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EXHIBIT 10.16
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CREDIT AGREEMENT
DATED AS OF NOVEMBER 29, 1999
BETWEEN
PLANTRONICS, INC.,
AS THE COMPANY,
AND
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION,
AS THE BANK
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TABLE OF CONTENTS
SECTION PAGE
ARTICLE 1....................................................................................1
DEFINITIONS..................................................................................1
1.01 Certain Defined Terms................................................................1
1.02 Other Interpretive Provisions.......................................................18
1.03 Accounting Principles...............................................................19
ARTICLE 2...................................................................................19
THE CREDIT..................................................................................19
2.01 The Revolving Credit................................................................19
2.02 Loan Accounts; Notes................................................................20
2.03 Procedure for Borrowing.............................................................20
2.04 Conversion and Continuation Elections...............................................21
2.05 Voluntary Termination or Reduction of the Commitment................................22
2.06 Optional Prepayments................................................................22
2.07 Cash Collateralization; Mandatory Prepayments.......................................22
2.08 Repayment...........................................................................23
2.09 Interest............................................................................23
2.10 Commitment Fee......................................................................24
2.11 Computation of Fees and Interest....................................................24
2.12 Payments by the Company.............................................................24
ARTICLE 3...................................................................................25
THE LETTERS OF CREDIT.......................................................................25
3.01 The Letter of Credit Subfacility....................................................25
3.02 Issuance, Amendment and Renewal of Letters of Credit................................26
3.03 Drawings and Reimbursements.........................................................27
3.04 Role of the Bank....................................................................27
3.05 Obligations Absolute................................................................28
3.06 Cash Collateralization Obligations..................................................29
3.07 Letter of Credit Fees...............................................................29
3.08 Uniform Customs and Practice........................................................29
ARTICLE 4...................................................................................30
TAXES, YIELD PROTECTION AND ILLEGALITY......................................................30
4.01 Taxes...............................................................................30
4.02 Illegality..........................................................................31
4.03 Increased Costs and Reduction of Return.............................................31
4.04 Funding Losses......................................................................32
4.05 Inability to Determine Rates........................................................32
4.06 Reserves on LIBOR Loans.............................................................32
4.07 Certificates of the Bank............................................................33
4.08 Survival............................................................................33
ARTICLE 5...................................................................................33
CONDITIONS PRECEDENT........................................................................33
5.01 Conditions of Effectiveness of Agreement............................................33
5.02 Conditions to All Credit Extensions.................................................34
ARTICLE 6...................................................................................35
REPRESENTATIONS AND WARRANTIES..............................................................35
6.01 Corporate Existence and Power.......................................................35
6.02 Corporate Authorization; No Contravention...........................................36
6.03 Governmental Authorization..........................................................36
6.04 Binding Effect......................................................................36
6.05 Litigation..........................................................................36
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SECTION PAGE
6.06 ERISA Compliance....................................................................37
6.07 Use of Proceeds; Margin Regulations.................................................37
6.08 Title to Properties.................................................................37
6.09 Taxes...............................................................................37
6.10 Financial Condition.................................................................38
6.11 Environmental Matters...............................................................38
6.12 Regulated Entities..................................................................38
6.13 No Burdensome Restrictions; Labor Relations.........................................38
6.14 Solvency............................................................................39
6.15 Copyrights, Patents, Trademarks and Licenses, etc...................................39
6.16 Subsidiaries........................................................................39
6.17 Insurance...........................................................................39
6.18 Swap Obligations....................................................................39
6.19 Full Disclosure.....................................................................40
6.20 Year 2000 Compliance................................................................40
6.21 Good Standing Certificates..........................................................40
ARTICLE 7...................................................................................41
AFFIRMATIVE COVENANTS.......................................................................41
7.01 Financial Statements................................................................41
7.02 Certificates; Other Information.....................................................41
7.03 Notices.............................................................................42
7.04 Preservation of Existence, Rights, etc..............................................43
7.05 Maintenance of Property.............................................................44
7.06 Insurance...........................................................................44
7.07 Payment of Obligations..............................................................44
7.08 Compliance with Laws................................................................44
7.09 Inspection of Property and Books and Records........................................44
7.10 Environmental Laws..................................................................45
7.11 Use of Proceeds.....................................................................45
7.12 Year 2000 Compliance................................................................45
7.13 Solvency............................................................................45
7.14 Internal Controls...................................................................45
ARTICLE 8...................................................................................46
NEGATIVE COVENANTS..........................................................................46
8.01 Limitation on Liens.................................................................46
8.02 Disposition of Assets...............................................................48
8.03 Consolidations and Mergers..........................................................49
8.04 Loans and Investments...............................................................49
8.05 Limitation on Indebtedness..........................................................51
8.06 Transactions with Affiliates........................................................53
8.07 Use of Proceeds.....................................................................53
8.08 Operating Lease Obligations.........................................................53
8.09 Restricted Payments.................................................................53
8.10 ERISA...............................................................................54
8.11 Net Funded Debt to EBITDA Ratio.....................................................54
8.12 Interest Coverage Ratio.............................................................54
8.13 Change in Business..................................................................55
8.14 Accounting Changes..................................................................55
ARTICLE 9...................................................................................55
EVENTS OF DEFAULT...........................................................................55
9.01 Event of Default....................................................................55
9.02 Remedies............................................................................57
9.03 Rights Not Exclusive................................................................58
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SECTION PAGE
ARTICLE 10..................................................................................58
GENERAL PROVISIONS..........................................................................58
10.01 Amendments and Waivers............................................................58
10.02 Notices...........................................................................58
10.03 No Waiver; Cumulative Remedies....................................................59
10.04 Costs and Expenses................................................................59
10.05 Indemnity.........................................................................59
10.06 Payments Set Aside................................................................60
10.07 Successors and Assigns............................................................60
10.08 Assignments, Participations, etc..................................................61
10.09 Confidentiality...................................................................61
10.10 Set-off...........................................................................62
10.11 Counterparts......................................................................62
10.12 Severability......................................................................62
10.13 No Third Parties Benefited........................................................62
10.14 Governing Law; Jurisdiction.......................................................62
10.15 Arbitration.......................................................................63
10.16 Entire Agreement..................................................................65
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SCHEDULES
2.01 Commitment
3.07 Letter of Credit Fees and Charges
6.05 Certain Litigation Matters
6.06 Certain ERISA Matters
6.10 Certain Permitted Liabilities
6.11 Certain Environmental Matters
6.15 Certain Intellectual Property Matters
6.16 Subsidiaries and Minority Interests
6.17 Certain Insurance Matters
8.01(a) Certain Permitted Liens
8.05(b) Certain Permitted Indebtedness
10.02 Bank's Payment Office/Lending Office; Notice Information
EXHIBITS
A Form of Compliance Certificate
B Form of Note
C Form of Notice of Borrowing
D Form of Notice of Conversion/Continuation
E Form of Legal Opinion of the Company's Counsel
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CREDIT AGREEMENT
This CREDIT AGREEMENT (this "Agreement"), dated as of November 29, 1999,
is between PLANTRONICS, INC., a Delaware corporation (the "Company"), and ▇▇▇▇▇
FARGO BANK, NATIONAL ASSOCIATION (the "Bank").
RECITALS
The Company has requested the Bank to extend credit to the Company in
the form of a revolving credit facility with a letter of credit sub-facility to
finance the operations of the Company and its Subsidiaries, to include certain
acquisitions, the repurchase of stock, and capital expenditures, and for other
general corporate purposes.
The Bank has agreed to make available such credit to the Company on the
terms and conditions contained herein.
Accordingly, the parties agree as follows:
ARTICLE 1
DEFINITIONS
1.01 Certain Defined Terms.
As used herein:
"AAA" has the meaning specified in Section 10.15(b).
"Acquired Indebtedness" means Indebtedness of a Person (a)
assumed in connection with an Acquisition from such Person or (b) existing at
the time such Person becomes a Subsidiary of another Person.
"Acquiree" has the meaning specified in Section 8.04(g).
"Acquisition" means any transaction, or any series of related
transactions, by which any Person, in the transaction or as of the most recent
transaction in a series of transactions, directly or indirectly: (a) acquires
all or substantially all of the assets of a Person (other than a Person that is
a Subsidiary of the Company), or of any business or division of a Person (other
than a Person that is a Subsidiary of the Company); (b) acquires in excess of
fifty percent (50%) of the capital stock, partnership interests or equity of any
Person (other than a Person that is a Subsidiary of the Company) or otherwise
causes any such Person to become a Subsidiary of the Company; or (c) merges,
consolidates or otherwise combines with another Person (other than a Person that
is a Subsidiary of the Company), provided that the Company or the Company's
Subsidiary is the surviving entity or the surviving or resulting entity is
under the control of, or under common control with, the Company.
"Adjusted EBITDA" means, for any period, for the Company and its
Subsidiaries on a consolidated basis determined in accordance with GAAP, EBITDA
for such period minus Capital Expenditures incurred during such period.
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"Affiliate" means any Person that directly or indirectly
controls, or is under common control with, or is controlled by, another Person.
As used in this definition, "control" (including, with its correlative meanings,
"controlled by" and "under common control with") means the possession, directly
or indirectly, of power to direct or cause the direction of the management or
policies (whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise), provided that, in any event, any
Person that owns directly or indirectly securities having 5% or more of the
voting power for the election of directors or other governing body of a
corporation or 5% or more of the partnership or other ownership interests of any
other Person (other than as a limited partner of such other Person) will be
deemed to control such corporation or other Person. Notwithstanding the
foregoing, with respect to the Company or any Subsidiary of the Company, the
definition of "Affiliate" shall not include (a) any individual solely by reason
of his or her being a director, officer or employee of (i) the Company or (ii)
any of the Company's Subsidiaries or (b) the Bank.
"Agreement" means this Credit Agreement.
"Applicable Commitment Fee Percentage" means, on any date,
one-tenth of one percent (0.10%) per annum.
"Applicable Lending Office" means, for each Type of Loan, the
"Lending Office" of the Bank (or of an Affiliate of the Bank) designated for
such Type of Loan on Schedule 10.02 or such other office of the Bank (or of an
Affiliate of the Bank) as the Bank may from time to time specify to the Company
as the office for its Loans of such Type.
"Approved Replacement Director" means: (a) any director of the
Company who has been approved by two-thirds of the Board of Directors of the
Company as constituted at the beginning of any relevant period or by a Permitted
Holder; or (b) any director of the Company who has been approved by two-thirds
of those members of the Board of Directors of the Company, as constituted at the
beginning of any relevant period, entitled pursuant to the Organizational
Documents of the Company to vote for such director, together with any directors
referred to in the preceding clause (a) or previously approved in accordance
with this clause (b) or by a Permitted Holder.
"Asset Sale" means any direct or indirect sale, conveyance,
transfer, lease or other disposition to any Person other than the Company or a
Subsidiary of the Company, in one transaction or a series of related
transactions, of: (a) any Capital Stock of any Subsidiary of the Company; or (b)
any other Property of the Company or any Subsidiary of the Company other than
sales of inventory or other assets in the Ordinary Course of Business and other
than isolated transactions which do not exceed $250,000, individually, or
$500,000, in the aggregate. For purposes hereof, the term "Asset Sale" shall not
include the following: (i) any disposition of the Property of the Company or any
Subsidiary of the Company that is governed under and complies with Section 8.03
or any disposition of Investments of the type described in Sections 8.04(b),
(c), (e), (f) and (k); or (ii) any issuance by the Company of its Capital Stock.
"Assignee" has the meaning specified in Section 10.08(a).
"Attorney Costs" means all fees and disbursements of any law firm
or other external counsel, the allocated cost of internal legal services and all
disbursements of internal counsel.
"Bank" has the meaning specified in the introduction hereto.
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"Bankruptcy Code" means the Bankruptcy Reform Act, Title 11 of
the United States Code.
"Bank's Payment Office" means the address of the Bank for
payments specified on Schedule 10.02 or such other address therefor as the Bank
may from time to time specify in accordance with the terms hereof.
"Base LIBOR" has the meaning specified in the definition of
"LIBOR" contained herein.
"Borrowing" means a borrowing hereunder consisting of Loans of
the same Type made to the Company on the same day by the Bank under Article 2,
and, other than in the case of Prime Rate Loans, having the same Interest
Period.
"Borrowing Date" means any date on which a Borrowing occurs under
Section 2.03.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in New York, New York or San Francisco,
California are authorized or required by law to close and, if the applicable
Business Day relates to any LIBOR Loan, means such a day on which dealings are
carried on in the applicable offshore dollar inter-bank market.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other law,
rule or regulation, whether or not having the force of law, in each case,
regarding capital adequacy of any bank or of any corporation controlling a bank.
"Capital Expenditures" means, for any period, the aggregate
expenditures (whether paid in cash or accrued as a liability, including the
aggregate amount of Capital Lease Obligations incurred during such period, but
excluding capitalized interest and items paid in cash that had been accrued and
counted as "Capital Expenditures" in a prior period) made by the Company or any
of its Subsidiaries to acquire or to construct fixed assets, plant and equipment
(including renewals, improvements and replacements, but excluding repairs in the
ordinary course) during such period, determined in accordance with GAAP.
"Capital Lease Obligations" means, for any Person, all
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP, and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized amount of
such obligations, determined in accordance with GAAP.
"Capital Stock" means, with respect to any Person, any and all
shares, interests, participations, rights in, or other equivalents (however
designated and whether voting or non-voting) of, such Person's capital stock
(including any partnership interest), whether outstanding on the Closing Date or
issued after the Closing Date, and any and all rights, warrants or options
exchangeable for or convertible into such capital stock.
"Cash Collateralize" means to pledge and deposit with or deliver
to the Bank, as collateral for the L/C Obligations, cash or deposit account
balances pursuant to documentation in form and substance satisfactory to the
Bank. Derivatives of such term shall have corresponding meaning.
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"Cash Equivalents" means:
(a) any evidence of Indebtedness with a maturity of 365
days or less issued or directly and fully guaranteed or insured by the United
States or any agency or instrumentality thereof, provided that the full faith
and credit of the United States is pledged in support thereof);
(b) certificates of deposit or acceptances with a maturity
of 365 days or less of any financial institution that is a member of the Federal
Reserve System having combined capital and surplus and undivided profits of not
less than $100,000,000;
(c) commercial paper with a maturity of 365 days or less
issued by a corporation (other than an Affiliate of the Company or any of its
Subsidiaries) organized under the laws of any State of the United States or the
District of Columbia and rated at least A-1 by Standard & Poor's Corporation or
P-1 by ▇▇▇▇▇'▇ Investors Services, Inc.;
(d) repurchase agreements and reverse repurchase
agreements relating to marketable direct obligations issued or unconditionally
guaranteed by the United States government or issued by any agency thereof and
backed by the full faith and credit of the United States government, in each
case maturing within one year from the date of acquisition, provided that the
terms of such agreements comply with the guidelines set forth in the Federal
Financial Agreements of Depositary Institutions with Securities and Others, as
adopted by the Comptroller of the Currency of the United States;
(e) deposit accounts maintained with financial
institutions referred to in the preceding clause (b); and
(f) investments in mutual funds which invest exclusively
in the items described in the preceding clauses (a) through (e).
"Cash Interest Expense" means, for any period, on a consolidated
basis, total interest expense for the period (including all commissions,
discounts, fees and other charges in connection with standby letters of credit
and similar instruments) for the Company and its Subsidiaries, less non-cash
items included in such interest expense (including any amortization of discount
or interest expense not payable in cash).
"Change of Control" means the occurrence, after the date of this
Agreement, of any of the following: (a) the direct or indirect sale, lease,
exchange or other transfer of all or substantially all of the Property of the
Company and its Subsidiaries, taken as a whole, to any Person or group of
Persons acting in concert as a partnership or other group (a "group of
Persons"), other than a Permitted Holder; (b) the merger or consolidation of the
Company with or into another Person with the effect that a Person or group of
Persons (such Person or group of Persons, the "Acquiring Persons"), other than
Permitted Holders, has become the beneficial owner (within the meaning of Rule
13d-3 under the Exchange Act) of securities of the surviving Person of such
merger or consolidation or the corporation resulting from such merger or
consolidation representing 35% or more of the combined voting power of the then
outstanding securities of such surviving or resulting Person, as the case may
be, ordinarily (and apart from rights arising under special circumstances)
having the right to vote in the election of directors, provided that such a
merger or consolidation shall not be a "Change of Control" if, after giving
effect to such merger or consolidation, Permitted Holders are then the
beneficial owner of securities of such surviving Person
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representing combined voting power in excess of the combined voting power of
such securities as to which the Acquiring Persons have become the beneficial
owner; (c) a change to the composition of the Board of Directors of the Company
over a two-year period such that the directors who constituted such Board of
Directors at the beginning of such period, together with all Approved
Replacement Directors elected since the beginning of such period, shall cease to
constitute a majority of the Board of Directors of the Company; and (d) a Person
or group of Persons (such Person or group of Persons, the "Purchasers"), other
than Permitted Holders, shall, as a result of a tender or exchange offer, open
market purchases, privately negotiated purchases or otherwise, have become the
beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of
securities of the Company representing 35% or more of the combined voting power
of the then outstanding securities of the Company ordinarily (and apart from
rights accruing under special circumstances) having the right to vote in the
election of directors, provided that such a change of ownership shall not be a
"Change of Control" if, after giving effect to such change, Permitted Holders
are then the beneficial owner of securities of the Company representing combined
voting power in excess of the combined voting power of such securities as to
which the Purchasers have become the beneficial owner.
"Closing Date" means the date on which all conditions precedent
set forth in Section 5.01 are satisfied, made conditions subsequent or waived by
the Bank.
"Code" means the Internal Revenue Code of 1986 and all
regulations promulgated thereunder.
"Commitment" has the meaning specified in Section 2.01.
"Compliance Certificate" means a certificate substantially in the
form of Exhibit A executed and delivered on behalf of the Company by a
Responsible Officer.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to
the Company for any period, the ratio of (a) the aggregate amount of Adjusted
EBITDA plus Capital Expenditures incurred in such period for the four full
fiscal quarters for which financial information in respect thereof is available
immediately preceding the date of the transaction (the "Transaction Date")
giving rise to the need to calculate the Consolidated Fixed Charge Coverage
Ratio (such four full fiscal quarter period being referred to herein as the
"Four Quarter Period") to (b) the aggregate amount of Consolidated Fixed Charges
for the Four Quarter Period. In addition to and without limitation of the
foregoing, for purposes of this definition, "Adjusted EBITDA" and "Consolidated
Fixed Charges" shall be calculated after giving effect on a pro forma basis for
the period of such calculation to, without duplication, (i) any incurrences, and
permanent repayments out of the proceeds of such incurrences, of Indebtedness of
the Company or any of its Subsidiaries occurring during the period commencing on
the first day of the Four Quarter Period through the Transaction Date (the
"Reference Period"), including the incurrence of the Indebtedness giving rise to
the need to make such calculation, as if such incurrence or repayment, as the
case may be, occurred on the first day of the Reference Period, but excluding
Indebtedness incurred or repaid under any revolving credit or similar facility
pursuant to which amounts incurred may be repaid and reborrowed for working
capital purposes (it being understood that such incurrences and repayments
referred to in this exclusion are included in the calculation of "Consolidated
Fixed Charge Coverage Ratio" on an actual basis), unless a permanent reduction
in the commitments is effected by such repayment and (ii) any Asset Sales or
Acquisitions (including any Acquisition giving rise to the need to make such
calculation as a result of the Company or one of its Subsidiaries (including any
Person who becomes a Subsidiary as a result of the Acquisition) incurring,
assuming or otherwise being liable for Acquired Indebtedness) occurring during
the Reference Period, as if such Asset Sale or Acquisition
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occurred on the first day of the Reference Period. Without limiting the
generality of the foregoing, in calculating "Consolidated Interest Expense" and
"Consolidated Fixed Charges" for purposes of determining the denominator (but
not the numerator) of "Consolidated Fixed Charge Coverage Ratio," (A) interest
on outstanding Indebtedness determined on a fluctuating basis as of the
Transaction Date and which will continue to be so determined thereafter shall be
deemed to have accrued at a fixed rate per annum equal to the rate of interest
on such Indebtedness in effect on the Transaction Date; (B) if interest on any
Indebtedness actually incurred on the Transaction Date may optionally be
determined at an interest rate based upon a factor of a prime or similar rate, a
eurocurrency inter-bank offered rate, or other rates, then the interest rate in
effect on the Transaction Date will be deemed to have been in effect during the
Reference Period; and (C) notwithstanding the immediately preceding clauses (A)
and (B), interest on Indebtedness determined on a fluctuating basis, to the
extent such interest is covered by Swap Agreements, shall be deemed to have
accrued at the rate per annum resulting after giving effect to such agreements.
If the Company or any of its Subsidiaries directly or indirectly enters into a
Guaranty Obligation with respect to Indebtedness of a third Person (other than
Indebtedness of a consolidated Subsidiary of such Person or, with respect to a
consolidated Subsidiary of the Company, other than Indebtedness of the Company),
the immediately preceding clause shall give effect to the incurrence of such
Guaranty Obligation as if such Person or such Subsidiary had directly incurred
or otherwise assumed such Guaranty Obligation.
"Consolidated Fixed Charges" means, with respect to the Company
for any period, the amounts for such period of (a) Consolidated Interest Expense
and (b) the aggregate amount of dividends and other distributions paid or
accrued during such period in respect of Disqualified Capital Stock of the
Company and its Subsidiaries on a consolidated basis; provided that, if, during
such period, the Company or any of its consolidated Subsidiaries shall have made
any Asset Sales or Acquisitions, "Consolidated Fixed Charges" for the Company
and its consolidated Subsidiaries for such period shall be adjusted to give pro
forma effect to the Consolidated Fixed Charges directly attributable to the
Properties which are the subject of such Asset Sales or Acquisitions during such
period.
"Consolidated Interest Expense" means, with respect to the
Company for any period, without duplication, the sum of (a) the interest expense
of such the Company and its Subsidiaries for such period on a consolidated basis
determined in accordance with GAAP, including (i) any amortization of debt
discount, (ii) the net cost of obligations under any Swap Agreements (including
any amortization of discounts), (iii) the interest portion of any deferred
payment obligation, (iv) all commissions, discounts and other fees and charges
owed with respect to letters of credit and bankers' acceptance financing and (v)
all accrued interest, (b) the interest component of Capitalized Lease
Obligations paid, accrued or scheduled to be paid or accrued by the Company and
its Subsidiaries during such period on a consolidated basis determined in
accordance with GAAP and (c) one-third of the amount of all lease payments
(other than Capitalized Lease Obligations) paid, accrued or scheduled to be paid
or accrued by the Company and its Subsidiaries during such period on a
consolidated basis determined in accordance with GAAP.
"Contingent Obligation" means, as to any Person, any direct or
indirect liability of that Person, whether or not contingent, with or without
recourse, (a) with respect to any Indebtedness, lease, dividend, letter of
credit or other obligation (the "primary obligations") of another Person (the
"primary obligor"), including any obligation of that Person (i) to purchase,
repurchase or otherwise acquire such primary obligations or any security
therefor, (ii) to advance or provide funds for the payment or discharge of any
such primary obligation, or to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet item, level of income or financial condition of the primary
obligor, (iii) to purchase property, securities or services primarily for
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the purpose of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation, or (iv)
otherwise to assure or hold harmless the holder of any such primary obligation
against loss in respect thereof (each of the foregoing, a "Guaranty
Obligation"); (b) with respect to any Surety Instrument issued for the account
of that Person or as to which that Person is otherwise liable for reimbursement
of drawings or payments; (c) to purchase any materials, supplies or other
property from, or to obtain the services of, another Person if the relevant
contract or other related document or obligation requires that payment for such
materials, supplies or other property, or for such services, shall be made
regardless of whether delivery of such materials, supplies or other property is
ever made or tendered, or such services are ever performed or tendered, or (d)
in respect of any Swap Contract. The amount of any Contingent Obligation shall,
in the case of Guaranty Obligations, be deemed equal to the stated or
determinable amount of the primary obligation in respect of which such Guaranty
Obligation is made or, if not stated or if indeterminable, the maximum
reasonably anticipated liability in respect thereof, and in the case of other
Contingent Obligations other than in respect of Swap Contracts, shall be equal
to the maximum reasonably anticipated liability in respect thereof and, in the
case of Contingent Obligations in respect of Swap Contracts, shall be equal to
the Swap Termination Value.
"Contractual Obligation" means, as to any Person, any provision
of any security issued by such Person or of any agreement, undertaking,
contract, indenture, mortgage, deed of trust or other instrument, document or
agreement to which such Person is a party or by which it or any of its Property
is bound.
"Conversion/Continuation Date" means any date on which, under
Section 2.04, the Company does either or both of the following: (a) converts
Loans of one Type to another Type, or (b) continues as Loans of the same Type,
but with a new Interest Period, Loans having Interest Periods expiring on such
date.
"Credit Documents" means this Agreement, any Note, the L/C
Related Documents and all other documents delivered to the Bank in connection
herewith.
"Credit Extension" means the following: (a) the making of any
Loans or L/C Advances hereunder; and (b) the Issuance of any Letters of Credit
hereunder.
"Default" means any event or circumstance which, with the giving
of notice, the lapse of time, or both, would (if not cured or otherwise remedied
during such time) constitute an Event of Default.
"Dispute" has the meaning specified in Section 10.15.
"Disqualified Capital Stock" means, with respect to any Person,
any Capital Stock which, by its terms (or by the terms of any security into
which it is convertible or for which it is exchangeable), or upon the happening
of any event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is exchangeable for Indebtedness, or is redeemable
at the option of the holder thereof, in whole or in part, on or prior to the
Revolving Termination Date.
"Dollars," "dollars" and "$" each mean lawful money of the United
States.
"Domestic Subsidiary" means any Subsidiary that is organized
under the laws of the United States or any State thereof.
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"EBITDA" means, for any period, for the Company and its
Subsidiaries on a consolidated basis, determined in accordance with GAAP, the
sum of: (a) the net income (or net loss) for such period; plus (b) all amounts
treated as expenses for such period for depreciation and interest and the
amortization of intangibles of any kind, but in each case only to the extent
included in the determination of such net income (or net loss); plus all accrued
taxes for such period on or measured by income, but in each case only to the
extent included in the determination of such net income (or net loss); plus (d)
all non-cash expenses or charges for management stock compensation for such
period, but in each case only to the extent included in the determination of
such net income (or net loss); provided that net income (or net loss) shall be
computed for all of the foregoing purposes without giving effect to
extraordinary gains or extraordinary losses.
"Effective Amount" means: (a) with respect to any Loans on any
date, the aggregate outstanding principal amount thereof after giving effect to
any Borrowings and prepayments or repayments occurring on such date; and (b)
with respect to any outstanding L/C Obligations on any date, the amount of such
L/C Obligations on such date after giving effect to any Issuances of Letters of
Credit occurring on such date and any other changes in the aggregate amount of
the L/C Obligations as of such date, including as a result of any reimbursements
of outstanding unpaid drawings under any Letters of Credit or any reductions in
the maximum amount available for drawing under Letters of Credit taking effect
on such date.
"Eligible Assignee" means any of the following: (a) a commercial
bank organized under the laws of the United States, or any state thereof, and
having a combined capital and surplus of at least $100,000,000; (b) a commercial
bank organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development (the "OECD"), or a
political subdivision of any such country, and having a combined capital and
surplus of at least $100,000,000, provided that such bank is acting through a
branch or agency located in the United States; (c) the central bank of any
country which is a member of the OECD, provided that such bank is acting through
a branch or agency located in the United States; (d) any (i) a finance company,
savings and loan association or other financial institution, mutual fund or
other fund (whether a corporation, partnership, trust or other entity), or (ii)
insurance company engaged in the business of writing insurance that, in either
case, (A) is organized under the laws of the United States (or any state thereof
or the District of Columbia), (B) is engaged in making, purchasing or otherwise
investing in commercial loans in the ordinary course of its business and having
total assets of $500,000,000 or more, and (C) is operationally and procedurally
able to meet the obligations of the Bank hereunder to the same degree as a
commercial bank that would be an Eligible Assignee, as determined by the Bank;
and (e) a Person that is primarily engaged in the business of commercial banking
and that is (i) a Subsidiary of the Bank, (ii) a Subsidiary of a Person of which
the Bank is a Subsidiary or (iii) a Person of which the Bank is a Subsidiary.
"Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility of any of the Company or any of its Subsidiaries for violation of
any Environmental Law, or for release or injury to the environment.
"Environmental Laws" means all federal, state, local or foreign
laws, statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, licenses,
authorizations and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental, health, safety and land use
matters.
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"ERISA" means the Employee Retirement Income Security Act of 1974
and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Company within the meaning of
subsection 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code
for purposes of provisions relating to Section 412 of the Code).
"ERISA Event" means any of the following: (a) a Reportable Event
with respect to a Pension Plan; (b) a withdrawal by the Company or any ERISA
Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan
year in which it was a substantial employer (as defined in Section 4001(a)(2) of
ERISA) or a cessation of operations which is treated as such a withdrawal under
Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Company or
any ERISA Affiliate from a Multiemployer Plan or notification that a
Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to
terminate, the treatment of a Plan amendment as a termination under Section 4041
or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a
Pension Plan or Multiemployer Plan; (e) an event or condition which might
reasonably be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan
or Multiemployer Plan; or (f) the imposition of any liability under Title IV of
ERISA, other than PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon the Company or any ERISA Affiliate.
"Eurocurrency Liabilities" has the meaning specified in
Regulation D (as amended) of the FRB.
"Event of Default" has the meaning specified in Section 9.01.
"Exchange Act" means the Securities Exchange Act of 1934 and all
regulations promulgated thereunder.
"Existing Facility" means the Credit Agreement, dated as of
February 19, 1997, as amended, between the Company and Bank of America, N.A. (as
successor in interest to Bank of America, National Trust & Savings Association).
"Fair Market Value" means, with respect to any Property, the
price which could be negotiated in an arm's-length free market transaction, for
cash, between a willing seller and a willing buyer, neither of whom is under
undue pressure or compulsion to complete the transaction. Fair Market Value
shall be determined by the Company acting in good faith; provided that, in the
case of any transaction in excess of $500,000, Fair Market Value shall be
determined by the Board of Directors of the Company acting in good faith and
shall be evidenced by a certified copy of a resolution of such Board of
Directors delivered to the Bank.
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"Foreign Subsidiary" means, with respect to any Person, any
Subsidiary of such Person that is not a Domestic Subsidiary of such Person.
"FRB" means the Board of Governors of the Federal Reserve System,
and any Governmental Authority succeeding to any of its principal functions.
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"Further Taxes" means any and all present or future taxes,
levies, assessments, imposts, duties, deductions, fees, withholdings or similar
charges (including net income taxes and franchise taxes), and all liabilities
with respect thereto, imposed by any jurisdiction on account of amounts payable
or paid pursuant to Section 4.01.
"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 and
consistently applied.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Guaranty Obligation" has the meaning specified in the definition
of "Contingent Obligation" contained herein.
"Honor Date" has the meaning specified in Section 3.03(c).
"Indebtedness" of any Person means (without duplication): (a) all
indebtedness of such Person for borrowed money; (b) all obligations of such
Person issued, undertaken or assumed as the deferred purchase price of property
or services; (c) all non-contingent reimbursement or payment obligations with
respect to Surety Instruments; (d) all obligations evidenced by notes, bonds,
debentures or similar instruments issued by such Person, including obligations
so evidenced incurred in connection with the acquisition of Property or
businesses; (e) all indebtedness of such Person created or arising under any
conditional sale or other title retention agreement, or incurred as financing,
in either case with respect to Property acquired by the Person (even though the
rights and remedies of the seller or bank under such agreement in the event of
default are limited to repossession or sale of such Property); (f) all Capital
Lease Obligations of such Person; (g) all Contingent Obligations referred to in
clause (d) of the definition of "Contingent Obligations" contained herein; (h)
all indebtedness referred to in the immediately preceding clauses (a) through
(g) secured by (or for which the holder of such indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien upon or in property
(including accounts and contracts rights) owned by such Person (but only to the
extent of the lesser of such indebtedness or the fair market value of the
Property subject to such Lien, where such Lien secured another Person's
indebtedness), even though such Person has not assumed or become liable for the
payment of such Indebtedness; (i) all Guaranty Obligations of such Person in
respect of the indebtedness or other obligations of others of the kinds referred
to in the immediately preceding clauses (a) through (g); and (j) all other
Contingent Obligations; provided that, with respect to any Person,
"Indebtedness" shall not include trade payables and accrued expenses (including
those between the Company and its Subsidiaries), in each case arising in the
Ordinary Course of Business; provided further that, for all purposes of this
Agreement, "Indebtedness" of any Person shall include all recourse obligations
or indebtedness of any partnership or joint venture or limited liability company
in which such Person is a general partner or a joint venturer or a member.
"Indemnified Liabilities" has the meaning specified in Section
10.05(a).
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"Indemnified Person" has the meaning specified in Section
10.05(a).
"Independent Auditor" has the meaning specified in Section
7.01(a).
"Insolvency Proceeding" means, with respect to any Person: (a)
any case, action or proceeding with respect to such Person before any court or
other Governmental Authority relating to bankruptcy, reorganization, insolvency,
liquidation, receivership, dissolution, winding-up or relief of debtors; or (b)
any general assignment for the benefit of creditors, composition, marshaling of
assets for creditors, or other, similar arrangement in respect of its creditors
generally or any substantial portion of its creditors; in either event
undertaken under United States federal, state or foreign law, including the
Bankruptcy Code.
"Interest Coverage Ratio" means, as of any date of determination,
in respect of the Company and its Subsidiaries on a consolidated basis, (a)
Adjusted EBITDA divided by (b) Cash Interest Expense, such amounts being
calculated on a rolling four-quarter basis (all through the then-most recent
quarter end for which the Company has delivered to the Bank a Compliance
Certificate).
"Interest Payment Date" means, as to any Loan other than a Prime
Rate Loan, the last day of each Interest Period applicable to such Loan and, as
to any Prime Rate Loan, the last Business Day of each calendar month and each
date such Loan is converted into another Type of Loan; provided that, if any
Interest Period for a LIBOR Loan exceeds one month, then each day during such
Interest Period which is a monthly anniversary of the beginning of such Interest
Period shall also be an Interest Payment Date.
"Interest Period" means, as to any LIBOR Loan, the period
commencing on the Borrowing Date of such Loan or on the Conversion/Continuation
Date on which a Loan is converted into or continued as a LIBOR Loan, and ending
on the date one, two, three or six months thereafter as selected by the Company
in its Notice of Borrowing or Notice of Conversion/Continuation; provided that:
(a) if any Interest Period would otherwise end on a day
that is not a Business Day, that Interest Period shall be extended to the
following Business Day unless, in the case of a LIBOR Loan, 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;
(b) any Interest Period pertaining to a LIBOR Loan that
begins on the last Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of the calendar month at the
end of such Interest Period; and
(c) no Interest Period shall extend beyond the date set
forth in clause (a) of the definition of "Revolving Termination Date" contained
herein.
"Investments" has the meaning specified in Section 8.04.
"IRS" means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions under the Code.
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"Issuance Date" has the meaning specified in Section 3.01(a).
"Issue" means, with respect to any Letter of Credit, to issue or
to extend the expiry of, or to renew or increase the amount of, such Letter of
Credit; and the terms "Issued," "Issuing" and "Issuance" have corresponding
meanings.
"Joint Venture" means a single-purpose corporation, partnership,
limited liability company, joint venture or other similar legal arrangement
(whether created by contract or conducted through a separate legal entity) now
or hereafter formed by the Company or any of its Subsidiaries with another
Person in order to conduct a common venture or enterprise with such Person.
"L/C Advance" means an extension of credit resulting from a
drawing under any Letter of Credit which is not reimbursed on the date of such
drawing nor converted into a Loan.
"L/C Amendment Application" means an application form for
amendment of outstanding standby or commercial documentary letters of credit as
shall at any time be in use at the Bank, as the Bank shall request.
"L/C Application" means an application form for issuances of
standby or commercial documentary letters of credit as shall at any time be in
use at the Bank, as the Bank shall request.
"L/C Borrowing" means an extension of credit resulting from a
drawing under any Letter of Credit which is not reimbursed on the date when made
nor converted into a Borrowing under Section 3.03(c).
"L/C Commitment" means the obligation of the Bank to issue
Letters of Credit pursuant to Article 3 and to make L/C Advances, in an
aggregate amount not to exceed on any date the amount equal to $10,000,000 less
the Effective Amount of all L/C Obligations outstanding on such date. The L/C
Commitment is a part of the Commitment, rather than a separate, independent
commitment.
"L/C Obligations" means at any time the sum of: (a) the aggregate
undrawn amount of all Letters of Credit then outstanding; plus (b) the amount of
all unreimbursed drawings under all Letters of Credit, including all outstanding
L/C Borrowings.
"L/C-Related Documents" means the Letters of Credit, the L/C
Applications, the L/C Amendment Applications and any other documents relating to
any Letter of Credit, including any of the Bank's standard form documents for
letter of credit issuances.
"Lending Office" means the office or offices of the Bank
specified on Schedule 10.02, or such other office or offices as the Bank may
from time to time notify the Company.
"Letters of Credit" means all letters of credit (whether standby
letters of credit or commercial letters of credit) Issued by the Bank pursuant
to Article 3.
"LIBOR" means, for any Interest Period, with respect to LIBOR
Loans comprising part of the same Borrowing, the rate of interest per annum
(rounded upward to the nearest 1/16th of 1%) determined by the Bank as follows:
LIBOR = BASE LIBOR
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1.00 - LIBOR Reserve Percentage
Where,
"Base LIBOR" means the rate per annum for United States
dollar deposits quoted by the Bank as the Inter-Bank Market
Offered Rate, with the understanding that such rate is quoted by
the Bank for the purpose of calculating effective rates of
interest for loans making reference thereto, on the first day of
an Interest Period for delivery of funds on such date for a
period of time approximately equal to the number of days in such
Interest Period and in an amount approximately equal to the
principal amount to which such Interest Period applies. The
understands and agrees that the Bank may base its quotation of
the Inter-Bank Market Offered Rate upon such offers or other
market indicators of the Inter-Bank Market as the Bank in its
sole discretion deems appropriate, including the rate offered for
U.S. dollar deposits on the London Inter-Bank Market.
"LIBOR Reserve Percentage" means the reserve percentage
prescribed by the FRB for Eurocurrency Liabilities, adjusted by
the Bank for expected changes in such reserve percentage during
the applicable Interest Period.
The LIBOR shall be adjusted automatically as to all LIBOR Loans
then outstanding as of the effective date of any change in the LIBOR Reserve
Percentage.
"LIBOR Loan" means a Loan that bears interest based on the LIBOR.
"Lien" means any security interest, mortgage, deed of trust,
pledge, hypothecation, assignment, charge or deposit arrangement, encumbrance,
lien (statutory or other) or preferential arrangement of any kind or nature
whatsoever in respect of any property (including those created by, arising under
or evidenced by any conditional sale or other title retention agreement, the
interest of a lessor under a capital lease, any financing lease having
substantially the same economic effect as any of the foregoing, or the filing of
any financing statement naming the owner of the asset to which such lien relates
as debtor, under the UCC or any comparable law) and any contingent or other
agreement to provide any of the foregoing, but not including the interest of a
lessor under an operating lease.
"Loan" means an extension of credit made (or deemed made) by the
Bank to the Company under Article 2, which extension of credit may be a Prime
Rate Loan or a LIBOR Loan (each, a "Type" of Loan).
"Margin Stock" means "margin stock" as such term is defined in
Regulation U of the FRB.
"Material Adverse Effect" means any of the following: (a) a
material adverse change in, or a material adverse effect upon, the operations,
business, properties or condition (financial or otherwise) of the Company and
its Subsidiaries, taken as a whole; (b) a material impairment of the ability of
the Company to perform its payment obligations under any of the Credit
Documents; or (c) a material adverse effect upon the legality, validity, binding
effect or enforceability of any Credit Document.
"Material Subsidiary" means, with respect to any Person, a
Subsidiary of such Person that would, on a pro forma basis after giving effect
to any Transfer permitted hereunder, constitute a "significant subsidiary" as
such term is defined under Rule 1.02(v) of Regulation S-X of the SEC.
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"Multiemployer Plan" means a "multiple employer plan" or a
"multiemployer plan," within the meaning of Sections 4064(a) and 4001(a)(3) of
ERISA, to which the Company or any ERISA Affiliate makes, is making, or is
obligated to make contributions or, during the preceding three calendar years,
has made, or been obligated to make, contributions.
"Net Funded Debt" means, as of any date of determination, (a)
Indebtedness (other than the types described in clause (i) of the definition
thereof) and, without duplication, all Guaranty Obligations with respect to any
such Indebtedness of another Person less (b) cash and Cash Equivalents, to the
extent not subject to any Lien, and to the extent exceeding in aggregate the
amount of $5,000,000, in each case determined on a consolidated basis for the
Company and its Subsidiaries in accordance with GAAP.
"Net Funded Debt to EBITDA Ratio" means, as of any date of
determination, the ratio of Net Funded Debt to EBITDA, calculated on a rolling
four-quarter basis (through the then-most recent quarter end for which the
Company has delivered to the Bank a Compliance Certificate).
"Net Proceeds" means, in the case of any sale, lease, conveyance
or other disposition of Property (including a sale/leaseback), the gross
consideration received in cash, checks or other cash equivalent financial
instruments (including Cash Equivalents) as and when received by the Person
making the disposition from such disposition (other than liabilities assumed
directly or indirectly by the buyer), less: (a) the amount of actual liabilities
for taxes reasonably anticipated by the Company to be attributable to such
disposition; (b) the amount of any reserves against any liabilities associated
with such disposition required to be retained by the Person making such
disposition after the disposition in conformity with GAAP (but only for the
period required to be retained as a reserve); (c) the amount of Indebtedness
required to be repaid or defeased under the terms thereof or under the terms of
the disposition in connection with the disposition; and (d) the amount of fees
and commissions payable to Persons other than the Person making the disposition
and other costs and expenses related to the disposition that are to be paid in
cash, in each case only to the extent customarily borne by a seller in an
arm's-length transaction; provided that gross consideration shall not include
the amount of intercompany indebtedness forgiven in connection with the
disposition.
"Note" means a promissory note executed by the Company in favor
of the Bank pursuant to Section 2.02(b), in substantially the form of Exhibit B.
"Notice of Borrowing" means a notice in substantially the form of
Exhibit C.
"Notice of Conversion/Continuation" means a notice in
substantially the form of Exhibit D.
"Obligations" means all advances, debts, liabilities,
obligations, covenants and duties and other Indebtedness arising under any
Credit Document (including all Loans and L/C Borrowings and any obligation to
Cash Collateralize) owing by the Company to the Bank or any Indemnified Person,
whether direct or indirect (including those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter arising and however
acquired.
"OECD" has the meaning specified in the definition of "Eligible
Assignee" contained herein.
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"Ordinary Course of Business" means, in respect of any
transaction involving any Person, the ordinary course of such Person's business,
as undertaken by such Person in good faith and, with respect to the Company and
any Subsidiary of the Company, not for the specific purpose of evading any
covenant or restriction contained in any Credit Document.
"Organization Documents" means: (a) for any corporation, the
certificate or articles of incorporation, the bylaws, any certificate of
determination or instrument relating to the rights of preferred shareholders of
such corporation, any shareholder rights agreement, and all applicable
resolutions of the board of directors (or any committee thereof) of such
corporation; (b) for any partnership, the partnership agreement, any other
agreements or instruments relating to the rights or the partners of such
partnership or limiting or authorizing the activities of such partnership, and
all applicable resolutions of such partnership; and (c) for any limited
liability company, the articles or certificate of formation, the operating
agreement, any other agreements or instruments relating to the rights or the
members of such limited liability company or authorizing the activities of such
limited liability company, and all applicable resolutions of such limited
liability company.
"Other Taxes" means any present or future stamp, court or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery, performance, enforcement or registration of, or otherwise with respect
to, this Agreement or any other Credit Documents.
"Participant" has the meaning specified in Section 10.08(b).
"PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions under ERISA.
"PBV" means Plantronics B.V., a Netherlands corporation, and a
Wholly Owned Subsidiary of the Company.
"Pension Plan" means a pension plan (as defined in Section 3(2)
of ERISA) subject to Title IV of ERISA which the Company or any ERISA Affiliate
sponsors, maintains, or to which it makes, is making, or is obligated to make
contributions, or in the case of a multiple employer plan (as described in
Section 4064(a) of ERISA) has made contributions at any time during the
immediately preceding five (5) plan years.
"Permitted Holders" means Citicorp Venture Capital Ltd. and its
Affiliates.
"Permitted Liens" has the meaning specified in Section 8.01.
"Permitted Swap Obligations" means all obligations (contingent or
otherwise) of the Company or any of its Subsidiaries existing or arising under
Swap Contracts, provided that each of the following criteria is satisfied: (a)
such obligations are (or were) entered into by such Person in the Ordinary
Course of Business for the purpose of directly mitigating risks associated with
liabilities, commitments or assets held or reasonably anticipated by such
Person, or changes in the value of securities issued by such Person in
conjunction with a securities repurchase program not otherwise prohibited
hereunder, and not for purposes of speculation or taking a "market view"; and
(b) such Swap Contracts do not contain (i) any provision (a "walk-away"
provision) exonerating the non-defaulting party from its obligation to make
payments on outstanding transactions to the defaulting party, or (ii) any
provision creating or permitting the declaration of an event of default,
termination event or similar event
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upon the occurrence of an Event of Default hereunder (other than an Event of
Default under Section 9.01(a)).
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3)
of ERISA) which the Company sponsors or maintains or to which the Company makes,
is making, or is obligated to make contributions and includes any Pension Plan.
"Plantronics Germany" means Plantronics Gmbh, a German
Corporation, and a Wholly Owned Subsidiary of the Company.
"Plantronics UK" means Plantronics Limited, a United Kingdom
corporation, and a Wholly Owned Subsidiary of the Company.
"Prime Rate" means at any time the rate of interest most recently
announced within the Bank at its principal office as its "Prime Rate," with the
understanding that the Bank's "Prime Rate" is one of the Bank's base rates and
serves as the basis upon which effective rates of interest are calculated for
those loans making reference thereto, and is evidenced by the recording thereof
after its announcement in such internal publication or publications as the Bank
may designate. Any change in the Bank's "Prime Rate" as announced by the Bank
shall take effect at the opening of business on the day specified in the public
announcement of such change.
"Prime Rate Loan" means a Loan or an L/C Advance that bears
interest based on the Prime Rate.
"Property" means any estate or interest in any kind of property
or asset, whether real, personal or mixed, and whether tangible or intangible.
"Purchase Money Indebtedness" means any Indebtedness incurred in
the Ordinary Course of Business by a Person to finance the cost (including the
cost of construction) of an item of Property, the principal amount of which
Indebtedness does not exceed the sum of (i) 100% of such cost and (ii)
reasonable fees and expenses of such Person incurred in connection therewith.
"Reportable Event" means, any of the events set forth in Section
4043(c) of ERISA or the regulations thereunder, other than any such event for
which the 30-day notice requirement under ERISA has been waived in regulations
issued by the PBGC.
"Requirement of Law" means, as to any Person, any law (statutory
or common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.
"Responsible Officer" means the chief executive officer, the
president, or the chief financial officer (or, if at the relevant time there is
no chief financial officer, the General Counsel and Secretary) of the Company,
or any other officer having substantially the same authority and responsibility
or, with respect to compliance with financial covenants, the chief financial
officer (or, if at
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the relevant time there is no chief financial officer, the General Counsel and
Secretary) or the treasurer of the Company, or any other officer having
substantially the same authority and responsibility.
"Revolving Termination Date" means the earlier to occur of: (a)
November 27, 2000; and (b) the date on which the Commitment terminates in
accordance with the provisions of this Agreement.
"Santa ▇▇▇▇ Property" means those certain three buildings
containing an aggregate of approximately 160,000 square feet owned by the
Company and located in Santa Cruz, California.
"SEC" means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.
"Solvent" means, as to any Person at any time, that: (a) the fair
value of the Property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(31) of the Bankruptcy Code and, in the alternative, for purposes of the
California Uniform Fraudulent Transfer Act; (b) the present fair saleable value
of the Property of such Person is not less than the amount that will be required
to pay the probable liability of such Person on its debts as they become
absolute and matured; (c) such Person is able to realize upon its Property and
pay its debts and other liabilities (including disputed, contingent and
unliquidated liabilities) as they mature in the normal course of business; and
(d) such Person is not engaged in business or a transaction for which such
Person's property would constitute unreasonably small capital.
"Subordinated Indebtedness" means any Indebtedness of the Company
which is by its terms subordinated in any manner in right of payment of the
Obligations.
"Subsidiary" of a Person means any corporation, association,
partnership, limited liability company, joint venture or other business entity
of which more than 50% of the voting stock, membership interests or other equity
interests (in the case of Persons other than corporations), is owned or
controlled directly or indirectly by the Person, or one or more of the
Subsidiaries of the Person, or a combination thereof. Unless the context
otherwise clearly requires, references herein to a "Subsidiary" refer to a
Subsidiary of the Company.
"Surety Instruments" means all letters of credit (including
standby and commercial), banker's acceptances, bank guaranties, shipside bonds,
surety bonds and similar instruments.
"Swap Contract" means any agreement, whether or not in writing,
relating to any transaction that is a rate swap, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap or
option, bond, note or ▇▇▇▇ option, interest rate option, forward foreign
exchange transaction, cap, collar or floor transaction, currency swap,
cross-currency rate swap, swap option, currency option or any other, similar
transaction (including any option to enter into any of the foregoing) or any
combination of the foregoing, and, unless the context otherwise clearly
requires, any master agreement relating to or governing any or all of the
foregoing.
"Swap Termination Value" means, in respect of any one or more
Swap Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or after
the date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the
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date referenced in clause (a) the amount(s) determined as the ▇▇▇▇-to-market
value(s) for such Swap Contracts, as determined based upon one or more
mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include the Bank).
"Taxes" means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings or similar charges,
and all liabilities with respect thereto, excluding, in the case of the Bank,
taxes imposed on or measured by its net income or gross receipts by the
jurisdiction (or any political subdivision thereof) under the laws of which the
Bank is organized or maintains a lending office.
"Transfers" has the meaning specified in Section 8.02.
"Type" has the meaning specified in the definition of "Loan"
contained herein.
"UCC" means the Uniform Commercial Code as in effect in the State
of California.
"Unfunded Pension Liability" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Plan's assets, determined in accordance with the assumptions used for funding
the Pension Plan pursuant to Section 412 of the Code for the applicable plan
year.
"United States" and "U.S." each means the United States of
America.
"Wholly Owned Domestic Subsidiary" means a Domestic Subsidiary
that is a Wholly Owned Subsidiary.
"Wholly Owned Subsidiary" means, with respect to any Person, any
entity of which (other than directors' qualifying shares required by law) 100%
of the Capital Stock of each class having ordinary voting power, and 100% of the
Capital Stock of every other class, in each case, at the time as of which any
determination is being made, is owned, beneficially and of record, by such
Person or by one or more of such Person's other Wholly Owned Subsidiaries, or
both.
"Year 2000 Compliant" means, in regard to any entity, that all
software, hardware, firmware, equipment, goods or systems material to the
business operations or financial condition of such entity, will properly perform
date sensitive functions before, during and after the year 2000.
1.02 Other Interpretive Provisions.
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
(b) The words "hereof," "herein," "hereunder" and similar words
refer to this Agreement as a whole and not to any particular provision of this
Agreement; and subsection, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(c) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced; and the term "including" is not limiting and means "including
without limitation."
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(d) In the computation of periods of time from a specified date
to a later specified date, the word "from" means "from and including"; the words
"to" and "until" each mean "to but excluding," and the word "through" means "to
and including."
(e) Unless otherwise expressly provided herein: (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Credit Document; and (ii) references to any statute or
regulation are to be construed as including all statutory and regulatory
provisions consolidating, amending, replacing, supplementing or interpreting the
statute or regulation.
(f) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(g) This Agreement and other Credit Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms. Unless otherwise expressly
provided, any reference to any action of the Bank by way of agreement, consent,
approval or waiver shall be deemed modified by the phrase "in its sole
discretion."
(h) This Agreement and the other Credit Documents are the result
of negotiations among and have been reviewed by counsel to the Company and the
Bank, and are the products of all parties. Accordingly, they shall not be
construed against the Bank merely because of the Bank's involvement in their
preparation.
1.03 Accounting Principles.
(a) Unless the context otherwise clearly requires, all accounting
terms not expressly defined herein shall be construed, and all financial
computations required under this Agreement shall be made or determined, in
accordance with GAAP consistently applied.
(b) References herein to "fiscal year" and "fiscal quarter" refer
to such fiscal periods of the Company.
ARTICLE 2
THE CREDIT
2.01 The Revolving Credit.
The Bank agrees, on the terms and conditions set forth herein, to make
loans to the Company from time to time on any Business Day during the period
from the Closing Date to the Revolving Termination Date in an aggregate amount
not to exceed at any time outstanding the amount set forth on Schedule 2.01
(such amount, as the same may be reduced under Section 2.05 or as a result of
one or more assignments under Section 10.08, the Bank's "Commitment"); provided
that, after giving effect to any Credit Extension, the Effective Amount of all
outstanding Loans and L/C Obligations together shall not at any time exceed the
Commitment. Within the limits of the Commitment, and subject to the other
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terms and conditions hereof, the Company may borrow under this Section 2.01,
prepay under Section 2.06 and reborrow under this Section 2.01.
2.02 Loan Accounts; Notes.
(a) The Loans made, and the Letters of Credit Issued, by the Bank
shall be evidenced by one or more accounts or records maintained by the Bank in
the Ordinary Course of Business. The accounts or records maintained by the Bank
shall be prima facie evidence of the amount of the Loans made by the Bank to the
Company and the Letters of Credit Issued for the account of the Company, and the
interest and payments thereon. Any failure so to record or any error in doing so
shall not, however, limit or otherwise affect the obligation of the Company
hereunder to pay any amount owing with respect to the Loans or any Letters of
Credit.
(b) Upon the request of the Bank, the Loans made by the Bank may
be evidenced by one or more Notes, instead of or in addition to loan accounts.
The Bank shall endorse on the schedules annexed to its Note(s) the date, amount
and maturity of each Loan made by it and the amount of each payment of principal
made by the Company with respect thereto. The Company hereby irrevocably
authorizes the Bank to endorse its Note(s) and acknowledges and agrees that the
Bank's record shall be prima facie evidence of the amounts so stated; provided
that the failure of the Bank to make, or an error in making, a notation thereon
with respect to any Loan shall not limit or otherwise affect the obligations of
the Company hereunder or under any such Note to the Bank.
2.03 Procedure for Borrowing.
(a) Each Borrowing shall be made upon the Company's irrevocable
written notice delivered to the Bank in the form of a Notice of Borrowing (which
notice must be received by the Bank prior to 9:00 a.m. (San Francisco time) (i)
three Business Days prior to the requested Borrowing Date, in the case of LIBOR
Loans; and (ii) on the requested Borrowing Date, in the case of Prime Rate
Loans, specifying:
(A) the amount of the Borrowing, which shall be in an
aggregate minimum amount of $500,000, in the case of LIBOR Loans,
or $100,000, in the case of Prime Rate Loans (provided that, if
there shall have been a partial assignment to an Assignee
pursuant to Section 10.08, the minimum principal amount for any
Prime Rate Loan shall be $500,000) or any multiple of $100,000 in
excess thereof;
(B) the requested Borrowing Date, which shall be a
Business Day;
(C) the Type of Loans comprising the Borrowing; and
(D) with respect to LIBOR Loans, the duration of the
Interest Period applicable to such Loans included in such notice.
If the Notice of Borrowing fails to specify the duration of the
Interest Period for any Borrowing comprised of LIBOR Loans, such
Interest Period shall be three month;
provided that, with respect to any Borrowing to be made on the Closing Date, the
Notice of Borrowing shall be delivered to the Bank not later than 11:00 a.m.
(San Francisco time) at least one Business Day before the Closing Date and such
Borrowing will consist solely of Prime Rate Loans.
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(b) The Bank will make the amount of each Borrowing available to
the Company at the Bank's Payment Office by 11:00 a.m. (San Francisco time) on
the Borrowing Date requested by the Company by crediting the account of the
Company on the books of the Bank or, if requested by the Company, by wire
transfer in accordance with written instructions provided to the Bank by the
Company, less customary fees for such wire transfer.
(c) Unless the Bank otherwise consents, after giving effect to
any Borrowing, there may not be more than five (5) different Interest Periods in
effect.
2.04 Conversion and Continuation Elections.
(a) The Company may, upon irrevocable written notice to the Bank
in accordance with Section 2.04(b):
(i) elect to convert, as of any Business Day, any Prime
Rate Loans (or any part thereof in an amount not less than $500,000 or
that is in an integral multiple of $100,000 in excess thereof) into
LIBOR Loans;
(ii) elect to convert, as of the last day of the
applicable Interest Period, any LIBOR Loans expiring on such day (or any
part thereof in an amount not less than $100,000, or that is in an
integral multiple of $100,000 in excess thereof) into Prime Rate Loans;
provided that, if there shall have been a partial assignment to an
Assignee pursuant to Section 10.08, the minimum principal amount which
may be converted into Prime Rate Loans shall be $500,000 or any integral
multiple of $100,000 in excess thereof; or
(iii) elect to continue, as of the last day of the
applicable Interest Period, any LIBOR Loans having Interest Periods
expiring on such day (or any part thereof in an amount not less than
$500,000, or that is in an integral multiple of $100,000 in excess
thereof);
provided that, if at any time the aggregate amount of LIBOR Loans in respect of
any Borrowing is reduced, by payment, prepayment, or conversion of part thereof
(but not by partial assignment to an Assignee pursuant to Section 10.08), to be
less than $500,000, such LIBOR Loans shall automatically convert into Prime Rate
Loans, and on and after such date the right of the Company to continue such
Loans as, and convert such Loans into, LIBOR Loans shall terminate.
(b) The Company shall deliver a Notice of Conversion/Continuation
for receipt by the Bank not later than 9:00 a.m. (San Francisco time) at least
(i) three Business Days in advance of the Conversion/Continuation Date, if the
Loans are to be converted into or continued as LIBOR Loans; and (ii) on the
Conversion/Continuation Date, if the Loans are to be converted into Prime Rate
Loans, specifying:
(A) the proposed Conversion/Continuation Date;
(B) the aggregate amount of Loans to be converted
or continued;
(C) the Type of Loans resulting from the proposed
conversion or continuation; and
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(D) other than in the case of conversions into
Prime Rate Loans, the duration of the requested Interest Period.
(c) If, upon the expiration of any Interest Period applicable to
LIBOR Loans, the Company has failed to select timely a new Interest Period to be
applicable to such LIBOR Loans, as the case may be, or if any Default or Event
of Default then exists, then the Company shall be deemed to have elected to
convert such LIBOR Loans into Prime Rate Loans effective as of the expiration
date of such Interest Period, and all conditions to such conversion shall be
deemed to have been satisfied.
(d) Unless the Bank otherwise consent, during the existence of a
Default or Event of Default, the Company may not elect to have a Loan converted
into or continued as a LIBOR Loan.
(e) Unless the Bank otherwise consents, after giving effect to
any conversion or continuation of Loans, there may not be more than five (5)
different Interest Periods in effect.
2.05 Voluntary Termination or Reduction of the Commitment.
The Company may, upon five Business Days prior notice to the Bank,
terminate the Commitment, or permanently reduce the Commitment by an aggregate
minimum amount of $1,000,000 or any multiple of $100,000 in excess thereof (or
of the balance of the Commitment, if less); unless, after giving effect thereto
and to any prepayments of the Loans made on the effective date thereof, the then
Effective Amount of the Loans and the L/C Obligations would exceed the
Commitment then in effect. Once reduced in accordance with this Section 2.05,
the Commitment (and, to the extent reduced in accordance with the provisions
hereof, the L/C Commitment) may not be increased. All accrued commitment fees to
the effective date of any reduction or termination of the Commitment shall be
paid on the effective date of such reduction or termination. Any notice of a
reduction of the Commitment shall specify to what extent if any to which to such
reduction shall be applied to reduce the L/C Commitment. Any termination of the
entire Commitment shall also terminate the entire L/C Commitment.
2.06 Optional Prepayments.
Subject to Section 4.04, the Company may, at any time or from time to
time, upon irrevocable notice received by the Bank, in the case of LIBOR Loans,
not less than three Business Days prior to the requested prepayment date, and,
in the case of Prime Rate Loans, on the Business Day prior to the requested
prepayment date, prepay the Loans, in whole or in part, in minimum amounts of
(a) $100,000 or any multiple of $100,000 in excess thereof in the case of Prime
Rate Loans and (b) $500,000 or any multiple of $100,000 in excess thereof in the
case of LIBOR Loans. Such notice of prepayment shall specify the date and amount
of such prepayment and the Type(s) of Loans to be prepaid. If any such notice is
given by the Company, then the Company shall make such prepayment and the
payment amount specified in such notice shall be due and payable on the date
specified therein, together with accrued interest to each such date on the
amount prepaid and any amounts required pursuant to Section 4.04.
2.07 Cash Collateralization; Mandatory Prepayments.
(a) Subject to Section 4.04, if, on any date, the Effective
Amount of all Loans and L/C Obligations together exceeds the Commitment, then
the Company shall immediately, and without notice or demand, prepay the
outstanding principal amount of the Loans or repay all unreimbursed drawings
under all Letters of Credit (including L/C Borrowings) in an amount equal to
such excess.
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(b) No later than forty-five days after the Bank has received
notice of a Change of Control pursuant to Section 7.03 (or upon and at any time
after the occurrence of any Change of Control if the Company is in default of
its obligation to deliver such a notice), the Bank may by notice to such effect
to the Company: (i) declare the Commitment to be terminated, whereupon the
Commitment shall automatically terminate; and (ii) declare an amount equal to
the maximum aggregate amount that is or at any time thereafter may become
available for drawing under any outstanding Letters of Credit (whether or not
any beneficiary shall have presented, or shall be entitled at such time to
present, the drafts or other documents required to draw under such Letters of
Credit) to be immediately due and payable, or demand that the Company Cash
Collateralize the L/C Obligations to the extent of outstanding and wholly or
partially undrawn Letters of Credit, whereupon the Company shall so Cash
Collateralize the L/C Obligations; and declare the unpaid principal amount of
all outstanding Loans, all interest accrued and unpaid thereon, and all other
amounts owing or payable hereunder or under any other Loan Document to be
immediately due and payable without presentment, demand or protest, all of which
are hereby expressly waived by the Company.
(c) Any prepayments pursuant to this Section 2.07 shall be
applied first to any Prime Rate Loans then outstanding and then to outstanding
LIBOR Loans with the shortest Interest Periods then remaining. All payments of
Loans and L/C Borrowings pursuant to this Section 2.07 shall be made together
with interest accrued to the date of such payment on the principal amount
repaid, together with any amounts payable under Section 4.04; provided that, if
any such prepayment would cause the Company to incur Obligations pursuant to
Section 4.04 with respect to LIBOR Loans, the Company may Cash Collateralize
such LIBOR Loans until the last day of the Interest Period related thereto, at
which time such Cash Collateral shall be applied by the Bank to repay such
Loans.
2.08 Repayment.
The Company shall repay the Bank on the Revolving Termination Date the
aggregate principal amount of all Loans outstanding on such date.
2.09 Interest.
(a) Subject to the Company's right to convert to other Types of
Loans under Section 2.04): (i) each Prime Rate Loan shall bear interest on the
outstanding principal amount thereof from the applicable Borrowing Date at a
rate per annum equal to the Prime Rate minus one percent (1.00%) per annum; and
(ii) each LIBOR Loan shall bear interest on the outstanding principal amount
thereof from the applicable Borrowing Date at a rate per annum equal to LIBOR
plus five-eighths of one percent (0.625%) per annum.
(b) Interest on each Loan shall be paid in arrears on each
Interest Payment Date. Interest shall also be paid on the date of any prepayment
of Loans under Section 2.06 or 2.07 for the portion of the Loans so prepaid and
upon payment (including prepayment) in full thereof and, during the existence of
any Event of Default, interest shall be paid on demand of the Bank.
(c) Notwithstanding subsection (a) of this Section, while any
Event of Default exists or after acceleration, the Company shall pay interest
(after as well as before entry of judgment thereon to the extent permitted by
law) on the principal amount of all outstanding Obligations, at a rate per annum
which is determined by adding two percent (2.00%) per annum to the rate
otherwise then in effect for such Loans and, in the case of Obligations not
Loans, at a rate per annum equal to the Prime Rate plus
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one percent (1.00%) per annum; provided that, on and after the expiration of any
Interest Period applicable to any LIBOR Loan outstanding on the date of
occurrence of such Event of Default or acceleration, the principal amount of
such Loan shall, during the continuation of such Event of Default or after
acceleration, bear interest at a rate per annum equal to the Prime Rate plus one
percent (1.00%) per annum. All such interest shall be payable upon demand.
(d) Notwithstanding anything to the contrary contained herein,
the obligations of the Company to the Bank hereunder shall be subject to the
limitation that payments of interest shall not be required for any period for
which interest is computed hereunder, to the extent (but only to the extent)
that contracting for or receiving such payment by the Bank would be contrary to
the provisions of any law applicable to the Bank limiting the highest rate of
interest that may be lawfully contracted for, charged or received by the Bank,
and, in such event, the Company shall pay the Bank interest at the highest rate
permitted by applicable law.
2.10 Commitment Fee.
The Company shall pay to the Bank a commitment fee on the average daily
unused portion of the Commitment, computed on a monthly basis in arrears on the
last Business Day of each calendar month based upon the daily utilization for
that month as calculated by the Bank, equal to such unused portion as so
calculated multiplied by the Applicable Commitment Fee Percentage for such
period. Such commitment fee shall accrue from the Closing Date to the Revolving
Termination Date and shall be due and payable monthly in arrears on the last
Business Day of each month commencing on December 31, 1999 through the Revolving
Termination Date, with the final payment to be made on the Revolving Termination
Date; provided that, in connection with any reduction or termination of the
Commitment hereunder, the accrued commitment fee calculated for the period
ending on such date shall also be paid on the date of such reduction or
termination, with the following monthly payment being calculated on the basis of
the period from such reduction or termination date to such monthly payment date.
The commitment fees provided in this Section shall accrue at all times after the
Closing Date, including at any time during which one or more conditions in
Article 5 are not met, and are non-refundable.
2.11 Computation of Fees and Interest.
(a) All computations of interest for Prime Rate Loans shall be
made on the basis of a year of 365 or 366 days, as the case may be, and actual
days elapsed. All other computations of fees and interest shall be made on the
basis of a 360 day year and actual days elapsed (which results in more interest
being paid than if computed on the basis of a 365-day year). Interest and fees
shall accrue during each period during which interest or such fees are computed
from the first day thereof to the last day thereof.
(b) Each determination of an interest rate by the Bank shall be
conclusive and binding on the Company in the absence of manifest error.
2.12 Payments by the Company.
(a) All payments to be made by the Company shall be made without
set-off, recoupment or counterclaim. Except as otherwise expressly provided
herein, all payments by the Company shall be made to the Bank at the Bank's
Payment Office, and shall be made in dollars and in immediately available funds,
no later than 11:00 a.m. (San Francisco time) on the date specified herein. Any
payment
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received by the Bank later than 11:00 a.m. (San Francisco time) shall be deemed
to have been received on the following Business Day and any applicable interest
or fee shall continue to accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period" contained herein, whenever any payment is due on a day other
than a Business Day, such payment shall be made on the following Business Day,
and such extension of time shall in such case be included in the computation of
interest or fees, as the case may be.
ARTICLE 3
THE LETTERS OF CREDIT
3.01 The Letter of Credit Subfacility.
(a) On the terms and conditions set forth herein and from time to
time on any Business Day during the period from the Closing Date to the
Revolving Termination Date, the Bank agrees (i) to issue Letters of Credit for
the account of the Company, and to amend or renew Letters of Credit previously
issued by it, in accordance with Sections 3.02(c) and 3.02(d) in an aggregate
amount not to exceed the L/C Commitment, and (ii) to honor drafts under the
Letters of Credit; provided that the Bank shall not be obligated to Issue any
Letter of Credit if, as of the date of and after giving effect to the Issuance
of such Letter of Credit (the "Issuance Date"), (A) the Effective Amount of all
L/C Obligations exceeds (or would exceed) the L/C Commitment or (B) the
Effective Amount of all L/C Obligations and Loans together exceeds (or would
exceed) the Commitment. Within the foregoing limits, and subject to the other
terms and conditions hereof, the Company's ability to obtain Letters of Credit
shall be fully revolving, and, accordingly, the Company may, during the
foregoing period, obtain Letters of Credit to replace Letters of Credit which
have expired or which have been drawn upon and reimbursed.
(b) The Bank is under no obligation to Issue any Letter of Credit
if:
(i) any order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to enjoin or restrain
the Bank from Issuing such Letter of Credit, or any Requirement of Law
applicable to the Bank or any request or directive (whether or not
having the force of law) from any Governmental Authority with
jurisdiction over the Bank shall prohibit, or request that the Bank
refrain from, the Issuance of letters of credit generally or such Letter
of Credit in particular or shall impose upon the Bank with respect to
such Letter of Credit any restriction, reserve or capital requirement
(for which the Bank is not otherwise compensated hereunder) not in
effect on the Closing Date, or shall impose upon the Bank any
unreimbursed loss, cost or expense which was not applicable on the
Closing Date and which the Bank in good ▇▇▇▇▇ ▇▇▇▇▇ material to it;
(ii) the Bank has received written notice from the
Company, on or prior to the Business Day prior to the requested date of
Issuance of such Letter of Credit, that one or more of the applicable
conditions contained in Article 5 is not then satisfied;
(iii) the expiry date of any requested Letter of Credit is
(A) more than 360 days after the date of Issuance, or (B) more than 200
days after the Revolving Termination Date, unless the Bank has approved
such expiry date in writing;
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(iv) any requested Letter of Credit does not provide for
drafts, or is not otherwise in form and substance acceptable to the
Bank, or the Issuance of a Letter of Credit shall violate any applicable
policies of the Bank; or
(v) any standby Letter of Credit is for the purpose of
supporting the issuance of any letter of credit by any other Person or
for the purpose of supporting any debt for borrowed money.
3.02 Issuance, Amendment and Renewal of Letters of Credit.
(a) Each Letter of Credit shall be issued upon the irrevocable
written request of the Company received by the Bank at least three Business Days
(or such shorter time as the Bank may agree in a particular instance) prior to
the proposed date of issuance. Each such request for issuance of a Letter of
Credit shall be in the form of an L/C Application and shall specify in form and
detail satisfactory to the Bank: (i) the proposed date of issuance of the Letter
of Credit (which shall be a Business Day); (ii) the face amount of the Letter of
Credit; (iii) the expiry date of the Letter of Credit; (iv) the name and address
of the beneficiary thereof; (v) the documents to be presented by the beneficiary
of the Letter of Credit in case of any drawing thereunder; (vi) the full text of
any certificate to be presented by the beneficiary in case of any drawing
thereunder; and (vii) such other matters as the Bank may reasonably require.
(b) Unless the issuance, amendment or renewal of any Letter of
Credit is not then permitted under Section 3.01(a)(ii) as a result of the
limitations set forth in clauses (A) or (B) thereof or under Section 3.01(b), or
one or more conditions specified in Article 5 are not then satisfied, then,
subject to the terms and conditions hereof, the Bank shall, on the requested
Issue date, Issue a Letter of Credit for the account of the Company in
accordance with the Bank's usual and customary business practices.
(c) From time to time while a Letter of Credit is outstanding and
prior to the Revolving Termination Date, the Bank will, upon the written request
of the Company received by the Bank at least four Business Days (or such shorter
time as the Bank may agree in a particular instance) prior to the proposed date
of amendment, amend any Letter of Credit issued by it. Each such request for
amendment of a Letter of Credit shall be made in the form of an L/C Amendment
Application and shall specify in form and detail satisfactory to the Bank: (i)
the Letter of Credit to be amended; (ii) the proposed date of amendment of the
Letter of Credit (which shall be a Business Day); (iii) the nature of the
proposed amendment; and (iv) such other matters as the Bank may reasonably
require. The Bank shall be under no obligation to amend any Letter of Credit if:
(A) the Bank would have no obligation at such time to issue such Letter of
Credit in its amended form under the terms of this Agreement; or (B) the
beneficiary of any such Letter of Credit does not accept the proposed amendment
to the Letter of Credit.
(d) From time to time while a Letter of Credit is outstanding and
prior to the Revolving Termination Date, the Bank shall, upon the written
request of the Company received by the Bank at least four Business Days (or such
shorter time as the Bank may agree in a particular instance) prior to the
proposed date of notification of renewal, be entitled to authorize the automatic
renewal of any Letter of Credit issued by it. Each such request for renewal of a
Letter of Credit shall be made in the form of an L/C Amendment Application and
shall specify in form and detail satisfactory to the Bank: (i) the Letter of
Credit to be renewed; (ii) the proposed date of notification of renewal of the
Letter of Credit (which shall be a Business Day); (iii) the revised expiry date
of the Letter of Credit; and (iv) such other matters as the Bank may require.
The Bank shall be under no obligation to renew any Letter of Credit if: (A) the
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Bank would have no obligation at such time to issue or amend such Letter of
Credit in its renewed form under the terms of this Agreement; or (B) the
beneficiary of any such Letter of Credit does not accept the proposed renewal of
the Letter of Credit. If any outstanding Letter of Credit provides that it shall
be automatically renewed unless the beneficiary thereof receives notice from the
Bank that such Letter of Credit will not be renewed, and if at the time of
renewal the Bank would be entitled to authorize the automatic renewal of such
Letter of Credit in accordance with this Section 3.02(d) upon the request of the
Company but the Bank shall not have received an L/C Amendment Application from
the Company with respect to such renewal or any other written direction by the
Company with respect thereto, the Bank shall nonetheless be permitted to allow
such Letter of Credit to renew, and the Company hereby authorizes such renewal,
and, accordingly, the Bank shall be deemed to have received an L/C Amendment
Application from the Company requesting such renewal.
(e) The Bank may, at its election, deliver any notices of
termination or other communications to any Letter of Credit beneficiary or
transferee, and take any other action as necessary or appropriate, at any time
and from time to time, in order to cause the expiry date of such Letter of
Credit to be a date not later than 200 days after the Revolving Termination
Date.
(f) This Agreement shall control in the event of any conflict
with any L/C-Related Document (other than any Letter of Credit).
3.03 Drawings and Reimbursements.
(a) In the event of any request for a drawing under a Letter of
Credit by the beneficiary or transferee thereof, the Bank will promptly notify
the Company. The Company shall reimburse the Bank prior to 10:00 a.m. (San
Francisco time), on each date that any amount is paid by the Bank under any
Letter of Credit (each such date, an "Honor Date"), in an amount equal to the
amount so paid by the Bank. In the event the Company fails to reimburse the Bank
for the full amount of any drawing under any Letter of Credit by 10:00 a.m. (San
Francisco time) on the Honor Date, the Company will be deemed to have requested
that Prime Rate Loans be made by the Bank to be disbursed on the Honor Date in
respect of such Letter of Credit, subject to the amount of the unutilized
portion of the Commitment and subject to the conditions set forth in Section
5.02. Solely for the purposes of making such Prime Rate Loans, the minimum
amount limitations set forth in Section 2.03 shall not be applicable. Any notice
given by the Bank pursuant to this Section 3.03(c) may be oral if immediately
confirmed in writing (including by facsimile); provided that the lack of such an
immediate confirmation shall not affect the conclusiveness or binding effect of
such notice.
(b) With respect to any unreimbursed drawing that is not
converted into Loans consisting of Prime Rate Loans to the Company in whole or
in part, because of the Company's failure to satisfy the conditions set forth in
Section 5.02 or for any other reason, the Company shall be deemed to have
incurred from the Bank an L/C Borrowing in the amount of such drawing, which L/C
Borrowing shall be due and payable on demand (together with interest) and shall
bear interest at a rate per annum equal to the Prime Rate plus one and one-half
percent (1.50%) per annum.
3.04 Role of the Bank.
The Bank and the Company agree that, in paying any drawing under a
Letter of Credit, the Bank shall not have any responsibility to obtain any
document (other than any sight draft and certificates expressly required by the
Letter of Credit) or to ascertain or inquire as to the validity or accuracy of
any such document or the authority of the Person executing or delivering any
such document. The Company
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hereby assumes all risks of the acts or omissions of any beneficiary or
transferee with respect to its use of any Letter of Credit; provided that this
assumption is not intended to, and shall not, preclude the Company from pursuing
such rights and remedies as it may have against the beneficiary or transferee at
law or under any other agreement. No Indemnified Person nor any Indemnified
Person's correspondents, participants or assignees, shall be liable or
responsible for any of the matters described in subsections (a) through (h) of
Section 3.05; provided that the Company may have a claim against the Bank, and
the Bank may be liable to the Company, to the extent, but only to the extent, of
any direct, as opposed to consequential or exemplary, damages suffered by the
Company which the Company proves were caused by the Bank's willful misconduct or
gross negligence or the Bank's willful failure to pay under any Letter of Credit
after the presentation to it by the beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions of a Letter of
Credit. In furtherance and not in limitation of the foregoing: (a) the Bank may
accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary; and (b) the Bank shall not be responsible for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason.
3.05 Obligations Absolute.
The obligations of the Company under this Agreement and any L/C-Related
Document to reimburse the Bank for a drawing under a Letter of Credit, and to
repay any L/C Borrowing and any drawing under a Letter of Credit converted into
Loans, shall be unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement and each such other L/C-Related
Document under all circumstances, including the following:
(a) any lack of validity or enforceability of this Agreement, any
L/C-Related Document or other Credit Document;
(b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the obligations of the Company in respect of
any Letter of Credit or any other amendment or waiver of or any consent to
departure from all or any of the L/C-Related Documents;
(c) the existence of any claim, set-off, defense or other right
that the Company may have at any time against any beneficiary or any transferee
of any Letter of Credit (or any Person for whom any such beneficiary or any such
transferee may be acting), the Bank or any other Person, whether in connection
with this Agreement, the transactions contemplated hereby or by the L/C-Related
Documents or any unrelated transaction;
(d) any draft, demand, certificate or other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect; or any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any Letter of Credit;
(e) any payment by the Bank under any Letter of Credit against
presentation of a draft or certificate that does not strictly comply with the
terms of any Letter of Credit; or any payment made by the Bank under any Letter
of Credit to any Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of or successor to any beneficiary or any
transferee of any Letter of Credit, including any arising in connection with any
Insolvency Proceeding;
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(f) any exchange, release or non perfection of any collateral, or
any release or amendment or waiver of or consent to departure from any other
guarantee, for all or any of the obligations of the Company in respect of any
Letter of Credit;
(g) any misapplication by the beneficiary of any Letter of Credit
of the proceeds of any drawing under such Letter of Credit; or
(h) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, including any other circumstance that might
otherwise constitute a defense available to, or a discharge of, the Company.
3.06 Cash Collateralization Obligations.
Upon (a) the request of the Bank (i) if the Bank has honored any full or
partial drawing request on any Letter of Credit and such drawing has resulted in
an L/C Borrowing hereunder and (ii) if, as of the Revolving Termination Date,
any Letters of Credit may for any reason remain outstanding and partially or
wholly undrawn, or (b) the occurrence of the circumstances described in Section
2.07 requiring the Company to Cash Collateralize Letters of Credit, then, the
Company shall immediately Cash Collateralize or cause to be Cash Collateralized
the L/C Obligations in an amount equal to such L/C Obligations. Such amount,
when received by the Bank, shall be held by the Bank and maintained in a blocked
deposit account or deposit accounts at the Bank, as Cash Collateral for
reimbursement obligations of the Company in respect of the L/C Obligations and
for the other Obligations. The Company hereby grants to the Bank a security
interest in all such cash, deposit accounts and deposit account balances.
Amounts held in such account(s) shall be applied by the Bank to the payment and
reimbursement of the Bank in full for all L/C Obligations, and the unused
portion thereof after all Letters of Credit have expired or been fully drawn
upon, if any, shall be applied to repay other Obligations of the Company
hereunder. The Company shall execute such further agreements, documents,
instruments or financing statements as the Bank reasonably deems necessary in
connection with the foregoing.
3.07 Letter of Credit Fees.
The Company shall pay to the Bank fees and charges in respect of the
Issuance, presentation, amendment, renewal and processing of any Letter of
Credit hereunder in the amount(s) and at the time(s) specified on Schedule
3.07(a). All fees and charges payable under this Section 3.07 shall be
nonrefundable.
3.08 Uniform Customs and Practice.
The Uniform Customs and Practice for Documentary Credits as published by
the International Chamber of Commerce most recently at the time of issuance of
any Letter of Credit shall (unless otherwise expressly provided in the Letters
of Credit) apply to the Letters of Credit.
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ARTICLE 4
TAXES, YIELD PROTECTION AND ILLEGALITY
4.01 Taxes.
(a) Any and all payments by the Company to the Bank under this
Agreement and any other Credit Document shall be made free and clear of, and
without deduction or withholding for, any Taxes. In addition, the Company shall
pay all Other Taxes.
(b) If the Company shall be required by law to deduct or withhold
any Taxes, Other Taxes or Further Taxes from or in respect of any sum payable
hereunder to the Bank, then:
(i) the sum payable shall be increased as necessary so
that, after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable under
this Section), the Bank receives and retains an amount equal to the sum
it would have received and retained had no such deductions or
withholdings been made;
(ii) the Company shall make such deductions and
withholdings;
(iii) the Company shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in
accordance with applicable law; and
(iv) the Company shall also pay to the Bank, at the time
interest is paid, Further Taxes in the amount that the Bank specifies is
necessary to preserve the after-tax yield that the Bank would have
received if such Taxes, Other Taxes or Further Taxes had not been
imposed.
(c) The Company agrees to indemnify and hold harmless the Bank
for the full amount of (i) Taxes, (ii) Other Taxes, and (iii) Further Taxes in
the amount that the Bank specifies is necessary to preserve the after-tax yield
that the Bank would have received if such Taxes, Other Taxes or Further Taxes
had not been imposed, and any liability (including penalties, interest,
additions to tax and expenses) arising therefrom or with respect thereto,
whether or not such Taxes, Other Taxes or Further Taxes were correctly or
legally asserted. Payment under this indemnification shall be made within 30
days after the date the Bank makes written demand therefor.
(d) Within thirty days after the date of any payment by the
Company of Taxes, Other Taxes or Further Taxes, the Company shall furnish to the
Bank the original or a certified copy of a receipt evidencing payment thereof,
or other evidence of payment satisfactory to the Bank.
(e) If the Company is required to pay any amount to the Bank
pursuant to subsection (b) or (c) of this Section, then the Bank shall use
reasonable efforts (consistent with legal and regulatory restrictions) to change
the jurisdiction of its Lending Office so as to eliminate any such additional
payment by the Company which may thereafter accrue, if such change in the sole
and absolute judgment of the Bank is not otherwise disadvantageous to the Bank.
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4.02 Illegality.
(a) If the Bank determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for the Bank or its Applicable Lending Office to make LIBOR
Loans, then, on notice thereof by the Bank to the Company, any obligation of the
Bank to make LIBOR Loans shall be suspended until the Bank notifies the Company
that the circumstances giving rise to such determination no longer exist.
(b) If the Bank determines that it is unlawful to maintain any
LIBOR Loan, the Company shall, upon its receipt of notice of such fact and
demand from the Bank, prepay in full all LIBOR Loans then outstanding, together
with interest accrued thereon and amounts required under Section 4.04, either on
the last day of the Interest Period thereof, if the Bank may lawfully continue
to maintain such LIBOR Loans to such day, or immediately, if the Bank may not
lawfully continue to maintain such LIBOR Loans. If the Company is required to so
prepay any LIBOR Loan, then, concurrently with such prepayment, the Company
shall borrow from the Bank, in the amount of such repayment, a Prime Rate Loan.
(c) If the obligation of the Bank to make or maintain LIBOR Loans
has been so terminated or suspended, the Company may elect, by giving notice to
the Bank that all Loans which would otherwise be made by the Bank as LIBOR Loans
shall be instead Prime Rate Loans.
4.03 Increased Costs and Reduction of Return.
(a) If the Bank shall determine that, due to either (i) the
introduction of or any change (other than any change by way of imposition of or
increase in reserve requirements included in the calculation of the LIBOR) in or
in the interpretation of any law or regulation after the Closing Date or (ii)
the compliance with any guideline or request from any central bank or other
Governmental Authority after the Closing Date (whether or not having the force
of law), there shall be any increase in the cost to the Bank of agreeing to make
or making, funding or maintaining any LIBOR Loans, then the Company shall be
liable for, and shall from time to time, not later than thirty days following
demand therefor by the Bank, pay to the Bank such additional amounts as are
sufficient to compensate the Bank for such increased costs.
(b) If the Bank shall have reasonably determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change in any Capital
Adequacy Regulation, (iii) any change in the interpretation or administration of
any Capital Adequacy Regulation by any central bank or other Governmental
Authority charged with the interpretation or administration thereof, or (iv)
compliance by the Bank (or its Lending Office) or any corporation controlling
the Bank with any Capital Adequacy Regulation, affects or would affect the
amount of capital required or expected to be maintained by the Bank or any
corporation controlling the Bank and (taking into consideration the Bank's or
such corporation's policies with respect to capital adequacy and the Bank's
desired return on capital) determines that the amount of such capital is
increased as a consequence of the Commitment, loans, credits or obligations
under this Agreement, then, upon demand of the Bank to the Company, the Company
shall immediately pay to the Bank, not later than thirty days following demand
therefor, additional amounts sufficient to compensate the Bank for such
increase.
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4.04 Funding Losses.
The Company shall reimburse the Bank and hold the Bank harmless from any
actual loss or expense which the Bank may sustain or incur as a consequence of:
(a) the failure of the Company to make on a timely basis any
payment of principal of any LIBOR Loan (including after any acceleration
thereof);
(b) the failure of the Company to borrow, continue or convert a
Loan after the Company has given (or is deemed to have given) a Notice of
Borrowing or a Notice of Conversion/Continuation;
(c) the failure of the Company to make any prepayment in
accordance with any notice delivered under Section 2.06;
(d) the prepayment (including pursuant to Section 2.07) or other
payment (including after acceleration thereof) of any LIBOR Loan on a day that
is not the last day of the relevant Interest Period; or
(e) the conversion of any LIBOR Loan to a Prime Rate Loan on a
day that is not the last day of the relevant Interest Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its LIBOR Loans hereunder or from fees
payable to terminate the deposits from which such funds were obtained. For
purposes of calculating amounts payable by the Company to the Bank under this
Section and under Section 4.03(a), each LIBOR Loan made by the Bank (and each
related reserve, special deposit or similar requirement) shall be conclusively
deemed to have been funded at the Base LIBOR used in determining the LIBOR for
such LIBOR Loan by a matching deposit or other borrowing in the inter-bank
eurodollar market for a comparable amount and for a comparable period, whether
or not such LIBOR Loan is in fact so funded.
4.05 Inability to Determine Rates.
If the Bank determines that for any reason adequate and reasonable means
do not exist for determining the LIBOR for any requested Interest Period with
respect to a proposed LIBOR Loan, or that the LIBOR applicable pursuant to
Section 2.09(a) for any requested Interest Period with respect to a proposed
LIBOR Loan does not adequately and fairly reflect the cost to the Bank of
funding such Loan, then the Bank will promptly so notify the Company.
Thereafter, the obligation of the Bank to make or maintain LIBOR Loans hereunder
shall be suspended until the Bank revokes such notice in writing. Upon receipt
of such notice, the Company may revoke without further obligation or penalty any
Notice of Borrowing or Notice of Conversion/Continuation then submitted by it.
If the Company does not revoke such Notice, the Bank shall make, convert or
continue the Loans, as proposed by the Company, in the amount specified in the
applicable notice submitted by the Company, but such Loans shall be made,
converted or continued as Prime Rate Loans instead of LIBOR Loans.
4.06 Reserves on LIBOR Loans.
The Company shall pay to the Bank, as long as the Bank shall be required
under regulations of the FRB to maintain reserves with respect to liabilities or
assets consisting of or including eurocurrency funds or deposits (currently
known as Eurocurrency Liabilities), additional costs on the unpaid principal
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amount of each LIBOR Loan equal to the actual costs of such reserves allocated
to such Loan by the Bank (as determined by the Bank in good faith, which
determination shall be prima facie evidence of such amounts), payable on each
date on which interest is payable on such Loan, provided that the Company shall
have received at least fifteen days prior written notice of such additional
costs from the Bank. If the Bank fails to give notice fifteen days prior to the
relevant Interest Payment Date, such additional interest shall be payable
fifteen days from receipt of such notice.
4.07 Certificates of the Bank.
If the Bank claims reimbursement or compensation under this Article 4,
it shall deliver to the Company a certificate setting forth in reasonable detail
the amount payable to the Bank hereunder and such certificate shall be prima
facie evidence of the amounts stated therein.
4.08 Survival.
The agreements and obligations of the Company in this Article 4 shall
survive the payment of all other Obligations.
ARTICLE 5
CONDITIONS PRECEDENT
5.01 Conditions of Effectiveness of Agreement.
The effectiveness of this Agreement is subject to satisfaction or waiver
of the condition that the Bank shall have received on or before the Closing Date
all of the following, in form and substance satisfactory to the Bank and its
counsel:
(a) Credit Agreement; Notes. This Agreement and, if requested by
the Bank, the Notes, each executed by each party thereto;
(b) Resolutions; Incumbency.
(i) Copies of the resolutions of the board of directors of
the Company authorizing the transactions contemplated hereby, certified
as of the Closing Date by the Company's Secretary or an Assistant
Secretary; and
(ii) A certificate of the Secretary or Assistant Secretary
of the Company, certifying the names and true signatures of the officers
of the Company authorized to execute, deliver and perform this Agreement
and all other Credit Documents to be delivered by it hereunder;
(c) Organization Documents; Good Standing. Each of the following
documents:
(i) the certificate of incorporation and the bylaws of the
Company as in effect on the Closing Date, certified by the Secretary or
Assistant Secretary of the Company as of the Closing Date; and
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(ii) a good standing certificate from the Secretary of
State (or similar, applicable Governmental Authority) as of a recent
date, and, if requested by the Bank, a bring-down certificate by
facsimile dated on or about the Closing Date and tax good standing
certificate, for the Company, of the State of California;
(d) Certificate. A certificate signed by a Responsible Officer,
dated as of the Closing Date, stating that:
(i) the representations and warranties contained in
Article 6 are true and correct on and as of such date, as though made on
and as of such date;
(ii) no Default or Event of Default exists or would result
from the initial Credit Extension; and
(iii) since September 30, 1999, there has occurred no
event or circumstance that has resulted or could reasonably be expected
to result in a Material Adverse Effect; and
(e) Termination of Existing Facility. Evidence satisfactory to
the Bank confirming that, if any principal, interest, fees, costs or other
amounts are outstanding under the Existing Facility, all such amounts have been
paid in full by the Closing Date or that the Loans borrowed by the Company on
the Closing Date will be used to repay such outstanding amounts, and that the
Existing Facility and the commitments of the "Bank" thereunder shall thereby
terminate on the Closing Date;
(f) Payment of Fees. The Company shall have paid all costs
(including Attorney Costs subject to Section 10.04(a)), accrued and unpaid fees
and expenses incurred by the Bank prior to the Closing Date; and
(g) Other Documents. Such other approvals, opinions, documents or
materials as the Bank may reasonably request;
provided that neither this Agreement nor any of the other Credit Documents shall
become effective or be binding on any party hereto unless each of the foregoing
conditions is satisfied on or before December 31, 1999. The Bank shall promptly
notify the Company of the Closing Date, and such notice shall be conclusive and
binding on the parties hereto.
5.02 Conditions to All Credit Extensions.
The obligation of the Bank to make any Credit Extension (including its initial
Credit Extension) or to continue/convert any Loan is subject to the satisfaction
of the following conditions precedent on the relevant Borrowing Date,
Conversion/Continuation Date or Issuance Date:
(a) Documentation. The Bank shall have received, in respect of
any Borrowing, a completed and duly executed Notice of Borrowing or Notice of
Conversion/Continuation (as applicable) and, in respect of any Issuance of any
Letter of Credit, a completed and duly executed L/C Application or L/C Amendment
Application (as applicable); in addition, in connection with the Bank's initial
Credit Extension, the Bank shall have received, on or before December 3, 1999,
the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel to the Company, and the
opinion of the General Counsel of the Company, each addressed to the Bank,
together containing opinions substantially in the form of Exhibit E;
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(b) Continuation of Representations and Warranties. The
representations and warranties in Article 6 shall be true and correct on and as
of such Borrowing Date, Conversion/Continuation Date or Issuance Date with the
same effect as if made on and as of such Borrowing Date, Conversion/Continuation
Date or Issuance Date (except to the extent such representations and warranties
expressly refer to an earlier date, in which case they shall be true and correct
as of such earlier date);
(c) No Existing Default. No Default or Event of Default shall
exist or shall result from such Credit Extension or continuation or conversion;
and
(d) No Material Adverse Effect. There shall not have occurred a
Material Adverse Effect.
Each Notice of Borrowing, Notice of Conversion/Continuation, L/C Application or
L/C Amendment Application submitted by the Company hereunder shall constitute a
representation and warranty by the Company hereunder, as of the date of each
such notice, L/C Application or L/C Amendment (as applicable) and as of each
Borrowing Date, Conversion/Continuation Date or Issuance Date (as applicable)
that the conditions contained in this Section 5.02 are satisfied.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Bank that:
6.01 Corporate Existence and Power.
The Company and each of its Material Subsidiaries:
(a) is a corporation or partnership duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or formation;
(b) has the power and authority and all governmental licenses,
authorizations, consents and approvals to (i) own its assets and carry on its
business as presently conducted except to the extent that the failure to do so
could not reasonably be expected to have a Material Adverse Effect and (ii) to
execute, deliver, and perform its obligations under the Credit Documents to
which each is a party;
(c) is duly qualified as a foreign corporation, partnership or
limited liability company and is licensed and in good standing, under the laws
of each jurisdiction where its ownership, lease or operation of Property or the
conduct of its business requires such qualification or license, except to the
extent that the failure to do so could not reasonably be expected to have a
Material Adverse Effect; and
(d) is in compliance with all Requirements of Law except to the
extent to which the failure to comply could not reasonably be expected to have a
Material Adverse Effect.
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6.02 Corporate Authorization; No Contravention.
The execution, delivery and performance by the Company of this Agreement and
each other Credit Document to which the Company is party, have been duly
authorized by all necessary corporate action, and do not and will not:
(a) contravene the terms of any of the Company's Organization
Documents;
(b) conflict with or result in any breach or contravention of, or
the creation of any Lien under, any document evidencing any Contractual
Obligation to which the Company is a party or any order, injunction, writ or
decree of any Governmental Authority to which the Company or its Property is
subject; or
(c) violate any Requirement of Law.
6.03 Governmental Authorization.
No approval, consent, exemption, authorization, or other action by, or
notice to, or filing with, any Governmental Authority is necessary or required
in connection with the execution, delivery or performance by, or enforcement
against, the Company of the Agreement or any other Credit Document to which the
Company is a party.
6.04 Binding Effect.
This Agreement and each other Credit Document to which the Company is a
party constitute the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms,
except as enforceability may be limited by applicable bankruptcy, insolvency, or
similar laws affecting the enforcement of creditors' rights generally or by
equitable principles relating to enforceability.
6.05 Litigation.
Except as specifically disclosed in Schedule 6.05, there are no actions,
suits, proceedings, claims or disputes pending, or to the best knowledge of the
Company, threatened or contemplated, at law, in equity, in arbitration or before
any Governmental Authority, against the Company, any of its Subsidiaries or any
of their respective Properties which:
(a) purport to affect or pertain to this Agreement or any other
Credit Document, or any of the transactions contemplated hereby or thereby; or
(b) if determined adversely to the Company or any of its
Subsidiaries, could reasonably be expected to have a Material Adverse Effect. No
injunction, writ, temporary restraining order or any order of any nature has
been issued by any court or other Governmental Authority purporting to enjoin or
restrain the execution, delivery or performance of this Agreement or any other
Credit Document, or directing that the transactions provided for herein or
therein not be consummated as herein or therein provided.
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6.06 ERISA Compliance.
Except as specifically disclosed on Schedule 6.06:
(a) As of the Closing Date, each Plan is in compliance with the
applicable provisions of ERISA, the Code and other federal or state law except
to the extent to which the failure to so comply could not reasonably be expected
to have a Material Adverse Effect. Each Plan which is intended to qualify under
subsection 401(a) of the Code has received a favorable determination letter from
the IRS and to the best knowledge of the Company, nothing has occurred which
would cause the loss of such qualification. As of the Closing Date, the Company
and each ERISA Affiliate has made all required contributions to any Plan subject
to Section 412 of the Code, and no application for a funding waiver or an
extension of any amortization period pursuant to Section 412 of the Code has
been made with respect to any Plan.
(b) As of the Closing Date: (i) there are no pending or, to the
best knowledge of the Company, threatened claims, actions or lawsuits, or action
by any Governmental Authority, with respect to any Plan which has resulted or
could reasonably be expected to result in a Material Adverse Effect; and (ii)
there has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan which has resulted or could
reasonably be expected to result in a Material Adverse Effect.
(c) As of the Closing Date, (i) no ERISA Event has occurred or is
reasonably expected to occur; and (ii) no event or circumstance has occurred or
exists that, if such event or circumstance had occurred or arisen after the
Closing Date, would create an Event of Default under Section 9.01(h).
6.07 Use of Proceeds; Margin Regulations.
The proceeds of the Loans are to be used solely for the purposes set
forth in and permitted by Section 7.11 and Section 8.07. Neither the Company nor
any of its Subsidiaries is generally engaged in the business of purchasing or
selling Margin Stock or extending credit for the purpose of purchasing or
carrying Margin Stock.
6.08 Title to Properties.
The Company and each of its Subsidiaries have good record and marketable
title in fee simple to, or valid leasehold interests in, all real property
necessary or used in the Ordinary Course of Business, except for such defects in
title as could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. As of the Closing Date, the Properties of the
Company and its Subsidiaries are subject to no Liens other than Permitted Liens.
6.09 Taxes.
The Company and each of its Subsidiaries have filed all federal and
other material tax returns and reports required to be filed, and have paid all
federal and other material taxes, assessments, fees and other governmental
charges levied or imposed upon them or their properties, income or assets
otherwise due and payable, except those which are being contested in good faith
by appropriate proceedings and for which adequate reserves have been provided in
accordance with GAAP. There is no proposed tax assessment against the Company or
any of its Subsidiaries that would, if made, have a Material Adverse Effect.
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6.10 Financial Condition.
(a) The audited consolidated financial statements of the Company
and its Subsidiaries dated March 31, 1999, and the related consolidated
statements of income or operations, shareholders' equity and cash flows, for the
fiscal year ended on March 27, 1999:
(i) were prepared in accordance with GAAP;
(ii) fairly present the financial condition of the Company
and its Subsidiaries as of the date thereof and results of operations
for the period covered thereby; and
(iii) except as specifically disclosed in Schedule 6.10,
show all material indebtedness and other liabilities, direct or
contingent, of the Company and its consolidated Subsidiaries as of the
date hereof, including liabilities for taxes, material commitments and
Contingent Obligations required to be disclosed in accordance with GAAP.
(b) Since September 30, 1999 (assuming that this Agreement were
in effect on such date and thereafter), there has been no Material Adverse
Effect.
6.11 Environmental Matters.
The Company conducts in the Ordinary Course of Business a review of the
effect of existing Environmental Laws and existing Environmental Claims on its
business, operations and properties and the business, operations and properties
of its Subsidiaries, and, as a result thereof, the Company has reasonably
concluded that, except as specifically disclosed in Schedule 6.11, such
Environmental Laws and Environmental Claims could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. In that
regard, the on-going operations of the Company and each of its Subsidiaries
comply in all respects with all Environmental Laws, except to the extent that
the failure to so comply could not reasonably be expected to have a Material
Adverse Effect.
6.12 Regulated Entities.
None of the Company, any Person controlling the Company, or any
Subsidiary of the Company is an "Investment Company" within the meaning of the
Investment Company Act of 1940. The Company is not subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code, or any other federal
or state statute or regulation limiting its ability to incur Indebtedness.
6.13 No Burdensome Restrictions; Labor Relations.
(a) Neither the Company nor any of its Subsidiaries is a party to
or bound by any Contractual Obligation, or subject to any restriction in any
Organization Document, or any Requirement of Law, which could reasonably be
expected to have a Material Adverse Effect.
(b) There are no strikes, lockouts or other labor disputes
against the Company or any of its Subsidiaries or, to the best knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries,
and no significant unfair labor practice complaint is pending against the
Company or any of its Subsidiaries or, to the best knowledge of the Company,
threatened against any of
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them before any Governmental Authority which, in the case of any of the
foregoing, could reasonably be expected to have a Material Adverse Effect.
6.14 Solvency.
The Company is Solvent and as of the Closing Date: (a) the Company does
not intend to, and does not believe that it will, incur debts beyond the
Company's ability to pay as such debts mature, and (b) the Company is not about
to engage in a transaction, after giving effect to which the Company's remaining
property would constitute unreasonably small capital for the business conducted
or transactions engaged by the Company.
6.15 Copyrights, Patents, Trademarks and Licenses, etc.
Except as specifically disclosed on Schedule 6.15, the Company and each
of its Subsidiaries own or are licensed or otherwise have the right to use all
of the patents, trademarks, service marks, trade names, copyrights, contractual
franchises, authorizations and other rights that are reasonably necessary for
the operation of their respective businesses, without conflict with the rights
of any other Person, except where such conflict could not reasonably be expected
to have a Material Adverse Effect. To the best knowledge of the Company, no
slogan or other advertising device, product, process, method, substance, part or
other material now employed, or now contemplated to be employed, by the Company
or any Subsidiary of the Company infringes upon any rights held by any other
Person, except where such infringement could not reasonably be expected to have
a Material Adverse Effect. Except as specifically disclosed in Schedule 6.05, no
claim or litigation regarding any of the foregoing is pending or threatened, and
no patent, invention, device, application, principle or any statute, law, rule,
regulation, standard or code is pending or, to the best knowledge of the
Company, proposed, which, in either case, could reasonably be expected to have a
Material Adverse Effect.
6.16 Subsidiaries.
As of the Closing Date, the Company does not have any Subsidiaries other
than those specifically disclosed in part (a) of Schedule 6.16 hereto, which
shows the form of organization and ownership of each such Person and has no
equity investments in any other Person constituting in excess of 5% of the
outstanding equity of such Person other than those specifically disclosed in
part (b) of Schedule 6.16. As of the Closing Date, the Material Subsidiaries of
the Company are as listed in part (c) of Schedule 6.16.
6.17 Insurance.
Except as specifically disclosed in Schedule 6.17, the respective
Properties of the Company and its Subsidiaries are insured with financially
sound and reputable insurance companies not Affiliates of the Company or any of
its Subsidiaries, in such amounts, with such deductibles and covering such risks
as are customarily carried by companies engaged in similar businesses and owning
similar properties in localities where the Company or any of its Subsidiaries
operates.
6.18 Swap Obligations.
Neither the Company nor any of its Subsidiaries has incurred any
outstanding obligations under any Swap Contracts, other than Permitted Swap
Obligations. The Company and each of its Subsidiaries has voluntarily entered
into each Swap Contract to which each such Person is a party based upon each
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such Person's own independent assessment of its consolidated assets, liabilities
and commitments, in each case as an appropriate means of mitigating and managing
risks associated with such matters, and has not relied on any swap counterparty
or any Affiliate of any swap counterparty in determining whether to enter into
any such Swap Contract.
6.19 Full Disclosure.
To the best knowledge after due inquiry of any Responsible Officer, none
of the representations or warranties made by the Company or any of its
Subsidiaries in the Credit Documents as of the date such representations and
warranties are made or deemed made, and none of the statements contained in any
exhibit, report, statement or certificate furnished by or on behalf of the
Company or any of its Subsidiaries in connection with the Credit Documents
(including any offering or disclosure materials delivered by or on behalf of the
Company to the Bank prior to the Closing Date), contains any untrue statement of
a material fact or omits any material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they are made, not misleading as of the time when made or delivered.
It is recognized by the Bank that projections and forecasts provided by or on
behalf of the Company, although reflecting the Company's good faith projections
and forecasts based on methods and data which the Company believes to be
reasonable and accurate, are not to be viewed as facts and that actual results
during the period or periods covered by any such projections and forecasts may
(and are likely to) differ from the projected or forecasted results.
6.20 Year 2000 Compliance.
(a) The Company and each of its Subsidiaries have: (i) undertaken
a detailed inventory, review and assessment of all areas within their respective
businesses and operations that could be adversely affected by their respective
failure to be Year 2000 Compliant on a timely basis; and (ii) developed and are
implementing a detailed plan and timetable which reasonably assures that the
Company and each of its Subsidiaries will be Year 2000 Compliant by December 31,
1999. The products of the Company and its Subsidiaries do not address or utilize
dates in their operation and, accordingly, should not fail due to the year 2000
problem.
(b) The Company and each of its Subsidiaries have made inquiry of
their respective key suppliers and vendors as to whether such Persons will be
Year 2000 Compliant by December 31, 1999 and, on the basis of such inquiry,
reasonably believe that (i) all such Persons will be so compliant or (ii) if any
of such Persons will not be so compliant, any such Person's failure to be Year
2000 Compliant could not reasonably be expected to have a Material Adverse
Effect.
6.21 Good Standing Certificates.
On or before the date that is five Business Days following the date of
this Agreement, the Company shall provide to the Bank a good standing
certificate and tax good standing certificate for the Company as of a recent
date from the Secretary of State (or similar, applicable Governmental Authority)
of the States of Delaware, Georgia, Maryland, Minnesota, New Jersey,
Pennsylvania, Ohio and Texas.
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ARTICLE 7
AFFIRMATIVE COVENANTS
So long as any of the Obligations shall remain unpaid or unsatisfied,
any Letter of Credit (other than a Letter of Credit that has been fully Cash
Collateralized) shall remain outstanding or the Bank shall have any Commitment,
the Company agrees as follows:
7.01 Financial Statements.
The Company shall deliver to the Bank:
(a) as soon as available, but not later than ninety days after
the end of each fiscal year, a copy of the audited consolidated balance sheet of
the Company and its Subsidiaries as at the end of such year and the related
consolidated statements of income or operations, shareholders' equity and cash
flows for such year, setting forth in each case in comparative form the figures
for the previous fiscal year, and accompanied by the opinion of a nationally
recognized independent public accounting firm ("Independent Auditor") which
report shall state that such consolidated financial statements present fairly
the financial position for the periods indicated in conformity with GAAP applied
on a basis consistent with prior years, and together with SEC Form 10K for the
Company. The Independent Auditor's opinion shall not be qualified or limited
because of a restricted or limited examination by the Independent Auditor of any
material portion of the Company's or any of its Subsidiaries' records; and
(b) as soon as available, but not later than forty-five days
after the end of each fiscal quarter of each year (other than the last fiscal
quarter of each fiscal year), a copy for the immediately preceding fiscal
quarter of the unaudited consolidated and consolidating balance sheets of the
Company and its Subsidiaries as of the end of such quarter and the related
consolidated and consolidating statements of income, shareholders' equity and
cash flows for the period commencing on the first day and ending on the last day
of such quarter, and certified by a Responsible Officer as fairly presenting, in
accordance with GAAP (subject to ordinary, good faith year-end audit
adjustments), the financial position and the results of operations of the
Company and its Subsidiaries, together with SEC Form 10Q for the Company.
7.02 Certificates; Other Information.
The Company shall furnish to the Bank:
(a) concurrently with the delivery of the financial statements
referred to in Sections 7.01(a) and (b), a Compliance Certificate;
(b) except for SEC Forms 10K and 10Q to be delivered pursuant to
Sections 7.01(a), promptly, and in any event no later than 10 days after the
same is made available to the Company's shareholders or is filed with the SEC,
copies of all financial statements and reports that the Company sends to its
shareholders, and copies of all financial statements and regular, periodical or
special reports that the Company or any Subsidiary of the Company may make to,
or file with, the SEC;
(c) upon the request from time to time of the Bank, the Swap
Termination Values, together with a description of the method by which such
values were determined, relating to any then-outstanding Swap Contracts to which
the Company or any of its Subsidiaries is party; and
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(d) promptly, such additional information regarding the business,
financial or corporate affairs of the Company or any Subsidiary of the Company
as the Bank may from time to time reasonably request.
7.03 Notices.
(a) The Company shall promptly notify the Bank, promptly after
any Responsible Officer becomes aware, of:
(i) (A) the occurrence of any Default or Event of Default,
and of the occurrence or existence of any event or circumstance that
foreseeably will become a Default or Event of Default; (B) the
commencement of, or any material adverse development in, any litigation
or proceeding affecting the Company or any Subsidiary of the Company in
which the amount of damages claimed and not covered by insurance is
$2,000,000 or more (or its equivalent in another currency or
currencies); (C) the commencement of, or any material adverse
development in, any litigation or proceeding affecting the Company or
any Subsidiary of the Company which the Company would be required to
report to the SEC pursuant to the Exchange Act, and in any event within
ten days after reporting the same to the SEC, provided that the notice
requirement with respect to this clause shall be satisfied if the
Company furnishes the Bank with a copy of any such report made to the
SEC; (D) any labor controversy resulting in or threatening to result in
any strike, work stoppage, boycott, shutdown or other labor disruption
against or involving the Company or any of its Subsidiaries which could
reasonably be expected to have a Material Adverse Effect; (E) if the
Company or any of its Subsidiaries shall at any time or from time to
time execute an agreement for an Asset Sale where the aggregate amount
of consideration to be paid has a value equal to or greater than
$5,000,000, of such proposed Asset Sale (including the amount of the
estimated Net Proceeds to be received by the Company or such Subsidiary
in respect thereof);
(ii) any matter that has resulted or could reasonably
result in a Material Adverse Effect, including: (A) breach or
non-performance of, or any default under, a Contractual Obligation of
the Company or any of its Subsidiaries; (B) any dispute, litigation,
investigation, proceeding or suspension between the Company or any of
its Subsidiaries and any Governmental Authority; (C) the commencement
of, or any material development in, any litigation or proceeding
affecting the Company or any of its Subsidiaries, including any of the
foregoing involving any applicable Environmental Laws or Environmental
Claims; or (D) the imposition of any fine or penalty by any Governmental
Authority against or with respect to any facility or plants of the
Company or any of its Subsidiaries;
(iii) the occurrence of any of the following events
affecting the Company or any ERISA Affiliate (but in no event more than
10 days after such event), and deliver to the Bank a copy of any notice
with respect to such event that is filed with a Governmental Authority
and any notice delivered by a Governmental Authority to the Company or
any ERISA Affiliate with respect to such event:
(A) an ERISA Event;
(B) an increase in the Unfunded Pension Liability
of any Pension Plan, including as a result of the adoption of any
amendment to a Plan subject to
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Section 412 of the Code, that could reasonably be likely to cause
or result in an Event of Default under Section 9.01(h); or
(C) the adoption of, or the commencement of
contributions to, any Plan subject to Section 412 of the Code by
the Company or any ERISA Affiliate other than any such Plan in
effect and receiving contributions as of the Closing Date.
(iv) any Acquisition, or incurring any Contractual
Obligations with respect to any Acquisition, by the Company or any
Subsidiary of the Company, if the aggregate cash and noncash
consideration (including assumption of liabilities and including all
Contingent Obligations) in connection with such Acquisition is (or could
reasonably be expected to become) $10,000,000 or more; and
(v) any Change in Control or any event or circumstance
that is reasonably likely to result in any Change in Control.
(b) The Company shall promptly notify the Bank, not later than
delivery of the next consolidated financial statements of the Company pursuant
to Section 7.01 after the date of any such change, of any change in the
accounting policies or financial reporting practices by the Company or any of
its Subsidiaries, provided that this notice requirement shall be satisfied if
the next consolidated financial statements of the Company delivered to the Bank
following any such change (or the Compliance Certificate delivered pursuant to
Section 7.02) describes any such change in reasonable detail.
(c) Each notice under this Section 7.03 shall be accompanied by a
written statement by a Responsible Officer setting forth details of the
occurrence referred to therein, and stating what action the Company or any of
its affected Subsidiaries proposes to take with respect thereto and at what
time. Each notice under Section 7.03(a)(i) shall describe with particularity any
and all Sections, subsections, clauses or provisions of this Agreement or any
other Credit Document that have been (or foreseeably will be) breached or
violated.
7.04 Preservation of Existence, Rights, etc.
Except as otherwise permitted by Section 8.02, 8.03 or 8.05, the Company
shall, and shall cause each of its Material Subsidiaries to:
(a) preserve and maintain in full force and effect its corporate,
partnership or limited liability company existence, as the case may be, and good
standing under the laws of its state or jurisdiction of incorporation or
organization;
(b) use commercially reasonable efforts to preserve and maintain
in full force and effect all governmental rights, privileges, qualifications,
permits, licenses and franchises necessary or desirable in the normal conduct of
its business, the non-preservation of which could reasonably be expected to have
a Material Adverse Effect; and
(c) use commercially reasonable efforts to preserve or renew and
maintain all of its registered patents, trademarks, trade names and service
marks and other intellectual property assets, the non-preservation or
non-maintenance of which could reasonably be expected to have a Material Adverse
Effect.
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7.05 Maintenance of Property.
The Company shall, and shall cause each of its Subsidiaries to, maintain
and preserve all its Property which is used or useful in its business in good
working order and condition, ordinary wear and tear excepted and make all
necessary repairs thereto and renewals and replacements thereof except where the
failure to do so could not reasonably be expected to have a Material Adverse
Effect. In connection with the foregoing, the Company shall, and shall cause
each of its Subsidiaries to, use a standard of care not less than that typical
in the industry in the operation and maintenance of their respective facilities.
7.06 Insurance.
The Company shall, and shall cause each of its Subsidiaries to,
maintain, with financially sound and reputable independent insurers, insurance
with respect to its Property and business against loss or damage of the kinds
customarily insured against by Persons engaged in the same or similar business,
of such types and in such amounts as are customarily carried under similar
circumstances by such other Persons.
7.07 Payment of Obligations.
The Company shall, and shall cause each of its Subsidiaries to, pay and
discharge as the same shall become due and payable:
(a) all material tax liabilities, assessments and governmental
charges or levies upon it or its properties or assets, unless the same are being
contested in good faith by appropriate proceedings and adequate reserves in
accordance with GAAP are being maintained by the Company or such Subsidiary;
(b) all lawful material claims which, if unpaid, would by law
become a Lien upon its Property, unless the same are being contested in good
faith by appropriate proceedings and adequate reserves in accordance with GAAP
are being maintained by the Company or such Subsidiary.
7.08 Compliance with Laws.
The Company shall, and shall cause each of its Subsidiaries to, comply
in all respects with all Requirements of Law of any Governmental Authority
having jurisdiction over it or its business or properties (including the Federal
Fair Labor Standards Act), unless such noncompliance is being contested in good
faith by appropriate proceedings and adequate reserves in accordance with GAAP
are being maintained by the Company or such Subsidiary with respect thereto, or
such noncompliance, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
7.09 Inspection of Property and Books and Records.
The Company shall, and shall cause each of its Subsidiaries to, maintain
proper books of record and account, in which full, true and correct entries in
conformity with GAAP shall be made of all financial transactions and matters
involving the assets and business of the Company and such Subsidiary. The
Company shall, and shall cause each of its Subsidiaries to, permit
representatives and independent contractors of the Bank to visit and inspect any
of their respective Properties, to examine their respective corporate, financial
and operating records, and make copies thereof or abstracts therefrom, and to
discuss
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their respective affairs, finances and accounts with their respective directors,
officers, and independent public accountants at such reasonable times during
normal business hours and as often as may be reasonably desired, upon reasonable
advance notice to the Company; provided that, when an Event of Default exists,
the Bank may do any of the foregoing at the expense of the Company at any time
during normal business hours and without advance notice; provided further that
the Company and it Subsidiaries will not be required to disclose, permit the
inspection, examination, copying or making of extracts of, or discuss, any
document, any portion thereof, or any information in respect of which and to the
extent that disclosure to the Bank is then prohibited by law or by an agreement
binding on the Company or any of its Subsidiaries entered into by such Person in
good faith and not for the specific purpose of evading the provisions of this
Section or any other provision of this Agreement.
7.10 Environmental Laws.
Except as otherwise specifically disclosed to the Bank in writing prior
to the Closing Date, the Company shall, and shall cause each of its Subsidiaries
to, conduct its operations and keep and maintain its Property in compliance with
all Environmental Laws, except where such noncompliance, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
7.11 Use of Proceeds.
The Company shall use the proceeds of the Loans for working capital and
other general corporate purposes, in each case not in contravention of any
Requirement of Law or of any Credit Document; provided that the Company shall
not directly or indirectly use the proceeds of the Loans for any Acquisition of
any Person if such Acquisition has not been approved by the board of directors
(or other body exercising similar authority) of such Person.
7.12 Year 2000 Compliance.
The Company shall, and shall cause each of its Subsidiaries to, perform
all acts reasonably necessary to ensure that: (a) the Company and each of its
Subsidiaries, and any business in which they may hold a substantial interest,
and (b) all customers, suppliers and vendors that are material to the Company
and each such Subsidiary's business, become Year 2000 Compliant in a timely
manner. Such acts shall include performing a comprehensive review and assessment
of all of the Company's and each such Subsidiary's systems and adopting a
detailed plan, with itemized budget, for the remediation, monitoring and testing
of such systems. The Company shall, immediately upon request, provide to the
Bank such certifications or other evidence of the Company's and each of its
Subsidiaries' compliance with the terms hereof as the Bank may from time to time
require.
7.13 Solvency.
The Company shall at all times be Solvent.
7.14 Internal Controls.
The Company will maintain reasonable internal controls and reporting
systems designed to insure that a Responsible Officer will be promptly informed
of all material financial, operational and compliance matters relevant to
compliance with the provisions of the Credit Documents to which the Company is a
party.
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ARTICLE 8
NEGATIVE COVENANTS
So long as any of the Obligations shall remain unpaid or unsatisfied,
any Letter of Credit (other than a Letter of Credit that has been fully Cash
Collateralized) shall remain outstanding or the Bank shall have any Commitment,
the Company agrees as follows:
8.01 Limitation on Liens.
The Company shall not, and shall not suffer or permit any of its
Subsidiaries to, directly or indirectly, make, create, incur, assume or suffer
to exist any Lien upon or with respect to any part of its property, whether now
owned or hereafter acquired, other than the following ("Permitted Liens"):
(a) any Lien existing on Property of the Company or any of its
Subsidiaries on the Closing Date and set forth on Schedule 8.01(a);
(b) any Lien created under any Credit Document;
(c) Liens for taxes, fees, assessments or other governmental
charges which are not delinquent or remain payable without penalty, or to the
extent that non-payment thereof is permitted by Section 7.07, provided that no
notice of lien has been filed or recorded under the Code;
(d) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the Ordinary Course
of Business which are not delinquent or remain payable without penalty or which
are being contested in good faith and by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale of the Property
subject thereto;
(e) Liens (other than any Lien imposed by ERISA) consisting of
pledges or deposits required in the Ordinary Course of Business in connection
with workers' compensation, unemployment insurance and other social security
legislation;
(f) Liens on the Property of the Company or any of its
Subsidiaries securing (i) the nondelinquent performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, (ii) contingent
obligations on surety and appeal bonds, and (iii) other nondelinquent
obligations of a like nature; in each case, incurred in the Ordinary Course of
Business; provided that all such Liens in the aggregate could not reasonably be
expected to have a Material Adverse Effect;
(g) Liens consisting of judgment or judicial attachment liens,
provided that the enforcement of such Liens is effectively stayed and all such
liens in the aggregate at any time outstanding for the Company and its
Subsidiaries do not exceed $1,000,000;
(h) easements, rights-of-way, restrictions and other similar
encumbrances or title defects affecting real Property incurred in the Ordinary
Course of Business which, in the aggregate, are not substantial in amount, and
which do not in any case materially detract from the value of the Property
subject thereto or interfere with the Ordinary Course of Business of the Company
and its Subsidiaries, taken as a whole;
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(i) Liens on Property of a Subsidiary of the Company existing at
the time such Property (or such Subsidiary) was acquired by the Company or such
Subsidiary of the Company and not incurred as a result of (or in connection with
or in anticipation of) such acquisition; provided that such Liens do not extend
to or cover any Property of the Company or any of its Subsidiaries other than
the Property so acquired or the Property of such Subsidiary so acquired;
(j) purchase money security interests on any Property acquired or
held by the Company or any of its Subsidiaries in the Ordinary Course of
Business, securing Indebtedness incurred or assumed for the purpose of financing
all or any part of the cost of acquiring such Property; provided that (i) any
such Lien attaches to such Property concurrently with or within 20 days after
the acquisition thereof, (ii) such Lien attaches solely to the Property so
acquired in such transaction, (iii) the principal amount of the Indebtedness
secured thereby does not exceed 100% of the cost of such Property plus
reasonable fees and expenses incurred in connection therewith, and (iv) the
principal amount of the Indebtedness secured by any and all such purchase money
security interests shall not at any time exceed, together with Indebtedness
permitted under Section 8.05(c), $5,000,000;
(k) Liens securing Capital Lease Obligations in respect of
capital leases on assets subject to such leases, provided that such capital
leases are otherwise permitted hereunder;
(l) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution; provided that (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Company in excess of those set forth by regulations promulgated by
the FRB, and (ii) such deposit account is not intended by the Company or any of
its Subsidiaries to provide collateral to the depository institution; and
(m) leases and subleases and licenses and sublicenses of Property
of the Company and its Subsidiaries where the Company or a Subsidiary of the
Company is the lessor or licensor (or sublessor or sublicensor) which, in the
aggregate, do not materially interfere with the ordinary conduct of the business
of the Company and its Subsidiaries, taken as a whole, but excluding any
sale-lease transaction;
(n) Liens securing or constituting Indebtedness which is incurred
to refinance Indebtedness which has been secured by a Lien permitted under this
Section 8.01 and which is permitted to be refinanced under Section 8.05;
provided that such Liens do not extend to or cover any Property of the Company
or any of its Subsidiaries not so refinanced;
(o) Liens on insurance policies and the proceeds thereof securing
the financing of premiums owing by the Company or any of its Subsidiaries with
respect thereto, not to exceed $250,000 in the aggregate principal amount
outstanding at any time;
(p) Liens in favor of customs and revenue authorities arising as
a matter of law to secure any payment obligations of the Company and its
Subsidiaries in respect of customs duties in connection with the importation of
goods;
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(q) Liens securing the obligations of the Company or any of its
Subsidiaries under documentary letters of credit permitted to be incurred under
Section 8.05; provided that such Liens shall attach only to the goods covered by
such letters of credit, the corresponding documents and the proceeds thereof;
(r) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of good entered into by the
Company or any of its Subsidiaries in the Ordinary Course of Business; provided
that all such Liens in the aggregate could not reasonably be expected to have a
Material Adverse Effect;
(s) Liens incurred or deposits made in the Ordinary Course of
Business to secure the performance of tenders, statutory obligations, surety,
appeal, reclamation, performance or other similar bonds, leases (including
Landlord's Liens), contracts and other similar bonds incurred in the Ordinary
Course of Business (exclusive of obligations in respect of the payment of or for
borrowed money); provided that all such Liens in the aggregate could not
reasonably be expected to have a Material Adverse Effect;
(t) Liens securing Indebtedness and Contingent Obligations of a
Subsidiary of the Company incurred pursuant to and in compliance with clause (i)
or (ii) of Section 8.05(g); and
(u) Liens on funds and other Property of employees of the Company
or any of its Subsidiaries which funds and Property are held and invested by the
Company for the benefit of such employees for the purpose of deferred
compensation.
8.02 Disposition of Assets.
The Company shall not, and shall not suffer or permit any of its
Subsidiaries to, directly or indirectly, sell, assign, lease, convey, transfer
or otherwise dispose of (whether in one or a series of transactions) any
Property or enter into any agreement (other than an agreement expressly
contingent on obtaining the consent of the Bank thereto) (collectively,
"Transfers") to do any of the foregoing, except:
(a) Transfers of inventory, or used, worn-out or surplus
equipment, all in the Ordinary Course of Business;
(b) the sale of equipment to the extent that such equipment is
exchanged for credit against the purchase price of similar replacement
equipment, or the proceeds of such sale are reasonably promptly applied to the
purchase price of such replacement equipment; and
(c) Transfers of Property for Fair Market Value where the Net
Proceeds thereof do not exceed $1,000,000 in the aggregate on a cumulative basis
in each case in any fiscal year;
(d)(i) Transfers from any Subsidiary of the Company to the
Company, (ii) Transfers from any Subsidiary of the Company to any other
Subsidiary of the Company and (iii) Transfers constituting Investments permitted
by Sections 8.04(j), (m), (n), (o) or (p);
(e) Transfers of equipment to Plamex, S.A., where the net book
value of such equipment does not exceed $5,000,000 in the aggregate on a
cumulative basis for any one fiscal year;
(f) Transfers of existing raw materials, work in process and
finished goods inventory from the Company to PBV; and
(g) non-exclusive licensing (but exclusive as to region) of
technology by the Company to PBV in connection with the research and development
of related technology or the manufacture of inventory by PBV for sale to the
Company and for sale to non-U.S. customers.
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8.03 Consolidations and Mergers.
The Company shall not, and shall not suffer or permit any of its
Subsidiaries to, merge, consolidate with or into any Person, except:
(a) any Subsidiary of the Company may merge with (i) the Company,
provided that the Company shall be the continuing or surviving entity, or (ii)
any one or more Subsidiaries of the Company, provided that, if any such
transaction shall be between a Subsidiary and a Wholly Owned Subsidiary of the
Company, the Wholly Owned Subsidiary of the Company shall be the continuing or
surviving corporation; and
(b) mergers pursuant to Acquisitions permitted by Section 8.04.
8.04 Loans and Investments.
The Company shall not, and shall not suffer or permit any of its
Subsidiaries to, purchase or acquire, or make any commitment therefor, any
Capital Stock or any obligations or other securities of, or any interest in, any
Person, or make or commit to make any Acquisitions, or make or commit to make
any advance, loan, extension of credit or capital contribution to or any other
investment in, or Joint Venture with, any Person, including any Affiliate of the
Company or any of its Subsidiaries (together, "Investments"), except for
(without duplication):
(a) Investments existing on the Closing Date and listed on
Schedule 8.04(a);
(b) Investments in cash and Cash Equivalents and Investments in
operating deposit accounts maintained in the Ordinary Course of Business for
operating fund purposes;
(c) Investments arising from transactions by the Company or any
of its Subsidiaries with customers or suppliers in the Ordinary Course of
Business, including Investments (including debt obligations) received in
connection with the bankruptcy or reorganization of customers and suppliers and
in settlement of delinquent obligations of, and other disputes with, customer or
suppliers arising in the Ordinary Course of Business;
(d) Investments accepted in connection with a Transfer permitted
by and in accordance with the terms of Sections 8.02(c);
(e) Investments consisting of (i) travel advances, employee
relocation loans and other employee loans and advances in the Ordinary Course of
Business, (ii) loans to employees, officers or directors relating to their
purchase of equity securities of the Company or its Subsidiaries or (iii) other
loans to officers and employees approved by the Board of Directors of the
Company, provided that all of the foregoing do not exceed $5,000,000 in the
aggregate at any one time outstanding;
(f) notes receivable of, or prepaid royalties and other credit
extensions to, customers and suppliers in the Ordinary Course of Business so
long as such notes, prepaid royalties or other credit extensions are due within
one year of the date of the acquisition thereof or cover no more than one year
of obligations to such customers or suppliers (as applicable);
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(g) any Acquisition so long as: (i) such Acquisition is
undertaken in accordance with all material applicable Requirements of Law; (ii)
if any Person or business so acquired (the "Acquiree") is subject to Section 12
of the Exchange Act or subject to the requirements of Section 15(d) of the
Exchange Act, the prior, effective written consent of the board of directors or
equivalent governing body of the Acquiree is obtained and delivered to the Bank;
(iii) immediately after giving effect to any such Acquisition, there shall exist
no Default or Event of Default; and (iv) in connection with any Acquisition of
Hello Direct, Inc. or Clear Vox Communications, Inc., such Acquisition is on
substantially the terms disclosed to the Bank in writing on or before November
19, 1999;
(h) Investments constituting Permitted Swap Obligations or
payments or advances under Swap Contracts relating to Permitted Swap
Obligations;
(i) Investments by Foreign Subsidiaries of the Company in the
Ordinary Course of Business or required by local law or regulation;
(j) Investments by the Company in Subsidiaries of the Company in
an aggregate amount for all such Investments not to exceed $15,000,000 at any
time outstanding; provided that, for purposes of calculating such amount (i) the
aggregate amount of (A) all repayments of advances to, dividends paid to, and
Investments made in, and the Fair Market Value of all Property that has been
transferred to, pursuant to a Transfer permitted under Section 8.02, the Company
by all such Subsidiaries and (B) mergers of Subsidiaries with the Company
permitted under Section 8.03(a), shall be subtracted from the amount of such
Investments to the extent the foregoing amounts have not been previously netted
against such Investments and (ii) the aggregate amount of Guaranty Obligations
made pursuant to Section 8.05(m) shall be added to the amount of such
Investments;
(k) Investments made by the Company for the benefit of employees
of the Company or its Subsidiaries for the purposes of deferred compensation;
(l) Investments by the Company in PBV in the form of prepayments
to PBV for inventory to be purchased from PBV in an aggregate cumulative amount
not to exceed $20,000,000;
(m) Investments in the Company by Plantronics UK and Plantronics
Germany, in each case in the form of intercompany loans from such Subsidiaries
to the Company, in an aggregate cumulative amount not to exceed $11,000,000;
(n) Investments by the Company or the Company's Wholly Owned
Subsidiaries in Plantronics UK and Plantronics Germany, in each case in the form
of intercompany loans or capital contributions from the Company or such Wholly
Owned Subsidiaries, as the case may be, in an aggregate cumulative amount not to
exceed $8,000,000;
(o) Investments by the Company in PBV in the form of deferred
payment obligations by PBV for the transfer of title by the Company to PBV of
existing raw materials, work in process and finished goods inventory of the
Company;
(p) Joint Ventures in the Ordinary Course of Business (which
shall include joint development agreements for the development of technology or
products); and
(q) other Investments (excluding Acquisitions) not otherwise
permitted under this Section 8.04 not exceeding an amount equal to $5,000,000
plus 15% times consolidated cumulative net
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income of the Company for the period from and after December 31, 1996 (provided
that, if such cumulative net income is negative in respect of such cumulative
period, such net income shall be deemed to be zero), outstanding at any one
time; provided that, at the time of any such Investment and at the time that the
Company or any of its Subsidiaries incurs any Contractual Obligation with
respect to any such Investment, no Default or Event of Default shall have
occurred and be continuing or result therefrom.
8.05 Limitation on Indebtedness.
The Company shall not, and shall not suffer or permit any of its
Subsidiaries to, create, incur, assume, suffer to exist, or otherwise become or
remain directly or indirectly liable with respect to, any Indebtedness, except
(and without duplication):
(a) Indebtedness incurred pursuant to the Credit Documents;
(b) Indebtedness existing on the Closing Date and set forth on
Schedule 8.05(b);
(c) Indebtedness of Foreign Subsidiaries of the Company incurred
for working capital purposes; provided that the aggregate outstanding principal
amount of Indebtedness incurred under this subsection (c) at the time of the
incurrence thereof shall not at any time exceed the lesser of (i) $5,000,000 or
(ii) the sum of (A) 85% of the net book value of the accounts receivable of the
Foreign Subsidiaries of the Company and (B) 50% of the net book value of the
inventory of the Foreign Subsidiaries of the Company, in both cases calculated
in accordance with GAAP at the time of each incurrence;
(d) Indebtedness of the Company and its Subsidiaries if, at the
time of and after giving pro forma effect to the incurrence of such Indebtedness
(including the application of the proceeds thereof), the Consolidated Fixed
Charge Coverage Ratio is equal to or greater than 3:00 to 1:00; provided that
(i) in no event may the aggregate principal amount of Indebtedness incurred
under this subsection (e) by Subsidiaries of the Company exceed $2,500,000 at
any time outstanding and (ii) Indebtedness incurred by the Company under this
subsection (e) shall not provide for any scheduled principal payment, mandatory
redemption or amortization or sinking fund requirement prior to November 30,
2000;
(e)(i) Purchase Money Indebtedness of the Company and its
Subsidiaries and (ii) Indebtedness of the Company represented by trade letters
of credit incurred in the Ordinary Course of Business, which are to be repaid in
full not more than one year after which such Indebtedness is originally
incurred, to finance the purchase of goods by the Company or a Subsidiary of the
Company such that the aggregate principal amount at any time outstanding under
this subsection (f) does not exceed $5,000,000;
(f) Capital Lease Obligations of the Company and its Subsidiaries
in an aggregate principal amount (determined in accordance with GAAP) not to
exceed $2,500,00 at any time outstanding under this subsection (g);
(g)(i) Indebtedness of a Domestic Subsidiary of the Company owed
to the Company or any of its Wholly Owned Domestic Subsidiaries so long as, in
the case of Indebtedness owed by a Subsidiary of the Company to the Company,
such Indebtedness or Contingent Obligation is not subordinated in right of
payment to any other Indebtedness of such Subsidiary, (ii) Indebtedness of a
Subsidiary of the Company owed to the Company or a Subsidiary of the Company
(other than
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Indebtedness governed by the immediately preceding clause (i) incurred pursuant
to and in compliance with Section 8.04, and (iii) Subordinated Indebtedness owed
to a Subsidiary of the Company; provided that in the case of the sale or
disposition of the Capital Stock of any Subsidiary of the Company that is owed
Indebtedness of the Company or another Subsidiary of the Company referred to in
this subsection (h) such that is ceases to be a Subsidiary of the Company, such
Indebtedness shall be deemed to have been incurred again and subject to this
Section 8.05;
(h) any replacements, renewals, refinancing and extensions of
outstanding Indebtedness permitted by subsections (b), (c), (d) or (e) of this
Section 8.05, provided that (i) any such replacement, renewal, refinancing or
extension of Indebtedness shall not be incurred by a Subsidiary of the Company
(except in the case of a replacement, renewal, refinancing or extension of
Indebtedness of a Subsidiary of the Company referred to in subsection (c) of
this Section 8.05) and (ii) any such replacement, renewal, refinancing or
extension (A) shall not provide for any mandatory redemption, amortization or
sinking fund requirement in an amount greater than or at a time prior to the
amounts and times specified in the Indebtedness being replaced, renewed,
refinanced or extended and (B) shall not exceed the sum of (1) the principal
amount (plus accrued interest and an amount equal to the required prepayment
premium, if any) of the Indebtedness being replaced, renewed, refinanced or
extended and (2) the reasonable fees and expenses of the Company or its
Subsidiaries, as the case may be, incurred in connection with such replacement,
renewal, refinancing or extension;
(i) Permitted Swap Obligations of the Company or any Subsidiary
of the Company; provided that (i) any Indebtedness to which the underlying Swap
Contract relates bears interest at fluctuating interest rate and is otherwise
permitted by this Section 8.05, (ii) the notional principal amount of any such
underlying Swap Contract does not exceed the principal amount of the
Indebtedness to which such underlying Swap Contract relates and (iii) the
underlying Swap Contracts do not increase the Indebtedness of the Company and
its Subsidiaries in the aggregate other than as a result of fluctuations in
foreign currency exchange rates;
(j) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient funds in
the Ordinary Course of Business, provided that such Indebtedness is extinguished
within three Business Days of its incurrence;
(k)(i) Guaranty Obligations of the Company with respect to
Indebtedness of Foreign Subsidiaries of the Company permitted under Section
8.05(c) and (ii) Guaranty Obligations of any Subsidiary of the Company with
respect to Indebtedness of the Company permitted under this Section 8.05;
(l) endorsements for collection or deposit in the Ordinary Course
of Business;
(m) Guaranty Obligations of the Company with respect to
Indebtedness of any Subsidiary of the Company to the extent permitted by Section
8.04(j);
(n) Indebtedness of PBV to the Company incurred in connection
with Investments permitted under Section 8.04(l) or 8.04(o);
(o) Indebtedness of (i) the Company to Plantronics UK and
Plantronics Germany incurred in connection with Investments permitted under
Section 8.04(m), (ii) Plantronics UK in
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connection with Investments permitted under Section 8.04(n) and (iii)
Plantronics Germany in connection with Investments permitted under Section
8.04(n); and
(p) in addition to the items referred to in subsections (a)
through (p) of this Section 8.05, Indebtedness of the Company and its
Subsidiaries in an aggregate principal amount not to exceed $10,000,000 at any
one time outstanding; provided that in no event shall the aggregate amount of
Indebtedness and Contingent Obligations incurred by Subsidiaries under this
subsection (q) exceed $2,000,000 at any one time outstanding.
8.06 Transactions with Affiliates.
The Company shall not, and shall not suffer or permit any of its
Subsidiaries to, enter into any transaction with any Affiliate of the Company or
any of its Subsidiaries, except upon fair and reasonable terms no less favorable
to the Company or such Subsidiary than would obtain in a comparable arm's-length
transaction with a Person not an Affiliate of the Company or such Subsidiary.
8.07 Use of Proceeds.
The Company shall not, and shall not suffer or permit any of its
Subsidiaries to, use any portion of the proceeds of any Loan or Letter of
Credit, directly or indirectly, (a) to purchase or carry Margin Stock, (b) to
repay or otherwise refinance indebtedness of the Company or others incurred to
purchase or carry Margin Stock, (c) to extend credit for the purpose of
purchasing or carrying any Margin Stock or (d) to acquire any security in any
transaction that is subject to Section 13 or 14 of the Exchange Act.
8.08 Operating Lease Obligations.
The Company shall not, and shall not suffer or permit any of its
Subsidiaries to, create or suffer to exist any obligations under any operating
leases, except for (and without duplication):
(a) operating leases of the Company and its Subsidiaries in
existence on the Closing Date and any renewal, extension or refinancing thereof;
(b) operating leases entered into by the Company or any of its
Subsidiaries after the Closing Date; provided that, immediately prior to giving
effect to any such operating lease, the Property the subject of such operating
lease was sold by the Company or any such Subsidiary to the lessor pursuant to a
transaction otherwise permitted under Section 8.02; and
(c) other operating leases entered into by the Company or any of
its Subsidiaries after the Closing Date in the Ordinary Course of Business;
provided that the aggregate annual rental payments for all such operating leases
shall not exceed $3,000,000 for any fiscal year.
8.09 Restricted Payments.
The Company shall not, and shall not suffer or permit any of its
Subsidiaries (other than its Wholly Owned Subsidiaries) to, declare or make any
dividend payment or other distribution of assets, properties, cash, rights,
obligations or securities (other than to the Company or to any Wholly Owned
Subsidiary of the Company) on account of any shares of any class of its Capital
Stock, or purchase, redeem or otherwise acquire for value any shares of its
Capital Stock or any warrants, rights or options to acquire such shares, now or
hereafter outstanding; except that the Company may:
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(a) declare and make dividend payments or other distributions
payable solely in its common stock;
(b) purchase, redeem or otherwise acquire shares of its common
stock or warrants or options to acquire any such shares with the proceeds
received from the substantially concurrent issue of new shares of its common
stock; and
(c)(i) declare or pay cash dividends to its common stock
shareholders or repurchase or redeem its common stock in an aggregate amount not
to exceed, as of any date of declaration, payment, repurchase or redemption, 50%
of the amount of the cumulative consolidated net income of the Company and its
Subsidiaries (net of cumulative losses) for the period from December 31, 1996
through such date of declaration, payment, repurchase or redemption; and (ii) in
addition to any repurchases or redemptions permitted pursuant to the immediately
preceding clause (i), repurchase or redeem its common stock following the
Closing Date in an aggregate amount not to exceed, as of any date of repurchase
or redemption, $70,000,000;
(d) purchase, redeem or otherwise acquire shares of its common
stock pursuant to any agreement entered into between it, or any Subsidiary of
the Company, and any officer, director employee or consultant to the Company or
any of its Subsidiaries, entered into in the Ordinary Course of Business, in
which the Company is obligated or has the option to repurchase from such
officer, director, employee or consultant shares of common stock of the Company
upon such Person's termination of employment or services with the Company or any
such Subsidiary, not in excess of $250,000 in the aggregate; and
(e) repay, convert, exchange or redeem any Indebtedness permitted
under Section 8.05 which by its terms is convertible or exchangeable, or
constitutes the right to purchase any shares of any class of Capital Stock.
8.10 ERISA.
The Company shall not, and shall not suffer or permit any of its ERISA
Affiliates to: (a) engage in a prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan; (b) cause or permit any
Plan which is qualified under subsection 401(a) of the Code to lose such
qualification; or (c) fail to make all required contributions to any Plan
subject to subsection 412 of the Code; but only to the extent that any such act
or failure to act, separately or together with all other such acts or failures
to act, in any of the foregoing subsections (a), (b) or (c) has resulted or
could reasonably expected to result in liability of the Company in an aggregate
amount in excess of $1,000,000; or (d) engage in a transaction that could be
subject to Section 4069 or 4212(c) of ERISA.
8.11 Net Funded Debt to EBITDA Ratio.
The Company shall not permit as of the last day of any fiscal quarter
the Net Funded Debt to EBITDA Ratio to be greater than 2:00 to 1:00.
8.12 Interest Coverage Ratio.
The Company shall not permit the Interest Coverage Ratio as of the last
day of any fiscal quarter to be less than 3:00 to 1:00.
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8.13 Change in Business.
The Company shall not, and shall not suffer or permit any of its
subsidiaries to, engage in any material line of business substantially different
from those lines of business carried on by the Company and its Subsidiaries on
the date hereof, except businesses contemplated by it has have been disclosed to
the Bank in writing prior to the date hereof.
8.14 Accounting Changes.
The Company shall not, and shall not suffer or permit any of its
Subsidiaries to, make any significant change in accounting treatment or
reporting practices, except as required or permitted by GAAP, or change the
fiscal year of the Company or any of its consolidated Subsidiaries, provided
that the Company may change its fiscal year and the fiscal year of its
consolidated Subsidiaries to a calendar year so long as it obtains any required
consents of Governmental Authorities in connection therewith. Subsidiaries.
ARTICLE 9
EVENTS OF DEFAULT
9.01 Event of Default.
Any of the following shall constitute an event of default hereunder
("Event of Default"):
(a) Non-Payment. The Company fails to pay: (i) when and as
required to be paid herein, any amount of principal of any Loan or any L/C
Advance; (ii) within three days after the same becomes due, any interest, fee or
any other amount payable hereunder or under any other Credit Document; or (iii)
any other amount payable hereunder or pursuant to any other Company Document
after the same shall become due within thirty days of notice by the Bank to such
effect; or
(b) Representation or Warranty. Any representation or warranty by
the Company or any of its Subsidiaries made or deemed made herein or in any
other Credit Document, or which is contained in any certificate, document or
financial or other statement by the Company or any of its Subsidiaries, or any
Responsible Officer, furnished at any time under this Agreement or in or under
any other Credit Document, is incorrect in any material respect on or as of the
date made or deemed made; or
(c) Specific Defaults. The Company fails to perform or observe
any term, covenant or agreement contained in Sections 7.01, 7.02, 7.03, 7.11,
7.12 or 7.13 or in Article 8; or
(d) Other Defaults. The Company fails to perform or observe any
other term or covenant contained in this Agreement or any other Credit Document
and such default shall continue unremedied for a period of thirty days after the
earlier of (i) the date upon which a Responsible Officer knew or reasonably
should have known of such failure or (ii) the date upon which written notice
thereof is given to the Company by the Bank; or
(e) Cross-Default. The Company or any of its Subsidiaries (i)
fails to make any payment in respect of any Indebtedness, having an aggregate
principal amount (including undrawn committed or available amounts and including
amounts owing to all creditors under any combined or
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syndicated credit arrangement) of more than $5,000,000, when due (whether by
scheduled maturity, required prepayment, acceleration, demand, or otherwise); or
(ii) fails to perform or observe any other condition or covenant, or any other
event shall occur or condition exist, under any agreement or instrument relating
to any such Indebtedness, and such failure continues after the applicable grace
or notice period, if any, specified in the relevant document on the date of such
failure if the effect of such failure, event or condition is to cause, or to
permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Indebtedness (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause such Indebtedness to
be declared to be due and payable prior to its stated maturity (or Indebtedness
consisting of any Contingent Obligation to become payable or cash collateral in
respect thereof to be demanded), and such failure shall not have been cured to
the satisfaction of the Bank for a period of fifteen days after the earlier of
(A) the date on which a Responsible Officer know of such default or (B) the date
upon which written notice thereof is given to the Company by the Bank; or (iii)
any such Indebtedness shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled prepayment) or cash collateralized,
prior to the stated maturity thereof; or
(f) Insolvency: Voluntary Proceedings. The Company or any of its
Material Subsidiaries (i) ceases or fails to be Solvent, or generally fails to
pay, or admits in writing its inability to pay, its debts as they become due,
subject to applicable grace periods, if any, whether at stated maturity or
otherwise; (ii) voluntarily ceases to conduct its business in the ordinary
course; (iii) commences any Insolvency Proceeding with respect to itself; or
(iv) takes any formal action through its Board of Directors or through a
Responsible Officer or comparable officer of such Material Subsidiary to
effectuate or authorize any of the foregoing; or
(g) Insolvency: Involuntary Proceedings. (i) Any involuntary
Insolvency Proceeding is commenced or filed against the Company or any Material
Subsidiary of the Company, or any writ, judgment, warrant of attachment,
execution or similar process, is issued or levied against a substantial part of
the Company's or any of its Material Subsidiaries' Properties, and any such
proceeding or petition shall not be dismissed, or such writ, judgment, warrant
of attachment, execution or similar process shall not be released, vacated or
fully bonded within sixty days after commencement, filing or levy; (ii) the
Company or any of its Material Subsidiaries admits the material allegations of a
petition against it in any Insolvency Proceeding, or an order for relief (or
similar order under non-U.S. law) is ordered in any Insolvency Proceeding; or
(iii) the Company or any of its Material Subsidiaries acquiesces in the
appointment of a receiver, trustee, custodian, conservator, liquidator,
mortgagee in possession (or agent therefor), or other similar Person for itself
or a substantial portion of its property or business; or
(h) ERISA. (i) An ERISA Event shall occur with respect to a
Pension Plan or Multiemployer Plan which has resulted or could reasonably be
expected to result in liability of the Company under Title IV of ERISA to the
Pension Plan, Multiemployer Plan or the PBGC; (ii) any Unfunded Pension
Liability with respect to any or all Pension Plans shall exist; or (iii) the
Company or any ERISA Affiliate shall fail to pay when due, after the expiration
of any applicable grace period, any installment payment with respect to its
withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan; but
only to the extent that any of the foregoing, separately or in the aggregate,
has or could reasonably be expected to have a Material Adverse Effect; or
(i) Monetary Judgments. One or more non-interlocutory judgments,
non-interlocutory orders, decrees or arbitration awards is entered against the
Company or any of its Material Subsidiaries involving in the aggregate a
liability (to the extent not covered by independent third-party insurance as to
which the insurer does not dispute coverage) as to any single or related series
of transactions, incidents or
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conditions, of $1,000,000 or more, and the same shall remain unsatisfied,
unvacated and unstayed pending appeal for a period of thirty consecutive days
after the entry thereof; or
(j) Non-Monetary Judgments. Any non-monetary judgment, order or
decree is entered against the Company or any of its Material Subsidiaries which
does or could reasonably be expected to have a Material Adverse Effect, and
there shall be any period of thirty consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
(k) Invalidity of Credit Documents. Any of the Credit Documents
after delivery thereof shall for any reason by revoked or invalidated or
otherwise case to be in full force and effect, or the Company shall contest in
any manner the validity or enforceability thereof, or the Company shall deny
that it has any further liability or obligation thereunder; or
(l) Material Adverse Effect. There occurs a Material Adverse
Effect.
9.02 Remedies.
If any Event of Default occurs, the Bank may:
(a) declare the Commitment to be terminated, whereupon the
Commitment shall automatically be terminated;
(b) declare the unpaid principal amount of all outstanding Loans
and L/C Advances, all interest accrued and unpaid thereon and all other
Obligations to be immediately due and payable, whereupon such amount with
respect to the Loans and the L/C Advances, all such accrued interest and all
such other Obligations shall become and be immediately due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Company;
(c) demand that the Company Cash Collateralize the L/C
Obligations to the extent of the maximum aggregate amount that is or at any time
thereafter may become available for drawing under any outstanding Letters of
Credit (whether or not any beneficiary shall have presented, or shall be
entitled at such time to present, the drafts or other documents required to draw
under such Letters of Credit); and
(d)(i) notwithstanding anything to the contrary contained herein,
without the consent of the Company, revoke all rights otherwise granted to the
Company under Article 8 and (ii) exercise on behalf of itself and any
Indemnified Person all rights and remedies available under the Credit Documents
or applicable law;
provided that, upon the occurrence of any event specified in subsection (f) or
(g) of Section 9.01 (in the case of clause (i) of subsection (g) upon the
expiration of the sixty day period mentioned therein), the Commitment, and the
obligation of the Bank to make Loans or L/C Advances and to Issue, amend or
renew Letters of Credit, shall automatically terminate and the unpaid principal
amount of all outstanding Loans and L/C Advances, all interest accrued and
unpaid thereon and all other Obligations shall become and be immediately due and
payable without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Company.
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9.03 Rights Not Exclusive.
The rights provided for in this Agreement and the other Credit Documents
are cumulative and are not exclusive of any other rights, powers, privileges or
remedies provided by law or in equity, or under any other instrument, document
or agreement now existing or hereafter arising.
ARTICLE 10
GENERAL PROVISIONS
10.01 Amendments and Waivers.
Subject to Section 9.02, no amendment or waiver of any provision of this
Agreement or any other Credit Document, and no consent with respect to any
departure by the Company or any of its Subsidiaries therefrom, shall be
effective unless the same shall be in writing and signed by the Bank and the
Company, and then any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. The Bank and the
Borrower hereby agree that: (a) following the Closing Date, the Bank and the
Borrower will negotiate in good faith to make adjustments to the terms and
provisions contained herein in order to reflect the financial condition of the
Borrower as of the Closing Date and to reflect the increase of the dollar amount
of the credit facility provided under the Existing Facility to the dollar amount
of the Commitment as in effect on the Closing Date; and (b) any such adjustments
shall be (i) in form and substance (including pursuant to documentation)
mutually acceptable to the Bank and the Borrower and (ii) entered into as soon
as is reasonably practicable following the Closing Date.
10.02 Notices.
(a) All notices, requests, consents, approvals, waivers and other
communications shall be in writing (including, unless the context expressly
otherwise provides, by facsimile transmission, provided that any matter
transmitted by the Company to the Bank by facsimile (i) shall be immediately
confirmed by a telephone call to the recipient at the number specified on
Schedule 10.02, and (ii) shall be followed promptly by delivery of a hard copy
original thereof) and mailed, faxed or delivered, to the address or facsimile
number specified for notices on Schedule 10.02; or, as directed to the Company
or the Bank, to such other address as shall be designated by such party in a
written notice to the other.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that
notices to the Bank pursuant to Article 2 shall not be effective until actually
received by the Bank.
(c) Any agreement of the Bank herein to receive certain notices
by telephone or facsimile is solely for the convenience and at the request of
the Company. The Bank shall be entitled to rely on the authority of any Person
purporting to be a Person authorized by the Company to give such notice and the
Bank shall not have any liability to the Company or any other Person on account
of any action taken or not taken by the Bank in reliance upon such telephonic or
facsimile notice. The obligation of the Company to repay the Obligations shall
not be affected in any way or to any extent by any failure by the Bank to
receive written confirmation of any telephonic or facsimile notice or the
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receipt by the Bank of a confirmation which is at variance with the terms
understood by the Bank to be contained in the telephonic or facsimile notice.
10.03 No Waiver; Cumulative Remedies.
No failure to exercise and no delay in exercising, on the part of the
Bank, any right, remedy, power or privilege hereunder, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege.
10.04 Costs and Expenses.
The Company shall:
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse the Bank within five Business Days after demand
for all costs and expenses incurred by the Bank in connection with the
development, preparation, delivery, administration and execution of, and any
amendment, supplement, waiver or modification to (in each case, whether or not
consummated), this Agreement, any Credit Document and any other documents
prepared in connection herewith or therewith, and the consummation of the
transactions contemplated hereby and thereby, including reasonable Attorney
Costs incurred by the Bank with respect thereto; provided that, if the Closing
Date occurs as provided in Section 5.01, then the actual Attorney Costs to be
paid by the Company in connection with the development, preparation, execution
and delivery of this Agreement and the other Credit Documents to be executed on
or before the Closing Date shall be limited to $5,000; and
(b) pay or reimburse the Bank within five Business Days after
demand for all costs and expenses (including Attorney Costs) incurred by it in
connection with the enforcement, attempted enforcement, or preservation of any
rights or remedies under this Agreement or any other Credit Document during the
existence of an Event of Default or after acceleration of the Loans (including
in connection with any "workout" or restructuring regarding the Loans, and
including in any Insolvency Proceeding or appellate proceeding).
10.05 Indemnity.
(a) General Indemnity. Whether or not the transactions
contemplated hereby are consummated, the Company agrees to indemnify, defend and
hold the Bank and each of its officers, directors, employees, counsel, agents
and attorneys-in-fact (each, an "Indemnified Person") harmless from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses and disbursements (including Attorney
Costs) of any kind or nature whatsoever which may at any time (including at any
time following repayment of the Loans) be imposed on, incurred by or asserted
against any such Person in any way relating to or arising out of this Agreement
or any document contemplated by or referred to herein, or the transactions
contemplated hereby, or any action taken or omitted by any such Person under or
in connection with any of the foregoing, including with respect to any
investigation, litigation or proceeding (including any Insolvency Proceeding or
appellate proceeding) related to or arising out of this Agreement or the Loans
or the use of the proceeds thereof, whether or not any Indemnified Person is a
party thereto (all the foregoing, collectively, the "Indemnified Liabilities");
provided that the Company shall have no obligation hereunder to any Indemnified
Person with respect to Indemnified Liabilities resulting solely from the gross
negligence or
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willful misconduct of such Indemnified Person. The agreements in this Section
shall survive payment of all other Obligations.
(b) Environmental Indemnity.
(i) The Company hereby agrees to indemnify, defend and
hold harmless each Indemnified Person, from and against any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses or disbursements (including
Attorney Costs and the allocated cost of internal environmental audit or
review services), which may be incurred by or asserted against such
Indemnified Person in connection with or arising out of any pending or
threatened investigation, litigation or proceeding, or any action taken
by any Person, with respect to any Environmental Claim arising out of or
related to any Property of the Company or any of its Subsidiaries. No
action taken by legal counsel chosen by the Bank in defending against
any such investigation, litigation or proceeding or requested remedial,
removal or response action shall vitiate or any way impair the Company's
obligation and duty hereunder to indemnify and hold harmless all
Indemnified Persons.
(ii) In no event shall any site visit, observation, or
testing by the Bank be deemed a representation or warranty that
Hazardous Materials are or are not present in, on, or under the site, or
that there has been or shall be compliance with any Environmental Law.
Neither the Company nor any other Person is entitled to rely on any site
visit, observation, or testing by the Bank. The Bank does not owe any
duty of care to protect the Company or any other Person against, or to
inform the Company or any other Person of, any Hazardous Materials or
any other adverse condition affecting any site or Property. The Bank
shall not be obligated to disclose to the Company or any other Person
any report or findings made as a result of, or in connection with, any
site visit, observation, or testing by the Bank.
(c) Survival; Defense. The obligations in this Section 10.05
shall survive payment of all other Obligations. At the election of any
Indemnified Person, the Company shall defend such Indemnified Person using legal
counsel satisfactory to such Indemnified Person in such Person's sole
discretion, at the sole cost and expense of the Company.
10.06 Payments Set Aside.
To the extent that the Company makes a payment to the Bank, or the Bank
exercises its right of set-off, and such payment or the proceeds of such set-off
or any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required (including pursuant to any settlement agreed
to by the Bank in its sole discretion) to be repaid to a trustee, receiver or
any other party, in connection with any Insolvency Proceeding or otherwise,
then, to the extent of such recovery, the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such set-off had not occurred.
10.07 Successors and Assigns.
The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
except that the Company may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of the Bank
(which consent may be withheld for any reason).
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10.08 Assignments, Participations, etc.
(a) The Bank may at any time assign and delegate to one or more
Eligible Assignees (each an "Assignee") all or any part of the Loans, the L/C
Obligations, the Commitment and the other rights and obligations of the Bank
hereunder, in a minimum amount of $5,000,000; provided that the Company may
continue to deal solely and directly with the Bank in connection with the
interest so assigned to an Assignee until written notice of such assignment,
together with payment instructions, addresses and related information with
respect to the Assignee, shall have been given to the Company by the Bank and
the Assignee.
(b) The Bank may at any time sell to one or more commercial banks
or other Persons not Affiliates of the Company or any of its Subsidiaries (a
"Participant") participating interests in any Loans, L/C Obligations, the
Commitment of the Bank and the other interests of the Bank hereunder and under
the other Credit Documents; provided that the Bank shall not transfer or grant
any participating interest under which the Participant has rights to approve any
amendment to, or any consent or waiver with respect to, this Agreement or any
other Credit Document, except to the extent such amendment, consent or waiver
would (i) increase or extend the Commitment or subject to the Bank to any
additional obligations; (ii) postpone or delay any date fixed for any payment of
principal, interest, fees or other amounts due under any Credit Document; (iii)
reduce the principal of, or the rate of interest specified herein on any Loan or
L/C Advance or of any fees or other amounts payable under any Credit Document.
In the case of any such participation, the Participant shall not have any rights
under this Agreement, or any of the other Credit Documents, and all amounts
payable by the Company hereunder shall be determined as if the Bank had not sold
such participation, except that, if amounts outstanding under this Agreement are
due and unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set-off in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as the Bank under this
Agreement. The Company shall not be required to incur any expense in connection
with any such participation.
(c) Notwithstanding any other provision in this Agreement, the
Bank may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement and the Note held by
it in favor of any Federal Reserve Bank in accordance with Regulation A of the
FRB or U.S. Treasury Regulation 31 CFR Section 203.14, and such Federal Reserve
Bank may enforce such pledge or security interest in any manner permitted under
applicable law.
10.09 Confidentiality.
The Bank agrees, and agrees to cause its Affiliates to, take normal and
reasonable precautions and exercise due care to maintain the confidentiality of
all information identified as "confidential" or "secret" by the Company and
provided to it by the Company or any of its Subsidiaries under this Agreement or
any other Credit Document, and neither the Bank nor any of its Affiliates shall
use any such information other than in connection with or in enforcement of this
Agreement and the other Credit Documents or in connection with other business
now or hereafter existing or contemplated with the Company or any of its
Subsidiaries; except to the extent such information (i) was or becomes generally
available to the public other than as a result of disclosure by the Bank, or
(ii) was or becomes available on a non-confidential basis from a source other
than the Company or its Subsidiaries, so long as such source is not bound by a
confidentiality agreement with the Company or any of its Subsidiaries known to
the Bank; provided that the Bank may disclose such information (A) at the
request or pursuant to any requirement of any Governmental Authority to which
the Bank is subject or in connection with an
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examination of the Bank by any such authority; (B) pursuant to subpoena or other
court process; (C) when required to do so in accordance with the provisions of
any applicable Requirement of Law; (D) to the extent reasonably required in
connection with any litigation or proceeding to which the Bank or any of its
Affiliates may be party; (E) to the extent reasonably required in connection
with the exercise of any remedy hereunder or under any other Credit Document;
(F) to the Bank's independent auditors and other professional advisors; (G) to
any Participant or Assignee, actual or potential, provided that such Person
agrees in writing to keep such information confidential to the same extent
required of the Bank hereunder; (H) as to the Bank or any of its Affiliates, as
expressly permitted under the terms of any other document or agreement regarding
confidentiality to which the Company or any of its Subsidiaries is a party or is
deemed a party with the Bank or the Bank's Affiliates; and (I) to the Bank's
Affiliates.
10.10 Set-off.
In addition to any rights and remedies of the Bank provided hereunder or
at law, if an Event of Default exists or the Obligations have been accelerated,
the Bank is authorized at any time and from time to time, without prior notice
to the Company, any such notice being waived by the Company to the fullest
extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held by, and other
indebtedness at any time owing by, the Bank to or for the credit or the account
of the Company against any and all Obligations now or hereafter existing,
irrespective of whether or not the Bank shall have made demand under this
Agreement or any Credit Document and although such Obligations may be contingent
or unmatured. The Bank agrees to notify promptly the Company after any such
set-off and application made by the Bank, provided that the failure to give such
notice shall not affect the validity of such set-off and application.
10.11 Counterparts.
This Agreement may be executed in any number of separate counterparts,
each of which, when so executed, shall be deemed an original, and all of said
counterparts taken together shall be deemed to constitute but one and the same
instrument.
10.12 Severability.
The illegality or unenforceability of any provision of this Agreement or
any instrument or agreement required hereunder shall not in any way affect or
impair the legality or enforceability of the remaining provisions of this
Agreement or any instrument or agreement required hereunder.
10.13 No Third Parties Benefited.
This Agreement is made and entered into for the sole protection and
legal benefit of the Company, the Bank and the Indemnified Persons, and their
permitted successors and assigns, and no other Person shall be a direct or
indirect legal beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement or any of the other Credit Documents.
10.14 Governing Law; Jurisdiction.
(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAW OF THE STATE OF CALIFORNIA,
PROVIDED THAT THE BANK SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
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(b) SUBJECT TO SECTION 10.15: (i) ANY LEGAL ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT
SOLELY IN THE COURTS OF THE STATE OF CALIFORNIA OR OF THE UNITED STATES FOR THE
NORTHERN DISTRICT OF CALIFORNIA, AND, BY EXECUTION AND DELIVERY HEREOF, EACH OF
THE COMPANY AND THE BANK CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO
THE JURISDICTION OF THOSE COURTS; (ii) EACH OF THE COMPANY AND THE BANK
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. EACH OF THE COMPANY AND THE
BANK WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH
MAY BE MADE BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW.
10.15 Arbitration.
(a) Upon the demand of any party, any Dispute shall be resolved
by binding arbitration (except as set forth in (e) below) in accordance with the
terms of this Agreement. A "Dispute" means any action, dispute, claim or
controversy of any kind, whether in contract or tort, statutory or common law,
legal or equitable, now existing or hereafter arising under or in connection
with, or in any way pertaining to, any of the Credit Documents, or any past,
present or future extensions of credit and other activities, transactions or
obligations of any kind related directly or indirectly to any of the Credit
Documents, including any of the foregoing arising in connection with the
exercise of any self-help, ancillary or other remedies pursuant to any of the
Credit Documents. Any party may by summary proceedings bring an action in court
to compel arbitration of a Dispute. Any party who fails or refuses to submit to
arbitration following a lawful demand by any other party shall bear all costs
and expenses incurred by such other party in compelling arbitration of any
Dispute.
(b) Arbitration proceedings shall be administered by the American
Arbitration Association ("AAA") or such other administrator as the parties shall
mutually agree upon in accordance with the AAA Commercial Arbitration Rules. All
Disputes submitted to arbitration shall be resolved in accordance with the
Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any
conflicting choice of law provision in any of the Credit Documents. The
arbitration shall be conducted at a location in California selected by the AAA
or other administrator. If there is any inconsistency between the terms hereof
and any such rules, the terms and procedures set forth herein shall control. All
statutes of limitation applicable to any Dispute shall apply to any arbitration
proceeding. All discovery activities shall be expressly limited to matters
directly relevant to the Dispute being arbitrated. Judgment upon any award
rendered in an arbitration may be entered in any court having jurisdiction;
provided that nothing contained herein shall be deemed to be a waiver by any
party that is a bank of the protections afforded to it under 12 U.S.C. Section
91 or any similar applicable state law.
(c) No provision hereof shall limit the right of any party to
exercise self-help remedies such as setoff, foreclosure against or sale of any
real or personal property collateral or security, or to obtain provisional or
ancillary remedies, including injunctive relief, sequestration, attachment,
garnishment or the appointment of a receiver, from a court of competent
jurisdiction before, after or during the pendency of any arbitration or other
proceeding. The exercise of any such remedy shall not waive the right of any
party to compel arbitration or reference hereunder.
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(d) Arbitrators must be active members of the California State
Bar or retired judges of the state or federal judiciary of California, with
expertise in the substantive laws applicable to the subject matter of the
Dispute. Arbitrators are empowered to resolve Disputes by summary rulings in
response to motions filed prior to the final arbitration hearing. Arbitrators
(i) shall resolve all Disputes in accordance with the substantive law of the
state of California, (ii) may grant any remedy or relief that a court of the
state of California could order or grant within the scope hereof and such
ancillary relief as is necessary to make effective any award, and (iii) shall
have the power to award recovery of all costs and fees, to impose sanctions and
to take such other actions as they deem necessary to the same extent a judge
could pursuant to the Federal Rules of Civil Procedure, the California Rules of
Civil Procedure or other applicable law. Any Dispute in which the amount in
controversy is $5,000,000 or less shall be decided by a single arbitrator who
shall not render an award of greater than $5,000,000 (including damages, costs,
fees and expenses). By submission to a single arbitrator, each party expressly
waives any right or claim to recover more than $5,000,000. Any Dispute in which
the amount in controversy exceeds $5,000,000 shall be decided by majority vote
of a panel of three arbitrators; provided that all three arbitrators must
actively participate in all hearings and deliberations.
(e) Notwithstanding anything to the contrary contained herein, in
any arbitration in which the amount in controversy exceeds $25,000,000, the
arbitrators shall be required to make specific, written findings of fact and
conclusions of law. In such arbitrations (i) the arbitrators shall not have the
power to make any award which is not supported by substantial evidence or which
is based on legal error, (ii) an award shall not be binding upon the parties
unless the findings of fact are supported by substantial evidence and the
conclusions of law are not erroneous under the substantive law of the state of
California, and (iii) the parties shall have in addition to the grounds referred
to in the Federal Arbitration Act for vacating, modifying or correcting an award
the right to judicial review of (A) whether the findings of fact rendered by the
arbitrators are supported by substantial evidence, and (B) whether the
conclusions of law are erroneous under the substantive law of the state of
California. Judgment confirming an award in such a proceeding may be entered
only if a court determines the award is supported by substantial evidence and
not based on legal error under the substantive law of the state of California.
(f) Notwithstanding anything to the contrary contained herein, no
Dispute shall be submitted to arbitration if the Dispute concerns indebtedness
secured directly or indirectly, in whole or in part, by any real property unless
(i) the holder of the mortgage, lien or security interest specifically elects in
writing to proceed with the arbitration, or (ii) all parties to the arbitration
waive any rights or benefits that might accrue to them by virtue of the single
action rule statute of California, thereby agreeing that all indebtedness and
obligations of the parties, and all mortgages, liens and security interests
securing such indebtedness and obligations, shall remain fully valid and
enforceable. If any such Dispute is not submitted to arbitration, the Dispute
shall be referred to a referee in accordance with California Code of Civil
Procedure Section 638 et seq., and this general reference agreement is intended
to be specifically enforceable in accordance with said Section 638. A referee
with the qualifications required herein for arbitrators shall be selected
pursuant to the AAA's selection procedures. Judgment upon the decision rendered
by a referee shall be entered in the court in which such proceeding was
commenced in accordance with California Code of Civil Procedure Sections 644 and
645.
(g) To the maximum extent practicable, the AAA, the arbitrators
and the parties shall take all action required to conclude any arbitration
proceeding within 180 days of the filing of the Dispute with the AAA. No
arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business, by applicable law or
regulation, or to the extent necessary to exercise any
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judicial review rights set forth herein. If more than one agreement for
arbitration by or between the parties potentially applies to a Dispute, the
arbitration provision most directly related to the Credit Documents or the
subject matter of the Dispute shall control. This arbitration provision shall
survive termination, amendment or expiration of any of the Credit Documents or
any relationship between the parties.
10.16 Entire Agreement.
This Agreement, together with the other Credit Documents, embodies the
entire agreement and understanding among the Company and the Bank and supersedes
all prior or contemporaneous agreements and understandings of such Persons,
verbal or written, relating to the subject matter hereof and thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in San Francisco, California by their proper and
duly authorized officers as of the day and year first written above.
The Company: PLANTRONICS, INC.,
a Delaware corporation
By:
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Name:
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Title:
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By:
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Name:
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Title:
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The Bank: ▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION
By:
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Name:
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Title:
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