EXECUTION
March 18, 1998
Osmonics, Inc.
5951 Clearwater Drive
Minnetonka, Minnesota 55343
Re: Amended and Restated Credit Facility
Ladies/Gentlemen:
U.S. Bank National Association (d/b/a First Bank National Association), a
national banking association ('First Bank'), or in its capacity as agent for the
Banks described below, the 'Agent'), and Osmonics, Inc., a Minnesota corporation
(the 'Borrower'), have heretofore entered into a letter Credit Agreement dated
February 13, 1998 (the 'Existing Credit Agreement'). The Borrower's obligations
to the Bank under the Existing Credit Agreement are further evidenced by a
revolving note of the Borrower in favor of First Bank dated February 13, 1998,
in the maximum principal amount of $20,000,000 (the 'Existing Revolving Note'),
and a term note of the Borrower in favor of First Bank dated February 13, 1998,
in the maximum principal amount of $35,000,000 (the 'Existing Term Note').
First Bank is pleased to advise Osmonics, Inc., a Minnesota corporation (the
'Borrower'), that First Bank, together with any other lenders that hereafter
become parties hereto (individually, a 'Bank' and, collectively, the 'Banks'),
is willing to make certain amendments to and to restate in its entirety the
Existing Credit Agreement in this Amended and Restated Credit Agreement (the
'Agreement'), and to cause the Existing Revolving Note to be amended and
restated in its entirety, to provide for a revolving credit facility in an
amended aggregate amount not to exceed $30,000,000, all as further described
herein. Capitalized terms used herein shall have the meanings set forth in
Section 7.
SECTION 1: ADVANCES, INTEREST AND FEES.
1.1 THE REVOLVING LOANS. Subject to the terms and conditions of this
Agreement, each Bank severally agrees to make Revolving Loans ratably in
proportion to such Bank's respective Revolving Commitment Amount as set forth on
Schedule 1.1 hereto as its Revolving Commitment Amount to the Borrower until the
earlier of March 31, 2003, or the date on which the Commitment is terminated as
provided herein (such earlier date being the 'Termination Date'). The Banks
shall not make any Revolving Loan if the aggregate outstanding principal amount
of the Revolving Loans plus the Letter of Credit Obligations would exceed the
Aggregate Revolving Commitment, as reduced as hereinafter provided. Each
borrowing of Revolving Loans shall be shared ratably among the Banks. The
Borrower may repay and reborrow.
1.2 PROCEDURE FOR REVOLVING LOANS. Any request by Borrower for Revolving
Loans hereunder shall be in writing or by telephone and must be given so as to
be received by the Agent not later than 11:00 a.m. (Minneapolis time) on the
requested Revolving Loan Date if the request is for a Reference Rate Advance, or
three Eurodollar Business Days prior to the Revolving Loan Date if the request
is for a Eurodollar Advance. Each request for Revolving Loans hereunder shall
specify (i) the requested Revolving Loan Date and (ii) the aggregate amount of
Revolving Loans to be made on such date which shall be in a minimum amount of
$250,000 or, if more, an integral multiple thereof. The Borrower hereby
authorizes the Agent to rely upon the telephone or written instructions of any
person identifying himself as an Authorized Officer and upon any signature which
the Agent believes to be genuine, and the Borrower shall be bound thereby in the
same manner as of such person were authorized or such signature were genuine.
The Agent shall notify each other Bank promptly thereafter (Minneapolis time) on
the date of receipt of the receipt of such request, the matters specified
therein. On the date of the requested Revolving Loans, each Bank shall provide
the amount of its Advance to the Agent in Immediately Available Funds not later
than 1:00 p.m., Minneapolis time. Unless the Agent determines that any
applicable condition specified in this Agreement has not been satisfied, the
Agent will make available to the Borrower in Immediately Available Funds not
later than 4:00 p.m. (Minneapolis time) on the requested Revolving Loan Date the
amount of the requested Revolving Loans. If the Agent has made a Revolving Loan
to the Borrower on behalf of a Bank but has not received the amount of such
Revolving Loan from such Bank by the time herein required, such Bank shall pay
interest to the Agent on the amount so advanced at the overnight Federal Funds
rate from the date of such Revolving Loan to the date funds are received by the
Agent from such Bank, such interest to be payable with such remittance from such
Bank of the principal amount of such Revolving Loan (provided, however, that the
Agent shall not make any Revolving Loan on behalf of a Bank if the Agent has
received prior notice from such Bank that it will not make such Revolving Loan).
If the Agent does not receive payment from such Bank by the next Business Day
after the date of any Revolving Loan, the Agent shall be entitled to recover
such Revolving Loan, with interest thereon at the rate then applicable to the
such Revolving Loan, on demand, from the Borrower, without prejudice to the
Agent's and the Borrower's rights against such Bank.
1.3 NOTES. The Revolving Loans of each Bank shall be evidenced by a
single Revolving Note in the form of EXHIBIT A hereto, payable to the order of
such Bank in a principal amount equal to such Bank's Revolving Commitment Amount
originally in effect. Each Bank shall enter in its records the amount of its
Revolving Loans, and the payments made thereon and such records shall be
rebutted by presumptive evidence of the subject matters thereof.
1.4 CONVERSIONS AND CONTINUATIONS. On the terms and subject to the
limitations hereof, the Borrower shall have the option at any time and from time
to time to convert all or any portion of the Revolving Loans into Reference Rate
Advances or Eurodollar Rate Advances, or to continue a Eurodollar Rate Advance
as such; provided, however that a Eurodollar Rate Advance may be converted or
continued only on the last day of the Interest Period applicable thereto, and no
Advance may be converted to or continued as a Eurodollar Rate Advance if a
Default or Event of Default has occurred and is continuing on the proposed date
of continuation or conversion. Advances may be converted to, or continued as,
Eurodollar Rate Advances only in integral multiples, as to the aggregate amount
of the Advances of all Banks so converted or continued, of $250,000, or, in
either case, if more, in integral multiples of $250,000 in excess thereof. The
Borrower shall give the Agent written notice of any continuation or conversion
of any Advances and such notice must be given so as to be received by the Agent
not later than 12:00 noon (Minneapolis time) two Eurodollar Business Days prior
to requested date of conversion or continuation in the case of the continuation
of, or conversion to, Eurodollar Rate Advances and on the date of the requested
continuation of, or conversion to, Reference Rate Advances. Each such notice
shall specify (a) the amount to be continued or converted, (b) the date for the
continuation or conversion, and (c) in the case of conversions to or
continuations as Eurodollar Rate Advances, the Interest Period applicable
thereto. Any notice given by the Borrower under this Section shall be
irrevocable. If the Borrower shall fail to notify the Agent of the continuation
of any Eurodollar Rate Advances within the time required by this Section, such
Advances shall, on the last day of the Interest Period applicable thereto,
automatically be converted into Reference Rate Advances of the same principal
amount. All conversions and continuation of Advances must be made uniformly and
ratably among the Banks. The number of Interest Periods for Eurodollar Rate
Advances in effect at any one time shall not exceed ten.
1.5 INTEREST RATES, INTEREST PAYMENTS AND DEFAULT INTEREST. Interest
shall accrue and be payable on the Loans as follows:
(i) Subject to paragraph (iii) below, each Eurodollar Rate Advance
shall bear interest on the unpaid principal amount thereof during the
Interest Period applicable thereto at a rate per annum equal to the sum of
(A) the Eurodollar Rate for such Interest Period, plus (B) the Applicable
Margin.
(ii) Subject to paragraph (iii) below, each Reference Rate Advance
shall bear interest on the unpaid principal amount thereof at a varying
rate per annum equal to the sum of (A) the Reference Rate, plus (B) the
Applicable Margin.
(iii) Any Advance which is not paid when due shall, at the option of
the Majority Banks, bear interest until paid in full at the 'Default Rate,'
which shall be (A) during the balance of any Interest Period applicable to
an outstanding Eurodollar Rate Advance, a rate per annum equal to the sum
of the rate applicable to such Advance during such Interest Period plus 2%,
and (B) otherwise, a rate per annum equal to the sum of (1) the Reference
Rate, plus (2) the Applicable Margin for Reference Rate Advances, plus (3)
2%.
(iv) Interest shall be payable (A) with respect to each Eurodollar
Rate Advance, on the last day of the Interest Period applicable thereto;
(B) with respect to any Reference Rate Advance, on the last day of each
month; (C) with respect to all Advances, upon any permitted prepayment (on
the amount prepaid); and (D) with respect to all Advances, on the
Termination Date; provided that interest under Section 1.6 (iii) shall be
payable on demand.
(v) Revolving Commitment Fees, Letter of Credit Fees and interest on
Loans shall be computed on the basis of actual days elapsed and a year of
360 days.
1.6 COMMITMENT FEES. The Borrower shall pay to the Agent, for the account
of each Bank, fees (the 'Revolving Commitment Fees') in an amount determined by
applying the Applicable Fee Rate to the average daily Unused Revolving
Commitment of such Bank for the period from the Closing Date to the Termination
Date. Such Revolving Commitment Fees are payable in arrears quarterly on the
last day of each quarter and on the Termination Date.
1.7 (a) OPTIONAL REDUCTION OR TERMINATION OF COMMITMENTS. The Borrower
may, by written notice to the Agent, ratably reduce or terminate the Revolving
Commitment Amounts, with any such reduction in a minimum amount of $1,000,000 or
an integral multiple thereof. Upon any reduction in the Revolving Commitment
Amounts pursuant to this Section, the Borrower shall pay to the Agent for the
account of the Banks the amount, if any, by which the aggregate unpaid principal
amount of outstanding Advances plus the Letter of Credit Obligations exceeds the
reduced Commitment. Amounts so paid cannot be reborrowed. If the Commitment
is terminated, the Borrower shall pay the full amount of all outstanding
Advances, all accrued and unpaid interest and fees and all other unpaid
obligations of the Borrower to the Bank hereunder. Notwithstanding the
foregoing, the Revolving Commitments may not be reduced to an amount below
outstanding Letter of Credit Obligations, or terminated if Letters of Credit are
outstanding.
(b) MANDATORY REDUCTION OF COMMITMENTS. If the closing of the Membrex
Acquisition does not take place on or before May 29, 1998, the Revolving
Commitment Amounts shall be ratably reduced by a total amount of $10,000,000.
Upon mandatory reduction of the Revolving Commitment Amounts pursuant to this
Section, the Borrower shall pay to the Agent for the account of the Banks the
amount, if any, by which the aggregate unpaid principal amount of outstanding
Revolving Loans plus the Letter of Credit Obligations exceeds the reduced
Commitments.
1.8 PRINCIPAL REPAYMENT. The principal of the Revolving Loans shall be
payable in full on the Termination Date. If any Letters of Credit are
outstanding on the Termination Date, the Borrower shall immediately deposit into
the Holding Account an amount equal to the maximum amount then available to be
drawn under such Letters of Credit.
1.9 PAYMENTS. Payments and pre-payments of principal, interest, fees and
expenses hereunder and under the Revolving Note shall be made without set-off or
counterclaim in immediately available funds not later than 2:00 p.m.,
Minneapolis time, on the dates called for under this Agreement at the main
office of the Agent in Minneapolis, Minnesota. Funds received on any day after
such time shall be deemed to have been received on the next business day. The
Agent will promptly distribute in like funds to each Bank its ratable share of
each payment of principal, interest, Revolving Commitment Fees and Letter of
Credit Fees. Whenever any payment would be due on a day which is not a business
day, such payment shall be made on the next succeeding business day and such
extension of time shall be included in the computation of any interest or fees.
1.10 OPTIONAL PREPAYMENTS. The Borrower may prepay the Revolving Loans,
in whole or in part, at any time, without premium or penalty. Each partial
prepayment of Revolving Loans shall be in an aggregate amount for all the Banks
of $1,000,000 or an integral multiple thereof. Amounts prepaid on the Revolving
Loans may be reborrowed subject to the terms conditions of this Agreement.
Amounts paid or prepaid on the Loans shall be for the account of each Bank in
proportion to its share of such Loans.
1.11 LETTERS OF CREDIT. Upon the terms and subject to the conditions of
this Agreement, the Agent agrees to issue Letters of Credit for the account of
the Borrower from time to time between the Closing Date and the Termination Date
in such amounts as the Borrower shall request up to an aggregate amount at any
time outstanding not exceeding $10,000,000; subject to the satisfaction of the
Agent with the form, substance and beneficiary of each such Letter of Credit,
and the absence of any statutory or regulatory change or directive affecting the
issuance by the Agent of letters of credit, and provided that no Letter of
Credit will be issued in any amount which, after giving effect to such issuance,
would cause Total Revolving Outstandings to exceed the Aggregate Revolving
Commitment. Letters of Credit shall be issued in support of obligations of the
Borrower incurred in the ordinary course of the Borrower's business. No Letter
of Credit may have a term longer than twenty-four months, and the aggregate
amount available to be drawn under all Letters of Credit with a remaining term
longer than twelve months shall not exceed $5,000,000.
1.12 PROCEDURES FOR LETTERS OF CREDIT. Each request for a Letter of Credit
shall be made by the Borrower in writing, by telex, facsimile transmission or
electronic conveyance received by the Agent by 2:00 p.m., Minneapolis time, on a
Business Day which is not less than two Business Days prior to the requested
date of issuance (which shall also be a Business Day). The Agent may require
that such request be made on such letter of credit application and reimbursement
agreement form as the Agent may from time to time specify, along with
satisfactory evidence of the authority and incumbency of the officials of the
Borrower making such request. The Agent shall promptly notify the other Banks
of the receipt of the request and the matters specified therein. On the date of
each issuance of a Letter of Credit the Agent shall send notice to the other
Banks of such issuance.
1.13 AGREEMENT TO REPAY LETTER OF CREDIT DRAWINGS. If the Agent has
determined to pay a drawing on any Letter of Credit, it will notify the Borrower
of that fact. The Borrower shall reimburse the Agent by 10:00 a.m. (Minneapolis
time) on the day on which such drawing is to be paid in Immediately Available
Funds in an amount equal to the amount of such drawing.
1.14 OBLIGATIONS ABSOLUTE. The obligations of the Borrower to repay the
Agent for any amount drawn on any Letter of Credit shall be absolute,
unconditional and irrevocable, shall continue for so long as any Letter of
Credit is outstanding notwithstanding any termination of this Agreement, and
shall be paid strictly in accordance with the terms of this Agreement, under all
circumstances whatsoever, including without limitation the following
circumstances:
(a) Any lack of validity or enforceability of any Letter of Credit;
(b) The existence of any claim, setoff, defense or other right which
the Borrower may have or claim at any time against any beneficiary, transferee
or holder of any Letter of Credit (or any Person for whom any such beneficiary,
transferee or holder may be acting), the Agent or any Bank or any other Person,
whether in connection with a Letter of Credit, this Agreement, the transactions
contemplated hereby, or any unrelated transaction; or
(c) Any statement or any other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect whatsoever.
Neither the Agent nor any Bank nor officers, directors or employees of any
thereof shall be liable or responsible for, and the obligations of the Borrower
to the Agent and the Banks shall not be impaired by:
(i) The use which may be made of any Letter of Credit or for any acts
or omissions of any beneficiary, transferee or holder thereof in connection
therewith;
(ii) The validity, sufficiency or genuineness of documents, or of any
endorsements thereon, even if such documents or endorsements should, in
fact, prove to be in any or all respects invalid, insufficient, fraudulent
or forged;
(iii) The acceptance by the Agent of documents that appear on their
face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary; or
(iv) Any other action of the Agent in making or failing to make
payment under any Letter of Credit if in good faith and in conformity with
U.S. or foreign laws, regulations or customs applicable thereto.
Notwithstanding the foregoing, the Borrower shall have a claim against the
Agent, and the Agent shall be liable to the Borrower, to the extent, but only to
the extent, of any direct, as opposed to consequential, damages suffered by the
Borrower which the Borrower proves were caused by the Agent's willful misconduct
or gross negligence in determining whether documents presented under any Letter
of Credit comply with the terms thereof.
1.15 LOANS TO COVER UNPAID DRAWINGS. Whenever any amount drawn under a
Letter of Credit is not repaid by the Borrower as required in Section 1.14, the
Agent shall give the other Banks notice to that effect, specifying the amount
thereof, in which event each Bank is authorized (and the Borrower does hereby so
authorize each Bank) to, and shall, make a Revolving Loan (as a Reference Rate
Advance) to the Borrower in an amount equal to such Bank's ratable share of
the amount of the unpaid drawing. The Agent shall notify each Bank by 12:00
noon (Minneapolis time) of the amount of the Revolving Loan to be made by such
Bank. Each Bank shall then make such Revolving Loan (regardless of
noncompliance with the applicable conditions precedent specified in this
Agreement hereof and regardless of whether an Event of Default then exists) and
each Bank shall provide the Agent with the proceeds of such Revolving Loan in
Immediately Available Funds, at the office of the Agent, not later than 2:00
p.m. (Minneapolis time) on the day on which such Bank received such notice. The
Agent shall apply the proceeds of such Revolving Loans directly to reimburse
itself for such unpaid drawing. If any portion of any such amount paid to the
Agent should be recovered by or on behalf of the Borrower from the Agent in
bankruptcy, by assignment for the benefit of creditors or otherwise, the loss of
the amount so recovered shall be ratably shared between and among the Banks in
the manner contemplated by Section 6.9 hereof. If for any reason any Bank is
unable to make a Revolving Loan to the Borrower to reimburse the Agent for an
unpaid drawing, then such Bank shall immediately purchase from the Agent a risk
participation in such unpaid drawing, at par, in an amount equal to such Bank's
ratable share of the unpaid drawing (before deducting the amount of any
Revolving Loans made by other Banks to reimburse the Agent for such Unpaid
Drawing). Each Bank shall pay to the Agent, not later than 2:00 P.M.
(Minneapolis time) on the date it receives such notice, such Bank's ratable
share of such unpaid drawing.
1.16 LETTER OF CREDIT FEES. For each Letter of Credit issued, the Borrower
shall pay to the Agent for the account of the Banks, in advance payable on the
date of issuance, a fee (a 'Letter of Credit Fee') in an amount determined by
applying a per annum rate equal to the Applicable Margin for Eurodollar Rate
Advances in effect on such date to the original face amount of a Letter of
Credit, for the period from the date of issuance to the scheduled expiration
date of such Letter of Credit; provided that for Performance Letters of Credit,
if the Applicable Margin for Eurodollar Rate Advances exceeds one percent (1%),
the rate for calculation of such fee shall be one percent (1%). In addition to
the Letter of Credit Fee, the Borrower shall pay to the Agent, for its own
account, on demand, all issuance, amendment, drawing and other fees regularly
charged by the Agent to its letter of credit customers and all out-of-pocket
expenses incurred by the Agent in connection with the issuance, amendment,
administration or payment of any Letter of Credit.
1.17 FUNDING LOSSES; EURODOLLAR RATE ADVANCES. The Borrower shall
indemnify the Banks against any loss or expense which the Banks may sustain:
(a) if for any reason, other than a default by such Bank, a funding of a
Eurodollar Rate Advance does not occur on the date specified therefor in the
Borrower's request or notice as to such advance, or (b) if any payment of any
Eurodollar Advance occurs on a date other than the last day of the Interest
Period thereof.
1.18 ILLEGALITY. If any Regulatory Change shall make it unlawful or
impossible for any Bank to make, maintain or fund any Eurodollar Rate Advances,
such Bank shall notify the Borrower and the Agent, whereupon all of the affected
Advances shall be automatically converted to Reference Rate Advances as of the
date of such Bank's notice, and upon such conversion the Borrower shall
indemnify such Bank in accordance with Section 1.18.
1.19 INTEREST RATE NOT ASCERTAINABLE, ETC. If, on or prior to the date for
determining the Adjusted Eurodollar Rate in respect of the Interest Period for
any Eurodollar Rate Advance, any Bank reasonably determines (which determination
shall be presumptively correct) that deposits in dollars (in the applicable
amount) are not being made available to such Bank in the relevant market for
such Interest Period, or the Adjusted Eurodollar Rate will not adequately and
fairly reflect the cost to such Bank of funding or maintaining Eurodollar Rate
Advances for such Interest Period, such Bank shall forthwith give notice to the
Borrower and the other Banks of such determination, whereupon the obligation of
such Bank to make or continue, or to convert any Advances to, Eurodollar Rate
Advance shall be suspended until such Bank notifies the Borrower and the Agent
that the circumstances giving rise to such suspension no longer exist. Each
Bank shall promptly notify the Borrower and the Agent when the circumstances
giving rise to any such suspension no longer exist. While any such suspension
continues, all further Advances by such Bank shall be made as Reference Rate
Advances.
1.20 INCREASED COST. If any Regulatory Change shall subject any Bank to
any tax, duty or other charge with respect to its Eurodollar Rate Advances, the
Letters of Credit, its Notes or its obligation to make Eurodollar Rate Advances
or to make Revolving Loans to repay, or purchase participations in, drawings
under Letters of Credit, or shall change the basis of taxation of payment to any
Bank of the principal of or interest on its Eurodollar Rate Advances or such
Revolving Loans or participations, or any other amounts due under this Agreement
in respect thereof (except for changes in the rate of tax on the overall net
income of such Bank or its Applicable Lending Office imposed by the jurisdiction
in which such Bank's principal office or Applicable Lending Office is located);
or shall impose, modify or deem applicable any reserve, special deposit, capital
requirement or similar requirement (including, without limitation, any such
requirement imposed by the Board, but excluding with respect to any Eurodollar
Rate Advance any such requirement to the extent included in calculating the
applicable Adjusted Eurodollar Rate) against assets of, deposits with or for the
account of, or credit extended by, any Bank or shall impose on any Bank or the
interbank Eurodollar market any other condition affecting its Eurodollar Rate
Advances, the Letters of Credit, its Notes, or its obligation to make
Eurodollar Rate Advances or to make Revolving Loans to repay, or purchase
participations in, drawings under Letters of Credit, and the result of any of
the foregoing is to increase the cost to such Bank, or to reduce the amount of
any sum received or receivable by such Bank under this Agreement or under its
Notes, then, within 10 days after demand by such Bank (with a copy to the
Agent), the Borrower shall pay to such Bank such additional amount or amounts as
will compensate such Bank for such increased cost or reduction. A certificate
of any Bank claiming compensation under this Section, setting forth the
additional amount or amounts to be paid to it hereunder and stating in
reasonable detail the basis for the charge and the method of computation, shall
be conclusive in the absence of error. In determining such amount, any Bank may
use any reasonable averaging and attribution methods. Failure on the part of
any Bank to demand compensation for any increased costs or reduction in amounts
received or receivable with respect to any Interest Period shall not constitute
a waiver of such Bank's rights to demand compensation for any increased costs or
reduction in amounts received or receivable in any subsequent Interest Period.
If a Regulatory Change with respect to which a Bank has demanded compensation
hereunder is subsequently terminated or repealed, or the costs imposed on a Bank
as a result of a change are subsequently reduced due to an amendment thereof,
such Bank shall only be entitled to compensation hereunder to the extent of the
increased costs incurred as a result of such Regulatory Change prior to the date
such Regulatory Change no longer imposes costs on such Bank, or to reduced
compensation from and after the date the amendment of such Regulatory Change
reduces the costs incurred by such Bank.
SECTION 2: CONDITIONS PRECEDENT
2.1 CONDITIONS OF INITIAL LOANS. The making of the initial Loans and the
issuance of the initial Letter of Credit hereunder shall be subject to the prior
simultaneous satisfaction of the following conditions precedent:
(a) The closing of the ReliaStar Indebtedness shall have occurred;
(b) The amount of the Term Loan under the Existing Credit Agreement
outstanding as of the date hereof shall have been repaid in full;
(c) The Agent shall have received the following in sufficient
counterparts (except for the Notes) for each Bank:
(i) Executed counterparts of this Agreement, duly executed by the
Borrower and the Banks;
(ii) A Revolving Note drawn to the order of each Bank executed by a
duly authorized officer (or officers) of the Borrower and dated the Closing
Date.
(iii) The Security Agreement duly executed by the Borrower and all the
ReliaStar purchasers party thereto, together with:
(A) Copies of Control Agreements with all securities
intermediaries through which the property pledged thereunder is being
held,
(B) Evidence that all other action necessary or, in the opinion
of the Agent, desirable to perfect and protect the Liens created under
the Security Agreement have been taken, and
(C) Completed requests for information or other evidence
satisfactory to the Agent that there are no Liens superior to the
Liens of the Agent in the property of the Borrowers other than as
permitted by Section 6.14.
(iv) The Intercreditor Agreement executed by all the ReliaStar
purchasers party to the Security Agreement and acknowledged by the
Borrower.
(v) A copy of the resolution of the Borrower authorizing the
execution, delivery and performance of this Agreement, the Note and other
documents provided for in this Agreement, certified by the Secretary or
Assistant Secretary of the Borrower, together with a certificate showing
the names and titles, and bearing the signatures of the officers of the
Borrower authorized to execute the Loan Documents and to request Loans and
Advances hereunder.
(vi) A certified copy of any amendment or restatement of the
Articles of Incorporation or the By-laws of the Borrower made or entered
into since the date such documents were delivered to the Agent, or a
certificate by the Secretary of the Borrower that no amendment or
restatement to the Articles of Incorporation or the By-laws have been made
since such date, and
(vii) A current Certificate of Good Standing for the Borrower issued
by the appropriate state office.
(d) The representations and warranties in the Existing Credit
Agreement shall be true and correct as though made on the date hereof, except
for the changes that are permitted by the terms of the Existing Credit
Agreement.
(e) The Agent shall have received for itself and for the account of
the Banks all fees and other amounts due and payable by the Borrower on or prior
to the Closing Date, including the reasonable fees and expenses of counsel to
the Agent payable pursuant to Section 8.2.
(f) The Borrower shall have requested its counsel to prepare a
written opinion addressed to the Banks and dated the Closing Date in
form and substance satisfactory to the Agent, and such opinion shall
have been delivered to the Agent.
2.2 CONDITIONS PRECEDENT TO ALL LOANS AND LETTERS OF CREDIT. The
obligation of the Banks to make any Loans hereunder and the obligation of the
Agent to issue Letters of Credit shall be subject to the fulfillment of the
following conditions and each request for a loan shall include a representation
that the following have been fulfilled:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in Section 3 shall be true and correct in all material
respects on and as of the date of each Loan or on the date each Letter of Credit
is to be issued, as though made on such date.
(b) NO DEFAULT. No Default or Event of Default shall have occurred
and be continuing on the date of each Loan, or on the date a Letter of Credit is
issued, or would result from such Loan or the issuance of such Letter of Credit.
SECTION 3: REPRESENTATIONS AND WARRANTIES.
To induce the Banks to enter into this Agreement and to make Loans
hereunder, and to induce the Agent to issue Letters of Credit, the Borrower
represents and warrants to the Banks:
3.1 ORGANIZATION, STANDING, ETC. The Borrower and each of its corporate
Subsidiaries are corporations duly incorporated and validly existing and in good
standing under the laws of the jurisdiction of their respective incorporation
and have all requisite corporate power and authority to carry on their
respective businesses as now conducted, to (in the instance of the Borrower)
enter into this Agreement and to issue the Notes and to perform its obligations
under the Loan Documents. The Borrower and each of its Subsidiaries are duly
qualified and in good standing as a foreign corporation in each jurisdiction in
which the character of the properties owned, leased or operated by it or the
business conducted by it makes such qualification necessary.
3.2 AUTHORIZATION AND VALIDITY. The execution, delivery and performance
by the Borrower of the Loan Documents have been duly authorized by all necessary
corporate action by the Borrower, and the Loan Documents constitute the legal,
valid and binding obligations of the Borrower, enforceable against the Borrower
in accordance with their respective terms, subject to limitations as to
enforceability which might result from bankruptcy, insolvency, moratorium and
other similar laws affecting creditors' rights generally and subject to
limitations on the availability of equitable remedies.
3.3 NO CONFLICT; NO DEFAULT. The execution, delivery and performance by
the Borrower of the Loan Documents will not (a) violate any provision of any
law, statute, rule or regulation or any order, writ, judgment, injunction,
decree, determination or award of any court, governmental agency or arbitrator
presently in effect having applicability to the Borrower, (b) violate or
contravene any provisions of the Articles (or Certificate) of Incorporation or
by-laws of the Borrower, or (c) result in a breach of or constitute a default
under any indenture, loan or credit agreement or any other agreement, lease or
instrument to which the Borrower is a party or by which it or any of its
properties may be bound or result in the creation of any Lien on any asset of
the Borrower or any Subsidiary. Neither the Borrower nor any Subsidiary is in
default under or in violation of any such law, statute, rule or regulation,
order, writ, judgment, injunction, decree, determination or award or any such
indenture, loan or credit agreement or other agreement, lease or instrument in
any case in which the consequences of such default or violation could constitute
an Adverse Event. No Default or Event of Default has occurred and is
continuing.
3.4 GOVERNMENT CONSENT. No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or
exemption by, any governmental or public body or authority is required on the
part of the Borrower or Micron to authorize, or in connection with the Micron
Acquisition or in connection with the execution, delivery and performance of, or
the legality, validity, binding effect or enforceability of the Acquisition
Documents, and the Loan Documents, except those which have already been
obtained.
3.5 FINANCIAL STATEMENTS AND CONDITION.
(a) POST-ACQUISITION BALANCE SHEET. The Post-Acquisition Balance
Sheet, a copy of which is attached hereto as EXHIBIT H, fairly represents the
Borrower's anticipated consolidated financial condition after giving effect to
the Acquisitions.
(b) FINANCIAL PROJECTIONS. The financial projections for the
Borrower and its Subsidiaries for its fiscal year ending December 31, 1998, and
the forecasted consolidated balance sheet of the Borrower and its Subsidiaries
as at the end of such fiscal year, together with supporting assumptions,
delivered to the Agent in connection with the transactions contemplated by this
Agreement, which are attached hereto as EXHIBIT I, were prepared in good faith
on the basis of information and assumptions that the Borrower believed to be
reasonable as of the date of such projections, and which the Borrower believes
to be reasonable as of the date hereof. The financial projections for the
Borrower and its Subsidiaries described in Section 4.3(g), when delivered to the
Banks, will have been prepared in good faith on the basis of information and
assumptions that the Borrower believed to be reasonable as of the date such
financial projections were delivered to the Banks.
(c) FINANCIAL STATEMENTS. The Borrower's audited financial
statements as at December 31, 1996 and its unaudited financial statements as at
September 30, 1997, as heretofore furnished to the Banks, have been prepared in
accordance with GAAP on a consistent basis and fairly present the financial
condition of the Borrower and its Subsidiaries as at such dates and the results
of its operations and cash flow for the respective periods then ended. To the
best of the Borrower's knowledge, the audited financial statements of Micron as
at October 31, 1997, as heretofore furnished to the Banks, have been prepared
in accordance with GAAP on a consistent basis and fairly present the financial
condition of Micron as at such date and the results of its operations and cash
flow for the fiscal year then ended. To the best of the Borrower's knowledge,
the audited financial statements of Membrex as at December 31, 1997, when
delivered to the Banks pursuant to Section 4.3, will have been prepared in
accordance with GAAP on a consistent basis and fairly present the financial
condition of Membrex as at such date and the results of its operations and cash
flow for the fiscal year then ended, provided that the foregoing representation
with respect to Membrex shall only be made from and after the Acquisition
Closing Date for the Membrex Acquisition. As of the dates of such financial
statements, none of the Borrower, any Subsidiary, Micron or Membrex had any
material obligation, contingent liability, liability for taxes or long-term
lease obligation which is not reflected in such financial statements or in the
notes thereto. Since December 31, 1996, with respect to the Borrower, since
October 31, 1997, with respect to Micron, and December 31, 1997, with respect to
Membrex no Adverse Event has occurred, provided that the foregoing
representation with respect to Membrex shall only be made from and after the
Acquisition Closing Date for the Membrex Acquisition.
(d) SOLVENCY. On each Acquisition Closing Date, after giving effect
to the applicable Acquisition, the payment of the purchase price and related
costs and expenses, and the Loans to be made and other financing to be obtained
in connection therewith, (a) the present date saleable value of the assets of
the Borrower is in excess of the total amount of its liabilities (including for
purposes of the definition all liabilities, whether or not reflected on a
balance sheet prepared in accordance with GAAP, and whether direct or indirect,
fixed or contingent, secured of unsecured, disputed or undisputed); and (b) the
Borrower will be able to pay its obligations as they mature in the ordinary
course of business as proposed to be conducted following the Acquisitions; and
(c) the Borrower does not have unreasonably small capital to carry out the
business as proposed to be conducted following the Acquisitions. For purposes
of this Section 4.5 (d), 'present fair saleable value' means the value which
would be realized from an interested purchaser are of all relevant information
relating to the assets or group of assets being sold and who is willing to
purchase under ordinary selling conditions in an existing and not theoretical
market if the assets or group of assets are disposed of within a period of six
(6) months to one year.
3.6 LITIGATION AND CONTINGENT LIABILITIES. Except as described in EXHIBIT
C, there are no actions, suits or proceedings pending or, to the knowledge of
the Borrower, threatened against or affecting the Borrower or any Subsidiary or
any of their properties before any court or arbitrator, or any governmental
department, board, agency or other instrumentality which might materially and
adversely affect the Borrower, any subsidiary or any of their respective
properties. Except as described in EXHIBIT C, neither the Borrower nor any
Subsidiary has any contingent liabilities which are material to the Borrower and
the Subsidiaries as a consolidated enterprise.
3.7 COMPLIANCE. The Borrower and its Subsidiaries are in material
compliance with all statutes and governmental rules and regulations applicable
to them.
3.8 ENVIRONMENTAL, HEALTH AND SAFETY LAWS. Except as disclosed on EXHIBIT
C hereto, there does not exist any violation by the Borrower or any Subsidiary
of any applicable federal, state or local law, rule or regulation or order of
any government, governmental department, board, agency or other instrumentality
relating to environmental, pollution, health or safety matters which will or
threatens to impose a material liability on the Borrower or a Subsidiary or
which would require a material expenditure by the Borrower or such Subsidiary to
cure. Except as disclosed on EXHIBIT C hereto, neither the Borrower nor any
Subsidiary has received any notice to the effect that any part of its operations
or properties is not in material compliance with any such law, rule, regulation
or order or notice that it or its property is the subject of any governmental
investigation evaluating whether any remedial action is needed to respond to any
release of any toxic or hazardous waste or substance into the environment, the
consequences of which non-compliance or remedial action could constitute an
Adverse Event.
3.9 ERISA. Each Plan, if any, complies with all material applicable
requirements of ERISA and the Code and with all material applicable rulings and
regulations issued under the provisions of ERISA and the Code setting forth
those requirements. No Reportable Event, other than a Reportable Event for
which the reporting requirements have been waived by regulations of the PBGC,
has occurred and is continuing with respect to any Plan. All of the minimum
funding standards applicable to such Plans have been satisfied and there exists
no event or condition which would permit the institution of proceedings to
terminate any Plan under Section 4042 of ERISA. The current value of the Plans'
benefits guaranteed under Title IV or ERISA does not exceed the current value of
the Plans' assets allocable to such benefits.
3.10 REGULATION U. The Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (as
defined in Regulation U of the Board of Governors of the Federal Reserve System)
and no part of the proceeds of any Loan will be used to purchase or carry margin
stock or for any other purpose which would violate any of the margin
requirements of the Board of Governors of the Federal Reserve System.
3.11 OWNERSHIP OF PROPERTY; LIENS. The interests of the Borrower and its
Subsidiaries in their respective real and personal property are fairly
represented in the financial statements furnished to the Agent pursuant to
Section 3.5 hereof (other than property acquired or disposed of since the date
of such financial statement in the ordinary course of business or in
transactions permitted by this Agreement). None of the properties, revenues or
assets of the Borrower or any of its Subsidiaries is subject to a Lien, except
for (a) Liens disclosed in the financial statements referred to in SECTION
3.5(c) Liens listed on EXHIBIT D, or (c) Liens allowed under SECTION 4.11.
3.12 TAXES. Each of the Borrower and the Subsidiaries has filed all
federal, state and local tax returns required to be filed and has paid or made
provision for the payment of all taxes due and payable pursuant to such returns
and pursuant to any assessments made against it or any of its property and all
other taxes, fees and other charges imposed on it or any of its property by any
governmental authority (other than taxes, fees or charges that are not material
in amount or the amount or validity of which is currently being contested in
good faith by appropriate proceedings and with respect to which reserves in
accordance with GAAP have been provided on the books of the Borrower). No tax
Liens have been filed and no material claims are being asserted with respect to
any such taxes, fees or charges. The charges, accruals and reserves on the
books of the Borrower in respect of taxes and other governmental charges are
adequate and the Borrower knows of no proposed material tax assessment against
it or any subsidiary or any basis therefor.
3.13 SUBSIDIARIES. EXHIBIT E sets forth as of the date of this Agreement a
list of all Subsidiaries and the number and percentage of the shares of each
class of capital stock owned beneficially or of record by the Borrower or any
Subsidiary therein, and the jurisdiction of incorporation of each Subsidiary.
3.14 TRADEMARKS, PATENTS. Except as disclosed on EXHIBIT C hereto, each of
the Borrower and the Subsidiaries possesses or has the right to use all of the
patents, trademarks, trade names, service marks and copyrights, and applications
therefor, and all technology, know-how, processes, methods and designs used in
or necessary for the conduct of its business, without known conflict with the
rights of others.
3.15 RETIREMENT BENEFITS. Except as required under Section 4980B of the
Code, Section 601 of ERISA or applicable state law, neither the Borrower nor any
Subsidiary is obligated to provide post-retirement medical or insurance benefits
with respect to employees or former employees.
3.16 FULL DISCLOSURE. Subject to the following two sentences, neither the
financial statements referred to in Section 3.5 nor any other certificate,
written statement, exhibit or report furnished by or on behalf of the Borrower,
in connection with or pursuant to the Loan Documents contains any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements contained therein not misleading. Certificates or
statements furnished by or on behalf of the Borrower to the Banks consisting of
projections or forecasts of future results or events have been prepared in good
faith and based on good faith estimates and assumptions of the management of the
Borrower, and the Borrower has no reason to believe that such projections or
forecasts are not reasonable. With respect to Membrex and Micron, to the best
of the Borrower's knowledge, neither the financial statements referred to in
Section 3.5 nor any other certificate, written statement, exhibit or report
furnished by or on behalf of the Borrower, in connection with or pursuant to the
Loan Documents contains any untrue statement of a material fact or omits to
state any material fact necessary in order to make the statements contained
therein not misleading, provided that the foregoing representation with respect
to Membrex shall only be made from and after the Acquisition Closing Date for
the Membrex Acquisition.
SECTION 4: COVENANTS
From the date of this Agreement and thereafter until the obligation of the
Banks hereunder to make the Term Loans and Advances hereunder and of the Agent
to issue Letters of Credit is terminated or expires and the Notes and all of the
other Obligations have been paid in full and all outstanding Letters of Credit
have expired or been terminated, unless the Majority Banks shall otherwise
expressly consent in writing, the Borrower will do, and will cause each
Subsidiary to do, all of the following:
4.1 MAINTAIN ASSETS. Maintain and keep its assets, properties and
equipment in good repair, working order and condition and from time to time make
or cause to be made all needed renewals, replacements and repairs so that at all
times the Borrower's and each Subsidiary's businesses can be operated
efficiently.
4.2 INSURANCE. Insure and keep insured all of its property of an
insurable value, under all-risk policies in an amount acceptable to the Bank and
workers' compensation insurance of not less than the minimum amounts required by
applicable statutes, and such other insurance as is usually carried by persons
engaged in the same or similar business, and from time to time furnish to the
Agent upon request appropriate evidence of such insurance.
4.3 FINANCIAL STATEMENTS. Furnish to the Banks:
(a) Within 95 days after the end of each of Borrower's fiscal years,
audited annual consolidated financial statements for Borrower and its
Subsidiaries, which include a balance sheet and income statement prepared by
accountants acceptable to the Agent and prepared in accordance with GAAP, which
show all liabilities, direct and contingent, of the Borrower and the
Subsidiaries. Such statement shall be accompanied by a certification of an
officer of Borrower that such information is true, correct, and complete and
that no Default or Event of Default has occurred or is continuing.
(b) Within 50 days after the end of each quarter, consolidated
financial statements for Borrower and its Subsidiaries, which include a balance
sheet and income statement, together with a certification by an officer of
Borrower that such information is true, correct and complete and that no Default
or Event of Default has occurred or is continuing.
(c) Together with the financial statements required under 4.1 (a) and
(b), a compliance certificate in the form specified by the Agent signed by the
chief financial officer of the Borrower demonstrating in reasonable detail
compliance (or noncompliance, as the case may be) with Sections 4.18 and 4.20
and stating that, as of the end of the quarter, there did not exist any Default
or Event of Default or, if such Default or Event of Default existed at such
time, specifying the nature and period of existence thereof and what action the
Borrower proposes to take with respect thereto.
(d) As soon as practicable and in any event before the beginning of
each fiscal year of the Borrower, statements of forecasted consolidated income
for the Borrower and the Subsidiaries for each fiscal year and a forecasted
consolidated balance sheet of the Borrower and the Subsidiaries, together with
supporting assumptions, as at the end of such fiscal year, all in reasonable
detail and reasonably satisfactory in scope to Majority Banks.
(e) As soon as available, audited financial statements of Membrex as
of December 31, 1997, which include a balance sheet and income statement
prepared by accountants acceptable to the Agent and prepared in accordance with
GAAP, and which show all liabilities, direct and contingent, of Membrex.
(f) Immediately upon any officer of the Borrower becoming aware of
the occurrence, with respect to any Plan, of any Reportable Event or any
Prohibited Transaction, a notice specifying the nature thereof and what action
the Borrower proposes to take with respect thereto, and, when received, copies
of any notice from PBGC of intention to terminate or have a trustee appointed
for any Plan.
(g) As soon as available, and in all events no later than March 31,
1998, financial projections for the Borrower and its Subsidiaries for each
fiscal quarter during its fiscal year ending December 31, 1998, and forecasted
consolidated balance sheets of the Borrower and its Subsidiaries as of the end
of each such fiscal quarter, together with supporting assumptions.
(h) Such other information as any Bank may reasonably request from
time to time.
4.4 ACCESS TO RECORDS. Permit any person designated by the Agent, at the
Banks' expense, to visit and inspect any of their respective properties, books
and financial records and to discuss their affairs, finances and accounts with
officers and employees of the Borrower or Subsidiaries, all at such reasonable
times and as often as Bank may reasonably request.
4.5 TAXES, ASSESSMENTS AND CHARGES. Promptly pay over to the appropriate
authorities all sums for taxes deducted and withheld from wages as well as the
employer's contributions and other governmental charges imposed upon or asserted
against their income, profits, properties and rental charges or otherwise which
are or might become a lien charged upon their respective properties, unless the
same are being contested in good faith by appropriate proceedings and adequate
reserves shall have been established on the Borrower's books with respect
thereto.
4.6 NOTIFICATION OF CHANGES. Promptly notify the Bank of:
(a) Any litigation which might materially and adversely affect the
Borrower or any Subsidiary or any of their respective properties;
(b) The occurrence of any Default or Event of Default; and
(c) Any Adverse Event.
4.7 CORPORATE EXISTENCE. Maintain its corporate existence and conduct the
same general type of business as is now being carried on and continue compliance
with all applicable statutes, laws, rules and regulations.
4.8 BOOKS AND RECORDS. Keep true and accurate books of records and
accounts in accordance with generally accepted accounting principles.
4.9 REIMBURSEMENT OF EXPENSES. Promptly reimburse the Agent for any and
all expenses, fees and disbursements, including attorneys' fees, incurred in
connection with the preparation and performance of this Agreement and the
instruments and documents related thereto, and all expenses of collection of any
loans made or to be made hereunder, including reasonable attorneys' fees.
4.10 MERGE, CONSOLIDATE OR SELL. Not transfer, lease or sell all or
substantially all of their respective properties or businesses to any other
entity or entities, other than in the ordinary course of business, and not merge
or consolidate or enter into any analogous reorganization or transaction with
any Person; provided, however, that the foregoing shall not prohibit: (a) sales
of assets not exceeding 10% of the total consolidated assets of the Borrower and
the Subsidiaries in the aggregate during any period of four consecutive fiscal
quarters and not consisting of assets which contributed 10% or more of
consolidated net income in the preceding four fiscal quarters; and (b) mergers
in which the Borrower is the surviving corporation, to the extent that before
and after giving effect to such mergers, no Default or Event of Default shall
have occurred.
4.11 LIENS AND ENCUMBRANCES. Not create, incur, assume or suffer to exist
any Lien with respect to any property, revenues or assets now owned or hereafter
arising or acquired, except:
(a) Liens in connection with the acquisition of property after the
date hereof by way of purchase money mortgage, conditional sale or other title
retention agreement, Capitalized Lease or other deferred payment contract, and
attaching only to the property being acquired if the Indebtedness secured
thereby does not exceed the fair market value of such property at the time of
acquisition and such Indebtedness is Permitted Additional Indebtedness;
(b) Liens for taxes, assessments and other governmental charges which
are not delinquent or which are being contested in good faith by appropriate
proceedings, against which required reserves have been set up;
(c) Liens incurred or deposits made in the ordinary course of
business in connection with workmen's compensation, unemployment insurance or
other similar laws or to secure the performance of statutory obligations or of a
like nature;
(d) Liens imposed by law in connection with transactions in the
ordinary course of business, such as liens of carriers, warehousemen, mechanics
and materialmen which are not delinquent or which are being contested in good
faith and by appropriate proceedings, against which adequate reserves have been
set up;
(e) Landlords' liens under leases to which the Borrower is a party;
(f) Zoning restrictions, licenses and minor encumbrances and
irregularities in title all of which in the aggregate do not materially detract
from the value of the property involved or impair its use;
(g) Liens disclosed on EXHIBIT D attached hereto;
(h) Liens securing other Indebtedness which does not have an
aggregate outstanding principal amount greater than $1,000,000;
(i) Liens on real and personal property located in Le Mee Sur Seine,
France to secure Indebtedness in an amount not exceeding $3,000,000 incurred by
AUTOTROL, S.A.; and
(j) Liens in favor of U.S. Bank National Association, as collateral
for the Agent, the Banks and the holders of the ReliaStar Indebtedness, securing
the Obligations and the ReliaStar Indebtedness.
4.12 ADDITIONAL INDEBTEDNESS. Not incur, create, issue, assume or suffer
to exist any Indebtedness, except:
(a) Indebtedness under this Agreement;
(b) Current liabilities, other than for borrowed money, incurred in
the ordinary course of business;
(c) Indebtedness existing on the date of this Agreement and disclosed
on EXHIBIT F hereto;
(d) Permitted Additional Indebtedness;
(e) Indebtedness consisting of endorsements for collection, deposit
or negotiation and warranties of products or services, in each case incurred in
the ordinary course of business; and
(f) Other Indebtedness which does not have an aggregate outstanding
principal amount greater than $1,000,000;
(g) Indebtedness not exceeding $3,000,000 incurred by AUTOTROL, S.A.,
Le Mee Sur Seine, France; and
(h) the ReliaStar Indebtedness.
4.13 GUARANTEES. Not assume, guarantee, endorse or otherwise become liable
upon the obligation of any person, firm or corporation except by endorsement of
negotiable instruments for deposit or collection in the ordinary course of
business, nor sell any notes or accounts receivable with recourse except for
product warranties and similar undertakings provided in the ordinary course of
business.
4.14 INVESTMENTS. Not acquire for value, make, have or hold any
Investments, except:
(a) Investments outstanding on the date hereof and listed on EXHIBIT
G;
(b) Travel advances to officers and employees in the ordinary course
of business;
(c) Investments in readily marketable direct obligations of the
United States of America having maturities of one year or less from the date of
acquisition;
(d) Certificates of deposit or bankers' acceptances, each maturing
within one year from the date of acquisition, issued by any commercial bank
organized under the laws of the United States or any State thereof which has (i)
combined capital, surplus and undivided profits of at least $100,000,000, and
(ii) a credit rating with respect to its unsecured indebtedness from a
nationally recognized rating service that is satisfactory to the Bank;
(e) Commercial paper maturing within 270 days from the date of
issuance and given the highest rating by a nationally recognized rating service;
(f) Repurchase agreements relating to securities issued or guaranteed
as to principal and interest by the United States of America;
(g) Extensions of credit in the nature of accounts receivable or
notes receivable arising from the sale of goods and services in the ordinary
course of business;
(h) Shares of stock, obligations or other securities received in
settlement of claims arising in the ordinary course of business;
(i) Investments outstanding on the date hereof in Subsidiaries by the
Borrower or other Subsidiaries;
(j) Investments resulting from the Acquisitions;
(k) Acquisitions by the Borrower of substantially all of the real and
personal property of, or the capital stock of, another Person, or substantially
all of the real and personal property of any business or the assets comprising
such business, provided the amount of each such Investment made after the
Closing Date does not exceed 10% of the Borrower's consolidated tangible net
worth at the end of the quarter most recently ended prior to such Investment;
provided further that the aggregate amount of all such Investments shall not
exceed 50% of the Borrower's consolidated tangible net worth at the end of the
fiscal quarter prior to the most recent such Investment, after giving effect to
such Investment; and provided further that the aggregate amount of all such
Investments in each of the 12 month periods ending March 31, 1999 and March 31,
2000 shall not exceed 20% of the Borrower's consolidated tangible net worth as
at the end of the fiscal quarter prior to the most recent such Investment, after
giving effect to such Investment;
(l) Equity investments in (in addition to those permitted by clauses
(j)and (k)) entities, other than Subsidiaries, that are primarily engaged in the
type of business engaged in by the Borrower, in accordance with the Borrower's
investment policies on the date hereof.
4.15 RESTRICTED PAYMENTS. Not either (a) purchase or redeem or otherwise
acquire for value any shares of the Borrower's or any Subsidiary's stock,
declare or pay any dividends thereon (other than stock dividends and dividends
payable solely to the Borrower), make any distribution on, or payment on account
of the purchase, redemption, defeasance or other acquisition or retirement for
value of, any shares of the Borrower's or any Subsidiary's stock or set aside
any funds for any such purpose (other than payment to, or on account of or for
the benefit of, the Borrower only), PROVIDED, HOWEVER, that if no Default or
Event of Default shall exist or shall result from such payment, and that at the
end of the measuring period set forth in Section 4.25 (a) hereof that is next
preceding the date the dividend is declared, the Leverage Ratio was less than
2.50 to 1.00, the Borrower may pay dividends not exceeding, on a cumulative
basis, 25% of consolidated net income of the Borrower and its Subsidiaries
earned after December 31, 1997, PLUS the net proceeds received by the Borrower
from issuance of equity securities (which are not debt instruments or
convertible instruments) after the date of this Agreement; or (b) directly or
indirectly make any payment on, or redeem, repurchase, defease, or make any
sinking fund payment on account of, or any other provision for, or otherwise
pay, acquire or retire for value, any Indebtedness of the Borrower or any
Subsidiary that is subordinated in right of payment to the Loans (whether
pursuant to its terms or by operation of law), except for regularly-scheduled
payments of interest and principal (which shall not include payments
contingently required upon occurrence of a change of control or other event)
that are not otherwise prohibited hereunder or under the document or agreement
stating the terms of such subordination.
4.16 NEGATIVE PLEDGES; SUBSIDIARY RESTRICTIONS. Not enter into any
agreement, bond, note or other instrument with or for the benefit of any Person
other than the Banks which would (i) prohibit the Borrower or such Subsidiary
from granting, or otherwise limit the ability of the Borrower or such Subsidiary
to grant, to the Banks any Lien on any assets or properties of the Borrower or
such Subsidiary, except limitations created in agreements creating Liens on, and
applicable only to, property on which a Lien is granted by the Borrower or any
Subsidiary as permitted in Sections 4.11(a), (g) or (j), or (ii) require the
Borrower or such Subsidiary to grant a Lien to any other Person if the Borrower
or such Subsidiary grants any Lien to the Banks. The Borrower will not permit
any Subsidiary to place or allow any restriction, directly or indirectly, on the
ability of such Subsidiary to (a) pay dividends or any distributions on or with
respect to such Subsidiary's capital stock or (b) make loans or other cash
payments to the Borrower.
4.17 ACCOUNTING CHANGES. Not make any significant change in accounting
treatment or reporting practices, except as required by GAAP, or change its
fiscal year or the fiscal year of any Subsidiary.
4.18 CAPITAL EXPENDITURES. Not make Capital Expenditures on a consolidated
basis in any fiscal year in excess of ten percent (10%) of the Borrower's sales
on a consolidated basis for the prior fiscal year; provided that for purposes of
calculating Capital Expenditures, the purchase price of the assets acquired in
the Acquisitions and the related fees and expenses shall not be included in such
calculation.
4.19 ACQUISITION DOCUMENTS. Not supplement, amend or otherwise modify the
Acquisition Documents; provided, that the Borrower may supplement, amend or
otherwise modify the Acquisition Documents in a manner that is not materially
adverse to the Banks as long as the Borrower notifies the Banks of any such
supplement, amendment or other modification.
4.20 FINANCIAL COVENANTS.
(a) LEVERAGE RATIO. The Borrower will not permit the Leverage Ratio
(as defined in Section 7 hereof) as of the last day of any fiscal quarter ending
during any period of measurement described below to be greater than the ratio
set forth below for such period:
Measurement Period Maximum Leverage Ratio
------------------ ----------------------
Closing Date through September 30, 1998 3.50 to 1.00
October 1, 1998 through December 31, 1998 3.25 to 1.00
January 1, 1999 through March 31, 1999 3.00 to 1.00
April 1, 1999 through June 30, 1999 2.75 to 1.00
July 1, 1999 through September 30, 1999 2.50 to 1.00
October 1, 1999 through December 31, 1999 2.25 to 1.00
January 1, 2000, and thereafter 2.00 to 1.00
PROVIDED, HOWEVER, that if the Borrower elects to pay dividends at any time
prior to July 1, 1999, as permitted pursuant to the provisions in Section
4.15(a), or to request a release of the security interest granted pursuant to
the Security Agreement, as permitted pursuant to Section 9 thereof, the maximum
Leverage Ratio for the period from the date such dividends are paid or such
security interest is released until September 30, 1999 shall be 2.50 to 1.00.
(b) FIXED CHARGE COVERAGE RATIO. The Borrower will not permit the
Fixed Charge Coverage Ratio (as defined in Section 7 hereof) for the four
consecutive fiscal quarters ending on the last day of any fiscal quarter ending
during any period of measurement described below to be less than the ratio set
forth below for such period:
Minimum Fixed
Measurement Period Charged Coverage Ratio
------------------ ----------------------
Closing Date through December 31, 1998 1.20 to 1.00
January 1, 1999 through December 31, 1999 1.30 to 1.00
January 1, 2000 and thereafter 1.40 to 1.00
(c) LOSS LIMITATION. Not permit (a) its consolidated net income for
any four consecutive fiscal quarters to be less than zero, or (b) its
consolidated net loss for any fiscal quarter to exceed five percent (5%) of the
consolidated sales of the Company and its Subsidiaries for such fiscal quarter.
4.21 GOVERNMENT CONSENT. Prior to the Membrex Acquisition, the Borrower
will have obtained any order, consent, approval, license, authorization or
validation of, or filing, recording or registration with, or exemption by, an
governmental or public body or authority required on the part of Membrex to
authorize, or required in connection with, the Membrex Acquisition or in
connection with the delivery and performance of, or the legality, validity,
binding effect or enforceability of the Membrex Purchase Agreement and all other
documents executed and delivered in connection therewith.
4.22 YEAR 2000 COMPLIANCE. The Borrower has conducted a comprehensive
review and assessment of its computer applications and has made inquiry of the
Borrower's material suppliers, vendors and customers with respect to the Year
2000 Problem. Based on the foregoing review, assessment and inquiry, the
Borrower reasonably believes that the Year 2000 Problem will not result in a
material adverse change in the Borrower's business condition (financial or
otherwise), operations, properties or prospects, or its ability to perform its
obligations under this Agreement.
SECTION 5: DEFAULTS.
5.1 Any one or more of the following events shall constitute an Event of
Default:
(a) PAYMENT. The Borrower shall fail to pay, when due, any
obligations hereunder or under the Notes or any other Obligation now or
hereafter required to be made to the Agent or any Bank pursuant to this
Agreement.
(b) REPRESENTATIONS AND WARRANTIES. Any representation or warranty
contained in this Agreement or any other document or any letter or certificate
furnished or to be furnished to any Bank or the Agent proves to be false as of
the date the Agreement or such document is executed or at the time such letter
or certificate is delivered to the Bank or the Agent.
(c) NON-COMPLIANCE. The Borrower shall fail to comply with Sections
4.7 (with respect to corporate existence), 4.10, 4.11, 4.12, 4.13, 4.14, 4.15,
4.16, 4.17 (with respect to changes in fiscal year or other changes that would
materially affect covenants set forth in Section 4.20) , 4.18, 4.19, or 4.20
hereof, or Section 3 or 4 of the Security Agreement.
(d) OTHER COVENANTS OR AGREEMENTS HEREIN. The Borrower shall fail to
comply with any other agreement, covenant, condition, provision or term
contained in this Agreement, or any other Loan Document (other than those
herein above set forth in this Section 5.1) and such failure to comply shall
continue for thirty (30) calendar days after whichever of the following dates is
the earliest: (i) the date the Borrower gives notice of such failure to the
Banks, (ii) the date the Borrower should have given notice of such failure to
the Banks pursuant to Section 4.3(c), or (iii) the date the Agent or any Bank
gives notice of such failure to the Borrower.
(e) INSOLVENCY. The Borrower shall become insolvent or unable to pay
its debts generally as they mature, (ii) suspend business, (iii) make a general
assignment for the benefit of creditors, (iv) admit in writing its inability to
pay its debts generally as they mature, (v) file or have filed against it a
petition in bankruptcy or a petition or answer seeking a reorganization,
arrangement with creditors or other similar relief under the Federal bankruptcy
laws or under any other applicable law of the United States of America or any
State thereof, (vi) consent to the appointment of a trustee or receiver for the
Borrower or for a substantial part of its property, (vii) take any corporate
action for the purpose of effecting or consenting to any of the foregoing, or
(viii) have an order, judgment or decree entered appointing, without its
consent, a trustee or receiver for Borrower or for a substantial part of its
property, or approving a petition filed against the Borrower seeking a
reorganization, arrangement with creditors or other similar relief under the
Federal bankruptcy laws or under any other applicable law of the United States
of America or any State hereof, which order, judgment or decree shall not be
vacated or set aside or stayed within thirty (30) days from the date of entry.
(f) JUDGMENTS. Judgments against the Borrower for the payment of
money totaling in excess of $250,000 shall be outstanding for a period of thirty
(30) days without a stay of execution.
(g) OTHER INDEBTEDNESS. The maturity of any material Indebtedness of
the Borrower (other than Indebtedness under this Agreement) or a Subsidiary
shall be accelerated, or the Borrower or a Subsidiary shall fail to pay any such
Indebtedness when due or, in the case of such Indebtedness payable on demand,
when demanded, or any event shall occur or condition shall exist and shall
continue for more than the period of grace, if any, applicable thereto and shall
have the effect of causing, or permitting (any required notice having been given
and grace period having expired) the holder of any such Indebtedness or any
trustee or other Person acting on behalf of such holder to cause, such
Indebtedness to become due prior to its stated maturity or to realize upon any
collateral given as security therefor. For purposes of this Section,
Indebtedness of the Borrower or any Subsidiary shall be deemed 'material' if it
(i) is owed to any Bank or any Subsidiary or Affiliate of any Bank or (ii)
exceeds $250,000 as to any item of Indebtedness or in the aggregate for all
items of Indebtedness with respect to which any of the events described in this
Section has occurred.
(h) BENEFIT PLANS. The institution by the Borrower or any ERISA
Affiliate of steps to terminate any Plan if in order to effectuate such
termination, the Borrower or any ERISA Affiliate would be required to make a
contribution to such Plan, or would incur a liability or obligation to such
Plan, in excess of $250,000, or the institution by the PBGC of steps to
terminate any Plan.
(i) CHANGE OF CONTROL. Any Person, or group of Persons acting in
concert, that owned less than 5% of the shares of any voting class of stock of
the Borrower shall have acquired more than 20% of the shares of such voting
stock.
(j) SECURITY DOCUMENTS. Any Security Document shall, at any time,
cease to be in full force and effect or shall be judicially declared null and
void, or the validity or enforceability thereof shall be contested by the
Borrower, or the Agent or the Banks shall cease to have a valid and perfected
security interest having the priority contemplated thereunder in all of the
collateral described therein, other than by action or inaction of the Agent or
the Banks if (i) the aggregate value of the collateral affected by any of the
foregoing exceeds $250,000 and (ii) any of the foregoing shall remain unremedied
for ten days or more after receipt of notice thereof by the Borrower from the
Agent; or any execution or attachment shall be issued whereby any of the
property pledged to the Security Agreement or any substantial part of the
property of the Borrower or any Subsidiary shall be taken or attempted to be
taken and the same shall not have been vacated or stayed within 30 days after
the issuance thereof.
5.2 BANKS' RIGHTS ON DEFAULT. If any Event of Default described in
Sections 5.1(e) shall occur with respect to the Borrower , the Commitments shall
automatically terminate and the Notes and all other Obligations shall
automatically become immediately due and payable, and the Borrower shall without
demand pay into the Holding Account an amount equal to the aggregate face amount
of all outstanding Letters of Credit. If any other Event of Default shall occur
and be continuing, then, upon receipt by the Agent of a request in writing from
the Majority Banks, the Agent shall take any of the following actions so
requested: (i) declare the Commitments terminated, whereupon the Commitments
shall terminate, (ii) declare the outstanding unpaid principal balance of the
Notes, the accrued and unpaid interest thereon and all other Obligations to be
forthwith due and payable, whereupon the Notes, all accrued and unpaid interest
thereon and all such Obligations shall immediately become due and payable, in
each case without presentment, demand, protest or other notice of any kind, all
of which are hereby expressly waived, anything in this Agreement or in the Notes
to the contrary notwithstanding; and (iii) demand that the Borrower pay into the
Holding Account an amount equal to the aggregate face amount of all outstanding
Letters of Credit. Upon the occurrence of any of the events described in clause
(a) of the preceding sentence, or upon the occurrence of any of the events
described in clause (b) of the preceding sentence when so requested by the
Majority Banks, the Agent may exercise all rights and remedies under any of the
Loan Documents, and enforce all rights and remedies under any applicable law.
5.3 OFFSET. Any Bank or any other holder of a Note shall have the right to
set off the indebtedness evidenced by such Note against any indebtedness of such
Bank or such holder or any deposit of the Borrower with such Bank or such
holder.
SECTION 6: THE AGENT
The following provisions shall govern the relationship of the Agent with
the Banks.
6.1 APPOINTMENT AND AUTHORIZATION. Each Bank appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such respective
powers under the Loan Documents as are delegated to the Agent by the terms
thereof, together with such powers as are reasonably incidental thereto.
Neither the Agent nor any of its directors, officers or employees shall be
liable for any action taken or omitted to be taken by it under or in connection
with the Loan Documents, except for its own gross negligence or willful
misconduct. The Agent shall act as an independent contractor in performing its
obligations as Agent hereunder and nothing herein contained shall be deemed to
create any fiduciary relationship among or between the Agent, the Borrower or
the Banks.
6.2 CONSULTATION WITH COUNSEL. The Agent may consult with legal counsel
selected by it and shall not be liable for any action taken or suffered in good
faith by it in accordance with the advice of such counsel.
6.3 LOAN DOCUMENTS; CREDIT ANALYSIS. The Agent shall not be under a duty
to examine or pass upon the validity, effectiveness, genuineness or value of any
of the Loan Documents or any other instrument or document furnished pursuant
thereto, and the Agent shall be entitled to assume that the same are valid,
effective and genuine and what they purport to be. Each Bank has made, and
shall continue to make, its own independent investigation or evaluation of the
operations, business, property and condition, financial and otherwise, of the
Borrower in connection with entering into this Agreement and has made its own
appraisal of the creditworthiness of the Borrower. Except as explicitly
provided herein, the Agent has no duty or responsibility, either initially or on
a continuing basis, to provide any Bank with any credit or other information
with respect to such operations, business, property, condition or
creditworthiness, whether such information comes into its possession on or
before the first Event of Default or at any time thereafter.
6.4 FIRST BANK AND AFFILIATES. With respect to its Commitments and the
Loans made by it, First Bank shall have the same rights and powers under the
Loan Documents as any other Bank and may exercise the same as though it were not
the Agent consistent with the terms thereof, and First Bank and its Affiliates
may accept deposits from, lend money to and generally engage in any kind of
business with the Borrower as if it were not the Agent.
6.5 ACTION BY AGENT. Except as may otherwise be expressly stated in this
Agreement, the Agent shall be entitled to use its discretion with respect to
exercising or refraining from exercising any rights which may be vested in it
by, or with respect to taking or refraining from taking any action or actions
which it may be able to take under or in respect of, the Loan Documents. The
Agent shall be required to act or to refrain from acting (and shall be fully
protected in so acting or refraining from acting) upon the instructions of the
Majority Banks, and such instructions shall be binding upon all holders of
Notes; provided, however, that the Agent shall not be required to take any
action which exposes the Agent to personal liability or which is contrary to the
Loan Documents or applicable law. The Agent shall incur no liability under or
in respect of any of the Loan Documents by acting upon any notice, consent,
certificate, warranty or other paper or instrument believed by it to be genuine
or authentic or to be signed by the proper party or parties and to be consistent
with the terms of this Agreement.
6.6 NOTICES. In the event that the Agent shall have acquired actual
knowledge of any Event of Default or Default, the Agent shall promptly give
notice thereof to the Banks. The Agent shall forward to the Banks copies of all
notices, financial reports and other communications received hereunder from the
Borrower by it as Agent, excluding, however, notices, reports and communications
which by the terms hereof are to be furnished by the Borrower directly to each
Bank.
6.7 INDEMNIFICATION. Each Bank agrees to indemnify the Agent, as Agent
(to the extent not reimbursed by the Borrower), ratably according to such Bank's
ratable share of the Loans from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on or incurred by the Agent in any way relating to or arising out of the Loan
Documents or any action taken or omitted by the Agent under the Loan Documents,
provided that no Bank shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Agent's gross negligence or willful
misconduct. No payment by any Bank under this Section shall relieve the
Borrower of any of its obligations under this Agreement.
6.8 PAYMENTS AND COLLECTIONS. All funds received by the Agent in respect
of any payments made by the Borrower on the Notes shall be distributed forthwith
by the Agent among the Banks, in like currency and funds as received, ratably
according to each Bank's ratable share thereof. After any Event of Default has
occurred, all funds received by the Agent, whether as payments by the Borrower
or as realization on collateral, shall (except as may otherwise be required by
law) be distributed by the Agent in the following order: (a) first to the Agent
or any Bank who has incurred unreimbursed costs of collection with respect to
any Obligations hereunder, ratably to the Agent and each Bank in the proportion
that the costs incurred by the Agent or such Bank bear to the total of all such
costs incurred by the Agent and all Banks; (b) next to the Agent for the account
of the Banks (in accordance with their respective ratable shares of all Loans
outstanding) for application on the Notes and the unpaid drawings under Letters
of Credit; (c) next to the Agent for the account of the Banks (in accordance
with their respective ratable shares) for any unpaid Revolving Commitment Fees
or Letter of Credit Fees owing by the Borrower hereunder; and (d) last to the
Agent to be held in the Holding Account to cover the Borrower's reimbursement
and other obligations with respect to any outstanding Letters of Credit.
6.9 SHARING OF PAYMENTS. If any Bank shall receive and retain any
payment, voluntary or involuntary, whether by setoff, application of deposit
balance or security, or otherwise, in respect of Indebtedness under this
Agreement or the Notes in excess of such Bank's share thereof as determined
under this Agreement, then such Bank shall purchase from the other Banks for
cash and at face value and without recourse, such participation in the Notes
held by such other Banks as shall be necessary to cause such excess payment to
be shared ratably as aforesaid with such other Banks. If any such excess payment
or part thereof is thereafter recovered from such purchasing Bank, the related
purchases from the other Banks shall be rescinded ratably and the purchase price
restored as to the portion of such excess payment so recovered, but without
interest. Subject to the participation purchase obligation above, each Bank
agrees to exercise any and all rights of setoff, counterclaim or banker's lien
first fully against any Notes and participations therein held by such Bank, next
to any other Indebtedness of the Borrower to such Bank arising under or pursuant
to this Agreement and to any participations held by such Bank in Indebtedness of
the Borrower arising under or pursuant to this Agreement, and only then to any
other Indebtedness of the Borrower to such Bank.
6.10 RESIGNATION. If at any time First Bank shall deem it advisable, in
its sole discretion, it may submit to each of the Banks and the Borrower a
written notification of its resignation as Agent under this Agreement, such
resignation to be effective upon the appointment of a successor Agent, but in no
event later than 30 days from the date of such notice. Upon submission of such
notice, the Majority Banks may appoint a successor Agent.
SECTION 7: DEFINITIONS.
7.1 In addition to the terms defined elsewhere in this Agreement, the
following terms shall have the following respective meanings:
'ACQUISITION CLOSING DATE': With respect to either Acquisition, the date
of closing of the respective Acquisition.
'ACQUISITION DOCUMENTS': The Membrex Purchase Agreement, the Micron Plan
and all other agreements, instruments, certificates and other documents executed
and delivered pursuant to or in connection therewith, as the same may be
supplemented, amended or otherwise modified.
'ACQUISITIONS': The Membrex Acquisition and the Micron Acquisition.
'ADVANCE': Any portion of the outstanding Revolving Loans by a Bank as to
which the Borrower elected one of the available interest rate options and, if
applicable, an Interest Period. An Advance may be a Eurodollar Rate Advance or
a Reference Rate Advance.
'ADVERSE EVENT': The occurrence of any event that could have material
adverse effect on the business, operations, property, assets or condition
(financial or otherwise) of the Borrower or any Subsidiary as a consolidated
enterprise or on the ability of the Borrower to perform its obligations under
the Loan Documents.
'AGGREGATE REVOLVING COMMITMENT': As of any date, the sum of the Revolving
Commitment Amounts of all the Banks.
'APPLICABLE FEE RATE': Subject to the last two sentences of this
definition with respect to the period beginning on the first day of the third
month of each quarter and ending on the last day of the first month of the
following fiscal quarter, the percentage specified as the Applicable Fee Rate
based on the Leverage Ratio calculated as of the preceding fiscal quarter:
Leverage Ratio
(in each case, to 1.00) Applicable Fee Rate
----------------------- -------------------
Greater than 2.76 0.35
2.51 to 2.75 0.30
2.01 to 2.50 0.25
1.51 to 2.00 0.20
1.26 to 1.50 0.20
1.25 or less 0.20
During the period beginning on the Closing Date and ending on May 31, 1998, the
Applicable Fee Rate shall be 0.35%. Notwithstanding the foregoing, if the
Borrower has not furnished the quarterly financial statements and reports
required under Sections 4.3(a) and 4.3(c) for any fiscal quarter by the first
day of the record month of the such fiscal quarter, the Applicable Fee Rate
shall be 0.35% for the period from the first day of such second month until the
first day of the month following the month in which such financial statements
and reports are delivered.
'APPLICABLE MARGIN': Subject to the last two sentences of this definition,
with respect to the period beginning on the first day of the third month of each
quarter and ending on the last day of the first month of the following fiscal
quarter, the percentage specified as applicable to Reference Rate Advances or
Eurodollar Rate Advances, as appropriate, based on the Leverage Ratio calculated
as of the end of the preceding fiscal quarter:
Leverage Ratio Eurodollar Reference
(in each case to 1.00) Rate Advances Rate Advances
---------------------- ------------- -------------
Greater than 3.00 1.500% 0.00%
2.76 to 3.00 1.375 0.00
2.51 to 2.75 1.250 0.00
2.01 to 2.50 1.000 0.00
1.51 to 2.00 0.750 0.00
1.26 to 1.50 0.500 0.00
1.25 or less 0.300 0.00
During the period beginning on the Closing Date and ending on May 31, 1998, the
Applicable Margin for Eurodollar Rate Advances shall be 1.500%, and for
Reference Rate Advances shall be 0.00%. Notwithstanding the foregoing, if the
Borrower has not furnished the quarterly financial statements and reports
required under Section 4.3 (a) and 4.3(c) for any fiscal quarter by the first
day of the record month of such fiscal quarter, the Applicable Margin for
Eurodollar Rate Advances shall be 1.500%, and for Reference Rate Advances shall
be 0.00%, for the period from the first day of such record month until the first
day of the month following the month in which such financial statements are
delivered.
'BUSINESS DAY': Any day (other than a Saturday, Sunday or legal holiday in
the State of Minnesota) on which national banks are permitted to be open in
Minneapolis, Minnesota.
'CAPITALIZED LEASE': Any lease which is or should be capitalized on the
books of the lessee in accordance with GAAP.
'CLOSING DATE': Any Business Day between the date of this Agreement and
March 31, 1998 selected by the Borrower for the making of the initial Loans
hereunder.
'CODE': The Internal Revenue Code of 1986, as amended, or any successor
statute, together with regulations thereunder.
'COMMITMENTS': The Revolving Commitments.
'CONTROL AGREEMENT': An Agreement among the Borrower, the Agent and a
'securities intermediary' (as defined in Section 8-102 of the Uniform Commercial
Code), in form and substance satisfactory to the Agent, pursuant to which the
Agent officers 'control' (as defined in Section 8-106 of the Uniform Commercial
Code) over any portion of the property pledged to the Agent for the benefit of
the Banks, pursuant to the Security Agreement.
'DEFAULT': Any event which, with the giving of notice to the Borrower or
lapse of time, or both, would constitute an Event of Default.
'EBITDA': For any period of determination, the consolidated net income of
the Borrower before deductions for income taxes, Interest Expense, depreciation
and amortization, all as determined in accordance with GAAP; PROVIDED, HOWEVER
that with respect to a period of determination, any transactional fees and other
expenses incurred in connection with this Agreement which are deducted from the
Borrower's income for federal income tax purposes, and any non-cash, post-
closing adjustments or changes resulting from the write-up or write-down of
assets acquired in the Acquisitions incurred by the Borrower in connection with
the Acquisitions which are deducted from or included in the Borrower's income in
accordance with GAAP, shall be added back or subtracted, as appropriate, in
determining EBITDA for that period.
'ERISA': The Employee Retirement Income Security Act of 1974, as amended,
and any successor statute, together with regulations thereunder.
'ERISA AFFILIATE': Any trade or business (whether or not incorporated)
that is a member of a group of which the Borrower is a member and which is
treated as a single employer under Section 414 of the Code.
'EURODOLLAR BUSINESS DAY': A Business Day which is also a day for trading
by and between banks in United States dollar deposits in the interbank
Eurodollar market and a day on which banks are open for business in New York,
New York.
'EURODOLLAR RATE': means a rate per annum (rounded upward, if necessary,
to the nearest 1/16 of 1 %) determined pursuant to the following formula:
[ LIBO Rate ]
Eurodollar Rate = [---------------------------]
[1.00 - Eurocurrency Reserve]
Percentage
In such formula, (i) 'Eurocurrency Reserve Percentage' means the average daily
percentage (expressed as a decimal) during the applicable Interest Period
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining reserve requirements applicable to 'Eurocurrency
liabilities' pursuant to Regulation D or any other applicable regulation of the
Board of Governors which prescribes such reserve requirements, and any
Eurodollar Advance shall be deemed to be a 'Eurocurrency liability' as defined
in Regulation D, and (ii) 'LIBO Rate' means the offered rate for deposits in
United States Dollars (rounded upwards, if necessary, to the nearest 1/16 of
1%), for delivery of such deposits on the first day of such Interest Period, for
the number of days comprised therein, which appears on the Reuters Screen LIBO
Page as of 11:00 a.m., London time, on the day that is two Banking Days
preceding the date of such Eurodollar Advance or the rate determined by the
Agent at such time based on such other public service of general application as
shall be selected by the Agent for such purpose or, if the Reuters Screen LIBO
Page or such other service does not report such rates or such rates do not, in
the judgment of the Agent, accurately reflect the rates of interest applicable
to the Banks in the relevant markets, the rate for such Interest Period shall be
determined by the Agent based on rates offered to the Bank for United States
Dollar deposits in the interbank Eurodollar market. 'Reuters Screen LIBO Page'
means the display designated as page 'LIBO' on the Reuter Monitor Money Rates
Service (or such other page as may replace the LIBO Page on that service for the
purpose of displaying London interbank offered rates of major banks for United
States Dollar deposits).
'EURODOLLAR RATE ADVANCE': An Advance with respect to which the interest
rate is determined by reference to the Eurodollar Rate.
'FIXED CHARGE COVERAGE RATIO': for any period of determination, the ratio
of
(a) EBITDA minus the sum of (i) consolidated Capital Expenditures of
the Borrower and its Subsidiaries (other than borrowings under this
Agreement), and (ii) taxes paid in cash by the Borrower and its
Subsidiaries,
to
(b) the sum of Interest Expense all required principal payments with
respect to Total Liabilities (including but not limited to all payments
with respect to Capitalized Lease Obligations of the Borrower and the
Subsidiaries), plus any Restricted Payments.
in each case determined for said period on a consolidated basis in accordance
with GAAP.
'GAAP': Generally accepted accounting principles as applied in the
preparation of the audited financial statement of the Borrower referred to in
SECTION 3.5(c).
'HOLDING ACCOUNT': A deposit account belonging to the Agent for the
benefit of the Banks into which the Borrower may be required to make deposits
pursuant to the provisions of this Agreement, such account to be under the sole
dominion and control of the Agent and not subject to withdrawal by the Borrower,
with any amounts therein to be held for application toward payment of any
outstanding Letters of Credit when drawn upon.
'INDEBTEDNESS': Without duplication, all obligations, contingent or
otherwise, which in accordance with GAAP should be classified upon the obligor's
balance sheet as liabilities, but in any event including the following (whether
or not they should be classified as liabilities upon such balance sheet): (a)
obligations secured by any mortgage, pledge, security interest, lien, charge or
other encumbrance existing on property owned or acquired subject thereto,
whether or not the obligation secured thereby shall have been assumed and
whether or not the obligation secured is the obligation of the owner or another
party; (b) any obligation on account of deposits or advances; (c) any obligation
for the deferred purchase price of any property or services, except Trade
Accounts Payable, (d) any obligation as lessee under any Capitalized Lease; (e)
all guaranties, endorsements and other contingent obligations in respect to
Indebtedness of others; and (f) undertakings or agreements to reimburse or
indemnify issuers of letters of credit. For all purposes of this Agreement, the
Indebtedness of any Person shall include the Indebtedness of any partnership or
joint venture in which such Person is a general partner or a joint venturer.
'INTEREST PERIOD': means for any Eurodollar Advance, a one-month, two-month
or three-month period as agreed upon by the Borrower and the Bank at the time of
the making of the applicable Advance, commencing on the date of the Advance.
Each Interest Period that would otherwise end on a day which is not a Banking
Day shall end on the next following Banking Day (unless, in the case of a
Eurodollar Advance, such next following Banking Day is the first Banking Day of
a calendar month, in which case such Interest Period shall end on the next
preceding Banking Day). No Interest Period with respect to Eurodollar Advances
consisting of Revolving Loans shall be selected that may not be completed prior
to the Termination Date.
'INTEREST-BEARING INDEBTEDNESS': At the time of any determination, all
Indebtedness of the Borrower and its Subsidiaries other than liabilities
incurred in the ordinary course of business which are not indebtedness for
borrowed money.
'INTERCREDITOR AGREEMENT': The Intercreditor Agreement dated as of March
18, 1998, among the Banks, the Borrower and the 'Purchasers'( as defined
therein).
'INVESTMENT': The acquisition, purchase, making or holding of any stock or
other security, any loan, advance, contribution to capital, extension of credit
(except for trade and customer accounts receivable for inventory sold or
services rendered in the ordinary course of business and payable in accordance
with customary trade terms), any acquisitions of real or personal property
(other than real and personal property acquired in the ordinary course of
business) and any purchase or commitment or option to purchase stock or other
debt or equity securities of or any interest in another Person or any integral
part of any business or the assets comprising such business or part thereof.
'LETTER OF CREDIT': An irrevocable letter of credit issued by the Agent
pursuant to this Agreement for the account of the Borrower.
'LETTER OF CREDIT OBLIGATIONS': Shall mean the aggregate amount of all
possible drawings under all Letters of Credit plus all amounts drawn under any
Letter of Credit and not reimbursed by the Borrower under this Agreement.
'LEVERAGE RATIO': As of any date of determination, the ratio of
(a) the sum (without duplication) of the aggregate principal amount of
all outstanding Indebtedness of the Borrower and its Subsidiaries as of
such date,
to
(b) EBITDA for the four fiscal quarters ending on such date
determined on a consolidated basis in accordance with GAAP and including
the results for Membrex and Micron for the relevant periods prior to their
respective Acquisition Closing Date.
'LIEN': Any security interest, mortgage, pledge, lien, hypothecation,
judgment lien or similar legal process, charge, encumbrance, title retention
agreement or analogous instrument or device (including, without limitation, the
interest of the lessors under Capitalized Leases and the interest of a vendor
under any conditional sale or other title retention agreement).
'LOAN': A Revolving Loan.
'LOAN DOCUMENTS': This Agreement, the Notes and the Security Documents.
'MAJORITY BANKS': At any time, Banks holding at least 66 2/3% of the
aggregate unpaid principal amount of the Notes or, if no Loans are at the time
outstanding hereunder, Banks whose Total Percentages aggregate at least 66 2/3%.
'MEMBREX': Membrex, a Delaware corporation.
'MEMBREX ACQUISITION': The purchase by the Borrower of all or
substantially all of the assets of Membrex pursuant to the Membrex Purchase
Agreement.
'MEMBREX PURCHASE AGREEMENT': An Asset Purchase Agreement or similar
agreement between the Borrower, as purchaser, and Membrex, as seller, in form
and substance reasonably satisfactory to the Majority Banks.
'MICRON': Micron Separations, Inc., a New York corporation.
'MICRON ACQUISITION': The acquisition by the Borrower of all of the
capital assets of Micron pursuant to the Micron Plan.
'MICRON PLAN': The Joint Plan of Reorganization dated as of December 15,
1997 submitted by Micron and the Borrower in Micron's bankruptcy process, and
confirmed by the United States Bankruptcy Court for the District of
Massachusetts on January 28, 1998, and as the same may be supplemented, amended
or otherwise modified after the date hereof with the prior written consent of
the Majority Banks.
'OBLIGATIONS': The Borrower's obligations in respect of the due and
punctual payment of principal and interest on the Notes when and as due, whether
by acceleration or otherwise and all fees, expenses, indemnities, reimbursements
and other obligations of the Borrower under this Agreement or any other Loan
Document, in all cases whether now existing or hereafter arising or incurred.
'PBGC': The Pension Benefit Guaranty Corporation, established pursuant to
Subtitle A of Title IV of ERISA, and any successor thereto or to the functions
thereof.
'PERFORMANCE LETTER OF CREDIT': A 'performance-based standby letter of
credit' as such term is defined and used in Appendix A to Part 3 of Chapter 1 of
Title 12 of the Code of Federal Regulations, 12 C.F.R, SS 3.1 ET SEQ.
'PERMITTED ADDITIONAL INDEBTEDNESS': Indebtedness incurred at a time that
no Default or Event of Default shall have occurred and continued, and the
incurrence of which shall not result in a Default or Event of Default, the
aggregate amount of which incurred after the Closing Date shall not exceed 10%
of consolidated tangible net worth as of the end of the most recently-ended
fiscal quarter, PROVIDED that (a) if incurred by either the Borrower or any
Subsidiary, the projected payments of principal and interest on such
Indebtedness, when added to principal and interest payments on all other
Indebtedness then outstanding and all Restricted Payments declared, shall not
cause the Fixed Charge Coverage Ratio (calculated on a pro-forma basis for the
succeeding 12 month period) to exceed the minimum ratio applicable for such
period, and the chief financial officer shall have submitted to the Bank a
calculation of the Fixed Charge Coverage Ratio on such a pro-forma basis, which
shall show compliance with this requirement; and (b) if incurred by any
Subsidiary the aggregate amount of such Indebtedness of Subsidiaries incurred
after the Closing Date ( giving effect to such new Indebtedness) shall not
exceed 5% of consolidated tangible net worth of the Borrower as of the end of
the most recently-ended fiscal quarter.
'PERSON': Any natural person, corporation, partnership, joint venture,
firm, association, trust, unincorporated organization, government or
governmental agency or political subdivision or any other entity, whether acting
in an individual, fiduciary or other capacity.
'PLAN': An employee benefit plan or other plan, maintained for employees
of the Borrower or of any ERISA Affiliate, and subject to Title IV of ERISA or
Section 412 of the Code.
'POST-ACQUISITION BALANCE SHEET': The consolidated pro forma balance sheet
of the Borrower as of the Acquisition Closing Date for the Membrex Acquisition,
reflecting the assets, liabilities and stockholders' equity of the Borrower as
of such date, adjusted to reflect the effect of the Loans contemplated to be
made on or prior to such date, the Acquisitions and any other financing
anticipated in connection with the Acquisitions.
'REFERENCE RATE': The rate of interest from time to time publicly
announced by the Agent as its 'reference rate.' The Agent may lend to its
customers at rates that are at, above or below the Reference Rate. For purposes
of determining any interest rate hereunder or under any other Loan Document
which is based on the Reference Rate, such interest rate shall change as and
when the Reference Rate shall change.
'REGULATORY CHANGE': Any change after the Closing Date in federal, state
or foreign laws or regulations or the adoption or making after such date of any
interpretations, directives or requests applying to a class of banks including
any Bank under any federal, state or foreign laws or regulations (whether or not
having the force of law) by any court or governmental or monetary authority
charged with the interpretation or administration thereof.
'RELIASTAR INDEBTEDNESS': The $15,000,000 Floating Rate Notes of the
Borrower and the $5,000,000 Fixed Rate Notes of the Borrower, all due in 2008,
issued pursuant to the Note Purchase Agreement dated as of March 18, 1998 among
the Borrower, ReliaStar Life Insurance Company and the other purchasers party
thereto.
'REVOLVING COMMITMENT': With respect to a Bank, the agreement of such Bank
to make Revolving Loans, and purchase risk participations in Letters of Credit
issued by the Agent for the account of the Borrower, upon the terms and subject
to the conditions and limitations of this Agreement.
'REVOLVING COMMITMENT AMOUNT': The Bank's 'Revolving Commitment Amount'.
'REVOLVING COMMITMENT ENDING DATE': March 31, 2003.
'SECURITY AGREEMENT': The Amended and Restated Security Agreement in the
form attached hereto as EXHIBIT J as the same may be amended, supplemented,
restated or otherwise modified from time to time.
'SECURITY DOCUMENTS': The Security Agreement, the Control Agreements, the
Intercreditor Agreement and any financing statements filed or required by the
Agent in connection therewith.
'SUBSIDIARY': Any Person of which or in which the Borrower and its other
Subsidiaries own directly or indirectly 50% or more of: (a) the combined voting
power of all classes of stock having general voting power under ordinary
circumstances to elect a majority of the board of directors of such Person, if
it is a corporation, (b) the capital interest or profit interest of such Person,
if it is a partnership, joint venture or similar entity, or (c) the beneficial
interest of such Person, if it is a trust, association or other unincorporated
organization.
'TOTAL REVOLVING OUTSTANDINGS': As of any date of determination, the sum
of (a) the aggregate unpaid principal balance of Revolving Loans, (b) the
aggregate maximum amount available to be drawn under Letters of Credit, and (c)
the aggregate amount of unpaid drawings under Letters of Credit.
'UNUSED REVOLVING COMMITMENT': With respect to any Bank, as of any date of
determination, the amount by which such Bank's Revolving Commitment Amount
exceeds such Bank's ratable share of Total Revolving Outstandings.
'YEAR 2000 PROBLEM': The risk that computer applications used by any person
may be unable to recognize and perform properly date-sensitive functions
involving certain dates prior to and any date after December 31, 1999.
7.2 ACCOUNTING TERMS AND CALCULATIONS. Except as may be expressly
provided to the contrary herein, all accounting terms used herein shall be
interpreted and all accounting determinations hereunder shall be made in
accordance with GAAP consistently applied. Any reference to 'consolidated'
financial terms shall be deemed to refer to those financial terms as applied to
the Borrower and its Subsidiaries in accordance with GAAP.
SECTION 8: MISCELLANEOUS.
8.1 MODIFICATIONS. Except as otherwise provided in this Section 8.1, any
provision of this Agreement or any other Loan Document may be amended or
modified only by an instrument or instruments in writing signed by the Majority
Banks and the Borrower. Any amendment, waiver or consent reducing any principal
of, or the amount of or rate of interest on or fees with respect to the Loans or
the Commitments, postponing any date fixed for the payment of any principal of
interest on or fees with respect to the Loans or Commitments, amending the
Security Agreement or releasing or subordinating any of the 'Collateral' (as
defined therein, except as provided therein), or amending Section 1.1, Section
1.2 or this Section 8.1 may only be made by an instrument or instruments in
writing signed by all of the Banks and the Borrower. In addition to the
foregoing requirements, (A) no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the requisite Banks indicated
above to take such action, affect the rights or duties of the Agent under this
Agreement or any Loan Document, and (B) no amendment may increase any Bank's
Commitment or Commitments unless it is in writing and signed by such Bank. No
waiver of any provision of this Agreement or any other Loan Document or consent
to any departure by the Borrower therefrom shall in any event be effective
unless the same shall be in writing and signed or consented to in writing by the
requisite Banks indicated above and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
8.2 EXPENSES. The Borrower agrees to reimburse the Agent upon demand for
all reasonable out-of-pocket expenses paid or incurred by the Agent (including
filing and recording costs and fees and expenses of Dorsey & Whitney LLP,
counsel to the Agent) in connection with the negotiation, preparation, approval,
review, execution, delivery, administration, amendment, modification and
interpretation of this Agreement and the other Loan Documents. The Borrower
shall also reimburse the Agent and each Bank upon demand for all reasonable
out-of-pocket expenses (including expenses of legal counsel) paid or incurred by
the Agent or any Bank in connection with the collection and enforcement of this
Agreement and any other Loan Document. The obligations of the Borrower under
this Section shall survive any termination of this Agreement.
8.3 SUCCESSORS AND ASSIGNS; DISPOSITION OF LOANS; TRANSFEREES. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that the Borrower may not
assign its rights or delegate its obligations hereunder or under any other Loan
Document without the prior written consent of all the Banks. Each Bank may at
any time sell, assign, transfer, grant participations in, or otherwise dispose
of any portion of its Commitments, and/or its Loans (each such interest so
disposed of being herein called a 'Transferred Interest') to banks or other
financial institutions ('Transferees'); PROVIDED, HOWEVER, that a Bank may
dispose of a Transferred Interest only with the consent of the Agent and, except
after the occurrence and during the continuance of an Event of Default, the
Borrower (which consent shall not be unreasonably withheld) and only upon
payment to the Agent by the parties to such disposition of a processing and
recording fee in the amount of $2,500 for each party and PROVIDED further, that
except after the occurrence and during the continuance of an Event of Default,
First Bank shall not dispose of a Transferred Interest if, after giving effect
thereto, First Bank's share of the outstanding Commitments and Loans would be
less than 51%. The Borrower agrees that each Transferee shall be entitled to
the benefits of Section 8.2 with respect to its Transferred Interest and that
each Transferee may exercise any and all rights of banker's Lien, setoff and
counterclaim as if such Transferee were a direct lender to the Borrower. If any
Bank makes any assignment to a Transferee, then upon notice to the Borrower such
Transferee, to the extent of such assignment (unless otherwise provided
therein), shall become a 'Bank' hereunder and shall have all the rights and
obligations of such Bank hereunder and such Bank shall be released from its
duties and obligations under this Agreement to the extent of such assignment.
Notwithstanding the sale by any Bank of any participation hereunder, (a) no
participant shall be deemed to be or have the rights and obligations of a Bank
hereunder except that any participant shall have a right of setoff under this
Agreement as if it were such Bank and the amount of its participation were owing
directly to such participant by the Borrower and (b) such Bank shall not in
connection with selling any such participation condition such Bank's rights in
connection with consenting to amendments or granting waivers concerning any
matter under any Loan Document upon obtaining the consent of such participant
other than on matters relating to (i) any reduction in the amount of any
principal of, or the amount of or rate of interest on, any Note or Advance in
which such participation is sold, (ii) any postponement of the date fixed for
any payment of principal of or interest on any Note or Advance in which such
participation is sold, (iii) the release or subordination of any material
portion of any collateral other than pursuant to the terms of any Security
Document or (iv) the release of any Guaranty.
8.4 GOVERNING LAW. This Agreement and the rights and obligations of the
parties hereunder and under the Note and any other documents delivered herewith
shall be construed in accordance with and governed by the substantive laws (but
not the laws of conflict) of the State of Minnesota but giving effect to all
federal laws applicable to national banking associations. The Borrower hereby
consents to the jurisdiction of the courts of the State of Minnesota and federal
courts located in the State of Minnesota for any actions brought hereon or on
the Notes.
8.5 SEVERABILITY. Whenever possible, each provision of this Agreement and
the other Loan Documents and any other statement, instrument or transaction
contemplated hereby or thereby or relating hereto or thereto shall be
interpreted in such manner as to be effective and valid under such applicable
law, but, if any provision of this Agreement, the other Loan Documents or any
other statement, instrument or transaction contemplated hereby or thereby or
relating hereto or thereto shall be held to be prohibited or invalid under such
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement, the other Loan Documents or any
other statement, instrument or transaction contemplated hereby or thereby or
relating hereto or thereto.
8.6 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE AGENT AND THE BANKS
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
8.7 INDEMNIFICATION. The Borrower hereby agrees to defend, protect,
indemnify and hold harmless the Agent and the Banks and their respective
Affiliates and the directors, officers, employees, attorneys and agents of the
Agent and the Banks and their respective Affiliates (each of the foregoing being
an 'Indemnitee' and all of the foregoing being collectively the 'Indemnitees')
from and against any and all claims, actions, damages, liabilities, judgments,
costs and expenses (including all reasonable fees and disbursements of counsel
which may be incurred in the investigation or defense of any matter) imposed
upon, incurred by or asserted against any Indemnitee, whether direct, indirect
or consequential and whether based on any federal, state, local or foreign laws
or regulations (including securities laws, environmental laws, commercial laws
and regulations), under common law or on equitable cause, or on contract or
otherwise:
(a) by reason of the Membrex Acquisition or the Micron Acquisition;
or
(b) by reason of, relating to or in connection with any act done or
omitted by any Person in connection with, or in the exercise of any rights or
remedies under, the Acquisition Documents; provided, however, that the Borrower
shall not be liable to any Indemnitee for any portion of such claims, damages,
liabilities and expenses resulting from such Indemnitee's gross negligence or
willful misconduct. In the event this indemnity is unenforceable as a matter of
law as to a particular matter or consequence referred to herein, it shall be
enforceable to the full extent permitted by law.
This indemnification applies, without limitation, to any act, omission,
event or circumstance existing or occurring on or prior to the later of the
Termination Date or the date of payment in full of the Obligations, including
specifically Obligations arising under clause (b) of this Section. The
indemnification provisions set forth above shall be in addition to any liability
the Borrower may otherwise have. Without prejudice to the survival of any other
obligation of the Borrower hereunder the indemnities and obligations of the
Borrower contained in this Section shall survive the payment in full of the
other Obligations.
8.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
8.9 NOTICES. Any notices required or contemplated hereunder shall be
effective upon the placing thereof in the United States mails, certified mail
and with return receipt requested, postage prepaid, and addressed as follows:
If to Borrower: Osmonics, Inc.
5951 Clearwater Drive
Minnetonka, Minnesota 55343
Attention: Howard Dicke
If to Bank: U.S. Bank National Association
(d/b/a First Bank National Association)
610 Second Ave. S.
Minneapolis, Minnesota 55402
Attention: Matthew Ross
8.10 NO WAIVERS. No failure or delay on the part of any Bank or the Agent
in exercising any right, power or privilege hereunder and no course of dealing
between the Borrower and any Bank or the Agent shall operate as a waiver
thereof; nor shall any single or partial exercise or any right, power, or
privilege hereunder preclude any other or further exercise thereof of the
exercise of any other right, power or privilege.
8.11 CAPITAL ADEQUACY. In the event that the Agent or a Bank shall have
determined that the adoption of any law, treaty, rule, regulation, guideline or
order regarding capital adequacy, or any change therein or in the interpretation
or application thereof, or compliance by any Bank with any request or directive
regarding capital adequacy (whether or not having the force of law) from any
central bank, governmental agency or body having jurisdiction, does or shall
have the effect of reducing the rate of return on such Bank's or its parent's
capital as a consequence of its obligations hereunder to a level below that
which the Bank or its parent could have achieved but for such adoption, change
or compliance (taking into consideration the Bank's and its parent's policies
with respect to capital adequacy), then the Borrower shall from time to time,
within 10 days after written notice from and demand from such Bank, pay to such
Bank additional amounts sufficient to compensate such Bank for such reduction.
A certificate as to the amount of such reduction, submitted to the Borrower by
the Bank, shall, absent manifest error, be final, conclusive and binding for all
purposes.
U.S. BANK NATIONAL ASSOCIATION
(d/b/a FIRST BANK NATIONAL ASSOCIATION) in
its individual capacity and as Agent
By: ________________________________
Title: _____________________________
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this ____ day of
March, 1998, by _________________________, the _________________________, of
U.S. Bank National Association (d/b/a First Bank National Association), a
national banking association, on behalf of said association.
________________________________
Notary Public
(NOTARIAL SEAL)
Accepted and agreed to as of March __, 1998.
OSMONICS, INC.
By: ________________________________
Title: _____________________________
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this ___ day of
March, 1998, by _________________________, the _________________________, of
Osmonics, Inc., a Minnesota corporation, on behalf of said corporation.
_______________________________
Notary Public
(NOTARIAL SEAL)
[signature page to letter agreement dated March 18, 1998]
SCHEDULE 1.1
REVOLVING COMMITMENT AMOUNT
Bank Amount
---- ------
U.S. Bank National Association $30,000,000
EXHIBIT A
REVOLVING NOTE
March 18, 1998
$30,000,000.00 Minneapolis, Minnesota
FOR VALUE RECEIVED, OSMONICS, INC., a Minnesota corporation, hereby
promises to pay to the order of U.S. Bank National Association (d/b/a First Bank
National Association) (the 'Bank') at the main office of U.S. Bank National
Association (d/b/a First Bank National Association) in Minneapolis, Minnesota,
in lawful money of the United States of America in Immediately Available Funds
(as such term and each other capitalized term used herein are defined in the
Credit Agreement hereinafter referred to) on the Revolving Commitment Ending
Date, the principal amount of THIRTY MILLION AND NO/100 DOLLARS ($30,000,000.00)
or, if less, the aggregate unpaid principal amount of the Revolving Loans made
by the Bank under the Credit Agreement, and to pay interest (computed on the
basis of actual days elapsed and a year of 360 days) in like funds on the unpaid
principal amount hereof from time to time outstanding at the rates and times set
forth in the Credit Agreement.
This note is one of the Revolving Notes referred to in the Credit Agreement
dated as of March 18, 1998 (as the same may hereafter be from time to time
amended, restated or otherwise modified, the 'Credit Agreement') among the
undersigned, the Bank and the other banks named therein. This note is secured,
it is subject to certain permissive prepayments and its maturity is subject to
acceleration, in each case upon the terms provided in said Credit Agreement.
This note replaces in its entirety an existing promissory note dated
February 13, 1998 issued by Osmonics, Inc. to the order of the Bank in the
original principal amount of $20,000,000.00 (the 'Prior Note'). It is expressly
intended, understood and agreed that this note shall replace the Prior Note as
evidence of indebtedness of Osmonics, Inc. to the Bank heretofore represented by
the Prior Note and the Prior Note shall be of no further force and effect; it
being further understood that all amounts outstanding under said Prior Note as
of the date hereof shall be considered outstanding hereunder from and after the
date hereof.
In the event of default hereunder, the undersigned agrees to pay all costs
and expenses of collection, including reasonable attorneys' fees. The
undersigned waives demand, presentment, notice of nonpayment, protest, notice of
protest and notice of dishonor.
THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF
THE UNITED STATES APPLICABLE TO NATIONAL BANKS.
OSMONICS, INC.
By ____________________________
Title ______________________
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this____ day of
_____________, 1998, by _______________________, the ____________________, of
Osmonics, Inc., a Minnesota corporation, on behalf of said corporation.
______________________________
Notary Public
(NOTARIAL SEAL)
Address:
5951 Clearwater Drive
Minnetonka, Minnesota 55343
Attention: Mr. Howard Dicke
[page 2 of Revolving Note dated March 18, 1998]