<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended April 1, 1995 or
[_] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
------------ -----------
Commission file number 0-14953
ACUSON CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 94-2784998
------------------------ ---------------------------------
(State of Incorporation) (IRS Employer Identification No.)
1220 Charleston Road
P. O. Box 7393
Mountain View, CA 94039-7393
(Address of principal executive offices)
Registrant's telephone number, including area code, is (415) 969-9112
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $.0001 par value 28,801,927 shares
------------------------------ -----------------------------
(Class) Outstanding at April 28, 1995
<PAGE>
- --------------------------------------------------------------------------------
FORM 10-Q
ACUSON CORPORATION
INDEX
<TABLE>
<CAPTION>
Page
Number
<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets as of
April 1, 1995 and December 31, 1994 1
Condensed Consolidated Statements of Operations
for the Three Months Ended April 1, 1995 and
April 2, 1994 2
Condensed Consolidated Statements of Cash Flows
for the Three Months Ended April 1, 1995 and
April 2, 1994 3
Notes to Unaudited Condensed Consolidated
Financial Statements 4
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 8
Signature 9
</TABLE>
<PAGE>
________________________________________________________________________________
ACUSON CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
April 1, December 31,
1995 1994
(Unaudited)
________________________________________________________________________________
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 40,801 $ 28,671
Short-term investments 33,612 38,421
-------- --------
Total cash and short-term
investments 74,413 67,092
Accounts receivable, net 76,868 78,534
Inventories 48,567 49,926
Other current assets 38,491 39,637
-------- --------
Total current assets 238,339 235,189
Property and Equipment, at cost, net of
accumulated depreciation and amortization
of $96,412 and $92,217 in 1995 and
1994, respectively 49,434 48,997
Other assets, net 23,509 20,452
-------- --------
Total Assets $311,282 $304,638
======== ========
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $ 18,925 $ 16,295
Other accrued liabilities 84,099 80,558
-------- --------
Total current liabilities 103,024 96,853
-------- --------
Commitments and contingencies (Note 4)
Stockholders' Equity
Preferred stock, par value $.0001:
authorized, 10,000 shares,
outstanding, none -- --
Common stock and additional
paid-in capital, common stock
par value $.0001: authorized,
50,000 shares; outstanding;
28,785 shares and 28,904 shares
in 1995 and 1994, respectively 81,377 79,183
Cumulative translation adjustment (1,109) (1,240)
Unrealized holding loss on
investment securities (169) (370)
Retained earnings 128,159 130,212
-------- --------
Total stockholders' equity 208,258 207,785
-------- --------
Total Liabilities and
Stockholders' Equity $311,282 $304,638
======== ========
</TABLE>
________________________________________________________________________________
See accompanying notes to unaudited condensed consolidated financial statements.
1
<PAGE>
________________________________________________________________________________
ACUSON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts, unaudited)
<TABLE>
<CAPTION>
Three Months Ended
--------------------
April 1, April 2,
1995 1994
_________________________________________________________________
<S> <C> <C>
Net sales
Product $68,645 $74,688
Service 19,321 18,137
------- -------
Total net sales 87,966 92,825
------- -------
Cost of sales
Product 31,846 31,132
Service 8,637 8,761
------- -------
Total cost of sales 40,483 39,893
------- -------
Gross profit 47,483 52,932
------- -------
Operating expenses
Selling, general and
administrative 27,262 26,640
Product development 18,059 17,317
------- -------
Total operating expenses 45,321 43,957
------- -------
Income from operations 2,162 8,975
Interest income, net 991 1,155
------- -------
Income before income taxes 3,153 10,130
Provision for income taxes 914 3,546
------- -------
Net income $ 2,239 $ 6,584
======= =======
Earnings per share $ 0.08 $ 0.23
======= =======
Weighted average common and common
equivalent shares outstanding 29,953 29,355
======= =======
</TABLE>
________________________________________________________________________________
See accompanying notes to unaudited condensed consolidated financial statements.
2
<PAGE>
________________________________________________________________________________
ACUSON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
<TABLE>
<CAPTION>
Three Months Ended
-------------------
April 1, April 2,
1995 1994
________________________________________________________________________________
<S> <C> <C>
Cash flows from operating activities
Net income $ 2,239 $ 6,584
Adjustments to reconcile net income
to cash provided by operating activities:
Depreciation and amortization 4,154 4,964
Changes in:
Accounts receivable 1,308 (8,002)
Leases receivable (3,613) 22,518
Inventories 1,578 45
Other current assets 1,923 1,862
Accounts payable 2,564 7,079
Other accrued liabilities 2,743 (1,988)
------- -------
Net cash provided by
operating activities 12,896 33,062
------- -------
Cash flows from investing activities
Decrease in short-term investments 4,929 9,567
Investment in property and equipment (4,325) (4,988)
Increase in other assets (87) (213)
------- -------
Net cash provided by
investing activities 517 4,366
------- -------
Cash flows from financing activities
Repurchase of common stock (5,091) (1,774)
Issuance of common stock under
stock option and stock
purchase plans 3,484 2,176
------- -------
Net cash provided by (used (1,607) 402
in) financing activities ------- -------
Effect of exchange rate changes on cash 324 244
------- -------
Net increase in cash and cash equivalents 12,130 38,074
Cash and cash equivalents, beginning of period 28,671 11,184
------- -------
Cash and cash equivalents, end of period $40,801 $49,258
======= =======
</TABLE>
________________________________________________________________________________
See accompanying notes to unaudited condensed consolidated financial statements.
3
<PAGE>
________________________________________________________________________________
ACUSON CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Note 1 - Interim Statements
In the opinion of management, the unaudited interim condensed consolidated
financial statements include all adjustments, which include only normal
recurring adjustments, necessary to summarize fairly Acuson Corporation's (the
"Company") condensed consolidated financial position as of April 1, 1995 and
its condensed consolidated results of operations and cash flows for the periods
ended April 1, 1995 and April 2, 1994. The results of operations for the three
months ended April 1, 1995 are not necessarily indicative of the results to be
expected for the entire year ending December 31, 1995. Certain information
reported in the prior year has been reclassified to conform to the 1995
presentation.
The Company's principle accounting policies are set forth in the financial
statements for the year ended December 31, 1994 and notes thereto, contained in
the Company's Annual Report filed with the Securities and Exchange Commission.
Note 2 - Investments
Under Statement of Financial Accounting Standards No. 115, the Company's
investments, which consisted entirely of debt securities (the "securities"),
were classified as available-for-sale. These securities mature at various dates
through the year 1996.
As of April 1, 1995, the securities' gross unrealized holding loss was
approximately $249,000. The unrealized holding loss of approximately $169,000,
net of the tax effect, was reported as a separate component of stockholders'
equity. The Company has determined that the unrealized holding loss is not a
permanent impairment of the fair value of its investments. During the three
months ended April 1, 1995, the Company did not sell any of its securities prior
to maturity.
Note 3 - Inventories
The components of inventories were as follows (in thousands):
<TABLE>
<CAPTION>
April 1, Dec. 31,
1995 1994
-------------------
<S> <C> <C>
Raw materials $27,749 $29,552
Work-in-process 3,936 3,783
Finished goods 16,882 16,591
------- -------
Total inventories $48,567 $49,926
======= =======
</TABLE>
Note 4 - Legal Contingencies
On July 1, 1993 and July 30, 1993, individuals purporting to represent a class
of persons who purchased Acuson common stock during the period between October
24, 1990, and July 22, 1992, filed two separate, but related, actions against
the Company and twelve of its officers and one former officer in the Federal
District Court for the Northern District of California alleging that the
defendants' statements about the Company were incomplete or inaccurate, in
violation of Federal securities laws. Plaintiffs seek damages in an unspecified
amount, as well as equitable relief or injunctive relief and attorneys' fees,
experts' fees and costs.
4
<PAGE>
On September 14, 1994, the Company filed an action in the United States
District Court for the Northern District of California against Advanced
Technology Laboratories, Inc. ("ATL") of Bothell, Washington. In the action,
the Company accuses ATL of infringing U.S. Letters Patent No. 4,058,003 for
"Ultrasonic Electronic Lens with Reduced Delay Range," a patent licensed
exclusively to the Company. In addition, the Company seeks a declaration that
it infringes no valid claim of four ATL patents: U.S. Letters Patent No.
4,543,960 for "Transesophageal Echocardiography Scanhead," No. 5,050,610 for
"Transesophageal Ultrasonic Scanhead," No. 5,207,225 for "Transesophageal
Ultrasonic Scanhead," or No. 5,226,422 for "Transesophageal Echocardiography
Scanner with Rotating Image Plane." No dollar amount is specified as damages in
the Company's action, but the complaint seeks an accounting for damages, treble
damages and an assessment of interests and costs against ATL. In addition, the
Company is informed that, in August 1994, ATL filed an action against the
Company in the United States District Court for the Western District of
Washington, in which ATL sought a declaration that it infringes no valid claim
of U.S. Letters Patent No. 4,058,003. On October 31, 1994, ATL amended that
action and added claims accusing the Company of infringing U.S. Patent Nos.
4,543,960; 5,050,610; 5,207,225; and 5,226,422. No dollar amount is specified
as damages in ATL's action, but the complaint seeks an injunction against
alleged infringement, an accounting for damages, treble damages, and an
assessment of interest and costs against the Company.
On October 27, 1994, the Company was sued in Ghent, Belgium, by Cormedica NV,
in connection with the Company's termination of its distributor relationship
with Cormedica. In the suit, Cormedica seeks indemnities and damages in the
amount of approximately $2.5 million.
The Company intends to defend each of these suits vigorously. Management
believes that the ultimate outcome of any of these matters will not have a
material adverse effect on the Company's financial condition.
________________________________________________________________________________
5
<PAGE>
________________________________________________________________________________
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Net sales for the quarter ended April 1, 1995, were $88.0 million compared to
$92.8 million in the quarter ended April 2, 1994. The change in revenue was
primarily because of a decrease in domestic product revenue. The Company's
average unit selling prices were lower in this quarter as a result of an
increase in sales of lower-priced configurations and intense competitive pricing
pressures. Worldwide service revenue increased 6.5% to $19.3 million from $18.1
million in the quarter ended April 2, 1994, primarily due to growing service
contract revenue from a larger base of installed systems. Geographically,
international revenue increased to $32.8 million, totalling 37.2% of the
Company's sales as compared to 27.9% in the comparable 1994 period.
The Company believes that the trends of health-care-provider consolidation,
medical cost containment and intense competitive pressures which existed in
1994, will continue into 1995. The Company believes that future revenues may
continue to be impacted by these uncertainties, especially in the domestic
ultrasound market. Although portions of the international ultrasound markets
are experiencing some economic recovery, it is uncertain whether this is
temporary or permanent.
The gross profit for the first quarter of 1995 was 54.0% of net sales,
compared to 57.0% in the first quarter of 1994. The percentage change was
primarily a reflection of reduced product prices and increased sales of lower-
priced product configurations, partially offset by improvement in service
margins.
Selling, general and administrative costs were $27.3 million in the quarter
ended April 1, 1995, as compared to $26.6 million in the prior year's period.
As a percentage of sales, such expenses in the first three months in 1995
totalled 31.0% of net sales compared to 28.7% in 1994. Dollar spending
increased primarily due to international expenses supporting the increase in
international sales.
Product development costs in the first quarter of 1995 totalled $18.1 million
or 20.5% of net sales, compared to $17.3 million or 18.7% of net sales in the
first quarter of 1994. The increase in product development expense results from
continuing investment in multiple new product development programs.
The provision for income taxes was $0.9 million in the first quarter of 1995
versus $3.5 million in the first quarter of 1994. The effective tax rate for the
three months ended April 1, 1995 was 29% versus 35% in the same period in the
prior year.
6
<PAGE>
________________________________________________________________________________
Liquidity and Capital Resources
The Company's cash and short-term investments balance has increased $7.3
million during the three months ended April 1, 1995 to $74.4 million. During
the quarter, the Company generated $12.9 million in cash from operations, as
compared to the first quarter of 1994 when operations generated $11.5 million in
cash. Also, in the first quarter of 1994, the Company sold its lease portfolio
generating an additional $21.6 million in cash. The Company's investing and
financing activities for the three months ended April 1, 1995 have used $1.1
million. Included in the financing activities was $3.5 million raised through
employee participation in the Company's stock option and stock purchase plans,
compared to $2.2 million during the first quarter of 1994.
In 1993, the Board of Directors authorized the repurchase of 4,000,000 shares
of common stock over an unspecified period of time. During the first quarter
the Company repurchased 450,000 shares, for a total repurchase of 817,700 shares
to date toward the Board authorization. As of April 1, 1995, there were
28,785,008 shares of Acuson common stock outstanding.
At April 1, 1995, the Company's working capital totalled $135.3 million. The
Company also has a revolving unsecured credit facility for $50 million which is
in effect through March 1997. No compensating balances are required and the
full amount is available under this credit facility. There were no draws on
this line of credit during the quarter.
Based on its current operating plan, the Company believes that the liquidity
provided by its existing cash and short-term investments, the borrowing
arrangements described above, and cash generated from operations will be
sufficient to meet the Company's operating and capital requirements for fiscal
1995.
________________________________________________________________________________
7
<PAGE>
________________________________________________________________________________
PART II
ITEM 1
LEGAL PROCEEDINGS
Previously reported in Company's Form 10-K for the fiscal year ended
December 31, 1994.
ITEM 6
EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
--------
10.1 Amended and Restated Credit Agreement, dated April 14, 1995
11.1 Statement regarding computation of per share earnings for the
quarter ended April 1, 1995
27.1 Financial Data Schedule
b) Reports on Form 8-K
-------------------
The Company filed no reports on Form 8-K during the quarter ended
April 1, 1995.
________________________________________________________________________________
8
<PAGE>
________________________________________________________________________________
SIGNATURE
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.
ACUSON CORPORATION
(Registrant)
May 15, 1995 By /s/ Stephen T. Johnson
--------------------------------------
Stephen T. Johnson
Vice President, Chief Financial
Officer and Treasurer
(duly authorized Officer and Principal
Financial and Accounting Officer)
9
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Sequentially
Page
Exhibit No. Number
- ----------- ------------
<C> <S> <C>
10.1 Amended and Restated Credit Agreement, dated April 14, 1995
11.1 Statement regarding computation of per share earnings for the
quarter ended April 1, 1995
27 Financial Data Schedule
</TABLE>
<PAGE>
___________________________________________________________________________
AMENDED AND RESTATED
CREDIT AGREEMENT
dated as of April 14, 1995
by and among
ACUSON CORPORATION,
THE FIRST NATIONAL BANK OF BOSTON,
ABN AMRO BANK N.V., San Francisco International Branch
and the other lending institutions listed on Schedule 1 hereto
and
THE FIRST NATIONAL BANK OF BOSTON,
as Agent
___________________________________________________________________________
Bingham, Dana & Gould
Boston, Massachusetts
<PAGE>
TABLE OF CONTENTS
1. DEFINITIONS
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
1.1. Defined Terms 1
1.2. Accounting Terms 8
</TABLE>
2. REVOLVING CREDIT LOANS
<TABLE>
<CAPTION>
<S> <C>
2.1 Revolving Credit Commitment 8
2.2 Rate Designation 8
2.3 Domestic Rate Revolving Loans. 8
2.4 Eurodollar Rate Loans 9
2.5 Loan Account 9
2.6 Special Notice Requirements 9
2.7 Prepayment 10
2.8 Commitment Fees 10
2.9 Reduction of Commitment 11
2.10 Conversion Options 11
</TABLE>
3. THE TERM LOAN
<TABLE>
<CAPTION>
<S> <C>
3.1 Conversion of Revolving Credit Loans; the Term Loan 11
3.2 The Term Notes 12
3.3 Schedule of Installment Payments of Principal of Term Loan 12
3.4 Option Prepayment of Term Loan 12
3.5 Interest on Term Loan 12
</TABLE>
4. CERTAIN GENERAL PROVISIONS
<TABLE>
<CAPTION>
<S> <C>
4.1 Computation of Interest and Fees/Adjustment to Interest Rates 13
4.2 Fees 13
4.3 Changed Circumstances 13
4.4 Payments Free of Taxes 16
4.5 Funding Sources 16
4.6 Late Principal and Interest 16
4.7 Place of Loans and Payments 17
4.8 Immediately Available Dollars 17
4.9 Failure to Charge Not Subsequent Waiver 17
4.10 Identification of Designated Interbank Eurodollar Market 17
4.11 Pro Rata Loans; Obligations Several 17
4.12 Survivability 17
4.13 Indemnity 17
</TABLE>
5. CONDITION OF LENDING
<TABLE>
<CAPTION>
<S> <C>
5.1 Conditions Precedent to Initial Borrowing 18
5.2 Conditions of Initial and Subsequent Borrowings 19
</TABLE>
<PAGE>
6. COMPANY'S REPRESENTATIONS AND WARRANTIES
<TABLE>
<CAPTION>
<S> <C>
6.1 Existence and Rights 19
6.2 Agreement Authorized 19
6.3 No Conflict 20
6.4 Litigation 20
6.5 Financial Condition 20
6.6 Title to Assets 20
6.7 Tax Status 20
6.8 Trademarks and Patents 20
6.9 Regulations G, T and U 21
6.10 ERISA 21
6.11 Environmental Quality 21
6.12 Other Regulations 21
6.13 Subsidiaries 21
</TABLE>
7. BANKS' REPRESENTATIONS
<TABLE>
<CAPTION>
<S> <C>
7.1 Nonreliance 21
</TABLE>
8. COMPANY'S AFFIRMATIVE COVENANTS
<TABLE>
<CAPTION>
<S> <C>
8.1 Punctual Payment 22
8.2 Corporate Rights and Facilities 22
8.3 Insurance 22
8.4 Taxes and Other Liabilities 22
8.5 Financial Covenants 22
8.6 Records and Reports 23
8.7 Notice of Certain Events 23
8.8 Bank Expenses 24
8.9 Indemnification 24
8.10 Compliance with Law 24
8.11 ERISA Compliance 24
8.12 Litigation 24
8.13 Inspection by the Banks 24
8.14 Use of Proceeds 25
8.15 Further Assurances 25
</TABLE>
9. COMPANY'S CERTAIN NEGATIVE COVENANTS
<TABLE>
<CAPTION>
<S> <C>
9.1 Type of Business 25
9.2 Liens and Encumbrances 25
9.3 Loans and Investments 26
9.4 Limitation on Contingent Liabilities 27
9.5 Purchases, Mergers or Consolidations 27
9.6 Dividends, Stock Payments 27
9.7 Regulations U and X 28
</TABLE>
<PAGE>
10. EVENTS OF DEFAULT
<TABLE>
<CAPTION>
<S> <C>
10.1 Events of Default and Acceleration 28
10.2 Termination of Commitments 29
10.3 Remedies 29
</TABLE>
11. THE AGENT
<TABLE>
<CAPTION>
<S> <C>
11.1 Authorization 30
11.2 Employees and Agents 30
11.3 No Liability 30
11.4 No Representations 31
11.5 Payments 31
11.6 Holder of Notes 32
11.7 Indemnity 32
11.8 Agent as Bank 32
11.9 Resignation 32
</TABLE>
12. SURVIVAL OF COVENANTS, ETC.
13. ASSIGNMENT AND PARTICIPATION
<TABLE>
<CAPTION>
<S> <C>
13.1 Conditions to Assignment by Banks 32
13.2 Certain Representations and Warranties; Limitations, Covenants 33
13.3 Register 34
13.4 New Notes 34
13.5 Participations 34
13.6 Assignee or Participant Affiliated with the Company 34
13.7 Miscellaneous Assignment Provisions 35
13.8 Assignment by Company 35
</TABLE>
14. MISCELLANEOUS
<TABLE>
<CAPTION>
<S> <C>
14.1 Survival of Warranties 35
14.2 Failure or Indulgence Not Waiver 35
14.3 Modification 35
14.4 Notices 35
14.5 Severability 36
14.6 Applicable Law 36
14.7 Counterparts 36
14.8 Section Headings 36
14.9 Confidentiality 36
14.10 Further Assurances 37
14.11 Future Credit 37
14.12 Sharing of Setoffs 37
</TABLE>
15. TRANSITIONAL ARRANGEMENTS
<TABLE>
<CAPTION>
<S> <C>
15.1 Original Credit Agreement Superseded 37
15.3 Interest and Fees Under Superseded Agreement 37
</TABLE>
Exhibits
Exhibit A Form of Notice of Borrowing
Exhibit B Subsidiary List
Exhibit C Form of Term Note
Exhibit D Form of Legal Opinion
Exhibit E Form of Compliance Certificate
Exhibit F Form of Assignment and Acceptance
Schedules
Schedule 1 Banks' Commitments
<PAGE>
-1-
ACUSON CORPORATION
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT is dated as of April 14,
1995, by and among ACUSON CORPORATION, a Delaware corporation (herein called the
"Company"), THE FIRST NATIONAL BANK OF BOSTON, a national banking association
("FNBB"), ABN AMRO BANK N.V., San Francisco International Branch ("ABN") and the
other lending institutions listed on Schedule 1 hereto and THE FIRST NATIONAL
BANK OF BOSTON, as agent for itself and such other lending institutions (in such
capacity, the "Agent").
WHEREAS, pursuant to a Credit Agreement dated as of July 21, 1992 (as
amended from time to time, the "Original Credit Agreement"), by and among the
Company, certain of the Banks (as hereinafter defined) and the Agent, certain
Banks made available revolving credit loans for general corporate and working
capital purposes; and
WHEREAS, the Company has requested certain modifications to the
Original Credit Agreement and the Banks are willing to make such modifications
on the terms and conditions set forth herein;
NOW, THEREFORE, the Company, the Agent and the Banks agree that on the
Closing Date (as hereinafter defined) the Original Credit Agreement is hereby
amended and restated in its entirety as set forth herein.
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS. All terms defined in this Agreement shall have the
defined meanings when used herein or in any certificate, report, or other
document made or delivered pursuant to this Agreement, unless the context
otherwise requires. The following terms shall have the following meanings:
"Adjustment Date" shall mean the first day of the Company's fiscal
month immediately following the month in which a Compliance Certificate is to be
delivered by the Company pursuant to Section 8.6C.
"Agreement" shall mean this Amended and Restated Credit Agreement,
including the schedules and exhibits hereto, as originally executed and as the
same may from time to time be amended, restated or supplemented.
"Applicable Margin" shall mean for each period commencing on an
Adjustment Date through the date immediately preceding the next Adjustment Date
(each a "Rate Adjustment Period"), the applicable margin set forth below with
respect to the Company's Leverage Ratio, as determined for the fiscal period of
the Company and its Subsidiaries ending immediately prior to the applicable Rate
Adjustment Period.
<PAGE>
-2-
<TABLE>
<CAPTION>
DOMESTIC EURODOLLAR
LEVERAGE RATIO RATE LOANS RATE LOANS
<S> <C> <C>
Greater than or equal to
0.80:1.00 0% 1%
Greater than or equal to
0.60:1.00 but less than
0.80:1.00 0% 3/4%
Less than 0.60:1.00 0% 1/2%
</TABLE>
Notwithstanding the foregoing, from the Closing Date through the first
Adjustment Date, the Applicable Margin shall be the highest Applicable Margin
unless the Company delivers a Compliance Certificate to the Agent on the
Effective Date demonstrating a Leverage Ratio which would entitle the Company to
a lower Applicable Margin. In addition, notwithstanding the foregoing but
subject to the balance of this paragraph, if the Company fails to deliver any
Compliance Certificate pursuant to Section 8.6C hereof then, for the period
commencing on the next Adjustment Date to occur subsequent to such failure
through the date immediately following the date on which such Compliance
Certificate is delivered, the Applicable Margin shall be the highest Applicable
Margin set forth above. In addition, notwithstanding anything to the contrary
contained herein, if the Borrower delivers a Compliance Certificate for the
preceding fiscal quarter and such Compliance Certificate evidences a Leverage
Ratio for such quarter which would indicate that the Applicable Margin (a)
should be calculated at a higher amount during the current fiscal quarter, the
Applicable Margin shall be adjusted upward retroactively on the basis of the
higher Leverage Ratio to the Applicable Margin which would have otherwise been
applicable pursuant to this definition, and the Company shall pay to the agent
for the pro rata account of the Banks within five (5) Business Days after notice
thereof all interest accrued but unpaid with respect to the Loans using the
adjusted Applicable Margin for any portion of the current fiscal quarter as to
which a portion of such interest has been paid; and (b) should be calculated at
a lower amount during the fiscal quarter, the Applicable Margin shall be
adjusted downward retroactively on the basis of the lower Leverage Ratio to the
Applicable Margin which would otherwise be applicable to this definition, and
the Banks shall pay to the Agent within five (5) Business Days after notice
thereof and the Agent shall pay to the Company within one (1) Business Day after
receipt thereof all amounts paid by the Company in excess with respect to the
Loans using the adjusted Applicable Margin for any portion of the current fiscal
quarter as to which a portion of such interest has been paid.
"Assignment and Acceptance" shall have the meaning set forth in Section
13.1.
"Bank of Boston Base Rate" shall mean the greater of (a) the rate of
interest announced from time to time by FNBB at its head office in Boston,
Massachusetts as its "Base Rate"; and (b) the Federal Funds Effective Rate in
effect on such date plus 1/2 of 1% (rounded upwards, if necessary, to the next
1/8 of 1%).
"Banks" shall mean FNBB, ABN and the other lending institutions listed
on Schedule 1 hereto and any other Person who becomes an assignee of any rights
and obligations of a Bank pursuant to
<PAGE>
-3-
Section 13.
"Business Day" means any day other than a Saturday, Sunday or holiday
on which banks in the State of California, the Commonwealth of Massachusetts and
the State of Illinois are authorized by law to close.
"Closing Date" means April 14, 1995.
"Commitment" shall mean with respect to each Bank, the amount set forth
on Schedule 1 hereto as the amount of such Bank's commitment to make Loans to
the Company, as the same may be reduced from time to time in accordance with the
terms hereof; or if such commitment is terminated pursuant to the provisions
hereof, zero.
"Commitment Percentage" shall mean, with respect to each Bank, the
percentage set forth on Schedule 1 hereto as such Bank's percentage of the
aggregate Commitments of all of the Banks.
"Compliance Certificate" shall have the meaning set forth in Section
8.6C.
"Consolidated Current Assets" shall mean all current assets of the
Company and its Subsidiaries on a consolidated basis as determined and computed
in accordance with generally accepted accounting principles consistently
applied.
"Consolidated Current Liabilities" shall mean all current liabilities
of the Company and its Subsidiaries on a consolidated basis as determined and
computed in accordance with generally accepted accounting principles
consistently applied, and including in any event all obligations outstanding
hereunder.
"Consolidated Net Current Assets" shall mean the excess of Consolidated
Current Assets over Consolidated Current Liabilities as determined and computed
in accordance with generally accepted accounting principles consistently
applied.
"Consolidated Tangible Net Worth" shall mean, on a consolidated basis
for the Company and its Subsidiaries, the excess of all assets (excluding any
value for goodwill, trademarks, patents, copyrights, organization expenses,
capitalized software and other similar intangible items) over all liabilities
(including, without limitation, accrued and deferred income taxes and
subordinated indebtedness), as determined and computed in accordance with
generally accepted accounting principles consistently applied.
"Consolidated Total Debt" shall mean, on a consolidated basis for the
Company and its Subsidiaries, the total of all items of indebtedness, obligation
or liability that in accordance with generally accepted accounting principles
consistently applied would be included in determining total liabilities as shown
on the liability side of a consolidated balance sheet of the Company and its
Subsidiaries as at the date as of which Consolidated Total Debt is to be
determined.
"Conversion Date" shall mean March 31, 1997.
"Conversion Request" shall mean a notice given by the Company to the
Agent of the Company's election to convert or continue a Loan in accordance with
Section 2.10.
<PAGE>
-4-
"Default" shall mean any event which but for the giving of notice or
the lapse of time or both would constitute an Event of Default.
"Designated Interbank Eurodollar Market" shall mean, for any Eurodollar
Rate Loan, an interbank Eurodollar market designated solely by the Agent to be
the appropriate interbank Eurodollar market for that Eurodollar Rate Loan.
"Disclosure Letter" shall mean the letter delivered by the Company to
the Agent and the Banks, dated as of the Closing Date, whereby certain
disclosures are made in respect of the Company's representations and warranties.
"Dollars" shall mean U.S. Dollars.
"Domestic Rate" shall mean the Bank of Boston Base Rate.
"Domestic Rate Loan" shall mean a Revolving Credit Loan and all or any
portion of the Term Loan bearing interest calculated by reference to the
Domestic Rate in accordance with Section 2.2.
"Drawdown Date" shall mean the date on which any Revolving Credit Loan
or the Term Loan is made or to be made, and the date on which any Revolving
Credit Loan is converted or continued in accordance with Section 2.10 or all or
any portion of the Term Loan is converted or continued in accordance with
Section 3.5B.
"Effective Date" shall mean the first date on which the conditions set
forth in Section 5 have been satisfied and any Revolving Credit Loans are to be
made.
"Eligible Assignee" shall mean any of (a) a commercial bank or finance
company organized under the laws of the United States, or any State thereof or
the District of Columbia, and having total assets in excess of $25,000,000,000;
(b) a commercial bank organized under the laws of any other country which is a
member of the Organization for Economic Cooperation and Development (the
"OECD"), or a political subdivision of any such country, and having total assets
in excess of $25,000,000,000, provided that such bank is acting through a branch
or agency located in the United States of America; (c) the central bank of any
country which is a member of the OECD; and (d) if, but only if, an Event of
Default has occurred and is continuing, any other bank, insurance company,
commercial finance company or other financial institution or other Person
approved by the Agent, such approval not to be unreasonably withheld.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"Eurocurrency Reserve Rate" shall mean, for any day with respect to a
Eurodollar Rate Loan, the maximum rate (expressed as a decimal) at which any
lender subject thereto would be required to maintain reserves under Regulation D
of the Board of Governors of the Federal Reserve System (or any successor or
similar regulations relating to such reserve requirements) against "Eurocurrency
Liabilities" (as that term is used in Regulation D), if such liabilities were
outstanding. The Eurocurrency Reserve Rate shall be adjusted automatically on
and as of the effective date of any change in the Eurocurrency Reserve Rate.
"Eurodollar Business Day" shall mean any Business Day that is also a
day for trading by and between banks in U.S. dollar deposits in the Designated
Interbank Eurodollar Market.
<PAGE>
-5-
"Eurodollar Lending Office" shall mean initially, the office of each
Bank designated as such on Schedule 1 hereto, thereafter, such other office of
such Bank, if any, that shall be making or maintaining Eurodollar Rate Loans.
"Eurodollar Rate" shall mean, for any Interest Period with respect to a
Eurodollar Rate Loan, the rate of interest equal to (a) the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of one percent) at which
the Reference Bank's Eurodollar Lending Office is offered Dollar deposits two
Eurodollar Business Days prior to the beginning of such Interest Period in the
Designated Interbank Eurodollar Market where the eurodollar and foreign currency
and exchange operations of such Eurodollar Lending Office are customarily
conducted at or about 10:00 a.m., Boston time, for delivery on the first day of
such Interest Period for the number of days comprised therein and in an amount
comparable to the amount of the Eurodollar Rate Loan of such Reference Bank to
which such Interest Period applies, divided by (b) a number equal to 1.00 minus
the Eurocurrency Reserve Rate, if applicable.
"Eurodollar Rate Loan" shall mean a Revolving Credit Loan and all or
any portion of the Term Loan bearing interest calculated by reference to the
Eurodollar Rate in accordance with Section 2.2.
"Event of Default" shall have the meaning set forth in Section 10.
"Federal Funds Effective Rate" shall mean, for any day, a fluctuating
interest rate per annum equal to the weighted average of the rates on overnight
federal funds transactions with members of the Federal Reserve System arranged
by federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day that is a Business
Day, the average of the quotations for such day on such transactions received by
the Agent from three federal funds brokers of recognized standing selected by
the Agent.
"Fee Adjustment Date" shall mean the first day of the calendar quarter
immediately following the quarter in which a Compliance Certificate is to be
delivered by the Company pursuant to Section 8.6C.
"Fee Amount" shall mean for each calendar quarter commencing
immediately after a Fee Adjustment Date through the date immediately preceding
the next Fee Adjustment Date (each a "Fee Rate Adjustment Period"), the
applicable amount set forth below with respect to the Company's Leverage Ratio,
as determined for the fiscal period of the Company and its Subsidiaries ending
immediately prior to the applicable Fee Rate Adjustment Period.
<TABLE>
<CAPTION>
LEVERAGE RATIO FEE AMOUNT
<S> <C>
Greater than or equal to 1:00:1.00 .50% per annum
Greater than or equal to 0.75:1.00 .375% per annum
but less than 1:00:1.00
</TABLE>
<PAGE>
-6-
<TABLE>
<S> <C>
Less than 0.75:1.00 .25% per annum
</TABLE>
Notwithstanding the foregoing, from the Closing Date through the first Fee
Adjustment Date, the Fee Amount shall be the highest applicable Fee Amount
unless the Company delivers a Compliance Certificate to the Agent on the Closing
Date demonstrating a Leverage Ratio which would entitle the Company to a lower
Fee Amount. In addition, notwithstanding the foregoing but subject to the
balance of this paragraph, if the Company fails to deliver any Compliance
Certificate pursuant to Section 8.6C hereof then, for the period commencing on
the next Fee Adjustment Date to occur subsequent to such failure through the
date immediately following the date on which such Compliance Certificate is
delivered, the Fee Amount shall be the highest Fee Amount set forth above.
Notwithstanding anything to the contrary contained herein, in the event either
(a) the Leverage Ratio is greater than that set forth by the Company or (b) the
Company delivers a Compliance Certificate indicating that the Fee Amount should
be calculated at a higher amount during the current Fee Rate Adjustment Period,
the Fee Amount shall be adjusted upward retroactively on the basis of the higher
Leverage Ratio to the Fee Amount which would otherwise have been applicable
pursuant to this definition, and the Company shall pay to the Agent for the
account of the Banks within five (5) Business Days after notice thereof all
commitment fees accrued but unpaid with respect to the Loans using such adjusted
Fee Amount for any portion of the Fee Rate Adjustment Period as to which a
portion of such commitment fees has been paid. In the event the Company
delivers a Compliance Certificate indicating that the Fee Amount should be
calculated at a lower amount during the current Fee Rate Adjustment Period, the
Fee Amount shall be adjusted downward retroactively on the basis of the lower
Leverage Ratio to the Fee Amount which would otherwise have been applicable
pursuant to this definition, and the Banks shall pay to the Agent within five
(5) Business Days after notice thereof and the Agent shall pay to the Company
within one (1) Business Day after receipt thereof all commitment fees overpaid
by the Company with respect to the Loans using the adjusted Fee Amount for any
portion of the Fee Rate Adjustment Period as to which portion of such commitment
fees has been paid.
"Interest Period" shall mean with respect to each Loan, (a) initially, the
period commencing on the Drawdown Date of such Loan and ending on the last day
of one of the periods set forth below, as selected by the Company pursuant to
Section 2.4, (i) for any Domestic Rate Loan, the last day of the calendar month;
and (ii) for any Eurodollar Rate Loan, 1, 2, 3, or 6 months; and (b) thereafter,
each period commencing on the last day of the next preceding Interest Period
applicable to such Loan and ending on the last day of one of the periods set
forth above, as selected by the Company in a Conversion Request; provided that
all of the foregoing provisions relating to Interest Periods are subject to the
following:
(a) if any Interest Period with respect to a Eurodollar Rate Loan would
otherwise end on a day that is not a Eurodollar Business Day, that Interest
Period shall be extended to the next succeeding Eurodollar Business Day unless
the result of such extension would be to carry such Interest Period
<PAGE>
-7-
into another calendar month, in which event such Interest Period shall end on
the immediately preceding Eurodollar Business Day;
(b) if any Interest Period with respect to a Domestic Rate Loan would end on a
day that is not a Business Day, that Interest Period shall end on the next
succeeding Business Day;
(c) if the Company shall fail to give notice as provided in Section 2.10, the
Company shall be deemed to have requested a conversion of the affected
Eurodollar Rate Loan to a Domestic Rate Loan and the continuance of all Domestic
Rate Loans as Domestic Rate Loans on the last day of the then current Interest
Period with respect thereto;
(d) any Interest Period that begins on the last Eurodollar Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
Eurodollar Business Day of a calendar month; and
(e) any Interest Period relating to any Eurodollar Rate Loan that would
otherwise extend beyond the Revolving Credit Loan Maturity Date (if a Revolving
Credit Loan) or the Term Loan Maturity Date (if the Term Loan) shall end on the
Revolving Credit Loan Maturity Date or (as the case may be) the Term Loan
Maturity Date.
"Leverage Ratio" shall mean as at the date of determination and with
respect to the Company and its Subsidiaries, the ratio of (a) Consolidated Total
Debt of the Company and its Subsidiaries for the fiscal quarters ending on such
date to (b) Consolidated Tangible Net Worth of the Company and its Subsidiaries
for the fiscal quarters ending on such date.
"Loan Account" shall have the meaning set forth in Section 2.5.
"Loan Documents" shall have the meaning set forth in Section 6.1.
"Loans" shall mean the Revolving Credit Loans and the Term Loan.
"Notes" shall mean the Term Notes and the Revolving Credit Notes.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any successor
thereto established under ERISA.
"Person" means a corporation, association, partnership, trust,
organization, business, individual or government or governmental agency or
political subdivision thereof.
<PAGE>
-8-
"Plan" shall mean any employee benefit plan of the Company subject to
ERISA.
"Quick Ratio" shall mean the ratio of (a) the sum of (i) all cash and cash
equivalents of the Borrower and its Subsidiaries plus (ii) all investments
which are permitted by Section 9.3 hereof and are deemed current under generally
accepted accounting principles plus (iii) all accounts receivable of the
Borrower and its Subsidiaries to (b) the sum of (i) Consolidated Current
Liabilities plus (ii) the aggregate amount of all outstanding Loans.
"Record" shall mean the grid attached to a Note, or the continuation of
such grid, or any other similar record, including computer records, maintained
by the Agent or any Bank with respect to any Loan referred to in such Note.
"Real Estate Acquisition" shall mean acquisition by the Company of (a)
certain real estate, improvements located thereon and related property, in
Mountain View, California, known as Shoreline Business Park for a purchase price
of approximately $35,000,000 to be paid in cash by the Company and (b) any
buildings and other improvements located on such property in an amount not to
exceed $25,000,000 in the aggregate on terms reasonably satisfactory to the
Agent for which the Agent has given its prior written consent which consent
shall not be unreasonably withheld.
"Reference Bank" shall mean FNBB.
"Regulation D" shall mean Regulation D, as at any time amended, of the
Board of Governors of the Federal Reserve System or any other regulation in
substance substituted therefor.
"Required Banks" shall mean, as of any date, the Banks holding 51% or more
of the outstanding principal amount of the Notes on such date; and if no such
principal is outstanding, the Bank's whose aggregate Commitments constitutes 51%
or more of the Total Commitment.
"Revolving Credit Loans" shall mean revolving credit loans made or to be
made by the Banks to the Company pursuant to Section 2.
"Revolving Credit Loan Maturity Date" shall mean March 31, 1997.
"Revolving Credit Note" shall have the meaning set forth in Section 2.1C.
"Revolving Credit Note Record" shall mean a Record with respect to a
Revolving Credit Note.
"Subsidiary" when used in the singular and "Subsidiaries" when used in the
plural shall mean any or all of those corporations listed in Exhibit B annexed
hereto and any corporation of which the Company or any other Subsidiary or the
Company and one or more Subsidiaries owns or controls, directly or indirectly,
more than 50% of the outstanding stock having by its terms ordinary voting power
to elect a majority of the Board of Directors of the corporation.
"Term Loan" shall mean the term loan made or to be made by the Banks to the
Company on the Conversion Date as contemplated by Section 3 hereof.
"Term Loan Maturity Date" shall mean March 31, 1998.
"Term Notes" shall have the meaning set forth in Section 3.1.
"Term Note Record" shall mean a Record with respect to a Term Note.
"Total Commitment" shall mean the sum of the Commitment of the Banks, as in
effect from time to time.
"Type" shall mean as to any Revolving Credit Loan or all or any portion of
the Term Loan its nature as a Domestic Rate Loan or a Eurodollar Rate Loan.
1.2 ACCOUNTING TERMS. Each accounting term not defined herein, and each
accounting term partly defined herein to the extent not defined, shall have the
meaning given to it under generally accepted accounting principles.
SECTION 2. REVOLVING CREDIT LOANS
2.1 REVOLVING CREDIT COMMITMENT.
A. Subject to the terms and conditions of this Agreement, each Bank
severally agrees to make Revolving Credit Loans to the Company at any one time
equal to such Bank's Commitment from the date of this Agreement to and including
the Revolving Credit Loan Maturity Date as at such time and in such amounts as
the Company may request, which amounts may be borrowed, repaid and reborrowed
subject to the limitations set out herein, provided that the sum of the
outstanding amount of the Revolving Credit Loans, (after giving effect to all
amounts requested) shall not at any time exceed the Total Commitment.
B. Each Loan shall be in a minimum aggregate principal amount of
$1,000,000 and in multiples of $100,000.
C. The obligation of the Company to repay to the Banks the principal
of the Revolving Credit Loans advanced by each Bank and interest thereon shall
be evidenced by a promissory note (the "Revolving Credit Note") dated as of the
Closing Date and completed with appropriate insertions. One Revolving Credit
Note shall be payable to the order of each Bank in a principal amount equal to
such Bank's Commitment or, if less, the outstanding amount of all Revolving
Credit Loans made by such Banks, plus interest accrued thereon, as set forth
below. The Company irrevocably authorizes each Bank to make or cause to be made,
at or about the time of the Drawdown Date of any Revolving Credit Loan or at the
time of receipt of any principal on such Bank's Revolving Credit Note, an
appropriate notation on such Bank's Revolving Credit Note Record reflecting the
making of such Revolving Credit Loan or, as the case may be, the receipt of such
payment. The outstanding amount of the Revolving Credit Loans set forth on such
Bank's Revolving Credit Note Record shall be prima facie evidence of the
principal amount thereof owing and unpaid to such Bank, but the failure to
record, or any error in so recording, any such amount on such Bank's Revolving
Credit Note Record shall not limit or otherwise affect the obligations of the
Company hereunder or under any Revolving Credit Note to make payments of
principal of or interest on any Revolving Credit Note when due.
2.2 RATE DESIGNATION. The Company shall designate each Revolving Credit
Loan requested hereunder as a Domestic Rate Loan or a Eurodollar Rate Loan in
the notice given to the Agent in accordance with Section 2.6 hereof.
2.3 DOMESTIC RATE REVOLVING LOANS. Principal with respect to each Revolving
Credit Loan bearing interest at the Domestic Rate shall be due and payable on
the Revolving Credit Loan Maturity Date. Except as set forth in Section 4.6,
each Revolving Credit Loan bearing interest at the Domestic Rate shall bear
interest upon the unpaid principal balance of such Revolving Credit Loan from
the Drawdown Date of such Revolving Credit Loan and ending on the last day of
the Interest Period with respect thereto at a fluctuating rate per annum equal
to the Domestic Rate plus the Applicable Margin. The Company promises to pay
interest on each Revolving Credit Loan monthly in arrears on the first day of
each month, commencing with the first such day to occur after each Revolving
Credit Loan is made hereunder, and on the Revolving Credit Loan Maturity Date,
on which date all interest remaining unpaid shall be due and payable.
<PAGE>
-9-
2.4 EURODOLLAR RATE LOANS. Each Interest Period for a Revolving Credit Loan
bearing interest at the Eurodollar Rate shall be selected by the Company,
provided that no such term extends beyond the Revolving Credit Loan Maturity
Date. Except as set forth in section 4.6, each Revolving Credit Loan bearing
interest at the Eurodollar Rate shall bear interest at a rate per annum equal to
the Eurodollar Rate plus the Applicable Margin for such period. Principal with
respect to each Eurodollar Rate Loan shall be due and payable on the Revolving
Credit Loan Maturity Date. The Company promises to pay interest on each
outstanding Eurodollar Rate Loan at the end of such Interest Period, provided
that if the Interest Period is longer than three months, then interest shall be
payable on the date that is three months from the first day of such Interest
Period, and, in addition, the last day at of such Interest Period.
2.5 LOAN ACCOUNT. Each Bank will maintain a separate account on its books
for the Company (the "Loan Account") on which will be recorded, in accordance
with such Bank's customary accounting practice, (a) all Revolving Credit Loans
made by such Bank to the Company, (b) all payments of such Revolving Credit
Loans made to such Bank, and (c) all other charges and expenses properly
chargeable to the Company hereunder. The debit balance of the Loan Account of
each Bank shall reflect the amount of the Company's indebtedness for Revolving
Credit Loans from time to time to such Bank hereunder. So long as any Revolving
Credit Loans are outstanding, each Bank shall deliver written statements to the
Company from time to time (but no less frequently than quarterly) reflecting the
amount of such indebtedness and such statements shall, in the absence of
manifest error or any written statement of objection delivered by the Company to
such Bank within five (5) Business Days after the Company's receipt thereof,
constitute prima facie evidence of the indebtedness for Revolving Credit Loans
of the Company to such Bank hereunder as of the date of such statement.
2.6 SPECIAL NOTICE REQUIREMENTS. Each Revolving Credit Loan bearing
interest at the Domestic Rate shall be made on a Business Day, and each
Revolving Credit Loan bearing interest at the Eurodollar Rate shall be made on a
Eurodollar Business Day. Irrevocable notice in the form of Exhibit A hereto (a
"Notice of Borrowing") shall be given by the Company to the Agent as follows:
A. For a Domestic Rate Loan, notice must be received by the Agent by
11:00 a.m., California time, one Business Day preceding the day on which such
Domestic Rate Loan is to be made; and
B. For a Eurodollar Rate Loan, notice must be received by the Agent
by 11:00 a.m., California time, three (3) Eurodollar Business Days preceding the
day on which such Eurodollar Rate Loan is to be made.
The Agent will promptly notify each Bank as to the content of each Notice of
Borrowing. Not later than 12:00 noon, Boston time, on the Drawdown Date of such
borrowing, each Bank shall make available its pro rata share of such borrowing
in immediately available funds, by wiring the proceeds thereof in accordance
with the instructions contained in the Notice of Borrowing.
The Agent may, unless notified to the contrary by any Bank prior to a Drawdown
Date, assume that such Bank has made available to the Agent on such Drawdown
Date the amount of such Bank's Commitment Percentage of the Revolving Credit
Loans to be made on such Drawdown Date, and the Agent may (but it shall not be
required to), in reliance upon such assumption, make available to the Company a
corresponding amount. If any Bank makes available to the Agent such amount on a
date after such Drawdown Date, such Bank shall pay to the Agent on demand an
amount equal to the product of (a) the average computed for the period referred
to in clause (c) below, of the weighted average interest rate paid by the Agent
for federal funds acquired by the Agent during each day included in such period,
times (b) the amount of such Bank's Commitment Percentage of such Revolving
Credit Loans, times (c) a fraction, the numerator of which is the number of days
that elapse from and including such Drawdown Date to the date on which the
amount of such Bank's Commitment Percentage of such Revolving Credit Loans shall
become immediately available to the Agent, and the denominator of which is 365.
A statement of the Agent submitted to such Bank with respect to any amounts
owing under this paragraph shall be prima facie evidence of the amount due and
owing to the Agent by such Bank. If the amount of such Bank's Commitment
Percentage of such Revolving Credit Loans is not made available to the Agent by
such Bank within three (3) Business Days following such Drawdown date, the Agent
shall be entitled to recover such amount from the Company on demand, with
interest thereon at the rate per annum applicable to the Revolving Credit Loans
made on such Drawdown date.
<PAGE>
-10-
2.7 PREPAYMENT. Upon written notice, or telephonic notice promptly
confirmed in writing, received by the Agent on the Business Day prior to the day
of such prepayment, the Company shall have the right to make prepayments of any
Revolving Credit Loan, without penalty or premium, provided that:
A. Each partial prepayment shall be in an amount of $100,000 or a
multiple thereof or the outstanding balance of such Revolving Credit Loan if the
outstanding balance is $1,000,000 or less; and
B. Eurodollar Rate Loans may be prepaid in accordance with the
provisions of Section 2.7A above only upon payment to the Agent of a prepayment
fee computed in accordance with the following formula:
L = (R - T) x P x D
---------------
360
L = amount payable to the Agent
R = interest rate on such Revolving Credit Loan being prepaid
T = Eurodollar Rate in effect on the date of prepayment for new
Revolving Credit Loans made for the remaining term of such
Revolving Credit Loan being prepaid and in a principal amount
equal to the amount prepaid
P = the amount of principal prepaid
D = the number of days remaining in the term of such Revolving Credit
Loan being prepaid as of the date of such prepayment
The Company shall pay such amount upon presentation by the Agent of a statement
setting forth the amount and the Agent's calculation thereof pursuant hereto,
which statement shall be deemed true and correct absent manifest error.
2.8 COMMITMENT FEES. The Company shall pay to the Agent for the account
of each Bank in accordance with their respective Commitment Percentages a
commitment fee equal to the Fee Amount on the average daily amount during each
calendar quarter or portion thereof from the Closing Date to the Revolving
Credit Loan Maturity Date by which the Total Commitment exceeds the outstanding
amount of Revolving Credit Loans during such calendar quarter. Such commitment
fee shall be due and payable quarterly in arrears on the last day of each
calendar quarter, commencing with the first such day to occur after the Closing
Date, and on the Revolving Credit Loan Maturity Date or any earlier date on
which the Commitments are terminated. Such fees shall be computed on the basis
of a 360-day year and actual days elapsed.
<PAGE>
-11-
2.9 REDUCTION OF COMMITMENT. Upon written notice, or telephonic notice
promptly confirmed in writing, received by each Bank five (5) Business Days
prior to the effective date of such reduction, the Company may at any time
wholly terminate the Total Commitment, or from time to time permanently reduce
in multiples of $1,000,000 the amount thereof. Each such reduction shall reduce
the Commitment of each Bank pro rata in accordance with their respective
Commitment Percentages of the amount specified in such notice. Said notice shall
be irrevocable unless all the Banks consent in writing to its revocation prior
to the effectiveness of such reduction. Upon the effective date of any such
reduction of Commitments, the Company shall make payments of principal to the
Agent for the accounts of the Banks necessary to reduce the amount outstanding
under the Revolving Credit Loans made pursuant to the Total Commitment to an
amount not exceeding the Total Commitment, as reduced. Upon the effective date
of any such reduction or termination, the Company shall pay to the Agent for the
respective accounts of the Banks the full amount of any commitment fee then
accrued on the amount of the reduction. No reduction of the Commitment may be
reinstated unless all the Banks consent in writing to its revocation prior to
the effectiveness of such reduction.
2.10. CONVERSION OPTIONS.
A.
The Company may elect from time to time to convert any outstanding Revolving
Credit Loan to a Revolving Credit Loan of another Type, provided that (i) with
respect to any such conversion of a Revolving Credit Loan to a Domestic Rate
Loan, the Company shall give the Agent at least two (2) Business Days prior
written notice of such election; (ii) with respect to any such conversion of a
Eurodollar Rate Loan into a Revolving Credit Loan of another Type, such
conversion shall only be made on the last day of the Interest Period with
respect thereto; (iii) with respect to any such conversion of a Domestic Rate
Loan to a Eurodollar Rate Loan, the Company shall give the Agent at least three
(3) Eurodollar Business Days prior written notice of such election and (iv) no
Loan may be converted into a Eurodollar Rate Loan when any Default or Event of
Default has occurred and is continuing. On the date on which such conversion is
being made each Bank shall take such action as is necessary to transfer its
Commitment Percentage of such Revolving Credit Loans to its domestic lending
office or its Eurodollar Lending Office, as the case may be. All or any part of
outstanding Revolving Credit Loans of any Type may be converted as provided
herein, provided that partial conversions shall be in an aggregate principal
amount of $1,000,000 or a whole multiple thereof. Each Conversion Request
relating to the conversion of a Revolving Credit Loan to a Eurodollar Rate Loan
shall be irrevocable by the Company.
B.
Any Eurodollar Rate Loan may be continued as such upon the expiration of an
Interest Period with respect thereto by compliance by the Company with the
notice provisions contained in Section 2.10A; provided that no Eurodollar Rate
Loan may be continued as such when any Default or Event of Default has occurred
and is continuing, but shall be automatically converted to a Domestic Rate Loan
on the last day of the first Interest Period relating thereto ending during the
continuance of any Default or Event of Default of which the officers of the
Agent active upon the Company's account have actual knowledge. In the event
that the Company fails to provide any such notice with respect to the
continuation of any Eurodollar Rate Loan as such, then such Eurodollar Rate Loan
shall be automatically converted to a Domestic Rate Loan on the last day of the
Interest Period relating thereto. Each Domestic Rate Loan shall automatically
continue as a Domestic Rate Loan unless notice is given by the Company to the
Agent electing a Loan of another Type as provided in Section 2.10A. The Agent
shall notify the Banks promptly when any such automatic conversion contemplated
by this Section 2.10 is scheduled to occur.
SECTION 3. THE TERM LOAN
3.1 CONVERSION OF REVOLVING CREDIT LOANS; THE TERM LOAN. Subject to the
terms and conditions hereinafter set forth, including, without limitation, the
satisfaction of the conditions set forth in Section 5.2 hereof, on the
Conversion Date the aggregate amount of the outstanding Revolving Credit Loans
shall be converted into a Term Loan in an aggregate principal amount equal to
the aggregate outstanding principal balance of the Revolving Credit Loans on
that date, held severally by the Banks in accordance with their Commitment
Percentages. The Term Loan outstanding after conversion shall be evidenced by
the separate Term Notes (the "Term Notes") of the Company payable to the order
of each Bank, each dated as of the Conversion Date and in substantially the form
of Exhibit C attached hereto, with appropriate insertions. On the Conversion
Date the Company shall pay to the Agent for the pro rata accounts of the Banks
all interest accrued to such date on the Revolving Credit Loans, any commitment
fees and other fees payable to the Agent and the Banks hereunder, and, as soon
as reasonably practicable after such payment, each Bank shall surrender to the
Company its Revolving Credit Note against receipt of its Term Note evidencing
the amount of the outstanding Revolving Credit Loans so converted.
<PAGE>
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3.2 THE TERM NOTES. Each Term Note shall represent the obligation of the
Company to pay to such Bank such principal amount or, if less, the outstanding
amount of such Bank's Commitment Percentage of the Term Loan, plus interest
accrued thereon, as set forth below. The Company irrevocably authorizes the
Agent to make or cause to be made a notation on the Agent's Term Note Record
reflecting the original principal amount of each Bank's Commitment Percentage of
the Term Loan and, at or about the time of the Agent's receipt of any principal
payment on any Term Note, an appropriate notation on the Term Note Record
reflecting such payment. The aggregate unpaid amount set forth on each Term
Note Record shall be prima facie evidence of the principal amount thereof owing
and unpaid to each Bank, but the failure to record, or any error in so
recording, any such amount on the Term Note Record shall not affect the
obligations of the Company hereunder or under any Term Note to make payments of
principal of and interest on any Term Note when due.
3.3 SCHEDULE OF INSTALLMENT PAYMENTS OF PRINCIPAL OF TERM LOAN. The
Company promises to pay to the Agent for the account of the Banks the principal
amount of the Term Loan in four (4) consecutive quarterly installments, each
equal as near as possible to 1/4th of the principal amount of the Term Loan
outstanding on the Conversion Date, such installments to be due and payable on
the last day of each fiscal quarter of the Company commencing with the fiscal
quarter ending closest to June 30, 1997 with a final payment of all remaining
outstanding principal amounts of the Term Loan, together with all accrued and
unpaid interest thereon, due and payable on the Term Loan Maturity Date.
3.4 OPTIONAL PREPAYMENT OF TERM LOAN. The Company shall have the right
at any time to prepay the Term Notes on or before the Term Loan Maturity Date,
as a whole, or in part, upon not less than three (3) Business Days' prior
written notice to the Agent, without premium or penalty, provided that (a) each
partial prepayment shall be in a principal amount equal to $500,000 or an
integral multiple of $100,000 in excess thereof, (b) no portion of the Term Loan
bearing interest at the Eurodollar Rate may be prepaid pursuant to this Section
3.4 except on the last day of the Interest Period relating thereto and (c) each
partial prepayment shall be allocated among the Banks, in proportion, as nearly
as practicable, to the respective outstanding amount of each Bank's Term Note,
with adjustments to the extent practicable to equalize any prior prepayments not
exactly in proportion. Any prepayment of principal of the Term Loan shall
include all interest accrued to the date of prepayment and shall be applied
against the scheduled installments of principal due on the Term Loan in the
inverse order of maturity. No amount repaid with respect to the Term Loan may
be reborrowed.
3.5 INTEREST ON TERM LOAN.
A. Except as otherwise provided in Section 4.6, the Term Loan
shall bear interest during each Interest Period relating to all or any portion
of the Term Loan at the following rates:
(i) To the extent that all or any portion of the Term Loan bears interest
during such Interest Period at the Domestic Rate, the Term Loan or such portion
shall bear interest during such Interest Period at the Domestic Rate plus the
Applicable Margin.
(ii) To the extent that all or any portion of the Term Loan bears interest
during such Interest Period at the Eurodollar Rate, the Term Loan or such
portion shall bear interest during such Interest Period at the Eurodollar Rate
plus the Applicable Margin.
(iii) The Company promises to pay interest on the Term Loan or any portion
thereof outstanding during each Interest Period (a) bearing interest at the
Domestic Rate monthly in arrears on the first day of each month, commencing with
the first such day to occur after the Conversion Date, and on the Term
Loan Maturity Date, on which date all interest remaining unpaid shall be due and
payable; and (b) bearing interest at the Eurodollar Rate at the end of such
Interest Period, provided that if the Interest Period is longer than three
months, then interest shall be due and payable on the date that is three months
from the first day of such Interest Period, and, in addition, on the last day of
such Interest Period.
B. The Company shall notify the Agent, such notice to be
irrevocable, at least three (3) Business Days prior to the Conversion Date if
all or any portion of the Term Loan is to bear interest at the Eurodollar Rate.
After the Term Loan has been made, the provisions of Section 2.10 shall apply
mutatis mutandis with respect to all or any portion of the Term Loan so that the
Company may have the same interest rate options with respect to all or any
portion of the Term Loan as it would be entitled to with respect to the
Revolving Credit Loans.
C. Any portion of the Term Loan bearing interest at the Eurodollar
Rate relating to any Interest Period shall be in the amount of $500,000 or an
integral multiple of $100,000 in excess thereof. No Interest Period relating to
the Term Loan or any portion thereof bearing interest at the Eurodollar Rate
shall extend beyond the date on which a regularly scheduled installment payment
of the principal of the Term Loan is to be made unless a portion of the Term
Loan at least equal to such installment payment has an Interest Period ending on
such date or is then bearing interest at the Domestic Rate.
<PAGE>
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SECTION 4. CERTAIN GENERAL PROVISIONS
4.1. COMPUTATION OF INTEREST AND FEES/ADJUSTMENT TO INTEREST RATES. All
computations of interest and fees made or called for hereunder shall be
calculated on the basis of a year of 360 days and actual days elapsed. Any
change in the interest rate applicable to any Domestic Rate Loan resulting from
a change in the Domestic Rate shall become effective as of the day on which such
change in the Domestic Rate shall become effective.
4.2. FEES. The Company shall pay to the Agent (a) for the pro rata
accounts of the Banks on the Closing Date a closing fee in the amount of $25,000
and (b) for the Agent's own account an Agent's fee in the amount and at the
times agreed to by the Agent and the Company.
4.3 CHANGED CIRCUMSTANCES.
A. Notwithstanding any other provision of this Agreement, in the
event any Bank determines in good faith that:
(i) the introduction of, any change in, or any change in the
interpretation or administration of, any law, treaty, directive or
regulation after the date hereof by any governmental agency charged with
the interpretation or administration thereof shall make it unlawful or
impracticable for any Bank to fund or maintain or charge interest with
respect to any Eurodollar Rate Loan; or
(ii) by reason of circumstances affecting the Designated Interbank
Eurodollar Market adequate and reasonable methods do not exist for
determining the applicable Eurodollar Rate; or
(iii) deposits of Dollars in the relevant amount for the applicable
term of a given Eurodollar Rate Loan are not available to such Bank in the
Designated Interbank Eurodollar Market (any such Loan, an "Affected Loan");
such Bank shall promptly give notice of such determination to the Company. Upon
such date as shall be specified in such notice (which shall not be earlier than
the date such notice is given) the right of the Company to borrow Affected Loans
shall cease to apply and the Company shall, with respect to the outstanding
Affected Loans, convert such Affected Loan to a Domestic Rate Loan. Upon such
specified date the Company shall pay to such Bank the accrued and unpaid
interest on the Affected Loans to (but not including) such specified date. In
addition, the Company hereby agrees promptly to pay the Agent for the accounts
of the Bank upon demand by the Bank, any additional amounts necessary to
compensate such Bank for any costs incurred by such Bank in making any
conversion in accordance with this Section 4.3, including any interest or fees
payable by any Bank to lenders of funds obtained by it in order to make or
maintain its Eurodollar Rate Loans hereunder. If at the time
<PAGE>
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any Bank so notifies the Company, the Company has previously given the
Banks a Notice of Borrowing but such Loans have not yet gone into effect, such
notification shall be deemed to be void and the Company may borrow Loans of a
non-affected type by giving an immediate substitute Notice of Borrowing.
B. Notwithstanding any other provision of this Agreement, in the
event any Bank determines in good faith that any law, regulation, treaty or
official directive or the interpretation or application thereof by any court or
by any governmental authority charged with the administration thereof or the
compliance with any guideline or request of any central bank or other
governmental authority (whether or not having the force of law)
(i) subjects any Bank to any tax, levy, impost, duty, charge, fee,
deduction or withholding of any nature with respect to payments of
principal or interest or any other amounts payable hereunder by the Company
or otherwise with respect to the transactions contemplated hereunder
(except for taxes on the overall net income of such Bank imposed by the
United States of America or any political subdivision thereof); or
(ii) materially changes the basis of taxation (except for changes in
taxes on income or profits) of payments to any Bank of the principal of or
the interest on any Loans or any other amounts payable to any Bank or the
Agent under this Agreement; or
(iii) imposes, modifies or deems applicable any deposit insurance,
reserve, special deposit, capital maintenance or similar requirement
against assets held by, or deposits in or for the account of, or loans by,
any Bank (other than such requirements as are included in the determination
of the Eurodollar Rate for Eurodollar Rate Loans, hereunder); or
(iv) imposes upon any Bank or the Agent any other condition or
requirements with respect to its performance under this Agreement;
and the result of any of the foregoing is to increase the cost to any Bank,
reduce the income receivable by or return on equity of such Bank or impose any
expense upon such Bank with respect to any Loans, such Bank shall notify the
Company thereof. The Company agrees to pay to each Bank the amount of such
increase in cost, reduction in income or return on equity or additional expense
as and when such cost, reduction or expense is incurred or determined, upon
presentation by such Bank of a statement prepared in good faith in the amount
and setting forth such Bank's calculation thereof, which statement shall be
deemed true and correct absent manifest error.
C. Each Bank which is a foreign person (i.e., a person other than
a United States person for United States Federal income tax purposes) (a
"Foreign Bank") agrees that:
(i) it shall, no later than the Closing Date (or, in the case of a
Foreign Bank which becomes a party hereto pursuant to Section 13 after the
Closing Date, the date upon which the Bank becomes a party hereto) deliver
to the Company through the Agent two accurate and complete signed originals
of Internal Revenue Service Form 4224 or any successor thereto ("Form
4224"), or two (2) accurate and complete signed originals of Internal
Revenue Service Form 1001 or any successor thereto ("Form 1001"), as
appropriate, in each case indicating that the Foreign Bank is on the
<PAGE>
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date of delivery thereof entitled to receive payments of principal,
interest and fees under this Agreement free from withholding of United
States Federal income tax;
(ii) if at any time any Foreign Bank makes any changes necessitating a
new Form 4224 or Form 1001, it shall with reasonable promptness deliver to
the Company through the Agent in replacement for, or in addition to, the
forms previously delivered by it hereunder, two (2) accurate and complete
signed originals of Form 4224 or two (2) accurate and complete signed
originals of Form 1001, as appropriate, in each case indicating that the
Foreign Bank is on the date of delivery thereof entitled to receive
payments of principal, interest and fees under this Agreement free from
withholding of United States Federal income tax;
(iii) it shall, before or promptly after the occurrence of any event
(including the passing of time but excluding any event mentioned in (ii)
above) requiring a change in or renewal of the most recent Form 4224 or
Form 1001 previously delivered by such Foreign Bank and deliver to the
Company through the Agent two (2) accurate and complete original signed
copies of Form 4224 or Form 1001 in replacement for the forms previously
delivered by the Foreign Bank; and
(iv) it shall, promptly upon the Company's or the Agent's reasonable
request to that effect, deliver to the Company or the Agent (as the case
may be) such other forms or similar documentation as may be required from
time to time by any applicable law, treaty, rule or regulation in order to
establish such Foreign Bank's tax status for withholding purposes.
D. The Company will not be required to pay any additional amounts
in respect of United States Federal income tax pursuant to Section 4.3B to any
Foreign Bank for the account of such Foreign Bank:
(i) if the obligation to pay such additional amounts would not have
arisen but for a failure by such Foreign Bank to comply with its
obligations under Section 4.3C above;
(ii) if such Foreign Bank shall have delivered to the Company a Form
4224 pursuant to Section 4.3C, and such Foreign Bank shall not at any time
be entitled to exemption from deduction or withholding of United States
Federal income tax in respect of payments by the Company hereunder for the
account of such Foreign Bank for any reason other than a change in United
States law or regulations or in the official interpretation of such law or
regulations by any governmental authority charged with the interpretation
or administration thereof (whether or not having the force of law) after
the date of delivery of such Form 4224; or
(iii) if the Foreign Bank shall have delivered to the Company a Form
1001 in respect of such Foreign Bank pursuant to Section 4.3C, and such
Foreign Bank shall not at any time be entitled to exemption from deduction
or withholding of United States Federal income tax in respect of payments
by the Company hereunder for the account of such Foreign Bank for any
reason other than a change in United States law or regulations or any
applicable tax treaty or regulations or in the official interpretation of
any such law, treaty or regulations by any governmental authority charged
with the interpretation or administration thereof (whether or not having
the force of law) after the date of delivery of such Form 1001 .
E. Notwithstanding any other provision of this Agreement, in the
event that any Bank determines in good faith that the adoption of or any change
in any applicable law, rule or regulation regarding capital requirements for
banks or bank holding companies, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by such Bank or the Agent with any request or directive of any such entity
regarding capital adequacy (whether or not having the force of law), has the
effect of reducing the return on such Bank's capital to a level below that which
such Bank could have achieved (taking into consideration such Bank's policies
with respect to capital adequacy immediately before such adoption, change or
compliance and assuming that such Bank's capital was fully utilized prior to
such adoption, change or compliance) but for such adoption, change or compliance
as a consequence of its commitment to make Loans hereunder by any amount deemed
by such Bank to be material:
(i) such Bank shall promptly after its determination of such
occurrence give notice thereof to the Company; and
(ii) the Company shall pay to such Bank as an additional fee from time
to time on demand such amount as such Bank certifies to be the amount that
will compensate it for such reduction; provided that the Company shall have
no obligation with respect to periods more than three months prior to any
such notice.
A certificate of any Bank claiming compensation under this Section 4.3 shall be
conclusive in the absence of manifest error. Such certificate shall set forth
the nature of the occurrence giving rise to such compensation, the additional
amount or amounts to be paid to it hereunder and the method by which such
amounts were determined. In determining such amount, the Banks may use any
reasonable averaging and attribution methods.
<PAGE>
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4.4 PAYMENTS FREE OF TAXES. All payments made by the Company in
connection with this Agreement shall be made free and clear of, and without
reduction by reason of, any taxes.
4.5 FUNDING SOURCES. Other than as specifically stated herein, nothing
herein shall be deemed to obligate any Bank to fund any Loan hereunder in any
particular place or manner and nothing herein shall be deemed to constitute a
representation by any Bank that it has funded or will fund any Loan hereunder in
any particular place or manner.
4.6 LATE PRINCIPAL AND INTEREST. Should principal and/or interest not be
paid when due (after all applicable grace periods set forth in this Agreement,
if any, have elapsed) with respect to any Loan made hereunder, it shall
thereafter bear interest at a fluctuating rate per annum equal to 2% in excess
of the interest rate in effect on such Loan.
<PAGE>
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4.7 PLACE OF LOANS AND PAYMENTS. All Loans made hereunder and other
amounts payable hereunder shall be paid to the Agent at the office of the Agent
in Boston, Massachusetts for the account of each Bank. Payments made by the
Company under this Agreement shall be received by the Agent no later than 1:00
p.m., Boston, Massachusetts time on the date that the payment is due. Each Bank
agrees to timely provide a statement of all amounts due and payable hereunder
from time to time, provided that the failure to provide such a notice shall not
affect the unconditional obligation of the Company to pay such amounts on the
dates herein provided.
4.8 IMMEDIATELY AVAILABLE DOLLARS. All Loans and payments hereunder
shall be made in Dollars and in immediately available funds.
4.9 FAILURE TO CHARGE NOT SUBSEQUENT WAIVER. The Company explicitly
agrees that any decision by the Agent or any Bank not to require payment of any
fees and/or compensation for costs, or to reduce that amount of such fees and/or
compensation for costs, for any particular Eurodollar Rate Loan shall in no way
limit the Agent's or such Bank's right to require full payment of any fees
and/or compensation for costs for any other Eurodollar Rate Loan.
4.10 IDENTIFICATION OF DESIGNATED INTERBANK EURODOLLAR MARKET. Upon
request of the Company communicated to the Agent, the Agent shall identify the
interbank Eurodollar market that constitutes the Designated Interbank Eurodollar
Market for any Eurodollar Rate Loan.
4.11 PRO RATA LOANS; OBLIGATIONS SEVERAL.
A. The Company, the Agent and the Banks agree that each extension of
credit shall be made on a pro rata basis by the Banks in accordance with their
respective Commitment Percentages. Each payment and prepayment of Loans, and
each payment of interest and fees, made by the Company to the Agent shall be
made, and each reduction of the Commitment shall be applied, pro rata to the
Banks in proportion to the respective amounts of the Loans outstanding
immediately prior to such payment or prepayment or, if no Loans are outstanding,
in the proportion that each Bank's Commitment bears to the Total Commitment.
B. The obligations of each Bank under this Agreement are several. The
failure of any Bank to meet its obligations hereunder shall not release any
other Bank from its obligations as provided herein. No Bank shall be liable for
the failure of any other Bank to perform its obligations under this Agreement.
4.12 SURVIVABILITY. Except as otherwise specified herein, all of the
Company's obligations under Section 2 and 3 hereof with respect to any Loans
made hereunder shall survive repayment of such Loans.
4.13 INDEMNITY. The Company agrees to indemnify each Bank and to hold each
Bank harmless from and against any loss, cost or expense that such Bank may
sustain or incur as a consequence of (a) default by the Company in payment of
the principal amount of or any interest on any Eurodollar Rate Loans as and when
due and payable, including any such loss or expense arising from interest or
fees payable by such Bank to lenders of funds obtained by it in order to
maintain its Eurodollar Rate Loans, (b) default by the Company in making a
borrowing after the Company has given (or is deemed to have given) a loan
request, notice (in the case of all or any portion of the Term Loan pursuant to
Section 3.5) or a Conversion Request relating thereto in accordance with Section
2.10 or Section 3.5 or (c) the making of any payment of a Eurodollar Rate Loan
or the making of any conversion of any such Loan to a Domestic Rate Loan on a
day that is not the last day of the applicable Interest Period with respect
thereto, including interest or fees payable by such Bank to lenders of funds
obtained by it in order to maintain any such Loans.
<PAGE>
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SECTION 5. CONDITION OF LENDING
5.1 CONDITIONS PRECEDENT TO INITIAL BORROWING. This Agreement shall
become effective on the Effective Date and the obligation of the Banks to make
the initial Revolving Credit Loans hereunder shall be subject to the condition
precedent that the Agent shall have received, in form and substance satisfactory
to the Agent and its counsel, the following:
A. certified copies of corporate certificates evidencing all necessary
action on the part of the Company with respect to the authorization of this
Agreement and the Notes and the authorization of certain officer(s) to execute,
deliver and take all other actions required under this Agreement and the Notes,
and providing specimen signatures of such officers;
B. a certified copy of the certificate of incorporation of the Company
and all amendments and supplements thereto, filed in the office of the Secretary
of State of Delaware, each certified by said Secretary of State as being a true
and correct copy thereof;
C. the Bylaws of the Company and all amendments and supplements
thereto, certified by the Secretary or Assistant Secretary of the Company as
being a true and correct copy thereof;
D. a certificate of the Secretary of State of Delaware as to legal
existence and good standing in such state and listing all documents on file in
his office;
E. a certificate of the Secretary of State of California as to the
licensing of the Company to do business in such state;
F. the favorable written opinion of the Company's in-house counsel
addressed to the Agent and the Banks substantially in the form of Exhibit D
attached hereto;
G. duly executed and delivered counterparts of this Agreement and the
Revolving Credit Notes, with both documents being in full force and effect;
H. such other documents as the Agent or its counsel may reasonably
request in order to effect fully the purposes of this Agreement;
I. the receipt by the Agent of the closing fee, the Agent's fee
pursuant to Section 4.2 and the Agent's Fee Letter; and
J. the receipt by the Agent of evidence that all fees and expenses
(including, without limitation, attorneys' fees and expenses of Agent's counsel
incurred in the preparation of this Agreement) have been paid.
Promptly after satisfaction of the foregoing conditions precedent, the Agent
shall deliver a written notice to the Company that to the best of the Agent's
knowledge the foregoing conditions have been satisfied, provided, however, the
parties hereto hereby acknowledge and agree that any such notice by the Agent to
the Company is not in any way a representation or warranty by the Agent to the
Company or the Banks as to the accuracy, truthfulness or authenticity of the
documents, instruments or agreements delivered by the Company pursuant to this
Section 5.1, nor shall such notice be construed by the Company as a waiver of
any Default or Event of Default which may occur as a result of any of the
representations, warranties or covenants contained in the documents, agreements
and instruments delivered pursuant to this Section 5.1 being untrue or
misleading.
<PAGE>
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5.2 CONDITIONS OF INITIAL AND SUBSEQUENT BORROWINGS. The obligation of
the Banks to make any Loan (including converting the outstanding portion of the
Revolving Credit Loans to the Term Loan on the Conversion Date) hereunder is
further subject to the following conditions:
A. timely receipt by the Agent of a Notice of Borrowing as provided in
Section 2.6;
B. the representations and warranties contained in Section 6 shall be
true and accurate in all material respects on and as of the date of such Notice
of Borrowing and on the effective date of each Loan as though made at and as of
such date (except to the extent that such representations and warranties
expressly relate to an earlier date), and no Default or Event of Default shall
have occurred and be continuing, or would result from such Loan;
C. the corporate action referred to in Section 5.1A shall remain in
full force and effect;
D. no change shall have occurred in any law or regulation or
interpretation thereof that, in the opinion of counsel for any Bank, would make
it illegal or against the policy of any governmental agency or authority for the
Banks to make Loans hereunder; and
E. prior to or on the Conversion Date, each Bank shall have received a
Term Note payable to the order of such Bank, in a principal amount equal to the
outstanding principal balance of the Revolving Credit Loans made by such Bank as
of the Conversion Date.
The making of each Loan shall be deemed to be a representation and warranty
by the Company on the date of such Loan as to the accuracy of the facts referred
to in subsections B and C of this Section 5.2.
SECTION 6. COMPANY'S REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Banks to enter into this Agreement and make the
Loans, the Company makes the following representations and warranties to each of
the Banks:
6.1 EXISTENCE AND RIGHTS. The Company and its Subsidiaries are corporations
duly organized and existing in good standing under the laws of the jurisdictions
in which they are incorporated without limit as to the duration of their
existence, and the Company is authorized and in good standing as a foreign
corporation and is duly authorized to do business in the State of California; it
has adequate authority, rights and franchises to own its property and to carry
on its business as now conducted, and is duly qualified and in good standing in
each jurisdiction in which the failure to so qualify could have a material
adverse effect on its business or properties; the Company has adequate authority
to make and carry out the provisions of this Agreement and all other documents
or instruments executed in connection therewith (the "Loan Documents"); and,
subject to Section 8.7 below, the Company's chief executive office is located in
the State of California. Except as shall have been disclosed in writing to the
Banks, the Company has no investment in any other corporation other than its
Subsidiaries listed in Exhibit B annexed hereto.
6.2 AGREEMENT AUTHORIZED. The execution, delivery and performance of this
Agreement and the Loan Documents are duly authorized by all necessary corporate
action and do not require the consent or approval of any governmental body or
other regulatory authority; are not in contravention of or conflict with any law
or regulation or any term or provision of its certificate of incorporation or
bylaws; and this Agreement and the Loan Documents are the valid, binding and
legal obligation of the Company, enforceable in accordance with its terms.
<PAGE>
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6.3 NO CONFLICT. The execution, delivery and performance of this
Agreement and the Loan Documents will not breach or constitute a default under
any agreement, indenture, undertaking or other instrument to which the Company
or its Subsidiaries are a party or by which they or any of their property may be
bound or affected, and such execution, delivery and performance will not result
in the creation or imposition of (or the obligation to create or impose) any
lien, charge or encumbrance on, or security interest in, any of their property
pursuant to the provisions of any of the foregoing.
6.4 LITIGATION. Except as shall have been disclosed in the Disclosure
Letter to the Agent and the Banks, there is no litigation or other proceedings
pending or, to the knowledge of the Company, affecting it or its Subsidiaries or
their properties that, if determined adversely to the Company or its
Subsidiaries, would have a materially adverse effect on the financial condition,
properties or operations of the Company or the Company and its Subsidiaries,
taken as a whole, and neither the Company nor any of its Subsidiaries is in
default with respect to any order, writ, injunction, decree or demand of any
court or other governmental or regulatory authority where such default would
have a material adverse effect on the financial condition, properties or
operations of the Company or the Company and its Subsidiaries, taken as a whole.
6.5 FINANCIAL CONDITION. The consolidated balance sheet of the Company
and its Subsidiaries as of December 31, 1994, and the related statements of
profit and loss, cash flow and changes in stockholders' equity for the twelve
months ended on that date, all as certified by public accountants acceptable to
the Banks, a copy of each of which has heretofore been delivered to the Banks
by the Company, and all other statements and data submitted in writing in
connection with the request for the credit granted by this Agreement, are true
and correct in all material respects, and said balance sheets, profit and loss
statements and other statements and data fairly present the financial condition
of the Company and its Subsidiaries as of the dates thereof and the results of
the operations of the Company and its Subsidiaries for the periods covered
thereby, and have been prepared in accordance with generally accepted accounting
principles on a basis consistently maintained. Since said dates there have been
no changes in the assets, liabilities or financial condition of the Company or
its Subsidiaries other than changes that have not been materially adverse to the
financial condition, operations or business of the Company or the Company and
its Subsidiaries taken as a whole. The Company has no knowledge of any
liabilities, contingent or otherwise, at said dates not reflected in said
balance sheets and the notes thereto, and the Company and its Subsidiaries have
not entered into any commitments or contracts outside the ordinary course of
business that are not reflected in said balance sheets or the notes thereto that
may have a materially adverse effect upon their financial condition, operations
or business as now conducted.
6.6 TITLE TO ASSETS. The Company and its Subsidiaries have good and clear
title to their assets, and the same are not subject to any mortgages, deeds of
trust, pledges, security interests or other encumbrances other than those
permitted by the terms of Section 9.2 hereof and those in their most recent
financial statements previously delivered to the Banks.
6.7 TAX STATUS. The Company and its Subsidiaries have filed all tax
returns and reports required to be filed and have paid all applicable federal,
state and local franchise and income taxes that are due and payable, (a) except
in those cases where the same are being contested in good faith and disclosed to
the Banks and (b) except for local taxes not paid not exceeding $50,000 in the
aggregate.
6.8 TRADEMARKS AND PATENTS. Except as shall have been disclosed in the
Disclosure Letter to the Agent and the Banks, the Company and its Subsidiaries,
as of the date hereof, possess all necessary trademarks, trade names,
copyrights, patents, patent rights, and licenses to conduct their businesses as
now operated, without any known conflict with the valid trademarks, trade names,
copyrights, patents and license rights of others.
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6.9 REGULATIONS G, T AND U. Not more than 25% of the value of the
Company's assets and other property consists of margin stock (as defined within
Regulation U of the Board of Governors of the Federal Reserve System). Shares
repurchased by the Company as permitted hereunder but not held as treasury stock
and instead retired as authorized and unissued shares of the Company shall not
be considered a "margin stock" hereunder and under Section 9.7 of this Agreement
unless required to be considered as margin stock pursuant to the terms of
Regulation U as interpreted by rulings and staff opinions of the Board of
Governors of the Federal Reserve System and counsel acceptable to the Agent.
6.10 ERISA. The Company and every member of the "controlled group" (as
such term is used in the Internal Revenue Code of 1986 and ERISA and the
applicable regulations thereunder) that includes the Company have fulfilled
their obligations under the minimum funding standards of ERISA and the Internal
Revenue Code with respect to each Plan and are in compliance in all material
respects with the applicable provisions of ERISA and the Code, and have not
incurred any liability to the PBGC or a Plan under Title IV of ERISA; no
"prohibited transaction" or "reportable event" (as such terms are defined in
ERISA) has occurred with respect to any Plan; no action has been taken by the
Company or any such Subsidiary to terminate or withdraw from any Plan and no
notice of intent to terminate a Plan has been filed under Section 4041 of ERISA;
and no proceeding has been commenced under Section 4042 of ERISA and no grounds
exist for the commencement of any such proceeding.
6.11 ENVIRONMENTAL QUALITY. To the best of its knowledge the Company and
its Subsidiaries have complied with all applicable state and federal laws and
regulations relating to environmental quality except where noncompliance would
not result in costs or expenses, penalties or fines exceeding $5,000,000 in the
aggregate; and the Company is not aware that it or any of its Subsidiaries are
under investigation by any state or federal agency designed to enforce said laws
and regulations.
6.12 OTHER REGULATIONS. Neither the Company nor any of its Subsidiaries or
affiliates is subject to any statute or regulation restricting the ability of
the Company or any Subsidiary or affiliate to incur indebtedness or encumber its
respective properties.
6.13 SUBSIDIARIES. Except as shall have been disclosed in writing to the
Banks, all the Subsidiaries of the Company are listed on Exhibit B hereto. The
Company or a Subsidiary of the Company is the owner, free and clear of all liens
and encumbrances, of all of the issued and outstanding stock of each Subsidiary
listed on Exhibit B. All shares of such stock have been validly issued and are
fully paid and nonassessable, and no rights to subscribe to any additional
shares have been granted, and no options, warrants or similar rights are
outstanding.
SECTION 7. BANKS' REPRESENTATIONS
7.1 NONRELIANCE. The Banks are not relying on or looking to any capital
stock or other security (as defined in Regulation U of the Board of Governors of
the Federal Reserve System) now or hereafter owned by the Company for the
repayment of the Loans provided for herein.
<PAGE>
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SECTION 8. COMPANY'S AFFIRMATIVE COVENANTS
The Company covenants and agrees that, so long as any Loan is outstanding
or any Bank has any obligation to make any Loans, the Company shall do, and
cause each of its Subsidiaries to do, all of the following:
8.1 PUNCTUAL PAYMENT. Duly and punctually pay or cause to be paid the
principal and interest on the Loans and the commitment fees and Agent's fee
provided for in this Agreement, all in accordance with the terms of this
Agreement and the Loan Documents.
8.2 CORPORATE RIGHTS AND FACILITIES. Maintain and preserve its corporate
existence and all rights, privileges, franchises and other authority, including
without limitation all trademarks, patents and licenses of the types referred to
in Section 6.8, adequate for the conduct of its business; maintain its
properties, equipment and facilities in good order and repair; and conduct its
businesses in an orderly manner without voluntary interruption.
8.3 INSURANCE. Maintain insurance with responsible insurance carriers
against such risks and in such amounts as is customarily carried by similar
businesses, including, without limitation, errors and omissions when available,
fire, public liability, property damage, workers' compensation and interruption
of business insurance.
8.4 TAXES AND OTHER LIABILITIES. Pay and discharge, before the same
become delinquent and before penalties accrue thereon, all taxes, assessments
and governmental charges upon or against it or any of its properties, and all
its other liabilities at any time existing, except to the extent that:
A. the same are being contested in good faith and by appropriate
proceedings in such manner as not to cause any materially adverse effect upon
its financial condition or the loss of any right of redemption from any sale
thereunder; and
B. it shall have set aside on its books reserves (segregated to the
extent required by generally accepted accounting principles) adequate with
respect thereto.
The Company shall pay all governmental charges or taxes (except for taxes on the
overall net income of any Bank imposed by the United States of America or any
political subdivision thereof) at any time payable or ruled to be payable in
respect of the existence, execution or delivery of this Agreement by reason of
any existing or hereafter enacted federal or state statute.
8.5 FINANCIAL COVENANTS. As of the end of each of the Company's fiscal
quarters:
A. Maintain a minimum Consolidated Tangible Net Worth of not less than
85% of the Consolidated Tangible Net Worth of the Company and its Subsidiaries
as at December 31, 1994 plus 85% of the net profit after taxes for each quarter
commencing with the quarter ended March 31, 1995 plus 100% of the proceeds of
new equity raised after December 31, 1994 minus 100% of the cost of repurchases
by the Company of its stock after December 31, 1994 in an aggregate amount of up
to $60,000,000. Any consolidated losses shall not reduce the amount of
Consolidated Tangible Net Worth required to be maintained pursuant to this
Section 8.5;
B. Maintain a Leverage Ratio of not more than 1.25:1.00;
C. As of the date of determination, have a net loss for any fiscal
quarter of not greater than 10% of Consolidated Tangible Net Worth of the
Company at the beginning of such fiscal quarter for which such loss is being
calculated, and not have net losses for each of the three consecutive fiscal
quarters then ended;
D. Maintain a ratio of Consolidated Current Assets to Consolidated
Current Liabilities of not less than (i) 1.75:1.00 as of the end of each fiscal
quarter in fiscal year 1995 and (ii) 1.50:1.00 as of the end of each fiscal
quarter in each fiscal quarter thereafter; and
E. Maintain a Quick Ratio of not less than 0.75:1.00.
<PAGE>
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8.6 RECORDS AND REPORTS. Maintain a system of accounting in accordance
with generally accepted accounting principles on a basis consistently
maintained; and furnish at the Company's expense to the Agent
with copies to each of the Banks:
A. as soon as available, and in any event within 55 days after the
close of each fiscal quarter of the Company, commencing with the quarter ending
closest to June 30, 1995 on a consolidated basis, a balance sheet, profit and
loss statement and a statement of cash flow of the Company and its Subsidiaries
as at the close of such quarter and covering operations for the portion of the
Company's fiscal year ending on the last day of such quarter, all in reasonable
detail and stating in comparative form the figures for the corresponding date
and period in the previous fiscal year, prepared in accordance with generally
accepted accounting principles on a basis consistently maintained by the Company
and its Subsidiaries and certified by an appropriate officer of the Company,
subject, however, to year-end audit adjustments;
B. as soon as available, and in any event within 100 days after the
close of each fiscal year of the Company, a consolidated balance sheet, and a
related consolidated statement of income, changes in stockholders' equity and
cash flow for the Company and its Subsidiaries for such year, all in reasonable
detail and stating in comparative form the figures as at the close of and for
the previous fiscal year, audited by and with the unqualified opinion of
certified public accountants satisfactory to the Banks;
C. concurrently with delivery of the documents provided for in Section
8.6A hereof, a certificate of the chief financial officer of the Company,
substantially in the form of Exhibit E (the "Compliance Certificate"), stating
that the Company has performed and observed each and every covenant contained in
this Agreement to be performed by it and that no Default or Event of Default has
occurred or, if such event has occurred, specifying the nature thereof;
D. promptly after the same are available, copies of all proxy
statements, financial statements and reports as the Company shall send to its
stockholders, and copies of all reports that the Company may file with the
Securities and Exchange Commission or any governmental authority at any time
substituted therefor;
E. as soon as possible, and in any event within 30 days after the
Company knows or has reason to know that any event that would constitute a
reportable event under Section 4043(b) of Title IV of ERISA with respect to any
Plan has occurred, or that the PBGC or the Company has instituted or will
institute proceedings under such Title to terminate any Plan, the Company will
deliver to the Banks a certificate of the chief financial officer of the Company
setting forth details as to such reportable event and the action that the
Company proposes to take with respect thereto, together with a copy of any
notice of such reportable event that may be required to be filed with the PBGC,
or any notice delivered by the PBGC evidencing its intent to institute such
proceedings or any notice to the PBGC that any Plan is to be terminated, as the
case may be. For all purposes of this covenant, the Company shall be deemed to
have all knowledge or knowledge of all facts attributable to the Plan
administrator under such Title. The Company shall furnish the Banks (or cause
the Plan administrator to furnish the Banks) with the Annual Report for each
Plan covered by such Title IV and filed with the PBGC not later than 10 days
after such Report has been filed with the PBGC; and
F. such other information relating to the affairs of the Company or
related entities as any Bank reasonably may request from time to time.
8.7 NOTICE OF CERTAIN EVENTS. Promptly notify the Banks in writing of the
occurrence of any (a) Default or Event of Default hereunder; (b) change in the
location of the Company's headquarters office; and (c) change in the name or
trade name of the Company.
<PAGE>
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8.8 BANK EXPENSES. Pay all expenses (including reasonable attorneys' fees
or allocated expenses of the Agent's in-house legal staff incurred in connection
with the preparation of this Agreement and, after the occurrence and during the
continuation of any Default or Event of Default, the fees and cost of any audit
by the Agent on behalf of the Banks including those incurred by the Agent's
employees or by any agent of the Agent) of the Agent on behalf of the Banks in
connection with the preparation, administration and enforcement of this
Agreement and the Loans or any waiver or amendment of any provision hereof. The
Company agrees to indemnify the Banks from and hold them harmless against any
transfer taxes, documentary taxes, assessments or charges made by any
governmental authority by reason of the execution, delivery and performance of
this Agreement and the Loans. The obligations of the Company under this Section
8.8 shall survive payment of any Loan and assignment of any rights hereunder.
8.9 INDEMNIFICATION. Indemnify, save, and hold harmless the Agent, the
Banks and their directors, officers, agents, and employees (collectively the
"indemnitees") from and against any and all claims, actions, suits whether
groundless or otherwise, and from and against any and all liabilities, losses,
damages and expenses of every nature and character arising out of this Agreement
and the Loan Documents or the transactions contemplated hereby, including
without limitation, (a) any actual or proposed use by the Company or any of its
Subsidiaries of the proceeds of any of the Loans, (b) the Company or any of
Subsidiaries entering into or performing this agreement or the other Loan
Documents, (c) with respect to the Company and its Subsidiaries and their
respective properties and assets, the violation of any environmental law or
regulation, the presence, disposal, escape, seepage, leakage, spillage,
discharge, emission, release or threatened release of any hazardous substances
or any action, suit, proceeding or investigation brought or threatened with
respect to any hazardous substances (including, but not limited to claims with
respect to wrongful death, personal injury or damage to property), in each case
including, without limitation, the reasonable fees and disbursements of counsel
and allocated costs of internal counsel incurred in connection with any such
investigation, litigation or other proceeding. In litigation, or the
preparation thereof, the Banks and the Agent shall be entitled to select their
own counsel and, in addition to the foregoing indemnity, the Company agrees to
pay promptly the reasonable fees and expenses of such counsel. If, and to the
extent that the obligations of the Company under this Section 8.9 are
unenforceable for any reason, the Company hereby agrees to make the maximum
contribution to the payment in satisfaction of such obligations which is
permissable under applicable law, provided, however, that the foregoing
indemnity shall not apply to the extent any of the foregoing arise from the
willful misconduct or gross negligence of any of the indemnitees. The
obligations of the Company under this Section 8.9 shall survive payment of any
Loans and assignment of any rights hereunder.
8.10 COMPLIANCE WITH LAW. Comply in all material respects with all
applicable state and federal laws and regulations, including, but not limited
to, those relating to environmental quality and the Federal Food and Drug
Administration.
8.11 ERISA COMPLIANCE. Comply in all material respects with the
requirements of ERISA with respect to any Plan.
8.12 LITIGATION. Promptly give notice in writing to the Agent of any
claims, disputes or pending or threatened litigation involving the Company, any
of its Subsidiaries or any of their respective properties that could, if
adversely determined, result in judgments, costs or expenses payable to third
parties exceeding $1,500,000 in the aggregate (and in connection with such
notice, the Company agrees to make available to each Bank its officers and legal
counsel to discuss with such Bank all pertinent aspects of any such claims,
disputes or pending or threatened litigation).
8.13 INSPECTION BY THE BANKS. Permit any Bank or its designees, upon
reasonable notice at any reasonable time and at reasonable intervals of time, at
such Bank's sole cost and expense (subject to Section 8.8), to (a) visit and
inspect the properties of the Company and its respective Subsidiaries, (b)
examine and make copies of and take abstracts from the financial books, accounts
and records of the Company and its Subsidiaries (provided that such Bank may
examine and make notes of, but shall not without the prior consent of the
Company make copies of, the consolidating financial statements of the Company
and its Subsidiaries), and (c) discuss the affairs, finances and accounts of the
Company and its Subsidiaries with the appropriate officers of the Company.
<PAGE>
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8.14 USE OF PROCEEDS. The Company will use the proceeds of the Loans
solely for working capital and general corporate purposes.
8.15. FURTHER ASSURANCES.
The Company will, and will cause each of its Subsidiaries to, cooperate with the
Banks and the Agent and execute such further instruments and documents as the
Banks or the Agent shall reasonably request to carry out to their satisfaction
the transactions contemplated by this Agreement and the other Loan Documents.
SECTION 9. COMPANY'S NEGATIVE COVENANTS
The Company covenants and agrees that so long as any Loan is outstanding or
any Bank has any obligation to make any Loans, the Company shall not do, or
permit any of its Subsidiaries to do, any of the following:
9.1 TYPE OF BUSINESS. Make any substantial change in the present
character of its business.
9.2 LIENS AND ENCUMBRANCES. Create, incur, assume or permit to exist any
mortgage, deed of trust, security interest (whether possessory or nonpossessory)
or other encumbrance of any kind (including, without limitation, the charge upon
property purchased under conditional sale or other title retention agreement)
(hereinafter collectively referred to as "Liens") upon or on any of its property
or assets now owned or hereafter acquired other than:
A. Liens for taxes and assessments or other governmental charges or
levies, either not yet due and payable or to the extent that nonpayment thereof
is permitted by the terms of subsection 8.4 hereof;
B. Liens in connection with workers' compensation, unemployment
insurance, social security or public or statutory liability laws or similar
legislation;
C. mechanics', workmen's, materialmen's, landlords', carriers',
warehousemen's or other similar Liens arising in the ordinary course of business
and securing indebtedness that is either (i) not more than 90 days past the date
such indebtedness first became due and payable or (ii) being contested in good
faith;
D. any attachment or judgment Liens not in excess of $3,000,000
securing the payment of money, unless the judgment it secures shall not, within
60 days after the entry thereof, have been discharged or execution thereof
stayed pending appeal, or shall not have been discharged within 30 days after
the expiration of any such stay;
E. encumbrances on real estate and real property leases that are
permitted by mortgages or leasehold mortgages permitted hereunder, provided that
such encumbrances have been disclosed to the Banks; and zoning restrictions,
easements, licenses, or other restrictions on the use of real property or other
minor irregularities in title (including leasehold title) thereto, so long as
the same do not materially impair the use, value, or marketability of such real
property, leases or leasehold estates;
F. Liens disclosed on the Company's financial statements dated
December 31, 1994 submitted to the Banks;
G. purchase money security interests or purchase money mortgages up to
an aggregate maximum of the lesser of (i) $65,000,000 or (ii) 25% of
Consolidated Tangible Net Worth with respect to assets not acquired for resale;
H. pledges or deposits not exceeding $10,000,000 in the aggregate at
any one time, securing bids, tenders, contracts (other than contracts for the
payment of money) or leases to which the Company or any of its Subsidiaries is a
party as lessee made in the ordinary course of business;
I. deposits not exceeding $5,000,000 in the aggregate at any one time,
securing or in lieu of surety, appeal or customs bonds in proceedings to which
the Company or any of its Subsidiaries is a party;
J. Liens in favor of the Agent;
K. Liens incurred in connection with the refinancing of indebtedness
secured by Liens permitted hereunder, provided that the amount of indebtedness
secured by any such Lien shall not be increased above the original financed
amount as a result of such refinancing and no such Lien shall extend to property
of the Company or any such Subsidiary not encumbered prior to any such
refinancing; and
L. Liens encumbering the property subject to the Real Estate
Acquisition in connection with financing obtained by the Company.
<PAGE>
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9.3 LOANS AND INVESTMENTS. Lend money or extend credit to any Person,
with the exception of credit to vendors or customers made or refinanced in the
ordinary course of business; or make any loans or investments other than in the
following:
A. direct obligations of the United States Government;
B. interest-bearing certificates of deposit issued by any Bank or any
commercial banking institution issuing short term obligations rated Prime 1 or
higher by Moody's Investors Service Inc. ("Moody's") or A-1 or higher by
Standard and Poors Corporation ("S&P") and organized under the laws of the
United States or any State thereof;
C. prime commercial paper rated Prime 1 or higher by Moody's, A-1 or
higher by S&P or F-1 or higher by Fitch Investors Service, Inc.;
D. other quality investments that are rated AA/A-1/MIG-1 level or
equivalent, which are in Dollar denominations and fall within the following
categories:
<TABLE>
<CAPTION>
DOMESTIC FOREIGN
- -------- -------------------------------
<S> <C>
Demand Deposits Time Deposits
Yankee Certificates of Deposit
U.S. Treasury and Certificates of Deposit
Agency Obligations
Eurodollar Time Deposits
Certificates of Deposit
Bankers Acceptances
Bankers Acceptances
Direct Obligations of, or
Obligations Unconditionally
Guaranteed by Canada, Germany,
Great Britain, Japan, The
Netherlands, Sweden, Switzerland
or France
Commercial Paper
Repurchase Agreements
(fully collateralized)
Tax Exempt Securities
Money Market Preferreds
Corporate Bonds
</TABLE>
E. loans to or investments in Subsidiaries, affiliates or unrelated
companies not to exceed, in the aggregate, 20% of Consolidated Tangible Net
Worth;
F. investments made in connection with acquisitions permitted pursuant
to Section 9.5 hereof; and
G. loans to employees not to exceed, in the aggregate, $5,000,000.
<PAGE>
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9.4 LIMITATION ON CONTINGENT LIABILITIES. Guarantee or otherwise become
responsible (including, but not limited to, pursuant to any agreement to
purchase any obligations, stock, assets, goods or services or to supply or
advance any funds, assets, goods or services) for obligations of any Person,
except by endorsement, in the ordinary course of collection, of negotiable
instruments, in excess of 15% of Consolidated Tangible Net Worth.
9.5 PURCHASES, MERGERS OR CONSOLIDATIONS. So long as no Event of Default
pursuant to Sections 10.1 or 10.3 (only as it relates to Section 8.5) has
occurred or is continuing or would exist as a result, other than with
respect to the Real Estate Acquisition, purchase or otherwise acquire in any one
year the assets or business of any Person in excess of 7-1/2% of Consolidated
Tangible Net Worth as at the date of such acquisition; or liquidate, dissolve,
merge or consolidate, or commence any proceedings therefor, provided that any
Subsidiary may merge or consolidate into or with the Company if the Company is
the surviving company or into or with any other wholly-owned Subsidiary of the
Company; or sell, lease, assign, or transfer all or substantially all of its
business or fixed assets, or any property or other assets necessary for the
continuation of its principal business, including, without limitation, the
selling of any such property or other asset accompanied by the leasing back of
the same.
9.6 DIVIDENDS, STOCK PAYMENTS. So long as no Event of Default pursuant
to Sections 10.1 or 10.3 (only as it relates to Section 8.5) has occurred or is
continuing or would exist as a result, declare or pay any dividend or make any
other distributions on any of its capital stock now outstanding or hereafter
issued, or purchase, redeem or retire any of such stock, except:
A. dividends payable solely in shares of the Company's stock;
B. dividends approved in writing by the Banks, in their sole
discretion;
C. amounts or shares paid or set aside in connection with any Company
employee and executive stock option and stock purchase program;
D. any stock repurchase program, not to exceed $60,000,000 in the
aggregate after December 31, 1994; and
E. other cash dividends not to exceed in the aggregate 7.5% of
Consolidated Tangible Net Worth.
<PAGE>
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9.7 REGULATIONS U AND X. Use the proceeds of any Loan made hereunder,
directly or indirectly, to purchase or carry any margin stock (within the
meaning of Regulations U and X of the Board of Governors of the Federal Reserve
System) or to extend credit to others for the purpose of purchasing or carrying,
directly or indirectly, any margin stock.
SECTION 10. EVENTS OF DEFAULT
10.1 EVENTS OF DEFAULT AND ACCELERATION. If any of the following events
("Events of Default") shall occur:
A. the failure of the Company to pay any installment of principal of
any Loan when due, any interest thereon within three days of its due date or any
expenses, fees or costs when required hereunder;
B. the failure of the Company or any Subsidiary to pay, or any
default in the payment of, any principal of or any interest on (a) any of its
obligations to any Bank (other than its obligations hereunder) or (b) any other
indebtedness exceeding $3,000,000, individually or in the aggregate, or any
breach with respect to any term of any document evidencing such indebtedness or
of any loan agreement, mortgage, guarantee, indenture or other agreement
relating thereto, unless waived by the note holder or obligee, subject, however,
to any grace periods allowed thereunder;
C. the failure of the Company to perform any other term or condition
set forth in Sections 8.5, 8.6A and B, 8.7A (with respect to notices of default
of the covenants set forth in Sections 8.5, 8.6A and B), 9.5 and 9.6 of this
Agreement binding upon it; or failure of the Company to perform or comply with
all other terms and conditions contained herein, which failure has not been
remedied within 30 days from the date the Company became aware or should have
become aware of the occurrence of a breach;
D. any of the Company's representations or warranties made herein or
in any statement or certificate at any time given in writing pursuant hereto or
in connection herewith shall be false or misleading in any material respect as
of the date made;
E. an involuntary case shall be commenced under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) for the Company or any of its Subsidiaries or for any
substantial part of its property, or ordering the winding up or liquidation of
its affairs and said case shall not be dismissed within 30 days, provided,
however, that should the Company or any of its Subsidiaries consent to the
commencement of the involuntary case, the thirty-day period shall be deemed to
have run; or the Company or any of its Subsidiaries shall commence a voluntary
case under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or shall consent to the entry of an order for relief in an
involuntary case under any such law, or shall consent to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or similar official) of the Company or any of its Subsidiaries or
for any substantial part of its property, or shall make any general assignment
for the benefit of creditors, or shall fail generally to pay its debts as they
become due or shall take any corporate action in furtherance of any of the
foregoing;
F. any money judgment in excess of $3,000,000 that is not covered by
insurance, any writ or warrant of attachment, or similar process shall be
entered or filed against the Company or Subsidiary or any of their assets and
shall remain unpaid, unvacated, unbonded or unstayed for a period of 60 days;
G. the failure to comply in all material respects with any applicable
state or federal laws and regulations relating to environmental quality or
failure to comply in all material respects within the time specified in any
order issued by the Environmental Protection Agency or any similar state agency
or as such time may be extended by such agency or a court of competent
jurisdiction, where such noncompliance has an adverse material effect on the
Company or any Subsidiary or any of its assets; or
H. the Company or any member of the "controlled group" (as such term
is used in the Internal Revenue Code of 1986 and ERISA and the applicable
regulations thereunder) that includes the Company shall fail to pay when due any
amount that it shall have become liable to pay to the PBGC or to a Plan under
Title IV of ERISA; or notice of intent to terminate a Plan or Plans shall be
filed under Title IV of ERISA by the Company, any member of such 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 the Company
and such proceedings shall not have been dismissed within 30 days thereafter; 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;
then, and in any such event, so long as the same may be continuing, the Agent
may, and upon the request of the Required Banks shall, by notice in writing to
the Company, declare all amounts owing with respect to this Agreement and the
Notes to be, and they shall thereupon forthwith become, immediately due and
payable, without presentment, demand, protest or other notice of any kind, all
of which are hereby expressly waived by the Company; provided that in the event
of any Event of Default specified in paragraph E, all such amounts shall become
immediately due and payable automatically and without requirement of notice from
the Agent or any Bank.
<PAGE>
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10.2 TERMINATION OF COMMITMENTS. If any one or more of the Events of
Default specified in Section 10.1E shall occur, any unused portion of the credit
hereunder shall forthwith terminate and each of the Banks shall be relieved of
all obligations to make Loans to the Company. If any other Event of Default
shall have occurred and be continuing, the Agent may and, upon the request of
the Required Banks, shall, by notice to the Company, terminate the unused
portion of the credit hereunder, and upon such notice being given such unused
portion of the credit hereunder shall terminate immediately and each of the
Banks shall be relieved of all further obligations to make Loans. If any such
notice is given to the Company the Agent will forthwith furnish a copy
thereof to each of the Banks. No termination of the credit hereunder shall
relieve the Company of any of the obligations or any of its existing obligations
to any of the Banks arising under other agreements or instruments.
10.3 REMEDIES. In case any one or more of the Events of Default
shall have occurred and be continuing, and whether or not the Banks shall have
accelerated the maturity of the Loans pursuant to Section 10.1, each Bank, if
owed any amount with respect to the Loans, may, with the consent of the Required
Banks but not otherwise, proceed to protect and enforce its rights by suit in
equity, action at law or other appropriate proceeding, whether for the specific
performance of any covenant or agreement contained in this Agreement or any
instrument pursuant to which the obligations to such Bank are evidenced,
including as permitted by applicable law the obtaining of the ex parte
appointment of a receiver, and, if such amount shall have become due, by
declaration or otherwise, proceed to enforce the payment thereof or any other
legal or equitable right of such Bank. No remedy herein conferred upon any Bank
or the Agent or the holder of any Note 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 any other provision of law.
<PAGE>
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SECTION 11. THE AGENT
11.1 AUTHORIZATION.
A. The Agent is authorized to take such action on behalf of each of
the Banks and to exercise all such powers as are hereunder and under any of the
other Loan Documents and any related documents delegated to the Agent, together
with such powers as are reasonably incident thereto, provided that no duties or
responsibilities not expressly assumed herein or therein shall be implied to
have been assumed by the Agent.
B. The relationship between the Agent and each of the Banks is that
of an independent contractor. The use of the term "Agent" is for convenience
only and is used to describe, as a form of convention, the independent
contractual relationship between the Agent and each of the Banks. Nothing
contained in this Credit Agreement nor the other Loan Documents shall be
construed to create an agency, trust or other fiduciary relationship between the
Agent and any of the Banks.
C. As an independent contractor empowered by the Banks to exercise
certain rights and perform certain duties and responsibilities hereunder and
under the other Loan Documents, the Agent is nevertheless a "representative" of
the Banks, as that term is defined in Article 1 of the Uniform Commercial Code,
for purposes of actions for the benefit of the Banks and the Agent with respect
to all collateral security and guaranties contemplated by the Loan Documents.
Such actions include the designation of the Agent as "secured party",
"mortgagee" or the like on all financing statements and other documents and
instruments, whether recorded or otherwise, relating to the attachment,
perfection, priority or enforcement of any security interests, mortgages or
deeds of trust in collateral security intended to secure the payment or
performance of any of the Obligations, all for the benefit of the Banks and the
Agent.
11.2 EMPLOYEES AND AGENTS.
The Agent may exercise its powers and execute its duties by or through employees
or agents and shall be entitled to take, and to rely on, advice of counsel
concerning all matters pertaining to its rights and duties under this Agreement
and the other Loan Documents. The Agent may utilize the services of such
Persons as the Agent in its sole discretion may reasonably determine.
11.3 NO LIABILITY.
Neither the Agent nor any of its shareholders, directors, officers or employees
nor any other Person assisting them in their duties nor any agent or employee
thereof, shall be liable for any waiver, consent or approval given or any action
taken, or omitted to be taken, in good faith by it or them hereunder or under
any of the other Loan Documents, or in connection herewith or therewith, or be
responsible for the consequences of any oversight or error of judgment
whatsoever, except that the Agent or such other Person, as the case may be, may
be liable for losses due to its willful misconduct or gross negligence.
<PAGE>
-31-
11.4 NO REPRESENTATIONS.
The Agent shall not be responsible for the execution or validity or
enforceability of this Agreement, the Notes, any of the other Loan Documents or
any instrument at anytime constituting, or intended to constitute, collateral
security for the Notes, or for the value of any such collateral security or for
the validity, enforceability or collectability of any such amounts owing with
respect to the Notes, or for any recitals or statements, warranties or
representations made herein or in any of the other Loan Documents or in any
certificate or instrument hereafter furnished to it by or on behalf of the
Company, or be bound to ascertain or inquire as to the performance or observance
of any of the terms, conditions, covenants or agreements herein or in any
instrument at any time constituting, or intended to constitute, collateral
security for the Notes or to inspect any of the properties, books or records of
the Company or any of its Subsidiaries. The Agent shall not be bound to
ascertain whether any notice, consent, waiver or request delivered to it by the
Company or any holder of any of the Notes shall have been duly authorized or is
true, accurate and complete. The Agent has not made nor does it now make any
representations or warranties, express or implied, nor does it assume any
liability to the Banks, with respect to the credit worthiness or financial
conditions of the Company or any of its Subsidiaries. Each Bank acknowledges
that it has, independently and without reliance upon the Agent or any other
Bank, and based upon such information and documents as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement.
11.5 PAYMENTS.
A. A payment by the Company to the Agent hereunder or pursuant to any
of the other Loan Documents for the account of any Bank shall constitute a
payment to such Bank. The Agent agrees promptly to distribute to each Bank such
Bank's pro rata share of payments received by the Agent for the account of the
Banks except as otherwise expressly provided herein or in any of the other Loan
Documents.
B. If in the opinion of the Agent the distribution of any amount
received by it in such capacity hereunder, under the Notes or under any of the
other 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.
C. Notwithstanding anything to the contrary contained in this
Agreement or any of the other Loan Documents, any Bank that fails (i) to make
available to the Agent its pro rata share of any Loan or (ii) to comply with the
provisions of Section 14.12 with respect to making dispositions and arrangements
with the other Banks, where such Bank's share of any payment received, whether
by setoff or otherwise, is in excess of its pro rata share of such payments due
and payable to all of the Banks, in each case as, when and to the full extent
required by the provisions of this Agreement, shall be deemed delinquent (a
"Delinquent Bank") and shall be deemed a Delinquent Bank until such time as such
delinquency is satisfied. A Delinquent Bank shall be deemed to have assigned
any and all payments due to it from the Company, whether on account of
outstanding Loans, interest, fees or otherwise, to the remaining nondelinquent
Banks for application to, and reduction of, their respective pro rata shares of
all outstanding Loans. The Delinquent Bank hereby authorizes the Agent to
distribute such payments to the nondelinquent Banks in proportion to their
respective pro rata shares of all outstanding Loans. A Delinquent Bank shall be
deemed to have satisfied in full a delinquency when and if, as a result of
application of the assigned payments to all outstanding Loans of the
nondelinquent Banks, the Banks' respective pro rata shares of all outstanding
Loans have returned to those in effect immediately prior to such delinquency and
without giving effect to the nonpayment causing such delinquency.
<PAGE>
-32-
11.6 HOLDERS OF NOTES. The Agent may deem and treat the payee of any
Note as the absolute owner thereof for all purposes hereof until it shall have
been furnished in writing with a different name by such payee or by a subsequent
holder.
11.7 INDEMNITY. The Banks ratably agree hereby to indemnify and hold
harmless the Agent from and against any and all claims, actions and suits
(whether groundless or otherwise), losses, damages, costs, expenses
(including any expenses for which the Agent has not been reimbursed by the
Company as required by Section 8.8), and liabilities of every nature and
character arising out of or related to this Agreement, the Notes, or any of the
other Loan Documents or the transactions contemplated or evidenced hereby or
thereby, or the Agent's actions taken hereunder or thereunder, except to the
extent that any of the same shall be directly caused by the Agent's willful
misconduct or gross negligence.
11.8 AGENT AS BANK. In its individual capacity, FNBB shall have the
same obligations and the same rights, powers and privileges in respect to its
Commitment and the Loans made by it, and as the holder of any of the Notes, as
it would have were it not also the Agent.
11.9 RESIGNATION. The Agent may resign at any time by giving thirty
(30) days prior written notice thereof to the Banks and the Company. Upon any
such resignation, the Required Banks shall have the right to appoint a successor
Agent. Unless a Default or Event of Default shall have occurred and be
continuing, such successor Agent shall be reasonably acceptable to the Company.
If no successor Agent shall have been so appointed by the Required Banks and
shall have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Banks, appoint a successor Agent, which shall be a financial institution
having a rating of not less than A or its equivalent by Standard & Poor's
Corporation. 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 and the other Loan Documents 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.
SECTION 12. SURVIVAL OF COVENANTS, ETC.
All covenants, agreements, representations and warranties made herein,
in the Notes, in any of the other Loan Documents or in any documents or other
papers delivered by or on behalf of the Company or any of its Subsidiaries
pursuant hereto shall be deemed to have been relied upon by the Banks and the
Agent, notwithstanding any investigation heretofore or hereafter made by any of
them, and shall survive the making by the Banks of the Loans, as herein
contemplated, and shall continue in full force and effect so long as any amount
due under this Agreement or the Notes or any of the other Loan Documents remains
outstanding or any Bank has any obligation to make any Loans, and for such
further time as may be otherwise expressly specified in this Agreement. All
statements contained in any certificate or other paper delivered to any Bank or
the Agent at any time by or on behalf of the Company or any of its Subsidiaries
pursuant hereto or in connection with the transactions contemplated hereby shall
constitute representations and warranties by the Company or such Subsidiary
hereunder.
SECTION 13. ASSIGNMENT AND PARTICIPATION
13.1 CONDITIONS TO ASSIGNMENT BY BANKS. Except as provided herein,
each Bank may assign to one or more Eligible Assignees all or a portion of its
interests, rights and obligations under this Agreement (including all or a
portion of its Commitment Percentage and Commitment and the same portion of the
Loans at the time owing to it) and the Notes held by it; provided that (a) each
of the Agent and the Company shall have given its prior written consent to such
assignment, which consent, in the case of the Company, will not be unreasonably
withheld, (b) each such assignment shall be of a constant, and not a varying,
percentage of all the assigning Bank's rights and obligations under this
Agreement, (c) each assignment shall be in a minimum amount of $5,000,000 and an
amount that is a whole multiple of $1,000,000, (d) after giving effect to the
assignment the minimum Commitment of the assignor Bank shall be $5,000,000 and
(e) the parties to such assignment shall execute and deliver to the Agent, for
recording in the Register (as hereinafter defined), an Assignment and
Acceptance, substantially in the form of Exhibit F hereto (an "Assignment and
Acceptance"), together with any Notes subject to such assignment. Upon such
execution, delivery, acceptance and recording, from and after the effective date
specified in each Assignment and Acceptance, which effective date shall be at
least five (5) Business Days after the execution thereof, (x) the assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Bank hereunder,
and (y) the assigning Bank shall, to the extent provided in such assignment and
upon payment to the Agent of the registration fee referred to in Section 13.3,
be released from its obligations under this Agreement.
<PAGE>
-33-
13.2 CERTAIN REPRESENTATIONS AND WARRANTIES; LIMITATIONS; COVENANTS.
By executing and delivering an Assignment and Acceptance, the parties to the
assignment thereunder confirm to and agree with each other and the other parties
hereto as follows:
A. other than the representation and warranty that it is the legal
and beneficial owner of the interest being assigned thereby free and clear of
any adverse claim, the assigning Bank makes no representation or warranty,
express or implied, and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement, the other Loan Documents or any other
instrument or document furnished pursuant hereto or the attachment, perfection
or priority of any security interest or mortgage;
B. the assigning Bank makes no representation or warranty and assumes
no responsibility with respect to the financial condition of the Company and its
Subsidiaries or any other Person primarily or secondarily liable in respect of
any of the obligations, or the performance or observance by the Company and its
Subsidiaries or any other Person primarily or secondarily liable in respect of
any of the obligations of any of their obligations under this Agreement or any
of the other Loan Documents or any other instrument or document furnished
pursuant hereto or thereto;
C. such assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements referred
to in Section 8.5 and 8.6 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance;
D. such assignee will, independently and without reliance upon the
assigning Bank, the Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement;
E. such assignee represents and warrants that it is an Eligible
Assignee;
F. such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
and the other loan documents as are delegated to the Agent by the terms hereof
or thereof, together with such powers as are reasonably incidental thereto;
G. such assignee agrees that it will perform in accordance with their
terms all of the obligations that by the terms of this Agreement are required to
be performed by it as a Bank; and
H. such assignee represents and warrants that it is legally authorized
to enter into such Assignment and Acceptance.
<PAGE>
-34-
13.3 REGISTER. The Agent shall maintain a copy of each Assignment
and Acceptance delivered to it and a register or similar list (the "Register")
for the recordation of the names and addresses of the Banks and the Commitment
Percentage of, and principal amount of the Revolving Credit Loans owing to the
Banks from time to time. The entries in the Register shall be conclusive, in
the absence of manifest error, and the Company, the Agent and the Banks may
treat each Person whose name is recorded in the Register as a Bank hereunder for
all purposes of this Agreement. The Register shall be available for inspection
by the Company and the Banks at any reasonable time and from time to time upon
reasonable prior notice. Upon each such recordation, the assigning Bank agrees
to pay to the Agent a registration fee in the sum of $2,500.
13.4 NEW NOTES. Upon its receipt of an Assignment and Acceptance
executed by the parties to such assignment, together with each Note subject to
such assignment, the Agent shall (a) record the information contained therein in
the Register, and (b) give prompt notice thereof to the Company and the Banks
(other than the assigning Bank). Within five (5) Business Days after receipt of
such notice, the Company, at its own expense, shall execute and deliver to the
Agent, in exchange for each surrendered Note, a new Note to the order of such
Eligible Assignee in an amount equal to the amount assumed by such Eligible
Assignee pursuant to such Assignment and Acceptance and, if the assigning Bank
has retained some portion of its obligations hereunder, a new Note to the order
of the assigning Bank in an amount equal to the amount retained by it hereunder.
Such new Notes shall provide that they are replacements for the surrendered
Notes, shall be in an aggregate principal amount equal to the aggregate
principal amount of the surrendered Notes, shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially the form
of the assigned Notes. Within five (5) Business Days of issuance of any new
Notes pursuant to this Section 13.4, the Company shall deliver an opinion of
counsel, addressed to the Banks and the Agent, relating to the due
authorization, execution and delivery of such new Notes and the legality,
validity and binding effect thereof, in form and substance satisfactory to the
Banks. The surrendered Notes shall be cancelled and returned to the Company.
13.5 PARTICIPATIONS. Each Bank may sell participations to one or
more banks or other entities in all or a portion of such Bank's rights and
obligations under this Agreement and the other loan documents; provided that (a)
each such participation shall be in an amount of not less than $5,000,000, (b)
any such sale or participation shall not affect the rights and duties of the
selling Bank hereunder to the Company and (c) the only rights granted to the
participant pursuant to such participation arrangements with respect to waivers,
amendments or modifications of the Loan Documents shall be the rights to approve
waivers, amendments or modifications that would reduce the principal of or the
interest rate on any Loans, extend the term or increase the amount of the
Commitment of such Bank as it relates to such participant, reduce the amount of
any commitment fees to which such participant is entitled or extend any
regularly scheduled payment date for principal or interest.
13.6 ASSIGNEE OR PARTICIPANT AFFILIATED WITH THE COMPANY. If any
assignee Bank is an Affiliate of the Company, then any such assignee Bank shall
have no right to vote as a Bank hereunder or under any of the other Loan
Documents for purposes of granting consents or waivers or for purposes of
agreeing to amendments or other modifications to any of the Loan Documents or
for purposes of making requests to the Agent pursuant to Section 10, and the
determination of the Required Banks shall for all purposes of this Agreement and
the other Loan Documents be made without regard to such assignee Bank's interest
in any of the Loans. If any Bank sells a participating interest in any of the
Loans to a participant, and such participant is the Company or an Affiliate of
the Company, then such transferor Bank shall promptly notify the Agent of the
sale of such participation. A transferor Bank shall have no right to vote as a
Bank hereunder or under any of the other loan documents for purposes of granting
consents or waivers or for purposes of agreeing to amendments or modifications
to any of the Loan Documents or for purposes of making requests to the Agent
pursuant to Section 10 to the extent that such participation is beneficially
owned by the Company or any Affiliate of the Company, and the determination of
the Majority Banks shall for all purposes of this Agreement and the other Loan
Documents be made without regard to the interest of such transferor Bank in the
Loans to the extent of such participation.
<PAGE>
-35-
13.7 MISCELLANEOUS ASSIGNMENT PROVISIONS. Any assigning Bank shall
retain its rights to be indemnified pursuant to Section 8.9 with respect to any
claims or actions arising prior to the date of such assignment. If any assignee
Bank is not incorporated under the laws of the United States of America or any
state thereof, it shall, prior to the date on which any interest or fees are
payable hereunder or under any of the other Loan Documents for its account,
deliver to the Company and the Agent certification as to its exemption from
deduction or withholding of any United States federal income taxes. If any
Reference Bank transfers all of its interest, rights and obligations under this
Agreement, the Agent shall, in consultation with the Company and with the
consent of the Company and the Required Banks, appoint another Bank to act as a
Reference Bank hereunder. Anything contained in this Section 13 to the contrary
notwithstanding, any Bank may at any time pledge all or any portion of its
interest and rights under this Agreement (including all or any portion of its
Notes) to any of the twelve Federal Reserve Banks organized under Section 4 of
the Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or the
enforcement thereof shall release the pledgor Bank from its obligations
hereunder or under any of the other Loan Documents.
13.8 ASSIGNMENT BY COMPANY. The Company shall not assign or transfer
any of its rights or obligations under any of the Loan Documents without the
prior written consent of each of the Banks.
SECTION 14. MISCELLANEOUS
14.1 SURVIVAL OF WARRANTIES. All agreements, representations and
warranties made herein shall survive the execution and delivery of this
Agreement and the making of the Loans hereunder.
14.2 FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the
part of the Banks in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other power, right or privilege. All rights and remedies existing under
this Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
14.3 MODIFICATION. Neither this Agreement nor any provision hereof
or thereof may be amended, waived, discharged or terminated except by a written
instrument amending, waiving, discharging or terminating such provision, as the
case may be, signed by the Required Banks and, in the case of amendments, by the
Company; provided that any amendment or waiver that changes (a) any required
payment date, (b) any of the rates of interest that may be charged on the Loans,
(c) any fees payable to any Bank (which for purposes of this Section 14.3 only
shall not include fees payable to the Agent), (d) the Commitments of any Bank,
(e) the rate of amortization of any Loan, (f) the definitions of "Required
Banks", or (g) the release of any guarantor or any substantial amount of any
collateral for the Loans, shall require a written instrument signed by all the
Banks, and provided, further, that any amendment to Section 11 or that otherwise
purports to affect the rights and liabilities of the Agent hereunder shall also
be signed by the Agent.
14.4 NOTICES. Except as otherwise expressly provided herein, any
notice herein required or permitted to be given shall be in writing and may be
personally served or sent by United States mail, and shall be deemed to have
been given when deposited in the United States mail, registered, with postage
prepaid, or sent by telex, answerback received, or electronic facsimile
transmission, receipt acknowledged, or delivered to an overnight courier, in
each case properly addressed. For the purposes hereof, the addresses of the
parties hereto (until notice of a change thereof served as provided in this
Section 14.4) shall be as follows:
Acuson Corporation
1220 Charleston Road
P.O. Box 7393
Mountain View, California 94039-7393
Attn: Treasurer
with a copy to:
Cooley Godward Castro Huddleson & Tatum
One Maritime Plaza, 20th Floor
San Francisco, California 94111-3580
Attn: Joseph A. Scherer, Esq.
The First National Bank of Boston
100 Federal Street
Boston, Massachusetts 02110
Attn: High Technology Division Executive
Re: Acuson Corporation
with a copy to:
The First National Bank of Boston
435 Tasso Street, Suite 250
Palo Alto, California 94301
Attn: High Technology Division
<PAGE>
-36-
14.5 SEVERABILITY. In case any provision in this Agreement shall be
invalid, illegal or unenforceable, such provision shall be severable from the
remainder of such contract and the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
14.6 APPLICABLE LAW. This Agreement and all documents provided for
herein and the rights and obligations of the parties thereto shall be deemed to
be documents executed under seal and shall be governed by the laws of the
Commonwealth of Massachusetts. The Banks retain all of their rights under
federal law, including those relating to the charging of interest rates.
14.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
14.8 SECTION HEADINGS. The various headings used in this Agreement are
inserted for convenience only and shall not affect the meaning or
interpretations of this Agreement or any provision hereof.
14.9 CONFIDENTIALITY. The Banks agree that they shall maintain
confidentiality with regard to nonpublic information concerning the Company
obtained from the Company, provided that the Banks shall not be precluded from
making disclosure regarding such information: (a) to the Banks' counsel,
accountants and other professional advisors, (b) in response to a subpoena or
order of a court or governmental agency, (c) to any entity participating or
considering participating in any credit made under this Agreement, provided that
such entity agrees in writing to be bound by these confidentiality provisions,
(d) to any guarantor or subordinated lender with respect to this Agreement, (e)
as required by law or applicable regulation, or (f) to any Person and in any
proceeding necessary in any Bank's judgment to protect such Bank's interest in
connection with any claim or dispute involving such Bank, provided that such
Bank first give notice to the Company of its intent to disclose such information
and further give the Company the opportunity to seek a protective order or other
appropriate means of insuring the confidentiality of such information in such
proceeding.
<PAGE>
-37-
14.10 FURTHER ASSURANCES. At any time or from time to time upon the
request of the Banks, the Company will execute and deliver such further
documents and do such other acts and things as the Banks may reasonably request
in order to effect fully the purposes of this Agreement and to provide for the
payment of the credit made hereunder and interest thereon in accordance with the
terms of this Agreement.
14.11 FUTURE CREDIT. The Company acknowledges that the credit extended
under the terms of this Agreement is the only credit committed to by the Banks
and that the Banks have not committed to any future credit of any kind, nor have
the Banks made promises or commitments to consider future financing of the
Company.
14.12 SHARING OF SETOFFS. Regardless of the adequacy of any
collateral, during the continuance of any Event of Default, any deposits or
other sums credited by or due from any of the Banks to the Company and any
securities or other properties of the Company in possession of such Bank may be
applied to or set off by such Bank against the payment of obligations of the
Company and any and all other liabilities, direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, of the
Company to such Bank. Unless otherwise expressly provided herein, all interest,
fees and principal payments on the Loans to the Company hereunder are to be
divided among the Banks in the same proportion as each Bank's Commitment
Percentage. Any sums obtained from the Company or any Subsidiary by any Bank by
reason of the exercise of its rights of setoff or banker's lien or otherwise
shall be shared among all the Banks in the same proportion and applied first to
indebtedness of the Company under this Agreement. Nothing in this Section shall
be deemed to require the sharing among the Banks of collections (other than by
setoff or banker's lien) with respect to any other indebtedness of the Company
or any Subsidiary to any Bank.
SECTION 15. TRANSITIONAL ARRANGEMENTS
15.1 ORIGINAL CREDIT AGREEMENT SUPERSEDED. This Agreement shall as of
the Effective Date supersede the Original Credit Agreement in its entirety,
except as provided in this Section 15. On the Effective Date, the rights and
obligations of the parties evidenced by the Original Credit Agreement shall be
evidenced by the Agreement and other Loan Documents, and the "Revolving Credit
Loans" as defined in the Original Credit Agreement shall be converted to
Revolving Credit Loans as defined herein.
15.2 INTEREST AND FEES UNDER SUPERSEDED AGREEMENT. All interest and
fees and expenses, if any, owing or accruing under or in respect of the Original
Credit Agreement through the Closing Date shall be calculated as of the Closing
Date (prorated in the case of any fractional periods), and shall be paid in
accordance with the method, and on the dates, specified in the Original Credit
Agreement, as if the Original Credit Agreement were still in effect. Commencing
on the Closing Date, the commitment fees shall be payable by the Company to the
Agent for the account of the Banks in accordance with Section 2.8.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
WITNESS the due execution hereof as of the date first above written.
ACUSON CORPORATION,
A Delaware corporation
By:_____________________________________
Title:____________________________________
By:______________________________________
Title:_____________________________________
THE FIRST NATIONAL BANK
OF BOSTON, individually and as Agent
By:______________________________________
Title:_____________________________________
ABN AMRO BANK N.V. - San Francisco
International Branch
By:______________________________________
Title:_____________________________________
By:______________________________________
Title:_____________________________________
<PAGE>
________________________________________________________________________________
ACUSON CORPORATION EXHIBIT 11.1
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
FOR THE QUARTER ENDED APRIL 1, 1995
In accordance with Accounting Principles Board Opinion No. 15, the Company
used the modified treasury stock method in computing the first quarter 1995
earnings per share.
The following is the computation of earnings per share:
<TABLE>
<S> <C>
Number of shares outstanding at April 1, 1995..................................... 28,785,008
Number of shares assumed to be repurchased (limited to 20%
of number of shares outstanding)............................................... 5,757,002
Multiply by market value per common share......................................... $ 13.87
-----------
Cost to repurchase................................................................ $79,849,618
Assumed proceeds to the Company had everyone exercised outstanding stock options.. 86,653,681
-----------
Excess assumed proceeds available................................................. 6,804,063
Multiply by average interest rate for the period.................................. 1.25%
-----------
Assumed interest on excess funds.................................................. 85,051
Less: tax provision............................................................... 24,665
-----------
Adjustment to net income.......................................................... 60,386
Add: net income.................................................................. 2,239,000
-----------
Adjusted net income............................................................... $ 2,299,386
===========
Divided by weighted shares outstanding, including common stock
equivalents.................................................................... 29,952,594
-----------
Fiscal period earnings per share.................................................. $0.08
=====
</TABLE>
________________________________________________________________________________
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> APR-01-1995
<CASH> 40,801
<SECURITIES> 33,612
<RECEIVABLES> 80,378
<ALLOWANCES> 3,510
<INVENTORY> 48,567
<CURRENT-ASSETS> 238,339
<PP&E> 145,846
<DEPRECIATION> 96,412
<TOTAL-ASSETS> 311,282
<CURRENT-LIABILITIES> 103,024
<BONDS> 0
<COMMON> 81,377
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 311,282
<SALES> 68,645
<TOTAL-REVENUES> 87,966
<CGS> 31,846
<TOTAL-COSTS> 40,483
<OTHER-EXPENSES> 45,321
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (991)
<INCOME-PRETAX> 3,153
<INCOME-TAX> 914
<INCOME-CONTINUING> 2,239
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,239
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.08
</TABLE>
