<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 12, 1998
------------
PIMCO ADVISORS HOLDINGS L.P.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in charter)
Delaware 001-9597 13-3412614
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
800 Newport Center Drive, Newport Beach, California 92660
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (949) 717-7022
--------------------------
Inapplicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed, since last report.)
Page 1 of 162 Pages
Exhibit Index is on Page 4
<PAGE>
Item 5. Other Events.
------------
On May 12, 1998 PIMCO Advisors L.P., a Delaware limited partnership ("PIMCO
Advisors") of which PIMCO Advisors Holdings L.P., a Delaware limited partnership
(the "Registrant") holds an approximate 43 percent interest, entered into
$500,000,000 credit facility consisting of (i) a Long-Term Credit Agreement,
dated as of May 12, 1998 (the "Long-Term Credit Agreement") among PIMCO
Advisors, NationsBank, N.A. ("Administrative Agent"), Deutsche Bank A.G., New
York Branch ("Documentation Agent") Union Bank of California, N.A. and CitiBank,
N.A. ("Co-Agents") and the financial institutions whose names are set forth on
the signature pages thereof, and (ii) a Short-Term Credit Agreement, dated as of
May 12, 1998 (the "Short-Term Credit Agreement") among PIMCO Advisors, the
Administrative Agent, the Documentation Agent, the Co-Agents and the financial
institutions whose names are set forth on the signature pages thereto.
The Long-Term Credit Agreement provides for a $250,000,000 five year
revolving credit facility. The Short-Term Credit Agreement provides for a
$250,000,000 364-day revolving credit facility. Loans under the credit
facilities may be Eurodollar Rate Loans or Alternative Base Rate Loans.
Eurodollar Rate Loans bear interest at the rate per annum at the London
interbank offered rate for deposits in dollars at approximately 11:00 a.m.
(London time) two days prior to the first day of the interest period, plus a
margin ranging, with respect to the Long-Term Credit Agreement, 0.25% to 0.425%,
and with respect to the Short-Term Credit Agreement, from 0.27% to 0.45%,
depending on the amount of leverage maintained by PIMCO Advisors. Alternative
Base Rate Loans bear interest at the higher of (i) the prime rate of the
Administrative Agent, or (ii) the Federal Funds Effective Rate, plus one-half of
one percent.
PIMCO Advisors intends to use proceeds of loans for acquisitions of other
businesses and general working capital purposes. At this time PIMCO Advisors
has not drawn funds under the credit facilities.
2
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
------------------------------------------------------------------
Exhibits.
--------
Exhibit
Number Description
------ -----------
10.1 Long-Term Credit Agreement dated as of May 12, 1998 among PIMCO
Advisors L.P., NationsBank, N.A., Deutsche Bank, N.A., New York
Branch, Union Bank of California, N.A., CitiBank, N.A. and the
financial institutions whose names are set forth on the signature
pages thereto.
10.2 Short-Term Credit Agreement dated as of May 12, 1998 among PIMCO
Advisors L.P., NationsBank, N.A., Deutsche Bank, N.A., New York
Branch, Union Bank of California, N.A., CitiBank, N.A. and the
financial institutions whose names are set forth on the signature
pages thereto.
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 hereunto duly authorized.
Date: May 14, 1998 PIMCO ADVISORS HOLDINGS L.P.
/s/ RICHARD M. WEIL
--------------------------------------
Richard M. Weil, Senior Vice President
3
<PAGE>
INDEX TO EXHIBITS
Sequentially
Numbered
Exhibit Description Page
- -------------- ----------- ------------
10.1 Long-Term Credit Agreement dated as 5
of May 12, 1998 among PIMCO
Advisors L.P., NationsBank, N.A.,
Deutsche Bank, N.A., Union Bank of
California, N.A. and the financial
institutions whose names are set forth
on the signature pages thereto.
10.2 Short-Term Credit Agreement dated as 85
of May 12, 1998 among PIMCO
Advisors L.P., NationsBank, N.A.,
Deutsche Bank, N.A., Union Bank of
California, N.A. and the financial
institutions whose names are set forth
on the signature pages thereto.
4
<PAGE>
EXHIBIT 10.1
LONG-TERM CREDIT AGREEMENT
Dated as of May 12, 1998
Among
PIMCO ADVISORS L.P.
as Borrower,
NATIONSBANK, N.A.
as Administrative Agent,
DEUTSCHE BANK AG, NEW YORK BRANCH
as Documentation Agent,
UNION BANK OF CALIFORNIA, N.A. and CITIBANK, N.A.
as Co-Agents
And
THE FINANCIAL INSTITUTIONS WHOSE NAMES
ARE SET FORTH ON THE SIGNATURE PAGES HEREOF
as Banks
5
<PAGE>
LONG-TERM CREDIT AGREEMENT
--------------------------
THIS LONG-TERM CREDIT AGREEMENT, dated as of May 12, 1998 (as amended,
supplemented or otherwise modified from time to time, this "Agreement"), among
PIMCO ADVISORS L.P., a Delaware limited partnership (together with its permitted
successors, the "Borrower"), NATIONSBANK, N.A., as Administrative Agent for the
Banks (in such capacity, the "Administrative Agent"), DEUTSCHE BANK AG, NEW YORK
BRANCH as Documentation Agent (the "Documentation Agent") UNION BANK OF
CALIFORNIA, N.A. and CITIBANK, N.A. as Co-Agents (the "Co-Agents") and the
financial institutions whose names are set forth on the signature pages hereof
as Banks (collectively, the "Banks");
W I T N E S S E T H:
-------------------
WHEREAS, the Borrower desires to obtain from the Banks credit facilities
consisting of a $250,000,000 five-year revolving credit facility under this
Agreement and a $250,000,000 364-day revolving credit facility under the Short-
Term Credit Agreement for the purposes provided below;
WHEREAS, the Banks are willing to provide such credit facilities to the
Borrower upon the terms and conditions set forth in this Agreement and in the
Short-Term Credit Agreement; and
WHEREAS, the Administrative Agent is willing to act as Administrative
Agent for the Banks in connection with such credit facilities as provided in
this Agreement and in the Short-Term Credit Agreement;
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
and agreements set forth herein below, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties, the parties hereto do hereby agree as follows:
1 DEFINITIONS AND RULES OF INTERPRETATION.
1.1 Definitions. The following terms shall have the meanings set
-----------
forth in this Section 1.1 or elsewhere in the provisions of this Agreement
referred to below:
Acquisition. Any acquisition by the Borrower or any Subsidiary of a
-----------
business or assets (subject to liabilities) constituting a business primarily
engaged in the investment management or investment advisory business, whether by
way of a purchase (for cash, securities or other assets) of Equity Securities or
assets (subject to liabilities) or a merger or consolidation, so long as (a) if
the Borrower is a party to any such merger or consolidation, the Borrower is the
survivor, and (b) immediately following such acquisition, such business or
assets are owned by the Borrower or any existing or newly created or acquired
Subsidiary.
Administrative Agent. NationsBank, N.A. acting as Administrative Agent
--------------------
for the Banks, or any successor to the rights and obligations of the
Administrative Agent under this Agreement.
6
<PAGE>
Administrative Agent's Head Office. The Administrative Agent's head
----------------------------------
office located at 901 Main Street, Dallas, Texas, 75202, or at such other
location as the Administrative Agent may designate in a written notice to the
other parties hereto from time to time.
Affiliate. As defined under Rule 144(a) under the Securities Act of
---------
1933, as amended.
Agreement. This Agreement, including the Schedules and Exhibits hereto.
---------
Alternative Base Rate. The higher of (a) the annual rate of interest
---------------------
announced from time to time by the Administrative Agent at the Administrative
Agent's Head Office as its "prime rate" and (b) the Federal Funds Effective Rate
plus one-half of one percent (0.50%). Changes in the Alternative Base Rate
shall become effective automatically without notice to any party.
Alternative Base Rate Loans. Loans bearing interest calculated by
---------------------------
reference to the Alternative Base Rate.
Arranging Agents. NationsBanc Montgomery Securities, Inc. and Deutsche
----------------
Morgan Grenfell Inc.
Assets Under Management. With respect to any Person, the dollar value
-----------------------
of assets owned by other Persons that are managed by such first Person pursuant
to a management contract to which such first Person is a party, and, with
respect to the Borrower, "Assets Under Management" refers to the Assets Under
Management of the Borrower and its Subsidiaries, taken as a whole.
Assignment and Acceptance. As defined in Section 16.1.
-------------------------
Banks. The financial institutions whose names are set forth on the
-----
signature pages hereof as Banks, and any other Person who becomes an assignee of
any rights and obligations of a Bank pursuant to Section 16.1.
Borrower. As defined in the preamble hereto.
--------
Borrower Partnership Agreement. The Agreement of Limited Partnership of
------------------------------
the Borrower, dated as of December 31, 1997, among PGP and any limited partner
who may be admitted as such, as such agreement may be amended or modified from
time to time in compliance with the provisions of this Agreement.
Business. With respect to any Person, the assets, properties, business,
--------
operations and condition (financial and otherwise) of such Person.
Business Day. Any day on which banking institutions in Dallas, Texas,
------------
New York, New York, and Los Angeles, California are open for the transaction of
banking business and, in the case of Eurodollar Rate Loans, also a day which is
a Eurodollar Business Day.
Capitalized Leases. Leases under which the Borrower or any of its
------------------
Subsidiaries is the lessee or obligor, the discounted future rental payment
obligations under which are required to be capitalized on the balance sheet of
the lessee or obligor in accordance with GAAP.
7
<PAGE>
CERCLA. As defined in Section 5.17.
------
Change of Control. Any of the following:
-----------------
(a) Any amendment, modification or revocation of the Written Action
other than such amendments, modifications which could not
reasonably be expected to reduce the authority delegated to the
Management Board or alter the manner of election of its members;
(b) Pacific Life Insurance Co. shall cease to own, directly or
indirectly, any general partnership interests in the Borrower;
or
(c) PIMCO Partners LLC, a California limited liability company and
Pacific Life Insurance Co., collectively, shall cease to
control, either directly or indirectly, a majority of the
general partnership interests in the Borrower.
Change of Control Date. Any date upon which a Change of Control occurs.
----------------------
Closing Date. The date on which each of the conditions set forth in
------------
Section 8 is satisfied or waived.
Code. The Internal Revenue Code of 1986, as amended.
----
Commitment. The several obligations of the Banks to advance to the
----------
Borrower pursuant to the terms hereunder the sum of up to $250,000,000, in the
aggregate at any time outstanding in accordance with their respective Commitment
Percentages, as such amounts may be reduced from time to time in accordance with
the terms hereof.
Commitment Percentage. With respect to each Bank, the percentage set
---------------------
forth on Schedule 1 hereto as such Bank's percentage of the aggregate Commitment
----------
of all of the Banks.
Consolidated or consolidated. With reference to any term defined
------------ ------------
herein, shall mean that term as applied to the accounts of the Borrower and its
Subsidiaries, consolidated in accordance with GAAP.
Consolidated Funded Debt. At any time of determination, the aggregate
------------------------
outstanding principal amount of Funded Debt of the Borrower and its Subsidiaries
at such time determined on a consolidated basis in accordance with GAAP.
Consolidated Net Income (or Loss). The consolidated net income (or
----------------------- -------
loss) of the Borrower (excluding therefrom any income attributable to minority
interests in another Entity), determined in accordance with GAAP, but excluding
earnings resulting from any reappraisal, revaluation, or write-up of assets.
Contracts. Contracts, agreements, mortgages, leases, bonds, promissory
---------
notes, debentures, guaranties, Capitalized Leases, indentures, pledges, powers
of attorney, proxies, trusts, franchises, or other instruments or obligations.
8
<PAGE>
Conversion Request. A notice given by the Borrower to the
------------------
Administrative Agent of the Borrower's election to convert or continue a Loan in
accordance with Section 2.7.
Default. Any Event of Default, and any of the events specified in
-------
Section 10.1 hereof regardless of whether there shall have occurred any passage
of time or giving of notice (or both) that would be necessary in order to
constitute such event an Event of Default.
Distribution. With respect to any Entity, the declaration or payment
------------
(without duplication) of any dividend or distribution on or in respect of any
Equity Securities of such Entity, other than dividends payable solely in Equity
Securities of such Entity that are not required to be classified as liabilities
on the balance sheet of such Entity under GAAP; the purchase, redemption, or
other retirement of any Equity Securities of such Entity, directly or indirectly
through a Subsidiary of such Entity or otherwise; or the return of capital by
such Entity to the holders of its Equity Securities as such.
Documentation Agent. Deutsche Bank AG, New York Branch acting as
-------------------
Documentation Agent for the Banks, or any successor to the rights and
obligations of the Documentation Agent under this Agreement.
Dollars or $. Dollars in lawful currency of the United States of
------- -
America.
Domestic Lending Office. Initially, the office of each Bank designated
-----------------------
as such in Schedule 1 hereto; thereafter, such other office of such Bank, if
----------
any, located within the United States that will be making or maintaining
Alternative Base Rate Loans.
Drawdown Date. The date on which any Loan is made or is to be made, and
-------------
the date on which any Loan is converted or continued in accordance with Section
2.7.
Eligible Assignee. Any of (a) a commercial bank or finance company
-----------------
organized under the laws of the United States, any State thereof, or the
District of Columbia, having total assets in excess of One Billion Dollars
($1,000,000,000); (b) a commercial bank organized under the laws of any other
country that is a member of the Organization for Economic Cooperation and
Development (the "OECD") or a political subdivision of any such country and
having total assets in excess of One Billion Dollars ($1,000,000,000); provided
--------
that such bank is acting through a branch or agency located in the country in
which it is organized or another country which is also a member of the OECD; and
(c) any of the twelve Federal Reserve Banks organized under (S)4 of the Federal
Reserve Act, 12 U.S.C. (S)341 or the central bank of any country which is a
member of the OECD.
Employee Benefit Plan. Any employee benefit plan within the meaning of
---------------------
(S)3(2) of ERISA maintained or contributed to by the Borrower or any ERISA
Affiliate, other than a Multiemployer Plan.
Entity. Any corporation, partnership, trust, unincorporated
------
association, joint venture, limited liability company, or other legal or
business entity.
Environmental Laws. As defined in Section 5.17(a).
------------------
9
<PAGE>
Equity Securities. With respect to any Entity, all equity securities of
-----------------
such Entity, including any (a) common or preferred stock, (b) limited or general
partnership interests, (c) options, warrants, or other rights to purchase or
acquire any equity security, or (d) securities convertible into any equity
security.
ERISA. The Employee Retirement Income Security Act of 1974, as amended.
-----
ERISA Affiliate. Any Person that is treated as a single employer
---------------
together with the Borrower under (S)414 of the Code.
ERISA Reportable Event. A reportable event with respect to a Guaranteed
----------------------
Pension Plan within the meaning of (S)4043 of ERISA and the regulations
promulgated thereunder as to which the requirement of notice has not been
waived.
Eurocurrency Reserve Rate. For any day with respect to a Eurodollar
-------------------------
Rate Loan, the maximum rate (expressed as a decimal) at which any lender subject
thereto would be required to maintain reserves (including any marginal, special,
supplemental or emergency reserves) under Regulation D of the Board of Governors
of the Federal Reserve System (or any successor or similar regulations relating
to such reserve requirements) against "Eurocurrency Liabilities" (as that term
is used in Regulation D), if such liabilities were outstanding. Without
limiting the effect of the foregoing, the Eurocurrency Reserve Rate shall
reflect any other reserves required to be maintained by member banks with
respect to (i) any category of liabilities which includes deposits by reference
to which the Eurodollar Rate is to be determined; or (ii) any category of
extensions of credit or other assets which include Eurodollar Rate Loans. The
Eurocurrency Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in the Eurocurrency Reserve Rate.
Eurodollar Business Day. Any day on which commercial banks are open for
-----------------------
international business (including dealings in Dollar deposits) in London or such
other Eurodollar interbank market as may be selected by the Administrative Agent
in its sole discretion acting in good faith.
Eurodollar Lending Office. Initially, the office of each Bank
-------------------------
designated as such in Schedule 1 hereto; thereafter, such other office of such
----------
Bank, if any, that shall be making or maintaining Eurodollar Rate Loans.
Eurodollar Rate. For any Interest Period with respect to a Eurodollar
---------------
Rate Loan, the rate of interest equal to (a) the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) appearing on Telerate Page
3750 (or any successor page) as the London interbank offered rate for deposits
in Dollars at approximately 11:00 a.m. (London time) two Business Days prior to
the first day of such Interest Period for a term comparable to such Interest
Period or if for any reason such rate is not available, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters
Screen LIBO Page as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days prior to the first day
of such Interest Period for a term comparable to such Interest Period; provided,
--------
however, if more than one rate is specified on Reuters Screen LIBO Page, the
- -------
applicable rate shall be the arithmetic mean of all such rates (rounded upwards,
if necessary, to the nearest 1/100 of 1%), divided by (b) a number equal to 1.00
minus the Eurocurrency Reserve Rate.
10
<PAGE>
Eurodollar Rate Applicable Margin. As defined in Section 2.5(c).
---------------------------------
Eurodollar Rate Loans. Loans bearing interest calculated by reference
---------------------
to the Eurodollar Rate.
Event of Default. Any of the events specified in Section 10.1 hereof,
----------------
provided that any requirement for notice or lapse of time, or both, has been
satisfied.
Fee Letters. That certain letter agreement dated as of the Closing Date
-----------
between the Borrower and the Administrative Agent regarding the payment of
certain fees to the Administrative Agent and that certain letter agreement dated
as of December 29, 1997 between the Borrower, the Administrative Agent and the
Arranging Agents, regarding the payment of certain fees to the Arranging Agents.
Federal Funds Effective Rate. For any day, the rate per annum (rounded
----------------------------
upward, if necessary, to the next higher 1/100th of 1%) equal to the weighted
average of the rates on overnight federal funds transactions offered to the
Reference Banks by federal funds brokers at 11:00 a.m. (Dallas time) on such
day, as confirmed to the Administrative Agent by the Reference Banks on the
Business Day next succeeding such day, provided that (i) if the day for which
such rate is to be determined is not a Business Day, the Federal Funds Effective
Rate for such day shall be such rate on such transactions on the next preceding
Business Day, and (ii) if any Reference Bank does not provide a confirmation,
the relevant weighted average shall be determined on the basis of confirmations
supplied by the remaining Reference Banks, and if no (or only one) Reference
Bank supplies confirmation, the Federal Funds Effective Rate for such day shall
be the average rate charged to the Administrative Agent on such day on overnight
federal funds transactions as determined by the Administrative Agent.
Fully Effective. With respect to any Contract, that (a) such Contract
---------------
is the legal, valid, and binding obligation of the Borrower or its Subsidiary,
as the case may be, enforceable against such party according to its terms, and
(b) if such Contract exists on or before the date of this Agreement, such
Contract shall remain in full force and effect notwithstanding the execution and
delivery of the Loan Documents and the consummation of the transactions
contemplated by the Loan Documents.
Funded Debt. With respect to any Person, (a) all indebtedness for money
-----------
borrowed of such Person, (b) every obligation of such Person in respect of
Capitalized Leases, (c) all reimbursement obligations of such Person with
respect to letters of credit, bankers' acceptances, or similar facilities issued
for the account of such Person, and (d) all guarantees, endorsements,
acceptances, and other contingent obligations of such Person, whether direct or
indirect, in respect of indebtedness for borrowed money of others, including any
obligation to supply funds to or in any manner to invest in, directly or
indirectly, the debtor, to purchase indebtedness for borrowed money, or to
assure the owner of indebtedness for borrowed money against loss, through an
agreement to purchase goods, supplies, or services for the purpose of enabling
the debtor to make payment of the indebtedness held by such owner or otherwise,
but excluding, for all purposes hereof with respect to the Borrower, (i) with
respect to OGI Exchangeable Debt issuable in connection with the Certificate of
Long-Term Indemnity Indebtedness dated November 4, 1997, not more than
$80,000,000 of OGI Exchangeable Debt, provided that no such OGI Exchangeable
Debt shall be excluded from the definition of "Funded Debt" after the one year
anniversary of its issuance and (ii) at all times (x) the
11
<PAGE>
obligations of the Borrower pursuant to that certain Certificate of Long-Term
Indemnity Indebtedness issued November 4, 1997, (y) up to $4,000,000 of OGI
Exchangeable Debt and (z) any Subordinated Debt.
GAAP. Principles that are (a) consistent with the principles
----
promulgated or adopted by the Financial Accounting Standards Board and its
predecessors, as in effect from time to time and (b) consistently applied with
past financial statements of the Borrower adopting the same principles.
Government Authority. The United States of America or any state,
--------------------
district, territory, or possession thereof, any local government within the
United States of America or any of its territories and possessions, any foreign
government or any province, territory, or possession thereof, or any court,
tribunal, administrative or regulatory agency, taxing or revenue authority,
central bank or banking regulatory agency, commission, or body of any of the
foregoing.
Government Mandate. With respect to (a) any Person, any statute, law,
------------------
rule, regulation, code, or ordinance duly adopted by any Government Authority,
any treaty or compact between two (2) or more Government Authorities, and any
judgment, order, decree, ruling, finding, determination, or injunction of any
Government Authority, in each such case that is legally binding on such Person,
any of its Subsidiaries or any of their respective properties, and (b) the
Administrative Agent or any Bank, in addition to subsection (a) hereof, any
policy, guideline, directive, or standard duly adopted by any Government
Authority with respect to the regulation of banks, monetary policy, lending,
investments, or other financial matters.
Guaranteed Pension Plan. Any employee pension benefit plan within the
-----------------------
meaning of (S)3(2) of ERISA maintained or contributed to by the Borrower or any
ERISA Affiliate the benefits of which are guaranteed on termination in full or
in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer
Plan.
Hazardous Substances. As defined in Section 5.17(b).
--------------------
Holdings. PIMCO Advisors Holdings L.P., a Delaware limited partnership.
--------
Indebtedness. All obligations, contingent and otherwise, that in
------------
accordance with GAAP should be classified upon the obligor's balance sheet as
liabilities, or to which reference should be made by footnotes thereto in
accordance with GAAP, including: (a) all debt and similar monetary obligations,
whether direct or indirect; (b) all liabilities secured by any Lien existing on
property owned or acquired subject thereto, whether or not the liability secured
thereby shall have been assumed; (c) all obligations in respect of hedging
contracts, including, without limitation, interest rate and currency swaps,
caps, collars and other financial derivative products; and (d) all guarantees,
endorsements, and other contingent obligations whether direct or indirect in
respect of indebtedness of others, including any obligation to supply funds to
or in any manner to invest in, directly or indirectly, the debtor, to purchase
indebtedness, or to assure the owner of indebtedness against loss, through an
agreement to purchase goods, supplies, or services for the purpose of enabling
the debtor to make payment of the indebtedness held by such owner or otherwise,
and the obligations to reimburse the issuer in respect of any letters of credit.
12
<PAGE>
Interest Coverage Ratio. For any period the ratio of OPAD for such
-----------------------
period to Interest Expense for such period.
Interest Expense. Interest expense in respect of Consolidated Funded
----------------
Debt for any period, provided, however, that with respect to any period in which
-------- -------
an Acquisition or Permitted Merger occurs, the foregoing amounts shall be
calculated on a pro forma basis as if such Acquisition or Permitted Merger
occurred on the first day of such period.
Interest Payment Date. (a) As to any Alternative Base Rate Loan, the
---------------------
last day of each calendar quarter during all or a portion of which such
Alternative Base Rate Loan is outstanding and the maturity of such Alternative
Base Rate Loan; and (b) as to any Eurodollar Rate Loan, the last day of each
Interest Period with respect to such Eurodollar Rate Loan and the maturity of
such Eurodollar Rate Loan.
Interest Period. With respect to each Eurodollar Rate Loan, (a)
---------------
initially, the period commencing on the Drawdown Date of such Loan and ending on
the last day of, as selected by the Borrower in a Loan Request, one (1), two (2)
or three (3) months thereafter; and (b) thereafter, each period commencing on
the last day of the next preceding Interest Period applicable to such Loan and
ending on the last day of one of the periods set forth above, as selected by the
Borrower in a Conversion Request; provided that all of the foregoing provisions
--------
relating to Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day that is not a
Eurodollar Business Day, that Interest Period shall be extended to
the next succeeding Eurodollar Business Day unless the result of
such extension would be to carry such Interest Period into another
calendar month, in which event such Interest Period shall end on
the immediately preceding Eurodollar Business Day;
(ii) any Interest Period that begins on the last Eurodollar Business
Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last Eurodollar Business
Day of a calendar month; and
(iii) any Interest Period commencing prior to the Maturity Date that
would otherwise extend beyond the Maturity Date shall end on the
Maturity Date.
Investments. All expenditures made and all liabilities incurred
-----------
(contingently or otherwise) for the acquisition of Equity Securities or
Indebtedness, or for loans, advances, or capital contributions to, or in respect
of any guaranties (or other commitments as described under Indebtedness) of, any
Person, other than any Acquisition.
Leverage Ratio. As defined in Section 7.13(b).
--------------
Lien. Any lien, mortgage, security interest, pledge, charge, beneficial
----
or equitable interest or right, hypothecation, collateral assignment, easement,
or other encumbrance.
13
<PAGE>
Loan Documents. This Agreement, the Notes, the Fee Letters, all Loan
--------------
Requests, all Swing Loan Requests, all Conversion Requests and all other
documents, certificates and agreements executed or delivered in connection with
or contemplated by this Agreement, and the Short-Term Loan Documents.
Loan Request. As defined in Section 2.6.
------------
Loans. The amount advanced by the Banks to the Borrower under the
-----
Commitment not to exceed the amount of the Commitment, and evidenced by the
Notes, and shall include the Swing Loans.
Majority Banks. As of any date, the Banks whose aggregate Commitments
--------------
constitute at least sixty-six and two thirds percent (66 2/3%) of the Total
Commitment.
Material Amount. As of the date of determination, an amount equal to 5%
---------------
of OPAD of the Borrower for the immediately preceding four (4) quarter period.
Material Effect. A material adverse effect on (a) the ability of the
---------------
Borrower to enter into and to perform and observe its Obligations under the Loan
Documents, or (b) the Business of the Borrower and its Subsidiaries taken as a
whole.
Maturity Date. The first to occur of (a) May 12, 2003 or (b) the date
-------------
on which the Obligations shall otherwise become due and payable by reason of
acceleration or otherwise.
Multiemployer Plan. Any multiemployer plan within the meaning of
------------------
(S)3(37) of ERISA maintained or contributed to by the Borrower or any ERISA
Affiliate.
1940 Act. The Investment Company Act of 1940, as amended.
--------
Note Agreement. That certain Amended and Restated Note Agreement dated
--------------
as of September 26, 1997 by and among PGP and the holders of the Private
Placement Notes.
Notes. Collectively, the Revolving Notes and the Swing Loan Note.
-----
Obligations. All indebtedness, obligations, and liabilities of any of
-----------
the Borrower and its Subsidiaries to any of the Banks and the Administrative
Agent, individually or collectively, existing on the date of this Agreement or
arising thereafter, direct or indirect, joint or several, absolute or
contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising or incurred under this Agreement or any of the other Loan
Documents or in respect of any of the Loans or any of the Notes or other
instruments at any time evidencing any thereof.
OGI Exchangeable Debt. That certain Indebtedness of Oppenheimer Group,
---------------------
Inc., in the original principal amount not to exceed $230,000,000, issued
pursuant to that certain Note Agreement dated November 4, 1997 and evidenced by
those certain 6% Senior Notes due December 1, 2037 dated November 4, 1997, the
holders of which have the right pursuant to that certain Exchange Right dated
November 4, 1997, issued by the Borrower, to exchange such Indebtedness for
Class A Limited Partner Units of the Borrower at the rate of $33 1/3 per unit.
14
<PAGE>
OPAD. With respect to any period, the sum of (a) Consolidated Net
----
Income (or Loss) of the Borrower and its Subsidiaries for such period, plus (b)
----
amortization, depreciation and other non-cash charges of the Borrower and its
Subsidiaries for such period to the extent deducted in determining Consolidated
Net Income (or Loss) for such period; provided, however, that if such sum is
-------- -------
less than zero, such sum shall be deemed to be zero for purposes of this
Agreement; and, provided, further, that with respect to any period in which an
-------- -------
Acquisition or Permitted Merger occurs, the foregoing amounts shall be
calculated on a pro forma basis as if such Acquisition or Permitted Merger
occurred on the first day of such period.
OpCap, G.P. Oppenheimer Capital, a Delaware general partnership.
-----------
Partners' Capital. The aggregate outstanding capital accounts of the
-----------------
partners of the Borrower.
PBGC. The Pension Benefit Guaranty Corporation created by (S)4002 of
----
ERISA and any successor entity or entities having similar responsibilities.
Permits. Permits, licenses, franchises, patents, copyrights,
-------
trademarks, trade names, approvals, clearances, and applications for or rights
in respect of the foregoing of any Government Authority.
Permitted Liens. Liens permitted by Section 7.4.
---------------
Permitted Merger. A merger or consolidation of the Borrower or any of
----------------
its Subsidiaries that does not violate this Agreement.
Person. Any individual, Entity, or Government Authority.
------
PGP. PIMCO Partners, G.P., a general partnership organized under the
---
laws of California.
PGP Refinancing. A transaction to refinance the Private Placement Notes
---------------
structured as either (a) a loan by the Borrower to PGP (the proceeds of which
are used to repay the Private Placement Notes in full) or (b) a guaranty of the
Private Placement Notes issued by the Borrower in favor of the holders of the
Private Placement Notes.
Private Placement Notes. Those certain 9.01% Secured, Non-Recourse
-----------------------
Notes due December 5, 2001, issued by PGP pursuant to that certain Amended and
Restated Note Agreement dated as of September 26, 1997, having a face amount, in
the aggregate not exceeding $130,000,000.
Proceedings. Any (a) actions at law, (b) suits in equity, (c)
-----------
bankruptcy, insolvency, receivership, dissolution, or reorganization cases or
proceedings, (d) administrative or regulatory hearings or other proceedings, (e)
arbitration and mediation proceedings, (f) criminal prosecutions, (g) judgment
levies, foreclosure proceedings, pre-judgment security procedures, or other
enforcement actions, and (h) other litigation, actions, suits, and proceedings
conducted by, before, or on behalf of any Government Authority.
15
<PAGE>
Public General Partner. Any "Public General Partner" as such term is
----------------------
defined in the partnership agreement of the Borrower in effect on the Closing
Date, and not as subsequently amended or modified.
Real Estate. All real property at any time owned or leased (as lessee
-----------
or sublessee) by the Borrower or any of its Subsidiaries.
Record. The grid attached to a Note, or the continuation of such grid,
------
or any other similar record, including computer records, maintained by any Bank
with respect to any Loan referred to in such Note.
Reference Banks. NationsBank, N.A. and Deutsche Bank AG, New York
---------------
Branch.
Revolving Notes. Those certain promissory notes in the aggregate
---------------
original principal amount of $250,000,000, one such note issued by the Borrower
to each of the Banks and substantially in the form of Exhibit A-1 attached
-----------
hereto, and any extensions, modifications, renewals or replacements of, or
amendments to, any of the foregoing.
Short-Term Credit Agreement. That certain Short-Term Credit Agreement
---------------------------
dated as of the date hereof, by and among the parties thereto, pursuant to which
the banks party thereto have agreed to provide a short-term credit facility to
the Borrower upon the terms and conditions set forth therein, as such agreement
may be amended, supplemented or otherwise modified from time to time.
Short-Term Loan Documents. The Short-Term Credit Agreement, the Notes
-------------------------
(as defined in the Short-Term Credit Agreement), all Loan Requests (as defined
in the Short-Term Credit Agreement), all Conversion Requests (as defined in the
Short-Term Credit Agreement) and all other documents, certificates and
agreements executed or delivered in connection with or contemplated by the
Short-Term Credit Agreement.
Subordinated Debt. At any date of determination thereof, any
-----------------
Indebtedness of the Borrower and any of its Subsidiaries that is subordinated to
the Obligations upon terms and conditions satisfactory to the Administrative
Agent and the Majority Banks.
Subsidiary. Any Entity of which the designated parent shall at any time
----------
own directly or indirectly through a Subsidiary or Subsidiaries at least a
majority (by number of votes) of the outstanding Voting Equity Securities;
except as the context may otherwise require, "Subsidiary" means any Subsidiary
of the Borrower.
Swing Loan Advance. Any advance of the Swing Loans.
------------------
Swing Loan Commitment. The obligation of the Swing Loan Lender to
---------------------
advance from time to time the aggregate sum of up to $25,000,000 to the Borrower
pursuant to the terms set forth in Section 2.10.
Swing Loan Lender. NationsBank, N.A. or any other Bank acting as the
-----------------
Swing Loan Lender in accordance with Section 2.10.
16
<PAGE>
Swing Loan Note. That certain Swing Loan Note dated as of the Closing
---------------
Date in the principal amount of $25,000,000, issued by the Borrower to the Swing
Loan Lender, substantially in the form of Exhibit A-2 attached hereto,
-----------
and any amendments, replacements, extensions or renewals thereof.
Swing Loan Request. As set forth in Section 2.10.
------------------
Swing Loans. The amounts advanced by the Swing Loan Lender pursuant to
-----------
Section 2.10 hereof.
TAG. Thomson Advisory Group, Inc., a Delaware corporation.
---
Total Commitment. The sum of the Commitments, as in effect from time to
----------------
time. As of the Closing Date the Total Commitment is $250,000,000.
Type. As to any Loan, its nature as an Alternative Base Rate Loan or a
----
Eurodollar Rate.
Voting Equity Securities. Equity Securities of any class or classes
------------------------
(however designated), the holders of which are at the time entitled, as such
holders, to vote for the election of a majority of the directors (or persons
performing similar functions) of the Entity that issued such Equity Securities.
Written Action. That certain written action dated November 28, 1997,
--------------
taken by PGP in its capacity as sole general partner of the Borrower.
Year 2000 Compliant. As defined in Section 5.21.
-------------------
Year 2000 Problem. As defined in Section 5.21.
-----------------
1.2. Rules of Interpretation.
-----------------------
(a) A reference to any Contract or other document shall include
such Contract or other document as amended, modified, or
supplemented from time to time in accordance with its terms and
the terms of this Agreement.
(b) The singular includes the plural and the plural includes the
singular.
(c) A reference to any Government Mandate includes any amendment or
modification to such Government Mandate or any successor
Government Mandate.
(d) A reference to any Person includes its permitted successors and
permitted assigns. Without limiting the generality of the
foregoing, a reference to any Bank shall include any Person
that succeeds generally to its assets and liabilities.
17
<PAGE>
(e) Accounting terms not otherwise defined herein have the meanings
assigned to them by GAAP.
(f) The words "include," "includes," and "including" are not
limiting.
(g) All terms not specifically defined herein or by GAAP, which
terms are defined in the Uniform Commercial Code as in effect
in the State of New York, have the meanings assigned to them
therein.
(h) Reference to a particular "(S)", Section, Schedule, or Exhibit
refers to that Section, Schedule, or Exhibit of this Agreement
unless otherwise indicated.
(i) The words "herein", "hereof", and "hereunder" and words of like
import shall refer to this Agreement as a whole and not to any
particular section or subdivision of this Agreement.
2. THE CREDIT FACILITIES.
---------------------
2.1 The Loans.
---------
(a) Subject to the terms and conditions set forth in Section 9
hereof, the Banks agree, severally in accordance with their
respective Commitment Percentages relating to the Commitment and
not jointly, upon the terms and subject to the conditions of this
Agreement, to lend and re-lend to the Borrower, from time to time
on or after the Closing Date and up to but excluding the Maturity
Date, such sums as are requested by the Borrower up to a maximum
aggregate principal amount outstanding (after giving effect to all
amounts requested) at any one time equal to such Bank's
Commitment, provided that the sum of the outstanding amount of the
--------
Loans (after giving effect to all amounts requested) shall not at
any time exceed the Commitment. The Loans (other than Swing Loans)
shall be made pro rata in accordance with each Bank's Commitment
--- ----
Percentage; provided that the failure of any Bank to lend in
--------
accordance with this Agreement shall not release any other Bank or
the Administrative Agent from their obligations hereunder, nor
shall any Bank have any responsibility or liability in respect of
a failure of any other Bank to lend in accordance with this
Agreement. Each request for a Loan and each borrowing hereunder
shall constitute a representation and warranty by the Borrower
that the conditions set forth in Section 9 have been satisfied on
the date of such request.
(b) In the event that, at any time when the conditions
precedent for any Loan have been satisfied, a Bank fails or
refuses to fund its portion of such Loan, then, until such time as
such Bank has funded its portion of such Loan, (i) such non-
funding Bank shall not have the right to vote regarding any issue
on which voting is required or advisable under this Agreement or
any other Loan Document, and the amount of such Bank's Commitment
shall not be counted for purposes of
18
<PAGE>
determining "Majority Banks" hereunder or for purposes of
determining Commitments representing one hundred percent (100%) of
the Total Commitment pursuant to Section 23 hereof, and (ii) any
payments made by the Borrower shall be applied to repay the
interest on, and principal of, the Loans held by the funding Banks
until either (A) any Loan funded by the Administrative Agent on
behalf of a non-funding Bank has been repaid in full or (B) the
aggregate outstanding Loans, together with any accrued and unpaid
interest thereof, shall be held by the Banks pro rata in
accordance with their respective Commitment Percentages.
2.2. Fees.
----
(a) Facility Fee. The Borrower agrees to pay to the
------------
Administrative Agent, for the benefit of each of the Banks in accordance with
their respective Commitment Percentages, a facility fee on the aggregate
Commitment, for each day from the Closing Date until the Maturity Date, at a
rate, determined by the Administrative Agent based upon the Leverage Ratio for
the most recent fiscal quarter end, effective as of the second (2/nd/) Business
Day after the financial statements referred to in Section 6.4(b) hereof are
required to be delivered by the Borrower to the Administrative Agent, expressed
as a per annum rate as follows:
<TABLE>
<CAPTION>
Leverage Ratio Rate
- -------------------------------------------------------------------------------
<S> <C>
Greater than or equal to 2.0 to 1 0.200%
Greater than or equal to 1.5 to 1 but less than 2.0 to 1 0.175%
Greater than or equal to 1.0 to 1 but less than 1.5 to 1 0.140%
Less than 1.0 to 1 0.100%
</TABLE>
.
Such facility fee shall be computed on the basis of a year of 360 days
for the actual number of days elapsed, shall be payable quarterly in arrears on
the last day of each calendar quarter commencing on June 30, 1998, shall be
fully earned when due, and shall be non-refundable when paid; provided, however,
-------- -------
that for the calendar quarter ending June 30, 1998, the facility fee shall be
calculated based upon a rate of 0.100% per annum. A final payment of any
facility fee then payable shall also be due and payable on the Maturity Date or
any earlier date on which the Commitment shall terminate.
(b) Miscellaneous. In the event that the Borrower fails to timely
-------------
provide the financial statements referred to in Section 2.2(a) hereof in
accordance with the terms of Section 6.4(b) hereof, and without prejudice to any
additional rights under Section 10.3 hereof, no adjustment of the facility fees
shall occur until the actual delivery of such statements.
(c) Fees Payable Under the Fee Letters. The Borrower agrees to pay to
----------------------------------
the Administrative Agent, for the benefit of the Administrative Agent, the
Arranging Agents and the Banks, as the case may be, such fees as are mutually
agreed upon and as are described in the Fee Letters.
19
<PAGE>
(c) Computation of Fees. In computing any fees payable under this
-------------------
Section 2.2, the first day of the applicable period shall be included and the
date of payment shall be excluded.
2.3 Reduction of Total Commitment. The Borrower shall have the right
-----------------------------
at any time and from time to time upon three (3) Business Days' prior written
notice to the Administrative Agent to reduce by at least $10,000,000 or integral
multiples of $1,000,000 in excess thereof, or to terminate entirely, the
unborrowed portion of the Total Commitment, whereupon the Commitments of the
Banks shall be reduced pro rata in accordance with their respective Commitment
--------
Percentages of the amount specified in such notice or, as the case may be,
terminated. Promptly after receiving any notice of the Borrower delivered
pursuant to this Section 2.3, the Administrative Agent will notify the Banks of
the substance thereof. Upon the effective date of any such reduction or
termination, the Borrower shall pay to the Administrative Agent for the
respective accounts of the Banks the full amount of any facility fee then
accrued on the amount of the reduction. No reduction or termination of the
Commitments may be reinstated.
2.4 The Notes. The Loans shall be evidenced by separate promissory
---------
notes of the Borrower in substantially the form of Exhibit A-1 hereto,
-----------
dated as of the Closing Date and completed with appropriate insertions. One
Revolving Note shall be payable to the order of each Bank in a principal amount
equal to such Bank's Commitment, or, if less, the outstanding amount of all
Loans made by such Bank, plus interest accrued thereon, as set forth below. The
Borrower irrevocably authorizes each Bank to make or cause to be made, at or
about the time of the Drawdown Date of any Loan or at the time of receipt of any
payment of principal on such Bank's Revolving Note, as the case may be, an
appropriate notation on such Bank's Record reflecting the making of such Loan or
(as the case may be) the receipt of such payment. The outstanding amount of the
Loans set forth on such Bank's Record shall be prima facie evidence of the
-----------
principal amount thereof owing and unpaid to such Bank, but the failure to
record, or any error in so recording, any such amount on such Bank's Record
shall not limit or otherwise affect the obligations of the Borrower hereunder or
under any Revolving Note to make payments of principal of or interest on any
Revolving Note when due.
2.5 Interest.
--------
(a) On Alternative Base Rate Loans. Except as otherwise provided
------------------------------
in Section 4.10, each Alternative Base Rate Loan shall bear interest at an
annual rate equal to the Alternative Base Rate as in effect from time to time
while such Alternative Base Rate Loan is outstanding.
(b) On Eurodollar Rate Loans. Except as otherwise provided in
------------------------
Section 4.10, each Eurodollar Rate Loan shall bear interest for each Interest
Period at an annual rate equal to the sum of the Eurodollar Rate for such
Interest Period plus the Eurodollar Rate Applicable Margin.
(c) Eurodollar Rate Applicable Margin. The Eurodollar Rate
---------------------------------
Applicable Margin with respect to any Loan outstanding under the Commitment
shall be the interest rate margin determined by the Administrative Agent based
upon the Leverage Ratio for the most recent fiscal quarter end, effective as of
the second (2/nd/) Business Day after the financial statements referred to in
Section 6.4(b) hereof are required to be delivered by the Borrower to the
Administrative Agent, expressed as a per annum rate of interest as follows:
20
<PAGE>
<TABLE>
<CAPTION>
Eurodollar Rate
Leverage Ratio Applicable Margin
- --------------------------------------------------------------------------------
<S> <C>
Greater than or equal to 2.0 to 1 0.425%
Greater than or equal to 1.5 to 1 but less than 2.0 to 1 0.325%
Greater than or equal to 1.0 to 1 but less than 1.5 to 1 0.260%
Less than 1.0 to 1 0.250%
</TABLE>
In the event that the Borrower fails to timely provide the financial
statements referred to above in accordance with the terms of Section 6.4(b)
hereof, and without prejudice to any additional rights under Section 10.3
hereof, no adjustment of the Eurodollar Rate Applicable Margin shall occur until
the actual delivery of such statements.
(d) Interest Payment Dates. The Borrower shall pay all accrued
----------------------
interest on each Loan in arrears on each Interest Payment Date with respect
thereto.
2.6 Requests for Loans. The Borrower shall give to the Administrative
------------------
Agent written notice in the form of Exhibit B-1 hereto (or telephonic notice
-----------
confirmed in a writing in the form of Exhibit C-1 hereto) of each Loan
-----------
requested hereunder (a "Loan Request") no later than (a) 11:00 a.m. (Dallas
------------
time) on the proposed Drawdown Date of any Alternative Base Rate Loan and (b)
three (3) Eurodollar Business Days prior to the proposed Drawdown Date of any
Eurodollar Rate Loan. Each such notice shall specify (i) the principal amount of
the Loan requested, (ii) the proposed Drawdown Date of such Loan, (iii) the Type
of such Loan, and (iv) the Interest Period for such Loan if such Loan is a
Eurodollar Rate Loan. Promptly upon receipt of any such Loan Request, the
Administrative Agent shall notify each of the Banks thereof. Each Loan Request
shall be irrevocable and binding on the Borrower and shall obligate the Borrower
to accept the Loan requested from the Banks on the proposed Drawdown Date. Each
Loan Request shall be in a minimum aggregate amount of $10,000,000 or in an
integral multiple of $1,000,000 in excess thereof.
2.7 Conversion Options.
------------------
(a) Conversion to Eurodollar Rate Loan. The Borrower may elect
----------------------------------
from time to time, subject to Section 2.9, to convert any outstanding
Alternative Base Rate Loan to a Eurodollar Rate Loan, provided that (i) the
--------
Borrower shall give the Administrative Agent at least three (3) Eurodollar
Business Days' prior written notice of such election; and (ii) no Alternative
Base Rate Loan may be converted into a Eurodollar Rate Loan when any Default has
occurred and is continuing. The Administrative Agent shall notify the Banks
promptly of any such notice. On the date on which such conversion is being
made, each Bank shall take such action as is necessary to transfer its
Commitment Percentage of such Loans to its Eurodollar Lending Office. All or
any part of outstanding Alternative Base Rate Loans may be converted into a
Eurodollar Rate Loan as provided herein, provided that any partial conversion
shall be in an aggregate principal amount of $1,000,000 or an integral multiple
of $1,000,000 in excess thereof.
21
<PAGE>
(b) Continuation of Type of Loan.
----------------------------
(i) All Alternative Base Rate Loans shall continue as
Alternative Base Rate Loans until converted into Eurodollar Rate Loans as
provided in Section 2.7(a).
(ii) Any Eurodollar Rate Loan may, subject to Section 2.9, be
continued, in whole or in part, as a Eurodollar Rate Loan upon the expiration of
the Interest Period with respect thereto, provided that (A) the Borrower shall
give the Administrative Agent at least three (3) Eurodollar Business Days' prior
written notice of such election; (B) no Eurodollar Rate Loan may be continued as
such when any Default has occurred and is continuing, but shall be automatically
converted to an Alternative Base Rate Loan on the last day of the first Interest
Period relating thereto ending during the continuance of any Default; and (iii)
any partial continuation of a Eurodollar Rate Loan shall be in an aggregate
principal amount of $1,000,000 or an integral multiple of $1,000,000 in excess
thereof.
(iii) If the Borrower shall fail to give any notice of
continuation of a Eurodollar Rate Loan as provided under this Section 2.7(b),
the Borrower shall be deemed to have requested a conversion of the affected
Eurodollar Rate Loan to an Alternative Base Rate Loan on the last day of the
then current Interest Period with respect thereto.
(iv) The Administrative Agent shall notify the Banks promptly
when any such continuation or conversion contemplated by this Section 2.7(b) is
scheduled to occur. On the date on which any such continuation or conversion is
to occur, each Bank shall take such action as is necessary to transfer its
Commitment Percentage of such Loans to its Domestic Lending Office or its
Eurodollar Lending Office as appropriate.
(c) Conversion Requests. All notices of the conversion or
-------------------
continuation of a Loan provided for in this Section 2.7 shall be in writing in
the form of Exhibit D hereto (or shall be given by telephone and confirmed by a
---------
writing in the form of Exhibit E hereto). Each such notice shall specify (i) the
---------
principal amount and Type of the Loan subject thereto, (ii) the date on which
the current Interest Period of such Loan ends if such Loan is a Eurodollar Rate
Loan, and (iii) the new Interest Period for such Loan if such Loan is a
Eurodollar Rate Loan. Promptly upon receipt of any such notice, the
Administrative Agent shall notify each of the Banks thereof. Each such notice
shall be irrevocable and binding on the Borrower.
2.8 Funds for Loans.
---------------
(a) Funding Procedures. Not later than 2:00 p.m. (Dallas time)
------------------
on the proposed Drawdown Date of any Loans, each of the Banks will make
available to the Administrative Agent, at its Head Office, in immediately
available funds, the amount of such Bank's Commitment Percentage of the amount
of the requested Loans. Upon receipt from each Bank of such amount, and upon
receipt of the documents required by Section 9 and the satisfaction of the other
conditions set forth therein, to the extent applicable, the Administrative Agent
will make available to the Borrower the aggregate amount of such Loans made
available to the Administrative Agent by the Banks. The failure or refusal of
any Bank to make available to the Administrative Agent at the aforesaid time and
place on any Drawdown Date the amount of its Commitment Percentage of the
requested Loans shall not relieve any other Bank from its several obligation
hereunder to make available to the
22
<PAGE>
Administrative Agent the amount of such other Bank's Commitment Percentage of
any requested Loans, but no other Bank shall be liable in respect of the failure
of such Bank to make available such amount.
(b) Advances by Administrative Agent. The Administrative Agent
--------------------------------
may, unless notified to the contrary by any Bank prior to a Drawdown Date,
assume that such Bank has made available to the Administrative Agent on such
Drawdown Date the amount of such Bank's Commitment Percentage of the Loans to be
made on such Drawdown Date, and the Administrative Agent may (but it shall not
be required to), in reliance upon such assumption, make available to the
Borrower a corresponding amount. If any Bank makes available to the
Administrative Agent such amount on a date after such Drawdown Date, such Bank
shall pay to the Administrative Agent on demand an amount equal to the weighted
average interest rate paid by the Administrative Agent for federal funds
acquired by the Administrative Agent during each day included in such period,
times the amount of such Bank's Commitment Percentage of such Loans calculated
on the basis of a 360-day year for the actual number of days elapsed. A
statement of the Administrative Agent submitted to such Bank with respect to any
amounts owing under this paragraph shall be prima facie evidence of the amount
due and owing to the Administrative Agent by such Bank. If the amount of such
Bank's Commitment Percentage of such Loans is not made available to the
Administrative Agent by such Bank within three (3) Business Days following such
Drawdown Date, the Administrative Agent shall be entitled to recover such amount
from the Borrower within one (1) Business Day after demand therefor, with
interest thereon at the rate per annum applicable to the Loans made on such
Drawdown Date.
2.9 Limit on Number of Eurodollar Rate Loans. At no time shall there
----------------------------------------
be outstanding Eurodollar Rate Loans having more than five (5) different
Interest Periods.
2.10 Swing Loans.
-----------
(a) Swing Loans. Subject to the terms and conditions of this
-----------
Section 2.10, the Swing Loan Lender agrees to make Swing Loans to the Borrower
from time to time from the Closing Date until the Maturity Date for the purposes
hereinafter set forth; provided, however, (i) the aggregate amount of Swing
-------- -------
Loans outstanding at any time shall not exceed the Swing Loan Commitment, and
(ii) the sum of Swing Loans outstanding plus other Loans outstanding at any time
shall not exceed the Total Commitment. Swing Loans hereunder may be repaid and
reborrowed in accordance with the provisions hereof.
(b) Swing Loan Advances; Notices; Disbursement. Whenever the
------------------------------------------
Borrower desires a Swing Loan hereunder, it shall give the Swing Loan Lender a
written notice in the form of Exhibit B-2 hereto (or telephone notice confirmed
-----------
in writing in the form of Exhibit C-2 hereto) of each Swing Loan requested
-----------
hereunder (the "Swing Loan Request") no later than 2:00 p.m. (Dallas time)
------------------
on the date of the requested Swing Loan Advance. Each such notice shall be
irrevocable and shall specify (i) that a Swing Loan Advance is requested, (ii)
the date of the requested Swing Loan Advance (which shall be a Business Day),
and (iii) the aggregate principal amount of the Swing Loan requested. The Swing
Loan Lender shall initiate the transfer of funds representing the Swing Loan
Advance to the applicable Borrower by 3:00 p.m. (Dallas time) on the Business
Day specified by such Borrower in the applicable Swing Loan Request.
23
<PAGE>
(c) Minimum Amounts. Each Swing Loan Advance shall be in a
---------------
minimum principal amount of $5,000,000 and integral multiples of $1,000,000.
(d) Repayment of Swing Loans. Each Swing Loan shall be due and
------------------------
payable on the earliest of (i) the date thirty (30) days from the date of
advance thereof or (ii) the Maturity Date. The Swing Loan Lender may, at any
time, in its sole discretion by written notice to the Borrower, require
repayment of the Swing Loans by way of an advance of a Loan, in which case the
Borrower shall be deemed to have requested an Alternative Base Rate Loan in the
amount of the respective Swing Loans; provided, however, that any such demand
-------- -------
shall be deemed to have been given one Business Day prior to the Maturity Date
and on the date of the occurrence of any Event of Default hereunder and the
exercise of remedies in accordance with the provisions of Section 10.3 hereof.
Each Bank hereby irrevocably agrees to make such Loans promptly upon any such
request or deemed request in the amount and in the manner specified in the
preceding sentence and on the same such date notwithstanding (A) the amount of
---------------
such Loan may not comply with the minimum amount for Loans otherwise required
hereunder, (B) whether any conditions specified in Article 9 are then satisfied,
(C) whether a Default or an Event of Default then exists, (D) the failure of any
such request or deemed request for a Loan to be made by the time otherwise
required in Section 2.6 or (E) any reduction in the Commitment or termination of
the Commitment immediately prior to such advance or contemporaneously therewith.
(e) Participations and Purchases of Swing Loans. In the event
-------------------------------------------
that any Loan cannot for any reason be made on the date otherwise required above
(including, without limitation, as a result of the commencement of a Proceeding
of the kind referred to in Sections 10.1(h) or 10.1(i) with respect to the
Borrower or any other obligor hereunder), then each Bank hereby agrees that it
shall forthwith purchase (as of the date such advance of a Loan would otherwise
have occurred, but adjusted for any payments received from the Borrower on or
after such date and prior to such purchase) from the Swing Loan Lender such
participations in the outstanding Swing Loans as shall be necessary to cause
each such Bank to share in such Swing Loans ratably based upon its respective
Commitment Percentage (determined before giving effect to any termination of the
Commitment pursuant to Article 10), provided that (i) all interest payable on
--------
the Swing Loans shall be for the account of the Swing Loan Lender until the date
the respective participation is purchased but upon such purchase the purchasing
Bank shall be entitled to all interest from and including the date upon which
the advance would otherwise have occurred, and (ii) at the time any purchase of
participations pursuant to this sentence is actually made, the purchasing Bank
shall be required to pay to the Swing Loan Lender interest on the principal
amount of participation purchased for each day from and including the day upon
which the advance of a Loan would otherwise have occurred to but excluding the
date of payment for such participation, at the rate equal to, if paid within two
(2) Business Days of the date of such advance, the Federal Funds Effective Rate,
and thereafter at a rate equal to the Alternative Base Rate.
(f) Interest on Swing Loans. Swing Loans shall bear interest
-----------------------
at the Alternative Base Rate and as set forth in the Swing Loan Note; provided,
--------
however, that during any period in which the Majority Banks have charged
- -------
interest on the Loans at the Default Rate in accordance with Section 4.10, the
Swing Loans shall also bear interest at the Default Rate. Interest on each
Swing Loan shall be payable in arrears on the date such Swing Loan becomes due
in accordance with Section 2.10(d).
24
<PAGE>
(g) Swing Loan Note. The Swing Loans shall be repayable in
---------------
accordance with the terms and provisions set forth herein, and shall be
evidenced by the Swing Loan Note in the form of Exhibit A-2 hereto. The Swing
-----------
Loan Note shall be issued by the Borrower to the Swing Loan Lender and shall be
duly executed and delivered by the Borrower.
3. REPAYMENT OF THE LOANS.
----------------------
3.1 Maturity. The Borrower shall pay on the Maturity Date, and there
--------
shall become absolutely due and payable on the Maturity Date, all of the Loans
and Swing Loans outstanding on such date, together with any and all accrued and
unpaid interest thereon. The Commitments shall terminate on the Maturity Date.
3.2 Mandatory Repayments of Loans. If at any time the sum of the
-----------------------------
outstanding amount of the Loans exceeds the Commitment, then the Borrower shall
immediately pay the amount of such excess to the Administrative Agent for
application to the Loans.
3.3 Optional Repayments of Loans. The Borrower shall have the right,
----------------------------
at its election, to repay the outstanding amount of the Loans, as a whole or in
part, at any time without penalty or premium, provided that any full or partial
repayment of the outstanding amount of any Eurodollar Rate Loans pursuant to
this Section 3.3 made on a date other than the last day of the Interest Period
relating thereto shall be subject to customary breakage charges as provided in
Section 4.9. The Borrower shall give the Administrative Agent, no later than
10:00 a.m. (Dallas time) at least one (1) Business Day's prior written notice,
of any proposed repayment pursuant to this Section 3.3 of Alternative Base Rate
Loans, and three (3) Eurodollar Business Days' notice of any proposed repayment
pursuant to this Section 3.3 of Eurodollar Rate Loans, in each case, specifying
the proposed date of payment of Loans and the principal amount to be paid. Each
such partial repayment of the Loans shall be in an amount of $10,000,000 or an
integral multiple of $1,000,000 in excess thereof, shall be accompanied by the
payment of accrued interest on the principal repaid to the date of payment, and
shall be applied, in the absence of instruction by the Borrower, first to the
principal of Alternative Base Rate Loans and then to the principal of Eurodollar
Rate Loans (in inverse order of the last days of their respective Interest
Periods). Each partial repayment shall be allocated among the Banks, in
proportion, as nearly as practicable, to the respective unpaid principal amount
of each Bank's Loans, with adjustments to the extent practicable to equalize any
prior repayments not exactly in proportion. Any amounts repaid under this
Section 3.3 may be reborrowed prior to the Maturity Date as provided in Section
2.6, subject to the conditions of Section 9.
4. CERTAIN GENERAL PROVISIONS.
--------------------------
4.1 Application of Payments.
-----------------------
(a) Except as otherwise provided in this Agreement, all
payments in respect of any Loan shall be applied first to accrued and unpaid
interest on such Loan and second to the outstanding principal of such Loan.
(b) If, at any time that a Default or Event of Default exists,
the Administrative Agent receives from the Borrower (or obtains funds for the
account of the Borrower,
25
<PAGE>
whether in connection with the enforcement of rights under the Loan Documents or
otherwise) less than the aggregate outstanding amount of all Obligations
hereunder, the Administrative Agent shall apply such amounts in the following
order of priority:
First, to the payment of, or (as the case may be) the reimbursement of
-----
the Administrative Agent for or in respect of all costs, expenses,
disbursements, and losses that shall have been incurred or sustained by the
Administrative Agent in connection with the collection of such monies by the
Administrative Agent, for the exercise, protection, or enforcement by the
Administrative Agent of all or any of the rights, remedies, powers, and
privileges of the Administrative Agent under this Agreement or any of the other
Loan Documents, or in support of any provision of adequate indemnity to the
Administrative Agent against any taxes or Liens that by Government Mandate shall
have, or may have, priority over the rights of the Administrative Agent to such
monies;
Second, to the satisfaction of any costs or expenses or other amounts
------
required to be paid by the Borrower under this Agreement not otherwise specified
in this Section 4.1(b);
Third, to the satisfaction of any accrued and unpaid fees hereunder;
-----
Fourth, to the satisfaction of any accrued and unpaid interest on any
------
Loans, first to Swing Loans, second to other Loans;
Fifth, to the satisfaction of any outstanding principal amount of any
-----
Loans, first to Swing Loans, second to other Loans; and
Sixth, the excess, if any, shall be returned to the Borrower or to
-----
such other Persons as are entitled thereto.
4.2 Funds for Payments.
------------------
(a) Payments to Administrative Agent. All payments of principal,
interest, facility fees and any other amounts due hereunder or under any of the
other Loan Documents shall be made to the Administrative Agent, for the
respective accounts of the Banks and the Administrative Agent, at the
Administrative Agent's Head Office or at such other location that the
Administrative Agent may from time to time designate, in each case in
immediately available funds.
(b) No Offset. All payments by the Borrower hereunder and under any
---------
of the other Loan Documents shall be made without setoff or counterclaim and
free and clear of and without deduction for any taxes, levies, imposts, duties,
charges, fees, deductions, withholdings, compulsory loans, restrictions, or
conditions of any nature now or hereafter imposed or levied by any Government
Authority unless the Borrower is compelled by Government Mandate to make such
deduction or withholding. If any such obligation is imposed upon the Borrower
with respect to any amount payable by it hereunder or under any of the other
Loan Documents (other than with respect to taxes on the income or profits of any
Bank or the Administrative Agent), the Borrower will pay to the Administrative
Agent, for the account of the Banks or (as the case may be) the Administrative
Agent, on the date on which such amount is due and payable hereunder or under
such other Loan Document, such additional amount in Dollars as shall be
necessary to enable the Banks or the Administrative
26
<PAGE>
Agent to receive the same net amount which the Banks or the Administrative Agent
would have received on such due date had no such obligation been imposed upon
the Borrower. The Borrower will deliver promptly to the Administrative Agent
certificates or other valid vouchers for all taxes or other charges deducted
from or paid with respect to payments made by the Borrower hereunder or under
such other Loan Document. If a refund is received (either in cash or by means of
a credit against future tax obligations) by the Administrative Agent or any Bank
in respect of an amount previously paid by the Borrower pursuant to the
immediately preceding sentence as determined solely by the Administrative Agent
or such Bank, such refund shall be promptly paid over to the Borrower; provided,
--------
however, in no event shall the Borrower have any right to receive or review tax
- -------
returns of any Bank or the Administrative Agent. Any Bank that is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) for
U.S. Federal income tax purposes agrees to provide to the Borrower on or prior
to the Closing Date two original signed copies of Internal Revenue Service Form
4224 or Form 1001 certifying to such Bank's entitlement to an exemption from
United States withholding tax with respect to payments to be made under this
Agreement and under any Note and from time to time upon the reasonable written
request of the Borrower after the Closing Date, such Bank will provide to the
Borrower two original signed copies of Internal Revenue Service Form 4224 or
Form 1001 (or any successor forms) certifying to such Bank's entitlement to an
exemption from, or reduction in, United States withholding tax with respect to
payments to be made under this Agreement and under any Note.
4.3 Computations. All computations of interest with respect to
------------
Alternative Base Rate Loans shall be based on a year of 365 days and paid for
the actual number of days elapsed. All computations of interest with respect to
Eurodollar Rate Loans shall be based on a year of 360 days and paid for the
actual number of days elapsed. Except as otherwise provided in the definition
of the term "Interest Period" with respect to Eurodollar Rate Loans, whenever a
payment hereunder or under any of the other Loan Documents becomes due on a day
that is not a Business Day, the due date for such payment shall be extended to
the next succeeding Business Day, and interest shall accrue during such
extension.
4.4 Inability to Determine Eurodollar Rate. In the event, prior to the
--------------------------------------
commencement of any Interest Period relating to any Eurodollar Rate Loan, the
Administrative Agent shall determine that adequate and reasonable methods do not
exist for ascertaining the Eurodollar Rate that would otherwise determine the
rate of interest to be applicable to any Eurodollar Rate Loan during any
Interest Period, the Administrative Agent shall forthwith give notice of such
determination (which shall be conclusive and binding on the Borrower and the
Banks) to the Borrower and the Banks. In such event (a) any Loan Request or
Conversion Request with respect to Eurodollar Rate Loans shall be automatically
withdrawn and shall be deemed a request for Alternative Base Rate Loans, (b)
each Eurodollar Rate Loan will automatically, on the last day of the then
current Interest Period relating thereto, become an Alternative Base Rate Loan,
and (c) the obligations of the Banks to make Eurodollar Rate Loans shall be
suspended until the Administrative Agent determines that the circumstances
giving rise to such suspension no longer exist, whereupon the Administrative
Agent shall so notify the Borrower and the Banks.
4.5 Illegality. Notwithstanding any other provisions herein, if any
----------
present or future Government Mandate shall make it unlawful for any Bank to make
or maintain Eurodollar Rate Loans, such Bank shall forthwith give notice of such
circumstances to the Borrower and the other Banks and thereupon (a) the
commitment of such Bank to make Eurodollar Rate Loans or convert
27
<PAGE>
Alternative Base Rate Loans to Eurodollar Rate Loans shall forthwith be
suspended, and (b) such Bank's Loans then outstanding as Eurodollar Rate Loans,
if any, shall be converted automatically to Alternative Base Rate Loans on the
last day of each then existing Interest Period applicable to such Eurodollar
Rate Loans or within such earlier period after the occurrence of such
circumstances as may be required by Government Mandate. The Borrower shall
promptly pay the Administrative Agent for the account of such Bank, upon demand
by such Bank, any additional amounts necessary to compensate such Bank for any
costs incurred by such Bank in making any conversion in accordance with this
Section 4.5 other than on the last day of an Interest Period, including any
interest or fees payable by such Bank to lenders of funds obtained by it in
order to make or maintain its Eurodollar Rate Loans hereunder.
4.6 Additional Costs. If any present or future applicable Government
----------------
Mandate (whether or not having the force of law), shall:
(a) subject any Bank or the Administrative Agent to any tax,
levy, impost, duty, charge, fee, deduction, or withholding of any nature with
respect to this Agreement, the other Loan Documents, such Bank's Commitment, or
the Loans (other than taxes based upon or measured by the income or profits of
such Bank or the Administrative Agent), or
(b) materially change the basis of taxation (except for changes
in taxes on income or profits) of payments to any Bank of the principal of or
the interest on any Loans or any other amounts payable to any Bank or the
Administrative Agent under this Agreement or the other Loan Documents, or
(c) impose, increase, or render applicable (other than to the
extent specifically provided for elsewhere in this Agreement) any special
deposit, reserve, assessment, liquidity, capital adequacy, or other similar
requirements (whether or not having the force of law) against assets held by, or
deposits in or for the account of, or loans by, or commitments of an office of
any Bank, or
(d) impose on any Bank or the Administrative Agent any other
conditions or requirements with respect to this Agreement, the other Loan
Documents, the Loans, such Bank's Commitment, or any class of loans or
commitments of which any of the Loans or such Bank's Commitment forms a part,
and the result of any of the foregoing is:
(i) to increase by an amount deemed by such Bank to be material
to the cost to any Bank of making, funding, issuing, renewing, extending, or
maintaining any of the Loans or such Bank's Commitment, or
(ii) to reduce, by an amount deemed by such Bank or the
Administrative Agent, as the case may be, to be material, the amount of
principal, interest, or other amount payable to such Bank or the Administrative
Agent hereunder on account of such Bank's Commitment or any of the Loans, or
(iii) to require such Bank or the Administrative Agent to make
any payment that, but for such conditions or requirements described in clauses
(a) through (d), would not be payable hereunder, or forego any interest or other
sum that, but for such conditions or
28
<PAGE>
requirements described in clauses (a) through (d), would be payable to such Bank
or the Administrative Agent hereunder, in any case the amount of which payment
or foregone interest or other sum is deemed by such Bank or the Administrative
Agent, as the case may be, to be material and is calculated by reference to the
gross amount of any sum receivable or deemed received by such Bank or the
Administrative Agent from the Borrower hereunder, then, and in each such case,
(x) the Borrower will, upon demand made by such Bank or (as the case may be) the
Administrative Agent at any time and from time to time (such demand to be made
in any case not later than the first to occur of (A) the date one hundred and
eighty (180) days after such event described in clause (i), (ii), or (iii)
giving rise to such demand, and (B) the date ninety (90) days after both the
payment in full of all outstanding Loans and termination of the Commitments) and
as often as the occasion therefor may arise, pay to such Bank or the
Administrative Agent such additional amounts as will be sufficient to compensate
such Bank or the Administrative Agent for such additional cost, reduction,
payment, foregone interest, or other sum, (y) the Borrower shall be entitled,
upon notice to the Administrative Agent and each Bank given within ninety (90)
days of any demand by a Bank under clause (x), to repay in cash in full all, but
not less than all, of the Loans of such Bank, together with all accrued and
unpaid interest on such Loans and any other amounts owing to such Bank under the
Loan Documents and terminate (in full and not in part) such Bank's Commitment,
and, (z) in the event the Borrower elects to repay the Loans of any Bank under
clause (y), each other Bank shall be entitled, by notice to the Administrative
Agent and the Borrower given within forty-five (45) days after receipt of the
notice referred to in clause (y), to require the Borrower to repay in cash in
full, within forty-five (45) days of such notice under this clause (z), all, but
not less than all, of the Loans of such other Bank, together with all accrued
and unpaid interest on such Loans and any other amounts owing to such other Bank
under the Loan Documents. Subject to the terms specified above in this Section
4.6, the obligations of the Borrower under this Section 4.6 shall survive
repayment of the Loans and termination of the Commitments.
4.7 Capital Adequacy. If after the date hereof any Bank or the
----------------
Administrative Agent determines that (a) the adoption of or change in any
Government Mandate (whether or not having the force of law) regarding capital
requirements for banks or bank holding companies or any change in the
interpretation or application thereof by any applicable Government Authority
with appropriate jurisdiction, or (b) compliance by such Bank or the
Administrative Agent, or any corporation controlling such Bank or the
Administrative Agent, with any Government Mandate (whether or not having the
force of law) has the effect of reducing the return on such Bank's or the
Administrative Agent's commitment with respect to any Loans to a level below
that which such Bank or the Administrative Agent could have achieved but for
such adoption, change, or compliance (taking into consideration such Bank's or
the Administrative Agent's then existing policies with respect to capital
adequacy and assuming full utilization of such Entity's capital) by any amount
reasonably deemed by such Bank or (as the case may be) the Administrative Agent
to be material, then such Bank or the Administrative Agent may notify the
Borrower of such fact. To the extent that the amount of such reduction in the
return on capital is not reflected in the Alternative Base Rate, (x) the
Borrower shall pay such Bank or (as the case may be) the Administrative Agent
for the amount of such reduction in the return on capital as and when such
reduction is determined upon presentation by such Bank or (as the case may be)
the Administrative Agent of a certificate in accordance with Section 4.8 hereof
(but in any case not later than the first to occur of (I) the date one hundred
and eighty (180) days after such adoption, change, or compliance causing such
reduction, and (II) as to adoptions of or changes in Government Mandates
occurring prior to the repayment of the Loans and the termination of the
29
<PAGE>
Commitment the date ninety (90) days after both the payment in full of all
outstanding Loans and termination of the Commitments), (y) the Borrower shall be
entitled, upon notice to the Administrative Agent and each Bank given within
ninety (90) days of any notice by such Bank under the next preceding sentence,
to repay in cash in full all, but not less than all, of the Loans of such Bank,
together with all accrued and unpaid interest on such Loans and any other
amounts owing to such Bank under the Loan Documents and terminate (in full and
not in part) such Bank's Commitment, and, (z) in the event the Borrower elects
to repay the Loans of any Bank under clause (y), each other Bank shall be
entitled, by notice to the Administrative Agent and the Borrower given within
forty-five (45) days after receipt of the notice referred to in clause (y), to
require the Borrower to repay in cash in full, within forty-five (45) days of
the notice under this clause (z), all, but not less than all, of the Loans of
such other Bank, together with all accrued and unpaid interest on such Loans and
any other amounts owing to such other Bank under the Loan Documents. Each Bank
shall allocate such cost increases among its customers in good faith and on an
equitable basis. Each Bank will use reasonable efforts (subject to overall
policy considerations of such Bank) to avoid or mitigate any increased cost or
obligation to prepay arising under this Section to the greatest extent
practicable (including transferring its Loans to another lending office or
affiliate of the Bank) unless, in the opinion of the Bank, such efforts would be
likely to result in the Bank (or its lending office or affiliate) suffering a
material economic, legal or regulatory disadvantage, and provided, further, that
nothing in this sentence shall affect or postpone the Borrower's obligations
hereunder, or any of the Bank's rights hereunder. Subject to the terms specified
above in this Section 4.7, the obligations of the Borrower under this Section
4.7 shall survive repayment of the Loans and termination of the Commitments.
4.8 Certificate. A certificate setting forth any additional amounts
-----------
payable pursuant to Section 4.6 or Section 4.7 and a brief explanation of such
amounts which are due and in reasonable detail the basis of the calculation and
allocation thereof, submitted by any Bank or the Administrative Agent to the
Borrower, shall be conclusive evidence, absent manifest error, that such amounts
are due and owing.
4.9 Indemnity. The Borrower shall indemnify and hold harmless each
---------
Bank from and against any loss, cost, or expense (excluding loss of anticipated
profits) that such Bank may sustain or incur as a consequence of (a) default by
the Borrower in payment of the principal amount of or any interest on any
Eurodollar Rate Loans as and when due and payable, including any such loss or
expense arising from interest or fees payable by such Bank to lenders of funds
obtained by it in order to maintain its Eurodollar Rate Loans, (b) default by
the Borrower in making a borrowing or conversion after the Borrower has given
(or is deemed to have given) a Loan Request or a Conversion Request; or (c)
except as otherwise expressly provided in Section 3.3, the making of any payment
of a Eurodollar Rate Loan or the making of any conversion of any such Loan to an
Alternative Base Rate Loan on a day that is not the last day of the applicable
Interest Period with respect thereto, including interest or fees payable by such
Bank to lenders of funds obtained by it in order to maintain any such Loans.
The obligations of the Borrower under this Section 4.9 shall survive repayment
of the Loans and termination of the Commitments.
4.10 Interest After Event of Default. All amounts outstanding under
-------------------------------
the Loan Documents that are not paid when due, including all overdue principal
and (to the extent permitted by applicable Government Mandate) interest and all
other overdue amounts (after giving effect to any applicable grace period),
shall to the extent permitted by applicable Government Mandate bear interest
until such amount shall be paid in full (after as well as before judgment) at a
rate per annum equal to
30
<PAGE>
two percent (2%) above the Alternative Base Rate. Any interest accruing under
this section on overdue principal or interest shall be due and payable upon
demand.
4.11 Special Banks. Unless the Majority Banks seek indemnification,
-------------
payment, or reimbursement under, or invoke the provisions of, Section 4.5, 4.6
or 4.7, if the Borrower is obligated to pay to the Administrative Agent or any
Bank any amount under said Sections, the Borrower may, at its option, so long as
no Default or Event of Default then exists, (x) subject to Section 4.9 hereof,
repay the outstanding Loans in favor of such Bank, which repayment shall be
allocated solely to Loans in favor of such Bank, and in the event of such
repayment, such Bank shall cease to be a Bank under this Agreement and the Total
Commitment hereunder shall be reduced by the amount of the Commitment of such
Bank (and the Commitment Percentages of the remaining Banks shall be
recalculated accordingly), or (y) replace such Bank with a new Bank reasonably
acceptable to the Administrative Agent, and such Bank hereby agrees to be so
replaced subject to the following:
(a) The obligations of the Borrower hereunder to the Bank to be
replaced (including such increased or additional costs incurred from the date of
notice to the Borrower of such increase or additional costs through the date
such Bank is replaced hereunder) shall be paid in full to such Bank concurrently
with such replacement;
(b) The replacement Bank shall be a Bank that is not subject to
the increased costs arising under such Sections which may have effectuated the
Borrower's election to replace any Bank hereunder;
(c) Each such replacement Bank shall execute and deliver to the
Administrative Agent such documentation reasonably satisfactory to the
Administrative Agent pursuant to which such Bank is to be come a party hereto
with a Commitment equal to that of the Bank being replaced and shall make a Loan
or Loans in the aggregate principal amount equal to the aggregate outstanding
principal amount of the Loan or Loans of the Bank being replaced;
(d) Upon such execution of such documents referred to in clause
(c) and repayment of the amounts referred to in clause (a), the replacement Bank
shall be a Bank with a Commitment as specified hereinabove and the Bank being
replaced shall cease to be a Bank hereunder, except with respect to
indemnification provisions under this Agreement, which shall survive as to such
replaced Bank; and
(e) The Administrative Agent shall reasonably cooperate in
effectuating the replacement of any Bank hereunder, but at no time shall the
Administrative Agent be obligated to initiate any such replacement; and
(f) Any Bank replaced hereunder shall be replaced at the
Borrower's sole cost and expense and at no cost or expense to the Administrative
Agent.
31
<PAGE>
5. REPRESENTATIONS AND WARRANTIES.
------------------------------
The Borrower represents and warrants to the Banks and the
Administrative Agent as follows:
5.1 Partnership or Corporate Authority.
----------------------------------
(a) Organization; Good Standing. Each of the Borrower, its
---------------------------
Subsidiaries, and PGP (i) is a limited partnership, general partnership or
corporation, as the case may be, and (with respect to any limited partnership or
corporation) is duly organized, validly existing, and in good standing under the
laws of its state of organization, (ii) has all requisite partnership or
corporate power to own its material properties and conduct its material business
as now conducted and as presently contemplated, and (iii) is in good standing as
a foreign corporation or partnership, as the case may be, and is duly authorized
to do business in each jurisdiction where it owns or leases properties or
conducts any business so as to require such qualification except where a failure
to be so qualified would not be likely to have a Material Effect.
(b) Authorization. The execution, delivery, and performance of
-------------
this Agreement and the other Loan Documents to which the Borrower, any of its
Subsidiaries, or PGP is or is to become a party and the transactions
contemplated hereby and thereby (i) are within the partnership or corporate
power of each such Entity, (ii) have been duly authorized by all necessary
partnership or corporate proceedings on behalf of each such Entity, (iii) do not
conflict with or result in any breach or contravention of any Government Mandate
to which any such Entity is subject, except where such conflict, breach or
contravention would not be likely to have a Material Effect (iv) do not conflict
with or violate any provision of the corporate charter or bylaws or the limited
or general partnership certificate or agreement, as the case may be, of any such
Entity, and (v) do not violate, conflict with, constitute a default or event of
default under, or result in any rights to accelerate or modify any obligations
under any Contract to which any such Entity is party or subject, or to which any
of its respective assets are subject, except where such violation, conflict,
default, event of default or right to accelerate or modify any obligations under
any Contract would not be likely to have a Material Effect.
(c) Enforceability. The execution and delivery of this
--------------
Agreement and the other Loan Documents to which the Borrower, any of its
Subsidiaries, or PGP is or is to become a party will result in valid and legally
binding obligations of such Person enforceable against it in accordance with the
respective terms and provisions hereof and thereof, except as enforceability is
limited by bankruptcy, insolvency, reorganization, moratorium, or other laws
relating to or affecting generally the enforcement of creditors' rights and by
general principles of equity, regardless of whether enforcement is sought in a
Proceeding in equity or at law.
(d) Equity Securities. As of the Closing Date, PGP and Holdings
-----------------
are the only general partners of the Borrower, and subsequent to the Closing
Date, PGP, Holdings and such additional general partners as have been previously
disclosed to the Administrative Agent and the Banks in writing are the only
general partners of the Borrower. As of the Closing Date, PGP is the sole
general partner of Holdings and PGP will be the only general partner of Holdings
as of any subsequent date except for any other general partner of Holdings that
has been disclosed by the Borrower to the Administrative Agent and the Banks in
writing. As of the Closing Date, the
32
<PAGE>
ownership of the Equity Securities of the Borrower and PGP is set forth on
Schedule 5.1(d), and subsequent to the Closing Date, the ownership of the Equity
- ---------------
Securities of PGP is as set forth on Schedule 5.1(d) unless otherwise disclosed
---------------
to the Administrative Agent and the Banks in writing. As of the Closing Date,
except as set forth on Schedule 5.1(d), neither the Borrower nor PGP nor
---------------
Holdings has agreed, committed, or otherwise obligated itself to authorize or
issue any Equity Securities. All of the outstanding Equity Securities of the
Borrower are validly issued, fully paid, and non-assessable.
5.2 Governmental Approvals. The execution, delivery, and performance
----------------------
by the Borrower, its Subsidiaries, and PGP of this Agreement and the other Loan
Documents to which the Borrower, any of its Subsidiaries, or PGP is or is to
become a party and the transactions contemplated hereby and thereby do not
require the approval or consent of, or filing with, any Government Authority
other than those already obtained and set forth on Schedule 5.2.
------------
5.3 Liens; Leases. The assets of the Borrower are subject to no
-------------
Liens except Permitted Liens. Each of the Borrower and its Subsidiaries enjoys
quiet possession under all leases relating to Real Estate or personal property
to which it is party as a lessee, except where such failure to have quiet
possession or be Fully Effective would not have a Material Effect.
5.4 Financial Statements. There has been furnished to the
--------------------
Administrative Agent and each of the Banks (a) a consolidated balance sheet of
the Borrower as at December 31, 1997, December 31, 1996 and December 31, 1995,
and a consolidated statement of income and cash flow of the Borrower for the
fiscal year then ended, certified by the Borrower's independent certified public
accountants, and (b) unaudited consolidated balance sheets of the Borrower as at
March 31, 1997, June 30, 1997, and September 30, 1997 and consolidated
statements of income and of cash flow of the Borrower for the respective fiscal
periods then ended and as set forth in the Borrower's Quarterly Reports on Form
10-Q for such fiscal quarters. With respect to the financial statements
prepared in accordance with clause (a) above, such balance sheet and statement
of income have been prepared in accordance with GAAP, and present fairly in all
material respects the financial position of the Borrower and its Subsidiaries as
at the close of business on the respective dates thereof and the results of
operations of the Borrower and its Subsidiaries for the fiscal periods then
ended; or, in the case of the financial statements referred to in clause (b),
have been prepared in accordance with Rule 10-01 of Regulation S-X of the
Securities and Exchange Commission, and contain all adjustments necessary for a
fair presentation of (i) the results of operations of the Borrower for the
periods covered thereby, (ii) the financial position of the Borrower at the date
thereof, and (iii) the cash flows of the Borrower for periods covered thereby
(subject to year-end adjustments). There are no contingent liabilities of the
Borrower or its Subsidiaries as of such dates involving material amounts, known
to the executive management of the Borrower that (x) should have been disclosed
in said balance sheets or the related notes thereto in accordance with GAAP and
the rules and regulations of the Securities and Exchange Commission, and (y)
were not so disclosed.
5.5 No Material Changes. Except as set forth on Schedule 5.5, no
------------------- ------------
change in the Business of the Borrower and its Subsidiaries, taken as a whole,
has occurred since December 31, 1996 that has resulted in a Material Effect.
5.6 Permits. The Borrower and its Subsidiaries have all Permits
-------
necessary or appropriate for them to conduct their Business, except where the
failure to have such Permits would
33
<PAGE>
not be likely to have a Material Effect. All of such Permits are in full force
and effect. Without limiting the foregoing, the Borrower is duly registered as
an "investment adviser" under the Investment Advisers Act of 1940 and under the
applicable laws of each state in which such registration is required in
connection with the investment advisory business of the Borrower and in which
the failure to obtain such registration would be likely to have a Material
Effect; PIMCO Funds Distributors LLC is duly registered as a "broker/dealer"
under the Securities Exchange Act of 1934 and under the securities or blue sky
laws of each state in which such registration is required in connection with the
business conducted by PIMCO Funds Distributors LLC and where a failure to obtain
such registration would be likely to have a Material Effect, and is a member in
good standing of the National Association of Securities Dealers, Inc.; no
Proceeding is pending or threatened with respect to the suspension, revocation,
or termination of any such registration or membership, and the termination or
withdrawal of any such registration or membership is not contemplated by the
Borrower or PIMCO Funds Distributors LLC except, only with respect to
registrations by the Borrower and PIMCO Funds Distributors LLC required under
state law, as would not be likely to have a Material Effect.
5.7 Litigation. Except as disclosed on Schedule 5.7 hereto as of
---------- ------------
the Closing Date, or as disclosed to the Administrative Agent and the Banks in
writing with respect to any subsequent date, there is no Proceeding of any kind
pending against the Borrower, any of its Subsidiaries, or PGP with an amount in
controversy exceeding the Material Amount. None of such Proceedings (a) is
reasonably likely to, either in any case or in the aggregate, have a Material
Effect, or (b) questions the validity of this Agreement or any of the other Loan
Documents, or any action taken or to be taken pursuant hereto or thereto.
5.8 Material Contracts. Except as would not be likely to have a
------------------
Material Effect, each Contract to which any of the Borrower and its Subsidiaries
is party or subject, or by which any of their respective assets are bound
(including investment advisory contracts and investment company distribution
plans) (a) is Fully Effective, (b) is not subject to any default or event of
default with respect to the Borrower, any of its Subsidiaries or, to the best
knowledge of the executive management of the Borrower, any other party, (c) is
not subject to any notice of termination given or received by the Borrower or
any of its Subsidiaries, and (d) is, to the best knowledge of the executive
management of the Borrower, the legal, valid, and binding obligation of each
party thereto other than the Borrower and its Subsidiaries enforceable against
such parties according to its terms.
5.9 Compliance with Other Instruments, Laws. None of the Borrower,
---------------------------------------
its Subsidiaries, or PGP is in violation of or default under (a) any provision
of its certificate of incorporation or by-laws, or its certificate of limited
partnership or agreement of limited or general partnership, as the case may be,
(b) except for the Note Agreement, any Contract to which it is or may be subject
or by which it or any of its properties are or may be bound, or (c) any
Government Mandate, including Government Mandates relating to occupational
safety and employment matters, except (with respect to subsections (b) and (c)),
in any case, where such violation or default would not be likely to have a
Material Effect.
5.10 Tax Status. The Borrower and its Subsidiaries (a) have made or
----------
filed all federal and state income and all other tax returns, reports, and
declarations required by any Government Authority to which any of them is
subject, except where the failure to make or file the same would not be likely
to have a Material Effect, (b) have paid all taxes and other governmental
assessments and
34
<PAGE>
charges due, except those being contested in good faith and by appropriate
Proceedings or those where a failure to pay is not reasonably likely to have a
Material Effect, and (c) have set aside on their books provisions reasonably
adequate for the payment of all taxes for periods subsequent to the periods to
which such returns, reports, or declarations apply. There are no unpaid taxes in
any material amount claimed to be due from the Borrower or any of its
Subsidiaries by any Government Authority, and the executive management of the
Borrower knows of no basis for any such claim.
5.11 No Event of Default. No Default has occurred and is continuing.
-------------------
5.12 Holding Company and Investment Company Acts. Neither the
-------------------------------------------
Borrower nor any of its Subsidiaries is a "holding company", or a "subsidiary
company" of a "holding company", as such terms are defined in the Public Utility
Holding Company Act of 1935. Neither the Borrower nor any of its Subsidiaries
is an "investment company", as such term is defined in the 1940 Act, required to
be registered in accordance with such Act.
5.13 Insurance. The Borrower and its Subsidiaries maintain
---------
insurance with financially sound and reputable insurers in such coverage
amounts, against such risks, with such deductibles and upon such other terms, or
are self-insured in respect of such risks (with appropriate reserves to the
extent required by GAAP), as is reasonable and customary for firms engaged in
businesses similar to those of the Borrower and its Subsidiaries. All policies
of insurance maintained by the Borrower or its Subsidiaries are Fully Effective.
All premiums due on such policies have been paid or accrued on the books of the
Borrower or its Subsidiaries, as appropriate.
5.14 Certain Transactions. Except in connection with (a) the PGP
--------------------
Refinancing, (b) transactions occurring in the ordinary course of business, (c)
transactions between the Borrower and Holdings authorized pursuant to the
Amended and Restated Operating Agreement dated as of January 1, 1998 by and
between Holdings and the Borrower, so long as PGP shall remain the sole general
partner of Holdings, (d) transactions with a Public General Partner that was
formerly a limited partner of the Borrower, and (e) transactions occurring on
fair and reasonable terms no less favorable to the Borrower and its Subsidiaries
taken as a whole than would be obtained in comparable arms' length transactions
with Persons that are not Affiliates of the Borrower or its Subsidiaries, none
of the officers, directors, partners, or employees of the Borrower or any of its
Subsidiaries, or, to the knowledge of the executive management of the Borrower,
any Entity (other than a Subsidiary) in which any such officer, director,
partner, or employee has a substantial interest or is an officer, director,
trustee, or partner, is at present a party to any transaction with the Borrower
or any of its Subsidiaries (other than for or in connection with services as
officers, directors, partners, or employees, as the case may be), including any
Contract providing for the furnishing of services to or by, providing for rental
of real or personal property to or from, or otherwise requiring payments to or
from any such officer, director, partner, employee, or Entity.
5.15 Employee Benefit Plans.
----------------------
(a) In General. Set forth on Schedule 5.15 is a
---------- -------------
list of each Employee Benefit Plan and Multiemployer Plan of the Borrower and
its Subsidiaries as of the Closing Date. After the Closing Date, any additional
Employee Benefit or Multiemployer Plan shall be disclosed to the Administrative
Agent in writing. Each Employee Benefit Plan has been maintained and operated
in compliance in all material respects with the provisions of ERISA and, to the
extent applicable, the
35
<PAGE>
Code, including the provisions thereunder respecting prohibited transactions,
except where the failure to so comply would not be likely to have a Material
Effect.
(b) Terminability of Welfare Plans. Under each Employee
------------------------------
Benefit Plan which is an employee welfare benefit plan within the meaning of
(S)3(1) or (S)3(2)(B) of ERISA, no benefits are due unless the event giving rise
to the benefit entitlement occurs prior to plan termination (except as required
by Title I, Part 6 of ERISA). The Borrower or an ERISA Affiliate, as
appropriate, may terminate each such Plan at any time (or at any time subsequent
to the expiration of any applicable bargaining agreement) in the discretion of
the Borrower or such ERISA Affiliate without liability to any Person, except as
would not be likely to have a Material Effect.
(c) Guaranteed Pension Plans. Each contribution required to
------------------------
be made to a Guaranteed Pension Plan, whether required to be made to avoid the
incurrence of an accumulated funding deficiency, the notice or lien provisions
of (S)302(f) of ERISA, or otherwise, has been timely made. No waiver of an
accumulated funding deficiency or extension of amortization periods has been
received with respect to any Guaranteed Pension Plan. No liability to the PBGC
(other than required insurance premiums, all of which have been paid) has been
incurred by the Borrower or any ERISA Affiliate with respect to any Guaranteed
Pension Plan and there has not been any ERISA Reportable Event, or any other
event or condition which presents a material risk of termination of any
Guaranteed Pension Plan by the PBGC. Based on the latest valuation of each
Guaranteed Pension Plan (which in each case occurred within fifteen (15) months
of the date of this representation), and on the actuarial methods and
assumptions employed for that valuation, the aggregate benefit liabilities of
all such Guaranteed Pension Plans within the meaning of (S)4001 of ERISA did not
exceed the aggregate value of the assets of all such Guaranteed Pension Plans by
more than $10,000,000, disregarding for this purpose the benefit liabilities and
assets of any Guaranteed Pension Plan with assets in excess of benefit
liabilities.
(d) Multiemployer Plans. Neither the Borrower nor any ERISA
-------------------
Affiliate has incurred any material liability (including secondary liability) to
any Multiemployer Plan as a result of a complete or partial withdrawal from such
Multiemployer Plan under (S)4201 of ERISA or as a result of a sale of assets
described in (S)4204 of ERISA. Neither the Borrower nor any ERISA Affiliate has
been notified that any Multiemployer Plan is in reorganization or insolvent
under and within the meaning of (S)4241 or (S)4245 of ERISA or that any
Multiemployer Plan intends to terminate or has been terminated under (S)4041A
of ERISA.
5.16 Use of Proceeds; Regulations U and X.
------------------------------------
(a) The proceeds of the Loans shall be used by the Borrower to
refinance certain Indebtedness, for working capital and for general corporate
purposes and may be used to repay the Private Placement Notes.
(b) No portion of any Loan is to be used for the purpose of
purchasing or carrying any "margin security" or "margin stock" as such terms are
used in Regulations U and X of the Board of Governors of the Federal Reserve
System, 12 C.F.R. Parts 221 and 224.
5.17 Environmental Compliance. To the best of the Borrower's
------------------------
knowledge:
36
<PAGE>
(a) none of the Borrower, its Subsidiaries, PGP, and any
operator of the Real Estate or any operations thereon is in violation, or
alleged violation, of any Government Mandate or Permit pertaining to
environmental, safety, or public health matters, including the Resource
Conservation and Recovery Act ("RCRA"), the Comprehensive Environmental
----
Response, Compensation and Liability Act of 1980 ("CERCLA"), the Superfund
------
Amendments and Reauthorization Act of 1986 ("SARA"), the Federal Clean Water
----
Act, the Federal Clean Air Act, and the Toxic Substances Control Act
(hereinafter "Environmental Laws"), which violation would be likely to have a
------------------
Material Effect;
(b) neither the Borrower nor any of its Subsidiaries has
received notice from any third party, including any Government Authority, (i)
that any one of them has been identified by the United States Environmental
Protection Agency ("EPA") as a potentially responsible party under CERCLA with
---
respect to a site listed on the National Priorities List, 40 C.F.R. Part 300
Appendix B (1986); (ii) that any hazardous waste, as defined by 42 U.S.C.
(S)9601(5), any hazardous substances as defined by 42 U.S.C. (S)9601(14), any
pollutant or contaminant as defined by 42 U.S.C. (S)9601(33) and any toxic
substances, oil, hazardous materials, or other chemicals or substances regulated
by any Environmental Laws ("Hazardous Substances") that any one of them has
--------- ----------
generated, transported, or disposed of has been found at any site at which a
Government Authority or other third party has conducted, or has ordered that
other parties conduct, a remedial investigation, removal, or other response
action pursuant to any Environmental Law; or (iii) that it is or shall be a
named party to any Proceeding (in each case, contingent or otherwise) arising
out of any third party's incurrence of costs, expenses, losses, or damages of
any kind whatsoever in connection with the release of Hazardous Substances; and
(c) except as would not be likely to have a Material Effect:
(i) no portion of the Real Estate has been used for the
handling, processing, storage, or disposal of Hazardous
Substances except in accordance with applicable Environmental
Laws;
(ii) no underground tank or other underground storage
receptacle for Hazardous Substances is located on any portion
of the Real Estate;
(iii) in the course of any activities conducted by any of
the Borrower, its Subsidiaries, PGP, and operators of any Real
Estate, no Hazardous Substances have been generated or are
being used on the Real Estate except in accordance with
applicable Environmental Laws;
(iv) there have been no releases (i.e., any past or
present releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping,
disposing, or dumping) or threatened releases of Hazardous
Substances on, upon, into, or from the Real Estate that would
have a material adverse effect on the value of the Real Estate
or the environment;
(v) there have been no releases of Hazardous Substances
on, upon, from, or into any real property in the vicinity of
any of the Real Estate that (A) may have come to be located on
the Real Estate through soil or groundwater contamination,
37
<PAGE>
and, (B) if so located, would have a material adverse effect on
the value of the Real Estate or the environment; and
(vi) any Hazardous Substances that have been generated by
any of the Borrower and its Subsidiaries, or on the Real Estate
by any other Person, have been transported offsite only by
carriers having an identification number issued by the EPA,
treated or disposed of only by treatment or disposal facilities
maintaining valid Permits as required under applicable
Environmental Laws, which transporters and facilities have been
and are, to the best of the Borrower's knowledge, operating in
compliance with such Permits and applicable Environmental Laws.
5.18 Subsidiaries, Partnerships and Joint Ventures. Schedules As of
---------------------------------------------
the Closing Date Schedule 5.18 sets forth a list of (a) each Subsidiary of the
-------------
Borrower, (b) the number of authorized and outstanding Equity Securities of each
class of each Subsidiary of the Borrower and the number and percentage thereof
owned, directly or indirectly, by the Borrower, and (c) any partnership or joint
venture in which the Borrower or any of its Subsidiaries is engaged with any
other Person. The foregoing representation shall remain true and correct each
day following the Closing Date on which this Agreement obligates the Borrower to
reaffirm its representations and warranties, unless otherwise disclosed in the
Borrower's Form 10-K delivered to the Administrative Agent and the Banks in
accordance with Section 6.4 hereof. The Equity Securities of each Subsidiary of
the Borrower are validly issued, fully paid, and non-assessable.
5.19 Funded Debt. Schedule 5.19 sets forth as of the Closing Date
----------- -------------
all outstanding Funded Debt of the Borrower and its Subsidiaries.
5.20 General. The Borrower's Annual Report on Form 10-K for the
-------
fiscal year ended December 31, 1996, and Quarterly Reports on Form 10-Q referred
to in Section 5.4 (a) conform in all material respects to the requirements of
the Securities Exchange Act of 1934, as amended, and to all applicable rules and
regulations of the Securities and Exchange Commission, and (b) as amended by
interim filings, do not contain an untrue statement of any material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they are made, not
misleading.
5.21 Year 2000 Compliance. The Borrower has (a) initiated a review
--------------------
and assessment of all areas within its and each of its Subsidiaries' business
and operations (including those affected by suppliers and vendors) that could be
adversely affected by the risk that computer applications used by the Borrower
or any of its Subsidiaries (or suppliers and vendors) may be unable to recognize
and perform properly date-sensitive functions involving certain dates prior to
and any date after December 31, 1999 (the "Year 2000 Problem"), (b) developed a
-----------------
plan and timeline for addressing the Year 2000 Problem on a timely basis, and
(c) to date, implemented that plan in accordance with that timetable. All
computer applications (including those of its suppliers and vendors) that are
material to the Borrower's or any of its Subsidiaries' business and operations
are expected on a timely basis to be able to perform properly date-sensitive
functions for all dates before and after January 1, 2000 (that is, be "Year 2000
---------
Compliant"), except to the extent that such failure could not reasonably be
- ---------
expected to have Material Effect.
38
<PAGE>
6. AFFIRMATIVE COVENANTS OF THE BORROWER.
-------------------------------------
The Borrower covenants and agrees that, so long as any Loan or Note is
outstanding or any Bank has any obligation to make any Loans:
6.1 Punctual Payment. The Borrower will duly and punctually pay or cause
----------------
to be paid the principal and interest on the Loans, the facility fees and all
other amounts provided for in this Agreement and the other Loan Documents to
which the Borrower is party, all in accordance with the terms of this Agreement
and such other Loan Documents.
6.2 Maintenance of Office. The Borrower will maintain its chief executive
---------------------
office in Newport Beach, California or at such other place in the United States
of America as the Borrower shall designate upon prior written notice to the
Administrative Agent, where notices, presentations, and demands to or upon the
Borrower in respect of the Loan Documents may be given or made.
6.3 Records and Accounts. The Borrower will, and will cause each of its
--------------------
Subsidiaries to, keep complete and accurate records and books of account.
6.4 Financial Statements, Certificates, and Information. The Borrower
---------------------------------------------------
will deliver to each of the Banks:
(a) as soon as practicable, but in any event not later than
ninety (90) days after the end of each fiscal year of the Borrower:
(i) the consolidated balance sheet of the Borrower as at the
end of such fiscal year;
(ii) the consolidating balance sheet of the Borrower as at
the end of such fiscal year;
(iii) the consolidated statement of income and consolidated
statement of cash flows of the Borrower for such fiscal year; and
(iv) the consolidating statement of income and consolidating
statement of cash flows of the Borrower for such fiscal year.
Each of the balance sheets and statements delivered under this Section 6.4(a)
shall (w) set forth in comparative form the figures for the previous fiscal
year; (x) be in reasonable detail and prepared in accordance with GAAP based on
the records and books of account maintained as provided in Section 6.3; (y) as
to items (i) and (iii) above, be accompanied by a certification by the principal
financial or accounting officer of the Borrower that the information contained
in such financial statements presents fairly in all material respects the
financial position of the Borrower and its Subsidiaries on the date thereof and
results of operations and cash flows of the Borrower and its Subsidiaries for
the periods covered thereby; and (z) as to items (i) and (iii) above, be
certified, without limitation as to scope, by a firm of independent certified
public accountants reasonably satisfactory to the Administrative Agent, and
shall be accompanied by a written statement from such accountants to the effect
that in connection with their audit of such financial statements nothing has
come to their attention that caused them to
39
<PAGE>
believe that the Borrower has failed to comply with the terms, covenants,
provisions or conditions of Section 6.3 or Section 7 of this Agreement as to
accounting matters (provided that such accountants may also state that the audit
was not directed primarily toward obtaining knowledge of such noncompliance),
or, if such accountants shall have obtained knowledge of any such noncompliance,
they shall disclose in such statement any such noncompliance;
(b) as soon as practicable, but in any event not later than
forty-five (45) days after the end of the first three fiscal quarters of each
fiscal year of the Borrower, (i) the unaudited interim consolidated balance
sheet of the Borrower as at the end of such fiscal quarter, and (ii) the
unaudited interim consolidated statement of income and unaudited interim
consolidated statement of cash flow of the Borrower for such fiscal quarter and
for the portion of the Borrower's fiscal year then elapsed, all in reasonable
detail and prepared in accordance with Rule 10-01 of Regulation S-X of the
Securities and Exchange Commission, together with a certification by the
principal financial or accounting officer of the Borrower that, in the opinion
of management of the Borrower, all adjustments necessary for a fair presentation
of (A) the results of operations of the Borrower for the periods covered
thereby, (B) the financial position of the Borrower at the date thereof, and (C)
the cash flows of the Borrower for periods covered thereby have been made
(subject to year-end adjustments);
(c) simultaneously with the delivery of the financial statements
referred to in subsections (a) and (b) above, a statement certified by the
principal financial officer, chief accounting officer or treasurer of the
Borrower in substantially the form of Exhibit F hereto and setting
---------
forth in reasonable detail computations evidencing the Borrower's compliance
with the covenants contained in Section 7.13 and (if applicable) reconciliations
to reflect changes in GAAP since December 31, 1996;
(d) promptly after the filing or mailing thereof, copies of all
material of a financial nature filed with the Securities and Exchange Commission
or sent to the holders of the Equity Securities of the Borrower;
(e) simultaneously with the delivery of the financial statements
referred to in subsections (a) and (b) above, a report of the ownership of
Equity Securities of the Borrower as of the end of such fiscal quarter or fiscal
year; and
(f) from time to time such other financial data and information
(including accountants' management letters) as the Administrative Agent (having
been requested to do so by any Bank) may reasonably request.
6.5. Notices.
-------
(a) Defaults. The Borrower will promptly after the executive
--------
management of the Borrower (which for purposes of this section shall mean the
chief executive officer, chief operating officer, chief financial officer, chief
accounting officer, and general counsel of the Borrower) becomes aware thereof
(and in any case within two (2) Business Days after the executive management
becomes aware thereof) notify the Administrative Agent and each of the Banks in
writing of the occurrence of any Default or Event of Default. If any Person
shall give any notice in writing of a claimed default (whether or not
constituting an Event of Default) under this Agreement or any other Contract
relating to Funded Debt equal to or in excess of the Material Amount to which or
with
40
<PAGE>
respect to which the Borrower or any of its Subsidiaries is a party or obligor,
whether as principal, guarantor, surety, or otherwise, the Borrower shall
forthwith give written notice thereof to the Administrative Agent and each of
the Banks, describing the notice or action and the nature of the claimed
default.
(b) Environmental Events. The Borrower will promptly give
--------------------
notice to the Administrative Agent and each of the Banks (i) of any violation of
any Environmental Law that the Borrower or any of its Subsidiaries reports in
writing, or that is reportable by any such Person in writing (or for which any
written report supplemental to any oral report is made) to any Government
Authority, and (ii) upon becoming aware thereof, of any Proceeding, including a
notice from any Government Authority of potential environmental liability, that
has the potential, in the Borrower's reasonable judgement, to have a Material
Effect.
(c) Notice of Proceedings and Judgments. The Borrower will give
-----------------------------------
notice to the Administrative Agent and each of the Banks in writing within seven
(7) days of becoming aware of any Proceedings pending or threatened in writing
affecting the Borrower or any of its Subsidiaries or to which the Borrower or
any of its Subsidiaries is or becomes a party that could reasonably be expected
by the Borrower to have a Material Effect (or of any material change in any such
Proceedings of which the Borrower has previously given notice). Any such notice
will state the nature and status of such Proceedings. The Borrower will give
notice to the Administrative Agent and each of the Banks, in writing, in form
and detail satisfactory to the Administrative Agent, within three (3) days of
any judgment not covered by insurance, final or otherwise, against the Borrower
or any of its Subsidiaries in an amount in excess of the Material Amount.
(d) Notice of Change of Control. In the event the Borrower
---------------------------
obtains knowledge of a Change of Control or an impending Change of Control, the
Borrower will promptly give written notice (a "Control Change Notice") of such
---------------------
fact to the Administrative Agent and the Banks at least forty (40) days prior to
any proposed Change of Control Date, (i) except to the extent the Borrower may
be prohibited by U.S. securities laws from giving such a notice, in which case
the Borrower shall do so as soon as may be legally permissible and (ii) except
to the extent the Borrower may be prohibited by a written confidentiality
covenant, in which case the Borrower shall do so as soon as it is contractually
permitted and in any event not later than forty-eight (48) hours prior to such
Change of Control. Any Control Change Notice shall describe the principal facts
and circumstances of such Change of Control known to the Borrower in reasonable
detail (including the Change of Control Date or, if the Borrower does not have
knowledge of the Change of Control Date, the Borrower's best estimate of such
Change of Control Date). In the event the Borrower shall not have designated
the Change of Control Date in its Control Change Notice, the Borrower shall keep
the Administrative Agent and the Banks informed as to any changes in the
estimated Change of Control Date and shall provide written notice to the
Administrative Agent and the Banks specifying the Change of Control Date
promptly upon obtaining knowledge thereof.
(e) Termination of Management Contracts. The Borrower will
-----------------------------------
promptly notify the Administrative Agent and the Banks of any termination of any
one or more management agreements or other contracts taking place during any
sixty (60) day period in respect of funds managed by the Borrower that, in the
aggregate, account for $20 billion or more of the Borrower's Assets Under
Management.
41
<PAGE>
(f) Year 2000 Compliance. The Borrower will promptly notify the
--------------------
Banks in the event the Borrower discovers or determines that any computer
application (including those of its suppliers and vendors) that is material to
the Borrower's or any of its Subsidiaries' business and operations will not be
Year 2000 Compliant on or before September 1, 1999, except to the extent that
such failure could not reasonably be expected to have a Material Effect.
(g) Acceleration of Private Placement Notes. The Borrower will
---------------------------------------
promptly notify the Banks and the Administrative Agent of any acceleration of
the Private Placement Notes.
6.6 Existence; Business; Properties.
-------------------------------
(a) Legal Existence. The Borrower will, and will cause each of
---------------
its Subsidiaries to, do or cause to be done all things necessary to preserve and
keep in full force and effect its existence, rights and franchises as a limited
partnership, general partnership or corporation, as the case may be, except,
with respect to existence, rights and franchises, where the failure to preserve
and keep in full force and effect such existence, rights and franchises would
not be likely to have a Material Effect.
(b) Conduct of Business. The Borrower will engage primarily in
-------------------
the investment advisor and investment management services business and will
cause each of its Subsidiaries to engage primarily in such businesses.
(c) Maintenance of Properties. The Borrower will, and will
-------------------------
cause each of its Subsidiaries to, cause its properties used or useful in the
conduct of its business and which are material to the Business of the Borrower
and its Subsidiaries to be maintained and kept in good condition, repair, and
working order and supplied with all necessary equipment, ordinary wear and tear
excepted.
(d) Status Under Securities Laws. The Borrower shall maintain
----------------------------
its status as a registered "investment adviser" under (a) the Investment
Advisers Act of 1940 and (b) under the laws of each state in which such
registration is required in connection with the investment advisory business of
the Borrower. The Borrower shall cause PIMCO Funds Distributors LLC or another
Subsidiary of the Borrower to maintain its status as a registered
"broker/dealer" under the Securities Exchange Act of 1934 and under the laws of
each state in which such registration is required in connection with the
business of PIMCO Funds Distributors LLC or another Subsidiary of the Borrower,
and to maintain its membership in the National Association of Securities
Dealers, Inc.
6.7 Insurance. The Borrower will, and will cause each of its Subsidiaries
---------
to, maintain with financially sound and reputable insurers insurance with
respect to its properties and business against such casualties and
contingencies, in such amounts, containing such terms, in such forms, and for
such periods, or shall be self-insured in respect of such risks (with
appropriate reserves to the extent required by GAAP), as shall be customary in
the industry for companies engaged in similar activities in similar geographic
areas.
42
<PAGE>
6.8 Taxes. The Borrower will, and will cause each of its Subsidiaries
-----
to, duly pay and discharge, or cause to be paid and discharged, before the same
shall become overdue, all taxes, assessments, and other governmental charges
imposed upon it or its real property, sales, and activities, or any part
thereof, or upon the income or profits therefrom, as well as all claims for
labor, materials, or supplies that if unpaid (a) might by law become a Lien upon
any of its property and (b) would be reasonably likely to result in a Material
Effect; provided that any such tax, assessment, charge, levy, or claim need not
--------
be paid if the validity or amount thereof shall currently be contested in good
faith by appropriate proceedings and if the Borrower or such Subsidiary shall
have set aside on its books, if and to the extent permitted by GAAP, adequate
accruals with respect thereto.
6.9 Inspection of Properties and Books; Communication with Accountants.
------------------------------------------------------------------
(a) General. The Borrower shall, and shall cause each of its
-------
Subsidiaries to, permit the Banks, through the Administrative Agent or any of
the Banks' other designated representatives, to visit and inspect any of the
properties of the Borrower or any of its Subsidiaries, to examine the books of
account of the Borrower and its Subsidiaries (and to make copies thereof and
extracts therefrom), and to discuss the affairs, finances, and accounts of the
Borrower and its Subsidiaries with, and to be advised as to the same by, its and
their officers, all at such reasonable times and intervals as the Administrative
Agent or any Bank may request.
(b) Communication with Accountants. The Borrower authorizes the
------------------------------
Administrative Agent and the Banks to communicate directly with the Borrower's
independent certified public accountants and authorizes such accountants to
disclose to the Administrative Agent and the Banks any and all financial
statements and other supporting financial documents and schedules, including
copies of any management letter with respect to the Business of the Borrower or
any of its Subsidiaries. At the request of the Administrative Agent, the
Borrower shall deliver a letter addressed to such accountants instructing them
to comply with the provisions of this Section 6.9(b).
6.10 Compliance with Government Mandates, Contracts, and
---------------------------------------------------
Permits. The Borrower will and will cause each of its Subsidiaries to, comply
- -------
(if and to the extent that a failure to comply would be likely to have a
Material Effect) with (a) all applicable Government Mandates wherever the
business of the Borrower or any such Subsidiary is conducted, including all
Environmental Laws and all Government Mandates relating to occupational safety
and employment matters; (b) the provisions of the certificate of incorporation
and by-laws or the agreement of limited partnership and certificate of limited
partnership, as the case may be, of the Borrower and any such Subsidiary; (c)
all Contracts to which the Borrower or any such Subsidiary is party, by which
the Borrower or any such Subsidiary is or may be bound, or to which any of their
respective properties are or may be subject; and (d) the terms and conditions of
any Permit used in the Business of the Borrower or any such Subsidiary. If any
Permit shall become necessary or required in order that the Borrower may fulfill
any of its obligations hereunder or under any of the other Loan Documents to
which the Borrower is a party, the Borrower will immediately take or cause its
Subsidiaries to take all reasonable steps within the power of the Borrower and
its Subsidiaries to obtain and maintain in full force and effect such Permit and
furnish the Administrative Agent and the Banks with evidence thereof.
6.11 Use of Proceeds. The Borrower will use the proceeds
---------------
of the Loans solely as provided in Section 5.16.
43
<PAGE>
6.12 Other Indebtedness. All Obligations under this Agreement and the
------------------
other Loan Documents shall rank at least pari passu with all other Indebtedness
of the Borrower and its Subsidiaries, except to the extent such other
Indebtedness is secured by Permitted Liens.
7. NEGATIVE COVENANTS OF THE BORROWER.
----------------------------------
The Borrower covenants and agrees that, so long as any Loan or Note is
outstanding or any Bank has any obligation to make any Loans:
7.1 Disposition of Assets; Mergers and Reorganizations. The Borrower will
--------------------------------------------------
not, and will not cause, permit, or suffer any Subsidiary to, sell, transfer,
assign or otherwise dispose of its business or assets, or enter into any merger
or consolidation, other than (a) sales of obsolete assets, (b) sales of assets
in the ordinary course of business, (c) sales of assets for fair value, so long
as no Default or Event of Default exists or is caused thereby, (d) transfers of
assets between the Borrower or a Subsidiary, and a Subsidiary or the Borrower,
(e) a merger or consolidation between the Borrower or a Subsidiary, and a
Subsidiary or the Borrower, so long as the Borrower, if a party, is the
survivor, or (f) a merger or consolidation between the Borrower or a Subsidiary
and another Person, so long as (i) such merger or consolidation constitutes an
Acquisition, or the exchange of securities or other assets in such merger or
consolidation is an exchange for fair value, and (ii) no Default or Event of
Default exists or is caused thereby.
7.2 Acquisitions. The Borrower will not, and will not cause, permit, or
------------
suffer any of its Subsidiaries to, become a party to, contract for, or effect
any Acquisition, unless no Default or Event of Default then exists or will be
caused thereby.
7.3 Restrictions on Liens. The Borrower will not, and will not cause,
---------------------
permit, or suffer any of its Subsidiaries to, (a) create or incur, or cause,
permit, or suffer to be created or incurred or to exist, any Lien upon any of
its property or assets of any character whether now owned or hereafter acquired,
or upon the income or profits therefrom; (b) transfer any of such property or
assets or the income or profits therefrom for the purpose of subjecting the same
to the payment of Indebtedness or performance of any other obligation in
priority to payment of its general creditors; (c) acquire, or agree or have an
option to acquire, any property or assets upon conditional sale or other title
retention or purchase money security agreement, device, or arrangement; (d)
suffer to exist any Indebtedness or claim or demand for a period of time such
that the same by Government Mandate or upon bankruptcy or insolvency, or
otherwise, would be given any priority whatsoever over its general creditors; or
(e) assign, pledge, or otherwise transfer any accounts, contract rights, general
intangibles, chattel paper, or instruments, with or without recourse, other than
a transfer or assignment in connection with a sale permitted under Section 7.1
or an Investment permitted under Section 7.5; provided that the Borrower and any
Subsidiary of the Borrower may create or incur, or cause, permit, or suffer to
be created or incurred or to exist:
(i) Liens imposed by Government Mandate to secure taxes,
assessments, and other government charges in respect of obligations not
overdue or which are being contested in accordance with Section 6.8;
(ii) statutory Liens of carriers, warehousemen, mechanics,
suppliers, laborers, and materialmen, and other like Liens, in each case in
respect of
44
<PAGE>
obligations not overdue or which are being contested in accordance with
Section 6.8 and for which a bond has been issued;
(iii) pledges or deposits made in connection with, or to secure
payment of, workers' compensation, unemployment insurance, old age
pensions, or other social security obligations;
(iv) Liens on Real Estate consisting of easements, rights of way,
zoning restrictions, restrictions on the use of real property, defects and
irregularities in the title thereto, and other minor Liens, provided, (A)
--------
none of such Liens in the reasonable opinion of the Borrower interferes
materially with the use of the affected property in the ordinary conduct of
the business of the Borrower and its Subsidiaries, and (B) such Liens
individually or in the aggregate do not have a Material Effect;
(v) the rights and interests of landlords and lessors under leases
of Real Estate leased by the Borrower or one of its Subsidiaries, as
lessee;
(vi) presently outstanding Liens listed on Schedule 7.3, and, so
------------
long as no Default or Event of Default exists, Liens securing any
refinancing, replacement or substitution of Indebtedness secured by such
Liens, provided that there is no increase in the principal amount of such
Indebtedness secured by such Liens and so long as the scope of such Liens
is not increased;
(vii) Liens in favor of either the Borrower or a Subsidiary of the
Borrower on all or part of the assets of any Subsidiary of the Borrower
securing Indebtedness owing by such Subsidiary to the Borrower or such
other Subsidiary, as the case may be;
(viii) Liens on interests of the Borrower or its Subsidiaries in
partnerships or joint ventures consisting of binding rights of first
refusal, rights of first offer, take-me-along rights, third-party offer
provisions, buy-sell provisions, other transfer restrictions and conditions
relating to such partnership or joint venture interests, and Liens granted
to other participants in such partnership or joint venture as security for
the performance by the Borrower or its Subsidiaries of their obligations in
respect of such partnership or joint venture; and
(ix) Liens on Class C Limited Partner Units of the Borrower in
favor of the holders of the OGI Exchangeable Debt; and
(x) Liens securing obligations of the Borrower or any of its
Subsidiaries (other than for borrowed money) in an amount not to exceed, in
the aggregate at any time outstanding, the Material Amount; and
(xi) any judgment lien that is not an Event of Default under
Section 10.1(j).
45
<PAGE>
7.4 Guaranties. Except to the extent the Borrower shall issue a guaranty
----------
of the Private Placement Notes in favor of the holders of the Private Placement
Notes in connection with the PGP Refinancing to the extent permitted in Section
7.5 hereof, the Borrower shall not, and shall not cause, permit, or suffer any
of its Subsidiaries to, either (a) guaranty, endorse, accept, act as surety for,
or otherwise become liable in respect of, Indebtedness of (or undertake to
maintain working capital or other balance sheet condition of, or otherwise to
advance or make funds available for the purchase of Indebtedness of) Persons
(other than the Borrower or any Subsidiary of the Borrower) unless such
obligation of the Borrower or its Subsidiary is expressly limited by the
instrument establishing the same to a specified amount, or (b) voluntarily
incur, create, assume, or otherwise become liable for any contingent obligations
that are not by their terms limited to a specific dollar amount; provided,
--------
however, the aggregate amount of all such obligations of the Borrower and its
- -------
Subsidiaries permitted pursuant to this Section 7.4 shall not cause the Borrower
to violate the financial covenants in Section 7.13.
7.5 Restrictions on Investments. The Borrower will not, and will not
---------------------------
cause, permit, or suffer any of its Subsidiaries to, make or permit to exist or
to remain outstanding any Investment except:
(a) Investments in marketable securities, liquid investments, and
other financial instruments that are acquired for investment purposes and that
have a value that may be readily established, including any such Investment that
may be readily sold or otherwise liquidated in any pooled investment vehicle for
which the Borrower or one of its Subsidiaries serves as investment manager or
adviser;
(b) Investments existing on the Closing Date and set forth on
Schedule 7.5;
- ------------
(c) Investments made by the Borrower or any Subsidiary of the
Borrower in the Borrower or any Subsidiary of the Borrower; and
(d) So long as no Default or Event of Default exists or is caused
thereby, Investments made by the Borrower in PGP in connection with the PGP
Refinancing in the form of (i) a loan by the Borrower to PGP (the proceeds of
which are used to repay the Private Placement Notes in full) or (ii) a guaranty
of the Private Placement Notes issued by the Borrower in favor of the holders of
the Private Placement Notes; and
(e) So long as no Default or Event of Default exists or is caused
thereby, other Investments made by the Borrower or any Subsidiary of the
Borrower in an aggregate amount outstanding at any time, not to exceed the sum
of (i) ten percent (10%) of Partner's Capital plus (ii) the net proceeds (or
fair value in the case of an exchange) received by the Borrower from the sale
(or exchange) of Equity Securities in the Borrower as of (y) the date of any
such Investment, or (z) the last day of any subsequent calendar quarter.
7.6 Restrictions on Consolidated Funded Debt. The Borrower will not
----------------------------------------
cause, permit, or suffer any of its Subsidiaries to, create, incur, assume,
guarantee, or be or remain liable, contingently or otherwise, with respect to
any Consolidated Funded Debt, except: (a) Consolidated Funded Debt arising under
this Agreement and under the Short-Term Credit Agreement, and (b) the Borrower
and its Subsidiaries may incur or suffer to exist any other Consolidated Funded
Debt if, and
46
<PAGE>
only if, no Default or Event of Default shall then exist or be caused by the
incurrence of such Consolidated Funded Debt.
7.7 Distributions. The Borrower shall not make any Distributions to its
-------------
partners if a Default or Event of Default shall then exist or be caused thereby.
The Borrower shall not cause, permit, or suffer any restriction or Lien on the
ability of any of its Subsidiaries to (a) pay, directly or indirectly, any
Distributions to the Borrower or any other Subsidiary of the Borrower, (b) make
any payments, directly or indirectly, in respect of any Indebtedness or other
obligation owed to the Borrower or any of its Subsidiaries, (c) make loans or
advances to the Borrower or any other Subsidiary of the Borrower, or (d) sell,
transfer, assign, or otherwise dispose of any property or assets to the Borrower
or any other Subsidiary of the Borrower, except, in each such case, restrictions
or Liens (x) that exist under or by reason of applicable Government Mandates,
including any net capital rules, (y) that arise by reason of the maintenance by
any Subsidiary of a level of net worth for the purpose of ensuring that any
limited partnerships for which it serves as general partner will be treated as
partnerships for federal income tax purposes, or (z) that arise in contracts
with shareholders or partners of Subsidiaries of the Borrower in contracts
executed after the Closing Date.
7.8 Transactions with Affiliates. The Borrower will not, and will not
----------------------------
cause, permit, or suffer any of its Subsidiaries to, directly or indirectly,
enter into any Contract or other transaction with any Affiliate of the Borrower
or any of its Subsidiaries that is material to the Borrower and the Subsidiaries
taken as a whole, unless either: (a) such Contract or transaction relates solely
to (i) compensation arrangements with directors, officers, or employees of the
Borrower, PGP, or the Subsidiaries, or (ii) so long as no Default or Event of
Default then exists or would be caused thereby, the PGP Refinancing, (b) such
transaction is, taking into account the totality of the relationships involved,
on fair and reasonable terms no less favorable to the Borrower and the
Subsidiaries taken as a whole than would be obtained in comparable arm's length
transactions with Persons that are not Affiliates of the Borrower or its
Subsidiaries, or (c) such transaction consists of loans and advances to the
Borrower's senior management employees in an amount not exceeding $2,000,000 to
any such employee and in the aggregate at any time outstanding not exceeding
$15,000,000.
7.9 Fiscal Year. The Borrower and each of its Subsidiaries maintains a
-----------
fiscal year ending December 31. The Borrower shall not change, and will not
permit any Subsidiary to change, its fiscal year unless the parties to the Loan
Documents shall first enter into amendments to the Loan Documents such that the
rights of the parties to the Loan Documents will not be affected by the change
in the fiscal year of the Borrower, and the parties shall enter into such
amendments as may be required in connection with a change of the Borrower's
fiscal year.
7.10 Compliance with Environmental Laws. The Borrower will not, and will
----------------------------------
not cause, permit, or suffer any of its Subsidiaries to, (a) use any of the Real
Estate or any portion thereof for the handling, processing, storage, or disposal
of Hazardous Substances, (b) cause, permit, or suffer to be located on any of
the Real Estate any underground tank or other underground storage receptacle for
Hazardous Substances, (c) generate any Hazardous Substances on any of the Real
Estate, (d) conduct any activity at any Real Estate or use any Real Estate in
any manner so as to cause a release (i.e., releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing, or dumping) or threatened release of Hazardous Substances
on, upon, or into the Real Estate, or (e) otherwise conduct any activity at any
Real Estate or use any
47
<PAGE>
Real Estate in any manner that would violate any Environmental Law or bring such
Real Estate in violation of any Environmental Law, in each case, so as would be
likely to have a Material Effect.
7.11 Employee Benefit Plans. Except where the liability of the Borrower
----------------------
and its Subsidiaries taken as a whole would not be likely to exceed the Material
Amount, the Borrower will not, and will not cause, permit, or suffer any ERISA
Affiliate to:
(a) engage in any "prohibited transaction" within the meaning of
(S)406 of ERISA or (S)4975 of the Code;
(b) permit any Guaranteed Pension Plan to incur an "accumulated
funding deficiency", as such term is defined in (S)302 of ERISA, whether or not
such deficiency is or may be waived;
(c) fail to contribute to any Guaranteed Pension Plan to an extent
that, or terminate any Guaranteed Pension Plan in a manner that, could result in
the imposition of a Lien on the assets of the Borrower or any of its
Subsidiaries pursuant to (S)302(f) or 54068 of ERISA; or
(d) permit or take any action that would result in the aggregate
benefit liabilities (within the meaning of (S)4001 of ERISA) of all Guaranteed
Pension Plans exceeding the value of the aggregate assets of such Plans,
disregarding for this purpose the benefit liabilities and assets of any such
Plan with assets in excess of benefit liabilities.
7.12 Amendments to Certain Documents. The Borrower shall not, without the
-------------------------------
prior written consent of the Majority Banks in each instance, permit or suffer
any material amendments, modifications, supplements, or restatements of its
certificate of limited partnership or the Borrower Partnership Agreement that
could reasonably be expected to materially adversely affect the ability of the
Borrower to perform and observe its obligations under the Loan Documents or the
legal rights and remedies of the Banks and the Administrative Agent under any of
the Loan Documents.
7.13 Financial Covenants.
-------------------
(a) Minimum Partners Capital. The Borrower shall not permit, at any
------------------------
time, its Partners' Capital to be less than (i) the product of (A) 75% times (B)
the Partners' Capital as of December 31, 1997, plus (ii) the product of (A) 75%
times (B) all Partners' Capital contributed to the Borrower after December 31,
1997.
(b) Leverage Ratio. As of (i) the last day of each calendar quarter
--------------
and (ii) the date any Loan is made, the Borrower will not permit the ratio of
(A) Consolidated Funded Debt on such date to (B) the Borrower's OPAD for the
four (4) calendar quarters ending on the last day of the applicable quarter in
the case of item (i) of this section and on the last day of the most recently
completed calendar quarter for which financial statements have been provided to
the Banks under Section 6.4(b) in the case of item (ii) of this section (the
"Leverage Ratio") to exceed 2.25 to 1.00.
--------------
(c) Interest Coverage Ratio. As of the last day of each calendar
-----------------------
quarter, the Borrower will not permit the Interest Coverage Ratio for the four
(4) consecutive calendar quarters ending on such date to be less than 4.00 to
1.00.
48
<PAGE>
(d) Assets Under Management. The Borrower shall not permit, at any
-----------------------
time, its Assets Under Management to be less than the sum of (i) $125 billion
plus (ii) the product of (A) 50% times (B) the dollar value of any Assets Under
Management acquired by the Borrower or any of its Subsidiaries pursuant to an
Acquisition or a Permitted Merger.
7.14 Limitation on Negative Pledge Clauses. The Borrower will not, and
-------------------------------------
will not cause, permit, or suffer any of its Subsidiaries to, directly or
indirectly, enter into any Contract with any Person, other than this Agreement
or the other Loan Documents, which by its terms prohibits or limits the ability
of the Borrower or any of its Subsidiaries to create, incur, assume or suffer to
exist, any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired.
8. CLOSING CONDITIONS.
------------------
The obligations of the Banks under this Agreement shall be subject to the
satisfaction of the following conditions precedent at or before the Closing
Date:
8.1 Financial Statements and Material Changes.
-----------------------------------------
(a) The Banks shall be reasonably satisfied that (i) the financial
statements of the Borrower and the Subsidiaries referred to in Section 5.4
fairly present in all material respects the business and financial condition and
the results of operations of the Borrower and its Subsidiaries as of the dates
and for the periods to which such financial statements relate, and (ii) there
shall have been no material adverse change in the Business of the Borrower and
its Subsidiaries taken as a whole since the dates of such financial statements.
(b) The Banks shall have received and shall have approved (i)
audited, consolidated financial statements, including balance sheets and income
and cash flow statements for OpCap, G.P. for the 1996 and 1997 fiscal years,
(ii) quarterly financial statements for OpCap, G.P. for the quarter ending July
31, 1997 and (iii) pro forma financial statements for the Borrower (after giving
effect to the Oppenheimer Transaction) for the 1998 calendar year, and the Banks
shall have approved all such matters.
8.2 Loan Documents. Each of the Loan Documents shall have been duly
--------------
executed and delivered by the respective parties thereto and shall be in full
force and effect.
8.3 Loan Certificates. The Administrative Agent shall have received from
-----------------
each of the Borrower and PIMCO Partners, LLC, a loan certificate signed by a
duly authorized officer of such Entity in the form of Exhibit G hereto, together
---------
with appropriate attachments which shall include: (a) a copy of its certificate
of organization, certificate of limited partnership, or other charter document
duly certified as of a recent date by the secretary of state of its
organization, (b) a copy, certified by a duly authorized officer of such Entity
to be true and complete on the Closing Date, of its operating agreement,
agreement of limited partnership, or equivalent document as in effect on such
date, (c) a certificate of the secretary of state of its organization as to the
due organization, legal existence, and good standing of the Borrower, Holdings
and PIMCO Partners, LLC, (d) a copy, certified by a duly authorized officer of
such Entity to be true and complete on the Closing Date of the unanimous
resolutions of the general partners of the Borrower and the Written Action. The
certificate
49
<PAGE>
of organization and operating agreement or partnership agreement and certificate
of limited partnership, as the case may be, of the Borrower, each of its
Subsidiaries, PIMCO Partners, LLC, and PGP shall be in all respects satisfactory
in form and substance to the Administrative Agent.
8.4 Partnership Action. All partnership action necessary for the valid
------------------
execution, delivery, and performance by the Borrower of this Agreement and the
other Loan Documents to which it is or is to become a party, and all partnership
action necessary for PGP and Holdings to cause the Borrower to execute, deliver,
and perform this Agreement and the other Loan Documents to which the Borrower is
or is to become a party, shall have been duly and effectively taken, evidence
thereof reasonably satisfactory to the Administrative Agent shall have been
provided to the Administrative Agent, and such action shall be in full force and
effect at the Closing Date.
8.5 Consents. Each party hereto shall have duly obtained all consents
--------
and approvals of Government Authorities and other third parties, and shall have
effected all notices, filings, and registrations with Government Authorities and
other third parties, as may be required in connection with the execution,
delivery, performance, and observance of the Loan Documents; all of such
consents, approvals, notices, filings, and registrations shall be in full force
and effect; and the Administrative Agent shall have each received evidence
thereof satisfactory to it.
8.6 Opinions of Counsel. The Administrative Agent shall have received
-------------------
favorable opinions addressed to the Banks and the Administrative Agent, in form
and substance acceptable to them, dated as of the Closing Date, from Latham &
Watkins, special counsel to the Borrower, Richards, Layton & Finger, special
Delaware counsel to the Borrower and Richard M. Weil, in-house counsel to the
Borrower.
8.7 Proceedings. There shall be no Proceedings pending or threatened the
-----------
result of which (a) is reasonably likely to impair or prevent the Borrower's
performance and observance of its obligations under this Agreement and the other
Loan Documents or (b) is reasonably likely to have a Material Effect.
8.8 Incumbency Certificate. The Administrative Agent shall have received
----------------------
from the Borrower an incumbency certificate, dated as of the Closing Date,
signed by a duly authorized officer of the Borrower and giving the name and
bearing a specimen signature of each individual who shall be authorized: (a) to
sign, in the name and on behalf of the Borrower, each of the Loan Documents to
which the Borrower is or is to become a party; (b) to make Loan Requests and
Conversion Requests; and (c) to give notices and to take other action on behalf
of the Borrower under the Loan Documents.
8.9 Material Effect. In the opinion of the Banks, there shall not have
---------------
occurred (a) any Material Effect, or (b) any material disruption, down-turn or
other adverse event in the financial markets or capital markets that adversely
affects the credit-worthiness of the Borrower or the investment advisor industry
in general.
8.10 Due Diligence. The Administrative Agent and the Banks shall have
-------------
completed customary due diligence of the Borrower and its Subsidiaries and shall
have received such documents, reports, summaries, descriptions and other
information regarding the Borrower and its Subsidiaries and their business,
prospects, financial results, litigation, tax matters, accounting, labor
insurance, pension liabilities, real estate, Contracts, indebtedness and other
matters as the Administrative Agent
50
<PAGE>
and the Banks may request.
8.11 Closing Certificate. The Administrative Agent and the Banks shall
-------------------
have received a closing certificate of the Borrower, in form and substance
acceptable to the Administrative Agent and the Banks, setting forth the
mathematical calculations evidencing the Borrower's compliance with the
financial covenants set forth in this Agreement.
8.12 Agreement with PGP. The Administrative Agent shall have received one
------------------
or more duly executed counterparts of a side agreement among the Administrative
Agent, the Borrower and PGP pursuant to which PGP agrees to notify the
Administrative Agent and the Borrower of its receipt of any notice of the
occurrence of any default or event of default under the Note Agreement.
9. CONDITIONS TO ALL BORROWINGS.
----------------------------
The obligations of the Banks to make any Loan, whether on or after the
Closing Date, shall also be subject to the satisfaction of the conditions
precedent set forth below. The submission of a Loan Request or a Conversion
Request by the Borrower and the acceptance by the Borrower of any Loan shall
constitute a representation and warranty by the Borrower that the conditions set
forth below have been satisfied.
9.1 No Default. No Default or Event of Default shall have occurred and
----------
be continuing, other than a Default under Section 10.1(f)(ii) hereof which has
not yet become an Event of Default.
9.2 Representations True. Each of the representations and warranties of
--------------------
the Borrower and its Subsidiaries contained in this Agreement, the other Loan
Documents, or in any document or instrument delivered pursuant to or in
connection with this Agreement shall be true and correct in all material
respects as of the time of the making of such Loan, with the same effect as if
made at and as of that time (except to the extent that such representations and
warranties expressly relate to a prior date, in which case they shall be true
and correct in all material respects as of such earlier date).
9.3 Loan or Conversion Request. The Administrative Agent shall have
--------------------------
received from the Borrower a Loan Request or a Conversion Request, as
applicable.
9.4 Payment of Fees. Without limiting any other condition, the Borrower
---------------
shall have paid to the Administrative Agent, for the account of the Banks and
the Administrative Agent as appropriate, all fees and other amounts due and
payable under the Loan Documents at or prior to the time of the making of such
Loan.
9.5 No Legal Impediment. No change shall have occurred in any Government
-------------------
Mandate that in the reasonable opinion of any Bank would make it illegal for
such Bank to make such Loan (it being understood that this section shall be a
condition only for the Bank or Banks affected by such Government Mandate).
9.6 Governmental Regulation. Each Bank shall have received such
-----------------------
statements in
51
<PAGE>
substance and form reasonably satisfactory to such Bank as such Bank shall
reasonably request for the purpose of compliance with any applicable Government
Mandates of the Comptroller of the Currency or the Board of Governors of the
Federal Reserve System.
10. EVENTS OF DEFAULT; ACCELERATION.
-------------------------------
10.1 Events of Default and Acceleration. Each of the following shall
----------------------------------
constitute an Event of Default, whatever the reason for such event and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment or order of any court or any order, rule, or regulation
of any governmental or non-governmental body:
(a) the Borrower shall fail to pay any principal of the Loans when
the same shall become due and payable, whether at the stated date of maturity or
any accelerated date of maturity or at any other date fixed for payment;
(b) the Borrower shall fail to pay any interest on the Loans, the
facility fees, the Administrative Agent's fees, or other sums due hereunder or
under any of the other Loan Documents, when the same shall become due and
payable, whether at the stated date of maturity or any accelerated date of
maturity or at any other date fixed for payment and such amounts shall remain
unpaid two (2) Business Days after the date when due;
(c) the Borrower shall (i) fail to perform or observe any of its
covenants contained in Sections 6.5(a), 6.5(d) or 6.6, or in Section 7 of this
Agreement or there shall exist any Event of Default (as such term is defined in
the Short-Term Credit Agreement), or (ii) fail to perform or observe any of its
covenants contained in Sections 6.4, 6.5(b), or 6.5(c) of this Agreement, which
failure shall continue for thirty (30) days after the date on which such
covenant was required to be performed or observed;
(d) the Borrower or any of its Subsidiaries shall fail to perform or
observe any term, covenant, or agreement contained herein or in any of the other
Loan Documents (other than those specified elsewhere in this Section 10) for
thirty (30) days after written notice of such failure has been given to the
Borrower by the Administrative Agent;
(e) any representation or warranty of the Borrower in this
Agreement, any of the other Loan Documents, or in any other document or
instrument delivered pursuant to or in connection with this Agreement shall
prove to have been incorrect in any material respect upon the date when made or
deemed to have been made or repeated;
(f) either (i) the occurrence and continuance beyond any applicable
grace period of any default, event of default or other breach (in any case, a
"Breach") of any agreement permitting (with or without the passage of time)
acceleration, termination or exercise of remedies with respect to (A) any
Consolidated Funded Debt in an amount equal to or greater than the Material
Amount, (B) any Funded Debt of PGP other than the Note Agreement in an amount
equal to or greater than $1,000,000 or (C) the nonpayment of principal, interest
or other amounts when due (other than by acceleration) by or on behalf of PGP
pursuant to the Note Agreement, or (ii) the holders of the Private Placement
Notes shall accelerate the Private Placement Notes or exercise or
52
<PAGE>
attempt to exercise any other remedies as a consequence of such Breach and, on
the seventh (7th) day following such acceleration, exercise of remedies or
attempt to exercise any other remedies either (A) the Private Placement Notes
shall not have been repaid in full and the Note Agreement shall not have been
terminated or (B) the Breach giving rise to such acceleration, exercise of
remedies or attempt to exercise any other remedies shall not have been waived in
writing by the holders of the Private Placement Notes to the satisfaction of the
Banks;
(g) any of the Loan Documents shall be cancelled, terminated,
revoked, or rescinded otherwise than in accordance with the terms thereof or
with the express prior written agreement, consent, or approval of the Banks, or
any Proceeding to cancel, revoke, or rescind any of the Loan Documents shall be
commenced by or on behalf of the Borrower, or any of its Subsidiaries party
thereto, or any Government Authority of competent jurisdiction shall make a
determination that, or issue a Government Mandate to the effect that, any
material provision of one or more of the Loan Documents is illegal, invalid, or
unenforceable in accordance with the terms thereof;
(h) the Borrower, PGP, or any Subsidiary of the Borrower shall make
an assignment for the benefit of creditors, or admit in writing its inability to
pay or generally fail to pay its debts as they mature or become due, or shall
petition or apply for the appointment of a trustee or other custodian,
liquidator, or receiver of the Borrower, PGP or any Subsidiary of the Borrower
or of any substantial part of the assets of the Borrower, PGP, or any Subsidiary
of the Borrower, or shall commence any Proceeding relating to the Borrower, PGP,
or any Subsidiary of the Borrower under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution, liquidation, or
similar law of any jurisdiction, now or hereafter in effect, or shall take any
action to authorize or in furtherance of any of the foregoing, or if any such
petition or application shall be filed or any such Proceeding shall be commenced
against the Borrower, PGP, or any Subsidiary of the Borrower and any of such
parties shall indicate its approval thereof, consent thereto, or acquiescence
therein;
(i) either (i) an involuntary Proceeding relating to the Borrower,
PGP, or any Subsidiary of the Borrower under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution, liquidation, or
similar law of any jurisdiction, now or hereafter in effect is commenced and not
dismissed or vacated within sixty (60) days following entry thereof, or (ii) a
decree or order is entered appointing any trustee, custodian, liquidator, or
receiver described in (h) or adjudicating the Borrower, PGP, or any Subsidiary
of the Borrower bankrupt or insolvent, or approving a petition in any such
Proceeding, or a decree or order for relief is entered in respect of the
Borrower, PGP, or any Subsidiary of the borrower in an involuntary Proceeding
under federal bankruptcy laws as now or hereafter constituted;
(j) there shall remain in force, undischarged, unsatisfied, and
unstayed, for more than thirty (30) days, any final judgment against the
Borrower or any of its Subsidiaries that, with any other such outstanding final
judgments, undischarged, against the Borrower and its Subsidiaries taken
together exceeds in the aggregate the Material Amount.
(k) with respect to any Guaranteed Pension Plan, an ERISA Reportable
Event shall have occurred and the Majority Banks shall have determined in their
reasonable discretion that such event reasonably could be expected to result in
liability of the Borrower, or any of its Subsidiaries to the PBGC or such
Guaranteed Pension Plan in an aggregate amount exceeding the
53
<PAGE>
Material Amount and such event in the circumstances occurring reasonably could
constitute grounds for the termination of such Guaranteed Pension Plan by the
PBGC or for the appointment by the appropriate United States District Court of a
trustee to administer such Guaranteed Pension Plan; or a trustee shall have been
appointed by the United States District Court to administer such Guaranteed
Pension Plan; or the PBGC shall have instituted proceedings to terminate such
Guaranteed Pension Plan;
(l) any Change of Control shall occur;
(m) any of the following: (i) the Borrower shall fail to be duly
registered as an "investment adviser" under the Investment Advisers Act of 1940,
if such registration is required by law; or (ii) the Borrower shall cease to
have a Subsidiary that is duly registered as a "broker/dealer" under the
Securities Exchange Act of 1934 or shall cease to be a member in good standing
of the National Association of Securities Dealers, Inc.; or
(n) the Borrower, PGP, or any Subsidiary of the Borrower shall
either (i) be indicted for a federal or state crime and, in connection with such
indictment, either (A) Government Authorities shall seek to seize or attach, or
seek a civil forfeiture of, property of the Borrower, PGP, or one or more of the
Borrower's Subsidiaries having an aggregate value in excess of the Material
Amount or (B) the Administrative Agent shall be advised by its legal counsel in
writing that there is a reasonable possibility of such a seizure, attachment, or
forfeiture under applicable Government Mandates, or (ii) be found guilty of, or
shall plead guilty, no contest, or nolo contendere to, any federal or state
---- ----------
crime, a punishment for which could include a fine, penalty, or forfeiture of
any assets of the Borrower, PGP, or such Subsidiary.
Upon the occurrence of an Event of Default, the Administrative
Agent, upon the request of the Majority Banks, shall by notice in writing to the
Borrower declare all amounts owing with respect to this Agreement, the Notes,
and the other Loan Documents to be, and they shall thereupon forthwith become,
immediately due and payable without presentment, demand, protest, or other
notice of any kind, all of which are hereby expressly waived by the Borrower;
provided that in the event of any Event of Default specified in Section 10.1(h)
- --------
or Section 10.1(i), all such amounts shall become immediately due and payable
automatically and without any requirement of notice from the Administrative
Agent or any Bank; and provided, further, that any such declaration may be
-------- -------
rescinded by the Majority Banks if the Events of Default leading to such
declaration are waived in writing by the Majority Banks.
10.2 Termination of Commitments. If any one or more of the Events of
--------------------------
Default specified in Section 10.1(h) or Section 10.1(i) shall occur, any unused
portion of the Total Commitments hereunder shall forthwith terminate and each of
the Banks shall be relieved of all obligations to make Loans to the Borrower.
If any other Event of Default shall have occurred, or if on any Drawdown Date
the conditions precedent to the making of the Loans to be made on such Drawdown
Date are not satisfied, the Administrative Agent may with the consent of the
Majority Banks and, upon the request of the Majority Banks, shall, by notice to
the Borrower, terminate the unused portion of the Total Commitment hereunder,
and upon such notice being given such unused portion of the Total Commitment
hereunder shall terminate immediately and each of the Banks shall be relieved of
all further obligations to make Loans. If any such notice is given to the
Borrower, the Administrative Agent will forthwith furnish a copy thereof to each
of the Banks. No termination of
54
<PAGE>
the Total Commitment hereunder shall relieve the Borrower of any of the
Obligations or any of its existing obligations to any of the Banks arising under
other agreements or instruments.
10.3 Remedies.
--------
(a) In case any one or more of the Events of Default shall have
occurred, and whether or not the Administrative Agent shall have accelerated the
maturity of the Loans pursuant to Section 10.1, each Bank, if owed any amount
with respect to the Loans, may with the consent of the Majority Banks but not
otherwise, proceed to protect and enforce its rights by any appropriate
Proceeding, whether for the specific performance of any covenant or agreement
contained in this Agreement and the other Loan Documents or any instrument
pursuant to which the Obligations to such Bank are evidenced, including as
permitted by applicable Government Mandate the obtaining of the ex parte
appointment of a receiver, and, if such amount shall have become due, by
declaration or otherwise, proceed to enforce the payment thereof or any other
legal or equitable right of such Bank.
(b) No remedy herein conferred upon any Bank or the Administrative
Agent or the holder of any Note is intended to be exclusive of any other remedy,
and each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity or
by any Government Mandate.
11. SETOFF.
------
Regardless of the adequacy of any collateral, during the continuance of any
Event of Default, any deposits or other sums credited by or due from any of the
Banks to the Borrower and any securities or other property of the Borrower in
the possession of such Bank may be applied to or set off by such Bank against
the payment of Obligations and any and all other liabilities, direct, or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, of the Borrower to such Bank. Each of the Banks agrees with
each other Bank that (a) if an amount to be set off is to be applied to
Indebtedness of the Borrower to such Bank, other than Indebtedness evidenced by
the Notes held by such Bank, such amount shall be applied ratably to such other
Indebtedness and to the Indebtedness evidenced by all such Notes held by such
Bank, and (b) if such Bank shall receive from the Borrower, whether by voluntary
payment, exercise of the right of setoff, counterclaim, cross action,
enforcement of the claim evidenced by the Notes held by such Bank by Proceedings
against the Borrower, by proof thereof in bankruptcy, reorganization,
liquidation, receivership or similar Proceedings, or otherwise, and shall retain
and apply to the payment of the Note or Notes held by such Bank any amount in
excess of its ratable portion of the payments received by all of the Banks with
respect to the Notes held by all of the Banks (exclusive of payments to be made
for the account of less than all of the Banks as provided in Sections 4.6, 4.7,
4.8, and 4.9), such Bank will make such disposition and arrangements with the
other Banks with respect to such excess, either by way of distribution, pro
---
tanto assignment of claims, subrogation, or otherwise as shall result in each
- -----
Bank receiving in respect of the Notes held by it its proportionate payment as
contemplated by this Agreement; provided that if all or any part of such excess
--------
payment is thereafter recovered from such Bank, such disposition and
arrangements shall be rescinded and the amount restored to the extent of such
recovery, but without interest.
55
<PAGE>
12. THE ADMINISTRATIVE AGENT AND THE DOCUMENTATION AGENT.
----------------------------------------------------
12.1 Authorization. The Administrative Agent and the Documentation Agent
-------------
are authorized to take such action on behalf of each of the Banks and to
exercise all such powers as are hereunder and under any of the other Loan
Documents and any related documents delegated to the Administrative Agent or the
Documentation Agent, respectively, together with such powers as are reasonably
incident thereto, provided that no duties or responsibilities not expressly
--------
assumed herein or therein shall be implied to have been assumed by the
Administrative Agent or the Documentation Agent. The relationship between the
Administrative Agent and the Banks and between the Documentation Agent and the
Banks is and shall be that of agent and principal only, and nothing contained in
this Agreement or any of the other Loan Documents shall be construed to
constitute the Administrative Agent or the Documentation Agent as a trustee for
any Bank.
12.2 Employees and Administrative Agents. Each of the Administrative
-----------------------------------
Agent and the Documentation Agent may exercise its powers and execute its duties
by or through employees or agents and shall be entitled to take, and to rely on,
advice of legal counsel concerning all matters pertaining to its rights and
duties under this Agreement and the other Loan Documents. Each of the
Administrative Agent and the Documentation Agent may utilize the services of
such Persons as it in its sole discretion may reasonably determine.
12.3 No Liability. Neither the Administrative Agent, the Documentation
------------
Agent nor any of their respective shareholders, directors, officers or employees
nor any other Person assisting them in their duties nor any agent or employee
thereof, shall be liable for any waiver, consent or approval given or any action
taken, or omitted to be taken, in good faith by it or them hereunder or under
any of the other Loan Documents, or in connection herewith or therewith, or be
responsible for the consequences of any oversight or error of judgment
whatsoever, except that the Administrative Agent, the Documentation Agent or
such other Person, as the case may be, may be liable for losses due to its
willful misconduct or gross negligence.
12.4 No Representations. Neither the Administrative Agent nor the
------------------
Documentation Agent shall be responsible for the execution (other than on its
own behalf) or validity or enforceability of this Agreement, the Notes, any of
the other Loan Documents or any instrument at any time constituting, or intended
to constitute, collateral security for the Notes, or for the value of any such
collateral security or for the validity, enforceability, or collectability of
any such amounts owing with respect to the Notes, or for any recitals or
statements, warranties, or representations made herein or in any of the other
Loan Documents or in any certificate or instrument hereafter furnished to it by
or on behalf of the Borrower, or be bound to ascertain or inquire as to the
performance or observance of any of the terms, conditions, covenants, or
agreements herein or in any instrument at any time constituting, or intended to
constitute, collateral security for the Notes or to inspect any of the
properties, books, or records of the Borrower or any of its Subsidiaries.
Neither the Administrative Agent nor the Documentation Agent shall be bound to
ascertain whether any notice, consent, waiver, or request delivered to it by the
Borrower or any holder of any of the Notes shall have been duly authorized or is
true, accurate, and complete. Neither the Administrative Agent nor the
Documentation Agent has made nor does it now make any representations or
warranties, express or implied, nor does it assume any liability to the Banks,
with respect to the credit worthiness or financial conditions of the Borrower or
any of its Subsidiaries. Each Bank acknowledges that it has, independently and
without reliance upon the Administrative Agent, the Documentation Agent or any
56
<PAGE>
other Bank, and based upon such information and documents as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement.
12.5 Payments.
--------
(a) Payments to Administrative Agent. A payment by the Borrower to
--------------------------------
the Administrative Agent hereunder or under any of the other Loan Documents for
the account of any Bank shall constitute a payment to such Bank. The
Administrative Agent shall promptly distribute to each Bank such Bank's pro rata
--------
share of payments received by the Administrative Agent for the account of the
Banks except as otherwise expressly provided herein or in any of the other Loan
Documents.
(b) Distribution by Administrative Agent. If in the reasonable
------------------------------------
opinion of the Administrative Agent the distribution of any amount received by
it in such capacity hereunder, under the Notes, or under any of the other Loan
Documents might involve it in liability, it may refrain from making distribution
until its right to make the same shall have been adjudicated by a court of
competent jurisdiction. If any Government Authority shall adjudge that any
amount received and distributed by the Administrative Agent is to be repaid,
each Person to whom any such distribution shall have been made shall either
repay to the Administrative Agent its proportionate share of the amount so
adjudged to be repaid or shall pay over the same in such manner and to such
Persons as shall be determined by such Government Authority.
12.6 Holders of Notes. Subject to Section 16, the Administrative Agent
----------------
may deem and treat the payee of any Note as the absolute owner thereof for all
purposes hereof until it shall have been furnished in writing with a different
name by such payee or by a subsequent holder, assignee, or transferee.
12.7 Indemnity. The Banks ratably shall indemnify and hold harmless the
---------
Administrative Agent and the Documentation Agent from and against any and all
Proceedings (whether groundless or otherwise), losses, damages, costs, expenses
(including any expenses for which the Administrative Agent has not been
reimbursed by the Borrower as required by Section 13), and liabilities of every
nature and character arising out of or related to this Agreement, the Notes, any
of the other Loan Documents, or the transactions contemplated or evidenced
hereby or thereby, or the Administrative Agent's or Documentation Agent's
actions taken hereunder or thereunder, except to the extent that any of the same
shall be directly caused by the Administrative Agent's or Documentation Agent's
willful misconduct or gross negligence.
12.8 Administrative Agent and Documentation Agent as Bank. In its
----------------------------------------------------
individual capacity, each of NationsBank, N.A. or Deutsche Bank AG, New York
Branch shall have the same obligations and the same rights, powers, and
privileges in respect to its Commitment and the Loans made by it, and as the
holder of any of the Notes, as it would have were it not also the Administrative
Agent or Documentation Agent, as the case may be.
12.9 Resignation. The Administrative Agent or Documentation Agent may
-----------
resign at any time by giving sixty (60) days' prior written notice thereof to
the Banks and the Borrower. Any Administrative Agent or Documentation Agent
resigning from this Agreement shall also resign from the Short-Term Credit
Agreement. Upon any such resignation, the Majority Banks shall have the
57
<PAGE>
right to appoint a successor Administrative Agent or Documentation Agent. Unless
an Event of Default shall have occurred and be continuing, such successor
Administrative Agent or Documentation Agent shall be reasonably acceptable to
the Borrower. If no successor Administrative Agent or Documentation Agent shall
have been so appointed by the Majority Banks and shall have accepted such
appointment within thirty (30) days after the retiring Administrative Agent's or
Documentation Agent's giving of notice of resignation, then the retiring
Administrative Agent or Documentation Agent may, on behalf of the Banks, appoint
a successor Administrative Agent or Documentation Agent, which shall be a
financial institution having a rating of not less than A or its equivalent by
Standard & Poor's Corporation. Upon the acceptance of any appointment as
Administrative Agent or Documentation Agent hereunder by a successor
Administrative Agent or Documentation Agent, such successor Administrative Agent
or Documentation Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges, and duties of the retiring Administrative Agent or
Documentation Agent, and the retiring Administrative Agent or Documentation
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Administrative Agent's or Documentation Agent's resignation, the
provisions of this Agreement and the other Loan Documents shall continue in
effect for its benefit in respect of any actions taken or omitted to be taken by
it while it was acting as Administrative Agent or Documentation Agent.
12.10 Notification of Defaults and Events of Default. Upon learning of the
----------------------------------------------
existence of a Default or an Event of Default, a Bank shall promptly notify the
Administrative Agent thereof. Upon receipt of any notice under this Section
12.10, the Administrative Agent shall promptly notify the other Banks of the
existence of such Default or Event of Default.
12.11 Duties in the Case of Enforcement. In case one of more Events of
---------------------------------
Default shall have occurred, and whether or not acceleration of the Obligations
shall have occurred, the Administrative Agent shall, if (a) so requested by the
Majority Banks and (b) the Banks have provided to the Administrative Agent such
additional indemnities and assurances against expenses and liabilities as the
Administrative Agent may reasonably request, proceed to enforce the provisions
of the Loan Documents and exercise all or any such other legal, equitable, and
other rights or remedies as it may have under the Loan Documents. The Majority
Banks may direct the Administrative Agent in writing as to the method and the
extent of any such action, the Banks hereby agreeing to indemnify and hold the
Administrative Agent harmless from all liabilities incurred in respect of all
actions taken or omitted in accordance with such directions, provided that the
Administrative Agent need not comply with any such direction to the extent that
the Administrative Agent reasonably believes the Administrative Agent's
compliance with such direction to be unlawful or commercially unreasonable in
any applicable jurisdiction.
13. EXPENSES.
--------
The Borrower shall upon demand either, as the Banks or the Administrative
Agent may require and regardless of whether any Loans are made hereunder, pay in
the first instance or reimburse the Banks and the Administrative Agent (to the
extent that payments for the following items are not made under the other
provisions hereof) for (a) the reasonable out-of-pocket costs of producing and
reproducing this Agreement, the other Loan Documents, and the other agreements
and instruments mentioned herein, (b) reasonable out-of-pocket expenses incurred
in connection with the
58
<PAGE>
syndication of this facility, (c) any taxes (including any interest and
penalties in respect thereto) payable by the Administrative Agent or any of the
Banks (other than taxes based upon the Administrative Agent's or any Bank's
income or profits) on or with respect to the transactions contemplated by this
Agreement, (d) the reasonable fees, expenses, and disbursements of the
Administrative Agent's counsel incurred in connection with the preparation,
administration, or interpretation of the Loan Documents, the other instruments
mentioned herein, and the term sheet for the transactions contemplated by this
Agreement, each closing hereunder, and amendments, modifications, approvals,
consents or waivers hereto or hereunder, (e) the fees, expenses, and
disbursements of the Administrative Agent incurred by the Administrative Agent
in connection with the preparation, administration, or interpretation of the
Loan Documents and other instruments mentioned herein, (f) all reasonable out-
of-pocket expenses (including reasonable attorneys' fees and costs, which
attorneys may be employees of any Bank or the Administrative Agent, and
reasonable consulting, accounting, appraisal, investment banking, and similar
professional fees and charges) incurred by any Bank or the Administrative Agent
in connection with (i) the enforcement of or preservation of rights under any of
the Loan Documents against the Borrower or any of its Subsidiaries or the
administration thereof after the occurrence of a Default or Event of Default and
(ii) any Proceeding or dispute whether arising hereunder or otherwise, in any
way related to any Bank's or the Administrative Agent's relationship with the
Borrower or any of its Subsidiaries. The covenants of this Section 13 shall
survive payment or satisfaction of all other Obligations.
14. INDEMNIFICATION.
---------------
The Borrower shall, regardless of whether any Loans are made hereunder,
indemnify and hold harmless the Administrative Agent and the Banks, together
with their respective shareholders, directors, Administrative Agents, officers,
Subsidiaries, and Affiliates, from and against any and all damages, losses,
settlement payments, obligations, liabilities, claims, causes of action, and
Proceedings, and reasonable costs and expenses in connection therewith,
incurred, suffered, sustained, or required to be paid by an indemnified party by
reason of or resulting, directly or indirectly, from the transactions
contemplated by the Loan Documents, including (a) any actual or proposed use by
the Borrower or any of its Subsidiaries of the proceeds of any of the Loans, (b)
the Borrower or any of its Subsidiaries entering into or performing this
Agreement or any of the other Loan Documents, or (c) with respect to the
Borrower and its Subsidiaries and their respective properties and assets, the
violation of any Environmental Law, the presence, disposal, escape, seepage,
leakage, spillage, discharge, emission, release, or threatened release of any
Hazardous Substances or any Proceeding brought or threatened with respect to any
Hazardous Substances (including claims with respect to wrongful death, personal
injury, or damage to property), in each case including the reasonable fees and
disbursements of legal counsel and reasonable allocated costs of internal legal
counsel incurred in connection with any such Proceeding, provided, however, the
-------- -------
Borrower shall not be obligated to indemnify any party for any damages, losses,
settlement payments, obligations, liabilities, claims, causes of action,
Proceedings, costs, and expenses that were caused directly by the gross
negligence, breach of this Agreement or willful misconduct of the indemnified
party. In Proceedings, or the preparation therefor, the indemnified parties
shall be entitled to select their legal counsel and, in addition to the
foregoing indemnity, the Borrower shall, promptly upon demand, pay in the first
instance, or reimburse the indemnified parties for, the reasonable fees and
expenses of such legal counsel. If, and to the extent that the obligations of
the Borrower under this Section 14 are unenforceable for any reason, the
Borrower shall make the maximum contribution to
59
<PAGE>
the payment in satisfaction of such obligations that is permissible under
applicable law. The covenants contained in this Section 14 shall survive payment
or satisfaction in full of all other Obligations.
15. SURVIVAL OF COVENANTS.
---------------------
All covenants, agreements, representations, and warranties made herein,
in the Notes, in any of the other Loan Documents, or in any documents or other
papers delivered by or on behalf of the Borrower or any of its Subsidiaries
pursuant hereto shall be deemed to have been relied upon by the Banks and the
Administrative Agent, notwithstanding any investigation heretofore or hereafter
made by any of them, and shall survive the making by the Banks of the Loans, as
herein contemplated, and shall continue in full force and effect so long as any
amount due under this Agreement or the Notes or any of the other Loan Documents
remains outstanding or any Bank has any obligation to make any Loans, and for
such further time as may be otherwise expressly specified in this Agreement.
All statements contained in any certificate or other paper delivered to any Bank
or the Administrative Agent at any time by or on behalf of the Borrower or any
of its Subsidiaries pursuant hereto or in connection with the transactions
contemplated hereby shall constitute representations and warranties by the
Borrower or such Subsidiary hereunder.
16. ASSIGNMENT AND PARTICIPATION.
----------------------------
16.1 Conditions to Assignment by Banks. Except as provided herein, each
---------------------------------
Bank may assign to one or more Eligible Assignees all or a portion of its
interests, rights, and obligations under this Agreement and under the Short-Term
Credit Agreement (including all or a portion of its Commitment Percentage and
Commitment and the same portion of the Loans at the time owing to it) and the
Notes held by it; provided that (a) each of the Administrative Agent and, so
--------
long as no Event of Default has occurred, the Borrower shall have given its
prior written consent to such assignment, which consent will not be unreasonably
withheld, (b) each such assignment shall be of a constant, and not a varying,
percentage of all the assigning Bank's rights and obligations under this
Agreement and under the Short-Term Credit Agreement, (c) each assignment of less
than all of the assigning Bank's rights and obligations under this Agreement,
shall be in an amount equal to $15,000,000 and in integral multiples of
$1,000,000 in excess thereof, and (d) the parties to such assignment shall
execute and deliver to the Administrative Agent, for recording in the Register
(as hereinafter defined), an Assignment and Acceptance, substantially in the
form of Exhibit G hereto (an "Assignment and Acceptance"), together with any
--------- -------------------------
Notes subject to such assignment. Upon such execution, delivery, acceptance, and
recording, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least five (5) Business Days after
the execution thereof, (i) the assignee thereunder shall be a party hereto and,
to the extent provided in such Assignment and Acceptance, have the rights and
obligations of a Bank hereunder, and (ii) the assigning Bank shall, to the
extent provided in such assignment and upon payment to the Administrative Agent
of the registration fee referred to in Section 16.3, be released from its
obligations under this Agreement.
16.2 Certain Representations and Warranties; Limitations; Covenants. By
--------------------------------------------------------------
executing and delivering an Assignment and Acceptance, the parties to the
assignment thereunder confirm to and agree with each other and the other parties
hereto as follows: (a) other than the representation and
60
<PAGE>
warranty that it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim, the assigning Bank makes
no representation or warranty, express or implied, and assumes no responsibility
with respect to any statements, warranties, or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency, or value of this Agreement, the other
Loan Documents or any other instrument or document furnished pursuant hereto;
(b) the assigning Bank makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower and its
Subsidiaries or any other Person primarily or secondarily liable in respect of
any of the Obligations, or the performance or observance by the Borrower and its
Subsidiaries or any other Person primarily or secondarily liable in respect of
any of the Obligations of any of their obligations under this Agreement or any
of the other Loan Documents or any other instrument or document furnished
pursuant hereto or thereto; (c) such assignee confirms that it has received a
copy of this Agreement, together with copies of the most recent financial
statements referred to in Section 5.4 and Section 6.4 and such other documents
and information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (d) such assignee will,
independently and without reliance upon the assigning Bank, the Administrative
Agent, or any other Bank and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (e) such assignee represents
and warrants that it is an Eligible Assignee; (f) such assignee appoints and
authorizes the Administrative Agent to take such action as Administrative Agent
on its behalf and to exercise such powers under this Agreement and the other
Loan Documents as are delegated to the Administrative Agent by the terms hereof
or thereof, together with such powers as are reasonably incidental thereto; (g)
such assignee agrees that it will perform in accordance with their terms all of
the obligations that by the terms of this Agreement are required to be performed
by it as a Bank; and (h) such assignee represents and warrants that it is
legally authorized to enter into such Assignment and Acceptance.
16.3 Register. The Administrative Agent shall maintain a copy of each
--------
Assignment and Acceptance delivered to it and a register or similar list (the
"Register") for the recordation of the names and addresses of the Banks and the
--------
Commitment Percentage of, and principal amount of the Loans owing to, the Banks
from time to time. The entries in the Register shall be conclusive, in the
absence of manifest error, and the Borrower, the Administrative Agent, and the
Banks may treat each Person whose name is recorded in the Register as a Bank
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by the Borrower and the Banks at any reasonable time and from
time to time upon reasonable prior notice. Upon each such recordation, the
assigning Bank agrees to pay to the Administrative Agent a registration fee in
the sum of $3,500.
16.4 New Notes. Upon its receipt of an Assignment and Acceptance executed
---------
by the parties to such assignment, together with each Note subject to such
assignment, the Administrative Agent shall (a) record the information contained
therein in the Register, and (b) give prompt notice thereof to the Borrower and
the Banks (other than the assigning Bank). Within five (5) Business Days after
receipt of such notice, the Borrower, at its own expense, shall execute and
deliver to the Administrative Agent, in exchange for each surrendered Note, a
new Note to the order of such Eligible Assignee in an amount equal to the amount
assumed by such Eligible Assignee pursuant to such Assignment and Acceptance
and, if the assigning Bank has retained some portion of its obligations
hereunder, a new Note to the order of the assigning Bank in an amount equal to
the amount retained by it hereunder. Such new Notes shall provide that they are
replacements for the surrendered Notes, shall be in an aggregate principal
amount equal to the aggregate principal amount
61
<PAGE>
of the surrendered Notes, shall be dated the effective date of such Assignment
and Acceptance and shall otherwise be in substantially the form of the assigned
Notes. The surrendered Notes shall be cancelled and returned to the Borrower.
16.5 Participations. Each Bank may sell participations to one or more
--------------
banks or other entities in all or a portion of such Bank's rights and
obligations under this Agreement and the other Loan Documents; provided that (a)
--------
any such sale or participation shall not affect the rights and duties of the
selling Bank hereunder to the Borrower, (b) the only rights granted to the
participant pursuant to such participation arrangements with respect to waivers,
amendments, or modifications of the Loan Documents shall be the rights to
approve waivers, amendments or modifications that would forgive or reduce the
principal of or the interest rate on any Loans, extend the term or increase the
amount of the Commitment of such Bank as it relates to such participant, reduce
the amount of any fees to which such participant is entitled, or extend any
regularly scheduled payment date for principal or interest and (c) such
participation shall be in a minimum amount of $1,000,000. Each Bank shall,
promptly upon request of the Borrower in each instance, disclose to the Borrower
the parties to which such Bank has granted participations under this section.
16.6 Disclosure. Any Bank may disclose information obtained by such Bank
----------
pursuant to this Agreement to assignees or participants and potential assignees
or participants hereunder in accordance with Section 25 hereof.
16.7 Assignee or Participant Affiliated with the Borrower. If any
----------------------------------------------------
assignee Bank is an Affiliate of the Borrower, then any such assignee Bank shall
have no right to vote as a Bank hereunder or under any of the other Loan
Documents for purposes of granting consents or waivers or for purposes of
agreeing to amendments or other modifications to any of the Loan Documents or
for purposes of making requests to the Administrative Agent pursuant to Section
10, and the determination of the Majority Banks shall for all purposes of this
Agreement and the other Loan Documents be made without regard to such assignee
Bank's interest in any of the Loans. If any Bank sells a participating interest
in any of the Loans to a participant, and such participant is the Borrower or an
Affiliate of the Borrower, then such transferor Bank shall promptly notify the
Administrative Agent of the sale of such participation. A transferor Bank shall
have no right to vote as a Bank hereunder or under any of the other Loan
Documents for purposes of granting consents or waivers or for purposes of
agreeing to amendments or modifications to any of the Loan Documents or for
purposes of making requests to the Administrative Agent pursuant to Section 10
to the extent that such participation is beneficially owned by the Borrower or
any Affiliate of the Borrower, and the determination of the Majority Banks shall
for all purposes of this Agreement and the other Loan Documents be made without
regard to the interest of such transferor Bank in the Loans to the extent of
such participation.
16.8 Miscellaneous Assignment Provisions. Any assigning Bank shall retain
-----------------------------------
its rights to be indemnified pursuant to Sections 4.6, 4.7, 4.8, 4.9, 13, and 14
with respect to any claims or actions arising prior to the date of the
assignment. If any assignee Bank is not incorporated under the laws of the
United States of America or any state thereof, it shall, prior to the date on
which any interest or fees are payable hereunder or under any of the other Loan
Documents for its account, deliver to the Borrower and the Administrative Agent
certification as to its exemption from deduction or withholding of any United
States federal income taxes. Anything contained in this Section 16 to the
contrary notwithstanding, any Bank may at any time pledge all or any portion of
its interest and rights
62
<PAGE>
under this Agreement (including all or any portion of its Notes) to any of the
twelve Federal Reserve Banks organized under (S)4 of the Federal Reserve Act, 12
U.S.C. (S)341. No such pledge or the enforcement thereof shall release the
pledgor Bank from its obligations hereunder or under any of the other Loan
Documents.
16.9 Assignment by Borrower. The Borrower shall not assign or transfer
----------------------
any of its rights or obligations under any of the Loan Documents without the
prior written consent of each of the Banks.
17. NOTICES.
-------
Except as otherwise expressly provided in this Agreement, all notices and
other communications made or required to be given pursuant to this Agreement or
the Notes shall be in writing and shall be delivered in hand, mailed by United
States registered or certified first class mail, postage prepaid, sent by
overnight courier, or sent by telegraph, telecopy, telefax or telex and
confirmed by delivery via courier or postal service, addressed as follows:
(a) if to the Borrower, at 800 Newport Center Drive, Suite 100,
Newport Beach, California (Fax Number (949) 759-9451), Attention: Chief
Financial Officer, with a copy sent via the same means to its General Counsel at
the same address, or at such other address for notice as any of such Persons
shall last have furnished in writing to the Person giving the notice;
(b) if to the Administrative Agent, at 901 Main Street, 66th Floor,
Dallas, Texas 75283-1000 (Fax Number (214) 508-0338), with a copy sent by the
same means to Chris Molen, Esq. at Paul, Hastings, Janofsky & Walker, LLP, Suite
2400, 600 Peachtree Street, Atlanta, Georgia 30308 (Fax Number (404) 815-2424),
or such other address for notice as such Person shall last have furnished in
writing to the Person giving the notice; and
(c) if to any Bank, at such Bank's address set forth on Schedule 1
----------
hereto, or such other address for notice as such Bank shall have last furnished
in writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or made
and to have become effective (i) if delivered by hand, overnight courier or
facsimile to a responsible officer of the party to which it is directed, at the
time of the receipt thereof by such officer or the sending of such facsimile, or
when delivery is duly attempted and refused, and (ii) if sent by registered or
certified first-class mail, postage prepaid, on the third Business Day following
the mailing thereof.
18. GOVERNING LAW.
-------------
PURSUANT TO, AMONG OTHER THINGS, SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAW OF THE STATE OF NEW YORK, THIS AGREEMENT AND, EXCEPT AS OTHERWISE
SPECIFICALLY PROVIDED THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS
UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL FOR ALL PURPOSES BE CONSTRUED
IN ACCORDANCE WITH AND GOVERNED
63
<PAGE>
BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO THE CONFLICTS OR
CHOICE OF LAW PRINCIPLES THEREOF). EACH OF THE ADMINISTRATIVE AGENT, THE BANKS,
AND THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW
YORK OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE
JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING
MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN SECTION 17. EACH OF
THE ADMINISTRATIVE AGENT, THE BANKS, AND THE BORROWER HEREBY WAIVES ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY
SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
19. HEADINGS.
--------
The captions in this Agreement are for convenience of reference only and
shall not define or limit the provisions hereof.
20. COUNTERPARTS.
------------
This Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which when so
executed and delivered shall be an original, and all of which together shall
constitute one instrument. In proving this Agreement it shall not be necessary
to produce or account for more than one such counterpart signed by the party
against whom enforcement is sought.
21. ENTIRE AGREEMENT.
----------------
The Loan Documents and any other documents executed in connection herewith
or therewith express the entire understanding of the parties with respect to the
transactions contemplated hereby. Neither this Agreement nor any term hereof may
be changed, waived, discharged or terminated, except as provided in Section 23.
22. WAIVER OF JURY TRIAL.
--------------------
EACH OF THE ADMINISTRATIVE AGENT, THE BANKS, AND THE BORROWER HEREBY WAIVES
ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY PROCEEDING ARISING OUT OF ANY
DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE NOTES, OR ANY OF THE OTHER LOAN
DOCUMENTS, AND RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE
OF SUCH RIGHTS AND OBLIGATIONS. EXCEPT AS PROHIBITED BY LAW, EACH OF THE
ADMINISTRATIVE AGENT, THE BANKS, AND THE BORROWER HEREBY WAIVES ANY RIGHT IT MAY
HAVE TO CLAIM OR RECOVER IN ANY PROCEEDING REFERRED TO IN THE
64
<PAGE>
PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY, PUNITIVE, OR CONSEQUENTIAL DAMAGES OR
ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. THE BORROWER (A)
CERTIFIES THAT NO REPRESENTATIVE, ADMINISTRATIVE AGENT, OR ATTORNEY OF ANY BANK
OR THE ADMINISTRATIVE AGENT HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
BANK OR THE ADMINISTRATIVE AGENT WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVERS AND (B) ACKNOWLEDGES THAT EACH OF THE
ADMINISTRATIVE AGENT AND THE BANKS HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS TO WHICH IT IS A PARTY BY, AMONG OTHER THINGS, THE
WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.
23. CONSENTS, AMENDMENTS, WAIVERS.
-----------------------------
Except as otherwise expressly provided in this Agreement, any term of this
Agreement, the other Loan Documents, or any other instrument related hereto or
mentioned herein may be amended with, but only with, the written consent of the
Borrower and the Majority Banks. Any consent or approval required or permitted
by this Agreement to be given by the Banks may be given, any acceleration of
Amounts owing under the Loan Documents may be rescinded, and the performance or
observance by the Borrower of any terms of this Agreement, the other Loan
Documents, or any other instrument related hereto or mentioned herein or the
continuance of any Default or Event of Default may be waived (either generally
or in a particular instance and either retroactively or prospectively) with, but
only with, the written consent of the Majority Banks. Notwithstanding the
foregoing, the rate of interest on the Notes (other than interest accruing
pursuant to Section 4.10 following the effective date of any waiver by the
Majority Banks of the Default or Event of Default relating thereto), the term of
the Notes, the amount of the Commitments of the Banks, the timing of payments of
principal, interest or fees due hereunder and the amount of facility fees
hereunder may not be changed without the written consent of the Borrower and the
written consent of Banks holding Commitments representing one hundred percent
(100%) of the Total Commitment; neither this Section 23 nor the definition of
Majority Banks may be amended without the written consent of all of the Banks;
and Section 12 may not be amended without the written consent of the
Administrative Agent. No waiver shall extend to or affect any obligation not
expressly waived or impair any right consequent thereon. No course of dealing or
delay or omission on the part of any Bank in exercising any right shall operate
as a waiver thereof or otherwise be prejudicial thereto. No notice to or demand
upon the Borrower shall entitle the Borrower to other or further notice or
demand in similar or other circumstances.
24. SEVERABILITY.
------------
The provisions of this Agreement are severable and if any one clause or
provision hereof shall be held invalid or unenforceable in whole or in part in
any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction, and shall not
in any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision of this Agreement in any jurisdiction.
65
<PAGE>
25. CONFIDENTIALITY.
---------------
Unless specifically authorized otherwise by the Borrower, the
Administrative Agent, the Documentation Agent and the Banks shall hold all non-
public information obtained pursuant to the requirements of this Agreement in
accordance with the Administrative Agent's, the Documentation Agent's or such
Banks' customary procedures for handling confidential information of this nature
and in accordance with safe and sound banking practices and shall use such non-
public information only for purposes of the transactions contemplated by this
Agreement. Any party hereto or any party that has agreed to be bound by the
terms of this Section 25 may make disclosure (a) to its Affiliates or (b)
reasonably required by a bona fide offeree, transferee or participant in
accordance with the contemplated transfer or participation or as required or
requested by any governmental authority or representative thereof or pursuant to
legal process; provided that such Affiliate, offeree, transferee or participant
shall have agreed in writing to be bound by the provisions of this Section 25.
In no event shall the Administrative Agent, the Documentation Agent or any Bank
be obligated to return any materials furnished to it by the Borrower in
connection with this Agreement.
[remainder of page intentionally left blank]
66
<PAGE>
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as a
sealed instrument as of the date first set forth above.
BORROWER: PIMCO ADVISORS L.P.
By: PIMCO PARTNERS, G.P., its General
Partner
By: PIMCO PARTNERS LLC, a California
limited liability company, a
general partner
By: /s/ William S. Thompson
------------------------------
Name: William S. Thompson
----------------------------
Title: Chief Executive Officer
---------------------------
By: PIMCO HOLDING LLC, a Delaware
limited liability company, a
general partner
By: /s/ Khanh T. Tran
------------------------------
Name: Khanh T. Tran
----------------------------
Title: Chief Financial Officer
---------------------------
[Signature Pages Continued]
67
<PAGE>
NATIONSBANK, N.A., as Administrative
Agent and Swing Loan Lender
By: /s/ Joan D'Amico
-----------------------------------
Name: Joan D'Amico
---------------------------------
Title: Vice President
--------------------------------
[Signature Pages Continued]
68
<PAGE>
DEUTSCHE BANK AG, NEW YORK BRANCH, as
Documentation Agent
By: /s/ Peter J. Bassler
-----------------------------------
Name: Peter J. Bassler
---------------------------------
Title: Vice President
--------------------------------
By: /s/ Jonathan B. P. Mendes
-----------------------------------
Name: Jonathan B. P. Mendes
---------------------------------
Title: Vice President
--------------------------------
[Signature Pages Continued]
69
<PAGE>
UNION BANK OF CALIFORNIA, N.A., as Co-
Agent
By: /s/ David C. Hants
-----------------------------------
Name: David C. Hants
---------------------------------
Title: Vice President
--------------------------------
[Signature Pages Continued]
70
<PAGE>
CITIBANK, N.A., as Co-Agent
By: /s/ Alexander Duka
-----------------------------------
Name: Alexander Duka
---------------------------------
Title: Attorney-In-Fact
--------------------------------
[Signature Pages Continued]
71
<PAGE>
NATIONSBANK, N.A., as a Bank
By: /s/ Joan D'Amico
-----------------------------------
Name: Joan D'Amico
---------------------------------
Title: Vice President
--------------------------------
[Signature Pages Continued]
72
<PAGE>
DEUTSCHE BANK AG, NEW YORK AND/OR
CAYMAN ISLANDS BRANCHES, as a Bank
By: /s/ Peter J. Bassler
-----------------------------------
Name: Peter J. Bassler
---------------------------------
Title: Vice President
--------------------------------
By: /s/ Jonathan B. P. Mendes
-----------------------------------
Name: Jonathan B. P. Mendes
---------------------------------
Title: Vice President
--------------------------------
[Signature Pages Continued]
73
<PAGE>
UNION BANK OF CALIFORNIA, N.A., as a
Bank
By: /s/ David C. Hants
-----------------------------------
Name: David C. Hants
---------------------------------
Title: Vice President
--------------------------------
[Signature Pages Continued]
74
<PAGE>
CITIBANK, N.A., as a Bank
By: /s/ Alexander Duka
-----------------------------------
Name: Alexander Duka
---------------------------------
Title: Attorney-In-Fact
--------------------------------
[Signature Pages Continued]
75
<PAGE>
CREDIT LYONNAIS SAN FRANCISCO BRANCH,
as a Bank
By: /s/ Edward W. Leong
-----------------------------------
Name: Edward W. Leong
---------------------------------
Title: Vice President & Manager
--------------------------------
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
[Signature Pages Continued]
76
<PAGE>
THE BANK OF NEW YORK, as a Bank
By: /s/ Lee B. Stephens, III
-----------------------------------
Name: Lee B. Stephens, III
---------------------------------
Title: Vice President
--------------------------------
[Signature Pages Continued]
77
<PAGE>
STATE STREET BANK AND TRUST COMPANY, as
a Bank
By: /s/ Steven R. Wolff
-----------------------------------
Name: Steven R. Wolff
---------------------------------
Title: Vice President
--------------------------------
[Signature Pages Continued]
78
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO, as
a Bank
By: /s/ Nicole Holzapfel
-----------------------------------
Name: Nicole Holzapfel
---------------------------------
Title: Vice President
--------------------------------
[Signature Pages Continued]
79
<PAGE>
MELLON BANK, N.A., as a Bank
By: /s/ Susan M. Whitewood
-----------------------------------
Name: Susan M. Whitewood
---------------------------------
Title: Vice President
--------------------------------
[Signature Pages Continued]
80
<PAGE>
FLEET NATIONAL BANK, as a Bank
By: /s/ Anson T. Harris
-----------------------------------
Name: Anson T. Harris
---------------------------------
Title: Vice President
--------------------------------
[Signature Pages Continued]
81
<PAGE>
SUNTRUST BANK, CENTRAL FLORIDA, N.A.,
as a Bank
By: /s/ Janet P. Sammons
-----------------------------------
Name: Janet P. Sammons
---------------------------------
Title: Vice President
--------------------------------
[Signature Pages Continued]
82
<PAGE>
CIBC INC., as a Bank
By: /s/ Gerald J. Girardi
-----------------------------------
Name: Gerald J. Girardi
---------------------------------
Title: Executive Director
--------------------------------
[Signature Pages Continued]
83
<PAGE>
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Bank
By: /s/ John G. Hayes
-----------------------------------
Name: John G. Hayes
---------------------------------
Title: Vice President
--------------------------------
84
<PAGE>
EXHIBIT 10.2
SHORT-TERM CREDIT AGREEMENT
Dated as of May 12, 1998
Among
PIMCO ADVISORS L.P.
as Borrower,
NATIONSBANK, N.A.
as Administrative Agent,
DEUTSCHE BANK AG, NEW YORK BRANCH
as Documentation Agent,
UNION BANK OF CALIFORNIA, N.A. and CITIBANK, N.A.
as Co-Agents
And
THE FINANCIAL INSTITUTIONS WHOSE NAMES
ARE SET FORTH ON THE SIGNATURE PAGES HEREOF
as Banks
85
<PAGE>
SHORT-TERM CREDIT AGREEMENT
---------------------------
THIS SHORT-TERM CREDIT AGREEMENT, dated as of May 12, 1998 (as amended,
supplemented or otherwise modified from time to time, this "Agreement"), among
PIMCO ADVISORS L.P., a Delaware limited partnership (together with its permitted
successors, the "Borrower"), NATIONSBANK, N.A., as Administrative Agent for the
Banks (in such capacity, the "Administrative Agent"), DEUTSCHE BANK AG, NEW YORK
BRANCH as Documentation Agent (the "Documentation Agent") UNION BANK OF
CALIFORNIA, N.A. and CITIBANK, N.A. as Co-Agents (the "Co-Agents") and the
financial institutions whose names are set forth on the signature pages hereof
as Banks (collectively, the "Banks");
W I T N E S S E T H:
-------------------
WHEREAS, the Borrower desires to obtain from the Banks credit facilities
consisting of a $250,000,000 364-day revolving credit facility under this
Agreement and a $250,000,000 five-year revolving credit facility under the Long-
Term Credit Agreement for the purposes provided below;
WHEREAS, the Banks are willing to provide such credit facilities to the
Borrower upon the terms and conditions set forth in this Agreement and in the
Long-Term Credit Agreement; and
WHEREAS, the Administrative Agent is willing to act as Administrative Agent
for the Banks in connection with such credit facilities as provided in this
Agreement and in the Long-Term Credit Agreement;
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and
agreements set forth herein below, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged by the parties, the
parties hereto do hereby agree as follows:
1. DEFINITIONS AND RULES OF INTERPRETATION.
1.1 Definitions. The following terms shall have the meanings set forth
-----------
in this Section 1.1 or elsewhere in the provisions of this Agreement referred to
below:
Acquisition. Any acquisition by the Borrower or any Subsidiary of a
-----------
business or assets (subject to liabilities) constituting a business primarily
engaged in the investment management or investment advisory business, whether by
way of a purchase (for cash, securities or other assets) of Equity Securities or
assets (subject to liabilities) or a merger or consolidation, so long as (a) if
the Borrower is a party to any such merger or consolidation, the Borrower is the
survivor, and (b) immediately following such acquisition, such business or
assets are owned by the Borrower or any existing or newly created or acquired
Subsidiary.
Administrative Agent. NationsBank, N.A. acting as Administrative Agent for
--------------------
the Banks, or any successor to the rights and obligations of the Administrative
Agent under this Agreement.
-86-
<PAGE>
Administrative Agent's Head Office. The Administrative Agent's head office
----------------------------------
located at 901 Main Street, Dallas, Texas, 75202, or at such other location as
the Administrative Agent may designate in a written notice to the other parties
hereto from time to time.
Affiliate. As defined under Rule 144(a) under the Securities Act of 1933,
---------
as amended.
Agreement. This Agreement, including the Schedules and Exhibits hereto.
---------
Alternative Base Rate. The higher of (a) the annual rate of interest
---------------------
announced from time to time by the Administrative Agent at the Administrative
Agent's Head Office as its "prime rate" and (b) the Federal Funds Effective Rate
plus one-half of one percent (0.50%). Changes in the Alternative Base Rate
shall become effective automatically without notice to any party.
Alternative Base Rate Loans. Loans bearing interest calculated by
---------------------------
reference to the Alternative Base Rate.
Arranging Agents. NationsBanc Montgomery Securities, Inc. and Deutsche
----------------
Morgan Grenfell Inc.
Assets Under Management. With respect to any Person, the dollar value of
-----------------------
assets owned by other Persons that are managed by such first Person pursuant to
a management contract to which such first Person is a party, and, with respect
to the Borrower, "Assets Under Management" refers to the Assets Under Management
of the Borrower and its Subsidiaries, taken as a whole.
Assignment and Acceptance. As defined in Section 16.1.
-------------------------
Banks. The financial institutions whose names are set forth on the
-----
signature pages hereof as Banks, and any other Person who becomes an assignee of
any rights and obligations of a Bank pursuant to Section 16.1.
Borrower. As defined in the preamble hereto.
--------
Borrower Partnership Agreement. The Agreement of Limited Partnership of
------------------------------
the Borrower, dated as of December 31, 1997, among PGP and any limited partner
who may be admitted as such, as such agreement may be amended or modified from
time to time in compliance with the provisions of this Agreement.
Business. With respect to any Person, the assets, properties, business,
--------
operations and condition (financial and otherwise) of such Person.
Business Day. Any day on which banking institutions in Dallas, Texas, New
------------
York, New York, and Los Angeles, California are open for the transaction of
banking business and, in the case of Eurodollar Rate Loans, also a day which is
a Eurodollar Business Day.
Capitalized Leases. Leases under which the Borrower or any of its
------------------
Subsidiaries is the lessee or obligor, the discounted future rental payment
obligations under which are required to be capitalized on the balance sheet of
the lessee or obligor in accordance with GAAP.
-87-
<PAGE>
CERCLA. As defined in Section 5.17.
------
Change of Control. Any of the following:
-----------------
(a) Any amendment, modification or revocation of the Written Action other
than such amendments, modifications which could not reasonably be expected to
reduce the authority delegated to the Management Board or alter the manner of
election of its members;
(b) Pacific Life Insurance Co. shall cease to own, directly or indirectly,
any general partnership interests in the Borrower; or
(c) PIMCO Partners LLC, a California limited liability company and Pacific
Life Insurance Co., collectively, shall cease to control, either directly or
indirectly, a majority of the general partnership interests in the Borrower.
Change of Control Date. Any date upon which a Change of Control occurs.
----------------------
Closing Date. The date on which each of the conditions set forth in
------------
Section 8 is satisfied or waived.
Code. The Internal Revenue Code of 1986, as amended.
----
Commitment. The several obligations of the Banks to advance to the
----------
Borrower pursuant to the terms hereunder the sum of up to $250,000,000, in the
aggregate at any time outstanding in accordance with their respective Commitment
Percentages, as such amounts may be reduced from time to time in accordance with
the terms hereof.
Commitment Percentage. With respect to each Bank, the percentage set forth
---------------------
on Schedule 1 hereto as such Bank's percentage of the aggregate Commitment of
----------
all of the Banks.
Consolidated or consolidated. With reference to any term defined herein,
------------ ------------
shall mean that term as applied to the accounts of the Borrower and its
Subsidiaries, consolidated in accordance with GAAP.
Consolidated Funded Debt. At any time of determination, the aggregate
------------------------
outstanding principal amount of Funded Debt of the Borrower and its Subsidiaries
at such time determined on a consolidated basis in accordance with GAAP.
Consolidated Net Income (or Loss). The consolidated net income (or loss)
----------------------- -------
of the Borrower (excluding therefrom any income attributable to minority
interests in another Entity), determined in accordance with GAAP, but excluding
earnings resulting from any reappraisal, revaluation, or write-up of assets.
Contracts. Contracts, agreements, mortgages, leases, bonds, promissory
---------
notes, debentures, guaranties, Capitalized Leases, indentures, pledges, powers
of attorney, proxies, trusts, franchises, or other instruments or obligations.
-88-
<PAGE>
Conversion Request. A notice given by the Borrower to the Administrative
------------------
Agent of the Borrower's election to convert or continue a Loan in accordance
with Section 2.7.
Default. Any Event of Default, and any of the events specified in Section
-------
10.1 hereof regardless of whether there shall have occurred any passage of time
or giving of notice (or both) that would be necessary in order to constitute
such event an Event of Default.
Distribution. With respect to any Entity, the declaration or payment
------------
(without duplication) of any dividend or distribution on or in respect of any
Equity Securities of such Entity, other than dividends payable solely in Equity
Securities of such Entity that are not required to be classified as liabilities
on the balance sheet of such Entity under GAAP; the purchase, redemption, or
other retirement of any Equity Securities of such Entity, directly or indirectly
through a Subsidiary of such Entity or otherwise; or the return of capital by
such Entity to the holders of its Equity Securities as such.
Documentation Agent. Deutsche Bank AG, New York Branch acting as
-------------------
Documentation Agent for the Banks, or any successor to the rights and
obligations of the Documentation Agent under this Agreement.
Dollars or $. Dollars in lawful currency of the United States of America.
------- -
Domestic Lending Office. Initially, the office of each Bank designated as
-----------------------
such in Schedule 1 hereto; thereafter, such other office of such Bank, if any,
----------
located within the United States that will be making or maintaining Alternative
Base Rate Loans.
Drawdown Date. The date on which any Loan is made or is to be made, and
-------------
the date on which any Loan is converted or continued in accordance with Section
2.7.
Eligible Assignee. Any of (a) a commercial bank or finance company
-----------------
organized under the laws of the United States, any State thereof, or the
District of Columbia, having total assets in excess of One Billion Dollars
($1,000,000,000); (b) a commercial bank organized under the laws of any other
country that is a member of the Organization for Economic Cooperation and
Development (the "OECD") or a political subdivision of any such country and
having total assets in excess of One Billion Dollars ($1,000,000,000); provided
--------
that such bank is acting through a branch or agency located in the country in
which it is organized or another country which is also a member of the OECD; and
(c) any of the twelve Federal Reserve Banks organized under (S)4 of the Federal
Reserve Act, 12 U.S.C. (S)341 or the central bank of any country which is a
member of the OECD.
Employee Benefit Plan. Any employee benefit plan within the meaning of
---------------------
(S)3(2) of ERISA maintained or contributed to by the Borrower or any ERISA
Affiliate, other than a Multiemployer Plan.
Entity. Any corporation, partnership, trust, unincorporated association,
------
joint venture, limited liability company, or other legal or business entity.
Environmental Laws. As defined in Section 5.17(a).
------------------
-89-
<PAGE>
Equity Securities. With respect to any Entity, all equity securities of
-----------------
such Entity, including any (a) common or preferred stock, (b) limited or general
partnership interests, (c) options, warrants, or other rights to purchase or
acquire any equity security, or (d) securities convertible into any equity
security.
ERISA. The Employee Retirement Income Security Act of 1974, as amended.
-----
ERISA Affiliate. Any Person that is treated as a single employer together
---------------
with the Borrower under (S)414 of the Code.
ERISA Reportable Event. A reportable event with respect to a Guaranteed
----------------------
Pension Plan within the meaning of (S)4043 of ERISA and the regulations
promulgated thereunder as to which the requirement of notice has not been
waived.
Eurocurrency Reserve Rate. For any day with respect to a Eurodollar Rate
-------------------------
Loan, the maximum rate (expressed as a decimal) at which any lender subject
thereto would be required to maintain reserves (including any marginal, special,
supplemental or emergency reserves) under Regulation D of the Board of Governors
of the Federal Reserve System (or any successor or similar regulations relating
to such reserve requirements) against "Eurocurrency Liabilities" (as that term
is used in Regulation D), if such liabilities were outstanding. Without
limiting the effect of the foregoing, the Eurocurrency Reserve Rate shall
reflect any other reserves required to be maintained by member banks with
respect to (i) any category of liabilities which includes deposits by reference
to which the Eurodollar Rate is to be determined; or (ii) any category of
extensions of credit or other assets which include Eurodollar Rate Loans. The
Eurocurrency Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in the Eurocurrency Reserve Rate.
Eurodollar Business Day. Any day on which commercial banks are open for
-----------------------
international business (including dealings in Dollar deposits) in London or such
other Eurodollar interbank market as may be selected by the Administrative Agent
in its sole discretion acting in good faith.
Eurodollar Lending Office. Initially, the office of each Bank designated
-------------------------
as such in Schedule 1 hereto; thereafter, such other office of such Bank, if
----------
any, that shall be making or maintaining Eurodollar Rate Loans.
Eurodollar Rate. For any Interest Period with respect to a Eurodollar Rate
---------------
Loan, the rate of interest equal to (a) the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any
successor page) as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days prior to the first day
of such Interest Period for a term comparable to such Interest Period or if for
any reason such rate is not available, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as
the London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period; provided, however, if more
-------- -------
than one rate is specified on Reuters Screen LIBO Page, the applicable rate
shall be the arithmetic mean of all such rates (rounded upwards, if necessary,
to the nearest 1/100 of 1%), divided by (b) a number equal to 1.00 minus the
Eurocurrency Reserve Rate.
-90-
<PAGE>
Eurodollar Rate Applicable Margin. As defined in Section 2.5(c).
---------------------------------
Eurodollar Rate Loans. Loans bearing interest calculated by reference to
---------------------
the Eurodollar Rate.
Event of Default. Any of the events specified in Section 10.1 hereof,
----------------
provided that any requirement for notice or lapse of time, or both, has been
satisfied.
Fee Letters. That certain letter agreement dated as of the Closing Date
-----------
between the Borrower and the Administrative Agent regarding the payment of
certain fees to the Administrative Agent and that certain letter agreement dated
as of December 29, 1997 between the Borrower, the Administrative Agent and the
Arranging Agents, regarding the payment of certain fees to the Arranging Agents.
Federal Funds Effective Rate. For any day, the rate per annum (rounded
----------------------------
upward, if necessary, to the next higher 1/100th of 1%) equal to the weighted
average of the rates on overnight federal funds transactions offered to the
Reference Banks by federal funds brokers at 11:00 a.m. (Dallas time) on such
day, as confirmed to the Administrative Agent by the Reference Banks on the
Business Day next succeeding such day, provided that (i) if the day for which
such rate is to be determined is not a Business Day, the Federal Funds Effective
Rate for such day shall be such rate on such transactions on the next preceding
Business Day, and (ii) if any Reference Bank does not provide a confirmation,
the relevant weighted average shall be determined on the basis of confirmations
supplied by the remaining Reference Banks, and if no (or only one) Reference
Bank supplies confirmation, the Federal Funds Effective Rate for such day shall
be the average rate charged to the Administrative Agent on such day on overnight
federal funds transactions as determined by the Administrative Agent.
Fully Effective. With respect to any Contract, that (a) such Contract is
---------------
the legal, valid, and binding obligation of the Borrower or its Subsidiary, as
the case may be, enforceable against such party according to its terms, and (b)
if such Contract exists on or before the date of this Agreement, such Contract
shall remain in full force and effect notwithstanding the execution and delivery
of the Loan Documents and the consummation of the transactions contemplated by
the Loan Documents.
Funded Debt. With respect to any Person, (a) all indebtedness for money
-----------
borrowed of such Person, (b) every obligation of such Person in respect of
Capitalized Leases, (c) all reimbursement obligations of such Person with
respect to letters of credit, bankers' acceptances, or similar facilities issued
for the account of such Person, and (d) all guarantees, endorsements,
acceptances, and other contingent obligations of such Person, whether direct or
indirect, in respect of indebtedness for borrowed money of others, including any
obligation to supply funds to or in any manner to invest in, directly or
indirectly, the debtor, to purchase indebtedness for borrowed money, or to
assure the owner of indebtedness for borrowed money against loss, through an
agreement to purchase goods, supplies, or services for the purpose of enabling
the debtor to make payment of the indebtedness held by such owner or otherwise,
but excluding, for all purposes hereof with respect to the Borrower, (i) with
respect to OGI Exchangeable Debt issuable in connection with the Certificate of
Long-Term Indemnity Indebtedness dated November 4, 1997, not more than
$80,000,000 of OGI Exchangeable Debt, provided that no such OGI Exchangeable
Debt shall be excluded from the definition of "Funded Debt" after the one year
anniversary of its issuance and (ii) at all times (x) the
-91-
<PAGE>
obligations of the Borrower pursuant to that certain Certificate of Long-Term
Indemnity Indebtedness issued November 4, 1997, (y) up to $4,000,000 of OGI
Exchangeable Debt and (z) any Subordinated Debt.
GAAP. Principles that are (a) consistent with the principles promulgated
----
or adopted by the Financial Accounting Standards Board and its predecessors, as
in effect from time to time and (b) consistently applied with past financial
statements of the Borrower adopting the same principles.
Government Authority. The United States of America or any state, district,
--------------------
territory, or possession thereof, any local government within the United States
of America or any of its territories and possessions, any foreign government or
any province, territory, or possession thereof, or any court, tribunal,
administrative or regulatory agency, taxing or revenue authority, central bank
or banking regulatory agency, commission, or body of any of the foregoing.
Government Mandate. With respect to (a) any Person, any statute, law,
------------------
rule, regulation, code, or ordinance duly adopted by any Government Authority,
any treaty or compact between two (2) or more Government Authorities, and any
judgment, order, decree, ruling, finding, determination, or injunction of any
Government Authority, in each such case that is legally binding on such Person,
any of its Subsidiaries or any of their respective properties, and (b) the
Administrative Agent or any Bank, in addition to subsection (a) hereof, any
policy, guideline, directive, or standard duly adopted by any Government
Authority with respect to the regulation of banks, monetary policy, lending,
investments, or other financial matters.
Guaranteed Pension Plan. Any employee pension benefit plan within the
-----------------------
meaning of (S)3(2) of ERISA maintained or contributed to by the Borrower or any
ERISA Affiliate the benefits of which are guaranteed on termination in full or
in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer
Plan.
Hazardous Substances. As defined in Section 5.17(b).
--------------------
Holdings. PIMCO Advisors Holdings L.P., a Delaware limited partnership.
--------
Indebtedness. All obligations, contingent and otherwise, that in
------------
accordance with GAAP should be classified upon the obligor's balance sheet as
liabilities, or to which reference should be made by footnotes thereto in
accordance with GAAP, including: (a) all debt and similar monetary obligations,
whether direct or indirect; (b) all liabilities secured by any Lien existing on
property owned or acquired subject thereto, whether or not the liability secured
thereby shall have been assumed; (c) all obligations in respect of hedging
contracts, including, without limitation, interest rate and currency swaps,
caps, collars and other financial derivative products; and (d) all guarantees,
endorsements, and other contingent obligations whether direct or indirect in
respect of indebtedness of others, including any obligation to supply funds to
or in any manner to invest in, directly or indirectly, the debtor, to purchase
indebtedness, or to assure the owner of indebtedness against loss, through an
agreement to purchase goods, supplies, or services for the purpose of enabling
the debtor to make payment of the indebtedness held by such owner or otherwise,
and the obligations to reimburse the issuer in respect of any letters of credit.
-92-
<PAGE>
Interest Coverage Ratio. For any period the ratio of OPAD for such period
-----------------------
to Interest Expense for such period.
Interest Expense. Interest expense in respect of Consolidated Funded Debt
----------------
for any period, provided, however, that with respect to any period in which an
-------- -------
Acquisition or Permitted Merger occurs, the foregoing amounts shall be
calculated on a pro forma basis as if such Acquisition or Permitted Merger
occurred on the first day of such period.
Interest Payment Date. (a) As to any Alternative Base Rate Loan, the last
---------------------
day of each calendar quarter during all or a portion of which such Alternative
Base Rate Loan is outstanding and the maturity of such Alternative Base Rate
Loan; and (b) as to any Eurodollar Rate Loan, the last day of each Interest
Period with respect to such Eurodollar Rate Loan and the maturity of such
Eurodollar Rate Loan.
Interest Period. With respect to each Eurodollar Rate Loan, (a) initially,
---------------
the period commencing on the Drawdown Date of such Loan and ending on the last
day of, as selected by the Borrower in a Loan Request, one (1), two (2) or three
(3) months thereafter; and (b) thereafter, each period commencing on the last
day of the next preceding Interest Period applicable to such Loan and ending on
the last day of one of the periods set forth above, as selected by the Borrower
in a Conversion Request; provided that all of the foregoing provisions relating
--------
to Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day that is not a
Eurodollar Business Day, that Interest Period shall be extended to the next
succeeding Eurodollar Business Day unless the result of such extension would be
to carry such Interest Period into another calendar month, in which event such
Interest Period shall end on the immediately preceding Eurodollar Business Day;
(ii) any Interest Period that begins on the last Eurodollar Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Eurodollar Business Day of a calendar month; and
(iii) any Interest Period commencing prior to the Maturity Date that
would otherwise extend beyond the Maturity Date shall end on the Maturity Date.
Investments. All expenditures made and all liabilities incurred
-----------
(contingently or otherwise) for the acquisition of Equity Securities or
Indebtedness, or for loans, advances, or capital contributions to, or in respect
of any guaranties (or other commitments as described under Indebtedness) of,
any Person, other than any Acquisition.
Leverage Ratio. As defined in Section 7.13(b).
--------------
Lien. Any lien, mortgage, security interest, pledge, charge, beneficial or
----
equitable interest or right, hypothecation, collateral assignment, easement, or
other encumbrance.
-93-
<PAGE>
Loan Documents. This Agreement, the Revolving Notes, the Fee Letters, all
--------------
Loan Requests, all Conversion Requests and all other documents, certificates and
agreements executed or delivered in connection with or contemplated by this
Agreement, and the Long-Term Loan Documents.
Loan Request. As defined in Section 2.6.
------------
Loans. The amount advanced by the Banks to the Borrower under the
-----
Commitment not to exceed the amount of the Commitment, and evidenced by the
Revolving Notes.
Long-Term Credit Agreement. That certain Long-Term Credit Agreement dated
--------------------------
as of the date hereof, by and among the parties thereto, pursuant to which the
banks party thereto have agreed to provide a long-term credit facility to the
Borrower upon the terms and conditions set forth therein, as such agreement may
be amended, supplemented or otherwise modified from time to time.
Long-Term Loan Documents. The Long-Term Credit Agreement, the Notes (as
------------------------
defined in the Long-Term Credit Agreement), all Loan Requests (as defined in the
Long-Term Credit Agreement), all Swing Loan Requests (as defined in the Long-
Term Credit Agreement), all Conversion Requests (as defined in the Long-Term
Credit Agreement) and all other documents, certificates and agreements executed
or delivered in connection with or contemplated by the Long-Term Credit
Agreement.
Majority Banks. As of any date, the Banks whose aggregate Commitments
--------------
constitute at least sixty-six and two thirds percent (66 2/3%) of the Total
Commitment.
Material Amount. As of the date of determination, an amount equal to 5% of
---------------
OPAD of the Borrower for the immediately preceding four (4) quarter period.
Material Effect. A material adverse effect on (a) the ability of the
---------------
Borrower to enter into and to perform and observe its Obligations under the Loan
Documents, or (b) the Business of the Borrower and its Subsidiaries taken as a
whole.
Maturity Date. The first to occur of (a) the date which is 364 days after
-------------
the Closing Date or (b) the date on which the Obligations shall otherwise become
due and payable by reason of acceleration or otherwise.
Multiemployer Plan. Any multiemployer plan within the meaning of (S)3(37)
------------------
of ERISA maintained or contributed to by the Borrower or any ERISA Affiliate.
1940 Act. The Investment Company Act of 1940, as amended.
--------
Note Agreement. That certain Amended and Restated Note Agreement dated as
--------------
of September 26, 1997 by and among PGP and the holders of the Private Placement
Notes.
Obligations. All indebtedness, obligations, and liabilities of any of the
-----------
Borrower and its Subsidiaries to any of the Banks and the Administrative Agent,
individually or collectively, existing on the date of this Agreement or arising
thereafter, direct or indirect, joint or several, absolute or
-94-
<PAGE>
contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising or incurred under this Agreement or any of the other Loan
Documents or in respect of any of the Loans or any of the Revolving Notes or
other instruments at any time evidencing any thereof.
OGI Exchangeable Debt. That certain Indebtedness of Oppenheimer Group,
---------------------
Inc., in the original principal amount not to exceed $230,000,000, issued
pursuant to that certain Note Agreement dated November 4, 1997 and evidenced by
those certain 6% Senior Notes due December 1, 2037 dated November 4, 1997, the
holders of which have the right pursuant to that certain Exchange Right dated
November 4, 1997, issued by the Borrower, to exchange such Indebtedness for
Class A Limited Partner Units of the Borrower at the rate of $33 1/3 per unit.
OPAD. With respect to any period, the sum of (a) Consolidated Net Income
----
(or Loss) of the Borrower and its Subsidiaries for such period, plus (b)
----
amortization, depreciation and other non-cash charges of the Borrower and its
Subsidiaries for such period to the extent deducted in determining Consolidated
Net Income (or Loss) for such period; provided, however, that if such sum is
-------- -------
less than zero, such sum shall be deemed to be zero for purposes of this
Agreement; and, provided, further, that with respect to any period in which an
-------- -------
Acquisition or Permitted Merger occurs, the foregoing amounts shall be
calculated on a pro forma basis as if such Acquisition or Permitted Merger
occurred on the first day of such period.
OpCap, G.P. Oppenheimer Capital, a Delaware general partnership.
-----------
Partners' Capital. The aggregate outstanding capital accounts of the
-----------------
partners of the Borrower.
PBGC. The Pension Benefit Guaranty Corporation created by (S)4002 of ERISA
----
and any successor entity or entities having similar responsibilities.
Permits. Permits, licenses, franchises, patents, copyrights, trademarks,
-------
trade names, approvals, clearances, and applications for or rights in respect of
the foregoing of any Government Authority.
Permitted Liens. Liens permitted by Section 7.4.
---------------
Permitted Merger. A merger or consolidation of the Borrower or any of its
----------------
Subsidiaries that does not violate this Agreement.
Person. Any individual, Entity, or Government Authority.
------
PGP. PIMCO Partners, G.P., a general partnership organized under the laws
---
of California.
PGP Refinancing. A transaction to refinance the Private Placement Notes
---------------
structured as either (a) a loan by the Borrower to PGP (the proceeds of which
are used to repay the Private Placement Notes in full) or (b) a guaranty of the
Private Placement Notes issued by the Borrower in favor of the holders of the
Private Placement Notes.
-95-
<PAGE>
Private Placement Notes. Those certain 9.01% Secured, Non-Recourse Notes
-----------------------
due December 5, 2001, issued by PGP pursuant to that certain Amended and
Restated Note Agreement dated as of September 26, 1997, having a face amount, in
the aggregate not exceeding $130,000,000.
Proceedings. Any (a) actions at law, (b) suits in equity, (c) bankruptcy,
-----------
insolvency, receivership, dissolution, or reorganization cases or proceedings,
(d) administrative or regulatory hearings or other proceedings, (e) arbitration
and mediation proceedings, (f) criminal prosecutions, (g) judgment levies,
foreclosure proceedings, pre-judgment security procedures, or other enforcement
actions, and (h) other litigation, actions, suits, and proceedings conducted by,
before, or on behalf of any Government Authority.
Public General Partner. Any "Public General Partner" as such term is
----------------------
defined in the partnership agreement of the Borrower in effect on the Closing
Date, and not as subsequently amended or modified.
Real Estate. All real property at any time owned or leased (as lessee or
-----------
sublessee) by the Borrower or any of its Subsidiaries.
Record. The grid attached to a Revolving Note, or the continuation of such
------
grid, or any other similar record, including computer records, maintained by any
Bank with respect to any Loan referred to in such Revolving Note.
Reference Banks. NationsBank, N.A. and Deutsche Bank AG, New York Branch.
---------------
Revolving Notes. Those certain promissory notes in the aggregate original
---------------
principal amount of $250,000,000, one such note issued by the Borrower to each
of the Banks and substantially in the form of Exhibit A attached hereto, and
---------
any extensions, modifications, renewals or replacements of, or amendments to,
any of the foregoing.
Subordinated Debt. At any date of determination thereof, any Indebtedness
-----------------
of the Borrower and any of its Subsidiaries that is subordinated to the
Obligations upon terms and conditions satisfactory to the Administrative Agent
and the Majority Banks.
Subsidiary. Any Entity of which the designated parent shall at any time
----------
own directly or indirectly through a Subsidiary or Subsidiaries at least a
majority (by number of votes) of the outstanding Voting Equity Securities;
except as the context may otherwise require, "Subsidiary" means any Subsidiary
of the Borrower.
TAG. Thomson Advisory Group, Inc., a Delaware corporation.
---
Total Commitment. The sum of the Commitments, as in effect from time to
----------------
time. As of the Closing Date the Total Commitment is $250,000,000.
Type. As to any Loan, its nature as an Alternative Base Rate Loan or a
----
Eurodollar Rate.
-96-
<PAGE>
Voting Equity Securities. Equity Securities of any class or classes
------------------------
(however designated), the holders of which are at the time entitled, as such
holders, to vote for the election of a majority of the directors (or persons
performing similar functions) of the Entity that issued such Equity Securities.
Written Action. That certain written action dated November 28, 1997, taken
--------------
by PGP in its capacity as sole general partner of the Borrower.
Year 2000 Compliant. As defined in Section 5.21.
-------------------
Year 2000 Problem. As defined in Section 5.21.
-----------------
1.2 Rules of Interpretation.
-----------------------
(a) A reference to any Contract or other document shall include such
Contract or other document as amended, modified, or supplemented from time to
time in accordance with its terms and the terms of this Agreement.
(b) The singular includes the plural and the plural includes the
singular.
(c) A reference to any Government Mandate includes any amendment or
modification to such Government Mandate or any successor Government Mandate.
(d) A reference to any Person includes its permitted successors and
permitted assigns. Without limiting the generality of the foregoing, a
reference to any Bank shall include any Person that succeeds generally to its
assets and liabilities.
(e) Accounting terms not otherwise defined herein have the meanings
assigned to them by GAAP.
(f) The words "include," "includes," and "including" are not
limiting.
(g) All terms not specifically defined herein or by GAAP, which terms
are defined in the Uniform Commercial Code as in effect in the State of New
York, have the meanings assigned to them therein.
(h) Reference to a particular "(S)", Section, Schedule, or Exhibit
refers to that Section, Schedule, or Exhibit of this Agreement unless otherwise
indicated.
(i) The words "herein", "hereof", and "hereunder" and words of like
import shall refer to this Agreement as a whole and not to any particular
section or subdivision of this Agreement.
-97-
<PAGE>
2. THE CREDIT FACILITIES.
---------------------
2.1 The Loans.
---------
(a) Subject to the terms and conditions set forth in Section 9
hereof, the Banks agree, severally in accordance with their respective
Commitment Percentages relating to the Commitment and not jointly, upon the
terms and subject to the conditions of this Agreement, to lend and re-lend to
the Borrower, from time to time on or after the Closing Date and up to but
excluding the Maturity Date, such sums as are requested by the Borrower up to a
maximum aggregate principal amount outstanding (after giving effect to all
amounts requested) at any one time equal to such Bank's Commitment, provided
--------
that the (i) sum of the outstanding amount of the Loans (after giving effect to
all amounts requested) shall not at any time exceed the Commitment, and (ii) at
the time such Loan is requested, the aggregate amount of all Loans (as defined
in the Long-Term Credit Agreement) outstanding under the Long-Term Credit
Agreement shall not be less than the Total Commitment (as defined in the Long-
Term Credit Agreement). The Loans shall be made pro rata in accordance with each
--------
Bank's Commitment Percentage; provided that the failure of any Bank to lend in
--------
accordance with this Agreement shall not release any other Bank or the
Administrative Agent from their obligations hereunder, nor shall any Bank have
any responsibility or liability in respect of a failure of any other Bank to
lend in accordance with this Agreement. Each request for a Loan and each
borrowing hereunder shall constitute a representation and warranty by the
Borrower that the conditions set forth in Section 9 have been satisfied on the
date of such request.
(b) In the event that, at any time when the conditions precedent for
any Loan have been satisfied, a Bank fails or refuses to fund its portion of
such Loan, then, until such time as such Bank has funded its portion of such
Loan, (i) such non-funding Bank shall not have the right to vote regarding any
issue on which voting is required or advisable under this Agreement or any other
Loan Document, and the amount of such Bank's Commitment shall not be counted for
purposes of determining "Majority Banks" hereunder or for purposes of
determining Commitments representing one hundred percent (100%) of the Total
Commitment pursuant to Section 23 hereof, and (ii) any payments made by the
Borrower shall be applied to repay the interest on, and principal of, the Loans
held by the funding Banks until either (A) any Loan funded by the Administrative
Agent on behalf of a non-funding Bank has been repaid in full or (B) the
aggregate outstanding Loans, together with any accrued and unpaid interest
thereof, shall be held by the Banks pro rata in accordance with their respective
Commitment Percentages.
2.2 Fees.
----
(a) Facility Fee. The Borrower agrees to pay to the Administrative
------------
Agent, for the benefit of each of the Banks in accordance with their respective
Commitment Percentages, a facility fee on the aggregate Commitment, for each day
from the Closing Date until the Maturity Date, at a rate, determined by the
Administrative Agent based upon the Leverage Ratio for the most recent fiscal
quarter end, effective as of the second (2/nd/) Business Day after the financial
statements referred to in Section 6.4(b) hereof are required to be delivered by
the Borrower to the Administrative Agent, expressed as a per annum rate as
follows:
-98-
<PAGE>
<TABLE>
<CAPTION>
Leverage Ratio Rate
- --------------------------------------------------------------------------------
<S> <C>
Greater than or equal to 2.0 to 1 0.175%
Greater than or equal to 1.5 to 1 but less than 2.0 to 1 0.150%
Greater than or equal to 1.0 to 1 but less than 1.5 to 1 0.120%
Less than 1.0 to 1 0.080%
</TABLE>
Such facility fee shall be computed on the basis of a year of 360 days
for the actual number of days elapsed, shall be payable quarterly in arrears on
the last day of each calendar quarter commencing on June 30, 1998, shall be
fully earned when due, and shall be non-refundable when paid; provided, however,
-------- -------
that for the calendar quarter ending June 30, 1998, the facility fee shall be
calculated based upon a rate of 0.080% per annum. A final payment of any
facility fee then payable shall also be due and payable on the Maturity Date or
any earlier date on which the Commitment shall terminate.
(b) Miscellaneous. In the event that the Borrower fails to timely
-------------
provide the financial statements referred to in Section 2.2(a) hereof in
accordance with the terms of Section 6.4(b) hereof, and without prejudice to any
additional rights under Section 10.3 hereof, no adjustment of the facility fees
shall occur until the actual delivery of such statements.
(c) Fees Payable Under the Fee Letters. The Borrower agrees to pay to
----------------------------------
the Administrative Agent, for the benefit of the Administrative Agent, the
Arranging Agents and the Banks, as the case may be, such fees as are mutually
agreed upon and as are described in the Fee Letters.
(d) Computation of Fees. In computing any fees payable under this
-------------------
Section 2.2, the first day of the applicable period shall be included and the
date of payment shall be excluded.
2.3 Reduction of Total Commitment. The Borrower shall have the right at
-----------------------------
any time and from time to time upon three (3) Business Days' prior written
notice to the Administrative Agent to reduce by at least $10,000,000 or integral
multiples of $1,000,000 in excess thereof, or to terminate entirely, the
unborrowed portion of the Total Commitment, whereupon the Commitments of the
Banks shall be reduced pro rata in accordance with their respective Commitment
--------
Percentages of the amount specified in such notice or, as the case may be,
terminated. Promptly after receiving any notice of the Borrower delivered
pursuant to this Section 2.3, the Administrative Agent will notify the Banks of
the substance thereof. Upon the effective date of any such reduction or
termination, the Borrower shall pay to the Administrative Agent for the
respective accounts of the Banks the full amount of any facility fee then
accrued on the amount of the reduction. No reduction or termination of the
Commitments may be reinstated.
2.4 The Revolving Notes. The Loans shall be evidenced by separate
-------------------
promissory notes of the Borrower in substantially the form of Exhibit A
---------
hereto, dated as of the Closing Date and completed with appropriate insertions.
One Revolving Note shall be payable to the order of each
-99-
<PAGE>
Bank in a principal amount equal to such Bank's Commitment, or, if less, the
outstanding amount of all Loans made by such Bank, plus interest accrued
thereon, as set forth below. The Borrower irrevocably authorizes each Bank to
make or cause to be made, at or about the time of the Drawdown Date of any Loan
or at the time of receipt of any payment of principal on such Bank's Revolving
Note, as the case may be, an appropriate notation on such Bank's Record
reflecting the making of such Loan or (as the case may be) the receipt of such
payment. The outstanding amount of the Loans set forth on such Bank's Record
shall be prima facie evidence of the principal amount thereof owing and unpaid
-----------
to such Bank, but the failure to record, or any error in so recording, any such
amount on such Bank's Record shall not limit or otherwise affect the obligations
of the Borrower hereunder or under any Revolving Note to make payments of
principal of or interest on any Revolving Note when due.
2.5 Interest.
--------
(a) On Alternative Base Rate Loans. Except as otherwise provided in
------------------------------
Section 4.10, each Alternative Base Rate Loan shall bear interest at an annual
rate equal to the Alternative Base Rate as in effect from time to time while
such Alternative Base Rate Loan is outstanding.
(b) On Eurodollar Rate Loans. Except as otherwise provided in Section
------------------------
4.10, each Eurodollar Rate Loan shall bear interest for each Interest Period at
an annual rate equal to the sum of the Eurodollar Rate for such Interest Period
plus the Eurodollar Rate Applicable Margin.
(c) Eurodollar Rate Applicable Margin. The Eurodollar Rate Applicable
---------------------------------
Margin with respect to any Loan outstanding under the Commitment shall be the
interest rate margin determined by the Administrative Agent based upon the
Leverage Ratio for the most recent fiscal quarter end, effective as of the
second (2/nd/) Business Day after the financial statements referred to in
Section 6.4(b) hereof are required to be delivered by the Borrower to the
Administrative Agent, expressed as a per annum rate of interest as follows:
<TABLE>
<CAPTION>
Eurodollar Rate
Leverage Ratio Applicable Margin
- --------------------------------------------------------------------------------
<S> <C>
Greater than or equal to 2.0 to 1 0.450%
Greater than or equal to 1.5 to 1 but less than 2.0 to 1 0.350%
Greater than or equal to 1.0 to 1 but less than 1.5 to 1 0.280%
Less than 1.0 to 1 0.270%
</TABLE>
In the event that the Borrower fails to timely provide the financial
statements referred to above in accordance with the terms of Section 6.4(b)
hereof, and without prejudice to any additional rights under Section 10.3
hereof, no adjustment of the Eurodollar Rate Applicable Margin shall occur until
the actual delivery of such statements.
(d) Interest Payment Dates. The Borrower shall pay all accrued
----------------------
interest on each Loan in arrears on each Interest Payment Date with respect
thereto.
-100-
<PAGE>
2.6 Requests for Loans. The Borrower shall give to the Administrative
------------------
Agent written notice in the form of Exhibit B hereto (or telephonic notice
---------
confirmed in a writing in the form of Exhibit C hereto) of each Loan
---------
requested hereunder (a "Loan Request") no later than (a) 11:00 a.m. (Dallas
------------
time) on the proposed Drawdown Date of any Alternative Base Rate Loan and (b)
three (3) Eurodollar Business Days prior to the proposed Drawdown Date of any
Eurodollar Rate Loan. Each such notice shall specify (i) the principal amount
of the Loan requested, (ii) the proposed Drawdown Date of such Loan, (iii) the
Type of such Loan, and (iv) the Interest Period for such Loan if such Loan is a
Eurodollar Rate Loan. Promptly upon receipt of any such Loan Request, the
Administrative Agent shall notify each of the Banks thereof. Each Loan Request
shall be irrevocable and binding on the Borrower and shall obligate the Borrower
to accept the Loan requested from the Banks on the proposed Drawdown Date. Each
Loan Request shall be in a minimum aggregate amount of $10,000,000 or in an
integral multiple of $1,000,000 in excess thereof.
2.7 Conversion Options.
------------------
(a) Conversion to Eurodollar Rate Loan. The Borrower may elect from
----------------------------------
time to time, subject to Section 2.9, to convert any outstanding Alternative
Base Rate Loan to a Eurodollar Rate Loan, provided that (i) the Borrower shall
--------
give the Administrative Agent at least three (3) Eurodollar Business Days' prior
written notice of such election; and (ii) no Alternative Base Rate Loan may be
converted into a Eurodollar Rate Loan when any Default has occurred and is
continuing. The Administrative Agent shall notify the Banks promptly of any such
notice. On the date on which such conversion is being made, each Bank shall take
such action as is necessary to transfer its Commitment Percentage of such Loans
to its Eurodollar Lending Office. All or any part of outstanding Alternative
Base Rate Loans may be converted into a Eurodollar Rate Loan as provided herein,
provided that any partial conversion shall be in an aggregate principal amount
of $1,000,000 or an integral multiple of $1,000,000 in excess thereof.
(b) Continuation of Type of Loan.
----------------------------
(i) All Alternative Base Rate Loans shall continue as Alternative
Base Rate Loans until converted into Eurodollar Rate Loans as provided in
Section 2.7(a).
(ii) Any Eurodollar Rate Loan may, subject to Section 2.9, be
continued, in whole or in part, as a Eurodollar Rate Loan upon the expiration of
the Interest Period with respect thereto, provided that (A) the Borrower shall
give the Administrative Agent at least three (3) Eurodollar Business Days' prior
written notice of such election; (B) no Eurodollar Rate Loan may be continued as
such when any Default has occurred and is continuing, but shall be automatically
converted to an Alternative Base Rate Loan on the last day of the first Interest
Period relating thereto ending during the continuance of any Default; and (iii)
any partial continuation of a Eurodollar Rate Loan shall be in an aggregate
principal amount of $1,000,000 or an integral multiple of $1,000,000 in excess
thereof.
(iii) If the Borrower shall fail to give any notice of continuation
of a Eurodollar Rate Loan as provided under this Section 2.7(b), the Borrower
shall be deemed to have requested a conversion of the affected Eurodollar Rate
Loan to an Alternative Base Rate Loan on the last day of the then current
Interest Period with respect thereto.
-101-
<PAGE>
(iv) The Administrative Agent shall notify the Banks promptly when
any such continuation or conversion contemplated by this Section 2.7(b) is
scheduled to occur. On the date on which any such continuation or conversion is
to occur, each Bank shall take such action as is necessary to transfer its
Commitment Percentage of such Loans to its Domestic Lending Office or its
Eurodollar Lending Office as appropriate.
(c) Conversion Requests. All notices of the conversion or continuation
-------------------
of a Loan provided for in this Section 2.7 shall be in writing in the form of
Exhibit D hereto (or shall be given by telephone and confirmed by a writing in
- ---------
the form of Exhibit E hereto). Each such notice shall specify (i) the principal
---------
amount and Type of the Loan subject thereto, (ii) the date on which the current
Interest Period of such Loan ends if such Loan is a Eurodollar Rate Loan, and
(iii) the new Interest Period for such Loan if such Loan is a Eurodollar Rate
Loan. Promptly upon receipt of any such notice, the Administrative Agent shall
notify each of the Banks thereof. Each such notice shall be irrevocable and
binding on the Borrower.
2.8 Funds for Loans.
---------------
(a) Funding Procedures. Not later than 2:00 p.m. (Dallas time) on the
------------------
proposed Drawdown Date of any Loans, each of the Banks will make available to
the Administrative Agent, at its Head Office, in immediately available funds,
the amount of such Bank's Commitment Percentage of the amount of the requested
Loans. Upon receipt from each Bank of such amount, and upon receipt of the
documents required by Section 9 and the satisfaction of the other conditions set
forth therein, to the extent applicable, the Administrative Agent will make
available to the Borrower the aggregate amount of such Loans made available to
the Administrative Agent by the Banks. The failure or refusal of any Bank to
make available to the Administrative Agent at the aforesaid time and place on
any Drawdown Date the amount of its Commitment Percentage of the requested Loans
shall not relieve any other Bank from its several obligation hereunder to make
available to the Administrative Agent the amount of such other Bank's Commitment
Percentage of any requested Loans, but no other Bank shall be liable in respect
of the failure of such Bank to make available such amount.
(b) Advances by Administrative Agent. The Administrative Agent may,
--------------------------------
unless notified to the contrary by any Bank prior to a Drawdown Date, assume
that such Bank has made available to the Administrative Agent on such Drawdown
Date the amount of such Bank's Commitment Percentage of the Loans to be made on
such Drawdown Date, and the Administrative Agent may (but it shall not be
required to), in reliance upon such assumption, make available to the Borrower a
corresponding amount. If any Bank makes available to the Administrative Agent
such amount on a date after such Drawdown Date, such Bank shall pay to the
Administrative Agent on demand an amount equal to the weighted average interest
rate paid by the Administrative Agent for federal funds acquired by the
Administrative Agent during each day included in such period, times the amount
of such Bank's Commitment Percentage of such Loans calculated on the basis of a
360-day year for the actual number of days elapsed. A statement of the
Administrative Agent submitted to such Bank with respect to any amounts owing
under this paragraph shall be prima facie evidence of the amount due and owing
to the Administrative Agent by such Bank. If the amount of such Bank's
Commitment Percentage of such Loans is not made available to the Administrative
Agent by such Bank within three (3) Business Days following such Drawdown Date,
the Administrative Agent shall be entitled to recover such amount from the
Borrower within one (1) Business Day after demand
-102-
<PAGE>
therefor, with interest thereon at the rate per annum applicable to the Loans
made on such Drawdown Date.
2.9 Limit on Number of Eurodollar Rate Loans. At no time shall there be
----------------------------------------
outstanding Eurodollar Rate Loans having more than five (5) different Interest
Periods.
3. REPAYMENT OF THE LOANS.
----------------------
3.1 Maturity. The Borrower shall pay on the Maturity Date, and there
--------
shall become absolutely due and payable on the Maturity Date, all of the Loans
outstanding on such date, together with any and all accrued and unpaid interest
thereon. The Commitments shall terminate on the Maturity Date.
3.2 Mandatory Repayments of Loans. If at any time the sum of the
-----------------------------
outstanding amount of the Loans exceeds the Commitment, then the Borrower shall
immediately pay the amount of such excess to the Administrative Agent for
application to the Loans.
3.3 Optional Repayments of Loans. The Borrower shall have the right, at
----------------------------
its election, to repay the outstanding amount of the Loans, as a whole or in
part, at any time without penalty or premium, provided that any full or partial
repayment of the outstanding amount of any Eurodollar Rate Loans pursuant to
this Section 3.3 made on a date other than the last day of the Interest Period
relating thereto shall be subject to customary breakage charges as provided in
Section 4.9. The Borrower shall give the Administrative Agent, no later than
10:00 a.m. (Dallas time) at least one (1) Business Day's prior written notice,
of any proposed repayment pursuant to this Section 3.3 of Alternative Base Rate
Loans, and three (3) Eurodollar Business Days' notice of any proposed repayment
pursuant to this Section 3.3 of Eurodollar Rate Loans, in each case, specifying
the proposed date of payment of Loans and the principal amount to be paid. Each
such partial repayment of the Loans shall be in an amount of $10,000,000 or an
integral multiple of $1,000,000 in excess thereof, shall be accompanied by the
payment of accrued interest on the principal repaid to the date of payment, and
shall be applied, in the absence of instruction by the Borrower, first to the
principal of Alternative Base Rate Loans and then to the principal of Eurodollar
Rate Loans (in inverse order of the last days of their respective Interest
Periods). Each partial repayment shall be allocated among the Banks, in
proportion, as nearly as practicable, to the respective unpaid principal amount
of each Bank's Loans, with adjustments to the extent practicable to equalize any
prior repayments not exactly in proportion. Any amounts repaid under this
Section 3.3 may be reborrowed prior to the Maturity Date as provided in Section
2.6, subject to the conditions of Section 9.
4. CERTAIN GENERAL PROVISIONS.
--------------------------
4.1 Application of Payments.
-----------------------
(a) Except as otherwise provided in this Agreement, all payments in
respect of any Loan shall be applied first to accrued and unpaid interest on
such Loan and second to the outstanding principal of such Loan.
-103-
<PAGE>
(b) If, at any time that a Default or Event of Default exists, the
Administrative Agent receives from the Borrower (or obtains funds for the
account of the Borrower, whether in connection with the enforcement of rights
under the Loan Documents or otherwise) less than the aggregate outstanding
amount of all Obligations hereunder, the Administrative Agent shall apply such
amounts in the following order of priority:
First, to the payment of, or (as the case may be) the reimbursement
-----
of the Administrative Agent for or in respect of all costs, expenses,
disbursements, and losses that shall have been incurred or sustained by the
Administrative Agent in connection with the collection of such monies by the
Administrative Agent, for the exercise, protection, or enforcement by the
Administrative Agent of all or any of the rights, remedies, powers, and
privileges of the Administrative Agent under this Agreement or any of the other
Loan Documents, or in support of any provision of adequate indemnity to the
Administrative Agent against any taxes or Liens that by Government Mandate shall
have, or may have, priority over the rights of the Administrative Agent to such
monies;
Second, to the satisfaction of any costs or expenses or other amounts
------
required to be paid by the Borrower under this Agreement not otherwise specified
in this Section 4.1(b);
Third, to the satisfaction of any accrued and unpaid fees hereunder;
-----
Fourth, to the satisfaction of any accrued and unpaid interest on any
------
Loans;
Fifth, to the satisfaction of any outstanding principal amount of any
-----
Loans; and
Sixth, the excess, if any, shall be returned to the Borrower or to
-----
such other Persons as are entitled thereto.
4.2 Funds for Payments.
------------------
(a) Payments to Administrative Agent. All payments of principal,
--------------------------------
interest, facility fees and any other amounts due hereunder or under any of the
other Loan Documents shall be made to the Administrative Agent, for the
respective accounts of the Banks and the Administrative Agent, at the
Administrative Agent's Head Office or at such other location that the
Administrative Agent may from time to time designate, in each case in
immediately available funds.
(b) No Offset. All payments by the Borrower hereunder and under any
---------
of the other Loan Documents shall be made without setoff or counterclaim and
free and clear of and without deduction for any taxes, levies, imposts, duties,
charges, fees, deductions, withholdings, compulsory loans, restrictions, or
conditions of any nature now or hereafter imposed or levied by any Government
Authority unless the Borrower is compelled by Government Mandate to make such
deduction or withholding. If any such obligation is imposed upon the Borrower
with respect to any amount payable by it hereunder or under any of the other
Loan Documents (other than with respect to taxes on the income or profits of any
Bank or the Administrative Agent), the Borrower will pay to the Administrative
Agent, for the account of the Banks or (as the case may be) the Administrative
Agent, on the date on which such amount is due and payable hereunder or under
such other Loan Document, such additional amount in Dollars as shall be
necessary to enable the Banks or the Administrative
-104-
<PAGE>
Agent to receive the same net amount which the Banks or the Administrative Agent
would have received on such due date had no such obligation been imposed upon
the Borrower. The Borrower will deliver promptly to the Administrative Agent
certificates or other valid vouchers for all taxes or other charges deducted
from or paid with respect to payments made by the Borrower hereunder or under
such other Loan Document. If a refund is received (either in cash or by means of
a credit against future tax obligations) by the Administrative Agent or any Bank
in respect of an amount previously paid by the Borrower pursuant to the
immediately preceding sentence as determined solely by the Administrative Agent
or such Bank, such refund shall be promptly paid over to the Borrower; provided,
--------
however, in no event shall the Borrower have any right to receive or review tax
- -------
returns of any Bank or the Administrative Agent. Any Bank that is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) for
U.S. Federal income tax purposes agrees to provide to the Borrower on or prior
to the Closing Date two original signed copies of Internal Revenue Service Form
4224 or Form 1001 certifying to such Bank's entitlement to an exemption from
United States withholding tax with respect to payments to be made under this
Agreement and under any Revolving Note and from time to time upon the reasonable
written request of the Borrower after the Closing Date, such Bank will provide
to the Borrower two original signed copies of Internal Revenue Service Form 4224
or Form 1001 (or any successor forms) certifying to such Bank's entitlement to
an exemption from, or reduction in, United States withholding tax with respect
to payments to be made under this Agreement and under any Revolving Note.
4.3 Computations. All computations of interest with respect to
------------
Alternative Base Rate Loans shall be based on a year of 365 days and paid for
the actual number of days elapsed. All computations of interest with respect to
Eurodollar Rate Loans shall be based on a year of 360 days and paid for the
actual number of days elapsed. Except as otherwise provided in the definition
of the term "Interest Period" with respect to Eurodollar Rate Loans, whenever a
payment hereunder or under any of the other Loan Documents becomes due on a day
that is not a Business Day, the due date for such payment shall be extended to
the next succeeding Business Day, and interest shall accrue during such
extension.
4.4 Inability to Determine Eurodollar Rate. In the event, prior to the
--------------------------------------
commencement of any Interest Period relating to any Eurodollar Rate Loan, the
Administrative Agent shall determine that adequate and reasonable methods do not
exist for ascertaining the Eurodollar Rate that would otherwise determine the
rate of interest to be applicable to any Eurodollar Rate Loan during any
Interest Period, the Administrative Agent shall forthwith give notice of such
determination (which shall be conclusive and binding on the Borrower and the
Banks) to the Borrower and the Banks. In such event (a) any Loan Request or
Conversion Request with respect to Eurodollar Rate Loans shall be automatically
withdrawn and shall be deemed a request for Alternative Base Rate Loans, (b)
each Eurodollar Rate Loan will automatically, on the last day of the then
current Interest Period relating thereto, become an Alternative Base Rate Loan,
and (c) the obligations of the Banks to make Eurodollar Rate Loans shall be
suspended until the Administrative Agent determines that the circumstances
giving rise to such suspension no longer exist, whereupon the Administrative
Agent shall so notify the Borrower and the Banks.
4.5 Illegality. Notwithstanding any other provisions herein, if any
----------
present or future Government Mandate shall make it unlawful for any Bank to make
or maintain Eurodollar Rate Loans, such Bank shall forthwith give notice of such
circumstances to the Borrower and the other Banks and thereupon (a) the
commitment of such Bank to make Eurodollar Rate Loans or convert
-105-
<PAGE>
Alternative Base Rate Loans to Eurodollar Rate Loans shall forthwith be
suspended, and (b) such Bank's Loans then outstanding as Eurodollar Rate Loans,
if any, shall be converted automatically to Alternative Base Rate Loans on the
last day of each then existing Interest Period applicable to such Eurodollar
Rate Loans or within such earlier period after the occurrence of such
circumstances as may be required by Government Mandate. The Borrower shall
promptly pay the Administrative Agent for the account of such Bank, upon demand
by such Bank, any additional amounts necessary to compensate such Bank for any
costs incurred by such Bank in making any conversion in accordance with this
Section 4.5 other than on the last day of an Interest Period, including any
interest or fees payable by such Bank to lenders of funds obtained by it in
order to make or maintain its Eurodollar Rate Loans hereunder.
4.6 Additional Costs. If any present or future applicable Government
----------------
Mandate (whether or not having the force of law), shall:
(a) subject any Bank or the Administrative Agent to any tax, levy,
impost, duty, charge, fee, deduction, or withholding of any nature with
respect to this Agreement, the other Loan Documents, such Bank's
Commitment, or the Loans (other than taxes based upon or measured by the
income or profits of such Bank or the Administrative Agent), or
(b) materially change the basis of taxation (except for changes in
taxes on income or profits) of payments to any Bank of the principal of or
the interest on any Loans or any other amounts payable to any Bank or the
Administrative Agent under this Agreement or the other Loan Documents, or
(c) impose, increase, or render applicable (other than to the extent
specifically provided for elsewhere in this Agreement) any special
deposit, reserve, assessment, liquidity, capital adequacy, or other
similar requirements (whether or not having the force of law) against
assets held by, or deposits in or for the account of, or loans by, or
commitments of an office of any Bank, or
(d) impose on any Bank or the Administrative Agent any other
conditions or requirements with respect to this Agreement, the other Loan
Documents, the Loans, such Bank's Commitment, or any class of loans or
commitments of which any of the Loans or such Bank's Commitment forms a
part, and the result of any of the foregoing is:
(i) to increase by an amount deemed by such Bank to be
material to the cost to any Bank of making, funding, issuing,
renewing, extending, or maintaining any of the Loans or such Bank's
Commitment, or
(ii) to reduce, by an amount deemed by such Bank or the
Administrative Agent, as the case may be, to be material, the amount
of principal, interest, or other amount payable to such Bank or the
Administrative Agent hereunder on account of such Bank's Commitment
or any of the Loans, or
(iii) to require such Bank or the Administrative Agent to make
any payment that, but for such conditions or requirements described
in clauses (a)
-106-
<PAGE>
through (d), would not be payable hereunder, or forego any interest
or other sum that, but for such conditions or requirements described
in clauses (a) through (d), would be payable to such Bank or the
Administrative Agent hereunder, in any case the amount of which
payment or foregone interest or other sum is deemed by such Bank or
the Administrative Agent, as the case may be, to be material and is
calculated by reference to the gross amount of any sum receivable or
deemed received by such Bank or the Administrative Agent from the
Borrower hereunder,
then, and in each such case, (x) the Borrower will, upon demand made by such
Bank or (as the case may be) the Administrative Agent at any time and from time
to time (such demand to be made in any case not later than the first to occur of
(A) the date one hundred and eighty (180) days after such event described in
clause (i), (ii), or (iii) giving rise to such demand, and (B) the date ninety
(90) days after both the payment in full of all outstanding Loans and
termination of the Commitments) and as often as the occasion therefor may arise,
pay to such Bank or the Administrative Agent such additional amounts as will be
sufficient to compensate such Bank or the Administrative Agent for such
additional cost, reduction, payment, foregone interest, or other sum, (y) the
Borrower shall be entitled, upon notice to the Administrative Agent and each
Bank given within ninety (90) days of any demand by a Bank under clause (x), to
repay in cash in full all, but not less than all, of the Loans of such Bank,
together with all accrued and unpaid interest on such Loans and any other
amounts owing to such Bank under the Loan Documents and terminate (in full and
not in part) such Bank's Commitment, and, (z) in the event the Borrower elects
to repay the Loans of any Bank under clause (y), each other Bank shall be
entitled, by notice to the Administrative Agent and the Borrower given within
forty-five (45) days after receipt of the notice referred to in clause (y), to
require the Borrower to repay in cash in full, within forty-five (45) days of
such notice under this clause (z), all, but not less than all, of the Loans of
such other Bank, together with all accrued and unpaid interest on such Loans and
any other amounts owing to such other Bank under the Loan Documents. Subject to
the terms specified above in this Section 4.6, the obligations of the Borrower
under this Section 4.6 shall survive repayment of the Loans and termination of
the Commitments.
4.7 Capital Adequacy. If after the date hereof any Bank or the
----------------
Administrative Agent determines that (a) the adoption of or change in any
Government Mandate (whether or not having the force of law) regarding capital
requirements for banks or bank holding companies or any change in the
interpretation or application thereof by any applicable Government Authority
with appropriate jurisdiction, or (b) compliance by such Bank or the
Administrative Agent, or any corporation controlling such Bank or the
Administrative Agent, with any Government Mandate (whether or not having the
force of law) has the effect of reducing the return on such Bank's or the
Administrative Agent's commitment with respect to any Loans to a level below
that which such Bank or the Administrative Agent could have achieved but for
such adoption, change, or compliance (taking into consideration such Bank's or
the Administrative Agent's then existing policies with respect to capital
adequacy and assuming full utilization of such Entity's capital) by any amount
reasonably deemed by such Bank or (as the case may be) the Administrative Agent
to be material, then such Bank or the Administrative Agent may notify the
Borrower of such fact. To the extent that the amount of such reduction in the
return on capital is not reflected in the Alternative Base Rate, (x) the
Borrower shall pay such Bank or (as the case may be) the Administrative Agent
for the amount of such reduction in the return on capital as and when such
reduction is determined upon presentation by such Bank or (as the case may be)
the Administrative Agent of a certificate in accordance with Section 4.8 hereof
(but in any case not later than the first to occur of (I) the date one hundred
and eighty (180) days after such
-107-
<PAGE>
adoption, change, or compliance causing such reduction, and (II) as to adoptions
of or changes in Government Mandates occurring prior to the repayment of the
Loans and the termination of the Commitment the date ninety (90) days after both
the payment in full of all outstanding Loans and termination of the
Commitments), (y) the Borrower shall be entitled, upon notice to the
Administrative Agent and each Bank given within ninety (90) days of any notice
by such Bank under the next preceding sentence, to repay in cash in full all,
but not less than all, of the Loans of such Bank, together with all accrued and
unpaid interest on such Loans and any other amounts owing to such Bank under the
Loan Documents and terminate (in full and not in part) such Bank's Commitment,
and, (z) in the event the Borrower elects to repay the Loans of any Bank under
clause (y), each other Bank shall be entitled, by notice to the Administrative
Agent and the Borrower given within forty-five (45) days after receipt of the
notice referred to in clause (y), to require the Borrower to repay in cash in
full, within forty-five (45) days of the notice under this clause (z), all, but
not less than all, of the Loans of such other Bank, together with all accrued
and unpaid interest on such Loans and any other amounts owing to such other Bank
under the Loan Documents. Each Bank shall allocate such cost increases among its
customers in good faith and on an equitable basis. Each Bank will use reasonable
efforts (subject to overall policy considerations of such Bank) to avoid or
mitigate any increased cost or obligation to prepay arising under this Section
to the greatest extent practicable (including transferring its Loans to another
lending office or affiliate of the Bank) unless, in the opinion of the Bank,
such efforts would be likely to result in the Bank (or its lending office or
affiliate) suffering a material economic, legal or regulatory disadvantage, and
provided, further, that nothing in this sentence shall affect or postpone the
Borrower's obligations hereunder, or any of the Bank's rights hereunder. Subject
to the terms specified above in this Section 4.7, the obligations of the
Borrower under this Section 4.7 shall survive repayment of the Loans and
termination of the Commitments.
4.8 Certificate. A certificate setting forth any additional amounts
-----------
payable pursuant to Section 4.6 or Section 4.7 and a brief explanation of such
amounts which are due and in reasonable detail the basis of the calculation and
allocation thereof, submitted by any Bank or the Administrative Agent to the
Borrower, shall be conclusive evidence, absent manifest error, that such amounts
are due and owing.
4.9 Indemnity. The Borrower shall indemnify and hold harmless each Bank
---------
from and against any loss, cost, or expense (excluding loss of anticipated
profits) that such Bank may sustain or incur as a consequence of (a) default by
the Borrower in payment of the principal amount of or any interest on any
Eurodollar Rate Loans as and when due and payable, including any such loss or
expense arising from interest or fees payable by such Bank to lenders of funds
obtained by it in order to maintain its Eurodollar Rate Loans, (b) default by
the Borrower in making a borrowing or conversion after the Borrower has given
(or is deemed to have given) a Loan Request or a Conversion Request; or (c)
except as otherwise expressly provided in Section 3.3, the making of any payment
of a Eurodollar Rate Loan or the making of any conversion of any such Loan to an
Alternative Base Rate Loan on a day that is not the last day of the applicable
Interest Period with respect thereto, including interest or fees payable by such
Bank to lenders of funds obtained by it in order to maintain any such Loans.
The obligations of the Borrower under this Section 4.9 shall survive repayment
of the Loans and termination of the Commitments.
4.10 Interest After Event of Default. All amounts outstanding under the
-------------------------------
Loan Documents that are not paid when due, including all overdue principal and
(to the extent permitted by applicable Government Mandate) interest and all
other overdue amounts (after giving effect to any
-108-
<PAGE>
applicable grace period), shall to the extent permitted by applicable Government
Mandate bear interest until such amount shall be paid in full (after as well as
before judgment) at a rate per annum equal to two percent (2%) above the
Alternative Base Rate. Any interest accruing under this section on overdue
principal or interest shall be due and payable upon demand.
4.11 Special Banks. Unless the Majority Banks seek indemnification,
-------------
payment, or reimbursement under, or invoke the provisions of, Section 4.5, 4.6
or 4.7, if the Borrower is obligated to pay to the Administrative Agent or any
Bank any amount under said Sections, the Borrower may, at its option, so long as
no Default or Event of Default then exists, (x) subject to Section 4.9 hereof,
repay the outstanding Loans in favor of such Bank, which repayment shall be
allocated solely to Loans in favor of such Bank, and in the event of such
repayment, such Bank shall cease to be a Bank under this Agreement and the Total
Commitment hereunder shall be reduced by the amount of the Commitment of such
Bank (and the Commitment Percentages of the remaining Banks shall be
recalculated accordingly), or (y) replace such Bank with a new Bank reasonably
acceptable to the Administrative Agent, and such Bank hereby agrees to be so
replaced subject to the following:
(a) The obligations of the Borrower hereunder to the Bank to be
replaced (including such increased or additional costs incurred from the date of
notice to the Borrower of such increase or additional costs through the date
such Bank is replaced hereunder) shall be paid in full to such Bank concurrently
with such replacement;
(b) The replacement Bank shall be a Bank that is not subject to the
increased costs arising under such Sections which may have effectuated the
Borrower's election to replace any Bank hereunder;
(c) Each such replacement Bank shall execute and deliver to the
Administrative Agent such documentation reasonably satisfactory to the
Administrative Agent pursuant to which such Bank is to be come a party hereto
with a Commitment equal to that of the Bank being replaced and shall make a Loan
or Loans in the aggregate principal amount equal to the aggregate outstanding
principal amount of the Loan or Loans of the Bank being replaced;
(d) Upon such execution of such documents referred to in clause (c)
and repayment of the amounts referred to in clause (a), the replacement Bank
shall be a Bank with a Commitment as specified hereinabove and the Bank being
replaced shall cease to be a Bank hereunder, except with respect to
indemnification provisions under this Agreement, which shall survive as to such
replaced Bank; and
(e) The Administrative Agent shall reasonably cooperate in
effectuating the replacement of any Bank hereunder, but at no time shall the
Administrative Agent be obligated to initiate any such replacement; and
(f) Any Bank replaced hereunder shall be replaced at the Borrower's
sole cost and expense and at no cost or expense to the Administrative Agent.
-109-
<PAGE>
5. REPRESENTATIONS AND WARRANTIES.
------------------------------
The Borrower represents and warrants to the Banks and the Administrative
Agent as follows:
5.1 Partnership or Corporate Authority.
----------------------------------
(a) Organization; Good Standing. Each of the Borrower, its
---------------------------
Subsidiaries, and PGP (i) is a limited partnership, general partnership or
corporation, as the case may be, and (with respect to any limited partnership or
corporation) is duly organized, validly existing, and in good standing under the
laws of its state of organization, (ii) has all requisite partnership or
corporate power to own its material properties and conduct its material business
as now conducted and as presently contemplated, and (iii) is in good standing as
a foreign corporation or partnership, as the case may be, and is duly authorized
to do business in each jurisdiction where it owns or leases properties or
conducts any business so as to require such qualification except where a failure
to be so qualified would not be likely to have a Material Effect.
(b) Authorization. The execution, delivery, and performance of this
-------------
Agreement and the other Loan Documents to which the Borrower, any of its
Subsidiaries, or PGP is or is to become a party and the transactions
contemplated hereby and thereby (i) are within the partnership or corporate
power of each such Entity, (ii) have been duly authorized by all necessary
partnership or corporate proceedings on behalf of each such Entity, (iii) do not
conflict with or result in any breach or contravention of any Government Mandate
to which any such Entity is subject, except where such conflict, breach or
contravention would not be likely to have a Material Effect (iv) do not conflict
with or violate any provision of the corporate charter or bylaws or the limited
or general partnership certificate or agreement, as the case may be, of any such
Entity, and (v) do not violate, conflict with, constitute a default or event of
default under, or result in any rights to accelerate or modify any obligations
under any Contract to which any such Entity is party or subject, or to which any
of its respective assets are subject, except where such violation, conflict,
default, event of default or right to accelerate or modify any obligations under
any Contract would not be likely to have a Material Effect.
(c) Enforceability. The execution and delivery of this Agreement and
--------------
the other Loan Documents to which the Borrower, any of its Subsidiaries, or PGP
is or is to become a party will result in valid and legally binding obligations
of such Person enforceable against it in accordance with the respective terms
and provisions hereof and thereof, except as enforceability is limited by
bankruptcy, insolvency, reorganization, moratorium, or other laws relating to or
affecting generally the enforcement of creditors' rights and by general
principles of equity, regardless of whether enforcement is sought in a
Proceeding in equity or at law.
(d) Equity Securities. As of the Closing Date, PGP and Holdings are
-----------------
the only general partners of the Borrower, and subsequent to the Closing Date,
PGP, Holdings and such additional general partners as have been previously
disclosed to the Administrative Agent and the Banks in writing are the only
general partners of the Borrower. As of the Closing Date, PGP is the sole
general partner of Holdings and PGP will be the only general partner of Holdings
as of any subsequent date except for any other general partner of Holdings that
has been disclosed by the Borrower to the Administrative Agent and the Banks in
writing. As of the Closing Date, the
-110-
<PAGE>
ownership of the Equity Securities of the Borrower and PGP is set forth on
Schedule 5.1(d), and subsequent to the Closing Date, the ownership of the Equity
- ---------------
Securities of PGP is as set forth on Schedule 5.1(d) unless otherwise disclosed
---------------
to the Administrative Agent and the Banks in writing. As of the Closing Date,
except as set forth on Schedule 5.1(d), neither the Borrower nor PGP nor
---------------
Holdings has agreed, committed, or otherwise obligated itself to authorize or
issue any Equity Securities. All of the outstanding Equity Securities of the
Borrower are validly issued, fully paid, and non-assessable.
5.2 Governmental Approvals. The execution, delivery, and performance by
----------------------
the Borrower, its Subsidiaries, and PGP of this Agreement and the other Loan
Documents to which the Borrower, any of its Subsidiaries, or PGP is or is to
become a party and the transactions contemplated hereby and thereby do not
require the approval or consent of, or filing with, any Government Authority
other than those already obtained and set forth on Schedule 5.2.
------------
5.3 Liens; Leases. The assets of the Borrower are subject to no Liens
-------------
except Permitted Liens. Each of the Borrower and its Subsidiaries enjoys quiet
possession under all leases relating to Real Estate or personal property to
which it is party as a lessee, except where such failure to have quiet
possession or be Fully Effective would not have a Material Effect.
5.4 Financial Statements. There has been furnished to the
--------------------
Administrative Agent and each of the Banks (a) a consolidated balance sheet of
the Borrower as at December 31, 1997, December 31, 1996 and December 31, 1995,
and a consolidated statement of income and cash flow of the Borrower for the
fiscal year then ended, certified by the Borrower's independent certified public
accountants, and (b) unaudited consolidated balance sheets of the Borrower as at
March 31, 1997, June 30, 1997, and September 30, 1997 and consolidated
statements of income and of cash flow of the Borrower for the respective fiscal
periods then ended and as set forth in the Borrower's Quarterly Reports on Form
10-Q for such fiscal quarters. With respect to the financial statements
prepared in accordance with clause (a) above, such balance sheet and statement
of income have been prepared in accordance with GAAP, and present fairly in all
material respects the financial position of the Borrower and its Subsidiaries as
at the close of business on the respective dates thereof and the results of
operations of the Borrower and its Subsidiaries for the fiscal periods then
ended; or, in the case of the financial statements referred to in clause (b),
have been prepared in accordance with Rule 10-01 of Regulation S-X of the
Securities and Exchange Commission, and contain all adjustments necessary for a
fair presentation of (i) the results of operations of the Borrower for the
periods covered thereby, (ii) the financial position of the Borrower at the date
thereof, and (iii) the cash flows of the Borrower for periods covered thereby
(subject to year-end adjustments). There are no contingent liabilities of the
Borrower or its Subsidiaries as of such dates involving material amounts, known
to the executive management of the Borrower that (x) should have been disclosed
in said balance sheets or the related notes thereto in accordance with GAAP and
the rules and regulations of the Securities and Exchange Commission, and (y)
were not so disclosed.
5.5 No Material Changes. Except as set forth on Schedule 5.5, no change
------------------- ------------
in the Business of the Borrower and its Subsidiaries, taken as a whole, has
occurred since December 31, 1996 that has resulted in a Material Effect.
5.6 Permits. The Borrower and its Subsidiaries have all Permits
-------
necessary or appropriate for them to conduct their Business, except where the
failure to have such Permits would
-111-
<PAGE>
not be likely to have a Material Effect. All of such Permits are in full force
and effect. Without limiting the foregoing, the Borrower is duly registered as
an "investment adviser" under the Investment Advisers Act of 1940 and under the
applicable laws of each state in which such registration is required in
connection with the investment advisory business of the Borrower and in which
the failure to obtain such registration would be likely to have a Material
Effect; PIMCO Funds Distributors LLC is duly registered as a "broker/dealer"
under the Securities Exchange Act of 1934 and under the securities or blue sky
laws of each state in which such registration is required in connection with the
business conducted by PIMCO Funds Distributors LLC and where a failure to obtain
such registration would be likely to have a Material Effect, and is a member in
good standing of the National Association of Securities Dealers, Inc.; no
Proceeding is pending or threatened with respect to the suspension, revocation,
or termination of any such registration or membership, and the termination or
withdrawal of any such registration or membership is not contemplated by the
Borrower or PIMCO Funds Distributors LLC except, only with respect to
registrations by the Borrower and PIMCO Funds Distributors LLC required under
state law, as would not be likely to have a Material Effect.
5.7 Litigation. Except as disclosed on Schedule 5.7 hereto as of the
---------- ------------
Closing Date, or as disclosed to the Administrative Agent and the Banks in
writing with respect to any subsequent date, there is no Proceeding of any kind
pending against the Borrower, any of its Subsidiaries, or PGP with an amount in
controversy exceeding the Material Amount. None of such Proceedings (a) is
reasonably likely to, either in any case or in the aggregate, have a Material
Effect, or (b) questions the validity of this Agreement or any of the other Loan
Documents, or any action taken or to be taken pursuant hereto or thereto.
5.8 Material Contracts. Except as would not be likely to have a
------------------
Material Effect, each Contract to which any of the Borrower and its Subsidiaries
is party or subject, or by which any of their respective assets are bound
(including investment advisory contracts and investment company distribution
plans) (a) is Fully Effective, (b) is not subject to any default or event of
default with respect to the Borrower, any of its Subsidiaries or, to the best
knowledge of the executive management of the Borrower, any other party, (c) is
not subject to any notice of termination given or received by the Borrower or
any of its Subsidiaries, and (d) is, to the best knowledge of the executive
management of the Borrower, the legal, valid, and binding obligation of each
party thereto other than the Borrower and its Subsidiaries enforceable against
such parties according to its terms.
5.9 Compliance with Other Instruments, Laws. None of the Borrower, its
---------------------------------------
Subsidiaries, or PGP is in violation of or default under (a) any provision of
its certificate of incorporation or by-laws, or its certificate of limited
partnership or agreement of limited or general partnership, as the case may be,
(b) except for the Note Agreement, any Contract to which it is or may be subject
or by which it or any of its properties are or may be bound, or (c) any
Government Mandate, including Government Mandates relating to occupational
safety and employment matters, except (with respect to subsections (b) and (c)),
in any case, where such violation or default would not be likely to have a
Material Effect.
5.10 Tax Status. The Borrower and its Subsidiaries (a) have made or
----------
filed all federal and state income and all other tax returns, reports, and
declarations required by any Government Authority to which any of them is
subject, except where the failure to make or file the same would not be likely
to have a Material Effect, (b) have paid all taxes and other governmental
assessments and
-112-
<PAGE>
charges due, except those being contested in good faith and by appropriate
Proceedings or those where a failure to pay is not reasonably likely to have a
Material Effect, and (c) have set aside on their books provisions reasonably
adequate for the payment of all taxes for periods subsequent to the periods to
which such returns, reports, or declarations apply. There are no unpaid taxes in
any material amount claimed to be due from the Borrower or any of its
Subsidiaries by any Government Authority, and the executive management of the
Borrower knows of no basis for any such claim.
5.11 No Event of Default. No Default has occurred and is continuing.
-------------------
5.12 Holding Company and Investment Company Acts. Neither the Borrower
-------------------------------------------
nor any of its Subsidiaries is a "holding company", or a "subsidiary company" of
a "holding company", as such terms are defined in the Public Utility Holding
Company Act of 1935. Neither the Borrower nor any of its Subsidiaries is an
"investment company", as such term is defined in the 1940 Act, required to be
registered in accordance with such Act.
5.13 Insurance. The Borrower and its Subsidiaries maintain insurance
---------
with financially sound and reputable insurers in such coverage amounts, against
such risks, with such deductibles and upon such other terms, or are self-insured
in respect of such risks (with appropriate reserves to the extent required by
GAAP), as is reasonable and customary for firms engaged in businesses similar to
those of the Borrower and its Subsidiaries. All policies of insurance
maintained by the Borrower or its Subsidiaries are Fully Effective. All
premiums due on such policies have been paid or accrued on the books of the
Borrower or its Subsidiaries, as appropriate.
5.14 Certain Transactions. Except in connection with (a) the PGP
--------------------
Refinancing, (b) transactions occurring in the ordinary course of business, (c)
transactions between the Borrower and Holdings authorized pursuant to the
Amended and Restated Operating Agreement dated as of January 1, 1998 by and
between Holdings and the Borrower, so long as PGP shall remain the sole general
partner of Holdings, (d) transactions with a Public General Partner that was
formerly a limited partner of the Borrower, and (e) transactions occurring on
fair and reasonable terms no less favorable to the Borrower and its Subsidiaries
taken as a whole than would be obtained in comparable arms' length transactions
with Persons that are not Affiliates of the Borrower or its Subsidiaries, none
of the officers, directors, partners, or employees of the Borrower or any of its
Subsidiaries, or, to the knowledge of the executive management of the Borrower,
any Entity (other than a Subsidiary) in which any such officer, director,
partner, or employee has a substantial interest or is an officer, director,
trustee, or partner, is at present a party to any transaction with the Borrower
or any of its Subsidiaries (other than for or in connection with services as
officers, directors, partners, or employees, as the case may be), including any
Contract providing for the furnishing of services to or by, providing for rental
of real or personal property to or from, or otherwise requiring payments to or
from any such officer, director, partner, employee, or Entity.
5.15 Employee Benefit Plans.
----------------------
(a) In General. Set forth on Schedules Schedule 5.15 is a list of
---------- -----------------------
each Employee Benefit Plan and Multiemployer Plan of the Borrower and its
Subsidiaries as of the Closing Date. After the Closing Date, any additional
Employee Benefit or Multiemployer Plan shall be disclosed to the Administrative
Agent in writing. Each Employee Benefit Plan has been maintained and operated
in compliance in all material respects with the provisions of ERISA and, to the
extent applicable, the
-113-
<PAGE>
Code, including the provisions thereunder respecting prohibited transactions,
except where the failure to so comply would not be likely to have a Material
Effect.
(b) Terminability of Welfare Plans. Under each Employee Benefit Plan
------------------------------
which is an employee welfare benefit plan within the meaning of (S)3(1) or
(S)3(2)(B) of ERISA, no benefits are due unless the event giving rise to the
benefit entitlement occurs prior to plan termination (except as required by
Title I, Part 6 of ERISA). The Borrower or an ERISA Affiliate, as appropriate,
may terminate each such Plan at any time (or at any time subsequent to the
expiration of any applicable bargaining agreement) in the discretion of the
Borrower or such ERISA Affiliate without liability to any Person, except as
would not be likely to have a Material Effect.
(c) Guaranteed Pension Plans. Each contribution required to be made
------------------------
to a Guaranteed Pension Plan, whether required to be made to avoid the
incurrence of an accumulated funding deficiency, the notice or lien provisions
of (S)302(f) of ERISA, or otherwise, has been timely made. No waiver of an
accumulated funding deficiency or extension of amortization periods has been
received with respect to any Guaranteed Pension Plan. No liability to the PBGC
(other than required insurance premiums, all of which have been paid) has been
incurred by the Borrower or any ERISA Affiliate with respect to any Guaranteed
Pension Plan and there has not been any ERISA Reportable Event, or any other
event or condition which presents a material risk of termination of any
Guaranteed Pension Plan by the PBGC. Based on the latest valuation of each
Guaranteed Pension Plan (which in each case occurred within fifteen (15) months
of the date of this representation), and on the actuarial methods and
assumptions employed for that valuation, the aggregate benefit liabilities of
all such Guaranteed Pension Plans within the meaning of (S)4001 of ERISA did not
exceed the aggregate value of the assets of all such Guaranteed Pension Plans by
more than $10,000,000, disregarding for this purpose the benefit liabilities and
assets of any Guaranteed Pension Plan with assets in excess of benefit
liabilities.
(d) Multiemployer Plans. Neither the Borrower nor any ERISA Affiliate
-------------------
has incurred any material liability (including secondary liability) to any
Multiemployer Plan as a result of a complete or partial withdrawal from such
Multiemployer Plan under (S)4201 of ERISA or as a result of a sale of assets
described in (S)4204 of ERISA. Neither the Borrower nor any ERISA Affiliate has
been notified that any Multiemployer Plan is in reorganization or insolvent
under and within the meaning of (S)4241 or (S)4245 of ERISA or that any
Multiemployer Plan intends to terminate or has been terminated under (S) 4041A
of ERISA.
5.16. Use of Proceeds; Regulations U and X.
------------------------------------
(a) The proceeds of the Loans shall be used by the Borrower to
refinance certain Indebtedness, for working capital and for general corporate
purposes and may be used to repay the Private Placement Notes.
(b) No portion of any Loan is to be used for the purpose of purchasing
or carrying any "margin security" or "margin stock" as such terms are used in
Regulations U and X of the Board of Governors of the Federal Reserve System, 12
C.F.R. Parts 221 and 224.
5.17 Environmental Compliance. To the best of the Borrower's knowledge:
------------------------
-114-
<PAGE>
(a) none of the Borrower, its Subsidiaries, PGP, and any operator of
the Real Estate or any operations thereon is in violation, or alleged violation,
of any Government Mandate or Permit pertaining to environmental, safety, or
public health matters, including the Resource Conservation and Recovery Act
("RCRA"), the Comprehensive Environmental Response, Compensation and Liability
- ------
Act of 1980 ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986
------
("SARA"), the Federal Clean Water Act, the Federal Clean Air Act, and the Toxic
----
Substances Control Act (hereinafter "Environmental Laws"), which violation would
------------------
be likely to have a Material Effect;
(b) neither the Borrower nor any of its Subsidiaries has received
notice from any third party, including any Government Authority, (i) that any
one of them has been identified by the United States Environmental Protection
Agency ("EPA") as a potentially responsible party under CERCLA with respect to a
---
site listed on the National Priorities List, 40 C.F.R. Part 300 Appendix B
(1986); (ii) that any hazardous waste, as defined by 42 U.S.C. (S)9601(5), any
hazardous substances as defined by 42 U.S.C. (S)9601(14), any pollutant or
contaminant as defined by 42 U.S.C. (S)9601(33) and any toxic substances, oil,
hazardous materials, or other chemicals or substances regulated by any
Environmental Laws ("Hazardous Substances") that any one of them has generated,
--------- ----------
transported, or disposed of has been found at any site at which a Government
Authority or other third party has conducted, or has ordered that other parties
conduct, a remedial investigation, removal, or other response action pursuant to
any Environmental Law; or (iii) that it is or shall be a named party to any
Proceeding (in each case, contingent or otherwise) arising out of any third
party's incurrence of costs, expenses, losses, or damages of any kind whatsoever
in connection with the release of Hazardous Substances; and
(c) except as would not be likely to have a Material Effect:
(i) no portion of the Real Estate has been used for the
handling, processing, storage, or disposal of Hazardous Substances
except in accordance with applicable Environmental Laws;
(ii) no underground tank or other underground storage
receptacle for Hazardous Substances is located on any portion of the
Real Estate;
(iii) in the course of any activities conducted by any of
the Borrower, its Subsidiaries, PGP, and operators of any Real Estate,
no Hazardous Substances have been generated or are being used on the
Real Estate except in accordance with applicable Environmental Laws;
(iv) there have been no releases (i.e., any past or
present releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, disposing, or dumping) or
threatened releases of Hazardous Substances on, upon, into, or from
the Real Estate that would have a material adverse effect on the value
of the Real Estate or the environment;
(v) there have been no releases of Hazardous Substances
on, upon, from, or into any real property in the vicinity of any of
the Real Estate that (A) may have come to be located on the Real
Estate through soil or groundwater
-115-
<PAGE>
contamination, and, (B) if so located, would have a material adverse
effect on the value of the Real Estate or the environment; and
(vi) Hazardous Substances that have been generated by any
of the Borrower and its Subsidiaries, or on the Real Estate by any
other Person, have been transported offsite only by carriers having an
identification number issued by the EPA, treated or disposed of only
by treatment or disposal facilities maintaining valid Permits as
required under applicable Environmental Laws, which transporters and
facilities have been and are, to the best of the Borrower's knowledge,
operating in compliance with such Permits and applicable Environmental
Laws.
5.18 Subsidiaries, Partnerships and Joint Ventures. Schedules As of the
---------------------------------------------
Closing Date Schedule 5.18 sets forth a list of (a) each Subsidiary of the
-------------
Borrower, (b) the number of authorized and outstanding Equity Securities of each
class of each Subsidiary of the Borrower and the number and percentage thereof
owned, directly or indirectly, by the Borrower, and (c) any partnership or joint
venture in which the Borrower or any of its Subsidiaries is engaged with any
other Person. The foregoing representation shall remain true and correct each
day following the Closing Date on which this Agreement obligates the Borrower to
reaffirm its representations and warranties, unless otherwise disclosed in the
Borrower's Form 10-K delivered to the Administrative Agent and the Banks in
accordance with Section 6.4 hereof. The Equity Securities of each Subsidiary of
the Borrower are validly issued, fully paid, and non-assessable.
5.19 Funded Debt. Schedules Schedule 5.19 sets forth as of the
----------- -----------------------
Closing Date all outstanding Funded Debt of the Borrower and its Subsidiaries.
5.20 General. The Borrower's Annual Report on Form 10-K for the fiscal
-------
year ended December 31, 1996, and Quarterly Reports on Form 10-Q referred to in
Section 5.4 (a) conform in all material respects to the requirements of the
Securities Exchange Act of 1934, as amended, and to all applicable rules and
regulations of the Securities and Exchange Commission, and (b) as amended by
interim filings, do not contain an untrue statement of any material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they are made, not
misleading.
5.21 Year 2000 Compliance. The Borrower has (a) initiated a review and
--------------------
assessment of all areas within its and each of its Subsidiaries' business and
operations (including those affected by suppliers and vendors) that could be
adversely affected by the risk that computer applications used by the Borrower
or any of its Subsidiaries (or suppliers and vendors) may be unable to recognize
and perform properly date-sensitive functions involving certain dates prior to
and any date after December 31, 1999 (the "Year 2000 Problem"), (b) developed a
-----------------
plan and timeline for addressing the Year 2000 Problem on a timely basis, and
(c) to date, implemented that plan in accordance with that timetable. All
computer applications (including those of its suppliers and vendors) that are
material to the Borrower's or any of its Subsidiaries' business and operations
are expected on a timely basis to be able to perform properly date-sensitive
functions for all dates before and after January 1, 2000 (that is, be "Year 2000
---------
Compliant"), except to the extent that such failure could not reasonably be
- ---------
expected to have Material Effect.
-116-
<PAGE>
6. AFFIRMATIVE COVENANTS OF THE BORROWER.
-------------------------------------
The Borrower covenants and agrees that, so long as any Loan or Revolving
Note is outstanding or any Bank has any obligation to make any Loans:
6.1 Punctual Payment. The Borrower will duly and punctually pay or
----------------
cause to be paid the principal and interest on the Loans, the facility fees and
all other amounts provided for in this Agreement and the other Loan Documents to
which the Borrower is party, all in accordance with the terms of this Agreement
and such other Loan Documents.
6.2 Maintenance of Office. The Borrower will maintain its chief
---------------------
executive office in Newport Beach, California or at such other place in the
United States of America as the Borrower shall designate upon prior written
notice to the Administrative Agent, where notices, presentations, and demands to
or upon the Borrower in respect of the Loan Documents may be given or made.
6.3 Records and Accounts. The Borrower will, and will cause each of its
--------------------
Subsidiaries to, keep complete and accurate records and books of account.
6.4 Financial Statements, Certificates, and Information. The Borrower
---------------------------------------------------
will deliver to each of the Banks:
(a) as soon as practicable, but in any event not later than ninety
(90) days after the end of each fiscal year of the Borrower:
(i) the consolidated balance sheet of the Borrower as at the end
of such fiscal year;
(ii) the consolidating balance sheet of the Borrower as at the
end of such fiscal year;
(iii) the consolidated statement of income and consolidated
statement of cash flows of the Borrower for such fiscal year; and
(iv) the consolidating statement of income and consolidating
statement of cash flows of the Borrower for such fiscal year.
Each of the balance sheets and statements delivered under this Section 6.4(a)
shall (w) set forth in comparative form the figures for the previous fiscal
year; (x) be in reasonable detail and prepared in accordance with GAAP based on
the records and books of account maintained as provided in Section 6.3; (y) as
to items (i) and (iii) above, be accompanied by a certification by the principal
financial or accounting officer of the Borrower that the information contained
in such financial statements presents fairly in all material respects the
financial position of the Borrower and its Subsidiaries on the date thereof and
results of operations and cash flows of the Borrower and its Subsidiaries for
the periods covered thereby; and (z) as to items (i) and (iii) above, be
certified, without limitation as to scope, by a firm of independent certified
public accountants reasonably satisfactory to the Administrative Agent, and
shall be accompanied by a written statement from such accountants to the effect
that in connection with their audit of such financial statements nothing has
come to their attention that caused them to
-117-
<PAGE>
believe that the Borrower has failed to comply with the terms, covenants,
provisions or conditions of Section 6.3 or Section 7 of this Agreement as to
accounting matters (provided that such accountants may also state that the audit
was not directed primarily toward obtaining knowledge of such noncompliance),
or, if such accountants shall have obtained knowledge of any such noncompliance,
they shall disclose in such statement any such noncompliance;
(b) as soon as practicable, but in any event not later than forty-five
(45) days after the end of the first three fiscal quarters of each fiscal year
of the Borrower, (i) the unaudited interim consolidated balance sheet of the
Borrower as at the end of such fiscal quarter, and (ii) the unaudited interim
consolidated statement of income and unaudited interim consolidated statement of
cash flow of the Borrower for such fiscal quarter and for the portion of the
Borrower's fiscal year then elapsed, all in reasonable detail and prepared in
accordance with Rule 10-01 of Regulation S-X of the Securities and Exchange
Commission, together with a certification by the principal financial or
accounting officer of the Borrower that, in the opinion of management of the
Borrower, all adjustments necessary for a fair presentation of (A) the results
of operations of the Borrower for the periods covered thereby, (B) the financial
position of the Borrower at the date thereof, and (C) the cash flows of the
Borrower for periods covered thereby have been made (subject to year-end
adjustments);
(c) simultaneously with the delivery of the financial statements
referred to in subsections (a) and (b) above, a statement certified by the
principal financial officer, chief accounting officer or treasurer of the
Borrower in substantially the form of Exhibit F hereto and setting forth
---------
in reasonable detail computations evidencing the Borrower's compliance with the
covenants contained in Section 7.13 and (if applicable) reconciliations to
reflect changes in GAAP since December 31, 1996;
(d) promptly after the filing or mailing thereof, copies of all
material of a financial nature filed with the Securities and Exchange Commission
or sent to the holders of the Equity Securities of the Borrower;
(e) simultaneously with the delivery of the financial statements
referred to in subsections (a) and (b) above, a report of the ownership of
Equity Securities of the Borrower as of the end of such fiscal quarter or fiscal
year; and
(f) from time to time such other financial data and information
(including accountants' management letters) as the Administrative Agent (having
been requested to do so by any Bank) may reasonably request.
6.5 Notices.
-------
(a) Defaults. The Borrower will promptly after the executive
--------
management of the Borrower (which for purposes of this section shall mean the
chief executive officer, chief operating officer, chief financial officer, chief
accounting officer, and general counsel of the Borrower) becomes aware thereof
(and in any case within two (2) Business Days after the executive management
becomes aware thereof) notify the Administrative Agent and each of the Banks in
writing of the occurrence of any Default or Event of Default. If any Person
shall give any notice in writing of a claimed default (whether or not
constituting an Event of Default) under this Agreement or
-118-
<PAGE>
any other Contract relating to Funded Debt equal to or in excess of the Material
Amount to which or with respect to which the Borrower or any of its Subsidiaries
is a party or obligor, whether as principal, guarantor, surety, or otherwise,
the Borrower shall forthwith give written notice thereof to the Administrative
Agent and each of the Banks, describing the notice or action and the nature of
the claimed default.
(b) Environmental Events. The Borrower will promptly give notice to
--------------------
the Administrative Agent and each of the Banks (i) of any violation of any
Environmental Law that the Borrower or any of its Subsidiaries reports in
writing, or that is reportable by any such Person in writing (or for which any
written report supplemental to any oral report is made) to any Government
Authority, and (ii) upon becoming aware thereof, of any Proceeding, including a
notice from any Government Authority of potential environmental liability, that
has the potential, in the Borrower's reasonable judgement, to have a Material
Effect.
(c) Notice of Proceedings and Judgments. The Borrower will give
-----------------------------------
notice to the Administrative Agent and each of the Banks in writing within seven
(7) days of becoming aware of any Proceedings pending or threatened in writing
affecting the Borrower or any of its Subsidiaries or to which the Borrower or
any of its Subsidiaries is or becomes a party that could reasonably be expected
by the Borrower to have a Material Effect (or of any material change in any such
Proceedings of which the Borrower has previously given notice). Any such notice
will state the nature and status of such Proceedings. The Borrower will give
notice to the Administrative Agent and each of the Banks, in writing, in form
and detail satisfactory to the Administrative Agent, within three (3) days of
any judgment not covered by insurance, final or otherwise, against the Borrower
or any of its Subsidiaries in an amount in excess of the Material Amount.
(d) Notice of Change of Control. In the event the Borrower obtains
---------------------------
knowledge of a Change of Control or an impending Change of Control, the Borrower
will promptly give written notice (a "Control Change Notice") of such fact to
---------------------
the Administrative Agent and the Banks at least forty (40) days prior to any
proposed Change of Control Date, (i) except to the extent the Borrower may be
prohibited by U.S. securities laws from giving such a notice, in which case the
Borrower shall do so as soon as may be legally permissible and (ii) except to
the extent the Borrower may be prohibited by a written confidentiality covenant,
in which case the Borrower shall do so as soon as it is contractually permitted
and in any event not later than forty-eight (48) hours prior to such Change of
Control. Any Control Change Notice shall describe the principal facts and
circumstances of such Change of Control known to the Borrower in reasonable
detail (including the Change of Control Date or, if the Borrower does not have
knowledge of the Change of Control Date, the Borrower's best estimate of such
Change of Control Date). In the event the Borrower shall not have designated
the Change of Control Date in its Control Change Notice, the Borrower shall keep
the Administrative Agent and the Banks informed as to any changes in the
estimated Change of Control Date and shall provide written notice to the
Administrative Agent and the Banks specifying the Change of Control Date
promptly upon obtaining knowledge thereof.
(e) Termination of Management Contracts. The Borrower will promptly
-----------------------------------
notify the Administrative Agent and the Banks of any termination of any one or
more management agreements or other contracts taking place during any sixty (60)
day period in respect of funds managed by the Borrower that, in the aggregate,
account for $20 billion or more of the Borrower's Assets Under Management.
-119-
<PAGE>
(f) Year 2000 Compliance. The Borrower will promptly notify the Banks
--------------------
in the event the Borrower discovers or determines that any computer application
(including those of its suppliers and vendors) that is material to the
Borrower's or any of its Subsidiaries' business and operations will not be Year
2000 Compliant on or before September 1, 1999, except to the extent that such
failure could not reasonably be expected to have a Material Effect.
(g) Acceleration of Private Placement Notes. The Borrower will
---------------------------------------
promptly notify the Banks and the Administrative Agent of any acceleration of
the Private Placement Notes.
6.6 Existence; Business; Properties.
-------------------------------
(a) Legal Existence. The Borrower will, and will cause each of its
---------------
Subsidiaries to, do or cause to be done all things necessary to preserve and
keep in full force and effect its existence, rights and franchises as a limited
partnership, general partnership or corporation, as the case may be, except,
with respect to existence, rights and franchises, where the failure to preserve
and keep in full force and effect such existence, rights and franchises would
not be likely to have a Material Effect.
(b) Conduct of Business. The Borrower will engage primarily in the
-------------------
investment advisor and investment management services business and will cause
each of its Subsidiaries to engage primarily in such businesses.
(c) Maintenance of Properties. The Borrower will, and will cause
-------------------------
each of its Subsidiaries to, cause its properties used or useful in the conduct
of its business and which are material to the Business of the Borrower and its
Subsidiaries to be maintained and kept in good condition, repair, and working
order and supplied with all necessary equipment, ordinary wear and tear
excepted.
(d) Status Under Securities Laws. The Borrower shall maintain its
----------------------------
status as a registered "investment adviser" under (a) the Investment Advisers
Act of 1940 and (b) under the laws of each state in which such registration is
required in connection with the investment advisory business of the Borrower.
The Borrower shall cause PIMCO Funds Distributors LLC or another Subsidiary of
the Borrower to maintain its status as a registered "broker/dealer" under the
Securities Exchange Act of 1934 and under the laws of each state in which such
registration is required in connection with the business of PIMCO Funds
Distributors LLC or another Subsidiary of the Borrower, and to maintain its
membership in the National Association of Securities Dealers, Inc.
6.7 Insurance. The Borrower will, and will cause each of its
---------
Subsidiaries to, maintain with financially sound and reputable insurers
insurance with respect to its properties and business against such casualties
and contingencies, in such amounts, containing such terms, in such forms, and
for such periods, or shall be self-insured in respect of such risks (with
appropriate reserves to the extent required by GAAP), as shall be customary in
the industry for companies engaged in similar activities in similar geographic
areas.
-120-
<PAGE>
6.8 Taxes. The Borrower will, and will cause each of its Subsidiaries
-----
to, duly pay and discharge, or cause to be paid and discharged, before the same
shall become overdue, all taxes, assessments, and other governmental charges
imposed upon it or its real property, sales, and activities, or any part
thereof, or upon the income or profits therefrom, as well as all claims for
labor, materials, or supplies that if unpaid (a) might by law become a Lien upon
any of its property and (b) would be reasonably likely to result in a Material
Effect; provided that any such tax, assessment, charge, levy, or claim need not
--------
be paid if the validity or amount thereof shall currently be contested in good
faith by appropriate proceedings and if the Borrower or such Subsidiary shall
have set aside on its books, if and to the extent permitted by GAAP, adequate
accruals with respect thereto.
6.9 Inspection of Properties and Books; Communication with
------------------------------------------------------
Accountants.
(a) General. The Borrower shall, and shall cause each of its
-------
Subsidiaries to, permit the Banks, through the Administrative Agent or any of
the Banks' other designated representatives, to visit and inspect any of the
properties of the Borrower or any of its Subsidiaries, to examine the books of
account of the Borrower and its Subsidiaries (and to make copies thereof and
extracts therefrom), and to discuss the affairs, finances, and accounts of the
Borrower and its Subsidiaries with, and to be advised as to the same by, its and
their officers, all at such reasonable times and intervals as the Administrative
Agent or any Bank may request.
(b) Communication with Accountants. The Borrower authorizes the
------------------------------
Administrative Agent and the Banks to communicate directly with the Borrower's
independent certified public accountants and authorizes such accountants to
disclose to the Administrative Agent and the Banks any and all financial
statements and other supporting financial documents and schedules, including
copies of any management letter with respect to the Business of the Borrower or
any of its Subsidiaries. At the request of the Administrative Agent, the
Borrower shall deliver a letter addressed to such accountants instructing them
to comply with the provisions of this Section 6.9(b).
6.10 Compliance with Government Mandates, Contracts, and Permits. The
-----------------------------------------------------------
Borrower will and will cause each of its Subsidiaries to, comply (if and to the
extent that a failure to comply would be likely to have a Material Effect) with
(a) all applicable Government Mandates wherever the business of the Borrower or
any such Subsidiary is conducted, including all Environmental Laws and all
Government Mandates relating to occupational safety and employment matters; (b)
the provisions of the certificate of incorporation and by-laws or the agreement
of limited partnership and certificate of limited partnership, as the case may
be, of the Borrower and any such Subsidiary; (c) all Contracts to which the
Borrower or any such Subsidiary is party, by which the Borrower or any such
Subsidiary is or may be bound, or to which any of their respective properties
are or may be subject; and (d) the terms and conditions of any Permit used in
the Business of the Borrower or any such Subsidiary. If any Permit shall become
necessary or required in order that the Borrower may fulfill any of its
obligations hereunder or under any of the other Loan Documents to which the
Borrower is a party, the Borrower will immediately take or cause its
Subsidiaries to take all reasonable steps within the power of the Borrower and
its Subsidiaries to obtain and maintain in full force and effect such Permit and
furnish the Administrative Agent and the Banks with evidence thereof.
6.11 Use of Proceeds. The Borrower will use the proceeds of the Loans
---------------
solely as provided in Section 5.16.
-121-
<PAGE>
6.12 Other Indebtedness. All Obligations under this Agreement and the
------------------
other Loan Documents shall rank at least pari passu with all other Indebtedness
of the Borrower and its Subsidiaries, except to the extent such other
Indebtedness is secured by Permitted Liens.
7. NEGATIVE COVENANTS OF THE BORROWER.
----------------------------------
The Borrower covenants and agrees that, so long as any Loan or Revolving
Note is outstanding or any Bank has any obligation to make any Loans:
7.1 Disposition of Assets; Mergers and Reorganizations. The Borrower
--------------------------------------------------
will not, and will not cause, permit, or suffer any Subsidiary to, sell,
transfer, assign or otherwise dispose of its business or assets, or enter into
any merger or consolidation, other than (a) sales of obsolete assets, (b) sales
of assets in the ordinary course of business, (c) sales of assets for fair
value, so long as no Default or Event of Default exists or is caused thereby,
(d) transfers of assets between the Borrower or a Subsidiary, and a Subsidiary
or the Borrower, (e) a merger or consolidation between the Borrower or a
Subsidiary, and a Subsidiary or the Borrower, so long as the Borrower, if a
party, is the survivor, or (f) a merger or consolidation between the Borrower or
a Subsidiary and another Person, so long as (i) such merger or consolidation
constitutes an Acquisition, or the exchange of securities or other assets in
such merger or consolidation is an exchange for fair value, and (ii) no Default
or Event of Default exists or is caused thereby.
7.2 Acquisitions. The Borrower will not, and will not cause, permit,
------------
or suffer any of its Subsidiaries to, become a party to, contract for, or effect
any Acquisition, unless no Default or Event of Default then exists or will be
caused thereby.
7.3 Restrictions on Liens. The Borrower will not, and will not cause,
---------------------
permit, or suffer any of its Subsidiaries to, (a) create or incur, or cause,
permit, or suffer to be created or incurred or to exist, any Lien upon any of
its property or assets of any character whether now owned or hereafter acquired,
or upon the income or profits therefrom; (b) transfer any of such property or
assets or the income or profits therefrom for the purpose of subjecting the same
to the payment of Indebtedness or performance of any other obligation in
priority to payment of its general creditors; (c) acquire, or agree or have an
option to acquire, any property or assets upon conditional sale or other title
retention or purchase money security agreement, device, or arrangement; (d)
suffer to exist any Indebtedness or claim or demand for a period of time such
that the same by Government Mandate or upon bankruptcy or insolvency, or
otherwise, would be given any priority whatsoever over its general creditors; or
(e) assign, pledge, or otherwise transfer any accounts, contract rights, general
intangibles, chattel paper, or instruments, with or without recourse, other than
a transfer or assignment in connection with a sale permitted under Section 7.1
or an Investment permitted under Section 7.5; provided that the Borrower and any
Subsidiary of the Borrower may create or incur, or cause, permit, or suffer to
be created or incurred or to exist:
(i) Liens imposed by Government Mandate to secure taxes,
assessments, and other government charges in respect of obligations
not overdue or which are being contested in accordance with Section
6.8;
(ii) statutory Liens of carriers, warehousemen, mechanics,
suppliers, laborers, and materialmen, and other like Liens, in each
case in respect of
-122-
<PAGE>
obligations not overdue or which are being contested in accordance
with Section 6.8 and for which a bond has been issued;
(iii) pledges or deposits made in connection with, or to secure
payment of, workers' compensation, unemployment insurance, old age
pensions, or other social security obligations;
(iv) Liens on Real Estate consisting of easements, rights of way,
zoning restrictions, restrictions on the use of real property,
defects and irregularities in the title thereto, and other minor
Liens, provided, (A) none of such Liens in the reasonable opinion of
--------
the Borrower interferes materially with the use of the affected
property in the ordinary conduct of the business of the Borrower and
its Subsidiaries, and (B) such Liens individually or in the aggregate
do not have a Material Effect;
(v) the rights and interests of landlords and lessors under leases
of Real Estate leased by the Borrower or one of its Subsidiaries, as
lessee;
(vi) presently outstanding Liens listed on Schedule 7.3, and, so
------------
long as no Default or Event of Default exists, Liens securing any
refinancing, replacement or substitution of Indebtedness secured by
such Liens, provided that there is no increase in the principal
amount of such Indebtedness secured by such Liens and so long as the
scope of such Liens is not increased;
(vii) Liens in favor of either the Borrower or a Subsidiary of the
Borrower on all or part of the assets of any Subsidiary of the
Borrower securing Indebtedness owing by such Subsidiary to the
Borrower or such other Subsidiary, as the case may be;
(viii) Liens on interests of the Borrower or its Subsidiaries in
partnerships or joint ventures consisting of binding rights of first
refusal, rights of first offer, take-me-along rights, third-party
offer provisions, buy-sell provisions, other transfer restrictions
and conditions relating to such partnership or joint venture
interests, and Liens granted to other participants in such
partnership or joint venture as security for the performance by the
Borrower or its Subsidiaries of their obligations in respect of such
partnership or joint venture; and
(ix) Liens on Class C Limited Partner Units of the Borrower in
favor of the holders of the OGI Exchangeable Debt; and
(x) Liens securing obligations of the Borrower or any of its
Subsidiaries (other than for borrowed money) in an amount not to
exceed, in the aggregate at any time outstanding, the Material
Amount; and
(xi) any judgment lien that is not an Event of Default under
Section 10.1(j).
-123-
<PAGE>
7.4 Guaranties. Except to the extent the Borrower shall issue a
----------
guaranty of the Private Placement Notes in favor of the holders of the Private
Placement Notes in connection with the PGP Refinancing to the extent permitted
in Section 7.5 hereof, the Borrower shall not, and shall not cause, permit, or
suffer any of its Subsidiaries to, either (a) guaranty, endorse, accept, act as
surety for, or otherwise become liable in respect of, Indebtedness of (or
undertake to maintain working capital or other balance sheet condition of, or
otherwise to advance or make funds available for the purchase of Indebtedness
of) Persons (other than the Borrower or any Subsidiary of the Borrower) unless
such obligation of the Borrower or its Subsidiary is expressly limited by the
instrument establishing the same to a specified amount, or (b) voluntarily
incur, create, assume, or otherwise become liable for any contingent obligations
that are not by their terms limited to a specific dollar amount; provided,
--------
however, the aggregate amount of all such obligations of the Borrower and its
- -------
Subsidiaries permitted pursuant to this Section 7.4 shall not cause the Borrower
to violate the financial covenants in Section 7.13.
7.5 Restrictions on Investments. The Borrower will not, and will not
---------------------------
cause, permit, or suffer any of its Subsidiaries to, make or permit to exist or
to remain outstanding any Investment except:
(a) Investments in marketable securities, liquid investments, and
other financial instruments that are acquired for investment purposes and that
have a value that may be readily established, including any such Investment that
may be readily sold or otherwise liquidated in any pooled investment vehicle for
which the Borrower or one of its Subsidiaries serves as investment manager or
adviser;
(b) Investments existing on the Closing Date and set forth on
Schedule 7.5;
- ------------
(c) Investments made by the Borrower or any Subsidiary of the
Borrower in the Borrower or any Subsidiary of the Borrower; and
(d) So long as no Default or Event of Default exists or is caused
thereby, Investments made by the Borrower in PGP in connection with the PGP
Refinancing in the form of (i) a loan by the Borrower to PGP (the proceeds of
which are used to repay the Private Placement Notes in full) or (ii) a guaranty
of the Private Placement Notes issued by the Borrower in favor of the holders of
the Private Placement Notes; and
(e) So long as no Default or Event of Default exists or is caused
thereby, other Investments made by the Borrower or any Subsidiary of the
Borrower in an aggregate amount outstanding at any time, not to exceed the sum
of (i) ten percent (10%) of Partner's Capital plus (ii) the net proceeds (or
fair value in the case of an exchange) received by the Borrower from the sale
(or exchange) of Equity Securities in the Borrower as of (y) the date of any
such Investment, or (z) the last day of any subsequent calendar quarter.
7.6 Restrictions on Consolidated Funded Debt. The Borrower will not
----------------------------------------
cause, permit, or suffer any of its Subsidiaries to, create, incur, assume,
guarantee, or be or remain liable, contingently or otherwise, with respect to
any Consolidated Funded Debt, except: (a) Consolidated Funded Debt arising under
this Agreement and under the Long-Term Credit Agreement, and (b) the
-124-
<PAGE>
Borrower and its Subsidiaries may incur or suffer to exist any other
Consolidated Funded Debt if, and only if, no Default or Event of Default shall
then exist or be caused by the incurrence of such Consolidated Funded Debt.
7.7 Distributions. The Borrower shall not make any Distributions to
-------------
its partners if a Default or Event of Default shall then exist or be caused
thereby. The Borrower shall not cause, permit, or suffer any restriction or
Lien on the ability of any of its Subsidiaries to (a) pay, directly or
indirectly, any Distributions to the Borrower or any other Subsidiary of the
Borrower, (b) make any payments, directly or indirectly, in respect of any
Indebtedness or other obligation owed to the Borrower or any of its
Subsidiaries, (c) make loans or advances to the Borrower or any other Subsidiary
of the Borrower, or (d) sell, transfer, assign, or otherwise dispose of any
property or assets to the Borrower or any other Subsidiary of the Borrower,
except, in each such case, restrictions or Liens (x) that exist under or by
reason of applicable Government Mandates, including any net capital rules, (y)
that arise by reason of the maintenance by any Subsidiary of a level of net
worth for the purpose of ensuring that any limited partnerships for which it
serves as general partner will be treated as partnerships for federal income tax
purposes, or (z) that arise in contracts with shareholders or partners of
Subsidiaries of the Borrower in contracts executed after the Closing Date.
7.8 Transactions with Affiliates. The Borrower will not, and will not
----------------------------
cause, permit, or suffer any of its Subsidiaries to, directly or indirectly,
enter into any Contract or other transaction with any Affiliate of the Borrower
or any of its Subsidiaries that is material to the Borrower and the Subsidiaries
taken as a whole, unless either: (a) such Contract or transaction relates solely
to (i) compensation arrangements with directors, officers, or employees of the
Borrower, PGP, or the Subsidiaries, or (ii) so long as no Default or Event of
Default then exists or would be caused thereby, the PGP Refinancing, (b) such
transaction is, taking into account the totality of the relationships involved,
on fair and reasonable terms no less favorable to the Borrower and the
Subsidiaries taken as a whole than would be obtained in comparable arm's length
transactions with Persons that are not Affiliates of the Borrower or its
Subsidiaries, or (c) such transaction consists of loans and advances to the
Borrower's senior management employees in an amount not exceeding $2,000,000 to
any such employee and in the aggregate at any time outstanding not exceeding
$15,000,000.
7.9 Fiscal Year. The Borrower and each of its Subsidiaries maintains
-----------
a fiscal year ending December 31. The Borrower shall not change, and will not
permit any Subsidiary to change, its fiscal year unless the parties to the Loan
Documents shall first enter into amendments to the Loan Documents such that the
rights of the parties to the Loan Documents will not be affected by the change
in the fiscal year of the Borrower, and the parties shall enter into such
amendments as may be required in connection with a change of the Borrower's
fiscal year.
7.10 Compliance with Environmental Laws. The Borrower will not, and
----------------------------------
will not cause, permit, or suffer any of its Subsidiaries to, (a) use any of the
Real Estate or any portion thereof for the handling, processing, storage, or
disposal of Hazardous Substances, (b) cause, permit, or suffer to be located on
any of the Real Estate any underground tank or other underground storage
receptacle for Hazardous Substances, (c) generate any Hazardous Substances on
any of the Real Estate, (d) conduct any activity at any Real Estate or use any
Real Estate in any manner so as to cause a release (i.e., releasing, spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing, or dumping) or threatened release of Hazardous Substances
-125-
<PAGE>
on, upon, or into the Real Estate, or (e) otherwise conduct any activity at any
Real Estate or use any Real Estate in any manner that would violate any
Environmental Law or bring such Real Estate in violation of any Environmental
Law, in each case, so as would be likely to have a Material Effect.
7.11 Employee Benefit Plans. Except where the liability of the
----------------------
Borrower and its Subsidiaries taken as a whole would not be likely to exceed the
Material Amount, the Borrower will not, and will not cause, permit, or suffer
any ERISA Affiliate to:
(a) engage in any "prohibited transaction" within the meaning of
(S)406 of ERISA or (S)4975 of the Code;
(b) permit any Guaranteed Pension Plan to incur an "accumulated
funding deficiency", as such term is defined in (S)302 of ERISA, whether or not
such deficiency is or may be waived;
(c) fail to contribute to any Guaranteed Pension Plan to an extent
that, or terminate any Guaranteed Pension Plan in a manner that, could result in
the imposition of a Lien on the assets of the Borrower or any of its
Subsidiaries pursuant to (S)302(f) or 54068 of ERISA; or
(d) permit or take any action that would result in the aggregate
benefit liabilities (within the meaning of (S)4001 of ERISA) of all Guaranteed
Pension Plans exceeding the value of the aggregate assets of such Plans,
disregarding for this purpose the benefit liabilities and assets of any such
Plan with assets in excess of benefit liabilities.
7.12 Amendments to Certain Documents. The Borrower shall not, without
-------------------------------
the prior written consent of the Majority Banks in each instance, permit or
suffer any material amendments, modifications, supplements, or restatements of
its certificate of limited partnership or the Borrower Partnership Agreement
that could reasonably be expected to materially adversely affect the ability of
the Borrower to perform and observe its obligations under the Loan Documents or
the legal rights and remedies of the Banks and the Administrative Agent under
any of the Loan Documents.
7.13 Financial Covenants.
-------------------
(a) Minimum Partners Capital. The Borrower shall not permit, at
------------------------
any time, its Partners' Capital to be less than (i) the product of (A) 75% times
(B) the Partners' Capital as of December 31, 1997, plus (ii) the product of (A)
75% times (B) all Partners' Capital contributed to the Borrower after December
31, 1997.
(b) Leverage Ratio. As of (i) the last day of each calendar
--------------
quarter and (ii) the date any Loan is made, the Borrower will not permit the
ratio of (A) Consolidated Funded Debt on such date to (B) the Borrower's OPAD
for the four (4) calendar quarters ending on the last day of the applicable
quarter in the case of item (i) of this section and on the last day of the most
recently completed calendar quarter for which financial statements have been
provided to the Banks under Section 6.4(b) in the case of item (ii) of this
section (the "Leverage Ratio") to exceed 2.25 to 1.00.
--------------
-126-
<PAGE>
(c) Interest Coverage Ratio. As of the last day of each calendar
-----------------------
quarter, the Borrower will not permit the Interest Coverage Ratio for the four
(4) consecutive calendar quarters ending on such date to be less than 4.00 to
1.00.
(d) Assets Under Management. The Borrower shall not permit, at
-----------------------
any time, its Assets Under Management to be less than the sum of (i) $125
billion plus (ii) the product of (A) 50% times (B) the dollar value of any
Assets Under Management acquired by the Borrower or any of its Subsidiaries
pursuant to an Acquisition or a Permitted Merger.
7.14 Limitation on Negative Pledge Clauses. The Borrower will not, and
-------------------------------------
will not cause, permit, or suffer any of its Subsidiaries to, directly or
indirectly, enter into any Contract with any Person, other than this Agreement
or the other Loan Documents, which by its terms prohibits or limits the ability
of the Borrower or any of its Subsidiaries to create, incur, assume or suffer to
exist, any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired.
8. CLOSING CONDITIONS.
------------------
The obligations of the Banks under this Agreement shall be subject to the
satisfaction of the following conditions precedent at or before the Closing
Date:
8.1 Financial Statements and Material Changes.
-----------------------------------------
(a) The Banks shall be reasonably satisfied that (i) the financial
statements of the Borrower and the Subsidiaries referred to in Section 5.4
fairly present in all material respects the business and financial condition and
the results of operations of the Borrower and its Subsidiaries as of the dates
and for the periods to which such financial statements relate, and (ii) there
shall have been no material adverse change in the Business of the Borrower and
its Subsidiaries taken as a whole since the dates of such financial statements.
(b) The Banks shall have received and shall have approved (i)
audited, consolidated financial statements, including balance sheets and income
and cash flow statements for OpCap, G.P. for the 1996 and 1997 fiscal years,
(ii) quarterly financial statements for OpCap, G.P. for the quarter ending July
31, 1997 and (iii) pro forma financial statements for the Borrower (after giving
effect to the Oppenheimer Transaction) for the 1998 calendar year, and the Banks
shall have approved all such matters.
8.2 Loan Documents. Each of the Loan Documents shall have been duly
--------------
executed and delivered by the respective parties thereto and shall be in full
force and effect.
8.3 Loan Certificates. The Administrative Agent shall have received
-----------------
from each of the Borrower and PIMCO Partners, LLC, a loan certificate signed by
a duly authorized officer of such Entity in the form of Exhibit G hereto,
together with appropriate attachments which shall include: (a) a copy of its
certificate of organization, certificate of limited partnership, or other
charter document duly certified as of a recent date by the secretary of state of
its organization, (b) a copy, certified by a duly authorized officer of such
Entity to be true and complete on the Closing Date, of its operating agreement,
agreement of limited partnership, or equivalent document as in effect on such
-127-
<PAGE>
date, (c) a certificate of the secretary of state of its organization as to the
due organization, legal existence, and good standing of the Borrower, Holdings
and PIMCO Partners, LLC, (d) a copy, certified by a duly authorized officer of
such Entity to be true and complete on the Closing Date of the unanimous
resolutions of the general partners of the Borrower and the Written Action. The
certificate of organization and operating agreement or partnership agreement and
certificate of limited partnership, as the case may be, of the Borrower, each of
its Subsidiaries, PIMCO Partners, LLC, and PGP shall be in all respects
satisfactory in form and substance to the Administrative Agent.
8.4 Partnership Action. All partnership action necessary for the
------------------
valid execution, delivery, and performance by the Borrower of this Agreement and
the other Loan Documents to which it is or is to become a party, and all
partnership action necessary for PGP and Holdings to cause the Borrower to
execute, deliver, and perform this Agreement and the other Loan Documents to
which the Borrower is or is to become a party, shall have been duly and
effectively taken, evidence thereof reasonably satisfactory to the
Administrative Agent shall have been provided to the Administrative Agent, and
such action shall be in full force and effect at the Closing Date.
8.5 Consents. Each party hereto shall have duly obtained all consents
--------
and approvals of Government Authorities and other third parties, and shall have
effected all notices, filings, and registrations with Government Authorities and
other third parties, as may be required in connection with the execution,
delivery, performance, and observance of the Loan Documents; all of such
consents, approvals, notices, filings, and registrations shall be in full force
and effect; and the Administrative Agent shall have each received evidence
thereof satisfactory to it.
8.6 Opinions of Counsel. The Administrative Agent shall have received
-------------------
favorable opinions addressed to the Banks and the Administrative Agent, in form
and substance acceptable to them, dated as of the Closing Date, from Latham &
Watkins, special counsel to the Borrower, Richards, Layton & Finger, special
Delaware counsel to the Borrower, and Richard M. Weil, in-house counsel to the
Borrower.
8.7 Proceedings. There shall be no Proceedings pending or threatened
-----------
the result of which (a) is reasonably likely to impair or prevent the Borrower's
performance and observance of its obligations under this Agreement and the other
Loan Documents or (b) is reasonably likely to have a Material Effect.
8.8 Incumbency Certificate. The Administrative Agent shall have
----------------------
received from the Borrower an incumbency certificate, dated as of the Closing
Date, signed by a duly authorized officer of the Borrower and giving the name
and bearing a specimen signature of each individual who shall be authorized: (a)
to sign, in the name and on behalf of the Borrower, each of the Loan Documents
to which the Borrower is or is to become a party; (b) to make Loan Requests and
Conversion Requests; and (c) to give notices and to take other action on behalf
of the Borrower under the Loan Documents.
8.9 Material Effect. In the opinion of the Banks, there shall not
---------------
have occurred (a) any Material Effect, or (b) any material disruption, down-turn
or other adverse event in the financial markets or capital markets that
adversely affects the credit-worthiness of the Borrower or the investment
advisor industry in general.
-128-
<PAGE>
8.10 Due Diligence. The Administrative Agent and the Banks shall have
-------------
completed customary due diligence of the Borrower and its Subsidiaries and shall
have received such documents, reports, summaries, descriptions and other
information regarding the Borrower and its Subsidiaries and their business,
prospects, financial results, litigation, tax matters, accounting, labor
insurance, pension liabilities, real estate, Contracts, indebtedness and other
matters as the Administrative Agent and the Banks may request.
8.11 Closing Certificate. The Administrative Agent and the Banks shall
-------------------
have received a closing certificate of the Borrower, in form and substance
acceptable to the Administrative Agent and the Banks, setting forth the
mathematical calculations evidencing the Borrower's compliance with the
financial covenants set forth in this Agreement.
8.12 Agreement with PGP. The Administrative Agent shall have received
------------------
one or more duly executed counterparts of a side agreement among the
Administrative Agent, the Borrower and PGP pursuant to which PGP agrees to
notify the Administrative Agent and the Borrower of its receipt of any notice of
the occurrence of any default or event of default under the Note Agreement.
9. CONDITIONS TO ALL BORROWINGS.
----------------------------
The obligations of the Banks to make any Loan, whether on or after the
Closing Date, shall also be subject to the satisfaction of the conditions
precedent set forth below. The submission of a Loan Request or a Conversion
Request by the Borrower and the acceptance by the Borrower of any Loan shall
constitute a representation and warranty by the Borrower that the conditions set
forth below have been satisfied.
9.1 No Default. No Default or Event of Default shall have occurred
----------
and be continuing, other than a Default under Section 10.1(f)(ii) hereof which
has not yet become an Event of Default.
9.2 Representations True. Each of the representations and warranties
--------------------
of the Borrower and its Subsidiaries contained in this Agreement, the other Loan
Documents, or in any document or instrument delivered pursuant to or in
connection with this Agreement shall be true and correct in all material
respects as of the time of the making of such Loan, with the same effect as if
made at and as of that time (except to the extent that such representations and
warranties expressly relate to a prior date, in which case they shall be true
and correct in all material respects as of such earlier date).
9.3 Loan or Conversion Request. The Administrative Agent shall have
--------------------------
received from the Borrower a Loan Request or a Conversion Request, as
applicable.
9.4 Payment of Fees. Without limiting any other condition, the
---------------
Borrower shall have paid to the Administrative Agent, for the account of the
Banks and the Administrative Agent as appropriate, all fees and other amounts
due and payable under the Loan Documents at or prior to the time of the making
of such Loan.
-129-
<PAGE>
9.5 No Legal Impediment. No change shall have occurred in any
-------------------
Government Mandate that in the reasonable opinion of any Bank would make it
illegal for such Bank to make such Loan (it being understood that this section
shall be a condition only for the Bank or Banks affected by such Government
Mandate).
9.6 Governmental Regulation. Each Bank shall have received such
-----------------------
statements in substance and form reasonably satisfactory to such Bank as such
Bank shall reasonably request for the purpose of compliance with any applicable
Government Mandates of the Comptroller of the Currency or the Board of Governors
of the Federal Reserve System.
10. EVENTS OF DEFAULT; ACCELERATION.
-------------------------------
10.1 Events of Default and Acceleration. Each of the following shall
----------------------------------
constitute an Event of Default, whatever the reason for such event and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment or order of any court or any order, rule, or regulation
of any governmental or non-governmental body:
(a) the Borrower shall fail to pay any principal of the Loans when
the same shall become due and payable, whether at the stated date of maturity or
any accelerated date of maturity or at any other date fixed for payment;
(b) the Borrower shall fail to pay any interest on the Loans, the
facility fees, the Administrative Agent's fees, or other sums due hereunder or
under any of the other Loan Documents, when the same shall become due and
payable, whether at the stated date of maturity or any accelerated date of
maturity or at any other date fixed for payment and such amounts shall remain
unpaid two (2) Business Days after the date when due;
(c) the Borrower shall (i) fail to perform or observe any of its
covenants contained in Sections 6.5(a), 6.5(d) or 6.6, or in Section 7 of this
Agreement or there shall exist any Event of Default (as such term is defined in
the Long-Term Credit Agreement), or (ii) fail to perform or observe any of its
covenants contained in Sections 6.4, 6.5(b), or 6.5(c) of this Agreement, which
failure shall continue for thirty (30) days after the date on which such
covenant was required to be performed or observed;
(d) the Borrower or any of its Subsidiaries shall fail to perform
or observe any term, covenant, or agreement contained herein or in any of the
other Loan Documents (other than those specified elsewhere in this Section 10)
for thirty (30) days after written notice of such failure has been given to the
Borrower by the Administrative Agent;
(e) any representation or warranty of the Borrower in this
Agreement, any of the other Loan Documents, or in any other document or
instrument delivered pursuant to or in connection with this Agreement shall
prove to have been incorrect in any material respect upon the date when made or
deemed to have been made or repeated;
(f) either (i) the occurrence and continuance beyond any applicable
grace period of any default, event of default or other breach (in any case, a
"Breach") of any agreement
-130-
<PAGE>
permitting (with or without the passage of time) acceleration, termination or
exercise of remedies with respect to (A) any Consolidated Funded Debt in an
amount equal to or greater than the Material Amount, (B) any Funded Debt of PGP
other than the Note Agreement in an amount equal to or greater than $1,000,000
or (C) the nonpayment of principal, interest or other amounts when due (other
than by acceleration) by or on behalf of PGP pursuant to the Note Agreement, or
(ii) the holders of the Private Placement Notes shall accelerate the Private
Placement Notes or exercise or attempt to exercise any other remedies as a
consequence of such Breach and, on the seventh (7th) day following such
acceleration, exercise of remedies or attempt to exercise any other remedies
either (A) the Private Placement Notes shall not have been repaid in full and
the Note Agreement shall not have been terminated or (B) the Breach giving rise
to such acceleration, exercise of remedies or attempt to exercise any other
remedies shall not have been waived in writing by the holders of the Private
Placement Notes to the satisfaction of the Banks;
(g) any of the Loan Documents shall be cancelled, terminated, revoked,
or rescinded otherwise than in accordance with the terms thereof or with the
express prior written agreement, consent, or approval of the Banks, or any
Proceeding to cancel, revoke, or rescind any of the Loan Documents shall be
commenced by or on behalf of the Borrower, or any of its Subsidiaries party
thereto, or any Government Authority of competent jurisdiction shall make a
determination that, or issue a Government Mandate to the effect that, any
material provision of one or more of the Loan Documents is illegal, invalid, or
unenforceable in accordance with the terms thereof;
(h) the Borrower, PGP, or any Subsidiary of the Borrower shall make an
assignment for the benefit of creditors, or admit in writing its inability to
pay or generally fail to pay its debts as they mature or become due, or shall
petition or apply for the appointment of a trustee or other custodian,
liquidator, or receiver of the Borrower, PGP or any Subsidiary of the Borrower
or of any substantial part of the assets of the Borrower, PGP, or any Subsidiary
of the Borrower, or shall commence any Proceeding relating to the Borrower, PGP,
or any Subsidiary of the Borrower under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution, liquidation, or
similar law of any jurisdiction, now or hereafter in effect, or shall take any
action to authorize or in furtherance of any of the foregoing, or if any such
petition or application shall be filed or any such Proceeding shall be commenced
against the Borrower, PGP, or any Subsidiary of the Borrower and any of such
parties shall indicate its approval thereof, consent thereto, or acquiescence
therein;
(i) either (i) an involuntary Proceeding relating to the Borrower,
PGP, or any Subsidiary of the Borrower under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution, liquidation, or
similar law of any jurisdiction, now or hereafter in effect is commenced and not
dismissed or vacated within sixty (60) days following entry thereof, or (ii) a
decree or order is entered appointing any trustee, custodian, liquidator, or
receiver described in (h) or adjudicating the Borrower, PGP, or any Subsidiary
of the Borrower bankrupt or insolvent, or approving a petition in any such
Proceeding, or a decree or order for relief is entered in respect of the
Borrower, PGP, or any Subsidiary of the borrower in an involuntary Proceeding
under federal bankruptcy laws as now or hereafter constituted;
(j) there shall remain in force, undischarged, unsatisfied, and
unstayed, for more than thirty (30) days, any final judgment against the
Borrower or any of its Subsidiaries that, with any other such outstanding final
judgments, undischarged, against the Borrower and its
-131-
<PAGE>
Subsidiaries taken together exceeds in the aggregate the Material Amount.
(k) with respect to any Guaranteed Pension Plan, an ERISA Reportable
Event shall have occurred and the Majority Banks shall have determined in their
reasonable discretion that such event reasonably could be expected to result in
liability of the Borrower, or any of its Subsidiaries to the PBGC or such
Guaranteed Pension Plan in an aggregate amount exceeding the Material Amount and
such event in the circumstances occurring reasonably could constitute grounds
for the termination of such Guaranteed Pension Plan by the PBGC or for the
appointment by the appropriate United States District Court of a trustee to
administer such Guaranteed Pension Plan; or a trustee shall have been appointed
by the United States District Court to administer such Guaranteed Pension Plan;
or the PBGC shall have instituted proceedings to terminate such Guaranteed
Pension Plan;
(l) any Change of Control shall occur;
(m) any of the following: (i) the Borrower shall fail to be duly
registered as an "investment adviser" under the Investment Advisers Act of 1940,
if such registration is required by law; or (ii) the Borrower shall cease to
have a Subsidiary that is duly registered as a "broker/dealer" under the
Securities Exchange Act of 1934 or shall cease to be a member in good standing
of the National Association of Securities Dealers, Inc.; or
(n) the Borrower, PGP, or any Subsidiary of the Borrower shall either
(i) be indicted for a federal or state crime and, in connection with such
indictment, either (A) Government Authorities shall seek to seize or attach, or
seek a civil forfeiture of, property of the Borrower, PGP, or one or more of the
Borrower's Subsidiaries having an aggregate value in excess of the Material
Amount or (B) the Administrative Agent shall be advised by its legal counsel in
writing that there is a reasonable possibility of such a seizure, attachment, or
forfeiture under applicable Government Mandates, or (ii) be found guilty of, or
shall plead guilty, no contest, or nolo contendere to, any federal or state
----------
crime, a punishment for which could include a fine, penalty, or forfeiture of
any assets of the Borrower, PGP, or such Subsidiary.
Upon the occurrence of an Event of Default, the Administrative Agent,
upon the request of the Majority Banks, shall by notice in writing to the
Borrower declare all amounts owing with respect to this Agreement, the Revolving
Notes, and the other Loan Documents to be, and they shall thereupon forthwith
become, immediately due and payable without presentment, demand, protest, or
other notice of any kind, all of which are hereby expressly waived by the
Borrower; provided that in the event of any Event of Default specified in
--------
Section 10.1(h) or Section 10.1(i), all such amounts shall become immediately
due and payable automatically and without any requirement of notice from the
Administrative Agent or any Bank; and provided, further, that any such
-------- -------
declaration may be rescinded by the Majority Banks if the Events of Default
leading to such declaration are waived in writing by the Majority Banks.
10.2 Termination of Commitments. If any one or more of the Events of
--------------------------
Default specified in Section 10.1(h) or Section 10.1(i) shall occur, any unused
portion of the Total Commitments hereunder shall forthwith terminate and each of
the Banks shall be relieved of all obligations to make Loans to the Borrower.
If any other Event of Default shall have occurred, or if on any Drawdown Date
the conditions precedent to the making of the Loans to be made on such
-132-
<PAGE>
Drawdown Date are not satisfied, the Administrative Agent may with the consent
of the Majority Banks and, upon the request of the Majority Banks, shall, by
notice to the Borrower, terminate the unused portion of the Total Commitment
hereunder, and upon such notice being given such unused portion of the Total
Commitment hereunder shall terminate immediately and each of the Banks shall be
relieved of all further obligations to make Loans. If any such notice is given
to the Borrower, the Administrative Agent will forthwith furnish a copy thereof
to each of the Banks. No termination of the Total Commitment hereunder shall
relieve the Borrower of any of the Obligations or any of its existing
obligations to any of the Banks arising under other agreements or instruments.
10.3 Remedies.
--------
(a) In case any one or more of the Events of Default shall have
occurred, and whether or not the Administrative Agent shall have accelerated the
maturity of the Loans pursuant to Section 10.1, each Bank, if owed any amount
with respect to the Loans, may with the consent of the Majority Banks but not
otherwise, proceed to protect and enforce its rights by any appropriate
Proceeding, whether for the specific performance of any covenant or agreement
contained in this Agreement and the other Loan Documents or any instrument
pursuant to which the Obligations to such Bank are evidenced, including as
permitted by applicable Government Mandate the obtaining of the ex parte
appointment of a receiver, and, if such amount shall have become due, by
declaration or otherwise, proceed to enforce the payment thereof or any other
legal or equitable right of such Bank.
(b) No remedy herein conferred upon any Bank or the Administrative
Agent or the holder of any Revolving Note is intended to be exclusive of any
other remedy, and each and every remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing at
law or in equity or by any Government Mandate.
11. SETOFF.
------
Regardless of the adequacy of any collateral, during the continuance of
any Event of Default, any deposits or other sums credited by or due from any of
the Banks to the Borrower and any securities or other property of the Borrower
in the possession of such Bank may be applied to or set off by such Bank against
the payment of Obligations and any and all other liabilities, direct, or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, of the Borrower to such Bank. Each of the Banks agrees with
each other Bank that (a) if an amount to be set off is to be applied to
Indebtedness of the Borrower to such Bank, other than Indebtedness evidenced by
the Revolving Notes held by such Bank, such amount shall be applied ratably to
such other Indebtedness and to the Indebtedness evidenced by all such Revolving
Notes held by such Bank, and (b) if such Bank shall receive from the Borrower,
whether by voluntary payment, exercise of the right of setoff, counterclaim,
cross action, enforcement of the claim evidenced by the Revolving Notes held by
such Bank by Proceedings against the Borrower, by proof thereof in bankruptcy,
reorganization, liquidation, receivership or similar Proceedings, or otherwise,
and shall retain and apply to the payment of the Revolving Note or Revolving
Notes held by such Bank any amount in excess of its ratable portion of the
payments received by all of the Banks with respect to the Revolving Notes held
by all of the Banks (exclusive of payments to be made for the account of less
than all of the Banks as provided in Sections 4.6, 4.7, 4.8, and 4.9), such Bank
will make such disposition and arrangements with the other Banks with respect to
such excess, either by way of distribution, pro tanto assignment
---------
-133-
<PAGE>
of claims, subrogation, or otherwise as shall result in each Bank receiving in
respect of the Revolving Notes held by it its proportionate payment as
contemplated by this Agreement; provided that if all or any part of such excess
--------
payment is thereafter recovered from such Bank, such disposition and
arrangements shall be rescinded and the amount restored to the extent of such
recovery, but without interest.
12. THE ADMINISTRATIVE AGENT AND THE DOCUMENTATION AGENT.
----------------------------------------------------
12.1 Authorization. The Administrative Agent and the Documentation
-------------
Agent are authorized to take such action on behalf of each of the Banks and to
exercise all such powers as are hereunder and under any of the other Loan
Documents and any related documents delegated to the Administrative Agent or the
Documentation Agent, respectively, together with such powers as are reasonably
incident thereto, provided that no duties or responsibilities not expressly
--------
assumed herein or therein shall be implied to have been assumed by the
Administrative Agent or the Documentation Agent. The relationship between the
Administrative Agent and the Banks and between the Documentation Agent and the
Banks is and shall be that of agent and principal only, and nothing contained in
this Agreement or any of the other Loan Documents shall be construed to
constitute the Administrative Agent or the Documentation Agent as a trustee for
any Bank.
12.2 Employees and Administrative Agents. Each of the Administrative
-----------------------------------
Agent and the Documentation Agent may exercise its powers and execute its duties
by or through employees or agents and shall be entitled to take, and to rely on,
advice of legal counsel concerning all matters pertaining to its rights and
duties under this Agreement and the other Loan Documents. Each of the
Administrative Agent and the Documentation Agent may utilize the services of
such Persons as it in its sole discretion may reasonably determine.
12.3 No Liability. Neither the Administrative Agent, the Documentation
------------
Agent nor any of their respective shareholders, directors, officers or employees
nor any other Person assisting them in their duties nor any agent or employee
thereof, shall be liable for any waiver, consent or approval given or any action
taken, or omitted to be taken, in good faith by it or them hereunder or under
any of the other Loan Documents, or in connection herewith or therewith, or be
responsible for the consequences of any oversight or error of judgment
whatsoever, except that the Administrative Agent, the Documentation Agent or
such other Person, as the case may be, may be liable for losses due to its
willful misconduct or gross negligence.
12.4 No Representations. Neither the Administrative Agent nor the
------------------
Documentation Agent shall be responsible for the execution (other than on its
own behalf) or validity or enforceability of this Agreement, the Revolving
Notes, any of the other Loan Documents or any instrument at any time
constituting, or intended to constitute, collateral security for the Revolving
Notes, or for the value of any such collateral security or for the validity,
enforceability, or collectability of any such amounts owing with respect to the
Revolving Notes, or for any recitals or statements, warranties, or
representations made herein or in any of the other Loan Documents or in any
certificate or instrument hereafter furnished to it by or on behalf of the
Borrower, or be bound to ascertain or inquire as to the performance or
observance of any of the terms, conditions, covenants, or agreements herein or
in any instrument at any time constituting, or intended to constitute,
collateral security for the Revolving Notes or to inspect any of the properties,
books, or records of the Borrower or any of its Subsidiaries.
-134-
<PAGE>
Neither the Administrative Agent nor the Documentation Agent shall be bound to
ascertain whether any notice, consent, waiver, or request delivered to it by the
Borrower or any holder of any of the Revolving Notes shall have been duly
authorized or is true, accurate, and complete. Neither the Administrative Agent
nor the Documentation Agent has made nor does it now make any representations or
warranties, express or implied, nor does it assume any liability to the Banks,
with respect to the credit worthiness or financial conditions of the Borrower or
any of its Subsidiaries. Each Bank acknowledges that it has, independently and
without reliance upon the Administrative Agent, the Documentation Agent or any
other Bank, and based upon such information and documents as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement.
12.5 Payments.
--------
(a) Payments to Administrative Agent. A payment by the Borrower
--------------------------------
to the Administrative Agent hereunder or under any of the other Loan Documents
for the account of any Bank shall constitute a payment to such Bank. The
Administrative Agent shall promptly distribute to each Bank such Bank's pro rata
--------
share of payments received by the Administrative Agent for the account of the
Banks except as otherwise expressly provided herein or in any of the other Loan
Documents.
(b) Distribution by Administrative Agent. If in the reasonable
------------------------------------
opinion of the Administrative Agent the distribution of any amount received by
it in such capacity hereunder, under the Revolving Notes, or under any of the
other Loan Documents might involve it in liability, it may refrain from making
distribution until its right to make the same shall have been adjudicated by a
court of competent jurisdiction. If any Government Authority shall adjudge that
any amount received and distributed by the Administrative Agent is to be repaid,
each Person to whom any such distribution shall have been made shall either
repay to the Administrative Agent its proportionate share of the amount so
adjudged to be repaid or shall pay over the same in such manner and to such
Persons as shall be determined by such Government Authority.
12.6 Holders of Revolving Notes. Subject to Section 16, the
--------------------------
Administrative Agent may deem and treat the payee of any Revolving Note as the
absolute owner thereof for all purposes hereof until it shall have been
furnished in writing with a different name by such payee or by a subsequent
holder, assignee, or transferee.
12.7 Indemnity. The Banks ratably shall indemnify and hold harmless
---------
the Administrative Agent and the Documentation Agent from and against any and
all Proceedings (whether groundless or otherwise), losses, damages, costs,
expenses (including any expenses for which the Administrative Agent has not been
reimbursed by the Borrower as required by Section 13), and liabilities of every
nature and character arising out of or related to this Agreement, the Revolving
Notes, any of the other Loan Documents, or the transactions contemplated or
evidenced hereby or thereby, or the Administrative Agent's or Documentation
Agent's actions taken hereunder or thereunder, except to the extent that any of
the same shall be directly caused by the Administrative Agent's or Documentation
Agent's willful misconduct or gross negligence.
12.8 Administrative Agent and Documentation Agent as Bank. In its
----------------------------------------------------
individual capacity, each of NationsBank, N.A. or Deutsche Bank AG, New York
Branch shall have the same obligations and the same rights, powers, and
privileges in respect to its Commitment and the Loans
-135-
<PAGE>
made by it, and as the holder of any of the Revolving Notes, as it would have
were it not also the Administrative Agent or Documentation Agent, as the case
may be.
12.9 Resignation. The Administrative Agent or Documentation Agent may
-----------
resign at any time by giving sixty (60) days' prior written notice thereof to
the Banks and the Borrower. Any Administrative Agent or Documentation Agent
resigning from this Agreement shall also resign from the Long-Term Credit
Agreement. Upon any such resignation, the Majority Banks shall have the right
to appoint a successor Administrative Agent or Documentation Agent. Unless an
Event of Default shall have occurred and be continuing, such successor
Administrative Agent or Documentation Agent shall be reasonably acceptable to
the Borrower. If no successor Administrative Agent or Documentation Agent shall
have been so appointed by the Majority Banks and shall have accepted such
appointment within thirty (30) days after the retiring Administrative Agent's or
Documentation Agent's giving of notice of resignation, then the retiring
Administrative Agent or Documentation Agent may, on behalf of the Banks, appoint
a successor Administrative Agent or Documentation Agent, which shall be a
financial institution having a rating of not less than A or its equivalent by
Standard & Poor's Corporation. Upon the acceptance of any appointment as
Administrative Agent or Documentation Agent hereunder by a successor
Administrative Agent or Documentation Agent, such successor Administrative Agent
or Documentation Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges, and duties of the retiring Administrative Agent or
Documentation Agent, and the retiring Administrative Agent or Documentation
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Administrative Agent's or Documentation Agent's resignation, the
provisions of this Agreement and the other Loan Documents shall continue in
effect for its benefit in respect of any actions taken or omitted to be taken by
it while it was acting as Administrative Agent or Documentation Agent.
12.10 Notification of Defaults and Events of Default. Upon learning of
----------------------------------------------
the existence of a Default or an Event of Default, a Bank shall promptly notify
the Administrative Agent thereof. Upon receipt of any notice under this Section
12.10, the Administrative Agent shall promptly notify the other Banks of the
existence of such Default or Event of Default.
12.11 Duties in the Case of Enforcement. In case one of more Events of
---------------------------------
Default shall have occurred, and whether or not acceleration of the Obligations
shall have occurred, the Administrative Agent shall, if (a) so requested by the
Majority Banks and (b) the Banks have provided to the Administrative Agent such
additional indemnities and assurances against expenses and liabilities as the
Administrative Agent may reasonably request, proceed to enforce the provisions
of the Loan Documents and exercise all or any such other legal, equitable, and
other rights or remedies as it may have under the Loan Documents. The Majority
Banks may direct the Administrative Agent in writing as to the method and the
extent of any such action, the Banks hereby agreeing to indemnify and hold the
Administrative Agent harmless from all liabilities incurred in respect of all
actions taken or omitted in accordance with such directions, provided that the
Administrative Agent need not comply with any such direction to the extent that
the Administrative Agent reasonably believes the Administrative Agent's
compliance with such direction to be unlawful or commercially unreasonable in
any applicable jurisdiction.
-136-
<PAGE>
13. EXPENSES.
--------
The Borrower shall upon demand either, as the Banks or the Administrative
Agent may require and regardless of whether any Loans are made hereunder, pay in
the first instance or reimburse the Banks and the Administrative Agent (to the
extent that payments for the following items are not made under the other
provisions hereof) for (a) the reasonable out-of-pocket costs of producing and
reproducing this Agreement, the other Loan Documents, and the other agreements
and instruments mentioned herein, (b) reasonable out-of-pocket expenses incurred
in connection with the syndication of this facility, (c) any taxes (including
any interest and penalties in respect thereto) payable by the Administrative
Agent or any of the Banks (other than taxes based upon the Administrative
Agent's or any Bank's income or profits) on or with respect to the transactions
contemplated by this Agreement, (d) the reasonable fees, expenses, and
disbursements of the Administrative Agent's counsel incurred in connection with
the preparation, administration, or interpretation of the Loan Documents, the
other instruments mentioned herein, and the term sheet for the transactions
contemplated by this Agreement, each closing hereunder, and amendments,
modifications, approvals, consents or waivers hereto or hereunder, (e) the fees,
expenses, and disbursements of the Administrative Agent incurred by the
Administrative Agent in connection with the preparation, administration, or
interpretation of the Loan Documents and other instruments mentioned herein, (f)
all reasonable out-of-pocket expenses (including reasonable attorneys' fees and
costs, which attorneys may be employees of any Bank or the Administrative Agent,
and reasonable consulting, accounting, appraisal, investment banking, and
similar professional fees and charges) incurred by any Bank or the
Administrative Agent in connection with (i) the enforcement of or preservation
of rights under any of the Loan Documents against the Borrower or any of its
Subsidiaries or the administration thereof after the occurrence of a Default or
Event of Default and (ii) any Proceeding or dispute whether arising hereunder or
otherwise, in any way related to any Bank's or the Administrative Agent's
relationship with the Borrower or any of its Subsidiaries. The covenants of
this Section 13 shall survive payment or satisfaction of all other Obligations.
14. INDEMNIFICATION.
---------------
The Borrower shall, regardless of whether any Loans are made hereunder,
indemnify and hold harmless the Administrative Agent and the Banks, together
with their respective shareholders, directors, Administrative Agents, officers,
Subsidiaries, and Affiliates, from and against any and all damages, losses,
settlement payments, obligations, liabilities, claims, causes of action, and
Proceedings, and reasonable costs and expenses in connection therewith,
incurred, suffered, sustained, or required to be paid by an indemnified party by
reason of or resulting, directly or indirectly, from the transactions
contemplated by the Loan Documents, including (a) any actual or proposed use by
the Borrower or any of its Subsidiaries of the proceeds of any of the Loans, (b)
the Borrower or any of its Subsidiaries entering into or performing this
Agreement or any of the other Loan Documents, or (c) with respect to the
Borrower and its Subsidiaries and their respective properties and assets, the
violation of any Environmental Law, the presence, disposal, escape, seepage,
leakage, spillage, discharge, emission, release, or threatened release of any
Hazardous Substances or any Proceeding brought or threatened with respect to any
Hazardous Substances (including claims with respect to wrongful death, personal
injury, or damage to property), in each case including the reasonable fees and
disbursements of legal counsel and reasonable allocated costs of
-137-
<PAGE>
internal legal counsel incurred in connection with any such Proceeding,
provided, however, the Borrower shall not be obligated to indemnify any party
- -------- -------
for any damages, losses, settlement payments, obligations, liabilities, claims,
causes of action, Proceedings, costs, and expenses that were caused directly by
the gross negligence, breach of this Agreement or willful misconduct of the
indemnified party. In Proceedings, or the preparation therefor, the indemnified
parties shall be entitled to select their legal counsel and, in addition to the
foregoing indemnity, the Borrower shall, promptly upon demand, pay in the first
instance, or reimburse the indemnified parties for, the reasonable fees and
expenses of such legal counsel. If, and to the extent that the obligations of
the Borrower under this Section 14 are unenforceable for any reason, the
Borrower shall make the maximum contribution to the payment in satisfaction of
such obligations that is permissible under applicable law. The covenants
contained in this Section 14 shall survive payment or satisfaction in full of
all other Obligations.
15. SURVIVAL OF COVENANTS.
---------------------
All covenants, agreements, representations, and warranties made herein,
in the Revolving Notes, in any of the other Loan Documents, or in any documents
or other papers delivered by or on behalf of the Borrower or any of its
Subsidiaries pursuant hereto shall be deemed to have been relied upon by the
Banks and the Administrative Agent, notwithstanding any investigation heretofore
or hereafter made by any of them, and shall survive the making by the Banks of
the Loans, as herein contemplated, and shall continue in full force and effect
so long as any amount due under this Agreement or the Revolving Notes or any of
the other Loan Documents remains outstanding or any Bank has any obligation to
make any Loans, and for such further time as may be otherwise expressly
specified in this Agreement. All statements contained in any certificate or
other paper delivered to any Bank or the Administrative Agent at any time by or
on behalf of the Borrower or any of its Subsidiaries pursuant hereto or in
connection with the transactions contemplated hereby shall constitute
representations and warranties by the Borrower or such Subsidiary hereunder.
16. ASSIGNMENT AND PARTICIPATION.
----------------------------
16.1 Conditions to Assignment by Banks. Except as provided herein,
---------------------------------
each Bank may assign to one or more Eligible Assignees all or a portion of its
interests, rights, and obligations under this Agreement and under the Long-Term
Credit Agreement (including all or a portion of its Commitment Percentage and
Commitment and the same portion of the Loans at the time owing to it) and the
Revolving Notes held by it; provided that (a) each of the Administrative Agent
--------
and, so long as no Event of Default has occurred, the Borrower shall have given
its prior written consent to such assignment, which consent will not be
unreasonably withheld, (b) each such assignment shall be of a constant, and not
a varying, percentage of all the assigning Bank's rights and obligations under
this Agreement and under the Long-Term Credit Agreement, (c) each assignment of
less than all of the assigning Bank's rights and obligations under this
Agreement, shall be in an amount equal to $15,000,000 and in integral multiples
of $1,000,000 in excess thereof, and (d) the parties to such assignment shall
execute and deliver to the Administrative Agent, for recording in the Register
(as hereinafter defined), an Assignment and Acceptance, substantially in the
form of Exhibit G hereto (an "Assignment and Acceptance"), together
--------- -------------------------
with any Revolving Notes subject to such assignment. Upon such execution,
delivery, acceptance, and recording, from and after the effective date specified
in
-138-
<PAGE>
each Assignment and Acceptance, which effective date shall be at least five
(5) Business Days after the execution thereof, (i) the assignee thereunder shall
be a party hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Bank hereunder, and (ii) the assigning Bank
shall, to the extent provided in such assignment and upon payment to the
Administrative Agent of the registration fee referred to in Section 16.3, be
released from its obligations under this Agreement.
16.2 Certain Representations and Warranties; Limitations; Covenants.
--------------------------------------------------------------
By executing and delivering an Assignment and Acceptance, the parties to the
assignment thereunder confirm to and agree with each other and the other parties
hereto as follows: (a) other than the representation and warranty that it is the
legal and beneficial owner of the interest being assigned thereby free and clear
of any adverse claim, the assigning Bank makes no representation or warranty,
express or implied, and assumes no responsibility with respect to any
statements, warranties, or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency, or value of this Agreement, the other Loan Documents or any other
instrument or document furnished pursuant hereto; (b) the assigning Bank makes
no representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower and its Subsidiaries or any other Person
primarily or secondarily liable in respect of any of the Obligations, or the
performance or observance by the Borrower and its Subsidiaries or any other
Person primarily or secondarily liable in respect of any of the Obligations of
any of their obligations under this Agreement or any of the other Loan Documents
or any other instrument or document furnished pursuant hereto or thereto; (c)
such assignee confirms that it has received a copy of this Agreement, together
with copies of the most recent financial statements referred to in Section 5.4
and Section 6.4 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (d) such assignee will, independently and without
reliance upon the assigning Bank, the Administrative Agent, or any other Bank
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement; (e) such assignee represents and warrants that it is an
Eligible Assignee; (f) such assignee appoints and authorizes the Administrative
Agent to take such action as Administrative Agent on its behalf and to exercise
such powers under this Agreement and the other Loan Documents as are delegated
to the Administrative Agent by the terms hereof or thereof, together with such
powers as are reasonably incidental thereto; (g) such assignee agrees that it
will perform in accordance with their terms all of the obligations that by the
terms of this Agreement are required to be performed by it as a Bank; and (h)
such assignee represents and warrants that it is legally authorized to enter
into such Assignment and Acceptance.
16.3 Register. The Administrative Agent shall maintain a copy of each
--------
Assignment and Acceptance delivered to it and a register or similar list (the
"Register") for the recordation of the names and addresses of the Banks and the
--------
Commitment Percentage of, and principal amount of the Loans owing to, the Banks
from time to time. The entries in the Register shall be conclusive, in the
absence of manifest error, and the Borrower, the Administrative Agent, and the
Banks may treat each Person whose name is recorded in the Register as a Bank
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by the Borrower and the Banks at any reasonable time and from
time to time upon reasonable prior notice. Upon each such recordation, the
assigning Bank agrees to pay to the Administrative Agent a registration fee in
the sum of $3,500.
-139-
<PAGE>
16.4 New Revolving Notes. Upon its receipt of an Assignment and
-------------------
Acceptance executed by the parties to such assignment, together with each
Revolving Note subject to such assignment, the Administrative Agent shall (a)
record the information contained therein in the Register, and (b) give prompt
notice thereof to the Borrower and the Banks (other than the assigning Bank).
Within five (5) Business Days after receipt of such notice, the Borrower, at its
own expense, shall execute and deliver to the Administrative Agent, in exchange
for each surrendered Revolving Note, a new Revolving Note to the order of such
Eligible Assignee in an amount equal to the amount assumed by such Eligible
Assignee pursuant to such Assignment and Acceptance and, if the assigning Bank
has retained some portion of its obligations hereunder, a new Revolving Note to
the order of the assigning Bank in an amount equal to the amount retained by it
hereunder. Such new Revolving Notes shall provide that they are replacements
for the surrendered Revolving Notes, shall be in an aggregate principal amount
equal to the aggregate principal amount of the surrendered Revolving Notes,
shall be dated the effective date of such Assignment and Acceptance and shall
otherwise be in substantially the form of the assigned Revolving Notes. The
surrendered Revolving Notes shall be cancelled and returned to the Borrower.
16.5 Participations. Each Bank may sell participations to one or more
--------------
banks or other entities in all or a portion of such Bank's rights and
obligations under this Agreement and the other Loan Documents; provided that (a)
--------
any such sale or participation shall not affect the rights and duties of the
selling Bank hereunder to the Borrower, (b) the only rights granted to the
participant pursuant to such participation arrangements with respect to waivers,
amendments, or modifications of the Loan Documents shall be the rights to
approve waivers, amendments or modifications that would forgive or reduce the
principal of or the interest rate on any Loans, extend the term or increase the
amount of the Commitment of such Bank as it relates to such participant, reduce
the amount of any fees to which such participant is entitled, or extend any
regularly scheduled payment date for principal or interest and (c) such
participation shall be in a minimum amount of $1,000,000. Each Bank shall,
promptly upon request of the Borrower in each instance, disclose to the Borrower
the parties to which such Bank has granted participations under this section.
16.6 Disclosure. Any Bank may disclose information obtained by such
----------
Bank pursuant to this Agreement to assignees or participants and potential
assignees or participants hereunder in accordance with Section 25 hereof.
16.7 Assignee or Participant Affiliated with the Borrower. If any
----------------------------------------------------
assignee Bank is an Affiliate of the Borrower, then any such assignee Bank shall
have no right to vote as a Bank hereunder or under any of the other Loan
Documents for purposes of granting consents or waivers or for purposes of
agreeing to amendments or other modifications to any of the Loan Documents or
for purposes of making requests to the Administrative Agent pursuant to Section
10, and the determination of the Majority Banks shall for all purposes of this
Agreement and the other Loan Documents be made without regard to such assignee
Bank's interest in any of the Loans. If any Bank sells a participating interest
in any of the Loans to a participant, and such participant is the Borrower or an
Affiliate of the Borrower, then such transferor Bank shall promptly notify the
Administrative Agent of the sale of such participation. A transferor Bank shall
have no right to vote as a Bank hereunder or under any of the other Loan
Documents for purposes of granting consents or waivers or for purposes of
agreeing to amendments or modifications to any of the Loan Documents or for
purposes of making requests to the Administrative Agent pursuant to Section 10
to the extent that such participation is beneficially owned by the Borrower or
any Affiliate of the Borrower, and the
-140-
<PAGE>
determination of the Majority Banks shall for all purposes of this Agreement and
the other Loan Documents be made without regard to the interest of such
transferor Bank in the Loans to the extent of such participation.
16.8 Miscellaneous Assignment Provisions. Any assigning Bank shall
-----------------------------------
retain its rights to be indemnified pursuant to Sections 4.6, 4.7, 4.8, 4.9, 13,
and 14 with respect to any claims or actions arising prior to the date of the
assignment. If any assignee Bank is not incorporated under the laws of the
United States of America or any state thereof, it shall, prior to the date on
which any interest or fees are payable hereunder or under any of the other Loan
Documents for its account, deliver to the Borrower and the Administrative Agent
certification as to its exemption from deduction or withholding of any United
States federal income taxes. Anything contained in this Section 16 to the
contrary notwithstanding, any Bank may at any time pledge all or any portion of
its interest and rights under this Agreement (including all or any portion of
its Revolving Notes) to any of the twelve Federal Reserve Banks organized under
(S)4 of the Federal Reserve Act, 12 U.S.C. (S)341. No such pledge or the
enforcement thereof shall release the pledgor Bank from its obligations
hereunder or under any of the other Loan Documents.
16.9 Assignment by Borrower. The Borrower shall not assign or transfer
----------------------
any of its rights or obligations under any of the Loan Documents without the
prior written consent of each of the Banks.
17. NOTICES.
-------
Except as otherwise expressly provided in this Agreement, all notices and
other communications made or required to be given pursuant to this Agreement or
the Revolving Notes shall be in writing and shall be delivered in hand, mailed
by United States registered or certified first class mail, postage prepaid, sent
by overnight courier, or sent by telegraph, telecopy, telefax or telex and
confirmed by delivery via courier or postal service, addressed as follows:
(a) if to the Borrower, at 800 Newport Center Drive, Suite 100, Newport
Beach, California (Fax Number (949) 759-9451), Attention: Chief Financial
Officer, with a copy sent via the same means to its General Counsel at the same
address, or at such other address for notice as any of such Persons shall last
have furnished in writing to the Person giving the notice;
(b) if to the Administrative Agent, at 901 Main Street, 66th Floor,
Dallas, Texas 75283-1000 (Fax Number (214) 508-0338), with a copy sent by the
same means to Chris Molen, Esq. at Paul, Hastings, Janofsky & Walker, LLP, Suite
2400, 600 Peachtree Street, Atlanta, Georgia 30308 (Fax Number (404) 815-2424),
or such other address for notice as such Person shall last have furnished in
writing to the Person giving the notice; and
(c) if to any Bank, at such Bank's address set forth on Schedules
---------
Schedule 1 hereto, or such other address for notice as such Bank shall have last
- ----------
furnished in writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or made
and to have become effective (i) if delivered by hand, overnight courier or
facsimile to a responsible officer of the
-141-
<PAGE>
party to which it is directed, at the time of the receipt thereof by such
officer or the sending of such facsimile, or when delivery is duly attempted and
refused, and (ii) if sent by registered or certified first-class mail, postage
prepaid, on the third Business Day following the mailing thereof.
18. GOVERNING LAW.
-------------
PURSUANT TO, AMONG OTHER THINGS, SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK, THIS AGREEMENT AND, EXCEPT AS
OTHERWISE SPECIFICALLY PROVIDED THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE
CONTRACTS UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL FOR ALL PURPOSES BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
(WITHOUT REFERENCE TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF). EACH
OF THE ADMINISTRATIVE AGENT, THE BANKS, AND THE BORROWER AGREES THAT ANY SUIT
FOR THE ENFORCEMENT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING
THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE
SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE
ADDRESS SPECIFIED IN SECTION 17. EACH OF THE ADMINISTRATIVE AGENT, THE BANKS,
AND THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE
TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN
AN INCONVENIENT COURT.
19. HEADINGS.
--------
The captions in this Agreement are for convenience of reference only and
shall not define or limit the provisions hereof.
20. COUNTERPARTS.
------------
This Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which when so
executed and delivered shall be an original, and all of which together shall
constitute one instrument. In proving this Agreement it shall not be necessary
to produce or account for more than one such counterpart signed by the party
against whom enforcement is sought.
21. ENTIRE AGREEMENT.
----------------
The Loan Documents and any other documents executed in connection
herewith or therewith express the entire understanding of the parties with
respect to the transactions contemplated hereby. Neither this Agreement nor any
term hereof may be changed, waived, discharged or terminated, except as provided
in Section 23.
-142-
<PAGE>
22. WAIVER OF JURY TRIAL.
--------------------
EACH OF THE ADMINISTRATIVE AGENT, THE BANKS, AND THE BORROWER HEREBY
WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY PROCEEDING ARISING OUT OF
ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE REVOLVING NOTES, OR ANY OF
THE OTHER LOAN DOCUMENTS, AND RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR
THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. EXCEPT AS PROHIBITED BY LAW,
EACH OF THE ADMINISTRATIVE AGENT, THE BANKS, AND THE BORROWER HEREBY WAIVES ANY
RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY PROCEEDING REFERRED TO IN THE
PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY, PUNITIVE, OR CONSEQUENTIAL DAMAGES OR
ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. THE BORROWER (A)
CERTIFIES THAT NO REPRESENTATIVE, ADMINISTRATIVE AGENT, OR ATTORNEY OF ANY BANK
OR THE ADMINISTRATIVE AGENT HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
BANK OR THE ADMINISTRATIVE AGENT WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVERS AND (B) ACKNOWLEDGES THAT EACH OF THE
ADMINISTRATIVE AGENT AND THE BANKS HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS TO WHICH IT IS A PARTY BY, AMONG OTHER THINGS, THE
WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.
23. CONSENTS, AMENDMENTS, WAIVERS.
-----------------------------
Except as otherwise expressly provided in this Agreement, any term of
this Agreement, the other Loan Documents, or any other instrument related hereto
or mentioned herein may be amended with, but only with, the written consent of
the Borrower and the Majority Banks. Any consent or approval required or
permitted by this Agreement to be given by the Banks may be given, any
acceleration of Amounts owing under the Loan Documents may be rescinded, and the
performance or observance by the Borrower of any terms of this Agreement, the
other Loan Documents, or any other instrument related hereto or mentioned herein
or the continuance of any Default or Event of Default may be waived (either
generally or in a particular instance and either retroactively or prospectively)
with, but only with, the written consent of the Majority Banks. Notwithstanding
the foregoing, the rate of interest on the Revolving Notes (other than interest
accruing pursuant to Section 4.10 following the effective date of any waiver by
the Majority Banks of the Default or Event of Default relating thereto), the
term of the Revolving Notes, the amount of the Commitments of the Banks, the
timing of payments of principal, interest or fees due hereunder and the amount
of facility fees hereunder may not be changed without the written consent of the
Borrower and the written consent of Banks holding Commitments representing one
hundred percent (100%) of the Total Commitment; neither this Section 23 nor the
definition of Majority Banks may be amended without the written consent of all
of the Banks; and Section 12 may not be amended without the written consent of
the Administrative Agent. No waiver shall extend to or affect any obligation
not expressly waived or impair any right consequent thereon. No course of
dealing or delay or omission on the part of any Bank in exercising any right
shall operate as a waiver thereof or otherwise be prejudicial thereto. No
notice to or demand upon the Borrower shall entitle the Borrower to other or
further notice or demand in similar or other circumstances.
-143-
<PAGE>
24. SEVERABILITY.
------------
The provisions of this Agreement are severable and if any one clause or
provision hereof shall be held invalid or unenforceable in whole or in part in
any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction, and shall not
in any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision of this Agreement in any jurisdiction.
25. CONFIDENTIALITY.
---------------
Unless specifically authorized otherwise by the Borrower, the
Administrative Agent, the Documentation Agent and the Banks shall hold all non-
public information obtained pursuant to the requirements of this Agreement in
accordance with the Administrative Agent's, the Documentation Agent's or such
Banks' customary procedures for handling confidential information of this nature
and in accordance with safe and sound banking practices and shall use such non-
public information only for purposes of the transactions contemplated by this
Agreement. Any party hereto or any party that has agreed to be bound by the
terms of this Section 25 may make disclosure (a) to its Affiliates or (b)
reasonably required by a bona fide offeree, transferee or participant in
accordance with the contemplated transfer or participation or as required or
requested by any governmental authority or representative thereof or pursuant to
legal process; provided that such Affiliate, offeree, transferee or participant
shall have agreed in writing to be bound by the provisions of this Section 25.
In no event shall the Administrative Agent, the Documentation Agent or any Bank
be obligated to return any materials furnished to it by the Borrower in
connection with this Agreement.
[remainder of page intentionally left blank]
-144-
<PAGE>
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as
a sealed instrument as of the date first set forth above.
BORROWER: PIMCO ADVISORS L.P.
By: PIMCO PARTNERS, G.P., its General Partner
By: PIMCO PARTNERS LLC, a California limited
liability company, a general partner
By: /s/ William S. Thompson
--------------------------------------
Name: William S. Thompson
-------------------------------------
Title: Chief Executive Officer
------------------------------------
By: PIMCO HOLDING LLC, a Delaware limited
liability company a general partner
By: /s/ Khanh T. Tran
---------------------------------------
Name: Khanh T. Tran
-------------------------------------
Title: Chief Financial Officer
------------------------------------
[Signature Pages Continued]
-145-
<PAGE>
NATIONSBANK, N.A.,
as Administrative Agent and Swing
Loan Lender
By: /s/ Joan D'Amico
--------------------------------------
Name: Joan D'Amico
-------------------------------------
Title: Vice President
------------------------------------
[Signature Pages Continued]
-146-
<PAGE>
DEUTSCHE BANK AG, NEW YORK BRANCH, as
Documentation Agent
By: /s/ Peter J. Bassler
---------------------------------------
Name: Peter J. Bassler
-------------------------------------
Title: Vice President
------------------------------------
By: /s/ Jonathan B. P. Mendes
---------------------------------------
Name: Jonathan B. P. Mendes
-------------------------------------
Title: Vice President
------------------------------------
[Signature Pages Continued]
-147-
<PAGE>
UNION BANK OF CALIFORNIA, N.A., as Co-
Agent
By: /s/ David C. Hants
---------------------------------------
Name: David C. Hants
-------------------------------------
Title: Vice President
-----------------------------------
[Signature Pages Continued]
-148-
<PAGE>
CITIBANK, N.A., as Co-Agent
By: /s/ Alexander Duka
---------------------------------------
Name: Alexander Duka
-------------------------------------
Title: Attorney-In-Fact
------------------------------------
[Signature Pages Continued]
-149-
<PAGE>
NATIONSBANK, N.A., as a Bank
By: /a/ Joan D'Amico
---------------------------------------
Name: Joan D'Amico
-------------------------------------
Title: Vice President
------------------------------------
[Signature Pages Continued]
-150-
<PAGE>
DEUTSCHE BANK AG, NEW YORK AND/OR
CAYMAN ISLANDS BRANCHES, as a Bank
By: /s/ Peter J. Bassler
---------------------------------------
Name: Peter J. Bassler
-------------------------------------
Title: Vice President
------------------------------------
By: /s/ Jonathan B. P. Mendes
---------------------------------------
Name: Jonathan B. P. Mendes
-------------------------------------
Title: Vice President
------------------------------------
[Signature Pages Continued]
-151-
<PAGE>
UNION BANK OF CALIFORNIA, N.A., as a Bank
By: /s/ David C. Hants
---------------------------------------
Name: David C. Hants
-------------------------------------
Title: Vice President
------------------------------------
[Signature Pages Continued]
-152-
<PAGE>
CITIBANK, N.A., as a Bank
By: /s/ Alexander Duka
---------------------------------------
Name: Alexander Duka
-------------------------------------
Title: Attorney-In-Fact
------------------------------------
[Signature Pages Continued]
-153-
<PAGE>
CREDIT LYONNAIS SAN FRANCISCO BRANCH, as a
Bank
By: /s/ Edward W. Leong
---------------------------------------
Name: Edward W. Leong
-------------------------------------
Title: Vice President & Manager
------------------------------------
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
[Signature Pages Continued]
-154-
<PAGE>
THE BANK OF NEW YORK, as a Bank
By: /s/ Lee B. Stephens, III
---------------------------------------
Name: Lee B. Stephens, III
-------------------------------------
Title: Vice President
------------------------------------
[Signature Pages Continued]
-155-
<PAGE>
STATE STREET BANK AND TRUST COMPANY, as a
Bank
By: /s/ Steven R. Wolff
---------------------------------------
Name: Steven R. Wolff
-------------------------------------
Title: Vice President
------------------------------------
[Signature Pages Continued]
-156-
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO, as a
Bank
By: /s/ Nicole Holzapfel
---------------------------------------
Name: Nicole Holzapfel
-------------------------------------
Title: Vice President
------------------------------------
[Signature Pages Continued]
-157-
<PAGE>
MELLON BANK, N.A., as a Bank
By: /s/ Susan M. Whitewood
---------------------------------------
Name: Susan M. Whitewood
-------------------------------------
Title: Vice President
------------------------------------
[Signature Pages Continued]
-158-
<PAGE>
FLEET NATIONAL BANK, as a Bank
By: /s/ Anson T. Harris
---------------------------------------
Name: Anson T. Harris
-------------------------------------
Title: Vice President
------------------------------------
[Signature Pages Continued]
-159-
<PAGE>
SUNTRUST BANK, CENTRAL FLORIDA, N.A., as a
Bank
By: /s/ Janet P. Sammons
---------------------------------------
Name: Janet P. Sammons
-------------------------------------
Title: Vice President
------------------------------------
[Signature Pages Continued]
-160-
<PAGE>
CIBC INC., as a Bank
By: /s/ Gerald J. Girardi
---------------------------------------
Name: Gerald J. Girardi
-------------------------------------
Title: Executive Director
-----------------------------------
[Signature Pages Continued]
-161-
<PAGE>
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as a Bank
By: /s/ John G. Hayes
---------------------------------------
Name: John G. Hayes
-------------------------------------
Title: Vice President
------------------------------------
-162-
