UNITED STATES 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 JULY 31, 1994
[ ] 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: 0-2537
OPTICAL COATING LABORATORY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State Or Other Jurisdiction Of Incorporation Or Organization)
68-0164244
(I.R.S. Employer Identification No.)
2789 NORTHPOINT PARKWAY, SANTA ROSA, CA 95407-7397
(Address Of Principal Executive Offices)
(707) 545-6440
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Classes of Common Stock
COMMON STOCK, $.01 PAR VALUE
Outstanding at August 31, 1994: 8,977,794
This document contains 18 pages.
The Exhibit listing appears on Page 16.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
July 31, October 31,
1994 1993
ASSETS
Current Assets:
Cash and short-term investments $ 16,458 $ 2,284
Accounts receivable, net of allowance for
doubtful accounts of $1,617 and $1,817 22,342 19,850
Inventories 9,435 11,605
Income tax receivable 2,043
Deferred income tax assets 4,297 4,510
Other current assets 2,380 1,061
TOTAL CURRENT ASSETS 54,912 41,353
Other Assets and Investments 9,190 8,949
Property, Plant and Equipment:
Land and improvements 8,525 8,380
Buildings and improvements 26,870 26,317
Machinery and equipment 76,358 72,429
Construction-in-progress 3,806 3,470
115,559 110,596
Less accumulated depreciation (65,277) (61,672)
PROPERTY, PLANT AND EQUIPMENT - NET 50,282 48,924
$114,384 $ 99,226
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 4,303 $ 4,243
Accrued expenses 7,458 7,694
Accrued compensation expenses 4,809 5,309
Income taxes payable 188
Current maturities on long-term debt 4,751 6,702
Notes payable 582 490
Deferred revenue 677 664
TOTAL CURRENT LIABILITIES 22,768 25,102
Accrued postretirement health benefits
and pension liabilities 1,841 1,767
Deferred income tax liabilities 2,024 2,112
Long-term debt 37,817 23,110
Stockholders' Equity:
Common stock, $.01 par value; authorized
30,000,000 shares; issued and outstanding
8,978,000 and 8,972,000 shares 90 90
Paid-in capital 39,967 39,930
Retained earnings 10,809 8,526
Cumulative foreign currency translation
adjustment (932) (1,411)
TOTAL STOCKHOLDERS' EQUITY 49,934 47,135
$114,384 $ 99,226
See Notes to Consolidated Financial Statements
OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three and Nine Months Ended July 31, 1994 and 1993
(Dollars in thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
July 31, July 31,
1994 1993 1994 1993
Net sales and other revenues $33,403 $31,497 $97,038 $91,900
COSTS AND EXPENSES:
Cost of sales 22,039 23,428 61,600 60,815
Research and development 1,434 1,769 3,889 4,690
Selling and administrative 7,402 7,664 23,086 22,121
Restructuring charges 8,637 8,637
Amortization of intangibles 173 138 489 322
Total costs and expenses 31,048 41,636 89,064 96,585
Earnings (loss) from
operations 2,355 (10,139) 7,974 (4,685)
OTHER INCOME (EXPENSE):
Interest income 113 33 131 111
Interest expense (899) (795) (2,313) (2,265)
Earnings (loss) before
income taxes 1,569 (10,901) 5,792 (6,839)
Income taxes (credit) 659 (4,079) 2,433 (2,455)
Net earnings (loss) $ 910 $(6,822) $3,359 $(4,384)
Net earnings (loss) per
share $ .10 $ (.77) $ .37 $ (.50)
See Notes to Consolidated Financial Statements
OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Nine Months Ended July 31, 1994
(Amounts in thousands)
(Unaudited)
FOREIGN
COMMON STOCK PAID IN RETAINED CURRENCY
SHARES AMOUNT CAPITAL EARNINGS TRANSLATION
Balance at November 1, 1993 8,972 $90 $39,930 $8,526 $(1,411)
Exercise of stock options,
including tax benefit and
shares issued to directors 6 37
Foreign currency
translation 479
adjustment for the period
Net earnings for the period 3,359
Dividend on common stock (1,076)
Balance at July 31, 1994 8,978 $ 90 $39,967 $10,809 $ (932)
See Notes to Consolidated Financial Statements
OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three and Nine Months ended July 31, 1994 and 1993
(Amounts in thousands)
(Unaudited)
Three Months Ended Nine Months Ended
July 31, July 31,
1994 1993 1994 1993
CASH FLOWS FROM OPERATING
ACTIVITIES:
Cash received from customers $35,244 $34,511 $98,052 $95,664
Interest received 90 5 103 88
Cash paid to suppliers and
employees (31,516) (28,161) (86,042) (84,049)
Cash paid to ESOP+ (266) (660)
Interest paid (640) (1,114) (1,882) (2,041)
Income taxes paid, net
of refunds 209 (1,044) (194) (3,348)
Net cash provided by
operating activities 3,121 4,197 9,377 6,314
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of plant and equipment (2,196) (2,608) (5,974) (6,761)
Cash portion of payment for
purchase of MMG, net of cash
acquired (3,443)
Net cash used for
investing activities (2,196) (2,608) (5,974) (10,204)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from notes payable 160 683 342 1,958
Proceeds from exercise of
stock options 223 16 1,834
Proceeds from debt borrowings 18,000 22,000 1,260
Payment of long-term debt (6,678) (645) (10,294) (3,969)
Payment of notes payable (10) (217) (291) (1,862)
Payment of dividend on common
stock (538) (534) (1,076) (1,043)
Net cash provided by (used for)
financing activities 10,934 (490) 10,697
(1,822)
Effect of exchange rate
changes on cash 36 (99) 74
(186)
Net increase (decrease) in cash
and cash equivalents 11,895 1,000 14,174 (5,898)
Cash and cash equivalents at
beginning of period 4,563 2,284
3,160 10,058
Cash and cash equivalents at
end of period $16,458 $4,160 $16,458 $ 4,160
OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three and Nine Months Ended July 31, 1994 and 1993
(Amounts in thousands)
(Unaudited)
Three Months Ended Nine Months Ended
July 31, July 31,
1994 1993 1994 1993
RECONCILIATION OF NET EARNINGS
(LOSS) TO CASH FLOWS FROM
OPERATING ACTIVITIES:
Net earnings (loss) $ 910 $(6,822) $3,359 $(4,384)
Adjustments to reconcile net
earnings (loss) to net cash
provided by (used for)
operating activities:
Depreciation and 1,974 1,919 5,577 5,607
amortization
Loss on disposal or
abandonment of equipment 327 4,686 545 4,981
Other non-cash adjustments
to net earnings (53) (47) (74) 376
(Increase) decrease in
accounts receivable (134) 3,413 (1,856) 2,433
(Increase) decrease in
inventories 1,647 1,777 2,424 1,855
(Increase) decrease in
income tax recoverable (2,784) 2,044 (2,784)
(Increase) decrease in
deferred income tax assets 236 (434) 213 (434)
(Increase) decrease in
other current assets and
other assets and
investments (959) (239) (1,609) (1,659)
Increase (decrease) in
accounts payable, accrued
expenses and accrued
compensation expenses (986) 4,610 (1,309) 2,662
Increase (decrease) in
deferred revenue 93 90 13 150
Increase (decrease) in
accrued postretirement
health benefits and
pension liabilities 31 20 55 60
Increase (decrease) in
deferred income tax
liabilities (132) (1,725) (182) (1,708)
Increase (decrease) in
income taxes payable 167 (267) 177 (841)
Total adjustments
2,211 11,019 6,018 10,698
Net cash provided by
operating activities $3,121 $4,197 $9,377 $6,314
Supplemental Schedule of Non-Cash Investing and Financing
Activities:
Effective December 31, 1992, the Company acquired MMG
Glastechnik GmbH (MMG) for approximately $3.4 million in cash
and approximately $9.3 million of notes payable to the
sellers. Cash and noncash components of the acquisition were
as follows:
Fair value of assets
acquired, including intangibles $ 22,865
Cash acquired (16)
Liabilities assumed (10,141)
Notes payable to sellers (9,265)
Net cash paid $ 3,443
See Notes to Consolidated Financial Statements
OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three and Nine Months Ended July 31, 1994 and 1993
(Unaudited)
1. GENERAL
The Consolidated Balance Sheet as of July 31, 1994, the
Consolidated Statements of Operations for the three and nine
month periods ended July 31, 1994 and 1993, the Consolidated
Statement of Stockholders' Equity for the nine month period
ended July 31, 1994 and the Consolidated Statements of Cash
Flows for the three and nine month periods ended July 31,
1994 and 1993 have been prepared by the Company without
audit. In the opinion of management, all adjustments,
consisting of normal recurring accruals, necessary to
present fairly the financial position, results of operations
and cash flows at July 31, 1994 and for the periods
presented have been made.
Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed
or omitted. It is suggested that these consolidated
financial statements be read in conjunction with the
financial statements and notes thereto included in the
Company's Annual Report to Stockholders for fiscal 1993.
Certain amounts in the 1993 consolidated financial
statements have been reclassified to conform with the
presentation in the 1994 consolidated financial statements.
The results of operations for the period ended July 31, 1994
are not necessarily indicative of the operating results
anticipated for the full year.
2. INVENTORIES
Inventories consisted of the following:
July 31, October 31,
1994 1993
(Amounts in thousands)
Raw materials and supplies $ 3,788 $ 5,730
Work-in-process and finished goods 5,647 5,875
$ 9,435 $11,605
3. ACCRUED EXPENSES
Accrued expenses consisted of the following:
July 31, October 31,
1994 1993
(Amounts in thousands)
Workers' compensation reserve $ 1,612 $ 1,897
Ground water remediation reserve 1,201 1,433
Other accrued liabilities 4,645 4,364
$ 7,458 $ 7,694
4. DEBT
Long-term debt consisted of:
July 31, October 31,
1994 1993
(Amounts in thousands)
Unsecured Senior Notes Interest at 8.71%
payable semiannually. Principal payable
in annual installments of $3.6 million
from 1998 through 2002. $18,000
Unsecured bank term loan, amortized in twelve
equal quarterly installments commencing
October 31,1994 and ending July 31, 1997.
Interest atapproximately 9.7% payable
quarterly. 6,000 $6,000
Term loan. Balance paid in March 1994. 2,750
Unsecured borrowings under bank line of credit.
Balance paid in 1994. 2,500
Land improvement assessment, at an average rate
of 6.75% interest, principal and interest
payable in semiannual installments of $77,000
through 1998. 518 627
Scottish Development Agency (SDA) building loan,
at 12%, with semiannual payments of approximately
$357,000, each comprising principal and interest
through 2006. Collateralized by the land and
building of the Company's Scottish subsidiary. 4,147 4,050
Notes payable to private parties in connection
with the purchase of MMG. Principal and interest
at 8% payable over ten years in quarterly
installments of approximately $400,000 through
2003. 8,032
8,187
Bank loans of MMG with interest rates from 4.5%
to 9.75%. Payable in annual and semiannual
installments through 2014. Partly secured by
mortgages on MMG land and buildings and liens
on equipment. 4,985 4,630
Present value of obligations of MMG under capital
leases at an assumed interest rate of 7.5%
payable in monthly installments through 2004. 693 789
European Coal and Steel Community loan to Scottish
subsidiary at 8.2%, with semiannual payments
of approximately $93,000, comprising principal
and interest through 1995. 193 279
42,568 29,812
Less current maturities (4,751) (6,702)
$ 37,817 $23,110
The Company has a $10 million credit facility with a bank
carrying a commitment fee of 1/2% per annum. $6.0 million of
the credit commitment is allocated to a term loan and becomes
available under the revolving credit segment as the term loan
is repaid on a quarterly basis over three years. The facility
expires on June 30, 1997. Additionally, the credit facility
covers a bank guarantee of approximately $4.0 million to
secure 50% of the notes payable arising from the purchase of
MMG. This guarantee facility carries a fee of 1.25% per annum.
The Company's subsidiary in Scotland has a credit arrangement
of up to approximately $450,000 with interest payable at
market rates. There were no borrowings under this credit
arrangement in 1993 or 1994.
On May 27, 1994, the Company completed the issuance of $18
million of unsecured Senior Notes, due in annual installments
of $3.6 million from June 1, 1998 through June 1, 2002, to a
group of insurance companies in a private placement. The notes
bear interest at 8.71%. $6.5 million of proceeds were used to
pay back the outstanding borrowings under the bank line of
credit.
At July 31, 1994, the Company had outstanding letters of
credit in the amount of $1.9 million to meet the requirements
under the Company's workers' compensation self insurance
plans, and the Company's subsidiary in Scotland had
outstanding letters of credit of approximately $300,000 to
guarantee payment of import duty.
5. ACQUISITION OF MMG
Effective December 31, 1992, the Company acquired MMG
MinnahYtte Maschinelle Glasbearbeitung GmbH, renamed MMG
Glastechnik GmbH (MMG), a precision glass fabricating company
in Germany. This acquisition was accounted for as a purchase.
Payment consisted of approximately $3.4 million in cash and
$9.3 million in ten year notes due the sellers which are
payable in equal quarterly installments of principal plus
interest at 8% per annum. In connection with the acquisition,
the Company assumed approximately $5.3 million of long-term
debt of MMG.
At July 31, 1994, other assets and investments includes $7.3
million of intangibles, principally goodwill, resulting from
the purchase of MMG, which are being amortized over 15 years.
6. STOCK OPTIONS
During the nine months ended July 31, 1994, the Company, under
its incentive compensation and employee stock option plans,
granted options to purchase 319,900 shares of the Company's
common stock at a price equal to 100% of the market price on
the date of grant. The Company canceled and regranted stock
options totaling 500,000 shares to one officer, the effect of
which was to extend the expiration dates of the options. These
options were not repriced and remain at or above the market
price of the CompanyOs common stock on the date of regrant. At
July 31, 1994, 1,344,095 shares are subject to outstanding
options, of which 930,120 options are exercisable. Options to
purchase 155,213 shares of common stock are available for
future grants under the plans.
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF MATERIAL CHANGES IN RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Net sales and other revenues for the third quarter of 1994
were $33.4 million, up 6% over net sales and other revenues of
$31.5 million for the third quarter of 1993. Net sales and
other revenues for the first nine months of 1994 were $97.0
million, up 6% over net sales and other revenues of $91.9
million for the same period of 1993. The increase in net sales
and other revenues for the third quarter and first nine months
of 1994 over comparative periods of 1993 was primarily due to
increased demand for the Company's fabricated mirror and glass
products for the office automation market.
During the third quarter and first nine months of 1994, the
Company estimates that it experienced price declines of
approximately 2%-4% in its OEM display product line and 8%-10%
in its fabricated glass product line. These price declines
were substantially offset by incremental volume in both product
areas. There were no other significant price changes in the
remainder of the Company's products during the third quarter
or the first nine months of 1994.
Cost of sales as a percent of sales was 66.0% for the third
quarter of 1994 and 74.4% for the third quarter of 1993 and
was 63.5% for the first nine months of 1994 and 66.2% for the
first nine months of 1993. These cost of sales percentages
exceed the Company's recent historical cost of sales
percentages which have approximated 60-62%. The third quarter
1994 cost of sales percentage reflects process start-up costs
in the Company's plastic display products area and low gross
margins in the Company's European technical products area due
to low volume. The third quarter of 1993 cost of sales
percentage reflects increased costs which included inventory
valuation provisions, above normal workers' compensation
expense and accrual for facility reorganization expense.
Research and development expenditures in the third quarter of
1994 decreased $335,000, or 19%, compared to the third quarter
of 1993 and for the first nine months of 1994 decreased
$801,000, or 17%, compared to the first nine months of 1993.
This reduction in research and development is primarily
attributable to management's decision to assign more of the
Company's technical resources to support improved manufacturing
activities.
Selling and administrative expenses for the third quarter of
1994, were $262,000 (3%) lower than in the third quarter of
1993. For the first nine months of 1994, selling and
administrative expenses were $965,000 (4%) higher compared to
the same period of 1993, primarily as a result of increased
sales staffing in the Company's Glare/Guard computer filter
products area and the establishment of regional sales offices
for the Santa Rosa Division.
During the third quarter of 1993, the Company recorded $8.6
million of restructuring charges. These restructuring charges
reflected staff reductions and abandonment and reduction of
the carrying value of certain equipment, inventory and other
assets.
Interest income in the third quarter of 1994 was up $80,000
from the third quarter of 1993 and, for the first nine months
of 1994, increased $20,000 from the same period of 1993. These
increases reflect the higher short-term investment balances on
hand in the current year periods. Interest expense for the
third quarter of 1994 increased $104,000, or 13%, from the
third quarter of 1993, and for the first nine months of 1994
increased $48,000, or 2%, over the same period of 1993.
Increased interest expense in the third quarter of 1993
reflects the increase in the Company's long-term debt.
As a result of the foregoing, the Company reported earnings
before income taxes of $1.6 million in the third quarter of
1994, compared to a loss before income taxes of $10.9 million,
including $8.6 of restructuring charges, in the third quarter
of 1993. For the first nine months of 1994, the Company
reported earnings before income taxes of $5.8 million,
compared to a loss before income taxes of $6.8 million,
including $8.6 million of restructuring charges, for the same
period of 1993.
The effective income tax rate applied against the earnings of
the third quarter and the first nine months of 1994 was 42.0%;
while the effective income tax rate relating to the loss for
the same periods of 1993 were 37.4% and 35.9%, because tax
benefits were not available to offset certain foreign losses.
As a result of the foregoing, the Company reported net
earnings of $910,000 in the third quarter of 1994, compared to
a net loss of $6.8 million in the third quarter of 1993. For
the first nine months of 1994, the Company reported net
earnings of $3.4 million, compared to a net loss of $4.4
million for the first nine months of 1993.
FINANCIAL CONDITION
During the three months ended July 31, 1994, the Company's
operating activities provided $3.1 million in cash flow of
which $2.2 million was utilized to purchase plant and
equipment. As part of its financing activities during this
period, the Company issued $18.0 million in unsecured Senior
Notes and on a net basis repaid $6.7 million of debt. As a
result of its operating and financing activities, the Company
increased its cash and short-term investment position by
$11.9 million during the three month period.
During the third quarter of 1994, the Company completed the
issuance of $18 million of unsecured Senior Notes in a private
placement. $6.5 million of the proceeds from this debt
offering were used to pay back outstanding borrowings under
the Company's bank line of credit. The borrowing was primarily
to restructure the Company's debt at a favorable interest rate
and provide the Company with additional liquidity for general
corporate purposes. The Senior Notes carry an interest rate of
8.71%, payable semiannually beginning in December 1994, with
principal repayment of $3.6 million per year from 1998 to
2002.
Also during the quarter, the Company renegotiated its bank
credit line arrangement. The available credit commitment under
this new credit line is $10 million, of which $6 million is
allocated to a term loan and becomes available under the
revolving credit segment as the term loan is repaid on a
quarterly basis over three years. The bank line of credit
arrangement also covers an approximate $4 million bank
guarantee. The bank line of credit arrangement expires on June
30, 1997.
Management believes that the cash on hand at July 31, 1994,
and cash anticipated to be generated from future operations
and the available credit from revolving credit arrangements
will be sufficient for the Company to meet its near-term
working capital needs, capital expenditures, debt service
requirements and payments of dividends as declared.
INDEPENDENT ACCOUNTANTS' REVIEW
The July 31,1994 consolidated financial statements included in
this filing on Form 10-Q have been reviewed by Deloitte &
Touche, independent accountants, in accordance with
established professional standards and procedures for such a
review.
The report of Deloitte & Touche LLP commenting on their review
follows.
INDEPENDENT ACCOUNTANTS' REPORT
To The Board of Directors and Stockholders
of Optical Coating Laboratory, Inc.
Santa Rosa, California
We have reviewed the accompanying condensed consolidated
balance sheet of Optical Coating Laboratory, Inc. and
subsidiaries as of July 31, 1994, and the related condensed
consolidated statements of operations and cash flows for the
three-month and nine-month periods ended July 31, 1994 and
1993 and the related condensed consolidated statement of
stockholders' equity for the nine-month period ended July 31,
1994. These financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards
established by the American Institute of Certified Public
Accountants. A review of interim financial information
consists of applying analytical review procedures to financial
data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than
an audit in accordance with generally accepted auditing
standards, the objective of which is the expression of an
opinion regarding the financial statements taken as whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to such condensed
consolidated financial statements for them to be in conformity
with generally accepted accounting principles.
We have previously audited, in accordance with generally
accepted auditing standards, the consolidated balance sheet of
Optical Coating Laboratory, Inc. and subsidiaries as of
October 31, 1993, and the related consolidated statements of
operations, stockholders' equity, and cash flows for the year
then ended (not presented herein); and in our report dated
December 17, 1993, we expressed an unqualified opinion on
those consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed
consolidated balance sheet as of October 31, 1993 is fairly
stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.
/s/ Deloitte & Touche LLP
August 17, 1994
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
During the quarter, the Company successfully defended a motion for
summary judgment in the ongoing patent litigation with Applied
Visions Limited. There were no other material developments in
legal proceedings since the report filed on Form 10-Q for the
quarter ended April 30, 1994.
Item 2. Changes In Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) The following are filed as Exhibits to
this Quarterly Report. The numbers refer to the
Exhibit Table of Item 601 of Regulation S-K.
(2) None
(4)(a) Note Purchase Agreement(s)
dated as of May 27, 1994 for the private
placement of $18,000,000 of 8.71% Senior
Notes due June 1, 2002 between the
Registrant and Connecticut Mutual Life
Insurance Company, Modern Woodman of
America and American Life and Casualty
Insurance Company.
(4)(b) Amended and Restated Credit
Agreement dated as of June 30, 1994
between the Registrant and Bank of
America NT&SA.
(10) None
(11) Computation of per share earnings
(loss) for the three and nine month
periods ended July 31, 1994 and 1993.
(15) Letter of Deloitte & Touche LLP
regarding unaudited interim financial
information.
(18) None
(19) None
(22) None
(23) None
(24) None
(27) Financial Data Schedule for the nine
months ended July 31, 1994.
(b) Reports on Form 8-K filed for the three
months ended July 31, 1994.
The Company filed a report on Form 8-K
dated May 27, 1994 which reported the
private placement of $18,000,000 of 8.71%
Senior Notes due June 1, 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
DATE: September 14, 1994 OPTICAL COATING LABORATORY, INC.
(Registrant)
By: /s/ Herbert M. Dwight, Jr.
President and Chief Financial Officer
(Principal Financial Officer)
4078534.04
AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of June 30, 1994
between
OPTICAL COATING LABORATORY, INC.
and
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS 1
1.01 Certain Defined Terms 1
1.02 Other Interpretive Provisions 16
1.03 Accounting Principles and Periods 17
ARTICLE II
THE CREDIT 17
2.01 Amount and Terms of Commitment 17
(a) The Term Credit 17
(b) The Revolving Credit 17
2.02 Loan Accounts 18
2.03 Procedure for Borrowing 18
2.04 Conversion and Continuation Elections 18
2.05 Voluntary Termination or Reduction of
Commitment 19
2.06 Optional Prepayments 20
2.07 Repayment 20
(a) The Term Credit 20
(b) The Revolving Credit 20
2.08 Interest 20
2.09 Fees 21
(a) Upfront Fee 21
(b) Commitment Fee 21
2.10 Computation of Fees and Interest 21
2.11 Payments by the Company 22
2.12 Prior Credit Agreements 22
ARTICLE III
THE LETTERS OF CREDIT; THE BIRCKHAHN GUARANTY 22
3.01 The Letter of Credit Subfacility. 22
3.02 Issuance, Amendment and Renewal of Letters
of
Credit 23
3.03 Existing Letter of Credit 25
3.04 Uniform Customs and Practice 25
3.05 Drawings and Reimbursements 25
3.06 The Birckhahn Guaranty 26
3.07 Obligations Absolute 26
3.08 Cash Collateral Pledge 26
3.09 Letter of Credit and Birckhahn Guaranty Fees 26
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY 27
4.01 Taxes. 27
4.02 Illegality 28
4.03 Increased Costs and Reduction of Return 28
4.04 Funding Losses 29
4.05 Inability to Determine Rates 29
4.06 Survival 30
ARTICLE V
CONDITIONS PRECEDENT 30
5.01 Conditions of Initial Loan 30
(a) Credit Agreement 30
(b) Resolutions; Incumbency 30
(c) Organization Documents; Good Standing 30
(d) Payment of Fees 30
(e) Certificate 30
(f) Legal Opinion 31
(g) Private Placement 31
(h) Other Documents 31
5.02 Conditions to All Credit Extensions 31
(a) Notice of Borrowing 31
(b) Continuation of Representations and Warranties 31
(c) No Existing Default 31
ARTICLE VI
REPRESENTATIONS AND WARRANTIES 32
6.01 Corporate Existence and Power 32
6.02 Corporate Authorization; No Contravention 32
6.03 Governmental Authorization 32
6.04 Binding Effect 33
6.05 Litigation 33
6.06 No Default 33
6.07 ERISA Compliance 33
6.08 Use of Proceeds; Margin Regulations 34
6.09 Title to Properties 34
6.10 Taxes 34
6.11 Financial Condition 34
6.12 Environmental Matters 35
6.13 Regulated Entities 35
6.14 No Burdensome Restrictions 35
6.15 Copyrights, Patents, Trademarks and
Licenses,
etc. 35
6.16 Subsidiaries 36
6.17 Insurance 36
6.18 Full Disclosure 36
ARTICLE VII
AFFIRMATIVE COVENANTS 36
7.01 Financial Statements 36
7.02 Certificates; Other Information 37
7.03 Notices 38
7.04 Preservation of Corporate Existence, Etc 39
7.05 Maintenance of Property 39
7.06 Insurance 39
7.07 Payment of Obligations 39
7.08 Compliance with Laws 39
7.09 Inspection of Property and Books and Records 39
7.10 Environmental Laws 40
7.11 Use of Proceeds 40
ARTICLE VIII
NEGATIVE COVENANTS 40
8.01 Limitation on Liens 40
8.02 Disposition of Assets 43
8.03 Consolidations and Mergers 43
8.04 Loans and Investments 44
8.05 Limitation on Indebtedness 46
8.06 Transactions with Affiliates 47
8.07 Use of Proceeds 47
8.08 Use of Proceeds - Ineligible Securities 47
8.09 Contingent Obligations 48
8.10 Lease Obligations 48
8.11 Restricted Payments 48
8.12 Tangible Net Worth 49
8.13 Fixed Charge Coverage Ratio 49
8.14 Leverage Ratio 49
8.15 Capital Expenditures 50
8.16 Change in Business 50
8.17 Accounting Changes 50
ARTICLE IX
EVENTS OF DEFAULT 50
9.01 Event of Default 50
(a) Non-Payment 50
(b) Representation or Warranty 50
(c) Specific Defaults 51
(d) Other Defaults 51
(e) Cross-Default 51
(f) Insolvency; Voluntary Proceedings 51
(g) Involuntary Proceedings 52
(h) ERISA 52
(i) Monetary Judgments 52
(j) Non-Monetary Judgments 52
(k) Change of Control 52
(l) Adverse Change 53
9.02 Remedies 53
9.03 Rights Not Exclusive 53
ARTICLE X
MISCELLANEOUS 53
10.01 Amendments and Waivers 53
10.02 Notices 54
10.03 No Waiver; Cumulative Remedies 54
10.04 Costs and Expenses 54
10.05 Indemnity 55
10.06 Payments Set Aside 55
10.07 Successors and Assigns 56
10.08 Assignments, Participations, etc. 56
10.09 Set-off 57
10.10 Automatic Debits of Fees 57
10.11 Counterparts 57
10.12 Severability 58
10.13 No Third Parties Benefited 58
10.14 Governing Law and Jurisdiction 58
10.15 Waiver of Jury Trial 58
10.16 Entire Agreement 59
Exhibits
Exhibit A Notice of Borrowing
Exhibit B Notice of Conversion/Continuation
Exhibit C Compliance Certificate
Exhibit D Form of Legal Opinion
Schedules
Schedule 6.05 Litigation
Schedule 6.16 Subsidiaries and Equity Investments
Schedule 8.01 Permitted Liens
Schedule 8.04(p) Investment Policies
Schedule 8.04(q) Existing Investments
Schedule 8.05 Existing Indebtedness
Schedule 8.09 Existing Contingent Obligations
AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDED AND RESTATED CREDIT AGREEMENT is entered into
as of June 30, 1994, between Optical Coating Laboratory, Inc., a
Delaware corporation (the "Company"), and Bank of America
National Trust and Savings Association (the "Bank").
WHEREAS, the Company and the Bank are parties to that
certain Credit Agreement dated as of July 31, 1991, as amended by
a (i) First Amendment to Credit Agreement dated as of February
26, 1993, (ii) Second Amendment to Credit Agreement dated as of
October 29, 1993, and (iii) a Third Amendment to Credit Agreement
dated as of March 31, 1994 (as so amended, the "Credit
Agreement"), pursuant to which the Bank has extended certain
credit facilities to the Company.
WHEREAS, the Company and the Bank wish to amend and restate
the Credit Agreement in its entirety on and subject to the terms
and conditions hereof.
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained herein, the parties agree as
follows:
ARTICLE I
DEFINITIONS
1.01 Certain Defined Terms. The following terms have the
following meanings:
"Acceptable Bank" means any commercial bank:
(a) that is organized under the laws of the
United States or any state thereof;
(b) that has capital, surplus and undivided
profits aggregating at least $100,000,000; and
(c) whose long-term unsecured debt
obligations (or the long-term unsecured debt
obligations of the bank holding company owning all of
the capital stock of such bank) shall have been rated
"A" or higher by Standard & Poor's or "A2" or higher by
Moody's.
"Acquisition" means any transaction or series of
related transactions for the purpose of or resulting,
directly or indirectly, in (a) the acquisition of all or
substantially all of the assets of a Person, or of any
business or division of a Person, (b) the acquisition of in
excess of 50% of the capital stock, partnership interests or
equity of any Person, or otherwise causing any Person to
become a Subsidiary, or (c) a merger or consolidation or any
other combination with another Person (other than a Person
that is a Subsidiary) provided that the Company or the
Subsidiary is the surviving entity.
"Affiliate" means, as to any Person, any other Person
which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person.
A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and
policies of the other Person, whether through the ownership
of voting securities, by contract, or otherwise.
"Agreement" means this Credit Agreement.
"Applicable Margin" means
(i) with respect to Base Rate Loans, 0.00%;
and
(ii) with respect to Offshore Rate Loans,
1.50%.
"Assignee" has the meaning specified in subsection
10.08(a).
"Attorney Costs" means and includes all fees and
disbursements of any law firm or other external counsel, the
allocated cost of internal legal services and all
disbursements of internal counsel.
"Bank" has the meaning specified in the introductory
clause hereto.
"Bankruptcy Code" means the Federal Bankruptcy Reform
Act of 1978 (11 U.S.C. 101, et seq.).
"Base Rate" means, for any day, the higher of: (a)
0.50% per annum above the latest Federal Funds Rate and (b)
the rate of interest in effect for such day as publicly
announced from time to time by the Bank in San Francisco,
California, as its "reference rate." (The reference rate is
a rate set by the Bank based upon various factors including
the Bank's costs and desired return, general economic
conditions and other factors, and is used as a reference
point for pricing some loans, which may be priced at, above,
or below such announced rate.) Any change in the reference
rate announced by the Bank shall take effect at the opening
of business on the day specified in the public announcement
of such change.
"Base Rate Loan" means a Loan that bears interest based
on the Base Rate.
"Birckhahn Guaranty" means the Guaranty 6019GT020948/92
issued by the Bank through its Frankfurt/Main branch as of
December 29, 1992, in favor of Henning von Birckhahn and
guaranteeing (in an amount not exceeding DM 7,500,000)
certain obligations of the Company to Henning von Birckhahn.
"Birckhahn Guaranty Documents" means the Birckhahn
Guaranty and any other document, instrument, or agreement
executed or delivered by the Company in connection with the
Bank's issuance of the Birckhahn Guaranty.
"Birckhahn Guaranty Outstanding Amount" means, at any
time, the amount guaranteed pursuant the Birckhahn Guaranty
but not disbursed thereunder at such time, plus all amounts
paid under the Birckhahn Guaranty by the Bank (including
through its Frankfurt/Main branch or other branch, office or
Affiliate) which have not yet been reimbursed, plus any
other obligation or liability of the Company to the Bank
(including any branch, office or Affiliate thereof) with
respect to the Birckhahn Guaranty.
"Borrowing" means a borrowing hereunder consisting of a
Revolving Loan or a Term Loan of a single Type made to the
Company on a given day by the Bank under Article II, and,
other than in the case of Base Rate Loans, having a single
Interest Period.
"Borrowing Date" means any date on which a Borrowing
occurs under Section 2.03.
"Business Day" means any day other than a Saturday,
Sunday or other day on which commercial banks in New York or
San Francisco are authorized or required by law to close
and, if the applicable Business Day relates to any Offshore
Rate Loan, means such a day on which dealings are carried on
in the applicable offshore dollar interbank market.
"Capital Adequacy Regulation" means any guideline,
request or directive of any central bank or other
Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each
case, regarding capital adequacy of the Bank or of any
corporation controlling the Bank.
"Closing Date" means the date on which all conditions
precedent set forth in Section 4.01 are satisfied or waived
by the Bank (or, in the case of subsection 4.01(e), waived
by the Person entitled to receive such payment).
"Code" means the Internal Revenue Code of 1986, and
regulations promulgated thereunder.
"Commitment" has the meaning specified in Section 2.01.
"Compliance Certificate" means a certificate
substantially in the form of Exhibit C.
"Contingent Obligation" means, as to any Person, any
direct or indirect liability of that Person, whether or not
contingent, with or without recourse, (a) with respect to
any Indebtedness, lease, dividend, letter of credit or other
obligation (the "primary obligations") of another Person
(the "primary obligor"), including any obligation of that
Person (i) to purchase, repurchase or otherwise acquire such
primary obligations or any security therefor, (ii) to
advance or provide funds for the payment or discharge of any
such primary obligation, or to maintain working capital or
equity capital of the primary obligor or otherwise to
maintain the net worth or solvency or any balance sheet
item, level of income or financial condition of the primary
obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such
primary obligation of the ability of the primary obligor to
make payment of such primary obligation, or (iv) otherwise
to assure or hold harmless the holder of any such primary
obligation against loss in respect thereof (each, a
"Guaranty Obligation"); (b) with respect to any Surety
Instrument issued for the account of that Person or as to
which that Person is otherwise liable for reimbursement of
drawings or payments; (c) to purchase any materials,
supplies or other property from, or to obtain the services
of, another Person if the relevant contract or other related
document or obligation requires that payment for such
materials, supplies or other property, or for such services,
shall be made regardless of whether delivery of such
materials, supplies or other property is ever made or
tendered, or such services are ever performed or tendered,
or (d) in respect of any Swap Contract.
"Contractual Obligation" means, as to any Person, any
provision of any security issued by such Person or of any
agreement, undertaking, contract, indenture, mortgage, deed
of trust or other instrument, document or agreement to which
such Person is a party or by which it or any of its property
is bound.
"Conversion/Continuation Date" means any date on which,
under Section 2.04, the Company (a) converts a Loan of one
Type to another Type, or (b) continues as a Loan of the same
Type, but with a new Interest Period, a Loan having an
Interest Period expiring on such date.
"Credit Extension" means and includes (a) the making of
any Loans hereunder, and (b) the Issuance of any Letters of
Credit hereunder.
"Default" means any event or circumstance which, with
the giving of notice, the lapse of time, or both, would (if
not cured or otherwise remedied during such time) constitute
an Event of Default.
"Designated Subsidiaries" means OCLI Optical Coatings
Limited, a corporation organized under the laws of Scotland,
and OCLI Foreign Sales Corporation, a corporation organized
under the laws of Guam.
"Distribution" means, without duplication, with respect
to any corporation:
(a) any dividend or other distribution,
direct or indirect, on account of any shares of capital
stock of such corporation now or hereafter outstanding,
whether in cash or other property, except a dividend or
other distribution payable solely in shares of stock of
such corporation; and
(b) any redemption, retirement, purchase or
other acquisition, direct or indirect, of any shares of
capital stock of such corporation now or hereafter
outstanding, including, without limitation, any
deferred payment made by such corporation in connection
with the acquisition of its capital stock, or of any
warrants, rights or options to acquire any shares of
such stock.
"Dollars", "dollars" and "$" each mean lawful money of
the United States.
"Effective Amount" means (i) with respect to any Loans
on any date, the aggregate outstanding principal amount
thereof after giving effect to any Loans made and
prepayments or repayments of Loans occurring on such date,
and (ii) with respect to any outstanding L/C Obligations on
any date, the amount of such L/C Obligations on such date
after giving effect to any Issuances of Letters of Credit
occurring on such date and any other changes in the
aggregate amount of the L/C Obligations as of such date,
including as a result of any reimbursements of outstanding
unpaid drawings under any Letters of Credit or any
reductions in the maximum amount available for drawing under
Letters of Credit taking effect on such date.
"Environmental Claims" means all claims, however
asserted, by any Governmental Authority or other Person
alleging potential liability or responsibility for violation
of any Environmental Law, or for release or injury to the
environment.
"Environmental Laws" means all federal, state or local
laws, statutes, common law duties, rules, regulations,
ordinances and codes, together with all administrative
orders, directed duties, requests, licenses, authorizations
and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental, health,
safety and land use matters.
"Equivalent Amount" means the equivalent of dollars in
a foreign currency calculated at the spot rate for the
purchase of such foreign currency with dollars as quoted by
the Bank through its Foreign Exchange Trading Center #5193,
San Francisco, California, or such other of the Bank's
offices as it may designate from time to time, at
approximately 8 a.m. (San Francisco time) two banking days
(as such days are determined by the Bank with respect to
such currency) prior to the relevant date.
"ERISA" means the Employee Retirement Income Security
Act of 1974, and regulations promulgated thereunder.
"ERISA Event" means (a) a Reportable Event with respect
to a Pension Plan; (b) a withdrawal by the Company from a
Pension Plan subject to Section 4063 of ERISA during a plan
year in which it was a substantial employer (as defined in
Section 4001(a)(2) of ERISA) or a cessation of operations
which is treated as such a withdrawal under Section 4062(e)
of ERISA; (c) the filing of a notice of intent to terminate,
the treatment of a plan amendment as a termination under
Section 4041 or 4041A of ERISA or the commencement of
proceedings by the PBGC to terminate a Pension Plan subject
to Title IV of ERISA; (d) a failure by the Company to make
required contributions to a Pension Plan or other Plan
subject to Section 412 of the Code; (e) an event or
condition which might reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of,
or the appointment of a trustee to administer, any Pension
Plan; (f) the imposition of any liability under Title IV of
ERISA, other than PBGC premiums due but not delinquent under
Section 4007 of ERISA, upon the Company; or (g) an
application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code with
respect to any Pension Plan.
"Event of Default" means any of the events or
circumstances specified in Section 9.01.
"Exchange Act" means the Securities and Exchange Act of
1934, and regulations promulgated thereunder.
"Existing Letter of Credit" means that certain letter
of credit #119323 in the face amount of $1,907,157 issued by
the Bank for the account of the Company.
"FDIC" means the Federal Deposit Insurance Corporation,
and any Governmental Authority succeeding to any of its
principal functions.
"Federal Funds Rate" means, for any day, the rate set
forth in the weekly statistical release designated as
H.15(519), or any successor publication, published by the
Federal Reserve Bank of New York (including any such
successor, "H.15(519)") on the preceding Business Day
opposite the caption "Federal Funds (Effective)"; or, if
such rate is not so published on any such preceding Business
Day, the rate for such day will be the arithmetic mean as
determined by the Bank of the rates for the last transaction
in overnight Federal funds arranged prior to 9:00 a.m. (New
York City time) on that day by each of three leading brokers
of Federal funds transactions in New York City selected by
the Bank.
"Fixed Charge Coverage Ratio" means, in respect of the
Company and the Designated Subsidiaries on a combined basis,
calculated as of the last day of each fiscal quarter, the
ratio of (a) the sum of the Company's and the Designated
Subsidiaries' combined net income, accrued U.S. and foreign
income and franchise taxes, interest expense, and operating
lease expense (in each case, for the four fiscal quarter
period ending on such day) to (b) the sum of interest
expense and operating lease expense for the Company and the
Designated Subsidiaries for such four fiscal quarter period.
"FRB" means the Board of Governors of the Federal
Reserve System, and any Governmental Authority succeeding to
any of its principal functions.
"GAAP" means generally accepted accounting principles
set forth from time to time in the opinions and
pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting
Standards Board (or agencies with similar functions of
comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of
the date of determination.
"Governmental Authority" means any nation or
government, any state or other political subdivision
thereof, any central bank (or similar monetary or regulatory
authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any
corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the
foregoing.
"Guaranty Obligation" has the meaning specified in the
definition of "Contingent Obligation."
"Indebtedness" of any Person means, without
duplication, (a) all indebtedness for borrowed money; (b)
all obligations issued, undertaken or assumed as the
deferred purchase price of property or services (other than
trade payables entered into in the ordinary course of
business on ordinary terms); (c) all reimbursement or
payment obligations (contingent or otherwise) with respect
to Surety Instruments; (d) all obligations evidenced by
notes, bonds, debentures or similar instruments, including
obligations so evidenced incurred in connection with the
acquisition of property, assets or businesses; (e) all
indebtedness created or arising under any conditional sale
or other title retention agreement, or incurred as
financing, in either case with respect to property acquired
by the Person (even though the rights and remedies of the
seller or bank under such agreement in the event of default
are limited to repossession or sale of such property); (f)
all obligations with respect to capital leases; (g) all net
obligations with respect to Swap Contracts; (h) all
indebtedness referred to in clauses (a) through (g) above
secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured
by) any Lien upon or in property (including accounts and
contracts rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of
such Indebtedness; and (i) all Guaranty Obligations in
respect of indebtedness or obligations of others of the
kinds referred to in clauses (a) through (g) above.
"Indemnified Liabilities" has the meaning specified in
Section 10.05.
"Indemnified Person" has the meaning specified in
Section 10.05.
"Independent Auditor" has the meaning specified in
subsection 7.01(a).
"Insolvency Proceeding" means (a) any case, action or
proceeding before any court or other Governmental Authority
relating to bankruptcy, reorganization, insolvency,
liquidation, receivership, dissolution, winding-up or relief
of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors,
or other, similar arrangement in respect of its creditors
generally or any substantial portion of its creditors;
undertaken under U.S. Federal, state or foreign law,
including the Bankruptcy Code.
"Interest Payment Date" means, as to any Offshore Rate
Loan, the last day of each Interest Period applicable to
such Loan and, as to any Base Rate Loan, the last Business
Day of each calendar quarter and each date such Loan is
converted into another Type of Loan, provided, however, that
if any Interest Period for an Offshore Rate Loan exceeds
three months, the date that falls three months after the
beginning of such Interest Period and after each Interest
Payment Date thereafter is also an Interest Payment Date.
"Interest Period" means, as to any Offshore Rate Loan,
the period commencing on the Borrowing Date of such Loan or
on the Conversion/Continuation Date on which the Loan is
converted into or continued as an Offshore Rate Loan, and
ending on the date one, two, three or six months thereafter
as selected by the Company in its Notice of Borrowing or
Notice of Conversion/Continuation;
provided that:
(i) if any Interest Period would otherwise
end on a day that is not a Business Day, that Interest
Period shall be extended to the following Business Day
unless, in the case of an Offshore Rate Loan, the result
of such extension would be to carry such Interest Period
into another calendar month, in which event such
Interest Period shall end on the preceding Business Day;
(ii) any Interest Period pertaining to an
Offshore Rate Loan that begins on the last 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
Business Day of the calendar month at the end of such
Interest Period; and
(iii) no Interest Period
for any portion of the Term Loan shall extend beyond
July 31, 1997 and no Interest Period for any Revolving
Loan shall extend beyond June 30, 1997; and
(iv) no Interest Period applicable to the Term
Loan or portion thereof shall extend beyond any date
upon which is due any scheduled principal payment in
respect of the Term Loan unless the aggregate principal
amount of the Term Loan represented by Base Rate Loans,
or by Offshore Rate Loans having Interest Periods that
will expire on or before such date, equals or exceeds
the amount of such principal payment.
"IRS" means the Internal Revenue Service, and any
Governmental Authority succeeding to any of its principal
functions.
"Issue" means, with respect to any Letter of Credit, to
issue or to extend the expiry of, or to renew or increase the
amount of, such Letter of Credit; and the terms "Issued",
"Issuing" and "Issuance" have corresponding meanings.
"Joint Venture" means a single-purpose corporation,
partnership, joint venture or other similar legal arrangement
(whether created by contract or conducted through a separate
legal entity) now or hereafter formed by the Company or any
of its Subsidiaries with another Person in order to conduct a
common venture or enterprise with such Person.
"L/C Amendment Application" means an application form
for amendment of outstanding standby letters of credit as
shall at any time be in use by the Bank.
"L/C Application" means an application form for issuance
of standby letters of credit as shall at any time be in use
by the Bank.
"L/C Borrowing" means an extension of credit resulting
from a drawing under any Letter of Credit which shall not
have been reimbursed on the date when made nor converted into
a Borrowing of Revolving Loans under subsection 3.05.
"L/C Commitment" means the commitment of the Bank to
issue Letters of Credit in an aggregate amount outstanding
not to exceed on any date $2,500,000, which commitment is a
component of (and not an addition to) the Commitment.
"L/C Obligations" means at any time the sum of (a) the
aggregate undrawn amount of all Letters of Credit then
outstanding, plus (b) the amount of all unreimbursed drawings
under all Letters of Credit.
"L/C-Related Documents" means the Letters of Credit, the
L/C Applications, the L/C Amendment Applications and any
other document relating to any Letter of Credit.
"Letter of Credit" means any standby letter of credit
issued by the Bank pursuant to Article III.
"Lien" means any security interest, mortgage, deed of
trust, pledge, hypothecation, assignment, charge or deposit
arrangement, encumbrance, lien (statutory or other) or
preferential arrangement of any kind or nature whatsoever in
respect of any property (including those created by, arising
under or evidenced by any conditional sale or other title
retention agreement, the interest of a lessor under a capital
lease, any financing lease having substantially the same
economic effect as any of the foregoing, or the filing of any
financing statement naming the owner of the asset to which
such lien relates as debtor, under the Uniform Commercial
Code or any comparable law) and any contingent or other
agreement to provide any of the foregoing, but not including
the interest of a lessor under an operating lease.
"Loan" means an extension of credit by the Bank to the
Company under Article II or Article III, and may be a Base
Rate Loan or an Offshore Rate Loan (each, a "Type" of Loan,
and includes any Revolving Loan or L/C Borrowing or the Term
Loan or any portion of the Term Loan.
"Loan Documents" means this Agreement, the L/C-Related
Documents, the Birckhahn Guaranty Documents, the letter
agreement referred to in subsection 2.09(a) and all other
documents delivered to the Bank in connection herewith.
"Margin Stock" means "margin stock" as such term is
defined in Regulation G, T, U or X of the FRB.
"Material Adverse Effect" means (a) a material adverse
change in, or a material adverse effect upon, the operations,
business, properties, condition (financial or otherwise) or
prospects of the Company or the Company and its Subsidiaries
taken as a whole; (b) a material impairment of the ability of
the Company to perform under any Loan Document and to avoid
any Event of Default; or (c) a material adverse effect upon
the legality, validity, binding effect or enforceability
against the Company of any Loan Document.
"Moody's" means Moody's Investors Service, Inc.
"Notice of Borrowing" means a notice in substantially
the form of Exhibit A.
"Notice of Conversion/Continuation" means a notice in
substantially the form of Exhibit B.
"Obligations" means all advances, debts, liabilities,
obligations, covenants and duties arising under any Loan
Document owing by the Company to the Bank, or any Indemnified
Person, whether direct or indirect (including those acquired
by assignment), absolute or contingent, due or to become due,
now existing or hereafter arising.
"Offshore Rate" means, for any Interest Period, with
respect to any Offshore Rate Loan comprising part of the same
Borrowing, the rate of interest per annum (rounded upward to
the next 1/16th of 1%) determined by the Bank as follows:
Offshore Rate = IBOR
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any
day for any Interest Period the maximum reserve
percentage (expressed as a decimal, rounded upward to
the next 1/100th of 1%) in effect on such day (whether
or not applicable to the Bank) under regulations issued
from time to time by the FRB for determining the maximum
reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with
respect to Eurocurrency funding (currently referred to
as "Eurocurrency liabilities") having a term comparable
to such Interest Period, it being understood that as of
the date hereof the Eurodollar Reserve Percentage is
zero; and
"IBOR" means the rate of interest per annum
determined by the Bank as the rate at which dollar
deposits in the approximate amount of the Bank's
Offshore Rate Loan for such Interest Period would be
offered by the Bank's Grand Cayman Branch, Grand Cayman
B.W.I. (or such other office as may be designated for
such purpose by the Bank), to major banks in the
offshore dollar interbank market at their request at
approximately 11:00 a.m. (New York City time) two
Business Days prior to the commencement of such Interest
Period.
The Offshore Rate shall be adjusted
automatically as to all Offshore Rate Loans then
outstanding as of the effective date of any change in
the Eurodollar Reserve Percentage.
"Offshore Rate Loan" means a Revolving Loan that bears
interest based on the Offshore Rate.
"Organization Documents" means, for any corporation, the
certificate or articles of incorporation, the bylaws, any
certificate of determination or instrument relating to the
rights of preferred shareholders of such corporation, any
shareholder rights agreement, and all applicable resolutions
of the board of directors (or any committee thereof) of such
corporation.
"Participant" has the meaning specified in subsection
10.08(d).
"PBGC" means the Pension Benefit Guaranty Corporation,
or any Governmental Authority succeeding to any of its
principal functions under ERISA.
"Pension Plan" means a pension plan (as defined in
Section 3(2) of ERISA) subject to Title IV of ERISA which the
Company sponsors, maintains, or to which it makes, is making,
or is obligated to make contributions, or in the case of a
multiple employer plan (as described in Section 4064(a) of
ERISA) has made contributions at any time during the
immediately preceding five (5) plan years.
"Permitted Liens" has the meaning specified in Section
8.01.
"Permitted Repurchase Agreement" means any written
agreement:
(a) that provides for
(i) the
transfer of one or more United States Governmental
Securities to the Company or a Subsidiary from an
Acceptable Bank against a transfer of funds (the
"transfer price") by the Company or such Subsidiary
to such Acceptable Bank, and
(ii) a
simultaneous agreement by the Company or such
Subsidiary, in connection with such transfer of
funds, to transfer to such Acceptable Bank the same
or substantially similar United States Governmental
Securities for a price not less than the transfer
price plus a reasonable return thereon at a date
certain not later than one year after such transfer
of funds; and
(b) in respect of which the Company or such
Subsidiary shall have the right, whether by contract or
pursuant to applicable law, to liquidate such repurchase
agreement upon the occurrence of any default thereunder.
"Person" means an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated
association, joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in
Section 3(3) of ERISA) which the Company sponsors or
maintains or to which the Company makes, is making, or is
obligated to make contributions and includes any Pension
Plan.
"Prior Credit Agreement" means that certain Credit
Agreement dated as of March 11, 1988 between the Company and
the Bank, as the same has been amended from time to time.
"Redeemable Stock" means, with respect to any Person,
each share of such Person's capital stock that is:
(a) redeemable, payable or required to be
purchased or otherwise retired or extinguished, or
convertible into indebtedness of such Person
(i) at a fixed
or determinable date, whether by operation of a
sinking fund or otherwise,
(ii) at the
option of any Person other than such Person, or
(iii) upon the
occurrence of a condition not solely within the
control of such Person; or
(b) convertible into other Redeemable Stock.
"Reportable Event" means, any of the events set forth in
Section 4043(b) of ERISA or the regulations thereunder, other
than any such event for which the 30-day notice requirement
under ERISA has been waived in regulations issued by the
PBGC.
"Requirement of Law" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or
determination of an arbitrator or of a Governmental
Authority, in each case applicable to or binding upon the
Person or any of its property or to which the Person or any
of its property is subject.
"Responsible Officer" means the chief executive officer
or the president of the Company, or any other officer having
substantially the same authority and responsibility; or, with
respect to compliance with financial covenants, the chief
financial officer or the treasurer of the Company, or any
other officer having substantially the same authority and
responsibility.
"Restricted Payment" means any Distribution (other than
on account of capital stock of a Subsidiary owned legally and
beneficially by the Company or a Designated Subsidiary),
including, without limitation, any Distribution resulting in
the acquisition by the Company of securities which would
constitute treasury stock.
"Revolving Loan" has the meaning specified in Section
2.01.
"Revolving Termination Date" means the earlier to occur
of:
(a) June 30, 1997; and
(b) the date on which the Commitment
terminates in accordance with the provisions of this
Agreement.
"SEC" means the Securities and Exchange Commission, or
any Governmental Authority succeeding to any of its principal
functions.
"Senior Note Agreement" means, collectively, those
certain separate Note Purchase Agreements dated as of May 27,
1994, each containing identical terms and provisions, entered
into by the Company with Connecticut Mutual Life Insurance
Company, Modern Woodmen of America and American Life and
Casualty Insurance Company.
"Senior Notes" means those certain Senior Notes in the
aggregate principal amount of $18,000,000 dated May 27, 1994
issued pursuant to the Senior Note Agreement.
"Standard & Poor's" means Standard & Poor's Corporation.
"Subsidiary" of a Person means any corporation,
association, partnership, joint venture or other business
entity of which more than 50% of the voting stock or other
equity interests (in the case of Persons other than
corporations) is owned or controlled directly or indirectly
by the Person, or one or more of the Subsidiaries of the
Person, or a combination thereof. Unless the context
otherwise clearly requires, references herein to a
"Subsidiary" refer to a Subsidiary of the Company.
"Surety Instruments" means all letters of credit
(including standby and commercial), banker's acceptances,
bank guaranties, shipside bonds, surety bonds and similar
instruments.
"Swap Contracts" means swap agreements (as such term is
defined in Section 101 of the Bankruptcy Code) and any other
agreements or arrangements designed to provide protection
against fluctuations in interest or currency exchange rates
or commodity prices.
"Tangible Net Worth" means the gross book value of the
assets of the Company and its Subsidiaries on a consolidated
basis (exclusive of goodwill, organization expense, treasury
stock, unamortized debt discount and expense, deferred
charges, and other like intangibles, but not including (i)
intangibles of the Company and its Subsidiaries existing on
the Closing Date as would appear on a consolidated balance
sheet for such Persons on the Closing Date prepared in
accordance with GAAP, and (ii) all intangibles of the Company
and its Subsidiaries in respect of prepaid royalties,
patents, copyrights, trademarks, trade names, service marks
and brand names not in existence on the Closing Date, as
would appear on the consolidated balance sheet for such
Persons at such time prepared in accordance with GAAP) less
(a) reserves applicable thereto, and (b) all liabilities
(including accrued and deferred income taxes).
"Term Commitment" means $6,000,000.
"Term Loan" has the meaning specified in Section 2.01.
"Type" has the meaning specified in the definition of
"Loan."
"Unfunded Pension Liability" means the excess of a
Plan's benefit liabilities under Section 4001(a)(16) of
ERISA, over the current value of that Plan's assets,
determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code
for the applicable plan year.
"United States" and "U.S." each mean the United States
of America.
"United States Governmental Securities" means any direct
obligation of, or obligation guaranteed by, the United
States, or any agency controlled or supervised by or acting
as an instrumentality of the United States pursuant to
authority granted by the Congress of the United States, in
respect of the payment of which obligation or guarantee the
full faith and credit of the United States, pursuant to
authority granted by the Congress of the United States, shall
have been pledged.
"Wholly-Owned Subsidiary" means any corporation in which
(other than directors' qualifying shares required by law)
100% of the capital stock of each class having ordinary
voting power, and 100% of the capital stock of every other
class, in each case, at the time as of which any
determination is being made, is owned, beneficially and of
record, by the Company, or by one or more of the other Wholly-
Owned Subsidiaries, or both.
1.02 Other Interpretive Provisions. (a) The meanings of
defined terms are equally applicable to the singular and plural
forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and
similar words refer to this Agreement as a whole and not to any
particular provision of this Agreement; and subsection, Section,
Schedule and Exhibit references are to this Agreement unless
otherwise specified. The term "documents" includes any and all
instruments, documents, agreements, certificates, indentures,
notices and other writings, however evidenced. The term
"including" is not limiting and means "including without
limitation." In the computation of periods of time from a
specified date to a later specified date, the word "from" means
"from and including"; the words "to" and "until" each mean "to
but excluding", and the word "through" means "to and including."
(c) Unless otherwise expressly provided herein, (i)
references to agreements (including this Agreement) and other
contractual instruments shall be deemed to include all subsequent
amendments and other modifications thereto, but only to the
extent such amendments and other modifications are not prohibited
by the terms of any Loan Document, and (ii) references to any
statute or regulation are to be construed as including all
statutory and regulatory provisions consolidating, amending,
replacing, supplementing or interpreting the statute or
regulation.
(d) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the
interpretation of this Agreement. This Agreement and the other
Loan Documents are the result of negotiations among and has been
reviewed by counsel to the Bank and the Company, and are the
products of both parties. Accordingly, they shall not be
construed against the Bank merely because of the Bank's
involvement in their preparation.
1.03 Accounting Principles and Periods. Unless the context
otherwise clearly requires, all accounting terms not expressly
defined herein shall be construed, and all financial computations
required under this Agreement shall be made, in accordance with
GAAP, consistently applied. References herein to "fiscal year"
and "fiscal quarter" refer to such fiscal periods of the Company.
ARTICLE II
THE CREDIT
2.01 Amount and Terms of Commitment.
(a) The Term Credit. The Bank agrees, on the terms and
conditions set forth herein, to make a single loan to the Company
(the "Term Loan") on the Closing Date in an amount not to exceed
the Term Commitment. The Term Loan shall be deemed funded by
converting, on the Closing Date, all amounts outstanding under
Tranche B of the Credit Agreement to the Term Loan. Amounts
borrowed as the Term Loan which are repaid or prepaid by the
Company may not be reborrowed. The Term Loan shall be comprised
of portions. The interest rate for each portion of the Term Loan
shall be based on the Base Rate or the Offshore Rate. Different
portions of the Term Loan may have a different interest rate
basis and different Interest Periods.
(b) The Revolving Credit. The Bank agrees, on the
terms and conditions set forth herein, to make loans to the
Company (each such loan, a "Revolving Loan") from time to time on
any Business Day during the period from the Closing Date to the
Revolving Termination Date, in an aggregate amount not to exceed
at any time outstanding, together with the principal amount of
the Term Loan outstanding at such time, $10,000,000 (such amount,
as the same may be reduced under Section 2.05 or as a result of
one or more assignments under Section 10.08, the "Commitment");
provided, however, that after giving effect to any Borrowing of
Revolving Loans, the Effective Amount of all outstanding
Revolving Loans, together with the principal amount of the Term
Loan outstanding at such time and the Effective Amount of all L/C
Obligations, shall not exceed at any time the Commitment. Within
the limits of the Commitment, and subject to the other terms and
conditions hereof, the Company may borrow under this subsection
2.01(b), prepay under Section 2.06 and reborrow under this
subsection 2.01(b).
2.02 Loan Accounts. The Loans made by the Bank shall be
evidenced by one or more loan accounts or records maintained by
the Bank in the ordinary course of business. The loan accounts
or records maintained by the Bank shall be conclusive absent
manifest error of the amount of the Loans made by the Bank to the
Company and the interest and payments thereon. Any failure so to
record or any error in doing so shall not, however, limit or
otherwise affect the obligation of the Company hereunder to pay
any amount owing with respect to the Loans.
2.03 Procedure for Borrowing. Each Borrowing shall be made
upon the Company's irrevocable written notice delivered to the
Bank in the form of a Notice of Borrowing (which notice must be
received by the Bank prior to 9:00 a.m. (San Francisco time) (a)
three Business Days prior to the requested Borrowing Date, in the
case of Offshore Rate Loans, and (b) on the requested Borrowing
Date, in the case of Base Rate Loans, specifying: (i) the amount
of the Borrowing, which shall be in an aggregate minimum amount
of $1,000,000 or any multiple of $1,000,000 in excess thereof;
(ii) the requested Borrowing Date, which shall be a Business Day;
(iii) the Type of Loans comprising the Borrowing; and (iv) the
duration of the Interest Period applicable to such Loans included
in such notice. If the Notice of Borrowing fails to specify the
duration of the Interest Period for any Borrowing comprised of
Offshore Rate Loans, such Interest Period shall be three months.
2.04 Conversion and Continuation Elections. (a) The
Company may, upon irrevocable written notice to the Bank in
accordance with subsection 2.04(b): (i) elect, as of any
Business Day, in the case of Base Rate Loans, or as of the last
day of the applicable Interest Period, in the case of Offshore
Rate Loans, to convert any such Revolving Loans or a portion of
the Term Loan (or any part thereof in an amount not less than
$1,000,000, or that is in an integral multiple of $1,000,000 in
excess thereof) into Revolving Loans or a portion of the Term
Loan of any other Type; or (ii) elect, as of the last day of the
applicable Interest Period, to continue any Revolving Loan or a
portion of the Term Loan having an Interest Period expiring on
such day (or any part thereof in an amount not less than
$1,000,000, or that is in an integral multiple of $1,000,000 in
excess thereof); provided, that if at any time the aggregate
amount of any Offshore Rate Loan is reduced, by payment,
prepayment, or conversion of part thereof to be less than
$1,000,000, such Offshore Rate Loan shall automatically convert
into a Base Rate Loan, and on and after such date the right of
the Company to continue such Loan as, and convert such Loan into
an Offshore Rate Loan shall terminate.
(b) The Company shall deliver a Notice of
Conversion/Continuation to be received by the Bank not later than
9:00 a.m. (San Francisco time) at least (i) three Business Days
in advance of the Conversion/Continuation Date, if any Loan is to
be converted into or continued as an Offshore Rate Loan; and (ii)
on the Conversion/Continuation Date, if any Loan is to be
converted into a Base Rate Loan, specifying: (A) the proposed
Conversion/Continuation Date; (B) the amount of the Loan to be
converted or continued; (C) the Type of Loan resulting from the
proposed conversion or continuation; and (D) other than in the
case of conversions into Base Rate Loans, the duration of the
requested Interest Period.
(c) If upon the expiration of any Interest Period
applicable to any Offshore Rate Loan the Company has failed to
select timely a new Interest Period to be applicable to such
Loan, or if any Default or Event of Default then exists, the
Company shall be deemed to have elected to convert such Loan into
a Base Rate Loan effective as of the expiration date of such
Interest Period.
(d) Unless the Bank otherwise agrees in writing, during
the existence of a Default or Event of Default, the Company may
not elect to have a Loan converted into or continued as an
Offshore Rate Loan.
2.05 Voluntary Termination or Reduction of Commitment. The
Company may, upon not less than five Business Days' prior notice
to the Bank, terminate the Commitment, or permanently reduce the
Commitment by an aggregate minimum amount of $1,000,000; unless,
after giving effect thereto and to any prepayments of Loans made
on the effective date thereof, (a) the Effective Amount of all
Revolving Loans, the Term Loan and L/C Obligations together would
exceed the amount of the Commitment then in effect, or (b) the
Effective Amount of all L/C Obligations then outstanding would
exceed the L/C Commitment. If and to the extent specified by the
Company in the notice to the Bank, some or all of the reduction
in the Commitment shall be applied to reduce the L/C Commitment.
Once reduced in accordance with this Section, the Commitment may
not be increased. All accrued commitment fees to, but not
including the effective date of any reduction or termination of
Commitment, shall be paid on the effective date of such reduction
or termination.
2.06 Optional Prepayments. Subject to Section 4.04, the
Company may, at any time or from time to time, upon not less than
three Business Days' irrevocable notice to the Bank, prepay Loans
in whole or in part in an amount not less than $1,000,000. Such
notice of prepayment shall specify the date and amount of such
prepayment and the Type(s) of Loans to be prepaid. If such
notice is given by the Company, the Company shall make such
prepayment and the payment amount specified in such notice shall
be due and payable on the date specified therein, together with
accrued interest to each such date on the amount prepaid and any
amounts required pursuant to Section 4.04. Optional prepayments
of the Term Loan or any portion thereof shall be applied in
inverse order of maturity.
2.07 Repayment.
(a) The Term Credit. The Company shall repay the
principal amount of the Term Loan in 12 equal installments
commencing on October 31, 1994 and on the last day of each
successive quarter thereafter, until July 31, 1997, on which day
the entire balance of principal and interest on the Term Loan
then unpaid shall be due and payable.
(b) The Revolving Credit. The Company shall repay to
the Bank on the Revolving Termination Date the principal amount
of Revolving Loans outstanding on such date.
2.08 Interest. (a) Each Revolving Loan and each portion of
the Term Loan shall bear interest on the outstanding principal
amount thereof from the applicable Borrowing Date at a rate per
annum equal to the Offshore Rate or the Base Rate, as the case
may be (and subject to the Company's right to convert to other
Types of Loans under Section 2.04), plus the Applicable Margin.
(b) Interest on each Revolving Loan and each portion of
the Term Loan shall be paid in arrears on each Interest Payment
Date. Interest shall also be paid on the date of any prepayment
of Loans under Section 2.06 for the portion of the Loans so
prepaid and upon payment (including prepayment) in full thereof
and, during the existence of any Event of Default, interest shall
be paid on demand of the Bank.
(c) Notwithstanding subsection (a) of this Section,
while any Event of Default exists or after acceleration, the
Company shall pay interest (after as well as before entry of
judgment thereon to the extent permitted by law) on the principal
amount of all outstanding Loans, at a rate per annum which is
determined by adding 2% per annum to the Applicable Margin then
in effect for such Loans; provided, however, that, on and after
the expiration of any Interest Period applicable to any Offshore
Rate Loan outstanding on the date of occurrence of such Event of
Default or acceleration, the principal amount of such Loan shall,
during the continuation of such Event of Default or after
acceleration, bear interest at a rate per annum equal to the Base
Rate plus 2%.
(d) Anything herein to the contrary notwithstanding,
the obligations of the Company to the Bank hereunder shall be
subject to the limitation that payments of interest shall not be
required for any period for which interest is computed hereunder,
to the extent (but only to the extent) that contracting for or
receiving such payment by the Bank would be contrary to the
provisions of any law applicable to the Bank limiting the highest
rate of interest that may be lawfully contracted for, charged or
received by the Bank, and in such event the Company shall pay the
Bank interest at the highest rate permitted by applicable law.
2.09 Fees. (a) Upfront Fee. The Company shall pay an
upfront fee to the Bank on the Closing Date in an amount as set
forth in a letter agreement between the parties dated June 30,
1994.
(b) Commitment Fee. The Company shall pay to the Bank
a commitment fee on the average daily unused portion of the
Commitment, computed on a quarterly basis in arrears on the last
Business Day of each calendar quarter based upon the daily
utilization for that quarter as calculated by the Bank, equal to
0.50% percent per annum. Such commitment fee shall accrue from
the Closing Date to the Revolving Termination Date and shall be
due and payable quarterly in arrears on the last Business Day of
each quarter commencing on the Closing Date through the Revolving
Termination Date, with the final payment to be made on the
Revolving Termination Date. For purposes of calculating
utilization under this subsection, the Commitment shall be deemed
used to the extent of the Effective Amount of Revolving Loans and
the Term Loan then outstanding plus the Effective Amount of L/C
Obligations then outstanding. The commitment fee provided in
this subsection shall accrue at all times after the above-
mentioned commencement date, including at any time during which
one or more conditions in Article V are not met.
2.10 Computation of Fees and Interest. All computations of
interest for Base Rate Loans when the Base Rate is determined by
the Bank's "reference rate" shall be made on the basis of a year
of 365 or 366 days, as the case may be, and actual days elapsed.
All other computations of fees and interest shall be made on the
basis of a 360-day year and actual days elapsed (which results in
more interest being paid than if computed on the basis of a
365-day year). Interest and fees shall accrue during each period
during which interest or such fees are computed from the first
day thereof to the last day thereof. Each determination of an
interest rate by the Bank shall be conclusive and binding on the
Company in the absence of manifest error.
2.11 Payments by the Company. All payments to be made by
the Company shall be made without set-off, recoupment or
counterclaim. Except as otherwise expressly provided herein, all
payments by the Company shall be made to the Bank at the address
from time to time specified by the Bank for such purpose, and
shall be made in dollars and in immediately available funds, no
later than 3:00 p.m. (San Francisco time) on the date specified
herein. Any payment received by the Bank later than 3:00 p.m.
(San Francisco time) shall be deemed to have been received on the
following Business Day and any applicable interest or fee shall
continue to accrue. Subject to the provisions set forth in the
definition of "Interest Period" herein, whenever any payment is
due on a day other than a Business Day, such payment shall be
made on the following Business Day, and such extension of time
shall in such case be included in the computation of interest or
fees, as the case may be.
2.12 Prior Credit Agreements. The Company acknowledges and
agrees that the Bank's obligations and commitments to lend under
the Prior Credit Agreement are irrevocably terminated.
ARTICLE III
THE LETTERS OF CREDIT; THE BIRCKHAHN GUARANTY
3.01 The Letter of Credit Subfacility.
(a) On the terms and conditions set forth herein, the
Bank agrees (i) from time to time on any Business Day during the
period from the Closing Date to the Revolving Termination Date to
issue Letters of Credit for the account of the Company, and to
amend or renew Letters of Credit previously issued by it, in
accordance with subsection 3.02(b), and (ii) to honor drafts
under the Letters of Credit; provided, that the Bank shall not be
obligated to Issue any Letter of Credit if as of the date of
Issuance of such Letter of Credit (A) the Effective Amount of all
L/C Obligations plus the Effective Amount of all Loans shall
exceed the Commitment, or (B) the Effective Amount of all L/C
Obligations shall exceed the L/C Commitment. Within the
foregoing limits, and subject to the other terms and conditions
hereof, the Company's ability to obtain Letters of Credit shall
be fully revolving, and, accordingly, the Company may, during the
foregoing period, obtain Letters of Credit to replace Letters of
Credit which have expired or which have been drawn upon and
reimbursed.
(b) The Bank shall be under no obligation to Issue any
Letter of Credit if:
(i) any order, judgment or decree of any
Governmental Authority or arbitrator shall by its terms
purport to enjoin or restrain the Bank from Issuing such
Letter of Credit, or any Requirement of Law applicable to the
Bank or any request or directive (whether or not having the
force of law) from any Governmental Authority with
jurisdiction over the Bank shall prohibit, or request that
the Bank refrain from, the Issuance of letters of credit
generally or such Letter of Credit in particular or shall
impose upon the Bank with respect to such Letter of Credit
any restriction, reserve or capital requirement (for which
the Bank is not otherwise compensated hereunder) not in
effect on the Closing Date, or shall impose upon the Bank any
unreimbursed loss, cost or expense which was not applicable
on the Closing Date and which the Bank in good faith deems
material to it;
(ii) one or more of the applicable conditions
contained in Article V is not then satisfied;
(iii) the expiry date of any requested Letter of
Credit is (A) more than 360 days after the date of Issuance,
or (B) after the Revolving Termination Date;
(iv) any requested Letter of Credit does not
provide for drafts, or is not otherwise in form and substance
acceptable to the Bank, or the Issuance of a Letter of Credit
shall violate any applicable policies of the Bank;
(v) any Letter of Credit is to be used for any
purpose other than for supporting workers compensation
obligations of the Company in the ordinary course of business
or for supporting other obligations of the Company incurred
in the ordinary course of business (which shall not include
obligations of the Company in connection with any Acquisition
or any obligations of the Company in respect of
Indebtedness); or
(vi) any Letter of Credit is denominated in a
currency other than Dollars.
3.02 Issuance, Amendment and Renewal of Letters of Credit.
(a) Each Letter of Credit shall be issued upon the
irrevocable written request of the Company received by the Bank
at least five days prior to the proposed date of issuance. Each
such request for issuance of a Letter of Credit shall be by
facsimile, confirmed immediately in an original writing, in the
form of an L/C Application, and shall specify in form and detail
satisfactory to the Bank: (i) the proposed date of issuance of
the Letter of Credit (which shall be a Business Day); (ii) the
face amount of the Letter of Credit; (iii) the expiry date of the
Letter of Credit; (iv) the name and address of the beneficiary
thereof; (v) the documents to be presented by the beneficiary of
the Letter of Credit in case of any drawing thereunder; (vi) the
full text of any certificate to be presented by the beneficiary
in case of any drawing thereunder; and (vii) such other matters
as the Bank may require.
(b) From time to time while a Letter of Credit is
outstanding and prior to the Revolving Termination Date, the Bank
will, upon the written request of the Company received by the
Bank at least five days prior to the proposed date of amendment,
amend any Letter of Credit issued by it. Each such request for
amendment of a Letter of Credit shall be made by facsimile,
confirmed immediately in an original writing, made in the form of
an L/C Amendment Application and shall specify in form and detail
satisfactory to the Bank: (i) the Letter of Credit to be
amended; (ii) the proposed date of amendment of the Letter of
Credit (which shall be a Business Day); (iii) the nature of the
proposed amendment; and (iv) such other matters as the Bank may
require. The Bank shall be under no obligation to amend any
Letter of Credit if: (A) the Bank would have no obligation at
such time to issue such Letter of Credit in its amended form
under the terms of this Agreement; or (B) the beneficiary of any
such Letter of Credit does not accept the proposed amendment to
the Letter of Credit.
(c) While a Letter of Credit is outstanding and prior
to the Revolving Termination Date, at the option of the Company
and upon the written request of the Company received by the Bank
at least five days prior to the proposed date of notification of
renewal, the Bank shall authorize the automatic renewal of any
Letter of Credit. Each such request for renewal of a Letter of
Credit shall be made by facsimile, confirmed immediately in an
original writing, in the form of an L/C Amendment Application,
and shall specify in form and detail satisfactory to the Bank:
(i) the Letter of Credit to be renewed; (ii) the proposed date of
notification of renewal of the Letter of Credit (which shall be a
Business Day); (iii) the revised expiry date of the Letter of
Credit; and (iv) such other matters as the Bank may require. The
Bank shall be under no obligation so to renew any Letter of
Credit if: (A) the Bank would have no obligation at such time to
issue or amend such Letter of Credit in its renewed form under
the terms of this Agreement; or (B) the beneficiary of any such
Letter of Credit does not accept the proposed renewal of the
Letter of Credit. If any outstanding Letter of Credit shall
provide that it shall be automatically renewed unless the
beneficiary thereof receives notice from the Bank that such
Letter of Credit shall not be renewed, and if at the time of
renewal the Bank shall not have received any L/C Amendment
Application from the Company with respect to such renewal or
other written direction by the Company with respect thereto, the
Bank shall nonetheless be permitted (but not obliged) to allow
such Letter of Credit to renew, and the Company hereby authorizes
such renewal, and, accordingly, the Bank shall be deemed to have
received an L/C Amendment Application from the Company requesting
such renewal.
(d) The Bank may, at its election, deliver any notices
of termination or other communications to any Letter of Credit
beneficiary or transferee, and take any other action as necessary
or appropriate, at any time and from time to time, in order to
cause the expiry date of such Letter of Credit to be a date not
later than the Revolving Termination Date.
(e) This Agreement shall control in the event of any
conflict with any L/C-Related Document (other than any Letter of
Credit).
3.03 Existing Letter of Credit. On and after the Closing
Date, the Existing Letter of Credit shall be deemed for all
purposes, including for purposes of the fees to be collected
pursuant to subsections 3.09(a) and 3.09(c), and reimbursement of
costs and expenses to the extent provided herein, a Letter of
Credit outstanding under this Agreement and entitled to the
benefits of this Agreement and the other Loan Documents, and
shall be governed by the applications and agreements pertaining
thereto and by this Agreement. For purposes of this Agreement,
the Existing Letter of Credit shall be deemed be a utilization of
the Commitment and the L/C Commitment.
3.04 Uniform Customs and Practice. The Uniform Customs and
Practice for Documentary Credits as most recently published by
the International Chamber of Commerce prior to issuance of the
Letter of Credit ("UCP") shall in all respects be deemed a part
of this Article III as if incorporated herein and (unless
otherwise expressly provided in the Letter of Credit) shall apply
to such Letter of Credit.
3.05 Drawings and Reimbursements. In the event of any
request for a drawing under a Letter of Credit by the beneficiary
or transferee thereof, the Bank will promptly notify the Company.
The Company shall reimburse the Bank prior to 11:00 a.m. (San
Francisco time), on each date that any amount is paid by the Bank
under any Letter of Credit, in an amount equal to the amount so
paid by the Bank. If the Company fails to reimburse the Bank for
the full amount of any drawing under any Letter of Credit by
11:00 a.m. (San Francisco time) on such date, the Company shall
be deemed to have requested that a Base Rate Loan be made by the
Bank to be disbursed on such date under such Letter of Credit,
subject to the amount of the unutilized portion of the Commitment
and subject to the conditions set forth in Section 5.02. With
respect to any unreimbursed drawing that is not converted into a
Revolving Loan consisting of a Base Rate Loan to the Company in
whole or in part, because of the Company's failure to satisfy the
conditions set forth in Section 5.02 or for any other reason, the
Company shall be deemed to have incurred from the Bank an L/C
Borrowing in the amount of such drawing, which L/C Borrowing
shall be due and payable on demand (together with interest) and
shall bear interest at a rate per annum equal to the Base Rate
plus 2% per annum.
3.06 The Birckhahn Guaranty. The Bank (through its
Frankfurt/Main branch) has issued the Birckhahn Guaranty on
behalf of the Company. The Company agrees that, except to the
extent explicitly provided to the contrary in the Birckhahn
Guaranty Documents, the Company shall immediately reimburse the
Bank for all sums paid by the Bank (including through its
Frankfurt/Main branch or any other branch, office or Affiliate)
under the Birckhahn Guaranty, and such reimbursement shall be in
Deutsche Marks or the Equivalent Amount in Dollars, as requested
by the Bank. This Agreement shall control in the event of any
conflict with any Birckhahn Guaranty Document (other than the
Birckhahn Guaranty). Any reimbursement not made when due shall
bear interest at a rate per annum equal to the Base Rate plus 2%
per annum.
3.07 Obligations Absolute. The obligations of the Company
under this Agreement and any L/C-Related Document or Birckhahn
Guaranty Document to reimburse the Bank for a drawing under a
Letter of Credit or the Birckhahn Guaranty, shall be
unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement and each such other
L/C-Related Document or Birckhahn Guaranty Document under all
circumstances.
3.08 Cash Collateral Pledge. Upon the request of the Bank,
(i) if, as of the Revolving Termination Date, any Letters of
Credit may for any reason remain outstanding and partially or
wholly undrawn, or (ii) if, as of June 30, 1997, the Birckhahn
Guaranty may for any reason remain outstanding and partially or
wholly undrawn, or (iii) in addition to any other rights or
remedies which the Bank may have under this Agreement or
otherwise, upon the occurrence of an Event of Default, then, the
Company shall immediately provide to the Bank cash collateral in
an amount equal to the L/C Obligations or the Birckhahn Guaranty
Outstanding Amount, as applicable.
3.09 Letter of Credit and Birckhahn Guaranty Fees.
(a) The Company shall pay to the Bank a letter of
credit and bank guaranty fee with respect to the Letters of
Credit and the Birckhahn Guaranty equal to 1.25% per annum of the
average daily maximum amount available to be drawn on the
outstanding Letters of Credit and the Birckhahn Guaranty,
computed on a quarterly basis in arrears on the last Business Day
of each calendar quarter based upon Letters of Credit outstanding
for that quarter and the Equivalent Amount of the outstanding
amount of the Birckhahn Guaranty for that quarter, as calculated
by the Bank. Such letter of credit and bank guaranty fee shall
be due and payable quarterly in arrears on the last Business Day
of each calendar quarter during which Letters of Credit or the
Birckhahn Guaranty are outstanding, commencing on the first such
quarterly date to occur after the Closing Date, through the
Revolving Termination Date (or such later date upon which the
outstanding Letters of Credit or the Birckhahn Guaranty shall
expire), with the final payment to be made on the Revolving
Termination Date (or such later expiration date).
(b) The Company shall pay to the Bank from time to time
on demand the normal issuance, presentation, amendment and other
processing fees, and other standard costs and charges, of the
Bank relating to letters of credit as from time to time in
effect.
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY
4.01 Taxes. (a) (i) If any taxes (other than taxes on net
income (A) imposed by the country or any subdivision of the
country in which the Bank's principal office or actual lending
office is located and (B) measured by the United States taxable
income the Bank would have received if all payments under or in
respect of this Agreement and any instrument or agreement
required hereunder were exempt from taxes levied by the Company's
country) are at any time imposed on any payments under or in
respect of this Agreement or any instrument or agreement required
hereunder including, but not limited to, payments made pursuant
to this Section, the Company shall pay all such taxes and shall
also pay to the Bank, at the time interest is paid, all
additional amounts which the Bank specifies as necessary to
preserve the after-tax yield the Bank would have received if such
taxes had not been imposed.
(ii) The additional amounts necessary to
preserve the after-tax yield the Bank would have received if such
taxes had not been imposed shall be calculated pursuant to the
formula:
(w)(t)(i)
y = -----------
1-w-t
where the terms are defined as follows:
y = additional payment to be made to the Bank
w = withholding tax rate levied by foreign
government
t = the Bank's combined Federal and state tax rate
i = amount of interest to be paid on credit
(computed by using the base rate plus
quoted
spread)
1 = one
(b) The Company will provide the Bank with original tax
receipts, notarized copies of tax receipts, or such other
documentation as will prove payment of tax in a court of law
applying the United States Federal Rules of Evidence, for all
taxes paid by the Company pursuant to subsection (a) above. The
Company will deliver receipts to the Bank within 30 days after
the due date for the related tax.
4.02 Illegality. (a) If the Bank determines that the
introduction of any Requirement of Law, or any change in any
Requirement of Law, or in the interpretation or administration of
any Requirement of Law, has made it unlawful, or that any central
bank or other Governmental Authority has asserted that it is
unlawful, for the Bank or any applicable lending office of the
Bank to make Offshore Rate Loans, then, on notice thereof by the
Bank to the Company, any obligation of the Bank to make Offshore
Rate Loans shall be suspended until the Bank notifies the Company
that the circumstances giving rise to such determination no
longer exist.
(b) If the Bank determines that it is unlawful to
maintain Offshore Rate Loans, the Company shall, upon its receipt
of notice of such fact and demand from the Bank, prepay in full
all Offshore Rate Loans then outstanding, together with interest
accrued thereon and amounts required under Section 4.04, either
on the last day of the Interest Period thereof, if the Bank may
lawfully continue to maintain Offshore Rate Loans to such day, or
immediately, if the Bank may not lawfully continue to maintain
Offshore Rate Loans. If the Company is required to so prepay any
Offshore Rate Loan, then concurrently with such prepayment, the
Company shall borrow from the Bank, in the amount of such
repayment, a Base Rate Loan.
4.03 Increased Costs and Reduction of Return. (a) If the
Bank determines that, due to either (i) the introduction of or
any change in or in the interpretation of any law or regulation
or (ii) the compliance by the Bank with any guideline or request
from any central bank or other Governmental Authority (whether or
not having the force of law), there shall be any increase in the
cost to the Bank of agreeing to make or making, funding or
maintaining any Offshore Rate Loan or other credit hereunder,
then the Company shall be liable for, and shall from time to
time, upon demand, pay to the Bank, additional amounts as are
sufficient to compensate the Bank for such increased costs.
(b) If the Bank shall have determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change
in any Capital Adequacy Regulation, (iii) any change in the
interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or
(iv) compliance by the Bank (or any applicable lending office of
the Bank) or any corporation controlling the Bank with any
Capital Adequacy Regulation, affects or would affect the amount
of capital required or expected to be maintained by the Bank or
any corporation controlling the Bank and (taking into
consideration the Bank's or such corporation's policies with
respect to capital adequacy and the Bank's desired return on
capital) determines that the amount of such capital is increased
as a consequence of its Commitment, loans, letters of credit,
bank guaranty, or obligations under this Agreement, then, upon
demand of the Bank to the Company, the Company shall pay to the
Bank, from time to time as specified by the Bank, additional
amounts sufficient to compensate the Bank for such increase.
4.04 Funding Losses. The Company shall reimburse the Bank
and hold the Bank harmless from any loss or expense which the
Bank may sustain or incur as a consequence of: (a) the failure
of the Company to make on a timely basis any payment of principal
of any Offshore Rate Loan; (b) the failure of the Company to
borrow, continue or convert a Loan after the Company has given
(or is deemed to have given) a Notice of Borrowing or a Notice of
Conversion/Continuation; (c) the failure of the Company to make
any prepayment in accordance with any notice delivered under
Section 2.06; (d) the prepayment or other payment (including
after acceleration thereof) of an Offshore Rate Loan on a day
that is not the last day of the relevant Interest Period; or (e)
the automatic conversion under Section 2.04 of any Offshore Rate
Loan to a Base Rate Loan on a day that is not the last day of the
relevant Interest Period; including any such loss or expense
arising from the liquidation or reemployment of funds obtained by
it to maintain its Offshore Rate Loans or from fees payable to
terminate the deposits from which such funds were obtained.
4.05 Inability to Determine Rates. If the Bank determines
that for any reason adequate and reasonable means do not exist
for determining the Offshore Rate for any requested Interest
Period with respect to a proposed Offshore Rate Loan, or that the
Offshore Rate applicable pursuant to subsection 2.08(a) for any
requested Interest Period with respect to a proposed Offshore
Rate Loan does not adequately and fairly reflect the cost to the
Bank of funding such Loan, the Bank will promptly so notify the
Company. Thereafter, the obligation of the Bank to make or
maintain Offshore Rate Loans hereunder shall be suspended until
the Bank revokes such notice in writing. Upon receipt of such
notice, the Company may revoke any Notice of Borrowing or Notice
of Conversion/Continuation then submitted by it. If the Company
does not revoke such Notice, the Bank shall make, convert or
continue the Loans, as proposed by the Company, in the amount
specified in the applicable notice submitted by the Company, but
such Loans shall be made, converted or continued as Base Rate
Loans instead of Offshore Rate Loans.
4.06 Survival. The agreements and obligations of the
Company in this Article IV shall survive the payment of all other
Obligations.
ARTICLE V
CONDITIONS PRECEDENT
5.01 Conditions of Initial Loan. The obligation of the Bank
to make the initial Credit Extension hereunder is subject to the
condition that the Bank have received on or before the Closing
Date all of the following, in form and substance satisfactory to
the Bank:
(a) Credit Agreement. This Agreement executed by the
Company;
(b) Resolutions; Incumbency. (i) Copies of the
resolutions of the board of directors of the Company authorizing
the transactions contemplated hereby, certified as of the Closing
Date by the Secretary of the Company; and (ii) A certificate of
the Secretary of the Company certifying the names and true
signatures of the officers of the Company authorized to execute,
deliver and perform, as applicable, this Agreement, and all other
Loan Documents to be delivered by it hereunder;
(c) Organization Documents; Good Standing. Each of the
following documents: (i) the articles or certificate of
incorporation and the bylaws of the Company as in effect on the
Closing Date, certified by the Secretary of the Company as of the
Closing Date; and (ii) a good standing and tax good standing
certificate for the Company from the Secretary of State (or
similar, applicable Governmental Authority) of its state of
incorporation and each state where the Company is qualified to do
business as a foreign corporation as of a recent date;
(d) Payment of Fees. Evidence of payment by the
Company of all accrued and unpaid fees, costs and expenses to the
extent then due and payable on the Closing Date, together with
Attorney Costs of the Bank to the extent invoiced prior to or on
the Closing Date, plus such additional amounts of Attorney Costs
as shall constitute the Bank's reasonable estimate of Attorney
Costs incurred or to be incurred by it through the closing
proceedings (provided that such estimate shall not thereafter
preclude final settling of accounts between the Company and the
Bank); including any such costs, fees and expenses arising under
or referenced in Sections 2.09 and 10.04;
(e) Certificate. A certificate signed by a Responsible
Officer, dated as of the Closing Date, stating that: (i) the
representations and warranties contained in Article VI are true
and correct on and as of such date, as though made on and as of
such date; (ii) no Default or Event of Default exists or would
result from the execution and delivery of this Agreement; (iii)
there has occurred since January 31, 1994, no event or
circumstance that has resulted or could reasonably be expected to
result in a Material Adverse Effect; and (iv) the Company has
furnished to the Bank a complete and correct copy of the Senior
Note Agreement and the Senior Notes, as in effect as of the
Closing Date;
(f) Legal Opinion. An opinion of Collette & Erickson,
counsel to the Company and addressed to the Bank, substantially
in the form of Exhibit D;
(g) Private Placement. Evidence satisfactory to the
Bank that the Company has issued no less than $18,000,000 in
principal amount of Senior Notes; and
(h) Other Documents. Such other approvals, opinions,
documents or materials as the Bank may reasonably request.
5.02 Conditions to All Credit Extensions. The obligation of
the Bank to make any Credit Extension (including the initial
Credit Extension) is subject to the satisfaction of the following
conditions precedent on the relevant Borrowing Date or date of
Issuance of any Letter of Credit ("Issuance Date"):
(a) Notice of Borrowing. The Bank shall have received
a Notice of Borrowing or in the case of any Issuance of any
Letter of Credit, an L/C Application or L/C Amendment
Application;
(b) Continuation of Representations and Warranties.
The representations and warranties in Article VI shall be true
and correct on and as of such Borrowing Date with the same effect
as if made on and as of such Borrowing Date or Issuance Date
(except to the extent such representations and warranties
expressly refer to an earlier date, in which case they shall be
true and correct as of such earlier date); and
(c) No Existing Default. No Default or Event of
Default shall exist or shall result from such Borrowing or
Issuance.
Each Notice of Borrowing and L/C Application or L/C Amendment
Application submitted by the Company hereunder shall constitute a
representation and warranty by the Company hereunder, as of the
date of each such notice and as of each Borrowing Date or
Issuance Date, as applicable, that the conditions in Section 5.02
are satisfied.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Bank that:
6.01 Corporate Existence and Power. Each of the Company and
its Subsidiaries: (a) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction
of its incorporation; (b) has the power and authority and all
governmental licenses, authorizations, consents and approvals to
own its assets, carry on its business and to execute, deliver,
and perform its obligations under the Loan Documents; (c) is duly
qualified as a foreign corporation and is licensed and in good
standing under the laws of each jurisdiction where its ownership,
lease or operation of property or the conduct of its business
requires such qualification or license; and (d) is in compliance
with all Requirements of Law; except, in each case referred to in
clause (c) or clause (d), to the extent that the failure to do so
could not reasonably be expected to have a Material Adverse
Effect.
6.02 Corporate Authorization; No Contravention. The
execution, delivery and performance by the Company of this
Agreement and each other Loan Document to which the Company is
party, have been duly authorized by all necessary corporate
action, and do not and will not: (a) contravene the terms of any
of the Company's Organization Documents; (b) conflict with or
result in any breach or contravention of, or the creation of any
Lien under, any document evidencing any Contractual Obligation to
which the Company is a party or any order, injunction, writ or
decree of any Governmental Authority to which the Company or its
property is subject; or (c) violate any Requirement of Law.
6.03 Governmental Authorization. No approval, consent,
exemption, authorization, or other action by, or notice to, or
filing with, any Governmental Authority is necessary or required
in connection with the execution, delivery or performance by, or
enforcement against, the Company or any of its Subsidiaries of
the Agreement or any other Loan Document. In providing the
representations and warranties in this Section 6.03, the Company
has assumed that, other than the Company and its Subsidiaries, no
party to the Agreement or any of the other Loan Documents is
subject to any statute, rule or regulation, or to any impediment
to which contracting parties are generally not subject, which
requires the Company, any of its Subsidiaries or any other Person
to obtain approval, consent, exemption, authorization or other
action by, or to provide notice to, or filing with, any
Governmental Authority in connection with the execution, delivery
or performance by, or enforcement against, the Company or any of
its Subsidiaries of the Agreement or any other Loan Document.
6.04 Binding Effect. This Agreement and each other Loan
Document to which the Company is a party constitute the legal,
valid and binding obligations of the Company, enforceable against
the Company in accordance with their respective terms, except as
enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws affecting the enforcement of
creditors' rights generally or by equitable principles relating
to enforceability.
6.05 Litigation. Except as disclosed on Schedule 6.05,
there are no actions, suits, proceedings, claims or disputes
pending, or to the best knowledge of the Company, threatened or
contemplated, at law, in equity, in arbitration or before any
Governmental Authority, against the Company, or its Subsidiaries
or any of their respective properties which: (a) purport to
affect or pertain to this Agreement or any other Loan Document,
or any of the transactions contemplated hereby or thereby; or (b)
if determined adversely to the Company or its Subsidiaries, would
reasonably be expected to have a Material Adverse Effect. No
injunction, writ, temporary restraining order or any order of any
nature has been issued by any court or other Governmental
Authority purporting to enjoin or restrain the execution,
delivery or performance of this Agreement or any other Loan
Document, or directing that the transactions provided for herein
or therein not be consummated as herein or therein provided.
6.06 No Default. No Default or Event of Default exists or
would result from the incurring of any Obligations by the
Company. As of the Closing Date, neither the Company nor any
Subsidiary is in default under or with respect to any Contractual
Obligation in any respect which, individually or together with
all such defaults, could reasonably be expected to have a
Material Adverse Effect, or that would, if such default had
occurred after the Closing Date, create an Event of Default under
subsection 9.01(e).
6.07 ERISA Compliance. (a) Each Plan is in compliance in
all material respects with the applicable provisions of ERISA,
the Code and other federal or state law. Each Plan which is
intended to qualify under Section 401(a) of the Code has received
a favorable determination letter from the IRS and to the best
knowledge of the Company, nothing has occurred which would cause
the loss of such qualification.
(b) There are no pending, or to the best knowledge of
Company, threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Plan which has
resulted or could reasonably be expected to result in a Material
Adverse Effect. There has been no prohibited transaction or
other violation of the fiduciary responsibility rule with respect
to any Plan which could reasonably result in a Material Adverse
Effect.
(c) No ERISA Event has occurred or is reasonably
expected to occur with respect to any Pension Plan.
(d) No Pension Plan has any Unfunded Pension Liability.
(e) The Company has not incurred, nor does it
reasonably expect to incur, any liability under Title IV of ERISA
with respect to any Pension Plan (other than premiums due and not
delinquent under Section 4007 of ERISA).
(f) The Company has not transferred any Unfunded
Pension Liability to any Person or otherwise engaged in a
transaction that could be subject to Section 4069 of ERISA.
(g) No trade or business (whether or not incorporated
under common control with the Company within the meaning of
Section 414(b), (c), (m) or (o) of the Code) maintains or
contributes to any Pension Plan or other Plan subject to Section
412 of the Code. Neither the Company nor any Person under common
control with the Company (as defined in the preceding sentence)
has ever contributed to any multiemployer plan within the meaning
of Section 4001(a)(3) of ERISA.
6.08 Use of Proceeds; Margin Regulations. The proceeds of
the Loans are to be used solely for the purposes set forth in and
permitted by Section 7.11 and for purposes not prohibited by
Sections 8.07 and 8.08. Neither the Company nor any Subsidiary
is generally engaged in the business of purchasing or selling
Margin Stock or extending credit for the purpose of purchasing or
carrying Margin Stock.
6.09 Title to Properties. The Company and each Subsidiary
have good record and marketable title in fee simple to, or valid
leasehold interests in, all real property necessary or used in
the ordinary conduct of their respective businesses, except for
such defects in title as could not, individually or in the
aggregate, have a Material Adverse Effect. As of the Closing
Date, the property of the Company and its Subsidiaries is subject
to no Liens, other than Permitted Liens.
6.10 Taxes. The Company and its Subsidiaries have filed all
Federal and other material tax returns and reports required to be
filed, and have paid all Federal and other material taxes,
assessments, fees and other governmental charges levied or
imposed upon them or their properties, income or assets otherwise
due and payable, except those which are being contested in good
faith by appropriate proceedings and for which adequate reserves
have been provided in accordance with GAAP. There is no proposed
tax assessment against the Company or any Subsidiary that would,
if made, have a Material Adverse Effect.
6.11 Financial Condition. (a) The unaudited consolidated
financial statements of the Company and its Subsidiaries dated
January 31, 1994, and the related consolidated statements of
income or operations, shareholders' equity and cash flows for the
fiscal quarter ended on that date:
(i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby,
except as otherwise expressly noted therein, subject to
ordinary, good faith year end audit adjustments;
(ii) fairly present the financial condition of the
Company and its Subsidiaries as of the date thereof and
results of operations for the period covered thereby; and
(iii) show all material indebtedness and other
liabilities, direct or contingent, of the Company and its
consolidated Subsidiaries as of the date thereof, including
liabilities for taxes, material commitments and Contingent
Obligations.
(b) Since January 31, 1994, there has been no Material
Adverse Effect.
6.12 Environmental Matters. The Company conducts in the
ordinary course of business a review of the effect of existing
Environmental Laws and existing Environmental Claims on its
business, operations and properties, and as a result thereof the
Company has reasonably concluded that, such Environmental Laws
and Environmental Claims could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
6.13 Regulated Entities. None of the Company, any Person
controlling the Company, or any Subsidiary, is an "Investment
Company" within the meaning of the Investment Company Act of
1940. The Company is not subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code, or any
other Federal or state statute or regulation limiting its ability
to incur Indebtedness.
6.14 No Burdensome Restrictions. Neither the Company nor
any Subsidiary is a party to or bound by any Contractual
Obligation, or subject to any restriction in any Organization
Document, or any Requirement of Law, which could reasonably be
expected to have a Material Adverse Effect.
6.15 Copyrights, Patents, Trademarks and Licenses, etc. The
Company or its Subsidiaries own or are licensed or otherwise have
the right to use all of the patents, trademarks, service marks,
trade names, copyrights, contractual franchises, authorizations
and other rights that are reasonably necessary for the operation
of their respective businesses, without conflict with the rights
of any other Person. To the best knowledge of the Company, no
slogan or other advertising device, product, process, method,
substance, part or other material now employed, or now
contemplated to be employed, by the Company or any Subsidiary
infringes upon any rights held by any other Person. No claim or
litigation regarding any of the foregoing is pending or
threatened, and no patent, invention, device, application,
principle or any statute, law, rule, regulation, standard or code
is pending or, to the knowledge of the Company, proposed, which,
in either case, could reasonably be expected to have a Material
Adverse Effect.
6.16 Subsidiaries. As of the Closing Date, the Company has
no Subsidiaries other than those specifically disclosed in part
(a) of Schedule 6.16 hereto and has no equity investments in any
other corporation or entity other than those specifically
disclosed in part (b) of Schedule 6.16.
6.17 Insurance. The properties of the Company and its
Subsidiaries are insured with financially sound and reputable
insurance companies not Affiliates of the Company, in such
amounts, with such deductibles and covering such risks as are
customarily carried by companies engaged in similar businesses
and owning similar properties in localities where the Company or
such Subsidiary operates.
6.18 Full Disclosure. None of the representations or
warranties made by the Company or any Subsidiary in the Loan
Documents as of the date such representations and warranties are
made or deemed made, and none of the statements contained in any
exhibit, report, statement or certificate furnished by or on
behalf of the Company or any Subsidiary in connection with the
Loan Documents (including the offering and disclosure materials
delivered by or on behalf of the Company to the Bank prior to the
Closing Date), contains any untrue statement of a material fact
or omits any material fact required to be stated therein or
necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading as of the
time when made or delivered.
ARTICLE VII
AFFIRMATIVE COVENANTS
So long as the Bank shall have any Commitment hereunder, or
any Loan or other Obligation shall remain unpaid or unsatisfied,
or any Letter of Credit or the Birckhahn Guaranty shall remain
outstanding, unless the Bank waives compliance in writing:
7.01 Financial Statements. The Company shall deliver to the
Bank, in form and detail satisfactory to the Bank:
(a) as soon as available, but not later than 90 days
after the end of each fiscal year, a copy of the audited
consolidated balance sheet of the Company and its Subsidiaries as
at the end of such year and the related consolidated statements
of income or operations, shareholders' equity and cash flows for
such year, setting forth in each case in comparative form the
figures for the previous fiscal year, and accompanied by the
opinion of Deloitte & Touche or another nationally-recognized
independent public accounting firm ("Independent Auditor") which
opinion shall state that such consolidated financial statements
present fairly the financial position for the periods indicated
in conformity with GAAP applied on a basis consistent with prior
years. Such opinion shall not be qualified or limited because of
a restricted or limited examination by the Independent Auditor of
any material portion of the Company's or any Subsidiary's records
or any other reason; and
(b) as soon as available, but not later than 45 days
after the end of each of the first three fiscal quarters of each
fiscal year, a copy of the unaudited consolidated balance sheet
of the Company and its Subsidiaries as of the end of such quarter
and the related consolidated statements of income, shareholders'
equity and cash flows for the period commencing on the first day
and ending on the last day of such quarter and commencing on the
first day of the fiscal year and ending on the last day of such
quarter, and certified by a Responsible Officer as fairly
presenting, in accordance with GAAP (subject to ordinary, good
faith audit adjustments and the absence of notes to such
financial statements), the financial position and the results of
operations of the Company and the Subsidiaries.
7.02 Certificates; Other Information. The Company shall
furnish to the Bank:
(a) concurrently with the delivery of the financial
statements referred to in subsection 7.01(a), a certificate of
the Independent Auditor stating that during the examination there
was observed no Default or Event of Default of the kind which
would normally be revealed by such an examination, or a statement
of such Default or Event of Default if any is found whether or
not the same shall have been cured; (b) concurrently with the
delivery of the financial statements referred to in subsections
7.01(a) and (b), a Compliance Certificate executed by a
Responsible Officer;
(b) annually not later than 45 days after the
commencement of each fiscal year, the consolidated operating
budget of the Company and its Subsidiaries for the coming fiscal
year;
(c) promptly, copies of all financial statements and
reports that the Company sends to its shareholders, and copies of
all financial statements and regular, periodical or special
reports (including Forms 10K, 10Q and 8K) that the Company or any
Subsidiary may make to, or file with, the SEC; and
(d) promptly, such additional information regarding the
business, financial or corporate affairs of the Company or any
Subsidiary as the Bank may from time to time request.
7.03 Notices. The Company shall promptly notify the Bank:
(a) of the occurrence of any Default or Event of
Default, and of the occurrence or existence of any event or
circumstance that foreseeably will become a Default or Event of
Default;
(b) of any matter that has resulted or may result in a
Material Adverse Effect, including (i) breach or non-performance
of, or any default under, a Contractual Obligation of the Company
or any Subsidiary; (ii) any dispute, litigation, investigation,
proceeding or suspension between the Company or any Subsidiary
and any Governmental Authority; or (iii) the commencement of, or
any material development in, any litigation or proceeding
affecting the Company or any Subsidiary; including pursuant to
any applicable Environmental Laws;
(c) of any of the following events affecting the
Company, together with a copy of any notice with respect to such
event that may be required to be filed with a Governmental
Authority and any notice delivered by a Governmental Authority to
the Company with respect to such event: (i) an ERISA Event;
(ii) if any of the representations and warranties in Section 6.07
ceases to be true and correct; (iii) the adoption of any new
Pension Plan or other Plan subject to Section 412 of the Code;
(iv) the adoption of any amendment to a Pension Plan or other
Plan subject to Section 412 of the Code, if such amendment
results in a material increase in contributions or Unfunded
Pension Liability; or (v) the commencement of contributions to
any Pension Plan or other Plan subject to Section 412 of the
Code; and
(d) of any material change in accounting policies or
financial reporting practices by the Company or any of its
consolidated Subsidiaries.
Each notice under this Section shall be accompanied by a
written statement by a Responsible Officer setting forth details
of the occurrence referred to therein, and stating what action
the Company or any affected Subsidiary proposes to take with
respect thereto and at what time. Each notice under subsection
7.03(a) shall describe with particularity any and all clauses or
provisions of this Agreement or other Loan Document that have
been (or foreseeably will be) breached or violated.
7.04 Preservation of Corporate Existence, Etc. The Company
shall, and shall cause each Subsidiary (except where the failure
so to cause any such Subsidiary could not be reasonably expected
to have a Material Adverse Effect) to: (a) preserve and maintain
in full force and effect its corporate existence and good
standing under the laws of its state or jurisdiction of
incorporation; (b) preserve and maintain in full force and effect
all governmental rights, privileges, qualifications, permits,
licenses and franchises necessary or desirable in the normal
conduct of its business except in connection with transactions
permitted by Section 8.03 and sales of assets permitted by
Section 8.02; (c) use reasonable efforts, in the ordinary course
of business, to preserve its business organization and goodwill;
and (d) preserve or renew, to the extent legally possible, all of
its registered patents, trademarks, trade names and service
marks, the non-preservation of which could reasonably be expected
to have a Material Adverse Effect.
7.05 Maintenance of Property. The Company shall maintain,
and shall cause each Subsidiary to maintain, and preserve all its
property which is used or useful in its business in good working
order and condition, ordinary wear and tear excepted.
7.06 Insurance. The Company shall maintain, and shall cause
each Subsidiary to maintain, with financially sound and reputable
independent insurers, insurance with respect to its properties
and business against loss or damage of the kinds customarily
insured against by Persons engaged in the same or similar
business, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons.
7.07 Payment of Obligations. The Company shall, and shall
cause each Subsidiary to, pay and discharge as the same shall
become due and payable, all their respective obligations and
liabilities, including: (a) all tax liabilities, assessments and
governmental charges or levies upon it or its properties or
assets, unless the same are being contested in good faith by
appropriate proceedings and adequate reserves in accordance with
GAAP are being maintained by the Company or such Subsidiary; (b)
all lawful claims which, if unpaid, would by law become a Lien
upon its property; and (c) all Indebtedness, as and when due and
payable, but subject to any subordination provisions contained in
any instrument or agreement evidencing such Indebtedness.
7.08 Compliance with Laws. The Company shall comply, and
shall cause each Subsidiary to comply, in all material respects
with all Requirements of Law of any Governmental Authority having
jurisdiction over it or its business (including the Federal Fair
Labor Standards Act), except such as may be contested in good
faith or as to which a bona fide dispute may exist.
7.09 Inspection of Property and Books and Records. The
Company shall maintain and shall cause each Subsidiary to
maintain proper books of record and account, in which full, true
and correct entries in conformity with GAAP consistently applied
shall be made of all financial transactions and matters involving
the assets and business of the Company and such Subsidiary. The
Company shall permit, and shall cause each Subsidiary to permit,
representatives and independent contractors of the Bank to visit
and inspect any of their respective properties, to examine their
respective corporate, financial and operating records, and make
copies thereof or abstracts therefrom, and to discuss their
respective affairs, finances and accounts with their respective
directors, officers, and independent public accountants, all at
such reasonable times during normal business hours and as often
as may be reasonably desired, upon reasonable advance notice to
the Company; provided, however, when an Event of Default exists
the Bank may do any of the foregoing at the expense of the
Company at any time during normal business hours and without
advance notice.
7.10 Environmental Laws. The Company shall, and shall cause
each Subsidiary to, conduct its operations and keep and maintain
its property substantially in compliance with all Environmental
Laws.
7.11 Use of Proceeds. The Company shall use the proceeds of
the Loans for working capital and other general corporate
purposes not in contravention of any Requirement of Law or of any
Loan Document.
ARTICLE VIII
NEGATIVE COVENANTS
So long as the Bank shall have any Commitment hereunder, or
any Loan or other Obligation shall remain unpaid or unsatisfied,
or any Letter of Credit or the Birckhahn Guaranty shall remain
outstanding, unless the Bank waives compliance in writing:
8.01 Limitation on Liens. The Company shall not, and shall
not suffer or permit any Subsidiary to, directly or indirectly,
make, create, incur, assume or suffer to exist any Lien upon or
with respect to any part of its property, whether now owned or
hereafter acquired, other than the following ("Permitted Liens"):
(a) any Lien existing on property of the Company or any
Subsidiary on the Closing Date and set forth in Schedule 8.01
securing Indebtedness outstanding on such date;
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other
governmental charges which are not delinquent or remain payable
without penalty, or to the extent that non-payment thereof is
permitted by Section 7.07;
(d) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the
ordinary course of business which are not delinquent or remain
payable without penalty or which are being contested in good
faith and by appropriate proceedings, which proceedings have the
effect of preventing the forfeiture or sale of the property
subject thereto;
(e) Liens (other than any Lien imposed by ERISA)
consisting of pledges or deposits required in the ordinary course
of business in connection with workers' compensation,
unemployment insurance and other social security legislation;
(f) Liens on the property of the Company or its
Subsidiary securing (i) the non-delinquent performance of bids,
trade contracts (other than for borrowed money), leases,
statutory obligations, (ii) contingent obligations on surety, and
appeal bonds, and (iii) other non-delinquent obligations of a
like nature; in each case, incurred in the ordinary course of
business as presently conducted;
(g) Liens consisting of judgment or judicial attachment
liens, provided that the enforcement of such Liens is effectively
stayed, the claims secured thereby are being actively contested
in good faith and by appropriate proceedings, adequate book
reserves shall have been established and maintained and shall
exist with respect thereto, and all such liens in the aggregate
at any time outstanding for the Company and its Subsidiaries do
not exceed $5,000,000;
(h) easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of business
which, in the aggregate, are not substantial in amount, and which
do not in any case materially detract from the value of the
property subject thereto or interfere with the ordinary conduct
of the businesses of the Company and its Subsidiaries;
(i) Liens on assets of corporations which become
Subsidiaries after the date of this Agreement, provided, however,
that such Liens existed at the time the respective corporations
became Subsidiaries and were not created in anticipation thereof;
(j) purchase money security interests on any property
acquired or held by the Company or its Subsidiaries in the
ordinary course of business, securing Indebtedness incurred or
assumed for the purpose of financing all or any part of the cost
of acquiring such property; provided that (i) any such Lien
attaches to such property concurrently with or within 20 days
after the acquisition thereof, and (ii) such Lien attaches solely
to the property so acquired in such transaction;
(k) Liens securing obligations in respect of capital
leases on assets subject to such leases, provided that such
capital leases are otherwise permitted hereunder;
(l) Liens arising solely by virtue of any statutory or
common law provision relating to banker's liens, rights of set-
off or similar rights and remedies as to deposit accounts or
other funds maintained with a creditor depository institution;
provided that (i) such deposit account is not a dedicated cash
collateral account and is not subject to restrictions against
access by the Company in excess of those set forth by regulations
promulgated by the FRB, and (ii) such deposit account is not
intended by the Company or any Subsidiary to provide collateral
to the depository institution;
(m) Liens consisting of pledges of cash collateral or
government securities to secure obligations under Swap Contracts
entered into in the ordinary course of business as bona fide
hedging transactions, provided that the counterparty to such Swap
Contract is under a similar requirement to deliver similar
collateral from time to time to the Company or the Subsidiary
party thereto;
(n) Liens not otherwise permitted pursuant to clauses
(a) through (m), inclusive, of this Section 8.01; provided, that:
(i) the Indebtedness or other obligations
secured thereby shall have been incurred, or shall be
permitted to be outstanding, in accordance with the
provisions of Section 8.05 of this Agreement; and
(ii) immediately prior to, and after giving
effect to the incurrence, assumption or creation thereof
and to any concurrent application of the proceeds
of any Indebtedness or other obligation secured thereby,
(A) the aggregate amount of all Indebtedness and other
obligations secured by such Liens at such time would not
exceed $5,000,000, and (B) no Default or Event of
Default would exist; and
(o) Liens securing renewals, extensions (as to time)
and refinancings of Indebtedness secured by the Liens described
in clauses (a) through (n) of this Section 8.01, provided, that:
(i) the amount of Indebtedness or other
obligations secured by each such Lien is not increased
in excess of the amount of such Indebtedness or other
obligations outstanding on the date of such renewal,
extension or refinancing;
(ii) none of such Liens is extended to
encumber or otherwise relate to or cover any additional
property of the Company or any Subsidiary; and
(iii) immediately prior to , and immediately
after the consummation of such renewal, extension or
refinancing, and after giving effect thereto, no Default
or Event of Default exists or would exist.
8.02 Disposition of Assets. The Company shall not, and
shall not suffer or permit any Subsidiary to, directly or
indirectly, sell, assign, lease, convey, transfer or otherwise
dispose of (whether in one or a series of transactions) any
property (including accounts and notes receivable, with or
without recourse and shares in any Subsidiary) or enter into any
agreement to do any of the foregoing, except:
(a) dispositions of inventory, or used, worn-out or
surplus equipment, all in the ordinary course of business;
(b) the sale of equipment to the extent that such
equipment is exchanged for credit against the purchase price of
similar replacement equipment, or the proceeds of such sale are
reasonably promptly applied to the purchase price of such
replacement equipment;
(c) dispositions of inventory, equipment or other
property by the Company or any Subsidiary to the Company or any
Subsidiary pursuant to reasonable business requirements; and
(d) dispositions (but not including any disposition of
any fixed or capital assets or any shares in any Subsidiary) not
otherwise permitted under this Section which are made for fair
market value; provided, that (i) at the time of any disposition,
no Event of Default shall exist or shall result from such
disposition, (ii) the aggregate sales price from such disposition
shall be paid in cash, and (iii) the aggregate value of all
assets so sold by the Company and its Subsidiaries, together,
shall not exceed in any fiscal year 5% of the gross book value of
the assets of the Company and its Subsidiaries on a consolidated
basis (exclusive of goodwill, patents, trademarks, trade names,
organization expense, treasury stock, unamortized debt discount
and expense, deferred charges, and other like intangibles) less
reserves applicable thereto.
8.03 Consolidations and Mergers. The Company shall not, and
shall not suffer or permit any Subsidiary to, merge, consolidate
with or into, or convey, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of transactions all or
substantially all of its assets (whether now owned or hereafter
acquired) to or in favor of any Person, except:
(a) any Subsidiary may merge with the Company, provided
that the Company shall be the continuing or surviving
corporation, or with any one or more Subsidiaries, provided that
if any transaction shall be between a Subsidiary and a
Wholly-Owned Subsidiary, the Wholly-Owned Subsidiary shall be the
continuing or surviving corporation; and
(b) any Subsidiary may sell all or substantially all of
its assets (upon voluntary liquidation or otherwise), to the
Company or another Wholly-Owned Subsidiary.
8.04 Loans and Investments. The Company shall not purchase
or acquire, or suffer or permit any Subsidiary to purchase or
acquire, or make any commitment therefor, any capital stock,
equity interest, or any obligations or other securities of, or
any interest in, any Person, or make or commit to make any
Acquisitions, or make or commit to make any advance, loan,
extension of credit or capital contribution to or any other
investment in, any Person including any Affiliate of the Company,
except for:
(a) subject to Section 8.15, investments in property to
be used in the ordinary course of business of the Company and its
Subsidiaries;
(b) investments in trade accounts receivable arising
from the sale of goods and services in the ordinary course of
business of the Company and its Subsidiaries;
(c) investments in United States Governmental
Securities, provided that such obligations mature within three
years from the date of acquisition thereof;
(d) investments in one or more Designated Subsidiaries;
(e) investments in commercial paper given either of the
two highest ratings by either Standard & Poor's or Moody's,
provided that such obligations mature within 270 days from the
date of creation thereof;
(f) investments constituting loans and advances to
employees, including travel advances and relocation loans, made
in the ordinary course of and furtherance of the business of the
Company or any Subsidiary;
(g) investments in demand deposit accounts maintained
with one or more local commercial banks, which qualify as
Acceptable Banks, as operating funds accounts used in the
ordinary course of business of the Company and the Subsidiaries;
(h) investments in publicly-traded shares in any
open-end mutual fund that invests solely in Investments of the
type described in clause (c), clause (e), clause (j) or clause
(k) of this Section 8.04 and has total assets in excess of
$1,000,000,000, provided that such Investments are classified as
current assets in accordance with GAAP;
(i) investments in money market preferred stock of
corporations organized under the laws of the United States or any
state thereof that (i) is commonly referred to by the terms
"Dutch-Auction Preferred," "Capital Market Preferred,"
"Remarketed Preferred," "Variable Rate Preferred" or similar
terms, and (ii) has been given, at the time of acquisition, one
of the two highest ratings by either Standard & Poor's or
Moody's;
(j) investments in certificates of deposit or banker's
acceptances issued by an Acceptable Bank, provided that such
obligations mature within one year from the date of acquisition
thereof;
(k) investments in Permitted Repurchase Agreements;
(l) investments in Dollar-denominated deposits with
(i) a bank organized under the laws of a country
that is a member of the European Community (or any political
subdivision of such country) having a combined capital and
surplus of not less than $100,000,000 and given an issuer
rating of "A" by Thomson BankWatch, Inc. (or a comparable
rating by another nationally-recognized rating agency of
similar standing if Thomson BankWatch, Inc. is not then in
the business of rating commercial banks), or
(ii) a foreign branch of an Acceptable Bank;
(m) investments in tax-exempt obligations of any state
of the United States, or any municipality of any such state,
given either of the two highest ratings by either Standard &
Poor's or Moody's, provided that such obligations mature within
three years from the date of acquisition thereof;
(n) investments in joint ventures, provided that the
aggregate book value of all such investments shall not at any
time exceed 10% of consolidated total assets of the Company and
its Subsidiaries determined at such time;
(o) investments in federally insured money market
deposit accounts maintained with one or more Acceptable Banks;
(p) other investments in securities for cash management
purposes, made in accordance with the Company's investment
policies as in effect on the Closing Date and as more
particularly set forth in Schedule 8.04(p) hereto, maturing
within one year from the date of acquisition thereof, provided
that the aggregate book value of all such investments shall not
at any time exceed 2.50% of the consolidated total assets of the
Company and its Subsidiaries determined at such time;
(q) investments in existence on the Closing Date
described in Schedule 8.04(q); and
(r) any other investment not otherwise permitted under
clauses (a) through (p) hereof; provided, that:
(i) immediately after, and after giving effect to,
any such investment, the sum of the aggregate amount of (x)
all Restricted Payments declared or made during the period
from and after the Closing Date to and including the date
such investment is made, plus (y) all such investments made
pursuant to this subsection 8.05(r) held at such time by the
Company and its Subsidiaries would not exceed the sum of:
(A) $5,000,000, plus
(B) the sum of 50%
(or minus 100% if a deficit) of the cumulative
consolidated net income of the Company and its
Subsidiaries for the period commencing on and
including October 31, 1993 and ending on and
including the date such investment is made, plus
(C) the aggregate
amount of cash proceeds (net of all costs and
out-of-pocket expenses in connection therewith,
including, without limitation, placement,
underwriting and brokerage fees and expenses)
received by the Company and its Subsidiaries after
the Closing Date and prior to such time from the
issuance and sale of (I) capital stock (other than
Redeemable Stock) of the Company (either directly
or through the exercise of warrants, rights or
other options or the exercise of any rights of the
holder of any Indebtedness of the Company to
convert such Indebtedness to capital stock (other
than Redeemable Stock)) or (II) any warrants,
rights or other options to purchase such capital
stock; and
(ii) immediately before, and after giving effect
to, such investment, no Default or Event of Default exists or
would exist.
8.05 Limitation on Indebtedness. The Company shall not, and
shall not suffer or permit any Subsidiary to, create, incur,
assume, suffer to exist, or otherwise become or remain directly
or indirectly liable with respect to, any Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement;
(b) Indebtedness consisting of Contingent Obligations
permitted pursuant to Section 8.09;
(c) Indebtedness existing on the Closing Date and set
forth in Schedule 8.05;
(d) Indebtedness secured by Liens permitted by
subsection 8.01(i), (j), (m) and (n) in an aggregate amount
outstanding not to exceed $5,000,000;
(e) Indebtedness incurred in connection with leases
permitted pursuant to Section 8.10;
(f) Indebtedness evidenced by the Senior Notes, not to
exceed $18,000,000 in aggregate principal amount; and
(g) Additional unsecured Indebtedness not otherwise
permitted under this Section 8.05 in aggregate amount outstanding
at any time not to exceed $1,000,000.
8.06 Transactions with Affiliates. The Company shall not,
and shall not suffer or permit any Subsidiary to, enter into any
transaction with any Affiliate of the Company, except upon fair
and reasonable terms no less favorable to the Company or such
Subsidiary than would obtain in a comparable arm's-length
transaction with a Person not an Affiliate of the Company or such
Subsidiary.
8.07 Use of Proceeds. The Company shall not, and shall not
suffer or permit any Subsidiary to, use any portion of the Loan
proceeds, directly or indirectly, (i) to purchase or carry Margin
Stock, (ii) to repay or otherwise refinance indebtedness of the
Company or others incurred to purchase or carry Margin Stock,
(iii) to extend credit for the purpose of purchasing or carrying
any Margin Stock, or (iv) to acquire any security in any
transaction that is subject to Section 13 or 14 of the Exchange
Act.
8.08 Use of Proceeds - Ineligible Securities. The Company
shall not, directly or indirectly, use any portion of the Loan
proceeds or any Letter of Credit (i) knowingly to purchase
Ineligible Securities from BA Securities, Inc. (the "Arranger")
during any period in which the Arranger makes a market in such
Ineligible Securities, (ii) knowingly to purchase during the
underwriting or placement period Ineligible Securities being
underwritten or privately placed by the Arranger, or (iii) to
make payments of principal or interest on Ineligible Securities
underwritten or privately placed by the Arranger and issued by or
for the benefit of the Company or any Affiliate of the Company.
The Arranger is a registered broker-dealer and permitted to
underwrite and deal in certain Ineligible Securities; and
"Ineligible Securities" means securities which may not be
underwritten or dealt in by member banks of the Federal Reserve
System under Section 16 of the Banking Act of 1933 (12 U.S.C.
24, Seventh), as amended.
8.09 Contingent Obligations. The Company shall not, and
shall not suffer or permit any Subsidiary to, create, incur,
assume or suffer to exist any Contingent Obligations except:
(a) endorsements for collection or deposit in the
ordinary course of business;
(b) Swap Contracts entered into in the ordinary course
of business; and
(c) Contingent Obligations of the Company and its
Subsidiaries existing as of the Closing Date and listed in
Schedule 8.09.
8.10 Lease Obligations. The Company shall not, and shall
not suffer or permit any Subsidiary to, create or suffer to exist
any obligations for the payment of rent for any property under
lease or agreement to lease, except for:
(a) leases of the Company and of Subsidiaries in
existence on the Closing Date and any renewal, extension or
refinancing thereof;
(b) operating leases entered into by the Company or any
Subsidiary after the Closing Date in the ordinary course of
business;
(c) leases entered into by the Company or any
Subsidiary after the Closing Date pursuant to sale-leaseback
transactions permitted under subsection 8.02(d);
(d) subject to Section 8.15, capital leases other than
those permitted under clauses (a) and (c) of this Section,
entered into by the Company or any Subsidiary after the Closing
Date to finance the acquisition of equipment; provided that the
aggregate annual rental payments for all such capital leases
shall not exceed in any fiscal year $1,000,000.
8.11 Restricted Payments. (a) The Company shall not, and
shall not suffer or permit any Subsidiary to, declare or make any
Restricted Payment unless:
(i) immediately after, and after giving effect to, such
Restricted Payment, the sum of the aggregate amount of (x)
all Restricted Payments declared or made during the period
from and after the Closing Date to and including the date
such Restricted Payment or is made, plus (y) all investments
made pursuant to Subsection 8.05(r), held at such time by the
Company and its Subsidiaries would not exceed the sum of
(A) $5,000,000 plus
(B) the sum of 50% (or minus 100% in the case
of a deficit) of the cumulative consolidated net income
of the Company and its Subsidiaries for the period
commencing on and including October 31, 1993 and ending
on and including the date such Restricted Payment is
declared or made, plus
(C) the aggregate amount of cash proceeds
(net of all costs and out-of-pocket expenses in
connection therewith, including, without limitation,
placement, underwriting and brokerage fees and expenses)
received by the Company and its Subsidiaries after the
Closing Date and prior to such time from the issuance
and sale of (I) capital stock (other than Redeemable
Stock) of the Company (either directly or through the
exercise of warrants, rights or other options or the
exercise of any rights of the holder of any Indebtedness
of the Company to convert such Indebtedness to capital
stock (other than Redeemable Stock)) or (II) any
warrants, rights or other options to purchase such
capital stock; and
(ii) at the time of such declaration and immediately
before, and after giving effect to, such Restricted Payment,
no Default or Event of Default exists or would exist.
(b) Time of Payment. The Company shall not authorize a
Distribution on any class of its capital stock that is not
payable within 90 days of authorization.
8.12 Tangible Net Worth. The Company shall not permit at
any time on a consolidated basis its Tangible Net Worth to be
less than $44,000,000 plus 50% of consolidated net income after
income taxes (but without giving effect to any net losses) earned
in any quarterly accounting period commencing after October 31,
1993.
8.13 Fixed Charge Coverage Ratio. The Company shall not
permit its Fixed Charge Coverage Ratio as determined as of the
last day of any fiscal quarter to be less than 1.50 to 1.00. The
foregoing and the definition of Fixed Charge Coverage Ratio
notwithstanding, the determination of the Fixed Charge Coverage
Ratio for the quarter ending April 30, 1994 shall be based only
on the immediately preceding two fiscal quarters, and for the
quarter ending on July 31, 1994, shall be based only on the
immediately preceding three consecutive fiscal quarters.
8.14 Leverage Ratio. The Company shall not permit at any
time on a consolidated basis, the ratio of total liabilities to
Tangible Net Worth to exceed the ratio indicated for each of the
periods set forth below:
Period Ratio
From the date hereof through
October 31, 1995 1.55 to 1.00
November 1, 1995 through
October 31, 1996 1.40 to 1.00
November 1, 1996 and thereafter 1.30 to 1.00
8.15 Capital Expenditures. The Company and its consolidated
Subsidiaries shall not make or commit to make capital
expenditures and expenditures for research and development during
any fiscal year set forth below in excess, in the aggregate, of
the amount set forth below with respect to such fiscal year:
Capital and Research
Fiscal Year Ending and Development Expenditures
October 31, 1994 $18,000,000
October 31, 1995 $20,000,000
October 31, 1996 $22,000,000
October 31, 1997 $22,000,000
8.16 Change in Business. The Company shall not, and shall
not suffer or permit any Subsidiary to, engage in any material
line of business substantially different from those lines of
business carried on by the Company and its Subsidiaries on the
date hereof.
8.17 Accounting Changes. The Company shall not, and shall
not suffer or permit any Subsidiary to, make any significant
change in accounting treatment or reporting practices, except as
required by GAAP, or change the fiscal year of the Company or of
any Subsidiary.
ARTICLE IX
EVENTS OF DEFAULT
9.01 Event of Default. Any of the following shall
constitute an "Event of Default":
(a) Non-Payment. The Company fails to pay, (i) when
and as required to be paid herein, any amount of principal of any
Loan, or (ii) within five days after the same becomes due, any
interest, fee or any other amount payable hereunder or under any
other Loan Document; or
(b) Representation or Warranty. Any representation or
warranty by the Company or any Subsidiary made or deemed made
herein, in any other Loan Document, or which is contained in any
certificate, document or financial or other statement by the
Company, any Subsidiary, or any Responsible Officer, furnished at
any time under this Agreement, or in or under any other Loan
Document, is incorrect in any material respect on or as of the
date made or deemed made; or
(c) Specific Defaults. The Company fails to perform or
observe any term, covenant or agreement contained in any of
Sections 7.01, 7.02, 7.03 or 7.09 or in Article VIII, and, in the
case of any term, covenant or agreement contained in any of
Sections 7.01 or 7.02, such default shall continue unremedied for
a period of ten days after the occurrence thereof; or
(d) Other Defaults. The Company fails to perform or
observe any other term or covenant contained in this Agreement or
any other Loan Document, and such default shall continue
unremedied for a period of 20 days after the earlier of (i) the
date upon which a Responsible Officer knew or reasonably should
have known of such failure or (ii) the date upon which written
notice thereof is given to the Company by the Bank; or
(e) Cross-Default. The Company or any Subsidiary (i)
fails to make any payment in respect of any Indebtedness or
Contingent Obligation having an aggregate principal amount
(including undrawn committed or available amounts and including
amounts owing to all creditors under any combined or syndicated
credit arrangement) of more than $1,000,000 when due (whether by
scheduled maturity, required prepayment, acceleration, demand, or
otherwise) and such failure continues after the applicable grace
or notice period, if any, specified in the relevant document on
the date of such failure; or (ii) fails to perform or observe any
other condition or covenant, or any other event shall occur or
condition exist, under any agreement or instrument relating to
any such Indebtedness or Contingent Obligation, and such failure
continues after the applicable grace or notice period, if any,
specified in the relevant document on the date of such failure if
the effect of such failure, event or condition is to cause, or to
permit the holder or holders of such Indebtedness or beneficiary
or beneficiaries of such Indebtedness (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries)
to cause such Indebtedness to be declared to be due and payable
prior to its stated maturity, or such Contingent Obligation to
become payable or cash collateral in respect thereof to be
demanded; or
(f) Insolvency; Voluntary Proceedings. The Company or
any Subsidiary (i) ceases or fails to be solvent, or generally
fails to pay, or admits in writing its inability to pay, its
debts as they become due, subject to applicable grace periods, if
any, whether at stated maturity or otherwise; (ii) voluntarily
ceases to conduct its business in the ordinary course; (iii)
commences any Insolvency Proceeding with respect to itself; or
(iv) takes any action to effectuate or authorize any of the
foregoing; or
(g) Involuntary Proceedings. (i) Any involuntary
Insolvency Proceeding is commenced or filed against the Company
or any Subsidiary, or any writ, judgment, warrant of attachment,
execution or similar process, is issued or levied against a
substantial part of the Company's or any Subsidiary's properties,
and any such proceeding or petition shall not be dismissed, or
such writ, judgment, warrant of attachment, execution or similar
process shall not be released, vacated or fully bonded within 60
days after commencement, filing or levy; (ii) the Company or any
Subsidiary admits the material allegations of a petition against
it in any Insolvency Proceeding, or an order for relief (or
similar order under non-U.S. law) is ordered in any Insolvency
Proceeding; or (iii) the Company or any Subsidiary acquiesces in
the appointment of a receiver, trustee, custodian, conservator,
liquidator, mortgagee in possession (or agent therefor), or other
similar Person for itself or a substantial portion of its
property or business; or
(h) ERISA. (i) An ERISA Event occurs with respect to a
Pension Plan which has resulted or could reasonably be expected
to result in liability of the Company under Title IV of ERISA to
the Pension Plan or the PBGC in an aggregate amount in excess of
$1,000,000; or (ii) the commencement or increase of contributions
to, or the adoption of or the amendment of a Pension Plan by the
Company which has resulted or could reasonably be expected to
result in an increase in Unfunded Pension Liability among all
Pension Plans in an aggregate amount in excess of $1,000,000; or
(i) Monetary Judgments. One or more non-interlocutory
judgments, non-interlocutory orders, decrees or arbitration
awards is entered against the Company or any Subsidiary involving
in the aggregate a liability (to the extent not covered by
independent third-party insurance as to which the insurer does
not dispute coverage) as to any single or related series of
transactions, incidents or conditions, of $5,000,000 or more, and
the same shall remain unvacated and unstayed pending appeal for a
period of 20 days after the entry thereof; or
(j) Non-Monetary Judgments. Any non-monetary judgment,
order or decree is entered against the Company or any Subsidiary
which does or would reasonably be expected to have a Material
Adverse Effect, and there shall be any period of 10 consecutive
days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be
in effect; or
(k) Change of Control. More than 50% of the Company's
issued and outstanding common stock is owned as a block by a
Person or Persons acting in concert with Persons other than the
Persons who own the Company's stock on the date of this
Agreement, if such change of control continues for a period of 30
days from the earlier of (i) the date the Company advises Bank of
such change of control or (ii) the date Bank advises the Company
that such change of control will be an Event of Default upon the
lapse of such 30-day period; or
(l) Adverse Change. There occurs a Material Adverse
Effect.
9.02 Remedies. If any Event of Default occurs, the Bank
may: (a) declare the commitment of the Bank to make Loans to be
terminated, whereupon such commitment shall be terminated; (b)
declare an amount equal to the maximum aggregate amount that is
or at any time thereafter may become available for drawing under
any outstanding Letters of Credit or the Birckhahn Guaranty
(whether or not any beneficiary shall have presented, or shall be
entitled at such time to present, the drafts or other documents
required to draw under such Letters of Credit or the Birckhahn
Guaranty shall have been drawn upon, as applicable) to be
immediately due and payable, and declare the unpaid principal
amount of all outstanding Loans, all interest accrued and unpaid
thereon, and all other amounts owing or payable hereunder or
under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived by the Company; and (c)
exercise all rights and remedies available to it under the Loan
Documents or applicable law; provided, however, that upon the
occurrence of any event specified in subsection (f) or (g) of
Section 9.01 (in the case of clause (i) of subsection (g) upon
the expiration of the 60-day period mentioned therein), the
obligation of the Bank to make Loans and to Issue Letters of
Credit shall automatically terminate and the unpaid principal
amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable
without further act of the Bank.
9.03 Rights Not Exclusive. The rights provided for in this
Agreement and the other Loan Documents are cumulative and are not
exclusive of any other rights, powers, privileges or remedies
provided by law or in equity, or under any other instrument,
document or agreement now existing or hereafter arising.
ARTICLE X
MISCELLANEOUS
10.01 Amendments and Waivers. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no
consent with respect to any departure by the Company therefrom,
shall be effective unless the same shall be in writing and signed
by the Bank and the Company, and then any such waiver or consent
shall be effective only in the specific instance and for the
specific purpose for which given
10.02 Notices. (a) All notices, requests and other
communications shall be in writing (including, unless the context
expressly otherwise provides, by facsimile transmission, provided
that any matter transmitted by the Company by facsimile (i) shall
be immediately confirmed by a telephone call to the recipient at
the number specified on the signature page hereof with respect to
such Person, and (ii) shall be followed promptly by delivery of a
hard copy original thereof) and mailed, telecopied or delivered,
to the address or facsimile number specified for notices on the
signature page hereof with respect to such Person; or, as
directed to the Company or the Bank, to such other address as
shall be designated by such party in a written notice to the
other parties, and as directed to any other party, at such other
address as shall be designated by such party in a written notice
to the Company and the Bank.
(b) All such notices, requests and communications
shall, when transmitted by overnight delivery, or faxed, be
effective when delivered for overnight (next-day) delivery, or
transmitted in legible form by facsimile machine, respectively,
or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery;
except that notices pursuant to Article II or Article III shall
not be effective until actually received by the Bank.
(c) Any agreement of the Bank herein to receive certain
notices by telephone or facsimile is solely for the convenience
and at the request of the Company. The Bank shall be entitled to
rely on the authority of any Person purporting to be a Person
authorized by the Company to give such notice and the Bank shall
not have any liability to the Company or other Person on account
of any action taken or not taken by the Bank in reliance upon
such telephonic or facsimile notice. The obligation of the
Company to repay the Loans shall not be affected in any way or to
any extent by any failure by the Bank to receive written
confirmation of any telephonic or facsimile notice or the receipt
by the Bank of a confirmation which is at variance with the terms
understood by the Bank to be contained in the telephonic or
facsimile notice.
10.03 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Bank, any
right, remedy, power or privilege hereunder, shall operate as a
waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right,
remedy, power or privilege.
10.04 Costs and Expenses. The Company shall, whether or not
the transactions contemplated hereby are consummated, pay or
reimburse the Bank within five Business Days after demand
(subject to subsection 5.01(d)) for all costs and expenses
(including Attorney Costs) incurred by the Bank in connection
with (a) the development, preparation, delivery, administration
and execution of, and any amendment, supplement, waiver or
modification to (in each case, whether or not consummated), this
Agreement, any Loan Document and any other documents prepared in
connection herewith or therewith, and the consummation of the
transactions contemplated hereby and thereby, and (b) the
enforcement, attempted enforcement, or preservation of any rights
or remedies under this Agreement or any other Loan Document
(including in connection with any "workout" or restructuring
regarding the Loans, and including in any Insolvency Proceeding
or appellate proceeding).
10.05 Indemnity. Whether or not the transactions
contemplated hereby are consummated, the Company shall indemnify
and hold the Bank and each of its officers, directors, employees,
counsel, agents and attorneys-in-fact (each, an "Indemnified
Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, charges, expenses and disbursements (including
Attorney Costs) of any kind or nature whatsoever which may at any
time (including at any time following repayment of the Loans) be
imposed on, incurred by or asserted against any such Person in
any way relating to or arising out of this Agreement or any
document contemplated by or referred to herein, or the
transactions contemplated hereby, or any action taken or omitted
by any such Person under or in connection with any of the
foregoing, including with respect to any investigation,
litigation or proceeding (including any Insolvency Proceeding or
appellate proceeding) related to or arising out of this Agreement
or the Loans or the use of the proceeds thereof, whether or not
any Indemnified Person is a party thereto (all the foregoing,
collectively, the "Indemnified Liabilities"); provided, that the
Company shall have no obligation hereunder to any Indemnified
Person with respect to Indemnified Liabilities resulting solely
from the gross negligence or willful misconduct of such
Indemnified Person. The agreements in this Section shall survive
payment of all other Obligations.
10.06 Payments Set Aside. To the extent that the Company
makes a payment to the Bank, or the Bank exercises its right of
set-off, and such payment or the proceeds of such set-off or any
part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including
pursuant to any settlement entered into by the Bank in its
discretion) to be repaid to a trustee, receiver or any other
party, in connection with any Insolvency Proceeding or otherwise,
then to the extent of such recovery the obligation or part
thereof originally intended to be satisfied shall be revived and
continued in full force and effect as if such payment had not
been made or such set-off had not occurred.
10.07 Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns,
except that the Company may not assign or transfer any of its
rights or obligations under this Agreement without the prior
written consent of the Bank.
10.08 Assignments, Participations, etc. (a) The Bank may at
any time, with the prior consent of the Company (other than any
time after acceleration of the Loans), which consent shall not be
unreasonably withheld, assign and delegate to one or more
commercial banks (each an "Assignee") all, or any part of all, of
the Loans, the Commitment and the other rights and obligations of
the Bank hereunder, in a minimum amount of $1,000,000; provided,
however, that the Company may continue to deal solely and
directly with the Bank in connection with the interest so
assigned to an Assignee until written notice of such assignment,
together with payment instructions, addresses and related
information with respect to the Assignee, shall have been given
to the Company by the Bank and the Assignee.
(b) The Bank may at any time, without notice to or
consent of the Company, sell to one or more commercial banks or
other Persons (a "Participant") participating interests in any
Loans, the Commitment of that Bank and the other interests of
that Bank (the "originating Bank") hereunder and under the other
Loan Documents.
(c) The Bank agrees to take normal and reasonable
precautions and exercise due care to maintain the confidentiality
of all information identified as "confidential" or "secret" by
the Company and provided to it by the Company under this
Agreement, and neither it nor any of its Affiliates shall use any
such information other than in connection with or in enforcement
of this Agreement; except to the extent such information (i) was
or becomes generally available to the public other than as a
result of disclosure by the Bank, or (ii) was or becomes
available on a non-confidential basis from a source other than
the Company, provided that such source is not bound by a
confidentiality agreement with the Company known to the Bank;
provided, however, that the Bank may disclose such information
(A) at the request or pursuant to any requirement of any
Governmental Authority to which the Bank is subject or in
connection with an examination of the Bank by any such authority;
(B) pursuant to subpoena or other court process; (C) when
required to do so in accordance with the provisions of any
applicable Requirement of Law; (D) to the extent reasonably
required in connection with any litigation or proceeding to which
the Bank or its Affiliates may be party, (E) to the extent
reasonably required in connection with the exercise of any remedy
hereunder or under any other Loan Document, (F) to the Bank's
independent auditors and other professional advisors, (G) to any
Participant or Assignee, actual or potential, provided that such
Person agrees in writing to keep such information confidential to
the same extent required of the Bank hereunder, and (H) as
expressly permitted under the terms of any other document or
agreement regarding confidentiality to which the Company is party
or is deemed party with the Bank.
(d) Notwithstanding any other provision in this
Agreement, the Bank may at any time create a security interest
in, or pledge, all or any portion of its rights under this
Agreement in favor of any Federal Reserve Bank in accordance with
Regulation A of the FRB or 31 CFR 203.15, and such Federal
Reserve Bank may enforce such pledge or security interest in any
manner permitted under applicable law.
10.09 Set-off. In addition to any rights and remedies of
the Bank provided by law, if an Event of Default exists or the
Loans have been accelerated, the Bank is authorized at any time
and from time to time, without prior notice to the Company, any
such notice being waived by the Company to the fullest extent
permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any
time held by, and other indebtedness at any time owing by, the
Bank to or for the credit or the account of the Company against
any and all Obligations owing to the Bank, now or hereafter
existing, irrespective of whether or not the Bank shall have made
demand under this Agreement or any Loan Document and although
such Obligations may be contingent or unmatured. The Bank agrees
promptly to notify the Company after any such set-off and
application made by the Bank; provided, however, that the failure
to give such notice shall not affect the validity of such set-off
and application.
10.10 Automatic Debits of Fees. With respect to any
commitment fee, arrangement fee, or other fee, or any other cost
or expense (including Attorney Costs) due and payable to the Bank
under the Loan Documents, the Company hereby irrevocably
authorizes the Bank to debit any deposit account of the Company
with the Bank in an amount such that the aggregate amount debited
from all such deposit accounts does not exceed such fee or other
cost or expense. If there are insufficient funds in such deposit
accounts to cover the amount of the fee or other cost or expense
then due, such debits will be reversed (in whole or in part, in
the Bank's sole discretion) and such amount not debited shall be
deemed to be unpaid. No such debit under this Section shall be
deemed a setoff.
10.11 Counterparts. This Agreement may be executed in any
number of separate counterparts, each of which, when so executed,
shall be deemed an original, and all of said counterparts taken
together shall be deemed to constitute but one and the same
instrument.
10.12 Severability. The illegality or unenforceability of
any provision of this Agreement or any instrument or agreement
required hereunder shall not in any way affect or impair the
legality or enforceability of the remaining provisions of this
Agreement or any instrument or agreement required hereunder.
10.13 No Third Parties Benefited. This Agreement is made
and entered into for the sole protection and legal benefit of the
Company, the Bank and their permitted successors and assigns, and
no other Person shall be a direct or indirect legal beneficiary
of, or have any direct or indirect cause of action or claim in
connection with, this Agreement or any of the other Loan
Documents.
10.14 Governing Law and Jurisdiction. (a) THIS AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW
OF THE STATE OF CALIFORNIA; PROVIDED THAT THE BANK SHALL RETAIN
ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS
OF THE STATE OF CALIFORNIA OR OF THE UNITED STATES FOR THE
NORTHERN DISTRICT OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, EACH OF THE COMPANY AND THE BANK CONSENTS, FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF THE COMPANY AND THE BANK
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS,
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION
OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT
OR ANY DOCUMENT RELATED HERETO. THE COMPANY AND THE BANK EACH
WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER
PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
CALIFORNIA LAW.
10.15 Waiver of Jury Trial. THE COMPANY AND THE BANK EACH
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR
OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES
AGAINST ANY OTHER PARTY OR PARTIES, PARTICIPANT OR ASSIGNEE,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR
OTHERWISE. THE COMPANY AND THE BANK EACH AGREE THAT ANY SUCH
CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT
A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER
AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY
OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER
PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE
VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
10.16 Entire Agreement. This Agreement, together with the
other Loan Documents, embodies the entire agreement and
understanding among the Company and the Bank, and supersedes all
prior or contemporaneous agreements and understandings of such
Persons, verbal or written, relating to the subject matter hereof
and thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered in San Francisco,
California by their proper and duly authorized officers as of the
day and year first above written.
OPTICAL COATING LABORATORY, INC.
By:
Title: Vice President and Corporate
Controller
By:
Title: Vice President and Secretary
Address for Notices:
2789 Northpoint Parkway
Santa Rosa, CA 95407-7397
Attention: Josef Wally,
Vice President and
Corporate Controller
Joseph C. Zils,
Vice President
and Secretary
Telephone: (707) 545-6440
Facsimile: (707) 525-6840
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By:
Title: Vice President
Notices (other than Notices of
Borrowing and Notices of
Conversion/Continuation):
Bank of America National Trust and
Savings Association
555 California St., 41st Floor
San Francisco, California 94104
Attention: Michael J. Dasher,
Vice President, #3838
Telephone: (415) 622-2126
Facsimile: (415) 622-4585
Domestic and Offshore Lending
Office:
1850 Gateway Boulevard
Fourth Floor
Concord, California 94520
Attention: Global Payment
Operations #5693
Telephone: (510) 675-7777
Facsimile: (510) 675-7531
EXHIBIT A
NOTICE OF BORROWING
Date: , 199
To: Bank of America National Trust and Savings Association
Ladies and Gentlemen:
The undersigned, Optical Coating Laboratory, Inc. (the
"Company"), refers to the Credit Agreement (the "Credit
Agreement") dated as of June 30, 1994 between the Company and
Bank of America National Trust and Savings Association (the
"Bank"), the terms defined therein being used herein as therein
defined, and hereby gives you notice irrevocably, pursuant to
Section 2.03 of the Credit Agreement, of the Borrowing specified
herein:
1. The Business Day of the proposed Borrowing is
, 19 .
2. The aggregate amount of the proposed Borrowing is
$ .
3. The Borrowing is to be comprised of $ of
[Base Rate] [Offshore Rate] Loans.
4. The duration of the Interest Period for the
Offshore Rate Loans included in the Borrowing shall be _____
months.
The undersigned hereby certifies that the following
statements are true on the date hereof, and will be true on the
date of the proposed Borrowing, before and after giving effect
thereto and to the application of the proceeds therefrom:
(a) the representations and warranties of the Company
contained in Article VI of the Credit Agreement are true and
correct as though made on and as of such date (except to the
extent such representations and warranties relate to an
earlier date, in which case they are true and correct as of
such date);
(b) no Default or Event of Default has occurred and is
continuing, or would result from such proposed Borrowing;
and
(c) The proposed Borrowing will not cause the
aggregate principal amount of all outstanding Revolving
Loans plus the aggregate amount available for drawing under
all outstanding Letters of Credit plus the aggregate
principal amount of all outstanding L/C Borrowings plus the
outstanding principal amount of the Term Loan to exceed the
Commitment.
OPTICAL COATING LABORATORY, INC.
By:
Title:
By:
Title:
EXHIBIT B
NOTICE OF CONVERSION/CONTINUATION
Date: , 199
To: Bank of America National Trust and Savings
Association
Ladies and Gentlemen:
The undersigned, Optical Coating Laboratory, Inc. (the
"Company"), refers to the Credit Agreement (the "Credit
Agreement") dated as of June 30, 1994 between the Company
and Bank of America National Trust and Savings Association
(the "Bank"), the terms defined therein being used herein as
therein defined, and hereby gives you notice irrevocably,
pursuant to Section 2.04 of the Credit Agreement, of the
[conversion] [continuation] of the Loans specified herein,
that:
1. The Conversion/Continuation Date is
, 19 .
2. The aggregate amount of the Loans to be
[converted] [continued] is $ .
3. The Loans are to be [converted into]
[continued as]
[Offshore Rate] [Base Rate] Loans.
4. [If applicable:] The duration of the Interest
Period for the Loans included in the [conversion]
[continuation] shall be [ months].
5. The Loan[s] to be [converted] [continued]
are/is [Revolving Loans] [a portion of the Term Loan].
OPTICAL COATING LABORATORY,
INC.
By:
Title:
By:
Title:
EXHIBIT C
OPTICAL COATING LABORATORY, INC.
COMPLIANCE CERTIFICATE
Date:
Reference is made to that certain Credit Agreement (the
"Credit Agreement") dated as of June 30, 1994 between
Optical Coating Laboratory, Inc. (the "Company") and Bank of
America National Trust and Savings Association (the "Bank").
Unless otherwise defined herein, capitalized terms used
herein have the respective meanings assigned to them in the
Credit Agreement.
The undersigned Responsible Officer of Optical Coating
Laboratory, Inc., hereby certifies as of the date hereof
that he/she is the of the Company, and
that, as such, he/she is authorized to execute and deliver
this Certificate to the Bank on the behalf of the Company
and its consolidated Subsidiaries and not as an individual,
and that:
[Use the following paragraph if this Certificate is
delivered in connection with the financial statements
required by subsection [7.01(a)] of the Credit Agreement.]
1. Attached as Schedule 1 hereto are (a) a true and
correct copy of the audited consolidated balance sheet of
the Company and its Subsidiaries as at the end of the fiscal
year ended _______________, 199__ and (b) the related
consolidated statements of income or operations,
shareholders' equity and cash flows for such fiscal year,
setting forth in each case in comparative form the figures
for the previous fiscal year, and accompanied by the
unqualified opinion of [Deloitte & Touche or another
nationally-recognized certified independent public
accounting firm] (the "Independent Auditor"). Such opinion
is not qualified or limited because of a restricted or
limited examination by the Independent Auditor of any
material portion of the Company's or any Subsidiary's
records or for any other reason. Such opinion is
accompanied by a certificate of the Independent Auditor
stating that in making the examination necessary for its
opinion no knowledge was obtained of any default or Event of
Default, except as specified in such certificate. The
attached financial statements are complete and correct, and
have been prepared in accordance with GAAP, fairly present,
in all material respects, the financial position of the
Company and its consolidated Subsidiaries for the periods
indicated and on a basis consistent with prior periods and
fairly state the financial condition and results of
operations of the Company and its consolidated Subsidiaries
in all material respects.
or
[Use the following paragraph if this Certificate is
delivered in connection with the financial statements
required by subsection [7.01(b)] of the Credit Agreement.]
1. Attached as Schedule 1 hereto is (a) a true and
correct copy of the unaudited consolidated balance sheet of
the Company and its Subsidiaries as of the end of such
quarter ended __________, 199__, and (b) the related
unaudited consolidated statements of income, shareholders'
equity and cash flows for the period commencing on the first
day and ending on the last day of such quarter and
commencing on the first day of the fiscal year and ending on
the last day of such quarter, setting forth in each case in
comparative form the figures for the previous year subject
only to ordinary, good faith audit adjustments and the
absence of footnotes. The attached financial statements are
complete and correct, and have been prepared in accordance
with GAAP, fairly present, in all material respects, the
financial position of the Company and its consolidated
Subsidiaries for the periods indicated and on a basis
consistent with prior periods and fairly state the financial
condition and results of operations of the Company and its
consolidated Subsidiaries in all material respects.
2. The undersigned has reviewed and is familiar with
the terms of the Credit Agreement and has made, or has
caused to be made under his/her supervision, a detailed
review of the transactions and conditions (financial or
otherwise) of the Company during the accounting period
covered by the attached financial statements.
3. To the best of the undersigned's knowledge, the
Company, during such period, has observed, performed or
satisfied all of its covenants and other agreements, and
satisfied every condition in the Credit Agreement to be
observed, performed or satisfied by the Company, and the
undersigned has no knowledge of any Default or Event of
Default.
4. The following financial covenant analyses and
information set forth on Schedule 2 attached hereto are true
and accurate on and as of the date of this Certificate.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate as of , 199 .
OPTICAL COATING LABORATORY,
INC.
By:
Title:
Date: ______________, 199__
For the fiscal quarter/year
ended ______________, 199__
SCHEDULE 2
to the Compliance Certificate
($ in 000's)
Attach detailed computations of compliance with
Sections 8.12, 8.13, 8.14, and 8.15 of the Credit
Agreement.
June 30, 1994
Bank of America National Trust &
Savings Association
555 California Street , 41st Floor, #3838
San Francisco, California 94104
Re: $10,000,000 Credit Facility by Bank of
America
National Trust & Savings Association to
Optical Coating Laboratory, Inc.
Ladies and Gentlemen:
We have acted as counsel to Optical Coating Laboratory,
Inc., a Delaware corporation (the "Company"), in connection
with the execution and delivery by the Company of that
certain Amended and Restated Credit Agreement dated as of
June 30, 1994 (the "Agreement") by and between the Company
and you providing for a term and revolving credit facility
from you to the Company of up to $10,000,000 (the "Loan").
This firm also represents the Company on a regular basis,
although our engagement has been limited to specific matters
as to which we have been consulted by the Company. We are
delivering this opinion to you pursuant to Section 5.01(f)
of the Agreement. All capitalized terms used and not
expressly defined herein shall have the meaning given to
them in the Agreement.
In connection with the foregoing we have been furnished
with originals or copies certified to our satisfaction of
such corporate or other records of the Company, with such
certificates of officers and representatives of the Company,
and with such other documents, and we have made such other
examinations, investigations and inquiries of the Company
and its officers, as we have deemed necessary as a basis for
the opinions expressed below.
In connection with this opinion, we have examined and
relied upon originals, or copies certified or otherwise
identified to our satisfaction as being true copies, of the
following, each dated this date unless otherwise indicated:
A. The Agreement;
B. The Loan Documents;
C. A Certificate of the Secretary of the Company
certifying as to (i) the Certificate of Incorporation of the
Company, (ii) the Bylaws of the Company and (iii)
resolutions adopted by the Board of Directors of the
Company;
D. A certificate executed by Herbert M. Dwight,
President, Chief Executive Officer and Chief Financial
Officer of the Company, Joseph C. Zils, Vice President,
General Counsel and Secretary of the Company, and Josef
Wally, Vice President and Corporate Controller of the
Company (the "Company's Certificate"), stating that aside
from certain outstanding indentures and loan, credit,
guaranty or lease agreements, all of which are identified in
said certificate, no other agreements or instruments or
orders, writs, judgments, awards, injunctions and decrees,
affect or purport to affect the right of the Company to
borrow money or to undertake and perform obligations of the
Company under the Agreement;
E. A certificate of the Secretary of State of
Delaware, dated June 22, 1994, attesting to the continued
corporate existence and good standing of, and current
payment of franchise taxes by, the Company in that state;
F. A certificate of the Secretary of State of
California, dated June 21, 1994, attesting that the Company
is qualified to transact business as a foreign corporation
in that state;
G. A certificate of the Franchise Tax Board of
California, dated June 22, 1994, attesting to the good
standing of the Company with that agency; and
H. Originals, or copies certified or otherwise
identified to our satisfaction, of such other documents,
records, instruments and certificates of public officials as
we have deemed necessary or appropriate to enable us to
render this opinion.
We have also examined originals or copies of the
documents listed in the Company's Certificate.
In conducting our examination we have assumed, without
investigation, the genuineness of all signatures, the
correctness of all certificates, the authenticity of all
certificates and documents submitted to us as originals, the
conformity to original documents of all documents submitted
to us as certified or photostatic copies and the
authenticity of the originals of such copies, and the
accuracy and completeness of all records made available to
us by the Company. We have also assumed, without
investigation, the accuracy of the representations and
warranties as to factual matters made by any party in the
Agreement and the accuracy of the representations and
statements made to us by officers or employees of the
Company and by public officials. In making our examination
of documents and instruments executed by any person or
entity, we have assumed, without investigation, that each
such person or entity has (i) the power, capacity, right and
legal authority to enter into and perform all of its
obligations under such documents and instruments, (ii) duly
authorized all requisite action with respect to such
documents and instruments, and (iii) duly executed and
delivered such documents and instruments. We have not,
however, made the assumptions set forth in the immediately
preceding sentence with respect to the Company or its power,
capacity, right, authority, authorization or execution of
documents and instruments.
Whenever a statement below is qualified by the phrases
"known to us" or "to our knowledge," it is intended to
indicate that during the course of our representation of the
Company, no information that would give us actual knowledge
of, or a reasonable belief concerning, the inaccuracy of
such statement has come to the attention of those attorneys
in this firm who have rendered legal services to the
Company. Except as otherwise expressly indicated, we have
not undertaken any independent investigation to determine
the accuracy of such statement, and any limited inquiry
undertaken by us during the preparation of this opinion
letter should not be regarded as such an investigation. No
inference as to our knowledge of any matters bearing on the
accuracy of any such statement should be drawn from the fact
of our representation of the Company.
In rendering the opinions hereinafter expressed, we
have also assumed, without investigation, that the following
facts are true:
You will enforce your rights under the Agreement in
circumstances and in a manner in which it is commercially
reasonable to do so, and in accordance with all procedural
requirements under applicable law.
Other than the Company, no party to the Agreement or to
any of the other Loan Documents or any agreement relating thereto
is subject to any statute, rule, or regulation, or to any
impediment to which contracting parties are generally not
subject, which requires the Company or any other person or party
to obtain the consent of or to make a declaration or filing with
any governmental authority or other person or entity.
We assume that you are exempt from the usury laws of
the State of California.
The opinions expressed below are subject to the following
qualifications:
Our opinions below are subject to the following: (a)
the effect of bankruptcy, insolvency, fraudulent conveyance,
reorganization, arrangement, moratorium and other similar laws
now or hereafter in effect relating to or affecting the rights of
creditors generally; (b) the limitations imposed by California
law, federal law, or equitable or public policy principles upon
the performance or enforceability of any of the remedies,
covenants, or other provisions of the Agreement and upon the
availability of injunctive relief or other equitable remedies,
including, without limitation, the effect of California and
federal court decisions invoking statutes or principles of equity
or of public policy, which have held that certain covenants and
provisions of agreements are unenforceable where: (i) the breach
of such covenants or provisions imposes restrictions or burdens
upon the debtor, including acceleration or the imposition of late
payment charges or increased interest rates upon delinquency in
the payment of indebtedness due under debt instruments, and it
cannot be demonstrated that the enforcement of such restrictions
or burdens is reasonably necessary for the protection of the
creditor, or (ii) the creditor's enforcement of such covenants or
provisions under the circumstances would violate the creditor's
implied covenant of good faith and fair dealing; and (c) the
limitations upon the ability of the Company or any other party to
the Agreement to waive any rights, claims or defenses available
to such party at law or in equity pursuant to statute or
otherwise. With respect to subclause (i) of clause (b) above,
but without limiting the generality of the foregoing, we note
that certain cases have held that imposition of increased
interest or late charges were, under the circumstances, punitive
and invalid. See Garrett v. Coast and Southern Federal Savings &
Loan, 9 Cal.3d 731 (1973).
2. In expressing our opinions below, we note that your
right to enforce certain remedies set forth in the Agreement may
be subject to various notice and procedural limitations imposed
by California law.
3. We are members of the Bar of the State of California
and do not hold ourselves out as experts on the law of any other
state. Consequently, our opinions below are limited to the
effect of the laws of the State of California and of the federal
laws of the United States. Accordingly, we express no opinion
with respect to the laws of any other jurisdiction, or the effect
thereof, on the transactions contemplated by the Agreement.
4. Our opinions below are limited to matters expressly set
forth in this opinion letter, and no opinion is to be implied or
may be inferred beyond the matters expressly so stated.
5. We call your attention to the fact that no opinion is
expressed with regard to any financial or similar covenants
contained in the Agreement.
6. We call your attention to the fact that no opinion is
expressed with regard to usury laws as would apply to you or any
of your Assignees or any Participants.
Based upon and subject to the foregoing, we are of the
opinion that:
The Company (i) is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware and is qualified to do business as a foreign
corporation in the State of California and (ii) is duly qualified
as a foreign corporation and in good standing in each state where
its ownership, lease or operation of property or the conduct of
its business requires such qualification, except, in the case of
clause (ii), to the extent that the failure to do so could not
reasonably be expected to have a Material Adverse Effect.
The Company has the power and authority to execute and
deliver, and to perform and observe the provisions of, each of
the Loan Documents.
The execution, delivery and performance by the Company
of the Loan Documents have been duly authorized by all necessary
corporate action.
The Loan Documents have been duly executed and
delivered by the Company.
To our knowledge, no approval, consent, exemption,
authorization, or other action by, or notice to, or filing with,
any Governmental Authority is necessary or required in connection
with the execution, delivery or performance by, or enforcement
against, the Company of the Agreement or any other Loan Document.
The Agreement and each other Loan Document to which the
Company is a party constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in
accordance with their respective terms.
Neither the Company nor any Subsidiary of the Company
is an "Investment Company" or a company "controlled" by an
Investment Company within the meaning of the Investment Company
Act of 1940. The Company is not subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power
Act, the Interstate Commerce Act, or, to our knowledge, any other
Federal or state statute or regulation limiting its ability to
incur Indebtedness. Without limiting any qualification or
assumption set forth in this letter, we note that our opinion in
this Paragraph (g) is based solely upon the Company's Certificate
and we have made no independent investigation of the status of
the Company, any Person controlling the Company or any Subsidiary
of the Company as an "Investment Company" or as to whether the
Company is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Interstate
Commerce Act, or any other Federal or state statute or regulation
limiting its ability to incur Indebtedness.
To our knowledge, no registration with, consent or
approval of, notice to, or other action by, any Governmental
Authority is required on the part of the Company for the
execution, delivery or performance by the Company of the Loan
Documents.
The execution, delivery and performance of the Loan
Documents by the Company are not in violation of the Certificate
of Incorporation or Bylaws of the Company or, to our knowledge,
any Requirement of Law.
To our knowledge after due inquiry of officers of the
Company, the execution, delivery and performance of the Loan
Documents by the Company will not violate or result in a breach
of any of the terms of or constitute a default under or result in
the creation of any Lien on any property or assets of the Company
pursuant to the terms of any agreement or instrument to which the
Company is a party and which is listed in the Company's
Certificate, or any order, injunction, writ or decree of any
Governmental Authority to which the Company or its property is
subject.
The execution delivery and performance of the Loan
Documents will not conflict with or contravene any of Regulations
G, T, U and X promulgated by the Federal Reserve Board.
To our knowledge and except with respect to those
matters identified on Schedule 6.05 to the Agreement, there are
no actions, suits, proceedings, claims or disputes pending or
threatened against the Company or its Subsidiaries or any of
their respective properties before any court, regulatory body,
administrative agency, at law, in equity, in arbitration or
before any Governmental Authority which (a) purport to affect or
pertain to the Loan Documents, or any of the transactions
contemplated thereby, or (b) if determined adversely to the
Company or its Subsidiaries, would reasonably be expected to have
a Material Adverse Effect.
This opinion letter is rendered solely for your benefit in
connection with the transaction described in the Loan Documents.
Without our prior written consent, this opinion letter may not be
(a) relied upon by any other person or entity or used for any
other purpose; (b) quoted in whole or in part or otherwise
referred to in any report or document; or (c) furnished (the
original or copies thereof) to any person or entity except in
connection with the enforcement of the Loan Documents by you or
to regulatory authorities to which you are subject.
Very truly yours,
Collette & Erickson
JGP:lf
OCLI 1.721
[COMPOSITE CONFORMED COPY WITH
SUBSTANTIALLY ALL EXHIBITS
CONFORMED AS EXECUTED]
OPTICAL COATING LABORATORY, INC.
Note Purchase Agreement
Dated as of May 27, 1994
$18,000,000
8.71% Senior Notes Due June 1, 2002
TABLE OF CONTENTS
(Not a Part of the Agreement)
PAGE
1. PURCHASE AND SALE OF NOTES . . . . . . . . . . . . . . . . . . . 1
1.1 Issuance of Notes. . . . . . . . . . . . . . . . . . . . . 1
1.2 The Closing. . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Representations of Purchasers. . . . . . . . . . . . . . . 2
1.4 Failure to Tender, Failure of Conditions.. . . . . . . . . 3
1.5 Expenses.. . . . . . . . . . . . . . . . . . . . . . . . . 4
2. WARRANTIES AND REPRESENTATIONS . . . . . . . . . . . . . . . . . 4
2.1 Nature of Business.. . . . . . . . . . . . . . . . . . . . 4
2.2 Financial Statements; Indebtedness; Material
Adverse Change.. . . . . . . . . . . . . . . . . . . . . . 5
2.3 Subsidiaries and Affiliates. . . . . . . . . . . . . . . . 5
2.4 Title to Properties; Leases; Patents, Trademarks,
etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.5 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.6 Pending Litigation.. . . . . . . . . . . . . . . . . . . . 7
2.7 Full Disclosure. . . . . . . . . . . . . . . . . . . . . . 7
2.8 Corporate Organization and Authority.. . . . . . . . . . . 8
2.9 Charter Instruments, Other Agreements. . . . . . . . . . . 8
2.10 Restrictions on Company and Subsidiaries.. . . . . . . . . 8
2.11 Compliance with Law. . . . . . . . . . . . . . . . . . . . 9
2.12 ERISA; Foreign Pension Plans.. . . . . . . . . . . . . . . 9
2.13 Environmental Compliance.. . . . . . . . . . . . . . . . . 11
2.14 Sale of Notes is Legal and Authorized; Obligations
are Enforceable. . . . . . . . . . . . . . . . . . . . . . 11
2.15 Governmental Consent; Certain Laws.. . . . . . . . . . . . 12
2.16 Private Offering of Notes. . . . . . . . . . . . . . . . . 12
2.17 No Defaults; Transactions Prior to Closing Date,
etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.18 Use of Proceeds of Notes.. . . . . . . . . . . . . . . . . 13
3. CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . 13
3.1 Opinions of Counsel. . . . . . . . . . . . . . . . . . . . 13
3.2 Warranties and Representations True. . . . . . . . . . . . 14
3.3 Officers' Certificates.. . . . . . . . . . . . . . . . . . 14
3.4 Legality.. . . . . . . . . . . . . . . . . . . . . . . . . 14
3.5 Private Placement Number.. . . . . . . . . . . . . . . . . 14
3.6 Expenses.. . . . . . . . . . . . . . . . . . . . . . . . . 14
3.7 Consent and Waiver.. . . . . . . . . . . . . . . . . . . . 14
3.8 Other Purchasers.. . . . . . . . . . . . . . . . . . . . . 14
3.9 Compliance with this Agreement.. . . . . . . . . . . . . . 15
3.10 Proceedings Satisfactory.. . . . . . . . . . . . . . . . . 15
4. PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.1 Interest.. . . . . . . . . . . . . . . . . . . . . . . . . 15
4.2 Required Principal Prepayments.. . . . . . . . . . . . . . 15
4.3 Optional Prepayments.. . . . . . . . . . . . . . . . . . . 15
4.4 Pro Rata Payments. . . . . . . . . . . . . . . . . . . . . 16
4.5 Notation of Notes on Prepayment. . . . . . . . . . . . . . 17
4.6 No Other Optional Prepayments. . . . . . . . . . . . . . . 17
5. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES. . . . . . . . . . 17
5.1 Registration of Notes. . . . . . . . . . . . . . . . . . . 17
5.2 Exchange of Notes. . . . . . . . . . . . . . . . . . . . . 18
5.3 Replacement of Notes.. . . . . . . . . . . . . . . . . . . 18
5.4 Issuance Taxes.. . . . . . . . . . . . . . . . . . . . . . 19
6. COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.1 Payment of Taxes and Claims. . . . . . . . . . . . . . . . 19
6.2 Maintenance of Properties; Corporate Existence;
etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.3 Payment of Notes and Maintenance of Office.. . . . . . . . 21
6.4 Fixed Charge Coverage. . . . . . . . . . . . . . . . . . . 21
6.5 Limitation on Consolidated Funded Debt.. . . . . . . . . . 21
6.6 Limitations on Restricted Subsidiary Indebtedness
and Intercompany Indebtedness. . . . . . . . . . . . . . . 22
6.7 Consolidated Adjusted Net Worth. . . . . . . . . . . . . . 23
6.8 Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.9 Restricted Payments and Restricted Investments.. . . . . . 26
6.10 Transfers of Property. . . . . . . . . . . . . . . . . . . 27
6.11 Merger, Consolidation, etc.. . . . . . . . . . . . . . . . 30
6.12 Nature of Business.. . . . . . . . . . . . . . . . . . . . 31
6.13 Transactions with Affiliates.. . . . . . . . . . . . . . . 31
6.14 ERISA; Foreign Pension Plans.. . . . . . . . . . . . . . . 31
6.15 Private Offering.. . . . . . . . . . . . . . . . . . . . . 33
6.16 Designation of Subsidiaries. . . . . . . . . . . . . . . . 33
6.17 Pro-Rata Offers. . . . . . . . . . . . . . . . . . . . . . 34
7. INFORMATION AS TO COMPANY. . . . . . . . . . . . . . . . . . . . 34
7.1 Financial and Business Information.. . . . . . . . . . . . 34
7.2 Officers' Certificates.. . . . . . . . . . . . . . . . . . 38
7.3 Accountants' Certificates. . . . . . . . . . . . . . . . . 38
7.4 Inspection.. . . . . . . . . . . . . . . . . . . . . . . . 38
7.5 Confidential Information.. . . . . . . . . . . . . . . . . 39
8. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . 40
8.1 Nature of Events.. . . . . . . . . . . . . . . . . . . . . 40
8.2 Default Remedies.. . . . . . . . . . . . . . . . . . . . . 42
8.3 Annulment of Acceleration of Notes.. . . . . . . . . . . . 44
9. INTERPRETATION OF THIS AGREEMENT . . . . . . . . . . . . . . . . 44
9.1 Terms Defined. . . . . . . . . . . . . . . . . . . . . . . 44
9.2 GAAP.. . . . . . . . . . . . . . . . . . . . . . . . . . . 65
9.3 Directly or Indirectly.. . . . . . . . . . . . . . . . . . 66
9.4 Section Headings and Table of Contents and
Construction.. . . . . . . . . . . . . . . . . . . . . . . 66
9.5 Governing Law. . . . . . . . . . . . . . . . . . . . . . . 66
9.6 Payments in Excess of Legal Rate of Interest.. . . . . . . 66
10. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . 66
10.1 Communications.. . . . . . . . . . . . . . . . . . . . . . 66
10.2 Reproduction of Documents. . . . . . . . . . . . . . . . . 67
10.3 Survival.. . . . . . . . . . . . . . . . . . . . . . . . . 68
10.4 Successors and Assigns.. . . . . . . . . . . . . . . . . . 68
10.5 Amendment and Waiver.. . . . . . . . . . . . . . . . . . . 68
10.6 Expenses.. . . . . . . . . . . . . . . . . . . . . . . . . 70
10.7 Payments on Notes. . . . . . . . . . . . . . . . . . . . . 70
10.8 Entire Agreement.. . . . . . . . . . . . . . . . . . . . . 71
10.9 Duplicate Originals, Execution in Counterpart. . . . . . . 71
Annex 1 -- Information as to Purchasers
Annex 2 -- Payment Instructions at Closing
Annex 3 -- Information as to Company and Subsidiaries
Exhibit A -- Form of 8.71% Senior Note Due June 1, 2002
Exhibit B1 -- Form of Closing Opinion of Counsel to the Company
Exhibit B2 -- Form of Closing Opinion of Special Counsel to
the Purchasers
Exhibit C -- Form of Officers' Certificate
Exhibit D -- Form of Secretary's Certificate
OPTICAL COATING LABORATORY, INC.
2789 Northpoint Parkway
Santa Rosa, California 95407-7397
NOTE PURCHASE AGREEMENT
$18,000,000
8.71% Senior Notes Due June 1, 2002
Dated as of May 27, 1994
[Separately Addressed to Each of the
Purchasers Listed on Annex 1 Hereto]
Ladies and Gentlemen:
OPTICAL COATING LABORATORY, INC. (together with its successors
and assigns, the "Company"), a Delaware corporation, hereby agrees
with you as follows:
1. PURCHASE AND SALE OF NOTES
1.1 Issuance of Notes.
The Company will authorize the issuance of Eighteen Million
Dollars ($18,000,000) in aggregate principal amount of its 8.71%
Senior Notes Due June 1, 2002 (the "Notes"). The Notes shall be in
the form of Exhibit A hereto, and shall have the terms as herein
and therein provided, and the terms therein provided are
incorporated herein by reference as if set forth herein in full.
The term "Notes" as used herein shall include each Note delivered
pursuant to this Agreement or the Other Note Purchase Agreements
referred to in Section 1.2(c) hereof and each Note delivered in
substitution or exchange for any such Note pursuant to Section 5.2
or Section 5.3 of this Agreement or any such Other Note Purchase
Agreement.
1.2 The Closing.
(a) Purchase and Sale of Notes. The Company hereby
agrees to sell to you and you hereby agree to purchase from
the Company, in accordance with the provisions hereof, the
aggregate principal amount of Notes set forth below your name
on Annex 1 hereto, in the amount or amounts set forth therein,
at one hundred percent (100%) of the principal amount thereof.
(b) The Closing. The closing (the "Closing") of the
Company's sale of Notes will be held on May 27, 1994 (the
"Closing Date") at 10:00 a.m., local time, at the office of
your special counsel, Hebb & Gitlin, a Professional
Corporation, One State Street, Hartford, Connecticut 06103.
At the Closing, the Company will deliver to you one or more
Notes (as set forth below your name on Annex 1 hereto), in the
denominations indicated on Annex 1 hereto, in the aggregate
principal amount of your purchase, dated the Closing Date and
payable to you or payable as indicated on Annex 1 hereto,
against payment by federal funds wire transfer in immediately
available funds of the purchase price thereof, as directed by
the Company on Annex 2 hereto.
(c) Other Purchasers. Contemporaneously with the
execution and delivery of this Agreement, the Company is
entering into a separate Note Purchase Agreement identical
(except for the name and signature of the purchaser) hereto
(individually, an "Other Note Purchase Agreement," and,
collectively, the "Other Note Purchase Agreements;" this
Agreement and the Other Note Purchase Agreements,
collectively, the "Note Purchase Agreements") with each other
purchaser (collectively, the "Other Purchasers") listed on
Annex 1 hereto, providing for the sale to each Other Purchaser
of Notes in the aggregate principal amount set forth below its
name on such Annex 1. The sales of the Notes to you and to
each Other Purchaser are to be separate sales.
1.3 Representations of Purchasers.
(a) Purchase for Investment. You represent to the
Company that you are purchasing the Notes listed on Annex 1
hereto below your name for your own account for investment and
with no present intention of distributing the Notes or any
part thereof, but without prejudice to your right at all times
to:
(i) sell or otherwise dispose of all or any part of
the Notes under a registration statement filed under the
Securities Act, or in a transaction exempt from the
registration requirements of the Securities Act; and
(ii) have control over the disposition of all of
your assets to the fullest extent required by any
applicable insurance law.
It is understood that, in making the representations set out
in Section 2.14(a) and Section 2.15(a) of this Agreement, the
Company is relying, to the extent applicable, upon your
representation in the immediately preceding sentence.
(b) ERISA. You represent, with respect to the funds
with which you are acquiring the Notes, that all of such funds
are from or attributable to one or more of:
(i) General Account -- your general account assets
or assets of one or more segments of such general
account, as the case may be;
(ii) Separate Account -- a "separate account" (as
defined in section 3 of ERISA),
(A) 10% Pooled Separate Account -- in respect
of which all requirements for an exemption under
DOL Prohibited Transaction Class Exemption 90-1 are
met with respect to the use of such funds to
purchase the Notes,
(B) Identified Plan Assets -- that is
comprised of employee benefit plans identified by
you in writing and with respect to which the
Company hereby warrants and represents that, as of
the Closing Date, neither the Company nor any ERISA
Affiliate is a "party in interest" (as defined in
section 3 of ERISA) or a "disqualified person" (as
defined in section 4975 of the IRC) with respect to
any plan so identified, or
(C) Guaranteed Separate Account -- that is
maintained solely in connection with fixed
contractual obligations of an insurance company,
under which any amounts payable, or credited, to
any employee benefit plan having an interest in
such account and to any participant or beneficiary
of such plan (including an annuitant) are not
affected in any manner by the investment
performance of the separate account (as provided by
29 C.F.R. 2510.3-101(h)(1)(iii));
(iii) Qualified Professional Asset Manager -- an
"investment fund" managed by a "qualified professional
asset manager" (as such terms are defined in Part V of
DOL Prohibited Transaction Class Exemption 84-14) and all
requirements for an exemption under such Exemption are
met with respect to the use of such funds to purchase the
Notes; or
(iv) Excluded Plan -- an employee benefit plan that
is excluded from the provisions of section 406 of ERISA
by virtue of section 4(b) of ERISA.
(c) Accredited Investor. You represent to the Company
that you are an Accredited Investor.
(d) No Brokers. You represent to the Company that you
have not retained any broker or agreed to any broker's or
finder's fee for which you would have liability for or on
account of this Agreement or for the purchase of the Notes
contemplated hereby.
1.4 Failure to Tender, Failure of Conditions.
If at the Closing the Company fails to tender to you the Notes
to be purchased by you at the Closing, or if the conditions
specified in Section 3 hereof to be fulfilled at the Closing have
not been fulfilled, you may thereupon elect to be relieved of all
further obligations hereunder. Nothing in this Section 1.4 shall
operate to relieve the Company from any of its obligations
hereunder or to waive any of your rights against the Company.
Notwithstanding the foregoing, the Company shall not be obligated
to issue and sell to you any Notes if any Other Purchaser shall
have failed to execute and deliver a Note Purchase Agreement or to
accept delivery of, or to make payments for, the Notes to be
purchased by it on the Closing Date.
1.5 Expenses.
(a) Generally. Whether or not the Notes are sold, the
Company will promptly (and in any event within thirty (30)
days of receiving any statement or invoice therefor) pay all
fees, expenses and costs relating hereto, including, but not
limited to:
(i) the reasonable cost of reproducing this
Agreement, the Notes and the other documents delivered in
connection with the Closing;
(ii) the reasonable fees and disbursements of your
special counsel incurred in connection herewith;
(iii) the reasonable cost of delivering to your
home office or custodian bank, insured to your
satisfaction, the Notes purchased by you at the Closing;
(iv) the reasonable fees, expenses and costs
incurred in complying with each of the conditions to
Closing set forth in Section 3 hereof; and
(v) the cost of obtaining a private placement
number for the Notes from Standard & Poor's.
(b) Counsel. Without limiting the generality of the
foregoing, it is agreed and understood that the Company will
pay, at the Closing, the statement for fees and disbursements
of your special counsel presented at the Closing and the
Company will also pay, upon receipt of any statement therefor,
each additional statement for fees and disbursements of your
special counsel rendered after the Closing in connection with
the issuance of the Notes or the matters referred to in
Section 1.5(a) hereof.
(c) Survival. The obligations of the Company under this
Section 1.5, Section 8.2(e) and Section 10.6 of this Agreement
shall survive the payment of the Notes and the termination
hereof.
2. WARRANTIES AND REPRESENTATIONS
To induce you to enter into this Agreement and to purchase the
Notes listed on Annex 1 hereto below your name, the Company
warrants and represents, as of the date hereof, as follows:
2.1 Nature of Business.
The Placement Memorandum (a copy of which previously has been
delivered to you) correctly describes the general nature of the
business and principal Properties of the Company and the
Subsidiaries as of the Closing Date.
2.2 Financial Statements; Indebtedness; Material Adverse
Change.
(a) Financial Statements. The Company has provided you
with its financial statements described in Part 2.2(a) of
Annex 3 hereto. Such financial statements have been prepared
in accordance with GAAP consistently applied, and present
fairly, in all material respects, the financial position of
the Company and its consolidated subsidiaries as of such dates
and the results of their operations and cash flows for such
periods. Except as set forth in Part 2.2(a) of Annex 3
hereto, all such financial statements include the accounts of
all subsidiaries of the Company for the respective periods
during which a subsidiary relationship has existed. All
Restricted Subsidiaries were subsidiaries during all of the
periods covered by such financial statements.
(b) Indebtedness. Part 2.2(b) of Annex 3 hereto lists
all Indebtedness of the Company and the Restricted
Subsidiaries as of April 30, 1994, and provides the following
information with respect to each item of such Indebtedness:
(i) the holder thereof,
(ii) the outstanding amount, as of April 30, 1994,
(iii) the portion which is classified as current
under GAAP, and
(iv) the collateral securing such Indebtedness, if
any.
The Company has not incurred more than Two Million
Dollars ($2,000,000) of additional Indebtedness since April
30, 1994.
(c) Material Adverse Change. Since October 31, 1993,
there has been no change in the business, prospects, profits,
Properties or condition (financial or otherwise) of the
Company or any of the Restricted Subsidiaries, except changes
in the ordinary course of business that, in the aggregate for
all such changes, could not reasonably be expected to have a
Material Adverse Effect.
2.3 Subsidiaries and Affiliates.
Part 2.3 of Annex 3 hereto sets forth:
(a) the name of each of the Subsidiaries, its
jurisdiction of incorporation and the percentage of its Voting
Stock owned by the Company and each other Subsidiary,
(b) the name of each Restricted Subsidiary, and
(c) a description of the Affiliates (other than
individuals) and the nature of their affiliation.
Each of the Company and the Subsidiaries has good and
marketable title to all of the shares it purports to own of the
stock of each Subsidiary, free and clear in each case of any Lien.
All such shares have been duly issued and are fully paid and
nonassessable, except with respect to the quota issued by MMG where
the failure of such quota to be fully paid would not (i) have a
Material Adverse Effect or (ii) materially adversely affect the
rights of the holder or holders of such quota.
2.4 Title to Properties; Leases; Patents, Trademarks, etc.
(a) Title to Properties. Each of the Company and the
Subsidiaries
(i) has good and marketable title to all of the
real Property, and good title to all of the other
Property, that it purports to own, and
(ii) holds a valid leasehold interest in all
Property subject to any Capital Lease,
in each case as reflected in the most recent balance sheet
referred to in Part 2.2(a) of Annex 3 hereto (except as sold
or otherwise disposed of in the ordinary course of business),
except where the failure to have such good and marketable
title or valid leasehold interest, as the case may be, (A) is
immaterial to such financial statements, and (B) could not
reasonably be expected to have a Material Adverse Effect. All
such Property is free from Liens not permitted by Section 6.8
hereof.
(b) Leases. Each of the Company and the Subsidiaries
has complied with all material obligations under all leases to
which it is a party, except where the failure to so comply
could not reasonably be expected to have a Material Adverse
Effect. All such leases are in full force and effect and each
of the Company and the Subsidiaries enjoys peaceful and
undisturbed possession under all such leases.
(c) Patents, Trademarks, etc. Each of the Company and
the Subsidiaries owns, possesses or has the right to use all
of the patents, trademarks, service marks, trade names,
copyrights and licenses, and rights with respect thereto,
necessary for the present conduct of its business, without any
known conflict with the rights of others, except for such
failures to own, possess, or have the right to use, that, in
the aggregate for all such failures, could not reasonably be
expected to have a Material Adverse Effect.
2.5 Taxes.
(a) Returns Filed; Taxes Paid.
(i) All tax returns required to be filed by each of
the Company and each Subsidiary and any other Person with
which the Company or any Subsidiary files or has filed a
consolidated return in any jurisdiction have been filed
on a timely basis, and all taxes, assessments, fees and
other governmental charges upon each of the Company, such
Subsidiary and any such Person, and upon any of their
respective Properties, income or franchises, that are due
and payable have been paid or have been fully reserved
and reflected as liabilities on the most recent balance
sheet referred to in Part 2.2(a) of Annex 3 hereto,
except for such tax returns and such tax payments which
are being contested in good faith and which could not, in
the aggregate for all such tax returns and payments,
reasonably be expected to have a Material Adverse Effect.
(ii) All liabilities of each of the Company, the
Subsidiaries and the other Persons referred to in the
preceding clause (i) with respect to federal income taxes
have been finally determined except for the fiscal years
1990 through 1992, inclusive, the only years not closed
by the completion of an audit or the expiration of the
statute of limitations.
(b) Book Provisions Adequate.
(i) The amount of the liability for taxes reflected
in each of the balance sheets referred to in Part 2.2(a)
of Annex 3 hereto is in each case an adequate provision
for taxes as of the dates of such balance sheets
(including, without limitation, any payment due pursuant
to any tax sharing agreement) as are or may become
payable by any one or more of the Company and the other
Persons consolidated with the Company in such financial
statements in respect of all tax periods ending on or
prior to such dates except in such cases where the
liability for taxes not so provided for could not
reasonably be expected to have a Material Adverse Effect.
(ii) The Company does not know of any proposed
additional tax assessment against it or any such Person
that is not reflected in full in the most recent balance
sheet referred to in Part 2.2(a) of Annex 3 hereto.
2.6 Pending Litigation.
(a) Proceedings. There are no proceedings, actions or
investigations pending or, to the knowledge of the Company,
threatened against or affecting the Company or any Subsidiary
in any court or before any Governmental Authority or
arbitration board or tribunal that, in the aggregate for all
such proceedings, actions and investigations, could reasonably
be expected to have a Material Adverse Effect.
(b) Defaults. Neither the Company nor any Subsidiary is
in default with respect to any judgment, order, writ,
injunction or decree of any court, Governmental Authority,
arbitration board or tribunal that, in the aggregate for all
such defaults, could reasonably be expected to have a Material
Adverse Effect.
2.7 Full Disclosure.
The financial statements referred to in Part 2.2(a) of Annex
3 hereto do not, nor does this Agreement, the Placement Memorandum
or any statement furnished by or on behalf of the Company to you in
connection with the negotiation or the closing of the sale of the
Notes, contain any untrue statement of a material fact or omit a
material fact necessary to make the statements contained therein
and herein not misleading. There is no fact that the Company has
not disclosed to you in writing that has had or, so far as the
Company can now reasonably foresee, could reasonably be expected to
have a Material Adverse Effect.
2.8 Corporate Organization and Authority.
Each of the Company and the Subsidiaries:
(a) is a corporation duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of
incorporation;
(b) has all legal and corporate power and authority to
own and operate its Properties and to carry on its business as
now conducted and as presently proposed to be conducted;
(c) has all licenses, certificates, permits, franchises
and other governmental authorizations necessary to own and
operate its Properties and to carry on its business as now
conducted and as presently proposed to be conducted, except
where the failure to have such licenses, certificates,
permits, franchises and other governmental authorizations, in
the aggregate for all such failures, could not reasonably be
expected to have a Material Adverse Effect; and
(d) has duly qualified or has been duly licensed, and is
authorized to do business and is in good standing, as a
foreign corporation, in each state (each of which states is
listed in Part 2.8(d) of Annex 3 hereto) where the failure to
be so qualified or licensed and authorized and in good
standing, in the aggregate for all such failures, could
reasonably be expected to have a Material Adverse Effect.
2.9 Charter Instruments, Other Agreements.
(a) Charter Instruments. Neither the Company nor any
Subsidiary is in violation in any respect of any term of any
charter instrument or bylaw.
(b) Agreements Relating to Indebtedness. Neither the
Company nor any Subsidiary is in violation of any term in, and
no default or event of default exists under, any agreement or
other instrument to which it is a party or by which it or any
of its Properties may be bound relating to, or providing the
terms of, any Indebtedness specified in Part 2.2(b) of Annex
3 hereto.
(c) Other Agreements. Neither the Company nor any
Subsidiary is in violation of any term in, and no default or
event of default exists under, any agreement or other
instrument to which it is a party or by which it or any of its
Properties may be bound (other than the agreements and other
instruments specified in clause (b) of this Section 2.9),
which, in the aggregate for all such violations, defaults or
events of default could reasonably be expected to have a
Material Adverse Effect.
2.10 Restrictions on Company and Subsidiaries.
Neither the Company nor any Subsidiary:
(a) is, to the best knowledge of the Company, a party to
any contract or agreement, or subject to any charter or other
corporate restriction that, in the aggregate for all such
contracts, agreements, charters and corporate restrictions,
could reasonably be expected to have a Material Adverse
Effect;
(b) is a party to any contract or agreement that
restricts the right or ability of such corporation to incur
Indebtedness, other than this Agreement and the agreements
listed in Part 2.10(b) of Annex 3 hereto, none of which
restricts the issuance and sale of the Notes or the
performance by the Company of its obligations under this
Agreement or under the Notes; or
E\O has agreed or consented to cause or permit in the
future (upon the happening of a contingency or otherwise) any
of its Property, whether now owned or hereafter acquired, to
be subject to a Lien not permitted by Section 6.8 hereof.
True, correct and complete copies of each of the agreements
listed in Part 2.10(b) of Annex 3 hereto have been provided to you
or your special counsel.
2.11 Compliance with Law.
Neither the Company nor any Subsidiary is in violation of any
law, ordinance, governmental rule or regulation to which it is
subject, which violations, in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
2.12 ERISA; Foreign Pension Plans.
(a) Prohibited Transactions.
(i) Neither the execution of this Agreement nor the
purchase of the Notes by you will constitute a
"prohibited transaction" (as such term is defined in
section 406 of ERISA or section 4975 of the IRC). The
representation by the Company in the preceding sentence
is made in reliance upon and subject to the accuracy of
the representations in Section 1.3(b) hereof as to the
source of funds used by you.
(ii) Part 2.12(a) of Annex 3 hereto (A) completely
lists all ERISA Affiliates and all employee benefit plans
with respect to which the Company, or any "affiliate" (as
such term is hereinafter defined), is a "party-in-
interest" (as such term is hereinafter defined) or in
respect of which the Notes could constitute an "employer
security" (as such term is hereinafter defined), and (B)
specifically identifies on such list all employee benefit
plans and plans and trusts maintained by each of the
Company and each ERISA Affiliate whose assets, in whole
or in part, are currently managed or invested by any one
or more of the Purchasers.
As used in this Section 2.12(a), the terms "employee benefit
plan" and "party-in-interest" have the meanings specified in
section 3 of ERISA and "affiliate" and "employer security"
have the meanings specified in section 407(d) of ERISA.
(b) Pension Plans.
(i) Compliance with ERISA. The Company and the
ERISA Affiliates are in compliance with ERISA, except for
such failures to comply that, in the aggregate for all
such failures, could not reasonably be expected to have
a Material Adverse Effect.
(ii) Funding Status; Relationship of Vested Benefits
to Pension Plan Assets.
(A) No "accumulated funding deficiency" (as
defined in section 302 of ERISA and section 412 of
the IRC), whether or not waived, exists with
respect to any Pension Plan.
(B) The present value of all benefits,
determined as of the most recent valuation date for
such benefits as provided in Section 6.14 hereof,
vested under each Pension Plan does not exceed the
value of the assets of such Pension Plan allocable
to such vested benefits, determined as of such date
as provided in Section 6.14 hereof.
(iii) PBGC. No liability to the PBGC has been
or is expected to be incurred by the Company or any ERISA
Affiliate with respect to any Pension Plan that,
individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect. No
circumstance exists that constitutes grounds under
section 4042 of ERISA entitling the PBGC to institute
proceedings to terminate, or appoint a trustee to
administer, any Pension Plan or trust created thereunder,
nor has the PBGC instituted any such proceeding.
(iv) Multiemployer Plans. Neither the Company nor
any ERISA Affiliate has incurred or presently expects to
incur any withdrawal liability under Title IV of ERISA
with respect to any Multiemployer Plan. There have been
no "reportable events" (as such term is defined in
section 4043 of ERISA) with respect to any Multiemployer
Plan that could result in the termination of such
Multiemployer Plan and give rise to a liability of the
Company or any ERISA Affiliate in respect thereof.
(v) Foreign Pension Plans. The present value of
all benefits vested under each Foreign Pension Plan,
determined as of the most recent valuation date in
respect thereof, does not exceed the value of the assets
of such Foreign Pension Plan, and all required payments
in respect of funding each such Foreign Pension Plan have
been made, except that, with respect to the contributory
defined pension plan maintained by OCLI Optical Coatings
Ltd. (Scotland), the present value of all benefits vested
under such plan may exceed the value of such plan's
assets by an amount not in excess of Two Hundred Fifty
Thousand Dollars ($250,000).
2.13 Environmental Compliance.
(a) Compliance. Each of the Company and the
Subsidiaries is in compliance with all Environmental
Protection Laws in effect in each jurisdiction where it is
presently doing business and in which the failure so to
comply, in the aggregate for all such failures, could
reasonably be expected to have a Material Adverse Effect.
(b) Liability. Neither the Company nor any Subsidiary
is subject to any liability under any Environmental Protection
Laws that, in the aggregate for all such liabilities, could
reasonably be expected to have a Material Adverse Effect.
(c) Notices. Neither the Company nor any Subsidiary has
received any:
(i) notice from any Governmental Authority by which
any of its present or previously-owned or leased
Properties has been identified in any manner by any
Governmental Authority as a hazardous substance disposal
or removal site, "Super Fund" clean-up site or candidate
for removal or closure pursuant to any Environmental
Protection Law;
(ii) notice of any Lien arising under or in
connection with any Environmental Protection Law that has
attached to any revenues of, or to, any of its owned or
leased Properties; or
(iii) any communication, written or oral, from
any Governmental Authority concerning any action or
omission by the Company or such Subsidiary in connection
with its ownership or leasing of any Property resulting
in the release of any Hazardous Substance resulting in
any violation of any Environmental Protection Law;
where the effect of which, in the aggregate for all such
notices and communications, could reasonably be expected to
have a Material Adverse Effect.
2.14 Sale of Notes is Legal and Authorized; Obligations are
Enforceable.
(a) Sale of Notes is Legal and Authorized. Each of the
issuance, sale and delivery of the Notes by the Company, the
execution and delivery of this Agreement by the Company and
compliance by the Company with all of the provisions of this
Agreement and of the Notes:
(i) is within the corporate powers of the Company;
and
(ii) is legal and does not conflict with, result in
any breach of any of the provisions of, constitute a
default under, or result in the creation of any Lien upon
any Property of the Company or any Subsidiary under the
provisions of, any agreement, charter instrument, bylaw
or other instrument to which it is a party or by which it
or any of its Properties may be bound.
(b) Obligations are Enforceable. Each of this Agreement
and the Notes has been duly authorized by all necessary action
on the part of the Company, has been duly executed and
delivered by authorized officers of the Company and
constitutes a legal, valid and binding obligation of the
Company, enforceable in accordance with its terms, except that
the enforceability of this Agreement and of the Notes may be:
(i) limited by applicable bankruptcy,
reorganization, arrangement, insolvency, moratorium or
other similar laws affecting the enforceability of
creditors' rights generally; and
(ii) subject to the availability of equitable
remedies.
2.15 Governmental Consent; Certain Laws.
(a) Governmental Consent. Neither the nature of the
Company or any Subsidiary, or of any of their respective
businesses or Properties, nor any relationship between the
Company or any Subsidiary and any other Person, nor any
circumstance in connection with the offer, issuance, sale or
delivery of the Notes and the execution and delivery of this
Agreement, is such as to require a consent, approval or
authorization of, or filing, registration or qualification
with, any Governmental Authority on the part of the Company as
a condition to the execution and delivery of this Agreement or
the offer, issuance, sale or delivery of the Notes.
(b) Certain Laws. Neither the Company nor any
Subsidiary is subject to regulation under, or otherwise
required to comply with any filing, registration or notice
provisions of, (i) the Investment Company Act of 1940, as
amended, (ii) the Public Utility Holding Company Act of 1935,
as amended, (iii) the Interstate Commerce Act, as amended, or
(iv) the Federal Power Act, as amended.
(c) Security Clearances. The Company and each of the
Subsidiaries has obtained all necessary security clearances
from the Department of Defense of the United States of America
and each other Governmental Authority with respect to the
facilities, officers and employees of the Company and each
such Subsidiary which are necessary for the present conduct of
the business of the Company and the Subsidiaries, except where
the failure to have or maintain any such security clearance,
in the aggregate for all such failures, could not reasonably
be expected to have a Material Adverse Effect.
2.16 Private Offering of Notes.
Neither the Company nor the Placement Agent (the only Person
authorized or employed by the Company as agent, broker, dealer or
otherwise in connection with the offering or sale of the Notes or
any similar Security of the Company, other than employees of the
Company) has offered any of the Notes or any similar Security of
the Company for sale to, or solicited offers to buy any thereof
from, or otherwise approached or negotiated with respect thereto
with, any prospective purchaser, other than the Purchasers and not
more than seventy (70) other Institutional Investors, each of whom
was offered all or a portion of the Notes at private sale for
investment.
2.17 No Defaults; Transactions Prior to Closing Date, etc.
(a) No event has occurred and no condition exists that,
upon the execution and delivery of this Agreement and the
issuance of the Notes, would constitute a Default or an Event
of Default.
(b) Neither the Company nor any Restricted Subsidiary
has entered into any transaction since the date of the most
recent balance sheet referred to in Part 2.2(a) of Annex 3
hereto that would have been prohibited by Section 6.6, Section
6.8 through Section 6.11, inclusive, or Section 6.13 hereof
had such Sections applied since such date.
2.18 Use of Proceeds of Notes.
(a) Use of Proceeds. The Company will apply the
proceeds from the sale of the Notes in the manner specified in
Part 2.18(a) of Annex 3 hereto.
(b) Margin Securities. None of the transactions
contemplated herein and in the Notes (including, without
limitation, the use of the proceeds from the sale of the
Notes) violates, will violate or will result in a violation of
section 7 of the Exchange Act or any regulations issued
pursuant thereto, including, without limitation, Regulations
G, T, U and X of the Board of Governors of the Federal Reserve
System, 12 C.F.R., Chapter II. The obligations of the Company
under this Agreement and the Notes are not and will not be
directly or indirectly secured (within the meaning of such
Regulation G) by any Margin Security, and no Notes are being
sold on the basis of any such collateral.
(c) Absence of Foreign or Enemy Status. Neither the
sale of the Notes nor the use of proceeds from the sale
thereof will result in a violation of any of the foreign
assets control regulations of the United States Treasury
Department (31 C.F.R., Subtitle B, Chapter V, as amended), or
any ruling issued thereunder or any enabling legislation or
Presidential Executive Order in connection therewith.
3. CLOSING CONDITIONS
Your obligation to purchase and pay for the Notes to be
delivered to you at the Closing is subject to the following
conditions precedent:
3.1 Opinions of Counsel.
You shall have received from
(a) Collette & Erickson, counsel for the Company, and
(b) Hebb & Gitlin, a Professional Corporation, your
special counsel,
closing opinions, each dated as of the Closing Date, substantially
in the respective forms set forth in Exhibit B1 and Exhibit B2
hereto and as to such other matters as you may reasonably request.
This Section 3.1 shall constitute direction by the Company to such
counsel named in the foregoing clause (a) to deliver such closing
opinion to you.
3.2 Warranties and Representations True.
The warranties and representations contained in Section 2
hereof shall be true on the Closing Date with the same effect as
though made on and as of that date.
3.3 Officers' Certificates.
You shall have received:
(a) a certificate dated the Closing Date and signed by
two Senior Officers, substantially in the form of Exhibit C
hereto; and
(b) a certificate dated the Closing Date and signed by
the Secretary or an Assistant Secretary of the Company,
substantially in the form of Exhibit D hereto.
3.4 Legality.
The Notes shall on the Closing Date qualify as a legal
investment for you under applicable insurance law (without regard
to any "basket" or "leeway" provisions), and such acquisition shall
not subject you to any penalty or other onerous condition contained
in or pursuant to any such law or regulation, and you shall have
received such evidence as you may reasonably request to establish
compliance with this condition.
3.5 Private Placement Number.
The Company shall have obtained or caused to be obtained a
private placement number for the Notes from the CUSIP Service
Bureau of Standard & Poor's and you shall have been informed of
such private placement number.
3.6 Expenses.
All fees and disbursements required to be paid pursuant to
Section 1.5(b) hereof shall have been paid in full.
3.7 Consent and Waiver.
The Company shall have received a consent and waiver from Bank
of America in respect of the Bank Credit Agreement, which consent
and waiver shall be satisfactory in form, scope and substance to
you and your special counsel.
3.8 Other Purchasers.
None of the Other Purchasers shall have failed to execute and
deliver a Note Purchase Agreement or to accept delivery of or make
payment for the Notes to be purchased by it on the Closing Date.
3.9 Compliance with this Agreement.
Each of the Company and the Subsidiaries shall have performed
and complied with all agreements and conditions contained herein
that are required to be performed or complied with by the Company
and the Subsidiaries on or prior to the Closing Date, and such
performance and compliance shall remain in effect on the Closing
Date.
3.10 Proceedings Satisfactory.
All proceedings taken in connection with the issuance and sale
of the Notes and all documents and papers relating thereto shall be
satisfactory to you and your special counsel. You and your special
counsel shall have received copies of such documents and papers as
you or they may reasonably request in connection therewith or in
connection with your special counsel's closing opinion, all in form
and substance satisfactory to you and your special counsel.
4. PAYMENTS
4.1 Interest.
Interest shall accrue on the unpaid principal balance of the
Notes on the basis of a 360-day year of twelve 30-day months at the
rate of eight and seventy-one one hundredths percent (8.71%) per
annum and shall be payable, in arrears, semi-annually on the first
(1st) day of each June and December in each year, commencing on
December 1, 1994, until the principal amount of the Notes in
respect of which such interest shall have accrued shall become due
and payable, and interest shall accrue on any such overdue
principal (including any overdue prepayment of principal) and Make-
Whole Amount, if any, and (to the extent permitted by applicable
law) on any overdue installment of interest, at a rate equal to the
lesser of
(a) the highest rate allowed by applicable law, and
(b) nine and seventy-one one hundredths percent (9.71%)
per annum.
4.2 Required Principal Prepayments.
The Company shall pay, and there shall become due and payable,
Three Million Six Hundred Thousand Dollars ($3,600,000) in
principal amount of the Notes on June 1 in each of 1998, 1999,
2000, 2001 and 2002, inclusive (each, a "Required Principal
Prepayment"). Each Required Principal Prepayment shall be at one
hundred percent (100%) of the principal amount paid, together with
interest accrued thereon to the date of payment. Without
limitation of the foregoing, all of the principal of the Notes
remaining outstanding on June 1, 2002 (if any), together with
interest accrued thereon, shall become due and payable on June 1,
2002.
4.3 Optional Prepayments.
(a) Optional Prepayments. The Company may, at any time
and from time to time, prepay the principal amount of the
Notes in part, in integral multiples of One Million Dollars
($1,000,000), or in whole, in each case together with:
(i) an amount equal to the Make-Whole Amount, if
any, on such date in respect of the principal amount of
the Notes being so prepaid; and
(ii) interest on such principal amount then being
prepaid accrued to the prepayment date.
(b) Notice of Optional Prepayment. The Company will
give notice, in writing, of any optional prepayment of the
Notes to each holder of Notes not less than thirty (30) days
or more than sixty (60) days before the date fixed for
prepayment, specifying:
(i) such date;
(ii) that such prepayment is to be made pursuant to
Section 4.3 of this Agreement;
(iii) the principal amount of each Note to be
prepaid on such date;
(iv) the interest to be paid on each such Note,
accrued to the date fixed for payment; and
(v) the calculation of an estimated Make-Whole
Amount, if any (calculated as if the date of such notice
was the date of prepayment), due in connection with such
prepayment, accompanied by a copy of any applicable
documentation used in connection with determining the
Make-Whole Discount Rate in respect of such prepayment.
Notice of prepayment having been so given, the aggregate
principal amount of the Notes to be prepaid specified in such
notice, together with the Make-Whole Amount as of the date of
prepayment specified in such notice, if any, and accrued
interest thereon shall become due and payable on such
specified date of prepayment. Two (2) Business Days prior to
the making of such prepayment, the Company shall deliver to
each holder of Notes by facsimile transmission a certificate
of a Senior Financial Officer specifying the details of the
calculation of such Make-Whole Amount as of such specified
date of prepayment, accompanied by a copy of any applicable
documentation used in connection with determining the Make-
Whole Discount Rate in respect of such prepayment.
(c) Application of Prepayments to Required Prepayments.
Each partial prepayment of the principal of the Notes made
pursuant to this Section 4.3 shall be applied against and
reduce each of the then remaining Required Principal
Prepayments by a percentage equal to the aggregate principal
amount of the Notes so prepaid divided by the aggregate
principal amount of the Notes outstanding immediately prior to
such prepayment.
4.4 Pro Rata Payments.
(a) Required Principal Prepayments. If at the time any
Required Principal Prepayment under Section 4.2 hereof is due
and there is more than one Note outstanding, the aggregate
principal amount of such Required Principal Prepayment shall
be allocated among the Notes at the time outstanding in
proportion, as nearly as practicable, to the respective unpaid
principal amounts of the Notes then outstanding, with
adjustments, to the extent practicable, to equalize for any
prior prepayments not in such proportion.
(b) Optional Prepayments. If at the time any optional
prepayment under Section 4.3 hereof is due and there is more
than one Note outstanding, the aggregate principal amount of
such optional prepayment of the Notes shall be allocated among
the Notes at the time outstanding in proportion, as nearly as
practicable, to the respective unpaid principal amounts of the
Notes then outstanding, with adjustments, to the extent
practicable, to equalize for any prior prepayments not in such
proportion.
4.5 Notation of Notes on Prepayment.
Upon any partial prepayment of a Note, such Note may, at the
option of the holder thereof, be (but shall not be required to be):
(a) surrendered to the Company pursuant to Section 5.2
hereof in exchange for a new Note in a principal amount equal
to the principal amount remaining unpaid on the surrendered
Note;
(b) made available to the Company for notation thereon
of the portion of the principal so prepaid; or
(c) marked by such holder with a notation thereon of the
portion of the principal so prepaid.
In case the entire principal amount of any Note has been paid, such
Note shall be surrendered to the Company for cancellation and shall
not be reissued, and no Note shall be issued in lieu of the paid
principal amount of any Note.
4.6 No Other Optional Prepayments.
Except for prepayments made in accordance with this Section 4
or in connection with an offer made in compliance with Section 6.17
hereof, the Company may not make any prepayment of principal in
respect of, or otherwise acquire or make any offer to acquire, or
permit any Subsidiary or any Affiliate to acquire or make any offer
to acquire, directly or indirectly, any of the Notes.
5. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES
5.1 Registration of Notes.
The Company will cause to be kept at its office maintained
pursuant to Section 6.3(b) hereof a register for the registration
and transfer of Notes. The name and address of each holder of one
or more Notes, the outstanding principal amount of each such Note,
each transfer thereof and the name and address of each transferee
of one or more Notes shall be registered in such register. The
Person in whose name any Note shall be registered shall be deemed
and treated as the owner and holder thereof for all purposes hereof
and the Company shall not be affected by any notice or knowledge to
the contrary.
5.2 Exchange of Notes.
(a) Upon surrender of any Note at the office of the
Company maintained pursuant to Section 6.3(b) hereof duly
endorsed or accompanied by a written instrument of transfer
duly executed by the registered holder of such Note or such
holder's attorney duly authorized in writing, the Company will
execute and deliver, at the Company's expense (except as
provided below), new Notes in exchange therefor, in
denominations of at least One Hundred Thousand Dollars
($100,000) (except as may be necessary to reflect any
principal amount not evenly divisible by One Hundred Thousand
Dollars ($100,000)), in an aggregate principal amount equal to
the unpaid principal amount of the surrendered Note. Each
such new Note shall be payable to such Person as such holder
may request and shall be substantially in the form of Exhibit
A hereto. Each such new Note shall be dated and bear interest
from the date to which interest shall have been paid on the
surrendered Note or dated the date of the surrendered Note if
no interest shall have been paid thereon. The Company may
require payment of a sum sufficient to cover any stamp tax or
governmental charge imposed in respect of any such transfer of
Notes.
(b) The Company will pay the cost of delivering to or
from such holder's home office or custodian bank from or to
the Company, insured to the reasonable satisfaction of such
holder, the surrendered Note and any Note issued in
substitution or replacement for the surrendered Note.
(c) Each holder of Notes agrees that, in the event it
shall sell or transfer any Note without surrendering such Note
to the Company as set forth in Section 5.2(a) hereof, it
shall:
(i) prior to the delivery of such Note, make a
notation thereon of all principal, if any, paid on such
Note and shall also indicate thereon the date to which
interest shall have been paid on such Note; and
(ii) promptly notify the Company of the name and
address of the transferee of any such Note so transferred
and the effective date of such transfer.
5.3 Replacement of Notes.
Upon receipt by the Company of evidence reasonably
satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Note (which evidence shall be, in
the case of an Institutional Investor, notice from such
Institutional Investor of such ownership (or of ownership by such
Institutional Investor's nominee) and of such loss, theft,
destruction or mutilation), and
(a) in the case of loss, theft or destruction, of
indemnity reasonably satisfactory to the Company (provided
that if the holder of such Note is an Institutional Investor
or a nominee of such Institutional Investor, such
Institutional Investor's own unsecured agreement of indemnity
shall be deemed to be satisfactory for such purpose), or
(b) in the case of mutilation, upon surrender and
cancellation thereof,
the Company at its own expense will execute and deliver, in lieu
thereof, a new Note, dated and bearing interest from the date to
which interest shall have been paid on such lost, stolen, destroyed
or mutilated Note or dated the date of such lost, stolen, destroyed
or mutilated Note if no interest shall have been paid thereon.
5.4 Issuance Taxes.
Except as provided in Section 5.2 hereof, the Company will pay
all taxes (if any) due in connection with and as the result of the
initial issuance and sale of the Notes and in connection with any
modification of this Agreement or the Notes and shall save each
holder of Notes harmless without limitation as to time against any
and all liabilities with respect to all such taxes. The
obligations of the Company under this Section 5.4 shall survive the
payment or prepayment of the Notes and the termination of this
Agreement.
6. COVENANTS
The Company covenants that on and after the Closing Date and
so long as any of the Notes shall be outstanding:
6.1 Payment of Taxes and Claims.
(a) Payment of Taxes and Claims. The Company will, and
will cause each Subsidiary to, pay before they become
delinquent:
(i) all taxes, assessments and governmental charges
or levies imposed upon it or its Property; and
(ii) all claims or demands of materialmen,
mechanics, carriers, warehousemen, vendors, landlords and
other like Persons that, if unpaid, might result in the
creation of a Lien upon its Property;
provided, that items of the foregoing description need not be
paid (A) while being actively contested in good faith and by
appropriate proceedings as long as adequate book reserves have
been established and maintained and exist with respect
thereto, and (B) so long as the title of the Company or the
Subsidiary, as the case may be, to, and its right to use, such
Property is not materially adversely affected thereby.
(b) Opinions. In the case of any such item being
contested as described in Section 6.1(a) hereof involving in
excess of One Million Dollars ($1,000,000), the existence of,
and the appropriateness of the forum for, the proceedings will
be acknowledged in writing by the independent counsel
responsible for such proceedings and the adequacy of such
reserves will be supported by an opinion of the independent
accountants of the Company or such Subsidiary (which documents
will be delivered to the holders of Notes as provided in
Section 7.1(c) hereof), provided that, if the aggregate amount
of all such items shall at any time exceed Two Million Dollars
($2,000,000), regardless of the amount of any individual item,
the adequacy of the reserves for all such items will be
supported by opinions of the independent accountants of the
Company or such Subsidiary (which opinions will be delivered
to the holders of the Notes as provided in Section 7.1(c)
hereof).
6.2 Maintenance of Properties; Corporate Existence; etc.
The Company will, and will cause each Subsidiary to:
(a) Property -- maintain, in all material respects, its
Property in good condition and working order, ordinary wear
and tear excepted, and make all necessary renewals,
replacements, additions, betterments and improvements thereto;
(b) Insurance -- maintain, with financially sound and
reputable insurers, insurance with respect to its Property and
business against such casualties and contingencies, of such
types (including, without limitation, insurance with respect
to losses arising out of Property loss or damage, public
liability, business interruption, larceny, workers'
compensation, embezzlement or other criminal misappropriation)
and in such amounts as is customary in accordance with sound
business practices in the case of corporations of established
reputations engaged in the same or a similar business and
similarly situated, provided, that, in lieu of any such
insurance in respect of worker's compensation or employee
healthcare, the Company or any Subsidiary may maintain
programs of self-insurance with respect to workers'
compensation and employee healthcare so long as each such
program is established in accordance with sound financial
practices and applicable law and each such program shall
maintain adequate reserves in accordance with GAAP and in
accordance with sound actuarial and insurance principles;
(c) Financial Records -- keep accurate and complete
books of records and accounts in which accurate and complete
entries shall be made of all its business transactions and
that will permit the provision of accurate and complete
financial statements in accordance with GAAP;
(d) Corporate Existence and Rights --
(i) do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate
existence, rights (charter and statutory) and franchises,
except where the failure to do so, in the aggregate,
could not reasonably be expected to have a Material
Adverse Effect, and
(ii) maintain each Restricted Subsidiary as a
Restricted Subsidiary,
in each case except as permitted by Section 6.10(b) and
Section 6.11 hereof; and
(e) Compliance with Law -- not be in violation of any
law, ordinance or governmental rule or regulation to which it
is subject (including, without limitation, any Environmental
Protection Law) and not fail to obtain any license,
certificate, permit, franchise or other governmental
authorization necessary to the ownership of its Properties or
to the conduct of its business if such violations or failures
to obtain, in the aggregate, could reasonably be expected to
have (i) a Material Adverse Effect or (ii) a material adverse
effect on the ability of the Company or any Subsidiary to
conduct in the future the business it conducts at the time of
such violation or failure to obtain.
6.3 Payment of Notes and Maintenance of Office.
(a) Payment of Notes. The Company will punctually pay,
or cause to be paid, the principal of and interest (and Make-
Whole Amount, if any) on the Notes, as and when the same shall
become due according to the terms of this Agreement and of the
Notes.
(b) Maintenance of Office. The Company will maintain an
office at the address of the Company set forth in Section 10.1
hereof where notices, presentations and demands in respect of
this Agreement or of the Notes may be made upon it. Such
office will be maintained at such address until such time as
the Company shall notify the holders of the Notes of any
change of location of such office, which will in any event be
located within the United States of America.
6.4 Fixed Charge Coverage.
(a) Prior to July 31, 1994. The Company will not, at
any time prior to July 31, 1994, permit Consolidated Net
Income Available for Fixed Charges for the period of two (2)
consecutive fiscal quarters of the Company most recently ended
at such time to be less than one hundred fifty percent (150%)
of Consolidated Fixed Charges for such period.
(b) July 31, 1994 to October 31, 1994. The Company will
not, at any time on or after July 31, 1994 and prior to
October 31, 1994, permit Consolidated Net Income Available for
Fixed Charges for the period of three (3) consecutive fiscal
quarters of the Company most recently ended at such time to be
less than one hundred fifty percent (150%) of Consolidated
Fixed Charges for such period.
(c) October 31, 1994 and Thereafter. The Company will
not, at any time on or after October 31, 1994, permit
Consolidated Net Income Available for Fixed Charges for the
period of four (4) consecutive fiscal quarters of the Company
most recently ended at such time to be less than one hundred
fifty percent (150%) of Consolidated Fixed Charges for such
period.
6.5 Limitation on Consolidated Funded Debt.
The Company will not at any time permit Consolidated Funded
Debt to exceed sixty percent (60%) of Consolidated Total
Capitalization, in each case determined at such time.
6.6 Limitations on Restricted Subsidiary Indebtedness and
Intercompany Indebtedness.
(a) Limit on Restricted Subsidiary Indebtedness. The
Company will not permit any Restricted Subsidiary to incur,
issue, assume or in any other manner become liable in respect
of any Indebtedness unless
(i) such Indebtedness is Excluded Restricted
Subsidiary Indebtedness and immediately prior to the
creation thereof, and after giving effect thereto and to
any concurrent application of the proceeds of such
Indebtedness, no Default or Event of Default would exist,
(ii) such Indebtedness is not Excluded Restricted
Subsidiary Indebtedness and immediately prior to the
creation thereof, and after giving effect thereto and to
any concurrent application of the proceeds of such
Indebtedness,
(A) the sum of
(I) Total Restricted Subsidiary
Indebtedness outstanding at such time, plus
(II) the aggregate amount of Indebtedness
and other obligations secured by Liens
permitted pursuant to Section 6.8(a)(viii)
hereof at such time,
would not exceed ten percent (10%) of Consolidated
Total Assets at such time, and
(B) no Default or Event of Default would
exist, or
(iii) such Indebtedness is a renewal, extension
(as to time) or refunding of Indebtedness previously
incurred in accordance with clause (i) or clause (ii)
hereof, and
(A) the principal amount of the Indebtedness
being so renewed, extended or refunded which is
outstanding at the time of such renewal, extension
or refunding is not increased, and
(B) immediately prior to such renewal,
extension or refunding, and after giving effect
thereto, no Default or Event of Default would
exist.
(b) No Restrictions on Distributions. The Company shall
not permit any Restricted Subsidiary to become obligated in
respect of any Indebtedness after the Closing Date if any
agreement, note or other instrument executed in connection
with, or as a condition to obtaining the funds constituting,
such Indebtedness contains any limitation or restriction on
the ability of such Restricted Subsidiary to declare or make
Distributions in respect of its capital stock.
(c) Disposition of Restricted Subsidiary Indebtedness.
Each Restricted Subsidiary any of whose outstanding
Indebtedness is at any time sold, transferred or otherwise
disposed of by the Company or a Restricted Subsidiary shall be
deemed to have incurred all such Indebtedness, and all Liens
securing such Indebtedness (if any), at the time of such sale,
transfer or other disposition.
(d) Limitation on Intercompany Indebtedness. The
Company will not at any time incur, issue, assume or in any
other manner become liable in respect of any Indebtedness
owing to any Subsidiary unless
(i) such Subsidiary is a Wholly-Owned Restricted
Subsidiary, and
(ii) all of the Company's obligations in respect of
such Indebtedness are subordinated in right of payment
and security to the Company's obligations under the Notes
on terms and conditions satisfactory in form, scope and
substance to the Majority Holders.
6.7 Consolidated Adjusted Net Worth.
The Company will not at any time permit Consolidated Adjusted
Net Worth to be less than Forty Million Dollars ($40,000,000).
6.8 Liens.
(a) Negative Pledge. The Company will not, and will not
permit any Restricted Subsidiary to, cause or permit to exist,
or agree or consent to cause or permit to exist in the future
(upon the happening of a contingency or otherwise), any of
their Property, whether now owned or hereafter acquired, to be
subject to any Lien except:
(i) Taxes, etc. -- Liens securing Property taxes,
assessments or governmental charges or levies or the
claims or demands of materialmen, mechanics, carriers,
warehousemen, vendors, landlords and other like Persons,
so long as the payment thereof is not at the time
required by Section 6.1 hereof;
(ii) Judicial Liens -- Liens
(A) arising from judicial attachments and
judgments,
(B) securing appeal bonds or supersedeas
bonds, and
(C) arising in connection with court
proceedings (including, without limitation, surety
bonds and letters of credit or any other instrument
serving a similar purpose),
provided that (1) any such attachments or judgments
relating thereto have been stayed, bonded or discharged
within sixty (60) days of the entry thereof and the
execution or other enforcement of such Liens is otherwise
effectively stayed, (2) the claims secured thereby are
being actively contested in good faith and by appropriate
proceedings, (3) adequate book reserves shall have been
established and maintained and shall exist with respect
thereto and (4) the aggregate amount so secured shall not
at any time exceed the greater of (x) Five Million
Dollars ($5,000,000) or (y) ten percent (10%) of
Consolidated Adjusted Net Worth at such time;
(iii) Ordinary Course Business Liens -- Liens
incurred or deposits made in the ordinary course of
business
(A) in connection with workers' compensation,
unemployment insurance, social security and other
like laws to secure statutory or public
obligations of the Company or such Restricted
Subsidiary in respect thereof, and
(B) to secure the performance of letters of
credit, bids, tenders, sales contracts, leases,
statutory obligations, surety and performance bonds
(of a type other than set forth in Section
6.8(a)(ii)) hereof) and other similar obligations
not incurred in connection with the borrowing of
money, the obtaining of advances or the payment of
the deferred purchase price of Property;
provided, however, that all such Liens do not, in the
aggregate, materially detract from the value of such
Property or materially interfere with the use of such
Property in the ordinary conduct of the business of the
Company and the Restricted Subsidiaries, taken as a
whole;
(iv) Certain Encumbrances -- Liens in the nature of
reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions,
leases and other similar title exceptions or encumbrances
affecting real Property, provided that such exceptions
and encumbrances do not in the aggregate materially
detract from the value of such Properties or materially
interfere with the use of such Property in the ordinary
conduct of the business of the Company and the Restricted
Subsidiaries, taken as a whole;
(v) Intercompany Liens -- Liens on Property of a
Restricted Subsidiary, provided that such Liens secure
only Indebtedness or other obligations owing to the
Company;
(vi) Closing Date Liens -- Liens in existence on the
Closing Date securing Indebtedness, provided that such
Liens and the Indebtedness secured thereby are described
in Part 6.8(a)(vi) of Annex 3 hereto;
(vii) Purchase Money Liens -- Purchase Money
Liens, if, after giving effect thereto and to any
concurrent transactions, each such Purchase Money Lien
secures Indebtedness in an amount not exceeding the
lesser of
(A) the cost of acquisition or construction,
or
(B) the Fair Market Value
of the particular Property to which such Indebtedness
relates;
(viii) Other Liens -- other Liens on Property of
the Company or the Restricted Subsidiaries not otherwise
permitted pursuant to clause (i) through clause (vii),
inclusive, of this Section 6.8(a), provided that,
(A) the Indebtedness or other obligations
secured thereby shall have been incurred, or shall
be permitted to be outstanding, in accordance with
the provisions of Section 6.5 and Section 6.6
hereof;
(B) immediately prior to, and after giving
effect to the incurrence, assumption or creation
thereof and to any concurrent application of the
proceeds of any Indebtedness or other obligation
secured thereby,
(I) the sum of
(1) the aggregate amount of all
Indebtedness and other obligations
secured by such Liens at such time, plus,
(2) the aggregate amount of Total
Restricted Subsidiary Indebtedness
outstanding at such time,
would not exceed ten percent (10%) of Consolidated
Total Assets at such time, and
(II) no Default or Event of Default would
exist; and
(ix) Refinancings, Extensions, etc. -- Liens
securing renewals, extensions (as to time) and
refinancings of Indebtedness secured by the Liens
described in clause (i) through clause (viii) of this
Section 6.8(a), provided that
(A) the amount of Indebtedness or other
obligations secured by each such Lien is not
increased in excess of the amount of such
Indebtedness or other obligations outstanding on
the date of such renewal, extension or refinancing,
(B) none of such Liens is extended to
encumber or otherwise relate to or cover any
additional Property of the Company or any
Restricted Subsidiary, and
(C) immediately prior to, and immediately
after the consummation of such renewal, extension
or refinancing, and after giving effect thereto, no
Default or Event of Default exists or would exist.
(b) Equal and Ratable Lien; Equitable Lien. In case any
Property shall be subjected to a Lien in violation of this
Section 6.8, the Company will forthwith make or cause to be
made, to the fullest extent permitted by applicable law,
provision whereby the Notes will be secured equally and
ratably with all other obligations secured thereby pursuant to
such agreements and instruments as shall be approved by the
Majority Holders, and the Company will cause to be delivered
to each holder of Notes an opinion of independent counsel
(selected by the Company and reasonably satisfactory to the
Majority Holders) to the effect that such agreements and
instruments are enforceable in accordance with their terms.
Regardless of whether the Company complies with the provisions
of the immediately preceding sentence, in case any Property
shall be subjected to a Lien in violation of this Section 6.8,
the Notes shall have the benefit, to the fullest extent that,
and with such priority as, the holders of Notes may be
entitled thereto under applicable law, of an equitable Lien on
such Property securing the Notes. A violation of this Section
6.8 will constitute an Event of Default, whether or not any
such provision is made or action is taken pursuant to this
Section 6.8(b).
(c) Financing Statements. The Company will not, and
will not permit any Restricted Subsidiary to, sign or file a
financing statement under the Uniform Commercial Code of any
jurisdiction that names the Company or such Restricted
Subsidiary as debtor, or sign any security agreement
authorizing any secured party thereunder to file any such
financing statement, except, in any such case, a financing
statement filed or to be filed to perfect or protect a
security interest that the Company or such Restricted
Subsidiary is entitled to create, assume or incur, or permit
to exist, under the foregoing provisions of this Section 6.8
or to evidence for informational purposes a lessor's interest
in Property leased to the Company or any such Restricted
Subsidiary.
6.9 Restricted Payments and Restricted Investments.
(a) Limit on Restricted Payments and Restricted
Investments. The Company will not at any time, and will not
at any time permit any Restricted Subsidiary to, declare or
make any Restricted Payment or make any Restricted Investment
unless:
(i) immediately after, and after giving effect to,
such Restricted Payment or such Restricted Investment,
the sum of the aggregate amount of (x) all Restricted
Payments declared or made during the period from and
after the Closing Date to and including the date such
Restricted Payment or Restricted Investment is made, plus
(y) all Restricted Investments held at such time by the
Company and the Restricted Subsidiaries would not exceed
the sum of
(A) Five Million Dollars ($5,000,000), plus
(B) the sum of fifty percent (50%) (or minus
one hundred percent (100%) in the case of a
deficit) of Consolidated Net Income for the period
commencing on and including October 31, 1993 and
ending on and including the date such Restricted
Payment is declared or made or such Restricted
Investment is made, plus
(C) the aggregate amount of cash proceeds
(net of all costs and out-of-pocket expenses in
connection therewith, including, without
limitation, placement, underwriting and brokerage
fees and expenses) received by the Company and the
Restricted Subsidiaries after the Closing Date and
prior to such time from the issuance and sale of
(I) capital stock (other than Redeemable Stock) of
the Company (either directly or through the
exercise of warrants, rights or other options or
the exercise of any rights of the holder of any
Indebtedness of the Company to convert such
Indebtedness to capital stock (other than
Redeemable Stock)) or (II) any warrants, rights or
other options to purchase such capital stock; and
(ii) at the time of such declaration and immediately
before, and after giving effect to, such Restricted
Payment or such Restricted Investment, no Default or
Event of Default exists or would exist.
(b) Time of Payment. The Company shall not authorize a
Distribution on any class of its capital stock that is not
payable within ninety (90) days of authorization.
(c) New Restricted Subsidiaries. Any Subsidiary which
becomes a Restricted Subsidiary after the Closing Date shall
be deemed to have made, at the time such Subsidiary becomes a
Restricted Subsidiary, all Restricted Investments of such
Subsidiary existing immediately after such Subsidiary shall
have become a Restricted Subsidiary.
6.10 Transfers of Property; Restricted Subsidiary Stock.
(a) Transfers of Property. The Company will not, and
will not permit any Restricted Subsidiary to, sell, lease as
lessor, transfer or otherwise dispose of any Property
(collectively, "Transfers"), except:
(i) Transfers of inventory and of obsolete or worn-
out Property, in each case in the ordinary course of
business of the Company or such Restricted Subsidiary;
(ii) Transfers from the Company to a Wholly-Owned
Restricted Subsidiary, and Transfers from a Restricted
Subsidiary to the Company or to a Wholly-Owned Restricted
Subsidiary;
(iii) Transfers of miscellaneous items of
Property having an individual current book value of less
than One Million Dollars ($1,000,000), so long as the
aggregate book value of all Property subject to Transfers
during any fiscal year of the Company pursuant to this
clause (iii) does not exceed Two Million Dollars
($2,000,000) for such fiscal year;
(iv) Transfers of Property in connection with an
exchange of Property by the Company or a Restricted
Subsidiary with another Person, so long as the Property
received by the Company or such Restricted Subsidiary in
such exchange shall have a substantially similar business
use as, and a Fair Market Value equal to or greater than
the Fair Market Value of, the Property subject to such
Transfer; and
(v) any other Transfer of Property at any time to
a Person, other than an Affiliate, for Acceptable
Consideration if:
(A) the sum of
(1) the current book value of such
Property, plus
(2) the aggregate book value of all
other Property of the Company and the
Restricted Subsidiaries previously subjected
to Transfers (other than Transfers referred to
in the foregoing clause (i) through clause
(iv), inclusive, (collectively, "Excluded
Transfers")) during the then-current fiscal
year of the Company,
would not exceed ten percent (10%) of Consolidated
Total Assets determined as of the last day of the
fiscal year of the Company ended immediately prior
to the time of such Transfer (such amount in
respect of the fiscal year in which such Transfer
is proposed to be made is herein referred to as the
"Specified Asset Percentage"); and
(B) immediately prior to, and immediately
after the consummation of such Transfer, and after
giving effect thereto, no Default or Event of
Default exists or would exist.
(b) Transfers of Restricted Subsidiary Stock. The
Company will not, and will not permit any Restricted
Subsidiary to, Transfer any shares of the stock (or any
warrants, rights or options to purchase stock or other
Securities exchangeable for or convertible into stock) of a
Restricted Subsidiary (such stock, warrants, rights, options
and other Securities herein called "Restricted Subsidiary
Stock"), nor will the Company permit any Restricted Subsidiary
to issue, sell or otherwise dispose of any shares of its own
Restricted Subsidiary Stock, provided that the foregoing
restrictions do not apply to:
(i) the issuance by a Restricted Subsidiary of
shares of its own Restricted Subsidiary Stock to the
Company or a Wholly-Owned Restricted Subsidiary;
(ii) Transfers (other than leases) of shares of
Restricted Subsidiary Stock by the Company to a Wholly-
Owned Restricted Subsidiary or by a Restricted Subsidiary
to the Company or to a Wholly-Owned Restricted
Subsidiary;
(iii) the issuance by a Restricted Subsidiary of
directors' qualifying shares; and
(iv) the Transfer of all of the Restricted
Subsidiary Stock of a Restricted Subsidiary owned by the
Company and the other Restricted Subsidiaries if:
(A) such Transfer satisfies the requirements
of Section 6.10(a)(v) hereof;
(B) in connection with such Transfer the
entire Investment (whether represented by stock,
Indebtedness, claims or otherwise) of the Company
and the other Restricted Subsidiaries in such
Restricted Subsidiary is sold, transferred or
otherwise disposed of to a Person other than the
Company or a Restricted Subsidiary not being
simultaneously disposed of;
(C) the Restricted Subsidiary being disposed
of has no continuing Investment in any other
Restricted Subsidiary not being simultaneously
disposed of or in the Company; and
(D) immediately prior to, and immediately
after the consummation of such Transfer, and after
giving effect thereto, no Default or Event of
Default would exist.
(c) Transfers of Property and Mergers of Restricted
Subsidiaries.
(i) Determination of Book Value. For purposes of
determining the book value of Property constituting
Restricted Subsidiary Stock subject to any Transfer as
provided in clause (iv) of Section 6.10(b) hereof, such
book value shall be deemed to be the aggregate book value
of the Property of the Restricted Subsidiary that shall
have issued such Restricted Subsidiary Stock.
(ii) Mergers of Restricted Subsidiaries. The merger
or consolidation of a Restricted Subsidiary into or with
another corporation, as contemplated in clause (iii) of
Section 6.11(a) hereof, shall be deemed to be a Transfer
of all of the Property of such Restricted Subsidiary at
the net book value thereof, as determined at the time of
such merger or consolidation.
(d) Transfers in Excess of the Specified Asset
Percentage.
(i) Application of Excess Proceeds Amount.
Notwithstanding the provisions of Section 6.10(a)(v) and
Section 6.10(b)(iv) hereof, the Company may, and may
permit a Restricted Subsidiary to, Transfer, in any
fiscal year of the Company, Property having an aggregate
book value in excess of the Specified Asset Percentage
for such fiscal year of the Company if:
(A) the Excess Proceeds Amount shall have
been applied by the Company or such Restricted
Subsidiary to a Qualified Proceeds Application
within three hundred sixty-five (365) days of the
receipt thereof by the Company or such Restricted
Subsidiary;
(B) immediately before and after the
consummation of each such Transfer, and after
giving effect thereto, no Default or Event of
Default exists or would exist; and
(C) prior to or contemporaneously with the
application of all or any portion of such Excess
Proceeds Amount, the Company shall have delivered a
certificate of a Senior Officer to each holder of
Notes providing a detailed description of such
application and certifying that the conditions set
forth in subclause (A) and subclause (B) hereof
have been satisfied.
(ii) Failure to Apply Proceeds. If, notwithstanding
the provisions of this Section 6.10(d), the Company shall
fail to comply with any of the requirements of Section
6.10(d)(i) hereof, then such failure to comply with any
such provisions as of such date shall be deemed to be an
Event of Default.
6.11 Merger, Consolidation, etc.
(a) Merger and Consolidation. The Company will not, and
will not permit any Restricted Subsidiary to, merge with or
into, consolidate with, or sell, lease, transfer or otherwise
dispose of all or substantially all of its assets to, any
other Person, or permit any other Person to merge or
consolidate with or into it, provided that the foregoing
restriction does not apply to
(i) the merger or consolidation of the Company into
or with, or the sale by the Company of all or
substantially all of its assets to, another corporation,
if:
(A) the corporation that results from such
merger or consolidation or that acquires all or
substantially all of such assets (the "Surviving
Corporation") is organized under the laws of the
United States of America, any state thereof or the
District of Columbia;
(B) the due and punctual payment of the
principal of and Make-Whole Amount, if any, and
interest on all of the Notes, according to their
tenor, and the due and punctual performance and
observance of all the covenants in the Notes and
this Agreement to be performed or observed by the
Company, are expressly assumed by the Surviving
Corporation pursuant to such agreements and
instruments as shall be approved by the Majority
Holders, and the Company causes to be delivered to
each holder of Notes an opinion of independent
counsel reasonably acceptable to the Majority
Holders to the effect that such agreements and
instruments are enforceable in accordance with
their terms (subject to customary qualifications);
and
(C) immediately prior to, and immediately
after the consummation of the transaction, and
after giving effect thereto, no Default or Event of
Default exists or would exist;
(ii) a merger of a Restricted Subsidiary into, or a
consolidation of a Restricted Subsidiary with, the
Company (so long as the Company is the surviving entity)
or a Wholly-Owned Restricted Subsidiary (so long as such
Wholly-Owned Restricted Subsidiary is the surviving
entity) or the sale or other disposition by a Restricted
Subsidiary of all or substantially all of its assets to
the Company or a Wholly-Owned Restricted Subsidiary; and
(iii) the merger of a Restricted Subsidiary
into, or consolidation of a Restricted Subsidiary with,
or the sale or other disposition by a Restricted
Subsidiary of all or substantially all of its assets to,
another corporation (which shall not be an Affiliate or
a Restricted Subsidiary), if
(A) such transaction complies, in all
respects, with the provisions of Section 6.10(a)(v)
of this Agreement, and
(B) immediately prior to, and immediately
after the consummation of the transaction, and
after giving effect thereto, no Default or Event of
Default exists or would exist.
(b) Acquisition of Stock, etc. The Company will not,
and will not permit any Restricted Subsidiary to, acquire any
stock of any corporation if upon completion of such
acquisition such corporation would be a Restricted Subsidiary,
or acquire all of the Property of, or such of the Property as
would permit the transferee to continue any one or more
integral business operations of, any Person unless,
immediately prior to, and immediately after the consummation
of such acquisition, and after giving effect thereto, no
Default or Event of Default exists or would exist.
6.12 Nature of Business.
The Company will not, and will not permit any Restricted
Subsidiary to, engage in any business if, as a result thereof, the
principal businesses of the Company and the Restricted
Subsidiaries, taken as a whole, would be changed from the
businesses thereof described in the Placement Memorandum.
6.13 Transactions with Affiliates.
The Company will not, and will not permit any Restricted
Subsidiary to, enter into or be a party to any transaction or
arrangement (other than Immaterial Transactions), including,
without limitation, the purchase, sale or exchange of Property or
the rendering of any service, with any Affiliate, except in the
ordinary course of and pursuant to the reasonable requirements of
the business of the Company or such Restricted Subsidiary and upon
fair and reasonable terms no less favorable to the Company or such
Restricted Subsidiary than would obtain in a comparable arm's-
length transaction with a Person not an Affiliate.
6.14 ERISA; Foreign Pension Plans.
(a) Compliance. The Company will, and will cause each
ERISA Affiliate to, at all times with respect to each Pension
Plan, make timely payment of contributions required to meet
the minimum funding standard set forth in ERISA or the IRC
with respect thereto, and to comply with all other applicable
provisions of ERISA.
(b) Relationship of Vested Benefits to Pension Plan
Assets. The Company will not at any time permit the present
value of all employee benefits vested under each Pension Plan
to exceed the assets of such Pension Plan allocable to such
vested benefits at such time, in each case determined pursuant
to Section 6.14(c) hereof.
(c) Valuations. All assumptions and methods used to
determine the actuarial valuation of vested employee benefits
under Pension Plans and the present value of assets of Pension
Plans will be reasonable in the good faith judgment of the
Company and will comply with all requirements of law.
(d) Prohibited Actions. The Company will not, and will
not permit any ERISA Affiliate to:
(i) engage in any "prohibited transaction" (as such
term is defined in section 406 of ERISA or section 4975
of the IRC) that would result in the imposition of a
material tax or penalty;
(ii) incur with respect to any Pension Plan any
"accumulated funding deficiency" (as such term is defined
in section 302 of ERISA), whether or not waived;
(iii) terminate any Pension Plan in a manner
that could result in
(A) the imposition of a Lien on the Property
of the Company or any Subsidiary pursuant to
section 4068 of ERISA, or
(B) the creation of any liability under
section 4062 of ERISA;
(iv) fail to make any payment required by section
515 of ERISA; or
(v) at any time be an "employer" (as such term is
defined in section 3(5) of ERISA) required to contribute
to any Multiemployer Plan if, at such time, it could
reasonably be expected that the Company or any Subsidiary
will incur withdrawal liability in respect of such
Multiemployer Plan and such liability, if incurred,
together with the aggregate amount of all other
withdrawal liability as to which there is a reasonable
expectation of incurrence by the Company or any
Subsidiary under any one or more Multiemployer Plans,
could reasonably be expected to have a Material Adverse
Effect.
(e) Foreign Pension Plans. The Company will, and will
cause each Subsidiary to, make all required payments in
respect of funding any Foreign Pension Plan applicable to such
Person and otherwise fully comply with all applicable laws,
statutes, rules and regulations governing or affecting such
Foreign Pension Plan if the failure to make such payments or
to so comply could reasonably be expected to have a Material
Adverse Effect.
6.15 Private Offering.
The Company will not, and will not permit any Person acting on
its behalf to, offer the Notes or any part thereof or any similar
Securities for issuance or sale to, or solicit any offer to acquire
any of the same from, any Person so as to bring the issuance and
sale of the Notes within the provisions of section 5 of the
Securities Act.
6.16 Designation of Subsidiaries.
(a) Right of Designation. Subject to the satisfaction
of the requirements of Section 6.16(c) hereof, the Company
shall have the right to designate each Subsidiary as a
Restricted Subsidiary or an Unrestricted Subsidiary by
delivering to each holder of Notes a writing, signed by a
Senior Officer, certifying that the Board of Directors shall
have so designated such Subsidiary within thirty (30) days of
the acquisition by the Company or any Subsidiary of the
necessary percentages of Voting Stock and other equity
interests of such Subsidiary as set forth in the definition of
"Subsidiary" contained in Section 9.1 of this Agreement. Any
such Subsidiary not so designated within such thirty (30) day
period shall be deemed, on and after such date and without any
further action by the Company or any holder of Notes, to have
been designated by the Company as an Unrestricted Subsidiary.
Each Subsidiary designated as a Restricted Subsidiary in Part
2.3 of Annex 3 hereto shall be a Restricted Subsidiary on and
after the Closing Date and all other Subsidiaries, if any,
listed in such Part 2.3 of Annex 3 shall, subject to Section
6.16(b) hereof, be Unrestricted Subsidiaries on and after the
Closing Date.
(b) Right of Redesignation. Subject to the satisfaction
of the requirements of Section 6.16(c) hereof, the Company may
at any time designate any Unrestricted Subsidiary as a
Restricted Subsidiary by delivering to each holder of Notes a
written notice, signed by a Senior Officer, certifying that
the Board of Directors shall have so designated such
Subsidiary. No Restricted Subsidiary shall at any time be
designated as an Unrestricted Subsidiary.
(c) Designation Criteria. No Subsidiary shall at any
time after the Closing Date be designated as a Restricted
Subsidiary unless immediately before and after, and after
giving effect to such designation, and assuming that all
obligations, liabilities and Investments of, and all Liens on
the Property of, such Subsidiary being so designated were
incurred or made contemporaneously with such designation,
(i) no Default or Event of Default exists or would
exist, and
(ii) the Company would be permitted by the
provisions of Section 6.5 hereof to have outstanding at
least One Dollar ($1.00) of additional Consolidated
Funded Debt.
(d) Effectiveness. Other than as set forth in the last
two sentences of Section 6.16(a) hereof, any designation under
this Section 6.16 that satisfies all of the conditions set
forth in this Section 6.16 shall become effective, for
purposes of this Agreement, on the day that notice thereof
shall have been delivered by the Company and received by each
holder of Notes in accordance with the provisions of Section
10.1 hereof.
(e) Covenant Compliance. Each notice required by
Section 6.16(d) hereof shall be accompanied by a certificate
of a Senior Officer and a Senior Financial Officer setting
forth the information (including detailed calculations)
required in order to establish whether the Company is in
compliance with the requirements of Section 6.4 through
Section 6.11 hereof, inclusive, at the time of such
designation, and immediately after giving effect thereto
(including with respect to each such Section, where
applicable, the calculations of the maximum or minimum amount,
ratio or percentage, as the case may be, permissible under the
terms of such Sections, and the calculation of the amounts,
ratio or percentage at such times).
6.17 Pro-Rata Offers.
The Company will not, nor will it permit any Subsidiary or any
Affiliate to, directly or indirectly, acquire or make any offer to
acquire any Notes unless the Company or such Subsidiary or
Affiliate shall have offered to acquire all of the Notes from all
holders of the Notes and upon the same terms. In case the Company,
any Subsidiary or any Affiliate acquires any Notes, such Notes will
thereafter be cancelled and no Notes will be issued in substitution
therefor.
7. INFORMATION AS TO COMPANY
7.1 Financial and Business Information.
The Company will deliver to each holder of Notes:
(a) Quarterly Statements -- within ninety (90) days
after the end of each quarterly fiscal period in each fiscal
year of the Company (other than the last quarterly fiscal
period of each such fiscal year) duplicate copies of
(i) consolidated and consolidating balance sheets
of the Company and its consolidated subsidiaries, and of
the Company and the Restricted Subsidiaries, as at the
end of such quarter, and
(ii) consolidated and consolidating statements of
operations, cash flows and stockholders' equity of the
Company and its consolidated subsidiaries, and the
Company and the Restricted Subsidiaries, for such quarter
and (in the case of the second and third quarters) for
the portion of the fiscal year ending with such quarter,
setting forth in each case in comparative form the figures for
the corresponding periods in the previous fiscal year, all in
reasonable detail, prepared in accordance with GAAP applicable
to quarterly financial statements generally and certified as
complete and correct, subject to changes resulting from year-
end adjustments, by a Senior Financial Officer, and
accompanied by the certificate required by Section 7.2 hereof;
(b) Annual Statements -- within one hundred twenty (120)
days after the end of each fiscal year of the Company
duplicate copies of
(i) consolidated and consolidating balance sheets
of the Company and its consolidated subsidiaries, and of
the Company and the Restricted Subsidiaries, as at the
end of such year, and
(ii) consolidated and consolidating statements of
operations, cash flows and stockholders' equity of the
Company and its consolidated subsidiaries, and the
Company and the Restricted Subsidiaries, for such year,
setting forth in each case in comparative form the figures for
the previous fiscal year, all in reasonable detail, prepared
in accordance with GAAP and accompanied by
(A) in the case of such consolidated
financial statements in respect of the Company and
its consolidated subsidiaries, an opinion of
independent certified public accountants of
recognized national standing, which opinion shall,
without qualification (including, without
limitation, qualifications related to (I) the scope
of the audit or (II) the ability of the Company or
any Subsidiary to continue as a going concern),
state that such financial statements present
fairly, in all material respects, the financial
position of the companies being reported upon and
their results of operations and cash flows and have
been prepared in conformity with GAAP, and that the
examination of such accountants in connection with
such financial statements has been made in
accordance with generally accepted auditing
standards, and that such audit provides a
reasonable basis for such opinion in the
circumstances,
(B) in the case of such consolidating
financial statements, a statement of such
independent certified public accountants which
states that (I) such consolidating financial
statements are fairly stated, in all material
respects, in relation to the consolidated financial
statements of the Company and its consolidated
subsidiaries and (II) such consolidating statements
were prepared using the same work papers as were
used in the preparation of such consolidated
statements,
(C) a certification by a Senior Financial
Officer that such consolidated and consolidating
financial statements are complete and correct, and
(D) the certificates required by Section 7.2
and Section 7.3 hereof;
(c) Written Acknowledgment of Counsel and Opinions of
Independent Accountants -- within one hundred twenty (120)
days after the end of each fiscal year of the Company,
duplicate copies of all written acknowledgements of counsel
and opinions of independent accountants required pursuant to
Section 6.1(b) hereof;
(d) Audit Reports -- promptly upon receipt thereof, a
copy of each other report submitted to the Company or any
Subsidiary by independent accountants in connection with any
annual, interim or special audit made by them of the books of
the Company or any Subsidiary;
(e) SEC and Other Reports -- promptly upon their
becoming available (and in any event no later than the time of
filing or sending thereof, as the case may be), one (1) copy,
without duplication, of (i) each financial statement, report,
notice or proxy statement sent by the Company or any
Subsidiary to public Securities holders generally, and (ii)
each regular or periodic report (including, without
limitation, each Annual Report on Form 10-K, each Quarterly
Report on Form 10-Q and each Current Report on Form 8-K), each
registration statement (other than any registration statement
on Form S-8) which shall have become effective, and each final
prospectus, and each amendment to any of the foregoing, in
respect thereof filed by the Company or any Subsidiary with
the National Association of Securities Dealers, any securities
exchange or the Securities and Exchange Commission or any
successor agency;
(f) ERISA --
(i) immediately upon becoming aware of the
occurrence of any
(A) "reportable event" (as such term is
defined in section 4043 of ERISA), or
(B) "prohibited transaction" (as such term is
defined in section 406 of ERISA or section 4975 of
the IRC),
in connection with any Pension Plan or any trust created
thereunder, a written notice specifying the nature
thereof, what action the Company is taking or proposes to
take with respect thereto and, when known, any action
taken by the IRS, the Department of Labor or the PBGC
with respect thereto; and
(ii) prompt written notice of and, where applicable,
a description of
(A) any notice from the PBGC in respect of
the commencement of any proceedings pursuant to
section 4042 of ERISA to terminate any Pension Plan
or for the appointment of a trustee to administer
any Pension Plan,
(B) any distress termination notice delivered
to the PBGC under section 4041 of ERISA in respect
of any Pension Plan, and any determination of the
PBGC in respect thereof,
(C) the placement of any Multiemployer Plan
in reorganization status under Title IV of ERISA,
(D) any Multiemployer Plan becoming
"insolvent" (as such term is defined in section
4245 of ERISA) under Title IV of ERISA,
(E) the whole or partial withdrawal of the
Company or any ERISA Affiliate from any
Multiemployer Plan and the withdrawal liability
incurred in connection therewith, and
(F) any material increase in contingent
liabilities of the Company or any Subsidiary in
respect of any post-retirement employee welfare
benefits.
(g) Actions, Proceedings -- promptly after the
commencement thereof, written notice of any action or
proceeding relating to the Company or any Subsidiary in any
court or before any Governmental Authority or arbitration
board or tribunal as to which there is a reasonable
possibility of an adverse determination and that, if adversely
determined, is reasonably likely to have a Material Adverse
Effect;
(h) Certain Environmental Matters -- prompt written
notice of and a description of any event or circumstance that,
had such event or circumstance occurred or existed immediately
prior to the Closing Date, would have been required to be
disclosed as an exception to any statement set forth in
Section 2.13 hereof;
(i) Notice of Default or Event of Default -- promptly
upon becoming aware (and in any event within five (5) Business
Days thereafter) of the existence of any condition or event
that constitutes a Default or an Event of Default, a written
notice specifying the nature and period of existence thereof
and what action the Company is taking or proposes to take with
respect thereto;
(j) Notice of Claimed Default -- promptly upon becoming
aware (and in any event within five (5) Business Days
thereafter) that the holder of (i) any Note, (ii) any other
Indebtedness having an outstanding principal amount in excess
of One Million Dollars ($1,000,000) or (iii) any other
Security of the Company or any Subsidiary shall have given
notice or taken any other action with respect to a claimed
Default, Event of Default, default or event of default, a
written notice specifying the notice given or action taken by
such holder and the nature of the claimed Default, Event of
Default, default or event of default and what action the
Company is taking or proposes to take with respect thereto;
and
(k) Requested Information -- promptly, and in any event
within fifteen (15) Business Days of any request therefor,
such other data and information as from time to time may be
requested by any holder of Notes, including, without
limitation,
(i) promptly after the furnishing thereof, copies
of any statement, report or certificate furnished to any
holder of Indebtedness of the Company or any Subsidiary,
TE\O information requested to comply with 17 C.F.R.
230.144A, as amended from time to time, and
(iii) information necessary to comply with any
request of the National Association of Insurance
Commissioners in respect of the designation of the Notes.
7.2 Officers' Certificates.
Each set of financial statements delivered to each holder of
Notes pursuant to Section 7.1(a) or Section 7.1(b) hereof shall be
accompanied by a certificate of a Senior Officer and a Senior
Financial Officer setting forth:
(a) Covenant Compliance -- the information (including
detailed calculations) required in order to establish whether
the Company was in compliance with the requirements of Section
6.4 through Section 6.11 hereof, inclusive, during the period
covered by the income statement then being furnished
(including with respect to each such Section, where
applicable, the calculations of the maximum or minimum amount,
ratio or percentage, as the case may be, permissible under the
terms of such Sections, and the calculation of the amounts,
ratio or percentage then in existence); and
(b) Event of Default -- a statement that the signers
have reviewed the relevant terms hereof and have made, or
caused to be made, under their supervision, a review of the
transactions and conditions of the Company and the
Subsidiaries from the beginning of the accounting period
covered by the income statements being delivered therewith to
the date of the certificate and that such review shall not
have disclosed the existence during such period of any
condition or event that constitutes a Default or an Event of
Default or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what
action the Company shall have taken or proposes to take with
respect thereto.
7.3 Accountants' Certificates.
Each set of annual financial statements delivered pursuant to
Section 7.1(b) shall be accompanied by a certificate of the
independent certified public accountants who certify such financial
statements stating that they have reviewed the provisions of
Section 6.4 through Section 6.7, inclusive, and Section 6.9 through
Section 6.11, inclusive, of this Agreement (as such Sections relate
to financial or accounting matters) and stating further, whether,
in making their audit, such accountants have become aware of any
failure by the Company or any Subsidiary to comply with any of the
terms, covenants, provisions or conditions thereof and, if such
accountants are aware that any such failure then exists, specifying
the nature and period of existence thereof.
7.4 Inspection.
The Company will permit, upon reasonable prior notice to the
Company, the representatives of each holder of Notes (at the
expense of the Company at any time when a Default or an Event of
Default has occurred and is in existence, and otherwise at the
expense of such holder) to visit and inspect any of the Properties
of the Company or any Subsidiary, to examine all their respective
books of account, records, reports and other papers, to make copies
and extracts therefrom and to discuss their respective affairs,
finances and accounts with their respective officers, employees and
independent public accountants (and by this provision the Company
authorizes such accountants to discuss the finances and affairs of
the Company and the Subsidiaries), all at such reasonable times and
as often as may be reasonably requested.
7.5 Confidential Information.
Each holder of Notes will employ reasonable procedures and
standards designed to maintain the confidential nature of all
Proprietary Business Information that has been or in the future is
furnished to or obtained by such holder in connection with this
Agreement and the Notes (provided that any such holder shall be
deemed to have complied with the foregoing requirement if in
respect of such Proprietary Business Information such holder shall
employ its customary business practices as used respecting such
holder's own proprietary business records) and that has been
clearly marked in writing as confidential, except such Proprietary
Business Information that was or is available to the public or was
not or is not treated as confidential by any one or more of the
Company, the Subsidiaries or the Affiliates. Notwithstanding the
foregoing, any such holder may disclose any Proprietary Business
Information furnished to or obtained by it in connection with this
Agreement:
(a) the disclosure of which is, in such holder's sole
good faith business and/or legal judgment, appropriate or
required in connection with regulatory requirements
(including, without limitation, the requirements of the
National Association of Insurance Commissioners) or other
legal requirements related to such holder's affairs,
including, without limitation, the disclosure of such
Proprietary Business Information in connection with or in
response to
(i) compliance with any law, ordinance or
governmental order, regulation, rule, policy, subpoena,
investigation or request (including, without limitation,
any informal investigative request by any Governmental
Authority or other regulatory body), or
(ii) any order, decree, judgment, subpoena, notice
of discovery or similar ruling, or pleading issued,
filed, served or purported on its face to be issued,
filed or served (A) by or under authority of any court,
tribunal, arbitration board or any governmental agency,
commission, authority, board or similar entity or (B) in
connection with any proceeding (including, without
limitation, any proceeding to enforce the obligations of
the Company under this Agreement and the Notes), cause or
matter pending (or on its face purported to be pending)
before any court, tribunal, arbitration board or any
governmental agency, commission, authority, board or
similar entity,
provided that in any such case such holder shall promptly send
written notice (unless prohibited by law) to the Company, in
accordance with Section 10.1 hereof, of any such requirement
of disclosure of any Proprietary Business Information;
(b) to any one or more of such holder's employees,
officers, directors, agents, attorneys, accountants or
professional consultants who would have access to such
Proprietary Business Information in the normal course of the
performance of such Person's duties for it, so long as such
holder employs reasonable procedures and standards designed to
maintain the confidential nature of all such Proprietary
Business Information that is disclosed to such Persons
(provided that such holder shall be deemed to have complied
with the foregoing requirement if in respect of such
Proprietary Business Information it shall employ its customary
business practices as used respecting its own proprietary
business records);
(c) to the National Association of Insurance
Commissioners, and to Moody's, Standard & Poor's or any other
nationally recognized financial rating service that is
reviewing the credit rating of any holder of Notes or is
rating or reviewing the rating of the Notes; and
(d) to any prospective purchaser, securities broker or
dealer or investment banker in connection with the resale or
proposed resale of all or any portion of the Notes by such
holder (so long as you shall have notified each such Person of
the confidential nature of such information and each such
Person has agreed in writing to be bound by the terms and
conditions of this Section 7.5).
No holder of Notes will be liable for the breach of this Section
7.5 by any other holder of Notes or by any Person to which any
Proprietary Business Information shall be delivered in accordance
with this Section 7.5.
8. EVENTS OF DEFAULT
8.1 Nature of Events.
An "Event of Default" shall exist if any of the following
occurs and is continuing:
(a) Principal or Make-Whole Amount Payments -- the
Company shall fail to make any payment of principal or Make-
Whole Amount on any Note on or before the date such payment is
due;
(b) Interest Payments -- the Company shall fail to make
any payment of interest on any Note on or before five (5)
Business Days after the date such payment is due;
(c) Particular Covenant Defaults -- the Company or any
Subsidiary shall fail to perform or observe any covenant
contained in Section 6.4 through Section 6.11 hereof,
inclusive, in Section 6.13 through Section 6.15 hereof, or in
Section 7.1(i) or Section 7.1(j) hereof;
(d) Other Defaults -- the Company or any Subsidiary
shall fail to comply in any material respect with any
provision hereof, other than as specified in Section 8.1(a),
Section 8.1(b) and Section 8.1(c) hereof, and such failure
continues for more than thirty (30) days after such failure
shall first become known to any officer of the Company;
(e) Warranties or Representations -- any warranty,
representation or other statement by or on behalf of the
Company contained herein or in any certificate or instrument
furnished in compliance with or in reference hereto shall have
been false or misleading in any material respect when made;
(f) Default on Debt or Security -- any event shall occur
or any condition shall exist in respect of any Indebtedness or
any Security of the Company or any Restricted Subsidiary, or
under any agreement securing or relating to any such
Indebtedness or Security, that has caused
(i) such Indebtedness or Security, or a portion
thereof, to become due prior to its stated maturity or
prior to its regularly scheduled date or dates of
payment; or
(ii) any one or more of the holders thereof or a
trustee therefor to require the Company or any Restricted
Subsidiary to repurchase such Indebtedness or Security
from the holders thereof;
provided that the aggregate amount of all obligations in
respect of such Indebtedness and Securities exceeds at such
time One Million Dollars ($1,000,000);
(g) Involuntary Bankruptcy Proceedings --
(i) a receiver, liquidator, custodian or trustee of
the Company or any Restricted Subsidiary, or of all or
any part of the Property of either, shall be appointed by
court order and such order shall remain in effect for
more than sixty (60) days, or an order for relief shall
be entered with respect to the Company or any Restricted
Subsidiary, or the Company or any Restricted Subsidiary
shall be adjudicated a bankrupt or insolvent;
(ii) any of the Property of the Company or any
Restricted Subsidiary shall be sequestered by court order
and such order shall remain in effect for more than sixty
(60) days; or
(iii) a petition shall be filed against the
Company or any Restricted Subsidiary under any
bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of
any jurisdiction, whether now or hereafter in effect, and
shall not be dismissed within sixty (60) days after such
filing;
(h) Voluntary Petitions -- the Company or any Restricted
Subsidiary shall file a petition in voluntary bankruptcy or
seeking relief under any provision of any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction, whether
now or hereafter in effect, or shall consent to the filing of
any petition against it under any such law (except, in each
case, in connection with a Permitted Reorganization of such
Person);
(i) Assignments for Benefit of Creditors, etc. -- the
Company or any Restricted Subsidiary shall make an assignment
for the benefit of its creditors, or shall admit in writing
its inability, or shall fail, to pay its debts generally as
they become due, or shall consent to the appointment of a
receiver, liquidator or trustee of the Company or any
Restricted Subsidiary or of all or any part of the Property of
either (except, in each case, in connection with a Permitted
Reorganization of such Person); or
(j) Undischarged Final Judgments -- a final,
nonappealable judgment or final, nonappealable judgments for
the payment of money aggregating in excess of One Million
Dollars ($1,000,000) (exclusive of any insurance coverage
applicable thereto for which the insurance company issuing
such coverage shall have acknowledged (in writing) coverage
with respect thereto and shall not have indicated that a
defense, exclusion or exemption to the payment of the related
insurance exists) is or are outstanding against any one or
more of the Company and the Restricted Subsidiaries and any
one of such judgments shall have been outstanding for more
than sixty (60) days from the date of its entry and shall not
have been discharged in full, stayed or bonded.
If any action, condition, event or other matter would, at any time,
constitute an Event of Default under any provision of this Section
8.1, then an Event of Default shall exist, regardless of whether
the same or a similar action, condition, event or other matter is
addressed in a different provision of this Section 8.1 and would
not constitute an Event of Default at such time under such
different provision.
8.2 Default Remedies.
(a) Acceleration on Event of Default.
(i) If an Event of Default specified in clause (g),
clause (h) or clause (i) of Section 8.1 hereof shall
exist, all of the Notes at the time outstanding shall
automatically become immediately due and payable together
with interest accrued thereon and the Make-Whole Amount
(if any) in respect thereof, in each case without
presentment, demand, protest or notice of any kind, all
of which are hereby expressly waived, and the Company
shall forthwith pay to the holder or holders of all the
Notes then outstanding the entire principal of and
interest accrued on the Notes and, to the extent
permitted by law, the Make-Whole Amount at such time with
respect to the Notes, and all other amounts owing under
the Note Purchase Agreements.
(ii) If an Event of Default other than those
specified in clause (g), clause (h) or clause (i) of
Section 8.1 hereof shall exist, the Required Holders may
exercise any right, power or remedy permitted to such
holder or holders by law and shall have, in particular,
without limiting the generality of the foregoing, the
right to declare the entire principal of, and all
interest accrued on and Make-Whole Amount (if any) in
respect of, all the Notes then outstanding to be, and
such Notes shall thereupon become, forthwith due and
payable, without any presentment, demand, protest or
other notice of any kind, all of which are hereby
expressly waived, and the Company shall forthwith pay to
the holder or holders of all the Notes then outstanding
the entire principal of and interest accrued on such
Notes and, to the extent permitted by law, the Make-Whole
Amount at such time with respect to such principal amount
of the Notes, and all other amounts owing under the Note
Purchase Agreements to such holder.
(b) Acceleration on Payment Default. During the
existence of an Event of Default described in Section 8.1(a)
or Section 8.1(b) hereof, and irrespective of whether the
Notes then outstanding shall have been declared to be due and
payable pursuant to Section 8.2(a)(ii) hereof, any holder of
Notes that shall have not consented to any waiver with respect
to such Event of Default may, at such holder's option, by
notice in writing to the Company, declare the Notes then held
by such holder to be, and such Notes shall thereupon become,
forthwith due and payable together with all interest accrued
thereon, and Make-Whole Amount (if any) in respect thereof,
without any presentment, demand, protest or other notice of
any kind, all of which are hereby expressly waived, and the
Company shall forthwith pay to such holder the entire
principal of and interest accrued on such Notes and, to the
extent permitted by law, the Make-Whole Amount at such time
with respect to such principal amount of such Notes, and all
other amounts owing under the Note Purchase Agreements to such
holder.
(c) Valuable Rights. The Company acknowledges, and the
parties hereto agree, that the right of each holder to
maintain its investment in the Notes free from repayment by
the Company (except as herein specifically provided for) is a
valuable right and that the provision for payment of a Make-
Whole Amount by the Company, in the event that the Notes are
prepaid or are accelerated as a result of an Event of Default
under certain circumstances, is intended to provide
compensation for the deprivation of such right under such
circumstances.
(d) Other Remedies; Remedies Cumulative; Nonwaiver.
During the existence of an Event of Default and irrespective
of whether the Notes then outstanding shall have been declared
to be due and payable pursuant to Section 8.2(a)(ii) hereof
and irrespective of whether any holder of Notes then
outstanding shall otherwise have pursued or be pursuing any
other rights or remedies, any holder of Notes may proceed to
protect and enforce its rights hereunder and under such Notes
by exercising such remedies as are available to such holder in
respect thereof under applicable law, either by suit in equity
or by action at law, or both, whether for specific performance
of any agreement contained herein or in aid of the exercise of
any power granted herein, provided that the maturity of such
holder's Notes may be accelerated only in accordance with
Section 8.2(a) and Section 8.2(b) hereof. All rights and
remedies of each holder of Notes are cumulative to, and not
exclusive of, any rights or remedies any such holder of Notes
would otherwise have. No course of dealing on the part of any
holder of Notes nor any delay or failure on the part of any
holder of Notes to exercise any right shall operate as a
waiver of such right or otherwise prejudice such holder's
rights, powers and remedies.
(e) Expenses. If the Company shall fail to pay when due
any principal of, or Make-Whole Amount or interest on, any
Note, or shall fail to comply with any other provision hereof,
the Company shall pay to each holder of Notes, to the extent
permitted by law, such further amounts as shall be sufficient
to cover the costs and expenses (including, but not limited
to, reasonable attorneys' fees) incurred by such holder in
collecting any sums due on such Notes or in otherwise
assessing, analyzing or enforcing any rights or remedies that
are or may be available to it.
8.3 Annulment of Acceleration of Notes.
If a declaration is made pursuant to Section 8.2(a)(ii)
hereof, then and in every such case, the Required Holders may, by
written instrument filed with the Company, rescind and annul such
declaration and the consequences thereof, provided that at the time
such declaration is annulled and rescinded:
(a) no judgment or decree shall have been entered for
the payment of any moneys due on or pursuant hereto or the
Notes;
(b) all arrears of interest upon all the Notes and all
other sums payable hereunder and under the Notes (except any
principal of, or interest or Make-Whole Amount on, the Notes
that shall have become due and payable by reason of such
declaration under Section 8.2(a)(ii) hereof) shall have been
duly paid; and
(c) each and every other Default and Event of Default
shall have been waived pursuant to Section 10.5 hereof or
otherwise made good or cured;
and provided further that no such rescission and annulment shall
extend to or affect any subsequent Default or Event of Default or
impair any right consequent thereon.
9. INTERPRETATION OF THIS AGREEMENT
9.1 Terms Defined.
As used herein, the following terms have the respective
meanings set forth below or set forth in the Section of this
Agreement following such term:
Acceptable Consideration -- means, with respect to any Transfer
of any Property of the Company or a Restricted Subsidiary, cash
consideration, promissory notes or such other consideration (or any
combination of the foregoing) received by such Person in connection
with such Transfer as is, in each case, determined by the Board of
Directors of the Company or such Restricted Subsidiary, as the case
may be, in its good faith opinion, to be in the best interests of
the Company or such Restricted Subsidiary, as the case may be, and
to reflect the Fair Market Value of such Property.
Accredited Investor -- means an "accredited investor," as such
term is defined in Section 2(15) of the Securities Act.
Affiliate -- means, at any time, a Person (other than a
Restricted Subsidiary)
(a) that directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under
common Control with, the Company,
(b) that beneficially owns or holds five percent (5%) or
more of any class of the Voting Stock of the Company,
(c) five percent (5%) or more of the Voting Stock (or in
the case of a Person that is not a corporation, five percent
(5%) or more of the equity interest) of which is beneficially
owned or held by the Company or a Subsidiary, or
(d) that is an officer or director (or a member of the
immediate family of an officer or director) of the Company or
any Subsidiary, at such time.
As used in this definition:
Control -- means the possession, directly or indirectly,
of the power to direct or cause the direction of the
management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
Agreement, this -- means this Note Purchase Agreement, as it
may be amended and restated from time to time.
Bank Credit Agreement -- means the Credit Agreement, dated as
of July 31, 1991, between the Company and Bank of America, as
amended from time to time.
Bank of America -- means Bank of America National Trust and
Savings Association.
Board of Directors -- means the board of directors of the
Company or a Restricted Subsidiary, as applicable, or any committee
thereof that, in the instance, shall have the lawful power to
exercise the power and authority of such board of directors.
Business Day -- means, at any time, a day other than a
Saturday, a Sunday or a day on which the bank designated by the
holder of a Note to receive (for such holder's account) payments on
such Note is required by law (other than a general banking
moratorium or holiday for a period exceeding four (4) consecutive
days) to be closed.
Capital Lease -- means, at any time, a lease with respect to
which the lessee is required to recognize the acquisition of an
asset and the incurrence of a liability at such time in accordance
with GAAP.
Capitalized Lease Obligation -- means, at any time, the
capitalized amount of rental commitment under a Capital Lease which
is required to be reflected on the balance sheet of the lessee at
such time pursuant to GAAP.
Closing -- Section 1.2(b).
Closing Date -- Section 1.2(b).
Company -- has the meaning assigned to such term in the
introductory sentence hereof.
Consolidated Adjusted Net Worth -- means, at any time,
(a) the sum of
(i) the par value (or value stated on the books of
the corporation) at such time of the capital stock of the
Company plus (or minus in the case of a deficit),
(ii) the amount of the paid-in surplus of the
Company at such time, plus (or minus in the case of a
deficit),
(iii) the amount of the retained earnings of the
Company at such time; minus
(b) the net book value at such time (after deducting
related depreciation, obsolescence, amortization, valuation
and other proper reserves) of all Intangible Assets of the
Company and the Restricted Subsidiaries, other than Excluded
Intangible Assets, in each case, as would appear on a consolidated
balance sheet for the Company and the Restricted Subsidiaries at
such time prepared in accordance with GAAP.
As used in this definition:
Intangible Assets -- with respect to any Person, at any
time, means the following:
(a) deferred assets, other than prepaid expenses
which are refundable (including, without limitation,
insurance and prepaid taxes);
(b) patents, copyrights, trademarks, trade names,
service marks, brand names, franchises, goodwill,
experimental expenses and other similar intangibles;
(c) unamortized debt discount and expense;
(d) lease rights; and
(e) all other Property which would be considered to
be intangible under GAAP.
Excluded Intangible Assets -- means, at any time,
(a) all Intangible Assets of the Company and the
Restricted Subsidiaries existing on the Closing Date as
would appear on a consolidated balance sheet for such
Persons on the Closing Date prepared in accordance with
GAAP, and
(b) all Intangible Assets of the Company and the
Restricted Subsidiaries in respect of prepaid royalties,
patents, copyrights, trademarks, trade names, service
marks and brand names not in existence on the Closing
Date, as would appear on a consolidated balance sheet for
such Persons at such time prepared in accordance with
GAAP.
Consolidated Fixed Charges -- means, for any period, the sum
of
(a) Consolidated Interest Expense, plus
(b) Consolidated Operating Rental Expense,
in each case, determined for such period.
Consolidated Funded Debt -- means, at any time, the aggregate
amount of Funded Debt of the Company and the Restricted
Subsidiaries, determined on a consolidated basis for such Persons
at such time in accordance with GAAP.
Consolidated Indebtedness -- means, at any time, the aggregate
amount of Indebtedness of the Company and the Restricted
Subsidiaries, determined on a consolidated basis for such Persons
at such time in accordance with GAAP.
Consolidated Interest Expense -- means, for any period, the
aggregate amount of interest accrued or capitalized on, or with
respect to, Consolidated Indebtedness for such period, including,
without limitation, amortization of debt discount, imputed interest
on Capital Leases and interest on the Notes.
Consolidated Net Income -- means, for any period, net earnings
(or loss) after income taxes of the Company and the Restricted
Subsidiaries, determined on a consolidated basis for such Persons
in accordance with GAAP, but excluding:
(a) net earnings (or loss) of any Person accrued prior
to the date such Person became a Restricted Subsidiary or was
merged into or consolidated with the Company or a Restricted
Subsidiary;
(b) any extraordinary, unusual or nonrecurring gains or
losses;
(c) any gain arising from any reappraisal or write-up of
assets;
(d) any portion of the net earnings of any Restricted
Subsidiary that, by reason of any contract, charter
restriction, applicable law or regulation, is unavailable for
payment of dividends to the Company or a Restricted
Subsidiary;
(e) any gain or loss (net of tax effects applicable
thereto) during such period resulting from the receipt of any
proceeds of any insurance policy, other than Permitted
Insurance Proceeds;
(f) any earnings of any Person acquired by the Company
or any Restricted Subsidiary through purchase, merger or
consolidation or otherwise, or earnings of any Person
substantially all of whose assets have been acquired by the
Company or any Restricted Subsidiary, for any period prior to
the date of acquisition;
(g) net earnings of any Person (other than a Restricted
Subsidiary) in which the Company or any Restricted Subsidiary
shall have an ownership interest unless such net earnings
shall have actually been received by the Company or such
Restricted Subsidiary in the form of cash distributions;
(h) any gain or loss arising from the acquisition of any
Securities of the Company or any Restricted Subsidiary;
(i) any portion of the net earnings of the Company and
the Restricted Subsidiaries that cannot be freely converted
into Dollars; and
(j) any gain or loss reflected in such net earnings for
such period that results solely from adjustments to net
earnings from prior periods due to the cumulative effect of
changes in any accounting principles required by GAAP.
Consolidated Net Income Available for Fixed Charges -- means,
for any period, the sum of
(a) Consolidated Net Income, plus
(b) the aggregate amount of
(i) income taxes, and
(ii) Consolidated Fixed Charges,
(to the extent, and only to the extent, that such
aggregate amount was deducted in the computation of
Consolidated Net Income),
in each case accrued for such period by the Company and the
Restricted Subsidiaries, determined on a consolidated basis for
such Persons.
Consolidated Operating Rental Expense -- means, with respect
to any period, the aggregate amount of Operating Rentals accrued
for such period on, or with respect to, Long-Term Operating Leases
of the Company and the Restricted Subsidiaries (other than Long-
Term Operating Leases between the Company and any Restricted
Subsidiary or between Restricted Subsidiaries), determined on a
consolidated basis for such Persons for such period in accordance
with GAAP.
As used in this definition:
Excluded Lease -- means
(a) any Capital Lease, and
(b) any lease (whether or not a Capital Lease) of
word processing, data, communications, computer and
office equipment.
Long-Term Operating Lease -- means any Operating Lease
with an original term of more than three (3) years (including
any extension of such term at the option of the lessor) and
that is not cancelable during such term at the option of the
lessee without incurrence by the lessee of a cancellation
charge or similar liability.
Operating Lease -- means any lease other than an Excluded
Lease.
Operating Rentals -- means all payments that the lessee
is required to make by the terms of any Operating Lease,
including, without limitation, additional rentals (in excess
of fixed minimums) based upon a percentage of gross receipts
and amounts required to be paid in respect of maintenance,
repairs, income taxes, Property taxes, insurance, assessments
and other similar charges.
Consolidated Total Assets -- means, at any time, the total
amount of all assets of the Company and the Restricted
Subsidiaries, determined on a consolidated basis for such Persons
at such time in accordance with GAAP.
Consolidated Total Capitalization -- means, at any time, the
sum of
(a) Consolidated Funded Debt, plus
(b) Consolidated Adjusted Net Worth,
in each case, determined at such time.
Default -- means an event or condition the occurrence of which
would, with the lapse of time or the giving of notice or both,
become an Event of Default.
Distribution -- means, without duplication, with respect to
any corporation:
(a) any dividend or other distribution, direct or
indirect, on account of any shares of capital stock of such
corporation now or hereafter outstanding, whether in cash or
other Property, except a dividend or other distribution
payable solely in shares of stock of such Person; and
(b) any redemption, retirement, purchase or other
acquisition, direct or indirect, of any shares of capital
stock of such corporation now or hereafter outstanding,
including, without limitation, any deferred payment made by
such corporation in connection with the acquisition of its
capital stock, or of any warrants, rights or options to
acquire any shares of such stock.
Dollars or $ -- means United States of America dollars.
Environmental Protection Law -- means any federal, state,
county, regional or local law, statute or regulation (including,
without limitation, CERCLA, RCRA and SARA) enacted in connection
with or relating to the protection or regulation of the
environment, including, without limitation, those laws, statutes
and regulations regulating the disposal, removal, production,
storing, refining, handling, transferring, processing or
transporting of Hazardous Substances, and any regulations issued or
promulgated in connection with such statutes by any Governmental
Authority, and any orders, decrees or judgments issued by any court
of competent jurisdiction in connection with any of the foregoing.
As used in this definition:
CERCLA -- means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended from time
to time (by SARA or otherwise), and all rules and regulations
promulgated in connection therewith.
RCRA -- means the Resource Conservation and Recovery Act
of 1976, as amended from time to time, and all rules and
regulations promulgated in connection therewith.
SARA -- means the Superfund Amendments and
Reauthorization Act of 1986, as amended from time to time, and
all rules and regulations promulgated in connection therewith.
ERISA -- means the Employee Retirement Income Security Act of
1974, as amended from time to time.
ERISA Affiliate -- means any corporation or trade or business
that:
(a) is a member of the same "controlled group of
corporations" (within the meaning of section 414(b) of the
IRC) as the Company; or
(b) is under "common control" (within the meaning of
section 414(c) of the IRC) with the Company.
Event of Default -- Section 8.1.
Excess Proceeds Amount -- means, in respect of any fiscal
year, an aggregate amount equal to (x) one hundred percent (100%)
of the Net Proceeds Amount in respect of all Transfers of Property
by the Company and the Restricted Subsidiaries during such fiscal
year, minus (y) an amount, expressed in Dollars, equal to the
Specified Asset Percentage in respect of such fiscal year.
Exchange Act -- means the Securities Exchange Act of 1934, as
amended from time to time.
Excluded Restricted Subsidiary Indebtedness -- means at any
time (without duplication):
(a) Indebtedness of a Restricted Subsidiary owing to the
Company or to a Wholly-Owned Restricted Subsidiary,
(b) Indebtedness of a Restricted Subsidiary outstanding
on the Closing Date and identified on Part 9.1 of Annex 3
hereto under the caption "Existing Restricted Subsidiary Indebtedness,"
(c) Indebtedness of a Restricted Subsidiary secured by,
and in respect of, Liens permitted pursuant to, and created in
accordance with, the provisions of Section 6.8(a)(vii) hereof,
and
(d) Indebtedness of a Restricted Subsidiary incurred by
any Person prior to the date on which such Person shall have
become a Restricted Subsidiary or shall have been merged with
or into, or consolidated with, a Restricted Subsidiary, so
long as such Indebtedness was not incurred in contemplation of
such Person becoming, merging with or into or consolidating
with, a Restricted Subsidiary,
in each case, at such time.
Excluded Transfers -- Section 6.10(a).
Fair Market Value -- means, at any time, with respect to any
Property, the sale value of such Property that would be realized in
an arm's-length sale at such time between an informed and willing
buyer and an informed and willing seller under no compulsion to buy
or sell, respectively.
Foreign Pension Plan -- means any plan, fund or other similar
program that is
(a) established or maintained outside of the United
States of America by any one or more of the Company or the
Subsidiaries primarily for the benefit of the employees
(substantially all of whom are aliens not residing in the
United States of America) of the Company or such Subsidiaries
which plan, fund or other similar program provides for
retirement income for such employees or results in a deferral
of income for such employees in contemplation of retirement,
and
(b) not otherwise subject to ERISA.
Funded Debt -- means, at any time of determination, with
respect to any Person, all Indebtedness of such Person that is
expressed to mature more than one (1) year from the date of the
creation thereof or that is extendible or renewable at the option
of such Person to a time more than one (1) year after the date of
the creation thereof, including, without limitation, payments on
Indebtedness that, although payable within one (1) year, constitute
payments required to be made on account of principal of
Indebtedness expressed to mature more than one (1) year from such
time.
GAAP -- means accounting principles as promulgated from time
to time in statements, opinions and pronouncements by the American
Institute of Certified Public Accountants and the Financial
Accounting Standards Board and in such statements, opinions and
pronouncements of such other entities with respect to financial
accounting of for-profit entities as shall be accepted by a
substantial segment of the accounting profession in the United
States of America.
Governmental Authority -- means:
(a) the government of
(i) the United States of America and any
state or other political subdivision thereof, or
(ii) any other jurisdiction (A) in which the
Company or any Subsidiary conducts all or any part
of its business or (B) that asserts jurisdiction
over the conduct of the affairs or Properties of
the Company or any Subsidiary; and
(b) any entity exercising executive, legislative,
judicial, regulatory or administrative functions of, or
pertaining to, any such government.
Guaranty -- means, with respect to any Person (for the
purposes of this definition, the "Guarantor"), any obligation
(except the endorsement in the ordinary course of business of
negotiable instruments for deposit or collection) of the Guarantor
guaranteeing or in effect guaranteeing any indebtedness, dividend
or other obligation of any other Person (the "Primary Obligor") in
any manner, whether directly or indirectly, including, without
limitation, obligations incurred through an agreement, contingent
or otherwise, by the Guarantor:
(a) to purchase such indebtedness or obligation or any
Property constituting security therefor;
(b) to advance or supply funds
(i) for the purpose of payment of such
indebtedness, dividend or other obligation, or
(ii) to maintain working capital or other balance
sheet condition or any income statement condition of the
Primary Obligor or otherwise to advance or make available
funds for the purchase or payment of such indebtedness,
dividend or other obligation;
(c) to lease Property or to purchase Securities or other
Property or services primarily for the purpose of assuring the
owner or payee of such indebtedness, dividend or other
obligation of the ability of the Primary Obligor to make
payment of the indebtedness, dividend or other obligation; or
(d) otherwise to assure the owner or payee of the
indebtedness, dividend or other obligation of the Primary
Obligor against loss in respect thereof.
For purposes of computing the amount of any Guaranty in connection
with any computation of indebtedness or other liability, it shall
be assumed that the indebtedness or other liabilities that are the
subject of such Guaranty are direct obligations of the issuer of
such Guaranty.
Hazardous Substances -- means any and all pollutants,
contaminants, toxic or hazardous wastes and any other substances
that might pose a hazard to health or safety, the removal of which
is required or the generation, manufacture, refining, production,
processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage or filtration
of which is, in each of the foregoing cases, restricted, prohibited
or penalized by any applicable law.
Immaterial Transaction -- means any transaction or arrangement
between the Company or any Restricted Subsidiary on the one hand,
and any Affiliate on the other hand, that is incidental and, when
considered in relation to, and together with, all transactions and
arrangements between the Company and the Restricted Subsidiaries on
the one hand, and such Affiliate on the other hand, is
insignificant and immaterial in relation to the business, affairs
and finances of the Company or the Restricted Subsidiary entering
into such transaction or arrangement.
Indebtedness -- means, with respect to any Person at any time,
without duplication:
(a) its liabilities for borrowed money (whether or not
evidenced by a Security);
(b) its obligations in respect of Redeemable Stock;
(c) any liabilities secured by any Lien existing on
Property owned by such Person (whether or not such liabilities
have been assumed);
(d) its Capitalized Lease Obligations;
(e) the present value of all payments due under any
arrangement for retention of title or any conditional sale
agreement (other than a Capital Lease), in each case
discounted in accordance with GAAP;
(f) obligations of such Person in respect of letters of
credit, acceptances, performance bonds or instruments serving
a similar function issued or accepted by banks or other
financial institutions for the account of such Person (other
than obligations in respect of any such instruments relating
to, or in support of, trade payables of such Person); and
(g) its Guaranties (other than Excluded Guaranties) of
any liabilities of another Person constituting liabilities of
a type set forth in clause (a) through clause (f), inclusive;
in each case, at such time, provided that trade accounts payable
incurred by such Person in the ordinary course of business shall
not constitute "Indebtedness."
As used in this definition:
Excluded Guaranty -- means any Guaranty in effect on
the Closing Date and described in Part 9.1 of Annex 3
hereto under the caption "Existing Guaranties," and any
renewal or extension (as to time) in respect of any such
Guaranty, provided that the aggregate amount of the
obligations of the Company or any Restricted Subsidiary
thereunder is not increased above the maximum amount of
the liquidated and contingent obligations of the Company
and the Restricted Subsidiaries thereunder immediately
prior to such renewal or extension.
Institutional Investor -- means the Purchasers, any affiliate
of any of the Purchasers and any holder or beneficial owner of
Notes that is an "accredited investor" as defined in section 2(15)
of the Securities Act.
Investment -- means any investment, made in cash or by
delivery of Property, by the Company or any Restricted Subsidiary:
(a) in any Person, whether by acquisition of stock,
indebtedness or other obligation or Security, or by loan,
Guaranty, advance, capital contribution or otherwise; or
(b) in any Property.
IRC -- means the Internal Revenue Code of 1986, together with
all rules and regulations promulgated pursuant thereto, as amended
from time to time.
IRS -- means the Internal Revenue Service and any successor
agency.
Joint Venture -- means a corporation, limited liability
company or Partnership formed, or invested in, by the Company or
any Restricted Subsidiary, in the ordinary course of such Person's
business, with other Persons, provided that
(a) such corporation, limited liability company or
Partnership is in the same line of business as the Company or
such Restricted Subsidiary,
(b) such corporation, limited liability company or
Partnership has substantially all of its operations and assets
in a jurisdiction which is not a Sanctioned Jurisdiction, and
(c) the Company or such Restricted Subsidiary exercises
significant influence over the operating and financial
policies of such corporation, limited liability company or
Partnership.
As used in this definition:
Sanctioned Jurisdiction -- means each and every
jurisdiction which by law, regulation or executive order
of the United States of America is specified as a
jurisdiction where citizens or businesses of the United
States of America are prohibited from investing in or
doing business in without special permission from the
government of the United States of America.
Lien -- means any interest in Property securing an obligation
owed to, or a claim by, a Person other than the owner of the
Property, whether such interest is based on the common law, statute
or contract, and including, but not limited to, the security
interest lien arising from a mortgage, encumbrance, pledge,
conditional sale, sale with recourse or a trust receipt, or a
lease, consignment or bailment for security purposes. The term
"Lien" includes, without limitation, reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases and other title exceptions and encumbrances
affecting real Property and includes, without limitation, with
respect to stock, stockholder agreements, voting trust agreements,
buy-back agreements and all similar arrangements. For the purposes
hereof, the Company and each Subsidiary shall be deemed to be the
owner of any Property that it shall have acquired or holds subject
to a conditional sale agreement, Capital Lease or other arrangement
pursuant to which title to the Property has been retained by or
vested in some other Person for security purposes, and such
retention or vesting is deemed a Lien. The term "Lien" does not
include negative pledge clauses in agreements relating to the
borrowing of money.
Majority Holders -- means, at any time, the holders of more
than fifty percent (50%) in principal amount of the Notes at the
time outstanding (exclusive of Notes then owned by any one or more
of the Company, any Subsidiary and any Affiliate).
Make-Whole Amount -- means, with respect to any portion of
the principal amount of Indebtedness (such portion, the "Prepaid
Principal") paid for any reason on a date (the "Prepayment Date"),
the excess (if any) of (x) the amount of the Present Value of the
Prepaid Cash Flows determined with respect thereto minus (y) the
amount of such Prepaid Principal.
As used in this definition,
Present Value of the Prepaid Cash Flows -- means, with
respect to any Prepaid Principal, the Indebtedness in respect
of which such Prepaid Principal was paid, and any Prepayment
Date in respect thereof, the sum of the present values of the
then remaining scheduled payments of principal and interest
that would have been payable in respect of such Indebtedness
but for the payment of such Prepaid Principal and that are no
longer payable as a result of such payment. In determining
such present values,
(i) the amount of interest accrued on such Prepaid
Principal since the scheduled interest payment date
immediately preceding such Prepayment Date shall be
deducted from the first of such payments of interest, and
(ii) a discount rate equal to the Make-Whole
Discount Rate determined with respect to such Prepaid
Principal and such Prepayment Date divided by two (2),
and a discount period of six (6) months of thirty (30)
days each, shall be used.
Applicable H.15 -- means, at any time, United States
Federal Reserve Statistical Release H.15(519) then most
recently published and available to the public, or if such
publication is not available, then any other source of current
information in respect of interest rates on securities of the
United States of America that is generally available and, in
the judgment of the Required Holders, provides information
reasonably comparable to the H.15(519) report.
Applicable H.15 Rate -- means, with respect to any
Prepaid Principal and Prepayment Date thereof, the then most
current annual yield to maturity of the hypothetical United
States Treasury obligation listed in the Applicable H.15 with
a Treasury Constant Maturity (as such term is defined in such
Applicable H.15) equal to the Weighted Average Life to
Maturity of such Prepaid Principal. If no such United States
Treasury obligation with a Treasury Constant Maturity
corresponding exactly to such Weighted Average Life to
Maturity is listed, then the yields for the two (2) then most
current hypothetical United States Treasury obligations with
Treasury Constant Maturities most closely corresponding to
such Weighted Average Life to Maturity (one (1) with a longer
maturity and one (1) with a shorter maturity, if available)
shall be calculated pursuant to the immediately preceding
sentence and the Make-Whole Discount Rate shall be
interpolated or extrapolated from such yields on a straight-
line basis.
Telerate Rate -- means, with respect to any Prepaid
Principal and any Prepayment Date in respect thereof, the per
annum yield reported on the Telerate Service at 10:00 a.m.
(New York time) on any on the second (2nd) Business Day
preceding such Prepayment Date for United States government
Securities having a maturity (rounded to the nearest month)
corresponding to the Weighted Average Life to Maturity of such
Prepaid Principal. Page 678 shall be used as the source of
such yields, or if not then available, such other screen
available on the Telerate Service as shall, in the opinion of
the Required Holders, provide equivalent information.
Make-Whole Discount Rate -- means, with respect to any
Prepaid Principal and Prepayment Date, fifty one-hundredths
percent (0.50%) per annum plus the per annum percentage rate
(rounded to the nearest three decimal (3) places) equal to the
bond equivalent yield to maturity derived from the Telerate
Rate, or if the Telerate Rate is not then available, the
Applicable H.15 Rate, determined in respect thereof.
Remaining Dollar-Years -- means, with respect to any
Prepaid Principal, the Indebtedness in respect of which such
Prepaid Principal was paid, and the Prepayment Date in respect
thereof, the result obtained by
(a) multiplying, in the case of each then remaining
scheduled payment of principal that would have been
payable in respect of such Indebtedness but for the
payment of such Prepaid Principal and that is no longer
payable as a result of such payment,
(i) an amount equal to such required payment
of principal, by
(ii) the number of years (calculated to the
nearest one-twelfth) that will elapse between such
Prepayment Date and the date such required
principal payment would be due if such Prepaid
Principal had not been so prepaid, and
(b) calculating the sum of each of the products
obtained in the preceding subsection (a).
Weighted Average Life to Maturity -- means, with respect
to any Prepaid Principal and Prepayment Date thereof, the
number of years obtained by dividing the Remaining Dollar-
Years of such Prepaid Principal determined on such Prepayment
Date by such Prepaid Principal.
Make-Whole Discount Rate -- has the meaning ascribed to such
term in the definition of "Make-Whole Amount" in this Section 9.1.
Margin Security -- means "margin stock" within the meaning of
Regulations G, T and X of the Board of Governors of the Federal
Reserve System, 12 C.F.R., Chapter II, as amended from time to
time.
Material Adverse Effect -- means a material adverse effect on
(a) the business, prospects, profits, Properties or
condition (financial or otherwise) of the Company and the
Restricted Subsidiaries, taken as a whole,
(b) the ability of the Company to perform its
obligations set forth in this Agreement and in the Notes, or
(c) the validity or enforceability of any of the terms
or provisions of this Agreement or the Notes.
MMG -- means MMG Glastechnik GmbH, a limited liability company
organized under the laws of the Federal Republic of Germany.
Moody's -- means Moody's Investors Service, Inc.
Multiemployer Plan -- means any "multiemployer plan" (as
defined in section 3(37) of ERISA) in respect of which the Company
or any ERISA Affiliate is an "employer" (as such term is defined in
section 3 of ERISA).
Net Proceeds Amount -- means, with respect to any Transfer of
Property, the aggregate proceeds received by the Company or any
Restricted Subsidiary, as the case may be, in respect of such
Transfer, after deducting therefrom all reasonable costs and
expenses of such Transfer (including, without limitation, all taxes
payable in respect of such Transfer).
Note Purchase Agreements -- Section 1.2(c).
Notes -- Section 1.1.
Other Note Purchase Agreements -- Section 1.2(c).
Other Purchasers -- Section 1.2(c).
Partnership -- means a limited partnership, a general
partnership and any other business venture in the nature of a
partnership where the Properties used in such venture are jointly
owned (as tenants in common or other similar status) and the
affairs of such business venture are governed by one or more
contracts among the Persons jointly owning such Properties.
PBGC -- means the Pension Benefit Guaranty Corporation and any
successor corporation or governmental agency.
Pension Plan -- means, at any time, any "employee pension
benefit plan" (as such term is defined in section 3 of ERISA)
maintained at such time by the Company or any ERISA Affiliate for
employees of the Company or such ERISA Affiliate, excluding any
Multiemployer Plan.
Permitted Insurance Proceeds -- means with respect to any
period, (i) proceeds of insurance received during such period from
business interruption coverage, and (ii) proceeds of any insurance
received during such period as a settlement of any Property loss or
a reimbursement of any expenses related thereto in an amount not in
excess of the amount of such loss or expenses that is required to
be reflected as a loss in the net earnings of the Company and the
Restricted Subsidiaries, determined on a consolidated basis for
such Persons in accordance with GAAP, provided that such insurance
proceeds were received within four (4) fiscal quarters of the time
such loss or expenses, as the case may be, were reflected in such
net earnings.
Permitted Reorganization -- means, with respect to the Company
or any Restricted Subsidiary, any voluntary reconstruction, merger,
consolidation or reorganization of such corporation on a solvent
basis, or any liquidation or winding up of such corporation on a
solvent basis, which, in each case, has been approved in writing
prior thereto by the Majority Holders.
Person -- means an individual, sole proprietorship,
partnership, corporation, trust, joint venture, limited liability
company, unincorporated organization, or a government or agency or
political subdivision thereof.
Placement Agent -- means BA Securities, Inc.
Placement Memorandum -- means the Private Placement
Memorandum, dated February 1994, prepared by the Placement Agent,
together with all exhibits, annexes, amendments and supplements
thereto.
Preferred Stock -- means any class of capital stock of a
corporation that is preferred over any other class of capital stock
of such corporation as to the payment of dividends or the payment
of any amount upon liquidation or dissolution of such corporation.
Property -- means any interest in any kind of property or
asset, whether real, personal or mixed, and whether tangible or
intangible.
Proprietary Business Information -- means any technology or
"trade secrets," customer lists, pricing information and cost data
of the Company or any Subsidiary.
Purchase Money Lien -- means:
(a) a Lien (including, without limitation, a Lien
arising in connection with a Capital Lease) held by any Person
(whether or not the seller of such Property) on Property
acquired, constructed or improved by the Company or any
Restricted Subsidiary, which Lien secures all or a portion of
the related purchase price or construction costs of such
Property, provided that
(i) such Lien
(A) is created contemporaneously with,
or within two hundred seventy (270) days of,
such acquisition or improvement, or the
completion of such construction,
(B) encumbers only Property purchased,
constructed or improved after the Closing Date
and acquired, constructed or improved with the
proceeds of the Indebtedness secured thereby,
and
(C) is not thereafter extended to any
other Property; and
(ii) after giving effect to the creation of such
Lien, and to any concurrent transactions, no Default or
Event of Default would exist;
(b) Liens existing on Property acquired by the Company
or a Restricted Subsidiary after the Closing Date which Liens
existed at the time of such acquisition, provided that
(i) such Liens
(A) were not placed on such Property,
and do not secure Indebtedness created,
incurred, issued or assumed, contemporaneously
with or in any manner in contemplation of, the
acquisition of such Property by the Company or
such Restricted Subsidiary, and
(B) do not extend to any other Property
of the Company or any Restricted Subsidiary
after such acquisition, and
(ii) after giving effect to such acquisition, and to
any concurrent transactions, no Default or Event of
Default would exist; and
(c) Liens existing on the Property, capital stock or
Indebtedness of a Person at the time such Person becomes a
Restricted Subsidiary or is merged into or consolidated with
the Company or a Restricted Subsidiary, or all or
substantially all of the Property, capital stock or
Indebtedness of such Person is sold, leased or otherwise
disposed of to the Company or another Restricted Subsidiary,
provided that
(i) such Lien shall only extend to or cover any
Property owned by such Person, or capital stock or
Indebtedness issued or created by such Person, prior to
the time such Person became a Restricted Subsidiary, or
prior to such merger, consolidation, sale or other
disposition,
(ii) such Lien was not created in contemplation of
any such transaction, and
(iii) after giving effect to such transaction,
and to any concurrent transactions, no Default or Event
of Default would exist.
Purchasers -- means you and the Other Purchasers.
Qualified Proceeds Application -- means the application by the
Company or a Restricted Subsidiary of the Excess Proceeds Amount
with respect to Transfers described in Section 6.10(d) hereof to
either (or both) of the following:
(a) the acquisition of operating assets of the Company
or any Restricted Subsidiary of a similar nature to be used in
the ordinary course of business of such Person described in
Section 6.12 (as determined in the good faith opinion of the
Board of Directors of the Company or such Restricted
Subsidiary, as the case may be); or
(b) to pay the outstanding principal of, and the
applicable premium (if any) on, Senior Debt of the Company or
any Restricted Subsidiary (other than Senior Debt held by the
Company, any Restricted Subsidiary or any Affiliate or Senior
Debt in respect of any revolving credit or similar credit
facility providing the Company or any Restricted Subsidiary
with the right to obtain loans or other extensions of credit
from time to time, except to the extent that in connection
with such payment of Senior Debt the availability of credit
under such credit facility is permanently reduced by an amount
not less than the amount of such proceeds applied to the
payment of such Senior Debt).
To the extent that any such proceeds are applied as provided
in clause (b) of this definition and such Senior Debt to be repaid
is Senior Debt evidenced by the Notes, the Company shall comply
with the provisions of Section 4.3 hereof in respect of such
prepayment.
Redeemable Stock -- means, with respect to any Person, each
share of such Person's capital stock that is:
(a) redeemable, payable or required to be purchased or
otherwise retired or extinguished, or convertible into
indebtedness of such Person
(i) at a fixed or determinable date, whether by
operation of a sinking fund or otherwise,
(ii) at the option of any Person other than such
Person, or
(iii) upon the occurrence of a condition not
solely within the control of such Person; or
(b) convertible into other Redeemable Stock.
Required Holders -- means, at any time, the holders of at
least sixty-six and two-thirds percent (66-2/3%) in principal
amount of the Notes at the time outstanding (exclusive of Notes
then owned by any one or more of the Company, any Subsidiary and
any Affiliate).
Required Principal Prepayment -- Section 4.2.
Restricted Investments -- means, at any time, all Investments
except the following:
(a) Investments in Property to be used in the ordinary
course of business of the Company and the Restricted
Subsidiaries;
(b) Investments in trade accounts receivable arising
from the sale of goods and services in the ordinary course of
business of the Company and the Restricted Subsidiaries;
(c) Investments in United States Governmental
Securities, provided that such obligations mature within three
(3) years from the date of acquisition thereof;
(d) Investments in one or more Restricted Subsidiaries
or any corporation that concurrently with such Investment
becomes a Restricted Subsidiary;
(e) Investments in commercial paper given either of the
two (2) highest ratings by either Standard & Poor's or
Moody's, provided that such obligations mature within two
hundred seventy (270) days from the date of creation thereof;
(f) Investments constituting loans and advances to
employees, including travel advances and relocation loans,
made in the ordinary course of and furtherance of the business
of the Company or any Restricted Subsidiary;
(g) Investments in demand deposit accounts maintained
with one or more local commercial banks, which qualify as
Acceptable Banks, as operating funds accounts used in the
ordinary course of business of the Company and the Restricted
Subsidiaries;
(h) Investments in publicly-traded shares in any open-
end mutual fund that invests solely in Investments of the type
described in clause (c), clause (e), clause (j) or clause (k)
of this definition and has total assets in excess of One
Billion Dollars ($1,000,000,000), provided that such
Investments are classified as current assets in accordance
with GAAP;
(i) Investments in money market preferred stock of
corporations organized under the laws of the United States of
America or any state thereof that (i) is commonly referred to
by the terms "Dutch-Auction Preferred," "Capital Market
Preferred," "Remarketed Preferred," "Variable Rate Preferred"
or similar terms, and (ii) has been given, at the time of
acquisition, one of the two (2) highest ratings by either
Standard & Poor's or Moody's;
(j) Investments in certificates of deposit or banker's
acceptances issued by an Acceptable Bank, provided that such
obligations mature within one (1) year from the date of
acquisition thereof;
(k) Investments in Permitted Repurchase Agreements;
(l) Investments in Dollar-denominated deposits with
(i) a bank organized under the laws of a country
that is a member of the European Community (or any
political subdivision of such country) having a combined
capital and surplus of not less than One Hundred Million
Dollars ($100,000,000) and given an issuer rating of "A"
by Thomson BankWatch, Inc. (or a comparable rating by
another nationally-recognized rating agency of similar
standing if Thomson BankWatch, Inc. is not then in the
business of rating commercial banks), or
(ii) a foreign branch of an Acceptable Bank;
(m) Investments in tax-exempt obligations of any state
of the United States of America, or any municipality of any
such state, given either of the two (2) highest ratings by
either Standard & Poor's or Moody's, provided that such
obligations mature within three (3) years from the date of
acquisition thereof;
(n) Investments in Joint Ventures, provided that the
aggregate book value of all such Investments shall not at any
time exceed ten percent (10%) of Consolidated Total Assets
determined at such time;
(o) Investments in federally insured money market
deposit accounts maintained with one or more Acceptable Banks;
(p) other Investments in Securities for cash management
purposes, made in accordance with the Company's investment
policies as in effect on the Closing Date and as more
particularly set forth in Part 9.1 of Annex 3 hereto under the
caption "Investment Policies," maturing within one (1) year
from the date of acquisition thereof, provided that the
aggregate book value of all such Investments shall not at any
time exceed two and fifty one-hundredths percent (2.50%) of
Consolidated Total Assets determined at such time;
(q) Investments in existence on the Closing Date in
Subsidiaries that are designated as Unrestricted Subsidiaries
on the Closing Date, as set forth in Part 2.3 of Annex 3
hereto; and
(r) other Investments, in existence on the Closing Date,
provided that such Investments are described in Part 9.1 of
Annex 3 hereto under the caption "Existing Investments."
Investments, for purposes of this Agreement, shall be valued
at cost less any net return of capital through the sale or
liquidation thereof or other return of capital thereon, in any case
without giving effect to any write-down in the value thereof.
As used in this definition:
Acceptable Bank -- means any commercial bank:
(a) that is organized under the laws of the United
States of America or any state thereof;
(b) that has capital, surplus and undivided profits
aggregating at least One Hundred Million Dollars
($100,000,000); and
(c) whose long-term unsecured debt obligations (or
the long-term unsecured debt obligations of the bank
holding company owning all of the capital stock of such
bank) shall have been rated "A" or higher by Standard &
Poor's or "A2" or higher by Moody's.
Permitted Repurchase Agreement -- means any written
agreement:
(a) that provides for
(i) the transfer of one or more United States
Governmental Securities to the Company or a
Restricted Subsidiary from an Acceptable Bank
against a transfer of funds (the "transfer price")
by the Company or such Restricted Subsidiary to
such Acceptable Bank, and
(ii) a simultaneous agreement by the Company
or such Restricted Subsidiary, in connection with
such transfer of funds, to transfer to such
Acceptable Bank the same or substantially similar
United States Governmental Securities for a price
not less than the transfer price plus a reasonable
return thereon at a date certain not later than one
(1) year after such transfer of funds; and
(b) in respect of which the Company or such
Restricted Subsidiary shall have the right, whether by
contract or pursuant to applicable law, to liquidate such
repurchase agreement upon the occurrence of any default
thereunder.
Restricted Payment -- means any Distribution (other than on
account of capital stock of a Subsidiary owned legally and
beneficially by the Company or a Restricted Subsidiary), including,
without limitation, any Distribution resulting in the acquisition
by the Company of Securities which would constitute treasury stock.
Restricted Subsidiary -- at any time means a Subsidiary which
(a) as of the Closing Date has been designated as a
"Restricted Subsidiary" in Part 2.3 of Annex 3 hereto, or
(b) after the Closing Date, and in accordance with
Section 6.16 hereof, has been designated as a "Restricted
Subsidiary."
Restricted Subsidiary Stock -- Section 6.10(b).
Securities Act -- means the Securities Act of 1933, as amended
from time to time.
Security -- means "security" as defined in section 2(1) of the
Securities Act.
Senior Debt -- means any Indebtedness of the Company or a
Restricted Subsidiary which is not Subordinated Debt.
Senior Financial Officer -- means the chief financial officer,
the principal accounting officer, the treasurer or the comptroller
of the Company.
Senior Officer -- means the chief executive officer, the chief
operating officer, the president or the chief financial officer of
the Company.
Specified Asset Percentage -- Section 6.10(a).
Standard & Poor's -- means Standard & Poor's Corporation.
Subordinated Debt -- means, at any time, any unsecured
Indebtedness of the Company or a Restricted Subsidiary that is in
any respect subordinate or junior in right of payment or otherwise
to the Indebtedness evidenced by the Notes or to any other
Indebtedness of the Company or any Restricted Subsidiary.
Subsidiary -- means, at any time, a corporation, limited
liability company or a Partnership (a) of which the Company owns,
directly or indirectly, more than fifty percent (50%) (by number of
votes) of each class of the Voting Stock or more than fifty percent
(50%) of the other equity interests, as the case may be, at such
time, and (b) whose financial statements and results are required
to be consolidated with the financial statements and results of the
Company in accordance with GAAP.
Surviving Corporation -- Section 6.11(a).
Total Restricted Subsidiary Indebtedness -- means, at any
time, (without duplication)
(a) the aggregate Indebtedness of all Restricted
Subsidiaries outstanding at such time, and
(b) the aggregate amount of claims (whether or not
contingent or liquidated at such time) in respect of
(including, without limitation, accumulated, unpaid dividends
on) all Preferred Stock (and other equity Securities and all
other Securities convertible into, exchangeable for, or
representing the right to purchase, Preferred Stock) of all
Restricted Subsidiaries outstanding at such time (whether or
not any right of redemption or conversion is exercisable by
the holder thereof at such time),
determined, in each case, on a combined basis for such Persons, but
excluding from such calculation (i) all Excluded Restricted
Subsidiary Indebtedness at such time and (ii) all such Preferred
Stock and other equity Securities which are legally and
beneficially owned by the Company or any Wholly-Owned Restricted
Subsidiary.
Transfers -- Section 6.10(a).
United States Governmental Securities -- means any direct
obligation of, or obligation guaranteed by, the United States of
America, or any agency controlled or supervised by or acting as an
instrumentality of the United States of America pursuant to
authority granted by the Congress of the United States of America,
in respect of the payment of which obligation or guarantee the full
faith and credit of the United States of America, pursuant to
authority granted by the Congress of the United States of America,
shall have been pledged.
Unrestricted Subsidiary -- at any time means a Subsidiary
which
(a) as of the Closing Date is not a Restricted
Subsidiary,
(b) after the Closing Date and in accordance with
Section 6.16 hereof, has been designated as, or deemed
designated as, an "Unrestricted Subsidiary," or
(c) otherwise does not satisfy the criteria for a
Restricted Subsidiary set forth in the definition of
"Restricted Subsidiary" contained in Section 9.1 hereof.
Voting Stock -- means capital stock of any class or classes of
a corporation the holders of which are ordinarily, in the absence
of contingencies, entitled to elect corporate directors (or Persons
performing similar functions).
Wholly-Owned Restricted Subsidiary -- means, at any time, any
Restricted Subsidiary one hundred percent (100%) of all of the
equity Securities (except directors' qualifying shares) and voting
Securities of which are owned by, and all of the Indebtedness of
which is held by, any one or more of the Company and the other
Wholly-Owned Restricted Subsidiaries at such time.
9.2 GAAP.
Unless otherwise provided herein, all financial statements
delivered in connection herewith will be prepared in accordance
with GAAP as in effect on the date of, or during the period covered
by, such financial statement. Where the character or amount of any
asset or liability or item of income or expense, or any
consolidation or other accounting computation is required to be
made for any purpose hereunder, it shall be done in accordance with
GAAP as in effect on the date of, or at the end of the period
covered by, the financial statements from which such asset,
liability, item of income, or item of expense is derived, or, in
the case of any such computation, as in effect on the date as of
which such computation is required to be determined, provided, that
if any term defined herein includes or excludes amounts, items or
concepts that would not be included in or excluded from such term
if such term were defined with reference solely to GAAP, such term
will be deemed to include or exclude such amounts, items or
concepts as set forth herein. Whenever a calculation based on the
consolidated financial position or consolidated results of
operations of a group of Persons is required hereby, investments by
members of the group in Persons which are excluded hereby from such
group shall be accounted for using the cost method.
9.3 Directly or Indirectly.
Where any provision herein refers to action to be taken by any
Person, or that such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly
or indirectly by such Person, including actions taken by or on
behalf of any partnership in which such Person is a general
partner.
LST Section Headings and Table of Contents and Construction.
(a) Section Headings and Table of Contents, etc. The
titles of the Sections of this Agreement and the Table of
Contents of this Agreement appear as a matter of convenience
only, do not constitute a part of this Agreement and shall not
affect the construction hereof. The words "herein," "hereof,"
"hereunder" and "hereto" refer to this Agreement as a whole
and not to any particular Section or other subdivision.
(b) Construction. Each covenant contained herein shall
be construed (absent an express contrary provision herein) as
being independent of each other covenant contained herein, and
compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance
with one or more other covenants.
9.5 Governing Law.
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, INTERNAL CONNECTICUT
LAW.
9.6 Payments in Excess of Legal Rate of Interest. In the
event the Company pays interest on the Notes and it is determined
that the interest rate in effect under the Notes was in excess of
the then legal maximum rate (after giving effect to any exemptions
available under applicable law), then that portion of the interest
payment representing an amount in excess of the then legal maximum
rate shall be deemed a payment of principal and shall be applied
first, to the principal amount due on the maturity date of the
Notes and second, to the Required Principal Prepayments due
pursuant to Section 4.2 of this Agreement, in the inverse order of
the maturity thereof.
10. MISCELLANEOUS
10.1 Communications.
(a) Method; Address. All communications hereunder or
under the Notes shall be in writing, shall be hand delivered,
deposited into the United States mail (registered or certified
mail), postage prepaid, sent by overnight courier or sent by
facsimile transmission (confirmed by delivery by overnight
courier) and shall be addressed,
(i) if to the Company,
Optical Coating Laboratory, Inc.
2789 Northpoint Parkway
Santa Rosa, California 95407-7397
Attention: Mr. Josef Wally, Vice President and
Corporate Controller and
Joseph C. Zils, Esq.
Vice President and Corporate Counsel
Phone: (707) 545-6440
Facsimile: (707) 525-6840
with a copy to:
John V. Erickson, Esq.
Collette & Erickson
555 California Street, Suite 4350
San Francisco, California 94104
Phone: (415) 788-4646
Facsimile: (415) 788-6929
or at such other address as the Company shall have furnished
in writing to all holders of the Notes at the time
outstanding, and
(ii) if to any of the holders of the Notes,
(A) if such holders are the Purchasers, at
their respective addresses set forth on Annex 1
hereto, and further including any parties referred
to on such Annex 1 that are required to receive
notices in addition to such holders of the Notes,
and
(B) if such holders are not the Purchasers,
at their respective addresses set forth in the
register for the registration and transfer of Notes
maintained pursuant to Section 5.1 hereof,
or to any such party at such other address as such party may
designate by notice duly given in accordance with this Section
10.1 to the Company (which other address shall be entered in
such register).
(b) When Given. Any communication properly addressed
and sent in accordance with Section 10.1(a) hereof shall be
deemed to be received when actually presented for delivery at
the address of the addressee.
10.2 Reproduction of Documents.
This Agreement and all documents relating hereto, including,
without limitation,
(a) consents, waivers and modifications that may
hereafter be executed,
(b) documents received by you at the closing of your
purchase of the Notes (except the Notes themselves), and
(c) financial statements, certificates and other
information previously or hereafter furnished to you or any
other holder of Notes,
may be reproduced by any holder of Notes by any photographic,
photostatic, microfilm, micro-card, miniature photographic, digital
or other similar process and each holder of Notes may destroy any
original document so reproduced. The Company agrees and stipulates
that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not
such reproduction was made by such holder of Notes in the regular
course of business) and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in
evidence. Nothing in this Section 10.2 shall prohibit the Company
or any holder of Notes from contesting the validity or the accuracy
of any such reproduction.
10.3 Survival.
All warranties, representations, certifications and covenants
made by the Company herein or in any certificate or other
instrument delivered by it or on its behalf hereunder shall be
considered to have been relied upon by you and shall survive the
delivery to you of the Notes regardless of any investigation made
by you or on your behalf. All statements in any such certificate
or other instrument shall constitute warranties and representations
by the Company hereunder.
10.4 Successors and Assigns.
This Agreement shall inure to the benefit of and be binding
upon the successors and assigns of each of the parties hereto. The
provisions hereof are intended to be for the benefit of all
holders, from time to time, of Notes, and shall be enforceable by
any such holder, whether or not an express assignment to such
holder of rights hereunder shall have been made by you or your
successor or assign.
10.5 Amendment and Waiver.
(a) Requirements. This Agreement may be amended, and
the observance of any term hereof may be waived, with (and
only with) the written consent of the Company and the Majority
Holders; provided that no such amendment or waiver of any of
the provisions of Section 1 through Section 3 hereof,
inclusive, or any defined term used therein, shall be
effective as to any holder of Notes unless consented to by
such holder in writing; and provided further that no such
amendment or waiver shall, without the written consent of the
holders of all Notes (exclusive of Notes held by the Company,
any Subsidiary or any Affiliate) at the time outstanding,
(i) subject to Section 8 hereof, change the amount
or time of any prepayment or payment of principal or
Make-Whole Amount or the rate or time of payment of
interest,
(ii) amend Section 4 or Section 8 hereof,
(iii) amend the definition of "Required Holders"
or the definition of "Majority Holders," or
(iv) amend this Section 10.5.
(b) Solicitation of Noteholders.
(i) Solicitation. The Company shall not solicit,
request or negotiate for or with respect to any proposed
waiver or amendment of any of the provisions hereof or
the Notes unless each holder of the Notes (irrespective
of the amount of Notes then owned by it) shall be
provided by the Company with sufficient information to
enable it to make an informed decision with respect
thereto. Executed or true and correct copies of any
waiver or consent effected pursuant to the provisions of
this Section 10.5 shall be delivered by the Company to
each holder of outstanding Notes forthwith following the
date on which the same shall have been executed and
delivered by all holders of outstanding Notes required to
consent or agree to such waiver or consent for such
waiver or consent to become effective.
(ii) Payment. The Company shall not, directly or
indirectly, pay or cause to be paid any remuneration,
whether by way of supplemental or additional interest,
fee or otherwise, or grant any security, to any holder of
Notes as consideration for or as an inducement to the
entering into by any holder of Notes of any waiver or
amendment of any of the terms and provisions hereof
unless such remuneration is concurrently paid, or
security is concurrently granted, ratably to the holders
of all Notes then outstanding.
(iii) Scope of Consent. Any consent made
pursuant to this Section 10.5 by a holder of Notes that
has transferred or has agreed to transfer its Notes to
the Company, any Subsidiary or any Affiliate and has
provided or has agreed to provide such written consent as
a condition to such transfer shall be void and of no
force and effect except solely as to such holder, and any
amendments effected or waivers granted or to be effected
or granted that would not have been or would not be so
effected or granted but for such consent (and the
consents of all other holders of Notes that were acquired
under the same or similar conditions) shall be void and
of no force and effect, retroactive to the date such
amendment or waiver initially took or takes effect,
except solely as to such holder.
(c) Binding Effect. Except as provided in Section
10.5(a) and Section 10.5(b)(iii) hereof, any amendment or
waiver consented to as provided in this Section 10.5 shall
apply equally to all holders of Notes and shall be binding
upon them and upon each future holder of any Note and upon the
Company whether or not such Note shall have been marked to
indicate such amendment or waiver. No such amendment or
waiver shall extend to or affect any obligation, covenant,
agreement, Default or Event of Default not expressly amended
or waived or impair any right consequent thereon.
10.6 Expenses.
The Company shall pay when billed
(a) all expenses incurred by any holder of Notes in
connection with the enforcement of any rights under this
Agreement and the Notes (including, without limitation, all
fees and expenses of such holder's special counsel and the
allocated cost of such holder's counsel who are its employees
or its affiliates' employees), and
(b) all expenses relating to the consideration,
negotiation, preparation or execution of any amendments,
waivers or consents pursuant to Section 10.5 and the other
terms and provisions hereof (including, without limitation,
all fees and expenses of your special counsel and the
allocated cost of your counsel who are your employees or your
affiliates' employees), whether or not any such amendments,
waivers or consents are executed, including, without
limitation any amendments, waivers or consents resulting from
any work-out, restructuring or similar proceedings relating to
the performance by the Company of its obligations under the
Note Purchase Agreements or the Notes.
10.7 Payments on Notes.
(a) Manner of Payment. The Company shall pay all
amounts payable with respect to each Note (without any
presentment of such Notes and without any notation of such
payment being made thereon) by crediting, by federal funds
bank wire transfer, the account of the holder thereof in any
bank in the United States of America as may be designated in
writing by such holder, or in such other manner as may be
reasonably directed or to such other address in the United
States of America as may be reasonably designated in writing
by such holder. Annex 1 hereto shall be deemed to constitute
notice, direction or designation (as appropriate) to the
Company with respect to payments as aforesaid. In the absence
of such written direction, all amounts payable with respect to
each Note shall be paid by check mailed and addressed to the
registered holder of such Note at the address shown in the
register maintained by the Company pursuant to Section 5.1
hereof.
(b) Payments Due on Holidays. If any payment due on, or
with respect to, any Note shall fall due on a day other than
a Business Day, then such payment shall be made on the first
Business Day following the day on which such payment shall
have so fallen due; provided that if all or any portion of
such payment shall consist of a payment of interest, for
purposes of calculating such interest, such payment shall be
deemed to have been originally due on such first following
Business Day, such interest shall accrue and be payable to
(but not including) the actual date of payment, and the amount
of the next succeeding interest payment shall be adjusted
accordingly. If any payment is to be made on the first
Business Day following the day on which the same shall have
fallen due, as provided in this paragraph, and is not so paid
on such first Business Day, interest shall accrue thereon (to
the extent permitted by applicable law) with respect to each
Note at the rate provided in such Note on overdue payments of
principal from (in each case) the originally scheduled day of
its payment.
(c) Payments, When Received. Any payment to be made to
the holders of Notes hereunder or under the Notes shall be
deemed to have been made on the Business Day such payment
actually becomes available to such holder at such holder's
bank prior to 1:00 p.m. (local time of such bank).
10.8 Entire Agreement.
This Agreement constitutes the final written expression of all
of the terms hereof and is a complete and exclusive statement of
those terms.
10.9 Duplicate Originals, Execution in Counterpart.
Two (2) or more duplicate originals hereof may be signed by
the parties, each of which shall be an original but all of which
together shall constitute one and the same instrument. This
Agreement may be executed in one or more counterparts and shall be
effective when at least one counterpart shall have been executed by
each party hereto, and each set of counterparts that, collectively,
show execution by each party hereto shall constitute one duplicate
original.
[Remainder of page intentionally blank; next page is signature
page.]<PAGE>
If this Agreement is satisfactory to you, please so indicate
by signing the acceptance at the foot of a counterpart hereof and
returning such counterpart to the Company, whereupon this Agreement
shall become binding between us in accordance with its terms.
Very truly yours,
OPTICAL COATING LABORATORY,
INC.
By /s/ Herbert M. Dwight, Jr.
Name: Herbert M. Dwight, Jr.
Title: Chairman of the Board,
President and
Chief Executive Officer
[Separately Executed by Each of
the Following Purchasers]
Accepted:
CONNECTICUT MUTUAL LIFE INSURANCE COMPANY
By /s/ Lawrence D. Stillman
Name: Lawrence D. Stillman
Title: Senior Investment Officer
MODERN WOODMEN OF AMERICA
By /s/ G. E. Stoefen
Name: G. E. Stoefen
Title: Director, Treasurer & Investment Manager
AMERICAN LIFE AND CASUALTY INSURANCE COMPANY
By: /s/ John F. Williamson
Name: John F. Williamson
Title: Vice President
By: /s/ Vince Otto
Name: Vince Otto
Title: Vice President
ANNEX 1
INFORMATION AS TO PURCHASERS
Purchaser Name CONNECTICUT MUTUAL LIFE INSURANCE COMPANY
Name in which to register Note(s) Connecticut Mutual Life Insurance
Company
Note registration numbers;
Principal amounts R-1 -- $5,000,000
R-2 -- $5,000,000 Payment on account of Note(s)
Method
Account
information
Federal Funds Wire Transfer
The Bank of New York
ABA #021000018 BNF:IOC566
Attn: P & I Department
FOR: Connecticut Mutual Life Insurance Company
Accompanying information
Name of Company: OPTICAL COATING LABORATORY, INC.
Description of
Security: 8.71% Senior Notes Due
June 1, 2002
PPN: 683829 A 6
Due Date and Application (as among principal, premium and interest) of the
payment being made (and indicating whether such payment is a final payment).
Address for notices related to payments
Connecticut Mutual Life Insurance Company
c/o The Bank of New York
P.O. Box 19266
Attn: P & I Department
Newark, NJ 07195
with a copy to:
Connecticut Mutual Life Insurance Company
140 Garden Street
Hartford, Connecticut 06154
Attn: Securities Accounting/ Carol Vojtila
Address for all other notices
Connecticut Mutual Life Insurance Company
140 Garden Street
Hartford, Connecticut 06154
Attn: Private Placements, MS 272
with a copy to:
Connecticut Mutual Life Insurance Company
c/o The Bank of New York
P.O. Box 19266
Attn: P & I Department
Newark, NJ 07195
Tax identification number 06-0304620
Purchaser Name MODERN WOODMEN OF AMERICA
Name in which to register Note(s) Modern Woodmen of America
Note registration number; Principal amount R-3 $5,000,000
Payment on account of Note(s)
Method
Account
information
Federal Funds Wire Transfer
Harris Trust & Savings Bank
111 West Monroe Street
Chicago, IL 60690
ABA # 071-000-288
For the account of Modern Woodmen of America
Account # 347-904-5
Accompanying information
Name of Company: OPTICAL COATING LABORATORY, INC.
Description of
Security: 8.71% Senior Notes Due
June 1, 2002
PPN: 683829 A 6
Due Date and Application (as among principal, premium and interest) of the
payment being made (and indicating whether such payment is a final payment).
Address for notices related to payments
Modern Woodmen of America
1701 1st Avenue
Rock Island, IL 61201
Attention: Investment Department
Address for all other notices
Modern Woodmen of America
1701 1st Avenue
Rock Island, IL 61201
Attention: Investment Department
Telecopy: (309) 786-1701
Tax identification number 36-1493430
Purchaser Name AMERICAN LIFE AND CASUALTY INSURANCE COMPANY
Name in which to register Note(s) Auer & Co.
Note registration number; Principal amount R-4 $3,000,000
Payment on account of Note(s)
Method
Account
information
Federal Funds Wire Transfer
Care of Banker's Trust
ABA #021001033
Account No. 92558
Attention: 99-911-145
Accompanyinginformation
Name of Company: OPTICAL COATING LABORATORY, INC.
Description of
Security: 8.71% Senior Notes Due
June 1, 2002
PPN: 683829 A 6
Due Date and Application (as among principal, premium and interest) of the
payment being made (and indicating whether such payment is a final payment).
Address for notices related to payments
Banker's Trust Company
Insurance Unit
P.O. Box 998
Bowling Green Station
New York, New York 10274
Address for all other notices
American Life and Casualty Insurance Company
405 6th Avenue
Des Moines, Iowa 50309
Tax identification number 13-606441
ANNEX 2
PAYMENT INSTRUCTIONS AT CLOSING
In accordance with Section 1.2(b) of this Agreement, the
Company directs you to make payment for the Note or Notes being
purchased by you by payment by federal funds wire transfer in
immediately available funds of the purchase price thereof to:
Bank of America
ABA No.: 121000358
For the account of: Optical Coating Laboratory, Inc.
Account No.: 14980-00084
Name and telephone number of person at bank
to contact with any questions:
Paula Canchola
(510) 675-7132
ANNEX 3
INFORMATION AS TO COMPANY
[INFORMATION TO BE SUPPLIED BY COMPANY]
2.2(a). Financial Statements.
1. The consolidated balance sheets of the Company and
its consolidated subsidiaries as of October 31 in each of
1993, 1992, and 1991, and the related consolidated statements
of operations, cash flows and stockholders' equity for the
fiscal years ended on such dates, all accompanied by opinions
thereon by Deloitte & Touche, independent certified public
accountants.
2. The unaudited consolidated balance sheet of the
Company and its consolidated subsidiaries as of January 31,
1994, and the related unaudited consolidated statements of
operations, cash flows and stockholders' equity for the three
(3) month period ended on such date.
2.2(b). Indebtedness.
[To be provided by the Company].
2.3. Subsidiaries and Affiliates.
(a) Subsidiaries and Affiliates
[To be provided by the Company].
(b) Restricted Subsidiaries
[To be provided by the Company].
(c) Unrestricted Subsidiaries
[To be provided by the Company].
2.8(d). Foreign Jurisdictions.
[To be provided by the Company].
2.10(b). Restrictions on Company and Subsidiaries.
[To be provided by the Company].
2.12(a). ERISA Affiliates and Employee Benefit Plans.
[To be provided by the Company].
2.18(a). Use of Proceeds.
The Company will use the proceeds from the sale of the Notes
to refinance outstanding Indebtedness and for general corporate
purposes.
6.8(a)(vi). Existing Liens.
[To be provided by the Company].
Part 9.1.
(a) Existing Guaranties
[To be provided by the Company].
(b) Existing Restricted Subsidiary Indebtedness
[To be provided by the Company].
(c) Existing Investments
[To be provided by the Company].
(d) Investment Policies
[To be provided by the Company].
EXHIBIT 11.
COMPUTATION OF EARNINGS PER SHARE
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
July 31, July 31,
1994 1993 1994 1993
PRIMARY SHARES:
Average common shares
outstanding 8,976 8,912 8,974 8,743
Common equivalent shares
outstanding 40 54
9,016 8,912 9,028 8,743
Net earnings (loss) $ 910 $(6,822) $ 3,359 $(4,384)
Net earnings (loss) per share,
primary $ .10 $ (.77) $ .37 $ (.50)
FULLY DILUTED SHARES:
Average common shares
outstanding 8,976 8,912 8,974 8,743
Common equivalent shares
outstanding 115 194 84 376
9,091 9,106 9,058 9,119
Net earnings (loss) for
calculation of fully diluted
earnings per share $ 910 $(6,822) $ 3,359 $(4,384)
Net earnings (loss), fully
diluted $ .10 $ (.75) $ .37 $ (.48)
Fully diluted earnings per common and common equivalent share
are the same as primary earnings per share or are antidilutive
and are, therefore, not separately presented in the
consolidated statements of operations.
1
EXHIBIT 15
To the Board of Directors and Stockholders
of Optical Coating Laboratory, Inc.
Santa Rosa, California
We have reviewed, in accordance with standards established by
the American Institute of Certified Public Accountants, the
unaudited interim financial information of Optical Coating
Laboratory, Inc. and subsidiaries for the periods ended July
31, 1994 and 1993 as indicated in our report dated August 17,
1994; because we did not perform an audit, we expressed no
opinion on that information.
We are aware that our report referred to above, which is
included in your Quarterly Report on Form 10-Q for the quarter
ended July 31, 1994, is incorporated by reference in
Registration Statements No. 33-41050, No. 33-26271, No. 33-
12276, No. 33-48808 and No. 33-65132 on Forms S-8 and
Registration Statement No. 2-97482 on Form S-3.
We are also aware that the aforementioned report, pursuant to
Rule 436(c) under the Securities Act, is not considered a part
of the Registration Statement prepared or certified by an
accountant or a report prepared or certified by an accountant
within the meaning of Sections 7 and 11 of that Act.
/s/ Deloitte & Touche LLP
September 10, 1994
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<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> JUL-31-1994
<CASH> 16,458
<SECURITIES> 0
<RECEIVABLES> 25,776
<ALLOWANCES> 3,434
<INVENTORY> 9,435
<CURRENT-ASSETS> 54,912
<PP&E> 115,559
<DEPRECIATION> 65,277
<TOTAL-ASSETS> 114,384
<CURRENT-LIABILITIES> 22,768
<BONDS> 0
<COMMON> 90
0
0
<OTHER-SE> 49,844
<TOTAL-LIABILITY-AND-EQUITY> 114,384
<SALES> 97,038
<TOTAL-REVENUES> 97,038
<CGS> 61,600
<TOTAL-COSTS> 61,600
<OTHER-EXPENSES> 27,464
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,313
<INCOME-PRETAX> 5,792
<INCOME-TAX> 2,433
<INCOME-CONTINUING> 3,359
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,357
<EPS-PRIMARY> .37
<EPS-DILUTED> .37
</TABLE>
