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EXHIBIT 10.14
AMENDED AND RESTATED
CREDIT AGREEMENT
dated as of
January 30, 1998
Among
PHASE METRICS, INC.,
as Borrower
FLEET NATIONAL BANK,
as Agent for the Lenders,
and
the Lenders now or hereafter party hereto
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TABLE OF CONTENTS
Page
RECITALS.....................................................................1
ARTICLE I DEFINITIONS.......................................................2
Section 1.1 Defined Terms.................................................2
Section 1.2 Other Definitional Provisions................................17
ARTICLE II THE LOANS.......................................................17
Section 2.1 The Revolving Loans..........................................17
Section 2.2 [Intentionally Deleted]......................................20
Section 2.3 Fees.........................................................20
Section 2.4 Repayment....................................................20
Section 2.5 Interest Rate and Payment Dates..............................21
Section 2.6 Continuation and Conversion Options..........................22
ARTICLE III GENERAL PROVISIONS CONCERNING THE LOANS........................22
Section 3.1 Use of Proceeds..............................................22
Section 3.2 Post Default Interest........................................23
Section 3.3 Computation of Interest and Fees.............................23
Section 3.4 Payments.....................................................23
Section 3.5 Payment on Non-Business Days.................................23
Section 3.6 Reduced Return...............................................24
Section 3.7 Indemnities..................................................24
Section 3.8 Funding Sources..............................................25
Section 3.9 Sharing of Payments, Etc.....................................25
Section 3.10 Inability to Determine Interest Rate........................26
Section 3.11 Requirements of Law.........................................26
Section 3.12 Illegality..................................................27
Section 3.13 Obligation to Mitigate......................................27
Section 3.14 Taxes.......................................................28
ARTICLE IV CONDITIONS OF EFFECTIVENESS AND LENDING.........................30
Section 4.1 Conditions Precedent to Effectiveness........................30
Section 4.2 Conditions Precedent to Each Borrowing.......................31
ARTICLE V REPRESENTATIONS AND WARRANTIES...................................32
Section 5.1 Representations and Warranties...............................32
ARTICLE VI COVENANTS.......................................................35
Section 6.1 Affirmative Covenants........................................35
Section 6.2 Negative Covenants...........................................38
ARTICLE VII EVENTS OF DEFAULT..............................................46
Section 7.1 Events of Default............................................46
ARTICLE VIII THE AGENT.....................................................49
Section 8.1 Authorization and Action.....................................49
Section 8.2 Agent's Reliance, etc........................................49
Section 8.3 The Agent and Affiliates.....................................50
Section 8.4 Lender Credit Decision.......................................50
Section 8.5 Indemnification..............................................50
Section 8.6 Successor Agent..............................................50
ARTICLE IX MISCELLANEOUS...................................................51
Section 9.1 Amendments, etc..............................................51
Section 9.2 Notices, etc.................................................51
Section 9.3 Right of Setoff; Deposit Accounts............................52
Section 9.4 No Waiver; Remedies..........................................52
Section 9.5 Costs and Expenses...........................................52
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Section 9.6 Additional Lenders; Assignments; Participations..............52
Section 9.7 Effectiveness; Binding Effect; Governing Law.................55
Section 9.8 Forum Selection and Consent to Jurisdiction..................55
Section 9.9 Waiver of Jury Trial.........................................56
Section 9.10 Entire Agreement............................................56
Section 9.11 Separability of Provisions..................................56
Section 9.12 Obligations Several.........................................56
Section 9.13 Survival of Certain Agreements..............................56
Section 9.14 Execution in Counterparts...................................57
Section 9.15 Intercreditor Agreements with Customers.....................57
ANNEX I Revolving Commitments
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SCHEDULES
5.1(f) Litigation
5.1(j) Environmental Matters
6.2(f) Permitted Liens
6.2(g) Existing Debt
6.2(k) Existing Investments
6.2(l) Existing Contingent Obligations
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EXHIBITS
Exhibit A Form of Revolving Promissory Note
Exhibit B [Intentionally Omitted]
Exhibit C Form of Notice of Borrowing
Exhibit D Form of Notice of Conversion/Continuation
Exhibit E Form of Borrower's Opinion
Exhibit F Form of Compliance Certificate
Exhibit G Form of Guaranty
Exhibit H Form of Security Agreement
Exhibit I Form of Assignment Agreement
Exhibit J Form of Borrowing Base Certificate
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AMENDED AND RESTATED
CREDIT AGREEMENT
This Amended and Restated Credit Agreement dated as of January 30, 1998 is
entered into among PHASE METRICS, INC., as the borrower (the "Borrower"), the
financial institutions named on the signature pages hereof and each other Person
that becomes a Lender hereunder as described in Section 9.6 hereof (each a
"Lender" and collectively the "Lenders"), and FLEET NATIONAL BANK, as agent (the
" Agent") for the Lenders. The parties hereto agree as follows:
RECITALS
WHEREAS, on or about December 4, 1996 the Borrower obtained from Lenders
and certain other financial institutions a term commitment of up to $80,000,000
and a revolving loan commitment of up to $40,000,000 all on the terms and
conditions contained in that certain Credit Agreement by and between the parties
hereto, certain other financial institutions and DLJ Capital Funding, Inc., as
syndication agent (the "Existing Credit Agreement"); and
WHEREAS, the Borrower has requested the Agent and the Lenders amend and
restate said credit facility by replacing same with the Revolving Commitment in
a maximum principal amount not to exceed $25,000,000 (which, subject to the
complete discretion of the Lenders may be increased to up to $40,000,000 in the
future) to repay certain outstanding indebtedness under the Existing Credit
Agreement and to permit the Borrower to issue up to $110,000,000 of senior
unsecured notes due 2005 and the Agent and the Lenders are willing to amend and
restate the Existing Credit Agreement to permit certain indebtedness outstanding
thereunder to remain outstanding on the terms and conditions set forth in this
Amended and Restated Credit Agreement and to provide for the Revolving
Commitment.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the Borrower, the Lenders and the
Agent agree that the Existing Credit Agreement is hereby amended and restated
and shall remain in effect as amended and restated hereby on the terms and
conditions contained herein, each of which are agreed to by the Borrower, the
Lenders and the Agent as follows:
WHEREAS, the Lenders are willing, on the terms and subject to the
conditions hereinafter set forth (including Article IV), to extend the
Commitment and make the Revolving Loans to the Borrower;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the Borrower, the Lenders and the
Agents agree as follows:
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ARTICLE I
DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms have
the following meanings:
"Accounts": All rights of a Person to payment for goods sold or
leased or for services rendered, no matter how evidenced, including accounts
receivable, contract rights, notes, drafts, chattel paper, acceptances and other
forms of obligations and receivables so long as the right to such payment has
been earned (entitlement to recognize revenue under GAAP) but regardless of
whether an invoice for such amount has been rendered so long as the failure to
render such invoice is in accordance with the payment schedule set forth in the
underlying contract.
"Account Debtor": The party who is obligated on or under an
Account.
"Acquisition": As defined in Section 6.2(j).
"Affiliate": As applied to any Person, any Person directly or
indirectly controlling, controlled by or under common control with, that Person.
For the purposes of this definition, "control" (including with the correlative
meanings, the terms "controlling", "controlled by" and "under common control
with"), as applied to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
that Person, whether through the ownership of voting securities or by contract
or otherwise.
"Agent": As defined in the introductory paragraph of this
Agreement and sometimes referred to as the Administrative Agent in certain of
the Loan Documents.
"Agreement": This Amended and Restated Credit Agreement, as
amended, supplemented, restated or modified from time to time.
"Applicable Margin": Initially, with respect to the unpaid
principal amount of each Revolving Loan maintained as a
(i) Prime Rate Loan, 1.00% per annum; and
(ii) LIBO Rate Loan, 3.00% per annum;
"Assignment Agreement": An Assignment Agreement in substantially
the form of Exhibit I attached hereto.
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"Borrower": Phase Metrics, Inc., a Delaware corporation and the
successor by merger to Phase Metrics, Inc., a California corporation.
"Borrower's Account": That certain deposit account established
and maintained by the Borrower at the Domestic Lending Office of the Agent
pursuant to Section 6.1(h).
"Borrowing": As defined in Section 2.1.
"Borrowing Base": An amount equal to seventy-five percent (75%) of
Eligible Accounts; provided that if and so long as Borrower maintains a ratio of
Consolidated Total Debt to EBITDA of less than 3.5:1.0 as of Fiscal Quarter
endings of the Borrower, in each case determined on the basis of the
Consolidated Total Debt and EBITDA for the Fiscal Quarter of the Borrower in
question and for the immediately preceding three consecutive Fiscal Quarters of
the Borrower, an amount equal to the sum of eighty percent (80%) of Eligible
Accounts and the lesser of (i) twenty-five percent (25%) of Eligible Inventory
and (ii) $10,000,000.
"Borrowing Base Certificate": A certificate of the Borrower in
substantially the form of Exhibit J attached hereto, delivered pursuant to
Section 6.1(a)(vi).
"Breakage Costs": All costs and losses which a Lender may incur as a
result of any repayment of principal on LIBO Rate Loans borrowed hereunder on a
date other than a scheduled maturity date for the applicable Borrowing and all
costs and losses which a Lender may incur as a result of any failure of the
Borrower to borrow hereunder after giving written Notice of Borrowing hereunder
to the Agent pursuant to Section 2.1(b) or 2.2(b), such Lender's good faith
computation of such costs and losses to be in reasonable detail setting forth
the basis of the calculation thereof and to be conclusive and binding in the
absence of manifest error, and the amount thereof to be paid in same day funds
upon demand by such Lender or the Agent.
"Business Day": A day other than a Saturday, Sunday or day on
which commercial banks in California, Massachusetts or New York are
authorized or required by law to close.
"Capital Lease": As applied to any Person, any lease of any property
(whether real, personal or mixed) by that Person as lessee which would, in
accordance with GAAP, be required to be accounted for as a capital lease on the
balance sheet of that Person.
"Change in Control" means
(a) the failure of the Borrower at any time to own, directly or
indirectly, free and clear of all Liens and encumbrances, all right, title
and interest in 100% of the shares of capital stock of each Guarantor
having ordinary voting power; or
(b) the failure of the Borrower at any time to have the right to
elect a majority of the Board of Directors of each Guarantor; or
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(c) 30% or more of the shares of capital stock of the Borrower
having ordinary voting power on a fully diluted basis shall cease to be
owned by the holders of such shares on the date of this Agreement; or
(d) a "Change of Control" as defined in the Indenture shall occur.
"Collateral": As defined in Section 1 of the Security Agreement,
in Section 1 of each Subsidiary Security Agreement in the Pledge Agreement
and in the Collateral Agreement.
"Collateral Assignment": The Collateral Assignment, Patent
Mortgage and Security Agreement dated as of December 4, 1996 between the
Borrower and the Agent and the Affirmation and Amendment of Collateral
Assignment, Patent Mortgage and Security Agreement between the Borrower and
the Agent of even date herewith.
"Commitment": The obligation of each Lender to make Loans to the
Borrower pursuant to Article II in the amount or amounts referred to
therein. The term "Commitments" means all such obligations of the Lenders.
"Compliance Certificate": A certificate of the Borrower in
substantially the form of Exhibit F attached hereto, delivered pursuant to
Section 6.1(a)(iv)(B).
"Consolidated Capital Expenditures": For any period, the Dollar
amount of gross expenditures incurred by the Borrower and its consolidated
Subsidiaries during such period for fixed assets, real property, plant and
equipment, and renewals, improvements and replacements thereto required to be
included in 'capital expenditures', 'additions to property, plant or equipment'
or comparable items in the consolidated statement of changes in financial
position of the Borrower and its consolidated Subsidiaries in conformity with
GAAP, including insurance proceeds received as the result of damage or
destruction of the property being replaced.
"Consolidated Current Assets": At any date of determination, all
amounts that should, in accordance with GAAP, be included as current assets
on the consolidated balance sheet of the Borrower and its consolidated
Subsidiaries as at such date.
"Consolidated Current Liabilities": At any date of
determination, all amounts that should, in accordance with GAAP, be included
as current liabilities on the consolidated balance sheet of the Borrower and
its consolidated Subsidiaries as at such date.
"Consolidated Net Income": For any period, the net income (or loss)
after income taxes plus to the extent deducted in determining net income (or
loss) purchased in-process research and development costs net of tax benefits,
all for such period of the Borrower and its Subsidiaries on a consolidated basis
determined in accordance with GAAP.
"Consolidated Net Worth": At any date of determination, the sum of
the capital stock and additional paid-in capital plus retained earnings (or
minus accumulated deficit) plus
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purchased in-process research and development costs (net of tax benefits) of the
Borrower and its consolidated Subsidiaries on a consolidated basis determined in
accordance with GAAP. Consolidated Net Worth shall be calculated without giving
effect to any foreign currency translation adjustments.
"Consolidated Total Debt": At any date of determination, any Debt of
the Borrower and its consolidated Subsidiaries; provided however, that,
notwithstanding the foregoing, Consolidated Total Debt includes all Debt (w)
under the Senior Unsecured Notes, (x) under Capital Leases, (y) under this
Agreement and (z) that is scheduled to be amortized during the term of this
Agreement, but excludes, for purposes of Section 6.2 Subordinated Debt.
"Contingent Obligation": As applied to any Person, any direct or
indirect liability, contingent or otherwise, of that Person (i) with respect to
any Debt, lease, dividend or other obligation of another if the primary purpose
or intent thereof by the Person incurring the Contingent Obligation is to
provide assurance that such obligation of another will be paid or discharged, or
that any agreements relating thereto will be complied with, or that the holders
of such obligation will be protected (in whole or in part) against loss in
respect thereof, (ii) with respect to any letter of credit issued for the
account of that Person or as to which that Person is otherwise liable for
reimbursement of drawings, or (iii) with respect to any Interest Rate Agreement
or Currency Agreement. Contingent Obligations shall include (a) the direct or
indirect guaranty, endorsement (otherwise than for collection or deposit in the
ordinary course of business), co-making, discounting with recourse or sale with
recourse by such Person of the obligation of another, (b) the obligation to make
take-or-pay or similar payment if required regardless of non-performance by any
other party or parties to an agreement, and (c) any liability of that Person for
the obligation of another through any agreement (contingent or otherwise) (x) to
purchase, repurchase or otherwise acquire such obligation or any security
therefor, or to provide funds for the payment or discharge of such obligation
(whether in the form of loans, advances, stock purchases, capital contributions
or otherwise) or (y) to maintain the solvency or any balance sheet item, level
of income or financial condition of another if, in the case of any agreement
described under subclauses (x) or (y) of this sentence, the primary purpose or
intent thereof is as described in the preceding sentence. The amount of any
Contingent Obligation shall be equal to the amount of the obligation so
guaranteed or otherwise supported or, if less, the amount to which such
Contingent Obligation is specifically limited.
"Currency Agreement": As applied to any Person, any foreign exchange
contract, currency swap agreement, futures contract, option contract, synthetic
cap or other similar agreement or arrangement designed to protect that Person
against fluctuations in currency values.
"Debt": As applied to any Person, (i) all indebtedness for borrowed
money, (ii) all Capital Leases whether or not properly classified as a liability
on a balance sheet in accordance with GAAP, (iii) notes payable and drafts
accepted representing extensions of credit whether or not representing
obligations for borrowed money, (iv) any obligation owed for all or any part of
the deferred purchase price of property or services, (v) all indebtedness
secured by any Lien on any property or asset owned or held or to be purchased by
that Person regardless of whether the indebtedness secured thereby shall have
been assumed by that Person or is
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nonrecourse to the credit of that person (excluding customer deposits held by
the Borrower), and (vi) any Contingent Obligation (excluding obligations under
Interest Rate Agreements and Currency Agreements).
"Dollars and $": Dollars in lawful currency of the United States
of America.
"EBITDA": For any applicable period, the sum (without
duplication) for the Borrower and its Subsidiaries on a consolidated basis of
(i) Consolidated Net Income,
plus
(ii) the amount deducted, in determining Consolidated Net Income,
representing depreciation and amortization,
plus
(iii) the amount deducted, in determining Consolidated Net Income,
representing income taxes (whether paid or deferred),
plus
(iv) the amount deducted, in determining Consolidated Net Income,
representing Interest Expense,
plus
(v) the amount deducted, in determining Consolidated Net Income,
representing charges from acquisitions which are allocated to in process
research and development,
plus
(vi) the amount deducted in determining Consolidated Net Income,
representing write-off of deferred initial public offering fees of
approximately $400,000 for the Fiscal Year of the Borrower ending December
31, 1997,
plus
(vii) the non-cash compensation expensed by the Borrower of
approximately $400,000 annually or $100,000 quarterly in connection with
the issuance of securities under stock option, stock purchase and other
equity based incentive plans.
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"Eligible Accounts": Accounts that arise in the ordinary course
of business of the Borrower that comply with the representations and
warranties contained in the Security Agreement, excluding Accounts as to
which any of the following apply:
(i) Accounts with respect to which more than ninety (90) days
have elapsed since the original invoice or payment schedule due date;
(ii) Accounts with respect to which the Account Debtor is a
director, officer, shareholder, employee, Subsidiary or Affiliate of the payee
of the obligation;
(iii) Accounts with respect to which the Account Debtor is the
subject of bankruptcy, receivership or a similar insolvency proceeding, or has
made an assignment for the benefit of creditors, or has failed or suspended or
gone out of business;
(iv) Accounts with respect to which the Account Debtor's
obligation to pay the Account is conditional upon the Account Debtor's approval,
or otherwise subject to return rights (without the consent of the account
holder), with respect to the goods purchased giving rise to any such Account,
but only to the extent of the portion thereof subject to approval or return;
(v) any Account not payable in Dollars;
(vi) Accounts against which the Account Debtor or any Person
obligated to make payment thereon asserts in writing any defense, offset,
counterclaim or other right to avoid or reduce the liability represented by such
Accounts, but only to the extent of the disputed portion thereof;
(vii) Accounts that are an obligation of any Person whose
billing address is located outside of the United States of America or Canada,
other than Accounts supported by one or more letters of credit in an amount, and
of a tenor, and used by a financial institution reasonably acceptable to the
Agent and other than Accounts of a subsidiary of a United States parent company
approved in advance by the Agent;
(viii) Accounts with respect to which the Account Debtor is
the United States of America or any department, agency or instrumentality
thereof, except for those Accounts as to which the payee has assigned its rights
of payment thereof to the Agent for the benefit of the Agent and the Lenders,
and the assignment has been acknowledged pursuant to the Assignment of Claims
Act of 1940, as amended (31 U.S.C. 3727);
(ix) Accounts owed by an Account Debtor where more than fifty
percent (50%) of the aggregate Accounts owed to the Borrower by such Account
Debtor do not constitute Eligible Accounts by reason of clause (i) above; or
(x) Accounts the collection of which the Agent has, after
consultation with a responsible officer of the Borrower, determined in the
exercise of its reasonable judgment
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and consistent with banking industry practices reasonably applied that (A) the
creditworthiness or financial condition of the Account Debtor is unsatisfactory
or (B) payment by the Account Debtor is impaired or doubtful.
Any Account which is at any time an Eligible Account, but which
subsequently meets any of the foregoing requirements, shall forthwith cease to
be an Eligible Account until such time as such Account shall meet all the
foregoing requirements.
"Eligible Inventory": Any inventory of the Borrower located in the
United States and as to which each of the following requirements has been
fulfilled to the reasonable satisfaction of the Agent:
(i) the Borrower has full and unqualified right to assign and
grant, and has assigned and granted, a perfected Lien in such inventory to the
Agent, for its benefit and that of the Lenders, as security for the Obligations;
(ii) the Borrower owns such inventory free and clear of all
Liens in favor of any Person other than the Lien in favor of the Agent and the
Lenders granted pursuant to this Agreement or another Loan Document;
(iii) none of such inventory is obsolete, unsalable, damaged
or otherwise unfit for sale or consumption or further processing; and
(iv) none of such inventory is stored by a warehouseman which
has issued a negotiable warehouse receipt that is not held by the Agent.
"Employee Benefit Plan": Any Pension Plan, any employee welfare
benefit plan, or any other employee benefit plan which is described in Section
3(3) of ERISA and which is maintained for employees of the Borrower or any ERISA
Affiliate of the Borrower.
"Equity Issuance": As applied to any Person, the sale or issuance by
such Person of (i) any capital stock of such Person, (ii) any options, warrants
or other similar rights exercisable in respect of such capital stock, or (iii)
any other security or instrument representing an equity interest (or the right
to obtain an equity interest) in such Person.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended from time to time and any successor statute.
"ERISA Affiliate": As applied to any Person, any trade or business
(whether or not incorporated) which is a member of a group of which that Person
is a member and which is under common control within the meaning of Section
414(b) and (c) of the Internal Revenue Code.
"Eurocurrency Liabilities": Has the meaning specified in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
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"Existing Credit Agreement": As defined in the first WHEREAS
clause of the Recitals of this Agreement.
"Federal Funds Rate": On any day, a fluctuating interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York, or
if such rate is not so published for any day which is a Business Day, the
average of the quotations for such day on such transactions received by the
Agent from three Federal funds brokers of recognized standing selected by it.
"Fiscal Quarter": Any calendar quarter.
"Fiscal Year": Any calendar year.
"Foreign Subsidiaries": Any direct or indirect Subsidiary of the
Borrower organized outside of the United States.
"GAAP": Generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession.
"Guarantors": Any direct or indirect Subsidiaries of the
Borrower which are organized in the United States and which have become
Guarantors in accordance with Section 6.2(v).
"Indenture": That certain indenture dated on or about the date of
this Agreement by and between the Borrower, each Guarantor under a Subsidiary
Guaranty and State Street Bank and Trust Company of California, N.A. pursuant to
which the Senior Unsecured Notes were issued and are outstanding as same may be
amended, restated or modified in compliance with this Agreement.
"Interest Coverage Ratio": At the end of any applicable period,
the ratio of
(a) EBITDA for the period of four consecutive Fiscal Quarters
then ended,
to
(b) Interest Expense for the period then ended.
"Interest Expense": For any applicable period, the aggregate
consolidated interest expense of the Borrower and its Subsidiaries for such
applicable period, as determined in
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accordance with GAAP, including the portion of any payments made in respect of
Capital Leases allocable to interest expense, but excluding for purposes of
Section 6.2 interest expense on the Subordinated Debt.
"Interest Payment Date": As to any Prime Rate Loan, until payment in
full, (i) the last Business Day of each month commencing on the first of such
days to occur after such Prime Rate Loan is made and, (ii) the Revolving
Maturity Date. As to any LIBO Rate Loan, until payment in full, (x) the last day
of the Interest Period relating to such LIBO Rate Loan (or, if earlier, the
third month following the commencement of such Interest Period) and (y) the
Revolving Maturity Date.
"Interest Period": With respect to any LIBO Rate Loan:
(i) initially, the period commencing on, as the case may be,
the Borrowing or conversion date with respect to such LIBO Rate Loan and ending
one, three or six months thereafter as selected by the Borrower in its Notice of
Borrowing as provided in Section 2.1(b) or Section 2.2(b) or its notice of
conversion as provided in Section 2.6; and
(ii) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such LIBO Rate Loan and ending one,
three or six months thereafter as selected by the Borrower in its notice of
continuation as provided in Section 2.6; provided, that all of the foregoing
provisions relating to Interest Periods are subject to the following:
(a) if any Interest Period for a LIBO Rate Loan would otherwise end
on a day which is not a LIBO Business Day, that Interest Period shall be
extended to the next succeeding LIBO Business Day unless the result of such
extension would be to carry such Interest Period into another calendar month in
which event such Interest Period shall end on the immediately preceding LIBO
Business Day;
(b) the Borrower may not select an Interest Period with respect to
any portion of principal of a LIBO Rate Loan which extends beyond a date on
which the Borrower is required to make a payment of that portion of principal;
and
(c) there shall be no more than three Interest Periods outstanding
at any time with respect to LIBO Rate Loans that constitute part of the
Revolving Loans.
"Interest Rate Agreement": As applied to any Person, an interest
rate swap, cap or collar agreement or similar arrangement designed to protect
that Person against fluctuations in interest rates.
"Internal Revenue Code": The Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter.
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"Investment": As applied to any Person, (i) any direct or indirect
purchase or other acquisition of, or of a beneficial interest in, capital stock,
bonds, notes, debentures, partnership or other ownership interests or other
securities of, another Person, or (ii) any direct or indirect loan, extension of
credit, advance (other than advances to employees for moving, entertainment and
travel expenses, drawing accounts and similar expenditures in the ordinary
course of business) or capital contribution to any other Person, including all
indebtedness and accounts receivable from the other Person that are not current
assets or did not arise from sales to that other Person in the ordinary course
of business. The amount of any Investment shall be the original cost of such
Investment plus the cost of all additions thereto, without any adjustment for
increases or decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment.
"Lender": As defined in the introductory paragraph of this
Agreement.
"Lending Office": As to any Lender, the office or offices of such
Lender specified as its "Lending Office" or "Domestic Lending Office" or
"Offshore Lending Office," as the case may be, on Annex II or in the applicable
Assignment Agreement, or such other office or offices as such Lender may from
time to time notify the Borrower and the Agent.
"Leverage Ratio": At the end of any applicable period, the ratio of
(a) Consolidated Total Debt outstanding at the end of such period,
to
(b) EBITDA for the period of four consecutive Fiscal Quarters then
ended.
"LIBO Business Day": A day which is a Business Day and a day on
which dealings in Dollar deposits may be carried out in the London interbank
market.
"LIBO Rate": For any Interest Period for all LIBO Rate Loans
comprising part of the same Borrowing, an interest rate per annum equal to the
rate per annum obtained by dividing (a) the interest rate per annum for deposits
in Dollars for a period equal to the relevant Interest Period which appears on
Telerate Page 3750 at or about 11:00 a.m. (London time) on the second Business
Day before and for value on the first day of the relevant Interest Period or
such other page as may replace such page on such service for the purpose of
displaying the London interbank offered rate of major banks for deposits in
Dollars at or about 11:00 a.m. (London time) on the second Business Day before
and for value on the first day of the relevant Interest Period for deposits in
amounts and durations comparable to such Borrowing and such Interest Period (and
rounded upward to the next whole multiple of 1/16 of 1%) by (b) a percentage
equal to 100% minus the LIBO Rate Reserve Percentage for such Interest Period.
"LIBO Rate Loans": Loans hereunder at such time as they accrue
interest at a rate based upon the LIBO Rate.
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"LIBO Rate Reserve Percentage": For any Interest Period for all LIBO
Rate Loans comprising part of the same Borrowing, the reserve percentage
applicable two Business Days before the first day of such Interest Period under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum reserve
requirement (including, without limitation, any emergency, supplemental or other
marginal reserve requirement) for a member bank of the Federal Reserve System in
New York City with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities (or with respect to any other category of liabilities
that includes deposits by reference to which the interest rate on LIBO Rate
Loans is determined) having a term equal to such Interest Period.
"Lien": Any lien, mortgage, deed of trust, pledge, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, and any
agreement to give any security interest).
"Loans": The Revolving Loans made to the Borrower pursuant to
Section 2.1.
"Loan Documents": This Agreement, the Notes, the Security Agreement,
the Subsidiary Guarantees, the Subsidiary Security Agreements, the Pledge
Agreement, the Collateral Assignment and each other document required by the
Agent or any Lender in connection with this Agreement and/or the credit extended
hereunder.
"Multiemployer Plan": A "multiemployer plan" as defined in Section
4001(a) (3) of ERISA which is maintained for employees of the Borrower or any
ERISA Affiliate of the Borrower.
"Net Proceeds": With respect to any insurance settlement, Equity
Issuance or the sale of any assets (to the extent permitted by this Agreement)
or subordinated Debt instruments, the gross cash proceeds received by the issuer
or seller from such settlement, issuance or sale (including any cash payments
subsequently received in respect of promissory notes or other non-cash
consideration delivered to the seller), less the sum of (i) all reasonable and
customary legal and accounting expenses, commissions and other fees and expenses
incurred or to be incurred, and all federal, state, local and foreign taxes
actually paid or estimated by the Borrower (in good faith) to be payable, in
connection therewith and (ii) all payments made by the seller to retire Debt
where such payments are required in connection with such sale; provided,
however, that each of the following shall be excluded in determining the amount
of Net Proceeds hereunder: (A) in the case of any Equity Issuance, the cash
proceeds from (1) any issuance or sale by any Subsidiary to the Borrower or any
Subsidiary, and (2) any issuance or sale to any officer, director, employee or
consultant pursuant to any stock option or other employee benefit plan or other
employee benefit plan or compensation plan in an aggregate amount up to
$3,000,000; (B) in the case of any sale of assets, (1) sales of readily
marketable investment securities investments in which are permitted under
Section 6.2(k), (2) leases and subleases (including any sale/lease backs and
synthetic lease transactions) permitted under Section 6.2(h), (3) sales and
other transfers between or among the Borrower and its Subsidiaries permitted
under Section 6.2(s), (4) cash payments required to be made in respect of any
accrued employee benefits in connection with any asset sale, (5) the amount of
any reasonable reserve established in accordance with
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GAAP against any liabilities associated with assets sold (provided that the
amount of any subsequent reduction of such reserve, other than in connection
with a payment in respect of such liability, shall be deemed to be Net Proceeds
received as of the date of such reduction), and (6) the amount of any such cash
proceeds that the Borrower or any Subsidiary has used (or intends to use within
6 months of the date of receipt of such cash proceeds) to pay the purchase price
in connection with any acquisition permitted hereunder; (C) in the case of any
Debt issuance, any Debt secured by Liens permitted under Section 6.2(f), any
Debt described in Section 6.2(g)(iv) or any Debt permitted under Section
6.2(g)(vi); and (D) in the case of any insurance settlement, the amount of any
reasonable reserve established in accordance with GAAP against any liabilities
associated with the receipt of such insurance settlement (provided the amount of
any subsequent reduction of such reserve, other than in connection with a
payment with respect to any such liability, shall be deemed to be Net Proceeds
received as of the date of such reduction).
"NonCash Working Capital": At any time of determination, the excess
of Consolidated Current Assets (other than cash) over Consolidated Current
Liabilities.
"Note" and "Notes": The Revolving Notes as such Notes may be
amended, endorsed or otherwise modified from time to time, including all Notes
issued from time to time in substitution therefor.
"Notice of Borrowing": The Notice of Borrowing required under
Section 2.1(b) and Section 2.2(b) in substantially the form of Exhibit C annexed
hereto.
"Obligations": All amounts owing by the Borrower and each Subsidiary
under this Agreement, the Notes or any other Loan Document.
"Other Taxes": Any present or future stamp, court or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery,
performance, enforcement or registration of, or otherwise with respect to, this
Agreement or any other Loan Document.
"Pension Plan": Any employee plan which is subject to Section 412 of
the Internal Revenue Code and which is maintained for employees of the Borrower
or any ERISA Affiliate of the Borrower, other than a Multiemployer Plan.
"Permitted Liens": The following types of Liens (other than any such
Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue
Code or by ERISA):
(i) Liens existing on the date hereof and listed on Schedule 6.2(f);
(ii) Liens for taxes, assessments or governmental charges or claims
to the extent not yet delinquent or being contested in good faith and for which
appropriate reserves have been made in accordance with GAAP;
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(iii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics and materialmen and other Liens imposed by law incurred
in the ordinary course of business securing obligations that are not yet
delinquent or are being contested in good faith and for which appropriate
reserves have been made in accordance with GAAP;
(iv) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, trade contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of borrowed
money);
(v) easements, reservations, rights-of-way, restrictions, minor
defects or irregularities in title and other similar charges or encumbrances
affecting real property not interfering in any material respect with the use or
value of such property;
(vi) any attachment or judgment Lien not constituting an Event of
Default under Section 7.1(h);
(vii) Liens which constitute rights of set-off of a customary nature
or bankers' Lien with respect to amounts on deposit, arising by operation of
law; and
(viii) Liens on inventory or cash to secure cash advances made by
customers for the purchase price of inventory.
"Person": An individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, governmental authority or other entity of whatever nature.
"Pledge Agreement": The Pledge Agreement dated as of December 4,
1996 between the Borrower and the Agent and the affirmation and amendment of
pledge agreement between the Borrower and the Agent of even date herewith.
"Potential Event of Default": Either (i) a condition or event which,
after notice or lapse of time or both, would constitute an Event of Default if
that condition or event were not cured or removed within any applicable grace or
cure period, or (ii) a condition or event which would constitute an Event of
Default on a future date if such condition or event is based on the Borrower's
own estimate of its financial performance for a fiscal period ending on a future
date.
"Prime Rate": The higher of (i) the rate of interest announced from
time to time by the Agent in Boston, Massachusetts as its Prime Commercial
Lending Rate and (ii) the sum of 1/2 of 1% plus the Federal Funds Rate on the
day prior to the date on which the Prime Rate is to be determined. The Prime
Commercial Lending Rate is a reference rate; the Agent may make loans at, above
or below the Prime Commercial Lending Rate.
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"Prime Rate Loans": Loans hereunder at such time as they accrue
interest at a rate based upon the Prime Rate.
"Regulations G, T, U and X": Regulations G, T, U and X,
respectively, promulgated by the Board of Governors of the Federal Reserve
System, as amended from time to time, and any successors thereto.
"Related Transactions": Issuance by the Borrower of the Senior
Unsecured Notes, execution and delivery of the Indenture, Borrower's receipt of
the Net Proceeds thereof and repayment by the Borrower of fees and costs of such
issuance and of outstanding Debt of the Borrower under the Existing Credit
Agreement.
"Requisite Lenders": As of any date of determination, Lenders owed
at least 51% of the then aggregate unpaid principal amount of the Notes, or, if
no principal amount of the Notes is outstanding, then Lenders having at least
51% of the Commitments.
"Revolving Commitment": The amount of $25,000,000 as such amount may
be reduced pursuant to Section 2.1(c) or may be increased up to $40,000,000 in
the complete discretion of the Lenders pursuant to Section 2.1(e).
"Revolving Loans": As defined in Section 2.1(a).
"Revolving Maturity Date": January __, 2001.
"Revolving Note": As defined in Section 2.1(d).
"S.E.C.": The United States Securities and Exchange Commission and
any successor institution or body which performs the functions or substantially
all of the functions thereof.
"Security Agreement": The Security Agreement dated as of December 4,
1996 between the Borrower and the Agent in substantially the form of Exhibit H
attached hereto and the affirmation and amendment of security agreement by the
Borrower and the Agent dated on or about the date hereof.
"Senior Unsecured Notes": Those certain 10.75% senior unsecured
notes due February 1, 2005, issued by the Borrower on or about the date hereof
and outstanding pursuant to the Indenture as same may be amended, restated or
modified in compliance with this Agreement and senior unsecured notes having the
same substantive terms and conditions which may be exchanged therefor pursuant
to the contemplated exchange offer for the notes issued on or about the date
hereof.
"Subordinated Debt": (i) that certain subordinated indebtedness
issued by the Borrower pursuant to a Securities Purchase Agreement dated as of
November 23, 1994, as amended prior to the date hereof (and as it may be
subsequently amended with the consent of the
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Requisite Lenders as provided herein), among the Borrower and the investors
named therein and (ii) any other indebtedness of the Borrower or its
Subsidiaries that is subordinated to the Obligations on terms acceptable to the
Requisite Lenders.
"Subsidiary": A corporation, partnership, association, joint venture
or other business entity of which more than 50% of the total voting power of
shares of stock or other ownership interests entitled (without regard to the
occurrence of any contingency) to vote in the election of Person or Persons
(whether directors, managers, trustees or other Persons performing similar
functions) having the power to direct or cause the direction of the management
and policies thereof are at the time owned, directly, or indirectly through one
or more intermediaries, or both, by the Borrower.
"Subsidiary Guaranty": Each guaranty dated as of December 4, 1996 by
a Guarantor in favor of the Agent, and each consent, amendment and ratification
of guaranty executed and delivered by each Guarantor on or about the date hereof
and any Subsidiary Guaranty entered into by a Guarantor in favor of the Agent
subsequent to the date hereof in substantially the form of Exhibit G annexed
hereto.
"Subsidiary Security Agreement": Each Security Agreement dated as of
December 4, 1996 between a Guarantor and the Agent and each affirmation and
amendment of security agreement between each Guarantor and the Agent dated on or
about the date hereof, and any Subsidiary Security Agreement entered into
between a Guarantor and the Agent subsequent to the date hereof in substantially
the form of Exhibit H annexed hereto.
"Taxes": Any and all present or future taxes, levies, assessments,
imposts, duties, deductions, fees, withholdings or similar charges, and all
liabilities with respect thereto, excluding, in the case of each Lender and the
Agent, respectively, taxes imposed on any Lender or the Agent as a result of a
present or former connection between such Lender or the Agent and the
jurisdiction of the governmental authority imposing such tax or any political
subdivision or taxing authority thereof or therein (other than any such
connection arising solely from such Lender or the Agent having executed,
delivered or performed its obligations or received a payment under, or enforced,
this Agreement).
"Termination Event": (i) a "Reportable Event" described in Section
4043 of ERISA and the regulations issued thereunder (other than a "Reportable
Event" not subject to the provision for 30 day notice to the Pension Benefit
Guaranty Corporation under such regulations), or (ii) the withdrawal of the
Borrower or any of its ERISA Affiliates from a Pension Plan during a plan year
in which it was a "substantial employer" as defined in Section 4001(l) (2) or
4068(f) of ERISA, or (iii) the filing of a notice of intent to terminate a
Pension Plan or the treatment of a Pension Plan amendment as a termination under
Section 4041 of ERISA, or (iv) the institution of proceedings to terminate a
Pension Plan by the Pension Benefit Guaranty Corporation, (v) any other event or
condition which might constitute grounds under ERISA for the termination of, or
the appointment of a trustee to administer, any Pension Plan, or (vi) the
imposition of a lien pursuant to Section 412(n) of the Internal Revenue Code.
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1.2 Other Definitional Provisions.
(a) All terms defined in this Agreement shall have the defined
meanings when used in the Notes or any certificate or other document made or
delivered pursuant hereto.
(b) As used herein and in the Notes, and any certificate or other
document made or delivered pursuant hereto, accounting terms not defined in
Section 1.1, and accounting terms partly defined in Section 1.1 to the extent
not defined, shall have the respective meanings given to them under GAAP. In the
event that GAAP changes during the term of this Agreement such that the
financial covenants contained in Sections 6.2(a) through (d) would then be
calculated in a different manner or with different components, (i) the Borrower,
the Agent and the Lenders agree to negotiate to amend this Agreement in such
respects as are necessary to conform those covenants as criteria for evaluating
the Borrower's financial condition to substantially the same criteria as were
effective prior to such change in GAAP and (ii) the Borrower shall be deemed to
be in compliance with the financial covenants contained in such Sections,
pending reaching agreement on such amendment, following any such change in GAAP
if and to the extent that the Borrower would have been in compliance therewith
under GAAP as in effect immediately prior to such change.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and section,
subsection, schedule and exhibit references are to this Agreement unless
otherwise specified.
(d) The terms defined in Section 1.1 include the plural as well as
the singular. Pronouns of either gender or neuter shall include, as appropriate,
the other pronoun forms. The terms "includes" and "including" shall not be
construed to imply any limitation.
(e) Each reference in the Loan Documents to the last day of a Fiscal
Quarter of the Borrower, or to the last Business Day of a Fiscal Quarter of the
Borrower, or to a Fiscal Quarter of the Borrower ending on a specified date,
shall be deemed to refer to the last day of the Fiscal Quarter of the Borrower
ending on or about such date.
ARTICLE II
THE LOANS
2.1 The Revolving Loans.
(a) The Revolving Commitment. Each Lender agrees, severally and not
jointly, on the terms and conditions hereinafter set forth, to make loans
("Revolving Loans") to the Borrower from time to time during the period from the
date hereof to but excluding the
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Revolving Maturity Date in an aggregate amount not to exceed the lesser of (x)
the amount set forth opposite such Lender's name on Annex I hereto, as such
amount may be reduced pursuant to Section 2.1(c) or (y) such Lender's pro rata
share of the Borrowing Base. Each borrowing under this Section (a "Borrowing")
shall be in a minimum amount of $300,000 and in an integral multiple of $100,000
in excess thereof; provided that a Revolving Loan consisting of a LIBO Rate Loan
shall be in a minimum amount of $1,000,000 or an integral multiple of $250,000
in excess thereof. Each Borrowing shall be made on the same day by the Lenders
ratably according to their respective Commitments. Within the limits of the
Revolving Commitment and prior to the Revolving Maturity Date, the Borrower may
borrow, repay pursuant to Section 2.4(b) and reborrow under this Section;
provided that at no time shall the aggregate principal amount of outstanding
Revolving Loans exceed the least of (x) the Revolving Commitment then in effect
or (y) the Borrowing Base.
(b) Making the Revolving Loans.
(i) The Borrower may borrow under the Revolving Commitment on
any Business Day if the Borrowing is to consist of a Prime Rate Loan and on any
LIBO Business Day if the Borrowing is to consist of a LIBO Rate Loan, provided
that the Borrower shall give the Agent irrevocable notice (which notice must be
received by the Agent prior to 9:00 A.M., San Francisco time) in the form of
Exhibit C (i) three (3) LIBO Business Days prior to the requested Borrowing date
in the case of a LIBO Rate Loan, and (ii) on or before the requested Borrowing
date in the case of a Prime Rate Loan, specifying (A) the amount of the proposed
Borrowing, (B) the requested date of the Borrowing, (C) whether the Borrowing is
to consist of a LIBO Rate Loan or a Prime Rate Loan, and (D) if the Loan is to
be a LIBO Rate Loan, the length of the Interest Period therefor. Promptly
following receipt of such notice, the Agent shall notify each Lender of the date
of the Loan, whether the Loan will be a Prime Rate Loan or a LIBO Rate Loan, the
amount of that Lender's pro rata share of the Loan and, if the Loan is a LIBO
Rate Loan, of the applicable Interest Period. Not later than 11:00 a.m., San
Francisco time, on the date specified for any Loan, each Lender shall deposit
immediately available funds in the amount of its pro rata share of the Loan to
the account of the Agent set forth on the signature pages hereof. Upon
satisfaction of the applicable conditions set forth in Article IV, the Agent
will make available the proceeds of all such Loans to the Borrower by depositing
the amount of such Loans in the Borrower's Account.
(ii) The notice of Borrowing may be given orally (including
telephonically), and shall be promptly confirmed by a notice of Borrowing in
writing, or in writing (including telex or facsimile transmission), and any
conflict regarding a notice or between an oral notice and a written notice
applicable to the same Borrowing shall be conclusively determined in the absence
of manifest error by the Agent's books and records. The Agent's failure to
receive any written notice of a particular Borrowing shall not relieve the
Borrower of its obligations to repay the Borrowing made and to pay interest
thereon. The Agent shall not incur any liability to the Borrower in acting upon
any notice of Borrowing which the Agent believes in good faith to have been
given by a Person duly authorized to borrow on behalf of the Borrower.
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(iii) Unless the Agent shall have received notice from a
Lender prior to the date of any Borrowing that such Lender will not make
available to the Agent such Lender's ratable portion of such Borrowing, the
Agent may assume that such Lender has made such portion available to the Agent
on the date of such Borrowing in accordance with subsection (i) of this Section
2.1(b) and the Agent may, in reliance upon such assumption, make available to
the Borrower on such date a corresponding amount. If and to the extent that such
Lender shall not have so made such ratable portion available to the Agent, such
Lender and the Borrower severally agree to repay to the Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Borrower until the date such
amount is repaid to the Agent, at (i) in the case of the Borrower, the interest
rate applicable at the time to such Borrowing and (ii) in the case of such
Lender, the Federal Funds Rate. If such Lender shall repay to the Agent such
corresponding amount, such amount so repaid shall constitute such Lender's pro
rata share of such Borrowing for purposes of this Agreement. The failure of any
Lender to make available its pro rata share of any Borrowing shall not relieve
any other Lender of its obligation, if any, hereunder, to make available its pro
rata share of such Borrowing on the date of such Borrowing, but no Lender shall
be responsible for the failure of any other Lender to make available its pro
rata share of any Borrowing on the date of any Borrowing. The Borrower reserves
all of its rights against any defaulting Lender.
(c) Reduction of the Revolving Commitment. The Borrower shall have
the right, upon at least two (2) Business Days' notice to the Agent, to
terminate in whole or reduce in part the unused portion of the Revolving
Commitment, without premium or penalty, provided that each partial reduction
shall be in the aggregate amount of $1,000,000 or an integral multiple of
$100,000 in excess thereof and that such reduction shall not reduce the
Revolving Commitment to an amount less than the amount of Revolving Loans
outstanding hereunder on the effective date of the reduction.
(d) Revolving Notes. The Revolving Loans made by the Lenders
pursuant hereto shall be evidenced by promissory notes of the Borrower,
substantially in the form of Exhibit A, with any appropriate insertions (the
"Revolving Notes"), payable to the order of each Lender and representing the
obligation of the Borrower to pay the aggregate unpaid principal amount of all
Revolving Loans made by that Lender, with interest thereon as prescribed in
Section 2.5. Each Lender is hereby authorized to record in its books and records
and on any schedule annexed to its Revolving Note, the date and amount of each
Revolving Loan made by that Lender, and the date and amount of each payment of
principal thereof, and in the case of LIBO Rate Loans, the Interest Period and
interest rate with respect thereto and any such recordation shall constitute
prima facie evidence of the accuracy of the information so recorded; provided
that failure by any Lender to effect such recordation shall not affect the
Borrower's obligations hereunder. Prior to the transfer of a Revolving Note, the
transferring Lender shall record such information on any schedule annexed to and
forming a part of such Revolving Note.
(e) Increase of the Revolving Commitment. From time to time upon
written request from the Borrower delivered to the Agent, the Lenders will
consider an increase in the Revolving Commitment up to a maximum Revolving
Commitment of $40,000,000; provided, however, that granting of any such increase
shall require the unanimous written consent of the
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Lenders, shall be granted only in the complete discretion of the Lenders, has
not in any way been committed to the Borrower and shall be additionally subject
to amendments to this Agreement, the Notes and such other documents, instruments
and agreements as the Lenders may in their complete discretion select, all of
which shall be in form and substance satisfactory to the Lenders in their
complete discretion. The Borrower acknowledges that neither the Agent nor any of
the Lenders has made any representation or warranty, either expressly or by or
implication that any such increase in the Revolving Commitment would be granted
at any time and the Borrower acknowledges and agrees that no Lender nor the
Agent has any obligations of any kind with respect to, and the Borrower has no
right to, the grant of any such increase in the Revolving Commitment.
2.2 [Intentionally omitted].
2.3 Fees.
(a) Commitment Fee. The Borrower agrees to pay to the Agent for the
ratable benefit of the Lenders providing the Revolving Commitment a commitment
fee on the average daily unused portion of the Revolving Commitment from the
date hereof until the Revolving Maturity Date at the rate of (i) three-quarters
of one percent (3/4 of 1%) per annum, payable on the last Business Day of each
Fiscal Quarter of the Borrower commencing on the first such date occurring after
the date of this Agreement through the date on which the Agent receives
Borrower's financial statements for a Fiscal Quarter of the Borrower pursuant to
Section 6.1(a)(ii) commencing with the March 31, 1999 Fiscal Quarter of the
Borrower establishing that Borrower is in compliance with Section 6.2 and
thereafter for any Fiscal Quarter of the Borrower for which Borrower is not in
compliance with Section 6.2 and (ii) commencing with the Fiscal Quarter of the
Borrower ending March 31, 1999, so long as Borrower is in compliance with
Section 6.2, one-half of one percent (1/2 of 1%) per annum, payable on the last
Business Day of each such Fiscal Quarter of the Borrower, and in all the
foregoing cases payable on the Revolving Maturity Date.
(b) Agency and Facility Fees. Upon execution of this Agreement and
thereafter, the Borrower shall pay to the Agent non-refundable fees in the
amounts agreed to separately by the Borrower. In addition, upon execution of
this Agreement the Borrower shall pay to the Agent a facility fee in the amount
agreed to separately by the Borrower and which shall be allocated to the Lender
by the Agent in its discretion.
2.4 Repayment.
(a) Mandatory Repayments. The aggregate principal amount of the
Revolving Loans outstanding on the Revolving Maturity Date, together with
accrued interest thereon, shall be due and payable in full on the Revolving
Maturity Date. If at any time the outstanding Borrowings under Section 2.1
exceed the least of (x) the Revolving Commitment then in effect or (y) the
Borrowing Base, then the Borrower shall immediately repay the excess to the
Agent for the ratable accounts of the Lenders providing the Revolving
Commitment.
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(b) Optional Prepayment. The Borrower may at its option prepay the
Loans, in whole or in part, at any time and from time to time, provided that the
Agent shall have received from the Borrower notice of any such prepayment at
least one (1) Business Day prior to the date of the proposed prepayment if such
date is not the last day of the then current Interest Period for each Loan being
prepaid, in each case specifying the date and the amount of prepayment, and
provided further, that the Borrower shall be liable for and shall promptly pay
to the Agent for the ratable benefit of the Lenders any Breakage Costs in
respect of LIBO Rate Loans. Partial prepayments hereunder shall be in an
aggregate principal amount of the lesser of (a) $200,000 or any whole multiple
of $100,000 in excess thereof in the case of Prime Rate Loans and $1,000,000 or
any whole multiple of $250,000 in excess thereof in the case of LIBO Rate Loans
and (b) the outstanding balance of the Loan being prepaid.
(c) Mandatory Prepayment. The Borrower shall immediately upon
receipt deliver to the Agent for the benefit of the Lenders (as their interests
may appear) the proceeds of the following as a mandatory prepayment and
permanent reduction of the Revolving Commitment: (i) one hundred percent (100%)
of the Net Proceeds received from the issuance of Debt or from the sale or other
disposition of any assets of the Borrower or any Guarantor outside the ordinary
course of business (in excess of amounts permitted under this Agreement); (ii)
fifty percent (50%) of the Net Proceeds of an Equity Issuance (other than that
described in clause (ii) of the definition of Equity Issuance); and (iii) one
hundred percent (100%) of the Net Proceeds of any insurance payments received in
respect of lost or damaged property that are not promptly applied to the repair,
rebuilding or replacement of such property; provided, however, that any such
mandatory prepayment may be waived, in whole or in part, by any Lender solely as
to such Lender.
(d) Excess Cash Flow Repayment. [Intentionally Omitted]
(e) Optional Escrow. Notwithstanding the foregoing provisions of
this Section 2.4, if the amount of Prime Rate Loans then outstanding is not
sufficient to satisfy the entire mandatory prepayment requirement hereunder, the
Borrower may, at its option, in order to avoid the payment of Breakage Costs,
place any amounts which it would otherwise be required to use to prepay LIBO
Rate Loans on a day other than the last day of the Interest Period therefor in
an interest-bearing escrow account with the Agent until the end of such Interest
Period at which time such escrowed amounts shall be applied to prepay such LIBO
Rate Loans.
2.5 Interest Rate and Payment Dates.
(a) Payment of Interest. Interest with respect to each Loan shall be
payable in arrears on each Interest Payment Date for such Loan and on the date
of any prepayment.
(b) Prime Rate Loans. Revolving Loans which are Prime Rate Loans
shall bear interest on the unpaid principal amount thereof at a rate per annum
equal to the Prime Rate plus the Applicable Margin.
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(c) LIBO Rate Loans. Revolving Loans which are LIBO Rate Loans shall
bear interest for each Interest Period with respect thereto on the unpaid
principal amount thereof at a rate per annum equal to the LIBO Rate determined
for such Interest Period in accordance with the terms hereof plus the Applicable
Margin.
2.6 Continuation and Conversion Options. The Borrower may elect from time
to time to convert any outstanding Loans from Loans bearing interest at a rate
determined by reference to one basis to Loans bearing interest at a rate
determined by reference to an alternative basis by giving the Agent (i)
irrevocable notice in the form of Exhibit D of an election to convert Loans to
Prime Rate Loans and (ii) at least three (3) LIBO Business Days' prior
irrevocable notice of an election to convert Loans to LIBO Rate Loans, provided
that any conversion of Loans other than Prime Rate Loans shall only be made on
the last day of an Interest Period with respect thereto, provided, further that
no Loan may be converted to a Loan other than a Prime Rate Loan so long as an
Event of Default or Potential Event of Default has occurred and is continuing.
The Borrower may elect from time to time to continue any outstanding Loans other
than Prime Rate Loans upon the expiration of the Interest Period(s) applicable
thereto by giving to the Agent at least three (3) LIBO Business Days' prior
irrevocable notice in the form of Exhibit D of continuation of a LIBO Rate Loan
and the succeeding Interest Period(s) of such continued Loan or Loans will
commence on the last day of the Interest Period of the Loan to be continued,
provided that no Loan may be continued as a Loan other than a Prime Rate Loan so
long as an Event of Default or Potential Event of Default has occurred and is
continuing. Each notice electing to convert or continue a Loan shall be in the
form of Exhibit D and shall specify: (i) the proposed conversion/continuation
date; (ii) the amount of the Loan to be converted/continued; (iii) the nature of
the proposed continuation/conversion; and (iv) in the case of a conversion to,
or continuation of, a Loan other than a Prime Rate Loan, the requested Interest
Period, and shall certify that no Event of Default or Potential Event of Default
has occurred and is continuing. On the date on which such conversion or
continuation is being made each Lender shall take such action as is necessary to
effect such conversion or continuation. In the event that no Notice of
Continuation or Conversion is received by the Agent with respect to outstanding
Loans other than Prime Rate Loans, upon expiration of the Interest Period(s)
applicable thereto, such Loans shall convert to Prime Rate Loans. Subject to the
limitations set forth in this Section and in the definition of Interest Period,
all or any part of outstanding Loans may be converted or continued as provided
herein, provided that partial conversions or continuations with respect to Loans
other than Prime Rate Loans shall be in an aggregate minimum amount of
$1,000,000 and in an integral multiple of $250,000 in excess thereof.
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ARTICLE III
GENERAL PROVISIONS CONCERNING THE LOANS
3.1 Use of Proceeds. The proceeds of the Loans hereunder shall be used
by the Borrower for general corporate purposes, including working capital needs,
payment of the costs and fees incurred in connection with obtaining the
Revolving Commitment and closing the Loans, capital expenditures, financing for
acquisitions and refinancing of existing indebtedness.
3.2 Post Default Interest. Notwithstanding anything to the contrary
contained in Section 2.5, after the occurrence of an Event of Default and
following notice to the Borrower, all Obligations shall bear interest at a rate
per annum which is equal to two percent (2%) above the highest rate which would
otherwise be applicable pursuant to Section 2.5, from the date of such Event of
Default. In addition, any Loan that is a Loan other than a Prime Rate Loan,
shall be converted to a Prime Rate Loan at the end of the then current Interest
Period thereafter.
3.3 Computation of Interest and Fees.
(a) Calculations. Interest in respect of the Prime Rate Loans and
fees shall be calculated on the basis of a 365/366 day year for the actual days
elapsed. Any change in the interest rate on a Prime Rate Loan resulting from a
change in the Prime Rate shall become effective as of the opening of business on
the day on which such change in the Prime Rate shall become effective. In
computing interest on any Loan, the date of the making of the Loan shall be
included and the date of payment shall be excluded; provided that if a Loan is
repaid on the same day on which it is made, one day's interest shall be paid on
that Loan. Interest in respect of the LIBO Rate Loans shall be calculated on the
basis of a 360 day year for the actual days elapsed.
(b) Determination by Agent. Each determination of an interest rate
or fee by the Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrower in the absence of manifest error.
3.4 Payments. The Borrower shall make each payment of principal,
interest and fees hereunder and under the Notes, without setoff or counterclaim,
not later than 10:00 A.M., San Francisco time, on the day when due in lawful
money of the United States of America to the Agent at the office of the Agent
designated from time to time in immediately available funds. The Borrower hereby
authorizes the Agent to charge its accounts with the Agent in order to cause
timely payment to be made to the Agent of all principal, interest, fees and
expenses due hereunder (subject to sufficient funds being available in its
accounts for that purpose). The Agent shall promptly pay to each Lender its pro
rata share of each payment received by the Agent as their interests may appear.
3.5 Payment on Non-Business Days. Whenever any payment to be made
hereunder or under the Notes shall be stated to be due on a day which is not a
Business Day, such payment
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may be made on the next succeeding Business Day, and with respect to payments of
principal, interest thereon shall be payable at the then applicable rate during
such extension.
3.6 Reduced Return. If any Lender shall have determined that any
applicable law, regulation, rule or regulatory requirement promulgated after the
date hereof ("Requirement") regarding capital adequacy, or any change therein
occurring after the date hereof, or any change occurring after the date hereof
in the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Lender's capital as a consequence
of its Commitment and obligations hereunder to a level below that which would
have been achieved but for such Requirement, change or compliance (taking into
consideration that Lender's policies with respect to capital adequacy) by an
amount deemed by that Lender to be material (which amount shall be determined by
that Lender's reasonable allocation of the aggregate of such reductions
resulting from such events), then from time to time, within thirty (30) days
after such Lender delivers to the Borrower a statement in reasonable detail
setting forth the basis and calculation for allocating any additional amounts,
the Borrower shall pay to that Lender such additional amount or amounts as will
compensate that Lender for such reduction.
3.7 Indemnities.
(a) Subject to the provisions of Section 9.5, whether or not the
transactions contemplated hereby shall be consummated, the Borrower agrees to
indemnify, pay and hold the Agent and each Lender, the shareholders, officers,
directors, employees and agents of the Agent and each Lender, and each other
Person controlling any of the foregoing within the meaning of either Section 15
of the Securities Act of 1933, as amended, or Section 20 of the Securities
Exchange Act of 1934, as amended (each, an "Indemnified Person"), harmless from
and against any and all claims, liabilities, losses, damages, costs and
expenses, including reasonable attorneys' fees and costs (including the
reasonable fees and out-of-pocket expenses of counsel) and including costs of
investigation, document production, attendance at a deposition or other
discovery, related to or in connection with the transactions contemplated by
this Agreement, any of the Related Transactions or any contemplated use of the
proceeds of the Loans, whether or not any Indemnified Person is a party thereto
(collectively, the "Indemnified Liabilities"), except to the extent that such
Indemnified Liabilities result from the gross negligence or willful misconduct
of the Agent, or any Lender or any other Indemnified Person. If any claim is
made, or any action, suit or proceeding is brought, against any Indemnified
Person pursuant to this Section, the Indemnified Person shall notify the
Borrower of such claim or of the commencement of such action, suit or
proceeding, and the Borrower shall have the option to, and at the request of the
Indemnified Person shall, direct and control the defense of such action, suit or
proceeding, employing counsel selected by the Borrower and reasonably
satisfactory to the Indemnified Person, and pay the fees and expenses of such
counsel; provided, however, that any Indemnified Person may at its own expense
retain separate counsel to participate in such defense. Notwithstanding the
foregoing, such Indemnified Person shall have the right to employ separate
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counsel at the Borrower's expense and to control and direct its own defense of
such action, suit or proceeding if, in the reasonable opinion of counsel to such
Indemnified Person, (i) there are or may be legal defenses available to such
Indemnified Person or to other Indemnified Persons that are different from or
additional to those available to the Borrower that the Borrower cannot assert,
or (ii) a conflict or potential conflict exists between the Borrower and such
Indemnified Person that would make such separate representation advisable. The
Borrower agrees that it will not, without the prior written consent of the
Agent, settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action, suit or proceeding with respect to which
the indemnification provided for in this Section is available (whether or not
any Indemnified Person is a party thereto) unless such settlement, compromise or
consent includes an unconditional release of the Agent and each other
Indemnified Person from all liability arising or that may arise out of such
claim, action, suit or proceeding. To the extent that the undertaking to
indemnify, pay and hold harmless set forth in this Section 3.7 may be
unenforceable because it is violative of any law or public policy, the Borrower
shall contribute the maximum portion which it is permitted to pay and satisfy
under applicable law, to the payment and satisfaction of all Indemnified
Liabilities incurred by any Indemnified Person. This covenant shall survive
termination of this Agreement and payment of the outstanding Notes.
(b) Funding Losses. The Borrower agrees to indemnify each Lender and
to hold each Lender harmless from any loss or expense including, but not limited
to, any such loss or expense arising from interest or fees payable by such
Lender to lenders of funds obtained by it in order to maintain its LIBO Rate
Loans hereunder, which such Lender may sustain or incur as a consequence of (i)
default by the Borrower in payment of the principal amount of or interest on the
LIBO Rate Loans of that Lender, (ii) default by the Borrower in making a
conversion or continuation after the Borrower has given a notice thereof, (iii)
default by the Borrower in making any payment after the Borrower has given a
notice of payment or (iv) the Borrower making any payment of a LIBO Rate Loan on
a day other than the last day of the Interest Period for such Loan. For purposes
of this Section and Section 3.10, it shall be assumed that the affected Lender
had funded or would have funded 100%, as the case may be, of a LIBO Rate Loan in
the London interbank market for an amount and term. The determination of such
amount by such Lender shall be presumed correct in the absence of manifest
error. This covenant shall survive termination of this Agreement and payment of
the outstanding Notes.
3.8 Funding Sources. Nothing in this Agreement shall be deemed to
obligate any Lender to obtain the funds for any Loan in any particular place or
manner or to constitute a representation by any Lender that it has obtained or
will obtain the funds for any Loan in any particular place or manner.
3.9 Sharing of Payments, Etc. If any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) on account of the Loans owing to it in excess of its ratable share
of payments on account of the Loans obtained by all the Lenders, then such
Lender shall forthwith purchase from the other Lenders such participations in
the Loans owing to them as shall be necessary to cause such purchasing Lender to
share the excess payment ratably with each of them; provided, however, that if
all or any portion of such excess payment is thereafter recovered from such
purchasing Lender, such
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purchase from each Lender shall be rescinded and such Lender shall repay to the
purchasing Lender the purchase price to the extent of such recovery together
with an amount equal to such Lender's ratable share (according to the proportion
of (i) the amount of such Lender's required repayment to (ii) the total amount
so recovered from the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect of the total amount so recovered.
The Borrower agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section 3.9 or any other provision of this Agreement
may, to the fullest extent permitted by law, exercise all of its rights of
payment (including the right to set-off) with respect to such participation as
fully as if such Lender were the direct creditor of the Borrower in the amount
of such participation.
3.10 Inability to Determine Interest Rate. In the event that the Agent or
any Lender shall have determined (which determination shall be conclusive and
binding upon the Borrower in the absence of manifest error) that by reason of
circumstances affecting the London interbank market generally, adequate and
reasonable means do not exist for ascertaining the LIBO Rate applicable pursuant
to Section 2.5 for any Interest Period with respect to a LIBO Rate Loan that
will result from a requested LIBO Rate Loan or that such rate of interest does
not adequately cover the cost of funding such Loan, the Agent or such Lender
shall forthwith give notice of such determination to the Borrower not later than
1:00 P.M., San Francisco time, on the requested Borrowing date, the requested
conversion date or the last day of an Interest Period of a Loan which was to
have been continued as a LIBO Rate Loan. If such notice is given and has not
been withdrawn (i) any requested LIBO Rate Loan shall be made as a Prime Rate
Loan, or, at the Borrower's option, such Loan shall not be made, (ii) any Loan
that was to have been converted to a LIBO Rate Loan shall be continued as, or
converted into, a Prime Rate Loan and (iii) any outstanding LIBO Rate Loan shall
be converted, on the last day of the then current Interest Period with respect
thereto, to a Prime Rate Loan. Until such notice has been withdrawn by the
Agent, no further LIBO Rate Loans shall be made and the Borrower shall not have
the right to convert a Loan to a LIBO Rate Loan. The Agent will review the
circumstances affecting the London interbank market from time to time and the
Agent will withdraw such notice at such time as it shall determine in the
exercise of its reasonable judgment that the circumstances giving rise to said
notice no longer exist.
3.11 Requirements of Law. In the event that any law, regulation or
directive or any change therein or in the interpretation or application thereof
or compliance by the Agent or any Lender with any request or directive (whether
or not having the force of law) from any central bank or other governmental
authority, agency or instrumentality:
(a) does or shall subject the Agent or any Lender to any tax of any
kind whatsoever with respect to this Agreement, any Note or any Loan made
hereunder, or change the basis of taxation of payments to the Agent or any
Lender of principal, commitment fee, interest or any other amount payable
hereunder (except for income taxes or changes in the rate of tax on the overall
net income of the Agent or such Lender);
(b) does or shall impose, modify or hold applicable any reserve,
assessment rate, special deposit, compulsory loan or other requirement against
assets held by, or deposits or other
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liabilities in or for the account of, advances or loans by, or other credit
extended by, or any other acquisition of funds by, any office of the Agent or
any Lender which are not otherwise included in the determination of any LIBO
Rate at the last Borrowing, conversion or continuation date of a Loan;
(c) does or shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or other requirement against Commitments to
extend credit;
(d) does or shall impose on the Agent or any Lender any other
condition;
and the result of any of the foregoing is to increase the cost to the Agent or
any Lender of making, renewing or maintaining its Revolving Commitment or the
LIBO Rate Loans or to reduce any amount receivable thereunder (which increase or
reduction shall be determined by the Agent's or such Lender's reasonable
allocation of the aggregate of such cost increases or reduced amounts receivable
resulting from such events), then, in any such case, the Borrower shall pay to
the Agent or such Lender within thirty (30) Business Days of its statement
described below, any additional amounts necessary to compensate the Agent or
such Lender for such additional cost or reduced amount receivable as determined
by the Agent or such Lender with respect to this Agreement. If the Agent or
Lender becomes entitled to claim any additional amounts pursuant to this Section
3.11, it shall notify the Borrower of the event by reason of which it has become
so entitled. A statement setting forth in reasonable detail the calculation as
to any additional amounts payable pursuant to the foregoing sentence, and
setting forth the basis and calculation for allocating such additional amounts
among the other borrowers of the affected Agent or Lender, submitted by the
affected Agent or Lender to the Borrower shall be conclusive in the absence of
manifest error.
3.12 Illegality. Notwithstanding any other provisions herein, if any law,
regulation, treaty or directive or any change therein or in the interpretation
or application thereof by an entity with jurisdiction over the Agent or any
Lender, shall make it unlawful, impossible, or impracticable for such Agent or
any Lender to make or maintain LIBO Rate Loans as contemplated by this
Agreement, (a) the commitment of the Agent or any Lender hereunder to make LIBO
Rate Loans or convert Prime Rate Loans to LIBO Rate Loans shall forthwith be
suspended until such event is resolved and (b) the Agent's or such Lender's
Loans then outstanding as LIBO Rate Loans, if any, shall be converted
automatically to Prime Rate Loans on the next succeeding Interest Payment Date
or within such earlier period as allowed by law. The Borrower hereby agrees to
pay the Agent or any such Lender, within thirty (30) days of its demand, any
additional amounts necessary to compensate the Agent or any such Lender for any
costs incurred by the Agent or any such Lender in making any conversion in
accordance with this Section, including, but not limited to, any interest or
fees payable by the Agent or any such Lender to lenders of funds obtained by it
in order to make or maintain its LIBO Rate Loans hereunder (the Agent's or any
such Lender's notice of such costs, in reasonable detail as certified to the
Borrower and the Agent to be conclusive absent manifest error).
3.13 Obligation to Mitigate. The Agent and each Lender agrees that as
promptly as practicable after it becomes aware of the occurrence of an event
that would entitle it to give
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notice pursuant to Section 3.6, 3.11 or 3.12, it will use reasonable efforts to
make, fund or maintain its affected LIBO Rate Loans through another Lending
Office of the Agent or such Lender if, as a result thereof, the increased cost
would be avoided or materially reduced or the illegality would thereby cease to
exist and if, in the reasonable opinion of the Agent or such Lender, the making,
funding or maintaining of such LIBO Rate Loans through such other Lending Office
would not in any material respect be disadvantageous to the Agent or such Lender
or contrary to the Agent's or such Lender's internal policies or normal banking
practices or any applicable legal or regulatory restrictions, provided that the
Borrower shall pay all incremental expenses incurred by the Agent or any such
Lender as a result of utilizing such other Lending Office.
3.14 Taxes. (a) Any and all payments by the Borrower to each Lender or the
Agent under this Agreement and any other Loan Document shall be made free and
clear of, and without deduction or withholding for, any Taxes. In addition, the
Borrower shall pay all Other Taxes to the relevant taxing authority or other
authority in accordance with applicable law.
(b) If the Borrower shall be required by law to deduct or withhold
any Taxes or Other Taxes from or in respect of any sum payable hereunder to any
Lender or the Agent, then:
(i) the sum payable shall be increased as necessary so that,
after making all required deductions and withholdings (including deductions and
withholdings applicable to additional sums payable under this Section), such
Lender or the Agent, as the case may be, receives an amount equal to the sum it
would have received had no such deductions or withholdings been made;
(ii) the Borrower shall make such deductions and withholdings;
and
(iii) the Borrower shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in accordance with
applicable law.
(c) The Borrower agrees to indemnify and hold harmless each Lender
and the Agent for the full amount of (i) Taxes and (ii) Other Taxes that are
payable by such Lender or the Agent and any penalties, interest, additions to
tax, expenses or other similar liabilities arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. Payment under this indemnification shall be made within 45 days after
the date the Lender or the Agent makes written demand therefor.
(d) Each Lender that is not incorporated or organized in or under
the laws of the United States of America or a state thereof (a "Non-U.S.
Lender") shall:
(i) deliver to the Borrower and the Agent, prior to the first
day on which the Borrower is required to make any payments hereunder to such
Lender, two copies of either United States Internal Revenue Service Form 1001 or
Form 4224 or, in the case of a Non-U.S. Lender claiming exemption from U.S.
Federal withholding tax under Section 871(h) or 881(c) of the Internal Revenue
Code with respect to payments of "portfolio interest", a Form W-8, or any
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subsequent versions thereof or successors thereto (and, if such Non-U.S. Lender
delivers a Form W-8, a certificate representing that such Non-U.S. Lender is not
a bank for purposes of Section 881(c) of the Internal Revenue Code, is not a
10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the
Internal Revenue Code) of the Borrower and is not a controlled foreign
corporation related to the Borrower (within the meaning of Section 864(d)(4) of
the Internal Revenue Code)), properly completed and duly executed by such
Non-U.S. Lender claiming complete exemption from, or a reduced rate of, U.S.
Federal withholding tax on payments by the Borrower under this Agreement;
(ii) deliver to the Borrower and the Agent two further copies
of any such form of certification on or before the date that any such form or
certification expires or becomes obsolete and after the occurrence of any event
requiring a change in the most recent form previously delivered by it to the
Borrower; and
(iii) obtain such extensions of time for filing and complete
such forms or certifications as may reasonably be requested by the Borrower or
the Agent;
unless in any such case any change in treaty, law or regulation has occurred
prior to the date on which any such delivery would otherwise be required that
renders any such form inapplicable or would prevent such Lender from duly
completing and delivering any such form with respect to it and such Lender so
advises the Borrower and the Agent. Each Non-U.S. Lender that shall become a
participant pursuant to Section 9.6 or a Lender pursuant to Section 9.6 shall,
upon the effectiveness of the related transfer, be required to provide all the
forms and statements required pursuant to this Section 3.14(d), provided that in
the case of a participant such participant shall furnish all such required forms
and statements to the Lender from which the related participation shall have
been purchased.
(e) The Borrower shall not be required to indemnify any Non-U.S.
Lender or the Agent, or to pay any additional amounts to any Non-U.S. Lender or
the Agent, in respect of U.S. Federal withholding tax pursuant to paragraph (a)
above to the extent that (i) the obligation to withhold amounts with respect to
U.S. Federal withholding tax existed on the date such Non-U.S. Lender became a
party to this Agreement (or, in the case of a Non-U.S. participant, on the date
such participant became a participant hereunder) or as of the date such Non-U.S.
Lender changes its applicable Lending Office; provided, however, that this
clause (i) shall not apply to the extent that (x) the indemnity payments or
additional amounts any Lender (or participant) would be entitled to receive
(without regard to this clause (i)) do not exceed the indemnity payment or
additional amounts that the Person making the assignment, participation,
transfer or change in Lending Office would have been entitled to receive in the
absence of such assignment, participation, transfer or change in Lending Office,
or (y) such assignment, participation, transfer or change in Lending Office had
been requested by the Borrower, (ii) the obligation to pay such additional
amounts would not have arisen but for a failure by such Non-U.S. Lender or
Non-U.S. participant to comply with the provisions of paragraph (d) above or
(iii) any of the representations or certifications made by a Non-U.S. Lender or
Non-U.S. participant pursuant to paragraph (d) above are incorrect at the time a
payment hereunder is made, other than by reason
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of any change in treaty, law or regulation having effect after the date such
representations or certifications were made.
(f) If the Borrower determines in good faith that a reasonable basis
exists for contesting any Taxes for which indemnification has been demanded
hereunder, the relevant Lender or the Agent, as applicable, shall cooperate with
the Borrower in challenging such Taxes at the Borrower's expense if so requested
by the Borrower in writing. If any Lender or the Agent, as applicable, receives
a refund of a Tax for which a payment has been made by the Borrower pursuant to
this Agreement, which refund in the good faith judgment of such Lender or Agent,
as the case may be, is attributable to such payment made by the Borrower, then
the Lender or the Agent, as the case may be, shall reimburse the Borrower for
such amount as the Lender or Agent, as the case may be, determines to be the
proportion of the refund as will leave it, after such reimbursement, in no
better or worse position than it would have been in if the payment had not been
required. Neither the Lenders nor the Agent shall be obliged to disclose
information regarding its tax affairs or computations to the Borrower in
connection with this paragraph (f) or any other provision of this Section 3.14.
(g) Promptly after the date of any payment by the Borrower of Taxes
or Other Taxes, the Borrower shall furnish to each Lender or the Agent the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to such Lender or the Agent.
ARTICLE IV
CONDITIONS OF EFFECTIVENESS AND LENDING
4.1 Conditions Precedent to Effectiveness. The effectiveness of this
Agreement is subject to the conditions precedent that:
(a) The Agent shall have received the following, each dated as of
the date hereof (except for the documents referred to in clause (ii)), in form
and substance satisfactory to the Agent and (except for the Notes) in sufficient
copies for each Lender:
(i) The Notes issued by the Borrower to the order of each
Lender;
(ii) Copies of the Articles of Incorporation of the Borrower
and each Guarantor, certified as of a recent date by the Secretary of State of
California;
(iii) Copies of the Bylaws of the Borrower and each Guarantor,
certified by the Secretary or an Assistant Secretary of such Person;
(iv) Copies of resolutions of the Board of Directors or other
authorizing documents of the Borrower and each Guarantor, approving the Loan
Documents to which such Person is a party and the transactions contemplated
thereunder;
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(v) An incumbency certificate executed by the Secretary or an
Assistant Secretary of the Borrower and each Guarantor or equivalent document,
certifying the names and signatures of the officers of the Borrower and each
Guarantor or other Persons authorized to sign the Loan Documents to which such
Person is a party and the other documents to be delivered hereunder;
(vi) An executed and completed Notice of Borrowing regarding
any Revolving Loans to be made or maintained on the date hereof;
(vii) An executed and completed Borrowing Base Certificate;
(viii) Executed copies of all Loan Documents; and
(ix) A favorable opinion of counsel to the Borrower and each
Guarantor, in the form of Exhibit E, and as to such other matters as any Lender
may reasonably request.
(x) Borrower's projections of its future performance.
(b) The Borrower shall have paid to the Agent, for distribution (as
appropriate) to the Agent and the Lenders, the fees, costs and expenses payable
as required in Section 2.3 and Section 9.5, which amounts the Borrower may fund
with a Borrowing.
(c) All corporate and legal proceedings and all instruments and
documents in connection with the transactions contemplated by this Agreement
shall be reasonably satisfactory in content, form and substance to the Agent and
its counsel, and each Lender, the Agent and the Agent's counsel shall have
received any and all further information and documents which the Agent or such
counsel may reasonably have requested in connection therewith, such documents
where appropriate to be certified by proper corporate or governmental
authorities.
(d) The Related Transactions shall have closed in a manner and
pursuant to documentation in all respects satisfactory to the Agent.
4.2 Conditions Precedent to Each Borrowing. The obligation of each Lender
to make a Loan on the occasion of each Borrowing (including the initial
Borrowing) shall be subject to the further conditions precedent that on the date
of such Borrowing:
(a) the following statements shall be true and the Agent shall have
received the Notice of Borrowing required by Section 2.1(b) and Section 2.2(b),
which notice shall be deemed to be a certification by the Borrower that:
(i) the representations and warranties contained in Section
5.1 are correct on and as of the date of such Borrowing as though made on and as
of such date, except to the extent that such representations and warranties
specifically relate only to an earlier date, in which
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case such representations and warranties shall have been true and correct on and
as of such earlier date,
(ii) no event has occurred and is continuing, or would result
from such Borrowing, which constitutes an Event of Default or Potential Event of
Default,
(iii) all Loan Documents are in full force and effect, and
(iv) based on information available to the Borrower as of the
date of such requested Borrowing, the Borrower represents and warrants that (x)
the amount of such Borrowing, when added to all Revolving Loans then
outstanding, will not exceed the Borrowing Base and (y) the Borrower is, as of
the date of such Borrowing, and is projected to be, as of the last day of the
next ending Fiscal Quarter, in minimum compliance with each of the covenants set
forth in Section 6.2.
(b) no injunction or other restraining order shall have been issued
and no hearing to cause an injunction or other restraining order to be issued
shall be pending or noticed with respect to any action, suit or proceeding
seeking to enjoin or otherwise prevent the consummation of, or to recover any
damages or obtain relief as a result of, the transactions contemplated by this
Agreement or the making of the Loans hereunder.
(c) As to Borrowings subsequent to the 90th day after the date
hereof the Agent's inspection of the Borrower's accounts receivable records at
the Borrower's premises shall have been completed and shall have been in all
respects satisfactory in form and substance to the Agent.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties. The Borrower represents and warrants
as follows:
(a) Organization. The Borrower and each of its Subsidiaries is duly
organized, validly existing and in good standing under the laws of the state of
its formation. The Borrower and each of its Subsidiaries is also duly
authorized, qualified and licensed in all applicable jurisdictions, and under
all applicable laws, regulations, ordinances or orders of public authorities, to
carry on its business in the locations and in the manner presently conducted.
(b) Authorization. The execution, delivery and performance by the
Borrower or other executing Person of the Loan Documents, and the making of
Borrowings hereunder, are within the Borrower's or such other Person's corporate
powers, have been duly authorized by all necessary corporate action, and do not
contravene (i) the Borrower's or such other Person's charter, by-laws or other
organizational document or (ii) any law or regulation (including
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Regulations G, T, U and X) or any contractual restriction binding on or
affecting the Borrower or such other Person, and will not result in the creation
of a Lien on any of its properties (other than under a Loan Document).
(c) Governmental Consents; Regulation. No authorization or approval
or other action by, and no notice to or filing with, any governmental authority
or regulatory body (except (i) the filing of any necessary financing statements
to perfect the Liens granted under the Security Agreement and (ii) routine
reports required pursuant to the Securities Exchange Act of 1934, as amended,
which reports will be made in the ordinary course of business) is required for
the due execution, delivery and performance by the Borrower or other executing
Person of the Loan Documents. Neither the Borrower nor any of its Subsidiaries
is an "investment company" within the meaning of the Investment Company Act of
1940, as amended, or a "holding company", or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
(d) Validity. The Loan Documents are the binding obligations of the
Borrower or other executing Person, enforceable in accordance with their
respective terms; except in each case as such enforceability may be limited by
bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar
laws of general application and equitable principles relating to or affecting
creditors' rights.
(e) Financial Condition. The balance sheet of the Borrower and its
consolidated Subsidiaries as at December 31, 1996 and September 30, 1997 and the
related statements of income and retained earnings of the Borrower and its
consolidated Subsidiaries for the Fiscal Year or Fiscal Quarter (as the case may
be) then ended, copies of which have been furnished to each Lender, fairly
present the financial condition of the Borrower and its consolidated
Subsidiaries as at such dates and the results of the operations of the Borrower
and its consolidated Subsidiaries for the respective periods ended on such
dates, all in accordance with GAAP, consistently applied, and since September
30, 1997 (subject, in the case of the September 30,1997 financial statements, to
year-end audit adjustments and the absence of footnotes) there has been no
material adverse change in the business, operations, properties, assets,
prospects or condition (financial or otherwise) of the Borrower and its
Subsidiaries, taken as a whole.
(f) Litigation. Except as set forth on Schedule 5.1(f), there is no
pending or threatened action or proceeding affecting the Borrower or any of its
Subsidiaries before any court, governmental agency or arbitrator, which may
materially adversely affect the consolidated financial condition or operations
of the Borrower and its Subsidiaries or which may have a material adverse effect
on the Borrower's or another executing Person's ability to perform their
respective obligations under the Loan Documents, having regard for their other
financial obligations.
(g) Employee Benefit Plans. The Borrower and each of its ERISA
Affiliates is in compliance in all material respects with any applicable
provisions of ERISA and the
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regulations and published interpretations thereunder with respect to all
Employee Benefit Plans. No Termination Event has occurred or is reasonably
expected to occur with respect to any Pension Plan.
(h) Disclosure. No representation or warranty of the Borrower
contained in this Agreement or any other document, certificate or written
statement furnished to the Agent or any Lender by or on behalf of the Borrower
or any Subsidiary for use in connection with the transactions contemplated by
this Agreement contains any untrue statement of a material fact or omits to
state a material fact (known to the Borrower in the case of any document not
furnished by it) necessary in order to make the statements contained herein or
therein not misleading. There is no fact known to the Borrower (other than
matters of a general economic nature) which materially adversely affects the
business, operations, properties, assets, prospects or condition (financial or
otherwise) of the Borrower or its Subsidiaries, taken as a whole, which has not
been disclosed herein or in such other documents, certificates and statements
furnished to the Agent or any Lender for use in connection with the transactions
contemplated hereby.
(i) Margin Stock. No proceeds of any Loan will be used to purchase
or carry any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock.
(j) Environmental Matters. Except as set forth in Schedule 5.1(j),
neither the Borrower nor any Subsidiary, nor any of their respective officers,
employees, representatives or agents, nor, to the best of their knowledge, any
other Person, has treated, stored, processed, discharged, spilled, or otherwise
disposed of any substance defined as hazardous or toxic by any applicable
federal, state or local law, rule, regulation, order or directive, or any waste
or by-product thereof, at any real property or any other facility owned, leased
or used by the Borrower or any Subsidiary, in violation of any applicable
statutes, regulations, ordinances or directives of any governmental authority or
court, which violations may result in liability to the Borrower or any
Subsidiary or any of their respective officers, employees, representatives,
agents or shareholders in an amount exceeding $250,000 for all such violations;
and the unresolved violations set forth in said Schedule will not result in
liability to the Borrower or any Subsidiary or any of their respective officers,
employees, representatives, agents or shareholders in an amount exceeding
$250,000 for all such unresolved violations. Except as set forth in said
Schedule, no employee or other Person has ever made a claim or demand against
the Borrower or any Subsidiary based on alleged damage to health caused by any
such hazardous or toxic substance or by any waste or by-product thereof; and the
unsatisfied claims or demands against the Borrower or any Subsidiary set forth
in said Schedule will not result in uninsured liability to the Borrower or any
Subsidiary or any of their respective officers, employees, representatives,
agents or shareholders in an amount exceeding $250,000 for all such unsatisfied
claims or demands. Except as set forth in said Schedule, neither the Borrower
nor any Subsidiary has been charged by any governmental authority with
improperly using, handling, storing, discharging or disposing of any such
hazardous or toxic substance or waste or by-product thereof or with causing or
permitting any pollution of any body of water; and the outstanding charges set
forth in said Schedule will not result in liability to the Borrower or any
Subsidiary or any of their
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respective officers, employees, representatives, agents or shareholders in an
amount exceeding $250,000 for all such outstanding charges.
(k) Employee Matters. There is no strike or work stoppage in
existence or threatened involving the Borrower or its Subsidiaries that may
materially adversely affect the consolidated financial condition or operations
of the Borrower and its Subsidiaries or that may have a material adverse effect
on the Borrower's ability to perform its obligations under the Loan Documents,
having regard for its other financial obligations.
ARTICLE VI
COVENANTS
6.1 Affirmative Covenants. So long as any Note shall remain unpaid or any
Lender shall have any Commitment hereunder, the Borrower will, and will cause
its Subsidiaries to (unless the Lenders shall otherwise consent in writing as
provided in Section 9.1):
(a) Financial Information. Furnish to each Lender and the Agent:
(i) as soon as available, but in any event within ninety (90)
days after the end of each Fiscal Year of the Borrower, a copy of the
consolidated and consolidating balance sheet of the Borrower and its
consolidated Subsidiaries as at the end of each Fiscal Year and the related
consolidated and consolidating statements of income (or comparable statement)
and changes in cash flow for such year, setting forth in each case in
comparative form the figures as at the end of the previous year as to the
balance sheet and the figures for the previous corresponding period as to the
other statements, accompanied, with respect to such consolidated statements, by
an unqualified report and opinion thereon of independent certified public
accountants reasonably acceptable to the Agent; all such financial statements to
be complete and correct in all material respects and in accordance with GAAP
applied consistently throughout the Fiscal Year (except as approved by such
accountants and disclosed therein);
(ii) as soon as available, but in any event within forty-five
(45) days after the end of each of the first three Fiscal Quarters of the
Borrower, a copy of the unaudited consolidated and consolidating balance sheet
of the Borrower and its consolidated Subsidiaries as at the end of such period
and the related unaudited consolidated and consolidating statements of income
(or comparable statement) and changes in cash flow for such period and year to
date, setting forth in each case in comparative form the figures as at the end
of the previous Fiscal Year as to the balance sheet and the figures for the
previous corresponding period as to the other statements, certified by a duly
authorized officer of the Borrower as being fairly stated in all material
respects subject to year end and audit adjustments, all such financial
statements to be complete and correct in all material respects and in accordance
with GAAP subject to normal year end and audit adjustments and the absence of
footnotes, applied consistently throughout the period reflected therein (except
as approved by such accountants and disclosed therein);
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(iii) as soon as available, but in any event within thirty
(30) days after the end of each calendar month, a copy of the unaudited
consolidated and consolidating balance sheet of the Borrower and its
consolidated Subsidiaries as at the end of such period and the related unaudited
consolidated and consolidating statements of income (or comparable statement)
for such month certified by a duly authorized officer of the Borrower as being
fairly stated in all material respects subject to normal quarterly, year end and
audit adjustments and the absence of footnotes;
(iv) together with each delivery of financial statements of
the Borrower and its Subsidiaries pursuant to subdivisions (i) and (ii) above,
(A) an officer's certificate stating that the signer has reviewed the terms of
the Loan Documents and has made, or caused to be made under his/her supervision,
a review in reasonable detail of the transactions and condition of the Borrower
and its Subsidiaries during the accounting period covered by such financial
statements and that such review has not disclosed the existence during or at the
end of such accounting period, and that the signer does not have knowledge of
the existence as at the date of the officer's certificate, of any condition or
event which constitutes an Event of Default or Potential Event of Default, or,
if any such condition or event existed or exists, specifying the nature and
period of existence thereof and what action the Borrower has taken, is taking
and proposes to take with respect thereto; and (B) a Compliance Certificate in
the form of Exhibit F demonstrating in reasonable detail compliance during and
at the end of such accounting periods with the each of the covenants and
restrictions contained in Section 6.2 as of the end of the fiscal period covered
thereby;
(v) substantially concurrent with the sending or filing
thereof, copies of all reports which the Borrower sends to a majority of its
security holders, and copies of all reports and registration statements which
the Borrower or any of its Subsidiaries files with the S.E.C. or any national
securities exchange; and
(vi) as soon as available, but in any event within thirty (30)
days after the end of each calendar month through March 31, 1999 and thereafter
within 30 days after the end of each Fiscal Quarter of the Borrower, a Borrowing
Base Certificate in substantially the form of Exhibit J setting forth the
calculation of the Borrowing Base, certified by the chief financial officer,
corporate controller or treasurer of the Borrower, and an aging of the
Borrower's accounts receivable and accounts payable in form and detail
acceptable to the Agent.
(b) Notices and Information. Deliver to the Agent and each Lender:
(i) promptly upon any officer of the Borrower obtaining
knowledge (A) of any condition or event which constitutes an Event of Default or
Potential Event of Default, (B) that any Person has given any notice to the
Borrower or any of its Subsidiaries or taken any other action with respect to a
claimed default or event or condition of the type referred to in Section 7.1(f),
(C) of the institution of any litigation involving an alleged liability
(including possible forfeiture of property) of the Borrower or any of its
Subsidiaries equal to or greater than $100,000 or any adverse determination in
any litigation involving a potential liability of the Borrower or any of its
Subsidiaries equal to or greater than $100,000, or (D) of a material
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adverse change in the business, operations, properties, assets or condition
(financial or otherwise) of the Borrower and its Subsidiaries, taken as a whole,
an officers' certificate specifying the nature and period of existence of any
such condition or event, or specifying the notice given or action taken by such
holder or Person and the nature of such claimed default, Event of Default,
Potential Event of Default, event or condition, and what action the Borrower has
taken, is taking and proposes to take with respect thereto;
(ii) promptly upon becoming aware of the occurrence of or
forthcoming occurrence of any (A) Termination Event, or (B) "prohibited
transaction," as such term is defined in Section 4975 of the Internal Revenue
Code or Section 406 of ERISA, in connection with any Employee Benefit Plan or
any trust created thereunder, a written notice specifying the nature thereof,
what action the Borrower has taken, is taking or proposes to take with respect
thereto, and, when known, any action taken or threatened by the Internal Revenue
Service, the Department of Labor, or the Pension Benefit Guaranty Corporation
with respect thereto;
(iii) with reasonable promptness copies of (A) all notices
received by the Borrower or any of its ERISA Affiliates of the Pension Benefit
Guaranty Corporation's intent to terminate any Pension Plan or to have a trustee
appointed to administer any Pension Plan, (B) each Schedule B (Actuarial
Information) to the annual report (Form 5500 Series) filed by the Borrower or
any of its ERISA Affiliates with the Internal Revenue Service with respect to
each Pension Plan, and (C) all notices received by the Borrower or any of its
ERISA Affiliates from a Multiemployer Plan sponsor concerning the imposition or
amount of withdrawal liability pursuant to Section 4202 of ERISA;
(iv) promptly, but in any event within thirty (30) days after
receipt thereof, a copy of any notice, summons, citation, directive, letter or
other form of communication from any governmental authority or court in any way
concerning any action or omission on the part of the Borrower or any of its
Subsidiaries in connection with any substance defined as toxic or hazardous by
any applicable federal, state or local law, rule, regulation, order or directive
or any waste or by-product thereof, or concerning the filing of a Lien upon,
against or in connection with the Borrower, its Subsidiaries, or any of their
leased or owned real or personal property, in connection with a Hazardous
Substance Superfund or a Post-Closure Liability Fund as maintained pursuant to
Section 9507 of the Internal Revenue Code if such act or omission may result in
liability in an amount exceeding $100,000 for all such acts or omissions or if
any such Lien, together with all other such Liens, is filed upon or against
property the fair market value of which exceeds $100,000 in the aggregate; and
(v) promptly, but in any event within ten (10) days after
request, such other information and data with respect to the Borrower or any of
its Subsidiaries as from time to time may be reasonably requested by the Agent
or any Lender.
(c) Corporate Existence, Etc. At all times preserve and keep in full
force and effect its and its Subsidiaries' corporate existence and rights and
franchises material to its business and those of each of its Subsidiaries;
provided, however, that the corporate existence of
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any such Subsidiary may be terminated if such termination is accomplished in
accordance with Section 6.2(j)(i).
(d) Payment of Taxes and Claims. Pay, and cause each of its
Subsidiaries to pay, all taxes, assessments and other governmental charges
imposed upon it or any of its properties or assets or in respect of any of its
franchises, business, income or property before any penalty or interest accrues
thereon, and all claims (including claims for labor, services, materials and
supplies) for sums which have become due and payable and which by law have or
may become a Lien upon any of its properties or assets, prior to the time when
any penalty or fine shall be incurred with respect thereto; provided that no
such charge or claim need be paid if being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted and if such
reserve or other appropriate provision, if any, as shall be required in
accordance with GAAP shall have been made therefor.
(e) Maintenance of Properties; Insurance. Maintain or cause to be
maintained in good repair, working order and condition all material properties
used or useful in the business of the Borrower and its Subsidiaries and from
time to time make or cause to be made all appropriate repairs, renewals and
replacements thereof. The Borrower will maintain or cause to be maintained, with
financially sound and reputable insurers, insurance with respect to its
properties and business and the properties and business of its Subsidiaries
against loss or damage of the kinds customarily insured against by corporations
of established reputation engaged in the same or similar businesses and
similarly situated, of such types and in such amounts as are customarily carried
under similar circumstances by such other corporations. The Borrower will comply
with any other insurance requirement set forth in any other Loan Document.
(f) Inspection. Permit any authorized representatives designated by
the Agent or any Lender to visit and inspect any of the properties of the
Borrower or any of its Subsidiaries, including its and their financial and
accounting records, and to make copies and take extracts therefrom, and to
discuss its and their affairs, finances and accounts with its and their officers
and independent public accountants, all upon reasonable advance notice and at
such reasonable times during normal business hours and as often as may be
reasonably requested.
(g) Compliance with Laws, Etc. Exercise, and cause each of its
Subsidiaries to exercise, all due diligence in order to comply with the
requirements of all applicable laws, rules, regulations and orders of any
governmental authority, including all environmental laws, rules, regulations and
orders, noncompliance with which would materially adversely affect the business,
properties, assets, operations, prospects or condition (financial or otherwise)
of the Borrower and its Subsidiaries, taken as a whole.
(h) Borrower's Account. Maintain the Borrower's Account at all times
with the Agent.
6.2 Negative Covenants. So long as any Note shall remain unpaid or any
Lender shall have any Commitment hereunder, the Borrower will not, and will not
permit any Subsidiaries to, without the written consent of the Lenders as
provided in Section 9.1:
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(a) Consolidated Net Worth. Permit Consolidated Net Worth at any
time commencing on March 31, 1999 to be less than an amount equal to 120% of
Borrower's Consolidated Net Worth at December 31, 1998 plus (i) 75% of
cumulative Consolidated Net Income (but not loss) for each Fiscal Quarter of the
Borrower commencing with the Fiscal Quarter ending March 31, 1999, plus (ii)
100% of the Net Proceeds of any Equity Issuance by the Borrower after the date
hereof, plus (iii) increases in stockholders' equity upon any conversion of any
Subordinated Debt or preferred stock to common stock by any Person after the
date hereof.
(b) [Intentionally omitted]
(c) Leverage Ratio. As at the end of any Fiscal Quarter of the
Borrower commencing with the Fiscal Quarter of the Borrower ending March 31,
1999, permit the ratio of Consolidated Total Debt as of the Fiscal Quarter of
the Borrower then ending to EBITDA as of the Fiscal Quarter of the Borrower then
ending to be more than the correlative amount indicated below:
Fiscal Quarter of the
Borrower Ending Ratio
--------------- -----
March 31, 1999 5.00:1.00
June 30, 1999 4.75:1.00
September 30, 1999 4.50:1.00
December 31, 1999 4.25:1.00
March 31, 2000 4.00:1.00
June 30, 2000 3.75:1.00
Each Fiscal Quarter Ending 3.50:1.00
of the Borrower thereafter
(d) Interest Coverage Ratio. As at the end of any Fiscal Quarter of
the Borrower commencing with the Fiscal Quarter of the Borrower ending March 31,
1999, permit the ratio of EBITDA as of the Fiscal Quarter of the Borrower then
ending to Interest Expense as of the Fiscal Quarter of the Borrower then ending
to be less than the ratio set forth below opposite the Fiscal Quarter of the
Borrower in question set forth below (in each case determined based upon the
EBITDA and Interest Expense for the Fiscal Quarter of the Borrower in question
and the immediately preceding three consecutive Fiscal Quarters of the
Borrower):
Fiscal Quarter of the
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Borrower Ending Ratio
--------------- -----
March 31, 1999 1.50:1.00
June 30, 1999 1.75:1.00
September 30, 1999 2.00:1.00
December 31, 1999 2.25:1.00
Each Fiscal Quarter Ending
of the Borrower thereafter 2.50:1.00
(e) Minimum EBITDA. Permit EBITDA for any Fiscal Quarter of the
Borrower commencing with the Fiscal Quarter of the Borrower ending March 31,
1998 to be less than the amount set forth below under the column headed "Minimum
Quarterly EBITDA" immediately opposite the Fiscal Quarter of the Borrower in
question or permit EBITDA for any such Fiscal Quarter of the Borrower and the
immediately preceding three Fiscal Quarters of the Borrower to be less than the
amount set forth below under the column headed "Minimum Rolling Four Quarter
EBITDA" opposite the Fiscal Quarter of the Borrower in question:
Minimum Minimum Rolling
Fiscal Quarter of the Quarterly Four Quarter
Borrower Ending EBITDA EBITDA
--------------- ------ ------
March 31, 1998 $1,000,000 $10,000,000
June 30, 1998 $3,500,000 $10,000,000
September 30, 1998 $3,500,000 $14,000,000
December 31, 1998 $5,000,000 $20,000,000
March 31, 1999 $5,000,000 $22,500,000
June 30, 1999 $5,000,000 $25,000,000
September 30, 1999 $5,000,000 $27,500,000
Each Fiscal Quarter Ending
of the Borrower thereafter $5,000,000 $30,000,000
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(e)(e) Profitability. Shall not have Consolidated Net Income of less
than $1.00 for (a) two or more Fiscal Quarters of the Borrower (i) in the 1999
Fiscal Year of the Borrower or (ii) in any four consecutive Fiscal Quarters of
the Borrower commencing with the Fiscal Quarter of the Borrower ending March 31,
2000 or (b) any four consecutive Fiscal Quarters of the Borrower commencing with
the Fiscal Quarter of the Borrower ending December 31, 1999.
(f) Liens Etc. Create or suffer to exist, or permit any of its
Subsidiaries to create or suffer to exist, any Lien upon or with respect to any
of its properties, whether now owned or hereafter acquired, other than:
(i) Permitted Liens;
(ii) purchase money Liens upon or in any property acquired,
leased or held by the Borrower or any Subsidiary in the ordinary course of
business to secure the purchase price of such property or to secure indebtedness
incurred solely for the purpose of financing the acquisition or lease of such
property, including Capital Leases;
(iii) Liens securing Subordinated Debt on the date of this
Agreement, subject to the subordination provisions of such Subordinated Debt;
(iv) all renewals, refundings, refinancings and extensions of
any such Liens described in clauses (i), (ii) and (iii) above; provided that the
principal amount secured is not increased and that such Lien is not extended to
other property (other than after acquired property of the same type which is
already collateral).
(g) Debt. Create or suffer to exist, or permit any of its
Subsidiaries to create or suffer to exist, any Debt, other than:
(i) Debt existing on the date hereof and set forth on Schedule
6.2(g);
(ii) Debt owed to the Lenders hereunder;
(iii) Debt secured by Liens permitted under Section 6.2(f);
(iv) Debt of a wholly-owned Subsidiary of the Borrower to
another wholly-owned Subsidiary of the Borrower and Debt of the Borrower to a
wholly-owned Subsidiary of the Borrower; provided, however, that the maximum
amount of Debt owing by Foreign Subsidiaries to the Borrower or any Guarantor
shall not exceed $10,000,000 in the aggregate at any time outstanding;
(v) Contingent Obligations permitted under Section 6.2(l);
(vi) Debt not otherwise permitted by clauses (i) through (v)
above, not in excess of $1,000,000 in the aggregate at any one time outstanding;
and
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(vii) all renewals, refundings, refinancings or extensions of
any such Debt described in clauses (i) and (iii) above, provided that the terms
thereof are not materially more burdensome to the Borrower than those set forth
in the documents evidencing such Debt as in effect on the date hereof in the
case of Debt described in clause (i), and provided, further, that no additional
assets (other than after acquired property of the same type which is already
collateral) are pledged to secure any renewals, refundings, refinancings or
extensions of Debt described in clause (iii); and
(viii) Debt under the Senior Unsecured Notes.
(h) Lease Obligations. Create or suffer to exist, or permit any of
its Subsidiaries to create or suffer to exist, any obligations for the payment
of rental for any property under leases or agreements to lease (other than
Capital Leases) which would cause the direct or contingent liabilities of the
Borrower and its Subsidiaries, on a consolidated basis, in respect of all such
obligations to exceed $7,000,000 payable in any Fiscal Year of the Borrower;
provided, however, that such amount shall be increased by an amount equal to the
periodic increases in rent payable by any of the Borrower or its Subsidiaries
under any such leases, which periodic increases shall not exceed more than 5% of
the prior rent amount in any Fiscal Year.
(i) Dividends, etc. Declare or pay any dividends, purchase or
otherwise acquire for value any of its capital stock now or hereafter
outstanding, or make any distribution of assets to its stockholders as such, or
permit any of its Subsidiaries to purchase or otherwise acquire for value any
stock of the Borrower, except that the Borrower may (i) declare and deliver
dividends and distributions payable in capital stock of the Borrower, and (ii)
repurchase its capital stock in connection with any agreement between the
Borrower or its Subsidiaries and any officer, director, employee or consultant
of the Borrower or its Subsidiaries (other than those with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇) entered into in the ordinary course of business wherein the
Borrower or its Subsidiary is obligated or entitled to repurchase from such
officer, director, employee or consultant such capital stock upon such Person's
termination of employment or services with the Borrower; provided that the
aggregate repurchases under this clause (ii) shall not exceed $2,000,000 in the
aggregate during the term of this Agreement, and except that any wholly-owned
Subsidiary of the Borrower may declare and pay cash dividends to the Borrower.
(j) Consolidation, Merger. Consolidate or merge with any other
Person, liquidate, wind-up or dissolve itself or acquire by purchase or
otherwise all or substantially all of the business, property or fixed assets of,
or stock or other evidence of beneficial ownership of, any Person (each, an
"Acquisition"), or permit any of its Subsidiaries to do any of the foregoing,
except that:
(i) any Subsidiary of the Borrower may be merged or
consolidated with or into the Borrower or any wholly-owned Subsidiary of the
Borrower or be liquidated, wound up or dissolved, or all or any substantial part
of its business, property or assets may be conveyed, sold, leased, transferred
or otherwise disposed of, in one transaction or a series of transactions, to the
Borrower or any wholly-owned Subsidiary of the Borrower; provided that, in the
case of such
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a merger or consolidation, the Borrower or such wholly-owned Subsidiary shall be
the continuing or surviving corporation in all such cases before and after
giving effect to such transaction there exists no Event of Default or Potential
Event of Default;
(ii) the Borrower may make Consolidated Capital Expenditures
permitted under Section 6.2(n);
(iii) the Borrower may make Acquisitions not otherwise
contemplated by this Section 6.2(j), where the sum of (x) the cash consideration
plus (y), the excess, if any, of the book value of the liabilities of the Person
being acquired over the book value of the assets of the Person being acquired
(each at the time immediately prior to the Acquisition) does not exceed an
aggregate amount over the period commencing on the date of this Agreement and
ending on the Revolving Maturity Date of $10,000,000; provided that any such
Acquisition may only be made if in all cases before and after giving effect to
any such Acquisition, (a) there exists no Event of Default or Potential Event of
Default and (b) the ratio of Consolidated Total Debt as at the end of the Fiscal
Quarter of the Borrower immediately preceding any such Acquisition to EBITDA as
at the end of such Fiscal Quarter of the Borrower is less than 3.50:1.00 and
such ratio remains less than 3.50:1.00 immediately after any such Acquisition;
and
(iv) the Borrower may make Investments permitted under Section
6.2(k).
(k) Investments. Make or permit to remain outstanding, or permit any
Subsidiary to make or permit to remain outstanding, any Investment, except that:
(i) the Borrower and its Subsidiaries may continue to own
Investments existing on the date hereof and set forth on Schedule 6.2(k);
(ii) the Borrower and its Subsidiaries may own, purchase or
acquire certificates of deposit issued by any Lender, commercial paper rated
Moody's P-I, municipal bonds rated ▇▇▇▇▇'▇ ▇▇ or better, direct obligations of
the United States of America or its agencies, and obligations guaranteed by the
United States of America;
(iii) the Borrower may acquire nominal amounts of stock of
public corporations, which acquisitions shall not exceed $500,000 in the
aggregate during the term of this Agreement;
(iv) the Borrower may acquire and own stock, obligations or
securities received from customers in connection with debts created in the
ordinary course of business owing to the Borrower or a Subsidiary;
(v) the Borrower may continue to own the existing capital
stock of its Subsidiaries;
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(vi) the Borrower and its Subsidiaries may make or permit to
remain outstanding Investments (whether in the form of loans or capital
contributions) within the limits permitted under Section 6.2(g)(iv); and
(vii) the Borrower may make any Acquisition permitted by
Section 6.2(j).
(l) Contingent Obligations. Create or become or remain liable, or
permit any of its Subsidiaries to create or become or remain liable, with
respect to any Contingent Obligation, except that:
(i) the Borrower or its Subsidiaries may remain liable with
respect to Contingent Obligations existing on the date hereof and set forth on
Schedule 6.2(l);
(ii) the Borrower may enter into Interest Rate Agreements and
Currency Agreements that are not speculative in nature; and
(iii) the Borrower or its Subsidiaries may endorse negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business.
(m) Asset Sales. Convey, sell, lease, transfer or otherwise dispose
of, or permit any Subsidiary to convey, sell, lease, transfer or otherwise
dispose of, in one transaction or a series of transactions, (i) all or any part
of its or its Subsidiary's business, property or fixed assets outside of the
ordinary course of business, whether now owned or hereafter acquired, or (ii)
any capital stock or debt of any of its Subsidiaries, except:
(i) the Borrower may convey, sell, lease, transfer or
otherwise dispose of business, property or fixed assets the fair market value of
which does not exceed $250,000 in the aggregate in any Fiscal Year; and
(ii) the Borrower or its Subsidiaries may convey, sell, lease,
transfer of otherwise dispose of obsolete or worn out assets.
(n) Consolidated Capital Expenditures. Commencing 1998 make, or
permit any Subsidiary to make, Consolidated Capital Expenditures in excess of
(a) if and so long as Borrower maintains a ratio of Consolidated Total Debt to
EBITDA of less than 3.5:1.0 as of the endings of Fiscal Quarters of the
Borrower, in each case determined on the basis of the Consolidated Total Debt
and EBITDA for the Fiscal Quarter of the Borrower in question and for the
immediately preceding three consecutive Fiscal Quarters of the Borrower,
$10,000,000 in any Fiscal Year of the Borrower and (b) so long as such ratio is
3.5:1.0 or greater, $2,000,000 in each Fiscal Quarter of the Borrower; provided
that the Borrower may carry over up to 50% of the Consolidated Capital
Expenditures permitted hereunder but not made in any Fiscal Year to the next
succeeding Fiscal Year so long as the Borrower is and, as a result of making
such additional Consolidated Capital Expenditures in such succeeding Fiscal Year
would remain, in compliance with each of the other financial covenants set forth
in Section 6.2.
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(o) Transactions with Shareholders and Affiliates. Enter into, or
permit any of its Subsidiaries to enter into, any transaction (including the
purchase, sale, lease or exchange of any property or the rendering of any
service) with any holder of 5% or more of any class of equity securities of the
Borrower, or with any Affiliate of the Borrower or any such holder, on terms
that (when taken in the light of any related or series of transactions of which
such transaction is a part (if any)) are less favorable to the Borrower or any
such Subsidiary than those which might be obtained at the time from Persons who
are not such a holder or Affiliate.
(p) Agreements Restricting Payment of Dividends. Permit any of its
Subsidiaries to enter into any agreement restricting the ability of such
Subsidiary to declare, order, pay or make or set apart any sum for any dividends
or other distributions or repayment of intercompany Debt on account of any
shares of any class of its stock.
(q) Restrictive Agreements. Agree with any Person, or permit any of
its Subsidiaries to agree with any Person, that the Borrower or such Subsidiary
will not create, incur or suffer to exist any Liens on its properties.
(r) Payments on Debt under the Senior Unsecured Notes and
Subordinated Debt. (i) Declare, order or pay, or permit any of its Subsidiaries
to declare, order or pay, any amount of principal of, premium, if any,
liquidated damages or interest on, or redeem, purchase or retire or make any
sinking fund or similar payment, or permit any of its Subsidiaries to do any of
the foregoing, with respect to any Subordinated Debt (including any Subordinated
Debt listed in Schedule 6.2(g)) or the Senior Unsecured Notes, except that the
Borrower may make scheduled payments of interest on the Senior Unsecured Notes,
provided, that no Event of Default or Potential Event of Default has occurred
and is continuing, or would result from such payment; or (ii) amend the terms of
any agreement relating to Subordinated Debt or the Senior Unsecured Notes,
including without limitation the Indenture, except that the Borrower and any of
its Subsidiaries may amend the terms of any Subordinated Debt so long as such
amendment does not impose any additional obligations or liabilities on the
Borrower or any of its Subsidiaries or impair the rights or benefits of the
Agent or the Lenders contained therein or amend any of the subordination
provisions thereof or (iii) except as prohibited hereby fail to comply with the
terms and conditions of or governing (x) the Subordinated Debt or (y) the Senior
Unsecured Notes, including without limitation the Indenture.
(s) Sales and Lease-Backs. Become or remain liable, or permit any of
its Subsidiaries to become or remain liable, directly or indirectly, with
respect to any lease, whether an operating lease or a Capital Lease, of any
property (whether real, personal or mixed), whether now owned or hereafter
acquired, (i) which the Borrower or any of its Subsidiaries has sold or
transferred or is to sell or transfer to any other Person or (ii) which the
Borrower or any of its Subsidiaries intends to use for substantially the same
purpose as any other property which has been or is to be sold or transferred by
the Borrower or any of its Subsidiaries to any Person in connection with such
lease; provided that the Borrower and its Subsidiaries may become and remain
liable as lessee, guarantor or other surety with respect to any such lease if
and to the extent that the Borrower or any of its Subsidiaries would be
permitted to enter into, and remain liable under, such lease under Section
6.2(h).
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(t) Conduct of Business. Engage, or permit any of its Subsidiaries
to engage, in any business other than (i) the business engaged in by the
Borrower and its Subsidiaries on the date of this Agreement and similar or
related businesses, and (ii) such other lines of business as may be consented to
by the Lenders as provided in Section 9.1.
(u) Fiscal Year. Change its fiscal year-end from December 31.
(v) New Subsidiaries. Create any new Subsidiaries (including any new
Subsidiaries created in connection with an Acquisition permitted pursuant to
Section 6.2(j)) unless, in the case of any Subsidiary that is not a Foreign
Subsidiary, such Subsidiary executes and delivers to the Agent, for the benefit
of the Lenders, a Subsidiary Guaranty of the Obligations in substantially the
form of Exhibit G attached hereto, and a Subsidiary Security Agreement in
substantially the form of Exhibit H attached hereto, with respect to all of its
assets, and the parent of such Subsidiary grants to the Agent for the benefit of
the Lenders a first priority, perfected pledge of all of the capital stock of
such Subsidiary (but limited to 65% of Foreign Subsidiaries if the Agent
receives evidence satisfactory to it that a pledge of greater than 65% would
have material adverse tax consequences).
(w) Investments in Foreign Subsidiaries. Make, or permit any
Subsidiary to make, any Investment in any Foreign Subsidiary if, after giving
effect to such Investment, the Borrower's aggregate Investment in all Foreign
Subsidiaries would be in excess of 20% of the Borrower's consolidated total
assets (determined in accordance with GAAP).
ARTICLE VII
EVENTS OF DEFAULT
7.1 Events of Default. If any of the following events ("Events of
Default") shall occur and be continuing:
(a) The Borrower shall fail to pay (i) any installment of principal
when due hereunder, (ii) any installment of interest when due hereunder or (iii)
any other amount payable hereunder on the date when due and (in the case of this
clause (a)(iii)) such failure shall continue for three Business Days; or
(b) Any representation or warranty made by the Borrower herein or by
the Borrower or any Guarantor (or any of their respective officers) in
connection with this Agreement or the other Loan Documents to which such person
is a party shall prove to have been incorrect in any material respect when made;
or
(c) The Borrower shall fail to perform or observe any term, covenant
or agreement contained in Sections 3.1, 6.1(b)(i)(A), (b)(i)(B), (c), (f) or 6.2
on its part to be performed or observed; or
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(d) The Borrower or any Guarantor shall fail to perform or observe
any term, covenant or agreement contained in this Agreement or any other Loan
Document to which such Person is a party other than those referred to in
Sections 7.1(a), (b), and (c) above on its part to be performed or observed and
any such failure shall remain unremedied or uncured for thirty (30) days after
the Borrower or such Guarantor (as the case may be) knows of such failure; or
(e) The Borrower or any of its Subsidiaries shall default in the
performance of or compliance with any term contained in any Loan Document other
than this Agreement and such default shall not have been remedied or waived
within any applicable grace period; or
(f) The Borrower or any of its Subsidiaries shall (A) fail to pay
any principal of, or premium or interest on, any Debt, the aggregate outstanding
principal amount of which is at least $250,000 (excluding Debt evidenced by the
Notes), when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) and such failure shall continue after the
applicable grace period, if any, specified in the agreement or instrument
relating to such Debt, or (B) fail to perform or observe any term, covenant or
condition on its part to be performed or observed under any agreement or
instrument relating to any such Debt, when required to be performed or observed,
such failure shall continue after the applicable grace period, if any, specified
in such agreement or instrument, if the effect of such failure to perform or
observe is to accelerate, or to permit the acceleration of, the maturity of such
Debt; or
(g) (i) The Borrower or any of its Subsidiaries shall commence any
case, proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian or other similar official
for it or for all or any substantial part of its assets, or the Borrower or any
of its Subsidiaries shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against the Borrower or any of its
Subsidiaries any case, proceeding or other action of a nature referred to in
clause (i) above which (A) results in the entry of an order for relief or any
such adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of sixty (60) days; or (iii) there shall be commenced
against the Borrower or any of its Subsidiaries any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets which results
in the entry of an order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within sixty (60) days from the
entry thereof; or (iv) the Borrower or any of its Subsidiaries shall take any
action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii) and (iii) above;
or (v) the Borrower or any of its Subsidiaries shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as they
become due; or
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(h) One or more judgments or decrees shall be entered against the
Borrower or any of its Subsidiaries involving in the aggregate a liability (not
paid or fully covered by insurance) equal to or greater than $500,000 and all
such judgments or decrees shall not have been vacated, discharged, or stayed or
bonded pending appeal within thirty (30) days from the entry thereof; or
(i) (i) The Borrower or any of its ERISA Affiliates shall fail to
make full payment when due of all amounts which, under the provisions of any
Pension Plan or Section 412 of the Internal Revenue Code, the Borrower or any of
its ERISA Affiliates is required to pay as contributions thereto;
(ii) any accumulated funding deficiency shall occur or exist,
whether or not waived, with respect to any Pension Plan;
(iii) the Borrower or any of its ERISA Affiliates shall enter
into any transaction which has as its principal purpose the evasion of liability
under Subtitle D of Title IV of ERISA;
(iv) (A) Any Pension Plan maintained by the Borrower or any of
its ERISA Affiliates shall be terminated within the meaning of Title IV of
ERISA, or (B) a trustee shall be appointed by an appropriate United States
district court to administer any Pension Plan, or (C) the Pension Benefit
Guaranty Corporation (or any successor thereto) shall institute proceedings to
terminate any Pension Plan or to appoint a trustee to administer any Pension
Plan, or (D) the Borrower or any of its ERISA Affiliates shall withdraw (under
Section 4063 of ERISA) from a Pension Plan, if as of the date of the event
listed in subclauses (A)-(D) above or any subsequent date, the Borrower or its
ERISA Affiliates has any liability (such liability to include any liability to
the Pension Benefit Guaranty Corporation, or any successor thereto, or to any
other party under Sections 4062, 4063 or 4064 of ERISA or any other provision of
law) resulting from or otherwise associated with the events listed in subclauses
(A)-(D) above; or
(v) As used in this Section 7.1(i) the term "accumulated
funding deficiency" has the meaning specified in Section 412 of the Internal
Revenue Code, and the terms "actuarial present value" and "benefit liabilities'
have the meanings specified in Section 4001 of ERISA; or
(j) Any Change in Control shall occur;
THEN, (i) upon the occurrence of any Event of Default described in clause (g)
above, the Commitments shall immediately terminate and all Loans hereunder with
accrued interest thereon, and all other amounts owing under this Agreement, the
Notes and the other Loan Documents shall automatically become due and payable;
and (ii) upon the occurrence of any other Event of Default, the Agent shall at
the request, or may with the consent, of the Requisite Lenders, by notice to the
Borrower, declare the Commitments to be terminated forthwith, whereupon the
Commitments shall immediately terminate, and/or, by notice to the Borrower,
declare the Loans hereunder, with accrued interest thereon, and all other
amounts owing under this Agreement, the
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Notes and the other Loan Documents to be due and payable forthwith, whereupon
the same shall immediately become due and payable and the Agent may exercise any
and all rights and remedies available at law or in equity and/or under any of
the Loan Documents. Except as expressly provided above in this Section,
presentment, demand, protest and all other notices of any kind are hereby
expressly waived.
ARTICLE VIII
THE AGENT
8.1 Authorization and Action. Each Lender hereby appoints and authorizes
the Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement as are delegated to the Agent by the terms hereof, together
with such powers as are reasonably incidental thereto. As to any matters not
expressly provided for by this Agreement (including enforcement or collection of
the Notes), the Agent shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Requisite Lenders, and such instructions shall be binding upon all Lenders
and all holders of Notes; provided, however, that Agent shall not be required to
take any action which is contrary to this Agreement or any other Loan Document
or applicable law; provided, further, that the Agent shall be fully justified in
refusing to take or to continue to take any action hereunder unless it shall
first be indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by the Agent by reason of taking or
continuing to take any such action. The Agent shall promptly furnish to each
Lender copies of all material documents, reports, certificates, financial
statements and notices furnished to the Agent by the Borrower; provided,
however, that the Agent shall not be liable to any Lender for its failure to
provide copies of such material documents, reports, certificates, financial
statements and notices unless such failure constitutes gross negligence or
willful misconduct by the Agent.
8.2 Agent's Reliance, etc. Neither the Agent nor any of its respective
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken under or in connection with this Agreement, except for its
own gross negligence or willful misconduct. The Agent may employ agents and
attorneys-in-fact and shall not be responsible to any Lender for the negligence
or misconduct of any such agents or attorneys-in-fact selected by it with
reasonable care. Without limitation of the generality of the foregoing, the
Agent: (i) may treat the payee of any Note as the holder thereof until the Agent
receives written notice of the assignment or transfer thereof signed by such
payee and in form satisfactory to the Agent; (ii) may consult with legal counsel
(including counsel for the Borrower), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (iii) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations made by the Borrower in or in connection with this Agreement;
(iv) shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Agreement on the
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part of the Borrower or to inspect the property (including the books and
records) of the Borrower; (v) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or any other instrument or document furnished pursuant hereto;
and (vi) shall incur no liability under or in respect of this Agreement by
acting upon any notice, consent, certificate or other instrument or writing
(which may be by telegram, cable or telex) believed by it in good faith to be
genuine and signed or sent by the proper party or parties.
8.3 The Agent and Affiliates. With respect to its Commitment, the Loans
made by it and the Note issued to it, the Agent shall have the same rights and
powers under this Agreement as any other Lender and may exercise the same as
though the Agent were not the Agent; and the term "Lender" or "Lenders" shall,
unless otherwise expressly indicated, include the Agent in its individual
capacity. The Agent and its affiliates may accept deposits from, lend money to,
act as trustee under indentures of, and generally engage in any kind of business
with, the Borrower, any of its subsidiaries and any Person who may do business
with or own securities of the Borrower or any such subsidiary, all as if it were
not the Agent and without any duty to account therefor to the Lenders.
8.4 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and based
on the financial statements referred to in Section 5.1(e) and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent,
except as to the delivery of documents required to be delivered to each Lender
pursuant to the terms hereof, or any other Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement.
8.5 Indemnification. Without limiting the obligations of the Borrower
hereunder, the Lenders agree to indemnify the Agent (to the extent not
reimbursed by the Borrower or any Guarantor), ratably according to the
respective principal amounts outstanding under the Notes then held by each of
them (or if no Notes are at the time outstanding or if any Notes are held by
Persons which are not Lenders, ratably according to the respective amounts of
their Commitments), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against the Agent in any way relating to or arising out of this
Agreement or any action taken or omitted by the Agent under this Agreement,
provided that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Agent's gross negligence or willful
misconduct. Without limitation of the foregoing, but subject to the proviso to
the preceding sentence each Lender agrees to reimburse the Agent promptly upon
demand for its ratable share of any reasonable out-of-pocket expenses (including
counsel fees and out-of-pocket expenses) incurred by the Agent in connection
with the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or
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responsibilities under, this Agreement, to the extent that the Agent is not
reimbursed for such expenses by the Borrower or any Guarantor.
8.6 Successor Agent. The Agent may resign at any time by giving written
notice thereof to the Borrower and the Lenders and may be removed at any time
with or without cause by the Requisite Lenders. Upon any such resignation or
removal, the Requisite Lenders shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Requisite
Lenders, and shall have accepted such appointment, within thirty (30) days after
the retiring Agent's giving of notice of resignation or the Requisite Lenders'
removal of the retiring Agent, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent, which shall be a commercial bank organized
under the laws of the United States of America or of any State thereof. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under this Agreement.
After any retiring Agent's resignation or removal hereunder as Agent, the
provisions of this Article VIII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement.
ARTICLE IX
MISCELLANEOUS
9.1 Amendments, etc. No amendment or waiver of any provision of the Loan
Documents nor consent to any departure by the Borrower or any Guarantor
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Borrower and the Lenders having at least 51% of the sum of (x)
the aggregate principal amount of Loans outstanding and (y) the aggregate
principal amount of the unused portion of the Revolving Commitment; and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given; provided, however, that no amendment,
waiver or consent shall, unless in writing and signed by all the Lenders, do any
of the following: (a) waive any of the conditions specified in Sections 4.1 and
4.2 or modify Section 9.7, (b) increase the Commitments of the Lenders, (c)
reduce the principal of, or interest on, the Notes or any fees or other amounts
payable hereunder, (d) postpone any date fixed for any payment (including any
mandatory prepayment pursuant to Section 2.4) of principal of, or interest on,
the Notes or any fees or other amounts payable hereunder, (e) change the
percentage of the Commitments or of the aggregate unpaid principal amount of the
Notes, or the number of Lenders, which shall be required for the Lenders or any
of them to take any action hereunder (f) release any Guarantor or release any
material portion of the Collateral, or (g) amend this Section 9.1; and provided,
further, that no amendment, waiver or consent shall, unless in writing and
signed by the Agent in addition to the Lenders required above to take such
action, affect the rights or duties of the Agent under this Agreement or any
other Loan Document.
9.2 Notices, etc. Except as otherwise set forth in this Agreement, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex or
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facsimile communication) and mailed or telegraphed or telexed or sent by
facsimile or delivered, if to the Borrower, at its address set forth on the
signature page hereof; and if to any Lender or the Agent, at its address set
forth on the signature page hereof; or, as to each party, at such other address
as shall be designated by such party in a written notice to the other parties.
All such notices and communications shall be effective three (3) Business Days
after deposit in the U.S mail, postage prepaid, when sent by telex or sent by
facsimile, or when delivered, respectively, except that notices and
communications to the Agent pursuant to Article II or VII shall not be effective
until received by the Agent.
9.3 Right of Setoff; Deposit Accounts. Upon and after the occurrence of
any Event of Default, each Lender is hereby authorized by the Borrower, at any
time and from time to time, without notice, (a) to set off against, and to
appropriate and apply to the payment of, the obligations and liabilities of the
Borrower under the Loan Documents (whether matured or unmatured, fixed or
contingent or liquidated or unliquidated) any and all amounts owing by such
Lender to the Borrower (whether payable in Dollars or any other currency,
whether matured or unmatured, and, in the case of deposits, whether general or
special, time or demand and however evidenced) and (b) pending any such action,
to the extent necessary, to hold such amounts as collateral to secure such
obligations and liabilities and to return as unpaid for insufficient funds any
and all checks and other items drawn against any deposits so held as such Lender
in its sole discretion may elect. The Borrower hereby grants to each Lender a
security interest in all deposits and accounts maintained with that Lender. The
rights of each Lender under this Section are in addition to other rights and
remedies (including other rights of set-off) which such Lender may have.
9.4 No Waiver; Remedies. No failure on the part of the Agent or any Lender
to exercise, and no delay in exercising, any right under any of the Loan
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise of any right under any of the Loan Documents preclude any other or
further exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
9.5 Costs and Expenses. The Borrower agrees to pay on demand all
reasonable fees and out-of-pocket costs and expenses of the Agent (including the
fees and out-of-pocket expenses of local or foreign counsel) in connection with
the preparation, amendment, or modification of the Loan Documents. The Borrower
agrees to pay on demand all fees and out-of-pocket costs and expenses of the
Agent and each Lender (including the fees and out-of-pocket expenses of local or
foreign counsel) in connection with the enforcement (including in appellate,
bankruptcy, insolvency, liquidation, reorganization, moratorium or other similar
proceedings) or restructuring of the Loan Documents or "work-out" of the
Obligations whether or not such work-out or restructuring is consummated.
9.6 Additional Lenders; Assignments; Participations.
(a) Any Lender may assign, from time to time, all or any portion of
its Commitments or its Loans and its Notes to an Affiliate of that Lender or to
a Federal Reserve Bank or, subject to the prior written approval of the Borrower
(which approval will not be
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unreasonably withheld or delayed and may be evidenced by the Borrower's
execution of an Assignment Agreement), to any other financial institution or any
fund that is regularly engaged in making, purchasing or investing in loans
reasonably acceptable to the Agent, by executing and delivering an Assignment
Agreement in substantially the form of Exhibit I annexed hereto, provided the
assigning Lender or the assignee has paid to the Agent a registration and
processing fee in the amount of $2,500. From and after the effective date of
such assignment (i) the assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it, have the
rights and obligations of a Lender hereunder and (ii) the Lender assignor
thereunder shall, to the extent that rights and obligations hereunder have been
assigned by it (other than to an Affiliate or to a Federal Reserve Bank),
relinquish its rights and be released from its obligations under this Agreement
(other than pursuant to Section 9.6(e)), and, in the case of an assignment
covering all or the remaining portion of an assigning Lender's rights and
obligations under this Agreement, such Lender shall cease to be a party hereto,
subject to its continuing obligations under Section 9.6(e) (other than to an
Affiliate or to a Federal Reserve Bank). The Commitments hereunder and Annex I
hereto shall be modified to reflect the Commitment of such assignee as provided
in Section 9.6(f) and (g), and, if any such assignment occurs while any Notes
are outstanding, new Notes shall, upon the surrender of the assigning Lender's
Notes, be issued to such assignee and to the assigning Lender as necessary to
reflect the new Commitments of the assigning Lender and of its assignee.
(b) Each Lender may sell, negotiate or grant participations to other
financial institutions in all or part of the obligations of the Borrower
outstanding under the Loan Documents, without notice to or the approval of the
Agent or the Borrower; provided that any such sale, negotiation or participation
shall be in compliance with the applicable federal and state securities laws and
the other requirements of this Section 9.6. No participant shall constitute a
"Lender" under any Loan Document, and the Borrower shall continue to deal solely
and directly with the Agent and the Lenders.
(c) Each Lender may disclose to any proposed assignee or participant
any information relating to the Borrower or any of its Subsidiaries; provided,
that prior to such disclosure such proposed assignee or participant shall have
agreed in writing to keep any such information confidential substantially on the
terms of Section 9.6(e).
(d) The grant of a participation interest shall be on such terms as
the granting Lender determines are appropriate, provided only that (i) the
holder of such a participation interest shall not have any of the rights of a
Lender under this Agreement except, if the participation agreement so provides,
rights to demand the payment of costs of the type described in Article III, to
the extent that the grantor of the participation would otherwise be entitled to
demand such payments, and rights to receive information provided by the Borrower
from time to time pursuant to Sections 6.1 (a) and (b) hereof, (ii) the consent
of the holder of such a participation interest shall not be required for
amendments or waivers of provisions of the Loan Documents other than those that
(A) increase the amount of the Commitments, (B) extend the term of the
Commitments in which such participant participates, (C) decrease the rate of
interest or the amount of any fee or any other amount payable to the Lenders
under the Loan Documents in which such participant participates, (D) reduce the
principal amount payable under the Loan
53
59
Documents in which such participant participates, or (E) extend the date fixed
for the payment of principal or interest or any other amount payable under the
Loan Documents in which such participant participates, and (iii) no Lender shall
grant participation interests to more than 2 additional financial institutions.
(e) Each Lender understands that some of the information and
documents furnished to it pursuant to this Agreement may be confidential and
each Lender agrees that it will keep all non-public information, documents and
agreements so furnished to it (and identified as confidential) confidential in
accordance with its customary procedures and will make no disclosure to other
Persons of such information or agreements until it shall have become public,
except (i) to the extent required in connection with matters involving
operations under or enforcement or amendment of the Loan Documents; (ii) to such
Lender's examiners and auditors or in accordance with such Lender's obligations
under law or regulations or pursuant to subpoenas or other process to make
information available to governmental agencies and examiners or to others; (iii)
to any corporate parent of any Lender so long as such parent agrees to accept
such information or agreement subject to the restrictions provided in this
Section 9.6(e); (iv) to any participant bank or trust company of any Lender so
long as such participant shares the corporate parent with such Lender and agrees
to keep such information, documents or agreement confidential in accordance with
the restrictions provided in this Section 9.6(e); (v) to the Agent or to any
other Lender and their respective counsel and other professional advisors and to
its own counsel and professional advisors so long as such Persons are instructed
to keep such information confidential in accordance with the provisions of this
Section 9.6(e); (vi) to proposed assignees and participants in accordance with
Section 9.6(c); and (vii) with the prior written consent of the Borrower.
(f) The Agent, on behalf of the Borrower, shall maintain at the
address of the Agent specified herein (or at such other address as may be
designated by the Agent from time to time in accordance with Section 9.2) a copy
of each Assignment Agreement delivered to it and a register (the "Register") for
the recordation of the names and addresses of the Lenders and the Commitment of
and principal amount of the Loans owing to each Lender from time to time. The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, the Agent and the Lenders shall treat each Person whose name
is recorded in the Register as the owner of a Loan or other obligation hereunder
as the owner thereof for all purposes of this Agreement and the other Loan
Documents, notwithstanding any notice to the contrary. Any assignment of any
Loan or other obligation hereunder shall be effective only upon appropriate
entries with respect thereto being made in the Register. The Register shall be
available for inspection by the Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
(g) Upon its receipt of an Assignment Agreement executed by an
assigning Lender and its assignee (and consented to by the Borrower (such
consent not to be unreasonably withheld)) together with payment to the Agent of
the registration and processing fee described in Section 9.6(a), the Agent shall
record the information contained therein in the Register and give notice of such
acceptance and recordation to the Lenders and the Borrower. Immediately upon the
recordation of such information in the Register, this Agreement shall be deemed
to be
54
60
amended to the extent, but only to the extent, necessary to reflect the addition
of the assignee and the resulting adjustment of the Commitments arising
therefrom, and (i) the assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment Agreement, shall have the rights of a Lender under the Loan
Documents and (ii) the assigning Lender shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been assigned by
it pursuant to such Assignment Agreement, relinquish its rights and be released
from its obligations under the Loan Documents. The Commitment allocated to each
assignee shall reduce such Commitments of the assigning Lender pro tanto.
9.7 Effectiveness; Binding Effect; Governing Law. This Agreement shall
become effective when it shall have been executed by the Borrower, the Agent and
each Lender and thereafter shall be binding upon and inure to the benefit of the
Borrower, the Agent, each Lender and their respective successors and assigns,
except that the Borrower shall not have the right to assign its rights hereunder
or any interest herein without the prior written consent of any Agent and all of
the Lenders. THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ITS
CHOICE OF LAW DOCTRINE.
9.8 Forum Selection and Consent to Jurisdiction. ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE LENDERS OR THE BORROWER
SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY (TO THE EXTENT PERMITTED UNDER
APPLICABLE LAW) IN THE COURTS OF THE STATE OF NEW YORK, NEW YORK COUNTY OR IN
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;
PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR
OTHER PROPERTY MAY BE BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE BORROWER
HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF
THE STATE OF NEW YORK, NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS
SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED
THEREBY IN CONNECTION WITH SUCH LITIGATION. THE BORROWER IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. THE BORROWER HEREBY EXPRESSLY
AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY
SUCH LITIGATION HAS
55
61
BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE BORROWER HAS OR
HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OF FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, THE BORROWER HEREBY IRREVOCABLY WAIVES (TO THE EXTENT PERMITTED UNDER
APPLICABLE LAW) SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS.
9.9 Waiver of Jury Trial. THE AGENT AND THE LENDERS AND THE BORROWER
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR
ACTIONS OF THE AGENT, THE LENDERS OR THE BORROWER. THE BORROWER ACKNOWLEDGES AND
AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION
(AND EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY)
AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND THE LENDERS
ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT.
9.10 Entire Agreement. This Agreement with Exhibits and Schedules and the
other Loan Documents embody the entire agreement and understanding between the
parties hereto and supersedes all prior agreements and understandings relating
to the subject matter hereof.
9.11 Separability of Provisions. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby.
9.12 Obligations Several. The obligation of each Lender hereunder is
several, and no Lender shall be responsible for the obligation or commitment of
any other Lender hereunder. Nothing contained in this Agreement and no action
taken by the Lenders pursuant hereto shall be deemed to constitute the Lenders
to be a partnership, an association, a joint venture or any other kind of
entity.
9.13 Survival of Certain Agreements. Notwithstanding anything in this
Agreement or implied by law to the contrary, the agreements of the Borrower set
forth in Sections 3.6, 3.7, 3.11, 3.14 and 9.5 and the agreements of the Lenders
set forth in Sections 3.9, 3.10, 8.2, 8.5 and 9.3 shall survive the payment of
the Loans and the Notes and the termination of this Agreement.
56
62
9.14 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement; signature
pages may be detached from counterpart documents and reassembled to form
duplicate executed originals.
9.15 Intercreditor Agreements with Customers. The Agent shall on behalf of
the Lenders at the request of the Borrower from time to time enter into
intercreditor agreements with the customers of the Borrower who have made
advance deposits for the purchase of inventory. Such agreements shall: (i) be in
a form acceptable to the Agent in the exercise of its reasonable commercial
judgment; (ii) permit the Borrower to deposit the customer's advance into a
separate deposit account which will be subject to a security interest solely in
favor of such customer; (iii) permit such customer to have a first priority
perfected security interest in the inventory purchased with such customer's
deposit; and (iv) include such other terms as are mutually agreeable.
57
63
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
PHASE METRICS, INC.
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
Title: Vice President - Finance
Address:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: R. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
THE AGENT:
FLEET NATIONAL BANK
By: /s/ Fleet National Bank
-----------------------------------------
Title: Vice President
Address:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Mail Stop: MA OF DO7A
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ (credit matters)
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇ (operations matters)
58
64
THE LENDERS:
FLEET NATIONAL BANK
By: /s/ Fleet National Bank
-----------------------------------------
Title: Vice President
Address:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Mail Stop: MA OF DO7A
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ (credit matters)
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇ (operations matters)
IMPERIAL BANK
By: /s/ Imperial Bank
-----------------------------------------
Title:
Address:
▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
59
65
ANNEX I
Lender Revolving Commitment
------ --------------------
Fleet National Bank $12,500,000
Imperial Bank $12,500,000
Total $25,000,000
----- -----------
A-1
66
EXHIBIT A
PHASE METRICS, INC.
REVOLVING PROMISSORY NOTE
San Diego, California
$______________________ ________________,____
FOR VALUE RECEIVED, PHASE METRICS, INC., a Delaware corporation (the
"Borrower"), promises to pay to the order of ________________________ (the
"Lender") the principal amount of _______________($____________) or, if less,
the aggregate amount of Revolving Loans (as defined in the Credit Agreement
referred to below) made by the Lender to the Borrower pursuant to the Credit
Agreement referred to below and outstanding on the Revolving Maturity Date (as
defined in the Credit Agreement referred to below) which shall be paid on the
Revolving Maturity Date. This Note amends and restates that certain revolving
promissory note of the Borrower payable to the order of the Lender dated
December 4, 1996.
The Borrower also promises to pay interest on the unpaid principal amount
hereof from the date hereof until paid at the rates and at the times which shall
be determined in accordance with the provisions of the Credit Agreement.
All payments of principal and interest in respect of this Note shall be
made in lawful money of the United States of America in same day funds at the
office of the Agent described in the Credit Agreement. Until notified of the
transfer of this Note, the Borrower shall be entitled to deem the Lender or such
person who has been so identified by the transferor in writing to the Borrower
as the holder of this Note, as the owner and holder of this Note. Each of the
Lender and any subsequent holder of this Note agrees that before disposing of
this Note or any part hereof it will make a notation hereon of all principal
payments previously made hereunder and of the date to which interest hereon has
been paid on the schedule attached hereto, if any; provided, however, that the
failure to make notation of any payment made on this Note shall not limit or
otherwise affect the obligation of the Borrower hereunder with respect to
payments of principal or interest on this Note.
This Note is referred to in, and is entitled to the benefits of, the
Amended and Restated Credit Agreement dated as of January 30, 1998, as same may
hereafter be amended, restated or modified (the "Credit Agreement") among the
Borrower, the financial institutions named therein and Fleet National Bank, as
Agent. The Credit Agreement, among other things, (i) provides for the making of
advances (the "Loans") by the Lender to the Borrower from time to time in an
aggregate amount not to exceed at any time outstanding the U.S. dollar amount
first above mentioned, the indebtedness of the Borrower resulting from each such
Loan being evidenced by this Note, and (ii) contains provisions for acceleration
of the maturity hereof upon the happening of certain stated events and also for
prepayments on account of principal hereof prior to the maturity hereof upon the
terms and conditions therein specified.
-A-2-
67
The terms of this Note are subject to amendment only in the manner
provided in the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this Note
or the Credit Agreement shall alter or impair the obligation of the Borrower,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the place, at the respective times, and in the currency herein
prescribed.
The Borrower promises to pay all costs and expenses, including reasonable
attorneys' fees and the out-of-pocket expenses of counsel, incurred in the
collection and enforcement of this Note. The Borrower hereby consents to
renewals and extensions of time at or after the maturity hereof, without notice,
and hereby waives diligence, presentment, protest, demand and notice of every
kind and, to the full extent permitted by law, the right to plead any statute of
limitations as a defense to any demand hereunder.
This Note shall be governed by, and construed in accordance with, the laws
of the state of New York without giving effect to its choice of law doctrine.
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed and
delivered by its duly authorized officer, as of the date and the place first
above written.
Phase Metrics, Inc.
By
------------------------------------
Title
---------------------------------
-A-3-
68
TRANSACTIONS
ON NOTE
Date Amount Amount Principal Interest Interest Notation
of Loan of Balance Paid Paid Made by
Made Principal Through
Paid
69
EXHIBIT B
[INTENTIONALLY OMITTED]
70
EXHIBIT C
[FORM OF NOTICE OF BORROWING]
NOTICE OF BORROWING
Pursuant to that certain Amended and Restated Credit Agreement dated as of
January 30, 1998, as amended, restated or otherwise modified to the date hereof
(said Amended and Restated Credit Agreement, as so amended, restated or
otherwise modified, being the "Credit Agreement," the terms defined therein and
not otherwise defined herein being used herein as therein defined), by and among
Phase Metrics, Inc., a Delaware corporation, (the "Borrower"), the financial
institutions listed therein as Lenders ("Lenders") and Fleet National Bank, as
Agent ("Agent"), this represents Borrower's request to borrow on
_________________, 199_ from Lenders, in accordance with their respective
commitment, $___________________ in Revolving Loans as [Prime/LIBO] Rate Loans.
[The initial Interest Period for such Loans is requested to be a _______________
month period.] The proceeds of such Loans are to be deposited in the Borrower's
Account.
The undersigned officer, to the best of his knowledge, on behalf of the
Borrower, certifies that:
(i) The representations and warranties contained in the Credit Agreement
and the other Loan Documents are true and correct in all material respects on
and as of the date hereof to the same extent as though made on and as of the
date hereof, except to the extent such representations and warranties
specifically relate to an earlier date, in which case such representations and
warranties were true and correct in all material respects on and as of such
earlier date;
(ii) No event has occurred and is continuing or would result from the
consummation of the borrowing contemplated hereby that would constitute an Event
of Default or a Potential Event of Default;
(iii) All Loan Documents are in full force and effect; and
(iv) Based on information available to the Borrower as of the date of such
requested Borrowing, the Borrower represents and warrants that (x) the amount of
such Borrowing, when added to all Revolving Loans then outstanding, will not
exceed the Borrowing Base and (y) the Borrower is, as of the date of the
Borrowing, and is projected to be, as of the last day of the next ending Fiscal
Quarter, in minimum compliance with the financial covenants and other
restrictions as set forth in Section 6.2.
-C-1-
71
DATED:
--------------------------
PHASE METRICS, INC.
By
-----------------------------------------
Title
---------------------------------------
-C-2-
72
EXHIBIT D
[FORM OF NOTICE OF CONVERSION/CONTINUATION]
NOTICE OF CONVERSION/CONTINUATION
Pursuant to that certain Amended and Restated Credit Agreement dated as of
January 30, 1998, as amended, restated or otherwise modified to the date hereof
(said Amended and Restated Credit Agreement, as so amended, restated or
otherwise modified, being the "Credit Agreement," the terms defined therein and
not otherwise defined herein being used herein as therein defined), by and among
Phase Metrics, Inc., a Delaware corporation (the "Borrower"), the financial
institutions listed therein as Lenders and Fleet National Bank, as Agent, this
represents the Borrower's request to [Select A or B with appropriate insertions
and deletions: [A: convert $_________ principal amount of presently outstanding
Revolving Loans that are [Prime/LIBO] Rate Loans [having an Interest Period that
expires on ___________________ 199_] to [Prime/LIBO] Rate Loans on
___________________ 199_. [The initial Interest Period for such [LIBO] Rate
Loans is requested to be a ________________ month period.] [B: continue as
[LIBO] Rate Loans $_______________ in principal amount of presently outstanding
Revolving Loans having an Interest Period that expires on ____________ 199_. The
Interest Period for such [LIBO] Rate Loans commencing on ____________ 199_ is
requested to be a ____________ month period.]
[For Conversions to or Continuations of LIBO Rate Loans Only: The
undersigned officer, to the best of his/her knowledge, on behalf of the
Borrower, certifies that no Event of Default or Potential Event of Default
has occurred and is continuing under the Credit Agreement.]
DATED:
--------------------------
PHASE METRICS, INC.
By
-----------------------------------------
Title
---------------------------------------
-D-1-
73
EXHIBIT E
[Letterhead of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP]
[TO BE PROVIDED]
-E-1-
74
EXHIBIT F
[FORM OF COMPLIANCE CERTIFICATE]
COMPLIANCE CERTIFICATE
I. This Compliance Certificate ("Compliance Certificate") is executed and
delivered by Phase Metrics, Inc., a Delaware corporation (the "Borrower") to
Fleet National Bank (the "Agent") pursuant to Section 6.1(a)(iv)(B) of the
Amended and Restated Credit Agreement dated as of January 30, 1998 among the
Borrower, the financial institutions named therein, and the Agent (the "Credit
Agreement"). Any terms used herein and not defined herein shall have the
meanings defined in the Credit Agreement. This Compliance Certificate covers the
Borrower's:
Fiscal Quarter ended ______________, 19__
Fiscal Year ended ______________, 19__
The following paragraphs set forth calculations in compliance with
obligations pursuant to Section 6.2(a), (c), (d), (e), (e)(e), (g), (h), (j),
(m) and (n) of the Credit Agreement, as of the end of the appropriate fiscal
period set forth in paragraph 1 hereof.
A. Consolidated Net Worth (Sec. 6.2(a)) - March 31, 1999 and
thereafter:
1. Consolidated Net Worth $ ___________
2. (a) Consolidated Net Worth at
12/31/98 x 120% = $ ___________
(b) 75% of cumulative Consolidated
Net Income for each Fiscal
Quarter of the Borrower
commencing with the Fiscal $ ___________
Quarter ending March 31, 1999
(c) 100% of the Net Proceeds of any
Equity Issuance by the Borrower $ ___________
after the date of the Credit
Agreement
(d) 100% of the increase in
shareholders' equity as a result
of any conversion of Subordinated $_____________
Debt to capital stock
3. (a)+(b)+(c)+(d) $_____________
Required: 1 > 3 $_____________
-F-1-
75
B. [Intentionally Omitted]
C. Leverage Ratio (Sec. 6.2(c)) - March 31, 1999 and thereafter:
(a) Consolidated Total Debt $_____________
(b) EBITDA $_____________
Ratio (a) to (b) ______________
Maximum Permitted Ratio ______________
D. Interest Coverage Ratio (Sec. 6.2(d)) - March 31, 1999 and
thereafter:
(a) EBITDA $_____________
(b) Interest Expense $_____________
Ratio (a) to (b) ______________
Minimum Permitted Ratio ______________
E. Minimum EBITDA (Sec. 6.2(e)) - March 31, 1998 and thereafter:
Required > $__________ for Fiscal
Quarter in question; and > $__________ $_____________
for Fiscal Quarter in question and 3 Fiscal Quarter
preceding Fiscal Quarters $_____________
4 Fiscal Quarters
E.E. Minimum Profitability (Sec. 6.2 (e)(e)) - 1999 and thereafter
Fiscal Quarters only:
Consolidated Net Income
(a) for most recent Fiscal Quarter $_____________
(b) immediately preceding Fiscal $_____________
Quarter
(c) 2nd preceding Fiscal Quarter $_____________
(d) third preceding Fiscal Quarter $_____________
F. Debt (Sec. 6.2(g):
-F-2-
76
Debt from Foreign Subsidiaries
Permitted: < $10,000,000 $_____________
G. Lease Obligations (Sec. 6.2(h)):
Operating Lease Obligations of the
Borrower and subsidiaries in the
current Fiscal Year $_____________
Required: < $7,000,000 indexed /= 3.5:1.0) $_______________
17. Eligible Inventory $_______________
18. Loan Value of Accounts and Inventory
(80% of #15 plus lesser of (i) 25% of #17
and (ii) $10,000,000) $_______________
BALANCES
19. Borrowing Base (#16 or #18) $_______________
20. Maximum Revolving Loan Amount $_______________
21. Total Funds Available [Lesser of #21 or #20] $_______________
22. Present balance owing on Revolving Facility $_______________
23. RESERVE POSITION (#22 minus #23) $_______________
The undersigned represents and warrants that the foregoing is true, complete and
correct, and that the information reflected in this Borrowing Base Certificate
complies with the representations and warranties set forth in the Credit
Agreement.
COMMENTS:
Phase Metrics, Inc.
By:
--------------------------------------------
Authorized Signer
1
148
SCHEDULE 5.1(f)
LITIGATION
1
149
SCHEDULE 5.1(j)
ENVIRONMENTAL MATTERS
1
150
SCHEDULE 6.2(f)
PERMITTED LIENS
1
151
SCHEDULE 6.2(g)
EXISTING DEBT
1
152
SCHEDULE 6.2(k)
EXISTING INVESTMENTS
1
153
SCHEDULE 6.2(l)
EXISTING CONTINGENT OBLIGATIONS
1