1
EXHIBIT 10.26
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of July 5, 2000,
between
CABOT MICROELECTRONICS CORPORATION
and
LASALLE BANK NATIONAL ASSOCIATION
2
TABLE OF CONTENTS
Page
SECTION 1: INTERPRETATION........................................................1
1.1 Definitions.....................................................1
1.2 Computation of Time Periods.....................................9
1.3 Accounting Terms................................................9
1.4 Headings and References.........................................9
1.5 Construction....................................................9
SECTION 2: CREDIT................................................................9
2.1 Term Loan A.....................................................9
2.2 Revolving Loan Commitment......................................10
2.3 Borrowing Procedures...........................................10
2.4 Various Types of Loans.........................................10
2.5 Conversion and Continuation Procedures.........................10
SECTION 3: INTEREST; FEES.......................................................11
3.1 Interest Rates.................................................11
3.2 Interest Payment Dates.........................................12
3.3 Setting and Notice of Eurodollar Rates.........................12
3.4 Computation of Interest........................................12
SECTION 4: PREPAYMENTS; COMMITMENT REDUCTIONS...................................12
4.1 Optional Prepayments...........................................12
4.2 Mandatory Prepayments..........................................12
4.3 Reductions in Revolving Commitment.............................12
SECTION 5: MAKING OF PAYMENTS; SETOFF; TAXES....................................12
5.1 Making of Payments.............................................12
5.2 Application of Certain Payments................................13
5.3 Due Date Extension.............................................13
5.4 Setoff.........................................................13
5.5 Taxes..........................................................13
SECTION 6: INCREASED COSTS; SPECIAL PROVISIONS FOR EURODOLLAR LOANS.............14
6.1 Increased Costs................................................14
6.2 Basis for Determining Interest Rate Inadequate or Unfair.......15
6.3 Changes in Law Rendering Eurodollar Loans Unlawful.............15
6.4 Funding Losses.................................................15
6.5 Right of Lender to Fund through Other Offices..................15
6.6 Discretion of Lender as to Manner of Funding...................16
6.7 Conclusiveness of Statements; Survival of Provisions...........16
SECTION 7: REPRESENTATIONS AND WARRANTIES.......................................16
7.1 Organization...................................................16
7.2 Authorization; No Conflict.....................................16
i
3
7.3 Validity and Binding Nature....................................16
7.4 Financial Condition............................................17
7.5 No Material Adverse Change.....................................17
7.6 Litigation and Contingent Liabilities..........................17
7.7 Taxes..........................................................17
7.8 Information....................................................17
7.9 Solvency.......................................................18
7.10 No Default.....................................................18
7.11 Use of Proceeds................................................18
7.12 Subsidiaries...................................................18
7.13 Ownership of Properties; Liens.................................18
7.14 Intellectual Property..........................................18
7.15 Insurance......................................................18
7.16 Investment Company Act; Public Utility Holding Company Act.....18
7.17 Regulation U...................................................18
7.18 Securities Matters.............................................19
7.19 Pension and Welfare Plans......................................19
7.20 Environmental Matters..........................................19
7.21 Labor Matters..................................................20
7.22 Year 2000 Issues...............................................20
7.23 Survival of Warranties.........................................20
SECTION 8: COVENANTS............................................................21
8.1 Reports, Certificates and Other Information....................21
8.2 Maintenance of Existence.......................................23
8.3 Compliance with Laws; Payment of Taxes and Liabilities.........23
8.4 Maintenance of Insurance.......................................23
8.5 Books, Records and Inspections.................................23
8.6 Financial Covenants............................................23
8.7 Limitations on Indebtedness....................................24
8.8 Liens..........................................................24
8.9 Mergers, Consolidations, Sales.................................25
8.10 Inconsistent Agreements; Negative Pledge.......................25
8.11 Advances and Other Investments.................................26
8.12 Restricted Payments............................................26
8.13 Transactions with Affiliates...................................27
8.14 Restriction of Amendments to Revolving Credit Facility.........27
8.15 Compliance with STEP...........................................27
8.16 Use of Proceeds................................................27
8.17 Employee Benefit Plans.........................................27
8.18 Environmental Matters..........................................27
8.19 Further Assurances.............................................28
SECTION 9: EFFECTIVENESS; CONDITIONS OF LENDING.................................28
9.1 Initial Loans; Amendment and Restatement.......................28
9.2 Subsequent Loans...............................................28
ii
4
SECTION 10: EVENTS OF DEFAULT AND THEIR EFFECT..................................29
10.1 Events of Default..............................................29
10.2 Effect of Event of Default.....................................30
SECTION 11: GENERAL.............................................................31
11.1 Waiver; Amendments.............................................31
11.2 Notices........................................................31
11.3 Costs, Expenses and Taxes......................................31
11.4 Governing Law; Severability....................................31
11.5 Counterparts...................................................32
11.6 Successors and Assigns.........................................32
11.7 Indemnification by the Borrower................................32
11.8 Forum Selection and Consent to Jurisdiction....................32
11.9 Waiver of Jury Trial...........................................33
11.10 Amendment and Restatement......................................33
iii
5
EXHIBITS
EXHIBIT A Form of Note
EXHIBIT B Form of Compliance Certificate
EXHIBIT C Form of Solvency Certificate
SCHEDULES
SCHEDULE 7.6 Litigation and Contingent Liabilities
SCHEDULE 7.14 Intellectual Property
SCHEDULE 7.15 Insurance
SCHEDULE 7.19 Pension and Welfare Plans
SCHEDULE 7.20 Environmental Matters
SCHEDULE 8.7 Existing Indebtedness
SCHEDULE 8.8 Existing Liens
SCHEDULE 8.13 Transactions with Affiliates
SCHEDULE 11.2 Addresses for Notices
iv
6
AMENDED AND RESTATED CREDIT AGREEMENT
This Amended and Restated Credit Agreement, dated as of July 5, 2000
(this "Agreement"), is between Cabot Microelectronics Corporation, a Delaware
corporation (the "Borrower"), and LaSalle Bank National Association, a national
banking association (the "Lender").
PRELIMINARY STATEMENTS:
1. The Borrower and the Lender are party to the Credit Agreement dated
as of March 29, 2000 (as amended, supplemented or otherwise modified from time
to time, the "Existing Credit Agreement"), under which the Lender made certain
term loans to the Borrower, which loans and extensions of credit are evidenced
by, among other things, the Term Note B dated as of March 29, 2000 (the
"Existing Note"), made by the Borrower in favor of the Lender in the original
principal amount of $13,500,000.
2. The Borrower has requested that the Lender amend and restate the
Existing Credit Agreement to, among other things, convert the term loan
evidenced by the Existing Note into a revolving line of credit and reduce such
revolving line of credit to $8,500,000.
3. The Lender has agreed to provide such a credit facility on the terms
and subject to the conditions set forth in this Agreement.
AGREEMENT:
In consideration of the premises and the mutual agreements herein
contained, the Borrower and the Lender hereby agree as follows:
SECTION 1: INTERPRETATION
1.1 Definitions. When used in this Agreement the following terms have
the indicated meanings:
Affiliate of any Person means (i) any other Person that, directly or
indirectly, controls or is controlled by or is under common control with such
Person and (ii) any officer or director of such Person. A Person shall be deemed
to be "controlled by" any other Person if such Person possesses, directly or
indirectly, power to vote 5% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors or managers or
power to direct or cause the direction of the management and policies of such
Person whether by contract or otherwise. Unless the context otherwise requires,
each reference to an Affiliate in this Agreement is a reference to an Affiliate
of the Borrower.
Agreement has the meaning set forth in the Preamble.
7
Applicable Margin means, as of any date of determination, a percentage
per annum determined by reference to the Level in effect at such time, as set
forth below:
Applicable Margin:
--------------------------------------------------------------------------------
Level Eurodollar Rate (Reserve Adjusted)
--------------------------------------------------------------------------------
Level I 1.50%
--------------------------------------------------------------------------------
Level II 1.75%
--------------------------------------------------------------------------------
Level III 2.00%
--------------------------------------------------------------------------------
The Applicable Margin shall change on the effective date of any change in the
applicable Level.
Base Rate means, for any day, the rate of interest in effect for such
day as publicly announced from time to time by the Lender at its principal place
of business in Chicago, Illinois as its prime, base or equivalent rate of
interest (whether or not such rate is actually charged by the Lender), which
rate is not necessarily the lowest rate of interest charged by the Lender with
respect to commercial loans. Any change in the Base Rate announced by the Lender
is effective as of the effective date specified in the public announcement by
the Lender of such change.
Base Rate Loan means any Loan bearing interest at the Base Rate.
Borrower has the meaning set forth in the Preamble.
Business Day means any day on which the Lender is open for commercial
banking business in Chicago, Illinois and, in the case of a Business Day that
relates to a Eurodollar Loan, on which dealings are carried on in the London
interbank eurodollar market.
Cabot Dividend means the dividends to be declared and paid by the
Borrower to Cabot Corporation in an aggregate amount equal to the lesser of (i)
the borrowings under the Loans plus the net proceeds of the Borrower's initial
public offering and (ii) Cabot's Corporation's estimated tax basis in the
Borrower's capital stock as of the completion of the Borrower's initial public
offering.
Capital Lease means, with respect to any Person, any lease of (or other
agreement conveying the right to use) any real or personal property by such
Person that, in conformity with GAAP, is or should be accounted for as a capital
lease on the balance sheet of such Person.
CERCLA means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, any amendments thereto, any regulations promulgated
thereunder and any successor statutes or regulations.
Change in Control means (i) the acquisition by any individual, entity
or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended, a "Controlling Person"), other than Cabot
Corporation, of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended) of more than
30% of the combined voting power of the then-outstanding voting securities
entitled to vote generally in the election of directors of the Borrower or (ii)
during any period of up to 24 consecutive
2
8
months, commencing before or after the Closing Date, individuals who at the
beginning of such 24-month period were directors of the Borrower shall cease
for any reason (other than due to death, disability or previously established
mandatory retirement) to constitute a majority of the board of directors of the
Borrower.
Closing Date means the later of (i) March 29, 2000, and (ii) the date
that each of the conditions precedent set forth in Section 9 have been satisfied
in full, which date will be set forth in the certificate described in Section
9.1(g).
Code means the Internal Revenue Code of 1986, any amendments thereto,
any regulations promulgated thereunder and any successor statutes or
regulations.
Consolidated Net Income (or Loss) means, with respect to the Borrower
and its Subsidiaries for any period, the net income (or loss) of the Borrower
and its Subsidiaries for such period, computed without giving effect to
extraordinary losses or extraordinary gains and any related tax effect.
Controlled Group means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the
Borrower, are treated as a single employer under Section 414 of the Code or
Section 4001 of ERISA.
Disposal has the meaning set forth in the definition of "Release".
EBITDA means, for any period, (i) Consolidated Net Income (or Loss) for
such period plus (ii) to the extent deducted in determining such Consolidated
Net Income (or Loss), (a) consolidated gross interest expense (including all
commissions, discounts, fees and other charges in connection with standby
letters of credit and similar instruments) accrued or paid by the Borrower and
its Subsidiaries for such period (including all imputed interest on Capital
Leases), determined in accordance with GAAP, (b) provisions for any income or
similar taxes paid or accrued by the Borrower and its Subsidiaries, (c) all
amounts treated as expenses for depreciation and the amortization of intangibles
of any kind and (d) any other non-cash charges minus (iii) non-cash gains
received by the Borrower during such period, in each case determined on a
consolidated basis in accordance with GAAP. For purposes of this definition,
EBITDA shall be calculated for any period by including the actual amount for
such period ending on the date of determination, including the EBITDA
attributable to any Person acquired pursuant to a Permitted Acquisition
occurring during such period on a pro forma basis for the period from the first
day of the applicable period through the date of the closing of each such
Permitted Acquisition, utilizing (a) where available or required pursuant to the
terms of this Agreement, historical audited or reviewed unaudited financial
statements obtained from such acquired Person (and prepared by an accounting
firm of national recognition or otherwise reasonably acceptable to the Lender),
broken down by fiscal quarter using methodology consistent with GAAP or (b)
where audited or reviewed financial statements are unavailable and not required
pursuant to the terms of this Agreement, unaudited financial statements reviewed
internally by the Borrower, broken down by fiscal quarter using methodology
consistent with GAAP.
3
9
Environmental Claims means all claims, however asserted, by any
governmental, regulatory or judicial authority or other Person alleging
potential liability or responsibility for violation of any Environmental Law, or
for release or injury to the environment.
Environmental Laws means all present or future federal, state or local
laws, statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any governmental authority,
in each case relating to Environmental Matters.
Environmental Matters means any matter arising out of or relating to
health and safety, or pollution or protection of the environment or workplace,
including, without limitation, any of the foregoing relating to the presence,
use, production, generation, handling, transport, treatment, storage, disposal,
distribution, discharge, release, control or cleanup of any Hazardous Substance.
ERISA means the Employee Retirement Income Security Act of 1974, any
amendments thereto, any regulations promulgated thereunder and any successor
statutes or regulations.
Eurocurrency Reserve Percentage means, with respect to any Eurodollar
Loan for any Interest Period, a percentage (expressed as a decimal) equal to the
daily average during such Interest Period of the percentage in effect on each
day of such Interest Period, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor), for determining the aggregate maximum
reserve requirements applicable to "Eurocurrency Liabilities" pursuant to
Regulation D or any other then applicable regulation of such Board of Governors
which prescribes reserve requirements applicable to "Eurocurrency Liabilities"
as presently defined in Regulation D.
Eurodollar Loan means any Loan bearing interest at the Eurodollar Rate
(Reserve Adjusted).
Eurodollar Office means with respect to the Lender the office or
offices of the Lender that shall be making or maintaining the Eurodollar Loans
of the Lender hereunder or such other office or offices through which the Lender
determines its Eurodollar Rate. A Eurodollar Office of the Lender may be, at the
option of the Lender, either a domestic or foreign office.
Eurodollar Rate means, with respect to any Eurodollar Loan for any
Interest Period, a rate per annum equal to the offered rate for deposits in
Dollars for a period equal or comparable to such Interest Period that appears on
Telerate Page 3750 as of 11:00 A.M. (London time) three Business Days prior to
the first day of such Interest Period. "Telerate Page 3750 " means the display
designated as "Page 3750 " on the Telerate Service (or such other page as may
replace page 3750 on that service or such other service as may be nominated by
the British Bankers' Association as the information vendor for the purpose of
displaying British Bankers' Association Interest Settlement Rates for Dollar
deposits).
Eurodollar Rate (Reserve Adjusted) means, with respect to any
Eurodollar Loan for any Interest Period, a rate per annum (rounded upwards, if
necessary, to the nearest 1/16th of 1%) determined pursuant to the following
formula:
Eurodollar Rate = Eurodollar Rate
(Reserve Adjusted) 1-Eurocurrency Reserve Percentage
4
10
Event of Default means any of the events described in Section 10.1.
Existing Credit Agreement has the meaning set forth in the first
preliminary statement.
Existing Note has the meaning set forth in the first preliminary
statement.
Funded Debt means, as of the date of determination, Indebtedness for
borrowed money and with respect to Capital Leases of the Borrower and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP.
GAAP means generally accepted accounting principles set forth from time
to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination; provided that for purposes of determining compliance with the
covenants set forth in Section 8.4, "GAAP" means such accounting principles as
in effect on the Closing Date.
Hazardous Substance has the meaning set forth in Section 7.20(b).
Indebtedness of any Person means, without duplication, (i) all
indebtedness of such Person for borrowed money, whether or not evidenced by
bonds, debentures, notes or similar instruments, (ii) all obligations of such
Person as lessee under Capital Leases which have been or should be recorded as
liabilities on a balance sheet of such Person in accordance with GAAP, (iii) all
obligations of such Person to pay the deferred purchase price of property or
services (excluding trade accounts payable in the ordinary course of business),
(iv) all indebtedness secured by a Lien on the property of such Person, whether
or not such indebtedness shall have been assumed by such Person, (v) all
obligations, contingent or otherwise, with respect to the face amount of all
letters of credit (whether or not drawn) and banker's acceptances issued for the
account of such Person and s (vi) all liabilities of such Person under any
agreement, undertaking or arrangement by which such Person guarantees, endorses
or otherwise becomes or is contingently liable upon (by direct or indirect
agreement, contingent or otherwise, to provide funds for payment, to supply
funds to or otherwise to invest in a debtor, or otherwise to assure a creditor
against loss) any indebtedness, obligation or other liability of any other
Person (other than by endorsements of instruments in the course of collection),
or guarantees the payment of dividends or other distributions upon the shares of
any other Person.
Interest Period means, as to any Eurodollar Loan, the period commencing
on the date such loan is borrowed or continued as a Eurodollar Loan and ending
on the date one, two, three or six months thereafter as selected by the Borrower
pursuant to Section 2.2.1; provided that:
(i) if any Interest Period would otherwise end on a day that is
not a Business Day, such Interest Period shall be extended to
the following 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
preceding Business Day;
5
11
(ii) any Interest Period that begins on a day for which there is no
numerically corresponding day in the calendar month at the end
of such Interest Period shall end on the last Business Day of
the calendar month at the end of such Interest Period; and
(iii) the Borrower may not select an interest period that would
extend beyond the Revolving Termination Date or the
Termination Date, as the case may be.
Lender has the meaning set forth in the Preamble.
Level means any of Level I, Level II and Level III. "Level I" means
that the Company's Leverage Ratio is less than 1.25 to 1.00 as of the end of the
fiscal quarter most recently ended. "Level II" means that the Company's Leverage
Ratio is greater than or equal to 1.25 to 1.00 and less than 2.00 to 1.00 as of
the end of the fiscal quarter most recently ended. "Level III" means that the
Company's Leverage Ratio is greater than or equal to 2.00 to 1.00 as of the end
of the fiscal quarter most recently ended. Any change in a Level will be made
upon receipt by the Lender of the applicable compliance certificate delivered
under Section 8.1(c) and will be effective three Business Days thereafter.
Leverage Ratio means the ratio of (i) Funded Debt to (ii) EBITDA.
Liabilities means all of the Borrower's liabilities, obligations and
indebtedness to the Lender for monetary amounts, whether now or hereafter owing,
arising, due or payable under this Agreement and any other Loan Document
howsoever evidenced, created, incurred, acquired or owing.
Lien means any lien, security interest or other charge or encumbrance
of any kind, or any other type of preferential arrangement, including, without
limitation, the lien or retained security title of a conditional vendor and any
easement, right of way or other encumbrance on title to real property.
Loan Documents means this Agreement, the Notes and such other documents
as the Borrower or any Subsidiary delivers to the Lender pursuant to the terms
of this Agreement.
Loans means, collectively, Term Loan A and the Revolving Loans.
Margin Stock means any "margin stock" as defined in Regulation U of the
Board of Governors of the Federal Reserve System.
Material Adverse Effect means any event that has had or could be
reasonably likely to have (i) a material adverse change in, or a material
adverse effect upon, the condition (financial or otherwise), operations, assets,
business or properties of the Borrower and its Subsidiaries taken as a whole,
(ii) a material impairment on the ability of the Borrower or any Subsidiary to
perform any of its obligations under any Loan Document or (iii) a material
adverse effect upon the legality, validity, binding effect or enforceability
against the Borrower or any other Person (other than the Lender) of any Loan
Document.
Multiemployer Pension Plan means a multiemployer plan, as such term is
defined in Section 4001(a)(3) of ERISA, and to which the Borrower or any member
of the Controlled Group may have any liability.
6
12
Notes means Term Note A and the Revolving Note.
PBGC means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
Pension Plan means a "pension plan", as such term is defined in Section
3(2) of ERISA, which is subject to Title IV of ERISA (other than a Multiemployer
Pension Plan), and to which the Borrower or any member of the Controlled Group
may have any liability, including any liability by reason of having been a
substantial employer within the meaning of Section 4063 of ERISA at any time
during the preceding five years, or by reason of being deemed to be a
contributing sponsor under Section 4069 of ERISA.
Permitted Acquisitions means the purchase or other acquire all or
substantially all of the assets or any stock of any class of, or any partnership
or joint venture interest in, any Person, so long as (i) the purchase price of
which, together with the aggregate purchase price all other purchases and
acquisitions consummated after the Closing Date, does not exceed $60,000,000,
(ii) the purchase price (payable in anything other than capital stock of the
Borrower) of which, together with the aggregate purchase price (payable in
anything other than capital stock of the Borrower) all other purchases and
acquisitions consummated after the Closing Date, does not exceed $30,000,000,
(iii) the Borrower has notified the Lender in writing of such acquisition and
such notice gives a reasonably detailed description of the acquisition, (iv) the
Borrower has provided the Lender with such other information as the Lender
reasonably requests, (v) such acquisition would not subject the Lender to any
additional regulatory or third party approvals in connection with the exercise
of its rights under this Agreement and the other Loan Documents, (vi) the board
of directors and, if required, the shareholders of the Borrower and the Person
so acquired have approved the acquisition and such acquisition is otherwise
considered "friendly," (vii) to the extent such acquisition is a stock or other
equity acquisition, the Person so acquired either guarantees the Liabilities in
a manner satisfactory to the Lender or is immediately merged with and into the
Borrower or another Person who has guaranteed the Liabilities (with the Borrower
or such other Person being the surviving entity), (viii) the Borrower has
demonstrated to the satisfaction of the Lender that it is in compliance with the
financial covenants and restrictions contained in Section 8.6 both before and
immediately after the consummation of such acquisition, (ix) no Event of Default
or Unmatured Event of Default has occurred and is continuing or would result
from the consummation of such acquisition and (x) the representations and
warranties of the Borrower set forth in Section 7 will be true and correct both
before and immediately after the consummation of such acquisition. For purposes
of this definition, (a) "purchase price" means the aggregate amount of
consideration to be paid to the seller upon the consummation of a Permitted
Acquisition (including, without limitation, Indebtedness incurred or assumed in
connection therewith and the aggregate amount of all potential earn-out
payments, but excluding the aggregate amount of such earn-out payments to the
extent determined by the post- acquisition performance of the applicable
acquired Person) and (b) capital stock of the Borrower will be valued in a
manner consistent with the purchase agreement relating to the Permitted
Acquisition or, if no such valuation method exists, the average of the fair
market value of such capital stock for the ten Business Days immediately
preceding the consummation date of the Permitted Acquisition.
7
13
Person means any natural person, corporation, partnership, trust,
limited liability company, association, governmental authority or unit, or any
other entity, whether acting in an individual, fiduciary or other capacity.
RCRA means the Resource Conservation and Recovery Act, any amendments
thereto, any regulations promulgated thereunder and any successor statutes or
regulations.
Release has the meaning specified in CERCLA and the term "Disposal" (or
"Disposed") has the meaning specified in RCRA; provided that in the event either
CERCLA or RCRA is amended so as to broaden the meaning of any term defined
thereby, such broader meaning shall apply as of the effective date of such
amendment; and provided, further that to the extent that the laws of a state
wherein any affected property lies establish a meaning for "Release" or
"Disposal" which is broader than is specified in either CERCLA or RCRA, such
broader meaning shall apply.
Responsible Officer means any executive officer of the Borrower, or any
other officer of the Borrower designated in writing by the chief executive
officer or chief financial officer of the Borrower to the Lender as responsible
for overseeing or reviewing compliance with this Agreement or any other Loan
Document.
Revolving Commitment means an amount equal to $8,500,000 on the Closing
Date, as such amount may be reduced under Section 4.3.
Revolving Credit Facility means the revolving credit facility provided
to the Borrower under a credit agreement to be entered into among the Borrower,
certain lending institutions and Fleet National Bank, a national banking
association, as agent, or any other revolving credit facility entered into in
substitution thereof.
Revolving Loans has the meaning set forth in Section 2.2.
Revolving Note has the meaning set forth in Section 2.2.
Revolving Termination Date means the earliest of (i) June 1, 2003
(unless extended in writing by the Lender and the Borrower), (ii) the date the
Liabilities become due and payable under Section 10.2 and (iii) the date the
Lender's obligation to make Revolving Loans terminates under Section 10.2.
STEP means the State of Illinois' State Treasurer's Economic Program.
STEP Rate means a fixed interest rate equal to 1.75% plus (i) until the
second anniversary of the Closing Date, 70% of the "two year treasury rate" and
(ii) after the second anniversary of the Closing Date and before the Termination
Date, 70% of the "three year treasury rate." For purposes of this definition,
(a) "two year treasury rate" means the rate for U.S. Treasury Bonds maturing
over a two year period announced in the Wall Street Journal or any similar
publication on the Closing Date and (b) "three year treasury rate" means the
rate for U.S. Treasury Bonds maturing over a three year period announced in the
Wall Street Journal or any similar publication on the second anniversary of the
Closing Date.
8
14
Subsidiary means, with respect to any Person, a corporation,
partnership, limited liability company or other entity of which such Person
and/or its other Subsidiaries own, directly or indirectly, such number of
outstanding shares or other ownership interests as have at least 50% of the
ordinary voting power for the election of directors or other managers or such
corporation, partnership, limited liability company or other entity. Unless the
context otherwise requires, each reference to a Subsidiary in this Agreement is
a reference to a Subsidiary of the Borrower.
Term Loan A has the meaning set forth in Section 2.1.
Term Note A has the meaning set forth in Section 2.1.
Termination Date means the earlier of (i) June 1, 2005 (unless extended
in writing by the Lender and the Borrower) and (ii) the date the Liabilities
become due and payable under Section 10.2.
Unmatured Event of Default means any event that, if it continues
uncured, will with lapse of time or the giving of notice or both constitute an
Event of Default.
Welfare Plan means a "welfare plan", as such term is defined in Section
3(1) of ERISA.
1.2 Computation of Time Periods. In this Agreement in the computation
of periods of time from a specified date to a later specified date, the words
"from" or "commencing on" means "from and including" and the words "to,"
"through," "ending on" and "until" each mean "to but excluding."
1.3 Accounting Terms. Except as otherwise indicated, all accounting
terms not specifically defined in this Agreement shall be construed in
accordance with, and certificates of compliance with covenants shall be based
upon, GAAP.
1.4 Headings and References. Section and other headings are for
reference only, and shall not affect the interpretation or meaning of any
provision of this Agreement. Any Section or clause references are to this
Agreement, unless otherwise specified. References to an annex, schedule or
exhibit are, unless otherwise specified, to an Annex, Schedule or Exhibit
attached to this Agreement. References in this Agreement and the other Loan
Documents or any other agreement include this Agreement and the other Loan
Documents and other agreements as the same may be amended, restated,
supplemented or otherwise modified from time to time pursuant to the provisions
hereof or thereof. A reference to any law, statute or regulation shall mean that
law, statute or regulation as it may be amended, supplemented or otherwise
modified from time to time, and any successor law, statute or regulation. A
reference to a Person includes the successors and assigns of such Person, but
such reference shall not increase, decrease or otherwise modify in any way the
provisions in this Agreement or any other Loan Document governing the assignment
of rights and obligations under or the binding effect of any provision of this
Agreement or any other Loan Document. The provisions of this Agreement relating
to Subsidiaries shall apply only during such times as the Borrower has one or
more Subsidiaries.
1.5 Construction. Each covenant contained in this Agreement shall be
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be
9
15
deemed to excuse compliance with any other covenant. Where any provision herein
refers to action to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be applicable whether such action is taken
directly or indirectly by such Person. The term "including" is not limiting and
means "including without limitation."
SECTION 2: CREDIT
2.1 Term Loan A. Subject to Section 9, on the Closing Date, the Term
Loan A made by the Lender under Section 2.1 of the Existing Credit Agreement
("Term Loan A") will continue under this Agreement. On March 29, 2000, the
Lender made Term Loan A to the Borrower in the principal amount of $3,500,000.
The obligations in connection with Term Loan A are evidenced by and payable in
accordance with the terms of a promissory note ("Term Note A") made in favor of
the Lender, dated as of March 29, 2000. Term Loan A shall be repaid in full,
together with any accrued and unpaid interest thereon, on the Termination Date.
Notwithstanding anything in Term Note A or this Agreement to the contrary, the
obligations in connection with Term Loan A shall become immediately due and
payable as provided in Section 10. No portion of Term Loan A that has been
repaid may be reborrowed.
2.2 Revolving Loan Commitment. Subject to Section 9, from time to time
after the Closing Date until the Revolving Termination Date, the Lender will
make loans on a revolving basis (collectively, the "Revolving Loans") in such
aggregate amounts as the Borrower may, from time to time, request up to the
Revolving Commitment. The Indebtedness of the Borrower outstanding under the
Existing Note will be restructured as Revolving Loans under this Agreement, and
the term "Revolving Loans" will for all purposes include all such indebtedness
so restructured and any additional Revolving Loans made by the Lender under this
Section 2.2. The obligations in connection with the Revolving Loans will be
evidenced by and payable in accordance with the terms of a promissory note (the
"Revolving Note") made in favor of the Lender, dated as of the Closing Date and
in the form of Exhibit A. The Borrower has the right to repay and reborrow any
of the Revolving Loans; provided that it is a condition precedent to any
reborrowing that as of the date of any reborrowing all of the conditions to
borrowing set forth in Section 9.2 have been satisfied or waived. Each advance
to the Borrower will, on the day of such advance, be deposited, in immediately
available funds, in the Borrower's demand deposit account with the Lender or in
such other account as the Borrower may, from time to time, designate. All
Revolving Loans shall be repaid in full, together with any accrued and unpaid
interest thereon, on the Revolving Termination Date. Notwithstanding anything in
the Revolving Note or this Agreement to the contrary, the obligations in
connection with the Revolving Loans shall become immediately due and payable as
provided in Section 10.
2.3 Borrowing Procedures. The Borrower shall give written notice or
telephonic notice (followed immediately by written confirmation thereof) to the
Lender of each proposed Revolving Loan not later than (i) in the case of a Base
Rate Loan, 11:00 A.M., Chicago time, on the proposed date of such Revolving Loan
and (ii) in the case of a Eurodollar Loan, 11:00 A.M., Chicago time, at least
three Business Days prior to the proposed date of such Revolving Loan. Each such
notice shall be effective upon receipt by the Lender, shall be irrevocable and
shall specify the date, amount and type of Revolving Loan and, in the case of a
Eurodollar Loan, the initial Interest Period therefor. Each borrowing of a
Revolving Loan shall be on a Business Day.
10
16
2.4 Various Types of Loans. Unless eligible for the STEP Rate as
described in Section 3.1(i)(a), each Loan shall be either a Base Rate Loan or a
Eurodollar Loan (each a "type" of Loan), as the Borrower shall specify on the
Closing Date or in a related notice of conversion pursuant to Section 2.5.
Eurodollar Loans having the same Interest Period are sometimes called a "group"
or collectively "groups". Base Rate Loans and Eurodollar Loans may be
outstanding at the same time; provided that (i) not more than seven different
groups of Eurodollar Loans shall be outstanding at any one time and (ii) the
aggregate principal amount of each group of Eurodollar Loans shall at all times
be at least $1,000,000 and an integral multiple of $500,000.
2.5 Conversion and Continuation Procedures. (a) Subject to Section 2.4,
the Borrower may, upon irrevocable written notice to the Agent in accordance
with Section 2.5(b):
(i) elect, as of any Business Day, to convert any Loans (or, in
the case of Loans being converted into Eurodollar Loans, any
part thereof in an aggregate amount not less than $1,000,000
or a higher integral multiple of $500,000) into Loans of the
other type; or
(ii) elect, as of the last day of the applicable Interest Period,
to continue any Eurodollar Loans having Interest Periods
expiring on such day (or any part thereof in an aggregate
amount not less than $1,000,000 or a higher integral multiple
of $500,000) for a new Interest Period.
(b) The Borrower shall give written or telephonic (followed immediately
by written confirmation thereof) notice to the Lender of each proposed
conversion or continuation not later than (i) in the case of conversion into
Base Rate Loans, 11:00 A.M., Chicago time, on the proposed date of such
conversion and (ii) in the case of conversion into or continuation of Eurodollar
Loans, 11:00 A.M., Chicago time, at least three Business Days prior to the
proposed date of such conversion or continuation, specifying in each case:
(i) the proposed date of conversion or continuation;
(ii) the aggregate amount of Loans to be converted or continued;
(iii) the type of Loans resulting from the proposed conversion or
continuation; and
(iv) in the case of conversion into, or continuation of, Eurodollar
Loans, the duration of the requested Interest Period therefor.
(c) If upon the expiration of any Interest Period applicable to
Eurodollar Loans, the Borrower has failed to select timely a new Interest Period
to be applicable to such Eurodollar Loans, the Borrower shall be deemed to have
elected to convert such Eurodollar Loans into Base Rate Loans effective on the
last day of such Interest Period.
(d) Any conversion of a Eurodollar Loan on a day other than the last
day of an Interest Period therefor shall be subject to Section 6.4.
11
17
SECTION 3: INTEREST; FEES
3.1 Interest Rates. The Borrower promises to pay interest on the unpaid
principal amount of the Loans for the period commencing on the Closing Date
until the Loans are paid in full as follows:
(i) with respect to Term Loan A, (a) so long as the Borrower
remains eligible to receive funds from STEP and so long as
funds in an amount at least equal to the then outstanding
principal amount of the Term Loan remain on deposit with the
Lender at the interest rates contemplated by STEP on the
Closing Date for purposes of funding the Borrower under STEP,
at the STEP Rate or (b) during any period of Term Loan A that
the Borrower is ineligible, as determined by the State of
Illinois' State Treasurer's Economic Program, to receive funds
from STEP or the State of Illinois ceases to maintain funds on
deposit with the Lender in the amounts and at the rates
contemplated by clause (i) (a) above for purposes of funding
the Borrower under STEP, at the rate set forth for Revolving
Loans in clause (ii) below;
(ii) with respect to Revolving Loans, (a) for each Revolving Loan
that is a Base Rate Loan, at a rate per annum equal to the
Base Rate from time to time in effect and (b) for each
Revolving Loan that is a Eurodollar Loan, at a rate per annum
equal to the sum of the Eurodollar Rate (Reserve Adjusted)
from time to time in effect plus the Applicable Margin;
provided that at any time an Event of Default exists the interest rate
applicable to the Loans shall be increased by 2.00%.
3.2 Interest Payment Dates. Accrued interest on Term Loan A (to the
extent calculated at the STEP Rate) and each Base Rate Loan shall be payable in
arrears on the last Business Day of each calendar quarter and at the Revolving
Termination Date or the Termination Date, as the case may be. Accrued interest
on each Eurodollar Loan shall be payable on the last day of each Interest Period
relating to such Loan (and, in the case of a Eurodollar Loan with a six-month
Interest Period, on the three-month anniversary of the first day of such
Interest Period) and at the Revolving Termination Date or the Termination Date,
as the case may be. After the Revolving Termination Date or the Termination
Date, as the case may be, accrued interest on all Loans shall be payable on
demand.
3.3 Setting and Notice of Eurodollar Rates. The applicable Eurodollar
Rate for each Interest Period shall be determined by the Lender. Each
determination of the applicable Eurodollar Rate by the Lender shall be
conclusive and binding upon the Borrower in the absence of demonstrable error.
The Lender shall upon written request of the Borrower deliver to the Borrower a
statement showing the computations used by the Lender in determining any
applicable Eurodollar Rate hereunder.
3.4 Computation of Interest. All computations of interest shall be
computed for the actual number of days elapsed on the basis of a year of 360
days. The applicable interest rate for each Base Rate Loan shall change
simultaneously with each change in the Base Rate.
12
18
SECTION 4: PREPAYMENTS; COMMITMENT REDUCTIONS
4.1 Optional Prepayments. The Borrower may from time to time prepay the
Loans in whole or in part; provided that the Borrower shall give the Lender
notice thereof not later than 11:00 A.M., Chicago time, on the day of such
prepayment (which shall be a Business Day), specifying the Loans to be prepaid
and the date and amount of prepayment. Subject to Sections 2.2, 4.3 and 9.2, all
amounts prepaid under this Section 4.1 may be reborrowed.
4.2 Mandatory Prepayments. If on any day the Revolving Loans exceed the
Revolving Commitment, the Borrower shall immediately prepay Revolving Loans in
an amount sufficient to eliminate such excess.
4.3 Reductions in Revolving Commitment. The Borrower may from time to
time reduce the amount of the Revolving Commitment in whole or in part; provided
that the Borrower shall give the Lender three Business Days notice thereof and
on the effective date of such reduction, the Borrower shall make any prepayment
required by Section 4.2.
SECTION 5: MAKING OF PAYMENTS; SETOFF; TAXES
5.1 Making of Payments. All payments on the Liabilities (including any
costs and expenses arising under Section 6) shall be made by the Borrower to the
Lender in immediately available funds at the office specified by the Lender not
later than 11:00 A.M., Chicago time, on the date due; and funds received after
that hour shall be deemed to have been received by the Lender on the next
following Business Day.
5.2 Application of Certain Payments. Each payment of principal shall be
applied to the Loans as the Borrower shall direct by notice to be received by
the Lender on or before the date of such payment or, in the absence of such
notice, as the Lender shall determine in its discretion. After an Event of
Default has occurred and is continuing, the Lender may apply any payments as the
Lender shall determine in its sole discretion.
5.3 Due Date Extension. If any payment on the Liabilities falls due on
a day that is not a Business Day, then such due date shall be extended to the
immediately following Business Day (unless, in the case of a Eurodollar Loan,
such immediately following Business Day is the first Business Day of a calendar
month, in which case such date shall be the immediately preceding Business Day)
and, in the case of principal, additional interest shall accrue and be payable
for the period of any such extension.
5.4 Setoff. The Borrower agrees that the Lender has all rights of
set-off and bankers' lien provided by applicable law, and in addition thereto,
the Borrower agrees that at any time any Event of Default exists, the Lender may
apply to the payment of any obligations of the Borrower hereunder, whether or
not then due, any and all balances, credits, deposits, accounts or moneys of the
Borrower then or thereafter with the Lender.
5.5 Taxes. All payments of principal of and interest on the Loans and
all other amounts payable hereunder shall be made free and clear of and without
deduction for any present or future income, excise, stamp or franchise taxes and
other taxes, fees, duties, withholdings or other charges
13
19
of any nature whatsoever imposed by any taxing authority, but excluding
franchise taxes and taxes imposed on or measured by the Lender's net income or
receipts (all nonexcluded items being called "Taxes"). If any withholding or
deduction from any payment to be made by the Borrower hereunder is required in
respect of any Taxes pursuant to any applicable law, rule or regulation, then
the Borrower will:
(i) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(ii) promptly forward to the Lender an official receipt or other
documentation satisfactory to the Lender evidencing such
payment to such authority; and
(iii) pay to the Lender such additional amount or amounts as is
necessary to ensure that the net amount actually received by
the Lender will equal the full amount the Lender would have
received had no such withholding or deduction been required.
Moreover, if any Taxes are directly asserted against the Lender with respect to
any payment received by the Lender hereunder, the Lender may pay such Taxes and
the Borrower will promptly pay such additional amounts (including any penalty,
interest and expense) as is necessary so that the net amount received by the
Lender after the payment of such Taxes (including any Taxes on such additional
amount) shall equal the amount the Lender would have received had such Taxes not
been asserted. If the Borrower fails to pay any Taxes when due to the
appropriate taxing authority or fails to remit to the Lender the required
receipts or other required documentary evidence, the Borrower shall indemnify
the Lender for any incremental Taxes, interest or penalties that may become
payable by the Lender as a result of any such failure.
SECTION 6: INCREASED COSTS;
SPECIAL PROVISIONS FOR EURODOLLAR LOANS
6.1 Increased Costs. (a) If, after the Closing Date, the adoption of
any applicable law, rule or regulation, 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 the Lender (or any Eurodollar Office of
the Lender) with any request or directive (whether or not having the force of
law) of any such authority, central bank or comparable agency:
(i) shall subject the Lender (or any Eurodollar Office of the
Lender) to any tax, duty or other charge with respect to the
Eurodollar Loans, the Notes or the Lender's obligation to make
Eurodollar Loans, or shall change the basis of taxation of
payments to the Lender of the principal of or interest on the
Eurodollar Loans or any other amounts due under this Agreement
in respect of the Eurodollar Loans or the Lender's obligation
to make Eurodollar Loans (except for changes in the rate of
tax on the overall net income of the Lender or its Eurodollar
Office imposed by the jurisdiction in which the Lender's
principal executive office or Eurodollar Office is located);
(ii) shall impose, modify or deem applicable any reserve (including
any reserve imposed by the Board of Governors of the Federal
Reserve System, but excluding any reserve
14
20
included in the determination of interest rates pursuant to
Section 3), special deposit or similar requirement against
assets of, deposits with or for the account of, or credit
extended by the Lender (or any Eurodollar Office of the
Lender); or
(iii) shall impose on the Lender (or its Eurodollar Office) any
other condition affecting the Eurodollar Loans, the Notes or
the Lender's obligation to make Eurodollar Loans;
and the result of any of the foregoing is to increase the cost to or to impose a
cost on the Lender (or any Eurodollar Office of the Lender) of making or
maintaining any Eurodollar Loan, or to reduce the amount of any sum received or
receivable by the Lender (or its Eurodollar Office) under this Agreement or
under any Note, then upon demand by the Lender, the Borrower shall pay directly
to the Lender such additional amount as will compensate the Lender for such
increased cost or such reduction.
(b) If the Lender shall determine that the adoption or phase-in of any
applicable law, rule or regulation regarding capital adequacy, 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 the Lender or any
Person controlling the Lender with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on the Lender's or such controlling Person's capital as a consequence of
the Lender's obligations hereunder to a level below that which the Lender or
such controlling Person could have achieved but for such adoption, change or
compliance (taking into consideration the Lender's or such controlling Person's
policies with respect to capital adequacy) by an amount deemed by the Lender or
such controlling Person to be material, then from time to time, upon demand by
the Lender, the Borrower shall pay to the Lender such additional amount or
amounts as will compensate the Lender or such controlling Person for such
reduction.
6.2 Basis for Determining Interest Rate Inadequate or Unfair. If with
respect to any Interest Period:
(i) deposits in Dollars (in the applicable amounts) are not being
offered to the Lender in the interbank eurodollar market for
such Interest Period, or the Lender otherwise determines
(which determination, if made in good faith, shall be binding
and conclusive on the Borrower) that by reason of
circumstances affecting the interbank eurodollar market
adequate and reasonable means do not exist for ascertaining
the applicable Eurodollar Rate; or
(ii) the Eurodollar Rate (Reserve Adjusted) as determined by the
Lender will not adequately and fairly reflect the cost to the
Lender of maintaining or funding such Eurodollar Loans for
such Interest Period or that the making or funding of
Eurodollar Loans has become impracticable as a result of an
event occurring after the date of this Agreement;
then the Lender shall promptly notify the other parties thereof and, so long as
such circumstances shall continue, (a) the Lender shall be under no obligation
to make Eurodollar Loans and (b) on the
15
21
last day of the current Interest Period for each Eurodollar Loan, such Loan
shall, unless then repaid in full, automatically convert to a Base Rate Loan.
6.3 Changes in Law Rendering Eurodollar Loans Unlawful. If any change
in (including the adoption of any new) applicable law or regulation, or any
change in the interpretation of applicable law or regulation by any governmental
or other regulatory body charged with the administration thereof, should make it
(or in the good faith judgment of the Lender cause a substantial question as to
whether it is) unlawful for the Lender to make, maintain or fund Eurodollar
Loans, then the Lender shall promptly notify the Borrower and, so long as such
circumstances shall continue, (i) the Lender shall have no obligation to make or
convert into Eurodollar Loans and (ii) on the last day of the current Interest
Period for each Eurodollar Loan of the Lender (or, in any event, on such earlier
date as may be required by the relevant law, regulation or interpretation), such
Eurodollar Loan shall, unless then repaid in full, automatically convert to a
Base Rate Loan.
6.4 Funding Losses. The Borrower hereby agrees that upon demand by the
Lender, the Borrower will indemnify the Lender against any net loss or expense
that the Lender may sustain or incur (including any net loss or expense incurred
by reason of the liquidation or reemployment of deposits or other funds acquired
by the Lender to fund or maintain any Eurodollar Loan) as a result of any
payment or prepayment of any Eurodollar Loan (including any conversion of any
such Eurodollar Loan into a Base Rate Loan) on a date other than the last day of
an Interest Period for such Loan. For this purpose, all notices to the Lender
pursuant to this Agreement shall be deemed to be irrevocable.
6.5 Right of Lender to Fund through Other Offices. The Lender may, if
it so elects, fulfill its commitment as to any Eurodollar Loan by causing a
foreign branch or affiliate of the Lender to make such Loan; provided that in
such event for the purposes of this Agreement such Loan shall be deemed to have
been made by the Lender and the obligation of the Borrower to repay such Loan
shall nevertheless be to the Lender and shall be deemed held by it, to the
extent of such Loan, for the account of such branch or affiliate.
6.6 Discretion of Lender as to Manner of Funding. Notwithstanding any
provision of this Agreement to the contrary, the Lender shall be entitled to
fund and maintain its funding of the Loans in any manner it sees fit, it being
understood, however, that for the purposes of this Agreement all determinations
hereunder shall be made as if the Lender had actually funded and maintained each
Eurodollar Loan during each Interest Period for such Loan through the purchase
of deposits having a maturity corresponding to such Interest Period and bearing
an interest rate equal to the Eurodollar Rate for such Interest Period.
6.7 Conclusiveness of Statements; Survival of Provisions.
Determinations and statements of the Lender pursuant to Section 6.1, 6.2, 6.3 or
6.4 shall be conclusive absent manifest error. The Lender may use reasonable
averaging and attribution methods in determining compensation under Sections 6.1
and 6.4, and the provisions of such Sections shall survive repayment of the
Loans, cancellation of the Notes and any termination of this Agreement.
16
22
SECTION 7: REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement and to induce the
Lender to make the Loans, the Borrower represents and warrants to the Lender as
follows:
7.1 Organization. The Borrower is a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation. The Borrower is in good standing and is duly qualified to do
business in the States of California, Colorado, Illinois, Indiana and Texas, the
Commonwealth of Massachusetts and each other jurisdiction where, because of the
nature of its activities or properties, such qualification is required, except
for such jurisdictions where the failure so to qualify would not have a Material
Adverse Effect.
7.2 Authorization; No Conflict. The Borrower is duly authorized to
execute and deliver each Loan Document to which it is a party, the Borrower is
duly authorized to borrow monies under this Agreement and the Borrower is and
will continue to be duly authorized to perform its obligations under each Loan
Document to which it is a party. The execution, delivery and performance by the
Borrower of this Agreement and of each Loan Document to which it is a party, and
the borrowings by the Borrower under this Agreement, do not and will not (i)
require any consent or approval of any governmental agency or authority that has
not been obtained or (ii) conflict with (a) any provision of law, (b) the
articles of incorporation or by-laws of the Borrower, (c) any material agreement
binding upon the Borrower or its properties or assets or (d) any court or
administrative order or decree applicable to the Borrower, and do not and will
not require, or result in, the creation or imposition of any Lien on any asset
of the Borrower or any of its Subsidiaries.
7.3 Validity and Binding Nature. Each of this Agreement and each other
Loan Document to which the Borrower is a party is the legal, valid and binding
obligation of the Borrower, enforceable against the Borrower in accordance with
its terms.
7.4 Financial Condition. The audited financial statements of the
Borrower as of and for the fiscal years ended September 30, 1998, and September
30, 1999, and unaudited financial statements of the Borrower for the portion of
fiscal year 2000 up to and including December 31, 1999, copies of which have
been furnished prior to the Closing Date to the Lender, fairly present in all
material respects the assets, liabilities, revenues, expenses and cash flows of
the Borrower as of the dates thereof and the results of operations for the
periods covered thereby. The Borrower has no liability or unusual or long-term
commitment that might have a Material Adverse Effect and that is not reflected
in the financial statements referred to above.
7.5 No Material Adverse Change. Since September 30, 1999, there has
been no event that has had or could be reasonably likely to have a Material
Adverse Effect.
7.6 Litigation and Contingent Liabilities. Except as set forth in
Schedule 7.6, no litigation (including derivative actions), arbitration
proceeding or governmental investigation or proceeding is pending or, to the
Borrower's knowledge, threatened against the Borrower or any Subsidiary which
might reasonably be expected to have a Material Adverse Effect. There are no
injunctions or temporary restraining orders (either pending or, to the
Borrower's knowledge, threatened) that would prohibit the making of Loans. Other
than any liability incident to such
17
23
litigation or proceedings, neither the Borrower nor any Subsidiary has any
contingent liabilities not listed on Schedule 7.6 or permitted by Section 8.7.
7.7 Taxes. The Borrower has filed, has caused to be filed or has been
included in all tax returns (federal, state, local, foreign and other material
tax returns) required to be filed by or on behalf of the Borrower and has paid
or caused to be paid all taxes and other governmental charges due for the
periods covered thereby, including interest and penalties, other than any such
taxes or charges (i) for which a timely and proper extension has been obtained
and (ii) that are being contested in good faith and by proper proceedings and as
to which appropriate reserves (in the reasonable judgment of the Lender) are
being maintained, unless and until any Lien resulting therefrom attaches to its
property and becomes enforceable against its other creditors. The reserves for
taxes reflected on the balance sheets of the Borrower submitted to the Lender in
accordance with the terms of Section 8.1 will be adequate in amount in
accordance with GAAP for the payment of all liabilities for all taxes (whether
or not disputed) of the Borrower accrued through the date of such balance sheet.
7.8 Information. All information heretofore or contemporaneously with
this Agreement furnished in writing by the Borrower to the Lender for purposes
of or in connection with this Agreement and the transactions contemplated by
this Agreement is, and all written information hereafter furnished by or on
behalf of the Borrower or any Subsidiary to the Lender pursuant to this
Agreement or any other Loan Document or in connection with this Agreement will
be, true and accurate in every material respect on the date as of which such
information is dated or certified, and none of such information is or will be
incomplete by omitting to state any material fact necessary to make such
information not misleading in light of the circumstances under which made (it
being recognized by the Lender that any projections and forecasts provided by
the Borrower are based on good faith estimates and assumptions believed by the
Borrower to be reasonable as of the date of the applicable projections or
assumptions and that actual results during the period or periods covered by any
such projections and forecasts may differ from projected or forecasted results).
7.9 Solvency. On the Closing Date, and immediately prior to and after
giving effect to the issuance of the Loans and the use of the proceeds thereof,
(i) the Borrower's assets will exceed its liabilities and (ii) the Borrower will
be solvent, will be able to pay its debts as they mature, will own property with
fair saleable value greater than the amount required to pay its debts and will
have capital sufficient to carry on its business as then constituted.
7.10 No Default. No Event of Default or Unmatured Event of Default
exists or would result from the incurring by the Borrower of any Indebtedness
under this Agreement or under any other Loan Document. No contract or other
agreement to which the Borrower or any Subsidiary is a party has been terminated
or breached by the Borrower or any Subsidiary if such termination or breach
could have a Material Adverse Effect.
7.11 Use of Proceeds. The Borrower will apply the proceeds of the Loans
under this Agreement to (i) partially finance the construction of a
manufacturing and distribution center in Aurora, Illinois and (ii) make the
Cabot Dividend.
7.12 Subsidiaries. The Borrower has no Subsidiaries.
18
24
7.13 Ownership of Properties; Liens. Except as permitted pursuant to
Section 8.8, each of the Borrower and each Subsidiary owns good title to all of
its personal properties and assets, tangible and intangible, of any nature
whatsoever (including patents, trademarks, trade names, service marks and
copyrights), free and clear of all Liens, charges and claims (including
infringement claims with respect to patents, trademarks, service marks,
copyrights and the like).
7.14 Intellectual Property. Except as set forth in Schedule 7.14, the
Borrower and each of its Subsidiaries owns and possesses or has a license or
other right to use all such patents, patent rights, trademarks, trademark
rights, trade names, trade name rights, service marks, service ▇▇▇▇ rights and
copyrights as are necessary for the conduct of the business of the Borrower and
its Subsidiaries as conducted on the Closing Date, without any infringement upon
rights of others which could reasonably be expected to have a Material Adverse
Effect.
7.15 Insurance. Set forth on Schedule 7.15 is a complete and accurate
summary of the property and casualty insurance program of the Borrower and its
Subsidiaries as of the Closing Date (including the names of all insurers, policy
numbers, expiration dates, amounts and types of coverage, annual premiums,
exclusions, deductibles, self-insured retention and a description in reasonable
detail of any self-insurance program, retrospective rating plan, fronting
arrangement or other risk assumption arrangement involving the Borrower or any
Subsidiary).
7.16 Investment Company Act; Public Utility Holding Company Act.
Neither the Borrower nor any Subsidiary is an "investment company" or a company
"controlled" by an "investment company", within the meaning of the Investment
Company Act of 1940. Neither the Borrower nor any Subsidiary is a "holding
company", or a "subsidiary company" of a "holding company", or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding company", within
the meaning of the Public Utility Holding Company Act of 1935.
7.17 Regulation U. The Borrower is not engaged principally, or as one
of its important activities, in the business of extending credit for the purpose
of purchasing or carrying Margin Stock.
7.18 Securities Matters. The making of the Loans, the application of
the proceeds and repayment thereof by the Borrower and the consummation of the
transactions contemplated by this Agreement and the other Loan Documents will
not violate any provision of any federal or state securities statutes, rules or
regulations, or any order issued by the Securities and Exchange Commission
(collectively, the "Securities Laws"). The Borrower agrees to indemnify the
Lender and hold the Lender harmless from the claims of any Persons in connection
with any of the Securities Laws and relating to the making of the Loans or the
transactions contemplated by this Agreement and the other Loan Documents.
7.19 Pension and Welfare Plans. (a) Except as set forth in Schedule
7.19, during the twelve-consecutive-month period prior to the date of the
execution and delivery of this Agreement, (i) no steps have been taken to
terminate any Pension Plan and (ii) no contribution failure has occurred with
respect to any Pension Plan sufficient to give rise to a Lien under Section
302(f) of ERISA. No condition exists or event or transaction has occurred with
respect to any Pension Plan which could result in the incurrence by the Borrower
of any material liability, fine or penalty. The Borrower has no contingent
liability with respect to any post-retirement benefit under a Welfare
19
25
Plan, other than liability for continuation coverage described in Part 6 of
Subtitle B of Title I of ERISA.
(b) Except as set forth in Schedule 7.19, all contributions (if any)
have been made to any Multiemployer Pension Plan that are required to be made by
the Borrower or any other member of the Controlled Group under the terms of the
plan or of any collective bargaining agreement or by applicable law; neither the
Borrower nor any member of the Controlled Group has withdrawn or partially
withdrawn from any Multiemployer Pension Plan, incurred any withdrawal liability
with respect to any such plan, received notice of any claim or demand for
withdrawal liability or partial withdrawal liability from any such plan, and no
condition has occurred which, if continued, might result in a withdrawal or
partial withdrawal from any such plan; and neither the Borrower nor any member
of the Controlled Group has received any notice that any Multiemployer Pension
Plan is in reorganization, that increased contributions may be required to avoid
a reduction in plan benefits or the imposition of any excise tax, that any such
plan is or has been funded at a rate less than that required under Section 412
of the Code, that any such plan is or may be terminated, or that any such plan
is or may become insolvent.
7.2 Environmental Matters.
(a) To the best of the Borrower's knowledge, neither the Borrower nor
any Subsidiary, nor any operator of the Borrower's or any Subsidiary's
properties, is in violation, or alleged violation, of any judgment, decree,
order, law, permit, license, rule or regulation pertaining to environmental
matters, including those arising under RCRA, CERCLA, the Superfund Amendments
and Reauthorization Act of 1986 or any other Environmental Law which might
reasonably be expected to have a Material Adverse Effect.
(b) Except for matters arising which would, individually, be expected
to have a Material Adverse Effect, neither the Borrower nor any Subsidiary has
received notice from any third party, including any federal, state or local
governmental authority (i) that any one of them has been identified by the
United States Environmental Protection Agency as a potentially responsible party
under CERCLA with respect to a site listed on the National Priorities List, 40
C.F.R. Part 300 Appendix B, (ii) that any hazardous waste, as defined by 42
U.S.C. ss.6903(5), any hazardous substance as defined by 42 U.S.C. ss.9601(14),
any pollutant or contaminant as defined by 42 U.S.C. ss.9601(33) or any toxic
substance, oil or hazardous material or other chemical or substance regulated by
any Environmental Law (all of the foregoing, "Hazardous Substances"), which any
one of them has generated, transported or disposed of has been found at any site
at which a federal, state or local agency or other third party has conducted a
remedial investigation, removal or other response action pursuant to any
Environmental Law, (iii) that the Borrower or any Subsidiary must conduct a
remedial investigation, removal, response action or other activity pursuant to
any Environmental Law or (iv) of any Environmental Claim.
(c) Except as set forth on Schedule 7.20, (i) no portion of any real
property or other assets of the Borrower or any Subsidiary has been used for the
handling, processing, storage or disposal of Hazardous Substances except in
accordance in all material respects with applicable Environmental Laws, (ii) in
the course of any activities conducted by the Borrower, any Subsidiary or the
operators of any real property of the Borrower or any Subsidiary, no Hazardous
Substances have been generated or are being used on such properties except in
accordance in all material
20
26
respects with applicable Environmental Laws, (iii) there have been no Releases
or threatened Releases of Hazardous Substances on, upon, into or from any real
property or other assets of the Borrower or any Subsidiary, which might
reasonably be expected to have a Material Adverse Effect, (iv) there have been
no Releases on, upon, from or into any real property in the vicinity of any real
property or other assets of the Borrower or any Subsidiary which, through soil
or groundwater contamination, may have come to be located on, and which might
reasonably be expected to have a Material Adverse Effect and (v) any Hazardous
Substances generated by the Borrower and its Subsidiaries have been transported
offsite only by properly licensed carriers and delivered only to treatment or
disposal facilities maintaining valid permits as required under applicable
Environmental Laws, which transporters and facilities have been and are
operating in compliance in all material respects with such permits and
applicable Environmental Laws.
7.21 Labor Matters. Neither the Borrower nor any Subsidiary is subject
to any labor or collective bargaining agreement. There are no existing or
threatened strikes, lockouts or other labor disputes involving the Borrower or
any Subsidiary that singly or in the aggregate could reasonably be expected to
have a Material Adverse Effect. Hours worked by and payment made to employees of
the Borrower and its Subsidiaries are not in violation of the Fair Labor
Standards Act or any other applicable law, rule or regulation dealing with such
matters.
7.22 Year 2000 Issues. The computer systems in the Borrower's business
are capable of the following before, during or after January 1, 2000 ("Year 2000
Compliant"): (i) handling date information involving all and any dates before,
during and/or after January 1, 2000, including accepting input, providing output
and performing date calculations in whole or in part; (ii) operating accurately
without interruption on and in respect of any and all dates before, during
and/or after January 1, 2000 and without any change in performance; (iii)
responding to and processing two digit year input without creating any ambiguity
as to the century; and (iv) storing and providing date input information without
creating any ambiguity as to the century.
7.2 Survival of Warranties. All representations contained in this
Agreement and the other Loan Documents survive the execution and delivery of
this Agreement.
SECTION 8: COVENANTS
Until the Termination Date and thereafter until all Liabilities of the
Borrower are paid in full, the Borrower agrees that it will:
8.1 Reports, Certificates and Other Information. Furnish to the Lender:
(a) promptly when available and in any event within 120 days after
the close of each fiscal year (i) a copy of the annual audit
report of the Borrower and its Subsidiaries for such fiscal
year, including therein consolidated balance sheets of the
Borrower and its Subsidiaries as of the end of such fiscal
year and consolidated statements of earnings and cash flow of
the Borrower and its Subsidiaries for such fiscal year,
audited by an accounting firm reasonably acceptable to the
Lender and (ii) consolidating balance sheets of the Borrower
and its Subsidiaries as of the end of such fiscal year and a
consolidating statement of earnings for the Borrower and its
Subsidiaries for such fiscal year, together with a comparison
of the preceding fiscal year, certified by a Responsible
Officer of the Borrower;
21
27
(b) promptly when available and in any event within 45 days after
the end of each fiscal quarter (except the last fiscal
quarter) of each fiscal year, consolidated balance sheets of
the Borrower and its Subsidiaries as of the end of such fiscal
quarter, together with consolidated statements of earnings for
such fiscal quarter and for the period beginning with the
first day of such fiscal year end ending on the last day of
such fiscal quarter, together with a comparison with the
corresponding period of the previous fiscal year, certified by
a Responsible Officer of the Borrower;
(c) contemporaneously with the furnishing of a copy of each annual
audit report pursuant to Section 8.1(a) and each set of
quarterly statements pursuant to Section 8.1(b), so long as
any Liabilities are outstanding at such time, a duly completed
compliance certificate in the form of Exhibit B, with
appropriate insertions, dated the date of such annual report
or such quarterly statement and signed by a Responsible
Officer of the Borrower, containing a computation of each of
the financial ratios and restrictions set forth in Section 8.6
and to the effect that such officer has not become aware of
any Event of Default or Unmatured Event of Default that has
occurred and is continuing or, if there is any such event,
describing it and the steps, if any, being taken to cure it;
(d) promptly upon the filing or sending thereof, copies of all
regular, periodic or special reports of any Affiliate of the
Borrower filed with the Securities and Exchange Commission
(the "SEC"); copies of all registration statements of any
Affiliate of the Borrower filed with the SEC (other than on
Form S-8); and copies of all proxy statements or other
communications made to security holders generally (in each
case only to the extent such reports or filings include or
incorporate the financial results of the Borrower or any
Subsidiary);
(e) promptly upon becoming aware of any of the following, written
notice describing the same and the steps being taken by the
Borrower or the Subsidiary affected thereby with respect
thereto:
(i) the occurrence of an Event of Default or an
Unmatured Event of Default;
(ii) any litigation, arbitration or governmental
investigation or proceeding not previously
disclosed by the Borrower to the Lender that has
been instituted or, to the knowledge of the
Borrower, is threatened against the Borrower or
any Subsidiary or to which any of the properties
of any thereof is subject that might reasonably
be expected to have a Material Adverse Effect;
(iii) the institution of any steps by any member of the
Controlled Group or any other Person to terminate any
Pension Plan, or the failure of any member of the
Controlled Group to make a required contribution to any
Pension Plan (if such failure is sufficient to give
rise to a Lien under Section 302(f) of ERISA) or to any
Multiemployer Pension Plan, or the taking of any action
with respect to a Pension Plan which could result in
the requirement that the Borrower furnish
22
28
a bond or other security to the PBGC or such Pension
Plan, or the occurrence of any event with respect to
any Pension Plan or Multiemployer Pension Plan which
could result in the incurrence by any member of the
Controlled Group of any material liability, fine or
penalty (including any claim or demand for withdrawal
liability or partial withdrawal from any Multiemployer
Pension Plan), or any material increase in the
contingent liability of the Borrower with respect to
any post-retirement Welfare Plan benefit, or any notice
that any Multiemployer Pension Plan is in
reorganization, that increased contributions may be
required to avoid a reduction in plan benefits or the
imposition of an excise tax, that any such plan is or
has been funded at a rate less than that required under
Section 412 of the Code, that any such plan is or may
be terminated, or that any such plan is or may become
insolvent;
(iv) any cancellation or material change in any insurance
maintained by the Borrower or any Subsidiary; or
(v) any event (including (a) any violation of any
Environmental Law or the assertion of any Environmental
Claim or (b) the enactment or effectiveness of any law,
rule or regulation) which might reasonably be expected
to have a Material Adverse Effect;
(f) promptly upon the request of the Lender, copies of all
detailed financial and management reports submitted to the
Borrower by independent auditors in connection with each
annual or interim audit made by such auditors of the books of
the Borrower;
(g) promptly from time to time, copies of any notices (including,
without limitation, notices of default or acceleration)
received from any holder or trustee of, under or with respect
to any Indebtedness; and
(h) from time to time such other information concerning the
Borrower, its Subsidiaries and its Affiliates, as the Lender
may reasonably request.
8.2 Maintenance of Existence. Maintain and preserve, and cause each
Subsidiary to maintain and preserve, (i) its existence and good standing in the
jurisdiction of its organization and (ii) its qualification and good standing as
a foreign corporation in each jurisdiction where the nature of its business
makes such qualification necessary (except in those instances in which the
failure to be qualified or in good standing could not have a Material Adverse
Effect).
8.3 Compliance with Laws; Payment of Taxes and Liabilities. (i) Comply,
and cause each Subsidiary to comply, in all material respects with all
applicable laws (including Environmental Laws), rules, regulations, decrees,
orders, judgments, licenses and permits, except where failure to comply could
not reasonably be expected to have a Material Adverse Effect and (ii) pay, and
cause each Subsidiary to pay, prior to delinquency, all taxes and other
governmental charges against it or any of its property, as well as claims of any
kind which, if unpaid, might become a Lien on any of its property; provided that
the foregoing shall not require the Borrower or any Subsidiary to pay any such
tax or charge so long as it shall contest the validity thereof in good faith by
appropriate
23
29
proceedings and shall set aside on its books adequate reserves with
respect thereto in accordance with GAAP.
8.4 Maintenance of Insurance. Maintain, and cause each Subsidiary to
maintain, with responsible insurance companies, such insurance as may be
required by any law or governmental regulation or court decree or order
applicable to it and such other insurance, to such extent and against such
hazards and liabilities (including business interruption insurance), as is
customarily maintained by companies similarly situated, but which shall insure
against all risks and liabilities of the type identified on Schedule 7.15 and
shall have insured amounts no less than, and deductibles no higher than, those
set forth on such schedule; and, upon request of the Lender, furnish to the
Lender a certificate setting forth in reasonable detail the nature and extent of
all insurance maintained by the Borrower and its Subsidiaries.
8.5 Books, Records and Inspections. Keep, and cause each Subsidiary to
keep, its books and records in accordance with sound business practices
sufficient to allow the preparation of financial statements in accordance with
GAAP. The Borrower shall permit, and cause each Subsidiary to permit, at any
reasonable time and with reasonable notice (or at any time without notice if an
Event of Default exists), the Lender or any representative thereof to visit any
or all of its offices, to discuss its financial matters with its officers and
its independent auditors (and the Borrower authorizes such independent auditors
to discuss such financial matters with the Lender or any representative
thereof), and to examine (and, at the expense of the Borrower or the applicable
Subsidiary, photocopy extracts from) any of its books or other records.
8.6 Financial Covenants.
(i) Not permit the ratio of (a) the sum of (i) the Borrower's
investments described in Sections 8.11(ii) and 8.11(iii), plus
(ii) the Borrower's right to payment for goods sold or leased
or for services rendered, whether or not evidenced by an
instrument or chattel paper and whether or not yet earned by
performance, in each case to the extent classified as current
assets under GAAP, to (b) current liabilities (as determined
according to GAAP) plus all outstanding revolving loans under
the Revolving Credit Facility to be, on a consolidated basis,
less than 1.25 to 1.00 at any time.
(ii) Not permit its Leverage Ratio to be greater than 2.25 to 1.00
at any time, as measured on the last day of each fiscal
quarter of the Borrower on a consolidated basis for the four
consecutive fiscal quarters most recently ended.
(iii) Not permit the ratio of (a) the sum of (1) Consolidated Net
Income (or Loss) for such period plus (2) to the extent
deducted in determining such Consolidated Net Income (or
Loss), (A) consolidated gross interest expense (including all
commissions, discounts, fees and other charges in connection
with standby letters of credit and similar instruments)
accrued or paid by the Borrower and its Subsidiaries for such
period (including all imputed interest on Capital Leases),
determined in accordance with GAAP and (B) provisions for any
income or similar taxes paid or accrued by the Borrower and
its Subsidiaries minus (3) non-cash gains received by the
Borrower during such period, in each case determined on a
consolidated basis in accordance with GAAP, to (b) the
consolidated gross interest expense (including all
24
30
commissions, discounts, fees and other charges in connection
with standby letters of credit and similar instruments)
accrued or paid by the Borrower and its Subsidiaries
(including all imputed interest on Capital Leases), determined
in accordance with GAAP, to be less than 3.00 to 1.00, as
measured on the last day of each fiscal quarter of the
Borrower on a consolidated basis for the four consecutive
fiscal quarters most recently ended.
(iv) Not permit Consolidated Net Income (or Loss) of the Borrower
and its Subsidiaries to be greater than (a) for any fiscal
quarter, ($7,500,000) and (b) for any two consecutive fiscal
quarters, ($10,000,000); it being understood that, by way of
example, ($2,000,000) is greater than ($1,000,000).
8.7 Limitations on Indebtedness. Not, and not permit any Subsidiary to,
create, incur, assume or suffer to exist any Indebtedness, except:
(i) obligations in respect of the Loans;
(ii) (a) Indebtedness incurred in connection with the acquisition
after the Closing Date of any real or personal property by the
Borrower or such Subsidiary or under any Capital Lease;
provided that the aggregate principal amount of such
Indebtedness shall not exceed $5,000,000 outstanding at any
time, (b) unsecured Indebtedness incurred under the Revolving
Credit Facility; provided that the aggregate principal amount
of such Indebtedness shall not exceed $25,000,000 outstanding
at any time and (c) Indebtedness incurred or assumed in
connection with Permitted Acquisitions;
(iii) Indebtedness of Subsidiaries owed to the Borrower and
unsecured Indebtedness of the Borrower to owed to
Subsidiaries; and
(iv) Indebtedness listed on Schedule 8.7.
8.8 Liens. Not, and not permit any Subsidiary to, create or permit to
exist any Lien on any of its real or personal properties, assets or rights of
whatsoever nature (whether now owned or hereafter acquired), except:
(i) Liens for taxes or other governmental charges not at the time
delinquent or thereafter payable without penalty or being
contested in good faith by appropriate proceedings and, in
each case, for which it maintains adequate reserves in
accordance with GAAP;
(ii) Liens arising in the ordinary course of business (such as (i)
Liens of carriers, warehousemen, mechanics and materialmen and
other similar Liens imposed by law and (ii) Liens incurred in
connection with worker's compensation, unemployment
compensation and other types of social security (excluding
Liens arising under ERISA) or in connection with surety bonds,
bids, performance bonds and similar obligations) for sums not
overdue or being contested in good faith by appropriate
proceedings and not involving any deposits or advances or
borrowed money or
25
31
the deferred purchase price of property or services and, in
each case, for which it maintains adequate reserves in
accordance with GAAP;
(iii) (i) Liens arising in connection with Capital Leases (and
attaching only to the property being leased), (ii) Liens
existing on property at the time of the acquisition thereof by
the Borrower or any Subsidiary (and not created in
contemplation of such acquisition) and (iii) Liens that
constitute purchase money security interests on any property
securing debt incurred for the purpose of financing all or any
part of the cost of acquiring such property; provided that any
such Lien attaches to such property within 60 days of the
acquisition thereof and such Lien attaches solely to the
property so acquired;
(iv) attachments, appeal bonds, judgments and other similar Liens,
for sums not exceeding $5,000,000 arising in connection with
court proceedings; provided that the execution or other
enforcement of such Liens is effectively stayed and the claims
secured thereby are being actively contested in good faith and
by appropriate proceedings;
(v) easements, rights of way, restrictions, minor defects or
irregularities in title and other similar Liens not
interfering in any material respect with the ordinary conduct
of the business of the Borrower or any Subsidiary; and
(vi) Liens identified on Schedule 8.8.
8.9 Mergers, Consolidations, Sales. Will not, and not permit any
Subsidiary to, be a party to any merger or consolidation, or purchase or
otherwise acquire all or substantially all of the assets or any stock of any
class of, or any partnership or joint venture interest in, any other Person, or
sell, transfer, convey or lease any of its assets other than (i) sales in the
ordinary course of business of obsolete, damaged or worn-out equipment and
inventory and (ii) Permitted Acquisitions.
8.1 Inconsistent Agreements; Negative Pledge. Not, and not permit any
Subsidiary to, enter into any agreement containing any provision which would (i)
be violated or breached by any borrowing of a Loan under this Agreement or by
the performance by the Borrower or any Subsidiary of any of its obligations
under this Agreement or under any other Loan Document, (ii) prohibit the
Borrower or any Subsidiary from granting to the Lender a Lien on any of its
assets (except in connection with the Revolving Credit Facility) or (iii) create
or otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any Subsidiary to (a) pay dividends or make other
distributions on its capital stock owned by the Borrower or any other
Subsidiary, or pay any Indebtedness owed to the Borrower or any other
Subsidiary, (b) make loans or advances to the Borrower or (c) transfer any of
its assets or properties to the Borrower.
8.11 Advances and Other Investments. Not, and not permit any Subsidiary
to, make, incur, assume or suffer to exist any investment in another Person,
whether by acquisition of any debt or equity security, by making any loan or
advance or by becoming obligated with respect to Indebtedness in respect of
obligations of such other Person, except (without duplication) the following:
26
32
(i) Permitted Acquisitions;
(ii) (a) any evidence of Indebtedness, maturing not more than one
year after such time, issued or guaranteed by the United
States Government (or, in the case of foreign operations, any
country that is a member of the OECD) or any agency of the
foregoing, (b) commercial paper, maturing not more than one
year from the date of issue, or corporate demand notes, in
each case (unless issued by the Lender or its Affiliates)
rated at least A-l by Standard & Poor's Ratings Group or P-l
by ▇▇▇▇▇'▇ Investors Service, Inc., (c) any certificate of
deposit (or time deposits represented by such certificates of
deposit) or banker's acceptance, maturing not more than one
year after such time, or overnight federal funds transactions
that are issued or sold by the Lender or its Affiliates or by
a commercial banking institution that is a member of the
Federal Reserve System (or, in the case of foreign operations,
a commercial banking institution organized under the laws of a
country that is a member of the OECD) and has a combined
capital and surplus and undivided profits of not less than
$500,000,000 or (d) any repurchase agreement entered into with
the Lender (or other commercial banking institution of the
stature referred to in clause (c) above) which (1) is secured
by a fully perfected security interest in any obligation of
the type described in any of clauses (a) through (c) above and
(2) has a market value at the time such repurchase agreement
is entered into of not less than 100% of the repurchase
obligation of the Lender (or other commercial banking
institution) thereunder;
(iii) bank deposits and balances in the ordinary course of business;
and
(iv) investments in securities of account debtors received pursuant
to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such account debtors.
8.12 Restricted Payments. Not, and not permit any Subsidiary to,
without the prior written consent of the Lender, (i) issue any equity securities
of the Borrower or any Subsidiary in an offering of equity securities registered
under the Securities Act of 1933, (ii) make any distribution to any of its
shareholders, (iii) pay any management fees or similar fees to Cabot Corporation
or any Affiliate thereof or (iv) set aside funds for any of the foregoing, in
each case other than (a) issuance of equity securities of the Borrower in
connection with the initial public offering of such securities, (b) advances to
its employees in connection with expense reimbursements in the ordinary course
of business, (c) management fees to Cabot Corporation or any Affiliate thereof
under the management agreement among such parties as in effect on the Closing
Date, (d) dividends or distributions to the Borrower's shareholders in an
amount, determined in the aggregate for all such dividends or distributions made
in any fiscal year, not to exceed 50% of the Borrower's Consolidated Net Income
(or Loss) calculated on a cumulative basis from the Closing Date through and
including the date of any such dividend or distribution and (e) the Cabot
Dividend.
8.13 Transactions with Affiliates. Except as set forth in Schedule
8.13, not, and not permit any Subsidiary to, enter into, or cause, suffer or
permit to exist any transaction, arrangement or contract with any of its other
Affiliates (other than the Borrower and its Subsidiaries) which is on
27
33
terms which are less favorable than are obtainable from any Person which is not
one of its Affiliates.
8.14 Restriction of Amendments to Revolving Credit Facility. Not amend
or otherwise modify, or waive any rights under, any agreement or instrument
relating to the Revolving Credit Facility if any such amendment, modification or
waiver would (i) increase the rate of interest (other than with respect to the
application of a default rate of interest), the fees (other than in respect of
amendment and waiver fees charged in the ordinary course of business) or any
prepayment premiums payable with respect to the Revolving Credit Facility, (ii)
add or change any covenants or events of default in a manner materially more
restrictive to the Borrower or any Subsidiary, (iii) impose any express
restrictions on the Borrower's ability to make payments on the Liabilities or
(iv) would give the agent or lenders under the Revolving Credit Facility an
express Lien on the assets of the Borrower or any Subsidiary.
8.1 Compliance with STEP. Use its reasonable efforts to comply with the
requirements of STEP and maintain its eligibility to participate in STEP.
8.16 Use of Proceeds. Use the proceeds of the Loans solely to (i)
partially finance the construction of a manufacturing and distribution center in
Aurora, Illinois and (ii) make the Cabot Dividend; and not use or permit any
proceeds of any Loan to be used, either directly or indirectly, for the purpose,
whether immediate, incidental or ultimate, of "purchasing or carrying" any
Margin Stock.
8.1 Employee Benefit Plans. Maintain, and cause each Subsidiary to
maintain, each Pension Plan in substantial compliance with all applicable
requirements of law and regulations.
8.18 Environmental Matters. (a) If any Release or Disposal of Hazardous
Substances shall occur or shall have occurred on any real property or any other
assets of the Borrower or any Subsidiary, the Borrower shall, or shall cause the
applicable Subsidiary to, cause the prompt containment and removal of such
Hazardous Substances and the remediation of such real property or other assets
as necessary to comply in all material respects with all Environmental Laws and
to preserve the value of such real property or other assets. Without limiting
the generality of the foregoing, the Borrower shall, and shall cause each
Subsidiary to, comply in all material respects with any valid federal or state
judicial or administrative order requiring the performance at any real property
of the Borrower or any Subsidiary of activities in response to the Release or
threatened Release of a Hazardous Substance.
(b) To the extent that the transportation of "hazardous waste" as
defined by RCRA is permitted by this Agreement, the Borrower shall, and shall
cause its Subsidiaries to, dispose of such hazardous waste only at licensed
disposal facilities operating in compliance with Environmental Laws.
8.1 Further Assurances. Take, and cause each Subsidiary to take, such
actions as are necessary, or as the Lender may reasonably request.
28
34
SECTION 9: EFFECTIVENESS; CONDITIONS OF LENDING
The obligation of the Lender to make any Loan and amend and restate the
Existing Credit Agreement is subject to the following conditions precedent:
9.1 Initial Loans; Amendment and Restatement. The obligation of the
Lender to make the initial Loans and to amend and restate the Existing Credit
Agreement is, in addition to the conditions precedent specified in Section 9.2,
subject to the conditions precedent that the Lender shall have received all of
the following, each duly executed and dated the Closing Date (or such earlier
date as shall be satisfactory to the Lender), in form and substance satisfactory
to the Lender:
(a) each Loan Document;
(b) a certificate signed by a Responsible Officer of the Borrower
on behalf of the Borrower dated as of the Closing Date with
respect to the following:
(i) affirming the matters set forth in Section 9.2 as of
the Closing Date;
(ii) stating that there has been no change in the certified
copies of the Borrower's articles of incorporation and
by-laws delivered to the Lender in connection with the
Existing Credit Agreement; and
(iii) stating that the officers authorized to sign the
Existing Credit Agreement are the same officers
authorized to sign the Loan Documents and that the
Lender may rely on the sample of the true signature of
each such officer provided in connection with the
Existing Credit Agreement (it being understood that the
Lender may conclusively rely on each such certificate
until formally advised by a like certificate of any
changes therein);
(c) certified copies of all documents evidencing any necessary
corporate or partnership action, consents and governmental
approvals (if any) required for the execution, delivery and
performance by the Borrower of the documents referred to in
this Section 9.1;
(d) a solvency certificate, substantially in the form of Exhibit
C, executed by a Responsible Officer of the Borrower executed
on behalf of such officer;
9.2 Subsequent Loans. The obligation of the Lender to make each Loan
is subject to the following further conditions precedent that:
(a) Compliance with Representations and Warranties, No Default. Both
before and after giving effect to the making of the Loans the following
statements shall be true and correct:
(i) the representations and warranties of the Borrower set
forth in this Agreement and the other Loan Documents
shall be true and correct in all material respects with
the same effect as if then made (except to the extent
stated to relate to a
29
35
specific earlier date, in which case such
representations and warranties shall be true and
correct as of such earlier date); and
(ii) no Event of Default or Unmatured Event of Default shall
have then occurred and be continuing.
(b) Compliance with STEP. The Borrower will provide the Lender with
evidence satisfactory to the Lender that the Borrower qualifies for STEP and the
State of Illinois has deposited an amount equal to the original principal amount
of Term Loan A with the Lender at an interest rate equal to the STEP rate in
effect on the Closing Date.
(c) Confirmatory Certificate. If requested by the Lender, the Lender
shall have received a certificate dated the date of such requested Loan and
signed by a Responsible Officer as to the matters set out in Sections 9.2(a) and
9.2(b) (it being understood that each request by the Borrower for the making of
a Loan shall be deemed to constitute a warranty by the Borrower that the
conditions precedent set forth in Sections 9.2(a) and 9.2(b) will be satisfied
at the time of the making of such Loan), together with such other documents as
the Lender may reasonably request in support thereof.
SECTION 10: EVENTS OF DEFAULT AND THEIR EFFECT
10. Events of Default. Each of the following shall constitute an Event
of Default under this Agreement:
(a) default in the payment of any principal or interest on the
Loans when such principal and interest is due or declared due
(whether by scheduled maturity, acceleration, demand or
otherwise) or other Liabilities remain unpaid for five
Business Days after notice to the Borrower;
(b) any default shall occur under the terms applicable to any
indebtedness of the Borrower or any Subsidiary in an aggregate
amount (for all such indebtedness so affected) exceeding
$5,000,000 and such default shall (i) consist of the failure
to pay such indebtedness when due, whether by acceleration or
otherwise or (ii) accelerate the maturity of such indebtedness
or permit the holder or holders thereof, or any trustee or
agent for such holder or holders, to cause such indebtedness
to become due and payable prior to its expressed maturity;
(c) the Borrower or any Subsidiary becomes insolvent or generally
fails to pay, or admits in writing its inability or refusal to
pay, debts as they become due; or the Borrower or any
Subsidiary applies for, consents to, or acquiesces in the
appointment of a trustee, receiver or other custodian for the
Borrower or such Subsidiary or any property thereof, or makes
a general assignment for the benefit of creditors; or, in the
absence of such application, consent or acquiescence, a
trustee, receiver or other custodian is appointed for the
Borrower or any Subsidiary or for a substantial part of the
property of any thereof and is not discharged within 30 days;
or the bankruptcy, reorganization, debt arrangement, or other
case or proceeding under the bankruptcy or insolvency law, or
any dissolution or liquidation proceeding, is commenced in
30
36
respect of the Borrower or any Subsidiary, and if such case or
proceeding is not commenced by the Borrower or such
Subsidiary, it is consented to or acquiesced in by the
Borrower or such Subsidiary, or remains for 30 days
undismissed; or the Borrower or any Subsidiary takes any
action to authorize, or in furtherance of, any of the
foregoing;
(d) failure by the Borrower to comply with or to perform any
covenant (i) under Sections 8.2, 8.3, 8.4 and 8.17 and such
failure remains unremedied for ten days after the earlier of
(A) the Borrower's knowledge of such failure or (B) written
notice of such failure by the Lender to the Borrower or (ii)
under any other Section of this Agreement or any other Loan
Document;
(e) any representation and warranty made by the Borrower herein or
any other Loan Document is breached or is false or misleading
in any material respect, or any schedule, certificate,
financial statement, report, notice or other writing furnished
by the Borrower to the Lender in connection herewith is false
or misleading in any material respect on the date as of which
the facts therein set forth are stated or certified;
(f) final judgments which exceed an aggregate of $5,000,000 shall
be rendered against the Borrower or any Subsidiary and shall
not have been paid, discharged or vacated or had execution
thereof stayed pending appeal within 30 days after entry or
filing of such judgments;
(g) (i) institution of any steps by the Borrower or any other
Person to terminate a Pension Plan if as a result of such
termination the Borrower could be required to make a
contribution to such Pension Plan, or could incur a liability
or obligation to such Pension Plan, in excess of $5,000,000,
(ii) a contribution failure occurs with respect to any Pension
Plan sufficient to give rise to a Lien under Section 302(f) of
ERISA or (iii) there shall occur any withdrawal or partial
withdrawal from a Multiemployer Pension Plan and the
withdrawal liability (without unaccrued interest) to
Multiemployer Pension Plans as a result of such withdrawal
(including any outstanding withdrawal liability that the
Borrower and the Controlled Group have incurred on the date of
such withdrawal) exceeds $5,000,000; or
(h) a Change in Control shall occur.
10.2 Effect of Event of Default. If any Event of Default described in
Section 10.1(c) shall occur, the Loans (if they have not theretofore terminated)
shall immediately terminate and all obligations hereunder shall become
immediately due and payable and the Lender shall have no further obligation to
make Revolving Loans, all without presentment, demand, protest or notice of any
kind; and, if any other Event of Default shall occur and be continuing, the
Lender may declare the Loans (if they have not theretofore terminated) to be
terminated or declare all obligations hereunder to be due and payable, whereupon
the Loans (if they have not theretofore terminated) shall immediately terminate
and all obligations hereunder shall become immediately due and payable and the
Lender may terminate its obligation to make Revolving Loans, all without
presentment, demand,
31
37
protest or notice of any kind. The Lender shall promptly
advise the Borrower of any such declaration, but failure to do so shall not
impair the effect of such declaration.
SECTION 11: GENERAL
11.1 Waiver; Amendments. No delay on the part of the Lender in the
exercise of any right, power or remedy shall operate as a waiver thereof, nor
shall any single or partial exercise by any of them of any right, power or
remedy preclude other or further exercise thereof, or the exercise of any other
right, power or remedy. No amendment, modification or waiver of, or consent with
respect to, any provision of this Agreement or any Note shall in any event be
effective unless the same shall be in writing and signed and delivered by the
Lender and then any such amendment, modification, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
11.2 Notices. All notices hereunder shall be in writing (including
facsimile transmission) and shall be sent to the applicable party at its address
shown on Schedule 11.2 or at such other address as such party may, by written
notice received by the other parties, have designated as its address for such
purpose. Notices sent by facsimile transmission shall be deemed to have been
given when sent; notices sent by mail shall be deemed to have been given three
Business Days after the date when sent by registered or certified mail, postage
prepaid; and notices sent by hand delivery or overnight courier service shall be
deemed to have been given when received.
11.3 Costs, Expenses and Taxes. The Borrower agrees to pay on demand
all reasonable out-of-pocket costs and expenses of the Lender (including the
reasonable fees and charges of counsel for the Lender and of local counsel, if
any, who may be retained by said counsel) in connection with the preparation,
execution, syndication, delivery and administration of this Agreement, the other
Loan Documents and all other documents provided for herein or delivered or to be
delivered hereunder or in connection herewith (including any amendments,
supplements or waivers to any Loan Documents), and all reasonable out-of-pocket
costs and expenses (including reasonable attorneys' fees, court costs and other
legal expenses and allocated costs of staff counsel) incurred by the Lender in
connection with the enforcement of this Agreement, the other Loan Documents or
any such other documents. In addition, the Borrower agrees to pay, and to save
the Lender harmless from all liability for, any stamp or other taxes (excluding
income taxes and franchise taxes based on net income) that may be payable in
connection with the execution and delivery of this Agreement, the borrowings
hereunder, the issuance of the Notes or the execution and delivery of any other
Loan Document or any other document provided for herein or delivered or to be
delivered hereunder or in connection herewith. All obligations provided for in
this Section 11.3 shall survive repayment of the Loans and any termination of
this Agreement.
11.4 Governing Law; Severability. This Agreement shall be a contract
made under and governed by the internal laws of the State of Illinois. Whenever
possible each provision of this Agreement shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement. All obligations of the Borrower and rights of the Lender expressed
herein or in any other Loan Document shall be in addition to and not in
limitation of those provided by applicable law.
32
38
11.5 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Agreement.
11.6 Successors and Assigns. This Agreement shall be binding upon the
Borrower, the Lender and their respective successors and assigns, and shall
inure to the benefit of the Borrower and the Lender and the successors and
assigns of the Lender. If the Lender transfers or assigns any portion of its
rights under this Agreement to any Person then the Lender must transfer such
corresponding portion of STEP deposits made by the State of Illinois Treasury
Department to such assignee or transferee.
11.7 Indemnification by the Borrower. In consideration of the execution
and delivery of this Agreement by the Lender and the agreement to make the Loans
under this Agreement, the Borrower hereby agrees to indemnify, exonerate and
hold the Lender and each of the officers, directors, employees, Affiliates and
agents of the Lender (each a "Lender Party") free and harmless from and against
any and all actions, causes of action, suits, losses, liabilities, damages and
expenses, including reasonable attorneys' fees and charges and allocated costs
of staff counsel (collectively, the "Indemnified Liabilities"), incurred by the
Lender Parties or any of them as a result of, or arising out of, or relating to
(i) any tender offer, merger, purchase of stock, purchase of assets (including,
without limitation, the Acquisition) or other similar transaction financed or
proposed to be financed in whole or in part, directly or indirectly, with the
proceeds of any of the Loans, (ii) the use, handling, release, emission,
discharge, transportation, storage, treatment or disposal of any hazardous
substance at any property owned or leased by the Borrower or any Subsidiary,
(iii) any violation of any Environmental Laws with respect to conditions at any
property owned or leased by the Borrower or any Subsidiary or the operations
conducted thereon, (iv) the investigation, cleanup or remediation of offsite
locations at which the Borrower or any Subsidiary or their respective
predecessors are alleged to have directly or indirectly disposed of hazardous
substances or (v) the execution, delivery, performance or enforcement of this
Agreement or any other Loan Document by any of the Lender Parties, except for
any such Indemnified Liabilities arising on account of any the Lender Party's
gross negligence or willful misconduct. If and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Borrower hereby agrees to
make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law. Nothing set
forth above shall be construed to relieve the Lender Party from any obligation
it may have under this Agreement. All obligations provided for in this Section
11.7 shall survive repayment of the Loans, any foreclosure under, or any
modification, release or discharge of any or all of the Loan Documents and any
termination of this Agreement.
11.8 FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT, THE
NOTES OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN
THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR
THE NORTHERN DISTRICT OF ILLINOIS. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE
PURPOSE OF ANY SUCH LITIGATION
33
39
AS SET FORTH ABOVE. THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR
WITHOUT THE STATE OF ILLINOIS. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH
COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE BORROWER HAS OR HEREAFTER MAY
ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN
AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE
BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS
UNDER THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS.
11.9 WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE LENDER HEREBY
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS UNDER THIS AGREEMENT, THE NOTES, ANY OTHER LOAN DOCUMENT AND
ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY
BANKING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND
AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.
11.10 Amendment and Restatement. This Agreement amends, restates and
supersedes in full the terms and provisions of the Existing Credit Agreement.
The execution and delivery of this Agreement and the other Loan Documents are
not intended and should not be construed (i) to deem the Borrower to have repaid
or otherwise discharged any amount of principal of or interest on the Existing
Note or any other obligation under the Existing Credit Agreement or (ii) to
effect a novation or otherwise to release the obligations and liabilities under,
or extinguish such obligations and liabilities evidenced by, the Existing Note
or the Existing Credit Agreement. Promptly after the Closing Date, the Lender
will ▇▇▇▇ the Existing Note "superseded" and return it to the Borrower.
[The remainder of this page intentionally is left blank.]
34
40
Delivered at Chicago, Illinois, as of the day and year first above
written.
CABOT MICROELECTRONICS CORPORATION
By
---------------------------------
Title:
LASALLE BANK NATIONAL ASSOCIATION
By
---------------------------------
Title: First Vice President
41
SCHEDULE 11.2
ADDRESSES FOR NOTICES
BORROWER
Cabot Microelectronics Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Telephone:
Facsimile:
LENDER
▇▇▇▇▇▇▇ ▇. Raider
LaSalle Bank National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
42
EXHIBIT A
FORM OF NOTE
[date]
$[amount] Chicago, Illinois
The undersigned, Cabot Microelectronics Corporation, a Delaware
corporation (the "Borrower"), for value received, promises to pay to the order
of LaSalle Bank National Association, a national banking association (the
"Lender"), at the office of the Lender in Chicago, Illinois, in immediately
available funds the principal amount of $[amount], such principal amount to be
payable on the dates set forth in the Credit Agreement dated as of March 29,
2000 (as amended or otherwise modified from time to time, the "Credit
Agreement"), between the Borrower and the Lender.
The Borrower further promises to pay interest on the unpaid principal
amount evidenced by this promissory note (this "Note") from the date of this
Note until such indebtedness is paid in full, payable at the rates and at the
times set forth in the Credit Agreement. Payments of both principal and interest
are to be made in lawful money of the United States of America.
This Note evidences indebtedness incurred under, and is subject to the
terms and provisions of, the Credit Agreement, to which reference is hereby made
for a statement of the terms and provisions under which this Note may or must be
paid prior to its due date or its due date accelerated.
This Note is made under and governed by the internal laws of the State
of Illinois without regard to the conflict provisions thereof.
CABOT MICROELECTRONICS CORPORATION
By
---------------------------------
Title:
A-1
43
EXHIBIT B
FORM OF COMPLIANCE CERTIFICATE
Reference is made to the Credit Agreement dated as of March 29, 2000
(as amended or otherwise modified from time to time, the "Credit Agreement"),
between Cabot Microelectronics Corporation, a Delaware corporation (the
"Borrower"), and LaSalle Bank National Association, a national banking
association (the "Lender"). Capitalized terms used in this certificate and not
otherwise defined have the meanings assigned to such terms in the Credit
Agreement.
The undersigned certifies to the Lender that he or she is a duly
elected, qualified and acting Responsible Officer of the Borrower and further
certifies as follows:
1. Reports. Enclosed herewith is a copy of the [annual
audited/quarterly report] of the Borrower as at _____________ (the "Computation
Date"), which report fairly presents in all material respects the financial
condition and results of operations [(subject to normal year-end adjustments)]
of the Borrower as of the Computation Date and has been prepared in accordance
with GAAP consistently applied.
2. Financial Tests. The Borrower hereby certifies and warrants to you
that the attached Schedule I contains the true and correct computations required
to establish whether the Borrower is in compliance with each of the financial
covenants and restrictions set forth in Section 8.6 of the Credit Agreement.
3. No Event of Default or Unmatured Event of Default. The Borrower
hereby certifies that no Event of Default or Unmatured Event of Default has
occurred and is continuing[, except: describe the nature of each Event of
Default or Unmatured Event of Default, the period of existence thereof and the
action taken or proposed to be taken with respect thereto].
Dated:
------------
CABOT MICROELECTRONICS CORPORATION
By:
--------------------------------
Title:
B-1
44
SCHEDULE 1
Schedule 1 to Compliance
Certificate dated as of:
A. SECTION 8.6(a) - QUICK RATIO:
1. Cash and Cash Equivalents ______________
2. Accounts Receivable ______________
3. Item A1 plus item A2 ______________
4. Current Liabilities (including
outstanding revolving loans under
the Revolving Credit Facility) ______________
5. Item A3 divided by item A4
(not to be less than 1.25 to 1.00) ______________
B. SECTION 8.6(b) - LEVERAGE RATIO:
1. Funded Debt ______________
2. Consolidated Net Income (or Loss) ______________
3. Interest Expense ______________
4. Taxes ______________
5. Depreciation ______________
6. Amortization ______________
7. Non-cash charges ______________
8. Items B2 through and including B7 ______________
9. Non-Cash Gains ______________
10. Item B8 minus item B9 ______________
11. Item B1 divided by item B10
(not to be greater than 2.25 to 1.00) ______________
1
45
C. SECTION 8.6(c) - INTEREST COVERAGE
RATIO:
1. Item B10 (above) minus items
B5 and B6 and B7 (above) ______________
2. Item C1 divided by item B3 (above)
(not to be less than 3.00 to 1.00) ______________
D. SECTION 8.6(d) - CONSOLIDATED NET
INCOME (OR LOSS):
1. Consolidated Net Income (or Loss)
(last quarter) (not to be greater
than ($7,500,000)) ______________
2. Consolidated Net Income (or Loss)
(penultimate quarter) ______________
3. Item D1 plus item D2
(not to be greater than ($10,000,000)) ______________
2
46
EXHIBIT C
FORM OF SOLVENCY CERTIFICATE
Reference is made to the Credit Agreement dated as of March 29, 2000
(as amended or otherwise modified from time to time, the "Credit Agreement"),
between Cabot Microelectronics Corporation, a Delaware corporation (the
"Borrower"), and LaSalle Bank National Association, a national banking
association (the "Lender"). Capitalized terms used in this certificate and not
otherwise defined have the meanings assigned to such terms in the Credit
Agreement.
The undersigned certifies to the Lender that he or she is a duly
elected, qualified and acting Responsible Officer of the Borrower and further
certifies as follows:
1. The Borrower has furnished the undersigned with a true, complete and
executed copy of the Credit Agreement as in effect on the date of this
certificate, and the undersigned has reviewed the Credit Agreement in its
entirety.
2. The undersigned is familiar with all of the Borrower's business and
financial affairs, including, without limitation, all of the matters described
in this certificate.
3. As of the date of this certificate, the Borrower is "solvent," and
the Borrower's incurrence of its obligations under the Credit Agreement will not
render the Borrower insolvent. For purposes of this certificate, a corporation
is "solvent" if:
(a) its assets exceed its liabilities;
(b) it is able to pay its debts as they mature;
(c) it owns property with fair salable value (including intangible
assets) greater than the amount required to pay its debts; and
(d) it has capital sufficient to carry on its business as then
constituted.
Dated: CABOT MICROELECTRONICS CORPORATION
------------
By:
--------------------------------
Title:
C-0