, however, that the Agent shall not be
------------------
required to take any action which exposes the Agent to personal liability or
which is contrary to this Agreement or applicable law. The Agent agrees to give
to each Lender prompt notice of each notice given to it by any of the Borrowers
pursuant to the terms of this Agreement.
9.2 Agent's Reliance, Etc. Neither the Agent nor any of its
----------------------
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with this Agreement,
except for its or their own gross negligence or wilful misconduct. Without
limitation of the generality of the foregoing, the Agent: (i) may treat the
payee of any Note as the holder thereof until the Agent receives written notice
of the assignment or transfer thereof signed by such payee and in form
satisfactory to the Agent (ii) may consult with legal counsel (including counsel
for the Borrowers), independent public accountants and other experts selected by
it and still not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or
experts; (iii) makes no warranty or representation to any Lender and shall not
be responsible to any Lender for any statements, warranties or representations
made in or in connection with this Agreement; (iv) shall not have any duty to
ascertain or to inquire as to the performance or observance of any of the terms,
covenants or conditions of this Agreement on the part of the Borrowers or to
inspect the property (including the books and records) of the Borrowers; (v)
shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
any other instrument or document furnished pursuant hereto; and (vi) shall incur
no liability under or in respect of this Agreement by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telegram,
cable or telex) believed by it to be genuine and signed or sent by the proper
party or parties.
9.3 Canadian Imperial Bank of Commerce. and Affiliates. With
--------------------------------------------------
respect to its Commitment, the Advances made by it and the Note issued to it,
Canadian Imperial Bank of Commerce shall have the same rights and powers under
this Agreement as any other Lender and may exercise the same as though it were
not the Agent; and the term "Lender" or "Lenders" shall, unless otherwise
expressly indicated, include Canadian Imperial Bank of Commerce in its
individual capacity. Canadian Imperial Bank of Commerce and its Affiliates may
accept deposits from, lend money to, act as trustee under indentures of, and
generally engage in any kind
54
of business with, BEI, any of its subsidiaries and any Person who may do
business with or own securities of BEI or any such subsidiary, all as if
Canadian Imperial Bank of Commerce were not the Agent and without any duty to
account therefor to the Lenders.
9.4 Lender Credit Decision. Each Lender acknowledges that it has,
----------------------
independently and without reliance upon the agent or any other Lender and based
on the financial statements referred to in Section 5.1(e) and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the 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 decisions in taking or
not taking action under this Agreement.
9.5 Indemnification. The Lenders agree to indemnify the Agent (to
---------------
the extent not reimbursed by the Borrowers), ratably according to the respective
principal amounts of the Notes then held by each of them (or if no Notes are at
the time outstanding or if any Notes are held by Persons which are not lenders,
ratably according to the respective amounts of their Commitments), from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against the
Agent in any way relating to or arising out of this Agreement or any action
taken or omitted by the Agent under this Agreement, provided that no Lender
--------
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's gross negligence or wilful misconduct. Without
limitation of the foregoing, each Lender agrees to reimburse the Agent promptly
upon demand for its ratable share of any out-of-pocket expenses (including
counsel fees) incurred by the Agent in connection with the preparation,
execution, delivery, administration, modification, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement, to the extent that the Agent is not reimbursed for such expenses
by the Borrowers.
9.6 Successor Agent. The Agent may resign at any time by giving
---------------
written notice thereof to the Lenders and the Borrowers and may be removed at
any time with or without cause by the Majority Lenders. Upon any such
resignation or removal, the Majority Lenders shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Majority Lenders, and shall have accepted such appointment, within thirty (30)
days after the retiring Agent's giving of notice of resignation or the Majority
Lenders' removal of the retiring Agent, then the retiring Agent may, on behalf
of the
55
lenders, appoint a successor Agent, which shall be a commercial bank organized
under the laws of the United States of America or of any State thereof and
having a combined capital and surplus of at least $50,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under this Agreement.
After any retiring Agent's resignation or removal hereunder as Agent, the
provisions of this Article IX shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement.
ARTICLE X
MISCELLANEOUS
10.1 Amendment. Etc. No amendment or Waiver of any provision of the
---------------
Loan Documents nor consent to any departure by the Borrowers therefrom shall in
any event be effective unless the same shall be in writing and signed by the
Majority Lenders, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no amendment, waiver or consent shall, unless in writing and
-------
signed by all the Lenders, do any of the following; (a) increase the Commitment
of the Lenders or subject the Lenders to any additional obligations, (b) reduce
the principal of, or interest on, the Notes or any fees or other amounts payable
hereunder, (c) postpone any date fixed for any payment of principal of, or
interest on, the Notes or any fees or other amounts payable hereunder, (d)
change the percentage of the Commitments or of the aggregate unpaid principal
amount of the Notes, or the number of Lenders, which shall be required for the
Lenders or any of them to take any action hereunder or (e) amend this Section
10.1; and provided, further that no amendment, waiver or consent shall, unless
-------
in writing and signed by the Agent in addition to the Lenders required above to
take such action, affect the rights or duties of the Agent under this Agreement
or any other Loan Document.
10.2 Notices. Etc. Except as otherwise set forth in this Agreement,
-------------
all notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex or facsimile communication) and mailed or
telegraphed or telexed or sent by facsimile or delivered, if to the Borrowers or
the Subsidiary Guarantor, at the addresses set forth on the signature page
hereof; and if to any Lender or the Agent, at its address set forth on the
signature page hereof; or, as to each party, at such other address as shall be
designated by such party in a written notice to the other parties. All such
notices and communications shall be effective three (3) Business Days after
deposit in the U.S mail, postage prepaid, when sent by telex or
56
sent by facsimile, or when delivered, respectively, except that notices and
communications to the Agent pursuant to Article II or VII shall not be effective
until received by the Agent.
10.3 Right of Setoff; Deposit Accounts. Upon and after the
---------------------------------
occurrence of any Event of Default, each Lender is hereby authorized by the
Borrowers, at any time and from time to time, without notice, (a) to set off
against, and to appropriate and apply to the payment of, the obligations and
liabilities of the Borrowers under the Loan Documents (whether matured or
unmatured, fixed or contingent or liquidated or unliquidated) any and all
amounts owing by such Lender to the Borrowers (whether payable in Dollars or any
other currency, whether matured or unmatured, and, in the case of deposits,
whether general or special, time or demand and however evidenced) and (b)
pending any such action, to the extent necessary, to hold such amounts as
collateral to secure such obligations and liabilities and to return as unpaid
for insufficient funds any and all checks and other items drawn against any
deposits so held as such Lender in its sole discretion may elect. The Borrowers
hereby grant to each Lender a security interest in all deposits and accounts
maintained with that Lender. The rights of each Lender under this Section are
in addition to other rights and remedies (including odds rights of set off)
which such Lender may have.
10.4 No Waiver; Remedies. No failure on the part of the Agent or any
-------------------
Lender to exercise, and no delay in exercising, any right under any of the Loan
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise of any right under any of the Loan Documents preclude any other or
further exercise hereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
10.5 Costs and Expenses. The Borrowers agree to pay on demand all
------------------
costs and expenses of the Agent (including attorney's fees and the reasonable
estimate of the allocated cost of in-house counsel and staff) in connection with
the preparation, amendment, modification, enforcement (including in appellate,
bankruptcy, insolvency, liquidation, reorganization, moratorium or other similar
proceedings) or restructuring of the Loan Documents.
10.6 Additional Lenders; Assignments: Participations.
-----------------------------------------------
(a) Each Lender hereby represents that it is making its Loans
provided for herein and receiving its Note for its own account and not with a
view to the distribution hereof, subject, however, to any requirement that its
------- -------
property shall at all times be within its control and subject further to each
---------------
Lender's right to assign all or any portion of its share of the Commitments and
its Note or to grant participations therein in accordance with this Section
10.6. Lender may assign, from time to time, all or any portion of its pro rata
share of the
57
Commitments and its Note to an Affiliate of that Lender or, subject to the prior
written approval of the Borrowers (which approval will not be unreasonably
withheld), to any other financial institution acceptable to the Agent; provided
--------
that any such assignment effected hereunder shall be in a minimum amount of
$5,000,000 or such Lender's entire Commitment; provided further that no such
-------- -------
assignment shall become effective until the Agent shall have received a
registration and processing fee of $3000 to be paid as the assignor and assignee
shall mutually agree; and provided, further that each such assignment shall be
-------- -------
evidenced by an Assignment and Acceptance Agreement in the form of Exhibit E.
From and after the effective date of such assignment (i) the assignee thereunder
shall be a party hereto and, to the extent that rights and obligations hereunder
have been assigned to it, have the rights and obligations of a Lender hereunder
and (ii) the Lender assignor hereunder shall, to the extent that rights and
obligations hereunder have been assigned by it, relinquish its rights and be
released from its obligations under this Agreement (other than pursuant to
Section 10.6(e)), and, in the case of an assignment covering all or the
remaining portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto, subject to its
continuing obligations under Section 10.6(e). The Commitments hereunder shall
be modified to reflect the Commitment of such assignee, and, if any such
assignment occurs while any Notes are outstanding, new Notes shall, upon the
surrender of the assigning Lender's Notes, be issued to such assignee and to the
assigning Lender as necessary to reflect the new Commitments of the assigning
Lender and of its assignee.
(b) Each Lender may sell, negotiate or grant participations to other
financial institutions in all or part of the obligations of the Borrowers
outstanding under the Loan Documents, without notice to or the approval of the
Agent or the Borrowers; provided that any such sale, negotiation or
--------
participation shall be in compliance with the applicable federal and state
securities laws and the other requirements of this Section 10.6. No participant
shall constitute a "Lender" under any Loan Document, and the Borrowers shall
continue to deal solely and directly with the Agent and the Lenders.
(c) Each Lender may disclose to any proposed assignee or participant
any information relating to BEI or any of its Subsidiaries; provided, that prior
to such disclosure such proposed assignee or participant shall have agreed in
writing to keep any such information confidential substantially on the terms of
Section 10.6(e).
(d) The grant of a participation interest shall be on such terms as
the granting Lender defines are appropriate, provided only that (i) the holder
of such a participation interest shall not have any of the rights of a Lender
under this Agreement except, if the participation agreement so provides, rights
to demand the payment of costs of the type described in
58
Article III; provided, however, the aggregate amount that the Borrowers shall be
-----------------
required to pay under Sections 3.6, 3.9 and 3.12, and the aggregate attorneys'
fees and costs that the Borrower shall be required to pay under Section 3.7,
with respect to any ratable share of the Commitment or any Loan (including
amounts paid to participants) shall not exceed the amount that the Borrowers
would have had to pay if no participation agreements had been entered into, and
(ii) the consent of the holder of such a participation interest shall not be
required for amendments or waivers of provisions of the Loan Documents other
than those that (A) increase the amount of the Commitments, (B) extend the term
of the Commitments, (C) decrease the rate of interest or the amount of any fee
or any other amount payable to the Lenders under the Loan Documents, (D) reduce
the principal amount payable under the Loan Documents, or (E) extend the date
fixed for the payment of principal or interest or any other amount payable under
the Loan Documents.
(e) Each Lender understands that some of the information and documents
furnished to it pursuant to this Agreement may be confidential and each Lender
agrees that it will keep all non-public information, documents and agreements so
furnished to it confidential and will make no disclosure to other Persons of
such information or agreements until it shall have become public, except (i) to
the extent required in connection with matters involving operations under or
enforcement or amendment of the Loan Documents; (ii) to such Lender's examiners
and auditors or in accordance with such Lender's obligations under law or
regulations or pursuant to subpoenas or other process to make information
available to governmental agencies and examiners or to others: (iii) to any
corporate parent of any Lender so long as such parent agrees to accept such
information or agreement subject to the restrictions provided in this Section
10.6(e); (iv) to any participant bank or trust company of any Lender so long as
such participant shares the corporate parent with such Lender and agrees to keep
such information, documents or agreement confidential in accordance with the
restrictions provided in this Section 10.6(e); (v) to the Agent or to any other
Lender and their respective counsel and other professional advisors and to its
own counsel and professional advisors so long as such Persons are instructed to
keep such information confidential in accordance with the provisions of this
Section 10.6(e); (vi) to proposed assignees and participants in accordance with
Section 10.6(c); and (vii) with the prior written consent of the Borrowers.
10.7 Effectiveness; Binding Effect; Governing Law. This Agreement
--------------------------------------------
shall become effective when it shall have been executed by the Borrowers, the
Subsidiary Guarantor, the Agent and each Lender and thereafter shall be binding
upon and inure to the benefit of the Borrowers, the Subsidiary Guarantor, the
Agent, each Lender and their respective successors and assigns, except that the
Borrowers and the Subsidiary Guarantor shall not have the right to assign their
rights hereunder or any interest
59
herein without the prior written consent of the Agent and all the Lenders. THIS
AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF TO STATE OF CALIFORNIA WITHOUT GIVING EFFECT TO ITS CHOICE OF LAW
DOCTRINE. EACH LETTER OF CREDIT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS AND RULES DESIGNATED IN SUCH LETTER OF
CREDIT, OR IF NO RULES OR LAWS ARE DESIGNATED, THE UNIFORM CUSTOMS AND PRACTICES
FOR DOCUMENTARY CREDIT (1983 REVISION), INTERNATIONAL CHAMBER OF COMMERCE,
PUBLICATION NO. 400 (THE "UCP") AND, AS TO MATTERS NOT GOVERNED BY THE UCP, THE
---
LAWS OF THE STATE OF CALIFORNIA.
10.8 Waiver of Jury Trial. THE BORROWERS, THE SUBSIDIARY GUARANTOR,
--------------------
THE AGENT AND EACH LENDER HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, ANY OF THE LOAN DOCUMENTS, OR ANY DEALINGS BETWEEN THEM RELATING TO
THE SUBJECT MATTER OF THIS LOAN TRANSACTION AND THE LENDER/BORROWER RELATIONSHIP
THAT IS BEING ESTABLISHED. The scope of this waiver is intended to be all-
encompassing of any and all disputes that may be filed in any court and that
relate to the subject matter of this transaction, including contract claims,
tort claims, breach of duty claims, and all other common law and statutory
claims. The Agent, each Lender, the Borrowers and the Subsidiary Guarantor each
acknowledge that this waiver is a material inducement to enter into a business
relationship, that each has already relied on the waiver in entering into this
Agreement, and that each will continue to rely on the waiver in is related
future dealings. The Agent, each Lender, the Borrowers and the Subsidiary
Guarantor further warrant and represent that each has reviewed this waiver with
its legal counsel, and that each knowingly and voluntarily waives its jury trial
rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT, THE LOAN DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING TO THE LOAN. In the event of litigation, this Agreement may be filed
as a written consent to a trial by the court.
10.9 Consent to Jurisdiction; Venue; Agent for Service of Process.
------------------------------------------------------------
All judicial proceedings brought against any Borrower or the Subsidiary
Guarantor with respect to this Agreement and the Loan Documents may be brought
in any state or federal court of competent jurisdiction in the City of San
Francisco in the State of California, and by execution and delivery of this
Agreement, each Borrower and the Subsidiary Guarantor accepts for itself and in
connection with its respective properties, generally and unconditionally, the
nonexclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be
bound by any judgment rendered thereby in connection with this Agreement. The
Borrowers and the Subsidiary Guarantor irrevocably waive any right they may have
to
60
assert the doctrine of forum non conveniens or to object to venue to the extent
----- ----------
any proceeding is brought in accordance with this Section. The Borrowers (other
than BEI) and the Subsidiary Guarantor designate and appoint BEI at the address
set forth on the signature page hereof and such other Person as may hereafter be
selected by the Borrowers and the Subsidiary Guarantor irrevocably agreeing in
writing to so serve as their agent to receive on their behalf service of all
process in any such proceedings in any such court, such service being hereby
acknowledged by the Borrowers and the Subsidiary Guarantor to be effective and
binding service in every respect. A copy of any such process so served shall be
mailed by registered mail to the applicable Borrower and the Subsidiary
Guarantor at its address provided in the applicable signature page hereto,
except that unless otherwise provided by applicable law, any failure to mail
such copy shall not affect the validity of service of process. If any agent
appointed by the Borrowers and the Subsidiary Guarantor refuses to accept
service, the Borrowers and the Subsidiary Guarantor hereby agree that service
upon them by mail shall constitute sufficient notice. Nothing herein shall
affect the right to serve process in any other manner permitted by law or shall
limit the right of the Agent or any Lender to bring proceedings against the
Borrowers and the Subsidiary Guarantor in courts of any jurisdiction.
10.10 Entire Agreement. This Agreement with Exhibits and Schedules
----------------
and the other Loan Documents embody the entire agreement and understanding
between the parties hereto and supersedes all prior agreements and
understandings relating to the subject matter hereof.
10.11 Separability of Provisions. In case any one or more of the
--------------------------
provisions contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby
10.12 Obligations Several. The obligation of each Lender hereunder is
-------------------
several, and no Lender shall be responsible for the obligation or commitment of
any other Lender hereunder. Nothing contained in this Agreement and no action
taken by the Lenders pursuant hereto shall be deemed to constitute the Lenders
to be a partnership, an association, a joint venture or any other kind of
entity.
10.13 Survival of Certain Agreements. Notwithstanding anything in
------------------------------
this Agreement or implied by law to the contrary, the agreements of the
Borrowers and the Subsidiary Guarantor (as applicable) set forth in Sections
3.6, 3.7, 3.9, 3.12, 3.13 and Article VII, 8.1 and 10.5 and the agreements of
the Lenders set forth in Sections 3.10, 9.2, 9.5 and 10.3 shall survive the
payment of the Loans and the Notes and the termination of this Agreement.
61
10.14 Execution in Counterparts. This Agreement may be executed in
-------------------------
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement;
signature pages may be attached from counterpart documents and reassembled to
form duplicate executed originals.
62
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
BORROWERS AND SUBSIDIARY GUARANTOR:
BEI TECHNOLOGIES, INC.,
as a Borrower
--------------------------------------------------
By:
Title:
Address:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
BEI SENSORS & SYSTEMS COMPANY,
INC., as a Borrower
--------------------------------------------------
By:
Title:
Address:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
63
DEFENSE SYSTEMS COMPANY, INC.,
as Subsidiary Guarantor
--------------------------------------------------
By:
Title:
Address:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
AGENT:
CANADIAN IMPERIAL BANK OF COMMERCE,
as Agent
--------------------------------------------------
By:
Title:
Address:
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇
Payment Address:
Bank of New York, New York
(SWIFT Code ▇▇▇▇▇▇▇▇)
ABA No.: ▇▇▇-▇▇▇-▇▇▇
Account No.: ▇▇▇-▇▇▇▇-▇▇▇
For further Credit to: Agented Loans
Account No.: 07-09611
Attention: Agency Services
Reference: BEI Electronics
64
COMMITMENT THE LENDERS:
$25,000,000 CIBC INC.,
as a Lender
--------------------------------------------------
By:
Title:
Address:
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇
THE ISSUING BANK:
CANADIAN IMPERIAL BANK OF COMMERCE,
as Designated Issuer
--------------------------------------------------
By:
Title:
Address:
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇
65
SCHEDULE 1.1(A)
---------------
PRICING GRID
------------
▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇ ▇▇▇▇▇ 4
PERIOD PERIOD PERIOD PERIOD
-------- -------- -------- --------
APPLICABLE MARGINS
------------------
EURODOLLAR RATE
---------------
LOANS: 1.00% 1.25% 1.50% 1.75%
-----
COMMITMENT FEE
--------------
PERCENTAGES: .250% .375% N/A N/A
-----------
EXPLANATION
-----------
1. The Applicable Margin for each Eurodollar Rate Loan and the Commitment Fee
Percentage will be set for each Pricing Period and will vary depending upon
whether such period is (a) a Level 1 Period or a Level 2 Period, in the
case of Commitment Fee Percentages and (b) a Level 1 Period, a Level 2
Period, a Level 3 Period or a Level 4 Period, in the case of Eurodollar
Rate Loans on the basis of the Compliance Certificate delivered during the
immediately preceding Pricing Period.
2. The first Pricing Period, which commences on the date of this Agreement and
ends on December 31, 1997, will be a Level 3 Period.
3. Each Pricing Period thereafter will be (a) a Level 1 Period or a Level 2
Period, in the case of Commitment Fee Percentages and (b) a Level 1 Period,
a Level 2 Period, a Level 3 Period or a Level 4 Period, in the case of
Eurodollar Rate Loans depending upon the Debt/Consolidated EBITDA Ratio for
the most recent fiscal quarter end prior to the first day of such Pricing
Period as follows:
(a) Commitment Fee Percentages:
--------------------------
(i) If, during any Pricing Period, the Debt/Consolidated EBITDA Ratio
is less than 2.50 to 1.00, the Borrowers' pricing will be a Level
1 Period.
(ii) If, during any Pricing Period, the Debt/Consolidated EBITDA Ratio
is greater than or equal to 2.50 to 1.00, the Borrowers' pricing
will be a Level 2 Period.
1.1-1
(b) Eurodollar Rate Loans:
---------------------
(i) If, during any Pricing Period, the Debt/Consolidated EBITDA Ratio
is less than 1.00 to 1.00, the Borrowers' pricing will be a Level
1 Period.
(ii) If, during any Pricing Period, the Debt/Consolidated EBITDA Ratio
is less than 1.50 to 1.00 but greater than or equal to 1.00 to
1.00, the Borrowers' pricing will be a Level 2 Period.
(iii) If, during any Pricing Period, the Debt/Consolidated EBITDA Ratio
is less than 2.50 to 1.00 but greater than or equal to 1.50 to
1.00, the Borrowers' pricing will be a Level 3 Period.
(iv) If, during any Pricing Period, the Debt/Consolidated EBITDA Ratio
is greater than or equal to 2.50 to 1.00, the Borrowers' pricing
will be a Level 4 Period.
1.1-2
EXHIBIT A
---------
[FORM OF PROMISSORY NOTE]
-------------------------
BEI TECHNOLOGIES, INC.
BEI SENSORS & SYSTEMS COMPANY, INC.
[/1/]
[/2/] [/3/]
FOR VALUE RECEIVED, BEI TECHNOLOGIES, INC., a Delaware corporation and
BEI SENSORS & SYSTEMS COMPANY, INC., a Delaware corporation (the "Borrowers"),
---------
promise to pay to the order of [ ] (the "Lender") the principal
--------------- ------
amount of [/4/] ($[/2/]) or, if less, the aggregate amount of Revolving Loans
(as defined in the Credit Agreement referred to below), made by the Lender to
the Borrowers pursuant to the Credit Agreement referred to below outstanding on
the Maturity Date (as defined in the Credit Agreement referred to below) on the
Maturity Date.
The Borrowers also promise jointly and severally to pay interest on
the unpaid principal amount hereof from the date hereof until paid at the rates
and at the times which shall be determined in accordance with the provisions of
the Credit Agreement.
All payments of principal and interest in respect of this Note shall
be made in lawful money of the United States of America in same day funds at the
office of the Agent (as defined in the Credit Agreement referred to below)
described in the Credit Agreement. Until notified of the transfer of this Note,
the Borrowers shall be entitled to deem the Lender or such person who has been
so identified by the transferor in writing to the Borrowers as the holder of
this Note, as the owner and holder of this Note. Each of the Lender and any
subsequent holder of this Note agrees that before disposing of this Note or any
part hereof it will make a notation hereon of all principal payments previously
made hereunder and of the date to which interest hereon has been paid on the
schedule attached hereto, if any; provided, however, that the failure to make
-------- -------
notation of any payment made on this Note shall not limit or otherwise affect
the obligation of the Borrowers hereunder with respect to payments of principal
or interest on this Note.
This Note is referred to in, and is entitled to the benefits of, the
Credit Agreement dated as of September 28, 1997 (the "Credit Agreement", the
----------------
terms defined herein and not otherwise defined herein being used herein as
therein defined)
----------------------------------
/1/ Insert place of delivery of Note.
/2/ Insert amount of Revolving Commitment in numbers.
/3/ Insert Closing Date.
/4/ Insert amount of Revolving Commitment in words.
among the Borrowers, Defense Systems Company, Inc., a Delaware corporation, as
the Subsidiary Guarantor, the financial institutions named therein, Canadian
Imperial Bank of Commerce, New York Agency, as Agent, Canadian Imperial Bank of
Commerce, as Designated Issuer and CIBC Wood Gundy Securities Corp., as
arranger. The Credit Agreement, among other things, (i) provides for the making
of advances (the "Loans") by the Lender to the Borrowers from time to time in an
-----
aggregate amount not to exceed at any time outstanding the dollar amount first
above mentioned, the indebtedness of the Borrowers resulting from each such Loan
being evidenced by this Note, and (ii) contains provisions for acceleration of
the maturity hereof upon the happening of certain stated events and also for
prepayments on account of principal hereof prior to the maturity hereof upon the
terms and conditions therein specified.
The terms of this Note are subject to amendment only in the manner
provided in the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this
Note or the Credit Agreement shall alter or impair the obligation of the
Borrowers, which is absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the currency
herein prescribed.
The Borrowers promise jointly and severally to pay all costs and
expenses, including reasonable attorneys' fees, incurred in the collection and
enforcement of this Note. The Borrowers hereby consent to renewals and
extensions of time at or after the maturity hereof, without notice, and hereby
waive diligence, presentment, protest, demand and notice of every kind and, to
the full extent permitted by law, the right to plead any statute of limitations
as a defense to any demand hereunder.
This Note shall be governed by, and construed in accordance with, the
laws of the state of California without giving effect to its choice of law
doctrine.
A-2
IN WITNESS WHEREOF, the Borrowers have caused this Note to be executed
and delivered by its duly authorized officer, as of date and the place first
above written.
BEI TECHNOLOGIES, INC.
--------------------------------------------------
By:
Title:
BEI SENSORS & SYSTEMS COMPANY, INC.
--------------------------------------------------
By:
Title:
A-3
TRANSACTIONS
ON
NOTE
Amount of Amount of Principal Interest Notation
Date Loan Made Principal Paid Balance Interest Paid Paid Through Made By
------ --------- -------------- --------- ------------- ------------ --------
EXHIBIT B
---------
[FORM OF NOTICE OF BORROWING]
-----------------------------
NOTICE OF BORROWING
Pursuant to that certain Credit Agreement dated as of September 28,
1997 (said Credit Agreement, as amended from time to time, being the "Credit
------
Agreement"; the terms defined therein and not otherwise defined herein being
---------
used herein as therein defined), by and among BEI Technologies, Inc., a Delaware
corporation and BEI Sensors & Systems Company, Inc., a Delaware corporation
(collectively, the "Borrowers"), Defense Systems Company, Inc., a Delaware
---------
corporation, as the Subsidiary Guarantor, the financial institutions listed
therein (the "Lenders"), Canadian Imperial Bank of Commerce, New York Agency, as
-------
Agent (the "Agent"), Canadian Imperial Bank of Commerce, as Designated Issuer
-----
and CIBC Wood Gundy Securities Corp., as the arranger, this represents
's request to borrow on , [199__][2000] from Lenders, in
--------- ---------
accordance with their applicable pro rata shares, $ in
--------------------
Revolving Loans as [Base] [Eurodollar] Rate Loans. [The initial Interest Period
for such Loans is requested to be a month period.] The proceeds of
----------
such Loans are to be deposited in 's account at Agent.
-----------
The undersigned officers, to the best of their knowledge, and on
behalf of the Borrower which he or she represent certify that:
(i) The representations and warranties contained in Section 5.1 of the
Credit Agreement are true and correct in all material respects on and as of the
date hereof as though made on and as of the date hereof except to the extent
such representations and warranties specifically related to an earlier date in
which case they were true and correct in all material respects on and as of such
earlier date;
(ii) No event has occurred and is continuing, or would result from the
consummation of the Borrowing contemplated hereby, which would constitute an
Event of Default or a Potential Event of Default; and
(iii) All Loan Documents are in full force and effect.
Dated: [BEI TECHNOLOGIES, INC.]
---------------- [BEI SENSORS & SYSTEMS COMPANY, INC.]
----------------------------------------
By:
-------------------------------------
Title:
----------------------------------
B-1
EXHIBIT C
---------
[FORM OF NOTICE OF CONVERSION/CONTINUATION]
-------------------------------------------
NOTICE OF CONVERSION/CONTINUATION
Pursuant to that certain Credit Agreement dated as of September 28,
1997 (said Credit Agreement, as amended from time to time, being the "Credit
------
Agreement"; the terms defined therein and not otherwise defined herein being
---------
used herein as therein defined), by and among BEI Technologies, Inc., a Delaware
corporation and BEI Sensors & Systems Company, Inc., a Delaware corporation
(collectively, the "Borrowers"), Defense Systems Company, Inc., a Delaware
---------
corporation, as the Subsidiary Guarantor, the financial institutions listed
therein ("Lenders"), Canadian Imperial Bank of Commerce, New York Agency, as
-------
Agent (the "Agent"), Canadian Imperial Bank of Commerce, as Designated Issuer
-----
and CIBC Wood Gundy Securities Corp., as the arranger, this represents
's request to [convert] [continue] a Revolving Loan as follows:
--------------
(a) The Borrowing to be [converted] [continued] consists of ["Base
Rate" or "Eurodollar Rate"] Loans in the aggregate principal amount of
$ which were initially advanced on , ;
------------- ------------- -------
(b) The Revolving Loans in the Borrowing are to be [converted into]
[continued as] ["Base Rate" or "Eurodollar Rate"] Loans;
(c) If such Revolving Loans are to be [converted into] [continued as]
Eurodollar Rate Loans, the Interest Period for such Eurodollar Rate Loans
commencing upon [conversion] [continuation] will be months; and
-----------
(d) The date of the requested [conversion] [continuation] is to be
, .
------------ -------
The undersigned officers, to the best of their knowledge, and on
behalf of the Borrower which he or she represent certify that:
(i) The representations and warranties contained in Section 5.1 of the
Credit Agreement are true and correct in all material respects on and as of the
date hereof as though made on and as of the date hereof except to the extent
such representations and warranties specifically related to an earlier date in
which case they were true and correct in all material respects on and as of such
earlier date;
(ii) No event has occurred and is continuing, or would result from the
consummation of the borrowing contemplated
C-1
hereby, which would constitute an Event of Default or a Potential Event of
Default; and
(iii) All Loan Documents are in full force and effect.
Dated: [BEI TECHNOLOGIES, INC.]
--------------- [BEI SENSORS & SYSTEMS COMPANY, INC.]
--------------------------------------
By:
-----------------------------------
Title:
--------------------------------
C-2
EXHIBIT D
---------
[FORM OF COMPLIANCE CERTIFICATE]
1. This Compliance Certificate ("Compliance Certificate") is executed and
----------------------
delivered by BEI Technologies, Inc., a Delaware corporation and BEI Sensors &
Systems Company, Inc., a Delaware corporation, and Defense systems Company,
Inc., a Delaware corporation (collectively, the "Borrowers") to Canadian
---------
Imperial Bank of Commerce, New York Agency (the "Agent") pursuant to Section
-----
6.1(a)(iii)(B) of the Credit Agreement dated as of September 28, 1997 among the
Borrowers, Defense Systems Company, Inc., a Delaware corporation, as the
Subsidiary Guarantor, the financial institutions named therein, the Agent,
Canadian Imperial Bank of Commerce, as Designated Issuer and CIBC Wood Gundy
Securities Corp., as the arranger (as amended from time to time, the "Credit
------
Agreement"). Any terms used herein and not defined herein shall have the
---------
meanings defined in the Credit Agreement. This Compliance Certificate covers
BEI's:
Fiscal quarter ended ,
------------------ ------
Fiscal year ended ,
------------------- ------
2. The following paragraphs set forth calculations in compliance with
obligations pursuant to Sections 6.2(a), (b), (c), (d) and (e) of the Credit
Agreement, as of the end of the fiscal period set forth in paragraph 1 hereof.
A. Debt/Consolidated EBITDA Ratio (Section 6.2(a)):
-----------------------------------------------
(a) Debt $
------------
(b) Consolidated EBITDA $
------------
Ratio (a) : (b) :
------ -----
Maximum Permitted Ratio 3.00 : 1.00
B. Consolidated Tangible Net Worth (Section 6.2(b)):
------------------------------------------------
1. Actual Consolidated Tangible Net Worth
(a) Stockholders' equity $
-----------
minus
(b) Intangible Assets (less Intangible
Assets acquired after September 27, 1997
in an aggregate amount not to exceed
$2,000,000)
$
-----------
D-1
(a) - (b) $
-----------
2. Minimum Consolidated Tangible Net Worth
(a) $28,149,000
plus
(b) 75% of Consolidated Net Income
for each fiscal quarter of BEI
after September, 1997 $
-----------
plus
(c) 100% of the Net Proceeds of any
Equity Issuance by BEI (excluding
Equity Issuances with respect
to the exercise of stock options) $
-----------
(a) + (b) + (c) $
-----------
Required 1 > 2 In compliance: Yes/No
-
C. Quick Ratio (Section 6.2(c)):
----------------------------
(a) Cash, Cash Equivalents
and accounts receivable $
-----------
(b) Current liabilities $
-----------
Ratio (a) : (b) :
----- -----
Minimum Permitted Ratio .80 : 1.00
D. Interest Coverage Ratio (Section 6.2(d)):
----------------------------------------
(a) Consolidated EBITDA
(i) Consolidated Net Income (or
Consolidated Net Losses) $
-----------
plus
(ii) Consolidated Interest
Expense $
-----------
plus
(iii) Provisions for taxes based
on income $
-----------
D-2
plus
(iv) Depreciation expense $
-----------
plus
(v) Amortization expense $
-----------
minus
(vi) the lessor of (i) out-of-
pocket divestiture expenses
or (ii) $1,250,000 $
-----------
minus
(vi) Consolidated Capital
Expenditures $
-----------
(i) + (ii) + (iii) + (iv)
+ (v) - (vi) - (vii) $
-----------
(b) Consolidated Interest Expense $
-----------
Ratio (a) : (b) :
---- -----
Minimum Permitted Ratio 2.00 : 1.00
In compliance: Yes/No
E. Adjusted Consolidated Net Income (Sec. 6.2(e)):
-----------------------------------------------
(i) Required: No Adjusted Consolidated Net Losses
greater than the greater of (i) $3,000,000
or 5% of Tangible Net Worth
In compliance: Yes/No
(ii) Required: No two consecutive fiscal quarters
with Adjusted Consolidated Net Losses in most
recently ended two fiscal quarters
In compliance: Yes/No
(iii) Required: Not permit the cumulative
Consolidated Net Income for any
consecutive four fiscal quarters
to be less than $1.00
In compliance Yes/No
F. Aggregate Dividends Paid to Date (Sec. 6.2(h)):
----------------------------------------------
(i) Less than $2,000,000
In compliance Yes/No
D-3
3. The undersigned has reviewed the terms of the Credit Agreement and
has made, or caused to be made under his/her supervision, a review in reasonable
detail of the transactions and condition of BEI and its Subsidiaries during the
fiscal period covered by this Compliance Certificate. The undersigned does not
(either as a result of such review or otherwise) have any knowledge of the
existence as of the date of this Compliance Certificate of any condition or
event that constitutes an Event of Default or a Potential Event of Default, with
the exception set forth below in response to which the Borrowers are taking or
propose to take the following actions (if none, so state):
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
4. This Compliance Certificate is executed on ,
-------------------
[19 ] [2000] by the Chief Executive Officer, Chief Financial Officer,
---
Treasurer or Controller of BEI. The undersigned hereby certifies that each and
every matter contained herein is derived from the Borrowers' books and records
and is, to the best of knowledge of the undersigned, true and correct.
BEI TECHNOLOGIES, INC.,
a Delaware corporation
----------------------------------------
By:
-------------------------------------
Title:
----------------------------------
D-4
EXHIBIT E
---------
[FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT]
THIS ASSIGNMENT AND ACCEPTANCE AGREEMENT ("Assignment Agreement"), dated as
--------------------
of the date set forth at the top of Attachment 1 hereto, by and among:
------------
(1) The bank designated under item A of Attachment I hereto as the
------------
Assignor Lender ("Assignor Lender"); and
---------------
(2) Each bank designated under item B of Attachment I hereto as an
------------
Assignee Lender (individually, an "Assignee Lender").
---------------
RECITALS
--------
A. Assignor Lender is one of the lenders which is a party to the Credit
Agreement dated as of September 28, 1997 by and among BEI Technologies, Inc., a
Delaware corporation and BEI Sensors & Systems Company, Inc., a Delaware
corporation (collectively, the "Borrowers"), Defense systems Company, Inc., a
---------
Delaware corporation, as the Subsidiary Guarantor, Assignor Lender and the other
financial institutions parties thereto (collectively, the "Lenders"), Canadian
-------
Imperial Bank of Commerce, New York Agency (the "Agent"), Canadian Imperial Bank
-----
of Commerce, as Designated Issuer and CIBC Wood Gundy Securities Corp., as the
arranger (as amended from time to time, the "Credit Agreement").
----------------
B. Assignor Lender wishes to sell, and Assignee Lender wishes to
purchase, all or a portion of Assignor Lender's rights under the Credit
Agreement pursuant to Section 10.6 of the Credit Agreement.
------------
AGREEMENT
---------
Now, therefore, the parties hereto hereby agree as follows:
1. Definitions. Except as otherwise defined in this Assignment
-----------
Agreement, all capitalized terms used herein and defined in the Credit Agreement
have the respective meanings given to those terms in the Credit Agreement.
2. Sale and Assignment. Subject to the terms and conditions of this
-------------------
Assignment Agreement, Assignor Lender hereby agrees to sell, assign and delegate
to each Assignee Lender and each Assignee Lender hereby agrees to purchase,
accept and assume the rights, obligations and duties of a Lender under the
Credit Agreement and the other Loan Documents equal to the pro rata share set
forth under the caption "Pro Rata Share Transferred" opposite such Assignee
Lender's name on Attachment I hereto.
------------
E-1
Such sale, assignment and delegation shall become effective on the date
designated in Attachment I hereto (the "Assignment Effective Date"), which date
------------ -------------------------
shall be, unless Agent shall otherwise consent, at least five (5) Business Days
after the date following the date counterparts of this Assignment Agreement are
delivered to Agent in accordance with Paragraph 3 hereof.
3. Assignment Effective Notice. Upon (a) receipt by Agent of five (5)
---------------------------
counterparts of this Assignment Agreement (to each of which is attached a fully
completed Attachment I), each of which has been executed by Assignor Lender and
------------
each Assignee Lender (and, to the extent required by Section 10.6 of the Credit
--------------------------
Agreement, by the Borrowers and Agent) and (b) payment to Agent of the
---------
registration and processing fee specified in Section 10.6 of the Credit
--------------------------
Agreement, Agent will transmit to the Borrowers, Assignor Lender and each
---------
Assignee Lender an Assignment Effective Notice substantially in the form of
Attachment II hereto, fully completed (an "Assignment Effective Notice").
------------- ---------------------------
4. Assignment Effective Date. At or before 12:00 noon (local time of
-------------------------
Assignor Lender) on the Assignment Effective Date, each Assignee Lender shall
pay to Assignor Lender, in immediately available or same day funds, an amount
equal to the purchase price, as agreed between Assignor Lender and such Assignee
Lender (the "Purchase Price"), for the pro rata share purchased by such Assignee
--------------
Lender hereunder. Effective upon receipt by Assignor Lender of the Purchase
Price payable by each Assignee Lender, the sale, assignment and delegation to
such Assignee Lender of such pro rata share as described in Paragraph 2 hereof
-----------
shall become effective.
5. Payments After the Assignment Effective Date. Assignor Lender and
--------------------------------------------
each Assignee Lender hereby agree that Agent shall, and hereby authorize and
direct Agent to, allocate amounts payable under the Credit Agreement and the
other Loan Documents as follows:
(a) All principal payments made after the Assignment Effective Date
with respect to each pro rata share assigned to an Assignee Lender pursuant
to this Assignment Agreement shall be payable to such Assignee Lender.
(b) All interest, fees and other amounts accrued after the Assignment
Effective Date with respect to each pro rata share assigned to an Assignee
Lender pursuant to this Assignment Agreement shall be payable to such
Assignee Lender.
Assignor Lender and each Assignee Lender shall make any separate arrangements
between themselves which they deem appropriate with respect to payments between
them of amounts paid under the Loan Documents on account of the pro rata share
assigned to such Assignee Lender, and neither Agent nor any Borrower shall have
E-2
any responsibility to effect or carry out such separate arrangements.
6. Delivery of Notes. On or prior to the Assignment Effective Date,
-----------------
Assignor Lender will deliver to Agent the Note payable to Assignor Lender. On
or prior to the Assignment Effective Date, the Borrowers will deliver to Agent
new Notes for each Assignee Lender and Assignor Lender, in each case in
principal amounts reflecting, in accordance with the Credit Agreement, their
respective Commitments (as adjusted pursuant to this Assignment Agreement).
Each such new Note shall be dated the Closing Date. Promptly after the
Assignment Effective Date, Agent will send to each of Assignor Lender and the
Assignee Lenders its new Notes and will send to the Borrowers the superseded
Note payable to Assignor Lender, marked "Replaced."
7. Delivery of Copies of Loan Documents. Concurrently with the execution
------------------------------------
and delivery hereof, Assignor Lender will provide to each Assignee Lender (if it
is not already a Lender party to the Credit Agreement) conformed copies of all
documents delivered to Assignor Lender on or prior to the Closing Date in
satisfaction of the conditions precedent set forth in the Credit Agreement.
8. Further Assurances. Each of the parties to this Assignment Agreement
------------------
agrees that at any time and from time to time upon the written request of any
other party, it will execute and deliver such further documents and do such
further acts and things as such other party may reasonably request in order to
effect the purposes of this Assignment Agreement.
9. Further Representations, Warranties and Covenants. Assignor Lender
-------------------------------------------------
and each Assignee Lender further represent and warrant to and covenant with each
other, Agent and the Lenders as follows:
(a) Other than the representation and warranty that it is the legal
and beneficial owner of the interest being assigned hereby free and clear
of any adverse claim, Assignor Lender 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 the
other Loan Documents or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement or the other Loan
Documents.
(b) Assignor Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of Borrower or any
of its obligations under the Credit Agreement or any other Loan Documents.
(c) Each Assignee Lender confirms that it has received a copy of the
Credit Agreement and such other documents and
E-3
information as it has deemed appropriate to make its own credit analysis
and decision to enter into this Assignment Agreement.
(d) Each Assignee Lender will, independently and without reliance upon
Agent, Assignor Lender or any other Lender and based upon 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 and the other Loan Documents.
(e) Each Assignee Lender appoints and authorizes Agent to take such
action as Agent on its behalf and to exercise such powers under the Credit
Agreement and the other Loan Documents as Agent is authorized to exercise
by the terms thereof, together with such powers as are reasonably
incidental thereto, all in accordance with Article IX of the Credit
------------------------
Agreement.
---------
(f) Each Assignee Lender agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Credit
Agreement and the other Loan Documents are required to be performed by it
as a Lender.
(g) Attachment I hereto sets forth administrative information with
------------
respect to each Assignee Lender.
10. Effect of this Assignment Agreement. On and after the Assignment
-----------------------------------
Effective Date, (a) each Assignee Lender shall be a Lender with a pro rata share
of the Revolving Commitment equal to the pro rata share set forth under the
caption "Pro Rata Share After Assignment" opposite such Assignee Lender's name
on Attachment I hereto and shall have the rights, duties and obligations of such
------------
a Lender under the Credit Agreement and the other Loan Documents and (b)
Assignor Lender shall be a Lender with a pro rata share of the Revolving
Commitment equal to the pro rata share set forth under the caption "Pro Rata
Share After Assignment" opposite Assignor Lender's name on Attachment I hereto
------------
and shall have the rights, duties and obligations of such a Lender under the
Credit Agreement and the other Loan Documents, or, if the pro rata share of the
Revolving Commitment of Assignor Lender has been reduced to 0%, Assignor Lender
shall cease to be a Lender and shall have no further obligation to make any
Loans.
11. Miscellaneous. This Assignment Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of California. Paragraph
headings in this Assignment Agreement are for convenience of reference only and
are not part of the substance hereof.
E-4
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
Agreement to be executed by their respective duly authorized officers as of the
date set forth in Attachment I hereto.
------------
, as
-------------------------------------
Assignor Lender
By:
----------------------------------
Name:
----------------------------
Title:
----------------------------
, as an
-------------------------------------
Assignee Lender
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
E-5
CONSENTED TO AND ACKNOWLEDGED BY:
BEI TECHNOLOGIES, INC.
By:
---------------------------
Name:
----------------------
Title:
---------------------
BEI SENSORS & SYSTEMS COMPANY, INC.
By:
---------------------------
Name:
----------------------
Title:
---------------------
DEFENSE SYSTEMS COMPANY, INC.
By:
---------------------------
Name:
----------------------
Title:
---------------------
E-6
CANADIAN IMPERIAL BANK OF COMMERCE,
As Agent
By:
----------------------------
Name:
-----------------------
Title:
----------------------
ACCEPTED FOR RECORDATION
IN REGISTER:
CANADIAN IMPERIAL BANK OF COMMERCE,
As Agent
By:
----------------------------
Name:
-----------------------
Title:
----------------------
E-7
ATTACHMENT 1
TO ASSIGNMENT AGREEMENT
-----------------------
NAMES, ADDRESSES AND PRO RATA SHARES
OF ASSIGNOR LENDER AND ASSIGNEE LENDERS
AND ASSIGNMENT EFFECTIVE DATE
,
--------------- -----
Pro Rata Pro Rata
Share Share After
A. ASSIGNOR LENDER Transferred/5/,/6/ Assignment /1/
--------------- ------------------ --------------
% %
-------------------- ------------- -----------
Lending Office:
--------------------------------
--------------------------------
--------------------------------
--------------------------------
----------------------------
/5/ To be expressed by a percentage rounded to the seventh-digit to the right of
the decimal point.
/6/ Share of Commitment sold by Assignor Lender, and share of Commitment
purchased by Assignee Lender.
E(1)-1
Address for notices:
---------------------------------
---------------------------------
---------------------------------
---------------------------------
Telephone No:
-----------
Telecopier No:
-----------
Wiring Instructions:
---------------------------------
---------------------------------
Pro Rata Pro Rata
Share Share After
B. ASSIGNEE LENDER Transferred/5/,/6/ Assignment /1/
--------------- ------------ -------------
/5/ To be expressed by a percentage rounded to the seventh-digit to the right of
the decimal point.
/6/ Share of Commitment sold by Assignor Lender, and share of Commitment
purchased by Assignee Lender.
% %
-------------------- ------------- -----------
Lending Office:
-----------------------------
-----------------------------
-----------------------------
-----------------------------
-----------------------------
Address for notices:
-----------------------------
-----------------------------
-----------------------------
-----------------------------
Telephone No:
-----------
Telecopier No:
-----------
Wiring Instructions:
-----------------------------
-----------------------------
B. ASSIGNMENT EFFECTIVE DATE:
-------------------------
,
----------------- ------
E(1)-3
ATTACHMENT 2
TO ASSIGNMENT AGREEMENT
-----------------------
FORM OF
ASSIGNMENT EFFECTIVE NOTICE
---------------------------
Reference is made to the Credit Agreement, dated as of September 28, 1997
by and among BEI Technologies, Inc., a Delaware corporation and BEI Sensors &
Systems Company, Inc., a Delaware corporation (collectively, the "Borrowers"),
---------
Defense systems Company, Inc., a Delaware corporation, as the Subsidiary
Guarantor, Assignor Lender and the other financial institutions parties thereto
(collectively, the "Lenders"), Canadian Imperial Bank of Commerce, New York
-------
Agency (the "Agent"), Canadian Imperial Bank of Commerce, as Designated Issuer
-----
and CIBC Wood Gundy Securities Corp., as the arranger (as amended from time to
time, the "Credit Agreement"). Agent hereby acknowledges receipt of five
----------------
executed counterparts of a completed Assignment Agreement, a copy of which is
attached hereto. [Note: Attach copy of Assignment Agreement.] Terms defined
in such Assignment Agreement are used herein as therein defined.
1. Pursuant to such Assignment Agreement, you are advised that the
Assignment Effective Date will be .
------------
2. Pursuant to such Assignment Agreement, Assignor Lender is required to
deliver to Agent on or before the Assignment Effective Date the Notes payable to
Assignor Lender.
3. Pursuant to such Assignment Agreement, Borrower is required to deliver
to Agent on or before the Assignment Effective Date the following Notes, each
dated [Insert appropriate date]:
-------------------------
[Describe each new Note for Assignor Lender and each Assignee Lender as to
principal amount.]
4. Pursuant to such Assignment Agreement, each Assignee Lender is
required to pay its Purchase Price to Assignor Lender at or before 12:00 Noon on
the Assignment Effective Date in immediately available funds.
Very truly yours,
CANADIAN IMPERIAL BANK OF COMMERCE
as Agent
By:
---------------------------
Name:
----------------------
Title:
---------------------
E(1)-4