<PAGE> 1
FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to __________
Commission File Number: 0-10018
DSC COMMUNICATIONS CORPORATION
--------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 54-1025763
- -------------------------------- ----------
(State or other jurisdiction of (I.R.S. of Employer
incorporation or organization) Identification No.)
1000 Coit Road, Plano, Texas 75075
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(214) 519-3000
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
Number of Shares Outstanding
Title of Each Class as of April 30, 1996
- ---------------------------- ----------------------------
Common Stock, $.01 Par Value 116,029,799
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
DSC COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
----------- -----------
(Unaudited)
<S> <C> <C>
Assets
CURRENT ASSETS
Cash and cash equivalents ...................... $ 228,414 $ 258,565
Marketable securities .......................... 303,191 310,699
Receivables .................................... 239,136 277,006
Inventories .................................... 328,035 303,962
Other current assets ........................... 74,463 70,315
----------- -----------
Total current assets ...................... 1,173,239 1,220,547
----------- -----------
PROPERTY AND EQUIPMENT, at cost .................. 706,205 675,725
Less accumulated depreciation
and amortization .............................. (322,296) (305,203)
----------- -----------
383,909 370,522
----------- -----------
LONG-TERM RECEIVABLES ............................ 29,712 17,557
CAPITALIZED SOFTWARE DEVELOPMENT COSTS ........... 46,509 43,821
COST IN EXCESS OF NET ASSETS OF
BUSINESSES ACQUIRED, NET ....................... 152,778 155,102
OTHER ............................................ 57,632 57,726
----------- -----------
Total assets .......................... $ 1,843,779 $ 1,865,275
=========== ===========
Liabilities and Shareholders' Equity
CURRENT LIABILITIES
Short-term debt ................................ $ 92,213 $ 83,438
Accounts payable ............................... 95,995 115,137
Accrued liabilities ............................ 214,227 220,679
Income taxes payable ........................... 11,241 29,230
Current portion of long-term debt .............. 33,163 33,098
----------- -----------
Total current liabilities ................. 446,839 481,582
----------- -----------
LONG-TERM DEBT, net of current portion ........... 209,738 210,441
NONCURRENT INCOME TAXES
AND OTHER LIABILITIES ........................... 50,201 49,173
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock, $.01 par value, issued -
120,839 in 1996 and 120,591 in 1995;
outstanding - 115,850 in 1996 and
115,602 in 1995 ............................... 1,208 1,206
Additional capital ............................. 706,410 703,448
Unrealized gains (losses) on securities,
net of income taxes ........................... (663) 391
Accumulated translation adjustment ............. 3,891 4,404
Retained earnings .............................. 469,266 457,741
----------- -----------
1,180,112 1,167,190
Treasury stock, at cost, 4,989 shares .......... (43,111) (43,111)
----------- -----------
Total shareholders' equity ................ 1,137,001 1,124,079
----------- -----------
Total liabilities and
shareholders' equity ................ $ 1,843,779 $ 1,865,275
=========== ===========
</TABLE>
See the accompanying Notes to Condensed Consolidated Financial Statements.
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DSC COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1996 1995
--------- ---------
<S> <C> <C>
Revenue .............................................. $ 307,897 $ 317,997
Cost of revenue ...................................... 178,431 159,327
--------- ---------
Gross profit ....................................... 129,466 158,670
--------- ---------
Operating costs and expenses:
Research and product development ................... 53,145 46,939
Selling, general and administrative ................ 55,779 46,101
Other operating costs .............................. 2,582 2,155
--------- ---------
Total operating costs and expenses ............... 111,506 95,195
--------- ---------
Operating income ................................... 17,960 63,475
Interest income ...................................... 7,026 3,919
Interest expense ..................................... (7,086) (1,031)
Other income (expense), net .......................... 689 (1,877)
--------- ---------
Income before income taxes ....................... 18,589 64,486
Income taxes ......................................... 7,064 22,570
--------- ---------
Net income ....................................... $ 11,525 $ 41,916
========= =========
Income per share ..................................... $ 0.10 $ 0.36
========= =========
Average shares used in per share computation ......... 118,353 117,684
</TABLE>
See the accompanying Notes to Condensed Consolidated Financial Statements.
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DSC COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1996 1995
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ......................................... $ 11,525 $ 41,916
Adjustments to reconcile net income to
net cash provided by (used for) operating
activities:
Depreciation and amortization .................. 21,864 17,942
Amortization of capitalized software
development costs ........................... 6,712 4,061
Decrease in current and long-term receivables ...... 26,316 23,610
Increase in inventories ............................ (24,073) (30,787)
Other, including changes in current
payables and other current assets ................ (47,847) 19,125
Increase in noncurrent income taxes
and other liabilities ............................ 1,028 10,366
--------- ---------
NET CASH PROVIDED BY (USED FOR)
OPERATING ACTIVITIES ....................... (4,475) 86,233
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment ................ (33,880) (30,866)
Purchases of marketable securities ................. (609,876) (19,804)
Proceeds from sales and maturities of marketable
securities ....................................... 616,821 42,637
Additions to capitalized software
development costs ................................ (9,400) (6,192)
Other .............................................. 877 (3,467)
--------- ---------
NET CASH USED FOR
INVESTING ACTIVITIES ....................... (35,458) (17,692)
--------- ---------
</TABLE>
(Continued)
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DSC COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Continued)
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1996 1995
--------- ---------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in short-term debt ............. 8,775 (39,791)
Payments on long-term borrowings ................... (864) (5,598)
Proceeds from the sale of common stock
under stock programs ............................. 1,645 3,787
Other .............................................. 226 1,022
--------- ---------
NET CASH PROVIDED BY (USED FOR)
FINANCING ACTIVITIES ....................... 9,782 (40,580)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS ..................................... (30,151) 27,961
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ..... 258,565 52,942
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ........... $ 228,414 $ 80,903
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid ...................................... $ 836 $ 594
========= =========
Income taxes paid .................................. $ 24,341 $ 20,721
========= =========
</TABLE>
See the accompanying Notes to Condensed Consolidated Financial Statements.
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DSC COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
March 31, 1996 and 1995 and December 31, 1995
(Unaudited)
BASIS OF PRESENTATION
The accompanying unaudited Condensed Consolidated Financial Statements reflect,
in the opinion of management, all adjustments necessary to present fairly the
Company's financial position, results of operations and cash flows. Such
adjustments are of a recurring nature unless otherwise disclosed herein.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to rules and regulations promulgated by
the Securities and Exchange Commission. However, the Company believes that the
disclosures contained herein are adequate to make the information presented not
misleading. Quarterly consolidated financial results may not be indicative of
annual consolidated financial results.
The Company has not paid or declared a cash dividend on its common stock since
its organization.
Certain prior year's financial statement information has been reclassified to
conform with the current year financial statement presentation.
These unaudited financial statements should be read in conjunction with the
audited financial statements and accompanying notes included in the Company's
1995 Annual Report to Shareholders for the year ended December 31, 1995.
INVENTORIES
Inventories consisted of the following (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
-------- -----------
<S> <C> <C>
Raw Materials ...................... $146,517 $137,002
Work in Process .................... 22,725 20,015
Finished Goods ..................... 158,793 146,945
-------- --------
$328,035 $303,962
======== ========
</TABLE>
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CREDIT AGREEMENTS AND SHORT-TERM BORROWINGS
At March 31, 1996, the Company had a domestic credit facility with two banks
providing for borrowings up to $50.0 million, reduced by the value of
outstanding letters of credit issued by the banks on behalf of the Company
which totaled $30.2 million at March 31, 1996. These outstanding letters of
credit included $27.2 million issued in support of foreign subsidiary credit
arrangements. There were no borrowings under the domestic credit facility
during the first quarter.
In early May 1996, the Company entered into a new, five-year, unsecured $160.0
million revolving credit facility with several banks. This new facility, which
replaced the existing domestic credit facility, provides for borrowings and
issuances of letters of credit in multiple currencies. The new facility
provides for various borrowing rates, including borrowing rates based on the
prime rate or 0.25% to 0.70% above the LIBOR rate. A commitment fee of 0.10% to
0.225% on the daily average unused portion of the facility is also assessed.
The maximum borrowings available under the facility are reduced by the value of
outstanding letters of credit issued by the banks on behalf of the Company.
This new facility contains various financial covenants.
Two of the Company's foreign subsidiaries also have several short-term credit
agreements providing for borrowings denominated in various foreign currencies
of up to $106.0 million, of which $92.2 million was outstanding at March 31,
1996. The interest rates on these agreements are market rates which ranged from
4% to 6% at March 31, 1996.
INCOME TAX EXPENSE
The Company's income tax expense includes federal, foreign, and state
(including Puerto Rico) income taxes. The estimated effective income tax rate
is based upon estimates for the full year for a number of variables including,
among other things, forecasted income in the United States and foreign
jurisdictions. The effective tax rate could change as estimates of these and
other variables change throughout the year.
COMMITMENTS AND CONTINGENCIES
Contingent Liabilities
The Company periodically sells customer receivables and operating leases under
agreements which contain recourse provisions. At March 31, 1996, $3.5 million
of certain receivables sold during 1995 were outstanding and subject to
recourse provisions which would require the Company to repurchase up to 100% of
the receivable balance upon customer default. Additionally, the Company could
be obligated to
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repurchase a portion of certain receivables and operating leases which were
sold in 1995 on a partial recourse basis, the terms of which allow the Company
to limit its risk of loss to approximately $7.8 million at March 31, 1996. The
Company also has guarantees of $28.8 million outstanding at March 31, 1996
supporting bid and performance bonds to customers and others, of which $3.0
million were collateralized by letters of credit issued under the Company's
credit facility. The Company believes it has adequate reserves for any ultimate
losses associated with these contingencies.
The Company, in management of its exposure to fluctuations in foreign currency
exchange rates, enters into forward foreign exchange contracts for both firm
commitments and anticipated transactions of sales and purchases which are
denominated in foreign currencies. At March 31, 1996, the Company had forward
foreign exchange contracts of $20.2 million outstanding.
Litigation
On July 20, 1993, the Company filed suit against Advanced Fibre Communications
("AFC"), a California corporation; Quadrium Corporation ("Quadrium"), a
California corporation; and two individuals. The Company seeks a declaratory
judgment that the two individuals are not entitled to any stock options or cash
payments under the Company's 1990 Stock Option and Cash Payment Plan because of
these defendants' alleged breaches of certain employment-related agreements
with the Company. The Company further seeks a declaration that AFC's products
are the proprietary property of the Company under the terms of certain
Proprietary Information Agreements or certain Consulting Agreements with
Quadrium. The Company also seeks unspecified damages for breaches of contract,
civil conspiracy, and tortious interference. The individual defendants have
both filed counterclaims whereby they claim entitlement to certain stock
options and cash payments under several of the Company's stock option plans.
AFC has also filed a counterclaim alleging that the Company has violated the
Sherman Antitrust Act and certain state antitrust statutes, and further claims
that the Company has (1) tortiously interfered with existing and prospective
contractual relationships, (2) committed industrial espionage and
misappropriation, (3) trespassed on AFC's business premises, (4) converted
certain property of AFC, (5) committed unfair competition, and (6) committed
acts in violation of the Racketeering Influenced Corrupt Organization Act. The
Company believes that it has valid and substantial claims against all of the
defendants. The Company intends to vigorously defend all of the defendants'
counterclaims, and further believes that it has valid defense to all of the
counterclaims.
On April 10, 1995, the Company filed a lawsuit against Next Level Communications
("NLC") and two former Company employees, alleging
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<PAGE> 9
breach of contract and the misuse of Company trade secrets. The Company is
seeking an injunction prohibiting NLC and the former employees from continued
use of Company trade secrets and opportunities. On March 28, 1996, the Company
received a favorable jury verdict in the amount of $369.2 million in damages.
The Court is yet to enter a judgment or rule on the issue of injunctive relief.
Once the Court enters a judgment, NLC will have 30 days to appeal the award.
On February 14, 1996, the Company joined Bell Atlantic in bringing an antitrust
action against AT&T Corporation ("AT&T") and Lucent Technologies, Inc.
("Lucent") alleging the use of monopoly power in the central office switch
market as part of a scheme to gain an unfair competitive advantage in the
remote digital terminal market. The Company is seeking to compel AT&T and
Lucent to open up the interfaces to the central office switch so that any
manufacturer will have the ability to compete with applications, software,
features, and services, and will more rapidly deliver to its customers the
enhanced functionality that they have come to expect.
The Company is also party to other routine legal proceedings incidental to its
business.
The Company does not believe the ultimate resolution of the above litigation
will have a material adverse effect on its consolidated financial position.
COMMON STOCK
At the April 25, 1996 Annual Shareholders' Meeting, the shareholders approved
certain amendments and an increase of 6 million shares of common stock subject
to the DSC Communications Corporation 1993 Employee Stock Option and Securities
Award Plan.
STOCK RIGHTS
On April 25, 1996, the Board of Directors declared a dividend of one preferred
stock purchase right on each outstanding share of the Company's common stock.
The dividend is payable on May 22, 1996 to shareholders of record on that date,
the same date the existing stock rights expire. The rights become exercisable
only on the close of business ten days following a public announcement that a
person or group has acquired 15% or more of the outstanding shares of common
stock of the Company or a public announcement or commencement of a tender offer
or exchange offer which would result in the offeror's acquiring 15% or more of
the outstanding shares of common stock of the Company. Once exercisable, each
right would entitle a holder to buy 1/1000 of a share of the Company's Series B
Junior Participating Preferred Stock at an exercise price of $175.00. The
Company may
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<PAGE> 10
redeem the rights for $0.01 per right prior to the rights becoming exercisable,
and the rights expire on April 25, 2006.
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<PAGE> 11
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
With the exception of historical information, the matters discussed or
incorporated by reference in this Quarterly Report on Form 10-Q are
forward-looking statements that involve risks and uncertainties including, but
not limited to, economic conditions, product demand and industry capacity,
competitive products and pricing, manufacturing efficiencies, new product
development, ability to enforce patents, availability of raw materials and
critical manufacturing equipment, new plant startups, the regulatory and trade
environment, and other risks indicated in filings with the Securities and
Exchange Commission.
Results of Operations
For the three months ended March 31, 1996, the Company reported revenue of
$307.9 million and net income of $11.5 million, or $0.10 per share, compared to
revenue of $318.0 million and net income of $41.9 million, or $0.36 per share,
for the three months ended March 31, 1995.
Compared to the same period last year, the revenue decline in the first quarter
of 1996 was primarily due to a slower European transmission business and
reduced deliveries of the Company's wireless switching products, offset
partially by increased deliveries of the Company's access products. Gross
profit as a percentage of revenue was 42% for the 1996 first quarter compared
to 50% in the same period of 1995. This decline was due primarily to a change
in product mix, including reduced software content, and decreased business
volumes. Certain of the Company's products, including software, typically
produce gross margin content greater than other Company products. As a result,
the Company's gross margin percentage in future periods could vary
significantly due to changes in the relative mix of product deliveries, as
occurred in the first quarter of 1996 compared to the first quarter of 1995.
Research and product development expenses increased to $53.1 million, or 17% of
revenue, for the three month period ended March 31, 1996 compared to $46.9
million, or 15% of revenue, for the three month period ended March 31, 1995.
The growth in research and development expenses reflects increased costs
related to the Company's on-going development of new products and enhancements
to existing products across all strategic product lines. Selling, general and
administrative expenses increased $9.7 million in the first three months of
1996 to $55.8 million or 18% of revenue from 14% for the same period in 1995.
This expense growth included expanded
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international selling activities and higher legal costs. The Company is
actively pursuing claims related to its intellectual property rights and, as
this litigation progresses, legal expenses may continue to increase. See
"Litigation" under "Commitment and Contingencies" in Notes to Condensed
Consolidated Financial Statements for further discussion.
DSC Communications A/S incurred an operating loss in the first quarter of 1996
due primarily to the delayed introduction of a new generation of optical
transmission equipment. While it is anticipated that this development will be
completed and product deliveries will begin over the next several months,
future near-term profitability of the Company's Denmark subsidiary is dependent
upon the successful completion and market acceptance of these products.
Both interest expense and interest income have increased in the three month
period ended March 31, 1996 compared to the three month period ended March 31,
1995 due primarily to the $225 million loan entered into in April 1995 which
bears interest at 9%. The majority of the proceeds from this loan have been
invested in short-term investments. Interest expense has also increased as a
result of borrowings under several foreign subsidiary borrowing arrangements
entered into during the second half of 1995.
The Company's estimated effective income tax rate was 38% for the three month
period ended March 31, 1996 compared to 35% for the same period in 1995. This
increase in the effective income tax rate is due primarily to the full
utilization of net operating loss and tax credit carryforwards in 1995 and an
expected increase in foreign taxes in 1996. See "Income Tax Expense" in Notes
to Condensed Consolidated Financial Statements for further information.
The Company has certain forward exchange contracts which were entered into
based upon anticipated future business transactions. Although these forward
contracts totaled only $2.9 million at March 31, 1996, future earnings could be
affected by the Company's practice of entering into these types of forwards as
forward contracts related to anticipated transactions are marked-to-market each
period.
The Company's future quarterly and annual operating results may be affected by
a number of factors, including the timing and ultimate receipt of orders from
certain customers which continue to constitute a large portion of the Company's
revenue; the successful enhancement of existing products; introduction and
market acceptance of new products on a timely basis; mix of products sold;
product costs; manufacturing lead times; significant fluctuations in foreign
currency exchange rates; and changes in general worldwide economic conditions,
any of which could have an adverse impact on operations.
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<PAGE> 13
Financial Condition and Liquidity
The Company's cash and cash equivalents at March 31, 1996 were $228.4 million
compared to $258.6 million at December 31, 1995, and marketable securities were
$303.2 million at March 31, 1996 compared to $310.7 million at December 31,
1995.
Cash used for operating activities of $4.5 million was primarily the result of
lower earnings, increased inventories to support existing customer backlog and
expected additional customer requirements, and a reduction in current payables.
Investing activities during the three months ended March 31, 1996 included
additions to property and equipment of $33.9 million. The Company's expected
future domestic and international business growth will require additional
capital expenditures. The timing and extent of additional capital requirements
are dependent on future business growth. However, the Company anticipates that
capital expenditures for 1996 could be in the range of approximately $150
million.
Two of the Company's foreign subsidiaries have several short-term credit
arrangements providing for borrowings up to $106.0 million, of which $92.2 were
outstanding at March 31, 1996. These arrangements are being used to fund
facilities expansion and working capital requirements and are repayable in
various foreign currencies. The Company expects to refinance approximately $50
million of the amount outstanding under these agreements with a long-term
facility during the next several months.
As discussed in "Credit Agreements and Short-Term Borrowings" in Notes to
Condensed Consolidated Financial Statements, the Company replaced its existing
domestic credit facility with a new, unsecured $160.0 million revolving credit
agreement in early May 1996. No borrowings were outstanding under the credit
facilities existing at March 31, 1996. Outstanding letters of credit, which
totaled $30.2 million at March 31, 1996, reduce the amount of available
borrowings.
The Company is party to certain litigation, as disclosed in "Litigation" under
"Commitment and Contingencies" in Notes to Condensed Consolidated Financial
Statements, the outcome of which the Company believes will not have a material
adverse effect on its consolidated financial position.
The Company believes that its existing cash and marketable securities and
available credit facilities will be adequate to support the Company's financial
resource needs, including working capital requirements, capital expenditures,
operating lease obligations, and debt payments. In order to be competitive in
the future, the Company believes that it will become increasingly necessary to
offer financing
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<PAGE> 14
alternatives to both domestic and international customers. To the extent such
financing becomes significant, additional borrowings could become necessary.
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<PAGE> 15
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Litigation
On January 26, 1994, C.L. Grimes, a stockholder of the Company, filed a
derivative suit in Delaware Chancery Court, purportedly on behalf of the
Company as the real party in interest and as a stockholder of the Company,
seeking a declaration that the Employment Agreement of James L. Donald, his
Executive Income Continuation Plan, and the 1990 Long- Term Incentive
Compensation Plan as it applies to Mr. Donald and all other benefits of Mr.
Donald, including previously granted Company stock options, are null and void.
The defendants in the suit are Mr. Donald, all current non-employee directors,
and two former directors of the Company. The Company itself is a nominal
defendant. The plaintiff contends that Mr. Donald's employment contract
contains an improper delegation of Board of Directors' authority to Mr. Donald
and excess payments. The suit also contends that the salary and benefits
established for Mr. Donald pursuant to the Donald agreements referred to above
and approved by the Company's Board of Directors are excessive and constitute a
diversion and waste of corporate assets. The suit seeks an injunction
restraining Mr. Donald from exercising any stock options, taking any action to
implement any of the Donald agreements, or declaring a constructive termination
of his employment, and also seeks unspecified damages against the defendants
and Grimes' legal fees. On June 1, 1994, the plaintiff filed an amended
complaint in which he restated his existing claims and added a new claim
contending that the Company's 1994 proxy statement was misleading in its
description of the 1994 Long-Term Incentive Compensation Plan ("LTIP"). On this
new claim, the plaintiff seeks a decree that the 1994 proxy statement insofar
as it relates to the 1994 LTIP and the actions taken pursuant to the proxy
statement with respect to the 1994 LTIP are null and void, and seeks to enjoin
the Company from implementing the 1994 LTIP.
On June 15, 1994, all defendants filed motions to dismiss all of the
plaintiff's claims, with the exception of the claim relating to the Company's
1994 proxy statement. On January 11, 1995, the Delaware Chancery Court granted
defendants' motions to dismiss. The plaintiff later filed a motion seeking
entry of a final judgment of dismissal so that he would be free to pursue an
immediate appeal of the Court's decision. In response, the Court directed entry
of a final judgment and certified the dismissed claims for appellate review. On
March 6, 1995, the plaintiff filed an appeal of the dismissed claims to the
Delaware Supreme Court. On April 11, 1996, the Delaware Supreme Court affirmed
the Chancery Court's previous decision and found in favor of the Company. The
plaintiff has the option to seek further discretionary review by the United
States Supreme Court.
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<PAGE> 16
The Company is also party to other routine legal proceedings incidental to its
business.
The Company does not believe the ultimate resolution of the above litigation
will have a material adverse effect on its consolidated financial position.
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<PAGE> 17
Item 4. Submission of Matters to a Vote of Security Holders
The Company's 1996 Annual Meeting of Stockholders was held on April 25, 1996.
The following matters were voted on by the stockholders:
1. Election of three Class III Directors. James L. Donald, Robert S. Folsom,
and James M. Nolan were elected to the Board of Directors as Class III
Directors for terms extending through the 1999 Annual Meeting of
Stockholders. The vote was 95,173,628 shares in favor of James L. Donald,
with 4,787,411 votes withheld, 95,261,676 shares in favor of Robert S.
Folsom, with 4,699,363 votes withheld and 95,186,089 shares in favor of
James N. Nolan, with 4,774,950 shares withheld.
2. Approval of an increase of 6,000,000 shares of Common Stock subject to the
DSC Communications Corporation 1993 Employee Stock Option and Securities
Award Plan. Under the terms of the 1993 Employee Stock Option and
Securities Award Plan, as amended, the Company may grant Plan Awards with
respect to an aggregate of 4,000,000 shares of Common Stock. On October
30, 1995, the Company's Board of Directors and Compensation Committee
amended the 1993 Plan to add an additional 6,000,000 shares of Common
Stock to the 1993 Plan, subject to stockholder approval. At the 1996
Annual Meeting of Stockholders, the Company's stockholders approved the
increase in the shares. The vote was 65,267,863 shares in favor,
13,874,456 shares against, 392,268 shares abstaining and 20,426,452 broker
non-votes.
3. Approval of amendments to the DSC Communications Corporation 1993 Employee
Stock Option and Securities Award Plan. Subject to stockholder approval,
the Company's Board of Directors and Compensation Committee approved
certain amendments to the 1993 Employee Stock Option and Securities Award
Plan. The 1993 Plan, as amended, is set forth in its entirety in Exhibit A
to the Company's Definitive Proxy Statement filed in connection with the
1996 Annual Meeting of Stockholders. At the 1996 Annual Meeting of
Stockholders, the Company's stockholders approved the amendments. The vote
was 85,945,279 shares in favor, 9,668,223 shares against, 471,800 shares
abstaining and 3,875,737 broker non-votes.
4. Approval of an amendment to the DSC Communications Corporation 1994
Long-Term Incentive Compensation Plan. Subject to stockholder approval,
the Company's Compensation Committee amended the 1994 Long-Term Incentive
Compensation Plan (the "1994 LTIP") to provide that no individual may
receive in excess of 140,000 units during the duration of the 1994 LTIP.
Page 17 0f 20
<PAGE> 18
The 1994 LTIP previously provided that no individual could receive in
excess of 100,000 units during the duration of the 1994 LTIP. At the 1996
Annual Meeting of Stockholders, the Company's stockholders approved the
amendment. The vote was 81,075,299 shares in favor, 14,517,437 shares
against, 490,766 shares abstaining and 3,877,537 broker non-votes.
5. Approval of the DSC Communications Corporation Annual Incentive Bonus
Plan. Subject to stockholder approval, the Company's Compensation
Committee adopted the DSC Communications Corporation Annual Incentive
Bonus Plan (the "Bonus Plan") and the performance goals established
therein. The Bonus Plan is set for the in its entirety in Exhibit B to the
Company's Definitive Proxy Statement filed in connection with the 1996
Annual Meeting of Stockholders. At the 1996 Annual Meeting of
Stockholders, the Company's stockholders approved the Bonus Plan. The vote
was 89,410,613 shares in favor, 6,203,458 shares against, 471,231 shares
abstaining and 3,875,737 broker non-votes.
Page 18 0f 20
<PAGE> 19
Item 6. Exhibits and Reports on Form 8-K.
A. Exhibits.
10.1 Multicurrency Credit Agreement, Dated as of May 8, 1996, Among
the Company and Certain of its Subsidiaries and Certain
Lenders Providing for Unsecured Revolving Credit.
11. Computation of Income Per Share.
27. Financial Data Schedule (for EDGAR filing purposes only).
B. Reports on Form 8-K.
No reports on Form 8-K have been filed during the three months ended
March 31, 1996.
Page 19 0f 20
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DSC COMMUNICATIONS CORPORATION
Dated: May 15, 1996 By: /s/ Kenneth R. Vines
--------------------
Kenneth R. Vines
Vice President, Finance,
duly authorized officer
and principal accounting
officer
Page 20 0f 20
<PAGE> 21
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
10.1 Multicurrency Credit Agreement, Dated as of May 8, 1996, Among
the Company and Certain of its Subsidiaries and Certain
Lenders Providing for Unsecured Revolving Credit.
11. Computation of Income Per Share.
27. Financial Data Schedule (for EDGAR filing purposes only).
<PAGE> 1
EXHIBIT 10.1
________________________________________________________________________________
________________________________________________________________________________
MULTICURRENCY CREDIT AGREEMENT
among
DSC COMMUNICATIONS CORPORATION,
EACH OTHER LOAN PARTY,
CERTAIN LENDERS,
NATIONSBANK OF TEXAS, NATIONAL ASSOCIATION,
AS ADMINISTRATIVE LENDER
May 8, 1996
________________________________________________________________________________
________________________________________________________________________________
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS
1.01. Certain Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02. Accounting Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.03. Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.04. Currency Equivalents Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE II. ADVANCES AND LETTERS OF CREDIT
2.01. Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.02. Manner of Borrowing and Disbursement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.03. Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.04. Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.05. Prepayment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.06. Reduction of Commitment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.07. Non-Receipt of Funds by Administrative Lender. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.08. Payment of Principal of Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.09. Reimbursement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.10. Manner of Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.11. Lending Offices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.12. Booking Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.13. Sharing of Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.14. Calculation of LIBOR Rate and Eurocurrency Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.15. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.16. Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE III. CONDITIONS PRECEDENT
3.01. Conditions Precedent to the Initial Advance and the Letters of Credit. . . . . . . . . . . . . . . . 38
3.02. Conditions Precedent to All Advances and Letters of Credit. . . . . . . . . . . . . . . . . . . . . 40
3.03. Conditions Precedent to New Eurocurrency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF LOAN PARTIES
4.01. Organization, Qualification, Authorization, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.02. Full Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.03. Changes, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.04. Financial Statements, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.05. Tax Returns and Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.06. Defaults Respecting Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.07. Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.08. Conflicting Agreements or Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
4.09. Litigation, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.10. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.11. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.12. Federal Reserve Regulations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.13. Foreign Assets Control Regulations, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.14. Status Under Certain Federal Statutes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.15. Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.16. Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
4.17. Senior Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
4.18. Patents, Trademarks, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
4.19. Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE V. COVENANTS
5.01. Reporting Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.02. Inspection of Property; Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.03. Subordinated Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.04. Payment of Taxes and Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
5.05. Maintenance of Properties; Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
5.06. Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
5.07. Performance of Loan Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.08. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.09. Legal Existence, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
5.10. Ownership of Loan Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
5.11. Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
5.12. Mergers, Consolidations and Dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
5.13. Transactions with Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
5.14. Investment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
5.15. Restricted Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
5.16. Limitations on Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
5.17. Minimum Consolidated Net Worth. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
5.18. Consolidated Funded Debt to Consolidated Excess Cash Flow Ratio. . . . . . . . . . . . . . . . . . . 59
5.19. Patents, Trademarks and Licenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
5.20. Notice of Labor Disputes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
5.21. Nature of Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
5.22. Translation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE VI. EVENTS OF DEFAULT AND REMEDIES
6.01. Events of Default and Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
6.02. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
6.03. Injunctive Relief. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
</TABLE>
- ii -
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE VII. GUARANTY
7.01. Guaranty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.02. Continuing Guaranty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.03. Effect of Debtor Relief Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
7.04. Waiver of Subrogation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
7.05. Subordination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
7.06. Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
7.07. Full Force and Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
7.08. Enforceability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
ARTICLE VIII. CHANGES IN CIRCUMSTANCES
8.01. LIBOR Basis or Eurocurrency Basis Determination Inadequate. . . . . . . . . . . . . . . . . . . . . 68
8.02. Illegality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.03. Increased Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
8.04. Base Rate Advances Rather than LIBOR Advances or Eurocurrency Advances. . . . . . . . . . . . . . . 70
8.05. Capital Adequacy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
ARTICLE IX. AGREEMENT AMONG LENDERS
9.01. Agreement Among Lenders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
9.02. Lender Credit Decision. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
ARTICLE X. MISCELLANEOUS
10.01. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
10.02. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
10.03. Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.04. Determination by Lenders Conclusive and Binding. . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.05. Set-Off. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.06. Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.07. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.08. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.09. Interest and Charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.10. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
10.11. Amendment and Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
10.12. Exception to Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
10.13. Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
10.14. Judgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.15. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.16. WAIVER OF CONSUMER RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
10.17. WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
</TABLE>
- iii -
<PAGE> 5
<TABLE>
<S> <C> <C>
10.18. FINAL AGREEMENT OF THE PARTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
</TABLE>
- iv -
<PAGE> 6
EXHIBITS
Form of Note Exhibit A
Form of Compliance Certificate Exhibit B
Form of Assignment Agreement Exhibit C
Form of Advance Request Exhibit D
Form of Redenomination Notice Exhibit E
Form of Assumption Agreement Exhibit F
Form of Eurocurrency Election Notice Exhibit G
SCHEDULES
Schedule 1.01(a) Lenders and Commitments
Schedule 1.01(b) Existing Letters of Credit
Schedule 1.01(c) Subordinated Debt
Schedule 1.01(d) Eurocurrency Payment Office
Schedule 2.11 LIBOR Lending Offices and Eurocurrency Lending Offices
Schedule 3.03 Permitted Currencies
Schedule 4.01 Jurisdiction of Incorporation
Schedule 4.04 Disclosure of Certain Events
Schedule 4.09 Litigation
Schedule 4.19 Labor Matters
Schedule 5.11 Permitted Liens
- v -
<PAGE> 7
MULTICURRENCY CREDIT AGREEMENT
MULTICURRENCY CREDIT AGREEMENT dated as of May 8, 1996, among DSC
Communications Corporation, a Delaware corporation ("Company"), DSC Finance
Corporation, a Delaware corporation, DSC International Corporation, a Delaware
corporation, DSC Marketing Services, Inc., a Delaware corporation, DSC of
Puerto Rico, Inc., a Delaware corporation, DSC Telecommunications Corporation,
a Delaware corporation, DSC Telecom, Inc., a Nevada corporation, DSC Telecom
L.P., a Texas limited partnership (such other corporations and limited
partnership being collectively, "Guarantors") (Company and the Guarantors being
collectively, the "Loan Parties"), the Lenders from time to time party hereto
("Lenders"), and NationsBank of Texas, National Association, a national banking
association, as Administrative Lender for Lenders ("Administrative Lender").
BACKGROUND.
Company has requested that Lenders make a revolving credit facility
available to Company in the maximum principal amount of $160,000,000. Lenders
and Issuing Bank (as defined herein) have agreed to do so, subject to the terms
and conditions set forth below.
AGREEMENT.
In consideration of the mutual covenants and agreements contained
herein, and other good and valuable consideration hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS
1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"Advance" means any amount advanced by Lenders to Company pursuant to
Article II on the occasion of any borrowing, including without limitation any
Refinancing Advance and any payment by Issuing Bank of a draft drawn under any
Letter of Credit which is not reimbursed by Company as provided in Section
2.16(c).
"Advance Request" means a notice in the form of Exhibit D.
"Affiliate" means when used with respect to any Person any other
Person which controls or is controlled by or is under common control with such
Person. As used in this definition, "control" means the possession, directly or
indirectly, of power to direct or cause the direction of management or policies
(whether through ownership of securities or partnership or ownership interests,
by contract or otherwise).
<PAGE> 8
"Agreement" means this Multicurrency Credit Agreement, as the same may
be amended or restated from time to time.
"Agreement Date" means the date of this Agreement.
"Applicable Law" means (a) in respect of any Person, all provisions of
Law of any Tribunal applicable to such Person and its properties, including,
without limiting the foregoing, all orders and decrees of all courts and
arbitrators in proceedings or actions to which the Person in question is a
party, and (b) in respect of contracts relating to interest or finance charges
that are made or performed in the State of Texas, "Applicable Law" shall mean
the laws of the United States of America, including without limitation 12 USC
Sections 85 and 86, as amended from time to time, and any other statute of the
United States of America now or at any time hereafter prescribing the maximum
rates of interest on loans and extensions of credit, and the laws of the State
of Texas, including, without limitation, Article 5069-1.04, Title 79, Revised
Civil Statutes of Texas, 1925, as amended ("Art. 1.04"), and any other statute
of the State of Texas now or at any time hereafter prescribing maximum rates of
interest on loans and extensions of credit; provided that the parties hereto
agree that the provisions of Chapter 15, Title 79, Revised Civil Statutes of
Texas, 1925, as amended, shall not apply to Advances, this Agreement, the Notes
or any other Loan Documents.
"Applicable Margin" means the following per annum percentages,
applicable in the following situations:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Consolidated Funded LIBOR Eurocurrency Commitment Fee
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Debt to Consolidated Excess Cash Flow Ratio Margin Margin Margin
- ----------------------------------------------------------------------------------------------------------
Greater than or equal to 2.00 to 1 0.700% 0.700% 0.225%
- ----------------------------------------------------------------------------------------------------------
Greater than or equal to 1.50 to 1, but less 0.550 0.550 0.200
than 2.00 to 1
- ----------------------------------------------------------------------------------------------------------
Greater than or equal to 1.25 to 1, but less 0.400 0.400 0.150
than 1.50 to 1
- ----------------------------------------------------------------------------------------------------------
Greater than or equal to 1.00 to 1, but less 0.325 0.325 0.125
than 1.25 to 1
- ----------------------------------------------------------------------------------------------------------
Less than 1.00 to 1 0.250 0.250 0.100
- ----------------------------------------------------------------------------------------------------------
</TABLE>
The Applicable Margin payable by Company on the Advances outstanding and fees
payable hereunder shall be subject to reduction or increase, as applicable and
as set forth in the table set forth above according to the performance of
Company as tested by the Consolidated Funded Debt to Consolidated Excess Cash
Flow Ratio; provided, that each adjustment in the Applicable Margin shall be
effective with respect to LIBOR Advances and Eurocurrency Advances (a) made
- 2 -
<PAGE> 9
following the date of receipt by Administrative Lender of the financial
statements required pursuant to Section 5.01(a) or (b), on the date of making
such LIBOR Advance or Eurocurrency Advance and (b) outstanding on the date of
receipt of the financial statements referred to in clause (a) immediately
preceding and which are continued as LIBOR Advances or Eurocurrency Advances
beyond the then effective Interest Period therefor, on the first day of the
immediately succeeding Interest Period; provided, further, that each adjustment
in the Applicable Margin shall be effective with respect to the commitment fee
on the date following receipt by Administrative Lender of the financial
statements required by Sections 5.01(a) or (b). If financial statements of
Company (and corresponding Compliance Certificate setting forth the
Consolidated Funded Debt to Consolidated Excess Cash Flow Ratio) are not
received by Administrative Lender by the fifth day following the date required
pursuant to Section 5.01, the Applicable Margin shall be determined as if the
Consolidated Funded Debt to Consolidated Excess Cash Flow Ratio is equal to or
greater than 2.00 to 1 until such time as such financial statements and
Compliance Certificate are received. Anything herein to the contrary
notwithstanding, the Applicable Margin for LIBOR Advances from and including
the Agreement Date to but not including the fifth day following receipt of
Company's March 31, 1996, financial statements shall be 0.55%, the Applicable
Margin for Eurocurrency Advances shall be 0.55% and the Applicable Margin for
purposes of determining the commitment fee pursuant to Section 2.04(a) shall be
0.20%.
"Arranger" means NationsBanc Capital Markets, Inc.
"Assignee" means any assignee of a Lender pursuant to an Assignment
Agreement and shall have the meaning ascribed thereto in Section 10.06.
"Assignment Agreement" has the meaning specified in Section 10.06.
"Assumption Agreement" means an assumption agreement substantially in
the form of Exhibit F to be executed by a New Subsidiary pursuant to Section
5.12(c).
"Authorized Signatory" means such senior personnel of Company as may
be duly authorized and designated in writing by Company to execute documents,
agreements and instruments on behalf of Company, and to request Advances and
Letters of Credit hereunder.
"Base Rate" means, for any day, a per annum interest rate equal to the
lesser of (a) the Highest Lawful Rate on such day, and (b) the higher of (i)
the Prime Rate on such day, and (ii) the sum of the Federal Funds Effective
Rate on such day plus .50%. The Base Rate shall be adjusted automatically as
of the opening of business on the effective date of each change in the Prime
Rate or Federal Funds Effective Rate, as the case may be, to account for such
change.
"Base Rate Advance" means any Advance bearing interest at the Base
Rate.
"Benefit Arrangement" means an employee benefit plan within the
meaning of section 3(3) of ERISA which is not a Plan or a Multiemployer Plan
and with respect to which
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<PAGE> 10
any Loan Party or a member of the ERISA Group has a liability or an obligation,
whether or not current, accrued or contingent, to make contributions.
"Board" means the Board of Governors of the Federal Reserve System of
the United States.
"Borrowings" means a borrowing consisting of Advances made on the same
day by Lenders.
"Business Day" means (a) with respect to a Lender making Base Rate
Advances, a day when the main office of such Lender in the United States is
open for business, (b) with respect to a Lender making LIBOR Advances or
Eurocurrency Advances, (i) a day when the main office of such Lender in the
United States is open and (ii) a day in England or in the country which is the
issuer of such Eurocurrency on which commercial banks are open for domestic or
international business in London, England and the country which is the issuer
of such Eurocurrency, (c) with respect to Issuing Bank issuing Letters of
Credit denominated in Dollars, a day when the main office of Issuing Bank in
Dallas is open for business and (d) with respect to Issuing Bank issuing
Letters of Credit denominated in a Eurocurrency, (i) a day on which the main
office of Issuing Bank in Dallas is open for business and (ii) a day in the
country which is the issuer of such Eurocurrency on which banks are open for
domestic or international business in the country which is the issuer of such
Eurocurrency.
"Capital Lease" means any lease in respect of which the obligations of
any Loan Party constitute Capitalized Lease Obligations.
"Capitalized Lease Obligations" means, without duplication, all lease
obligations which shall have been or should be, in accordance with GAAP,
capitalized on the books of Loan Parties.
"CERCLA" means the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980 (42 U.S.C. Sections 9601 et. seq).
"Certificate of Exemption" has the meaning specified in Section
2.15(b).
"Code" means Internal Revenue Code of 1986 and the regulations
promulgated thereunder.
"Commitment" means, collectively, $160,000,000, as reduced from time
to time, pursuant to Section 2.06, and as to each Lender, such Lender's
Specified Percentage of such amount.
"Company" has the meaning specified in the introduction to this
Agreement.
"Compliance Certificate" means a certificate in the form of Exhibit B
to be executed by a Financial Officer of Company certifying, inter alia, the
truth and accuracy of the information
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<PAGE> 11
required to be contained therein, and delivered to each Lender on a quarterly
basis as provided in Article V.
"Consolidated Capital Expenditures" means, for any period,
expenditures made by Company and its consolidated Subsidiaries to acquire or
construct fixed assets, plants and equipment, computed in accordance with GAAP,
consistently applied, including, without limitation renewals, improvements and
replacements during such period and the aggregate amount of items leased or
acquired under Capital Leases at the cost of the item, but excluding
expenditures on capitalized software development cost.
"Consolidated Capitalization" means, at any time, the sum of
(a) Consolidated Debt, plus
(b) Consolidated Net Worth,
in each case determined at such time.
"Consolidated Current Assets" means, at any time, all amounts which,
in accordance with GAAP, would be included as current assets on a consolidated
balance sheet of Company and its consolidated Subsidiaries at such time.
"Consolidated Current Liabilities" means, at any time, all amounts
which, in accordance with GAAP, would be included as current liabilities on a
consolidated balance sheet of Company and its consolidated Subsidiaries at such
time.
"Consolidated Debt" means, at any time, the aggregate amount of Debt
of Company and its consolidated Subsidiaries (excluding Debt of the type
described in clauses (g), (h), (i), and (j) of the definition of the term
"Debt"; provided, however, the exclusion of Debt of the type described in
clause (j) of the definition of the term "Debt" shall only be to the extent
that any Guarantee therein refers to Debt described in clauses (g) and (h) of
such definition), determined on a consolidated basis in accordance with GAAP at
such time.
"Consolidated EBITDA" means, for any period, without duplication, an
amount equal to (a) Consolidated Income From Continuing Operations Before
Income Taxes and Extraordinary Items for such period plus (b) the aggregate
amount which in accordance with GAAP, was deducted, in determining Consolidated
Income From Continuing Operations Before Income Taxes and Extraordinary Items
for such period under clause (a) in respect of Consolidated Interest Expense,
depreciation and amortization (including the amortization of capitalized
software development costs of Company and its consolidated Subsidiaries for
such period) of Company and its consolidated Subsidiaries for such period.
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<PAGE> 12
"Consolidated Excess Cash Flow" means, for any four consecutive fiscal
quarters of Company, an amount equal to the sum of (a) Consolidated EBITDA for
such period minus (b) Consolidated Capital Expenditures for such period.
"Consolidated Funded Debt" means, for Company and its consolidated
Subsidiaries on a consolidated basis determined in accordance with GAAP, at any
time, without duplication, an amount equal to the sum of Capital Leases and
debt created, issued or incurred or assumed for money borrowed or for the
capitalized deferred purchase price of property or services purchased
(excluding accounts payable in the ordinary course of business and obligations
in respect of undrawn letters of credit).
"Consolidated Funded Debt to Consolidated Excess Cash Flow Ratio"
means, with respect to any fiscal quarter of Company, the ratio of Consolidated
Funded Debt as of the last day of such fiscal quarter to Consolidated Excess
Cash Flow for the immediately preceding four consecutive fiscal quarters of
Company ending on such fiscal quarter.
"Consolidated Income From Continuing Operations Before Income Taxes
and Extraordinary Items" means, without duplication, for any period, all
amounts which, in accordance with GAAP, would be included as income from
continuing operations of Company and its consolidated Subsidiaries before
income taxes and extraordinary items and cumulative effects of accounting
changes, if any, for such period.
"Consolidated Interest Expense" means, without duplication, for any
period, the sum of:
(a) aggregate interest expense of Company and its
consolidated Subsidiaries for such period, as determined in accordance
with GAAP and in any event including, all commissions, discounts and
other fees and charges owed with respect to letters of credit and
bankers acceptances and net costs under interest rate protection
agreements and the portion of any Capitalized Lease Obligations
allocable to consolidated interest expense;
plus
(b) interest expense of the type described in clause (a)
above of Company and its consolidated Subsidiaries capitalized during
such period.
"Consolidated Net Income" means, with respect to any period, the net
income (or loss) of Company and its consolidated Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Worth" means at any time, the sum (without
duplication) of (a) the shareholders' equity of Company and its consolidated
Subsidiaries, determined on a consolidated basis in accordance with GAAP at
such time, plus (b) all minority interests which are Investments owned by
Company and its consolidated Subsidiaries, determined on a consolidated basis
in accordance with GAAP at such time, provided, however, that (i) unrealized
gains or
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<PAGE> 13
losses from translation adjustments required under GAAP and (ii) unrealized
gains or losses in connection with the determination of the fair value (as
required by GAAP) of Investments owned by Company and its consolidated
Subsidiaries shall be excluded from the determination of "Consolidated Net
Worth".
"Consolidated Senior Debt" means, at any time, the aggregate amount of
Senior Debt of Company and its consolidated Subsidiaries determined on a
consolidated basis in accordance with GAAP at such time.
"Consolidated Total Assets" means, at any time, all amounts which, in
accordance with GAAP, would be included as total assets on a consolidated
balance sheet of Company and its consolidated Subsidiaries at such time.
"Consolidated Total Liabilities" means, at any time, the sum of all
amounts which, in accordance with GAAP, would be included as a liability on a
consolidated balance sheet of Company and its consolidated Subsidiaries at such
time plus, to the extent not reflected on such balance sheet, all Guarantees of
(a) Debt of the type described in clause (h) of the definition of the term
"Debt" with respect to letters of credit issued for the account of Company or
any of its consolidated Subsidiaries with respect to transactions not in the
ordinary course of their respective businesses and (b) debt for borrowed money.
"Debt" means, at any time, with respect to any Person, without
duplication:
(a) its liabilities for borrowed money (whether or not
evidenced by a promissory note, a security or otherwise), including,
without limitation, liabilities for borrowed money in respect of
banker's acceptances;
(b) any liabilities for borrowed money secured by any
Lien existing on property owned by such Person (whether or not such
liabilities shall have been assumed by such Person, or there shall
exist recourse to such Person in respect of such liabilities);
(c) any obligations in respect of any Capital Lease of
such Person;
(d) the present value of all payments due under any
arrangement for retention of title, any conditional sale agreement or
any deferred purchase price of Property or services (other than a
Capital Lease) discounted at the implicit rate, if known, with respect
thereto or, if unknown, at 8% per annum;
(e) any Recourse Obligations of such Person;
(f) any other obligations of such Person that would be
deemed to be borrowed money liabilities of such Person, determined in
accordance with customary financial practices;
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<PAGE> 14
(g) any obligations of such Person in respect of interest
rate protection and currency exchange rate hedge and protection
agreements;
(h) the undrawn maximum face amount of all outstanding
letters of credit issued for the account of such Person, and, without
duplication, the outstanding amount of all drafts drawn thereunder;
(i) all liabilities in respect of unfunded vested
benefits under Benefit Arrangements; and
(j) (i) any Guarantee of such Person for any obligation
or liability of another Person of a type described in any of clause
(a) through clause (h), inclusive, of this definition or (ii) any
obligation of such Person in respect of interest rate protection
agreements for any obligation or liability of such Person of a type
described in any of clause (a) through clause (h), inclusive, of this
definition;
provided, that, for purposes of this definition, trade payables incurred within
the ordinary course of business and payable within 120 days after the
incurrence thereof shall not be Debt.
"Debtor Relief Laws" means any applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, insolvency,
reorganization or similar debtor relief Laws affecting the rights of creditors
generally from time to time in effect.
"Default" means the occurrence of any event which with the giving of
notice or the passage of time could become an Event of Default.
"Default Rate" means a simple per annum interest rate equal to the
lesser of (a) the Highest Lawful Rate, and (b) the sum of the Base Rate plus
two percent.
"Determining Lenders" means, on any date of determination, any
combination of Lenders having at least 51% of the aggregate amount of Advances
then outstanding; provided, however, that if on any date of determination there
are no Advances outstanding, "Determining Lenders" means any combination of
Lenders whose Specified Percentages aggregate at least 51%.
"Dollar Advance" means an Advance denominated in Dollars.
"Dollars" and the symbol "$" mean the lawful currency of the United
States.
"Domestic Subsidiary" means any Subsidiary which is not a Foreign
Subsidiary.
"Effective Date" means the date on which the conditions set forth in
Article III are first met.
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<PAGE> 15
"Environmental Laws" means any Laws (including the common law) of any
Tribunal (including, without limitation, related determinations, orders,
decrees, judgments, opinions or interpretations by any Tribunal) pertaining to
pollution, environmental, health, safety, industrial hygiene or similar
matters.
"ERISA" means the United States Employee Retirement Income Security
Act of 1974 and the regulations promulgated thereunder.
"ERISA Group" means all corporations, trades or businesses (whether or
not incorporated) and other Persons which, together with any Loan Party, are
treated as a single employer under either section 414(b), (c), (m) or (o) of
the Code or Sections 4001(a)(14) or 4001(b)(1) of ERISA.
"Eurocurrency" means any currency listed on Schedule 3.03 and any
other lawful currencies acceptable to Lenders (a) for which Company has
delivered to Administrative Lender an Advance Request or a Redenomination
Notice and (b) which is freely convertible into Dollars.
"Eurocurrency Advance" means an Advance which Company requests to bear
interest at the Eurocurrency Basis or which is reborrowed and bears interest at
the Eurocurrency Basis, in accordance with the provisions of Section 2.02.
"Eurocurrency Basis" means a simple per annum interest rate equal to
the lesser of (a) the Highest Lawful Rate, and (b) the sum of the applicable
Eurocurrency Rate plus the Applicable Margin. The Eurocurrency Basis shall,
with respect to Eurocurrency Advances subject to reserve or deposit
requirements, be subject to premiums therefor assessed by each Lender, which
are payable directly to each Lender. Once determined at the beginning of an
Interest Period, the Eurocurrency Basis shall remain unchanged during the
applicable Interest Period.
"Eurocurrency Election Notice" means each Eurocurrency Election
Notice, substantially in the form of Exhibit G, appropriately completed.
"Eurocurrency Equivalent Excess" has the meaning specified in Section
2.05(b).
"Eurocurrency Interbank Market" means, with respect to a particular
Eurocurrency, the buying and selling of Dollar deposits or such Eurocurrency,
as applicable, payable by financial institutions located in the principal
banking center of the country which is the issuer of such Eurocurrency between
Administrative Lender and other financial institutions in the ordinary course
of Administrative Lender's business.
"Eurocurrency Lending Office" means the address of each Lender
specified on Schedule 2.11 as its Eurocurrency Lending Office.
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<PAGE> 16
"Eurocurrency Payment Office" means the addresses of the
Administrative Lender specified on Schedule 1.01(d).
"Eurocurrency Rate" means, for any Interest Period, the interest rate
per annum (rounded upward to the nearest 1/16th of one percent) determined by
Administrative Lender at approximately 9:00 a.m. (London time), on the date
which is two Business Days (or one Business Day with respect to an Advance to
be denominated in Pounds) before the first day of such Interest Period to be
the offered quotations that appear on the Reuter's Screen SIDE page for
deposits in the applicable Eurocurrency in the applicable Eurocurrency
Interbank Market for a length of time approximately equal to the Interest
Period for the Eurocurrency Advance sought by Company. If at least two such
offered quotations appear on the Reuter's Screen SIDE page, the Eurocurrency
Rate shall be the arithmetic mean (rounded upward to the nearest 1/16th of one
percent) of such offered quotations, as determined by Administrative Lender.
If the Reuter's Screen SIDE page is not available or has been discontinued, the
Eurocurrency Rate shall be the rate per annum that Administrative Lender
determines to be the arithmetic mean (rounded as aforesaid) of the per annum
rates of interest at which deposits in the applicable Eurocurrency in an amount
approximately equal to the principal amount of, and for a length of time
approximately equal to the Interest Period for, the Eurocurrency Advance sought
by Company are offered to Administrative Lender in immediately available funds
in the applicable Eurocurrency Interbank Market at 11:00 a.m. (local time of
such Eurocurrency Interbank Market), on the date which is two Business Days (or
one Business Day with respect to an Advance to be denominated in Pounds) prior
to the first day of an Interest Period.
"Event of Default" means any of the events described in Article VI.
"Existing Agreement" means that certain Credit Agreement, dated as of
February 24, 1994, among Company and certain Subsidiaries of Company,
NationsBank of Texas, N.A., as Administrative Lender, and each lender, as
amended or modified from time to time.
"Existing Letters of Credit" means each Letter of Credit described on
Schedule 1.01(b).
"FDIC" means the Federal Deposit Insurance Corporation (or any
successor).
"Federal Funds Effective Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight federal funds transactions with members of
the Federal Reserve System arranged by federal funds broker, as published on
the succeeding Business Day by the Federal Reserve Bank of Dallas, or, if such
rate is not so published for any day which is a Business Day, the average of
the quotations for the day of such transactions received by Administrative
Lender from three federal funds brokers of recognized standing selected by it.
"Fee Letter" has the meaning specified in Section 2.04(c).
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<PAGE> 17
"Financial Officer" of any Person means its chief financial officer,
principal accounting officer, or treasurer or assistant treasurer.
"Fiscal Quarter Increase" means, in respect of any fiscal quarter of
Company, 50% of Consolidated Net Income for such fiscal quarter of Company
unless Consolidated Net Income for such fiscal quarter of Company shall be a
loss, in which event the amount determined pursuant to this definition for such
fiscal quarter of Company shall be zero.
"Foreign Subsidiaries" means each Subsidiary of Company which is
organized under the Laws of a jurisdiction other than the fifty states of the
United States of America, Puerto Rico or the District of Columbia.
"GAAP" means generally accepted accounting principles as in effect
from time to time as set forth in the opinions, statements and pronouncements
of the Accounting Principles Board of the American Institute of Certified
Public Accountants, the Financial Accounting Standards Board and such other
Persons who shall be approved by a significant segment of the accounting
profession and concurred in by the independent certified public accountants
certifying any audited financial statements of Company.
"Government Acts" has the meaning specified in Section 2.16(e).
"Government Securities" means readily marketable direct full faith and
credit obligations of the United States or obligations unconditionally
guaranteed by the full faith and credit of the United States.
"Guarantee" means as to a Person any guarantee or other contingent
liability (other than any endorsement for collection or deposit in the ordinary
course of business), direct or indirect, with respect to any obligation of
another Person, through an agreement or otherwise, including, without
limitation, (a) any other endorsement or discount with recourse or undertaking
substantially equivalent to or having economic effect similar to a guarantee in
respect of any such obligation and (b) any agreement (i) to purchase, or to
advance or supply funds for the payment or purchase of, any such obligation,
(ii) to purchase, sell or lease property, products, materials or supplies, or
transportation or services, in respect of enabling such other Person to pay any
such obligation or to assure the owner thereof against loss regardless of the
delivery or nondelivery of the property, products, materials or supplies or
transportation or services or (iii) to make any loan, advance or capital
contribution to or other investment in, or to otherwise provide funds to or
for, such other Person in respect of enabling such Person to satisfy any
obligation (including any liability for a dividend, stock liquidation payment
or expense) or to assure a minimum equity, working capital or other balance
sheet condition in respect of any such obligation. The amount of any Guarantee
shall be equal to the outstanding amount of the obligation directly or
indirectly guaranteed. The term "Guarantee" used as a verb has a corresponding
meaning.
"Guaranteed Obligations" has the meaning specified in Section 7.01.
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<PAGE> 18
"Guarantors" has the meaning specified in the introduction to this
Agreement, and also includes any New Subsidiary that becomes a Loan Party
pursuant to Section 5.12(c).
"Guarantors' Agreement" means that certain Agreement among Guarantors
dated as of the Agreement Date among Guarantors.
"Guaranty" means the guaranty contained in Article VII.
"Hazardous Materials" means any pollutants, contaminants, toxic or
hazardous materials or substances, wastes, petroleum or petroleum products,
flammable, explosive or radioactive materials or other substances or materials
listed, designated, defined or regulated under any Environmental Law.
"Highest Lawful Rate" means at the particular time in question the
maximum rate of interest which, under Applicable Law, Lenders are then
permitted to charge on the Obligations. If the maximum rate of interest which,
under Applicable Law, Lenders are permitted to charge on the Obligations shall
change after the date hereof, the Highest Lawful Rate shall be automatically
increased or decreased, as the case may be, from time to time as of the
effective time of each change in the Highest Lawful Rate without notice to
Company. For purposes of and, with respect to each determining the Highest
Lawful Rate under the Applicable Law of the State of Texas, the applicable rate
ceiling shall be (a) the indicated rate ceiling described in and computed in
accordance with the provisions of Section (a)(1) of Art. 1.04, or (b) if the
parties subsequently contract as allowed by Applicable Law, the quarterly
ceiling or the annualized ceiling computed pursuant to Section (d) of Art.
1.04; provided, however, that at any time the indicated rate ceiling, the
quarterly ceiling or the annualized ceiling shall be less than 18% per annum or
more than 24% per annum, the provisions of Sections (b)(1) and (2) of said Art.
1.04 shall control for purposes of such determination, as applicable.
"Impermissible Qualification" means, relative to the opinion by
independent public accountants as to any financial statement of Company and its
consolidated Subsidiaries, any qualification or exception to such opinion:
(a) which is of a so-called "going concern" or a similar
nature;
(b) which relates to the limited scope of examination of
matters relevant to such financial statement (other than scope
limitations included in the standard form of opinion utilized by such
accountants); or
(c) which relates to the treatment or classification of
any item in such financial statement and which, as a condition to its
removal, would require an adjustment to such item the effect of which
would be to cause any Loan Party to be in Default of any of its
obligations under Sections 5.03, 5.15, 5.16, 5.17 or 5.18.
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<PAGE> 19
"Indemnitees" means Administrative Lender, Issuing Bank, and each
Lender and the holders of participations in the Notes and other Obligations and
each of their successors and assigns, along with each of their respective
officers, directors, shareholders, employees, agents and servants.
"Interest Period" means, for any LIBOR Advance or Eurocurrency
Advance, the period beginning on the day the Advance is made and ending one,
two, three or six months thereafter (as Company with respect to such Advance
shall select); provided, however, that:
(i) no Interest Period may extend beyond the Maturity
Date; and
(ii) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next succeeding
Business Day, provided, in the case of any Interest Period for a LIBOR
Advance or a Eurocurrency Advance, that if such extension would cause
the last day of such Interest Period to occur in the next following
calendar month, the last day of such Interest Period shall occur on
the immediately preceding Business Day.
"Investment" means any investment so classified under GAAP by a Person
made by stock purchase, capital contribution, loan or advance or by purchase of
property or otherwise, but in any event shall include as an investment of such
Person in any other Person the amount of all Debt owed by the other Person to
the investing Person and all receivables from such other Person owed to the
investing Person which are not current assets and did not arise from service
rendered or sales to such other Person in the ordinary course of the investing
Person's business.
"Issuing Bank" means NationsBank of Texas, National Association in its
capacity as issuer of the Letters of Credit, or such other Lender that issues
any Letter of Credit.
"Laws" means all constitutions, statutes, laws, ordinances, rules,
regulations, orders, writs, injunctions, decrees, judgments, opinions or
interpretations of any Tribunal.
"Lender" means each Lender now or hereafter a party to this Agreement
and listed on Schedule 1.01(a).
"Lending Office" means, with respect to a Lender, the office or
offices designated as its LIBOR Lending Office, Base Rate Lending Office and
Eurocurrency Lending Office on Schedule 2.11, and such other office or offices
of such Lender or any of its Affiliates hereafter designated by notice to
Company and Administrative Lender.
"Letter of Credit" means (a) a Letter of Credit described in Section
2.16(a) and issued under the Letter of Credit Facility and (b) an Existing
Letter of Credit.
"Letter of Credit Agreement" has the meaning specified in Section
2.16(b).
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<PAGE> 20
"Letter of Credit Facility" has the meaning specified in Section
2.16(a).
"Letter of Domestic Organization" has the meaning specified in Section
2.15(b).
"Letter of Non-Exemption" has the meaning specified in Section
2.15(b).
"LIBOR Advance" means an Advance which Company requests to bear
interest at the LIBOR Basis or which is reborrowed and bears interest at the
LIBOR Basis, in accordance with the provisions of Section 2.02.
"LIBOR Basis" means a simple per annum interest rate equal to the
lesser of (a) the Highest Lawful Rate, and (b) the sum of the LIBOR Rate plus
the Applicable Margin. The LIBOR Basis shall, with respect to LIBOR Advances
subject to reserve or deposit requirements, be subject to premiums therefor
assessed by each Lender, which are payable directly to each Lender. Once
determined at the beginning of an Interest Period, the LIBOR Basis shall remain
unchanged during the applicable Interest Period.
"LIBOR Lending Office" means the address of each Lender specified on
Schedule 2.11 as its LIBOR Lending Office.
"LIBOR Rate" means, for any Interest Period, the interest rate per
annum (rounded upward to the nearest 1/16th of one percent) determined by
Administrative Lender at approximately 11:00 a.m. (London time), on the date
which is two Business Days before the first day of such Interest Period to be
the offered quotations that appear on the Reuter's Screen LIBO page for dollar
deposits in the London interbank market for a length of time approximately
equal to the Interest Period for the LIBOR Advance sought by Company. If at
least two such offered quotations appear on the Reuter's Screen LIBO page, the
LIBOR Rate shall be the arithmetic mean (rounded upward to the nearest 1/16th
of one percent) of such offered quotations, as determined by Administrative
Lender. If the Reuter's Screen LIBO page is not available or has been
discontinued, the LIBOR Rate Basis shall be the rate per annum that
Administrative Lender determines to be the arithmetic mean (rounded as
aforesaid) of the per annum rates of interest at which deposits in dollars in
an amount approximately equal to the principal amount of, and for a length of
time approximately equal to the Interest Period for, the LIBOR Advance sought
by Company are offered to Administrative Lender in immediately available funds
in the London interbank market at 11:00 a.m., London time, on the date which is
two Business Days prior to the first day of an Interest Period.
"Lien" means, as to any Person, any mortgage, lien, pledge, adverse
claim, charge, security interest or other encumbrance in or on, or any interest
or title of any vendor, lessor, lender or other secured party to or of the
Person under any conditional sale or other title retention agreement or Capital
Lease with respect to, any property or asset of the Person, or the signing or
filing of a financing statement which names the Person as debtor, or the
signing of any security or other agreement authorizing any other Person as the
secured party thereunder to file any financing statement.
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<PAGE> 21
"Loan Documents" means this Agreement, the Notes, the Guarantors'
Agreement, the Letters of Credit and all other documents and instruments
executed by any Loan Party in connection with this Agreement, the Advances and
the Letters of Credit for the benefit of Administrative Lender, Lenders, and
Issuing Bank.
"Loan Party" has the meaning specified in the introduction of this
Agreement and shall also include any New Subsidiary with respect to which
Company exercises the option set forth in Section 5.12(c) to cause such New
Subsidiary to be a Loan Party to the Agreement and a guarantor of the
Guaranteed Obligations.
"Material Adverse Effect" means, relative to any occurrence of
whatever nature (including any adverse determination in any litigation,
arbitration or governmental investigation or proceeding) and after taking into
account actual insurance coverage and effective indemnification with respect to
such occurrence, (a) a material adverse effect on the financial condition,
business or operations of Company and its Subsidiaries taken as a whole or (b)
any material impairment upon the collective ability of Loan Parties to perform
their payment or other obligations hereunder or under the Notes or the right of
Administrative Lender, Issuing Bank or any Lender to enforce any of such
obligations or any of their remedies under the Loan Documents.
"Maturity Date" means May 8, 2001 or the earlier date of termination
in whole of the Commitment pursuant to Section 2.06 or 6.02.
"Maximum Amount" means the maximum amount of interest which, under
Applicable Law, Issuing Bank and Lenders are permitted to charge on the
Obligations.
"Multiemployer Plan" means any employee pension benefit plan as
defined in Section 4001(a)(3) of ERISA to which any Loan Party or a member of
its ERISA Group has a liability or an obligation, whether or not current,
accrued or contingent. to make contributions or has within the preceding five
plan years made or accrued an obligation to make contributions.
"New Subsidiary" has the meaning specified in Section 5.12(c).
"Non-Excluded Taxes" has the meaning specified in Section 2.15.
"Note" means each Promissory Note of Company evidencing Advances
hereunder owed to a Lender, substantially in the form of Exhibit A, together
with any extension, renewal or amendment thereof, or substitution therefor.
"Note Purchase Agreement" means the Note Purchase Agreement dated as
of April 15, 1995 among Company, certain Subsidiaries of Company, and the
purchasers a party thereto.
"Notice of Issuance" has the meaning specified to it in Section
2.16(b).
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<PAGE> 22
"Obligations" means (a) all obligations of any nature (whether matured
or unmatured, fixed or contingent, including the Reimbursement Obligations) of
Company or any Subsidiary of Company to Lenders under the Loan Documents as
they may be amended from time to time, and (b) all obligations of Company or
any of its Subsidiaries for losses, damages, expenses or any other liabilities
of any kind that any Lender may suffer by reason of a breach by Company or any
of its Subsidiaries of any obligation, covenant or undertaking with respect to
any Loan Document.
"Officer's Certificate" means a certificate signed in the name of a
Loan Party by a Responsible Officer of such Loan Party.
"Other Returns" has the meaning specified in Section 4.05.
"Participants" has the meaning specified in Section 10.06(c).
"Paticipations" has the meaning specified in Section 10.06(c).
"Payment Date" means the last day of the Interest Period for any LIBOR
Advance and Eurocurrency Advance.
"Payment Office" means, with respect to payments of Base Rate Advances
and LIBOR Advances, the principal office of Administrative Lender in Dallas,
located on the date hereof at 901 Main Street, 67th Floor, Dallas, Texas 75202,
and, with respect to payments of Eurocurrency Advances, such office of
Administrative Lender as shall be set forth on Schedule 1.01(d).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to all or any of its functions under ERISA.
"Permits" means any and all registrations, notifications, licenses,
authorizations, permits, certificates, approvals and consents required by any
Tribunal.
"Permitted Portfolio Investments" means, when used in connection with
any Person, such Person's Investments in:
(a) Government Securities;
(b) repurchase agreements collateralized by Government
Securities;
(c) commercial paper rated at time of purchase at least
P-1 or A-1 by Moody's Investors Service, Inc. or Standard & Poor's
Ratings Group, a Division of McGraw-Hill, Inc., a New York
corporation, respectively, or an equivalent rating by a recognized
rating agency;
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<PAGE> 23
(d) corporate notes rated at time of purchase at least
Baa or BBB by Moody's Investors Service, Inc. or Standard & Poor's
Ratings Group, a Division of McGraw-Hill, Inc., a New York
corporation, respectively, or an equivalent rating by a recognized
rating agency;
(e) bank obligations with a financial institution rated
at time of purchase at least Baa or BBB by Moody's Investors Service,
Inc. or Standard & Poor's Ratings Group, a Division of McGraw-Hill,
Inc., a New York corporation, respectively, or an equivalent rating by
a recognized rating agency;
(f) mortgage-backed securities rated at time of purchase
at least Baa or BBB by Moody's Investors Service, Inc. or Standard &
Poor's Ratings Group, a Division of McGraw-Hill, Inc., a New York
corporation, respectively, or an equivalent rating by a recognized
rating agency;
(g) asset-backed securities rated at time of purchase at
least Baa or BBB by Moody's Investors Service, Inc. or Standard &
Poor's Ratings Group, a Division of McGraw-Hill, Inc., a New York
corporation, respectively, or an equivalent rating by a recognized
rating agency;
(h) other securities which satisfy the criteria of being
rated at time of purchase at least Baa or BBB by Moody's Investors
Service, Inc. or Standard & Poor's Ratings Group, a Division of
McGraw-Hill, Inc., a New York corporation, respectively, or an
equivalent rating by a recognized rating agency; or
(i) Investments in shares of the Merrill Lynch
Institutional Fund or the Goldman Sachs ILA/POP fund, or investments
in other mutual funds with investment objectives substantially
equivalent to either of these mutual funds.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a foreign state or political subdivision thereof or
any agency of such state or subdivision.
"Plan" means an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or is subject to the
minimum funding standards under section 412 of the Code and with respect to
which (a) any Loan Party or any member of the ERISA Group has a liability or an
obligation, whether or not current, accrued or contingent, to make
contributions or (b) at any time within the preceding six years any Loan Party
or any Person which was at such time a member of the ERISA Group made or had a
liability or obligation, whether or not current, accrued or contingent, to make
contributions.
"Pounds" means lawful money of The United Kingdom.
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<PAGE> 24
"Prime Rate" means, as of a particular date, the rate of interest for
loans established by NationsBank of Texas, National Association from time to
time as its prime rate, automatically fluctuating upward and downward with and
at the time specified in each such establishment without special notice to the
Company, the other Loan Parties or any other Person, which prime rate may not
necessarily represent the lowest or best rate actually charged to a customer.
"Quarterly Date" means the last day of each March, June, September and
December, beginning June 30, 1996.
"Receivable" means any obligation of a customer payable to a Loan
Party arising from the sale or lease of any item of goods, materials,
equipment, supplies, merchandise or other personal property of such Loan Party.
"Recourse Obligation" means, at any time and with respect to any
Person which shall have effected a sale, transfer or other disposition (whether
by way of factoring, discounting, securitizing or otherwise) of accounts
receivable, general intangibles, leases, chattel paper or any other obligations
of its customers arising from its sale or leasing of goods or provision of
services in the ordinary course of its business (collectively, for purposes of
this definition, "receivables"), the aggregate amount of the obligations of
such Person (whether contingent or actual), as determined by GAAP, arising from
the contractual rights of the transferees thereof to require such Person to
reacquire, or otherwise make a payment to such transferees in respect of, such
receivables as a result of (a) the failure of the obligors under such
receivables to perform any obligations evidenced or embodied by such
receivables or (b) the failure of such receivables to satisfy the eligibility
or other requirements thereof agreed upon by such Person and such transferees
in order for such receivables to be sold, transferred or otherwise disposed of
to such transferees.
"Redenominate", "Redenomination" and "Redenominated" each refers to
redenomination of each Advance comprising the same Borrowing from Dollars into
a Eurocurrency or from a Eurocurrency into Dollars or another Eurocurrency or
from a LIBOR Advance, Eurocurrency Advance or Base Rate Advance pursuant to
Section 2.02(d).
"Redenomination Notice" means a notice in the form of Exhibit E.
"Refinancing Advance" means any LIBOR Advance or Eurocurrency Advance
which is used to pay the principal amount (or any portion thereof) of a LIBOR
Advance or Eurocurrency Advance, respectively, at the end of its Interest
Period and, if requested by Company, any accrued interest thereon, and which,
after giving effect to such application, does not result in an increase in the
aggregate amount of outstanding LIBOR Advances or Eurocurrency Advances,
respectively, other than by the amount, if any, of accrued interest related
thereto which is not paid at the end of such Interest Period.
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<PAGE> 25
"Regulation G, T, U or X" (and any reference to each such regulation)
means Regulations G, T, U and X of the Board, as each is from time to time in
effect, and all official rulings and interpretations thereunder or thereof.
"Reimbursement Obligations" means, in respect of any Letter of Credit
as at any date of determination, the maximum aggregate amount which is then
available to be drawn under such Letter of Credit.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing into
the environment (including the abandonment or discarding of barrels, containers
and other closed receptacles).
"Required Lenders" means, on any date of determination, any
combination of Lenders having at least 66-2/3% of the aggregate amount of
Advances then outstanding; provided, however, that if on any date of
determination there are no Advances, "Required Lenders" means any combination
of Lenders whose Specified Percentage aggregate at least 66-2/3%.
"Responsible Officer" means (a) as to any Loan Party, the Chairman of
its Board of Directors, its President, any Senior Vice President, its
Treasurer, its Vice President of Finance, its Controller, or its General
Counsel, and (b) as to any other Person, the Chairman of its Board of
Directors, its President, any Senior Vice President, its Treasurer, its
Controller, its General Counsel, or the chief financial officer of such Person.
"Restricted Payment" means, with respect to any Loan Party:
(a) the declaration of any dividend on, or the incurrence
of any liability to make any other payment or distribution in respect
of, any shares of such Loan Party (other than one payable solely in
its common shares); or
(b) any payment or distribution on account of the
purchase, redemption or other retirement of any shares of such Loan
Party, or the purchase, redemption or other retirement of any warrant,
option or other right to acquire such shares, or any other payment or
distribution (other than pursuant to a dividend theretofore declared
or liability theretofore incurred as specified in subsection (a)),
made in respect thereof, (i) either directly or indirectly or (ii) the
purchase, redemption or other retirement of shares of such Loan Party
in exchange for, or out of the net cash proceeds received by such Loan
Party from a substantially concurrent sale of, other shares of such
Loan Party;
provided, that, Restricted Payments shall not include any Restricted Payment
which is received by any Loan Party.
"Securities Act" means the Securities Act of 1933, as amended from
time to time.
"Security" means the "security" as defined in section 2(1) of the
Securities Act.
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<PAGE> 26
"Senior Debt" means Consolidated Debt which is not Subordinated Debt.
"Sharing Ratio" means each Lender's pro rata part determined by a
fraction, the denominator of which equals the aggregate outstanding Advances
and Reimbursement Obligations hereunder and the numerator of which equals the
product of such Lender's Specified Percentage times the aggregate outstanding
Advances and Reimbursement Obligations hereunder, as determined pursuant to
Section 1.04.
"Special Counsel" means the law firm of Donohoe, Jameson & Carroll,
P.C., or such other legal counsel as Administrative Lender may select.
"Specified Percentage" means, as to any Lender, the percentage
indicated beside its name on Schedule 1.01(a), or if applicable, specified in
its most recent Assignment Agreement.
"Subordinated Debt" means, without duplication, (a) the subordinated
debt of Company and each of its consolidated Subsidiaries which is listed on
Schedule 1.01(c) and (b) other Debt of Company and each of its consolidated
Subsidiaries which is subordinated to the Obligations pursuant to terms and
provisions satisfactory to Lenders.
"Subsidiary" means, as to any Person, any corporation, partnership or
other entity a majority of (a) the total combined voting power of all classes
of Voting Stock of which or (b) the outstanding equity interest of which shall,
at the time as of which any determination is being made, is owned by such
Person either directly or through one or more Persons described in clauses (a)
and (b).
"Taxes" means all taxes, assessments, fees or other charges at any
time imposed by any Laws or Tribunal.
"Tribunal" means any municipal, state, commonwealth, federal, foreign,
territorial or other court, governmental body, subdivision, agency, department,
commission, board, bureau or instrumentality.
"U.S." and "United States" means the United States of America.
"Unused Portion" means, at any time, the excess of the Commitment at
such time over the sum of (a) the aggregate principal amount of Advances
outstanding at such time, plus (b) the aggregate amount of all Reimbursement
Obligations at such time. The Unused Portion shall be calculated with respect
to (a) each Eurocurrency Advance by assuming that the quoted spot rate to
exchange Dollars for such Eurocurrency in effect on the (i) date of such
Eurocurrency Advance remains the same for each day from such date to the
immediately following Quarterly Date, and (ii) last day of each Quarterly Date
thereafter was the rate in effect for each day during the calendar quarter
ending on such Quarterly Date and (b) Reimbursement Obligations in respect of
Letters of Credit denominated in a currency other than Dollars, by assuming
that the quoted spot rate to exchange Dollars for such currency in effect on
the last day of each
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<PAGE> 27
Quarterly Date was the rate in effect for each day during the calendar quarter
ending on such Quarterly Date.
"Voting Stock" means any share of stock or other equity ownership
interest of a Person having general voting power under ordinary circumstances
to elect a majority of the Board of Directors or other governing body of such
Person (irrespective of whether at the time stock or equity ownership interests
of any other class or classes shall have or might have voting power by reason
of the happening of any contingency).
"Withdrawal Liability" has the meaning given such term under Part I of
Subtitle E of Title IV of ERISA.
1.02. Accounting Terms. All accounting terms not otherwise defined
herein have the meanings assigned to them in accordance with GAAP and, except
as otherwise herein expressly provided, the GAAP which shall be applied under
this Agreement are those which shall be in effect from time to time.
1.03. Interpretation. (a) In this Agreement, unless a clear
contrary intention appears:
(i) the singular number includes the plural number and
vice versa;
(ii) reference to any gender includes each other gender;
(iii) the words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole and
not to any particular Article, Section or other subdivision;
(iv) reference to any Person includes such Person's
successors and assigns but, if applicable, only if such successors and
assigns are permitted by this Agreement, and reference to a Person in
a particular capacity excludes such Person in any other capacity or
individually, provided that nothing in this clause (iv) is intended to
authorize any assignment not otherwise permitted by this Agreement;
(v) reference to any agreement, document, or instrument
means such agreement, document or instrument as amended, supplemented
or modified and in effect from time to time in accordance with the
terms thereof and, if applicable, the terms hereof, and reference to
the Notes includes any note issued pursuant hereto in extension or
renewal thereof and in substitution or replacement therefor;
(vi) unless the context indicates otherwise, reference to
any Article, Section, Schedule or Exhibit means such Article or
Section hereof or such Schedule or Exhibit hereto;
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<PAGE> 28
(vii) the words "including" (and with correlative meaning
"include") means including, without limiting the generality of any
description preceding such term;
(viii) with respect to the determination of any period of
time, the word "from" means "from and including" and the word "to"
means "to but excluding";
(ix) reference to any Law means such as amended, modified,
codified or reenacted, in whole or in part, and in effect from time to
time;
(x) whenever the character or amount of any asset or
liability or item of income or expense is required to be determined,
or any consolidation or accounting computation is required to be made,
for purposes hereof, such determination or computation shall be made
in accordance with GAAP; and
(xi) all references to time are deemed to refer to Dallas,
Texas time.
(b) The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction hereof.
(c) No provision of this Agreement shall be interpreted or
construed against any Person solely because that Person or its legal
representative drafted such provision.
(d) Whenever this Agreement refers to any Person having knowledge
of a particular fact or situation, such Person and the Financial Officer or
Responsible Officer making any representation or warranty on behalf of such
Person shall be deemed to possess the actual knowledge of all Responsible
Officers (but not other employees) of the Person in question relating to said
fact or situation.
1.04. Currency Equivalents Generally. For all purposes of this
Agreement other than Article II, the equivalent in any Eurocurrency of an
amount in Dollars shall be determined at the rate of exchange quoted to
Administrative Lender, in London, at 9:00 a.m. (London time) on the date of
determination, by prime banks in London for the spot purchase in the London
foreign exchange market of such amount of Dollars with such Eurocurrency. For
purposes of the provisions of Article II and calculation of the Sharing Ratio,
(a) the equivalent in Dollars of any Eurocurrency shall be determined by using
the quoted spot rate at which Administrative Lender's principal office in
London offers to exchange Dollars for such Eurocurrency in London at 11:00 a.m.
(London time) two Business Days prior to the date on which such equivalent is
to be determined, (b) the equivalent in any Eurocurrency of any other
Eurocurrency shall be determined by using the quoted spot rate at which
Administrative Lender's principal office in London offers to exchange such
Eurocurrency for the equivalent in Dollars of such other Eurocurrency in London
at 11:00 a.m. (London time) two Business Days prior to the date on which such
equivalent is to be determined, and (c) the equivalent in any Eurocurrency of
Dollars shall be determined by using the quoted spot rate at which
Administrative Lender's principal office in London offers to exchange such
Eurocurrency for Dollars in London at 11:00 a.m.
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<PAGE> 29
(London time) two Business Days prior to the date on which such equivalent is
to be determined. The equivalent in Dollars of each Eurocurrency Advance may
be recalculated hereunder on each date that it shall be necessary to determine
each Lender's Unused Portion of the Commitment, or any or all Advance or
Advances outstanding on such date.
ARTICLE II. ADVANCES AND LETTERS OF CREDIT
2.01. Advances. (a) Each Lender severally agrees, upon the terms
and subject to the conditions of this Agreement, to make Advances to Company
(which may be Base Rate Advances, LIBOR Advances or Eurocurrency Advances) from
time to time on any Business Day in an aggregate amount (determined in Dollars)
not to exceed an amount equal to its Specified Percentage of the Commitment
less an amount equal to its Specified Percentage of the aggregate amount of all
Reimbursement Obligations then outstanding (assuming compliance with all
conditions to drawing) (determined in Dollars), for the purposes set forth in
Section 4.11. Subject to Section 2.09, Advances, in part or in whole, may be
repaid and then reborrowed. Each LIBOR Advance and Eurocurrency Advance shall
be subject to availability and to the provisions of Article VIII; provided
there shall not be outstanding to any Lender, at any one time, more than
fifteen LIBOR Advances and fifteen Eurocurrency Advances. On the Maturity Date
unless sooner paid as provided herein, the outstanding Base Rate Advances shall
be repaid in full.
(b) Currency Determinations. The equivalent in Dollars of any
Eurocurrency or the equivalent in any Eurocurrency of Dollars or of any other
Eurocurrency shall be determined in accordance with Section 1.04.
2.02. Manner of Borrowing and Disbursement.
(a) Base Rate Advances. In the case of Base Rate Advances,
Company, through a Financial Officer, shall give Administrative Lender prior to
11:00 a.m. on the date of any proposed Base Rate Advance irrevocable written
notice (in the form of Advance Request), or irrevocable telephonic notice
followed immediately by written notice (in the form of an Advance Request)
(provided, however, that Company's failure to confirm any telephonic notice in
writing shall not invalidate any notice so given), of its intention to borrow a
Base Rate Advance hereunder.
(b) LIBOR Advances. In the case of LIBOR Advances, Company,
through a Financial Officer, shall give Administrative Lender at least three
Business Days' irrevocable written notice (in the form of Advance Request), or
irrevocable telephonic notice followed immediately by written notice (in the
form of Advance Request) (provided, however, that Company's failure to confirm
any telephonic notice in writing shall not invalidate any notice so given), of
its intention to borrow a LIBOR Advance hereunder. Notice shall be given to
Administrative Lender prior to 11:00 a.m. in order for such Business Day to
count toward the minimum number of Business Days required. LIBOR Advances
shall in all cases be subject to availability and to Article VIII.
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<PAGE> 30
Each Advance Request shall specify the requested funding date, which shall be a
Business Day, the amount of the proposed aggregate LIBOR Advances, and the
Interest Period selected by Company, provided that no such Interest Period
shall prohibit or impair Company's ability to comply with Section 2.08.
Administrative Lender, whose determination shall be conclusive, shall determine
the LIBOR Basis no later than the second Business Day prior to the applicable
funding date and shall notify (which notice may be telephonic) Company and
Lenders of such LIBOR Basis.
(c) Eurocurrency Advances. In the case of Eurocurrency Advances,
Company, through a Financial Officer, shall give Administrative Lender at least
three Business Days' irrevocable written notice (in the form of Advance
Request), or irrevocable telephonic notice followed immediately by written
notice (in the form of Advance Request) (provided, however, that Company's
failure to confirm any telephonic notice in writing shall not invalidate any
notice so given), of its intention to borrow a Eurocurrency Advance hereunder.
Notice shall be given to Administrative Lender prior to 11:00 a.m. in order for
such Business Day to count toward the minimum number of Business Days required.
Eurocurrency Advances shall in all cases be subject to availability and to
Article VIII. Each Advance Request shall specify the requested funding date,
which shall be a Business Day, the Eurocurrency in which the Advance will be
funded, the amount of the proposed aggregate Eurocurrency Advances, and the
Interest Period selected by Company, provided that no such Interest Period
shall prohibit or impair Company's ability to comply with Section 2.08.
Administrative Lender, whose determination shall be conclusive, shall determine
the Eurocurrency Basis no later than the second Business Day prior to the
applicable funding date and shall notify (which notice may be telephonic)
Company and Lenders of such Eurocurrency Basis.
(d) Refinancing. Subject to Sections 2.01 and 2.09, at least (i)
three Business Days prior to each Payment Date for a LIBOR Advance and (ii) at
least three Business Days for a Eurocurrency Advance prior to each Payment
Date, Company, through an Authorized Signatory, shall give Administrative
Lender irrevocable written notice, or irrevocable telephonic notice followed
immediately by written notice (in the form of a Redenomination Notice)
(provided, however, that Company's failure to confirm any telephonic notice in
writing shall not invalidate any notice so given), specifying whether all or a
portion of such Advance outstanding on the Payment Date (A) is to be repaid and
then reborrowed in whole or in part as a LIBOR Advance, (B) is to be repaid and
then reborrowed in whole or in part as a Base Rate Advance, (C) is to be repaid
and reborrowed in whole or in part as a Eurocurrency Advance, (D) is to be
repaid and not reborrowed at that time and (E) if such Advance is a
Eurocurrency Advance or a LIBOR Advance, is to have accrued interest thereon
borrowed as part of a Eurocurrency Advance or LIBOR Advance, as appropriate;
provided, however, notwithstanding anything in this Agreement to the contrary,
if on any Payment Date a Default shall exist, such LIBOR Advance or
Eurocurrency Advance may only be reborrowed as a Base Rate Advance. Upon such
Payment Date, each LIBOR Advance and Eurocurrency Advance shall, subject to the
provisions hereof, be so repaid and, as applicable, reborrowed.
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<PAGE> 31
(e) Funding Amounts. The aggregate amount of Base Rate Advances
to be made by Lenders on any day shall be in a principal amount which is at
least $1,000,000 and which is an integral multiple of $100,000; provided,
however, that such amount may equal the Unused Portion. The aggregate amount
of LIBOR Advances which are Dollar Advances having the same Interest Period and
to be made by Lenders on any day shall be in a principal amount which is at
least $5,000,000 and which is an integral multiple of $1,000,000. The
aggregate amount of Eurocurrency Advances having the same Interest Period and
to be made by Lenders on any day shall be in a principal amount which is at
least the Eurocurrency equivalent (as determined by Administrative Lender) of
$1,000,000.
(f) Funding Times. Administrative Lender shall promptly notify
Lenders of each notice received from Company pursuant to this Section 2.02.
Failure of Company to give any notice in accordance with Section 2.02(d) with
respect to a LIBOR Advance or Eurocurrency Advance (or if on the applicable
Payment Date a Default shall exist) shall result in a repayment of any such
existing LIBOR Advance or Eurocurrency Advance on the applicable Payment Date
by an Advance which is a Base Rate Advance. Such a LIBOR Advance or
Eurocurrency Advance must be repaid in full and may not be reborrowed. Each
Lender shall, not later than 2:00 p.m. on the date of any Advance that is not a
Refinancing Advance, deliver to Administrative Lender, at its address specified
in Section 10.01, an amount equal to such Lender's Specified Percentage of such
Advance in immediately available funds in the appropriate currency in
accordance with Administrative Lender's instructions. Prior to 3:00 p.m. on
the date of any Advance which is not a Refinancing Advance, Administrative
Lender shall, subject to satisfaction of the conditions set forth in Article
III, disburse the amounts made available to Administrative Lender by Lenders by
(i) transferring such amounts by wire transfer pursuant to Company's
instructions, or (ii) in the absence of such instructions, crediting such
amounts to the account of Company maintained with Administrative Lender. All
Advances shall be made by each Lender according to its Specified Percentage.
2.03. Interest.
(a) On Base Rate Advances. Company shall pay interest on the
unpaid principal amount of the Base Rate Advances outstanding from time to
time, until due (whether at maturity or by reason of acceleration) or repaid,
at a simple interest rate per annum equal to the Base Rate as in effect from
time to time. Interest on Base Rate Advances shall be computed on the basis of
a year of 365 or 366 days, as applicable, for the number of days actually
elapsed, and shall be payable in arrears on each Quarterly Date and on the
Maturity Date.
(b) On LIBOR Advances. Company shall pay interest on the unpaid
principal amount of each LIBOR Advance, from the date such Advance is made
until it is due (whether at maturity or by reason of acceleration) or repaid,
at a rate per annum equal to the LIBOR Basis for such Advance. Subject to
Section 10.09, interest on each LIBOR Advance shall be computed on the basis of
a 360-day year for the actual number of days elapsed, and shall be payable in
arrears on the applicable Payment Date and on the Maturity Date; provided,
however,
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<PAGE> 32
that if the Interest Period for such Advance exceeds three months, interest
shall also be due and payable in arrears on the 90th day of such Interest
Period.
(c) On Eurocurrency Advances. Company shall pay interest on the
unpaid principal amount of each Eurocurrency Advance, from the date such
Advance is made until it is due (whether at maturity or by reason of
acceleration) or repaid, at a rate per annum equal to the Eurocurrency Basis
for such Advance. Subject to Section 10.09, interest on each Eurocurrency
Advance shall be computed on the basis of a 360-day year (except in the case of
Advances denominated in Pounds, on the basis of a 365 or 366-day year, as
appropriate), for the actual number of days elapsed, and shall be payable in
arrears on the applicable Payment Date and on the Maturity Date; provided,
however, that if the Interest Period for such Eurocurrency Advance exceeds
three months, interest shall also be due and payable in arrears on the 90th day
of such Interest Period.
(d) Interest if No Notice of Selection of Interest Rate Basis. If
Company fails to give Administrative Lender timely notice of its selection of a
LIBOR Advance or Eurocurrency Advance or an Interest Period for a LIBOR Advance
or a Eurocurrency Advance, or if for any reason a determination of a LIBOR
Basis or a Eurocurrency Basis for any Advance is not timely concluded due to
the fault of Company in the reasonable opinion of Determining Lenders, (i) the
Base Rate shall apply to the applicable Advance and (ii) the Lenders shall have
no obligation to fund such Eurocurrency Advance.
(e) Interest After an Event of Default. (i) Commencing thirty
days after an Event of Default (other than an Event of Default specified in
Section 6.01(g) or (h)) and during any continuance thereof, at the option of
Determining Lenders, and (ii) after an Event of Default specified in Section
6.01(g) or (h) and during any continuance thereof, automatically and without
any action by Administrative Lender, or any Lender, the Obligations which (A)
bear interest shall bear interest at a rate per annum equal to the lesser of
(1) the Highest Lawful Rate and (2) the Base Rate, Eurocurrency Basis or LIBOR
Basis, as applicable, plus two percent, and (B) do not otherwise bear interest
shall bear interest at a rate per annum equal to the Default Rate. Such
interest shall be payable on the earlier of demand or the Maturity Date, and
shall accrue until the earlier of (i) waiver or cure (to the reasonable
satisfaction of Determining Lenders) of the applicable Event of Default, (ii)
agreement by Lenders to rescind the charging of interest at the Default Rate,
or (iii) payment in full of the Obligations. Lenders shall not be required to
(i) accelerate the maturity of the Advances, (ii) exercise any other rights or
remedies under the Loan Documents, or (iii) give notice to any Loan Party of
the decision to charge interest at the Default Rate. Lenders will undertake to
notify Company, after the effective date, of the decision to charge interest at
the Default Rate.
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2.04. Fees.
(a) Commitment Fee.
(i) Subject to Section 10.09, Company shall pay to
Administrative Lender for the account of each Lender a commitment fee
(which shall be payable on each Quarterly Date in arrears, commencing
June 30, 1996, and on the Maturity Date) on the average daily Unused
Portion, on the basis of a year of 365 or 366 days, as appropriate,
for the actual number of days elapsed, at a rate per annum as set
forth in the table in the definition of Applicable Margin.
(ii) Adjustment of Commitment Fee. The commitment fee
payable in respect of the Commitment shall be subject to reduction or
increase, as applicable and as set forth in the table contained in the
definition of Applicable Margin in Section 1.01 according to the
performance of Company as tested by the Consolidated Funded Debt to
Consolidated Excess Cash Flow Ratio. Any such increase or reduction
in such fee shall be effective as of the day following the date of
receipt of the financial statements required pursuant to Section
5.01(a) or (b), as appropriate. If such financial statements are not
received by the day following the date required, the fee payable in
respect of the Commitment shall be determined as if the Consolidated
Funded Debt to Consolidated Excess Cash Flow Ratio is greater than or
equal to 2.00 to 1 until such time as such financial statements are
received. Notwithstanding anything herein to the contrary, the
commitment fee from and including the Agreement Date to but not
including the day following receipt of Company's March 31, 1996,
financial statements shall be .20%.
(b) Participation Fee. Subject to Section 10.09, Company shall
pay to Administrative Lender, for the ratable account of Lenders, a one-time
participation fee of 0.050% based on the amount of each Lender's Specified
Percentage of the Commitment. Such fee shall be payable on the Agreement Date,
and shall be fully-earned when due and, subject to Section 10.09, nonrefundable
when paid.
(c) Other Fees. Subject to Section 10.09, Company shall pay to
Administrative Lender and Arranger, for their respective accounts and not the
account of Lenders, the fees provided for in the letter agreement ("Fee
Letter"), dated as of September 25, 1995, among Company, Administrative Lender
and Arranger on the date and in the amounts specified therein.
2.05. Prepayment.
(a) Voluntary Prepayments. The principal amount of any Base Rate
Advance may be voluntarily prepaid in full or in part at any time without
penalty, upon telephonic notice (to be promptly followed by written notice) by
an Authorized Signatory to Administrative Lender prior to 10:00 a.m. on the
date of such prepayment. Subject to Section 2.09, the principal amount of any
LIBOR Advances may be voluntarily prepaid in full or in part at any time
without penalty upon three Business Days' prior telephonic notice (to be
promptly followed by written
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notice) by an Authorized Signatory to Administrative Lender. Subject to
Section 2.09, the principal amount of any Eurocurrency Advances may be
voluntarily prepaid in full or in part at any time without penalty upon five
Business Days' prior telephonic notice (to be promptly followed by written
notice) by an Authorized Signatory to Administrative Lender.
(b) Mandatory Prepayment. On or before the date of any reduction
of the Commitment, Company shall prepay outstanding Advances in an amount
necessary to cause the sum of outstanding Advances and Reimbursement
Obligations to be an amount not greater than the Commitment as so reduced
pursuant to Section 2.06. Company shall first prepay all Base Rate Advances,
second prepay all LIBOR Advances and third prepay all Eurocurrency Advances.
If on any date the sum of outstanding Advances and Reimbursement Obligations is
greater than the Commitment (for any reason, including any determination by
Administrative Lender pursuant to Section 1.04), Company shall repay
outstanding Advances in an amount necessary to cause the sum of outstanding
Advances and Reimbursement Obligations to be an amount not greater than the
Commitment; provided, however, if (i) no Default or Event of Default shall
exist and (ii) the only reason that the sum of outstanding Advances and
Reimbursement Obligations exceeds the Commitment is as a result of a change in
the Eurocurrency equivalents of Dollars (the "Eurocurrency Equivalent Excess"),
Company shall not be obligated to repay the Eurocurrency Equivalent Excess
until the end of the Interest Period of the Eurocurrency Advance or Advances
that caused the Eurocurrency Equivalent Excess so long as (i) the Eurocurrency
Equivalent Excess does not exceed 10% of the Commitment or (ii) if the
Eurocurrency Equivalent Excess does exceed 10% of the Commitment, Company has
provided Administrative Lender with cash collateral (and such agreements and
documents which in the reasonable judgment of Administrative Lender are
necessary to perfect a Lien in such cash collateral) in an amount equal to the
amount by which the Eurocurrency Equivalent Excess exceeds 10% of the
Commitment. To the extent that any prepayment (whether mandatory or voluntary)
requires that a LIBOR Advance or Eurocurrency Advance be repaid on a date other
than the last day of its Interest Period, Company shall reimburse each Lender
in accordance with Section 2.09.
(c) Prepayments, Generally. Any prepayment of an Advance shall be
accompanied by interest accrued on the principal amount being prepaid. Any
voluntary partial prepayment of a Base Rate Advance shall be in a principal
amount of $1,000,000 or integral multiples of $100,000 in excess thereof. Any
voluntary partial prepayment of a LIBOR Advance shall be in a principal amount
of $5,000,000 or integral multiples of $1,000,000 in excess thereof or in such
other amount to the extent that the prepayment is with respect to a Refinancing
Advance that included accrued interest. Any voluntary partial prepayment of a
Eurocurrency Advance shall be in a principal amount which is at least the
Eurocurrency equivalent (as determined by Administrative Lender) of $1,000,000
or integral multiples of the Eurocurrency equivalent of $500,000 in excess
thereof or in such other amount to the extent that the prepayment is with
respect to a Refinancing Advance that included accrued interest. Prepayment of
LIBOR Advance and Eurocurrency Advance shall be applied to LIBOR Advance and
Eurocurrency Advances according to the respective Sharing Ratio of Lenders.
Prepayments of Base Rate
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Advances shall be applied to the outstanding Base Rate Advances in accordance
with the Specified Percentage of Lenders.
2.06. Reduction of Commitment.
(a) Voluntary Reduction. Company shall have the right, upon not
less than ten Business Days' notice (provided only three Business Days' notice
shall be required for a termination in whole of the Commitment) by an
Authorized Signatory to Administrative Lender (if telephonic, to be confirmed
by telecopy or in writing on or before the date of reduction or termination),
which shall promptly notify Lenders, to reduce the Commitment in part or
terminate the Commitment in whole. Each partial termination shall be in an
aggregate amount which is at least $10,000,000 and which is an integral
multiple of $10,000,000, and no voluntary reduction in the Commitment shall
cause any LIBOR Advance or Eurocurrency Advance to be repaid prior to the last
day of its Interest Period unless Company concurrently reimburses Lenders in
accordance with Section 2.09.
(b) Mandatory Reduction. On the Maturity Date, the Commitment
(other than the obligation of Issuing Bank to honor drawings against Letters of
Credit outstanding on the Maturity Date) shall automatically reduce to zero.
(c) General Requirements. Upon any reduction of the Commitment
pursuant to this Section 2.06, Company shall immediately make a repayment of
applicable Advances in accordance with Section 2.05(b). Company shall
reimburse each Lender for any loss or out-of-pocket expense incurred by each
Lender in connection with any such payment, as set forth in Section 2.09 to the
extent applicable. Company shall not have any right to rescind any termination
or reduction. Once reduced or terminated, the Commitment may not be increased
or reinstated.
2.07. Non-Receipt of Funds by Administrative Lender. Unless
Administrative Lender shall have been notified by a Lender prior to the date of
any proposed Advance (which notice shall be effective upon receipt) that such
Lender does not intend to make the proceeds of such Advance available to
Administrative Lender, Administrative Lender may assume that such Lender has
made such proceeds available to Administrative Lender, on such date, and
Administrative Lender may in reliance upon such assumption (but shall not be
required to) make available to Company a corresponding amount. If such
corresponding amount is not in fact made available to Administrative Lender by
such Lender, Company and such Lender severally agree to repay to Administrative
Lender forthwith on demand such corresponding amount together with interest
thereon in respect of each day during the period commencing on the date such
amount was available to Company and ending on (but excluding) the date
Administrative Lender receives such amount from Lender or Company at a per
annum rate equal to the lesser of (a) the Highest Lawful Rate and (b) (i) in
the case of such Lender, the Federal Funds Effective Rate and (ii) in the case
of Company, the interest rate applicable to such Advance; provided, however, no
provision of this Agreement or any other Loan Document shall require Company to
pay interest on such amount except as provided in this Section 2.07. If such
Lender
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shall repay to Administrative Lender, such corresponding amount, such amount
shall constitute such Lender's Advance for purposes of this Agreement. No
Lender shall be liable for any other Lender's failure to fund an Advance
hereunder.
2.08. Payment of Principal of Advances. Company agrees to pay the
principal amount of its respective Advances in the currency borrowed to
Administrative Lender for the account of Lenders as follows:
(a) Base Rate Advances. The unpaid principal amount of the Base
Rate Advances shall be due and payable on the Maturity Date.
(b) LIBOR Advances and Eurocurrency Advances. The principal
amount of each LIBOR Advance and each Eurocurrency Advance hereunder shall be
due and payable on its Payment Date, which (subject to the other provisions of
this Agreement) principal payment may be made by means of a Refinancing
Advance.
(c) Commitment Reduction. On the date of any reduction of the
Commitment pursuant to Section 2.06, including the Maturity Date, the aggregate
amount of the Advances outstanding on such date of reduction in excess of the
Commitment as reduced minus all outstanding Reimbursement Obligations shall be
due and payable, which principal payment may not be made by means of
Refinancing Advances.
(d) Maturity Date. To the extent not otherwise required to be
paid earlier as provided herein, the principal amount of the Advances, all
accrued interest and fees thereon, and all other Obligations related thereto,
shall be due and payable in full on the Maturity Date.
2.09. Reimbursement. Whenever any Lender shall sustain or incur any
losses or reasonable out-of-pocket expenses in connection with (a) failure by
Company to borrow any LIBOR Advance or Eurocurrency Advance after having given
notice of its intention to borrow in accordance with Section 2.02 (whether by
reason of Company's election not to proceed or the non-fulfillment of any of
the conditions set forth in Article III), or (b) any payment or prepayment for
any reason of any LIBOR Advance or Eurocurrency Advance in whole or in part
(including a prepayment pursuant to Sections 2.05(c) and 8.03(b)), Company
shall pay to any such Lender, upon its demand, subject to Section 10.09, an
amount sufficient to compensate such Lender for all such losses and
out-of-pocket expenses, including, but not limited to, any loss or reasonable
expense sustained or incurred or to be sustained or incurred in liquidating or
employing deposits from third parties acquired to effect or maintain such LIBOR
Advance or Eurocurrency Advance or any part thereof as a LIBOR Advance or
Eurocurrency Advance. Such loss shall equal an amount equal to the excess, if
any, as reasonably determined by each Lender of (i) its cost of obtaining the
funds for the LIBOR Advance or Eurocurrency Advance being paid, prepaid or
converted pursuant to Article VIII or not borrowed (based on the LIBOR Basis,
Eurocurrency Basis applicable thereto) for the period from the date of such
payment, prepayment or conversion or failure to borrow to the last day of the
Interest Period for such LIBOR Advance or Eurocurrency Advance (or, in the case
of a failure to borrow, the Interest
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Period for such LIBOR Advance or Eurocurrency Advance which would have
commenced on the date of such failure to borrow) over (ii) the amount of
interest (as reasonably determined by such Lender) that could be realized by
such Lender in reemploying during such period the funds so paid, prepaid or
converted or not borrowed in an instrument or investment of substantially
similar yield to such LIBOR Advance or Eurocurrency Advance. Such Lender's
good faith determination of the amount of such losses or out-of-pocket
expenses, calculated in its usual fashion, absent demonstrable error, shall be
binding and conclusive. Such Lender shall provide a certificate setting forth
the amount to be paid to it by Company hereunder and calculations therefor.
Company's obligation pursuant to this Section 2.09 is not dependent upon any
Lender's actual reinvestment or method of reinvestment of the prepaid LIBOR
Advance or Eurocurrency Advance.
2.10. Manner of Payment.
(a) Each payment (including prepayments) by Company of the
principal of or interest on the Advances, fees, and any other amount owed under
this Agreement or any other Loan Document shall be made with respect to
principal, interest, fees, and other amounts due to Administrative Lender or
any Lenders, not later than 12:00 noon on the date specified for payment under
this Agreement to Administrative Lender at its address specified in Section
10.01 or Schedule 1.01(d), in the currency borrowed constituting immediately
available funds.
(b) If any payment under this Agreement or any other Loan Document
shall be specified to be made upon a day which is not a Business Day, it shall
be made on the next succeeding day which is a Business Day, unless such
Business Day falls in another calendar month, in which case payment shall be
made on the preceding Business Day. Any extension of time shall in such case
be included in computing interest and fees, if any, in connection with such
payment.
(c) Company shall pay (i) in respect of the Advances made to
Company, principal, interest, and fees and (ii) all other fees and amounts due
under the Loan Documents without deduction for set-off or counterclaim or any
deduction whatsoever.
(d) If some but less than all amounts due from Company are
received by Administrative Lender, Administrative Lender shall apply such
amounts in the following order of priority: (i) to the payment of
Administrative Lender's expenses incurred on behalf of Lenders then due and
payable, if any; (ii) to the payment of all other fees then due and payable;
(iii) to the payment of interest then due and payable on the Advances; (iv) to
the payment of all other amounts not otherwise referred to in this clause (d)
then due and payable under the Loan Documents; and (v) to the payment of
principal then due and payable on the Advances owed to each Lender in
accordance with its Sharing Ratio.
2.11. Lending Offices. Each Lender's initial Lending Office for
Base Rate Advances, LIBOR Advances and Eurocurrency Advances, as appropriate,
is set forth opposite its name in Schedule 2.11. Each Lender shall have the
right at any time and from time to time to designate
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a different office of itself or of any Affiliate as such Lender's Lending
Office for Base Rate Advances, LIBOR Advances and Eurocurrency Advances, as
appropriate, and to transfer any outstanding LIBOR Advance, Base Advance or
Eurocurrency Advance to such Lending Office. No such designation or transfer
shall result in any liability on the part of Company for increased costs or
expenses resulting solely from such designation or transfer (except any such
transfer which is made by a Lender pursuant to Section 8.02 or 8.03, or
otherwise for the purpose of complying with Applicable Law). Increased costs
for expenses resulting from a change in Law occurring subsequent to any such
designation or transfer shall be deemed not to result solely from such
designation or transfer.
2.12. Booking Advances. Any Lender may make, carry or transfer
Advances at, to or for the account of any of its branch offices or the office
of any Affiliate.
2.13. Sharing of Payments. Any Lender obtaining a payment (whether
voluntary or involuntary, due to the exercise of any right of set-off, or
otherwise) on account of its Advances in excess of its Specified Percentage of
all payments made by Company with respect to Advances shall purchase from each
other Lender such participation in the Advances made by such other Lender as
shall be necessary to cause such purchasing Lender to share the excess payment
pro rata according to Specified Percentages with each other Lender; provided,
however, that if all or any portion of such excess payment is thereafter
recovered from such purchasing Lender, the purchase shall be rescinded and the
purchase price restored to the extent of such recovery, but without interest.
Company agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section 2.13, to the fullest extent permitted by Law,
may exercise all its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Lender were the direct
creditor of Company in the amount of such participation.
2.14. Calculation of LIBOR Rate and Eurocurrency Rate. The
provisions of this Agreement relating to calculation of the LIBOR Rate and
Eurocurrency Rate are included only for the purpose of determining the rate of
interest or other amounts to be paid hereunder that are based upon such rate,
it being understood that each Lender shall be entitled to fund and maintain its
funding of all or any part of a LIBOR Advance and Eurocurrency Advance as it
sees fit.
2.15. Taxes.
(a) If each Lender has complied with the provisions of Section
2.15(b), all payments by Company for the account of such Lender of principal
of, and interest on, the Advances and all other amounts payable hereunder shall
be made free and clear of and without deduction for any present or future
income, excise, stamp, or franchise taxes and other taxes, fees, duties,
withholdings, or other charges of any nature whatsoever imposed by any taxing
authority, but excluding franchise taxes and taxes imposed on or measured by
any Lender's net income or receipts (such non-excluded items being called
"Non-Excluded Taxes"). In the event that any
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withholding or deduction from any payment to be made by Company hereunder is
required in respect of any Non-Excluded Taxes pursuant to any Applicable Law,
then Company will:
(i) pay directly to the relevant authority the full
amount required to be so withheld or deducted;
(ii) promptly forward to Administrative Lender an official
receipt or other documentation satisfactory to Administrative Lender
evidencing such payment; and
(iii) pay to Administrative Lender for the account of
Lenders such additional amount or amounts as is necessary to ensure
that the net amount actually received by each Lender will equal the
full amount such Lender would have received had no such withholding or
deduction been required.
Moreover, if any Non-Excluded Taxes are directly asserted against
Administrative Lender or any Lender with respect to any payment received by
Administrative Lender or such Lender hereunder, Administrative Lender or such
Lender may pay such Non-Excluded Taxes and Company will promptly pay such
additional amounts (including any penalties, interest or expenses) as is
necessary in order that the net amount received by such Person after the
payment of such Non-Excluded Taxes (including any Non-Excluded Taxes on such
additional amount) shall equal the amount such Person would have received had
no such Non-Excluded Taxes been asserted.
If any Company fails to pay any Non-Excluded Taxes when due to the
appropriate taxing authority or fails to remit to Administrative Lender, for
the account of the respective Lenders, the required receipts or other required
documentary evidence, Company shall indemnify Administrative Lender and,
without duplication, Lenders for any incremental Non-Excluded Taxes, interest
or penalties that may become payable by Administrative Lender or, without
duplication, any Lender as a result of any such failure. For purposes of this
Section 2.15, a distribution hereunder by Administrative Lender or, without
duplication, any Lender to or for the account of any Lender shall be deemed a
payment by Company.
(b) Each Lender shall deliver to each of Company and
Administrative Lender either (i) a letter or other written certification in
duplicate stating that it is organized under the Laws of the United States of
America or a state thereof and containing its employer identification number,
address of its place of business in the United States of America and the
signature and official title of the signing partner or corporate officer (a
"Letter of Domestic Organization") or (ii) if it is not a "United States
person" within the meaning of Section 7701(a)(30) of the Code (a "Foreign
Lender") (x) two properly completed and executed copies of United States
Internal Revenue Service Form 4224 or Form 1001 or other successor applicable
form, certificate or document prescribed by the Internal Revenue Service
certifying as to such Foreign Lender's entitlement to an exemption from or
reduced rate of United States withholding under an applicable statute or tax
treaty with respect to payments to be made to such Foreign Lender hereunder (a
"Certificate of Exemption") or (y) a letter (in duplicate) from such Foreign
Lender
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stating that it is not entitled to any such exemption or reduced rate (a
"Letter of Non-Exemption"). Each initial Lender shall provide such a Letter of
Domestic Organization or a Certificate of Exemption or a Letter of
Non-Exemption on or before the Effective Date; each Lender that becomes a
Lender after the Effective Date shall provide a Letter of Domestic
Organization, a Certificate of Exemption or a Letter of Non-Exemption on the
date such Lender becomes a Lender and each Lender shall provide additional
Letters of Domestic Organization, Certificates of Exemption or Letters of Non-
Exemption from time to time thereafter if requested by Company or
Administrative Lender or required because, as a result of a Law or a change in
Law, or a change in circumstances, the expiration of a previously delivered
letter or certificate, or otherwise, a previously delivered letter or
certificate becomes incomplete, incorrect or ineffective in any material
respect; provided, however, that each initial Lender (other than ABN AMRO Bank
N.V. Houston Agency and Commerzbank Aktiengesellschaft, Atlanta Agency)
executing this Agreement certifies that it is organized under the Laws of the
United States of America or a state thereof. Unless Company and Administrative
Lender have received from each Lender a Certificate of Exemption or Letter of
Domestic Organization when and as required pursuant to the preceding sentence,
the accuracy of which shall be reasonably satisfactory to Company and
Administrative Lender, Company and Administrative Lender shall be entitled to
withhold taxes from all payments to such Lender at the statutory rate
applicable to amounts to be paid hereunder to such Lender. If Company and
Administrative Lender have received from any Foreign Lender a Certificate of
Exemption when and as required by this Section 2.15(b), the accuracy of which
shall be reasonably satisfactory to Company and Administrative Lender,
certifying as to such Foreign Lender's entitlement to a reduced rate of
withholding tax, Company and Administrative Lender shall withhold taxes from
all payments to such Foreign Lender at the rate specified in such certificate.
Any reference to any Lender in this Section 2.15 shall be deemed to refer to
and include Issuing Bank.
2.16. Letters of Credit.
(a) The Letter of Credit Facility. Company may request Issuing
Bank, on the terms and conditions hereinafter set forth, to issue, and Issuing
Bank shall, if so requested, issue, Letters of Credit for the account of
Company from time to time on any Business Day from the Effective Date until the
Maturity Date in an aggregate maximum amount (assuming compliance with all
conditions to drawing) not to exceed at any time outstanding (A) the Commitment
minus (B) the aggregate principal amount of Advances then outstanding (the
"Letter of Credit Facility"). Letters of Credit may be issued in Dollars,
Eurocurrencies, or, subject to the provisions hereof, other currencies which
are determined by Issuing Bank to be available. No Letter of Credit
denominated in Dollars or Eurocurrencies shall have an expiry date (including
all rights of renewal) later than the Maturity Date. No Letter of Credit
denominated in a currency other than Dollars or Eurocurrencies shall have an
expiry date (including all rights of renewal) later than a date reasonably
determined by Issuing Bank; provided, however, in no event shall such expiry
date (including all rights of renewal) be later than the Maturity Date.
Immediately upon the issuance of each Letter of Credit (or upon satisfaction of
the conditions set forth in Section 3.01 and 3.02, with respect to the Existing
Letters of Credit), Issuing Bank shall be deemed to have sold and transferred
to each Lender, and each Lender shall be deemed
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to have purchased and received from Issuing Bank, in each case irrevocably and
without any further action by any party, an undivided interest and
participation in such Letter of Credit, each drawing thereunder and the
obligations of Company under this Agreement in respect thereof in an amount
equal to the product of such Lender's Specified Percentage times the maximum
amount in Dollars (if such Letter of Credit is denominated in a currency other
than Dollars, the Dollar equivalent of such currency) available to be drawn
under such Letter of Credit (assuming compliance with all conditions to
drawing). Subject to the limits referred to above, Company may request the
issuance of Letters of Credit under this Section 2.16(a), repay any Advances
resulting from drawings thereunder pursuant to Section 2.16(c) and request the
issuance of additional Letters of Credit under this Section 2.16(a). Issuing
Bank and Lenders acknowledge that all conditions precedent to the issuance of
the Existing Letters of Credit have been satisfied.
(b) Request for Issuance. Each Letter of Credit shall be issued
upon notice, given not later than 11:00 a.m. on the Business Day prior to the
date of the proposed issuance of such Letter of Credit, by Company to Issuing
Bank, which shall give to Administrative Lender and each Lender prompt notice
thereof by telex, telecopier or cable. Each Letter of Credit shall be issued
upon notice given in accordance with the terms of any separate application and
agreement between Company and Issuing Bank in form and substance reasonably
satisfactory to Company and Issuing Bank providing for the issuance of Letters
of Credit pursuant to this Agreement and containing terms and conditions not
inconsistent with this Agreement (a "Letter of Credit Agreement"), provided
that if any such terms and conditions are inconsistent with this Agreement,
this Agreement shall control. Each such request for issuance of a Letter of
Credit (a "Request for Issuance") shall be by telex or telecopier, and shall be
in substantially the form of Exhibit E. If the Letter of Credit requested is
to be denominated in a currency other than Dollars or Eurocurrencies, Issuing
Bank shall notify Company within twenty-four hours of receipt of the Request
for Issuance of the availability of such currency and the expiry date available
for Letters of Credit denominated in such currency. If the requested terms of
such Letter of Credit are acceptable to Issuing Bank in its reasonable
discretion, Issuing Bank will, upon fulfillment of the applicable conditions
set forth in Article III, make such Letter of Credit available to Company at
Company's office referred to in Section 10.01 or as otherwise agreed with
Company in connection with such issuance on the proper issuance date.
(c) Drawing and Reimbursement. Unless funds are otherwise made
available by Company to Issuing Bank, the payment by Issuing Bank of a draft
drawn under any Letter of Credit shall constitute for all purposes of this
Agreement the making by Issuing Bank of a Dollar Advance, which shall bear
interest at the Base Rate in the amount of such draft (but without any
requirement for compliance with the conditions set forth in Article III).
Issuing Bank shall notify Company within one Business Day of its receipt of a
draw request with respect to a Letter of Credit issued in other than Dollars.
Company, within one Business Day of receipt of such notice from Issuing Bank,
shall notify Issuing Bank whether Company intends to make funds available to
Administrative Lender in such currency. Upon payment by Issuing Bank of a
draft drawn under a Letter of Credit, Issuing Bank shall immediately notify
Company of such drawing. In the event that such Dollar Advance is not
reimbursed by Company by 11:00 a.m. on the first Business Day after such
drawing, Issuing Bank shall promptly notify Administrative
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Lender and each Lender. Each Lender shall, on the first Business Day following
such notification, make a Dollar Advance, which shall bear interest at the Base
Rate, and shall be used to repay the applicable portion of Issuing Bank's
Advance with respect to such Letter of Credit, in an amount equal to the amount
of its participation in such drawing for application to reimburse Issuing Bank
(but without any requirement for compliance with the applicable conditions set
forth in Article III) and shall make available to Administrative Lender for the
account of Issuing Bank, by deposit at Administrative Lender's office, in same
day funds, the amount of such Dollar Advance. In the event that any Lender
fails to make available to Administrative Lender for the account of Issuing
Bank the amount of such Dollar Advance, Issuing Bank shall be entitled to
recover such amount on demand from such Lender together with interest thereon
at a rate per annum equal to the lesser of (i) the Highest Lawful Rate and (ii)
the Federal Funds Effective Rate.
(d) Increased Costs. If any change in any Law or in the
interpretation thereof by any Tribunal charged with the administration thereof
shall either (i) impose, modify or deem applicable any reserve, special deposit
or similar requirement against letters of credit or guarantees issued by, or
assets held by, or deposits in or for the account of, Issuing Bank or any
Lender or (ii) impose on Issuing Bank or any Lender any other condition
regarding this Agreement, Issuing Bank, such Lender or any Letter of Credit,
and the result of any event referred to in the preceding clause (i) or (ii)
shall be to increase the cost to Issuing Bank of issuing or maintaining any
Letter of Credit or to any Lender of purchasing any participation therein or
making any Dollar Advance pursuant to Section 2.16(c), then, upon written
demand by Issuing Bank or such Lender, Company shall, subject to Section 10.09,
pay to Issuing Bank or such Lender, from time to time as specified by Issuing
Bank or such Lender in the below-mentioned certificate, additional amounts that
shall be sufficient to reasonably compensate Issuing Bank or such Lender for
such increased cost. A certificate as to the amount of such increased cost,
submitted to Company by Issuing Bank or such Lender, shall include in
reasonable detail the basis for the demand for additional compensation and
shall be conclusive and binding for all purposes, absent demonstrable error.
The obligations of Company under this Section 2.16(d) shall survive termination
of this Agreement. Issuing Bank or any Lender claiming any additional
compensation under this Section 2.16(d) shall use reasonable efforts
(consistent with legal and regulatory restrictions) to reduce or eliminate any
such additional compensation which may thereafter accrue and which efforts
would not, in the sole discretion of Issuing Bank or such Lender, be otherwise
disadvantageous.
(e) Indemnity. In addition to amounts payable as elsewhere
provided in this Article II, Company shall protect, indemnify, pay and save
Issuing Bank and each Lender harmless from and against any and all claims,
demands, liabilities, damages, losses, costs, charges and expenses (including
reasonable attorneys' fees) which Issuing Bank or any Lender may incur or be
subject to as a consequence, direct or indirect, of (i) the issuance of any
Letter of Credit other than, as a result of its willful misconduct or gross
negligence, as determined by a court of competent jurisdiction, or (ii) the
failure of Issuing Bank to honor a drawing under a Letter of Credit as a result
of any act or omission, whether rightful or wrongful, of any
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present or future de jure or de facto Tribunal (all such acts or omissions
herein called "Government Acts").
(f) Assumption of Risk. As among Company, the other Loan Parties,
Issuing Bank and Lenders, Company and the other Loan Parties assume all risks
of the acts and omissions of, or misuse of the Letters of Credit by, the
respective beneficiaries of the Letters of Credit. In furtherance and not in
limitation of the foregoing, subject to the provisions of the Request for
Issuance, neither Issuing Bank nor any Lender or any of their respective
officers or directors shall be liable or responsible: (i) for the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for and issuance of
the Letters of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) for failure of the beneficiary of
a Letter of Credit to comply duly with conditions required in order to draw
upon such Letter of Credit; (iv) for errors, omissions, interruptions or delays
in transmission or delivery of any messages, by mail, cable, telegraph, telex
or otherwise, whether or not they be in cipher; (v) for errors in
interpretation of technical terms; (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any Letter of Credit or of the proceeds thereof; (vii) for the
misapplication by the beneficiary of a Letter of Credit of the proceeds of any
drawing under such Letter of Credit; and (viii) for any consequences arising
from causes beyond the control of Issuing Bank or any Lender, including,
without limitation, any Government Acts. In furtherance and extension and not
in limitation of the specific provisions hereinabove set forth, any action
taken or omitted by Issuing Bank or any Lender under or in connection with the
Letters of Credit or any related certificates, shall not put Issuing Bank or
any Lender under any resulting liability to any Loan Party or relieve any Loan
Party of any of its obligations hereunder to any such Person unless such
liability to a Loan Party is proximately caused by the gross negligence of
Issuing Bank or any Lender, as determined by a court of competent jurisdiction,
and in such case, any resulting liability shall be solely that of the party so
adjudicated to have legal responsibility therefor.
(g) Compensation for Letters of Credit.
(i) Letter of Credit Fees. Subject to Section 10.09,
Company shall pay, in respect of each Letter of Credit issued for its
account, to Administrative Lender for the account of each Lender a
letter of credit fee (which shall be payable quarterly in arrears on
each Quarterly Date and on the Maturity Date) on the average daily
amount available for drawing under all outstanding Letters of Credit
(calculated in respect of Letters of Credit denominated in a currency
other than Dollars, by using the quoted spot rate to exchange Dollars
for such currency in effect on the last day of each Quarterly Date as
the rate in effect during the calendar quarter ending on such
Quarterly Date) (including the Existing Letters of Credit), computed,
subject to Section 10.09, on the basis of a year of 365 or 366 days,
as appropriate, for the actual number of days elapsed, at a rate per
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annum equal to the LIBOR Margin percentages set forth in the
definition of Applicable Margin in Section 1.01.
(ii) Adjustment of Letter of Credit Fee. The letter of
credit fee payable in respect of the Letters of Credit shall be
subject to reduction or increase, as applicable and as set forth in
the table contained in the definition of Applicable Margin in Section
1.01 according to the performance of Company as tested by the
Consolidated Funded Debt to Consolidated Excess Cash Flow Ratio. Any
such increase or reduction in such fee shall be effective as of the
day following the date of receipt of the financial statements required
pursuant to Section 5.01(a) or (b), as appropriate. If such financial
statements are not received by the day following the date required,
the fee payable in respect of the Letters of Credit shall be
determined as if the Consolidated Funded Debt to Consolidated Excess
Cash Flow Ratio is greater than or equal to 2.00 to 1 until such time
as such financial statements are received. Notwithstanding anything
herein to the contrary, the letter of credit fee payable in respect of
the Letters of Credit from and including the Agreement Date to but not
including the day following receipt of Company's March 31, 1996,
financial statements shall be 0.55%.
(iii) Issuance Fee. Subject to Section 10.09, Company
shall pay, in respect of each Letter of Credit issued for its account,
to Administrative Lender for the sole account of Issuing Bank an
issuance fee (which fee shall be payable quarterly in arrears on each
Quarterly Date and on the Maturity Date) equal to 0.125% per annum on
the average daily amount available for drawing under all outstanding
Letters of Credit (including the Existing Letters of Credit)
(calculated in respect of Letters of Credit denominated in a currency
other than Dollars, by using the quoted spot rate to exchange Dollars
for such currency in effect on the last day of each Quarterly Date as
the rate in effect during the calendar quarter ending on such
Quarterly Date), and computed, subject to Section 10.09, on the basis
of a year of 365 or 366 days, as appropriate, for the actual number of
days elapsed.
ARTICLE III. CONDITIONS PRECEDENT
3.01. Conditions Precedent to the Initial Advance and the Letters of
Credit. The obligation of each Lender to make the initial Advance and the
obligation of Issuing Bank to issue the initial Letter of Credit (and the
obligation of each Lender to participate in the Existing Letters of Credit) are
subject to (i) receipt by Administrative Lender of each of the following, in
form and substance satisfactory to each Lender, with a copy (except for this
Agreement and the Notes) for each Lender and (ii) satisfaction of the following
conditions, except as otherwise waived by each Lender:
(a) A certificate of the Secretary or an Assistant Secretary of
Company certifying, inter alia, (i) true and correct copies of (A) the
Certificate of Incorporation (certified by the Secretary of State of the
jurisdiction in which Company is incorporated) and Bylaws of Company
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<PAGE> 45
and (B) resolutions adopted by the Board of Directors or Executive Committee
(as appropriate and as may be required by the corporate governance documents of
Company) of Company authorizing Company to borrow and effect other transactions
hereunder, (ii) the incumbency and specimen signatures of the Persons executing
any documents on behalf of Company, and (iii) a certificate of existence and a
good standing certificate or similar evidence of qualification to do business
(or their equivalents) for Company from the Secretary of State of Delaware and
from the States of Texas and California, each to be dated a recent date prior
to the Agreement Date;
(b) A certificate of the Secretary or an Assistant Secretary of
each Guarantor (or of each general partner of each Guarantor which is a
partnership) certifying, inter alia, (i) true and correct copies of (A) the
Certificate of Incorporation or Limited Partnership (certified by the Secretary
of State of the jurisdiction in which such Guarantor is organized) and Bylaws
or limited partnership agreement, as applicable, of such Guarantor and (B)
resolutions adopted by the Board of Directors or Executive Committee (as
appropriate and as may be required by the corporate governance documents of
such Guarantor) of such Guarantor (or of each general partner of each Guarantor
which is a partnership) authorizing such Guarantor to guaranty the Obligations
and effect other transactions hereunder, (ii) the incumbency and specimen
signatures of the Persons executing any documents on behalf of such Guarantor,
and (iii) a certificate of existence and a good standing certificate or similar
evidence of qualification to do business (or their equivalents) for each
Guarantor from the Secretary of State of the jurisdiction in which such
Guarantor is organized and from other jurisdictions required by Administrative
Lender to be delivered, each to be dated a recent date prior to the Agreement
Date;
(c) duly executed Notes, payable to the order of each Lender and
in an amount for each Lender equal to its Specified Percentage;
(d) this Agreement, duly executed by Loan Parties, together with
all exhibits and schedules which shall be true, complete and correct in all
material respects as of the Effective Date;
(e) opinions of counsel to each Loan Party addressed to
Administrative Lender and Lenders and in form and substance satisfactory to
Administrative Lender, dated the Agreement Date, and covering such matters
incident to the transactions contemplated hereby as Administrative Lender or
Special Counsel may reasonably request, together with instruction letters
authorizing the addressees to rely on such opinions;
(f) reimbursement to Administrative Lender for Special Counsel's
reasonable fees and expenses rendered as of the date set forth in the invoice
of Special Counsel;
(g) the participation fee and other fees as required pursuant to
Sections 2.04(b) and (c), respectively;
(h) no Material Adverse Effect shall have occurred since December
31, 1995; and
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<PAGE> 46
(i) payment in full of the existing Debt (excluding the Existing
Letters of Credit which shall become Obligations under this Agreement) of
Company to the lenders party to the Existing Agreement, outstanding on the
Agreement Date.
3.02. Conditions Precedent to All Advances and Letters of Credit.
The obligation of each Lender to make each Advance hereunder (including the
initial Advance), the obligation of Issuing Bank to issue each Letter of Credit
(including the initial Letter of Credit) and the obligation of each Lender to
participate in the Existing Letters of Credit is subject to fulfillment of the
following conditions immediately prior to or contemporaneously with each such
Advance or issuance:
(a) With respect to Advances (other than Refinancing Advances and
deemed Advances in respect of Letters of Credit pursuant to Section 2.16(c))
and each issuance of a Letter of Credit, all of the representations and
warranties of each Loan Party under this Agreement are deemed made at and as of
the time of such Advance or issuance unless modified as permitted herein
(unless stated to relate solely to an earlier date, in which case such
representations and warranties shall be true and correct in all material
respects as to such earlier date), shall be true and correct at such time in
all material respects, both before and after giving effect to the application
of the proceeds of the Advance or issuance;
(b) The incumbency of the Authorized Signatories shall be as
stated in the certificate of incumbency in Company's certificate delivered
pursuant to Section 3.01(a) or as subsequently modified and reflected in a
certificate of incumbency delivered to Administrative Lender. Lenders may,
without waiving this condition, consider it fulfilled and a representation by
Company made to such effect if no written notice to the contrary, dated on or
before the date of such Advance and deemed Advance pursuant to Section 2.16(c)
or issuance, is received by Administrative Lender from Company prior to the
making of such Advance or issuance;
(c) (i) With respect to Advances (other than Refinancing Advances
and deemed Advances pursuant to Section 2.16(c)) and the issuance of each
Letter of Credit, there shall exist no Default hereunder, (ii) with respect to
any Refinancing Advance, there shall exist no Event of Default hereunder, and,
(iii) with respect to each Advance (other than a Refinancing Advance or a
deemed Advance pursuant to Section 2.16(c)) and the issuance of each Letter of
Credit, Administrative Lender shall have received written or telephonic
certification thereof by an Authorized Signatory (which certification, if
telephonic, shall be followed promptly by written certification);
(d) The aggregate Advances and amount available for draws under
Letters of Credit, after giving effect to such proposed Advance or Letter of
Credit, shall not exceed the Commitment;
(e) No Law shall prohibit, and no order, judgment or decree of any
Tribunal shall enjoin, prohibit or restrain Lenders from making the requested
Advance or from making the
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<PAGE> 47
deemed Advance pursuant to Section 2.16(c) or Issuing Bank from issuing the
Letter of Credit requested to be issued; and
(f) Administrative Lender shall have received all such other
certificates, reports, statements, or other documents as Administrative Lender,
Issuing Bank, or any Lender may reasonably request.
Each request by Company to Administrative Lender or Issuing Bank, as
appropriate, for an Advance (including a Refinancing Advance) or the issuance
of a Letter of Credit shall constitute a representation and warranty by Company
as of the date of the making of such Advance or the issuance of such Letter of
Credit that all the conditions contained in this Section 3.02 have been
satisfied.
3.03. Conditions Precedent to New Eurocurrency. The obligation of
each Lender to make an Advance in a currency not listed on Schedule 3.03 (as
amended) is subject to the conditions set forth in Sections 3.01 and 3.02 and
the fulfillment of the following conditions not less than three Business Days,
prior to any request for an Advance in such currency:
(a) Receipt by Administrative Lender of a Eurocurrency Election
Notice;
(b) Receipt by Administrative Lender of written confirmation from
each Lender that such Lender can fund Advances in such currency; and
(c) Delivery to Company of notice that such currency will be,
subject to the other conditions of this Agreement, available for the making of
Advances.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF LOAN PARTIES
Each Loan Party represents and warrants as to itself that:
4.01. Organization, Qualification, Authorization, Etc. (a) Each
Loan Party (i) is a corporation or limited partnership duly organized, validly
existing and in good standing under the Laws of the jurisdiction of its
organization, (ii) is qualified to do business and is in good standing in each
jurisdiction in which the failure to be so qualified or be in good standing
(when considered alone or together with the failure of any other one or more of
them to be so qualified or be in good standing) would reasonably be expected to
have a Material Adverse Effect and (iii) has all requisite power and authority
(corporate and, to the knowledge of each Loan Party, otherwise) to own, lease,
operate and maintain its assets and to carry on its business as now conducted.
The jurisdiction under which each Loan Party is incorporated is listed on
Schedule 4.01.
(b) The execution, delivery and performance by each Loan Party of
this Agreement, the Notes and the other Loan Documents to which it is a party
have been duly authorized by all
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necessary corporate or other required action on the part of such Loan Party.
Each of this Agreement and the other Loan Documents to which any Loan Party is
a party constitutes, and the Notes (when executed and delivered as contemplated
hereby) will constitute, legal, valid and binding obligations of such Loan
Party, enforceable in accordance with their respective terms, except as
enforcement thereof may be limited by Debtor Relief Laws and general principles
of equity (whether applied in a proceeding at law or in equity).
4.02. Full Disclosure. (a) Neither this Agreement, the Notes, the
other Loan Documents, the documents and statements referred to in Section 4.04,
nor any other document delivered by or on behalf of any Loan Party contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained herein or therein not misleading.
Company has furnished certain financial and operational forecasts to Lenders,
and with respect to such forecasts, this representation is not intended to
warrant the ability of Company to achieve such forecasts.
(b) There is no fact peculiar to any Loan Party which has a
Material Adverse Effect which has not been set forth in the Loan Documents or
in the other documents, certificates and statements furnished to Lenders by or
on behalf of Loan Parties at the direction of such Loan Party prior to the date
hereof in connection with the transactions contemplated hereby.
4.03. Changes, Etc. Neither the business nor the properties of any
Loan Party is presently affected by any fire, explosion, accident, labor
controversy, strike, lockout or other dispute, embargo, act of God or act of a
public enemy or other similar event, condition or casualty which would
reasonably be expected to have a Material Adverse Effect, or if any such
existing event, condition or casualty were to continue for more than thirty
additional days (unless in the reasonable opinion of such Loan Party such event
or condition is not likely to continue for such period) would reasonably be
expected to have a Material Adverse Effect.
4.04. Financial Statements, Etc. Company has furnished Lenders with
its annual audited consolidated financial statements as at December 31, 1995.
Such financial statements (including any related schedules and/or notes) are
true, correct and complete in all material respects (subject, as to interim
statements, to changes resulting from audits and year-end adjustments), and
have been prepared in accordance with GAAP followed throughout the periods
involved. The balance sheets fairly present the consolidated condition of
Company and its consolidated Subsidiaries as at the dates thereof, and the
statements of income and statements of cash flow fairly present the
consolidated results of the operations of Company and its consolidated
Subsidiaries for the periods indicated. Since December 31, 1995, no events have
occurred which, individually or in the aggregate, would reasonably be expected
to have a Material Adverse Effect, except as disclosed in this Schedule 4.04 or
as otherwise disclosed to Lenders in writing.
4.05. Tax Returns and Payments. Each Loan Party has filed or has
caused to be filed all United States federal income tax returns and all other
tax returns ("Other Returns") which are required by Law to be filed by it (or
obtained extensions with respect thereto) and has paid
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all Taxes levied upon it or any of its properties, assets, income or franchises
which are due and payable; provided, however, that, if Company is in compliance
with Section 5.11, Loan Parties shall not be required to pay any Taxes or to
file any other Returns if (a) such Other Returns and Taxes do not involve an
obligation to pay Taxes of $5,000,000 or more, or (b) regardless of the amount
involved, the Taxes are being contested in good faith by appropriate
proceedings diligently conducted for which such reserves or other appropriate
provisions, if any, as shall be required by GAAP, have been made. The
consolidated federal income tax returns of Company and its consolidated
Subsidiaries have been examined and reported upon by the Internal Revenue
Service for all fiscal years to and including the fiscal year ended December
31, 1985.
4.06. Defaults Respecting Debt. No payment default under the
provisions of any instrument evidencing any Debt (other than with respect to
trade payables the payment of which is being contested in good faith by
appropriate proceedings diligently conducted for which such reserves or other
appropriate provisions, if any, as shall be required by GAAP, have been made)
or under any agreement relating thereto and no other default under any such
instrument or agreement which is a default covered under Section 6.01(e) has
occurred which would reasonably be expected to have a Material Adverse Effect.
4.07. Property. Each Loan Party has good and defensible title to
its real property and good and defensible title to all of its other property
and assets which are materially necessary for the operation of its business,
including the property and assets reflected in the consolidated balance sheet
as at December 31, 1995 referred to in Section 4.04 (other than properties and
assets disposed of in the ordinary course of business or as otherwise permitted
pursuant to the terms of this Agreement), and shall not be subject to any Lien
prohibited by Section 5.11. All leases of real property, and all other
material leases necessary for the conduct of the respective businesses of Loan
Parties are valid and subsisting and are in full force and effect.
4.08. Conflicting Agreements or Restrictions. The execution and
delivery of this Agreement and the other Loan Documents and the consummation of
the transactions contemplated hereby or thereby will not (a) conflict with, or
result in a breach of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument relating to Debt of such Loan Party to which any Loan
Party is a party, (b) result in the creation of any Lien upon any of the
properties or assets of any Loan Party pursuant to any agreement or instrument
relating to Debt of such Loan Party to which any Loan Party is a party or (c)
result in any violation of (i) the provisions of the charter documents of any
Loan Party or (ii) any Law, which, in the case of clause (c)(ii), would
reasonably be expected to have a Material Adverse Effect; and, to the knowledge
of Loan Parties, no consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body is required
for the consummation by Loan Parties of the transactions contemplated by this
Agreement.
4.09. Litigation, Etc. Except as listed on Schedule 4.09, or as
otherwise disclosed to Lenders in writing, there is no action, suit,
investigation or proceeding pending or, to the knowledge of Loan Parties,
threatened against any Loan Party, or any property or rights of any
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<PAGE> 50
Loan Party, by or before any court, arbitrator or administrative or
governmental body which, having regard to (a) the size of the claim and (b)
whether there is a reasonable possibility of an adverse determination, would
reasonably be expected to have a Material Adverse Effect.
4.10. ERISA. Each Loan Party and each member of its ERISA Group is
in compliance in all material respects with the applicable provisions of ERISA,
the Code and other Law with respect to the Plan(s) and Benefit Arrangement(s),
(for purposes of this sentence, "compliance in all material respects" means
such failure(s) to comply with respect to one or more Plan(s), and/or Benefit
Arrangement(s), individually or in the aggregate, would not result in a
Material Adverse Effect.) All payments required to be made to or in respect of
a Plan, whether or not previously terminated, Multiemployer Plan or Benefit
Arrangement by a Loan Party or a member of its ERISA Group have been paid to
the extent that nonpayment would have a Material Adverse Effect. No Loan Party
or any member of its ERISA Group has any unpaid liability under Title IV of
ERISA (other than a liability to the PBGC for premiums under section 4007 of
ERISA), which would result in a Material Adverse Effect. There is no "amount
of unfunded benefit liabilities," as defined in section 4001(a)(18) of ERISA,
under any Plan and should complete or partial withdrawals occur with respect to
all Multiemployer Plans, the aggregate amount of such withdrawal
liability(ies), if any, would not reasonably be expected to have a Material
Adverse Effect. To the knowledge of Loan Parties after reasonable
investigation, no litigation, proceeding(s), investigation(s) or claim(s)
(other than a routine, undisputed claim for benefits) is or are pending or, to
the knowledge of Loan Parties, threatened concerning any Plan(s), Multiemployer
Plan(s) or Benefit Arrangement(s), which, individually or in the aggregate,
would result in a Material Adverse Effect. Except as disclosed in writing to
Administrative Lender prior to the Agreement Date, Loan Parties or a member of
their ERISA Group may terminate any and/or all currently existing Plan(s)
and/or Benefit Arrangement(s) so long as such termination would not reasonably
be expected to have a Material Adverse Effect. As of the Agreement Date, Loan
Parties and/or members of the ERISA Group do not currently maintain, sponsor or
contribute to any employee pension benefit plan, as defined in Section 3(2) of
ERISA, which is subject to Title IV of ERISA or Section 412 of the Code.
4.11. Use of Proceeds. Company will apply the proceeds of the
Advances for working capital and other general corporate purposes, including
loans to Subsidiaries of Company. The proceeds of the Advances and the Letters
of Credit will be used to benefit all Loan Parties, directly or indirectly.
4.12. Federal Reserve Regulations. No Loan Party is engaged,
principally or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying "margin stock" (within the
meaning of Regulation G, T, U or X). The making of the Advances, the issuance
of the Letters of Credit and the execution, delivery, and performance of this
Agreement, the Notes and the other Loan Documents, and the use of the proceeds
of the Advances and the Letters of Credit do not and will not constitute a
violation of Regulation G, T, U or X.
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4.13. Foreign Assets Control Regulations, Etc. Neither the issue of
the Notes by Company nor the use of the proceeds thereof or of any Letter of
Credit contemplated by this Agreement will violate the Export Administration
Act, the Foreign Corrupt Practices Act of 1977, the Foreign Assets Control
Regulations, or any other regulations of the Office of Foreign Asset Control,
United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as
amended).
4.14. Status Under Certain Federal Statutes. No Loan Party is (a)
an "investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended, (b) 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," as such terms are defined in the Public Utility Holding Company Act
of 1935, as amended, (c) a "public utility" as such term is defined in the
Federal Power Act, as amended, (d) a "rail carrier or a person controlled by or
affiliated with a rail carrier," within the meaning of Title 49, U.S.C., or (e)
a "carrier" to which 49 U.S.C. Section 11301(b)(1) is applicable.
4.15. Environmental Matters.
(a) Each Loan Party has all environmental Permits which are
necessary for the conduct of its business as presently conducted and for the
ownership, use, maintenance and operation of its assets (except where the
failure to have such environmental Permits would not, individually or in the
aggregate, reasonably be expected to have or have a Material Adverse Effect),
and is in compliance with all material terms of its environmental Permits; and,
as to any such environmental Permit that has expired or is about to expire or
is needed for the proposed conduct of its business, each Loan Party has timely
and properly applied for renewal or receipt of the same or, if such Permit is
not reasonably expected to be renewed, such nonrenewal would not reasonably be
expected to have a Material Adverse Effect.
(b) Without in any manner limiting any other representations and
warranties set forth in this Agreement:
(i) neither any Loan Party nor any real property or
facility currently owned, used, maintained or operated by any such
Person, nor any of the other assets of any such Person is in violation
of or is in noncompliance with, any applicable Environmental Laws in
connection with the ownership, use, maintenance or operation of such
real property, facility or other assets or the conduct of the business
related thereto, except for violations or noncompliances which,
individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect; and
(ii) without in any manner limiting the generality of
clause (b)(i):
(A) except for those of the activities described
below (including Releases or threatened Releases) which,
individually or in the aggregate, would
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not reasonably be expected to have a Material Adverse Effect,
no Hazardous Materials have been used, generated, manufactured,
stored or treated or disposed of, landfilled or in any other
way Released (and no Release is threatened), on, under or about
any property owned, used, maintained or operated by any Loan
Party or transported to or from any such property, and, to the
knowledge of each Loan Party, no Hazardous Materials have been
generated, manufactured, stored or treated or disposed of,
landfilled or in any other way Released (and no Release is
threatened), on, under, about or from any property adjacent to
any such property, except in accordance with Environmental Laws
(including, without limitation, the obtaining of necessary
Permits);
(B) except for liabilities or requirements which,
individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect, no Loan Party is,
as a result of the ownership, operation or condition of its
business or assets prior to or at the Agreement Date, subject
to any (1) contingent liability in connection with any Release
or threatened Release of any Hazardous Materials into the
environment whether on or off any property currently or
formerly owned, used, maintained or operated by any Loan Party
or (2) reclamation or remediation requirements under
Environmental Laws, or any reporting requirements related
thereto;
(C) no Loan Party has been named as a potentially
responsible party under, and, to the knowledge of any Loan
Party none of the property currently or formerly owned, used,
maintained or operated by any Loan Party has been nominated or
identified as a facility which is subject to an existing or
potential claim under, CERCLA or other Environmental Laws
(other than any violation or noncompliance which is the
subject of the cause of action styled Varian Associates, Inc.,
a Delaware Corporation, Plaintiff v. DSC Communications
Corporation, et al, pending before the United States District
Court for the Northern District of California), and no such
property is subject to any Lien arising under Environmental
Laws except for Liens which individually or in the aggregate
would not reasonably be expected to have a Material Adverse
Effect;
(D) each Loan Party has all environmental and
pollution control equipment necessary for compliance in all
respects with all applicable Environmental Laws (including,
without limitation, all applicable Permits) and operation of
the business of any Loan Party as it is presently conducted,
except where the failure to have all such equipment would not
reasonably be expected to have a Material Adverse Effect;
(E) except in accordance with Environmental Laws,
no Hazardous Materials have been incorporated by any Loan
Party into or, to the knowledge of any Loan Party, contained
in any of the personal property or improvements to the real
property owned, used, maintained or operated by any Loan Party
such that
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such Hazardous Materials would reasonably be expected to have
a Material Adverse Effect;
(F) none of the off-site locations where
Hazardous Materials from any of the current or former assets
of any Loan Party have been stored, treated, recycled,
disposed of or Released, has been, to the knowledge of any
Loan Party, nominated or identified as a facility which is
subject to an existing or potential claim under CERCLA or
other Environmental Laws such that such nomination or
indemnification would reasonably be expected to have a
Material Adverse Effect;
(G) no Loan Party has received any notices of any
violation of, noncompliance with, or remedial obligation
under, Environmental Laws, relating to the current or former
ownership, use, maintenance, operation of, or conduct of
business related to, any property or assets of such Loan
Party, or of any Release or threatened Release of Hazardous
Materials, except for violations, noncompliances, obligations,
Releases or threatened Releases which, individually or in the
aggregate, would not reasonably be expected to have a Material
Adverse Effect;
(H) except for writs, injunctions, decrees,
orders, judgments, lawsuits, claims, proceedings or
investigations which, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect,
there are no writs, injunctions, decrees, orders or judgments
outstanding, or lawsuits, claims, proceedings or
investigations pending or, to the knowledge of any Loan Party,
threatened, relating to the current or former ownership, use,
maintenance, operation of, or conduct of business related to,
any property or assets of any Loan Party, nor is there any
basis for any of the foregoing;
(I) to the knowledge of Loan Parties, no
underground or aboveground storage tanks or surface
impoundments, not in material compliance with all applicable
Environmental Laws, are located at any property owned, used,
maintained or operated by any Loan Party, and to the knowledge
of any Loan Party there are no remedial or other liabilities
with respect to underground or aboveground storage tanks or
surface impoundments that may have been located at any
property owned, used, maintained or operated by any Loan
Party, except for liabilities which, individually or in the
aggregate, would not reasonably be expected to have a Material
Adverse Effect; and
(J) there are no material obligations,
undertakings or liabilities arising out of or relating to
Environmental Laws which any Loan Party has agreed to, assumed
or retained, by contract or other agreement.
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4.16. Solvency. Loan Parties, viewing their businesses and
operations as a single consolidated entity, have capital sufficient to carry on
their businesses and transactions and all businesses and transactions in which
they are about to engage, and are now solvent and able to pay their collective
debts as they mature, and Loan Parties now collectively own property having a
value, both at fair valuation and at present fair saleable value, greater than
the amount required to pay all existing debts of Loan Parties.
4.17. Senior Debt. The Debt evidenced by the Notes and this
Agreement is senior to the Debt evidenced by the Subordinated Debt. All terms
and provisions of the Subordinated Debt have been disclosed to Lenders, the
instruments evidencing the Subordinated Debt have not been amended or modified
except as disclosed in writing to Lenders, and no payments have been made in
respect of the Subordinated Debt other than regularly scheduled interest
payments.
4.18. Patents, Trademarks, Etc. Loan Parties collectively possess
adequate assets, licenses, patents, patent applications, copyrights,
trademarks, service marks, trademark applications, trade names, technology,
processes, logotypes and Permits and other governmental approvals and
authorizations to conduct their businesses. Except as previously disclosed to
Lenders in writing, there are no existing or, to Loan Parties' knowledge,
threatened claims of any Person based on the use of such Permits, patents,
trademarks, trade names, copyrights, technology and processes by Loan Parties.
The consummation of the transactions contemplated by the Loan Documents will
not impair the ownership by Loan Parties of or the rights of any of such
parties under (or the license or other right to use, as the case may be) any
Permits, patents, trademarks, trade names, copyrights, technology or processes.
4.19. Labor Matters. Except as disclosed in writing to Lenders, as
provided in Section 5.20, Schedule 4.19 sets forth a complete and correct list
of all labor union contracts to which any of Loan Parties is a party,
specifying the expiration date of each such contract and the nature of any
strikes, walkouts or other disputes related thereto.
ARTICLE V. COVENANTS
5.01. Reporting Requirements. Company will deliver to each Lender:
(a) as soon as practicable and in any event within 90 days after
the end of each fiscal year of Company, audited consolidated and unaudited
consolidating statements of income, audited consolidated cash flows and changes
in shareholders equity of Company and its consolidated Subsidiaries for such
fiscal year, and audited consolidated and unaudited consolidating balance
sheets of Company and its consolidated Subsidiaries as at the end of such
fiscal year, all, except for the consolidating statements, prepared in
accordance with GAAP, and, with respect to such consolidated statements,
setting forth in comparative form corresponding figures from the immediately
preceding fiscal year end, and, with respect to the consolidated statements,
certified without any Impermissible Qualification by Ernst & Young or other
independent public accountants of recognized national standing selected by
Company, together
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with a certificate of such accountants stating in connection with performing
their audit of such consolidated financial statements, the scope of which was
not directed toward obtaining knowledge regarding any Loan Party's compliance
with any of the covenants, terms, provisions or other conditions of this
Agreement or the occurrence of an Event of Default hereunder, that nothing came
to their attention to cause them to believe that, as at the end of such fiscal
year, Company and its consolidated Subsidiaries were not in compliance with any
of the financial covenants hereof, except as specifically stated therein,
indicating the nature of such non-compliance or other Default or Event of
Default; it being understood that such accountants shall have no liability to
any Lender by reason of the failure of such accountants to obtain knowledge of
the occurrence of such Default or Event of Default;
(b) as soon as practicable and in any event within forty-five days
after the end of the first three fiscal quarters of each fiscal year of
Company, an unaudited consolidated balance sheet and statements of income and
an unaudited consolidated statement of cash flows of Company and its
consolidated Subsidiaries as reported on Form 10-Q and filed with the
Securities and Exchange Commission for each such fiscal quarter, and an
unaudited consolidating balance sheet and statement of income (non-GAAP) and an
unaudited statement of changes in shareholders' equity of Company and its
consolidated Subsidiaries for each such fiscal quarter, and, with respect to
the consolidated statements, certified by a Financial Officer of Company as
presenting fairly, in accordance with GAAP applied on a basis consistent with
prior fiscal quarters, the information contained therein, subject to changes
resulting from year-end adjustments;
(c) if requested by any Lender, promptly upon Company's receipt
thereof, copies of all other accounting or financial reports or statements
submitted to Company by independent public accountants in connection with any
annual, interim or special audit of the books of Company and its consolidated
Subsidiaries;
(d) promptly upon transmission thereof, copies of all such
financial statements, proxy statements, notices and reports as Company shall
send to its public stockholders and copies of all registration statements
(without exhibits) and all reports which it files with the Securities and
Exchange Commission (or any governmental body or agency succeeding to the
functions of the Securities and Exchange Commission);
(e) as soon as practicable and in any event within five Business
Days after any Loan Party obtains knowledge (i) of any condition or event which
would reasonably be expected to have a Material Adverse Effect, (ii) of the
occurrence of a Default or Event of Default, (iii) of the institution of any
litigation involving claim against any Loan Party equal to or greater than
$5,000,000 with respect to any single cause of action, or (iv) of any
regulatory proceeding which, if determined adversely to such Loan Party, would
reasonably be expected to have a Material Adverse Effect, a Responsible Officer
of Company will deliver an Officer's Certificate to Lenders specifying the
nature and period of existence of any such condition or event, or specifying
the notice given or action taken by such Person and the nature of any such
Default
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or Event of Default, or specifying the details of such proceeding or litigation
and what action, if any, such Loan Party has taken, is taking or proposes to
take with respect thereto;
(f) promptly, but in any event within fifteen calendar days, after
any Loan Party obtains knowledge thereof, if and when any member of the ERISA
Group (i) gives or is required to give notice to the PBGC of any "reportable
event" (as defined in section 4043 of ERISA) (other than a "reportable event"
not subject to the provisions for thirty-day notice to the PBGC under the
regulations issued under section 4043 of ERISA) with respect to any Material
Plan (hereinafter defined) which may reasonably be expected to constitute
grounds for a termination of such Material Plan under Title IV of ERISA, or
knows that the plan administrator of any Material Plan has given or is required
to give notice of any such reportable event, a copy of the notice of such
reportable event given or required to be given to the PBGC; (ii) receives
notice of complete or partial withdrawal liability under Title IV of ERISA or
notice that any Multiemployer Plan is (or may become) in reorganization or
partitioned, is (or may become) insolvent or has been (or may be) terminated, a
copy of such notice; (iii) receives notice from the PBGC under Title IV of
ERISA of an intent to terminate, impose liability (other than for premiums
under section 4007 of ERISA) in respect of, or appoint a trustee to administer,
any Material Plan, a copy of such notice; (iv) applies for a waiver of the
minimum funding standard under section 412 of the Code, a copy of such
application; (v) gives notice of intent to terminate any Material Plan under
section 4041(c) of ERISA, a copy of such notice and other information filed
with the PBGC; (vi) gives notice of withdrawal from any Material Plan pursuant
to section 4063 of ERISA (or an event is deemed under section 4062(e) of ERISA
to be a withdrawal under section 4063); (vii) fails to timely make any required
payment(s) or contribution(s) to any Plan(s) or Multiemployer Plan(s) or in
respect of any Benefit Arrangement(s) in an amount individually or in the
aggregate in excess of $5,000,000 or makes any amendment(s) to any Plan(s)
which could result in the imposition of a lien(s) or the posting of a bond(s)
or other security under ERISA or the Code in an amount individually or in the
aggregate in excess of $5,000,000, a statement of the chief financial officer
of such Loan Party reasonably describing such event and the action which such
Loan Party or applicable member of the ERISA Group has taken, is taking or
proposes to take with respect to such event; (viii) engages in one or more
prohibited transactions (as defined in section 406 of ERISA or section 4975 of
the Code) or receives notice of a claim or claims involving one or more
violations of fiduciary duties under ERISA which individually or in combination
could result in a liability in excess of $5,000,000, a statement of the chief
financial officer of such Loan Party reasonably describing such event of notice
and the action which such Loan Party or applicable member of the ERISA Group
has taken, is taking or proposes to take with respect thereto; or (ix) receives
any proposed unfavorable determination letter (or notice proposing to revoke a
favorable letter) from the Internal Revenue Service regarding the qualification
of a Plan under section 401(a) of the Code, a copy of such notice (for purposes
of this paragraph (f), a "Material Plan" is one or more Plans, Multiemployer
Plans and/or Benefit Arrangements (individually or collectively) with respect
to which a Loan Party and/or one or more members of the ERISA Group has
incurred or can be reasonably expected to incur liabilities, whether or not
current, in excess of $5,000,000); and
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(g) with reasonable promptness, such other information respecting
the business, financial condition or results or operations of Loan Parties as
Lenders may reasonably request.
Together with each delivery of financial statements required by clause
(b) above, Company will deliver a Compliance Certificate signed by a Financial
Officer of Company demonstrating (with computations in reasonable detail)
compliance by Loan Parties with the provisions of Section 5.12(b)(i), Section
5.14(h), and Sections 5.15 through Section 5.18 and stating that there exists
no Event of Default or a Default, or, if any Event of Default or a Default
exists, specifying the nature and period of existence thereof and what action,
if any, Loan Parties propose to take or cause to be taken with respect thereto;
provided, however, the certification as to whether a Default or Event of
Default is a result of the representation contained in Section 4.02 may be to
the knowledge of a Financial Officer, after due inquiry has been made by such
Financial Officer.
5.02. Inspection of Property; Books and Records. (a) Each Loan
Party covenants that it will permit or cause to be permitted any Person
designated by any Lender to examine and inspect any properties of Loan Parties,
to examine and inspect and take extracts from the corporate books and financial
records of Loan Parties and to discuss the affairs, finances and accounts of
any of such corporations with the principal officers of such Loan Party and
(with the prior written consent of the Controller of Company, which consent
shall not be unreasonably withheld) the certified public accountants of
Company, all at such reasonable times and as often as any Lender may reasonably
request. During such visits and inspections such Person will comply with Loan
Parties' normal safety and security procedures which have been made available
to such Person in writing or as to which such Person has been apprised prior to
such visit or inspection.
(b) Company will keep or cause to be kept, adequate records and
books of account on a consolidated basis in which complete entries are to be
made reflecting the business and financial transactions of it and the other
Loan Parties and as required by applicable rules and regulations of any
Tribunal having jurisdiction over Company or any such Loan Party or the
transactions contemplated by this Agreement. Such books of account shall be
kept in a manner consistent with GAAP;
5.03. Subordinated Debt.
(a) No Loan Party shall make any payment or distribution of cash
or other property on account of the purchase, redemption or other acquisition
or retirement of any Subordinated Debt or the setting aside or payment to a
trustee of money with respect to any Subordinated Debt, provided, so long as no
Default or Event of Default shall exist prior to or immediately after giving
effect to such payment or distribution, Company may make
(i) distributions of its common stock, on account of its
Subordinated Debt, including, without limitation, Company exercising
any rights of conversion or redemption; and
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(ii) mandatory payments of cash on account of the payment
of interest thereon on the regularly scheduled due dates therefor.
(b) No Loan Party will materially amend or otherwise materially
modify any provision of its Subordinated Debt without the prior written consent
of Lenders.
5.04. Payment of Taxes and Claims. Each Loan Party covenants that
it will pay or discharge all Taxes imposed upon it or any of its properties or
assets or in respect of any of its franchises, business, income or profits
before any penalty accrues thereon, and all claims (including, without
limitation, 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 property or assets, provided that no such Tax or claim need be paid or
discharged (a) while the same is being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted and if such accrual or
other appropriate provision, if any, as shall be required by GAAP shall have
been made therefor or (b) if the aggregate amount of all such unpaid Taxes and
claims for all Loan Parties does not exceed $5,000,000 (without regard to
whether such Taxes and claims under this clause (b) are being contested in good
faith by appropriate proceedings diligently conducted for which such reserves
or other appropriate provisions, if any, as shall be required by GAAP, have
been made); provided, further, that clauses (a) and (b) of this Section 5.04
shall apply only if Company otherwise complies with Section 5.11.
5.05. Maintenance of Properties; Insurance.
(a) Each Loan Party will maintain or cause to be maintained in
good repair, working order and condition, all property materially necessary for
the operation of the business of such Loan Party and from time to time will
make or cause to be made all appropriate repairs, renewals and replacements
thereof; and
(b) Each Loan Party will maintain or cause to be maintained with
financially sound and reputable insurers, insurance with respect to their
property and business against such liabilities, casualties, risks and
contingencies (including business interruption insurance) and in such types and
amounts as is customary in the case of Persons engaged in the same or similar
businesses and similarly situated unless such coverage is not available at
commercially reasonable rates for reasons other than the acts or omissions of
such Loan Party. Loan Parties shall furnish or cause to be furnished to each
Lender (i) at least annually, a summary of all insurance coverage of Loan
Parties prepared by an independent insurance broker and (ii) upon request of
any Lender during the continuance of any Default or Event of Default, copies of
all policies of insurance.
5.06. Compliance with Laws.
(a) Company shall comply with all Laws, the non-compliance with
which, when considered alone or together with all non-compliance with such Laws
by all such Loan Parties,
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would reasonably be expected to have a Material Adverse Effect; provided,
however, such Loan Party shall have the right to diligently contest any Law so
long as (i) the contest is in good faith and by appropriate proceedings and
such reserve or other appropriate provision, if any, as shall be required by
GAAP shall have been made therefor and (ii) such contest shall operate to
suspend the collection of any disputed amount from any property of such Loan
Party and any forfeiture or sale of such property.
(b) Notwithstanding, and without limitation of the foregoing, each
Loan Party shall (i) comply in a timely fashion with, or operate pursuant to
valid waivers of the provisions of, all Environmental Laws, including, without
limitation, any such Laws relating to contamination from, or remedial
obligations in connection with, any Hazardous Materials, (ii) obtain, where its
business is to be changed so it is different than the business presently
conducted, all environmental Permits necessary for the conduct of its business
as intended to be so conducted, with such Permits obtained prior to such
change, (iii) notify each Lender promptly in the event of any actual or alleged
noncompliance with any Environmental Laws and (iv) promptly forward to each
Lender a copy of any claim, judgment, order, notice, applications for Permits,
Permits or other communication or report in connection with any material matter
relating to Environmental Law as it may affect any Loan Party or any of their
respective assets.
5.07. Performance of Loan Documents. Each Loan Party will duly and
punctually pay and perform their respective obligations under the Loan
Documents to which it is a party in accordance with, and without breach of, the
terms of each thereof.
5.08. Indemnification.
(a) Loan Parties shall, jointly and severally indemnify and hold
harmless each Indemnitee from and against any and all claims, damages and
liabilities whatsoever which any Indemnitee may directly or indirectly incur
(or which may be claimed against such Indemnitee by any Person or entity
whatsoever) by reason of or in connection with (i) this Agreement, Advances or
the Letters of Credit (including without limitation the enforcement of this
Agreement, the Notes and the other Loan Documents and the defense of such
Indemnitee's actions and inactions in connection therewith); (ii) any breach of
any Loan Party or any other Person of any warranty, covenant, term or condition
in, or the occurrence of any default under, this Agreement, the Notes or any
other Loan Document, including all reasonable fees or expenses resulting from
the settlement or defense of any claims or liabilities arising as a result of
any such breach or default; and (iii) involvement in any legal suit,
investigation, proceeding, inquiry or action as to which any Indemnitee is
involved as a consequence, directly or indirectly, of the making of any
Advance, the issuance of any Letter of Credit, its execution of this Agreement
or the other Loan Documents or any other event or transaction contemplated by
any of the foregoing. Nothing in this Section 5.08 is intended to limit the
obligations of Loan Parties contained in any other Section of this Agreement.
Loan Parties jointly and severally shall pay all expenses (including without
limitation fees and disbursements of counsel) reasonably incurred by each
Indemnitee in investigating, defending or preparing to defend against any such
claim, damage or liability and for all costs of settlement made with the
written consent of
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Company in connection with any such claim, damage or liability. However, such
indemnities shall not apply to any particular Indemnitee (but shall apply to
the other Indemnitees) to the extent the subject of the indemnification is
caused by or arises out of the gross negligence or willful misconduct of such
particular Indemnitee. Notwithstanding any provision to the contrary contained
herein, no Indemnitee will be indemnified for liability arising in connection
with its gross negligence or willful misconduct.
(b) Without limiting any provision of this Agreement, it is the
express intention of the parties hereto that each Indemnitee shall be
indemnified and held harmless against any and all losses, liabilities, claims
or damages arising out of or resulting from the ordinary, sole or contributory
negligence of such Indemnitee. Without prejudice to the survival of any other
obligations of Loan Parties under this Agreement, the Notes or the other Loan
Documents, the obligations of Loan Parties under this Section 5.08 shall
survive the termination of this Agreement.
5.09. Legal Existence, Etc. Except as expressly permitted by
Section 5.12(b), each Loan Party covenants that it will, at all times, preserve
and maintain its legal existence, rights, privileges and franchises material to
its business and will qualify to do business in any jurisdiction where the
failure to do so when considered alone or together with the failure of any or
all of the other Loan Parties to do so would reasonably be expected to have a
Material Adverse Effect.
5.10. Ownership of Loan Parties. Company will at all times own and
hold the entire legal title to and beneficial interest, either directly or
indirectly through one or more intermediaries, in all outstanding shares of all
classes of the capital stock or other equity interests of the other Loan
Parties.
5.11. Liens. Loan Parties will not create or otherwise allow any
Liens to exist on or otherwise to affect any of its assets, except the
following Liens which shall be permitted:
(a) Liens imposed by Law, carriers', warehousemen's or
mechanics' liens, and liens to secure claims for labor, material or
supplies arising in the ordinary course of business, but only to the
extent that payment thereof shall not at the time be due or is being
contested in good faith by appropriate proceedings diligently
conducted and with respect to which appropriate reserves have been set
aside in accordance with GAAP, and so long as the enforcement thereof
has been stayed and such Liens do not individually or in the aggregate
materially impair the value or materially interfere with the use of
the property subject thereto or the operation of the usual business of
the Loan Parties involved;
(b) Deposits or pledges to enable Loan Parties to
exercise any privilege or license, deposits or pledges made in
connection with, or to secure payment of, worker's compensation,
unemployment insurance, old age pensions or other social security, or
to secure the performance of bids, tenders, contracts (other than
those relating to borrowed
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money) or leases or to secure statutory obligations or surety or
appeal bonds, or to secure indemnity, performance or other similar
bonds in the ordinary course of business, or in connection with
contests, to the extent that payment thereof shall not at the time be
due or is being contested in good faith by appropriate proceedings
diligently conducted and there have been set aside on its books
appropriate reserves with respect thereto and in accordance with GAAP,
and so long as the enforcement thereof has been stayed and such Liens
do not individually or in the aggregate materially impair the value or
materially interfere with the use of the property subject thereto or
the operation of the usual business of the Loan Parties involved;
(c) Liens arising out of judgments or awards against a
Loan Party with respect to which such Person shall be in good faith
prosecuting an appeal or a proceeding for review, or Liens incurred by
a Loan Party for the purpose of obtaining a stay or discharge of any
legal proceeding to which such Person is a party, provided, however,
nothing herein is intended to waive any Event of Default that may
result from any such judgment, award or proceeding under Section
6.01(i);
(d) Liens which relate to Taxes, assessments, levies or
other governmental charges which in the aggregate do not exceed
$5,000,000, whether contested or otherwise, or Liens which relate to
Taxes, assessments, levies or other governmental charges which in the
aggregate are greater than $5,000,000, in which latter case, such
Taxes, assessments, levies or charges must either (i) not yet be due
or (ii) be the subject of a pending contest made in good faith by
appropriate proceedings diligently conducted and with respect to which
appropriate reserves have been set aside in accordance with GAAP (so
long as the enforcement of the Liens with respect to the contested
amounts has been stayed and such Liens do not individually or in the
aggregate materially impair the operation of the usual business of
Loan Parties involved);
(e) Liens covering the cash or deposit accounts of Loan
Parties;
(f) Purchase money Liens having a duration of
effectiveness of not longer than forty-five days which are created in
connection with the purchase by a Loan Party of any raw materials
comprising a part of its inventory, and which are filed in favor of a
vendor as part of its payment terms on credit sales of raw materials
to a Loan Party;
(g) Easements, rights of way, restrictions and other
similar encumbrances on the use of real property that do not render
title to the property encumbered thereby unmarketable or materially
adversely offset the use of such property for its present purposes;
(h) Liens which are described on Schedule 5.11 and
renewals and extensions thereof, provided such Liens as renewed or
extended shall not cover additional assets;
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(i) Other Liens created to secure Debt incurred solely
for the purpose of financing Consolidated Capital Expenditures,
whether or not incurred at the time of acquisition, so long as each
such Lien shall at all times be confined solely to the asset or assets
so financed (and proceeds thereof), and the aggregate amount of Debt
incurred during each fiscal year and secured by such Liens does not
exceed the aggregate Consolidated Capital Expenditures during such
fiscal year;
(j) Landlord's Liens covering any part of Loan Parties'
assets which secure an amount of past due rent not to exceed
$2,000,000 in aggregate amount;
(k) Liens granted by a Loan Party upon a customer's
obligation payable to such Loan Party and the collateral securing such
obligation and including without limitation any chattel paper,
document, instrument, account, or general intangible arising
therefrom, or necessary or related thereto and all products and
proceeds thereof, as a result of the sale or lease of any item of
goods, materials, equipment, supplies, merchandise or other personal
property of such Loan Party through any type of conditional sales
contract, note and security agreement, operating or financing lease,
or other form of chattel paper, including without limitation such
obligations being financed at Agreement Date or at any time
thereafter, by Sanwa Business Credit or any similar lender; or
(l) Liens on property of a Loan Party, provided that such
Liens secure only obligations owing to another Loan Party.
5.12. Mergers, Consolidations and Dispositions.
(a) Loan Parties will not in any single transaction or series of
transactions:
(i) be a party to any merger or consolidation;
(ii) change or modify any of their corporate structures;
(iii) sell, transfer, convey or lease (or agree to take any
such action) any assets; or
(iv) take any action with a view toward dissolution,
liquidation, winding up its affairs or termination.
(b) Notwithstanding the foregoing, so long as no Default or Event
of Default would exist after giving effect thereto or would result therefrom:
(i) Loan Parties may sell, transfer, convey or lease any
asset, except that sales, transfers, conveyances and leases of assets
from and after the Agreement Date to Persons who are not Loan Parties,
together with the aggregate amount of Investments
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(not including Permitted Portfolio Investments) made pursuant to
Section 5.14(h) from and after the Agreement Date, shall not at any
time exceed 40% of the Consolidated Total Assets, based on the most
recent audited financial statements of Company and its consolidated
Subsidiaries; provided, however, notwithstanding anything in this
Section 5.12(b)(i) to the contrary, Loan Parties may, without any
restriction or limitation, (A) sell, transfer, convey or lease
inventory in the ordinary course of business and (B) sell, transfer,
convey or assign Receivables for consideration.
(ii) Company may merge into or consolidate with any other
Loan Party provided that in each case Company is the survivor;
(iii) any Loan Party (other than Company) may merge into or
consolidate with any Loan Party (other than Company), provided that
Company and its consolidated Subsidiaries are no less creditworthy in
the reasonable opinion of Lenders immediately after such merger or
consolidation; or
(iv) any Loan Party may accomplish a consolidation or
merger via a stock for stock transaction, provided, that in each case
(A) a Loan Party (provided, in the event Company is involved in any
such consolidation or merger, Company must be the survivor) is the
survivor and (B) the consolidation or merger would not have a Material
Adverse Effect.
(c) Company may, at Company's option, after any Person becomes a
direct or indirect Domestic Subsidiary of Company (each such Subsidiary being a
"New Subsidiary"), (i) give written notice thereof to Lenders and (ii) deliver
or cause to be delivered to Administrative Lender (A) the Assumption Agreement
and an amendment to Schedule 4.01 hereto executed by the New Subsidiary and
Loan Parties, which has the effect of adding the New Subsidiary as a Loan Party
to this Agreement, and, as a guarantor of the Guaranteed Obligations, all in
form and substance satisfactory to Lenders, and (B) a copy of the resolutions
of the board of directors or similar governing body of such Subsidiary
approving the form of the Assumption Agreement and such amendment, their
respective execution and delivery, the transactions under this Agreement as
amended by such amendment and the guaranteeing of the Guaranteed Obligations by
such New Subsidiary hereunder, which copy shall be certified to be a true and
complete copy by the Secretary or Assistant Secretary of such New Subsidiary.
5.13. Transactions with Affiliates. Loan Parties will not enter
into any material Investment, transaction, contract or agreement of any kind
(except for ordinary and reasonable compensation arrangements for full-time
employees of such Person) with any officer, director or holder of any of the
outstanding capital stock of such Person or any Affiliate, unless such
Investment, transaction, contract or agreement is made (i) upon terms and
conditions no less favorable to any Loan Party that is a party thereto than
terms and conditions which could have been obtained from wholly independent and
unrelated sources, and (ii) in the ordinary course of business of the Loan
Party and Affiliate in question; provided, however, nothing in this Section
5.13 shall prohibit sales or transfers of inventory, equipment or any other
asset from any
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Loan Party to another Loan Party or an Affiliate of a Loan Party in the
ordinary course of business that is not otherwise prohibited by this Agreement;
provided, however, that notwithstanding anything in this Agreement to the
contrary, no Loan Party shall directly or indirectly transfer or dispose of any
of its properties to an Affiliate of such Loan Party or to any other Person
with actual intent to delay, defraud or hinder collection or enforcement of any
rights of Administrative Lender or any Lender under this Agreement, or
otherwise at Law or in equity; and provided, further, that no Loan Party shall
directly or indirectly transfer or otherwise dispose of any of its assets in a
transaction with an Affiliate of such Loan Party wherein the Loan Party
receives less than reasonably equivalent value (as such term is used and
construed in Section 548 of the United States Bankruptcy Code) in exchange for
such transfer, regardless of the solvency of such Loan Party.
5.14. Investment. Loan Parties will not make or have any Investment
in any Person, or make any commitment to make such Investment, except the
following which shall be permitted as stated below:
(a) Permitted Portfolio Investments;
(b) stock or securities received in the settlement of debts
(created in the ordinary course of business) or as a premium from a customer;
(c) travel advances to officers and employees made in the ordinary
course of business;
(d) loans made by Loan Parties in the ordinary course of business
to officers and employees not exceeding $1,000,000 at any one time outstanding
for all such loans made by all Loan Parties;
(e) customer obligations and receivables owing to Loan Parties in
the ordinary course of business;
(f) loans made to expatriate officers and employees to compensate
or reimburse such Persons for foreign tax obligations, which loans shall not be
included for purposes of calculating the amount of loans made under Section
5.14(d);
(g) Investments by a Loan Party in any other Loan Party; and
(h) Investments (not including Permitted Portfolio Investments) in
Persons from and after the Agreement Date who are not Loan Parties, together
with the aggregate amount of assets sold, transferred, conveyed or leased to
Persons from and after the Agreement Date who are not Loan Parties, as provided
in Section 5.12(b)(i) (other than asset sales in the ordinary course of
business), in an aggregate amount at any time not in excess of 40% of the
Consolidated Total Assets, based on the most recent audited financial
statements of Company and its consolidated Subsidiaries.
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5.15. Restricted Payments. Loan Parties will not directly or
indirectly, declare, order, pay, make or set apart any Restricted Payment
unless immediately after, and after giving effect to, the declaring or making,
as the case may be, of such Restricted Payment, no Default or Event of Default
would exist and the amount of all Restricted Payments made from and after the
Agreement Date would not exceed the sum of the following:
(a) $10,000,000, plus (or minus in the case of a deficit)
(b) 50% of Consolidated Net Income (or 100% in the case of a
deficit) determined in respect of the single period commencing on January 1,
1995 and ending on the date such Restricted Payment is made, plus
(c) the aggregate amount of cash proceeds received by the Loan
Parties from the sale or issuance of common stock (or the sale or issuance of
other Securities at the time such other Securities are subsequently converted
into common stock) of any of the Loan Parties to Persons other than another
Loan Party after the Agreement Date, net, in each case, of all transaction
costs and expenses incurred in connection with such sale or issuance.
5.16. Limitations on Debt. Loan Parties shall not, as at the last
day of each fiscal quarter of Company, permit:
(i) Consolidated Senior Debt, determined as of
such day, to exceed 35% of Consolidated Capitalization, determined as
of such day; or
(ii) Consolidated Debt, determined as of such day,
to exceed 45% of Consolidated Capitalization, determined as of such
day.
5.17. Minimum Consolidated Net Worth. As at the last day of each
fiscal quarter of Company, Consolidated Net Worth shall be at least (a) 80% of
Consolidated Net Worth on December 31, 1995 plus (b) the sum of the Fiscal
Quarter Increase for all fiscal quarters of Company ended subsequent to
December 31, 1995 and on and prior to such date, plus (c) an amount equal to
50% of any increase in shareholders equity of Company pursuant to offerings of
equity securities (including as a result of the exercise of employee stock
options and warrants or the sale or issuance of Securities subsequently
converted into common stock) of Company or any of its Subsidiaries on or after
the Agreement Date, plus (d) without duplication, an amount equal to the net
worth of any Person that, on or after the Agreement Date, becomes a Subsidiary
of Company or is merged into or consolidated with Company or any Subsidiary of
Company or substantially all of the assets of which are acquired by Company or
any Subsidiary of Company to the extent the purchase price therefor is paid in
equity securities of Company or any Subsidiary of Company.
5.18. Consolidated Funded Debt to Consolidated Excess Cash Flow
Ratio. On the last day of each fiscal quarter, Loan Parties will not permit
the ratio of Consolidated Funded Debt to Consolidated Excess Cash Flow to
exceed 3.25 to 1.
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5.19. Patents, Trademarks and Licenses. Loan Parties shall
collectively maintain adequate assets, licenses, patents, copyrights,
trademarks, service marks, trade names, Permits and other governmental
approvals and authorizations to conduct their respective businesses.
5.20. Notice of Labor Disputes. Loan Parties shall notify Lenders
in writing, promptly upon learning thereof, of any labor union dispute to which
any Loan Party may become a party, any strikes or walkouts relating to any of
Loan Parties' plants or other facilities, and the expiration or termination of
any labor union contract to which any Loan Party is a party or by which any
Loan Party is bound or of any negotiations with respect thereto.
5.21. Nature of Business. Loan Parties shall not make any material
change in the nature of its business as carried on at the Agreement Date. Loan
Parties shall not make an Investment in any Person whose business is not in the
same or similar line of business as the business carried on by Loan Parties at
the Agreement Date.
5.22. Translation. Upon the request of Administrative Lender,
Company shall promptly provide to Administrative Lender a written English
translation of any document or instrument to be delivered pursuant to any Loan
Document, prepared by and certified as to correctness by a Person acceptable to
Administrative Lender.
ARTICLE VI. EVENTS OF DEFAULT AND REMEDIES
6.01. Events of Default and Remedies. The following events which
shall occur and be continuing shall be Events of Default hereunder:
(a) (i) principal of any Note or any other amount due hereunder
(other than amounts due (A) in respect of any drawing after acceleration of the
Maturity Date pursuant to Section 6.02 with respect to a Letter of Credit or
(B) in respect of any LIBOR Advance or Eurocurrency Advance at the end of its
Interest Period) shall not be paid on the date on which such payment is due,
(ii) any installment of interest of any Note (other than amounts due in respect
of any LIBOR Advance or Eurocurrency Advance at the end of its Interest Period)
shall not be paid within two Business Days following the date on which such
payment is due, (iii) any amount due in respect of any drawing after the
Maturity Date with respect to a Letter of Credit shall not be paid within one
Business Day following the date on which such payment is due or (iv) any amount
due in respect of any LIBOR Advance or Eurocurrency Advance at the end of its
Interest Period shall not be paid within three Business Days following the date
on which such payment is due; or
(b) any representation or warranty made by any Loan Party herein
or in any document, certificate or financial statement delivered in connection
with this Agreement shall prove to have been incorrect in any material respect
when made or deemed made or reaffirmed, as the case may be; or
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(c) any Loan Party shall fail to perform or observe any covenant
contained in Section 5.03 or Sections 5.11 through Section 5.22 of this
Agreement; or
(d) any Loan Party shall fail to perform or observe any other
term, covenant (provided that such a failure with respect to a covenant in
subsection (i), (ii) or (iii) of Section 5.06(b) shall be an Event of Default
only in the event that the failure to comply in the case of subsection (i), the
failure to obtain a Permit in the case of subsection (ii) or the noncompliance
referenced in subsection (iii) would reasonably be expected to have a Material
Adverse Effect) or agreement contained in this Agreement (other than those
specified in Section 6.01(a), Section 6.01(b) or Section 6.01(c)), and any such
failure shall remain unremedied for 30 calendar days after the earlier of (i)
written notice of such failure shall have been given to a Responsible Officer
of Company by Administrative Lender or (ii) any Loan Party knows of such
failure; or
(e) (i) any Loan Party shall default in the payment of principal
or interest of any Debt having an unpaid principal balance in excess of
$10,000,000 (excluding (A) Debt evidenced by the Notes or any other amounts due
under the Loan Documents and (B) Debt of the type described in clause (g) of
the definition of "Debt" herein) of such Loan Party, when due whether by
acceleration or otherwise, beyond any period of grace provided with respect
thereto, or (ii) any event shall occur or condition shall exist which gives
rise to a default in the performance or observance of any other obligation or
condition with respect to any Debt having an unpaid principal balance in excess
of $10,000,000 (excluding (A) Debt evidenced by the Notes or any other amounts
due under the Loan Documents and (B) Debt of the type described in clause (g)
of the definition of "Debt" herein) if the effect of such default results in
the holder of such other Debt or any Person acting on such holder's behalf
being authorized to (i) accelerate the maturity of such other Debt (or any
portion thereof which is greater than $10,000,000) or (ii) require such Loan
Party to purchase such other Debt (or any portion thereof which is greater than
$10,000,000); or
(f) any Loan Party shall default in its obligation to pay any
dividend respecting its capital stock when due, or to purchase, redeem, retire
or otherwise acquire shares of its capital stock; or
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i) relief
in respect of any Loan Party, or of a substantial part of the property or
assets of such Loan Party, under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other federal or state bankruptcy,
insolvency, receivership or similar law, (ii) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for any Loan
Party or for a substantial part of the property or assets of such Loan Party or
(iii) the winding-up or liquidation of any Loan Party; and such proceeding or
petition shall continue undismissed for 90 days or an order or decree approving
or ordering any of the foregoing shall be entered; or
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(h) any Loan Party shall (i) voluntarily commence any proceeding
or file any petition seeking relief under Title 11 of the United States Code,
as now constituted or hereafter amended, or any other federal or state
bankruptcy, insolvency, receivership or similar law, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or the filing of any petition described in (g) above, (iii) apply
for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for such Loan Party or for a
substantial part of the property or assets of such Loan Party, (iv) file an
answer admitting the material allegations of a petition filed against it in any
such proceeding, (v) make a general assignment for the benefit of creditors,
(vi) become unable, admit in writing its inability or fail generally to pay its
debts as they become due or (vii) take any action for the purpose of effecting
any of the foregoing, or
(i) a final judgment or judgments for the payment of money shall
be entered by a court or courts against any Loan Party and such judgment or
judgments remain unstayed or undischarged (or provision shall not be made for
such discharge) for a period of 30 days from the date of entry thereof and the
aggregate amount of all such judgments against all such Persons exceeds
$5,000,000 (net of actual insurance coverage if Administrative Lender receive
evidence satisfactory to it that coverage exists); or
(j) (i) a proceeding shall be commenced to have a trustee
appointed, or a trustee shall be appointed, to terminate or administer a Plan
under Section 4042(b) of ERISA which proceeding or appointment is, in the
reasonable opinion of Lenders, likely to result in the termination of such Plan
and to give rise to a material liability of any member(s) of the ERISA Group
with respect to such termination, (ii) a notice of intent to terminate a Plan
under Section 4041(c) of ERISA is filed with the PBGC, if such termination
would give rise to a material liability of any member(s) of the ERISA Group,
(iii) any Multiemployer Plan is in reorganization or is insolvent and the
circumstances are such that, in the reasonable opinion of Lenders, a material
liability is likely to be incurred by any member(s) of the ERISA Group, (iv)
there is a complete or partial withdrawal from a Multiemployer Plan that
subjects any member(s) of the ERISA Group to a material liability, (v) any
member(s) of the ERISA Group shall fail to pay an amount or amounts aggregating
in excess of $10,000,000 which it (or they) shall have become liable to pay to
or with respect to one or more Plans, Multiemployer Plans and/or Benefit
Arrangements, (vi) a waiver of the minimum funding standard under section 412
of the Code or an extension of any amortization period thereunder is requested
by any member(s) of the ERISA Group with respect to a Plan that has "unfunded
benefit liabilities," within the meaning of Section 4001(a)(18) of ERISA, in
excess of $10,000,000, (vii) any member(s) of the ERISA Group shall have any
liability for health benefits pursuant to a group health plan to any group of
employees or former employees beyond their retirement or other termination of
service, other than coverage mandated by Part 6 of Subtitle B of Title I of
ERISA or coverage that can be unilaterally terminated by the member(s) of the
ERISA Group at any time without resulting in a material liability, (viii) any
member(s) of the ERISA Group or any of its (or their) agents or representatives
shall engage in any "prohibited transaction" (as defined in Section 406 of
ERISA or Section 4975 of the Code) for which a statutory or class exemption is
not available or a private exemption has not been previously obtained from the
Department of Labor and such
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prohibited transaction subjects any member(s) of the ERISA Group to a material
liability, or (ix) more than one or any combination of the events or conditions
described in (i) through (viii) above shall occur or exist (determined without
regard to whether each such event or condition taken alone would result in a
material liability) and such events or conditions in the aggregate result in a
material liability to any member(s) of the ERISA Group (for purposes of this
Section 6.01(j), an obligation or liability shall be considered material if it
equals or exceeds $10,000,000);
(k) Any Person or group (within the meaning of Rule 13d-5 of the
Securities and Exchange Commission as in effect on the date hereof) shall own,
directly or indirectly, beneficially or of record 50% or more of any class of
the Voting Stock of Company; or
6.02. Remedies. If an Event of Default shall have occurred and
shall be continuing:
(a) With the exception of an Event of Default specified in Section
6.01(a), Section 6.01(g) or Section 6.01(h), Administrative Lender shall, upon
the direction of the Required Lenders, by notice to Company terminate the
Commitment and/or declare the principal of and interest on the Advances and all
other Obligations (including the aggregate amount of the Reimbursement
Obligations outstanding at such time) to be forthwith due and payable without
presentation, demand, protest, notice of intent to accelerate, notice of
acceleration or other notice of any kind (other than notice as expressly
provided herein), all of which are hereby expressly waived, anything in this
Agreement or the other Loan Documents to the contrary notwithstanding.
(b) Upon the occurrence of an Event of Default specified in
Section 6.01(a), Administrative Lender shall, upon direction of the Determining
Lenders, by notice to Company terminate the Commitment and/or declare the
principal of and interest on the Advances and all other Obligations (including
the aggregate amount of the Reimbursement Obligations outstanding at such time)
to be forthwith due and payable without presentation, demand, protest, notice
of intent to accelerate, notice of acceleration or other notice of any kind
(other than notice as expressly provided herein), all of which are hereby
expressly waived, anything in this Agreement or the other Loan Documents to the
contrary notwithstanding.
(c) Upon the occurrence of an Event of Default specified in
Section 6.01(g) or Section 6.01(h), the principal of and interest on the
Advances and all other Obligations (including the aggregate amount of the
Reimbursement Obligations outstanding at such time) shall thereupon and
concurrently therewith become due and payable and the Commitment shall
forthwith terminate, all without any action by Administrative Lender, any
Lender or any holders of the Notes and without presentment, demand, protest,
notice of intent to accelerate, notice of acceleration or other notice of any
kind, all of which are expressly waived, anything in this Agreement or the
other Loan Documents to the contrary notwithstanding.
(d) Loan Parties recognize that notwithstanding any termination of
the Commitment pursuant to Section 6.02(a), Section 6.02(b) or Section 6.02(c),
the obligation of Issuing Bank
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to fund draws against Letters of Credit outstanding on the Maturity Date, as
accelerated pursuant to the said Section 6.02, shall continue until expiration
of each such Letter of Credit. In consideration of the agreement of Lenders to
not require that Loan Parties provide cash collateral to secure the
Reimbursement Obligations in respect of the Letters of Credit outstanding on
the Maturity Date, as so accelerated, Loan Parties hereby unconditionally and
irrevocably agree that upon any acceleration of the Obligations pursuant to
Section 6.02(a), Section 6.02(b) or Section 6.02(c), the aggregate amount of
the Reimbursement Obligations outstanding at such time shall be immediately due
and payable in full.
To the extent that amounts received by Administrative Lender
and Lenders in the exercise of their post- default rights granted to them under
the Loan Documents and under Applicable Law exceed the unpaid Obligations
(other than the outstanding Reimbursement Obligations), such excess, up to an
amount equal to the aggregate amount of the Reimbursement Obligations, shall be
deposited in a deposit account maintained by Administrative Lender (the
"Reimbursement Obligation Account"). Title to, and ownership of, the
Reimbursement Obligation Account shall be in and for the benefit of Lenders and
the Reimbursement Obligation Account shall be under the sole dominion and
control of Administrative Lender. Except as set forth herein, no Loan Party
shall have any interest or right with respect to the Reimbursement Obligation
Account. Administrative Lender, as draws are made against Letters of Credit,
shall apply the funds in the Reimbursement Obligation Account to the unpaid
Obligations then outstanding. After all Letters of Credit have been funded or
expired by their terms, and all unpaid Obligations then outstanding have been
paid in full, Administrative Lender shall refund any amount remaining in the
Reimbursement Obligation Account to Company. Loan Parties acknowledge that (i)
if the Letters of Credit outstanding on the Maturity Date are not extended
beyond their respective expiration dates in effect on the Maturity Date, such
Letters of Credit will be drawn upon on or prior to their respective expiration
dates, (ii) Issuing Bank will not extend the expiration date of any Letter of
Credit outstanding on the Maturity Date, (iii) as a result of clauses (i) and
(ii) immediately preceding, the Reimbursement Obligations of Company will be a
fixed amount in the aggregate amount of the Letters of Credit outstanding on
the Maturity Date and not a contingent amount and (iv) as a result of clauses
(i), (ii) and (iii) immediately preceding, no provision herein shall be deemed
to be a confession of judgment.
(e) Subject to the terms and provisions of the Loan Documents,
Administrative Lender and Lenders may exercise all of the post-default rights
granted to them under the Loan Documents or under Applicable Law.
(f) The rights and remedies of Administrative Lender and Lenders
hereunder shall be cumulative, and not exclusive.
6.03. Injunctive Relief. Loan Parties recognize that in the event
they fail to perform, observe or discharge any of their obligations or
liabilities under this Agreement or any other Loan Document, any remedy of law
may prove to be inadequate relief to Lenders; therefore, Loan Parties agree
that Lenders, if Lenders so requests, shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages.
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Lenders recognize that in the event it fails to perform, observe or discharge
any of their obligations or liabilities under this Agreement or any other Loan
Document, any remedy of law may prove to be inadequate relief to Loan Parties;
therefore, Lenders agree that Loan Parties shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages.
ARTICLE VII. GUARANTY
7.01. Guaranty. In consideration of the Commitment, Guarantors
hereby absolutely, unconditionally and irrevocably, jointly and severally
guarantee the punctual payment and performance when due, whether at stated
maturity, by acceleration or otherwise, of the Obligations (including, without
limitation, interest accruing or becoming owing both prior to and subsequent to
the commencement of any proceeding against or with respect to Company under any
Debtor Relief Law), fees, commissions, expenses (including reasonable
attorneys' fees and expenses) or otherwise, and all reasonable costs and
expenses, if any, incurred by Administrative Lender, Issuing Bank and Lenders
in connection with enforcing any rights under this Guaranty (all such
obligations being the "Guaranteed Obligations"), and agree to pay any and all
reasonable expenses incurred by Administrative Lender, Issuing Bank and Lenders
in enforcing this Guaranty. This Guaranty is an absolute, unconditional,
present and continuing guaranty of payment and not of collectibility and is in
no way conditioned upon any attempt to collect from Company or any other
action, occurrence or circumstance whatsoever.
7.02. Continuing Guaranty. Each Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms of
this Agreement, the Notes and the other Loan Documents. Each Guarantor agrees
that the Guaranteed Obligations and Loan Documents may be extended or renewed,
and Advances repaid and reborrowed in whole or in part, without notice to or
assent by such Guarantor, and that it will remain bound upon this Guaranty
notwithstanding any extension, renewal, restatement, or other alteration of any
Guaranteed Obligations or Loan Documents, or any repayment and reborrowing of
Advances. The obligations of each Guarantor under this Guaranty shall be
absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms hereof under any circumstances whatsoever, including:
(a) any increase, restatement, extension, renewal, modification,
settlement, compromise, waiver or release in respect of any Guaranteed
Obligations;
(b) any restatement, extension, renewal, amendment, modification,
rescission, waiver or release in respect of any Loan Documents;
(c) any release, exchange, substitution, non-perfection or
invalidity of, or failure to exercise rights or remedies with respect to, any
direct or indirect security for any Guaranteed Obligations, including the
release of any other Guarantor or other Loan Party;
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(d) any change in the corporate existence, structure or ownership
of any Loan Party, or any insolvency, bankruptcy, reorganization, or other
similar proceeding affecting any Loan Party or any of their respective assets;
or
(e) the existence of any claim, defense, set-off or other rights
or remedies which such Guarantor at any time may have against any other Loan
Party, whether in connection with this Guaranty, the Loan Documents, the
transactions contemplated thereby or any other transaction.
7.03. Effect of Debtor Relief Laws. If after receipt of any payment
of, or proceeds of any security applied (or intended to be applied) to the
payment of all or any part of the Guaranteed Obligations, Administrative
Lender, Issuing Bank, or any Lender is for any reason compelled to surrender or
voluntarily surrenders, such payment or proceeds to any Person (a) because such
payment or application of proceeds is or may be avoided, invalidated, declared
fraudulent, set aside, determined to be void or voidable as a preference,
fraudulent conveyance, fraudulent transfer, impermissible set-off or a
diversion of trust funds, or (b) for any other reason, including (i) any
judgment, decree or order of any court or administrative body having
jurisdiction over Administrative Lender, Issuing Bank, or any Lender or any of
its properties, or (ii) any settlement or compromise of any such claim effected
by Administrative Lender, Issuing Bank, or any Lender with any such claimant
(including Company), then the Guaranteed Obligations or part thereof intended
to be satisfied shall be reinstated and continue, and this Guaranty shall
continue in full force as if such payment or proceeds have not been received,
notwithstanding any revocation thereof or the cancellation of the Notes or any
other instrument evidencing any Guaranteed Obligations or otherwise; and
Guarantors, jointly and severally, shall be liable to pay Administrative
Lender, Issuing Bank, or such Lender, and hereby do indemnify Administrative
Lender, Issuing Bank, and such Lender and hold it harmless for the amount of
such payment or proceeds so surrendered and all expenses (including reasonable
attorneys' fees, court costs and expenses attributable thereto) incurred by
Administrative Lender, Issuing Bank, and such Lender in the defense of any
claim made against it that any payment or proceeds received by Administrative
Lender, Issuing Bank, and such Lender in respect of all or part of the
Guaranteed Obligations must be surrendered. The provisions of this Section 7.03
shall survive the termination of this Guaranty, and any satisfaction and
discharge of Company by virtue of any payment, court order or any Law.
7.04. Waiver of Subrogation. Notwithstanding any payment or
payments made by any Guarantor hereunder, or any set-off or application by
Administrative Lender, Issuing Bank, or any Lender of any security or of any
credits or claims, no Guarantor will assert or exercise any rights of
Administrative Lender, Issuing Bank, or any Lender or of such Guarantor against
Company to recover the amount of any payment made by such Guarantor to
Administrative Lender, Issuing Bank, or any Lender hereunder by way of
subrogation, reimbursement, contribution, indemnity, or otherwise arising by
contract or operation of Law, and such Guarantor shall not have any right of
recourse to or any claim against assets or property of Company, whether or not
the obligations of Company have been satisfied, all of such rights being herein
expressly waived by such Guarantor. Each Guarantor agrees not to seek
contribution or indemnity or other recourse from any other Loan Party or other
Person. If any
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amount shall nevertheless be paid to a Guarantor by any other Loan Party or
another Guarantor prior to payment in full of the Guaranteed Obligations, such
amount shall be held in trust for the benefit of Administrative Lender, Issuing
Bank, and Lenders and shall forthwith be paid to Administrative Lender to be
credited and applied to the Guaranteed Obligations, whether matured or
unmatured. The provisions of this Section 7.04 shall survive the termination
of this Guaranty, and any satisfaction and discharge of Company by virtue of
any payment, court order or any Law.
7.05. Subordination. If any Guarantor becomes the holder of any
indebtedness payable by Company, each Guarantor hereby subordinates all
indebtedness owing to it from Company to all indebtedness of Company to
Administrative Lender, Issuing Bank, and Lenders, and agrees that upon the
occurrence and continuance of a Default or an Event of Default, it shall not
accept any payment on the same until payment in full of the obligations of
Company under this Agreement, the Notes and all other Loan Documents, and shall
in no circumstance whatsoever attempt to set-off or reduce any obligations
hereunder because of such indebtedness. If any amount shall nevertheless be
paid to a Guarantor by Company prior to payment in full of the Guaranteed
Obligations, such amount shall be held in trust for the benefit of
Administrative Lender, Issuing Bank, and Lenders and shall forthwith be paid to
Administrative Lender to be credited and applied to the Guaranteed Obligations,
whether matured or unmatured.
7.06. Waiver. Each Guarantor hereby waives promptness, diligence,
notice of acceptance and any other notice with respect to any of the Guaranteed
Obligations and this Guaranty and waives presentment, demand of payment, notice
of intent to accelerate, notice of acceleration, notice of dishonor or
nonpayment and any requirement that Administrative Lender, Issuing Bank, or any
Lender institute suit, collection proceedings or take any other action to
collect the Guaranteed Obligations, including any requirement that
Administrative Lender, Issuing Bank, or any Lender protect, secure, perfect or
insure any Lien against any property subject thereto or exhaust any right or
take any action against any Loan Party or any other Person or any collateral
(it being the intention of Administrative Lender, Issuing Bank, and each Lender
and each Guarantor that this Guaranty is to be a guaranty of payment and not of
collection). It shall not be necessary for Administrative Lender, Issuing
Bank, or any Lender, in order to enforce any payment by any Guarantor
hereunder, to institute suit or exhaust its rights and remedies against any
Loan Party or any other Person, including others liable to pay any Guaranteed
Obligations, or to enforce its rights against any security ever given to secure
payment thereof. Each Guarantor hereby expressly waives each and every right to
which it may be entitled by virtue of the suretyship laws of the State of
Texas, including, without limitation, any and all rights it may have pursuant
to Rule 31, Texas Rules of Civil Procedure, Section 17.001 of the Texas Civil
Practice and Remedies Code and Chapter 34 of the Texas Business and Commerce
Code. Each Guarantor hereby waives marshaling of assets and liabilities,
notice by Administrative Lender, Issuing Bank, or any Lender of any
indebtedness or liability to which Administrative Lender, Issuing Bank, or any
Lender applies or may apply any amounts received by Administrative Lender,
Issuing Bank, or any Lender, and of the creation, advancement, increase,
existence, extension, renewal, rearrangement and/or modification of the
Guaranteed Obligations. Each Guarantor expressly waives, to the extent
permitted by Applicable Law, the
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benefit of any and all Laws providing for exemption of property from execution
or for valuation and appraisal upon foreclosure.
7.07. Full Force and Effect. This Guaranty is a continuing guaranty
of payment and shall remain in full force and effect until final payment in
full after the Maturity Date of the Obligations of all Loan Parties under this
Agreement, the Note and all other Loan Documents and all other amounts payable
under this Guaranty.
7.08. Enforceability. Notwithstanding any other provision of this
Article VII, if any one or more provisions of this Guaranty 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, impaired, prejudiced or disturbed thereby. If at any time any
portion of the obligations of Guarantors under this Guaranty shall be
determined by any Tribunal to be invalid, unenforceable or avoidable, the
remaining portion of the obligations of Guarantors under this Guaranty shall
not in any way be affected, impaired, prejudiced or disturbed thereby and shall
remain valid and enforceable to the fullest extent permitted by Applicable Law.
If at any time all or any portion of the obligation of Guarantors under this
Guaranty would otherwise be determined by a court of competent jurisdiction to
be invalid, unenforceable or avoidable under Section 548 of the United States
Bankruptcy Code or under a similar Debtor Relief Law of any jurisdiction, then
notwithstanding any other provisions of this Guaranty to the contrary such
obligation or portion thereof of Guarantors under this Guaranty shall be
limited to the greatest of (a) the value of any quantifiable economic benefits
accruing to Guarantors as a result of this Guaranty, (b) an amount equal to 95%
of the excess on the date the relevant liabilities were incurred of the present
fair saleable value of the assets of Guarantors over the amount of all
liabilities of Guarantors, contingent or otherwise, and (c) the maximum amount
for which this Guaranty is determined to be enforceable under Applicable Law.
ARTICLE VIII. CHANGES IN CIRCUMSTANCES
8.01. LIBOR Basis or Eurocurrency Basis Determination Inadequate.
If with respect to any proposed LIBOR Advance or Eurocurrency Advance for any
Interest Period, any Lender determines in good faith that (a) deposits in
Dollars or a Eurocurrency (in the applicable amount) are not being offered to
that Lender in the relevant market for such Interest Period or (b) the LIBOR
Basis or Eurocurrency Basis for such proposed LIBOR Advance or Eurocurrency
Advance, respectively, does not adequately cover the cost to such Lender of
making and maintaining such proposed LIBOR Advance or Eurocurrency Advance for
such Interest Period, such Lender shall forthwith give notice thereof to
Company, whereupon until such Lender notifies Company that the circumstances
giving rise to such situation no longer exist, the obligation of such Lender to
make LIBOR Advances or Eurocurrency Advance, as appropriate, shall be
suspended.
8.02. Illegality. If any Applicable Law, or any change therein or
adoption thereof, or interpretation or administration thereof by any Tribunal,
central bank or comparable agency
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charged with the interpretation or administration thereof, or compliance by any
Lender (or its LIBOR Lending Office or Eurocurrency Lending Office) with any
request or directive (whether or not having the force of law) of any such
Tribunal, central bank or comparable agency, shall make it unlawful or
impossible for such Lender (or its LIBOR Lending Office or Eurocurrency Lending
Office) to make, maintain or fund its LIBOR Advances or Eurocurrency Advances,
such Lender shall so notify Company, Administrative Lender. Before giving any
notice to Company pursuant to this Section 8.02, the notifying Lender shall
designate a different LIBOR Lending Office, Eurocurrency Lending Office or
other lending office if such designation will avoid the need for giving such
notice and will not, in the sole judgment of such Lender, be materially
disadvantageous to such Lender. Upon receipt of such notice, notwithstanding
anything contained in Article II, Company shall repay in full the then
outstanding principal amount of each LIBOR Advance or Eurocurrency Advance
owing to the notifying Lender, together with accrued interest thereon, on
either (a) the last day of the Interest Period applicable to such Advance, if
such Lender may lawfully continue to maintain and fund such Advance to such
day, or (b) immediately, if such Lender may not lawfully continue to fund and
maintain such Advance to such day. Concurrently with repaying each affected
LIBOR Advance or Eurocurrency Advance owing to such Lender along with any
reimbursement required under Section 2.09, notwithstanding anything contained
in Article II, Company shall borrow a Base Rate Advance from such Lender, and
such Lender shall make such Base Rate Advance, in an amount such that the
outstanding principal amount of the Advances owing to such Lender shall equal
the outstanding principal amount of the Advances owing immediately prior to
such repayment.
8.03. Increased Costs.
(a) If any Applicable Law, or any change in or adoption of any
Law, or any interpretation or administration thereof by any Tribunal, central
bank or comparable agency charged with the interpretation or administration
thereof or compliance by any Lender (or its LIBOR Lending Office or
Eurocurrency Lending Office) with any request or directive (whether or not
having the force of law) or any such Tribunal, central bank or compatible
agency:
(i) shall subject a Lender (or its LIBOR Lending Office
or Eurocurrency Lending Office) to any Tax (net of any tax benefit
engendered thereby) with respect to its LIBOR Advances or its
Eurocurrency Advances or its obligation to make LIBOR Advances or
Eurocurrency Advances, or shall change the basis of taxation of
payments to a Lender (or to its LIBOR Lending Office or Eurocurrency
Lending Office) of the principal of or interest on its LIBOR Advances
or Eurocurrency Advances or in respect of any other amounts due under
this Agreement, as the case may be, or its obligation to make LIBOR
Advances or Eurocurrency Advances (except for changes in the rate of
tax on the overall net income, net worth or capital of such Lender and
franchise taxes, doing business taxes or minimum taxes imposed upon
such Lender); or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors
of the Federal Reserve System);
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special deposit or similar requirement against assets of, deposits
with or for the account of, or credit extended by, a Lender's LIBOR
Lending Office or Eurocurrency Lending Office or shall impose on such
Lender (or its LIBOR Lending Office or Eurocurrency Lending Office) or
on the United States market for certificates of deposit, the London
interbank market or the Eurocurrency Interbank Market any other
condition affecting its LIBOR Advances or its Eurocurrency Advances or
its obligation to make such Advances;
and the result of any of the foregoing is to increase the cost to a Lender (or
its LIBOR Lending Office or its Eurocurrency Lending Office) of making or
maintaining any LIBOR Advances or Eurocurrency Advances, or to reduce the
amount of any sum received or receivable by a Lender (or its LIBOR Lending
Office or its Eurocurrency Lending Office) with respect thereto, by an amount
reasonably deemed by a Lender to be material, then, within fifteen days after
demand by a Lender, Company shall pay to such Lender such additional amount as
will reasonably compensate such Lender for such increased costs or reduced
amounts, subject to Section 10.09. The affected Lender will as soon as
practicable notify Company of any event of which it has knowledge, occurring
after the date hereof, which will entitle such Lender to compensation pursuant
to this Section 8.03 and will designate a different LIBOR Lending Office or
Eurocurrency Lending Office or other lending office if such designation will
avoid the need for, or reduce the amount of, such compensation and will not, in
the sole judgment of the affected Lender made in good faith, be disadvantageous
to such Lender.
(b) A certificate of any Lender claiming compensation under this
Section 8.03 and setting forth the additional amounts to be paid to it
hereunder and calculations therefor shall be conclusive in the absence of
demonstrable error. In determining such amount, a Lender may use any
reasonable averaging and attribution methods. If a Lender demands compensation
under this Section 8.03, Company may at any time, upon at least five Business
Days' prior notice to such Lender, after reimbursement to such Lender by
Company in accordance with this Section 8.03 of all costs incurred, prepay in
full the then outstanding LIBOR Advances or Eurocurrency Advance, as
appropriate, of such Lender, together with accrued interest thereon to the date
of prepayment, along with any reimbursement required under Section 2.09.
Concurrently with prepaying such LIBOR Advances or Eurocurrency Advances, as
appropriate, made by Lenders, Company may borrow a Base Rate Advance from such
Lender, and such Lender shall make such Base Rate Advance, in an amount such
that the outstanding principal amount of the Advances owing to such Lender
shall equal the outstanding principal amount of the Advances owing immediately
prior to such prepayment.
8.04. Base Rate Advances Rather than LIBOR Advances or Eurocurrency
Advances. If notice has been given pursuant to Section 8.01, 8.02 or 8.03
suspending the obligation of a Lender to make LIBOR Advances or Eurocurrency
Advances, as appropriate, or requiring LIBOR Advances or Eurocurrency Advances,
as appropriate, of a Lender to be repaid or prepaid, then, unless and until
such Lender notifies Company that the circumstances giving rise to such
repayment no longer apply, all Advances which would otherwise be made by such
Lender to Company as LIBOR Advances or Eurocurrency Advances, as appropriate,
shall be made instead as Base Rate Advances.
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8.05. Capital Adequacy. If either (a) the introduction of or any
change in or in the interpretation of any Law or (b) compliance by a Lender
with any Law or any guideline or request from any central bank or other
Tribunal (whether or not having the force of law) affects or would affect the
amount of capital required or expected to be maintained by a Lender or any
corporation controlling such Lender, and such Lender determines that the amount
of such capital is increased by or based upon the existence of such Lender's
commitments or Advances hereunder and other commitments or advances of such
Lender of this type, then, upon demand by such Lender, subject to Section
10.09, Company shall immediately pay to such Lender, from time to time as
specified by such Lender, additional amounts sufficient to compensate such
Lender with respect to such circumstances, to the extent that such Lender
reasonably determines in good faith such increase in capital to be allocable to
the existence of such Lender's commitment hereunder. A certificate as to such
amounts submitted to Company by a Lender hereunder, shall, in the absence of
demonstrable error, be conclusive and binding for all purposes. The failure of
any Lender to demand compensation hereunder shall not constitute a waiver of
such Lender's rights to demand such compensation. Without prejudice to the
survival of any other obligations of Company hereunder, the obligations of
Company under this Section 8.05 shall survive the payment of the Obligations
and termination of this Agreement.
ARTICLE IX. AGREEMENT AMONG LENDERS
9.01. Agreement Among Lenders. Lenders agree among themselves that:
(a) Administrative Lender. Each Lender hereby appoints
Administrative Lender as its nominee in its name and on its behalf, to receive
all documents and items to be furnished hereunder; to act as nominee for and on
behalf of all Lenders under the Loan Documents; to, except as otherwise
expressly set forth herein, take such action as may be requested by Determining
Lenders or the Required Lenders, as appropriate, provided that, unless and
until Administrative Lender shall have received such requests, Administrative
Lender may take such administrative action, or refrain from taking such
administrative action, as it may deem advisable and in the best interests of
Lenders; to arrange the means whereby the proceeds of the Advances of Lenders
are to be made available to Company; to distribute promptly to each Lender
information, requests and documents received from any Loan Party, and each
payment (in like funds received) with respect to any of such Lender's Advances,
fee or other amount; and to deliver to any Loan Party requests, demands,
approvals and consents received from Lenders. Administrative Lender agrees to
promptly distribute to each Lender, at such Lender's address set forth on
Schedule 2.11 information, requests, documents and payments received from any
Loan Party.
(b) Replacement of Administrative Lender. Should Administrative
Lender or any successor Administrative Lender ever cease to be a Lender
hereunder, or should Administrative Lender or any successor Administrative
Lender ever resign as Administrative Lender, or should Administrative Lender or
any successor Administrative Lender ever be removed with cause by Determining
Lenders, then the Lender appointed by the other Lenders, with the consent of
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Company, shall forthwith become Administrative Lender, and Company and Lenders
shall execute such documents as any Lender may reasonably request to reflect
such change. Any resignation or removal of Administrative Lender or any
successor Administrative Lender shall become effective upon the appointment by
Lenders, with the consent of Company, of a successor Administrative Lender;
provided, however, that if Lenders fail for any reason to appoint a successor
within sixty days after the resigning Administrative Lender's giving notice of
resignation or Determining Lenders' removal of Administrative Lender,
Administrative Lender or any successor Administrative Lender (as the case may
be) may, on behalf of Lenders, appoint a successor Administrative Lender, which
shall be a commercial bank organized under the Laws of the United States of
America or of any state thereof and having a combined capital and surplus of at
least $10,000,000, and the resigning Administrative Lender shall thereafter
have no obligation to act as Administrative Lender hereunder.
(c) Expenses. Each Lender shall pay its pro rata share, based on
its Sharing Ratio, of any expenses paid by Administrative Lender directly and
solely in connection with any of the Loan Documents if Administrative Lender
does not receive reimbursement therefor from other sources within sixty days
after the date incurred, unless payment of such fees is being diligently
disputed by such Lender or Company in good faith. Any amount so paid by
Lenders to Administrative Lender shall be returned by Administrative Lender pro
rata to each paying Lender to the extent later paid by Company or any other
Person on Company's behalf to Administrative Lender.
(d) Delegation of Duties. Administrative Lender may execute any
of its duties hereunder by or through officers, directors, employees, attorneys
or agents, and shall be entitled to (and shall be protected in relying upon)
advice of counsel concerning all matters pertaining to its duties hereunder.
(e) Reliance by Administrative Lender. Administrative Lender and
its officers, directors, employees, attorneys and agents shall be entitled to
rely and shall be fully protected in relying on any writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram, telegram, telex or
teletype message, statement, order, or other document or conversation
reasonably believed by it or them in good faith to be genuine and correct and
to have been signed or made by the proper Person and, with respect to legal
matters, upon opinions of counsel selected Administrative Lender.
Administrative Lender may, in its reasonable judgment, deem and treat the payee
of any Note as the owner thereof for all purposes hereof.
(f) Limitation of Administrative Lender's Liability. Neither
Administrative Lender nor any of its Affiliates, officers, directors,
employees, attorneys or agents shall be liable for any action taken or omitted
to be taken by it or them hereunder in good faith and believed by it or them to
be within the discretion or power conferred to it or them by the Loan Documents
or be responsible for the consequences of any error of judgment, except for its
or their own gross negligence or wilful misconduct. Except as aforesaid,
Administrative Lender shall not be under any duty to enforce any rights with
respect to any of the Advances, Letters of Credit, or any security therefor.
Administrative Lender shall not be compelled to do any act hereunder or
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to take any action towards the execution or enforcement of the powers hereby
created or to prosecute or defend any suit in respect hereof, unless
indemnified to its satisfaction against loss, cost, liability and expense.
Administrative Lender shall not be responsible in any manner to any Lender or
Issuing Bank for the effectiveness, enforceability, genuineness, validity or
due execution of any of the Loan Documents, or for any representation,
warranty, document, certificate, report or statement made herein or furnished
in connection with any Loan Documents, or be under any obligation to any Lender
or Issuing Bank to ascertain or to inquire as to the performance or observation
of any of the terms, covenants or conditions of any Loan Documents on the part
of any Loan Party. To the extent not reimbursed by Loan Parties, each Lender
hereby jointly and severally indemnifies and holds harmless Administrative
Lender, pro rata according to its Sharing Ratio, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses and/or disbursements of any kind or nature whatsoever
which may be imposed on, asserted against, or incurred by Administrative Lender
(in its capacity as Administrative Lender and not as a Lender or Issuing Bank)
in any way with respect to any Loan Documents or any action taken or omitted by
Administrative Lender (in its capacity as Administrative Lender and not as a
Lender or Issuing Bank) under the Loan Documents (including any negligent
action of Administrative Lender), except to the extent the same result from
gross negligence or wilful misconduct by Administrative Lender. The
obligations of Loan Parties and Lenders under this Section 9.01(h) shall
survive termination of this Agreement and any resignation or removal of
Administrative Lender.
(g) Liability Among Lenders. No Lender shall incur any liability
(other than the sharing of expenses and other matters specifically set forth
herein and in the other Loan Documents) to any other Lender, except for acts or
omissions in bad faith.
(h) Rights as Lender. With respect to its obligations in respect
of the Commitment, the Advances made by it and Note issued to it,
Administrative Lender and Issuing Bank shall have the same rights as a Lender
and may exercise the same as though it were not Administrative Lender or
Issuing Bank and the term "Lender" or "Lenders" shall, unless the context
otherwise indicates, include Administrative Lender and Issuing Bank in their
respective individual capacities. Administrative Lender, Issuing Bank or any
Lender may accept deposits from, act as trustee under indentures of, and
generally engage in any kind of business with, Company and any of its
Affiliates, and any Person who may do business with or own securities of
Company or any of its Affiliates, all as if Administrative Lender and Issuing
Bank were not Administrative Lender or Issuing Bank, respectively, hereunder
and without any duty to account therefor to Lenders.
9.02. Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon Administrative Lender, Issuing Bank or
any other Lender and based upon the financial statements referred to in
Sections 4.04, 5.01(a) and 5.01(b), 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 Administrative Lender, Issuing Bank or any other
Lender and based upon such documents and information as it shall deem
appropriate at the time, continue to make
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its own credit decisions in taking or not taking action under this Agreement
and the other Loan Documents.
ARTICLE X. MISCELLANEOUS
10.01. Notices.
(a) All notices and other communications under this Agreement
shall be in writing (including telecopy) and shall be deemed to have been given
on the date personally delivered or sent by telecopy, or three days after
deposit in the mail, designated as certified mail, return receipt requested,
postage-prepaid, or one day after being entrusted to a reputable commercial
overnight delivery service, or one day after being delivered to the telegraph
office or sent out by telex addressed to the party to which such notice is
directed at its address determined as provided in this Section 10.01. All
notices and other communications under this Agreement shall be given to the
parties hereto at the following addresses:
(i) If to Company, to it or if to any other Loan Party,
to it in care of Company, in each case, at:
DSC Communications Corporation
1000 Coit Road
Plano, Texas 75075
Telecopy Number: (214) 519-2688
Attn: Christian J. Ornes, Vice President and Treasurer
(ii) If to Administrative Lender or Issuing Bank, at:
NationsBank of Texas, N.A.
901 Main Street, 67th Floor
Dallas, Texas 75202
Telecopy Number: (214) 508-0980
Attn: Donald L. Harrison, Jr., Senior Vice President or
Brent W. Mellow, Vice President
(iii) If to a Lender, at its address shown on Schedule
2.11, or if applicable, set forth in its Assignment
Agreement.
(b) Any party hereto may change the address to which notices shall
be directed by giving ten days' written notice of such change to the other
parties.
10.02. Expenses. Company shall promptly pay:
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(a) all reasonable out-of-pocket expenses of Administrative Lender
in connection with the preparation, negotiation, execution and delivery of this
Agreement and the other Loan Documents, the transactions contemplated hereunder
and thereunder, and the making of Advances and the issuance of Letters of
Credit hereunder, including, without limitation, the reasonable fees of and the
out-of-pocket expenses incurred by Special Counsel;
(b) all reasonable out-of-pocket expenses and attorneys' fees of
Administrative Lender in connection with the administration of the transactions
contemplated in this Agreement and the other Loan Documents and the
preparation, negotiation, execution and delivery of any waiver, amendment or
consent by Lenders relating to this Agreement or the other Loan Documents; and
(c) (i) all costs, out-of-pocket expenses and attorneys' fees of
Administrative Lender incurred for enforcement, collection, restructuring,
refinancing and "work-out", or otherwise incurred in obtaining performance
under the Loan Documents, which in each case shall include, without limitation,
fees and expenses of counsel for Administrative Lender, and administrative fees
for Administrative Lender, (ii) after the occurrence of an Event of Default
specified in Section 6.01(a), all costs, out-of-pocket expenses and attorneys'
fees of each Lender incurred for enforcement, collection, restructuring,
refinancing and "work-out", or otherwise incurred in obtaining performance
under the Loan Documents, and all costs and out-of-pocket expenses of
collection, which in each case shall include, without limitation, fees and
expenses of consultants and counsel for each Lender, and (iii) after the
occurrence of an Event of Default other than that specified in Section 6.01(a),
all non-legal out-of-pocket expenses of each Lender and all attorneys' fees of
one counsel acting on behalf of all Lenders incurred for enforcement,
restructuring, refinancing and "work-out", or otherwise incurred in obtaining
performance under the Loan Documents.
10.03. Waivers. The rights and remedies of Administrative Lender,
Issuing Bank, and Lenders under this Agreement and the other Loan Documents
shall be cumulative and not exclusive of any rights or remedies which they
would otherwise have. No failure or delay by Administrative Lender, Issuing
Bank, or any Lender in exercising any right shall operate as a waiver of such
right. Lenders expressly reserve the right to require strict compliance with
the terms of this Agreement in connection with any funding of a request for an
Advance and Issuing Bank expressly reserves the right to require strict
compliance with the terms of this Agreement in connection with any issuance of
a Letter of Credit. In the event that any Lender decides to fund an Advance or
Issuing Bank decides to issue a Letter of Credit at a time when a Loan Party is
not in strict compliance with the terms of this Agreement, such decision by
such Lender or Issuing Bank shall not be deemed to constitute an undertaking by
such Lender to fund any further requests for Advances or by Issuing Bank to
issue any additional Letters of Credit or preclude Administrative Lender,
Issuing Bank or Lenders from exercising any rights available under the Loan
Documents or at law or equity. Any waiver or indulgence granted by
Administrative Lender, Issuing Bank or Lenders shall not constitute a
modification of this Agreement, except to the extent expressly provided in such
waiver or indulgence, or constitute a course of dealing by Administrative
Lender, Issuing Bank or Lenders at variance with the terms of the Agreement
such as to require further notice by Administrative Lender, Issuing Bank
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or Lenders of Administrative Lender's, Issuing Bank's or any Lender's intent to
require strict adherence to the terms of the Agreement in the future. Any such
actions shall not in any way affect the ability of Administrative Lender,
Issuing Bank, or any Lender, in their discretion, to exercise any rights
available to them under this Agreement or under any other agreement, whether or
not Administrative Lender, Issuing Bank, or any Lender is a party thereto,
relating to any Loan Party.
10.04. Determination by Lenders Conclusive and Binding. Any material
determination required or expressly permitted to be made by Administrative
Lender, Issuing Bank, or any Lender under this Agreement shall be made in its
reasonable judgment and in good faith, and shall when made, absent demonstrable
error, be conclusive and binding on all parties.
10.05. Set-Off. Upon the occurrence and continuance of an Event of
Default and acceleration of the Notes and Obligations, each Lender and any
subsequent holder of any Note, and any assignee in any Note is hereby
authorized by each Loan Party at any time or from time to time to set-off,
appropriate and apply any deposits (general or special (except trust and escrow
accounts), time or demand, including without limitation debt evidenced by
certificates of deposit, in each case whether matured or unmatured) and any
other debt at any time held or owing by such Lender or holder to or for the
credit or the account of any Loan Party, against and on account of the
Obligations and other liabilities of any Loan Party to such Lender or holder,
irrespective of whether or not the Lender or holder shall have made any demand
hereunder (other than as expressly provided in Section 6.02) and although
certain of such obligations and liabilities, or any of them, shall be
contingent. Any sums obtained by any Lender or by any assignee or subsequent
holder of any Note shall be subject to pro rata treatment of all Obligations
and other liabilities hereunder. Each Lender agrees promptly to notify any
Loan Party after any such set-off and application by such Lender, but the
failure to give such notice shall not affect the validity of such set-off and
application.
10.06. Assignment.
(a) No Loan Party may assign or transfer any of its rights or
obligations hereunder or under the other Loan Documents without the prior
written consent of Lenders.
(b) No Lender shall be entitled to assign its interest in this
Agreement, its Notes or its Advances, except as hereinafter set forth.
(c) Without the consent of Company, any Lender may at any time
sell participations in all or any part of its Advances and Reimbursement
Obligations (collectively, "Participations") to any banks or other financial
institutions ("Participants") provided that neither such Participation nor any
agreement relating thereto shall confer on any Person (other than the parties
hereto) any right to vote on, approve or sign amendments or waivers, or any
other independent benefit or any legal or equitable right, remedy or other
claim under this Agreement or any other Loan Documents, other than the right to
vote on, approve, or sign amendments or waivers or consents with respect to
items that would result in (i) any increase in the commitment
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of any Participant; or (ii)(A) the extension of the date of maturity of, or (B)
the extension of the due date for any payment of principal, interest or fees
respecting, or (C) the reduction of the amount of any installment of principal
or interest on or the change or reduction of any mandatory reduction required
hereunder, or (D) a reduction of the rate of interest on, the Advances, the
Letters of Credit, or the Reimbursement Obligations to which such Participant
is entitled; or (iii) the release of security for the Obligations, including
without limitation any guarantee, except pursuant to this Agreement; or (iv)
the reduction of any fees payable hereunder to which such Participant is
entitled. Lenders may, subject to Section 10.13, provide copies of all
financial information received from Company to such Participants.
(d) Each Lender may assign to one or more financial institutions
or funds organized under the laws of the United States, or any state thereof,
or under the laws of any other country that is a member of the Organization for
Economic Cooperation and Development, or a political subdivision of any such
country, which is engaged in making, purchasing or otherwise investing in
commercial loans in the ordinary course of its business (each, an "Assignee")
its rights and obligations under this Agreement and the other Loan Documents;
provided, however, that (i) each such assignment shall be subject to the prior
written consent of Administrative Lender and Company, which consent shall not
be unreasonably withheld, (ii) each such assignment shall be of a constant, and
not a varying, percentage of such Lender's rights and obligations under this
Agreement, (iii) the amount of the Advances and Reimbursement Obligations being
assigned pursuant to each such assignment (determined as of the date of the
assignment with respect to such assignment) shall in no event be less than the
lesser of (A) $10,000,000 (or the Eurocurrency equivalent), or (B) the
applicable Lender's portion of the Commitment, (iv) the applicable Lender,
Administrative Lender, and applicable Assignee shall execute and deliver to
Administrative Lender an Assignment and Acceptance Agreement (an "Assignment
Agreement") in substantially the form of Exhibit C, together with the Notes
subject to such assignment, (v) the Assignee or the Lender executing the
Assignment Agreement as the case may be, shall deliver to Administrative Lender
a processing fee of $3,500, and (vi) Administrative Lender shall give Company
notice of any proposed assignment no later than thirty days prior to any
assignment by any Lender. Upon such execution, delivery and acceptance from
and after the effective date specified in each Assignment Agreement, which
effective date shall be at least three Business Days after the execution
thereof, (A) the Assignee thereunder shall be party hereto and, to the extent
that rights and obligations hereunder have been assigned to it pursuant to such
Assignment, have the rights and obligations of a Lender hereunder and (B) the
assigning Lender shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment Agreement, relinquish such
rights and be released from such obligations under this Agreement.
(e) Notwithstanding anything in Section 10.06(d) to the contrary,
any Lender may assign and pledge all or any portion of its Advances and Notes
to any Federal Reserve Bank as collateral security pursuant to Regulation A of
F.R.S. Board and any Operating Circular issued by such Federal Reserve Bank;
provided, however, that no such assignment under this Section 10.06(e) shall
release the assignor Lender from its obligations hereunder.
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(f) Upon its receipt of an Assignment Agreement executed by a
Lender and an Assignee, and any Note or Notes subject to such assignment,
Company shall, within three Business Days after its receipt of such Assignment
Agreement, at its own expense, execute and deliver to Administrative Lender, in
exchange for the surrendered Notes, new Notes to the order of such Assignee in
an amount equal to the portion of the Commitment assigned to it pursuant to
such Assignment Agreement and new Notes to the order of the assigning Lender in
an amount equal to the portion of the Advances and Commitment retained by it
hereunder. Such new Notes shall be in an aggregate principal amount equal to
the aggregate principal amount of such surrendered Notes, shall be dated the
effective date of such Assignment Agreement and shall otherwise be in
substantially the form of Exhibit A.
(g) Any Lender may, in connection with any assignment or proposed
assignment pursuant to this Section 10.06, disclose to the Assignee or proposed
Assignee, any information relating to Loan Parties furnished to such Lender by
or on behalf of any Loan Party.
(h) Except as specifically set forth in this Section 10.06,
nothing in this Agreement or any other Loan Documents, expressed or implied, is
intended to or shall confer on any Person other than the respective parties
hereto and thereto and their successors and Assignees permitted hereunder and
thereunder any benefit or any legal or equitable right, remedy or other claim
under this Agreement or any other Loan Documents.
(i) Notwithstanding anything in this Section 10.06 to the
contrary, no Assignee shall be entitled to receive any greater payment under
Section 2.15 or Section 8.03 than such assigning Lender would have been
entitled to receive with respect to the interest assigned to such Assignee.
10.07. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same
instrument.
10.08. Severability. Any provision of this Agreement which is for
any reason prohibited or found or held invalid or unenforceable by any court or
governmental agency shall be ineffective to the extent of such prohibition or
invalidity or unenforceability without invalidating the remaining provisions
hereof in such jurisdiction or affecting the validity or enforceability of such
provision in any other jurisdiction.
10.09. Interest and Charges. It is not the intention of any parties
to this Agreement to make an agreement in violation of the Laws of any
applicable jurisdiction relating to usury. Regardless of any provision in any
Loan Documents, no Lender shall ever be entitled to receive, collect or apply,
as interest on the Obligations, any amount in excess of the Maximum Amount. If
any Lender ever receives, collects or applies, as interest, any such excess,
such amount which would be excessive interest shall be deemed a partial
repayment of principal and treated hereunder as such; and if principal is paid
in full, any remaining excess shall be paid to Company. In determining whether
or not the interest paid or payable, under any
- 78 -
<PAGE> 85
specific contingency, exceeds the Maximum Amount, Loan Parties and Lenders
shall, to the maximum extent permitted under Applicable Law, (a) characterize
any nonprincipal payment as an expense, fee or premium rather than as interest,
(b) exclude voluntary prepayments and the effect thereof, and (c) amortize,
prorate, allocate and spread in equal parts, the total amount of interest
throughout the entire contemplated term of the Obligations so that the interest
rate is uniform throughout the entire term of the Obligations; provided,
however, that if the Obligations are paid and performed in full prior to the
end of the full contemplated term thereof, and if the interest received for the
actual period of existence thereof exceeds the Maximum Amount, Lenders shall
refund to Company the amount of such excess or credit the amount of such excess
against the total principal amount of the Obligations owing, and, in such
event, Lenders shall not be subject to any penalties provided by any laws for
contracting for, charging or receiving interest in excess of the Maximum
Amount. This Section 10.09 shall control every other provision of all
agreements pertaining to the transactions contemplated by or contained in the
Loan Documents.
10.10. Headings. Headings used in this Agreement are for convenience
only and shall not be used in connection with the interpretation of any
provision hereof.
10.11. Amendment and Waiver. The provisions of this Agreement may
not be amended, modified or waived except by the written agreement of Loan
Parties and Determining Lenders; provided, however, that no such amendment,
modification or waiver shall be made (a) without the consent of all Lenders, if
it would (i) increase the Commitment, or (ii) increase the Specified Percentage
of any Lender, or (iii) extend the date of maturity of, extend the due date for
any payment of principal or interest on, reduce the amount of any principal of
or interest on, or reduce the rate of interest on, any Advance or other amount
owing under any Loan Documents, or (iv) release any guaranty of the Obligations
(except pursuant to this Agreement), or (v) reduce the fees payable hereunder,
or (vi) revise this Section 10.11, or (vii) waive the date for payment of any
of the Obligations, or (viii) amend the definition of Determining Lenders, or
(ix) amend or waive the provisions of Section 5.03(b) or (x) extend the
expiration date of any Letter of Credit beyond the Maturity Date; or (b)
without the consent of Administrative Lender, if it would alter the rights,
duties or obligations of Administrative Lender; or (c) without the consent of
Issuing Bank, if it would alter the rights, duties or obligations of Issuing
Bank. Neither this Agreement nor any term hereof may be amended orally, nor
may any provision hereof be waived orally but only by an instrument in writing
signed by Administrative Lender and, in the case of an amendment, by Loan
Parties.
10.12. Exception to Covenants. No Loan Party shall be deemed to be
permitted to take any action or fail to take any action which is permitted as
an exception to any of the covenants contained herein or which is within the
permissible limits of any of the covenants contained herein if such action or
omission would result in the breach of any other covenant contained herein.
10.13. Confidentiality. Each Lender and Administrative Lender agrees
(on behalf of itself and each of its Affiliates, directors, officers, employees
and representatives) to use
- 79 -
<PAGE> 86
reasonable precautions to keep confidential, in accordance with customary
procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices, any non-public information
supplied to it by any Loan Party pursuant to this Agreement which is identified
by any Loan Party as being confidential at the time the same is delivered to
Lenders or Administrative Lender, provided that nothing herein shall limit the
disclosure of any such information (a) to the extent required by Law or
judicial process, (b) to counsel for any Lender or Administrative Lender, (c)
to bank examiners, auditors or accountants of any Lender, (d) to Administrative
Lender or any other Lender, (e) in connection with any litigation involving a
Loan Party to which any one or more of Lenders is a party, provided, further,
that, unless specifically prohibited by Applicable Law or court order, each
Lender shall, prior to disclosure thereof, notify Company of any request for
disclosure of any such not-public information (i) by any Tribunal or
representative thereof (other than any such request in connection with an
examination of such Lender's financial condition by such Tribunal) or (ii)
pursuant to legal process, or (f) to any Assignee (or prospective Assignee) so
long as such Assignee (or prospective Assignee) agrees to handle such
information confidentially.
10.14. Judgment.
(a) If for the purposes of obtaining judgment in any court it is
necessary to convert a sum due hereunder or under the Notes in any currency
(the "Original Currency") into another currency (the "Other Currency") the
parties hereto agree, to the fullest extent that they may effectively do so,
that the rate of exchange used shall be that at which in accordance with normal
banking procedures Administrative Lender could purchase the Original Currency
with the Other Currency at 11:00 a.m. on the third Business Day preceding that
on which final judgment is given.
(b) The obligation of any Loan Party in respect of any sum due in
the Original Currency from it to any Lender or Administrative Lender hereunder
or under the Note held by such shall, notwithstanding any judgment in any Other
Currency, be discharged only to the extent that on the Business Day following
receipt by such Lender or Administrative Lender (as the case may be) of any sum
adjudged to be so due in such Other Currency such Lender or Administrative
Lender (as the case may be) may in accordance with normal banking procedures
purchase Dollars with such Other Currency; if the amount of the Original
Currency so purchased is less than the sum originally due to such Lender or
Administrative Lender (as the case may be) in the Original Currency, each Loan
Party, jointly and severally, agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify such Lender or Administrative
Lender (as the case may be) against such loss, and if the amount of the
Original Currency so purchased exceeds the sum originally due to any Lender or
Administrative Lender (as the case may be) in the Original Currency, such
Lender or Administrative Lender (as the case may be) agrees to remit to Company
such excess.
10.15. GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
TEXAS; PROVIDED, HOWEVER, THAT
- 80 -
<PAGE> 87
PURSUANT TO ARTICLE 5069-15.10(B), TITLE 79, REVISED CIVIL STATUTES OF TEXAS,
1925, AS AMENDED, IT IS AGREED THAT THE PROVISIONS OF CHAPTER 15, TITLE 79,
REVISED CIVIL STATUTES OF TEXAS, 1925, AS AMENDED, SHALL NOT APPLY TO THE
ADVANCES, THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. WITHOUT EXCLUDING ANY
OTHER JURISDICTION, EACH LOAN PARTY AGREES THAT THE STATE AND FEDERAL COURTS OF
TEXAS LOCATED IN DALLAS, TEXAS SHALL HAVE JURISDICTION OVER PROCEEDINGS IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS ARE PERFORMABLE IN DALLAS COUNTY, TEXAS.
10.16. WAIVER OF CONSUMER RIGHTS. EACH LOAN PARTY WAIVES ITS RIGHTS
UNDER THE DECEPTIVE TRADE PRACTICES- CONSUMER PROTECTION ACT, SECTION 17.41 ET
SEQ., TEXAS BUSINESS AND COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL
RIGHTS, AND PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF ITS OWN
SELECTION, EACH LOAN PARTY VOLUNTARILY CONSENTS TO THIS WAIVER.
10.17. WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY LAW,
EACH LOAN PARTY HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR UNDER ANY
LOAN DOCUMENT, AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH
MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM OR
RELATING TO THIS AGREEMENT, THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.
10.18. FINAL AGREEMENT OF THE PARTIES. THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES. THIS SECTION 10.19 IS INCLUDED IN THIS AGREEMENT PURSUANT TO SECTION
26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
- 81 -
<PAGE> 88
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.
LOAN PARTIES: DSC COMMUNICATIONS CORPORATION,
a Delaware corporation
By:
------------------------------
Christian J. Ornes
Vice President and Treasurer
DSC FINANCE CORPORATION,
a Delaware corporation
By:
------------------------------
Christian J. Ornes
Vice President and Treasurer
DSC INTERNATIONAL CORPORATION,
a Delaware corporation
By:
------------------------------
Christian J. Ornes
Vice President and Treasurer
DSC MARKETING SERVICES, INC.,
a Delaware corporation
By:
------------------------------
Christian J. Ornes
Vice President and Treasurer
- 82 -
<PAGE> 89
DSC OF PUERTO RICO, INC.,
a Delaware corporation
By:
------------------------------
Christian J. Ornes
Vice President and Treasurer
DSC TELECOMMUNICATIONS CORPORATION,
a Delaware corporation
By:
------------------------------
Christian J. Ornes
Treasurer
DSC TELECOM, INC.,
a Nevada corporation
By:
------------------------------
Christian J. Ornes
Treasurer
DSC TELECOM L.P.,
a Texas limited partnership
By: DSC TELECOMMUNICATIONS
CORPORATION, its General
Partner
By:
-----------------------
Christian J. Ornes
Treasurer
- 83 -
<PAGE> 90
ADMINISTRATIVE LENDER: NATIONSBANK OF TEXAS, NATIONAL
ASSOCIATION, as Administrative Lender
By:
------------------------------
Donald L. Harrison, Jr.
Senior Vice President
ISSUING BANK: NATIONSBANK OF TEXAS, NATIONAL
ASSOCIATION, as Issuing Bank
By:
------------------------------
Donald L. Harrison, Jr.
Senior Vice President
LENDERS: NATIONSBANK OF TEXAS, NATIONAL
ASSOCIATION
By:
------------------------------
Donald L. Harrison, Jr.
Senior Vice President
- 84 -
<PAGE> 91
THE FIRST NATIONAL BANK OF CHICAGO
By:
-------------------------------
Name:
-------------------------
Title:
------------------------
- 85 -
<PAGE> 92
ABN AMRO BANK N.V. HOUSTON AGENCY
By: ABN AMRO North America, Inc.,
as agent
By:
----------------------
Name:
-----------------
Title:
----------------
By:
----------------------
Name:
-----------------
Title:
----------------
- 86 -
<PAGE> 93
COMMERZBANK AKTIENGESELLSCHAFT,
ATLANTA AGENCY
By:
------------------------------
Name:
-------------------------
Title:
------------------------
By:
------------------------------
Name:
-------------------------
Title:
------------------------
- 87 -
<PAGE> 94
CORESTATES BANK N.A.
By:
------------------------------
Name:
-------------------------
Title:
------------------------
- 88 -
<PAGE> 95
EXHIBIT A
NOTE
Dallas, Texas May 8, 1996
FOR VALUE RECEIVED, the undersigned, DSC COMMUNICATIONS CORPORATION, a
Delaware corporation ("Company"), HEREBY PROMISES TO PAY to the order of
_________________________ ("Lender"), the unpaid principal amount of the
Advances (as defined in the Credit Agreement referred to below) made by Lender
to Company pursuant to the Credit Agreement, payable at such times, and in such
amounts, as are specified in the Credit Agreement. The books and records of
Lender shall be prima facie evidence of all sums due Lender, absent
demonstrable error.
Company promises to pay interest on the unpaid principal amount of the
Advances from the date made until such principal amount is paid in full, at
such interest rates, and payable at such times, as are specified in the Credit
Agreement.
Both principal and interest in respect of each Advance (i) in Dollars
(as defined in the Credit Agreement) are payable in lawful money of the United
States of America to Administrative Lender (as defined in the Credit Agreement)
(for the account of Lender) at Administrative Lender's principal banking house
at 901 Main Street, Dallas, Texas 75202 in immediately available funds, and
(ii) in any currency other than Dollars are payable in such currency at such
place as Administrative Lender may direct, in immediately available funds.
This Note is one of the Notes referred to in, and is entitled to the
benefits of, the Multicurrency Credit Agreement dated as of May 8, 1996 among
Company, certain guarantors, NationsBank of Texas, National Association, as
Administrative Lender, NationsBank of Texas, National Association, as Issuing
Bank, Lender and certain other financial institutions (such agreement, together
with all amendments and restatements, the "Credit Agreement"). The Credit
Agreement, among other things, 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.
Company and each guarantor, surety and endorser waives demand,
presentment, notice of dishonor, protest and diligence in collecting sums due
hereunder; agrees that extensions and renewals without limit as to number,
acceptance of any number of partial payments, releases of any party liable
hereon, and releases or substitutions of collateral, before or after maturity,
shall not release or discharge its obligation under this Note. Company agrees
that during the full term hereof the maximum lawful interest rate for this Note
determined under Texas law shall be the indicated rate ceiling as specified in
Article 5069-1.04 of V.A.T.S. Further, to the extent that any other lawful
rate ceiling exceeds the rate ceiling so determined, then the higher rate
ceiling shall apply. Chapter 15 of the Texas Credit Code does not apply to
this Note.
<PAGE> 96
This Note shall be governed by and construed in accordance with the
laws of the State of Texas.
DSC COMMUNICATIONS CORPORATION
By:
------------------------------
Christian J. Ornes
Vice President and Treasurer
- 2 -
<PAGE> 97
EXHIBIT B
COMPLIANCE CERTIFICATE
NationsBank of Texas, N.A.,
as Administrative Lender
901 Main Street, 67th Floor
Dallas, Texas 75202
Attention: Brent Mellow, Vice President [DATE]
Dear Sirs:
Reference is made to the Multicurrency Credit Agreement dated as of
May 8, 1996 (the "Credit Agreement") among DSC Communications Corporation (the
"Company"), DSC Marketing Services, Inc., DSC Finance Corporation, DSC
International Corporation, DSC of Puerto Rico, Inc., DSC Telecommunications
Corporation, DSC Telecom, Inc., DSC Telecom, L.P., NationsBank of Texas, N.A.,
as Administrative Lender, and the Lenders party thereto. Capitalized terms
used herein and not otherwise defined herein shall have the meanings assigned
to such terms in the Credit Agreement. The Company hereby delivers to you this
Compliance Certificate pursuant to Section 5.01 of the Credit Agreement, and
certifies as follows:
<TABLE>
<CAPTION>
In Compliance
(Please
-------
indicate)
---------
<S> <C> <C> <C>
1. Financial Statements and Reports
--------------------------------
(i) Quarterly unaudited financial statements within 45 days after the end of each of Yes No
the first three fiscal quarters of each fiscal year (Section 5.01(b)).
(ii) Other accounting or financial reports specially requested by any Lender (Section Yes No
5.01(c)).
(iii) All documents disclosed to shareholders or the Securities and Exchange Commission Yes No
(Section 5.01(d)).
(iv) Any required disclosure of certain conditions or events (Section 5.01(e)). Yes No
</TABLE>
<PAGE> 98
<TABLE>
<CAPTION>
In Compliance
(Please
-------
indicate)
---------
<S> <C> <C>
2. Section 5.16. Limitations on Debt.
-------------------
A. Maximum Consolidated Senior Debt
(i) Consolidated Debt
(a) Liabilities for borrowed money (whether $
or not evidenced by a promissory note, a -----------------
security or otherwise), including,
without limitation, liabilities for
borrowed money in respect of banker's
acceptances
(b) Liabilities for borrowed money secured $
by any Lien existing on property owned -----------------
by such Person (whether or not such
liabilities shall have been assumed by
such Person, or there shall exist
recourse to such Person in respect of
such liabilities)
(c) Obligations in respect of any Capital $
Leases -----------------
(d) The present value of all payments due $
under any arrangement for retention of -----------------
title, any conditional sale agreement or
any deferred purchase price of Property
or services (other than a Capital Lease)
discounted at the implicit rate, if
known, with respect thereto or, if
unknown, at 8% per annum
(e) Any Recourse Obligations $
-----------------
</TABLE>
<PAGE> 99
<TABLE>
<CAPTION>
In Compliance
(Please
-------
indicate)
---------
<S> <C> <C>
(f) Other obligations that would be deemed $
to be borrowed money liabilities, -----------------
determined in accordance with customary
financial practices
(g) Obligations in respect of interest rate $
protection and currency exchange rate -----------------
hedge and protection agreements
(h) The undrawn maximum face amount of all $
outstanding letters of credit, and, -----------------
without duplication, the outstanding
amount of all drafts drawn thereunder
(i) All liabilities in respect of unfunded $
vested benefits under Benefit -----------------
Arrangements
(j) (i) any Guarantee for any obligation or $
liability of another Person of a type -----------------
described in any of clause (a) through
clause (h), inclusive, above or (ii) any
obligation in respect of interest rate
protection agreements for any obligation
or liability of a type described in any
of clause (a) through clause (h),
inclusive, above
(k) Guaranties of Debt referred to in $
Items (g) or (h) above -----------------
(l) Consolidated Debt [((a) + (b) + (c) + $
(d) + (e) + (f) + (j)) - (to the extent --------------
included in (j), (k))]
</TABLE>
- 3 -
<PAGE> 100
<TABLE>
<CAPTION>
In Compliance
(Please
-------
indicate)
---------
<S> <C> <C> <C> <C> <C>
(ii) Consolidated Net Worth (from 3.B(iii) below) $
-----------------
(iii) Maximum [.35 x ((i) + (ii))] $
--------------
B. Actual Consolidated Senior Debt for [DATE]
(i) Consolidated Debt (from 2.A(i) above) $
-----------------
(ii) Subordinated Debt $
-----------------
(iii) Actual [(i) - (ii)] $ Yes No
--------------
C. Maximum Consolidated Debt
(i) Consolidated Debt (from 2.A(i) above) $
-----------------
(ii) Consolidated Net Worth (from 3.B(iii) below) $
-----------------
(iii) Maximum [.45 x ((i) + (ii))] $
--------------
D. Actual Consolidated Debt (from 2.A(i) above) $ Yes No
--------------
3. Section 5.17. Minimum Consolidated Net Worth
A. Minimum
(i) 80% of Consolidated Net Worth on December 31, $
1995 -----------------
(ii) The sum of the Fiscal Quarter Increase for $
all fiscal quarters of Company ended -----------------
subsequent to December 31, 1995 and on and
prior to such date
</TABLE>
- 4 -
<PAGE> 101
<TABLE>
<CAPTION>
In Compliance
(Please
-------
indicate)
---------
<S> <C> <C> <C> <C> <C>
(iii) 50% of increase in stockholder's equity $
pursuant to offerings (including as a -----------------
result of exercise of employee stock
options and warrants or issuance of
Securities subsequently converted into
common stock) after the Agreement Date
(iv) Without duplication, the net worth of any $
Person becoming a Subsidiary on or after the -----------------
Agreement Date or substantially all of the
assets of which are acquired and paid for in
equity securities
(v) Minimum [(i) + (ii) + (iii) + (iv)] $
--------------
B. Actual
(i) Shareholders' equity of Company and its $
consolidated Subsidiaries at such time -----------------
(ii) All minority interests which are Investments $
owned by Company and its consolidated -----------------
Subsidiaries, at such time (excluding
(a) unrealized gains or losses from
translation adjustments required under GAAP
and (b) unrealized gains or losses in
connection with the determination of the fair
value (as required by GAAP) of Investments)
(iii) [(i) + (ii)] $ Yes No
--------------
4. Section 5.18. Consolidated Funded Debt to Consolidated
Excess Cash Flow Ratio
A. Maximum for the quarter ending ___________ 3.25:1.00
</TABLE>
- 5 -
<PAGE> 102
<TABLE>
<CAPTION>
In Compliance
(Please
-------
indicate)
---------
<S> <C> <C> <C>
B. Actual for the quarter ending ___________
(i) Consolidated Funded Debt
(a) Capital Leases $
-----------------
(b) Debt created, issued or incurred or $
assumed for money borrowed or for the -----------------
capitalized deferred purchase price of
property or services purchased
(excluding accounts payable in the
ordinary course of business and
obligations in respect of undrawn
letters of credit)
(c) [(a) + (b)] $
--------------
(ii) Consolidated Excess Cash Flow
(a) Consolidated EBITDA
(1) Consolidated Income From Continuing $
Operations Before Income Taxes and -----------------
Extraordinary Items
(2) Aggregate amount deducted in $
determining (1) above in respect of -----------------
Consolidated Interest Expense,
depreciation and amortization
(including the amortization of
capitalized software development
costs for such period)
(3) [(1) + (2)] $
--------------
(b) Consolidated Capital Expenditures $
(excluding expenditures on capitalized -----------------
software development costs)
</TABLE>
- 6 -
<PAGE> 103
<TABLE>
<CAPTION>
In Compliance
(Please
-------
indicate)
---------
<S> <C> <C> <C> <C> <C>
(c) [(a) - (b)] $
--------------
(iii) [(i)/(ii)] to 1 Yes No
----
5. Sections 5.12(b)(i) and 5.14(h). Investments and
Dispositions of Assets
A. Maximum
(i) Maximum (from and after the Agreement Date) $
40% of Consolidated Total Assets based on -----------------
most recent audited financial statements
B. Actual (from and after the Agreement Date)
(i) Aggregate amount of Investments to date to $
Persons who are not Loan Parties (not -----------------
including Permitted Portfolio Investments)
(ii) Aggregate amount of sales, transfers, $
conveyances or leases of assets to date to -----------------
Persons not Loan Parties outside the ordinary
course of business
Actual [(i) + (ii)] $ Yes No
--------------
6. Section 5.15. Restricted Payments
A. Maximum (during term of Agreement)
(i) Maximum $10,000,000
(ii) 50% of Consolidated Net Income (or 100% in $
the case of a deficit) determined in respect -----------------
of a single period commencing January 1, 1995
and ending on the date such Restricted
Payment is made)
</TABLE>
- 7 -
<PAGE> 104
<TABLE>
<CAPTION>
In Compliance
(Please
-------
indicate)
---------
<S> <C> <C> <C> <C> <C>
(iii) Aggregate amount of cash proceeds $
received from the sale or issuance of -----------------
common stock (or the sale or issuance of
other Securities subsequently converted
into common stock) of any of the Loan
Parties to Persons other than Loan
Parties after the Agreement Date, in
each case, net of all transaction costs
and expenses incurred in connection with
such sale or issuance
(iv) [(i) + (ii) + (iii)] $
--------------
B. Actual
Aggregate amount to date $ Yes No
--------------
</TABLE>
The undersigned hereby certifies that the above information and
computations are true and correct and not misleading as of the date hereof, and
that no Default or Event of Default has occurred and is continuing.
- 8 -
<PAGE> 105
Executed this ________ day of _____________, 19___.
Very truly yours,
DSC COMMUNICATIONS CORPORATION
By:
---------------------------------
Name:
---------------------------
Title:
--------------------------
- 9 -
<PAGE> 106
EXHIBIT C
ASSIGNMENT AND ACCEPTANCE
Dated _______________, 199__
Reference is made to the Multicurrency Credit Agreement dated as of
May 8, 1996, among DSC Communications Corporation, each other Loan Party,
NationsBank of Texas, National Association, as Administrative Lender,
NationsBank of Texas, National Association, as Issuing Bank, and Lenders (the
"Credit Agreement"). Terms defined in the Credit Agreement are used herein
with the same meaning.
*[___________________________ ("Assignor")]*[_______________ and
_________________, (singly and collectively, "Assignor")]* and
________________________ ("Assignee") agree as follows:
1. Assignor hereby sells and assigns to Assignee, and Assignee
hereby purchases and assumes from Assignor, a _____% interest in and to all of
Assignor's rights and obligations under the Credit Agreement as of the
Effective Date (as defined below), with respect to such percentage interest in
Assignor's Commitment as in effect on the Effective Date, the principal amount
of Advances owing to Assignor on the Effective Date, and the Notes held by
Assignor, and Assignor's participation in any Letters of Credit and
Reimbursement Obligations outstanding on the Effective Date, subject to the
terms and conditions of this Assignment and Acceptance.
2. Assignor (a) represents and warrants that (i) as of the date
hereof its Commitment (without giving effect to assignments thereof which have
not yet become effective) is $____________ and, as of the date hereof, the
outstanding principal amount of the Advances owing to it (without giving effect
to assignments thereof which have not yet become effective) is ____________,
(ii) as of the date hereof its participation in Letters of Credit and
Reimbursement Obligations (without giving effect to assignments thereof which
have not yet become effective) is _____________, and (iii) it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (b) makes no representation or
warranty and assumes no responsibility with respect to (i) any statements,
warranties, or representations made in or in connection with the Credit
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency, or value of the Credit Agreement or any other instrument or
document furnished pursuant thereto or (ii) the financial condition of any Loan
Party or the performance or observance by any Loan Party of any of its
obligations under the Credit Agreement or any other instrument or document
furnished pursuant thereto; and (c) attaches the Notes referred to in Paragraph
1 above to exchange such Notes for new Notes as follows:
*[a Note dated ______________, _____, payable to the order of Assignee
at the office of Administrative Lender,]*
*[a Note dated _____________, ____, payable to the order of Assignee
at the office of Administrative Lender,]*
<PAGE> 107
3. Assignee (a) confirms that it has received a copy of the
Credit Agreement and the other Loan Documents, together with copies of the
financial statements referred to in Sections 4.04 and 5.01 of the Credit
Agreement and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into this Assignment and
Acceptance; (b) agrees that it will, independently and without reliance upon
Administrative Lender, Issuing Bank, Assignor, 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
the Credit Agreement and the other Loan Documents; (c) appoints and authorizes
Administrative Lender to take such action as agent on its behalf and to
exercise such powers under the Credit Agreement, the other Loan Documents, and
this Assignment and Acceptance as are delegated to Administrative Lender by the
terms thereof and hereof, together with such powers as are reasonably
incidental thereto and hereto; (d) agrees that it will perform in accordance
with its terms all of the obligations which by the terms of the Credit
Agreement, the other Loan Documents, and this Assignment and Acceptance are
required to be performed by it as a Lender; [and] (e) specifies the addresses
set forth in Schedule I attached hereto as its address for the receipt of
notices and as its initial LIBOR Lender Office and Eurocurrency Lending Office,
respectively[; and (f) attaches the forms prescribed by the IRS certifying as
to Assignee's status for purposes of determining exception from United States
withholding taxes with respect to all payments to be made to Assignee under
the Credit Agreement, the other Loan Documents, and this Assignment and
Acceptance or such other documents as are necessary to indicate that all such
payments are subject to such taxes at a rate reduced by an applicable tax
treaty].
4. The effective date for this Assignment and Acceptance shall be
__________, ____ (the "Effective Date").
5. Upon such acceptance as of the Effective Date and upon the
remittance of a $3,500 processing fee to Administrative Lender, (a) Assignee
shall be a party to the Credit Agreement and, to the extent provided in this
Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and (b) Assignor shall, to the extent provided in this Assignment
and Acceptance, relinquish its rights and be released from its obligations
under the Credit Agreement.
6. Upon such acceptance from and after the Effective Date,
whenever Administrative Lender shall receive a payment, or whenever
Administrative Lender shall make an application of funds, in respect of any
aggregate outstanding principal amount of the Advances or in respect of any
aggregate amount of interest accrued on the Advances, or in respect of the
commitment fee (other than a payment or an application of funds in respect of
any amount due and owing to any Lender, Administrative Lender, or Issuing Bank
under Sections 2.09, 2.16(g)(iii), 5.08, 8.03, 8.05, or 10.02 of the Credit
Agreement), Administrative Lender shall pay over to each of Lenders an amount
equal to (i) such Lender's Pro Rata Share (as defined below) of such aggregate
amount of principal, (ii) such Lender's Pro Rata Share of such aggregate amount
of interest, and (iii) such Lender's Pro Rata Share of such aggregate amount of
the commitment fee.
- 2 -
<PAGE> 108
The "Pro Rata Share" of any aggregate amount means, with respect to
such Lender, the amount equal to the product obtained by multiplying (i) such
aggregate amount and (ii) a fraction, the numerator of which is such Lender's
Commitment, or after the Advances have been made, the principal amount of the
Advances owing to such Lender and the denominator of which is the sum of the
Commitments of all of Lenders, or after the Advances have been made, the
aggregate principal amount of the Advances owing to all Lenders.
7. In the event that, after Administrative Lender has paid to any
Lender its Pro Rata Share of any such payment received by Administrative
Lender, or any such application made by Administrative Lender, such payment or
application is rescinded or must otherwise be returned or must be paid over by
Administrative Lender for any reason, such Lender shall, upon notice by
Administrative Lender, forthwith pay back to Administrative Lender such
Lender's Pro Rata Share of the amount so rescinded or so returned or paid over.
8. This Assignment and Acceptance shall be governed by and
construed in accordance with the laws of the State of Texas and the United
States of America. Without excluding any other jurisdiction, Assignee agrees
that the courts of Texas will have jurisdiction over proceedings in connection
herewith.
9. Assignee's Specified Percentage shall be _____%.
10. This Assignment and Acceptance may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same
instrument.
ASSIGNOR:
*[ASSIGNOR]*
By:
-------------------------------------------------
,
------------------------- ----------------------
(Print Name) (Print Title)
- 3 -
<PAGE> 109
ASSIGNEE:
*[ASSIGNEE - LENDER]
By:
-------------------------------------------------
,
------------------------- ----------------------
(Print Name) (Print Title)]*
Accepted this ___ day of ____________, ______
NATIONSBANK OF TEXAS, NATIONAL ASSOCIATION,
as Administrative Lender
By:
-----------------------------------------------
,
------------------------- --------------------
(Print Name) (Print Title)
ISSUING BANK:
NATIONSBANK OF TEXAS, NATIONAL ASSOCIATION,
as Issuing Bank
By:
-----------------------------------------------
,
------------------------- --------------------
(Print Name) (Print Title)
- 4 -
<PAGE> 110
COMPANY:
DSC COMMUNICATIONS CORPORATION
By:
-----------------------------------------------
,
------------------------- --------------------
(Print Name) (Print Title)
- 5 -
<PAGE> 111
Schedule I
ASSIGNEE'S ADDRESS
1. Address for the Advances and Receipt of Notices
2. Initial LIBOR Lending Office
3. Initial Eurocurrency Lending Office
- 6 -
<PAGE> 112
EXHIBIT D
ADVANCE REQUEST
[Date]
NationsBank of Texas, N.A.,
as Administrative Lender
901 Main Street
13th Floor
Dallas, Texas 75202
Attention: Gilda Digges
Ladies and Gentlemen:
The undersigned refers to the Multicurrency Credit Agreement dated as
of May 8, 1996, among DSC Communications Corporation, each other Loan Party,
NationsBank of Texas, National Association, as Administrative Lender,
NationsBank of Texas, National Association, as Issuing Bank, and Lenders (the
"Credit Agreement", the capitalized terms defined therein being used herein as
therein defined), and hereby gives you notice pursuant to Section 2.02 of the
Credit Agreement that the undersigned hereby requests ________ Borrowing[s]
under the Credit Agreement, and in that connection sets forth below the
information relating to [each] such Advance (a "Proposed Borrowing") as
required by Section 2.02 of the Credit Agreement:
Proposed Borrowing:
(i) The Business Day of such Proposed Borrowing is _________, 19__.
(ii) The type of Advance[s] comprising such Proposed Borrowing is
[are] [Base Rate Advance[s] [to the extent of an aggregate amount of
$__________]] [LIBOR Advance[s] [to the extent of an aggregate amount
of $________________]] [Eurocurrency Advance[s] [to the extent of an
aggregate amount of ____________]].
(iii) The currency of the Proposed Borrowing is _________________.
(iv) The aggregate amount of such Proposed Borrowing is _________.
[(v) The initial Interest Period for each [LIBOR Advance]
[Eurocurrency Advance] made as part of such Proposed Borrowing is
_________________________.]
[(vi) The funds evidencing the Proposed Borrowing should be
disbursed by you as follows:]
<PAGE> 113
The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the Proposed
Borrowing, before and after giving effect thereto and to the application of the
proceeds therefrom:
(A) the conditions precedent specified in Sections 3.01
(with respect to the initial Advances) and 3.02(with respect to all
Advances) of the Credit Agreement have been satisfied with respect to
the Proposed Borrowing and will remain satisfied on the date of such
Proposed Borrowing;
(B) the representations and warranties specified in
Article IV of the Credit Agreement are true and correct in all
material respects as though made on and as of such date; and
(C) no event has occurred and is continuing or would
result from such Proposed Borrowing, which constitutes a Default or
Event of Default.
Very truly yours,
DSC COMMUNICATIONS CORPORATION
By:
------------------------------
, Vice President
--------------
- 2 -
<PAGE> 114
EXHIBIT E
REDENOMINATION NOTICE
[Date]
NationsBank of Texas, N.A.,
Administrative Lender
901 Main Street
13th Floor
Dallas, Texas 75202
Attention: Gilda Digges
Ladies and Gentlemen:
The undersigned refers to the Multicurrency Credit Agreement dated as
of May 8, 1996, among DSC Communications Corporation, each other Loan Party,
NationsBank of Texas, National Association, as Administrative Lender,
NationsBank of Texas, National Association, as Issuing Bank, and Lenders (the
"Credit Agreement", the capitalized terms defined therein being used herein as
therein defined), and hereby gives you notice pursuant to Section 2.02 of the
Credit Agreement that the Company requests a Redenomination (as defined in the
Credit Agreement) of:
[The LIBOR Advances comprising the Borrowing originally made on
___________, 19___ and now in the outstanding aggregate amount of [here insert
the outstanding aggregate amount of such Advances on the date of this Notice]
into the following:
(i) The Business Day of such proposed Borrowing is _________, 19__.
(ii) The type of Advance[s] comprising such proposed Borrowing is
[are] [Base Rate Advance[s] [to the extent of an aggregate amount of
$__________]] [LIBOR Advance[s] [to the extent of an aggregate amount
of $________________]] [Eurocurrency Advance[s] [to the extent of an
aggregate amount of ____________]].
(iii) The amount of accrued interest, if any, comprised in the
proposed Borrowing is $________________.
(iv) The currency of the proposed Borrowing is _________________.
(v) The aggregate amount of such proposed Borrowing is ___________.
<PAGE> 115
[(vi) The initial Interest Period for each [LIBOR Advance]
[Eurocurrency Advance] made as part of such proposed Borrowing is
_________________________.]]
[The Eurocurrency Advances comprising the Borrowing originally made on
__________, 19___ and now in the outstanding aggregate amount of [here insert
the currency and outstanding aggregate amount of such Advances on the date of
this Notice] into the following:
(i) The Business Day of such proposed Borrowing is _________, 19__.
(ii) The type of Advance[s] comprising such proposed Borrowing is
[are] [Base Rate Advance[s] [to the extent of an aggregate amount of
$__________]] [LIBOR Advance[s] [to the extent of an aggregate amount
of $________________]] [Eurocurrency Advance[s] [to the extent of an
aggregate amount of ____________]].
(iii) The amount of accrued interest, if any, comprised in the
proposed Borrowing is _________________.
(iv) The currency of the proposed Borrowing is _________________.
(v) The aggregate amount of such proposed Borrowing is ___________.
[(vi) The initial Interest Period for each [LIBOR Advance]
[Eurocurrency Advance] made as part of such proposed Borrowing is
_________________________.]]
[The LIBOR Advances comprising the Borrowing originally made on
___________, 19___ and now in the outstanding aggregate amount of [here insert
the outstanding aggregate amount of such Advances on the date of this Notice]
will be repaid in full on the last day of their Interest Period and will not be
reborrowed.]
[The Eurocurrency Advances comprising the Borrowing originally made on
___________, 19___ and now in the outstanding aggregate amount of [here insert
the outstanding aggregate amount of such Advances on the date of this Notice]
will be repaid in full on the last day of their Interest Period and will not be
reborrowed.]
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the Redenomination,
before and after giving effect thereto:
(A) the representations and warranties specified in
Article IV of the Credit Agreement are true and correct in all
material respects as though made on and as of such date; and
- 2 -
<PAGE> 116
(B) no event has occurred and is continuing or would
result from such proposed Borrowing, which constitutes a Default or
Event of Default.
Very truly yours,
DSC COMMUNICATIONS CORPORATION
By:
-------------------------------
, Vice President
---------------
- 3 -
<PAGE> 117
EXHIBIT F
ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT (the "Agreement") is dated as of
_______________, and is made by _________________, a _________ [jurisdiction of
organization and form of entity] ("New Subsidiary").
BACKGROUND.
DSC Communications Corporation, each other Loan Party,
NationsBank of Texas, National Association, as Administrative Lender,
NationsBank of Texas, National Association, as Issuing Bank, and Lenders have
entered into the Multicurrency Credit Agreement dated as of May 8, 1996 (such
agreement, together with each amendment and restatement, the "Credit
Agreement"). Section 5.12(c) of the Credit Agreement provides Company the
option to add any of its direct or indirect Domestic Subsidiaries as a Loan
Party to the Credit Agreement and as a guarantor of the Guaranteed Obligations.
Company has exercised such option with respect to the New Subsidiary. New
Subsidiary desires to become a Guarantor and each existing Loan Party desires
for New Subsidiary to become a Guarantor.
AGREEMENT.
NOW, THEREFORE, in consideration of the premises set forth herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Administrative Lender, Issuing Bank, each Lender, each
Loan Party, and New Subsidiary hereby agree as follows:
1. Capitalized terms not otherwise defined herein have the
meaning specified in the Credit Agreement.
2. Without releasing, discharging or otherwise impairing or
negating the obligations and/or liabilities of Company or any other Loan Party
thereunder or in connection therewith (all of which obligations and liabilities
are hereby expressly ratified, confirmed and acknowledged by Company and each
Guarantor), New Subsidiary hereby (a) agrees to become, and does hereby become
(i) a Loan Party under the Credit Agreement and bound jointly and severally as
a Loan Party under the Agreement and (ii) a Guarantor under the Guaranty and
bound jointly and severally as a Guarantor under the Guaranty and (b) assumes
all of the obligations, liabilities, duties and agreements of a Loan Party and
Guarantor under the Credit Agreement and each other Loan Document.
3. New Subsidiary hereby represents, warrants, covenants and
agrees to and with Administrative Lender, Issuing Bank and each Lender as
follows:
<PAGE> 118
(a) New Subsidiary shall perform all obligations of a
Loan Party and a Guarantor under the Loan Documents; and
(b) Each provision of Article IV of the Credit Agreement
is incorporated herein by reference and New Subsidiary represents and warrants
as to itself each provision of Article IV as of the date hereof.
4. Each Loan Party (including New Subsidiary) represents and
warrants as to itself as follows:
(a) The execution, delivery and performance by each Loan
Party of this Agreement, have been duly authorized by all necessary corporate
action on the part of such Loan Party.
(b) This Agreement constitutes, and each other Loan
Document will constitute, legal, valid and binding obligation of each Loan
Party, enforceable in accordance with its terms, except as enforcement thereof
may be limited by Debtor Relief Laws and general principles of equity (whether
applied in a proceeding at law or in equity).
5. All representations and warranties by each Loan Party herein
shall survive delivery of this Agreement and the closing of the transactions
contemplated hereby.
6. This Agreement may be executed by the parties in any number of
counterparts, all of which taken together shall constitute one and the same
agreement, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
7. GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
TEXAS; PROVIDED, HOWEVER, THAT PURSUANT TO ARTICLE 5069-15.10(B), TITLE 79,
REVISED CIVIL STATUTES OF TEXAS, 1925, AS AMENDED, IT IS AGREED THAT THE
PROVISIONS OF CHAPTER 15, TITLE 79, REVISED CIVIL STATUTES OF TEXAS, 1925, AS
AMENDED, SHALL NOT APPLY TO THE ADVANCES, THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS. WITHOUT EXCLUDING ANY OTHER JURISDICTION, EACH PARTY HERETO AGREES
THAT THE STATE AND FEDERAL COURTS OF TEXAS LOCATED IN DALLAS, TEXAS SHALL HAVE
JURISDICTION OVER PROCEEDINGS IN CONNECTION WITH THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS ARE PERFORMABLE IN
DALLAS COUNTY, TEXAS.
8. WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY LAW,
EACH LOAN PARTY HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR UNDER ANY
OTHER LOAN DOCUMENT,
- 2 -
<PAGE> 119
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM OR RELATING TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY,
AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY.
9. FINAL AGREEMENT OF THE PARTIES. THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES. THIS SECTION 9 IS INCLUDED IN THIS AGREEMENT PURSUANT TO SECTION 26.02
OF THE TEXAS BUSINESS AND COMMERCE CODE.
Executed as of the date specified above.
NEW SUBSIDIARY:
[NEW SUBSIDIARY]
By:
--------------------------------------------
,
------------------------- -----------------
(Print Name) (Print Title)
LOAN PARTIES:
DSC COMMUNICATIONS CORPORATION
By:
--------------------------------------------
,
------------------------- -----------------
(Print Name) (Print Title)
- 3 -
<PAGE> 120
DSC FINANCE CORPORATION
By:
--------------------------------------------
,
------------------------- -----------------
(Print Name) (Print Title)
DSC INTERNATIONAL CORPORATION
By:
--------------------------------------------
,
------------------------- -----------------
(Print Name) (Print Title)
DSC MARKETING SERVICES, INC.
By:
--------------------------------------------
,
------------------------- -----------------
(Print Name) (Print Title)
DSC OF PUERTO RICO, INC.
By:
--------------------------------------------
,
------------------------- -----------------
(Print Name) (Print Title)
DSC TELECOMMUNICATIONS CORPORATION
By:
--------------------------------------------
,
------------------------- -----------------
(Print Name) (Print Title)
- 4 -
<PAGE> 121
DSC TELECOM, INC.
By:
--------------------------------------------
,
------------------------- -----------------
(Print Name) (Print Title)
DSC TELECOM L.P.
By:
--------------------------------------------
,
------------------------- -----------------
(Print Name) (Print Title)
By:
--------------------------------------------
,
------------------------- -----------------
(Print Name) (Print Title)
ADMINISTRATIVE LENDER:
NATIONSBANK OF TEXAS, NATIONAL ASSOCIATION, as
Administrative Lender
By:
--------------------------------------------
,
------------------------- -----------------
(Print Name) (Print Title)
ISSUING BANK:
NATIONSBANK OF TEXAS, NATIONAL ASSOCIATION, as
Issuing Bank
By:
--------------------------------------------
,
------------------------- -----------------
(Print Name) (Print Title)
- 5 -
<PAGE> 122
LENDERS:
NATIONSBANK OF TEXAS, NATIONAL ASSOCIATION
By:
--------------------------------------------
,
------------------------- -----------------
(Print Name) (Print Title)
*[EACH OTHER LENDER]*
By:
--------------------------------------------
,
------------------------- -----------------
(Print Name) (Print Title)
- 6 -
<PAGE> 123
EXHIBIT G
EUROCURRENCY ELECTION NOTICE
[Date]
NationsBank of Texas, N.A.,
as Administrative Lender
901 Main Street
67th Floor
Dallas, Texas 75202
Attention: Brent W. Mellow
Ladies and Gentlemen:
The undersigned refers to the Multicurrency Credit Agreement dated as
of May 8, 1996, among DSC Communications Corporation, each other Loan Party,
NationsBank of Texas, National Association, as Administrative Lender,
NationsBank of Texas, National Association, as Issuing Bank, and Lenders (the
"Credit Agreement", the capitalized terms defined therein being used herein as
therein defined), and hereby gives you notice pursuant to Section 3.03 of the
Credit Agreement that the undersigned hereby requests that Advances be funded
in [insert name of currency and name of country which issues the currency] and
that Schedule 3.03 to the Credit Agreement be amended to reflect the addition
of [insert name of currency].
Company acknowledges that it may not submit any Advance Request or
Request for Issuance requesting any Advance or Letter of Credit in such
currency prior to receipt by Company of written notice in accordance with
Sections 3.03(b) and (c) of the Credit Agreement.
Very truly yours,
DSC COMMUNICATIONS CORPORATION
By:
-------------------------------
, Vice President
---------------
<PAGE> 1
Exhibit 11
DSC COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Computation of Income per Share
(In thousands)
(Unaudited)
The following table sets forth the computation of shares used in the
calculation of income per share for the three months ended March 31, 1996 and
1995.
Average Shares Used in Income per Share Calculation:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------
1996 1995
-------- --------
<S> <C> <C>
Weighted average
shares outstanding
during the period ........................ 115,815 113,884
Common share equivalents
outstanding:
Options and warrants
issued and
contingently issuable .................. 3,921 5,397
Assumed purchase of
treasury shares ........................ (1,383) (1,597)
-------- --------
Weighted average shares
used in calculation ...................... 118,353 117,684
======== ========
</TABLE>
Fully diluted income per share is not shown since the dilutive effect is less
than three percent for the three months ended March 31, 1996 and 1995.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-01-1996
<CASH> 228,414
<SECURITIES> 303,191
<RECEIVABLES> 239,136
<ALLOWANCES> 0
<INVENTORY> 328,035
<CURRENT-ASSETS> 1,173,239
<PP&E> 706,205
<DEPRECIATION> (322,296)
<TOTAL-ASSETS> 1,843,779
<CURRENT-LIABILITIES> 446,839
<BONDS> 209,738
<COMMON> 1,208
0
0
<OTHER-SE> 1,135,793
<TOTAL-LIABILITY-AND-EQUITY> 1,843,779
<SALES> 307,897
<TOTAL-REVENUES> 307,897
<CGS> 178,431
<TOTAL-COSTS> 178,431
<OTHER-EXPENSES> 111,506
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,086
<INCOME-PRETAX> 18,589
<INCOME-TAX> 7,064
<INCOME-CONTINUING> 11,525
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,525
<EPS-PRIMARY> 0.10
<EPS-DILUTED> 0
</TABLE>
