16
THIRD QUARTER 1995
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, 1995
[ ] 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
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, 1995: 9,409,486 shares
This document contains __ pages.
The Exhibit listing appears on Page _____
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
July 31, 1995 October 31, 1994
ASSETS
Current Assets:
Cash and short-term investments $ 12,412 $ 19,663
Accounts receivable, net of
allowance for doubtful accounts
of $1,359 and $1,810 30,358 22,007
Inventories 15,061 10,559
Deferred income tax assets 5,618 4,235
Other current assets 2,466 1,246
Total Current Assets 65,915 57,710
Other Assets and Investments 17,441 9,159
Property, Plant and Equipment:
Land and improvements 8,660 8,623
Buildings and improvements 30,488 27,495
Machinery and equipment 102,402 80,206
Construction-in-progress 15,055 3,083
156,605 119,407
Less accumulated depreciation (73,507) (67,397)
Property, Plant and Equipment - Net 83,098 52,010
$ 166,454 $ 118,879
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 9,823 $ 6,197
Accrued expenses 9,889 8,423
Accrued compensation expenses 7,443 4,785
Income taxes payable 1,778 1,671
Current maturities on long-term debt 2,992 6,878
Notes payable 3,073 428
Deferred revenue 146 636
Total Current Liabilities 35,144 29,018
Accrued postretirement health benefits
and pension liabilities 1,966 1,877
Deferred income tax liabilities 229 506
Long-term debt 46,909 35,441
Minority interest 10,732
Convertible redeemable preferred stock 11,362
Common stockholders' Equity:
Common stock, $.01 par value;
authorized 30,000,000 shares;
issued and outstanding 9,344,000
and 8,978,000 shares 93 90
Paid-in capital 43,036 39,967
Retained earnings 16,703 12,055
Cumulative foreign currency translation
adjustment 280 (75)
Common Stockholders' Equity 60,112 52,037
Total Liabilities and
Stockholders' Equity $ 166,454 $ 118,879
See Notes to Consolidated Financial Statements
OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three and Nine Months Ended July 31, 1995 and 1994
(Dollars in thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
July 31, July 31,
1995 1994 1995 1994
Revenues $47,289 $33,403 $124,769 $97,038
Cost of sales 29,536 22,039 76,811 61,600
Gross profit 17,753 11,364 47,958 35,438
Operating expenses:
Research and development 2,546 1,434 5,565 3,889
Selling and administrative 9,707 7,402 28,341 23,086
Amortization of intangibles 213 173 688 489
Total operating expenses 12,466 9,009 34,594 27,464
Income from operations 5,287 2,355 13,364 7,974
Other income (expense):
Interest income 127 113 549 131
Interest expense (974) (899) (2,885) (2,313)
Income before provision for
income taxes and minority
interest 4,440 1,569 11,028 5,792
Provision for income taxes 1,866 659 4,632 2,433
Minority Interest 443 443
Net income 2,131 910 5,953 3,359
Dividend on preferred stock 222 222
Net income applicable to
common stock $ 1,909 $ 910 $ 5,731 $ 3,359
Net income per common and common
equivalent share $ .20 $ .10 $ .61 $ .37
See Notes to Consolidated Financial Statements
OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Nine Months Ended July 31, 1995
(Amounts in thousands)
(Unaudited)
FOREIGN
COMMON STOCK PAID-IN RETAINED CURRENCY
SHARES AMOUNT CAPITAL EARNINGS TRANSLATION
BALANCE AT
NOVEMBER 1, 1994 8,978 $90 $39,967 $12,055 $ (75)
Shares issued for
purchase of Netra 165 1 1,584
Shares issued to
Employee Stock
Ownership Plan 62 1 593
Exercise of stock options,
including tax benefit
and shares issued to
directors 139 1 892
Foreign currency translation
adjustment for the period 355
Net income for the period 5,953
Dividend on preferred stock (222)
Dividend on common stock (1,083)
BALANCE AT JULY 31, 1995 9,344 $ 93 $ 43,036 $ 16,703 $ 280
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, 1995 and 1994
(Amounts in thousands)
(Unaudited)
Three Months Ended Nine Months Ended
July 31, July 31,
1995 1994 1995 1994
Cash Flows from Operating
Activities:
Cash received from customers $46,529 $35,244 $119,028 $98,052
Interest received 123 90 617 103
Cash paid to suppliers and
employees (34,907) (31,516) (100,983) (86,042)
Cash paid to ESOP+ (266) (406) (660)
Interest paid (1,294) (640) (3,397) (1,882)
Income taxes paid,
net of refunds (631) 209 (4,518) (194)
Net cash provided by
operating activities 9,820 3,121 10,341 9,377
Cash Flows from Investing
Activities:
Purchase of plant and
equipment (9,321) (2,196) (20,459) (5,974)
Equity and debt acquired of
Flex Products, Inc., net of
cash acquired (15,185) (15,185)
Cash portion of payment
for purchase of Netra,
net of cash acquired (1,477)
Net cash used for
investing activities (24,506) (2,196) (37,121) (5,974)
Cash Flows from Financing
Activities:
Net proceeds from issuance
of preferred stock 11,362 11,362
Proceeds from exercise of
stock options 263 635 16
Proceeds from debt borrowings 19,542 18,000 19,542 22,000
Proceeds from notes payable 6 160 194 342
Repayment of long-term debt (8,752) (6,678) (10,644) (10,294)
Repayment of notes payable (80) (10) (387) (291)
Payment of dividend on
preferred stock (222) (222)
Payment of dividend on
common stock (544) (538) (1083) (1,076)
Net cash provided by
financing activities 21,575 10,934 19,397 10,697
Effect of exchange rate
changes on cash 56 36 132 74
Net increase (decrease) in
cash and short-term investments 6,945 11,895 (7,251) 14,174
Cash and short-term investments
at beginning of period 5,467 4,563 19,663 2,284
Cash and short-term investments
at end of period $12,412 $16,458 $12,412 $16,458
OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three and Nine Months Ended July 31, 1995 and 1994
(Amounts in thousands)
(Unaudited)
Three Months Ended Nine Months Ended
July 31, July 31,
1995 1994 1995 1994
Reconciliation of net
income to cash flows from
operating activities:
Net income $2,131 $ 910 $5,953 $3,359
Adjustments to reconcile net
earnings to net cash provided
by operating activities:
Depreciation and amortization 2,955 1,974 6,925 5,577
Minority interest in earnings of
Flex Products, Inc. 443 443
Loss on disposal or abandonment
of equipment 82 327 180 545
Accrued postretirement health
benefits 19 31 56 55
Deferred income tax liabilities 17 (132) 527 (182)
Other non-cash adjustments to
net earnings 446 (53) 267 (74)
Change in:
Accounts receivable 308 (134) (4,375) (1,856)
Inventories 294 1,647 (1,492) 2,424
Deferred income tax assets 243 236 (456) 213
Other current assets and
other assets and investments (360) (959) (2,120) (1,609)
Accounts payable, accrued
expenses and accrued
compensation expenses 2,726 (986) 4,766 (1,309)
Deferred revenue (449) 93 (490) 13
Income taxes payable 965 167 157 2,221
Total adjustments 7,689 2,211 4,388 6,018
Net cash provided by
operating activities $ 9,820 $ 3,121 $ 10,341 $ 9,377
Supplemental Schedule of Non-Cash Investing and Financing Activities:
During the third quarter of 1995, the Company increased its ownership
in Flex Products, Inc. (Flex Products) from 40% to 60% through the
investment of approximately $8.7 million in cash and the payment of an
additional $7.0 million to acquire a 60% interest in an $11.7 million
promissory note issued by Flex Products to its former majority
shareholder. The investment was financed, in part, by the issuance of
$12 million of Series C Convertible Redeemable Preferred Stock
(yielding $11.4 million after expenses) and from bank borrowings under
the new bank line of credit that was entered into subsequent to the
Flex Products investment and preferred stock transactions.
The cash and non-cash components of the Flex Products investment
transaction were as follows:
Fair value of assets acquired, including intangibles $ 27,789
Cash acquired (508)
Liabilities assumed (1,807)
Minority interest in Flex Products, Inc. (10,289)
Net cash paid $ 15,185
OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONT.)
Three and Nine Months Ended July 31, 1995 and 1994
(Amounts in thousands)
(Unaudited)
During the second quarter of 1995, the Company acquired Netra
Corporation for approximately $1.5 million in cash and the issuance of
approximately $1.6 million in the Company's common stock. Cash and non-
cash components of the acquisition were as follows:
Fair value of assets acquired, including intangibles $3,529
Cash acquired (188)
Liabilities assumed (279)
$3,062
Cash paid to sellers, net of cash acquired $1,477
OCLI common stock issued to sellers 1,585
$3,062
See Notes to Consolidated Financial Statements
OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three and Nine Months Ended July 31, 1995 and 1994
(Unaudited)
1. GENERAL
The Consolidated Balance Sheet as of July 31, 1995, the
Consolidated Statements of Income for the three and nine month
periods ended July 31, 1995 and 1994, the Consolidated Statement
of Stockholders' Equity for the nine month period ended July 31,
1995 and the Consolidated Statements of Cash Flows for the three
and nine month periods ended July 31, 1995 and 1994 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, 1995 and for all
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
1994.
Certain amounts in the 1994 consolidated financial statements have
been reclassified to conform with the presentation in the 1995
consolidated financial statements.
The results of operations for the period ended July 31, 1995 are
not necessarily indicative of the operating results anticipated
for the full year.
2. INVENTORIES
Inventories consisted of the following:
July 31, October 31,
1995 1994
(Amounts in thousands)
Raw materials and supplies $ 6,791 $ 3,633
Work-in-process and finished goods 8,270 6,926
$15,061 $10,559
3. OTHER ASSETS AND INVESTMENTS
At July 31, 1995, other assets and investments included $9.0
million of goodwill; of which $7.9 million is attributed to the
purchase of MMG which is being amortized over 15 years and $1.1
million is attributed to the purchase of Netra which is being
amortized over five years.
During the second quarter of 1995, the Company acquired the assets
and liabilities of Netra Corporation, a precision plastic
component manufacturer, for a total purchase price of
approximately $3.1 million. The purchase price consisted of cash
of approximately $1.5 million paid at closing and the balance of
approximately $1.6 million was paid in July 1995 by the issuance
of 164,735 shares of the Company's common stock. The acquisition
was recorded as a purchase.
During the third quarter of 1995, the Company increased its
ownership in Flex Products, Inc. (Flex Products) from 40% to 60%,
with the remaining interest in Flex Products simultaneously
purchased by SICPA Holding S.A., a privately-held Swiss
corporation and a major customer of Flex Products. The Company
invested $8.7 million to acquire the incremental 20% interest in
Flex Products and paid another $7.0 million to acquire a 60%
interest in an $11.7 million promissory note previously issued by
Flex Products to its former majority shareholder. The incremental
investment in Flex Products was recorded as a purchase
transaction. Other assets and investments include intangible
assets of $2.7 million and deferred income tax assets of $3.9
million associated with the transaction.
4. ACCRUED EXPENSES
Accrued expenses consisted of the following:
July 31, October 31,
1995 1994
(Amounts in thousands)
Workers' compensation reserve $ 1,593 $ 1,578
Ground water remediation reserve 1,193 1,197
Other accrued liabilities 7,103 5,648
$ 9,889 $ 8,423
5. LONG-TERM DEBT
Long-term debt consisted of: July 31, October 31,
1995 1994
(Amounts in thousands)
Unsecured senior notes. Interest
at 8.71% payable semi-annually.
Principal payable in annual
installments of $3.6 million
from 1998 through 2002. $18,000 $18,000
Unsecured bank term loan. Variable
interest rate (7.31% at July 31,
1995). Principal payable
semiannually as follows:
Payment Dates Amounts
Oct. 1995 and Apr. 1996 $ 500,000
Oct. 1996 and Apr. 1997 1,000,000
Each Oct. and Apr.
thereafter 2,000,000 15,000
Unsecured bank term loan.
Balance paid in 1995. 5,500
Land improvement assessment.
Interest at an average rate of
6.75%. Principal and interest
payable in semi-annual
installments of $77,000 through 1998. 401 517
Scottish Development Agency (SDA) building
loan, with an interest moratorium from
February 1, 1995 through January 31,
1998 with interest at 9.5% thereafter.
Semiannual principal payments of
approximately $100,000 are payable through
January 1998 with subsequent payments
of $331,000 comprising principal and
interest through 2006. Collateralized
by the land and building of the
Company's Scottish subsidiary. 4,159 4,289
Notes payable to private parties in
connection with the purchase of MMG.
Principal and interest at 8% payable
in quarterly installments of
approximately $400,000 through 2003. 8,100 8,167
Bank loans of MMG with interest rates
ranging from 4.5% to 9.75%. Payable in
annual and semi-annual installments
through 2014. Partly collateralized by
mortgages on MMG land and buildings
and liens on equipment. 3,316 5,133
Present value of obligations under
capital leases at an assumed weighted
average interest rate of 8.0%
payable in monthly installments
through 2004. 925 713
49,901 42,319
Less current maturities (2,992) (6,878)
$ 46,909 $ 35,441
At July 31, 1995, the Company had a $30 million unsecured credit
facility comprised of a $15 million term loan and a $15 million
revolving line of credit and had terminated its previously
existing credit facility. The term loan borrowings were utilized
in connection with the Flex Products transaction discussed in Note
3, for capital expenditures and to liquidate outstanding debt. No
borrowings were made under the new $15 million revolving credit
facility which expires on April 28, 2000 and carries a commitment
fee of .375% per year on the unused portion of the facility. The
Company has an incremental credit facility to cover a surety
letter for approximately $4.2 million issued to secure 50% of the
Company's notes payable arising from the purchase of MMG. The
Company also has a letter of credit in the approximate amount of
$1.5 million to satisfy the Company's workers' compensation self-
insurance requirements. The guarantee and letter of credit
facilities carry a fee of 1.25%.
The Company's subsidiary in Scotland has a credit arrangement of
up to approximately $430,000 at market interest rates and has
outstanding letters of credit of approximately $370,000 to
guarantee import duty. There were no borrowings under the credit
arrangement in fiscal years 1995 or 1994.
The Company's subsidiary in Germany has various credit facilities
with local banks, totaling approximately $3 million, for working
capital requirements. These credit facilities are utilized as
part of normal local payment practices.
6. CONVERTIBLE REDEEMABLE PREFERRED STOCK
During the third quarter of 1995, in conjunction with the
acquisition of a controlling interest in Flex Products, the
Company issued $12 million of Series C Convertible Redeemable
Preferred Stock (netting $11.4 million after expenses) in a
private placement. The Preferred Stock is convertible at any time
by the holders at a conversion price of $10.50 per common share
(subject to adjustment in certain circumstances) and is redeemable
by the Company commencing two years from the date of issuance if
the price of the Company's common stock is equal to or greater
than $17.00 per share, and unconditionally thereafter at 108% of
nominal value declining to 100% over 4 years. The Series C
Preferred Stock carries an 8% cumulative dividend which is payable
quarterly
7. STOCK OPTIONS
During the nine months ended July 31, 1995, the Company granted
options to purchase 471,500 shares of the Company's common stock
at a price equal to 100% of the market price on the date of grant
under the Company's incentive compensation and employee stock
option plans. At July 31, 1995, 1,661,200 shares are subject to
outstanding options at option prices ranging from $4.50 to $10.63,
of which 1,075,200 options are exercisable.
At the Annual Stockholders Meeting on March 30, 1995, the
stockholders approved the 1995 Incentive Compensation (Stock
Option) Plan. The new Plan authorizes the Company to grant stock
options up to 600,000 shares. At July 31, 1995, options to
purchase 302,213 shares are available for future grants under all
of the Company's authorized 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
Revenues for the third quarter of 1995 were $47.3 million, up 42% over
revenues of $33.4 million for the third quarter of 1994. Revenues for
the first nine months of 1995 were $124.8 million, up 29% over revenues
of $97 million for the same period of 1994. Third quarter and first
nine months of fiscal 1995 results include $8.2 million of revenue of
Flex Products, Inc., being consolidated beginning with the third
quarter of fiscal 1995. The incremental increase in revenues for the
third quarter and first nine months of 1995 over the comparative
periods of 1994 was primarily due to increased shipments of custom and
OEM computer display products, fabricated glass components used in
office automation applications, coatings on plastic film used in
consumer electronic applications, visual filters used in medical and
scientific instrumentation, and work performed on an X-ray space
telescope project for NASA.
At the beginning of the third quarter, the Company increased its
ownership in Flex Products, Inc. (Flex Products) from 40% to a
controlling 60%, resulting in the consolidation of Flex Product's
operating results into the Company's financial statements effective May
1, 1995. A minority interest in the earnings and equity of Flex
Products is included in the consolidated financial statements.
During the first nine months of 1995, the Company estimates that it
experienced an approximate 7-10% price decline in its Glare/Guard(R)
product line, an approximate 5-7% price decline in its OEM display
product line, and an approximate 3-5% price decline in its glass
fabrication product line. The competitive pricing pressures have
moderated in the current quarter of fiscal 1995. The Company had no
other significant price increases or decreases in its other product
lines during the first nine months of 1995.
Cost of sales as a percent of sales was 62.5% for the third quarter of
1995 compared with 66.0% for the third quarter of 1994 and was 61.6%
for the first nine months of 1995 compared with 63.5% for the first
nine months of 1994. The average gross margin for the third quarter of
1995 was higher at 37.5% compared to 34.0% for the third quarter of
1994 and for the nine months of 1995 was higher at 38.4% compared to
36.5% for the nine months of 1994, primarily as a result of the greater
manufacturing efficiencies associated with higher sales volume and the
above average gross margin contribution of Flex Products in the current
year periods; offset in part by start up costs associated with several
new customer programs in the Company's visual filter products area.
Research and development expenditures in the third quarter of 1995
increased $1.1 million, or 78%, compared to the third quarter of 1994,
and for the first nine months of 1995, increased $1.7 million, or 43%,
compared to the first nine months of 1994. Third quarter fiscal 1995
and first nine months research and development expenditures include
approximately $700,000 from the consolidation of Flex Products. The
additional increase reflects the Company's continued emphasis on
several development programs in the MetaMode(R) area and on
electrochromic technology.
Selling and administrative expenses in the third quarter of 1995
increased $2.3 million, or 31%, over the corresponding quarter of 1994,
and for the first nine months of 1995, increased $5.3 million, or 23%,
over the first nine months of 1994. Third quarter fiscal 1995 and first
nine months selling and administrative expenses include approximately
$1.1 million from the consolidation of Flex Products. The year to year
increases reflect higher selling expenses in relation to the higher
sales volumes and increased general and administrative expenses in
connection with the Company's European Glare/Guard(R) distribution
operations.
Interest expense, net of interest income amounts, increased $61,000, or
8%, for the third quarter of 1995 compared to the third quarter of
1994, and increased $154,000, or 7%, for first nine months of 1995
compared to the first nine months of 1994. The increase reflects higher
funded debt levels in the current year periods.
As a result of the foregoing, income before provision for income taxes
and minority interest in the third quarter of 1995 increased $2.9
million, or 183%, compared to income before provision for income taxes
in the third quarter of 1994, and income before provision for income
taxes and minority interest for the first nine months of 1995 increased
$5.2 million, or 90%, over the corresponding period of 1994.
The effective income tax rate for the third quarters and first nine
months of 1995 and 1994 was 42%.
For the third quarter and first nine months of 1995, minority interest
expense of $443,000 is reflected in the Company's income statement,
representing the 40% minority ownership participation in Flex Product's
net income for the period. For the third quarter and first nine months
of 1995, the Company also recorded $222,000 for dividends on
convertible redeemable preferred stock issued at the beginning of the
third quarter of 1995.
Net income applicable to common stock, net of dividend on preferred
stock, for the third quarter of 1995 was $1.9 million, or 110%, higher
than the third quarter of 1994, and net income for the first nine
months of 1995 was $5.7 million, or 71%, higher than the first nine
months of 1994.
FINANCIAL CONDITION
During the three months ended July 31, 1995, the Company engaged in
significant investing and financing activities which, in addition to
cash provided by operating activities, maintained its financial
liquidity substantially at the same levels as at July 31, 1994, and at
the beginning of the fiscal year, November 1, 1994.
During the third quarter of 1995, the Company completed a transaction
to increase its ownership to a controlling 60% interest in Flex
Products. The Company paid $8.4 million for an incremental 20% equity
interest in Flex Products and paid $7.0 million to assume a 60%
interest in a note of Flex Products held by the seller. Flex Products
designs, manufactures and markets thin film products produced by a
proprietary vacuum deposition technology. Its products include
optically variable pigment (OVP) currently used in currency anti-
counterfeiting and automobile paint applications, energy efficient
window film used for residential, commercial and automotive energy
conservation, printing plates used in offset color printing and
photoreceptor ground planes used in copiers.
In connection with the Flex Products transaction and other cash flow
requirements, the Company issued $12 million in convertible redeemable
preferred stock, netting $11.4 million after expenses, through a
private placement. The Company also reached agreement with its
principal bank on a new five-year $30 million unsecured credit
facility, which consists of a $15 million term loan and a $15 million
revolving line of credit. The facility replaces the Company's prior
$10 million credit facility. The $15 million term loan was drawn down
to repay the previously outstanding loan amounts to the bank and in
part to add to the Company's cash balance. The revolving line of
credit remains available to fund future cash flow requirements of the
Company.
During the third quarter of 1995, the Company spent $9.3 million, and
for the first nine months of 1995, $20.5 million, for the purchase of
plant and equipment. During the first nine months of 1995, the Company
added additional MetaMode(R) machine capacity to its flat panel
operation and product development area and upgraded its in-line
MetaMACTM sputter coater for increased capacity for front surface
mirror products. During the third quarter of 1995, the Company took
delivery of a large scale, high volume coating machine and is currently
in the process of installing this machine and related glass fabrication
operations in a newly constructed 65,000 square foot building at its
Santa Rosa campus. The Company intends to spend approximately $9.5
million to complete the aforementioned machine purchase and
installation and building projects. Flex Products spent approximately
$1 million for capital additions during the third quarter of 1995.
As a result of its operating, investing and financing activities during
the third quarter of 1995, the Company's cash and short-term investment
position increased $6.9 million during the quarter to a total cash and
short-term investment balance of $12.4 million at July 31, 1995.
Management believes that the cash on hand at July 31, 1995, cash
anticipated to be generated from operations, and availability of the
revolving line of credit under the Company's renegotiated bank loan and
credit arrangements will be sufficient for the Company to meet its near-
term working capital needs, capital expenditure commitments, debt
service requirements and payments of dividends as declared. In
addition, Flex Products is pursuing independent financing for its
capital expenditure and working capital requirements.
INDEPENDENT ACCOUNTANTS' REVIEW
The July 31, 1995 consolidated financial statements included in this
filing on Form 10-Q have been reviewed by Deloitte & Touche LLP (which
makes reference to the report of other accountants), 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,
1995, and the related condensed consolidated statements of income and
cash flows for the three-month and nine-month periods ended July 31,
1995 and 1994 and the related condensed consolidated statement of
stockholders' equity for the nine-month period ended July 31, 1995.
These financial statements are the responsibility of the Company's
management. We were furnished with the report of other accountants on
their review of the interim financial information of Flex Products,
Inc. (a consolidated subsidiary), whose total assets constituted, 8% of
consolidated total assets at July 31, 1995, and whose total revenues
constituted 17% and 7% of consolidated, total revenues for the
respective three-month and six-month periods ended July 31, 1995.
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 conducted in accordance with generally
accepted auditing standards, the objective of which is the expression
of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review and the report of other accountants, 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, 1994, and the
related consolidated statements of income, stockholders' equity, and
cash flows for the year then ended (not presented herein); and in our
report dated December 14, 1994, we expressed an unqualified opinion on
those consolidated financial statements based on our audit. In our
opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of October 31, 1994 is fairly stated, in
all material respects, in relation to the consolidated balance sheet
from which it has been derived.
/s/Deloitte & Touche LLP
San Francisco, California
August 17, 1995
PART II. OTHER INFORMATION
Item 1. Legal Proceedings Page(s)
During the quarter, there were no material developments in
legal proceedings since the report filed on Form 10-Q for the
quarter ended April 30, 1995.
Item 2. Changes in Securities
The Company issued 12,000 shares of 8% Series C Convertible
Redeemable Preferred Stock on May 8, 1995, in consideration
for $1,000 per share. The Series C Preferred Stock is
convertible into Common Stock at any time by the holders at a
conversion price of $10.50 per common share (subject to
adjustment in certain circumstances). The Series C Preferred
Stock is redeemable by the Company commencing two years from
the date of issuance (if the Company's Common Stock is
trading at $17 per share or more for any 20 consecutive day
period beginning at that time) and, after three years,
unconditionally, at 108% of the purchase price per share
declining to 100% over 4 years. The holders of the Series C
Preferred Stock are entitled to receive a cumulative annual
dividend of $80 per share, which is payable quarterly and is
to be paid prior to any other dividends being paid by the
Company.
The holders of shares of Series C Preferred Stock are not
entitled to notice of any stockholders' meetings or to vote
on any matter, except as provided by law or as otherwise
specified in the Series C Preferred Stock Certificate of
Designation, Preferences and Rights. If, however, dividends
on the Series C Preferred Stock are in arrears in an amount
equal to four quarterly dividends, a default period would
begin in which the holders of the Series C Preferred Stock,
voting as a class, would have the right to elect the greater
of 2 directors or a number of directors not less than 25% of
the total number of authorized directors. Such right
terminates upon expiration of the default period. The
holders of the Series C Preferred Stock are entitled to a
liquidation preference equal to $1,000 per share plus accrued
and unpaid dividends. The Company may not create any series
or class of capital stock ranking prior or equal to the
Series C Preferred Stock unless the terms of any such series
or class shall be approved by not less than sixty-six and two-
thirds percent (66-2/3%) of the outstanding shares of Series
C Preferred Stock, voting separately as a class.
Pursuant to the terms of a Stock Purchase Agreement entered
into with the holders of the Series C Preferred Stock, the
Company may not pay any dividends or make any other
distributions in respect of, or redeem or repurchase any,
securities of the Company to the extent such payments exceed
25% of the difference between (a) aggregate "Net Income" (as
such term is defined in the Stock Purchase Agreement) of the
Company after January 31, 1995 and (b) all losses suffered by
the Company during such period.
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) Credit Agreement dated as of May 24, 1995 among the
Registrant, Bank of America NT & SA as agent, and
letter of Credit Issuing Bank and the other Financial
Institutions Party hereto arranged by BA Securities,
Inc.
(4)(b) 2nd Amended & Restated Credit Agreement dated as of
May 24, 1995 between Optical Coating Laboratory and
Bank of America NT & SA.
(10) None
(11) Computation of per share earnings for the three and
nine month periods ended July 31, 1995 and 1994.
(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 three months
ended July 31, 1995.
(99) None
(b) Reports on Form 8-K filed for the three months
ended July 31, 1995.
The Company filed a report on Form 8-K on May 23, 1995
to report the acquisition of controlling ownership (60%)
of Flex Products, Inc., with the purchase of an additional
20% interest in Flex from ICI Americas Inc. and ICI American
Holding Inc. on May 8, 1995.
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 and in the capacity
indicated.
OPTICAL COATING LABORATORY, INC.
(Registrant)
Date John M. Markovich
Vice President Finance and
Chief Financial Officer
(Principal Financial Officer)
CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of May 24, 1995, among
Optical Coating Laboratory, Inc. a Delaware corporation (the
"Company"), the several financial institutions from time to time party
to this Agreement (collectively, the "Banks"; individually, a "Bank"),
and Bank of America National Trust and Savings Association, as letter
of credit issuing bank and as agent for the Banks.
WHEREAS, the Banks have agreed to make available to the Company a
term loan and revolving credit facility with a letter of credit
subfacility upon the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained herein, the parties agree as
follows:
I DEFINITIONS
1 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, membership 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, membership
interests, by contract, or otherwise.
"Agent" means BofA in its capacity as agent for the Banks
hereunder, and any successor agent arising under Section 10.9.
"Agent-Related Persons" means BofA and any successor agent
arising under Section 10.09 and any successor letter of credit
issuing bank hereunder, together with their respective Affiliates
(including, in the case of BofA, the Arranger), and the officers,
directors, employees, agents and attorneys-in-fact of such
Persons and Affiliates.
"Agent's Payment Office" means the address for payments set
forth on Schedule 11.02 in relation to the Agent, or such other
address as the Agent may from time to time specify.
"Agreement" means this Credit Agreement.
"Applicable Margin" means 1.25% for Offshore Rate Advances,
1.375% for CD Rate Advances, and 0.25% for Base Rate Advances
until two Business Days after receipt by the Agent of the
Compliance Certificate delivered together with the financial
statements referred to in Section 7.01(a) for the Company's 1995
fiscal year; thereafter the Applicable Margin shall be determined
as follows:
If the Funded Debt to EBITDA Ratio of the Company shown
on the most recent Compliance Certificate (starting with
the Compliance Certificate delivered together with the
financial statements referred to in Section 7.01(a) for
the Company's 1995 fiscal year) furnished pursuant to
Section 7.02(b) is as set forth below and an Event of
Default has not occurred:
Greater than Less than Less than Less than
or equal to 2.5 to 1.0 2.0 to 1.0 1.5 to 1.0
2.5 to 1.0 but greater but greater
than or than or
equal to 2.0 equal to 1.5
to 1.0 to 1.0
Offshore
Rate Loans 1.500% 1.250% 1.000% 0.875%
CD Rate
Loans 1.625% 1.375% 1.125% 1.000%
Base Rate
Loans 0.500% 0.250% 0.250% 0.000%
Each subsequent change in the Applicable Margin shall take effect two
Business Days after receipt by the Agent of the Company's Compliance
Certificate pursuant to Section 7.02(b).
"Arranger" means BA Securities, Inc., a Delaware
corporation.
"Assignee" has the meaning specified in subsection 11.08(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. References to the "Banks" shall include BofA, including
in its capacity as Issuing Bank; for purposes of clarification
only, to the extent that BofA may have any rights or obligations
in addition to those of the Banks due to its status as Issuing
Bank, its status as such will be specifically referenced.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of
1978 (11 U.S.C. Section101, 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 BofA in San Francisco, California, as its
"reference rate." (The "reference rate" is a rate set by BofA
based upon various factors including BofA'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 BofA shall
take effect at the opening of business on the day specified in
the public announcement of such change.
"Base Rate Loans" (singly a "Base Rate Loan") mean Loans
that bear interest based on the Base Rate, including L/C
Advances.
"BofA" means Bank of America National Trust and Savings
Association, a national banking association.
"Borrowing" means a borrowing hereunder consisting of Loans
of the same Type made to the Company on the same day by the Banks
under Article II, and, other than in the case of Base Rate Loans,
having the same 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, New York or
San Francisco, California 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 any
Bank or of any corporation controlling a Bank.
"Cash Collateralize" means to pledge and deposit with or
deliver to the Agent, for the benefit of the Agent, the Issuing
Bank and the Banks, as collateral for the L/C Obligations, cash
or deposit account balances pursuant to documentation in form and
substance satisfactory to the Agent and the Issuing Bank (which
documents are hereby consented to by the Banks). Derivatives of
such term shall have corresponding meaning. The Company hereby
grants the Agent, for the benefit of the Agent, the Issuing Bank
and the Banks, a security interest in all such cash and deposit
account balances. Cash collateral shall be maintained in
blocked, interest bearing deposit accounts at BofA. The types
of, and the rates of interest on, such accounts shall be
determined by BofA and such accounts shall be subject to BofA's
standard terms and conditions for such accounts.
"CD Rate" means, for any Interest Period with respect to CD
Rate Loans comprising part of the same Borrowing, the rate of
interest (rounded upward to the next 1/100th of 1%) determined as
follows:
CD Rate = Certificate of Deposit Rate + Assessment
1.00 - Reserve Percentage Rate
Where:
"Assessment Rate" means, for any day of such
Interest Period, the rate determined by the Agent as equal to
the annual assessment rate in effect on such day payable to
the FDIC by a member of the Bank Insurance Fund that is
classified as adequately capitalized and within supervisory
subgroup "A" (or a comparable successor assessment risk
classification within the meaning of 12 C.F.R. Section327.3)
for insuring time deposits at offices of such member in the
United States; or, in the event that the FDIC shall at any
time hereafter cease to assess time deposits based upon such
classifications or successor classifications, equal to the
maximum annual assessment rate in effect on such day that is
payable to the FDIC by commercial banks (whether or not
applicable to any particular Bank) for insuring time deposits
at offices of such banks in the United States.
"Certificate of Deposit Rate" means the rate of
interest per annum determined by the Agent to be the
arithmetic mean (rounded upward to the next 1/100th of 1%) of
the rates notified to the Agent as the rates of interest bid
by two or more certificate of deposit dealers of recognized
standing selected by the Agent for the purchase at face value
of dollar certificates of deposit issued by major United
States banks, for a maturity comparable to such Interest
Period and in the approximate amount of the CD Rate Loans to
be made, at the time selected by the Agent on the first day
of such Interest Period.
"Reserve Percentage" means, for any day of such
Interest Period, the maximum reserve percentage (expressed as
a decimal, rounded upward to the next 1/100th of 1%), as
determined by the Agent, in effect on such day (including any
ordinary, marginal, emergency, supplemental, special and
other reserve percentages), prescribed by the FRB for
determining the maximum reserves to be maintained by member
banks of the Federal Reserve System with deposits exceeding
$1,000,000,000 for new non-personal time deposits for a
period comparable to such Interest Period and in an amount of
$100,000 or more.
The CD Rate shall be adjusted, as to all CD Rate Loans then
outstanding, automatically as of the effective date of any change
in the Assessment Rate or the Reserve Percentage.
"CD Rate Loan" means a Loan that bears interest based on the
CD Rate.
"Closing Date" means the date on which all conditions
precedent set forth in Section 5.01 are satisfied or waived by all
Banks (or, in the case of subsection 5.01(d), waived by the Person
entitled to receive such payment).
"Code" means the Internal Revenue Code of 1986, and
regulations promulgated thereunder.
"Commitment", as to each Bank, has the meaning specified in
Section 2.01.
"Compliance Certificate" means a certificate substantially in
the form of Exhibit A.
"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 (other than any Letter of Credit)
issued for the account of that Person or as to which that Person
is otherwise liable for reimbursement of drawings or 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. The amount of any Contingent Obligation shall, in
the case of Guaranty Obligations (unless otherwise specifically
provided in such Guaranty Obligations), be deemed equal to the
stated or determinable amount of the primary obligation in respect
of which such Guaranty Obligation is made or, if not stated or if
indeterminable, the maximum reasonably anticipated liability in
respect thereof, and in the case of other Contingent Obligations,
shall be equal to the maximum reasonably anticipated liability in
respect thereof.
"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 Loans of one Type to
another Type, or (b) continues as Loans of the same Type, but with
a new Interest Period, Loans having Interest Periods expiring on
such date.
"Convertible Preferred Stock" means the Company's Convertible
Redeemable Preferred Stock to be issued by the Company on or
before the Closing Date.
"Credit Extension" means and includes (a) the making of any
Term Loans hereunder, (b) any Revolving Loans hereunder, and (c)
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.
"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.
"EBIT" of a Person means such Person's earnings before
interest income, interest expense, and taxes.
"EBITDA" of a Person means such Person's earnings before
interest income, interest expense, taxes, depreciation, and
amortization. In the Company's case, the Company's EBITDA for the
first and second quarters of the Company's 1995 fiscal year shall
be computed as though the Company, during each such period, owned
60% of Flex Products and each Compliance Certificate shall show
such computations in form and detail satisfactory to Majority
Banks.
"Effective Amount" means (i) with respect to any Revolving
Loans and Term Loans on any date, the aggregate outstanding
principal amount thereof after giving effect to any Borrowings and
prepayments or repayments of Revolving Loans and Term 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.
"Eligible Assignee" means (i) a commercial bank organized
under the laws of the United States, or any state thereof, and
having a combined capital and surplus of at least $100,000,000;
(ii) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic
Cooperation and Development or a political subdivision of any such
country, and having a combined capital and surplus of at least
$100,000,000, provided that such bank is acting through a branch
or agency located in the United States; and (iii) a Person that is
primarily engaged in the business of commercial banking and that
is (A) a Subsidiary of a Bank, (B) a Subsidiary of a Person of
which a Bank is a Subsidiary, or (C) a Person of which a Bank is a
Subsidiary.
"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.
"ERISA" means the Employee Retirement Income Security Act of
1974, and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Company within the
meaning of Section 414(b) or (c) of the Code (and Sections 414(m)
and (o) of the Code for purposes of provisions relating to Section
412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a
Pension Plan; (b) a withdrawal by the Company or any ERISA
Affiliate 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) a complete or partial withdrawal by the
Company or any ERISA Affiliate from a Multiemployer Plan or
notification that a Multiemployer Plan is in reorganization; (d)
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 or Multiemployer Plan; (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 or Multiemployer
Plan; or (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 any ERISA Affiliate.
"Eurodollar Reserve Percentage" has the meaning specified in
the definition of "Offshore Rate".
"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 Credit Agreement" means the credit agreement dated
as of June 30, 1994 between the Company and BofA as in effect as
of the opening of business on the date of this Agreement.
"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 for any relevant day 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 Agent 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 Agent.
"Fee Letter" has the meaning specified in subsection 2.10(a).
"Flex Products" means Flex Products, Inc., a Delaware
corporation.
"Flex-SICPA Contract" means the License and Supply Agreement
by and among Flex Products, Inc. and SICPA Holding, S.A. dated as
of December 2, 1994, as in effect as of the date of this
Agreement.
"FRB" means the Board of Governors of the Federal Reserve
System, and any Governmental Authority succeeding to any of its
principal functions.
"Funded Debt" of a Person means, without duplication, all
indebtedness for borrowed money, all non-contingent reimbursement
or payment obligations with respect to Surety Instruments, all
obligations with respect to capital leases, and all Guaranty
Obligations in respect of indebtedness or obligations of others of
the foregoing kinds; and shall exclude 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 if the rights and remedies of
the seller or bank under such agreement in the event of default
are limited to repossessions or sale of such property. Funded
Debt shall be measured on a consolidated basis.
"Funded Debt to EBITDA Ratio" of the Company means the ratio
of the Company's Funded Debt to the Company's EBITDA.
"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."
"Honor Date" has the meaning specified in subsection 3.03(b).
"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 non-
contingent reimbursement or payment obligations 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 (excluding such indebtedness if 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 11.05.
"Indemnified Person" has the meaning specified in Section
11.05.
"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 Loan other than a
Base 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 fiscal quarter of the Company and each date such Loan is
converted into another Type of Loans, provided, however, that if
any Interest Period for a CD Rate Loan or Offshore Rate Loan
exceeds 90 days or three months, respectively, the date that falls
90 days or three months (as the case may be) after the beginning
of such Interest Period and after each Interest Payment Date
thereafter is also an Interest Payment Date.
"Interest Period" means, (a) 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; and
(b) as to any CD 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 a CD Rate Loan, and
ending 30, 60, 90 or 180 days 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 Term Loan shall
extend beyond the last Business Day of April 2000 and no
Interest Period for any Revolving Loan shall extend beyond
the last Business Day of April 2000; and
(iv) no Interest Period applicable to a Term Loan
or portion thereof shall extend beyond any date upon which is
due any scheduled principal payment in respect of the Term
Loans unless the aggregate principal amount of Term Loans
represented by Base Rate Loans, or by CD Rate Loans or
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 under the Code.
"Issuance Date" has the meaning specified in subsection
3.01(a).
"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.
"Issuing Bank" means BofA in its capacity as issuer of one or
more Letters of Credit hereunder, together with any replacement
letter of credit issuer arising under subsection 10.01(b) or
Section 10.09.
"Joint Venture" means a single-purpose corporation,
partnership, limited liability company, 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 Advance" means each Bank's participation in any L/C
Borrowing in accordance with its Pro Rata Share.
"L/C Amendment Application" means an application form for
amendment of outstanding standby or commercial documentary letters
of credit as shall at any time be in use at the Issuing Bank, as
the Issuing Bank shall request.
"L/C Application" means an application form for issuances of
standby or commercial documentary letters of credit as shall at
any time be in use at the Issuing Bank, as the Issuing Bank shall
request.
"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 Section 3.03.
"L/C Commitment" means the commitment of the Issuing Bank to
Issue, and the commitments of the Banks severally to participate
in Letters of Credit from time to time Issued or outstanding under
Article III, in an aggregate amount not to exceed on any date the
amount of $5,000,000, as the same shall be reduced as a result of
a reduction in the L/C Commitment pursuant to Section 2.05;
provided that the L/C Commitment is a part of the Revolving
Commitments, rather than a separate, independent 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, including all outstanding L/C
Borrowings.
"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, including any of the
Issuing Bank's standard form documents for letter of credit
issuances.
"Lending Office" means, as to any Bank, the office or offices
of such Bank specified as its "Lending Office" or "Domestic
Lending Office" or "Offshore Lending Office", as the case may be,
on Schedule 11.02, or such other office or offices as such Bank
may from time to time notify the Company and the Agent.
"Letters of Credit" means any letters of credit (whether
standby letters of credit or commercial documentary letters of
credit) Issued by the Issuing 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.
"Loans" (singly a "Loan") means extensions of credit by a
Bank to the Company:
(a) under Article II (and Loans may be Base Rate Loans,
CD Rate Loans or Offshore Rate Loans, each, a "Type" of Loans),
and include Revolving Loans and Term Loans; and
(b) under Article III and include L/C Advances.
"Loan Documents" means this Agreement, the Fee Letter, the
L/C Related Documents, and all other documents delivered to the
Agent or any Bank in connection herewith.
"Majority Banks" means at any time:
(a) BofA, if it is the only Bank, or
(b) both Banks if there are only two Banks party to this
Agreement, or
(c) if there are more than two Banks party to this
Agreement,
(i) and BofA holds in excess of 60% of the then
aggregate unpaid principal amount of the Loans or, if no such
principal amount is outstanding, has 60% of the Revolving
Commitments, BofA and another Bank, and
(ii) in all other cases, Banks then holding in
excess of 60% of the then aggregate unpaid principal amount
of the Loans, or, if no such principal amount is then
outstanding, Banks then having in excess of 60% of the
Revolving Commitments.
"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 or any
Subsidiary 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 or any Subsidiary of any Loan Document.
"Material Subsidiary" means Flex Products and, at any time,
any other Subsidiary of the Company having at such time either
(i) total (gross) revenues for the preceding four fiscal quarter
period of 10% or more of the total (gross) revenues of the Company
on a consolidated basis, or (ii) total assets, as of the last day
of the preceding fiscal quarter, having a net book value of 10% or
more of the net book value of the Company's consolidated total
assets, in each case based upon the Company's most recent annual
or quarterly financial statements delivered to the Agent under
Section 7.01.
"Multiemployer Plan" means a "multiemployer plan", within the
meaning of Section 4001(a)(3) of ERISA, to which the Company or
any ERISA Affiliate makes, is making, or is obligated to make
contributions or, during the preceding three calendar years, has
made, or been obligated to make, contributions.
"Net Issuance Proceeds" means, as to any issuance of common
stock by any Person, cash proceeds received or receivable by such
Person in connection therewith, net of reasonable out-of-pocket
costs and expenses paid or incurred in connection therewith in
favor of any Person not an Affiliate of such Person. Net Issuance
Proceeds shall not include cash proceeds received in connection
with (a) common stock issued by the Company upon exercise of
employee stock options, (b) common stock issued by the Company to
its employee stock ownership plan, and (c) common stock issued by
the Company upon the exercise of rights for which no additional
consideration is received by the Company.
"Notice of Borrowing" means a notice in substantially the
form of Exhibit B.
"Notice of Conversion/Continuation" means a notice in
substantially the form of Exhibit C.
"Obligations" means all advances, debts, liabilities,
obligations, covenants and duties arising under any Loan Document
owing by the Company to any Bank, the Agent, 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 Offshore Rate Loans comprising part of the same Borrowing, the
rate of interest per annum (rounded upward to the next 1/16th of
1%) determined by the Agent 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
any 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"); and
"IBOR" means the rate of interest per annum
determined by the Agent as the rate at which dollar deposits
in the approximate amount of BofA's Offshore Rate Loan for
such Interest Period would be offered by BofA's Grand Cayman
Branch, Grand Cayman, B.W.I. (or such other office as may be
designated for such purpose by BofA), 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 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.
"Other Taxes" means any present or future stamp or
documentary taxes or any other excise or property taxes, charges
or similar levies which arise from any payment made hereunder or
from the execution, delivery or registration of, or otherwise with
respect to, this Agreement or any other Loan Documents; excluding,
in the case of each Bank and the Agent, such taxes (including
income taxes or franchise taxes) as are imposed on or measured by
each Bank's net income by the jurisdiction (or any political
subdivision thereof) under the laws of which such Bank or the
Agent, as the case may be, is organized or maintains a lending
office.
"Participant" has the meaning specified in subsection
11.08(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
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,
limited liability company, 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.
"Pro Rata Share" means, as to any Bank at any time, the
percentage equivalent (expressed as a decimal, rounded to the
ninth decimal place) at such time of such Bank's Commitment
divided by the Commitments of all the Banks.
"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:
(1) at a fixed or determinable date, whether by operation
of a sinking fund or otherwise,
(2) at the option of any Person other than such Person, or
(3) 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 another Subsidiary) including,
without limitation, any Distribution resulting in the acquisition
by the Company of securities which would constitute treasury
stock.
"Revolving Commitments" means fifteen million dollars
($15,000,000).
"Revolving Loan" has the meaning specified in Section 2.01.
"Revolving Termination Date" means the earliest to occur of:
(a) April 28, 2000;
(b) the fifth anniversary of this Agreement; and
(c) the date on which the Revolving Commitments
otherwise terminate 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.
"SICPA/OCLI Joint Acquisition Agreement" means that certain
agreement between the Company and SICPA Holding, S.A. dated as of
December 13, 1994 and amended by Addendum No. 1 thereto dated May
1, 1995, as in effect as of the date of this Agreement pursuant to
which SICPA Holding, S.A. and the Company have agreed to acquire
from ICI Americas, Inc. all of ICI Americas, Inc.'s interest in
Flex Products and to acquire jointly from ICI American Holdings
Inc. all of ICI American Holdings Inc.'s interest in Flex
Products' promissory note payable to the order of ICI American
Holdings Inc. dated April 30, 1995, evidencing a revolving credit
and in the face amount of $15,000,000.
"Stock and Note Purchase Agreement" means that certain Stock
and Note Purchase Agreement among the Company, SICPA Holding,
S.A., ICI Americas, Inc., and ICI American Holdings, Inc. dated
May 1, 1995, as in effect as of the date of this Agreement,
pursuant to which the Company and SICPA Holding, S.A. effect the
transactions contemplated in the SICPA/OCLI Joint Acquisition
Agreement.
"Subsidiary" of a Person means any corporation, association,
partnership, limited liability company, joint venture or other
business entity of which more than 50% of the voting stock,
membership interests 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 Contract" means any agreement (including any master
agreement and any agreement, whether or not in writing, relating
to any single transaction) that is an interest rate swap
agreement, basis swap, forward rate agreement, commodity swap,
commodity option, equity or equity index swap or option, bond
option, interest rate option, forward foreign exchange agreement,
rate cap, collar or floor agreement, currency swap agreement,
cross-currency rate swap agreement, swaption, currency option or
any other, similar agreement (including any option to enter into
any of the foregoing).
"Tangible Net Worth" of the Company means, on a consolidated
basis, the Company's net worth minus goodwill.
"Taxes" means any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding, in the case of each Bank and the
Agent, such taxes (including income taxes or franchise taxes) as
are imposed on or measured by each Bank's net income by the
jurisdiction (or any political subdivision thereof) under the laws
of which such Bank or the Agent, as the case may be, is organized
or maintains a lending office.
"Term Commitments" means fifteen million dollars
($15,000,000).
"Term Loan" has the meaning specified in Section 2.01.
"Type" has the meaning specified in the definition of "Loan."
"UCP" has the meaning specified in Section 3.09.
"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 means the United States of
America.
"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.
2 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.
(c) (1) The term "documents" includes any and all
instruments, documents, agreements, certificates, indentures,
notices and other writings, however evidenced.
(1) The term "including" is not limiting and means
"including without limitation."
(2) 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."
(d) 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.
(e) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation
of this Agreement.
(f) This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and
shall each be performed in accordance with their terms.
(g) This Agreement and the other Loan Documents are the result
of negotiations among and have been reviewed by counsel to the Agent, the
Company and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Banks or the Agent
merely because of the Agent's or Banks' involvement in their preparation.
3 Accounting Principles.
(a) 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.
(b) References herein to "fiscal year" and "fiscal quarter"
refer to such fiscal periods of the Company.
II THE CREDITS
1 Amounts and Terms of Commitments.
(a) The Term Credit.
(1) Each Bank severally agrees, on the terms and conditions
set forth herein, to make a single loan to the Company (each such loan,
a "Term Loan") on the Closing Date in an amount not to exceed the amount
set forth in Schedule 2.01 as such Bank's Term Commitment. Amounts borrowed
as Term Loans which are repaid or prepaid by the Company may not be
reborrowed hereunder.
(2) The proceeds of the Term Loans shall be applied first
to repay principal and interest on all Loans outstanding under the Existing
Credit Agreement and the balance, if any, shall be disbursed to the Company
on the Closing Date as instructed by the Company in writing to the Agent.
(b) The Revolving Credit.
(1) Each Bank severally 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, the amount set forth on Schedule 2.01
(such amount is the Bank's Revolving Commitment and, together with the
Bank's Term Commitment, as such total may be reduced under Section 2.05 or
as a result of one or more assignments under Section 11.08, the Bank's
"Commitment"); provided, however, that, after giving effect to any
Borrowing of Revolving Loans, the Effective Amount of all outstanding
Revolving Loans and the Effective Amount of all L/C Obligations shall not
at any time exceed the Revolving Commitments.
(2) Subject to the provisions of Section 2.13, if for any
reason the sum of a Bank's share of (A) the Effective Amount of all
outstanding Revolving Loans plus (B) the Effective Amount of all L/C
Obligations (such total of clauses (A) and (B) the "Total Sum") is more
(or less) than such Bank's Pro Rata Share of the Total Sum, and another
Bank's share of the Total Sum is less (or more) than such Bank's Pro Rata
Share of the Total Sum, such Banks shall sell and buy interests in each
other's shares of the Total Sum so that, as a result of such sale and
purchase, each Bank's share of the Total Sum equals such Bank's Pro Rata
Share of the Total Sum. The provisions of Section 2.13 shall prevail in
the event of conflict between this subsection and Section 2.13.
(3) Within the limits of each Bank's Revolving Commitment,
and subject to the other terms and conditions hereof, amounts borrowed by
the Company as Revolving Loans under this subsection, may be prepaid under
Section 2.06 and reborrowed under this subsection.
2 Loan Accounts. The Loans made by each Bank and the Letters of
Credit Issued by the Issuing Bank shall be evidenced by one or more loan
accounts or records maintained by such Bank or the Issuing Bank, as the
case may be, in the ordinary course of business. The loan accounts or
records maintained by the Agent, the Issuing Bank, and each Bank shall be
conclusive absent manifest error of the amount of the Loans made by the
Banks to the Company and the Letters of Credit Issued for the account of
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 or any Letter of Credit.
3 Procedure for Borrowing.
(a) Each Borrowing shall be made upon the Company's irrevocable
written notice delivered to the Agent in the form of a Notice of Borrowing
(which notice must be received by the Agent prior to 9:00 a.m. San Francisco,
California time) (i) three Business Days prior to the requested Borrowing
Date, in the case of Offshore Rate Loans; (ii) two Business Days prior to
the requested Borrowing Date, in the case of CD Rate Loans, and (iii) one
Business Day prior to the requested Borrowing Date, in the case of Base Rate
Loans, specifying:
(1) the amount of the Borrowing, which shall be in an
aggregate minimum amount of $1,000,000 for CD Rate Loans or Offshore Rate
Loans, or $100,000 for Base Rate Loans, or any multiple of $100,000 in
excess of such respective amounts;
(2) the requested Borrowing Date, which shall be a
Business Day;
(3) the Type of Loans comprising the Borrowing; and
(4) 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 CD Rate Loans or Offshore Rate Loans, such Interest Period shall be
90 days or three months, respectively.
provided, however, that with respect to the Borrowing to be made on
the Closing Date, the Notice of Borrowing shall be delivered to the
Agent not later than 2:00 p.m. (San Francisco, California time) one
Business Day before the Closing Date and such Borrowing will consist
of Base Rate Loans only.
(b) The Agent will promptly notify each Bank of its receipt
of any Notice of Borrowing and of the amount of such Bank's Pro Rata
Share of that Borrowing.
(c) Each Bank will make the amount of its Pro Rata Share of
each Borrowing available to the Agent for the account of the Company at
the Agent's Payment Office by 11:00 a.m. (San Francisco, California time)
on the Borrowing Date requested by the Company in funds immediately
available to the Agent. The proceeds of all such Loans will then be
made available to the Company by the Agent at such office by crediting
the account of the Company on the books of BofA with the aggregate of
the amounts made available to the Agent by the Banks and in like funds
as received by the Agent.
(d) After giving effect to any Borrowing, there may not be at
any one time more than six different Interest Periods in effect for Offshore
Rate Loans and CD Rate Loans.
4 Conversion and Continuation Elections.
(a) The Company may, upon irrevocable written notice to the
Agent in accordance with subsection 2.04(b):
(1) 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 any other Type of Loans, to convert any such Loans (or any part
thereof in an amount not less than $1,000,000, or that is in an integral
multiple of $100,000 in excess thereof) into Loans of any other Type; or
(2) elect, as of the last day of the applicable Interest
Period, to continue any Loans having Interest Periods 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 $100,000 in excess thereof);
provided, that if at any time the aggregate amount of CD Rate Loans or
Offshore Rate Loans in respect of any Borrowing is reduced, by
payment, prepayment, or conversion of part thereof to be less than
$1,000,000, such CD Rate Loans or Offshore Rate Loans shall
automatically convert into Base Rate Loans, and on and after such date
the right of the Company to continue such Loans as, and convert such
Loans into, Offshore Rate Loans or CD Rate Loans, as the case may be,
shall terminate. With respect to each Borrowing that is less than
$1,000,000 in aggregate principal amount, the Company may combine such
Borrowing with another Borrowing(s) so as to have a combined Borrowing
of not less than $1,000,000 (and, if greater, in a whole multiple of
$100,000) and borrow such combined Borrowing as CD Rate Loans or
Offshore Rate Loans, subject to the other provisions of this
Agreement.
The Company may not elect to convert a Revolving Loan into a Term Loan
or a Term Loan into a Revolving Loan.
(b) The Company shall deliver a Notice of Conversion/
Continuation to be received by the Agent not later than 9:00 a.m.
San Francisco, California time) at least (i) three Business Days in
advance of the Conversion/Continuation Date, if the Loans are to be
converted into or continued as Offshore Rate Loans; (ii) two Business
Days in advance of the Conversion/Continuation Date, if the Loans are
to be converted into or continued as CD Rate Loans; and (iii) one Business
Day in advance of the Conversion/Continuation Date, if the Loans are to be
converted into Base Rate Loans, specifying:
(1) the proposed Conversion/Continuation Date;
(2) the aggregate amount of Loans to be converted or
renewed;
(3) the Type of Loans resulting from the proposed conversion
or continuation; and
(4) 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 CD Rate Loans or Offshore Rate Loans, the Company has failed to select
timely a new Interest Period to be applicable to such CD Rate Loans or
Offshore Rate Loans, as the case may be, or if any Default or Event of
Default then exists, the Company shall be deemed to have elected to convert
such CD Rate Loans or Offshore Rate Loans into Base Rate Loans effective
as of the expiration date of such Interest Period.
(d) The Agent will promptly notify each Bank of its receipt of
a Notice of Conversion/Continuation, or, if no timely notice is provided
by the Company, the Agent will promptly notify each Bank of the details of
any automatic conversion. All conversions and continuations shall be made
ratably according to the respective outstanding principal amounts of the
Loans held by each Bank with respect to which the notice was given.
(e) Unless the Majority Banks otherwise agree, 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 or a CD
Rate Loan.
(f) After giving effect to any conversion or continuation of
Loans, there may not be at any one time more than six different Interest
Periods in effect for Offshore Rate Loans and CD Rate Loans.
5 Voluntary Termination or Reduction of Revolving Commitments.
The Company may, upon not less than five Business Days' prior notice to
the Agent, terminate the Revolving Commitments, or permanently reduce
the Revolving Commitments by an aggregate minimum amount of $5,000,000
or any multiple of $1,000,000 in excess thereof; 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 and L/C
Obligations together would exceed the amount of the Revolving Commitments
then in effect, or (b) the Effective Amount of all L/C Obligations
then outstanding would exceed the L/C Commitment. Once reduced in
accordance with this Section, the Revolving Commitments may not be
increased. Any reduction of the Revolving Commitments shall be applied
to each Bank according to its Pro Rata Share. If and to the extent
specified by the Company in the notice to the Agent, some or all of the
reduction in the Revolving Commitments shall be applied to reduce the
L/C Commitment. All accrued commitment fees and letter of credit fees
to, but not including the effective date of any reduction or termination
of Revolving Commitments, shall be paid on the effective date of such
reduction or termination.
6 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'
(for Offshore Rate Loans), two Business Days' (for CD Rate Loans), and one
Business Day's (for Base Rate Loans) irrevocable notice to the Agent,
ratably prepay Loans in whole or in part, in minimum amounts of $1,000,000
or any multiple of $100,000 in excess thereof. Such notice of prepayment
shall specify the date and amount of such prepayment, the Type(s) of Loans
to be prepaid, and whether prepayment is to be applied to Revolving Loans
or to Term Loans. The Agent will promptly notify each Bank of its receipt
of any such notice, and of such Bank's Pro Rata Share of such prepayment.
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 Term Loans shall be applied in
inverse order of maturity.
7 Mandatory Prepayments of Loans, Mandatory Commitment Reductions.
(a) If on any date the Effective Amount of L/C Obligations
exceeds the L/C Commitment, the Company shall, within two Business Days,
Cash Collateralize the outstanding Letters of Credit in an amount equal
to the excess of the maximum amount then available to be drawn under the
Letters of Credit over the Aggregate L/C Commitment. Subject to Section
4.04, if on any date after giving effect to any Cash Collateralization
made on such date pursuant to the preceding sentence, the Effective Amount
of all Revolving Loans then outstanding plus the Effective Amount of all
L/C Obligations exceeds the Revolving Commitments, the Company shall,
within two Business Days and without notice or demand, prepay the
outstanding principal amount of the Revolving Loans and L/C Advances by an
amount equal to the applicable excess.
(b) The Company shall, upon each receipt of Net Issuance
Proceeds, prepay the Term Loans in an amount not less than 33% of such
proceeds. Each prepayment under this Section shall be applied on a pro
rata basis to reduce the remaining instalments of the Term Loans.
8 Repayment.
(a) The Term Credit. The Company shall repay the Term Loans
in ten instalments, on each date (each a "Principal Payment Date") and in
the instalments set forth in the following table:
On the last Business Day of: The instalment amount of:
October 1995 and April 1996 $500,000 on each such day
October 1996 and April 1997 $1,000,000 on each such day
each October and April thereafter $2,000,000 on each such day
until the last Business Day of April 2000 on which day all unpaid
principal and interest accrued thereon shall be due and payable.
(b) The Revolving Credit. The Company shall repay to the
Banks on the Revolving Termination Date the aggregate principal amount
of Revolving Loans outstanding on such date.
9 Interest.
(a) Each Loan shall bear interest on the outstanding principal
amount thereof from the applicable Borrowing Date at a rate per annum
equal to the CD Rate, 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 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 or Section 2.07 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 Agent at the request or with the consent of the
Majority Banks.
(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 Obligations
at a rate per annum which is determined by adding 3% per annum to the
Applicable Margin then in effect for such Loans and, in the case of
Obligations not subject to an Applicable Margin, at a rate per annum
equal to the Base Rate plus 3%; provided, however, that, on and after
the expiration of any Interest Period applicable to any Offshore Rate
Loan or CD 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 3%.
(d) Anything herein to the contrary notwithstanding, the
obligations of the Company to any 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
such Bank would be contrary to the provisions of any law applicable to
such Bank limiting the highest rate of interest that may be lawfully
contracted for, charged or received by such Bank, and in such event the
Company shall pay such Bank interest at the highest rate permitted by
applicable law.
10 Fees.
(a) Fees. The Company shall pay fees to the Agent for the
account of BofA and the Arranger, in the times and in the amounts required
by the letter agreement (the "Fee Letter") between the Company and the
Arranger and Agent dated March 2, 1995.
(b) Commitment Fees.
(1) The Company shall pay to the Agent for the account
of each Bank a commitment fee on the average daily unused portion of such
Bank's Revolving Commitment, computed on a quarterly basis in arrears on
the last Business Day of each fiscal quarter of the Company based upon the
daily utilization for that quarter as calculated by the Agent in accordance
with the table set forth in clause (2) of this subsection. For purposes of
calculating utilization under this subsection, the Revolving Commitment
shall be deemed used to the extent of the effective Amount of Revolving
Loans then outstanding plus the Effective Amount of L/C Obligations then
outstanding. 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 fiscal quarter of the Company
commencing on July 31, 1995 through the Revolving Termination Date, with
the final payment to be made on the Revolving Termination Date; provided
that, in connection with any reduction or termination of the Revolving
Commitments under Section 2.05, the accrued commitment fee calculated for
the period ending on such date shall also be paid on the date of such
reduction or termination, with the following quarterly payment being
calculated on the basis of the period from such reduction or termination
date to such quarterly payment date. The commitment fees 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) The commitment fee shall be at 0.375% per annum
until two Business Days after receipt by the Agent of the Compliance
Certificate delivered together with the financial statements referred
to in Section 7.01(a) for the Company's 1995 fiscal year and thereafter:
If the Funded Debt to EBITDA Ratio shown on the most recent Compliance
Certificate (starting with the Compliance Certificate delivered
together with the financial statements referred to in Section 7.01(a)
for the Company's 1995 fiscal year) furnished pursuant to Section
7.02(b) is as set forth below;
Greater than Less than 2.0 to Less than
or equal to 1.0 but greater 1.5% to 1.0%
2.0 to 1.0: than or equal to
1.5 to 1.0:
the commitment the commitment fee the commitment
fee shall be 0.375% shall be 0.250% fee shall be
per annum per annum 0.200% per
annum
Each subsequent change in the commitment fee shall take effect two
Business Days after receipt by the Agent of the Company's Compliance
Certificate pursuant to Section 7.02(b).
11 Computation of Fees and Interest.
(a) All computations of interest for Base Rate Loans when
the Base Rate is determined by BofA'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.
(b) Each determination of an interest rate by the Agent shall
be conclusive and binding on the Company and the Banks in the absence of
manifest error.
12 Payments by the Company.
(a) 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 Agent for
the account of the Banks at the Agent's Payment Office, and shall be made in
dollars and in immediately available funds, no later than 11:00 a.m.
(San Francisco, California time) on the date specified herein. The Agent
will promptly distribute to each Bank its Pro Rata Share (or other
applicable share as expressly provided herein) of such payment in like
funds as received. Any payment received by the Agent later than 1:00 p.m.
(San Francisco, California time) shall be deemed to have been received
on the following Business Day and any applicable interest or fee shall
continue to accrue.
(b) 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.
(c) Unless the Agent receives notice from the Company prior
to the date on which any payment is due to the Banks that the Company
will not make such payment in full as and when required, the Agent may
assume that the Company has made such payment in full to the Agent on
such date in immediately available funds and the Agent may (but shall
not be so required), in reliance upon such assumption, distribute to
each Bank on such due date an amount equal to the amount then due such
Bank. If and to the extent the Company has not made such payment in full
to the Agent, each Bank shall repay to the Agent on demand such amount
distributed to such Bank, together with interest thereon at the Federal
Funds Rate for each day from the date such amount is distributed to such
Bank until the date repaid.
13 Payments by the Banks to the Agent.
(a) Unless the Agent receives notice from a Bank on or prior
to the Closing Date or, with respect to any Borrowing after the Closing
Date, at least one Business Day prior to the date of such Borrowing, that
such Bank will not make available as and when required hereunder to the
Agent for the account of the Company the amount of that Bank's Pro Rata
Share of the Borrowing, the Agent may assume that each Bank has made such
amount available to the Agent in immediately available funds on the
Borrowing Date and the Agent may (but shall not be so required), in
reliance upon such assumption, make available to the Company on such date
a corresponding amount. If and to the extent any Bank shall not have
made its full amount available to the Agent in immediately available
funds and the Agent in such circumstances has made available to the
Company such amount, that Bank shall on the Business Day following such
Borrowing Date make such amount available to the Agent, together with
interest at the Federal Funds Rate for each day during such period.
A notice of the Agent submitted to any Bank with respect to amounts
owing under this subsection shall be conclusive, absent manifest error.
If such amount is so made available, such payment to the Agent shall
constitute such Bank's Loan on the date of Borrowing for all purposes of
this Agreement. If such amount is not made available to the Agent on the
Business Day following the Borrowing Date, the Agent will notify the
Company of such failure to fund and, upon demand by the Agent, the Company
shall pay such amount to the Agent for the Agent's account, together with
interest thereon for each day elapsed since the date of such Borrowing,
at a rate per annum equal to the interest rate applicable at the time to
the Loans comprising such Borrowing.
(b) The failure of any Bank to make any Loan on any Borrowing
Date shall not relieve any other Bank of any obligation hereunder to make
a Loan on such Borrowing Date, but no Bank shall be responsible for the
failure of any other Bank to make the Loan to be made by such other Bank
on any Borrowing Date.
14 Sharing of Payments, Etc. If, other than as expressly provided
elsewhere herein, any Bank shall obtain on account of the Loans made by it
any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) in excess of its Pro Rata Share, such Bank
shall immediately (a) notify the Agent of such fact, and (b) purchase from
the other Banks such participations in the Loans made by them as shall be
necessary to cause such purchasing Bank to share the excess payment pro
rata with each of them; provided, however, that if all or any portion of
such excess payment is thereafter recovered from the purchasing Bank,
such purchase shall to that extent be rescinded and each other Bank shall
repay to the purchasing Bank the purchase price paid therefor, together
with an amount equal to such paying Bank's ratable share (according to
the proportion of (i) the amount of such paying Bank's required repayment
to (ii) the total amount so recovered from the purchasing Bank) of any
interest or other amount paid or payable by the purchasing Bank in respect
of the total amount so recovered. The Company agrees that any Bank so
purchasing a participation from another Bank may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right
of set-off, but subject to Section 11.10) with respect to such participation
as fully as if such Bank were the direct creditor of the Company in the
amount of such participation. The Agent will keep records (which shall
be conclusive and binding in the absence of manifest error) of
participations purchased under this Section and will in each case notify
the Banks following any such purchases or repayments.
III THE LETTERS OF CREDIT
1 The Letter of Credit Subfacility.
(a) On the terms and conditions set forth herein, (i) the
Issuing Bank agrees, (A) 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
subsections 3.02(c) and 3.02(d), and (B) to honor drafts under the Letters
of Credit; and (ii) the Banks severally agree to participate in Letters of
Credit Issued for the account of the Company; provided, that the Issuing
Bank shall not be obligated to Issue, and no Bank shall be obligated to
participate in, any Letter of Credit if as of the date of Issuance of such
Letter of Credit (the "Issuance Date") (1) the Effective Amount of all L/C
Obligations plus the Effective Amount of all Revolving Loans exceeds the
Revolving Commitments, (2) the participation of any Bank in the Effective
Amount of all L/C Obligations plus the Effective Amount of the Revolving
Loans of such Bank exceeds such Bank's Revolving Commitment, or (3) the
Effective Amount of L/C Obligations exceeds 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 Issuing Bank is under no obligation to Issue any
Letter of Credit if:
(1) any order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to enjoin or restrain
the Issuing Bank from Issuing such Letter of Credit, or any Requirement
of Law applicable to the Issuing Bank or any request or directive
(whether or not having the force of law) from any Governmental Authority
with jurisdiction over the Issuing Bank shall prohibit, or request that
the Issuing Bank refrain from, the Issuance of letters of credit
generally or such Letter of Credit in particular or shall impose upon the
Issuing Bank with respect to such Letter of Credit any restriction,
reserve or capital requirement (for which the Issuing Bank is not
otherwise compensated hereunder) not in effect on the Closing Date, or
shall impose upon the Issuing Bank any unreimbursed loss, cost or expense
which was not applicable on the Closing Date and which the Issuing Bank
in good faith deems material to it;
(2) the Issuing Bank has received written notice from any
Bank, the Agent or the Company, on or prior to the Business Day prior
to the requested date of Issuance of such Letter of Credit, that one
or more of the applicable conditions contained in Article V is not then
satisfied;
(3) the expiry date of any requested Letter of Credit is
(A) more than 360 days after the date of Issuance, unless the Majority
Banks have approved such expiry date in writing, or (B) after the
Revolving Termination Date, unless all of the Banks have approved such
expiry date in writing;
(4) the expiry date of any requested Letter of Credit is
prior to the maturity date of any financial obligation to be supported by
the requested Letter of Credit;
(5) any requested Letter of Credit does not provide for
drafts, or is not otherwise in form and substance acceptable to the
Issuing Bank, or the Issuance of a Letter of Credit shall violate any
applicable policies of the Issuing Bank;
(6) any standby Letter of Credit is for the purpose of
supporting the issuance of any letter of credit by any other Person; or
(7) such Letter of Credit is in a face amount less than
$100,000 or denominated in a currency other than Dollars.
2 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 Issuing Bank (with a
copy sent by the Company to the Agent) at least four days (or such
shorter time as the Issuing Bank may agree in a particular instance
in its sole discretion) 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 Issuing 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 Issuing Bank may require.
(b) At least two Business Days prior to the Issuance of any
Letter of Credit, the Issuing Bank will confirm with the Agent
(by telephone or in writing) that the Agent has received a copy of
the L/C Application or L/C Amendment Application from the Company
and, if not, the Issuing Bank will provide the Agent with a copy
thereof. Unless the Issuing Bank has received notice on or before
the Business Day immediately preceding the date the Issuing Bank is to
issue a requested Letter of Credit from the Agent (A) directing the
Issuing Bank not to issue such Letter of Credit because such issuance
is not then permitted under subsection 3.01(a) as a result of the
limitations set forth in clauses (1) through (3) thereof or subsection
3.01(b)(2); or (B) that one or more conditions specified in Article V
are not then satisfied; then, subject to the terms and conditions hereof,
the Issuing Bank shall, on the requested date, issue a Letter of Credit
for the account of the Company in accordance with the Issuing Bank's
usual and customary business practices.
(c) From time to time while a Letter of Credit is outstanding
and prior to the Revolving Termination Date, the Issuing Bank will,
upon the written request of the Company received by the Issuing Bank
(with a copy sent by the Company to the Agent) at least five days
(or such shorter time as the Issuing Bank may agree in a particular
instance in its sole discretion) 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 Issuing 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 Issuing Bank may require.
The Issuing Bank shall be under no obligation to amend any Letter of
Credit if: (A) the Issuing 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. The
Agent will promptly notify the Banks of the receipt by it of any
L/C Application or L/C Amendment Application.
(d) The Issuing Bank and the Banks agree that, 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 Issuing Bank (with a copy sent by the Company
to the Agent) at least five days (or such shorter time as the Issuing
Bank may agree in a particular instance in its sole discretion) prior
to the proposed date of notification of renewal, the Issuing Bank shall
be entitled to authorize the automatic renewal of any Letter of Credit
issued by it. 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 Issuing 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
Issuing Bank may require. The Issuing Bank shall be under no obligation
so to renew any Letter of Credit if: (A) the Issuing 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 Issuing Bank that such Letter of Credit shall
not be renewed, and if at the time of renewal the Issuing Bank would be
entitled to authorize the automatic renewal of such Letter of Credit in
accordance with this subsection upon the request of the Company but the
Issuing 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 Issuing Bank shall nonetheless be
permitted to allow such Letter of Credit to renew, and the Company and
the Banks hereby authorize such renewal, and, accordingly, the Issuing
Bank shall be deemed to have received an L/C Amendment Application from
the Company requesting such renewal.
(e) The Issuing Bank may, at its election (or as required by
the Agent at the direction of the Majority Banks), 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.
(f) This Agreement shall control in the event of any conflict
with any L/C-Related Document (other than any Letter of Credit).
(g) The Issuing Bank will also deliver to the Agent,
concurrently or promptly following its delivery of a Letter of Credit,
or amendment to or renewal of a Letter of Credit, to an advising bank
or a beneficiary, a true and complete copy of each such Letter of Credit
or amendment to or renewal of a Letter of Credit.
3 Risk Participations, Drawings and Reimbursements.
(a) Immediately upon the Issuance of each Letter of Credit, each
Bank shall bedeemed to, and hereby irrevocably and unconditionally agrees
to, purchase from the Issuing Bank a participation in such Letter of
Credit and each drawing thereunder in an amount equal to the product of
(i) the Pro Rata Share of such Bank, times (ii) the maximum amount
available to be drawn under such Letter of Credit and the amount of
such drawing, respectively. For purposes of subsection 2.01(b), each
Issuance of a Letter of Credit shall be deemed to utilize the Revolving
Commitment of each Bank by an amount equal to the amount of such
participation.
(b) In the event of any request for a drawing under a Letter of
Credit by the beneficiary or transferee thereof, the Issuing Bank will
promptly notify the Company. The Company shall reimburse the Issuing
Bank prior to 10:00 a.m. San Francisco, California time, on each date
that any amount is paid by the Issuing Bank under any Letter of Credit
(each such date, an "Honor Date"), in an amount equal to the amount so
paid by the Issuing Bank. In the event the Company fails to reimburse
the Issuing Bank for the full amount of any drawing under any Letter of
Credit by 10:00 a.m. San Francisco, California time on the Honor Date,
the Issuing Bank will promptly notify the Agent and the Agent will
promptly notify each Bank thereof, and the Company shall be deemed to
have requested that Base Rate Loans be made by the Banks to be disbursed
on the Honor Date under such Letter of Credit, subject to the amount of
the unutilized portion of the Revolving Commitments and subject to the
conditions set forth in Section 5.02. Any notice given by the Issuing
Bank or the Agent pursuant to this subsection may be oral if immediately
confirmed in writing (including by facsimile); provided that the lack
of such an immediate confirmation shall not affect the conclusiveness
or binding effect of such notice and provided, further, that such
confirmation will be provided by the Issuing Bank or the Agent.
(c) Each Bank shall, upon any notice pursuant to subsection
3.03(b), make available to the Agent for the account of the relevant
Issuing Bank an amount in Dollars and in immediately available funds
equal to its Pro Rata Share of the amount of the drawing, whereupon
the participating Banks shall (subject to subsection 3.03(e)) each be
deemed to have made a Revolving Loan consisting of a Base Rate Loan
to the Company in that amount. If any Bank so notified fails to make
available to the Agent for the account of the Issuing Bank the amount
of such Bank's Pro Rata Share of the amount of the drawing by no later
than 12:00 noon San Francisco, California time on the Honor Date, then
interest shall accrue on such Bank's obligation to make such payment,
from the Honor Date to the date such Bank makes such payment, at a
rate per annum equal to the Federal Funds Rate in effect from time to
time during such period. The Agent will promptly give notice of the
occurrence of the Honor Date, but failure of the Agent to give any such
notice on the Honor Date or in sufficient time to enable any Bank to
effect such payment on such date shall not relieve such Bank from
its obligations under this Section.
(d) With respect to any unreimbursed drawing that is not
converted into Revolving Loans consisting of Base Rate Loans 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 Issuing
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 3% per annum, and each Bank's payment to the Issuing Bank pursuant
to subsection 3.03(c) shall be deemed payment in respect of its
participation in such L/C Borrowing and shall constitute an L/C
Advance from such Bank in satisfaction of its participation obligation
under this Section.
(e) Each Bank's obligation in accordance with this Agreement
to make the Revolving Loans or L/C Advances, as contemplated by this
Section as a result of a drawing under a Letter of Credit, shall be
absolute and unconditional and without recourse to the Issuing Bank
and shall not be affected by any circumstance, including (i) any
set-off, counterclaim, recoupment, defense or other right which such
Bank may have against the Issuing Bank, the Company or any other
Person for any reason whatsoever; (ii) the occurrence or continuance
of a Default, an Event of Default or a Material Adverse Effect;
or (iii) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing; provided, however,
that each Bank's obligation to make Revolving Loans under this
Section is subject to the conditions set forth in Section 5.02.
4 Repayment of Participations.
(a) Upon (and only upon) receipt by the Agent for the account
of the Issuing Bank of immediately available funds from the Company (i) in
reimbursement of any payment made by the Issuing Bank under the Letter of
Credit with respect to which any Bank has paid the Agent for the account
of the Issuing Bank for such Bank's participation in the Letter of Credit
pursuant to Section 3.03 or (ii) in payment of interest thereon, the Agent
will pay to each Bank, in the same funds as those received by the Agent
for the account of the Issuing Bank, the amount of such Bank's Pro Rata
Share of such funds, and the Issuing Bank shall receive the amount of the
Pro Rata Share of such funds of any Bank that did not so pay the Agent for
the account of the Issuing Bank.
(b) If the Agent or the Issuing Bank is required at any time to
return to the Company, or to a trustee, receiver, liquidator, custodian, or
any official in any Insolvency Proceeding, any portion of the payments made
by the Company to the Agent for the account of the Issuing Bank pursuant to
subsection 3.04(a) in reimbursement of a payment made under the Letter of
Credit or interest or fee thereon, each Bank shall, on demand of the Agent,
forthwith return to the Agent or the Issuing Bank the amount of its Pro Rata
Share of any amounts so returned by the Agent or the Issuing Bank plus
interest thereon from the date such demand is made to the date such amounts
are returned by such Bank to the Agent or the Issuing Bank, at a rate per
annum equal to the Federal Funds Rate in effect from time to time.
5 Role of the Issuing Bank.
(a) Each Bank and the Company agree that, in paying any drawing
under a Letter of Credit, the Issuing Bank shall not have any responsibility
to obtain any document (other than any sight draft and certificates expressly
required by the Letter of Credit) or to ascertain or inquire as to the
validity or accuracy of any such document or the authority of the Person
executing or delivering any such document.
(b) No Agent-Related Person nor any of the respective
correspondents, participants or assignees of the Issuing Bank shall be
liable to any Bank for: (i) any action taken or omitted in connection
herewith at the request or with the approval of the Banks (including the
Majority Banks, as applicable); (ii) any action taken or omitted in the
absence of gross negligence or willful misconduct; or (iii) the due
execution, effectiveness, validity or enforceability of any L/C-Related
Document.
(c) The Company hereby assumes all risks of the acts or
omissions of any beneficiary or transferee with respect to its use of
any Letter of Credit; provided, however, that this assumption is not
intended to, and shall not, preclude the Company's pursuing such rights
and remedies as it may have against the beneficiary or transferee at
law or under any other agreement. No Agent-Related Person, nor any of
the respective correspondents, participants or assignees of the Issuing
Bank, shall be liable or responsible for any of the matters described
in clauses (a) through (g) of Section 3.06; provided, however, anything
in such clauses to the contrary notwithstanding, that the Company may
have a claim against the Issuing Bank, and the Issuing Bank may be
liable to the Company, to the extent, but only to the extent, of any
direct, as opposed to consequential or exemplary, damages suffered by
the Company which the Company proves were caused by the Issuing Bank's
willful misconduct or gross negligence or the Issuing Bank's willful
failure to pay under any Letter of Credit after the presentation to it
by the beneficiary of a sight draft and certificate(s) strictly complying
with the terms and conditions of a Letter of Credit. In furtherance and
not in limitation of the foregoing: (i) the Issuing Bank may accept
documents that appear on their face to be in order, without responsibility
for further investigation, regardless of any notice or information to the
contrary; and (ii) the Issuing Bank shall not be responsible for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may
prove to be invalid or ineffective for any reason.
6 Obligations Absolute. The obligations of the Company under this
Agreement and any L/C-Related Document to reimburse the Issuing Bank for a
drawing under a Letter of Credit, and to repay any L/C Borrowing and any
drawing under a Letter of Credit converted into Revolving Loans, 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
under all circumstances, including the following:
(a) any lack of validity or enforceability of this Agreement
or any L/C-Related Document;
(b) any change in the time, manner or place of payment of,
or in any other term of, all or any of the obligations of the Company
in respect of any Letter of Credit or any other amendment or waiver of
or any consent to departure from all or any of the L/C-Related Documents;
(c) the existence of any claim, set-off, defense or other right
that the Company may have at any time against any beneficiary or any
transferee of any Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the Issuing Bank
or any other Person, whether in connection with this Agreement, the
transactions contemplated hereby or by the L/C-Related Documents or
any unrelated transaction;
(d) any draft, demand, certificate or other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; or any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under
any Letter of Credit;
(e) any payment by the Issuing Bank under any Letter of Credit
against presentation of a draft or certificate that does not strictly
comply with the terms of any Letter of Credit; or any payment made by
the Issuing Bank under any Letter of Credit to any Person purporting
to be a trustee in bankruptcy, debtor-in-possession, assignee for the
benefit of creditors, liquidator, receiver or other representative of
or successor to any beneficiary or any transferee of any Letter of
Credit, including any arising in connection with any Insolvency
Proceeding;
(f) any exchange, release or non-perfection of any collateral,
or any release or amendment or waiver of or consent to departure from
any other guarantee, for all or any of the obligations of the Company
in respect of any Letter of Credit; or
(g) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, including any other circumstance
that might otherwise constitute a defense available to, or a discharge
of, the Company or a guarantor.
7 Cash Collateral Pledge. Upon (i) the request of the Agent,
(A) if the Issuing Bank has honored any full or partial drawing request
on any Letter of Credit and such drawing has resulted in an L/C Borrowing
hereunder, or (B) if, as of the Revolving Termination Date, any Letters
of Credit may for any reason remain outstanding and partially or wholly
undrawn, or (ii) the occurrence of the circumstances described in
subsection 2.07(a) requiring the Company to Cash Collateralize Letters
of Credit, then, the Company shall within two Business Days Cash
Collateralize the L/C Obligations in an amount equal to such L/C Obligations.
The two Business Days provided for in this Section is not intended
to be in addition to the two Business Days provided in subsection 2.07(a).
8 Letter of Credit Fees.
(a) The Company shall pay to the Agent for the account of
each of the Banks a letter of credit fee with respect to the Letters of
Credit equal to the rates per annum set forth in subsection (b) of this
Section of the average daily maximum amount available to be drawn on
the outstanding Letters of Credit, computed on a quarterly basis in
arrears on the last Business Day of each fiscal quarter of the Company
based upon Letters of Credit outstanding for that quarter as calculated
by the Agent. Such letter of credit fees shall be due and payable
quarterly in arrears on the last Business Day of each fiscal quarter
of the Company during which Letters of Credit 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 shall expire), with the final payment
to be made on the Revolving Termination Date (or such later expiration
date).
(b) The letter of credit fee is 1.25% per annum until two
Business Days after receipt by the Agent of the Compliance Certificate
delivered together with the financial statements referred to in Section
7.01(a) for the Company's 1995 fiscal year; thereafter the letter of
credit fee shall be determined as follows:
If the Funded Debt to EBITDA Ratio of the Company shown on
the most recent Compliance Certificate (starting with the
Compliance Certificate delivered together with the financial
statements referred to in Section 7.01(a) for the Company's
1995 fiscal year) furnished pursuant to Section 7.02(b)
is as set forth below and an Event of Default has not occurred:
Greater than Less than 2.5 Less than 2.0 Less than
or equal to to 1.0 but to 1.0 but 1.5 to 1.0
2.5 to 1.0 greater than greater than
or equal to or equal to
2.0 to 1.0 1.5 to 1.0
Letter of
credit fee
is the per
annum
rate of: 1.500% 1.250% 1.000% 0.875%
Each subsequent change in the letter of credit fee shall take effect two
Business Days after receipt by the Agent of the Company's Compliance
Certificate pursuant to Section 7.02(b).
(c) The Company shall pay to the Issuing Bank a letter of
credit fronting fee for each Letter of Credit Issued by the Issuing Bank
equal to 0.125% of the face amount (or increased face amount, as the case
may be) of such Letter of Credit. Such Letter of Credit fronting fee shall
be due and payable on each date of Issuance of a Letter of Credit.
(d) The Company shall pay to the Issuing Bank from time to
time on demand the normal issuance, presentation, amendment and other
processing fees, and other standard costs and charges, of the Issuing
Bank relating to letters of credit as from time to time in effect.
9 Uniform Customs and Practice. The Uniform Customs and
Practice for Documentary Credits as published by the International
Chamber of Commerce ("UCP") most recently at the time of issuance of
any Letter of Credit shall (unless otherwise expressly provided in
the Letters of Credit) apply to the Letters of Credit.
IV TAXES, YIELD PROTECTION AND ILLEGALITY
1 Taxes.
(a) Any and all payments by the Company to each Bank or
the Agent under this Agreement and any other Loan Document shall be
made free and clear of, and without deduction or withholding for
any Taxes. In addition, the Company shall pay all Other Taxes.
(b) The Company agrees to indemnify and hold harmless
each Bank and the Agent for the full amount of Taxes or Other Taxes
(including any Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this Section) paid by the Bank or the Agent
and any liability (including penalties, interest, additions to tax
and expenses) arising therefrom or with respect thereto, whether or
not such Taxes or Other Taxes were correctly or legally asserted.
Payment under this indemnification shall be made within 30 days after
the date the Bank or the Agent makes written demand therefor.
(c) If the Company shall be required by law to deduct or
withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder to any Bank or the Agent, then:
(i) the sum payable shall be increased as necessary so
that after making all required deductions and withholdings
(including deductions and withholdings applicable to additional
sums payable under this Section) such Bank or the Agent, as the
case may be, receives an amount equal to the sum it would have
received had no such deductions or withholdings been made;
(ii) the Company shall make such deductions and
withholdings;
(iii) the Company shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in
accordance with applicable law; and
(iv) the Company shall also pay to each Bank or the
Agent for the account of such Bank, at the time interest is paid,
all additional amounts which the respective Bank specifies as
necessary to preserve the after-tax yield the Bank would have
received if such Taxes or Other Taxes had not been imposed.
(d) Within 30 days after the date of any payment by the
Company of Taxes or Other Taxes, the Company shall furnish the Agent
the original or a certified copy of a receipt evidencing payment thereof,
or other evidence of payment satisfactory to the Agent.
(e) If the Company is required to pay additional amounts to
any Bank or the Agent pursuant to subsection (c) of this Section, then such
Bank shall use reasonable efforts (consistent with legal and regulatory
restrictions) to change the jurisdiction of its Lending Office so as to
eliminate any such additional payment by the Company which may thereafter
accrue, if such change in the judgment of such Bank is not otherwise
disadvantageous to such Bank.
(f) Each Bank agrees, upon written request of the Company,
to cooperate with and assist the Company in contesting any assessment
of Taxes and/or Other Taxes which the Company determines were incorrectly
or illegally asserted, subject to the following:
(1) All costs and expenses (including Attorney Costs)
will be at the expense of the Company. Such Bank may, from time to time,
require prepayment of the estimated costs and expenses (including Attorney
Costs) involved, without precluding final settling of accounts between the
Company and such Bank;
(2) Such Bank shall, at all times, retain full control of
the contest which shall be conducted as such Bank, in its sole
discretion, may direct; and
(3) Such Bank may decide, in its sole discretion, to
discontinue its cooperation with the Company in such contest after the
final administrative proceeding of such contest is concluded.
2 Illegality.
(a) If any 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 any Bank or its applicable Lending
Office to make Offshore Rate Loans, then, on notice thereof by the Bank
to the Company through the Agent, any obligation of that Bank to make
Offshore Rate Loans shall be suspended until the Bank notifies the
Agent and the Company that the circumstances giving rise to such
determination no longer exist.
(b) If a Bank determines that it is unlawful to maintain any
Offshore Rate Loan, the Company shall, upon its receipt of notice of such
fact and demand from such Bank (with a copy to the Agent), prepay in full
such Offshore Rate Loans of that Bank 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 such Offshore Rate Loans to such day, or immediately,
if the Bank may not lawfully continue to maintain such Offshore Rate Loan.
If the Company is required to so prepay any Offshore Rate Loan, then
concurrently with such prepayment, the Company shall, at its option and
subject to the other provisions of this Agreement, borrow from the affected
Bank, in the amount of such repayment, a Base Rate Loan or a CD Rate Loan.
(c) If the obligation of any Bank to make or maintain Offshore
Rate Loans has been so terminated or suspended, the Company may elect,
by giving notice to the Bank through the Agent that all Loans which would
otherwise be made by the Bank as Offshore Rate Loans shall be instead Base
Rate Loans or CD Rate Loans or a combination of such Types of Loans, at the
option of the Company and subject to the other provisions of this Agreement.
(d) Before giving any notice to the Agent under this Section,
the affected Bank shall designate a different Lending Office with respect
to its Offshore Rate Loans if such designation will avoid the need for
giving such notice or making such demand and will not, in the judgment of
the Bank, be illegal or otherwise disadvantageous to the Bank.
3 Increased Costs and Reduction of Return.
(a) If any Bank determines that, due to either (i) the
introduction of or any change (other than any change by way of imposition of
or increase in reserve requirements included in the calculation of the CD
Rate or the Offshore Rate or in respect of the assessment rate payable
by any Bank to the FDIC for insuring U.S. deposits) in or in the
interpretation of any law or regulation or (ii) the compliance by that 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 such Bank of agreeing to make or making, funding
or maintaining any CD Rate Loans or Offshore Rate Loans or participating
in Letters of Credit, or, in the case of the Issuing Bank, any increase
in the cost to the Issuing Bank of agreeing to issue, issuing, or
maintaining any Letter of Credit or of agreeing to make or making, funding,
or maintaining any unpaid drawing under any Letter of Credit, then the
Company shall be liable for, and shall from time to time, upon demand
(with a copy of such demand to be sent to the Agent), pay to the Agent for
the account of such Bank, additional amounts as are sufficient to compensate
such Bank for such increased costs.
(b) If any 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 its Lending Office) 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 such Bank's or such corporation's policies with respect
to capital adequacy and such Bank's desired return on capital) determines
that the amount of such capital is increased as a consequence of its
Commitment, loans, credits or obligations under this Agreement, then, upon
demand of such Bank to the Company through the Agent, 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 Funding Losses. The Company shall reimburse each Bank and
hold each 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 CD Rate Loan or 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 (including pursuant to Section 2.07) or
other payment (including after acceleration thereof) of an Offshore
Rate Loan or a CD 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 or CD 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 CD Rate Loans or from fees payable to terminate the deposits
from which such funds were obtained. For purposes of calculating
amounts payable by the Company to the Banks under this Section and
under subsection 4.03(a), (i) each Offshore Rate Loan made by a Bank
(and each related reserve, special deposit or similar requirement)
shall be conclusively deemed to have been funded at the Offshore Rate
for such Offshore Rate Loan by a matching deposit or other borrowing
in the interbank eurodollar market for a comparable amount and for a
comparable period, whether or not such Offshore Rate Loan is in fact
so funded, and (ii) each CD Rate Loan made by a Bank (and each related
reserve, special deposit or similar requirement) shall be conclusively
deemed to have been funded at the Certificate of Deposit Rate used in
determining the CD Rate for such CD Rate Loan by the issuance of its
certificate of deposit in a comparable amount and for a comparable
period, whether or not such CD Rate Loan is in fact so funded.
5 Inability to Determine Rates. If the Majority Banks determine
that for any reason adequate and reasonable means do not exist for
determining the Offshore Rate or the CD Rate for any requested Interest
Period with respect to a proposed Offshore Rate Loan or CD Rate Loan, or
that the Offshore Rate or the CD Rate applicable pursuant to subsection
2.09(a) for any requested Interest Period with respect to a proposed
Offshore Rate Loan or CD Rate Loan does not adequately and fairly reflect
the cost to such Banks of funding such Loan, the Agent will promptly so
notify the Company and each Bank. Thereafter, the obligation of the
Banks to make or maintain CD Rate Loans or Offshore Rate Loans, as the
case may be, hereunder shall be suspended until the Agent upon the
instruction of the Majority Banks 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 Banks 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 CD Rate Loans or
Offshore Rate Loans, as the case may be.
6 Reserves on Offshore Rate Loans. The Company shall pay to
each Bank, as long as such Bank shall be required under regulations of
the FRB to maintain reserves with respect to liabilities or assets consisting
of or including Eurocurrency funds or deposits (currently known as
"Eurocurrency liabilities"), additional costs on the unpaid principal amount
of each Offshore Rate Loan equal to the actual costs of such reserves
allocated to such Loan by the Bank (as determined by the Bank in good faith,
which determination shall be conclusive), payable on each date on which
interest is payable on such Loan, provided the Company shall have received
at least 15 days' prior written notice (with a copy to the Agent) of such
additional interest from the Bank. If a Bank fails to give notice 15 days
prior to the relevant Interest Payment Date, such additional interest shall
be payable 15 days from receipt of such notice.
7 Certificates of Banks. Any Bank claiming reimbursement or
compensation under this Article shall deliver to the Company (with a copy
to the Agent) a certificate setting forth in reasonable detail the amount
payable to the Bank hereunder and such certificate shall be conclusive and
binding on the Company in the absence of manifest error.
8 Survival. The agreements and obligations of the Company in this
Article shall survive the payment of all other Obligations.
V CONDITIONS PRECEDENT
1 Conditions of Initial Credit Extensions. The obligation of each
Bank to make its initial Credit Extension hereunder is subject to the
condition that the Agent have received on or before the Closing Date all
of the following, in form and substance satisfactory to the Agent and
each Bank, and in sufficient copies for each Bank:
(a) Credit Agreement. This Agreement executed by each party
thereto;
(b) Resolutions; Incumbency.
(1) 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 or an Assistant
Secretary of the Company; and
(2) A certificate of the Secretary or Assistant 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) Legal Opinion. An opinion of Collette & Erickson, outside
counsel to the Company and addressed to the Agent and the Banks, substantially
in the form of Exhibit D;
(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 reasonable Attorney Costs of
BofA to the extent invoiced prior to or on the Closing Date, plus such
additional amounts of Attorney Costs as shall constitute BofA'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 BofA);
including any such costs, fees and expenses arising under or referenced
in Sections 2.10 and 11.04;
(e) Certificate. A certificate signed by a Responsible
Officer or any authorized vice president of the Company, dated as of
the Closing Date, stating that:
(1) 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;
(2) no Default or Event of Default exists or would result
from the Credit Extension; and
(3) there has occurred since October 31, 1994, no event
or circumstance that has resulted or could reasonably be expected to
result in a Material Adverse Effect;
(f) Stock and Note Purchase Agreement. A certificate signed
by a Responsible Officer or any authorized vice president of the Company,
dated as of the Closing Date, stating that the Stock and Note Purchase
Agreement has been consummated.
(g) Convertible Preferred Stock. Evidence that the Convertible
Preferred Stock has been issued for a consideration of not less than
$10,000,000 and that such Convertible Preferred Stock provides for a
dividend rate of not more than 9% per annum;
(h) Amendment of Existing Credit Agreement; Payment of Loans
under Existing Credit Agreement. Evidence that BofA and the Company have
entered into an amendment of the Existing Credit Agreement substantially
in the form attached to this Agreement as Exhibit E, that principal and
interest of the Term Loan and the Revolving Loans and all other sums then
due BofA under the Existing Credit Agreement have been paid in full, and
that the "Effective Date" of such agreement and as defined therein has
occurred;
(i) Contracts. Copies of the Flex-SICPA Contract, the
SICPA/OCLI Joint Acquisition Agreement, and the Stock and Note Purchase
Agreement certified as true and complete as of the date of this Agreement
by the Secretary of the Company;
(j) Financial Statements. The Company's (i) pro forma opening
balance sheet after giving effect to the transactions contemplated by the
SICPA/OCLI Joint Acquisition Agreement, the Stock and Note Purchase Agreement,
the issuance of the Convertible Preferred Stock, and the financing
contemplated by this Agreement; and (ii) five year projections of balance
sheet, income statement, and cash flow statement, all such statements to
be pro forma statements as of March 31, 1995;
(k) Other Documents. Such other approvals, opinions, documents
or materials as the Agent or any Bank may request.
2 Conditions to All Credit Extensions. The obligation of each
Bank to make any Loan to be made by it (including its initial Loan) or to
continue or convert any Loan under Section 2.04 and the obligation of the
Issuing Bank to Issue any Letter of Credit (including the initial Letter of
Credit) is subject to the satisfaction of the following conditions precedent
on the relevant Borrowing Date, Conversion/Continuation Date, or Issuance
Date:
(a) Notice of Borrowing or Conversion/Continuation; Application.
The Agent shall have received (with, in the case of the initial Loan only,
a copy for each Bank) a Notice of Borrowing, a Notice of Conversion/
Continuation, or in the case of any Issuance of any Letter of Credit, the
Issuing Bank and the Agent shall have received an L/C application or L/C
amendment Application as required under Section 3.02;
(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 or Conversion/Continuation Date with
the same effect as if made on and as of such Borrowing Date or
Conversion/Continuation 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 continuation or conversion.
Each Notice of Borrowing, Notice of Conversion/Continuation, 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, Conversion/Continuation Date, or Issuance Date, as
applicable, that the conditions in Section 5.02 are satisfied.
VI REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Agent and each Bank
that:
1 Corporate Existence and Power. The Company and each
of 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.
2 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.
3 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, 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.
4 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.
5 Litigation. Except as specifically disclosed in 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 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).
7 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. The Company and each ERISA Affiliate has made all
required contributions to any Plan subject to Section 412 of the Code, and
no application for a funding waiver or an extension of any amortization
period pursuant to Section 412 of the Code has been made with respect to
any Plan.
(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 violation of the fiduciary responsibility rules
with respect to any Plan which has resulted or could reasonably be expected
to result in a Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected
to occur; (ii) no Pension Plan has any Unfunded Pension Liability;
(iii) neither the Company nor any ERISA Affiliate has incurred, or reasonably
expects 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); (iv) neither the Company nor any ERISA Affiliate has incurred,
or reasonably expects to incur, any liability (and no event has occurred
which, with the giving of notice under Section 4219 of ERISA, would result in
such liability) under Section 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (v) neither the Company nor any ERISA Affiliate
has engaged in a transaction that could be subject to Section 4069 or 4212(c)
of ERISA.
8 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 7.12 and Section 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.
9 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.
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.
11 Financial Condition.
(a) The unaudited consolidated financial statements of the Company
and its Subsidiaries dated January 31, 1995, and the related consolidated
statements of income or operations, shareholders' equity and cash flows
for the fiscal quarter ended on that date:
(1) 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;
(2) 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
(3) except as specifically disclosed in Schedule 6.11, 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 October 31, 1994, there has been no Material Adverse
Effect.
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, except as
specifically disclosed in Schedule 6.12, such Environmental Laws and
Environmental Claims could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
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.
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.
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. Except as specifically disclosed in Schedule 6.05, 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.
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.
17 Insurance. Except as specifically disclosed in Schedule 6.17, 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.
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 Banks 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.
VII AFFIRMATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any
Loan or other Obligation shall remain unpaid or unsatisfied, or any
Letter of Credit shall remain outstanding, unless the Majority Banks
waive compliance in writing:
1 Financial Statements. The Company shall deliver to the Agent,
in form and detail satisfactory to the Agent and the Majority Banks, with
sufficient copies for each Bank:
(a) (1) 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;
(1) as soon as available, but not later than 90 days after
the end of each fiscal year, a copy of the balance sheet of Flex Products as
at the end of such year and the related statements of income and cash flows
for such year, setting forth in each case in comparative form the figures for
the previous fiscal year, 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 Flex Products;
(b) (1) 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;
(1) 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 balance sheet of Flex Products as of the end of such quarter
and the related statements of income 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 Flex Products.
2 Certificates; Other Information. The Company shall furnish to
the Agent, with sufficient copies for each Bank:
(a) concurrently with the delivery of the financial statements
referred to in subsection 7.01(a)(1), 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)(1) and (b)(1), a Compliance Certificate
executed by a Responsible Officer;
(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;
(d) 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; and
(e) promptly, notice of each change in ownership of Flex Products
(including each change in the proportionate ownership of Flex Products by the
Company and/or SICPA Holding, S.A.);
(f) promptly, such additional information regarding the business,
financial or corporate affairs of the Company or any Subsidiary as the Agent,
at the request of any Bank, may from time to time request.
3 Notices. The Company shall promptly notify the Agent and each
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 the occurrence of any of the following events affecting
the Company or any ERISA Affiliate (but in no event more than 10 days after
such event), and deliver to the Agent and each Bank a copy of any notice
with respect to such event that is filed with a Governmental Authority and
any notice delivered by a Governmental Authority to the Company or any
ERISA Affiliate with respect to such event:
(1) an ERISA Event;
(2) a material increase in the Unfunded Pension Liability of
any Pension Plan;
(3) the adoption of, or the commencement of contributions to,
any Plan subject to Section 412 of the Code by the Company or any ERISA
Affiliate; or
(4) the adoption of any amendment to a Plan subject to
Section 412 of the Code, if such amendment results in a material
increase in contributions or Unfunded Pension Liability;
(d) of any material change in accounting policies or financial
reporting practices by the Company or any of its consolidated
Subsidiaries;
(e) each proposed amendment to the SICPA/OCLI Joint Acquisition
Agreement; and
(f) each proposed amendment to the Flex-SICPA Contract.
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.
4 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 8.04 and sales
of assets permitted by Section 8.03;
(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.
5 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.
6 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 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.
8 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.
9 Compliance with ERISA. The Company shall, and shall cause
each of its ERISA Affiliates to: (a) maintain each Plan in compliance in
all material respects with the applicable provisions of ERISA, the Code and
other federal or state law; (b) cause each Plan which is qualified under
Section 401(a) of the Code to maintain such qualification; and (c) make all
required contributions to any Plan subject to Section 412 of the Code.
10 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 Agent or any 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 Agent or any Bank may do any of the foregoing at the expense of
the Company at any time during normal business hours and without advance
notice.
11 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.
12 Use of Proceeds. The Company shall use the proceeds of the Loans
and the Letters of Credit for working capital, capital equipment, and other
general corporate purposes, (including, in its discretion without limitation,
the purchase of additional equity interests in Flex Products resulting in
the increase of the Company's ownership of Flex Products from 40% to 60%)
so long as such usage is not in contravention of any Requirement of Law or
of any Loan Document.
VIII NEGATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any
Loan or other Obligation shall remain unpaid or unsatisfied, or any
Letter of Credit shall remain outstanding, unless the Majority Banks
waive compliance in writing:
1 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) (1) 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;
(1) A deed of trust on the Company's property in Santa Rosa,
California, to secure financing up to $9,000,000 for the construction of
general purpose manufacturing and office buildings on such property;
(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; provided, that:
(1) 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 8.06 of this Agreement;
and
(2) 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; provided, that:
(1) 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;
(2) none of such Liens is extended to encumber or otherwise
relate to or cover any additional property of the Company or any
Subsidiary; and
(3) 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.
2 Restrictions on Liens Except for the Senior Note Agreement, the
Company shall not, and shall not suffer or permit any Subsidiary to, directly
or indirectly, enter into any Contractual Obligations that impairs the
ability of the Company to grant or prohibits the Company from granting any
Lien(s) in favor of the Agent and the Banks.
3 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, fully
depreciated, 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 twelve month period, 10% 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.
4 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.
5 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) 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 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;
(e) 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;
(f) 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;
(g) investments in publicly-traded shares in any open-end mutual
fund that invests solely in Investments of the type described in clause (c),
clause (d), clause (i) or clause (j) of this Section and has total assets
in excess of $1,000,000,000, provided that such Investments are classified
as current assets in accordance with GAAP;
(h) 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;
(i) 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;
(j) investments in Permitted Repurchase Agreements;
(k) investments in Dollar-denominated deposits with:
(1) 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
(2) a foreign branch of an Acceptable Bank;
(l) 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;
(m) 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;
(n) investments in federally insured money market deposit
accounts maintained with one or more Acceptable Banks;
(o) 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 8.05, 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;
(p) investments in existence on the Closing Date described
in Schedule 8.05;
(q) extensions of credit to and equity investments in Flex
Products (including the investments contemplated in the Stock and Note
Purchase Agreement); the aggregate amount of credit extended to Flex
Products shall be subject to the limits set forth in subsection 8.06(g);
(r) any other investment not otherwise permitted under clauses
(a) through (q) hereof and subject to the provisions of Section 8.06(h);
provided, that:
(1) 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 October 31,
1994 to and including the date such investment is made, plus (y) all
such investments made pursuant to this subsection held at such time by
the Company and its Subsidiaries would not exceed the sum of:
(A) $7,000,000, 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 after October 31, 1994
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 October 31, 1994 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
(2) immediately before, and after giving effect to, such
investment, no Default or Event of Default exists or would exist.
6 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; and
(c) Indebtedness existing on the Closing Date and set forth in
Schedule 8.06;
(d) Indebtedness incurred in connection with leases permitted
pursuant to Section 8.11;
(e) Indebtedness evidenced by the Senior Notes, not to exceed
$18,000,000 in aggregate principal amount;
(f) Indebtedness, not to exceed $9,000,000 in principal amount,
secured by the deed of trust described in Section 8.01(j)(2), for the
purpose of financing the construction of general purpose manufacturing and
office buildings on such property; provided that the weighted average life
of such Indebtedness is for a term not shorter than the remaining term of
the Term Loans or the remaining term of the revolving credit under this
Agreement, whichever is longer;
(g) (1) Indebtedness incurred by the Subsidiaries of the Company
(this Indebtedness may be guaranteed by the Company) other than Flex Products
in connection with unsecured facilities not to exceed at any one time an
aggregate principal amount of $4,500,000 (utilized and unutilized);
(1) Indebtedness incurred by Flex Products (including
Indebtedness to SICPA Holding, S.A. and the Company) not to exceed at any one
time an aggregate principal amount of $25,000,000 (utilized and unutilized);
of which up to $2,000,000 (utilized and unutilized) may be extended by third
parties in the form of credit extensions not included in subsection (j) of
this Section;
(h) Indebtedness secured by Liens permitted under Section 8.01(i)
in an aggregate amount which, together with the investments permitted under
Section 8.05(r) does not exceed the amount permitted for investments under
such Section.
(i) Indebtedness of the Company not covered in clauses (a)
through (h) of this Section not to exceed the amounts by which $30,000,000
exceeds the sum of (i) the then outstanding aggregate principal amount of
the Term Loans plus (ii) the aggregate of the Revolving Commitments, in
both cases as of the date of computation.
(j) Indebtedness of Flex Products to third persons which is
incurred in lieu of Indebtedness to SICPA Holding, S.A. pursuant to the
SICPA/OCLI Joint Acquisition Agreement, provided that:
(1) The terms and provisions of such Indebtedness meet the
requirements of the SICPA/OCLI Joint Acquisition Agreement applicable
to credit extensions made by SICPA Holding, S.A. and the Company
thereunder;
(2) The Company extends credit to Flex Products at the
same time pursuant to the terms of the SICPA/OCLI Joint Acquisition
Agreement;
(3) Such Indebtedness to third persons is at all times
guaranteed by SICPA Holding, S.A.; and
(4) If a breach or default occurs under the documents
evidencing such Indebtedness to third persons, payment of such
Indebtedness is made by SICPA Holding, S.A.
The provisions of this Section shall govern in the event of any
contradiction or ambiguity between the provisions of this Section and
any other provision of this Agreement or other Loan Document.
7 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 Use of Proceeds.
(a) The Company shall not, and shall not suffer or permit any
Subsidiary to, use any portion of the Loan proceeds or any Letter of Credit,
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.
(b) 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 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. Section 24, Seventh),
as amended.
9 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 as bona fide hedging transactions; and
(c) Contingent Obligations of the Company and its
Subsidiaries existing as of the Closing Date and listed in Schedule 8.09.
10 Joint Ventures. The Company shall not, and shall not suffer
or permit any Subsidiary to, enter into any Joint Venture, other than in
businesses and industries reasonably related to the Company's or such
Subsidiary's business or industries as of the date of this Agreement.
11 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 8.03(d);
(d) 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.
12 Restricted Payments.
(a) The Company shall not, and shall not suffer or permit any
Subsidiary to, declare or make any Restricted Payment unless:
(1) 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
October 31, 1994 to and including the date such Restricted Payment is
made, plus (y) all investments made pursuant to Subsection 8.05(r),
plus (z) all Indebtedness permitted under Section 8.06(h) held or owed
at such time by the Company and its Subsidiaries would not exceed the
sum of
(A) $7,000,000 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 after
October 31, 1994 and ending on and including the date such
Restricted Payment is declared or made, and
(2) 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) The Company shall not authorize a Distribution on any class
of its capital stock that is not payable within 90 days of authorization.
13 ERISA. The Company shall not, and shall not suffer or permit any
of its ERISA Affiliates to: (a) engage in a prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan
which has resulted or could reasonably be expected to result in liability of
the Company in an aggregate amount in excess of $1,000,000; or (b) engage
in a transaction that could be subject to Section 4069 or 4212(c) of ERISA.
14 Tangible Net Worth. The Company shall not permit, at any time and
on a consolidated basis, its Tangible Net Worth to be less than $40,000,000
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, 1994.
15 Leverage Ratio.
(a) The Company shall not permit, at any time and on a
consolidated basis, its ratio of Funded Debt to EBITDA:
(1) To exceed 3.0 to 1.0 for the period from the end of
its third fiscal quarter of 1995 through the end of its second fiscal
quarter of 1996; and
(2) To exceed 2.5 to 1.0 thereafter;
provided; that so long as Funded Debt is less than or equal to $60,000,000,
the Company shall not permit, at any time and on a consolidated basis,
its ratio of Funded Debt to EBITDA:
(A) To exceed 3.0 to 1.0 from the end of the Company's third
fiscal quarter of its 1995 fiscal year through its fourth fiscal quarter
of 1996; and
(B) To exceed 2.5 to 1.0 thereafter.
(b) In making the calculations required under this Section:
(1) The Company's Funded Debt will be measured as of the end
of each fiscal quarter of the Company and the Company's EBITDA will be
measured on a four quarter trailing basis; and
(2) Indebtedness of Flex Products covered by Section 8.06(j)
to the extent it is owed to SICPA Holding, S.A. or to a third person who
is making the credit extension in lieu of SICPA Holding, S.A. and the
interest expense allocated to such Indebtedness shall be excluded in
making the calculations required under this Section.
16 Fixed Charge Coverage Ratio.
(a) The Company shall not permit, at any time and on a
consolidated basis, its ratio of EBIT to net interest expense and current
portion of long term debt to be less than (a) 1.25 to 1.00 for the period
from the end of the third fiscal quarter of 1995 through the end of the
third fiscal quarter of 1996, and (b) 1.50 to 1.00 thereafter.
(b) In making the calculations required under this Section:
(1) EBIT and interest expense will be measured on a four
quarter trailing basis (including historical Flex Products EBIT and
interest expense) and current portion of long term debt will be
calculated on a four quarter prospective basis; and
(2) Indebtedness of Flex Products covered by Section
8.06(j) to the extent it is owed to SICPA Holding, S.A. or to a third
person who is making the credit extension in lieu of SICPA Holding, S.A.
and the interest expense allocated to such Indebtedness shall be
excluded in making the calculations required under this Section.
17 Current Ratio. The Company shall not permit, on a consolidated
basis, the ratio of its current assets to current liabilities to be less
than 1.2 to 1.0. Indebtedness of Flex Products covered by Section 8.06(j)
to the extent it is owed to SICPA Holding, S.A. or to a third person who
is making the credit extension in lieu of SICPA Holding, S.A. and the
interest expense allocated to such Indebtedness shall be excluded in making
the calculations required under this Section.
18 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.
19 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; except that the Company
shall be permitted to change to the Company's fiscal year the fiscal year
of Flex Products, Netra Corporation, or any Subsidiary acquired by the
Company after the date of this Agreement.
20 SICPA/OCLI Joint Acquisition Agreement; Flex-SICPA Contract.
(a) The Company shall not materially amend the SICPA/OCLI Joint
Acquisition Agreement and the Flex-SICPA Contract (the "SICPA Agreements")
without the prior written consent of the Majority Banks.
(b) (1) The Company shall give the Banks, through the Agent,
notice of each proposed material amendment to either or both SICPA Agreements
not less than 20 days prior to the date the Company proposes to enter into
any such amendment. Each notice under this subsection, to be effective, must
include a full and complete explanation (in form and detail acceptable to
the Majority Banks) of the proposed amendment covered by such notice and
the 20 day period commences on the day after which such notice is received
by the Agent.
(1) The Majority Banks shall, within such 20 day period,
advice the Agent whether the Majority Banks object to the amendment covered
by such notice. Failure of the Majority Banks to object within such 20 day
period shall be deemed a consent to the amendment by the Majority Banks.
(c) The Company may elect to give the Banks notice through the
Agent, describing a proposed amendment to either or both of the SICPA
Agreements. If the Company elects to give the Banks notice under this
subsection, the Banks shall have a period of five calendar days (but not
less than three Business Days) within which to advise the Company whether
the Banks consider such proposed amendment a material amendment. Failure
to respond within such period shall be deemed notice by the Banks that such
proposed amendment is not a material amendment, in which case the Company
need not comply with the provisions of subsection (b) of this Section. If
the Banks advise the Company that such proposed amendment is not a material
amendment, such advise shall bind the Banks. If the Banks advise the
Company that such proposed amendment is a material amendment, the Company
must comply with the provisions of subsection (b) of this Section.
Each notice under this subsection must, in order to be effective,
specifically refer to (y) this subsection and (z) the period within which
a response is required if the amendment described in the notice is to be
considered a material amendment.
(d) The Company understands that two of the fundamental premises
on which the Banks' decision to grant the credit provided in this Agreement
are the terms and provisions of the SICPA Agreements as in effect as of the
date of this Agreement, and therefore any material amendment to either or
both of the SICPA Agreements will affect these fundamental premises. Any
decision by any Bank to object to a proposed amendment to either or both
of these Agreements will be in light of such effect.
(e) The Company also understands that a failure to obtain the
consent of Majority Banks to a proposed amendment to either or both of the
SICPA Agreements is an Event of Default if the Majority Banks disagree with
the Company's determination that a proposed amendment is not material and
as a result notice of the proposed amendment required under this Section
is not given to the Agent.
IX EVENTS OF DEFAULT
1 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 of
any L/C Obligation, 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 Section 7.01, 7.02, 7.03,
7.12, 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 Agent or any
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
Material 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.
(1) Any involuntary Insolvency Proceeding is commenced or
filed against the Company or any Material 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 Material
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;
(2) the Company or any Material 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
(3) the Company or any Material 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.
(1) An ERISA Event shall occur with respect to a Pension
Plan or Multiemployer 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, Multiemployer Plan or the PBGC in an aggregate amount in excess of
$1,000,000;
(2) the aggregate amount of Unfunded Pension Liability
among all Pension Plans at any time exceeds $1,000,000; or
(3) the Company or any ERISA Affiliate shall fail to pay
when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under Section
4201 of ERISA under a Multiemployer Plan 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) Loss of Licenses. Any Governmental Authority revokes or
fails to renew any material license, permit or franchise of the Company or
any Subsidiary, or the Company or any Subsidiary for any reason loses any
material license, permit or franchise, or the Company or any Subsidiary
suffers the imposition of any restraining order, escrow, suspension or
impound of funds in connection with any proceeding (judicial or
administrative) with respect to any material license, permit or franchise;
provided, however, that to the extent any of the foregoing shall occur with
respect to a Subsidiary, it shall not constitute an Event of Default unless
such occurrence could reasonably be expected to have a Material Adverse
Effect; or
(m) Adverse Change. There occurs a Material Adverse Effect.
2 Remedies. If any Event of Default occurs, the Agent shall, at
the request of, or may, with the consent of, the Majority Banks:
(a) declare the commitment of each Bank to make Loans and any
obligation of the Issuing Bank to Issue Letters of Credit to be
terminated, whereupon such commitments and obligation 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 (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) to be immediately due and payable; and
(c) 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;
in all such cases without presentment, demand, protest or other notice
of any kind, all of which are hereby expressly waived by the Company;
and
(d) exercise on behalf of itself and the Banks all rights and
remedies available to it and the Banks 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 (1) of
subsection (g) upon the expiration of the 60-day period mentioned
therein), the obligation of each Bank to make Loans and any obligation
of the Issuing Bank 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 Agent, the Issuing Bank, or
any Bank.
3 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.
4 Certain Financial Covenant Defaults. In the event that, after
taking into account any extraordinary charge to earnings taken or to be
taken as of the end of any fiscal period of the Company (a "Charge"), and
if solely by virtue of such Charge, there would exist an Event of Default
due to the breach of any of Sections 8.13 through 8.17, as of such fiscal
period end date, such Event of Default shall be deemed to arise upon the
earlier of (a) the date after such fiscal period end date on which the
Company announces publicly it will take, is taking or has taken such Charge
(including an announcement in the form of a statement in a report filed
with the SEC) or, if such announcement is made prior to such fiscal period
end date, the date that is such fiscal period end date, and (b) the date
the Company delivers to the Agent its audited annual or unaudited quarterly
financial statements in respect of such fiscal period reflecting such Charge
as taken.
X THE AGENT
1 Appointment and Authorization.
(a) Each Bank hereby irrevocably (subject to Section 10.09)
appoints, designates and authorizes the Agent to take such action on its
behalf under the provisions of this Agreement and each other Loan Document
and to exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, the Agent shall not have any duties
or responsibilities, except those expressly set forth herein, nor shall the
Agent have or be deemed to have any fiduciary relationship with any Bank,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Agent.
(b) The Issuing Bank shall act on behalf of the Banks with
respect to any Letters of Credit Issued by it and the documents associated
therewith until such time and except for so long as the Agent may agree at
the request of the Majority Banks to act for such Issuing Bank with respect
thereto; provided, however, that the Issuing Bank shall have all of the
benefits and immunities (i) provided to the Agent in this Article with
respect to any acts taken or omissions suffered by the Issuing Bank in
connection with Letters of Credit Issued by it or proposed to be Issued
by it and the application and agreements for letters of credit pertaining
to the Letters of Credit as fully as if the term "Agent", as used in this
Article, included the Issuing Bank with respect to such acts or omissions,
and (ii) as additionally provided in this Agreement with respect to the
Issuing Bank.
2 Delegation of Duties. The Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent (but only in
its capacity as Agent) shall not be responsible for the negligence or
misconduct of any agent or attorney-in-fact that it selects with reasonable
care.
3 Liability of Agent. None of the Agent-Related Persons shall (i)
be liable for any action taken or omitted to be taken by any of them under
or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or
willful misconduct), or (ii) be responsible in any manner to any of the
Banks for any recital, statement, representation or warranty made by the
Company or any Subsidiary or Affiliate of the Company, or any officer
thereof, contained in this Agreement or in any other Loan Document, or in
any certificate, report, statement or other document referred to or provided
for in, or received by the Agent under or in connection with, this Agreement
or any other Loan Document, or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document,
or for any failure of the Company or any other party to any Loan Document
to perform its obligations hereunder or thereunder. No Agent-Related Person
shall be under any obligation to any Bank to ascertain or to inquire as to
the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of the Company or any of the Company's
Subsidiaries or Affiliates.
4 Reliance by Agent.
(a) The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper
Person or Persons, and upon advice and statements of legal counsel
(including counsel to the Company), independent accountants and other
experts selected by the Agent. The Agent shall be fully justified in failing
or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Majority Banks as it deems appropriate and, if it so requests, it shall first
be indemnified to its satisfaction by the Banks against any and all liability
and expense which may be incurred by it by reason of taking or continuing
to take any such action. The Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement or any other
Loan Document in accordance with a request or consent of the Majority Banks
and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 5.01, each Bank that has executed this Agreement shall
be deemed to have consented to, approved or accepted or to be satisfied
with, each document or other matter either sent by the Agent to such Bank
for consent, approval, acceptance or satisfaction, or required thereunder
to be consented to or approved by or acceptable or satisfactory to the Bank.
5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest and
fees required to be paid to the Agent for the account of the Banks, unless
the Agent shall have received written notice from a Bank or the Company
referring to this Agreement, describing such Default or Event of Default
and stating that such notice is a "notice of default". The Agent will
notify the Banks of its receipt of any such notice. The Agent shall take
such action with respect to such Default or Event of Default as may be
requested by the Majority Banks in accordance with Article IX; provided,
however, that unless and until the Agent has received any such request,
the Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default or Event of Default
as it shall deem advisable or in the best interest of the Banks.
6 Credit Decision. Each Bank acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and
that no act by the Agent hereinafter taken, including any review of the
affairs of the Company and its Subsidiaries, shall be deemed to constitute
any representation or warranty by any Agent-Related Person to any Bank.
Each Bank represents to the Agent that it has, independently and without
reliance upon any Agent-Related Person and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial
and other condition and creditworthiness of the Company and its Subsidiaries,
and all applicable bank regulatory laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement
and to extend credit to the Company hereunder. Each Bank also represents
that it will, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement
and the other Loan Documents, and to make such investigations as it deems
necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of the Company.
Except for notices, reports and other documents expressly herein required
to be furnished to the Banks by the Agent, the Agent shall not have any
duty or responsibility to provide any Bank with any credit or other
information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of the Company which may
come into the possession of any of the Agent-Related Persons.
7 Indemnification of Agent. Whether or not the transactions
contemplated hereby are consummated, the Banks shall indemnify upon demand
the Agent-Related Persons (to the extent not reimbursed by or on behalf of
the Company and without limiting the obligation of the Company to do so),
pro rata, from and against any and all Indemnified Liabilities; provided,
however, that no Bank shall be liable for the payment to the Agent-Related
Persons of any portion of such Indemnified Liabilities resulting solely
from such Person's gross negligence or willful misconduct. Without
limitation of the foregoing, each Bank shall reimburse the Agent upon demand
for its ratable share of any costs or out-of-pocket expenses (including
Attorney Costs) incurred by the Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, any
other Loan Document, or any document contemplated by or referred to herein,
to the extent that the Agent is not reimbursed for such expenses by or on
behalf of the Company. The undertaking in this Section shall survive the
payment of all Obligations hereunder and the resignation or replacement of
the Agent.
8 Agent in Individual Capacity. BofA and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking,
trust, financial advisory, underwriting or other business with the Company
and its Subsidiaries and Affiliates as though BofA were not the Agent or
the Issuing Bank hereunder and without notice to or consent of the Banks.
The Banks acknowledge that, pursuant to such activities, BofA or its
Affiliates may receive information regarding the Company or its Affiliates
(including information that may be subject to confidentiality obligations
in favor of the Company or such Subsidiary) and acknowledge that the Agent
shall be under no obligation to provide such information to them. With
respect to its Loans, BofA shall have the same rights and powers under this
Agreement as any other Bank and may exercise the same as though it were not
the Agent or the Issuing Bank, and the terms "Bank" and "Banks" include
BofA in its individual capacity.
9 Successor Agent. The Agent may, and at the request of the
Majority Banks shall, resign as Agent upon 30 days' notice to the Banks.
If the Agent resigns under this Agreement, the Majority Banks shall appoint
from among the Banks a successor agent for the Banks. If no successor agent
is appointed prior to the effective date of the resignation of the Agent,
the Agent may appoint, after consulting with the Banks and the Company, a
successor agent from among the Banks. Upon the acceptance of its appointment
as successor agent hereunder, such successor agent shall succeed to all the
rights, powers and duties of the retiring Agent and the term "Agent" shall
mean such successor agent and the retiring Agent's appointment, powers and
duties as Agent shall be terminated. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Article and Sections 11.04 and
11.05 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement. If no successor agent
has accepted appointment as Agent by the date which is 30 days following a
retiring Agent's notice of resignation, the retiring Agent's resignation
shall nevertheless thereupon become effective and the Banks shall perform
all of the duties of the Agent hereunder until such time, if any, as the
Majority Banks appoint a successor agent as provided for above.
Notwithstanding the foregoing, however, BofA may not be removed as the Agent
at the request of the Majority Banks unless BofA shall also simultaneously
be replaced as "Issuing Bank" hereunder pursuant to documentation in form
and substance reasonably satisfactory to BofA.
10 Withholding Tax.
(a) If any Bank is a "foreign corporation, partnership or trust"
within the meaning of the Code and such Bank claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code,
such Bank agrees with and in favor of the Agent, to deliver to the Agent:
(1) if such Bank claims an exemption from, or a reduction
of, withholding tax under a United States tax treaty, properly completed
IRS Forms 1001 and W-8 before the payment of any interest in the first
calendar year and before the payment of any interest in each third
succeeding calendar year during which interest may be paid under this
Agreement;
(2) if such Bank claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Bank, two properly completed and executed copies of IRS Form 4224
before the payment of any interest is due in the first taxable year
of such Bank and in each succeeding taxable year of such Bank during
which interest may be paid under this Agreement, and IRS Form W-9; and
(3) such other form or forms as may be required under the
Code or other laws of the United States as a condition to exemption from,
or reduction of, United States withholding tax.
Such Bank agrees to promptly notify the Agent of any change in
circumstances which would modify or render invalid any claimed
exemption or reduction.
(b) If any Bank claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001
and such Bank sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of the Company to such Bank, such
Bank agrees to notify the Agent of the percentage amount in which it is no
longer the beneficial owner of Obligations of the Company to such Bank.
To the extent of such percentage amount, the Agent will treat such Bank's
IRS Form 1001 as no longer valid.
(c) If any Bank claiming exemption from United States withholding
tax by filing IRS Form 4224 with the Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations
of the Company to such Bank, such Bank agrees to undertake sole responsibility
for complying with the withholding tax requirements imposed by Sections 1441
and 1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such
Bank an amount equivalent to the applicable withholding tax after taking
into account such reduction. If the forms or other documentation required
by subsection (a) of this Section are not delivered to the Agent, then the
Agent may withhold from any interest payment to such Bank not providing such
forms or other documentation an amount equivalent to the applicable
withholding tax.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Agent did not properly
withhold tax from amounts paid to or for the account of any Bank (because
the appropriate form was not delivered, was not properly executed, or because
such Bank failed to notify the Agent of a change in circumstances which
rendered the exemption from, or reduction of, withholding tax ineffective,
or for any other reason) such Bank shall indemnify the Agent fully for all
amounts paid, directly or indirectly, by the Agent as tax or otherwise,
including penalties and interest, and including any taxes imposed by any
jurisdiction on the amounts payable to the Agent under this Section,
together with all costs and expenses (including Attorney Costs). The
obligation of the Banks under this subsection shall survive the payment of
all Obligations and the resignation or replacement of the Agent.
XI MISCELLANEOUS
1 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 Majority Banks (or by the Agent
at the written request of the Majority Banks) and the Company and
acknowledged by the Agent, and then any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for
which given; provided, however, that no such waiver, amendment, or consent
shall, unless in writing and signed by all the Banks and the Company and
acknowledged by the Agent, do any of the following:
(a) increase or extend the Commitment of any Bank (or reinstate
any Commitment terminated pursuant to Section 9.02);
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, (including mandatory
prepayments) interest, fees or other amounts due to the Banks (or any of
them) hereunder or under any other Loan Document;
(c) reduce the principal of, or the rate of interest specified
herein on any Loan, or (subject to clause (ii) below) any fees or other
amounts payable hereunder or under any other Loan Document;
(d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which is required for the Banks or any
of them to take any action hereunder; or
(e) amend this Section, or Section 2.14, or any provision
herein providing for consent or other action by all Banks;
and, provided further, that (i) no amendment, waiver or consent shall,
unless in writing and signed by the Issuing Bank in addition to the
Majority Banks or all the Banks, as the case may be, affect the rights
or duties of the Issuing Bank under this Agreement or any L/C-Related
Document relating to any Letter of Credit Issued or to be Issued by
it, (ii) no amendment, waiver or consent shall, unless in writing and
signed by the Agent in addition to the Majority Banks or all the
Banks, as the case may be, affect the rights or duties of the Agent
under this Agreement or any other Loan Document, and (iii) the Fee
Letter may be amended, or rights or privileges thereunder waived, in a
writing executed by the parties thereto.
2 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 Schedule 11.02, and (ii) shall be
followed promptly by delivery of a hard copy original thereof) and mailed,
faxed or delivered, to the address or facsimile number specified for
notices on Schedule 11.02; or, as directed to the Company or the Agent,
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 Agent.
(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 X shall not be effective until
actually received by the Agent, and notices pursuant to Article III to the
Issuing Bank shall not be effective until actually received by the Issuing
Bank at the address specified for the "Issuing Bank" on the applicable
signature page hereof.
(c) Any agreement of the Agent and the Banks herein to receive
certain notices by telephone or facsimile is solely for the convenience and
at the request of the Company. The Agent and the Banks 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 Agent and the Banks shall not have
any liability to the Company or other Person on account of any action taken
or not taken by the Agent or the Banks in reliance upon such telephonic or
facsimile notice. The obligation of the Company to repay the Loans and L/C
Obligations shall not be affected in any way or to any extent by any failure
by the Agent and the Banks to receive written confirmation of any telephonic
or facsimile notice or the receipt by the Agent and the Banks of a
confirmation which is at variance with the terms understood by the Agent and
the Banks to be contained in the telephonic or facsimile notice.
3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agent or any 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.
4 Costs and Expenses. The Company shall:
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse the Arranger and BofA (including in its
capacity as Agent and Issuing Bank) within five Business Days after demand
(subject to subsection 5.01(d)) for all costs and expenses incurred by BofA
(including in its capacity as Agent and Issuing Bank) in connection with
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, including
reasonable Attorney Costs incurred by BofA (including in its capacity as
Agent and Issuing Bank) with respect thereto; and
(b) pay or reimburse the Agent, the Arranger and each Bank
within five Business Days after demand (subject to subsection 5.01(d)) for
all costs and expenses (including Attorney Costs) incurred by them in
connection with the enforcement, attempted enforcement, or preservation of
any rights or remedies under this Agreement or any other Loan Document
during the existence of an Event of Default or after acceleration of the
Loans (including in connection with any "workout" or restructuring regarding
the Loans, and including in any Insolvency Proceeding or appellate
proceeding).
5 Company Indemnification. Whether or not the transactions
contemplated hereby are consummated, the Company shall indemnify and hold
the Agent-Related Persons, and each Bank and each of its respective 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, the termination of the Letters of Credit, and the
termination, resignation or replacement of the Agent or replacement of any
Bank) 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 Letters of Credit
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.
6 Payments Set Aside. To the extent that the Company makes a
payment to the Agent or the Banks, or the Agent or the Banks exercise their
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 Agent or such Bank in its discretion) to be repaid to
a trustee, receiver or any other party, in connection with any Insolvency
Proceeding or otherwise, then (a) 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, and (b) each Bank severally
agrees to pay to the Agent upon demand its pro rata share of any amount so
recovered from or repaid by the Agent.
7 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 Agent and each Bank.
8 Assignments, Participations, etc.
(a) Any Bank may, with the prior written consent of the Company
at all times other than during the existence of an Event of Default and the
Agent and the Issuing Bank, which consent of the Company shall not be
unreasonably withheld, at any time assign and delegate to one or more
Eligible Assignees (provided that no written consent of the Company, the
Agent, or the Issuing Bank shall be required in connection with any
assignment and delegation by a Bank to an Eligible assignee that is an
Affiliate of such Bank) (each an "Assignee") all, or any ratable part of
all, of the Loans, the Commitment, the L/C Obligations and the other rights
and obligations of such Bank hereunder, in a minimum amount of $5,000,000
(or the remainder of its Loans and Commitment, if less than $5,000,000);
provided, however, that the Company and the Agent may continue to deal
solely and directly with the assignor Bank in connection with the interest
so assigned to an Assignee until (i) 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 and the Agent
by such Bank and the Assignee; (ii) such Bank and its Assignee shall have
delivered to the Company and the Agent an Assignment and Acceptance in the
form of Exhibit F ("Assignment and Acceptance") and (iii) the assignor Bank
has paid to the Agent a processing fee in the amount of $3,000.
(b) From and after the date that the Agent notifies the assignor
Bank that it has received (and that the Agent and the Issuing Bank have
provided their consents with respect to) an executed Assignment and
Acceptance and payment of the above-referenced processing fee, (i) the
Assignee thereunder shall be a party hereto and, to the extent that rights
and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Bank
under the Loan Documents, and (ii) the assignor Bank shall, to the extent
that rights and obligations hereunder and under the other Loan Documents
have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under the
Loan Documents.
(c) Immediately upon each Assignee's making its processing fee
payment under the Assignment and Acceptance, this Agreement shall be deemed
to be amended to the extent, but only to the extent, necessary to reflect
the addition of the Assignee and the resulting adjustment of the Commitment
arising therefrom. The Commitment allocated to each Assignee shall reduce
such Commitment of the assigning Bank pro tanto.
(d) Any Bank may at any time sell to one or more commercial
banks or other Persons not Affiliates of the Company (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; provided, however, that (i) the originating
Bank's obligations under this Agreement shall remain unchanged, (ii) the
originating Bank shall remain solely responsible for the performance of
such obligations, (iii) the Company, the Issuing Bank, and the Agent shall
continue to deal solely and directly with the originating Bank in connection
with the originating Bank's rights and obligations under this Agreement and
the other Loan Documents, and (iv) no Bank shall transfer or grant any
participating interest under which the Participant has rights to approve any
amendment to, or any consent or waiver with respect to, this Agreement or
any other Loan Document, except to the extent such amendment, consent or
waiver would require unanimous consent of the Banks as described in the
first proviso to Section 11.01. In the case of any such participation,
the Participant shall be entitled to the benefit of Sections 4.01, 4.03,
and 11.05 as though it were also a Bank hereunder, and if amounts outstanding
under this Agreement are due and unpaid, or shall have been declared or
shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall be deemed to have the right of set-off in
respect of its participating interest in amounts owing under this Agreement
to the same extent as if the amount of its participating interest were owing
directly to it as a Bank under this Agreement.
(e) Notwithstanding any other provision in this Agreement, any
Bank may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the FRB or U.S.
Treasury Regulation 31 CFR Section 203.14, and such Federal Reserve Bank
may enforce such pledge or security interest in any manner permitted under
applicable law.
9 Confidentiality. Each Bank agrees to take and to cause its
Affiliates 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 or any Subsidiary, or by the Agent on such Company's or Subsidiary's
behalf, under this Agreement or any other Loan Document, and neither it nor
any of its Affiliates shall use any such information other than in connection
with or in enforcement of this Agreement and the other Loan Documents or in
connection with other business now or hereafter existing or contemplated with
the Company or any Subsidiary; 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 any 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 such 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 Agent,
any Bank or their respective 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 such 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 Banks hereunder;
(H) as to any Bank or its Affiliate, as expressly permitted under the terms
of any other document or agreement regarding confidentiality to which the
Company or any Subsidiary is party or is deemed party with such Bank or such
Affiliate; and (I) to its Affiliates.
10 Set-off. In addition to any rights and remedies of the Banks
provided by law, if an Event of Default exists or the Loans have been
accelerated, each 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, such Bank
to or for the credit or the account of the Company against any and all
Obligations owing to such Bank, now or hereafter existing, irrespective of
whether or not the Agent or such Bank shall have made demand under this
Agreement or any Loan Document and although such Obligations may be
contingent or unmatured. Each Bank agrees promptly to notify the Company
and the Agent after any such set-off and application made by such Bank;
provided, however, that the failure to give such notice shall not affect
the validity of such set-off and application.
11 Notification of Addresses, Lending Offices, Etc. Each Bank
shall notify the Agent in writing of any changes in the address to which
notices to the Bank should be directed, of addresses of any Lending Office,
of payment instructions in respect of all payments to be made to it
hereunder and of such other administrative information as the Agent shall
reasonably request.
12 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.
13 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.
14 No Third Parties Benefited. This Agreement is made and entered
into for the sole protection and legal benefit of the Company, the Banks,
the Agent and the Agent-Related Persons, 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.
15 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
AGENT AND THE BANKS 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, THE AGENT AND THE BANKS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE
COMPANY, THE AGENT AND THE BANKS 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, THE AGENT AND THE BANKS EACH WAIVE
PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE
MADE BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW.
16 Waiver of Jury Trial. THE COMPANY, THE BANKS AND THE AGENT 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 ANY AGENT-RELATED PERSON, PARTICIPANT OR
ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.
THE COMPANY, THE BANKS AND THE AGENT 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.
17 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the Company,
the Banks, the Issuing Bank and the Agent, and supersedes all prior or
contemporaneous agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof and thereof.
18 Automatic Debit 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 Agent, BofA or the Arranger under
the Loan Documents, the Company hereby irrevocably authorizes BofA to debit
any deposit account of the Company with BofA 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 BofA's sole
discretion) and such amount not debited shall be deemed to be unpaid. No
such debit under this Section shall be deemed a set-off.
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:
Name:
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
By:
Name:
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Issuing Bank
By:
Name:
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a Bank
By:
Name:
Title:
CREDIT AGREEMENT
DATED AS OF MAY 24, 1995
AMONG
OPTICAL COATING LABORATORY, INC.
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
AS AGENT,
AND
LETTER OF CREDIT ISSUING BANK
AND
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
ARRANGED BY
BA SECURITIES, INC.
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS 1
1.01 Certain Defined Terms 1
1.02 Other Interpretive Provisions 21
1.03 Accounting Principles 22
ARTICLE II
THE CREDITS 22
2.01 Amounts and Terms of Commitments 22
(a) The Term Credit 22
(b) The Revolving Credit. 22
2.02 Loan Accounts 23
2.03 Procedure for Borrowing. 23
2.04 Conversion and Continuation Elections 24
2.05 Voluntary Termination or Reduction of
Revolving Commitments 26
2.06 Optional Prepayments 26
2.07 Mandatory Prepayments of Loans, Mandatory
Commitment Reductions 27
2.08 Repayment 27
(a) The Term Credit 27
(b) The Revolving Credit 27
2.09 Interest 28
2.10 Fees 28
(a) Fees 28
(b) Commitment Fees 29
2.11 Computation of Fees and Interest 30
2.12 Payments by the Company 30
2.13 Payments by the Banks to the Agent 31
2.14 Sharing of Payments, Etc. 31
III
THE LETTERS OF CREDIT 32
3.01 The Letter of Credit Subfacility. 32
3.02 Issuance, Amendment and Renewal of Letters
of Credit 33
3.03 Risk Participations, Drawings and
Reimbursements 35
3.04 Repayment of Participations 37
3.05 Role of the Issuing Bank 38
3.06 Obligations Absolute 39
3.07 Cash Collateral Pledge 40
3.08 Letter of Credit Fees 40
3.09 Uniform Customs and Practice 41
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY 41
4.01 Taxes. 41
4.02 Illegality 43
4.03 Increased Costs and Reduction of Return 44
4.04 Funding Losses 45
4.05 Inability to Determine Rates 45
4.06 Reserves on Offshore Rate Loans 46
4.07 Certificates of Banks 46
4.08 Survival 46
ARTICLE V
CONDITIONS PRECEDENT 46
5.01 Conditions of Initial Credit Extensions 46
(a) Credit Agreement 47
(b) Resolutions; Incumbency 47
(c) Legal Opinion 47
(d) Payment of Fees 47
(e) Certificate 47
(f) Stock and Note Purchase Agreement 47
(g) Convertible Preferred Stock 47
(h) Amendment of Existing Credit Agreement;
Payment of Loans under Existing
Credit Agreement 48
(i) Contracts. 48
(j) Financial Statements 48
(k) Other Documents 48
5.02 Conditions to All Credit Extensions 48
(a) Notice of Borrowing or Conversion/
Continuation; Application 48
(b) Continuation of Representations and
Warranties 48
(c) No Existing Default 49
ARTICLE VI
REPRESENTATIONS AND WARRANTIES 49
6.01 Corporate Existence and Power 49
6.02 Corporate Authorization; No Contravention 49
6.03 Governmental Authorization 50
6.04 Binding Effect 50
6.05 Litigation 50
6.06 No Default 50
6.07 ERISA Compliance 51
6.08 Use of Proceeds; Margin Regulations 51
6.09 Title to Properties 51
6.10 Taxes 52
6.11 Financial Condition 52
6.12 Environmental Matters 52
6.13 Regulated Entities 52
6.14 No Burdensome Restrictions 53
6.15 Copyrights, Patents, Trademarks and
Licenses, etc. 53
6.16 Subsidiaries 53
6.17 Insurance 53
6.18 Full Disclosure 53
ARTICLE VII
AFFIRMATIVE COVENANTS 54
7.01 Financial Statements 54
7.02 Certificates; Other Information 55
7.03 Notices 56
7.04 Preservation of Corporate Existence, Etc 57
7.05 Maintenance of Property 57
7.06 Insurance 57
7.07 Payment of Obligations 57
7.08 Compliance with Laws 58
7.09 Compliance with ERISA 58
7.10 Inspection of Property and Books and Records 58
7.11 Environmental Laws 58
7.12 Use of Proceeds 58
ARTICLE VIII
NEGATIVE COVENANTS 59
8.01 Limitation on Liens 59
8.02 Restrictions on Liens 61
8.03 Disposition of Assets 61
8.04 Consolidations and Mergers 62
8.05 Loans and Investments 62
8.06 Limitation on Indebtedness 65
8.07 Transactions with Affiliates 66
8.08 Use of Proceeds 66
8.09 Contingent Obligations 67
8.10 Joint Ventures 67
8.11 Lease Obligations 67
8.12 Restricted Payments 68
8.13 ERISA 68
8.14 Tangible Net Worth 68
8.15 Leverage Ratio 69
8.16 Fixed Charge Coverage Ratio 69
8.17 Current Ratio 70
8.18 Change in Business 70
8.19 Accounting Changes 70
8.20 SICPA/OCLI Joint Acquisition Agreement;
Flex-SICPA Contract 70
ARTICLE IX
EVENTS OF DEFAULT 71
9.01 Event of Default 71
(a) Non-Payment 71
(b) Representation or Warranty 72
(c) Specific Defaults 72
(d) Other Defaults 72
(e) Cross-Default 72
(f) Insolvency; Voluntary Proceedings 72
(g) Involuntary Proceedings 73
(h) ERISA 73
(i) Monetary Judgments 73
(j) Non-Monetary Judgments 74
(k) Change of Control 74
(l) Loss of Licenses 74
(m) Adverse Change 74
9.02 Remedies 74
9.03 Rights Not Exclusive 75
9.04 Certain Financial Covenant Defaults 75
ARTICLE X
THE AGENT 75
10.01 Appointment and Authorization 75
10.02 Delegation of Duties 76
10.03 Liability of Agent 76
10.04 Reliance by Agent 77
10.05 Notice of Default 77
10.06 Credit Decision 77
10.07 Indemnification of Agent 78
10.08 Agent in Individual Capacity 78
10.09 Successor Agent 79
10.10 Withholding Tax 79
ARTICLE XI
MISCELLANEOUS 81
11.01 Amendments and Waivers 81
11.02 Notices 82
11.03 No Waiver; Cumulative Remedies 83
11.04 Costs and Expenses 83
11.05 Company Indemnification 83
11.06 Payments Set Aside 84
11.07 Successors and Assigns 84
11.08 Assignments, Participations, etc. 84
11.09 Confidentiality 86
11.10 Set-off 86
11.11 Notification of Addresses, Lending
Offices, Etc. 87
11.12 Counterparts 87
11.13 Severability 87
11.14 No Third Parties Benefited 87
11.15 Governing Law and Jurisdiction 87
11.16 Waiver of Jury Trial 88
11.17 Entire Agreement 88
11.18 Automatic Debit of Fees 88
SCHEDULES
Schedule 2.01 Commitments
Schedule 6.05 Litigation
Schedule 6.11 Permitted Liabilities
Schedule 6.12 Environmental Matters
Schedule 6.16 Subsidiaries and Minority Interests
Schedule 6.17 Insurance Matters
Schedule 8.01 Permitted Liens
Schedule 8.05 Certain Investments
Schedule 8.06 Certain Indebtedness
Schedule 8.09 Contingent Obligations
Schedule 10.02 Lending Offices; Addresses for Notices
EXHIBITS
Exhibit A Form of Compliance Certificate
Exhibit B Form of Notice of Borrowing
Exhibit C Form of Notice of Conversion/Continuation
Exhibit D Form of Legal Opinion of Company's Counsel
Exhibit E Form of Amendment to Credit Agreement
Exhibit F Form of Assignment and Acceptance
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
This SECOND AMENDED AND RESTATED CREDIT AGREEMENT is entered
into as of May 24, 1995, 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
Amended and Restated Credit Agreement dated as of June 30, 1994, (as
in effect as of the Effective Date of this Agreement, 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 as set forth and subject to the
terms and conditions hereof.
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained herein, the parties agree that
from and after the date of this Agreement, the Credit Agreement is
amended and restated in its entirety to provide as follows:
I DEFINITIONS
1 Certain Defined Terms. The following terms have the following
meanings:
"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, membership interests, by contract, or otherwise.
"Agreement" means this Second Amended and Restated Credit
Agreement.
"Assignee" has the meaning specified in subsection
11.08(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.
"Bank-Related Persons" means the Bank and its Affiliates
and the officers, directors, employees, agents and attorneys-in-
fact of the Bank and its Affiliates.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act
of 1978 (11 U.S.C. Section101, 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.
"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 6,000,000) 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, renewal or other amendment 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.
"Business Day" means any day other than a Saturday, Sunday
or other day on which commercial banks in New York, New York or
San Francisco, California are authorized or required by law to
close.
"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.
"Code" means the Internal Revenue Code of 1986, and
regulations promulgated thereunder.
"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.
"Dollars", "dollars" and "$" each mean lawful money of the
United States.
"Effective Date" means the date on which all conditions
precedent set forth in Section 5.01 are satisfied or waived by
the Bank (or, in the case of subsection 5.01(c), waived by the
Person entitled to receive such payment).
"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.
"ERISA" means the Employee Retirement Income Security Act
of 1974, and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or
not incorporated) under common control with the Company within
the meaning of Section 414(b) or (c) of the Code (and Sections
414(m) and (o) of the Code for purposes of provisions relating
to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to
a Pension Plan; (b) a withdrawal by the Company or any ERISA
Affiliate 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) a complete or partial withdrawal by the
Company or any ERISA Affiliate from a Multiemployer Plan or
notification that a Multiemployer Plan is in reorganization;
(d) 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 or Multiemployer Plan;
(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 or Multiemployer Plan; or (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 any ERISA Affiliate.
"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.
"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.
"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.
"FRB" means the Board of Governors of the Federal Reserve
System, and any Governmental Authority succeeding to any of its
principal functions.
"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.
"Indemnified Liabilities" has the meaning specified in
Section 11.05.
"Indemnified Person" has the meaning specified in Section
11.05.
"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.
"IRS" means the Internal Revenue Service, and any
Governmental Authority succeeding to any of its principal
functions under the Code.
"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 Borrowing" means an extension of credit resulting
from a drawing under the Letter of Credit which shall not have
been reimbursed on the date when made.
"L/C-Related Documents" means the Letter of Credit, the
letter of credit application(s) relating to the Letter of
Credit, the L/C Amendment Applications and any other document
relating to the Letter of Credit.
"Letter of Credit" means that certain letter of credit
#119323 in the face amount of $1,483,628 issued by the Bank for
the account of the Company on April 29, 1987, as the same may
be renewed or otherwise amended.
"Loan" means an extension of credit by the Bank to the
Company under the Credit Agreement prior to the Effective Date
of this Agreement.
"Loan Documents" means this Agreement, the L/C-Related
Documents, the Birckhahn Guaranty Documents, 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 or any Subsidiary 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 or any Subsidiary of any
Loan Document.
"Material Subsidiary" means Flex Products and, at any
time, any other Subsidiary of the Company having at such time
either (i) total (gross) revenues for the preceding four fiscal
quarter period of 10% or more of the total (gross) revenues of
the Company on a consolidated basis, or (ii) total assets, as
of the last day of the preceding fiscal quarter, having a net
book value of 10% or more of the net book value of the
Company's consolidated total assets, in each case based upon
the Company's most recent annual or quarterly financial
statements delivered to the Bank under Section 7.01.
"Multiemployer Plan" means a "multiemployer plan", within
the meaning of Section 4001(a)(3) of ERISA, to which the
Company or any ERISA Affiliate makes, is making, or is
obligated to make contributions or, during the preceding three
calendar years, has made, or been obligated to make,
contributions.
"New Syndicate Agreement" means the credit agreement
providing for a $30,000,000 credit facility dated as of May 24,
1995 between the Company, the Bank as Issuing Bank and Agent
for the Banks, and the financial institutions party to such
agreement.
"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.
"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
11.08(b).
"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 plan years.
"Person" means an individual, partnership, corporation,
limited liability company, 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.
"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.
"SEC" means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal
functions.
"Subsidiary" of a Person means any corporation,
association, partnership, limited liability company, joint
venture or other business entity of which more than 50% of the
voting stock, membership interests 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.
"Termination Date" means the earlier to occur of:
(a) June 30, 1997; and
(b) the date on which the Bank's commitment to
continue the Letter of Credit and the Birckhahn Guaranty
terminates in accordance with the provisions of this Agreement.
"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.
"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.
2 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.
(c) (1) The term "documents" includes any and all
instruments, documents, agreements, certificates, indentures, notices
and other writings, however evidenced.
(1) The term "including" is not limiting and means
"including without limitation."
(2) 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."
(d) 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.
(e) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation
of this Agreement.
(f) This Agreement and other Loan Documents may use
several different limitations, tests or measurements to regulate the
same or similar matters. All such limitations, tests and measurements
are cumulative and shall each be performed in accordance with their terms.
(g) This Agreement and the other Loan Documents are the
result of negotiations among and have been reviewed by counsel to the
Bank, the Company and are the products of all parties. Accordingly,
they shall not be construed against the Bank merely because of the
Bank's involvement in their preparation.
3 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.
II THE CREDIT
1 Repayment of Loans.
(a) On the Effective Date of this Agreement:
(1) The Bank's obligations to make Loans to the Company
under the Credit Agreement and this Agreement shall terminate without
necessity of further act of either or both the Bank and the Company.
(2) Principal and interest of all Loans outstanding as
of the opening of business on the Effective Date shall be due and payable
by close of business on the Effective Date without necessity of further
act of either or both the Bank and the Company.
2 Computation of Interest and Fees, Default Interest.
(a) All sums due under this Agreement and any Loan Document
which are not paid when due shall accrue interest, payable on demand,
at a rate per annum equal to the Base Rate plus three percentage points.
(b) All computations of interest and fees under this
Agreement shall be made on the basis of a year of 360 days and actual
days elapsed (which results in more interest being paid than if computed
on the basis of a 365-day year).
3 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,
California time) on the date specified herein. Any payment received
by the Bank later than 3:00 p.m. (San Francisco, California time)
shall be deemed to have been received on the following Business Day
and any applicable interest or fee shall continue to accrue. 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.
III THE LETTER OF CREDIT; THE BIRCKHAHN GUARANTY
1 The Letter of Credit.
(a) On the Effective Date of this Agreement, the Bank's
obligation to issue letters of credit shall terminate without necessity
of further act of either or both the Bank and the Company. On the
terms and conditions set forth herein, and notwithstanding the preceding
sentence, the Bank agrees to continue the Letter of Credit and, at the
request of the Company, to amend the Letter of Credit in accordance with
Section 3.02 and to honor drafts under the Letter of Credit; provided,
that the Bank shall not be obligated to amend the Letter of Credit if
as of the date request for or the date of the proposed amendment there
shall exist any outstanding L/C Borrowing.
(b) The Bank shall be under no obligation to amend the Letter
of Credit if:
(1) any order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to enjoin or
restrain the Bank from amending the 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 amending letters of credit generally
or the Letter of Credit in particular or shall impose upon the Bank
with respect to the Letter of Credit any restriction, reserve or
capital requirement (for which the Bank is not otherwise compensated
hereunder) not in effect on the Effective Date, or shall impose upon
the Bank any unreimbursed loss, cost or expense which was not
applicable on the Effective Date and which the Bank in good faith
deems material to it;
(2) one or more of the applicable conditions contained
in Article V is not then satisfied;
(3) the expiry date of the Letter of Credit as proposed
to be amended, is (A) more than 360 days after the current expiration
date or (B) after the Termination Date;
(4) the Letter of Credit as proposed to be amended will
not provide for drafts, or is not otherwise in form and substance
acceptable to the Bank, or the amendment of the Letter of Credit
shall violate any applicable policies of the Bank;
(5) the 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;
(6) the Letter of Credit is to be denominated in a
currency other than Dollars; or
(7) the amount of the Letter of Credit is to be increased.
2 Amendment of the Letter of Credit.
(a) From time to time while the Letter of Credit is
outstanding and prior to the 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 the Letter of Credit.
Each such request for amendment of the 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:
(1) the proposed date of amendment of the Letter of
Credit (which shall be a Business Day);
(2) the nature of the proposed amendment; and
(3) such other matters as the Bank may require.
The Bank shall be under no obligation to amend the 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 the Letter of Credit does not
accept the proposed amendment to the Letter of Credit.
(b) While the Letter of Credit is outstanding and prior to
the 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 the Letter of Credit. Each such request for
renewal of the 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:
(1) the proposed date of notification of renewal of the
Letter of Credit (which shall be a Business Day);
(2) the revised expiry date of the Letter of Credit; and
(3) such other matters as the Bank may require.
The Bank shall be under no obligation so to renew the Letter of
Credit if:
(A) the Bank would have no obligation at such time
to issue or amend the Letter of Credit in its renewed form under
the terms of this Agreement; or
(B) the beneficiary of the Letter of Credit does not
accept the proposed renewal of the Letter of Credit.
If the 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.
(c) 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 the Letter of Credit to be a date not later than the Termination Date.
(d) This Agreement shall control in the event of any
conflict with any L/C-Related Document (other than any Letter of Credit).
3 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 the Letter of Credit.
4 Drawings and Reimbursements. In the event of any request
for a drawing under the 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, California time),
on each date that any amount is paid by the Bank under the 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 the Letter of Credit by 11:00 a.m. (San Francisco, California
time) on such date, 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 without demand on the date when
made (together with interest) and shall bear interest at a rate per
annum equal to the Base Rate plus three percentage points.
5 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 three percentage points.
6 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.
7 Cash Collateral Pledge. Upon the request of the Bank,
(i) if, as of the Termination Date, the Letter 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 within two Business Days provide
to the Bank cash collateral in an amount equal to the sum of (a) the
aggregate undrawn amount of the Letter of Credit plus the outstanding
L/C Borrowings plus (b) the Birckhahn Guaranty Outstanding Amount.
8 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 Letter of Credit and the
Birckhahn Guaranty equal to 1.25% per annum of the average daily
maximum amount available to be drawn on the Letter of Credit and the
Birckhahn Guaranty, computed on a quarterly basis in arrears on the
last Business Day of each calendar quarter based on the outstanding
amount of the Letter of Credit 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 either or
both of the Letter of Credit and the Birckhahn Guaranty are outstanding,
commencing on the first such quarterly date to occur after the date
of this Agreement through the Termination Date (or such later date
upon which the Letter of Credit or the Birckhahn Guaranty shall expire),
with the final payment to be made on the 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.
IV TAXES AND YIELD PROTECTION
1 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 applicable 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.
2 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, or maintaining any 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 under this Agreement, the Letter of Credit, the Birckhahn
Guaranty, or other 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.
3 Survival. The agreements and obligations of the Company
in this Article IV shall survive the payment of all other Obligations.
V CONDITIONS PRECEDENT
1 Conditions to Effective Date. This Agreement shall be
effective on the date (the "Effective Date") in which the Bank has
received all of the following, in form and substance satisfactory to
the Bank:
(a) Credit Agreement. This Agreement executed by the Company;
(b) Resolutions; Incumbency.
(1) Copies of the resolutions of the board of
directors of the Company authorizing the transactions contemplated
hereby, certified as of the Effective Date by the Secretary of the
Company; and
(2) 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) 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 Effective Date, together with Attorney Costs of
the Bank to the extent invoiced prior to or on the Effective 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 Section 11.04;
(d) Certificate. A certificate signed by a Responsible
Officer or any authorized vice president of the Company, dated as of
the Effective Date, stating that:
(1) 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;
(2) no Default or Event of Default exists or would
result from the execution and delivery of this Agreement;
(3) there has occurred since October 31, 1994, no
event or circumstance that has resulted or could reasonably be
expected to result in a Material Adverse Effect.
(e) Legal Opinion. An opinion of Collette & Erickson,
counsel to the Company and addressed to the Bank, substantially in the
form of Exhibit D; and
(f) Other Documents. Such other approvals, opinions,
documents or materials as the Bank may reasonably request.
2 Conditions to Amendment of the Letter of Credit. The
obligation of the Bank to amend the Letter of Credit is subject to
the satisfaction of the following conditions precedent on the relevant
amendment date:
(a) L/C Amendment/Application. The Bank shall have
received a properly completed 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 amendment date with the same effect as if made on and
as of such amendment 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 amendment.
Each 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 amendment date, that the
conditions in Section 5.02 are satisfied.
VI REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Bank that:
1 Corporate Existence and Power. The Company and each of
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.
2 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.
3 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, 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.
4 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.
5 Litigation. Except as specifically disclosed in 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 No Default. No Default or Event of Default exists or
would result from the incurring of any Obligations by the Company.
As of the Effective 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 Effective Date, create an Event of
Default under subsection 9.01(e).
7 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. The Company and each ERISA
Affiliate has made all required contributions to any Plan subject to
Section 412 of the Code, and no application for a funding waiver or
an extension of any amortization period pursuant to Section 412 of
the Code has been made with respect to any Plan.
(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 violation of the fiduciary
responsibility rules with respect to any Plan which has resulted or
could reasonably be expected to result in a Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably
expected to occur; (ii) no Pension Plan has any Unfunded Pension
Liability; (iii) neither the Company nor any ERISA Affiliate has
incurred, or reasonably expects 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); (iv) neither the
Company nor any ERISA Affiliate has incurred, or reasonably expects
to incur, any liability (and no event has occurred which, with the
giving of notice under Section 4219 of ERISA, would result in such
liability) under Section 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (v) neither the Company nor any ERISA Affiliate
has engaged in a transaction that could be subject to Section 4069 or
4212(c) of ERISA.
8 Margin Regulations. 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.
9 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 Effective Date, the property of the Company
and its Subsidiaries is subject to no Liens, other than Permitted Liens.
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.
11 Financial Condition.
(a) The unaudited consolidated financial statement of
the Company and its Subsidiaries dated January 31, 1995, and the related
consolidated statements of income or operations, shareholders' equity and
cash flows for the fiscal quarter ended on that date:
(1) 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;
(2) 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
(3) except as specifically disclosed in Schedule 6.11,
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 October 31, 1994, there has been no Material
Adverse Effect.
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, except as specifically disclosed in Schedule
6.12, such Environmental Laws and Environmental Claims could not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
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.
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.
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. Except as specifically disclosed
in Schedule 6.05, 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.
16 Subsidiaries. As of the Effective 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.
17 Insurance. Except as specifically disclosed in Schedule
6.17, 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.
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 Effective 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.
VII SPECIAL COVENANTS
If the New Syndicate Agreement terminates or if the Bank's Pro
Rata Share (as defined in the New Syndicate Agreement) in the credit
facilities under the New Syndicate Agreement is 50% or less, the
Company agrees that from and after of the first of such events to
occur, and so long as the Letter of Credit or the Birckhahn Guaranty
shall remain outstanding or any Obligation shall remain unpaid or
unsatisfied, unless the Bank waives compliance in writing, the
Company shall comply with each covenant contained in the articles
titled "Affirmative Covenants" and Negative Covenants" of the New
Syndicate Agreement as in effect immediately prior to the earlier of
such termination or reduction of the Pro Rata Share to 50% or less.
Each reference in each covenant to the "Agent", the "Majority
Banks", the "Banks", etc. shall be deemed a reference to the Bank.
VIII NEGATIVE COVENANTS
So long as the Letter of Credit or the Birckhahn Guaranty shall
remain outstanding, or any Obligation shall remain unpaid or
unsatisfied, unless the Bank waives compliance in writing:
1 Use of Proceeds.
(a) The Company shall not, and shall not suffer or permit
any Subsidiary to, use any portion of the Letter of Credit or the
Birckhahn Guaranty, 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.
(b) The Company shall not, directly or indirectly, use any
portion of the Letter of Credit or the Birckhahn Guaranty (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. Section 24, Seventh), as amended.
IX EVENTS OF DEFAULT
1 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 due to the Bank under
its reimbursement obligation for the Letter of Credit or the Birckhahn
Guaranty, 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) Other Defaults.
(1) The Company fails to perform or observe any term,
covenant, or agreement contained in the affirmative or negative covenant
articles of the New Syndicate Agreement when required to comply with such
articles pursuant to Article VII of this Agreement and, under the terms of
the New Syndicate Agreement, such breach is an Event of Default (as defined
therein) and no grace period is provided therein; or
(2) The Company fails to perform or observe any other
term or covenant contained in this Agreement or any other Loan Document
(including any other term or covenant contained in the New Syndicate
Agreement when required to comply with the affirmative and negative
covenants of the New Syndicate Agreement and not falling within clause
(1) of this subsection) 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
(d) 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, including but not limited
to the New Syndicate Agreement) 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
(e) Insolvency; Voluntary Proceedings. The Company or any
Material 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
(f) Involuntary Proceedings.
(1) Any involuntary Insolvency Proceeding is commenced
or filed against the Company or any Material 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 Material
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;
(2) the Company or any Material 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
(3) the Company or any Material 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
(g) ERISA.
(1) An ERISA Event shall occur with respect to a
Pension Plan or Multiemployer 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, Multiemployer Plan or the PBGC
in an aggregate amount in excess of $1,000,000;
(2) the aggregate amount of Unfunded Pension Liability
among all Pension Plans at any time exceeds $1,000,000; or
(3) the Company or any ERISA Affiliate shall fail to
pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under
Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount
in excess of $1,000,000; or
(h) 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
(i) 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
(j) 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
(k) Loss of Licenses. Any Governmental Authority revokes
or fails to renew any material license, permit or franchise of the Company
or any Subsidiary, or the Company or any Subsidiary for any reason loses
any material license, permit or franchise, or the Company or any Subsidiary
suffers the imposition of any restraining order, escrow, suspension or
impound of funds in connection with any proceeding (judicial or
administrative) with respect to any material license, permit or franchise;
provided, however, that to the extent any of the foregoing shall occur with
respect to a Subsidiary, it shall not constitute an Event of Default unless
such occurrence could reasonably be expected to have a Material Adverse
Effect; or
(l) Adverse Change. There occurs a Material Adverse Effect.
2 Remedies. If any Event of Default occurs, the Bank may:
(a) declare the commitment of the Bank to continue the Letter of Credit
and/or the Birckhahn Guaranty 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 the Letter of Credit and/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 the Letter
of Credit or the Birckhahn Guaranty shall have been drawn upon, as
applicable) to be immediately due and payable, 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), any obligation of the Bank to
continue the Letter of Credit shall automatically terminate and all
amounts as aforesaid shall automatically become due and payable without
further act of the Bank.
3 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.
X DELIBERATELY LEFT BLANK
XI
MISCELLANEOUS
1 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.
2 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 Schedule 11.02, and (ii) shall be
followed promptly by delivery of a hard copy original thereof) and mailed,
faxed or delivered, to the address or facsimile number specified for notices
on Schedule 11.02; 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 party, 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 X shall not
be effective until actually received by the Bank, and notices pursuant to
Article III to the Bank shall not be effective until actually received by
the Bank at the address specified for such notices on the applicable
signature page hereof.
(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 sums due under this Agreement or
any Loan Document 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.
3 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.
4 Costs and Expenses. The Company shall:
(a) 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(c)) for all costs and expenses incurred
by the Bank in connection with 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, including reasonable Attorney Costs incurred by the Bank
with respect thereto; and
(b) pay or reimburse the Bank within five Business Days after
demand (subject to subsection 5.01(c)) for all costs and expenses
(including Attorney Costs) incurred by them in connection with the
enforcement, attempted enforcement, or preservation of any rights or
remedies under this Agreement or any other Loan Document during the
existence of an Event of Default or after acceleration of the Company's
obligations under this Agreement or any other Loan Document (including
in connection with any "workout" or restructuring regarding the Letter
of Credit, the Birckhahn Guaranty, this Agreement or any other Loan
Document and including in any Insolvency Proceeding or appellate proceeding).
5 Company Indemnification. Whether or not the transactions
contemplated hereby are consummated, the Company shall indemnify and hold
the Bank-Related Persons, and the Bank and each of its respective 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 sums due under this Agreement, the termination of the Letter
of Credit and the Birckhahn Guaranty) 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 Letter of Credit or the Birckhahn Guaranty 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.
6 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.
7 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.
8 Assignments, Participations, etc.
(a) The Bank may at any time, with the prior consent of the
Company (other than any time after occurrence of an Event of Default),
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 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
interests of the Bank (the "originating Bank") hereunder and under
the other Loan Documents.
(c) [deliberately left blank]
(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 Section203.15, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted
under applicable law.
9 Confidentiality. The Bank agrees to take and to cause its
Affiliates 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 or any Subsidiary, under this Agreement or any other Loan Document,
and neither it nor any of its Affiliates shall use any such information
other than in connection with or in enforcement of this Agreement and the
other Loan Documents or in connection with other business now or hereafter
existing or contemplated with the Company or any Subsidiary; 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 any
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 such 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; (H) as to the Bank or its Affiliate, as expressly permitted
under the terms of any other document or agreement regarding confidentiality
to which the Company or any Subsidiary is party or is deemed party with the
Bank or such Affiliate; and (I) to its Affiliates.
10 Set-off. In addition to any rights and remedies of the Bank
provided by law, if an Event of Default exists or the obligations of the
Company to the Bank under this Agreement or any other Loan Document 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,
such Bank to or for the credit or the account of the Company against any
and all Obligations owing to such 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.
11 [Deliberately left blank].
12 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.
13 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.
14 No Third Parties Benefited. This Agreement is made and
entered into for the sole protection and legal benefit of the Company
and 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.
15 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, THE COMPANY
AND THE BANK EACH 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.
16 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 ANY BANK-RELATED PERSON,
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.
17 Deliberately Left Blank.
18 Automatic Debit 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 set-off.
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:
Name:
Title:
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:
Name:
Title: Vice President
NOTICES:
Bank of America National Trust and
Savings Association
555 California St., 41st Floor
San Francisco, California 94104
Attention: Richard E. Bryson
Vice President, #3838
Telephone: (415) 622-
Facsimile: (415) 622-4585
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
DATED AS OF MAY 24, 1995
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 8
1.03 Accounting Principles and Periods 9
ARTICLE II
THE CREDIT 9
2.01 Repayment of Loans 9
2.02 Computation of Interest and Fees,
Default Interest 9
2.03 Payments by the Company 9
ARTICLE III
THE LETTER OF CREDIT; THE BIRCKHAHN GUARANTY 10
3.01 The Letter of Credit. 10
3.02 Amendment of the Letter of Credit 11
3.03 Uniform Customs and Practice 12
3.04 Drawings and Reimbursements 12
3.05 The Birckhahn Guaranty 13
3.06 Obligations Absolute 13
3.07 Cash Collateral Pledge 13
3.08 Letter of Credit and Birckhahn Guaranty Fees 13
ARTICLE IV
TAXES AND YIELD PROTECTION 14
4.01 Taxes. 14
4.02 Increased Costs and Reduction of Return 15
4.03 Survival 15
ARTICLE V
CONDITIONS PRECEDENT 16
5.01 Conditions to Effective Date 16
(a) Credit Agreement 16
(b) Resolutions; Incumbency 16
(c) Payment of Fees 16
(d) Certificate 16
(e) Legal Opinion 16
(f) Other Documents 17
5.02 Conditions to Amendment of the
Letter of Credit 17
(a) L/C Amendment/Application 17
(b) Continuation of Representations
and Warranties 17
(c) No Existing Default 17
ARTICLE VI
REPRESENTATIONS AND WARRANTIES 17
6.01 Corporate Existence and Power 17
6.02 Corporate Authorization; No Contravention 18
6.03 Governmental Authorization 18
6.04 Binding Effect 18
6.05 Litigation 18
6.06 No Default 19
6.07 ERISA Compliance 19
6.08 Margin Regulations 20
6.09 Title to Properties 20
6.10 Taxes 20
6.11 Financial Condition 20
6.12 Environmental Matters 20
6.13 Regulated Entities 21
6.14 No Burdensome Restrictions 21
6.15 Copyrights, Patents, Trademarks
and Licenses, etc. 21
6.16 Subsidiaries 21
6.17 Insurance 21
6.18 Full Disclosure 21
ARTICLE VII
SPECIAL COVENANTS 22
ARTICLE VIII
NEGATIVE COVENANTS 22
8.01 Use of Proceeds 22
ARTICLE IX
EVENTS OF DEFAULT 23
9.01 Event of Default 23
(a) Non-Payment 23
(b) Representation or Warranty 23
(c) Other Defaults 23
(d) Cross-Default 24
(e) Insolvency; Voluntary Proceedings 24
(f) Involuntary Proceedings 24
(g) ERISA 25
(h) Monetary Judgments 25
(i) Non-Monetary Judgments 25
(j) Change of Control 25
(k) Loss of Licenses 25
(l) Adverse Change 26
9.02 Remedies 26
9.03 Rights Not Exclusive 26
ARTICLE X
DELIBERATELY LEFT BLANK
ARTICLE XI
MISCELLANEOUS 26
11.01 Amendments and Waivers 26
11.02 Notices 27
11.03 No Waiver; Cumulative Remedies 27
11.04 Costs and Expenses 28
11.05 Company Indemnification 28
11.06 Payments Set Aside 29
11.07 Successors and Assigns 29
11.08 Assignments, Participations, etc. 29
11.09 Confidentiality 29
11.10 Set-off 30
11.11 [Deliberately left blank] 30
11.12 Counterparts 30
11.13 Severability 31
11.14 No Third Parties Benefited 31
11.15 Governing Law and Jurisdiction 31
11.16 Waiver of Jury Trial 31
11.17 Deliberately Left Blank 32
11.18 Automatic Debit of Fees 32
EXHIBIT 11.
OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
July 31, July 31,
1995 1994 1995 1994
PRIMARY SHARES:
Average common shares outstanding9,134 8,976 9,044 8,974
Common equivalent shares outstanding 423 40 277 54
9,557 9,016 9,321 9,028
Net earnings $2,131 $ 910 $5,953 $3,359
Dividend on preferred stock (222) (222)
Net earnings applicable to
common stock $1,909 $ 910 $5,731 $3,359
Net earnings per common and common
equivalent share, primary$ .20 $ .10 $ .61 $ .37
FULLY DILUTED SHARES:
Average common shares outstanding9,134 8,976 9,044 8,974
Common equivalent shares outstanding 554 115 364 84
Potential dilution of convertible
preferred stock 1,068 356
10,756 9,091 9,764 9,058
Net earnings applicable to common stock$1,909 $ 910 $5,731 $3,359
Dividend on preferred stock 222 222
Net earnings for calculating fully
diluted earnings per share $2,131 $ 910 $5,953 $3,359
Net earnings per common and common
equivalent share, fully diluted$ .20$ .10$ .61$ .37
Fully diluted earnings per common and common equivalent share are the same as
primary earnings per share and are, therefore, not separately presented in the
consolidated statements of earnings.
- 1 -
F:\DOC\0197\01973701.DOC, 9/8/95, 11:39 AM
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, 1995 and 1994 as indicated
in our report (which report makes reference to the report of other
accountants), dated August 17, 1995. 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, 1995,
is incorporated by reference in Registration Statements No. 33-41050,
No. 33-26271, No. 33-12276, No. 33-48808, No. 33-65132, and
No. 33-60891 on Forms S-8 and Registration Statement No. 2-97482 and
No. 33-61177 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
San Francisco, California
September 8, 1995
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<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> JUL-31-1995
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11,362
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