EXHIBIT 10.1
REVOLVING CREDIT LOAN AGREEMENT AND GUARANTY
BY AND AMONG
ADVANCED TECHNOLOGY LABORATORIES, INC.,
A WASHINGTON CORPORATION
AS BORROWER,
ATL ULTRASOUND, INC.,
A WASHINGTON CORPORATION
AS GUARANTOR,
AND
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
DOING BUSINESS AS
SEAFIRST BANK
AS LENDER.
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS........................................................... 1
Section 1.1 Certain Defined Terms..................................... 1
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Section 1.2 General Principles Applicable to Definitions.............. 7
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Section 1.3 Accounting Terms.......................................... 7
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ARTICLE 2
U.S. DOLLAR FACILITY.................................................. 7
Section 2.1 Loans..................................................... 7
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Section 2.2 Manner of Borrowing a Loan................................ 7
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Section 2.3 Reduction of Commitment................................... 7
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Section 2.4 Repayment of Principal.................................... 7
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Section 2.5 Interest on Loans......................................... 7
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Section 2.6 Prepayments............................................... 10
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Section 2.7 Revolving Note............................................ 10
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Section 2.8 Manner of Payments........................................ 11
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Section 2.9 Commitment Fees........................................... 11
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Section 2.10 Extension of Maturity Date................................ 11
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ARTICLE 3
MULTICURRENCY FACILITY................................................ 11
Section 3.1 Multicurrency Advances.................................... 11
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Section 3.2 Multicurrency Note........................................ 12
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ARTICLE 4
STANDBY LETTER OF CREDIT FACILITY..................................... 12
Section 4.1 Issuance.................................................. 12
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Section 4.2 Fees...................................................... 12
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Section 4.3 Yield Indemnity........................................... 12
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Section 4.4 Collateral................................................ 12
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ARTICLE 5
CONDITIONS OF LENDING................................................. 13
Section 5.1 Conditions to Initial Loan................................ 13
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Section 5.2 Conditions to All Loans................................... 13
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ARTICLE 6
REPRESENTATIONS AND WARRANTIES........................................ 14
Section 6.1 Corporate Existence and Power............................. 14
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Section 6.2 Corporate Authorization................................... 14
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Section 6.3 Government Approvals, Etc................................. 14
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Section 6.4 Binding Obligations, Etc.................................. 14
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Section 6.5 Litigation................................................ 14
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Section 6.6 Financial Condition....................................... 14
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Section 6.7 Title and Liens........................................... 15
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Section 6.8 Taxes..................................................... 15
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Section 6.9 Laws, Orders; Other Agreements............................ 15
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Section 6.10 Federal Reserve Regulations............................... 15
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Section 6.11 ERISA..................................................... 16
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Section 6.12 Subsidiaries.............................................. 16
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Section 6.13 Patents, Licenses, Franchises............................. 16
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Section 6.14 Investment Company; Public Utility Holding Company........ 16
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ARTICLE 7
AFFIRMATIVE COVENANTS................................................. 16
Section 7.1 Use of Proceeds........................................... 17
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Section 7.2 Financial Statements...................................... 17
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Section 7.3 Inspection of Property.................................... 17
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Section 7.4 Payment of Taxes.......................................... 17
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Section 7.5 Preservation of Corporate Existence....................... 17
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Section 7.6 Maintenance of Property................................... 18
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Section 7.7 Insurance................................................. 18
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Section 7.8 Records and Accounts...................................... 18
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Section 7.9 Additional Payments; Additional Tax....................... 18
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Section 7.10 Notification.............................................. 18
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Section 7.11 Maintenance of Quick Ratio................................ 18
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Section 7.12 Maintenance of Current Ratio.............................. 18
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Section 7.13 Maintenance of Tangible Net Worth......................... 19
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ARTICLE 8
NEGATIVE COVENANTS.................................................... 19
Section 8.1 Limitations on Liens...................................... 19
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Section 8.2 Limitations on Indebtedness............................... 19
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Section 8.3 Limitations on Dividends.................................. 20
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Section 8.4 Limitations on Stock Repurchases.......................... 20
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Section 8.5 Limitation on Investments................................. 20
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Section 8.6 Merger or Sale of Assets.................................. 21
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Section 8.7 Limitation on Capital Expenditures........................ 21
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Section 8.8 Maintenance of Leverage Ratio............................. 21
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Section 8.9 Limitation on Net Losses.................................. 22
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Section 8.10 Transactions with Affiliates.............................. 22
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ARTICLE 9
EVENTS OF DEFAULT.................................................... 22
Section 9.1 Events of Default......................................... 22
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Section 9.2 Consequences of Default................................... 23
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ARTICLE 10
GUARANTY.............................................................. 24
Section 10.1 Guaranteed Obligations.................................... 24
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Section 10.2 Guarantor's Consent....................................... 24
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Section 10.3 Guarantor's Waiver........................................ 24
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Section 10.4 Unconditional Guaranty.................................... 24
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Section 10.5 Waiver of Subrogation..................................... 24
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ARTICLE 11
MISCELLANEOUS......................................................... 25
Section 11.1 No Waiver; Remedies Cumulative............................ 25
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Section 11.2 Governing Law............................................. 25
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Section 11.3 Consent to Jurisdiction................................... 25
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Section 11.4 Notices................................................... 25
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Section 11.5 Assignment................................................ 25
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Section 11.6 Severability.............................................. 25
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Section 11.7 Survival.................................................. 26
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Section 11.8 Conditions Not Fulfilled.................................. 26
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Section 11.9 Entire Agreement; Amendment............................... 26
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Section 11.10 Headings.................................................. 26
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Section 11.11 Prevailing Party Attorney's Fees.......................... 26
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Section 11.12 Counterparts.............................................. 26
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Section 11.13 Confidentiality........................................... 26
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Section 11.14 CONCERNING ORAL AGREEMENTS................................ 26
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SCHEDULES
Schedule 1 Prepayment Fees
Schedule 2 Borrower and Subsidiary Schedule
Schedule 3 Notice Addresses
EXHIBITS
Exhibit A Form of Revolving Note
Exhibit B Form of Multicurrency Note
Exhibit C Form of Multicurrency Borrowing Notice
Exhibit D Form of Quarterly Officer's Certificate
REVOLVING CREDIT LOAN AGREEMENT AND GUARANTY
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THIS REVOLVING CREDIT AGREEMENT AND GUARANTY ("Agreement") is made
effective as of July 1, 1997, by and among Bank of America National Trust and
Savings Association, doing business as SEAFIRST BANK, successor by merger to
Seattle-First National Bank, (the "Lender"), ADVANCED TECHNOLOGY LABORATORIES,
INC., a Washington corporation (the "Borrower") and ATL ULTRASOUND, INC., a
Washington corporation, (the "Guarantor"). This Agreement replaces the Revolving
Credit Loan Agreement and Guaranty dated as of June 26, 1992, and all amendments
thereto.
ARTICLE 1
DEFINITIONS
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Section 1.1 Certain Defined Terms. As used in this Agreement, the
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following terms have the following meanings:
"Aggregate Collateral Value" shall mean (i) the market value of
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Marketable Securities pledged to secure the L/C Obligations, multiplied by (ii)
the following percentages as to the category of Marketable Securities indicated:
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SECURITY TYPE ADVANCE PERCENTAGE
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Seafirst Bank Time Deposits 100%
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Money Market Mutual Funds 90%
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U.S. Common Stocks (by S&P Rating) other
than Bank America Corporation:
A+, A, A- 75%
B+ 60%
B 50%
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Bank America Corporation Common or 70%
Preferred Stock
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U.S. Corporate and Municipal Bonds
S&P AAA & AA or Moody's Aaa & Aa 80%
S&P A or Moody's A 75%
S&P BBB or Moody's Baa 50%
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U.S. Government Issued or Guaranteed
(Treasury Bills, Treasury Notes, Treasury Bonds),
by years to maturity:
less than 1 year 90%
1 to 5 years 85%
more than 5 years 80%
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U.S. Government Sponsored (e.g., Farm 75%
Credit System, Federal Home Loan Bank,
FNMA)
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Bankers Acceptances (Accepting bank is 90%
Seafirst Bank or another Bank America
Corporation affiliate
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Commercial Paper issued by U.S. companies
and rated:
A1/P1 90%
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1
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SECURITY TYPE ADVANCE PERCENTAGE
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A2/P2 85%
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"Applicable Interest Period" means, with respect to any Loan accruing
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interest at a Fixed Rate, or any Multicurrency Advance, the period commencing on
the first date the Borrower elects to have such Fixed Rate apply to such Loan
pursuant to Section 2.5(d) or, as the case may be, the day of funding a
Multicurrency Advance, and ending:
(a) No less than seven (7) and no more than thirty (30) days
thereafter in the case of a Quoted Rate Loan as specified in the
Interest Rate Notice given in respect of such loan; or
(b) One, two, three or six months thereafter in the case of a
LIBOR Loan as specified in the Interest Rate Notice given in respect of
such Loan, or in the case of a Multicurrency Advance specified in the
Multicurrency Borrowing Notice given in respect of such Multicurrency
Advance;
provided, however, that no Applicable Interest Period may be selected if it
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extends beyond the Maturity Date.
"Applicable Interest Rate" means for each Loan, the Reference Rate, the
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Quoted Rate or LIBOR Rate as designated by the Borrower in an Interest Rate
Notice given with respect to such Loan (or portion thereof) or otherwise
determined pursuant to Section 2.5(d).
"Available Amount" means the Commitment, minus the outstanding
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principal balances of all Loans outstanding, minus the sum of the U.S. dollar
equivalent of the outstanding principal balance of all Multicurrency Advances,
based on the Exchange Rate for each such Multicurrency Advance.
"Borrower" means Advanced Technology Laboratories, Inc., a Washington
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corporation, and any permitted Successor or assign pursuant to the terms of this
Agreement.
"Business Day" means any day other than Saturday, Sunday or another day
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on which banks are authorized or obligated to close in Seattle, Washington,
except in the context of the selection of a LIBOR Loan or the calculation of the
LIBOR Rate for any Applicable Interest Period, in which event "Business Day"
means any day other than Saturday or Sunday on which dealings in foreign
currencies and exchange between banks may be carried on in London, England and
Seattle, Washington.
"Code" means the Internal Revenue Code of 1986, as amended from time to
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time.
"Collateral Account" shall mean an account established by Borrower with
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the Custodian, pledged by Borrower to Lender to secure the L/C Obligations, and
subject to a custodial agreement and pledge instructions satisfactory to Lender.
"Commitment" and "Commitment Period" have the meanings given in Section
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2.1.
"Consolidated Net Income" means for any period the consolidated net
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income of the Guarantor, Borrower, and Borrower's Consolidated Subsidiaries,
excluding all extraordinary items (other than utilization of net operating loss
carry-forwards), after eliminating all intercompany items and portions of
earnings properly attributable to minority interests in stock of any Subsidiary
of Borrower, all computed in accordance with generally accepted accounting
principles.
"Consolidated Subsidiaries" means those Subsidiaries that are included
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in determining the consolidated financial condition of Guarantor or Borrower in
accordance with generally accepted accounting principles.
"Controlled Group" means all members of a controlled group of
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corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower, are treated as a single
employer under Section 414(b) or 414(c) of the Code.
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"Custodian" shall mean BNY Western Trust Company or other custodian
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satisfactory to Lender in its sole discretion.
"Default" means any event which but for the passage of time or the giving
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of notice or both would be an Event of Default.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
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amended from time to time.
"Event of Default" has the meaning given in Section 9.1.
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"Exchange Rate" shall mean the rate of exchange actually obtained by Lender
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for a given currency in funding a Multicurrency Advance in such currency.
"Fixed Rate" means the Quoted Rate or the LIBOR Rate, as applicable.
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"Fixed Rate Loan" means any Quoted Rate Loan or LIBOR Loan.
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"Fiscal Year" means the year, for accounting purposes, which ends on
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December 31st of each calendar year.
"Guarantor" means ATL Ultrasound, Inc., a Washington corporation.
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"Government Approval" means an approval, permit, license, authorization,
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certificate, or consent of any Governmental Authority.
"Governmental Authority" means the government of the United States or any
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State or any foreign country or any political subdivision of any thereof or any
branch, department, agency, instrumentality, court, tribunal or regulatory
authority which constitutes a part or exercises any sovereign power of any of
the foregoing.
"Indebtedness" means for any person (i) all items of indebtedness or
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liability (except capital, surplus, deferred taxes and deferred revenues as
such) which would be included in determining total liabilities as shown on the
liability side of a balance sheet as of the date as of which indebtedness is
determined, (ii) indebtedness secured by any Lien, whether or not such
indebtedness shall have been assumed, (iii) any other indebtedness or liability
for borrowed money or for the deferred purchase price of property or services
for which such person is directly or contingently liable as obligor, guarantor,
or otherwise, or in respect of which such person otherwise assures a creditor
against loss, (iv) any other obligations of such person under leases which shall
have been or should be recorded as capital leases and (v) obligations of such
person for unsatisfied judgments or orders; provided, however, Indebtedness does
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not include accounts payable and accrued expenses arising in the ordinary course
of such person's business, payable on terms customary in the trade.
"Interest Rate Notice" shall have the meaning given in Section 2.5(d).
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"L/C Agreement" shall have the meaning given in Section 4.1.
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"L/C Obligations" shall have the meaning given in Section 4.4.
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"Lender" means Bank of America National Trust and Savings Association,
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doing business as Seafirst Bank, and any Successors thereto or permitted assigns
thereof.
"Letter of Credit" shall have the meaning given in Section 4.1.
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"LIBOR Loan" means any Loan or portion thereof bearing interest at the
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LIBOR Rate.
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"LIBOR Rate" shall mean, with respect to any LIBOR Loan for any Applicable
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Interest Period, an interest rate per annum equal to the sum of (a) the
applicable Usage Factor and (b) the product of (i) the Euro-dollar Rate in
effect for such Applicable Interest Period and (ii) the Euro-dollar Reserves in
effect on the first day of such Applicable Interest Period.
The "Euro-dollar Rate" will be determined on the basis of the offered
rate for deposits in U.S. Dollars for the Applicable Interest Period
commencing on the first day of such Applicable Interest Period (the "Reset
Date") which appears on the display designated as the "LIBO" page in the
Reuters Monitor Money Rates Service (or such other page as may replace the
LIBO page on that service for the purpose of displaying London interbank
offered rates of major banks; or such other financial news service provider
to which Lender and Borrower mutually agree) as of 11:00 o'clock a.m.,
London time, on the day that is two Business Days preceding the Reset Date.
If at least two such offered rates appear on such Reuters screen LIBO page,
the Euro-dollar Rate in respect of that Reset Date will be the arithmetic
mean of such offered rates. If fewer than two offered rates appear, the
Euro-dollar Rate will be determined on the basis of the rates at which
deposits in U.S. Dollars are offered by four major banks (selected by
Lender) in the London interbank market at approximately 11:00 o'clock a.m.,
London time, on the day that is two Business Days preceding the Reset Date
to prime banks in the London interbank market for the Applicable Interest
Period. The Lender will request the principal London office of each of the
four banks to provide a quotation of its rate. If at least two such
quotations are provided, the Euro-dollar Rate will be the arithmetic mean
of the quotations. If fewer than two quotations are provided as requested,
the Euro-dollar Rate in respect of that Reset Date will be the arithmetic
mean of the rates quoted by major banks in New York City (selected by the
Lender) at approximately 11:00 o'clock a.m., New York city time, on that
Reset Date for loans in U.S. Dollars in an amount equal to the applicable
Loan to leading banks in Europe for the Applicable Interest Period.
As used herein, the term "Euro-dollar Reserves" means a fraction
(expressed as a decimal), the numerator of which is the number one and the
denominator of which is the number one minus the aggregate of the maximum
reserve percentages (including, without limitation, any special,
supplemental, marginal or emergency reserves) expressed as a decimal
established by the Board of Governors of the Federal Reserve System or any
other banking authority to which the Lenders are subject for Eurocurrency
Liability (as defined in Regulation D of such Board of Governors). It is
agreed that for purposes hereof, each Loan shall be deemed to constitute a
Eurocurrency Liability and to be subject to the reserve requirements of
Regulation D, without benefit of credit or proration, exemptions or offsets
which might otherwise be available to the Lenders from time to time under
such Regulation D. Each LIBOR Rate shall be adjusted automatically on and
as of the effective date of any change in the Euro-dollar Reserves.
"Lien" means, for any person, any security interest, pledge, mortgage,
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charge, assignment, hypothecation, encumbrance, attachment, garnishment,
execution or other voluntary or involuntary lien upon or affecting the revenues
of such person or any real or personal property in which such person has or
hereafter acquires any interest, except (i) liens for Taxes which are not
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delinquent or which remain payable without penalty or the validity or amount of
which is being contested in good faith by appropriate proceedings upon stay of
execution of the enforcement thereof; (ii) liens imposed by law (such as
mechanics' liens) incurred in good faith in the ordinary course of business
which are not delinquent or which remain payable without penalty or the validity
or amount of which is being contested in good faith by appropriate proceedings
upon stay of execution of the enforcement thereof; and (iii) deposits or pledges
under worker's compensation, unemployment insurance, social security or other
similar laws or made to secure the performance of bids, tenders, contracts
(except for repayment of borrowed money), or leases, or to secure statutory
obligations or surety or appeal bonds or to secure indemnity, performance or
other similar bonds given in the ordinary course of business.
"Loan Documents" means this Agreement, the Multicurrency Note, the L/C
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Agreement, and the Revolving Note.
4
"Loans" has the meaning given in Section 2.1.
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"Marketable Securities" shall mean securities of the types listed under the
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definition of "Aggregate Collateral Value" above; provided, that only securities
having a minimum per-share price of $15 shall be deemed "Marketable Securities."
"Maturity Date" means June 30, 2000 or such later date as shall be
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established pursuant to Section 2.10 hereof.
"Multicurrency Advances" shall have the meaning given in Subsection 3.1.
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"Multicurrency Borrowing Notice" shall have the meaning given in Section
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3.1.
"Multicurrency Note" shall have the meaning given in Section 3.2.
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"Multicurrency Rate" shall mean for each Multicurrency Advance (i) the per
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annum rate for the currency advanced, calculated on the basis of actual number
of days elapsed over a year of 365/366 days as to Canadian Dollars and British
Pounds Sterling, and on the basis of actual number of days elapsed over a year
of 360 days as to all other currency, determined by Lender to be the applicable
borrowing rate for such currency in an amount and for the Applicable Interest
Period of the Multicurrency Advance requested, as determined between 6:30 a.m.
and 7:00 a.m., Seattle time, on the day which is (a) two Business Days prior to
the date of such Multicurrency Advance as to all currencies other than Canadian
Dollars, and (b) one Business Day prior to the date of such Multicurrency
Advance as to Canadian Dollars; which rate shall be a rate within 0.125% of the
index rate appearing on the display designated as "Page 3740" and "Page 3750" on
the Telerate Service, or such other financial news service provided to which
Lender and Borrower mutually agree, for such currency between 6:30 a.m. and 7:00
a.m. on the same date; plus (ii) the applicable Usage Factor.
"Notice of Borrowing" means a request for a Loan from Borrower delivered to
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Lender and containing the information set forth in Section 2.2 which shall be
delivered prior to 10:00 a.m. (Seattle time) on the requested date of borrowing
of a Reference Rate Loan or a Quoted Rate Loan and at least three (3) Business
Days before the requested date of borrowing in the case of a LIBOR Loan.
Requests for borrowing received after the designated hour will be deemed
received on the next succeeding Business Day. A Notice of Borrowing may be
given in writing or telephonically (but if given telephonically, shall be
confirmed in writing prior to 12:00 noon (Seattle time) on the first day of the
Applicable Interest Period).
"Officer's Certificate" means a certificate signed in the name of the
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Borrower or Guarantor, as the case may be, by its Chairman, President, senior
financial officer, or Treasurer.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
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succeeding to any or all of its functions under ERISA.
"Pension Plan" means an "employee pension benefit plan" (as such term is
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defined in ERISA) from time to time maintained by the Borrower or a member of
the Controlled Group.
"Permitted Foreign Governments" shall mean the governments of the nations
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of Canada, United Kingdom, Germany, France, Belgium, Austria, Netherlands,
Australia, Italy, Argentina, China, and Singapore, or any agencies thereof
entitled to commit the full faith and credit of such national government.
"Person" shall mean any natural person, corporation, unincorporated
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organization, limited liability company, trust, joint stock company, joint
venture, association, company, partnership or government, or any agency or
political subdivision of any government.
"Plan" shall mean, at any time, an employee pension benefit plan which is
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covered by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either (a) maintained by the Borrower or any
member of a Controlled Group for employees of the Borrower or any
5
member of such Controlled Group or (b) maintained pursuant to a collective
bargaining agreement or any other arrangement under which more than one employer
makes contributions and to which the Borrower or any member of a Controlled
Group is then making or accruing an obligation to make contributions or has
within the preceding five (5) plan years made contributions.
"Quoted Rate" means, with respect to any Quoted Rate Loan for any
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Applicable Interest Period, an interest rate per annum, as determined by Lender
in its sole discretion and quoted to Borrower.
"Quoted Rate Loan" means a Loan or portion thereof bearing interest at the
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Quoted Rate.
"Reference Rate" means the rate of interest publicly announced from time to
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time by Lender in San Francisco, California, as its "Reference Rate." The
Reference Rate is set based on various factors, including Lender's costs and
desired return, general economic conditions, and other factors, and is used as a
reference point for pricing some loans. Any change in the Reference Rate shall
take effect at the opening of business on the day specified in the public
announcement of a change in the Reference Rate.
"Reference Rate Loan" means a Loan or portion thereof bearing interest at
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the Reference Rate.
"Revolving Note" has the meaning given in Section 2.7.
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"Subsidiary" means any corporation of which a majority (by number of shares
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or by number of votes) of any class of outstanding capital stock normally
entitled to vote for the election of one or more directors (regardless of any
contingency which does or may suspend or dilute the voting rights of such class)
is at such time owned directly or indirectly by the Guarantor or Borrower.
"Successor" means, for any corporation or banking association, any
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successor by merger or consolidation, or by acquisition of substantially all of
the assets of the predecessor.
"Tangible Net Worth" shall have the meaning given in Section 7.3.
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"Tax" means for any person any tax, assessment, duty, levy, impost or other
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charge imposed by any Governmental Authority on such person or on any property,
revenue, income, or franchise of such person and any interest or penalty with
respect to any of the foregoing, provided, however, as used herein a "Tax"
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imposed on or assessed against the Lender shall not include any income tax,
business and occupation tax, gross receipts tax, value added tax, franchise tax,
tax penalty (unless the tax penalty is the result of Borrower's failure to
perform its obligations hereunder) or any other tax imposed generally upon the
business of the Lender if any of the above taxes are imposed by a Governmental
Authority of a jurisdiction (including a municipal, state, national or federal
jurisdiction) under the laws of which Lender is organized, maintains a place of
business or would otherwise be subject to taxation without regard to the
transactions with Borrower and Guarantor contemplated by this Agreement or the
activities of Borrower and Guarantor.
"Unfunded Vested Liabilities" shall mean, with respect to any Plan, at any
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time, the amount (if any) by which (a) the present value of all vested
nonforfeitable benefits under such Plan exceeds (b) the fair market value of all
Plan assets allocable to such benefits, all determined as of the then most
recent valuation date for such Plan, but only to the extent that such excess
represents a potential liability of the Borrower or any member of the Controlled
Group to the PBGC or the Plan under Title IV of ERISA.
"Usage Factor" means, in any calendar quarter, the percentage set forth
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below for any LIBOR Loan, expressed as a function of the average daily principal
balance of Loans outstanding during such quarter:
Average Daily Balance of Loans Usage Factor
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and U.S. Dollar equivalent of
Multicurrency Advances Outstanding
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Less than $7.5 million 5/8%
6
$7.5 million or more 3/4%
Section 1.2 General Principles Applicable to Definitions. Definitions
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given in Section 1.1 shall be equally applicable to both singular and plural
forms of the terms therein defined and references herein to he or it shall be
applicable to persons whether masculine, feminine or neuter. References herein
to any document including, but without limitation, this Agreement shall be
deemed a reference to such document as it now exists, and as, from time to time
hereafter, the same may be amended.
Section 1.3 Accounting Terms Except as otherwise provided herein,
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accounting terms not specifically defined shall be construed, and all accounting
procedures shall be performed, in accordance with generally accepted United
States accounting principles consistently applied.
ARTICLE 2
U.S. DOLLAR FACILITY
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Section 2.1 Loans. Lender agrees on the terms and conditions of this
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Agreement to make loans ("Loans") to the Borrower from time to time on Business
Days during the period beginning on the date hereof and ending on the Maturity
Date (the "Commitment Period"), up to the Available Amount, in an aggregate
principal amount not exceeding Fifteen Million Dollars ($15,000,000) less any
reductions made pursuant to Section 2.3 (the "Commitment").
Section 2.2 Manner of Borrowing a Loan. The Borrower shall give Lender
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the required Notice of Borrowing specifying the date of the borrowing of any
Loan and the amount thereof, which shall be in integral multiples of Five
Hundred Thousand Dollars ($500,000) and, for a Quoted Rate Loan, in a minimum
amount of Five Million Dollars ($5,000,000). Such notice shall be irrevocable
and shall be deemed to constitute a representation and warranty by the Borrower
that as of the date of the notice the statements set forth in Article 6 hereof
are true and correct and that no Default or Event of Default has occurred and is
continuing. Upon fulfillment to the Lender's satisfaction of the applicable
conditions set forth in Article 5, the Lender will promptly make such
immediately available funds available to the Borrower by depositing them to the
ordinary checking account maintained by the Borrower with the Lender.
Section 2.3 Reduction of Commitment. Upon not less than ten (10) Business
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Days' written notice to the Lender, the Borrower may terminate the Commitment in
whole or in part, provided that in no event may the Commitment be reduced to an
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amount less than the outstanding principal balance of the Loans plus the U.S.
Dollar equivalent of the outstanding principal balance of all Multicurrency
Advances.
Section 2.4 Repayment of Principal. The Borrower shall repay to the
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Lender the principal amount of each Loan on the Maturity Date.
Section 2.5 Interest on Loans.
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(a) Interest Rate. The Borrower agrees to pay to Lender interest
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on the unpaid principal amount of each Loan from the date of such Loan
until such Loan shall be due and payable at a per annum rate equal to the
Applicable Interest Rate, and, if default shall occur in the payment when
due of any such Loan, from the maturity of that Loan until it is paid in
full at a per annum rate equal to two percentage points (2%) above the
Reference Rate (changing as the Reference Rate changes).
(b) Interest Payment Dates. Accrued but unpaid interest on each
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Fixed Rate Loan shall be paid on the last day of each Applicable Interest
Period, on the date of any principal payment (to the extent accrued on the
principal amount paid), and at maturity and, in the case of a LIBOR Loan
for which the Applicable Interest Period is six months, on the day that is
three months after the commencement of such Applicable Interest Period.
Accrued but unpaid interest on each Reference Rate Loan shall be paid on
the last Business Day of each calendar quarter commencing
7
on June 30, 1997, and continuing on the last Business Day of each March,
June, September and December thereafter and on the date of any principal
payment (to the extent accrued on the principal amount paid) and at
maturity. Unpaid interest accruing on amounts in default shall be payable
on demand.
(c) Adjustments in Interest Rate Resulting from Usage Factor Changes.
----------------------------------------------------------------
During any calendar quarter, interest shall initially accrue and be paid on
LIBOR Loans based on the Usage Factor that would apply if, during such
calendar quarter, the average daily outstanding balance of Loans was less
than $7,500,000 (the "Preliminary Usage Factor"). The interest as so
accrued and paid shall be subject to adjustment as provided in this Section
at the end of the calendar quarter for the actual Usage Factor for such
quarter. At the end of each calendar quarter, Lender shall determine the
actual daily outstanding balance of Loans during the preceding calendar
quarter and the correspondingly appropriate Usage Factor to be used in
determining the actual interest rate for each LIBOR Loan outstanding during
such calendar quarter (the "Actual Usage Factor"). The Lender shall
calculate the adjustments to be made in interest accruing or paid on each
LIBOR Loan resulting from the difference between the Actual Usage Factor
and the Preliminary Usage Factor and shall so notify the Borrower. To the
extent that such adjustment relates to LIBOR Loans for which interest was
previously paid in such calendar quarter, Borrower's demand deposit account
with Lender shall be debited for the amount of such adjustment on the day
following such notice (and Borrower shall assure that there are available
funds in such account to permit such withdrawal). To the extent the
adjustment relates to LIBOR Loans for which interest has accrued during
such calendar quarter but not been paid, the interest, as adjusted, shall
be paid on the dates scheduled for interest payment pursuant to Section
2.5(d).
(d) Selection of Alternative Rates.
------------------------------
(i) The Borrower may, subject to the requirements of this
Section 2.5(d), on same-day notice (in the case of a selection of
Reference Rate or Quoted Rate) or three (3) Business Days' prior
notice (in the case of a selection of a LIBOR Rate) elect to have
interest accrue on any Loan or any portion thereof at a Fixed Rate for
an Applicable Interest Period. Such notice (herein, an "Interest Rate
Notice") shall be deemed delivered on receipt by Lender except that
the Interest Rate Notice received by the Lender after 10:00 a.m.,
(Seattle time), on any Business Day, shall be deemed to be received on
the immediately succeeding Business Day. An Interest Rate Notice may
be given in writing or telephonically (but, if given telephonically,
shall be confirmed in writing prior to 12:00 noon (Seattle time) on
the first day of the Applicable Interest Period). Such Interest Rate
Notice shall identify, subject to the conditions of this Section
2.5(d), the Loan or portions thereof, the Fixed Rate and the
Applicable Interest Period which the Borrower selects. Any such
Interest Rate Notice shall be irrevocable and shall constitute a
representation and warranty by the Borrower that as of the date of
such Interest Rate Notice no Event of Default or Default has occurred
and is continuing.
(ii) Borrower's right to select a Fixed Rate to apply to a Loan
or any portion thereof shall be subject to the following conditions:
(i) the aggregate of all Loans or portions thereof to accrue interest
at a particular LIBOR Rate for the same Applicable Interest Period
shall be an integral multiple of Five Hundred Thousand Dollars
($500,000); (ii) the Quoted Rate may not be selected for any Loan or
portion thereof which is less than Five Million Dollars ($5,000,000);
(iii) a Fixed Rate may not be selected for any Loan or portion thereof
which is already accruing interest at a Fixed Rate unless such
selection is only to become effective at the maturity of the
Applicable Interest Period then in effect; (iv) the Lender shall not
have given notice pursuant to Section 2.5(f) that the selected LIBOR
Rate is not available on or before the day the Borrower gave the
Interest Rate Notice; and (v) no Default or Event of Default shall
have occurred and be continuing.
(iii) In the absence of an effective request for the application
of a Fixed Rate, the Loans or remaining portions thereof shall accrue
interest at the Reference Rate.
8
(iv) The Interest Rate Notice may be given with and contained in
any Notice of Borrowing.
(v) If the Borrower delivers an Interest Rate Notice and a
condition precedent to the making of the applicable Loan set forth in
Article 5 or the conversion to the requested interest rate set forth
in this section 2.5 is not satisfied or waived in writing by Lender,
Borrower shall indemnify the Lender for all losses and any costs which
the Lender sustains as a consequence thereof including, without
limitation, the costs of re-employment of funds at rates lower than
the cost to the Lender of such funds. A certificate of the Lender
setting forth the amount due to it pursuant to this subparagraph (v)
and the basis for, and the calculation of, such amount shall be prima
facie evidence of the amount due to it hereunder, absent manifest
error. Payment of the amount owed shall be due within fifteen (15)
days after the Borrower's receipt of such certificate.
(e) Applicable Days For Computation of Interest. Computations of
-------------------------------------------
interest shall be made on the basis of a year of three hundred sixty days
(360), in each case, for the actual number of days (including the first day
but excluding the last day) occurring in the period for which such interest
is payable.
(f) Unavailable LIBOR Rate. If Lender determines that for any reason
----------------------
beyond Lender's control fair and adequate means do not exist for
establishing a particular LIBOR Rate or that a specific LIBOR Rate will not
adequately and fairly reflect the cost to it of making or maintaining the
principal amount of a particular LIBOR Loan or that accruing interest on
any Loan at a LIBOR Rate by Lender has become unlawful, Lender may give
notice of that fact to the Borrower and such determination shall be
conclusive and binding absent manifest error. After such notice has been
given and until Lender notifies the Borrower that the circumstances giving
rise to such notice no longer exist, the interest rate or rates so
identified in such notice shall no longer be available. If,
notwithstanding such notice, Borrower shall thereafter select a LIBOR Rate,
the Lender shall promptly notify the Borrower again that a LIBOR Rate is
unavailable. Thereafter, any subsequent request by the Borrower to have
interest accrue at a LIBOR Rate shall be deemed to be a request for
interest to accrue at the Reference Rate. If the circumstances giving rise
to the notice described herein no longer exist, the Lender shall notify the
Borrower in writing of that fact, and the Borrower shall then once again
become entitled to request that a LIBOR Rate apply to the Loans in
accordance with Section 2.5(d) hereof.
(g) Compensation for Increased Costs. In the event that after the
--------------------------------
date hereof any change occurs in any applicable law, regulation, treaty or
directive or interpretation thereof by any authority charged with the
administration or interpretation thereof, or any condition is imposed by
any authority after the date hereof or any change occurs in any condition
imposed by any authority on or prior to the date hereof which:
(i) subjects Lender to any Tax, or changes the basis of
taxation of any payments to Lender on account of principal of or
interest on the Fixed Rate Loans, the Revolving Note (to the extent
the Revolving Note evidences Fixed Rate Loans) or fees in respect of
Lender's obligation to make Fixed Rate Loans or other amounts payable
with respect to its Fixed Rate Loans (other than a change in the rate
of tax based solely on the overall net or gross income of Lender); or
(ii) imposes, modifies or determines applicable any reserve,
deposit or similar requirements against any assets held by, deposits
with or for the account of, or loans or commitments by, any office of
Lender in connection with its Fixed Rate Loans to the extent the
amount of which is in excess of, or was not applicable at the time of
computation of, the amounts provided for in the definition of the
applicable Fixed Rate; or
(iii) affects the amount of capital required or expected to be
maintained by
9
banks generally or corporations controlling banks and Lender
determines the amount by which Lender or any corporation controlling
Lender is required or expected to maintain or increase its capital is
increased by, or based upon, the existence of this Agreement or the
Loans or the Commitment hereunder;
(iv) imposes upon Lender any other condition with respect to
the Fixed Rate Loans or the obligation to make Fixed Rate Loans;
which, as a result thereof, (1) increases the cost to Lender of making or
maintaining the Loans or its commitment hereunder, or (2) reduces the net
amount of any payment received by Lender in respect of its Fixed Rate Loans
(whether of principal, interest, commitment fees or otherwise), or (3)
requires Lender to make any payment on or calculated by reference to the
gross amount of any sum received by it in respect of its Fixed Rate Loans,
then and in any such case Lender shall, as soon as reasonably practical
after becoming aware of such event, notify Borrower thereof, and, the
Borrower shall pay to Lender on demand such amount or amounts as will
compensate Lender for any such increased cost, deduction or payment
actually incurred or made by Lender. The demand for payment by Lender
shall be delivered to the Borrower and shall state the subjection or change
which occurred or the reserve or deposit requirements or other conditions
which have been imposed upon Lender or the request, direction or
requirement with which it has complied, together with the date thereof, the
amount of such cost, reduction or payment and the manner in which such
amount has been calculated. The statement of Lender as to the additional
amounts payable pursuant to this Section 2.5(g) shall be prima facie
evidence of the amounts due hereunder, unless manifest error.
The protection of this Section 2.5(g) shall be available to Lender
regardless of any possible contention of invalidity or inapplicability of
the relevant law, regulation, treaty, directive, condition or
interpretation thereof. In the event that the Borrower pays Lender the
amount necessary to compensate Lender for any charge, deduction or payment
incurred or made by Lender as provided in this Section 2.5(g), and such
charge, deduction or payment or any part thereof is subsequently returned
to Lender as a result of the final determination of the invalidity or
inapplicability of the relevant law, regulation, treaty, directive or
condition, then Lender shall remit to the Borrower the amount paid by the
Borrower which has actually been returned to Lender (together with any
interest actually paid to Lender on such returned amount), less the
percentage share of Lender's costs and expenses incurred in connection with
such governmental regulation or any challenge made by Lender with respect
to its validity or applicability that is proportionate to the percentage
that the affected Loan or Commitment bears to all of Lender's affected
assets.
Section 2.6 Prepayments. Reference Rate Loans may be repaid at any time
-----------
without penalty or premium. Quoted Rate Loans may not be voluntarily repaid
prior to the end of the Applicable Interest Period. LIBOR Loans may be repaid
prior to the end of the Applicable Interest Period. A fee computed in the
manner set out in Schedule 1 shall be assessed and paid at the time of such
early repayment of a LIBOR Loan or refinancing. Such fee shall apply in all
circumstances where a LIBOR Loan is paid prior to the end of the Applicable
Interest Period, regardless of whether such payment is voluntary, mandatory or
the result of the Lender's collection efforts.
Section 2.7 Revolving Note. The Loans shall be evidenced by a promissory
--------------
note of the Borrower substantially in the form of Exhibit A hereto, payable to
the order of Lender, dated as of the date hereof, and in the face amount of the
Commitment (the "Revolving Note"). Lender is hereby authorized to record the
date and amount of Loans it makes and the date and amount of each payment of
principal and interest thereon on a schedule or computer-generated statement
constituting part of its Revolving Note; provided, however, that the failure to
-------- -------
make any such recordation or any error in any such recordation shall not affect
the obligations of the Borrower hereunder or under the Revolving Note.
10
Section 2.8 Manner of Payments.
------------------
(a) All payments and prepayments of principal and interest on
any Loan or Multicurrency Advance and all other amounts payable hereunder
by the Borrower or Guarantor to Lender shall be made by paying the same in
United States Dollars or the currency that was advanced and in immediately
available funds to the Lender at its Commercial Loan Service Center,
Seattle, Washington not later than 10:00 o'clock a.m., Seattle time, on the
date on which such payment or prepayment shall become due. If such payment
is received after 10:00 o'clock a.m., then it will be deemed received on
the next Business Day.
(b) The Borrower and Guarantor hereby authorize the Lender, if
and to the extent any payment is not promptly made pursuant to this
Agreement or any other Loan Document, to charge from time to time against
any or all of the accounts of the Borrower or Guarantor with the Lender.
(c) Whenever any payment hereunder or under any other Loan
Document shall be stated to be due or whenever the last day of any interest
period would otherwise occur on a day other than a Business Day, such
payment shall be made and the last day of such interest period shall occur
on the next succeeding Business Day and such extension of time shall in
such case be included in the computation and payment of interest or
commitment fees, as the case may be, unless such extension would cause such
payment to be made or the last day of such interest period to occur in the
next following calendar month, in which case such payment shall be due and
the last day of such interest period shall occur on the next preceding
Business Day.
Section 2.9 Commitment Fees. During the Commitment Period, Borrower
---------------
agrees to pay to the Lender a commitment fee computed daily at the rate of one-
fourth of one percent (1/4%) per annum on the difference between the Commitment
and the combined outstanding principal balance of the Loans and Multicurrency
Advances (based on U.S. Dollar equivalent determined on the date of funding such
Multicurrency Advance) payable in arrears at quarterly intervals commencing on
June 30, 1997, and payable on the last Business Day of each March, June,
September and December thereafter, except that accrued commitment fees shall be
payable on the Maturity Date and on demand after Default. Computations of
commitment fees shall be made on the basis of a year of three hundred sixty
(360) days for the actual number of days (including the first day but excluding
the last day) occurring in the period for which such fees are payable.
Section 2.10 Extension of Maturity Date. The Borrower may request that
--------------------------
Lender extend the Maturity Date for successive one-year periods by notifying the
Lender in writing at any time before a date one (1) year prior to the then-
existing Maturity Date. If Lender consents in writing to such an extension
within sixty (60) days of such request, the Maturity Date shall be extended for
one (1) additional year.
ARTICLE 3
MULTICURRENCY FACILITY
----------------------
Section 3.1 Multicurrency Advances. Borrower may request a loan in
----------------------
Australian Dollars, British Pounds Sterling, Canadian Dollars, French Francs,
German Marks, Hong Kong Dollars, Japanese Yen, Italian Lire, Dutch Guilders,
Belgian Francs, Danish Kroner, Finnish Marks, Norwegian Kroner, Swedish Kroner,
Swiss Francs, Singapore Dollars, Austrian Shillings, and/or Spanish Pesetas
(each a "Multicurrency Advance"), up to the U.S. Dollar equivalent of the
Available Amount, as determined by the Exchange Rate for each such currency, as
determined on the date the interest rate for such Multicurrency Advance is
determined, by delivering its borrowing notice to Lender in the form of Exhibit
C attached ("Multicurrency Borrowing Notice"), on or before 9:30 a.m., Seattle
time, on a London Banking Day at least three Business Days prior to the date the
Multicurrency Advance is to be made. Such notice shall specify the currency,
principal amount, and Applicable Interest Period requested. Each Multicurrency
Advance shall be in a minimum amount equivalent to U.S.$500,000.
11
Section 3.2 Multicurrency Note. The obligation of Borrower to repay the
------------------
Multicurrency Advances shall be evidenced by a promissory note (including all
renewals, modifications, and extensions thereof, the "Multicurrency Note"), made
by Borrower to the order of Lender. The Multicurrency Note shall be unsecured,
and shall be in substantially the same form as Exhibit B attached.
(a) Interest. Each Multicurrency Advance shall bear interest
--------
from the date of advance until the end of its Applicable Interest Period at
the Multicurrency Rate determined by Lender. All interest accrued on each
such Multicurrency Advance shall be due and payable in full on the last day
of the Applicable Interest Period applicable to such Multicurrency Advance.
(b) Principal. Borrower shall repay in full the outstanding
---------
principal balance of each Multicurrency Advance, in the currency advanced,
on the last day of its Applicable Interest Period. Such repayment may be
effected either (a) by making payment to Lender in immediately available
funds in the same manner as provided in Section 2.8, or (b) by obtaining a
Multicurrency Advance, pursuant to the procedures of Section 3.1, in the
same currency and at least the same amount as the maturing Multicurrency
Advance (but in any case not to exceed the Available Amounts), with
instructions to Lender to apply the proceeds of such new Multicurrency
Advance to the maturing Multicurrency Advance before disbursing the balance
(if any) to Borrower. Lender shall have no liability for, nor bear any of
the risk of, intra-day fluctuations in foreign exchange rates.
Multicurrency Advances may not be prepaid prior to the end of their
respective Applicable Interest Periods.
ARTICLE 4
STANDBY LETTER OF CREDIT FACILITY
---------------------------------
Section 4.1 Issuance. Upon Borrower's execution of Lender's standard
--------
form Application and Agreement for Standby Credit ("L/C Agreement"), Lender
shall issue for Borrower's account a standby letter of credit ("Letter of
Credit") in an amount not to exceed $40,000,000, with an expiration date (or a
right to terminate under an evergreen expiration clause) no later than December
31, 1998, to an entity providing a supersedeas bond on Borrower's behalf to stay
the SRI Judgment (as defined in Section 8.9 of the Agreement). If there is a
draw under the Letter of Credit, Borrower shall on demand immediately reimburse
Lender for the amount of the draw, together with interest on the amount drawn,
from the date drawn, until paid, at the default rate of interest set forth in
Section 2.5(a) of the Agreement. Lender shall in addition have all rights
provided in the L/C Agreement. Any default in the L/C Agreement shall be an
Event of Default under the Agreement.
Section 4.2 Fees. Borrower shall pay to Lender quarterly in advance a
----
commitment fee determined according to the following formula, on the date of
issuance of the Letter of Credit, and on the same day of every third month
thereafter until the Letter of Credit is no longer outstanding: 0.25% per annum
of the face amount of the Letter of Credit. Borrower shall additionally, on
demand, pay transaction fees according to Lender's then-outstanding standard fee
schedule on all drafts, transfers, extensions, and other transactions with
regard to the Letter of Credit, and reimburse Lender for all out-of-pocket
costs, legal fees, and expenses.
Section 4.3 Yield Indemnity. If any law or regulation imposes or
---------------
increases any reserve, special deposit, or similar requirement against letters
of credit issued by Lender or subjects Lender to any tax, charge, fee,
deduction, or withholding of any kind in regard to the Letter of Credit,
Borrower shall promptly on demand indemnify Lender for any such increased costs,
taxes, or charges.
Section 4.4 Collateral. All of Borrower's obligations under the L/C
----------
Agreement (the "L/C Obligations") shall be secured by: Marketable Securities
having an Aggregate Collateral Value equal to the face amount of the Letter of
Credit. Borrower hereby grants to Lender a security interest in investments
held in the Collateral Account. Upon an Event of Default, Lender may instruct
the Custodian to liquidate investments and disburse to Lender all amounts
necessary for the payment in full of the L/C Obligations. If at any time Lender
shall determine that the Aggregate Collateral Value of the Marketable Securities
in the Collateral Account is less than the amount required under this Section,
Borrower (or Guarantor if necessary)
12
shall, within three Business Days of demand by Lender, deliver for deposit to
the Collateral Account additional Marketable Securities so that the total in the
Collateral Account shall again equal the Aggregate Collateral Value.
ARTICLE 5
CONDITIONS OF LENDING
---------------------
Section 5.1 Conditions to Initial Loan. In addition to the conditions
--------------------------
set forth in Section 5.2, the obligation of the Lender to make the initial Loan
and Multicurrency Advance hereunder is subject to fulfillment of the following
conditions:
(a) Loan Documents. Lender shall have received all of the Loan
--------------
Documents, each duly executed and delivered by the respective parties
thereto, and satisfactory to Lender in form and substance.
(b) Corporate Certificates. The Lender shall have received all
----------------------
of the following, each satisfactory to the Lender in form and substance:
(i) Certified copies of the Articles of Incorporation
and Bylaws of the Borrower and Guarantor;
(ii) Certificate of good standing issued by the
Secretary of State of the applicable state of incorporation with
respect to the Borrower and Guarantor;
(iii) Borrower's Officers' Certificate attaching copies
of the resolutions adopted by the Board of Directors of the Borrower
authorizing the execution, delivery and performance by the Borrower of
this Agreement, the Multicurrency Note and the Revolving Note; and
(iv) Guarantor's Officers' Certificate attaching copies
of the resolutions adopted by the Board of Directors of Guarantor
authorizing the execution, delivery and performance by Guarantor of
this Agreement;
(v) Incumbency certificates describing the office and
identifying the specimen signatures of the individuals signing the
Loan Documents on behalf of the Borrower and Guarantor.
(c) Certificates. The Lender shall have received a certificate
------------
of the Borrower's Chief Financial Officer, President, or Treasurer as to
the accuracy of the Borrower's representations and warranties set forth in
Article 6.
Section 5.2 Conditions to All Loans. The obligation of the Lender to
-----------------------
make any Loans and Multicurrency Advances hereunder, including the initial Loan
and/or Multicurrency Advance, is subject to fulfillment of the following
conditions:
(a) Prior Conditions. All of the conditions set forth in Section
----------------
5.1 shall have been satisfied.
(b) Notice of Borrowing. The Lender shall have received the
-------------------
Notice of Borrowing in respect of such Loan or the Multicurrency Borrowing
Notice as to such Multicurrency Advance.
(c) No Default. At the date of the Loan or Multicurrency
----------
Advance, no Default or Event of Default shall have occurred and be
continuing or will have occurred as the result of the making of the Loans
or Multicurrency Advances; and the representations and warranties in
Article 6 shall be true on and as of such date with the same force and
effect as if made on and as of such date.
13
(d) Other Information. The Lender shall have received such other
-----------------
statements, certificates, documents and information as it may reasonably
request in order to satisfy itself that the foregoing conditions have been
fulfilled.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
------------------------------
The Borrower and Guarantor, jointly and severally, represents and warrant
to the Lender as follows:
Section 6.1 Corporate Existence and Power. Guarantor, Borrower, and
-----------------------------
Borrower's Subsidiaries are each a corporation duly incorporated, validly
existing and in good standing under the laws of its respective jurisdiction of
incorporation. The Guarantor, Borrower, and Borrower's Subsidiaries are each
duly qualified to do business in each other jurisdiction where the nature of
their respective activities or the ownership of their respective properties
requires such qualification. The Borrower and Guarantor each has full corporate
power, authority and legal right to carry on its business as presently
conducted, to own and operate its properties and assets, and to execute, deliver
and perform the Loan Documents to which it is a party.
Section 6.2 Corporate Authorization. The execution, delivery and
-----------------------
performance by the Borrower of this Agreement, the Multicurrency Note and the
Revolving Note, and any borrowing hereunder or thereunder, and the execution,
delivery and performance by Guarantor of this Agreement have been duly
authorized by all necessary corporate action of the Borrower or the Guarantor,
as the case may be, do not require any shareholder approval or the approval or
consent of any trustee or the holders of any Indebtedness of the Borrower or
Guarantor, except such as have been obtained (certified copies thereof having
been delivered to the Lender), do not contravene any law, regulation, rule or
order binding on the Borrower or Guarantor or the Articles of Incorporation or
Bylaws of the Borrower or Guarantor and do not contravene the provisions of or
constitute a default under any indenture, mortgage, contract or other agreement
or instrument to which the Borrower or Guarantor is a party or by which the
Borrower or Guarantor or any of their properties may be bound or affected.
Section 6.3 Government Approvals, Etc. No Government Approval or filing
--------------------------
or registration with any Governmental Authority is required for the making and
performance by the Borrower or Guarantor of the Loan Documents to which it is a
party or in connection with any of the transactions contemplated hereby or
thereby, except such as have been heretofore obtained and are in full force and
effect (certified copies thereof having been delivered to the Lender).
Section 6.4 Binding Obligations, Etc. This Agreement, the Multicurrency
------------------------
Note and the Revolving Note have been duly executed and delivered by the
Borrower and constitute the legal, valid and binding obligation of the Borrower
enforceable against the Borrower in accordance with their respective terms.
This Agreement has been duly executed and delivered by the Guarantor and
constitutes the legal, valid and binding obligation of Guarantor enforceable
against it in accordance with its terms.
Section 6.5 Litigation. Except for the SRI judgement defined in Section
----------
8.9, there are no actions, proceedings, investigations, or claims against or
affecting the Guarantor, Borrower or any of Borrower's Subsidiaries now pending
before any court, arbitrator or Governmental Authority (nor to the knowledge of
Borrower or Guarantor has any thereof been threatened, nor to the knowledge of
Borrower or Guarantor does any basis exist therefor) which if determined
adversely to the Guarantor, Borrower, or any of the Borrower's Subsidiaries
would be likely to have a material adverse effect on the consolidated financial
condition of the Guarantor or the Borrower or on the ability of the Borrower or
Guarantor to perform its obligations under the Loan Documents.
Section 6.6 Financial Condition. The consolidated balance sheet of the
-------------------
Guarantor (which includes Borrower and Borrower's Subsidiaries) as of December
31, 1996, and the related consolidated statements of income, cash flows, and
shareholders' equity for the Fiscal Year then ended and the
14
consolidated balance sheet of the Guarantor (which includes Borrower and
Borrower's Subsidiaries) as of March 28, 1997, and the related consolidated
statements of income and cash flows for the quarter then ended copies of which
have been furnished to Lender, fairly present the consolidated financial
condition of the Guarantor, Borrower, and Borrower's Subsidiaries as at such
dates and the results of consolidated operations of the Guarantor, Borrower, and
Borrower's Subsidiaries for the periods then ended, all in accordance with
generally accepted accounting principles consistently applied. The Guarantor,
Borrower and the Borrower's Subsidiaries did not have on such dates any material
contingent liabilities for Taxes, unusual forward or long-term commitments or
unrealized or anticipated losses from any unfavorable commitments, except as
referred to or reflected or provided for in that balance sheet and in the notes
to those financial statements. Since March 28, 1997, there have been no material
changes to the operations, business or financial condition of Guarantor,
Borrower and the Borrower's Subsidiaries that would be sufficient to impair the
Borrower's ability to repay any outstanding or requested Loans or Multicurrency
Advances or that have resulted in, or are forecast by Borrower or Guarantor to
result in, a Default or Event of Default.
Section 6.7 Title and Liens. The Guarantor, Borrower, and Borrower's
---------------
Subsidiaries have good and marketable title to each of the properties and assets
reflected in the balance sheet referred to in Section 6.6 (except such as have
been since sold or otherwise disposed of in the ordinary course of business or
in compliance with the terms of Section 8.6 hereof). No assets or revenues of
the Guarantor, the Borrower, or Borrower's Subsidiaries are subject to any
material Lien except as required or permitted by this Agreement or disclosed in
the balance sheets referred to in Section 6.6 or otherwise disclosed to the
Lender in writing prior to the date of this Agreement. All properties of the
Guarantor, Borrower, and Borrower's Subsidiaries and their respective use
thereof comply in all material respects with all applicable material zoning and
use restrictions and with applicable material laws and regulations relating to
the environment.
Section 6.8 Taxes. As of the date of this Agreement, the Guarantor,
-----
Borrower and Borrower's Subsidiaries have filed all material tax returns and
reports required of them, have paid all material Taxes which are due and
payable, and have provided adequate reserves for payment of any Tax whose
payment is being contested. The charges, accruals and reserves on the books of
the Guarantor, Borrower, and Borrower's Subsidiaries in respect of Taxes for all
fiscal periods to date of this Agreement are accurate to the best of their
knowledge. There are no questions or disputes between the Guarantor, Borrower,
or any Subsidiaries of Borrower and any Governmental Authority with respect to
any material Taxes except as disclosed in the balance sheets referred to in
Section 6.6 or otherwise disclosed to the Lender in writing prior to the date of
this Agreement and except disputes which if resolved adversely to the positions
being asserted by the Guarantor, Borrower, or any Subsidiary of Borrower would
not result in a material adverse change in the consolidated financial condition
of the Guarantor, Borrower, and Borrower's Subsidiaries.
Section 6.9 Laws, Orders; Other. Except as described in the financial
-------------------
statements delivered to Lender pursuant to Section 6.6 neither the Guarantor nor
Borrower, is in violation of or subject to any contingent liability on account
of any material laws, statutes, rules, regulations and orders of any
Governmental Authority. Neither the Guarantor nor Borrower is in material
breach of or default under any agreement to which it is a party or which is
binding on it or any of its assets.
Section 6.10 Federal Reserve Regulations. Neither the Borrower nor the
---------------------------
Guarantor is engaged principally or as one of its important activities in the
business of extending credit for the purpose of purchasing or carrying any
margin stock (within the meaning of Federal Reserve Regulation U), and no part
of the proceeds of any Loan or Multicurrency Advance will be used to purchase or
carry any such margin stock or to extend credit to others for the purpose of
purchasing or carrying any such margin stock or for any other purpose that
violates the applicable provisions of any Federal Reserve Regulation. The
Borrower will furnish to the Lender on request a statement conforming with the
requirements of Regulation U.
15
Section 6.11 ERISA.
-----
(a) The present value of all benefits vested under all Pension
Plans did not, as of the most recent valuation date of such Pension Plans,
exceed the value of the assets of the Pension Plans allocable to such
vested benefits by an amount which would represent a potential material
liability of the Guarantor and the Borrower, taken as a whole, or affect
materially the ability of the Borrower and Guarantor to perform this
Agreement.
(b) Except as disclosed to the Lender in writing prior to the
date hereof, no Plan or trust created thereunder, or any trustee or
administrator thereof, has engaged in a "prohibited transaction" (as such
term is defined in Section 406 or Section 2003(a) of ERISA) which could
subject such Plan or any other Plan, any trust created thereunder, or any
trustee or administrator thereof, or any party dealing with any Plan or any
such trust to the tax or penalty on prohibited transactions imposed by
Section 502 or Section 2003(a) of ERISA.
(c) No Pension Plan or trust has been terminated, except in
accordance with the Code, ERISA, and the regulations of the Internal
Revenue Service and the PBGC as applicable to solvent plans in which
benefits of participants are fully protected. No "reportable event" as
defined in Section 4043 of ERISA has occurred for which notice has not been
waived or for which alternative notice procedures are permitted.
(d) No Pension Plan or trust created thereunder has incurred any
"accumulated funding deficiency" (as such term is defined in Section 302 of
ERISA) whether or not waived, since the effective date of ERISA.
(e) The required allocations and contributions to Pension Plans
will not violate Section 415 of the Code.
Section 6.12 Subsidiaries. Schedule 2 to this Agreement sets forth as of
------------
the date of this Agreement a list of Guarantor's and Borrower's Subsidiaries.
Except as noted otherwise, all subsidiaries are wholly owned by Guarantor,
Borrower or Subsidiaries of Borrower.
Section 6.13 Patents, Licenses, Franchises. To the best of their
-----------------------------
knowledge, the Guarantor, Borrower, and each of Borrower's Subsidiaries owns or
possesses all the patents, trademarks, service marks, trade names, copyrights,
licenses, franchises, permits and rights with respect to the foregoing necessary
to own and operate its properties and to carry on its business as presently
conducted and presently planned to be conducted without material conflict with
the valid rights of others except as previously disclosed in writing to the
Lender prior to the date hereof.
Section 6.14 Investment Company; Public Utility Holding Company. Neither
--------------------------------------------------
the Borrower nor the Guarantor is (a) an "investment company" or a company
"controlled" by an investment company within the meaning of the Investment
Company Act of 1940, as amended; or (b) a "holding company" or a "subsidiary
company" of a "holding company" or an "affiliate" of either a "holding company"
or a "subsidiary company" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
ARTICLE 7
AFFIRMATIVE COVENANTS
---------------------
So long as Lender shall have any commitment hereunder and, until payment in
full of each Loan and the Revolving Note, each Multicurrency Advance and the
Multicurrency Note and performance of all other obligations of the Borrower and
the Guarantor under this Agreement and the L/C Agreement, the Borrower and
Guarantor, as applicable, agree to do all of the following unless the Lender
shall otherwise consent in writing.
16
Section 7.1 Use of Proceeds. The proceeds of all Loans and Multicurrency
---------------
Advances shall be used by Borrower solely for general corporate purposes of
Borrower.
Section 7.2 Financial Statements. The Borrower covenants and agrees that
--------------------
it will deliver to Lender:
(i) as soon as practicable and in any event within forty-
five (45) days after the end of each quarterly period (other than the
last quarterly period) in each Fiscal Year, the consolidated
statements of income and of cash flows of the Guarantor (which
includes Borrower and Borrower's Subsidiaries) for such quarterly
period and for the period from the beginning of the current Fiscal
Year to the end of such quarterly period, and a consolidated balance
sheet of the Guarantor (which includes Borrower, and Borrower's
Subsidiaries) as at the end of such quarterly period, setting forth in
each case in comparative form figures for the corresponding period in
the preceding Fiscal Year, all in reasonable detail and certified by
an authorized financial officer of the Guarantor, subject to changes
resulting from year-end adjustments;
(ii) as soon as practicable and in any event within ninety
(90) days after the end of each Fiscal Year, consolidated statements
of income, cash flows, and shareholders' equity of the Guarantor
(which includes the Borrower and Borrower's Subsidiaries) for such
year, and a consolidated balance sheet of the Guarantor (which
includes the Borrower and Borrower's Subsidiaries) as at the end of
such year, setting forth in each case in comparative form
corresponding figures from the preceding annual financial statements,
all in reasonable detail and satisfactory in scope to the Lender. The
annual consolidated financial statements shall be certified to the
Guarantor (or to its Board of Directors and Shareholders) by
independent public accountants of recognized standing selected by the
Guarantor whose certificate shall be in scope and substance
satisfactory to Lender; and
(iii) promptly after transmission thereof, copies of all such
financial statements, proxy statements, notices and reports as
Guarantor shall send to its stockholders and copies of all
registration statements (without exhibits) and all reports, if any,
which it files with the Securities and Exchange Commission (or any
governmental body or agency succeeding to the functions of the
Securities and Exchange Commission).
Together with each delivery of financial statements required by clauses (i) and
(ii) above, the Borrower will deliver to Lender an Officer's Certificate of
Guarantor in the form of Exhibit D.
Section 7.3 Inspection of Property. The Borrower and Guarantor each
----------------------
covenant and agree that it will permit Lender on reasonable notice, at Lender's
expense (unless a Default or Event of Default shall have occurred, in which
event the expense of such visit and inspection shall be for the Borrower's
account), to visit and inspect any of the properties of the Guarantor and the
Borrower, to examine the corporate books and financial records of the Guarantor
and the Borrower, and to make copies thereof or extracts therefrom and to
discuss the affairs, finances and accounts of the Guarantor and the Borrower
with the principal officers of the Borrower or Guarantor and its independent
public accountants, all at such reasonable times as Lender may reasonably
request.
Section 7.4 Payment of Taxes. During the term of this Agreement, the
----------------
Borrower and Guarantor shall each cause to be paid and discharged all material
Taxes imposed upon the Guarantor, Borrower, or any Subsidiary of Borrower before
the same shall be in default, as well as all lawful claims for labor, materials
and supplies which, if unpaid, might become a lien or charge upon such property
or any part thereof; provided, however, that the Borrower, Guarantor, and any
-------- -------
Subsidiary of Borrower shall not be required to cause to be paid or discharged
any such Tax or claim so long as the validity thereof shall be contested in good
faith by appropriate proceedings, and the Borrower, Guarantor, and the
Subsidiary of Borrower shall have set aside on their books adequate reserves
with respect thereto.
Section 7.5 Preservation of Corporate Existence. The Borrower and
-----------------------------------
Guarantor shall each
17
cause to be done all things necessary to preserve and keep in full force and
effect their corporate existence and shall comply with all laws applicable to
the Guarantor or Borrower.
Section 7.6 Maintenance of Property. The Borrower and Guarantor shall,
-----------------------
and shall cause the Subsidiaries of Borrower to at all times keep, maintain,
preserve and protect all the property of the Borrower, Guarantor and
Subsidiaries of Borrower in good repair, working order and condition and from
time to time make all needful and proper repairs, renewals, replacements,
betterments and improvements thereto, so that the business carried on in
connection therewith may be properly and advantageously conducted at all times.
Section 7.7 Insurance. The Borrower and Guarantor shall, and shall cause
---------
the Borrower's Subsidiaries to, at all times keep adequately insured, by
financially sound and reputable insurers, all property of the Guarantor,
Borrower, and the Borrower's Subsidiaries of the character usually insured by
corporations engaged in the same or similar business against loss or damage of
the kinds customarily insured against by such corporations, and carry such other
insurance as is usually carried by corporations engaged in the same or similar
business.
Section 7.8 Records and Accounts. The Borrower and Guarantor shall at all
--------------------
times keep true and complete books of record and accounts in accordance with
generally accepted accounting principles.
Section 7.9 Additional Payments; Additional Tax. From time to time, the
-----------------------------------
Borrower shall (a) pay or reimburse the Lender for all out-of-pocket expenses,
including reasonable legal fees, actually incurred by the Lender in connection
with the preparation or making of this Agreement or the other Loan Documents, or
the making of any Loan or any Multicurrency Advance, or, except as provided in
Section 11.11, incurred by Lender in connection with the enforcement by judicial
proceedings or otherwise of any of the rights of the Lender under this Agreement
or the other Loan Documents, only if Lender is the prevailing party; (b) upon
Lender's request, obtain and promptly furnish to Lender evidence of all such
Government Approvals as may be required to enable the Borrower and Guarantor to
comply with their obligations under this Agreement and the other Loan Documents;
and (c) execute and deliver all such instruments and perform all such other acts
as the Lender may reasonably request to carry out the transactions contemplated
by this Agreement.
Section 7.10 Notification. Promptly after learning thereof, Borrower or
------------
Guarantor will notify the Lender of (a) the details of any action, proceeding,
investigation or claim against or affecting Guarantor or Borrower instituted
before any court, arbitrator or Governmental Authority or, to Borrower's or
Guarantor's knowledge threatened to be instituted, which, if determined
adversely to Guarantor or Borrower would be likely to result in a material
adverse change in the consolidated financial condition of the Guarantor or
Borrower; (b) any labor controversy which has resulted in or, to Borrower's or
Guarantor's knowledge, threatens to result in a strike which would significantly
affect the consolidated financial condition of Guarantor or Borrower; (c) if
Borrower, Guarantor or any member of the Controlled Group gives or is required
to give notice to the PBGC of any "reportable event" (as defined in subsections
(b)(1), (2), (5) or (6) of Section 4043 of ERISA) with respect to any Plan (or
the Internal Revenue Service gives notice to the PBGC of any "reportable event"
as defined in subsection (c)(2) of Section 4043 of ERISA and Borrower or
Guarantor obtains knowledge thereof) which might constitute grounds for a
termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any such
reportable event, a copy of the notice of such reportable event given or
required to be given to the PBGC; and (d) if any Event of Default or Default
exists, the nature and period of existence thereof and any action Borrower or
Guarantor has taken or proposes to take with respect thereto.
Section 7.11 Maintenance of Quick Ratio. Based on the consolidated
--------------------------
financial statements of Guarantor and the Consolidated Subsidiaries, the
Guarantor shall maintain, as of the end of each fiscal quarter of Guarantor, a
Quick Ratio of not less than 1.0 to 1.0. The "Quick Ratio" shall be the ratio
of (a) the sum of Cash and Cash Equivalents plus Short Term Marketable
Securities plus Receivables (net of the allowance for doubtful receivables and
sales returns) of Guarantor and the Consolidated Subsidiaries to (b)
consolidated Current Liabilities of Guarantor and the Consolidated Subsidiaries,
all as reflected on the quarterly consolidated financial statements required to
be furnished hereunder.
Section 7.12 Maintenance of Current Ratio. Based on the consolidated
----------------------------
financial statements of
18
Guarantor and the Consolidated Subsidiaries, Guarantor shall maintain, as of the
end of each fiscal quarter of Guarantor, a Current Ratio of not less than 1.8 to
1.0. The "Current Ratio" shall be the ratio of (a) consolidated current assets
of Guarantor and the Consolidated Subsidiaries to (b) consolidated current
liabilities of Guarantor and the Consolidated Subsidiaries, all as reflected on
the quarterly consolidated financial statements required to be furnished
hereunder.
Section 7.13 Maintenance of Tangible Net Worth. Based on the consolidated
---------------------------------
financial statements of Guarantor and the Consolidated Subsidiaries, Guarantor
shall maintain, as of the end of each fiscal quarter of Guarantor, a minimum
consolidated Tangible Net Worth equal to at least the sum of (i) 90% of the
actual consolidated Tangible Net Worth of Guarantor and the Consolidated
Subsidiaries as of December 31, 1996, plus (ii) 50% of Consolidated Net Income
(if positive) in each fiscal quarter of Guarantor ending after December 31,
1996, plus (iii) one hundred percent (100%) of the contribution to Tangible Net
Worth arising since December 31, 1996, from the raising or contribution of
additional equity to Guarantor or any of the Consolidated Subsidiaries or the
conversion of any subordinated debt of Guarantor or any Consolidated Subsidiary
to equity in Guarantor or any Consolidated Subsidiary (excluding equity
adjustments arising from employee stock compensation plans). "Tangible Net
Worth" means the excess of the total assets over total liabilities of Guarantor
and the Consolidated Subsidiaries (excluding from such difference the cumulative
foreign currency translation adjustment appearing on the applicable consolidated
balance sheet of Guarantor and the Consolidated Subsidiaries); provided,
--------
however, that for purposes of this section, the determination of total assets
-------
shall exclude (i) all assets which should be classified as intangible assets
(such as goodwill, patents, trademarks, copyrights, franchises, unamortized debt
discount, capitalized research and development costs, capitalized software costs
and organization costs) (ii) cash held in a sinking or other similar fund
established for the purpose of redemption or other retirement of capital stock,
(iii) to the extent not already deducted from total assets, reserves for
depreciation, depletion, obsolescence or amortization of properties and other
reserves or appropriations of retained earnings which have been or should be
established in connection with the business conducted by the relevant
corporation, and (iv) any revaluation or other write-up in book value of assets
subsequent to December 31, 1996.
ARTICLE 8
NEGATIVE COVENANTS
------------------
So long as Lender shall have any commitment hereunder and, until payment in
full of each Loan and the Revolving Note, each Multicurrency Advance and the
Multicurrency Note and performance of all other obligations of the Borrower and
the Guarantor under this Agreement and the L/C Agreement, the Borrower and the
Guarantor, as applicable, agree not to do any of the following unless the Lender
shall otherwise consent in writing.
Section 8.1 Limitations on Liens.
--------------------
(a) The Guarantor and the Borrower will not, and will not permit
any Subsidiary of Borrower to, create or suffer to be created or to exist
any Lien upon any of its property or assets; provided, however, that the
-------- -------
foregoing shall not apply to:
(i) Liens on property acquired by the Guarantor, Borrower,
or a Subsidiary of Borrower to secure the payment of all or any part
of the purchase price or construction cost thereof; provided, however,
-------- -------
that such Lien shall not extend to other property;
(ii) Any Lien on assets of the Guarantor, Borrower, or a
Subsidiary of Borrower located outside the United States of America;
provided, however, that the aggregate amount of the Indebtedness
-------- -------
secured by such assets shall not exceed Six Million Dollars
($6,000,000);
(iii) Tax liens and routine mechanics' and materialmen's
liens incurred in the ordinary course of business; and
19
(v) Any Lien renewing, extending, refunding or replacing
any Lien permitted above by clauses (i) through (iv), inclusive,
provided that the principal amount of Indebtedness secured thereby
--------
shall not exceed the principal amount of Indebtedness secured at the
time of such renewal, extension, refunding or replacement, and that
such renewal, extension, refunding or replacement Lien shall be
limited to all or part of the same property (plus improvements,
additions, extensions, repairs and replacements to or on such
property) which secured the Lien renewed, extended, refunded or
replaced.
(b) Nothing in this Section 8.1 shall be construed to permit the
Guarantor, Borrower, or a Subsidiary of Borrower to incur any Indebtedness
the incurrence of which would at the time be prohibited pursuant to the
provisions of Section 8.2.
Section 8.2 Limitations on Indebtedness. The Guarantor and Borrower will
---------------------------
not, and will not permit any Subsidiary of Borrower to, create, incur, or become
liable for any Indebtedness except:
(a) Taxes;
(b) Indebtedness of Guarantor to Borrower, or of Borrower to a
Subsidiary of Borrower, or of Borrower or Guarantor to Lender;
(c) Indebtedness for the payment of obligations under operating
leases in an amount not exceeding Nine Million Dollars ($9,000,000) in any
Fiscal Year;
(d) Indebtedness in addition to that described in clauses (a) -(d)
the aggregate outstanding principal amount of which does not at any time
exceed Fifteen Million Dollars ($15,000,000) (or its equivalent in foreign
currencies); and
(e) Guarantees by Guarantor or Borrower of Indebtedness of a
Subsidiary that is permitted hereunder.
Section 8.3 Limitations on Dividends. The Guarantor will not declare or
------------------------
pay any dividend on, or make any distribution to the holders of, any shares of
its capital stock of any class for a consideration other than shares of capital
stock of the Guarantor nor make any payment on account thereof, if, after giving
effect to such dividend or distribution or payment and to any other such
dividend declared but not yet paid, the sum of the aggregate of all such
dividends and distributions declared after December 31, 1996, would exceed fifty
percent (50%) of Consolidated Net Income as of the most current reporting
periof.
Section 8.4 Limitations on Stock Repurchases. The Guarantor and Borrower
--------------------------------
will not, and will not permit any Subsidiary of Borrower to, purchase, redeem,
or otherwise acquire any shares of capital stock of any class of the Guarantor
or such Subsidiary of Borrower if, after giving effect to such purchase,
redemption, or acquisition, the cumulative, aggregate amount paid for the
purchase, redemption, or acquisition of such capital stock during any Fiscal
Year commencing after the Closing Date would exceed Twenty Million Dollars
($20,000,000).
Section 8.5 Limitation on Investments. The Guarantor and Borrower will
-------------------------
not, and will not permit any Subsidiary of Borrower to, make or permit to remain
outstanding any loan or advance to any Person or purchase or otherwise acquire
the capital stock, shares, voting trust certificates, bonds, debentures, notes
or instruments or other securities or evidences of indebtedness of, or any
interest in, or make any capital contribution to, any Person (collectively,
"Investments") except that the Guarantor, Borrower, and Subsidiaries of Borrower
may:
(a) Make or permit to remain outstanding loans or advances to any
Subsidiary;
(b) Own, purchase or acquire stock, obligations or securities of a
corporation that, upon such ownership, purchase or acquisition, shall be a
Subsidiary;
20
(c) Own, purchase or acquire (i) obligations including, but not
limited to, time deposits maturing within one year of commercial banks
having combined capital and surplus in excess of $100,000,000 (or the
equivalent in a foreign currency), organized or licensed to conduct a
banking business under the laws of the United States of America, any state
thereof, or a Permitted Foreign Government; (ii) obligations of the United
States government, any agency thereof or of a Permitted Foreign Government;
(iii) obligations guaranteed by the United States government or a Permitted
Foreign Government; and (iv) short-term commercial paper rated in the
highest available class by ▇▇▇▇▇'▇ Investors Services or Standard & Poor's
Corporation; and
(d) Make additional Investments in an amount not exceeding, in the
aggregate for Guarantor, Borrower, and all Subsidiaries of Borrower for all
such additional Investments, Fifteen Million Dollars ($15,000,000) which
are consistent with the guidelines adopted from time to time by the
Guarantor's and Borrower's Board of Directors.
Section 8.6 Merger or Sale of Assets. The Borrower and Guarantor will not
------------------------
and will cause the Subsidiaries of Borrower not to merge or consolidate with any
other corporation or sell, lease or transfer or otherwise dispose of any portion
of its or their business or assets, to any Person (either in a single
transaction or in a series of transactions during any Fiscal Year), except that:
(a) Any Subsidiary may merge with the Borrower (provided that the
Borrower shall be the continuing or surviving corporation);
(b) Any Subsidiary may sell, lease, transfer or otherwise dispose
of any of its assets to the Borrower, Guarantor, or another subsidiary or
Guarantor;
(c) The Guarantor may merge with any other corporation, provided
--------
that (a) the Guarantor shall be the continuing or surviving corporation,
and (b) immediately after such merger, no Default or Event of Default shall
exist;
(d) Guarantor, Borrower and Subsidiaries of Borrower may, in the
aggregate, enter into leases for assets not exceeding 10% of Guarantor's
total consolidated assets;
(e) The Borrower and its Subsidiaries may sell their products in
the ordinary course of business; and
(f) The Guarantor, Borrower, and the Borrower's Subsidiaries may
sell assets in addition to those described in clauses (a) through (d) above
in an aggregate amount for all sales by Guarantor, Borrower, and the
Borrower's Subsidiaries in any Fiscal Year not to exceed Fifteen Million
Dollars ($15,000,000); provided, that the sales of notes receivable and
leases of ultrasound equipment including service contracts to Borrower's
end customers by Guarantor or any of the Borrower's Subsidiaries shall not
be deemed sales of assets for purposes of this subsection.
Guarantor shall notify Lender in writing of all asset sales by Guarantor or any
subsidiary that involve a sales price of more than Five Million Dollars
($5,000,000) and that are outside the ordinary course of business.
Section 8.7 Limitation on Capital Expenditures. The Guarantor and
----------------------------------
Borrower shall not, and shall not permit any Subsidiary of Borrower to, make
expenditures for fixed assets or other capital expenditures which in any Fiscal
Year exceed, in the aggregate for Guarantor and the Consolidated Subsidiaries
combined, based on the consolidated financial statements, the sum of Twenty-Five
Million Dollars ($25,000,000). Nothing in this Section 8.7 shall be construed
to permit the Guarantor or any subsidiary to incur any Indebtedness the
incurrence of which would at the time be prohibited pursuant to the provisions
of Section 8.2.
Section 8.8 Maintenance of Leverage Ratio. Based on the consolidated
-----------------------------
financial statements of Guarantor and the Consolidated Subsidiaries, the
Guarantor shall not, as of the end of any Fiscal Year, permit the ratio of the
consolidated total liabilities of Guarantor to consolidated Tangible Net Worth
of
21
Guarantor to exceed 1.2 to 1.0.
Section 8.9 Limitation on Net Losses. Based on the consolidated financial
------------------------
statements of Guarantor and the Consolidated Subsidiaries, the consolidated net
loss of Guarantor shall not exceed in any one fiscal quarter the amount of Ten
Million Dollars ($10,000,000) and shall not exceed in any period of four
consecutive fiscal quarters, the aggregate amount of Twenty Million Dollars
($20,000,000); provided, that the effects of the judgment entered against
Borrower in favor of SRI International (the "SRI Judgment") by the U.S. District
Court for the Northern District of California in a case involving alleged patent
violations shall not be included when calculating compliance with this covenant,
up to a maximum amount excluded of $40,000,000.
Section 8.10 Transactions with Affiliates. Neither Guarantor, Borrower
----------------------------
nor any Subsidiary of Borrower shall enter into or be a party to any transaction
or arrangement with any Affiliate, as defined below, except in the ordinary
course of and pursuant to the reasonable requirements of Guarantor's, Borrower's
or such Subsidiary's business, and upon fair and reasonable terms no less
favorable to Guarantor, Borrower or such Subsidiary of Borrower than the
Guarantor, Borrower or Subsidiary of Borrower would obtain in a comparable arms'
length transaction with a Person other than an Affiliate. Notwithstanding the
foregoing, Guarantor or Borrower may enter into or be a party to a transaction
or arrangement with an Affiliate which, in the reasonable business judgement of
Borrower and Guarantor serves a legitimate business purpose and is in the best
interest of the Guarantor or Borrower. "Affiliate" shall mean any Person that,
directly or indirectly, through one or more intermediaries, controls, or is
controlled by or is under common control with, Guarantor or any Consolidated
Subsidiary, or 5% or more of the equity interest of which is held beneficially
or of record by Guarantor or a Consolidated Subsidiary. The term "control"
means the possession, directly or indirectly, of the power to cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise.
ARTICLE 9
EVENTS OF DEFAULT
-----------------
Section 9.1 Events of Default. The occurrence of any of the following
-----------------
events shall constitute an "Event of Default" hereunder.
(a) Payment Default. The Borrower shall fail to pay when due any
---------------
amount of principal of or interest on any Loan or Multicurrency Advance or
the Borrower or Guarantor shall fail to pay when due any other amount
payable by it hereunder; or
(b) Breach of Warranty. Any representation or warranty made by
------------------
the Borrower or Grantor under or in connection with this Agreement or the
other Loan Documents shall prove to have been incorrect in any material
respect when made; or
(c) Breach of Certain Covenants. The Borrower or Guarantor shall
---------------------------
fail to perform or observe the covenant set forth in clause (d) of Section
7.10; or
(d) Breach of Other Covenants. The Borrower shall fail to perform
-------------------------
or observe any other covenant, obligation or term of this Agreement to be
performed by and such failure shall remain unremedied for thirty (30) days
after written notice thereof shall have been given to the Borrower by the
Lender; or
(e) Cross-default. The Guarantor, Borrower, or any Subsidiary of
-------------
Borrower shall fail to pay when due (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise) any Indebtedness
having an outstanding principal balance in the aggregate in excess of Five
Hundred Thousand Dollars ($500,000) (except any Loan or Multicurrency
Advance) or any interest or premium thereon and such failure shall continue
after the applicable grace period, if any, specified in the agreement or
instrument relating to such Indebtedness; or
(f) Voluntary Bankruptcy, Etc. The Guarantor, Borrower, or
-------------------------
Subsidiary of Borrower
22
shall: (1) file a petition seeking relief for itself under Title 11 of the
United States Code, as now constituted or hereafter amended, or file an
answer consenting to, admitting the material allegations of or otherwise
not controverting, or fail timely to controvert a petition filed against it
seeking relief under Title 11 of the United States Code, as now constituted
or hereafter amended, or (2) file such petition or answer with respect to
relief under the provisions of any other now existing or future applicable
bankruptcy, insolvency, or other similar law of the United States of
America or any state thereof or of any other country or jurisdiction
providing for the reorganization, winding-up or liquidation of corporations
or an arrangement, composition, extension or adjustment with creditors,
unless such act or failure to act described in Section 9.1(f) with respect
------
to Subsidiaries of Borrower has no material adverse affect on the
consolidated financial condition of Guarantor or Borrower or on the ability
of Guarantor or Borrower to perform its obligations under the Loan
Documents; or
(g) Involuntary Bankruptcy, Etc. An order for relief shall be entered
---------------------------
against the Guarantor, Borrower, or Subsidiary of Borrower under Title 11
of the United States Code, as now constituted or hereafter amended, which
order is not stayed; or upon the entry of an order, judgment or decree by
operation of law or by a court having jurisdiction in the premises which is
not stayed adjudging it a bankrupt or insolvent under, or ordering relief
against it under, or approving as properly filed a petition seeking relief
against it under the provisions of any other now existing or future
applicable bankruptcy, insolvency or other similar law of the United States
of America or any state thereof or of any other country or jurisdiction
providing for the reorganization, winding-up or liquidation of corporations
or any arrangement, composition, extension or adjustment with creditors, or
appointing a receiver, liquidator, assignee, sequestrator, trustee or
custodian of the Guarantor, Borrower, or any Subsidiary of Borrower or of
any substantial part of its property, or ordering the reorganization,
winding-up or liquidation of its affairs, or upon the expiration of thirty
(30) days after the filing of any involuntary petition against it seeking
any of the relief specified in Section 9.1(f) or this Section 9.1(g)
without the petition being dismissed prior to that time, unless such
------
occurrence described in this Section 9.1(g) with respect to Subsidiaries of
Borrower has no material adverse affect on the consolidated financial
condition of Guarantor or Borrower or on the ability of Guarantor or
Borrower to perform its obligations under the Loan Documents; or
(h) Insolvency, Etc. The Guarantor, Borrower, or any Subsidiary of
---------------
Borrower shall (i) make a general assignment for the benefit of its
creditors or (ii) consent to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, or custodian of all or a
substantial part of the property of the Guarantor, Borrower, or any
Subsidiary of Borrower, or (iii) admit its insolvency or inability to pay
its debts generally as they become due, or (iv) fail generally to pay its
debts as they become due, or (v) take any action (or suffer any action to
be taken by its directors or shareholders) looking to the dissolution or
liquidation of the Borrower, unless such occurrence described above in (i)
------
through (v) with respect to Subsidiaries of Borrower has no material
adverse affect on the consolidated financial condition of Guarantor or
Borrower or on the ability of Guarantor or Borrower to perform its
obligations under the Loan Documents; or
(i) ERISA. The Borrower or any member of the Controlled Group shall
-----
fail to pay when due an amount or amounts aggregating in excess of Five
Hundred Thousand Dollars ($500,000) which it shall have become liable to
pay to the PBGC or to a Plan under Section 515 of ERISA or Title IV of
ERISA; or notice of intent to terminate a Plan or Plans (other than a
multi-employer plan, as defined in Section 4001(3) of ERISA), having
aggregate Unfunded Vested Liabilities in excess of Five Hundred Thousand
Dollars ($500,000) shall be filed under Title IV of ERISA by the Borrower,
any member of the Controlled Group, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings under
Title IV of ERISA to terminate any such Plan or Plans; or
(j) Borrower's Status as Wholly-Owned Subsidiary. Borrower shall
--------------------------------------------
cease to be a wholly-owned Subsidiary of Guarantor.
Section 9.2 Consequences of Default. If any of the Events of Default
-----------------------
described in Section 9.1(f) or Section 9.1(g) shall occur, the Commitment shall
immediately terminate, the principal of and the interest on
23
Loans, Multicurrency Advances and all other sums payable by Borrower hereunder
and under the Revolving Note and the Multicurrency Note shall become immediately
due and payable, and shall become immediately due and payable all without
protest, presentment, notice or demand, all of which the Borrower and Guarantor
expressly waive. If any other Event of Default shall occur and be continuing,
then in any such case and at any time thereafter so long as any such Event of
Default shall be continuing, the Lender may immediately terminate the Commitment
and, if Loans or Multicurrency Advances shall have been made, the Lender may
declare the principal of and the interest on the Loans and the Revolving Note,
and on the Multicurrency Advances and the Multicurrency Note, and all other sums
payable by the Borrower or Guarantor hereunder or thereunder to be immediately
due and payable, whereupon the same shall become immediately due and payable all
without protest, presentment, notice, or demand, all of which the Borrower and
Guarantor expressly waive.
ARTICLE 10
GUARANTY
--------
Section 10.1 Guaranteed Obligations. The Guarantor absolutely and
----------------------
unconditionally guarantees payment to the Lender when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) of all
indebtedness, liabilities and obligations whatsoever of the Borrower owing to
the Lender hereunder or under the Revolving Note or the Multicurrency Note or
the L/C Agreement, whether presently existing or hereafter arising
(collectively, the "Obligations"), without set-off, counterclaim, recoupment or
deduction of any amounts owing or alleged to be owing by Lender to Borrower.
This guaranty is a guaranty of payment and not merely of collection.
Section 10.2 Guarantor's Consent. The Guarantor hereby consents that the
-------------------
Lender may without further consent or disclosure and without affecting or
releasing the obligations of Guarantor hereunder: (a) waive or delay the
exercise of any rights or remedies of the Lender against the Borrower; and (b)
renew, extend, waive or modify the terms of any Obligation or any instrument or
agreement evidencing the same.
Section 10.3 Guarantor's Waiver. The Guarantor waives any action on
------------------
delinquency in respect of the Obligations or any part thereof, including any
right to require Lender to ▇▇▇ Borrower. Guarantor further waives notice of (a)
any default by the Borrower; (b) the obtaining of any guaranty or surety
agreement (in addition to this guaranty); (c) the obtaining of any pledge,
assignment or other security for any Obligations; (d) any renewal, extension or
modification of the terms of any Obligation or of the obligations or liabilities
of any surety or guarantor or any instruments or agreements evidencing the same;
(e) any other demands or notices whatsoever with respect to the Obligation or
this guaranty.
Section 10.4 Unconditional Guaranty. The obligations of the Guarantor
----------------------
under this guaranty are absolute and unconditional without regard to the
obligations of any other party or person. The obligations of the Guarantor
hereunder shall not be in any way limited or effected by any circumstances
whatsoever including, without limitation, (a) any failure by the Borrower or any
other guarantor or surety to perform or comply with the Obligations or the terms
of any instrument or agreement relating thereto; (b) any change in the name,
purpose, capital stock or constitution of the Borrower; (c) any irregularity or
defect by Lender (excluding negligent or willful misconduct), Borrower or any
other guarantor or surety or any of their respective officers, directors or
other agents in executing and delivering any instrument or agreements relating
to the Obligations or in carrying out or attempting to carry out the terms of
any such agreements; (d) any insolvency, bankruptcy, reorganization or similar
proceeding by or against Borrower, Lender, Guarantor or any other surety or
guarantor; (e) any setoff, counterclaim, recoupment, deduction, defense or other
right which Guarantor may have against Lender, Borrower or any other person for
any reason whatsoever whether related to the Obligations or otherwise; or (f)
any other circumstances which might constitute a legal or equitable discharge or
defense, in whole or in part, of a surety or guarantor. Guarantor hereby waives
all defenses of a surety to which it may be entitled by statute or otherwise.
Section 10.5 Waiver of Subrogation. Guarantor hereby irrevocably waives
---------------------
all claims it has or may acquire against Borrower in respect of the Obligations,
including rights of exoneration, reimbursement and subrogation.
24
ARTICLE 11
MISCELLANEOUS
-------------
Section 11.1 No Waiver; Remedies Cumulative. No failure by Lender,
------------------------------
Guarantor or the Borrower to exercise, and no delay in exercising, any right,
power or remedy under this Agreement or any other Loan Document shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, power
or remedy under this Agreement or any other Loan Document preclude any other or
further exercise thereof or the exercise of any other right, power, or remedy.
The exercise of any right, power, or remedy shall in no event constitute a cure
or waiver of any Event of Default under this Agreement or any other Loan
Document nor prejudice any party's rights in the exercise of any powers
hereunder or thereunder. The rights and remedies provided herein and therein
are cumulative and not exclusive of any right or remedy provided by law.
Section 11.2 Governing Law. This Agreement and the other Loan Documents
-------------
shall be governed by and construed in accordance with the laws of the State of
Washington, U.S.A.
Section 11.3 Consent to Jurisdiction. Each party hereto irrevocably
-----------------------
submits to the nonexclusive jurisdiction of any state or federal court sitting
in Seattle, King County, Washington, in any action or proceeding brought to
enforce or otherwise arising out of or relating to this Agreement or any other
Loan Document and agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in any other jurisdiction by suit on the
judgment or in any other manner provided by law. Nothing in this Section 11.3
shall impair the right of any party to bring any action or proceeding hereunder
in the courts of any other jurisdiction, and the Borrower and Guarantor
irrevocably submit to the nonexclusive jurisdiction of the appropriate courts of
the jurisdiction in which any property or an office of the Borrower or Guarantor
is located.
Section 11.4 Notices. All notices and other communications provided for
-------
in this Agreement shall be in writing or (unless otherwise specified) by telex,
facsimile transmission, telegram or cable and shall be mailed (with first class
postage prepaid) or sent or delivered to each party at the address set forth
under its name on Schedule 3 hereof, or at such other address as shall be
designated by such party in a written notice to each other party. Except as
otherwise specified all notices sent by mail, if duly given, shall be effective
three (3) Business Days after deposit into the mails, all notices sent by a
nationally recognized overnight courier service, if duly given, shall be
effective one (1) Business Day after delivery to such courier service, and all
other notices and communications if duly given or made shall be effective upon
receipt.
Section 11.5 Assignment. This Agreement shall be binding upon and inure
----------
to the benefit of the parties and their respective Successors and assigns,
provided that the Borrower or Guarantor may not assign or otherwise transfer all
--------
or any part of its rights or obligations hereunder or under any other Loan
Document without the prior written consent of the Lender. Except as provided
herein, Lender shall not have the right to sell or assign all or any portion of
the Loans or Multicurrency Advances or of its right, title and interest therein
or thereto or in or to this Agreement or any other Loan Document to any other
person without the Borrower's prior written consent; provided, however, Lender
-------- -------
may grant participations in all or any portion of its Loans or Multicurrency
Advances, or the Commitment, but Lender's obligations under the Loan Documents
shall remain unchanged, and the Borrower and Guarantor shall continue to deal
solely and directly with the Lender in connection with Lender's rights and
obligations under the Loan Documents.
Section 11.6 Severability. Any provision of this Agreement or any other
------------
Loan Document which is prohibited or unenforceable in any jurisdiction shall as
to such jurisdiction be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties waive any
provision of law which renders any provision hereof prohibited or unenforceable
in any respect.
25
Section 11.7 Survival. All representations, warranties and indemnities of
--------
the Borrower, Guarantor or the Lender shall survive the execution and delivery
of this Agreement and the other Loan Documents and the making of any Loan or
Multicurrency Advance. Notwithstanding anything in this Agreement or implied by
law to the contrary, the indemnities of Borrower and Guarantor in favor of the
Lender, and the obligations of Borrower and Guarantor contained herein to pay
fees to, and expenses incurred by, the Lender shall survive the payment of the
Loans and Revolving Note and the Multicurrency Advances and the Multicurrency
Note, and the termination of the Commitment and this Agreement.
Section 11.8 Conditions Not Fulfilled. If the Commitment is not borrowed,
------------------------
owing to nonfulfillment of any condition precedent specified in Article 5, no
party hereto shall be responsible to any other party for any damage or loss by
reason thereof, except that the Borrower shall in any event be liable to pay the
fees, Taxes, and expenses for which it is obligated hereunder and the
Guarantor's obligations under Article 10 hereof shall extend to the Borrower's
responsibility to pay such amounts.
Section 11.9 Entire Agreement; Amendment. This Agreement comprises the
---------------------------
entire agreement of the parties and may not be amended or modified except by
written agreement, executed in conformance with the terms of Section 11.1
hereof. No provision of this Agreement may be waived except in writing and then
only in the specific instance and for the specific purpose for which given.
Section 11.10 Headings. The headings of the various provisions of this
--------
Agreement are for convenience of reference only, do not constitute a part
hereof, and shall not affect the meaning or construction of any provision
hereof.
Section 11.11 Prevailing Party Attorney's Fees. If a final judgment is
--------------------------------
rendered in any judicial proceeding brought by any party against any other party
to enforce the provisions of this Agreement or any other Loan Document, the
party in whose favor such judgment is rendered shall be entitled to recovery of
its reasonable attorney's fees and costs, including the allocated cost of in-
house counsel.
Section 11.12 Counterparts. This Agreement may be executed in any number
------------
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original, and all of which
taken together shall constitute one and the same Agreement.
Section 11.13 Confidentiality. Lender agrees during the term of this
---------------
Agreement and for three years thereafter, except as required by applicable law
or regulation or as is necessary to the enforcement of the Loan Documents, to
maintain in confidence any confidential information provided by Borrower or
Guarantor which is not or does not become publicly known without breach of this
provision. Lender agrees to use such confidential information only in
connection with the administration of the Loans, the Multicurrency Advances and
the Letter of Credit.
Section 11.14 CONCERNING ORAL. ORAL AGREEMENTS OR ORAL COMMITMENTS TO
---------------
LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING PAYMENT OF A DEBT ARE NOT
ENFORCEABLE UNDER WASHINGTON LAW (RCW 19.36).
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers or agents thereunto duly authorized as of
the date first above written.
26
BORROWER:
ADVANCED TECHNOLOGY LABORATORIES,
INC., a Washington corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
________________________________
Its: Vice President & Treasurer
_______________________________
GUARANTOR:
ATL ULTRASOUND, INC., a Washington
corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
________________________________
Its: Vice President & Treasurer
_______________________________
LENDER:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, dba SEAFIRST
BANK
By: /s/ [signature illegible]
________________________________
Its: Vice President
_______________________________
27
EXHIBIT A
REVOLVING NOTE
$15,000,000 July _____,1997
Seattle, Washington
FOR VALUE RECEIVED, the undersigned, ADVANCED TECHNOLOGY LABORATORIES, INC.
a Washington corporation (the "Borrower"), hereby promises to pay to the order
of Bank of America National Trust and Savings Association, doing business as
SEAFIRST BANK (the "Lender") on the Maturity Date the unpaid principal balance
of all loans made under this Note, in a maximum amount not to exceed Fifteen
Million Dollars ($15,000,000), together with interest thereon from the date
hereof until maturity at a per annum rate equal to the Interest Rate (changing
as the Interest Rate changes), and, if default shall occur in the payment when
due (whether by acceleration or otherwise) of any principal amount hereunder,
from the maturity of that amount until it is paid in full at a per annum rate
equal to the Reference Rate (changing as the Reference Rate changes), plus two
percent (2%). Notwithstanding anything herein to the contrary, interest shall
not accrue at a rate in excess of the maximum rate permitted by applicable law.
The Borrower further agrees as follows:
1. All payments of principal and interest on this Note shall be made to
Seafirst Bank, at its Commercial Loan Service Center, Seattle, Washington, in
immediately available funds.
2. As used herein "Interest Rate" shall mean the Reference Rate unless
the Borrower shall elect to have some or all of the loans made hereunder accrue
interest at the Quoted Rate or the LIBOR Rate as provided in Section 2.5(d) of
the Revolving Credit Agreement and Guaranty dated July ______, 1997, among
Lender, Borrower, and ATL ULTRASOUND, INC., as "Guarantor" ("Loan Agreement").
Accrued but unpaid interest on loans bearing interest at the Reference Rate
shall be paid on (i) the last Business Day of each calendar quarter commencing
on June 30, 1997, and continuing on the last Business Day of each March, June,
September and December thereafter, (ii) the date of any principal payment (to
the extent accrued on the principal amount paid) and (iii) at maturity. Accrued
but unpaid interest on each Quoted Rate Loan or LIBOR Loan shall be paid (i) on
the last day of each Applicable Interest Period, (ii) the date of any principal
payment (to the extent accrued on the principal amount paid), (iii) at maturity
and (iv) for LIBOR Loans for which the Applicable Interest Period is six months,
interest shall also be payable on a day 90 days or three months, respectively,
after the commencement of such Applicable Interest Period. Unpaid interest
accruing on amounts in default shall be payable on demand.
3. This Note is issued under and is subject to the terms of the Loan
Agreement. In the event of any conflict between the terms of this Note and the
Loan Agreement, the Loan Agreement shall control. Capitalized terms not defined
herein have the meanings set forth in the Loan Agreement.
4. It is expressly provided that if any of the Events of Default defined
in Sections 9.1(f) or 9.1(g) of the Loan Agreement shall occur, the entire
unpaid balance of the principal and interest hereunder shall be immediately due
and payable in accordance with the terms of the Loan Agreement. It is also
expressly provided that upon the occurrence of any other Event of Default, the
entire remaining unpaid balance of the principal and interest may be declared by
the Lender to be immediately due and payable in accordance with the terms of
the Loan Agreement.
5. The unpaid principal balance of the Loans made hereunder shall be the
total amount advanced hereunder, less the amount of the principal payments made
hereon. This Note is given to avoid the execution of an individual note for
each Loan by the Lender to the Borrower. This Note evidences a revolving credit
and within the limits and on the conditions set forth in the Loan Agreement,
prior to the Maturity Date, the Borrower may borrow, repay and reborrow
hereunder. The Lender is hereby
1
authorized to record on a schedule or computer-generated statement the date and
amount of each Loan it makes hereunder and the date and amount of each payment
of principal and interest thereon, and such schedule or statement shall
constitute a part of this Note. Any such recordation by the Lender shall
constitute prima facie evidence of the accuracy of the information so recorded;
provided, however, that the failure to make any such recordation or any error in
any such recordation shall not affect the obligations of the Borrower hereunder.
6. Each maker, surety, guarantor and endorser of this Note expressly
waives all notices, demands for payment, presentations for payment, notices of
intention to accelerate the maturity, protest and notice of protest.
7. In the event this Note is placed in the hands of an attorney for
collection, or suit is brought on the same, or the same is collected through
bankruptcy or other judicial proceedings, except as provided in Section 11.11 of
the Loan Agreement, the Borrower agrees and promises to pay reasonable
attorneys' fees and collection costs, including all out-of-pocket expenses
incurred by the Lender, and the allocated cost of in-house counsel.
8. This Note has been executed and delivered in and shall be governed by
and construed in accordance with the internal laws of the State of Washington.
The Borrower hereby irrevocably submits to the nonexclusive jurisdiction of any
state or federal court sitting in Seattle, King County, Washington, in any
action or proceeding brought to enforce or otherwise arising out of or relating
to this Note.
2
BORROWER:
ADVANCED TECHNOLOGY LABORATORIES, INC., a Washington corporation
By:_________________________________
Its:________________________________
2
EXHIBIT B
MULTICURRENCY NOTE
July _____, 1997
Seattle, Washington
FOR VALUE RECEIVED, the undersigned, ADVANCED TECHNOLOGY LABORATORIES, a
Washington corporation (the "Borrower"), hereby promises to pay to the order of
Bank of America National Trust and Savings Association, doing business as
SEAFIRST BANK (the "Lender") on the Maturity Date, in immediately available
funds, all principal amounts advanced under this Note, pursuant to the terms,
conditions, and definitions of the Revolving Credit Agreement and Guaranty dated
July ______, 1997, among Lender, Borrower, and ATL ULTRASOUND, INC., as
"Guarantor" ("Loan Agreement"), together with interest on the daily unpaid
principal balance from the date of each Multicurrency Advance until paid in full
in accordance with the Loan Agreement.
This Note is the Multicurrency Note referred to in the Loan Agreement, and
the Loan Agreement is incorporated herein.
Each Multicurrency Advance shall be repaid in the currency which was
advanced, and shall be repaid on the last day of its Applicable Interest Period.
Interest accrued on each Multicurrency Advance under this Note shall be paid as
provided in the Loan Agreement.
1. All payments of principal and interest on this Note shall be made to
Seafirst Bank, at its Commercial Loan Service Center, Seattle, Washington, in
immediately available funds.
2. This Note is issued under and is subject to the terms of the Loan
Agreement. In the event of any conflict between the terms of this Note and the
Loan Agreement, the Loan Agreement shall control. Capitalized terms not defined
herein have the meanings set forth in the Loan Agreement.
3. It is expressly provided that if any of the Events of Default defined
in Sections 9.1(f) or 9.1(g) of the Loan Agreement shall occur, the entire
unpaid balance of the principal and interest hereunder shall be immediately due
and payable in accordance with the terms of the Loan Agreement. It is also
expressly provided that upon the occurrence of any other Event of Default, the
entire remaining unpaid balance of the principal and interest may be declared by
the Lender to be immediately due and payable in accordance with the terms of the
Loan Agreement.
4. The unpaid principal balance of the Multicurrency Advances made
hereunder shall be the total amount advanced hereunder, less the amount of the
principal payments made hereon. This Note is given to avoid the execution of an
individual note for each Multicurrency Advance by the Lender to the Borrower.
This Note evidences a revolving credit and within the limits and on the
conditions set forth in the Loan Agreement, prior to the Maturity Date, the
Borrower may borrow, repay and reborrow hereunder. The Lender is hereby
authorized to record on a schedule or computer-generated statement the date and
amount of each Loan it makes hereunder and the date and amount of each payment
of principal and interest thereon, and such schedule or statement shall
constitute a part of this Note. Any such recordation by the Lender shall
constitute prima facie evidence of the accuracy of the information so recorded;
provided, however, that the failure to make any such recordation or any error in
any such recordation shall not affect the obligations of the Borrower hereunder.
5. Each maker, surety, guarantor and endorser of this Note expressly
waives all notices, demands for payment, presentations for payment, notices of
intention to accelerate the maturity, protest and notice of protest.
6. In the event this Note is placed in the hands of an attorney for
collection, or suit is brought
1
on the same, or the same is collected through bankruptcy or other judicial
proceedings, except as provided in Section 11.11 of the Loan Agreement, the
Borrower agrees and promises to pay reasonable attorneys' fees and collection
costs, including all out-of-pocket expenses incurred by the Lender, and the
allocated cost of in-house counsel.
7. This Note has been executed and delivered in and shall be governed by
and construed in accordance with the internal laws of the State of Washington.
The Borrower hereby irrevocably submits to the nonexclusive jurisdiction of any
state or federal court sitting in Seattle, King County, Washington, in any
action or proceeding brought to enforce or otherwise arising out of or relating
to this Note.
BORROWER:
ADVANCED TECHNOLOGY LABORATORIES,
INC., a Washington corporation
By:___________________________________
Its:__________________________________
2
EXHIBIT C
MULTICURRENCY BORROWING NOTICE
TO: Seafirst Bank
Metropolitan Commercial Team 2
▇▇▇ ▇▇▇▇▇ ▇▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Att'n: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
BORROWING INSTRUCTIONS:
Date of Borrowing: ______________
Specify New Advance or Rollover: ______________
Currency Type: ______________
Amount requested in applicable Currency: ______________
Interest Period (1, 2, 3, or 6 months): ______________
WIRE INSTRUCTIONS:
Bank Name: ______________
SWIFT Code: ______________
Account Name: ______________
Account Number: ______________
Attention: ______________
Phone Number: ______________
DATED as of this __________ day of _____________________________, 19______.
ADVANCED TECHNOLOGY LABORATORIES
By___________________________________
Title________________________________
________________________________________________________________________________
Bank Use Only:
Currency Borrowing Rate: ______________
Plus Usage Factor (0.625% or 0.75%) ______________
All-In Rate: ______________
Accrual Basis (actual/360 or actual/365/66) ______________
U.S.$ Equivalent: ______________
EXHIBIT D
QUARTERLY COMPLIANCE CERTIFICATE
The undersigned, being the _______________________ of ATL ULTRASOUND,
INC., a Washington corporation, (the "Guarantor"), does hereby certify to Bank
of America National Trust and Savings Association, doing business as SEAFIRST
BANK, (the "Lender"), as follows:
(a) This Certificate is given pursuant to Section 7.2 of that certain
Revolving Credit Loan Agreement (the "Credit Agreement") dated as of July
______, 1997, among the Lender, the Guarantor and Advanced Technology
Laboratories, Inc., a Washington corporation (the "Borrower").
(b) The financial statements for the Fiscal Year [fiscal quarter]
ended _________________ delivered with this Certificate pursuant to the
requirements of Section 7.2 of the Credit Agreement have been prepared in
accordance with generally accepted accounting principles consistently applied
and present fairly the financial position and the results of operations of the
Guarantor and the Consolidated Subsidiaries as of the end of and for such fiscal
period.
(c) Since the Fiscal Year-end report previously provided to the Lender
pursuant to Section 6.6 or Section 7.2(ii) of the Credit Agreement, there have
been no changes to the operations, business or financial condition of the
Guarantor and the Consolidated Subsidiaries that would be sufficient to impact
the Borrower's ability to repay any outstanding or requested Loans or that have
resulted in, or are forecast by Borrower to result in, a Default or Event of
Default.
(d) There has not existed during the fiscal quarter ended
_______________________ and there does not now exist any Event of Default or
Default under the Credit Agreement.
(e) If an Event of Default has existed or does exist, the nature of
such event is as follows: ________________________________. Such Event of
Default occurred on ________________ and existed for a period of
____________________. Guarantor or Borrower took the following action, or
propose to take the following action with respect to such Event of
Default:_______________________
(f) The computations and descriptions set forth in Schedule 1 hereto
demonstrate compliance with Sections 7.11-7.13, 8.3-8.9 of the Credit Agreement.
(g) Capitalized terms used herein and not otherwise defined shall have
the meanings defined in the Credit Agreement.
DATED this _____ day of _______________, 19___.
ATL ULTRASOUND, INC., a Washington
corporation
By: ______________________________
Its:______________________________
1
SCHEDULE 1 TO QUARTERLY COMPLIANCE CERTIFICATE
Section 7.11 Quick Ratio
------------------------
Actual Quick Ratio
------------------
1. Cash and Cash Equivalents $__________
2. Short Term Marketable
Securities $__________
3. Receivables (net of allowance
for doubtful receivables and
sales returns) $__________
4. Sum of 1, 2 & 3 $__________
5. Total Current
Liabilities $__________
6. Actual Quick Ratio
(clause 4 divided
by clause 5) __________
Permitted Minimum Quick Ratio Not less than
1.1 to 1
Section 7.12 Current Ratio
--------------------------
1. Consolidated Current
Assets $________
2. Consolidated
Current Liabilities $________
3. Current Ratio (clause 1 divided by clause 2) ________
Permitted Minimum Current Ratio Not less than 1.8 to 1.0
Section 7.13 Tangible Net Worth
-------------------------------
Actual Tangible Net Worth
as of 199
-------------------------
1. Total assets as reflected
on balance sheet $__________
Page 1
Less excluded assets:
a. intangible assets $__________
b. cash in fund for
redemption or retire-
ment of capital stock $__________
c. reserves to the extent
not already deducted
from total assets $__________
d. revaluation or write-up
of book value of assets
subsequent to Fiscal
Year ended December 31, 1996 $__________
2. Sum of non-excluded
assets $__________
3. Total Liabilities (as used
in Section 7.13) $__________
4. Difference between 2 and 3 $__________
5. Cumulative Foreign Currency
Translation Adjustments
Excluded $__________
6. Actual Tangible Net Worth
(difference between 4 and 5) $__________
Required Tangible Net Worth
---------------------------
1. 90% of consolidated Tangible
Net Worth of Borrower and
its Subsidiaries as of
December 31, 1996 $__________
2. 50% of Consolidated Net
Income since December 31, 1996
(if positive) $__________
3. Contribution to Tangible Net
Worth arising since
December 31, 1996, from
additional equity (excluding
equity adjustments arising
from stock compensation
plans) $__________
Page 2
4. Required Tangible Net Worth:
(sum of 1, 2 and 3) $__________
Section 8.3 Dividends
---------------------
1. Actual dividends since December 31, 1996 $__________
2. Permitted dividends: 50% of
Consolidated Net Income since
December 31, 1996 $__________
Section 8.4 Stock Repurchases
-----------------------------
1. Actual amount paid for
acquisition of Guarantor stock
during fiscal quarter ended
___________________ $__________
2. Total actual amount paid for
acquisition of Guarantor stock
in applicable Fiscal Year
through quarter ended
___________________ $__________
3. Permitted amount to be paid
for acquisition of Guarantor
stock during any Fiscal Year $20,000,000
Section 8.5 Investments
-----------------------
1. Actual amount invested in any
related business during fiscal
quarter ended ________________
(other than investments
specifically permitted by
subsections (a)-(b) of
Section 8.5) $__________
2. Total actual amount invested in
any related business in applicable
Fiscal Year through quarter ended
___________________ (other than
investments specifically permitted
by subsections (a)-(b) of Section 8.5)
$__________
Page 3
3. Permitted amount to be invested
in any related business during
any Fiscal Year (other than
amounts specifically permitted
in subsections (a)-(b) of
Section 8.5) $15,000,000
Section 8.6 Merger or Sale of Assets
------------------------------------
1. Aggregate sales price of assets
sold in fiscal quarter ended
_______________ (other than
sales permitted by clauses
(a)-(e) of Section 8.6) $__________
2. Aggregate sales price of assets
sold in applicable Fiscal Year
through quarter ended
___________________ (other
than sales permitted by clauses
(a)-(e) of Section 8.6) $__________
3. Permitted asset sales during any
Fiscal Year (other than sales
permitted by clauses (a)-(e)
of Section 8.6) $15,000,000
Description of asset sales of Guarantor or a Subsidiary that involve a
sales price of more than $5,000,000 and are outside the ordinary course of
business: ________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
Section 8.7 Capital Expenditures
--------------------------------
1. Aggregate capital expenditures of
Guarantor and Subsidiaries for
fiscal quarter ended _____________ $__________
2. Aggregate capital expenditures of
Guarantor and Subsidiaries in applicable
Fiscal Year through quarter
ended ___________________ $__________
3. Permitted aggregate capital expenditures
of Guarantor and Subsidiaries for any
Fiscal Year $25,000,000
Page 4
Section 8.8 Leverage Ratio (Fiscal Year End Only)
--------------------------
Actual Leverage Ratio as of ______________
---------------------
1. Consolidated total liabilities of
Guarantor and Subsidiaries $__________
2. Consolidated Tangible Net Worth
(as defined in Section 7.13) of
Guarantor and Subsidiaries $__________
3. Leverage Ratio (clause 1 divided
by clause 2) __________
Permitted Maximum Leverage Ratio Not greater
--------------------------------
than 1.2 to 1.0
Section 8.9
-----------
Consolidated Net Losses
(Most recent quarter)
1. Consolidated Net Losses of
Guarantor and its Subsidiaries
During Quarter Ending ________ $__________
2. Permitted Consolidated Net
Losses of Guarantor and its
Subsidiaries $10,000,000
Quarter
Ending
-------
Consolidated Net Losses
(Most recent 4 consecutive
quarters)
1. Consolidated Net Losses _________ $___________
of Guarantor and its _________ $___________
Subsidiaries _________ $___________
_________ $___________
Total $___________
2. Permitted consolidated Net
Losses of Guarantor and its
Subsidiaries in any period of
four consecutive fiscal
quarters $20,000,000
Page 5
SCHEDULE 3
NOTICE ADDRESSES
BORROWER:
ADVANCED TECHNOLOGY LABORATORIES
Advanced Technology Laboratories.
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Senior Vice President, Finance
and Administration
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
GUARANTOR:
ATL ULTRASOUND, INC.
ATL Ultrasound, Inc.
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Senior Vice President, Finance
and Administration
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
LENDER:
SEAFIRST BANK
Seafirst Bank
Metropolitan Wholesale, Team 2
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Att: ▇▇. ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇,
Vice President
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
