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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended December 26, 1999
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 1-5560
--------
ALPHA INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-2302115
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20 SYLVAN ROAD, WOBURN, MASSACHUSETTS 01801
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (781) 935-5150
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 [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
CLASS OUTSTANDING AT JANUARY 30, 2000
COMMON STOCK, PAR VALUE $.25 PER SHARE 19,887,482
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PAGE
PART 1 FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Balance Sheets - December 26, 1999 and March 28, 1999..... 3
Consolidated Statements of Income - Quarters and Nine Months Ended
December 26, 1999 and December 27, 1998................................ 4
Consolidated Statements of Cash Flows - Nine Months Ended
December 26, 1999 and December 27, 1998................................ 5
Notes to Consolidated Financial Statements............................. 6
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations.............................................. 9
Item 3 - Quantitative and Qualitative Disclosures About Market Risk........ 13
PART 2 OTHER INFORMATION
Item 1 - Legal Proceedings................................................. 13
Item 6 - Exhibits and Reports on Form 8-K.................................. 14
- --------------------------------------------------------------------------------
2
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
DECEMBER 26, MARCH 28,
1999 1999
(UNAUDITED) (AUDITED)
- --------------------------------------------------------------------------------
ASSETS
Current assets
Cash and cash equivalents...................... $ 27,850 $ 14,029
Short-term investments (Note 2)................ 108,041 9,731
Accounts receivable, trade, less allowance
for doubtful accounts of $712 and $741....... 27,691 22,972
Inventories (Note 3)........................... 9,324 8,773
Prepayments and other current assets........... 2,485 796
Deferred tax assets............................ 2,493 6,522
-------- --------
Total current assets.................. 177,884 62,823
-------- --------
Property, plant and equipment, less accumulated
depreciation and amortization of $69,233
and $62,204.................................... 59,383 42,497
Other assets......................................... 1,561 1,361
-------- --------
$238,828 $106,681
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt........... $ 111 $ 912
Accounts payable............................... 12,733 10,700
Accrued liabilities:
Payroll, commissions and related expenses.... 5,314 7,292
Other accrued liabilities.................... 628 1,232
-------- --------
Total current liabilities............. 18,786 20,136
-------- --------
Long-term debt ...................................... 404 713
-------- --------
Other long-term liabilities.......................... 1,857 1,626
-------- --------
Deferred tax liabilities............................. 3,380 3,192
-------- --------
Commitments and contingencies (Note 6)
Stockholders' equity (Note 7)
Common stock par value $.25 per share: authorized
30,000,000 shares; issued 19,775,423 and
16,051,311 shares............................ 4,944 4,013
Additional paid-in capital..................... 175,198 58,872
Retained earnings.............................. 34,346 18,276
Less - Treasury shares 37,078 and 62,379 shares
at cost...................................... 77 133
Unearned compensation-restricted stock....... 10 14
-------- --------
Total stockholders' equity............ 214,401 81,014
-------- --------
$238,828 $106,681
======== ========
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
3
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
THIRD QUARTER ENDED NINE MONTHS ENDED
DEC. 26, DEC. 27, DEC. 26, DEC. 27,
1999 1998 1999 1998
- --------------------------------------------------------------------------------
Net sales............................. $47,463 $32,489 $127,837 $92,070
Cost of sales....................... 26,484 18,151 71,340 52,046
Research and development expenses... 5,332 3,397 14,416 9,310
Selling and administrative
expenses.......................... 7,598 5,809 20,886 16,728
------- ------- -------- -------
Operating income...................... 8,049 5,132 21,195 13,986
Interest expense...................... (20) (61) (94) (231)
Interest income and other, net........ 1,810 231 4,009 647
------- ------- -------- -------
Income before income taxes............ 9,839 5,302 25,110 14,402
Provision for income taxes............ 3,542 530 9,040 1,440
------- ------- -------- -------
Net income............................ $ 6,297 $ 4,772 $ 16,070 $12,962
======= ======= ======== =======
Net income per share basic............ $ 0.32 $ 0.30 $ 0.86 $ 0.82
======= ======= ======== =======
Net income per share diluted.......... $ 0.31 $ 0.29 $ 0.82 $ 0.80
======= ======= ======== =======
Weighted average common shares basic.. 19,660 15,835 18,671 15,773
======= ======= ======== =======
Weighted average common shares
diluted............................. 20,605 16,402 19,688 16,211
======= ======= ======== =======
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
4
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
NINE MONTHS ENDED
DEC. 26, DEC. 27,
1999 1998
- --------------------------------------------------------------------------------
Cash flows from operating activities:
Net income.............................................. $ 16,070 $ 12,962
Adjustments to reconcile net income to net cash
provided by operations:
Depreciation and amortization of property, plant
and equipment...................................... 7,029 5,806
Deferred taxes........................................ 9,128 --
Contribution of treasury shares to Savings and
Retirement Plan.................................... 850 707
Amortization of unearned compensation - restricted
stock, net......................................... 4 58
Increase (decrease) in other liabilities and long-
term benefits...................................... 231 (488)
Increase in other assets.............................. (230) (178)
Change in assets and liabilities
Accounts receivable ................................. (4,719) (818)
Inventories.......................................... (551) (942)
Prepayments and other current assets................. (1,689) (1,295)
Accounts payable..................................... 2,033 1,503
Other accrued liabilities and expenses............... (2,582) 1,495
--------- --------
Net cash provided by operations.................... 25,574 18,810
--------- --------
Cash flows from investing activities:
Purchases of short-term investments..................... (142,925) (16,908)
Maturities of short-term investments.................... 44,615 6,079
Additions to property, plant and equipment.............. (23,915) (11,117)
--------- --------
Net cash used in investing activities.............. (122,225) (21,946)
--------- --------
Cash flows from financing activities:
Payments on long-term debt.............................. (1,110) (1,407)
Deferred charges related to long-term debt.............. 30 12
Payments on capital lease obligations................... -- (8)
Proceeds from sale of stock............................. 109,446 98
Exercise of stock options............................... 2,106 518
--------- --------
Net cash provided by (used in) financing
activities...................................... 110,472 (787)
--------- --------
Net increase (decrease) in cash and cash equivalents...... 13,821 (3,923)
Cash and cash equivalents, beginning of period............ 14,029 14,356
--------- --------
Cash and cash equivalents, end of period.................. $ 27,850 $ 10,433
========= ========
- --------------------------------------------------------------------------------
Supplemental cash flow disclosures:
Cash paid for income taxes ............................... $ 3,078 $ 903
========= ========
Cash paid for interest.................................... $ 118 $ 218
========= ========
Noncash transaction from financing activities:
Tax benefit associated with the exercise of
stock options........................................ $ 4,911 $ --
========= ========
The accompanying notes are an integral part of these financial statements.
5
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 BASIS OF PRESENTATION
The interim financial information included herein is unaudited. In addition, the
financial information does not include all disclosures required under generally
accepted accounting principles because certain note information included in the
Company's annual report to shareholders has been omitted and such information
should be read in conjunction with the prior year's annual report. However, the
financial information reflects all adjustments (consisting solely of normal
recurring adjustments), which are, in the opinion of management, necessary to a
fair statement of the results for the interim periods. The Company considers the
disclosures adequate to make the information presented not misleading.
NOTE 2 SHORT-TERM INVESTMENTS
The Company's short-term investments are classified as held-to-maturity. These
investments consist primarily of commercial paper and bonds with original
maturities of more than 90 days. Such short-term investments are carried at
amortized cost, which approximates fair value, due to the short period of time
to maturity. Gains and losses are included in investment income in the period
they are realized.
NOTE 3 INVENTORIES
DEC. 26, MARCH 28,
Inventories consist of the following: 1999 1999
- --------------------------------------------------------------------------------
(in thousands)
Raw materials.............................. $3,038 $3,852
Work-in-process............................ 4,651 3,034
Finished goods............................. 1,635 1,887
------ ------
$9,324 $8,773
====== ======
NOTE 4 SEGMENT INFORMATION
The Company is organized into three reportable segments as follows:
WIRELESS SEMICONDUCTOR PRODUCTS:
The Wireless Semiconductor segment designs and manufactures gallium arsenide
integrated circuits and other discrete semiconductors for the global market for
wireless telephone handsets, wireless data and other applications.
APPLICATION SPECIFIC PRODUCTS:
The Application Specific segment designs and manufactures a broad range of
gallium arsenide and silicon devices and components for satellite,
instrumentation, defense and other communications markets.
CERAMIC PRODUCTS:
The Ceramics segment designs and manufactures technical ceramic and magnetic
products for wireless telephony infrastructure and other wireless markets.
6
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
NOTE 4 SEGMENT INFORMATION (CONTINUED)
The table below presents selected financial data by business segment for the
periods indicated.
QUARTERS ENDED NINE MONTHS ENDED
------------------ -------------------
DEC. 26, DEC. 27, DEC. 26, DEC. 27,
1999 1998 1999 1998
------- ------- -------- -------
SALES
Wireless Semiconductor Products..... $31,496 $17,945 $ 81,680 $46,303
Application Specific Products....... 7,815 7,676 21,582 27,497
Ceramic Products.................... 8,152 6,868 24,575 18,270
------- ------- -------- -------
$47,463 $32,489 $127,837 $92,070
======= ======= ======== =======
OPERATING INCOME
Wireless Semiconductor Products..... $ 5,012 $ 2,503 $ 12,550 $ 4,772
Application Specific Products....... 1,996 1,895 5,663 8,100
Ceramic Products.................... 1,041 734 2,982 1,114
------- ------- -------- -------
$ 8,049 $ 5,132 $ 21,195 $13,986
======= ======= ======== =======
DEC. 26, MARCH 28,
1999 1999
-------- --------
(in thousands)
TOTAL ASSETS
Wireless Semiconductor Products........................... $ 61,589 $ 41,508
Application Specific Products............................. 10,907 10,751
Ceramic Products.......................................... 23,662 20,119
Corporate................................................. 142,670 34,303
-------- --------
$238,828 $106,681
======== ========
SIGNIFICANT CUSTOMER
During the quarters ended December 26, 1999 and December 27, 1998, one customer
accounted for approximately 35% and 32%, respectively, of the Company's sales.
During the nine months ended December 26, 1999 and December 27, 1998, one
customer accounted for approximately 34% and 27%, respectively, of the Company's
sales.
NOTE 5 EARNINGS PER SHARE
A reconciliation of the weighted average number of shares outstanding used in
the computation of the basic and diluted earnings per share for the quarters and
nine months ended December 26, 1999 and December 27, 1998 is as follows:
QUARTERS ENDED NINE MONTHS ENDED
------------------ ------------------
DEC. 26, DEC. 27, DEC. 26, DEC. 27,
1999 1998 1999 1998
-------- -------- -------- --------
(in thousands)
Weighted average shares (basic).......... 19,660 15,835 18,671 15,773
Effect of dilutive stock options......... 945 567 1,017 438
------ ------ ------ ------
Weighted average shares (diluted)........ 20,605 16,402 19,688 16,211
====== ====== ====== ======
NOTE 6 COMMITMENTS AND CONTINGENCIES
The Company is party to suits and claims arising in the normal course of
business. Management believes these are adequately provided for or will result
in no significant additional liability to the Company.
7
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
NOTE 7 SUBSEQUENT EVENT
On January 27, 2000, the Company's Board of Directors approved a two-for-one
stock split, to be effected in the form of a stock dividend or stock
distribution, subject to stockholder approval of an increase in the authorized
shares of the Company's common stock to 100 million shares. The Company will
seek approval of the share increase at a Special Meeting of Stockholders to be
held on March 28, 2000. Subject to receiving such stockholder approval, the
stock split will be payable on April 19, 2000 to shareholders of record as of
March 29, 2000.
The data for the third quarters ended December 26, 1999 and December 27, 1998,
respectively, if restated to reflect the stock split, are basic net income per
share of $0.16 and $0.15; diluted net income per share of $0.15 and $0.15; basic
weighted average shares of 39.3 and 31.7 million and diluted weighted average
shares of 41.2 and 32.8 million. The data for the nine months ended December 26,
1999 and December 27, 1998, respectively, if restated to reflect the stock
split, are basic net income per share of $0.43 and $0.41; diluted net income per
share of $0.41 and $0.40; basic weighted average shares of 37.3 and 31.5 million
and diluted weighted average shares of 39.4 and 32.4 million.
8
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
The following table shows our statement of operations data as a percentage of
sales for the periods indicated:
Quarters Ended Nine Months Ended
------------------- -------------------
Dec. 26, Dec. 27, Dec. 26, Dec. 27,
1999 1998 1999 1998
-------- -------- -------- --------
Sales.................................. 100.0% 100.0% 100.0% 100.0%
Cost of sales ......................... 55.8 55.9 55.8 56.5
----- ----- ----- -----
Gross margin........................... 44.2 44.1 44.2 43.5
Research and development expenses...... 11.2 10.5 11.3 10.0
Selling and administrative expenses.... 16.0 17.9 16.3 18.2
----- ----- ----- -----
Operating income....................... 17.0 15.7 16.6 15.3
Other income (expense), net............ 3.8 0.5 3.0 0.5
----- ----- ----- -----
Income before income taxes............. 20.8 16.2 19.6 15.8
Provision for income taxes............. 7.5 1.6 7.0 1.6
----- ----- ----- -----
Net income............................. 13.3% 14.6% 12.6% 14.2%
===== ===== ===== =====
SALES. Sales increased 46.1% to $47.5 million for the third quarter of fiscal
2000 from $32.5 million for the third quarter of fiscal 1999. For the first nine
months of fiscal 2000, sales increased 38.8% to $127.8 million from $92.1
million for the first nine months of fiscal 1999. The increase in sales
continues to be the result of increased demand for wireless products and our
penetration into additional handset platforms. Deliveries to one customer
represented approximately 35% of our total sales for the third quarter of fiscal
2000 compared with 32% for the same period last year. Deliveries to one customer
represented approximately 34% of our total sales for the first nine months of
fiscal 2000 compared with 27% for the comparable period last year.
GROSS PROFIT. Gross profit increased 46.3% to $21.0 million or 44.2% of sales
for the third quarter of fiscal 2000 from $14.3 million or 44.1% of sales for
the comparable period last year. For the first nine months of fiscal 2000, gross
profit increased 41.2% to $56.5 million or 44.2% of sales compared with $40.0
million or 43.5% of sales for the same period last year. The increase in gross
margin for the year to date was primarily a result of improved operating
efficiencies, particularly in our Wireless Semiconductor and Ceramics Groups,
which continued to leverage capacity and improve yields.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses increased
57.0% to $5.3 million or 11.2% of sales for the third quarter of fiscal 2000
from $3.4 million or 10.5% of sales compared with the same period last year. For
the first nine months of fiscal 2000, research and development expenses
increased 54.8% to $14.4 million or 11.3% of sales from $9.3 million or 10% of
sales for the comparable period last year. The increase in research and
development expenses is primarily attributable to the development of processes
and products in the Wireless Semiconductor Products Group. For the third quarter
and first nine months of fiscal 2000, over 75% of our total research and
development expenses were focused on the Wireless Semiconductor Products Group's
efforts in developing GaAs integrated circuits and other high volume wireless
products.
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
SELLING AND ADMINISTRATIVE EXPENSES. Selling and administrative expenses totaled
$7.6 million or 16.0% of sales for the third quarter of fiscal 2000 compared
with $5.8 million or 17.9% of sales for the same period last year. For the first
nine months of fiscal 2000, selling and administrative expenses totaled $20.9
million or 16.3% compared to $16.7 million or 18.2% of sales for the first nine
months of fiscal 1999. The increase in selling and administrative expenses
reflects increased sales commissions resulting from higher sales volumes as well
as increased costs related to training, recruiting and an increased sales force.
The decrease in selling and administrative expenses as a percentage of sales was
attributable to our continued efforts to control administrative costs.
OTHER INCOME (EXPENSE), NET. Interest expense for the third quarter and first
nine months of fiscal 2000 decreased $41 thousand and $137 thousand,
respectively, over the comparable periods last year due to a decline in
outstanding borrowings. Interest income for the third quarter and nine months
ended December 26, 1999 increased $1.6 million and $3.5 million, respectively,
over the comparable periods last year as a result of higher levels of cash, cash
equivalents and short-term investments.
PROVISION FOR INCOME TAXES. Our effective tax rates for the first nine months of
fiscal 2000 and 1999 were 36% and 10%, respectively. Last year's rate differed
from statutory rates primarily as a result of the utilization of net operating
loss carryforwards.
BUSINESS SEGMENTS
The table below displays sales and operating income by business segment for the
periods indicated.
Quarter Ended Nine Months Ended
------------------- -------------------
Dec. 26, Dec. 27, Dec. 26, Dec. 27,
1999 1998 1999 1998
-------- -------- -------- --------
SALES
Wireless Semiconductor Products.... $31,496 $17,945 $ 81,680 $46,303
Application Specific Products...... 7,815 7,676 21,582 27,497
Ceramic Products................... 8,152 6,868 24,575 18,270
------- ------- -------- -------
$47,463 $32,489 $127,837 $92,070
======= ======= ======== =======
OPERATING INCOME
Wireless Semiconductor Products.... $ 5,012 $ 2,503 $ 12,550 $ 4,772
Application Specific Products...... 1,996 1,895 5,663 8,100
Ceramic Products................... 1,041 734 2,982 1,114
------- ------- -------- -------
$ 8,049 $ 5,132 $ 21,195 $13,986
======= ======= ======== =======
WIRELESS SEMICONDUCTOR PRODUCTS. Sales for the Wireless Semiconductor Products
Group increased 75.5% to $31.5 million for the third quarter of fiscal 2000 from
$17.9 million for the same quarter last year. For the first nine months of
fiscal 2000, sales for the Wireless Semiconductor Group increased 76.4% to $81.7
million from $46.3 million for the same period last year. The increase was
primarily the result of increased demand for wireless products and our
penetration into additional handset platforms.
Operating income for the Wireless Semiconductor Group increased 100.2% to $5.0
million for the third quarter of fiscal 2000 from $2.5 million for the
comparable quarter last year. For the nine months ended December 26, 1999,
operating income increased 163.0% to $12.6 million from $4.8 million for the
comparable period last year. The increase was primarily attributable to
increased sales and improved operating efficiencies as this group continued to
leverage capacity and improve yields. In addition, this group continued its
focus on the development of processes and products for the wireless market,
while continuing to control administrative costs.
APPLICATION SPECIFIC PRODUCTS. Sales for the Application Specific Products Group
for the third quarter of fiscal 2000 remained relatively constant compared to
the comparable quarter last year. For the first nine months of fiscal 2000,
sales for Application Specific Products decreased 21.5% to $21.6 million from
$27.5 million. This decrease was the result of a reduction of volume on some of
our few remaining defense contracts and from discontinuing certain products in
the group.
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
Operating income for the Application Specific Products Group increased 5.3% to
$2.0 million for the third quarter of fiscal 2000 from $1.9 million for the same
quarter last year. For the first nine months of fiscal 2000, operating income
for Application Specific Products decreased 30.1% to $5.7 million from $8.1
million for the comparable period last year. This group continued to realign its
cost structure to current volumes, reporting gross margins of over 50% and
operating margins of over 25% for the third quarter and first nine months of
fiscal 2000.
CERAMIC PRODUCTS. Sales for the Ceramics Group for the third quarter increased
18.7% to $8.2 million from $6.9 million for the same quarter last year. For the
first nine months of fiscal 2000, sales for the Ceramics Group increased 34.5%
to $24.6 million from $18.3 million for the same period last year. The increase
is due primarily to increased demand for wireless infrastructure products.
Operating income for the Ceramics Group increased 41.8% to $1.0 million from
$734 thousand for the third quarter and increased 167.7% to $3.0 million from
$1.1 million for the first nine months of fiscal 2000 compared with the same
periods last year. The increase in operating income was primarily the result of
increased sales and improved operating efficiencies, including the leveraging of
capacity and increased manufacturing automation.
FINANCIAL CONDITION
At December 26, 1999, working capital totaled $159.1 million and included $135.9
million in cash, cash equivalents and short-term investments, compared with
$42.7 million of working capital at the end of fiscal 1999. In June 1999, we
completed a public offering of our common stock that raised net proceeds of
$109.4 million. Uses of cash included $23.9 million for capital expenditures as
we continued our investment in the semiconductor GaAs wafer fabrication
operation and the integrated circuit and discrete semiconductor assembly and
test areas, as well as for improved manufacturing capabilities at the ceramics
manufacturing facility.
The expansion of the GaAs fabrication facility in Massachusetts has allowed us
to significantly increase our current capacity. The new clean room space is
complete and in use, and additional manufacturing equipment has been installed
and brought to full productivity. Since demand for our GaAs products continues
to increase strongly, we have accelerated the second phase of expansion in our
fab. This phase involves the installation of additional production equipment,
without the need for additional clean room construction. We expect this second
phase to cost approximately $12 million and to be complete by the summer of
2000. We are also examining various options that would allow another significant
expansion of our GaAs capacity, through acquisition or construction.
At December 26, 1999, we had a $10 million unsecured revolving line of credit.
We believe that our current cash position, together with continued cash
generated from operations and the $10 million line of credit, will provide us
with adequate funds to support our current operating needs and allow us to
undertake and complete these expansion projects.
NEW ACCOUNTING PRONOUNCEMENTS
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities"
establishes accounting and reporting standards for derivatives and hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the balance sheet and measure those instruments at fair
value. SFAS No. 133 will be effective for our fiscal year 2002. We are currently
evaluating SFAS No.133. We do not expect this new statement to have a material
effect on our consolidated financial position, results of operations or cash
flow.
YEAR 2000
The Year 2000 issue relates to the inability of certain computer software
programs to properly recognize and process date sensitive information relative
to the Year 2000 and beyond. To address this issue, we undertook a company-wide
Year 2000 project under the direction of senior management. As part of this
project, we evaluated our products and determined that our products are not date
sensitive. We completed a comprehensive inventory of our internal information
systems, equipment and facilities. All critical items were tested to determine
compliance and minor upgrades were completed. We also completed formal
communication with significant suppliers, customers, financial
11
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
institutions and other third parties with which we have a material relationship
in order to determine whether those entities had adequate plans in place to
ensure their Year 2000 preparedness.
As of the date of this filing, we have not experienced any significant Year 2000
problems with our internal systems or equipment, nor have we detected any
significant Year 2000 problems affecting our customers or suppliers. In
addition, the costs associated with Year 2000 compliance have not been
significant and we do not expect any potential additional costs to have a
material adverse effect on our business, results of operations or financial
condition. However, we will continue to monitor our information systems,
facilities, equipment and relationships with third parties. Although we believe
our planning efforts have been adequate to address our Year 2000 compliance
concerns, we cannot guarantee that we will not experience unanticipated negative
consequences or material costs caused by undetected errors or defects in the
technology used in our internal systems or that third parties upon which we rely
will not experience similar negative consequences.
OTHER MATTERS
Safe Harbor Statement - Except for the historical information contained herein,
this report contains forward-looking statements that constitute the Company's
current intentions, hopes, beliefs, expectations or predictions of the future,
which are, therefore, inherently subject to risks and uncertainties. The
Company's actual results could differ materially from those anticipated in the
Company's forward-looking statements based on various factors, including without
limitation: cancellation or deferral of customer orders, dependence on a small
number of large customers, difficulties in the timely development and market
acceptance of new products, market developments that vary from the current
public expectations concerning the growth of wireless communications,
difficulties in manufacturing new or existing products in sufficient quantity or
quality, increased competitive pressures, decreasing selling prices for the
Company's products, or changes in economic conditions. Further information on
factors that could affect the Company's performance is included in the Company's
periodic reports filed with the SEC, including but not limited to the Company's
Form 10-K for the year ended March 28, 1999, and subsequent Forms 10-Q. The
Company cautions readers not to place undue reliance upon any such
forward-looking statements, which speak only as of the date made. The Company
expressly disclaims any obligations or undertaking to release publicly any
updates or revisions to any such statements to reflect any change in the
Company's expectations or any change in events, conditions or circumstances on
which any such statement is based.
12
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
PART I
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk represents the risk of changes in the value of a short-term
investment and a financial instrument caused by fluctuations in investment
prices and interest rates.
The Company handles market risks in accordance with established policies. The
Company's risk-management activities include "forward-looking statements" that
involve risk and uncertainties. Actual results could differ materially from
those projected in the forward-looking statements.
Investment Price Risk
The fair value of the Company's short-term investment portfolio at December 26,
1999 approximated carrying value due to its short-term duration. Market risk,
estimated as the potential decrease in fair value resulting from a hypothetical
10% decrease in interest rates for the issues contained in the investment
portfolio, is considered not to be material because of the short-term nature of
the investments.
Interest Rate Risk
The carrying value of the Company's long-term debt, including current
maturities, was approximately $515 thousand at December 26, 1999. Due to the
nature of the debt instruments, management has determined that the fair value
was not materially different from the quarter-end carrying value.
PART II - OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
The Company does not have any material pending legal proceedings other than
routine litigation incidental to its business.
The Company has been notified by federal and state environmental agencies of its
potential liability with respect to the Spectron, Inc. Superfund site in Elkton,
Maryland. Several hundred other companies have also been notified about their
potential liability regarding this site. The Company continues to deny that it
has any responsibility with respect to this site other than as a DE MINIMIS
party. Management is of the opinion that the outcome of the aforementioned
environmental matter will not have a material effect on the Company's operations
or financial position.
13
<PAGE> 14
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(3) Certificate of Incorporation and By-laws.
(a) Restated Certificate of Incorporation (Filed as Exhibit 3(a) to
Registration Statement on Form S-3 (Registration No.
33-63857))*.
(b) Amended and restated By-laws of the Corporation dated April 30,
1992 (Filed as Exhibit 3(b) to the Annual Report on Form 10-K
for the year ended March 29, 1992)*.
(4) Instruments defining rights of security holders, including
indentures.
(a) Specimen Certificate of Common Stock (Filed as Exhibit 4(a) to
Registration Statement on Form S-3 (Registration No.
33-63857))*.
(b) Loan and Security Agreement dated December 15, 1993 between
Trans-Tech, Inc., and County Commissioners of Frederick County
(Filed as Exhibit 4(h) to the Quarterly Report on Form 10-Q for
the quarter ended July 3, 1994)*.
(c) Revolving Credit Agreement dated November 1, 1999 between Alpha
Industries, Inc., and Trans-Tech Inc. and Fleet Bank of
Massachusetts and Silicon Valley Bank.
(10) Material Contracts.
(a) Alpha Industries, Inc., 1986 Long-Term Incentive Plan as
amended (Filed as Exhibit 10(a) to the Quarterly Report on Form
10-Q for the quarter ended October 2, 1994)*.(1)
(b) Alpha Industries, Inc., Employee Stock Purchase Plan as amended
October 22, 1992 (Filed as Exhibit 10(b) to the Annual Report
on Form 10-K for the fiscal year ended March 28, 1993)* and
amended August 22, 1995 (Filed as Exhibit 10(b) to the Annual
Report on Form 10-K for the fiscal year ended March 31,
1996)*.(1)
(c) SERP Trust Agreement between the Registrant and the First
National Bank of Boston as Trustee dated April 8, 1991 (Filed
as Exhibit 10(c) to the Annual Report on Form 10-K for the
fiscal year ended March 31, 1991)*.(1)
(d) Alpha Industries, Inc., Long-Term Compensation Plan dated
September 24, 1990 (Filed as Exhibit 10(i) to the Annual Report
on Form 10-K for the fiscal year ended March 29, 1992)*;
amended March 28, 1991 (Filed as Exhibit 10(a) to the Quarterly
Report on Form 10-Q for the quarter ended June 27, 1993)* and
as further amended October 27, 1994 (Filed as Exhibit 10(f) to
the Annual Report on Form 10-K for the fiscal year ended April
2, 1995)*.(1)
(e) Severance Agreement dated May 20, 1997 between the Registrant
and David J. Aldrich (Filed as Exhibit 10(g) to the Annual
Report on Form 10-K for the fiscal year ended March 30,
1997)*.(1)
(f) Severance Agreement dated January 14, 1997 between the
Registrant and Richard Langman (Filed as Exhibit 10(h) to the
Annual Report on Form 10-K for the fiscal year ended March 30,
1997)*.(1)
(g) Consulting Agreement dated August 13, 1992 between the
Registrant and Sidney Topol (Filed as Exhibit 10(p) to the
Annual Report on Form 10-K for the fiscal year ended April 3,
1994)*.(1)
(h) Alpha Industries, Inc., 1994 Non-Qualified Stock Option Plan
for Non-Employee Directors (Filed as Exhibit 10(r) to the
Quarterly Report on Form 10-Q for the quarter ended October 2,
1994)*.(1)
(i) Alpha Industries Executive Compensation Plan dated January 1,
1995 and Trust for the Alpha Industries Executive Compensation
Plan dated January 3, 1995 (Filed as Exhibit 10(p) to the
Annual Report on Form 10-K for the fiscal year ended April 2,
1995)*.(1)
(j) Alpha Industries, Inc. Savings and Retirement 401(k) Plan dated
July 1, 1996 (Filed as Exhibit
14
<PAGE> 15
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
10(n) to the Annual Report on Form 10-K for the fiscal year
ended March 30, 1997)*.
(k) Severance Agreement dated September 4, 1998 between the
Registrant and Paul E. Vincent (Filed as Exhibit 10(n) to the
Quarterly Report on Form 10-Q for the fiscal quarter ended
September 27, 1998)*.(1)
(l) Severance Agreement dated December 11, 1998 between the
Registrant and Jean-Pierre Gillard (Filed as Exhibit 10(r) to
the Quarterly Report on Form 10-Q for the fiscal quarter ended
December 27, 1998)*.(1)
(m) Alpha Industries, Inc., 1997 Non-Qualified Stock Option Plan
for Non-Employee Directors. (Filed as Exhibit 10 (r) to the
Annual Report on Form 10-K for the fiscal year ended March 29,
1998)*.(1)
(n) Alpha Industries, Inc. 1996 Long-Term Incentive Plan (Filed as
Exhibit 99 to Registration Statement on Form S-8 filed January
22, 1999)*.(1)
(o) Alpha Industries, Inc. 1999 Employee Long-Term Incentive Plan
dated April 27, 1999 (Filed as Exhibit 10(q) to the Quarterly
Report on Form 10-Q for the fiscal quarter ended June 27,
1999)*.(1)
(p) Severance Agreement dated September 13, 1999 between the
Registrant and Thomas C. Leonard (Filed as Exhibit 10(p) to the
Quarterly Report on Form 10-Q for the fiscal quarter ended
September 26, 1999)*.(1)
(11) Statement re computation of per share earnings.**
(27) Financial Data Schedules.
(b) Reports on Form 8-K
No reports on Form 8-K were filed with the Securities and
Exchange Commission during the fiscal quarter ended December
26, 1999.
- -------------------
* Not filed herewith. In accordance with Rule 12b-32 promulgated pursuant to the
Securities Exchange Act of 1934, as amended, reference is hereby made to
documents previously filed with the Commission, which are incorporated by
reference herein.
** Reference is made to Note 5 of the notes to Consolidated Financial Statements
on Page 7 of this Quarterly Report on Form 10-Q, which Note 5 is hereby
incorporated by reference herein.
(1) Management Contracts.
15
<PAGE> 16
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
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.
Date: FEBRUARY 9, 2000
Alpha Industries, Inc. and Subsidiaries
---------------------------------------
Registrant
/s/ Thomas C. Leonard
--------------------------------------
Thomas C. Leonard
Chief Executive Officer
Vice Chairman, Board of Directors
/s/ Paul E. Vincent
--------------------------------------
Paul E. Vincent
Chief Financial Officer
Principal Financial Officer
Principal Accounting Officer
16
<PAGE> 1
Exhibit 99.4(c)
REVOLVING CREDIT AGREEMENT
Dated as of November 1, 1999
among
ALPHA INDUSTRIES, INC.,
TRANS-TECH, INC., as Borrowers,
FLEET NATIONAL BANK, as a Bank and as Agent
and
SILICON VALLEY BANK, as a Bank
------------------------------
Revolving Line of Credit Loans
$10,000,000
-----------------------
<PAGE> 2
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT, dated as of November 1, 1999
(the "AGREEMENT") by and among ALPHA INDUSTRIES, INC., a Delaware corporation
with its principal place of business at 20 Sylvan Road, Woburn, Massachusetts
01801 ("ALPHA"), TRANS-TECH, INC., a Maryland corporation with its principal
place of business at 5520 Adamstown Road, Adamstown, Maryland ("TRANS-TECH"),
and FLEET NATIONAL BANK, successor in interest to Fleet Bank of Massachusetts,
N.A., a national banking association with its principal place of business at
Fleet Center, One Federal Street, Boston, Massachusetts 02110 (together with its
successors, "FLEET"), and SILICON VALLEY BANK, a California-chartered bank, with
its principal place of business at 3003 Tasman Drive, Santa Clara, California
95054 and with a loan production office located at Wellesley Office Park, 40
William Street, Wellesley, Massachusetts 02481, doing business under the name
"Silicon Valley East" (together with its successors, "SVB" and, together with
its successors as well as Fleet, a "LENDER" and collectively, together with
their respective successors, the "LENDERS"). Alpha and Trans-Tech are sometimes
each referred to herein as a "BORROWER" and together as the "BORROWERS". Fleet
in its capacity as agent for the Lenders is referred to herein as the "Agent".
This Agreement supercedes in its entirety that certain Credit Agreement, to
which both the Borrowers and the Lenders are parties, dated as of October 1,
1997, as amended as of September 30, 1998 (the "1997 CREDIT AGREEMENT").
SECTION 1. Revolving Line of Credit Loans.
1.1 AMOUNT. Subject to and upon the terms and conditions set
forth below, each of the Lenders severally agrees to make loans (each a
"REVOLVING LINE OF CREDIT LOAN" and collectively, the "REVOLVING LINE OF CREDIT
Loans") to the Borrowers under this Section 1.1 from time to time to and
including October 31, 2000 (the "REVOLVING LINE OF CREDIT COMMITMENT EXPIRATION
DATE"), unless earlier terminated pursuant to Section 1.7, in an aggregate
principal amount not to exceed at any one time outstanding their respective
Revolving Line of Credit Commitments as set forth in Section 1.2 below
(together, the "TOTAL REVOLVING LINE OF CREDIT COMMITMENT"), subject to the
limitation set forth in Section 1.5. Within the limit of the Revolving Line of
Credit Commitment, the Borrowers may borrow, repay and reborrow at any time or
from time to time until the Revolving Line of Credit Commitment Expiration Date,
or the termination of the Revolving Line of Credit Commitment, whichever occurs
earlier.
1.2 REVOLVING LINE OF CREDIT COMMITMENTS. The Total Revolving
Line of Credit Commitment shall be $10,000,000 in the aggregate; the Revolving
Line of Credit Commitment of SVB shall be $2,500,000; and the Revolving Line of
Credit Commitment of Fleet shall be $7,500,000
1.3 REVOLVING LINE OF CREDIT NOTES. The Revolving Line of
Credit Loans made by each Lender shall be evidenced (i) in the case of SVB, by a
promissory note payable to the order of SVB with interest in accordance with the
terms of the Promissory Note of the Borrowers to be issued in substantially the
form of attached EXHIBIT A-1, dated the date hereof and (ii) in the case of
Fleet by a promissory note payable to the order of Fleet with interest in
accordance with the terms of the Promissory Note of the Borrowers to be issued
in substantially the form of attached EXHIBIT A-2, dated the date hereof (each a
"REVOLVING LINE OF CREDIT NOTE" and together the "REVOLVING LINE OF CREDIT
NOTES"). Upon receipt of an affidavit of an officer of a Lender as to the loss,
theft, destruction or mutilation of a Revolving Line of Credit Note or any other
security document which is not of public record, and, in the case of any such
loss, theft, destruction or mutilation, upon cancellation of such a Revolving
Line of Credit or other security document, Borrower will issue, in lieu thereof,
a replacement note or other security document in the same principal amount
thereof and otherwise of like tenor.
1.4 REQUESTS FOR REVOLVING LINE OF CREDIT LOANS. Whenever
either Borrower desires to obtain a Revolving Line of Credit Loan, such Borrower
shall notify Fleet in accordance with the provisions of 2.6 below. Not later
than 1:00 p.m. (Boston time) on the date specified for the making of each such
Revolving Line of Credit Loan, each Lender shall make available to Fleet, at
Fleet's principal office, an amount equal to such Lender's respective Revolving
Line of Credit Commitment Percentage multiplied by the amount of the Revolving
Line of
<PAGE> 3
Credit Loan requested as set forth above. Subject to the terms and conditions of
this Agreement, the amount so received by Fleet shall be made available to the
Borrowers by crediting the same in immediately available funds, to Alpha's
regular deposit account with Fleet.
1.5 LIMIT ON REVOLVING LINE OF CREDIT LOANS. The Borrowers
shall not permit, or request any advance or the issuance of any Letter of Credit
hereunder that would cause, the sum of (a) the aggregate unpaid principal amount
of all Revolving Line of Credit Loans under the Total Revolving Line of Credit
Commitment and (b) Aggregate Letter of Credit Usage (the sum of (a) and (b), the
"REVOLVING EXTENSIONS OF CREDIT") to exceed at any time an amount equal to the
Total Revolving Line of Credit Commitment. If at any time the aggregate
principal amount of all Revolving Extensions of Credit exceeds the Total
Revolving Line of Credit Commitment, the Borrowers shall, on the next Banking
Day, prepay such excess principal amount together with accrued interest thereon
at the applicable rate.
1.6 MATURITY DATE OF REVOLVING LINE OF CREDIT LOANS. All
Revolving Line of Credit Loans shall mature and the total unpaid principal
amount thereunder shall be due and payable on October 31, 2000 (the "REVOLVING
LINE OF CREDIT MATURITY DATE"), at which time all amounts advanced under this
Section 1 shall be immediately due and payable.
1.7 TERMINATION OF REVOLVING LINE COMMITMENT. The Borrowers,
upon (a) notice to the Lenders in accordance with the provisions of Section 2.6
and (b) the repayment in full of the outstanding principal balance of the
Revolving Line of Credit Loans (and accrued interest thereon) and the payment in
full of the unpaid balance of the Commitment Fee provided for in Section 4.8
through the Revolving Line of Credit Commitment Expiration Date together with
any expenses or other fees owed by the Borrowers to the Lenders under or
pursuant to this Agreement, may elect to permanently terminate the Total
Revolving Line of Credit Commitment.
1.8 LETTERS OF CREDIT.
(a) (Borrowers may use up to $3,000,000 of the Revolving Line
of Credit Commitment for Letters of Credit to be issued by Fleet, PROVIDED that
in each case (a) the relevant Borrower executes and delivers a letter of credit
application and reimbursement agreement satisfactory to Fleet and complies with
any conditions to the issuance of such Letter of Credit (including payment of
any applicable fees); (b) Fleet has approved the form of such Letter of Credit
and the purpose of its issuance; (c) such Letter of Credit bears an expiration
date not later than 45 days prior to the Revolving Line of Credit Commitment
Expiration Date; and (d) the conditions set forth in Sections 4.2 and 4.3 shall
have been satisfied as of the date of the issuance of the Letter of Credit.
(b) Effective upon the issuance of each Letter of Credit and
without any further action of any Lender in respect thereof, Fleet hereby grants
to SVB, and SVB hereby acquires from Fleet, a participating interest in such
Letter of Credit to the extent of SVB's Revolving Line of Credit Commitment
Percentage thereof (the "LETTER OF CREDIT PARTICIPATION"), and SVB agrees that
it shall be absolutely liable, without regard to any Default or Event of
Default, to the extent of its Revolving Line of Credit Commitment Percentage, to
reimburse Fleet on demand for the amount of each draft paid by Fleet under each
Letter of Credit to the extent that such amount is not reimbursed by the
Borrower, except to the extent such deficiency is attributable to Fleet's gross
negligence or intentional misconduct. Fleet shall promptly notify SVB of the
issuance of any Letter of Credit under this Section 1.8.
SECTION 2. Interest Rates; Payments and Optional Prepayments.
2.1 Interest Rates.
(a) (REVOLVING LINE OF CREDIT LOANS. The Borrowers agree to
pay interest on the unpaid principal amount of each Revolving Line of Credit
Loan for each day from and including the date such Revolving
-2-
<PAGE> 4
Line of Credit Loan was made to but excluding the date the principal on such
Revolving Line of Credit Loan is due (whether at maturity, by acceleration or
otherwise), at the following fluctuating rates per annum:
(i) for Prime Rate Loans, at the Prime Rate per annum; and
(ii) for LIBOR Loans, at the LIBOR Rate, PLUS 75 basis points
per annum.
(b) Notwithstanding the foregoing, the Borrowers will pay to
the Lenders interest at the applicable Post-Default Rate on any principal of any
Revolving Line of Credit Loan, and on any other amount payable by the Borrowers
hereunder (but, if such amount is interest, only to the extent legally
enforceable), which shall not be paid in full when due (whether at stated
maturity, by acceleration or otherwise), for the period commencing on the due
date thereof until the same is paid in full. Accrued interest on each Prime Rate
Loan and LIBOR Loan shall be payable monthly in arrears on the first day of each
month and in any event, upon the payment, prepayment or conversion thereof, but
only on the principal so paid or prepaid or converted; PROVIDED THAT interest
payable at the Post-Default Rate shall be payable from time to time on demand of
any Lender. Promptly after the determination of any interest rate provided for
herein or any change therein, each Lender shall notify the Borrowers thereof.
Changes in the rate of interest resulting from changes in the Prime Rate shall
take place immediately without notice or demand of any kind.
Notwithstanding the foregoing provisions of this Section 2.1,
if at any time the rate of interest set forth above (the "STATED RATE") exceeds
the maximum non-usurious interest rate permissible for any Lender to charge
commercial borrowers under applicable law (the "MAXIMUM RATE"), the rate of
interest charged on any Borrower Loans by any Lender hereunder shall be limited
to the Maximum Rate.
In the event any Lender ever receives, collects or applies as
interest any sum in excess of the Maximum Rate, such excess amount shall be
applied to the reduction of the principal balance of the Revolving Line of
Credit Loans in respect of which such interest was paid or to other amounts
(other than interest) payable hereunder, and if no such principal is then
outstanding, such excess or part thereof remaining shall be paid to the
Borrowers.
All agreements between the Borrowers and the Guarantor and the
Lenders are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of acceleration of maturity of the indebtedness
evidenced hereby or otherwise, shall the amount paid or agreed to be paid to the
Lenders for the use or the forbearance of the indebtedness evidenced hereby
exceed the maximum permissible under applicable law. As used herein, the term
"applicable law" shall mean the law in effect as of the date hereof provided,
however, that in the event there is a change in the law which results in a
higher permissible rate of interest, then the Loan Documents shall be governed
by such new law as of its effective date. In this regard, it is expressly agreed
that it is the intent of the Borrower and the Lenders in the execution, delivery
and acceptance of the Loan Documents to contract in strict compliance with the
laws of the Commonwealth of Massachusetts and the State of California from time
to time in effect. If, under or from any circumstances whatsoever, fulfillment
of any provision hereof or of any of the Loan Documents at the time of
performance of such provision shall be due, shall involve transcending the limit
of such validity prescribed by applicable law, then the obligation to be
fulfilled shall automatically be reduced to the limits of such validity, and if
under or from circumstances whatsoever Lender should ever receive as interest an
amount which would exceed the highest lawful rate, such amount which would be
excessive interest shall be applied to the reduction of the principal balance
evidenced hereby and not to the payment of interest. This provision shall
control ever other provision of all agreements between the Borrowers, the
Guarantor and the Lenders.
2.2 MANNER AND PLACE OF PAYMENT. All payments under this
Agreement or otherwise in respect of any Revolving Line of Credit Loan shall be
made not later than 2:00 p.m. (Boston Time) on the date when due and shall be
made in lawful money of the United States in immediately available funds at the
Office of the Lender which has made such Revolving Line of Credit Loan or by a
Borrower's check drawn on the depositary
-3-
<PAGE> 5
account(s) maintained by such Borrower with such Lender payable to such Lender
or its order. All payments shall be made without setoff, counterclaim,
withholding or reduction of any kind whatsoever. Each Borrower hereby requests
and authorizes each Lender to debit any of such Borrower's accounts with such
Lender for payments of interest and principal due on the Borrower Loans and any
other obligations owing by the Borrowers to such Lender. Each Lender will notify
the Borrowers of all debits which such Lender makes against a Borrower's
accounts. Any such debits against a Borrower's accounts in no way shall be
deemed a setoff.
2.3 PAYMENTS DUE ON SATURDAYS, SUNDAYS AND HOLIDAYS. Whenever
any payment to be made hereunder or under the Revolving Line of Credit Notes
shall be due on a day which is not a Banking Day (or a London Banking Day in the
case of a LIBOR Loan), such payment may be made on the next succeeding Banking
Day or London Banking Day, as the case may be, and such extension of time shall
be included in computing any interest or fees due.
2.4 COMPUTATIONS. Interest on the Revolving Line of Credit
Loans shall be computed on the basis of a year of 360 days and actual days
elapsed (including the first day but excluding the last day) occurring in the
period for which payable.
2.5 MINIMUM AND MAXIMUM AMOUNTS. Each borrowing, conversion
and prepayment of principal of Revolving Line of Credit Loans shall be in an
aggregate principal amount equal to (a) in the case of LIBOR Loans, $200,000 or
a larger multiple of $50,000 and (b) in the case of Prime Rate Loans, without
any minimum amount or any minimum integral multiple thereof (conversions or
prepayments of Revolving Line of Credit Loans of different Types or, in the case
of LIBOR Loans, having different Interest Periods, at the same time hereunder to
be deemed separate conversions and prepayments for purposes of the foregoing,
one for each Type or Interest Period); PROVIDED that any payment or prepayment
in full of any Revolving Line of Credit Loans may be in the aggregate
outstanding principal amount thereof.
2.6 CERTAIN NOTICES. Notices to the Agent and the Lender with
respect to: (a) termination of the Revolving Line of Credit Commitment, (b)
borrowings of Revolving Line of Credit Loans, (c) conversions and prepayments of
Revolving Line of Credit Loans and of the duration of Interest Periods, shall be
irrevocable and shall be effective only if received by the Lender in question
not later than 12:00 Noon (Boston time) on the number of Banking Days prior to
the date of the termination, borrowing, conversion and/or prepayment specified
below:
Number of
Banking Days
Prior Notice
------------
Termination of Commitment 2
Borrowings, or prepayment of Prime
Rate Loans 1
Prepayment of, conversion into, or duration of
Interest Periods for, LIBOR Loans 3
Each notice of borrowing, conversion or prepayment shall specify the amount, the
Type of the Revolving Line of Credit Loan to be borrowed, converted or prepaid,
the date of borrowing, conversion or prepayment (which shall be a Banking Day in
the case of the prepayment of a Prime Rate Loan, or a London Banking Day in the
case of the conversion or prepayment of a LIBOR Loan) and, in the case of LIBOR
Loans, the duration of the Interest Period therefor (subject to the definition
of Interest Period). Each such notice of duration of an Interest Period shall
specify the Revolving Line of Credit Loans to which such Interest Period is to
relate. In the event that the Borrowers fail to
-4-
<PAGE> 6
select the duration of any Interest Period for any LIBOR Loan within the time
period and otherwise as provided in this Section 2.6, such LIBOR Loan will be
automatically converted into a Prime Rate Loan on the last day of the then
current Interest Period for such LIBOR Loan or (if outstanding as Prime Rate
Loans) will remain as, or (if not then outstanding) will be made as Prime Rate
Loans. The Borrowers right to select LIBOR Loans shall terminate on the
Revolving Line of Credit Commitment Expiration Date, or if sooner, immediately
upon the occurrence of an Event of Default.
2.7 ADDITIONAL COSTS.
(a) The Borrowers shall pay to each Lender from time to time
such amounts as such Lender may reasonably determine to be necessary to
compensate it for any costs incurred by such Lender which such Lender determines
are attributable to its making or maintaining of any LIBOR Loans hereunder or
its obligation to make any of such Revolving Line of Credit Loans hereunder, or
any reduction in any amount receivable by such Lender hereunder in respect of
any LIBOR Loan or such obligation (such increases in costs and reductions in
amounts receivable being herein called "ADDITIONAL COSTS"), in each case
resulting from any Regulatory Change which:
(1) changes the basis of taxation of any amounts
payable to such Lender under this Agreement or the Revolving
Line of Credit Note held by such Lender in respect of any
LIBOR Loan; or
(2) imposes or modifies any reserve, special deposit
or similar requirements relating to any extensions of credit
or other assets of, or any deposits with or other liabilities
of, such Lender (including any LIBOR Loan or any deposits
referred to in the definition of "LIBOR Rate" below).
Each Lender will notify the Borrowers of any event occurring after the date of
this Agreement which will entitle such Lender to compensation pursuant to this
Section 2.6 as promptly as practicable after it obtains knowledge thereof and
determines to request such compensation. Such Lender will furnish the Borrowers
with a statement, in reasonable detail, setting forth the basis and amount of
each request by such Lender for compensation under this Section 2.6.
(b) Without limiting the effect of the foregoing provisions of
this Section 2.6 in the event that, by reason of any Regulatory Change, any
Lender either (i) incurs Additional Costs based on or measured by the excess
above a specified level of the amount of a category of deposits or other
liabilities of such Lender which includes deposits by reference to which the
interest rate on LIBOR Loans is determined as provided in this Agreement or a
category of extensions of credit or other assets of such Lender which includes
LIBOR Loans or (ii) becomes subject to restrictions on the amount of such a
category of liabilities or assets which it may hold, then, if such Lender so
elects by notice to the Borrowers, the obligation of such Lender to make LIBOR
Loans hereunder shall be suspended until the date such Regulatory Change ceases
to be in effect.
(c) Determinations and allocations by any Lender for purposes
of this Section 2.7 of the effect of any Regulatory Change on its costs of
maintaining its obligations to make LIBOR Loans or of making or maintaining
LIBOR Loans or on amounts receivable by it in respect of LIBOR Loans, and of the
additional amounts required to compensate such Lender in respect of any
Additional Costs, shall be conclusive absent manifest error, provided that such
determinations and allocations are made on a reasonable basis, and provided
further that in administering this Section each Lender shall not single out the
Borrowers for different treatment but shall deal with them on the same basis as
the Lender deals with its other customers generally.
(d) If the entire amount of any required principal and/or
interest is not paid in full within ten (10) Banking Days after the same is due,
the Borrowers shall be obligated, on a joint and several basis, to pay the
Lenders a late fee equal to five percent (5%) of the required payment.
-5-
<PAGE> 7
2.8 LIMITATION ON TYPES OF LOANS. Anything herein to the
contrary notwithstanding, if, with respect to any LIBOR Loans, any Lender
determines (which determination shall be conclusive) that the relevant rates of
interest referred to in the definition of "LIBOR Rate" in Section 9.1 below upon
the basis of which the rates of interest for any LIBOR Loan are to be determined
do not accurately reflect the cost to such Lender of making or maintaining such
LIBOR Loans for the Interest Period therefor, then such Lender shall promptly
notify the Borrowers, and so long as such condition remains in effect, such
Lender shall be under no obligation to convert Prime Rate Loans into LIBOR Loans
and the Borrowers shall, on the last day(s) of the then current Interest
Period(s) for the outstanding LIBOR Loans, either prepay such LIBOR Loans or
convert such LIBOR Loans into Prime Rate Loans in accordance with Section 3.12.
2.9 ILLEGALITY. Notwithstanding any other provision of this
Agreement to the contrary, in the event that it becomes unlawful for any Lender
to (a) honor its obligation to make LIBOR Loans hereunder, or (b) maintain LIBOR
Loans (identifying the illegality in question in reasonable detail) hereunder,
then such Lender shall promptly notify the Borrowers and the other Lender
thereof and such Lender's obligation to make LIBOR Loans hereunder shall be
suspended until such time as such Lender may again make and maintain LIBOR
Loans.
2.10 SUBSTITUTE PRIME RATE LOANS. If the obligation of any
Lender to make LIBOR Loans shall be suspended pursuant to Section 2.7, 2.8 or
2.9 hereof, all Revolving Line of Credit Loans which would otherwise be made by
such Lender as LIBOR Loans shall be made instead as Prime Rate Loans (and, if an
event referred to in Section 2.7(b) or 2.9 has occurred and such Lender so
requests, by notice to the Borrowers, each LIBOR Loan of such Lender then
outstanding shall be automatically converted into a Prime Rate Loan on the date
specified by such Lender in such notice) and, to the extent that LIBOR Loans are
so made as (or converted into) Prime Rate Loans, all payments of principal which
would otherwise be applied to such LIBOR Loans shall be applied instead to such
Prime Rate Loans.
2.11 COMPENSATION. Borrowers shall pay to a Lender, upon
requests of such Lender, such amount or amounts as shall be sufficient (in the
reasonable opinion of such lender) to compensate it for any loss, cost, or
expense incurred as a result of: (i) any payment of a LIBOR Loan on a date other
than the last day of the Interest Period for such Loan; (ii) any failure by
Borrowers to borrow a LIBOR Loan on the date specified by Borrowers' written
notice; (iii) any failure by Borrowers to pay a LIBOR Loan on the date for
payment specified in Borrower's written notice. Without limiting the foregoing,
Borrower shall pay to such Lender a "yield maintenance fee" in an amount
computed as follows: The current rate for United States Treasury securities
(bills on a discounted basis shall be converted to a bond equivalent) with a
maturity date closest to the term chosen pursuant to the Fixed Rate Election as
to which the prepayment is made, shall be subtracted from the LIBOR in effect at
the time of prepayment. If the result is zero or a negative number, there shall
be no yield maintenance fee. If the result is a positive number, then the
resulting percentage shall be multiplied by the amount of the principal balance
being prepaid. The resulting amount shall be divided by 360 and multiplied by
the number of days remaining in the term chosen pursuant to the Fixed Rate
Election as to which the prepayment is made. Said amount shall be reduced to
present value calculated by using the above referenced United States Treasury
securities rate and the number of days remaining in the term chose pursuant to
the Fixed Rate Election as to which prepayment is made. The resulting amount
shall be the yield maintenance fee due to such Lenders upon the payment of a
LIBOR Loan. Each reference in this paragraph to "Fixed Rate Election" shall mean
the election by Borrowers of the LIBOR Rate. If by reason of an Event of
Default, Lenders elect to declare a Revolving Line of Credit Note to be
immediately due and payable, then any yield maintenance fee with respect to a
LIBOR Loan shall become due and payable in the same manner as though the
Borrowers had exercised such right of prepayment.
2.12 CAPITAL ADEQUACY. If any Lender shall determine that the
applicability of any law, rule, regulation or guideline adopted pursuant to or
arising out of the July 1988 report of the Basle Committee on Banking
Regulations and Supervisory Practices entitled "International Convergence of
Capital Measurement and Capital Standards", or the adoption after the date
hereof of any other applicable law, rule, regulation or guideline regarding
capital adequacy, or any change in the foregoing or in the enforcement,
interpretation or administration thereof by
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<PAGE> 8
any Governmental Authority charged with the enforcement, interpretation or
administration thereof, or compliance by such Lender or any Person controlling
such Lender (a "PARENT") with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such Governmental
Authority, has or would have the effect of reducing the rate of return on
capital of such Lender or its Parent as a consequence of such Lender's
obligations hereunder to a level below that which such Lender (or its Parent)
could have achieved but for such applicability, adoption, change or compliance
(taking into consideration the policies of such Lender (or its Parent) with
respect to capital adequacy) by an amount reasonably deemed by such Lender to be
material, then from time to time, within the second Business Day after demand by
such Lender, the Borrowers shall pay to such Lender such additional amount or
amounts as will compensate such Lender for such reduction in the rate of return,
together with interest on each such amount from the thirtieth day after such
demand until payment in full thereof (as well after as before judgement) at the
Post-Default Rate. A statement of such Lender, in reasonable detail, claiming
compensation under this Section 2.12 and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive absent manifest error;
PROVIDED that the determination thereof is made on a reasonable basis and
PROVIDED, FURTHER, that the Borrowers shall not be obligated to compensate any
Lender for any such reduction occurring more than 30 days prior to the time the
Lender first notifies the Borrowers of such adoption, implementation, charge or
compliance, and provided further that in administering this Section each Lender
shall not single out the Borrowers for different treatment but shall deal with
them on the same basis as the Lender deals with its other customers generally.
In determining such amount, such Lender may use any reasonable averaging and
attribution methods.
2.13 OPTIONAL PREPAYMENTS. The Borrowers shall have the right
to prepay the Revolving Line of Credit Loans in whole or in part and to convert
Revolving Line of Credit Loans of one Type into another Type, without premium or
penalty, at any time and from time to time, provided that (i) at the time of the
prepayment in full of all Revolving Line of Credit Extensions of Credit, the
Borrowers shall pay all interest accrued on the amount prepaid; (ii) the
Borrowers shall give the Lender or Lenders in question notice of such prepayment
as provided in Section 2.6; (iii) the LIBOR Loans may be converted into Prime
Rate Loans only on the last day of an Interest Period thereof; and (iv) such
Lender or Lenders shall be paid, at the time of any prepayment of a LIBOR Loan
that is being prepaid on other than the last day of an Interest Period therefor,
the amount provided for in Section 2.11. Principal amounts repaid or prepaid
under the Revolving Line of Credit Notes or under the Revolving Line of Credit
Commitments may be reborrowed by the Borrowers subject to the terms hereof;
PROVIDED, HOWEVER, that any funds repaid or prepaid on or after the earlier to
occur of (a) the Revolving Line of Credit Commitment Expiration Date or (b) the
termination of the Revolving Line of Credit Commitment pursuant to Section 1.7
hereof, may not be reborrowed or readvanced thereafter.
SECTION 3. Guaranty.
3.1 GUARANTY. The Borrower Loans have been guaranteed by Alpha
Securities Corp., a Massachusetts corporation, 20 Sylvan Road, Woburn, MA 01801
(the "GUARANTOR"). Alpha hereby agrees to take all necessary or appropriate
action to cause the Guarantor to execute and deliver a guaranty in the form of
EXHIBIT C hereto (the "GUARANTY").
SECTION 4. Conditions Precedent.
The Lenders shall not be obligated to make any of the
Revolving Line of Credit Loans to the Borrowers hereunder until the following
conditions have been satisfied:
4.1 THIS AGREEMENT AND THE REVOLVING LINE OF CREDIT NOTES.
This Agreement, the borrowings hereunder, and the Revolving Line of Credit
Notes, and all transactions contemplated by this Agreement shall have been duly
authorized by the Borrowers. The Borrowers shall have duly executed and
delivered to the Lenders this Agreement and the Revolving Line of Credit Notes
to the Lenders in form and substance satisfactory to the Lenders and their
counsel. The Guarantor shall have duly executed and delivered to the Agent its
Guaranty.
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<PAGE> 9
4.2 NO DEFAULT. On the date of this Agreement and on the date
of making each Borrower Loan, no Default or Event of Default shall have occurred
and be continuing.
4.3 CORRECTNESS OF REPRESENTATIONS. On the date of this
Agreement and on the date of each Borrower Loan, all representations and
warranties made by the Borrowers in Section 5 below or otherwise in writing in
connection herewith shall be true and correct with the same effect as though
such representations and warranties had been made on and as of today's date,
except that representations and warranties expressly limited to a certain date
shall be true and correct as of that date.
4.4 OPINION OF COUNSEL FOR THE BORROWERS. The Lenders shall
have received the favorable opinion of Riemer & Braunstein, counsel for the
Borrowers and the Guarantors, in form and substance satisfactory to the Lenders
and their counsel.
4.5 GOVERNMENTAL APPROVALS. On the date of this Agreement and
on the date of each Revolving Line of Credit Loan, all necessary approvals,
licenses, permissions, registrations or validations of any Governmental
Authority required for the execution, delivery, performance or carrying out of
the provisions of this Agreement and the Revolving Line of Credit Notes, or for
the validity or enforceability of the obligations incurred thereunder (other
than the filing of financing statements as required under Section 4.6 below),
shall have been obtained and shall be in full force and effect and copies
thereof certified by a duly authorized officer of a Borrower to such effect
shall have been delivered to the Lenders.
4.6 SUPPORTING DOCUMENTS. On or before the Original Closing
Date, there shall have been delivered to the Lenders the following supporting
documents:
(a) legal existence and corporate good standing certificates
with respect to each of the Borrowers and the Guarantor dated as of a recent
date issued by the appropriate Secretaries of State or other officials;
(b) certificates with respect to the due qualification of
Alpha and the Guarantor to do business in Massachusetts dated as of a recent
date and issued by the Secretary of State of such jurisdiction;
(c) copies of the corporate charter of each of the Borrowers
and the Guarantor, certified by the appropriate Secretaries of State or other
officials, as in effect on the date thereof;
(d) a certificate of the Secretary or Assistant Secretary of
each of the Borrowers certifying as to (i) the By-Laws of such Borrower, as in
effect on the date thereof; (ii) the incumbency and signatures of the officers
of such Borrower who have executed any documents in connection with the
transactions contemplated by this Agreement; and (iii) the resolutions of the
Board of Directors and, to the extent required by law, the shareholders, of such
Borrower authorizing the execution, delivery and performance of this Agreement
and the making of any of the Revolving Line of Credit Loans hereunder, and the
execution and delivery of the Revolving Line of Credit Notes;
(e) a certificate of the Secretary or Assistant Secretary of
the Guarantor certifying as to (i) the By-Laws of the Guarantor, as in effect on
the date hereof; (ii) the incumbency and signatures of the officers of the
Guarantor who have executed any documents in connection with the transactions
contemplated by this Agreement; and (iii) the resolutions of the Board of
Directors and, to the extent required by law, the shareholders, of the Guarantor
authorizing the execution, delivery and performance of the Guaranty;
(f) all other information and documents which the Lenders or
their counsel may request in connection with the transactions contemplated by
this Agreement.
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<PAGE> 10
4.7 COMMITMENT FEE. In respect of the Revolving Line of Credit
Commitments, the Borrowers shall pay to each Lender quarterly in arrears on the
last day of each calendar quarter a Facility Fee equal to one-quarter percent
(1/4%) per annum of such Lender's Revolving Line of Credit Commitment, PROVIDed,
HOWEVer, in the event that the Borrowers request termination of the Total
Revolving Line of Credit Commitment, the payment of the unpaid portion of the
Facility Fee for the period through the Revolving Line of Credit Commitment
Expiration Date shall be accelerated and shall be immediately payable in full in
accordance with Section 1.7.
4.8 LEGAL MATTERS. All documents and legal matters incident to
the transactions contemplated by this Agreement shall be satisfactory to
Sullivan & Worcester LLP, special counsel for the Agent.
Each borrowing hereunder shall constitute a representation and
warranty by the Borrowers to the Lenders that all of the conditions specified in
this Section 4 have been complied with as of the time of any such Borrower Loan.
SECTION 5. Representations and Warranties.
In order to induce the Lenders to enter into this Agreement
and to make the contemplated Extensions of Credit, the Borrowers hereby
represent and warrant as follows (except to the extent qualified by supplemental
disclosure set forth on SCHEDULE A hereto) and the following representations and
warranties as so qualified shall survive the execution and delivery of this
Agreement and any of the Revolving Line of Credit Loans:
5.1 CORPORATE STATUS. Each of the Borrowers and each of their
respective Subsidiaries is a duly organized and validly existing corporation in
good standing under the laws of the jurisdiction of its incorporation and is
duly qualified or licensed as a foreign corporation in good standing in each
jurisdiction in which the failure to do so would have a Material Adverse Effect.
5.2 NO VIOLATION. Neither the execution, delivery or
performance of this Agreement or any other Loan Document, nor consummation of
the contemplated transactions will contravene any law, statute, rule or
regulation to which either of the Borrowers or any of their Subsidiaries is
subject or any judgment, decree, franchise, order or permit applicable to either
of the Borrowers or any of their Subsidiaries, or will conflict or be
inconsistent with or will result in any breach of, or constitute a default
under, or result in or require the creation or imposition of any Lien (other
than the lien created by the Security Instruments) upon any of the property or
assets of either of the Borrowers or any of their Subsidiaries pursuant to, any
Contractual Obligation of the Borrowers or any of their Subsidiaries, or violate
any provision of the corporate charter or by-laws of either of the Borrowers or
any of their Subsidiaries.
5.3 CORPORATE POWER AND AUTHORITY. The execution, delivery and
performance of this Agreement and the other Loan Documents are within the
corporate powers of each of the Borrowers and have been duly authorized by all
necessary corporate action.
5.4 ENFORCEABILITY. This Agreement and each other Loan
Document constitutes a valid and binding obligation of each of the Borrowers
enforceable against each Borrower in accordance with its terms, except as be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and
subject to general principles of equity, whether applied in a court of equity or
at law.
5.5 GOVERNMENTAL APPROVALS. No order, permission, consent,
approval, license, authorization, registration or validation of, or filing with,
or exemption by, any Governmental Authority is required to authorize, or is
required in connection with, the execution, delivery and performance of this
Agreement or any other Loan Document by the Borrowers, or the taking of any
action contemplated hereby or thereby.
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<PAGE> 11
5.6 FINANCIAL STATEMENTS. (a) The Borrowers have furnished the
Lenders with complete and correct copies of the audited consolidated balance
sheet of the Borrowers and their Subsidiaries as of the Financial Statements
Date, and the related audited consolidated statements of income and of cash
flows for the fiscal year of the Borrowers and their Subsidiaries ended on such
date, examined by the Accountants. Such financial statements (including the
related schedules and notes) fairly present the consolidated financial condition
of the Borrowers and their Subsidiaries as of the Financial Statements Date, and
the consolidated results of their operations and their consolidated cash flows
for the fiscal year then ended.
(b) The Borrower has furnished the Lenders with complete and
correct copies of the unaudited consolidated balance sheet of the Borrowers and
their Subsidiaries as of June 30, 1999, and the related consolidated statements
of income and of cash flows for the three-month period ended on such date. Such
financial statements (including the related schedules and notes) fairly present
the consolidated financial condition of the Borrowers and their Subsidiaries as
of June 30, 1999, and the consolidated results of their operations and their
consolidated cash flows for the three-month period ended on such date (subject
to normal year-end audit adjustments).
(c) During the period from the Financial Statements Date to
the date hereof: (i) there has been no sale, transfer or other disposition by
the Borrowers or any of their Subsidiaries of any material part of its business
or property and no purchase or other acquisition of any business or property
(including any capital stock of any Person) material in relation to the
consolidated financial condition of the Borrowers and their Subsidiaries at the
Financial Statements Date; and (ii) neither the Borrowers nor any of their
Subsidiaries has made a Restricted Payment, or agreed or committed to make a
Restricted Payment.
(d) All the above-referenced financial statements (including
the related schedules and notes) have been prepared in accordance with GAAP
applied consistently throughout the periods involved (except as approved by the
Accountants and disclosed therein and, in the case of interim financial
statements, subject to normal year-end adjustments and the absence of footnotes
and schedules). Neither Borrower nor any of their respective Subsidiaries has
any material liabilities, contingent or otherwise, including liabilities for
taxes or any unusual forward or long-term commitments or any Guarantee, which
are not disclosed by or included in the above-referenced financial statements or
the accompanying notes and there are no unrealized or anticipated losses from
any unfavorable commitments of the Borrowers or any of their Subsidiaries which
may have a Material Adverse Effect.
5.7 NO MATERIAL CHANGE. Since the Financial Statements Date
there has been no development or event, nor to the best knowledge of the
Borrowers, any prospective development or event, which has had or could have a
Material Adverse Effect.
5.8 LITIGATION. There are no actions, suits or proceedings
pending or threatened against or affecting either of the Borrowers or any of
their Subsidiaries before any Governmental Authority, which in any one case or
in the aggregate, if determined adversely to the interests of either Borrower or
any Subsidiary thereof, would have a Material Adverse Effect.
5.9 COMPLIANCE WITH OTHER INSTRUMENTS; COMPLIANCE WITH LAW.
Neither Borrower nor any Subsidiary thereof is in default under any Contractual
Obligation, where such default could have a Material Adverse Effect. Neither
Borrower nor any Subsidiary thereof is in default and or in violation of any
applicable statute, rule, writ, injunction, decree, order or regulation of any
Governmental Authority having jurisdiction over the Borrower or any Subsidiary
thereof which default or violation could have a Material Adverse Effect,
provided that nothing herein shall prevent the Borrower from contesting in good
faith any alleged default or violation by appropriate proceedings diligently
conducted where adequate reserves have been established in accordance with GAAP.
5.10 SUBSIDIARIES. The Borrowers have no Subsidiaries except
as set forth on attached SCHEDULE A.
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<PAGE> 12
5.11 INVESTMENT BORROWER STATUS; LIMITS ON ABILITY TO INCUR
INDEBTEDNESS. Neither Borrower nor any of their Subsidiaries is an "investment
company" or a company "controlled by" an investment company within the meaning
of the Investment Company Act of 1940, as amended. Neither Borrower is subject
to regulation under any Federal or State statute or regulation which limits its
ability to incur Indebtedness.
5.12 TITLE TO PROPERTY. Each of the Borrowers and each of
their Subsidiaries has good and marketable title to all of its properties and
assets, including the properties and assets reflected in the consolidated
balance sheet of the Borrowers and their Subsidiaries as of the Financial
Statements Date, except as disclosed on SCHEDULE A and except such as have been
disposed of since that date in the ordinary course of business, and none of such
properties or assets is subject to any Lien except for (a) Permitted Liens, or
(b) a defect in title or other claim other than defects and claims that, in the
aggregate, would have no Material Adverse Effect. Each of the Borrowers and each
of their Subsidiaries enjoys peaceful and undisturbed possession under all
leases necessary in any material respect for the operation of its properties and
assets, none of which contains any unusual or burdensome provisions which might
materially affect or impair such properties or assets. All such leases are valid
and subsisting and are in full force and effect.
5.13 ERISA. Each of the Borrowers and each member of the
Controlled Group have fulfilled their obligations under the minimum funding
standards of ERISA and the Code with respect to each Plan and are in compliance
in all material respects with the presently applicable provisions of ERISA and
the Code, and have not incurred any liability to the PBGC or a Plan under Title
IV of ERISA (other than to make contributions or premium payments in the
ordinary course).
5.14 TAXES. All tax returns of the Borrowers and their
Subsidiaries required to be filed have been timely filed, all taxes, fees and
other governmental charges (other than those being contested in good faith by
appropriate proceedings diligently conducted and with respect to which adequate
reserves have been established) and, in the case of AD VALOREM taxes or
betterment assessments, no proceedings to foreclose any lien with respect
thereto have been commenced and, in all other cases, no notice of lien has been
filed or other action taken to perfect or enforce such lien) shown thereon which
are payable have been paid. The charges and reserves on the books of the
Borrower and their Subsidiaries for all income and other taxes are adequate, and
the Borrower knows of no additional assessment or any basis therefor. The
Federal income tax returns of the Borrowers and their Subsidiaries have not been
audited within the last three years, all prior audits have been closed, and
there are no unpaid assessments, penalties or other charges arising from such
prior audits.
5.15 ENVIRONMENTAL MATTERS. (a) Each of the Borrowers
and each of their Subsidiaries have obtained all Governmental Approvals that are
required for the operation of its business under any Environmental Law, except
where the failure to so obtain a Governmental Approval would not have a Material
Adverse Effect.
(b) Each of the Borrowers and each of their Subsidiaries are
in compliance with all terms and conditions of all required Governmental
Approvals and are also in compliance with all terms and conditions of all
applicable Environmental Laws, noncompliance with which would have a Material
Adverse Effect.
(c) Except as disclosed in SCHEDULE A, there is no civil,
criminal or administrative action, suit, demand, claim, hearing, notice of
violation, investigation, proceeding, notice or demand letter pending or, to the
best knowledge of the Borrowers threatened against the Borrowers or any
Subsidiary thereof relating in any way to the Environmental Laws, and there is
no Lien of any private entity or Governmental Authority against any property of
the Borrowers or any Subsidiary thereof relating in any way to the Environmental
Laws.
(d) There has been no claim, complaint, notice, or request for
information received by the Borrowers with respect to any site listed on the
National Priority List promulgated pursuant to the Comprehensive Environmental
Response, Compensation, and Liability Act ("CERCLA"), 42 USC ss. 9601 et seq.,
or any state list of sites requiring investigation or cleanup with respect to
contamination by Hazardous Substances.
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<PAGE> 13
(e) To the best of the Borrowers' knowledge, there has been no
release or threat of release of any Hazardous Substance at any Borrower Property
which would likely result in liability being imposed upon either of the
Borrowers or any Subsidiary thereof, which liability would have a Material
Adverse Effect.
5.16 INTELLECTUAL PROPERTY. Each of the Borrowers and each of
their Subsidiaries owns or possesses such Intellectual Property and similar
rights necessary for the conduct of its business as now conducted, without any
known conflict with the rights of others which would have a Material Adverse
Effect.
SECTION 6. Affirmative Covenants.
The Borrowers covenant and agree that for so long as this
Agreement is in effect and until the Revolving Line of Credit Notes, together
with all interest thereon and all other Obligations of the Borrowers to the
Lenders are paid or satisfied in full:
6.1 MAINTENANCE OF EXISTENCE. Except as disclosed on SCHEDULE
A, each of the Borrowers will, and will cause each of their Subsidiaries to,
maintain its existence and comply with all applicable statutes, rules and
regulations and to remain duly qualified as a foreign corporation, licensed and
in good standing in each jurisdiction where such qualification or licensing is
required by the nature of its business, the character and location of its
property, business, or the ownership or leasing of its property, except where
such noncompliance or failure to so qualify would not have a Material Adverse
Effect, and the Borrowers will, and will cause each of their Subsidiaries to,
maintain its properties in good operating condition, and continue to engage in
the same business as presently conducted or businesses reasonably related or
complementary thereto.
6.2 TAXES AND OTHER LIENS. Each of the Borrowers will, and
will cause each of their Subsidiaries to, pay when due all taxes, assessments,
governmental charges or levies, or claims for labor, supplies, rent and other
obligations made against it which, if unpaid, might become a Lien against either
Borrower or such Subsidiary or on its property, except liabilities being
contested in good faith and by proper proceedings, as to which adequate reserves
are maintained on the books of the Borrowers or their Subsidiaries, in
accordance with GAAP.
6.3 INSURANCE. Each of the Borrowers will, and will cause each
of their Subsidiaries to, maintain insurance with financially sound and
reputable insurance companies in such amounts and against such risks as is
usually carried by owners of similar businesses and properties in the same
general areas in which the Borrowers and their Subsidiaries operate, provided
that in any event the Borrowers and their Subsidiaries shall maintain or cause
to be maintained (a) insurance against casualty, loss or damage covering all
property and improvements of the Borrowers and their Subsidiaries in amounts and
in respect of perils usually carried by owners of similar businesses and
properties in the same general areas in which the Borrowers and their
Subsidiaries operate; (b) comprehensive general liability insurance against
claims for bodily injury, death or property damage; and (c) workers'
compensation insurance to the extent required by applicable law. In the case of
policies referenced in clause (b) above, all such insurance shall (i) name the
Borrowers and the Lenders as additional insureds as their interests may appear;
(ii) provide that no termination, cancellation or material reduction in the
amount or material modification to the extent of coverage shall be effective
until at least 30 days after receipt by the Lenders of notice thereof; and (iii)
be reasonably satisfactory in all other respects to the Agent, provided that as
long as no Event of Default has occurred or is continuing and no casualty could
reasonably be expected to have a Material Adverse Effect, the Borrowers shall
have the right to use any insurance proceeds to repair or replace damaged or
lost equipment or property.
6.4 FINANCIAL STATEMENTS, ETC. The Borrowers will furnish to
the Lenders:
(a) promptly upon the filing thereof by a Borrower with the
SEC (and in any event within five (5) days of such filing), copies of any
registration statements and reports on Forms 10-K, 10-Q and 8-K (or their
equivalents if such forms no longer exist); provided, however, if Alpha ceases
to be a "reporting company" under
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<PAGE> 14
the Securities Act of 1933, as amended, and the Exchange Act of 1934, as
amended, such financial information of the Borrowers as would be required to be
reported to the SEC on Form 10-K (which shall be furnished within ninety (90)
days after the last day of each fiscal year of the Borrowers) or 10-Q (which
shall be furnished within ninety (45) days after the last day of each fiscal
quarter of the Borrowers) or their equivalents if such forms no longer exist.
(b) at the time of the delivery of the quarterly and yearly
financial statements required by Sections 6.4(a) and (b) above, a Compliance
Certificate signed by the chief financial officer or the president of Alpha in
the form attached to this Agreement as EXHIBIT B, appropriately completed;
(c) promptly upon the mailing thereof to the shareholders of
the Borrowers generally, copies of all financial statements, reports, proxy
statements and other materials;
(d) promptly upon request by any Lender, copies of any
management letter provided by the Accountants;
(e) promptly upon becoming aware of any litigation or other
proceeding against any Borrower or any Subsidiary thereof that may have a
Material Adverse Effect, notice thereof; and
(f) promptly following the request of any Lender, such further
information concerning the business, affairs and financial condition or
operations of the Borrower and their Subsidiaries as such Lender may reasonably
request.
6.5 NOTICE OF DEFAULT. As soon as practicable, and in any
event, within five (5) Banking Days of becoming aware of the existence of any
condition or event which constitutes a Default, the Borrowers will provide each
Lender with written notice specifying the nature and period of existence thereof
and what action the Borrowers is taking or proposes to take with respect
thereto.
6.6 Environmental Matters.
(a) Each of the Borrowers and each of their Subsidiaries shall
comply with all terms and conditions of all applicable Governmental Approvals
and all applicable Environmental Laws, except where failure to comply could
reasonably be anticipated not to have a Material Adverse Effect.
(b) The Borrowers shall promptly notify the Lenders in the
event that any executive officer of either Borrower or any employee of the
Borrowers primarily responsible for compliance with Environmental Laws becomes
aware of:
(i) any spill, release, or threat of release of any
Hazardous Substance at or from any Borrower Property
or by any Person for whose conduct either Borrowers
or any Subsidiary thereof is responsible, to the
extent such Borrowers is required by Environmental
Laws to report such to any Governmental Authority;
(ii) any action or notice with respect to a civil,
criminal or administrative action, suit, demand,
claim, hearing, notice of violation, investigation,
proceeding, notice or demand letter pending or
threatened against either Borrower or any Subsidiary
thereof relating in any way to the Environmental
Laws, or any Lien of any Governmental Authority or
any other Person against any Borrower Property
relating in any way to the Environmental Laws;
(iii) any claim made or threatened by any Person against
either Borrower or any Subsidiary thereof or any
property of either Borrower or any Subsidiary thereof
relating to damage,
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<PAGE> 15
contribution, cost recovery compensation, loss or
injury resulting from any Hazardous Substance
pertaining to such property or the business or
operations of either Borrower or such Subsidiary; and
(iv) any occurrence or condition on any real property
adjoining or in the vicinity of any Borrower Property
known to the officers or supervisory personnel of
either Borrower or any Subsidiary thereof or other
employees having responsibility for the compliance by
either Borrower or any Subsidiary thereof with
Environmental Laws, without any independent
investigation, which does cause, or could cause, such
Borrower Property, or any part thereof, to contain
Hazardous Substances in violation of any
Environmental Laws, or which does cause, or could
cause, such Borrower Property to be subject to any
restrictions on the ownership, occupancy,
transferability or use thereof by either Borrower or
any Subsidiary thereof.
(c) Each Borrower will, and will cause each of their
Subsidiaries to, at its own cost and expense, and within such period as may be
required by applicable law or regulation, initiate all remedial actions and
thereafter diligently prosecute such action as shall be required by law for the
cleanup of such Borrower Property, including all removal, containment and
remedial actions in accordance with all applicable Environmental Laws and shall
further pay or cause to be paid, at no expense to the Lenders, all cleanup,
administrative, and enforcement costs of applicable Government Authorities which
may be asserted against such Borrower Property.
6.7 ERISA INFORMATION. If and when either Borrower or any
member of the Controlled Group (a) gives or is required to give notice to the
PBGC of any "reportable event" (as defined in Section 4043 of ERISA) with
respect to any Plan which might constitute grounds for a termination of such
Plan under Title IV of ERISA, or knows that the plan administrator of any Plan
has given or is required to give notice of any such reportable event, (b)
receives notice of complete or partial withdrawal liability under Title IV of
ERISA or (c) receives notice from the PBGC under Title IV of ERISA of an intent
to terminate or appoint a trustee to administer the Plan, the Borrowers shall in
each such instance promptly furnish to the Lenders a copy of any such notice.
6.8 INSPECTION. Each Borrower will, upon the request of the
Lenders, permit a representative of the Lenders (including any field examiner or
auditor retained by the Lenders) to inspect and make copies of the Borrowers'
books and records, and to discuss its affairs, finances and accounts with its
officers and accountants, at such reasonable times and as often as the Lenders
may reasonably request and cause each of their Subsidiaries to do so. Each
Lender will maintain the confidentiality of any non-public information relating
to the Borrowers and their Subsidiaries which has been identified in writing as
confidential on the information itself or otherwise (the "Confidential
Information") and, except as provided below, will exercise the same degree of
care that such Lender exercises with respect to its own proprietary information
to prevent the unauthorized disclosure of the Confidential Information to third
parties. Confidential Information shall not include data or information that
either: (a) is in or becomes part of the public domain or is already in the
knowledge or possession of such Lender when disclosed to such Lender, without
breach of this Agreement; or (b) is disclosed to such Lender by a third party,
provided such Lender does not have actual knowledge that such third party is
prohibited from disclosing such information. The terms of this Section shall not
apply to disclosure of Confidential Information by either Lender that is, in the
good faith opinion of such Lender, compelled by laws, regulations, rules, orders
or legal process or proceedings or is disclosed to: (a) any party, including a
prospective participant, who has signed a confidentiality agreement containing
terms substantially similar to those contained herein; and (b) examiners,
auditors and investigators having regulatory authority over such Lender.
6.9 USE OF PROCEEDS. The Borrowers shall use the proceeds of
the borrowings under the Revolving Line of Credit Notes for the general
corporate purposes of the Borrowers, including, without limitation, providing
liquidity for working capital, capital expenditures, stock repurchases and
acquisitions to the extent
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permitted under Section 7.3 below. Without limiting the foregoing, no part of
such proceeds will be used for the purpose of purchasing or carrying any "margin
security" as such term is defined in Regulation U of the Board of Governors of
the Federal Reserve System.
6.10 FURTHER ASSURANCES. Each Borrower will, and will cause
each of their Subsidiaries to, execute and deliver to the Lenders any writings
and do all things necessary, effectual or reasonably requested by the Lenders to
carry into effect the provisions and intent of this Agreement or any other Loan
Document.
6.11 SUBSIDIARIES. Each Borrower shall immediately notify each
Lender of the organization of any additional foreign or domestic Subsidiaries of
the Borrowers. The Lenders may require that any Subsidiaries become parties to
any of the Loan Documents as guarantors or sureties.
SECTION 7. Negative Covenants.
Each of the Borrowers covenants and agrees that for so long as
this Agreement is in effect and until the Revolving Line of Credit Notes,
together with all interest thereon and all other Obligations of the Borrower to
the Lenders are paid or satisfied in full, without the prior written consent of
all the Lenders:
7.1 ERISA The Borrowers will not permit any pension plan
maintained by either Borrower or by any member of a "Controlled Group" (ERISA
ss.210(c) or ERISA ss.210(d)) of which either Borrower is a member to: (a)
engage in any "prohibited transaction" (ERISA ss.2003(c)); (b) fail to report to
the Lenders a "reportable event" (ERISA ss.4043) within 30 days after its
occurrence or as to any reportable event as to which the 30-day notice period
requirement of Section 4043(b) of Title IV of ERISA has been waived by the PBGC,
within 30 days of such time as the Borrower is requested to notify the PBGC of
such reportable event; (c) incur any "accumulated funding deficiency" (ERISA
ss.302); (d) terminate its existence at any time in a manner which could result
in the imposition of a Lien on the property of the Borrower or any Subsidiary
thereof; or (e) fail to report to the Lenders any "complete withdrawal" or
"partial withdrawal" by the Borrower or an affiliate from a "multiemployer plan"
(ERISA ss.ss.4203, 4205, and 4001, respectively). The quoted terms are defined
in the respective sections of ERISA cited above.
7.2 TRANSACTIONS WITH AFFILIATES. Subject to the provisions of
Section 7.8, neither Borrower will and nor permit any of their Subsidiaries to,
directly or indirectly, pay any funds to or for the account of, make any
Investment in, lease, sell, transfer or otherwise dispose of any assets,
tangible or intangible, or engage in any transaction in connection with any
joint enterprise or other joint arrangement with, any Affiliate of the
Borrowers, unless such transaction is otherwise permitted under this Agreement,
is in the ordinary course of the Borrowers' or such Subsidiary's business, and
is (a) in the case of any transaction, between any Borrower and its Subsidiaries
or between the Subsidiaries, is duly accounted for in accordance with GAAP, and
(b) in the case of transactions with other Affiliates, is upon fair and
reasonable terms no less favorable to such Borrower or such Subsidiary as those
that could be obtained in a comparable arm's length transaction with a Person
which is not an Affiliate but is a significant and valued customer.
7.3 CONSOLIDATION, MERGER OR ACQUISITION. Neither Borrower
will, nor permit any of their Subsidiaries to, merge or consolidate with or into
any other Person, or make any acquisition of the business of any other Person
unless it obtains the prior written consent of the Lenders; PROVIDED that any
Subsidiary may merge into a Borrower or any wholly-owned Subsidiary of a
Borrower, and PROVIDED, FURTHER that either Borrower and their Subsidiaries may
make an acquisition or effectuate a merger with another Person as long as (a) no
Event of Default would arise as a result of such transaction or is otherwise
reasonably expected to occur during the four fiscal quarters immediately
following such transaction and the Borrowers furnishes to the Lenders in advance
of such transaction PRO FORMA financial information reasonably demonstrating the
foregoing; (b) the other Person is engaged in the same or a related line of
business; (c) there is no change in the senior management of the Borrowers; (d)
in the case of any merger, the Borrower or its Subsidiary is the surviving
entity; and (e) the aggregate value of cash
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consideration paid by the Borrowers and their Subsidiaries in connection with
such transactions between the date of this Agreement and the Revolving Line of
Credit Committed Expiration Date does not exceed $25,000,000.
7.4 DISPOSITION OF ASSETS. Neither Borrower will nor permit
any of their Subsidiaries to, convey, sell, lease, transfer or otherwise dispose
of any of its property, business or assets (including, without limitation,
accounts receivable and leasehold assets), whether now owned or hereafter
acquired, except:
(a) excess, obsolete or worn out property disposed of in the
ordinary course of business;
(b) the sale or other disposition of any property in the
ordinary course of business, PROVIDED that the aggregate book value of all
assets (other than inventory) so sold or disposed of in any period of twelve
consecutive months shall not exceed 10% of the consolidated total assets of the
Borrowers and their Subsidiaries as at the beginning of such twelve-month
period; and
(c) the sale of inventory in the ordinary course of business.
7.5 INDEBTEDNESS. The Borrowers will not, and will not permit
any of their Subsidiaries to, create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness payable to the Lenders in connection with
this Revolving Credit Agreement;
(b) existing Indebtedness, including Subordinated Debt, if
any, listed on SCHEDULE A hereto;
(c) Subordinated Debt incurred by either Borrower after the
date hereof; PROVIDED that, giving effect to the incurrence of such Subordinated
Debt and to the receipt and application of the proceeds thereof, no Default
shall have occurred and be continuing; and
(d) Purchase Money Indebtedness and Capital Lease Obligations
in an aggregate amount not in excess of $5,000,000 in any fiscal year.
7.6 LIENS. The Borrowers will not, and will not permit any of
their Subsidiaries to, create, incur, assume or suffer to exist any Lien on any
of its properties or assets, except the following (collectively, "PERMITTED
LIENS"):
(a) Liens for taxes not delinquent or being contested in good
faith and by proper proceedings, as to which adequate reserves are maintained on
the books of the Borrowers or their Subsidiaries in accordance with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's or
similar liens imposed by law incurred in the ordinary course of business in
respect of obligations not overdue, or being contested in good faith and by
proper proceedings and as to which adequate reserves with respect thereto are
maintained on the books of the Borrowers and their Subsidiaries in accordance
with GAAP;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other types of social security
legislation;
(d) security deposits made to secure the performance of
leases, licenses and statutory obligations incurred in the ordinary course of
business;
(e) Liens in favor of Fleet as Agent for the Lenders under the
Loan Documents;
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(f) existing Liens, if any, listed on SCHEDULE A hereto;
PROVIDED that no such Lien is spread to cover any additional property after the
date hereof, and that the amount of the Indebtedness secured thereby is not
increased;
(g) Purchase Money Security Interests securing Purchase Money
Indebtedness permitted under Section 7.5(d) above;
(h) Liens with respect to Indebtedness secured by real
property having a fair market value in excess of the Indebtedness so secured;
(i) Liens securing Indebtedness under Capital Lease
Obligations permitted under Section 7.5(d); and
(j) Encumbrances on real property, such as easements, rights
of way, and zoning restrictions, which do not, individually or in the aggregate,
materially interfere with the use of the property in the conduct of the
Borrower's or a Subsidiary business.
7.7 RESTRICTED PAYMENTS. The Borrowers will not, and will not
permit any of their Subsidiaries to, declare or make any Restricted Payment,
provided that, however, Alpha (a) may make cash expenditures in an aggregate
amount of up to $1,500,000 in any fiscal year in order to redeem shares of
capital stock of Alpha under the Borrower's employee benefits plans and (b) make
stock repurchases of the capital stock of Alpha on the open market pursuant to a
stock repurchase plan approved by the board of directors of Alpha in an amount
not to exceed $40,000,000 in any year.
7.8 INVESTMENTS. The Borrowers will not, and will not permit
any of their Subsidiaries to, make, maintain or acquire any Investment in any
Person other than:
(a) Investments permitted pursuant the investment policy of
Alpha in effect on the date hereof and attached hereto as EXHIBIT D, subject to
any changes in such investment policy which are approved by the Chief Financial
Officer of Alpha (subject to the approval, which shall not be unreasonably
withheld, of the Majority Lenders);
(b) Investments by either Borrower in the other Borrower or
the Guarantor and Investments by the Guarantor in either Borrower;
(c) Investments by the Borrowers in their Subsidiaries other
than the Guarantor; PROVIDED that the sum of (A) the aggregate amount of all
Investments made after October 31, 1999 by the Borrowers in their Non-Guarantor
Subsidiaries and (B) the outstanding amount of any Indebtedness of any
Non-Guarantor Subsidiary of the Borrowers that is Guaranteed pursuant to this
subparagraph (c), may not exceed $1,000,000 at any time, provided, however,
nothing in this Section 7.8 shall prohibit Investments by the non-Guarantor
Subsidiaries in the Borrowers;
(d) existing joint ventures, partnerships or strategic
alliances listed on SCHEDULE A and joint ventures, partnerships or strategic
alliances formed hereafter and approved in writing in advance by the Majority
Lenders;
(e) securities of a corporation or limited liability company
engaged in a line of business complimentary to that of the Borrowers but not
constituting a Subsidiary, provided such Investment is approved in advance in
writing by the Majority Lenders, except for nominal holdings of the securities
of competitors; and
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(f) authorized loans to employees, sales representatives and
vendors of the Borrowers and their Subsidiaries provided that the aggregate
principal amount of such loans outstanding at any one time may not exceed
$500,000 at any time.
7.9 SALE AND LEASEBACK. Neither Borrower nor any of their
Subsidiaries shall enter into any arrangement having a transactional amount in
excess of $5,000,000, directly or indirectly, whereby it shall sell or transfer
any property owned by it in order to lease such property or lease other property
that such Borrowers or any such Subsidiary intends to use for substantially the
same purpose as the property being sold or transferred.
7.10 ADDITIONAL STOCK ISSUANCE BY SUBSIDIARIES. The Borrowers
shall not permit any of their Subsidiaries to issue any additional shares of its
capital stock or other equity securities, any options therefor or any securities
convertible thereto other than to the Borrowers.
7.11 QUICK RATIO. The Borrowers will not permit the Quick
Ratio at the end of any quarter to be less than 1.5 to 1.
7.12 MINIMUM PROFITABILITY. The Borrowers shall not permit
total EBITDA for the four fiscal quarters then ended to be less than $18,000,000
at the end of any fiscal quarter.
7.13 TANGIBLE NET WORTH. The Borrowers shall not permit the
Tangible Net Worth at the end of any fiscal quarter to be less than
$100,000,000.
7.14 CAPITAL EXPENDITURES. Neither the Borrowers nor any of
their Subsidiaries shall purchase or agree to purchase, or incur any obligations
(including that portion of the obligations arising under capital leases that is
required to be capitalized on the consolidated balance sheet of the Borrowers
and their Subsidiaries) for any equipment or other property constituting fixed
assets in any fiscal year in excess of $40,000,000.
SECTION 8. EVENTS OF DEFAULT.
8.1 EVENTS OF DEFAULT. The occurrence of any of the following
events shall be an "Event of Default" hereunder:
(a) The Borrowers (i) shall default in the due and punctual
payment of principal or interest on any Borrower Note, or (ii) shall fail to
make payment of any other amount due under any Loan Document within four (4)
days of the date on which the Lenders notify the Borrower that such amount is
due or on which demand is made therefor, and provided that any neglect or delay
by of a Lender to execute a previously agreed debit of an account of a Borrower
under the control of such Lender shall not constitute a default or failure to
pay until such notice is given or demand made; or
(b) Any representation, warranty or statement made herein or
any other Loan Document, or in any certificate or statement furnished pursuant
to or in connection herewith or therewith, shall prove to be incorrect,
misleading or incomplete in any material respect on the date as of which made or
deemed made; or
(c) The Borrowers shall default in the performance or
observance of any term, covenant or agreement on their part to be performed or
observed pursuant to Sections 7.3 and 7.11 through 7.14; or
(d) The Borrowers shall default in the performance or
observance of any term, covenant or agreement on their part to be performed or
observed pursuant to any of the provisions of this Agreement or any other Loan
Document (other than those referred to in paragraphs 8.1(a) through 8.1(c)
above) and such default shall continue unremedied for a period of ten (10)
Banking Days after the occurrence of such default; or
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(e) Any obligation of the Borrowers or any Subsidiary thereof
in an amount in excess of $250,000 in respect of any Indebtedness (other than
the Revolving Line of Credit Notes) or any Guarantee shall be declared to be or
shall become due and payable prior to the stated maturity thereof, or such
Indebtedness or Guarantee shall not be paid as and when the same becomes due and
payable, or there shall occur and be continuing any default under any
instrument, agreement or evidence of indebtedness relating to any such
Indebtedness the effect of which is to permit the holder or holders of such
instrument, agreement or evidence of indebtedness, or a trustee, agent or other
representative on behalf of such holder or holders, to cause such Indebtedness
to become due prior to its stated maturity, provided that no default shall be
deemed to exist under this Section 8.1 due to an event referenced in this
Section 8.1 so long as Borrower cures within any applicable grace period and,
thereafter no default under this Section 8.1 shall be deemed to be continuing
after such default has been cured; or
(f) The Borrowers or a Subsidiary thereof shall (i) apply for
or consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or of all or a substantial part of
its property, (ii) make a general assignment for the benefit of its creditors,
(iii) commence a voluntary case under the Bankruptcy Code, (iv) file a petition
seeking to take advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or readjustment of debts, (v) fail to
controvert in a timely and appropriate manner, or acquiesce in writing to, any
petition filed against it in an involuntary case under the Bankruptcy Code, or
(vi) take any corporate action for the purpose of effecting any of the
foregoing; or
(g) A proceeding or case shall be commenced, without the
application or consent of the Borrowers or any Subsidiary thereof in any court
of competent jurisdiction, seeking (i) its liquidation, reorganization,
dissolution or winding-up of either Borrower or any Subsidiary, or the
composition or readjustment of its debts, (ii) the appointment of a trustee,
receiver, custodian, liquidator or the like of either Borrower or any Subsidiary
or of all or any substantial part of its assets, or (iii) similar relief in
respect of either Borrower or any Subsidiary under any law relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment
of debts, and such proceeding or case shall continue undismissed, or an order,
judgment or decree approving or ordering any of the foregoing shall be entered
and continue unstayed and in effect, for a period of 60 days; or an order for
relief against either Borrower or any Subsidiary shall be entered in an
involuntary case under the Bankruptcy Code; or
(h) A judgment or judgments for the payment of money in excess
of $250,000 (net of insurance proceeds) in the aggregate shall be rendered
against either Borrower or any Subsidiary thereof and any such judgment or
judgments shall not have been vacated, discharged, stayed or bonded pending
appeal within thirty (30) days from the entry thereof; or
(i) Either Borrower or any member of the Controlled Group
shall fail to pay when due an amount or amounts aggregating in excess of
$100,000 which it is obligated to pay to the PBGC or to a Plan under Title IV of
ERISA; or a notice of intent to terminate a Plan or Plans having aggregate
Unfunded Liabilities in excess of $100,000 shall be filed under Title IV of
ERISA by either Borrower or any member of the Controlled Group, any plan
administrator or any combination of the foregoing; or the PBGC shall institute
proceedings under Title IV of ERISA to terminate or to cause a trustee to be
appointed to administer any such Plan or Plans or a proceeding shall be
instituted by a fiduciary of any such Plan or Plans against either Borrower or
any member of the Controlled Group to enforce Sections 515 or 4219(c)(5) of
ERISA; or a condition shall exist by reason of which the PBGC would be entitled
to obtain a decree adjudicating that any such Plan or Plans must be terminated;
or there shall occur a complete or partial withdrawal form, or a default, within
the meaning of Section 4219(c)(5) of ERISA, with respect to, one or more
Multiemployer Plans which could cause either Borrower or one or more members of
the Controlled Group to incur a current payment obligation in excess of
$100,000; or
(j) Either Borrower or any Subsidiary thereof shall default in
the performance or observance of any term, covenant or agreement on its part to
be performed or observed pursuant to any of the provisions of any
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agreement with the Lenders or any instrument delivered in favor of any Lender
(other than, in either case, a Loan Document), and such default shall continue
unremedied beyond the grace period (if any) provided for therein; or
(k) Either Borrower shall make any payment on account of its
Subordinated Debt, except to the extent such payment is expressly permitted
hereby or under any subordination agreement entered into with the Lenders; or
(l) a Change of Control Event has occurred in respect of any
Borrower or any of their Subsidiaries.
8.2 REMEDIES UPON AN EVENT OF DEFAULT. Upon the occurrence of
an Event of Default described in Sections 8.1(f) and 8.1(g), immediately and
automatically, and upon the occurrence of any other Event of Default, at any
time thereafter while such Event of Default is continuing, at the option of the
Agent and upon the Agent's declaration:
(i) the Revolving Line of Credit Commitments of each
Lender shall be terminated;
(ii) the unpaid principal amount of any Revolving Line of
Credit Loans, together with accrued interest, any
facility fee and all other amounts payable hereunder
and under the Borrower Notes shall become immediately
due and payable without presentment, demand, protest
or further notice of any kind, all of which are
hereby expressly waived; and
(iii) the Agent and the Lenders may exercise any and all
rights they have under this Agreement, the other Loan
Documents or at law or in equity, and proceed to
protect and enforce their respective rights by any
action at law or in equity or by any other
appropriate proceeding.
No remedy conferred upon the Agent or the Lenders in this Agreement or any other
Loan Document is intended to be exclusive of any other remedy, and each and
every remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by statute
or by any other provision of law.
SECTION 9. The Agent
9.1 Appointment of Agent; Powers and Immunities.
(a) Each Lender hereby irrevocably appoints and authorizes
Fleet to serve as the Agent hereunder and to act as its agent hereunder and
under the other Loan Documents in such capacity. Each Lender irrevocably
authorizes the Agent to take such action on behalf of each of the Lenders and to
exercise all such powers as are expressly delegated to the Agent hereunder and
in the other Loan Documents and all related documents, together with such other
powers as are reasonably incidental thereto. The Agent shall not have any duties
or responsibilities or any fiduciary relationship with any Lender except those
expressly set forth in this Agreement.
(b) Neither the Agent nor any of its directors, officers,
employees or agents shall be responsible for any action taken or omitted to be
taken by it or them hereunder or in connection herewith, except for its or their
own gross negligence or wilful misconduct. Without limiting the generality of
the foregoing, neither the Agent nor any of its Affiliates shall be responsible
to the Lenders for or have any duty to ascertain, inquire into or verify: (i)
any recitals, statements, representations or warranties made by the Borrowers or
any of their Subsidiaries or any other Person whether contained herein or
otherwise; (ii) the value, validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement, the other Loan Documents or any other document
referred to or
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provided for herein or therein; (iii) any failure by the Borrowers or any of
their Subsidiaries or any other Person to perform its obligations under any of
the Loan Documents; (iv) the satisfaction of any conditions specified in Section
4 hereof; (v) the existence, value, collectibility or adequacy of any collateral
or any part thereof or the validity, effectiveness, perfection or relative
priority of any liens and security interests of the Lenders therein; or (vi) the
filing, recording, refiling, continuing or re-recording of any financing
statement or other document or instrument evidencing or relating to the security
interests or liens of the Lenders in any collateral, PROVIDED, HOWEVER, the
Agent shall have the duty, subject to the terms of this Section 9, to take
notice of and to act upon any matter brought to its attention by a Lender.
(c) The Agent may employ agents, attorneys and other experts,
shall not be responsible to any Lender for the negligence or misconduct of any
such agents, attorneys or experts selected by it with reasonable care and shall
not be liable to any Lender for any action taken, omitted to be taken or
suffered in good faith by it in accordance with the advice of such agents,
attorneys and other experts. Fleet in its separate capacity as a Lender shall
have the same rights and powers under the Loan Documents as the other Lender and
may exercise or refrain from exercising the same as though it were not the
Agent, and Fleet and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrowers as if it were not
the Agent.
9.2 ACTIONS BY AGENT. (a) The Agent shall be fully justified
in failing or refusing to take any action under this Agreement as it reasonably
deems appropriate unless it shall first have received such advice or concurrence
of the Lenders and shall be indemnified to its reasonable satisfaction by the
Lenders against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement or any of the Loan Documents in accordance with a request of the
Lenders, and such request and any action taken or failure to act pursuant
thereto shall be binding upon the Lenders and all future holders of the
Revolving Line of Credit Notes.
(b) Whether or not an Event of Default shall have occurred,
the Agent may from time to time exercise such rights of the Agent and the
Lenders under the Loan Documents as it determines may be necessary or desirable
to protect the Collateral and the interests of the Agent and the Lenders therein
and under the Loan Documents.
(c) The Agent shall not incur any liability by acting in
reliance on any notice, consent, certificate, statement or other writing (which
may be a bank wire, telex, facsimile or similar writing) believed by it to be
genuine or to be signed by the proper party or parties.
9.3 INDEMNIFICATION. Without limiting the obligations of the
Borrowers hereunder or under any other Loan Document, the Lenders agree to
indemnify the Agent, ratably in accordance with their respective Revolving Line
of Credit Commitment Percentages, for any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may at any time be imposed
on, incurred by or asserted against the Agent in any way relating to or arising
out of this Agreement or any other Loan Document or any documents contemplated
by or referred to herein or therein or the transactions contemplated hereby or
thereby or the enforcement of any of the terms hereof or thereof or of any such
other documents; PROVIDED, HOWEVER, that no Lender shall be liable for any of
the foregoing to the extent they result from the gross negligence or willful
misconduct of the Agent.
9.4 REIMBURSEMENT. Without limiting the provisions of Section
9.3, the Lenders and the Agent hereby agree that the Agent shall not be obliged
to make available to any Person any sum which the Agent is expecting to receive
for the account of that Person until the Agent has determined that it has
received that sum. The Agent may, however, disburse funds prior to determining
that the sums which the Agent expects to receive have been finally and
unconditionally paid to the Agent, if the Agent wishes to do so. If and to the
extent that the Agent does disburse funds and it later becomes apparent that the
Agent did not then receive a payment in an amount equal to the sum paid out,
then any Person to whom the Agent made the funds available shall, on demand from
the Agent,
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refund to the Agent the sum paid to that Person. If the Agent in good faith
reasonably concludes that the distribution of any amount received by it in such
capacity hereunder or under the Loan Documents might involve it in liability, it
may refrain from making distribution until its right to make distribution shall
have been adjudicated by a court of competent jurisdiction. If a court of
competent jurisdiction shall adjudge that any amount received and distributed by
the Agent is to be repaid, each Person to whom any such distribution shall have
been made shall either repay to the Agent its proportionate share of the amount
so adjudged to be repaid or shall pay over the same in such manner and to such
Persons as shall be determined by such court.
9.5 NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender
represents that it has, independently and without reliance on the Agent or any
other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of the financial condition and affairs of
the Borrowers and decision to enter into this Agreement and the other Loan
Documents and agrees that it will, independently and without reliance upon the
Agent or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own appraisals and
decisions in taking or not taking action under this Agreement or any other Loan
Document. The Agent shall not be required to keep informed as to the performance
or observance by the Borrowers of this Agreement, the other Loan Documents or
any other document referred to or provided for herein or therein or by any other
Person of any other agreement or to make inquiry of, or to inspect the
properties or books of, any Person. Except for notices, reports and other
documents and information expressly required to be furnished to the Lenders by
the Agent hereunder, if any, the Agent shall not have any duty or responsibility
to provide any Lender with any credit or other information concerning any person
which may come into the possession of the Agent or any of its affiliates. Each
Lender shall have access to all documents relating to the Agent's performance of
its duties hereunder at such Lender's request. Unless any Lender shall promptly
object to any action taken by the Agent hereunder (other than actions to which
the provisions of Section 11.6(b) are applicable and other than actions which
constitute gross negligence or willful misconduct by the Agent), such Lender
shall conclusively be presumed to have approved the same.
9.6 RESIGNATION OR REMOVAL OF AGENT. The Agent may resign at
any time by giving 30 days prior written notice thereof to the Lenders and the
Borrowers. Upon any such resignation, the Lenders shall have the right to
appoint a successor Agent which shall be Fleet or another financial institution
reasonably acceptable to the Borrowers and shall be a Lender or another
financial institution having a combined capital and surplus in excess of
$100,000,000. If no successor Agent shall have been so appointed by the Lenders
and shall have accepted such appointment within 30 days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent which shall be reasonably acceptable
to the Borrowers and shall be a financial institution having a combined capital
and surplus in excess of $100,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations hereunder. After any retiring Agent's resignation, the
provisions of this Agreement shall continue in effect for its benefit in respect
of any actions taken or omitted to be taken by it while it was acting as Agent.
9.7 Ratable Sharing
The Lenders hereby agree among themselves that if any of them
shall, whether by voluntary payment, by realization upon security, through the
exercise of any right of set-off or banker's lien, by counterclaim or cross
action or by the enforcement of any right under the Loan Documents or otherwise,
or as adequate protection of a deposit treated as cash collateral under the
Bankruptcy Code, receive payment or reduction of a proportion of the aggregate
amount of principal, interest, fees and other amounts then due and owing to that
Lender hereunder or under the other Loan Documents (collectively, the "AGGREGATE
AMOUNTS DUE") to such Lender) which is greater than the proportion received by
any other Lender in respect of the Aggregate Amounts Due to such other Lender,
then the Lender receiving such proportionately greater payment shall (i) notify
the Agent and each other Lender of the receipt of such payment and (ii) apply a
portion of such payment to purchase participations (which it shall be
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deemed to have purchased from each seller of a participation simultaneously upon
the receipt by such seller of its portion of such payment) in the Aggregate
Amounts Due to the other Lenders so that all such recoveries of Aggregate
Amounts Due shall be shared by all Lenders in proportion to the Aggregate
Amounts Due to them; PROVIDED that if all or part of such proportionately
greater payment received by such purchasing Lender is thereafter recovered from
such Lender upon the bankruptcy or reorganization of Borrower or otherwise,
those purchases shall be rescinded and the purchase prices paid for such
participations shall be returned to such purchasing Lender ratably to the extent
of such recovery, but without interest. The Borrowers expressly consents to the
foregoing arrangement and agrees that any holder of a participation so purchased
may exercise any and all rights of banker's lien, set-off or counterclaim with
respect to any and all monies owing by the Borrowers to that holder with respect
thereto as fully as if that holder were owed the amount of the participation
held by that holder.
SECTION 10. Definitions.
10.1 Certain Definitions.
"ACCOUNTANTS" means KMPG Peat Marwick or another accountant
firm of national reputation or other certified public accountants selected by
the Borrower and approved by the Lenders.
"AFFILIATE" means, with respect to any specified Person (the
"SPECIFIED PERSON"), any Person directly or indirectly controlling, controlled
by or under direct or indirect common control with, the Specified Person and,
without limiting the generality of the foregoing, includes (i) any director or
officer of the Specified Person or any Affiliate of the Specified Person, (ii)
any such director's or officer's parent, spouse, child or child's spouse (a
"RELATIVE"), (iii) any group acting in concert, of one or more such directors,
officers, relatives or any combination thereof (a "GROUP"), (iv) any Person
controlled by any such director, officer, relative or group in which any such
director, officer, relative or group beneficially owns or holds 5% or more of
any class of voting securities or a 5% or greater equity or profits interest and
(v) any Person or group which beneficially owns or holds 5% or more of any class
of voting securities or a 5% or greater equity or profits interest in the
Specified Person. For the purposes of this definition, the term "control" when
used with respect to any Specified Person means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Specified Person, whether through the ownership of voting
securities, by contract or otherwise.
"AGGREGATE LETTER OF CREDIT USAGE" means, at any time, the
aggregate at such time of (a) the maximum amount then available to be drawn
under all outstanding Letters of Credit, and (b) all then unreimbursed drawings
under any Letters of Credit.
"AGREEMENT" shall mean this Revolving Credit Agreement.
"BANKING DAY" shall mean any day, excluding Saturday and
Sunday and excluding any other day which in the Commonwealth of Massachusetts or
the State of California is a legal holiday or a day on which banking
institutions are authorized by law to close.
"BORROWER PROPERTY" means any real property owned, occupied,
or operated by either Borrower or any of their Subsidiaries.
"CAPITAL LEASE OBLIGATIONS" means, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) real and/or personal property which
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP (including Statement of Financial
Accounting Standards No. 13 of the Financial Accounting Standards Board) and,
for purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP (including FASB
Statement No. 13).
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"CHANGE OF CONTROL EVENT" shall mean, in respect of any
Person, the occurrence of any of the following events:
(a) such Person merges with or into, another entity or
conveys, transfers, leases or otherwise disposes of all or substantially all of
its assets to any other Person, other than any such transaction in which,
immediately after such transaction, the holders of common stock of such Person
are entitled to exercise, directly or indirectly, at least a majority of the
voting rights attaching to the capital stock of the surviving or transferee
Person; or
(b) any Person taken together with any Person or Persons
acting as a group, with such Person acquiring 50% or more of the issued and
outstanding common stock of such Person following an offer by such Person or
Persons to acquire the whole or part of the outstanding common stock of such
Person.
"CODE" means the Internal Revenue Code of 1986, as amended, or
any successor statute.
"CONTRACTUAL OBLIGATION" means, as to any Person, any
provision of any security (as such term is defined in the Securities Act of
1933, as amended) issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"CONTROLLED GROUP" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower, are treated as a single
employer under Section 414 of the Code.
"1997 CREDIT AGREEMENT" shall have the meaning specified in
the preamble.
"CURRENT LIABILITIES" means, at any time, all liabilities of
the Borrowers and their Subsidiaries at such time, on a consolidated basis, that
would be classified as current liabilities in accordance with GAAP, including,
without limitation, all Indebtedness of the Borrowers and their Subsidiaries
payable on demand or maturing within one year of such time, or renewable at the
option of the Borrowers or such Subsidiary for a period of not more than one
year from such time, and all serial maturity and periodic or installment
payments on any Indebtedness, to the extent such payments are required to be
made within one year from such time.
"DEFAULT" means any condition or event that constitutes an
Event of Default or that with the giving of notice or lapse of time or both
would, unless cured or waived, become an Event of Default.
"EBITDA" shall mean, for any fiscal period, an amount equal to
Net Income for such period, plus each of the following (without duplication), to
the extent deducted in computing such Net Income: (i) Interest Expense, (ii)
taxes accrued, (iii) depreciation, and (iv) amortization of goodwill and other
intangibles.
"ENVIRONMENTAL LAWS" means all federal, state, local and
foreign laws, and all regulations, notices or demand letters issued, promulgated
or entered thereunder, relating to pollution or protection of the environment
and to occupational health and safety, including, without limitation, laws
relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or Hazardous Substances into the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemicals or Hazardous
Substances.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, or any successor statutes.
"EVENT OF DEFAULT" has the meaning set forth in Section 8.1.
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"FINANCIAL STATEMENTS DATE" means date of last audited year
end.
"GAAP" means accounting principles generally accepted in the
United States applied on a consistent basis.
"GOVERNMENTAL APPROVALS" shall mean any authorization,
consent, order approval, license, lease, ruling, permit, tariff, rate,
certification, validation, exemption, filing or registration by or with, or
notice to, any Governmental Authority.
"GUARANTEE" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Indebtedness
or other obligation of any other Person and, without limiting the generality of
the foregoing, any obligation, direct or indirect, contingent or otherwise of
such Person (a) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness or other obligation (whether arising by virtue
of partnership arrangements, by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (b) entered into for the purpose of
assuring in any other manner the obligee of such Indebtedness or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part); PROVIDED that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"GUARANTOR" shall have the meaning specified in Section 3.1.
"HAZARDOUS SUBSTANCES" shall mean all hazardous and toxic
substances, wastes or materials, hydrocarbons (including naturally occurring or
man-made petroleum and hydrocarbons), flammable explosives, urea formaldehyde
insulation, radioactive materials, biological substances, PCBs, pesticides,
herbicides and any other kind and/or type of pollutants, or contaminates and/or
any other similar substances or materials which, because of toxic, flammable,
explosive, corrosive, reactive, radioactive or other properties that may be
hazardous to human health or the environment, are included under or regulated by
any Environmental Laws.
"INDEBTEDNESS" of any Person at any date shall mean, (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (excluding current trade liabilities incurred in
the ordinary course of business and payable in accordance with customary
practices, but including any class of capital stock of such Person with fixed
payment obligations or with redemption at the option of the holder), or which is
evidenced by a note, bond, debenture or similar instrument, (b) all Capital
Lease Obligations of such Person, (c) all obligations of such Person in respect
of acceptances issued or created for the account of such Person, and all
reimbursement obligations (contingent or otherwise) of such Person in respect of
any letters of credit issued for the account of such Person, and (d) all
liabilities secured by any Lien on any property owned by such Person even though
such Person has not assumed or otherwise become liable for the payment thereof.
"INTELLECTUAL PROPERTY" shall have the meaning specified in
Section 5.16.
"INTEREST EXPENSE" shall mean, for any fiscal period, the sum
(determined without duplication) of the aggregate amount of interest required to
be paid during such period on Indebtedness of the Borrowers and their
Subsidiaries (on a consolidated basis), including the interest portion of
payments under Capital Lease Obligations.
"INTEREST PERIOD" means, with respect to any LIBOR Loan, the
period commencing on the date such LIBOR Loan is converted from a Prime Rate
Loan or the last day of the next preceding Interest Period with
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respect to such LIBOR Loan and ending on the numerically corresponding day in
the first, second or third calendar month thereafter, as the Borrower may select
as provided in Section 2.6, except that each such Interest Period which
commences on the last Banking Day of a calendar month (or on any day for which
there is no numerically corresponding day in the appropriate subsequent calendar
month) shall end on the last Banking Day of the appropriate subsequent calendar
month.
"INVESTMENTS" means, with respect to any Person (the
"INVESTOR"), (a) any investment by the Investor in any other Person, whether by
means of share purchase, capital contribution, purchase or other acquisition of
a partnership or joint venture interest, loan, time deposit, demand deposit or
otherwise and (b) any Guarantee by either Borrower of any Indebtedness or other
obligation of any other Person.
"LETTER OF CREDIT" means any commercial letter of credit or
standby letter of credit issued by the Lenders or either Lender for the account
of either Borrower as provided in this Agreement.
"LIBOR LOAN" means, at any time, that principal amount of the
Revolving Line of Credit, the interest on which is determined at such time on
the basis of rates referred to in the definition of "LIBOR Rate".
"LIBOR RATE" means with respect to any Interest Period
pertaining to a LIBOR Loan, the rate per annum (rounded upward, if necessary, to
the nearest 1/32 of one percent) as determined on the basis of the offered rates
for deposits in U.S. dollars, for a period of time comparable to such Interest
Period which appears on the Telerate page 3750 as of 11:00 a.m. London time on
the day that is two London Banking Days preceding the first day of such LIBOR
Loan; provided, however, if the rate described above does not appear on the
Telerate System on any applicable interest determination date, the LIBOR rate
shall be the rate (rounded upwards as described above, if necessary) for
deposits in dollars for a period substantially equal to the interest period on
the Reuters Page "LIBOR" (or such other page as may replace the LIBOR Page on
that service for the purpose of displaying such rates), as of 11:00 a.m. (London
Time), on the day that is two (2) London Banking Days prior to the beginning of
such Interest Period.
If both the Telerate and Reuters system are unavailable, then
the rate for that date will be determined on the basis of the offered rates for
deposits in U.S. dollars for a period of time comparable to such Interest Period
which are offered by four major banks in the London interbank market at
approximately 11:00 a.m. London time, on the day that is two (2) London Banking
Days preceding the first day of such LIBOR Loan as selected by the Agent. The
principal London office of each of the four major London banks will be requested
to provide a quotation of its U.S. dollar deposit offered rate. If at least two
such quotations are provided, the rate for that date will be the arithmetic mean
of the quotations. If fewer than two quotations are provided as requested, the
rate for that date will be determined on the basis of the rates quoted for loans
in U.S. dollars to leading European banks for a period of time comparable to
such Interest Period offered by major banks in New York City at approximately
11:00 a.m. New York City time, on the day that is two London Banking Days
preceding the first day of such LIBOR Loan. In the event that the agent is
unable to obtain any such quotation as provided above, it will be deemed that
LIBOR pursuant to a LIBOR Loan cannot be determined. In the event that the Board
of Governors of the Federal Reserve System shall impose a Reserve Requirement
with respect to LIBOR deposits of the Agent, then for any period during which
such Reserve Requirement shall apply, LIBOR shall be equal to the amount
determined above divided by an amount equal to 1 minus the Reserve Percentage.
"LIEN" means any mortgage, pledge, hypothecation, conditional
or collateral assignment, deposit arrangement, encumbrance, lien (statutory or
other), or preference, priority or other security agreement of any kind or
nature whatsoever (including, without limitation, any conditional sale or other
title retention agreement, any lease that should be capitalized in accordance
with GAAP, and the filing of a financing statement under the Uniform Commercial
Code or comparable law of any jurisdiction), together with any renewal or
extension thereof.
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"LOAN DOCUMENTS" means, collectively, this Agreement, the
Revolving Line of Credit Notes, the Guaranty, and all other agreements and
instruments that are from time to time executed in connection with this
Agreement, as each of such agreements and instruments may be amended, modified
or supplemented from time to time.
"LONDON BANKING DAY" shall mean any day, excluding Saturday
and Sunday and excluding any other day which in England or the City of London is
a legal holiday or a day on which banking institutions are authorized by law to
close.
"MAJORITY LENDERS" shall mean, at any time while no Loans are
outstanding, the Lenders having at least fifty-one percent (51%) of the
aggregate amount of the Total Revolving Line of Credit Commitments and, at any
time while Loans are outstanding, Lenders holding at least fifty-one percent
(51%) of the outstanding aggregate principal amount of the Revolving Line of
Credit Loans.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on
(a) the business, operations, property, condition (financial or otherwise) or
prospects of either Borrower, or of the Borrowers and their Subsidiaries taken
as a whole, (b) the ability of either Borrower to perform its obligations under
this Agreement, the Revolving Line of Credit Notes or any of the other Loan
Documents, or (c) the validity or enforceability of this Agreement, the
Revolving Line of Credit Notes or any of the other Loan Documents, or the rights
or remedies of the Lenders hereunder or thereunder.
"MULTIEMPLOYER PLAN" means at any time an employee pension
benefit plan within the meaning of Section 4001(a)(3) of ERISA to which either
Borrower or any member of the Controlled Group is then making or accruing an
obligation to make contributions or has within the preceding five plan years
made contributions, including for these purposes any Person which ceased to be a
member of the Controlled Group during such five year period.
"NET INCOME" or "NET LOSS" for any period in respect of which
the amount thereof shall be determined, shall mean the aggregate of the
consolidated net income (or net loss) after taxes for such period (taken as a
cumulative whole) of the Borrowers and their Subsidiaries, determined in
accordance with GAAP, exclusive of the write-up of any asset.
"OBLIGATIONS" shall mean all obligations of the Borrowers and
their Subsidiaries to the Agent and the Lenders of every kind and nature whether
such obligations are now existing or hereafter incurred or created, joint or
several, direct or indirect, absolute or contingent, due or to become due,
matured or unmatured, liquidated or unliquidated, arising by contract, operation
of law or otherwise, including, without limitation, (a) all principal of and
interest (including, without limitation, any interest which accrued after the
commencement of any case, proceeding or other action relating to the bankruptcy,
insolvency or reorganization of any Borrower) on any advance to the Borrowers
under the Revolving Line of Credit Notes issued by the Borrowers or pursuant to
this Agreement; (b) all other amounts (including, without limitation, any fees
or expenses) payable by the Borrowers or the Guarantor under the Loan Documents;
(c) all amounts payable to the Issuing Lender in connection with the issuance of
any letter of credit by the Issuing Lender for the account of any Borrower or
any drawing thereunder, including, without limitation, any reimbursement
obligation and letter of credit fees payable under any letter of credit
application or reimbursement agreement executed by the Borrowers in connection
with any such letter of credit; and (d) any renewals, refinancings or extensions
of any of the foregoing.
"OFFICE OF THE LENDERS" shall mean (a) in the case of SVB, the
banking office of SVB located at 3003 Tasman Drive, Santa Clara, California
95054, or such other location of which SVB shall notify the Borrowers, and (b)
in the case of Fleet, the banking office of Fleet located at One Federal Street,
Boston, Massachusetts 02110, or such other location of which Fleet shall notify
the Borrower.
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"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"PERMITTED LIENS" shall have the meaning set forth in Section
7.6.
"PERSON" shall mean and include any individual, firm,
corporation, trust or other unincorporated organization or association or other
enterprise or any government or political subdivision, agency, department or
instrumentality thereof.
"PLAN" means any employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either (a) maintained by either Borrower or any
member of the Controlled Group for employees of either Borrower or any member of
the Controlled Group or (b) maintained pursuant to a collective bargaining
agreement or any other arrangement under which more than one employer makes
contributions and to which either Borrower or any member of the Controlled Group
is then making or accruing an obligation to make contributions or has within the
preceding five plan years made contributions.
"POST-DEFAULT RATE" means, in respect of any principal of the
Revolving Line of Credit Loans or any other amount payable by either Borrower
under this Agreement which is not paid when due (whether at stated maturity, by
acceleration or otherwise, a rate per annum during the period commencing on the
due date until such amount is paid in full (after as well as before judgment)
equal to the sum of 3% plus the higher of (i) the rate of interest applicable to
Prime Rate Loans and (ii) in the case of any LIBOR Loan, the rate of interest
otherwise applicable to such LIBOR Loan.
"PRIME RATE" shall mean the variable per annum rate of
interest so designated from time to time by Fleet as its prime rate. The Prime
Rate is a reference rate and does not necessarily represent that lowest or best
rate being charged to any customer.
"PURCHASE MONEY INDEBTEDNESS" shall mean Indebtedness incurred
to finance the acquisition of assets or the cost of improvements on real
property or leaseholds, in each case in an amount not in excess of the lesser of
(a) the purchase price or acquisition cost of said assets or the cost of said
improvements and (b) the fair market value of said assets or said improvements
on the date of acquisition of said assets or contract for said improvements.
"PURCHASE MONEY SECURITY INTEREST" shall mean (a) a security
interest securing Purchase Money Indebtedness, which security interest applies
solely to the particular assets acquired with the Purchase Money Indebtedness
that said Purchase Money Security Interest secures, and (b) the renewal,
extension and refunding of such Purchase Money Indebtedness in an amount not
exceeding the amount thereof remaining unpaid immediately prior to such renewal,
extension or refunding.
"QUICK RATIO" means, at any time, all cash, cash equivalents
and accounts receivable, less reserves for doubtful accounts, less advance
billings to customers, of the Borrowers and their Subsidiaries at such time, on
a consolidated basis, determined in accordance with GAAP, divided by the sum
(without duplication) of (a) the aggregate of all Current Liabilities at such
time, (b) then outstanding Revolving Extensions of Credit and (c) the current
portion of long-term Indebtedness of the Borrowers and their Subsidiaries as
determined in accordance with GAAP.
"REGULATION D" means Regulation D of the Board of Governors of
the Federal Reserve System as the same may be amended or supplemented from time
to time.
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"REGULATORY CHANGE" means any change on or after the date of
this Agreement in United States federal, state or foreign laws or regulations,
including Regulation D, or the adoption or making on or after such date of any
interpretations, directives or requests applying to a class of lenders including
the Lenders of or under any United States federal or state, or any foreign, laws
or regulations (whether or not having the force of law) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof (other than changes which affect taxes measured by or
imposed on the overall net income of any Lender by the jurisdiction in which
such Lender has its principal office.
"RESERVE REQUIREMENT" means, for any LIBOR Loans for any
Interest Period therefor, the average maximum rate at which reserves (including
any marginal, supplemental or emergency reserves) are required to be maintained
during such Interest Period under Regulation D by the Lender against
"Eurocurrency liabilities" (as such term is used in Regulation D).
"RESTRICTED PAYMENT" means, with respect to either Borrower or
any Subsidiary thereof, (a) any dividend or other distribution on any shares of
capital stock of Stock Borrower or such Subsidiary (except dividends payable
solely in shares of capital stock or rights to acquire capital stock of Alpha,
and cash dividends payable solely to either Borrower by a Subsidiary), (b) any
payment on account of the purchase, redemption, retirement or acquisition of (i)
any shares of the capital stock of any Borrower or a Subsidiary thereof or (ii)
any option, warrant, convertible security or other right to acquire shares of
the capital stock of any Borrower or a Subsidiary thereof, other than, in either
case, payments made solely to Alpha by a Subsidiary, and (c) any payment of any
principal of, or premium or interest on, or any required or optional purchase,
redemption or other retirement or other acquisition of any Subordinated Debt of
any Borrower other than on terms expressly permitted under the subordination
provisions approved by the Lenders.
"REVOLVING LINE OF CREDIT COMMITMENT EXPIRATION DATE" shall
have the meaning specified in Section 1.1.
"REVOLVING LINE OF CREDIT COMMITMENT PERCENTAGE" shall mean,
with respect to any Lender, that Lender's Revolving Line of Credit Commitment
expressed as a percentage of the Total Revolving Line of Credit Commitment.
"REVOLVING LINE OF CREDIT EXTENSION OF CREDIT" shall have the
meaning set forth in Section 1.5.
"REVOLVING LINE OF CREDIT COMMITMENT" shall have the meaning
set forth in Section 1.1.
"REVOLVING LINE OF CREDIT LOANS" shall have the meaning set
forth in Section 1.1.
"REVOLVING LINE OF CREDIT NOTE" shall have the meaning set
forth in Section 1.3.
"SUBORDINATED DEBT" means indebtedness of the Borrowers that
is subordinated to the Indebtedness of the Borrowers owing to the Lenders either
(a) pursuant to a subordination agreement in form and substance satisfactory to
the Lenders between the Lenders and the holder(s) of such Indebtedness, or (b)
pursuant to the terms thereof, where the Lenders have confirmed in writing that
such terms are satisfactory to them.
"SUBSIDIARY" means, with respect to any Person, any
corporation or other entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other Persons performing similar functions are at the time directly or
indirectly owned by such Person.
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"TANGIBLE NET WORTH" means, at any time, the consolidated
stockholders' equity of the Borrowers and their Subsidiaries at such time
determined in accordance with GAAP, LESS all assets that are reflected on the
consolidated balance sheet of the Borrowers and their Subsidiaries at such time
that would be treated as intangibles under GAAP (including, but not limited, to
goodwill, capitalized software and excess purchase costs), PLUS all then
outstanding Subordinated Debt.
"TOTAL REVOLVING LINE OF CREDIT COMMITMENT" shall have the
meaning set forth in Section 1.1.
"TYPE" shall refer to the determination of whether a Revolving
Line of Credit Loan is a Prime Rate Loan or a LIBOR Loan, each of which shall
constitute a Type.
"UCC" shall have the meaning given such term in the Security
Agreement.
"UNFUNDED LIABILITIES" means, with respect to any Plan, at any
time, the amount (if any) by which (a) the present value of all benefits under
such Plan exceeds (b) the fair market value of all Plan assets allocable to such
benefits, all determined as of the then most recent valuation date for such
Plan, but only to the extent that such excess represents a potential liability
of the Borrower or any member of the Controlled Group to the PBGC or such Plan
under Title IV of ERISA.
SECTION 11. Miscellaneous.
11.1 ACCOUNTING TERMS AND DEFINITIONS. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be delivered hereunder shall be prepared, in accordance with GAAP;
PROVIDED that if any change in GAAP in itself materially affects the calculation
of any financial covenant in this Agreement, the Borrowers may by notice to the
Lenders, or the Lenders may by notice to the Borrower, require that such
covenant thereafter be calculated in accordance with GAAP as in effect, and
applied by the Borrowers, immediately before such change in GAAP occurs. If such
notice is given, the compliance certificates delivered pursuant to Section
6.4(c) after such change occurs shall be accompanied by reconciliations of the
difference between the calculation set forth therein and a calculation made in
accordance with GAAP as in effect from time to time after such change occurs. To
enable the ready determination of compliance with the covenants set forth in
this Agreement, the Borrowers will not change the date on which their fiscal
year or any of their fiscal quarters end without thirty (30) days' prior notice
to the Agent.
11.2 AMENDMENTS, ETC. No amendment or waiver of any provision
of this Agreement, the Revolving Line of Credit Notes, or any other Loan
Document nor consent to any departure by the Borrowers therefrom, shall in any
event be effective unless the same shall be in writing and signed by the
Majority Lenders and the Borrowers, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; PROVIDED that no amendment, waiver or consent shall, unless in writing
and signed by all the Lenders, do any of the following: (i) increase any
Revolving Line of Credit Commitment of any of the Lenders or subject the Lenders
to any additional obligations; (ii) reduce the principal of, or interest on, any
Revolving Line of Credit Loan or fees hereunder; (iii) postpone any date fixed
for any payment of principal of, or interest on, any Revolving Line of Credit
Loan, or fee hereunder; (iv) change the percentage of any of the Revolving Line
of Credit Commitments or of the aggregate unpaid principal amount of any of the
Revolving Line of Credit Loans, or the number of Lenders, which shall be
required for the Lenders or any of them to take any action under this Agreement;
(v) change any provision contained in this SECTION 11.2 hereof; (vi) release any
substantial portion of the security for the Obligations of the Borrowers under
this Agreement or any Revolving Line of Credit Note, except for dispositions
permitted under Sections 5.2 or 9.3 or release any Guarantor of any of its
obligations under the Guaranty or other document delivered by the Guarantor;
(vii) modify the definition of "Majority Lenders" as set forth in SECTION 10; or
(viii) in those provisions where consent or approval by the Majority Lenders is
required, eliminate the requirement of such consent or approval. Upon receipt of
an affidavit of an officer of Agent as to the
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loss, theft, destruction or mutilation of any Revolving Line of Credit Note or
any other security document which is not of public record and in the case of any
such loss, theft, destruction or mutilation, upon surrender and cancellation of
any such Revolving Line of Credit Note or other Loan Document, Borrowers will
issue, in lieu thereof, a replacement Revolving Line of Credit Note or other
Revolving Line of Credit Loan Document in the same principal amount thereof (to
the extent applicable) and otherwise of like tenor.
11.3 NOTICES, ETC. All notices and other communications
provided for hereunder shall be in writing and shall be delivered by hand, by a
nationally recognized commercial overnight delivery service, by first class mail
or by telecopy, delivered, addressed or transmitted, if to the Borrowers, at the
following address: 20 Sylvan Road, Woburn, Massachusetts 01810, Attention: Paul
E. Vincent, Chief Financial Officer, Telecopy No. (617) 824-4564, with a copy to
the attention of the Legal Department of the Borrower at the same address; if to
SVB, at its address at Wellesley Office Park, 40 William Street, Wellesley,
Massachusetts 02181, Attention: Jane A. Braun, Vice President, Telecopy No.
(781) 431-9906; and if to Fleet, at its address at Fleet Center, One Federal
Street, Boston, Massachusetts 02110, Attention: Irina V. Case, Vice President,
with a copy in the case of any notice to a Lender, to Sullivan & Worcester LLP,
One Post Office Square, Boston, Massachusetts 02109, Attention Dennis J. White,
Esq., Telecopy No. (617) 338-2880 or, as to each party, at such other address as
shall be designated by such party in a written notice to the other party. All
such notices and communications shall be deemed effective, (a) in the case of
hand deliveries, when delivered; (b) in the case of an overnight delivery
service, on the next Banking Day after being placed in the possession of such
delivery service, with delivery charges prepaid; (c) in the case of mail, three
days after deposit in the postal system, first class postage prepaid; and (d) in
the case of telecopy notices, when electronic indication of receipt is received,
except that notices to any Lender pursuant to the provisions of Section 1.7
shall not be effective until received by such Lender.
11.4 NO WAIVER; REMEDIES. No failure on the part of any Lender
to exercise, and no delay in exercising, any right hereunder or under the
Borrower Notes shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder or under the Borrower Notes preclude any
other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
11.5 RIGHT OF SET-OFF. (a) The Borrowers and the Guarantor
hereby grant to the Lenders, a lien, security interest and right of setoff as
security for all liabilities and obligations to the Lenders, whether now
existing or hereafter arising, upon and against all deposits, credits.
collateral and property, now or hereafter in the possession, custody,
safekeeping or control of banks or any entity under the control of Fleet
Financial Group, Inc. or of Silicon Valley Bank, or in transit to any of them.
At any time, without demand or notice, each Lender may set off the same or any
part thereof and apply the same to any liability or obligation of the Borrowers
and the Guarantor even though unmatured and regardless of the adequacy of any
other collateral securing the Revolving Line of Credit Loan. ANY AND ALL RIGHTS
TO REQUIRE ANY LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY
OTHER COLLATERAL WHICH SECURES THE REVOLVING LINE OF CREDIT LOAN, PRIOR TO
EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER
PROPERTY OF THE BORROWERS OR THE GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY
AND IRREVOCABLY WAIVED.
(b) Each Lender agrees promptly to notify the Borrowers after
any such set-off and application, PROVIDED that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of the
Lenders under this Section 11.5 are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the Lenders may
have.
11.6 EXPENSES; INDEMNIFICATION. (a) The Borrowers shall pay on
demand (i) the reasonable fees and disbursements of counsel to the Lenders in
connection with the preparation of this Agreement and the preparation or review
of each agreement, opinion, certificate and other document referred to in or
delivered pursuant hereto; (ii) all reasonable out-of-pocket costs and expenses
of the Lenders in connection with the administration of
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this Agreement and the other Loan Documents, (including without limitation any
lien search or filing fees) and any waiver or amendment of any provision hereof
or thereof, including without limitation, the reasonable fees and disbursements
of counsel for the Agent or Lenders, and of any field examiner or auditor
retained by the Agent or the Lenders as contemplated in Section 6.8; and (iii)
if any Event of Default occurs, all reasonable costs and expenses incurred by
the Lenders, including the reasonable fees and disbursements of counsel to the
Agent and the Lenders, and of any appraisers, environmental engineers or
consultants, or investment banking firms retained by the Agent and the Lenders
in connection with such Event of Default or collection, bankruptcy, insolvency
and other enforcement proceedings related thereto. Each Borrower agrees on a
joint and several basis to pay, indemnify and hold the Agent and the Lenders
harmless from, any and all recording and filing fees, and any and all
liabilities with respect to, or resulting from any delay in paying, stamp,
excise or other taxes, if any, which may be payable or determined to be payable
in connection with the execution and delivery of or the consummation or
administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement or the other Loan Documents, or any documents delivered pursuant
hereto or thereto.
(b) Each Borrower agrees on a joint and several basis to
indemnify the Agent and each Lender and its officers and directors and hold the
Agent and each Lender and its officers and directors harmless from and against
any and all liabilities, losses, damages, costs and expenses of any kind
(including, without limitation, the reasonable fees and disbursements of counsel
for the Agent and each Lender in connection with any investigative,
administrative or judicial proceeding initiated by a third party, whether or not
the Agent and each Lender shall be designated a party thereto) which may be
incurred by the Agent and each Lender, relating to or arising out of this
Agreement or any other Loan Document, or the existence of any Hazardous
Substance on, in, or under any Borrower Property, or any violation of any
applicable Environmental Laws for which the Borrower or any Subsidiary thereof
has any liability or which occurs upon any Borrower Property, or the imposition
of any Lien under any Environmental Laws, PROVIDED that neither the Agent nor
any Lender shall have the right to be indemnified hereunder for its own gross
negligence or willful misconduct as determined by a court of competent
jurisdiction.
(c) The agreements in this Section 11.6 shall survive the
repayment of the Borrower Notes, and all other amounts payable under this
Agreement and the other Loan Documents.
11.7 BINDING EFFECT. (a) This Agreement shall become effective
when it shall have been executed by the Borrowers, the Agent and the Lenders
(provided, however, in no event shall this Agreement become effective until
signed by an officer of SVB in California) and thereafter shall be binding upon
and inure to the benefit of the Borrowers, the Agent and the Lenders and their
respective successors and assigns, except that the Borrower shall not have the
right to assign its rights hereunder or any interest herein without the prior
written consent of the Lenders.
(b) Each Lender shall have the unrestricted right at any time
or from time to time, and without Borrowers' or any Guarantor's consent, to
assign all or any portion of its rights and obligations hereunder to one or more
banks or other financial institutions (each, an "Assignee"), and Borrower and
each Guarantor agrees that it shall execute, or cause to be executed such
documents, including without limitation, amendments to this Agreement and to any
other documents, instruments and agreements executed in connection herewith as
such Lenders shall deem necessary to effect the foregoing. In addition, at the
request of such Lenders and any such Assignee, Borrowers shall issue one or more
new promissory notes, as applicable, to any such Assignee and, if such Lender
has retained any of its rights and obligations hereunder following such
assignment, to such Lenders, which new promissory notes shall be issued in
replacement of, but not in discharge of, the liability evidenced by the
promissory note held by such Lenders prior to such assignment and shall reflect
the amount of the respective commitments and loans held by such Assignee and
such Lenders after giving effect to such assignment. Upon the execution and
delivery of appropriate assignment documentation, amendments and any other
documentation required by such Lenders in connection with such assignment, and
the payment by Assignee of the purchase price
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<PAGE> 34
agreed to by such Lenders, and such Assignee, such Assignee shall be a party to
this Agreement and shall have all of the rights and obligations of such Lenders
hereunder (and under any and all other guaranties, documents, instruments and
agreements executed in connection herewith ) to the extent that such rights and
obligations have been assigned by such Lenders pursuant to the assignment
documentation between such Lenders and such Assignee, and such Lenders shall be
released from its obligations hereunder and thereunder to a corresponding
extent.
(c) Each Lender shall have the unrestricted right at any time
and from time to time, and without the consent of or notice to any Borrower or
the Guarantor, to grant to one or more banks or other financial institutions
(each, a "Participant") participating interests in such Lender's obligation to
lend hereunder and/or any or all of the Revolving Line of Credit Loans held by
such Lender hereunder. In the event of any such grant by such Lender of a
participating interest to a Participant, whether or not upon notice to the
Borrowers, such Lender shall remain responsible for the performance of its
obligations hereunder and the Borrowers shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations hereunder. Such Lender may furnish any information concerning the
Borrowers in its possession from time to time to prospective Participants,
provided that such Lender shall require any such prospective Participant to
agree in writing to maintain the confidentiality of such information.
(d) Each Lender may at any time pledge all or any portion of
its rights under the Loan Documents including any portion of the Revolving Line
of Credit Note to any of the twelve (12) Federal Reserve Banks organized under
Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or
enforcement thereof shall release such Lender from its obligations under any of
the Loan Documents.
11.8 SEVERABILITY. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
11.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
11.10 WAIVER OF JURY TRIAL. THE AGENT, EACH LENDER AND EACH
BORROWER AGREES THAT NONE OF THEM NOR ANY ASSIGNEE OR SUCCESSOR SHALL (A) SEEK A
JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER ACTION BASED
UPON, OR ARISING OUT OF, THIS AGREEMENT, ANY RELATED INSTRUMENTS, ANY COLLATERAL
OR THE DEALINGS OR ANY COURSE OF CONDUCT, COURSE OR DEALINGS, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY, OR (B) SEEK TO CONSOLIDATE
ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT
BEEN WAIVED. THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY DISCUSSED BY THE
LENDERS AND THE BORROWER, AND THESE PROVISIONS SHALL BE SUBJECT TO NO
EXCEPTIONS. NEITHER THE LENDERS NOR THE BORROWERS HAVE AGREED WITH OR
REPRESENTED TO THE OTHER THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY
ENFORCED IN ALL INSTANCES. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR THE
LENDERS TO ACCEPT THE REVOLVING LINE OF CREDIT NOTES AND MAKE THE REVOLVING LINE
OF CREDIT LOAN.
11.11 VENUE. CONSENT TO SERVICE OF PROCESS. EACH BORROWER
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE COMMONWEALTH OF MASSACHUSETTS (AND IN THE EVENT
SVB IS FOR ANY REASON DENIED ACCESS TO THE COURTS OF MASSACHUSETTS, THEN SOLELY
IN SUCH CASE, CALIFORNIA) IN ANY ACTION, SUIT OR PROCEEDING OF ANY KIND AGAINST
IT WHICH
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<PAGE> 35
ARISES OUT OF OR BY REASON OF THIS AGREEMENT, THE BORROWER NOTES, ANY OTHER LOAN
DOCUMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IRREVOCABLY AGREES
TO BE BOUND BY ANY FINAL JUDGEMENT RENDERED BY ANY SUCH COURTS IN ANY SUCH
ACTION, SUIT OR PROCEEDING IN WHICH IT SHALL HAVE BEEN SERVED WITH PROCESS IN
THE MANNER HEREINAFTER PROVIDED, SUBJECT TO EXERCISE AND EXHAUSTION OF ALL
RIGHTS OF APPEAL AND TO THE EXTENT THAT IT MAY LAWFULLY DO SO, WAIVES AND AGREES
NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, IN SUCH ACTION, SUIT
OR PROCEEDING ANY CLAIMS THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION
OF SUCH COURT, THAT ITS PROPERTY IS EXEMPT OR IMMUNE FROM ATTACHMENT OR
EXECUTION, THAT THE ACTION, SUIT OR OR PROCEEDING IS BROUGHT IN AN INCONVENIENT
FORUM OR THAT THE VENUE THEREOF IS IMPROPER, AND AGREES THAT PROCESS MAY BE
SERVED UPON IT IN ANY SUCH ACTION, SUIT OR PROCEEDING IN THE MANNER PROVIDED BY
CHAPTER 223A OF THE GENERAL LAWS OF MASSACHUSETTS, RULE 4 OF THE MASSACHUSETTS
RULES OF CIVIL PROCEDURE OR RULE 4 OF THE FEDERAL RULES OF CIVIL PROCEDURE.
11.12 HEADINGS. Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
11.13 COUNTERPARTS. This Agreement may be signed in one or
more counterparts each of which shall constitute an original and all of which
taken together shall constitute one and the same instrument.
11.14 JOINT AND SEVERAL OBLIGATIONS. Each and every
representation, warranty, covenant and agreement made by either of the
Borrowers, hereunder and under the other Loan Documents shall be joint and
several, whether or not so expressed, and such obligations of either of the
Borrowers shall not be subject to any counterclaim, setoff, recoupment or
defense based upon any claim either Borrower may have against the other Borrower
or the Agent or the Lenders, and shall remain in full force and effect without
regard to, and shall not be released, discharged or in any way affected by, any
circumstance or condition affecting the other Borrower, including without
limitation (a) any waiver, consent, extension, renewal, indulgence or other
action or inaction under or in respect of this Agreement or any other Loan
Document, or any agreement or other document related thereto with respect to the
other Borrower, or any exercise or nonexercise of any right, remedy, power or
privilege under or in respect of any such agreement or instrument with respect
to the other Borrower, or the failure to give notice of any of the foregoing to
Trans-Tech, it being agreed by Trans-Tech that notice in each such case to Alpha
shall be sufficient and that no notice to the Borrowers shall be effective
without notice to Alpha; (b) any invalidity or unenforceability, in whole or in
part, of any such agreement or instrument with respect to the other Borrower;
(c) any failure on the part of the other Borrower for any reason to perform or
comply with any term of any such agreement or instrument; (d) any bankruptcy,
insolvency, reorganization, arrangement, readjustment, composition, liquidation
or similar proceeding with respect to the other Borrower or its properties or
creditors; or (e) any other occurrence whatsoever, whether similar or dissimilar
to the foregoing, with respect to the other Borrower. Each Borrower hereby
waives any requirement of diligence or promptness on the part of the Lender in
the enforcement of the Lender's rights hereunder or under any other Loan
Document with respect to the obligations of itself or of the other Borrower.
Without limiting the foregoing any failure to make any demand upon, to pursue or
exhaust any rights or remedies against a Borrower, or any delay with respect
thereto, shall not affect the obligations of the other Borrower hereunder or
under any other Loan Document.
[remainder of page blank]
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<PAGE> 36
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
ALPHA INDUSTRIES, INC.
By: /s/ Paul E. Vincent
-----------------------------------
Name: Paul E. Vincent
Title: Chief Financial Officer
TRANS-TECH, INC.
By: /s/ Paul E. Vincent
-----------------------------------
Name: Paul E. Vincent
Title: Chief Financial Officer
FLEET NATIONAL BANK, in its capacity as a
Bank and as Agent hereunder
By: /s/ Irina V. Case
-----------------------------------
Name: Irina V. Case
Title: Vice President
SILICON VALLEY EAST, a Division of Silicon
Valley Bank, in its capacity as a Bank
By: /s/ Jane A. Braun
-----------------------------------
Name: Jane A. Braun
Title: Senior Vice President
SILICON VALLEY BANK, in its capacity as
a Bank
By: /s/ Michael Jordan
-----------------------------------
Name: Michael Jordan
Title: Vice President
(Signed at Santa Clara, California)
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<PAGE> 37
TABLE OF CONTENTS
PAGE
----
Section 1. Revolving Line of Credit Loans.................................... 1
1.1 Amount.......................................................... 1
1.2 Revolving Line of Credit Commitments............................ 1
1.3 Revolving Line of Credit Notes.................................. 1
1.4 Requests For Revolving Line of Credit Loans..................... 1
1.5 Limit on Revolving Line of Credit Loans......................... 2
1.6 Maturity Date of Revolving Line of Credit Loans................. 2
1.7 Termination of Revolving Line Commitment........................ 2
1.8 Letters of Credit............................................... 2
Section 2. Interest Rates; Payments and Optional Prepayments................. 2
2.1 Interest Rates.................................................. 2
2.2 Manner and Place of Payment..................................... 3
2.3 Payments Due on Saturdays, Sundays and Holidays................. 4
2.4 Computations.................................................... 4
2.5 Minimum and Maximum Amounts..................................... 4
2.6 Certain Notices................................................. 4
2.7 Additional Costs................................................ 5
2.8 Limitation on Types of Loans.................................... 6
2.9 Illegality...................................................... 6
2.10 Substitute Prime Rate Loans..................................... 6
2.11 Compensation.................................................... 6
2.12 Capital Adequacy................................................ 6
2.13 Optional Prepayments............................................ 7
Section 3. Guaranty........................................................... 7
3.1 Guaranty......................................................... 7
Section 4. Conditions Precedent............................................... 7
4.1 This Agreement and the Revolving Line of Credit Notes............ 7
4.2 No Default....................................................... 8
4.3 Correctness of Representations................................... 8
4.4 Opinion of Counsel for the Borrowers............................. 8
4.5 Governmental Approvals........................................... 8
4.6 Supporting Documents............................................. 8
4.7 Commitment Fee................................................... 9
4.8 Legal Matters.................................................... 9
Section 5. Representations and Warranties..................................... 9
5.l Corporate Status................................................. 9
5.2 No Violation..................................................... 9
5.3 Corporate Power and Authority.................................... 9
5.4 Enforceability................................................... 9
5.5 Governmental Approvals........................................... 9
5.6 Financial STatements.............................................10
5.7 No Material Change...............................................10
5.8 Litigation.......................................................10
5.9 Compliance with Other Instruments: Compliance with Law...........10
5.10 Subsidiaries....................................................10
5.11 Investment Borrower Status; Limits on Ability to Incur
Indebtedness..................................................11
5.12 Title to Property...............................................11
5.13 ERISA...........................................................11
i
<PAGE> 38
TABLE OF CONTENTS
(continued)
PAGE
----
5.14 Taxes ..........................................................11
5.15 Environmental Matters ..........................................11
5.16 Intellectual Property ..........................................12
Section 6. Affirmative Covenants .............................................12
6.1 Maintenance of Existence ........................................12
6.2 Taxes and Other Liens ...........................................12
6.3 Insurance .......................................................12
6.4 Financial Statements, Etc .......................................12
6.5 Notice of Default ...............................................13
6.6 Environmental Matters ...........................................13
6.7 ERISA Information ...............................................14
6.8 Inspection ......................................................14
6.9 Use of Proceeds .................................................14
6.10 Further Assurances .............................................15
6.11 Subsidiaries ...................................................15
Section 7. Negative Covenants ................................................15
7.1 ERISA ...........................................................15
7.3 Consolidation, Merger or Acquisition ............................15
7.4 Disposition of Assets ...........................................16
7.5 Indebtedness ....................................................16
7.6 Liens ...........................................................16
7.7 Restricted Payments .............................................17
7.8 Investments .....................................................17
7.9 Sale and Leaseback ..............................................18
7.10 Additional Stock Issuance by Subsidiaries ......................18
7.11 Quick Ratio ....................................................18
7.12 Minimum Profitability ..........................................18
7.13 Tangible Net Worth .............................................18
7.14 Capital Expenditures ...........................................18
Section 8. Events of Default .................................................18
8.1 Events of Default ...............................................18
8.2 Remedies Upon an Event of Default ...............................20
Section 9. The Agent .........................................................20
9.1 Appointment of Agent; Powers and Immununities....................20
9.2 Actions By Agent ................................................21
9.3 Indemnification .................................................21
9.4 Reimbursement ...................................................21
9.5 Non-Reliance on Agent and Other Lenders .........................22
9.6 Resignation or Removal of Agent .................................22
9.7 Ratable Sharing .................................................22
Section 10. Definitions ......................................................23
10.1 Certain Definitions ............................................23
Section 11. Miscellaneous ....................................................30
11.1 Accounting Terms and Definitions ...............................30
11.2 Amendments, Etc ................................................30
11.3 Notices, Ere ...................................................31
ii
<PAGE> 39
TABLE OF CONTENTS
(continued)
PAGE
11.4 No Waiver; Remedies .....................................................31
11.5 Right of Set-off ........................................................31
11.6 Expenses; Indemnification ...............................................31
11.7 Binding Effect ..........................................................32
11.8 Severability ............................................................33
11.9 GOVERNING LAW ...........................................................33
11.10 WAIVER OF JURY TRIAL ...................................................33
11.11 VENUE, CONSENT TO SERVICE OF PROCESS ...................................33
11.12 Headings ...............................................................34
11.13 Counterparts ...........................................................34
11.14 Joint and Several Obligations ..........................................34
Exhibits
A-1 - Revolving Line of Credit Note (SVB)
A-2 - Revolving Line of Credit Note (Fleet)
B - Compliance Certificate
C - Guarantee of Alpha Securities Corp.
D - Investment Policy of Alpha Industries, Inc.
Schedule
A - Disclosure Schedule
iii
<PAGE> 40
GUARANTEE
GUARANTEE dated as of November 1, 1999 made by ALPHA
SECURITIES CORP., a Massachusetts corporation (the "GUARANTOR"), for the benefit
of SILICON VALLEY BANK ("SVB"), and FLEET BANK OF MASSACHUSETTS, N.A.("FLEET",
together with SVB, the "BANKS" and each a "BANK") and Fleet as agent for the
Banks (together with its successors in such capacity, the "AGENT").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, pursuant to the Revolving Credit Agreement dated as of
November 1, 1999 among Alpha Industries, Inc., ("ALPHA") a Delaware corporation
and the corporate parent of the Guarantor together with Trans-Tech, Inc., a
Maryland corporation and a subsidiary of Alpha (together, the "BORROWERS"), the
Agent, and the Banks (as the same may be amended, modified, supplemented,
extended or restated from time to time, the "CREDIT AGREEMENT"), the Banks have
agreed, subject to the terms and conditions thereof, to make advances and other
extensions of credit for the benefit of the Borrower;
WHEREAS, it is a condition precedent to the obligation of the Banks to
make such advances to the Borrowers and other extensions of credit under the
Credit Agreement that, among other things, the Guarantor shall have executed and
delivered a guarantee of the obligations of the Borrowers under the Credit
Agreement, including, without limitation, the Borrowers' obligations under their
promissory notes to the Banks issued pursuant to the Credit Agreement (as the
same may be amended, modified, supplemented, extended or restated from time to
time, the "NOTES");
NOW, THEREFORE, in consideration of the premises and to induce
the Banks to make advances and other extensions of credit for the benefit of the
Borrowers thereunder, the Guarantor hereby agrees with the Collateral Agent and
the Banks as follows:
1. DEFINED TERMS. Unless otherwise defined herein, terms which
are defined in the Credit Agreement and used herein are so used as so defined.
In addition, the following terms shall have the meanings set forth below:
"MATERIAL ADVERSE EFFECT" means a material adverse effect on
(a) the business, operations, property, condition (financial or
otherwise) or prospects of the Guarantor, or of the Guarantor and its
Subsidiaries taken as a whole, (b) the ability of the Guarantor to
perform its obligations under this Guarantee, or (c) the validity or
enforceability of this Guarantee, or the rights of the Banks hereunder.
"OBLIGATIONS" shall mean all obligations of the Borrowers to
the Agent and the Banks, whether such obligations are now existing or
hereafter incurred or created, joint or several, direct or indirect,
absolute or contingent, due or to become due, matured or unmatured,
liquidated or unliquidated, arising by contract, operation of law or
otherwise, including, without limitation, (a) all principal of and
interest (including, without limitation, any interest which accrues
after the commencement of any case, proceeding or other action relating
to the bankruptcy, insolvency or reorganization of the Borrowers) on
any advance to the Borrowers under the Credit Agreement or the Notes;
(b) all other amounts (including, without limitation, any fees or
expenses) payable by the Borrowers under the Credit Agreement, the
Notes or any other Loan Document; (c) all amounts payable to either
Bank in connection with the issuance of any letter of credit by such
Bank for the account of the Borrowers or any drawing thereunder,
including without limitation, any reimbursement obligation and letter
of credit fees payable under any letter of credit application or
reimbursement agreement executed by the Borrowers in connection with
any such letter of credit; and (d) any renewals, refinancings or
extensions of any of the foregoing.
2. GUARANTEE. The Guarantor hereby unconditionally and
irrevocably guarantees to the Agent and the Banks the prompt and complete
payment and performance by the Borrowers when due (whether at stated maturity,
by acceleration or otherwise) of the Obligations. The Guarantor further agrees
to pay any and all expenses
<PAGE> 41
(including, without limitation, all reasonable fees and disbursements of counsel
to the Agent and the Banks) which may be paid or incurred by the Banks in
enforcing, or obtaining advice of counsel in respect of, any of their rights
under this Guarantee. This Guarantee shall remain in full force and effect until
the Obligations are paid in full and the Revolving Line of Credit under the
Credit Agreement is terminated, notwithstanding that from time to time prior
thereto the Borrowers may be free from any Obligations.
3. RIGHT OF SET-OFF. Regardless of the adequacy of any
collateral or other means of obtaining repayment of the Obligations, any
deposits (general or special, time or demand, provisional or final, including,
but not limited to indebtedness evidenced by a certificate of deposit, whether
matured or unmatured) and any other indebtedness at any time held or owing by
either Bank to the Guarantor may, at any time and from time to time after the
occurrence of an Event of Default, without notice to the Guarantor or compliance
with any other condition precedent now or hereafter imposed by statute, rule of
law, or otherwise (all of which are hereby expressly waived to the extent
permitted by law) be set off, appropriated, and applied by either Bank against
any and all obligations of the Guarantor to either Bank (irrespective of whether
such obligations may be contingent or unmatured at such time) in such manner as
such Bank in its sole discretion may determine, and the Guarantor hereby grants
both Banks a continuing security interest in such deposits and indebtedness for
the payment and performance of such obligations. [Conform]
4. SUBROGATION AND CONTRIBUTION. Until such time as the
Obligations are paid in full, the Guarantor irrevocably and unconditionally
waives any and all rights to which it may be entitled, by operation of law or
otherwise, (a) to be subrogated, with respect to any payment made by the
Guarantor hereunder, to the rights of the Agent and the Banks against the
Borrowers, or otherwise to be reimbursed, indemnified or exonerated by the
Borrowers in respect thereof or (b) to receive any payment, in the nature of
contribution or for any other reason, from any other guarantor of the
Obligations with respect to any payment made by the Guarantor hereunder.
5. EFFECT OF BANKRUPTCY STAY. If acceleration of the time for
payment or performance of any of the Obligations is stayed upon the insolvency,
bankruptcy or reorganization of the Borrowers or any other Person or otherwise,
all such amounts otherwise subject to acceleration shall nonetheless be payable
by the Guarantor under this Guarantee forthwith upon demand.
6. RECEIPT OF LOAN DOCUMENTS, ETC. The Guarantor confirms,
represents and warrants to the Agent and the Banks that (a) it has received true
and complete copies of the Credit Agreement, the Notes and the other Loan
Documents from the Borrowers, has read the contents thereof and reviewed the
same with legal counsel of its choice; (b) no representations or agreements of
any kind have been made to the Guarantor which would limit or qualify in any way
the terms of this Guarantee; (c) this Guarantee is executed at the Borrowers'
request and not at the request of the Bank; (d) the Agent and the Banks have
made no representation to the Guarantor as to the creditworthiness of the
Borrowers; and (d) the Guarantor has established adequate means of obtaining
from the Borrowers on a continuing basis information regarding the Borrowers'
financial condition. The Guarantor agrees to keep adequately informed from such
means of any facts, events, or circumstances which might in any way affect the
Guarantor's risks under this Guarantee, and the Guarantor further agrees that
the Banks shall have no obligation to disclose to the Guarantor any information
or documents acquired by the Banks in the course of their relationship with the
Borrowers.
7. AMENDMENTS, ETC. WITH RESPECT TO THE OBLIGATIONS. The
obligations of the Guarantor under this Guarantee shall remain in full force and
effect without regard to, and shall not be released, altered, exhausted,
discharged or in any way affected by any circumstance or condition (whether or
not the Borrowers shall have any knowledge or notice thereof), including without
limitation: (a) any amendment or modification of or supplement to the Credit
Agreement, the Notes, or any other Loan Document, or any obligation, duty or
agreement of the Borrowers or any other Person thereunder or in respect thereof;
(b) any assignment or transfer in whole or in part of any of the Obligations,
(c) any furnishing or acceptance of any direct or indirect security or
guarantee, or any release of or non-perfection or invalidity of any direct or
indirect security or guarantee, for any of the Obligations, (d) any waiver,
consent, extension, renewal, indulgence, settlement, compromise or other action
or inaction under or in respect of the Credit Agreement, the Notes, or any other
Loan Document, or any exercise or nonexercise of any right, remedy, power or
privilege under or in respect of any such instrument (whether by operation of
law or otherwise), (e) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or similar proceeding with respect to
either Borrower or any other Person or any of their respective properties or
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<PAGE> 42
creditors or any resulting release or discharge of any Obligations, (f) the
voluntary or involuntary sale or other disposition of all or substantially all
the assets of either Borrower or any other Person, (g) the voluntary or
involuntary liquidation, dissolution or termination of either Borrower or any
other Person, (h) any invalidity or unenforceability, in whole or in part, of
any term hereof or of the Credit Agreement, the Notes, or any other Loan
Document, or any obligation, duty or agreement of the Borrowers or any other
Person thereunder or in respect thereof, or any provision of any applicable law
or regulation purporting to prohibit the payment or performance by the Borrowers
or any other Person of any Obligations, (i) any failure on the part of either
Borrower or any other Person for any reason to perform or comply with any term
of the Credit Agreement, the Notes, or any other Loan Document or any other
agreement, or (j) any other act, omission or occurrence whatsoever, whether
similar or dissimilar to the foregoing. The Guarantor authorizes each Borrower,
each other guarantor in respect of Obligations and the Banks at any time in
their discretion, as the case may be, to alter any of the terms of Obligations.
8. GUARANTOR AS PRINCIPAL. If for any reason either Borrower
or any other Person is under no legal obligation to discharge any Obligations,
or if any other moneys included in Obligations have become unrecoverable from
either Borrower or any other Person by operation of law or for any other reason,
including, without limitation, the invalidity or irregularity in whole or in
part of any Obligation or of the Credit Agreement, the Notes, or any other Loan
Document, the legal disability of either Borrower or any other obligor in
respect of Obligations, any discharge of or limitation on the liability of
either Borrower or any other person or any limitation on the method or terms of
payment under any Obligation, or of the Credit Agreement, the Notes, or any
other Loan Document, which may now or hereafter be caused or imposed in any
manner whatsoever (whether consensual or arising by operation of law or
otherwise), this Guarantee shall nevertheless remain in full force and effect
and shall be binding upon the Guarantor to the same extent as if the Guarantor
at all times had been the principal obligor on all Obligations.
9. WAIVER OF DEMAND, NOTICE, ETC. The Guarantor hereby waives,
to the extent not prohibited by applicable law, (a) all presentments, demands
for performance, notice of nonperformance, protests, notices of protests and
notices of dishonor in connection with the Obligations or the Credit Agreement,
the Notes, or any other Loan Document, including but not limited to notice of
additional indebtedness constituting Obligations or the existence, creation or
incurring of any new or additional indebtedness or obligation or of any action
or non-action on the part of the Borrowers, the Agent and the Banks, any
endorser or creditor of the Borrowers or any other Person; (b) any notice of any
indulgence, extensions or renewals granted to any obligor with respect to
Obligations; (c) any requirement of diligence or promptness in the enforcement
of rights under the Credit Agreement, the Notes, or any other Loan Document, or
any other agreement or instrument directly or indirectly relating thereto or to
the Obligations; (d) any enforcement of any present or future agreement or
instrument relating directly or indirectly thereto or to the Obligations; (e)
notice of any of the matters referred to in PARAGRAPH 8 above, (f) any defense
of any kind which the Guarantor may now have with respect to his liability under
this Guarantee; (g) any right to require the Agent or the Banks, as a condition
of enforcement of this Guarantee, to proceed against the Borrowers or any other
Person or to proceed against or exhaust any security held by the Agent or the
Banks at any time or to pursue any other right or remedy in the Banks' power
before proceeding against the Guarantor; (h) any defense that may arise by
reason of the incapacity, lack of authority, death or disability of any other
Person or Persons or the failure of the Banks to file or enforce a claim against
the estate (in administration, bankruptcy, or any other proceeding) of any other
Person or Persons; (i) any defense based upon an election of remedies by the
Banks; (j) any defense arising by reason of any "one action" or
"anti-deficiency" law or any other law which may prevent the Banks from bringing
any action, including a claim for deficiency, against the Guarantor, before or
after the Banks' commencement of completion of any foreclosure action, either
judicially or by exercise of a power of sale; (k) any defense based upon any
lack of diligence by the Banks in the collection of any Obligation; (l) any duty
on the part of the Banks to disclose to the Guarantor any facts the Banks may
now or hereafter know about the Borrowers or any other obligor in respect of
Obligations; (m) any defense arising because of an election made by the Banks
under Section 1111(b)(2) of the Federal Bankruptcy Code; (n) any defense based
on any borrowing or grant of a security interest under Section 364 of the
Federal Bankruptcy Code; and (o) any defense based upon or arising out of any
defense which either Borrower or any other Person may have to the payment or
performance of Obligations (including but not limited to failure of
consideration, breach of warranty, fraud, payment, accord and satisfaction,
strict foreclosure, statute of frauds, bankruptcy, infancy, statute of
limitations, lender liability and usury). Guarantor acknowledges and agrees that
each of the waivers set forth herein on the part of the Guarantor is made with
Guarantor's full knowledge of the significance and consequences thereof and that
under the circumstances the waivers are reasonable. If any such waiver is
determined to be contrary to any applicable law or public policy, such waiver
shall be effective only to the extent permitted by such law or public policy.
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<PAGE> 43
10. REINSTATEMENT. This Guarantee shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by the Agent or the Banks upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower or upon or as a
result of the appointment of a receiver, intervenor or conservator of, or
trustee or similar officer for, either Borrower or any substantial part of its
property, or otherwise, all as though such payments had not been made.
11. PAYMENTS. The Guarantor hereby agrees that the Obligations
will be paid to each Bank without set-off or counterclaim in immediately payable
funds U.S. Dollars at the respective Offices of the Banks, or to such other
location as the Banks shall notify the Guarantor.
12. REPRESENTATIONS AND WARRANTIES. The Guarantor represents
and warrants that:
(a) CORPORATE EXISTENCE. The Guarantor and each of its
Subsidiaries is a corporation duly incorporated and validly existing
under the laws of the jurisdiction of its incorporation, and is duly
licensed or qualified as a foreign corporation in all states wherein
the nature of its property owned or business transacted by it makes
such licensing or qualification necessary, except where the failure to
be licensed or to so qualify could not have a Material Adverse Effect.
(b) NO VIOLATION. The execution, delivery and performance of
this Guarantee will not contravene any provision of law, statute, rule
or regulation to which the Guarantor or any of its Subsidiaries is
subject or any judgment, decree, franchise, order or permit applicable
to the Guarantor or any of its Subsidiaries, or will conflict or will
be inconsistent with or will result in any breach of, any of the terms,
covenants, conditions or provisions of, or constitute a default under,
or result in the creation or imposition of (or the obligation to create
or impose) any Lien upon any of the property or assets of the Guarantor
or any of its Subsidiaries pursuant to the terms of any Contractual
Obligation of the Guarantor or any of its Subsidiaries, or violate any
provision of the corporate charter or by-laws of the Guarantor or any
of its Subsidiaries.
(c) CORPORATE AUTHORITY AND POWER. The execution, delivery and
performance of this Guarantee is within the corporate powers of the
Guarantor and has been duly authorized by all necessary corporate
action.
(d) ENFORCEABILITY. This Guarantee constitutes a valid and
binding obligation of the Guarantor enforceable against the Guarantor
in accordance with its terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally
and except as enforceability may be subject to general principles of
equity, whether such principles are applied in a court of equity or at
law.
(e) GOVERNMENTAL APPROVALS. No order, permission, consent,
approval, license, authorization, registration or validation of, or
filing with, or exemption by, any Governmental Authority is required to
authorize, or is required in connection with, the execution, delivery
and performance of this Guarantee, or the taking of any action
contemplated hereby or thereby.
(f) LITIGATION. There are no actions, suits or proceedings
pending or threatened against or affecting the Guarantor or any of its
Subsidiaries before any Governmental Authority, which in any one case
or in the aggregate, if determined adversely to the interests of the
Guarantor or any Subsidiary thereof, would have a Material Adverse
Effect.
(g) COMPLIANCE WITH OTHER INSTRUMENTS; COMPLIANCE WITH LAW.
(A) Neither the Guarantor nor any Subsidiary thereof is in default
under (B) any Contractual Obligation, where such default could have a
Material Adverse Effect, or (C) the terms of any agreements relating to
any Indebtedness of the Guarantor or such Subsidiary.
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<PAGE> 44
(h) Neither the Guarantor nor any Subsidiary thereof is in
default with respect to any applicable statute, rule, writ, injunction,
decree, order or regulation of any Governmental Authority having
jurisdiction over the Guarantor or any Subsidiary thereof which could
have a Material Adverse Effect.
(i) SUBSIDIARIES. The Guarantor has no Subsidiaries.
(j) INVESTMENT COMPANY STATUS; LIMITS ON ABILITY TO INCUR
INDEBTEDNESS. Neither the Guarantor nor any of its Subsidiaries is an
"investment company" or a company "controlled by" an investment company
within the meaning of the Investment Company Act of 1940, as amended.
The Guarantor is not subject to regulation under any Federal or State
statute or regulation which limits its ability to incur Indebtedness.
(k) TITLE TO PROPERTY. The Guarantor and each of its
Subsidiaries has good and marketable title to all of its properties and
assets, in each case including the properties and assets reflected in
the consolidated balance sheet of the Borrowers and their Subsidiaries
as of the Financial Statements Date, except properties and assets
disposed of since that date in the ordinary course of business, and
none of such properties or assets is subject to (i) any Lien except for
Permitted Liens, or (ii) a defect in title or other claim other than
defects and claims that, in the aggregate, would have no Material
Adverse Effect. The Guarantor and each of its Subsidiaries enjoys
peaceful and undisturbed possession under all leases necessary in any
material respect for the operation of its properties and assets, none
of which contains any unusual or burdensome provisions which might
materially affect or impair such properties or assets. All such leases
are valid and subsisting and are in full force and effect.
13. SUBORDINATION OF CLAIMS AGAINST BORROWERS. Without limiting the
provisions of PARAGRAPH 4 hereof, the Guarantor hereby irrevocably agrees that
any and all claims which the Guarantor may now or hereafter have against the
Borrowers or any other guarantor of the Obligations, including, without
limitation, the benefit of any setoff or counterclaim or proof against dividend,
composition or payment by the Borrowers or such other guarantor, shall be
subject and subordinate to the prior payment in full of all of the Obligations
to the Collateral Agent and the Banks. After the occurrence of a Default, the
Guarantor shall not claim from the Borrowers or such other guarantor, or with
respect to any of their respective properties, any sums which may be owing to
the Guarantor, or have the benefit of any setoff or counterclaim or proof
against dividend, composition or payment by the Borrowers or such other
guarantor, until all Guaranteed Obligations shall have been paid in full. Should
any payment or distribution or security or the benefit of proceeds thereof be
received by the Guarantor upon or with respect to amounts due to him from the
Borrowers or any other guarantor of the Obligations after a Default has occurred
and prior to the payment in full of all Obligations, the Guarantor will
forthwith deliver the same to the Banks in precisely the form received (except
for endorsement or assignment where necessary), for application in or towards
repayment of the Obligations and, until so delivered, the same shall be held in
trust as property of the Banks. In the event of the failure of the Guarantor to
make any such endorsement or assignment, the Collateral Agent and the Banks are
hereby irrevocably authorized to make the same on behalf of the Guarantor.
14. SEVERABILITY. Any provision of this Guarantee which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
15. PARAGRAPH HEADINGS. The paragraph headings used in this Guarantee
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
16. NO WAIVER, CUMULATIVE REMEDIES. The Agent and the Banks shall not
by any act (except by a written instrument pursuant to PARAGRAPH 17 hereof),
delay, indulgence, omission or otherwise, be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of Default or in
any breach of any of the terms and conditions hereof. No failure to exercise,
nor any delay in exercising, on the part of the Agent or the Banks, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Agent or the Banks of any right or remedy hereunder
on any one occasion shall not be construed as a bar to any right or remedy which
the Banks would otherwise have on any future
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<PAGE> 45
occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any rights or remedies
provided by law.
17. WAIVERS AND AMENDMENTS; SUCCESSORS AND ASSIGNS. None of the terms
or provisions of this Guarantee may be waived, amended, supplemented or
otherwise modified except by a written instrument executed by the Guarantor, the
Agent and the Banks, provided that any provision of this Guarantee may be waived
by the Agent and the Banks in a letter or agreement executed by the Collateral
Agent and the Banks or by telecopy from the Agent and the Banks. This Guarantee
shall be binding upon the successors and assigns of the Guarantor and shall
inure to the benefit of the Banks and its successors and assigns.
18. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION; GOVERNING LAW. THE
GUARANTOR HEREBY EXPRESSLY WAIVES ANY RIGHT IT MAY NOW OR HEREAFTER HAVE TO A
JURY TRIAL IN ANY SUIT, ACTION OR PROCEEDING WHICH ARISES OUT OF OR BY REASON OF
THIS GUARANTEE, ANY LOAN DOCUMENT (AS DEFINED IN THE CREDIT AGREEMENT), OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
BY ITS EXECUTION AND DELIVERY OF THIS GUARANTEE, THE GUARANTOR ACCEPTS
FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY,
THE NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE COMMONWEALTH OF MASSACHUSETTS (AND IN THE EVENT SVB IS FOR
ANY REASON DENIED ACCESS TO THE COURTS OF MASSACHUSETTS, THEN SOLELY IN SUCH
CASE, CALIFORNIA) IN ANY ACTION, SUIT OR PROCEEDING OF ANY KIND AGAINST IT WHICH
ARISES OUT OF OR BY REASON OF THIS GUARANTEE, ANY LOAN DOCUMENT (AS DEFINED IN
THE CREDIT AGREEMENT), OR THE TRANSACTIONS CONTEMPLATED HEREBY, IN ADDITION TO
ANY OTHER COURT IN WHICH SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT,
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED BY ANY SUCH COURT IN ANY
SUCH ACTION, SUIT OR PROCEEDING IN WHICH IT SHALL HAVE BEEN SERVED WITH PROCESS
IN THE MANNER HEREINAFTER PROVIDED, AND TO THE EXTENT THAT IT MAY LAWFULLY DO
SO, WAIVES AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE OR
OTHERWISE, IN SUCH ACTION, SUIT OR PROCEEDING ANY CLAIMS THAT IT IS NOT
PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURT, THAT ITS PROPERTY IS
EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTION, THAT THE ACTION, SUIT OR
PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE THEREOF IS
IMPROPER, AND AGREES THAT PROCESS MAY BE SERVED UPON IT IN ANY SUCH ACTION, SUIT
OR PROCEEDING IN THE MANNER PROVIDED BY CHAPTER 223A OF THE GENERAL LAWS OF
MASSACHUSETTS, RULE 4 OF THE MASSACHUSETTS RULES OF CIVIL PROCEDURE OR RULE 4 OF
THE FEDERAL RULES OF CIVIL PROCEDURE.
THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
19. NOTICES. All notices under this Guarantee shall be in writing, and
shall be delivered by hand, by a nationally recognized commercial overnight
delivery service, by first class mail or by telecopy, delivered, addressed or
transmitted, if to the Agent or the Banks, at their address or telecopy number
set out in the Credit Agreement, and if to the Guarantor, at its address or
telecopy number set out below its signature in this Guarantee. Such notices
shall be effective (a) in the case of hand deliveries, when received; (b) in the
case of an overnight delivery service, on the next Banking Day after being
placed in the possession of such delivery service, with delivery charges
prepaid, (c) in the case of mail, three days after deposit in the postal system,
first class postage prepaid; and (d) in the case of telecopy notices, when
electronic indication of receipt is received. Either party may change its
address and telecopy number by written notice to the other.
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<PAGE> 46
IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be
duly executed and delivered as of the date first above written.
ALPHA SECURITIES CORP.
By _________________________________
Name:
Title:
Address for Notices:
20 Sylvan Road
Woburn, MA 01824
------------------------------------
Telecopy No.: _________
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<PAGE> 47
EXHIBIT A-1
-----------
PROMISSORY NOTE
(Revolving Line of Credit Loans)
$2,500,000 Woburn, Massachusetts
Dated as of November 1, 1999
For value received, the undersigned, ALPHA INDUSTRIES, INC., a Delaware
corporation, and TRANS-TECH, INC., a Maryland corporation (each a "BORROWER" and
collectively the "BORROWERS"), jointly and severally promise to pay to SILICON
VALLEY BANK (the "BANK") at the office of the Bank located at 3003 Tasman Drive,
Santa Clara, California 95054, or to its order, the lesser of TWO MILLION FIVE
HUNDRED THOUSAND DOLLARS ($2,500,000) or the outstanding principal amount
hereunder, on October 31, 2000 (the "MATURITY DATE"), together with interest on
the principal amount hereof from time to time outstanding payable at the times
and at the rate set forth in the Credit Agreement referred to below.
Computations of interest shall be made by the Bank on the basis of a
year of 360 days for the actual number of days occurring in the period for which
such interest is payable.
This promissory note is one of the Revolving Line of Credit Notes
referred to in the Section 1.3(i) of that certain revolving credit agreement
dated November 1, 1999, by and among the Bank, Fleet National Bank as Agent and
a bank and the Borrowers together with all related schedules, as the same may be
amended, modified or supplemented from time to time (the "CREDIT AGREEMENT"),
and is subject to optional and mandatory prepayment as provided therein, and is
entitled to the benefits thereof and of the other Loan Documents referred to
therein.
Upon the occurrence of any Event of Default under, and as defined in,
the Credit Agreement, at the option of the Bank, the principal amount then
outstanding of and the accrued interest on the advances under this note and all
other amounts payable under this note shall become immediately due and payable,
without notice (including, without limitation, notice of intent to accelerate),
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by the Borrowers.
The Bank shall keep a record of the amount and the date of the making
of each advance pursuant to the Credit Agreement and each payment of principal
with respect thereto by maintaining a computerized record of such information
and printouts of such computerized record, which computerized record, and the
printouts thereof, shall constitute PRIMA FACIE evidence of the accuracy of the
information so endorsed.
If the entire amount of any required payment of principal and/or
interest is not paid within ten (10) Business Days after the same is due, the
Borrowers shall pay to the Bank a late fee equal to five percent (5%) of the
required payment.
Each of the undersigned agrees to pay all reasonable costs and expenses
of the Agent and the Bank (including, without limitation, the reasonable fees
and expenses of attorneys) in connection with the enforcement of this note and
the other Loan Documents and the preservation of its rights hereunder and
thereunder.
No delay or omission on the part of the Agent or the Bank in exercising
any right hereunder shall operate as a waiver of such right or of any other
right of the Agent or the Bank, nor shall any delay, omission or waiver on any
one occasion be deemed a bar to or waiver of the same or any other right on any
future occasion. The Borrowers and every endorser or guarantor of this note
regardless of the time, order or place of signing waives presentment, demand,
protest and notices of every kind and assents to any one or more extensions or
postponements of the time of payment or any other indulgences, to any
substitutions, exchanges or releases of collateral for this note, and to the
additions or releases of any other parties or persons primarily or secondarily
liable.
<PAGE> 48
The Bank may at any time pledge all or any portion of its rights under
the Loan Documents including any portion of this promissory note to any of the
twelve (12) Federal Reserve Banks organized under Section 4 of the Federal
Reserve Act, 12 U.S.C. Section 341. No such pledge or enforcement thereof shall
release the Bank from its obligations under any of the Loan Documents.
THIS NOTE HAS BEEN DELIVERED TO THE BANK AND ACCEPTED BY THE BANK IN
THE STATE OF CALIFORNIA.
THE BORROWERS HEREBY EXPRESSLY WAIVE ANY RIGHT THEY MAY NOW OR
HEREAFTER HAVE TO A JURY TRIAL IN ANY SUIT, ACTION OR PROCEEDING WHICH ARISES
OUT OF OR BY REASON OF THIS NOTE, ANY LOAN DOCUMENT (AS DEFINED IN THE CREDIT
AGREEMENT), OR THE TRANSACTIONS CONTEMPLATED HEREBY.
BY ITS EXECUTION AND DELIVERY OF THIS NOTE, EACH BORROWER ACCEPTS FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE COMMONWEALTH OF MASSACHUSETTS (OR IF FOR ANY REASON ACCESS
TO SUCH COURTS IS DENIED TO THE BANK, THEN, IN THE STATE OF CALIFORNIA) IN ANY
ACTION, SUIT OR PROCEEDING OF ANY KIND AGAINST IT WHICH ARISES OUT OF OR BY
REASON OF THIS NOTE, ANY LOAN DOCUMENT (AS DEFINED IN THE CREDIT AGREEMENT), OR
THE TRANSACTIONS CONTEMPLATED HEREBY, IN ADDITION TO ANY OTHER COURT IN WHICH
SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT, IRREVOCABLY AGREES TO BE BOUND
BY ANY FINAL JUDGMENT RENDERED BY ANY SUCH COURT IN ANY SUCH ACTION, SUIT OR
PROCEEDING IN WHICH IT SHALL HAVE BEEN SERVED WITH PROCESS IN THE MANNER
HEREINAFTER PROVIDED, SUBJECT TO EXERCISE AND EXHAUSTION OF ALL RIGHTS OF APPEAL
AND TO THE EXTENT THAT IT MAY LAWFULLY DO SO, WAIVES AND AGREES NOT TO ASSERT,
BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, IN SUCH ACTION, SUIT OR PROCEEDING
ANY CLAIMS THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURT,
THAT ITS PROPERTY IS EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTION, THAT THE
ACTION, SUIT OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE
THEREOF IS IMPROPER, AND AGREES THAT PROCESS MAY BE SERVED UPON IT IN ANY SUCH
ACTION, SUIT OR PROCEEDING IN THE MANNER PROVIDED BY CHAPTER 223A OF THE GENERAL
LAWS OF MASSACHUSETTS, RULE 4 OF THE MASSACHUSETTS RULES OF CIVIL PROCEDURE OR
RULE 4 OF THE FEDERAL RULES OF CIVIL PROCEDURE.
(remainder of page blank)
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<PAGE> 49
ALL RIGHTS AND OBLIGATIONS HEREUNDER SHALL BE GOVERNED BY THE LAW OF
THE COMMONWEALTH OF MASSACHUSETTS AND THIS NOTE SHALL BE DEEMED TO BE UNDER
SEAL.
Attest: ALPHA INDUSTRIES, INC.
________________________ By: ____________________________
Name: Name:
Title: Title:
[Seal]
Attest: TRANS-TECH, INC.
________________________ By: ____________________________
Name: Name:
Title: Title:
[Seal]
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<PAGE> 50
EXHIBIT A-2
-----------
PROMISSORY NOTE
(Revolving Line of Credit Loans)
$7,500,000 Woburn, Massachusetts
Dated as of November 1, 1999
For value received, the undersigned, ALPHA INDUSTRIES, INC., a Delaware
corporation, and TRANS-TECH, INC., a Maryland corporation (each a "BORROWER" and
collectively the "BORROWERS"), jointly and severally promise to pay to FLEET
NATIONAL BANK (the "BANK") at the office of the Bank located at One Federal
Street, Boston, Massachusetts 02110, or to its order, the lesser of SEVEN
MILLION FIVE HUNDRED THOUSAND DOLLARS ($7,500,000) or the outstanding principal
amount hereunder, on October 31, 2000 (the "MATURITY DATE"), together with
interest on the principal amount hereof from time to time payable at the times
and outstanding at the rate set forth in the Credit Agreement referred to below.
Computations of interest shall be made by the Bank on the basis of a
year of 360 days for the actual number of days occurring in the period for which
such interest is payable.
This promissory note is one of the Revolving Line of Credit Notes
referred to in the Section 1.3(i) of that certain Revolving Credit Agreement
dated November 1, 1999 by and among the Bank, Fleet National Bank as Agent and a
bank and the Borrowers together with all related schedules, as the same may be
amended, modified or supplemented from time to time (the "CREDIT AGREEMENT"),
and is subject to optional and mandatory prepayment as provided therein, and is
entitled to the benefits thereof and of the other Loan Documents referred to
therein.
Upon the occurrence of any Event of Default under, and as defined in,
the Credit Agreement, at the option of the Bank, the principal amount then
outstanding of and the accrued interest on the advances under this note and all
other amounts payable under this note shall become immediately due and payable,
without notice (including, without limitation, notice of intent to accelerate),
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by the Borrowers.
The Bank shall keep a record of the amount and the date of the making
of each advance pursuant to the Credit Agreement and each payment of principal
with respect thereto by maintaining a computerized record of such information
and printouts of such computerized record, which computerized record, and the
printouts thereof, shall constitute PRIMA FACIE evidence of the accuracy of the
information so endorsed.
If the entire amount of any required payment of principal and/or
interest is not paid within ten (10) Business Days after the same is due, the
Borrowers shall pay to the Bank a late fee equal to five percent (5%) of the
required payment.
Each of the undersigned agrees to pay all reasonable costs and expenses
of the Agent or the Bank (including, without limitation, the reasonable fees and
expenses of attorneys) in connection with the enforcement of this note and the
other Loan Documents and the preservation of its rights hereunder and
thereunder.
No delay or omission on the part of the Agent or the Bank in exercising
any right hereunder shall operate as a waiver of such right or of any other
right of the Bank, nor shall any delay, omission or waiver on any one occasion
be deemed a bar to or waiver of the same or any other right on any future
occasion. The Borrowers and every endorser or guarantor of this note regardless
of the time, order or place of signing waives presentment, demand, protest and
notices of every kind and assents to any one or more extensions or postponements
of the time of payment or any other indulgences, to any substitutions, exchanges
or releases of collateral for this note, and to the additions or releases of any
other parties or persons primarily or secondarily liable.
<PAGE> 51
The Bank may at any time pledge all or any portion of its rights under
the Loan Documents including any portion of this promissory note to any of the
twelve (12) Federal Reserve Banks organized under Section 4 of the Federal
Reserve Act, 12 U.S.C. Section 341. No such pledge or enforcement thereof shall
release the Bank from its obligations under any of the Loan Documents.
THE BORROWERS HEREBY EXPRESSLY WAIVE ANY RIGHT THEY MAY NOW OR
HEREAFTER HAVE TO A JURY TRIAL IN ANY SUIT, ACTION OR PROCEEDING WHICH ARISES
OUT OF OR BY REASON OF THIS NOTE, ANY LOAN DOCUMENT (AS DEFINED IN THE CREDIT
AGREEMENT), OR THE TRANSACTIONS CONTEMPLATED HEREBY.
BY ITS EXECUTION AND DELIVERY OF THIS NOTE, EACH BORROWER ACCEPTS FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE COMMONWEALTH OF MASSACHUSETTS IN ANY ACTION, SUIT OR
PROCEEDING OF ANY KIND AGAINST IT WHICH ARISES OUT OF OR BY REASON OF THIS NOTE,
ANY LOAN DOCUMENT (AS DEFINED IN THE CREDIT AGREEMENT), OR THE TRANSACTIONS
CONTEMPLATED HEREBY, IN ADDITION TO ANY OTHER COURT IN WHICH SUCH ACTION, SUIT
OR PROCEEDING MAY BE BROUGHT, IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL
JUDGMENT RENDERED BY ANY SUCH COURT IN ANY SUCH ACTION, SUIT OR PROCEEDING IN
WHICH IT SHALL HAVE BEEN SERVED WITH PROCESS IN THE MANNER HEREINAFTER PROVIDED,
SUBJECT TO EXERCISE AND EXHAUSTION OF ALL RIGHTS OF APPEAL AND TO THE EXTENT
THAT IT MAY LAWFULLY DO SO, WAIVES AND AGREES NOT TO ASSERT, BY WAY OF MOTION,
AS A DEFENSE OR OTHERWISE, IN SUCH ACTION, SUIT OR PROCEEDING ANY CLAIMS THAT IT
IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURT, THAT ITS PROPERTY
IS EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTION, THAT THE ACTION, SUIT OR
PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE THEREOF IS
IMPROPER, AND AGREES THAT PROCESS MAY BE SERVED UPON IT IN ANY SUCH ACTION, SUIT
OR PROCEEDING IN THE MANNER PROVIDED BY CHAPTER 223A OF THE GENERAL LAWS OF
MASSACHUSETTS, RULE 4 OF THE MASSACHUSETTS RULES OF CIVIL PROCEDURE OR RULE 4 OF
THE FEDERAL RULES OF CIVIL PROCEDURE.
(remainder of page blank)
-2-
<PAGE> 52
ALL RIGHTS AND OBLIGATIONS HEREUNDER SHALL BE GOVERNED BY THE LAW OF
THE COMMONWEALTH OF MASSACHUSETTS AND THIS NOTE SHALL BE DEEMED TO BE UNDER
SEAL.
Attest: ALPHA INDUSTRIES, INC.
________________________ By: ____________________________
Name: Name:
Title: Title:
[Seal]
Attest: TRANS-TECH, INC.
________________________ By: ____________________________
Name: Name:
Title: Title:
[Seal]
-3-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF ALPHA INDUSTRIES, INC. AND SUBSIDIARIES AS OF AND FOR
THE NINE MONTHS ENDED DECEMBER 26, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-02-2000
<PERIOD-END> DEC-26-1999
<CASH> 27,850
<SECURITIES> 108,041
<RECEIVABLES> 28,403
<ALLOWANCES> 712
<INVENTORY> 9,324
<CURRENT-ASSETS> 177,884
<PP&E> 128,616
<DEPRECIATION> 69,233
<TOTAL-ASSETS> 238,828
<CURRENT-LIABILITIES> 18,786
<BONDS> 404
0
0
<COMMON> 4,944
<OTHER-SE> 209,457
<TOTAL-LIABILITY-AND-EQUITY> 238,828
<SALES> 127,837
<TOTAL-REVENUES> 127,837
<CGS> 71,340
<TOTAL-COSTS> 106,642
<OTHER-EXPENSES> 89
<LOSS-PROVISION> 233
<INTEREST-EXPENSE> (4,004)
<INCOME-PRETAX> 25,110
<INCOME-TAX> 9,040
<INCOME-CONTINUING> 16,070
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,070
<EPS-BASIC> 0.86
<EPS-DILUTED> 0.82
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF ALPHA INDUSTRIES, INC. AND SUBSIDIARIES AS OF AND FOR
THE NINE MONTHS ENDED DECEMBER 27, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS. THIS SCHEDULE HAS BEEN UPDATED TO
REFLECT THE THREE-FOR-TWO COMMON STOCK SPLIT DISTRIBUTED FEBRUARY 19, 1999.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-28-1999
<PERIOD-END> DEC-27-1998
<CASH> 10,433
<SECURITIES> 12,322
<RECEIVABLES> 19,961
<ALLOWANCES> 643
<INVENTORY> 8,883
<CURRENT-ASSETS> 53,134
<PP&E> 104,605
<DEPRECIATION> 66,630
<TOTAL-ASSETS> 92,367
<CURRENT-LIABILITIES> 19,551
<BONDS> 769
0
0
<COMMON> 2,655
<OTHER-SE> 67,510
<TOTAL-LIABILITY-AND-EQUITY> 92,367
<SALES> 92,070
<TOTAL-REVENUES> 92,070
<CGS> 52,046
<TOTAL-COSTS> 78,084
<OTHER-EXPENSES> (15)
<LOSS-PROVISION> 170
<INTEREST-EXPENSE> (401)
<INCOME-PRETAX> 14,402
<INCOME-TAX> 1,440
<INCOME-CONTINUING> 12,962
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,962
<EPS-BASIC> 0.82
<EPS-DILUTED> 0.80
</TABLE>
